XIANGLI LIMITED AND A CLASS COACHES 2008 LIMITED

[2024] NZHC 2871

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2024-409-000093

[2024] NZHC 2871

BETWEEN

XIANGLI LIMITED

Appellant

AND

A CLASS COACHES 2008 LIMITED

Respondent

Hearing:

24 June 2024

Appearances:

C Jiang for Appellant

S Caradus for Respondent

Judgment:

3 October 2024

JUDGMENT OF PRESTON J

This judgment was delivered by me on 3 October 2024 at 2.30 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date……………

XIANGLI LIMITED v A CLASS COACHES 2008 LIMITED [2024] NZHC 2871 [3 October 2024]

Introduction

[1]    The appellant, Xiangli Limited (Xiangli), is a travel and tourism company. The respondent, A Class Coaches 2008 Ltd (A Class) imports, modifies and sells tour buses.

[2]    Proceedings arose several years  after  Xiangli  purchased  a  tour  bus  from A Class in 2014. Xiangli sued A Class, seeking a refund of the $200,000 purchase price, claiming: misrepresentation, breach of an implied term and misleading and deceptive conduct under the Fair Trading Act 1986 (FTA).

[3]On 13 December 2023, Judge Kellar found against Xiangli.1

[4]    Xiangli appeals against the Judge’s findings as to misrepresentation and seeks directions remitting the proceedings to the District Court.2 Xiangli seeks the following judgment:

(a)a finding that A Class did make the representation relied on and a direction that the District Court determines whether the modification was inherently defective, and the amount of damages payable to Xiangli;

(b)a finding that Xiangli’s claim under the FTA is not out of time and a direction that the District Court determines Xiangli’s third cause of action for misleading and deceptive conduct under the FTA based on the representation;

(c)a finding that Xiangli did not fail to mitigate its loss; and

(d)costs.

1      Xiangli Ltd v A Class Coaches 2008 Ltd [2023] NZDC 27777.

2      The second ground of appeal, alleging breach of implied term, was abandoned.

[5]    Unless Xiangli succeeds in respect of either [4(a)] or [4(b)] it will not be necessary to address [4(c)] as Xiangli will not be entitled to damages meaning the issues of mitigation would not arise.

Background

Chronology

[6]The broad chronology was set out by Judge Kellar, which I here adopt:

[1]        The plaintiff, (Xiangli) is a travel and tourism company. The defendant (A Class) imports, modifies, and sells buses. On 17 September 2014 Xiangli entered into an agreement to buy a bus from A Class for

$200,000 plus GST. The bus was not new when sold. It had been an A Class lease vehicle and had driven approximately 45,000 km when sold. A Class gave warranties for a further 100,000 km.

[2]        In 2015, Xiangli relocated the bus from the South Island to the North Island. In 2017, Xiangli advertised the bus for sale for $155,000. It did not sell.

[3]        In December 2017, the bus received a pink sticker for misaligned second and third axles by which time the bus had over 190,000 km on the clock. The bus required a realignment and a LT 400. A Class offered to repair the bus for $8,800. Xiangli did not accept the offer. Nor did Xiangli obtain any other prices to do the repairs. Xiangli chose not to repair the bus. Instead, Xiangli placed the bus in storage and eventually sold it for $1,200 in a private sale.

The contest as to the axle modification

[7]Some further background regarding the axle modification.

[8]    A Class imported the bus, Zhongtong model LCK6980H in 2010, at the order of a previous customer. That customer had specified that a significantly larger, heavier engine be installed in the bus when built. The heavier engine was to provide more power for South Island conditions involving multiple mountain passes.

[9]    The bus was designed to seat 42 passengers. It had two-axles. However, as a result of the heavier engine, under New Zealand law the two-axle bus could only carry

25 people to comply with weight limit requirements. A Class carried out a modification to address this, installing a third “tag axle” to distribute the load. The

modification was designed, supervised and certified by a Heavy Vehicle Certifying Engineer and Specialist Certifier (HVCE/HCSC), Mr Nicholas Watson.

[10]   The bus in issue in this case was one of three identical two-axle buses imported by A Class. One bus had a tag axle added when it was imported and went through certification at that time. This bus was sold to a third party in 2011 and has gone on to cover over 260,000 kilometres. A Class is not aware of any issues with that bus.

[11]   The other two buses were leased without the addition of a tag axle but tag axles were subsequently added when the buses came off lease, with that modification certified as noted (in [9] above). Of those two buses, one is the bus the subject of this proceeding sold to Xiangli — the other bus remains in A Class’s ownership which it leases out from time to time. It has now covered over 170,000 kilometres.

Xiangli’s allegations

[12]   Mr Zhai is the sole director of Xiangli. Mr Zhai negotiated the purchase of the bus from A Class. The purchase discussion occurred during an unheralded visit by Mr Zhai to A Class, accompanied by a Mr Zhang.

[13]   The statement of claim  pleaded  that  during  Mr Zhai’s  visit  he  spoke  to  A Class’s representative who told him:

4. (c) Karina and Mr Gao advised Mr Zhai that a tag axle had been installed on the Bus by the defendant (the Axel Modification) to increase the power of the Bus to withstand the terrain of the South Island (the Representation).3

[14]   The above was pleaded to be a representation relied on by Xiangli to enter into the agreement for sale and purchase.

[15]The pleading, without specifics, alleged that:

8. After taking possession of  the  Bus,  the  plaintiff  experienced  difficulties with obtaining COF due to the Axel Modification …

3      ‘Karina’ was a reference to Karina Hughes, the general manager of A Class, one of the respondent’s three witnesses.

[16]   Xiangli pleaded as the first cause of action pre-contractual misrepresentation under the Contractual Remedies Act 1979.4

[17]   The pre-contractual misrepresentation claim pleaded alleged the statement described at [4(c)] of the statement of claim was a misrepresentation which induced Xiangli to enter into the contract. No other representation was pleaded.

[18]A separate cause of action under the FTA pleaded:

22.The representation and the conduct set out in paragraphs 4 to 7 [of the statement of claim] amounted to conduct which were capable of misleading the plaintiff:

Particulars

(a)The defendant’s Misrepresentation was misleading and deceptive in that the Misrepresentation gave the impression to the plaintiff that the Axel Modification was fit for purpose; and

(b)The defendant’s sale of the Bus to the plaintiff was misleading and deceptive, as the Axel Modification was not fit for purpose.

[19]   Paragraphs [5], [6] and [7] of the statement of claim do not allege conduct by A Class — [5] being a pleading of reliance on the representation, [6] being a pleading of terms of the agreement for sale and purchase, and [7] being a pleading as to when Xiangli collected the bus from the defendant, that is on 22 October 2014.

[20] It is clear the allegation pleaded at [4(c)] of the statement of claim, that is the statement set out at [12] above, is at the heart of both the misrepresentation and FTA claims.

[21]   Accordingly, the key issue in the hearing in the District Court before Judge Kellar was factual, that is whether Xiangli had proved the statement pleaded at [4(c)] of the statement of claim which was denied in A Class’s statement of defence.

4      The statement of claim was issued on 9 October 2018. By that time the Contract and Commercial Law Act 2017 was in force but nothing turns on the fact that the reference should have been to that Act and not the 1979 Act.

Judge Kellar’s approach to whether the pleaded representation was established

[22]   Judge Kellar recorded what he described as a controversy between the parties, as to whether Xiangli was required to put its case to Ms Hughes who gave evidence for A Class — A Class submitting Xiangli failed to cross-examine Ms Hughes in breach of the requirements of s 92 of the Evidence Act 2006. Xiangli, however, submitted it was not required to do so because Ms Hughes did not deny the representation in her evidence.

[23]   Judge Kellar acknowledged that Ms Hughes did not deny the representation in her affidavit evidence, however, what she said in oral evidence in chief was as follows:

Q. You’ve heard Mr Zhai’s evidence, could I just ask you, what is your recollection of your discussions with Mr Zhai?

A. Well I did discuss a new build option but that sort of  a  six  to eight-month lead time to get into the country and it seemed from conversations between Mr Zhai and Mr Zhang that they wanted the bus pretty immediately. The timing is that that tour circuit starts in October so October to March thing and so the timings were in that August, September can’t remember the date that they approached us and obviously wanted it for the start of this coming – of that coming season. I did talk about it having a larger engine that was more fuel efficient that had a third axle and that the road user charges would be less than the vehicle had two axles which it is because the load is – the way the road user charge system is that the load is being shared over more wheels and that is deemed to damage the road less.

[24]   Implicit in Ms Hughes’ evidence as to what she said when Mr Zhai discussed buying the bus is what she did not say. The above evidence from Ms Hughes was in response to Mr Zhai’s evidence as to what occurred prior to the purchase. Mr Zhai’s affidavit evidence was that he was told the axle modification increased the power of the bus to withstand the terrain of the South Island.

[25]   Mr Caradus, counsel for A Class, who cross-examined Mr Zhai in the District Court hearing on 22 August 2023, asked Mr Zhai the question:

Q. Do you remember them [A Class] telling  you  that  the  axle  modification increased the power of the bus to withstand the terrain of the South Island?

A.Yes I did mention this now that they recommended this car to me and that they have added a axle and then they have increased the horse power of the car.

Q.So they did specifically tell you about the increase of horse power from the engine?

A.Yes. So they did mention that it can do a better turn and is a stronger power.

[emphasis added]

[26]   Accordingly, Mr Caradus did ask Mr Zhai about what he was told about the axle modification. Mr Zhai’s answer was not consistent with the pleading at [4(c)] set out at [12] above.

[27] Ms Hughes was asked about Mr Zhai’s evidence in the passage reproduced at [23] above. Her answer, in particular the last sentence, is inconsistent with Mr Zhai’s evidence. Implied in Ms Hughes’ evidence as to what was said was a denial of Mr Zhai’s version of their meeting. Counsel for Xiangli should have put Mr Zhai’s evidence to Ms Hughes. However, at the end of the day that question was not why Judge Kellar preferred Ms Hughes’ evidence.

[28]   Judge Kellar focused on the misrepresentation that was alleged: that Mr Zhai was told the axle modification was to increase the power of the bus. Judge Kellar did not accept that it had been proved that Ms Hughes made the representation, for four reasons. The first was that the representation was nonsense because tag axles do not increase power. The tag axle is load bearing. Secondly, Mr Zhai did not claim that Ms Hughes used the words actually pleaded.   Thirdly, the Judge considered that   Ms Hughes would not have told Mr Zhai that the tag axle had been installed to increase the power of the bus to withstand the terrain of the South Island as she knew that the larger engine was added for the South Island tour circuit with the tag axle installed due to the weight of the engine in order to increase passenger capacity.  Fourthly, that  Mr Zhai misunderstood what Ms Hughes had said when she talked about the larger engine and the tag axle. The Judge was satisfied that Mr Zhai’s evidence shows he did not understand what was being discussed.

Approach on appeal

[29]   Under s 127 of the District Court Act 2016 and r 20.18 of the High Court Rules 2016 (the Rules), appeals are by way of rehearing.

[30]   This does not mean that the Court starts with a clean slate but that the Court must “come to its own conclusion, based on the material presented before the decision- maker, and any further evidence which has been admitted”.5

[31]   The Supreme Court has identified that in respect of a general appeal by way of rehearing, the appeal court must arrive at its own assessment of the merits of the case.6 However, the appeal court may rightly hesitate to conclude that findings of fact are wrong where the lower court had a particular advantage, such as technical expertise or the opportunity to assess the credibility of witnesses.7 This is especially where the case depends largely on disputed oral evidence, even where no issue of credibility arises.8

[32]   The appellant bears the onus of persuading the appeal court to reach a different conclusion from the trial judge,9 and must identify the respect on which the judgment under appeal is said to be in error.10 The extent of the consideration the appeal court gives to the decision appealed is a matter for its judgment.11

The challenges to Judge Kellar’s approach

[33] Mr Jiang who appeared for Xiangli on the appeal, challenged Judge Kellar’s approach on each of the matters noted at [28].

[34] Mr Jiang submits that Ms Hughes gave evidence in examination in chief that she told Mr Zhai that the third axle was installed for fuel efficiency and reduced the road user charges and discussed the trade-offs between a two and three-wheel axle vehicle. Counsel styles this as the “efficiency representation”. Mr Zhai submits that this representation was demonstrably false and therefore undermined her credibility. However, the passage from Ms Hughes’ evidence set out in Judge Kellar’s judgment and reproduced at [23] above was that the larger engine was more fuel efficient and

5      Jessica Gorman and others McGechan on Procedure (online ed, Thomson Reuters) at [HR20.18.01].

6      Austin, Nichols & Co v Stichting Lodestar [2007] NZSC 103 at [5].

7 At [5].

8      Wu v Tan [2023] NZHC 3747 at [9] citing Fonterra Co-operative Group Ltd v McIntyre and Williamson Partnership [2016] NZCA 538 at [156]-[159].

9      Austin, Nichols & Co v Stichting Lodestar, above n 6, at [4].

10     Green v Green [2016] NZCA 486 at [30].

11     Austin, Nicols & Co v Stichting Lodestar, above n 6, at [5].

that the third axle was relevant to road user charges (as it resulted in load sharing). Mr Zhai’s submission ignores the interconnection between the distinct factors.

[35]   In support of the submission that these representations were false, Mr Jiang points to the modification, that is the tag axle being done to allow the bus to carry additional weight so that it could carry 42 rather than 25 passengers.

[36] This submission misunderstands the evidence. As addressed at [8] above, the heavier engine was to provide more power for the South Island conditions. However, as a result of the heavier engine, if the vehicle remained a two-axle bus it could only carry 25 people because of the weight limit requirements. The addition of the third axle to distribute the load meant the vehicle could carry 42 passengers, but the presence of a third axle is also relevant to road user charges.

[37]   Mr Jiang then submits that even if Ms Hughes did say that the modification was for load bearing purposes instead of increased power, Mr Zhai could not and did not understand what she said. This submission in fact undercuts Xiangli’s entire claim as if Mr Zhai did not understand what was said, as I consider the Judge was entitled to find, then he cannot have relied on it to enter the purchase. However, this submission is in fact a claim that the misrepresentation may have been made by A Class’s employee who translated what Ms Hughes said  during the pre-purchase meeting.  Mr Jiang is critical of A Class not calling Mr Gao.

[38]Mr Jiang submits:

e.It is entirely possible or likely that the Representation was given by   Mr Gao, who either did not understand the Modification or mistranslated to Mr Zhai. There is no factual basis to deny that the Representation was made by A Class.

[39]   I do not accept this submission. As I have pointed out, in cross-examination Mr Zhai’s evidence was that he was told that an axle had been added and that A Class had increased the horsepower of the bus. This passage was clearly important to Judge Kellar’s findings as he refers to it twice in his judgment.

[40]   As to what Mr Gao translated, Ms Hughes can say what she told Mr Gao but again, Mr Zhai’s answer in cross-examination when asked about the conversations was to say that he was told that A Class had added an axle and then increased the horsepower of the bus. It is not disputed that the evidence for A Class was that the sequence of modifications — installation of larger engine when built and later addition of tag axle — occurred in that order and not, as Mr Zhai’s answer suggests, the other way around. I consider this a good example of the particular advantage the first instance Judge had in assessing the import of the evidence, as given by the witnesses including Mr Zhai. Mr Zhai went on to confirm that he was told about the increased horsepower from the engine, by contrast with the tag axle. Mr Zhai had a translator during his evidence.

[41]   Mr Jiang emphasised that Ms Hughes did not, prior to trial, deny the representation in her affidavit. Counsel submits that deprived Xiangli of the opportunity to summons Mr Gao. However, it was clear from the pleadings that the alleged representation was denied. Consistent with this and as noted at [23]-[27], implicit in Ms Hughes’ evidence read as a whole was her denial of Mr Zhai’s version of their meeting. It was open to Xiangli to issue a witness summons to Mr Gao but it did not do so. Equally, Xiangli could have summonsed Mr Zhang, one of A Class’ existing customers who introduced Mr Zhai and acted also as translator in the purchase discussions.12 As it was for Xiangli to prove its case, it cannot complain on appeal about the omission to do so.

[42]   Mr Jiang’s written submissions referred also to what he calls the “load bearing representation”. It was put to Mr Zhai that he was told that the tag axle helps carry additional  weight.   Mr Zhai  answered:   “so  they  told  me  that  they  can  take    42 passengers so I do not quite understand when you talk about the extra weight”. This issue is not directly relevant to the credibility findings made by Judge Kellar. Mr Jiang submits that it shows Mr Zhai knew the difference between power and load bearing. Further, he says it shows Mr Zhai confirmed that A Class made

12 Ms Hughes said she spoke to Mr Zhang “probably the most but Jake [Gao] and Mr Zhang were translating”; she did not speak Mandarin. Her evidence on this aspect was unchallenged and her brief cross-examination was focused almost entirely on the fact A Class did not call expert evidence from an independent heavy vehicle certifying specialist.

representations in relation to both the power and load bearing capabilities of the axle modification.

[43]The whole passage from the cross-examination is as follows:

A. So I have mentioned this earlier  that  Ms Hughes  they  recommended this and they talk about the car to me when I was here. So because of their recommendation I bought this car.

Q. Do you remember them [A Class] telling  you  that  the  axle  modification increased the power of the bus to withstand the terrain of the South Island?

A.Yes I did mention this now that they recommended this car to me and that they have added a axle and then they have increased the horse power of the car.

Q.So they  did specifically tell  you about the increase  of horse  power from the engine?

A. Yes. So they did mention that it can do a better turn and is a  stronger power.

Q.       And did they tell you that the tag axle helps reduce road user charges?

A.       I can’t remember. It’s been a while.

Q.       Did they tell you the tag axle helps carry additional weight?

A. So they told me that they can take 42 passengers. So I do not quite understand when you talk about the extra weight.

[underline emphasis added]

[44]   Mr Jiang submits that Judge Kellar’s finding that the tag axle was installed due to the weight of the engine is incorrect. Mr Jiang submits the tag axle was installed so the bus could carry 42 passengers instead of 20-25 passengers. This submission again misunderstands the evidence. But for the addition of the tag axle, the weight of the vehicle (because of the more powerful engine) meant it could not  carry more than  25 passengers. Accordingly, Judge Kellar’s conclusion was correct as it is not possible to separate the issue of weight, passenger number and the reason for installing the tag axle.

[45] Judge Kellar concluded that Mr Zhai misunderstood what Ms Hughes said when she referred to the larger engine and the tag axle. This was a conclusion open to his Honour on the evidence. Mr Zhai’s evidence was that he was not knowledgeable about vehicles. His Honour held that Mr Zhai’s evidence showed he did not understand what was being discussed. Mr Jiang submits that conclusion is not supported by the evidence. However, his Honour’s comment was a global conclusion about the evidence. It is supported by the passage from the Notes of Evidence set out at [43] above but also by the common sense conclusion reached by his Honour that a tag axle does not increase power.

[46]   Mr Jiang in oral submissions urged the so-called efficiency representation and the load bearing representation as being false. However, as noted they were not the basis of the statement of claim and are irrelevant to the appeal and at the risk of labouring the point, were not incorrect because of their inter-relationship already noted.

[47]   The only pre-contractual misrepresentation pleaded is in respect of the tag axle being fitted to increase power.

[48]   Returning to his Honour’s four reasons for concluding that A Class did not make the representation. The first is that the representation was a nonsense statement because tag axles do not increase power. Nothing in Mr Jiang’s submissions addresses that this conclusion is factually accurate. Mr Jiang attempts to challenge this statement by referring to the efficiency representation being incorrect and to Mr Gao not giving evidence but the fact is tag axles have nothing to do with power.

[49]   His Honour’s reference to the fact Mr Zhai did not claim Ms Hughes used the exact words pleaded is probably a point of less strength because of the presence of    a translator (or, translators: Mr Gao and Mr Zhang — as Mr Caradus identifies, the evidence is both were involved in translating during the pre-purchase discussion). However, that does not address the evidence in fact given by Mr Zhai in cross-examination through a translator set out above.

[50]   His Honour’s third conclusion was  that  Ms Hughes  would  not  have told Mr Zhai that the tag axle was to increase power because she understood the true reasons for the modification. Again, Mr Jiang relies on Mr Gao not being called and other factors already addressed. But the substance of his Honour’s point is that because Ms Hughes understood the rationale for the sequential, dual, modifications and relationship between the impact of the larger engine on passenger capacity and the advantages of a tag axle, it was unlikely that she would have made a nonsense claim to Mr Zhai.

[51]   As to Judge Kellar’s fourth reason that Mr Zhai misunderstood what was being said, Mr Jiang in fact submits that Mr Zhai had little understanding of the mechanics of the bus. That submission is consistent with Judge Kellar’s finding that Mr Zhai misunderstood what he was told.

Conclusion: the contractual misrepresentation issue

[52]   I am satisfied that Xiangli’s appeal in respect of the contractual misrepresentation cause of action must be dismissed.

[53] The essential difficulty for Xiangli is that the representation it claims is as Judge Kellar said, nonsensical. The fitting of an extra axle cannot cause the bus to generate more power. When that basic proposition is coupled with Mr Zhai’s evidence from cross-examination and the fact that it is inherently unlikely that Ms Hughes would make such a nonsensical claim, it was open to his Honour to reach the conclusion that he did and his own assessment of the merits of the case reflects those of Judge Kellar. Coupled with that, it was not directly put to Ms Hughes that she did make the representation as pleaded and that the evidence she gave in oral evidence in chief set out at [23] above was incorrect. Given A Class denied the allegation and given, as I have said, it was implicit in Ms Hughes’ evidence as to what she did say that she denied the representation, Xiangli’s counsel in the District Court had to put to her that she did make the representation relied on.

[54]   Mr Jiang’s attempt to find further misrepresentations to bolster a challenge to Ms Hughes’ credibility being the efficiency and load bearing representations are unconvincing as they  are not the basis of the claim as pleaded but in  any  event, as  I have said, misconstrue the evidence and the inter-relationship between the increased engine size, weight, passenger capacity and the advantages of a tag axle.

[55]   I cannot see any error of substance in Judge Kellar’s approach to the key finding as to whether the representation was made.

The Fair Trading Act 1986 cause of action

[56]The FTA cause of action is set out at [18] above, repeated here for convenience:

22.The representation and the conduct set out in paragraphs 4 to 7 [of the statement of claim] amounted to conduct which were capable of misleading the plaintiff:

Particulars

(a)The defendant’s Misrepresentation was misleading and deceptive in that the Misrepresentation gave the impression to the plaintiff that the Axel Modification was fit for purpose; and

(b)The defendant’s sale of the Bus to the plaintiff was misleading and deceptive, as the Axel Modification was not fit for purpose.

[57]Judge Kellar concluded the FTA claim was filed out of time.

[58]   Mr Zhai’s evidence was that Xiangli spent significant repair costs on the bus from May 2015 onwards with his Honour concluding that was the date on which defects in the tag axle ought reasonably to have been discovered. As this proceeding was filed on 3 December 2018, his Honour concluded that the cause of action was filed outside the three-year period after the date on which the loss or damage, or likelihood of loss or damage, could have been discovered or ought reasonably to have been discovered.13

13     Fair Trading Act 1986, s 43A

[59]Mr Jiang submits that his Honour’s conclusion in that regard was incorrect.

[60]   However, I need not make a conclusion about that because as noted at [17]– [20], the FTA cause of action at least in part relies on the same representation said to found the pre-contractual representation claim.

[61] Further, as noted at [18] above, the FTA cause of action also relies on the conduct set out at paras [4]-[7] of the statement of claim which, as explained at [19], is not conduct of A Class.

[62]Section 9 of the FTA provides:

9        Misleading and deceptive conduct generally

No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

[63]   The claim alleges in particular (a) that the representation gave the impression to Xiangli that the axle modification was fit for purpose. I have held the representation did not occur and therefore, particular (a) of the FTA cause of action cannot be established.

[64]   There is then the pleading at particular (b) that the sale of the bus itself was misleading as the axle modification was not fit for purpose. That claim is itself pleaded as a particular of the representation (and conduct) which I have held did not occur (or, relevantly, was not conduct).

[65]   The representation and conduct pleaded is incapable of supporting a claim that there was misleading or deceptive conduct by A Class in relation to the axle modification. None of the conduct pleaded concerns the axle modification as again, the pleading concerns the representation and the matters addressed at [19] which cannot reasonably be understood to say anything about the axle modification.

[66]   Further, to the extent this argument asserts an alleged additional representation that the axle modification was fit for purpose it can only do so on the same basis as averred in Xiangli’s second cause of action, based on an implied term to that effect, which the Judge dismissed and which has been abandoned on appeal.

[67]   There is no pleading of conduct that could be a representation in relation to the axle modification. The fact is that at the time of sale from A Class to Xiangli, the bus had covered 45,000 kilometres and had a warranty to 100,000 kilometres. At the time the bus was “pink stickered” it had covered 190,000 kilometres.

[68]   The bald reference in the pleading to the axle modification not being fit for purpose cannot survive the fact that the vehicle was operated by Xiangli for approximately three years and covered a further 145,000 kilometres during that time. Consistent with this, there was an evidential basis for A Class’ case that deferred maintenance issues were evident and I accept Mr Caradus’ submission the evidence of repairs and maintenance undertaken in the intervening period supported this and note further that Mr Robinson, the mechanical engineer called by Xiangli accepted deferred maintenance as “to some extent” an issue.

[69]   It follows that, even if Judge Kellar was incorrect in respect of the limitation point, I am satisfied that on the basis of the FTA claim as pleaded, that claim cannot succeed.

[70]   It is unnecessary to determine the further ground, that the Judge erred in finding Xiangli failed to mitigate its loss.

Outcome

[71]The appeal is dismissed.

Costs

[72]   There is no reason why costs should not follow the event, on a 2B basis and with reasonable disbursements as fixed by the registrar, and I so order.

[73]I direct that the security for costs may be released, accordingly.

[74]   Mr Caradus indicates that the respondent wishes to seek costs personally against Mr Zhai in the event costs awarded are not met. Any application for third party costs is to be filed, and served on the third party, within five working days of the date of this judgment.

[75]   Any response is to be filed within a further five working days, following which period the application is to be referred to an Associate Judge for determination on the papers or other direction.

………………………………………

Preston J

Solicitors:

Tompkins Wake, Auckland for Appellant Duncan Cotterill, Christchurch for Respondent