CATCHWOPODS5 TRADE PRACTICES - statements made by respondent concerning a concrete pump's capacity material to applicant's decision as to the vig's suitability - applicant caused a company to purchase the rig from the respondent - applicant leased the rig from the company - certain statements inaccurate and in the circumstances were misleading or deceptive when made (sub-s. 52(1) of the Trade Practices Act). Trade Practices Act, ss. 52(1), 82 LEIGH ENTERPRISES PTY LIMITED -V- TRANSCRETE PTY LIMITED (Qld G109 of 1982) FITZGRRALD J. BRISBANE 13 APRIL 1984 IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD 109 of 1982 GENERAL DIVISION ) BETWEEN : LEIGH ENTERPRISES PITY LIMITED Applicant AND: TRANSCRETE PTY LIMITED Respondent ORDER JUDGE MAKING CRDER: FITZGERALD J. DATE OF ORDER: 13 APRIL 1984 WHERE, MADE: BRISBANE THE COURT ORDERS THAT: 1. There be judgment for the applicant against the respondent for 845,000.00. 2. The respondent pay to the applicant its costs of the proceedings other than reserved costs to be taxed. 3. Liberty to either party to apply on or before 27 April 1984 for the hearing to be relisted for the determination of an application for an order in respect of all or any of the reserved costs. IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD 109 of 1982 GENERAL DIVISTON ) BETWEEN : LEIGH ENTERPRISES PLY LIMITED Applicant AND: TRANSCRETE PTY LIMITED Respondent FITZGERALD J. 13 APRIL 1984 REASONS FOR JUDGMENT The applicant claims under s.82 of the Trade Practices Act 1974 ("the Act") to recover loss or damage allegedly suffered by conduct of the respondent in contravention of sub-ss. 52(1), 53(a) and 53(c) of the Act. The matter was argued solely by reference to sub-s. 52(1). The applicant is and at material times was the trustee for the B.A. Woodcroft Trust, the beneficiaries of which are Mr and Mrs Graham John Kelly. The respondent is a corporation within the meaning of the Act and carries on business in Australia as a supplier of concrete pumps, including Transcrete "Stinger 45" concrete pumps, and accessories. -¢ The «applicant carried on business as a concrete pump operator under the name "Kelly's Concrete Pump Hire". The business was conducted only in the first half of 1982, principally on Bribie Island and at Caboolture near Brisbane. At that time, it was the applicant's only business. Basically, the business involved attendance at sites to which concrete was delivered by concrete suppliers and the transfer of that concrete by pumping to wherever it was required on the site. Commonly, the applicant was engaged on sub-contract by a builder. The equipment used by the applicant in its business consisted of a new Transcrete Stinger 45 concrete pump, powered by a turbo-charged 4 cylinder diesel engine and mounted on a second-hand Acco 10 Wheel Bogie Diesel Drive 12 ton truck, witha new Hiab hydraulic Boom. The equipment was acquired by the applicant under a lease from the Bank of New South Wales to the applicant dated 29 December 1981. The respondent was aware, at all material times, that the applicant antended to enter into such a lease. It is not in dispute that the respondent supplied the equipment other than the truck but the respondent denies that it supplied the truck and says that it only acted as "agent for the applicant in the purchase of the truck". The issue is of limited significance but I am satisfied that the respondent did acquire the truck and resell it to the Bank along with the other equipment for the purposes of the lease. . Broadly, the applicant's method of operation was as follows. The truck on which the applicant's concrete pump was mounted was driven into a convenient position at the site and stabilized using hydraulically powered stabilizer legs fitted to the vehicle. Pre-mixed concrete was poured from delivery trucks into a hopper at the rear of the truck. The hopper had an agitator and an outlet to which a pipeline was attached. The concrete pump had two cylinders with hydraulically controlled reciprocating pistons. The concrete was drawn out of the hopper by one cylinder and into the pipeline by the other. A swinger tube, the open end of which was at the beginning of the plpeline, moved from side to side in the hopper in a sequence tied to the movement of the rams of the pump cylinders so that the open end of the swinger tube was positioned over the mouth of the cylinder from which concrete was being discharged while the other cylinder was filling with concrete in preparation for discharge when the swinger tube changed position. The concrete bearing pipeline could be raised and lowered and moved from side to side by the boom which was connected to the truck chassis. There was a remote control apparatus to enable the boom to be manoeuvred without resort to the control panel at the vehicle. The boom could be folded for travelling and unfolded by means of a hydraulic ram at each joint. The pipeline was also jointed and attached to the boom with which it folded and unfolded. The pump cylinders, swinger tube, and agitator fitted to the hopper on the 'one hand and che boom on the other were operated by separate hydraulic systems which shared a common oil reservoir. A Casappa CPL-20D gear pump operated the uydraulic system controlling the boom movements. A 3520 V.Q. 35A 12 Vickers vane double pump operated the other hydraulic system. The power to drive both pumps was provided by the turbo charged diesel four cylinder engine. The applicant made its decision to acquire the equipment the subject of the lease on or about 24 October 1981 when it sent to the respondent a deposit of $9,200.00 and confirmed that the pump was to be delivered on 20 December 1981. Prior to that time, Mr Kelly had had a number of conversations with the National Sales Manager for the respondent, Mr Southall. Mr Kelly had had no experience with concrete pumps or concrete pumping prior to the delivery of the equipment by the respondent in mid-January 1982 although the evidence does not establish that the respondent was aware of his inexperience, at least until after the applicant's order had been placed and the deposit paid. The initial contact between applicant and respondent had occurred during the month prior to the payment of the deposit. Mr Kelly rang and spoke to Mr Southall after making inquiries concerning concrete pumps of acquaintances, one of whom had given him a copy of the respondent's price list. Mr Kelly told Mr Southall that he had the price list and it was arranged that Mr Southall would send Mr Kelly a brochure relating to Transcrete Stinger 45 pumps, which he did. The price list included the following entry: "COMPLETE CONCRETE PUMP - BOOM RIGS NEW MODEL FULLY IMPORTED HIAB 17-21M BOOM ALL HYDRAULIC 3 STAGE WITH REMOTE CONTROL AND FOUR HYDRAULIC STABILISERS. NEW STINGER 45 SERIES CONCRETE PUMP POWERED BY A TURBO CHARGED AIR COOLED DIESEL ENGINE, CONCRETE OUTPUT 45 CUBIC METRES PER HOUR. THE ABOVE IS MOUNTED WITH ALL STEEL PIPE RACKS, WATER TANK AND PUMP, COMPRESSED AIR, LOCK UP TOOL AND CLAMP BOXES. chee cero r essere $92,000.00 PLUS NEW OR SECONDHAND TRUCK OF YOUR CHOICE." In one conversation prior to 24 October 1981, Mr Southall said words to the following effect: "The Stinger 45 will pump 45m3 an hour, its pump is capable of pushing concrete to a height of 6 storeys. I[t has a remote control to let you operate from the boom, and the boom will reach to 17 metres." Mr Southall also told Mr Kelly that the pump would pump 45 cubic metres with the boom fully extended but it i3 not entirely clear when that statement was made. In another conversation prior to Southall confirmed the the following effect: 24 October by Mr Southall work would not start until "Everything that has been said about the Stinger 45 in the brochure is correct. It will do all that is set out there." The Kelly, included the following: "Not just another heavy duty pump ... we build them extra tough and strong to pump more metres of concrete ... without sending you broke doing it! That's what it's all about - reliability, dependability, performance ata cost you can afford - year after year!" "RATED OUTPUT: (at 100% efficiency) 50m3 per hour, full throttle, 45m3 per hour at 70% power. Empties a 5m3 agitator in 6-8 mins" and PERFORMANCE: metres (200') Vertical: In excess of 60 Horizontal: metres (800') In excess of 240 The above figures are minimum distances using pump mix and varies according to mix design. Far greater distances have been achieved however we prefer to quote conservative figures easily reached with average concrete." 1981, Mr contents of the brochure, saying words to statements in the brochure, which was read by Mr Prior to payment of the deposit Mr Kelly was made aware that the concrete pump and boom would have to be assembled by the respondent and mounted on a truck and that such the deposit was paid and would take 'some weeks. It was also arranged that Mr and Mrs Kelly would attend at the respondent's factory while the work was in progress. There were a number of further conversations during that period. On the first occasion on which Mr Kelly and his wife attended at the respondent's factory, which was early in November 1981, he and Mr Southall "had a general discussion about my experience and I told him that I was familiar with machinery such as tractors and trucks", and Mr Southall said: "Transcrete will send someone up to the island to commission the pump and to show you how to operate it." A few days later, Mr Southall introduced Mr Kelly to a Transcrete employee, one Steven Lang, and said: "Steve will come up to the Island to conmission the pump and to show you how to operate it." After Mr and Mrs Kelly returned from Sydney, they forwarded a further $4,000 to the respondent which paid approximately $22,000 to acquire the truck. The total cost of the equipment was $113,000.00. On 2% November 1981, Mr Kelly authorised the applicant''s bank to pay for the equipment which was nearly complete. The equipment was delivered to Mr Kelly in Sydney on 8 January 1982 and he drove the truck to Bribie Island, arriving on Saturday 9 January 1982. After he arrived, Mr Kelly found a "Warranty" which he had not seen previously in the vehicle. Neither party placed any reliance upon the terms of that document. The applicant had been engaged by a Bribie Island builder, Mr Lex McCarthy, to pump approximately 160 cubic metres of concrete on 15 January 1982. Mr Lang arrived on the afternoon of Thursday 14 January and Kelly, Lang, and some Bribie Island builders took the equipment to test it to the Sellars Concrete Plant, one of two plants supplying the bulk of the pre-mixed concrete used in the area by builders. The other plant is operated by Boral whose product was used by Mr McCarthy because it was cheaper. Problems were encountered during the test run at the Sellars Concrete Plant, including the rupture of a hose. A replacement had to he flown urgently from the respondent in Sydney. Mr Lang operated the pump throughout the entire job on 15 January. Again, there were difficulties. When the engine providing power to the pump was operated in excess of 1800 r.p.m., there was unacceptable vibration. The "O-rings" blew out. The concrete in the pump "bled", i.e. the components in the concrete mix separated and the water rose to the surface. The boom "crept down", i.e. descended slowly without operation of the boom controls. The time taken to empty each 5 cubic metre load 'was considerably in excess of 8 minutes. After the completion of the job, Mr Lang fitted the remote control apparatus for the operation of the boom and the device was successfully operated with the pump and the pipes empty. Mr Lang then returned to Sydney. The applicant had another job over the weekend of 16-17 January, to pump approximately 55 cubic metres of concrete for another builder, Mr Robert Hartman. The pump blocked after two loads. Once again the problem related to the "bleeding" of the concrete. Another concrete pump and operator had to be engaged to complete the job. The applicant next attempted a job for Island Homes on the afternoon of 18 January 1982. The concrete ""bled" and the boom "crept down". The job involved only approximately 15 cubic metres of concrete which finally was taken onto the site in wheelbarrows. Mr Kelly complained to the respondent's manager, one Ken Thomas, who suggested that the problems might be caused by the manner in which the pump was being operated. The applicant's next job was for Mr McCarthy on 20 January 1982. Apart from an early blockage which had to be cleared, the pump operated satisfactorily except that the boom "crept down" and Mr Kelly was dissatisfied with the rate of pumping. 10. The applicant was engaged for another job by Island Homes on 25 January 1982. Once again, the concrete "bled" and the boom "crept down". During further work the next day on the same site, the boom again "crept down" and Mr Kelly was dissatisfied with the rate of pumping. On the same day, 26 January 1982, a further job was carried out by the applicant for Mr McCarthy and once again the boom "crept down". Further problems were experienced with the boom "creeping down" ina job which the applicant carried out on 2 February 1982 for Mr Ted Baker. Mr Kelly telephoned the respondent and spoke to Mr Thomas. He said: "We're having trouble with the rig. It won't pump fast enough and the boom keeps dropping. I've got a big pour on the 5th February and I want it to be working properly. You're going to have to send someone up to fix it." After discussion, it was agreed that the respondent would send Mr Lang up but that the applicant would have to pay his air fare. Soon afterwards Mr Thomas telephoned Mr Kelly and authorised him to take the equipment to Penta Hydraulics Pty Ltd for attention to the boom. Work was performed on the boom by Penta Hydraulics on 4 February 1982, and Mr Lang arrived that night. li. A further job was carried out by the applicant for Mr McCarthy on 5 February 1982. Tue major problem encountered on that day was in relation to the boom but Mr Kelly said that the pump also continued to take considerably in excess of 8 minutes to pump 5 cubic metres of concrete. More significant problems were encountered the following day, February €, 1982, when the applicant was again engaged to pump concrete for Island Homes. Concrete could only be moved along the pipe connected to the pump for a distance of about 18 inches. Another pump had to be sent fer. The applicant's equipment was taken to the Sellars Concrete Plant and cleaned out. Mr Lang went back to Sydney promising to return on the following Monday, 9 February, but did not do so. Mr Kelly again telephoned Mr Thomas on that Monday and over that and the ensuing two days a series of communications were exchanged between the applicant and its solicitors and the respondent. In his telephone conversation with Mr Kelly and a letter which he sent on the same day, Mr Thomas suggested that a larger diameter pipe be fitted from the hopper outlet to facilitate the pumping of the concrete and it was arranged that the respondent would supply the parts and that Mr Lang would do the work. However, the respondent's position was and is that the problem was in the concrete, not the pump. Although the pumping of Boral concrete was by no means trouble-free, the difficulties with Sellars Concrete were much worse. Mr Thomas' letter stated that "the problem you are having regarding pumping is not uncommon and Is due to the standard of concrete to be pumped, not i2. 'the machine." He also sald in his letter that the pump was under warranty and that the respondent was prepared to honour its commitment and that the manufacturer of the boom was prepared to meet its obligations. On that same day, the applicant's solicitors sent a telex to the respondent complaining that the pump did not "carry out the tasks represented by your company as capable of being done" and asserting that, despite many complaints, the respondent had failed to put the pump "in the condition where it can carry out the tasks that you represented it to be capable of doing". A telex in reply from the respondent to the applicant's solicitors on 10 February 1982 was consistent with Mr Thomas' letter of the previous day. Further telexes were exchanged on 11 February 1982 which related principally to responsibility for expenses which had been incurred and would be incurred and a demand by the applicant for the replacement of the remote control system for the operation of the boom. There is no adequate evidence of what was finally arranged. However, it may be noted that in the final paragraph of the last telex from the solicitors for the applicant to the respondent it was stated: "We also confirm that our client requires the machine to be fully tested after repairs on proper jobs using both Boral and Sellars concrete." 13. Mr Lang came to Bribie Isiand but was unable to fit the new pipe. The equipment was taken to Jonlin Hydraulics and Pneumatics Pty Ltd but its attempt to fit the pipe also failed. Finally, another part was sent up from Sydney and fitted. Mr Lang brought with him and furnished to the applicant an instruction manual which related to a different Transcrete pump, not a Stinger 45, although it contained observations material to the operation of a Stinger 45. When the applicant was carrying out a job for G.L. Stewart on 1 March 1982, the pump again became blocked. Mr Kelly had a conversation with Mr Ian Hay, the managing director of the respondent. It was arranged that the respondent would supply a re-mixer to the hopper of the concrete pump and that Mr Lang would attend to fit it and that the applicant would pay for both the part and the labour. The respondent considered then and still asserts that the re-mixer would not have been necessary if the concrete mix was suitable for pumping. There is no evidence whether or not the applicant ever paid the respondent for the fitting of the re-mixer. Mr Kelly also caused a modification to be made to the pipe along which the concrete was pumped in order to facilitate the entry into the pipe of a slurry which ts introduced to facilitate the passage of the concrete. Further jobs were carried out by the applicant between 2 March 1982 and 11 June 1982. During that period, the pump worked without bleeding of the concrete or other significant problems although according to Mr Kelly it was pumping too slowly. Mr Kelly's evidence was that the pump took 12-14 minutes to pump 5 14. "cubic metres of concrete. Mr Kelly did not understand, even at the time of the trial, that the rate at which a pump can pump concrete can be affected by the distance over which and the angle at which the concrete has to flow and also by the nature of the concrete mix to be pumped. The boom continued to give problems. At about the end of March 1982 the operation of the boom was tested by Jonlin Hydraulics and the opinion was formed that the hydraulic system associated with the boom was developing insufficient pressure. Some days later, a larger diameter cylinder (6" as against 5" previously) was fitted to the pump which operated the boom's hydraulic systen. However, the boom continued to "creep down" when used in the applicant's business. Further, the new remote control for the operation of the boom which had been fitted by the respondent did not work. Finally, an additional problem with the boom was encountered for the first time at a job for A.V. Jennings on 4 May 19382. After that time, the sideways movement of the boom could not be adequately controlled by the panel controls on the pump. On the final occasion on which the equipment was used on 1l June 1982, the boom slewed sideways suddenly and knocked over Mr Kelly and his assistant. No complaint was made to the respondent prior to the commencement of these proceedings on 28 October 1982 with respect to the sideways movement of the boom or its non-response to the controls on the control panel. Other complaints emerged after these proceedings had been commenced including the inedequate operation of the rear outward stabilizer legs and the presence of 'metal particles in the oil. Again, there was delay in communicating these problems. The trial first came on for hearing in March 1983 but then and on a subsequent occasion later that year had to be adjourned because the applicant was not ready. The hearing finally commenced on 19 March 1984. The respondent inspected the equipment in March 1983 during the course of the litigation. As a result of that inspection, it became aware of the need to fit a new wear plate and wear ring to the pump and to replace the piston rings in the pump engine and it offered to do so at its expense. It was at that time that the respondent also became aware of the additional problems with the boom. An inspection at that time on behalf of the applicant by Penta Hydraulics also confirmed that the boom was not operating properly. The wear plate, wear ring, and piston rings were replaced on 15 June 1983. Correspondence was exchanged between the solicitors for the parties between the time of the respondent's inspection in March 1983 and the commencement of the trial. In a letter dated 18 April 1983, the solicitors for the applicant said, inter alia, +». as we understand it, the major difficulty with the Pump at the present time, 1s in relation to the boom." In a further letter dated 22 April 1983, the respondent by its solicitors requested an opportunity to inspect the boom. By letter dated 5 July 1983 from its solicitors, the respondent indicated that it had arranged for 600 Machinery Australia Pty 16. "Ltd to carry out a further appraisal and, if necessary, repairs to the boon. The applicant was requested to indicate when it could convey the pump to the premises of 600 Machinery. The applicant's solicitors by letter dated 15 August 1983 indicated that the applicant required the respondent to arrange transportation of the pump "to 600 Machinery Company to carry out a further appraisal of necessary repairs" and that the respondent meet all transportation costs. A copy of a report on the pump was requested and the applicant required an undertaking that no work would be carried out unless it agreed. The applicant's conditions were met by the respondent by a letter from its solicitors dated 19 August 1983. Mr Lang delivered the equipment to 600 Machinery on the morning of Wednesday 21 September 1983 and a report, in the form of a telex, was sent to the respondent that day. A copy of the telex was provided to the applicant on Thursday morning, 22 September. The telex was in the following terms: "ATIN: J KOCH We have tested hiab concrete pumping boom as discussed. We found relief valves operationg at 20MPA The inner boom was able to lift 225kg in any position, as was the fly jib. The outer boom was unable to fully straighten. 17. We adjusted the malin relief valve to the recommended pressure 23.5MPA and also the port relief valve on the outer boom. The unit will now handle the full-rated load and the pump maintains both flow and pressure. We have checked the boom leakage and found that when supporting full load, the boom lowers 1255 MM in 40 mins. The leak down measured during this time on each piston rod was: inner boom 23MM, outer boom 0.5MM, fly jib 11MM. We assume from these tests that the check valves that normally lock the booms have a small amt. of leakage. We also experienced various rates of leakage during initial testing and assume that this is due to lack of use and maintenance during the last 12 months. Pls advise if U wish us to strip and repair the check valves. Pls note we have no info for the check vaives on the outer boom and fly jib. This telex also sent to Steel Bros., N.Z. G.8. Eagle 600 Machinery Australia P/L" On the same day, the applicant's solicitors advised the respondent's solicitors that the applicant was not agreeable to permitting 600 Machinery to proceed with the work until the applicant had obtained an expert's opinion on the report. Accordingly, the equipment was returned to Bribie Island on Thursday afternoon, 22 September. By letter dated 27 September 1983 from its solicitors, the respondent confirmed that it was prepared to effect the repairs to the boom suggested by 600 Machinery. 18. On 1 December 1983, 600 Machinery forwarded to the respondent's solicitors a quotation to repair the boom in the Following terms: Please find quotation to repair Hydraulic faults and components on concrete pumping boom with Hiab Crane base. (1) Remove all cylinders and Repair and replace necessary components § 520.00 (2) Repair Lock valves on outer two cylinders $ 240.00 (3) Strip spool valve and Repair and Replace where necessary $ 192.00 (4) Replace existing Pump with High Pressure Pump $ 735.00 Total: wee wee $1687.00 Sales tax has not been included and is extra if applicable. Should you require any further information please contact this office or the undersigned. On 24 January 1984, the solicitors for the respondent forwarded a copy of the quotation to the solicitors for the applicant and said, inter alia, 19. "Thes2 repairs would have been done by our client had it known of the faults under the warranty and at no cost to your client. However our client was not informed that any such faults existed until 21 March 1983, so could not do so before then. The quotation is a maximum quotation because 600 Machinery Australia Pty Limited at the time they carried out the appraisal were not permitted by your client to strip the check valves to ascertain the vrecise problem. On 15 June 1983 our client did replace the pump's piston rings and wear plate and wear ring. The degree of wear in both the wear plate and wear ring were caused by fault on your client's behalf. The metal particles in the oil were from the piston rings and as these have been replaced, the problem of metal particles in the oil no longer exists. Our client had no knowledge of these problems until 21 March 1983, when our client appraised the machine in situ. There had been no earlier complaint by your client. Our client offers to have the boom repaired by 600 Machinery Australia Pty Limited at its cost in accordance with the quotation enclosed and requires your client's reply to this offer to be given within 14 days. Failure to reply will be regarded as a refusal of the offer." The solicitors for the applicant requested an extenslon of time within which the applicant might consider the offer but there is nothing to indicate that the offer was ever accepted. Since 11 June 1982, the equipment has been permitted to stand idle at the Kelly's home at Bribie Island and has deteriorated. No attempt has been made to repair it except to the extent which I have indicated, to use it, or sell it. 20. Of course, the applicant does not have a claim under the Act merely because problems were experienced with the equipment. However, it alleges that it would not have acquired the equipment but for misrepresentations by the respondent which it particularized as follows in paragraphs 8 and 9 of the final version of its Statement of Claim: "8. In or about September or October, 1981, the Respondent: (i) By a document identified as 'Transcrete Price list effective from April lst 1981' represented to the applicant that the pump had a concrete output of 45 cubic metres per hour; and (ii) By David Southall orally represented to the Applicant, Graham John Kelly that:- (a) the pump would pump 45m3 of concrete per hour; (b) that the pump boom was capable of operating to a height of 17 metres; (c) that the pump was subject toa six month warranty by the Respondent; (d) the equipment would be fitted with a remote control device to permit the pump to be effectively operated from the boom nozzle. 9. In or about September 1981 the Respondent by documents identified as 'Stinger 45 Export Brochure' and 'What it's all about! Reliability, Dependability, Performance at a cost you can afford!' represented to the Applicant that:- (a) The concrete pumping capacity of the pump was 45 cubic metres per hour; (b) The pump was a heavy duty pump; (c) The pump was built extra strong; (ad) The pump was reliable; (e) The pump was dependable; 21. (f) The pump was economical in operation; {g) The rated output of the pump at 100% efficiency was 50 cubic metres of concrete per hour at full throttle, 45 cubic metres per hour at 70% power and that it emptied a 5 metre agitator 1m six to eight minutes. {h) The performance of the pump in conservative figures was in excess of 60 metres (200 feet) vertically and 240 metres (800 feet) horizontally." The respondents, in addition to denying specifically certain of the alleged representations, pleaded in paragraph 6 of the Amended Defence: "6. All representations made by the respondent were true and included the qualification that the performance figures supplied oniy applied if:- (a) "pump mix" concrete was used and the performance of the pump varied according to the "mix design" of the concrete used; (db) an experienced and competent person operated and maintained the pump and accessories; (c) the pump and accessories were properly maintained." The same theme was pursued in paragraph 8 of the Amended Defence in which, in addition to not admitting various of the applicant's allegations concerning deficiences in the equipment, the respondent asserted that, if the allegations were true, the matters alleged were due to the applicant's failure to: 22. "(i) use "pump mix" concrete; and/or (ii) employ an experienced and competent person to operate and maintain the pump and accessories; and/or (iii) maintain the pump and accessores properly; and/or (iv) notify the respondent of such facts. The same paragraph of the respondent's Amended Defence, delivered as late as 6 March 1984 also asserted, inconsistently at least in part with the correspondence from the respondent's solicitors that: (d) The remote control device worked and continued to work after minor repairs were done during the pumps commissioning trial. (e) The respondent so far as it was permitted by the applicant did honcur the said six month warranty. (f) The pump boom was repaired under warranty and thereafter operated satisfactorily." Neither Mr Southail nor Mr Thomas gave evidence. In paragraph 7 of his affidavit, Mr Kelly said, speaking of the time when he first received a copy of the respondent's price list from an acquaintance, that he and his wife discussed the price list and were attracted to the Stinger 45 pump "because it was fitted with a boom, it best fitted my wish to pump for low-rise unit construction and otherwise offered more flexibility. l was also attracted by its price as it was significantly less expensive than others with similar capacity". 23. In his evidence in chief Mr Kelly said that when he read the Transcrete brochure he regarded as being important the "metres per hour that it said it would pump". In his cross-examination when asked about the brochure, he said that he understood "rated output" to mean "the metres it pumps per hour". He was asked to state what he understood ""rated" to mean and said: "Rated - it is rated at 45 metres per hour. It empties a 5 metre agitator in 6-8 minutes. That is the rate." Elsewhere in his cross-examination he said that he "had to get something that would pump about 45 metres an hour", and that he "understood it done 45 an hour". He was asked whether he understood that, when an engine is rated, it is not rated on the basis of its performance in practice but its theoretical performance and said: "Once you rate something, that is completely different - rated is completely different to performance. Rated is something that has been tried under heavy loads and that is what it has done. It is rated." 24. * He was again asked to state what he thought "rated" meant and said: "Rated is a thing that has been done under heavy loads - what it can handle under load. That is rated performance in any horsepower." Mr Kelly was asked how he came to decide that what he wanted was a pump which would pump 45 cubic metres an hour of concrete and he said that all the builders required that. He continued: "You have got to have something that can pump at least 45 an hour, otherwise 1t 1s too slow for them." Later, he seemed to admit that Mr Southall had told him that the pump's rated output was 45 cubic metres an hour. After he stated that Mr Southall assured him that "it would pump 45 an hour", the following exchange took place: "Did he not tell you that it was the rated output? - - - rated output. That is what he told you? - - - That it was it has been rated at, 45 an hour. And that is what Mr Southall told you? - - - Yes." 25. ' However, it is necessary to have regard also to the next question and answer: "You did not make any enquiries about whether or not it in fact did pump 45 cubic metres an hour did you? - - - Only over the phone and he sent the brochure up to me." A number of the builders were called. None gave evidence that it was a requirement that a concrete pump pump 45 cubic metres of concrete per hour. I do not accept that part of Mr Kelly's evidence. However, I do accept that Mr Kelly believed that the pump which the applicant was to acquire would be able to pump concrete at 45 cubic metres per hour and that it would be able to empty a 5 cubic metre agitator in 6-8 minutes. I find that Mr Kelly did not believe that the equipment would be routinely operated tc achieve such performance but believed that that performance was the maximum of which the equipment would be consistently capable. I also accept that Mr Kelly's belief as to these matters formed an integral and essential part in the applicant's decision to acquire the equipment. Mr Kelly's other reasons for acquiring the equipment were that it was suitably priced and he believed that, because of the boom, it was suited for use on the jobs which would be available to the applicant. I 26. "do not accept that the applicant relevantly relied upon any of the other matters allegedly represented to 1t. In expressing my view in this way, I do not mean to suggest that Mr Kelly did not believe other of the matters allegedly represented. Perhaps he did. Further he may have believed at least some of these matters as a result of information supplied by the respondent. However, he did not rely upon any of those matters in arriving at the decision to acquire the equipment. The next question which arises concerns whether or not the respondent was responsible for Mr Kelly's material beliefs. Although I do not think that it is essential to do so, since the respondent not only published the price list but through Mr Southall was aware that Mr Kelly had a copy, I put aside from consideration the statement in the price list which, as the respondent pointed out, was not provided to Mr Kelly by the respondent. The statement in the price list 1s not materially different from some of Mr Southall's statements to Mr Kelly. The question to be determined 1s whether what Mr Southall said to Mr Kelly and the statements in the respondent's brochure contained and conveyed meanings which corresponded with presently material beliefs formed by Mr Kelly. It is not enough that Mr Kelly formed his beliefs by reference to what was said to him and what was contained in the brochure. That is particularly obvious in a case such as this in which it is apparent that Mr Kelly misunderstood part of the respondent's brochure and falled to appreciate that the use of a boom, the distance and angle the concrete must be pumped, 27. . differences in pump mix, and the rate at which the concrete, once pumped, can be screeded and spread, can all have an effect on the rate of pumping. On the other hand, I reject the respondent's submission that Mr Southall's statements and the brochure must be considered by reference only to a potential purchaser who was knowledgeable and/or experienced in respect of the operation of concrete pumps. There is no evidence which is acceptable that the class of persons who purchase or might purchase a concrete pump, whether from the respondent or generally, is so confined, and no basis whatever upon which it might be concluded that Mr Southall dealt with Mr Kelly on the footing that he was either experienced or knowledgeable or that Mr Kelly gave Mr Southall any justification for such a conclusion. The manner in which statements are to be construed to determine whether they contravene sub-s. 52(1) of the Act has been dealt with by the High Court in Parkdaie Custom Built Furniture Pty Ltd v. Puxu Pty Ltd (1982) 42 A.L.R. 1 and by the Full Court in Taco Company of Australia Inc. v. Taco Bell Pty Ltd (1982) 42 A.L.R. 177. I am satisfied that in order to determine what wags vrepresented to Mr Kelly it is not inappropriate simply to treat him as an ordinary layman of average knowledge and intelligence and to decide objectively what meaning would have been reasonably attached to Mr Southall's statements and the respondent's brochure by such a person. If anything, such an approach favours the respondent. Further, in my opinion it would be inappropriate to divide what was said and written into parts and to interpret each separately. The search is for the ultimate meaning conveyed by the statements and the brochure overall. 28. The statement in the Transcrete brochure that a Stinger 45 concrete pump "Empties a 5 cubic metre agitator in 6-8 minutes" is of importance. Although it appeared under the heading "Rated Output" it was expressed as a statement concerning the pump's actual rate of pumping. The other statements in the brochure under the heading "Rated Output" were statements as to the theoretical performance of the pump at 100% efficiency. Some of the statements by Mr Southall referred back to the brochure. Other statements by Mr Southall seemed to assert the pump's actual and not its theoretical pumping rate. An ordinary layman of average knowledge and intelligence would not have understood those statements as referring to the theoretical pumping rate because of the brochure. The theoretical figures in the brochure were by no means inconsistent with achievement of an actual pumping rate of 45 cubic metres per hour, using something between "70% power" and "full throttle" with the pump operating at less than "100% efficiency". The importance of the statement in the brochure "Empties a5 cubic metre agitator In 6-8 minutes" is that it was broadiy consistent with both the theoretical statements in the brochure and with the achievement of an actual pumping rate of 45 cubic metres of concrete per hour If the pumping was consistent and uninterrupted. The respondent's overall conduct would have led an ordinary layman of average knowledge and intelligence to the same beliefs as it led Mr Kelly. There was no disclosure by the respondent of the variations which may result from the use of a boom, the distance or angle over which the concrete is pumped, differences in pump mix, or differences in the rate of spreading or screeding. Even 29. 'if the average layman be assumed to have been aware of such factors, the obvious and quite legitimate assumption would have been that the statements by or on behalf of the respondent referred to normal operating conditions and "average concrete", to quote from the last line of the extract from the respondent's brochure which is set out above. In deciding whether or not the respondent's conduct contravened sub-s. 52(1) of the Act, it is necessary to keep in mind that the respondent's conduct did not occur in connection with the possible supply of specific identified existing equipment but in connection with a possible supply under its brand name of equipment to be manufactured and assembled. As statements of existing fact, what was said by Mr Southall and what was contained in the brochure applied generally to Transcrete Stinger 45 concrete pumps with boom. However, in the context, there was at least implicit in the respondent's conduct a representation that, if the applicant acquired such a pump, the pump supplied would correspond with what was claimed for such pumps generally. In determining whether the making of sucha statement was conduct that was misleading or deceptive or likely to mislead or deceive, it may be necessary to have regard to the belief of the respondent and to the basis, if any, for its belief. 30. I am satisfied that, irrespective of the pump-mix, the angle of the boom, or the length of pipeline, the applicant's equipment could not pump 45 cubic metres of concrete per hour (assuming continuously available concrete, a lack of interruptions and a sufficient gang of men to screed and spread the pumped concrete) and that, given the same assumptions, it could not empty a5 cubic metre agitator of concrete in 6-8 minutes. IT am satisfied that until the larger outlet pipe and the re-mixer were fitted, it was generally unable to pump Sellars concrete pump mix at all and that, it could not at any time before or after the larger outlet pipe and the remixer were fitted pump any concrete pump mix, for example Boral pump mix, at the rates claimed. Further, I am satisfied that at the material time the respondent didnot believe, and had no basis for believing, that such equipment, that is to say a Stinger 45 concrete pump used in connection with a Hiab hydraulic boom, could in practice pump as claimed. Indeed, I would not accept that the respondent held or might reasonably have held a belief that such rates were even theoretically achievable by such equipment. The evidence does not admit of a firm conviction, but I think it likely that the statements in the brochure were devised by reference to the use of the pump without a boom and did not take into account the effects which the boom, the distance and angle of pumping, and perhaps differences in pump 31. mix, can have on pumping rate. The statements of the respondent to the applicant were made in general and unqualified terms in the context of a possible sale of equipment including a boom and did not draw attention to any variable conditions or circumstances which could affect performance. The respondent must accept responsibility on that basis. I have for these reasons concluded that the respondent did engage in conduct that was misleading and deceptive. Such conduct induced the applicant to acquire and operate the subject equipment. In arriving at those conclusions, I have paid little attention to the problems which existed with respect to the boon acquired by the applicant. There is no suggestion that the boom supplied as part of the equipment acquired by the applicant was different in its design or components from other Hiab booms previously supplied by the respondent in conjunction with other Stinger 45 pumps. The problems with the boom, which are described below, accordingly should have arisen on prior occasions and should have been known to the respondent as supplier, although the respondent was not the manufacturer, of such booms. The respondent did not disclose such problems to the applicant but conveyed the opposite impression by its brochure and Mr Southall's statements. However, it is unnecessary to place reliance upon this aspect of the matter in view of the conclusions which I have otherwise reached and I have nct done so because the respondent's state of mind in this connection was not sufficiently revealed by the evidence. 32. Because the applicant would not have acquired the equipment but for the respondent's contravention of sub-s. 52(1) of the Act, it is entitled under s.82 of the Act to recover from the respondent the amount of any loss or damage which it suffered as a consequence of its acquisition of the equipment. It may be said immediately that, although the applicant's equipment cannot and could not when acquired pump at the rate claimed, it was not for that reason any less valuable. If the defects in the applicant's particular equipment are put to one side, I am not satisfied that such equipment was not worth §113,000, when acquired. There is no call to investigate what amount it would have cost to modify equipment of the description acquired by the applicant to improve it to the extent necessary to meet the pumping rate claimed for it. An applicant is entitled under s.82 of the Act to loss or damage suffered by conduct done in contravention of a provision such as) sgub-s. 52(1), not to the amount necessary to put the applicant in the position in which it would have been if the conduct. engaged in had not been misleading or deceptive or likely to mislead or deceive, that is to say, the position in which it would have been if the statements had been accurate. However, even accepting, as I do, that equipment of the description acquired by the applicanc was, when new, generally of a value equivalent to cost, it does not follow that 33. * the applicant suffered no loss or damage when it was induced to acquire the equipment which it did by the respondent's conduct in contravention of sub-s. 52(1) of the Act. The applicant claimed, in addition to the costs associated with attempts to repair the equipment, a further amount which is best seen from paregraphs 14-16 of the Statement of Claim which provided: "14. In consequence of the Applicant entering the Lease referred to in paragraph 11, the Applicant became liable to pay, inter alia:- (a) 92,592.51 a month for sixty months commencing 29th December, 1981 and concluding 29th December 1986; (b) other monies up to but not exceeding $22,600.00 being the amount of residual value within the meaning of that term as defined in the said Lease; {c) insurance premiums of not less than $1,412.50 per annum for the term of the Lease; and assumed all other obligations imposed on it by the said Lease. 15. At the time of supply the true value of the truck, pump and accessories was not more than $50,000.00. 16. Had the Applicant entered into a lease similar to that in paragraph 14 for equipment valued at $50,000.00 then the Applicant would have been required to pay no more than $1,147.50 a month for sixty months commencing 29th December, 1981 and concluding on 29th December, 1986; other monies up to but not exceeding $10,000.00 being the residual value, and insurance premiums of not less than $625.00 per annum for the term of the lease." BY 34. Interest was also claimed in the pleading, but not referred to in the argument. Other considerations aside, I would not award interest having regard to the share of responsibility which the applicant must bear for the unsatisfactory and dilatory course which has been followed with respect to these proceedings. It was part of the applicant's case that the turbo-charged 4 cylinder diesel engine was inadequate to provide the power required by the equipment. I reject that contention. (In the circumstances, I do not propose to state my reasons for rejecting applications by the respondent for the reference of that issue in the middle of the trial to a Court Expert or an Arbitrator.) However, the pump as supplied was defective apart from its inability to pump as claimed. In order to render it properly operational, it required the addition of a remixer and a larger outlet pipe and its operation in the condition in which it was supplied resulted in excessive vibration, led to the need for anew wear plate and wear rings and the replacement of piston rings in the engine, and caused the presence of metal particles in the oil. All of these problems with the possible exception of the engine oil have already been attended to, some while the equipment was still in use in the applicant's business and well before the commencemant of the Litigation. The evidence raised the possibility that that o1il-cooling system was inadequate and/or that the metal particles in the oil may have caused damage to the valves and that either circumstance might have contributed to a reduction in the pumping rate. At the end of the cases these remained mere possibllities cf which I was not satisfied. 35. Although I have not made any finding that the respondent was guilty of misleading or deceptive conduct in relation to the boom, it of course does not follow that deficiencies in the boom must be excluded from consideration. The boom was part of the equipment which the applicant acquired 1n consequence of the respondent's misrepresentations with respect to the performance of the pump. The boom was unsatisfactory in a number of respects. A new remote control device is needed, a different pump needs to be substituted for the Casappa pump, the rear stabilizer legs need to be made to function properly, the valves and the cylinder seals need to be checked for leaks and if necessary replaced or additional vaives inserted, and the entire hydraulic system needs to be stripped and checked and any defective or damaged parts must be repaired or replaced. I reject the respondent's contention that all or any of the problems with the equipment were caused by incompetent operation, continued operation despite the problems experienced, inadequate maintenance, or the welding by the applicant of a plece of metal onto the side of the hopper. Regarding the latter, I accept Mr Kelly's denial that such a step was taken by or on behalf of the applicant. I also reject the respondent's contention that the fault lay with the concrete which the applicant sought to pump and not with the equipment. I am satisfied that for bulldings for which the applicant was required to pump concrete it is neither customary nor practical for different pump mixes to be designed and supplied for individual pumps and that standard pump mixes are supplied for use by pumps generally. Iam also satisfied that both Sellars and Boral pump "4 ' mixes were entirely suitable pump mixes which were generally pumpable and that the difficulties experienced by the applicant were due to its equipment not to the pump mix. It is true that the applicant did not notify all of the problems with the equipment to the respondent before it ceased to use the equipment and that some of the problems which it had notified were corrected and that some of the other problems of which the respondent later became aware were also rectified. The pump was working satisfactorily (although not at the rate claimed) prior to the applicant ceasing to use the equipment. However, the boom was not. Despite attempts to repair it, it continued to possess deficiencies which were worsening in that the rate of "creeping down" had increased and the problems with the control panel and the erratic sideways movement had commenced. Further, the remote control apparatus did not work. Not all of the problems with the boom had been notified to the respondent, but some had and the respondent had failed to fix them. Further, the respondent has insisted that the applicant agree to pay for the supply and installation of the remixer which had been necessary for the proper functioning of the pump. As aresult of the problems with the equipment, the applicant's buginess had run at a loss during the period it had been conducted. Further, for the same reason, builders available to provide work to the applicant notified the applicant that they were unwilling to engage it until satisfied that the equipment had been repaired and its performance was proven. In those circumstances the equipment was commercially useless to the 37. * applicant which was, in my opinion, reasonably entitled to shut down the business, that is to say to cease using the equipment and bring to an end its outlays for wages etc. The potential cost to the applicant of continuing the business was not just the cost of repairs to the equipment but other expenses and there was no certainty that, at the end of the period which it took to have the equipment working satisfactorily, there would be work available to the applicant. Although the evidence establishes that there is and has been work constantly available on Bribie Island and around Caboolture, in June 1982 when the applicant had to make its decision the economic recession had reduced the anount of building taking place and it was uncertain how severe the recession would be or how long it would last. It doez not follow that the applicant acted reasonably in the further course which it undertook. The respondent pleaded that the applicant had failed to mitigate its damages. Whether or not the issue is properly seen ag one of mitigation, I can see no possible justification for the course which the applicant has followed. I find that there was no basis for the applicant's failure to repair and sell the equipment within a reasonable time after it ceased to use it in June 1982 and, in particular, I reject as quite untenable the submission that the applicant was unable to afford todo soa. T have not overlooked that the applicant operated at aloss during the period it carried on business in the first half of 1982 and that its assets exceeded its liabilities. However, it would be commercially naive to ignore the relationship between the applicant and Mr and Mrs Kelly who are quite well off financially, and [I note that there 38. is evidence that the applicant has recently acquired a concrete delivery vehicle costing about $50,000.00 under a lease from the bank guaranteed by Mr and Mrs Kelly. I do not doubt that it could have borrowed funds to repair the equipment to make it suitable for resale and that there is no reasonable explanation for its failure to do so or even to ascertain what repairs would have cost. Apart from the commencement of this proceeding on 28 October 1982, there is no evidence that anything at all took place in the second half of 1982 and no reason has emerged why the applicant should not have had the equipment repaired and sold during that period. I propose to fix the applicant's loss and damage on the basis that it should have done so. In my opinion, the only approach realistically open is to determine what amount the applicant has expended in connection with repairs and what further amount it was necessary to expend for that purpose at or about mid-1982, and to add to those amounts the difference, at an appropriate date at which the equipment should have been sold, between the value of the equipment and the total amount paid or payable by the applicant under its lease from the Bank (including the residual payment required). The applicant's claim made no reference to the amounts paid by the applicant by way of deposit and the capital figure upon which the lease was based, $113,000, was 39. approximately equal to the aggregate of the cost of the truck (about $22,000.00) and the cost of the remainder of the equipment (about $92,000.00). The matter was not touched upon in evidence but I can only assume that the applicant's deposits must have been refunded when the bank purchased the equipment from the respondent to lease it to the applicant. I accept the evidence that the applicant has expended $1364.01 on repairs, which does not include the cost of the remixer. Further, I find that the boom could be repaired and made suitably operational for approximately $6,000.00 and there is no basis for adopting a different figure as applicable in 1982. There is very little evidence concerning the value in the latter half of 1982 of second-hand equipment of the description of that acquired by the applicant which was of similar age and which had had similar limited use. I find that, as at the end of June 1982, the value of such equipment was $90,000. By then, the applicant had become liable for 6 payments under the lease each of $2,592.51, a total of $15,555.06 and had paid an insurance premium of $1495.00 for a period of 12 months from February 1982. The payment figure under the lease was then approximately $112,000.00. For each month thereafter, the payout figure reduced by less than the amount of the monthly instalment. The exercise in which I am engaged on does not admit of precision on the available evidence. The cost of repairs to the boom may be less than $6,000.00 because when the work is carried out less may be needed to be done than the amount of work on which that figure is based. On the other hand, there is considerable doubt as to the date by which it may have been possible to have the equipment 40. repaired and sold. Applying the formula which I have indicated, I assess the applicant's loss by the respondent's contravention of sub-s. 52(1) of the Act at $45,000.00 on the basis that the equipment could and should have been repaired and sold by the applicant between 11 June 1982 and the commencement of these proceedings. There will be judgment for the applicant against the respondent for $45,000.00. On a number of occasions during the course of the litigation costs have been reserved. The parties will be given an opportunity to make submissions in relation to what orders should be made concerning the reserved costs. Subject to that, the respondent must pay to the applicant its costs of the proceedings to be taxed, F Cruly cat it, aa hae 39 precedin 3 receding Popova ty ate vy bah eeusens for JUL je mt here GE ths elo our Me Jun tice Fitzgerald huge Asstciate Datei 13. &. FY.