Nareena Industries Pty Limited v Coal Mine Services Pty Limited

[2010] NSWDC 220

CITATION:	Nareena Industries Pty Limited v Coal Mine Services Pty Limited [2010] NSWDC 220 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	24 May 2010 - 27 May 2010
JUDGMENT DATE:	6 October 2010
JURISDICTION:	District Court - Civil
JUDGMENT OF:	Sidis DCJ
DECISION:	1) Verdict and judgment for the plaintiff in the sum of $125,571.10. 2) The proceedings are adjourned to a date to be fixed to deal with the issues of costs and interest.
CATCHWORDS:	CONTRACT DISPUTE - Hire of mining equipment - Whether returned by defendant hirer - Credit - Conversion and detinue - Measure of damage - Whether required compensation for the purchase of new equipment
CASES CITED:	Chep v Bunnings [2010] NSWSC 301 Gaba Formwork Contractors Pty Ltd v Turner Corporation Ltd (1991) 32 NSWLR 175 Hadley v Baxendale (1854) 9 Ex 341; a56 ER 145 J & E Hall Ltd v Barclay [1937] 3 All ER 620 Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 Robinson v Harman (1848) 1 Ex 850; (1848) 154 ER 363 Twentieth Super Pace Nominees Pty Ltd v Australian Rail Track Corporation Ltd [2006] VSC 500
PARTIES:	Nareena Industries Pty Limited (Plaintiff) Coal Mine Services Pty Limited (Defendant)
FILE NUMBER(S):	2008/00314639
COUNSEL:	Mr T Saunders (Acting for the Plainitff) Mr J C Hewitt (Acting for the Defendant)
SOLICITORS:	Harvey Law Firm (Acting for the Plainitff) Tranter Lawyers (Acting for the Defendant)

JUDGMENT

1 Nareena Industries Pty Limited claimed that it was owed $141,796.10 for outstanding rental and the capital value of unreturned items of equipment hired by it to Coal Mine Services. The plaintiff did not pursue its claim for loss of profits arising from its inability to hire out the items of equipment it alleged were unreturned.

2 The items of equipment allegedly not returned and the amounts claimed in respect of outstanding hire fees were set out in the statement of claim as follows:

First tensioner and foot pump at $200 per week
Period of hire 28.7.06 – 22.1.08 $12,131.40

Purchase order 400

One fatboy bolter at $200 per week

Period of hire 10.8.06 – 22.1.08 $12,131.40

Purchase order 402

Second tensioner and foot pump at $200 per week

Period of hire 26.9.06 – 22.1.08 $12,131.40

Purchase order 414

Third tensioner and foot pump at $200 per week

Period of hire 13.10.06 – 22.1.08 $6,857.70

Purchase order 420

First roof bolter at $200 per week

Period of hire 13.10.06 – 22.1.08 $12,131.40

Purchase order 413

Second roof bolter at $200 per week

Period of hire 18.10.06 – 10.8.07 $6,946.69

Purchase order 424

Third roof bolder at $250 per week

Period of hire 29.1.07 – 22.1.08 $8,092.84

Purchase order 461

Fourth roof bolter at $200 per week

Period of hire 23.4.07 – 22.1.08 $6,474.27

Purchase order 525

3 The claim for outstanding hire fees amounted to $76,896.10.

4 The plaintiff claimed a further $64,900 as the value of the items of unreturned equipment.

5 The defendant admitted that it hired the equipment from the plaintiff but claimed that it returned all equipment it hired from the plaintiff by June 2007.

6 The plaintiff claimed that the agreements under which the equipment was hired were written and oral and were partly expressed and partly implied.

7 The oral terms were claimed to arise from discussions between representatives of the plaintiff and the defendant at the time of hire. They concerned the type of equipment to be hired, the weekly rate of hire and the date on which hiring was to commence.

8 The express written terms were contained in the purchase orders that the defendant occasionally, but not always, provided to the plaintiff and in the delivery dockets issued by the plaintiff each time an item of equipment was hired to the defendant.

9 The purchase order identified the purchase order number, the supplier of the equipment, the mine at which the equipment was to be used, the equipment required and the weekly hire rate. The delivery docket identified the purchase order number, the plaintiff’s job number, the equipment supplied and the date of commencement of hire, the time period for hire, if any, and any delivery instructions.

10 The plaintiff claimed that the implied terms imposed the following obligations on the defendant:

a. The Defendant must keep the hire equipment safe and in its possession, custody or control at all times;

b. The Defendant must take reasonable steps to ensure the hired equipment is not lost or stolen;

c. The Defendant must return the hired equipment to the Plaintiff on request from the Plaintiff;

d. The Defendant must return the hired equipment to the Plaintiff in good condition, fair wear and tear excepted; and

e. The Defendant must pay to the Plaintiff the weekly hire rate disclosed by the Plaintiff to the Defendant for each week or part thereof from the time the hired equipment is taken by the Defendant to the time it is returned to the Plaintiff. ⁱ

11 The defendant did not challenge the claimed express written and oral conditions of the hiring agreements. It admitted the implied conditions.

12 The issues were:

1 Was there evidence to support the defendant’s claim that the equipment was returned?
2 If not returned, was there evidence that the defendant converted the equipment to its own use or detained them.
3 The measure of any damage suffered by the plaintiff.

BACKGROUND

13 The plaintiff and the defendant were both engaged in the mining industry.

14 Mr Gary Jaques was the managing director of the plaintiff. The plaintiff supplied tools and equipment used for various purposes in the construction and maintenance of mines. The equipment was used in three ways:

1 By third party mining contractors such as the defendant.
2 Directly by mine operators for use by their employees.
3 By the plaintiff’s employees hired by the mine operators on a casual basis.

15 The defendant undertook contracts for construction and maintenance in mines on behalf of mine operators. Mr Brownell was a director of the defendant. His responsibilities involved company finance and oversight of its various activities.

16 Mr Brownell stated that in the 2007 financial year the defendant hired approximately 20 pieces of hand held equipment from the plaintiff. The defendant also purchased three hand held bolters from the plaintiff.

17 Between June 2006 and April 2007 the defendant undertook contract work at Newstan, Awaba, Mandalong and Austar mines. The disputed equipment was used at Mandalong, Newstan and Austar.

18 Mr Brownell said that the plaintiff invoiced the defendant monthly until July 2007. In that month the defendant received invoices dating back six months. He instructed Ms Paula Wells, an accounts department employee, to prepare a reconciliation of accounts to determine the amount then owing to the plaintiff. On 24 August 2007 the defendant sent the plaintiff a letterⁱⁱ and spreadsheetⁱⁱⁱ setting out that reconciliation together with a cheque for the amount the defendant considered to be payable.

19 Further invoices were received in October 2007. Mr Brownell contacted Mr Gary Jaques and told him that the equipment was returned. Mr Gary Jaques disagreed.

20 Mr Gary Jaques disputed the claim that invoices were forwarded in July 2007 that covered a six month period. He conceded that he did not give priority to sending out invoices and that there were some occasional delays in issuing them. He agreed that disputes concerning the payment of invoices commenced in August 2007 and that payments ceased in November 2007.

ISSUE 1 – WAS THE EQUIPMENT RETURNED?

21 There was no issue that the equipment was supplied to the defendant. Hiring out practices were therefore of background relevance only to the issues between the parties.

22 Mr Gary Jaques set out in his affidavit of 25 November 2009 the plaintiff’s practices for the hiring and return of equipment. He said these practices had been in place since 1992.

23 Requests for hire were initiated by telephone or by written order. They were dealt with by him or his underground manager, Mr Craig Windle. They quoted prices that were based on a weekly hire rate and varied according to the age of the equipment.

24 In each case the customer provided an order number. Mr Gary Jaques said that no equipment was hired out unless an order number was supplied. On receipt of an order number the plaintiff allocated its own job number to the hire.

25 When the equipment was supplied a delivery docket was prepared. Customers usually collected the equipment. Occasionally it was delivered. The delivery dockets described the equipment and stated the customer’s order number and the plaintiff’s job number.

26 If the equipment broke down or was damaged while on hire it was returned to the plaintiff and repaired and returned or replaced if other equipment was available. A scope of work document was prepared that described the damage, the repair work and the cost of repair. This was given to the customer as an invoice for payment.

27 The customer nominated the return date and brought the equipment back to the plaintiff’s premises at Boolaroo. The equipment was returned to Mr Gary Jaques, Mr Windle or another employee, Mr Wayne Jaques.

28 When it was returned Mr Gary Jaques checked the equipment. Mr Wayne Jaques then cleaned and tested it and repaired it, if necessary before placing it back onto a rack for rehire.

29 Mr Gary Jaques and Mr Windle maintained a written record of the return of items of equipment by noting the words Finished Hire on the first invoice issued in respect of the equipment of the type returned and adding the date.

30 Mr Gary Jaques exhibited to his affidavit a series of documents^iv dealing with the items of equipment that were the subject of the plaintiff’s claim. In respect of each item an order and job number was recorded. In respect of the second roof bolter, recorded as having been hired to the defendant on 18 October 2006, the words FINISHED HIRE 10 AUGUST 2007 were typed on two invoices^v, numbered 811 and 811B.

31 Ms Windle, an employee of the plaintiff with responsibility for the accounting and administration of the operations of the plaintiff between July 2006 and January 2008, typed this information onto labels and attached the labels to the invoices.

32 Mr Windle said his practice, if equipment was returned when Mr Gary Jaques was not at the plaintiff’s premises, was to note the return on the job order. He placed the job order on Mr Gary Jaques’ desk. The equipment was not moved until Mr Gary Jaques returned and assessed post hire charges. The equipment was then cleaned and returned to a rack.

33 Mr Windle said that, in his experience, assessment and notations on the job order were always made on the day that the equipment was returned, whether or not Mr Gary Jaques was present.

34 Mr Wayne Jaques stated that, as a trades assistant employed by the plaintiff, he was responsible for testing, cleaning and repairing the equipment hired out by the plaintiff. He took no part in the process involved in hiring out the equipment and he was rarely involved in its return

35 On rare occasions, when he was the only person present at the time equipment was returned, he noted the return by writing on a whiteboard in the workshop the name of the customer, the equipment involved and the date of its return. The equipment was not moved until Mr Gary Jaques assessed it and he or Mr Windle noted its return on the job order. It was then cleaned and returned to a rack.

36 Mr Wayne Jaques also gave evidence of the practice he adopted for the exchange of damaged equipment. He said that the damaged equipment was returned to the plaintiff’s premises by the hirer. It was the plaintiff’s practice to provide replacement equipment rather than requiring the hirer to wait for repairs. On such occasions, because the hire continued, the returned item was not marked off hire. He recorded the service exchange in an exercise book by noting the item returned and the date of its return.

37 The defendant’s evidence concerning the procedures for the hire of equipment generally accorded with that of the plaintiff. Its mine supervisors were required to obtain purchase order numbers before hiring equipment.

38 Hiring arrangements were therefore reasonably straightforward.

39 The evidence concerning the return of equipment was less clear cut.

40 Mr Windle said that no person from or on behalf of the defendant returned to him any of the equipment that was the subject of the plaintiff’s claim.

41 Mr Wayne Jaques said that no person from or on behalf of the defendant returned to him any of the equipment that was the subject of the proceedings.

42 He gave some confused evidence when he attempted to explain the notes that appeared in the extracts from his notebook. The defendant subsequently tendered the notebook^vi in evidence. Mr Wayne Jaques said the note that referred to Adam was made on 4 May 2007. He did not know Adam’s last name but I was asked to infer that the person was referred to was Adam Dalton, an employee of the defendant. The note that referred to Condron was made initially on 4 May 2007. He was told that Mr Condron would return it on 7 May 2007 but he was unsure if he had done so. He said he was almost and quite sure that Adam picked up a tensioner head and that Mr Condron returned it. His evidence concerning the use of pens with blue and black ink was confused.

43 Mr Condron in an affidavit dated 24 May 2010 denied that he was involved in the exchange of equipment at this time. He said Mr Dalton was responsible for the Mandalong mine. He was responsible for Austar and subsequently Newstan and it was not his practice to be involved with equipment used at the Mandalong mine site.

44 Mr Dalton, for the defendant, in an affidavit dated 24 May 2010 stated that he did not recall attending the plaintiff’s workshop in May 2007. He produced a copy of an extract^vii from his diary for 4 May 2007 that made no reference to his attending the premises on that date.

45 The defendant employed mine supervisors who were responsible for arranging for the hire and return of equipment. They all gave evidence of their roles in the return of the equipment that was the subject of the plaintiff’s claim.

46 They were:

Mr Adam Dalton, supervisor, Mandalong Mine and OH&S manager for the defendant. He was involved with purchase orders 400, 402 and 413.

Mr Neil Wilkinson, the defendant’s managing director and supervisor of the Newstan Mine. He was involved with purchase orders 414 and 424. He was also responsible for the supervision of Mr Dalton and Mr Condron.

Mr Noel Condron, supervisor, Austar. He was involved with purchase orders 420, 461 and 525.

47 The defendant had no system for recording the dates upon which the hired equipment was returned, nor did it require that the plaintiff provide it with any form of receipt. It adopted two methods of determining when equipment was returned.

48 Mr Brownell and the supervisors met regularly to discuss progress on the various contracts that the defendant was undertaking. Minutes of those meetings were recorded. They included a record of the equipment being used at the sites at which the defendant was working.

49 The defendant also relied on diaries of Mr Dalton, Mr Wilkinson and Mr Condron, although those of Mr Condron had been lost and were not in evidence. Only extracts the diaries of Mr Dalton and Mr Wilkinson were provided. Mr Wilkinson said that, in any event, he did not always note in his diary when equipment was returned.

Mandalong Mine

50 Mr Adam Dalton, the defendant’s supervisor at the Mandalong mine site, dealt with the plaintiff between 28 July 2006 and 25 June 2007. Mr Dalton said it was his practice to telephone the plaintiff’s office to request the equipment that he wished to hire. The equipment was delivered to the defendant’s office at the Mandalong mine. If the office was unattended it was left at the front of the office, often without documents. When the equipment was no longer required, Mr Dalton telephoned the plaintiff with a request that it be picked up. When the equipment was picked up he was occasionally, but not always, given a delivery docket. He was not always present when the equipment was collected. If a delivery docket was provided, he placed it in a folder.

51 Mr Dalton kept a work diary in which he recorded the hire and return of equipment. He said the plaintiff sometimes marked its equipment with a letter N and then a number. He noted this mark in his diary.

52 Mr Dalton said he rarely returned equipment to the plaintiff’s premises. It was normally collected by an employee of the plaintiff after he telephoned the plaintiff to advise that it was ready for collection. His practice was to leave the equipment outside the defendant’s site office with an out of service tag on it. He assumed that the plaintiff collected it whether or not a delivery docket was left. He was never notified of any instance when, having been told that equipment was ready for collection, the plaintiff reported that it was not in the designated pick up area.

53 Mr Ken Horn was a manager employed by a subsidiary of the plaintiff. He agreed that he delivered and collected equipment from Mandalong. He said he provided a receipt for each item of equipment collected and he never collected equipment without handing over a receipt to the person from whom it was collected.

Purchase Order 400 – First tensioner and foot pump

54 The defendant hired the first tensioner on 28 July 2006 under purchase order 400. Mr Dalton said it was returned on 24 November 2006. He said he remembered that he was at the defendant’s Mandalong site office when it was collected and he was handed a delivery docket for its return. He attached to his affidavit a copy of a delivery docket^viii signed by Mr Horn. He said he related this delivery docket to the first tensioner because of the entries appearing in the defendant’s purchase order register. Mr Dalton did not remember if he told the defendant’s accounts department that the equipment was returned on 24 November 2006. He said it was not his practice to do so. He reported returns of equipment only at the regular meetings.

55 He also attached to his affidavit a copy of an extract from his work diary^ix that recorded the exchange and replacement of the defective tensioner on 26 October 2006. Also appearing on the work diary was a handwritten note: OUT 24/11/06. Mr Dalton said that this meant that it was taken from the mine and no longer under hire after that date.

56 The plaintiff’s response to Mr Dalton’s evidence acknowledged that the delivery docket signed by Mr Horn referred to a tensioner that was picked up on 24 November 2006. The plaintiff pointed out that the docket did not indicate the purchase order under which that tensioner was hired or whether it was collected by way of a service exchange or whether it was off hire.

57 The plaintiff claimed that this tensioner was the subject of purchase order 385. The tensioner hired on this purchase order was returned and its hire was not part of the plaintiff’s claim. In support of this contention Mr Gary Jaques produced documents^x that related to the hire of a tensioner under purchase order 385. Among those documents was an invoice^xi for the tensioner, paid to 26 November 2006 and a delivery docket^xii that noted that the item was picked up from Mandalong Colliery by Mr Horn and that it was off hire on Friday,

24 November 2006.

58 The plaintiff also noted the payment made by the defendant on 10 April 2007 in which hire fees for the tensioner hired under purchase order 400 were paid to 31 December 2006, notwithstanding the claim that it was returned on 24 November 2006.

Purchase Order 402 – Fatboy bolter

59 Mr Dalton said that a fatboy bolter was hired under purchase order 402. He attached to his affidavit an extract from his work diary^xiii that recorded the return of a fatboy bolter on 18 December 2006. Mr Dalton stated that his recollection was that the fatboy bolter was sent back to the plaintiff for repair and returned to the defendant on 16 November 2006. It was returned to the plaintiff off hire on 18 December 2006 as recorded in the diary entry. A delivery docket^xiv signed by Mr Horn acknowledged the return of fatboy bolter NI-16, a reference number allocated to this equipment by the plaintiff.

60 Again, the plaintiff acknowledged the return of a fatboy roof bolter on 18 December 2006 and noted that the delivery docket signed by Mr Horn did not specify the purchase order number under which it was hired.

61 Mr Gary Jaques produced documents^xv that indicated that a fatboy bolter was hired to the defendant on 16 November 2006 under purchase order 479, that it was painted blue and not numbered and it was off hire on 18 December 2006.

62 The defendant was billed for and paid hire charges for the fatboy bolter hired on purchase order 479 to 18 December 2006. The defendant was billed for and paid hire charges for the fatboy bolter hired on purchase order 402 to 31 December 2006 notwithstanding its claim that the item was returned on 18 December 2006.

Purchase Order 413 – First roof bolter

63 The first roof bolter was hired under purchase order number 413. Mr Dalton’s diary entries^xvi recorded that the roof bolter was received on 14 September 2006, returned to the plaintiff as defective on 15 September 2006, replaced with a roof bolter marked N18, sent back on 18 September 2006 as defective, returned to the defendant on the same day, became defective on 16 October 2006, collected on that date and replaced with a bolter belonging to the defendant that the plaintiff had repaired. The defendant’s bolter was moved to the Newstan Mine on 15 November 2006.

64 For the plaintiff it was contended that the roof bolter returned on 16 October 2006 was not the first roof bolter but in fact the second roof bolter that was hired under purchase order 424. This contention was based on the defendant’s purchase order register that indicated that the defendant ordered a Rambor bolter on 16 October 2006 as distinct from the first roof bolter, the subject of purchase order 413 that was ordered on 14 September 2006.

65 There was some support for this contention in the diary note made by Mr Dalton that referred to a New Rambor and made no reference to the marking NI8.

66 Further, the plaintiff pointed out that although it claimed to have returned the first roof bolter on 16 October 2006, the defendant continued to pay for its hire to 31 December 2006.

Purchase Order 414 – Second tensioner

67 The second tensioner was hired by Mr Wilkinson under purchase order 414 and used at the Mandalong site. Mr Wilkinson’s work diary^xvii for 24 November 2006 contained an entry that he believed referred to the return of the second tensioner on that date. The plaintiff noted that this entry did not provide evidence that it was the second tensioner that was returned on that date.

68 The minutes of a meeting of supervisors held on 24 November 2006 recorded that no equipment was left at the Mandalong site and Mr Wilkinson interpreted that record to mean that the second tensioner was returned by that date.

69 The plaintiff agreed that one tensioner was collected from the Mandalong mine on that date but contended that it was the tensioner for which Mr Horn issued the delivery docket relied upon by Mr Dalton to establish that the first tensioner was returned on 24 November 2006.

70 In any event, according to the plaintiff, the one tensioner collected on that date was not that hired under purchase order 400 or purchase order 414. It was that hired under purchase order 385.

71 The plaintiff pointed out that the defendant paid hire fees for the second tensioner until 31 December 2006. Mr Wilkinson could not explain why the defendant paid for the equipment hired on purchase order 414 from 4 October 2006 to 31 December 2006 if it was returned on 24 November 2006.

72 The plaintiff suggested that the reason that the second tensioner was not returned was that it was moved to the Newstan mine and was the tensioner referred to in the defendant’s minute^xviii of the meeting held on 15 December 2006 that, in relation to the Newstan mine, recorded: Equipment onsite at Newstan – Nareena pump and tensioner (smashed by pit).

73 Mr Wilkinson said he did not know if the second tensioner hired under purchase order 414 was used at Newstan. The minutes of the meeting^xix held on 24 November 2006 recorded that equipment hired from the plaintiff was at Newstan.

74 There was no record in the minutes of what happened to this equipment. Mr Wilkinson’s evidence was that it was returned to the plaintiff on 24 November 2006. Mr Wilkinson subsequently stated that it was transferred to Mandalong and then returned to the plaintiff on that date. He later said that it was smashed and removed by the plaintiff.

75 Mr Wilkinson said that the smashed pump was removed by Mr Windle who was going to take it up with the mine operator and seek reimbursement. He did not point to any diary entry where this was recorded. Nor did the minute state that Mr Windle removed the smashed pump. He did not explain why Mr Windle would take the matter up with the mine operator when responsibility for this item of equipment remained with the defendant until its return to the plaintiff. It was never put to Mr Windle that he removed a smashed pump from the Newstan mine and this incident was not dealt with in Mr Wilkinson’s affidavit. Mr Wilkinson denied that the equipment was not returned because it was smashed.

Newstan Mine

76 Mr Wilkinson responsible for the supervision of the Newstan mine site.

77 In his affidavit of 5 February 2010 Mr Wilkinson said that he kept a work diary in an A4 sized book. This was sometimes used to note the return of equipment to various suppliers. He described the meetings attended by himself and Mr Brownell and each of the site supervisors, when available. He said the meetings were normally, but not always, held weekly. Among the topics dealt with at those meetings was the equipment that was on the mine sites, whether it should be returned and when it was returned. Minutes were usually taken by Mr Brownell who typed them and kept them with the defendant’s records.

Purchase Order 424 – Second roof bolter

78 The roof bolter hired under purchase order 424 was moved from Mandalong to Newstan. Minutes^xx of the meeting held on 9 February 2007 indicated that the roof bolter was at Newstan but as the contract was complete, it was to be returned to the plaintiff.

79 The minutes^xxi of the meeting held on 16 March 2007 recorded that no equipment remained at the Newstan mine. Mr Wilkinson interpreted these minutes as meaning that the roof bolter hired under purchase order 424 was returned between 9 February 2007 and 16 March 2007.

80 The plaintiff agreed that the second roof bolter was returned but said that it was returned on 10 August 2007 and sought payment of hire fees to that date.

81 The range of dates referred to by Mr Wilkinson differed markedly from the date of 20 November 2006 originally provided to Ms Wells at the time of the preparation of the spreadsheet.

82 It was clear that the defendant paid hire fees for this item of equipment only to 31 December 2006 when, if its evidence is to be accepted, it was not returned until sometime between February and March 2007.

83 Mr Wilkinson said he met with Ms Wells in July and August 2007 to discuss the plaintiff’s concerns about missing equipment. He did not remember if he told her when various items were returned. He said he had diary entries to support the information that the roof bolter hired on purchase order 424 was returned on 20 November 2006. These diary entries were not in evidence. He did not remember if this roof bolter was in fact used between 9 February and 16 March 2007. As a result he was unable to explain the discrepancy between the spreadsheet^xxii, where it was indicated that, on information that he supplied, there were no roof bolters at Newstan after 20 November 2006 and his affidavit^xxiii in which he stated that this equipment was at the mine on 9 February 2007 and that by 16 March 2007 no equipment remained at that site. He could not explain why the invoice for this roof bolter was not paid at least to 16 March 2007.

84 He said he relied on minutes of the meeting of 9 February 2007 concerning date of return. The minute of 16 March 2007 indicated that there was no equipment at Newstan. He acknowledged that the minutes did not state that the equipment was returned. He said he assumed that it was returned but he was unable to state the date of its return or the means by which it was returned. He said no further equipment was hired for Newstan between 16 March 2007 and 30 June 2007 from the plaintiff or from any other contractor.

85 No minute was produced for the meeting held on 20 April 2007 but Mr Wilkinson’s diary^xxiv for January to April 2007 attached draft minutes for that meeting in which there was a handwritten reference to 1 Rambor. He said this was probably not the equipment hired through purchase order 424 because of the reference to George who worked for Coaltex. The note indicated that he was to see George about a Rambor. This material was inconsistent with his earlier evidence that no further equipment was hired from the plaintiff or any other contractor. Mr Wilkinson denied that this reference in the minutes related to the second roof bolter hired under purchase order 424. He denied fabricating his evidence.

Austar Mine

86 Mr Noel Condron stated that as a supervisor for the defendant he dealt with the plaintiff for approximately 12 months. He supervised a contract at the Austar mine between August 2006 and April 2007. His role included the ordering of equipment necessary for the contract works, some of which he ordered from the plaintiff. This equipment was used on a regular basis. He stated that it involved one tensioner and one or two bolters.

87 Entries in the purchase order register were made on his behalf by the defendant’s office staff because he worked on site. The office staff gave him an order number. He then telephoned Mr Gary Jaques or Mr Wayne Jaques, gave them the order number and details of the equipment required. He usually attended at the plaintiff’s premises to collect the equipment.

88 Mr Condron said he provided Ms Wells with dates that appeared in his diaries upon which he returned equipment to the plaintiff. He said he kept three work diaries in which he noted the equipment he collected for hire from different suppliers. He said it was his practice to handwrite in those diaries the dates of collection and return of equipment. Mr Condron’s diaries were not in evidence because he could not find them.

89 The evidence of Mr Condron concerning the loss of his diaries was unconvincing. He said that after going through them with Ms Wells he placed them in an archive box that he kept in his utility. He did not make copies of the diaries for Ms Wells. He did not report the loss of the diaries because he did not think it was important. He searched for them at his home without success.

90 Mr Condron said the defendant’s secondary support contract at Austar was completed at the end of April 2007. The defendant continued with other work, using roof bolters but not tensioners for a further two to three months, or until about July or August 2007.

Purchase Order 420 – Third tensioner and foot pump

91 Mr Wilkinson, at the request of Mr Condron, ordered a tensioner from the plaintiff under purchase order number 420 for the Austar site.

92 Mr Condron said he believed that he followed his usual procedure and collected the tensioner from the plaintiff’s premises.

93 As to its return, he said he specifically remembered collecting the third tensioner from an area at the mine designated the US pit and returning it to the plaintiff’s workshop. It was his usual practice to do so and he believed that he followed his usual practice. He did not remember the employee of the plaintiff to whom he returned the third tensioner but thought it was probably Wayne Jaques. He believed the date of return was 10 May 2007. He showed his work diary to Ms Wells when she prepared the reconciliation of the plaintiff’s invoices. She wrote the date from the notes in his diary as the date of return in the spreadsheet that she prepared.

94 The defendant also relied on minutes that it claimed indicated that work at Austar was finished at the end of April 2007 and that the tensioner was no longer needed.

95 The plaintiff pointed to minutes that recorded that the plaintiff’s equipment was at Austar at least until August 2007. The minutes^xxv of the meeting held on 2 August 2007 recorded in relation to Austar: Equipment still on site – scaffold, grout mixer, hand borer, Nareena Bolter, tensioner. No hire being charged!!!

96 Mr Condron agreed that he was present at the meeting of 2 August 2007. He denied that he reported to the meeting that equipment belonging to the plaintiff remained at Austar. He suggested that the bolter and tensioner referred to were not hired from the plaintiff but agreed that he did not know. He did not know who reported that no hire charge was being made.

97 Added to this material were inconsistencies in Mr Condron’s evidence concerning the dates upon which he returned the third tensioner and the third roof bolter. Paragraph 31 of his affidavit of 29 January 2010 dealt with the return of these items and suggested that they were returned to the plaintiff on the same day. It read:

In relation to the two items of equipment discussed below (referred to as the Third Tensioner and Third Roof Bolter) I can specifically recall picking them up from the “US” Pit. I can specifically recall this because at the time the Contract at Austar had finished and we had no other equipment on site so I was specifically looking for these items of equipment coming out of the mine. I also recall taking them back to Nareena’s workshop that same day. My recollection is that this occurred around May 2007 when CMS was in tidy up phase at Austar because the Contract had finished in April. I believe I would have phoned Paula in the CMS office and told her that I had picked up those items from Austar and was returning them to Nareena and made an entry in my work diary to that effect in accordance with my usual practice.

98 Paragraphs 46 and 53 of the same affidavit read:

46 I believe the Third Tensioner was returned to Nareena on 10 May 2007 because I recall that I showed my work diary to Paula at the time she was preparing a reconciliation of the Nareena invoices and she wrote down that date from the notes in my diary at the time as the date of return in a spreadsheet she was preparing.

53 The Third Roof bolter was returned to Nareena on or about 22 May 2007. The spreadsheet prepared by Paula records the return of a roof bolter to Nareena on that date and I know that she entered that date into the spreadsheet after seeing an entry to that effect in my work diary. I specifically recall collecting the Third Roof Bolter from the “US” Pit at the Austar Mine site around that time and putting it in my car and driving to the Nareena workshop. The Third Roof Bolter was not brand new at the time we were using it, however it was in working order. This was done in accordance with my usual routine as described above.

Purchase Order 461 – Third roof bolter

99 Mr Condron said he believed the third roof bolter was allocated purchase order number 461, although the purchase order register contained no description of this item. It was hired for work under the contract at Austar.

100 I have already noted the inconsistencies in Mr Condron’s evidence concerning the dates upon which he claimed that the third roof bolter was returned.

101 The minute of 2 August 2007 was also relevant to this item and suggested that it remained at the Austar mine at least until that date.

Purchase Order 525 – Fourth roof bolter

102 The fourth roof bolter was hired from the plaintiff on 11 April 2007 under purchase order number 525. Mr Condron said it was returned on 21 June 2007. This belief was based on the defendant’s meeting minutes that indicated that work at the Austar mine was completed by that date and on the entry made by Ms Wells in the spreadsheet after he showed her his work diary. This was inconsistent with Mr Condron’s evidence that work at Austar was completed by the end of April 2007 and that the defendant used no equipment hired from the plaintiff after April 2007.

103 Mr Condron speculated that the fourth roof bolter remained underground at the mine between May 2007 when he looked for equipment in the US pit and 21 June 2007 when he found it in the US pit. He said he kept it as a spare and it would have been in the US pit for no longer than one week.

104 The minute of 2 August 2007 was also relevant to this item as was the unconvincing evidence concerning the loss of the diaries.

105 In respect of this item, the plaintiff also pointed to the third version of the spreadsheet prepared by Ms Wells that noted: This could be equipment that turned up 10/8/07 as per Nareena’s claim.

106 Mr Condron’s said that in July 2007 he went to the Austar mine at Ms Well’s request and checked the areas where equipment was normally left. He said there was no equipment belonging to the plaintiff when he undertook this check.

107 He said he did not know if Ms Wells’ note referred to the fourth roof bolter. He did not remember it specifically and agreed that the note could refer to this item of equipment.

Records of return of equipment – the minutes

108 Mr Brownell confirmed Mr Wilkinson’s evidence that staff meetings were held, usually weekly, at which site supervisors informed him of the equipment that was on hire and the dates when equipment was returned. Minutes of the meetings were recorded by him or Mr Wilkinson and Mr Brownell typed them.

Mr Brownell said the defendant’s accounts department was given copies of the minutes.

109 Mr Brownell said that when equipment was returned either he or Mr Wilkinson were notified, usually verbally. There was no evidence from Mr Wilkinson or the other mine supervisors to confirm that they adopted this practice. If they did report returns verbally, the defendant maintained no written record of those reports. The only written record kept by the defendant to confirm the return of hired equipment was the minute of the information provided at the weekly meetings.

110 Mr Brownell relied on the minutes of a staff meeting held on 24 November 2006 that recorded that no hired equipment remained at the Mandalong mine. He took this entry to mean that all hired equipment from that site was returned.

111 Similarly, minutes of a meeting held on 16 March 2007 recorded that there was no equipment at the Newstan mine. He took this entry to mean that all hired equipment was returned and all equipment belonging to the defendant was returned to its workshop.

112 Minutes of a meeting held on 17 July 2007 recorded that the only equipment at the Austar mine belonged to the defendant or to entities other than the plaintiff.

113 I have already noted the discrepancies that existed in some cases between the minutes and spreadsheets. Ms Wells said she did not have access to the minutes when she prepared the various versions of the spreadsheet. Indeed, contrary to Mr Brownell’s evidence that the accounts department was supplied with copies of the minutes, Ms Wells did not even know that the minutes existed. This appeared to account for her entry in the spreadsheet that recorded that the first tensioner and foot pump hired under purchase order 400 was returned on 24 November 2006 when the minutes recorded that this equipment remained on site until about 16 March 2007.

114 Mr Wilkinson said he attended almost all staff meetings. He set out in his affidavit^xxvi the regular procedure that was adopted at those meetings for the reporting by site supervisors of the equipment that was at sites for which they were responsible. He was taken to various minutes where, contrary to this evidence, no reference was made to hired equipment.

115 The defendant produced a bundle of minutes^xxvii in response to a notice to produce. No minutes were produced for the period between 6 October 2006 and 24 November 2006. Mr Wilkinson was unable to explain why they were not produced. He did not remember if meetings took place during this period.

116 The minutes^xxviii of the meeting held on 24 November 2006 recorded the equipment belonging to the plaintiff at Austar, including a DSI tensioner. Mr Brownell said that the defendant was not permitted to use a DSI tensioner at Austar and that it could use Jenmar equipment only. He said the defendant did not hire Jenmar equipment from the plaintiff. He said this did not occur to him at the time he took the minutes of the meeting. Mr Wilkinson said he was unaware of any requirement that equipment other than DSI be used. He said he would know if such a requirement was imposed. From mid-2007 there was reference to the presence of DSI tensioners at Austar. Mr Brownell ultimately conceded that he was obviously aware that this type of equipment was being used.

117 Of significant concern in relation to the second roof bolter, hired under purchase order 424, was the omission from the bundle of minutes^xxix of the minutes of the meeting of 20 April 2007. Mr Brownell and Mr Wilkinson were unable to provide an explanation for its omission. I have already noted the inconsistency between Mr Wilkinson’s evidence concerning the second roof bolter and the draft minutes^xxx of the meeting of 20 April 2007.

118 Mr Brownell was taken to the minutes of 3 August 2007 that referred to equipment at Austar for which no hire fees were being charged. He confirmed that he was keen to ensure that hiring costs were passed on and that he took steps to do this if they had been overlooked.

119 The minutes^xxxi of the meeting of 10 August 2007 referred to a fatboy Bolter, tensioner that was still at Austar. Mr Condron initially said that he was certain that this was not equipment that was hired from the plaintiff. He subsequently conceded that he did not know from whom the equipment was hired.

120 The minutes of the same date recorded: Nareena to be paid as per our decided off hire date. Mr Condron denied that these were his words. Mr Brownell said these words were his summary of the discussion that took place at this meeting. He agreed that the reference was to the off hire date rather than the date on which the equipment was returned.

121 Mr Condron agreed that from mid-2007 entries in the minutes suggested that the defendant was pursuing payment of its Austar invoices. He said this was not unusual. He did not know if this was placing financial pressure on the defendant or putting the defendant in a position where it was required to pay the plaintiff when it was not receiving reimbursement for the plaintiff’s hire fees.

122 Mr Brownell claimed that the equipment referred to in the minute of 2 August 2007 was not hired from the plaintiff. He said it was a Jenmar tensioner that the defendant purchased from the plaintiff for use at Austar and it was therefore not necessary to hire equipment of this type from the plaintiff. He said Mr Condron was mistaken in his evidence that he hired a tensioner for use at Austar from the plaintiff.

123 The word Jenmar did not appear in the first reference to this equipment in the minute^xxxii of 2 August 2007. A very similar minute^xxxiii dated 10 August 2007 recorded: …fatboy Bolter, tensioner. No hire being charged!!! Jenmar. Mr Brownell denied that these minutes were prepared at the time that Ms Wells was undertaking the reconciliation of the plaintiff’s invoices for the purposes of her spreadsheet and that they were altered to add the word Jenmar and to remove the reference to the plaintiff. He agreed that it was in the defendant’s interests to make these changes.

124 The minute^xxxiv of 22 June 2007 was inconsistent with Mr Condron’s evidence and the record contained in earlier minutes to the effect that work at Austar finished by the end of April 2007. It recorded that there was approx 4 weeks left at Austar and detailed equipment, including some hired from the plaintiff, that was at the site at that date.

Methods of return of equipment

125 Mr Brownell said that equipment hired from the plaintiff that needed repair or that was off hire was left near the demountable office at Mandalong for collection by the plaintiff. At Newstan, there was a designated area at which this equipment was placed. Equipment that was coming on hire was also placed in these areas. No paperwork was involved in these transactions.

126 He said an employee of the defendant, usually the site supervisor involved, telephoned the plaintiff’s office to advise that the equipment was ready to be collected or that it was to be returned to the plaintiff’s premises.

127 Mr Brownell said he was never informed that an item of equipment was not at the place from which the plaintiff was told it was to be collected.

128 Mr Brownell said that the plaintiff employed a person who drove around the mines regularly dropping off and collecting equipment. This was denied by the plaintiff’s witnesses and was inconsistent with the evidence of the defendant’s site supervisors. Mr Brownell subsequently accepted that this evidence was incorrect. He agreed that he never witnessed anyone on behalf of the plaintiff collect equipment from any mine.

129 Mr Horn was the manager of a subsidiary of the plaintiff. He said he delivered and collected equipment from the Mandalong mine. He issued a delivery docket as a receipt for equipment that he collected. He stated that he never removed equipment without handing a receipt to the person who gave it to him.

130 Mr Horn denied that he collected any equipment from the Newstan mine. He had never been to the Austar mine, was not accredited to enter this mine and did not know where it was located.

131 Mr Gary Jaques and Mr Windle agreed that they occasionally picked up or delivered equipment but denied that the plaintiff provided any regular pick up service.

132 Mr Dalton said that the Mandalong mine operated on a 24 hour seven day a week basis. The defendant’s contract was undertaken with up to 15 employees who at times worked three shifts. They worked at weekends when required.

133 Mr Dalton was not sure whether there were other contractors undertaking work at Mandalong during the currency of the defendant’s contract.

134 He said equipment was left outside the defendant’s office at the mine. It was not locked away and the area was readily accessed. No form of authority was required to be produced before the equipment could be removed.

135 He said the plaintiff picked up equipment from this area when he telephoned to advise that it was available for collection. It could remain outside the office for up to one day before it was collected. He agreed that it was possible for third parties to borrow or steal equipment left outside the office in this manner but that this had not occurred with the equipment hired from any other contractor.

136 Mr Wilkinson said that employees of the plaintiff attended the Newstan site daily and that they sometimes collected equipment when it was off hire. At other times he or other employees of the defendant returned equipment to the plaintiff’s premises.

137 Mr Wilkinson agreed that this was inconsistent with his evidence to the Court that Craig Windle attended at Newstan on most days, that he drove a black utility and that he delivered and collected the three pieces of equipment hired from the plaintiff for Newstan. Further, it was not put to Mr Windle that he undertook this function.

138 At the Newstan mine the defendant employed three men per shift on two or three shifts. At times there were others working at the mine as supplementary labour with other contractors, including the plaintiff, doing the same work as the defendant. Some were employed by the mine operator to do the same or similar work for which they required equipment such as bolters and tensioners.

139 Mr Wilkinson said the plaintiff’s equipment was grey/blue in colour. Coaltex, another equipment hire company, used a similar but darker blue colour on its equipment. The defendant’s equipment was painted red. Mr Wilkinson did not know what colour was used by the mine operator, although some of its equipment was yellow. He agreed that it was hard to distinguish the blues when it was dark and the equipment was dirty.

140 He did not know if Coaltex was supplying equipment at that time, although he saw the principals of that company, whom he named as George and his father at the mine, so he assumed they did. He said that the defendant did not hire equipment from Coaltex for its work at Newstan.

141 The equipment that was to be collected by the plaintiff was placed near the mine controller’s office. The controller’s office was staffed on a 24 hour basis. It was open and accessible by anyone. Equipment was left in a barricaded area in front of the office and was visible to those inside. It was not locked or fenced off but it was not available to the general public. There was no watch by security guards but the controller and control room staff kept an eye on the equipment.

142 Mr Wilkinson agreed that this area was open for access by employees of the mine operator, the defendant, Coaltex or the plaintiff. He said he did not see any employees of the mine operator go into this area but he saw it accessed by other contractors. There was no procedure in place that required that a register or other paperwork be signed before equipment was removed. He claimed that the controller would prevent its removal without authority.

143 Mr Wilkinson agreed there was no one employed in the controller’s office whose sole function was to watch over the equipment. He said it was accepted and expected that, if requested, they would keep an eye out for the equipment. He said he made such requests but did not know if they were complied with.

144 In 2006 and 2007 the plaintiff’s equipment was left in this area until the defendant returned it or the plaintiff collected it. It could have been left there for a couple of days.

145 Mr Wilkinson conceded that it was possible that the equipment was borrowed or stolen by employees of other parties working at the mine. He agreed that hand tools belonging to the defendant, such as spanners, had been stolen from mine sites. They were stolen from a locked box from which the lock was cut.

146 He said larger items of equipment were kept in a larger steel box and that the plaintiff’s equipment was kept in this box. He could not guarantee that this procedure was complied with.

147 He said hand tools were also taken from Mandalong. The minutes^xxxv of the meeting of 8 September 2006 recorded:

Mandalong bolting crew asking for toolbox able to be carried and some basic tools as currently tools are being taken by others from the worksite.

148 Mr Wilkinson did not know if the toolbox requested was provided.

149 He said it was common for contractors to lend to or borrow tools from clients but if this was hired equipment he arranged for the client to take over the hire of the equipment that was borrowed.

150 The minutes^xxxvi of the meeting held on 29 September 2006 referred to equipment at Mandalong that was borrowed. Mr Wilkinson said he knew nothing of this.

151 Mr Wilkinson agreed the defendant transferred the plaintiff’s equipment between sites without telling the plaintiff. He agreed that no document was signed by the defendant to record the return of items of equipment or the purchase order that applied to items returned. Mr Wilkinson did not know that the plaintiff applied returned items to the earliest invoice.

152 Mr Condron provided details of his practice when returning equipment to the plaintiff. He said he first telephoned an employee of the plaintiff to advise of his intention to return equipment. He took the equipment to the premises and walked in through the roller door that was always open. He said there was always someone in the workshop. He handed the equipment to an employee of the plaintiff or left it on a bench in the workshop where an employee was present.

153 He said Mr Gary Jaques was not usually at the plaintiff’s premises and he normally returned equipment to Mr Wayne Jaques. Occasionally he was handed a receipt for the returned equipment but he produced no receipts. Mr Wayne Jaques did not provide a receipt because he did not have access to the administration office. On most occasions, but not always, when he returned equipment he saw an employee of the plaintiff write against its record of the item of equipment returned the words Coal Mine Services and Returned.

154 Mr Condron said two shifts operated at Austar on a 24 hour, seven day a week basis. He denied that any equipment at Austar was stolen. He agreed that a Mandalong mine employee borrowed a bolter without telling him. He claimed that this bolter belonged to Coaltex. It took him three weeks to track it down.

155 Mr Condron agreed that bolters were not locked up overnight. He said tensioners were chained but not locked.

156 Other contractors worked at Austar but about 200 metres from where the defendant worked. These contractors used roof bolters that, according to Mr Condron were different to those hired from the plaintiff. Mine operator’s employees also used tensioners and bolters about 1.5 kilometres distant from where the defendant worked.

157 Mr Condron said the plaintiff’s equipment was painted blue and was easily identified because it was the only equipment painted with this colour. The defendant’s equipment was painted red for identification. He placed items of equipment in the US pit or picked them up from there.

158 The US pit was near the general store at the Austar mine. It was not fenced or locked and it was used by the defendant, other contractors and the mine operator. No form of authority was required to remove equipment from the US pit. Mr Condron said the storeman watched it like a hawk. The storeman rang and told him when equipment was there. In addition, he drove by and checked the store at least once a week.

159 Mr Condron said the plaintiff never collected equipment from Austar. He agreed that its equipment could be at the store for some days before it was returned to the plaintiff.

160 Mr Condron agreed that another contractor or a mine employee could borrow the equipment from the store.

The invoices and spreadsheets

161 A number of the invoices that were in evidence bore Mr Brownell’s initials and those of the defendant’s supervisors authorising them for payment. Some of those invoices were not paid and some were paid for part only of the period authorised.

162 Mr Brownell said the initials that appeared on the invoices were not in his handwriting. He could not explain how the initials came to be on the invoices. He could not explain why they were not paid. He said he did not think that a decision to authorise payment would be reversed.

163 Ms Wells was the defendant’s accounts manager, employed since February 2007. In July 2007 she took over from Ms Harvey responsibility for managing accounts payable by the defendant.

164 She prepared a spreadsheet^xxxvii from the invoices, records of payments made by the defendant and information and records provided by the defendant’s supervisors concerning the dates the items of equipment were returned to the plaintiff. She undertook the process in consultation with Mr Dalton, Mr Condron and Mr Wilkinson and by reference to their work diaries from which she was provided with the dates on which the equipment was returned.

165 Having undertaken this process, Ms Wells calculated that about $3,000 had been paid for periods of hire after the equipment had been returned.

166 Ms Wells provided copies of the invoices for the various items to the supervisor whose name was recorded in the purchase order register as the person who placed the order for the equipment. The supervisor concerned was requested to check his diary for the date of return to the plaintiff against the date shown on the invoice. She also asked the supervisors to undertake a physical check of the mine sites for equipment.

167 After preparing the spreadsheet Ms Wells found delivery dockets^xxxviii for a tensioner and foot pump hired and a fatboy. She understood that related to equipment hired under purchase orders 400 and 402 and that they indicated that an employee of the plaintiff collected these items of equipment.

168 She located another delivery docket^xxxix in December 2007 or January 2008. This docket related to purchase order 756 and referred to tensioner number NI-3. Ms Wells believed this was the same tensioner that was the subject of purchase order 400. This was because Mr Dalton told her that the tensioner hired under purchase order 400 was inscribed with the mark NI-03. There was no reference to this inscription on any document issued in respect of purchase order 400. Nor was this inscription noted in Mr Dalton’s diary extract, although other inscriptions were noted in that extract.

169 Ms Wells conceded that the process she adopted in preparing the spreadsheet relied on information provided by the mine supervisors and contained in their diaries. She did not know what equipment was on hire at any one time. She saw no documents that directly connected any equipment to a particular purchase order number. She agreed that in these circumstances she made a number of assumptions in preparing the spreadsheet.

Issue 1 - Findings

170 It was apparent from this summary of the evidence that the plaintiff’s system of recording the hiring out and return of its equipment was reasonably well organised and consistently applied. Written records were maintained of the various transactions. My only area of concern with the plaintiff’s evidence arose out of Mr Wayne Jaques confusion concerning the use of pens with different coloured inks when entering notes into his exercise book in May 2007. I did not regard this concern as suggestive of any major defect in the plaintiff’s evidence.

171 The plaintiff did not own large quantities of equipment of the type hired to the defendant. I accepted therefore that it would be obvious to the plaintiff when equipment was not returned to its position on its racking system.

172 This factor, coupled with the evidence concerning the records consistently maintained by the plaintiff, lead me to conclude that it was improbable that the plaintiff overlooked the return of the equipment hired to the defendant or that it mixed it with equipment hired to other contractors or used by its own employees.

173 The defendant’s method of dealing with hired equipment was fundamentally deficient. Although a purchase order number was required before equipment could be hired, no system was in place to the track equipment by reference to this number. There was no system that required written notification to be given to any person responsible for the administration of accounts receivable or accounts payable of the dates upon which equipment hire commenced or ceased.

174 In order for me to reject the plaintiff’s claim it would be necessary to accept the unsupported evidence of the defendant’s witnesses that all equipment hired from the plaintiff was returned. I would need to have full confidence in the defendant’s records and its witnesses to take this course in the face of the rational and logical evidence upon which the plaintiff relied.

175 I did not have the level of confidence required for the reasons that follow.

176 I decided that Mr Brownell was not honest in his evidence. His acknowledgement that he was wrong in his understanding that the plaintiff operated a delivery and pick up service might have persuaded me to regard this part of his evidence as a mistake were it not for other material that provided a clear indication that he did not tell the truth.

177 He attempted to support his claim that equipment referred in minutes did not belong to the plaintiff because it was the DSI brand that the defendant was not permitted to use or because it was the Jenmar brand that belonged to the defendant. In the case of the DSI brand, Mr Wilkinson, his managing director, knew nothing of the restriction on its use and Mr Brownell ultimately conceded that his evidence was wrong. In the case of the Jenmar brand of equipment, it was clear that the minutes of the meeting of 10 August 2007 were deliberately written with a view to misrepresenting the ownership of the equipment that remained at Austar.

178 Mr Brownell could not explain the gap in the minutes for the period between 6 October 2006 and 24 November 2006. Accepting that meetings were not always held weekly, this was a significant gap, particularly when these meetings were the only method by which the defendant attempted to maintain some control of hired equipment. The absence of these minutes suggested that their contents would not assist the defendant.

179 The minutes of the meeting of 20 April 2007 were not in the bundle provided in response to the plaintiff’s notice to produce. The draft of the minutes that was attached to Mr Wilkinson’s affidavit was inconsistent with the defendant’s claim to have returned equipment used at Newstan and most certainly did not assist the defendant.

180 This lead me to conclude that the omission of the missing minutes was more than inadvertent and that the defendant’s witnesses selectively withheld copies of minutes that did not support their claims to have returned the plaintiff’s equipment.

181 Mr Brownell’s statement that the defendant’s accounts department was given copies of the minutes was not true. Ms Wells did not know they existed. They were not given to her to assist in the preparation of the spreadsheet. This oversight not only undermined my confidence in Mr Brownell’s evidence, it rendered the spreadsheet of little value in supporting the defendant’s claims to have returned the equipment.

182 Mr Brownell acknowledged that he was responsible for the decision that the defendant would reach its own conclusions concerning the off hire dates of the plaintiff’s equipment without reference to the dates on which the equipment was returned. This suggested that, from the outset of the dispute with the plaintiff, he did not propose to honour the defendant’s contractual obligations to the plaintiff.

183 The evidence of Mr Wilkinson, the managing director of the defendant, was also less than straightforward. He could not explain the failure to produce the minutes of a significant number of meetings.

184 He maintained, inconsistently with the minutes, that equipment was returned from Newstan in November 2006.

185 He was unable to provide any evidence, in the minutes or his diary, to support his contention that Mr Windle removed equipment that was damaged at Newstan. His evidence in respect of this equipment was confused and contradictory.

186 He agreed that the plaintiff’s equipment was moved from one site to another without record or notification to the plaintiff.

187 He gave inconsistent evidence concerning the ownership of the equipment referred to as a Rambor in the draft minute of the meeting of 20 April 2007.

188 His evidence indicated that he inadequately controlled equipment left at the controller’s office at Newstan.

189 Mr Dalton similarly did not exercise adequate control over equipment left at the site office at Mandalong. Mr Horn agreed that he collected and delivered equipment to the Mandalong mine and that he provided the delivery dockets that were in evidence. I did not accept that, with this system in place, Mr Dalton was not concerned when delivery dockets were not provided for some of the equipment that was left at the site office and that he simply assumed that it had been picked up.

190 I have already noted the unconvincing nature of Mr Condron’s evidence about the loss of his diaries in circumstances when he was aware that there was a dispute between the plaintiff and the defendant about the return of equipment. I have already noted the inconsistencies in Mr Condron’s evidence about the dates of return of equipment that he specifically remembered returning. There were further inconsistencies between his statements as to the dates on which work at Austar was completed and the minutes that indicated that work continued until August 2007.

191 Mr Condron accepted that Ms Wells’ note about equipment that turned up on 10/8/07 as per Nareena’s claim could have been a reference to the fourth roof bolter.

192 As with the other supervisors, Mr Condron’s evidence indicated that he failed to maintain adequate control over the equipment that was left in the US pit.

193 For these reasons, I was not persuaded to prefer the evidence of the defendant’s witnesses to that of the witnesses for the plaintiff. The plaintiff’s evidence satisfied me that the equipment hired to the defendant was not returned.

194 I was satisfied therefore that the defendant breached its contract with the plaintiff in failing to return the equipment that was the subject of the claim and in failing to pay the hire fees claimed.

ISSUE 2 – CONVERSION AND DETINUE

195 This part of the claim was pleaded as an alternative to the claim in contract.

196 I was satisfied that the plaintiff proved its right to possession of the seven unreturned items of equipment and that demand was made for the delivery up of those items.

197 It was not known what happened to the unreturned equipment, leaving for determination the question of whether the defendant refused delivery.

198 The plaintiff accepted that it could recover damages for the detention of the goods only if it established that the defendant used them during the period of detention.

199 The plaintiff argued that I should do my best in respect of the unreturned equipment, its primary contention being that I should allow damages to the date that the hiring agreements were terminated on 22 January 2008 on the basis that the evidence supported a finding that the defendant continued to use the equipment to that date.

200 I did not accept that the evidence did supported a finding that the unreturned equipment was used by the defendant up to 22 January 2008.

201 When the dispute arose, Mr Wilkinson offered to allow Mr Gary Jaques or any other representative of the plaintiff to inspect the defendant’s premises or any of its mine sites to confirm that it no longer held any of the plaintiff’s equipment. The offer was not taken up. The date upon which this offer was made was not stated but it could be inferred that it was made some time after the dispute arose in August 2007.

202 In addition there was evidence that a pump and tensioner had been smashed at Newstan and that the second roof bolter was returned to the plaintiff in August 2007.

203 The evidence in fact went no further than establishing that the balance of the equipment was not returned and that the defendant’s methods of maintaining control of the equipment were so deficient that it was simply unable to state where it ultimately ended up.

204 I therefore find that the claims in conversion and detinue were not made out.

ISSUE 3 - DAMAGES

205 The plaintiff claimed damages on two bases.

206 The first related to hire fees up to the date upon which the plaintiff terminated the hire agreements, 22 January 2008. The defendant responded to this claim by suggesting that the equipment was on hire only during the period that the defendant was making use of it. It was claimed that it was not responsible for hire fees after the equipment went missing.

207 This argument overlooked the implied term of the contract, admitted on the pleadings, that the defendant was responsible for the weekly hire rate until the equipment was returned to the plaintiff.

208 I find therefore that the defendant was responsible for hire fees until 22 January 2008, the date upon which the plaintiff elected to terminate the hire agreements.

209 The amount awarded for hire fees was $76,896.10.

210 The second head of damage claimed by the plaintiff was the cost of replacing the unreturned equipment with new equipment. This claim was based on the proposition that there was no ready market for second hand equipment of the type hired to the defendant and that the plaintiff regularly refurbished its equipment by stripping, checking it and replacing parts where necessary. The plaintiff claimed that, once refurbished, the equipment was as effective and reliable as new equipment.

211 Mr Gary Jaques said he had been involved in the purchase and hire of roof bolters and tensioners in the mining industry for 20 years. He provided quotations^xl for the cost of acquiring new equipment to replace that which was not returned by the defendant. His experience was that there was no ready market for second hand equipment.

212 Tensioners, he said, were in short supply and there was a considerable delay between placing an order and the supply of a new tensioner. He said he waited two months for new tensioners purchased from DSI and that parts for this equipment were not readily available. In 2010 he was told the delay in supply was three months.

213 Mr Gary Jaques did not know of any place where second hand tensioners could be purchased and he was unaware of any second hand tensioner that became available for purchase.

214 He did not know of any business that sold second hand roof bolters but said it might be possible to purchase second hand roof bolters from a mine or hirer of mining equipment that was closing down. He said in his experience this rarely occurred. He acknowledged that it was not his practice to purchase second hand roof bolters and that therefore his experience of the second hand market was limited.

215 Mr Brownell said the equipment hired by the defendant from the plaintiff was between one month and five years old and that its condition varied from good to poor, with some failing with little use. Mr Gary Jaques disagreed, claiming that the plaintiff’s equipment was refurbished and in as new condition.

216 He provided copies of invoices^xli for roof bolters the defendant purchased from the plaintiff in February 2007 at a cost of $8,000. He estimated the cost of a tension head and pump at between $8,000 and $10,000. In April 2008 the defendant purchased a tensioner for $9,507.95^xlii.

217 Mr Brownell disputed Mr Gary Jaques’ claim of delays in securing replacement equipment. He said in his experience new tensioners were readily available and that he purchased a tension head from DSI in April 2008 with a two week delay between order and delivery. He had purchased no equipment since that date.

218 Mr Brownell said that part of his work involved searching out second hand mining equipment and he named four companies in the mining industry that had second hand roof bolters available for sale. He provided estimates of the cost of second hand equipment, supported by quotations^xliii from Coaltex Australia of $4,500 for a second hand roof bolter and $5,000 for a second hand tensioner head. A further quotation^xliv from CQE did not make clear the nature of the equipment referred to.

219 He acknowledged that he did not inspect the equipment hired by the defendant’s supervisors and therefore did not know of its condition. His said he applied his knowledge as a mechanical engineer to form the opinion that equipment was in as new condition only if every part was replaced. It was on this basis that he made the statement that the plaintiff’s equipment was not in as new condition. He agreed that it was possible to refurbish equipment to as new condition if parts were replaced that were worn or outside their wear life and that, if refurbished, equipment with an initial working life of four years could be used for a further four years.

220 Mr Brownell acknowledged that he had purchased no second hand equipment from the suppliers he nominated. He said he was aware that, in the auction of equipment by Thiess Contractors after the completion of construction work on the Lane Cove tunnel, a container filled with various items of equipment was sold for $30,000. He said the equipment in the container included 30 roof bolters, 6 pumps and 2 tensioners. He did not bid for the container because the defendant did not require this quantity of equipment.

221 He acknowledged that the defendant purchased second hand equipment on one occasion only. This was purchased from a company that was wound up and from which the defendant purchased all of its equipment, ranging from bolters and other items to a Landcruiser vehicle and office equipment. From the time of this acquisition, the defendant purchased only new equipment.

222 In regard to the quotations received from Coaltex, Mr Brownell said this company was in the same business as the plaintiff and was its competitor. The defendant hired equipment from Coaltex since the dispute with the plaintiff developed. He agreed that he asked a representative of Coaltex what the price would be if it had equipment for sale. He did not ask if any equipment was in fact for sale. He did not know what the condition of the equipment was. He agreed that he informed Coaltex that the defendant was in dispute with plaintiff and that he obtained the quotations for the sole purpose of the proceedings.

223 The equipment quoted by CQE was provided at a time when it was selling assets to pay money it owed its bankers. He did not purchase any of the equipment that was on offer. He saw photographs of it and observed that it was freshly painted but otherwise he was unaware of its condition.

224 The result of this evidence was that the defendant was not in a position to dispute the evidence of Mr Gary Jaques concerning the condition of the unreturned equipment. Mr Brownell did not know what its condition was. The defendant’s supervisors who were directly involved in its hire provided no evidence to suggest that it was not in good order. Indeed, they continued to use it. I therefore accepted the evidence of Mr Gary Jaques that the equipment was maintained in good order.

225 Similarly, the material provided by Mr Brownell failed to establish that replacement equipment of adequate standard was available through a second hand market. It was not reasonable to suggest that the plaintiff should be compensated on the basis that it purchase a container load of mixed items of plant and equipment in anticipation that it might find within that load some usable replacement items.

226 Of most significance was the evidence of Mr Brownell that entirely matched that of Mr Gary Jaques that neither elected to purchase second hand equipment.

227 The question then was whether, in the absence of evidence of a readily available second hand market through which the unreturned equipment could be replaced, the appropriate measure of damage resulting from the defendant’s breach of contract was the full cost of replacing the equipment or whether this would result in overcompensation of the plaintiff by providing it with new equipment to replace equipment that was used.

228 The defendant argued that I should adopt the approach taken in Twentieth Super Pace Nominees Pty Ltd v Australian Rail Track Corporation Ltd^xlv where, in assessing damages for breach of contract, Justice Gillard applied a discount in recognition that the replacement railway wagons were new and therefore of greater value than those that were destroyed in the accident for which the defendant was responsible. Justice Gillard noted the principles established in English authority^xlvi to the effect that damages are to be paid as compensation to put the plaintiff in the position it would be in if there had been no breach of contract and set out in full the rule formulated by Alderson B in Hadley v Baxendale^xlvii:

Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such a breach of contract shall be such as may fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as a probable result of a breach of it.

229 The plaintiff preferred that I take the course adopted by Justice Giles in Gaba Formwork Contractors Pty Ltd v Turner Corporation Ltd^xlviii and applied by Justice McDougall in Chep v Bunnings^xlix.

230 In Gaba Formwork Justice Giles undertook an extensive review of the authorities concerning the measure of damages to be applied in cases of conversion and detinue. He noted that in that case it was not disputed that damages included replacement costs of the formwork hired by the plaintiff to the defendant that was not returned. The assessment of replacement costs was undertaken by a referee and the basis of the assessment was therefore not apparent from the Justice Giles’ reasons.

231 Justice Giles^l said that the value of the goods in question was not necessarily their market value because that assumed that with that amount of money the plaintiff would be able to go into the market and replace them. He said a different approach was required, such as that taken in J & E Hall Ltd v Barclay^li where, in the absence of a current market price for the goods in question, the plaintiff was held not to be limited to value of the goods when sold as scrap but was allowed to recover the cost of obtaining replacement goods. In Gaba Formwork’s case, he noted that it was accepted that it was appropriate to award replacement cost, rather than their market value … presumably because Gaba had not held the formwork materials for sale or because there was no current market price for used formwork materials of the kind and in the quantities under consideration^lii.

232 The major focus of the Gaba Formwork decision was, however, directed at the additional right to recover the loss of hire fees for the formwork.

233 In Chep v Bunnings Justice McDougall was similarly concerned with the recovery of charges for the hire of pallets provided by the plaintiff and it was in this respect that he made reference to the Gaba Formwork decision. After quoting from Lord Blackburn in Livingstone v Rawyards Coal Co, Justice McDougall said:

The underlying principle appearing from the passage just quoted has been applied many times, in support of the proposition that damages should be assessed robustly against a wrongdoer where the wrong itself has made quantification difficult . ^liii

234 Further, he noted the requirement in cases of conversion, as in the assessment of damages on other causes of action, to apply flexibility in order to achieve the true compensatory purpose of damages^liv and the need to take account of the particular facts rather than applying principle in a mechanical or unthinking manner^lv.

235 He therefore decided that he should apply a discount to avoid over compensation in the amount awarded for the loss of hiring fees.

236 In the current case, I am required to assess damages for breach of contract and not on a tortious basis for conversion or detinue. Thus although Gaba Formwork may not be directly applicable, the flexible approach taken by Justice McDougall to the application of the principles established in Gaba Formwork accorded with those adopted by Justice Gillard in Twentieth Super Pace Nominees.

237 On the basis of those principles, it was apparent that the plaintiff in this case could not recover more than it had, namely the value of equipment that was used but well maintained. There was no evidence to suggest that the contract provided for the recovery of more than the loss actually sustained or that a result allowing the plaintiff to recover full replacement cost for the unreturned equipment could reasonably be supposed to have been in the contemplation of the plaintiff and the defendant at the time the hiring agreements were entered into.

238 In the circumstances, I concluded that the appropriate measure of the plaintiff’s loss was 75% of the cost of replacing the unreturned equipment. The amount awarded for the capital value of the unreturned equipment was $48,675.

ORDERS

239 Verdict and judgment for the plaintiff in the sum of $125,571.10.

240 The proceedings are adjourned to a date to be fixed to deal with the issues of costs and interest.

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Amended Ordinary Statement of Claim, paragraph 4

Exhibit PW-1.30

Exhibit PW-1.31

Exhibit GJ-1

Exhibit GJ-1.69, 71

Exhibit 1

Annexure A

Annexure B

Annexure C

GJ1102 –109

GJ1-105

GJ1.109

Annexure E

Annexure F

Exhibit GJ1.124-126

Annexure G

Annexure C

Exhibit A.14

Exhibit A.11

Annexure A.8 to Wilkinson affidavit

Annexure A.12 to Wilkinson affidavit

Exhibit PW-1.D

At paragraphs 12 and 13

Exhibit B

Exhibit A.60

at [9]

Exhibit A

Exhibit A.11

Exhibit A

Exhibit B

Exhibit A.64

Exhibit A.60

Exhibit A.64

Exhibit A.49

Exhibit A.2

Exhibit A.6

Exhibit PW-1.C

Exhibit PW-1.E

Exhibit PW-1.R

Exhibit GJ-1.7-9

Brownell affidavit 29.1.10, annexure A

Brownell affidavit 29.1.10, annexure H

Brownell affidavit 24.5.10, annexure A

Brownell affidavit 24.5.10, annexure B

[2006] VSC 500

(1880) 5 App Cas 25 at 39; Robinson v Harman (1848) 1 Ex 850; (1848) 154 ER 363

(1854) 9 Ex 341; a56 ER 145

32 NSWLR 175

[2010] NSWSC 301

at p. 178

[1937] 3 All ER 620

Gaba Formwork at p. 179

at [226]

at [229]

at [255]

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04/08/2011 - 3 November 2010Costs Result:I vary the orders made on 6 October 2010. Order 1 is varied to read:Verdict and judgement for the plaintiff in the sum of $140,491.71 Comprising of the judgement sum of $125,571.10 and interest comprising of $14,920.61The defendant is to pay the plaintiff’s costs of the proceedings as agreed or assessed. The exhibits are returned. - Paragraph(s) 239 and 240