Tower Cranes International Pty Ltd v Boland Cranes Pty Ltd
[2021] QDC 183
•13 August 2021
DISTRICT COURT OF QUEENSLAND
CITATION:
Tower Cranes International Pty Ltd v Boland Cranes Pty Ltd [2021] QDC 183
PARTIES:
TOWER CRANES INTERNATIONAL PTY LTD
ACN 137 155 269
(Appellant)
v
BOLAND CRANES PTY LTD
ACN 106 127 208
(Respondent)
FILE NO:
3515/20
DIVISION:
Appellate
PROCEEDING:
Appeal pursuant to s222 Justices Act 1886 (Qld)
ORIGINATING COURT:
Magistrates Court of Queensland
DELIVERED ON:
13 August 2021
DELIVERED AT:
Brisbane
HEARING DATE:
27 April 2021
JUDGE:
Jarro DCJ
ORDER:
The appeal is dismissed
CATCHWORDS:
APPEAL AND NEW TRIAL – APPEAL - GENERAL PRINCIPLES – INTERFERENCE WITH JUDGE’S FINDINGS OF FACT – OTHER MATTERS – where the plaintiff obtained judgment against the defendant for supplying a faulty crane invertor – whether the trial judge made incorrect findings of fact.
APPEAL AND NEW TRIAL – APPEAL - GENERAL PRINCIPLES – INTEREFERENCE WITH DISCRETION OF THE COURT BELOW – IN GENERAL – WRONG PRINCIPLE - where the plaintiff obtained judgment against the defendant for supplying a faulty crane invertor – whether the trial judge made errors of law relating to the reversal of the onus of proof, jurisdictional errors and the failure to give reasons.
LEGISLATION:
Competition and Consumer Act 2010 (Cth)
CASES:
Drew v Makita (Australia) Pty Ltd [2009] 2 Qd R 219
Jones v Dunkel (1959) 101 CLR 298
COUNSEL: Dr M Wilson for the appellant
Ms N Pearce for the respondentSOLICITORS: SLF Lawyers for the appellant
Results Legal for the respondent
Introduction
The appellant appeals against the whole of the decision of the Magistrates Court of Queensland at Rockhampton dated 18 November 2020 by which it was ordered that judgment be granted for the respondent in the amount of $47,438.91, plus interest. The proceedings concerned the appellant’s supply of a crane part, being a second hand inverter, to the respondent who was in the business of hiring cranes for construction sites; the appellant was in the business of selling cranes and crane parts. Soon after the supply of the second hand inverter, it is alleged defects became apparent which ultimately rendered the crane inoperable. The respondent sought recovery for damages for breach of contract or alternatively negligent misrepresentation or breach of the Australian Consumer Law (“ACL”) contained within Schedule 2 of the Competition and Consumer Act 2010 (Cth). The learned magistrate found that the appellant breached the contract between the parties through the provision of a second hand inverter that was not fit for purpose and awarded damages in favour of the respondent.
Five grounds of appeal have been pressed, namely:
(a)The magistrate misdirected himself as to which party bore the onus of proving whether or not on the balance of probabilities the inverter was of acceptable quality or fit for the disclosed purpose of use, erroneously imposing an onus on the appellant to prove on the balance of probabilities that the inverter was of acceptable quality and fit for the disclosed purpose of use.
(b)The magistrate erred in relying on evidence from after the time of supply that the inverter was not of acceptable quality or fit for the disclosed purpose or use despite that the time at which goods are to be of acceptable quality or fit for the disclosed purpose of use is the time at which the goods are supplied to the consumer and not after the time of supply.
(c)The magistrate erred in finding that the inverter was not of acceptable quality or fit for the disclosed purpose of use at the time of supply in circumstances where the evidence adduced by the appellant was that the inverter was functional prior to its supply on 23 March 2016 and the respondent had functionality from the inverter between 23 March and 9 June 2016.
(d)The magistrate erred in failing to draw an inference that the installation of the inverter contributed to the alleged defects or adverse performance of the inverter based on the evidence of L B Joum that he did not follow the applicable manual or transition guide during installation of the inverter and the evidence of the expert witnesses, Matthew Blight and Matthew Dorhauer, as to the importance of use of the applicable manual and transition guide.
(e)The magistrate erred in failing to draw an adverse inference in accordance with the principles in Jones v Dunkel (1959) 101 CLR 298 as a result of the respondent’s unexplained failure to call Kelvin Smith who was the last person to attempt to rectify the alleged defects in the inverter on 9 June 2016.
Before dealing with each ground of appeal, the appellant consistently raised two themes against the magistrate’s decision in relation to jurisdictional error and a failure to give full and adequate reasons. Regarding the former theme, it was submitted that relevant evidence was ignored. As to the latter, it was submitted that there was a recognition by the magistrate about the failure to give reasons by the statement that:
“I have considered the whole of the evidence, and just because matters have not been stated does it indicate that I have disregarded them or not given them sufficient weight.”[1]
[1]T2, lines 39 – 41.
The magistrate’s comment however also included the following observations:
“It is not my intention to fully repeat that evidence here in my decision, however I will refer to certain aspects of it. I wish to make it quite clear that … Conversely, just because matters have been stated is no indication I have given them undue weight. During the course of the trial I have had the opportunity of listening to and observing the demeanour of each of the witnesses whilst they gave evidence. This greatly assisted me in assessing their credibility or otherwise.”[2]
[2]T2, lines 37 – 45.
I was referred to the authority of Drew v Makita (Australia) Pty Ltd [2009] 2 Qd R 219 at [57] where Muir JA (with whom Holmes JA (as her Honour then was) and Daubney J agreed) stated:
“A court from which an appeal lies must state adequate reasons for its decision.[3] The failure to give sufficient reasons constitutes an error of law[4]”.
[3]Sun Alliance Insurance Ltd v Massoud [1989] VR 8 at 18, 19; Pettitt v Dunkley [1971] 1 NSWLR 376 at 388; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 270, 279, 280 per McHugh JA.
[4]Soulemezis v Dudley (Holdings) Pty Ltd; RES 1 v Medical Board of Queensland [2008] QCA 152 at para [14]; Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 at 431; and Fitzgibbon v Waterways Authority [2003] NSWCA 294.
Muir JA provided further useful remarks and stated:
“[61] In Strbak v Newton,[5] Samuels JA said:
[5](Unreported, New South Wales Court of Appeal, Gleeson CJ, Samuels and Priestley JJA, 18 July 1989).
"…What is necessary, it seems to me, is a basic explanation of the fundamental reasons which led the judge to his conclusion. There is no requirement, however, that the reasons must incorporate an extended intellectual dissertation upon the claim of reasoning which authorises the judgment which is given."
[62] Woodward J, in Ansett Transport Industries (Operations) Pty Ltd v Wraith,[6] said that the decision maker:
"…should set out his understanding of the relevant law, any findings of fact on which his conclusions depend (especially if those facts have been in dispute), and the reasoning processes which led him to those conclusions."
[63] Meagher JA in Beale v Government Insurance Office of NSW[7] stated these propositions:
"…there are three fundamental elements of a statement of reasons, which it is useful to consider. First, a judge should refer to relevant evidence. There is no need to refer to the relevant evidence in detail, especially in circumstances where it is clear that the evidence has been considered. However, where certain evidence is important or critical to the proper determination of the matter and it is not referred to by the trial judge, an appellate court may infer that the trial judge overlooked the evidence or failed to give consideration to it: North Sydney Council v Ligon 302 Pty Ltd (1995) 87 LGERA 435. Where conflicting evidence of a significant nature is given, the existence of both sets of evidence should be referred to. Secondly, a judge should set out any material findings of fact and any conclusions or ultimate findings of fact reached. The obvious extension of the principle in North Sydney Council is that, where findings of fact are not referred to, an appellate court may infer that the trial judge considered that finding to be immaterial. Where one set of evidence is accepted over a conflicting set of significant evidence, the trial judge should set out his findings as to how he comes to accept the one over the other. But that is not to say that a judge must make explicit findings on each disputed piece of evidence, especially if the inference as to what is found is appropriately clear: Selvanayagam v University of the West Indies [1983] 1 WLR 585; [1983] 1 All ER 824. Further, it may not be necessary to make findings on every argument or destroy every submission, particularly where the arguments advanced are numerous and of varying significance: Rajski v Bainton (Court of Appeal, 6 September 1991, unreported). Thirdly, a judge should provide reasons for making the relevant findings of fact (and conclusions) and reasons in applying the law to the facts found. Those reasons or the process of reasoning should be understandable and preferably logical as well."
[64] Whilst, in my respectful opinion, it would be inconsistent with authority to apply the three "fundamental elements" rigidly, and I do not understand his Honour to be suggesting otherwise, they provide useful guidance for a determination of the sufficiency of reasons in the general run of cases.”
[6](1983) ALR 500 at 507.
[7](1997) 48 NSWLR 430 at 443 – 444.
I am cognisant that the relevant decision maker must make an assessment as to the need to provide sufficient reasons for making a determination and a balance has to be struck between a basic explanation to be afforded to the parties and an extensive detailed recitation as to how a decision has been reached. In any event, it is with these principles in mind that I will address each ground of appeal.
Ground 1 – Reversal of the Onus of Proof
It was submitted on behalf of the appellant that there was a failure of the magistrate, in the words of his Honour’s decision, to require that the appellant bore the onus of proof that the inverter was not of acceptable quality and not fit for the purpose of use. Relevantly the decision included the following findings:
(a)“I find that notwithstanding the email communication from Mr Fioni to Mr Boland on 27 April 2016, where Mr Fioni advised that ‘the used inverter was working perfectly when it was sent to you’, that there was insufficient evidence that the inverter was ever working perfectly.”[8];
(b)“I was not satisfied Mr Maurer’s evidence was reliable enough to satisfy me on the balance of probabilities that the inverter was actually in satisfactory working order…”.[9]
[8]T5, lines 5 – 36.
[9]T5, lines 41 – 42.
It was submitted that the magistrate fell into error and thus the respondent, as plaintiff, failed to prove that the inverter was not of acceptable quality or fit for purpose at the time of supply. For reasons to follow, I am not satisfied the magistrate caused a reversal of the onus of proof or that it was necessary for the respondent plaintiff to prove, at the time of supply, that the inverter was not of acceptable quality or fit for purpose. In essence, the magistrate accepted that between 23 March 2016 and 27 April 2016, there were defects associated with the inverter, and despite attempts to fix the defects, by 9 June 2016, the inverter and therefore the crane ceased to operate. The magistrate merely preferred the plaintiff’s evidence over the defendant’s evidence and ruled in favour of the plaintiff given the context of the plaintiff’s pleaded case, namely:
(a)The inverter was supplied, received and installed on 23 March 2016.
(b)During and after installation, the inverter commenced to display ‘observable defects’.
(c)Attempts to fix the ‘observed defects’ were unsuccessful.
(d)The inverter also suffered ‘latent defects’ (which, by the nature of latency, were not observable at the time of supply).
(e)From those facts flowed certain legal consequences, specifically breach of contract, and/or breach of a consumer guarantee under the ACL.
It was highlighted by the appellant that there was no pleading by the respondent that the inverter was not working at the date of supply on 23 March 2016. However my view is that the magistrate was entitled to proceed on the basis of what was pleaded on behalf of the respondent, namely that:
“During and after installation, between 23 March 2016 and a date on or around 27 April 2016, Mr Joum discovered several defects of the Inverter including:
(a)The Inverter was not tuned correctly to the motor indicating that some of the parameters were not correct. This caused a speed vibration in the mid-range.
(b)The Inverter shuddered in the transition between first and second gears.
(c)A fault in the brake. The VFD shuts down intermittently during which the inverter displayed the fault of ‘brake release failure’. The inverter was trying to drive with the brake still on. The terminal block circuit board, which also contains the brake relay, had a relay missing and the brake relay looked like it had been resoldered.
(d)The pre-set motor RPM is higher than the RPM on the motor’s name plate.
(e)The drive will run for a short period from cold, but will trip on a ground fault, and will not re-set. Even if the drive is powered down for 10 minutes and then powered back up, the drive will still fault on an EXT run command, which does not appear to be wired as a separate input.
(f)If the drive is left powered down for 20-30 minutes, the drive will run fine until it heats up again. The current never exceeds the drive current, even when passing through the vibration. Motor and brake resistors check at 550 Meg Ohm to Earth from the control cabinet.
(g)The outside case of the inverter was rusted,
(collectively, ‘the observed defects’).”[10]
[10]Third Further Amended Statement of Claim at [9]. At the hearing of the appeal, it was submitted that subparagraphs (b) and ff were essentially consequences of subparagraph (a). Not much turns upon this however because each subparagraph was pleaded as an ‘observed defect’. See also the defendant’s response to this allegation contained in the Further Amended Defence at [9].
This allegation was denied by the appellant in its pleading.[11]
[11]Further Amended Defence at [9].
The appellant has criticised a failure by the respondent to plead a date from which the inverter allegedly ceased to work properly after it had been installed.[12] However in my view that was not fatal to the respondent’s case because, in addition to the allegation cited above regarding the ‘observed defects’, it was pleaded and the matter proceeded below, to which the magistrate accepted, that by 9 June 2016 the inverter and, therefore, the crane stopped working altogether.[13] Defects were noticed from 23 March 2016 until 9 June 2016 when the inverter and crane stopped operating. The magistrate made reference in the reasons to Mr Joum’s evidence, which he found “credible and reliable”, and “the evidence of other witnesses who attempted to rectify the alleged defects in the inverter”, which “cause[d] me no concerns as to their credibility, and I found them reliable witnesses”.[14] The magistrate was not persuaded by the evidence of defence witnesses Mr Fioni, Mr Hobbs and Mr Maurer.[15] The magistrate referred to the evidence of the witnesses he was prepared to act upon later in his reasons, as well as providing sufficient reasons for not acting upon the evidence of other witnesses.[16] The latter was largely because of reliability issues. In doing so and in accepting the evidence which was “credible and reliable”, the magistrate found “the defects were such that they were unable to be repaired despite numerous attempts that the inverter was not – and that the inverter, therefore was not fit for the purpose of use in the crane”.[17] The defects, consistent with the pleaded case and the evidence received at trial, were identified by the magistrate prior to the finding of not fit for purpose.[18]
[12]Appellant’s Outline of Argument at [25(a)].
[13]Third Further Amended Statement of Claim at [12A].
[14]T3, lines 10 – 14.
[15]The magistrate made no explicit reference to the defence expert, Mr Dorhauer. See though T3, lines 15 – 19.
[16]T5 – T6, line 19. Consistent with the approach taken in Drew v Makita, supra.
[17]T6, lines 11 – 14.
[18]T5.
It was advanced on behalf of the appellant that the respondent’s case at trial was that the inverter did work but with a slight shudder at low speed which witnesses for the appellant defendant testified could have been due to external sources, or the failure of the installer, Mr Joum, to manually insert new parameters into the inverter. However, the magistrate relied upon, accepted and preferred the evidence of the witness, Mr Joum.[19] In making the finding in relation to whether the inverter was suitable for purpose, the magistrate said:
“On the evidence of the expert witnesses, I am satisfied that the inverter was a compatible replacement. The evidence of Mr [Joum], a crane technician, was that a shutter was evident upon installation of the inverter, that the shutter put stress on other mechanical components, that the inverter was unable to perform its own autotune, that his emailed Mr Fioni and Mr Boland on 31 March 2016 about the shuttering in the first speed, that he sought advice on behalf of Mr Boland on how to correct the inverter tuning and rough operation in first gear; that after speaking with persons recommended by the defendant, the defects with the inverter were still unable to be rectified; that the inverter then began shutting down intermittently, and that he noticed the inverter had a relay missing and that the relay was responsible for the brake that had soldered before; that the inverter was displaying error messages and that ultimately, on 9 June, the inverter ceased working altogether. Mr [Joum’s] evidence continued: that he advised both Mr Boland and Mr Fiori by email dated 27 April 2016 that, in his view, Mr Boland would be better off with a new inverter as unless the brake fault can be assured as fixed, the inverter looks to be nothing but more problems”.[20]
[19]T3, lines 10 – 19.
[20]T5, lines 1 – 17.
Although not explicitly stated, by making the above findings, it should be evident that the magistrate preferred Mr Joum’s evidence to any defence evidence.[21] No error can be discerned.
[21]Including Mr Dorhauer. See also T3, lines 15 – 19.
It was highlighted and submitted on behalf of the appellant that the magistrate misdirected himself with the following:
“I further find that the contract was formed on the basis there was no warranty on the used inverter. That is the email dated 22 March 2016. On that point, though, I am satisfied where the defendant did point out defects with the inverter, that a guarantee of acceptable quality still applied to the sale of the inverter.”[22]
[22]T4-4 – 4.
It was suggested that the magistrate appeared to make a finding that there were defects in the inverter as at the date of supply, which situation was not pleaded by the respondent nor did the respondent adduce any evidence on this point. Accordingly the magistrate had fallen into jurisdictional error by making a decision regarding defects as at the date of supply without any pleadings or evidence to support it. This contention however overlooks that it was not necessary for the plaintiff to prove that at the time of supply, the inverter was not in a satisfactory working order. Consistent with the pleaded case and the evidence at trial, the magistrate accepted that defects arose, after supply for a period of time, sufficient to find that the inverter was not suitable in light of the pleaded causes of action.
It was also submitted that the magistrate made a finding of “a guarantee of acceptable quality still applied to the sale of the inverter” but acceptable quality meant that it had to be not working properly as at the date of supply and none of this was pleaded. I reject this contention for reasons given earlier. No error can be discerned.
It was submitted that the most influential indication that the magistrate had reversed the onus of proof in requiring the applicant as the defendant at trial, to prove the inverter was fit for purpose and/or of acceptable quality was contained in the magistrate’s decision, namely:
(a)“I find that notwithstanding the email communication from Mr Fioni to Mr Boland on 27 April 2016, where Mr Fioni advised that ‘the used inverter was working perfectly when it was sent to you’, that there was insufficient evidence that the inverter was ever working perfectly.”[23]
(b)“I was not satisfied Mr Maurer’s evidence was reliable enough to satisfy me on the balance of probabilities that the inverter was actually in satisfactory working order…”.[24]
[23]T5, lines 36 – 39.
[24]T5, lines 41 – 42.
However I accept as the respondent submitted that the statements emphasised by the appellant have been taken out of context which deprives the magistrate’s reasoning. The magistrate began his analysis of the issue of fitness for purpose by setting out the effect of the evidence led by the plaintiff in aid of its pleaded case. His Honour then:
(a)against the weight of that evidence, went on to identify the evidence led by the defendant; and,
(b)having analysed the whole of the evidence, concluded that:
“I was satisfied that the defects were such that they were unable to be repaired despite numerous attempts…and that the inverter, therefore, was not fit for the purpose of use in the crane.”[25]
[25]T5, lines 11 – 14.
Notably, the respondent submitted, which I accept, that with reference to Mr Fioni’s evidence, the magistrate’s remarks constituted no more than a recording of his Honour’s assessment of Mr Fioni’s oral and documentary evidence.
Additionally, the submission was advanced by the respondent, with which I agree, that the appellant’s emphasis of the magistrate’s finding regarding Mr Maurer’s evidence, has been truncated in a way that deprived his Honour’s statement to its full effect because what was stated in full was as follows:
“I was not satisfied Mr Maurer’s evidence was reliable enough to satisfy me on the balance of probabilities that the inverter was actually in satisfactory working order such that I would prefer it over the email evidence on behalf of the plaintiff outlining the defects they were experiencing with the inverter.”[26]
[26]T5, lines 41 – 44.
His Honour then continued with his analysis of Mr Maurer’s evidence in terms which left the magistrate with further doubt as to Mr Maurer’s credibility in relation to the inverter, before moving onto an analysis of the evidence of the defendant’s next witnesses. I accept therefore that seen in full context, it was clear that the magistrate’s remarks were not a conclusion on the pleaded case such as to involve either a reversal of the onus of proof or a misdirection. Rather, those remarks again constituted no more than the magistrate’s recordings of his assessment of Mr Maurer’s evidence.
It is clear the magistrate was prepared to act upon the evidence of Mr Joum. Mr Joum was the installer of the inverter and his evidence demonstrated firstly that the defect of the shudder existed at the date of supply/installation, and secondly that that defect rendered it to be either not of acceptable quality or fit for purpose.
His Honour’s remarks that “…where the defendant did not point out any defects with the inverter…a guarantee of acceptable quality still applied to the sale of the inverter”:
(a)were not a finding that defects existed, although such a finding was later made in the decision on the basis of the plaintiff’s pleaded case and evidence;
(b)rather, were likely an allusion to (and ruling out of ) s 54(4) of the ACL (which provides in effect that goods are taken to be of acceptable quality if defects are drawn to the consumer’s attention prior to the agreement to supply);
(c)consequently did not involve any jurisdictional error.
Therefore contrary to the appellant’s submissions, there was no reversal of the onus of proof when the magistrate found, on the evidence available, that the inverter was not of acceptable quality nor fit for purpose. I am not satisfied ground 1 has been established.
Ground 2 – Quality at Time of Supply
It was submitted on behalf of the applicant that this ground is straightforward. The only pleadings or evidence for a defective inverter was that such was the case after supply whereas for an item to be found to be not fit for purpose or of acceptable quality (in circumstances where the magistrate acknowledged it had been sold without a warranty), such must be proved to have been the case at the time of delivery. It was submitted that the fundamental problem for the respondent plaintiff was that it bought an inverter without any warranty at all. It was a commercial transaction and must be assumed that the respondent was capable of executing a bargain to protect itself against a second-hand product that might not work after some time in the future. But the respondent did not and purchased an inverter without negotiating any warranty period at all with the applicant. It was submitted that caveat emptor applies to such a transaction and the magistrate did not consider this aspect and therefore fell into jurisdictional error. It was submitted that the magistrate only found that there was a warranty on the basis of unpleaded and unproven defects which the magistrate did not even find were in existence as at the date of supply of 23 March 2016.
Dr Wilson of counsel, who appeared for the appellant at the hearing of this appeal, submitted that there was insufficient evidence to find that the inverter was defective at the time of supply. Reliance was placed on the issue of the need for the inverter to be programmed. The evidence given by the witnesses below, all of which was ignored by the magistrate, sufficiently demonstrated that had the inverter been programmed properly, it would have worked there. This would lead to a finding that the inverter was not defective. Dr Wilson identified the evidence regarding the quality of the inverter prior to installation, at the time of installation and after installation. Relevantly the evidence suggested that it should have been programmed correctly and therefore there was nothing wrong with the inverter such that a finding regarding any defects could be made. It was necessary of course to look at the plaintiff’s evidence given the defendant did not have access to the inverter post installation. Relevantly that evidence came from the plaintiff’s Mr Boland[27] as well as evidence from Mr Joum[28] all of which, it was submitted, the only logical conclusion was that Mr Joum was ‘out of his depth’ regarding the inability of the plaintiff to properly program the inverter so that it could function.[29] He submitted that Mr Joum did not program it properly or indeed attempt to program it at all. In addition, there was evidence from Mr Beddal, a witness for the plaintiff who worked on the inverter, all of which Dr Wilson submitted the magistrate ignored.[30]
[27]T1-19, T1-36, T1-62 (evidence from Mr Joum).
[28]T1-69, T1-71, T1-72, T1-73, T1-84, T1-85 and T1-87.
[29]This was disputed by the respondent in evidence led at trial from Mr Bolan (T1-46) and Mr Joum (T1-57).
[30]See for instance T1-92, T1-93, T1-94.
Dr Wilson submitted that the ‘silver bullet’ was revealed in the evidence of the plaintiff’s drive specialist, Mr Hatcher who stated:
“I have been to look at this drive and found that the unit is tripping on ground fault initially. The unit is also not tuned correctly to the motor, indicating that some of the parameters are not correct, causing a speed vibration in the mid-range.”[31]
[31]T1-100.
Dr Wilson submitted that this evidence together with other evidence from Mr Hatcher was ignored by the magistrate.[32] In addition, the expert evidence regarding the importance of programming correctly was ignored by the magistrate.[33] It was submitted that such evidence demonstrated that there was nothing wrong with the inverter. The magistrate was plainly unreasonable in coming to the view that he formed regarding the success of the claim.
[32]T1-101, T1-102 and T1-106.
[33]See for instance T1-111 and T1-114.
On the other hand, the respondent submitted, with which I agree, that the finding of defects at the time of supply involved no jurisdictional error because the plaintiff’s pleaded case and accompanying evidence was clear and adequate to support the findings made in the decision. It was highlighted that the very purpose and effect of the contractual warranty implied by the Sale of Goods Act 1896 (Qld) and the consumer guarantees prescribed by the ACL is to provide the plaintiff with the benefits it claimed in the proceedings.
The respondent identified that it was not only issues to do with programming which formed part of what was pleaded as the “observed defects”, but also the “latent defects” of which the magistrate had sufficient regard to given the evidence led at trial. Such evidence enabled the magistrate to properly form the view that there were defects and such defects rendered the inverter not fit for purpose. There was evidence that the inverter could not be programmed/tuned. It submitted that evidence was led at trial that:
(a)The inverter immediately showed defects, namely a shuddering in the gears and not working properly.[34] It was confirmed under cross-examination that the inverter shuddered, was not doing its job properly and did not ever work properly.[35]
(b)A shudder in the part of the crane controlled by the inverter was a problem,[36] indeed a serious problem because it controls the winch and that is what lifts everything so it is dangerous if it is not working properly.[37]
(c)Despite subsequent representations by the defendant that the inverter was working perfectly when supplied, it in fact never worked perfectly,[38] and did not run properly from the day it was put in.[39]
(d)Despite subsequent representations by the defendant that the inverter was working fine prior to shipment, such was not accepted by the plaintiff.[40]
(e)The inverter was inspected by technicians including a technician who had done work for the defendant, Mr Beddal.[41]
(f)The plaintiff sought advice from a technician named John Hobbs who had been proposed by the defendant to assist, without success.[42]
(g)Attempts were made, without success, to fix the shutter in the inverter, including by attempting to auto tune it (which was a process that is wise and necessary to undertake in a case where the history of the inverter is not known),[43] which attempts did not work,[44] and manually overriding the break.[45]
(h)The inverter demonstrated further defects, being that it would shut down intermittently and display a break release failure message,[46] would not activate the brake contractors,[47] and would run for a short period from cold but then trip on ground fault and not reset,[48] and also had a software issue as well.[49]
(i)At no point in time did any of the technicians who inspected the inverter in situ suggest that the installation by Mr Joum was not correct,[50] and it was never inspected in situ by the defendant.[51]
(j)In June 2016, the winch just completely stopped and could not be used at all.[52]
[34]Evidence from Mr Boland (Senior) at T1-19 and T1-20; Mr Joum at T1-53; Mr Beddal at T1-92; Mr Hatcher at T1-100 – T101.
[35]Mr Boland (Senior) at T1-37.
[36]Mr Joum at T1-55.
[37]Mr Boland (Senior) at T1-20.
[38]Mr Boland (Senior) at T1-21 – T1-T22.
[39]Mr Joum at T1-71.
[40]Mr Boland (Senior) at T1-24.
[41]Mr Boland (Senior) at T1-26.
[42]Mr Joum at T1-62 – T1-64. See also Mr Joum at T1-74 – T1-75 and Mr Beddal at T1-92, T1-93 and T1-94.
[43]Mr Hatcher at T1-100 – T1-101.
[44]Mr Boland (Junior) at T1-46. See also Mr Joum at T1-56 – T1-57.
[45]Mr Joum at T1-70 – T1-71.
[46]Mr Joum at T1-68, T1-69 – T1-70.
[47]Mr Joum at T1-69.
[48]Mr Hatcher at T1-101.
[49]Mr Hatcher at T1-101.
[50]Mr Joum at T1-60. Mr Beddal at T1-92. Mr Hatcher at T1-101.
[51]Mr Foini at T2-23.
[52]Mr Boland (Junior) at T1-47.
It was submitted on behalf of the respondent that the appellant led no evidence capable of contradicting these matters. However the difficulty of course for the appellant was that it could not contradict these matters and could only challenge and test that evidence because the appellant did not have access to the inverter post installation. In any event however it does seem to me that, overall, there was sufficient evidence led below, and indeed for the magistrate to find, that defects were present such that the defects rendered the inverter not fit for purpose. Again the magistrate preferred certain evidence over other evidence. His Honour was prepared to act especially on the evidence of Mr Joum. Mr Joum’s evidence revealed both observed and latent defects. That evidence coupled with the evidence of Mr Hatcher revealed and permitted the magistrate to make a finding that the inverter was defective and not fit for purpose. It was not necessary for the magistrate to find that the inverter was defective at the time of supply.
In my view, despite the finding by the magistrate that “the contract was formed on the basis there was no warranty on the used inverter”, it was open to his Honour to be satisfied “that a guarantee of acceptable quality still applied to the sale of the [used] inverter”. Presumably the guarantee of acceptable quality was implied by statute, although not expressly stated by his Honour. The case pleaded and advanced below relevantly included that during and after installation, the inverter’s ‘observed defects’ were noticed and efforts were made to attempt to fix the observed defects. That evidence was led by the plaintiff’s witnesses, being Mr Joum, Mr Beddal, Mr Parker and Mr Hatcher. Regarding these individuals, the magistrate said: “Mr [Joum’s] evidence I found to be reliable and credible. His evidence was consistent with the independent evidence contained in the emails. The evidence of other witnesses who attempted to rectify the alleged defects in the inverter cause me no concern as to their credibility, and I found them reliable witnesses”.[53] It was this evidence which the magistrate was prepared to act upon, and consistent with the pleaded case, to find a breach of a consumer guarantee under the ACL, although again the magistrate did not expressly state the relevant provision. Not unsurprisingly therefore, the respondent pressed by way of notice of contention that, in accordance with the pleading and the evidence, coupled with the finding made by the magistrate that:
[53]T3, lines 10 – 14.
(a)a consumer guarantee of acceptable quality:
(i)applied to the defendant’s supply of the inverter by virtue of s 54(1) of the ACL; and
(ii)was breached by the defendant (by reason of the same matters by which the court was satisfied that the defendant supplied an inverter that was not fit for purpose of use in the crane (specifically that it featured defects that were unable to be repaired despite numerous attempts)), entitling the plaintiff to recover its losses from the defendant by way of damages pursuant to s 236(a) of the ACL.
(b)a consumer guarantee of fitness for the purpose of use in the crane:
(i)applied to the defendant’s supply of the inverter by virtue of s 55(1) of the ACL; and
(ii)was breached by the defendant (by reason of the same matters by which the court was satisfied that the defendant supplied an inverter that was not fit for purpose of use in the crane (specifically that it featured defects that were unable to be repaired despite numerous attempts)), entitling the plaintiff to recover its losses from the defendant by way of damages pursuant to s 236(a) of the ACL.
Consequently I find this ground of appeal has not been established.
Ground 3 – Functionality at Time of Supply
It was submitted on behalf of the appellant that the magistrate acknowledged that the previous owner of the inverter had used the inverter prior to selling it to Mr Fioni, who then sold it to the respondent. His Honour said:
“Mr Maurer, on his evidence, has on the same day that the contract was agreed between the parties purchased the crane with the inverter in question in it. His use of that inverter was limited, as I have stated before, to him pulling down the crane”.[54]
[54]T5, lines 44 – 47.
It was submitted therefore that the magistrate found that it had been working in the short time before delivery to the respondent, but ignored this relevant evidence and thus fell into jurisdictional error. In doing so it relied upon the evidence given by Mr Fioni and Mr Maurer that the inverter was working properly at the time of delivery. However, it seems to me the magistrate had sufficiently expressed his reservations regarding the evidence of Mr Fioni and Mr Maurer, such that it impacted upon their credibility and reliability.[55]
[55]For example, at T3 and T5.
In any event, the respondent has submitted that the magistrate neither erred in finding that the inverter was not of acceptable quality nor fit for purpose at the time of supply. Rather it was said that the appellant has argued and misstated the evidence led at trial and the magistrate’s careful assessment of it. Specifically, it is not the case that the evidence adduced by the appellant at trial was that the inverter was working properly at the time of delivery. Such evidence, as was led by the defendant, was not accepted, but in any event was limited to periods prior to the supply. For example:
(a)Mr Fioni’s evidence about the condition of the crane approximately a week before he offered it to Mr Boland and “one to two weeks before”. The magistrate, with the benefit of having observed Mr Fioni’s testimony, considered him “somewhat selective” in his recollections, which affected his reliability of the evidence, and found that Mr Fioni’s contemporaneous statement that the inverter was working perfectly at the time of supply was not supported by the balance of the evidence.
(b)Mr Maurer’s evidence that roughly a week before the crane was removed to the defendant’s yard, he operated the crane as it was pulled down. The magistrate, with the benefit of having observed Mr Maurer’s testimony, formed doubts as to his credibility and reliability of his evidence by comparison with the contemporaneous email evidence.
(c)Mr Hobbs’s evidence, which the magistrate considered was not sufficient in any way to support a proposition that the inverter was in good condition, because he had never seen it operating.
Furthermore the magistrate gave greater weight to the evidence led by the respondent regarding the defects which commenced to become apparent on the day of supply/installation. It cannot consequently be said that the magistrate found that the inverter “had been working in the short time before delivery to the respondent”. Further, the magistrate did not ignore the defendant’s evidence, he simply did not prefer or accept it.
I agree with the submissions raised by the respondent and, for the reasons stated in ground 2 regarding the various aspects of the evidence, I find ground 3 has not been established. Further the magistrate duly recognised that the respondent had functionality of the crane for a period of time and reduced the damages by 10 percent.[56] This ground fails.
[56]See T6, lines 42 ff.
Ground 4 – Defective installation
It was submitted on behalf of the appellant that the magistrate improperly reversed the onus of proof with regard to the installation of the inverter. The respondent failed to plead that the inverter was installed competently and that any defective products that emerged were not the fault of the installer. It was highlighted that the appellant pleaded in the alternative that had the inverter been installed correctly it would not have suffered from the defects alleged by the plaintiff below. The respondent then positively alleged in its reply a denial to the allegation as the inverter was installed correctly by an experienced and licensed crane technician, Mr Joum and the installation of the inverter was then checked by Mr Beddal and Mr Hatcher, a specialist inverter technician, to ensure the installation was effected correctly. It was submitted that because of this pleading, the respondent as plaintiff, made a specific allegation that these individuals had effected the installation correctly. However the magistrate did not explore that pleading for whether or not it had been proven, as in the section of the decision referring to the installation, the magistrate clearly evidenced his error in reversing the onus of proof in finding that:
“There was no evidence before the court to satisfy me on the balance of probabilities that the installation was incompetent or that it in any way contributed to the defects of the inverter. I find that the installation of the inverter did not, therefore, contribute to the adverse performance of the inverter.”[57]
[57]T6, lines 26-29.
It was submitted that in this reversal of the onus of proof, the magistrate was clearly referring to his “satisfaction” and the lack of evidence able to be supplied by the applicant to prove a defective installation. This was impossible for the appellant to have proven, in any case, as the appellant did not have access to the crane in the relevant period of the installation and in the immediate aftermath.
In any case, it was submitted that the proper installation was an essential ingredient of the statement of claim which had not been pleaded. By drawing the court’s attention to the failure to deal with the issue, the appellant was not reversing the onus of proof, it always remained with the respondent as plaintiff to plead and prove the essential elements of the case. It was highlighted in this respect that evidence that the inverter may not have been properly installed included that of:
(a)The installer, Mr Joum, who admitted that he did not manually input the necessary parameters;
(b)Mr Fioni regarding the respondent declining the services of the appellant to install the inverter and the installer should have manually tuned the inverter but he did not;
(c)The vibration when using the inverter could come from incorrect parameters or no parameters loaded into the inverter by the installer and/or the inverter could have been reprogrammed.
I disagree with the contention advanced by the appellant. It was unnecessary for the respondent, as plaintiff, to plead specifically that the inverter was installed competently because the proper installation was not an essential ingredient of the statement of claim for the success of the plaintiff’s action. All the magistrate did, which was open to him on the pleaded case and the evidence, was to find that observed and latent defects were noticed about the inverter, after the date of supply, over a period of time, such that it rendered the product not fit for its purpose. In doing so, the magistrate simply preferred the evidence of Mr Joum about the defects over contrary evidence. Because the appellant, as defendant, pleaded in the alternative that had the inverter been installed correctly, it would not have suffered the defects, it was incumbent upon the defendant to lead evidence about it. The particulars pleaded by the defendant were supported by the expert opinion of Matthew Dorhauer, however the magistrate commented that:
“The evidence of the experts was limited to their viewing of the inverter several years after it ceased working. Neither witness was able to give any evidence of the operation or the defects that were or were not present before or after installation of the plaintiffs crane with any reliability.”[58]
[58]T3, lines 15 – 19.
In any event, the respondent has submitted in response to this ground of appeal with which I agree, that the respective pleaded cases were as follows:
(a)The respondent plaintiff pleaded that:
(i)during and after installation, certain defects in the inverter were observed;
(ii)the observed and latent defects in the inverter caused the plaintiff to suffer loss;
(b)In response to these allegations respectively, the appellant:
(i)denied the allegation as to the observed defects on the basis that such was untrue, for the defendant offered the direct explanation that, inter alia, “had the inverter been installed correctly, it would not have suffered from the defects alleged…” and,
(ii)did two things: one, denied the causation, for which it offered the direct explanation of “the matters pleaded in the corresponding paragraphs of this defence” and, two, advanced a positive case “…and says that any loss of damage suffered by the plaintiff…is as a result of the matters pleaded in [relevantly] paragraphs 9(d) and not the conduct of the defendant”. That positive allegation was particularised only by non-specific reference to the expert report of Mr Dorhauer.
(c)In its reply, the plaintiff, denied incorrect installation, and said that the defendant had failed to plead any material facts to support that allegation.
It was also highlighted that the defendant positively pleaded, but failed either to particularise or lead any evidence, that the installation was incorrect. It therefore bore the onus of proof and led no evidence to discharge it, which the magistrate was prepared to accept.
Consequently the magistrate made no error in concluding that he was not satisfied on the balance of probabilities that the installation was incompetent or contributed to the defects of the inverter. I therefore find this ground has not been established.
Ground 5 – Failure to call a witness
It was submitted on behalf of the appellant that the last person to have attempted to rectify the crane who could have entered new parameters into the inverter to have made it operable, was Kelvin Smith. But he was not called by the respondent, who had access to him, thus there was no evidence of why the inverter stopped working on or about 9 June 2016. Thus under the principles established in Jones v Dunkel[59], the appellant’s case is thus enhanced by the respondent, without any or sufficient reason, failing to call Kelvin Smith.
[59](1959) 101 CLR 298.
A contrary position was taken by the respondent who submitted that the evidence did not show that Mr Smith was the last person to have attempted to rectify the crane. Rather the last such person was one Eddie Parker. The significance of Mr Smith’s evidence is consequently diminished and therefore the ground founders on this aspect alone. Further, the appellant has misstated the effect of a Jones v Dunkel inference, which is not that the appellant’s case is enhanced but rather that:
(a)“…where an inference is open from facts proved by direct evidence and the question is whether it should be drawn, the circumstances that the defendant disputing it might have proved the contrary had he chosen to give evidence properly to be taken into account as a circumstance in favour of drawing the inference”.[60]
(b)Such an inference will not be drawn where “the evidence was insufficient to call for an explanation for his failure to give evidence”.[61]
[60]Per Menzies J at 312.
[61]Glancy v McPhail [2003] QCA 263 per Williams JA (with whom McPherson JA and Fryberg J agreed) at [9] and [12].
Here the appellant led no direct evidence which reasonably allowed an inference that the inverter’s poor performance was the result of incorrect installation. Consequently the Jones v Dunkel principle did not come into play to afford the magistrate any greater basis upon which to draw such an inference. Rather, the weight of the evidence was that there was nothing incorrect in the installation. As has been stated by the High Court, “the critical deficiencies of proof apparent in the present case cannot be remedied by reliance upon any failure to call these witnesses”.[62]
[62]West v Government Insurance Office of New South Wales (1981) 148 CLR 52 at 69.
I am not satisfied this ground has been met because Mr Smith was not the last person who worked on the inverter and there was no direct evidence below which reasonably allowed an inference that the inverter’s poor performance was the result of incorrect installation.
Conclusion
All in all I am of the view the magistrate properly considered the evidence led over the course of three days, gave sufficient reasons for granting judgment in favour of the plaintiff for the amount awarded and did not fall into any error in making the decision. The appeal therefore fails and should be dismissed with the applicant to pay the respondent’s costs. Should there be some error, as alluded earlier, a notice of contention was filed which has pressed that, in accordance with the pleading and the evidence, coupled with the finding made by the magistrate:
(a)A consumer guarantee of acceptable quality:
(i)applied to the defendant’s supply of the inverter by virtue of s 54(1) of the ACL; and
(ii)was breached by the defendant (by reason of the same matters by which the court was satisfied that the defendant supplied an inverter that was not fit for purpose of use in the crane (specifically that it featured defects that were unable to be repaired despite numerous attempts)), entitling the plaintiff to recover its losses from the defendant by way of damages pursuant to s 236(1) of the ACL.
(b)A consumer guarantee of fitness for the purpose of use in the crane:
(i)applied to the defendant’s supply of the inverter by virtue of s 55(1) of the ACL; and
(ii)was breached by the defendant (by reason of the same matters by which the court was satisfied that the defendant supplied an inverter that was not fit for purpose of use in the crane (specifically that it featured defects that were unable to be repaired despite numerous attempts)), entitling the plaintiff to recover its losses from the defendant by way of damages pursuant to s 236(1) of the ACL.
A review of the magistrate’s findings sufficiently enables me to accept that the decision of the magistrate should be affirmed on a ground other than a ground relied upon by the court below. I accept the magistrate made the express finding that the defendant breached the contract through the provision of the second hand inverter and no express finding in the alternative for damages pursuant to s 236(1) of the ACL. However it is clear by the finding that the second hand inverter was not fit for purpose, the magistrate accepted the complaint by the plaintiff that the inverter was not of acceptable quality or not fit for purpose based largely upon the evidence of Mr Joum, such that judgment be awarded against the respondent defendant.
Proposed Order
Having not identified any error or mistake in law in the magistrate’s decision, the appeal is dismissed.
In the event the parties are unable to resolve the issue of costs by consent within 14 days, I direct that the respondent file and serve written submissions (less than 5 pages) within 14 days and the appellant file and serve written submissions (less than 5 pages) within 14 days thereafter.
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