(55 CATCHWORODS TRADE PRACTICES - claim under s.52 of Act - rescission sought - accord and satisfaction - undertaking given to restore property in question to proper condition. Trade Practices Act, 1974, s.52, s.87 Sale of Goods Act, 1896 (Q.), s.36 PATRICIA DOLORES TOMPKIN v. NOSSIDA (NO. 1) PTY. LTD. QLD G117 OF 1985 PINCUS J. BRISBANE 24 DECEMBER 1985 EpERAL COURT OF FEDETUSTAALIA IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD G117 of 1985 GENERAL DIVISTON ) BETWEEN : PATRICIA DOLORES TOMPKIN Applicant AND: NOSSIDA (NO. 1) PTY. LTD. Respondent MINUTES OF ORDER JUDGE MAKING ORDER: PINCUS J. DATE OF ORDER: 24 DECEMBER 1985 WHERE MADE: BRISBANE THE COURT ACCEPTED THE FOLLOWING UNDERTAKING: The respondent undertakes to repair the applicant's BMW 318i motor vehicle in accordance with the letters, exhibits MG6 and MG8 to the affidavit of Marian Graham filed herein, including supplying a suitable replacement vehicle during the time of such repairs, to the approved standards of BMW Australia, compliance with such standards and restoration of the vehicle to "as new" condition to be verified by an officer nominated by the Royal Automobile Club of Queensland (other than Mr. A. J. Budworth), all to be done at the expense of the respondent. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD G117 of 1985 GENERAL DIVISION ) BETWEEN : PATRICIA DOLORES TOMPKIN Applicant NOSSIDA (NO. 1) PTY. LTD. Respondent PINCUS J. 24 DECEMBER 1985 EX TEMPORE REASONS FOR JUDGMENT This is an application made under the provisions of the Trade Practices Act and also under the general law in respect of the purchase of anew BMW 318i motor vehicle made by the applicant in September 1985. The application seeks rescission of the contract for sale, which was effected by the applicant paying cash in the sum of $21,350 and trading in a 1974 model BMW 2002 motor vehicle, valued for the purposes of the transaction at $5,000. The applicant asks in her statement of claim that the transaction be reversed; that is, the claim is not one in which damages are pursued. Although formally asked for, there is no evidence before me upon which damages might be assessed, and the case turns on the question of whether or not under the general law or the contract the applicant has a right to rescission. . The application is brought on three rather similar factual bases, but it seems to me necessary for the purpose of this decision to deal with one of them only. I am satisfied on the evidence that the applicant was keen to obtain, and in fact insisted upon obtaining, anew vehicle in mint condition, to adopt the expression used more than once by her counsel. The reason for this is not absolutely clear to me, but probably is that she had heard stories about people being sold unsatisfactory new vehicles. She was paying a fairly large sum of money for what she regarded as a luxury vehicle, and I am satisfied that she made it clear to the respondent motor dealer that it had to be in perfect condition. Io am equally satisfied that the vehicle was not delivered in that condition. It is a curiosity of this case that, although the respondent has given evidence that it had an inflexible practice of "detailing" new motor vehicles, a process said to take some hours and for which a substantial charge is made, the vehicle, it 1s not really now disputed, was delivered in an unsatisfactory state. There was not anything seriously wrong with it, but it had imperfections of varying degrees of importance which the average buyer of an expensive new car would notice and be dissatisfied with. JI will mention those which seem to me to be most important. The body panels, on the evidence, are not quite in their correct positions relative to each other. In particular, that is so with respect to the boot and the right-hand front panel beside 3. the windscreen. There is not any gross error in their alignment, but there was evidence from Mr. A. J. Budworth and Mr. A. J. Long, both apparently independent witnesses, that the panels are in the wrong position, and that seemed to me, on inspection, to be correct. Secondly, there are scratches on all the windows except the front windscreen, These scratches are quite noticeable, and I think it clear that even a reasonably careful inspection of the car by the respondent before delivery would have disclosed their existence. The boot has obviously been repaired or replaced. There are ample signs of its having been spray-painted, whereas the evidence of the experts shows that this vehicle is prepared in the factory by some electro~static process, which gives results of a superior kind to spray-painting. The colour of the boot, according to the evidence, is different; that 1s not a matter in which I am really assisted by expert evidence much. It seemed to me, on inspection, to be slightly different from that of the rest of the car. The surface generally is not as good as a new car's surface should be. There are many slight scratches which I should think would probably come out with a very careful rubbing, although it 1s not absolutely clear that they would. The badge is missing at the rear of the car, that is, the 3181 badge. This is no doubt very easily remedied, but it is typical of the lack of care the respondent took in ensuring that the applicant's expressed desire to have a perfect car was met. There is damage to both the front towing eyes. The left one in particular is damaged to the extent that one would expect it to be useless, and the body panel underneath it has also been damaged, presumably by that towing eye being bent down. There are various lesser defects in the 4. car, not in themselves individually of significance, but, nevertheless, put together with the other matters, such as to make it clear enough that the car is not in perfect condition. I use the present tense, but it seems to be common ground that since the car was delivered in September it has been very carefully preserved and that it has not suffered any further damage. The principal factual issue in the case as fought, that is, the one which occupied most time and attention, I think, was the one which I am dealing with now. On that question, the respondent fails; that is, I am satisfied that more than once the applicant said to Mr. Godwin and Mr. Visscher, employees of the respondent, that she was anxious to obtain a perfect car. She put this in a number of ways, and she was assured by Mr. Visscher when the car was delivered that it was in that condition. She did not at that time inspect it carefully, but she did subsequently and ascertained the matters to which I have referred. Symptomatic of the lack of care with which the car was delivered was the fact that quite obviously the rear number plate was not even put on straight. This is not a matter which is complained of, but I use it in an evidentiary way in support of a finding (which I make) that the respondent was guilty of carelessness. That matter may be relevant to the question of the relief which should be granted under s.87. 5. The real difficulties in the case seem to me to come at the second stage, that is, when one is considering the effect of the events that have happened since the car was delivered. Before coming to that, however, I mention the question of breach ef contract, which is alleged. The parties raised various issues with respect to the applicant's contractual claim. For example, the respondent said that the contractual claim was defeated by an exemption clause. It seems to me, however, unnecessary to consider the claim in any detail because I am satisfied that the applicant cannot succeed in contract. The breach of contract alleged is that which I have already alluded to, that is, it is said by the applicant that there was a term of the contract that the car should be perfect; by that she meant at least superficially in such a condition as one would expect a new expensive car to manifest. I am satisfied it was not in that condition, or close to 1t. However, the reason I say that it 1s not necessary to consider the question of breach of contract further is that it appears to me that the applicant must be defeated on the basis that she accepted the vehicle. It 1s true that she said she did not accept it, but she in fact kept 1t after delivery, did not return it to the respondent, and drove it for some 2000 kilometres. The evidence she gave as to the reason for this was, in essence, that she thought that, if the car''s condition was to be corrected by the respondent, that might occur at the 2000 kilometre service, and she said she was encouraged in that thought by statements made by Mrs. Graham, the service manager of the respondent. I. am not prepared to find, however, that the 6. respondent said or did anything by way of acquiescence in the course which the applicant took, namely, seeking to preserve her right to return the car while keeping and driving it. Indeed, the respondent's position was fairly consistent. It refused to replace the car, but insisted and continues to insist that it is prepared to restore it to perfect condition. The reason that the applicant cannot succeed in contract is that she accepted the vehicle, having had a reasonable opportunity of examining it within the meaning of section 36 of the Sale of Goods Act of 1896 (Q.). Her statement that she did not accept it is, for the purposes of the law of contract, negated by the fact that she kept it and drove it for some considerable distance after she was, in substance, aware that the promise made to her by the respondent had not been kept. It is therefore sufficient to concentrate upon the two other legal heads of claim, namely, the claim for innocent misrepresentation (fraud not being alleged) and the claim under section 52 of the Trade Practices Act. It was argued by Mr. O'Donnell, who appeared on behalf of the applicant, that the decision in Alati v. Kruger (1955) 94 C.L.R. 216, supports the view that the applicant was entitled to keep the car and drive it, and when she had driven it 2000 kilometres, house it, that being the course she has followed. I am not satisfied that the case supports that proposition. Alati v. Kruger was rather a different case in that there, for practical reasons, it seemed essential to keep the 7. business, the fraudulent sale of which was the subject of the case, going, pending the resolution of the dispute. In contrast, here, there seems to me to have been no practical necessity for the applicant either to keep or drive the car. As to keeping the car, that may seem rather a harsh view, because one can understand the applicant's not wishing simply to give the car back without getting either her money or the car she had traded in. However, it is not necessary for me to determine whether, for purposes of a rescission order in equity, it is in circumstances of this sort fatal that the car not be returned, but rather retained. That is so because here there is something additional, namely, that the applicant drove the car for some 2000 kilometres. It is my view that a court of equity would not in those circumstances order rescission. The second answer which, it seems to me, the respondent can properly make to the applicant's claim for rescission in equity 1s accord and satisfaction. I confess I have had considerable difficulty in coming to a conclusion as to the facts on this aspect of the case, and initially thought, having heard Mrs. Graham, that I should reject the assertion that there was an accord and satisfaction. Mrs. Graham's evidence in some respects was unsatisfactory, and I did not get the impression she had a very precise recollection of the conversations to which she deposed. On the other hand, she impressed me as being a basically honest woman who would not attempt in a deliberate way to deceive the court on an important matter. That is of some significance, because the case put forward by the respondent is 8. that on or about 31 October 1985 Mrs Graham had a conversation with the applicant at which it was agreed, there having been considerable pressure in this direction earlier on behalf of the respondent, that the car would be returned, that in the meantime the applicant would be given acar by way of loan, that the rectification work would be completed, and before the vehicle was handed back, a Mr. Karl Krumb would inspect it on his next scheduled visit. Mrs. Graham says that this occurred and that she made a note of it about that time, which appears on exhibit 5, dated, it appears wrongly, 30 October 1985. The note reads as follows: . "IT have agreed to collect her car and give hera BMW from a mutual agreed location. The work is to be fully completed before handing back, and Karl Krumb will inspect the vehicle on his next scheduled visit." On the following day, 31 October 1985, there was a letter written, which was said to evidence the making of that contract, and that letter is exhibit MG8 to the affidavit of Mrs. Graham. Mr. O'Donnell, in the course of his able address, argued that the letter is somewhat equivocal in that 1t is capable of evidencing merely a unilateral agreement. He pointed out that, in its opening words, although the expression "We agree to rectify" is used, "We" is plainly a reference to the respondent and not to the applicant and respondent. The last paragraph, however, is a little difficult to square with that theory, because it concludes with the words, "As we discussed this morning, we will await your phone call early next week to arrange a time suitable for yourself for the work to be done." That letter did not meet with any prompt denial - that is, it was not met with a distinct response on behalf of the applicant to the effect that no such agreement had ever been made. On 6 November 1985, Mr. Barry, the solicitor for the applicant, replied, setting up the case which she presently advances, but the letter of 6 November did not deny the assertions in the letter of 31 October. Although I have to confess my mind has fluctuated on the point, having reconsidered the evidence which the applicant gave on the question of the return of the vehicle and looked again at the documents, I have come to the conclusion that there was, more probably than not, such an agreement as Mrs. Graham deposes to. The applicant promptly, in my view, decided that she would rather not carry through that agreement, and in that decision I can to some extent sympathise with her, because she had been very disappointed by the respondent's performance in the past. Nevertheless, the agreement made on or about 31 October, to which I have alluded, seems to me to constitute a defence to the claim for rescission. The last of the three heads of claim which it is necessary to consider in this connection is the claim under the Trade Practices Act. It is said by counsel - and I think rightly ~ that the court's power to give relief under s.87 of the Trade Practices Act, where it has found, as I have, that there has been a breach of section 52, is much wider than, and not necessarily 10. trammelled by, the restrictions which exist under the general law. Nevertheless, it seems to me that if in any circumstances, despite a later accord and satisfaction, the court should rescind an agreement under s.87, this is not such a case. Looking at the matter broadly, the initial fault was very much that of the respondent and not that of the applicant; nevertheless, the respondent's response to the matter, when the trouble was discovered, was not entirely unreasonable. It would certainly have satisfied the applicant much more had it responded by saying the vehicle would be replaced, but it did not regard the defects as being serious enough to warrant that course. The principal reasons why I hold, as I do, that I should not, for the purposes of the Trade Practices Act, go past the agreement which was made at the end of October, are that the applicant kept the car and drove it. It seems tome that certainty in commercial dealings is not enhanced if the courts encourage the thought that 1t 1s possible, so to speak, to keep one's options open and retain property which has been purchased and which it as desired to restore to the vendor, in circumstances where there is no practical necessity to do so - more, to retain and use the property. Iam therefore of the view that the transaction should not be rescinded, and I am disposed to dismiss the claim for rescission. It seems to me, however, that the reasons which I have given are not inconsistent with the course of requiring an undertaking on the part of the respondent that it will restore il. the vehicle as it has promised. The terms of the undertaking may be the subject of some discussion, and if no such undertaking is given, I propose to make an appropriate order. (After discussion) The respondent undertakes to repair the applicant's BMW 3181 motor vehicle in accordance with the letters, exhibits MG6 and MG8 to the affidavit of Marian Graham filed herein, including supplying a suitable replacement vehicle during the time of such repairs, to the approved standards of BMW Australia, compliance with such standards and restoration of the vehicle to "as new" condition to be verified by an officer nominated by the Royal Automobile Club of Queensland (other than Mr. A. J. Budworth), all to be done at the expense of the respondent. (After submission) The question of costs is one which it seems to me should, perhaps, in theory, be dealt with in the following way to achieve perfect justice, and that is that the costs of the issues on which the applicant succeeded should be paid by the respondent, and the costs of the 1ssues on which the respondent succeeded should be paid the other way, and the general costs should go to the respondent. It seems clear - and it is hardly disputed, I think - that the costs of the issues on which the respondent succeeded must be less than those on which the applicant succeeded. 12. There are two reasons, it seems to me, why an order in the terms just mentioned would be inappropriate here. One of them is that it would be difficult (and, in the event of a serious dispute, quite costly) to work out from this considerable volume of oral and written material which of it related to which question; the case is already one which may be characterised as being a fairly expensive fight over a rather small sum of money. The second reason is that there are some questions which I have not found it necessary to deal with to determine the matter, in particular, the applicant's second and third factual cases as pleaded. It would be necessary for me to reach a decision on those aspects to enable such an order for costs to be carried into effect, and I do not really think that is necessary or desirable. Although I have some hesitation in doing so, in the end I have decided to accept the contention of counsel for the applicant and to make no order as to costs. 1 certify that this and the // preceding Pages are a true copy of the reasons for judgment herein of His Honour Mr Justice Pincus Grier oO 'Rite, 3 / 7/8 G Associate Date