| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : McFARLANE & ANOR -v- CLYDEBANK PTY LTD [2005] WADC 131 CORAM : COMMISSIONER STAVRIANOU HEARD : 29-31 MARCH, 1 & 21-22 APRIL 2005 DELIVERED : 8 JULY 2005 FILE NO/S : CIV 2894 of 2002 BETWEEN : BARRY McFARLANE FIREPAT PTY LTD
Plaintiffs
AND
CLYDEBANK PTY LTD
Defendant
Catchwords: Trade practices - Misleading or deceptive conduct - Sale of greenhouse - Silence constituting misleading or deceptive conduct
Contract - Sale of goods - Fitness for purpose - Merchantable quality - Acceptance - Sale of Goods Act 1895, s 14
Legislation: Sales of Goods Act 1895
Trade Practices Act 1974 (Cth)
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Result:
First plaintiff's claim dismissed
Judgment for second plaintiff on claim
Judgment for defendant on counterclaim Representation:
Counsel:
Plaintiffs : Mr B P Wheatley
Defendant : Mr P S Bates
Solicitors:
Plaintiffs : Nicholson Clement
Defendant : CBA Legal
Case(s) referred to in judgment(s):
Bentley v Wright & McNamara [1997] 2 VR 175
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83
Hoenig v Isaacs [1952] 2 All ER 176
Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 68 ALR 77
Case(s) also cited:
Bernstein v Pamson Motors (Golders Green) Ltd [1987] 2 All ER 220
Bolton v Mahadeva [1972] 1 WLR 1009
DTR Nominees Pty Ltd v Mona Homes Ltd (1978) 138 CLR 423
Eminent Forms Pty Ltd v Formosa [2004] SASC 192
Footersville Pty Ltd v Miles (1998) 48 SASR 525
Garraway Metals Ltd v Camalco Aluminium Ltd (1993) 114 ALR 118
Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82
Gould v Vaggelas (1984) 157 CLR 215
Gurdag v B S Stillwell Ford Pty Ltd (1985) 8 FCR 526
Hadley v Baxendale (1854) 9 Exch 341
Harding v Schidor [2002] NSWCA 277
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Hudson Crushed Metal Pty Ltd v Henry [1985] 1 Qd R 202
Humble v Hunter (1848) 12 QB 310
James v ANZ Banking Group Ltd (1986) 64 ALR 347
New South Wales Leather Co Pty Ltd v Vanguard Insurance Co Ltd (1991) 25 NSWLR 699
Reg Glass Pty Ltd v Rivers Locking Systems Pty Ltd (1968) 120 CLR 516
Shevill v Builders Licensing Board (1982) 42 ALR 305
Sykes v Reserve Bank of Australia (1999) ATPR 41-699
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1 COMMISSIONER STAVRIANOU: The plaintiffs claim damages in relation to the sale of a kit for the construction of a greenhouse. The claims are made in contract, negligence and pursuant to s 82 of the Trade Practices Act 1974 ("the TPA"). There is a counterclaim brought by the defendant for recovery of the balance due pursuant to the contract to purchase and a sum for additional work performed.
Background 2 The second plaintiff ("Firepat") is a company associated with Barry Kevin McFarlane ("Barry McFarlane") and his son Christopher Barry McFarlane ("Christopher McFarlane"). When I need to refer to them together, I will use the phrase "the McFarlanes". 3 The defendant carries on business as Advanced Environmental Structures ("AES") and is a company associated with Charles Angus Youngson ("Mr Youngson"), who was a director during the period to which this dispute relates. AES designs, manufactures and supplies greenhouses in both kit form and on site fully erected. Andrew John Sadler ("Mr Sadler") is the sales manager of AES and has been involved in the horticulture structure industry since 1987. He has worked for AES for a number of years. 4 Firepat carries on business as a commercial producer of vegetables, utilising greenhouses for the purpose of propagation from its property at Karnup. 5 In mid-1998 AES supplied nine greenhouses to Firepat. 6 Christopher McFarlane joined Firepat in April 2001 as its assistant manager. At that time it was resolved to increase production and for that purpose to construct an additional greenhouse. Barry McFarlane spoke to Mr Sadler and requested AES to provide a quotation for the supply of a greenhouse. The conversation was in general terms and the only specification provided by Barry McFarlane was that the dimensions for the greenhouse were to be 64 metres by 24 metres. 7 By letter dated 3 April 2001 AES provided a quotation to Barry McFarlane for the supply of three different greenhouses. The least expensive quote was for $88,438, for a roof opening greenhouse. That sum included $20,028 for installation. The quotation had attached to it a brochure concerning AES, three plans of greenhouses and some materials concerning fans, covers and netting.
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8 Between April 2001 and September 2001 Barry McFarlane obtained further quotations from other suppliers and from AES. The additional quote from AES was supplied in June 2001 and was for a smaller greenhouse.
9 On 26 September 2001 the McFarlanes met Mr Sadler at Firepat's property. At that time there were discussions about the supply of a greenhouse kit by AES to be constructed by Firepat on its property. A major issue arises as to what was said in conversations between Mr Sadler and the McFarlanes between April and September 2001 and particularly, at the meeting on 26 September 2001. 10 At the meeting on 26 September 2001 Barry McFarlane signed an agreement for the supply of a kit by AES and handed to Mr Sadler a deposit cheque of $17,309.16 together with the sum of $582.12 for plastic. The contract was initialled but not signed by Mr Sadler. One of the final stages in the construction process is to install covers over the framework. This was to be done by AES but was not provided for in the contract. It was always intended that the covers over the greenhouse would be installed by AES. 11 On 2 October 2001 Mr Youngson signed the contract on behalf of AES. 12 On 9 October 2001 the spigots being the first parts for the construction of the greenhouse were delivered by AES to the property. On 29 October 2001 Barry McFarlane attended AES's premises and inspected a prototype of the greenhouse. 13 On or about 14 November 2001 delivery of the kit commenced. 14 On or about 28 November 2001 Firepat commenced construction of the greenhouse. 15 On 5 February 2002, Firepat paid to AES the second instalment due under the contract of $34,618.32. 16 By 5 March 2002 Firepat had finished constructing the main structure of the greenhouse. It was always the position that the covers to the greenhouse would be installed by AES. 17 Problems arose in relation to a number of items of the kit which had been supplied. In particular there was a problem with sagging gutters. The structural integrity of the greenhouse became an issue and each party
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obtained advice from an engineer. There was then a series of meetings to discuss the problems and AES did some work on site and offered to rectify some of the kit which Firepat contended was defective. Work was done on the greenhouse by AES between the 11 March 2002 to 15 March 2002 and 18 March 2002 to 22 March 2002. 18 Further deliveries of parts of the kit were made up until the 22 March 2002. 19 Mr Kitson an employee of AES asked Barry McFarlane to sign timesheets for the work done in March 2002 but he refused and said he would not pay. 20 On 22 March 2002 AES removed items of the kit which had not been constructed from Firepat's property. 21 On 8 April 2002 Barry McFarlane's solicitors requested the return of the items removed from the property. 22 By letter dated 10 April 2002 Barry McFarlane’s solicitors advised Firepat that it regarded the removal of plant and equipment as a repudiation of the contract and purported to accept the repudiation. It was further stated that an engineer would "inspect the structure in its present format with a view to then returning the partially completed components …". The letter concluded with a request for moneys paid under the contract. 23 Negotiations between the parties continued up until the about the 20 May 2002. 24 Firepat eventually completed construction of the greenhouse towards the end of September 2002.
Conduct of the proceedings 25 The claim and counterclaim arise out of events which occurred principally between April 2001 and May 2002. The parties were amending pleadings, introducing new claims and providing expert material at trial. This was unsatisfactory. 26 There were a number of claims made by each party and many documents adduced into evidence. The parties sought to rely in a number of cases upon documents to establish the various claims. The parties' documents were in some cases incomplete which has necessitated a need for special care in the examination of the claims made.
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The claims in the proceedings
27 The re-amended statement of claim dated 20 April 2005 pleads that Barry McFarlane signed the contract for supply of the greenhouse kit on behalf of Firepat as undisclosed principal. There is no mention in the contract of the existence of Firepat. 28 AES joined issue as to who was the proper party to the contract. Ultimately at trial no claim in the action was pursued on behalf of Barry McFarlane. I will deal with the issue as to who were the parties to the contract subsequently in these reasons. Suffice to say at this stage that I accept that Barry McFarlane was acting on behalf of Firepat when he signed the contract on 26 September 2001. 29 The pleaded causes of action are for contravention of s 52 of the TPA, negligence and breach of contract. The claims include one for loss of profits of $205,580. 30 Firepat's claim for contravention of s 52 of the TPA relied upon express representations and the effect of silence. 31 The representations said to form the basis of the Firepat's claims are contained in par 7 of the Further Re-Amended Statement of Claim dated 21 April 2005 ("statement of claim"). Paragraph 7 provides: "In the course of negotiations prior to the Contract referred to in paragraph 8 below at the property, Andy Sadler, the sales manager of the Defendant on behalf of the Defendant represented to the First Plaintiff in order to induce the first plaintiff to enter into the contract referred to in paragraph 8 below or alternatively in trade or commerce that: (a) the defendant had previously developed or designed and/or manufactured and supplied roof opening greenhouses of the design or style of the greenhouse; (b) the first of the parts for the greenhouse would be supplied by 3 October 2001 with the balance to be supplied from 11 October 2001 when the first defendant returned from holidays; (c) the greenhouse would be operational in time for the summer growing season and ready for picking the summer crop by January 2002."
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32 Each representation is pleaded to have been made negligently, to have been false and to have been misleading.
33 The conduct by silence said By Firepat to constitute misleading and deceptive conduct is contained in par 14 of the Further Re-Amended Statement of Claim which provides: "Further or in the alternative the representations referred to in paragraph 7 above were made negligently or alternatively were misleading or deceptive or likely to mislead or deceive as the defendant failed to inform the plaintiffs that it had not previously manufactured or supplied a roof opening greenhouse of the design or size of the greenhouse and needed to build a prototype and that the greenhouse may not be operational in time for the summer growing season and ready for picking the summer crop by January 2002 and that the kit supplied by the defendant would not contain instructions as required for construction but that the plaintiffs would have to obtain oral instructions from the defendant and that the gutters supplied would not be trafficable." 34 The second cause of action relied upon by Firepat is for damages for negligence. The facts and particulars relied upon in support of the claim based upon misleading and deceptive conduct are also relied upon in support of this claim. 35 Firepat alleges that, by virtue of s 14 of the Sale of Goods Act 1895 the contract for the supply of the greenhouse kit, included an implied condition that the kit supplied was reasonably fit for the purpose (s 14(1)) which Firepat had made known to Mr Sadler during the course of negotiations, namely, the construction of a greenhouse and a further implied condition that the kit was of merchantable quality (s 14(2)). 36 Firepat further contended that implied undertakings as to quality and fitness of the kit and merchantable quality arose because of the operation of s 71 of the TPA. Firepat and Barry McFarlane did not maintain at trial that they were, or either of them, was a consumer within the meaning of s 71 of the TPA. Accordingly, the claims made in reliance upon s 71 of the TPA must fail. 37 By par 10 of its statement of claim Firepat alleged that the representations as to timing were oral terms of the contract or that the representations comprised a collateral contract.
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38 Firepat also pleads the breach of an implied term that all reasonable skill, care, and diligence would be exercised by the defendant in the manufacture and supply of equipment and services the subject of the contract.
39 In summary, Firepat's case is that during the antecedent negotiations surrounding the sale of the greenhouse kit representations were made to it by AES. Firepat alleges that a series of oral enquiries and discussions occurred by which Barry McFarlane, made it known to AES's manager, Mr Sadler, which he was looking to him for advice and recommendations about the selection of the greenhouse kit. Firepat maintains that the representations were relied upon by Firepat in deciding to purchase the kit. Firepat says that had it been aware that the representations were false, it would not have purchased the kit. Had it not done so, it would not have incurred the losses it says it did. 40 The parties are at issue over the events which took place in the initial discussions and negotiations leading to the contract for the sale of the kit and importantly at the meeting which occurred on 26 September 2001. AES denies that any representations made to Firepat by it were misleading or deceptive. 41 AES counterclaims for $2,243.30 for the balance of the sum due pursuant to the contract. There is also a claim for $13,574 for work done by AES on behalf of Firepat in March 2002. 42 In considering all of Firepat claims I am very aware that there was significant time period between when the first quote was obtained by Firepat from AES and when the contract was signed. During that period further quotes were obtained. The McFarlanes were in my view acutely aware of what they were contracting to obtain from AES. The cost of the kit to be supplied was substantial and Firepat needed to obtain finance to complete the purchase. There had been previous unsatisfactory dealings between the parties and Barry McFarlane was keen to ensure that Firepat's position was protected. 43 Firepat took on the task of constructing a very large greenhouse provided in kit form. Firepat accepted the goods supplied and made the second instalment payment of $34,618.32 on 5 February 2002 which only became due when 90 per cent of the kit had been supplied. I am satisfied that Barry McFarlane given his previous experience with AES and the importance of the greenhouse to his business would not have made payment if the problems with the kit were as extensive as alleged.
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44 By the beginning of March 2002 Firepat was having the covers placed on the greenhouse being one of the final stages of the construction process.
45 I generally preferred the evidence adduced on behalf of AES to that of Firepat. Specifically I preferred the evidence of Mr Sadler to that of the McFarlanes. The distinct impression which I formed as to Firepat's case was that there was exaggeration as the effect of the problems created by AES in the discharge of its contractual obligations. The evidence adduced on behalf of Firepat as to delay was unconvincing. A spreadsheet prepared by Barry McFarlane was produced. It particularised a series of complaints but did not establish periods of delay caused by any conduct of AES. The oral evidence of Barry McFarlane and Christoper McFarlane was unsatisfactory in this regard and I am not prepared to rely upon it to establish delay. I accept the evidence of Mr Graham Dann the AES employee that he was generally available to assist and that there was little delay. 46 I was not at all impressed with the evidence adduced on behalf of Firepat in support of its claim for loss of profits. The timesheets relied upon suggested remedial work was last performed by the McFarlanes on the greenhouse on the 29 August 2002 yet the claim for loss was made from 1 January 2002 until 31 October 2002. There was no explanation as to why the greenhouse did not become operational until the end of October 2002 given the evidence as to the stage the work had reached by March 2002. 47 The expert accounting evidence of Mr Frank Leahy and relied upon by Firepat contained arithmetical errors which were corrected at the hearing. The premise for the calculation of loss was based upon assumptions which were not established as to the return expected to be obtained from the greenhouse when constructed. The calculation of loss was based upon a comparison of what was earned when the greenhouse was finally constructed and operational and what was earned when it was not. It was clear that there were factors which had not been taken into account in the calculation of loss. The loss figure did not for example take into account seasonal variations, the time required to build the business up and market forces. Between July and October 2001 there was an increase of $34,927or $8,729.25 per month when compared to the same period in 2002. In comparison there was an increase of $14,969.87 in the eight months following the completion of the greenhouse. Mr Leahy accepted that there were obviously other factors involved leading to changes in production figures. The evidence was unacceptable.
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The evidence of Wayne Healy an accountant called by AES was more reliable. It was based upon reasonable assumptions. 48 AES's expert evidence as to calculation of loss based upon average production was in my view more reliable. Whilst ultimately it has been unnecessary to perform a calculation of loss the assessment made by AES's expert Mr Peter James Keating was in my view far more reliable than the evidence sought to be relied upon by Firepat. 49 Mr Keating has considerable academic and practical experience in the horticultural industry. He made assumptions as to average return per square metre of the area under cultivation and then applied an average price for sale of the product. Utilising his calculations resulted in average gross income of $169,000. From that sum it was necessary to deduct an average overhead component of 65per cent to arrive at a nett profit of $59,461. When tax was deducted from that sum a nett figure of $874 per week was obtained. A figure of $768 per week was calculated by Mr Rowe a witness called on behalf of AES. I prefer the evidence of Mr Keating. 50 I will deal first with Firepat's claim for damages for contravention of s 52 of the TPA and then consider the claims based upon negligence and breach of contract. Firepat pleads similar complaints in relation to each cause of action. Accordingly I will not, except where necessary, repeat findings made. Having considered Firepat's claims, I will then consider the counterclaim made by AES.
The contract
51 The first issue is whether Barry McFarlane, in executing the agreement dated 26 September 2001, did so, on behalf of Firepat, as undisclosed principal. 52 Barry McFarlane in his evidence told me that in 1998 AES had supplied a greenhouse and that invoices were addressed to McFarlane. The payments due to AES in relation to that supply were drawn on the account of Firepat Pty Ltd as trustee for the McFarlane Family Trust. 53 The letter of quotation dated 3 April 2001 was addressed to Barry McFarlane. I am satisfied that AES did not know of any relationship between Barry McFarlane and Firepat when the contract was entered into. I am satisfied that when Barry McFarlane executed the agreement he did so with the express or implied authority of Firepat.
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54 The defendant's case is that Barry McFarlane did not contract for an undisclosed principal, and was the sole contracting party. The written agreement described Barry McFarlane as the purchaser.
55 Beneath Barry McFarlane's signature appears his printed name and then next to the typed word "position" appears in handwriting the word "Director". I do not accept that in using the word director, Barry McFarlane was seeking to describe his occupation. 56 Barry McFarlane in writing the word director next to the word position made clear that he was executing the agreement in the capacity of director of a corporation which was the purchaser. I am satisfied that the terms of the contract and circumstances are not inconsistent with the existence of agency. 57 In the circumstances I am satisfied that in executing the agreement Barry McFarlane did so as the agent for, and on behalf of, Firepat as undisclosed principal.
The terms 58 The written terms of the contract between the parties requires careful examination because, to a degree, it forms part of the matrix against which the evidence concerning representations and oral terms must be evaluated. 59 On 26 September 2001 Barry McFarlane signed the contract to purchase a greenhouse kit from AES. The parties named in the contract are Barry McFarlane and AES. 60 The total amount payable to AES was $57,697.20. 61 Payments were to be made by instalments as follows: Deposit payable with this contract of 30% $17,309.16 Payment on delivery of 90% materials 60% $34,618.32 Balance due 60 days from complete delivery $5,769.72 62 There were clauses of the contract as follows: "1.2 Entire Agreement This agreement constitutes the entire agreement between the parties in respect of its subject matter and supersedes all prior agreement, quotation requests, understandings,
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" SCHEDULE 1
SCOPE OF WORKS
AES will manufacture and supply a complete kit of steelwork, fittings and fabrics to construct an AES Roof Opening Greenhouse as specified below. Construction will be completed by the customer. Specifications 4 spans of 6.4 metres (25.6 metres) x 16 bays of 4 metres (64 metres long). Total floor area of 1638 square metres. Gutter clearance of 4 metres with heavy duty galvanised gutters. Special structural arrangements for central walk way under 3 gutters. Steel structure in pre-galvanised tube with factory coated welds. Ridge hinged opening roof to full length of all spans. Curved rack and pinion drive through line gearboxes and 1 off drive motor. Springclip lock strip in galvanised spring steel. Double Sunselector Clear plastic covers with inflation blowers (2 off). Crop support bracing to ends. 2 off double door sets to greenhouse. Drawings and instructions as required for construction."
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"
Structure -- Manufacturing 2 years Motors & Drive System -- 1 year Sunselector Plastic -- Properly applied 3 years" " SCHEDULE 4 SPECIAL CONDITIONS FOR PROJECT
Customers responsibilities 1. Application and Shire approval 2. Local authority Licences and Fees 3. All earthworks 4. All site work unless special arrangements are made with AES 5. On site power and water supply 6. Wiring and control " " ANNEXURE A GENERAL TERMS AND CONDITIONS
…. 3. No representation of (sic) statements purported to have been made by AES by any of its employees or agents shall be binding on AES as a condition or warranty or otherwise, subject to any law to the contrary, unless contained in the order.
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… 16. Unless otherwise stated terms are strictly 30 days from invoice date and payment is required no later than the end of the month following the month of purchase. Interest at ( %) per month will be charged on amounts not paid within the due date. If any overdue account is placed in the hands of a debt collector or solicitor for collection, all bank charges, fees and disbursements are to be reimbursed by the customer. …. 24. Property in the goods shall remain vested with AES until payment is made full and AES shall be entitled, upon default, to enter the customer’s property to recover the stock in question."
Misleading and deceptive conduct 63 Firepat alleges that AES engaged in conduct that was misleading and deceptive in contravention of s 52(1) of the TPA and that it is accordingly entitled to damages pursuant to s 82(1). 64 Section 52(1) of the TPA provides: "A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive." 65 As Gummow J said in Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 37: "It is well to bear in mind that whilst contractual rights subsisted between the parties their relationship is not governed simply by the general law as to vendor and purchaser. The legislation regulates the existence in the exercise of what would otherwise be the rights at general law and, in addition, itself creates new rights and remedies." 66 In Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83 at 93 Lockhart J said: "Misleading or deceptive conduct generally consists of misrepresentations, whether express or by silence; but it is
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erroneous to approach s 52 on the assumption that its application is confined exclusively to circumstances which constitute some form of representation. The section is expressed briefly, indeed tersely, in plain and simple words ... There is no need or warrant to search for other words to replace those used in the section itself. Dictionaries, ones own knowledge of the developing English language and ordinary experience are useful touchstones, but ultimately in each case it is necessary to examine the conduct, whether representational in character or not, and ask the question whether the impugned conduct of its nature constitutes misleading or deceptive conduct." 67 Firepat relied upon three express representations in support of its claim. The first representation concerned the previous activities of AES in designing, developing manufacturing and supplying roof opening greenhouses. AES denies that a representation as to manufacture was made and further pleads that what was represented in relation to design and development was true. 68 Mr Sadler's evidence was that when asked to provide a quote in April 2001 he was to provide information to Barry McFarlane who would do his own research. He told me that he did not think that the time of delivery came up at that time. That was also the evidence of Barry McFarlane. Further in this regard I note that there is no mention of a time of delivery in the quotation of 3 April 2001. The next time Mr Sadler dealt with Barry McFarlane was at the time of the contract. Mr Sadler told me that there was a call for a contract. Following preparation he went to Barry McFarlane’s house with the contract to have it signed. 69 Barry McFarlane referred to AES's quote of the 3 April 2001 and in particular the phrase, "this is also a new structure in the AES range. It has been developed to suit a budget greenhouse for the vegetable and flower growers". For reasons expressed later I do not accept that it was relied upon by Barry McFarlane in deciding to enter into the agreement. Christopher McFarlane could not recall anything specific being said by Mr Sadler about development, design or manufacture and supply. 70 By letter dated 3 October 2000 AES wrote to Mr Paul Humble providing a quotation for the construction of a greenhouse. One of the greenhouses proposed was a roof opening greenhouse. Barry McFarlane was referred in cross examination to the letter of the 3 October 2000 from
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AES to Mr Hunble. He agreed that a greenhouse of the type subsequently purchased by Firepat was in development as at October 2000. 71 Mr Youngson's evidence was that AES had a design and construction team and that after a customer placed an order a prototype was constructed to establish the structural integrity of the proposed greenhouse. AES had been operating for a number of years and it is clear that it was before the negotiations commenced with Barry McFarlane in the process of designing and developing roof opening greenhouses. Engineering drawings dated 11 September 2000 were produced for design of a greenhouse. 72 I accept Mr Youngson's evidence in relation to the activities of AES. I accept that the representation if made was true in relation to development or design. 73 At trial the McFarlanes' evidence as to this representation focussed upon the statement said to have been made by Mr Sadler that AES has constructed a greenhouse of a similar type in the Eastern States. 74 Mr Sadler's evidence as to the representation was:
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of the criteria is always the cost and we had gone through a series of different materials looking at different ways of making it, and there's engineering that goes back to sort of midway through the previous year; and the final concept was based on the greenhouse at Westgrove Greenhouses, Paul Humble's - basically a copy of that with, as we felt, some improvement. Did Mr McFarlane indicate to you whether or not he had seen Paul Humble's greenhouse at that stage?---I'm pretty sure he had seen Paul Humble's. I can't remember him saying, 'Yes, I've seen that', but they are in the cucumber-growers group and, you know, they do meet on each other's farms." 75 Barry McFarlane's evidence was given in a way that suggested he was uncertain as to precisely what was said by Mr Sadler. Christopher McFarlane's evidence was clearer. He said that Mr Sadler had said that AES had constructed a greenhouse in the eastern states. Mr Sadler told me that whilst there had been discussion about the activity of AES and that he recently returned from the eastern states he did not refer to AES building a greenhouse there. I accept and prefer Mr Sadler's evidence in this respect. There was no reason at all for him to say what Christopher McFarlane alleges. Mr Sadler was adamant that he did not say that AES had actually constructed one of the greenhouses in the eastern states. I accept that evidence. 76 The second representation pleaded by Firepat is that the first of the parts for the greenhouse would be supplied by 3 October 2001 with the balance to be supplied from 11 October 2001 when Barry McFarlane returned from holidays. Mr Sadler accepted that he did tell the McFarlanes that the spigots would be delivered within a week. The spigots are the vertical sections which form the base for the upright columns of the greenhouse. The spigots were delivered on 9 October 2001. Firepat had arranged for a granoworker to concrete the spigots into place. Because of the delay in delivery the granoworker could not attend site until 23 October 2001 and then completed the installation of the spigots. In any event ultimately the spigots were in place before the kit was ready for construction. 77 The issue as to delivery following Barry McFarlane's return from holidays did not become a part of Firepat's claim until after the trial had commenced. In the spreadsheet dated 29 April 2001 under the heading contract details the following appears:
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"Balance of Greenhouse was to start being delivered week beginning 8/10/01.so erection could start" 78 Mr Sadler denied he made a representation in relation to delivery occurring when Barry McFarlane returned from holiday. I accept that evidence and prefer it to the evidence of the McFarlanes. 79 The final representation pleaded was that the greenhouse would be operational in time for the summer growing season and ready for picking the summer crop by January 2002.Barry McFarlane gave evidence to that effect. Mr Sadler's evidence was that when asked by the McFarlanes he said that the greenhouse would be operational by the end of January 2002. That statement was of course dependent upon Firepat's performance in the construction of the kit. Following the commencement of the action Firepat pleaded three different versions of the representation as to completion. 80 Firepat first pleaded its statement of claim on 28 October 2002. The representation then pleaded as to completion in the statement of claim was that the greenhouse would be operational by the end of January 2002 in time for the summer growing season. Barry McFarlane said there was an error in the original pleading. 81 The representation was amended to read: "The greenhouse would be operational in time for the summer growing season and ready for picking the summer crop by the beginning of January 2002." 82 The final version of the representation amended at trial was: "The greenhouse would be operational in time for the summer growing season and ready for picking the summer crop by January 2002." 83 Barry McFarlane was asked in cross examination about the spreadsheet he prepared and handed to AES on 1 May 2002. In that document there is reference to delivery dates and that when asked about delivery dates Mr Sadler had said: "Kays Engineering had a very large workshop and if necessary extra workers could be brought in to fabricate.
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We would be picking produce by the end of January 2002 (easily). (This was the main reason for signing the contract with them as it would enable us to produce a Summer crop)." 84 Barry McFarlane accepted that his spreadsheet was in error. 85 Firepat's expert accounting witness Mr Leahy produced a document entitled Anticipated Production and Income from New Greenhouse. The document was intended show losses in production. The growing season is shown as being throughout January 2002 with picking of produce is shown as commencing in February 2002. 86 Christopher McFarlane's evidence was that Mr Sadler had said that "definitely we'd have it up, no worries, and we'd definitely get a summer crop in". 87 Mr Sadler's evidence was that there was a real push by Firepat in the negotiation stage to have the greenhouse finished by the end of January 2002. He denied that there was any mention of when Firepat could pick its crop. I accept that evidence in preference to the evidence of Mr Barry McFarlane and Mr Christopher McFarlane. There was no discussion about a delivery date. I do not accept that Mr Sadler said that the greenhouse would be completed in sufficient time to enable picking of a crop in January 2002. This would have involved a shorter then usual period for manufacture and construction of the greenhouse, fit out and growing of the crop. 88 Mr Sadler was certainly aware of the time it would take to manufacture, construct and fit out. That time period did not allow sufficient time for a crop to be able to be grown and picked by January 2002. I find what he said was that it would be operational by the end of January 2002. 89 The evidence of the McFarlanes as to this representation was unsatisfactory. The case was opened on a different basis to that ultimately relied upon. The allegation as to what the representation was changed between opening and closing. I do not consider their evidence to be reliable. The inconsistencies are not adequately explained by simply describing the earlier versions of the representations as errors. When pressed in cross examination as to the representation Barry McFarlane said that Mr Sadler "would make a statement just to win the contract". I do not accept that to be the case. I prefer the evidence of Mr Sadler to the evidence of the McFarlanes. His evidence was given in a straightforward manner and was consistent and reliable.
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90 In the alternative AES pleads that in saying what he did Mr Sadler had reasonable grounds for doing so. Accordingly, the representation to the extent it related to a future matter was not misleading and deceptive.
91 The meeting when Mr Sadler spoke about completion took place on 26 September 2001. The conversation occurred approximately twelve weeks before the beginning of January 2002. The evidence does not establish that there was any other relevant discussion as to when Firepat would have completed construction. Mr Sadler knew that the usual construction time was between four and six weeks which meant there was ample time before the end of January for the construction of the greenhouse to take place. He knew that the budgeted cost for construction of the greenhouse, including covers, were based on 44-man days for a team of two which is something over four weeks. 92 In the circumstances I am satisfied that insofar the representation related to a future matter Mr Sadler had reasonable grounds for making the representation. In the circumstances I am not satisfied that the conduct of AES was misleading and deceptive.
The case based upon failure to disclose 93 Firepat's claim based upon silence is put on the basis that in not disclosing certain information AES engaged in misleading and deceptive conduct. It is also pleaded that as a result of failing to disclose that same information the express representations relied upon were misleading and deceptive or likely to mislead and deceive. 94 In Demagogue(supra) Gummow J at 41 said: "But, consistently with regard to the natural meaning of the terms of s 52, the question is whether in the light of all relevant circumstances constituted by acts, omissions, statements or silence, there has been conduct which is or is likely to be misleading or deceptive." 95 Section 4(2)(a) of the TPA provides: "a reference to engaging in conduct shall be read as a reference to doing or refusing to do any act, including the making of, or the giving effect to a provision of, a contract or arrangement, the arriving at, or the giving effect to a provision of, an understanding or the requiring of the giving of, or the giving of, a covenant."
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96 Section 4(2) (c) of the TPA provides:
"(c) a reference to refusing to do an act includes a reference to:
(i) refraining (otherwise than inadvertently) from doing that act; or
(ii) making it known that that act will not be done." 97 A failure to provide information can be conduct which is misleading or deceptive. However, where the conduct in question is constituted by silence, that conduct must have been deliberately engaged in for it to be actionable. Bowen CJ in Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 68 ALR 77 at 84 said this followed from the use of the words "refuse" and "refrain" in s 4(2). This conclusion is reinforced by the fact that by s 4(2) (c) conduct includes the refraining from doing an act provided it is "otherwise than inadvertently" (Demagogue Pty Ltd v Ramensky [1992] 39 FCR 31 at 42). 98 The first question is whether the failure by Firepat to make the disclosures or any of them constituted misleading or deceptive conduct.
AES activities and the prototype 99 I have accepted that what was said on behalf of AES about its previous design and manufacturing of roof opening greenhouses was true. 100 The prototype was inspected at the end of October 2001 by the McFarlanes. The obligation on AES was to supply the kit in accordance with the contract. The fact a prototype was to be constructed was irrelevant. The evidence was that the McFarlanes were concerned that they had not heard of the need for a prototype. However, in all the circumstances there was nothing misleading or deceptive in AES not disclosing the need to build a prototype to Firepat.
Operation of the greenhouse 101 I have found that there was no representation made by AES concerning completion of the greenhouse in time for picking by January 2002. The parties had entered into an agreement in writing. Whether the greenhouse was ready was dependant upon when the kit was delivered and how long it took Firepat to construct it. The time for delivery was dependent upon the terms of the contract and I have found that there was
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no breach in this regard by AES. AES could not in the circumstances be considered to have engaged in misleading and deceptive conduct.
Plans, instructions and assistance 102 Firepat maintained that it was misleading and deceptive conduct for AES not to disclose that the instruction to be provided was to be oral. Schedule 1 of the contract provided that "drawings and instructions as required for construction" would be provided. Firepat's counsel submitted that disclosure was required specifically in circumstances where Mr Sadler was aware that the McFarlanes intended to carry out the construction work themselves. By carrying out the construction itself Firepat was able to save $20,028. It was Firepat's decision to proceed with construction of the greenhouse itself. 103 Mr Youngson's evidence was clear that AES does not provide a written manual. They provide the marking plans and then instructions and assistance as required from a supervisor. The contract provided that AES was to provide "drawings and instructions as required". Mr Sadler's evidence was that he told Barry McFarlane that verbal instructions would be provided. I accept that evidence. The contract did not define the nature of the instruction to be provided and in particular that it be in writing. In a construction project such as this one, where Firepat was doing the work itself it was not unreasonable that the instruction be oral. Mr Dann in effect attended site from time to time and assisted in the construction. In those circumstances it was not unreasonable for the instruction to be oral rather than written. I am not satisfied that the evidence adduced on behalf of Firepat establishes the need for the provision of a manual. Firepat had access to instruction from AES at any time it required. 104 Firepat's case was that there were eight plans provided which were not to scale and were not sufficiently detailed to enable construction to take place. As a result Firepat had to continually refer back to AES and its officers to check the items and to check the construction requirements and details. 105 Barry McFarlane told me that Firepat could not take any measurements off the plan and could not scale from it. Barry McFarlane said he often spoke to AES's supervisor Mr Dann concerning the issue. Mr McFarlane told me that that there were problems with measurement on the plans. He said he would speak to Mr Graham Dann, AES's supervisor, about the problems and there were often delays as a result. The obligation imposed on AES by the contract did not require a response by it to
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Firepat's enquiries to be made within any particular time. In the circumstances, instructions needed to be provided within a reasonable time. 106 Mr Dann's evidence was that he attended the site regularly and provided assistance. It has not been demonstrated that there was any inadequacy in the plans or the instructions and assistance provided. Barry McFarlane's evidence on this issue of delay and the adequacy of the plans and instructions was very general and lacking in detail. He could not identify specifically periods of delay occasioned by AES. I do not in the circumstances accept his evidence is reliable. I accept Mr Dann's evidence that he regularly attended Firepat's property and provided assistance and advice as required. 107 Mr Dann also gave evidence which I accept that the construction process was "on and off". He observed periods when no construction proceeded. He said that at least half the time he attended site no construction was proceeding. He accepted that Barry McFarlane had some justifiable complaints but that these were dealt with at the time in a timely manner. He described these as fabrication problems. I accept Mr Dann's evidence in relation to the problems and the response of AES. Whilst he accepted in his view that "a couple of weeks" was attributable to AES when, properly analysed, his evidence established that the McFarlanes had difficulty because of their degree of expertise in completing the construction. Mr Youngson's evidence, which I accept, was that he was surprised at the time it took Firepat to erect the greenhouse. In this regard, I note that Firepat continued to operate its business whilst the greenhouse was in the process of construction. When Mr Youngson visited the property after December 2001 the bulk of the greenhouse was complete. 108 Mr Frank Maroni is a practising engineer and gave evidence on behalf of Firepat. In his view the plans that have been supplied were insufficient for a layperson to erect the greenhouse. However in cross examination he accepted that many of the criticisms he made of the plans were unjustified. For example he was unaware that of the precise nature of the assistance to be provided. In the end I was not able to rely upon his evidence to any significant extent. 109 Firepat was able to complete the construction of the greenhouse with the plans provided and with the assistance provided by AES.
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110 Mr Youngson's evidence which I accept was the marking plans provided to Firepat contained relevant dimensions to enable the construction to proceed. I accept his evidence as to the adequacy of the plans. The adequacy of the plans must be considered in the light of the provision by AES of on site assistance and the fact components were numbered and marked on the plans. In that circumstance I am not satisfied that the plans were defective. In any event any deficiency in the plans could be remedied by seeking assistance from AES. The obligations as to plans and instruction need to be considered in conjunction with each other.
111 Firepat had the responsibility pursuant to the contract for the "wiring and control" and for "application and shire approval". Accordingly, I do not accept that the plans supplied were defective for the reason that the electrical layout was not shown or that the plans did not comply with the requirements of the local authority. I am not satisfied that the plans and instructions supplied by AES were inadequate. 112 It has not been demonstrated that in failing to disclose the nature of the instruction to be provided there was any misleading or deceptive conduct.
The gutters 113 The gutters supplied as part of the kit were raised in a number of different ways in Firepat's claim. In the s 52 claim it was alleged that AES's conduct in failing to inform Firepat that the gutters supplied would not be trafficable was misleading and deceptive conduct. In the alternative it was said to be negligent. In the contract claim it was pleaded that the gutters were "totally inadequate". It is not alleged that it was an express term of the contract that the gutters would be trafficable. There was no allegation that there was an express representation that the gutters would be trafficable. By very late amendment to the statement of claim Firepat claimed damages of $33,044 described as "additional costs due to non-trafficable gutters". In or about February 2002 Mr Sadler attended at Firepat's property and inspected the gutters. It was agreed there was a problem with the gutters sagging and AES then arranged for its employees to carry out rectification work which was done in March 2002. Expert evidence was adduced by both parties in relation to issues arising with respect to the gutters. 114 Mr Maroni was instructed to look at the gutters and to consider structural adequacy. He concluded initially that the gutters appeared inadequate.
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115 Mr Maroni's view was that the downpipes were inadequate. This was because of the cross-section of the gutter and the amount of water flow in the downpipes. He agreed that in the first two reports prepared by his firm there was no mention of Australian Standard 2867 of 1986 relating to farm structures. He agreed in cross examination that the "the structural integrity of the greenhouse was okay".
116 Mr Maroni said that the greenhouse gutter should be able to cope with a 1 in 100 year storm. He did however agree the life of the greenhouse would be probably 25 years and that it did have a capacity to deal with the one in 20 years storm. 117 Christopher Ralph Robinson is a consultant engineer. He was requested by AES in April 2002 to comment on the reports obtained by Firepat from Mr Maroni concerning the structural adequacy of the greenhouse and in particular the gutters. 118 Mr Robinson's firm had designed the greenhouse. He explained in evidence that the design process requires consideration of relevant Australian Standards and an assessment of the terrain category structure. As the structure was characterised as a farm building there were reduced limits applicable. 119 There was also a problem with the gutters overflowing during heavy rain. 120 In relation to the adequacy of the gutters Mr Robinson told me that the gutters had been subjected to computer analysis. The analyses revealed there was no overstress. Mr Robinson was asked about the adequacy of the structural gutter and he said it was adequate. 121 Mr Robinson told me that he calculated the area of the gutter as being 12,500 square millimetres. He compared a Hortinova gutter and the AES gutter. On the basis of calculations he performed, he concluded the AES gutter would pass 25 per cent more water than the Hortinova. 122 Mr Robinson's view was that the two downpipes in the gutter had sufficient capacity to deal with the one in 20 year storm which is basically 146 millimetres per hour. 123 I prefer the evidence of Mr Robinson to that of Mr Maroni. Mr Robinson was part of the firm involved in the original design. His view as to the structural adequacy of the guttering was ultimately accepted by Mr Maroni. Mr Robinson had a better understanding of the applicable
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standards and had analysed all relevant factors in reaching his conclusions. 124 The guttering supplied by AES was, on the evidence from Mr Robinson, which I accept, adequate for a 1 in 20 year storm. It was of greater capacity than the guttering on a similar greenhouse installed for Mr Paul Humble. Photographs of overflowing gutters which were produced were taken at a time when, according to Christopher McFarlane, there was a heavy storm. I do not consider, based upon the evidence of Mr Robinson, which I accept, that there was any defect in the gutters. 125 On 16 May 2002 Mr Youngson spoke to Barry McFarlane who confirmed there was then no structural problem with the gutters. 126 Access to the greenhouse roof is required for maintenance purposes. The maintenance includes the application and removal of whitewash and patching of the roof. Firepat's case was that in order to perform necessary maintenance the guttering needs to be trafficable. The evidence establishes that it is possible to perform maintenance by use of a scissor lift. 127 Christopher McFarlane's evidence was that after installation it was quite difficult to walk along the gutters especially when the vent arms were installed. 128 Firepat sought at trial to contend that the width of the gutters did not conform to industry standard. The ability to walk in the gutters which were constructed as part of the greenhouse occupied much time at trial. The evidence of Barry McFarlane was that other greenhouses he had encountered had gutters which were larger than the ones contained in the AES kit. I do not accept his evidence as to industry practice. The evidence was imprecise in parts. There were no detailed measurements provided or evidence which could be relied upon as to the alternate structures. 129 The specification provided to Firepat to AES was specific as to what was supplied. Firepat did not enter into a contract for the provision by AES of an industry standard greenhouse. The greenhouse constructed by Firepat does have gutters which can be walked in and it is possible to carry out maintenance albeit with some difficulty. 130 Mr Youngson's evidence was that the size of the gutters installed on AES greenhouses was determined by structural requirements. He was asked about the width of gutters installed by other manufacturers and the
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industry standard. In cross examination on this issue the following exchange took place (T379): "Well, the Azrom gutter is bigger than the gutter you have supplied to Mr McFarlane?---Yes, absolutely. The Netafim gutter is bigger and the Redpath is both bigger and walk-through?---I think I've covered the walk-through issue. WorkSafe will crucify you if someone fell out of any one of those three gutters. Isn't it the case that the industry standard is to have wide gutters that are trafficable?---No, I think you'll find - I think the relative issues here are the snow loading which would put significantly more load onto the structure and therefore require a bigger gutter from a structural component; possibly Hartfords are designed - they're a New Zealand-based company and predominantly develop structures for - they have an office in Queensland as well, I think, from memory; so both New Zealand and Queensland experience. I think you'll find the span is wider which means that the volume of water - - -" 131 The initial cause of the problem in relation to the width of the gutters was that when the vent arms were closed size the width of the gutter was reduced. Because of complaints that the gutter was untrafficable the vent arms were eventually cut back leaving the gutters free to walk in. 132 Mr Youngson's evidence was that the gutters supplied were not intended to be trafficable. Gutters suitable for a person to walk in would need to be wider. The added width would limit light to the inside of the greenhouse with a consequent reduction in production. He referred to safety requirements and the danger posed by people walking in the gutters. He reiterated in his evidence that the gutters are not trafficable access ways and that they operate as structural members to support the roof. Mr Sadler agreed that he did not tell Barry McFarlane that the gutters supplied would not be trafficable. There was no discussion about trafficability before signing. Mr Keating's evidence was that he often saw scaffolding laying over the gutters to allow easy access. I do not accept that the evidence allows me to conclude that there was any industry practice as to the appropriate width of a gutter. 133 There was no evidence adduced to establish the quantum of the claim of $33,044, being the additional costs due to non--trafficable gutters. The
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claim was put on the basis that the figures and assumptions necessary to establish the quantum were reasonable. I do not accept that submission. 134 It has not been demonstrated that in failing to disclose the trafficability of the gutters there was any misleading or deceptive conduct. 135 It has not been demonstrated that the silence of AES on any of the pleaded issues was misleading and deceptive conduct. 136 The second question is whether the conduct was deliberate. On this question I have come to the firm view that AES did not deliberately withhold information from Firepat. Accordingly, the claim based upon a failure to disclose fails.
Reliance 137 I do not accept that the McFarlanes (and Firepat) placed any reliance upon what was said by Mr Sadler. There are a number of reasons for this. 138 Barry McFarlane had had dealings with AES in 1998. From Firepat's point of view that transaction was unsatisfactory. Firepat had obtained additional quotations after AES's quote of 3 April 2001. It seems improbable in the circumstances that Firepat would have relied upon what was said by Mr Sadler as to completion in deciding to accept the quote and enter into the contract. The parties entered into a detailed written contract which purported to include their entire agreement. It was a commercial transaction between parties who had had a previous dealing. 139 Barry McFarlane told me that Firepat needed to arrange finance to proceed with the acquisition of the greenhouse kit. This was arranged and in place prior to the meeting of 26 September 2001. The contract for execution was prepared and taken to Firepat's premises by Mr Sadler for execution by Barry McFarlane. Mr Sadler's evidence which I accept was the order for the greenhouse kit was placed verbally with Mr Bob Kitson. The representations relied upon are pleaded to have been made at the meeting of the 26 September 2001 and prior thereto. I am satisfied that by the time of the meeting the McFarlanes had decided to purchase the greenhouse kit from AES. What was said at the meeting did not impact upon the decision to proceed with the contract. 140 The case at trial for Firepat was that if the representations had not been made it would have entered into an agreement with an alternate supplier Azrom Greenhouses of Israel. The quotation from Azrom suggests that it would take 45 days from order for the kit to be delivered
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to a port presumably in Israel for transport to Australia. There was no evidence that an Azrom greenhouse ordered in late September 2001 could have been supplied and constructed to be operational in time for the summer growing season and ready for picking the summer crop by January 2002.
The claim in contact 141 Paragraph 17 of the Re-amended Statement of Claim is in the following terms: "17. In breach of the Contract alternatively breach of duty of care alternatively as a result of the misleading or deceptive conduct the Defendant failed to supply goods including drawings and instructions: 142 Particulars are provided in cl 17 and I will deal with each of them separately: "(i) goods were not supplied by 3 October 2001 or to enable the Greenhouse to be operational in time for the summer growing season and ready for picking the summer crop by January 2002." 143 Firepat's case as to delivery of the kit was that goods were not supplied on time, that is, by 3 October 2001, and that goods were not delivered, not delivered in the quantities required or the correct sizes. There were also problems with the batons that were supplied being defective. 144 In the course of negotiations Mr Sadler told Barry McFarlane that AES had a large workshop and that a greenhouse kit could be "knocked up in no time by putting workers on overtime". Mr Sadler's evidence, which I accept, was that he did not commit to a delivery date. There was no discussion as to the specific date of delivery. The date of delivery was dependant upon the time it took AES to manufacture the kit.
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Barry McFarlane agreed in his evidence that manufacture, construction and fit-out of the greenhouse would take between 12 to 18 weeks in total. 145 The parties did not reach agreement as to when the kit was to be delivered. In that circumstance performance was required to be within a reasonable time. In my view the agreement between the parties was constituted by the writing dated 2 October 2001. I do not accept that there were oral terms as pleaded by Firepat or a collateral contract. 146 The kit was delivered so that construction could commence on the 28 November 2001. Whilst some items still needed to be delivered the majority of the parts of the kit had been delivered by the middle of November 2001. That time period was reasonable in the circumstances. It was approximately eight weeks after Barry McFarlane had signed the contract. Other items continued to be delivered thereafter. 147 Mr Youngson was asked about delay. Even with some delay the greenhouse could still, on his evidence, have been constructed by mid to the third week of January. I accept that evidence. 148 Mr Youngson was asked about delivery of materials to site and told me that AES believed it had delivered a full kit to site. Mr Youngson was shown a list of items not delivered to site and on that basis accepted that delivery had not been completed by the 22 March 2002. Until such time as a shortage or a discrepancy was highlighted AES was not in a position to make another delivery. I accept that evidence. If there were missing items then Firepat should have made this known to AES at an early stage so that a further delivery could be arranged. There was no time specified for performance. By March 2002 the greenhouse construction had reached the final stages preparatory to the covers being installed. I am not satisfied that the kit was not delivered within a reasonable time or that if there was any delay in delivery that such delay caused Firepat to suffer any loss. "(ii) goods were supplied without any or adequate instructions or plans or incorrect instructions or plans were supplied for the construction of the Greenhouse." 149 I am not satisfied that the particular has been made out. I am not satisfied that there was any delay because of any deficiency as alleged by Firepat or in AES's responses to Firepat's requests for instructions.
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"(iii) goods required for the purpose of constructing the Greenhouse were not delivered, not delivered in the quantities required or not delivered in the correct sizes." 150 I will deal with this particular later in these reasons. It is not a particular of merchantable quality or fitness for purpose save in relation to incorrect delivery. "(iv) the gutters were totally inadequate." 151 I do not accept, for the reasons outlined above that this was the case. "(v) the vent drive motor was not suitable." 152 AES incorrectly or mistakenly supplied the wrong drive motor. This was accepted by Mr Youngson. He told me that because of the inconvenience AES was prepared to supply a replacement. A replacement was ordered by AES but not supplied. 153 Firepat's claim in relation to the motor is for $1380. The quantum of the claim is supported by invoices from Dongendale Engineering works and Martin Electrical Services. No issue was raised as to reasonableness of the amounts claimed. I would allow the sum of $1380 as part of Firepat's claim. 154 Firepat also claims the replacement cost of an extractor fan supplied to it by AES which failed following delivery. Mr Youngson accepted that the fan did "blow out" after delivery but described it as a warranty claim. I allow the claim in the agreed quantum of $150.
Firepat's other claims 155 Firepat also made claims for modification work necessary to the content of the kit supplied. There was also a claim that some materials supplied as part of the kit were defective and inadequate and that there were materials missing.
Modification work necessary 156 Christopher McFarlane's evidence was that in or about May 2002 Firepat decided to get its own contractors to come in and carry out repairs. His evidence in this regard was that: "We made a few repairs ourselves and we contracted other firms to supply parts so that we could finish the greenhouse ourselves, which we did."
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157 Barry McFarlane said it was necessary "to cut each vent arm back approximately 200-150 mil, and fit a new bracket on so the vents didn't protrude into the gutter". He told me that Firepat engaged Kanyana Engineering in late May or early June 2002 to assist in relation to the vent construction. An invoice was produced from Kanyana Engineering dated 23 May 2002 in the sum of $1,461.24.
158 On 23 March 2002 representatives of AES and Firepat met to discuss resolution of the problems which had developed between the parties. At that meeting Mr Sadler accepted that the vents and the attachment of the side rails were problems which were the responsibility of AES. On 2 April 2002 AES wrote to Firepat advising that it would drill and bolt the side rails, modify the vents to give better gutter access, replace the drive motor and fit the then remaining covers. Ultimately that work was done by Firepat. The claim for gutter drainage pipes is disallowed on the basis of my views as to the adequacy of the gutters supplied. 159 Firepat produced as part of its case a document entitled timesheet for hours and equipment used to complete installation of the greenhouse. The description of the work in the timesheets are side rails, vent brackets and gutter drainage pipes. Mr Youngson's evidence was that the work required to complete the greenhouse as at 28 March 2002 would take two weeks and was a two or three man job. At normal rates in his view a charge of $10,000 to $12,000 would be appropriate. 160 Mr Sadler accepted that work was necessary on the side rails and vent brackets and accordingly Firepat is entitled to damages in relation thereto. 161 Insofar as the labour charge is concerned, I do not accept that the sum calculated from the timesheets produced by Firepat is reasonable. There are 419 man hours shown on the timesheets. I prefer, and accept, Mr Youngson's evidence that a charge of $10,000 to $12,000 would be appropriate. I would allow the sum of $10,000 inclusive of the Kanyana Engineering fee.
The content of the kit 162 This claim related to an omission of materials in the kit and concerned items necessary to remedy gutter overflow and missing TEK screws.
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Gutter overflow
163 The plans supplied showed two outlets per gutter run. Only one outlet was supplied by AES. It was conceded by Mr Youngson that two downpipes were required for each run. Mr Youngson's evidence was that AES was not given an opportunity to supply a second downpipe. 164 Firepat has as a remedial measure installed other outlets along the interior of the greenhouse for the gutter. Firepat produced an invoice from Powell Enterprises (WA) Pty Ltd in the sum of $251.70 being the remedial cost for the installation of pops for gutters. I accept the claim for pops based on Mr Youngson's evidence. There was also additional pipe work required. Invoices were produced from Total Eden ($279.86) and Reece Plumbing ($33.38). There was also a claim for the labour charge of $1656 to install gutter drainage pipes being an additional labour component incurred because the outlets were not large enough. I do not consider the extra pipe work was necessary based upon the opinion of Mr Robinson which I accept as to the adequacy of the gutters
TEK screws 165 Firepat claims $133.60 for TEK Screws on the basis that an insufficient number was supplied to enable construction of the kit. Copies of receipts were produced to support the claim. The item is referred to in Firepat's spreadsheet dated 29 April 2002. I am prepared to accept the claim.
Engineers fees 166 Firepat claimed fees of $2,310 paid to Robin Salter & Associates. That firm inspected the greenhouse and reported in April 2001. Ultimately it was established that there were no structural problems and an engineer's certificate was provided. There is in the circumstances no basis for the claim.
The claim in negligence 167 Firepat also sues AES for damages for negligence arising out of the antecedent negotiations leading to the entry into of the contract. 168 The case advanced in closing was based upon negligence in making the pleaded representations and upon a failure to disclose information. I will not repeat the findings above and in particular those made in relation to the misleading and deceptive conduct claim and the contract claim. Based upon the findings made, Firepat's claim for damages for
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negligence fails. It is unnecessary for the purpose of this decision to decide whether there exists a duty of care to disclose information as between vendor and purchaser in the circumstances of this case. In my view there was no duty to volunteer information other than in circumstances where not to do so would create a false impression (Bentley v Wright & McNamara[1997] 2 VR 175). 169 It is also pleaded that AES had a duty to exercise reasonable care, skill and diligence in the manufacture and supply of the kit and services. It has not been demonstrated that there was any such breach.
Firepat's credit for items removed on 22 March 2002 170 AES pleaded that it was prepared to allow a credit in the sum of $3,526.42 in respect of items of materials removed from Firepat's property on 22 March 2002. Particulars were provided of the items removed. AES was prepared to allow Firepat an additional credit of $517.22 resulting in a total credit of $4,043.64. Firepat pleaded that the replacement cost of items removed and not supplied was $5,159.05. Firepat produced some invoices to support its claim. No other evidence was adduced in relation to the quantum issue. In the circumstances I am prepared to allow the sum of $5,159.05.
The counterclaim by AES 171 There were two parts to the AES counterclaim. First the final instalment due pursuant to the contract of $5,769.12. Secondly the sum of $13,574 for work done in relation to the greenhouse by AES between the 11 March 2001 to 15 March 2001 and 18 March 2001 to 22 March 2001. It was conceded by Firepat in closing submissions that the sum of $5,769.12 was a credit in its claim against AES. The contract was for the supply of materials and labour. 172 The framework for the kit was substantially complete in early March 2002. AES had substantially performed its obligations under the contract. Firepat was then discussing with AES the requirement to install the covers and complete construction of the greenhouse. Mr Dann approached Barry McFarlane about signing a quote for the further work to be done. Barry McFarlane would not sign the quote. The second payment was made on 5 February 2002 and only became due when 90 per cent of the kit had been supplied. As parts of the kit were delivered they were obviously incorporated by Firepat into the greenhouse structure and accepted by it.
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173 Where performance does not correspond exactly with the requirements of the contact, but the contract is substantially fulfilled; the promisee will be bound to pay the price subject to any other remedies appropriate to the variation in performance: Hoenig v Isaacs [1952] 2 All ER 176.
174 Firepat accepted the parts of the kit as they were delivered. Firepat's obligation was to pay the contractual sum subject to any claim for damages for parts of the kit not delivered or which were not of merchantable quality. 175 I am satisfied that AES is entitled to payment of the final instalment of $5,769.12. 176 The claim made by AES for $13,574 was made in contract and in the alternative on a quantum meruit. The claim was in two parts. 177 The first part of the claim was for the period between 5 March 2002 and 15 March 2002 and was for $5,883 inclusive of GST. The work carried out is described in the timesheet produced in support of the claim as being for "redpath to gutters" and "drives". Barry McFarlane's evidence was that Mr Dann told him that the drives would be done by AES when the redpath strips were being installed. Mr Dann's evidence was that there was no discussion about any charge for the work but that the hourly rate would apply. Mr Youngson's evidence, which I accept, was that he had a meeting on site with Barry McFarlane in relation to the gutters. The drives were also discussed at the time. The installation of the drives is difficult. Mr Youngson told me that the impression he obtained was that Barry McFarlane wanted AES to do the work. 178 I accept the evidence of Mr Dann and allow the claim in the sum of $5,883. 179 The claim for the period from 18 March 2002 to 22 March 2002 was for $7,691 inclusive of GST. The claim included $1,334.00 inclusive of GST for the drives and redpath stripping which I allow. It was always the case that Firepat was responsible to make payment for installation of the covers. The rate claimed for this work is reasonable. 180 Firepat was aware that the work was being carried out on its behalf. It acquiesced in the work being performed and made no complaint when the work was being performed. Barry McFarlane accepted in cross-examination that the work was done by AES and that the amounts charged were reasonable.
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181 I would allow the claim in the sum of $13,574 inclusive of GST.
Combined effect of claims and counterclaim 182 Firepat's claim succeeds as follows: 183 Barry McFarlane was not a party to the contract. He was Firepat's agent. His claims are dismissed. 184 AES's counterclaim succeeds as follows: Amount due pursuant to contract $5,769.72 Amount allowed for work done $13,574.00 $19,343.72 Less credit for items removed $5,159.05 Balance $14,184.67
Conclusion 185 Firepat is entitled to judgment on its claim for $11,915.36. 186 AES is entitled to judgment on its counterclaim for $14,184.67. 187 I will hear the parties as to interest and costs.
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