IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY ' wwe ww GENERAL DIVISION BETWEEN: BAFFI & ANOTHER and MACK TRUCKS AUSTRALIA PTY. LTD. ORDER JUDGE MAKING ORDER Woodward J. DATE OF ORDER 4 November 1983 WHERE MADE Melbourne THE COURT ORDERS THAT: The application be dismissed with costs. No. 89 of 1982 Applicant Respondent ry IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY No. 89 of 1982 wwe ww GENERAL DIVISION BETWEEN: BAFFI & ANOTHER Applicant and MACK TRUCKS AUSTRALIA PTY. LTD. Respondent CORAM: Woodward J. DATE: 4 November 1983 REASONS FOR JUDGMENT This is an unfortunate case in which the first-named applicant (whom I shall refer to for convenience as 'the applicant') ventured into the interstate haulage business with no capital and only limited experience. In the result he has lost a great deal of money. I am satisfied from all the evidence before me that the business which he contemplated - regular trips between Perth and Melbourne or Sydney - could only have been moderately profitable if all his hopes had been realized. It was necessary that his semi-trailer should be on the road for almost the whole year, and should average three return trips a month, in order for him to show a reasonable profit. The evidence strongly suggests that even these assumptions were quite unrealistic. If his truck was off the road for any length of time, it was clear that he would be in great difficulties. In the event his truck was off the road quite frequently in the nine months he operated it and it required some quite expensive repairs in that time. On a few occasions the length of time off the road was increased substantially by the applicant's inability to pay for repairs. Eventually the point was reached where he was months behind with his hire purchase payments, found himself unable to pay for a major repair and had to allow the truck to be repossessed at a further substantial loss. He already owed large sums of money to various members of his family who had assisted him in his venture. For most of his misfortunes the applicant blames the respondent, the company which sold him his prime mover. It is common ground that the vehicle was" secondhand and was several years old at the time of the purchase. I find that the applicant had told the manager of the respondent's Victorian Used Trucks Division, Mr. Fraser, that he wanted a prime mover like one belonging to a friend, Mr. Latorre, who had bought his vehicle from the respondent. Mr. Fraser found that there was a vehicle answering this general description in the respondent's sales yard in Sydney. He obtained photographs and a written appraisal of it, showed these to the applicant, and suggested that he and Mr. Latorre look at the vehicle when next in Sydney. After doing so, the applicant said+he was interested in buying it and it was brought to Melbourne. After looking at it again with Mr. Latorre, who had more experience with interstate haulage than himself, the applicant made a firm decision to buy it. After some further discussions with Mr. Fraser and another sales representative, the applicant signed a document and after arranging finance through a hire purchase company, which involved the mortgaging of his parents' home, he took delivery of the vehicle. The document which the applicant signed was a 'Used Truck Purchase Order' which began with the words "I hereby order from you subject to all terms, conditions and agreements contained hereon, and on an "as is" basis without warranty of any character expressed or implied, including any warranty of merchantability or fitness for a particular purpose, the following." The following provisions also appeared on this' short document, a copy of which was handed to the applicant "Alterations, repairs and additions included in sales price:- Vehicle to be in saleable condition - fit twin headlights." "NOTICE TO THE BUYER" "(1) Do not sign this agreement before you read it. (2) You are entitled to a completed copy of this agreement. (3) If you* default in the performance of your obligations under this agreement, the vehicle may be repossessed and you may be subject to suit and liability for the unpaid indebtedness, under the terms of the security agreement pertaining to this transaction." "I agree that this order, which I have read and to which I agree, constitutes the entire agreement relating to the sale of said property ..." .On the facts as I find them, the respondent does not need to rely on this very explicit document to avoid the consequences of any oral representation. The applicant alleged in his statement of claim that he was misled by the representatives of the respondent in several different ways. In the first place he claimed that the vehicle was represented to him as being a 1977 model. However in evidence he has not maintained that claim and says only that the document he signed described the vehicle as being a 1976 model, whereas the manufacturers plate on the truck shows it to have been built in June 1975. This is disputed by Mr. Fraser, who gave evidence that the relevant plate showed it to be a 1976 vehicle, although some components may have carried a 1975 plate. His evidence was fully confirmed by the respondent's accountant. Even if I had found on this point that a misrepresentation having legal consequences had been made, it would not have been a serious misrepresentation, because the difference between June 1975 and an unspecified date in 1976 could not mean very much by the middle of 1980. It could not have been an inducing factor persuading the applicant to buy the vehicle. I am satisfied that the reality of the matter was that the applicant purchased the truck which he saw in front of him and which he had inspected both in Sydney and Melbourne. He certainly never made any complaint to the respondent about the year of manufacture of the vehicle. ~ The next point relied upon by the applicant was that the respondent's officers told him that the truck had a "reconditioned" motor. However, I accept the evidence of Mr. Fraser that, reading from an appraisa]. sheet before him, which was shown to the applicant, he told the applicant that the truck's engine had been "overhauled" s1x months earlier. There is nothing to suggest that this statement was inaccurate. The applicant was also given the name and telephone number of the workshop which had conducted the overhaul so that he could make further enquiries if he wished to do so. Although the applicant maintains that the word used was "reconditioned", I think it is significant that when it was put to him that the word used had been "overhauled", his response was to the effect that he thought the words had the same meaning. I think it is highly unlikely that Mr. Fraser would have deliberately misled the applicant on this matter; and he would have seen a substantial difference between the two expressions since he said in evidence that reconditioning a motor costs three times as much as an overhaul. The eviderfce on this issue is complicated by the fact that the respondent, in its answers to interrogatories, admits that Mr. Fraser told the applicant that the truck did have a reconditioned engine. In another answer it says that the engine had in fact been reconditioned. Mr. Fraser, who no longer works for the respondent, concedes that he supplied information for these answers and checked them before they were sworn by an officer of the company. He can only explain the particular answers as oversights on his part. In spite of this contradiction, I am prepared to accept Mr. Fraser's considered evidence that the only information he supplied to the applicant came from the 'appraisal record' which referred to an 'overhaul'. I found him to be a careful and credible witness. I can only assume that when he assisted in the preparation of answers to interrogatories he was relying on his memory of events nearly three years old and did not have the appraisal record in front of him to assist his memory. The next allegation in the statement of claim was that the respondent represented to the applicants that "the truck was capable of completing three interstate trips per month to Perth for the purpose of the applicants' business as an interstate road haulier". This allegation was not supported by the applicant's evidence. The most that could be said was that the respondent represented the vehicle as being of a type suitable for regular use between Melbourne and Perth. This it clearly was. The final and main point relied upon by the applicant is that Mr. Fraser told him was that it was a "good" truck of "saleable" quality and did so with the knowledge that it was to be used for haulage to and from Perth. Mr. Fraser has said that he probably did say that the truck was a good one, obviously meaning by that that it was a good second~hand vehicle, always bearing in mind that it was four years old. He based that on what he read in the appraisal record, together with his own inquiries from the firm which had previously serviced the vehicle, the service which it had been given under his directions, and his own test-drive of the vehicle. The purchase order showed that it was a term of the contract that the vehicle would be "in saleable condition". I do not think that the use of either of these expressions was intended or would have been understood to amount to a specific warranty about the period of trouble-free use which the applicant could expect from the vehicle or the repairs that he might expect to have to carry out. But this 1s the way in which the case for the applicant has been put. It has to be remembered that the vehicle was four years old and that the applicant was intending to make something like 30 round trips to Perth each year, of about 7,000 kms per trip. He should therefore have expected that the previous owner might have used it at least to half that extent - say 100,000 km per year - and it must have been showing signs of wear' in a number of ways. Even the overhauled motor had probably seen over 50,000 km of use. I find that the vehicle was at the time of sale a good second-hand vehicle and of saleable quality. Although it was not pleaded in the statement of claim, or opened by counsel for the applicants, the applicant said in evidence that he had been given a three months verbal warranty on the vehicle. The evidence for the respondent was that no such warranty was given, but the company had been prepared to bear the cost of repairs for an unspecified period of that order. The company had in fact borne the cost of a number of repairs which occurred in the first three months that the respondent had the truck. It was only after three months had expired, and all the Gefects occurring in that time had been cleared up, that the respondent billed the applicant for a clutch repair and other minor repairs all of which were obviously new defects. The applicant then enjoyed some two months of trouble-free driving (although this period needs to be considered in light of the fact that it included Christmas 1980 and the New Year of 1981). It is to be noted that the applicant made no complaint at the time about being charged for these later repairs; nor did he go back to the respondent when faced with a major repair to the fuel pump, for which he was unable to pay. He simply notified the hire purchase company 'that he was unable to meet his commitments and submitted to repossession of the truck. These present proceedings were only instituted some twelve months later. I also note in passing that the significant defects which appeared in the vehicle in its first six months of operation by the applicant, did not relate to the motor but rather to the differential, clutch and other parts of the mechanism. The clutch failure could well have been related to an accident with the vehicle a short time before when the trailer left the road. The final breakdown of the engine must have resulted from a dropping of the water level in the cooling system. This could have been due to inadequate maintenance or a leak in the system. There was uncontradicted expert evidence on behalf of the respondent given by Mr. De Leeuw, the respondent's service manager, who I found to be a careful and impressive witness, that (a) the repairs required by the vehicle were not out of the ordinary for a four year old prime mover undergoing moderate usage, (b) they could have been contributed to by inadequate maintenance (the applicant serviced the vehicle himself after each trip but produced no evidence of any major servicing by an experienced mechanic; I can make no positive finding on the adequacy of maintenance), mm ee eee - 10 - (c) with one possible exception, the more important defects which developed could not have been present when the vehicle was sold, and (a) that possible exception related to oil leaks from the differential casing; such leaks are not uncommon in a truck of ? this type, they are not serious provided the oil level is maintained, and in this case, when the fault was clearly established, the casing was replaced without charge. The facts of this case are very different from those of Miheljevic v Eiffel Tower Motors Pty. Ltd. & Anor 1973 VR 545, upon which the applicant relied. In the first place the circumstances surrounding the entry into the contract are quite different and, secondly, the nature of the defects, in the time-frame in which they occurred, are also quite different. In the present case I do not believe that an intelligent bystander would reasonably have inferred that any warranty as to trouble-free performance was intended by use of the words 'good' or 'saleable', and on the whole of the evidence I am not satisfied that those words misrepresented the vehicle. I have great sympathy for the applicant in this case. I think he is an honest, hard-working man who has got into serious financial difficulties without any fault on his part other than an error of judgment. He is the victim of an ill-advised venture into a notoriously difficult industry, together with a certain amount of bad luck. On the other hand I believe that the respondent company behaved honestly and honourably towards him throughout the transaction which is the subject-matter of these proceedings. I do not believe that the respondent is responsible for the applicant's financial problems either in fact or in law. I can find no deceptive or misleading conduct, misrepresentation, breach of warranty, breach of implied condition or negligence on the part of the respondent. There must therefore be judgment for the respondent with costs. I certify that this and the 10 preceding pages are a true copy of the Reasons for Judgment herein of the Honourable Mr. Justice A.E. Woodward Associate Dated: 4 November 1983