Russo v Belcar Pty Ltd ACN 967 286 081 - [2011] SASCFC 151

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
RUSSO v BELCAR PTY LTD ACN 967 286 081 & ANOR
[2011] SASCFC 151
Judgment of The Full Court
(The Honourable Justice Gray, The Honourable Justice Sulan and The Honourable Justice Peek)
16 December 2011
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES
SALE OF GOODS - CONDITIONS AND WARRANTIES - IMPLIED CONDITIONS AND WARRANTIES - QUALITY OR FITNESS FOR PARTICULAR PURPOSE - MERCHANTABLE QUALITY
Appeal from civil claim following trial in District Court – plaintiff ordered a 360 Modena F1 Ferrari from defendant – a lengthy litany of complaints was made to the defendant as to the state of the vehicle – trial Judge dismissed claim against defendant on the facts.
Whether the vehicle was fit for its purpose – whether the vehicle was of merchantable quality – whether the plaintiff had an entitlement to rescind – whether purported rescission was legally effective.
Held: Appeal dismissed.
Per Gray and Sulan JJ: The plaintiff affirmed the contract of purchase – rescission not made within a reasonable time – circumstances demonstrate an acceptance of the vehicle – plaintiff never established any entitlement to rescind – any breach to be treated as a breach of warranty rather than a ground for rejecting the vehicle or treating the contract as repudiated.
Per Peek J: Plaintiff deemed to have accepted the car pursuant to s 35 of the Sale of Goods Act 1895 by reason of his continued possession and acquiescence in the performance of warranty work by defendant – plaintiff compelled to treat any breach of a condition on the part of the defendant as a breach of warranty – plaintiff did not unequivocally reject the vehicle – any purported rejection was too late.
No evidence to support any representation or misrepresentation preventing acceptance under s 35 – trial Judge correct in finding that the defendant was not estopped, that acceptance was not induced by misleading or deceptive conduct, that plaintiff not entitled to award of damages in consequence of reliance upon representations or misrepresentations as claimed.
Trial Judge correct in finding that taking the plaintiff’s complaints individually and cumulatively, it was still not established that the car was not of merchantable quality, nor fit for its purpose – trial Judge correctly concluded that it had not been established that the alleged problems existed at the time of delivery as distinct from developing later.
Sale of Goods Act 1895 s 11, s 13, s 14, s 34, s 35, s 36, s 41, s 52; Trade Practices Act 1974 (Cth); Fair Trading Act 1987 (SA), referred to.
Annand & Thompson Pty Ltd v Trade Practices Commission (1979) 25 ALR 91; R v Ford Motor Co Ltd (1974) 1 WLR 1220; Graanhandel The Vink BV v European Grain & Shipping Ltd [1989] 2 Lloyd's Rep 531; Trevilyan v Donaldson & Anor (1997) 196 LSJS 26; Whitecap Leisure Ltd v John H Rundle Ltd (2008) EWCA Civ 429; Attorney-General of Botswana v Aussie Diamond Products Pty Ltd (No 3) [2010] WASC 141, considered.

RUSSO v BELCAR PTY LTD ACN 967 286 081 & ANOR
[2011] SASCFC 151
Full Court: Gray, Sulan and Peek JJ
GRAY and SULAN JJ:

This is an appeal from the dismissal of a civil claim following a trial in the District Court.
On 28 October 1999, the plaintiff and appellant, Bill Russo, placed an order for a 360 Modena F1 Ferrari with Belcar Pty Ltd trading as Prestige Formula. He paid a deposit of $5,000.00. It was anticipated that there would be a delay of about two years in delivery. The purchase price was not fixed, but was expected to exceed $380,000.00. Mr Russo’s dealings over the purchase were with Robert Corradini of Prestige Formula. The Ferrari arrived in Adelaide in December 2001. Mr Russo proceeded with the purchase and took possession of the vehicle. Ownership was transferred to Mr Russo.
The Ferrari was built in Italy and imported to Australia by Maranello Imports Pty Ltd. Maranello had appointed Belcar in September 1998 as a non-exclusive dealer for the sale and servicing of Ferrari cars in South Australia.
Mr Russo was a collector of expensive and exotic motor vehicles and at the time of the order being placed for the new Ferrari he was the owner of two other Ferraris.
Following the arrival of the Ferrari in Adelaide, as noted above, the purchase proceeded and the vehicle was delivered in early 2002 to Mr Russo. Soon thereafter, Mr Russo commenced what developed as a lengthy litany of complaints. Peek J, in his reasons for judgment, has recorded the history of those complaints in considerable detail and we adopt his treatment of those matters. We only refer to that history where necessary for an understanding of our reasons.
It is apparent that Mr Russo over the ensuing years made extensive use of the Ferrari. Over the months and years following initial delivery, there was considerable oral discussion as well as an exchange of correspondence concerning the vehicle. Mr Russo asserted and maintained that the Ferrari was not a new vehicle. He complained that he had contracted to purchase a new Ferrari and that the vehicle delivered was not new. This was his primary case at trial. The District Court Judge rejected this claim. The Judge made an express finding that the vehicle was new. This finding was not challenged on appeal.
At trial, Mr Russo advanced a number of alternative claims to his primary claim that he had not received a new vehicle. He contended that the vehicle was not of merchantable quality and that he was entitled to relief under the Sale of Goods Act 1895 (SA). He further claimed that Belcar had engaged in the making of misrepresentations and in misleading and deceptive conduct. In those respects Mr Russo sought relief at common law and under both state and federal legislation that provided for relief against misleading and deceptive conduct. The Judge dismissed each of these claims. It was the dismissal of these claims that was the subject of the appeal. Although a claim of damages was pleaded it does not appear to have been pursued at trial. No claim for damages was advanced on appeal.
The trial Judge preferred the evidence of Mr Corradini and others from Belcar and Maranello to that of Mr Russo. The Judge did not make a finding that Mr Russo engaged in any deliberate falsehood. The Judge concluded, however, that Mr Russo had become convinced that he had not received a new vehicle and that this mistaken conviction coloured his attitude and conduct throughout. We do not consider that any of the Judge’s findings as to the credibility and reliability of the witnesses have been impugned. Counsel for Mr Russo on appeal accepted that there was no basis to challenge these findings.
Peek J has set out in his reasons a detailed account of the ongoing disputes between Mr Russo and Belcar. We adopt this account. In particular, he has recounted the events that led to the replacement of the engine and gearbox under warranty. Peek J has also addressed the topic of an area of alleged damage that had been the subject of repainting that had left a blemish to the body of the vehicle that was said to have had a material and detrimental effect on value.
For the purposes of our reasons, we wish to note that the complaints about the engine related to a momentary problem that occurred on starting up. Once the engine was warm, the problem disappeared. The engine was replaced under warranty, and it may be inferred that that was undertaken in an effort to address the perceived concern of a long established client. There was a body of evidence that the problem was minor and did not affect engine function in any material way. The gearbox problem was rectified under warranty. The so called blemish to the body of the vehicle was not discernable to the ordinary viewer. A highly qualified paint expert, called by Mr Russo, was unable himself to see the blemish. Apparently, when pointed out, a mark called a blend line could be discerned.
It is established that rescission must be overt, clear and unequivocal. The decision to rescind must be communicated to the other party. A decision to rescind is often treated as a species of election. The party seeking to rescind is entitled to affirm the contract. In the present proceeding at least by necessary inference, if not by express conduct, Mr Russo affirmed the contract of purchase. Mr Russo behaved in a manner that was only consistent with affirmation. He accepted warranty benefits, he made use of the vehicle for more than four years and he did not purport to rescind for more than four years. Any rescission must be made within a reasonable time. More than four years is, on any view, grossly unreasonable.
As the years passed, Mr Russo’s litany of complaints continued and grew. On 29 July 2002, Mr Russo for the first time wrote to Belcar advising “I will be returning this vehicle back to your workshop and I expect that it will be replaced with a brand new 360 Ferrari or money refunded in full”. Mr Russo retained and continued to use the vehicle.
More than a year later on 13 November 2003, Mr Russo’s solicitors wrote to Ferrari in Italy with a copy to Prestige Formula. The letter records that since Mr Russo’s letter of 29 July 2002, the vehicle had been back to Prestige Formula on three separate occasions seeking to remedy transmission problems. The solicitors advised “our client’s position is that he does not want to own this vehicle and intends to return the same to the local agent seeking a refund of the purchase price”. Mr Russo retained and continued to use the vehicle.
Some eight months later on 8 July 2004, the solicitors wrote to Prestige Formula. As in earlier correspondence, the complaint was reiterated that the vehicle was not a new vehicle when delivered. This letter gave notice that unless the purchase price was returned, proceedings would be issued. The letter concluded “upon refund of the purchase price, our client will transfer ownership of the vehicle to your company”. Mr Russo retained and continued to use the vehicle.
A little more than one month later on 16 August 2004, the solicitors wrote to the importer Maranello further advising that Mr Russo “no longer wishes to own the vehicle and seeks a full refund of the purchase price”. Proceedings were threatened but the hope was expressed that the matter could be resolved without the need to resort to proceedings. Mr Russo retained and continued to use the vehicle.
On 8 April 2005, the solicitors wrote to lawyers acting for the importer Maranello. In this letter, the complaint that the vehicle was not new was reiterated and a further complaint was made that the vehicle was unsafe and unfit for the purpose for which it was purchased. Mr Russo apparently was uninterested in an extended warranty and no longer wished to own the vehicle. The advice was noted that the importer Maranello was not prepared to repurchase the vehicle and confirmed that Mr Russo would be issuing proceedings. Mr Russo retained and continued to use the vehicle.
On 12 July 2005, Mr Russo wrote to Prestige Formula advising “the vehicle has now been returned to your premises and you are hereby put on notice that we have this day rescinded the contract to purchase the vehicle”. By this time, Mr Russo had been the owner of the vehicle for more than four and a half years, had accepted a new motor and a new gearbox under warranty, had many of the other aspects of his litany of complaints attended to and had made extensive use of the vehicle. The vehicle had now been used by Mr Russo to travel a distance of many thousands of kilometres.
The vehicle was returned to Mr Russo soon thereafter and has remained in his custody. He has retained ownership since delivery in early 2002.
The above circumstances demonstrate an acceptance of the vehicle by Mr Russo. His retention of ownership, his use of the vehicle for more than four years and his acceptance of major warranty works represent unequivocal acts of acceptance. In our view his attempt to rescind was legally ineffective. Any entitlement to rescind was long gone. A new vehicle was delivered. A warranty accompanied the purchase. The warranty was there for a purpose. The warranty was honoured. We add that we do not accept that Mr Russo had ever established any entitlement to rescind.
As discussed above, we consider the evidence of acceptance of the vehicle by Mr Russo to be overwhelming. When coupled with the delay in giving notice of rescission, the conclusion that Mr Russo remained bound in contract is overwhelming. Insofar as either of the defendants have acted in breach of contract or breach of warranty, his remedy lies in damages. As noted above, Mr Russo has not pursued any claim for damages.
During the trial and the appeal, much attention was given to the Sale of Goods Act. Section 11 of that Act provides:
When conditions to be treated as warranty
(1)     Where a contract of sale is subject to any condition to be fulfilled by the seller, the buyer may waive the condition, or may elect to treat the breach of such condition as a breach of warranty, and not as a ground for treating the contract as repudiated.
(2)     Whether a stipulation in a contract of sale is a condition the breach of which may give rise to a right to treat the contract as repudiated, or a warranty the breach of which may give rise to a claim for damages, but not to a right to reject the goods and treat the contract as repudiated, depends in each case on the construction of the contract. A stipulation may be a condition, though called a warranty in the contract.
(3)     Where a contract of sale is not severable, and the buyer has accepted the goods, or part thereof, the breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty, and not as a ground for rejecting the goods and treating the contract as repudiated, unless there be a term of the contract express or implied to that effect.
(4)     Nothing in this section shall affect the case of any condition or warranty, fulfilment of which is excused by law by reason of impossibility or otherwise.
Our foregoing observations lead to the conclusion that section 11(3) applies. Mr Russo has accepted the goods and any breach is to be treated as a breach of warranty and not a ground for rejecting the vehicle or treating the contract as repudiated.
Attention was also drawn to section 35 of the Sale of Goods Act, which provides:
Acceptance
The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or (subject to section 34 of this Act) when the goods have been delivered to him, and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them.
Were it necessary to do so, we would conclude that Mr Russo by his earlier referred to conduct would be deemed to have accepted the vehicle within the meaning of section 35.
We do not wish to add to the reasons of Peek J in regard to the alternative claims of misrepresentation and breach of the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (SA). We would dismiss the appeal insofar as the appellant seeks relief on under these causes of action. We agree with the orders proposed by Peek J with respect to the Cross Appeal and Notice of Contention of the defendant, Maranello.
We would dismiss the appeal.
PEEK J
Introduction
The appellant, Mr Bill Russo (Russo) is a collector of cars. At the time of trial he owned some 40 or so, including expensive examples of various exotic marques.
The respondent is Belcar Pty Ltd (Belcar), trading under the name “Prestige Formula” (Prestige), whose Managing Director is Mr Robert Corradini (Corradini). The third party, Maranello Imports Pty Ltd (Maranello), is the importer and distributor of Ferrari cars in Australia and New Zealand. By contract dated 30 September 1998, Maranello appointed Belcar to be a non-exclusive dealer for the sale and servicing of Ferrari cars in South Australia.
Only a certain number of Ferrari vehicles are exported to Australia and New Zealand each year and only a small percentage of those are allotted to South Australia; in some years, as few as three vehicles.
In 1999, Corradini informed Russo, who already owned a Ferrari 308 and a Ferrari 355, that a new model was due, the 360 Modena F1. It was to be a two door coupe powered by a V8 engine positioned behind the driver’s seat and with a gear selection system bearing some resemblance to that in formula 1 racing cars. On 28 October 1999 Russo placed an order and paid the $5,000 deposit; the price was expected to exceed $380,000 and the expected wait for delivery was about two years.
The new addition to Russo’s fleet (the car) was eventually built, delivered to him in December 2001 and paid for by him. Unfortunately, he has been unhappy with it for various reasons to be considered below. He brought proceedings in the District Court claiming his money back. He lost and now appeals to this Court. A brief overview of the litigation is as follows.
Russo’s claim that the car was not “new”
Russo’s primary claim at trial was that the car was not “new” in that it had been used by someone in unknown circumstances prior to delivery. He submitted that, pursuant to s 13 Sale of Goods Act 1895 (“SGA”), the sale was “a sale by description”, an essential part of which was that the car was a “new” car. He further submitted that this condition of compliance with description was breached, that he had terminated the contract and that he was entitled to have his payments of the deposit and purchase price refunded.
Russo promptly raised this claim with Prestige. His Honour found that Russo did hold the view that the car had been used by a third party in unknown circumstances prior to delivery to him, but that he was mistaken in that view. His Honour found that the car was indeed a new car and that there was no breach of the condition implied by s 13 SGA.
Russo’s claims that the car was not fit for purpose or of merchantable quality
At trial, Russo put forward a secondary case that the car was not fit for purpose or of merchantable quality in breach of the conditions implied by s 41(a) and (b) SGA and that he had terminated the contract. His Honour also found against that claim. On appeal, Russo maintained his position that the car was not new, but in effect entirely relied upon grounds of appeal claiming that the car was not fit for purpose or of merchantable quality.
As time went on, and Russo continued to use the car, he raised certain further complaints including as to the engine and the gear selection process. The position of Prestige was that all matters complained of had been rectified under warranty, that they could not be treated as breach of a condition and that the car had been “accepted”. Russo argued that these matters were latent defects which had existed at the time of delivery unknown to him and that they should be viewed cumulatively with all other defects as demonstrating that the car had not been of merchantable quality at the time of delivery.
The trial Judge rejected all the above claims. In my view, he was correct in so doing and the appeal should be dismissed. My reasons follow.
Background matters of fact
The following matters were agreed between the parties or were unchallenged findings by the Judge.
On 28 October 1999 Russo ordered the car and on 31 May 2001 he was informed that it was to be manufactured in the month of September 2001. He provided his required specifications including the external and internal colours and certain accessories. The car was then built and test driven in Italy and shipped to Maranello Imports in Sydney. On arrival the odometer read 99km.

On 20 November 2001, an initial pre-delivery inspection (including the body and paintwork under lighting) was carried out by Scuderia Veloce Motors on behalf of Maranello Imports. On 3 December 2001, Mr Lenn Kench (Kench), the National Service Manager of Maranello, inspected the car and signed a Ferrari body sheet which noted some minor body damage only.[1]
[1] Exhibit P1-42.
The car was then transported from Sydney to Adelaide by TNT Automotive Logistics (TNT) and was initially taken to the TNT depot at Wingfield and then to the Prestige’s premises at Frewville. On 3 December 2001 an employee of Prestige signed a TNT consignment note which recorded minor body damage in a number of places.[2] Exhibit P1-41, a Ferrari body sheet, was completed by Mr Tony Cocca (Cocca), a mechanic employed by Prestige, who recorded “thin paint” at the top of the driver’s door, a “visible repair” above the left rear quarter panel and a “chip” on the right front.[3] (As will be shown to be relevant to “the blend line argument” considered below, no body damage or paint imperfection on the right rear quarter panel was recorded in relation to any of the above inspections).
[2] Exhibit P1-39.
[3] Exhibit P1-41.
When the car arrived in Adelaide the battery was flat. On 3 December 2001 Prestige employees noted that the odometer reading was not correct; it had suddenly changed from about 100km (as referred to above) to 555,560km and “X” was shown on the visual display unit which indicated that it was inoperative. His Honour found that this was caused by the battery having gone flat, there being evidence that a “spiking” current which occurs when a vehicle is jump started can cause such a malfunction.
On 6 December 2001, Cocca carried out a pre-delivery service at Prestige, briefly road tested the car and filled it with petrol. On 7 December 2001 Prestige gave Russo a tax invoice for $400,000 in addition to the previous $5,000 deposit.
His Honour found that some time during December 2001 a replacement instrument panel was received from the Ferrari factory in Italy, that it incorrectly read 555km rather than about 100km as it should have and that it was installed between 19 and 20 December 2001.
The contract documentation
The agreed documents include a “Contract for the Sale of a New Vehicle” dated 22 December 2001[4] which was signed on behalf of the defendant but not by the plaintiff, although Russo’s name has been printed in the appropriate space. The parties agree that the settlement sum was paid on 24 December 2001.
[4] Exhibit P1-50.
The Warranty Card accompanying the car stated that the “delivery date and warranty start date” was 21 December 2001 and was signed by both Corradini (for Prestige) and Russo.[5] It included the following provisions:
1.1FERRARI guarantees the correct functioning of the vehicles they produce for a period 24 months from the date of first delivery and that it is as described in the conformity document which sets out the characteristics of its specification…
1.2The warranty covers all and only the operations to repair or replace parts which in the opinion of the factory are necessary to restore the efficient operation of the vehicle…
[5] Exhibit P1-52 - 53.
RUSSO’S CLAIM THAT THE CAR WAS NOT “NEW”
At trial, Russo’s claim that the car was not “new” was the most prominent aspect of his case which his counsel described in his final address as primarily “a new car case”. This emphasis significantly affected the course of the trial and the way in which his Honour approached the construction of his judgment.
His Honour correctly noted that the defendant accepted that the contract was “a sale by description” and that s 13 Sale of Goods Act 1895 (“the Act”) applied. That provision is as follows:
13—Sale by description
Where there is a contract for the sale of goods by description, there is an implied condition that the goods shall correspond with the description; and if the sale be by sample, as well as by description, it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description.
His Honour accepted that an essential part of the description of the car was that it was a new car; if the car was not new, the condition implied pursuant to s 13 of the Act would have been breached and Russo would have been entitled to terminate the contract and have his payments of the deposit and balance of the purchase price refunded.
When is a vehicle “new”?
One question that arose was: when is a car “new”? His Honour referred to Annand & Thompson Pty Ltd v Trade Practices Commission where the Full Federal Court concluded that the word “new” had five possible meanings when used to describe a vehicle, namely:[6]
·the vehicle has not been previously sold by retail, that is, that it is not a second-hand vehicle;
·the vehicle is a current and not a superseded model;
·the vehicle has not suffered significant deterioration or been used to any significant extent;
·the vehicle is of recent origin; and
·the vehicle is one which has suffered a measure of damage but this damage has been quite effectively repaired or any damaged part replaced and the vehicle is otherwise new in every respect.
[6] (1979) 25 ALR 91, 111.
His Honour also referred to the decision in R v Ford Motor Co Ltd where the English Court of Appeal observed that a car ceases to be “new” once the mileage it has travelled under its own power significantly exceeds that to be expected as reasonably incidental to delivery. However, the court rejected a suggestion that a car ceases to be new as soon as it sustains significant damage and held that provided damage is “in practical terms perfectly repaired so that it can in truth be said after repairs have been affected that the car is as good as new” it would not be a false trade description to describe such a car as new. Relevantly the court said:[7]
An example given in the course of the evidence was of the engine of a new car sustaining serious damage, for instance for lack of oil on its journey from the factory to the dealer’s premises. If the dealer removed the defective engine and replaced it with a brand new engine from the factory, we can see no reason in common sense why the resulting car should not still be described as a new car. So also if superficial damage to part of the bodywork is sustained but is perfectly repaired either by panel beating followed by respraying, or by replacement of individual panels with new panels: if a perfect result can be achieved, why, one may ask rhetorically, should the car no longer qualify to be described as new? Of course, the question whether the repairs which have been undertaken in any particular case have attained the necessary degree of perfection to entitle the car to be described as new must be a matter of fact and degree to be decided by the tribunal of fact before whom the question arises.
[7] (1974) 1 WLR 1220, 1227-1228.
The two bases of the claim that the car was not new
Russo claimed that the car was not new on two bases. The first basis was that the car had been used, or driven, by a third party prior to its delivery to Russo and rested on observations made shortly after delivery that appeared to Russo to establish that the car had travelled more kilometres that could be justified by testing and delivery. Russo complained of these matters shortly after delivery. Prestige immediately denied strenuously that the car had travelled more than the usual 100km prior to delivery to Russo and made every effort both to convince Russo that he was mistaken and to rectify each matter complained of by way of a warranty claim.
The second basis was that the car had been damaged and inadequately repaired prior to its delivery to Russo and rested on observations made some time later of a “blend line” where two different shades of paint meet on the rear right quarter of the car and will be referred to as the “blend line” complaint. It was Russo’s case that the “blend line” (together with misalignment of the engine hatch cover) evidenced a repair of damage caused by an accident prior to delivery which had resulted in the misalignment of the right rear section of the car. I will refer to the first basis as excessive travel prior to delivery and to the second basis as the blend line complaint.
The first basis of the complaint that the car was not new - excessive travel prior to delivery
His Honour approached this aspect of the case in a way that was quite favourable to Russo. His Honour stated:[8]
Mr Russo had paid the full price for a new vehicle. The first question is whether Prestige Formula delivered a new vehicle to Mr Russo. If the vehicle had been used as a demonstration car or had been taken for a joyride, then it did not satisfy the requirements for a new car and Mr Russo did not receive what he had ordered and paid for.
[8] Russo v Belcar Pty Ltd & Maranello Imports Pty Ltd [2010] SADC 155, [78].
The factual matters relied upon to suggest excessive travel
Mr Russo’s version of the facts was as follows. He said that he took delivery of the car without making any close inspection and drove it a short distance to his own business premises. About an hour later, an ex-employee told him that he had noticed a sand build-up on the sub frame, the sand being white yellow in colour, like beach sand. As a result of that unexpected discovery, Russo had the car raised on a four poster hoist and removed the wheels to provide a better view. From that, and other inspections, Russo clearly formed the view that the car had travelled a substantial distance prior to delivery. This belief was no doubt strengthened by the fact that the car had by then been fitted with a replacement odometer which should have read about 100kms but had an incorrect reading of 550kms. Russo originally advanced the following matters in support of the proposition that the car was not new:
·the sand on the sub frame;
·the reading of 550kms on the odometer;
·the Pirelli tyres did not have the dimples usually associated with new tyres and had on them “tyre sheen” (used in the motor trade to make tyres look new and glossy.) (Russo ordered new “Kumho” tyres and, when they arrived, took the original Pirelli Tyres off the car, stored them, and fitted the “Kumhos”.);
·the floor mat had also been painted with sheen;
·the brake discs seemed to have “severe score marks”, which he thought were excessive for the mileage;[9]
·some paint chipping was evident;
·the stainless steel plate near the accelerator had a lot of smear marks where the driver’s foot rubs on it;
·the driver’s seat had crease marks which he interpreted as signs of wear;[10]
·the bonnet was very hard to close and paint was missing in the area of the bonnet lock;[11]
·the bonnet did not line up properly;
·on the left-hand side of the bonnet, close to the windscreen, was a patch about 10 inches in diameter which was darker in colour than the rest of the car, referred to as a dimple or dent; and
·there was red over spray on both black inner door pillars.
[9] T136.
[10] T138.
[11] T146.
The Judge’s findings as to the claim of excessive travel
Two obvious matters that needed to be resolved when addressing a question of how many kilometres the car had travelled prior to its delivery were as follows. First, exactly when was the car delivered and second, how far had he driven the car between taking delivery and 2 January 2002 when he first took the car back to Prestige complaining that it was not a new car (an odometer reading being taken that day). There is a close connection between the two matters in that, as his Honour observed, the earlier that the car was delivered, the greater opportunity Russo had to use it prior to 2 January 2002.
The Judge’s findings as to the date of delivery to Mr Russo
There was a dispute as to the date on which the car was physically delivered to Russo. Russo gave evidence that he took delivery on the day after the public holiday after Christmas 2001, which would have been Thursday 27 December 2001. However, there was a good deal of oral and documentary evidence tending to establish that the correct date was earlier than this and the Judge found that the car was in fact delivered on about 21 December 2001.
In making that finding, his Honour specifically rejected the evidence of Russo and accepted the evidence of the Prestige witnesses. I consider that he was justified in doing so.
The Judge’s findings as to Russo’s use of the car before 2 January 2002
His Honour noted that Russo’s case was that he had hardly used the vehicle at all between taking delivery and 2 January 2002, whereas Prestige’s case was that the car travelled about 650km during that period. He specifically found that Russo had given unsatisfactory evidence as to the extent of his use of the car during that period, and stated:[12]
[12] Russo v Belcar Pty Ltd & Maranello Imports Pty Ltd [2010] SADC 155, [191]-[196].
One unsatisfactory aspect of the plaintiff's case is Mr Russo’s evidence of his actual use of the vehicle between delivery and the return of the vehicle to Prestige Formula on about 2 January 2002.
As I have mentioned Mr Russo maintained that he did not receive the vehicle until 27 January 2001. It was in his interest to push forward the date of delivery because the later the delivery of the vehicle to Mr Russo the less chance he would have had to use the vehicle.
Initially the plaintiff's case was that he picked up the vehicle on 27 December[13] and did not use the vehicle other than for a very short period of driving.[14] In opening the plaintiff’s case Mr Heuzenroeder said “His (Mr Russo’s) recollection is that it (the signs of use) was noticed pretty much on the same day that he got the car and he didn’t drive it after that”. The plaintiff’s case was said to be that instead of getting a new car with no more than a hundred or so kilometres on the odometer he was given a car which had travelled as much as 1,000 km.[15]
When Mr Heuzenroeder opened the plaintiff’s case he said that it was most likely that Mr Russo picked up the car from Prestige Formula on 27 December 2001 and that he drove it to his place of work. It was on that day that the sand on the chassis was noticed and the vehicle was placed on the hoist.[16] Counsel said that at that point the vehicle was driven to the “toy shop” where Mr Russo kept his collectable cars and it remained there.[17]
The evidence of Mr Russo was that up until the Kumho Tyres were fitted:
The only driving that got done was from Prestige Formula down to work, then obviously in the workplace which went to City Tyre Mag and I’m not sure, I may have used that night to go home or may not, but that’s about it. I may have, which I doubt it very much.[18]
On his evidence Mr Russo had driven the vehicle less than 100km when he returned it to Prestige Formula on 2 January 2002.
[13] “January” actually appears here but that is obviously a mistake.
[14] T44.
[15] T45.
[16] T52.
[17] T55.
[18] T295.
His Honour then performed a detailed analysis that convincingly demonstrates, by reference to the amount of fuel used and various documentary evidence, that the car was driven for about 650km between when it was first delivered to Russo and 2 January 2002.
His Honour specifically stated that Russo “was evasive when questioned on the topic.”[19] Unsurprisingly, he further observed that “Mr Russo’s own use of the vehicle for about 650km could explain some of the matters which he claims show that the vehicle had been used prior to delivery.”
The Judge’s findings as to the factual matters said to suggest excessive travel
[19] Russo v Belcar Pty Ltd & Maranello Imports Pty Ltd [2010] SADC 155, [197].
His Honour found that none of the matters relied upon by Russo did lead to the conclusion that there had been excessive travel prior to delivery. I briefly summarise his Honour’s findings thus:
As to the wear on the tyres, it is to be first noted that his Honour rejected the evidence of Russo that he had taken off the original Pirelli Tyres (“to preserve them as evidence”) before the vehicle went back to Prestige Formula on 2 January 2002. He did so on the basis that Krznaric inspected the tyres on 2 January 2002 and wrote the word “Normal” on the Repair Order card alongside the word “Tyres” and that that notation would have been inappropriate if the original Pirelli Tyres had previously been removed and replaced by the Kumho tyres prior to that inspection.[20]
[20] His Honour also noted that the invoice for the Kumho Tyres indicates that the Kumho Tyres were not purchased until 2 January 2002 but, in my view, that does not preclude the possibility of those being fitted that day prior to the trip to Prestige.
His Honour noted both the evidence of Mr Slater (who examined the tyres and concluded that it would have taken 500kms to 1,000kms to remove the dimples on the new tyres) and that of Mr David Southwell (an expert in the area of car tyres, who concluded that the tyres had completed between no less than 500km and no more than 1,000km). In the light of his Honour’s positive finding, referred to above, that at the time of these two inspections (and by 2 January 2002), the car had in fact been driven with those original tyres a distance of about 750km (being the 99 or 100kms prior to delivery to Russo and then about 650km by Russo himself), his Honour correctly observed that the evidence of Slater and Southwell did not advance Russo’s case at all.
As to the tyre walls and floor mat having been painted, his Honour considered that this did not establish inappropriate use of the car; they may have become dirty during road testing in Italy and/or the persons who carried out the pre-delivery service may have decided to paint them to improve the car’s appearance.
As to the scratches on the right-hand kick panel, his Honour found that this evidence did not establish that the car had travelled a greater distance than 750km.
As to the sand on the chassis rail, his Honour found that it had been explained as being a consequence of factory testing in Italy and poor pre-delivery procedures.
As to the suggested wear on the driver’s seat at the time of delivery, his Honour found that the evidence did not establish how much use was indicated by the condition of the driver’s seat as at 2 January 2002 and/or whether the condition of the seat was a consequence of use of the vehicle or simply poor quality leather (the leather was in fact replaced as a warranty claim).
As to the disc brake rotors, Russo said in evidence that he raised this matter with Mr Krznaric and Mr Corradini by telephone. However, his Honour noted that Krznaric could not recall Mr Russo complaining about the brake pads or discs and that he said there was nothing recorded on any of the job cards to that effect. Further, the repair order on 2 January 2002 did not refer to the brakes and the first reference to the condition of the brakes is in a letter from Mr Russo to Ferrari of 29 July 2002. His Honour also noted that Mr Scott Newman, the Service Manager of Prestige Formula, gave evidence that Russo made no complaint about the disc brakes until the letter of 29 July 2002 and that when Kench wrote to Newman dealing with a number of issues he stated that the first time he had heard the complaint about disc wear was at a meeting on 7 November 2002. His Honour accordingly found that the evidence did not establish that the plaintiff had complained about the brakes prior to 29 July 2002.
As to the wear on the discs itself, his Honour noted that the evidence of Mr Slater was that there was some wear but that he had not been aware of the fact (as his Honour found it to be) that the car had then travelled about 750km. His Honour found that Slater’s observations were not inconsistent with that distance of travel and, accordingly, he further found that the evidence was vague and, taken at its highest, did not support the allegation that the car had received greater use than can be accounted for by his Honour’s findings as to distance travelled.

His Honour concluded that none of these matters, taken alone or cumulatively, established that the car had travelled more than about 100km at the time of delivery. His Honour found that the original odometer reading of about 100km correctly recorded the distance that had been travelled at the time of delivery to Adelaide (and hence to Russo) and that this reading negated the possibility of incorrect or excessive use of the vehicle in Italy or in Sydney.
The second basis of the complaint that the car was not new - the “blend line”
The second basis of the suggestion that the car was not new was of the “blend line” complaint (viewed in conjunction with a slight misalignment of the engine hatch cover), the suggestion being that the two things combined should be interpreted as evidencing an accident which had occurred prior to delivery to Russo and which had resulted in the misalignment of the car’s right rear section.
His Honour found that, as at the time of expert inspection leading up to the trial, there was in fact a blend line on the right rear quarter panel and pink spray putty which could be seen under the right rear wheel arch. His Honour further found that those things indicated repairs but that there was no evidence as to the cause of the repairs or when they were carried out.
The date when the blendline complaint was first made
Mr Russo gave evidence that a matter of weeks after he had taken the car back for its first service (which would appear to refer to 2 January 2002) he left the car parked outside his office. An employee, Mr Adam (Adam), an experienced crash repairer, approached him in his office, took him outside and pointed to the blend line in the paintwork, indicating that in his view it showed that the car had been repaired. Up until that time Russo had not noticed the blend line but once it had been pointed out by Mr Adam he was able to see it.
Adam in turn gave evidence confirming the above matters. He said that the day of his observation was a Saturday in late January but that he thought that it was in 2001, which was obviously incorrect. He gave some context as to the event including the fact that it was shortly after Christmas and that this was the first time that he had seen an example of the Ferrari 360 Modena F1 and that he therefore went up to it to have a good look.
Russo gave further evidence that, after inspecting the blend line with Mr Adam, he telephoned Mr Krznaric (Krznaric) the Workshop Manager at Prestige, and explained what he had found in the paintwork in reinforcement of his position that the car was not new.
However, Prestige maintained that it was not until July 2004 that Russo first complained about the blend line. In fact Russo conceded that there was at least some possibility that he had been mistaken as to when he actually first reported the blend line issue to Prestige. Thus he stated in cross-examination:[21]
[21] T353.
Q:I want to suggest to you that the first time that you raised this belief that there was a paint defect on the rear right-hand quarter of the car was two and a half years after you took delivery of the car?
A: No. Incorrect.
Q: Do you think it is possible you might be mistaken about that?
A:Like I said, as far as I can recall, okay, as far as reporting to them, okay, yes, I might have reported it at a later stage. I reported it over the phone directly I noticed the situation. As far as obviously making - forgetting to put some of the complaints that I had written down, yes, I accept that. But as far as the actual problems they were definitely recognised at a very very early stage.
Q:Is there any possibility at all that you might be wrong about that and that in fact, in the time that had gone by since you took the car or anything that happened, you just made a mistake about the date?
A:Possibly, but to the best of my mind I would say no. To the best of my recollection it was actually in the early stages. I mean, why would I worry when I reported the situation if the problem was there from day one? I have never had an accident in that car. So the issue was there from day one regardless of when I may have actually reported it. It is as simple as that. If you are trying to suggest that I actually damaged the vehicle that isn’t possible.
Krznaric gave evidence contradicting Russo’s evidence as to making an early complaint; he stated that he never made any note about the blend line, that it was his responsibility to note down any complaint about the car and that if Russo had made complaints to him, irrespective of how minor they were, he would have recorded them.[22]
[22] T955.
The first reference to the “blend line” in any document is in a letter dated 2 August 2004 from Kench to Russo in which Kench thanked Russo for meeting with himself and a representative of Ferrari in late July 2004 and continued:
…It was a shame that on the day your 360 Modena was not available for inspection (as requested) especially in light of the new issue you raised during the meeting of the paint defect on the rear guard. I would be happy to inspect and address this problem at your earliest convenience.
(Emphasis added)
Kench gave evidence that he had come to Adelaide on 15 March 2002, inspected the car and met with Russo who did not then say anything about a blend line or damage to the right rear guard; Kench stated that if the blend line had been mentioned it would have been a matter of concern to him because the car had been inspected in his workshop and he would want to know why a significant blemish in the paintwork had not been detected. Mr Newman also gave evidence that the blend line was first raised at a meeting in July 2004.[23]
[23] T606.
The Judge’s findings of the date when the blend line complaint was first made
His Honour rejected Russo’s evidence and found that he did not raise the presence of the blend line with the defendant until July 2004, over 2½ years after the delivery of the car to him. His Honour stated:[24]
Mr Adam gave his evidence in a straightforward and matter of fact way and he gave no reason to question his credibility. However, he was clearly mistaken as to the date of his inspection and his evidence does not establish when the blend line was first identified.
In comparison with other complaints which Mr Russo did raise about the paint and bodywork the blend line was of greater significance. It is likely that Mr Russo would have raised the blend line with Prestige Formula at the earliest opportunity, particularly given that Mr Russo’s strategy from the beginning was to return the vehicle. Evidence that the vehicle had been involved in an accident before delivery would have added another dimension to Mr Russo’s argument that the vehicle was not new.
Mr Kench’s letter of 2 August 2004 is objective contemporaneous evidence that so far as Mr Kench was concerned the blend line was a new issue. It is significant that the plaintiff never replied to Mr Kench disputing the statement in the letter or suggesting that Mr Russo had raised the blend line previously.
The Judge’s findings as to the impact of the blend line complaint on Russo’s case that the car was not “new”
[24] Russo v Belcar Pty Ltd & Maranello Imports Pty Ltd [2010] SADC 155, [97]-[99].
The blend line evidence was relied upon at trial to advance a case that the car had been involved in an accident and been so inadequately repaired that it could no longer be properly described as new; this was to be distinguished from the previous argument that the car was not new on the basis that it had been driven by unknown driver(s) for a greater distance than could be justified as incidental to testing or delivery purposes.
His Honour rejected the blend line argument on the basis that the onus of proof was on Russo to establish the essential facts on which he relied and, in light of the delay of more than 2½ years in raising the matter, he had failed adequately to demonstrate that the blend line evidenced an accident which had occurred prior to delivery. Thus his Honour stated:[25]
The reason for the repair to the right rear panel and the blend line remains unexplained. Because there was no complaint to Prestige Formula or Maranello Imports about the blend line until over 2½ years after the vehicle was delivered to Mr Russo no inference can be drawn that the blend line was present at the time of delivery and Prestige Formula is not under any obligation to explain the existence of blend line.
If the blend line had been present prior to delivery of the vehicle to Mr Russo its existence was missed when the vehicle was inspected by Scuderia Veloce and Maranello Imports in Sydney and by Prestige Formula in Adelaide. The inspection by Scuderia Veloce included a full body inspection with proper lighting.[26] Other defects which were less obvious and less significant were detected and recorded on body sheets.
…
There is no evidence that blend line and repair to the right rear panel was present at the time the vehicle was delivered to Mr Russo.
[25] Russo v Belcar Pty Ltd & Maranello Imports Pty Ltd [2010] SADC 155, [100]-[106].
[26] T846.
Once one accepts, as I do, that his Honour was justified both in rejecting Russo’s evidence about making an early oral complaint about the blend line, and in accepting the evidence adduced by Prestige that Russo did not raise the blend line matter until July 2004, I consider that his Honour was entitled to go further. I consider that he was justified in declining to be satisfied on the basis of Russo’s evidence (which he rejected in several different contexts) that any damage or repairs suggested by the blend line could not have occurred after delivery to Russo.
I appreciate that his Honour accepted Adam as apparently a witness of truth and that his evidence did constitute some circumstantial evidence in support of Russo’s version despite his misstatement as to the year. To that extent, I consider that his Honour’s assertion that “there was no evidence that blend line and repair to the right rear panel was present at the time the vehicle was delivered to Mr Russo” was not entirely correct since the evidence of both Adam and Russo taken together did constitute some circumstantial evidence of that fact. However, his Honour surely appreciated this obvious proposition and I consider that he was in fact expressing a conclusion, perhaps inelegantly, that there was no direct evidence of such damage and, more importantly, no sufficient evidence to discharge the onus of proof on the plaintiff in relation to this matter.
This matter of the onus of proof is quite an important consideration here. In the circumstances, the burden of proof to establish the existence of damage prior to delivery clearly lay upon Russo. The Judge had to consider the matter in the context of a great deal of oral and documentary evidence and, at the same time, in the light of his observations and assessment of the various witnesses including Russo himself. His Honour has not positively found that Russo caused or was aware of damage (and hence the blend line repair) occurring while the car was in his possession; rather, his Honour has simply been unable to find that Russo discharged the requisite onus of proof that damage in fact occurred to the car prior to delivery. On balance, I consider that his Honour’s findings and conclusions in this regard should not be disturbed.
IMPLIED CONDITIONS OF MERCHANTABLE QUALITY AND FITNESS FOR PURPOSE
I will now consider the implied conditions of merchantable quality and fitness for purpose together with the question of whether in the circumstances Russo was restricted to treating any breach as a breach of warranty only.
The appellant’s grounds of appeal 1 to 3
The appellant’s grounds of appeal 1 to 3 were as follows:
Implied Condition of Fitness for Purpose
1The trial judge erred in concluding [2], [164], [188], [302], [304] that the respondent was not in breach of the implied condition of fitness for purpose in section 14 of the Sale of Goods Act 1895 (SA);
In particular the trial judge:
a.erred in failing to hold that it was an implied condition of the contract of sale that the Ferrari 360, as a new prestige exotic sports car costing more than $400,000 was fit for the purpose of providing an exceptional, trouble free, pleasurable motoring experience, such as could reasonably be expected of such a vehicle in concourse condition;
b.erred, in failing to find that the cumulative effect of the identified and proved defects, rendered the Ferrari 360 not fit for any of the identified purposes.
The trial judge ought to have held that:
c.the cumulative effect of defects (including recurrent defects in the gearbox, and a defective engine), revealed the Ferrari 360 as being unfitted at the time of delivery for any of the identified purposes;
and
d.the first respondent breached an implied condition of the contract of sale.
Implied Condition of Merchantable Quality
2The trial judge erred in concluding [2], [164], [176], [187-188], [301] that the first respondent was not in breach of the implied condition of merchantable quality in section 14 of the Sale of Goods Act 1895 (SA);
In particular the trial judge:
a.erred in applying the wrong standard of merchantable quality for a new prestige exotic sports car costing more than $400,000;
b.erred in failing to have regard to the cumulative effect of the identified and proved defects (including recurrent defects in the gearbox, and a defective engine);
The trial judge ought to have held that:
c.the cumulative effect of defects, rendered the Ferrari 360 not of merchantable quality;
d.the first respondent breach an implied condition of the contract of sale.
Rejection and/or Rescission
3The trial judge erred in that he failed to hold that the appellant was entitled to refuse to accept the car, and to rescind the contract of sale, and that he did so. Alternatively, the trial judge failed to hold that if the appellant’s subsequent use of the car could otherwise have amounted to acceptance (whether pursuant to section 35 of the Sale of Goods Act 1895 (SA), or otherwise) the respondent was estopped from relying on any such acceptance, or in the further alternative, any such acceptance was induced by the misleading and deceptive conduct of the respondent, for which the appellant was entitled to an award of damages.
The trial judge ought to have held:
a.that the Ferrari 360, was not fit for its purposes (see Ground 1) and not of merchantable quality (see Ground 2);
b.that the appellant was entitled to refuse to accept the car, and that he did so;
c.alternatively, that the respondent was estopped from asserting that the appellant had accepted the car; and that accordingly the appellant was entitled to, and did, rescind the contract of sale;
d.in the further alternative, that any loss of the entitlement to refuse to accept, and in consequence to rescind, arose by reason of the first respondent’s misleading and deceptive conduct, for which the appellant was entitled to an award of damages.
An overview of the arguments
At trial his Honour approached these matters by first considering whether Russo was precluded from asserting termination for breach of condition (although retaining any rights in relation to breach of warranty). It may be, of course, that in some cases it will be convenient to first resolve questions as to whether the contractual conditions implied by s 41(a) and/or (b) SGA have been breached and only then proceed to the question of whether the buyer is precluded from treating such breach as a breach of essential condition. Obviously this is the order taken in the major academic works on the SGA but there was good reason for his Honour to take a different course here due to the rather peculiar facts and the course that the litigation has taken.
As noted above, Russo did complain of certain matters soon after delivery, but in the context of suggesting that the car was not “new” rather than as suggesting a lack of merchantable quality. At trial, Russo sought to elevate these complaints to a secondary or alternative case of a breach of the implied condition of fitness for purpose or merchantable quality and accordingly enlivening a right to terminate the contract. On appeal, these matters were relied upon even more heavily and assumed the central focus of the appeal argument.
Importantly, Prestige in fact rectified any defects as they arose, treating this as rectification or repair work covered by warranty. Such repairs were done with Russo’s full concurrence and co-operation. Prestige’s position at trial, and on appeal, was that it was far too late to treat such matters as a breach of a condition and submitted that, apart from anything else, the car at the relevant time had been “accepted” by Russo within the meaning of s 35 SGA and therefore any right to terminate had therefore been lost.
On appeal, Russo’s position was that he had not “accepted” the car but had “rejected” it on the basis that it was not “new”. He maintained that even if it later turned out to be “new”, he was entitled to rely upon any valid ground for rejection that had existed at the relevant time even if he had not then specifically relied upon it. The submission continued, that lack of fitness for purpose and/or merchantable quality constituted such valid ground for rejection.
As time went on, Russo continued to use the car and raised certain other complaints. The most important related to the engine (which was replaced without charge), the gear selection process (the clutch was also replaced without charge) and the “blend line” in the paint work (considered above in the context of the contention that it evidenced pre-delivery repair and hence pre-delivery damage).
The position of Prestige was consistently that it had rectified these matters as they arose, that they could not be treated as breach of a condition and that the car had been “accepted”. Russo’s rejoinder was, in effect, that these matters constituted latent defects which had existed at the time of delivery unknown to Russo and submitted that these matters should be viewed cumulatively with all other defects as demonstrating that the car had not been of merchantable quality at the time of delivery.
I will first consider whether Russo was compelled to treat any breach of a condition as a breach of warranty and only then refer to the question of whether there had in fact been any breach of the implied conditions.
The provisions of the Sale of Goods Act1895
The relevant provisions of the Sale of Goods Act 1895 are as follows:
11—When conditions to be treated as warranty
(1)     Where a contract of sale is subject to any condition to be fulfilled by the seller, the buyer may waive the condition, or may elect to treat the breach of such condition as a breach of warranty, and not as a ground for treating the contract as repudiated.
(2)     Whether a stipulation in a contract of sale is a condition the breach of which may give rise to a right to treat the contract as repudiated, or a warranty the breach of which may give rise to a claim for damages, but not to a right to reject the goods and treat the contract as repudiated, depends in each case on the construction of the contract. A stipulation may be a condition, though called a warranty in the contract.
(3)     Where a contract of sale is not severable, and the buyer has accepted the goods, or part thereof, the breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty, and not as a ground for rejecting the goods and treating the contract as repudiated, unless there be a term of the contract express or implied to that effect.
(4)     Nothing in this section shall affect the case of any condition or warranty, fulfilment of which is excused by law by reason of impossibility or otherwise.
14—Implied conditions as to quality or fitness
Subject to the provisions of this Act, and of any Statute in that behalf, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows:
(a)     where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller’s skill or judgment, and the goods are of a description which it is in the course of the seller’s business to supply (whether he be the manufacturer or not), there is an implied condition that the goods shall be reasonably fit for such purpose: Provided that in the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose;
(b)     where goods are bought by description from a seller who deals in goods of that description (whether he be the manufacturer or not), there is an implied condition that the goods shall be of merchantable quality: Provided that if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed;
(c)     an implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade;
(d)     an express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent therewith.
34—Buyer’s right of examining the goods
(1)     Where goods are delivered to the buyer, which he has not previously examined, he is not deemed to have accepted them unless and until he has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract.
(2)     Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is bound, on request, to afford the buyer a reasonable opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the contract.
35—Acceptance
The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or (subject to s 34 of this Act) when the goods have been delivered to him, and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them.
36—Buyer not bound to return rejected goods
Unless otherwise agreed, where goods are delivered to the buyer, and he refuses to accept them, having the right so to do, he is not bound to return them to the seller, but it is sufficient if he intimates to the seller that he refuses to accept them.
52—Remedy for breach of warranty
(1)     Where there is a breach of warranty by the seller, or where the buyer elects or is compelled to treat any breach of a condition on the part of the seller as a breach of warranty, the buyer is not by reason only of such breach of warranty entitled to reject the goods; but he may—
(a)set up against the seller the breach of warranty in diminution or extinction of the price; or
(b)maintain an action against the seller for damages for the breach of warranty.
(2)     The measure of damages for breach of warranty is the estimated loss directly and naturally resulting, in the ordinary course of events, from the breach of warranty.
(3)     In the case of breach of warranty of quality, such loss is prima facie the difference between the value of the goods at the time of delivery to the buyer and the value they would have had if they had answered to the warranty.
(4)     The fact that the buyer has set up the breach of warranty in diminution or extinction of the price does not prevent him from maintaining an action for the same breach of warranty if he has suffered further damage.
Was Russo compelled to treat any breach of a condition on the part of the seller as a breach of warranty?

I consider that the central enquiry may be formulated as “whether Russo was compelled to treat any breach of a condition on the part of the seller as a breach of warranty”, such being a distillation of the combined effect of ss 11(3) and 52(1) SGA and/or certain other doctrines of law and equity which may also apply in circumstances such as the present. I consider that the answer must be in the affirmative. My reasons follow.
“Acceptance” under s 35 SGA
The first question is whether Russo is to be deemed to have accepted the goods. If so, he will be compelled to treat any breach of a condition on the part of the seller as a breach of warranty. As referred to above, s 35 SGA states:
The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or (subject to s 34 of this Act) when the goods have been delivered to him, and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them.
The courts have traditionally very much borne in mind practical commercial considerations such as the need for finality of transactions which, in the context of s 35 SGA, requires that there be a relatively short period within which sellers may be satisfied that the goods have been “accepted”. This approach has given rise to two inter-related principles.
The first is that “a reasonable period” may be found to have expired even though a latent fault is present and could not have been detected during that period. Thus Atiyah The Sale of Goods stated:[27]
A few preliminary comments on the concept of acceptance and its relationship to other legal doctrines are necessary. First, the provisions of the Act concerning acceptance must be read against the general common law doctrines of affirmation, waiver and estoppel (Scotice, homologation, waiver, personal bar). The concept of affirmation is in some respects a general common law principle parallel to the concept of acceptance, but there are important differences between them. In particular, it is generally held that an innocent party who wishes to terminate a contract because of a breach of condition (or a repudiatory breach) by the other party cannot be treated as having affirmed the contract unless he knew of the breach, and of his right to terminate. On the other hand, a buyer can be held to have accepted the goods, and so lost his right of rejection under the Sale of Goods Act, even where he did not know of the seller’s breach or of his rights. This means that termination for breach is in principle often possible long after the breach occurs, because the facts may only then come to light; but acceptance is usually something which happens very shortly after delivery in a contract of sale. It is not usually possible to reject goods long after delivery because some latent or hidden defect comes to light months or years after the goods are delivered.
The Law Commissions discussed this question in their Report of 1987, but recommended against any change in the law which would confer a long-term right of rejection on the buyer, where (for instance) serious defects come to light in the goods long after they are delivered. The chief reason for rejecting such a change seems to have been that it would introduce new complications regarding the use and benefit which the buyer may have had from the goods. At present, because rejection must take place within a relatively short period, it is possible for the law to insist that rejection of the goods produces a total failure of consideration, so that the buyer is entitled to the full repayment of his price. But if the law recognized a long-term right of rejection, it would hardly be possible to maintain this position, and the seller might well expect some credit for the use the buyer has had from the goods, even where the buyer does not seek damages. This would weaken the buyer’s bargaining position where he rejects (or wants to reject) the goods, and introduce complications which the law currently avoids. Of course nothing said here detracts from the possibility of the buyer being able to pursue a claim for damages where hidden defects come to light long after delivery.
In addition to the common law concept of affirmation, which is largely replaced for contracts of sale by the concept of acceptance, there are also other common law doctrines – such as waiver and estoppel (personal bar) – which are still frequently applied to contracts of sale, especially in commercial situations. Thus a buyer who makes clear and unequivocal representations (whether by express words, or by implication from conduct) that he will accept the goods, or that he will not reject them on the grounds of late delivery or some other ground of that kind, may lose his right to reject them under these common law doctrines. So also a person cannot reject the goods if at the same time he acts in a way which is inconsistent with rejection, whether this amounts to an acceptance or not.
(Footnotes omitted)
[27] P S Atiyah, The Sale of Goods, (Longman, 10^th ed, 2001) 510-511.
Similarly, Sutton Sales And Consumer Law noted:[28]
The commercial desirability of a seller being able to close off his or her ledger reasonably soon after the transaction was complete was referred to in Bernstein v Pamson Motors (Golders Green) Ltd where the question was what was a reasonable time in the case of a new motor car before retention of the goods was held to be acceptance under the English equivalent of s 38(1). It was held by the court that a reasonable time must mean a reasonable time to inspect and try out the goods in general terms rather than with an eye to any specific defect and that the use of the motor car to drive 140 odd miles over a period of three weeks was sufficient for this purpose. It was said that the nature of the particular defect, discovered ex post facto, and the speed with which it might have been discovered, were irrelevant to the concept of reasonable time as s 38(1) was drafted. That section was directed solely to what was a reasonable practical interval in commercial terms between a buyer receiving the goods and his or her ability to send them back, taking into consideration from his or her point of view the nature of the goods and his or her function (for the complexity of the intended function was of prime consideration), and from the point of view of the seller the commercial desirability of finalising the transaction.
To reiterate the points made by Salmond J in the passage from his judgment in Taylor v Combined Buyers Ltd quoted above, it is a question of fact as to what is a reasonable examination and a reasonable delay for the purpose of examination, depending on the article sold and the nature of the defects alleged, and if the defects are latent some user may be essential to discover them. If the delay or user is more than reasonable, it will amount to acceptance. But even if the defects are so far latent as to be undiscoverable except by extended use, this might not save the buyer’s right of rejection, especially if he or she has got a substantial part of the benefit of his or her purchase. Of course a buyer can always get damages for breach of condition reduced to the level of a warranty ex post facto if he or she acts with reasonable promptitude after discovering the true position, but this may not always be a satisfactory remedy.
(Footnotes omitted)
[28] Kenneth Sutton, Sales and Consumer Law (Law book, 4^th ed 1995) 587-588.
Finally, the most recent edition of Benjamin’s Sale Of Goods states:[29]
What is a reasonable time is a question of fact. Section 35 clearly bars rejection in some cases where the buyer did not know of and even could not have ascertained the defect, for example where the defect is one that would only manifest itself after a period of time. It seems also that the policy behind the section is one of finality of transactions, which, while it does not prevent some weight being given to the discoverability of the defect, prescribes that the right to reject be lost fairly quickly despite this factor. It is certainly clear that the notion of reasonable time prevents the existence of any long-term right to reject in the case of items, such as washing machines, which have defects or durability which by definition will not manifest themselves for a considerable period: and proposals to alter the law to create such a long-term right have been rejected. However, within the fairly short period which this policy seems to require, there is certainly scope for the discoverability of the defect to be taken into account in the ascertainment of reasonable time, as section 35(5) of the Act now requires. Subsections (2) and (6) now make clear that a reasonable opportunity of examining the goods is relevant to the ascertainment of what is a reasonable time and that the buyer’s asking or agreeing to repair does not of itself create acceptance.
(Footnotes omitted)
[29] Judah Phillip Benjamin, Benjamin’s Sale of Goods (Sweet & Maxwell, 7^th ed, 2006) 629-630.
The second principle is that, subject to the caveat constituted by the first principle above, what is “a reasonable time” will very much depend on all the facts of the particular case. Thus Sutton Sales And Consumer Law stated:[30]
The question whether a buyer has had a reasonable opportunity to examine the goods is one of fact. As Salmond J put it in Taylor v Combined Buyers Ltd:
What amounts to a reasonable examination, and to reasonable delay for the purpose of examination, is a question of fact which depends on the nature of the article sold and the nature of the defects alleged. There are cases in which these defects are discoverable at once or on a mere cursory inspection. There are other cases in which the defects are so far latent that some form of investigation, or even user, and some consequent delay, may be essential for their discovery. But if such user or such delay exceeds what is reasonably necessary for this purpose it amounts to an acceptance which destroys the right of rejection and relegates the purchaser to his right to damages as for a breach of warranty.”
This passage was adopted in Finch Motors Ltd v Quin (No 2) where Hardie Boys J held that a journey of some length was reasonably necessary to enable the buyer of a motor car to ascertain whether it was reasonably fit for the particular purpose of towing a large boat. Such user was not acceptance preventing the buyer from rejecting the vehicle. His Honour went on to hold that so long as the right to rescind the contract subsisted, the buyer could not be said to have obtained the kind of benefit under the contract which prevented reliance on a total failure of consideration when that right was exercised.
… There is some authority for the proposition that where a buyer has taken possession of a specific chattel and has sought over a considerable period of time to have its defects remedied by the seller, while continuing to use it or to attempt to use it for its intended purpose, this extended use will not amount to an acceptance under s 16(3) of the SGA so as to prevent the buyer from ultimately rejecting the goods for breach of condition. But the better view is that in continuing to insist that the seller repair the defective goods the buyer elects not to accept the breach of condition as putting an end to the contract. It continues on foot and the buyer has a claim for damages.
Thus, in Tompkin v Nossida (No 1) Pty Ltd where a new motor car purchased by the plaintiff turned out to be defective, it was held that the retention and use of the vehicle by the plaintiff for some 2000 kilometres in the belief that the faults would be rectified, amounted to acceptance of the car which prevented rescission of the contract. There was a reasonable opportunity to inspect the vehicle, there was no necessity to retain it and to drive it, and such retention and use after the plaintiff became aware of the breach of contract was fatal to the claim to be able to reject it. Pincus J refused also to allow rescission under the provisions of the TPA (which were untrammelled by any notion of acceptance) on the ground that certainty in commercial dealings would not be enhanced if courts encouraged the thought that one could keep one’s options open and retain property which it was desired to return to the vendor in circumstances where there was no practical necessity to do so.
(Footnotes omitted)
[30] Kenneth Sutton, Sales and Consumer Law (Law book, 4^th ed 1995) 586.
A rejection of goods must be clear and unequivocal
A rejection of goods must be clear and unequivocal and the whole of the buyer’s conduct will be relevant to this issue.[31] As Evans J stated in Graanhandel The Vink BV v European Grain & Shipping Ltd:[32] “if he [the buyer] does decide to reject the goods he must do so unequivocally and be prepared to take a stand.” His Honour further observed:[33]
… [A]n unequivocal rejection does not necessarily depend upon the terms of one communication alone. It is necessary to consider the whole of the relevant communications and also of the buyer’s conduct generally.”
[31] Judah Phillip Benjamin, Benjamin’s Sale of Goods (Sweet & Maxwell, 7^th ed, 2006) 613.
[32] [1989] 2 Lloyd’s Rep 531, 533.
[33] [1989] 2 Lloyd’s Rep 531, 533.
Trevilyan v Donaldson & Anor[34] is a South Australian decision which, although not dealing with a sale of goods, provides a useful analogy illustrating the degree of specificity required for a valid and unequivocal termination. The owner of a farm purported to terminate a share farming agreement by a letter dated 1^stFebruary, such termination to commence at the end of February. The relevant passage read thus:[35]
It is with regret that we feel that we must terminate our arrangements with you from the end of February. Current indications lead us to believe that you will not handle the 1996 calving and milking season to our satisfaction. However if you can address our concerns to our satisfaction by 12^th February we are willing to reconsider this decision.
[34] (1997) 196 LSJS 26.
[35] (1997) 196 LSJS 26, 30.
After analysis of the facts and relevant authorities, Olsson J stated:[36]
As the authorities to which I have referred render abundantly clear, a promisee alleging breach of a fundamental term of a contract cannot behave in an inconsistent manner. Either the promisee must elect to rescind, thereby immediately terminating the contract, or must elect to affirm and claim damages for breach of contract.
That is not to gainsay the promisee’s prerogative of giving to the promisor due warning of an intention to rescind, if remedial action is not taken within a reasonable time. But that was not what occurred in the instant case. Here we had an absolute rescission (or “termination”), albeit at a future date - one which was not qualified by the expressed, vague willingness to reconsider in certain circumstances.
As I understand the authorities, if an election to rescind is lawfully to be made, it must be unequivocal, immediate and communicated to the relevant promisor. Such an election is no more and no less than an unqualified statement to a promisor to the effect - “You have committed a breach of a fundamental term of our contract entitling me to bring it to an end and I now do so.”
What the appellant here sought to say was - “You have committed a breach of a fundamental term of our contract entitling me to bring it to an end and I am doing so, but you are to continue to discharge your responsibilities under it for another four weeks when, I have decided, that rescission will become effective.” This was in no sense, a mere warning of intended cancellation if a breach was not remedied. It was an unequivocal rescission, said to be operative at a future date.
In my view such an approach is utterly inconsistent with the giving of notice of exercise of election to rescind for fundamental breach. An election must be made unequivocally and unconditionally and operates instantly. There is no principle known to me whereby a promisee can elect, but nominate a future date for its operation. That would be to seek both to affirm the contract for the interim period, but to terminate it at a time to suit the promisee. The two concepts are, logically, mutually exclusive. If this were to be possible where would the line be drawn? Presumably the nominated date could be four months hence, rather than four weeks. To state the proposition is to demonstrate how untenable it is.
(Emphasis added)
[36] (1997) 196 LSJS 26, 39-40.
The recent English decision in Whitecap Leisure Ltd v John H Rundle Ltd[37] provides an example of the reverse situation of a vendor being held by reason of its indecisive conduct to have accepted a rejection of purchased equipment by a buyer which would otherwise have been out of time. The facts were that the buyer had demanded long after delivery (in circumstances where it probably no longer had any right to do so) that the seller take back equipment it had supplied or it would charge for its storage. The vendor reluctantly took possession of the equipment and submitted on appeal that it had been forced to do so by the threat of storage charges and in order to protect the equipment in which it retained title, part of the purchase price still being outstanding. Moore-Bick LJ (with whom Ward and Wall LJJ concurred) rejected these arguments and stated:
[46]… On 12^thNovember 2004 Whitecap’s solicitors wrote to Rundle’s solicitors informing them that Whitecap rejected the equipment in its entirety, were proceeding to dismantle it and intended to replace it in due course. Rundle’s solicitors responded on 15^thNovember disputing Whitecap’s right to reject the equipment or to dismantle it. They said that Rundle intended to rely on the retention of title clause in the contract and expected Whitecap to make payment. They also confirmed that Rundle intended to rely on the exclusion clause in response to any claim for damages. On 19^th January 2005 Whitecap’s solicitors wrote again, stating that their client had completed dismantling the machinery and demanding that Rundle collect it within 21 days, failing which Whitecap would charge for its storage. On 21^st January Rundle’s solicitors responded confirming that their client would collect the equipment, but saying that it might take more than one visit to do so.
[47]The judge found that Rundle had attended at Whitecap’s premises by arrangement over two days in order to collect the majority of the equipment but that it was refused further access in order to collect the remainder. In particular, Whitecap retained the launching platform and pontoons, which it used in conjunction with the new cable tow system supplied by Rixen. The retention of that equipment led Rundle to make a claim in these proceedings for damages for conversion of what in terms of its value it contends was the major part of the equipment.
[48]Despite the return of what the judge found to be the majority of the equipment pursuant to the exchange of correspondence to which I have referred, at the trial no one seems to have considered the legal implications of what had taken place. I think it is clear that although Rundle disputed (correctly) Whitecap’s right to reject the goods, it acquiesced in its doing so and accepted the return of part of the equipment on that basis. Mr Wilson submitted that in practice Rundle was not free to take any other course because Whitecap had threatened to charge it for storing the equipment if it failed to remove it. He also submitted that Rundle was doing no more than was reasonable to protect the equipment in which it retained title, part of the purchase price still being outstanding. However, in my view neither of these arguments meets the point. Faced with Whitecap’s purported rejection Rundle had a choice: it could dispute Whitecap’s right to reject the equipment and claim the outstanding balance of the price, or it could acquiesce in it, accept redelivery and claim damages for non-acceptance. Although Rundle initially shaped up to take the former course, the correspondence shows that it ultimately took the latter.
(Emphasis added)
[37] (2008) EWCA Civ 429.

His Honour found that a problem in relation to the engine was first raised by Russo as early as 2 January 2002 when a “rattle” was referred to. There were various discussions about the engine which eventually resulted in a new engine (with the same number as the original engine[63]) being supplied and fitted at no charge to Russo on 6 May 2002.
[63] As his Honour observed at [219]: “The same engine number avoids any suggestion that the value of the vehicle was diminished because the numbers did not match.”
His Honour found that the matter of the engine did not lead to a right to terminate for two reasons. First, it was not established by Russo that there really was any fault with the engine which existed at the time of delivery (that being the time at which the question of merchantable quality was to be assessed); there was documentary evidence that Prestige/Ferrari were prepared to replace the engine simply as a gesture of goodwill to Russo since he was a valued repeat customer who undoubtedly held the view (understandably, but quite wrongly, that he had not received a new car). Second, as recounted above, Russo did not reject the car on the basis of the engine but, to the contrary, permitted Prestige/Ferrari to go to the trouble and expense of shipping out and fitting a new engine with matching numbers.
The gear selection problem
His Honour found that Russo first experienced gear selection problems more than six months after delivery and the matter was first raised by Russo in his letter dated 29 July 2002. His Honour notes that the “distance travelled by the vehicle at the date of the letter, 29 July 2002, is not known but on 22 April 2002 the vehicle had travelled 3,528km and 19 August 2002 it had travelled 4,694km.”[64] There were various discussions and continuing efforts by Prestige to fix what may have been more than one problem in relation to gear selection. The end result was that various work was done culminating in a new clutch being fitted at no charge to Russo on 31 March 2004 and thereafter there was no further problem. His Honour noted:[65]
At that time the odometer reading was 13,689km, which indicated a distance travelled of about 15,569km … In cross-examination Mr Russo agreed that on the last occasion the car was returned to him from Prestige Formula he was told “that it was all repaired” and “that the gearbox and everything was working correctly”. That was on 31 March 2004. There is no evidence of any problem with the clutch or gearbox since that time.
[64] Russo v Belcar Pty Ltd & Maranello Imports Pty Ltd [2010] SADC 155, [234].
[65] Russo v Belcar Pty Ltd & Maranello Imports Pty Ltd [2010] SADC 155, [275]-[276].
His Honour found the gear selection problem did not lead to a right to terminate for two reasons. First, it was not established by Russo that the fault existed at the time of delivery (that being the time at which the question of merchantable quality was to be assessed). Second, once again Russo did not reject the car on the basis of the gear selection problem but permitted Prestige/Ferrari to go to the trouble and expense of rectifying the problem.
The blend line
As referred to above in the context of the new car dispute, his Honour specifically rejected the evidence of Russo and found that he did not raise the blend line complaint until July 2004. Again, his Honour found the matter of the blend line did not lead to a right to terminate for two reasons. First, it was not established by Russo that the blend line existed at the time of delivery. Second, once again Russo did not reject the car on the basis of that matter. His Honour further found that Prestige offered to repair the defect but Russo declined the offer.
The appellant’s argument as to circumstantial evidence and latent defects
In conjunction with the above complaints, the appellant developed an argument that his Honour had approached his task of assessing the relevant evidence incorrectly. Ground 4(e) of appeal is as follows:
4 The trial judge erred and the trial of the action miscarried, in that he:
e.erred in his approach to, and assessment of, circumstantial evidence, in concluding that:
(i)there was “no evidence” [162], [174] that the Ferrari 360 was not of merchantable quality at the time it was delivered to the appellant;
(ii)there was “no evidence” [164] that the Ferrari 360 was not fit for purpose at the time it was delivered to the appellant.
The trial judge ought to have considered the cumulative effect of the proved defects (rather than each defect in isolation) and ought, accordingly, to have held, the Ferrari 360 to be not of merchantable quality, and unfitted for any of the identified purposes.
The way in which the appellant developed this argument is adequately summarised in his outline of argument as follows:
16.1The trial judge failed to consider the cumulative force of various defects with the Ferrari 360, some of which manifested over time, and how these to an extent corroborated each other. His Honour considered and disposed of each suggested defect in isolation from the others, and in so doing failed to consider the united force of all of the circumstances taken together.
(Emphasis added)
The appellant’s submission later continued thus:
18.At the trial evidence was called about a catalogue of defects in the Ferrari 360. … In addressing the trial judge’s failure to consider the cumulative effect of the defects these submissions focus on the following defects:
18.1 the engine defects;
18.2 the gear box and clutch defects;
18.3the blend line in the paintwork on the right hand quarter panel (and its link with the misalignment of the rear hatch).
19.Although the nature of the vehicle must be assessed at the time of delivery, to meet that condition it must be such as to continue in a state of merchantable quality and being fit for its purposes for a reasonable period of time. This is because an inference about its state at the time of delivery may be drawn from its subsequent performance. The trial judge was asked to draw an inference about the merchantable quality and fitness for purpose of the Ferrari 360, based on evidence of defects, including defects which became apparent after delivery, and in circumstances where it was established by unchallenged evidence that there was no impact to the vehicle when it was in Russo’s custody, and no unreasonable use of it by him. It was the appellant’s case at trial that the Ferrari 360 revealed problems soon after delivery, in particular with the engine and the gearbox which respectively resulted in the engine being completely replaced in May 2002, and the clutch kit being replaced in March 2004.
(Footnotes omitted, emphasis added)
Conclusion as to the SGA s 14 implied conditions
I consider that there is no substance in these grounds or any of the arguments advanced by the appellant in relation to the SGA s 14 implied conditions.
The theory of the various problems all having a common cause was originally part of the argument that the car was not “new”: it was postulated that some one had “used and abused” the car in ways that caused damage to the car, in some respects obvious (see the list of items alleged to display excessive wear dealt with seriatim above) and in other respects such as to cause latent damage which would only emerge in time, of which the engine and the rear selection problems were said to be the main exemplars.
However, in the wake of his Honour’s finding that the car was new and that there was no such abuser, the theory of a common cause of various alleged defects commensurately dwindled.
I have referred above to Russo’s various complaints in my consideration of the matters relied upon by him in support of his contention that the car was not new and of the trial Judge’s rejection of Russo’s case in that regard. His Honour also found that, taken individually and cumulatively, these complaints did not establish that the car was not of merchantable quality. On balance, I consider that the appellant has not succeeded in establishing that such finding constituted appellable error.
In my view, his Honour did have proper regard to the various matters referred to by the appellant both individually and in a cumulative way but ultimately came to the correct conclusion that it had not been established by the appellant that such matters as the problem alleged to exist with the engine, the gear selection problem or the blend line defect in fact did exist at the time of delivery to Russo as distinct from developing later.
I have now considered the appellant’s grounds of appeal 1, 2, 3 and 4(e). I reject each of these grounds of appeal.
Damages for breach of warranty?
As to the matter of rectification work, his Honour found that by the end of July 2004 all matters had been attended to. His Honour stated:[66]
On 27 July 2004 Mr Graham wrote to Mr Kench referring to a meeting with Mr Russo the previous week.[67] Mr Graham wrote:
…The points or previous problems that the customer raised during our meeting with regards to the 360 Modena Chassis No. 126072 have all been resolved, and accepted in the normal warranty process.
It is fully understood by all parties that there has been some issues with the car that now have been repaired, but did take some time to fix and that was not the fault of the Importer or the factory. …
It is significant that Mr Graham, following a meeting with Mr Russo, believed that the points or previous problems had all been resolved. If what he said in the letter is correct that should be the end of the matter. He had no reason to misstate the position. I accept the statement of Mr Graham as an accurate summary of the position at the end of July 2004. It is evidence that Mr Russo had accepted that the issues with the car had been resolved.[68]
[66] Russo v Belcar Pty Ltd & Maranello Imports Pty Ltd [2010] SADC 155, [280]-[281].
[67] Exhibit P1-223.
[68] The only further “new issue” that was raised after this time was the blend line complaint which has been considered above. His Honour found that Russo first raised this matter in July 2004.
His Honour concluded that, as at the time of the trial, all defects that had existed had been rectified. His Honour therefore concluded that Prestige bore no liability in damages for breach of warranty. Specifically, his Honour found:[69]
Paragraph 66 of the Further Amended Statement of Claim alleges that the vehicle had “various faults”. For reasons which are already stated none of the faults listed give rise to an entitlement to relief. Any significant “faults” have been dealt with under warranty. The allegation in para 68 of the Further Amended Statement of Claim that the defendant has been unable to or has refused to take adequate steps to repair the faults identified in para 66 is not made out by the evidence.
[69] Russo v Belcar Pty Ltd & Maranello Imports Pty Ltd [2010] SADC 155, [316].
It is important to emphasise that the appellant has in no way alluded to the topic of damages for breach of warranty in his notice of appeal or grounds of appeal or in his written or oral submissions on appeal. Accordingly, it is unnecessary for me to comment further on the matter.[70]
[70] The only reference to “damages” in the grounds of appeal is that in ground 3 which is a distinct matter specifically addressed above.
FURTHER ASSERTED ERRORS IN HIS HONOUR’S APPROACH TO EVALUATING EVIDENCE
It remains to consider grounds of appeal 4(a) to (d) which relate to the appellant’s further assertions that his Honour erred in his approach to evaluating evidence. Those grounds appear as follows:
4 The trial judge erred and the trial of the action miscarried, in that he:
a.failed or refused to have any regard [311] to relevant expert evidence, concerning standards of merchantable quality expected of a new prestige exotic sports car of a type costing more than $400,000;
b.failed or refused to have any regard [311] to relevant expert evidence, concerning the likelihood that the Ferrari 360 had suffered an impact;
c.failed to rule whether the evidence of Mr Enkelman would be excluded, when it had been taken de bene esse with an objection as to its admissibility, when he ought to have excluded it as inadmissible speculation, and based impermissibly upon hearsay;
d.failed or refused to permit the appellant to cross-examine appropriately qualified witnesses of the respondents about the nature and cause of the problems manifested by the gearbox and clutch, when he ought to have permitted a full cross-examination of such witnesses on these issues;
Grounds of appeal 4(a) and (b)
At the judgment paragraph [311] referred to in each of these grounds, his Honour stated: “As a consequence of the findings which I have made there is no reason to consider the opinions of Dr Thomson, Mr Skothos and Mr Panagaris.”
Mr Thompson was an expert who furnished a report and gave evidence as to his examination of paint samples from the car in connection with the blend line issue. He concluded that the area of the blend line had been painted at a different time and with “a different painting regimen” to the rest of the car. He was not able to opine as to when, or in what circumstances, this had occurred.
As referred to above, his Honour found that it was not established when the blend line painting occurred or whether it occurred before delivery to Russo. It is clear that the evidence of Dr Thompson was not able to assist in that area. In those circumstances, his evidence was of no assistance on any issue and in that sense his Honour was correct in stating that there was no reason to consider his evidence.
Mr Skothos furnished a report and gave evidence as to his examination of the paint work at various places on the car. There are two relevant references in the appellant’s outline of argument to the suggested use of his evidence. The first is as follows:
16.3Special characteristics of the vehicle: The trial judge took no account of the fact that the Ferrari 360, a luxury vehicle costing more than $400,000, was more than an instrument of transport, and took no account of the expert evidence directed to these matters. Exhibit P14 [Report of Skothos AB 480]
In so far as Mr Skothos purported to give evidence about a standard of merchantable quality and/or the present value of the car, his evidence was extremely vague. In any event, I consider that his Honour was correct in concluding that it was unnecessary to refer to it in the light of his finding that even if the car was thought not to be of merchantable quality, Russo was unable to rely upon this as a breach of condition giving rise to a right to terminate for the reasons analysed above. Further, Russo had previously indicated that he was satisfied that Prestige had carried out all rectification work that he wished to have done and, as previously emphasised, there is no ground of appeal claiming that his Honour erred in failing to award damages for breach of warranty.
The second reference to Mr Skothos in the appellant’s outline of argument is as follows:
45.4Inference or appearance of damage: Mr Skothos’ report notes that there is no way of completely restoring the blend line to original condition and the repair will always be noticeable to an expert. The blend line was created by the inappropriate use of the “blow in” method of re-spraying. The repairs around the blend line had an observable amount of dirt trapped in the paint film.
(Footnotes omitted)
The evidence that Mr Skothos could here give was limited to the fact that the blend line area had been repainted. He was unable to comment as to when or in what circumstances this had occurred and was unable to comment as to the extent of damage, if any, that might have previously occurred. His Honour found that it was not established when the blend line painting occurred or whether it occurred before delivery to Russo and Mr Skothos’ evidence could not assist in that regard. In those circumstances, his evidence was of no assistance on any issue and his Honour was correct in stating that there was no reason to consider his evidence.
Mr Panagaris furnished a report commenting as to the present value of the car having regard to the facts that it had “had a complete engine change and other major items replaced or repaired”. The relevant reference in the appellant’s outline of argument is as follows:
16.3Special characteristics of the vehicle: The trial judge took no account of the fact that the Ferrari 360, a luxury vehicle costing more than $400,000, was more than an instrument of transport, and took no account of the expert evidence directed to these matters. Exhibit P13 [Report of Panagaris AB 464]
If it is suggested that Mr Panagaris could give evidence that the car was not of merchantable quality, or of its current value, again I consider that his Honour was correct in concluding that it was unnecessary to refer to such evidence because of his finding that even if the car was thought not to be of merchantable quality, Russo was unable to rely upon this as a breach of condition giving rise to a right to terminate for the reasons analysed above. Further, Russo had previously indicated that he was satisfied that Prestige had carried out all rectification work that he wished to have done and once again, as emphasised above, there is no ground of appeal claiming that his Honour erred in failing to award damages for breach of warranty.
I reject each of grounds 4(a) and (b) of appeal.
Ground of appeal 4(c)
The appellant here complains that his Honour, having received the evidence of Mr Enkelman, did not positively rule it to be inadmissible. However, his Honour specifically stated that he did not take it into account which had exactly the same effect that a formal ruling of inadmissibility would have had. I reject this ground of appeal.
Ground of appeal 4(d)
The subject matter of this ground is referred to in the appellant’s outline of argument at [36]:
Russo sought to cross-examine Prestige Formula’s Mr Newman and Maranello’s Mr Kench to elicit evidence of the cause of the gear box and clutch problem, which Russo had identified in evidence as being a fault with the electronic motor (more technically called an actuator) that pushed the gear in.
As to Mr Newman, during the course of his cross-examination, counsel for Russo referred him to an email which dilated upon technical aspects of the gear selection system and asked “Does that mean anything to you?” The witness replied “Bits and pieces, I vaguely understand the system but I am not fully trained enough.” Counsel then sought to put a question seeking opinion which was objected to and disallowed by his Honour.
I consider that his Honour was plainly correct in his ruling. Counsel did not attempt to put any further questions of the same nature to him and did not seek to attempt to qualify the witness to answer such questions.
As to Mr Kench, during the course of his cross-examination,[71] counsel for Russo referred him to a repair order and attempted to ask him questions as to its interpretation. His Honour ruled that counsel was entitled to ask the witness as to events but that the document was in evidence and was to be interpreted by the Court rather than by the witness. I consider that it is not established that his Honour was incorrect in his ruling. I reject this ground of appeal.
[71] T909.
Conclusion as to the appeal
I have now dealt with and rejected all of the grounds of appeal. Accordingly, I consider that the appeal should be dismissed.
THE CROSS APPEAL BY MARANELLO
The cross appeal by Maranello Imports Pty Ltd seeks orders to be made only if this Court should allow the appeal by Russo. Since I consider that Russo’s appeal should be dismissed, I would propose that the cross appeal be dismissed, subject of course to the question of who should pay the costs of the cross appeal.
THE NOTICE OF CONTENTION FILED BY MARANELLO

Since I consider that Russo’s appeal should be dismissed, it is unnecessary to consider the notice of contention filed by Maranello Imports Pty Ltd.
ORDERS
I would propose the following orders:
1The appeal be dismissed.
2The cross appeal be dismissed.