HYUNDAI ELEVATOR CO LTD v LIFTRONIC PTY LTD and ORS;HYUNDAI CORPORATION and ANOR v LIFTRONIC PTY LTD [1994] NSWCA 143

HYUNDAI ELEVATOR CO LTD v LIFTRONIC PTY LTD and ORS; HYUNDAI CORPORATION and ANOR v LIFTRONIC PTY LTD

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

MAHONEY, PRIESTLEY and HANDLEY JJA 15 and 16 February 1994, 9 December 1994

[1994] NSWCA 143

CONTRACT- breach — damages — causation — no question of principle. CONTRACT — collateral — representations during negotiations — long delay before contract concluded — no collateral contract.

CONTRACT breach damages causation — no question of principle. CONTRACT — collateral — representations during negotiations — long delay before contract concluded — no collateral contract.

A company in the business of installing and maintaining lifts purchased lifts from a group of Korean companies. During preliminary negotiations in July and September 1986 with the Australian company owned by the Korean group representations were made to the purchaser relating to the skill and experience of the group and the quality of its lift equipment. The first contracts for the purchase of such equipment from Korean companies were made in April 1988. The representations were not repeated after September 1986. The trial Judge (Cole J) held that the representation gave rise to oral contracts collateral with the contracts of purchase made in April 1988. Held: Reversing the trial Judge collateral contracts were not made between the purchaser and the Australian company in April 1988 in terms of the earlier representations.

The plaintiff purchased lift equipment from the Korean companies after April 1988. The equipment proved unsatisfactory and the plaintiff ceased purchasing in April 1990. The plaintiff was then unable to obtain alternative equipment for 21 months. It was entitled to damages for loss of profits during this period which coincided with a severe downturn in the building industry and in the market for new lifts. The trial Judge (Giles J) made an allowance for the effects of the recession in assessing damages for loss of profits. Held: The trial Judge had not made sufficient allowance for the effects of the recession. Appeal allowed and damages reduced.