Currabubula Holdings Pty Limited v Blackwood Hodge (Australia) Pty Limited [2000] NSWSC 837

New South Wales Supreme Court

CITATION : Currabubula Holdings Pty Limited v Blackwood Hodge (Australia) Pty Limited [2000] NSWSC 837 CURRENT JURISDICTION: Common Law FILE NUMBER(S) : SC 13291/91 HEARING DATE(S) : 12/7/99, 13/7/99, 14/7/99, 15/7/99 16/7/99, 23/8/99, 24/8/99 JUDGMENT DATE : 29 August 2000

PARTIES : Currabubula Holdings Pty Limited - Plaintiff Blackwood Hodge (Australia) Pty Limited - Defendant JUDGMENT OF : Simpson J at 1

COUNSEL : Mr N Perram - Plaintiff Mr F Lever - Defendant SOLICITORS : Gadens - Plaintiff Mark Kennedy & Co - Defendant CATCHWORDS : Contract - negligence - Trade Practices Act 1974 - sale of bulldozer - no breach of contract - no negligence - no breach of Trade Practices Act. LEGISLATION CITED : Trade Practices Act 1974 CASES CITED : Currabubula Holdings Pty Limited v Blackwood Hodge (Australia) Pty Limited, NSWSC unreported, 20 October 1997 DECISION : Statement of claim dismissed

THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

SIMPSON J

29 August 2000

13291/91 CURRABUBULA HOLDINGS PTY LIMITED v BLACKWOOD HODGE (AUSTRALIA) PTY LIMITED Judgment

HER HONOUR : 1 In these proceedings the plaintiff, Currabubula Holdings Pty Limited, claims damages from the defendant, Blackwood Hodge (Australia) Pty Limited (now known as Marubeni Mining and Excavation Pty Limited) arising from the purchase and sale of a bulldozer in 1989. The damages claimed include damages for economic loss as a result of the plaintiff's alleged inability to sew crops on its farming properties during certain years. The defendant cross claims for a relatively small amount, representing an unpaid final instalment of the purchase price of the bulldozer. 2 The present claims come at the end of a rather protracted and somewhat unusual history, and it is convenient to begin by setting out, as succinctly as possible, the relevant detail of that history. 3 The plaintiff is a pastoral company of whom two directors are Mr Anthony Michael Paola and his wife. In 1989 the plaintiff conducted farming enterprises at a property known as Currabubula, in or near the Hunter Valley of NSW, and at a property called Durhambone West, which, so far as the evidence discloses, appears to have been situated somewhere near Tamworth, also in NSW. 4 Early in 1989, acting on behalf of the plaintiff, Mr Paola commenced negotiations with representatives of the defendant in relation to the purchase of a bulldozer. Initially he intended to purchase a machine known as a Fiatallis FA200, and such a machine was in fact delivered to Durhambone in February 1989. It quickly proved unsuitable and was returned. No issue arises in relation to this machine. Mr Paola then agreed to purchase a larger machine, a Fiatallis FD14. The total purchase price of this machine was agreed at $219,000, to be paid by way of trade in another bulldozer amounting to $88,000, the balance, except for $30,000, to be paid on delivery, and $30,000 to be paid by three equal six monthly instalments. The negotiations were conducted by Mr Paola acting on behalf of the plaintiff, and Mr Alan Dwyer, a sales representative on behalf of the defendant. A document entitled "Quotation", dated 21 February 1989, appears to be the most comprehensive document containing the terms and conditions of the agreement. It will be necessary to mention certain of these terms and conditions at a later point. 5 The FD14 was delivered to Currabubula on 22 March 1989. Staff of the defendant spent at least a day at Currabubula Station, training the plaintiff's staff in the operation and maintenance of the machine. 6 In about March 1990 the machine was taken to the property Durhambone. The manager of the farming operations at the property at that time was Craig Power. The FD14 was used for root cutting and making dams. Certain problems arose in relation to the use of the machine, which the plaintiff now claims demonstrate that the machine was unsuitable for the purpose for which it was purchased, and which have given rise to the present dispute. The problems fall into three categories. Firstly, some time in 1990, the machine began to overheat after relatively short use. This occurred only after the machine was moved to Durhambone. The evidence concerning the commencement and circumstances of the overheating is controversial and it will be necessary to consider it in more detail below. From September or October the overheating became a significant problem. Secondly, there were problems with the air conditioning; the cabin of the bulldozer was not pressurised and accordingly there was nothing to prevent the entry of fine dust into the operator's cabin. Thirdly, bolts attaching ram rods to the machine had a propensity to break when a blade was used. This was evident both at Currabubula and at Durhambone. 7 The machine was inspected, and its operators observed, by the defendant's representatives, on more than one occasion. Despite a number of attempts to rectify the problems, all three continued. A heavy earth moving and machinery consultant, Malcolm Robbins, was engaged from time to time by the plaintiff for the same purpose. Eventually, late in 1992, Mr Robbins stripped, cleaned and re-sealed the transmission and torque converter. Although, even during the course of this operation, he was unable to identify a cause of the overheating, that problem seems to have been cured as a result of his treatment. 8 In 1991 the plaintiff commenced these proceedings against the defendant. It pleaded causes of action in contract and negligence. The defendant filed a defence and cross claim. On 6 May 1998 the plaintiff filed an amended statement of claim, re-pleading the causes of action in contract and negligence, and adding claims under ss 52 and 53(a) of the Trade Practices Act 1974. At that time, it seems, the principal focus of the parties lay on the overheating and its causes. Accordingly, in August 1996, pursuant to SCR Part 72, a referee was appointed to inquire and report as to the causes of the overheating. He was not asked to inquire into or report on either of the other matters. On 17 January 1997 the referee reported. His conclusion was, in summary, that inappropriate operation was the most likely cause of the overheating. He observed that the FD14 is a relatively sophisticated and expensive machine, that operators should have been trained to operate it correctly, and that no evidence had been offered to him that the men who operated the machine had been afforded appropriate training. The referee also considered that certain inappropriate implements had been used with the machine and would have increased the likelihood of the operators overloading machine and causing it to overheat. A good deal of attention was paid, during these proceedings, to the implement which the referee mentioned. I will come back to this. 9 On 17 February 1997, by consent, Hidden J ordered that the referee's report be adopted. Subsequently, by notice of motion the plaintiff sought orders that Hidden J's consent order of 17 February 1997 be set aside, and that the matter be remitted to the referee for further consideration, inquiry and report as to the causes of overheating and as to certain of the referee's conclusions. The plaintiff sought leave to adduce additional evidence in relation to the referee's conclusion that operator error was the most likely cause of the problems, his observations about training of operators, and his conclusions about the use of inappropriate implements. The basis for the application was the asserted failure of the plaintiff's former solicitors to place all available material before the referee. 10 On 20 May 1997 Murray AJ dismissed the notice of motion: Currabubula Holdings Pty Limited v Blackwood Hodge (Australia) Pty Limited, unreported, 20 October 1997. His Honour expressed the view that the plaintiff was doing no more than seeking a second chance to litigate matters that were before the referee. He considered that the new material the plaintiff sought to rely on added little, other than an expression of what was already before the referee. 11 In April 1998 the plaintiff again applied to set aside the report, this time alleging breach of the rules of procedural fairness in its preparation. This application came before Hidden J, who refused it. His Honour did, however, grant leave to the plaintiff to amend its statement of claim by adding a plea that the defendant was under, and in breach of, a duty to inform it of the cause of overheating, and to instruct its employees on the correct use of the machine so as to avoid overheating. 12 It is not in dispute that, having regard to the adoption of the report and the two unsuccessful applications to reverse the adoption, this court is bound by the referee's conclusions. This places a significant constraint upon the avenues that remain open to the plaintiff in relation to this aspect of its case. It is not open to the plaintiff now to contend that the machine suffered from some inherent fault or defect that caused it to overheat. It is for that reason that the plaintiff has recast its case in relation to the overheating, so as to seek to attribute blame to the defendant, not in the provision of a faulty machine, but as a consequence of the advice it agreed, expressly or by implication, to give to the plaintiff when consulted about the overheating. To some extent it will be necessary to refer to allied issues in the determination of the plaintiff's newly formulated claim. 13 Bearing in mind the meandering course the pleadings in this case have taken, it is now appropriate to set out in some detail the basis on which the plaintiff finally pleads its case. This is to be found in a Further Amended Statement of Claim filed on 14 August 1999. The plaintiff pleads causes of action in contract, negligence, and under ss 52 and 53(a) of the Trade Practices Act.