Outback Health Screenings Pty Ltd v Gwam Investments Pty Ltd

[2009] SADC 30

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

OUTBACK HEALTH SCREENINGS PTY LTD v GWAM INVESTMENTS PTY LTD & ORS

[2009] SADC 30

Judgment of His Honour Judge Tilmouth

26 March 2009

TORTS - NEGLIGENCE - ESSENTIALS OF ACTION FOR NEGLIGENCE - DUTY OF CARE - SPECIAL RELATIONSHIPS AND DUTIES - OTHER CASES

The plaintiff contracted with the defendants to build a mobile health unit onto the tray of a 6 ton truck supplied by it.  When so built the combined weight was over the legal limit permitted for driving on public roads.

Held: The defendants were liable in negligence for failing to warn the plaintiff that the unit they proposed to build might bring the combined mass of the vehicle over the legal limit, once they knew what was proposed.

Perre & Ors v Apand Pty Ltd (1999) 198 CLR 180; Voli v Inglewood Shire Council (1963) 110 CLR 74, applied.

TORTS - NEGLIGENCE - ESSENTIALS OF ACTION FOR NEGLIGENCE - WHERE ECONOMIC OR FINANCIAL LOSS - CARELESS ADVICE, STATEMENTS AND NON-DISCLOSURE

Held:  The defendants were not liable for misrepresentation or false or misleading conduct, because they did not make representations as to which truck was suitable for the particular unit built.

New South Wales v Fahy (2007) 232 CLR 486; Roads and Traffic Authority of NSW v Dederer (2007) 234 CLR 330; San Sebastian Pty Ltd v Minister Administering Environmental Planning and Assessment Act 1979 (1986) 162 CLR 340; Pappas v Soulac Pty Ltd (1993) 50 ALR 231; Wyong Shire Council v Shirt (1979) 146 CLR 40, referred to.
Hedley Byrne & Co Ltd v Heller and Partners Ltd [1964] AC 465; Mutual Life and Citizens Assurance Co Ltd v Evatt (1968) 122 CLR 556, applied.

TORTS - NEGLIGENCE - CONTRIBUTORY NEGLIGENCE - PARTICULAR CASES

Held:  As the defendants were best placed to ascertain what weight the unit was likely to be and as they should have realised the potential for an over-load situation to develop sooner, the plaintiff is not guilty of contributory negligence.

Civil Liability Act 1936 (SA) ss 3, 44, 50, referred to.
Podrebersek v Australian Iron & Steel Pty Ltd (1985) 59 ALJR 492, applied.

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - IMPLIED TERMS

Held:  As it was made known to the defendants that the vehicle was intended to be driven on outback public roads, a term should be implied that the unit to be built would be fit for that purpose.  The defendants were in breach of that term by building a unit too heavy to permit lawful travel on the roads.

Helicopter Sales (Australia) Pty Ltd v Rotor-Work Pty Ltd (1974) 132 CLR 1; Truk (UK) Ltd v Tokmakidis GMB H & Ors [2000] 1 Lloyds R 543; Clegg v Olly Anderson [2003] EWCA CIV 320; The Moorcock (1889) 14 PD 64; Codelfa Construction Pty Ltd v State Rail Authority (NSW) (Codelfa / Eastern Suburbs Railway Case) (1982) 149 CLR 337, applied.

SALE OF GOODS - REMEDIES FOR BREACH OF CONTRACT - MEASURE OF DAMAGES

Held: In the above circumstances the defendants were in breach of a statutory warranty to supply a vehicle fit for the intended purpose.

Sale of Goods Act 1895 (SA) ss 14, 50, referred to.
Bristol Tramways and Carriage Company Ltd v Fiat Motors Ltd [1910] 2 KB 831; Cammell Laird and Co. Ltd v Manganese Bronze and Brass Co. Ltd [1934] AC 402; John Paul Jones Autos v Volvo Distributors (1975) 14 SASR 297; Finch Motors Ltd v Quin [1980] 2 NZLR 5; R & B Customs Brokers Co Ltd v United Dominions Trust Ltd [1988] 1 WLR 321, discussed.

DAMAGES - GENERAL PRINCIPLES - DIFFICULTY OF ASSESSING DAMAGES

Held: Although the means of damages in tort, under contract and pursuant to the Sale of Goods is different, since it is not possible to reinstate the plaintiff to the position it would have been beforehand, the sensible course is to assess damages on the basis of proved loss and expenditure incurred.

Gould v Vaggelas (1985) 157 CLR 215; Johnson v Perez (1988) 166 CLR 351; Haines v Bendall (1991) 172 CLR 60; Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 83 ALJR 390; Hungerfords v Walker (1988) 171 CLR 125; Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1; South Australia v Johnson (1982) 42 ALR 161; John Paul Jones Autos v Volvo Distributors (1975) 14 SASR 297, discussed.

PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - AMENDMENT

Held 1:  The application to amend pleadings late in the proceedings, to raise apportionate liability should be refused.

Held 2:  This is a defence that must be specifically pleaded.

Supreme and District Court Civil Rules 2006 Rule 6R 98(2)(d); Law Reform (Contributory Negligence and Apportionment of Liability) Act ss 8, 10; Astley v Austrust (1999) 197 CLR 1, referred to.
Fookes v Slaytor [1978] 1 WLR 1293; Ucak v Avante Developments [2007] NSWSC 367; P & V Industries Pty Ltd (formerly Porto & Valente Industries Pty Ltd) as trustee for Porto & Valente Unit Trust v Secombs (a firm) [2008] VSC 209; Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd (2007) 164 FCR 450; HSD Co Pty Ltd v Masu Financial Management Pty Ltd [2008] NSWSC 1279; Christie v Bridgestone Australia Pty Ltd (1983) 33 SASR 377; Government Insurance Office of New South Wales v ALI (1992) 59 SASR 124, applied.

OUTBACK HEALTH SCREENINGS PTY LTD v GWAM INVESTMENTS PTY LTD & ORS
[2009] SADC 30

The issue

1. Quite apart from their daytime jobs, Luke and Roslyn Netherton were kept busy managing a health service principally for mining companies around the remote Olympic Dam area where they live.  They conceived the idea of acquiring a mobile health unit, fitted to the rear of a truck or trailer.  This they eventually did.  The problem was that once fitted to the chassis supplied by them, the combined weight exceeded the maximum permitted for lawful travel on public roads, so that it was simply unusable for the intended or any other practical purpose.

   Background

2. They were attracted to a newspaper article discussing the work of the business Gwam Special Vehicles (“GSV”).  Mr Netherton promptly paid GSV a visit, the upshot being that GSV agreed to construct for the Netherton’s company Outback Health Screenings Pty Ltd, a unit to be fitted to the rear of a truck, comprising three examination rooms and a work area, which they did in a first-rate manner.

3. During the course of their negotiations and over the entire construction phase, as will be seen, neither party clearly raised with the other the question of the combined weight of the unit and chassis.  It appears both assumed the other was responsible for this consideration and had the situation under control.  Unfortunately, neither did.  This court is asked to determine on which side the burden of the ensuing impasse should fall.

4. The plaintiff sues GSV across a wide range of remedies, including negligence, breach of contract, under the Sale of Goods Act 1895 (SA), s 52 of the Trade Practices Act (Cth) 1974 and s 56 of the Fair Trading Act 1987 (SA).Jurisdiction is invested in this court under the Trade Practices Act by s 86(2) thereof. The plaintiff claims consequential damages totalling $99,816.70.

   The initial discussions

5. Mr Netherton worked as a mine safety technician for BHP Billiton at Olympic Dam and with his wife formed the plaintiff company.  This provided in their out-of-hours time a drug and alcohol testing service for the heavy mining industry in the surrounding areas.  This service is an adjunct to occupational health and safety requirements in the industry, primarily designed to test employees for the presence of alcohol and drugs at work sites.  His wife, who is a nurse by occupation, was employed in the business.

6. By 2006 they commenced investigating options for a mobile testing unit in order to expand the range of services they could offer the industry.  They contacted a number of trailer and caravan manufacturers to obtain a general idea of pricing, the designs that may be available, and whether the better option was a trailer or truck mounted unit.  One consideration not negotiable was that a four wheel drive vehicle was necessary, as this was required as a matter of policy by the mining companies for travel on unsealed outback roads on which the mine sites were located.

7. An article in the “Cars Guide” supplement to the weekend edition of The Advertiser of Saturday 8 July 2006 came to their attention.  This referred to a South Australian firm of bodybuilders, GSV at Wingfield.  The article specifically mentioned “police operation trucks and mobile health clinics” constructed by them in Adelaide.

8. The evidence was that the bulk of the work on the manufacturing side was undertaken by the second defendant Saturnio Albertini, a director of the first defendant and on the design side by his son and employee, Christian.  The article made reference to the police unit mounted on an Isuzu NPR 400 long-wheel base cab chassis and a mobile health unit mounted on an Isuzu NPS 300 chassis.  It attributes to Mr Albertini Jnr “the customer usually makes the choice of truck and we measure it up”[1] and was accompanied by a photograph of an Isuzu, although that was not tendered in evidence.

   [1]    Exhibit P1, p 1

9. This excited the interest of Mr Netherton to the point that the following Monday 10 July 2006, he visited GSV’s Wingfield operations unannounced, and there spoke to Mr Albertini Snr.  He said he wanted a mobile testing unit for drug and alcohol testing in remote areas and that it had to be a four wheel drive.  Mr Albertini Snr responded “he could do that sort of work”.[2]  At this time Mr Netherton was shown a number of photographs of the Health Unit, in addition to a series of other photographs of work GSV had completed on truck mounted vehicles.  They inspected a two wheel drive Isuzu then under construction on site for the Northern Territory Police.  As a two wheel drive vehicle it is common ground that it was unsuitable for the Nethertons’ purposes.  He left two hand drawn concept designs for GSV to consider, both at this stage contemplating a trailer mounted vehicle.[3]  The exchange was left on the basis that Mr Albertini Jnr would contact him “to knuckle – bed things down”.[4]

   [2]    T21.16

   [3]    Exhibit P1 pp 6 and 7

   [4]    T23.7-8

   The negotiations

10. Later that day he telephoned Mr Netherton who was still on the road to Olympic Dam, during which Mr Netherton asked him to:[5] 

    … send me through some details on the truck, … on the Isuzu that we had seen, that Albert had said we could build it on that, so I asked Chris to send through some details and contact details on the truck as well, so that we could get some quotes on buying that truck.

    [5]    T24.22-.24

11. Awaiting them in the facsimile machine on arrival home, was a one-page copy of a brochure containing details of two four wheel drive Isuzu trucks, an NPS 250 and an NPS 300.[6]  This was endorsed in the handwriting of Mr Albertini Jnr “Rick Menechella”, his telephone number, and an asterisk against the NPS 300, accompanied by the note “max body length = 4.7 metres”.  Mr Menechella was a sales consultant with North East Isuzu, with whom the Albertinis had some dealings in the past.  In addition this page contained the information that the gross vehicle mass (“GVM”) of the vehicles was 4490 and 6000kg respectively.  The latter was therefore considered in common parlance to be a six-ton truck.  Mr Netherton acknowledged understanding this to mean the maximum weight of the NPS 300 for operating on the road, was 6 tons.[7]

    [6]    Exhibit P1, p 11

    [7]    T25.29-.30

12. Shortly thereafter he downloaded more information about the vehicles from the Isuzu website.  The first page was identical to that faxed to him.[8]  He ascertained the additional information that the “Tare Mass” of the two NPS vehicles, was 2,725kg.[9]  This is a reference to the unladen weight, so that it is obvious from the difference between the two, that a “standard” NPS 300 had a load capacity of 3,275kg.

    [8]    Exhibit P1, p 12

    [9]    Exhibit P1, p 15

13. The following day Mr Netherton forwarded an e-mail to GSV, referring to concept plans attached to the facsimile sent by Mr Albertini Jnr,[10] nominating a truck mounted unit as suitable for their purposes, with “some changes”.[11]  He raised the prospect of increasing storage capacity for the water and black water tanks, and continued in parenthesis: “bigger if not unrealistic for weight considerations …”.[12]  As he acknowledged knowing the overall weight limitation of the proposed vehicle, this could only have been a reference to that kind of consideration.

    [10]   Exhibit P1, pp 9 and 10

    [11]   Exhibit P1, p 16

    [12]   Exhibit P1, p 16

    The contract

14. Outback Health paid $550 upon request, for the preparation of formal concept designs and to work up the detailed pricing.  A quotation was faxed to the Nethertons on 27 July 2006 for truck and trailer mounted units, specified to be “suited to 4x4 driving on corrugated dirt roads… fitted on your selected chassis” at a cost of $62,220 plus GST.[13]  This quote described a unit 4.8m in length, which of course was 100mm longer than the body length of an NPS 300 indicated in the facsimile of July 10.  The unit itself comprised three examination rooms and a staff or office room,[14] whereas the previously constructed units were either “open space” or “just one room”.[15]

    [13]   Exhibit P1, p 27

    [14]   Exhibit P1, p 17

    [15]   T325.18-.25

15. In the meantime Mr Netherton initiated enquiries with Mr Menechella of North East Isuzu, a business situated on the corner of Port Wakefield and Waterloo Corner Roads, Burton.  Mr Menechella quoted for the supply of an Isuzu NPS 300 4x4 truck, at a total of $58,680.20 including 12 months registration.[16]  This quotation priced other options if required, including a bull-bar, an extra fuel tank and spare tyre, amongst other things.  GSV was later asked to quote for the supply of an “in-built” generator, which it did on 2^nd August, at $13,800 plus GST.[17]

    [16]   Exhibit P1, p 29

    [17]   Exhibit P1, p 31

16. Finance was obtained for the purchase of the Isuzu and the projected cost of a “custom made truck mounted unit” of $142,302.20, repayable over 60 months at $2,896.73 per month.[18]  Mr Netherton proceeded to order some of the options listed in the Menechella quote, adding an additional $8,790 to the purchase price, bringing it to $67,490.20.[19]  These accessories also added something in the order of approximately 350kg to the tare weight according to the calculations of the plaintiff’s counsel[20] and between 259kg and 480kg according to those of defence counsel.[21]

    [18]   Exhibit P1, p 32

    [19]   Exhibit P1, p 35

    [20]   Plaintiff’s submission paragraph 60

    [21]   Further supplementary submissions (10/3/09) paragraph 11

17. For its part GSV raised a purchase order, faxed to Outback Health on the 8^th August of $83,622, for the “design and construction of specialised truck mounted unit to fit an Isuzu Cab Chassis supplied”.[22]  A copy was returned, counter-signed by the Nethertons, acknowledging the “design and construction of one specialised truck mounted unit to specifications and drawings dated 27/07/2006”, with a handwritten addition “with minor layout modifications”.[23]  These included the generator changing some aspects of the joinery, adding a compartment for a jerry can, an awning, as well as other minor items, for which GSV invoiced them on the 12^th December 2006, bringing the total cost to $93,247.[24]  These additional items added in the order of a further 255kg to the combined weight, excluding the generator once again on the calculations of the plaintiff,[25] whereas on the calculations of defence counsel, these added between 259 and 480kg.[26]

    [22]   Exhibit P1, p 38

    [23]   Exhibit P1, p 39

    [24]   Exhibit P1, pp 52 and 78

    [25]   Plaintiff’s written submission paragraph 58

    [26]   Further supplementary submissions (10/3/09) paragraph 12

18. Mr Netherton organised an extension to the chassis with North East Isuzu and dealt directly with Mr Menechella about that.  This came at an additional cost of $3,000, so that the final purchase price with the other additions and options, was $67,490.20.[27]  Various estimates given in evidence suggesting this exercise added between 100kg and 250kg to the weight of the chassis.[28]

    [27]   Exhibit P1, p 35

    [28]   T152.14, 251.15 and T280.20

    Delivery of the finished vehicle

19. It is unclear on the evidence when the extended chassis was actually delivered to GSV.  However Mr Netherton visited them on occasions during August and September 2006 to check on progress.  As North East Isuzu undertook to register the vehicle, it was returned to them once GSV finished their work.  Delivery occurred on 19 December 2006 with the unit intact.  In order to secure registration, it had first to be weighed.  The Isuzu dealer arranged for this earlier that day through AAA Recycling, using a registered weighbridge located just around the corner on Waterloo Corner Road.  This recorded a tare weight of 6730kg.[29]  There is no evidence that the parties became aware of this fact at this time.  The fact that this and the other formal measurements of weight taken later were accurate, was not ultimately disputed by the defendants.

    [29]   Exhibit P4

20. The Isuzu dealer lodged the application for registration on the 20^th December 2006 on behalf of Outback Health. This noted the manufacturer’s recommended GVM of 6000kg.  The application annexed a copy of the original AAA weigh-note from the previous day, obviously altered to the naked eye from 6730kg to 5730kg in the Tare Mass column.[30]  The significance of this disconcerting fact will become more apparent later.  Mr Netherton received a copy of the registration certificate when collecting the vehicle from Mr Menechella.[31]  Either then or soon after, he noticed the actual mass of 5730kg, consistent with the altered weigh-note.  Upon driving the vehicle home, he added other “consumables”, organised sign-writing, installed fire extinguishers and so on.

    [30]   Exhibit P10

    [31]   Exhibit P2

    An over-loading issue emerges

21. On the 4^th January 2007, he decided to test it under operational conditions at Olympic Village, on premises leased from BHP.  He organised an informal weighing.  By then he had become concerned because the certificate of registration indicated he had “only … 270kg of leeway”,[32] so he wanted to know, for obvious reasons, “how close to the legal limit I was”.[33]  This “test” suggested the vehicle might be at least 700kg overweight and therefore to his way of thinking “illegal to drive on the road”.[34]  When this was done both fuel tanks were full, so a few days later he emptied one, drained the water tanks, and checked the weight again by the same means.  This time the vehicle weighed in at 6400kg.

    [32]   T37.36

    [33]   T37.37-.38

    [34]   T39.15

22. Consequently, he inquired of the local police if he could obtain a permit to drive an overweight vehicle.  They referred him to the Department of Transport.  It informed him there was no such permit enabling the vehicle “to exceed the manufacturer’s GVM as stated”,[35] but they did suggest re-weighing on a Departmental weighbridge located in Port Augusta.

    [35]   T40.9

23. The following day, either the 6^th or 7^th January 2007, he drove to Port Augusta for that purpose.  The truck and fitted unit weighed in at 6820kg,[36] under fully laden operational conditions, without occupants.  Later in April 2007 he took the vehicle to AAA Recycling, stripped down as much as was possible, when it weighed-in at precisely 6 tons.[37]

    [36]   T43.27

    [37]   Exhibit P5

    An impasse develops

24. Towards the end of January or early February 2007, Mr Netherton again visited GSV unannounced.  He initially engaged Mr Albertini Snr and soon after, Mr Albertini Jnr.  There was an exchange as to which there are some differences although the subject matter and outcome is common ground.  It was to the effect that there was a problem with the truck.  Mr Netherton wanted to know what they proposed to do about it.  They told him they were not prepared to swap or buy a new truck.  Thereafter, various offers were put forward by the defendants to undertake a changeover to a new vehicle without cost, though that did not crystallise in concrete terms.[38]  These simply ended with an offer by the defendants “to assist with rectification work … (O)ur client however is not liable for the cost of such rectification.”[39]

    [38]   See letters Exhibit P8

    [39]   Exhibit P8, DLA Phillips Fox letter 18 April 2007, p 2

1. Outback Health was looking for options out of a difficult situation, as it could not use the vehicle as it was.  Mr Netherton said in his evidence “we were cornered … we had no option … I had to do something to get value back for my money.”[40]  Accordingly he returned to North East Isuzu and obtained a quotation for a 10 ton truck, which would accommodate the unit.  This was quoted to cost $69,000, after allowing for a trade-in of $59,000 on the original vehicle, chassis and cab.[41]  The Nethertons discussed this option, but as the company was not making much money (which is not surprising given that the vehicle was not income producing), they reckoned this required borrowing another $50,000, which to their minds was at that time “out of our ball park”.[42]

   [40]   T63.13-18

   [41]   Exhibit P1, p 79

   [42]   T62.33

2. For that reason they approached CMI–Hino, and obtained a quotation for the supply of a 10 ton truck for $58,830, this time with a trade-in of $40,000.[43]  This brought the purchase price for the Hino down by nearly $10,000 less than the Isuzu option, and for that reason they elected for this cheaper alternative.  To achieve this end the company injected an extra $30,000 towards the purchase price.[44]  As they saw matters no other avenues were open to them.  The vehicle in its present condition was unmarketable and unusable.  A transfer of the unit to the new vehicle chassis was organised around 15^th September 2007,[45] at conversion costs totalling $9,540.58.[46]

   [43]   Exhibit P1, pp 80-83

   [44]   T63.32-35, T210.31-211.24

   [45]   T64.33-.38

   [46]   Exhibit P1, p 106 and p 107

   The Road Traffic Act requirements

3. Part 4 of the Road Traffic Act 1961 (SA) deals with “Vehicle standards, mass and loading requirements, and safety provisions”. Section 113 enables the Governor to make regulations prescribing the “mass and loading of motor vehicles”. As s 5 defines a “motor vehicle” to mean no more than “a vehicle built to be propelled by a motor that forms part of the vehicle”, this obviously includes trucks, such as the Isuzu NPS 300. In addition, s 5 defines the gross vehicle mass “GVM” to mean the maximum loaded mass specified by the vehicle's manufacturer. That was 6 tons in this instance.

4. From 30 July 2006 to 30 April 2007, it was an offence to drive a vehicle on a road under s 114 “if the vehicle or a load on the vehicle does not comply with the mass and loading requirements”. By a combination of regulation 5 and Schedule 1 to the Road Traffic (Mass and Loading Requirements) Regulations 1999, the Isuzu purchased by the plaintiff fitted with the unit built by GSV, therefore infringed s 114 if driven on a public road when the total mass thereof exceeded 6 tons. Thereafter new s 119(1) and 125(2)(a) in conjunction with Regulation 5 (which remained in operation) had precisely the same effect.

5. This was always going to be the case whenever the vehicle was driven under anything approaching operational conditions.  On the abovementioned weigh-in returns, it was in the order of 700-800kg over the legal limit.  On this basis it is quite apparent that even without the extras, the total weight under operational conditions was always likely to exceed the maximum permissible GVM.

   The case for the plaintiff

6. The case for the plaintiff is initially premised on the stance that the defendants recommended a particular make and model of vehicle suitable for their purposes, in conjunction with the unit they were to design, manufacture and fit.  There is no complaint about the quality of workmanship and nor could there be on the evidence.  The essence of the problem lies in the fact that once mounted, the combined weight was over the maximum permissible under statute.

7. Negligence is also alleged by failing to take reasonable care that unit and truck would come within the maximum weight capacity.[47]  The plaintiff also mounts its case around what it describes as four central representations. The first is that Mr Albertini Snr showed Mr Netherton a series of photographs including an Isuzu NPS 300, which he said was suitable for the unit;[48] secondly that Mr Albertini Jnr said to Mr Netherton during the telephone call of the 10^th July 2006, that this truck was suitable for a unit comprising three toilets and a work area;[49] thirdly by faxing the brochure containing the Isuzu NPS 300 marked as referred to above, it was represented that particular truck would be suitable for the nominated purpose;[50] and finally following the email of the 11^th July 2006 in which issues of weight were raised, the defendants thereby represented the gross vehicle mass would not exceed the manufacturer’s specified maximum, by their silence.  In light of these allegations it is necessary to consider the evidence touching them.

   [47]   Further amended Statement of Claim paragraph 20.2 and 20.3

   [48]   Paragraph 7

   [49]   Paragraph 8

   [50]   Paragraph 10

   The first representation?

8. Mr Netherton’s evidence was that Mr Albertini Snr told him “we could build the unit on this sort of truck” bearing in mind a 4WD vehicle was essential for his purposes.[51]  By the time he arrived home that evening he had already formed the view, as he immediately told his wife, that this vehicle was “just what we needed”.[52]  Mr Albertini acknowledges showing the photographs including several other models apart from an Isuzu.  He told Mr Netherton at the time “this is what I can do and I can fit this body on this chassis, this is one here, this is an Isuzu, I can fit it on this or a Hino, or a Mitsubishi,”[53] and “that’s what we can build”.[54]

   [51]   T22.11-.12

   [52]   T205.18

   [53]   T236.36-.38

   [54]   T267.9

9. During his evidence he said that as a matter of policy he never recommended any particular chassis or model, in order “to protect [my] credential with my other customer dealers…”[55] even though he acknowledged doing “a lot of work for Isuzu”.[56] Under cross-examination he accepted that when the photographs were shown to Mr Netherton, these included the health unit mounted on an Isuzu NPS 300, and that he pointed to it whilst indicating “that’s what we can build”,[57] and “this type of vehicle it’s a 4WD and we can put a unit on this chassis”.[58]

   [55]   T239.17-.18

   [56]   T239.19-.20

   [57]   T267.9

   [58]   T267.16-.17

   The second representation?

10. With respect to the second representation, Mr Netherton’s evidence of the content of the telephone call is quoted above.  He added that he believed Mr Albertini Jnr told him on this occasion “we could build it, the NPS 300 would be the vehicle for it”.[59]  For his part Mr Albertini Jnr said there was not much discussion about a chassis, although he confirmed the initial request at the first meeting for additional information on the Isuzu vehicle.

    [59]   T24.27-.29

    The third representation?

11. The third representation alleged is said to be inherent in the act of sending the brochure to the Nethertons.  Mr Albertini Jnr claimed this happened to be “around the place”, as the brochure was kept in the file relating to the vehicle built for the Northern Territory Government.  He personally marked the contact number and “the maximum body length that would fit on that chassis”,[60] because “it was an Isuzu chassis that Luke was referring to”.[61]  However he asserted under cross-examination the impetus for this particular model came from Mr Netherton as “he asked … for the details of the Isuzu NPS 300 truck”.[62]  When making the notation he said that it was intended to convey “that the chassis was too short”.[63]  He denied recommending the vehicle, and understood Mr Netherton had decided for himself to purchase it.[64]

    [60]   T300.15-.23

    [61]   T300.37

    [62]   T302.36-.38

    [63]   T302.19

    [64]   T320.21-.22

12. For his part Mr Netherton said that upon receiving the facsimile, he understood the reference to the GVM indicated “the most that that vehicle can weigh, once it is operating on the road, is 6000kg”.[65]  As to the handwriting max body length = 4.7m, he thought “that figure in there didn’t enter into the suitability of the vehicle”,[66] but rather understood it “needed to be lengthened, which is standard business practice”.[67]

    [65]   T25.30-.31

    [66]   T101.30-.31

    [67]   T102.24-.25

    The fourth representation?

13. The fourth representation is said to comprise the omission to say anything about the potential weight of the unit, or to point out that it might compromise the ability to travel lawfully on the open road.  This portion of the claim is based upon the principle that silence may amount to a misrepresentation, or constitute misleading or deceptive conduct, where a duty exists to reveal the relevant facts and where the other party is therefore led to believe that the matter does not exist: Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd,[68] Demagogue v Ramensky,[69] and Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1).[70]

    [68] (1986) 12 FCR 477

    [69] (1992) 39 FCR 31 at 31 and 40-41

    [70] (1988) 39 FCR 546

    (Mis)representations – general principles

14. Since the decision of the House of Lords in Hedley Byrne & Co Ltd v Heller and Partners Ltd,[71] the law has imposed a duty of care in making statements in circumstances where a “special relationship” exists between the parties: Mutual Life and Citizens Assurance Co Ltd v Evatt.[72]  This kind of relationship brings the speaker under a duty of care when advice is given in relation to a “serious matter”, where the speaker realises or ought to realise he is being trusted and it is reasonable in the circumstances for the other party to act upon that information.  This formulation was accepted in San Sebastian Pty Ltd v Minister Administering Environmental Planning and Assessment Act 1979.[73]  The majority judgment in that case stated liability might arise in this way:[74]

    The maker of a statement may come under a duty to take care through a combination of circumstances or in various ways, in the absence of a request by the recipient. The author, though volunteering information or advice, may be known to possess, or profess to possess, skill and competence in the area which is the subject of the communication. He may warrant the correctness of what he says or assume responsibility for its correctness. He may invite the recipient to act on the basis of the information or advice, or intend to induce the recipient to act in a particular way. He may actually have an interest in the recipient so acting.

    [71] [1964] AC 465

    [72] (1968) 122 CLR 556 at 572-573

    [73] (1986) 162 CLR 340

    [74]   Above at 357, per Gibbs CJ, Mason, Wilson & Dawson JJ

    Alleged representations - analysis

15. It can be seen each of these exchanges took place at a point in time when preliminary discussions had only just commenced.  They occurred well before the working diagrams were prepared and certainly before there was a meeting of minds by way of a contract comprising the quote of the 27^th July, the purchase order of the 8^th August, or the acceptance thereof of the 8^th August.

16. Accordingly, the subject “representations” pertained to a prospective state of affairs when mere concepts were being exchanged; nothing was “bedded down”.  None amounted to a representation that a precise unit of specified dimensions or description, or of any particular weight, was suitable for the NPS 300.  That being the case, they cannot amount to misrepresentations when they did not relate to an existing state of affairs, and were entirely contingent upon an agreement to build a unit of a yet-to-be particularised configuration.

17. At these stages in the negotiations these “representations” could not therefore be false or misleading, because the defendants could in fact build a unit on that kind of truck (first representation) and they could build a unit of this generic type on the Isuzu NPS 300 (the second and third representations).  There could have been no misrepresentation by silence at this stage, because there was simply no unit designed as yet giving rise to any duty to disclose the potential weight, because there was none.  Nor at these times had there been a definite indication by the plaintiffs that they intended to purchase the subject vehicle, so that their discussions were further contingent upon that critical event.  As a matter of fact, Mr Netherton proffered under cross-examination that he could not say he specifically told the defendants of his intention to purchase the Isuzu prior to 31 July.[75]

    [75]   T121.8-.27

18. None of the statements were therefore capable of being false or misleading in the requisite sense, whether at common law or under State or Commonwealth legislation.  The critical question had as yet not arisen, whether they could build a particular unit, with particular specifications on a particular vehicle.  The position here was like that noted in Pappas v Soulac Pty Ltd:[76]

    …essentially the type of introductory comments, in the nature of puffery, made at the start of negotiations for the purpose of obtaining the interest of a possible purchaser …

    [76] (1983) 50 ALR 231 at 234, per Fisher J

    Negligence – General principles

19. The general duty of care is to exercise the care and skill of the ordinary experienced motor vehicle body builder: Voli v Inglewood Shire Council.[77]The High Court held in Perre & Ors v Apand Pty Ltd[78] that the matters upon which the duty of care depended were a combination of foresight of the likelihood of harm, knowledge or means of knowledge of an ascertainable class of vulnerable persons who were unable to protect themselves from harm, that imposing a duty would not impair the legitimate pursuit by a defendant of its own commercial interests and the fact that the damage flowed from the occurrence of activities within the defendant's control.

    [77] (1963) 110 CLR 74 at 84

    [78] (1999) 198 CLR 180

20. In this particular case the parties were in a relationship of close proximity to each other.  It was reasonably foreseeable that the unit agreed upon might bring the combined mass above 6 tons.  The plaintiff had little if any control over the weight of the unit and no means at all by which it could ascertain the total mass, whereas the defendants alone had the exclusive means, expertise and capacity to ascertain and deal with that problem.  This left the plaintiff very vulnerable to the defendants in that respect.

21. This approach is consistent with the authoritative statement of general principle by Mason J in Wyong Shire Council v Shirt:[79]

    In deciding whether there has been a breach of the duty of care the tribunal of fact must first ask itself whether a reasonable man in the defendant's position would have foreseen that his conduct involved a risk of injury to the plaintiff or to a class of persons including the plaintiff. If the answer be in the affirmative, it is then for the tribunal of fact to determine what a reasonable man would do by way of response to the risk.

    [79] (1979) 146 CLR 40 at 47, approved in Gedeon v Commissioner of the New South Wales Crime Commission; Dowe v Commissioner of NSW Crime Commission (2008) 249 ALR 398; (2008) 82 ALJR 1465 at [56] per Gummow, Kirby, Hayne, Heydon, Crennan and Kiefel JJ

22. The abiding authority of this passage was affirmed in New South Wales v Fahy[80] and reaffirmed in Roads and Traffic Authority of NSW v Dederer.[81]

    [80] (2007) 232 CLR 486 at 511 [78] per Gummow and Hayne JJ

    [81] (2007 234 CLR 330 at [18], [55], [68], [134], [271] and [295]

23. The defendants must have appreciated they had less than three tons to play with before overloading the vehicle.  Since they regularly built units of this kind and had just recently build one on an identical chassis, they should have anticipated the risk once more and more extras were added, that the ability to manufacture a unit within statutory limitations would become compromised.  Upon delivery of the extended chassis, and upon seeing that it had the extras fitted by North East Isuzu in addition to those they were asked to install, the question should by then have triggered in the defendants’ minds whether these were likely to compromise the GVM, which they knew to be 6 tons.  This they did not do.

24. In that respect they were therefore in breach of a duty of care to specifically raise with the plaintiff the potential for the unit to bring the combined weight over the lawful limit and to initiate reasonable inquiries to ascertain the potential weight of the agreed unit with that risk in mind.  On the basis of the evidence presented to the court, some of which was by way of estimates only, the complete unit weighed in the order of 4 to 4.2 tons on the plaintiff’s calculations and between approximately 3.2 and 3.43 tons on the defendant’s calculations, so the potential to compromise the carrying capacity of the truck should have become obvious at a fairly early stage of the manufacture on either view.[82]

    [82]   Plaintiff’s second supplementary submission paragraphs 17-20, defendant’s Further Supplementary Submissions (10/3/09) paragraphs 11, 14 and 15, respectively

25. A first step could so easily have been to take the vehicle as delivered to a weigh-bridge to ascertain precisely what weight margin they had available to them.  A second step could have been to make some attempt to weigh the materials expected to be employed in the build.  Just exactly what was involved was known to them through the detailed design and costing process and it could not have been difficult to weigh or estimate the weight of the major individual components.  Mr Albertini Snr conceded it would have been prudent to calculate the weight of the unit and that it could be done “approximate”.[83]  Another option was to have ascertained the weight of the other units they had built previously.  This would have been a simple matter of a telephone call to find out what each weighed when registered.  Although they were different, this simple step would certainly have provided a starting point from which to calculate the weight of the subject unit.

    [83]   T276.5-.11

26. In this context the plaintiff points to Mr Albertini Snr’s admission of telling Mr Netherton “this is too much…(Y)ou are loading this too much”,[84] “you are going to be very close”.[85]  Mr Netherton denied this when recalled (this was not initially put to him under cross-examination).[86]  He remembered a conversation relating to the length and not the weight of the vehicle.  The probabilities are that whatever words were exchanged on this occasion, they were insufficiently clear to convey to Mr Netherton there was a potential problem concerning the weight of the vehicle.

    [84]   T258.21-.22

    [85]   T278.18 and T290.16-.20

    [86]   T351.5-353.34

27. It must have been known to the defendants because of their familiarity with this kind of truck, not to mention the facsimile, that they were dealing with a 6 ton truck.  But whatever was said, it is impossible to accept that Mr Netherton would have laughed it off had it been made clear to him there might be such a problem.  He adverted to the issue earlier in his email, so it is evident that he was alive to the question, so that if the defendants had already raised the issue, it was too significant by far for him to ignore.  The inherent probabilities are therefore that Mr Albertini only raised the issue of length.  This would make sense in the context, for it was his evidence that the exchange occurred when he went to the yard at North East Isuzu to measure the extension.[87]  It was eminently sensible that he should do so.  That consideration strongly suggests this was the topic of discussion as opposed to the potential combined tare weight.

    [87]   T246.2-247.28

28. The discharge of the duty of care depends upon “the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the defendant may have”: Wyong Shire Council v Shirt.[88]  In this instance the duty of care would have been simply and effectively discharged by the defendants asking the question before building commenced, “what is the likely weight of this unit and is it likely to exceed the GVM?”, or alternatively by advising the plaintiff “this may weigh more than the load capacity, do you wish us to go ahead?”  Had this been done, the kinds of reasonable steps suggested earlier could and should have been taken.  This being the situation, the defendants were in breach of their duty of care to the plaintiff, by not alerting it to the potential for an over-loading situation to occur, once they had taken delivery of the cab chassis from North East Isuzu.

    [88] (1980) 146 CLR 40 at 47

    Contributory negligence

1. The parties accepted the Civil Liability Act 1936 (SA) and the Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA) apply to these proceedings.[89] Section 3 of the former defines “contributory negligence” as “a failure by a person who suffers harm to exercise reasonable care and skill for his or her own protection or for the protection of his or her own interests”. The standard of contributory negligence is that specified in s 44 of the Civil Liability Act, incorporating the “principles … applicable in determining whether a person has been negligent ….”  Pursuant to s 50(2) and (3) the court is required first to assess the damages to which the plaintiff would be entitled assuming there had been no contributory negligence, to determine the extent of the contributory negligence expressed as a “percentage reduction”, and then to reduce the amount to which the plaintiff was otherwise entitled by the percentage fixed on account of the extent of contributory negligence as so found.

   [89]   The former commences on 1 May 2004 and the latter on 1 October 2005

2. The statutory formulation reflects common law principles which therefore remain applicable: Podrebersek v Australian Iron & Steel Pty Ltd:[90]

   The making of an apportionment as between a plaintiff and a defendant of their respective shares in the responsibility for the damage involves a comparison both of culpability, ie of the degree of departure from the standard of care of the reasonable man (Pennington v Norris (1956) 96 CLR 10 at 16) and of the relative importance of the acts of the parties in causing the damage: Stapley v Gypsum Mines Ltd [1953] AC 663 at 682; Smith v McIntyre [1958] Tas SR 36 at 42–49 and Broadhurst v Millman [1976] VR 208 at 219, and cases there cited. It is the whole conduct of each negligent party in relation to the circumstances of the accident which must be subjected to comparative examination. The significance of the various elements involved in such an examination will vary from case to case; for example, the circumstances of some cases may be such that a comparison of the relative importance of the acts of the parties in causing the damage will be of little, if any, importance.

   [90] (1985) 59 ALJR 492 at 493-494 per Gibbs CJ, Mason, Wilson, Brennan and Deane JJ

3. In this case the plaintiffs engaged experts having compiled forty years experience in this line of business, including expertise and experience in manufacturing the very kind of generic unit the plaintiff was after.  They were uniquely placed to know the materials that went into the manufacture, what weight they might be when installed, and therefore to ascertain whether or not there was a risk of running over the prescribed limit.

4. Although the partially constructed unit was lifted onto the chassis by means of an overhead crane at one end having a load capacity of 5 ton and at the other by a forklift, the defendants claim there was no equipment available to them to weigh it.  No expert evidence was called on either side as to how difficult this may or may not be.  Although the plaintiff’s counsel put to the defendants the proposition that other body builders conventionally weighed their units, no evidence of industry standards or the practicalities was called to back this up.  As the proposition was not assented to by the defendants, it was not therefore evidential.

5. The fact of the matter is that the defendants were best placed, by far, to know or otherwise to ascertain what weight a unit manufactured by them was likely to be.  Even if they did not have the specific equipment available to them, they were responsible for ordering the materials and the parts that went into its construction, so they must have had some detailed idea what the combined weight was likely to be.  It is difficult to accept that there is no conceivable way of calibrating, or at least calculating the approximate weight of units of this kind.  They also had the benefit of the past experience building comparable units, which must surely have led them to gaining some insight into the potential weight of such units.

6. In one sense the plaintiff contributed to the problem by acquiring from North East Isuzu accessories and options of some considerable extra weight as per the estimates detailed above, without telling the defendants, and then by ordering from GSV a number of other additions, together at worst totalling an upwards maximum of a ton, or slightly more perhaps.  Mr Netherton alluded to the topic in his e-mail of 11 July, a question he failed to pursue any further, despite these subsequent additions.

7. The circumstances suggest at first sight that he fell under a duty to protect his own interests by keeping check of the developing situation, or by specifically raising the issue with the defendants when they were still in a position to do something about it.  Apart from that, there was nothing further he could conceivably do.  Even if the plaintiff was alive to the potential for an over-load situation to develop, the defendants should have been, sooner.  Thereafter the plaintiff was powerless to influence the subsequent events, whereas the defendants had the exclusive means at their disposal to assess and if necessary, to correct the situation.

8. This means that even if the plaintiff had raised the issue with GSV, that would have placed the defendants in the position they should have been in anyway.  To apply the criteria in Podrebersek v Australian Iron & Steel Pty Ltd,[91] the acts of the plaintiff were of no importance in comparison to those of the defendants which were of controlling importance.  In light of these considerations it is not appropriate to find any degree of contributory negligence was involved on the part of the plaintiff.  Furthermore, even if there was, it did not cause or contribute to the resultant harm in any event.  The outcome would be the same, for exactly the same reasons, under s 82(1B) of the Trade Practices Act.[92]

   Apportionment liability

   [91]   Quoted above

   [92]   Above

   The statutory scheme

9. Although not formally pleaded, the defendants ultimately endeavoured to rely on the Law Reform (Contributory Negligence and Apportionment of Liability) Act[93] for the purposes of mounting a case that the plaintiff should be limited in the extent of damages it may receive. This legislative package made far-reaching changes to the avenues and means of redress in claims for damages. In particular s 8(1) introduces the concept of limiting the liability of a defendant in cases where liability is “apportionable”. One purpose of the amendments was to overcome the decision in Astley v Austrust[94] to the effect that the previous legislation did not permit a reduction of damages in actions under contract on account of contributory negligence, whether or not the plaintiff has or could also have sued in tort.

   [93]   Above

   [94] (1999) 197 CLR 1

10. Apportionate liability arises when the acts or omissions of “two of more wrongdoers” caused or contributed to the harm: s 8(2)(b). That end is achieved by determining the extent of the defendants’ responsibility for the harm, then the extent of the responsibility for the harm caused or contributed to by “other wrongdoers” (whether parties to the proceedings or not): s 8(2). Next the court may limit a defendant’s liability to the plaintiff in damages, to a percentage that is fair and equitable having regard for the extent of its responsibility: s 8(2). Still further, in the case of other wrongdoers who also happen to be defendants to the proceedings, the court is given the power to determine as against each, a proportion of the plaintiff’s damages equivalent to the percentage representing the extent of each defendants respective contribution to the plaintiffs’ harm: s 8(4).

11. The net effect is as if contribution notices were passed between defendants and between plaintiff and defendants. Another consequence is to remove the practice of entering judgment joint and severally against all defendants found to contribute to the harm, so that the plaintiff is limited to recovery against each defendant to the extent only that they actually contributed to such harm. A defendant achieves no contribution from another wrongdoer, because liability in its case is already limited to the extent of its own contribution. Certain procedural safeguards are contemplated before this course is open to a defendant. These principally entail the obligation to provide the plaintiff with “information” about another wrongdoer not then a party to the action, as to the “circumstances giving rise to the other person’s liability”: s 10(1)(a) & (b).

12. The basis upon which the defendants seek an order limiting their liability is said to reside in a duty on North East Isuzu “to ensure that the chassis on the truck was suitable for the purpose indicated by the plaintiff to North East Isuzu”.[95]  Alternatively they seek leave to amend their pleadings to facilitate an order for apportionate liability as between them.  Both courses were strongly opposed by counsel for the plaintiff on a number of grounds, substantive and procedural.  These included the failure to plead the issue, the failure of the defendants to join North East Isuzu in the first place, conflict with statutory and procedural prerequisites, inconsistency with the conduct of their case, and incurable prejudice.

    [95]   Defendant’s written submission paragraph 39

    The Rules of court

13. The application of the statutory provisions are subject to the various Rules of Court.  Generally these are designed to define the issues in dispute and to ensure no party is taken by surprise as to those issues: Williams v Australian Telecommunications Commission.[96]  For instance a party is required to plead “such facts as give fair notice of the party’s case at trial”: Rule 6R 98(2)(d) of the Supreme and District Court Civil Rules 2006, and a defendant is to “specifically raise any special defence on which the defendant relies”: 6R 100(1)(c) and to “state the basis of each special defence … (including reference to any statutory provision on which the defendant relies)”: 6R 100(1)(d).  Rule 6R 100(3) specifies that a special defence is “a defence other than a denial of facts alleged by the plaintiff, or a denial that facts alleged by the plaintiff give rise to a cause of action”.  Examples of estoppel or statute bar are given.

    [96] (1988) 52 SASR 215 at 216

14. Both contributory negligence and apportionable liability are creatures of statute.  At common law the former was a complete defence,[97] first abolished in England by the Law Reform (Contributory Negligence) Act 1945 (UK), a move adopted in South Australia upon the insertion of s 27a in the Wrongs Act 1936 (SA) by the Wrongs Act Amendment Act 1951 (SA) s 4 (No. 50 of 1951).  Quite apart from the examples furnished by the statute, it was always conventional practice to plead fraud, and for that matter contributory negligence: Benjamin v Currie[98] and Christie v Bridgestone Australia Pty Ltd.[99] In the latter case it was held not to be open to apportion liability in the absence of an express plea of contributory negligence.[100]

    [97]   Taylor v Simon Carves Ltd [1958] S.L.T. (Sh.Ct.) 23, Hickson v Goodman Fielder Ltd [2009] HCA 11 at [19]

    [98] [1958] VR 259 at 263

    [99] (1983) 33 SASR 377

    [100] At 381 per Mitchell ACJ and 394 per Legoe J, White J dissenting at 389 adding “provided both counsel are on notice throughout the trial that is an issue in the case”.

15. It is true enough that the previous District Court Rules 1987 which obliged a defendant to specifically plead “any fact or material which … might take the opposing party by surprise”: R 46.10(1) is not reproduced in the current rules. That does not alter the underlying fundamental and long standing practice to plead contributory negligence as a matter of fairness, a practice fashioned into a rule of law by the Court of Appeal in Fookes v Slaytor,[101] and applied by the Full Court in Christie v Bridgestone Australia Pty Ltd,[102] and again in Government Insurance Office of New South Wales v ALI.[103]

    [101] [1978] 1 WLR 1293

    [102] Above

    [103] (1992) 59 SASR 124 per Olsson J, King CJ and Mullighan J concurring

16. Olson J observed in his reasons in that case:[104]

    There is, in my opinion, no doubt that, having regard to the reasoning in Christie v Bridgestone Australia Pty Ltd (1983) 33 SASR 377, the advice of counsel was sound. The appellant will not be able to pursue any case based on an issue arising under s 35a of the Wrongs Act, or in contributory negligence related to a failure to wear a seatbelt, in absence of the proposed amendment.

    The last-mentioned statutory provision merely erects a rule of law which is to be applied in certain types of factual situation.  In accordance with long-established procedural principles a party is not entitled to invoke such a provision unless that party both pleads the alleged prerequisite factual circumstances giving rise to the operation of the statute and also the specific issue based on and arising from the section.  It is stating the obvious to say that the fair and orderly conduct of litigation is based upon that fundamental conceptual approach; and that a non-observance of it would plainly lead to potential unfairness to other parties and an inability to conduct trials in an efficient manner.  It would negate the very purpose for which the system of pleading is established - to define in advance the true issues arising for consideration and determination.

    Christie v Bridgestone Australia Pty Ltd was subsequently applied by the Court of Appeal of the Northern Territory in North Australian Aboriginal Legal Aid Service Inc v Liddle.[105]It must follow inevitably from the principle affirmed in this authoritative line of cases that apportionate liability must be pleaded where it is to be relied upon.

    [104] At 127

    [105] (1994) 118 FLR 109

17. With due respect to the carefully developed submission of Mr Allen, it cannot be right that by merely flagging in correspondence between solicitors the issue of the potential liability of North East Isuzu, the defendants provided a sufficient foundation to seek an order to limit its liability to Outback Health on account of apportionable liability.  He commenced this part of his submission by reference to that correspondence, contained in Exhibits P8 and 8A.  It is to be recalled the key events transpired during the latter half of 2006.  Proceedings were instituted in August 2007 and an initial defence was filed in September of that year.  The plaintiff’s solicitor Mr Walsh, first wrote to GSV in mid February 2007.  There followed a number of exchanges not relevant to the current topic.  However DLA Phillips Fox suggested in a letter of 4 April 2008 that questions of configuration, specification of the truck and altering the wheel base, were matters exclusively arising between the plaintiff and North East Isuzu.  The letter concluded on this note:[106]

    For the purposes of the Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001, we have reasonable grounds to believe that North East Isuzu, not our client, may be liable to your clients claim.

    [106] Exhibit 8A

18. Based on this, and an earlier exchange between the solicitors at a settlement conference, it was submitted due compliance with s 10 of the Law Reform (Contributory Negligence and Apportionment of Liability) Act[107] was established.  This section provides:

    10—Procedural provision

    (1)     If a defendant entitled to a limitation of liability under this Part has reasonable grounds to believe that a person who is not a party to the action may be liable on the plaintiff's claim, the defendant must, as soon as practicable, provide the plaintiff with information that is in the defendant's possession, or reasonably available to the defendant (and not equally available to the plaintiff), about—

    (a)     the other person's identity and whereabouts; and

    (b)     the circumstances giving rise to the other person's liability.

    (2)     If a defendant fails to comply with its obligation under this section, a court may order the defendant to pay costs incurred in proceedings that could have been avoided if the obligation had been carried out.

    (3)     A court may order that costs payable under this section be assessed on the basis of an indemnity.

    [107] Above

19. Accepting for the present purposes that the letter of April 2008 duly satisfied the base requirements of this section, so far as it goes, as the heading suggests, the section is procedural.  It does not purport to regulate the litigation process, as such.  This section is designed to impose a measure of procedural fairness at forensic levels.  Hence once proceedings are on foot and once a defendant forms the view there are “reasonable grounds to believe that a person who is not a party to the action may be liable on the plaintiff’s claim, the defendant must as soon as practicable, provide …” the statutorily required information to the plaintiff.  The mandatory obligation matures once the requisite state of mind is formed.

20. The evident purpose of this is to notify a plaintiff that it might be at risk of an order limiting its level of recovery against the present defendant.  Consequently this affords the plaintiff the opportunity to consider whether it ought to review its position with respect to the supposed non-party wrongdoer, thus facilitating the making of an informed forensic judgment whether to join the other “wrongdoer”.  The section has no other operation in regulating proceedings.  It does not supply the substantive right to raise questions of apportionate liability in the absence of a formal plea to that end.

21. Moreover, as Mr Keen pointed out during his countering submissions, the position contended for by the defendant conflicts with the Rules of Court paraphrased above and with long-standing principle established by the case law.  The defendants’ stance also conflicts with the decision of Hammerschlag J in Ucak v Avante Developments[108] on identical legislation which his Honour described as furnishing a defence which must be pleaded.  His decision  was applied by Judd J in P & V Industries Pty Ltd (formerly Porto & Valente Industries Pty Ltd) as trustee for Porto & Valente Unit Trust v Secombs (a firm),[109] by Middleton J in Dartberg Pty Ltd v Wealthcare Financial Planning Pty Ltd[110] and by Rothman J in HSD Co Pty Ltd v Masu Financial Management Pty Ltd[111] in relation to analogous legislation: and see McDougall “Proportionate Liability in Construction Litigation”.[112]

    [108] [2007] NSWSC 367 at [33]

    [109] [2008] VSC 209 at [8]

    [110] (2007) 164 FCR 450 at [31]

    [111] [2008] NSWSC 1279 at [18]

    [112] (2006) 22 BCL 394 at 400

    The application to amend

22. Putting these formidable hurdles aside, an application by the defendants made towards the conclusion of the trial and perfected during the course of closing submissions to amend in the event that was necessary, to plead apportionate liability, was bound to fail on the merits.  The trial was conducted on both sides on the basis that the dealings between the plaintiff and North East Isuzu were generally inadmissible, except to the extent they threw any light on the frame of mind of Mr Netherton, or to explain how he dealt with the issue of extending the frame and then in purchasing a bigger truck.  Defence counsel occasionally objected to evidence of wider dealings between them[113] and when under cross-examination, the content of Mr Netherton’s dealings with North East Isuzu were not explored.[114]  Indeed the dealings between either party and North East Isuzu were not otherwise ventilated for any evidentiary purpose and certainly not to expose any potential wrongdoing on its part.

    [113] T30.4-.34, T31.20

    [114] T115.4-T118.4

23. In these circumstances it is simply not open to make findings of fact in relation to the involvement or otherwise of North East Isuzu, just as it is impossible to determine whether or not there was any duty on its part, or what the content of that duty might be.  This is fundamentally because those issues were not agitated as they might otherwise have been during the course of the trial.  In that respect the parties are bound by their conduct: Port of Melbourne Authority v Anshun Pty Ltd (Anshun Case).[115]

    [115] (1981) 147 CLR 589 at 598 and 603-604

1. Furthermore, an amendment for that purpose must inevitably fail purely on grounds of procedural fairness.  It is not difficult to see that if apportionate liability had been specifically raised on the pleadings, the plaintiff might have conducted its case differently, not only in respect to the nature of the evidence it might have led, but in the way it might have cross-examined witnesses.  Apart from that, it may have called witnesses from North East Isuzu.  As things stand, neither party elected to adduce evidence from that source, even though at face value employees of North East Isuzu, including Mr Menechella, were equally available to both parties.  But it may not have been the position if the plaintiff had been fully alive to the claim now sought to be made for sharing responsibility with North East Isuzu.  If the issue was raised in the pleadings, the plaintiff may well have made different forensic decisions altogether.

2. Mr Allen indicated he would not oppose the plaintiff having leave to re-open its case, re-call witnesses and/or to enable any other witness to be called. However this is the very kind of situation s 10 was designed to forestall. Granted the requisite notice was furnished thereunder, it must be assumed the plaintiff subsequently made such inquiries as it was advised and consequently took such forensic decisions as it considered necessary, decisions taken in light of the fact that the defendants’ elected at that point in time not to seek orders in the nature of proportionate liability. In these circumstances it is simply too late to seek to change course so drastically at such a late stage in the proceedings. The defendants are equally bound by the conduct of their case in this respect. It would have been quite a simple matter to plead the new statutory defence had they chosen to.

3. Even if the amendment was permitted, the claim against North East Isuzu is without substance on the evidence as it stands.  Clearly enough North East Isuzu assumed in their arrangements with the Nethertons a contractual obligation to lengthen the chassis and to register the truck.  There is no evidence they assumed any other responsibility in relation to the vehicle apart from supplying it.  Although the Albertinis went to the premises to measure the chassis at some point in time (as to precisely when they are in conflict), there was no evidence during any stage that North East Isuzu or Mr Menechella played any active role.  Although the evidence is conflicting in relation to when the chassis was measured (Mr Albertini Snr said it was afterwards,[116] whereas his son said it was beforehand),[117] the probabilities are that it was afterwards, for the reasons mentioned earlier.

   [116] T246.2-247.28

   [117] T305.19-306.14, T321.24-322.12

4. Apart from this, the only other subject of potential relevance was the altered weigh note attached to the application for registration.[118] The circumstances are such that this was most likely altered by someone from North East Isuzu. However, by that stage all the damage had been done. The truck was supplied and paid for and so was the unit, so that even if this might have furnished some basis for responsibility against them, it did not result in any damage. There was then no evidence upon which it was open to make a finding that their “acts or omissions caused or contributed to the harm”: s 8(2)(b) Law Reform Contributory Negligence and Apportionment of Liability Act.[119]For these various reasons, the claim to apportionate liability and the application to amend if necessary, must fail on procedural as well as substantive grounds.

   [118] Exhibit P10

   [119] Above

   Breach of Contract

5. The plaintiff maintains there was an implied term to the contractual arrangements between the parties to deliver a unit mounted vehicle capable of being legally driven on public roads.  The general principle is not in doubt as being that formulated by Mason J in Codelfa Construction Pty Ltd v State Rail Authority (NSW) (Codelfa / Eastern Suburbs Railway Case),[120] approving the conditions necessary to ground the implication of terms summarized in the majority judgment in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council,[121] namely: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that `it goes without saying'; (4) it must be capable of clear expression;  (5) it must not contradict any express term of the contract.

   [120] (1982) 149 CLR 337 at 347

   [121] (1977) 52 ALJR 20 at 26

6. At this juncture counsel for the plaintiff submitted a particular application of the general principle was to imply a condition “that the overall package of the truck together with the unit should be able to be legally driven”.[122] It was further argued this was a necessary adjunct of the recognized class of implied terms that a chattel is to be fit for the purpose for which it is intended: Reg Glass Pty Ltd v Rivers Locking Systems Pty Ltd,[123] GH Myers and Co v Brent Cross Service Co[124] and Helicopter Sales (Australia) Pty Ltd v Rotor-Work Pty Ltd.[125]

   [122] Written submission, paragraph 27

   [123] (1968) 120 CLR 516 at 521-522

   [124] [1934] 1 KB 46

   [125] (1974) 132 CLR 1 at 8-9

7. Counsel relied on two cases in particular whose facts were said to be similar to the present.  The first was Truk (UK) Ltd v Tokmakidis GmbH & Ors.[126]  This case concerned the supply and fitting of lifting equipment on a tow-truck chassis supplied by the defendant.  It was not installed according to the chassis manufacturer’s recommendations and was rejected by the purchaser.  The case turned on the application of s 35(4) of the Sale of Goods Act 1979 (UK) and the expression therein that the buyer is “deemed to have accepted the goods when after the lapse of a reasonable time he retains the goods …”.

   [126] [2000] 1 Lloyds R 543, 546, 548 and 552

8. The second case Clegg v Olly Andersson,[127] related to the purchase of a yacht required to have a shoal draught keel “in accordance with the manufacturer’s standard specification”.  The keel turned out to be substantially heavier than the specifications, having an adverse and unacceptable effect on the safety of the rig.  Once again the decision turned on an established breach of the Sale of Goods Act. It was considered in the Court of Appeal decision of Gallagher (T/A Gallery Kitchens & Bathrooms)[128] and by the House of Lords in J H Ritchie Ltd v Lloyd Ltd,[129] but in each instance with respect to the right to reject unsatisfactory goods.  This line of cases therefore do not advance matters so far as the general law of contract goes.

   [127] [2003] EWCA CIV 320 at [45-49]

   [128] [2005] 1 Lloyds LR 337

   [129] [2007] 1 WLR 670

9. A term is only to be implied if it is necessary to make a contract effective in the business sense and if without it the contract is unworkable: Hospital Products Ltd v United States Surgical Corp & Ors.[130]  This is done so as to “give such business efficacy to the transaction as must have been intended at all events by both parties: The Moorcock.[131]  No authority goes so far as to suggest the law implies a condition in every contract that goods supplied must be capable of being lawfully used.  The cases do demonstrate that the law will imply obligations to contracts for the supply of goods that they will be fit for the intended purpose, when to do so accords with principle.  Indeed contracts to do work and supply materials usually carry two implied warranties; that the goods are of good quality and free from latent defects and that the materials are reasonably fit for their intended purpose: Helicopter Sales (Australia) Pty Ltd v Rotor-Work Pty Ltd.[132]

   [130] [1984] 156 CLR 41 at 65-66, 117-118, 121, 139

   [131] (1889) 14 PD 64 at 68

   [132] Above at 6 per Barwick J

10. Based on these principles of general application, counsel argued ‘it is almost trite that such a contract would imply that the overall package of the truck together with the unit should be able to be legally driven’.[133]  The cases relied on to support this proposition turned on differently characterised issues: Reg Glass Pty Ltd v Rivers Locking Systems Pty Ltd[134] (breach of implied warranty of fitness), G.H. Myers & Co. v Brent Cross Service Co[135] (implied warranty goods were of good quality and reasonably fit for intended purpose), a decision approved in Helicopter Sales (Australia) Pty Ltd v Rotor-Work Pty Ltd[136] (implied warranties that the materials were of good quality and free from latent defects and reasonably fit for their intended purpose) and North East Equity Pty Ltd v Proud Nominees Pty Ltd (No.2)[137] (implied condition that goods supplied would be reasonably fit for the purposes of the purchaser).

    [133] Written submissions paragraph 27

    [134] (1968) 120 CLR 516 at 521

    [135] [1934] 1 KB 46

    [136] (1974) 132 CLR 1 at 8-9

    [137] [2008] FCA 1189

11. The proper application of the principles emerging from these cases is that the contract between the partes in this instance is one requiring in the requisite sense, the implication of a term that the unit built by the defendants on the chassis supplied by the plaintiff would be fit for the mutual purpose contemplated by them, which was to be driven on public roads.  The plain fact of the matter is that it could not be so driven.  It must follow that the defendants were in breach of an implied term of the contract that the unit was to be fit for the intended purpose.

    Sale of Goods Act

12. A number of authorities relevant to this aspect of the claim are cited above. Section 14(a) of the Sale of Goods Act[138] provides:

    (a)where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller's skill or judgment, and the goods are of a description which it is in the course of the seller's business to supply (whether he be the manufacturer or not), there is an implied condition that the goods shall be reasonably fit for such purpose: Provided that in the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose;

    A liberal interpretation has been given to equivalent provisions: Cammell Laird & Co Ltd v Manganese Bronze and Brass Co Ltd.[139]  Even so the purpose must be made known with sufficient particularity to enable the seller to identify the characteristics necessary to fit them for that purpose: Henry Kendall & Sons v William Lillico & Sons Ltd,[140] and Ashington Piggeries Ltd v Christopher Hill Ltd.[141]

    [138] Above

    [139] [1934] AC 402 per Lord Wright at 422-423

    [140] [1969] 2 AC 31 per Lord Reid at 79, per Lord Pearce at 114-115 and Lord Wilberforce at 123

    [141] [1972] AC 441 at 468, 476-477, 486, 496-497, 506-507

13. Apart from the decisions mentioned above, several other reports bear some analogy to the present case, but as can be seen from the following précis’, none are completely on all fours.  The case of Bristol Tramways and Carriage Company Ltd v Fiat Motors Ltd[142] concerned the purchase of a Fiat Omnibus chassis “for the road”, to be used for the conveyance of passengers around Bristol, in heavy and hilly traffic conditions.  The chassis proved unfit for this purpose on account of breaking-down too often.  The Court of Appeal held there was an implied condition that the omnibus should be reasonably fit for the declared purpose.[143] The case otherwise turned on the application the proviso to s 14, not applicable here.

    [142] [1910] 2 KB 831

    [143] Above at 836, 838-839

14. Next in Cammell Laird and Co. Ltd v Manganese Bronze and Brass Co. Ltd[144] a firm of shipbuilders agreed to build two ships designed for carrying heavy liquids, having propellers of special construction and diameter according to certain specifications. One proved unsatisfactory because it caused too much noise. It was held that since the facts came within the first exception to s 14 of the Sale of Goods Act, the seller fell into breach of the implied condition that it should be reasonably fit for that purpose. The case is often cited for the proposition that it is not necessary for the purposes of s 14 that the buyer should rely “totally and exclusively on the skill and judgment of the seller for every detail in the production of the goods” concerned.[145]

    [144] [1934] AC 402

    [145] Per Lord Wright at 427

15. Then in John Paul Jones Autos v Volvo Distributors,[146] the purchaser entered into an agreement for the installation of two diesel powered engines recommended by the defendant, which proved insufficient to drive the boat at a speed fast enough to make it capable of satisfactory use as a profit making enterprise.  The resolution of the case however turned on the appropriate level of damages.  It will be necessary to return to this decision later in that context.  Next in point of time comes Finch Motors Ltd v Quin.[147]  The plaintiff purchased a motor vehicle later found to have a corroded radiator, a blown gasket and deficiencies in braking and steering as well as various other faults.  This decision turned on a procedural point as to whether or not the defendant should have leave to defend.

    [146] (1975) 14 SASR 297

    [147] [1980] 2 NZLR 513

16. Finally reference should be made to the decision of the Court of Appeal in R & B Customs Brokers Co Ltd v United Dominions Trust Ltd,[148] relating to the purchase of a motor vehicle, found to have a leaking roof. Essentially it was held there was a breach of s 14(3) of the Sale of Goods Act 1979 (UK) on the basis of an implied warranty of fitness for the particular purpose for which it had been purchased, namely use upon English roads in English weather conditions.

    [148] [1988] 1WLR 321

17. In one sense the closest analogy to the present situation is the well recognized category of contracts frustrated on account of supervening illegality: Joseph Constantine Steamship Line Ltd v Imperial Smelting Corp Ltd[149] and Gamerco SA v ICM/Fair Warning (Agency) Ltd.[150]  A common occurrence is where parties enter into a lawful contract before war time regulations render the subject matter of the contract illegal.  Those contracts usually discharge because of the doctrine of frustration.  This is not such a case, as by the time the illegality was discovered, the truck had been delivered and the full purchase price paid over, so that the contract was no longer on foot; the subject matter was spent.  Accordingly the doctrine of frustration plays no part in resolving the issues in contention in this case.  Neither party contended or argued otherwise.

    [149] [1942] AC 154 at 163

    [150] [1995] 1WLR 1226

18. The action mounted under the Sale of Goods Act must succeed for precisely the same reasons as the breach of implied term of fitness for purpose succeeds under the general law of contract.  Both sides clearly understood the intended purpose of the unit was that it be mounted on the chassis for the purpose of being driven on public roads.  It was not fit for that purpose, not because the law implies a term that the goods in question could be lawfully used, but fundamentally because the unit was too heavy, and hence not fit for the contemplated purpose.

    Damages

    The basis of the claim for damages

19. Damages are claimed under several heads, totalling $99,816.70.  The first is the loss attributable to the diminished value of the Isuzu once traded-in.  The original Isuzu cost $67,490.20 for which CMI Hino allowed $40,000 as a trade-in, the difference between the two being $27,490.20.  Secondly the plaintiff seeks the cost of transferring the unit from the Isuzu to the Hino: this has been proved to have cost $9,540.58.[151]  These changeover costs are denied by the defendants on the basis they offered to assist the plaintiff to do this.  The fact of the matter is that this never crystallised into a concrete unconditional offer.  This issue was resolved earlier in these reasons.

    [151] Exhibit P1, pp 41 and 42.

20. Next the plaintiff claims the financial costs of $30,446.12.  This is calculated on the footing that they were required to make a series of monthly payments of $3,273.28 between December 2007 and August 2008 under the original finance arrangement and before the new truck could be purchased and refitted.  A final head of damage relates to the “extra cost” of the new truck claimed to be $32,340.  This figure derives from the difference between the $98,830 paid for the Hino and the cost price of the Isuzu of $67,490.

    Damages – general principles

21. Before considering the merits of these several claims, it is necessary to identify the conceptual basis upon which damages are to be assessed.  The measure of damages in tort, contract and under the Sale of Goods Act are not necessarily the same.

22. Under the law of tort, an award of damages is designed to place a plaintiff in the position he would have been if the wrongful act had not been committed: South Australia v Johnson,[152] Gould v Vaggelas,[153] Johnson v Perez,[154] Gates v City Mutual Life Assurance Society Ltd,[155] and Haines v Bendall.[156]Whereas in contract, damages are awarded so far as money can do it, with the object of placing the plaintiff in the position in which he would have been had the contract been performed: Tabcorp Holdings Ltd v Bowen Investments Pty Ltd.[157]  In Gates v City Mutual Life Assurance Society Ltd the joint judgment of Mason, Wilson and Dawson JJ points out that damage suffered by means of reliance loss in contract, is “similar to” the measure of damage in tort.[158]

    [152] (1982) 42 ALR 161 at 170

    [153] (1985) 157 CLR 215 at 265

    [154] (1988) 166 CLR 351 at 355-356, 359, 367, 370, 380 and 386

    [155] (1986) 160 CLR 1 at 11-12

    [156] (1991) 172 CLR 603

    [157] (2009) 83 ALJR 390

    [158] Above at 12-13 

23. When it comes to the Sale of Goods Act the measure of damages for breach of statutory warranty is the “estimated loss directly and naturally resulting, in the ordinary course of events, from the seller’s breach of contract”: s 50(2).  Under s 50(3) this is:

    … prima facie the difference between the value of the goods at the time of delivery to the buyer and the value they would have had if they had answered to the warranty.

24. An immediate problem posed by the facts emerges if the cause of action under the three respective heads arise at different points in time.  The court has determined negligence occurred soon after delivery of the chassis by North East Isuzu to GSV fitted with the additional options and extras,[159] which should have triggered in the mind of the defendants that overall weight might compromise the recommended GMV.  This must have been around 8 August 2006 when the purchase order was raised.[160]  On the other hand supply occurred shortly after the Isuzu invoice was raised on 12 December 2006, so that the operative negligence and the operative breaches of the contract and the sale of goods warranties occurred several months apart.  At the earlier date it was still open to terminate the deal with GSV and cut their losses, but as of the latter it was not.

    [159] Exhibit P1, p48

    [160] Exhibit P1, p38

25. The abject difficulty with placing the plaintiff in the position it would have been in as of August 2006 is that it had already taken delivery of the extended chassis, so that restoring it to that position now would be impracticable and if not impossible.  It was legally bound to pay the purchase price to North East Isuzu by then, but it was at least open to repudiate the GSV contract with possibly little damage being done.  Assuming that to be the case, the plaintiff might or might not have recovered some if not most of the cost of the Isuzu if it could be sold.  It should not be assumed this would realise the $59,000 offered as a trade-in, as that was given on the back of the purchase of a more expensive vehicle.

26. It can be seen that if damages flow on the basis of placing the plaintiff in the position in which it would have been, but for the wrong, or the position it would have been had the contract been performed, the picture is somewhat different, and entails potentially different inquiries.  In contrast the breach of the implied statutory warranty requires the court to assess the difference between the value of the goods at the time of delivery and the value they would have had if they had answered to the warranty, which is quite another exercise.

1. The plaintiff contended that both the tortious and the measure of damages under the Sale of Goods Act, were inapplicable because of the evidence of Mr and Mrs Netherton that they could not afford to purchase the more expensive unit or truck in the first place, because there was no market for the unusable assembly and because the plaintiff did not rely upon any representations as to value.  For the reasons mentioned earlier it can be accepted that in contracting as they did, the Nethertons were stretching their budget to the limit, so that the more expensive truck was not an option for them at that time.  Mr Netherton said it was “a very hard decision to come by”.[161]  For her part Mrs Netherton considered the original purchase was “a big struggle, but in the end we made the commitment”.[162]

   [161] T 62.23-.24

   [162] T208.26-.27

2. Both gave evidence that they did not have sufficient funds to purchase a 10 ton vehicle if that was what was required in the first place, simply because they had stretched the financial resources available to them at that time to the limit as it was.[163]  It was quite evident when given their evidence that the original decision was difficult enough, so this evidence not only has the ring of truth about it, and as they were patently honest witnesses the court has no difficulty in accepting this state of affairs to be the truth of the matter.

   [163] T62.18-.35, 227.13-124

3. It is obvious that by early 2007 the vehicle and unit were practically useless, so that unless the problem was solved in some way, they simply would not have been able to sell both as one, as they were.  Although there might have been a market for the extended chassis at more or less the trade-in value at best, there was no market for the unit on its own, as it was built for a unique one-off purpose.  Approaching an assessment of damages from the perspective of the difference between the value of the goods delivered and the value they would have had had they answered to the intended purpose, is not apposite to the circumstances for these very reasons.

4. Irrespective of the cause of action, the only sensible course is then to assess damages on the basis of proved loss suffered and expenditure incurred, consequent upon the breaches, in the actual circumstances then pertaining.  Damages under the Trade Practices Act and the Misrepresentation Act were not articulated by counsel any differently.  These causes would have failed in any case since the four alleged (mis)representations on which they depend were not proved, for the reason already identified.

5. As Mason, Wilson and Dawson JJ pointed out in Gates v City Mutual Life Assurance Society Ltd:[164]

   The question then is whether it is appropriate to apply the contract measure of damages to the contraventions found to have taken place.  The courts are not bound to make a definitive choice between the two measures of damages so that one applies to all contraventions to the exclusion of the other.  However, there is much to be said for the view that the measure of damages in tort is appropriate in most, if not all, Pt V cases, especially those involving misleading or deceptive conduct and the making of false statements.  Such conduct is similar both in character and effect to tortious conduct, particularly fraudulent misrepresentation and negligent misstatement.

   [164] Above at p12

6. Thus the precise application of the above principles depends very much in this case on the individual circumstances, as acknowledged in South Australia v Johnson:[165]

   The principle which underlines the award of damages in tort is, generally speaking, that of restitutio in integrum. The object is to restore the plaintiff to the position in which he would have been placed if the wrongful act had not been committed. The measure will vary as between deceit and negligence. In deceit, the plaintiff recovers the difference between the amount paid and the value of the property acquired, the object being to place him in a position equivalent to that which he would have occupied had the transaction not taken place. The defendant being guilty of a deliberate wrong, the damages will include the whole loss directly flowing from the fraudulent inducement because, as Lord Denning MR declared in Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158 at 167, “it does not lie in the mouth of the fraudulent person to say that they could not reasonably have been foreseen”.

   …

   In Shaddock, as no question of loss of profits arose, it was appropriate to award the plaintiff compensation by reference to the difference between the amount paid by the plaintiff for the property and its actual value plus other incidental expenses.

   The precise application of these principles will depend on the circumstances of the case.

   [165] Above at 170

   Calculating the measure of damages

7. The various items claimed by the plaintiff were proved to have been incurred by them.  It was in a predicament requiring a solution, and so it was more than reasonable to acquire a bigger truck, capable of accommodating the extra weight.  The defendant has not demonstrated the plaintiff failed in its duty to mitigate its loss.  Whilst on the horns of a dilemma the plaintiff worked through the limited options available to it.

8. As it was the company had to invest more capital even though its capacity in that respect was quite limited.  The Nethertons also tried and failed to negotiate a solution through the respective solicitors which continued through to April 2007, which once again was perfectly reasonable.  It was then that they made further inquiries and settled on the cheaper Hino option in June 2007.  A subsequent delay of some two months before delivery, was not one not of their own making.[166]  And of course time was needed to effect the change-over.  Although in theory the alternative Isuzu was available as early as February 2007, it was reasonable to first explore and exhaust these other options.  As they were not in a financial position to transact at that time and since their straightened financial position directly resulted from their inability to earn money from the unit, it is not appropriate to reduce damages on account of any failure to mitigate, as there was no such failure: Burns v M.A.N. Automotive (Aust) Pty Ltd.[167]

   [166] T63.22-64.1, 212.7-.24, 184.6-186.38

   [167] (1986) 161 CLR 653 at 649 per Gibbs CJ

9. Turning then to the first head, this was calculated by subtracting from the original purchase price of $67,490 for the NPS 300, the trade-in of $40,000 allowed by CMI-Hino,[168] thus producing the $27,490 sought.  This sum effectively represents the additional cost of upgrading to a larger vehicle.  As there was no other option sensibly available, this sum will be allowed, because it represents an expense incurred, in restoring the plaintiff to the position it should have been in but for the breaches.

   [168] Exhibit P1, p98 

10. The second item is the cost of transferring the unit from one truck to the other.  This was proved to be $9,540.[169]  The defence complains that $1,387 of extras were unnecessarily added and therefore should be disallowed.[170]  As the evidence of Mr Netherton was that these proved necessary because of differences in the configuration of the Hino from that of the Isuzu, that objection cannot be sustained.[171]  Otherwise, that these were reasonably incurred or done at a reasonable cost was not disputed by the defendants, apart from the consideration that they had offered to do it themselves.  As that point of view has been rejected, this item will be allowed, as forming repair or restitution costs reasonably incurred: Zuvela & Another v Geiger,[172] Hyder Consulting (Australia) Pty Ltd v Wilh Wilhelmsen Agency Pty Ltd[173] and Bellgrove v Eldridge.[174]

    [169] Exhibit P1, p 106 & 107

    [170] Written submission paragraph 142, and refer Exhibit P1, p 107

    [171] T187.11 – 188.2

    [172] [2007] WASCA 138 at [3] and [11]

    [173] [2001] NSWCA 313

    [174] (1954) 90 CLR 613 at 618

11. The third aspect of loss pertains to “wasted finance costs”.  This comprises the initial monthly commitments to the financier, consisting of a first payment of $4,259, followed by eight monthly amounts of $3,273, totalling $30,446.12.[175] Those payments were made over the period between delivery in December 2006 and the supply of the second “capable” vehicle in August 2007.  The foundation for this aspect of damages lies in the fact that the vehicle could not be used over the period in question.  In cases such as this, borrowings and interest thereon unnecessarily incurred or wasted, are an aspect of loss suffered and therefore properly awarded as a component of damages.  In Hungerfords v Walker,[176] the point is made that loss of the use of the use of the money paid away is so directly related to the wrong that it can be recovered, based on the premise that money is borrowed to avoid the loss.

    [175] Exhibit P1, p 108 to p116 inc 

    [176] (1988) 171 CLR 125 at 144

12. This is not such a case on the evidence as it was presented.  These subject sums were expended on a liability incurred for the initial purchase, not as a consequence of breach.  Moreoever, they served to increase the plaintiff’s equity in the Isuzu.  On the other hand the plaintiff was unable to use the vehicle, although they claim no loss of expectation on account of that, probably because it would be impossible to quantify in the quite unique circumstances.  No attempt was made to distinguish between the proportion of principal and interest these payments represent.  And no evidence was adduced as to what ends the company funds would be otherwise employed, had the loan not been made.  Nor is there any claim for the borrowing costs of the additional $30,000.

13. There is however a stronger case for the recovery of interest over the subject period, because of the inability to use the truck which had the effect of channelling the interest towards an unproductive end.

14. Doing the best one can according to the principles set out in Commonwealth v Amann Aviation Pty Ltd,[177] and bearing in mind the common experience that earlier payments of a loan are more likely to contain a larger interest component, the court allows 60% of the sum claimed, which comes to $18,267.67.  The balance is disallowed on the dual grounds that the capital proportion of the loan increased the plaintiff’s equity in the vehicle and because it has not been demonstrated to have been a borrowing unnecessarily paid away or wasted in order to avoid loss.

    [177] (1991) 174 CLR 64 at 83

15. The last aspect of damages relates as articulated, to “extra costs” of the Hino.  This commences with the cost price of $99,830,[178] then by subtracting the purchase price of the Isuzu of $67,490,[179] thus producing a balance of $32,340.  In point of fact the actual cost was $58,830 since $40,000 was deducted from the initial price upon trading-in the Isuzu.  This aspect of the damages claim is not straightforward at all.  It can be readily understood that upgrading to a larger vehicle having a greater and effective carrying capacity, was a reasonable course to take and that the Hino was the least costly option.  In that respect the plaintiff has proven this item was a direct consequence of the proven negligence or breach of implied term, whether statutory or contractual.  On the other hand the Nethertons acquired a more valuable asset to the extent of $32,340 based on this calculation, or $27,490 if based on the additional cost of purchasing the Hino.

    [178] Exhibit P1, p 98

    [179] Exhibit P1, p77

16. When an innocent party has no option other than to replace goods supplied in order to restore their pre-tortious or precontractural position, the proper measure of damages is the cost of replacement: Hollebone v Midhurst and Fernhurst Builders Ltd[180] and Harbutt’s “Plasticine” Ltd v Wayne Tank & Pump Co Ltd.[181]  So how does the law then view this situation against the guiding principle of placing the plaintiff in the position in which it would have been but for the negligence or had the contract been performed?

    [180] [1968] 1 Lloyds Rep 38

    [181] [1970] 1QB 447

17. At this point it becomes necessary to return to John Paul Jones Autos v Volvo Distributors.[182]  Although a sale of goods case, the facts are somewhat analogous in the respect now under discussion.  Bright J held an owner was entitled to a sum covering labour and materials wasted in making marine engines conform to warranty, in addition to the difference in capital value between the boat as it was after the new engines were installed and as it would have been if it had been capable of travelling at the warranted speed with diesel engines.  Damages were also awarded for loss of profits for a reasonable period before a suitable replacement boat was obtained.  Such damages are not claimed in this instance. 

    [182] (1975) 14 SASR 297

18. In the course of his judgment Bright J reasoned:[183]

    His loss must therefore be measured by having regard to the resulting asset. In reality, although perhaps not in legal theory, the warranty goes to the craft fitted with the engines and not to the engines in their original packing cartons. Cf. cases collected in 78 C.J.S. page 252, note 2.[184] 

    The equivalent current reference to that mentioned in the above passage would appear to be Corpus Juris Secundum77A ¶ 22 (2008) where the following statement is made:

    However, where the application of such measure results in a windfall for, or unjust enrichment of, the buyer it is improper to apply such a measure.

    [183] At 302

    [184] This is ostensibly a reference to what is now a very dated version of Corpus Juris Secundum

19. Applying the logic of his Honour’s further reasoning,[185] the same result can be reached by taking a different route, namely that if a truck of the appropriate capacity was available in the first place, the difference in value of that truck equipped with the defendant's unit, and the same truck of adequate carrying capacity fit for the plaintiff's purpose, would have then cost just as much as it has now anyway.  For the same reasons as those expressed by Bright J, the warranty goes to the unit as fitted, not to the unit standing alone.  Even so this aspect of the claim must be rejected as it would otherwise constitute an unjustified betterment of the plaintiff’s position.  The loss must be measured having regard to the resultant more valuable asset.

    [185] At 302-303

20. This is another consideration.  The plaintiff has already been awarded more or less an equivalent sum under the rubric of the “loss of the trade-in”.  In truth this was another method of calculating the additional costs of purchasing a suitable vehicle.  This last head of damage does much the same thing.  Although yielding a slightly different figure, once carefully analysed there is no disguising the fact that this amounts to an alternative method of accounting for the direct cost of restoring the plaintiff’s position.  More than that, Mr Netherton had settled on purchasing the Isuzu well before any operative cause of action on the defendants part arose, so that this could not have been productive of any loss on account of their conduct.  This sum will then be disallowed for the additional reasons that it amounts to a doubling up of an item of damage for which the plaintiff is already to be compensated.

21. Although the sum under this head is marginally higher than that provided in the calculation under the first head, it remains appropriate to allow the lesser sum, if only because the plaintiff cannot demonstrate on balance the latter is more appropriate than the former.  In the result the plaintiff fails to establish an entitlement under this head of damage, but as the other items are allowed, it is proposed to enter judgment in favour of the plaintiff accordingly for $27,490 under the first head, $9,540 costs of conversion, and $18,267.67 interest in effect thrown away, producing an award of $55,297.67.

    Conclusion and orders 

22. The plaintiff fails in misrepresentation, but it has established negligence by the defendants failing to alert it to the foreseeable possibility that the unit intended for the Isuzu NPS 300 could bring the gross vehicle mass above the 6  ton legal limit.  They have also established a breach of the statutory and contractually implied terms to supply goods fit for the mutually understood purpose.  The defendants have failed to demonstrate the existence of active contributory negligence on the part of the plaintiff.  The application to raise apportionate liability is refused.  Although damages for each cause of action in theory falls to be assessed differently, on the facts of this case, principle and the practicalities of the situation, dictate the proper assessment of damage under each cause of action coalesce into an assessment of the actual loss suffered and expense incurred directly arising from the proved breaches.  Measured on that footing the plaintiff is entitled to an award of damages totalling $55,297.67.

23. The parties are entitled to be heard as to which defendant party judgment is to be entered against and as to interest and costs