IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION No. G.13 of 1983 CORAM: DATE: PLACE: BETWEEN: PROFESSIONAL CONSTRUCTIO! CONTROL (AUSTRALIA) PTY. LIMITED Applicant AND: ATKINS CAMPBELL & ASSOCIATES PTY. LIMITED First Resvondent ALAN ATKINS Second Respondent COLIN CAMPBELL Third Respondent ORDERS ST. JOHN, J. TUESDAY, 28th FEBRUARY, 1984 SYDNEY The application is dismissed. The applicant is ordered to pay the cespondents' costs. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. G.13 of 1983 ee wv GENERAL DIVISION BETWEEN : PROFESSIONAL CONSTRUCTION CONTROL (AUSTRALIA) PTY. LIMITED Applicant AND: ATKINS CAMPBELL & ASSOCIATES PTY. LIMITED First Respondent ALAN ATKINS Second Respondent COLIN CAMPBELL Third Respondent REASONS FOR JUDGMENT CORAM: ST. JOHN, J. DATE: TUESDAY, 28th FEBRUARY, 1984. PLACE: SYDNEY The applicant company seeks damaqes from the respondents pursuant to Section 82 of the Trade Practices Act, 1974 ("the Act") for alleged breaches of Sections 52, 53 and tv 55 of Part V of the Act and also for fraud and neaqligent misstatement, all of which causes of action are based upon certain statements, oral and in writing, alleged to have been made by or on behalf of the respondents about the performance and capacity of @ mobile concrete block-making machine imported into this country from Italy by the respondents and mounted on a trailer. The applicant company, of which Michael Wallace was a director was based in Lismore, to where Michael Wallace retired from his former occupation of quantity surveyor. In December, 1981 Michael Wallace became aware of a building system known as Boralok, which system consisted of building by Means of placing together interlocking concrete building blocks which did not need mortar in order to effect a joint between the blocks, and which blocks were marketed by the first respondent. Michael Wallace approached the first respondent by speaking to one of its directors, namely the second respondent, and expressed the interest of the applicant company in becoming an agent for marketing houses constructed in the Boralok system in and around Lismore. In February the following year, Michael Wallace attended the offices of the first respondent where he learned that the latter was in the process of importing from Italy a machine for making concrete blocks which would later be mounted on a trailer and made mobile. Negotiations then commenced with a view to reaching agreement as to the use of the machine by the applicant company in the Lismore area and the applicant company alleges that, during the course of these negotiations, misleading statements within the meaning of Section 52 of the Act were made. From the amended statement of claim, the statements relied upon by the applicant company to substantiate all its causes of action were as follows:- (a) Was rully mobile. (b) Could be operated efficiently by three men. (c) Would be fully tested and operational before it was delivered to the applicant. (d) Was capable of manufacturing cement blocks of a quality suitable for use in housing and building construction generally. (e@) Was capable of manufacturing cement blocks of a quality suitable for use in a building system known as the "Boralok Building System" marketed by the first respondent. (f) Was capable of manufacturing cement blocks of a uniform high standard quality. (q) Was capable of manufacturing cement blocks of a standard and quality equal to or better than those manufactured by other cement block manufacturers in and around Lismore, New South Wales. (h) Could be towed safely behind a 2.5 tonne truck. {i) Was suitabie for operation in and around Lismore in the said State using raw materials available in that locality. () Was capable of mixing 0.183 cubic metres of cement and aggregate mix every five minutes. (k) Could manufacture several types of cement blocks at a specified speed, material wastage and profit margin. (1) Would be available for delivery on a specified date. (m) Would be promoted by the first respondent in and around Lismore in the said State. (n) Would be available for use by the applicant in relation to the construction of a supermarket at Casino in the said State and for the other building projects of which the applicant informed the first respondent. Before the machine was available for operation, Michael Wallace carried out a survey of the availability of concrete blocks in the north coast area of New South Wales, collected information as to where they were manufactured and what prices were charged for them. He then, after receipt of information as to the number of blocks which could be manufactured by the machine in a normal working day, supplied data which was fed into a computer which produced estimates of the profitability of the use of the machine. Many such print- outs were tendered in evidence, but it is unnecessary for me to go into detail of the data fed into the computer and its results because, on the evidence, I am satisfied that the statements made as to the capacity of the machine to produce the number of blocks stated by the respondents was not inaccurate and in doing so, I accept the evidence, called by the respondents, of persons who had recently operated the machine. On receipt of the machine from Italy, the respondents instructed a firm of engineers to mount the machine on a trailer and, in order todo so, so that the height of the mounted machine would be reduced, to some extent modified that machine. I am satisfied on the evidence that the modifications did not affect the performance of the machine as oO it had been seen operating in Italy before the purchase. The main components of the machine were a cement mixer from which a conveyer belt ran to a hopper from which the concrete mixture could be released by means of a hand operated lever into the mould for the particular brick block being manufactured. The mixture was then vibrated in the mould to ensure the shape of the block, the surplus material scraped away, the mould removed and a pallet upon which the block was formed was then removed for curing. It is of great significance to the fate of the applicant company's claim that at the time the applicant company took delivery of the machine, no concluded agreement had been reached between the applicant company and the first respondent as to the terms and conditions under which the machine would be operated and, in particular, that the proposed profit-sharing which was intended to be agreed had not, in fact, been aareed. A rental was fixed but it was always in the contemplation of the parties that further terms and conditions as to profit-sharing be agreed. Before the machine was ready for operation, the applicant company, through its director Michael Wallace, purchased ~x~-Ford truck with the intention of towing the machine with it. When the machine was constructed and operational, Michael Wallace's son drove a Ford truck purchased by the applicant to Mittagong and received instruction in the operation of the machine and also used the truck to tow the trailer on which the machine was mounted to a motor registry for registration of the trailer. It is pertinent to point out that at the time that this was done, and in the presence of the son, parts of the machine were not on the trailer at the time it was weighed for registration purposes and, additionally, no pallets were being carried on the trailer. Within a day or two of reqistration, the son proceeded to tow the trailer carrying the complete machine and an unspecified number of pallets in the direction of Lismore. After he had proceeded some distance, the son said that when he was going down an incline at probably no more than 70 or 80 kilometres per hour, the trailer would fishtail all over the road and give the impression it was pushing the truck which he was driving. He decided not to proceed with the tow and the machine mounted on the trailer was later delivered to Lismore by being carried. Michael Wallace decided that the Ford truck was inadequate to tow the trailer and traded in the Ford truck on a heavier vehicle. Thereafter, Michael Wallace conducted what he described as "trials" in the operation of the machine. He gave evidence to the effect that he and three other young men, including his son, operated the machine and he made various complaints about the capacity and performance of the machine which 8. are summarised in the allegations set out statement of claim and reproduced above. in the It is necessary to deal specifically with each of the alleged statements:- (a) Was fully mobile. The machine mounted on the trailer was so described by the respondents' agents, but I am not satisfied that that statement was misleading or inaccurate. The evidence of Michael Wallace's son about the trailer fishtailinag referred to the trailer when it was loaded with Material other than the machine, namely the pallets; likewise, the evidence of Michael Wallace that the trailer appeared to fishtail whilst towed by the heavier vehicle when it was also partially loaded with pallets. In addition, there 1s no expert evidence before me as to the possible causes of the fishtailing and, in particular, there is no evidénce directed as to whether or not the braking system on the trailer was adequate or efficiently working. In short, there is no evidence that the trailer carrying only the machine would misbehave in any respect which would make it not mobile had it (b) not been carrying pallets, the weight of which was not the subject of any evidence. Could be operated efficiently by three men. Michael Wallace gave evidence that he and three other men were necessary to operate the machine. His son does not confirm this and gave evidence to the effect that his father was "doing various odd jobs around the place". When asked the direct question whether his father was operating the machine, the son replied "to the best of my recollection he did not actually operate it but, no, he helped in that operation". It is to be noted that during the three days of trials, the son had received some instruction in the operation of the machine. There is no evidence that the other two young men had any experience of operating such a machine or a similar machine and ait is obvious that in releasing the mixture from the hopper, judgment as to the amount to be released had to be exercised and it would be a matter of experience that would determine how much should be released and the movement necessary to do so. In addition, I accept the evidence of Mr. Hafford of his experience of the operation of the machine in (ec) (d) (e) 10. which he said that three men would operate the machine and did so for long periods. The fact that the machine had been ina stationary position whilst this was being done in my view is not to the point, as it has not been suggested that the machine operated any differently whilst in a stationary position of a permanent nature than in a temporary position. Would be fully tested and operational before it was delivered to the applicant. I am satisfied that the machine was tested and it was operational. Was capable of manufacturing cement blocks of a_quality suitable for use in housing and building construction generally. I accept again the evidence of Mr. Hafford in this regard and I am satisfied that the differences in height produced by the operation of the machine in the trials at Lismore were due to inexperience. Was capable of manufacturing cement blocks of & quality suitable for use in a building system known as the ""Boralok Building System: marketed by the first respondent. Again I am satisfied that the machine was so capable. (f) (g) (h) il. Was capable of manufacturing cement blocks of a_ uniform high standard quality. If this representation can be implied from the evidence, I am satisfied that the blocks manufactured in the machine could be of a standard quality in the sense that they were properly shaped and of a size sufficiently uniform for building purposes. No evidence was directed to the quality of blocks produced except their shape and height. Was capable of manufacturing cement blocks of a standard and quality equal to or better than those manufactued by other cement block manufacturers in and around Lismore, New South Wales. There was no direct evidence of this statement being made. Further, there was no evidence as to the quality of cement blocks manufactured in and around Lismore and therefore no basis for comparison. Could be towed safely behind a 2.5 tonne truck. There was no evidence that the machine mounted on the trailer without any additional material being carried on the trailer could not be towed safely behind a 2.5 tonne truck. In addition, there was no expert evidence as to (1) (4) (Kk) ™. 12. what was a 2.5 tonne truck and additionally, no evidence as to whether or not the Ford vehicle was in that category or not. Was suitable for operation in and around Lismore in the said State using raw materials available in that locality. If this statement can be implied from the evidence, there is, in my view, no evidence to contradict it. Was capable of mixing 0.183 cubic metres of cement and aggregate mix every five minutes. This statement was not specifically adverted to in evidence unless it was part of the data fed into the computer which resulted in the print-outs previously referred to. I have already stated in general terms that the representations as to the capacity of the machine to produce blocks at certain rates were not misleading or innacurate. Could manufacture several tvpes of cement blocks at a specified speed, material wastage and profit marqin. The print-outs tendered were the result of data selected by Michael Wallace to feed into the computer. As I have already said, if it is these print-outs which are relied upon, and ™-~they included statements by the respondents as 13. to the rate of production, no misstatement was made by any of the respondents. (1) Would be available for delivery on a specified date. There is no evidence that delivery was specified for a particular date and, if there Was, as no concluded agreement was reached between the parties, no damage would result from delay. (m) Would be promoted by the first respondent in and around Lismore in the said State. Even if this statement were borne out in evidence, no damage results from it. (n) Would be available for use by the applicant in relation to the construction of a supermarket at Casino in the said State and for other building projects of which the applicant informed the first respondent. I am not satisfied on the evidence that such a statement was made. As to the other causes of action, I find no evidence of fraud and I find none of the elements necessary to make up the tort of negligent statement. Should I be in error in any of the findings of fact made as to whether or not the statments had been made or were 14. in fact misleading or likely to mislead, I go on to consider the question of damages. Again, I repeat that the terms and conditions under which the applicant company would operate the machine were never finally agreed upon. The applicant company's director Michael Wallace referred to the operation of the machine at Lismore as "trials". The rent agreed upon was never charged. The money expended in taking delivery of the machine has not been specified, except that the applicant company claims a loss onthe purchase of the two trucks. There is no expert evidence as to the value of the Ford truck when purchased or when traded in on the second truck. There is no expert evidence as to the value of the second truck when it was returned to the dealer from whom it was purchased. The negotiations entered into by the applicant company for the supply of concrete bricks were premature in the circumstance that, at the time they were entered into, the applicant company did not have the machine, nor did it have any concluded agreement as to the use of the machine. I am satisfied that the applicant's director, Michael Wallace, was in error in his evaluation of the profitability of the machine when he failed to take into account the time involved in moving the machine and setting it up for operation and also in failing to appreciate that, for small buildings such as houses, the number of blocks necessary for such buildings did not justify movement to the site. * 15. The application is therefore dismissed, and the applicant is ordered to pay the respondents' costs. Fovareenr Gy) ween Sr. Toun