Roadstar Caravans Pty Ltd v Emjay Products Pty Ltd
[2013] VCC 1921
•20 December 2013
| IN THE COUNTY COURT OF VICTORIA | Revised (Not) Restricted |
AT MELBOURNE
COMMERCIAL LIST
GENERAL CASES DIVISION
Case No. CI-12-02412
| ROADSTAR CARAVANS PTY LTD | Plaintiff |
| v. | |
| EMJAY PRODUCTS PTY LTD & ANOR | Defendants |
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JUDGE: | His Honour Judge Anderson | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 3, 4, 5 & 9 December 2013 | |
DATE OF JUDGMENT: | 20 December 2013 | |
CASE MAY BE CITED AS: | Roadstar Caravans Pty Ltd v. Emjay Products Pty Ltd & Anor | |
MEDIUM NEUTRAL CITATION: | [2013] VCC 1921 | |
REASONS FOR JUDGMENT
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Catchwords: Consumer law – Supply of sealant to caravan manufacturer – Complaints of caravans leaking – Whether distributor and/or manufacturer of sealant liable under the Goods Act 1958 (Vic), in negligence or for misleading and deceptive conduct– Whether plaintiff contributorily negligent or must share responsibility for its loss – s.19(1) Goods Act 1958 (Vic) – Trade Practices Act 1974 (Cth).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M. Whitten | Hall & Wilcox |
| For the First Defendant | Mr M. Campbell | Norris Coates |
| For the Second Defendant | Mr A.J. Weinstock | Norton Gledhill |
HIS HONOUR:
1Roadstar Caravans Pty Ltd (“Roadstar”) is a manufacturer of caravans. Between May 2010 and March 2011, Roadstar purchased a polyurethane sealant, Matrix FC, for use in the manufacturing process to seal joints, particularly at the windows, edges and roof of the caravan. Matrix FC was manufactured by Bostik (Australia) Pty Ltd (“Bostik”) and was sold to Roadstar by a supplier, Emjay Products Pty Ltd (“Emjay”).
2Between 2010 and 2012, Roadstar received complaints that 50 caravans had developed leaks. They were returned for rectification works. Roadstar alleges that the leaks were caused by the unsuitability of the sealant for use in the manufacturing process. Roadstar claims from Emjay and Bostik rectification costs totalling $246,689.21.
3Roadstar relies upon the following causes of action:
a.against Emjay, that:
i.Matrix FC was unfit for the purpose for which it was supplied by Emjay, namely as a “one component sealant in the manufacture of caravans”;
ii.Emjay engaged in misleading or deceptive conduct by representing to Roadstar that Matrix FC was suitable for use as a one component sealant in the manufacture of caravans;
iii.Emjay was negligent in recommending Matrix FC without informing Roadstar that proper adhesion was only possible if the sealant was used with an appropriate primer, and also by failing to provide Roadstar with the technical data sheet for Matrix FC.
b.against Bostik, that:
i.Bostik engaged in misleading or deceptive conduct by representing to Roadstar that Matrix FC would produce a watertight seal so long as an alcohol based cleaner was not used on the surfaces to which the sealant would be applied;
ii.Bostik was negligent in informing Roadstar that Matrix FC would produce a watertight seal so long as an alcohol based cleaner was not used on the surfaces to which the sealant would be applied;
iii.Bostik was negligent by failing to inform Roadstar that Matrix FC was not suitable for use as a one component sealant in the manufacture of caravans unless used with an appropriate primer.
4By its defence, Emjay:
a.denied recommending Matrix FC to Roadstar for use in the manufacture of caravans;
b.said that it merely provided a price to Matrix FC after the product was recommended by another supplier;
c.denied that Matrix FC was supplied for any particular purpose or that Roadstar had relied upon Emjay’s skill or judgment in the purchase of the product;
d.denied that it was negligent or engaged in misleading or deceptive conduct;
e.alleged that, if it were negligent or otherwise liable, Roadstar was also negligent or partly responsible by failing to obtain appropriate advice regarding the use of Matrix FC, or to obtain the technical data sheet for the product;
f.alleged that, if it were held to be liable to Roadstar, Bostik was a “concurrent wrongdoer” for the purposes of the Wrongs Act 1958 (Vic) or the Trade Practices Act 1974 (Cth);
g.put in issue the quantum of the damages claimed.
5By its defence, Bostik:
a.denied that it made any representations to Roadstar, or that Roadstar relied upon anything Bostik had said or done;
b.denied that it was negligent or otherwise liable and alleged that Roadstar’s own negligence or conduct had caused or contributed to any loss that it suffered;
c.alleged that, if it were held liable to Roadstar, Emjay was a “concurrent wrongdoer” for the purposes of the Wrongs Act or the Trade Practices Act;
d.put in issue the quantum of the damages claimed.
Witnesses
6The determination of the issues in the case depends, primarily, upon the factual conclusions I reach upon the evidence. The witnesses who gave evidence at the trial were:
a.Ken Nizam, the director of Roadstar in charge of its operations, gave evidence of the circumstances in which Roadstar purchased Matrix FC, the critical meeting with representatives of Emjay and Bostik on 7 July 2010 and the cost of repairing the damaged caravans;
b.Noel Zammit, Roadstar’s Production Planner, gave evidence of the ordering of Matrix FC and conversations at the time with Stephen Petruccelle from Emjay, the meeting in July 2010 and the repair of the damaged caravans;
c.Trevor Rowlands, a materials engineer, examined samples of Matrix FC in September 2011;
d.Stephen Petruccelle, the Victorian Sales Manager of Emjay, gave evidence of the supply of products to Roadstar including Matrix FC and the meeting in July 2010;
e.David Stuart, Bostik’s Technical Services Manager, gave evidence of the meeting in July 2010, his further visits to Roadstar’s factory in September 2011 and later testing that was undertaken;
f.Matthew Hodgins, Bostik’s Sales Manager, was Mr Petruccelle’s contact at Bostik and was present at the meeting in July 2010.
7A feature of the trial was that, generally, there was a lack of contemporaneous records which might have provided a better basis for assessing the oral testimony. Roadstar relied upon specific phrases used in certain conversations. The critical words in the conversations were denied or not recalled by other participants. The evidence of discussions was rarely detailed or specific although this was perhaps not surprising for conversations which occurred many years ago.
8The following comments can be made about the witnesses:
a.Mr Nizam was, on occasions in cross-examination, argumentative with counsel and refused to directly answer questions. He tried to anticipate where he thought counsel was heading and responded by simply repeating evidence he had earlier given. This seemed to be more from frustration with the process than a deliberate attempt to avoid answering questions. Nevertheless, it made it difficult for cross-examining counsel to effectively test his evidence;
b.Mr Zammit was generally a straightforward witness. He was the direct point of contact with Mr Petruccelle, and the conversations between them are critical in the determination of Roadstar’s claim against Emjay. Mr Zammit’s evidence appeared to lack the detail of conversations and observations which would make me confident that his unsupported evidence of the critical conversations was to be relied upon;
c.Thamesh Lokgalappaththi is a leading hand who has been employed by Roadstar for many years. Thamesh is in charge of the section which, in the manufacturing process, places the external aluminium cladding on the frame of the caravan. Thamesh did not give evidence at the trial. Unfortunately, two weeks before the trial, Thamesh’s father died and he returned to Sri Lanka for his father’s burial. He was not due to return to Australia until 20 January 2014;
d.it was not suggested that the explanation for Thamesh’s absence as a witness was unsatisfactory, and it is not appropriate to speculate as to what evidence he may have been able to give if he had been a witness;
e.Mr Petruccelle had limited recollection and on a number of occasions gave the response, “I do not recall”. It is difficult to determine whether these were anything other than honest responses;
f.Mr Hodgins gave limited evidence, particularly in relation to the 7 July 2010 meeting, when he said he took very little interest because Mr Stuart was the person from Bostik with the necessary expertise;
g.Mr Stuart generally appeared to be a straightforward, honest witness. In his evidence, particularly in cross-examination about the results of the testing of Matrix FC carried out in September 2011, he gave evidence about the shortcomings of the product in the manufacture of caravans. At the meeting on 7 July 2010 and after the site visits in September 2011, I have determined that Mr Stuart’s responses were not as informed or as useful as they might have been;
h.the evidence of both Mr Petruccelle and Mr Hodgins might have been expected to be more responsive. Matrix FC was first ordered in late April 2010. A complaint about the product resulted in an on-site meeting just over two months later on 7 July. The problem was not resolved at the meeting and the issue continued to be investigated.
9In these circumstances, it would be expected that at least one of the parties would have better written records of key events including conversations with other parties. Bostik apparently made no internal report after the July meeting, as was done in September 2011 when Mr Stuart again visited Roadstar. There is very little evidence that Roadstar communicated the ongoing problems it had with the defective caravans to Emjay or Bostik in written form.
10I cannot determine the proceeding on the basis of the absence of evidence. However, as a result of the features of the evidence I have referred to (lack of independent objective evidence or detailed recollection of other matters), I consider that I should be cautious in too readily accepting unsupported oral evidence of specific details of conversations unless I am satisfied that it is more probable than not, that that was what occurred.
Background events
11Roadstar has been manufacturing caravans for about 20 years. Mr Nizam took over the operation in late 2008. Many of the company’s employees, including Mr Zammit, continued with the company. In 2010/11, Roadstar built about 200 caravans with a sales value of about $8 million. Each caravan takes little more than a week to manufacture on the factory floor.
12Sealants are used in the manufacturing process, principally around the windows and on the “j moulds” where the cladding joins on the roof and sides of the caravan. In 2009, and into 2010, Roadstar used a Bostik industrial grade sealant, “Silicone White”, which was supplied through Emjay.
Circumstances in which Emjay supplied Z-Bond V4 and Matrix FC to Roadstar
13Emjay’s sales records show that:
a.Roadstar submitted the first order of Z-Bond V4 by facsimile on 24 February 2010;
b.Roadstar was invoiced for quantities of Z-Bond V4 on 25 February (60 units), 9 March (60 units), 18 March (150 units) and 9 April 2010 (120 units);
c.Roadstar submitted the first order of Matrix FC by facsimile on 29 April 2010. The order was for 150 370 gram tubes of the product;
d.Roadstar was invoiced for purchasers of Matrix FC on 17 occasions between 7 May 2010 and 11 March 2011. The first order was for 160 units. Most subsequent orders (about 2 each month) were for 200 units of the product.
14Mr Zammit said that just before February 2010, a caravan dealer, Paul Watson, told him that Z-Bond was a “better product” than the Bostik industrial grade sealant Roadstar had been using. Mr Zammit decided to give Z-Bond V4 a go. Mr Zammit said that he had discussed the product with Stephen Petruccelle. Mr Petruccelle told him that Z-Bond V4 “was a better product, although Emjay sold a large quantity of the industrial grade sealant”.
15It is not clear from the evidence as to precisely why Z-Bond V4 was ordered and the circumstances in which it was ordered as a replacement for the “industrial grade” sealant and whether that sealant had proved to be unsatisfactory in any way. There were also differences in the evidence about the conversations Mr Zammit had with Mr Petruccelle in ordering the Z-Bond V4 and the Matrix FC. No evidence was given of any testing carried out by Roadstar before it changed from the industrial grade sealant to Z-Bond V4, or before the change about two months later from Z-Bond V4 to Matrix FC.
16Mr Nizam said that, in early 2010, there was concern about the discoloration of the sealant which was turning from white to yellow, although it was not “coming apart”. This made the vans look “old”. From the context of this evidence, and the fact that immediately before Mr Nizam had been talking about Z-Bond V4, I assume that he was saying that it was the Z-Bond V4 which was discolouring. Mr Nizam appeared to confirm that fact in cross-examination. Mr Nizam said that during a sales call to Roadstar, ATA Distributors (“ATA”) had recommended Matrix FC, which they said “doesn’t discolour”. Mr Nizam asked Mr Zammit to talk to Emjay, and as a result, Roadstar started using Matrix FC.
17Mr Zammit said that Mr Nizam had told him that ATA had suggested Matrix FC would not discolour and look old. He had phoned Mr Petruccelle to see if Emjay could supply the product and to obtain a price. Mr Zammit said that he told Mr Petruccelle the reason Roadstar was going to change from the Z-Bond V4. Mr Zammit said that Mr Petruccelle told him that Matrix FC was a “better product” and that he would “get back to him with a price” after talking to Bostik.
18Mr Petruccelle said that before Roadstar began to order Z-Bond V4 in February 2010, he had received a phone call from Mr Zammit. Mr Zammit told him that ATA had recommended Z-Bond V4 and Matrix FC. Mr Zammit asked him for prices for the products. He later got back to Mr Zammit with the prices and on 24 February 2010, Roadstar submitted an order for Z-Bond V4.
19During cross-examination, Mr Petruccelle was asked about the conversations Mr Zammit said he had with Mr Petruccelle. On a number of occasions, when particular details of conversations were put to Mr Petruccelle, he answered that he “can’t recall”. He did remember that he was only requested to give a price for Matrix FC, as it “stuck in my mind because a competitor was involved”.
Knowledge and expertise of Stephen Petruccelle
20Mr Petruccelle started working with Emjay as its Victorian Sales Manager in 2007/08. His brother had established the company in Sydney in 2006. The Melbourne operation consisted of only two full-time employees and one part-time employee. Mr Petruccelle had previously worked as a truck driver, a storeman and sales representative.
21Emjay’s business was to supply adhesive and packaging products, including products from Bostik. Mr Petruccelle said he had no technical knowledge of adhesives and knew “nothing about the manufacture of caravans”. He was never shown around the Roadstar factory or shown how a caravan was made. In cross-examination, Mr Petruccelle said that on one occasion, Roadstar had an issue with masking tape, and that was the “only time I went on the factory floor”. His first dealing with Roadstar was in 2009 and he dealt “exclusively” with Mr Zammit.
22Emjay had been distributing Matrix FC to customers since 2009. In 2009, Emjay supplied products to about 20-30 caravan manufacturers. In early 2010, when the company commenced selling Z-Bond V4 and Matrix FC to Roadstar, it was only supplying two other caravan manufacturers with Z-Bond V4 and one other manufacturer with Matrix FC.
23Mr Zammit said that when Mr Petruccelle visited Roadstar, it was “mainly to my office”, although Mr Zammit said he “had taken Mr Petruccelle around the factory floor” and Mr Petruccelle “would have known” that the sealants supplied by Emjay would be “used externally”.
24Mr Nizam was asked in cross-examination about the knowledge Mr Petruccelle would have had of Roadstar’s manufacturing processes. Mr Nizam said that Mr Petruccelle was “shown around the factory floor” and was “shown the manufacturing process”, although Mr Nizam was not asked and did not say, when or by whom. Mr Nizam did add, “All the sales representatives have been in the factory and seen the processes. They come in to count the stock”.
Complaints about leaking caravans
25About two weeks after Roadstar started using Matrix FC in early May 2010, Thamesh told Mr Zammit that the Matrix FC was not curing. Mr Zammit said he immediately complained by phone to Mr Petruccelle. Mr Petruccelle told him that “problems can happen with the weather conditions” and it can take “longer to cure”.
26Mr Zammit said that Thamesh “made further complaints” that the Matrix FC was not curing, and Mr Zammit had a further conversation with Mr Petruccelle which, he said, was similar to the first one, and Mr Petruccelle had again referred to the “weather conditions”. Mr Zammit said that there was a third conversation with Mr Petruccelle along the same lines and at that time he agreed to arrange for Bostik personnel to visit the Roadstar factory to inspect the problem.
27Mr Petruccelle said that Mr Zammit made a complaint after the “first couple of orders” that the Matrix FC was “not drying or curing as quickly” as it should. Mr Petruccelle said that he told Mr Zammit that he would need to get in touch with Mr Hodgins from Bostik. Mr Petruccelle said that Mr Hodgins told him that the Matrix FC “was different from the industrial grade sealant; it stays flexible and the membrane moves with the van”.
28Mr Petruccelle recorded his contacts with customers on a “daily call sheet” which he said he maintained “as I go along”. For 2 July 2010, the entry reads, “Roadstar Caravans Coolaroo, Service, Having trouble with Matrix drying/Mr Hodgins”. Mr Petruccelle said that it was in this conversation with Mr Hodgins that he asked if he could set up a meeting at Roadstar to look at the “problem with Matrix setting”.
Meeting at Roadstar on 7 July 2010
29Mr Nizam said that, during the meeting, he did not participate in the initial discussion about the problems with Matrix FC. Later, the participants came to his office. They were Mr Zammit, Mr Petruccelle from Emjay and Mr Hodgins and Mr Stuart from Bostik. Mr Nizam said that Roadstar was told by Mr Stuart that they were not to have methylated spirits on site as it contaminated the sealant with its fumes. The wax and grease remover used in the Roadstar factory had no alcohol and was “fine to use”.
30Mr Zammit said he took the visitors to the factory floor. He showed them the silicon around the window of a caravan. Mr Stuart asked how the sealant was applied. Mr Zammit said that Thamesh was the person to ask. Mr Stuart had a conversation with Thamesh on the factory floor, out of the hearing of the others.
31When Mr Stuart returned from speaking with Thamesh, he said that methylated spirits or other alcohol based products should not be used. He looked around the factory and read the label on a can of wax and grease remover. He said that it was “OK to use” as it did not contain alcohol. Mr Zammit said that Mr Stuart then asked Mr Petruccelle if he had “provided a data sheet” to Roadstar. When Mr Petruccelle said he hadn’t, Mr Stuart told him that he had “better supply it straight away”.
32Mr Petruccelle said that the meeting at the Roadstar factory lasted about one hour. He did not recall Thamesh being there. He said that he could only recall being in the office at Roadstar and that Mr Nizam was present. He said that during the meeting, Mr Stuart asked him if he had supplied a data sheet to Roadstar. He said that he told Mr Stuart, “No samples were given, I didn’t introduce the product”.
33Mr Petruccelle said that Mr Stuart had asked during the meeting what cleaning agents were used. He did not recall the discussion, although Mr Stuart had said that, if Roadstar stopped using methylated spirits, the product should work.
34Mr Stuart said that he was asked to attend the meeting because Roadstar was having a problem with the Matrix FC not curing. They were shown a caravan in the driveway of the Roadstar factory which had signs of uncured material. The sealant was “soft and sticky”.
35Mr Stuart asked to see how Roadstar was applying the product. The group was taken to the factory where there were several vans in various stages of construction. He said he asked what Roadstar used to clean the vans. He was told they used “metho” to clean the surfaces and the excess adhesive. Mr Stuart said that methylated spirits should not be used and he looked for another solvent on the factory floor. He examined the label on a grease and wax remover and said that it looked safe and would not prevent the sealant curing.
36Mr Hodgins said that although he attended the meeting, he “switched off” as Mr Stuart, Bostik’s technical person, was present.
Matrix FC technical data sheet and primer use
37Following the meeting, Mr Petruccelle sent a technical data sheet for Matrix FC to Roadstar. Mr Nizam said that he discussed the data sheet with Mr Zammit but they found it “confusing”. The data sheet, under the heading “Primer”, stated that Matrix FC, “generally does not require priming [although] for maximum performance and long term integrity, the use of a primer is recommended”. The data sheet stated that, “on non-porous surfaces such as metal, plastic, etc. use Bostik N41 Primer”.
38Mr Nizam said that he asked Mr Zammit to speak to Emjay about the primer. Mr Zammit said that he contacted Mr Petruccelle and told him that Roadstar needed to get the N41 Primer. Mr Petruccelle phoned back and said that the N41 Primer was no longer available and there was no alternative product. Mr Petruccelle said that using the wax and grease remover, “should be OK”.
39Mr Petruccelle was asked about these matters in cross-examination. He said that he did not recall a conversation in which Mr Zammit asked if he could order the primer that he had read about in the data sheet. He did not recall saying that Bostik no longer made the N41 Primer. He said there was never a conversation in which he said that Roadstar should “just keep using the wax and grease remover as David Stuart had said”.
Labels, technical data sheet, primers, cleaners and “pretesting” programme
40Labels: Each tube of Matrix FC had a wrap around label which included the following statements:
a.“Description – A single component, high performance fast curing polyurethane adhesive/sealant formulated to provide a flexible and durable seal and an exceptionally strong bond. Suitable for a wide range of internal and external applications”;
b.“Substrate preparation – Surfaces must be clean, dry and free from oil, grease and dust. Clean non-porous surfaces with Bostik 5077 cleaner”;
c.“Priming – Bostik has a range of primers and cleaners which may be required on some substrates. Refer primer selection guide for details”;
d.“Clean up – Wipe off excess sealant immediately and clean up with Bostik 9907”;
e.“Limitations…A field test is recommended to ensure compatibility”;
f.the label showed drawings of a truck, a caravan, a shipping container and a large speed boat, presumably indicating the wide range of uses for the product.
41Technical data sheet: The data sheet, published in August 2005 and current in 2010, was headed, “Matrix FC Single Component P4 Adhesive”. The data sheet included the following passages:
a.the list of “recommended uses” included:
i.“Perimeter sealing of door and window framing”;
ii.“For sealing gaps and adhering façade and cladding panels to various building materials”;
iii.“Adhering common building materials such as metals, enamelled substrates, concrete, masonry, brick and most plastics”.
These items were deleted from the “recommended uses” in the 2013 edition of the data sheet. Mr Stuart said that the uses were “not appropriate to the product”;
b.under the heading, “Features & Benefits”, the phrase “single component” was expressed as, “one component, no mixing required”;
c.extracts under the heading “primer” have already been quoted. Mr Stuart said that the omission of the passage referring to the “Bostik N41 Primer” from the 2013 edition of the data sheet was because the statement was “more appropriate for industrial applications”;
d.both under the headings “placing” and “cleaning”, the use of Bostik 9907 solvent was recommended to remove excess Matrix FC “while still uncured” and to “clean up uncured material and equipment immediately after use”;
e.under the heading “P.A.T.S (Pretested Adhesion to Substrate) Programme”, the date sheet states, “Bostik offer a service in which a program has been established to eliminate potential field problems by pre-testing Bostik adhesives with samples of building materials to which the adhesive will be applied. This service is available on large projects where pre-application testing will aid in determining the proper surface preparation method to achieve optimum adhesion. Consult a Bostik representative for further information”;
f.at the end of the data sheet is the following disclaimer, “The representations and recommendations regarding the products are based on tests which we believe to be reliable. However, no guarantee of their accuracy can be made because of the great range of field conditions and variations encountered in raw materials, manufacturing equipment and methods. Thus the products are sold with a limited warranty only, and on the condition that purchasers will make their own tests to determine the suitability of the product for their particular purposes. Under no circumstances will Bostik Australia Pty Ltd be liable to anyone except for replacement of the products or refund of the purchase price”.
42Cleaners: Mr Zammit said that following the meeting on 7 July 2010, all methylated spirits was removed from the factory and the alternative cleaning product recommended by Mr Stuart during the meeting was used.
43Pre-testing: Roadstar did not test the Matrix FC product before commencing to use it in the production process.
Technical evidence – Mr David Stuart
44Mr Stuart has a qualification in applied science and is by training a chemist. When he first worked for Bostik in the 1970’s, he was involved in the development of adhesive products. More recently, he has been involved in the investigation of customer problems and complaints.
45 Mr Stuart made the following statements:
a.technical data sheets are available for most of Bostik’s products and are available “on request” for customers;
b.Matrix FC is a “single component” product in the sense that it is “ready to use as supplied, and nothing is to be added”;
c.Matrix FC is both an adhesive (to bond components) and a sealant (to be placed between components to prevent the entry of dust and water);
d.it is not possible to tell how the product will perform without testing;
e.priming improves adhesion and the durability of the bond although, on metal, the use of a primer is not as satisfactory;
f.on caravans, the sealant is generally affixed to painted metal surfaces; the adhesion is to the paint;
g.alcohol based solvents inhibit curing;
h.the P.A.T.S. programme involves the provision by Bostik of free testing upon request;
i.if a sealant has not cured and the joint has a high movement, it may not seal;
j.if the sealant remains “gooey”, it will probably still seal.
46Between 13 and 16 September 2011, Mr Stuart spent a number of hours inspecting returned damaged caravans at Roadstar’s factory. On 26 September 2011, Mr Stuart wrote a report for Mr Chris Sinis, Bostik’s Head of Sales for industrial adhesives. In the report, Mr Stuart made the following statements:
a.“the sealant showed relatively poor adhesion to the colourbond (?) aluminium (?) exterior panels, but adequate adhesion to the window frames”;
b.“samples of the panel material and cover strips were returned to the laboratory at Thomastown to test adhesion”;
c.“examination of the removed window [a side window] showed deficient sealing and evidence of water leaking”. This was “evidence of faulty application of the sealant”;
d.with the removed front and bathroom windows, “no evidence of water leaks through the sealant around the front window was seen, despite evidence of water leaking inside the van”;
e.the window frame, upon “closer examination showed evidence of water passing the rubber seal around the window”;
f.there was “evidence of water leaks at several places inside” the caravan. These leaks were not “located near any window or obvious panel join” and may have been “due to overflow of the wash basin and or washing machine”;
g.“I do not believe that Matrix FC is the cause of water leaks experienced by Roadstar”.
47Mr Stuart also carried out testing of Matrix FC. Using a sample of aluminium taken from Roadstar’s factory, Mr Stuart applied a Bostik solvent cleaner and then applied Matrix FC to both primed and unprimed surfaces. Mr Stuart’s conclusion was that the test results for both surfaces showed “relatively poor adhesion”. He later updated the technical data sheet to accord with his test results and what he considered were appropriate applications for the product. This information was never communicated to Roadstar.
48Mr Stuart said that in 2010 he “would not have known an appropriate product for the caravan industry”. He was now aware that “most caravan customers” of Bostik use Z-Bond V4 or the industrial grade sealant, and that Matrix FC is “not so much used by caravan manufacturers for sealing but for bonding panels”. He has learned (since 2010), that Matrix FC is “not an appropriate product” for the use to which it was put by Roadstar.
49On 28 February 2011, Mr Hodgins sent an email to Mr Petruccelle setting out Bostik’s response to Roadstar’s complaints. The email was sent on to Mr Nizam by Mr Petruccelle. The email read:
”Just following up on our call to Roadstar caravans.
(1)No complaints lodged on the Matrix FC product [ie. by other customers].
(2)The issues experienced by Roadstar were determined to be due to the use of an incompatible cleaning solvent.
(3)Roadstar don’t appear to have any further issue since removing the use of that solvent.
Any questions please call”.
Technical evidence – Technical Assessing (Vic) Pty Ltd report
50On 26 August 2011, Mr Paul Hacche of Technical Assessing (Vic) Pty Ltd produced an expert report on the failure of the use of Matrix FC on Roadstar’s caravans. It concluded that the sealant either did not cure, or had only partly, which resulted in water penetrating the caravan.
51The report exhibited an earlier report of tests conducted by Intertek Probe on 28 February 2011 on three samples of Matrix FC provided by Roadstar; a cured sample, an uncured sample approximately 6 months old from a caravan which Roadstar said had not come into contact with methylated spirits, and from an unused tube of the product. The report stated that when the virgin sample from the unused tube was exposed to ethanol, it “gave a spectrum that was similar…to the uncured sample”, indicating that the uncured sample had previously been exposed to ethanol. Roadstar could not provide an explanation for this.
Technical evidence – Mr Trevor Rowlands
52Mr Trevor Rowlands of ATTAR completed an export report on 16 November 2011 analysing a caravan manufactured by Roadstar which contained the failed sealant. The caravan was inspected by Mr Rowlands on 14 September 2011, however the date on which the caravan was built is unknown. Mr Rowlands undertook both a visual assessment of the failed sealant and a “Fourier Transform Infrared (FTIR) spectroscopy and Differential Scanning Calorimetry (DSC) to compare the extent of curing between a fully cured, an uncured sample and a failed sample”.
53Mr Rowlands concluded that:
a.“the Matrix FC sealant used on the affected caravans failed as a result of inherently poor adhesive strength to the substrate aluminium panel in the absence of the prescribed primer;
b.Chemical analysis test results confirm the failed sample had fully cured and therefore no evidence of contamination by alcohols could be found”.
Repair of the damage by Roadstar
54I am satisfied that when complaints were made of defective sealing of the caravans resulting in water leaks, that these matters were fully investigated by Mr Nizam and Mr Zammit and by Roadstar’s insurers. The evidence of photographs and the sample of Matrix FC that did not adhere and was stripped from a defective caravan, support the contentions of Roadstar as to the cause of damage. I reject the evidence of Mr Stuart that there is any convincing evidence to demonstrate that the faults in the caravans were caused by faulty application of Matrix FC or that the water leaks were unrelated to the defective sealant. In view of the opinions formed by Mr Stuart following his testing in September 2011, I do not consider that the earlier statements in the email to Emjay in February 2011 or the report to Mr Sinis in September 2011 are matters that should be relied upon.
55I am also satisfied that the claims made by third party repairers were properly assessed by Roadstar before they were paid, and that, apart from the matters I shall discuss under the heading of quantum, the charges made by Roadstar for the caravans it repaired, were fair and reasonable.
56On 6 July 2010, a “warranty claim form” was submitted in respect of the first affected caravan (chassis no. AR0118). That van was repaired by Great Southern Vans at a cost of $7,496.64, which was borne by Roadstar. Over the following 21 months, other caravans were either repaired by local dealers at Roadstar’s cost or were returned to Roadstar for repair. One caravan (chassis no. AR0087) was damaged beyond repair and only a few items could be salvaged and reused in the replacement van. On occasions, it was necessary for Mr Nizam to incur travelling expenses in order to inspect damaged caravans, and to satisfy himself that the vans suffered water leaks from faulty sealing of chassis joints or around windows.
57A table is in evidence which lists the affected caravans and the “cost of repairs” and associated expenses. From the “caravan chassis no.”, the “date of manufacture” was extracted from a book kept by Roadstar which records the date the caravan left the factory as a completed unit.
58This showed that all the affected caravans were manufactured between May 2010 and May 2011. The only white sealant used during this period to March 2011 was Matrix FC. There was no direct evidence that the caravan (chassis no. BR0201) manufactured on 5 May 2011 was manufactured using Matrix FC. However, 200 units of the product were supplied on 11 March 2011, and it appears from the period between previous orders that it is likely the caravan manufactured on 5 May 2011 would have involved the use of Matrix FC.
59The following table shows the number of affected caravans manufactured between 13 May 2010 and 5 May 2011:
Month Defective caravans manufactured that month Total caravans manufactured that month May 2010 7 13 June 2010 11 14 July 2010 5 13 August 2010 6 15 September 2010 5 16 October 2010 5 16 November 2010 - 10 December 2010 3 (42) 14 (111) January 2011 1 Not Available February 2011 4 ‘’ March 2011 2 ‘’ April 2011 - ‘’ May 2011 1 ‘’ 60The warranty claim forms show that of the complaints received by Roadstar, claims were submitted as follows:
Month No. of claim forms submitted July 2010 1 October 2010 1 December 2010 2 February 2011 2 March 2011 6 April 2011 1 May 2011 7 June 2011 3 July 2011 5 August 2011 1 September 2011 1 November 2011 2 March 2012 1 April 2012 3 June 2010 2 July 2012 4 September 2012 1 November 2012 2 January 2012 1 February 2012 1 April 2012 1
Emjay – 1. Claim based on s.19 Goods Act 1958
61Roadstar asserts that the Matrix FC was unfit for the purpose for which it was supplied by Emjay. From the pleading, the particular purpose was expressed as involving:
a.a one component sealant (i.e. without the need for a primer);
b.able to be used in the manufacture of caravans; and
c.with proper adherence to the aluminium panels to make a watertight seal.
62Roadstar relies upon the circumstances in which the product was supplied by Emjay, and in particular, the conversation between Mr Zammit and Mr Petruccelle shortly before Roadstar submitted an order for the Matrix FC on 29 April 2010.
63Section19(a) of the Goods Act 1958 provides that, ”Where the buyer expressly or by implication makes known to the seller the particular purpose for which the goods are required so as to show that the buyer relies on the seller's skill or judgment and the goods are of a description which it is in the course of the seller's business to supply (whether he be the manufacturer or not) there is an implied condition that the goods shall be reasonably fit for such purpose: Provided that in the case of a contract for the sale of a specified article under its patent or other trade name there is no implied condition as to its fitness for any particular purpose”.
64Sutton, Sales and Consumer Law (4th ed, 1995) at paragraph 9.3 lists the requirements of the section as follows:
“(i) The buyer must make known, not necessarily expressly to the seller, at or before the time when the contract is made, the particular purpose for which he or she wants the goods.
(ii) The particular purpose must be disclosed in such a way that it is clear that the buyer is relying on the seller’s skill or judgment, and he or she does in fact rely on it.
(iii) The goods must be of the description which it is in the course of the seller’s business to supply.
(iv) The goods if specific goods must not be bought under their patent or other trade name.”
65Communicating the “particular purpose”: Roadstar relies upon the Court reaching the following conclusions:
a.Mr Petruccelle was the person at Emjay to whom Roadstar “made known” the particular purpose for which it required Matrix FC;
b.Mr Petruccelle was familiar with Roadstar’s manufacturing process from his previous dealings with Roadstar, including his visits to the Roadstar factory;
c.in particular, Mr Petruccelle would have known that Roadstar needed a product which would seal the aluminium panels against the ingress of water from outside;
d.Mr Petruccelle would have known that a watertight seal could only be achieved if an appropriate primer were first applied to the aluminium panels;
e.Mr Petruccelle would have followed this process of reasoning when Mr Zammit telephoned him in April 2010 to ask whether Emjay could supply Matrix FC.
66There is a dispute on the evidence about Mr Petruccelle’s knowledge of both the processes involved in the manufacture of caravans and the technical qualities of the Bostik products that Emjay sold. However, the following appears to be the most likely state of his knowledge:
a.Mr Petruccelle commenced with Emjay in 2007/2008. He had no previous experience with sealants or adhesives or the manufacture of caravans;
b.he supplied a number of caravan manufacturers with Emjay’s products and no doubt visited their premises and probably their factory floors;
c.no evidence was produced by Roadstar of any specific occasion when Mr Petruccelle was shown around Roadstar’s factory with the purpose of making him familiar with its manufacturing processes, or which was of such a nature that it was likely to have done so;
d.no evidence was led of any particular conversation between Mr Petruccelle and a Roadstar employee which demonstrated that he had knowledge of Roadstar’s production processes, how the products he sold to them would be used or the specific qualities of any of the products.
67The sales records of Emjay show that before April 2010, Emjay had supplied a number of products to Roadstar including the following Bostik sealants or adhesives:
a.“Construction adhesive”, from November 2009 in quantities of at least 100 units;
b.“Silicone clear”, from November 2009 in quantities of mainly 100 or 200 units;
c.“Silicone white”, from November 2009 in similar quantities;
d.“Anchorweld vinyl adhesive”, from October 2009 in 15 litre containers;
e.“Anchorweld 107 clear”, from October 2009 in 200 litre containers;
f.“Clear spray adhesive”, from October 2009 in 20 (presumably litre) containers;
g.“Z-Bond V4 Metal and Masonry White”, from February 2010 in quantities of at least 60 units.
68Mr Petruccelle knew that Emjay’s business was manufacturing caravans and that the Matrix FC was a “white” rather than a “clear” sealant and was to replace the previously ordered Z-Bond V4. He knew therefore, that the product would be used as a sealant (i.e. to prevent the entry of water from outside the caravan). He probably would have known that Matrix FC was marketed by Bostik as a “single component” product.
69There is no evidence from which it can be concluded that he knew, or would have been likely to have known, that a primer was recommended for use with Matrix FC in order to obtain the best adhesion and long term stability.
70In my view, the chain of reasoning necessary to establish Emjay’s liability under the Goods Act is not supported by the evidence as to whether the “particular purpose” relied upon by Roadstar was disclosed to Emjay as to why Roadstar required Matrix FC.
71Reliance upon Emjay’s skill or judgment: The following matters of evidence are relevant to this issue:
a.there is little evidence that Roadstar consulted with Mr Petruccelle about the technical aspects of any of the products that Emjay supplied;
b.Emjay did not supply Roadstar with technical data sheets for the products purchased;
c.when Mr Zammit telephoned Mr Petruccelle, he told Mr Petruccelle that ATA had recommended Matrix FC, and this was the reason Roadstar wanted to change the sealant it was using;
d.it is unlikely, in the telephone conversation, that Mr Petruccelle said that Matrix FC was a “better product”, presumably than the Z-Bond FC, but possibly than the industrial grade sealant. There was no reason for Mr Zammit to have recalled that particular phrase as having been said at that time, and it is inconsistent with the level of detail given by Mr Zammit in his evidence about that and other conversations;
e.Mr Zammit said Mr Petruccelle had responded to complaints in May 2010 that Matrix FC was not curing by telling him the product may take longer to cure depending on the weather conditions. Mr Petruccelle’s evidence was that he told Mr Zammit that he would need to get in touch with Bostik. I consider that when the complaint was made, probably only on one occasion on 2 July 2010, Mr Petruccelle did not offer advice himself but simply undertook to contact Bostik;
f.at the meeting on 7 July 2010, Mr Stuart handled all technical queries.
72Roadstar says that it relied upon a statement by Mr Petruccelle in a telephone conversation in May 2011 with Mr Zammit that Matrix FC was a “better product”. I do not accept this evidence. It is unlikely that Mr Zammit would have remembered this phrase in a conversation where the other details of what was said has simply been stated as the “substance”, rather than particular passages of conversation. Further, without more, the phrase is ambiguous and it is unclear to what the comparison related.
73I do not consider that in the circumstances of the relationship between Roadstar and Emjay, and between Mr Zammit and Mr Petruccelle, that it can be inferred that:
a.Emjay had any particular skill or judgment which was relevant to the dealings between them except as related to matters of price or supply, rather than the technical aspects of the product itself;
b.Roadstar had any expectations that Emjay would provide any information about the product, save as to price and supply, which would influence its decision to purchase.
74As with other orders of products placed by Roadstar with Emjay:
a.the product was ordered by its serial number and name rather than by reference to its performance characteristics, i.e. “ROA 00158 Adhesive Matrix FC white silicone net/cure 370g”;
b.the quantity ordered, 150 units at over $6 each, indicated that a decision had been made by Roadstar to use the product, without first testing a sample.
75In my view, Roadstar has not established that it placed any reliance upon Emjay’s “skill or judgment” in the purchase of the Matrix FC. Accordingly, the claim based on a breach of section 19(1) of the Goods Act 1958 must fail.
Emjay – 2. Claim based on misleading and deceptive conduct
76Roadstar alleges that Emjay engaged in misleading or deceptive conduct by representing to Roadstar that Matrix FC was suitable for use as a one component sealant in its business for the manufacture of caravans.
77Roadstar relies upon a representation alleged to have been made in a telephone conversation between Mr Zammit and Mr Petruccelle in early April 2010. The particulars to the relevant pleading in the statement of claim simply alleged that, “The substance of the conversation, so far as is material was to the effect alleged”.
78In his written submissions, Roadstar’s counsel Mr Whitten appeared to rely upon the following matters as constituting misleading and deceptive conduct, arising during the telephone conversation:
a.Mr Zammit informed Mr Petruccelle that ATA had told Roadstar that Matrix FC was a “better product” than Z-Bond V4 because it did not discolour, and Mr Petruccelle had agreed;
b.Mr Petruccelle did not advise Mr Zammit that:
i.he “did not know about Matrix FC”;
ii.he had only sold Matrix FC “to one other customer by that stage”;
iii.before he could offer any advice as to “whether Matrix FC was suitable for Roadstar’s purposes”, he would need “to consult Bostik first”;
iv.there was a technical data sheet available for the product and where Mr Zammit could obtain a copy;
v.“the technical data sheet could contain important information as to whether Matrix FC would be suitable for Roadstar”;
vi.“Matrix FC may have to be used differently to industrial grade sealant or Z-Bond V4” which Mr Petruccelle “knew Roadstar had used in the past”;
vii.Matrix FC may have to be used with a “special Bostik cleaner or primer”, including “recommended” products;
viii.“Roadstar should conduct its own tests on a sample before deciding whether Matrix FC was suitable for Roadstar’s purposes”;
c.after the telephone conversation, “Roadstar was reasonably entitled to believe that Matrix FC was suitable for use in Roadstar’s manufacture of caravans”;
d.Roadstar was entitled to rely upon “Emjay’s representation”, because:
i.Emjay was a supplier and distributor of Bostik products including Matrix FC;
ii.there was an ongoing relationship between Emjay and Roadstar;
iii.Mr Petruccelle had been silent in the conversation (and presumably at all other relevant times) of “any matter which might have raised doubt or called for caution as to the suitability of Matrix FC for Roadstar’s purpose”;
e.the representation was “one of the factors which contributed” to Roadstar’s decision to purchase Matrix FC and to continue to reorder the product.
79For similar reasons as I stated in relation to the Goods Act claim, I consider that even if Roadstar were able to rely upon all the circumstances surrounding the conversation, the evidence does not support the version of the facts contended for by Roadstar. Further, there is no evidence of reliance by Roadstar upon any relevant statement or conduct by Emjay. Accordingly, this claim must also fail.
Emjay – 3. Negligence claim
80Roadstar claimed that Emjay was negligent in recommending Matrix FC without also:
a.informing Roadstar that proper adhesion was only possible if the sealant was used with an appropriate primer; and/or
b.providing Roadstar with the technical data sheet for Matrix FC.
81 There was little dispute, in relation to this claim that:
a.it was a claim for economic loss;
b.whether Emjay owed a duty of care did not merely arise from the relationship of vendor and purchaser but an “additional factor” needed to be ascertained from “the nature of the goods, the risk involved, and the circumstances of the case” (McPherson’s Ltd v Eaton [2005] NSWCA 435 at paragraph 60 per Ipp JA);
c.an alternative formulation, where the duty of care arises in a “novel circumstance”, involves a consideration of “the ‘salient features’ or factors affecting the appropriateness of imputing a legal duty to take reasonable care to avoid harm or injury” (Caltex Refineries (Qld) Pty Ltd v Stavar [2009] NSWCA 258 at paragraph 102 per Allsop P).
82Both Roadstar’s, and Emjay’s, counsel discussed the relevant factors. They included the following:
a.the degree of reliance by Roadstar upon Emjay and any assumption of responsibility by Emjay;
b.the foreseeability of harm, the nature of the harm alleged, and Emjay’s knowledge that its conduct may cause harm;
c.Emjay’s proximity to Roadstar, and the degree of “vulnerability” of Roadstar from being harmed by Emjay’s conduct.
83These matters must be related to the specific allegations made by Roadstar which are tied to the failure to mention the need for a primer to be used before Matrix FC was applied, and the failure to provide a copy of the technical data sheet.
84I have previously discussed these matters in relation to the Goods Act claim. Although Emjay sold Matrix FC to Roadstar, there is little evidence to establish that:
a.Emjay (and particularly Mr Petruccelle) had any technical knowledge or expertise about the product Matrix FC, whether it needed the prior application of a primer, or about Roadstar’s manufacturing processes;
b.Mr Petruccelle was able to advise on matters of price and supply and little else. He did not have a copy of the technical data sheets for Matrix FC or N41 Primer and was not familiar with Bostik’s Primer Selection Guide;
c.Roadstar conducted no testing of Matrix FC before using it in the production process;
d.there is no evidence that Roadstar relied upon Emjay to give it advice about anything other than the price and availability of Matrix FC, and perhaps later, of N41 Primer.
85In the circumstances, I do not consider that Emjay owed to Roadstar the duty of care alleged. If such a duty were owed, it would be unlikely that any damage would flow from a breach of duty. The technical data sheet would have alerted Roadstar, as it did after the meeting on 7 July 2010, that a primer may result in “maximum performance and long term integrity” of the product. However, Mr Stuart’s evidence was that his testing demonstrated that, whether or not a primer were used, the product showed “relatively poor adhesion” when applied to the aluminium panels used in caravan manufacturing and that therefore, Matrix FC was “not an appropriate product” for Roadstar’s purposes.
86 For these reasons, Roadstar’s claim in negligence against Emjay must also fail.
Bostik – 1. Claim in misleading and deceptive conduct
87The claims against Bostik arise from its conduct at the meeting at Roadstar’s factory on 7 July 2010. Mr Stuart and Mr Hodgins from Bostik attended the meeting. The following matters are significant:
a.the meeting was arranged between Mr Petruccelle and Mr Hodgins because Roadstar was concerned that the Matrix FC was “not curing”;
b.the problem was notified to Mr Petruccelle, probably on 2 July 2010, when he recorded in his log sheet after a visit to Roadstar that it was “having trouble with Matrix drying”. The record of an earlier service call on 28 June 2010 makes no note of any problem;
c.it is probable that there was at least one telephone conversation at about this time between Mr Petruccelle and Mr Zammit about the nature of the problem and the fact that Mr Petruccelle would discuss the complaint with Bostik;
d.it is less likely, in my view, that Mr Petruccelle told Mr Zammit that the weather conditions were the cause of the sealant not curing. I would be reluctant to accept a recollection as specific as this when little detail was given of this or other conversations;
e.Mr Stuart attended the meeting as a technical expert whose role at Bostik included the investigation of technical complaints;
f.Mr Stuart was aware the problem related to Matrix FC not curing;
g.Mr Stuart was given the opportunity to inspect a damaged caravan in the factory driveway and to inspect the manufacturing process on the factory floor;
h.I consider that it is also probable that he spoke with Tamesh about the preparation of the surfaces prior to the application of Matrix FC;
i.Mr Stuart, at the time he visited Roadstar, should have been aware of the instructions on the label of Matrix FC and the contents of the technical data sheet. He presumably would have been aware of:
i.the notes on the label relating to “priming” and the recommendation of a “field test”;
ii.the recommendation in the technical data sheet of the use of a primer “for maximum performance and long term integrity”, the availability of the P.A.T.S programme for “large projects”, and the “condition” of the “warranty” that “purchasers will make their own tests to determine the suitability of the product for their particular purposes”;
j.at the meeting, Mr Stuart:
i.instructed Mr Petruccelle to immediately forward the technical data sheet for Matrix FC to Roadstar but failed to highlight any particular matter that Roadstar should take account of when it received and read the document;
ii.told Roadstar that they must not use methylated spirits or any other alcohol based product in the preparation of the area to which the sealant was to be applied or in cleaning up afterwards, as the alcohol inhibited curing;
iii.advised Roadstar that the wax and grease remover, that he located on the factory floor, was an appropriate product to use rather than methylated spirits;
iv.failed to advise Roadstar that at that time he “would not have known an appropriate product for the caravan industry”;
k.Mr Stuart failed to offer any further advice to Roadstar including in relation to:
i.the appropriate use of a primer before the application of Matrix FC;
ii.the use of any particular Bostik product, rather than a product he located on the factory floor, when preparing the substrate for Matrix FC;
iii.taking note of any particular parts of the technical data sheet, when it was received, including the parts relating to priming, cleaning and pre-testing;
iv.carrying out any tests on the factory floor of Matrix FC before continuing to use it in the manufacturing process;
v.any matter concerning Roadstar’s application of Matrix FC, other than discounting the use of methylated spirits and replacing it with the wax and grease remover, in preparation for applying the sealant and in cleaning up afterwards;
l.Mr Stuart did not, until September 2011, carry out any testing of the Matrix FC and its application to the aluminium panels used by Roadstar in its manufacturing process;
m.Mr Stuart at no time informed Roadstar that his testing demonstrated that Matrix FC, when applied to aluminium panels used by Roadstar in its manufacturing process, showed “relatively poor adhesion”, or that he had concluded that Matrix FC was “not an appropriate product” for the use to which it was put by Roadstar;
n.Mr Stuart at no time informed Roadstar that he had become aware that “most caravan customers” of Bostik use Z-Bond V4 or the industrial grade sealant, and Matrix FC is “not so much used by caravan manufacturers for sealing but for bonding panels”.
88In the circumstances, I consider that Roadstar has established that as a result of the statements Mr Stuart made and the matters which he could have, but did not say, that Roadstar was misled and deceived. It was entitled after the meeting on 7 July 2010, to conclude that so long as it discontinued the use of methylated spirits on the factory floor, and instead used a non-alcohol based product in the preparation for the application of Matrix FC, that no problems should be encountered. For the reasons I have stated, I do not consider that Mr Stuart had reasonable grounds for making the representation to Roadstar which, as Mr Petruccelle recalled, was in terms that “Roadstar got told to stop using methylated spirits and that…the product would work”.
89Roadstar was entitled to rely upon the advice of Mr Stuart because of his expertise and the way he conducted himself at the meeting. I am satisfied that Roadstar did in fact rely upon what had occurred at the meeting, and apart from discontinuing the use of methylated spirits and using the substitute recommended by Mr Stuart, it continued with the application of Matrix FC in the manufacturing process.
90I do not consider that the chain of causation was broken by:
a.the receipt by Roadstar of the technical data sheet for Matrix FC shortly after the meeting;
b.Roadstar being notified of water leaks, in substantial numbers of caravans it had manufactured in 2010, which appeared to be related to the failure of Matrix FC to adequately adhere or seal.
91After reading the data sheet, Mr Nizam and Mr Zammit understood the significance of a primer for Matrix FC. Mr Zammit said he phoned Mr Petruccelle to enquire about Bostik N41 primer, referred to in the data sheet. Mr Zammit said that Mr Petruccelle phoned back saying that the primer product was “no longer available” and that the wax and grease remover “should be OK to use as David [Stuart] had pointed out”.
92Mr Petruccelle said in evidence that he did not recall a telephone enquiry by Mr Zammit about primer products. He did, however, deny that he would have advised Roadstar to keep using the wax and grease remover as Mr Stuart had suggested. Mr Hodgins gave evidence that the N41 primer had been available for 12 years.
93I am unable to resolve this conflict of evidence. Mr Zammit was cross-examined by Emjay’s counsel and repeated his earlier evidence about his conversation with Mr Petruccelle. Mr Zammit was not questioned on the conversation by Bostik’s counsel. I consider it likely that Mr Zammit did follow up the primer issue with Mr Petruccelle and for some reason was deflected from taking the matter further.
94I would not be prepared to conclude that Mr Petruccelle made a statement to the effect attributed to him by Mr Zammit. However, it is possible that something was said about the availability of the primer or about what Mr Stuart had said at the meeting on 7 July. I note that in his evidence about the meeting, Mr Petruccelle said that the resolution of Roadstar’s problems at the meeting, was that it should “stop using metho and the product [Matrix FC] would work”.
95I shall discuss later in my consideration of quantum, the issue of whether Roadstar should have determined from the volume of complaints it was receiving, that it was appropriate to discontinue the use of Matrix FC. I have concluded that it was not unreasonable, in the circumstances, for Roadstar to continue using the product.
96Accordingly, I consider that Roadstar should succeed on its claim based upon Bostik’s breach of the Trade Practices Act.
Bostik – 2. Claim in negligence
97Roadstar claimed in its statement of claim that Bostik was negligent, in the conduct of Mr Stuart at the meeting on 7 July 2010:
a.by informing Roadstar that Matrix FC would produce a watertight seal so long as an alcohol based cleaner was not used on the surfaces to which the sealant would be applied;
b.by failing to inform Roadstar that Matrix FC was not suitable for use as a one component sealant in the manufacture of caravans unless used with an appropriate primer.
98In its final submissions, Roadstar referred to an “allied duty” which had emerged; a duty to take “all reasonable skill and care:
a.in the formulation and manufacture of Matrix FC to ensure it performed in accordance with the representations on its label and the technical data sheet in force at the relevant time…and/or;
b.that the contents of its label and technical data sheet accurately represented what Matrix FC was capable of”.
99The claim against Bostik in negligence is a claim for negligent advice. It is not, in my view, a case involving “the duty of care owed by a manufacturer or producer to a consumer…to take reasonable care to avoid injury to the consumer”. In such a case, as McHugh J said in Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at paragraph 106, “to formulate the duty in more specific terms invites error because it is likely to mistake a question of law (whether a duty existed) with a question of fact (whether a breach occurred)”. The facts of such cases are usually very different to those of the present case.
100In this case, before Roadstar can establish that Bostik owed it a duty of care, “something more is required”. This will depend upon “the nature of the goods, the risk involved, and the circumstances of the case”, or upon consideration of the “salient features”.Bostik’s conduct must be assessed against the standard of what a reasonable person in its position should have done in the circumstances.
101I consider that the matters I have referred to and the conclusions I have reached in relation to the claim against Bostik under the Trade Practices Act are equally applicable to this claim, as pleaded in the statement of claim. The matters I highlighted in relation to the meeting on 7 July 2010 are the relevant “salient features” necessary to establish the requisite duty of care. The breach of that duty is apparent from the opinions expressed by Mr Stuart after he tested Matrix FC on aluminium panels taken from Roadstar’s factory in September 2011.
102Accordingly, I consider that Roadstar has also established its claim against Bostik based in negligence.
Roadstar’s contributory negligence or part responsibility for its loss
103Both defendants alleged that, if they were to be found liable to Roadstar in negligence or by reason of misleading or deceptive conduct, Roadstar’s contributory negligence or its own responsibility for any loss must be taken into account.
104I have determined that Roadstar’s claims against Bostik in negligence and for misleading and deceptive conduct should succeed. Accordingly, it is appropriate to consider whether Roadstar’s damages should be reduced by reason of:
a.Roadstar’s contributory negligence;
b.the extent to which it is considered just and equitable, having regard to Roadstar’s share in the responsibility for the loss, pursuant to section 82(1B) of the Trade Practices Act.
105By its defence, Bostik alleged that Roadstar had failed “to take reasonable care to ensure that Matrix FC should adhere watertightly to the aluminium surfaces to which the plaintiff would apply it”, in the following respects:
a.Roadstar “failed to comply with the technical data sheet for Matrix FC…which directed, ‘On non-porous surfaces such as metal…use Bostik N41 Primer’ and stipulated that Matrix FC was sold ‘on the condition that purchasers will make their own tests to determine the suitability of the product for their particular purposes’”;
b.Roadstar “failed to test, or to procure [Bostik] or anyone else to test, whether Matrix FC, without a primer, would adhere watertightly to the aluminium surfaces to which the plaintiff would apply it”.
106In my view, the relevant factors in the determination of these matters are that:
a.Emjay did not provide a copy of the technical data sheet for Matrix FC to Roadstar until after the meeting on 7 July 2010;
b.the data sheet was probably available in April 2010 on Bostik’s website;
c.there is insufficient evidence from which to conclude, as Bostik submitted, that “A reasonable person in Roadstar’s position would have got the technical data sheet off Bostik’s website, if not elsewhere, and would have read it”, at the time it “started using Matrix FC in May 2010”;
d.as soon as Roadstar was given a copy of the data sheet, following the meeting on 7 July 2010, it would have been aware of the recommendation that although generally not required, the use of a primer would provide “Maximum performance and long term integrity”;
e.Mr Zammit probably enquired from Mr Petruccelle about the availability of the Bostik N41 Primer. I am not satisfied on the evidence as to what response Mr Zammit received from Mr Petruccelle although it was probably deflected from pursuing the matter further;
f.I do not accept that Roadstar regarded Mr Stuart’s recommendation of the wax and grease remover as an appropriate solvent, as equivalent to or a substitute for a primer;
g.it is likely that a suitable primer would, as Mr Stuart said, modify “the surface to improve adhesion”;
h.nevertheless, Mr Stuart’s expert opinion of Matrix FC, after he conducted testing in September 2011, was that:
i.even with a primed surface, Matrix FC showed “relatively poor adhesion”;
ii.the technical data sheet was inaccurate in a number of respects relevant to the product’s use for Roadstar’s purposes;
iii.Matrix FC was “not an appropriate product” for the use to which it was put by Roadstar;
i.Roadstar ordered and used Matrix FC without undertaking any testing as to the performance of the product when applied in the manufacturing process;
j.the label on the product noted, under the heading “limitations”, that “a field test is recommended to ensure compatibility”;
k.the Matrix FC technical data sheet was sent to Roadstar after Mr Stuart, at the meeting on 7 July 2010, and in the context of not using alcohol based solvents which were incompatible with the product, had indicated the importance of the document;
l.the data sheet referred to the Bostik “P.A.T.S (Pretested Adhesion Substitute) Programme” which involved the pre-testing of “Bostik adhesives with samples of building materials to which the adhesive will be applied”. The data sheet did however state that, “This service is available on large projects”. Roadstar purchased Matrix FC at a total cost of about $1,000-$2,500 per month;
m.the data sheet noted that Matrix FC was “sold with a limited warranty only, and on condition that purchasers will make their own tests to determine the suitability of the product for their particular purposes”;
n.Mr Nizam conceded that, “you can’t know whether [a sealant product] will work in the intended application without testing it”. Mr Rowlands also stated in his report that “pilot testing” was appropriate “to ensure adequate bond strength is achieved”.
107I do not consider that the failure by Roadstar to prime the substrate before applying Matrix FC is a matter which contributed to, or was responsible for part of the loss it suffered, because:
a.as Mr Stuart said, Matrix FC had “relatively poor adhesion” whether the surface to which it was applied was primed or unprimed;
b.further, Matrix FC was simply “not an appropriate product” for Roadstar’s purposes;
c.although Roadstar understood, from reading the technical data sheet, that primer was recommended for better results, for some reason it appears the enquiries to Mr Petruccelle were not pursued;
d.at the meeting on 7 July 2010, the only advice Mr Stuart had given to Roadstar was that it should stop using any alcohol based solvent including methylated spirits but that the wax and grease remover was “OK to use” in its place;
e.notwithstanding that Mr Stuart was at the meeting to investigate the reason Matrix FC was alleged not to be curing, about one hour was spent investigating the matter, including in discussion and by observation of a defective caravan and of the production process itself to see “how the sealant was applied, the use of primer was not raised by Bostik at the meeting”.
108In relation to the failure by Roadstar to pre-test Matrix FC before it was used in the production process, I consider that this matter contributed to the loss suffered by Roadstar.
109Pre-testing was agreed by Mr Nizam, Mr Stuart and Mr Rowlands to be a sensible course. This view was reinforced by the notes on both the label and the technical data sheet. I am not satisfied that a reasonable person in the position of Roadstar would have regarded the P.A.T.S. programme as available to it, or that it was appropriate to enquire as to whether it was. Although some reassurance would be derived from the illustration of a caravan on the label, I consider that some pre-testing was an obvious step for a product to be used as a sealant in the manufacture of a caravan.
110However, the evidence does not establish what was an appropriate level of testing in the circumstances and whether such testing, in the absence of different advice by Mr Stuart at, or subsequent to the 7 July meeting, would have established the unsuitability of the product for Roadstar’s purposes.
111In my judgment, I consider that an allowance of 10 per centum should be applied to the damages Roadstar would otherwise recover, as:
a.Roadstar’s contributory negligence;
b.the Court’s consideration of what would be just and equitable, having regard to Roadstar’s responsibility for its loss.
Apportionment among concurrent wrongdoers
112Each claim against the defendants would be an “apportionable claim” as they involved an allegation that, as a matter of fact, the relevant defendant failed to exercise due care. However, as I have concluded that Emjay is not liable to Roadstar in respect of any of the claims brought against it, Emjay cannot be regarded as a “concurrent wrongdoer”, for the purpose of apportioning the liability I have found that Bostik has to Roadstar, in respect of the negligence and misleading or deceptive conduct claims.
Quantum
113Roadstar seeks to establish the quantum of its loss by reference to a spreadsheet which details the “cost of repairs” for each of the damaged caravans. The spreadsheet is a summary of a series of “warranty claim” forms, third party invoices and a few extra invoices for travel expenses.
114The following matters were raised by the defendants in relation to the quantification of the claims:
a.the claims relating to 18 caravans (chassis nos. AR0045, 49, 61, 62, 68. 70, 78, 80, 81, 83, 87, 96, 106, 107, 117, and 118) had repair costs totalling $118,657.26. This loss occurred prior to the conduct of Bostik at the meeting on 7 July 2010, upon which the claims against it are based. Caravan chassis no. AR0146 should be treated similarly as the manufacture of the caravan was completed on 9 July 2010. The cost of repairs to this caravan was $28,144.28;
b.no supporting documentation is available for a number of the claims totalling $9,314.41 as follows;
i.caravan AR0074 - $500 for travel expenses;
ii.caravan AR0165 - $839.56 for the cost of repairs and $129.55 for travel expenses;
iii.caravan BR0187 - $4,818 for repairs and $800 for expenses;
iv.caravan AR0146 - $27.30 for repairs;
c.Roadstar has charged its labour at $95 per hour for repairs it carried out in its own factory. This compares with;
i.the labour cost of third party repairers which ranged from $50 to $95 per hour;
ii.Roadstar’s “direct labour cost” of $50 per hour;
iii.I consider it would be appropriate to only allow Roadstar’s hourly labour cost at $80, this being equivalent to slightly more than the median charge of the third party repairers. This will involve the adjustment of the plaintiff’s claim by $35,244 as follows:
Caravan Chassis No. Warranty Claim Form No. Cost of Labour Claimed Cost of Labour Allowed AR0107 130 $6,270 $5,280 AR0045 31 & 151 $9,614 $8,096 AR0096 136 $6,270 $5,280 AR0049 73 $2,090 $1,760 AR0118 46, 71 & 137 $6,270 $5,280 AR0070 146 $6,270 $5,280 AR0069 51 $3,344 $2,816 AR0078 65 $3,344 $2,816 AR0106 66 $3,344 $2,816 AR0080 30 $3,344 $2,816 AR0083 18 $4,180 $3,520 AR0068 57 (x2) $3,344 $2,816 AR0081 67 $3,344 $2,816 AR0155 39 $3,344 $2,816 AR0074 38 $3,344 $2,816 AR0145 143 $6,270 $5,280 AR0097 62 $3,344 $2,816 AR0142 78 $3,344 $2,816 AR0101 117 $6,270 $5,280 AC0016 138 $6,270 $5,280 AC0017 148 $6,270 $5,280 AR0082 76, 91, 131 & 133 $5,016 $4,224 AR0128 139 $6,270 $5,280 AR0116 82 $3,344 $2,816 AR0130 140 $6,270 $5,280 AR0154 45 $3,344 $2,816 AR0113 113 $3,344 $2,816 AR0162 132 $6,270 $5,280 AR0172 64 $3,344 $2,816 AR0165 50 & 77 $3,344 $2,816 BR0183 142 $6,270 $5,280 BR0185 141 $6,270 $5,280 BR0167 129 $6,270 $5,280 BR0187 86 $6,270 $5,280 BR0160 112 $3,344 $2,816 BR0190 115 $3,344 $2,816 BR0193 158 $9,614 $8,096 BR0201 171 $6,270 $5,280 BR0219 135 $6,270 $5,280 BR0216 164 $3,344 $2,816 AR0088 126 $6,270 $5,280 AR0146 74 (2) & 155 19,646 $16,544 Total $223,212 $187,968 Total Reduction $35,244 d.Roadstar used parts salvaged from a damaged caravan (chassis no. AR0087) in manufacturing a replacement caravan. However the total claim for this caravan has already been deducted;
e.it was submitted that Roadstar should not be able to recover the cost of rectifying caravans manufactured in the months after the meeting on 7 July 2010, and after Roadstar had continued to receive complaints of water leaks. This included caravans manufactured after the date of the meeting, when Roadstar followed Mr Stuart’s advice and stopped using methylated spirits. Complaints continued to be received by Roadstar until April 2013;
115However, the date of manufacture of the last caravan in respect of which a complaint was made (or more likely processed), was 5 May 2011; and of the second last caravan complained of was 8 March 2011. By 8 March 2011, only seven complaints had been processed (chassis nos. AR0045, 80, 81, 83, 106 and 118 manufactured before 7 July 2010 and caravan no. AR00182 manufactured after 7 July 2010, on 25 October 2010).
116By 5 May 2011, a further eight complaints had been processed, two for caravans manufactured prior to 7 July 2010 (nos. AR0061 and 62) and six after 7 July 2010 (nos. AR0074, 113, 154, 155, 172, 179).
117In these circumstances, I do not consider that Roadstar should have discontinued using Matrix FC on the basis of the complaints made in respect of the defective caravans, until a date after Roadstar stopped using the last stock of Matrix FC it received on about 11 March 2011.
Conclusions
118 As a consequence of the findings I have made:
a.Roadstar fails in its claims against Emjay;
b.Roadstar succeeds in its claims against Bostik;
c.Roadstar’s damages are assessed in the total sum of $55,329.26 ($246,689.21 claimed, less $146,801.54 for caravans manufactured before the 7 July 2010 meeting and the caravan completed two days later, $9,314.41 for losses not substantiated and $35,244 for the reduction of the hourly labour rate; a total of $191,359.95);
d.Roadstar was contributorily negligent and it is fair and equitable that it be responsible for its share of the loss which is fixed at 10 per centum;
e.it is not otherwise appropriate to apportion responsibility in respect of Bostik’s liability to Roadstar.
Orders
119 Accordingly, I consider that the following orders are appropriate:
a.judgment for the first defendant against the plaintiff that the plaintiff’s claim against the first defendant be dismissed;
b.judgment for the plaintiff against the second defendant that the second defendant pay to the plaintiff damages of $55,329.26 reduced by 10 percent on account of the plaintiff’s contributory negligence and its share of responsibility for the loss, being $49,796.33.
120The calculation of damages is based in part upon the information and figures contained in a spreadsheet handed up by Bostik’s counsel Mr Weinstock during his final submissions. The parties should have the opportunity to check that Mr Weinstock’s document is an accurate reflection of the original warranty claim forms and other documents it purports to summarise and that the calculations I have made are correct.
121I will hear the parties further on the calculation of damages, the form of the orders and questions of interest and costs.
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Certificate
I certify that these 38 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 20 December 2013.
Dated: 20 December 2013
Philippa Gilkes
Associate to His Honour Judge Anderson
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