Tranquility Pools & Spas Pty Limited v Huntsman Chemical Company Australia Pty Limited [2011] NSWSC 75

Supreme Court New South Wales

Medium Neutral Citation: Tranquility Pools & Spas Pty Limited v Huntsman Chemical Company Australia Pty Limited [2011] NSWSC 75 Hearing dates: 1-5, 8-12, 15, 16, 22-26, 30 November 2010, 9 & 10 February 2011 Decision date: 25 February 2011 Before: Einstein J Decision: The Referee's findings bind the parties and the Court. The plaintiffs pleaded case against the defendant for breach of contract and contravention of sections 52 and 53 of the Trade Practices Act 1974 (Cth) is made out. The parties will be given an opportunity to adduce further evidence from their accounting experts to value the damages payable in accordance with the Court's findings on the destruction of business claim. The plaintiffs have established a liability to all pool owners with failed pools. The plaintiffs will be exposed to claims of failed pool owners for a maximum period of 10 years not 16 years. Pool owners with failed pools are entitled as against the plaintiffs to full replacement of the pool and making good of the premises. In relation to all pools that have presently failed the plaintiffs are entitled as against the defendant to damages under section 82 of the Trade Practices Act. In relation to pools which will fail in future, which will result in a liability of the plaintiffs, s 87 of the Trade Practices Act is engaged. Catchwords: Defective product claim Fibreglass swimming pools Claim that defective resin sold by the defendants to plaintiffs had caused unseemly blistering and blackspots to hundreds of fibreglass swimming pools Plaintiffs claim entitlement to sue on be half of 837 owners of pools manufactured with allegedly defective resin Plaintiffs claim that all defective swimming pools necessary to be replaced Reference out Effect of adoption of referee's report Reference not to be treated as some kind of "warmup" for the real contest Cause of failure Whether failure of the pools caused by the defendant or by the plaintiff Whether defendant had contravened sections 52 and 53 of Trade Practices Act 1974 (Cth) Whether alleged representations were made by the defendant Whether representations induced the Plaintiffs to buy the product Whether defendant made out defence of contributory negligence under s 82(1B) Whether defendant breached implied contractual terms of merchantable quality and fitness for purpose Whether defendant estopped from relying on standard terms and conditions which would have greatly restricted such a claim Assessment of claim to damages and expense to the businesses of the Plaintiffs as a result of the pool failures Whether plaintiffs entitled for damages on basis that defendant's defective product had destroyed their business Whether plaintiff could rely on data favoured by it to establish trends in the swimming pool market Court left to determine, on all the evidence, but for the pool failures, how plaintiffs' business would have performed Quantum of plaintiffs' consequential loss Whether plaintiffs' liable to customers with failed pools Whether alleged express warranty incorporated into plaintiffs' contract with customers who contracted directly with it Whether alleged express warranty formed a collateral contract between plaintiffs and customers where pool purchased through a third party dealer Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 61 applied Fairey Australasia Pty Ltd v Joyce [1981] 2 NSWLR 314 considered Whether customers could rely on express warranty contained in warranty cards, brochures, and conveyed orally Whether plaintiffs use of "sampling" evidence from a subset of customers appropriate Civil Procedure Act 2005 (NSW) ss 56, 62 considered Whether customers could rely on implied contractual terms as to merchantability and fitness for purpose against plaintiffs Trade Practices Act 1974 (Cth) s 71, Sale of Goods Act 1923 (NSW) s 19 applied Whether plaintiffs also liable to customers under Pt V Div 2A of the Trade Practices Act 1974 (Cth) Whether that Division applied to "goods" once they had become fixtures Theo Holdings Pty Limited v Hockey (2000) 99 FCR 232 considered Trade Practices Act 1974 (Cth) ss 74B, 74D, 74F, 74G applied Whether plaintiffs liable to subsequent purchasers of properties including failed pools manufactured by plaintiffs Whether letters written by plaintiffs stating that warranties covering vendors would be transferable to purchasers affected a novation Alternatively whether plaintiffs liable to subsequent purchasers under Pt V Div 2A of the Trade Practices Act 1974 (Cth) Limitation periods applicable to plaintiffs' liability to customers Whether maximum liability, under express warranty, was 10 or 16 years VAI Industries (UK) v Bostock & Brawley [2003] BLR 359 considered Whether, as against plaintiffs, pool owners entitled to complete replacement of their failed pools or some lesser rectification method Willshee v WestCourt [2009] WASCA 81, Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 83 ALJR 390, applied. Whether any of lesser suggested rectification methods meet the relevant test laid down by the authorities Consideration of costs of replacement of failed pools Proper approach to sections 82 and 87 of the Trade Practices Act 1974 (Cth) Wardley Australia v Western Australia (1992) 175 CLR 514 considered Whether plaintiffs' liability to its customers constitutes damage Legislation Cited: Arbitration Act 1950 (UK) Civil Procedure Act 2005 (NSW) Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (Cth) Corporations Act 2001 (Cth) Home Building Act 1989 (NSW) Sale of Goods Act 1923 (NSW) Trade Practices Act 1974 (Cth) Workers Compensation and Rehabilitation Act 2003 (Qld) Cases Cited: Ackers v Austcorp International Ltd [2009] FCA 432 Adler v Australian Securities and Investments Commission [2003] NSWCA 131 Andrews v Hopkinson [1957] 1 QB 229 Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441 Assafiri v The Shell Company of Australia [2010] NSWSC 930 Astley & Ors v Austrust Limited (1999) 197 CLR 1 Australian Energy Limited v Lennard Oil NL (No 2) [1988] 2 Qd R 230 Australian Knitting Mills Ltd v Grant (1933) 50 CLR 387 Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613 Bonnington Castings Ltd v Wardlaw [1956] AC 613 Boyd v Leftwich (1982) 43 ALR 280 Bresatz v Przibilla (1962) 108 CLR 541 Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2006] NSWCA 361 Building Insurers' Guarantee Corporation v The Owners - Strata Plan No 57504 [2010] NSWCA 23 Carew Counsel Pty Ltd v French (2002) 4 VR 172 Carey-Hazell v Getz Bros & Co (Aust) Pty Ltd (2004) ATPR 42-014 Chicco v The Corporation of the City of Woodville (1990) Aust Torts Reports 81-028 Clutha Ltd (in liq) v Millar [2002] NSWSC 362 Clutha v Millar (No 3) [2002] NSWSC 642 Collins Trading Co Pty Ltd v Maher [1969] VR 20 Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 Cooper Brookes (Wollongong) Pty Ltd v Cmr of Taxation (Cth)(1981) 147 CLR 297 Courtney v Medtel Pty Ltd (2003) 126 FCR 219 Deta Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] VR 167 Emu Brewery Mezzanine Ltd (In Liq) v Australian Securities and Investments Commission (2006) 32 WAR 204 Fairey Australasia Pty Ltd v Joyce [1981] 2 NSWLR 314 Ferro Corporation (Aust.) Pty Limited v International Pools (Aust.) Pty Ltd (unreported, Supreme Court of New South Wales, 8 August 1994, Cole J) Fidelitas Shipping Co Limited v V/O Exportchleb [1966] 1 QB 630; [1965] 2 All ER 4 Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473 Gagner Pty Ltd t/as Indochine Caf v Canturi Corporation Pty Ltd [2009] NSWCA 413; (2009) 262 ALR 691 Gate Gourmet Australia Pty Ltd (in liq) v Gate Gourmet Holding AG [2004] NSWCA 149 Gould v Vaggelas (1985) 157 CLR 215 Graham Barclay Oysters Pty Ltd v Ryan (2000) 102 FCR 307 Havyn Pty Ltd v Webster [2005] NSWCA 182 Hawkins v Clayton (1988) 164 CLR 539 Henderson v Henderson (1843) 67 ER 313 Henry Kendall & Sons v William Lillico & Sons Ltd (Hardwicke Game Farm) [1969] 2 AC 31 Henville v Walker (2001) 206 CLR 459 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 Hoystead v Commissioner of Taxation (1926) 42 TLR 207 Hughes v Van Eyk [2008] NSWSC 525 I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 Idoport Pty Limited v National Australia Bank Limited [2007] NSWSC 23 Jones v Dunkel (1959) 101 CLR 298 Kent v Gunns Ltd [2009] TASSC 30 Khoury v Sidhu (No. 2) [2010] FCA 1320 Kingston v Keprose Pty Ltd (No 3) (1987) 11 NSWLR 404 Kirkby v Coote [2006] QCA 061 Lee v Griffin (1861) 1 B and S 272; 121 ER 716 Macquarie Generation v Peabody Resources Ltd [2000] NSWCA 361 Maddox v Storer [1963] 1 QB 451 March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 Maynard v Rover Mowers Ltd [2000] QCA 26 Medtel Pty Ltd v Courtney (2003) 130 FCR 182 Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp [1979] Ch 384 Mistral International Pty Ltd v Polstead Pty Ltd [2002] NSWCA 321 Mitchell v Mulholland (No 2) [1972] 1 QB 65 Murray v Shillingsworth [2006] NSWCA 367 Narellan Pools Pty Limited v Huntsman Chemical Co Australia Pty Limited [2010] FCA 267 Norris v Blake by his Tutor Porter (No 2) (1997) 41 NSWLR 49 Nouvelle Homes Pty Ltd v G & M Smargiassi [2008] WASC 127 Olsson v Dyson (1969) 120 CLR 365 Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257 Politis v FCT (1988) 16 ALD 707 Purcell v Watson (1979) 26 ALR 235 R v Trade Practices Tribunal; Ex Parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 Radford v de Froberville [1977] 1 WLR 1262 Rasell v Cavalier Marketing (Aust) Pty Ltd & Anor [1991] 2 Qd R 323 Robinson v Harman (1848) 1 Exch 850; (1848) 154 ER 363 Rogers v Parish (Scarborough) Ltd [1987] QB 933 Ruxley Electronics & Constructions Ltd v Forsyth [1996] AC 344 Shanklin Pier Ltd v Detel Products Ltd [1951] 2 KB 854 South Parklands Hockey & Tennis Centre Inc v Brown Falkiner Group Pty Ltd [2004] SASC 81 St George Bank Ltd v MJK Pty Ltd [1999] FCA 1752 State of New South Wales v Ibbett (2005) 65 NSWLR 168 State of WA v Wardley Australia Ltd & Ors (1991) 30 FCR 245 Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 SWF Hoists and Industrial Equipment Pty Ltd v State Government Insurance Commission (1990) 6 ANZ Ins Cas 61-002 Sydney Harbour Casino Properties Pty Ltd v Coluzzi [2002] NSWCA 74 Symes v Laurie [1985] 2 Qd R 547 Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 83 ALJR 390; [2009] HCA 8 Theo Holdings Pty Limited v Hockey (2000) 99 FCR 232 Tiplady v Gold Coast Carlton Pty Ltd (1984) 3 FCR 426 Traill v Baring (1864) 4 De GJ & Sm 318; 46 ER 941 Tranquility Pools & Spas Pty Ltd v Huntsman Chemical Company Australia Pty Ltd [2008] NSWSC 58 Travel Compensation Fund v Tambree t/as R Tambee & Associates (2005) 224 CLR 627 United Australia Ltd v Barclays Bank Ltd [1941] AC 1 Upper Hunter County District Council v Australian Chilling and Freezing Co Pty Ltd (1968) 118 CLR 429 VAI Industries (UK) v Bostock & Brawley [2003] BLR 347 Van Win Pty Ltd v Eleventh Mirontron Pty Ltd [1986] VR 484 Vickery v Woods (1952) 85 CLR 336 Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 Wardman v Hatfield [2003] NSWCA 283 Waterman v Gerling Australia Insurance Co Pty Ltd (2005) 65 NSWLR 300 Wenco Industrial Pty Ltd v W W Industries Pty Ltd [2009] VSCA 191 Westpoint Management Ltd v Chocolate Factory Apartments Ltd [2007] NSWCA 253 Wheeler & Anor v Ecroplot Pty Ltd [2010] NSWCA 61 Willshee v WestCourt Ltd [2009] WASCA 81; [2008] WASC 18 Wright v TNT Management Pty Ltd (1989) 15 NSWLR 679 Zaravinos v Dairy Farmers Co-op Ltd & Anor (1985) 7 FCR 195 Texts Cited: JD Heydon, Cross on Evidence (6th ed, Butterworths, 2000) D Byrne and JD Heydon Cross on Evidence, (4th Aus ed, Butterworths, 1991). KR Handley, Spencer Bower and Handley Res Judicata (4th ed, LexisNexis, 2009) Julian Bailey, "Novation" (1999) 14 Journal of Contract Law 189 Lord Diplock, "The Courts as Legislators", The Lawyer and Justice (Sweet & Maxwell, 1978) Category: Principal judgment Parties: Tranquility Pools & Spas Pty Limited (First Plaintiff) Tranquility Pools & Spas (Manufacturing) Pty Limited (Second Plaintiff0 Huntsman Chemical Company Australia Pty Limited (Defendant) Representation: Mr J Stevenson SC, Mr N Kabilafkas (Plaintiff) Mr S Donaldson SC, Mr G Sirtes SC, Mr T Maltz I E Duffield (Plaintiff) DLA Phillips Fox (Defendant) File Number(s): 2006/00268486