Tone v Rage Engineering Limited

[2020] NZHC 2161

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2020-404-574

[2020] NZHC 2161

UNDER

the Senior Courts Act 2016

IN THE MATTER

of an election to have this matter heard in the High Court

BETWEEN

SETEFANO TONE

First Appellant

PACIFIC EXPORTS LIMITED
Second Appellant

AND

RAGE ENGINEERING LIMITED

Respondent

Hearing:	22 July 2020
Appearances:	T Setefano in person for First and Second Appellants No appearance for or on behalf of the Respondent
Judgment:	25 August 2020

JUDGMENT OF DUFFY J

This judgment was delivered by me on 25 August 2020 at 12 noon pursuant to

Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar

Copy to:

The First Appellant The Second Appellant The Respondent

TONE & PACIFIC EXPORTS LTD v RAGE ENGINEERING LTD [2020] NZHC 2161

[1]    This appeal arises from a proceeding in the District Court in which Judge Harrison found for the plaintiff Rage Engineering Ltd (Rage Engineering) and dismissed the defendants’ counterclaim.1

District Court decision

[2]    In the District Court Rage Engineering sought moneys due and owing under an agreement for the sale and purchase of a Komatsu WA 500-3 wheel loader (the contract). The statement of claim named two persons as defendants. The first defendant was Setefano Tone and the second defendant was Pacific Exports Ltd (Pacific Exports). It was common ground between the parties that Pacific Exports was incorporated on 4 January 2017.2

[3]    The statement of claim does not identify a specific date on which the contract was agreed. There was evidence that Mr Tone had commissioned an engineering report by Machine-Tech on a specific WA 500-3 wheel loader (serial number 20124) that Rage Engineering was offering for sale; this report was completed on 29 November 2016 and forwarded by Matthew Hughes, the director of Rage Engineering, to Mr Tone on that day.3

[4]    The Judge found that the contract was agreed by Mr Hughes and Mr Tone on or about 29 November 2016,4 which was before Pacific Exports was incorporated.5 Because there was no evidence Pacific Exports subsequently ratified the purchase or that it was the contracting party with Rage Engineering, the Judge found the contract was between Rage Engineering and Mr Tone.6 The Judge went on to find that Mr Tone paid a deposit of $22,000;7 and that he had opportunities to reject the loader, but these were not exercised.8 This led the Judge to conclude that absent any justified reduction

1      Rage Engineering Ltd v Tone [2020] NZDC 4249.

2      The date of incorporation was pleaded in the statement of claim and admitted in the statement of defence. In addition, the certificate of incorporation of the company was in evidence.

3      The report prepared by Carl Christensen of Machine-Tech Northland Ltd identified the wheel loader as “Komatsu WA500 serial #20124, 2166 hours (described engine running time) belonging to estate of Dave Stewart Holdings.”

4      Rage Engineering Ltd v Tone [2020] NZDC 4249 at [6] and [7].

5 Above at [16].

6 Above at [18].

7 Above at [20].

8      Above at [23]

in the purchase price Rage Engineering was entitled to payment of the contract sum from Mr Tone.9

[5]    The Judge then turned to consider the counterclaim, which if established would have provided a basis for set-off against the contract price found to be owing. The allegations in the counterclaim were found to be not proved.10

[6]    Accordingly, the Judge was satisfied Rage Engineering was entitled to recover the full contract price and so judgment on the statement of claim was entered for Rage Engineering.11 Mr Tone was ordered to pay Rage Engineering $39,100 plus interest as claimed pursuant to the Money Claims Act 2016.12

[7]    In his decision the Judge gave reasons for dismissing the allegations in the counterclaim against Rage Engineering, but he did not enter judgment on the counterclaim for Rage Engineering.

[8]    At the District Court hearing none of the parties were legally represented. On appeal Mr Tone represented himself with the help of a McKenzie friend. There was no appearance from Rage Engineering.

[9]    At the time the statement of claim and the statement of defence and counterclaim were filed and served all parties were legally represented, and those documents were prepared by their respective lawyers. Regrettably, the pleadings of the plaintiff and the defendants are defective when it comes to identifying when the contract to sell the loader was formed and as to who was the purchaser. This lack of precision coupled with the absence of lawyers at the District Court hearing would have made the Judge’s task more difficult, and it is the likely cause of him reaching a wrong decision. For the reasons given below I am satisfied the contract was formed sometime after Pacific Exports was incorporated and, therefore, the reasons the Judge gave for finding that the company could not be the purchaser were wrong. As this was the basis

9 Above at [24].

10     Above at [25] to [30].

11 Above at [32].

12 Above at [32].

for the Judge entering judgment against Mr Tone I am satisfied that judgment cannot stand, and so the appeal must be allowed.

Pleadings

[10]   It is helpful to outline the pleadings. The Court of Appeal in Price Waterhouse v Fortex Group Ltd described pleadings as an “essential road map for the Court and for the parties”.13 In saying this, the Court of Appeal rejected the idea that the exchange of briefs of evidence before trial could cure any lack of particularity in the pleadings:14

It has become fashionable in some quarters to regard the pleadings as being of little importance. There was an echo of that approach in the implicit suggestion floated in this case that exchange of briefs of evidence before trial might be seen as curing any lack of particularity in the pleadings. Any such view is misguided. Pleadings which are properly drawn and particularised are, in a case of any complexity, if not in all cases, an essential road map for the Court and the parties. They are the documents against which the briefs of evidence are or should be prepared. They are the documents which establish parameters of the case, not the briefs of evidence.

We are not casting aspersions on the pleadings in this case which, leaving aside issues about necessary particularity, are well drawn on each side. Nor are we advocating a pedantic approach to the topic. Pleadings should be read as conveying what they would reasonably convey, in the context of the case, to a sensible legal mind. Even less are we advocating prolixity of pleadings, or the raising of every conceivable cause of action irrespective of its potential for success; this type of pleading often contains the additional flaw of overlooking R114 which requires each cause of action to be separately pleaded. What we are saying is that both the Court and opposite parties are entitled to be advised of the essential basis of a claim or defence, and all necessary ingredients of it, so that subsequent processes and the trial itself can be conducted against recognisable boundaries. Neither the Court nor opposite parties should be placed in the position of having to deal with a proposition of whose substance adequate notice has not been given in the pleadings.

[11]   Here, the statement of claim pleads an alleged contract that was partly oral and partly in writing. Significantly, it does not tie the formation of the contract to a specific date. Instead it pleads that in or around December 2016 Mr Tone represented to Rage Engineering that he was acting on behalf of a company, BHL Ltd, which was a customer in the Pacific Islands that was interested in purchasing machinery from Rage Engineering for transport to the Pacific Islands (Mr Tone partly admitted this

13     Price Waterhouse v Fortex Group Ltd CA179/98, 30 November 1998 at 17.

14     Above at 17.

allegation as he accepted it to the point where he denied representing he was acting on behalf of BHL Ltd). Then an earlier sale is pleaded, perhaps to establish a pattern of conduct. This was the sale of a forklift between Rage Engineering and Mr Tone acting on behalf of BHL Ltd, which was agreed on or about 13 December 2016 with various steps being done through to 14 February 2017 or thereabouts. This allegation is partly admitted in the statement of defence, with the exception that Mr Tone denied he was acting on behalf of BHL Ltd, asserting instead that he was trading as Pacific Exports (in December 2016 that company was not incorporated).

[12]   The statement of claim then pleads that “around the same period” Mr Tone “expressed an interest” in a WA500-3 loader serial no 20124 (the subject loader); which was admitted in the statement of defence. The statement of claim goes on to plead the formation of a partly oral and partly written contract for the sale of this loader. The price was $65,000 (admitted), a deposit of $20,000 with the balance paid on arrival in the Pacific Islands (denied on the basis the actual deposit paid was

$22,000); the loader was to be collected from Awanui on 25 June 2017 (admitted); and Rage Engineering would not contribute to shipping costs (denied as shipping costs to be shared equally between seller and purchaser).

[13]   The statement of claim then alleges a series of events which show performance of the contract by Rage Engineering and a failure to perform by Mr Tone or BHL Ltd. These are: (a) the issue of an invoice to BHL Ltd for the sale of the loader at the price of $65,000 (partly admitted with the exception that the invoice was issued to the wrong entity); (b) payment of deposit on 16 May 2017 (denied on the basis the payment was

$22,000 rather than $20,000); (c) Rage Engineering met all obligations under the contract and shipped the loader to the Pacific Islands on or about 25 June 2017 (shipping date admitted, but rest denied); (d) 17 July 2017 Rage Engineering was informed the purchaser in the Pacific Islands was not happy with state of the machine (admitted); (e) 31 August 2017 Rage Engineering agreed to reduce the price of loader by $2,000 (denied on the basis Mr Tone did not accept a price deduction of $2000);

(f) the balance of $43,000 was not paid and remains owing (partly admitted, accepted there was no payment but contended none is owing); (g) 5 October 2017 demand made of Mr Tone and BHL Ltd for payment of $43,000 (making of demand admitted but

denied there is money owing); and 13 October 2017 Mr Tone refused to make payment and asserted he was acting for Pacific Exports (admitted).

[14]   Based on the above events Rage Engineering then alleges a breach of contract and for the first time alleges that under this contract Mr Tone and Pacific Exports “would be jointly and severally liable” for the payment of the $65,000.

[15]   In addition to the various admissions, partial admissions and denials identified above, in the statement of defence and counterclaim Mr Tone and Pacific Exports plead that although negotiations for the sale of the loader commenced in January 2017 they were not completed until May or June 2017, with the delay being caused by advice from Rage Engineering that the bucket that was originally to be part of the loader was no longer available because it had already been sold, and Mr Tone would not complete the purchase until there was a bucket for the loader.

[16]The statement of defence and counterclaim also pleads that after the deposit of

$22,000 was paid Mr Tone sourced an alternative bucket to use with the loader at a cost to Pacific Exports. This bucket (bucket no 2) was sent from Hamilton to Rage Engineering in Whangarei. Rage Engineering accepted bucket no 2 and said it would reduce the purchase price to account for the bucket being provided by Mr Tone. However, when the loader was transported to Auckland for shipping overseas the bucket did not accompany it and remained in the possession of Rage Engineering. Mr Tone then arranged for transporters to collect the bucket from Rage Engineering, but the transporters could not access the work site, which caused the loader to miss two shipping dates.

[17]   The statement of defence and counterclaim also pleads there was a significant difference between the weight of the machine Mr Tone believed was being purchased (30 tonne) and the weight of the machine shipped to the Pacific Islands (21 tonne) which led Mr Tone to seek a refund or reduction in price to account for the cost of the bucket, the condition of the loader and the weight difference.

[18]   Rage Engineering did not file a reply to the affirmative defences, but it did file a defence to the counterclaim.

[19]   The counterclaim repeats the pleading in the statement of defence and alleges a breach of contract by Rage Engineering for: (a) refusing to pay half the shipping costs as agreed (Rage Engineering denies this was agreed); (b) providing a loader not to a satisfactory standard (Rage Engineering denies the loader was not to a satisfactory standard and says Mr Tone and Pacific Exports had sufficient opportunity to inspect it prior to agreeing to purchase it); (c) providing a loader that was underweight (Rage Engineering denies there was an agreement the loader was a 30 tonne loader); and (d) failing to provide a bucket with the loader (Rage Engineering denies the contract included the provision of a bucket).

Analysis

[20]   It is clear to me from reading the pleadings that neither the statement of claim nor the statement of defence expressly or by implication supports the view that the contract was formed on or about 29 November 2016, as the Judge found. With many contracts that are formed through oral and written exchanges between the parties, picking the precise time that they changed from negotiations to a legally binding contract is not always easy, because it hinges on assessment of all the evidence that is relevant to such a contract’s formation. As was recognised by the Supreme Court in ANZ Bank Ltd v Bushline Trustees Ltd:15

[65]      Ascertaining whether an oral contract (or a partly oral and partly written contract) was entered into and, if so, what its terms are, is a question of fact. This means that all evidence to assist that task is admissible, including evidence of the parties’ subjective intentions and subsequent conduct.

[66]      In Thorner v Major, Lord Neuberger explained the reasons for this and for the contrast with purely written contracts as follows:

This shows that (a) the interpretation of a purely written contract is a matter of law, and depends on a relatively objective contextual assessment, which almost always excludes evidence of the parties’ subjective understanding of what they were agreeing, but (b) the interpretation of an oral contract is a matter of fact (I suggest inference from primary fact), rather than one of law, on which the parties’ subjective understanding of what they were agreeing is admissible.

… The reason for this dichotomy is partly historical. Juries were often illiterate, and could therefore not interpret written contracts, whereas they could interpret oral ones. But it also has a good practical basis. If the contract is solely in writing, the parties rarely give evidence as to

15     ANZ Bank New Zealand Ltd v Bushline Trustees Ltd [2020] NZSC 71 (footnotes omitted).

the terms of the contract, so it is cost-effective and practical to exclude evidence of their understanding as to its effect. On the other hand, if the contract was made orally, the parties will inevitably be giving evidence as to what was said and done at the relevant discussions or meetings, and it could be rather artificial to exclude evidence as to their contemporary understanding. Secondly, and perhaps more importantly, memory is often unreliable and self-serving, so it is better to exclude evidence of actual understanding when there is no doubt as to the terms of the contract, as when it is in writing. However, it is very often positively helpful to have such evidence to assist in the interpretation of an oral contract, as the parties will rarely, if ever, be able to recollect all the details and circumstances of the relevant conversations.

[21]   I have the impression from the pleadings and the evidence in this proceeding that at the material times none of the parties were overly concerned about precisely when the contract was formed. Perhaps it was for this reason that neither the statement of claim nor the statement of defence expressly pleads a specific date for when the contract was formed. As the parties understood their respective cases nothing turned on the date of the contract’s formation. Both accepted there was a contract for the sale of the subject loader; their dispute was over whether this contract had been properly performed.

[22]   There was a secondary and almost incidental dispute that is not well articulated, but the ghost of it is apparent from the pleadings. This was over the identity of the purchaser. The statement of claim does not explicitly identify Mr Tone as being the purchaser in his own right. He is first alleged to be acting on behalf of BHL Ltd, although that company is not named as a defendant. In this regard the pleading is confused because if he was BHL Ltd’s agent he could not be personally liable as a purchaser. To be personally liable he would need to have been acting in his own right, but if this is how Rage Engineering saw matters it is difficult to see why it alleged Mr Tone was acting on behalf of BHL Ltd. Then there is the later assertion that Mr Tone and Pacific Exports are jointly and severally liable for payment of the contract price. No legal basis to support this assertion is identified in the statement of claim. For example, if Mr Tone were alleged to have purchased the loader in partnership with Pacific Exports it would follow that both he and the company would be jointly and severally liable to pay the purchase price, but no partnership is alleged.

[23]   All that can be said about the statement of claim is that when it comes to identifying the purchaser the pleading is confused. It never expressly alleges Mr Tone was the purchaser in his own right. It presents him as being an agent to a company that is not a named defendant and pleads that an invoice for payment was issued to that company (which is consistent with BHL Ltd being the purchaser). Then the statement of claim refers to Mr Tone representing that he was acting on behalf of Pacific Exports (which is consistent with him being an agent of that company). Finally it asserts a joint and several liability between Mr Tone and Pacific Exports without first pleading how that liability could have come about.

[24]   Because no reply to the affirmative defences was filed there is no pleading from Rage Engineering to dispute the affirmative allegations in the statement of defence. The defence to the counterclaim is expressed in a way that suggests both  Mr Tone and Pacific Exports are being treated as parties to the contract for the purchase of the subject loader.

[25]   In short, the pleadings of both the plaintiff and defendants do not expressly recognise the separate legal personalities of Mr Tone and the two named companies BHL Ltd and Pacific Exports. Nor does any pleading expressly identify the legal role of Mr Tone in the negotiations with Rage Engineering.   There are three possibilities:

(a) he was acting on his own behalf and intended to purchase the loader for the purpose of on-selling it to a company that would in turn be selling the loader to the persons in the Pacific Islands who were the ultimate purchasers; (b) he was acting as an agent for BHL Ltd; or (c) he was acting as an agent/director of Pacific Exports. Both companies could only act through a natural person and therefore irrespective of who the legal purchaser was, it would have been Mr Tone who was actually engaging in seeing the purchase through to an end. Thus, he would necessarily have been named in the various allegations on which the plaintiff’s claim was based. But it was incumbent on the lawyers who prepared the respective pleadings to identify expressly just what role Mr Tone was undertaking when he participated in the purchase negotiations. This is  a material defect in the pleadings. Identification of the purchaser of the loader is critical, because that is only the person who can be held legally responsible for payment of the contract price. Further and better particulars of the statement of claim and the statement of defence/counterclaim were required, however none were sought.

The evidence

[26]   Mr Hughes says in his evidence that the loader never had a bucket and that Mr Tone knew this at the time. In his evidence in chief (written brief) at the hearing in the District Court Mr Hughes referred to a text message conversation between him and Mr Tone regarding the subject loader not having a bucket, which Mr Hughes says was made clear to Mr Tone at the time. The text message is in evidence. It reveals Mr Tone asking if the bucket comes with the loader and Mr Hughes replying:

Nah mate the bucket has gone they couldn’t wait, and looks like the loader will go later tomorrow at this stage.

[27]   Whereas, Mr Tone’s understanding, as outlined in his evidence, was that the bucket that had initially been part of the subject loader had been sold separately, and there was a likelihood the loader might be sold elsewhere as well.

[28]   The evidence regarding the issue about the bucket is relevant and helpful to determining when the contract was formed. The language used in the text indicates that at the time it was written (8 February 2017) there was still a question of whether the proposed sale would proceed, with the purchaser having to find an alternative bucket. This understanding of the text message is confirmed by the answer Mr Hughes gave under cross-examination when he was asked about the loader not having a bucket:

Q.Did you or did you not state during our negotiation process which   lasted approximately six months that you would supply a bucket to go onto the loader which came from forestry and I stated in our negotiations that the loader was to go to work in the aggregates?

A. No, they had a bucket with the loader but due to the timeline of our negotiation as per my text to you, they released the bucket because they – we didn’t confirm anything, nothing was tied down, no monies were changed hands after we’d said yes, and they sold the bucket as per my text, I never said it was coming with one, I said I can get you a bucket, but they sold it. Hence the reason for it being lighter.

[29]   The evidence reveals that in February 2017 Rage Engineering was acting like it was intending to sell the subject loader to BHL Ltd (the invoice of 5 February 2017), but it was still free to sell that loader to anyone else who was interested in purchasing it (the text of 8 February 2017). The import of Mr Hughes’ answer suggests that as at

8 February 2017 the loader was in fact still owned by the person who was offering to sell it, Rage Engineering, and because nothing was tied down that person had considered himself free to sell a part of the loader (the bucket) to someone else.

[30]   This view of matters is consistent with the statement of defence, which pleads that Mr Tone did not want to complete the purchase without a bucket, which is a state of affairs that is also consistent with no concluded sale having been reached as at 8 February 2017.

Analysis

[31]   The above evidence satisfies me that: (a) there was a possibility as at 8 February 2017 of the loader being sold to someone else; (b) from Mr Hughes’ perspective nothing was confirmed or tied down as at that date; and (c) from Mr Tone’s perspective the negotiations were still ongoing. These factors are not consistent with Judge Harrison’s finding that the contract was entered into on or about 29 November 2016.

[32]   Then there is the question of the purchaser’s identity. As at February 2017 Rage Engineering thought Mr Tone was  acting  on  behalf  of  BHL Ltd,  whereas Mr Tone thought he was acting on behalf of Pacific Exports, which by then was a registered company. The invoice Rage Engineering sent on 5 February 2017 was issued to BHL Ltd as purchaser not to Mr Tone. There are no communications from Rage Engineering that would suggest it was negotiating directly with Mr Tone acting on his own behalf. Then in May 2017 Pacific Exports paid a deposit of $22,000 to Rage Engineering, which is consistent with Pacific Exports being the contracting purchaser. Mr Tone  is  a director of Pacific Exports.  There is also  evidence  that  Mr Tone was asking Rage Engineering to re-issue its invoice in the name of Pacific Exports and not BHL Ltd.

[33]   The above factors weigh against Rage Engineering having formed a contract to sell the loader to Mr Tone, personally, on or about 29 November 2016. Instead they satisfy me on the balance of probabilities that as at 8 February 2017 there was still no agreed contract. This finding places the date of the contract’s formation beyond the

incorporation date for Pacific Exports, which leaves it possible for that company to be a contracting party with Rage Engineering.

[34]   The absence of evidence to support Mr Tone having contracted personally with Rage Engineering also satisfies me on the balance of probabilities that at the material times neither Rage Engineering nor Mr Tone regarded the contract being with Mr Tone personally, rather than a corporate entity on whose behalf he was acting.

[35]   Typically, in a hearing where the evidence comes out differently from the pleadings there can be applications to amend the pleadings. However, here no lawyers were present at the District Court hearing, and there is nothing to suggest the parties realised at that time how confused the pleadings were when it came to the identity of the purchaser.

[36]   The findings that I have reached are enough to dispose of the appeal insofar as the Judge found Mr Tone to be personally liable under a contract that was formed on or about 29 November 2016. For the reasons expressed above there is no evidential foundation to support the Judge’s finding; indeed all the evidence points in another direction.

Is there another basis for finding Mr Tone personally liable as purchaser?

[37]   I have next considered whether there is evidence to prove on the balance of probabilities that at some later time in 2017 Mr Tone purchased the loader in his own right, because if that were so, I would then need to consider if Rage Engineering could by that means prove a breach of contract by Mr Tone. However, Rage Engineering never pleaded its case clearly on that basis.

[38]   Further, the confusion in the statement of claim leaves open the possibility that Rage Engineering has always been prepared to view Pacific Exports as the purchaser. Mr Tone has conducted himself on the basis he was acting on behalf of Pacific Exports as purchaser. Pacific Exports paid the initial deposit of $22,000. These additional three factors support the purchaser being Pacific Exports, which in turn would

preclude Mr Tone being the purchaser in his own right and therefore the person legally responsible to pay the balance of the contract price.

[39]   I face one further problem. As matters stand, Pacific Exports is not a party to the appeal. This is through no fault of Pacific Exports or Mr Tone.

[40]   Rage Engineering brought proceedings against Mr Tone personally and against Pacific Exports. A finding that Pacific Exports was not the purchaser did not require that company to be struck out of the proceeding. It could have remained as second defendant but with no judgment entered against it and the counterclaim dismissed. However, when Judge Harrison delivered his judgment Pacific Exports had been removed as a party from the proceeding. This is how the matter came before this Court. This outcome essentially deprived Pacific Exports of its ability to appeal against the judgment, dismissing its defence and counterclaim. The appeal was conducted before me as an appeal by Mr Tone on the basis he is not liable under the contract, albeit for different reasons than I have found.

[41]   I consider the best I can do now is to allow the appeal and to set the Judge’s decision aside both in relation to the claim by Rage Engineering and the counterclaim. Then to remit the matter back to the District Court for re-hearing. This will give Pacific Exports the opportunity to have itself reinstated as a party in the District Court proceeding. It may be that a common position can be reached on who the purchaser is. If so, that can be properly identified in an amended statement of claim and an amended statement of defence. If no common position is reached, then, given the poor state of the pleadings in terms of identifying when the contract arose and who was the purchaser, it may be helpful in any event for amended pleadings to be filed. The issue can be determined on re-hearing in the District Court by a Judge who knows from the findings I have made herein that the contract was formed after Pacific Exports was incorporated, and therefore it is a matter of him or her deciding from the other available evidence when the contract arose and who the purchaser is.

Additional ground for allowing the appeal and observations on the counterclaim

[42]   There is a separate matter that is raised in both the statement of defence and the counterclaim; namely the failure of Rage Engineering to deliver what it contracted

to deliver. This would be a further ground for allowing the appeal against Mr Tone (because it is a failure to perform the contract by the seller) and it is relevant to the counterclaim. The communications from Mr Tone, from the time he first showed interest in purchasing a loader, show he wanted to purchase a specific Komatsu WA 500-3 wheel loader, serial number 20124 which had been assessed by Machine-Tech. For the appeal Mr Tone sought to introduce new evidence from the manufacturers of Komatsu Loaders. This material shows that a WA500-3 model has an operating weight of 30 tonne, 235 kW engine and a bucket volume of 4.5-5.5m3.

[43]   The statement of claim pleads that Rage Engineering was to supply a Komatsu WA 500-3 model loader, which is a 30 tonne loader. However, the defence to the counterclaim denies Rage Engineering was to supply a 30 tonne loader. This is contradictory to what Rage Engineering pleaded in its statement of claim. The evidence shows that Rage Engineering was offering to sell a specific WA 500-3 Komatsu loader serial number 20124. This was the very machine that Machine-Tech were engaged to provide a report on. The statement of claim pleads the sale was for this very machine, which weighs 30 tonne. Accordingly, I am satisfied that the contract was for the sale of a specific identifiable loader that weighed 30 tonne.

[44]   Mr Tone never saw the loader that was purchased from Rage Engineering. Ultimately it was transported from Northland to the port in Auckland where it was shipped to Samoa. It was not until the loader arrived in Samoa and complaints were made from persons there to Mr Tone, that he realised the loader that was shipped to Samoa did not measure up to the report from Machine-Tech. Mr Tone relies on the shipping weigh bills which show the weight of the shipped loader was 21 tonne, to argue that a different and less substantial Komatsu loader was shipped to Samoa. It so happens that there is a Komatsu WA 450-2 wheel loader that weighs 21,700 kg, with a bucket. This model has a smaller engine and a smaller bucket capacity. Manufacturer’s specifications about this model were included in the new evidence that Mr Tone sought to adduce on appeal.16

16 New evidence can only be adduced in an appeal with leave of the Court.  For the reasons given  later there has been no need for me to deal with the question of whether leave should be granted here. See [51] herein.

[45]   Mr Hughes tried to account for the loader weighing less than 30,000 kg because of the absence of a bucket. The Judge was seemingly attracted to this argument. He did not realise that the different weights represented different models, each with a different level of performance power.

[46]   There were numerous complaints from Samoa about the defects of the loader shipped there. Those complaints are at odds with the report from Machine-Tech, which picked up some defects, but nothing of significance. The mismatch between the loader Machine-Tech describes and the loader that arrived in Samoa may be accounted for by the fact they were different loaders.

[47]   Another piece of evidence, which was led in the District Court hearing, that is consistent with a different model loader having been shipped to Samoa is the fact that Mr Tone obtained a bucket for a WA500-3 Komatsu loader and sent it to Northland to be fitted on the loader being purchased, so the two could be shipped together to Samoa. However, Mr Hughes said the new bucket supplied by Mr Tone did not fit as it was too large. This explanation from Mr Hughes would be correct if the loader that he was shipping to Samoa was in fact the lighter model Komatsu WA 450-2 loader. The brochure for this loader shows the dimensions to be smaller than the WA-500-3 model, so it is hardly likely the bucket for a WA500-3 model would fit on to a 450-2 model.

[48]   The Judge attempted to reconcile the different weights from the manufacturer’s specifications to what was shipped to Samoa by attributing the lesser weight to the fact the loader shipped to Samoa did not have a bucket. However, without knowing the weight of a bucket (which he seemingly did not as he does not mention it in his judgment) it is not possible to reach that view.

[49]   Proof of what model loader was shipped to Samoa rested on Rage Engineering as plaintiff. The evidence and the statement of claim shows Rage Engineering intended to sell and to ship a specific Komatsu WA 500-3 loader, which weighs 30 tonne, however that is not consistent with other evidence which suggests a smaller model Komatsu loader was in fact shipped to Samoa. Because the sale was for a specific WA 500-3 serial number 20124 loader, to send something other than that very loader to Samoa would be a breach of the contract by Rage Engineering. Unless the

purchaser affirmed the breach, it would provide a basis for cancelling the contract. Here, because the loader was shipped directly from Northland to the port of Auckland for transport to Samoa, there was no opportunity for Mr Tone to view the loader to check if it complied with the contract specifications. This would be a further reason for finding the contract is not enforceable by Rage Engineering. However, the earlier findings that I have made provide enough foundation for that conclusion. The identification of the goods sold is not essential to me finding the Judge came to the wrong decision.

The counterclaim

[50]   Regrettably, I cannot make any determination on the counterclaim in this appeal. The finding I have made about when the contract was formed would allow for Pacific Exports to be the purchaser and therefore the party to bring the counterclaim. However, as matters stand, for the reasons given earlier, Pacific Exports is not a party to the appeal, therefore I cannot give judgment in its favour, were I so persuaded. It is, therefore, best that I make no findings on the counterclaim either.

[51]   Because I am not making any determination on the counterclaim it is not necessary for me to determine whether Mr Tone should be granted leave to file his fresh evidence showing the manufacturer’s specifications for the WA500-3 and WA450-2 models. Such evidence would have been available for the hearing before Judge Harrison, and had it been available to him he may have realised the significance between the weight of what was shipped to Samoa and the weight of the contracted for model. In a rehearing there will be ample opportunity to place this evidence before the District Court Judge who rehears the counterclaim.

Result

[52]   The appeal is allowed. The judgment entered against Mr Tone in the District Court is set aside. The proceeding is remitted back to the District Court for rehearing of the claim and counterclaim and for reinstatement of Pacific Exports as second defendant and a counterclaim plaintiff.

Duffy J