Mae. Vie AER Ses CATCHWORODS TRADE PRACTICES - misleading statements - measure of damages. Trade Practices Act, s.52 Anthony Tsingolis v. Tottenham Investments Pty. Limited NSW G261 of 1986 PINCUS J. SYDNEY 12 DECEMBER 1986 IN THE FEDERAL COURT OF AUSTRALIA ) NEW SOUTH WALES DISTRICT REGISTRY ) N.S.W. G261 of 1986 GENERAL DIVISION ) BETWEEN: ANTHONY TSINGOLIS Applicant AND: TOTTENHAM INVESTMENTS PTY. LIMITED trading as HORSELESS CARRIAGES First Respondent AND: JAMES LEONARD KEEVILL Second Respondent MINUTES OF ORDER JUDGE MAKING ORDER: PINCUS J. DATE OF ORDER: 12 DECEMBER 1986 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The first and second respondents pay the applicant the sum of $15,000. 2. The first and second respondents pay the applicant's costs of and incidental to the proceedings, to be taxed. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALTA ) NEW SOUTH WALES DISTRICT REGISTRY ) N.S.W. G261 of 1986 GENERAL DIVISION BETWEEN: ANTHONY TSINGOLIS Applicant AND: TOTTENHAM INVESTMENTS PTY. LIMITED trading as HORSELESS CARRIAGES First Respondent AND: JAMES LEONARD KEEVILL Second Respondent PINCUS J. 12 DECEMBER 1986 REASONS FOR JUDGMENT This is an application under s.52 of the Trade Practices Act relating to a second-hand motor car. The applicant's case 15 that he bought what was represented to be a Maserati Merak mctor vehicle in June 1985. His principal complaint is that the vehicle was not then fitted with the standard engine, but with a Leyland P76 engine. There was originally one respondent only, the vendor, but a director was joined as second respondent during the hearing. The references below to "the respondent" are to the first respondent. The respondent admits that the vehicle was sold with a Leyland engine in it, and it is also common ground that to fit that engine in substantial alterations had to be made to the body of the car. There is no suggestion that the identity of the engine was immaterial, but the respondent's case is that the applicant was told at the time of sale that the engine was not the standard one. In the statement of claim, it is set up that there were other representations, such as that the motor vehicle was not of merchantable quality and the like. No satisfactory evidence was given in support of those allegations, and I will say no more about them. None of the witnesses called seemed to me very convincing. The applicant appeared to be an unusually ill -educated man, careless in expression and vague in recollection. Even on his version of events, he agreed to purchase the vehicle in question without any but the most cursory inspection, merely on impulse, and there is something to be said for the view that only the appearance of the car mattered to him, not its mechanical characteristics. Other difficulties in the way of acceptance of his case are referred to below. In the end, however, resolution of the principal factual conflict in the case - whether the applicant was told about the fitting of the Leyland engine - depends simply upon a choice between the two versions of the transaction which have been put forward, at least one of which appears to have been fabricated. Of course, in making that choice it has to be kept in mind that the applicant bears the onus of proof. lo . The applicant's case is that he bought the Maserati from the respondent for $27,000, a price paid by trading in a Range Rover owned by the applicant at a price of $22,000, the balance being paid in cash. The applicant would have me accept that nothing was said by anyone to him, about the time of sale, to suggest that there was any peculiarity about the vehicle's engine. That the respondent's case is that, although the price was indeed 327,000, it was wholly paid by the trade-in of the Range Rover, which the applicant had owned, that, although the applicant in fact paid $2,000 in cash as a "holding deposit", the sum was refunded to him, and that he was distinctly told by three pecple on three different occasions that the motor was not the standard one. Of course, the question whether part of the price consisted of $5,000 in cash is peripheral, but resolution of it bears upon the parties' respective credit. The applicant's version of events is that he visited the respondent's used car yard in company with one Hatzivasiliou, a mechanic, the latter being interested in buying a sports car. There was no consensus as to the presence of Hatzivasiliou. He gave evidence, but had such poor command of the language that I derived little assistance from what he had to say. According to the applicant, his initial negotiations were with one "Mark", a Salesman. "Mark" was in fact not a man of that name, but one Ross Allan Reed who gave evidence for the respondent. Then, according to the applicant, he spoke to Mr. James Keevill who 1s, according to the evidence, a director of the respondent. The applicant says that he made with Keevill the agreement I have mentioned - i.e. that $22,000 trade-in would be allowed on his Range Rover (which, typically, the applicant variously described as a land rover and as a jeep). The applicant saw no sign or notice, as he claims, on the car. According to the applicant, he returned on the following day and the transaction was completed. He took delivery and received a warranty book and a Maserati manual. Very shortly after that, as is common ground, the applicant began to have trouble with the motor car, which proved to be expensive to correct. He complained about this to the respondent, and repairs were done at the respondent's expense during the month of July 1985. After that, further repairs were done at the expense of the applicant. The respondent's witnesses consisted of Mr. James Keevill and his wife, Marjorie, Mr. Ross Reed, and a Mr. Carrasco; the evidence of the last-named appeared to me to be of no assistance at all. Mr. Reed, who no longer works for the respondent, claimed to recall that the applicant asked him why the vehicle for sale was so cheap, and Reed explained that 1t did not have a genuine Maserati motor in it, but a Leyland V8 motor. Mrs. Keevill's evidence was that the applicant asked her what kind of v8 it had init, and she said, "I understood it was a Rover engine." Mr. James Keevill gave evidence that he had bought the car in question for, he thought, $15,000 from a finance company as a repossession, and that the vendor had pointed out to him that 1t had a "Rover type motor in it". Mr. Keevill said that he did "some painting and detailing", apparently made necessary by the matter referred to above, namely that the fitting of the non-standard (and larger) engine had brought about some extensive changes in the area of the vehicle's cabin. Keevill said that Reed introduced the applicant, whose name is said to be Anthony Tsingolis, as "Tony Lloyd" or "Tcny". Keevill said, speaking of his conversation with the applicant: "I pointed out the mechanicals of the car and to be specific I pointed out that it had what I believed to be a Rover V8 motor engine fitted to it, that it was not a standard motor, that 1t would he necessary to have an engineer's certificate when reregistration time came, and that I would be happy to help with it." He said that after a test drive, during which a visit was made to a mechanical workshop for minor repairs, the applicant paid him 31,000; then, according to Keevill, the applicant went away and returned later the same day with the Range Rover trade-in and another $1,000. Presumably at a later time - although that was not made clear by the evidence - Keevill told the applicant, according to him, that the car was sold with no warranty at all. Keevill also said that the applicant told him he knew where the original motor was and would like to restore the car and make some money on it. The applicant asked him, said Keevill, whether Keevill could "possibly get him the real numbers of the car ..." Further with respect to the warranty, Keevill gave evidence that he mentioned to the applicant that there was a warranty put out by a company called Forte which could ke purchased. He said, "This was duly discussed and agreed to, and he was supplied with it." There appears to me to be a basic improbability about this version of events. It does not seem likely that if the applicant already knew where the original motor of the vehicle was, he would need Keevill to obtain its number. Further, Keevill's story about the warranty does not ring true tome. If the vehicle was sold "without warranty", I cannot understand why (as is admitted) a Forte warranty was supplied, allegedly at the expense of the respondent. Even more importantly, 1f the vehicle was sold without warranty, that ill accords with the admitted fact that the respondent paid substantial sums on a number of occasions in the following month for repairs to the vehicle. Keevill also gave evidence that when he purchased the vehicle the "physical registration certificate" was non-existent, and he had no knowledge of what engine number was recorded at the Department of Motor Transport. He claims to have ascertained the registered engine number at the request of the applicant, to he placed on documents furnished to the applicant. "so that if he could acquire the original engine 1t would keep all the paperwcrk on the car more original and hopefully get a better price on sale -.- when he eventually restored it and sold it". As I understand the respondent's case, then, Keevill ascertained the number of the Maserati engine with which the vehicle had originally been fitted so that that number could be inserted (falsely) in documents relating to the sale; the plan apparently was that when the applicant refitted the original engine, he would be able to produce to a prospective purchaser Sale documents corresponding with the motor then physically fitted. I must say this seems to me much too subtle a plan for one of the applicant's temperament and intellect. He appeared to me to be a man unlikely to be concerned with forms and legalities, preferring to deal in cash and physical objects. Quite apart from that view, based upon my observation of the applicant, the whole scheme seems rather far-fetched: it depended upon the original engine which had, presumably, been removed because it was unserviceable, being able to be restored and refitted in sucha way as to conceal the fact that it had ever been taken out; as I have pointed out above, its removal necessitated extensive changes to the body work which would have had to be reversed. I think Keevill's evidence with respect to the registration number, which I have just mentioned, is unacceptable and that it was given to meet the difficulty that exhibit 1, which is admitted to be a record of the transaction dated and signed by both parties, gives the engine number, not of the P76 Leyland motor actually fitted, but of the Maserati engine which had formerly been fitted. Fairly commonly in claims of this sort, it is the applicant who undertakes the task of showing that a statement was made additional to, or at variance with, the formal documents. Here, the boot 1s rather on the other foot; it is admitted that the record of the transaction evidences the sale of a Maserati vehicle with a standard engine, but the respondent says that hy statements made before the agreement was entered into, the applicant was orally made aware that the fact was otherwise. No doubt the ultimate onus remains on the applicant, but he 1s considerably assisted by the fact that the respondent admits to having entered a false engine number on exhibit 1. It is necessary to make some other findings with respect to allegedly contemporaneous documents. Exhibit 15 is in two parts; firstly, an offer to purchase, and secondly a trade-in declaration; it purports to be signed by, among others, the applicant, but he denies having signed it. The document 15 consistent with the case of both parties insofar as 1t contained the false engine number - i.e. that of the Maserati - but it is inconsistent with the applicant's case insofar as it has the note immediately above what purports to be his gignature: "Vehicle sold as is without warranty for restoration purposes". I do not accept that any such agreement was made - i.e. I do not believe the vehicle was sold on the basis set out in the note just quoted, nor do JT accept that the applicant's signature appears immediately below the note. I appreciate that this is equivalent to a finding that exhibit 15 contains forged signatures; I believe that to be so. Another document which was challenged 1s exhibit 18, recording payment of a holding deposit of $1,000. It is admitted on both sides that the applicant paid $1,000, but the document requires consideration because it describes the vehicle as, inter alia, Maserati 4400/2956, that being, it is said, the number of the engine actually fitted. If the document is authentic, it tends to support the respondent's case in one respect, but on the other hand is inconsistent with the story that 1t was agreed that the transaction would be documented with a false engine number. On the whole, the impact of exhibit 18 appears to me to be neutral, and it appears to me unnecessary to make a finding as to its authenticity. I have mentioned above that the applicant's evidence was unsatisfactory in some respects, and more detail needs to be given. He claims that he reregistered the vehicle in August 1985, having obtained the requisite inspection and consequential "pink 10. slip". That inspection should have disclosed that the number of the engine actually fitted did not correspond with the registration certificate, which showed the original engine number. For a reason which is quite unexplained, according to the applicant it did not do so, and he says he failed to ascertain the discrepancy until October 1985, in the course of an attempt to sell the vehicle. The applicant gave evidence that the purchaser required that the vehicle be checked by the Department of Motor Transport and (in response to a leading question) agreed that it was during that inspection that he learnt that the vehicle had a Leyland motor. He also gave evidence that the departmental officers instructed him to "get things done to the vehicle ..." and that in consequence he obtained an inspection report which became exhibit 11. That inspection report, however, is dated 5 December 1986, some 14 months after, according to the applicant, the departmental officers gave him a direction; that version of events makes little sense to me. Then (again in response toa leading question), the applicant agreed that after he had been to the department, he telephoned Keevill and "I told him he had sold me a car without D.M.R. approval on the road ... without approval on the road. It is D.M.R. approval or something ... I just said to him he sold me a dud car and I want it fixed up or give us me jeep back." The "jeep" is, of course, a reference to the Range Rover. Again, this version of events ill accords with the applicant's case. One would have expected his complaint at that ll. stage to be that, as he claimed to have just discovered, the vehicle had a Leyland P76 engine. I have been considerably troubled by matters of the sort just mentioned, but have, in the end, come to the view, that I should accept the applicant's case that he was induced to buy by a misleading assertion that the vehicle was a Maserati Merak where it was in truth only partly a Maserati. An important reason for my preference for the applicant's version of events is, as I have mentioned, a document, namely the contemporaneous record of the sale signed by both parties. Another document which has swayed me in favour of the applicant's case is the defence, delivered in August 1986. It must then have been clear that the central question was whether, and if so how, the applicant was made aware that a non-standard engine had been fitted. It 15 reasonable to infer that' the defence was prepared on the instructions of the directors of the respondent, or at least on those of Mr. Keevill, yet it says nothing of either director having informed the applicant that a non-standard engine was fitted. The allegations it makes are that a sign printed on the windscreen "stated that the said vehicle was fitted with a Leyland P76 model V8 engine". It also alleges that an employee of the respondent told the applicant about that. As to the former allegation, the respondent's witnesses denied that any such sign was fitted, and said that the sign was merely "V8 Maserati Merak" or something of the kind. It was argued that a knowledgable buyer should have deduced that the engine was not 12. standard, because Maseratis are well known not to have V8 engines. I reject that contention; Mrs. Keevill, for example, who claimed to have many years' experience, really had no idea what sort of an engine a Maserati Merak has. As to the second allegation, with respect to "an employee of the respondent", that appears to refer to Mr. Reed, and no reasonable explanation has occurred to me for the absence of an allegation that directors of the respondent told the applicant about the nature of the motor. It 15 also worth noting that an explanation of the respondent's having paid for repairs was given in evidence which was quite different from that in para.4(b) of the defence. Evidence with respect to damages came from a number of sources. One Rinaldi, a relatively inexperienced witness, assessed the current value of the vehicle at $10,000. Reed gave evidence of having told the applicant that with a genuine Maserati motor in it, the vehicle would be worth "in excess of $40,000 to $45,000" and that accords fairly well with an estimate made by Keevill ("between $45,000 and $50,000"). Keevill also said that, in its current state, the vehicle is worth "$30,000 or better" i.e. three times the estimate made by Rinaldi. Although the evidence is not entirely satisfactory, it appears to me that there is enough information before me to make an estimate of the value of the vehicle at the time of sale. I have taken into account the evidence as to the cost of repairs to the vehicle, but can see no foundation for making a separate award in respect of the cost of those repairs. It appears to me that the proper measure of damages is the difference between the price of the vehicle and 1ts value at the date of sale. It should be added that there was, in my view, no acceptable evidence on which to make an assessment of the value the vehicle would have had with a Maserati engine fitted. The applicant produced no evidence along those lines, and I think statements made by Reed and Keevill on the subject were unreliable. Further, to make the necessary calculation, one would have to postulate that the hypothetical Maserati-engined vehicle was in a certain condition; just what condition one should postulate is unclear. For that reason, I have treated this asa case in which the ordinary rule should be followed, and "reliance damages" should not be awarded. I have also rejected the rather faint suggestion made on behalf of the applicant that damages might be awarded as for breach of contract, for the same reason. It 1s true that, as I find, the contract was for the sale of a Maserati Merak vehicle with the engine number stated in exhibit 1, but as I understand the law, that circumstance does not deprive the applicant of a right to damages in respect of the statements made which induced the purchase. I have come to the conclusion, therefore, that the applicant was caused loss by the representations that the vehicle was a Maserati Merak which were misleading, because it was only partly s0 describable. I find that the second respondent was 14. involved in the contravention of s.52 of the Trade Practices Act committed by the first respondent, and judgment will go against both of them in respect of the difference between value and price mentioned above, which I find to be $15,000. The respondents must pay the costs. i certify that this and the /3 preceding Pages are a true copy of the reasons for judgment herein of His Honour Mr Justice Pincus per yous Associate Dated 2 chew eer 1986