Mackay, J.C. v R.J. Hobbs Pty Ltd

Neaves J.

10 January 13E6

Canberra

For-the applicant and cross-respondent

Counsel : Mr N.€. Francey

Sollcitors: €or the respondents and the cross-clamant

Malcolm Johns and Company

Counsel : Mr S .G. Finch

Solicitors: Dupree Davey Watson

Assoclates

Dates of hearing

20, 21 , 22, 23 May 1985

----="---

JCNXIFER 'y.LTiiEF YXE MAC!.;??.P

A2Flicant

R . J .

HGEBS PTY. LIMITED

Clrst r2spondent

ROEERT JO'r!!N HOEES

Second respondent

R.	J. HOSES PTY. LIYITED

Cross-claimant

JENNIFER CATHERINE MACKAY

Cross-respondent

MINUTE OF ORDER

JUDGE MAKING ORDER :	Neaves J.
DATE OF ORDER	10 January 1986
WHERE MADE	Canberra
THE COURT ORDERS THAT:

1. There be judgment for the applicant, Jennifer Catherine Mackay, against the first respondent,

R.	J. Hobbs Pty. Limited, In the sum of $10,000.

The application in

so far as It seeks relief

against the second respondent, Robert John Hobbs.

be dlsmissed.

The cross-claim

by R. J. Hobbs Fty.

Limited

aqainst Jennifer Catherine Mackay be dismissed.

R. J.

FIobbs

Pty. Limited pay the applicant's

costs of the application and of the cross-claim.

N o t e :

Settlement and entry of orders is dealt with in

Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

)

NEW SOUTH WALES DISTRICT REGISTRY	)	No. I; 19:	gf 1984
>
GENERAL DIVISION

.JENNIFEF( CAThE2INE MAi3KAY

Applicant

R.J. HOBDS PTY. LIMITED

First resp0nder.t

ROBE%T JOHN HOEES

Second respondent

R.J. HOESS PTY. LIMITED

Cross-claimant

JENNIFER CATHERINE

MICKAP

Cross-respondent

m: Neaves J.	,
i

D B :

10 January 1986

REASONS FOR JUDGMENT

This proceeding arises out

a transaction entered

into in July 1983 whereby Jennifer Catherme Mackay ("the applicant") acquired a second-hand Silver Shadow Rolls-Royce motor vehicle (1974 model) registration number (N.S.W.) RR-081.

The motor vehicle was offered for sale throuuh

R.J. Hobbs Pty.

Limited ("the first

respondent"), a

company which carried on

2 .

The applicant claims, pursuant

5 . 3 2 of the

Eractices Act 1974 (Cth) ("the Act"), to recover f r m the first respcndent and from Robert John Hobbs. the second respondent, the amount of loss or damage alleged to have been suffered by her by conduct that was done In contravention of sub-s.52(1) or

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5 . 5 3 of the Act. The basis of that claim is

an allegation that

,.:v

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she was induced

.to enter into the transaction by certain

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representatlons in relation to the vehicle alleged to have been

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. ,	'.= .	,made. to her	by Mr Hobbs, as agent f o r the first respondent.	It
,	1 .	.~

- ,

.. , is alleged

that

hose

representations

were false

and

-. . ' ' constituted misleading or deceptive conduct.

As pleaded, the

, . , .

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c',

- . ( ,,~.qepteSentations''relied

upon were as follows:

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(a) that

the

vehicle

was

good

mechanical

Ibl

that the only mechanlcal work necessary to be

performed upon the

venlcle was the replacement

#of X 5r.71ne mountlnq; and

!c) that t>e (cost cf ceplacement of an engine

mountinq xas appronmately $ 2 0 0 .

The representations were alleged to have Seen made during the course of two conver-ations in July 1383 between t k e applicant

and Mr Hobbs.

one at the premises of Ace-Hi Courier Service and

the other in the course	of a journey between those premlses and
Drummoyne.

. . ,,..,>- .

The applicant also alleges that there was

breach of

d "

I:. >... '

. ' I -. ~ ,

the

condition

implied

the

hire

purchase

agreement

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% . ,

sub-s.71(1)

of the

Act

that

the

motor

vehicle

was

, .... ,

/-.,. .

,=-.

" 7

merchantable quality.

She claims to recover damages against

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.. - . 'the first 'respondent in respect of that breach, basing

that

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' claim on the provisions of s.73 of the Act.

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The applicant

gave

evidence

that, at the relevant

time. she was employed in the Bureau

of Meteorology at a salary

of $1200 per month.

She

also gave evidence that at that time

c - ,..she owned a business which was conducted from premises at

.I . ,

Newtown, another suburb

Sydney, under the name

"Ace-Hi

Courier Servlce". That business, she said, was managed on her behalf by one Brett Wyatt. One of the employees was Reginald

Varley. 'rfer evidence

concerning

her

involvement

that

business was. however. sir!qularly vague.

She obviously took no

part In

YIIE runninc; of

th;. ' r x : n e s c and

I:n?w

nothlnq of

~ t s

financial affalrs. She was

lum.ble. 3r unmll;z<, to glve

any

comprehensive accIxmt of the xonaps i if any-.

she received from

the Suslness. She inslsted. hovever. chat she had invested $5':1,?C0

z m p 1 : r 5a:i

'he

d l d no';

remember.

si.;.

to ;60.000

I n

the businzzs. that money representing accumulated savlnqs

whlc'n

she kept at home In cash as she dld not beliere in banks. %e

also said that from time to time she gave substantial sums of

money to Mr Wyatt who was. in the applicant's words "flatting"

with her ai

the time. She said he had

no money of hls

own.

She said that the deposit on the vehicle in questlon was paid

out of her own

moneys but she was unable to say what savlnqs

. she had at the time of the transaction.

She said that In July

1983 she owned shares which were sold for

$5,000. that money

being used as part

of the deposlt on

the motor vehicle. She

agreed that she could not maintain the monthly payments under

the hire purchase agreement from the salary she recelved from

the Bureau of Meteorology and the moneys

(if any)

received from

- , .,.?Ace-Hi

Courler Service. Those payments

were to be made from

: .	.	I
.f-	her accumulated savings.
I _

In June 1983 the applicant had acquired a 1967

model

Rolls-Royce motor vehicle registration number (N.S.W.)

MHR-264

(In some of the documentation referred to as MNR-264). under a hire purchase agreement with NRMA Finance Limited. At the time

of the subsequent transaction, the amount outstanding under

that agreement was

$17 .000 .

The appllcant opene2 a

cheque

ascount wlth the Neutral Bay branch of t h e Hestpac Ban'.:

either

at the time

of, or shortly before. the June

1983

trsnsaction

took place from which. apparently, Faynents ta	?JRY.A	Finance
Limlted were made.

Clalm based on sections

52 and 53

According to the applicant Mr Wyatt and Mr Varley

informed her that they had seen

Rolls-Royce motor vehicle

available for sale in a second-hand car yard in Victorla Road, Drummoyne when they were driving past. Her evidence was that

Mr Wyatt had telephoned her to say that

he had seen the car.

. ,

that it looked nice and that she would. perhaps,

be interested

. . # $ I

in it.

She

said that Mr Wyatt

had, without her knowledge or

. ,

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1nstruction;paid

a preliminaFy deposit of $500 on the vehicle.

. ,

. .	Mr Hobbs, 'according to the applicant, subsequently came to the

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premises of Ace-Hi Courier Service

at Newtown, the applicant

presumed for the purpose

of discussing with Mr Wyatt the

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- , - purchase'. of fleet cars

for the business.

The applicant said

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: '	she was introduced to Mr Hobbs by Mr Wyatt and she became aware

I "

for the first time that Mr

Hobbs had the Rolls-Royce vehicle

c . '

seen by Mr. Wyatt and Mr Varley.

The applicant further said

that in the course of conversation

Mr Hobbs said that it was

beautiful car. in good condition and much better than the one

she had been driving.

Tn CrOss-es~.mlnatlon the applicant said that

liurinq

the first conversatlon w1r:h Mr Hobbs he said: "I have a

beautiful Rolls--?oycr I chnk you :muld be mterested in": that

she sald: "P.eal iy - Xhat colour 1 s ~t?": m d k e then sari&: "it

i s peacock blue, bone inter1.c.r. It : S :?

beautiful ~co~di~ior~.

top quality car and Setter than	the crle you Are d r l v ~ n g n o w " .
T

bater she said that Mr :-LULLS to1 . j her "at soxe staue" ttlat the

car he had f o r sale was better than the car she was driving but

she could

not

positlve

that it was during

the first

conversation. Lar:er she

again asserted that the words were

spoken during the flrst conversatlon. Asked

how Nr Hobbs was

able to compare the two vehicles when.

so far as she was aware,

he had not seen her car.

tine appllcanr: could

o n l y

speculate

that he had seen the car "because Brett Wyatt

was driving it".

The applicant said that during the first conversation she asked whether she could inspect the vehicle and that Mr Hobbs replied

in the affirmative and suggested that she come

to the premises

of Chevelle Motors on the foliowing Saturday afternoon.

According to the applicant she drove her car to the

' premises of Chevelle Motors Pty Limited at Drummoyne on the

following Saturday. She said she spoke to the only person who

was at the premises and whom she assumed was a salesman. The

person concerned was not otherwise Identified.

The applicant

said that the person she

saw at the premises told her that Mr

Hobbs was not there and neither was the Rolls-Royce vehicle.

The salesman said of the vehicle for sale: "It I s a good buy,

The applicant's ev~ctence

was that 22 70 J d l y 1983

she

had a furth5r convsrsatlon with Mr Hmbs ac the pr~mi3es of

Ace-Hi Courler Service. Asked about that conversatlon. her

evldence in chief

was as follows:

"I met him in the courier office and he had all the forms for Mercantile Credlts there and 'ne said the

car was ready to be plcked up and a l l the thin93 to

sign were there with the car. I asked	h m again,
what was the car like. and he told me It	was peacock

blue, bone

interlor.

really

good

condition,

top

quality car.

I stlll had not mewed It at this

stage. I just believed

hlm. So I sald, 'Where 1 s

the car tonight?'

He said, 'Well, it is garaged

somewhere'.

I said, 'Well, what about picking it

tonight?' It

was about six o'clock - and he

said,

'All right, but I will have to get it from the

. I. , .

garage', and I said, 'All right. I will drive you

over In cross-examination she said that Mr

' .

Hobbs had been with

Wyatt in the inner offlce: that he came out into the outer office where she was and said:

"I'm the one with the Rolls Royce.

Here

are the

documents. Don't worry about it.

I'll fill in the

form and all

you have to do is sign it."

She said that Mr Hobbs appeared to write on the form having asked her for her name and address and where she worked. The cross-examination included the following questions and answers:

Q .

You do not deny, do you, that Brett

Wyatt

dlscujsed the comlng deal for the Rolls-Royce

with P!r Hobbs on that day?

A .	I presu!ne Le discussed It. but he dld not acc for

And the 6ea.l. lncludlng the financlal aspects of the deAl. was flnallced by the time Mr Hobbs came out of that inner office and asked :IOU fcr your personel detalls. was 11; not?

A .

I an tiylnc; to

think what happened. Everythlnq

W ~ S

worked out and

I asked #John Hob33 what was

going on and he yulckly told

me. whlch I dld not

really understand anyway.

He said. 'Everything

is okay, lust slgn the form', which I did.

And a i i the numbers had already been entered on

the f

crm?

A .

I dlll not notice.

You dld not see them being put

down, though, did

you?

A.	B11 I saw was John Xobbs. He was slttinq across

the other side of the table and he was writlnq on

a form.

So he did not discuss the numbers

with you?

Yes. He said that he was going to phy out my

NRMA loan and I was qoinq to qet

$4000 as a

. >	.	-I I.	'"	'Q.4	-Nothing was discussed, though, about the time
I ,

>.,"

I *

.charges and the'!hire purchase agreement with you,

__ ."."was

it?

I .

L-

I- . -

':',?:.. A.: , What is time

charges?

,'. I . :.

*,., I. 2 I

' ' I ::':-Q'.	-cThe interest you would have to pay on the hire
I purchase agreement that was on the document when

. .i

;-..,

, ' ,~

h . - A . ,

you slgned it.

-	, . " % . a , > > , .

,, , .

,. A. , Yes.

I . . < . , ,

: Q.< You had not approved or otherwise of it before

, .I .

,'~~: -. -1 -L you signed it?

. '1 .A.

I did not worry about it because it

just

, . .

another hire purchase agreement.

I .

- ,

'--. Q': ' And you.did not read

it?

. 1

-	A .	No.
Q.	Because you knew Brett Wyatt had already checked it, did you not?
A .	No.

9 .

Q.	You dld not know that Brett Wyatt had already checked It?
A.	I dxd not know, and I do not know ncw.

Q. Y ~ L

assumed he had, 21d you:

As f a c as - I just

though7 they must have told

him about it obvl.ously because Erett told me

33out the car. He sald that he had vlewed lt,

that is all, so presumably lt came up in the

discLssion.

your evidence 1 s . 15 it not. thac YOU had signed

thls document before you had seen

'the caf at all?

Yes.

One of

the the dockments signed

bjj

the applicant

(Exhibit A) refers	to the financial details of the transaction
as follows -

Carh price	$45,000.00
Less deposit -

Cash

10.000.00

Trade-in

4,000.00

Residue

(unpaid balance)

31,000.00

The amount to be flnanced

31,000.00

cha ges

terms

13,950.32

Add

Total rent

payable

44,950.32

deposit	Add	14,000.00
Total amount payai)le

(including

deposit)

$58,950.32

.. I

So far as appears from the evidence there was

.:	discussion between the applicant and	Mr	Hobbs as to the	cash
I _

price of the vehicle.

The applicant was, however, aware that

an amount of $21,000

was to be allowed by way of trade-in on

' the car she then had and

of that $17,000 was to be paid by Mr

Hobbs to discharge the applicant's indebtedness to NRMA Finance Limited and $4,000 was to be treated as part of the deposit on the replacement vehicle. The absence of any discussion with the applicant concerning the cash price of the vehicle or the

10.

arrangements for the financing

its purchase is consistent

with the answer which she gave in cross-examlnation and

referred. to above that

"Everythlng was worked out and I

asked

John Hobbs hhat was qolng on and he quickly told me, which	I
did. not really understand anyway".

The applicant

hen

drew two

post-dated

cheques

apparently on her account

with the Westpac Dank

to which

reference has already been made, one for

$5,000 and the other

for $4,500.

Those

cheques,

together

with

the

preliminary

deposit paid by Mr Wyatt

of $500, made up the cash deposit of

$10,000 which the applicant had to provlde.

The cheque for

$4,500 was not cleared

presentation but arrangements were

subsequently made for payment.

I , . I

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According to the applicant, she then

drove Mr Hobbs to

;

. .

. .,

I. :,Drummoyne and dropped him off, somewhere near Victoria Road.

, .,

.:>-.,

.~ _i

..,was to,

collect the car

and meet her at the Birkenhead Tavern

.	-	I
, :--

. .

.--L.f.:.some'.half

an hour later. She said that during the journey she

I .

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. , I.

~ .had a conversation with Mr Hobbs concerning

the vehicle she was

- I . ',% _.

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""-:.'>'acqu+~ri~ng.

- ._

According to

the applicant's recollection what took

l..3 ,,,-; .- . ,

. ;. ;place was as follows:

.__ ,' ,. .

... * I A, '.,

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"As we were nearing the bridge I asked him if

there

. 1 0 1

<.:

L. ,

., . .

were any problems about the new

car that I

should

know about beforehand, and

he said, 'No. nothing to

worry about'. He said, ' A nut might have to be tightened. It would be a $200 job and it is just a

nut for an engine mounting'; and

I said, 'Is it

important?' He said, 'It is not important at all. You can get it done whenever you feel like

it' ....

He said, 'When it goes around corners you

may hear a squeaking sound and	that is all. It
need. a bolt tightened'."

The applicant identlfled the Sridue

of which she vas speaklnq

as "the one	that	goes	over towards Birkenhead	Tavern" at
Drummoyne.

The applic

ant said that, having

"dropped" Mr Hobbs

near Victoria

Road,

she proceeded to the Birkenhead Tavern.

Hobbs arrived there about half	an hour later and they exchanged
cars.

The version given by differs in almost every particular.

Mr Hobbs of what took place

However, before turning to

- _

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his version, some reference should be made to the history of

. - ,

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the vehicle: Mr

Hobbs said that he first viewed the vehicle

-- . "

I I ,

A,.,

I,.;

'	'short" time before March 1983 in a repossession holding yard in

-I

. .

G.,-,,-

, . , .. ;:. -V.ictoria .when he was in that State

, I . , . , !

.,*. ?I .

buying cars. It had

I ,> ."

. . .

_ -

.,... I I ,

, I ,

.. .

..;Victorian registration plates.

It had been involved in a front

I. .

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end collision. As a result of seeing the vehicle

he advised a

.I ..$,,.:..

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: 'I I

;

,..Mr

P.J. Goodman, who

either lived or had business premises at

, I , , .-

, I , ,Du,kal,

New South Wales,

purchase

it. The vehicle

was

. . , I .

. . , p 1 brought to Sydney and taken to the premises of Bruce R.

Ross

, .I 2, -,. .

;, .,

. . - , , ..'Pty. Limited

Pennant Hills where certain repairs were

I ':,, :

I	I. , .: .' L

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carried'out in March and April

1983.

I will refer to these

12.

later. The vehicle was subsequently inspected and registered

at the prenuses of the Department of Motor	Transport	(N.5.W.)
at Naltat-a, a northern suburb of Sydney.

Mr	Hobbs was then asked to sell the vehicle. He

arranqed for it to be on dlsplay at the premlses of Chevelle Motors Pty. Limlted at Drummoyne. It was there, he said "on conslgnment" - so that, if that company effected a sale, It would receive the commission.

Mr Hobbs also said that he had driven the vehicle on two or three occaslons. From

his driving of it he concluded

that it had a broken engine mountlng and that its front tyres,

.	being over-sized, were scraping on the body work on full lock
,	. l r ,

.~ > L

~. ,I.. :'In 'either

. L

direction.

Otherwise, he said, no defects

were

- .

- ,

.:'. ,;

., .

--<,p7?:

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,. r:.:":::.appa;eni

. ;. I C,,"

to him

8 s a result

of driving the vehicle and

he had

, . , ( . I t . .

I I -

8 .. . , ..

> .

::,-::no'-reservations

about

its

roadworthiness.

He agreed

that he

,. :

.. .

, ' , t >

F .

, :.

:,!-G

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. ~ ~ ::).,had

not arranged to have a mechanical or other inspection of

. . _ .

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the vehicle carried

out.

I . 2 .-~.~-	L I .
I ,,:;t':.

- 'S

, .

. I d "(>;$?L;

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. .

I r . .,.

$*:i

1. ..

. _ _ .

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. - I .

. : . According

Hobbs, he received a telephone

call

- t , . ~ 5 y ~ ~ , ~ A : . 4

. i'--

.:rj;.early

in July 1'9'83 from an independent wholesaler named Gary

, I , i

. ,<!:$;L"

-3-F +Ionan as a result of which he allowed Mr Honan to take the car

, ' S

.:,

7;xy !

I ,

a.,:-.,-

- .

-'?

'?aj:F.;gfrom the premises of Chevelle Motors Pty. Limited to show to

'": < ..r 9 , .>. .

' ,

, 9

,- :-I .!

~-'. .customer. Ace-Hi Courier Service

The car, he said, was taken to

the premises of

at Newtown.

Priar CO the deposlt being pald there was,

accordina

to Mr Hobbs. a further telephone conversation between

Mr Wyatt

and himself =hen

Kr Wyatt said that he

needed finance to be

arranged for the purchase

of the vehicle. Mr Hobbs then asked

for the necessary credit particulars to which

Mr Wyatt replied:

"There was no use him flnanclnq the car because

h had

a bad credit rating

...

but his girl friend had

a good

credit rating so he Cwouldl

put it in her name for a

while". Mr Wyatt sa1.d he would obtain tne

necessary credit particulars.

Subsequencly, he telephcned Mr Wyatt to arrange

meetlng wlth the applicant. That

meetlng was arranqed for 20

July l983 at the prew3es

of Ace-Hi Cqurier Servlc? .

He sald

that both Mr Wyatt and

t he applicant were present

at the

meeting. He informed Mr Nyatt that i-teriantll? Credits Limited required a letter confirmins that the aeplicant

vas employed at

Ace-Hi Courier Service and that

he,

Hobbs. would have to

undertake to repurchase the vehicle

if the appllcant failed to

fulfil her obllgations under the

hire purchase agreement.

said he had

with him the

hire purchase documents which had been

received by him from his

Tamworth office with most of the

particulars already inserted thereln.

He said

he filled in

only the registration number and the description

of the car

being purchased.

He signed the document

as a witness to the

applicant's signature.

He agreed that he received from the

applicant on that occaslon two cheques, one for

$4,500 and one

for $5,000.

It is convenient to mentlon

at this point that the

cheque for

$4,500 was endorsed in favour

of Mr

Goodman and

apparently lodged for collection

with the Fymble Branch of the

ANZ Bank for credit

to an

acount in the name

of F.J. and

B.L.

15.

Mr 'rlchbs salcl :-ha:, at t h e anretlqu o n ZI! ,;uly l??,:,

lnformz-i

Mr iJyatt that the vehicle proljably re.qui:-ed an

enGine

mountin7 to be replaced

and he offered. tr. f i x It. Mr

Wyatt.

according t o Mr

HGbbs. said he woule do lt h m - e l f .

52 sald he

had no dlscusslon

at any time with MC bJyact 6 5 to the condition

of the vehicle being

purchased, the discussion belng limited to

the trade-in allowance to

be made on the 1967 Rollj-Royce.

Hobbs explained why this was

so by saylnq that

Wyatt hzd

already (a week before his first meeting with MY Wyztt) decided to buy the car. Mr Honan, he said, had already ?Old the car to

Mr Wyatt and

it was bad business practice in sellinq cars to

"sell a car twice".

Mr Hobbs denied that

he had any conversation with

the

applicant prior to 20 July 1983 or that he had arranued for her

to visit the premises	of	Chevelle Motors Pty. Limited to
inspect the vehicle.

According to Mr Hobbs. the hire purchase documents

were then returned to

his

company at Tamworth and there

submitted to Mercantile Credits Limited. The proposal embodied

in the documents was accepted by that company

o 25 July 1983.

16.

Mr Theodore William Homeyer, a director of Chevelle Motors Pty. Limited, gave evidence that In June 1383 he

spoke

to two persons about he vehicle the subject of thls proceeding. He said he spoke to Mr Varley and Mr Wyatt, the latter having been introduced to him by Mr Varley. The

conversation took place

at the premises of Chevelle Motors Pty.

Limited

69 Victoria Road, Drummoyne.

Before

referring

further to that conversation, brief reference should be made to

the evidence of

Peter James Roberts who at the relevant

time

was employed as a salesman by Chevelle Motors

Pty Llmited.

Roberts said that

he had a telephone conversation

wlth Mr Lyall

of the firm

of Lyall and Vine following which two men. one of

"5,

Do p,>j~ reca l l 5x5

:on.;ersjtio:?

ti,

j:>eSt

vour ~.=c~ll+~ti::?

t ;~ac you ha4

biyztt?

Ye:, zlr, I ch.

mL:..at :cnveysj;:t:!? X:.: t;:;a\:

A .

Mr +iTjy?.tt

zal? t.2 F,?, '-W.at scrt G: t:3~. 15

t h s ? '

I sai.i, 'It's

n G * : 2

hafi cai.'

E5 33ld.

'bR1at

year mcdel 1 s lt?'

sald. 'It's S 13'4

ncdel'.

He s3id.

' 2 0 :-GL

kncw :T~W man:;

rJwnFrS

l t

!las

- .

had?

' I sal&, '?To, L L= riot. '

'PI,?

t hen

>!c-

Wpatt th?r. loslied over the veh-c-le tnq;.ther

with

h m and I nor? or iess shGwe2 iilm

ove t the

vehicle and fuither conversation took :;lace	from
there.

Q.	You do not

recall

the

exact

nature

that

conversatlon. o r do you?

A .	I recall some of the conversation, sir, yes.
Q.	Do you recall any further conversation

with

Wyatt?

A .

Yes, I do.

What conversation 1 s that?

A .

He said to me.

'Wnat has happened tr, the quard

here?' and

he indicated the front riFht hand

guard of the Rolls.

I said, 'It's obviously been

involved in an accidat there.'

He said. 'Oh.

yes, I can see that.

Do you recall anything further?

A .

There was addltional conversatlon then concerninq

ordinary pomts on the car, the operation

controls of the vehicle, and he said to me,

'How

much are you askins €or the

car?'

I said,

'$45.000'.

Q.	What happened then?
A .	I said, 'How would you - if you decide to buy the vehicle - intend to settl??' He said. 'Hell. I

19.

have $rot a trade-in.

I said. 'What s o i t of

car

1 s It?'

He sald. '

L ha'Je got a Shadow 1966

model.

He sal<* 'How much voclld you qlve m? for

that7'

I zald, 'It': :e?-:J dlfflcult

wlthout

5ee:r.T

?he 1z.r. but I sm JIuce 1:

:IC.U U l v e us the

oppovz'-.nlty c

havlnq a i~.:ic

at it. I vi11 m r k

ouz

:ea:

>-oc,. '

1 z a l l . 'Xouid ycu l L k e

.dr :~e thiz

c?r.?'

zal .5 . 'XCI,

not

lust

:J?? .

XOW does it Idrlvip?' I 5512 'It drives i;er:r

w2::.

It dses n?ed m engine mourlt1riq and the tyL=s

t k t 5avr been f;tt?d

are tco larq?.'

:<e

za lc l .

'Hhat dl; you man's'

I sald.

' 5 i e I l it

d~se~n't

matter

much

a5out the tyres

except !be17

scrape. one tyre scrapes. when you turn the car m t o full lock.' Thsre was some further conversation in relation to finance company

interest rates. and

a short tlme after. both

Varley

and

Wyatt

left.

There xas no flxeci

appomtment concernxq the inspection cf a trade-in or any further comeback."

Mr Homeyer sald he had no further conversatlon or contact	wich
Mr Wyatt thereafter.

Mr Homeyer also said that at the relevant tlme

h had

three employees at the

car yard in Victoria

Road, Mr Peter

Roberts. Miss Lindy Moran and	a car washer whose name he could
not remember.

Mr Gary Daniel Honan gave evidence that in June and

July 1983 he

was a commission agent working on occasions for

the respondent and for the firm

of Lyall and Vine.

said

that late in June 1983 he received a telephone call from Mr Andrew Lyall as a result of which he picked up a Rolls-Royce

motor vehicle and took it

to the premises

of Ace-Hi Courier

Service at Newtown.

There he

saw Mr Wyatt and Mr Varley. Mr

Wyatt then drove the car for some

20-30 minutes with Mr Honan

and Mr Varley as

passengers. After returning to the premises

of Ace-Hi Courler Sernce. Mr Wyatt, accordmg to Mr Honan.

sald khat he

would like to

purchase

the

vehicle.

There

EollcwEd some dlscu.:sion

a h u t the tcnde-in jllowance

on a (dark

blue 'Aolls-Royce. M L HGnan adid 5hsL h , i-iya'lt,

would have to

speak to Yr Lyail c5uardrnq- the

trade-lr. allowance. He.

Honan. then drove ;ne ve;?lcle back to the premises c:

13hev511e

Motors

Pty. L l m i t t r l .

Mr Honan said that. about

a week or ten days later.

drove Mr Hobbs to the premises of Ace-H1 Courier Service on the

way to the airport.

He accompanied

Mr Hobiis into the office

and introduced him to Mr i dya t t .

He then left and returned to

the vehicle he was driving.

He had no conversation with Mr

Wyatt about the proposed purchase.

The parties

were

agreed

that

Wyatt

was

not

available to be called

as a witness, enquiries

to his

whereabouts having proved unsuccessful. It was agreed that

inference adverse

to any party should be drawn from

Mr Wyatt's

absence from the witness box.

That being the state

of the evidence

on this aspect of

the matter, the question is whether the applicant,

has, on the

balance of probabilities,

established

that

here

was

contravention of sub-s. 5 2 ( 1 ) or S. 53 of the Act.

20.

The applicant did not create a favourable

mpresslon

as a witness. Indeed, unsatisfactory on a number *2f matters. S'ne 1:

I found

her

vldence

quite

clearly 3 x o m x

of some sophlstlcation and Lnr?lliqcnze

;

l n re1at:on

to iiec

ljuslness deallngs she scuqht

to qlve the lapresslcn of ccaplete

nalvety. I have

already

commented upor. -,he un~atisfaztor:r

nature of her

evidence

cc,ncerning

hek- invclrien\rnt

cl??

business of Ace-Hi Courler Service

and, ~n particular. as

her role therein and as to the moneys

(lf any) she recelved

from it.

In additlcn. I can m l y regard her evidence as to her

own financial resources a s unsatisfactory and less than frank.

If the applicant is to be believed,

Mr Nyatt saw the

motor vehicle in question at

a car sales yard while driving

past

and,

without

her

knowing

anything

about

it, paid a

prellminary deposit of

$500 on the vehicle out

of moneys

belonglng to her.

far as appears,

the applicant was not

told by Mr Wyatt

of the price of

the vehicle or any details

about it - not even its colour - and she agreed to purchase it

without inspecting it or having

a test drive. Indeed, on her

evidence, the purchase was made without anyone

on her behalf

neither Mr Wyatt nor

Mr Varley nor anyone else

- making

inspection of, or test driving, the vehicle.

The applicant's evidence was that, by arrangement with

Mr Hobbs,

she went to the premises

Chevelle Motors Pty.

Limited t o inspect the car one Saturday afternoon.

Mr Homeyer,

I am equally unable to accept her evldence

that on 70

July 1993, immediately

after

slgning

the

hlre purchase

documents, she drove Mr Hobbs to Drummoyne and took possession of the vehicle at or near the Birkenhead Tavern. It is, I think, improbable that Mr Hobbs. a car dealer, would not have

used his

own transport to travel to the premises

Ace-Hi

Courier Service

so that, to act in the

way the applicant

suggests, would

have involved leaving his means of transport at

Newtown. Further, there is the statement on the face of the bank document to which I have already referred to the effect

that the cheque for

$4,500, admittedly handed by the applicant

to Mr Hobbs on 20 July

1983, was presented to the L V Z Bank on

thar date.

This w,2uld have been impos~ible :I

the applicnnt's

evidence is accepted

she

sald

it was nor. junk11 about

5.l)Op.m. that the

srranqements to p l c % up the car were nade.

m e r e are

a l z o 3ome un%atizfactory frzturez

LP.

the

evi2.ence given cn Sekalf CI the respondents in re:ati.cn to

the

transaction.

Accordinc

Hobbs.

GJ:Jatt had

already

agreed to purchase the vehlcle for $4S,OOO before he. Pfr :iobDs, had any conversation with hlm. Accordmg t o Mr Hobbs. the sale of th5 vehlcle had been arranqed by Mr Honan, but it is clear

from Mr Honan's evidence that,

although Mr Wyatt after drlving

told arrangements for the sale were made

hlm

he would

like to

purchase it, no

the

vehicle

wlth Mr Honan. Mr Honan's

involvement did not extend beyond driving

the

vehicle to

Newtown so that Mr Wyatt could test drive it.

It is equally

clear that Mr Homeyer did not sell the vehicle to

Mr Wyatt: the

conversation he had with

Mr Wyatt at the premises of Chevelle

Motors Pty

Limited was quite inconclusive. Mr Honan became

involved, so he said, by reason of a telephone call

he had from

a Mr Andrew Lyall of the firm of Lyall and Vine. A

telephone

' -

. ,

I _

call from Mr Lyall to Mr Roberts also preceded the visit of

Wyatt and Mr Varley to Chevelle Motors Pty Limited. Mr Lyall was not, however, called as a witness and neither his absence

nor his part in the transaction

has been explained.

Notwlthstandlcg theze unzatlsfactory features l!?

the

evldsncc dduced or. behalf of the respondents, I am satljfled t:;at ?lr H y a ~ t ?ad a m L t i h ? r z i t ? r 1n.fclvement In thz arraqgeeents f,:,: the ac:p1jltion of the vehicle t han the spr;lcant would conced? 3r.e that ali tke details of the trAnsaction wer5 arrnnqed mth him mll nct :nth the appilcant.

The mswer which the applicant 3ave 111 cro~~-e~anlna~~or..	3 d
which is set out in Its contest earller In these reasons. to

the effect that everythiny

wa4 worked out beLween

Mr FJyatt and

Mr Hcbbs and that she	asked Mr Hobbs to explain the detalls to
her is lliuminatlng.

O n the balance of probabilltles,

I prefer Mr

Hobbs’

version of the event3

which led to the acqulsition

of the

vehicle by the applicant. That version

supported in some

particulars by the evidence of Mr

Homeyer and Mr Honan whose

evidence I accept.

I am

not satisfied that Mr Hobbs made the

. .

representations to the applicant which she has alleged as

the

basis for her claim under

ss.52

and 53 of the Act or that, in

so far as any statements were made to her by

Mr Hobbs, she was

induced thereby to enter into the transaction. Her claim based

on 55.52 and 53, therefore, fails.

*	‘ Claim based on sections 71 and 73

24.

" ( 1)

Where a corporation

supplies ,>:?-erwise

than by way of sale by auctlonl

q o w i s

consumer In the course

of 3 ~usiness, there 1:

mplled condltlon tha',

tne qocds s.upFl;ed

lun4er

the contact for the supply

the 3ooCs %L'?

merchantable quality, exceFt

';hat :her?

ij nc

such cocdltlon

by virtue cclp of tnls s e c t ~ o n -

(a)

as regaros defecc specifically dram

to the consumer's actentlon

Lefore the

contract 1 s made:

o r

:b)

i f the consumer

examines

the

S ~ G G ~ S

before

the

contract

made,

regards defects which that examinatlon

ought to reveal.

As to

m anlnq

or "merchantable quality",

sub-s.66(2) provides:

" ( 2) Goods of any kind

are of merchantable

quality wlthln the meaninq of this Divlsion if

they are as fit for the purpose or purposes f o r

which goods of that kind are commonly bought as

it is reasonable to expect having regard to any

description

applied

them, the

price

(if

relevant)

and

all the other

relevant

circumstances."

Section 7 3 provides:.

.II

"73. Where-

corporation

(in this

section

referred to as the 'owner') enters into

a contract

f o r the supply by way of

lease, hire or hire-purchase of goods

to a consumer:

antecedent negotiations in relation to the contract were conducted with the consumer by or on behalf of another corporation that is not related to the owner ;

the

other

corporation

supplied

the

goods,

caused

the

goods

supplied, to the

owner;

3-5.

i d )

the

owr.e~

dld

not

take

physical

possession rJf the goods before they were delivered to the consumer: and

! e ; the cznsuiwt suf:e:s

105s ~r Sdanage as

a resdt S: a breach of a condltlon

that 13 Implied in ths contracr, by

vlrtu? Nf'

sectlon 7 ' 3 , 71 'DC 7 2 ,

the

owner

1 s

not under any

1 1 z b l l l t : j

the

consumer by re3s;n of the breach

that

condicion but; Lhe cxsumer ma:~ relover the aaount

of the loss

of damqe by action ln a court of

competent ~urlsdiction a9ain.t the

other

corporatlon.

It 1 s not disputed

tnat the vehlcle was supplied

(otherwise than by

way of sale by auctlm) by Mercantile

Credlts Limlted and that It was supplled to the applicant as

consumer (see s.4B of the >xt).

The transaction. therefore,

falls within the purview

of sub-s.71(1)

and there is to

implied a

condition that the vehicle was

merchantable

qua.lity. It is not asserted that the exceptions set out in the

sub-section have any application to the facts

of this case.

There is also satisfied. The question is whether

no dispute that pars (a)-(d)

5 . 7 3 are

the

vehlcle

was

merchantable quality and, if so, whether the applicant suffered

loss or damage as a result of the

breach of the implied

condition. If both those

questions are answered

the

applicant's favour, she is

entitled, in the terms of s.73.

I ,

-'recover

the amount

of such loss or damage by action in

a "court

of competent jurisdiction", this being a reference to a

State

court

invested with federal

jurisdiction. However, as the

claim based on ss.71 and 7 3 and the claim based

on ss.52 and 53

2 6 .

are part of the same matter. this Court has

jurisdiction to

entertam ;he

clairn: Stack v.

Coast

Securities (No. '?) P t v .

Ltd. !lSZ3) 154 C.L.2.261.

The evldencr

upon Yhirh the appllcmt relies to

support Lhe conclusion that the vehicle wzs. when supplied. not

of merckantable qualltg is that of John Lubert Vawser. Leslie

Ferguson Howson and Francis Bndrew Howard.

Durlng the few weeks

after the appllcant took

possession of the vehicle she noticed a number of minor defects

in it - the alr-conditlonmg, the radio and the cassette player

were not working.

She sald

that when the car went around

bend she could hear

a grlnding noise but she

did not take much

. . notice of it.	A short time later having taken possession of the car), the paintwork was	(within about four weeks of
. . .

damaged

by vandals and at the suggestion of Mr Wyatt she took the car

to John Vawser Motors Pty. Limited. Arrangements were made for

' I the car to

be returned to that company's premises some weeks

later for the purpose of having the necessary repairs carried

' . out and the vehicle overhauled.

Mr Vawser

of John Vawser Motors Pty. Limited is

' trained motor mechanlc with

over 25 years' experience working

on Rolls-Royce and Bentley motor vehicles. The nature of the

company's business

is the carrying out

of mechanical repairs on

such

vehicles. Mr Vawser

said

that an inspection of

the

2 7 .

vehicle in question

rllsclnsed that the

rear trdke discs

were

rusted out. enuin? mountings were broken

and the tail shaft was

hict;nu

che tmnel In t h e centre (of the car.

M: mountlnus, ani! front and one (ear, he observed the way :n

Vavs?r

sa:d

thar;. ;?a~:nq f i t t e d

t w o

new

~'nqlne

whlch

the engine was sittlns in the fronr; sub-frame. sometlme3 called

"the englne cradle

frame".

It was apparent to him that the

vehicle was out of aliunment. this being confirmed by the

misalignment of the sub-frame. He, therefore, arranged for the vehicle to be taken

tail

shaft

relation

the

rear

to James Somers and

Co. Pty. Limited for jig testing.

By reference to a workshop manual

Mr Vawser explained,

in general terms, the front and rear sub-frame and suspenslon assemblies of the vehicle in question. The front sub-frame is

rectangular in shape

and on it are mounted the engine, gear box

and

front

suspension rectangular in shape and carries the two rear trailing

units.

The rear sub-frame I s also

arms,

the rear suspension and

wheels and the differential assembly.

The front sub-frame

has four mountlng points by which it is

attached to the left and right hand

front body rails.

Vawser explained that there is

a jig or template which will,

, .

the vehicle is properly aligned, fit into certain holes

In the

top plate of each of the front suspension coiled spring towers.

. .

28.

Mr Vawser 3ald that.

running his nand alonq che

side

of the body ralls of the

vehicle he could feel a buckle In both

the 12ft and right

tLar.d Lody ralls.

ite sald

he was almost

positivc the main tub-frane was

alzo bent. Having pxpressed

the oplnion Lhat

the veh~cle

had been mvolved in a m:or front

end collision, he waz a~liec! whac	effect 3uch an acc;trnt would
have. He sald:

"Push everythmg out of squareness

- a long way

out - you would be scrubbing tyres out, when you get up a bit of speed it would be hard to control, it could put more strain on the engine mountmg, and the next thing they would break and

the engine is flopping around Inside the

car."

He said that stress would increase

at faster speeds and on

cornering with the possibility of

the engine mountings

which

are of bonded rubber working loose or breaking.

further

. ,

.said: "I would not really call it a real safe motor vehicle."

Mr Vawser mechanical work necessary to repair the vehicle. He

made an: estimate of the

cost of the

estimated

the cost at

$6,030 including $3,500 for the cost of

purchasing

. I . .a replacement front sub-frame.

. .

I,: . *

. .

Mr Howson is a principal of Howson and

Rapp Pty.

_ I

Limited, formerly James Somers

and Co. Pty. Limited, a

company

. .	c , , , .
. . which carries on business as a motor body repairer specializing in Rolls-Royce vehicles. Mr Howson is a licensed panel beater,

2 9 .

having qualified employment with the

such

DecemSer

1961. He commenced

company in 1 3 7 7

wher. hls experlence wlth

Rolls-Royce motc7r venxcles beqan.

Fe sat2 that ?:e Inspected the vPhi:?e

in company with

Mr Somers. Asked	to b i e j c r l b e the condlt1s.n of the vehicle,	N r
Howson said:

"There was some paint rectificaticn needed doing

to the bonnet. the

off-side front guard, and

thlnk the near side

front guard, and somewhere on

the back. We were

then asked to have a look

it whlle we had

the vehicle there for something

wrong underneath the vehicle because there was

rubbing noise or somethmg out of alignment

with

the tail shaft.

put the car up on the hoist

and we investigated underneath, only to find

that

the body rail

specially on

the right hand side

was badly bent and out

of alignment. The engine

cradle also showed signs that it had

been out and

I .

had portapower put into it to make it

fit to what

,..I.

< . , q , L s - . !

i .

. I

we call trunnion bolts."

He explained that

the expression "portapower" referred to

.I , :>

.y,. , ,. .

,-.I 'I)

hydraulic ram uked in pushink panels into place.

He said that

,..' :

._,,

, . +.. r'. .

. <I_

the engine cradle had holes about 3 inches in diameter at

each

, ..

-..

' I .

corner into which fit trunnions made

of aluminium and rubber

' with a hole of'about 310 inch diameter in the middle.

The

engine cradle is attached to

the chassis or body rails by bolts

' passing through the trunnions.

He said he also discovered by

'.	.	L	:	,	, measurement that there was	a discrepancy of about 518 inch
< _

*.- : ...	between the wheel base on the left hand side and that on	the
right.

Mr Howson said

the vehsle had been in

a s?rious

accident which had r5sulted in blq bulges lr. the body rails. He expressed the view that the mlsalignment of the vehicle w a y

a malor one and he agreed with Mr Vawser'y assessment that it

would be necessary to remove and replace the front sub-frame.

He estimated the cost of repair. in addition

to the c'3st which

Mr Vawser had estimated for mechanical repairs. at $8,564, the

total estlmate, therefore, being $14,595.

He agreed that the

vehicle was Indeed, he said it was not safe.

not

a satisfactory

roadworthy

condition.

In the light of

the evidence

given by one of the

respondents' witnesses to

which I will refer hereafter, it

should be noted that neither

Mr Vawser nor Mr Howson was

cross-examined upon their evidence that it would be necessary to replace the front sub-frame. In particular. it was not put to either of them that the misalignment of the vehicle of which

they had spoken was capable

of correction by means

of what is

31.

called the lateral locat-on or panhard rod at the front

of the

vehlcle and the horizoncal compllance mountings towards the

rear.

>1r Howard iz a motor vehicle lnjpector employsd by

!:he

National Roads and Motorlscs Association.

He 1s a quallfled

and	experlenced

motor

inspector. He has had. however, no tralninq or repalr

experience in relation CO Rolls-Royce vehicles.

mechanic. panel

beater

and

palnt

He inspected the vehicle

on 9 December 1983 at the

premises of

Windsor Motors, South Windsor.

Following

his

inspection, he made

a written report which states

that a visual

inspection

under

difficult

conditions

revealed

the

listed

I _

a defects. The comment

hat

conditions

were

difficult

, .

I , I

, - . ,..

. I

, '

reflected the absence of

hoist facilities in consequence of

. ,.,,'. , which he had to rely on floor jacks

to enable him to inspect

.. .

. .

, I

: 1:.

X,.>,. .

. _

+ ;., -,the,

underside of the vehicle:

The defects disclosed in the

. .	_ _ I . ' .

. .

' .',report which are significant for present purposes

are

items

. _

' (a!! (b). (c) and (d) under

the

heading

"Vehicle

Frame

.. I. I . ;-'

I ,

- ,

(Chassis)"

and

items

(m) and (q) under

the

heading

I ,

; .%:.,,-.

. .

,." , F I- "Mechanical." Those items are:

<,..?I '

" VEHICLE FRA??

(CHASSIS)

(a) A crease

and split evident in right hand

front rail near shock absorber and coil

spring tower.

(b) Engine cradle frame

showed signs of recent

removal.

( c :

Varia-,ims

I n

p a r i l l e l

and

diaqonal

measurements evldent In rlqht and left hand

sldos

c>f

fra;ne.

Rluht

hand

side

appros-matel7 fifteen mi:llmetres	zhort and
not w.-cln.x acce2te;d tolerances.

id;	Z p a c e r s xere	f lL4.	u8-ed ta front jumper bar
brackets.

MECHANICAL

. . . .

(m1	Variation in	w h e e l	ba-,e. ilght hand side
shorter.
....

( q )

Witness marks on tail shaft and tail shaft

tunnel,

evident

tail

shaft

misallqnment.

The report also notes the presence

spacers

which

had been fitted to the top radlator panel on the left hand side

of the grille

and. to the bonnet hlnyes. The report concluded:

"From the above aforementioned malor work would

necessary

return

this

vehicle

acceptable and serviceable conditlon and this

work would

be extensive and expensive.

,, .

. ,,

It would Involve the repairing

of the vehicle

frame,

attention

bodywork

and

mechanical

components as listed, a quotation

should

sought prior to attempting the repairs."

In his circumstance that the frame of the vehicle was

oral

evidence

Mr Howard

said

that

bent led him to

conclude that the vehicle had been in

a major accident.

, I

Mr Howard

agreed

that

he took no measurements of

the

crease and split that

said was evident in the right hand

front body rail.

He was

n o t able to express a view as to the

effect such a

defect would have

on the roadworthiness of the

3 3 .

vehicle. He sald. hcwevr r . that. being structural damage,

was essential that

be repaired. It3 presence, he

sald.

would. lead to reglstracljn uf the vehicle beir.g refused.

I-!r Howard. 3aid that. %nth t:ir a-d af 3 tremmel bar, :?e

compared

the distances between correspondlng polnts on the

rlght and left hand sides

uf the vehicle an? ,concluded that the

dlstance on the

right

hand

side

was

horter

than

the

corresponding distance on the left.

He did not accurately

measure the difference but estimated it at 15 millimetres.

conflrmed that measurements taken between the points.

there

was

a dlvcrepancy

the

diagonal

ussd

for

making the

parallel comparison.

He said he

also satlsfled himself that

there was a variation between the wheel base on the left hand side and that on the right but he did not make any measurement

1 . 1 .

of the variation.

. I .

He also said that the tail shaft,

when rotated, was

not touching or rubbing

the tunnel when

he inspected the

vehicle although, by reason

of the observed marks being shiny,

he concluded that they

had been made in the recent

past.

For the first respondent, evidence on this aspect

I the matter

was given by Mr Bruce Robert

Ross, the managing

director of Bruce R.

Ross Pty. Limited.

That company carries

34.

on business as a Rolls-Royce service

and spare parts agent. Mr

Ross 1s a

quallfled mechanlc. a

qualifled panel beater and a

quallfled spray Fainter.

The company carried out certain repalrs on the vehlcle

in March or April

1983 after it was brouq-hr. to Sydney from

Melbourne.

The work then carrled out concerned the right hand

front panel, repaintlng

of the vehicle and refurbishing

of the

leather and timber work.

work was done on the body ralls,

the sub-frames or the drive train as none was requested by the

owner. After the repairs were carried out	Mr	Ross had the
vehicle registered.

', - ..	Mr Ross was adamant that the vehicle was in perfect
L % -

L .

, -

:- >;<A,: , ,.	. -,, :	,condition when it left his company's premises.	Any defects in
,	. _.

-.;, !,y < I

the vehicle subsequently discovered

must, according to his

: .

, L

:..

f:..,

* I

:. -, , evidence, have arisen from the vehicle having received

a bump,

. I , .. .;*.,~.-::

, -

;.L

I _,,.

. o r having had certain cornponeits removed

and refitted, after

. , < 7 - .

I ,

. , . ,

.: :'left his charge.

- .

- , . ,

Mr Ross said that his inspection of the vehicle did not reveal any defects in the right hand body rails

I	.
. .
.1	.I

the

2 -

. -

- '

_ -

' front sub-frame. He added that, unless

a crack or split in the

I ., ..

, I .	,
4 .

% -., I,

front body rail was of

"some great magnitude", it would not

? , ,_

~ .I

". .

' . I

- .

, . . .

affect the safety

of the vehicle and, in any event, could

probably be

repaired by welding without removing the front

sub-frame from the vehicle.

He also said that a crack or split

3 5 .

in a front body rall would not affect the wheel base of the

vehicle though a -7ery slqnlflcant benfi xould. do so.

crease

in a front body

rall

could. a:So,

tiiouqht, be repalred in

sitd. He consldered

x t lunlikelp that

3 bent body

rail

would

affect the safet:J of

che vehcle.

described

test,

known

as 9 drop-llne test,

designed as

a means

of checking the geometry

of a vehlcle.

Such a test

1 s carrled out by first establishing

the

centre

line of the vehicle and then markinq

on the floor by means of a

drop line the positions of given polnts on the front and rear

sub-frames.

The resulting configuration

on the floor enables

checks to be made

on the relationship of the sub-frames to the

body

frame

taking

certain

parallel

and

diagonal

measurements.

The tolerances allowed in each measurement made

as a result of a

drop-line test is, according to the workshop

manual, .062 of

an inch

or 1.59 millimetres. It is apparent

that this or

a similar test

was carried out by

Mr Howard.

According

Mr Ross, adjustments to correct any

misalignment of the front

or rear sub-frames could

be made by

the

lateral

ocation

(panhard)

rod

and

the

horizontal

compliance

mountings

respectively.

his

opinion, an

. -

adjustment of the panhard

rod could compensate for a difference

left millimetres whether or not the front sub-frame or

hand

parallel

measurements

in the

right

and

a body rail

was slightly bent though the adjustment that could

be made in

3 6 .

any particular case would depend on

a number

factors.

lncludlng the extent to which the panhard r3d

o r the compllance

mountings

had

already missllgnment. In his view. If the differmce between the right

been

adjusted

take

care

any

and left hand parallel meajurements vas not more

thar. 1 5

millmetres

an2 if it wece

assumed that that illfference

resulted from a bend In a front body cail. the bend could

described as a very small

or slight bend

only.

Accordlng to

his evidence, it is not possible to determine whether the front

sub-frame of a vehicle is distorted without removing it

from

the vehicle and

applymg a jig test.

As to the use of spacers, Mr ROSS said that they were

frequently present on

new Rolls-Royce vehicles, that they were

,	-standard replacement parts and that they were customarily used

'L.; . .

~.~

. ,

" _

in the repair of Rolls-Royce vehicles.

.. .

. .

Mr Ross said he did'not notice on his inspection of

. . the vehicle whether there were any

witness marks on the rear

1 , I

. , - _ .	. t
-	>

'tunnel indicating that the tail shaft was out

of alignment. He

: :

.~&

6 -

I .

:" said, however, that

such

witness marks could result from

, ,;j :::-: ,

, I I

. . - -

'fatigued rear compliance mounting

or a broken engine mounting.

" . I F<:,,;

'J.

, I ,

..,,b..,,,.

,.'

.. ..

':...-.*'C.

He 'did not think they would

caused by the misalignment

I . I

>- :., 5:s. :. .

I " ...*

: ' , : l ,

/a< '

the front sub-frame unless the misalignment was extreme.

.. .7 '+,.,L.-

: ":S":- ,

, , . .

. .;,	I"	I -
>_

.., ~

, ' *

- . : . 1 an accident which caused

- !

!.- I './.

. .

Mr Ross agreed

that

vehicle

had

been

involved

I ,

^ .

, I .

a "fair deal" of body damage.

would not agree that

i was a major accident.

3 7 .

The questlon 1 s whether it has been established that

there was a breach of the implled condition

merchantable

quality.

I accept the e-Jidence of Mr Vawser

and Mr Howson that

there were very aiqniflcant bends in the

front body rails

leading to a distlrtlon of the frcnt sub-frame and, in consequence, a substantlal mlsaiignment of that sub-frame In relation to the rear sub-frame and the bodjj of the vehlcle

generally and I so flnd.

I also find that

thls condition

rendered the vehicle unroadworthy and, in fact, unsafe.

I also

rely on the evidencs

of Mr Howard that there was a discrepancy

between the right hand and left hand parallel measurements

which he made of the vehicle In carrying out a test similar to

the drop-line

test described by Mr

Ross. a discrepancy which he

estimated at

15 millimetres and which was

not challenged in

_ I

cross-examination.

I accept that evldence

of Mr Howard which

: I

. * _

. ,	supports the findings I have	made based on the evidence of	Mr
Vawser and Mr Howson.

., . , I

. . I

, I

. - 3 .

I am not prepared to make

a positive finding, based as

it would be solely on Mr Howard's crease and split in the right hand body rail

evidence, that there was a

of the vehicle. I

-	decline to make such a finding as such a crease or split was not observed by Mr Vawser or Mr Howson on their detailed

. 1-

Inspection of the vehicle

in circumstances

which were obviously

,, . . .

much more favourable to

its

detection

than

the

difficult

conditions under which Mr	Howard was labouring, not having the
use of a vehicle hoist.

3 8 .

I further find

that the defects to which

I have

referred were present in the vehicle

the time when the

vehlcle was ai.qulre& by the applicant. I an satlsfied that the defects dlscovered by Mr Vawser and Mr Howson could only have

resulted from a very

sericus

accldent

and

there

suqgestlon ln the eoldence that the vehicl? was lnvolved in

such an accident after lt was Jelivered tG tile applicant.

I should add that, in

so far as

the evidence of Mr

Hobbs or Mr Ross is In conflict with that of Mr Vawser and Mr Howson. I do not accept it. In particular, I do not accept Plr Ross' evidence that the defects of which Mr Vawser and Mr

Howson spoke could

be overcome by adjustment

of the panhard rod

or the rear compliance mountings

or both.

That solution to the

. problem

was

not

put

Mr Vawser or Mr Howson

I .

, : ,+g -

,'C ' . .

, -

, ~~ .

*;: -":.

-	-.-c:cross'examination and I, therefore, do not have the benefit of

, :..,

...*	., .,- . .~, .

- <:.'their response to it.

But, having observed their demeanour in

.,, >.

I :,.,,-q":* *i,. ,

. ~

, I .I

, . ,.

"the witness box and having regard

their knowledge and

, . .:

,.!p*.

I I

>:, ,":

" ,.'%.

. :.,A..

r , : experience of Rolls-Royce vehicles, I

am satisfied that, had

- I . ~

, .

. , . - l

. ' ~I /'-either of them

seen such adjustments

as alleviating the

. .

.:;-?. ..

' :	;'$.problem,	they would have said so. In any	event,	such
, .	. . ~ , L - - 8 . 2 , . .- . I

1 ;.c. . .; .

.' .,':.:ad'justments would only be compensatory and would not remove or

?: "'2 I , ,

X*, P ' ,

.?,&

t. L.

""'cure the -defects themselves.

I cannot accept that they would

,;',.I*"

, ,.L?.+;.-:.

. .

.' -,

' . <:\,..:;i??be appropriate in the case

such serious defects as were

, ,,-?C. :

,:kg; -,

._I

. !,+r. !,,-

, >

(' c::: spoken of by	Mr Vawser and Mr Howson.
- "9. ,~

3 9 .

Counsel f o r

the f l r s r ,

respondent submitted that It

would not be 3afe for the

Courr.

t o conclude that the defects

Identlfied by Mr

Vawser

azd K r tiowson In fact existed because

of the lack of

evidence of handling difficultles ln the drivlng

of the vehlcls and to the

p03itl.JP evldecc? glven by Mr Hobbs,

Mr Homeyer and Mr

Ross

that. when drlnn?

the -Jehicle, they

were not conscious of any such Ciifficultles. None

of those

witnesses had, however,

driven the vehicle for any length

time and I am unable to regard the fzct that they encountered no difflcultiev as warrantinq the rejection gf the evidence of

Mr Vawser and Mr Howson.

In the result.

I flnd that there

was a beach of the

implied condition

of merchantable quality.

. Damases

Having been informed of as a result of the inspections carried out by

the condition of the vehicle

Mr Vawser and Mr

Howson, the applicant made no further payments under the hire

purchase agreement with

Mercantile Credits Limited. Although

' the applicant suggested that she may

have

made two

of the

monthly

payments

under

the

hire purchase

agreement,

the

. evidence does not establish that more than

one such payment was

2 .

made. In consequence of the applicant's default, the vehicle was repossessed apparently while it was still at the premises

of James Somers and

Co. Pty. Limited.

4 0 .

It was submitted by counsel for the applicant and not contested by counsel for the flrst respondent that the

1055 or

damage

suffered

reason

the

breach

the

lmslled

condlticn that the vehlcle was of merchantable quality was to be measure& either by the cost Gf mdkln9 Tood the defects in

the vehlcle or by the dlfference in the market

valLe

of the

vehlcle wlth and

without

the

defects.

No evidence was.

however, put before the Court from

which the difference in

value attributable to the existence

the defects can be

determined. And, althouqh there I s evidence, from Mr Vawser

and Mr Howson as to the estimated cost to repair the defects,

the applicant did not arrange for any repairs

to be carried out

before the

vehicle was repossessed in consequence

her

default under the hire purchase agreement.

She is,

therefore,

- ..

. unable to point

to any expenditure

as being the cost

.	~.	> I	2
I .,:L	;

. \	carrying out any necessary repairs.

. .

, - . < I

Y . , 9 ,

, .

.,,. t;'. -

- 1 -

In essence, what the'Oapplicant seeks to recover is

.'.

.. , -1 I,

;

, .

" ., .

. I , L -

.. _,

I -

.	amount ($14,000) equal to the amount described in the hire

I .,..-. . >.-

. ..

, . ..,

- L? 5. I.

I .

,:,. ..- .,;' . . - - purchase agreement	as	the deposit on the vehicle made up of
- <;:>:~&;:i.J, ::.

.	-1 I $10,000 paid 'in cash or by cheque and $4,000 being the balance

' *$>-,<*:. '.-'h

. I

I. ,>L

X n +,

,.I ,'S.,

.,, I f. . ,

- ;

,~y>$xir,-s~.

, . . ,

-:::.-,..

,: .. -'of'the

$rade-in allowance of $21,000 after deducting therefrom

I - !,.>L .

, -ill

. I

I 5

' the

' amount ($17,'000) outstanding under the hire purchase

: ; , +.

', I

7 ,

.c:,

- .

,.:,agreement

with NRMA Finance Limited.

The applicant did not

. -I ..I.	I 4	,	,. ,
. .,

..\ >,

p;,<.,,:,;..

~ ,. .

, . _.

I , ,, claim to recover from

the first respondent an amount equal to

, . :

.I ...,.:' the monthly payment made to Mercantile Credits Limited though	_ .
I"'	' I

:,., :

. it was submitted that that sum should

be regarded as providing

-. - ', -

a reasonable adjustment

f o r the fact that the applicant had the

use of the vehicle for a perlod.

Counsel f o r

the

first

respondent

referred

the

provisions of s.75.A of the

Act and, in

partlcular,

sub-s.3(b) t'nerecf. Section

75A prondes that.

where a

corporatlon supplles goods to

consumer in the coufse

business and there is a

breach of a condition that is implied

in the contract for

the supply of the goods

by virtue o f . inter

alia. sub-S. 71(1) of the Act, the consumer is, subject to the

section, entitled to rescind the contract. Where

contract

has been so rescinded,

the

consumer

may,

by virtue of

sub-s.3(b), recover from the corporation, as a debt, the amount

or value of any consideration paid or provided by him for the

. I .

, .

It'was submitted that, reading ss.73 and 75A together,

c , , 2, 5 1.

., I

.I ,

-'L

, .

. '.. '_ ,

- the conciusion should- be

reached that

a consumer is not

m .

- .

. <.

-.:',A ,

entitlkd to recover

by way of damages any amount which answers

m'. ., ,

I..

p '

^."

, .- .~.,

, _ _

_ I <

, ._ the description of

"the amount or value of any consideration

, ,'\.C .? >' -	.	:	.,	,. ;. paid o r provided by him for the goods". Any such amount must,
I ,m<,	p,,;:,.

T, ~ 1 -

I ,

- < ".

- ,

",'so the argument ran, be recovered as a debt pursuant to s.75A.

,,.>

- . c

. ,. , .'

. I .

s 'Allied 'to this argument was

the further submission that the'

I , . ;% ,:~..I.~~;,.;applicant,

... , .

,,C'

. 1

by failing to exercise the right

to rescind the hire

L .. . <...~-J...

,; >,.;:S.

.?. -

*-.-..?!!' :

purchase agreement pursuant to s.75A. had failed to mitigate

- , . .

. .

.,I

- i

I :

I.. ,

. ,

..-

. her damages.

. >

A-

. . . , I.

' ,"Lastly, attention is drawn

to the restricted field of

., entities to

whom

the

consumer

may

look

for

. i l ,

. I

compensation by reason of 5 7 3 in cases of the hire

. ..

h rental of goods. It is then submitted that

it would

- :.'be surprising If by

the backdoor method of following

' :'.':".:'the procedure

provibed

s75A, a consumer

could

.:'.;. obtain a remedy agdinst

a dealer Csicl when 9.73

'.,...G

_ _

explicitly denies this opportunity. Once again. in my

c view, it would be to do violence to the intention of

. . r

.. 'the legislature to seek to cut down the proper scope for the operation of the wide provisions

s75A by

_ . .

' * - , reference to other unrelated provisions of

the Act or

. - I .

~: presumptions, which

do not find

a ready accommodation

I with wide ranging consumer protection provisions.

- .

-any event, s75A(4) expressly

preserves all other

' '

'''remedies including remedies

conferred

the Act.

, .Section 75A is just

such a remedy. Furthermore, 973

."":l's directed to compensation for 'loss or damage'. The

,' . '+'

L I payment directed by s75A(3)(b)

is unrelated to any

:, .,;.:loss

or damage and is required

to be made even in the

' 1

_- I absence of any identifiable loss or damage."

43.

Counsel also referred ta

the decizion of the Suprene Court

Queensland (Campbell ,T.) l n

Four Square Stores

(Old.) Ltd. v.

A.B.E.

Copiers Ptv. Ltd. (1981) ATPR 40-232.

In my opinlon the 3ubmissions mace on bekslf of the

flrst respondent must

be rejected. it

1 s not unimportant to

note that 5 . 7 3

formed part of the Act =hen

it was originally

enacted in 1974 whereas 5 . 7 5 3 was flrst enacted

by the

Trade

Practices Act 1977 (Cth). The oblect of the latter section was

to provide additlonal remedies to those already available under

the Trade Practices Act 1974

(Cth) or under State CT

Territory

law.

That that was its object is made plain

by sub-s.(4) which

provides that the rlght of

rescissim conferred by the section

is in addltion

to, and not in derogation

of, any other right

I ,

remedy under the Act

or any other Act, any State Act, any

law

.,:

,I -

.. , -

,>v:,

of a Territory or any rule

of law.

. .

.I , .

L ,	In my opinion s.75A is not to be read as in any sense

I .: ' 'limiting the right which 3.73 confers.

I can find nothing in

S I '

the cases to

which counsel for

the first respondent referred

. ,

,. :

- , ,,<:-. Pj>

I ,

-,-,L+; A' which supports the submissions made.

In circumstances such as

., . ,,-..

.g , . <:

.> <:.

.__I .,_.I

.> >.,

~ _. . .. . ~;.+.

i. ;'tkose existing in this case,

ss.73 and 75A confer on 3 consumer

'I	> . ,
. ,

.';-'.

.different rights against different parties and I can see no

;, :

,, r-

- I - ' . .

- /,.", justification for limiting the scope of the right given against

I,.

- .

.': ,.

. -.

: :

.I>'.

-,<

. I .

,?- -;

. o n e party by

reason only of the circumstance that the right

(

. 8 .

given against another party has not

been exercised.

, Y -

I -

I ,. ,

' ' , L \ _ *

44.

The question remains what is the measure of the

loss

or damage suffered by the appllcant as a result of the breach of the condition of merchantable quallty. Doing the best I can

with the material before the Court.

I assess that

loss

damaqe at $10,000.	That amount 1 s reco-7erabl.e from the first
respondent.
Cross-clslm

The first respondent filed a cross-claim against the appllcant alleging that it was

term and conditlon upon which

Mercantile

Credits

Limited

entered

m t o the hire

purchase

agreement with "guaranteed the observance and performance by the applicant

the

applicant

hat

first

respondent

I , ;.

h . ~

I "

.' ..

I ,

< * !

. ,

her -obligation's pursuant to the agreement". It was further

:,.p->, :

,:-

;

.1, :L,:.

1' "

. I: L

. .

; ;

a<lldge'd that the first respondent, by a written guarantee dated

' I > L

. - ' . .

20 July

,1983, guaranteed to Mercantile Credits Limited the due

' 1

r ,,,,'CS<

, .

,. !

, ..>.

, '.:.

. I

. , ,. ';. observance and performance

'by the

applicant of all her

,..v .., .

.	,	:	'	r . . .
. , ..

, -

L ,obligations under the agreement and that,

reason of the

a , I,

':.	applicant's failure to pay certain moneys owing to Mercantile

Credits Limited,

the first respondent became liable to

pay and

I . ..

. .	. paid the sum of $37,000 to that company. The first respondent

, ' , claims $7,000 being the difference between the sum of

$37.000

.> .;, ;

referred to. and the sum of $30,000 said to be the amount

. ,

- . .

I.7

. .\.: -received on the sale

of the vehicle.

45.

The first resp0nder.t dlii nr,t prove

in evldence any

agreement m writlng

whereby

lt guaranteed

Mercantile

Credits Limited the due ob3ervance and performance by the

applicant of the

hire purcharc a,?reem?nt ?ntered into

L:J

n e r

with tinat company.

Indeed.

th? h i r e pur.chase

aar4rmer.t

evidence, which is a pripted form ir wklch the necesszky particulars have been insert&. has endfirsec I u p n it a grlnted form of guarantee of performance but that guarantee has not beer. executed.

The only evldence supportlng the existence

obligation on the flrst respondent to bind itself in any

respect to Mercantile Credits Limited is the

oral evidence of

Mr Hobbs and the document Exhibit

Mr Hobbs' evidence was to

the effect that he informed Mr

Wyatt on 20 July 1983 that he,

* I I

Hobbs. would have to undertake to repurchase the vehicle

if the

applicant failed

to fulfil her obligations under the

hire

-..

, ~ . ' .

. . . purchase agreement. Exhibit

'!3 is a document headed "Schedule

of Transaction" and

is part of

the documentation relating to

the hire purchase transaction.

It is a printed form which

c I . ,

I .

,- .. . . . . to be comple.ted by the dealer. It contains, inter alia, a box

,I, _ . I .

'. <*

. I

,. . . ?:.,. I . - . .

- I

_.,I

:I.

- . I '

. . .

:: within which are printed the following words:

* .

. I ,,

I .

. .

\ ,

. ,

8 .

. .	, ' i	.
"ENDORSEMENT (if applicable)

' m I % 1. . . c	Subject	to	FULL REC~URSE
REPURCHASE

Delete endorsement which is not applicable."

The words "FULL RECOURSE" have been struck

out and Mr Hobbs'

signature appears oppocite the box in a spzc? for "Dealer' s Slgnature". Tne t rrm of what 15 referced to as the "endorsement" are Rot 12 ?vidence.

Mr Hobbs qav? evidence

that he was cequlsea to

repurchase the vehicle. He said that he paid "$37,000 and some

odd dollars". H13 evldence continued:

"Q.	Once you had the vehicle in your possession what

dld YOU do with It?

A .

I wanted to wholesale It because I needed the

mcjney. I did not want to have that much money

tied up in one car at that particular time. I

was selling over at

Tamwcrth, I needed the cash.

.I ,

,	->.~	Q.	So you wholesaled the vehicle, did you?
~	. I-

..,dI

.,.!.:..

1,	:	-.>*;:! .?:	I ,. '	A.	That is correct.
,.
1 _I,

L : : v . ~ r . . , . . ~ )

X. ;?,*S,.- I . .L .

,,.: y ,:y$ . .

1 '

. . - J V S

. ,

At the time you wholesaled

it did you have

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another look at the car?

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Not

really.

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' Who 'did you wholgsale it to?

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Dennis West.

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HOW much did you wholesale it to him for?

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$30,000.

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A .

I could not afford to hold It

at that particular

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Mr Dennis

Roger

West

also

gave

evidence.

He is a

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L "'motor vehicle buyer

who at the relevant time was working for

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,! John Thompson Performance Cars at

Burwood.

He said that,

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. . ,. ' . . behalf of

.. .

that firm, he purchased the vehicle from Chevelle

Motors Pty. Limited on a	wholesale basis. Asked what was	the
price he said:

47.

"Well. I traded 30me cars on	t h e car so the car owed
me $33,000.

His evidence continued;

"Q.

When you say the car owed

you $33,000 could you

explain very briefly to the Court	how that
system operates?

A .

Yes.

I had some vehlcles that owed me X amount

of dollars and I did a deal with Chevelle

Motors and sold them some

of my cars whlch owed

me X amount of dollars and bought the Rolls-

Royce, plus an amount of cash. so the amount

the vehicle owed was

$33,000.

Is it the case that when a deal is done like that in the motor. industry either party In the transaction - the vehicle is expressed either more or less?

Yes, it would be.

So if you say the vehicle cost

you $33,000 is

it necessarily the case that that means

$33,000 changed hands?

A .

No, not necessarlly, just an amount of cars

plus cash.

It might be Just an amount of

cars, 3 or 4 cars, or vice versa.

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Do you know how much the

deal was worth to

. .,

the

other

side

of the

transaction?

. .

No, I do not."

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He also said that the car was subsequently sold

for $40.000.

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I am not satisfied

on the material before the Court

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~~ , ,, I.	that the first respondent	has established a basis for the claim
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-'.it' has made against the applicant.

It has certainly not

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. .established the -claim

as pleaded. Further, even if, contrary

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to the view I have expressed, a foundation for a claim against

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the applicant has been made out, no satisfactory evidence has

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I. been adduced from which the Court can conclude that the first

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respondent has suffered the loss or damage alleged

or,

indeed,

any loss or damage.

I certify that this and the

preceding 47 pages

are

true

copy of the

Reasons

for Judgment herein of	the
Honourable
Dated: 10 January 1986

[1986] FCA 2

1 Oct 1986