Australian Guarantee Corporation Ltd v Jennings - [2006] NSWLC 3 - NSWLC 2006 case summary — Zoe

NSWNSWLC

Australian Guarantee Corporation Ltd v Jennings

[2006] NSWLC 3

Local Court of NSW|2006-02-10|Before: Mr P

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At a glance

Source facts

Court

Local Court of NSW

Decision date

2006-02-10

Before

Mr P

Catchwords

2. In the action brought pursuant to s.75A by the first defendant/cross-claimant against the plaintiff/first cross-defendant, there will be a verdict for the cross-claimant in the sum of $10,276.69.
4. In the action brought by the cross-claimant against the third party pursuant to ss.74B-74G there will be a verdict for the third party/cross-defendant. Judgment accordingly.
5. I reserve the question of costs. Parties to have liberty to apply on seven days' notice.

Source

Original judgment source is linked above.

Catchwords

2. In the action brought pursuant to s.75A by the first defendant/cross-claimant against the plaintiff/first cross-defendant, there will be a verdict for the cross-claimant in the sum of $10,276.69.4. In the action brought by the cross-claimant against the third party pursuant to ss.74B-74G there will be a verdict for the third party/cross-defendant. Judgment accordingly.5. I reserve the question of costs. Parties to have liberty to apply on seven days' notice.

Judgment (190 paragraphs)

[1]

CITATION: Daimler Chrysler Services AustraliaTollan Real Estate Peter Gregory Londish [2006] NSWLC 3 JURISDICTION: Civil Daimler Chrysler Services Australia Pty Ltd PARTIES: Tollan Real Estate 1st Defendant Peter Gregory Londish 2nd Defendant Daimler Chrysler Asia/Pacific Pty Ltd Third Party FILE NUMBER: 2098 of 2004 PLACE OF HEARING: Downing Centre DATE OF DECISION: 02/10/2006 MAGISTRATE: Magistrate H Dillon CATCHWORDS: Downing Centre - 10 February 2006 - H.C.B. Dillon - Contract -- Whether first defendant entitled to rescind contract - Whether plaintiff "supplied" a motor vehicle - Whether vehicle of merchantable quality - Indicia of merchantability for motor vehicles - Whether a potential defect requiring recall of vehicle sufficient to make vehicle unmerchantable -- Whether consumer entitled to have higher expectations in respect of new luxury vehicles -- Relief. - Trade Practices - Whether distributor of vehicle is a "manufacturer" - Whether plaintiff a "linked credit provider" - Whether third party a "supplier" linked to a credit provider. - Practice and procedure - Problems caused by overly complex pleadings - Problems caused by overly voluminous tenders of documents - Problems caused by delays in making submissions - Problems caused by over-reliance on lengthy written submissions - Emphasis in Civil Procedure Act 2005 LEGISLATION CITED: Civil Procedure Act 2005 s.56 Trade Practices Act 1974 ss. 4, 4C, 66, 68, 71, 73, 74A, 74B, 74D, 75A. Australian Guarantee Corporation Ltd v Jennings [1981] 1 NSWLR 50. Bernstein v Pamson Motors (Golders Green) Ltd [1987] 2 All ER 220. Cavalier Marketing v Rasell (1990) 96 ALR 375. Clark v Esanda Ltd [1984] 3 NSWLR 1. CASES CITED: Courtney v Medtel [2003] FCA 36. King v Sexton & Green (Sales and Service) [2000] NSWCA 340. Medtel Pty Ltd v Courtney (2003) 198 ALR 630. Rasell v Cavalier Marketing (Australia) Pty Ltd [1991] 2 Qd R 323. Rogers v Parish (Scarborough) Ltd [1987] 1 QB 933. Thomas v Foreshore Marine Exhaust Systems Pty Ltd [2005] NSWCA 451. Ms Humphreys Counsel Humphreys & Feather Solicitors for plaintiff REPRESENTATION: Mr P Bruckner Counsel Morgan Lewis Attorneys for defendant Mr S Bliim of Counself for Third Party Riley, Grey - Spencer Lawyers for Third Party ORDERS: 1. In the action between the plaintiff and the first and second defendants, there will be verdicts for the defendants and judgment accordingly.; 2. In the action brought pursuant to s.75A by the first defendant/cross-claimant against the plaintiff/first cross-defendant, there will be a verdict for the cross-claimant in the sum of $10,276.69.; 3. In the action brought pursuant to s.73 by the first defendant/cross-claimant against the plaintiff/first cross-defendant and third party/second cross-defendant, there will be a verdict for the cross-defendants. Judgment accordingly.; 4. In the action brought by the cross-claimant against the third party pursuant to ss.74B-74G there will be a verdict for the third party/cross-defendant. Judgment accordingly.; 5. I reserve the question of costs. Parties to have liberty to apply on seven days' notice.

[131]

The next factor to be taken into account was "whether the defect is of such a kind that it is in fact capable of being satisfactorily repaired so as to produce a result as good as new." He said (at 227): [If] the defect is so serious, or of such fundamental a kind that no amount of repair, however well performed, will ever bring the car properly to its pristine state, then it will be almost impossible to see how a car so handicapped could pass the test of merchantability. This consideration applies not only to the part or parts which may be the site of the actual defect, but also to what has been described as the "knock-on" effect.
Concerning minor defects he said (at 227): [ There] is also the cumulative effect of a series of relatively minor defects to consider, 'a congeries of defects' as was stated in one case. Here again it is a question of degree, but clearly there could come a stage when an army of minor, unconnected defects would be evidence of such bad workmanship in the manufacture, or on the assembly line generally, as to amount in toto to a breach of the condition of merchantability.
Finally, he considered (at 228) that: [C]osmetic factors will also apply depending on the description and price applied to any individual car. No buyer of a brand new Rolls-Royce Cornich would tolerate the slightest blemish on its exterior paintwork; the purchaser of a motor car very much at the humbler end of the range might be less fastidious .
In Rogers v Parish (Scarborough) Ltd9, a case in which a new Range Rover vehicle was apparently roadworthy but which had a misfiring engine and noise coming from its gearbox as well as substantial defects in its bodywork was held to be of unmerchantable quality, Mustill LJ said (at 944): Furthermore, the judge applied the test of whether the defects had destroyed the workable character of the car. No doubt this echoed an argument similar to the one developed before us that if a vehicle is capable of starting and being driven in safety from one point to the next on public roads and on whatever other surfaces the car is supposed to be able to negotiate, it must necessarily be merchantable. I can only say that this proposition appears to have no relation to the broad test propounded by s 14(6) even if, in certain particular circumstances, the correct inference would be that no more could be expected of the goods sold. This being so, I think it legitimate to look at the whole issue afresh with direct reference to the words of s 14(6). Starting with the purpose for which 'goods of that kind' are commonly bought, one would include in respect of any passenger vehicle not merely the buyer's purpose of driving the car from one place to another but of doing so with the appropriate degree of comfort, ease of handling and reliability and, one might add, of pride in the vehicle's outward and interior appearance. What is the appropriate degree and what relative weight is to be attached to one characteristic of the car rather than another will depend on the market at which the car is aimed. To identify the relevant expectation one must look at the factors listed in the sub-section. The first is the description applied to the goods. In the present case the vehicle was sold as new. Deficiencies which might be acceptable in a second hand vehicle were not to be expected in one purchased as new. Next, the description 'Range Rover' would conjure up a particular set of expectations, not the same as those relating to an ordinary saloon car, as to the balance between performance, handling, comfort and resilience. The factor of price was also significant. At more than ?14,000 this vehicle was, if not at the top end of the scale, well above the level of the ordinary family saloon. The buyer was entitled to value for his money. With these factors in mind, can it be said that the Range Rover as delivered was as fit for the purpose as the buyer could reasonably expect? The point does not admit of elaborate discussion. I can only say that to my mind the defects in engine, gearbox and bodywork, the existence of which is no longer in dispute, clearly demand a negative answer.
That passage was cited with approval in the Australian case of Cavalier Marketing v Rasell10 by the Full Court of the Queensland Supreme Court.

[156]

Section 74B(1) provides: Where: a corporation, in trade or commerce, supplies goods manufactured by the corporation to another person who acquires the goods for re-supply; (b) a person (whether or not the person who acquired the goods from the corporation) supplies the goods (otherwise than by way of sale by auction) to a consumer; (c) the goods are acquired by the consumer for a particular purpose that was, expressly or by implication, made known to the corporation, either directly, or through the person from whom the consumer acquired the goods or a person by whom any antecedent negotiations in connexion with the acquisition of the goods were conducted; (d) the goods are not reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied; and (e) the consumer or a person who acquires the goods from, or derives title to the goods through or under, the consumer suffers loss or damage by reason that the goods are not reasonably fit for that purpose; the corporation is liable to compensate the consumer or that other person for the loss or damage and the consumer or that other person may recover the amount of the compensation by action against the corporation in a court of competent jurisdiction.
The concept of "manufacture" has been given a wide definition in Part V, Division 2A of the Trade Practices Act. Section 74A(3) provides: If: a corporation holds itself out to the public as the manufacturer of goods; (b) a corporation causes or permits the name of the corporation, a name by which the corporation carries on business or a brand or mark of the corporation to be applied to goods supplied by the corporation; or (c) a corporation causes or permits another person, in connexion with the supply or possible supply of goods by that other person, or in connexion with the promotion by that other person by any means of the supply or use of goods, to hold out the corporation to the public as the manufacturer of the goods; the corporation shall be deemed , for the purposes of this Division, to have manufactured the goods.
Section 74A(5) provides that, for purposes of (3)(b): For the purposes of paragraph (3)(b): a name, brand or mark shall be deemed to be applied to goods if it: (i) is woven in, impressed on, worked into or annexed or affixed to the goods; or (ii) is applied to a covering, label, reel or thing in or with which the goods are supplied; and (b) if the name of a corporation, a name in which a corporation carries on business or a brand or mark of a corporation is applied to goods, it shall be presumed, unless the contrary is established, that the corporation caused or permitted the name, brand or mark to be applied to the goods.
Although the name "Mercedes Benz" and the three-pointed star logo are registered trademarks of Daimler Chrysler AG, Stuttgart Germany, the distributor as importer of the vehicles writes correspondence on letterhead under the name "Mercedes Benz" with the Mercedes-Benz logo. Further, Laurence Preston of G Brothers - a Mercedes Benz dealer - refers to Mercedes Benz and the distributor interchangeably when stating that the warranty repairs were to be conducted in accordance with Mercedes- Benz policy, then stating that he relied on the representative from the distributor regarding the repair to be undertaken pursuant to that warranty.

Australian Guarantee Corporation Ltd v Jennings

At a glance

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Catchwords

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Judgment (190 paragraphs)

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Cases Cited (5)