White v Malco

[2000] NSWSC 1165

CITATION:	White v Malco [2000] NSWSC 1165
FILE NUMBER(S):	SC 20152/98
HEARING DATE(S):	10/11/2000
JUDGMENT DATE:	21 December 2000
PARTIES :	Bruce Charles White v Malco Engineering Pty Limited
JUDGMENT OF:	James J at 1

COUNSEL :	MJ Neil QC/I Mescher - 1st Defendant G Swinton - 2nd Defendant D Nock SC - cross-defendant I Faulkner - cross defendant
SOLICITORS:	Cutler Hughes & Harris Leitch Hasson & Dent Ebsworth & Ebsworth Henry Davis York
CATCHWORDS:	Negligence - causation - remoteness of damage - cross-claim - contract - reasonable fitness
DECISION:	Decision on cross-claims

THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

JAMES J

Thursday 21 December 2000

20152/98 - White v Malco Engineering Pty Limited & Ors

JUDGMENT

1   HIS HONOUR: In this matter I gave a lengthy preliminary judgment on 29 October 1999. Commencing at paragraph 12 of the preliminary judgment I identified eleven cross-claims. In the preliminary judgment I dealt extensively with some of the cross-claims, to some extent with some of the other cross-claims and not at all with the remaining cross-claims.

2   When I delivered my preliminary judgment I did not direct entry of any verdict in the action by the plaintiff against the defendants or in any of the cross-claims. Subsequently, after further argument, I directed entry of verdicts disposing of the plaintiff’s claims against the two defendants, Malco Engineering Pty Limited (“Malco”) and Skilled Engineering Pty Limited (“Skilled”).

3   The various cross-claims were mentioned before me on 18 April 2000 and again on 19 July 2000. In a judgment I gave on 19 July 2000 I said that I would proceed as I had indicated on 18 April 2000, that is I would not withdraw anything I had said in the preliminary judgment of 29 October 1999 about the cross-claims which I had identified as cross-claims 1, 2, 7, 8, 10 and 11 in the preliminary judgment and what I said in my preliminary judgment disposes of those cross-claims (subject to the entering of verdicts and the making of orders to give effect to my judgment). However, I said in my judgment of 19 July 2000 that I withdrew anything I had said in the preliminary judgment about the cross-claims identified as cross-claims 3, 4, 5, 6 and 9 in my preliminary judgment, that is to say I withdrew pars 554 to 592 of the preliminary judgment.

4   My principal reason for withdrawing these parts of my preliminary judgment, as explained in remarks I made in Court on 18 April 2000, was that these cross-claims had not been properly argued, and in some cases had hardly been argued at all, at the principal hearing and I was concerned that the rules of procedural fairness should be observed.

5 In my judgment of 19 July 2000 I referred to what was said in par34 of the joint judgment of five justices of the High Court in DJL v Central Authority 74 ALJR 706, as affirming that a superior Court of record, as the Supreme Court is, has full power to re-hear or review a case until judgment is drawn up, passed and entered. In the present case judgment has not yet been entered on any of the cross-claims. In any case, what I said in my preliminary judgment about many of these cross-claims was inconclusive and did not purport to dispose of the cross-claims.

6   The outstanding cross-claims, as identified by me in the preliminary judgment and retaining the numbering of the cross-claims used by me in the preliminary judgment are:-

3. Cross-claim by Malco against Prevwreck Pty Limited (“Prevwreck”)

4. Cross-claim by Malco against Liftquip Pty Limited (“Liftquip”).

5. Cross-claim by Malco against Lift Truck Services Pty Limited (“LTS”).

6. Cross-claim by Skilled against LTS and Liftquip.

9. Cross-claim by Prevwreck against LTS and Liftquip.

7   Liftquip and LTS, which are closely related companies, were represented throughout the hearings before me by the same counsel and the same solicitors and I was informed by that counsel that there was no need for me, in dealing with any of the cross-claims, to distinguish between the two companies. Consequently, cross-claims 4 and 5 can be treated as one cross-claim brought against Liftquip and LTS. In this judgment I will refer to Liftquip and LTS simply as “Liftquip”.

8   Some of the outstanding cross-claims contain causes of action for breach of contract. In par588 of my preliminary judgment I found that there was a contract for the hire of the forklift from Liftquip to Prevwreck and that there was a contract for the on-hiring or sub-hiring of the forklift from Prevwreck to Malco and that there was no contract for the hire of the forklift, or any other contract, between Liftquip and Malco. I now repeat those findings. Hence, the causes of action for breach of contract in the cross-claims by Malco against Prevwreck and by Prevwreck against Liftquip will need to be considered. On the other hand, the causes of action for breach of contract in the cross-claim by Malco against Liftquip must fail.

9   It is convenient to deal firstly with the cross-claims by the two defendants in the action, Malco and Skilled, against Liftquip, which do not contain any cause of action in contract or, at any rate, any arguably viable cause of action in contract.

Cross-claim by Malco against Liftquip

10   Malco relied on a number of causes of action in its cross-claim against Liftquip.

11   Having regard to findings made in my preliminary judgment, which I have not withdrawn, or to findings already made in this judgment, some of these causes of action must fail.

12   As I have already stated, any cause of action for breach of contract must fail because of my finding that there was no contract between Malco and Liftquip. I incorporate into this judgment sub-paragraph (iii) of par588 of my preliminary judgment.

13   The claims by Malco based on an alleged statutory agency fail for the reason given in par539 of my preliminary judgment, namely that I had found that there was no negligence on the part of Mr Onody, who was the only person, apart from the plaintiff, who could have been the driver of the forklift and who was, accordingly, the only person for whose negligence (if there was any negligence) another person might have been liable by virtue of a statutory agency.

14   The cross-claim by Malco against Liftquip contained causes of action based on alleged contraventions of s52 and s53(a) of the Trade Practices Act. It was alleged that Liftquip had made a representation to Malco that the forklift was of a reasonable standard and quality. In par588 of my preliminary judgment I held that no such representation had been made by or on behalf of Liftquip on which Malco could rely and that these claims failed. I remain of this opinion and I incorporate into this judgment sub-par(iv) of par588 of my preliminary judgment.

15   In its cross-claim against Liftquip Malco relied on the following further causes of action:-

(i) That Liftquip owed a duty of care to Malco, that Liftquip breached that duty of care and that the liability for damages which Malco incurred to the plaintiff was damage sustained by Malco, which was caused by the breach of the duty of care.

(ii) That Liftquip owed a duty of care to the plaintiff, Mr White, that Liftquip had breached that duty of care and that Liftquip was a person who, if it had been sued by the plaintiff, would have been liable to the plaintiff in respect of the same damage as that in respect of which Malco was liable, so that Malco was entitled to recover contribution and, it was submitted, a complete indemnity from Liftquip for the damages it was liable to pay the plaintiff, pursuant to s5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946.

16   I will now deal with these two remaining causes of action. It is possible to deal with both causes of action simultaneously.

17   Liftquip knew that Prevwreck, the party to whom it was hiring the forklift, was on-hiring the forklift and, in my opinion, Liftquip as the supplier of the forklift owed a duty of care to Malco as the entity to whom Prevwreck on-hired the forklift and the entity in whose operations the forklift was used. I am also of the opinion that Liftquip owed a duty of care to the plaintiff as a worker who was an ultimate user of the forklift. Counsel for Liftquip did not dispute that a duty of care was owed by Liftquip to Malco and to the plaintiff.

18   Having regard to the findings I made in pars412-445 of my preliminary judgment, I am satisfied that there was a breach by Liftquip of the duty of care it owed to Malco and of the duty of care it owed to the plaintiff. The forklift, when hired and on-hired and delivered to the premises of Australian Newsprint Mills (“A.N.M”), where Malco was conducting its operations, was defective and unsafe and Liftquip, in whose possession the forklift had been for two to three months up to 31 October 1995 failed to take reasonable care to repair and test the forklift, before it was picked up by Mr Harders of Prevwreck and delivered to the premises of A.N.M.

19   It was submitted by counsel for Liftquip that, at the time of the accident, the forklift was being used by the plaintiff and the employees of Malco otherwise than as a forklift, that is otherwise than in the ordinary way in which a forklift is used for lifting and moving objects, and that it had not been established that the forklift was defective and unsafe for use in the ordinary way in which a forklift is used. However, I am satisfied, on the basis of findings I made in the preliminary judgment, that the forklift was generally defective and unsafe and was defective and unsafe, even for use simply in lifting and moving objects.

20 I am further satisfied that the breach by Liftquip of its duty of care to the plaintiff was a cause of the plaintiff being injured and that the breach by Liftquip of its duty of care to Malco was a cause of Malco incurring its liability to pay damages to the plaintiff. Under the decision of the High Court in March v E & M.H. Stramare Pty Limited (1990-1991) 171 CLR 506 a question of causation is to be resolved by applying common sense to the facts of the particular case. In actions in tort it is sufficient for a causal connection to be established between the defendant’s negligence and the plaintiff’s damage that the negligence of the defendant materially contributed to the happening of the accident and the sustaining of damage by the plaintiff. A defendant’s negligence can be a cause of an accident, even though some act or decision of the plaintiff or of a third party was a more immediate cause of the plaintiff’s damage than the defendant’s negligence. See Kavanagh v Akhtar (1998) 45 NSWLR 588 at 597 per Mason P.

21   The main submission made by counsel for Liftquip, in opposition to the claim in tort and the claim for contribution or indemnity, was that the damage was too remote.

22   It was submitted by counsel for Liftquip that the forklift was hired out by Liftquip for the purpose of being used as a forklift and for no other purpose and that Liftquip had no knowledge of any special use to which the forklift might be put, other than the ordinary use of a forklift in lifting and moving objects, with a driver in the driver’s seat of the forklift and thus in a position to control the forklift; whereas, at the time the accident happened, the forklift was in fact being used, not as a forklift and with a driver in the driver’s seat, but in an attempt to jump start another piece of equipment, the boom lift, by connecting the battery of the forklift to the battery of the boom lift, with no one being in the driver’s seat in a position to control the forklift.

23 Since the decision of the Privy Council in The Wagon Mound (No 1) (Overseas Tankships (UK) v Morts Dock & Engineering Co (1961) AC 388), the question of remoteness of damage in actions in tort has depended on whether the damage was reasonably foreseeable. The question has been considered by the New South Wales Court of Appeal in a number of cases, to some of which I will refer.

24 In Commonwealth of Australia v McLean (1996) 41 NSWLR 389 the plaintiff was a seaman on HMAS “Melbourne” on 10 February 1964, when it collided with, and sank, HMAS “Voyager”. In 1995 he brought an action to recover damages. His case was that as a result of his experiences on the night of the collision he had suffered a post-traumatic stress disorder and that, consequently, over the next thirty years or more he had drunk alcohol and smoked tobacco, both to excess, which had caused him to develop throat cancer. The trial judge extended the limitation period within which the action could be brought.

25   The trial itself took place before a jury. The trial judge instructed the jury that no question of remoteness of damage arose in relation to the allege consequences of the post-traumatic stress disorder, as distinct from the occurrence of the post-traumatic stress disorder itself. A ground of appeal on the appeal to the Court of Appeal was that the trial judge had erred in giving this direction.

26   In the Court of Appeal Handley JA and Beazley JA discussed the subject of remoteness of damage in their joint judgment (at pp402-407). Inter alia their Honours said at p403:-

“A wrongdoer is responsible for all damage of the same type or kind as that which was reasonably foreseeable, even if the particular damage, or its extent, were not reasonably foreseeable, or the damage occurred in an unexpected and unforeseeable manner”.

27 Their Honours referred with approval to what Windeyer J said in Mount Isa Mines Limited v Pusey (1970) 125 CLR 383 at 402, including:-

“… forseeability does not mean foresight of the particular course of events causing the harm. Nor does it suppose foresight of the particular harm which occurred, but only of some harm of a like kind…”

28   Handley JA and Beazley JA ultimately held that the ground of appeal to which I have referred should be upheld, on the basis that a question of remoteness of damage did arise in relation to the alleged consequences of the post-traumatic stress disorder. The plaintiff was entitled to recover for this further damage, only if the jury found that either it was damage of the same kind as a foreseeable post-traumatic stress disorder or was damage of a kind which was reasonably foreseeable.

29   In Kavanagh v Akhtar, to which I have already referred, a woman suffered a shoulder injury as a result of the defendant’s negligence. As a consequence of that injury she was unable to care for her long hair and she cut it off, without her husband’s consent, contrary to the principles and customs of their religion. The woman’s action angered her husband and resulted in the marriage breaking down, with the woman suffering psychiatric illness as a result of the breakdown of their marriage. It was held by the Court of Appeal that the woman’s psychiatric illness was not too remote and that damages could be awarded for her psychiatric illness, notwithstanding the voluntary and deliberate conduct by the plaintiff and her husband which had intervened between the defendant’s negligence and the onset of the psychiatric illness.

30   Mason P, with whom the other members of the Court agreed, discussed the question of remoteness of damage in actions in tort at pp599-603. At p600 Mason P referred with approval to the joint judgment of Handley JA and Beazley JA in Commonwealth of Australia v McLean and expressly adopted the proposition at p403 of the joint judgment which I have already quoted.

31 Mason P considered that this proposition was well illustrated by the decision of the House of Lords in Hughes v Lord Advocate (1963) AC 837. In that case the plaintiff was injured by being burnt as a result of an explosion. Injury by being burnt by fire from a lamp was reasonably foreseeable. However, the plaintiff had been burnt, not by fire from a lamp but by an explosion and the suffering of burning by an explosion was not reasonably foreseeable. Nevertheless, the plaintiff was held entitled to recover.

32 In the course of his judgment Mason P at p600 summarised the earlier decision of the Court of Appeal in Nader v Urban Transit Authority (NSW) (1985) 2 NSWLR 501.) Part of this summary was as follows:-

“In Nader the defendant was held liable for the hysterical reaction (known as the Ganser Syndrome) which supervened on moderate injuries suffered by the ten year old plaintiff precipitated by his parents’ overly protective concern over his injuries. The accident was held by the majority (Samuels JA and McHugh JA) to have been a legal cause of the reaction because it materially contributed to the onset and continuation of the condition. Those two judges then addressed remoteness. Each held that it was sufficient that psychiatric illness of some kind was reasonably foreseeable as a consequence of the physical injury. It did not matter that the particular psychiatric illness was of rare occurrence and uncertain aetiology”.

33   Later in his judgment Mason P said at p602:-

“The fact the breakdown occurred in consequence of a perhaps unforeseeable step taken by the respondent (cutting her hair) or the perhaps unforeseeable reaction of her husband is irrelevant in the light of cases such as Hughes and Nader , so long as psychiatric injury is itself regarded as a foreseeable consequence of the physical injury inflicted on the respondent…”

34 A further example of the Court of Appeal holding that a claim for damages was not too remote is to be found in Habib v The Nominal Defendant (1995) 22 MVR 454. In that case the plaintiff claimed damages for personal injuries allegedly suffered in a motor vehicle accident involving an unidentified motor vehicle. The plaintiff was subsequently charged with having made his claim for damages fraudulently. At a first criminal trial the jury were unable to agree. At a second trial the plaintiff was found guilty but an appeal against his conviction was successful and a verdict of acquittal was entered. It was held by the Court of Appeal that the legal costs the plaintiff had incurred in defending the criminal charge in the two trials and on the appeal were recoverable in an action against the Nominal Defendant based on the negligence of the driver of the unidentified motor vehicle.

35 Kirby P, with whose judgment Priestley JA concurred, said that the test for remoteness of damage in actions in tort is an “undemanding” one (at p463). His Honour considered that an illustration of how undemanding the test was, was that the plaintiff had succeeded in “the unlikely chain of events involved in Chapman v Hearse” (1961) 106 CLR 112. As Kirby P pointed out, “in that case, the driver of a car (Chapman) was thrown on to the side of the road as a result of an accident. A passing medical practitioner (whose executor was the plaintiff) stopped to help. He was, in turn, struck and killed by another passing motorist”.

36   In my opinion, having regard to the authorities I have referred to, the damage which the plaintiff suffered, being his personal injuries and the consequences of those personal injuries, and the damage which Malco suffered, being its liability to compensate the plaintiff for the plaintiff’s personal injuries and their consequences, were reasonably foreseeable as a consequence of the breaches by Liftquip of the duties of care it owed either to the plaintiff or to Malco and were not too remote. In each case the damage suffered was damage of a kind or type which was reasonably foreseeable. It is not necessary, in order for the damage not to be too remote, that the particular kind of damage suffered or its extent should have been foreseeable. Nor is it necessary that the precise sequence of events which led up to Mr White being injured should have been foreseeable.

37   Insofar as it is necessary that the sequence of events which led up to Mr White being injured should have been foreseeable in a general sort of way, then I consider that this requirement is satisfied. Liftquip knew that it was hiring out a forklift to Prevwreck which would be on-hired by Prevwreck. It was reasonably foreseeable that the forklift would be used in a factory in the industrial operations of the party to whom Prevwreck would be on-hiring the forklift. At the time the accident happened the forklift was being used in a factory in the industrial operations of Malco, which was the hirer of the forklift from Prevwreck.

38   It is true that at the time of the accident the forklift was not being used to lift and carry objects. However, it was being used in the course of carrying on Malco’s operations for the purpose of attempting to render operative another piece of equipment which was being used in the factory by Malco in the course of the same industrial operations and by the “undemanding” test of remoteness of damage such a use of the forklift, even if not the ordinary use of the forklift, was not beyond the bounds of reasonable foreseeability.

39   Moreover, it was reasonably foreseeable that the engine of the forklift might be started, at a time when no one was in the driver’s seat. The ignition could easily be reached by someone not sitting in the driver’s seat. If the vehicle had not been defective and had been parked out of gear and with the handbrake applied, the engine could have been started by someone not sitting in the driver’s seat, without any risk of danger. A person using the forklift only for the purpose of lifting and moving objects might nevertheless start the engine of the forklift, before entering the cabin and sitting in the driver’s seat.

40   Some of the cases to which I have referred exhibit what might be thought to have been a highly unlikely sequence of events between the defendant’s negligence and the plaintiff’s sustaining of the relevant damage, with some of those events being voluntary acts by the plaintiff or a third person, yet the damage resulting from the defendant’s negligence has been held to have been reasonably foreseeable and not to have been too remote.

41   In my opinion, Malco has established all the elements of its cause of action in tort against Liftquip and should obtain a verdict in its cross-claim against Liftquip for the amount of damages it has to pay the plaintiff.

42   I also consider that Malco is entitled to succeed against Liftquip on its claim for contribution or indemnity. In my opinion, Malco is entitled to a complete indemnity. Malco was held liable to the plaintiff on the basis that the forklift was defective and unsafe and the forklift was supplied by Liftquip.

Cross-claim by Skilled against Liftquip

43 Skilled relied on the same kinds of causes of action in its cross-claim, as those which I have held should succeed in the cross-claim by Malco against Liftquip, that is a claim in tort based on a duty of care owed by Liftquip to Skilled and a claim for contribution or indemnity pursuant to s5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946. For similar reasons to those which I have given for holding that Malco is entitled to succeed against Liftquip on its claims, I hold that Skilled is entitled to a verdict against Liftquip in its claim in tort for the full amount of the damages it is liable to pay to the plaintiff and also to contribution amounting to a full indemnity on its claim under s5(1)(c) of the Law Reform (Miscellaneous Provision) Act.

Remaining cross-claims

44   I now turn to the cross-claims which include causes of action for breach of contract which are arguably viable. These cross-claims are:-

(i) The cross-claim by Malco against Prevwreck.

(ii) The cross-claim by Prevwreck against Liftquip.

45   These cross-claims raise similar issues. Counsel for Prevwreck resisted the cross-claim by Malco against Prevwreck only on grounds corresponding to grounds on which counsel for Liftquip resisted the cross-claim by Prevwreck against Liftquip.

Cross-claim by Malco against Prevwreck - initial consideration

46   I dealt with this cross-claim at some length in pars554-585 of my preliminary judgment but I have, of course, withdrawn these paragraphs of my preliminary judgment.

47   One claim made by Malco against Prevwreck was a claim for an indemnity from Prevwreck under cl8 of the conditions on the reverse of the white copy of Malco’s form of purchase order, which, it was submitted, formed part of the contract for the hire of the forklift between Prevwreck and Malco. I dealt with this claim in pars556-561 of my preliminary judgment and decided that I should reject it. Since I published my preliminary judgment, no further submissions have been put to me in support of this claim. I remain of the views expressed in pars556-561 of the preliminary judgment and I incorporate those paragraphs in the present judgment. I am also not satisfied that a white copy of the purchase order was sent by Malco to Prevwreck. I reject this claim.

48   Two other claims made by Malco against Prevwreck were based on ss52 and 53(a) of the Trade Practices Act. I dealt with these claims to some extent in pars578-584 of my preliminary judgment, without purporting to finally determine the claims. I noted that it was not alleged that any express representation had been made by Prevwreck, that the only authority relied on by counsel for Malco Given v Pryor (1979) 39 FLR 437 was of little assistance and that the conduct from which the alleged representation was said to be implied was not specified with any precision. I remain of the views expressed in pars578-584 in my preliminary judgment and I incorporate them in this judgment. It is unnecessary for me to determine these particular claims in order to decide whether Malco should succeed on its cross-claim and I do not propose to seek to determine these claims.

49   The claims which, after the publication of my preliminary judgment, were really pressed in written and oral submissions by counsel for Malco, were claims in contract based on implied terms said to have been implied in the contract for the hire of the forklift from Prevwreck to Malco, either at common law or under the Trade Practices Act, that the forklift was of reasonable fitness and of merchantable quality.

50 In my preliminary judgment I held that at common law a term is implied in a contract for the hire of a chattel, in the absence of some provision to the contrary in the contract, that the chattel is reasonably fit for the purpose for which it is being hired, that is a purpose made known by the person taking the chattel on hire or a purpose apparent from the nature of the chattel. See par569 of my preliminary judgment. In support of my holding I referred to the decisions of the High Court in Beaton v Moore Acceptance Corporation Pty Limited (1960) 104 CLR 107 especially at 119 and Derbyshire Building Co Pty Limited v Becker (1961-62) 107 CLR 633 at 642, 645, 649-650, 656-657 and 659.

51   Since I published my preliminary judgment no submission has been put that I was in error in holding that such a term would be implied in a contract for the hire of a chattel, such as the contract for the hire of the forklift from Prevwreck to Malco. I remain of the views expressed in pars569-572 in my preliminary judgment, and I incorporate those paragraphs in this judgment. I conclude that a term of reasonable fitness would have been implied at common law in the contract for the hire of the forklift.

52 As I am of the opinion that a term of reasonable fitness would have been implied in the contract for the hire of the forklift from Prevwreck to Malco, simply by virtue of its being a contract for the supply on hire of a chattel, it is unnecessary to enquire whether such a term would have been implied in the contract as a matter of business efficacy, on the basis that all of the conditions for the implication of such a term, as stated by the Privy Council in BP Refinery (Westernport) Pty Limited v Shire of Hastings (1977) 180 CLR 266 at 282-3, are satisfied. It does, however, seem to me that such a term would be reasonable and equitable, would be necessary to give business efficacy to the contract, would be obvious, would be capable of clear expression and would not contradict any express term of the contract.

53   It was submitted by counsel for Malco that conditions that the forklift was of merchantable quality and was reasonably fit for the purposes for which it was being hired would have been implied in the contract of hire by virtue of s71(1) and s71(2) of the Trade Practices Act. I dealt with submissions of this kind in pars562-568 of my preliminary judgment and concluded that the conditions set out in s71 of the Trade Practices Act were to be implied in the contract for the hire of the forklift from Prevwreck to Malco. Whether this is so depends on whether Malco was a “consumer” within the meaning of that expression in the Trade Practices Act. In my preliminary judgment I held that Malco had the benefit of the presumption under s4B(3) that it was a consumer and that there was no evidence to the contrary rebutting that presumption. Since I published my preliminary judgment no submission has been made that I was wrong in holding in the preliminary judgment that Malco was a consumer.

54   Especially in the absence of any submissions to the contrary, I remain of the views expressed in pars562-568 of my preliminary judgment and I incorporate those paragraphs of my preliminary judgment in this judgment. I am accordingly of the view that conditions in the terms of the conditions in s71(1) and s71(2) of the Trade Practices Act were incorporated in the contract for the hire of the forklift from Prevwreck to Malco.

55   The submissions which were made by counsel for Prevwreck in opposing the cross-claim for breach of contract by Malco against Prevwreck were adapted from the submissions which were made by counsel for Liftquip in opposing the cross-claim by Prevwreck against Liftquip and it is convenient at this stage to turn to the cross-claim by Prevwreck against Liftquip.

Cross-claim by Prevwreck against Liftquip

56   The only claim which was pressed by counsel for Prevwreck in his final submissions was a claim in contract.

57   I have found that there was a contract for the hire of the forklift from Liftquip to Prevwreck. A condition of reasonable fitness would be implied in the contract at common law. However, terms in accordance with s71 of the Trade Practices Act would not be implied in the contract for hire between Liftquip and Prevwreck, because on the evidence Prevwreck was not a “consumer”. Prevwreck did not fall within the definition of “consumer” in s4B(1)(a) of the Trade Practices Act, because Prevwreck did acquire the forklift for the purpose of re-supply.

58   The principal submissions which were made by counsel for Liftquip can be summarised as follows. Even if a term of reasonable fitness was implied in the contract for the hire of the forklift from Liftquip to Prevwreck, the scope of such a term and, in particular, the purpose for which the forklift was to be reasonably fit had to be ascertained. On the proper interpretation of any such term, the term was restricted to requiring that the forklift be reasonably fit for use as a forklift, that is reasonably fit for the purpose for which forklifts are ordinarily used, that is for lifting and moving objects with a driver being in the driver’s seat. It was correctly pointed out by counsel that no special purpose for which the forklift was required had been made known to Liftquip. Hence, it was submitted, the only purpose for which the forklift had to be reasonably fit was the purpose for which forklifts are ordinarily used.

59   It was further submitted that, if the scope of any implied term was properly restricted, then there had not been any breach of any such implied term. At the time of the accident the forklift might have been a source of danger but at the time of the accident the forklift was being used, not as a forklift, but for the purpose of attempting to jump-start another vehicle, with no one being in the driver’s seat of the forklift. Alternatively, if there had been a breach of any implied term, the damage sustained by Prevwreck was too remote under the rules governing remoteness of damage in claims for breach of contract.

60   I consider that I should find that there was a breach of the implied term of reasonable fitness. Even if the scope of the implied term was as restricted as counsel for Liftquip submitted, the findings I made in my preliminary judgment warrant the conclusion that the forklift was generally defective and unsafe and was defective and unsafe and therefore not reasonably fit, even to be used simply for the purpose of lifting and carrying objects. A forklift would not be reasonably fit, even to be used for the purpose for which forklifts are ordinarily used, if it contained some defect which would be a source of potential danger to someone using the forklift. See Derbyshire Building Co Pty Limited at 649 per Kitto J.

61 The classic statement of the principles governing remoteness of damage in claims for breach of contract is that which was made by the Court of Exchequer in Hadley v Baxendale (1854) 9 Ex 341 at 354, that is to say:-

“Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it”.

62 In C. Czarnikow Ltd v Koufos (1969) 1 AC 350 at 385 Lord Reid said in a passage which was referred to with approval by Wilson J, Deane J and Dawson J in their joint judgment in Burns v M.A.N. Automotive (Aust.) Pty Limited (1986) 161 CLR 653 at p667:-

“The crucial question is whether, on the information available to the defendant when the contract was made, he should, or the reasonable man in his position would, have realised that such a loss was sufficiently likely to result from the breach of contract to make it proper to hold that the loss flowed naturally from the breach or that loss of that kind should have been within his contemplation”.

63   At the time the contract was made the only information available to Liftquip was that Prevwreck required a forklift of certain specifications and that Prevwreck would be on-hiring the forklift. Liftquip did not know who would be the sub-hirer of the forklift. However, Liftquip should, or a reasonable person in Liftquip’s position would, have realised that the forklift was going to be used by workers for the ultimate hirer in the course of industrial operations in a factory.

64   It further seems to me that, in the light of the information available to Liftquip, Liftquip should, or a reasonable person in the position of Liftquip would, have realised that, if the forklift was defective and unsafe, a loss resulting from the suffering of personal injuries by a worker engaged in those operations who was using the forklift and the incurring of liability to that worker by his employer or a person occupying a position analogous to that of his employer and a claim by that person against Prevwreck to be indemnified against that liability was sufficiently likely to result from a breach of contract in supplying a forklift which was not reasonably fit for use, as to make it proper to hold that such a loss flowed naturally from the breach or that such a loss was a loss of a kind which should have been within the contemplation of Liftquip.

65   It is true that at the time of the accident the forklift was not being used to lift or carry objects but was being used for the purpose of jump-starting another vehicle and that there was no one in the driver’s seat of the forklift.

66   However, it is not necessary, in order for such a loss not to be too remote, that Liftquip should, or a reasonable person in the position of Liftquip would, have realised in advance the sequence of events which happened between the breach of contract and the incurring of the loss. In my opinion, it was not at all unlikely that the forklift might be used in an attempt to render operative another piece of equipment being used by the same workers in the same industrial operations for the same employer. It was also quite likely that a worker might start the engine of the forklift, while no one was in the driver’s seat, being a procedure which could easily be performed and a procedure which would not have been unsafe, if the forklift had not been defective.

67   In my opinion, Prevwreck is entitled to succeed in its cross-claim against Liftquip and to recover from Liftquip whatever damages it is liable to pay to Malco.

Cross-claim by Malco against Prevwreck - further consideration

68   For reasons I have already given in my initial consideration of this cross-claim and for reasons similar to those I have given in deciding that Prevwreck should succeed in its cross-claim against Liftquip, I hold that Malco is entitled to succeed in its cross-claim against Prevwreck and to recover from Prevwreck whatever damages it is liable to pay any other party.

69   The parties should endeavour to reach agreement on what verdicts should be entered and what orders should be made in order to give effect to this judgment and my preliminary judgment.

**********

Last Modified: 12/21/2000