Spearman, G.S. v Alfarm Australia Ltd

[1990] FCA 504

IN THE FEDERAL COURT OF AUSTRALIA	)QLD G93 of 1989
QUEENSLAND DISTRICT REGISTRY	)
GENERAL DIVISION	1

BETWEEN:  GEORGE SIMON SPEARMAN and DIANE MARGUERITE SPEARMAN

Applicants

AND:  ALFARM AUSTRALIA LIMITED

Respondent

AND:  ALFARM AUSTRALIA LIMITED

Cross-Claimant

AND:  JOSEPH MICHAEL MIZZI

Cross-Respondent

MINUTES OF ORDER

JUDGE MAKING ORDER:	PINCUS J.
DATE OF ORDER:	14 SEPTEMBER 1990
WHERE MADE:	BRISBANE
THE COURT ORDERS THAT:

1.    The trial be adjourned to a date to be fixed by the Registrar.

NOTE:  Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.

RECEIVED

17 SEP 1990

FEDEW OF

IN THE FEDERAL COURT OF AUSTRALIA	)	QLD G93 of 1989
OUEENSLAND DISTRICT REGISTRY	1
GENERAL DIVISION	)

BETWEEN: GEORGE SIMON SPEARMAN and

DIANE MARGUERITE SPEARMAN

Applicants

AND: ALFARM AUSTRALIA LIMITED

Respondent

AND: ALFARM AUSTRALIA LIMITED

Cross-Claimant

AND: JOSEPH MICHAEL MIZZI

Cross-Respondent

CORAM: PINCUS J.

PLACE: BRISBANE

m: 14 SEPTEMBER 1990

REASONS FOR JUDGMENT

This is a claim for damages under the Trade
Practices Act 1974 relating to the acquisition of a cane

harvester. A defence and cross-claim have been filed. On 23

July 1990, an order was made that the applicants' claim be	tried on Friday, 3 August. On that date, the applicants
appeared by counsel (W. Pope) but there was no appearance by or on behalf of the respondent, which is in receivership.
The applicants have adduced evidence that, about the end of 1988, and again on or about 13 March 1989, one Grant, on behalf of the respondent, made oral and written representations concerning the harvester. They were that it would outperform all opposition harvesters, would cut green cane all day and that it conformed to the description in a brochure delivered by Grant. The applicants' evidence is that all these representations were untrue.
I have noted that the case foreshadowed in the defence appeared to imply that the respondent was not prepared to assert that the harvester was performing satisfactorily when sold. Paragraph 3(b) of the defence asserts that Grant told one of the applicants "that the respondent had overcome a lot of early problems although the hydraulics were in the course of being revamped and that the respondent was confident that the engineers will successfully deal with this problem".
However, there is no evidence called on behalf of the respondent, and I have only the applicants' version, supported by other witnesses, on the basis of which a finding is inevitable that the respondent breached the Trade Practices
&.& in the respects alleged in the statement of claim. On the
evidence, it appears that the harvester was still in the
competing harvesters in that it worked only intermittently, development stage, its performance being well below that of
with frequent breakdowns. Further, I accept that, as the applicants allege, it did not conform, even substantially, with the description in the brochure.
The question remains : what damages should be awarded? The applicants did not buy the harvester from the respondent, but took it under a hire purchase agreement with
Commonwealth Development Bank of Australia. There is said to be a true copy of that agreement exhibited to Spearman's affidavit but it appears to be incomplete: it is certainly hard to read. However, it appears that the cash price was $290,000, of which $60,000 was provided by $15,000 paid as deposit and $45,000 for a machine traded in. That left $230,000. But the rent was $336,894, payable by thirty instalments of $11,229.80 each, payable monthly beginning in August 1989. There were no instalments payable other than in harvesting season - i.e. from August to January inclusive. The last instalment falls due, under the agreement, in January 1994.
The hire, which apparently commenced on 27 April 1989, gave the applicants value only until about August 1989, when they ceased to use the machine because it would not work well enough. However, the applicants completed their obligations for the 1989 season using another machine, but at additional expense. The applicants have not harvested during
used work have made other arrangements. the current season and the growers for whom the applicants
The principal element in the claim is based on the hire purchase agreement. The applicants claim back the $60,000 credited towards the purchase, plus the total amount payable under the hire purchase agreement, $336,894, making a total of $396,894. There is evidence from a Mr. Butcher, who is a representative of a manufacturer of sugar cane harvesters, to the effect that there is no market for the machine due to its condition and its "performance history".
Nevertheless, the amount claimed seems to me overstated. As I have mentioned, the agreement makes provision for monthly payments during the harvesting season up to January 1994: only eight of the thirty payments have so far fallen due. Under clause 4 of the hire purchase agreement, the applicants are entitled to determine the hiring by returning the goods to the owner at its office in Brisbane. The effect of doing so would be that the bank would be entitled to recover, not the whole sum which would have been payable, but a lesser amount. This amount is ascertained in accordance with clause 3 of the agreement read with s.15 of
the Hire Purchase Act 1959 (Q.). It will be noticed that s.15
introduces the concept of the "net amount payable" which is defined in sub-s.2 and in turn uses the expression "statutory rebate" defined in s.2(1).
It would be possible to make the calculation and give judgment accordingly. But it appears to me that the applicant's counsel should be given the opportunity of making further submissions on the point. Further, Mr. Spearman's affidavit implies that as at its date (26 July 1990) he still had possession of the harvester. There is no statement as to whether the bank is in fact insisting upon and receiving the payments, and to give judgement in accordance with the method I have mentioned - i.e. making a calculation in accordance with the Act - might be unfair to the respondent. This is so because there is a statutory implied condition that the goods are of merchantable quality (s.5(2)) and a further statutory condition which might be of assistance to the applicants against the bank (s.5(3)). It may be - there is no statement either way - that the applicants have raised these matters against the bank. I am told nothing of the applicants' dealings with the bank or whether they have had any since the hire-purchase agreement was made.
It is clear, on any view, the amount ($336,894) claimed against the respondent as being the total of instalments under the hire purchase agreement is not recoverable. But I am unwilling to give judgment for the lesser sum which the Hire Purchase Act makes recoverable by the bank, because even that might be unfair to the respondent.
The other substantial claim is for loss of profits, calculated on the assumption that the applicants will lose $61,494.72 over the next five years. Again, it appears to me
that giving judgment on this basis might be unfair to the respondent, for that prima facie sum might well be reducible.
I am not told whether the applicants propose to obtain another
machine and go back into business; there is no information on that subject, nor on the question whether the applicants have used, or propose to use, the time saved in not harvesting.
I propose to deliver these preliminary reasons and adjourn. The applicants may wish to adduce further evidence or make submissions, or both. If they do not, then I shall decide the matter as well as I can on the present evidence. Evidence may be given on affidavit and I will accept written submissions.
The order will be that the trial is adjourned to a date to be fixed by the Registrar.

I certify that this and the five preceding pages are a true copy of the reasons for judgment herein of his Honour Mr. Justice Pincus.

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Date /4( ' 1 i'f 70.