Perth Photography Services Pty Ltd v Perth Professional Sales and Service Pty Ltd - [2009] WADC 199

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA

LOCATION: PERTH

CITATION: PERTH PHOTOGRAPHY SERVICES PTY LTD -v- PERTH PROFESSIONAL SALES AND SERVICE PTY LTD [2009] WADC 199

CORAM: GOETZE DCJ

HEARD: 29, 30 SEPTEMBER & 1, 2, 5 & 6 OCTOBER 2009

DELIVERED : 22 DECEMBER 2009

FILE NO/S: CIV 2692 of 2004

BETWEEN: PERTH PHOTOGRAPHY SERVICES PTY LTD
Plaintiff
AND
PERTH PROFESSIONAL SALES AND SERVICE PTY LTD
Defendant
PHOTO ELECTRONIC SERVICES PTY LTD
Third Party

Catchwords:

Contract for sale of film scanner - Representations as to capabilities thereof - Merchantable quality - Fitness for purpose - Breach - Damages - Turns on own facts

Legislation:

Sale of Goods Act 1895

Result:

Claim dismissed

Representation:

Counsel:

Plaintiff:     Mr G H Lawton
Defendant:     Mr J C Curthoys
Third Party  :     Mr B C Sierakowski

Solicitors:

Plaintiff:     Lawton Lawyers
Defendant:     Stables Scott
Third Party  :     B C Sierakowski

Case(s) referred to in judgment(s):

Atanasoska v Inghams Enterprises Pty Ltd [2009] WASCA 17
Grant v Australian Knitting Mills Ltd (1935) 54 CLR 49
Jones v Dunkel (1959) 101 CLR 298
Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370

GOETZE DCJ:

Introduction

In 2003, the plaintiff established a new professional photographic laboratory business in Perth.
Part of the equipment required for that laboratory was a Durst Sigma scanner, which it purchased from the defendant.
The defendant had, in turn, purchased the Durst scanner from the third party, which is the Australasian importer of such scanners. The defendant located in Perth, and the third party located in Melbourne, are wholesale and retail suppliers of photographic equipment and electronic imaging products. The third party arranged for demonstration of the Durst scanner for the plaintiff and the defendant at the premises of two of its customers in Melbourne following which, the plaintiff purchased the scanner from the defendant, which in turn, had purchased that scanner from the third party.
The plaintiff alleges that the Durst scanner did not meet its requirements, despite representations from the defendant that it would do so. The plaintiff also alleges that the scanner was, in any event, defective.
The plaintiff alleges that in consequence of the scanner not meeting requirements and being defective, its business failed. The plaintiff sues the defendant to recover its consequential loss and damage. The defendant has joined the third party seeking damages or an indemnity for any liability which the defendant might have to the plaintiff.
This trial therefore concerned the representations alleged to have been made by Mr Patrick Donaghey on behalf of the defendant, to Mr Peter Palmer on behalf of the plaintiff, and further, whether the scanner could not only meet the performance criteria allegedly represented by Mr Donaghey, but also whether it was defective in some way.

The issues

The plaintiff contends, that, during a meeting on 1 July 2003 between Mr Palmer and Mr Donaghey, Mr Palmer made known to Mr Donaghey the particular purpose for which the Durst Sigma scanner was required, namely the express oral terms referred to below, and that Mr Donaghey represented to Mr Palmer that the scanner could meet those requirements. It is contended that these representations were given on both 1 July 2003, at the defendant's showroom in Perth and on 31 July 2003, at the third party's showroom in Melbourne. The defendant denies this.
Express oral terms of the contract are pleaded to be that the Durst Sigma scanner itself had the capability to:
1.produce high quality outputs;
2.provide a range of useable services; and
3.provide effective colour management.
It is also pleaded that it was an express oral term of the contract that the defendant had the capability to supply local maintenance and service support for the scanner. These terms are reproduced in a letter dated 13 August 2003 from the defendant to the plaintiff.
The defendant denies these express terms.
The plaintiff contends that it relied upon Mr Donaghey's representations and his skill and judgment, on behalf of the defendant, in respect of the fitness of the scanner for the purpose for which it was required. The plaintiff also pleads that the scanner was an item the description which was in the course of the defendant's business to sell. In this way, the plaintiff alleges, that, pursuant to s 14(i) and s 14(ii) of the Sale of Goods Act 1895, the scanner was reasonably fit for the purpose for which it was purchased and that it was of merchantable quality. The defendant denies this.
It is also claimed that the business failed because the scanner was not capable of producing high quality outputs or providing a range of useable services or providing effective colour management and further, that the defendant was not capable of supplying local maintenance and service support for the scanner. Thus, the plaintiff contends that the scanner was not reasonably fit for its purpose and it was not of merchantable quality. The defendant contends that, apart from some mechanical breakdowns, the scanner was at all times operating according to factory specification.
The plaintiff also contends that in order to supplement the operation of the scanner as part of its business operations, it purchased a printer and a film processor, which it would not have done absent the representations regarding the scanner.
The plaintiff claims that its business failed and it was unable to service its clients by reason of the defective scanner. It was forced to cease operating the scanner on 30 April 2005. Further, the plaintiff entered into a two‑year lease of premises at 24 Brisbane Street, Perth from 1 November 2003 at an annual rental of $41,851.12. The lease thus extended beyond the decision to cease using the scanner after which decision Mr Palmer then began looking for an alternative, but profitable, business. To enable him to do this, the plaintiff necessarily had to employ two assistants to manage the plaintiff's business during his absence investigating the purchase of another business.
The plaintiff claims:
1.loss in that it cannot sell the scanner;
2.loss on sale of the printer;
3.loss in that it was unable to sell the film processor;
4.the cost of the employees retained to run the business whilst Mr Palmer sought another business; and
5.rent in respect of the business premises from the time the business failed until April 2006, extending beyond the expiration of the lease by reason that the plaintiff still required the leased premises for storage purposes.
Initially, the plaintiff also sought damages for loss of profits in the business, but, that claim has been abandoned.
The defendant denies that the plaintiff has suffered loss and damage.

What discussion took place at the meeting on 1 July 2003 at the defendant's premises?

In 2003, Mr Peter Palmer and his wife Suzanne Palmer migrated from London, England to Perth.
Previously, Mr Palmer had been employed in the photography section of the Metropolitan Police in London and Mrs Palmer had been employed in various administrative roles. They proposed to establish a professional photographic laboratory business in Perth through a company which had been incorporated in 2002. From May 2003 onwards, they set about doing such things as were necessary for the establishment of the business.
Mr Palmer had earlier prepared a business plan for his professional photographic laboratory as part of his visa migration requirements. Prior to meeting Mr Donaghey, Mr Palmer was aware of the Durst Sigma scanner, through general research, including a press release from the Durst website (Exhibit 2.1).
Mr Palmer had seen a number of other scanners, including the Imacon Flextight scanner (T28 and 29). He had visited a number of businesses dealing with photographic equipment and he decided to visit the defendant, which he did, on 1 July 2003, at Lord Street, East Perth.
In his evidence, Mr Palmer said that he dealt with Mr Donaghey and told him that he was in the process of setting up a photographic services company and was considering his equipment needs, about which he wished to have a discussion.
Mr Donaghey discussed an Imacon scanner with Mr Palmer, together with a Genie printer.
Mr Palmer said that he told Mr Donaghey that he did not believe that the Imacon scanner would be satisfactory to scan large quantities of film and he said that Mr Donaghey then raised the Durst Sigma scanner with him. He also said, that, on that occasion, Mr Donaghey provided to him a brochure relating thereto (T33). This brochure became Exhibit 3.
At T38, counsel for the plaintiff said that the leaflet discovered as item 50 in Mr Palmer's affidavit of discovery sworn 29 March 2006 (Exhibit 18) was a similar document to the brochure, being Exhibit 3, but which brochure was not discovered.
At T39, Mr Palmer said that the discovered document was an electronic version of the brochure. The discovered document was downloaded from the Durst website, whereas the brochure handed to him by Mr Donaghey, was photocopied and the photocopy thereof was given to his solicitors "sometime ago". It was only on the weekend immediately prior to the trial that Mr Palmer actually sought out and obtained the original brochure from his archives.
In cross‑examination, Mr Palmer indicated that he had always known where Exhibit 3 was in his archives. He acknowledged its crucial importance in this litigation and also commented that he did not think it was discovered by him (T162).
Importantly, the brochure is not referred to in the statement of claim. The defendant pleaded that the Sigma scanner was not discussed at the meeting on 1 July 2003. It is further pleaded that Mr Donaghey did not then have any knowledge of that scanner. The plaintiff did not file a reply to the defence.
It is not disputed, that, the third party was the agent for Durst equipment within Australia and New Zealand. Mr Palmer knew that before visiting the defendant's showroom. He also knew that the third party was resident in Melbourne, Victoria (T42). Prior to July 2003, there was only one other Durst Sigma scanner in Western Australia and that was at another business. It had been supplied by the third party without reference to the defendant.
Further, it is not seriously disputed, that, the defendant and the third party had only just developed some form of business relationship at the time Mr Palmer visited the defendant's showroom. That had come about in May 2003 when Mr Paul Taylor, from the third party, visited the defendant's business premises for the purpose of creating an agency with the defendant to sell the Genie printer in Western Australia. It is not disputed, that, on 30 and 31 July 2003, Mr Donaghey was required to be in Melbourne for training on the Genie printer by the third party.
Mr Palmer said that the purpose of Mr Donaghey's trip to Melbourne was, for Mr Donaghey to undergo training on the Genie printer from the third party (T47) and for Mr Palmer to observe a demonstration of that printer and the Durst scanner in operation (T42). Mr Palmer said that Mr Donaghey told him that if he was so prepared to travel to Victoria to view the machines at the same time that Mr Donaghey was in Melbourne and a subsequent sale ensued then, Mr Donaghey would refund his travel expenses (T43).
Mr Donaghey gave evidence that the purpose of his trip to Melbourne was for him to undertake training on the Genie printer. Having met Mr Palmer on 1 July 2003 and having told him that the defendant did not have such a printer for show, Mr Donaghey offered to demonstrate it to Mr Palmer at the same time that he was to undergo his training on it in Melbourne (T405).
Mr Donaghey said that he had not heard of the Durst scanner until he was in Melbourne for the demonstration of the Genie printer (T405‑T406).
Mr Donaghey denied that he mentioned the Durst Sigma scanner to Mr Palmer on 1 July 2003 in Perth. He said that at that time he was unaware of it. He further denied that on that date he provided a brochure relating to it to Mr Palmer.
Mr Palmer says that he left the meeting on 1 July 2003 and went away to work on amendments to his business plan in anticipation of his wife's arrival in Perth on 18 July 2003. He amended the required equipment in that plan by including therein the Durst Sigma scanner and the Genie printer. Mr Palmer was clearly aware in his business plan of the Durst Lambda printer costing approximately $250,000, such that it was not considered.
The fact that the business plan refers to the Durst Sigma scanner and the Genie printer, the latter of which Mr Palmer said that he had not heard of prior to 1 July 2003 (T45), is the basis of a submission by counsel for the plaintiff to support Mr Palmer's evidence that the Durst scanner was discussed on 1 July 2003 and that the brochure relating to it was handed to Mr Palmer by Mr Donaghey on that date. The business plan is however a self-serving statement in that regard and its alteration, on or about 1 July 2003, to include the Durst scanner and the Genie printer, has not been independently verified.
Further, it is the fact that by July 2003, the Durst Sigma scanner had been superseded by the Durst Sigma Plus scanner. It therefore seems unlikely, that, if Mr Donaghey was to hand over a brochure on 1 July 2003 that it would relate to the earlier model scanner rather than to the later model scanner, which was in fact the model sold to the plaintiff. However, I do not place any weight on this latter aspect of the evidence given that Mr Palmer was not cross examined about it.
It is now convenient to consider the meeting on 31 July 2003 in Melbourne and the pleadings before making findings of fact in relation to the meeting on 1 July 2003 in Perth.

What discussion took place at the meeting on 31 July 2003 at the third party's premises?

Mr Donaghey gave evidence that when he went to Melbourne for the purpose of training on the Genie printer, he met there with Mr Paul Taylor and Mr Gordon Graham, both from the third party, on 30 July 2003.
During that day, they talked about Mr Palmer's proposed visit to the third party's showroom due the next day. Mr Taylor asked Mr Donaghey what sort of laboratory Mr Palmer was seeking to establish so that he could understand the nature of the features in the Genie printer required to be demonstrated. On the same day, Mr Graham advised Mr Donaghey of the Durst Sigma film scanner which may be of interest to Mr Palmer. He explained some if its features, including the fact that it was a particularly fast roll film scanner (T405).
Mr Donaghey then said in evidence that later that same evening of 30 July 2003, after learning about the Durst Sigma scanner, he advised Mr Palmer of the information relating to it. Mr Palmer indicated his interest in it. On the next morning, Mr Donaghey advised Mr Taylor that Mr Palmer was interested in inspecting the Sigma scanner and so Mr Taylor then asked Mr Graham to arrange visits to two laboratories in Melbourne for demonstrations of it. Mr Taylor then demonstrated the Genie printer to Mr Palmer (T405).
Mr Taylor gave evidence that on 30 July 2003, Mr Donaghey was informed that the third party was the national importer of the Durst Sigma scanner.
Mr Taylor also said that during the course of the demonstration of the Genie printer on 31 July 2003, Mr Donaghey said that Mr Palmer was interested in the Durst Sigma scanner, as a consequence of which, Mr Taylor asked Mr Graham to make arrangements for demonstrations of the Durst Sigma scanner for Mr Palmer and Mr Donaghey. Prior to this visit, Mr Taylor only knew that Mr Palmer was interested in a demonstration of the Genie printer. Until then, that was the only purpose of the visit to the third party's showrooms on 31 July 2003 (T444).
In cross-examination, Mr Taylor said that there was some discussion about the third party being involved in the supply of the scanner to the defendant on 30 July 2003. That occurred as follows:
"Mr Taylor, at what stage did you discuss with Mr Donaghey the basis upon which your company was prepared to become involved with the supply of the scanner to his company? - - - That would have been on 30 July.
So on 30 July, something relatively definite was put to you, was it, by Mr Donaghey? - - - No, not at all.
- - - in respect to the possible purpose by Mr Palmer of that scanner? - - - No. But Mr Donaghey's a business man, he sensed that Mr Palmer may want to buy one. He wanted to know if he could buy it through him, and I said, 'that could be arranged, the details we'll have to work out later', and I'm sure that was about as far as it went.
So did he tell you that Mr Palmer had expressed interest in – in purchasing that scanner? - - - he told me that Mr Palmer was looking for a high speed scanner.
…
Had you previously supplied Mr Donaghey with brochures relating to the Durst Sigma scanner? - - - No.
…. prior to 30 July 03? - - - No." (T450)
Mr Graham gave evidence that the purpose of the visit on 31 July 2003 to the third party's premises was for a demonstration of the Genie printer to Mr Palmer. At that meeting, there was discussion about Mr Palmer's interest in film scanning, as a consequence of which, Mr Graham was asked only that morning by Mr Taylor if he could arrange for Mr Palmer to visit customers of the third party who had a Durst scanner (T366). In cross‑examination, he repeated this and said that the two demonstrations were set up at short notice (T371).
From all the evidence, it is clear that the defendant and the third party had only just established a relationship of agency in May 2003, and that was then limited to the Genie printer. The defendant did not have a relationship with the third party for the sale of the Durst Sigma scanner prior to 30 July 2003.
The initial purpose of the trip to Melbourne was for the training of Mr Donaghey on the Genie printer, and subsequently, for the demonstration of it to Mr Palmer. If the purpose of the trip had included a demonstration of the Durst scanner, then, one would have expected Mr Taylor at least to have been aware thereof prior to the trip and there would have been no need for Mr Graham to organise meetings, at short notice for the same day, with two of the customers of the third party.
The evidence of Mr Taylor logically supports Mr Donaghey returning to the motel on the evening of 30 July and discussing the Durst scanner with Mr Palmer on that occasion and then reporting to Mr Taylor on the morning of 31 July that Mr Palmer was interested in the scanner. Mr Graham's evidence is also consistent with that such that the two demonstrations of the scanner were only then arranged that morning. The fact that the defendant was not previously involved in an agency relationship with the third party in relation to the Durst scanner also explains why Mr Donaghey did not have either a brochure (Exhibit 3) or the leaflet discovered at item 50 in the plaintiff's list of documents to hand over to Mr Palmer at their meeting on 1 July 2003.
On 30 July 2003, Mr Taylor told Mr Donaghey that the sale of such a scanner to the plaintiff through the defendant was possible. This is a further reason why Mr Donaghey would not previously have raised the subject of the Durst scanner with Mr Palmer as there was no arrangement in place for the defendant to receive a commission on sale of the Durst scanner. Further, Mr Donaghey was, of course, aware of the plans by Mr Palmer to set up a professional photographic laboratory, and on 30 July 2003 he discussed with Mr Taylor the sort of laboratory which Mr Palmer proposed at least in a general way with respect to the features of the Genie printer required to be demonstrated by Mr Taylor on 31 July 2003. It can be readily inferred that having been advised of the features of the Durst scanner that Mr Donaghey, being a businessman, "sensed that Mr Palmer may want to buy one", as stated by Mr Taylor (T450).

Relevant to this issue is the fact that seven statements of claim (Exhibit 9.1‑9.7) have been filed in this matter between November 2004 and December 2008. In the first two statements of claim, the pleading did not specify with whom Mr Palmer discussed matters prior to purchasing the Durst scanner. The third statement of claim dated 21 February 2007 particularised Mr Don Nichols, the managing director of the defendant, as being the person with whom Mr Palmer spoke between May and July 2003 in Perth and in Melbourne. The fourth statement of claim dated 25 October 2007 specified that it was Mr Nichols and Mr Donaghey with whom Mr Palmer spoke between May and July 2003 in Perth and in Melbourne. The next two statements of claim dated 7 November 2008 and 4 December 2008 specified only Mr Donaghey. These last two statements of claim also specified that instead of the period of discussions being between May and July, they were held on 1 July 2003 in Perth and 31 July 2003 in Melbourne.
Mr Palmer acknowledged that he had approved the contents of the various statements of claim that have been filed in this action (T163). It is of fundamental importance to his case that he ought to have been able to correctly nominate the person with whom he held discussions, at least in terms of what he alleged in his evidence by way of representations against Mr Donaghey. However, he first nominated Mr Don Nichols and then in two further subsequent statements of claim, both Mr Nichols and Mr Donaghey. The same comment applies with respect to the period of time in which he at first alleged that his discussions were held with Mr Nichols as being between May and July 2003. The same period of time is alleged in the next two statements of claim concerning both Mr Nichols and Mr Donaghey, but then, the penultimate statement of claim alleges that the first discussion took place on 1 July 2003 with Mr Donaghey. That then is maintained in the final statement of claim and is now the evidence of Mr Palmer. These variations are a matter to which consideration ought to be given when assessing Mr Palmer's credibility.
Mr Palmer was evasive when he was asked whether, in the statements of claim, he had been inconsistent as to whom he alleged he made known the purpose for which the scanner was required. At first, he would only "accept that it appears to be inconsistent" (T171). When later pursued further with respect to the same issue, he said that: "That – that does seem inconsistent, yes" (T173).
In all the circumstances, I find as a fact that Mr Donaghey only became aware of the Durst Sigma scanner on 30 July 2003, when he visited Melbourne and was informed about it by Mr Paul Taylor. It follows that Mr Donaghey did not discuss the Durst scanner with Mr Palmer on 1 July 2003 in Perth.
Further, Mr Palmer did not give any evidence of Mr Donaghey making any representations with respect to the Durst scanner at the third party's office in Melbourne, as alleged in the statement of claim.
It follows that the two alleged oral parts of the contract to supply the scanner, being that made on 1 July 2003 at the defendant's showroom in Perth and that made on 31 July 2003 at the office of the third party in Melbourne, have not been made out.

Did Mr Donaghey make any representations at the demonstrations of the Durst scanner?

On 31 July 2003, Mr Palmer attended at the third party's premises in Melbourne and a demonstration of the Genie printer was provided to him. Thereafter, there were two demonstrations of the Durst scanner at two of the third party's clients. The first demonstration was at a business called Pro Image and the second, at a business called CPL. Mr Palmer, Mr Donaghey and Mr Graham attended these demonstrations performed by representatives from Pro Image and CPL respectively.
Mr Palmer did not recall communicating very well with the operator of the Durst scanner at Pro Image. He believed that Mr Donaghey asked questions and answers were given. He said that the operator operated the scanner very proficiently and demonstrated the main functions.
Mr Palmer said that the demonstration at CPL was "more of a verbal demonstration … we were asking questions. I asked questions. And we were given verbal answers" (T48–T49).
In cross‑examination, Mr Palmer said that he "honestly can't recall much of (the) particular demonstration at all at Pro Image (T201)". He also said that:
"An individual sat at the machine putting through rolls of film very, very quickly. He seemed to get through quite a quantity of work and he was demonstrating how he could put a roll of film through very quickly. He showed us how he was able to bring the scans up very quickly on the screen. He ran over the various control mechanisms that he had, to deal with those images." (T202)
Further, he said that he asked the demonstrator a number of questions:
"To get an understanding of his experience of that machine and his knowledge and my observations would go to increase my knowledge of the machine. … I can't remember exactly what he told me, but I would imagine he was telling me about his experience." (T203)
Mr Palmer was also cross‑examined about the demonstration at CPL. He was unable to remember the exact conversation. He was vague on the detail of that demonstration. He acknowledged that it was an important demonstration and that he asked a number of questions of the operator (T204).
Importantly, Mr Palmer does not attribute any information, representation or assurance being provided to him during the demonstrations by either Mr Donaghey or Mr Graham. Nor does he suggest that any were provided by Mr Donaghey on the flight back to Perth.
Mr Palmer thought that the Durst scanner looked to be "interesting" and "efficient". He needed to return to Perth "to absorb the information". After his return, he received provisional costings and discussed matters with his wife. He then decided to purchase both the Genie printer and the Durst scanner without any further "particular communication" with Mr Donaghey (T49–T50).
Mr Donaghey gave evidence relating to the visits to Pro Image and CPL (T406). He was cross‑examined about these visits only to the extent that he was impressed with what he saw (T418). He also said that during the flight back to Perth, he discussed with Mr Palmer the operation of the Durst scanner and how he would be able to use it in his proposed business. They discussed changing the business plan to make use of the Durst scanner (T419–T420). This would tend to suggest that any amendment to the business plan was made only after the trip to Melbourne, rather than after that meeting on 1 July 2003.
Mr Donaghey was "keen for the client to purchase [the Durst scanner] if that was what he wanted" (T420). It was not a high resolution scanner, but if Mr Palmer thought it was, then, he would not have needed the Imacon scanner which was for high resolution purposes (T421).
Mr Graham gave evidence that at Pro Image, there was a flow back of questions and answers between Mr Palmer and the operator, Mr Sacha Leeman. Mr Donaghey was generally observing and did not ask many questions (T366‑368). He was not cross‑examined on this.
Importantly, the pleading against the defendant in respect of representations allegedly made during the trip to Melbourne relates to those representations said to have been made on or about 31 July 2003 at the office of the third party. I have already made a finding as to this. The plaintiff, through Mr Palmer, did not give any evidence whatever of representations or assurances as to the Durst scanner allegedly made by Mr Donaghey on behalf of the defendant at any time whilst the parties were in Melbourne either at the third party's office, or at Pro Image and CPL, or on the flight from Melbourne to Perth. The decision to purchase the Durst scanner was made without any "particular communication" with Mr Donaghey once he and Mr Palmer had returned to Perth.
There is nothing in the evidence by which the plaintiff can rely on discussions between Mr Palmer and Mr Donaghey that the Durst scanner "possessed the capabilities to produce high quality outputs, could offer a range of usable services and could offer effective colour management" (statement of claim par 4, particulars).
I therefore further find as a fact, that, Mr Donaghey did not make any representations or provide any assurances as to the scanner on or about 31 July 2003, as pleaded in the statement of claim made by Mr Donaghey, whether they be at any of the places attended by Mr Donaghey and Mr Palmer in Melbourne, or on their return flight to Perth from Melbourne, or thereafter. I will deal with the requirement for local maintenance and service support below.

The letter dated 13 August 2003

Mr Palmer gave evidence, that, following the trip to Melbourne, he discussed matters with his wife and that he then decided to proceed to purchase the Genie printer and the Sigma scanner (T49 and T56).
On 6 August 2003, in anticipation of a further meeting, Mr Palmer wrote to Mr Donaghey detailing certain equipment seeking the best price on that equipment (T50).
The prices for the equipment were provided by letter dated 13 August 2003 from Mr Donaghey. The plaintiff alleges that this forms the written part of the contract to purchase the scanner and that it contains the express terms of that contract. The various prices of the items need not be detailed here, but, the letter recited the following:
"In submitting our quote we have given particular consideration to the following factors:
•Ability to produce high quality output
•Ability to offer a range of services
•Provision of colour management
•Provision of local support."

Output, services and colour management

The statement of claim pleads that the four bullet points in the letter dated 13 August 2003 above repeated express oral terms that the scanner had each of the abilities, being the first three bullet points, referred to above. However, this is clearly incorrect. For instance, an objective reading of the bullet point item relating to "a range of services" clearly relates to the various products working together in the laboratory to provide a range of services. A scanner is a scanner. The Durst scanner did not purport to provide any service other than that of scanning.
Mr Palmer also said:
"I had been having a number of discussions with Donaghey and I believed that he understood what our objectives were. And on receiving the quote I – I understand that he was providing on the basis of what I – of – of the objectives I had described to him. So I needed high quality output, I needed to offer a range of services, each of those items of equipment needed to have the ability – or would – would have been the tools for me to offer those abilities. Provision of colour management, that can be described as a fairly generic term; it can apply to a specific piece of equipment or it can apply to a whole workflow so you need – that needs – you've got to qualify in what context you're – you're talking about colour management." (T52)
Mr Palmer also said:
"And in relation to the other three items, high quality outputs, range of services, colour management, were these discussed? ‑ ‑ ‑ they were generally discussed, yes, because that was again one of our objectives, was to – was to produce high quality outputs. We had a range of services in mind that he wanted to achieve, so all of these things were – were discussed. Provision of colour management – colour management is a wide ranging term, that can apply to either a device or a whole work flow. And that was an issue that I had to consider, and he explained to me that as part of their system's support they can provide colour management, from calibrating monitors through to setting up devices." (T56)
It is clear from these passages that Mr Palmer required the ability to offer a range of services, but that each of the items of equipment were the "tools" which, together, enabled him to "offer" that range of services, or "those abilities" and that these were generally discussed.
Mr Palmer indicated that colour management was not only a requirement of individual items of equipment, but also the whole workflow system (T181). As Mr Palmer said, it is a generic term and the context in which it is being discussed should be qualified.
The passage quoted from the letter dated 13 August 2003, being the four bullet points referred to above, immediately precedes each item of equipment being sold by trade name, the quantity thereof, and the price for each piece of equipment.
It should also be noted, that, the range of equipment included not only the Durst scanner and the Genie printer, but, another scanner, another printer, work stations, monitors and a film processor. Clearly, they each have a set service, rather than a range of services, but that together, they were the tools to offer a range of services or abilities.
Arguably, each piece of equipment was to produce a high quality output as indicated by Mr Palmer at T52. For instance, Mr Palmer said that the Imacon scanner would not be the tool to scan large quantities of film (T33), but it was capable of providing high quality scanning services (T150). Mr Palmer still uses the Imacon scanner (T159).
The Imacon scanner is limited in terms of handling film strips and long rolls of film. The Durst scanner was designed for long rolls of films. The Imacon and Durst scanners are two very different scanners (T183). Mr Palmer said that "they are poles apart, designed for two different purposes" (T197). The Imacon is a standalone desktop unit designed for individual custom, high end scans. It is an extremely slow machine compared to the Durst which Mr Palmer said is" designed to handle large quantities of film, particularly roll film formats at very high speed" (T220).
Mr Donaghey gave evidence that the Imacon scanner was a scanner for high resolution scans, but, the Durst scanner was not a high resolution scanner. Indeed, if the Durst scanner was of high resolution quality, then, there would have been no need to additionally purchase the Imacon. But the Imacon was purchased for high resolution. The Durst scanner was for high speed scanning of roll film (T421).
It can be seen therefore, that, the expression "high quality output" is itself an ambiguous term given that the Imacon produced high resolution scanning, whereas the Durst scanner was only for the production of high quality scans as can be seen from Exhibit 3, but with the need to provide high volume scanning, which the Imacon scanner could not provide.
If both the Imacon and the Durst scanners provided high resolution scanning, then, as Mr Donaghey said, there would have been no need for the plaintiff to purchase both scanners. The Durst scanner would have sufficed in that it could take single frames but, more importantly, it had the capacity to scan long rolls of film, which the Imacon scanner did not.
I find as a fact therefore, that, all of the various pieces of equipment provided together were required to produce high quality output, a range of usable services and effective colour management, each within its own individual capacity and not as a fully integrated system providing all services. For instance, high resolution quality would come from the Imacon scanner. Nonetheless, in combination with other pieces of equipment, all pieces of equipment together provided the required capabilities. The Durst scanner alone was not required to provide high quality outputs, a range of services and effective colour management.

The requirement for local support

It is also pleaded that it was an express oral term of the contract that the defendant had the capability to supply local maintenance and support for the Durst scanner. Further, the plaintiff also alleges that the letter dated 13 August 2003 refers to this term.
Mr Palmer gave evidence of a key objective being the need to find a local supplier to service all needs without having to deal with interstate companies. The reason for that was that he was new to Australia and did not wish to deal with interstate companies. Rather, he needed to deal with people here in Perth, face to face. He was aware that the Durst scanner was to be sold through an agent in Victoria.
Mr Palmer said that Mr Donaghey informed him that should the plaintiff proceed with the purchase of the Durst scanner, then, he would ensure that a technician would be trained, whom he named as Phil Curran (T43, 44, 52, 55 and 56). At T56, it was an "impression" that Mr Palmer had that Mr Curran would be trained and that local support could be provided. It was something with which Mr Donaghey "seemed comfortable" (T44). That is as far as the evidence goes.
In cross‑examination, Mr Palmer said that Mr Paul Taylor discussed servicing the Sigma in the presence of Mr Donaghey and that it was in the context that Mr Donaghey would provide training to Phil Curran (T177).
Neither Mr Donaghey nor Mr Paul Taylor gave evidence relating to the requirement for local support in respect of the Durst scanner.
That Mr Donaghey "seemed comfortable" with local support and that Mr Palmer had the "impression" of it falls short of an express oral term of the contract.
Further, the "provision of local support" is referred to in the letter dated 13 August 2003, but this is further qualified in the letter itself by "Ongoing Site Support" and "Phone Counselling" as follows:
"In submitting our quote we have given particular consideration to the following factors:
• Provision of local support
….
Support services
Included in the price quoted is a range of support services and benefits designed to help maximise the potential of your investment. In order to provide you with a clear undertaking of our commitment to your ongoing satisfaction, we have outlined these additional services and benefits below.
Acceptance of the attached quote entitles the purchaser to the additional services and benefits listed below:
Imaging System
System Configuration
Delivery and Installation
Operator Training
Ongoing Site Support
Phone Counselling
Colour Calibration Service and Printer Profiling".
The reason for the plaintiff requiring local support is plausible. Clearly, however, Mr Palmer knew that the Durst scanner was a new product to the defendant. He knew that someone locally would need to be trained and hence he gave the evidence regarding Phil Curran as being the person to be trained to provide that local support. However, there would necessarily have been at least an initial period in which local support could not be provided until Mr Curran was fully trained. Therefore, initial support at least was required to be provided from the third party, which was based in Melbourne.
I presume that, the plaintiff interprets "provision of local support" to mean that someone from the local area in Perth would physically provide that support on demand. My finding is that that term means "ongoing site support" which is set out in the letter as being part of the "provision of local support", along with other benefits listed in the letter.
Whatever the position, the fact is, that, when the scanner required some form of expert attention from a person qualified to provide that service, then, that service was provided, albeit by the third party. There was therefore "ongoing site support" as referred to in the letter.
The evidence is that someone from the third party's office always attended in Perth to service the plaintiff's Durst scanner when required. The plaintiff claims delay in attending the plaintiff's premises when the scanner camera failed from 15 to 23 December 2003. There was a further delay in waiting for a new camera to be sent from Italy, however, that latter mentioned delay would have occurred in any event. Further, there is no evidence of what effect, if any, alleged delay in support being provided from Melbourne had on the plaintiff's business. Evidence has not been led that the plaintiff suffered any detriment by reason of support coming from Melbourne, rather than it being sourced locally from Perth.

Does the Sale of Goods Act 1895 apply?

The plaintiff contends that it was an implied term of the contract pursuant to s 14(i) and s 14(ii) of the Sale of Goods Act 1895 that the scanner was reasonably fit for the purpose for which it was required, namely, to provide high quality batch scanning services to professional photographers and that it was of merchantable quality to provide this service.
This is premised on Mr Palmer having made it known to Mr Donaghey at the meeting on 1 July 2003 that, the particular purpose for which the scanner was required was to provide high quality batch scanning services to professional photographers. Mr Donaghey is alleged to have acknowledged both in Perth and in Melbourne that the scanner had such capabilities. It is then pleaded, that, in reliance of such assurance, the plaintiff contracted to purchase the scanner, relying on the defendant's skill and judgment. Further, the scanner was of a description which was in the course of the defendant's business to supply.
I have found, that, the subject of the Durst scanner was not raised at the meeting on 1 July 2003 in Perth. I have also found, that there is no evidence of any representation or assurance by Mr Donaghey, at the meeting in Melbourne, whether at the office of the third party or at the office of either of Pro Image or CPL concerning the Durst scanner. Demonstrations of the Durst Sigma scanner in Melbourne were quite independent of Mr Donaghey and the third party, although they were organised through Mr Donaghey, with the aid of the third party.
What happened was that the proprietors of Pro Image and CPL demonstrated the Durst scanner to Mr Palmer. Mr Donaghey was present at such demonstrations, but mainly as an observer. Any questions that were asked about the scanner were answered by the proprietors of Pro Image and CPL, but not by either Mr Donaghey or Mr Graham.
There is also no evidence of any representation or assurance by Mr Donaghey on the return flight to Perth or in the days thereafter leading up to the letter dated 13 August 2003.
In the circumstances, Mr Donaghey did not make any representation or give any assurances and the plaintiff, through Mr Palmer, did not rely on any representation or assurance given by Mr Donaghey.
Further, the plaintiff did not rely on any skill or judgment on the part of the defendant, through Mr Donaghey, in making his decision to purchase the Durst scanner. In fact, after his return from Melbourne, Mr Palmer discussed the purchase of the Durst scanner with his wife and it was thereafter that the plaintiff, through Mr Palmer, determined to purchase it and other equipment and Mr Palmer then by letter dated 6 August 2003 sought the quotation dated 13 August 2003.
In addition to this, the Durst scanner was purchased under its trade name following its demonstration in which neither the defendant nor the third party played any real role. The plaintiff did not rely on any representation, assurance or the skill and judgment of the defendant, through Mr Donaghey, in the purchase of that Durst scanner. Rather, the plaintiff relied upon Mr Palmer for this purchase. He had been to the two demonstrations in Melbourne and he made his own decision on behalf of the plaintiff.
In the circumstances of the facts as I have found them to be, that, the Durst scanner was purchased "as the specific thing" and therefore, it was not something sold by description, such that the implied term of merchantable quality does not apply to it – see Grant v Australian Knitting Mills Ltd (1935) 54 CLR 49 at 61.
In any event, nothing has been produced in the plaintiff's case to lay an evidentiary base for what is merchantable quality when purchasing a scanner of the nature of the Durst Sigma scanner or, indeed, of the Durst Sigma scanner itself. Likewise, nothing has been led in evidence that the scanner has not been fit for the purpose for which it was purchased, save that Mr Palmer has complained that the Durst scanner was defective once delivered and installed at the plaintiff's business premises in Brisbane Street. I will deal with defects later but, it is sufficient to say here, that, I do not find there to have been the defects alleged by the plaintiff.
It follows, that, the supply of the Durst scanner was only one part of a system to provide high quality outputs, a range of useable services and effective colour management and that the Sale of Goods Act has not been breached.

Was the Durst scanner defective?

Before dealing with any alleged defects in the Durst scanner, it is relevant to review the evidence regarding the need for operator input, and who was trained to operate the Durst scanner.

Was the Durst scanner designed to be automated or near automated?

Counsel put the plaintiff's case on the basis that the Durst scanner had to be able to deal with what was required to produce a good quality print within the machine and not be a machine that relied upon operator utility to produce a quality, professional scan. He said:
"… This machine was meant, for instance, to, as a batch scanner, scan a roll of film with minimal interference from, or intervention from, an operator in quick time." (T8–T9)
Mr Palmer said:
"If we tried to achieve what it was designed to do, that is, scan a roll of film and just place that material directly onto a disk and give to a customer, we'd often find our customers were complaining." (T59)
"… A batch scanner is supposed to be able to scan a whole roll of film without any great difficulty. It appeared to me to be incapable of doing that." (T60)
There is no evidence, that, the scanner was in fact designed to scan a roll of film and to then transfer the images onto a disk without the aid of an operator. The evidence is that the scanner required the expertise of an operator. Mr Palmer saw that at the demonstrations in Melbourne. This is particularly so to meet the requirements of a professional photographer who would require each image to be adjusted (T178‑T179).
The plaintiff's counsel also said:
"And we still allege the machine doesn't provide effective colour management. It doesn't turn out professional scans when it's operated. Particularly when it's operated as a – or meant to be operated as a high quality batch scanner.
And it's the consequence of that that if the scans are manually adjusted by an operator, then they can be improved. But that's just a consequence of the fact that the machine doesn't provide effective colour management. If it provided effective colour management, then it wouldn't be necessary – it would be an automatic process. It wouldn't be necessary for someone to have the task of manually adjusting scans.
What I'm saying is that what I have said in the opening is nothing new. It's just a consequence – and I don't really think anything turns on it. It's just the reverse side of the coin as to what happens when there is no effective colour management, then you've got to have an operator spending time – and it's no longer being used as an effective, high quality batch scanner.
All I've done is gone on and said, 'if it doesn't provide effective colour management then you have a problem. You can't use it anymore as a batch scanner because you're having an operator sit there adjusting everything that comes out'. It wasn't meant to change anything that's pleaded." (T19)
After some further discussion between counsel for each of the plaintiff, the defendant and myself, counsel for the plaintiff said "the machine couldn't do it" (T21), by which, I take the plaintiff to be arguing that the Durst scanner could not produce a quality scan with effective colour management, such that operator control is required when that should not be required, or at least only required minimally.
This point reveals a fundamental flaw in the plaintiff's case as can be seen from the cross‑examination of Mr Palmer, in which the following exchange took place:
"You'd accept that the scanner was a machine that had a lot of functions? - - - It had a number of functions.
And a lot of adjustments that could be made. You could, for instance, adjust the graininess? - - - Well, a range of configuration tools within the software, yes.
…
And do you accept that the Sigma scanner allows you to adjust each image? - - - Correct.
…
Do you accept that it's likely that a professional photographer is going to require each image to be adjusted? --- Yes.
And that would necessarily involve operator input into each image? - - - Correct." (T178‑179)
Further:
"It was made known to you that there would be a need for – well you always knew that there was a need for manual intervention, didn't you? - - - Yes. There will always be a need for some sort of adjustment." (T207)
When pressed in cross-examination, Mr Palmer clearly knew that even when using the Durst scanner as a batch scanner to scan a roll of film for a professional photographer, that, the operator would be required to process each image separately.
However, the case was put on the basis that if the Durst scanner provided effective colour management, then adjustment by an operator would not be required – it would be an automatic process or at least, one with minimal operator involvement. The plaintiff's case is that the Durst scanner cannot be used for batch scanning because an operator is required to adjust every image.
Marius Pixner is a service engineer from Durst Phototechnik in Brixen, Italy. He began with Durst in February 2002. He is an electrician, has studied industrial electronics and telecommunications. He is trained on the Durst scanner and has been involved in assembling it and checking the electronics on it. He has been involved in the Durst service department answering clients' queries. His work involves helping service technicians outside Italy.
In cross‑examination, Mr Pixner acknowledged that he was not a professional photographer and so he was not able to judge the output of scans from the Durst scanner, but he was able to see mechanical or electronic interference with the image produced by the scanner (T302). English is Mr Pixner's third language. He said that:
"The scanner is set up with certain calibrations and it is then up to the operator to calibrate within the range provided. The operator can adjust the film channels and the individual images (T346‑T347)."
An advantage of the Durst scanner is that it has very open software such that the customer can make a lot of adjustments. In cross‑examination, Mr Pixner explained the relationship between the setting of the scanner and the operator's role as follows:
"Yes?‑‑‑Then the computer, there's the software. It is actually the user software, which is converting – is kind – is a kind of an interface. The Sigma is providing a datum to the software, and this user software makes all the conversation. And this software is very open for the customer. So the customer make – can make a lot of settings.
A lot of adjustments?‑‑‑A lot of adjustments there. So it is not – it's important to get the correct data to this point, and then what is going on then, can be mainly set by the customer.
Right. You tested the calibrations, the settings on the Sigma?‑‑‑I have tested the Sigma until this point where the data is handed over to the – to the user software, what is then in the hand of the operator (T305).
So you can't say how a scan would turn out if you scanned a film because you didn't do it?‑‑‑Actually, I made sure the image data to the software are correct. What's happened then, there are so many points what can be changed by a customer, like profiling all film channels are things - this can be done by the customer.
…
If you were given at the test a particular piece of film and you knew what type of film it was, you could have adjusted the film channel and scanned that piece of film to see what the result was, couldn't you?‑‑‑There is – to get all this adjustment, to make all this perfect, you need a very – you need a – how do you say? A very well trained operator to see then it's printed really correctly. As long as you don't have all this good profiles.
So you don't have the ability to actually produce a good scan, is that what you're saying? All you have is the ability to make sure that the machine is calibrated the right way, and provided it's calibrated the right way you don't have the ability to see the process through until it gets to a scan?‑‑‑Actually, there are too many factors inside. If you have profiles with calibrated film channel properly and then you can make a lot of film (T311).
Well, the film channels don't belong to the customer, do they? They – what is prescribed, what's set out by Durst as being the proper film channel for a particular film?‑‑‑This is just a roughly setting which is drawn from a factory set, a starting point, but the film channel can be calibrated by the customer (T333‑T334)."
It was suggested to Mr Pixner in cross‑examination, that, the only way to properly test the Durst batch scanner was to run a roll of film through it and see what happens. Mr Pixner disagreed, saying, that he tested the machine so that he could see what values it was providing and at that point, he would then know if the machine was operating properly. He said:
"But if the settings on the user software are not operator, well‑trained operator, on the Sigma scanner I know the settings which it can make, but I'm not able to make all the settings in order to have to say, 'now is the image good' or 'it's not good' ." (T345)
Although Durst put the initial profiles into the scanner, the operator can change the profiles and the film channel settings.
Re‑examination proceeded as follows:
"All right. And the operator can adjust the film channel settings?‑‑‑Yes sir.
And within each film channel can you make whatever settings you like?‑‑‑Some settings, sir, you cannot make. But you can set a lot of types.
All right. And once the individual frame is scanned, can you then – does the Durst Sigma Plus Scanner enable you to adjust the settings in individual frame before it's sent to a printer?‑‑‑There are different work flows, but basically if it's it is possible.You get showing them as thumb nail on the monitor, and then you can make your correction or make say everyone is little bit wrong colour so you just select all of them, correct them, and you send them.
And if you load the film incorrect, does the Durst Sigma Scanner have a carrier device to put the film through the scanner?‑‑‑Yeah. There is one carrier, which is transporting the film, let's say from left to right, then it's getting clamped while scanning, and then there is a scan carrier which is moving all film for scanning.
So if you put the film in incorrectly, if the operator puts the film in incorrectly, will that cause an error message?‑‑‑Yeah. In several cases, yes (T346‑T347)."
Mr Clayton Taylor, from the third party and son of Mr Paul Taylor, also gave evidence that the quality of the images is dependent on the operator (T386). The Durst scanner requires the operator to make adjustments to the film channels. He also said that "the basic film channel, which is calibrated and sent out with the scanner, is then needed to be edited to the needs of the specific customer" (T395).
Whilst not holding him out as an expert, it should also be noted, that, Mr Sacha Leeman, from Pro Image who demonstrated the Durst scanner to Mr Palmer in Melbourne, gave evidence of the need to adjust film channels and individual images depending on the individual photographer and the need for a skilled operator to make those changes as follows:
"In wedding portrait film, what does – does that have to – does that need evaluating and correcting?‑‑‑Definitely. Each – because of so many different lighting situations within the – within a wedding, a wedding that goes on, we have to evaluate each individual image due to the obviously different lighting, the daylight balances or the different balances of the colour.
And do different photographers have different requirements in relation to their film?‑‑‑Definitely different, different in some ways, warmer as in more reds than yellows and others are more neutral, more sort of cleaner – clean whites and so forth.
And do you have a skilled operator use your Sigma?‑‑‑Yes, both myself and my business partner are – are the operators of that device.
And how important is it to be a skilled operator in relation to that machine?‑‑‑Very, because obviously the – each individual image has to be evaluated, and obviously it's – it's based on what the final output would be." (T317‑T318)
Mr Leeman further explained in cross‑examination the need to adjust film channels depending on the type of film and the way the photographers take photographs, as follows.
"Sorry, when the scanner was installed?‑‑‑There were a certain amount of pre‑set ones that were in there and then we were adjusting them after that.
Sorry, I missed the last part of your answer?‑‑‑And then we were adjusting them according to our own needs after the installation.
…
And did you require someone of his [Clayton Taylor's] occupation, experience, to adjust your film channels?‑‑‑To adjust the film channels, no.
Is it a difficult task or is it one requiring a lot of care and skill?‑‑‑It is a fair amount of care and skill and obviously it's got to do with the type of film that you have and obviously the way your photographers shoot. (T322)"
Mr Leeman's evidence does, fairly conveniently, explain the case against the plaintiff. Different professional photographers do have different requirements. The Durst scanner requires a skilled operator – not someone only partially trained. The operator must adjust the scanner for the instant task. It is not an automated or near automated process.
Further, as Mr Donaghey indicated, the Durst scanner was a high quality machine, but, it was not high specification. For that, scanning was required to be undertaken on the Imacon scanner. Mr Donaghey also said that, many professional photographic laboratories in Perth operated with just the Imacon scanner. The plaintiff could have done likewise. All that the Durst scanner was required to do was to process batch scanning more quickly and that came at the price of it not being at high specification, but merely at high quality. Once that is understood, then, there was a place for both machines to co‑exist in a professional film laboratory. Indeed, this understanding was appreciated by Mr Palmer who distinguished between high volume and low volume scans, with the latter only requiring high quality and resolution (T307 and 358‑359). And if Mr Palmer was the careful business manager he would have me accept him to be, then, he would have appreciated that he was purchasing the two different scanning machines for two different purposes.
My finding is that Mr Palmer did know that batch scanning was not meant to be a fully automatic or nearly automatic process, especially for professional photographers, because they would require each image to be scanned and dealt with as required. Successful use of the Durst scanner required a skilled operator, as suggested by Mr Leeman. I therefore turn now to the installation training of operators.

Installation and training

Installation of the scanner occurred in November 2003. Mr Paul Taylor attended to do this. Phil Curran was present for part of that installation. Mr Palmer said that he, Mr Palmer, was trained by Mr Paul Taylor, but immediately, he and his two technicians had difficulty in operating the Durst scanner (T57 and 58).
Mr Palmer said that his initial employees were Olga Tchineval who commenced early in November 2003 and Chris Sergeant who also commenced early in November 2003. Olga Tchineval was a full time employee who had a degree from the Curtin University "in something related to photography". Chris Sergeant was initially full time, but later he became part time.
Mr Palmer said that Mr Paul Taylor returned to Perth on 11 December 2003 to deal with the defects in the scanner and to provide further training. Thereafter, Mr Clayton Taylor was the technician who came to Perth to attend to repairs and he next attended on 23 December 2003 and then on 5 January 2004. He also returned on 30 January 2004 to provide further training.

Mr Palmer indicated, that, on 30 January 2004, Mr Clayton Taylor reviewed "work flow and how we were going about doing things" and said that "there was no great issue there" (T65).
Mr Palmer's evidence was that on 5 and 6 February 2004, Mr Clayton Taylor trained all three of himself, Olga Tchineval and Chris Sergeant. He claimed that they had received training in November and December, but without knowing the requirements of the curriculum for full training, Mr Palmer could not say whether he and the two employees had been fully trained.
In cross‑examination, Mr Palmer did not accept that he was not trained on the Durst scanner. He said that he was trained by Paul Taylor at various times and then later by his son Clayton Taylor. He did not recall 8 hours being the requirement for full training and he could not say how long he had spent in training.
Mrs Suzanne Palmer gave evidence that in 2005 the plaintiff employed Paul Langmead and another man named Mark, whose surname she could not recall (T100). In cross-examination, she also said that there was "a full‑time girl and a part‑time chap before them" (T106).
In re‑examination, Mrs Palmer said that the female technician "had quite a lot to do with the printing and also she did work the Sigma occasionally as well", but she did not advise how frequently, if at all, Chris Sergeant operated the Durst scanner (T107).
At no stage during the trial was any evidence led with respect to the periods of employment of Olga Tchineval and Chris Sergeant. They did not give any evidence and it follows, that, they did not give evidence of their periods of employment, their training, the extent to which they undertook work on the Durst scanner, and any records they kept of its defects and defective work.
Mr Paul Taylor gave evidence that on 5 November 2003, he carried out the installation of the Genie printer and the Sigma scanner at the plaintiff's business premises in Perth. At that time, he trained Mr Palmer with respect to the Genie printer and he "did some basic training with Mr Palmer on the operation of Sigma, mainly to allow us to take some scans into images, profile them and output them onto the Genie." He only provided "some basic training, enough to operate the Sigma to create scans." He "agreed with Mr Palmer that when he (ie, Mr Palmer) was finished getting everything set up and had operators ready, we would send Clayton Taylor back to do the full Sigma training". Only Mr Palmer received this training in November 2003, including "some basic calibrations of a couple of film channels on the Sigma and scanned some of Mr Palmer's own film". Mr Palmer received a draft of the operator's manual for the Durst Sigma, as the full version had not then been completed (T447).
In cross‑examination, Mr Paul Taylor said that he was not qualified to train on the Durst scanner, but he was qualified to install it. He also said that to judge colour and adjust channels required skills not possessed by him (T450‑T451). He was not cross-examined to the effect that he had trained more people than just Mr Palmer. Nor was he cross-examined on his evidence that he had agreed with Mr Palmer to send Clayton Taylor back to do the full Durst scanner training when the laboratory was set up and he had operators ready to be trained.
Mr Clayton Taylor also carried out some minor operator training on 4 January 2004. He returned to Perth on 5 and 6 February 2004 for the purpose of training an operator whose name he recalled was Olga. The training was completed over two days, taking approximately eight hours. He did not train anybody else (T374–T377).
In cross‑examination, Mr Clayton Taylor said that in January 2004 he did some minor operator training with Mr Palmer who wanted a better understanding of how to operate the scanner. At that stage, Mr Palmer did not have a full understanding of how to operate the scanner. Mr Clayton Taylor was also cross‑examined as to why he did not train Olga in January. He said that it was because he did not recall her being there, but he did train her in February 2004, at a time when complaints were being made about the scanner, but, there was no specifically trained operator prior to that time. He told Mr Palmer that further training was required to achieve the best results from the scanner (T383‑T384). Another male received some basic training from Mr Clayton Taylor, but he could not recall the occasion and he did not recall specifically training Mr Sergeant (T396).
No other witnesses were called with respect to training.
I accept Mr Paul Taylor's evidence that he provided only some basic training to Mr Palmer when he installed the Durst scanner in November 2003. Mr Clayton Taylor gave evidence, which I also accept, that Mr Palmer was only partially trained by him in January 2004.
I further accept Mr Clayton Taylor's evidence that there was some basic training given by him, probably to Chris Sergeant, in February 2004, but that Mr Clayton Taylor only trained Olga Tchineval to full operator level in February 2004.
This then leaves Mrs Palmer's evidence that Olga Tchineval only "occasionally" used the scanner. Mrs Palmer was able to see who used the scanner because she was in the room next to where it was located and the walls of the two rooms were made of glass, so that she could see into the room housing that scanner. She did not say how often, if at all, Chris Sergeant operated the Durst scanner.
There is simply no evidence whatever from Chris Sergeant or Olga Tchineval. These people were, on Mr Palmer's evidence, the technicians employed to operate the Durst scanner. If the scanner was defective in some way, at least Olga Tchineval and possibly Chris Sergeant would be the best persons to describe their experiences. There is no evidence from them as to how frequently they used the Durst scanner. The only evidence is that Ms Tchineval used it occasionally. There is no evidence from anyone as to Chris Sergeant's regularity of use or otherwise of that scanner.
It is to be remembered, that, Mr Palmer's previous experience was with "much cheaper desk type, lower specification type scanners". He was "familiar with the process of scanning film and the – the ideas behind it" (T29), but he was not in a position to only accept partial training. He may have thought that he was trained on the Durst scanner, but he was not.
From this evidence there are two inferences which may be drawn. The first is, that, inadequately trained persons were operating the scanner, rather than Olga Tchineval, and that that is why Mr Clayton Taylor complained of lack of operator training. His uncontradicted evidence, supported by Marius Pixner is, that, at all times the scanner was performing within factory specification. The second inference is that not much work was required to be undertaken at all on the scanner, because the only fully trained operator used it only occasionally.
My finding is that only Olga Tchineval was fully trained on the Durst scanner, but that she only occasionally used that scanner. If Mr Palmer and Chris Sergeant used the scanner without success, it was because Mr Palmer wrongly believed himself to have been trained when he was not. Mr Sergeant was also not fully trained.

The evidence, or lack of evidence, of defects

Mr Palmer gave evidence that the technicians employed by the plaintiff, namely Olga Tchineval and Chris Sergeant, each kept a log book into which, he said, that they respectively entered faults they experienced with the Durst scanner. Those log books have not been produced into evidence. No explanation has been provided for the two technicians not being called to give evidence, nor has any explanation been given for the log books of the two technicians not being tendered into evidence.
Exhibit 12 is a note book containing a series of notes comprising 20 error signals between 6 July 2004 and 16 November 2004. The evidence does not reveal who wrote these notes, save that Mr Palmer said that two of the entries were his. If the other entries were made by Olga Tchineval and Chris Sergeant, then, the rhetorical question is asked as to why they did not make their entries into their own log book?
Mr Clayton Taylor gave evidence that it is common to receive error or warning messages from the Durst scanner. Each different message required a different test to be performed and with this came the requirement to know what steps had been attempted on the scanner which gave rise to the message. Such message could relate to either operator error or a malfunction in the scanner.
Mr Clayton Taylor was also cross-examined about error messages, some of which he said were due to operator performance, others were not errors at all and some were warnings which would have occurred during the operation of the scanner. But if the operator was not operating the machine correctly, then, it was common to get error or warning signs. He spoke to Mr Palmer about a couple of errors (T393).
Customers of the plaintiff's business were not called to provide details of problems or disappointing results with the scanning of images requested by them. In this regard, there is Exhibit 2.17, namely an email dated 22 February 2004, from Mr Palmer to the third party stating that "we have had another wedding client walk away from us due to the quality of work we gave him", but there is no evidence of dissatisfaction from that client. It can be reasonably inferred, that, evidence from the technicians, their log books of complaint and customers would not have supported the plaintiff's case – Jones v Dunkel (1959) 101 CLR 298.
Within Exhibit 2.2, being the plaintiff's business plan, there are work flow projections spread over a period of two years from the commencement of business. Included therein is the following schedule of anticipated work in the business:
"14 x 18 prints from digital file
10 x 8 prints from digital file
5 x 7 prints from digital file
6 x 4 prints from digital file
High end film scan up to 20 MBTIFF file
High end film scan larger 20 – 60 MBTIFF file
High end film scan 60 MB
C41 film process
DEV 36 exp C41 scan, right 19 mb JPGS to CD
DEV 24 exp C41 scan, right 18 mb JPGS to CD
DEV 12 roll C41 scan, right 18 mb JPGS to CD
Epson large format print 44 x 20."
The workflow then provides for the unit cost of each of the above items, the number per day, the resulting daily total and monthly income over the two year period. The same document also provides for estimated monthly expenses and, as might be imagined, it is then possible to calculate out turnover and profit as projected during that period.
Now, it seems likely, that, if Mr Palmer prepared projected workflows and profits as claimed, then, he would likewise have kept some records of actual workflow and profit which could be measured against the projections. However, nothing was tendered into evidence from which it might be possible to determine how much scanning work was actually being undertaken in the business and, in particular, with the Durst scanner and how much of that scanning was the satisfactory or unsatisfactory, as measured, perhaps, by complaints from customers. Save for Exhibit 2.32, being four scans of one frame to which I will refer below, samples of bad work have not been tendered into evidence. Again, the inference is that these records would not have supported the plaintiff's case.
Mr Palmer gave evidence that the plaintiff's business opened on 17 November 2003 and that the Sigma scanner did not perform particularly well at all (T57).
Mr Palmer said that following installation there were quality problems and constant software errors in respect of the Durst scanner. His evidence was that he was instructed to alter the configuration for various channels, but according to Mr Palmer, this apparently did not achieve success ((T58‑T62).
On 11 December 2003, Mr Paul Taylor returned to Perth. The issue with the film channels was then discussed and Mr Palmer said that he was told by Mr Taylor to place his fingers inside the scan gate and bend back a piece of metal (baffle plate). He thought that this was a bizarre suggestion. It did not improve anything.
Some calibrating of a couple of film channels was undertaken so that scanning of Mr Palmer's own film could be printed on the Genie printer (T44).
Mr Taylor was satisfied that the scanner was working correctly after testing it upon the completion of installation (T448). He returned to Perth for adjustments to the Genie printer and because there was "the occasional scan line on the Sigma". At that point, he adjusted the baffle plate under the scan gate, but, he did not instruct Mr Palmer to do that (T448). He was not cross‑examined to suggest that the Durst scanner was not operating within factory specifications either upon the completion of installation or on 11 December 2003.
Mr Clayton Taylor gave evidence that on 23 December 2003, he attended the plaintiff's business by reason of issues with scanning quality. He found that the CCD camera in the scanner had failed. Mr Taylor said that this was the first camera that he had known to fail. The statement of claim alleges a failure to attend from 15 December 2003. This alleged eight-day delay to 23 December 2003 is the only delay in attending the plaintiff's business. A new camera was ordered, which was shipped from Italy to Perth and he returned on 4 January 2004 to install it. He then had to recalibrate the scanner and carry out tests to ensure that it was operating. Those tests revealed the scanner to be operating within the factory tolerances expected of it. He sent multiple tests to Durst to enable the creation of a better profile for Mr Palmer and his needs (T377–T378).
Mr Clayton Taylor was then again back in Perth at the end of January 2004. Mr Palmer also said in evidence that at the time:
"The issue with film channels came up again, and at that point I wasn't over convinced that the film channels was the issue, because we'd spent so much time and effort in – in – in trying to achieve that. So I wasn't convinced with the film channel argument at all."
In February 2004, Mr Palmer was complaining about quality defects in the scanner but, he said that the main thrust of the response to him was that he and his staff were not operating the film channels correctly. Representatives from the third party were constantly trying to convince him that he and his staff ought to put more effort into the film channels on the scanner (T145).
Mr Palmer said that Mr Clayton Taylor returned again on 6 February 2004 and on 23 February 2004. A new list of channels was provided to Mr Palmer, which he installed, but, which he said made no difference to production (T64–T69).
On 23 February 2004, a series of new film channels was sent to the plaintiff in consequence of which, Mr Palmer sent an email on the same date to Mr Taylor saying that with "these film channels I can more objectively assess whether it is an operator issue or a fault with the machine" (Exhibit 2.17).
On 2 March 2004, the lamp within the scanner exploded. Mr Phil Curran attended on the following day to remove glass from within the scanner. It was replaced.
On 8 March 2004, Mr Palmer wrote direct to Durst Phototechnik AG in Italy complaining that he was "achieving very poor scan results, only approximately 5% good images per roll of film". He found that he had to make "major corrections to every image" (Exhibit 2.18).
Mr Palmer then came to the conclusion that the scanner was defective and he wanted it to be replaced (T72). He wrote to Mr Donaghey seeking a replacement by letter dated 14 March 2004 (Exhibit 2.21).
The result is that Mr Palmer agreed to Mr Clayton Taylor returning to Perth to remedy the problem. He returned over two days on 30 and 31 March 2004 and provided a new profile for the scanner and he also installed a software module called Image Intelligence at no cost to the plaintiff in order to try to:
"… appease the customer more. The customer at this stage was not happy, he was feeling that the output was not what he expected. We wanted, of course, as we do with all our customers, for them to be exceptionally happy with our equipment." (T388–T389)
It was suggested to Mr Clayton Taylor in cross-examination that the provision of Image Intelligence at no cost to the plaintiff was because the scans being produced by the Durst scanner were not up to standard. Mr Taylor rejected that proposition. It was not because the scanner was producing scans of an inappropriate standard (T388–T389). All the Image Intelligence did was to "facilitate easier operation of the scanner. The scanner does, in fact, work quite well without Image Intelligence" (T389).
Mr Clayton Taylor reported lack of proper operating technique to Mr Palmer. The scanner was also operating within factory tolerances when he tested the machine on 30 and 31 March 2004 (T386).
Further, during his attendance in Perth, Mr Clayton Taylor informed Mr Palmer that Durst would replace the scanner.
On 7 May 2004, Mr Palmer was provided with a letter dated 6 May 2004 from the defendant – Exhibit 2.24. This letter required any new scanner to be "accepted as full and final settlement of any claims you may consider you have as a result of problems associated with the old scanner." This was not acceptable to Mr Palmer (T77). Mr Palmer then consulted a solicitor.
Mr Clayton Taylor then again attended at the plaintiff's premises in June 2004. Certain tests were undertaken by agreement between the parties and Mr Palmer simply observed those tests. This attendance resulted in correspondence passing from the plaintiff's solicitor to the defendant and correspondence from the third party's Melbourne solicitors to the plaintiff's solicitors. On 29 June 2004 the third party's solicitors wrote to the plaintiff advising that "the scanner performs to factory specifications pursuant to the terms of sale." (Exhibit 2.27.3)
The steps taken by Mr Clayton Taylor were recorded in correspondence dated 30 June 2004 and were sent to the plaintiff's solicitors (Exhibit 2.27.4).
Mr Clayton Taylor gave evidence that when he recalibrated and tested the scanner on 25 and 26 June 2004, its operation was within factory specifications (T378‑T379).
Thus, the uncontradicted evidence from Mr Clayton Taylor is that the scanner was operating within factory specifications in December 2003 and January, March and June 2004.
The scanner was never replaced. Mr Palmer continued to use it until April 2005, when he determined to withdraw it from service (T85).
An immediate problem confronting the plaintiff is the fact that Mr Clayton Taylor's evidence of the Durst scanner functioning within factory specifications outlined above is unchallenged and evidence has not been produced as to what the defects are and what caused the alleged defects, if any, in the scanner. All that there is in evidence is Mr Palmer's statements that the scanner did not operate in the manner required of it by him and Exhibit 2.32. I will separately deal with the plaintiff's expert evidence below.
Mr Marius Pixner from Durst Phototechnik examined the subject Durst scanner in March 2008. He prepared a report on it. He also then found the scanner to be operating according to factory specification, as had Mr Clayton Taylor previously.
The plaintiff did not seek to lead any evidence regarding the performance or lack of performance of the Durst scanner in accordance with factory specifications.
The plaintiff has not provided any evidence of what standard the Durst scanner was required to meet. There is no yard stick against which it can be compared in respect of both terms of output and also quality. Mr Palmer gave evidence of different scanners from various producers (T30–T33), but the closest evidence regarding any yard stick relates to that of the Imacon scanner, which was designed for a different purpose.
Such actual evidence as was tendered comes from Exhibit 2.32. It might reasonably have been expected that numerous examples of poor quality scans would have been tendered in evidence. Further, it might also have expected that, prior to trial, the plaintiff would have performed scanning on the Durst scanner in the presence of experts from the plaintiff, defendant and third party, with the results being tendered into evidence and the experts then explaining the faults, or lack of faults, in the Durst scanner. However, subject to expert evidence with which I will deal below, there is no such evidence and the end result is, that, it is only on Mr Palmer's oral evidence and Exhibit 2.32 from which any finding of a defect in the Durst scanner can be made.

Exhibit 2.32 concerns some photographs taken by Mr Donaghey in January 2004. The film was provided to Mr Palmer who processed it and produced a set of scans which were printed. Mr Palmer then returned the film to Mr Donaghey. Mr Palmer is of the view, that, Mr Donaghey arranged for the film to be sent to CPL Services in Melbourne, where the film was scanned onto a CD‑ROM disc.
The film and the disc were then provided to Mr Palmer. He then scanned the film and printed out the four prints. He also printed four prints from the CD‑ROM disk that had been provided to him. There was no manual image correction on prints 1, 2, and 5 and 6, but there was on prints 3, 4, 7 and 8. Prints 1 to 4 were then compared with prints 5 to 8 respectively. Further, there was a 300 per cent enlargement of prints 3 and 7. From all photographs, Mr Palmer was of the opinion that the photographs prepared in Perth on the Durst Sigma were of substandard professional quality.
However, counsel for the defendant made the point that if it is necessary to enlarge a photograph by 300 per cent to indicate sub‑standard photography then it obviously must not be much of a problem. Further, if a print were to be enlarged by 300 per cent, then, it would necessarily be printed on the Imacon scanner and this was conceded by Mr Palmer (T194).
The photographs were not put to the defendant's expert, Dr Leslie Walkling, nor were they put to the plaintiff's expert, Mr Brent Acie, and nor were they put to any other witness. One might reasonably have expected an independent expert witness to give evidence relating to the quality of the photographs being Exhibit 2.32. This did not occur.
Further, it is not known what method of scanning was adopted with respect to the scans and photos on the CD‑ROM. It is not known how that work was undertaken. Mr Palmer did not give any evidence of the profiles used by him in reproducing the scans.
In the circumstances, not much weight can be placed on Exhibit 2.32. Even Mr Palmer was unable to vouch for the four photographs returned to him on the CD disc (T89). It was his opinion, that, those photographs were also sub‑standard.
The end result is that there is only Mr Palmer's opinion as to what is a professional standard of photography required to be produced from the Durst scanner. He said that the scanner did not produce satisfactory scans.
However, there is another matter of importance going not only to Mr Palmer's credibility but, also to any alleged defects in the Durst scanner. This concerns his attempts to sell that scanner.
Mr Palmer advertised the Durst scanner for sale on his website from about March 2006 (T121) until 12 September 2009, being three weeks before trial. The advertisement is Exhibit 2.51 and, without detailing all of its terms, it provides that the scanner is "as brand new … and has had low use". Further, that it "must go we need the space – make us an offer."
Mr Palmer also advertised this scanner in very similar terms in the Photo Image Council Australia (PICA) Grapevine Newsletter – Exhibit 4. On this occasion however, the reference to the need for space was deleted.
Mr Palmer necessarily conceded that the advertisements did not reflect either any defect in the scanner or suggest that the scanner was not capable of high speed film scanning (T134‑5). Nonetheless, the advertisements indicate that the scanner was:
"A high speed film scanner for:
•professional laboratories
•pre-press houses"
He explained that it was not his intention to say that the scanner was capable of that, but rather, that that was what it was designed for.
Contradicting Mr Palmer's evidence was a Mr Brian Murray, who responded to the advertisement in the PICA Grapevine Newsletter. Mr Murray resides in Horsham, Victoria and has been in the professional photographic processing business since 1959. He received the PICA Newsletter on 28 July 2009 because he is a member of the Photographic Marketing Association. He contacted Mr Palmer with respect to the advertisement. He said, that, Mr Palmer told him the following:
1.The scanner was in perfect condition, good as new with no marks whatsoever on it physically and that it was an excellent scanner.
2.It has Image Intelligence stored on it.
3.It was a very fast and a very efficient scanner.
4.He had purchased it in 2003 and that it had not been used for some years. It had been in storage.
5.That it was a really very good scanner and very few scans had to have corrections.
6.The scanner came with a keyboard so that if corrections were required they could be done very quickly.
7.A lot of the scans could be done using that equipment.
8.The scanner was being sold because Mr Palmer did not use it.
9.He had not used it for two years.
10.All Mr Palmer does now is photograph works of art.
11.The price was $18,500 inclusive of GST.
12.The purchaser had to freight the scanner at his own cost.
Mr Palmer told Mr Murray that the scanner was "in perfect condition and it's so fast and with the Image Intelligence software, it does an excellent job." (T328)
On the following day, Mr Murray received an email from Mr Palmer attaching to it a Durst sales brochure and some photos of the actual scanner which became Exhibit 10.
The email from Mr Palmer says that the scanner "has been stored for a number of years and is regarded as having had relatively low use … No form of warranty or guarantee is being offered and I would advise examining and testing the machine before buying."
I have no hesitation whatever in accepting the evidence of Mr Murray. He is a person of senior years who is completely independent of the plaintiff and the defendant, although, he does obtain supplies from the third party. In passing, I note that the email saying that the scanner had "had relatively low use" is consistent with Mrs Palmer's evidence that Olga Tchineval only used the scanner "occasionally".
In the email being Exhibit 10, Mr Palmer suggested a visit to inspect the scanner. Mr Murray was wanting to come within the next few days (T330). In submissions from counsel for the defendant, the rhetorical question was asked – can Mr Palmer seriously suggest that he was inviting Mr Murray to come on a fruitless trip from Victoria to Perth to inspect a defective scanner?
The advertisements were not withdrawn until 12 September 2009 (Exhibit 5). Nonetheless, the advertisements remained notwithstanding the provision of Mr Brent Acie's reports to Mr Palmer, those reports being Exhibits 15 and 16. Exhibit 15 is dated 1 September 2004 and Exhibit 16 is dated 19 March 2008. Mr Acie is the plaintiff's expert witness.
Mr Palmer explained that he withdrew the advertisement because he received a further report which "definitively identified the defect quite definitively for us. … Whereas Mr Acie's report demonstrated that the machine was not performing to a standard that he would be happy with" (T139). There is an inconsistency in Mr Palmer's conduct in allowing the advertisement to go forward when he was in receipt of Mr Acie's report, but then, to withdraw it only upon receipt of the further report, which has not been received into evidence.
There is also inconsistency between what Mr Palmer told Mr Murray and Mr Palmer's evidence in this trial.
Neither Exhibit 2.51 nor Exhibit 4 suggest anything being problematic with the Durst scanner. The inference to be drawn from the advertisements is that the Durst scanner was not defective and that it was capable of doing those things for which it was manufactured. Mr Palmer did not give any hint to Mr Murray that he had any difficulty with the scanner and indeed, Mr Murray's evidence was that Mr Palmer, as the plaintiff's counsel put it, "singing the praises" of the scanner (T238).
I have difficulty in accepting Mr Palmer's evidence unless it is corroborated by other evidence.

Expert evidence

The plaintiff relied on Mr Brent Acie who was of the view that the Durst scanner was malfunctioning. He was said to be an expert witness. That requires that an expert should prove his or her expertise and the opinion must be based on primary facts which need to be proved before the expert's opinion can be received into evidence: Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370 at 390 and Atanasoska v Inghams Enterprises Pty Ltd [2009] WASCA 17 at [46].
Mr Acie is a design consultant and he has been teaching digital imaging and digital media. He has been so engaged since 1999, predominantly for the professional photography industry which, over recent years, has been required to move from a film based workflow to a digital based workflow. Hence it has been necessary to train those previously involved in photography, but now, the word "photography" is no longer used. Now, there is "photo‑imaging".
Mr Acie has been teaching on a casual basis for the past 10 years. He also consults privately and has lectured at various conferences.
For the past 10 years, Mr Acie has worked with professional photographers and more recently, he has been involved in editing for the West Australian Professional Photographer Awards and the Australian Professional Photographer Awards. This work has involved assessing scans. He has also been the chairman of judges for Light Fantastic, which is a seminar run each year and he also judges camera clubs in this State about five times per annum. He has trained Mr Patrick Donaghey at the defendant's business premises.
Mr Acie began his career in digital technologies from a background of being involved in visual art and design. He does not have any formal qualifications. Rather, it is experience which has enabled him to be called as an expert in this trial, by the plaintiff.
Mr Acie has used different scanners, two of which he referred to in a report which was tendered into evidence as Exhibit 2.15.
Mr Acie said in his evidence‑in‑chief, that, scanning software is very driver based. Operators must understand what is going on on the screen and to address certain processes (T239).
Shortly prior to September 2004, Mr Acie was asked by Mr Palmer to evaluate the results of scanning from the plaintiff's business. To do this, he used the Durst scanner and two other scanners which were not high end productivity scanners. Together with Mr Palmer, he established what parameters he should look for. This included tonal range and clipping within that tonal range, tonal density and the steps between the density, posterisation, noise, colour cast, colour shift and contrast. Further, numerical values were prescribed to colours so that colours were compared with what they should have been. Visual comparison was also required.
Mr Acie tested 14 frames being predominantly wedding, portrait and some commercial subjects. Three scanners were used as noted above. Each scanner was tested once on automatic scanning and once with minor adjustments within a batch scanning parameter.
The end result is, that, each of the 14 images were passed through the scanner twice, thus making 84 images in all. Mr Acie was then asked to compare the images. Each image had its name changed and he did not know from which scanner the images came. He then compared the images to determine which were acceptable and which were not, based on his industry experience. He determined that most of the images from the Durst scanner were unacceptable because of noise, colour, shift, density, clumping, blocking and clipping (T246‑T247).
Scanning on the Durst Sigma had been carried out by Olga Tchineval and the other two scanners were used by operators who normally used those scanners, being at Plaza Imaging and the State Library.
Mr Acie concluded that the speed of the Durst scanner was certainly exemplary, but the overall image quality was quite disappointing, especially considering the not unrealistic expectations of the target clientele being professional photographers. The Durst scanner had the lowest ratio of acceptable scans of the automatically produced scans. Fine tuning the film channels would have produced better results, but, those that were operator enhanced were still not sufficiently great in numbers. The uncorrected scans were not of an even quality that would be acceptable as a proof in each, thereby defeating the purpose of obtaining a batch of scans. They would not be satisfactory to be printed as the final product.
Mr Acie made the point in his report, that:
"No attempts were made in this evaluation to consider mechanical, electrical or other technical aspects of the hardware or software relating to the scanner itself, and without having another Sigma or two to compare against, it is impossible to say definitively that this unit is in fact defective."
Three errors were logged during the test such that the Durst scanner stopped.
In cross‑examination, Mr Acie acknowledged that he was self‑taught in scanning. He is not qualified as a technician. He has no technical training in setting up film scanners or in diagnosing problems with scanners. He had not previously been involved in a Durst scanner prior to his involvement in this matter. He had no knowledge of the Durst scanner other than from what he ascertained reading the technical specifications. He does not know how to use it. He did not have any input into the operation of the Durst scanner. He does not have any technical training in setting up the Durst scanner, in diagnosing problems with it, or in assessing the output of that scanner and adjusting it to change the outputs. He has not compared the output from the subject scanner to any other Durst scanner (T253‑254).
Mr Acie acknowledged that his experience is essentially related to the processing of digital files, rather than in converting film images to digital images. Further, although the skill of an operator should not be significant, it is certainly a factor to evaluate when scanning from film to a digital file (T255).
Although Mr Acie reported that a high ratio of acceptable scans should be obtained from using the Durst scanner, he did not say what that ratio was. The reason for that is, that, his report was simply to satisfy Mr Palmer's specific request, not to end up as an expert report for trial purposes. The data giving rise to his opinion is not contained in the report. Again, the reason for that is that clients do not ask for "the numbers". "Clients are more interested in the conclusions" (T259), so there is no means of testing Mr Acie's evidence against the data.
Further, the report did not provide any standards against which, for instance, the colour neutral grey could be measured (T260). The appendices 1 and 2 to the report do not provide any data against which standards can be measured. Further, when considering contrast, there is no objective standard for that, but, it is subjective, based on experience.
Mr Acie referred to noise in his report, which was measured against the UBDIG standard, but, that standard is not referred to in the report. Contouring was also a subjective visual matter (T262).
Mr Acie also advised, that, the acceptable quality of the scan will depend on size. In a smaller size, some discrepancies and aberrations may not be visually obvious. Larger prints would normally not be done on a batch scanner (T264).
In terms of the September 2004 evaluation of scanning in the plaintiff's business, Mr Acie said that there were 10 different types of film that were used. Mr Acie could only indicate that there were wedding, portrait and commercial categories. He could not however say in evidence what the subject matters of images were, such that he conceded, that, it was not possible to judge whether the chosen themes and subject matters were broadly indicative of the range of images presented by professional photographers using the scanning service.
The testing by Mr Acie involved 10 different films with an unknown number of photographs on each film. From each film, one frame was taken, save for film No 4, from which four frames were taken. The lowest number frame taken from any of the films is frame 5 on roll 3 and the highest is frame 41 on roll 10. From these films 14 frames were chosen. It is not known who took the photographs. Weddings, portrait and commercial photographic themes were chosen because Mr Palmer said that was the main business passing through the plaintiff's laboratory at the time, but Mr Acie did not know if that was correct or not. Evidence was not led in this regard. Mr Acie did not know who took the photographs. He did not know the conditions in which the photographs were taken. He only knew that they were not taken with push/pull processing (T265). Mr Acie accepted that different photographers would shoot wedding photos in different ways. He also accepted that commercial photography has a vast range in that photographers take photographs in different ways (T266).
Mr Acie also explained in his report that an IT8 target was used to provide a more objective and detailed assessment to characterise the response of the scanner to the spectral characteristics of the films being scanned. Various numbers were provided against which the scans were measured, but, the numbers from the IT8 scans were not provided in the report and therefore, there is nothing to compare the numbers in the report against (T267).
The report goes on to indicate that two scans were required from each frame, one with minimal operator intervention and one with image adjustments consistent with the requirements of a bulk scanning job but, those requirements are not stated in the report. The scans were then assessed for fitness of purpose, but, that fitness was not defined other than to say that fitness for purpose was Mr Acie's points of reference, but, then again, those points of reference were not provided against which his conclusions could be tested. Each scan is ranked with a rating of acceptable, borderline or unacceptable based on the overall appearance and yet again, it is not known how each scan was rated. Mr Acie did not indicate in his report the weight given to the various factors that ultimately determined the overall appearance of each scan (T269‑T270).
Mr Acie is not a professional photographer. He said that he could perform that role, but he does not do so (T271).
Of the images that were adjusted, it is not known what those image adjustments were (T272). Mr Acie did not use the Durst scanner's film channel to correct any colour charts. He did not verify that the film channels were calibrated prior to conducting the scans. He assumed that the operator, Olga Tchineval, operated the scanner in accordance with her training (T282).
Mr Acie was aware that subsequent testing of the Durst scanner indicated that colour was linear and that that suggested a problem with the software, but, he was not qualified to look at that and nor did he test for that (T274‑T275).
Mr Acie acknowledged that the testing on the three different scanners was not based on a cost comparison of those three scanners or on the respective capabilities of each of the scanners. His only concern was that they were all film scanners capable of working in an automatic mode and generating a result. He considered, that, it would have been ideal to test the Durst scanner owned by the plaintiff with another Durst scanner of the same kind. This did not happen. He accepted that the operation of the Durst scanner required training, but his report indicates that:
"managers and staff have been trained by two (2) representatives of the national agent. It is interesting to note that several inconsistencies and discrepancies relating to recommendations and procedures between those individuals has been commented upon."
However, I have found that only Olga Tchineval was fully trained. Only Mr Clayton Taylor was qualified to train. Mr Paul Taylor only provided some basic training to Mr Palmer. Mr Palmer may believe that he and others have been trained. He was not. Mr Clayton Taylor attended to train him, but he did not avail himself of that opportunity. Chris Sergeant was also not fully trained. "Inconsistencies and discrepancies" arise, no doubt, because of lack of training.

Mr Acie conceded that his report is not an expert report at all.
The data supporting his conclusions was not annexed to that report and there is no means to test his evidence against the data upon which he relied. He did not test the subject Durst scanner against another equivalent Durst scanner.
Finally, it must be recorded, that, none of the 14 frames, nor any of the 84 images taken from those 14 frames, were tendered into evidence.
In all the circumstances, it is simply not possible to place any weight upon Mr Acie's report.
In March 2008, Mr Acie was present when Mr Marius Pixner attended at the plaintiff's business premises to test the Durst Sigma scanner the subject of this action. Mr Acie agreed, that, what Mr Pixner said about the physical performance of the scanner, namely that it was operating within factory specification, was correct.
The defendant called Dr Leslie Walkling as an expert witness. He is a Senior Research Fellow in the School of Art in the College of Design and Social Context at RMIT University in Melbourne. He is presently involved in a three year study in the genealogies of digital light. He has a Doctorate of Philosophy in this field, in particular, new techniques in the field of colour printing which involves colour management, print production, production strategies, efficiencies, qualitative and quantitative analysis. He is also a fine art photographer.
It was the opinion of Dr Walkling, that, the photographic industry in the years 1996 to 2008 was characterised by the rise of digital photography and the decline of traditional analogue photography. This is marked by the rapid decline in the manufacture and sale of film and film based cameras, and consequent decline in film based workloads. In the period 2003 to 2006, film capture was overtaken by digital capture, due to its speed, efficiency, cost effectiveness, availability and productivity. There has been:
" … a significant shift away from traditional film based services and support, to digital processes, especially direct digital capture with professional DSLR cameras. During this period film scanning, and bulk film scanning, together with decreasing film sales and film processing revenue, suffered most. …Over this period, the importance of film scanning as a percentage of professional laboratory sales mix would have declined. While hard data on this was difficult to obtain, anecdotal evidence and conversations with laboratory managers supports my contention, as to the Perth Photography Services revenue figures (Timoney, 2009 b) whose mix of services and performance is perfectly consistent with overall industry trends of the time".
Dr Walkling's report (Exhibit 8) contains the source information for the provision of his opinion.
In cross‑examination, Dr Walkling was asked about Mr Acie's capacity to make an assessment of the scan of the same nature as a professional photographer would be able to assess a scan, to which he replied:
"If you're asking me about are there some – is there some common denominator that we'd expect anyone in one field or another associated with the industry of professional photography to be able to judge a scan by? I would say you would, yes, he would – he would know the basic things to look for. Whether or not that can then be applied into a whole range of industrial contexts, I couldn't tell you that … because I have never seen him in a professional context, as in editing files for a client, consulting with a client. He's been in my workshops ‑ ‑ ‑and he – he was a very wonderful, chirpy, fellow, but beyond that, I'm sorry, I can't really comment I'm sorry." (T352‑T353)
Dr Walkling conceded that his report did not make any distinction between the consumer market and the professional market (T356). He concluded that the world wide trends are followed in Perth, and at the end of his report, he related that to a specific business in Perth.
Dr Walkling did not dispute, that, in 2007, Kodak conducted a survey of 9,000 professional photographers in the US which concluded that film continues to have an avid following with 75 per cent of photographers saying that they will continue to use film even as some embrace image technology. Further, that in the same year, 3,000 professional photographers were canvassed by Kodak in the United Kingdom with 67 per cent responding that they intended to carry on using film while 55 per cent said that their preferred results were obtained from film capture rather than digital photography.
Mr Brian Murray's business demonstrates that there is still a market for scanning film in which the Durst scanner can play a useful role. However, it is also the case that, as Dr Walkling said, there has been a decline in the need for bulk film scanning from 2003 when the plaintiff purchased the Durst scanner for that purpose.
The expert evidence does not assist the plaintiff's case.

Conclusion as to whether the Durst scanner was defective

Drawing all this together, Mr Palmer was well aware that the Durst scanner was not an automated, or near automated, process, especially for scanning required to be performed for professional photographers.
Successful operation of the Durst scanner required a trained operator, but only Olga Tchineval was fully trained. The only evidence is that she operated that scanner occasionally. If others were operating it and not obtaining satisfactory results, then, that is more probably than not because they were not properly trained.
The Durst scanner was operating at all material times within factory specification. It was not defective and Mr Palmer "sang its praises" to Mr Murray.
However, from the time the plaintiff purchased the scanner, there was a world wide decline in the need for film scanning and although some people, such as Mr Murray, continue to be involved with it, most others do not, as Dr Walkling said in evidence. It is more probable than not that this world wide trend affected the plaintiff's business, such that there was only occasional use required of the Durst scanner and it was therefore surplus to needs.
The plaintiff's case simply does not explain what the alleged defects were and what caused those alleged defects in the scanner. The burden was on the plaintiff to establish this. It has not done so.

Result

For these reasons, the plaintiff's claim must be dismissed. However, in the event that I am wrong, I will consider the issue of damages.

Damages

The plaintiff claims $114,945.60 less GST of $10,449.60 for the scanner. This leaves an amount of $104,496. However, the scanner was used between November 2003 and April 2005. Mr Acie said that it was being used continuously in September 2004 (T 261). The plaintiff has not otherwise provided any substantive evidence relating to use of the scanner. It may have been used continuously and it may have paid for itself from that use. It is not known to what use the scanner has been put and what profit or loss has been made from it.
The claim is also made for the loss on sale of the Genie printer and for the disposal of the Fuji processer, which could not be sold. These items cost a total of $131,589.70. The Genie printer was sold in February 2008 for $16,000. The plaintiff has therefore had some five years use of it. No credit has been allowed in respect of that use. I do not know to whom it has been sold and whether the sale was genuine.
Further, the Fuji film processor was not able to be sold, but, no evidence has been given of efforts made to sell that processor. Again, it had been used for a period of time prior to it being given away, but credit has not been allowed for that use. It is not known when it was given away.
In addition to this, information has not been provided relating to the depreciated tax values of equipment in order to ascertain the plaintiff's true loss because, presumably some tax benefit has been obtained by reason of depreciation of income producing assets used in the business.
Further, there is a claim for the employment of an unnamed person from Soma Photo Agency and Paul Langmead. The unnamed person and Mr Langmead both worked in the Brisbane Street premises when Mr Palmer was apparently seeking to establish a replacement business. It is conceded by counsel that the Soma Photo Agency claim is not claimable but that all bar two hours of Mr Langmead's time is claimable because he was operating the plaintiff's business at Brisbane Street. This claim of $6,534.39 should be reduced by two hours, but, the fact is that the business was still operating and no credit has been allowed for income received during that time. There is no evidence of that income. The invoices from Mr Langmead (Exhibit 2.59) show that he was working in the business until 2 August 2005. Mr Langmead may have earned sufficient income in the business to pay his wages. I have no details of the hours Mr Palmer was away from the plaintiff's business and what Mr Palmer was doing when he was so away. I have no records to show what the position is.
The lease in respect of 24 Brisbane Street expired on 30 October 2005 (T121). Rent was paid until May 2006 because Mr Palmer determined that he would continue to use the premises for storage. A claim for rent beyond the expiration of the lease cannot be attributed to the defendant. In any event, I do not have any records which would substantiate Mr Palmer's claim that the business was not viable from April or June/July 2005 (T112). I further do not know whether this lack of viability is due to the alleged problems relating to the scanner or not. As I have previously noted, I do not have any figures, as might have been expected, detailing income from the various proposed aspects of the business as set out in the July 2003 business plan.
As previously noted, the claim originally sought loss of profits from the business. However, that claim has been abandoned. There is an absence of relevant evidence with respect to each item sought by way of damage. Relevant evidence has not been presented. It is not simply a situation of a trial judge saying "doing the best I can" and then providing damages, because there is nothing with which anything can be done.
The plaintiff's claim is dismissed. Further, in this circumstance, there is no need for me to consider the claim by the defendant against a third party. There is no claim capable of being upheld against the defendant, but, it was inevitable, that, the defendant would join the third party.