oor 'HL J. Green, Govt. Print, Melb. f | i : i (<e IN THE HIGH COURT OF AUSTRALIA. McDERMOTT COLLIEN & LUFF QRDER The plaintiff's claim for rescission and the return of the purchase money fails, but the claim for damages for breach of warranty succeeds. Questions as to the form of judgment and as to costs reserved further pending/argument, as desired by the parties. JUDGMENT? . McDERMOTT. Ve COLLIEN & LUFF. WEBB J. McDERMOTI. ve COLLIE} Li JUDGMENT . WEEB_J. This action in the original jurisdiction of the Court aftises out of the sale of an. Austin A90 motor car for £1200 at Gundagai in New South Wales on 21st August, 1950. The sale was and sub-agents for Austin cares, made by the defendants, residents of Gundagai/ to the plaintiff, a@ resident of Caulfield in Victoria. The plaintiff claims (4) rescission of this agreement for sale; (2) the return of the alternatively damages for breach of warranty. £1150 purchase money paid by him; and (3) damages;/ The claim is based on alleged breaches of an express condition of sale, and of implied conditions of sale under the Sale of Goods Act. The Sale of Goods Act of New South Wales is in all material particulars the same as that of Victoria, so that to this extent it is immaterial whether the law of the contract is that of New South Wales or of Victoria. The plaintiff alleges that the sale was subject to the express condition that the car with equipment and accessories, i.e. tools and instruction book, should be delivered to him in Melbourne in first-class new car condition; and to the implied conditions that it should be (1) fit for the purpose of being used as a motor car, and (2) of merchantable quality. I find that it was subject to that express condition, and proceed to deal with the case on that basis. However, on the first of these two implied conditions Little, if any,argument was offered by Mr. Gowa ns for the plaintiff. But on the second implied conuaition there was full argument by counsel for both parties. But it is enough for me to say that on the facts as I find them, as later appears, I think that (1) the sale of this car was by description, and (2) that the car was not of merchantable quality at the time of the sale. On poth points I adopt the reasoning of Dixon J. (as he then was) in Australian Knitting Mills v, Grant, 50 C.L.R. 387 at 416-7. On Qe the appeal in that case the Privy Council appears to me to have tacitly approved of his Honour's view on the second point, although not in precisely the same terms. But Dr. Coppel for the defendants submitted that ths view was not taken in Cammeli Laird & Co, Lid, v. Manganese Bronze and Brass Co., 1934 A.C. 402, at 430, by Lord Wright, who later delivered the judgment of the Privy Council in Grant's case. That may well be so; but in any event I must follow the judgment of the Privy Council as I understand it. The defendants deny the breach of any condition, and say that, in any event, the plaintiff accepted the car and that at most he would be entitled only to damages for breach of warranty, but that by agreement with the defendants he had retained £50 of the purchase money, and that this sum is sufficient to meet any claim he might otherwise have for damages. After the plaintiff had kept the car for over five months, during which period he had driven it several thousand miles in the course of his business, he left it with the defendants at Gundagai on 17th January 1951 and claimed the return of the purchase money he had paid for it. Meanwhile, it had been damaged in a collision with another car; the plaintiff had substituted a Ford choke for the Austin chokes and in a letter to the Austin car manufacturers in England had stated his willingness to sell the car to then. The plaintiff and both defendants gave evidence, and I do not regard any of them as a fully reliable witness. A check on the plaintiff's testimony is afforded by the letters he wrote to the defendants and to the Austin car manufacturers in England, commencing from about the time when he took delivery of the car in Melbourne and continuing until after he had returned it to the defendants. As I read these letters, they are inconsistent to some extent with the plaintiff's evidence. I refer more particularly to the plaintiff's letter of 21st December, 1950, to the English manufacturers as to the car's engine performance, In that Letter he said that the engine performance had been good "so far", although he had alleged the contrary in earlier letters to the defendants, anddid soin his evidence. Mr. Gowans for the plaintiff invites me to read the statement in the letter of the 2ist December, 1950, as referring to Austin cars generally and not to this particular car; 'but I do not think that it has that meaning. Again, if the car hed dents and duco chips and the hood had been torn at the time of the sale on the 21st August, 1950, and the plaintiff had noticed those defects as he claimed he did, I think he would have mentioned them in his letter of ist or 13th September, 1950. There is no such check on the evidence of the defendants, as they did not write any letters that were put in evidence. But the defendant Luff gave what I consider an improbable account of how the £1200 purchase price was arrived at; and he also impressed me unfavourably when he was being cross-examined as to the oil services the car had been given before it was driven from Gundagai to Melbourne, The other defendant, Collien, seemed to have a limited recollection of what was said and done at Gundagai on the 21st August, 1950, and in Melbourne on the 30th idem. I find the facts to be that the plaintiff, immediately prior to the sale, asked the defendant Luff whether the car was a new Car, and was told by Luff that it was, and that its price was £1257/10/- in Sydney and £10 more at Gundagai., The plaintiff had noticed that the driving side door window had been broken; that the clock was not working; and that the rear vision mirror was cracked, Later he also noticed that the hood and windows were operated by an hydraulic arrangement, and was told by Luff that this was in good order, but should not be operated while the window was broken. Actually it was out of order and the defendant was aware of the fact, but claims that he told the plaintiff it was out of order, However, as already stated, I am not satisfied that there 4. were dents in the car and chips in the duco or that the hood had been torn at the time of the sale; but, except on the question of the plaintiff's credibility, this is of little, if any, importance, in view of the attitude of the Sydney agents, Larke Hoskins,-to whom the defendants had referred the plaintiff - as disclosed by their executive officer, Martin, in the interview he had with the plaintiff early in November 1950 in Sydney. Martin was dealing with a dissatisfiel, if not difficult, purchaser of an Austin car, and allowance should be made for that in determining whether Martin made admissions as to the condition of the car at the time of sale or of delivery to the plaintiff in Melbourne, because of, and to the extent of, this offer to have repairs made at the expense of Larke Hoskins. If it had dents and chips, and the hood was torn at the time of sale, Vipond, the mechanic who repaired the car twice in September 1950 and gave evidence for the plaintiff that the car was not new when sold to the plaintiff, would, I think, have given the dents and chips and the torn hood as additional ~ reasons for suggesting the car was not a new car. The defendents also told the plaintiff that they had obtained the car in Sydney only a few weeks earlier; but they hed in fact obtained it over four months before for a person not named who declined to accept it for reasons not disclosed. Here, however, it may be observed that the defendant Luff admitted that almost immediately after he took delivery of the car in Sydney, he found that the hydraulic apparatus was out of order, Moreover, the defendants agreed to accept £1200 for the car delivered in Melbourne in first-class new car condition. It is significant that the defendants after having paid £1152/10/- for the car in Sydney, were still prepared to accept £1200 for it on those terms. It suggests to me that they thought the car was not worth £1200 even when put in order. It should be kept in mind too that they had the car on their hands for over four months before selling it to licDermott, Allowing for the cost of putting it in De order and taking it to Melbourne, I am not prepared to find that it was worth more than the defendants had paid for it, i.e, £1152/10/- in Sydney and £10 more in Gundagai. At Gundagai on the 21st August, 1950, the plaintiff paid £500 deposit and was to pay the balance of £700 on the car being delivered in Melbourne in first-class new car condition, together with tools and instruction book. However, nothing more was done to the car by the defendants. On the journey to Melbourne the wireless failed. On arrival in Melbourne on the 30th August, 1950, the defendants, after some discussion with the plaintiff, arranged with him that he should retain £50 of the balance of the purchase money to provide for servicing and for remedying those defects which were apparent and were discussed at Gundagai on the 21st August, 1950, and for repairing the wireless. It was part of this arrangement that, if the £50 was more than sufficient for those purposes, the plaintiff should pay the surplus to the defendants, and that, if it was less than sufficient, the defendants should pay the excess to the plaintiff. However, with these specified defects remedied, the car would still not be in first-class new car condition. To bring that about, a total expenditure of £96/19/3 was required, as claimed by the plaintiff. They include items covered by the £50 arrangement, but exclude repainting and new leather seating, which I am not satisfied were at the time of the delivery such as to prevent the car from being in first-class new car condition. In any case there is no evidence as to the probable expenditure required on those two items, and the cost of getting the evidence, including the costs of taking it, would be likely to exceed such probable expenditure; and so the game would not be worth the candle to the plaintiff, who would have to pay all the additional costs in any event. It follows from what I have found as to the car's condition on arrival in Melbourne that the plaintiff could then 6. properly have refused to accept it. Further, I think he could have refused to accept it within a reasonable time after taking possession of it, and even after using it. However, I find that the plaintiff retained and used it for a longer period and to a greater extent than was reasonable under the circumstances. If the defendants on the receipt of the plaintiff's letters had replied to them intimating their intention to put the car into the condition stipulated for, he might have been entitled to retain and use it to the extent that he did without losing his right to rescission and to the return of his money. But the defendants ignored his letters, and eventually when personally approached by him, they disclaimed responsibility and sought to attach it to Larke Hoskins. Still the plaintiff continued to drive the car in his business, and therefore I think he mast be held to have accepted it. As already stated he even went so far as to replace the Austin choke with a Ford choke. This may have involved substantial structural alteration, although the replacement was done at small cost, The car was also damaged in a collision with another car which backed into it while it was standing in the street, perhaps in anobviously unsafe position. These may well appear not to have been normal incidents in the use of the car and could have reduced its value and prevented the plaintiff from returning the car. as he had received it, subject only to normal the stipulated user pending/repairs. However, it is arguable that the onus af proof of all this is on the defendants as part of their defence that the plaintiff accepted the cars although it is also arguable that this onus shifted to the plaintiff as to the cause of the collision, that being a matter peculiarly within the plaintiff's knowledge. The defendants also rely on the plaintiff's unaccepted offer to sell the car to the Austin manufacturers; but this in no way prevented the plaintiff from returning the car to the defendants, and so I disregard it as evidence of acceptance of the car by the plaintiff. I should add perhaps that, although I do not 7. rest my finding that the plaintiff accepted the car on the altera- tion of the choke or the offer to sell, still I do not deny that they could be taken to reveal that the plaintiff had come to regard himself as having accepted the car and as having finally become its owner, . I think then that the plaintiff has failed to establish his claim to rescission and the return of the £1150 purchase money and damages in addition; and that he is limited to his alternative claim for damages only, i.e. for breach of warranty. In these damages he seeks to include the difference between £1000 and £1269/16/10, that is, the difference between what he got and what he contracted for; but it is safe to assume that the value of a brand new Austin A90 in Melbourne on 30th August, 1950, was £1259/16/10, the same as in Sydney, to state the exact figures. However, the evidence that the car when delivered, assuming the defects to have been remedied, was worth at most £1000, was based on the further assumption that on 27th September 1950, less than a month after its delivery in Melbourne, the car had pistor Slap due to wear. Now the uncontradicted evidence is that piston slap is due either to wear or, in the case of a new car, to stiff- ness, but that, in order to be due to wear, the car must have been driven 50,000 miles or more. I am not prepared to find that this "car had piston slap due to wear, oF to accept a valuation based on the assumption that it had. But I am satisfied that it was not worth £1200 after allowing for those repairs which were within the £50 arrangement. As already stated,I am not prepared to find that, including the benefit of the £50 arrangement, it was worth more than the defendants paid for it, that is £1152/10/-, I do not accept the defendants' explanation that they delivered the car in Melbourne at their own expense because they wanted to see that city for the first time. Then I take £1152/10/- as being the value of what the plaintiff got. But he contracted for that particular car delivered in Melbourne in first-class new car condition, That did not mean a brand new car, which I take it would have been worth £1259/16/10 in Melbourne as in Sydney. The car purchased was this car with its history of faults, although minor faults, and not a brand new car. It was impossible, or impracticable at all events, to make it a brand new car; but it was sufficient for the purposes of the express condition that it was made to look and to perform like a new car. What the car would actually be worth when delivered in Melbourne in first-class new car condition is really a matter for estimate by experts, and I have no evidence of that. But if it were necessary so to do I would venture to determine its value having regard to the price of a brand new car and to the number and nature of the repairs necessary to put this car in the condition stipulated for, In this way I would fix the value of the car if delivered in Melbourne in first-class new car condition at £1225, Its actual value when delivered, allowing for the benefit of the £50 arrangement, was, as I find, £1152/10/-. It might appear from this that there should be judgment for the plaintiff for £72/10/= for breach of warranty. Contrary to the submission of Mr. Gowans for the plaintiff, I see no reason why the plaintiff should get the cost of repairs in addition, as that would appear to involve duplication of damages. However, I think in the particular circumstances the proper course As to give the plaintiff judgmet for an amount limited to the expenditure required to put the car in the stipulated condition, less that part of the expenditure covered by the £50 arrangement. I see no ground upon which judgment can properly be given for an amount comprising, not only the difference between what the plaintiff got and what he contracted to get, but also the cost of putting the car in the condition contracted for. He was entitled to have the car delivered to him in Melbourne in that condition. It was delivered to him there but not in that condition, He could have wjected it but he accepted it. Still he had a right of action limited to damages for breach of warranty, 9. i.e. to say to recover the cost of putting the car in the condition contracted for, excluding that part of such cost as had already been secured to him by the defeniants. Obviously he could not get judgment forwhat he already had. It follows that the more defects the plaintiff had observed at the time of sale the greater was the scope of the £50 arrangement and the smaller must be the amount of the judgment for the plaintiff. If it had so happened that the £50 arrangement was sufficimt to meet the whole of the cost of putting the car in the condition contracted for there would have to be judgment for the defendants. But I find that this £50 arrangement provided for at most £15 of the total cost involved, including in the £15 the cost of the usual servicing of a new car. The balance of this total cost was outside that arrangement. However these calculations of amounts within and without the £50 arrangement are subject to checking when the question of the costs of the action is being argued,as both parties desire it should be. After deducting from the plaintiff's estimate of £96/19/3 as the total cost the sum of £15 and a further sum of £5/9/0 for the repairs and supplies by Robinson and Taylor there remains £76/10/0. I propose thm to give judgment for £76/10/0 less £35, being the balance of the £50 not required for the purpose of the arrangement. The argument on costs will be heard on a day to be appointed during the next | sittings of the Court in Melbourne unless in the meantime the parties can agree on outstanding matters, without prejudice to their rights to take this matter furthers