New South Wales Supreme Court CITATION : Lindores v Jacap [2004] NSWSC 867 HEARING DATE(S) : 3, 4 and 5 May and 22 June 2004 JUDGMENT DATE : 23 June 2004 JUDGMENT OF : McDougall J at 1 DECISION : See para [53] of judgment CATCHWORDS : BAILMENT - bailee for reward - breach of bailment - burden of proof - whether bailee discharged burden of proof - whether evidence excludes likely or possible cause of loss consistent with negligence or default on part of bailee - DAMAGES - quantification of loss - whether plaintiff acted reasonably - whether plaintiff entitled to full cost of replacement crane - whether plaintiff entitled to "new for old" - whether crane could have been repaired CASES CITED : Hobbs v Petersham Transport Co Pty Limited (1971) 124 CLR 220 Glebe Island Terminals Pty Ltd v Continental Seagram Pty Ltd (1993) 40 NSWLR 206 Lindores Plant and Equipment Pty Limited (First Plaintiff) PARTIES : LCR Lindores Group Pty Limited (Second Plaintiff) Jacap Low Loaders Pty Limited (Defendant) FILE NUMBER(S) : SC 20297/02 COUNSEL : A D Hewitt SC (for Plaintiffs) K Andrews (for Defendant) SOLICITORS : Rankin Nathan (for Plaintiffs) A W M Dickinson & Son (for Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION McDOUGALL J 23 June 2004 (Revised 15 September 2004) 20297/02 LINDORES PLANT AND EQUIPMENT PTY LIMITED & ANOR v JACAP LOW LOADERS PTY LIMITED JUDGMENT 1 HIS HONOUR: As at 6 July 2001, one or other of the plaintiffs ("Lindores") leased a Leibherr 90 tonne mobile crane serial number 63079 and registered number 434 FOK ("the crane"). No point is now taken as to the entitlement of the plaintiffs between them to sue for and recover damages for what they say was the loss, by write-off, of that crane following an accident that occurred on 7 July 2001. 2 On and before 6 July 2001, the crane was located at Lindores' premises at Darra, Queensland. Lindores required the crane to be used in Sydney at the Luna Park site. Mr Heys of Lindores agreed with Mr Budge of the defendant ("Jacap") that Jacap would transport the crane from Darra to Sydney. It is not suggested that, whether by some prior course of dealings or otherwise, there were particular terms (including any terms restricting or exempting liability) incorporated into the agreement so made. 3 On 6 July 2001 Mr Baird, an employee of Jacap, drove a prime mover and low loader to Lindores' premises at Darra. Mr Baird prepared the low loader to receive the crane. An employee of Lindores drove the crane onto the low loader to a position indicated by Mr Baird. The employee then lowered the suspension of the crane, and may have locked it in place for safety; and lowered the outriggers. He then left and locked the cabin of the crane and gave the key to Mr Baird. 4 Mr Baird secured the crane to the body of the low loader using chains; he inspected the chains before doing so and satisfied himself that they were in good condition. It is clear that the loading and securing of the crane were done in accordance with normal practice. 5 Mr Baird then drove the rig out of Lindores' yard. He intended to drive south, picking up the New England Highway to Sydney. On 6 July he travelled as far as Wallangarra on the Queensland/New South Wales border. He rested there overnight. 6 The next day, 7 July, Mr Baird set off that morning and drove south as far as Wallabadah. Before setting out, he checked the rig and its load to satisfy himself that everything was in order. Mr Baird stopped at Wallabadah for a mandatory one half hour rest break. He then set off, having again first checked the rig and its load. 7 South of Wallabadah, and after Mr Baird had been driving for about half an hour following his rest break, there is (going south) a right hand bend followed at a distance of 300 metres or more by a left hand bend. Mr Baird safely negotiated the right hand bend. At about that time, his mobile phone rang. The caller was Mr Budge. As they were exchanging pleasantries, Mr Budge heard a noise. He asked Mr Baird: "Did you drop the phone?" Mr Baird replied: "No, I've dropped the crane." 8 I accept Mr Baird as a witness of truth (in fact, there was no real conflict as to the primary facts of this case and I should make it clear that I accept all the witnesses of fact who gave evidence as witnesses of truth). I accept Mr Baird's account of the accident and of the events leading up to it. He said that he went through the first (right hand) bend at about 80 kilometres per hour and that he had slowed to about 70 kilometres per hour by the time he reached the second (left hand) bend. He answered Mr Budge's telephone call at about the time he was negotiating the right hand bend. Mr Baird's mobile phone was at this time fitted with an attachment that included an ear piece and a microphone. Mr Baird was using that attachment and the phone itself was in his pocket. The phone had a feature that answered calls and disconnected calls automatically. That feature was in use. 9 Mr Baird said that he was watching the road and that he was not distracted by the phone call. He said that, in effect, it was like talking to someone else in the cabin. He said that, as the rig entered the left hand bend, he felt it lean to the right. He looked into the left hand mirror and saw that the rear left hand wheels of the low loader were leaving the road surface. He then looked into the right hand mirror and saw the crane lifting off the low loader. As the crane left the low loader, it became entangled with some part of the low loader. When the crane hit the road surface it gave what Mr Baird described as a "hell of a shunt". Mr Baird succeeded eventually in getting the rig back onto the left hand side of the road, bringing it back under control. He then stopped when it was safe to do so. 10 There is no basis in the evidence to say that the conditions, either atmospheric or of the road surface, contributed in any way to what had happened. 11 Mr Baird was at the time an experienced driver. He had driven the New England Highway many times and knew it well. He was well aware of the area where the accident happened. 12 At the relevant part of the highway, the posted speed limit was 100 kilometres per hour. Mr Baird said that it was his normal practice to drive below that speed limit, at about 80 kilometres per hour, because if he drove faster he would lose time and money (because of tyre blowouts). 13 After the right hand bend and about 300 metres before the left hand bend, there was an advisory speed sign. That indicated, for the left hand bend, a speed of 75 kilometres per hour. 14 The evidence of Dr Barry Hill, an expert called by Lindores, was that in fact Mr Baird's rig could have rounded the left hand bend at almost double the advisory speed limit (if, contrary to the fact, it was capable of travelling so fast) without causing the crane to fall off. 15 Dr Hill expressed the opinion that the accident may have happened because Mr Baird allowed the rig to drift across towards the incorrect, or right hand, side of the road, and then corrected forcefully. Dr Hill said that if this happened it would effectively sharpen, or diminish, the radius of the corner. He said that this could lead to a situation where even a speed of 75 kilometres per hour would be sufficient to cause the crane to fall off the low loader. In Dr Hill's first report, he gave that opinion based solely on calculations performed by him. (Dr Hill had had a view of the site of the accident, but by the time he attended there was no evidence that he was able to identify, such as skid marks, that could be said to relate to the accident.) Dr Hill was given further instructions (including photographs taken by either police officers or Roads and Traffic Authority inspectors who had investigated the accident). In a second report, he said that his opinion was supported by some tyre marks that were shown in some (but not all) of those photographs. It is not clear that the actual photographs that, Dr Hill said, supported his opinion were in evidence. However, Dr Hill said, those photographs were similar to others that were in evidence. 16 I do not find Dr Hill's opinion compelling. There is no evidence that the tyre marks shown in some of the photographs (including, by inference, in the photographs seen by him) were caused by Mr Baird's rig. There is no explanation why (as the photographs in evidence depicted) there would have been tyre marks before the hypothesised sudden change in direction. For example, it was not put to Mr Baird that he had braked heavily (so as to lock up some of the wheels of the rig) before he turned (as Dr Hill opined he might have done) back towards the left hand side of the road. 17 Even if the tyre marks did come from Mr Baird's rig, they are, or at least the matters that they depict were, consistent with his evidence: namely, that the rig leaned to the right and that after the crane fell off, he brought it back towards the left hand side of the road. 18 Some of the photographs show gouge marks in the road surface on or towards the right hand side (looking south). Assuming that they were caused by the accident, they may have come either from the crane or from the front right hand wheel of the rig which lost its tyre in the accident: the gouge marks do not support, nor do they detract from, Dr Hill's opinion or Mr Baird's evidence. 19 There are two further points to make about Dr Hill's evidence. The first is that he did not state what would be the radius of curvature of the left hand bend at which (on his calculations) the load on the low loader would become unstable. There was thus no basis on which an estimate could be made whether the tyre marks that were shown (assuming them to have been caused by Mr Baird's rig) might depict an attempt to turn at such a radius: ie, whether the change in direction that was shown was consistent with his theory. The second point is that Dr Hill's opinion offers no guidance as to why the rig veered or leaned, as Mr Baird said it did, to the incorrect side of the roadway. 20 In short, I do not find that Dr Hill's evidence assists in resolving the vital question: why did the rig move to the right hand side of the road as it entered the bend? 21 If it were necessary for Lindores to show negligence or breach of contract, I would conclude that their claim failed. Specifically, as to the particulars of negligence alleged in the further amended statement, I would conclude, on the basis of my acceptance of Mr Baird's evidence, that none had been made out. In particular, I find that Mr Baird was not distracted from the task at hand by the phone call he received from Mr Budge. I should say as to this that Mr Budge, whom (as I have indicated) I accept as a witness of truth, said, with the benefit of more than 20 years' experience as a driver of heavy vehicles, that an experienced driver who knew the road would not be distracted from the task at hand by a phone call of the kind that had occurred. This is not to say that, in principle, it is acceptable for the drivers of heavy rigs, such as Mr Baird, to have mobile phone conversations whilst they drive. Indeed, I think that Mr Baird said as much. It is to say, and I find, only that in the circumstances of this accident the mobile phone call that occurred was not a causal or contributing factor. 22 But, of course, Lindores sue not just in negligence and for breach of contract but in bailment. There is no doubt that Jacap was a bailee for reward of the crane. As such, its duty was, as Windeyer J said in Hobbs v Petersham Transport Co Pty Limited (1971) 124 CLR 220 at 238: " … to use due care and diligence to keep the goods safely and to deliver them undamaged." 23 His Honour then said that: "The standard of care and diligence is that which a careful and vigilant man would exercise in respect of goods of his own of the same kind in similar circumstances." 24 The consequence, as Windeyer J put it at 240, was as follows: "The obligation of a carrier as bailee is to exercise due care, skill and diligence for the safety of chattels entrusted to him. If he fails to deliver them safely at the end of the bailment, that is evidence of a failure to perform his duty to exercise due care of them. He can rebut this by shewing that their loss or damage was not the result of any default on his part. But to escape liability he must establish that. The burden lies on him." 25 Thus, as his Honour said at 242: "The question would be whether anything which would have avoided the accident, and which ought reasonably to have been done, was not done. If that was left in doubt the bailee would be liable." 26 What his Honour said may be regarded as obiter because he held (as did Barwick CJ) that the appellant was not a bailee. But his Honour's reasons on this point were consistent with those of Menzies J who, with the concurrence of McTiernan J, held that the appellant was a bailee. Menzies J said at 233-234 (omitting citations): "To escape liability for non-delivery the onus of proving that the non-delivery, however caused, was without fault on its part, rested upon it. A modern statement of the position is to be found in the judgment of Lord Denning M.R. in Morris v. C. W. Martin & Sons Ltd., as follows: "Once a man has taken charge of goods as a bailee for reward, it is his duty to take reasonable care to keep them safe: and he cannot escape that duty by delegating it to his servant. If the goods are lost or damaged, whilst they are in his possession, he is liable unless he can show - and the burden is on him to show - that the loss or damage occurred without any neglect or default on … or misconduct of himself or of any of the servants to whom he delegated his duty." These well-established rules, which I think should be accepted without qualification or gloss, do not constitute a carrier, such as the defendant, an insurer; he escapes liability if he can show that non-delivery of goods entrusted to him for carriage was not due to his fault, notwithstanding that he does not show how the loss actually occurred." 27 One significant point emerging from the passage just quoted is that it shows that the bailee may not necessarily have to show how the loss actually occurred. Whether or not the bailee has to go so far will depend on the facts of the particular case, as Sheller JA (with whom Cripps JA agreed) made clear in Glebe Island Terminals Pty Ltd v Continental Seagram Pty Ltd (1993) 40 NSWLR 206 at 228 (again omitting citations): "A bailee is not an insurer of the chattels bailed. He is under no absolute obligation to re-deliver them but is obliged only to exert reasonable diligence in taking care of them ... Ordinarily, in the event of loss of the chattels bailed the bailee for reward is ... "bound to show that he took reasonable and proper care for the due security and proper delivery of that bailment; the proof of that rested upon him". Such proof may require showing what became of the goods. It may be satisfied by determining that due care was taken yet when [sic] the goods were removed, as in this case, by unknown means. If the goods are not re-delivered and the bailee fails to show he took reasonable and proper care, he is liable, in the absence of an appropriate exemption clause, because a failure to deliver gives rise to an inference that the bailee has failed to take proper care of the chattels bailed." 28 The nature and severity of the burden of proof cast on a bailee for reward is demonstrated by the facts in Hobbs. Two judges out of three in the Court of Appeal held that the appellant (in their view a bailee) had not satisfied it; and Windeyer J may well have agreed with them if, contrary to his view, the appellant were a bailee: Hobbs at 242. 29 In this case, common sense and reason alike suggest that something must have "caused" the accident. The onus borne by Jacap would require it to prove that the likely cause or causes occurred without fault on its part. That onus would not require Jacap to prove that highly improbable or purely speculative causes likewise occurred without fault on its part. But if (for example) the expert evidence was that the accident was inevitable, then the onus would require Jacap to prove that this involved no negligence on its part. 30 In the first category (relating to possible or likely causes), Jacap would not be required to prove how the accident happened. It need only negative the likely causes (eg, driver error or mechanical failure). But in the second (inevitable accident), proof by definition would require or include proof of the cause: because showing that an inevitable accident occurred without negligence requires demonstration of why the accident was inevitable - ie, what was the cause that can be so described. 31 In the present case, the accident may have happened for a number of reasons. They include: negligently securing the load, negligent driving; defective equipment (the rig or the chains); and some defect in the crane. 32 In my judgment the first two have been excluded. But there is no evidence that the prime mover or low loader were in good condition or that they had been regularly serviced and properly maintained. There is no evidence of any system of maintenance or inspection. There is no evidence that the prime mover and low loader were inspected after the accident, and that there was nothing found to indicate that any mechanical defect had caused or contributed to the accident. 33 Thus, accepting that Jacap as a bailee for reward does not have to show how the loss actually occurred, the evidence in my view does not exclude a likely or possible cause consistent with negligence or default on its part. In other words, by failing to call evidence dealing with what in ordinary human experience would be regarded as a possible if not likely cause of such an accident (it being human experience that such accidents rarely happen without some cause, and other obvious causes having been excluded), I do not think that Jacap has discharged the burden cast upon it. I do not think that mechanical defect in the rig can be said to be so highly improbable or purely speculative that Jacap bore no onus in respect of it. In particular, where proof of the mechanical condition of the rig was clearly and solely within Jacap's power, I think that its failure to lead evidence is indicative of a failure to meet the burden that, as bailee for reward, is cast upon it. 34 There was some suggestion that the accident may have occurred through some movement of the crane on the low loader. It was suggested either that the jib of the crane became loose and moved or that its suspension collapsed. But there was no evidence to make good that suggestion. It was not, of course, incumbent on Jacap to prove this (being an example of the proposition that, in general, a bailee for reward need not prove how the loss occurred). But the failure to prove it means the suggestion cannot assist in leading to a conclusion that the accident occurred without any negligence or default or misconduct on the part of Jacap. 35 I therefore conclude that Jacap has not satisfied the onus upon it. The consequence is that Lindores' claim for breach of bailment must succeed. It is therefore necessary to look at the quantification of the loss Lindores say they sustained. 36 Lindores in effect treated the crane as a write-off. They acquired a new one almost straightaway. They claim the full cost of that, together with recovery and assessment and suchlike charges, less salvage. 37 Jacap submits that Lindores were not entitled so to act, because the crane could have been repaired. It was in fact repaired and sold, although there is no evidence of the actual cost of repair or of the amount recovered on sale. 38 In principle, I think that it was open to Lindores to act as they did. G M Baden Pty Ltd furnished a quotation for repair in the sum of $1,102,677 inclusive of GST. That was assessed by an independent expert, Mr Paul Kiem. In his opinion the repair quotation may have been "very much underquoted". He thought that the crane was a total loss with a salvage value of $100,000. However, and perhaps incongruously at first sight, Mr Kiem thought that the crane could have been rebuilt "in house" for $680,000. However, on analysis, I think that what he meant to say was that it could be rebuilt by a skilled organisation in its spare time, costing parts and labour on an in-house rather than on a retail basis. In other words, I think, he was saying that with the time and the skills and the access to spare parts to do so Baden could have rebuilt the crane and sold it at a profit. But even this may not be correct, because I do not think that Mr Kiem's opinion took account, in calculating the likely profit, of the salvage value of the crane. However, it is not necessary to reach a concluded view on this because I do not think that the evidence overall justifies the conclusion that Lindores acted unreasonably in acquiring a new crane and selling off the wreck for salvage. There are a number of reasons why this is so. 39 First, the assessment of repair costs is not on the evidence overstated; and indeed there is evidence that it may have been substantially understated. 40 Second, the assessment of repair costs was not so disproportionate to the cost of the new crane ($1,405,486 excluding GST) as to make it clearly unreasonable for Lindores to take the course of replacement: particularly when the salvage figure is taken into account against the cost of the new crane. 41 Third, if Lindores had taken the course of repairing the crane, there would have been inevitably a claim for loss of earnings or for the hire of a replacement crane. 42 Fourth, there was evidence that the replacements and repairs may well have had an adverse effect on the reliability of the crane: something that, in a competitive market, Lindores were undoubtedly and (in my view) understandably anxious to avoid. 43 At the end the question is whether or not Lindores acted reasonably. In my judgment, for the reasons I have indicated, they did. 44 The remaining question is that of "new for old". 45 The crane was about seven months old when the accident occurred. It was replaced with a new crane. There is no evidence as to the work that the crane had performed or as to its condition or likely useful life at the time the accident occurred. 46 Mr Kiem said the crane would depreciate by about 20 per cent in its first year of service. There is no evidence to the contrary. I think that the assessment of Lindores' loss must take into account that what was lost had depreciated in value. If Lindores chose to replace the crane with a new crane, the benefit of the extra life (or longer depreciation) accrues to it. The burden of that should not be borne by Jacap. 47 In principle, the function of damages is, so far as money can do it, to put the injured party in the position that it would have been in but for the wrong. Where what is lost or damaged is personal property, then the assessment of damages must take account of the estimate of value of the property at the time of the wrong. In the present case, the choice of Lindores (or, if it be the case, the choice of their insurers) to replace the crane with a new one is not something for all of which, by reference to the compensatory function of damages, Jacap should be responsible. 48 Lindores' claim included some $70,885.23 for repair estimates and related expenses. There was no dispute as to those amounts. 49 I should note that it was not submitted for Jacap that, if Lindores were held in principle entitled to recover on the basis of replacement rather than repair, the value of the replacement crane was an inappropriate starting point. It was not submitted that the appropriate starting point was or should have been the purchase price of the (damaged) crane. Jacap's attack was directed at the principle, not at the mechanics, of quantification. 50 I therefore assess damages as follows: Value of replacement crane $1,405,486.00 Less: Depreciation at 20% 281,097.20 Salvage 100,000.00 381,097.20 Sub total: 1,024,388.80 Plus: Recovery, assessment and associated expenses 70,885.23 Total (rounded): $ 1,095,274.00 51 In addition, Lindores are entitled to interest under s 94 of the Supreme Court Act 1970. 52 The parties are agreed that interest on the sum I have just set out should be quantified at $246,436, leading to a total of $1,341,710. 53 I therefore make the following orders: (1) I direct entry of judgment for the plaintiffs against the defendant in the sum of $1,341,710. (2) I order the defendant to pay the plaintiffs' costs of the proceedings. ****** Last Modified: 09/20/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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