The Switch Décor Company Pty Ltd v Ganjekar

[2016] NSWDC 123

District Court

New South Wales

Medium Neutral Citation:

The Switch Décor Company Pty Ltd & Anor v Ganjekar [2016] NSWDC 123

Hearing dates:

21-24 March 2016

Date of orders:

01 April 2016

Decision date:

01 April 2016

Jurisdiction:

Civil

Before:

Neilson DCJ

Decision:

Verdict and judgment for the plaintiff, the Switch Décor Company Pty Ltd, against the defendant for $30,780.84

 

Verdict and judgment for the defendant against the plaintiff, Victoria Rydstrand

 

Defendant to pay the costs of the Switch Décor Company Pty Ltd

 Plaintiff's costs in these proceedings include the costs of the summons filed by the defendant seeking a transfer of these proceedings from the Local Court at Murwillumbah to the District Court at Sydney

Catchwords:

CIVIL – Torts – Negligence – Defendant held himself out as a “professional engineer” – Defendant had a tradesmen’s qualification as a fitter and first class machinist – Meaning of “engineer” and “professional” considered – Defendant expected to have university qualifications if holding himself out as a professional engineer – Defendant held to that standard of care – Whether plaintiff company relied on defendant’s expertise – Plaintiff relied on defendant’s representation that a flatbed printer had the capacity to print the plaintiff’s range of products – It did not have that capacity – Defendant liable for losses incurred by plaintiff company to the extent they were established by the evidence

Legislation Cited:

Apprenticeship and Traineeship Act 2001
Tradespersons' Rights Regulation Act 1946

Cases Cited:

L. Shaddock & Associates Pty Ltd v Parramatta City Council (1981) 150 CLR 225
San Sebastian Pty Ltd & Anor v The Minister Administering the Environmental Planning & Assessment Act 1979 (1986) 162 CLR 340; [1986] HCA 68
Smith v Bush [1990] 1 AC 831

Texts Cited:

Francis Trindade, Peter Cane and Mark Lunney, The Law of Torts in Australia (Oxford University Press, 4th ed,2007)

Category:

Principal judgment

Parties:

Victoria Rydstrand (1st Plaintiff)
The Switch Décor Company Pty Ltd (2nd Plaintiff)
Sayeedprasad Ganjekar (Defendant)

Representation:

In person (1st Plaintiff)
Ms V Rydstrand (2nd Plaintiff)
Mr M Davis (Defendant)

File Number(s):

2014/47726

Publication restriction:

No

Judgment

1. HIS HONOUR: The current proceedings were commenced by a statement of claim filed in the Local Court at Murwillumbah in 2014. Subsequently, the defendant filed a summons in this Court at Sydney asking to transfer the Local Court proceedings to this Court. That relief was granted and the matter was transferred to this Court but no application was made for the venue to be at Lismore and the venue stayed in Sydney, the place at which the summons had been filed. It appears that the plaintiff may have been unaware that proceedings could have been transferred to Lismore.

2. There are two plaintiffs. The first plaintiff is Victoria Rydstrand. The second plaintiff is the Switch Décor Company Pty Ltd. Ms Rydstrand has been the director, secretary and principal shareholder of the second plaintiff since its incorporation on 25 March 2010. The first contact with the defendant was in August 2010 when, according to an agreed fact:

"The defendant's first contact with the first and second plaintiff was made in or around August 2010 through the 'getafreelancer' website, and by way of a bid by the defendant for the project titled 'Amendments to Simple Product Design' and listed under the profile ID name 'decorbrand'".

Very shortly thereafter, it was disclosed to the defendant that the principal behind the name 'decorbrand' was the plaintiff company, because the defendant was required to enter into a non-disclosure agreement with the plaintiff company. In other words, very early in the relationship between the defendant and the plaintiffs it was disclosed to the defendant that the person with whom he was engaging was the plaintiff company rather than Ms Rydstrand personally.

3. The second plea filed by the defendant is this:

"The Defendant admits para 2 and says the Second Plaintiff is the only proper Plaintiff in these proceedings. The defendant says, further, that the Second Plaintiff is insolvent."

The fact that the second plaintiff might be insolvent is immaterial. However, the first sentence of that plea is a valid defence. The first plaintiff, Ms Rydstrand, ought not to have been a plaintiff in the proceedings. However, noting turns on that except as to the nature of the relief to be granted if the plaintiff company be successful and perhaps as to questions of costs. I leave such considerations to the end of this matter. I shall endeavour hereafter to refer to the second plaintiff (the company) merely as “the plaintiff” and I shall merely refer to the first plaintiff as Ms Rydstrand.

4. The background to the current proceedings is set out in Ms Rydstrand's affidavit sworn on 16 February 2015, which is exhibit A. That background is this:

"2 The first plaintiff, Victoria Rydstrand, has been producing and importing a variety of products for wholesale and retail gift markets over the period 2007 to date.

3 One of the product lines produced by the first plaintiff as a sole trader during this period is a range of Switch Décor products designed by Victoria Rydstrand and produced in timber, stone, cane and bamboo by manufacturers based in Vietnam and Thailand.

4 During the period 2009 to 2010 the first plaintiff developed a business plan to further her range of Switch Décor products and:

(i) Develop and produce a switch cover product range for sports fan and souvenir merchandise markets, including NRL, AFL and other club teams under their respective licensing programs.

(ii) Produce and sell Switch Cover product range to consumers and wholesale giftware, home décor and lighting markets[.]

(iii) Establish a model business operation for personalised 'print on demand' services for licensing/franchising opportunities[.]

5 A two-piece switch cover for various light and power point configurations was designed by the first plaintiff in 2010 for surface decoration, including sublimation printing.

U.S[.] based product manufacturing engineer, Terry Traser, was engaged by the first plaintiff in or around January 2010 to prepare drawings, prototypes and advise upon product manufacturing. The first plaintiff collected prototypes from the U.S[.] in or about March 2010.

6 The Switch Décor Company Pty Ltd was incorporated on or about 26 March 2010 to provide for business aims (ii) and (iii) (in paragraph 4 above):

(i) Manufacture switch décor range of sublimation blanks (blank switch covers);

(ii) Establish a model personalised printing business for switch décor products with the purpose of developing a licensing/franchise operation, including the supply of printing equipment, switch décor blanks, collection of 'switch décor' graphics, switch décor merchandising and POS materials;

(iii) Sell switch décor products to consumers and wholesale customers through a website, including 'print on demand' services whereby customers could upload images and purchase personalised switch décor through the SDC website.

The costs and expenditure of establishing the model Switch Décor business operation including produce manufacturing and marketing expenses to be funded by Victoria Rydstrand, and repaid by the Switch Décor Company Pty Ltd through sales and/or income derived from its above business activities.

7 Business plan for the sale of sports and promotional switch décor merchandise was a further switch décor business to be established."

5. Unfortunately Ms Rydstrand's affidavit does not set out in any detail her background other than that which can be gleaned from what I have just quoted. During the course of the hearing, her background was given to me in greater detail, but unfortunately I do not recall whether that was in evidence or during submissions. Suffice it to say that there is no suggestion and no evidence that Ms Rydstrand has any background in engineering. Rather her background has been, in recent times, that of an entrepreneur.

6. As can be gleaned from the agreed fact which I quoted earlier, the first contact between the plaintiff and the defendant was when the plaintiff placed on the website an electronic advertisement calling for a bid. The advertisement was posted by decorbrand, which was clearly an alias used by Ms Rydstrand on behalf of the plaintiff company. The project description was this:

"I have drawings for a product that requires minor amendments and a variation of same. Very simple task.

I would like to connect with an experienced professional who can deliver 3D drawings solid works or other.

Finalised amendments would be a fast and very easy task for a professional in this field of expertise. I would require drawings (including revisions) within five days of awarding projects. Please only place a bid if you have the time and expertise.

If experienced in the field of giftware, you will know of suitable materials and manufacturers to produce these products. You must be able to provide advice on suitable quality and cost competitive manufacturers for these giftware products.

The design drawings will be posted via the PMB. Thank you for reading."

There is then a heading specifying what skills were required. The following was then stated: "CAD/CAM. Manufacturing. Manufacturing Design. Product Design." I should indicate that the evidence discloses that the initials CAD refer to “Computer-Aided Design”, the initials CAM refer to “Computer-Aided Manufacturing”. There was also reference in the evidence to CAE which the evidence discloses means “Computer-Aided Engineering”.

7. On 10 September 2010 the defendant posted a reply to the plaintiff's advertisement; it is document 3 in exhibit D, a notice to admit facts and authenticity documents. It is accepted as an authentic document. It says this:

"G'Day decorbrand. I am Sayee, Freelance Design Engineer, based in Sydney, Australia with over 15 years of design and manufacturing experience. Based on your project description, I think I can make contribution to your product idea and direct you towards prototyping and manufacturing. I approach product development as a business which has associated financial investment risks. First, product development and 3D CAD is difficult and expensive, if it wasn't, everyone would be doing it and succeeding. Gaining your confidence and trust that I am qualified and committed to your objectives and goals is important to me and I have dedicated my services to building such trust. I use tools including: brainstorming, conceptual sketching, colour and form studies, 3D photo-realistic-hand-drawn, colour marker rendering, mock ups, model making, prototyping and focus testing. These processes can be applied concurrently or chronologically. Phases 1-2-3 Conceptual Dev. and Feasibility Analysis Phases 4-5-6 Design and Engineering/3D Development Phases 7-8-9 Pre-Production Dev. 3D/CAD Prototype Phases 10-11-12 Production Dev.-Tooling and Assembly Post Production Support ECO's, Quality Control[.]

My strength is design for Human factors insight, logical user interface design and an eye for universally appealing form design is the bonus you get while working with me. My goal is to work with you to reduce your piece price, tooling and manufacturing costs, while increasing quality perceived value. I have mastered materials and manufacturing processes to explore and deliver the best possible manufacturability, assembly design, SolidWorks, 3D CAD configuration for your product or package. If you succeed, I succeed. I have built my reputation on it. Payment will be asked once you are 110% satisfied with my services. I'll continue to deliver until you are satisfied You have nothing to lose, 'THAT'S MY PROMISE TO YOU'[.] Regards, Sayee Ganjekar[,] Wildfire Design Studio."

8. Also in evidence is a "blurb" posted by the defendant on the website that was in use between August 2010 and December 2012. In it the defendant describes himself as the Wildfire Design Studio and says that he is, "Your one-stop idea shop for Industrial Design, Engineering, CAD CAE CAM drawings. Prototype and Branding consulting for almost any type of 3D product, device or machine." Later the blurb says this:

"Wildfire Design Studio is a full service engineering company offering a wide variety of solutions and services to a broad range of industries. We provide talented specialists with applied experience and an excellent command of the tools of the trade. Above all, we partner with you to engineer answers."

9. In his primary affidavit the defendant said this is par 2: "I am a mechanical and product design engineer, with more than 16 years' experience in product design in Australia. I have a diploma in mechanical engineering, specialising in product design from the Government Tool Room Training Centre in Bangalore, India."

10. Subsequently there has been a dispute between the parties as to whether the defendant is entitled to call himself either an engineer or a professional. I infer that the plaintiff's native land is India. He obtained his primary qualifications in that country. He was then permitted to migrate to Malaysia as a skilled migrant and worked in that country as a tooling engineer before obtaining a visa to enter Australia as a skilled migrant. After being admitted to Australia in August 2001 the Commonwealth Government and the New South Wales Government recognised his qualifications. Annexed to exhibit 3, an affidavit of the defendant sworn on 21 March 2016, is a certificate issued on 20 February 2002 by the Commissioner for Vocational Training of this State pursuant to the provisions of the Apprenticeship and Traineeship Act 2001. It states that the defendant "has satisfied the requirements for trade recognition, has been awarded an appropriate qualification by a registered training organisation and is adequately trained to pursue to the trade of: Engineering (Mechanical)." That is a tradesman's qualification. On 22 February 2002 the Commonwealth Government issued to the plaintiff an Australian-Recognised Trade Certificate pursuant to the Tradespersons' Rights Regulation Act 1946. That recognises the defendant as having the qualification of "Fitter and First Class Machinist". That also is a tradesman's qualification.

11. Subsequently the plaintiff obtained what might be described as a testamur from the "Almeda University" conferring the degree of bachelor of science majoring in mechanical engineering technology. That degree appears to have been awarded with a distinction. That testamur bears date 12 October 2010. There is a further testamur bearing date 22 January 2011 conferring the degree of master of science with a major in mechanical engineering technology, again awarded with a "distinction".

12. Prior to the granting of those testamurs the defendant applied to Engineers Australia for membership of that Institution in the professional engineer category. Engineers Australia replied to the defendant's application on 24 June 2010. The substance of the reply is this:

"Engineers Australia has assessed your application as not demonstrating Stage 1 competency and eligibility of membership Engineers Australia in any occupational category.

The assessment focused on your whole career, as set out in your application, as well as your qualifications. As you know, the academic pre-requisite for a professional engineer in Australia is a four year Bachelor of Engineering degree. An accredited professional engineering degree program develops breadth of understanding and outlook, an ability to engage with a wide range of technologies and applications, with sufficient depth in one or more specific areas of practice. This brings to the fore the broad areas of study missing from the evidence of your underpinning knowledge. The Diploma in Tool and Die Making which you have completed from GT&TC does not meet the academic pre-requisite for Professional Engineer or Engineering Technologist or Engineering Associate and regrettably, the evidence provided in your CV and narrative does not bridge the educational gap for any of these categories.

I would encourage you to pursue further engineering studies at TAFE or University, which you could perhaps be granted advanced standing."

13. Subsequently, of course, the plaintiff received the two testamurs which I have described. However it would appear to this Court that the testamurs are meaningless documents, which are merely documents that were paid for. Ms Rydstrand swore a further affidavit on 8 March 2016, it is exhibit C. Exhibit 12 to that affidavit is an online advertisement for Almeda University. The relevant part of the advertisement says this: "Get your education at your own pace! Affordable accredited degrees on your own time! No studying. No high fees. No attendance. No exams." The defendant, in his oral evidence, admitted that all those advertised matters were correct. He paid US $800 for his bachelor’s degree, US $920 for his master's degree. He submitted to the Ameda University all earlier qualifications and a description of his experience, over the years and was asked to attend online video courses from the Massachusetts Institute of Technology before being awarded the degrees to which I have referred.

14. The inference to be drawn from his is that the degrees were obtained over a period of weeks or a few months rather than over the usual four years for an engineering degree and perhaps a further year or two for a master's degree. Indeed the defendant admitted that profile placed by him on LinkedIn showing that he had obtained his bachelor's degree from the Almeda University during the period from 2004 to 2010 and his master’s degree between the period from 2007 to 2011 may well be misleading because it would suggest to a reader in Australia he actually attended university during those periods of time when that was not the reality. The plaintiff said that the periods of time represented the periods of time over which the university had assessed his career experience, entitling him to the degree which this university awarded. I am afraid that the university qualifications are nothing but a sham.

15. The defendant in essence is a tradesman but represented himself to the plaintiff as a professional engineer. However, one does not need to be a member of the Institution of Engineers, Australia which is known also as "Engineers Australia" to be a professional engineer. Language can be ambiguous. The fifth edition of the Shorter Oxford English Dictionary tells me that the English word "engineer" is derived from old French which is derived from medieval Latin, "ingeniator", derived from a medieval Latin verb, "ingeniare". That verb was derived from the classical noun, "ingenium"; the fourth meaning of which, according to the Oxford Latin Dictionary, are mental powers, natural abilities, talent, intellect or the like with the implication of excellence of such powers, abilities or attributes. By metonymy, the noun indicated that a person having "ingenium" had good mental powers. The noun "ingenium" is derived from the verb "gigno, gignere, genui, genitum", which means primarily to bring into being or to create; when used of a male it means to beget; when used of a female it means to conceive or to give birth. The seventh meaning of the verb, according to the Oxford Latin Dictionary, is "to produce by intellectual means". One can see how the Latin noun acquired its extended meaning and how it forms the basis of the word "engineer".

16. Initially, in English an engineer was a designer and constructor of military works or engines of war. Engineers are still a branch of the army. The word was then applied to the designer or maker of engines but there, of course, is a qualitative difference between a person who designs an engine and person who makes an engine. A person who makes something merely follows somebody else's plans. The next meaning of the English word "engineer" is a civil engineer; a person whose occupation is the design, construction and maintenance of works of public utility such as roads, bridges, canals and that leads to the extended meaning of a person who works in any branch of engineering especially as a qualified professional.

13. However the word "engineer" has other meanings as well, for example, in America a train driver is called an engineer because he maintains or runs the train's engine. My late father was a member of the Australasian Society of Automotive Engineers. He did not design automobiles or engines as such but he was a motor mechanic specialising in auto electrics. The Australasian Society of Automotive Engineers was in fact the name of the trade union to which motor mechanics and auto electricians belonged. They worked on engines of automobiles and therefore described themselves as automotive engineers. The word "engineer" does not have any fixed meaning in English.

14. Likewise the word "professional" has a limited historical use but has expanded dramatically over my lifetime. "Professional" originally meant a person who took vows entering a religious order, vows of poverty, chastity and obedience to be a member of the Benedictine order, the Cistercian order, the Franciscan order, the Dominican order, et cetera, either as a monk or a nun. That led to the word "profession" to mean the same as a "vocation" or "calling". Originally "vocation" or "calling" was one requiring advanced knowledge or training in some branch of learning or science, generally, law, biology or medicine. When I was at law school in the 1970s it was accepted that the four professions were theology, medicine, law and architecture. However, by analogy, dentists and pharmacists were recognised as professionals just like medical practitioners. The debate, when I was at law school, was whether accountants ought be recognised as professional persons but there is no longer any dispute about that. By analogy, with architecture, one could see that civil engineers would be described as professional persons and that there are clearly other sorts of engineers who have special training, special learning in science which would admit them to being called a professional.

15. However, these days, we have so debased the word "profession" that one gets constructions such as a professional football player, a professional plumber and a professional journalist and the like. The word is now apt to refer to any particular trade, calling or occupation by which somebody gains their usual living. I have no doubt that the defendant was entitled to refer to himself as an engineer and as a professional engineer. Equally, no doubt the vast majority of persons in this country would have been misled, by the use of such terminology, into believing that the defendant had university qualifications as a mechanical engineer and had studied mechanical engineering over a period of at least four years at a university in Australia or the equivalent, not merely have bought a testamur for a few hundred dollars.

16. However, relevantly, for the purpose of this case, the defendant held himself out as a professional engineer and accordingly must realise that the expertise one would expect of a professional engineer is the standard to which he should be held. However, not much turns on that, because, ultimately, the defendant did not disclaim responsibility for his opinion as to a certain machine.

17. On 8 October 2010 there was a telephone call made by Ms Rydstrand to the defendant in which she gave him a brief description of the work required of him and to obtain his agreement that the copyright in all designs, drawings, et cetera, would remain the property of either the defendant or Ms Rydstrand and that the defendant would enter into non-disclosure with agreement plaintiff company. The non-disclosure agreement bears date 10 October 2010 but was in fact executed on 25 October 2010. That is an agreed fact in these proceedings. That agreement is clearly between the plaintiff company and the defendant. Clearly, by that stage, the defendant knew that he was dealing not with "decorbrand", or with Ms Rydstrand personally, but with the plaintiff company.

18. There was a further telephone conversation between the plaintiff and the defendant on 25 October and that is set out in par 11 of Ms Rydstrand's primary affidavit, that of 16 February 2015. Again, it need not be repeated. On 28 October 2010, there was an email transmission from the plaintiffs to the defendant which enclosed pictures relating to the product being developed. I shall not cite that email in full but merely the penultimate paragraph which in essence tells one what was occurring:

"I am sure this and the following emails with attachments will give you a firm understanding of what I am trying to achieve. I hope to speak with you or chat when you have looked these over."

23. On Tuesday 2 November 2010, the defendant sent an email to Ms Rydstrand at 12.03am. In it he referred to an earlier discussion conducted on Skype in which the project had been discussed. The email continues thus:

"Based on our discussion today, I will do the three face plates for switch. I'll send you 3D SolidWorks native files, SW drawing files, PDF drawings, 3D pdf of parts. And any minor adjustments. To complete this I am estimating four hours and a total of $140 at the rate of $35. Furthermore, I will assist you in manufacturing stages in selecting plastic materials to get great results of parts. If you want me to proceed with the design, Please reply, and Send the RP parts to inspect to below address."

There was then a telephone call between the parties which is recorded in par 13 of Ms Rydstrand's primary affidavit in which her concern appears to have been mainly about copyright. At 3.51pm there was a further email sent by Ms Rydstrand to the defendant in which she advised him that she would be sending to him, by post, certain parts and notes for discussion which he should have by the following Thursday. It would appear that Ms Rydstrand had a great trust in the power of delivery of Australia Post to dispatch something on a Tuesday from Pottsville and expecting it to arrive on the next Thursday in Sydney.

24. The defendant sent an email in reply at 8.31pm in which he asked whether his quote was acceptable and if so, if he could proceed with the CAD work. Sometime around, but hardly before, 4 November the defendant received from the plaintiff prototype switch cover parts and pdf drawings and sample products. On 8 November 2010, at 11.41pm, the defendant sent an email to Ms Rydstrand. It says this:

"Attached is concept of Switch décor. Idea being is to take out the HPM or CLIPSAL face plate and replace with Décor Face plate[.] I have done basic NRL face plate for HPM Switch.

This Decor face plate can be moulded in plastic same as HPM or CLIPSAL face plate. In edrawing, you can explode and see how its[sic] fits, you can do cutaway and how it utilises HPM edge to click on the Inner frame.

Please let me know what you think about the idea. If you agree with it, I'll proceed with the rest of the Switch models."

The defendant then invited a reply. Annexed to that email was a photograph of a light switch cover. The whole of switch faceplate has been coloured blue and on it has been printed, or otherwise somehow made out, the official NRL logo in white, green, black and yellow. The important thing to note is that the painting or colouring of the switch cover extends to the whole of the faceplate; that is, not only the top flat surface but also the sides down to the very edge of the faceplate.

25. After receiving that Ms Rydstrand made a further telephone call to the defendant. That telephone call is deposed to par 16 of her primary affidavit:

"On 9 November 2010 the first plaintiff telephoned the defendant to discuss the NRL product concept and offered the defendant further works. As a result of these discussions the defendant and the first plaintiff extended the number of product designs from three as set out in the defendant's quote dated 2 November 2010 to a total of seven, on the same terms as set out in the defendant's 2 November 2010 quote and for the combined agreement price of $345."

26. These early transactions between the parties are important to note because they set out how the relationship between the plaintiff and the defendant developed. More input was made by each of Ms Rydstrand and the defendant and more work was done by the defendant for the plaintiff. On 15 November 2010, the plaintiff advised the defendant by email that $300 had been deposited in his account for the continuation of the "project".

27. Arrangements then were made for Ms Rydstrand and the defendant to meet at the Swiss Grand Hotel in Sydney. I understand that hotel to be in Bondi. According to the plaintiff, the meeting was held on 6 December 2010. According to the defendant, it was held on 3 December 2010. Nothing hangs on that discrepancy. Ms Rydstrand refers to this meeting in par 19 of her primary affidavit:

"Following receipt of the prototypes, the defendant and Victoria Rydstrand arranged to meet at the Swiss Grand Hotel on or about December 6 2010. The purpose of the meeting was to discuss the 620 prototypes, and designs to be prepared...

At the meeting, the defendant and I discussed the 620 prototype, and both prototype covers from previous US engineer. Looking at the two piece prototype, the defendant said I should produce that product as a single piece cover. We looked at a few sample switch plates from the USA, and had a discussion about surface printing covers with sublimation equipment. The defendant said, 'you can also print the covers with a flatbed printer.' The defendant then told me he had only recently heard about flatbed printers, and [would] forward more information to me by email.

For reference and 'fit' purposes I provided the defendant a bagged set of Clipsal and HPM switches, having various configurations, together with a variety of decorative switch plates obtained during my previous visit to the USA."

The defendant himself described this meeting in pars 11 to 17 of his primary affidavit of 14 February 2015. Unfortunately, that description provides no direct evidence of the conclusions which the defendant believed to be the effect of the meeting. For example, the defendant does not provide or attempt to provide the substance of any conversation. In par 15 he says this:

"I provided information, advice, recommendations and assistance to SDC [the plaintiff company] in the attempted development of the Product Range in good faith, but at no time provided any guarantee, warranty or categorical assurance or promise that the Product Range SDC was proposing to develop and manufacture could be successfully produced, marketed or sold or that the Product Range would be a commercial success. I could not and did not guarantee that the Product Range could be successfully produced or would be a commercial success on the open market."

There is no suggestion by Ms Rydstrand that the plaintiff did give any guarantee, warranty or categorical assurance about anything. Largely, what is deposed to by the defendant is his impression or version of what he thought was happening at the time.

28. Paragraph 20 of Ms Rydstrand's primary affidavit says this:

"By 15 March 2011, the defendant had completed six of the agreed seven product concept design drawings and obtained preliminary quotes for the production of moulds and switch décor parts from China based producers, previously used by the defendant's other clients, 'The Pastoral Group, Jianjun Hardware'."

The evidence relating to quantum has a number of invoices from "Pastoral Group" which includes at least two companies, Qing Dao Pastoral Technology Co Limited and Qing Dao Golden Rainbow Trading Co Ltd. Jianjun Hardware is also more fully described as Jianjun Hardware Fittings Company.

29. In March 2011, Ms Rydstrand travelled to China. According to the plaintiff that was on 19 March 2011. According to the defendant, it was on 18 March 2011. Again, nothing turns on that discrepancy. The defendant was subsequently to go to China but it is clear from email transmissions that the plaintiff must have been aware, before Ms Rydstrand set out for China, that he was himself proposing to travel to China. There is in evidence an email sent on 17 March 2011, at 10.01pm, by Ms Rydstrand enclosing three black and white images and a couple of coloured images that the defendant might wish to use for mock ups "to take to China". However, this might also be a reference to things that she wished to take to China because the email continues thus:

"Please remember I will want to show

(a) 140 x 100 standard size (I have these images already)

(b) the longer 200 x 100 (I don't think we finalise that length) standard ie without insert area

(c) longer plaque 220 multiplied by 100 with insert cavity provision 4 (acrylic\3d resign insert)."

I omit a paragraph in which she refers to some other design or product, but then there is reference in the penultimate paragraph to her having found some fridge magnet suppliers on the internet and raising a query as to whether the Pastoral Group might be able produce such items.

30. On 23 March 2011, whilst Ms Rydstrand was in China, she sent a lengthy email to the defendant setting out what she had done and what she was about to do in China. In the first paragraph, she stated that she had completed "checking out" factories and manufacturers in Guangzhou where she had a reliable representative who could coordinate shipping, communications and quality control. She described that man as an engineer and the general manager of a furniture company. In the second paragraph Ms Rydstrand tells of meeting a manufacturer of sublimation tiles, for inserts, that I understand to be part of sublimation printing. Ms Rydstrand had obtained samples of each size and shape to show to the defendant. She had also met with another sublimation company who could make sublimation tiles and a cover, if drawings were supplied to them. She had also visited a metal plate factory which she believed could provide filigree metal embellishments to stick on to switch covers. She had also met the manufacturer of acrylic magnets which could manufacture to order with, no doubt, "décor" printed on the magnets and a mould would cost $400. There were other gift items which she discusses in the paragraph concerning that manufacturer. In the sixth paragraph she recorded meeting up with resin and wood manufacturers but they were "unimpressive". However, she found others on a website which she believed were more promising. In the penultimate paragraph she pointed out that she was going to Qingdao on the following Sunday, which would have been 27 March 2011, to look at arrangements for printing and packaging, no doubt with the Pastoral Group. She then said that she would let the defendant know how she would get on after she met up with Shirley whom the evidence discloses was the, or a, contact person with the Pastoral Group.

31. When she was in Qingdao Ms Rydstrand inspected the Pastoral Group's factory and an associate, IMD printing service, transfer printing factories and other manufacturers of sublimated gift and home wares. I assume that "sublimated gift and home wares" were gift and home wares which had been the subject of sublimation printing. IMD is an acronym for “In-Mould Decoration” and there is reference in the evidence before me to "IMD Company" which I assumed is the In-Mould Decoration Company. In-mould decoration and sublimation printing are alternative ways of printing or otherwise decorating switch covers, as I understand it. According to the defendant's affidavit, Ms Rydstrand returned to Australia on 30 March 2011 and she spent some time in Sydney and did not arrive at her home in Pottsville until 3 April 2011.

32. The notes I have made, after reading the voluminous documentation before me, remind me of a number of emails between 5 April 2011 and 10 April 2011. A number of those emails concern a patent application and others concern other material but none of those emails appears to be directly relevant, other than to show that significant work was being done by the defendant for the plaintiff and much work solicited from the defendant by the plaintiff.

33. There was a further telephone call between the plaintiff and the defendant on or about 8 April 2011. Ms Rydstrand's primary affidavit says this:

"28 On or about 8 April 2011 the first plaintiff had a telephone conversation with the defendant. The first plaintiff said words to the effect: 'After what I found in China, I still think switch décor products are best produced for sublimation printing.'

The defendant replied and said words to the effect, 'the flatbed printer would be quality print and look for switch décor, you should look at the flatbed printer before you decide. I sent you the link before.'

29 On or about 12 April 2011 the defendant informed Victoria Rydstrand he had made contact with a flatbed printer company on Skype and will be sending an email with details.

30 13 April 2011 the defendant sent an email to Victoria Rydstrand containing a list of BYC printers and prices. Following receipt of the defendant's email the first plaintiff searched for flatbed printers for sale in Australia, without success.

31 On or about 14 April 2011 the first plaintiff, by telephone, informed the defendant, 'there are no flatbed printers anywhere in Australia, or New Zealand, and I am not prepared buy a machine but I haven't seen or inspected, and can't test to see how, and if it can print the whole surface of switch décor products'."

34. The email referred to in par 30 of Ms Rydstrand's primary affidavit, which I have just quoted, is an admitted and authentic document; it is the document numbered 11. BYC is an acronym for “Bo Yi Chuang” and refers to products manufactured by Bo Yi Chuang Science and Technology Development Company Limited, China. The email on 13 April 2011 sets out the costs of various types of BYC flatbed printers and encloses a description of the machines provided by the manufacturer, the contact for which manufacturer is generally known as Cloudy Chen. The manufacturer's premises are in the city of Kunming in Yunnan Province in the People's Republic of China.

35. On or about 15 April 2011, after the last telephone communication which I have quoted from Ms Rydstrand's primary affidavit, the defendant informed Ms Rydstrand that he was going to travel to China for another client and he offered to go to the BYC factory on behalf of the plaintiff to inspect and test the BYC flatbed printer's capacity and suitability for printing Switch Décor products. Ms Rydstrand's affidavit continues thus:

"33 Prior to the defendant [sic] leaving for China, the defendant and the first plaintiff had a telephone conversation about the defendant's printer trial, during which Victoria Rydstrand asked what materials the defendant needed from her and would [be] taking with him for the trial. The defendant confirmed he would be taking Clipsal, HPM and his 620 Switch Décor prototype together with the defendant's graphic images and product files.

The defendant confirmed he would inspect and trial[sic] the BYC printer's capability and suitability [for] second plaintiff's specific printing requirements:

(i) printing of images onto the whole surface of the plaintiff's products,

(ii) high quality print images,

(iii) 'print on demand' capability,

(iv) mass production capability[.]"

36. On approximately 21 April 2011 the defendant went to China. That date can be inferred from the admittedly authentic document numbered 12 contained in exhibit D. On 27 April 2011, a Wednesday, Ms Rydstrand sent an email to the defendant in which she expressed her estimate that on that day he was travelling home from China. The first question she asked of the defendant was whether he got "to trial" [sic] the printer. Ms Rydstrand then refers to having had discussions with Shirley at the Pastoral Group and what she was asking of that manufacturer. Then the email goes on to discuss other items being considered for printing such as phone holders, phone covers and photo frames.

37. On 28 April 2011 the defendant sent an email to Ms Rydstrand. After inquiring about Ms Rydstrand's health the email continues:

"I have reached Sydney today after weeklong travel in China. I have visited Flat bed printer and In Mould Decoration company.

Ms Cloudy Chen given me some sample of prints done on wood, glass, plastic and ceramic tile. They have printed image on Clipsal and HPM covers. I think, this printer has potential in Décor switch cover external look. I'll send you samples they gave me.

Next I have visited IMD plastic moulding company. If the part has the same design in produced in mass production, IMD is the best option. I have sampled part and will pass it to you.

I'll update you with photos tomorrow/Saturday."

Like many of the documents involved of this case, it can be found in two places: as annexure 6 to Ms Rydstrand's affidavit of 16 February 2015 and exhibit D, admitted document 12. One will note that the defendant's email of 28 April 2011 states that the flatbed printer which he inspected in China had potential for printing or decorating switch covers as the plaintiff was attempting to do. Nevertheless he recommended in-mould decoration as the best object if the part were to be mass produced. As I understand it, the plaintiff company's intentions were not to mass produce anything but rather design a varying range of products that could be used according to one's tastes and one's decoration needs and of course one's interest.

38. I turn now to Sunday 1 May 2011. At 1.11pm Ms Rydstrand sent an email to the defendant. It is this:

"How are you going with the final mobile and photo parts, and templates for designers?

I would like to talk to you about the IMD parts and printing, and packaging/shop display options.

If it is okay with you I will call you this afternoon after 4pm."

At 1.14pm on the same day the defendant sent an email to Ms Rydstrand inviting her to "call now". Ms Rydstrand did so. I know, from another email sent at 2.29pm on the same day, that the telephone conversation occurred sometime between 1.14pm and 2.29pm. Ms Rydstrand's version of the conversation was originally set out in par 36 of her primary affidavit. However, a successful objection was taken to most of that part of her affidavit as in essence there was no attempt to state what was actually said but merely an attempt to state the plaintiff's understanding of what the defendant said. However, I granted leave to the plaintiff to adduce the evidence of the conversation orally. The conversation concerned the trial of the BYC flatbed printer. My notes of what Ms Rydstrand said the defendant said are these:

"[It] provided cover over the whole of the product. [There was] photographic quality of printing. It would match your do it yourself printing [requirement]. It was very fast to operate. It printed six or eight products at a time. It printed commercial quantities. [It was] perfect for plastic of switch covers using ADS plastic. [It was] perfect for what we need. It is much better then sublimation printing that [Ms Rydstrand] wanted."

Ms Rydstrand went on to say that the defendant was very enthusiastic about flatbed printing. She also said that he recommended that the plaintiff buy a flatbed printer. Most of what the plaintiff said occurred in that conversation is denied by the defendant. His version was merely that the printer had the potential to print the desired print on demand as required by the plaintiff. The defendant went on to say that at that time he sent the plaintiff what became exhibit 4.

39. Exhibit 4 is materials provided by the Bo Yi Chuang Science and Technology Development Company Limited. The first two pages concern the BYC 168 2.3 flatbed printer. The next two pages concern the BYC 168 3 flatbed printer and the fifth page is a "sample show", a collage of photographs of items printed by the BYC company. In addition to flat surfaces the sample show provides photographs of handbags that look somewhat like Gladstone bags with a printed design on it, a handheld expanding fan which has been printed, round water bottles on which designs have been printed over at least half the rounded surface of the bottle, and printing on golf balls. Those samples suggest strongly that the flatbed printer could print on other than flat surfaces.

40. After this conversation the defendant sent to the plaintiff an email at 8.58pm, which was a resending of the email on 13 April 2011. However prior to that Ms Rydstrand had sent an email to the defendant at 2.29pm inquiring about the printer, whether it was a "three phase piece of equipment". From the material before me, that appears to have prompted the email transmission at 8.58pm. At 9.54pm Ms Rydstrand sent an email back to the defendant. It says this:

"I've looked over the printers. I think we should seek to buy one at the wholesale rate as a test model. I think we may be able to use one of their larger models downstream. They may be willing to sell at wholesale so we can test the print and performance of the machine and their consumables."

The same email then goes on to talk about costs at wholesale rates and ends with a request that the defendant see what he could do to arrange a purchase of a flatbed printer at a wholesale rate in the following week. On 3 May 2011 the BYC company in China generated a pro forma invoice for the supply of a BYC 168 3 flatbed printer which quoted a total cost of USD $6,200 including transportation of the flatbed printer from China to Sydney by sea, stating that delivery would be within three working days of obtaining payment and that payment was to be made through Western Union.

41. On Wednesday 4 May 2011 at 9.57pm the defendant sent an email to Ms Rydstrand answering a question, "How can I print the colour white?" At 11.52pm on the same evening Ms Rydstrand replied to the defendant to this effect:

"After reading that information, I say we just go for the printer. The transparency of the ink will give the near white colour, maybe.

For our products with Jianjun I think we should need a mould for these products[:]

single vert [scil. vertical] plaque,

single picture plaque,

single horiz [horizontal] plaque,

single phone,

double phone,

and the insert, if not included, as part of the above mould. I do not know if there is any limit to the size of the mould just going off the combinations first set out by Pastoral of different size products.

We can then do IMD and acrylic on these.

Would you please get confirmation on what can go in the one mould and price so we can get going."

Clearly, the majority of that email relates to the making of moulds by Jianjun Hardware Fittings Company but the first sentence clearly refers to a positive decision to buy a flatbed printer.

42. There were then negotiations with the BYC company in China which led to the plaintiff company buying a flatbed printer on 18 May 2011. Paragraph 38 of Ms Rydstrand's primary affidavit says this:

"38 In reliance on Ganjekar's printer trial, report and recommendations, the first plaintiff, on 11 May 2011 funded the second plaintiff's purchase of one BYC168 digital flatbed printer for the total cost of $5,064.50 US including custom jigs produced for switch décor parts, and accessories."

Annexed to the affidavit is an email dated 18 May 2011 sent by Ms Rydstrand to Cloudy Chen at the BYC Company for the purchase of a BYC 168 3 flatbed printer for US $5064, clearly a much lower cost than the US $6,200 contained in the pro forma invoice of 3 May 2011. Critically, the email to Cloudy Chen of 18 May 2011 contains this matter:

"I have not ordered the coating free ink as I would like to try it first to see how it looks and adheres compared to the standard ink. Would it be possible for a sampling of this product for my testing? I have not seen the sample Sayee obtained from you as we are some distance apart. Once we test the printer with our parts/products I intended to order further machines or a larger model."

Annexed to that email was a record of an international money transfer from Ms Rydstrand to BYC Holding Limited of Kunming, Province of Yunnan, People's Republic of China.

43. There is no dispute that Ms Rydstrand had never seen a flatbed printer operating nor seen the product of flatbed printing herself. The defendant says that he sent to Ms Rydstrand a photograph of a flatbed printing machine containing a switch cover prior to printing and one of the switch cover after it had been printed by the flatbed printer, by depositing them in a "dropbox" which I understand to be a place somewhere in the internet ether where photographs and the like can be deposited whence another person can gain access to them. According to the evidence before me this "dropbox" had been set up by Ms Rydstrand so that it could be used by her and by the defendant in order to send documents to each other. Ms Rydstrand said she never received the two photographs in question, which are exhibit 5.

44. The photograph of the printed switch cover is a photograph of exhibit F, which is a Clipsal switch cover which was eventually given by the defendant to the plaintiff. Exhibit F clearly shows printing on the top flat surface of the switch cover. There is then a rounded or bevelled edge leading from the horizontal surface of the switch cover to a vertical surface which is, using a ruler, 10 mm deep. There has been no printing on any of the vertical surfaces of the switch cover. However there is printing on the rounded bevelled edge between the flat surface and the vertical surface on both the upper side of the object and on each of the left and right sides of the object, as one holds it upright, but there is misprinting on the bottom rounded or bevelled edge and also some residual ink from one design on the vertical bottom surface. The photograph of exhibit F, contained in exhibit 5, clearly shows the misprinting on the bottom rounded side and also residual ink on the bottom vertical component of the switch cover. Exhibit 5 clearly indicates that the flatbed printer was incapable of printing on a vertical surface of the switch cover and insofar as it did print on a rounded edge, there was no great depth, and the printing was erratic.

45. Ms Rydstrand attests on oath that she did not receive exhibit 5 and I believe that to be the truth. The misprinting of exhibit F is clearly visible on the photograph. If she had seen it she would have instantly hesitated in following a recommendation by the defendant that the flatbed printer had potential, and there I am deliberately using the word that the defendant admits that he used, to produce the switch covers which the plaintiff company was seeking to produce. There is, in the email to Cloudy Chen of 18 May 2011, almost contemporaneous evidence that Ms Rydstrand had not seen the sample that the defendant obtained on his visit to China and nothing to suggest that she had even seen a photograph of the sample that the defendant had obtained when he was in China.

46. Furthermore, when one looks at what happened on 1 May 2011, it is clear that by the end of that day Ms Rydstrand had determined to purchase a flatbed printer. That is a reasonable inference to draw from the email from Ms Rydstrand to the defendant at 9.54pm on Sunday 1 May 2011. The only thing that could have prompted Ms Rydstrand to commit herself to purchasing the printer was a favourable report by the defendant about it combined with, as Ms Rydstrand said, his enthusiasm for the flatbed printer to provide for the printing requirements that the plaintiff had.

47. The speed of Ms Rydstrand's conversion to buying the flatbed printer from her earlier lack of knowledge of it and her earlier preference for sublimation printing makes it more probable than not, in my view, that what she says the defendant said on 1 May 2011 is much more accurate than what the defendant would have me believe. I therefore accept that not only did the defendant say, holding himself out as a professional engineer, that the flatbed printer had the potential to provide the printing needs of the plaintiff but it also was suitable for the printing requirements of the plaintiff and that it was something to be embraced enthusiastically by the plaintiff although the word "enthusiastically" does not appear to be used but was conveyed by the overall impression of the defendant's words to the plaintiff and the defendant's mode of expression.

48. I am also persuaded that the defendant represented to the Ms Rydstrand, acting for the plaintiff, that the flatbed printer was capable of printing over the whole of the switch cover; that is, not only its upper flat surfaces but its sides as well. As will shortly become clear, the flatbed printer had no ability and therefore no potential to do the printing work that the plaintiff company wanted done. It can be observed that the sum of US $5,064.50 amounted to AU $4,821.04, a happy time when the Australian dollar was greater in value than the greenback, a rare time in anyone's lifetime. Eventually once the flatbed printer was shipped to Sydney it needed to be transferred to the home of Ms Rydstrand, which was also the registered office of the plaintiff company and, in essence, its place of business, for a total of $6,851.27. That is relevant to the one of the plaintiff's claims for damages.

49. On 12 May 2011 there was a conversation between Ms Rydstrand and the defendant through Skype. Paragraph 28 of the defendant's primary affidavit of 14 February 2015, which is exhibit 2, sets out the conversation, or, rather, excerpts from it. There are many Skype conversations set out in the affidavit evidence before me. Most of these Skype conversations provide only selected highlights which makes them unsatisfactory ways of giving evidence. Furthermore, when there are Skype conversations which are the same, they are given different times because at one stage the computers being used by Ms Rydstrand and the defendant were not set to the same time standard. It makes reading the Skype conversations and comparing them quite difficult. According to par 28 of the defendant's primary affidavit, the reason for quoting this conversation is to show that independent inquiries were being made by Ms Rydstrand about the flatbed printer. It is clear from what has been quoted by the defendant that Ms Rydstrand visited websites other than that of the BYC Company and chatted to another three companies about flatbed printers and their supplies. It appears that a major concern was cost: such is wholly understandable. She advised the defendant that she did "not go for the extra print head or coating mixed ink" because she had received advice that it was "not a good finish". However, the conversation set out does record Ms Rydstrand as saying to the defendant that he would have to be the expert on printing and his saying, "I can give it a try."

50. There was then another conversation which could be interpreted as suggesting that the defendant was telling Ms Rydstrand that the flatbed printer could provide a good quality "on parts" only of a product but the conversation as quoted goes on to talk about things being printed without having been "coated" - I assume, some form of undercoating. There is then a reference to the time it took for the printing to dry and again a reference to a certain ink mix not being satisfactory for drying. I do not read anything in the conversation which suggests that Ms Rydstrand had any concern about the flatbed printer being adequate to print on the whole of a switch cover nor that she made any inquiry about that of anybody other than the defendant.

51. On 12 June 2011, the plaintiff placed a purchase order with the Pastoral Group for the tooling and production of moulds for four of the plaintiff's 610 product series. On 18 June 2011, the plaintiff placed a purchase order with Jianjun Hardware Fitting Company for tooling of moulds and for the production of IMD moulds for a total of US $5,000. A further order was placed with Jianjun Hardware for further moulds and tooling and IMD forming moulds for US $5,500. However, there is no direct evidence of the cost of those moulds in the sense that there was no invoice or bill and no receipt and no financial document to prove that the documents were purchased for a certain price.

52. Although the printer was received by Ms Rydstrand on 7 July 2011, it was not unpacked until a week later. Paragraph 43 of Ms Rydstrand's primary affidavit is this:

"When the printer was unpacked on 15 July 2011, the Plaintiffs observed errors had been made in the manufacture of each of the three product jigs purchased. Each jig was manufactured from clear Perspex. The purpose of the jig is to enable multiple switch décor products to be printed at the same time. Each of the jig's supplied had 4 5 mm recessed cavities. Placing switch décor products into these cavities made printing of the whole switch décor on the product impossible."

In the following paragraph, Ms Rydstrand sets out, again, excerpts from a Skype conversation held on the same day. The way it has been set out in her affidavit is quite unsatisfactory. However, the first quotation made by Ms Rydstrand is this, which occurred at 12:57:07 according to her computer timer: "Re BYU printer, I was concerned the jigs may not be made to suit. They have come recessed, which means the parts could not be fully printed. How did this happen[?]". After quoting other matter, the quotation ends with something that occurred at 2:03:40 and has the defendant say this: "Jig, I need to see first and I think we can fix it." Whatever was contained in the conversation, there is no explanation recorded of why the jigs provided were not made to purpose by the BYC company. However, I must point out that there is no evidence that any special order was made about the jigs, the jigs may have just been standard. It may well be that the defendant did tell Ms Rydstrand that.

53. On Sunday 17 July 2011 Ms Rydstrand sent an email to the defendant, it is annexure 9 to Ms Rydstrand's primary affidavit. It is lengthy. However, it does reiterate this: "As I mentioned before, the jigs from BYU are each recessed, so I cannot see how the product can be fully printed." That email was sent at 1.05pm. At 8.38pm on Tuesday 19 July 2011, the defendant sent an email to the plaintiff, the first line of which is this: "Can you take some photos of the jig and send it to me?" Eventually the problem with the jigs was rectified by obtaining Perspex inserts to place in the recesses of the jigs provided.

54. A number of things occurred in September 2011, according to the plaintiff, they were these:

"46 During the month of September 2011, the second plaintiff received approximately 80 product samples from China based companies, Pastoral Tech and Jianjun Hardware, and produced in accordance with manufacturing drawings, CAD files, and instructions provided by the defendant.

47 During September 2011, in accordance with the defendant's instructions, the plaintiff organised the production of 100 Perspex block inserts to fill the recessed jig cavities, whilst holding the switch décor product in place for printing."

55. Another critical time in the chronology of the current proceedings is 1 October 2011. About that day Ms Rydstrand deposed to this:

"48 On 1 October 2011, the defendant attended the first plaintiff's home and second plaintiff's registered office in Pottsville, NSW, for the purpose of setting up the BYC printer for the second plaintiff, and to test print the samples. Soon after his arrival at the home in Pottsville, the defendant returned a bag of switch products and samples to the first plaintiff which included[:]

(i) 620 model prototype delivered to the defendant in 2010;

(ii) 2 switch décor prototypes from the first plaintiff's previous engineer;

(iii) Set of 10 Clipsal and HPM brand switches.

In addition to these items, the defendant delivered to Victoria Rydstrand, two switch cover samples from his inspection and trial of the BYC printer in April 2011, together with two printed coasters, and 1 printed compact mirror.

[49] One of the printed switch covers was a slim style HPM brand cover having a side depth of 2 3 mms. This sample showed a design printed over the whole surface and sides.

The second switch cover was a standard Clipsal brand cover having a side depth of 12.5 mms. The sides of this sample showed no print. The following communication occurred:

Victoria Rydstrand: 'What is this, it is not printed properly?'

Sayee Ganjekar: 'They were very busy, and couldn't set up the large image before the Printing.'

Victoria Rydstrand: 'but you inspected the machine and it will definitely print the whole switch products surface, yes?

Sayee Ganjekar: 'Yes, there is no problem for printing the switch décor products.'

Victoria Rydstrand: 'Why didn't you test print the prototype?'

Sayee Ganjekar: 'I didn't take it with me, I forgot.'

The defendant had not sent or shown the plaintiffs either of the printed switch cover samples or any of the other printed sample items from his inspection and trial of the BYC printer prior to 1 October 2011."

56. Exhibit F is the standard Clipsal brand cover having a side depth of 12.5 mm. The difference between my 10 mm and Ms Rydstrand's 12.5 mm is the depth of the rounded bevelled edge between the horizontal surface and each of the vertical surfaces. The defendant, as I earlier said, stated that he had earlier sent to Ms Rydstrand photographs of exhibit F but Ms Rydstrand says she had not received it. I accept Ms Rydstrand in that regard. The defendant said not that he had forgotten to take the prototype product with him but did not do so as it was unsuitable for printing because it was porous because of the method of construction of the prototype. However, I believe that to be a lame excuse. If a porous item were printed one might expect, after printing, for the ink used in printing to expand within the object after printing, but immediately after printing one would not expect the ink to flow through the object rapidly, and therefore, that one could get a good idea, by inspecting the item immediately after printing, as to whether it could be wholly covered by printing. More importantly, if after printing the porous object did not show that the whole of the product were printed, despite its porosity, then one would certainly know that the printing process of the flatbed printer would not cover the whole of the surface of the object being printed, i.e. if, for example, days or weeks after the object had been printed, the printing had not covered the whole of the surface or penetrated throughout the product, then one might form the view that the printing by the flatbed printer was incapable of covering the whole of the object even if it were nonporous. In the circumstances I believe it highly likely that what Ms Rydstrand said the defendant said, when she asked him about the prototype, is accurate and the defendant forgot to take it with him.

57. Ms Rydstrand's affidavit continues thus:

"50 The defendant inspected the recessed jigs and the new jig blocks and said to Victoria Rydstrand: 'I don't know why they made the jigs mistake, I gave them the switch décor sizes for production. These inserts (new blocks) are well fitting, they did a good job.'

51 On 2 October 2011 the defendant set up the printer with the assistance of a China based BYC technician on Skype video link. On completion of the setup the defendant test printed approximately 35 sample products including samples of each of the plaintiff's 610, 821 and 620 product areas in the presence of Victoria Rydstrand.

52 The defendant's test print showed all 35 samples received full print to the top surface of the product but only an unsightly overspray to approximately 15% or 3 mms down each side. The remaining side of each product displayed no print.

53 The defendant picked up three or more partly printed products, went into the dining room and examined the parts. The defendant then attached one of the 610 sample products onto a light switch.

54 The defendant, upon examination of the partly printed samples, pointed to the sides and corners of the attached switch cover and said to Victoria Rydstrand:

(a) 'if the sides of the product are made rounded the printer will then be able to print all the sides easily.'

(b) 'I will modify the shape of all switch décor products to give the size the right curvature for printing the whole product.'

(c) 'it is not a big problem, this can be easily fixed.'

(d) 'the cost to modify moulds will be very small, these are just minor changes, maybe $50 to $100, or they may not charge anything for minor changes.'"

58. There, with respect, does not appear to be much dispute about those matters. The following are admitted facts in these proceedings:

"29 The defendant attended the first plaintiff's home and second plaintiff's registered office over the weekend of 2 and 3 October 2011 for the purpose of setting the BYC flatbed printer and trialling[sic] the printing of sample products.

30 On 2 October 2011, the defendant returned a bag of switches, switch covers, two product prototypes to Victoria Rydstrand. The defendant also delivered print samples previously obtained by the defendant when he visited China BYC printer manufacturer in April 2011.

31 The first of the two prototype models returned was a 620 series switch plaque prototype, and the second, a two piece switch cover prototype. Both prototype models had been in the defendant's possession since November or December 2010.

33 Victoria Rydstrand was in attendance throughout the defendant's printer set up and sample print trials."

59. The relevant part of the defendant's primary affidavit is this:

"49 The testing and trialling of the printer with the Product Range samples on 2 October 2011 was the first opportunity that the parties had to test the printer with any samples of the Product Range.

50 There was a problem achieving full print to the top surface of the product but this could only be ascertained by testing the printer with the Product Range samples.

51 The testing and trialling of the printer was part of the trial and error process of endeavouring to find a suitable printing method for the Product Range. As far as I am aware, no such successful printing has ever been found by [the plaintiff].

52 I deny par 31 of the [statement of claim] and the 'representations' attributed to me therein. I made a series of suggestions as to what could be tried to achieve full print to the top surface of the Product Range samples. However, I never gave any guarantee or warranty that such a result could be definitely achieved with the BYC printer, to the standard required by [the plaintiff].

53 As to par 34 of the [statement of claim], I modified the designed of the Product Range attempting to achieve a design which would allow printing by the BYC printer onto its full surface. I attempted to redesign the Product Range so that the curvature of each light switch cover in the Product Range was not so steep but was more of a gradual curve, so that it would not be so difficult to print the sides. However, it is only by actually trialling the product sample of the new design that it could be established by testing that the new design would allow printing on its full surface by the BYC printer. I refer to p 13 of Exhibit "SG-1", which is a copy of an email dated 12 October 2011 concerning the modifications."

I hasten to add that it is unhelpful for a party to deny, in evidentiary material, a pleading. The pleading is denied by the defence. What the evidentiary material should do is answer the evidence put forward by the opposing party. Here, the plaintiff's primary affidavit was sworn on 16 February 2015 and was filed at the Murwillumbah Courthouse on 26 February 2015. The defendant's affidavit was sworn on 14 February 2015, clearly, prior to the Ms Rydstrand's affidavit. This, I am told, reflects the practice in the Local Court, of ordering each party to file and serve its evidence by the same date, which is quite unsatisfactory. However, no affidavit in reply to what Ms Rydstrand said was ever prepared or filed let alone relied upon in these proceedings. There is a second affidavit of the defendant, sworn on 21 March 2016, which responds to a number of issues but mainly the issue concerning the defendant's qualifications.

60. It is clear that the problem deposed to by the plaintiff was experienced. It is clear that the defendant offered what he thought was a solution or could be solution to the problem. It is clear from what happened subsequently that that was no solution at all. The flatbed printer appears not to be able to print more than 3 millimetres below the horizontal of flat upper surface of the object being printed, no matter what curvature there might be below the initial flat surface.

61. The email of 12 October 2011 is this:

"Please check the 3D pdf files of 610 series part modified as discussed. Have uploaded them in Dropbox Folder.

Have added ribs behind the clips for HPM so it can fit better and changed corner radius so that it can be printed on full surface[.] This is the best we can achieve in terms of end surface.

Please review and let me know."

Again, the substance of that email is set out in par 56 of Ms Rydstrand's affidavit and it also annexed in full as annexure 11 to that affidavit and is annexed to the defendant's affidavit as I have already said. Why have one copy of the document when you can have two or three? There is nothing to negate what is said specifically by Ms Rydstrand in her affidavit concerning the events of the weekend of either 1 and 2 October or 2 and 3 October, there being a conflict, of course, in the evidence as to when the weekend was. It would appear that it is likely to have been a long weekend.

62. The evidence before me sets out a number of Skype conversations conducted on 17 October 2011. In the defendant's primary affidavit, exhibit 2, at par 57, he sets out a Skype conversation commencing at 2:39:04. This appears to me to be largely irrelevant. It concerns 3D sublimation printing. In par 55 of the same affidavit the defendant sets out a further Skype communication commencing at 2:55:47. The exact same conversation is set out in par 57 of exhibit A, Ms Rydstrand's affidavit. However, the plaintiff's affidavit says that the Skype conversation commenced at 3:55:18pm. The conversation recorded by both Ms Rydstrand and the defendant is this:

"VR: 'So where can we print to with it looking right?'

SG: 'You can check in E Drawings.'

SG: 'Measure.'

SG: 'we can print until end with this.'

SG: 'Print.'

VR: 'But not sides.'

SG: 'Sides also.'

VR: 'Oh!'

VR: 'But not to base.'

SG: 'Almost.'

VR: 'Good.'

VR: 'Can you find the point at which the print should stop?'

VR: 'To visualise the end look of partly printed product?'

SG: 'Okay. I'll render few and put it in dropbox.'

VR: 'Great.'

VR: 'Then we can determine if other mods [scil. modifications] needed.'

SG: 'Sure.'"

This conversation clearly refers to the attempt to try to have the flatbed printer print on the sides of the switch covers, to overcome the problem observed by Ms Rydstrand in the attempt at printing in early October of the same year.

63. On 18 October 2011, the defendant sent an email to Ms Rydstrand. It contained an attachment, six images of the plaintiff's 610 product modified by the defendant and rendered by the defendant with designs to demonstrate to the plaintiff and to Ms Rydstrand the printable surface of the modified product using the flatbed printer. Those images are annexures 12(a) to 12(f) to Ms Rydstrand's affidavit. Each of those is in colour. One can see the top flat surface of each switch cover and a slopping side on each of the four sides of the rectangular cover. Each of the four sides of the rectangular cover appears to have been fully printed. In other words, according to the documents supplied to the plaintiff by the defendant, with these modified designs for the switch covers, the flatbed printer should cover the whole of the sides of each switch cover.

64. There was a telephone conversation concerning those images on 21 October 2011. Ms Rydstrand deposed to the following:

"On 21 October 2011 Victoria Rydstrand telephoned the defendant:

S. Ganjekar: 'Have you seen the rendered images I sent?'

V. Rydstrand: 'Yes, I cannot see where the print stops.'

S. Ganjekar: 'You will be able to print almost entire surface of the modified parts, except possibly 0.5 mm-1.00 mm at the very bottom of the part maybe a bit blurry or not print, but that will be hardly noticeable.'

V. Rydstrand: 'Good, that would be acceptable, now what about the other models, 620 and 821. How will they print?'

S. Ganjekar: 'They will be the same as modified 610, you can print whole part, except like 610 with a possible 0.05 mm to 1 mm bottom a bit blurry or no print, all products will be the same, full front and 99% of sides can be printed.'"

I accept that that conversation is likely to have occurred, in light of the hard evidence of the annexures 12(a) to 12(f) to Ms Rydstrand's affidavit.

65. On 22 December 2011, the plaintiff sent a purchase order to the Pastoral Group for the purchase of a number of switch décor parts. All told, there were 6,500 parts and deposit was paid of AU $1,030. The purchase order also asked for a quotation for plain packing. On 14 January 2012, the plaintiff company sent a purchase order to the Jianjun Hardware Fittings company for 11,000 switch décor parts, but there is no reference in the purchase order to any price or to any deposit.

66. The next set of documentation passing between the plaintiff/Ms Rydstrand and the defendant concerns negotiations as to fee. However, before I turn to that I should have indicated something that happened on 10 May 2011. Paragraph 97 of Ms Rydstrand's primary affidavit says this:

"The defendant, during the period February 2010 to 10 April 2011, provided product drawings and CAD files for the plaintiff's patent applications to IP Australia. On about 10 April 2011, the first plaintiff contacted the defendant by telephone to discuss works being provided by the defendant, and additional works required by the first plaintiff and second plaintiff.

As at the time of this communication the defendant had been paid $345, as agreed, for the design and preparation of drawings for seven switch cover designs together with advices and assistance with manufacturing those products.

The first plaintiff, upon receiving the defendant's drawings and assistance for patent applications, formed the opinion that the defendant was undercharging for his services and at the time valued the services and assistance the defendant had and was providing.

By telephone, the first plaintiff conveyed to the defendant, her satisfaction with the defendant’s services and concern that the defendant could and should charge more for his services. The first plaintiff conveyed the future needs of the first and second plaintiff included assistance with product packaging, point of sale materials, product marketing, including the creation of a website, as well as further product design works.

The first and second plaintiff offered the defendant:

(i) a once only payment of $2,500 to provide the further works and assistance to be paid by The Switch Décor Company Pty Ltd, and

(ii) A 5% shareholding in the Switch Décor Company Pty Ltd, through the transfer by the first plaintiff, of the first plaintiff's shares.

The defendant was offered shares due to his repeated expressions of interest in the switch décor products and potential future opportunity to acquire [a] licensee agreement for him and his wife to print and sell switch décor products.

An agreement providing for the above was finalised on 10 May 2010."

67. There are numerous copies of that document in the evidence before me. The document is on the stationery of the plaintiff company. It has been signed by the defendant. It records the allocation to him of 50 fully paid shares from the plaintiff. Conditions numbered 2 and 3 are these:

"In addition to the allotment of paid member shares..., a once only payment in the amount of $2,500 will become due and payable to you on the first day of the second quarter of the financial year ending 3 June 2012 or upon the expiration of the first three months trading of the company's switch décor product. Upon payment of this amount the company shall cease to be indebted to you and/or assigns for any and all assistance for works provided by you to the company in and about the development of the company's range of switch décor products and services to this date.

Nothing contained in the above (2) condition has the effect of reducing or eliminating your member rights to participate in the distribution of profits or dividend equal to your member shareholding. In consideration of your continued assistance the company guarantees an annual dividend of $5,000 or an amount equal to 5% of profits as declared by the company's accountant, having control of the company's financial books and records, whichever [be] the greater amount."

The condition numbered 4 merely states that the shares were not transferable without consent. As to condition numbered 2, the first day of the second quarter of the financial year ending 30 June 2012 is, on my understanding, 1 September 2011. No demand was made by the defendant at that time for the payment to him of $2,500. Indeed no demand was made requesting any payment until January 2012. There is a clearly a problem with the drafting of cl 2. It contains an alternative as to when the sum of $2,500 would become payable. The alternative can only be of any practical relevance if the matter, "whichever be the later", inserted between the word "product" and the full stop at the end of the first sentence of the clause. That is the only way of achieving business efficacy. The plaintiff company never traded. It has never sold any product because it has never manufactured any product. The time for the payment of $2,500 never arrived. Furthermore, the company has never made any profit. According to the defendant himself, it is insolvent. Therefore the circumstances of a guaranteed income by way of share dividend never arose.

68. When the defendant raised questions about payment in January 2012, one can understand Ms Rydstrand and the plaintiff becoming somewhat upset about it. On 14 January 2012 the defendant sent to Ms Rydstrand a list of his expenditure thus far on behalf of the plaintiff. That expenditure amounted to $9,543.98. To that piece of information Ms Rydstrand replied on 18 January 2012 by email. Ms Rydstrand proposed a further share payment. She said this:

"Thanks for the list [of] expenditure by you.

I think the following manner of calculating share pricing and shareholder contributions are the most appropriate and fair but I'm open to your comments or suggestions.

The price for 100 (10%) further shares at $250 is $25,000, less than already expended by you ($9.543.98) gives balance of $15,456.

To apply the amounts you have paid, I will need copy invoices and payment receipts."

Then are set out a number of conditions attached to the shares. The email then continues thus:

"As to current progress, we need to look at the expenditure that is needed before cash flow starts, so business is soon satisfactorily in line with website offerings etc etc. I have updated my list of most important impending expenses. As shareholder, I would ask that you contribute an amount equal to your shareholding towards these impeding expenses. Any contribution you make toward upfront expenses will of course become a loan account, repayable when the company has sufficient income to repay this amount. Please note, parts will not be ready from Pastoral for six weeks, so I cannot see realistic income before March.

In the interim, we can put out catalogues and website up, advising delivery from March shipment.

Have a look at the Pending expenditure sheet. Your percentage contribution that I will request would be $5,000."

The planned business expenditure between February and March 2002 gives a number of columns, one column ends up with a total of $37,349.50. The other column ends up with $5,650 and appears to be an estimate of additional moneys to that contained in the first column.

SG: Yes, and I will, it is no problem for me. I can make this product with who I like, easy.

VR: You are a disgrace Sayee. There must be an institute or association of engineers I can call to report you to.

SG: You can if you want, they won't care."

83. The next relevant date on my assessment of the evidence before me is 19 December 2012 and this event is essentially set out in par 71 of the statement of claim. Paragraph 71 of the statement of claim is denied by the defendant in par 84 of his primary affidavit. Again, what par 71 of the statement of claim asserts is a dispute between the plaintiff and the defendant concerning monies that be payable to the defendant. I do not believe it necessary to canvass the further facts in any detail whatever.

84. However, I will return to one statement contained in the defendant's email to Ms Rydstrand of 26 April 2012 which, I indicated when I quoted it, was highly contentious. That was the statement that Ms Rydstrand knew of the problem with the flatbed printer when she was buying it and that had been discussed before and had been discussed before changes were made in the parts by the defendant's redesigning them. In my view, this is a wholly self-serving statement and is not supported by any evidence that could be contemporaneous. As the email goes on to say, the defendant thought that Ms Rydstrand was blaming him for problems that had arisen and this statement, that she had known of the problem in advance, appears to me to be wholly self-serving, in that there is no evidence of his drawing any of the problems experienced with a flatbed printer to her at any time in the past. In particular, there is no suggestion that prior to 19 May 2012 that the defendant drew to the attention of Ms Rydstrand the representation about the flatbed printer made to him by Cloudy Chen, nor was it drawn to Ms Rydstrand's attention at any time prior to then that the defendant relied upon that representation, rather than any expertise that he professed that he had, and it should be recorded that the plaintiff was relying upon the expertise professed by the defendant, that of being a professional engineer.

85. It is my usual practice to commence ex tempore judgments with a short statement of the nature of the case, in particular a short description of the nature of the cause of action. In the current matter I did not do so deliberately. The statement of claim was filed by Ms Rydstrand on behalf of herself and the plaintiff company. The originating process filed in the Local Court at Murwillumbah on 14 February 2014 described the "type of claim" in this fashion:

"Contract: misrepresentation, duty of care, breach of contract.

Tort: negligence, professional misconduct."

The amended statement of claim filed on 18 February 2015 deleted that matter but inserted in lieu thereof:

"Mercantile law - building dispute engineer negligence".

When one reads the amended statement of claim, upon which the plaintiff was granted leave to rely, it is difficult to discern whether the cause of action pleaded is in tort or in contract and a number of the ways in which the statement of claim is pleaded suggests that there may be reliance upon some statute, such as the Competition and Consumer Act 2010 (Cth) or the Fair Trading Act1987. However, no statutory relief is sought. The relief claimed in the amended statement of claim is damages. After reading the pleadings, which are lengthy, I formed a view that the easiest way of hearing the case would be to proceed on the basis that the plaintiff was relying on the tort of negligence. Ms Rydstrand was happy to accede to that and learned counsel for the defendant, Mr Davis, was happy for that to occur and was prepared to meet a claim based on the tort of negligence.

86. In addresses, Mr Davis referred me to San Sebastian Pty Ltd & Anor v The Minister Administering the Environmental Planning & Assessment Act 1979 (1986) 162 CLR 340; [1986] HCA 68 and, in particular, the dictum of Brennan J commencing at [18]. His Honour said this:

“18. The relationship of proximity is an integral constituent of the duty of care concept. We refer to that relationship in its broader sense, namely, as embracing a general limitation upon the test of reasonable foreseeability, this being the sense in which it has been discussed and applied in recent judgments in this Court (Caltex, at pp.574-576; Jaensch v. Coffey [1984] HCA 52; (1984) 58 ALJR 426, at pp 427-428, 440-442; [1984] HCA 52; 54 ALR 417, at pp 419-421, 442-446; Sutherland Shire Council v. Heyman [1985] HCA 41; (1985) 59 ALJR 564, at pp 579, 599; [1985] HCA 41; 60 ALR 1, at pp 29, 62-63; Stevens v. Brodribb Sawmilling Co. Pty. Ltd. [1986] HCA 1; (1986) 60 ALJR 194; 63 ALR 513). The notion of proximity, because it limits the loss that would otherwise be recoverable if foreseeability were used as an exclusive criterion of the duty of care, is of vital importance when the plaintiff's claim is for pure economic loss. When the economic loss results from negligent misstatement, the element of reliance plays a prominent part in the ascertainment of a relationship of proximity between the plaintiff and the defendant, and therefore in the ascertainment of a duty of care. But when the economic loss results from a negligent act or omission outside the realm of negligent misstatement, the element of reliance may not be present. It is in this sphere that the absence of reliance as a factor creates an additional difficulty in deciding whether a sufficient relationship of proximity exists to enable a plaintiff to recover economic loss.

19. In cases of negligent misstatement, reliance plays an important role, particularly so when the defendant directs his statement to a class of persons with the intention of inducing members of the class to act or refrain from acting, in reliance on the statement, in circumstances where he should realize that they may thereby suffer economic loss if the statement is not true. In these situations Caltex, which related to economic loss caused by a negligent act or omission, should not be regarded as excluding the existence of a duty of care.”

In essence, the defendant submitted that the second and third conditions were not fulfilled in this case and, in particular, that there had been no reliance placed by the plaintiff on anything said by the defendant, and because there was no damage flowing from what the defendant said. It appeared to me that reliance upon that authority, whilst binding, may have clouded the issue in the case somewhat.

87. I turned to the The Law of Torts in Australia 4th ed, published by Oxford University Press. Commencing at par 9.5.5 on p 502 the authors commenced discussing the bases of liability for negligence advice and services. At par 9.5.5.1.1, the authors say this:

"The basis of the duty of care invented in Hedley Byrne v Heller was that there was a 'special relationship' between the parties: special in the sense that it was neither contractual nor fiduciary, and in the sense that it was not based simply on the concept of foreseeability as enunciated by Lord Atkin in Donoghue v Stevenson. The special relationship existed because the defendant had voluntarily given advice (it was under no obligation to do so) in response to a request by P's bank, in circumstances where it ought to have realised that P was relying on it to exercise care, and where it was reasonable for P so to rely. The defendant, it could be said, had voluntarily undertaken (or 'assumed') a responsibility for the accuracy of the advice and so (subject to the disclaimer) was under a duty to take care in giving that advice. The point of the word 'voluntarily' was to indicate that the liability was not being imposed by the law but was a product of the defendant's own free action in giving advice without disclaiming a responsibility for its accuracy. In this way, liability under the Hedley Byrne principle is seen as being 'akin to' (or 'equivalent to') contractual liability, the main difference being that a contract requires consideration, whereas gratuitously given advice may be actionable in tort. This analogy with contract was drawn in order to justify imposing liability in tort for pure economic loss, which was traditionally seen as being mainly within the province of the law of contract."

In the following paragraph, the authors point out that it is now recognised that a duty may arise even if no request for advice or information was made. The authority cited for that is San Sebastian at pp 356 to 357 in the judgment of the plurality, Gibbs CJ, Mason, Wilson and Dawson JJ. It has now been accepted that the idea of implied acceptance by a defendant of liability is, in effect, a liability imposed by law and is not voluntary: Smith v Bush [1990] 1 AC 831 at 864-5.

88. At par 9.5.5.1.2, the authors of this work say this:

"In Mutual Life & Citizens Assurance Co Limited v Evatt, the Privy Council laid down what might be called the 'skill principle': a duty of care will arise only if the giving of the advice required some special skill or competence, and if the advisor was in the business of giving advice of the type sought or held itself out as having and being willing to exercise the skill and competence appropriate to a person in that advice-giving the business. Only in such cases can it be said that the defendant must have assumed responsibility for the statement.

The skill principle was applied in a variety of contexts, but it has now been very largely eroded. English Courts never accepted it, but preferred what might be called the 'course of business' principle to the effect that although the advice need not have been given by a professional advisor, it must at least have been given in a business context. This principle does not seem to require that the advisor be in the habit of making statements of the type made in the course of business, only that they did so on this occasion. The relevance of the statement being made on a business occasion is that this ensures that it is meant to be taken seriously and that it was reasonable for the advisee to rely on it."

89. Applying those principles to the current case, it is clear that the defendant held himself out as having the skill or competence of a professional engineer and, furthermore, the advice which he gave was clearly given in a business context. It was given to the plaintiff, knowing the plaintiff would rely upon any advice given to it in ordering its affairs, in seeking to produce goods the sale of which would earn a profit.

90. The work which I am currently citing then turns to consider the decision of the High Court of Australia in L. Shaddock & Associates Pty Ltd v Parramatta City Council (1981) 150 CLR 225 and pointed out that Gibbs CJ in that case doubted the correctness of the skill principle. However, even if the skill principle be no longer necessary, it certainly applies in the current case. The authors of the work then state this:

"Shaddock goes at least as far as establishing that there is no crucial distinction between information and advice, and that a person who is in a particularly good position to collect information and has voluntarily made that information available to others, is under a duty to take care in the imparting of that information."

Here, of course, the defendant acquired information from, for example, Cloudy Chen and failed to pass it on to the plaintiff.

91. In par 9.5.5.1.4 the authors discussed relationships of dependence. The second principle cited is this:

"Secondly, the idea of dependence is apposite in cases where negligence is alleged against a skilled professional, such as a solicitor or accountant. Here, disparity of skill, knowledge and information between the professional acting as such and those meant to benefit from the services creates dependence."

Again, here there can be no dispute that the plaintiff depended upon the skill and expertise of the defendant in selecting a suitable printing system and redesigning product for that system.

92. Paragraph 9.5.5.1.5 discusses the reasonableness of the reliance placed upon the defendant's conduct by the plaintiff. The law requires that the reliance be reasonable. The work says this:

"By and large, this will be so only if the statement was made or the service performed on a serious occasion or in the context of the serious business or other relationship. Statements made on social occasions or services performed in family contexts would not normally give rise to a duty. Nor is it reasonable to rely on advice given 'off the cuff' or 'off the top of the head' or in circumstances where it could not be said that the speaker ought to have realised that they were being relied upon."

Again, here there is no form of disclaimer by the defendant at any time and he was giving advice in commercial circumstances. Clearly the plaintiff was entitled to rely upon the defendant's representations, such as they were.

93. Paragraph 9.5.5.2 of the work discusses "continuing relationships". This is particularly apposite in the current proceedings, where the initial relationship between the plaintiff and the defendant was for the defendant to produce a number of drawings for a fixed price. The number of drawings initially proposed was increased and the amount of the fixed price was also increased. However, the parties then continued their dealings with each other without there being any formal contract or, indeed, any form of written agreement, and if one were required to rely upon the law of contract rather than the law of tort, one would have to try to construct what the contract was by implying most of the terms. This is why, in the current case, it is appropriate to rely upon the law of tort. Concerning continuing relationships, the work says this:

"As we have seen, the typical continuing relationship is based on the contract between professional and client. A duty to take care may also arise in relation to statements (called 'misrepresentations') made in negotiations preceding the making of a contract, which induce the person to whom they are made to enter a contract with the maker. However, the Supreme Court of Canada has held that, misrepresentations apart, there can be no tort liability for negligence in the conduct of pre contractual negotiations or tendering processes.

By means of the idea of the continuing special relationship, and the relationship of dependence, the Hedley Byrne principle has been extended from statements to acts and omissions, and from specific to general reliance. The job of the professional, for example a solicitor, is often to 'advise' in a rather extended sense of carrying through a particular transaction or set of transactions. There may be no specific request for advice in a narrow sense and no advice given, but documents prepared, legal requirements met, signatures obtained, and so on. In such cases the immediate cause of the client's loss would often be an act or omission of the solicitor rather than a statement on which the client relies to his or her detriment. But from a wider perspective, it can be said that the client, by committing their affairs generally to the solicitor has placed (general) reliance on the solicitor.

The basic rule in England, Canada and Australia is that professionals can be sued by their clients concurrently, in respect of the same conduct, in contract (for breach of a contractual obligation to take care, which is normally implied rather than express) and tort (for breach of a duty of care) for negligence in the performance of their contractual functions. In relation to misrepresentations that induce a person to enter a contract with a misrepresentor, there may be concurrent liability if the misrepresentation was 'incorporated into the contract as a term'. In circumstances of concurrent liability, the contract between the parties is important in the tort action for several reasons. Firstly, the contract may contain an express provision that limits or excludes liability in tort. In relation to pre contractual misrepresentations, the contract may, by casting the burden of inquiry on one of the parties, relieve the other of the duty to provide accurate information relevant to the making of the contract. Furthermore, where a term of the contract excludes or limits the relevant contractual liability, it will also, to the same extent, be effective to exclude or limit concurrent tort liability.

Secondly, the contract is important because it helps to define what it was that the defendant was under an obligation to do, and so what (in both contract and tort) D can be sued for not doing, or for doing badly. It has been held in a series of English cases that the obligations imposed on the defendant by the contract define the limits of the liability in tort. Unless the contract expressly or impliedly requires the defendant to do (or to refrain from doing) X, D cannot be liable in tort for not doing (or for doing) X. In other words, the law of tort cannot be used to fill gaps in contracts.

However, it is not clear that the High Court would adopt a similar approach. In Hawkins v Clayton, Deane J took the view that the law of tort could be used to impose obligations 'beyond the specifically agreed professional task or function' and that once it accepted that:

'the ordinary law of negligence can apply to render a solicitor liable for economic loss caused to a client by professional negligence, the content and incidence of the solicitor's common law duty of care must be seen as representing the law's judgment of the extent to which it is reasonable and desirable to render a solicitor liable for the loss or damage suffered by his client.'

In other words, although it may be open to contracting parties to modify or exclude the obligations imposed by law of tort, tort law has a legitimate role to play in specifying the rights and obligations of contracting parties inter se by reference to what is just and fair in moral and social terms."

94. That there was a continuing relationship between the plaintiff and the defendant throughout the period from September 2010 to at least December 2012 is clear. At all material times the defendant held himself out as being a professional engineer. I have no hesitation, as I have already said, in accepting that the plaintiff relied upon that expertise, which he professed that he had. He went to China and inspected a flatbed printing machine. It was he who had raised with the plaintiff and Ms Rydstrand the possibility of a flatbed printing machine being an appropriate printing method for the plaintiff's range of products. He saw the machine operated. He then, on his own admission, said it had the potential to do the printing required by the plaintiff. It did not have that potential as the evidence in this case clearly establishes. I have not cited it in full but every time it was thought that a product range could be launched, the expectation was blasted.

95. In May of the 2013, the plaintiff sold the flatbed printer at a substantial loss. The printer never had the potential which the defendant said it had on his own admission. Furthermore, I held in reasons given yesterday that the defendant made further statements about the suitability of the flatbed printing machine which were relied upon by the plaintiff and that those representations were untrue, not that they were deliberately false, but they were incomplete and they were misleading and the representations were made negligently. Bearing in mind the timing of the purchase of the flatbed printing machine, which I pointed out yesterday, I have no hesitation in accepting that the plaintiff did rely upon the defendant's expertise and, therefore, that the threefold test required by San Sebastian has been established. The defendant did not appreciate that the flatbed printing machine could not print lower than 3mm below the horizontal and then redesigned drawings and moulds and the like in order to try to produce a product which could be printed using the flatbed printer, but all that work was otiose. It resulted in no advancement of the plaintiff's interest. There has been, in my view, negligence by the defendant and the plaintiff is entitled to succeed.

94. One of the interesting aspects of the current case is that, although there is much evidence which establishes the plaintiff’s entitlement to succeed, what has been very poorly established is the quantum of the plaintiff's loss. In general, litigants in person come to Court armed with "bucket loads" of evidence to prove the loss but usually without sufficient evidence to prove liability. Here we are in exactly the opposite position. After Mr Davis' address, I agreed with him that there appeared to be no proof of the damages claimed by the plaintiff. However, after listening to the plaintiff and pointing out the difficulties to her, I granted an adjournment to the parties so that Ms Rydstrand could show to Mr Davis documentation relating to economic loss. Unfortunately that adjournment, time given to the parties, did not bear any fruit and I allowed the plaintiff leave to reopen her case and tender a further 13 exhibits numbered H1 to H13.

95. The first item of damage is the economic loss incurred in the purchase and then the sale of the flatbed printer. The evidence establishes that the total cost to the defendant of purchasing the flatbed printer and having it installed at Pottsville was $6,851.27. The plaintiff sold the flatbed printer in May 2013 for $600. It was sold to a local printer, i.e. a printer from either the Northern Rivers or South East Queensland who had been coming from time to time to carry out repairs. Ms Rydstrand had sought to sell the flatbed printer to a printer in Sydney who had one such machine but he showed no interest whatever. The local agreed to pay to the plaintiff $600. I accept that that was the value of the flatbed printer on the open market. The loss to the defendant is $6,251.27.

96. Exhibit H1 relates to tools or moulds for the 610 switch cover product. It is for $3,524.

97. Exhibit H2 is for the sum of $9,380 and, again, refers to the costs of the making of moulds or tools. These were invoices from the Pastoral Group. A submission was put by Mr Davis that these moulds or tools had some residual value. I queried that. These moulds are in factories in China and whether anyone who wanted to buy them would want them in that place is problematic and the number of persons who want to make their own light switch or power point covers is, in my view, infinitesimal, if any such person exists. Furthermore, one must bear in mind what Ms Rydstrand said in her email to the defendant of 31 May 2012 that she did not see the then moulds being able to be modified sufficiently at a lower cost than the making of new moulds. That was the statement made by her a long time prior to the current dispute between the parties. I accept that the residual value of the existing moulds is nil. I therefore allow the $3,524 set out in exhibit H1 and two sums set out in H2, $2,463 and $3,393 not the full $9,381 shown at the end of exhibit H2, which includes a duplication of the $3,524 contained in exhibit H1.

98. Exhibit H3 amounts to $1,584.39. It is amounts paid by the plaintiff to various freelancers for the production of drawings, artwork and the like, the value of which is now nil and because of the inability of the flatbed printer to produce any products for the plaintiff. I allow that sum.

99. Exhibit H4 are the graphic designs for product printing and product catalogues and marketing materials paid using Paypal. The amounts shown on exhibit H4 have been added together by my Associate. Some payments have been in Australian dollars and some in US dollars. The two have been equated. One might recall that yesterday I pointed out that during part of the period in question the Australian dollar was worth more than the US dollar and at times there was parity and other times there would have been a difference the other way; that is that a US dollar was worth more than an Australian dollar. In my view those things even themselves out. The total shown on exhibit 4 is $4,973.02.

100. Exhibit H5 is for two sums of money: $1,030 and $500 for a deposit payment for switch décor parts and a balance payment for freight on the same purchase order. I accept that these parts have no residual value. I allow those two sums.

101. Exhibit H6 is a deposit payment for packaging. Again, the packaging paid for parts of no value, has no value of any residual nature.

102. Exhibit H7 relates to various payments for moulds. Two sums are shown $2,703.50 and $2,872.18. Both of those are in Australian dollars. Anything that is not in Australian dollars I shall mention specifically.

103. Exhibit H8 is for the sum of $418.36 that is for shipping of various products to the defendant. Since the residual products have no value, that shipping was of no value to the plaintiff.

104. Exhibit H9 is for the sum of $440.00 being the cost of transporting prototype switch covers from the plaintiff to the defendant. This ultimately resulted in no gain by the plaintiff and was an unnecessary cost which it incurred. Furthermore, one of the reasons for sending the prototype moulds to the defendant was to enable him to take a prototype to China to test on a flatbed printer, which was not done. I allow that sum.

105. Exhibit H10 is for $692 and that was for making a rack to be used with the printer. I allow that sum.

106. Exhibit H11 is for the princely sum of $87 and it is, according to my note, packaging of product.

107. Exhibit H12 is for $861.55. That is for shipping of product and the product now having no value, that cost of shipping ought not to have been incurred. The value of it has been lost.

108. Exhibit H13 is payment for the Dropbox used by both the plaintiff and the defendant. Since this Dropbox appears to have pre-existed the engagement of the defendant by the plaintiff, I would not allow that the sum that is shown on that document, which is the princely sum of $19.98.

109. The total of the sums which I have allowed and have been proved satisfactorily is $26,037.39. The plaintiff is entitled to some interest thereon. Arbitrarily I have had to choose the date when the interest ought commence. I have commenced it on 1 June 2013 and it was calculated to the end of yesterday. My Associate's calculation of interest has been reduced to a form which I have marked for identification 6. A copy will be given to each party.

MFI #6 INTEREST CALCULATION

112. According to MFI 6, interest calculated under the rates prescribed by the rules from 1 June 2013 to 31 March 2016 is $4,743.44. The damages which I have allowed and the interest claimed amount to $30,780.84. It ought be clear from what I have cited already that the defendant himself incurred expenditure in what might be thought from April 2011 onwards to be some form of joint venture between the defendant and the plaintiff. However, the defendant has not made any cross claim or claimed any set off on account of monies paid by him to the plaintiff.

113. I have asked Mr Sykes, counsel who appeared for the defendant yesterday and today whether any further reasons for judgment are required. I am told that none is so required.

114. For those reasons, I give verdict and judgment for the plaintiff, The Switch Décor Company Pty Ltd, against the defendant for $30,780.84.

115. I give verdict and judgment for the defendant against the plaintiff, Victoria Rydstrand.

116. I order defendant to pay the costs of the Switch Décor Company Pty Ltd.

117. I decline to make any order that Victoria Rydstrand pay any part of the defendant's costs because the extra costs in nominating Victoria Rydstrand as a plaintiff were, in my assessment, negligible.

118. I order that the plaintiff's costs in these proceedings include the costs of the summons filed by the defendant seeking a transfer of these proceedings from the Local Court at Murwillumbah to the District Court at Sydney.

119. Having carefully listened to what has been put to me by Mr Sykes of counsel about the costs of the transfer proceedings, I maintain the view that it is proper in the circumstances that the defendant pay the plaintiff's costs of the transfer.

120. Exhibits F and G can be returned to Ms Rydstrand on her receipt therefor on the basis that if there be an appeal they have to be returned as they are to the Court of Appeal. Exhibit 6 can be retained by the Court.

**********

Decision last updated: 07 July 2016