Lowe v Mack Trucks Australia Pty Limited

• Jurisdiction: Australia Federal only
• Judgment Date: 04 April 2008
• Neutral Citation: [2008] FCA 439
• Court: Federal Court

FEDERAL COURT OF AUSTRALIA

Lowe v Mack Trucks Australia Pty Limited [2008] FCA 439

TRADE PRACTICES – Consumer protection – Breach of implied condition of merchantable quality – Breach of implied condition of fitness for purpose – Misleading and deceptive conduct – (CTH) Trade Practices Act 1974 ss 52, 66(2), 71(1), 71(2), 75AD, 82, 87

Evidence – Opinion – Expert evidence – Admissibility – (CTH) Evidence Act 1995 ss 79,135

Trade Practices Act 1974 (Cth) ss 52, 66(2), 71(1), 71(2), 75AD, 82,87

Evidence Act 1995 (Cth) ss 79,135

Bernstein v Pamson Motors (Golders Green) Ltd [1987] 2 All ER 220 cited

Crowther v Shannon Motors Co [1975] 1 WLR 30 cited

Jillawarra Grazing Co v John Shearer Ltd (1984) ATPR 40-441 cited

Rogers v Parish (Scarborough) Ltd [1987] QB 933 approved

Courtney v Medtel Pty Ltd (2003)126 FCR 219 cited

Medtel Pty Ltd v Courtney (2003) 130 FCR 18 followed

Cavalier Marketing (Australia) Pty Ltd v Rasell (1990) 96 ALR 375 cited

Graham Barclay Oysters Pty Ltd v Ryan (2000) 102 FCR 307 followed

Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 cited

Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216cited

Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 cited

Henville v Walker (2001) 206 CLR 459 cited

Ting v Blanche (1993) 118 ALR 543 cited

Phoenix Court Pty Ltd v Melbourne Central Pty Ltd (1997) ATPR (Digest) 46-179 cited

Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (1998) ATPR 41-633 cited

Banque Commerciale S A v Akhil Holdings Ltd (1990) 169 CLR 279 cited

General Newspapers Pty Ltd v Telstra Corporation (1993) 45 FCR 164 cited

Pappas v Soulac Pty Ltd (1983) 50 ALR 231 cited

Sanders v Glev Franchises Pty Ltd [2002] FCA 1332 cited

Hanave Pty Ltd v LFOT Pty Ltd [1998] FCA 1051 cited

Gurdag v Stillwell Ford Pty Ltd (1985) 61 ALR 689 cited

HG v The Queen (1999) 197 CLR 414 applied

Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705cited

Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354 cited

Hamod v Suncorp Metway Insurance Ltd [2006] NSWCA 243cited

Allstate Life Insurance Co v ANZ Banking Group Ltd (No 6) (1996) 64 FCR 79cited

Henscke & Co v Rosemount Estates Pty Ltd (1999) 47 IPR 63; [1999] FCA 1561 cited

Rhoden v Wingate [2002] NSWCA 165 cited

Arnotts Ltd v Trade Practices Commission (1990 24 FCR 313 cited

Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 123cited

National Justice Compania Naviera SA v Prudential Assurance Co Ltd [1993] 2 Lloyd’s Rep 68 cited

FGT Custodians Pty Ltd v Fagenblat [2003] VSCA 33 cited

United Rural Enterprises Pty Ltd v Lopmand Pty Ltd [2003] NSWSC 870 cited

Austral Pacific Group Ltd (in liq) v Airservices Australia (2000) 203 CLR 136 applied

Arturi v Zupps Motors Pty Ltd (1980) 49 FLR cited

LNC Industries Ltd v BMW (Australia) Ltd (1983) 151 CLR 575 cited

Hadley v Baxendale (1854) 9 Ex 341cited

AFA Electronics Pty Ltd v Strathfield Group Wholesale Pty Ltd [2001] VCS 289 cited

Burns v MAN Automotive (Aust) Pty Ltd (1986) 161 CLR 653 cited

Hodgson & Hodgson v Morella Pastoral Co Pty Ltd (1975) 13 SASR 51cited

NEA Pty Ltd v Magenta Mining Pty Ltd [2005] WASC 106cited

NEA Pty Ltd v Magenta Mining Pty Ltd [2007] WASCA 70cited

Kenny & Good Pty Ltd v MGICA (1992) Ltd (1997) 77 FCR 307 applied

Zuvela v Geiger [2007] WASCA 138 cited

GRAHAM LOWE AND ERICA LOWE v MACK TRUCKS AUSTRALIA PTY LIMITED

VID 249 OF 1999

KENNY J

4 APRIL 2008

MELBOURNE

TABLE OF CONTENTS

1. Introduction

2. The applicants’ Further Amended Statement of Claim

3. Mack’s defence

4. Relevant legal framework

(A) Conditions as to merchantability and fitness for purpose

(B) Misleading and deceptive conduct

(C) Were there insurmountable deficiencies in the applicants’ s 52 claim as Mack alleged?

5. The history of the applicants’ operation of the truck

(A) Buying the truck

(B) The first trip – first problems

(C) Ongoing problems

(D) Settlement of the Magistrates Court proceeding in November 1998

(E) Unresolved issues

(F) Notice of Rescission

(G) The truck goes back to work and proceedings are instituted against Mack

6. Assessment of witnesses

(A) Mr Lowe

(B)Mrs Lowe

(C) Wayne Pasfield

(D) Wayne Wallace

(E) Jon Heironymous

(F)Mr Buttignol

(G) Mr Kumnick

7. The FORS Report

(A) Process

(B) FORS Report vibration analysis

(C) FORS Report handling quality analysis

8.The experts’ evidence regarding the FORS Report issues

(A) Dr Morrison

(B)Mr Robert McPherson

(C) Status of Mr Lambert’s and Dr McLean’s evidence

(i) Dr McLean

(ii) Mr Lambert

9.The applicants’ case on liability assessed

10.Damages

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 249 OF 1999

BETWEEN:	GRAHAM LOWE AND ERICA LOWE Applicant
AND:	MACK TRUCKS AUSTRALIA PTY LIMITED Respondent

JUDGE:	KENNY J
DATE OF ORDER:	4 APRIL 2008
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The application be dismissed.

2. The parties file and serve written submissions on costs on or before 4 pm on 16 April 2008.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 249 OF 1999

BETWEEN:	GRAHAM LOWE AND ERICA LOWE Applicant
AND:	MACK TRUCKS AUSTRALIA PTY LIMITED Respondent

JUDGE:	KENNY J
DATE:	4 APRIL 2008
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. Introduction

1 Some years ago now, Mr and Mrs Lowe carried on an interstate transport business in partnership under the name “G & E Lowe”. This proceeding concerns a truck that they bought from Mack Trucks Australia Pty Ltd (referred to hereafter as ‘Mack’) in 1998. The truck was a new Mack CH Elite Highway prime mover (hereafter ‘the truck’ or the ‘Lowes’ truck’), which Mack had manufactured. The Lowes’ case is that Mack assured them that the truck was suitable for their interstate long-haul transport business (hereafter ‘the business’ or ‘the Lowes’ business’), when in fact it was not. They seek damages in respect of the loss allegedly suffered as a result. For the reasons that follow, I find that their claim is not made out.

2 The Lowes conducted the business from Adelaide, transporting goods by truck from Adelaide to Brisbane, Sydney and other destinations mostly along the east coast of Australia. On 23 March 1998, they entered into a conditional contract with Mack to purchase the truck, for a price of $209,230. Although the Lowes initially contemplated a Freightliner or Western Star model vehicle as a changeover for their then current Mack CHR (which they purchased in 1995), they gave consideration to a new Mack when they were offered a competitive price. Mr Dean Kumnick, a Mack branch salesman in Adelaide, stated that the truck would be suitable for their needs. He knew that the Lowes were involved in the business of interstate long-haul goods transport as truck owner-operators.

3 On 1 April 1998, Mr Lowe took delivery of the truck from Mack and set out to drive the truck from Adelaide to Brisbane and back, towing a fully loaded Tautliner trailer. Mr Lowe noticed problems with the truck almost immediately. He complained to Mack in Brisbane and, on his return, to Mack in Adelaide.

4 It was part of the Lowes’ case that “[t]he litany of complaints was so bad” that as early as June 1998, the Lowes asked Mack about the possibility of returning the truck on a walk-away (or no-loss or no-cost) basis. As appears below, the evidence did not establish as much. The evidence did, however, establish that Mrs Lowe enquired about returning the truck on a walk-away basis in October 1998.

5 In early 1999, the Lowes’ complaints about the truck led to it being included in a group of trucks selected for examination by Roaduser International Pty Ltd (hereafter ‘Roaduser’) as part of an inquiry by the Federal Office of Road Safety (hereafter ‘FORS’) into aspects of long-haulage road transport operation in Australia. Indeed, in an initial “inspect and drive” test organised by Roaduser, Mr JohnLambert, who gave evidence at the trial, reported that the truck exhibited characteristics of vibration, wandering and darting. The FORS Inquiry resulted in a Final Report, entitled “Investigation into the Specification of Heavy Trucks and Consequent Effects on Truck Dynamics and Drivers”. In this proceeding, this report was referred to as the ‘FORS Report’. This Report is discussed below.

6 Throughout the period he drove the truck, Mr Lowe complained about it, especially its rough ride and poor performance. The Lowes claimed that, over the period they operated the truck, these characteristics were made manifest by various things, particularly vibration, inordinate component failures, and the need for constant repairs and parts replacement. The Lowes’ case was that the on-going defects in the truck ultimately led Mr Lowe to ‘park up’ the truck at Rick Cobby’s depot and ‘walk away’ from it. They claimed that they did so “despite the clear and substantial financial ramifications” for them and the business.

7 The genesis of this proceeding was a class action that began on 17 May 1999. The class action was unable to proceed as such and, by an application and statement of claim dated 11 October 2001, the Lowes elected to continue the proceeding as applicants in their own right against Mack and Australian Guarantee Corporation Limited (referred to below as ‘AGC’), which had financed the truck’s purchase. The proceeding against AGC has been resolved. The matter took some time to be ready for trial, in part because of changes in legal representation.

8 At trial, the applicants complained of the truck’s rough ride, poor handling and poor performance, which they said was manifest by “vibration, darting and wandering and a litany of breakages, repairs and premature replacement of parts”. The...