Trajkovski v R K Findlay Pty Ltd - [2008] NSWSC 273

No judgment structure available for this case.

CITATION: Trajkovski v R K Findlay Pty Ltd [2008] NSWSC 273

HEARING DATE(S): 2-12 April, 17 April and 21 September 2007; final submissions 2 November 2007

JUDGMENT DATE :
31 March 2008

JUDGMENT OF: Harrison J

DECISION: Defendants to pay the plaintiff $10,000 together with interest at court rates from 25 November 1994

CATCHWORDS: CONTRACT – agreement to provide engineering advice for obtaining full volume approval to import Porsche motor vehicles complying with Australian design rules and compliance plate approval – whether agreement extended to scheme to import motor vehicles in parts – terms of agreement vague – agreement void for uncertainty – money paid on a consideration that wholly failed - TORT – duty of care – scope and content of duty coextensive with terms of agreement – not possible to determine whether breach occurred

LEGISLATION CITED: Motor Vehicle Standards Act 1989

CATEGORY: Principal judgment

CASES CITED: Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104
F & G Sykes (Wessex) Ltd v Fine Fare Ltd [1967] 1 Lloyd's Rep 53
Hammond v Vam Ltd [1972] 2 NSWLR 16
McRae v Commonwealth Disposals Commission (1951) 84 CLR 377
Mobile Innovations Limited v Vodafone Pacific Limited & Ors [2003] NSWSC 166
York Air Conditioning and Refrigeration (A'asia) Pty Ltd v The Commonwealth (1949) 80 CLR 11

TEXTS CITED: J W Carter and D J Harland, Contract Law in Australia, 4th ed, (2002) Butterworths

PARTIES: Petar Trajkovski (Plaintiff)
R K Findlay Pty Ltd (First defendant)
Russell K Findlay (Second defendant)

FILE NUMBER(S): SC 20143 of 2000

COUNSEL: J B Conomy with C G Carroll (Plaintiff)
R S Sheldon (Defendants)

SOLICITORS: Colin Daley Quinn (Plaintiff)
Bryan Gorman & Co (Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
PROGRESSIVE LIST

Harrison J

31 March 2008

20143 of 2000 Petar Trajkovski v R K Findlay Pty Ltd and Russell K Findlay
JUDGMENT

1 HIS HONOUR: By his first amended statement of claim filed 14 February 2002, the plaintiff sues the defendants for damages. The plaintiff claims in contract and in tort.

2 The plaintiff alleges that, by an agreement in writing dated 26 October 1994 made between the plaintiff and the first defendant, the first defendant agreed to provide certain technical information and services to the plaintiff. The technical information and services are said to be set out in paragraphs 1 to 4 inclusive of the agreement and relate to 1975 to 1989 series Porsche 911 motor vehicles. Alternatively, the plaintiff alleges that the same agreement obliged the second defendant to perform the first defendant's obligations arising under the contract.

3 The plaintiff alleges that in purported performance of the agreement, the defendants, on about 24 November 1994, lodged with the Federal Office of Road Safety ("FORS") an application for Compliance Plate Approval in respect of such vehicles. The plaintiff alleges further that the defendants were, or should have been, aware in October 1994 and at all material times thereafter that certain additional requirements for the issue of Compliance Plate Approval for these vehicles would become operative after 30 June 1995. In particular, so the plaintiff alleges, the defendants knew or should have known of the fact that if Compliance Plate Approval in respect of 1975 to 1989 series Porsche 911 motor vehicles was not issued by that date, such vehicles would be required to comply with what was, in effect, a more onerous Australian Design Rule, being ADR 69/00 on and from 1 January 1996. Central to the plaintiff's allegations in this respect is that the defendants knew or should have known of the fact that 1975 to 1989 series Porsche 911 motor vehicles would not comply with ADR 69/00.

4 It is the plaintiff's case that the defendants, in October 1994 and at all material times thereafter, were aware of the fact the plaintiff's purpose for obtaining such approval was to affix a compliance plate to certain 1975 to 1989 series Porsche 911 motor vehicles which he proposed to import and to sell at a profit.

5 The plaintiff alleges that in breach of the agreement and in breach of an express guarantee contained in it, the application prepared by the defendants was deficient and inadequate for the purpose for which it was lodged and continued to be deficient and inadequate up to and including 30 June 1995 and beyond.

6 In answer to the claim in contract the defendants say that any obligations under the agreement were to be performed by the second defendant and others employed by the first defendant. All other matters are admitted, with the exception of the allegations of breach of contract. The defendants deny that there were any deficiencies or inadequacies and say that any outstanding requirements were caused, inter alia, by the plaintiff's failure to provide requisite test vehicles and parts.

7 The claim in negligence mirrors the claim in contract. The plaintiff alleges that the defendants were subject to a contractual obligation to exercise reasonable care and skill in the making of the application and in advising the plaintiff about it. The plaintiff alleges that, in breach of the duty of care owed by the plaintiff to the defendants, the defendants failed to draft the relevant application with necessary and sufficient technical data to achieve its purpose, failed to advise the plaintiff of the deficiencies in the application and how to address them and failed to overcome the deficiencies in the application in a timely way or indeed at all. The plaintiff's claim in negligence is denied.

8 The plaintiff also alleges a total failure of consideration.

9 In their defence to the first amended statement of claim filed 4 June 2002, the defendants raise a series of matters in answer to the whole of the first amended statement of claim. For the reason that the terms of the written contract lie at the heart of the plaintiff's case, and to the defendants' responses to it, it is convenient to refer to the terms of the agreement in detail before turning to those responses.

The contract

10 The agreement is dated 26 October 1994. It is relevantly in the following form:-

" CERTIFICATION PORSCHE 911

CONDITIONS OF AGREEMENT BETWEEN RK FINDLAY PTY LTD CONSULTING ENGINEERS

AND

AGREEMENT

RK FINDLAY WILL PROVIDE FOLLOWING

1. TECHNICAL REPORTS SPECIFICATIONS AND DETAILS AND TECHNICAL DATA NECESSARY COMPILATION OF THE SUBMISSION AND ALL SOURCE DOCUMENTS RELATING TO THE SUBMISSION.

2. ALL TECHNICAL SUPPORT AND TRAINING BE INCLUDED IN TOTAL.

3. GUARANTEES THAT THE SUBMISSION DETAILS TEST RESULTS AND SPECIFICATIONS FULLY ENCOMPASS THE INFORMATION REQUIRED BY THE FEDERAL OFFICE OF ROAD AND SAFETY FOR PORSCHE 911 VEHICLES FROM 1975 TO 1989 FULL VOLUME COMPLIANCE AND THAT VEHICLES CONVERTED AND MODIFIED BY DIAMOND CAR REPAIRS WILL MEET THOSE SPECIFICATIONS AND BE ACCEPTABLE TO THE FEDERAL OFFICE OF ROAD AND SAFETY SUBJECT TO THE NORMAL AUDIT REQUIREMENTS

A. ALL TECHNICAL REPORTS CONTAINED IN OR USED IN THE PREPARATION OF THE FULL VOLUME SUBMISSION ON REQUEST.

B. PRIOR TO THE SUBMISSION BEING FORWARDED TO THE FEDERAL OFFICE OF ROAD AND SAFETY RK FINDLAY WILL PROVIDE A COPY OF THE FULL VOLUME SUBMISSION FOR HIS APPROVAL.

C. SUCH FULL VOLUME SUBMISSION WILL NOT BE FORWARDED TO THE FEDERAL OFFICE OF ROAD AND SAFETY UNLESS APPROVED BY PETAR TRAJKOVSKI.

D. GUARANTEE THAT HE IS THE OWNER OF ANY INTELLECTUAL PROPERTY OR COPYRIGHT CONTAINED IN THE FULL VOLUME SUBMISSION AND INDEMNIFIES PETAR TRAJKOVSKI TO ANY CLAIM IN RELATION TO THE PROPERTY.

E. WILL ON REQUEST PROVIDE PROOF OF OWNERSHIP TO ANY SUCH PROPERTY.

F. PROJECT WILL COMMENCE ON RECEIPT OF $10000 BEING 50% OF TOTAL BALANCE $10,000 WILL BE PAID WITHIN 7 DAYS OF THE APPROVALS BEING PROVIDED BY THE FEDERAL OFFICE OF ROAD AND SAFETY.

G. PROJECT WILL BE FORWARDED FOR APPROVAL TO THE FEDERAL OFFICE OF ROAD AND SAFETY WITHIN 30 DAYS OF RECEIVING THE 50% DEPOSIT OF $10,000.

H. THE SUBMISSION BECOMES THE PROPERTY OF DIAMOND CAR REPAIRS SUBJECT TO ALL FINANCIAL AGREEMENTS BEING COMPLIED WITH.

11 The agreement is signed by the plaintiff and the second defendant.

The defence

12 It will become necessary in due course to examine the terms of this agreement. In the meantime, the defendants' response to the plaintiff's various claims should be noted. First, the defendants say that any loss or damage allegedly suffered by the plaintiff was caused by specific conduct on his part. In particular, the defendants identify ten matters said to constitute this conduct. They are as follows: -

(a) Failure to submit an acceptable Quality System Document to the Federal Office of Road Safety (FORS) on or before 30 June 1995.

(b) Failure to respond adequately or at all to the matters raised by the FORS in relation to the requirement for an acceptable Quality System Document on or before 30 June 1995.

(c) Failure to establish any or any adequate quality control system.

(d) Failure to establish any or any adequate premises, equipment, facilities or staff such as would have entitled the plaintiff to obtain Compliance Plate Approval.

(e) Lack of the requisite financial means to obtain Compliance Plate Approval and import the vehicles the subject of the claim in these proceedings.

(f) Failure to provide the requisite vehicles and components to the defendants for testing.

(g) Submitting Australian delivery vehicles for testing in lieu of vehicles representative of those the plaintiff allegedly proposed to import.

(h) The plaintiff's withdrawal, on 29 November 1994, of his agency authorisation pursuant to which the defendants were able to deal directly with the FORS and instead requiring that the FORS communicate directly with him.

(i) Requiring that all submission documents prepared by the defendants be sent to the plaintiff for forwarding to FORS instead of being sent by the defendants directly to the FORS.

13 The defendants say further that even if the plaintiff had obtained the subject Compliance Plate Approval, he had no agreement or source of supply for the vehicles he alleges he would have imported. The defendants also say that if the subject Compliance Plate Approval had been granted, it would only have entitled the plaintiff to import complete vehicles and convert them from left-hand drive to right-hand drive in order to meet registration requirements but would not have entitled him to import vehicles and parts and thereafter to assemble them.

14 The defendants then say that the plaintiff's proposed importation of vehicles involved the illegal purpose of evading the special duty of $12,000 collected by the Australian Customs Service under the authority of the Customs Tariff Act 1987 which applied after 1 July 1992 to each used or second-hand vehicle imported into Australia in high-volume and that the plaintiff is thereby not entitled to any damages at all. Alternatively, the defendants say that if the plaintiff is entitled to recover damages, then such damages should be calculated by including a cost of $12,000 per vehicle referable to the said special duty. Finally, the defendants say that if the plaintiff is entitled to recover damages, such damages are limited to vehicles imported pursuant to a Compliance Plate Approval prior to 1 January 1996, since all vehicles imported or on or after that date were required to comply with ADR 69/00.

The plaintiff's case

15 In October 1994 Mr Trajkovski was the proprietor of a business known as Diamond Car Repairs at 635 Princes Highway, Kogarah ("the business"). The business was established in about 1989 and was involved primarily in the overhaul and servicing of Porsche motor vehicles for private customers. Mr Trajkovski said that through the business he was also involved in the conversion from left to right-hand drive of vehicles that had been imported into the country by private owners. He said that the importation, sale and conversion of Porsche motor vehicles were the primary source of income generated by the business.

16 As a result of legislation that came into force in 1989, Mr Trajkovski said that there was a limit on the number of Porsche motor vehicles that could be imported into the country by any one person. In 1994 the repair and conversion work to Porsche motor vehicles carried out by the business began to decline.

17 Mr Trajkovski gave evidence of why, in his opinion, this occurred. Specifically, according to him, the Motor Vehicles Standards Act required all vehicles to comply with the Australian Design Rules ("ADR") when first sold in Australia. In order to demonstrate compliance with the ADR, manufacturers are required to conduct tests and to provide evidence based on those tests to the Federal Office of Road Safety ("FORS"). Mr Trajkovski said that typically suitably qualified consulting engineers who submit an application to FORS on behalf of the applicant manufacturer conduct such tests.

18 The evidence that is provided is checked by FORS prior to the issue of a Compliance Plate Approval ("CPA"). A CPA allows the manufacturer to fit compliance plates to vehicles. Compliance plates indicate to vehicle buyers and motor registering authorities that vehicles comply with all relevant ADRs.

19 It was Mr Trajkovski's evidence that he intended to obtain CPA for Porsche 911 vehicles for models between 1975 and 1989 in order that he could import and sell them to the general public at a profit. He said that having CPA in relation to these Porsches would also allow him to be registered and authorised by FORS to inspect and fit compliance plates to Porsches brought into the country by private owners.

20 It should be noted that in a subsequent affidavit sworn 17 November 2005 Mr Trajkovski referred to par 8 of his first affidavit where he indicated that it had been his intention to obtain CPA for Porsche 911 vehicles for the year models 1975 to 1989. In his subsequent affidavit, however, he said that although the agreement with the defendants provided that they were to obtain CPA for those year models, it had always been his intention to restrict the importation of these Porsches to models manufactured between 1986 and 1989. Mr Trajkovski said that the reason he intended to limit the importation and sale in this way was that in around 1994 and 1995 the 1975 to 1985 models were less profitable than the 1986 to 1989 models. The question and significance of whether or not this intention was ever communicated to the defendants is discussed in more detail below.

21 Mr Trajkovski said that in an application for compliance plate approval the applicant is required to nominate the relevant manufacturer category. According to him, the relevant categories are "Full Volume" (over 100 vehicles per year), "Low Volume" (26 to 100 vehicles per year) and "Low Volume" (up to 25 vehicles per year).

22 In order to facilitate the manufacture, conversion and sale of Porsches, Mr Trajkovski said that he applied to Rockdale Council for approval to build a suitable warehouse on land owned by his father. He said that part of this land, known as 8 Schofield Avenue, Kogarah was already being used as a panel beating shop. He said that the approval extended to the manufacture and conversion of Porsches.

23 Mr Trajkovski said that the new factory was to be located on the Princes Highway at Kogarah and consisted of a glass showroom with a factory, offices on the mezzanine levels, spray booths and all the equipment necessary to undertake a full volume conversion of Porsche motor vehicles.

24 Mr Trajkovski gave evidence that, in addition to his own funds, he also had financial backing in relation to the proposed importation and sale of Porsches from Tim Gatland and Peter George. He met Tim Gatland in November 1993 when he was employed by Consolidated Capital Acceptances Pty Ltd. Tim Gatland was in partnership with Peter George. It appears that Mr Gatland is now dead. Mr George gave evidence before me.

25 Sometime in or around mid-1994 Mr Trajkovski met the second defendant ("Mr Findlay"). He was introduced to Mr Findlay by Gary McDonald, who worked for American European Conversions ("AEC") and who was what Mr Trajkovski described as "a Porsche compliance holder". That meant, according to him, that Mr McDonald held CPA for low-volume production of Porsche 930 vehicles. Mr McDonald recommended Mr Findlay as a suitably qualified engineer to perform the necessary tests to achieve CPA for the Porsches.

26 Mr Trajkovski said that he had the following conversation with Mr Findlay at the Keg Hotel in October 1994: -

"RF: As it happens I have actually conducted all the relevant tests and draft reports necessary to get approval for that model 911 Porsche. I can draft an application for you to FORS. I will need $15,000 to complete and forward the application.

PT: Look Russell, I will give you $20,000. Just do it. How long do you want?

RF: Give me a week or two and I can prepare it all for you. I've got all the test reports as I've said. It is a matter of putting your name on the documents and putting the application together.

PT: Look, I'll give you 30 days to make it so you don't have any problems with it.

27 Mr Trajkovski said that in due course he drafted a contract himself. Some time around 26 October 1994 he met up again with Mr Findlay that the Princes Highway premises. At that time Mr Findlay brought with him a proposed agreement in relation to what had been discussed at the Keg Hotel.

28 Although it does not constitute the agreement into which the parties entered, for reasons that will emerge, the form of the document proposed by Mr Findlay is instructive and is, relevantly, as follows: -

"I wish to confirm the following;

RK Findlay Consulting Engineers will on behalf of . . . . . . . .
provide a Full Volume Submission to the Federal Office of Road Safety for a total fee of $20,000. On completion and approval by the Federal Office of Road Safety, the submission becomes the property of . . . . . . . . subjected ( sic ) to all financial agreements being complied with.

RK Findlay Pty Ltd will guarantee the work performed will comply with the requirements of the Federal Office of Road Safety, based on the understanding that all information and technical requirements provided for production of the Quality Assurance Manual are provided by the company . . . . . . . .

The project will commence on receipt of a $10,000 50% deposit. $5,000 further is to be provided when submission is completed and forwarded to the Federal Office of Road Safety, which ( sic ) time a complete copy of the submission will be provided to . . . . . . . . and the remaining $5,000 is to be paid within 7 days of the approvals being provided by the Federal Office of Road Safety. . . . . . . . . or nominees will be required to provide details of premises, personal or quality documentation. a vehicle to be used for a single uniform type inspection.

29 The contract was signed on that day. Mr Trajkovski paid Mr Findlay $10,000. On the same day Mr Trajkovski also signed an authorisation of agent to allow the necessary application to be drafted.

30 On about 24 November 1994 Mr Findlay returned to the premises with what Mr Trajkovski described as "a complete application to be forwarded to FORS". That document is in evidence as part of Exhibit PT1 to Mr Trajkovski's affidavit sworn 4 September 2003. It was accompanied by a letter on the letterhead of RK Findlay Pty Ltd dated 24 November 1994 addressed to FORS to the following terms: -

"Please find attached a full volume compliance application complete with quality assurance which we have prepared on behalf of Petar Trajkovski t/a Diamond Card Repairs of 635 Princess ( sic ) Hwy, KOGARAH. The submission is for full volume on Porsche 911 Series 1975-1989 and covers Porsche 911 coupe, 911 SC, 911 Carrera and 911 Carrera Cabriolet with engine options of 3 litre or 3.2 litre.

31 Mr Trajkovski said he was anxious that the application be processed as soon as possible. Accordingly, he flew to Canberra personally with the application and covering letter within one or two days of meeting with Mr Findlay. He said he personally delivered the application to FORS sometime in late November 1994.

32 Mr Trajkovski gave evidence that after he dropped off the application to FORS he had various conversations with Mr Findlay in relation to the processing of the application. Over the next two to three months he said Mr Findlay would give him feedback in relation to the application. Typically, Mr Findlay would tell him that there had been some delay or that FORS was asking him for further information and material.

33 The application had not been approved by 16 February 1995. On that day a meeting was held attended by Mr Trajkovski, Mr Finianos, Ms Bebek, and Messrs Goonewardene and Mackay. The minutes of that meeting are in evidence before me. There is no dispute that they are an accurate record of what took place. It is convenient to record some portions of those minutes at this stage.

34 The minutes record that the meeting was to have been held on 14 February 1995 in Sydney at Mr Trajkovski's premises where the vehicles were intended to be "manufactured". However, as FORS was advised that the building was still under construction, and that there was no equipment available for observation, the meeting was held in Canberra.

35 According to the minutes, Mr Trajkovski had been requested, on 10 February 1995, to bring "ALL" the information available to support the testing already conducted for CPA and proposed arrangements for ensuring Conformity of Production ("COP") for the vehicle model and its variants for the model years for which compliance was sought. That information was to include complete test reports, drawings, test procedures, vehicle specifications and any other relevant information available. The minutes note that Mr Findlay, described as Mr Trajkovski's "engineering consultant", had contacted FORS to seek clarification of the information requested and had been similarly advised.

36 The minutes also record that it was clear from the outset that most of the documents relating to the ADR tests conducted had not been brought to the meeting. Apparently, however, as Mr Trajkovski and others had travelled from Sydney for the meeting, it was decided to continue discussions using the material that was available.

37 Under the heading "Access to ADRs and Test Documents", the minutes record that Mr Trajkovski advised that he did not subscribe to the ADRs but relied instead on his engineering consultant to provide the technical input for CPA purposes. The minutes record that he was unaware of the Administrator's procedures for CPA, particularly those relating to the period to be allowed for examining evidence submitted for CPA. The minutes note that Mr Trajkovski "then made arrangements to subscribe to the ADRs and obtain a copy of the COP and TFI manuals".

38 The penultimate paragraph on the first page of the minutes is as follows:-

"In regard to the test documents it was clear that [Mr Trajkovski] was not able to access the test documents as all the documents were not made available for the meeting although advance notice had been provided to him and his engineering consultant neither of whom had indicated any difficulty in providing this documentation."

39 The minutes go on to record that Mr Trajkovski was made aware that as the CPA holder he would be responsible for compliance of the vehicles to which he fixed compliance plates and as such he needed to have arrangements in place to ensure that his responsibilities were discharged effectively and that the above instances clearly indicated that such arrangements were not in place. Additionally, in the absence of the full test reports, the Administrator would not have any assurance that the ADR compliance tests had indeed been carried out. Mr Trajkovski advised that many ADR related components on the vehicles were to be replaced by new items. A list was being prepared and a copy would be provided to FORS. Mr Trajkovski was advised that this should include all items mentioned in Circular 0-4-5. (This document is consistently referred to throughout the evidence as a 045 certificate).

40 Under the heading "Test evidence requirements", the minutes record that Mr Trajkovski advised that his application was to be amended to cover model years 1979-89 only and that he would formally advise FORS of this. The minutes then proceed to record that he was advised (although I find that this would include Mr Finianos and Ms Bebek) of the need for the following: -

To document clearly the specification of the vehicle variants to be covered by the application, particularly in relation to ADR related components.

To document the selection of test vehicles and components to demonstrate that the selection was the worst case or otherwise covered all the variants in the application.

To retain documentation identifying the specification of the vehicle and components tested.

To ensure documentation is available to verify that compliance has been demonstrated with all current ADRs.

To have access to documents and test facilities to verify that the tests demonstrated compliance.

To have evidence on which compliance is based for those ADRs for which only an assurance of compliance is provided.

To have documented procedures based on AS 3901 to ensure that vehicles would be "manufactured" to specifications covered by a compliance plate approval and that compliance plates were fixed only to such vehicles.

To ensure that these procedures addressed all relevant requirements in the ADRs and Circulars.

41 Then under the heading "Test evidence of ADR compliance", the minutes record that Mr Trajkovski was advised that both he and his engineering consultant had been advised in writing of various deficiencies in the SER evidence submitted to that time and that responses to these were a pre-requisite to obtaining a CPA. The full test reports used as the basis of the SERs were reviewed to assess if they provided adequate assurance that first the vehicle or components tested complied with the ADRs and that secondly the information contained enabled production vehicles to be built to the same specification. In this regard the minutes thereafter record significant inadequacies or absences of information in respect of 36 itemised ADRs. See, in this respect, pages 3 to 5 inclusive of the minutes set out at pages 103-105 of Exhibit PT1 to Mr Trajkovski's affidavit sworn 4 September 2003.

42 Next, under the heading "Compliance with ADR 69/00", the minutes record that the need to comply with that ADR for "New" model vehicles manufactured or after 1 July 1995 was "clarified". Apparently Mr Trajkovski was advised that if he was unable to obtain a CPA and fit a compliance plate to at least one vehicle prior to this date, then that model would be considered to be a "new" model as defined in the ADR.

43 Finally, under the heading "Quality Manual and Conformity of Production", the minutes address the respects in which the quality manual provided failed to address all aspects of quality assurance in AS 3901. It is sufficient to note that several deficiencies were described.

44 The minutes concluded with the following paragraphs: -

"The Manufacturing/Engineering Instructions listed does not address some applicable ADRs e.g. 3/02, 13/00, 25/02, 28/01, 29/00, and ADRs after 37/00. It however refers to ADR 24/04 which has not yet been issued. [Mr Trajkovski] agreed that these instructions did not yet exist and was advised that in their absence the Administrator would have little assurance that production vehicles would comply with the ADRs.

45 Mr Trajkovski gave evidence that it was at this meeting that he first became aware of the implementation of ADR 69/00. It will be necessary in due course to return to this aspect of his evidence.

46 Mr Trajkovski said that shortly after this meeting he asked Mr Findlay what was going on in relation to his application. He said that Mr Findlay replied in words to the effect that he had all of the reports but could not take them down to Canberra for the meeting. He said: "Leave it to me I'll fix everything up".

47 Mr Trajkovski said that he also discussed with Mr Findlay the need to comply with ADR 69/00. He said that Mr Findlay told him: "Don't worry Petar I will get it through before then. Anyway the new ADR 69/00 compliance doesn't affect you".

48 According to Mr Trajkovski, it became apparent after the meeting in Canberra that a number of additional testing procedures needed to be carried out by the defendants. The requirement for the additional testing came about as Mr Findlay was unable to locate the original primary reports forming the basis of the application.

49 Following the meeting, Mr Trajkovski said he left the outstanding matters raised by FORS to be dealt with by Mr Findlay. However, FORS sent to Mr Trajkovski copies of various correspondence that had already been sent directly to the first defendant, in relation to deficiencies in the application. As late as July 1995, according to Mr Trajkovski, Mr Findlay was continuing to give him assurances that he was attending to all of the outstanding matters raised by FORS at the meeting.

50 On about 1 August 1995 Mr Trajkovski received a facsimile from FORS outlining numerous matters which still needed to be attended to in order to obtain compliance plate approval. Part of that facsimile is in the following terms: -

"Appreciate your concern on the status of your application and the resolution of the outstanding queries. However to be fully informed on the position of your application, you need to be fully aware of the details on ALL submissions and responses submitted to this office on your behalf. As discussed, it would assist if all submissions and response replies are transmitted by your office and NOT by your agent on your behalf.

. . .

From our records there has been no delay in the examination of evidence submitted to this office. However, except for January, there has been little response to this office to address our queries on the evidence submitted. Processing of your application cannot proceed.

. . .

51 On 5 October 1995, Mr Peter Core from the Department of Transport wrote to Mr Trajkovski. The date and content of that letter are important, and the relevant portions of it are as follows: -

"Following our discussion on Tuesday I thought it would be helpful to set out the position regarding your application for a "full volume" compliance plate approval covering 1986-89 Porsche 911 cars.

You have embarked on an undertaking which comes under the provisions of the Motor Vehicle Standards Act, and requires your enterprise to meet the same standards of performance as a major international car manufacturer. The Federal Office of Road Safety, in assessing your application, is obliged to ensure that the information you provide demonstrates that the vehicles you propose to sell will indeed meet all of the requirements of the legislation.

It was in recognition of your situation that the Administrator, Mr McLennan, wrote to you last week setting out an arrangement which would allow you to import a number of vehicles under a limited approval. The limited approval would be contingent on you providing satisfactory evidence that the 911 models that you wish to import had been shown to meet the requirements of the relevant provisions of the Federal Motor Vehicle Safety Standard 208 in the configuration that you propose to market, and a test to demonstrate full compliance with Australian Design Rule 69 within a reasonable period during the life of the approval.

There is a community expectation that vehicles supplied to the market meet the safety and emission design rules. To meet the obligations set out under the Act, it would also be necessary for you to provide satisfactory evidence that your proposed vehicle models meet all of the other relevant design rules, and that you had satisfactory arrangements in place to ensure that your production vehicles would also meet the requirements.

To facilitate a resolution it will also be necessary for you to provide full test reports to allow a proper assessment of the evidence of compliance with the requirements of the design rules. The Federal Office of Road Safety has procedures to provide confidentiality in regard to test evidence, and other information regarding an application. The Administrator has given me his personal assurance that any information you provide will be formally treated as commercial in confidence. If you wish, your test evidence will be returned to you after assessment and FORS will only retain the summary reports.

I confirm that when FORS is satisfied that the evidence provided meets the requirements set out above, the Administrator will issue an approval for a maximum of 50 vehicles. This approval will be contingent upon full evidence being supplied within a reasonable period during the life of the approval demonstrating compliance with ADR 69.

I understand your business plans involve importing vehicles as components rather than as complete vehicles. I endorse Mr McLennan's advice that you should discuss your proposals with the Australian Customs Service to ensure that they are satisfied that all relevant duties and tariffs are covered.

52 Mr Trajkovski gave evidence that shortly before November 1995, he had a conversation with Mr Findlay in the course of which Mr Findlay said to him: "Petar, I'm almost there with getting compliance plate approval from FORS. You can now start importing cars." Mr Trajkovski replied: "Are you sure Russell?" Mr Findlay is said to have replied: "Yes. By the time you get the cars here I'll have the approval through".

53 Mr Trajkovski said that further meetings were held in Canberra with representatives from FORS. One such meeting took place on 12 October 1995. Following that meeting he received a facsimile from Lawrence Glynn on about 3 November 1995 which, in Mr Trajkovski's words, confirmed "the state of affairs in relation to the application for compliance plate approval". My reading of that document indicates that in November 1995 a considerable amount of material and information was still required by FORS before Mr Trajkovski's application would be approved.

54 At par 49 of his affidavit Mr Trajkovski said that in around November 1995, "on the promise of obtaining compliance plate approval I imported ten Porsches (in parts) to be assembled and fitted with compliance plates pending approval from FORS." He was able to produce a bill of lading relating to four only of these Porsches. The document described the vehicles as "body shells". The cost of the vehicles is not given. Mr Trajkovski said that he was unable to locate any other bill of lading itemising the remaining (presumably six) vehicles. There is no evidence of the cost of these vehicles either.

55 Although Mr Trajkovski said that he imported these vehicles in reliance upon the promise referred to in the preceding paragraph, he said at par 50 of his affidavit that he limited himself to bringing in 10 Porsches "as approval was not yet in place". As will be apparent, there is some tension between these two notions, an issue to which it will be necessary in due course to return. In any event, Mr Trajkovski went on to say that he could have imported in excess of 40 Porsches in parts at one time. He said that assuming CPA were obtained for them, and a compliance plate fitted prior to what he described as "the relevant time", the Porsches could have been sold at any time.

56 At par 51 of his affidavit Mr Trajkovski said that the 10 Porsches that he imported into the country in November 1995 "were by and large imported in parts". His evidence at par 49 was to the effect that they were imported completely in parts. The photographs exhibited at page 126 of "PT1" rather confirm this. Similarly, he said at par 52 of his affidavit that he "imported the vehicles as spare parts as opposed to a complete motor vehicle". This had tariff advantages for him.

57 Mr Trajkovski gave further and more detailed evidence of this at par 55 of his affidavit. He said that in order to import the Porsches, he would fly to the United States and arrange for the purchase "of vehicle parts in which [he] was interested". He said that these Porsches would typically be cars that had been recovered by insurers or finance companies or damaged in some way. Often the car parts that he purchased would simply consist of a shell and an engine. Those vehicles would then be disassembled and imported into Australia in parts in a container. That was said to be the process that he used to import the 10 Porsches he allegedly imported in November 1995.

58 Mr Trajkovski said that, apart from the trip in November 1995, he returned to the United States on at least three further occasions to buy more Porsches in parts. He said that he did so in reliance upon assurances given to him by Mr Findlay. He has no records of these trips or of the vehicles that he says he purchased. I consider that the absence of such records is significant. I record at this point in these reasons that I am not satisfied that Mr Trajkovski returned to the United States on any further occasions as he suggests or that he did so in reliance upon any assurances said to have been given to him by Mr Findlay.

59 Significantly for the purposes of his case, Mr Trajkovski said that in his estimation, in the event that compliance plate approval were obtained by Mr Findlay in accordance with the agreement, he would have been able to import and sell approximately 40 Porsche 911 motor vehicles up until 1 January 1996 when the universal implementation of ADR 69/00 came into force. He said that the factory at Kogarah had been specifically built and approved by Council in order to assemble and affix the vehicles with compliance plates. In addition, he said that the original Diamond Car Repairs at Schofield Avenue, Kogarah could have been utilised to assemble and convert the cars. He considered that 40 vehicles within the period prior to 1 January 1996 was "a conservative estimate".

60 Mr Trajkovski said at par 56 of his affidavit "over the following 12 month period [he] continued to receive assurances from Russell Findlay that the necessary testing was almost complete". It is not clear to what period of 12 months he is referring in this paragraph. However, he said that on many occasions Mr Findlay would show him photographs of the testing being conducted "to put [his] mind at ease". These photographs did not become evidence.

61 Mr Trajkovski said that on or around 25 November 1995 FORS were provided with details of compliance with ADR 14/02 (the impact test) on the Porsches. This was said to be the last requirement that needed to be met for approval by FORS, apart from ADR 69/00. He said at par 57 of his affidavit, "[c]onditional approval was then given by FORS in accordance with its letter of 5 October 1995 for the manufacture of a maximum of 50 vehicles". In my opinion that sentence, and the sentence "[t]his approval as stated above was conditional on a demonstration of compliance with ADR 69/00 within a reasonable period during the life of the approval" which follows it, misstate what the relevant paragraph of that letter said: see par [51] above.

62 However, Mr Trajkovski cites a letter from FORS dated 27 November 1996 as confirmation of that conditional approval. That letter is from Lindsay Evans, Administrator of Vehicle Standards at FORS, and is in the following terms: -

"The fax of 25/11/96 indicates that you have carried out an impact test. This test is considered satisfactory and clears up the issue of compliance with ADR 14/02.

As the Quality System Documentation and all applicable ADRs, other than ADR 69/00, have now been cleared, Approval documents reflecting the arrangement as set out in the Administrators letter of 19 October 1995 and Mr Core’s letter of 5 October 1995 are now being prepared.

I acknowledge that it has taken some time to reach this stage, however I believe that much of the delay can be attributed to the relatively poor quality evidence provided at times in support of your application. This has clearly resulted in a great deal of additional time spent by FORS officers lodging, examining and confirming evidence.

63 Mr Trajkovski expressed the view at par 58 of his affidavit that the words "within a reasonable period during the life of the approval" contained in Mr Core's 5 October 1995 letter was clarified in a letter dated 24 February 1997 from Keith Seyer, who was then the Administrator for FORS. The relevant portion of the letter is as follows: -

"Also, you sought clarification on the reasonable time, as stated in Attachment A of the Approval, by which tests to ADR 69/00 must be conducted. Having considered all the factors leading to the issue of this approval, I am of the view that proof of compliance with ADR 69/00 in accordance with the test procedures for the issue of a Full Volume CPA should be provided within six (6) months from the date of this Approval (or prior to the supply to the market of the 50th vehicle, if sooner), subject to relevant factors which come to my attention in the meantime."

64 As Mr Trajkovski notes at par 59 of his affidavit, the six-month period referred to was due to expire on 24 August 1997. Mr Findlay had still not conducted the relevant testing to comply with ADR 69/00 by that time. On or about 19 September 1997 he sent Mr Findlay a letter noting that the submissions to FORS had not been finalised and requesting that he provide all outstanding reports and materials in accordance with the agreement of 26 October 1994. That letter threatened legal action as well.

65 On or around 16 December 1997 the Australian Government Solicitor wrote to Mr Trajkovski's then solicitors. He said that this letter confirmed that the conditional approval from FORS had lapsed. That letter is in the following relevant terms: -

"I refer to your letter of 28 October 1997, in which you requested that the suspension of Approval No. 10619 be revoked.

2. The Approval was issued to the manufacturer, Swissnet Pty Ltd, on 24 February 1997. As issued, the Approval was subject to the condition that a test or tests be conducted on right-hand drive vehicles to ensure compliance with ADR 69/00 within a reasonable time after the grant of the Approval.

3. At the time of the issue of the Approval, the Administrator of Vehicle Standards stated that this condition required that proof of compliance with ADR 69/00 be provided within six months from the date of the Approval or prior to the supply to the market of the 50th vehicle, if sooner.

4. That requirement was consistent with indications provided to Mr Trajkovski on behalf of the earlier applicant for an Approval, as early as 29 September 1995. It was also consistent with the underlying public safety objective of the Australian Design Rules.

5. No representation was made by or on the half of the Minister or the Administrator that Swissnet Pty Ltd would have a period of two years in which to comply with ADR 69/00. As noted above, the Approval issued to Swissnet Pty Ltd was accompanied by advice that must have corrected any misunderstanding that the applicant for Approval may have had.

The defendants' case

66 Mr Findlay gave evidence. He said that before any passenger vehicle is registered in Australia it must be fitted with an Australian compliance plate. Such plates can only be placed on a motor vehicle by a manufacturer or importer who has obtained prior approval from FORS to affix them. The affixation of an Australian compliance plate denotes that the vehicle complies with ADRs

67 Leaving aside personal imports, there are two kinds of approvals: a Full Volume approval and a Low Volume approval. The former requires the manufacturer or importer to demonstrate compliance with all applicable ADRs by providing a satisfactory test report on a representative vehicle. The latter can be obtained for the importation of a motor vehicle not already sold in Australia under a Full Volume approval. A Low Volume approval is limited to 25 vehicles in a calendar year and involves less stringent requirements.

68 Safety standards vary from country to country. It cannot therefore be assumed that a vehicle manufactured for sale in one country will comply with the safety standards of another. FORS may accept overseas test results on equivalent vehicles when the overseas safety standard is more stringent than the Australian standard.

69 Mr Findlay recalled that he first met Mr Trajkovski in late September or early October 1994 at his premises at 635 Princes Highway, Kogarah following a phone call from him in which he had told Mr Findlay he had been referred by AEC Porsche. Mr Trajkovski told him, "I am interested in obtaining a Full Volume compliance approval for Porsche 911 series vehicles. My business is called Diamond Imports".

70 Mr Findlay said that the Kogarah premises had no signage or identification and comprised a ground floor and first floor. On the ground floor was a workshop with limited facilities for panel beating and painting of motor vehicles. The only vehicle in the workshop at that time was a smashed BMW. There was no staff present during Mr Findlay's visit. On the first floor there was only a lunchroom and that is where they spoke on the first occasion. Mr Findlay said that there was nothing visible to indicate that the premises were a licensed smash repair facility.

71 According to Mr Findlay, Mr Trajkovski said to him, "I want to get Full Volume compliance reports for Porsche 911s so I can compete against Porsche Cars Australia. I understand you've already obtained a Low Volume approval for AEC Porsche for Porsche 930s and you should be able to use a lot of that for my application. I know all about Porsches. I trade as Diamond Smash Repairs but I want the application to go in as Diamond Porsche".

72 Mr Findlay asked, "Where do you plan to assemble and prepare these vehicles?" Mr Trajkovski replied, "I'm going to rebuild this place". Mr Trajkovski asked, "What sort of cost am I looking at?” Mr Findlay replied, "It will cost you $20,000 plus the cost of any further testing that may be required. For example, if you want to change the brake system and fit turbo brakes then that will require a new test at a cost of about $7,500. Also, even if you get your approval, you will sooner or later be required to comply with ADR 69 which requires a crash test". Mr Trajkovski denied that Mr Findlay told him that there would be any further cost for him to compile a successful application to FORS.

73 Mr Findlay gave Mr Trajkovski a document and said, "Have a look at this. This is our standard form of agreement". Approximately two weeks later Mr Trajkovski rang Mr Findlay and they agreed to meet at the restaurant in Beverly Hills for lunch. Mr Trajkovski said, "I want to go ahead. I'm happy to pay the $20,000". They shook hands and left the restaurant.

74 On 26 October 1994 Mr Trajkovski rang Mr Findlay and said, "I have the agreement signed and I've got a cheque for $10,000 for you. Can you come down here and pick it up?" Mr Findlay went to the Kogarah premises, which appeared to him to be in all respects the same as when he first went there. Mr Findlay was introduced to two other men. The four of them went upstairs to the lunchroom and Mr Trajkovski produced a document that he had signed. He said, "I want to sign this". Mr Findlay replied, "Why won't you sign my standard agreement?" Mr Trajkovski replied, "My legal people have prepared this document. Don't worry about the wording". Mr Findlay then signed a document, which he noted was set out as an agreement between Mr Trajkovski and the first defendant.

75 Between 26 October 1994 and 24 November 1994 Mr Findlay met Mr Trajkovski on two other occasions at the Kogarah premises. He thought that it was on the first of these occasions that Mr Trajkovski handed him a copy of a QSD (Quality System Document) and said, "This is a document I have obtained from Frank in Perth who is one of the principals of Taiyo, which is importing standard RX7s from Japan. All I want is the name changed so that I can use this document for my application". Mr Findlay said, "That is all well and good, but the document must represent the facilities and systems in your company, because FORS will conduct an inspection of those facilities before they give any approval". The first defendant then prepared a QSD in accordance with Mr Trajkovski's instructions. Mr Trajkovski then retrieved the QSD that had been provided to him as the source document for the QSD that was submitted to FORS. According to Mr Findlay, Mr Trajkovski signed the original application documents on the second occasion. Mr Trajkovski denied the conversation referred to in this paragraph. He said that because Mr Findlay failed to provide FORS with a properly drafted QSD, he tried to assist the application by giving him one he had obtained from Taiyo.

76 Under cover of a letter from the first defendant dated 24 November 1994, the application was submitted to FORS. It was in the terms set forth above at par [30].

77 Mr Findlay said that he did not prepare the application but that two members of the first defendant's staff prepared it. He signed the documents before they were submitted and sent a copy of the application to Mr Trajkovski the same day.

78 In late November or early December 1994 Mr Findlay had a conversation with Andrew Mackay of FORS, during which he said to Mr Findlay, "We've been requested to only deal with Mr Trajkovski and not to supply you with any information". Exhibit F to Mr Findlay's affidavit is an unaddressed handwritten letter written by Mr Trajkovski that Mr Findlay believed was sent to FORS by Mr Trajkovski. It said that Mr Trajkovski "would like all communications regarding a submission lodged by me personally to the offices FORS regarding . . . all Porsche to be sent to me on my fax or post". Mr Trajkovski admitted writing the letter but denied telling Andrew Mackay or anyone else from FORS in 1994 that FORS were only to deal with Mr Trajkovski or were not to supply information to Mr Findlay. Mr Trajkovski said the handwritten letter was sent to FORS between six and twelve months after he entered into the agreement with the defendants because he was receiving information from FORS that Mr Findlay was not responding to correspondence being sent to FORS regarding the application for compliance plate approval. Mr Trajkovski said that at no time did he approach anyone from FORS or request that they stop dealing with Mr Findlay.

79 On 30 November 1994 Mr Findlay received a fax from FORS to which he responded the same day. On 14 December 1994 FORS sent a fax to Mr Trajkovski. That document was in several pages and, in summary, expressed FORS' dissatisfaction in a number of respects with Mr Trajkovski's application. It is clear from the document that FORS was insisting upon a significant amount of additional evidence before any further consideration to the application could be given.

80 The letter was referred to Mr Findlay. At par 29 of his affidavit sworn 27 January 2004 Mr Findlay refers to that document and deals with it in considerable detail. Upon my reading of that paragraph, however, Mr Findlay is setting out his understanding of the matters to which the letter was directing attention rather that listing or describing anything done by him as a response to the concerns that it raised. It would appear that FORS continued to seek clarification of Mr Trajkovski's application until shortly before the meeting in Canberra on 16 February 1995, to which I have earlier referred. Mr Findlay said that Mr Trajkovski rang him in early February 1995 and said, "I've arranged a meeting with FORS which will be held in Canberra on 16 February. You or Simon should attend". Mr Findlay said that at no stage prior to the date of the meeting had Mr Trajkovski told him that he intended to replace any of the components, which affected the ADRs, with new items. At no stage prior to the date of the meeting had Mr Trajkovski told Mr Findlay that he intended to change his application from 1975-1989 models to 1979-1989 models.

81 Mr Findlay deals with the minutes of this meeting in his affidavit in quite some considerable detail at par 39. It is not an unfair summary of Mr Findlay's response to say that the first defendant conducted most of the tests said in the minutes to be required by the relevant ADRs.

82 On 20 February 1995 FORS sent a facsimile to Mr Trajkovski referring to his visit to Canberra on "15 [sic] February 1995". The terms of that document are as follows:-

(a) ADR 31/00, Unique braking system identification given as "PORSCHE 911". It appear that this may be insufficient to identify system tested. Please advise if braking system on vehicle tested was fully identified. If so, please provide a copy. Noted that only some unsigned test graphs were available. Please complete report.

(b) ADR 28/01, please supply SF form to complete submission. In a quick look at test report noted that vehicle tested may not have been sufficiently identified. Also report unsigned.

(c) ADRs 13/00, 42/00, 43/03 and 61/01. No documentation available to backup assurance of compliance. Please supply full details of documents available.

(e) ADR 2/00, test reports in complete, just some grant available.

(f) ADR 10/01. No report available for body block test. Report on barrier test report noted that RK Findlay certified the material tested. Please provide a copy so can confirm.

(g) ADR 20/00. Only some graphs available. Suggest report be completed.

(h) ADR 4/01. SERs incomplete as do NOT cover installation. Please provide.

(i) ADR 21/00. Quick look at test report appears not to cover compartment door.

83 It would seem that Mr McLennan also forwarded "the report of the discussions held . . . on 16 February 1995" (i.e. the minutes) to Mr Trajkovski by facsimile dated 7 March 1995 together with a covering letter dated March 1995. The terms of that letter in full are as follows:-

"Please find attached the report of the discussions held between Mr Goonewardene and Mr Mackay of this office and yourself, Mr S. Finianos of RK Findlay and Associates and Ms J Bebek of your organisation on 16 February 1995 to discuss your application for certification of used imported Porsche vehicles.

A number of items requiring further action were identified during the discussions and are detailed in the report.

You would appreciate that I need to ensure that your proposed arrangements provide a level of assurance of compliance equivalent to that given by a manufacturer of new vehicles. Considering that your organisation is new to the compliance plate approval system and that the unknown status of used vehicles adds to the complexity of these arrangements, we need to ensure that the proposed procedures will be satisfactory in practice. A conformity of production assessment is not possible as your organisation has not commenced production.

A major concern is the ability of your organisation to ensure that the original manufacturer has not changed the design, the serial specification etc of ADR related components even where the part number remains unchanged in the parts catalogue. Additionally, you would need to be able to differentiate between any ADR related components that may have been replaced by the previous owners and those of the original specification of the vehicle, particularly where such components are to be continued to be used. I would appreciate your views on how your organisation intends to address this concern.

84 On 10 May 1995 Mr Goonewardene sent an internal memorandum to Mr McLennan and Mr Huntington headed "INFORMATION FOR DISCUSSION WITH MR PETER TRAJKOVSKI -15/5/95". That memo is in the following terms:-

"1. Attached is a copy of the letter sent to Mr Trajkovski (including the attached report of discussions held on 16 February 1995).

I am not aware of any information provided in response to this letter addressing the concerns raised in the report or the letter.

2. The responsibilities of a full volume CPA holder under the MVSA to ensure that each vehicle complies with current ADRs prior to a fixing the compliance plate may need to be reiterated as a matter of form.

This should include the following:-

(a) submission of evidence of compliance with all current applicable ADRs (e.g. ADR 69/00 from 1 July 1995- see page 5 of report of discussion on 16/2/95)

(b) ensuring that tests (demonstrating compliance of the options and variants of the vehicles to which compliance plates are to be affixed) have been conducted, the evidence submitted to FORS and CPA coverage obtained

(c) ensuring availability of documentation to verify that test vehicle, component or system selection meet worst case criteria.

(d) confirming continuing access to all full certification test reports which must identify the specification of the vehicle, component or system tested

(e) ensuring availability of the documented basis used to determine compliance for each ADR where only an assurance of compliance is provided for certification purposes.

(a) confirmation of accessibility to production facilities where vehicles were produced; if vehicles are to be assembled in Australia from components, the need for access to overseas production facilities of the components would depend on the components concerned

(b) availability of a quality manual, procedures and work instructions covering the 20 elements of AS 3901 as applicable to the QA system being followed; work instructions need to be comprehensive and include fixing torques, dimensions the location of components, welding specifications etc.

(c) availability of production controls confirming vehicle specification is that approved (even where part numbers of components are the same); as vehicles have been used, their specification is unknown (replacement due to wear and tear, accident repair and state of worn components on vehicles needs to be considered)

(d) availability of records to confirm compliance with Circular 0-4-5 requirements including conformity testing to noise and gaseous emissions requirements

85 Mr Trajkovski referred to this document at pars 37 and 38 of his affidavit sworn 13 March 2007.

86 Mr Findlay annexed to his affidavit a facsimile dated 16 June 1995 from Mr Goonewardene at FORS to Mr Trajkovski on the subject of Mr Trajkovski's QSD (Quality System Documentation). The QSD had apparently been received by FORS on 15 May 1995. The letter advised Mr Trajkovski that there were "a number of items that [needed] to be included or amended in [his] QSD". The items concerned were then listed in detail. That list ran to three pages. The evidence does not reveal whether or not these matters were attended to or if so by whom. It becomes necessary to set out this document in full as follows:-

"Reference your QSD received 15 May 1995.

Although information had been provided for your guidance in drawing up your QSD in my fax of 7 March 1995 and in the attachment to Mr McLennan’s letter of 14 March 1995, your QSD has not taken that information into account.

There are a number of items that need to be included or amended in your QSD.

The items concerned are listed below.

Some of these may appear to be matters of minor detail. However it needs to be understood that the QSD reflects the operation of your quality system and that the level of attention to detail in your QSD does not provide confidence that your procedures to modify vehicles to comply with ADRs would achieve that end.

1. The first page of the QSD has provision for copy number and issued (date) but neither has been shown.

2. The QSD has been signed as having been prepared, checked and approved but the signatories have not been identified by name.

3. The pages of the QSD have not been numbered. This creates difficulties especially in regard to identifying the correct sequence of several pages (the contents of which do not include clause numbers) and to ensure that no pages are missing.

4. The next page is titled ‘Appendix’ and has the contents 'Produce index' and 'Note: This document is controlled with the'. It is unclear as to what status the page has in the QSD.

(a) The first column is headed "Aust Standards Clause" but that is not identified the Australian Standard. The Clause numbers and their titles do not align with AS 3901 which you were advised as being the quality standard applicable to CPA applicants.

(b) All the requirements of AS 3901 need to be addressed. However, some requirements of AS 3901 are not included in the list. e.g. Design Control, Contract Review etc. If any requirements of AS 3901 are considered inapplicable, this should be indicated with the reason also being provided.

6. The next page titled "iii" and "Table of Contents" indicates that the QSD contains a "List of Effective Pages" and an "Amendment Record List" but these were not found in your QSD.

7. The table of contents also does not include some of the aspects of AS 3901 (refer item 5(b) above).

8. The QSD did not contain section 2.3 Quality System and Procedures referred to in the Table of Contents.

9. Under "Amendments, Re-issue and Distribution" it is indicated that the list of holders of controlled copies is given in Section Preface (vi) but this was found on page titled (v).

(a) has not been signed although the needs of this was previously advised

(b) refers to AS 3902 and is not AS 3901 although the need for this was previously advised

(c) contains the typographical/spelling error "Sustem" in the very first line.

"Diamond Porsche Quality System shall cover the requirements defined in AS 3902 or equivalent International Standard which are summarised below:-
- Document/Change Control"

13. The list of ADRs identified in relation to Circular 0-4-5 under Section 1 Clause 3.3 does not include ADR 37/00.

This statement is obviously untrue (refer item 3 above).

This and the repetition of "uniquely" indicates that contents of this page have not been checked.

15. Section 1 Clause 5.0 refers to ISO 8420 but Clause 6.2 refers to ISO 842, apparently another typographical error.

16. Clause 2.12 appears to have a word left out.

17. Clause 2.2 .1 appears to have the identification of the company left out and refers to Figure 1 which has not been provided.

Further examination of this document appears to be not warranted in view of the multitude of deficiencies indicated above. Please refer to the information provided previously and ensure that a response is provided to all items on which information has been requested.

In this regard, the following items also need to be addressed.

18. Your previous QSD contained a list of "manufacturing/Engineering Instructions" and identified document numbers for certain ADRs. These documents were not available for examination at your meeting with FORS on 16/2/95. You are new QSD makes no reference to this list. Please advise if this list is still applicable and if not provide the list that is applicable and also advise if all the applicable instructions now exist.

19. Details of proposed noise and gaseous conformity testing need to be provided. Please refer to previously supplied notes.

87 Mr Trajkovski refers to this document at pars 39 and 40 of his affidavit sworn 13 March 2007.

88 On 21 June 1995 Mr Goonewardene sent an internal memorandum to Mr McLennan headed "DIAMOND PORSCHE QSD" to which is attached a copy of a facsimile sent to Mr Trajkovski on 19 June 1995. (That facsimile of 19 June 1995 to Mr Trajkovski is not identified in the evidence). The terms of the memo are as follows:-

"Attached is a copy of the fax sent to Mr Trajkovski on 19/6/95.

He rang back to complain that:-

89 Mr Trajkovski described this document as "a reasonably accurate account of a communication [he] had with Mr Goonewardene about June 1995". Mr Trajkovski said that the communication was prompted by an earlier conversation he had had with Mr Findlay in June 1995 in words to the following effect:-

"Mr Trajkovski: 'What's going on with the application Russell?'

90 Mr Findlay said that on the basis of the FORS internal memo from Mr Goonewardene to Mr McLennan and Mr Huntington dated 10 May 1995 and Mr Goonewardene's facsimile to Mr Trajkovski dated 16 June 1995, he believed that Mr Trajkovski met with officers from FORS on 15 May 1995. Mr Findlay was not invited to attend the meeting and as far as he is aware, no employee of the first defendant was in attendance either.

91 Mr Findlay said that throughout the period from November 1994 to 30 June 1995, Mr Finianos handled the day-to-day conduct of Mr Trajkovski's application to FORS. Mr Findlay signed some of the documentation in relation to the original application.

92 In about March 1995 Mr Findlay had taken Mr Trajkovski to the New South Wales RTA's crash lab at Rosebery, where he met with the manager Mr Delnevo, the finance director and Mr Babui, the engineer in charge. On this occasion Mr Delnevo said, "The cost of conducting a crash test is $39,000. On top of that you’ll have the cost of the car. Obviously we cannot give any guarantees as to the outcome of that test". According to Mr Findlay, following that meeting Mr Trajkovski said to Mr him, "I will not be doing any crash tests here in Australia". Mr Trajkovski denied saying this.

93 Shortly before 29 August 1995 Mr Trajkovski rang Mr Findlay and said, "I want you to come to a meeting with FORS at my place next Tuesday. Please don't bring any copies of the submissions or test reports with you, as I'm going to set these two up". Mr Findlay said that he understood from the use of those words that Mr Trajkovski was intending to dispute statements made by FORS in relation to documents previously submitted by Mr Trajkovski or by the first defendant on his behalf. Mr Trajkovski denied saying this.

94 On 29 August 1995 Mr Findlay went to a meeting with officers from FORS at the invitation of Mr Trajkovski, held Mr Trajkovski's premises at Kogarah. Lawrence Glynn and Doug Rann from FORS were present, together with Mr Trajkovski and Mr Findlay. On this occasion there was only one complete Porsche vehicle present at the premises, being a blue Porsche 911 which Mr Findlay had previously seen there and which Mr Trajkovski had been driving. However, on this occasion, the NSW registration plates had been removed and during the course of the meeting Mr Findlay saw that the compliance plates had also been removed. The only other Porsche vehicle present on that occasion was a Porsche 911 body shell without doors that Mr Findlay had seen at the premises being panel beaten on previous visits.

95 Lawrence Glynn brought a number of SE (summary evidence) documents with him to the meeting. He went to each of these documents and said, "Where's the supporting documents and test results for this one?" Mr Trajkovski was unable to provide any documents in response to any of Mr Glynn's requests. Mr Findlay said that he was unable to assist as he had been instructed not to take any documentation to the meeting.

96 Mr Findlay said that as far as he knew that was the first time that anyone from FORS had inspected Mr Trajkovski's facilities. While they were there Mr Glynn and Mr Rann casually inspected the blue Porsche at the premises, lifting the bonnet and the boot lid. When the bonnet was lifted Mr Findlay observed four holes in the firewall indicating to him that the compliance plate had been removed. Mr Findlay said that during the course of the inspection Mr Trajkovski said, "This is a vehicle which I have converted". Mr Trajkovski denied saying this.

97 Mr Findlay said that in August 1995, apart from AEC Porsche (who had Low Volume approval for Porsche 930 vehicles), and another company that had obtained a Low Volume approval for Porsche 930 vehicles, all of the Porsche vehicles imported into Australia, that had compliance plate approval, were imported by Porsche Cars Australia.

98 Mr Findlay never saw Mr Trajkovski supply a test vehicle that complied with his specifications, which could have been used as an ADR test vehicle. The blue Porsche referred to was not standard in that it did not have any heater - demister unit and the exhaust system was also non-standard.

99 Mr Findlay said that he was aware of the intended introduction of ADR 69 prior to 1 July 1995 when it became applicable to "new" vehicles, meaning a new model introduced into Australia. It was his understanding that ADR 69 became applicable to all MA category (i.e. passenger) motor vehicles sold in Australia on or after 1 January 1996.

Matters of agreement

100 An analysis of the pleadings, and of the way in which the case was conducted before me, reveals the following significant matters are not in dispute:-

100.1 Mr Findlay was at all material times a professional engineer holding himself out as having expertise in matters of compliance with the Australian Design Rules promulgated under the Motor Vehicle Standards Act 1989 in matters of making applications to FORS for compliance plate approval.

100.2 During 1994 and 1995 the first defendant carried on the business of consulting engineers to the transport industry, which was performed in part at least by Mr Findlay.

100.3 The agreement upon which Mr Trajkovski sues dated 26 October 1994 required the defendants to provide him with the technical information and services set out in paragraphs 1 to 4 of the agreement in respect of 1975 to 1989 series Porsche 911 motor vehicles.

100.4 On or about 24 October 1994, in purported performance of the agreement, the defendants lodged an application for compliance plate approval in respect of 1975 to 1989 series Porsche 911 motor vehicles with FORS.

100.5 In October 1994 and at all material times thereafter the defendants were aware of the fact that additional requirements for the issue of Compliance Plate Approval in respect of 1975 to 1989 series Porsche 911 motor vehicles would be operative after 30 June 1995.

100.6 In October 1994 the defendants were or should have been aware of the fact that if Compliance Plate Approval in respect of 1975 to 1989 series Porsche 911 motor vehicles was not issued by 30 June 1995, such vehicles would be required to comply with ADR 69/00 from 1 January 1996.

100.7 The defendants were or should have been aware in and after October 1994 of the fact that 1975 to 1989 series Porsche 911 motor vehicles would not comply with ADR 69/00.

100.8 In October 1994 and at all material times thereafter the defendants were aware of the fact that Mr Trajkovski's purpose for obtaining Compliance Plate Approval in respect of 1975 to 1989 series Porsche 911 motor vehicles was to affix such a plate to them to be imported and sold at a profit.

Construction of the contract

101 There are differences between the parties as to the correct construction of the contract.

The plaintiff's submissions

102 In Mobile Innovations Limited v Vodafone Pacific Limited & Ors [2003] NSWSC 166 Einstein J said at [650] ff:-

"[650] The basic approach to the proper construction of a written contract has often been stated but it bears repeating.

[651] The general test of objectivity is pervasive in the law of contract. Two passages from speeches of Lord Diplock illustrate the point (as Gleeson CJ said in Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 549).

Gissing v Gissing

Ashington Piggeries v Christopher Hill

103 Relying upon these passages, Mr Trajkovski emphasised that it is not the actual intention of the parties that is relevant in ascertaining the true construction of the contract. Whether or not there is a meeting of the minds by the parties is not a matter that needs to be considered in properly construing the parties' intention as expressed in the agreement.

104 Einstein J also said at [655] to [656]:-

"[655] The court is dealing with a commercial contract. In construing the meaning of a term the court will strive to give the agreement a commercial, reasonable and rational operation: Australian Broadcasting Commission v Australian Performing Right Association (1972) 129 CLR 99 at 109 Hide & Skin Trading v Oceanic Meat (1990) 20 NSWLR 310.

Meehan v Jones

Biotechnology Australia Pty Ltd v Pace

Biotechnology

Kofi-Sunkersette Obu v A Strauss & Co Ltd

201 Next, Mr Trajkovski's case on damages was promoted upon the basis that losses he allegedly incurred were formulated by reference to the sale of comparable, but genuine, Porsche motor vehicles. It goes without saying that this involved, and would have required, that the cars he was selling would be sold as "Porsches". However, his ability to do this, and the evidence about comparable sales of genuine Porsche vehicles, has to be considered in the light of the following evidence that he gave in cross-examination:-

"Q. You didn't have approval by the way from Porsche Australia to use the name Porsche in the cars you were going to sell, did you?
A. No compliance plate holder, I don't think, does that.

HIS HONOUR: Again, I don't know if it is important or not, but it is important that you answer the question. Otherwise answers you give might not seem like they are dealing with the same question. The question was whether it related to whether or not you are entitled to use the word Porsche, I think.

202 Mr Moor gave the only evidence on what one might expect to be the value of motor vehicles manufactured by Mr Trajkovski in his case. It was not otherwise contradicted and much of it was admitted. The evidence did not accommodate in a wholly satisfactory way the issue of whether or not the use of the Porsche name was authorised or the effect, if any, on the value of the vehicle that the absence of that authority might have. It did deal, however, with the difference in the market place between what might be described as genuine Porsche manufactured vehicles and vehicles of the type that Mr Trajkovski said he intended to construct from Porsche components recovered from wrecked or otherwise disassembled Porsche vehicles. That evidence consisted of the following:-

"Q. Are you able to clarify for his Honour where in that spectrum you think the vehicles that you have been asked to consider here are, which if I can remind you are full volume compliance plate vehicles which would have had a compliance plate affixed by Diamond Porsche?
A. It is an interesting one. We are talking about here about Glass compiling their data from full ADR spec cars with an Australian compliance plate.

I would tell you practically that when a dealer, auctioneer or whatever looks at a motor vehicle compliance plate, they look for a silver plate. All they do is look for the plate. I would say 99 times out of a hundred they would not read it, they would look for the date and it would then be classed as a car you would buy from Scuderia or somebody like that.

I guess other things that would impact on, if people started suddenly noticing there was a slightly different compliance plate, the volumes were significant then there might be a warning in the market these cars were not the real thing but something a bit less from the real thing but I am getting away from the track.

In terms of determining a value, if it was perceived by FORS they were full ADR complied cars I would say the value would be more towards the top end. You have to understand as well when Glass compile their data they have Porsche dealers in their sales reports and to give you an idea, there is about two thousand used Porsches sold a year. Last year Porsche sold 1156 vehicles on a market of just less than a million so they have just over point one percent of the market so the rough approximation between the used car market and the new car is about double. I would say Glass was asked, I was asked to get their information but it has long since been archived. How many records did Glass check to compile these numbers but, at a guess, we get about fifty percent of the market so a thousand vehicles so we have statistically worked to produce the figures in my table.

Within those figures there are vehicles that are sold by Porsche dealers, like Sydney Porsche or Scuderia, that are approved, these Porsches, and they obviously attract a premium price and they would be above the number here shown as the statistical average and there are obviously vehicles that are sold second hand that would be less than that so it is a long winded way trying to explain a bit more about the market but, yeah, if they were full ADR cars it is my opinion they would be certainly at the fifty percent end, probably not at the hundred percent end but certainly more towards the higher end.

203 In my opinion this evidence has at least the effect that Mr Trajkovski could not have expected to sell motor vehicles constructed by him for any price exceeding 50 per cent of the price of a genuine Porsche vehicle of apparently comparable specifications, even with the benefit of a compliance plate approved for affixation to the vehicle by FORS. The burden of Mr Moor's evidence is that such vehicles would in all likelihood be unattractive to buyers in search of genuine vehicles with which they would not be able to compete on price. His evidence on this was to this effect:-

"Q. And if you are a person who wants a car that hasn't been modified, you are not going to buy a car with a compliance plate--
A. Yes.

Q. --such as Diamond Porsche, are you?
A. Probably not.

204 I would also have found, had it been necessary to do so, that Mr Trajkovski would not have manufactured and sold in excess of ten vehicles in any configuration or howsoever produced. For example, the comparative sophistication and thoroughness with which his case on damages was formulated and presented by experienced counsel on his behalf was not matched, in my opinion, by the existence of a corresponding sophistication or thoroughness observable in Mr Trajkovski himself. He did not give me confidence that the things that he contended the defendants were bound in contract, or upon the basis of a duty they owed him, to provide could or would have been utilised by him in the way assumed for the purposes of the calculation of the damages that are claimed.

205 The evidence given by Mr Trajkovski on various topics leads me to this conclusion. For example:-

*****

Q. So, is the position that when you stepped on that plane to lodge those documents, you had no idea who the ramifications might be for you?
A. In what part?

Q. You did not know what they were going to call upon you to do in the future, is the situation?
A. I have a professional engineer. We liaise and he tells me what to do.

Q. You were going to run the business?
A. Yes.

Q. He wasn't going to run the business?
A. No.

Q. As I understand the effect of your evidence is when you lodged those documents you did not know what they would require of you in the future, is that the position?
A. If other people are doing it I am sure I could have.

Q. Could you please answer the question?
A. Did I know what the ramifications were?

Q. Did you know what requirements those documents were going to place on you?
A. No.

206 Another example is as follows:-

"Q. How many employees were you proposing would work on the conversion of these vehicles if you got approval?
A. Depending on the volume, I could find contractors anywhere.

Q. You'd have to pay contractors a higher rate than wages, wouldn't you?
A. Well, wages are wages.

Q. But you'd also have difficulty, wouldn't you, if you had to employ different contractors from time to time in making sure that the vehicles complied with the approval you had?
A. I was basically on a factory floor sometimes to 1 o'clock in the morning, so.

Q. But you didn't know anything about ADRs, did you?
A. I would have learnt it, wouldn't I?

Q. When?
A. As soon as the approval came through Russell would have told us, right, now this is what you have to do and we would do it.

Q. You don't suggest that Russell, or Mr Findlay would have been present in the factory during the construction of every vehicle, do you?
A. No, but you've got to learn somewhere.

Q. So his input would not have enabled you, on your limited knowledge of the ADRs, to look at a vehicle in the process of being converted and say that complies, would it?
A. I pick things up pretty quick.

Q. Do you?
A. Yeah.

Q. So you would have picked things up quickly enough to do, I think you say, 50 Porsches in six months or so; is that right?
A. I don't know if you can do them in six months, like, that's a bit much. I mean, you could do as many as you wanted to do as long as you had your staff there.

Q. How many were you planning on doing in the six months between 1 July and the end of 1995?
A. In the 1st of July?

Q. From 1 July 1995 to 31 December 1995, how many Porsches were you planning to modify?
A. As many as I could handle, really. I can get them at a dime a dozen to get.
Q. How many was that?
A. It really depends on the car itself too and which ones I was actually selecting because some cars were more complete than the other cars.

Q. Of course, you wouldn't be on the factory floor when you were in Los Angeles sourcing these vehicles?
A. No, but I a right-hand man here, Gary Donovan, that was very good.

Q. Did he know anything about ADRs?
A. He is a person that was around 55 years old, a very good qualified tradesperson that understands vehicles very well. So I'm sure that if I pointed out things to him he would follow it.

207 Mr Trajkovski also said this:-

"Q. You did not know about ADRs did you?
A. I know a lot about building cars.

208 Mr Trajkovski would appear also to have had no realistic understanding of the requirements of Australian Customs, and accordingly of the likely effect upon his proposals, of Customs rules or regulations. He had not sought their advice:-

"Q. Can I ask you this; did you get any advice from customs in relation to your business proposal?
A. No. I get up-to-date with tariffs.

Q. Did you seek any advice of any sort in relation to what you were proposing to do?
A. I can't remember.

209 The following is to like effect:-

"Q. Did you ever discuss your proposals with Australian Customs?
A. I never discussed them.

Q. Do you emphasise in that answer the word "I", do you?
A. Sorry.

Q. Do you emphasise the fact that you personally never discussed --
A. No, never.

Q. You never had anybody on your behalf discuss it with Customs, did you?
A. No.

Q. You didn't know what might be the relevant duties and tariffs if you imported the vehicles as components rather than as complete vehicles, did you?
A. Yes, I did.

Q. You didn't know whatever it was you knew on that subject as a result of any discussion with Australian Customs, did you?
A. I was up to date all the time on the tariffs. I used to renew every 30 days.

Q. Is it fair that at the meeting preceding this letter Mr McClennan raised a question at least as to the applicable duties and tariffs in circumstances where your proposal was to import components as to complete vehicles
A. There was lots of discussions which ended up before this letter, Mr McClennan and Russell.

Q. It is fair, isn't it, that what the Department of Transport are doing in this paragraph is suggesting to you that you need to ensure that you understand the implications of your proposal so far as Customs are concerned
A. That is fine, we can do that if we need to do that.

Q. The fact of the matter is you never put to Customs your proposal to see what their attitude was, did you?
A. I don't have to put it to Customs.

Q. I am not suggesting you had to, but you received some advice that you ought to, didn't you?
A. We knew what the tariffs were. So did they.

Q. Who is "they"?
A. Being FORS.

Q. You say that they knew as well?
A. Of course they know, they deal with it every day.

Q. Doesn't it therefore seem a little odd to you this PT Core, who wrote the letter, endorsed something said by Mr McClennan, namely, you should discuss your proposal with Customs?
A. Because it was probably talking about that meeting as well. There were numerous things said at that meeting which would probably cover five pages, instead of two.

Q. What I am suggesting to you is that this paragraph suggests that it wasn't as clear to the Department of Transport as you claim it was to you, do you understand that question?
A. No, I see this; the department, they don't want to commit to anything, because it is not in their area, it is Customs.

Q. Doesn't that suggest to you that they weren't at all confident about their non-Customs implications of your proposal?
A. That didn't take me anywhere anyway.

Q. You didn't care what they thought?
A. I have to deal with Customs with that issue. I need to talk about a tariff, I have to talk to them.

210 The last answer was at best cavalier. It was not helpful to me or to Mr Trajkovski's case. In association with other things it did not give me confidence in Mr Trajkovski's ability to prosecute any approval he may have been given to a successful or profitable conclusion. He relied to some extent upon his prior business record of importing vehicles for sale at a profit. However, Mr Trajkovski was unable to produce any records to support this in circumstances where the existence of such records might have been expected. For example:-

"Q. But presumably there was documentation at the time?
A. There would have been an invoice given to us at the time, yes.

Q. And you were conducting this business where you were selling converted Porsches from time to time?
A. That's correct.

Q. Back in 1993?
A. That's correct.

Q. So presumably you would have filed tax returns which reflected this sale?
A. Possibly.

Q. What do you mean possibly?
A. Well, I can't remember it. It was just so long ago.

Q. Well, there wouldn't be any reason for you not to file a tax return, would there?
A. Well, I know but you're asking me something that's like many, many years down the track.

Q. You see, Mr Trajkovski, what I'm trying to understand is you must have detailed information about the profit you made from the importation of these individual cars, mustn't you?
A. Possibly, yes, they would go through our accounts.

211 The following passage is a similar example:-

"Q. Do you have any details of the cost of the vehicles you'd been importing between 1989 and 1994? Do you have any information about that?
A. How do you mean costs? I've given you the costs.

Q. I'm sorry?
A. I've given you costs.

Q. That doesn't relate to the cars you imported between 1989 and 1994, does it?
A. But it's the same car.

Q. Have you got any documents which show what you paid for cars between 1989 and 1994?
A. Yes.

Q. Where is it?
A. In the documents.

Q. You say the invoices between 1989 and 1994 are in the documents?
A. Can you bear with me for a second. I'm just having a bit of a problem seeing these documents.

Q. Sorry, what did you say?
A. I can't read them. There's a lot of documents that I can't - there's just--

Q. Can I suggest to you that none of them relate to the period 89 to 94?
A. No, there is. There's a document that relates to a car purchased before 94.

Q. Before 94?
A. Yes, this one was brought in before 1994.

Q. Which page are you on?
A. Page 0174.

Q. This one was brought in before 1994; is that right?
A. That's right.

Q. But this one relates to your sale of it, doesn't it?
A. Yeah, this one was one that was sold through - through Pickles that Mr Gatland purchased.

Q. I see. Well, that vehicle is sold, by the look of this, in November 1993?
A. That's right.

Q. But I was asking you about some evidence of what you paid for a vehicle imported by you between 89 and 1994?
A. The invoices for this shell?

Q. Any shell?
A. No, but there is some after 94. I've noticed here 95, a year later.

Q. As I understand it, between 1989 and 1994 you were importing Porsches as personal imports?
A. That's right.

Q. And one of the reasons you wanted to get involved in approval of the Federal Office of Road Safety was because the personal import--
A. Scheme.

212 Mr Trajkovski argued that criticism of his ability to produce records of prior activities was irrelevant and ill conceived and without justification. This was because the defendants are uncontroversially to be taken to have admitted the cost (in 1995) of the manufacture of the vehicles in respect of which he claimed losses in the present proceedings and the reliability of the sales figures contained in the Glass’s Guide with respect to the relevant Porsche models.

213 However, in my opinion this evidence goes to a different proposition. Paragraphs 6.1 and 6.2 of Mr Trajkovski's thorough submissions in reply were as follows:-

"6.1 It is Mr Trajkovski's case that he has lost the opportunity of doing something which would have been commercially rewarding. A necessary feature of this is that not only must he satisfy the Court of matters which did happen but he must also adduce evidence of what he says would have happened . The former needs to be achieved on the balance of probabilities. In respect to the latter, the Court needs to assess the probability of what might have occurred so as to reach a conclusion as to the extent of his loss.

impossible

214 Bearing these things in mind, the ability to establish a track record with some degree of certainty would have enhanced the suggestion that Mr Trajkovski had the ability to bring his allegedly frustrated intentions to fruition. It seems to me to be a matter of common sense that the difficulties associated with the proof of what would have happened could in a commercial context be reduced by proof of what has previously been achieved. The attention to detail exhibited by those appearing for Mr Trajkovski suggests to me that any failure to produce such material must be attributed to Mr Trajkovski and that its absence derogates from his case in this regard. I have no confidence that Mr Trajkovski had any track record, or associated documents, to rely upon.

215 This also flows on to Mr Trajkovski's proposal to use vehicles said to be available as a result of his past activities, to which he claimed he had access, for use as a SUTI. He gave the following evidence about this:-

"Q. You did not have a vehicle at that stage that could be inspected?
A. I had access.

Q. Where?
A. Numerous people.

Q. They were not your vehicles, is that right?
A. Vehicles that I had converted that were of the same type.

Q. When had you converted them?
A. In the early days. I've been converting since 89.

Q. So you had access to these vehicles?
A. Yes and I probably still do even till today.

Q. But you would not have any record of the part numbers in them would you?
A. No but before you fill in your O45 you would need to check and cross-check the car.

Q. I am talking about the approval process?
A. That's right and that is what I am talking about.

Q. You would have to produce a vehicle for inspection before you got approval?
A. That's right.

Q. And it would have to be a vehicle that you could build other vehicles to correspond with?
A. No, sorry. You get your approval. That is the SUTI vehicle, what you are talking about.

Q. You would have to be able to build vehicles that conform with the SUTI wouldn't you?
A. Conform with the SUTI?

Q Yes?
A. No the SUTI vehicle has to conform to what you build.

Q. You would have the SUTI vehicle inspected by the Federal Office of Road Safety before you produced any vehicles, wouldn't you?
A. No. What they would do is you would build your vehicles and then the New South Wales RTA along with the Federal Office of Safety would come and inspect the vehicle based on an A45 [sic 045] certificate.

Q. Am I to understand that answer to mean you think you would build 50 Porsches and submit one as a SUTI at the end of that?
A. That's right.

Q. So you would have 50 cars in stock?
A. Would you do 50 cars in stock in one hit?

Q. Is that the way you understood the process works?
A. You could it a hundred if you wanted to.

Q. You understand your position on the way this works is you build how many car you want to build and then you provide a SUTI, is that right?
A. Well, you have to get the cars to build the car to provide a SUTI car don't you.

Q. Let me put it--
A. I don't understand you.

Q. What you have to do is you have to build a vehicle and get it approved. That is the first step is it not?
A. No first your approval comes in place and then you supply the SUTI vehicle and then you can go ahead and start selling your cars.

Q. I want to suggest to you that the process is one in which you submit all your information?
A. That's right.

Q. Summaries of evidence
A. Correct.

Q. You then present a car which conforms with the summaries of evidence?
A. As long as your - -

Q. Let me finish? Which conforms with the summary of evidence for inspection by the office of road safety?
A. Correct.

Q. You then have to build cars that conform to the vehicle that you presented following inspection?
A. That's correct.

Q. So the process is not one of building 50 cars and having a SUTI approved, is it?
A. But if you are getting a SUTI - you see, you don't, you have to know how many SUTI vehicles you would need. You would need a cabriolet, a coupe, whatever you would need if there is any changes. Then you have the problem of once you have - first you have to get your approval in place, SERs have to comply, they have to be accurate, they have to be correct and then you get your approval and then you do your SUTI vehicle but what they do is let you bring in the vehicles under test evaluation and all sorts of things but we did not do that in this case.

Q. To get a full volume approval, you have to present the Federal Office of Road Safety with a typical vehicle. Do you agree or disagree with that?
A. A proto vehicles.

Q. And all the vehicles that you subsequently manufacture have to confirm to the proto vehicle?
A. That's right.

Q. If you had modified the vehicles from 1989 you would not know what any one of them had in it by way the part numbers, would you?
A. Okay.

216 Mr Trajkovski continued giving answers on this topic a little later:-

"Q. What I am suggesting to you is none of those vehicles could be the SUTI?
A. That is not correct.

Q. And the reason I am suggesting to you that is the position is because you did not have summaries of evidence in relation to the parts that had been used to convert those vehicles did you?
A. No but they were standard vehicles so they would be the same.

Q. That was an assumption you made?
A. If they weren't the same then I would on my O45 I would narrow it down and change the parts to what I had to change so it does comply for a SUTI vehicles.

Q. The 045 only comes in relation to each production vehicle does it not?
A. No, the 045 certificate is per vehicle to say complies.

Q. Nothing to do with the SUTI?
A. The SUTI does have an O45 it is part of the build plan.

Q. If you chose to sell it?
A. No it is part of the build plan.

Q. The point is this -
A. Are you talking about selling or are you talking about build plan.

Q. I will ask you another question. The point is this, I suggest, that in modifying these vehicles in 1989 through to 1994 you had not been modifying them with a view to then building the SUTI?
A. No.

217 Then finally:-

"Q. The simple fact is that you do not know anything about the relationship between those summaries of evidence that you took down there and any one vehicle you had modified between 1989 and 1995, did you?
A. At what time.

218 At one point during cross-examination of Mr Trajkovski I raised some matters that were then of some interest to me as I saw the case developing. I said this:-

"HIS HONOUR: . . . What I'm interested to know is, I suppose in both cases; that's to say, the plaintiff's case and the defendant's case, I'd like to know what the competing evidence is on the time lines for sourcing, buying, shipping, getting through customs, clearance, transport to Kogarah, sourcing parts not imported, build times, and I would be assisted I suspect to know what was the reliability of the supply of Porsches in any of the categories we've discussed in which Mr Trajkovski may have been interested in 1995, both overseas and here. It may be that this is material I have not yet got to, but Mr Trajkovski has nominated two named suppliers and it may be that it's not possible now by reference to their records to know what stock was on their books or in their yard in the relevant period and we'll have to make some assumptions based upon evidence from experts who were familiar with the trade at the time."

219 I am not satisfied that Mr Trajkovski had the ability to draw all, or many, of these things together in a practical or realistic way. Mr Trajkovski's approach to the enterprise to my observation was to try to rely upon his experience with a previous enterprise of a different type and on a smaller scale as a basis for proof of the likelihood of success of a rather different business. As he said:-

In my opinion, this was the triumph of hope.

220 Mr Trajkovski's submission was to this effect:-

"6.4 There is a strong likelihood that Mr Trajkovski would have been in a position whereby he could have made a substantial profit in the time available if RK Findlay Pty Ltd had performed its obligations under the agreement, and RK Findlay Pty Ltd and Mr Findlay had not breached their duties of care to Mr Trajkovski."

221 In the circumstances as I have outlined them, I am unable to accept that submission.

222 In summary, therefore, my further findings are as follows:-

222.1 If there was a variation of the agreement from one relating to 1975-89 vehicles to one relating to 1986-89 vehicles, that variation was not such that the agreement ceased to govern the relationship between the parties.

222.2 The agreement did not contemplate or permit itself to be exploited by Mr Trajkovski as one relating to a parts based scheme with the result that any damages alleged to have been caused by the loss of an opportunity to exploit such a scheme were not caused by any breach of the agreement.

222.3 Mr Trajkovski did not interfere with the defendants' performance of the agreement and did not breach any implied term, or duty, that he would cooperate with them.

Orders

223 In these circumstances I order the defendants to pay the plaintiff $10,000 together with interest at court rates from 25 November 1994.

224 I will hear the parties on the question of costs.

**********

Actions

Download as PDF Download as Word Document

Citations

Trajkovski v R K Findlay Pty Ltd [2008] NSWSC 273

Most Recent Citation

Trajkovski v R K Findlay Pty Ltd (No 2) [2008] NSWSC 773

Cases Citing This Decision

1

Trajkovski v R K Findlay Pty Ltd (No 2) [2008] NSWSC 773

Cases Cited

11

Statutory Material Cited

1

Mobile Innovations Limited v Vodafone Pacific Limited [2003] NSWSC 166

Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5

CITATION:	Trajkovski v R K Findlay Pty Ltd [2008] NSWSC 273
HEARING DATE(S):	2-12 April, 17 April and 21 September 2007; final submissions 2 November 2007
JUDGMENT DATE :	31 March 2008
JUDGMENT OF:	Harrison J
DECISION:	Defendants to pay the plaintiff $10,000 together with interest at court rates from 25 November 1994
CATCHWORDS:	CONTRACT – agreement to provide engineering advice for obtaining full volume approval to import Porsche motor vehicles complying with Australian design rules and compliance plate approval – whether agreement extended to scheme to import motor vehicles in parts – terms of agreement vague – agreement void for uncertainty – money paid on a consideration that wholly failed - TORT – duty of care – scope and content of duty coextensive with terms of agreement – not possible to determine whether breach occurred
LEGISLATION CITED:	Motor Vehicle Standards Act 1989
CATEGORY:	Principal judgment
CASES CITED:	Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104 F & G Sykes (Wessex) Ltd v Fine Fare Ltd [1967] 1 Lloyd's Rep 53 Hammond v Vam Ltd [1972] 2 NSWLR 16 McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 Mobile Innovations Limited v Vodafone Pacific Limited & Ors [2003] NSWSC 166 York Air Conditioning and Refrigeration (A'asia) Pty Ltd v The Commonwealth (1949) 80 CLR 11
TEXTS CITED:	J W Carter and D J Harland, Contract Law in Australia, 4th ed, (2002) Butterworths
PARTIES:	Petar Trajkovski (Plaintiff) R K Findlay Pty Ltd (First defendant) Russell K Findlay (Second defendant)
FILE NUMBER(S):	SC 20143 of 2000
COUNSEL:	J B Conomy with C G Carroll (Plaintiff) R S Sheldon (Defendants)
SOLICITORS:	Colin Daley Quinn (Plaintiff) Bryan Gorman & Co (Defendants)