Wicks Farming Pty Ltd v Waraluck Mining Pty Ltd

[1995] QCA 316

IN THE COURT OF APPEAL	[1995] QCA 316
SUPREME COURT OF QUEENSLAND

Appeal No. 170 of 1994.

Brisbane

[Wicks Farming v. Waraluck Mining]

BETWEEN:

WICKS FARMING PTY LTD

(Plaintiff) Appellant

AND:

WARALUCK MINING PTY LIMITED

(Defendant) Respondent

___________________________________________________________________

Pincus J.A. Davies J.A. McPherson J.A.

___________________________________________________________________

Judgment delivered 01/08/1995

Joint reasons for judgment of Pincus and Davies JJA; separate concurring reasons of
McPherson J.A.

___________________________________________________________________

APPEAL DISMISSED WITH COSTS
___________________________________________________________________

CATCHWORDS: DAMAGES - agreement for hire of tractor - moneys spent on repair of tractor after hiring ceased - findings of fact by trial judge not detailed - onus of establishing and classifying damage on appellant - whether fair wear and tear, onus of proof - lack of proper proof of loss - court could not award claimed cost of repairs where so greatly exceeding market value - claim should have been for amount by which market value lessened by damage done.

Darbishire v. Warren [1963] 1 W.L.R. 1067
Grimley v. Stubbs (1908) 39 N.B.R. 21

Taylor v. Carnell (1909) 2 Alta L.R. 237

Schroder v. Ward (1863) 13 C.B. (N.S.) 410; 143 E.R. 162.

Counsel:	Mr P F Allen, with him Mr S J Mead for the appellant. Mr G J Robinson, with him Mr C M Jones for the respondent.
Solicitors:	Robertson Foster as town agents for Carvosso & Winship for the appellant. McNamara & Smith for the respondent.

Hearing date:7 March 1995.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 170 of 1994.

Brisbane

Before Pincus J.A. Davies J.A. McPherson J.A.

[Wicks Farming v. Waraluck Mining]

BETWEEN:

WICKS FARMING PTY LTD

(Plaintiff) Appellant

AND:

WARALUCK MINING PTY LIMITED

(Defendant) Respondent

JOINT REASONS FOR JUDGMENT OF PINCUS AND DAVIES JJA.

Judgment delivered 01/08/1995

The appellant brought an action in the District Court for moneys which are claimed

in relation to an agreement for hire of a Caterpillar tractor. The appellant alleged, and it

was not disputed, that there was a substantial sum due to it in respect of hire and money

relating to transporting the machine. The issue at the trial, and on appeal, concerned

another part of the appellant's claim, namely a sum of $64,806.04 spent by the appellant

on repairing the machine after the hiring ceased. The primary judge rejected that claim,

which was based on the proposition that the machine was abused by its operators during

the period of hire.

It was contended for the appellant that the reasons the judge gave for his decision

were unsatisfactory in that his Honour failed to make findings on important points; counsel

argued that therefore the judgment should be set aside and there should be a new trial. It

was submitted in the alternative that this Court should itself make the necessary findings,

on the basis of the record; there are obvious difficulties about doing that in the present

case, not only because of the general circumstance that issues of credit arise, but also

because of the particular difficulty that the primary judge made unflattering observations

about the credit of the expert witness called on the appellant's side, Mr McKay. It appears

that if the appeal is to be allowed, that must be done on the basis that the action will be

tried again. The length of the trial was six days.

The hiring agreement, which is in writing, required that the respondent "supply all

fuel and lubricants associated with the daily use of the machine" and "be responsible for

any damage to the machine other than fair wear and tear or damage arising from the theft

of the equipment". In addition, the respondent was made "responsible for all costs

associated with ground engaging tools i.e. adaptors and wear strips on blade and rippers".

The appellant for its part was made "responsible for all motor repairs and services to the

machine, mobilisation and demobilisation costs and insurance". Two comments should

be made about these provisions. It was common ground that some of the servicing of the

machine was done by the respondent, although the agreement made that the responsibility

of the appellant; secondly, the exception of fair wear and tear, in the provision making the

respondent liable for damage to the machine, gives rise to a difficulty in disposing of the

matter, discussed below under the heading "Loss".

The primary judge found that the tractor was operated during the hiring by
competent operators who did not abuse it. That finding, if not set aside, is substantially

destructive of the appellant's claim for the cost of repair, as it would follow from it that most

of the repairs done at the end of the hiring must have been to make good fair wear and

tear. The judge was "not prepared to find that the tractor was in excellent mechanical

condition at the commencement of the hiring". The mode of expression is such as to imply

that the onus in that respect lay on the appellant, and that was not we think disputed by the

appellant. The judge went on to find in effect that a second-hand gearbox had been

installed in the tractor shortly before the hiring began; that Mr J R Wicks, a director of the

appellant, had not made sure it was satisfactory before buying it and having it installed, and

that "the gearbox was in poor condition when the hiring began". It was common ground

before us that the gearbox or more generally the transmission was to be treated as a

central issue.

His Honour accepted that there was "air in the transmission oil from the

commencement of the hiring" and that the tractor's torque converter had a pre-existing fault

the nature of which his Honour did not specify. The judge also dealt with some other

specific issues of lesser importance than the transmission - "lateral slop", the condition of

the blade, a bent crown wheel shaft and warping of the steering clutches; as to each of

them, the judge rejected the appellant's case which was, as has been mentioned, that the

relevant work was made necessary by abuse of the tractor while it was under hire.

The principal criticism of the judge's reasons was that, so it was said, his Honour

made no mention of and perhaps overlooked particular parts of the evidence which should

have affected the conclusions reached. But before coming to those matters it is desirable
to explain further the nature of the appellant's case, as advanced below.

The evidence adduced on the appellant's side was that, although old - the tractor

had been bought second-hand in 1979 - the machine was, when hired out to the

respondent, in satisfactory condition; its engine had recently been overhauled and the

gearbox replaced with a good second-hand gearbox. The monthly hire was, although

generally paid late, duly discharged for some months; it was said on behalf of the appellant

that this was inconsistent with the respondent's assertion that from the start the machine

was unsatisfactory. Mr Wicks gave evidence of having attended, on requests made on

behalf of the respondent, at the place where the machine was being used, to repair it or

have it repaired from time to time. At a time when Mr Wicks was anxious about the tractor,

not least because substantial amounts were due for hire, he arranged to see it at a place

called Ban Ban Springs, late in August 1992. He had been told by one George Jekyll who,

it appears, controlled the respondent that there was a problem with the gearbox, but when

Mr Wicks examined the tractor he found there were other more obvious difficulties; he

described the tractor as being in a "distressed state", in that various external parts had

been destroyed by use. When Mr Wicks started the tractor and moved it he noticed a

problem with the gearbox and also with the steering. Mr Wicks conceded that he then

adopted an "extremely mild attitude" in discussion with a Mr Peter Greenland, a director

of the respondent who was on site, by which he appears to have meant that he did not then

complain of any serious damage to the tractor. It was taken to Dalby and repaired by Mr

J S McKay, mentioned above.

Mr McKay's evidence was that before the hire period the machine was in "quite
good condition", he noted that the gearbox tested satisfactorily and that the machine was

"in unusually good condition for a tractor of this vintage". According to Mr McKay, when the

machine came back to his workshop in September 1992 its condition was an "absolute

horror" and he gave details of the deficiencies which were apparent to him and those which

became apparent when he stripped it down; of the latter, the most important was that the

transmission had "more or less destroyed itself". He said that every moving part in the

transmission had to be replaced. When asked whether he had had contact with machines

of the same type used in similar operations he said he had and that he had never seen a

machine damaged to the extent that the appellant's was. It should be added that the judge

was not impressed by Mr McKay's evidence, at least as to the torque converter and, by

implication, generally. His Honour described Mr McKay's evidence as "quite unpersuasive

and exaggerated".

To come now to some of the specific complaints made about the judge's reasons,

the appellant pointed first to the judge's conclusion that the gearbox of the machine was in

"poor condition when the hiring began". It was contended that the judge did not reconcile

that finding with various other pieces of evidence. Of those items the most important are

a number taken from the transcript of McKay's evidence. He said, as has already been

pointed out, that the transmission had "just destroyed itself" and that every moving part in

the transmission had to be replaced; he described the damage as a "chain reaction with

this heat business". It is not clear to us why that evidence is necessarily inconsistent with

the judge's finding; if use of the tractor generated great heat, that might have been due

wholly or in part to a pre-existing condition. Further, it is necessary to keep in mind that

the written contract obliged the appellant, not the respondent, to take care of "services to the machine" and one might have expected the process of damage to the transmission

during the hiring to be detected during a service. Then, a number of the points taken by the

appellant under this heading are based on the respondent's having paid hire without

complaint. Examination of Mr Wicks' evidence, however, somewhat weakens that. When

asked whether there was a "complaint on quite a number of occasions from the mine that

the transmission oil was overheating", Mr Wicks gave an answer which did not appear to

dispute the proposition. A little later Mr Wicks was asked "And on a number of occasions

you were told over the telephone and when you visited in person that there was a problem

with the transmission oil overheating. Is that not so?". A rather long answer was given

which, again, did not explicitly refute what was put. It must be accepted, however, that the

general tenor of Mr Wicks' evidence was that, with some exceptions which he explained

in detail, the machine worked satisfactorily on the occasions when he was present during

the hiring, and the judge must be taken to have rejected that. Presumably, his Honour did

so at least in part because of the evidence of the witnesses Henderson, Brebner and S A

Greenland, all of whom drove the tractor on behalf of the respondent during the period of

hire and had some criticisms to make of its performance. Henderson, who worked the

machine from about March 1992, complained that it used to overheat; although Brebner

did not, except in a minor respect, support that complaint, Brebner asserted that he had

operated the machine only for short periods. S A Greenland also made substantial

complaints of overheating.

It seems necessary to say that the learned primary judge's finding about the

condition of the gearbox would have carried more conviction if his Honour had given at

least a summary of his views about the evidence relevant to it.

Parts of the tractor which, on the appellant's case were badly damaged, such as the

track system and the blade, were dealt with by his Honour in rather summary fashion; the

appellant is able to point to evidence which is of importance and might with advantage

have been the subject of some discussion or at least reference in the reasons. To take

one example, there was specific and uncontradicted evidence that over $4,000 was paid

by the appellant for replacement parts to rectify damage to one of the idlers, being part of

the track system, and, on the evidence, such damage was quite unusual. Similarly, there

was photographic evidence of damage to an idler housing which the respondent's expert

R E Broome said, in effect, was quite unusual.

Looking at the matter more broadly, it seems unsatisfactory that such a claim as

made by the appellant, supported by a wealth of detail, has been rejected in toto without,

speaking generally, mention of categories of the evidence which seem, on the face of it,

to give aspects of the appellant’s case strong support. Although a new trial in a case of this

sort is an outcome which one tries to avoid, there would it seems have to be a grant of that

relief, were it not for the appellant's difficulty on the question of loss, which will now be

discussed.

Loss

It was conceded, no doubt correctly, that the onus of establishing that there was

damage to the tractor during the course of the hire lay upon the appellant. Further, it was

in our view necessary for the appellant to show to what extent differences between the

condition of the tractor when it was let on hire and its condition when returned represented
recoverable damage - i.e. damage other than fair wear and tear.

It is true that there is authority that a covenant for repair in a lease, which excepts fair

wear and tear, throws the onus on the tenant as covenantor to prove the applicability of the

exception: Haskell v. Warlow [1928] 2 K.B. 45 at 48; somewhat qualified support for this

view is to be found in Brown v. Davies [1958] 1 Q.B. 117 at 127 and cf. Sim v. Mitchell

[1917] G.L.R. 403 at 404. In such cases, the tenant has full opportunity to inform himself

of the condition of the premises and the extent to which defects in them were due to fair

wear and tear. But the agreement in question here contemplated that all servicing would

be done by the appellant, which was also responsible for "demobilisation costs". What

happened, no doubt consistently with the intention of the agreement, was that the appellant

took the machine away when the bailment concluded and had repair work done. It was

impossible for the respondent to know what part of the work done and parts supplied by

the appellant related to matters for which it had to pay, since that was peculiarly, at least

in substantial part, within the knowledge of the appellant and its agent Mr McKay. In the

absence of any attempt by the appellant properly to discriminate, in its claim and the

evidence called, between work and materials for which the respondent properly had to pay,

and other work and materials, the Court could not possibly assess the damages.

As his Honour said, "the claim simply encompassed all repair items performed by

Mr McKay". It is desirable to quote a sample of the relevant evidence, from Mr Wicks:-

“ You will recall before my learned friend gave you a big bundle of invoices in respect of parts that had been purchased from Hastings Deering on your account to be used in this major overhaul that took place in September/October of ‘92. Do you remember that?-- Yes.

. . .
And when you looked through each of those parts purchased from Hastings
Deering, did you address yourself to the question of ‘was this part really connected
with fair wear and tear and should I pay for it?’ ?-- No. “

Subsequently, when questioned by the judge, Mr Wicks said in effect that it "is probably for

you to decide" whether an item was attributable to fair wear and tear. In his reasons the

judge referred to certain concessions having been made on this subject, but reference to

the record shows that the concessions were perfectly general; it is simply not possible to

attribute any amount to them, but it seems evident that a substantial sum should have been

allowed for fair wear and tear.

The difficulties with respect to the proof of the amount of the claim do not end there.

According to the evidence of one P G Zoeller, called on behalf of the respondent, such a

tractor as was in issue would, in the condition described to him, be worth as hired out a

sum in the "early 20's", by which he presumably meant not much more than $20,000. One

might cavil at the description given to Zoeller as being too favourable to the respondent.

But that is not of any great importance because, if one accepts Zoeller, then the tractor

must have been worth very much less than the amount the appellant claimed was spent on

putting it in proper condition. There was some evidence, not of an expert kind, opposed

to Zoeller's on this question; but the judge preferred Zoeller's evidence, on the basis of

which it must have been held that the claimed cost of repair of the tractor was of the order

of two or three times its market value. It was not suggested in argument that it was not

open to the judge to accept Zoeller. The court could not, in our view, properly have

awarded the claimed cost of repair, being a sum so greatly exceeding the value of the

chattel repaired, which is not alleged to have any special or scarcity value: Darbishire v.

Warran [1963] 1 W.L.R. 1067, van der Wal v. Harris [1961] W.A.R. 124 and Jansen v.

Dewhurst [1969] V.R. 421.

The appellant made no claim, here or below, that it was entitled to recover the whole

value of the tractor when hired and it is plain that such a claim could not succeed. On

Zoeller’s evidence, the proper claim should have been for the amount by which the market

value of the machine had been lessened by the damage done to it. Its claim is for the cost

of repair which as put forward is excessive by an unascertainable amount, because no

attempt has been made to quantify the extent to which the amount spent represents making

good fair wear and tear and because the sum claimed is, in any event, much too high for
the reason just discussed.

In these circumstances the order the judge made dismissing the claim must be

upheld; the amount of loss claimed was not proved to be properly recoverable, nor was it

possible to make, on the evidence, a reasonable estimate of the proper figure. The

deficiencies in the reasons dealing with the question of liability, of which the appellant

complains, cannot entitle it to an order for a new trial, setting aside the judgment below: that

judgment was, because of lack of proper proof of loss, correct.

The appeal is dismissed with costs.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 170 of 1994

Brisbane

Before Davies J.A.
McPherson J.A.
Pincus J.A.

[Wicks Farming P/L. v. Waraluck Mining P/L. Ltd.]

BETWEEN

WICKS FARMING PTY. LTD.

(Plaintiff) Appellant

AND

WARALUCK MINING PTY. LIMITED

(Defendant) Respondent

REASONS FOR JUDGMENT - McPHERSON J.A.

Judgment delivered the 1st day of August 1995

I agree with the joint reasons of Pincus and Davies JJ.A. which I have had the

advantage of reading. I wish to add only a few remarks of my own concerning the matter

of proof, or the absence of it, of what is alleged to have been the respondent's breach of

contract or duty.

The contract was for hire of a tractor, and so involved the bailment of a chattel for

reward. Special conditions apart, the rule is that a bailee must take reasonable care of the

chattel bailed. As a general proposition, it is for him to show that loss of or damage to it

has not arisen from any want of reasonable care on his part. See Hughes & Bremerman v. Hooke [1954] St.R.Qd. 45, 49; Palmer: Bailment, at 746. The terms of the contract, if

any, under which the chattel is bailed may, however, alter, increase or qualify the bailee's

obligation in that regard.

The tractor hired by the appellant to the respondent was not a new but a used

vehicle, which was said to have been mechanically overhauled before being delivered. In

the case of such a machine, one would expect that the bailee would not be liable for

damage consisting of, or consistent only with, fair wear and tear arising from ordinary use.

Otherwise the contract would in effect be one not for the hire and redelivery of the machine

bailed, but for its hire and replacement by a machine that is new or at least equal in quality

to its condition when hired. The terms of the agreement in the present case, which were

set out in the letter or invoice ex. 2, expressly provided that:

"... the respondent will also be responsible for any damage to the machine other than fair wear and tear or damage arising from theft of the equipment.

... [the appellant] will be responsible for all motor repairs and services to the

machine, mobilisation and demobilisation costs, and insurance."

In Schroder v. Ward (1863) 13 C.B. (N.S.) 410; 143 E.R. 162, the plaintiff hired to

the defendant a "rather old" sailing barge, which according to the plaintiff's evidence was

in good working order, with all her rigging, gear and implements complete. When returned

by the defendant, it was no longer in the same condition or order. At the trial, the defendant

set out to prove that the barge was not in good order when hired, and that he had not used

it unreasonably; but the trial judge would not permit such evidence to be given. The

Exchequer Chamber held that the evidence should have been allowed because the

contract in that case, which expressly provided that the barge should be redelivered "in

good working order, with all her rigging, gear and implements complete", added "fair wear and tear to be allowed by the owner". The obligation to deliver up in good working order

was subject to fair wear and tear, which to that extent qualified the obligation to redeliver

in good order.

The decision in Schroder v. Ward did not determine where the onus of proof would

have rested if the trial had proceeded according to law. There are two Canadian cases

in which the question was considered, in both of which the courts applied a statement in

the then current edition of Beven on Negligence. They are Gremley v. Stubbs (1908) 39

N.B.R. 21 and Taylor v. Carnell (1909) 2 Alta. L.R. 237, which are referred to by Palmer

in his text on Bailment. The passage from Beven is as follows:

"The onus of shewing negligence is, in some cases, thrown on the latter [the bailor]; so that a hirer is not bound to account, that is, to give an explanation of the cause of the loss or injury ... The position of the bailor, if the bailee returns the article hired in a damaged condition, becomes dependent on the character of the damage done. The bailor commits his property to the bailee on the understanding most generally implied that he will take due care of it. In ordinary circumstances good faith requires that, if the property is returned in a damaged condition, some account should be given of the time, place and manner of the occurrence of the injury. If, then, the bailee returns the property in a damaged condition and fails to give any account of the matter, the law will authorize a presumption that he has been negligent; because when there is no apparent cause of the accident and the bailee has possession, he must show how the accident happened. The bailor need only point to the deteriorated condition of the article. If, however, the deterioration is the natural consequence of wear and use, the bailor must give other evidence to discharge the onus and to raise a case of negligence or misuse."

In the Alberta case, the agreement was for the hire of a Case steam tractor to drive

a threshing machine. After using it for only two or three days, the defendant became

dissatisfied with it. When the plaintiff recovered it, he found it was in a seriously damaged

condition due to leakage from the crown sheet caused by failure to tighten some bolts. In

applying the passage from Beven, Stuart J. said (at 146):

"In the present case, I think, after the plaintiff had shown the existence of the deteriorated condition of the engine and that it could not have resulted simply from ordinary wear and tear, both of which I think he did show, the onus was then cast upon the defendant of giving some explanation."

The result, it seems to me, is that in the case of a contract like this, the bailor is bound to

offer evidence that on redelivery the chattel was in a damaged condition going beyond

mere wear and tear. Once that is shown, it is for the bailee to prove, if possible, that

reasonable care was taken in the use of the chattel hired. The reason is that a contract like

ex. 2 is to be regarded as imposing an obligation to return the chattel not in the condition

in which it was hired out, but in a condition that is consistent with its having been used in

a reasonable manner.

In Taylor v. Carnell it was held that the bailee could not escape liability by showing

that he had employed an apparently competent engineer to run the tractor. He was

responsible for the acts or omission of his servant in failing to take care of it. By contrast

in this case, the appellant by the terms of ex. 2 undertook responsibility for all motor repairs

and services to the tractor. It cannot complain of a state or condition arising from failure

on its part to perform that obligation.

The problem for the appellant is in the end that at the trial it proved at most that the

vehicle when returned required extensive repairs. It failed to show the character of the

damage. It did not establish that the repairs carried out resulted from use of the machine

in a manner that went beyond what might be expected from reasonable use having regard

to the appellant's own contractual responsibility for all motor repairs and services. Indeed,

as Pincus and Davies JJ.A. have pointed out, the evidence of Mr Wicks of the appellant

company was that he did not address his mind to the question whether or not the parts

required to repair the tractor were connected with, or attributable to, fair wear and tear, or to a use or abuse of the machine going beyond that level and exceeding the responsibility

it undertook for motor repairs and services. No means was afforded at the trial of

analysing and dissecting the appellant's repair claim according to any such criterion or of

separating out any items which fell outside it. The matter was in this case not something

that was peculiarly within the knowledge of the respondent as bailee.