District Court New South Wales Medium Neutral Citation: Alan Burns Used Equipment Sales Pty Ltd v Sandbell Pty Ltd [2011] NSWDC 44 Hearing dates: 20, 21 September 2010, 22, 24 and 25 February 2011 Decision date: 30 May 2011 Jurisdiction: Civil Before: Judge Peter Johnstone Decision: Verdict for the plaintiff against the defendants Amount of damages and interest to be finalised Catchwords: CONTRACT - claim for breach of contract and misleading and deceptive conduct Legislation Cited: Trade Practices Act 1974 Sale of Goods Act 1923 Category: Principal judgment Parties: Alan Burns Used Equipment Sales Pty Ltd (formerly known as Detabo Pty Limited) (Plaintiff) Sandbell Pty Ltd trading as Turner Engineering (First Defendant) Peter Turner (Second Defendant) Representation: Ms M Painter of counsel, instructed by Adams & Partners, Lawyers (Plaintiff) Mr G Lancaster, solicitor of Access Law Group (Defendants) File Number(s): 2009/334458 REASONS FOR Judgment 1In 2008 the first defendant, Sandbell Pty Ltd, sold 2 used dump trucks to the plaintiff, now known as Alan Burns Used Equipment Sales Pty Ltd, pursuant to an agreement made on or around 3 March 2008, for $195,000 each. 2The plaintiff alleges that the trucks were in such a state of disrepair that it had to spend a considerable amount of money to bring them up to the agreed condition. It claims the cost of additional necessary repairs and other losses. The issues 3The plaintiff sues for breach of the agreement and breach of s 52 of the Trade Practices Act 1974 by reason of misleading and deceptive representations made by Mr Turner, as an officer or agent of the first defendant. It alleges against Mr Turner, the second defendant, that he aided, abetted, counselled or procured the contraventions of the Act by the first defendant or, alternatively, that he made the false and misleading representations in his personal capacity. 4The breach of contract alleged is that the first defendant failed to provide the plaintiff with an accurate assessment of the condition of the trucks, and failed to provide the trucks in a reasonable standard. 5The breaches of the Trade Practices Act alleged are that Mr Turner falsely represented that the trucks could be brought to a neat, tidy and work ready condition for approximately $20,000 per truck. The true estimate of bringing the trucks to a neat, tidy and work ready was far in excess of $20,000 each. 6The plaintiff claims that the actual cost of bringing the trucks to a neat, tidy and work ready condition was $152,561.55, made up of: * Caterpillar 773B dump truck serial number 66W-04556 $77,287.12 * Caterpillar 773B dump truck serial number 63W-04557 $75,274.43 7The plaintiff also claims lost hire fees for of each truck for the period during which they were out of service and being repaired, in a total amount of $133,739.67. 8After allowing an amount of $20,000.00 for each truck, being the amount that Mr Turner represented was required to bring them up to a neat, tidy and work ready condition, the plaintiff's nett total claim was, therefore, $246,301.22, plus interest: Repairs $152,561.55 Lost hire costs $133,739.67 Total $286,301.22 Less estimate for repair work $ 40,000.00 Nett total claim $246,301.22 9The defendants opposed the plaintiff's claim. They deny that Mr Turner made any representations about the trucks that were misleading and deceptive. They say that the trucks were purchased subject to a satisfactory inspection, on an "as is, where is" basis, without any warranties. 10The defendants say further that Mr Clinton Burns, the manager of the plaintiff, forewent the opportunity to inspect the trucks prior to their purchase, and rely on s 38 of the Sale of Goods Act 1923. The defendants also dispute the repair costs and the replacement hire costs claimed. The factual background 11It is common ground that on 3 March 2008 an agreement was entered into between the plaintiff and the first defendant for the sale of two used Caterpillar dump trucks. The contract was concluded by Mr Clinton Burns, the Manager of the plaintiff, and Mr Peter Turner, the Manager of the first defendant, Sandbell Pty Ltd. However, prior to concluding the agreement there were various events and discussions that need to be considered in order to determine, objectively, the rights and liabilities of the parties to the contract. 12The plaintiff was a company engaged in the business of buying, selling and hiring out earthmoving equipment. The plaintiff had conducted business with the defendants for some 15 years, buying and selling used equipment. 13On 29 January 2008 Mr Turner was contacted by Mr David Waldron of Shin-Pacific Pty Ltd, who told him he had two 1995 model Caterpillar 773B dump trucks with Michelin tyres for sale for $175,000 each, which were located at Ronnenburg in Germany. According to Mr Turner there was a shortage of this type of truck in Australia, and of that type of tyre, and dealers were looking overseas to purchase such trucks. 14Mr Waldron sent Mr Turner an email attaching 17 photographs of the trucks. On 31 January 2008 he rang Mr Waldron and advised he would purchase the trucks subject to a visual inspection of them. 15However, prior to Mr Turner inspecting the trucks Mr Burns heard about them, and on 6 February 2008 he telephoned Mr Turner to ask whether he would be interested in selling them to the plaintiff. Mr Turner told Mr Burns he hadn't seen the trucks yet, but was intending to travel to Germany to view them in the next fortnight. Mr Burns asked for "first right of refusal" for the trucks, and Mr Turner agreed. 16Mr Turner subsequently travelled to Germany and on 25 February 2008 he inspected the trucks at Ronnenburg. That inspection was somewhat cursory, as became apparent during the cross-examination of Mr Turner. He said: Q. Would you agree that you conducted a careful inspection of the two trucks? A. Not really, no. (T 236.41) Q. So you must have had a decent look at them? A. Without being blas, that's not a big number to me to pay for those - I thought those trucks were cheap. (T 237.34) 17The next day, 26 February 2008, while still in Germany, Mr Turner sent an email to Mr Waldron at Shin-Pacific Pty Ltd and offered to buy the trucks for $165,000 each, on the basis that the paintwork was poor and they had many bad rust holes. The full text of the email was as follows (Exhibit H at Tab 9): "David, Got here (Romrod Castle) easily. Your directions were excellent. Met Harold from Zeppelin and inspected the trucks. The trucks are quite O.K. and as I mentioned do suit me. 2 small problems which I can fix. The trucks have been sandblasted. The paint job would be 2 out of 10 at best. The overspray and lack of preparation is very poor. There are many bad rust holes in numerous parts of the panelwork including nose cones, doors, mudguards etc. Mechanically the trucks are quite good. I am keen to purchase the trucks and not look like a tyre kicker in Zeppelin's eyes. I did not mention pricing to Harold. $165,000 plus G.S.T. I believe would be a fair price that hopefully you can make work for everyone. Zeppelin conceded they have had no interest at all in these trucks and appear very keen to move them. Harold has offered to take me to Frankfurt airport at 12.00 your time (9.00 a. m. here) and the drive takes 1 hour. I would love to be able to tell him we've done a deal. Please see what you can do and give me a quick call on my mobile. If you get this over the line we shall play golf at Hope Island Resort! Regards, Peter Turner" 18Mr Turner then travelled back to Australia. On the way he sent an email to Mr Burns from Singapore offering to on-sell the trucks to the plaintiff for $195,000 each plus GST, C.I.F. Sydney or Brisbane. 19Mr Turner later sent a second email enclosing the 17 photographs provided to him by Mr Waldron, and a component report. Both emails were silent as to the "two small problems", the poor paint job and the "many bad rust holes". Nor did Mr Turner tell Mr Burns the trucks had been sandblasted. In cross-examination Mr Turner conceded that the photographs "might not show a complete description" of the rust holes. (T 270.46). 20Soon after, a critical conversation took place between Mr Burns and Mr Turner, in a telephone call on 3 March 2008. The differing versions of what each man alleges was said in that conversation is what gives rise to the dispute that has resulted in these proceedings. 21Mr Burns' version of the conversation on 3 March 2008 is as follows: Burns: "What condition are the trucks in? And what is the estimated cost to bring them up to a neat, tidy and work ready condition? We will be hiring both trucks out after we install water tanks." Turner: "$20,000 per truck to bring them up to a neat, tidy and work ready condition. That would include paintwork." Burns: "What is the asking price?" Turner: "$195,000 each plus G.S.T. delivered to the Port of Brisbane." Burns: "Ok. Send me your invoices. Turner: "I want $20,000.00 deposit on each truck. 22Mr Turner's version of the conversation is quite different. He denies telling Mr Burns the trucks could be brought to a neat, tidy and work ready condition for approximately $20,000 each (FAD at paragraph 5(l)). He asserts that Mr Burns agreed to purchase the trucks and pay a deposit of $20,000 per truck with the balance due on satisfactory inspection of the trucks at the wharf. 23Mr Turner says that when they began to discuss the photographs, Mr Burns interrupted him at about the third photograph when Mr Burns told him he had seen the photographs and the trucks appeared to be fine. Mr Turner's version of the telephone conversation on 3 March 2008 is as follows: Burns: "I have seen the photographs and the trucks appear fine." Turner: "You can see that they need some body work though if you look at the photographs." Burns: "I have been through the photos, there is no need to go through them again. $20,000.00 each for panel and paint then?" Turner: "Possibly. If you want to buy them, what payment terms do you want?" Burns: "We will pay $20,000.00 deposit per truck with the balance due on the satisfactory inspection of the trucks at the Sydney Wharf. As long as I am happy with them I will pay the balance." Turner: "I will send you an invoice then with banking details for the payment of the $40,000.00 deposit." 24Mr Burns denied Mr Turner told him the trucks needed some bodywork, or that he interrupted him at about the third photograph, or that he mentioned a sum of $20,000.00 for "panel and paint" (T 168.33 - 50). What is not in dispute is that Mr Turner agreed the photographs did not show a total complete description of the trucks (T 270.46), nor did he disclose that they had many bad rust holes and that the paint job was unsatisfactory (T 273.45 - 274.10). 25Mr Burns also denies any discussion about him inspecting the trucks at the wharf (T 169.35). Mr Turner says he made an entry in his diary to the effect that the sale was "subject to inspection" by Mr Burns. 26There is an entry in Mr Turner's diary on 3 March 2008, which he said was made several hours after the telephone conversation, that is in the following terms: "CLINTON BURNS TRUCK (sic) APPEAR FINE. $20,000 DEPOSIT PER TRUCK. BALANCE UPON ARRIVAL. SUBJECT TO INSPECTION. HE MENTIONS 20, PER TRUCK P&P." 27As against the diary note, Mr Turner gave a note to his Office Manager, Mr David Sharpe, instructing him to prepare invoices. That note (Exhibit K) is in the following terms: "DAVE, PLEASE INVOICE THESE 2 TRUCKS TO DETABO PTY LTD TRADING AS ALAN BURNS. BOTH ARE 1995 CATERPILLAR 773-B DUMP TRUCKS COMPLETE WITH AIR R.O.P.S. CABS BUT NO BODIES. PRICE $195,000 + G.S.T. C.I.F. SYDNEY SEPARATE INVOICES PLEASE. THANK YOU PT" 28Mr Sharpe then duly created the invoices, but they were silent so far as any terms were concerned such as "subject to inspection" or "as is, where is" or, "no warranty". Mr Turner said these terms should have been included, but Mr Sharpe neglected to do so due to an "administrative oversight". (T 330.9) Just why Sharpe should have put such notations on the invoices when there was nothing in the note was not explained. Mr Sharpe did not give evidence. 29Mr Turner also relies on another note that he said was made about a week later, on the inside cover of the manila folder that was used as the file for the transaction (Exhibit 4). That note is in the following terms: "773 - 15 & 16 PURCHASED FROM SHIN PACIFIC FOR $165,000 + G.S.T. DELIVERED SYDNEY SOLD TO DETABO PTY LTD $195,000 DELIVERED SYDNEY SUBJECT TO INSPECTION SERIAL NO: 63W- 04556 63 W- 04557" 30Mr Turner was cross-examined about the diary note, the note in the manila folder, and his note to Mr Sharpe in respect of the invoices. It was suggested to him that the diary entry was highly unusual in the context of other entries in the diary relating to transactions negotiated by Mr Turner on behalf of the first defendant. He was questioned as to why this particular transaction should require a special entry, when other transactions were merely the subject of a brief entry on the page for the first Sunday of each month. Mr Turner gave the following answer (T 316.9): "A. Well the day the first call that Clinton Burns placed to me I hadn't spoken to him for 16 months. Previous to that it was nothing for him to ring me ten times a week for a period of years. I hadn't spoken to him for 16 months; he rang me and spoke to me about these trucks, alluded to possibly purchasing some trucks off me. I thought originally that he must be purchasing the trucks for someone else because there was existing on his part bad blood with me over a previous incident and it was a very short conversation. It was obvious that he was dealing with me under sufferance. I made an attempt to make - have some light hearted conversation; he didn't want to talk to me at all. He kept the conversation as brief as possible and it just seemed a very unusual conversation to me." 31If there was indeed "bad blood" between Mr Burns and Mr Turner, one could well understand Mr Burns wanting to have an inspection of the trucks before buying them. The problem with this evidence from Mr Turner, which only emerged in re-examination, is that the idea of "bad blood" existing prior to the transaction the subject of these proceedings was not mentioned anywhere else in the evidence, either in the affidavits, or during cross-examination. Furthermore, it had not been 16 months since he had spoken with Mr Burns. In evidence given the previous day by Mr Turner he told the court about a telephone conversation with Mr Burns four months earlier (T 288.21). 32Mr Turner was asked what would have happened in the event that the trucks had not, upon the inspection asserted, met Mr Burn's expectations and he refused to accept them. According to Mr Turner he would have taken the cost of transporting the trucks to the first defendant's premises in Queensland out of the deposit, at a cost of $12,000 per truck (T 277.27 - 39). But there was nothing in the conversation on 3 March 2008 to that effect. 33Mr Burns did not strike me as the sort of person who would forego the opportunity of inspection in the absence of having been assured that the trucks only required minimal work to bring them up to a neat, tidy and work ready condition (T 277.30 - 49). 34Of all the documents relied on by Mr Turner to support his version of the telephone conversation on 3 March 2008, only the note to Mr Sharpe was unequivocally proved to have been created on the same day. 35Having regard to the discrepancies in Mr Turner's evidence, together with the absence of any subject to inspection reference in the note to Mr Sharpe and the absence of any subject to inspection notation in the invoices, and the failure to explain the so-called "administrative oversight", or to call Mr Sharpe to give evidence, I am persuaded that more probably than not such a term was never discussed in the conversation between Mr Burns and Mr Turner in their telephone conversation on 3 March 2008. 36On 11 March 2008 the plaintiff transferred $40,000 to the first defendant being the $20,000 deposit for each truck. As far as Mr Burns was concerned, once the deposit was paid, the plaintiff had bought the trucks. The balance was to be paid once they were cleared from quarantine and customs. (T 166.8 - 12) 37According to Mr turner, about a week later, Mr Burns rang him and requested that the trucks be delivered to Melbourne, not Sydney. He then arranged for the trucks to be transported on to Melbourne. Mr Burns said he couldn't find appropriate people in Sydney at the time to attend to the trucks and wanted them to go to Heavy Equipment Refinishing Pty Ltd (HER Pty Ltd), which had been recommended to him. The HER Pty Ltd workshop was located in Melbourne. (T169.50) 38The trucks arrived in Port Melbourne in May 2008. On 26 May 2008 Mr Turner was advised they had been cleared through Customs and he then made arrangements for final payment to be made, and for the trucks to be transported to HER Pty Ltd. 39Mr Turner asserts that prior to the clearance of the trucks through Customs, Mr Burns had the opportunity to inspect the trucks at Port Melbourne, but failed to do so. Mr Turner said that on 5 May 2008 he arranged with Mr Burns for the inspection to take place on Monday 12 May 2008. In a conversation on 7 May 2008 Mr Burns said he could not make the appointment. On 9 May 2009 they agreed to change the date of the inspection to 19 May 2008 due to a quarantine hold up. But on 16 May 2008 Mr Burns cancelled the inspection, saying: "I am not coming to Melbourne on Monday. In fact I am going in the opposite direction, to North Queensland, and so won't be able to do the inspection. I am happy to go ahead though and I will just arrange payment." 40Mr Turner points to entries in his diary to substantiate these conversations and arrangements (Exhibit J). 41Mr Burns denies these conversations. He said in his second affidavit: "At no stage prior to full payment of the purchase price and delivery of the trucks did I have any discussions with Mr Turner regarding inspection of the trucks as the sale was not conditional upon the Plaintiff's inspection." 42Mr Burns was cross-examined about Mr Turner's claim that arrangements were made for an inspection, but maintained his denial, saying that an inspection was never part of the purchase arrangement. 43The trucks were delivered to the HER Pty Ltd workshop. The Managing Director of HER Pty Ltd was Mr Dale Hocking, a qualified mechanic who had worked in the heavy vehicle industry since leaving school, and in the business on his own account for some 22 years. He said that in May 2008 Mr Burns rang him and told him he had purchased two 773B dump trucks that were en route to Melbourne from overseas, which he wanted HER Pty Ltd to look at and provide a quote to "bring them up to a neat tidy and work ready condition". 44After their arrival at his workshop, Mr Hocking carried out a preliminary inspection of the trucks. He found the cabins and main platforms were badly rusted and the trucks were in a very poor condition: the hydraulic hoses were frayed, the steering yokes were worn, the front brake pads were worn out, and there were leaks in the differential housing. He telephoned Mr Burns and had the following conversation: Hocking: "I have got your trucks. They are in very poor condition. You really need to come down and look at them. We can discuss how much it will cost you once you get here. There are major signs of rust, need a lot of work to bring them up to scratch." Burns: "Not a problem, I will be down shortly." 45Mr Burns then went to Melbourne to inspect the trucks at the HER Pty Ltd workshop, in the company of Mr Hocking. Both men observed extensive rust, and other problems requiring attention. Mr Hocking took 5 photographs (exhibited at A to E of his affidavit). Mr Burns took 32 photographs (exhibited at P9 of his affidavit). The defects in the trucks requiring repair were extensive. Mr Burns describes it by reference to his 32 photographs: i. Corroded and rusty battery box. ii. Corroded and pitted fuel tank. iii. Rust around the window seals of the cabin. iv. Rust holes in the front grille. v. Signs of rust within the cabin. vi. Rust around the window seal of the cabin. vii. Rusted floor of the battery box on the second truck. viii. Rusted channelling in the floor. ix. Completely corroded sub base of the floor and front mud guard. x. Rusted front mud guard. xi. Rust holes in front grille of second dump truck. xii. Rust holes front right hand light housing. xiii. Full truck rust signs - first truck. xiv. Rust holes in front grille. xv. Rust underneath sub floor base channelling. xvi. Rust holes front right hand light housing for second truck. xvii. Rust holed front left hand light housing. xviii. Corrosion of left hand front mud guard. xix. Full truck rust signs - second truck. xx. Front grille rust. xxi. Rust in sub floor of each truck. xxii. Rust in sub floor of each truck. xxiii. Rust in battery box. xxiv. Rust in sub floor of each truck. xxv. Rust around window seal. xxvi. Rust signs at rear of cabin. xxvii. Rust signs front left hand mud guard. xxviii. Gaffer tape covering holes in cabin. xxix. Major rust in left hand front light housing. xxx. Minor rust holes - full truck. xxxi. Air vents missing from cabin. xxxii. Rear of one truck. 46Mr Burns asked Mr Hocking how much it would cost to put the trucks into a neat tidy and work ready condition. Mr Hocking said he could not provide a fixed price quote without assessing the full extent of the condition of the trucks after stripping and blasting the panels. But the trucks had not been well maintained and would need a lot of work. To keep the expense of repairs down, Mr Hocking offered to perform the work on the basis that he would track down the necessary parts and arrange for the suppliers to bill the plaintiff directly, and not charge a profit component on the supply of parts. 47After his inspection of the trucks Mr Burns telephoned Mr Turner and complained to him that the trucks were not in the condition that had been represented to him. The following conversation ensued: Burns: "I am concerned at the repair costs to bring the trucks back to a neat tidy and work ready condition. Your estimate of $20,000.00 per truck will go nowhere." Turner: "I'll work with you on this. I'll work out some compensation for the repairs required." Burns: "You could not have inspected these trucks in Germany with your own eyes." Turner: "No, I definitely did inspect these trucks. I could possibly have missed some of the rust due to the fact they had bodies fitted." Burns: "They never had bodies fitted to them." Turner:"I must have made a mistake. I agree there were no bodies fitted to them." Burns: "I would like to go to Melbourne with you to inspect the trucks." Turner:"OK." Burns: "Some of the panels are not repairable. We will need to replace them with new or good second hand panels." Turner:"Not a problem. Do it. We'll work it out. I appreciate the call." 48Mr Turner gives a version of the conversation that essentially accords with Mr Burns' version. Mr Turner agreed to work with Mr Burns on the problem. He agreed that there was a reference to the fact that estimates of $20,000 per truck "would go nowhere", but that was Mr Burn's estimate, not his. He said he was happy to look at the trucks and try and work something out. 49Then on 3 June 2008 Mr Burns sent an email to Mr Turner attaching the photographs. He sent a further email on 13 June 2008 advising Mr Turner of the location of the HER Pty Ltd workshop. 50According to Mr Burns he rang Mr Turner on 16 June 2008 when they had a conversation as follows: Burns: "When will we meet?" Turner:"I've already had a look at the trucks. I didn't understand the work involved. Let the work continue and we'll work it out." 51Mr Turner denies that such a conversation ever took place between him and Mr Burns. 52Mr Burns says he then authorised Mr Hocking to proceed with the necessary work on the trucks to bring them up to a neat tidy and work ready condition. 53The repair work on the trucks proceeded over the next couple of months at the HER Pty Ltd workshop. Mr Hocking found further problems with the trucks after stripping them down and commencing the repair works. For example, leaks were exposed in the hydraulic oil tanks, further rust was identified, and various bolts and nuts snapped. Apart from panel work, other mechanical work was required, including repair of the front brake pads, worn hydraulic hoses, worn Y link brushes and pins, leaking rear discs, perished trims, worn brushes and seals in the hydraulic steering mechanisms, and defective front wipers. Mr Hocking took photographs (exhibited at F to I of his affidavit). At one point he rang Mr Burns and said: Hocking: "These are fucking shit heaps. It's going to cost you a lot of money to get them up to scratch and get them up to a work ready condition." 54On completion of the repair work HER Pty Ltd invoiced the plaintiff for all the work carried out. According to Mr Hocking, in excess of 900 hours of work was performed on the trucks, but the plaintiff was only charged for 408 hours. The parts supplied by other suppliers, and some work done by other contractors, were paid for directly by the plaintiff in accordance with the arrangement agreed to between Mr Burns and Mr Hocking. 55On 8 September 2008 Mr Burns sent an email to Mr Turner forwarding the invoices for the first truck repaired (exhibited at P 13). He indicated that he expected the repairs to the second truck to be completed within a fortnight. 56Then, on 12 September 2008 he sent a proposal to Mr Turner (exhibited at P 14) in respect of the first truck, in which he set out the total cost of work and parts at $68,707.73. From this he deducted the original $20,000 estimate for the repairs, leaving $48,707.73. Of this amount, he proposed that Turner Engineering contribute $24,707.86. 57Shortly afterwards Mr Burns rang Mr Turner. According to Mr burns, the conversation went as follows: Burns: "Have you got the proposal I sent you?" Turner:"Yes I have." Burns: "What do you want to do about it? I believe my offer is more than fair." Turner:"Clinton, I only made $15,000.00 per truck. What do you want me to do?" Burns: "Sometimes, Peter, it costs you some money to correct mistakes, to make it right. We have purchased these trucks on your representations. On occasions we've had to do it to make it right with our customers. Peter, we had previously considered purchasing 2 trucks out of Japan. We did not purchase those trucks because of the rust. When we purchased the trucks from you we didn't expect to wait 2 to 3 months to get them out of the workshop. These trucks have set us back 3 months in missed hire. Ultimately can you pay the money put in my offer or do we have a problem?" Turner:"We have a problem." 58Mr Turner says of this conversation that only the first part of it occurred, up to him saying, "What do you want me to do?" He does not record whether Mr Burns made any response to his question, only that the response for which Mr Burns contends did not occur. 59This summary of the factual background to the issues in dispute discloses that there are direct conflicts between the evidence of Mr Burns and Mr Turner that require determination. Credit 60I turn, therefore, to consider the credibility of Mr Burns and Mr Turner. In assessing their credibility I have sought to rely predominantly on contemporary materials, objectively established facts, independent support from other witnesses, and the apparent logic of events, and I have placed limited reliance on an assessment of their demeanour and appearance: Fox v Percy [2003] HCA 22. Ultimately, however, I was comfortably satisfied about which of these two witnesses was the more reliable. To the extent that demeanour and appearance played a part in my assessment, however, I found Mr Burns to be the more believable witness. 61In circumstances where the evidence is based to a large extent on the recollection of oral conversations, it can never be expected that there be total accuracy of any witness, either as to content, time or sequence. Human nature being what it is, recollections often differ, and a witness will recollect things more beneficial to him or herself and vice versa. In my assessment, however, Mr Burns' recollection of events and conversations was more convincing and struck me as the more probable. I found that in giving his evidence, Mr Turner was evasive and less than candid. 62The evidence of Mr Turner was unconvincing and contained a number of unsatisfactory features. At no stage did he genuinely concede that the two trucks were in a far worse condition than he represented to Mr Burns. The evidence clearly established that the inspection he carried out in Germany was perfunctory and superficial. This was most unsatisfactory, given he knew that he would in all probability be on-selling the trucks to the plaintiff. Then, subsequently, he was less than forthcoming in his portrayal of the trucks to Mr Burns. 63Mr Burns, on the other hand, impressed me as a straightforward witness of integrity who gave direct, honest accounts of conversations and events. His evidence was unshaken on key matters, in particular the critical conversation on 3 March 2008. 64In my view, much of Mr Turner's evidence was a reconstruction of events, designed to advance a case that fitted the available documents. Important aspects of his evidence only emerged in cross-examination, and a critical aspect of his case only appeared in the Further Amended Defence filed on the second day of the hearing. There were opportunities to lead supporting evidence for his version of events and discussions that were not forthcoming, for example, the absence of Mr Sharpe. And, for the reasons I have already discussed, the diary entries are unconvincing, particularly those surrounding the critical telephone conversation on 3 March 2008. The subsequent dealings between the two men are inconsistent with a "subject to inspection" arrangement. Nor do I consider that Mr Turner's evidence refuting the conversation with Mr Burns concerning his rejection of the offer to resolve the dispute was full or frank. It is improbable that after telling Mr Burns, he only made $15,000.00 per truck and asking, "What do you want me to do?" that there was not some response from Mr Burns. But Mr Turner did not tell the court what that was. He even resiled from the accuracy of the $15,000.00 assertion. 65For these reasons I have concluded that much of Mr Turner's evidence was unreliable. The result is that I am not prepared to accept his evidence where it has not been otherwise independently supported or established by other reliable or objective material. I prefer, therefore, Mr Burns' version of events and conversations where they were at odds with the evidence of Mr Turner. Findings and conclusions on liability 66I am satisfied, therefore, that the contract entered into between the plaintiff and the first defendant was in the terms contended for by Mr Burns, that is, the trucks were purchased on the basis that they were in a condition such that they only required an amount of some $20,000.00 each to bring them to a neat, tidy and work ready condition. 67On any analysis of what a neat, tidy and work ready condition might mean, these trucks fell far short of that description. 68I am further satisfied that there was no term in the agreement to the effect that the trucks were purchased subject to inspection, or that there was any term to the effect that the trucks were purchased on an "as is, where is, no warranty given", basis. Such a term was contrary to the express terms I have already found, and the contract was effective without it. In any event, to the extent that the defendants rely upon prior dealings to support such a term, the evidence of prior dealings does not support such a contention. 69The first defendant cannot escape liability merely because Mr Burns did not inspect the trucks. Inspection was never contemplated by the purchase agreement, objectively construed. The plaintiff relied upon the first defendant's express representation made on its behalf by Mr Turner as to the condition of the trucks, to enter into the agreement. Even if it were to be accepted, contrary to Mr Burns evidence, that he made an arrangement with Mr Turner to inspect the trucks, the conversations relied upon by Mr Turner occurred after the contract had been concluded. 70Similarly, the defendants cannot rely on the Sale of Goods Act 1923 to escape liability. 71I find, therefore, that the first defendant breached the purchase agreement, as a result of which the plaintiff suffered losses for which it is entitled to damages. 72I am also satisfied that the representations made by Mr Turner as to the condition of the trucks were misleading and deceptive. He knowingly misrepresented that the trucks could be brought to a neat, tidy and work ready condition for approximately $20,000 per truck. I find also that the plaintiff relied upon these representations to purchase the trucks. They were, however, false. The true estimate of bringing the trucks to a neat, tidy and work ready condition was far in excess of $20,000 each. Mr Turner made those representations as an officer or agent of the first defendant. In so doing, he intentionally and knowingly aided, abetted and procured a contravention by the first defendant of s 52 of the Trade Practices Act 1974 . 73I find, therefore, that the plaintiff has made out its claim against the first defendant for breach of the Trade Practices Act 1974 . 74Having regard to his interest in and position with the first defendant, I am satisfied that in addition to aiding, abetting, and procuring the contravention of the Act by the first defendant, Mr Turner also intentionally made the false and misleading representations in his personal capacity. I find, therefore, that the plaintiff has made out its claim against the second defendant for breach of the Trade Practices Act 1974 . 75As a result of these breaches the plaintiff suffered losses for which it is entitled to damages. Neat, tidy and work ready condition 76An issue in the proceedings was the meaning of the phrase "neat, tidy and work ready condition". It was submitted for the defendants that this composite phrase is not one used in the heavy equipment industry. However, he tendered an industry publication (Exhibit 3) in which there are numerous advertisements using these words or variations of them. 77More importantly, Mr Hocking knew what the phrase meant and said he had used it on many occasions. In his affidavit of 20 September 2010, Mr Hocking explained the meaning of the phrase in the context of heavy machinery, and I will come to that in a moment. 78The plaintiff's expert, Dr Robert Casey, has also come across the expression in relation to used heavy plant and equipment in the context of importation and in connection with the hiring out of such equipment within Australia. He was not aware of an accepted industry-wide definition, however from his dealings with previous cases and from "intuitive interpretation" of the expression, gave his version of what it might mean: see paragraphs 14 and 15 of his report dated 28 May 2010. 79For my part, I prefer the explanation of Mr Hocking, the one person, independent of the parties, who is experienced in the industry. He said that the phrase "neat, tidy and work ready" condition involves: (a) Paint and bodywork that is in good condition with little or no rust. (b) All lights and flashing lights are working and the windscreen wipers are working. (c) There is no broken or badly scratched glass in the cabin and there is good visibility from the cabin. (d) The reverse beepers and safety equipment is working. (e) Tyres and tracks are in good working order. (f) The cabin trim, seat and seatbelt are in good working order. (g) The hydraulics are in good order with no leaks or damage. (h) The machine is fitted with all relevant s afety decals and the operators manual has been supplied. (i ) T he pins and bushes on moving parts of the machine are not worn out and there is "no excessive slop and slack". (j) T he cutting teeth on buckets and blades are in working order. (k) The machine is fitted with certified rollover protection bars or cabins. (l) All brakes are in good working order. Damages 80T he plaintiff's nett total claim for damages amounts to $246,301.22, plus interest, made up in the following way: Repairs $152,561.55 Lost hire costs $133,739.67 Total $286,301.22 Less estimate for repair work $ 40,000.00 Nett total claim $246,301.22 81The calculations in support of these figures are set out in a schedule handed up to me by counsel for the plaintiff at the beginning of her address. 82The claim for repairs is calculated by reference to the various invoices tendered and the supporting evidence. Certain items in the various invoices were not claimed. The amount of $152,561.55 consists of: Repairs to truck 63W04556: $ 77,287.12 Repairs to truck 63W04557: $ 75,274.43 Total repairs $152,561.55 83The defendants' response to the claim for repairs was ineffective. In his affidavit (at paragraph 60), Mr Turner is critical of the invoices. He says, for example, that on his reading of them, much of the work claimed could not be attributed to bringing the trucks to a neat, tidy and work ready condition: that some work appeared to have been undertaken for the purpose of restoring the trucks to an "as new" condition; that other work was suggestive of making the trucks compliant with working conditions in a mine or similar environment, being an upgrade or modification, rather than restorative work; that some invoices had insufficient detail; and that others appeared not to relate to the two trucks in question. 84But at the hearing, the defendants did not engage in the detail of the invoices, apart from cross-examining the plaintiff's expert and Mr Hocking. In my view the expert, at least on the issue of repairs, fell short. First, he failed to demonstrate any expertise in the required area. Secondly, he made no independent assessment of the reasonable cost of repairs, and thirdly, as to whether particular repairs were necessary to bring the trucks to a neat, tidy and work ready condition, he relied upon Mr Hocking having done the work. In the result I regarded his evidence as lacking any probative value in the assessment of damages and I rejected it. 85Mr Lancaster, who appeared on behalf of the defendants, did not address the quantification of damages in his written submissions. In oral submissions he seemed to be suggesting that the plaintiff failed to prove that it incurred any additional costs in carrying out the necessary repairs, such that it should not recover any damages for repairs. 86Mr Lancaster said: "...the plaintiff is bound to prove the elements of its case. That is, not just that there was a contract but the nature of that contract. Then it must prove the breach of the contract. It also must prove the fact that the repairs were necessary, the fact that all reasonable steps were taken to mitigate their loss and indeed, the fact that any loss was suffered at all. Now I can explain that last very simply, your Honour. You have seen a process where two trucks that come out the end process were almost as new. In fact if we could take anything from the evidence of Dr Casey, I think the evidence we can take is that he recognised these trucks were refurbished. That's why he in part sought to delineate between the necessary repairs in his report and those that he would exclude. He saw a need to because these trucks came out far better than what they were sold to the plaintiff as. There was an improvement of the trucks and I don't think that there is a great deal of controversy about that." (T 400) 87Mr Lancaster was critical of Mr Hocking for destroying his working papers, knowing the trucks and the repairs could be the subject of a court case. He was also critical of the fact that Mr Burns gave HER Pty Ltd "carte blanche" in the repair process, without Mr Burns supervising or approving particular items of repair. Mr Lancaster submitted: "What we have though, is the difficulty in apportioning those costs to what is neat, tidy, work-ready. That's if your Honour has accepted that that's a term of the contract. We say it isn't. If your Honour goes to that point, how do you determine which part of those repairs fall within that? You have no time sheets, you have no accounting records, you have no other record from Mr Hocking than the photographs and the invoices." (T 415) 88As to the plaintiff's expert, he submitted: "Dr Casey seeks to assist. He's an expert. He's a mechanical engineer. His expertise I would submit, your Honour, is limited to that, mechanical engineering. His methodology of seeking to apportion costs, when explained to us in some detail, demonstrated that: (a) he did not apply any independent analysis; (b) he conducted no calculations; he used a reverse process where he said I'm going to accept what Mr Burns has said and then I am going to see if I can challenge it in some way and if I can't, it must be reasonable. Now as a matter of logic, that is actually absurd. He's worked backwards from the result. But there is no evidence on cross-examination of Dr Casey that he did anything independent himself, no research on the terminology. He intuitively guessed at that. He's done no testing. He's made no inquiries. Indeed, he made no inquiries of Mr Hocking because he felt that he would not be assisted by Mr Hocking. I don't know why he would feel that and he conceded later that maybe he should have done that... That is the only assistance he could provide but the manner in which he has done his report, your Honour, you could not feel comfortable adopting it. (T 415) 89Mr Lancaster continued: "Your Honour, we have a schedule of damages now that arrives for the first time in this case, that seeks to set out with some detail. It may be said that the damages appear in the statement of claim. But if you look at those, they differ from what is put in Mr Burns' affidavit. What is put in Mr Burns' affidavit is in effect a bundle of invoices and then a schedule at the end that says these are the ones we claim. No explanation is really given as to why he has excluded any particular items. The explanations that now seem to appear are in this schedule and that's the first time that we get to see the damages being calculated out in that fashion. One of the premises of the calculations of damages is if an invoice relates to both trucks it should be divided in half. Now, I can understand as a matter of simple estimation that exercise. The difficulty is that these two trucks did not suffer the same damage and require the same repair, notwithstanding the HER invoices suggesting that they did." 90The evidence from Mr Hocking, however, was that all the work carried out by HER Pty Ltd, for which the plaintiff claims, was undertaken for the purpose of putting the trucks in a neat, tidy and work ready condition, in accordance with his understanding of that phrase, which I have accepted as appropriate. All parts were paid for by the plaintiff direct to suppliers, at cost. The evidence presented by the plaintiff may not have been the best evidence, but it was the only evidence, and in my view sufficient to enable quantification of the plaintiff's claim. I accept the evidence of Mr Hocking, and there is, simply put, no evidence to the contrary. The complaints made by Mr Turner, and by Mr Lancaster, that the repairs claimed were inflated or unreasonable, were not supported by evidence, and must remain, therefore, mere assertions. 91The schedule prepared on behalf of the plaintiff was based on that material, but also took account of these criticisms. Furthermore, items criticised by the plaintiff's expert, or that were concerned with the fitting of other modifications or improvements, as opposed to repairs, were not claimed. 92It must also be borne in mind when assessing the reasonableness of the cost of repairs claimed, that HER Pty Ltd discounted the actual hours worked. 93For these reasons I am satisfied that the amounts claimed by the plaintiff for the repair of the two trucks reflect work and parts necessary to bring the trucks to a neat, tidy and work ready condition, and were fair and reasonable. 94I find, therefore, that the total cost of those repairs was $152,561.55. From this I deduct $40,000.00, being the amount Mr Turner represented the cost of such repairs would be, leaving an entitlement to damages for this head of the loss incurred by the plaintiff at $112,561.55. 95I turn to the other head of loss for which the plaintiff claims damages, namely the hire revenue lost due to the unavailability of the trucks during the period in which they were being repaired, an amount of $133,739.67. This is made up as follows: L ost hire for truck 63W04556: $ 64,812.30 Lost hire for truck 63W04557: $ 68,927.37 Total hire revenue lost $133,739.67 96The trucks were delivered to HER Pty Ltd on about 27 May 2008. It was anticipated that the trucks would have been ready for hire by 27 July 2008, allowing 2 months for the represented repairs and other modifications. There is no doubt that hire opportunities would have been available. Mr Turner himself gave evidence that these sort of trucks were in high demand at that time. 97It was submitted on behalf of the defendants that the period taken to repair the trucks was inordinately long. The evidence of Mr Hocking, however, was that the repairs were done as expeditiously, and as economically as possible. There is no evidence to the contrary. I accept Mr Hocking's evidence. 98In respect of truck 63W04556, a claim for lost hire is made for the period from 27 July 2008 to 30 September 2008. The evidence establishes that the plaintiff could have hired the truck during that period for $30,863.00 a month. The lost hire for 2 months and 3 days is calculated at $64,812.30. 99In respect of truck 63W04557, a claim for lost hire is made for the period from 27 July 2008 to 4 October 2008. The evidence establishes that the plaintiff could have hired the truck during that period for $30,863.00 a month. The lost hire for 2 months and 7 days is calculated at $64,297.37. 100I am satisfied as to the rate of the lost hire fees, and as to the period claimed, and as to the arithmetic of the claims. I am not satisfied, however, that the basis of the claim is the true reflection of the plaintiff's loss. 101I find that the plaintiff lost the revenue, as calculated, for lost hire fees. But lost revenue is not the proper way to measure loss. The true loss is the margin, or the profit the plaintiff lost, after taking account of overheads and tax. There is no evidence of what that might be. Rather than make an estimate, I would prefer to give the parties an opportunity to reach agreement on the proper figure, or in the absence of agreement, to further address on this issue. Interest 102In my view, interest on the damages should be awarded up to judgment under s 100 of the Civil Liability Act 2005 at the prescribed rates. I will, however, give leave to the defendants to address on this issue if such an entitlement is disputed. 103Calculation of any interest needs to await the final calculation of the damages for the hire fees. Subject to that, the parties ought to be able to agree the calculation. Costs 104Costs follow the event and are payable on the ordinary basis, unless some other order is appropriate: UCPR r 42.1. There is nothing before me, at this point, to indicate that some other order is appropriate. 105There should be an order for costs in favour of the plaintiff against the defendants, but I will give leave to the parties to apply for some other order, if appropriate. Disposition 106I enter a verdict in favour of the plaintiff against each defendant. The entry of judgment will await finalisation of the amount of damages, and interest thereon. 107I order the defendants to pay the plaintiff's costs on the ordinary basis. However, I give liberty to apply, provided the application is made in writing to the other party, specifying the differential order sought, before Friday 10 June 2011. 108The parties are to confer in respect of the outstanding matters and use their best endeavours to reach agreement, with a view to providing me with short minutes for the finalisation of the matter and the entry of judgment. 109I list the matter for further hearing on these outstanding matters on Tuesday 14 June 2011. That date can be vacated if the parties reach agreement before then and provide me with short minutes, by email, enabling the entry of judgment and other orders, in chambers. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 23 June 2011