Consumer sales - Merchantable quality - Purchase of secondhand backhoe - Extent of purchaser's examination and testing of backhoe prior to sale - Nature of representations made to purchaser - Whether purchaser entitled to damages - Assessment of damages

Fair Trading Act 1987

Sale of Goods Act 1895

Trade Practices Act 1974

Australian Knitting Mills Ltd & Anor v Grant [1933] HCA 35; (1933) 50 CLR 387

Claude B Fox Pty Ltd v Rayner [1978] Qd R 250

Harlingdon & Leinster Enterprises Ltd v Christopher Hull Fine Art Ltd [1989] EWCA Civ 4; [1990] 3 WLR 13

Lloyds & Scottish Finance Ltd v Modern Cars and Caravan (Kingston) Ltd [1966] 1 QB 764

Rasell v Cavalier Marketing (Aust) Pty Ltd [1991] 2 Qd R 323

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

Truck Wreckers (1979) Pty Ltd v Waters (1994) ASC 56-260

Wilson v United Counties Bank [1920] AC 102

Arturi v Zupps Motors Pty Ltd (1980) ATPR 40-189

Baldry v Marshall [1925] 1 KB 260

Bartlett v Sidney Marcus Ltd [1965] 2 All ER 753

Burns v MAN Automotive (Aust) Pty Ltd [1986] HCA 81; (1986) 161 CLR 653

Cambridge v AGC Ltd (1982) ASC 55-184

Daniels v R White & Sons Ltd [1938] 4 All ER 258

Esanda Finance Corp Ltd v Peat Marwick Hungerfords [1997] HCA 8; (1997) 71 ALJR 448

Franich v Swannell (1993) 10 WAR 459

Frank v Grosvenor Motor Auctions Pty Ltd [1960] VicRp 95; [1960] VR 607

Jorgenson v Harris Bros (1912) 14 WAR 180

Rasell v Cavalier Marketing (Aust) Pty Ltd [1991] 2 Qd R 323

Robinson v Motor Mart Ltd (1955) 2 DLR 427

Rogers v Parish (Scarborough) Ltd [1987] 1 QB 933

Service v Walker (1877) 3 VLR 348

Thornett & Fehr v Beers & Son [1919] 1 KB 486

1 DEANE DCJ: This matter arises out of the purchase of a backhoe loader by the plaintiff from the defendants in June 2001. Pictures of the particular machine are contained in Exhibit 1A, B and C. The defendants are the registered proprietors of Wattleup Tractors in Kewdale ("Wattleup") which supplies and deals with farming machinery. The plaintiff paid $7,700 (inclusive of GST) for a JD 410 backhoe loader ("the tractor") and claims that based on both the representations and conduct of Wattleup staff that the tractor was of merchantable quality and fit for the purpose for which it was acquired, the plaintiff purchased it. It is alleged that a mechanic employed by the defendants known only to the plaintiff as "Steve" on or about 5 June 2001 made statements to the plaintiff that the tractor was "a good machine" and also in effect it was "in working condition" although the engine required an external battery unit to be started, since the machine had not been operated for some time. Steve allegedly also informed the plaintiff that there was "no area to dig" and so there was no or insufficient space at the premises to test drive and operate the machine.

2 The plaintiff further alleges that on that same date at the defendants' premises their manager, Mr Marin Zuvela, made similar statements to the same effect to the plaintiff. At trial it was clear from part of the plaintiff's evidence that there had been a communication problem or misunderstanding when he gave instructions to his solicitors on the matter of there being "no area to dig". Mr Geiger said that neither Steve nor Mr Zuvela said this to him, rather Mr Zuvela told him there was such an area but the plaintiff was loathe to drive an unregistered vehicle on a road to access a vacant block about which he knew nothing. Further Mr Zuvela did not tell him the area was not the back of the premises. The plaintiff claims that each of these two people remained silent and failed to disclose relevant to the tractor that the transmission was inoperable, the hydraulic pump was worn beyond repair as a result of which the front and rear devices were inoperable, the radiator core was degraded beyond repair, the head gasket was damaged and therefore not sealing and the engine could not be started without artificial aid. Despite these representations and in breach of the contract and s 10, s 17 and s 38 of the Fair Trading Act 1987 and s 14 of the Sale of Goods Act 1895 the plaintiff claims that the tractor was not of merchantable quality or reasonably fit for the purpose for which it was acquired. The defendants' duty to disclose as required by this legislation arises it is said because of the legal effect of both the Fair Trading Act 1987 and the Sale of Goods Act 1895.

3 As a result the plaintiff claims he undertook substantial repairs and maintenance to the tractor to render it fully operational and fit for the purpose for which it was acquired. Those repairs were carried out by CJD Equipment Pty Ltd ("CJD") at a cost of $33,935.53. The first series of repairs were carried out pursuant to job No 101081 (6 August 2001) for a cost of $17,902.49 and further repairs pursuant to job No 101910 (26 October 2001) were carried out for a further cost of $16,033.04. The plaintiff originally claimed $41,635.53 comprising the purchase price of and repairs to the tractor as well as damages for breach of contract. At trial counsel for the plaintiff abandoned the claim for the purchase price of the tractor. Further or alternatively the plaintiff claims damages pursuant to s 52 of the Sale of Goods Act 1895 and s 79 of the Fair Trading Act 1987. Interest is also claimed on any sums found payable to the plaintiff from 6 August 2001.

4 In an amended defence filed on 18 May 2004 the defendants admit the purchase of the tractor and the nature of their business but deny that the defendants are a dealer for new John Deere machinery. Relevant to the alleged particulars of representations the defendants say that the tractor was expressly advertised as being for sale in "as traded" condition and that the price of $7,700 was well below the usual market price for that particular type of machine. They say that the plaintiff, who resides on a rural property in Jarrahdale, advised the servants or agents of the defendants that he required a cheap second hand tractor and after examining the tractor which had its engine started with the use of "Aerostart" in his presence, the plaintiff purchased the tractor.

5 The defendants allege that the plaintiff had the opportunity to test drive and operate the machine on a vacant lot which was next door to their premises in Kewdale and if that had been done such testing ought to have revealed the defects alleged in the reamended statement of claim. The defendants claim the plaintiff did not rely on the seller's skill or judgment and the goods purchased were a patent or trade name, so in the circumstances there was no condition of the contract that the goods were of merchantable quality or fit for the purpose for which they were supplied.

6 Further and in the alternative the defendants plead that in the circumstances it was not reasonable for the plaintiff to rely on the alleged representations of the staff with whom he dealt, which representations are denied in any event.

7 It is the defendants' case that the tractor was operable and reasonably fit for the purpose for which it was required and therefore of merchantable quality. The repairs were carried out by the plaintiff were, in the defendants' submission, unreasonable or unnecessary or did not solely relate to the defects which the plaintiff claims existed in the tractor. It is denied the plaintiff has suffered any loss or damage but the defendants submit that if the Court were to find that there was loss and damage it is limited to the difference between the value of the tractor and the price paid or the difference between the value of the tractor at the time of delivery to the plaintiff and the value it would have had if it had answered to the warranty of quality pursuant to s 52(3) of the Sale of Goods Act 1895. Therefore it is said that the plaintiff is not entitled to claim the cost of repairs which are unreasonable (in that they are more than four times the cost of the tractor) and do not reasonably relate to the defects which the plaintiff claims existed in the machine.

8 The defendants also say that the plaintiff failed to mitigate his loss by engaging a third party to carry out the repairs without reference to the defendants when the plaintiff knew that they had a full workshop capable of carrying out such repairs. Further they allege that the plaintiff failed to mitigate his loss by terminating the contract and obtaining a refund of the purchase price or a replacement tractor.

9 Initially the plaintiff did not specify any particulars of purpose relevant to the tractor and evidence in that regard was received on a provisional basis. Subsequently counsel for the plaintiff obtained leave to amend the statement of claim to allege the purposes for which the tractor was acquired being:

(1) to maintain the roads on the plaintiff's farm at Jarrahdale;

(2) to maintain the drainage ditches on that property;

(4) for use in digging a trench for underground powerlines to the plaintiff's property at Jarrahdale.

10 In response counsel for the defendants submitted that in any event the particulars of purpose were irrelevant to inducing sale, claiming that it did not occur in reliance on any representations or conduct on the part of the defendants' servants or agents.

11 Counsel for the plaintiff argued that until such time as an agreement was reached there was an obligation on the defendants through it servants or agents, particularly once they were aware of the plaintiff's requirements, to advise the plaintiff as to whether or not the tractor was capable of performing those requirements. Further it was submitted that an agreement is not concluded until the transaction is finalised by payment of the purchase price.

12 A number of issues both of fact and law fall to be determined on the evidence before the Court. There is a question as to whether the defendants were dealers for new John Deere machinery and whether they advertised a second hand John Deere 410 backhoe loader for sale in "as traded" condition, with the knowledge of the plaintiff, and whether in fact the $7,700 purchase price paid was well below the usual market value for such a piece of machinery. There is considerable debate as to whether the alleged representations both by word and conduct during the negotiations relevant to the purchase of the tractor were actually made to the plaintiff and whether in fact the plaintiff disclosed to the defendants the purposes for which the tractor was required and if in doing so he relied on the defendants' skill or judgment.

13 There is a question as to whether the tractor was bought by description and under which name it was sold. There is an issue as to whether the plaintiff did have an opportunity to test and operate the tractor which ought to have revealed the alleged defects and whether in fact on delivery the tractor actually had the defects alleged by the plaintiff. If this was so, whether it meant that the tractor was not of merchantable quality or was such that it was not fit for the purposes for which it was alleged required by the plaintiff. In addition it must be determined whether the repair costs incurred by the plaintiff were attributable to the alleged defects and necessary to put the tractor or backhoe into a condition whereby it was of merchantable quality and whether such repair costs were necessary to put the machine into a condition whereby it was fit for the purposes allegedly required by the plaintiff.

14 The defendants also raise an issue as to whether the plaintiff has failed to mitigate his alleged loss and further if he is entitled to damages, whether the amount claimed is reasonable in the circumstances.

15 Mr Geiger was born in the United States in 1946 and was educated there. After spending three years in the Marine Corp he went to university where he obtained a Bachelor of Science degree, majoring in philosophy in 1971. From then until about 1985 he worked with the railways, beginning as a labourer and working his way up to the position of track inspector, whereby he was licensed by the federal government to inspect and oversee repairs. It was in this context that he obtained a qualification to operate a backhoe, which he did for approximately five years in the mid-1970's. After marrying an Australian woman the plaintiff migrated to Western Australia in December 1985 and lived at Cottesloe for a time. During this period he worked on a number of oil rigs in a domestic capacity, rather than working with machinery. In 1998 approximately 12 months before the tragic death of his wife, the plaintiff purchased a five acre property in Jarrahdale. During his wife's illness the plaintiff retired from working on the rigs in order to spend more time at home. During this period he worked in real estate.

16 In 2000 the plaintiff with his young daughter moved to the Jarrahdale property which has a three bedroom house and a large shed on it. The property has a long rock and gravel driveway with fairly extensive drainage ditches bordering it and for this reason the plaintiff considered it would be a good idea to have a backhoe to carry out the work relevant to digging and maintaining drainage ditches. To this end he began to study newspaper advertisements for backhoes and that was how he came to see an advertisement for the backhoe or tractor which he ultimately purchased from the defendants. That advertisement, Exhibit 2, states "Backhoe loader JD 410 with torque converter, as traded" and there then follows a telephone number.

17 As a result the plaintiff attended Wattleup Tractors, the defendants' business, and driving into the parking area he saw the machine in the corner of a large lot. The layout of the premises showing Lots 104 and 105 with machinery and a vacant adjacent lot is in photos, Exhibit 3A and 3B. The plaintiff got out of his vehicle and went straight over to the backhoe and began to inspect it. He noticed some people in another corner of the yard and one of them approached the plaintiff and introduced himself as Steve. The plaintiff recalled Steve said he was the lead mechanic for Wattleup Tractors.

18 The plaintiff advised Steve that he had noticed a fuel leak at the front of the machine. The person called Steve indicated he was aware of this and that it would be fixed by the defendants replacing a fitting that went into the bottom of the tank.

19 The plaintiff said in evidence that he did not recall if he told Steve of his needs relevant to the backhoe or not, but he said he clearly recalled Steve advising him that "this is a good machine". Steve then took the plaintiff into the office of Wattleup Tractors where he was introduced to Mr Marin Zuvela, whom the plaintiff understood to be the service or sales manager. After a short conversation with Mr Zuvela he and the plaintiff decided to view the tractor whilst it was actually running. Steve then arrived with what appeared to be an auxiliary battery which was to be hooked up to the battery in the backhoe to give it extra strength in order for it to work. Some aerosol was also placed in the air intake to assist the machine to start.

20 At this point the plaintiff said Mr Zuvela informed him that the battery did not work and that the defendants would put a new battery into the backhoe. In the meantime the aerosol product was being used because the battery was weak and needed assistance to start. After a short time the backhoe started with Mr Zuvela sitting in the operator's seat. As it was idling Mr Zuvela returned to his office and advised the plaintiff that he could "have a go at it". At this point Steve had also left and so the plaintiff sat in the driver's seat and began pulling various levers on the machine. The machine, however, was surrounded by other equipment and so there was a limited area in which the plaintiff said he could carry out testing. This particular machine had a joystick with two levers and the plaintiff tried each lever. He tried the stabilisers whereby one pushes the lever and one stabiliser goes down and then he tried the other lever. He could not recall whether in the space available it could go all the way down, but certainly he recalled extending the boom out and it worked in the sense that it went down. The main boom is the rear apparatus displayed in the photographs of the backhoe, whilst there is another boom at the front of the machine which attaches to a bucket. When the rear boom with its bucket was partially extended the plaintiff attempted to roll the bucket out and in but he was fairly cautious in doing so because he said it was sitting on its rubber tyres and when one extends the boom a little on the rubber tyres, it can be somewhat unstable when it is not up on the stabilisers. For this reason he did not attempt any dramatic moves and in any event he was somewhat hampered by the surrounding equipment. He tried swinging it to the left and right and it performed those tasks. It appeared to the plaintiff to be capable of carrying out each individual motion as he tried them.

21 As part of his trial he raised the front bucket and tilted it and he also put it in gear and moved it forward one or two metres and probably backwards one or two metres. When he did this, he noticed after taking his foot off the clutch that the machine was very slow to start moving, but he thought this was simply a matter of adjustment. These manoeuvres, as explained by the plaintiff, comprised the extent of his trial of the machine at that time. At a later point in evidence the plaintiff conceded he was aware that there were some problems with the machine but pointed out that he was not a mechanic. He believed that as the machine was working, it would be acceptable and so he went to see Mr Zuvela to make an offer on the backhoe. Initially the plaintiff enquired if Mr Zuvela would accept $5,000 but he rejected that offer. Mr Zuvela did, however, say that if the plaintiff purchased the machine he would have it delivered. He also said that he would replace the battery and fuel line if the sale proceeded.

22 Having agreed to a sale price of $7,700 inclusive of GST, the plaintiff said that whilst Mr Zuvela was filling out the necessary paperwork he informed Mr Zuvela that he had a block of land and he needed to maintain the roads and ditches on that property and in addition the plaintiff intended to build a swimming pool on it. He said he also informed Mr Zuvela that one day he hoped to connect underground power to the property. Mr Zuvela never said or suggested to the plaintiff that he could not or would not be able to use the backhoe to carry out these tasks. Having written out a cheque the plaintiff received Exhibit 4, a receipt from Wattleup Tractors dated 5 June 2001. This was the first and only backhoe that the plaintiff inspected prior to purchasing such a machine.

23 Pursuant to the agreement, not long after on a Friday morning the backhoe was delivered by a person from Wattleup Tractors who unloaded the backhoe from the trailer and then commenced to start it using aerosol. The plaintiff thought this was a little unusual as he considered the machine must have been started a short time earlier in order to load it on to the truck. The plaintiff got on to the tractor, put it in gear and drove it up to his shed during the course of which he noticed once more that when he removed his foot from the clutch it took a couple of seconds to engage or commence movement.

24 Mr Bozanich, who was that delivery driver, was called on behalf of the defendants. He had only very recently been requested to recall the events of the day of delivery and his subsequent visit to collect the backhoe to take it to CJD's for repairs. Mr Geiger made no particular complaints about the machine to Mr Bozanich, but in my view there would be no call for him to do so. Mr Bozanich conceded that he did not have a particularly clear recollection of his role in these events or this machine. For that reason his evidence did not greatly assist in this matter.

25 It would appear that the plaintiff did not use the backhoe that day but the following morning he went down to his shed and started the machine, before driving it to an area where he could test it and familiarise himself with its levers. He attempted to dig a hole and realised almost immediately that something was amiss. The machine would only perform one function at a time and so its functions did not coordinate in the way that the plaintiff expected they would. Having noticed this he returned the machine to the front of the shed and turned it off.

26 Early the next week he contacted Wattleup Tractors to ask if they could send their truck back in order to take the backhoe to CJD, the John Deere dealer, in order for some repairs to be carried out to the backhoe. At this time the plaintiff said he appreciated from looking at various advertisement in the paper that backhoes (presumably secondhand) often sold for $15,000 to $20,000 and so he thought that if there were some repairs or adjustments required he could spend a further $10,000 or $12,000 and still be, as he described it, "in the ball park for an operating machine". At that point he believed it was simply a matter of tuning and adjusting the backhoe in order to have an operational machine.

27 He had previously been informed by Mr Zuvela that the defendants were not John Deere dealers and they had only taken the machine in question as a trade-in and were anxious to move it off their premises, so for that reason the plaintiff understood that it was being sold at a relatively cheap price. He said he was not aware that the defendants repaired all types and makes of machinery.

28 The defendants agreed to send their truck to the plaintiff's property to collect the machine and deliver it to CJD where the plaintiff spoke to the service manager, Mr Richard Grunwell.

29 He informed Mr Grunwell that the tractor had been recently purchased from the defendants and that it had some problems with its movement and he also wanted the seat repaired. Given what he had paid for it the plaintiff informed Mr Grunwell that he could afford another $10,000 to $12,000 to carry out repairs and enquired whether in the circumstances this was a reasonable expectation. The seat did not swivel properly in that it did not lock but rather kept rotating as the machine was being driven. He also wanted the seat recovered as it was ripped. Mr Grunwell, according to the plaintiff, after inspecting the machine, advised that this amount of money could well be sufficient to render it a good operating machine.

30 Over time, during the repair period, the plaintiff was kept informed of developments and was satisfied with the work which CJD appeared to be carrying out. He was, however, informed that the radiator was not capable of being rebuilt and a new one would be required. He was also informed that there were bubbles coming through the radiator, indicating a head gasket in the engine had blown and that this would also have to be replaced. Unfortunately his budget for repairs would not cover this and there would be additional costs involved.

31 The plaintiff having spent $10,000 to $12,000 as well as the initial purchase price said he felt "trapped" and ordered these further repairs to be carried out. In the course of this occurring it became apparent that the pistons, liners and internals of the motor were worn to such a degree that CJD advised it would be sensible to spend further money to rebuild the engine. The backhoe was returned to the plaintiff, who was given an itemised invoice of the repairs carried out, Exhibit 5. His evidence was that the document also contained some red writing which was placed there later by Mr Grunwell when the plaintiff asked him to provide further comments by way of explanation regarding the work done on the machine.

32 The plaintiff was somewhat distressed at the extent of the repairs which had to be carried out and so he contacted Mr Zuvela and gave him a copy of the repairs carried out and their costs, advising he felt that having to spend a considerably amount of money to render the machine operational it was excessive and he asked if Mr Zuvela would consider giving the plaintiff a couple of thousand dollars or virtually splitting the extreme costs in excess of its value so that the situation could come to an end. He was very surprised when Mr Zuvela asked why the plaintiff did not take the machine to Wattleup Tractors for repairs because the plaintiff understood they were not a John Deere dealer and further understood that Mr Zuvela did not want to see the machine again once he had disposed of it from his premises. At that point the plaintiff still owed the defendants $181.50, Exhibit 6, relevant to cartage for the collection of the backhoe and its transport to CJD but Mr Zuvela informed him that he could forget that particular debt.

33 After the repairs were carried out and the backhoe redelivered to the plaintiff's property he decided to use it to dig a hole for the swimming pool he wished to install. This task took about 30 hours as was evidenced by the hour metre on the machine, which had been replaced by CJD as the original hour metre was broken. Towards the completion of the task the right front wheel of the machine broke off. On investigation the plaintiff saw that this was due to a welding fault, as a result of which the kingpin holding the wheel had been welded right around and up through the front axle. When the weld popped it caused the wheel to dislodge. The plaintiff managed to chain the wheel back on to the machine so that he could drive it back to his shed.

34 Once more he contacted CJD to arrange for them to collect the machine and repair the problem. He was informed that it would be expensive, although CJD would try and reduce costs by using used parts. As the brakes were also problematic the plaintiff asked that they be checked during the course of repairs. For this subsequent work the plaintiff received a further invoice, Exhibit 7, for $16,033.04, dated 26 October 2001. Again subsequently Mr Grunwell noted on the invoice in red pen further explanations as to the nature of the repairs that had been carried out.

35 The plaintiff's evidence was that he now has a fully operational machine but for the money he spent on initially purchasing it and subsequently repairing it he believes he could have purchased a new machine. The plaintiff said he purchased the backhoe on the basis of what it was supposed to be and what was indicated to him about it by the defendants.

36 The plaintiff believed that the advertisement stated a price for the backhoe but he could not recall other backhoes being advertised in the same section, which became Exhibit 8. He could not recall saying to Mr Zuvela that he wanted a backhoe for under $10,000 and rather than saying he wanted a machine to play around with on his property the plaintiff maintained he told Mr Zuvela it was to do work on his property and he specified that the work was digging a swimming pool, maintaining ditches and roads and putting in underground power. He claimed the statements made by Mr Zuvela and the mechanic Steve were important and caused him to purchase the backhoe.

37 In November 2001 the plaintiff made a complaint to the Ministry of Fair Trading, Exhibit 9, in which he did not refer to any of the alleged representations made to him. He then caused a letter of demand, Exhibit 10, dated 21 November 2001 to be sent to the manager of Wattleup Tractors which again did not make reference to any alleged representations made to the plaintiff by the defendants or their servants or agents, but requested the defendants pay the plaintiff $20,410.46. Following this, through a solicitor, Mr Michael Workman, the plaintiff sent another letter of demand to the manager of Wattleup Tractors dated 15 January 2002 which he conceded again contained no reference to any alleged statements made to him by either Mr Zuvela or the mechanic Steve. However, on 16 April 2002 the plaintiff's current solicitors sent a further letter of demand to the defendants, Exhibit 12, which in par 4 states: "Despite the representations made by you and other representatives of Wattleup Tractors (which representations induced our client to purchase the backhoe), the backhoe required significant maintenance and repairs before it could be properly operated." The nature of the representations, however, were not referred to in that faxed document.

38 The plaintiff did not recall speaking to a Sean McGee at Wattleup Tractors at the time of purchasing the tractor and believed he only spoke to the man Steve and Mr Zuvela. He agreed Mr Zuvela never said anything regarding the machine not being in an operable condition, but equally he did not say anything about the operative condition of the machine. Although certainly from photographs taken by the defendants in mid-2004, the plaintiff agreed the large vacant area to the left of the Wattleup Tractors' yard provided room for test digging he qualified it by saying this would be the case if one was not concerned about plumbing, electrics or gas.

39 He denied the backhoe was parked near the entrance to the mechanic's shed at Wattleup Tractors and maintained it was parked at the side of the buildings on the premises. Relevant to Exhibit 15, a title search for Lots 104 and 105, the plaintiff marked with a cross where he said the backhoe was when he inspected it. He also marked the locations of the shed and office. He recalled the entrance to the workshop facility as being at the north east end of the building via a sliding door which he also marked. It should be noted that the witness made these markings some years after he had visited the premises on only two occasions.

40 He agreed the first complaint he made to the defendants regarding the operation of the backhoe was after the first series of repairs had been carried out and although the plaintiff offered the defendants a compromise they did not respond to his offer at that or subsequent times. This irritated the plaintiff but he denied requesting the defendants to waive the cartage costs of $181.50. He agreed, however, he told the defendants he felt "funny" about coming to them and asking them to reimburse him relevant to some of the repairs, when in fact the plaintiff owed them money for cartage.

41 The invoice relevant to that account has the notation "This written off, 10 September 2001, after customer came in and complained". The plaintiff asked for $2,000 from the defendants being in his estimation one half of the excess of what the plaintiff believed to be the value of the backhoe as a marketable machine and what the plaintiff had spent on repairs.

42 The plaintiff said the hour meter which was inoperative on purchase was repaired during the first series of repairs being carried out and yet both invoices for repairs being Exhibits 5 and 7 indicate that the hour meter shows the same reading on each of 1859 hours. The plaintiff said, however, after the first occasion the hour meter was operating. This apparent anomaly was later explained by the witness Mr Grunwell.

43 In relation to Exhibit 10, Mr Geiger agreed annexed to it was a list of specific items claimed Exhibit 17, and certainly the amounts claimed would appear to coincide with the figures in the invoices for repairs, but he was unable to say that the attachment was in that particular form when the letter of demand was sent. Exhibit 18 is a collation of costs relevant to the first and second repair jobs carried out on the backhoe, prepared by Mr Stephen Oxley.

44 The plaintiff was cross-examined at some length regarding the repairs carried out on the tractor. Relevant to Exhibit 5, being the invoice for the first series of repairs, he said item 8 being re-securing the operator's seat and recovering it, item 10 being replacing the exhaust muffler and retubing the system and item 12 being the supply and fitting of an appropriate replacement front grill, were all repairs carried out at his request. The exhaust muffler was unstable or wobbling but he conceded that this would not prevent the backhoe functioning properly.

45 He said, however, the instability of the seat could render operating the machine difficult and dangerous in that as it was unstable the driver could fall off while sitting on the seat because it would not lock into position. The re-covering of the seat, however, would appear to be cosmetic in the sense that it did not negatively impact upon the functioning of that part of the backhoe.

46 In relation to item 15, being cutting off some market bracketing, this was done because its presence made it more difficult to get in and out of the machine, however, it did not prevent the machine operating effectively. Similarly item 16 for supplying and fitting a replacement cover was cosmetic in the sense it did not prevent the machine operating properly. Item 17 relates to the fitting and replacement of the hour meter and rewiring it so it was functioning and reliable. After the first series of repairs the plaintiff's recollection was the hour meter worked properly and indeed he noticed this while he was digging a hole for the swimming pool, just prior to the second series of repairs being carried out. For that reason he believed it was an error that the same repair job was also covered in the second series of repairs.

47 Item 7 on Exhibit 5 relates to greasing of the entire machine and clearing blocked grease ways as well as re-securing a number of pins, which is a normal service item and whilst it does not stop the backhoe from operating, nonetheless in the plaintiff's opinion the machine should not have been sold in this condition whereby it required this type of repair. Item 9 on that invoice relates to removing the battery, cleaning it and topping up the fluid. Once more this was not a defect which prevented the backhoe operating properly, but in the plaintiff's opinion any conscientious dealer would have attended to this item before selling the machine.

48 Item 14 relates to the removal of an earth wire for the stop solenoid from the fuel line in order to relocate it. According to the plaintiff this was indicative of a shoddy repair being carried out previously and was dangerous according to what he was told by the mechanic from CJD. Such a defect which would not be obvious on general inspection means the backhoe is not operating correctly and as it should, therefore according to the plaintiff this repair was not a normal item of maintenance.

49 Item 4 relates to the repair of the fuel tank which was poorly mounted and leaking diesel fuel. The plaintiff said this was unacceptable because one should not drive a machine which is leaking fuel over the ground. Relevant to this first series of repairs the plaintiff said the transmission was serviced at his request because there was debris in the bottom of the pan consistent with the vehicle not being properly serviced in the past.

50 With respect to item 2, the action of the backhoe was very slow and only one function could be utilised at a time. The main hydraulic pump was found to be in very poor condition with the result that it was replaced. This defect, according to the plaintiff, essentially meant the backhoe was not operating as it was designed to function and he pointed out that he was not able to fully test this particular function prior to purchase because of the confined area available to carry out the trial at the defendants' premises.

51 The radiator according to CJD was unserviceable and had to be replaced. For the same reason, item 11 in Exhibit 5 with respect to rebuilding the engine was necessary because CJD advised the plaintiff that the pistons and sleeves were worn to such an extent that there was every likelihood they would fail in the near future. According to item 6 in Exhibit 5 the injectors on the backhoe needed to be replaced because on testing they were found to be operating poorly and incapable of repair. This was necessary because the fault injectors were responsible for the engine not starting when it should have done so.

52 Item 13 in Exhibit 5 relates to replacing the front bucket edge on the backhoe with a straight edged bucket. The floor, however, was found to be too corroded to attach the replacement edge and required a full replacement. The plaintiff said that it was obvious to him on inspection that the front bucket edge was serrated rather than straight, and it was quite unusual for front bucket edging to have teeth.

53 According to the plaintiff's evidence after the machine was returned to him following the first series of repairs he used it for one major job on his property being the digging of the hole for the installation of a swimming pool. At this time the hour meter was working and it would seem that it was indicating about 30 hours work had been done (although the plaintiff explained that this did not necessarily mean 30 hours in clock time) when the wheel came off the machine and it could no longer function as it was defective and dangerous. This is what caused the second series of repairs to be carried out as evidenced in Exhibit 7.

54 Item 8 relevant to cutting off brackets, referred to the removal of additional brackets on the side of the machine that were not cut off at the time of the first series of repairs. This did not, however, prevent the machine from operating effectively. Item 1 on Exhibit 7 was cartage of the machine from the plaintiff's property at Jarrahdale to CJD's premises at the plaintiff's request. Item 9 relates to resealing of both crowd cylinders which were leaking because they were worn out. The practical effect of this according to the plaintiff was that when he raised a load, the bucket in which it was housed would roll off by itself causing the load to spill on the ground. The plaintiff had no way of controlling this function and considered that it was dangerous. Mr Grunwell from CJD advised the plaintiff that this repair should be carried out.

55 Item 4 on that invoice relates to repairs to the braking system of the backhoe. After the first series of repairs the plaintiff noticed a noise coming from the braking system and observed that the backhoe tended to slide down inclines, indicating the braking system was not working efficiently. Further the steering brakes in his opinion did not work effectively. Item 7 on that same invoice also relates to work carried out to render the braking system more effective.

56 As part of the second series of repairs the transmission on the machine was serviced because as item 5 indicates there was debris in the pan consistent with the vehicle not being properly serviced in the first instance. On that second occasion work was done to split the machine and replace the rear main oil seal and transmission input oil seals because the machine was still leaking oil and was therefore defective. Further as indicated in item 6 the hydraulic system needed to be checked as it was heating up in a very short time and causing the hydraulics to slow down in combination with excessive play in the linkages. The fault was found to be with the front bucket valve and control linkage which then had to be repaired.

57 Mr Richard Grunwell has been a qualified diesel fitter for approximately 40 years and during his career has worked on a wide range of machinery including mobile earthmoving machinery. It was clear from his evidence that he has a wide range of experience and in 2001 was employed at CJD as their customer service manager which was how he came into contact with the plaintiff. The backhoe was delivered to CJD's premises where Mr Grunwell and the plaintiff discussed the repairs required. The machine had engine problems and had to be towed off the truck on Mr Grunwell's instructions to the foreman with the plaintiff instructing that he wanted the immediate problems with it to be defined and if possible the machine remobilised so the plaintiff could use it.

58 Mr Geiger advised that he hoped the cost of repairs would not exceed $10,000 to $12,000 but, given the age of the machine he was not prepared to commit himself on that point. The immediate problem appeared to be with the transmission of the machine.

59 Mr Grunwell explained how documents such as Exhibits 5 and 7 come to be prepared relevant to the job descriptions contained in them. He does not physically carry out the repairs and maintenance but he personally oversees the job through to completion and edits it which includes ensuring all the costs are on and in keeping with the work done, before the invoice is presented to the client for payment. Whilst the job itself is raised by the service clerk, the entries were placed there by Mr Grunwell. He is in a position then to provide the client with an explanation if one is required, relevant to the costings and work done. He also explained how costings come about in terms of profit margins being included by a setting on a computer. The labour rate is also submitted automatically by the computer as are the price of parts used.

60 Relevant to item 1 in Exhibit 5 prior to repair Mr Grunwell said the backhoe could not operate with the transmission in the condition it was when the backhoe was sold. The oil quality was very poor as it was mixed with water and contained an excessive amount of debris. After repair to the transmission the machine operated acceptably in that it could move around but that did not mean it was in as new condition. The pump needed to be replaced as per item 2 because it was too worn to repair. The radiator in item 3 had corroded to the point where it was failing and coolant was ending up on the ground so it needed to be replaced.

61 Relevant to item 4, the fuel tank needed to be repaired with some replacements because it was a safety risk as fuel was leaking and posed a fire hazard. With respect to item 5, coolant was leaking because the water pump bearing had failed and the fan belt which was about to fall off, needed to be replaced. If the fan belt had broken it probably would have gone through the radiator which would have caused considerable problems.

62 Relevant to item 6, the injectors needed to be replaced because the engine could not start normally and was blowing excessive black smoke indicating poor burning of fuel. They were not reparable. Item 7 relating to greasing of the machine is a normal part of maintenance but was required in this case because it appeared to be a very long time since the machine had been greased and this is necessary for the machine to operate effectively and efficiently.

63 He explained in relation to item 8, that the operator seat was re-secured because it was an issue with safety implications given it was a dual purpose seat facing forwards and backwards depending in which direction one was operating the backhoe. If the pivot did not lock in the forward or backward position it would be unstable and could cause safety problems for the machine operator. In relation to item 9, it was recommended that given the battery terminals were corroded, the battery be replaced in due course. At the time it was cleaned and topped up as part of normal service which should have been done on a regular basis and clearly this had not occurred.

64 Relevant to item 10, the muffler was insecure and had been for some time so at the plaintiff's request it was replaced. In Mr Grunwell's opinion if the muffler had fallen off into dry grass, for example, it could have been a fire risk. Item 11 relates to the in frame engine rebuild. Mr Grunwell noted the engine had blown a head gasket and this was putting compression into the cooling system which meant the engine could not be started without artificial aid. An inspection of the disassembled engine and associated parts made it plain why this was the case and Mr Grunwell believed the machine could not be used with the engine in the condition it was when the machine was sold. This defect also meant that the machine did not have the ability to keep itself cool with consistent use and ultimately a seizure would have occurred.

65 Item 12 relates to the supply and fitting of an appropriate replacement front grill tank protector which the plaintiff requested be done. Mr Grunwell said that if one was not present a fuel tank was vulnerable because it was not protected from items which may fly into the area and puncture the fuel tank causing fuel leakage. The front bucket edge was replaced with a straight edge because in its current condition it appeared that the edge had been subject to an amount of abuse.

66 Mr Geiger explained why the repair in item 14 had to be carried out. In his opinion attaching the earth wire for the stop solenoid to a fuel line was very dangerous and may even lead to a fire. The after market bracketing in item 15 was removed because the plaintiff did not require it to be there. He could not recall any precision why repair item 16 was carried out.

67 In relation to item 17, being the fitting of a replacement hour meter, Mr Grunwell said the one on the machine had not worked for some time and was not in a condition whereby it could be reconnected to run. It had to be replaced. This is an important piece of equipment because it is part of a warning instrument advising the operator as to the condition of the machine when it is running, which is a safety issue. The hour meter is referred to in both invoices and against each is the notation 1859 which Mr Grunwell explained would be the hour reading on the hour meter on the machine the first time he saw it and was placed into the system. When the machine was returned by the plaintiff, a clerk in setting up the document, Exhibit 7, simply printed off a duplication of the original hour reading, which was incorrect. It is therefore apparent, in my view, that the hour meter was repaired on the first occasion only and not on the second occasion, because at that point it was working effectively.

68 Relevant to item 2 on Exhibit 7 Mr Grunwell explained that the part of the machine the kingpin was welded to was of an entirely different metal than the kingpin itself which caused them to come apart and the wheel to dislodge. In his opinion this rendered the machine dangerous because one had no steering and could not control it. After the breakage the machine was inoperable. Mr Grunwell also explained why relevant to item 3 on Exhibit 7 the work was carried out and he considered it to be prudent in the circumstances.

69 In relation to item 4 on that document, which deals with brakes, Mr Grunwell noted that the brake condition was very poor to the point where it was unreliable and unsafe with the possibility of total mechanical failure occurring within a short time if the problem was not addressed. Item 5 was a follow up to the first series of repairs. As the machine had worked for some 35 hours after the first repairs Mr Grunwell recommended that the screens and filters be pulled in order to examine the filters so as to give the plaintiff some confidence in the transmission. Mr Grunwell strongly suggested that the oil and filters be changed for the reasons he explained in his evidence.

70 Relevant to item 6, he said there was a problem with the hydraulics overheating in a short space of time because of a cutting in/cutting out action related to a variable displacement pump. This in turn led to hardening of seals and leakage within the machine. In relation to item 7, the problem was there were only brakes on one side meaning that when they were applied the machine swerved to one side, causing it to become unpredictable in its behaviour and manoeuvring ability. As to item 9, relating to resealing both crowd cylinders, Mr Grunwell said that the lefthand side cylinder was leaking badly causing instability when the bucket was lifted with a load and as it was not an expensive job it was worthwhile repairing both cylinders. If this was not done the operating effectiveness of the front bucket would be reduced and oil would also leak past the seal on to the ground.

71 Mr Grunwell said he was aware of the value of this particular machine and the plaintiff's desire to keep repair costs under control. As a result Mr Grunwell was not looking to carry out anything more than the necessary repairs. Once repair work commenced it became evident that the general condition of the machine was very poor, to the point in his view that it was not a commercial proposition.

72 Mr Grunwell did not physically carry out repair work on the plaintiff's backhoe rather it was supervised by the workshop foreman and mechanics under his control. A mechanic working on a particular machine prepares a daily timesheet relevant to the work done and this is often broken down into what are termed sub-jobs relevant both to the nature of the task and the job number allocated to it. The mechanic does not make any form of commentary relevant to the work done. That timesheet or time card information is then entered into the system via a designated procedure explained by Mr Grunwell.

73 In this case he explained that the commentary he provided relevant to Exhibits 5 and 7 came either from a diary which he kept with respect to the work done or by means of him vetting the job card and from memory providing the explanation. He vets job cards not only to clarify an explanation if one is needed regarding the work done, but also to ensure that all costs are noted and in proportion to the amount of work done. He also explained that Exhibits 5 and 7 which he described as "retail prints" are actually taken from internal prints which are not always viewed by the customer as they contain confidential and sensitive information in some cases. A retail print is simply a condensation of the information on an internal print with appropriate deletions. His evidence was that all the repairs carried out to the backhoe were necessary and reasonable as to cost, time and replacement items used.

74 He agreed that if the machine had been operated then problems would certainly have been obvious to the person operating it. It was not clear, however, from cross-examination what was meant by the machine having been operated or which particular problems would have been apparent to the operator. As to item 11 on Exhibit 5, relevant to the frame engine rebuild Mr Grunwell told the Court that during such a procedure the crankshaft stays in place. It would appear, however, there is a notation on the document asking that the crank on JD 410 be tested and a cost of $735 for that service being raised. He was unable to say how that occurred, but observed that if it happened then it would have been what is called a sublet job done by a company specialising in that type of work who would then bill CJD for it.

75 Mr Marin Zuvela operates the defendants' business and sold the backhoe to the plaintiff. With his brother he owns the land depicted on Exhibit 15, Lot 104 being the adjacent vacant lot next to the lot where the backhoe was located. Mr Zuvela, however, disagreed with the location of the backhoe on Lot 105 as marked by the plaintiff and also took issue with the entry and exit points on to Hodgson Way as marked by the plaintiff. He said there was an access way from Lot 105 to 104 because the dividing fence did not run the whole length between the two lots of land. He also described the layout of the property with reference to a series of photographs taken in May and June 2004 being Exhibit 13(1) to (5). Exhibit 14, a photograph taken on 29 June 2004 depicts a bulldozer being tested, or one which was tested, on the vacant lot.

76 Mr Zuvela qualified as a fitter and turner and has been dealing in machinery including tractor sales since 1975. In the mid-1980's he took over the Massey Ferguson dealership and currently operates under the name Wattleup Tractors. This business has a high volume turnover and supplies machinery to market gardens, orchards, vineyards, councils, hobby farmers and farmers. He supplies a different sector than CJD although his business has supplied CJD with front end loaders on their agricultural tractors.

77 In response to the advertisement, Exhibit 2, he said Mr Geiger attended Wattleup Tractors and went straight to the backhoe in the area as marked by Mr Zuvela on Exhibit 15. The backhoe had only been at the premises for a couple of days, although it seems Mr Zuvela did not actually see it being delivered. His business paid $5,500 inclusive of GST for the machine.

78 Mr Geiger then in company with Mr Zuvela went to further inspect the machine which needed to be jump started using a battery and "Aerostart" starting fluid. "Aerostart" was used because an old machine such as this backhoe being a 1981 model can have low compression as a result of a worn head or worn valves. He believed the person who actually used the "Aerostart" was Sean McGee, a salesman for Western Ag who happened to be at the premises at the time but he knew nothing about this particular backhoe. Western Ag, although a totally separate entity from Wattleup Tractors, is a company of which Mr Zuvela and his brother are directors and the sole shareholders and they employ Mr McGee. He worked for Wattleup Tractors for about three months as a mechanic in 2000 before going to work at Western Ag.

79 Mr Zuvela had a discussion with the plaintiff about a leaking fuel pipe which Mr Zuvela said the defendants would repair and he also said the defendants would replace the battery. He further told Mr Geiger that he could go next door on to the vacant block and operate the machine in order to test it. He pointed out where the block was and in more detail with reference to Exhibit 19, a series of photographs taken on 2 July 2004, indicated where the backhoe was located at the time of this discussion.

80 Relevant to photo Exhibit 19(2) he said there was a clearway to the adjacent block which always had to be kept clear because there was a main entrance into the rear of the workshop at that point and it was the only way to get access into the other side of the workshop. There was no obstruction to the clearway on the day that the plaintiff attended the premises and carried out his inspection. He said the access way to Lot 104 was clear and obvious when he indicated that the plaintiff could go next door to test the backhoe. Mr Zuvela did not tell the plaintiff that the defendants owned the adjacent vacant block but simply told the plaintiff according to his evidence that he could go next door. Further, he did not advise the plaintiff that the vacant adjacent lot did not have electric or water services connected to it. The vacant block also had machinery parked on it and there was about a 10 metre gap allowing clear access from Lot 105 to Lot 104. At that point Mr Zuvela returned to his office to take a telephone call and so he did not see how or where the plaintiff operated the backhoe. In his view, however, a person would have to be experienced in order to use a backhoe properly and if this backhoe had been tested, according to Mr Zuvela, serious defects in the hydraulics and transmission would have been evident. Little weight can be attached to this opinion, however, as he claimed he personally did not test it and further he did not see the plaintiff testing.

81 He said he did not speak to the plaintiff regarding the condition of the backhoe but was told by him that he had a small property in Jarrahdale and he wanted the machine to use it on that property in order to "play around with it on his property and dig a few holes". He said he never informed the plaintiff that the machine was good or bad and while it is his policy that customers are free to check machinery on his premises for themselves, he refrains from commenting on the merits or otherwise of machinery because in his experience it "does create a problem down the line", or may do so. He said the plaintiff informed him he was looking for a cheap machine for under $10,000 and the backhoe in question was in Mr Zuvela's opinion a bargain which he expected would sell quickly, particularly given that there was a relatively high demand for this type of machine priced under $10,000.

82 His business sells a number of secondhand backhoes for which there is a good demand and he was not inclined to accept the plaintiff's first offer of $5,000. He informed Mr Geiger that a minimum price would be $7,000 plus GST of $700. This counter offer was accepted by Mr Geiger and Mr Zuvela began to prepare the paperwork. He then said he did not remember at that point the plaintiff informing him of the purposes for which he required the backhoe, rather all he could recall was that the plaintiff mentioned his property at Jarrahdale and the fact that he wanted the machine to do odd jobs on the property. He conceded the plaintiff may have said he wanted to use the machine to maintain ditches and to dig a trench for underground power lines but claimed the plaintiff did not inform him that he wished to use it to dig a hole for a swimming pool.

83 Mr Zuvela next saw the plaintiff when he came to Wattleup Tractors after the backhoe had been delivered to CJD for the first series of repairs. At that point the plaintiff requested that the defendants waive the cartage costs and also mentioned that he had spent money on the machine. Mr Zuvela agreed that he would not pursue the cartage costs, as evidenced by the notation on Exhibit 6. The plaintiff also referred specifically to the costs of the first series of repairs on the backhoe and asked Mr Zuvela to look at the account in order to see whether he could do something about it, which Mr Zuvela said he would do and contact the plaintiff, although no specific amounts of money were mentioned.

84 He said he told Mr Geiger that he should have brought the machine back to Wattleup Tractors and they would have given the plaintiff his money back. According to Mr Zuvela, the plaintiff responded by saying "I suppose I should've". This is a somewhat curious recollection on Mr Zuvela's part. The plaintiff said in his evidence (which was not contradicted) that he contacted the defendants to arrange transport of the tractor to CJD for the first series of repairs to be carried out. This clearly suggests that at that point the defendants must have been aware that there were significant mechanical problems with the machine and yet no offer was made to the plaintiff at that time to refund his money or for the defendants themselves to inspect the tractor and repair it. Mr Zuvela conceded, however, that he did not advise the plaintiff at the time of purchase that if he was unhappy with the machine the purchase price would be refunded. He denied ever informing the plaintiff that the defendants would not repair the machine and that Mr Zuvela simply wanted to get rid of it. In the end he did not feel the need to contact the plaintiff regarding the defendants contributing to the costs of the first series of repairs. He claimed that his business is concerned with its reputation and customer satisfaction and so they had a refund policy. The business also employs 20 people in a workshop who are able to carry out repairs on machinery. This capacity is evident if one attends the premises. In this respect he never informed the plaintiff that the defendants were not John Deere dealers and did not have the capacity to repair that type of equipment.

85 The plaintiff did not contact him regarding the second series of repairs but Mr Zuvela did receive Exhibit 10, a letter of demand, and he was also aware that the plaintiff had contacted the Ministry of Fair Trading because Mr Zuvela explained to that organisation his view on the situation and he heard nothing further from them.

86 In Mr Zuvela's experience backhoes can develop mechanical problems without warning. The defendants' business enables it to carry out mechanical work on all types of machinery including John Deere machinery. They fit loaders to about 70 per cent of John Deere dealers because the defendants have what Mr Zuvela considers to be the biggest agricultural workshop in the State.

87 Although in the course of business Mr Zuvela checks secondhand machinery to see if it is operating and tests it, that was not done in relation to the particular machine purchased by the plaintiff. A test of such a machine would in Mr Zuvela's evidence involve starting it and driving it backwards and forwards as well as working the front loader and back loader, which would quickly reveal if the machine had any defects. The gears would be tested as well as the hydraulics by means of lifting the buckets up and down, but it would not be used to dig a hole as in many places this simply cannot be done. This particular machine was not traded in with the defendants rather when another dealer, Robert Micale enquired as to whether the defendants wanted the particular machine, they purchased it.

88 Mr Zuvela was unaware of the price Mr Micale paid for the machine in the first instance but was of the opinion that the machine was a cheap purchase at $5,000 and the defendants got "a lot of machine for very little money". This machine was purchased sight unseen by the defendants and Mr Zuvela certainly did not operate it or know anything about it. Given the price, one could not expect a lot of machine for the money although he was told by Mr Micale that one could drive it and the loader would lift and the backhoe would operate. This was necessary information given that the defendants wished to resell the machine in an operative condition.

89 After the machine was delivered by Mr Micale to the defendants' premises and placed in the location marked by Mr Zuvela, it was not checked in any way by the defendants' mechanics, for example, with a view to see if it could be cheaply repaired in order to sell it at a much higher price than was ultimately paid by the plaintiff. It was Mr Zuvela's belief that the hydraulics were working and he was not aware if there were serious deficiencies with them or the brakes or indeed any part of the mechanics of the machine. He accepted that if there were deficiencies with the steering it would prevent the driver from turning the machine and if the brakes were deficient it would be dangerous. A faulty water pump could lead to the engine seizing and the machine will run hot if the radiator is deficient.

90 Mr Stephen Oxley, the service manager of Wattleup Tractors, qualified in his profession in 1981 and became a technician in 1983. He worked for a firm in England for 12 years for purchasing his own agricultural service business. He came to Australia in 1996 and was employed by Wattleup Tractors in approximately 1999. In that capacity he has worked on a variety of tractors and whilst he is familiar with the type of backhoe loader purchased by the plaintiff, he did not recall the particular machine in question. In his role as service manager he was able to say that Wattleup Tractors have a refund policy, but noted that it has not been utilised a great deal in the past.

91 Mr Oxley did not have any contact with the plaintiff relevant to the purchase of the backhoe although he said it is common for prospective buyers to test machines at Wattleup Tractors premises, which is usually done in the vacant adjacent lot although it depends on what the prospective customer wishes to do. He had seen prospective purchasers testing various machines by driving them on the bituminised tarmac area outside the main workshop as well as on the sandy area in the adjacent vacant lot.

92 Mr Oxley prepared a document, Exhibit 18, by studying Exhibits 5 and 7 in order to determine what he described as "actual problems" as distinct from "cosmetic items" and what were "service items". As a result, the document was divided into mechanical repairs and cosmetic repairs relevant to work carried out in both series of repairs, being as Mr Oxley described it "job No 1" and "job No 2". In relation to item 1 on Exhibit 5 Mr Oxley said the reluctance of the machine to drive forward and reverse was referable to the lever boots and pressure switch which in his opinion would not have any effect on the working of the machine. He considered 10 hours was excessive labour to replace the filter and oil in the transmission.

93 In relation to item 3 on Exhibit 7 Mr Oxley was of the opinion that the splitting of the machine and replacing the rear main seal and transmission input seals, was a duplication of a repair that had been carried out previously in the form of item 11 in Exhibit 5. Mr Grunwell, however, did not concede that was the case. As to item 11 on Exhibit 5 Mr Oxley said normally an in chassis rebuild would not involve the removal of a crankshaft because if this happened one would have to remove the entire engine from the machine and it could not then properly be described as an in chassis rebuild. For this reason he was unable to explain a charge of $735 for this item.

94 The plaintiff's claim has a number of different bases. It involves breach of contract and breach of s 10, s 17 and s 38 of the Fair Trading Act 1987 as well as s 14 of the Sale of Goods Act 1895. Section 10 of the Fair Trading Act 1987 which is the equivalent of s 52 of the Trade Practices Act states:

"(1) A person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

(2) Nothing in this Part shall be taken as limiting by implication the generality of subsection (1)."

95 Section 317 of the Fair Trading Act, which equates with s 55 of the Trade Practices Act states:

"A person shall not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose or the quantity of any goods."

96 Section 38 of the Fair Trading Act which is the equivalent of s 71 of the Trade Practices Act states:

"(1) Where a person supplies (otherwise than by way of sale by auction) goods to a consumer in the course of business, there is an implied condition that the goods supplied under the contract for the supply of the goods are of merchantable quality, except that there is no such condition by virtue only of this section -

(a) as regards defects specifically drawn to the attention of the consumer before the contract is made; or

(b) if the consumer examines the goods before the contract is made, as regards defects which that examination ought to reveal.

(2) Where a person supplies (otherwise than by way of sale by auction) goods to a consumer in the course of a business and the consumer, expressly or by implication, makes known to the supplier or to the person by whom any antecedent negotiations are conducted any particular purpose for which the goods are being acquired, there is an implied condition that the goods supplied under the contract for the supply of the goods are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the consumer does not rely, or that it is unreasonable for him to rely, on the skill or judgment of the supplier or of that person

(3) Subsections (1) and (2) apply to a contract for the supply of goods made by a person who in the course of a business is acting as agent for a supplier as they apply to a contract for the supply of goods made by a supplier in the course of business, except where that supplier is not supplying in the course of a business and either the consumer knows that fact or reasonable steps are taken to bring it to the notice of the consumer before the contract is made."

97 As the evidence unfolded it became apparent that the plaintiff could not definitely identify the mechanic Steve as Mr Steven Oxley who worked for Wattleup Tractors in that position at the relevant time. Further to that Mr Oxley positively said he had no direct dealings with the plaintiff regarding the sale of the backhoe. It would certainly seem that the person to whom the plaintiff spoke at the time and who the plaintiff believed was the mechanic Steve was in fact Mr Sean McGee who was present at the time according to Mr Zuvela, although Mr McGee did not give evidence. It was he who said to the plaintiff that the backhoe was "a good machine" which evidence is not contradicted.

98 As I understand the plaintiff's case in the end, however, a major emphasis is placed on alleged silence on the part of Mr Zuvela who allegedly being aware that the plaintiff wanted the backhoe in order to carry out work on his property using the front and rear buckets, failed to inform the plaintiff, who was not an experienced mechanic or a person who had particular aptitude in that area, about various matters relevant to the machine. It follows from this according to the plaintiff's case that there was an obligation on the defendants, through Mr Zuvela to disclose that in effect the defendants knew nothing about the mechanical condition of the backhoe. I accept the plaintiff's evidence on this point.

99 The plaintiff complains that the backhoe which he purchased from the defendants was not of merchantable quality and was not reasonably fit for the purpose for which the backhoe was intended and for which the plaintiff acquired it as reflected in the four purposes contained in the re-amended statement of claim. Although the conditions may be implied into contracts for sale of goods pursuant to s 14 of the Sale of Goods Act and s 38 of the Fair Trading Act s 33(3) of the latter Act provide that if there is any inconsistency with the Sale of Goods Act the Fair Trading Act prevails.

100 Notwithstanding that the Fair Trading Act prevails it is still relevant to consider what was said to constitute merchantable quality in the context of the Sale of Goods Act by Dixon J in Australian Knitting Mills Ltd & Anor v Grant [1933] HCA 35; (1933) 50 CLR 387;

"The condition that goods are of merchantable quality requires that they should be in such an actual state that a buyer fully acquainted with the facts and, therefore, knowing what hidden defects exist and not being limited to their apparent condition would buy them without abatement of the price obtainable for such goods if in reasonably sound order and condition and without special terms."

101 The question of merchantable quality pursuant to both the Fair Trading Act and Sale of Goods Act was also considered by this Court in Truck Wreckers (1979) Pty Ltd v Waters (1994) ASC 56-260. In that case the consumer had purchased a used truck engine from the vendor, who was in the business of truck wrecking. The purchaser wished to use the engine to place in his truck which was used for commercial long distance transport of goods. After responding to an advertisement the purchaser acquired the engine having been assured in response to his query that the engine did not have an oil consumption problem. Some initial testing was carried out on the engine, which emitted bluish white smoke consistent with starting up a diesel engine when cold. The test was not capable of determining the condition of the engine. In the end result the engine used an inordinate amount of oil and the purchaser was no longer able to use it for fear of concern that the engine would seize completely. It was dismantled and inspected which revealed that due to wear in the valves the engine had an excessive consumption problem and reconditioning it would cost $7,837.41.

102 On appeal, the District Court was concerned with the issue as to whether or not the truck engine purchased was not of merchantable quality within the meaning of s 33(2) and s 38(1) of the Fair Trading Act. The Court dismissed the appeal and upheld the decision of the Court below but for different reasons. It was noted that the statutory definition of merchantable quality contained in the Fair Trading Act should be construed without reliance upon the common law definitions or decisions and further that if there was any ambiguity arising the statutory definition prevailed: Rasell v Cavalier Marketing (Aust) Pty Ltd [1991] 2 Qd R 323. The Court further noted that the definition of merchantable quality requires two matters to be determined;

(1) The identification of the purpose, or purposes for which goods of this kind are commonly bought; and

(2) Whether the goods are fit for the purpose, or purposes, so identified as is reasonable to expect having regard to the listed criteria.

103 The test is an objective rather than a subjective one and in that case it was necessary to consider the fitness of the used truck engine by testing fitness against each of the purposes for which a used truck engine may be commonly purchased without exclusion. It was said that if the truck engine was not fit for any one of those purposes then it was not of merchantable quality. Further the Court observed that the language used in the Fair Trading Act required the focus to be on the actual examination made by the consumer in order to determine whether that examination ought to have revealed the defect or defects. The Court was not concerned with whether an examination of that kind or nature ought to reveal a defect. In that case it was said that the particular defect could not have been revealed by starting the engine after it had been standing and the only examination which ought to have revealed it involved dismantling the engine and carrying out an examination of its parts.

104 Importantly in that case the Court was of the view that notwithstanding the consumer purchased the used engine in order to propel a truck, that use or intended use could not be examined in isolation, as it would necessarily include a capacity to propel a truck which was loaded with cargo of some sort and in this regard the Court took into account the observations in Rogers v Parish (Scarborough) Ltd [1987] QB 933 which was followed in Harlingdon & Leinster Enterprises Ltd v Christopher Hull Fine Art Ltd [1989] EWCA Civ 4; [1990] 3 WLR 13.

105 In further considering the purposes for which the truck engine was acquired in the context of whether or not it was of merchantable quality, Yeats DCJ identified specific matters for consideration being:

106 Her Honour went on to observe that the definition of merchantable quality made it clear that the vendors could have applied any description to the used engine, for example, describing it as suitable only for spare parts. If that had occurred then it would have been the only purpose for which fitness needed to be tested in order to determine merchantable quality. Further, if during sale negotiations the vendor or its representative had told the consumer that the engine was only suitable for purchase as spare parts, the consumer then would have no basis for later complaint if it was not fit for the purpose of propelling a fully laden truck engaging in long distance haulage.

107 In this case the defendants advertised the backhoe in Exhibit 2 "as traded". It is common ground that the machine was secondhand and bought for a comparatively modest price within a range that was contemplated by the plaintiff, who was in effect looking for a cheap secondhand machine. Despite this, however, in the circumstances it was required that the machine be of merchantable quality taking into account the applicable criteria. For that reason the fact that it was not a new machine and bought for a relatively low cost must be viewed in the context of a machine that was still fit to be used as and function as a backhoe taking into account what one would necessarily expect the functions of a backhoe to be.

108 Clearly the plaintiff did not and could not reasonably have expected to purchase a machine for this price that was in excellent or pristine condition, without some cosmetic defects and without the necessity of carrying out some work to improve the functioning of the machine. In this regard the plaintiff in his evidence freely admitted that in the circumstances he was prepared to spend some $10,000 to $12,000 if necessary to improve the functioning of the machine. I did not understand the plaintiff's evidence in this context to be directed at carrying out repairs to the machine which would cause it to function as a backhoe in the first instance, in other words to repair a non-functioning backhoe to render it operative as a backhoe.

109 Reference has already been made for finding on the evidence regarding the conversation that the plaintiff had with the person who the evidence would strongly suggest was Mr McGee. The evidence does not suggest, and I do not find, that Mr Zuvela himself told the plaintiff that the backhoe was "a good machine" nor did he positively assert that the machine was in working condition. Relevant to s 38(1) of the Fair Trading Act it is conceded that two defects with respect to the machine came to the plaintiff's attention at the time of his initial inspection in that Mr Geiger was fully aware that the battery was not functioning properly as the machine needed the aid of an external auxiliary battery in order for it to start, and there was a leak in a fuel line.

110 I accept that Mr Zuvela informed the plaintiff that the defendants would fix these problems. It must be noted, however, that in relation to the battery being replaced Mr Grunwell observed that the terminals had corroded and the battery needed cleaning and topping up. In my view this would be a most unusual occurrence between the time of purchase and the short period of time later when Mr Grunwell made this observation. The plaintiff on his evidence, which I accept, was that he was not aware apart from these two problems of any other mechanical problems or defects as a result of his inspection of the machine.

111 The contents of the conversation between the plaintiff and Mr Zuvela regarding the alleged purposes for which the plaintiff required the backhoe are of critical importance. In the circumstances given that the plaintiff was expending $7,700 on the purchase of the machine I consider it extremely unlikely that he would have informed Mr Zuvela that he wanted a machine to play around with on his property although I accept that he may well have told Mr Zuvela he wanted a backhoe for under $10,000.

112 The plaintiff had had limited experience using machines of this type and whilst he was not a complete novice with respect of operation of such machines he was not very experienced in this regard. It is evident that he wished to purchase a backhoe which would be suitable for carrying out specific tasks on his rural property. I accept that he did inform Mr Zuvela at the time of purchase when Mr Zuvela was completing relevant paperwork, of the four specific purposes for which he required the backhoe and therefore the reasons for his acquisition of the machine.

113 Mr Zuvela's initial evidence on this aspect of the matter was quite vague as previously indicated, but on being pressed he conceded that whilst he did not have a specific memory of it the plaintiff may have said he wanted the machine to maintain ditches and dig a trench for underground power lines. This being the case I do not accept that Mr Zuvela did not know or understand that the plaintiff required the backhoe for the purposes of carrying out work of a nature which is clearly undertaken by a functioning backhoe. This necessarily implies that the front and rear buckets on the machine are operational, or are able to be operated so that the machine carries out the functions for which it is designed in part, namely digging and lifting earth and carrying and depositing loads within the buckets in a stable manner.

114 In these circumstances it is not to the point that Mr Zuvela did not inform the plaintiff as to the merits of the machine and did not give information or advice that the backhoe was fit for the purposes required by the plaintiff. There is in my view therefore an implied condition in these circumstances that the goods were reasonably fit for the purposes for which the plaintiff acquired them and further that at least two of those purposes on Mr Zuvela's evidence were in all probability conveyed to him by the plaintiff at the time of purchase.

115 Whilst mere disclosure of the plaintiff's purposes does not demonstrate reliance or reasonable reliance on the skill or judgment of the defendants as the basis of contractual obligation, Claude B Fox Pty Ltd v Rayner [1978] Qd R 250, this implied condition existed because in my view the plaintiff was clear in his evidence that he purchased the backhoe on the basis of what it was supposed to be and what was indicated to him about it by the defendants in the sense that there was no indication to him that there could be difficulties in the machine carrying out the functions for which it was designed and for which it should have been reasonably fit.

116 In the circumstances it was not unreasonable for the plaintiff to rely on the defendants' skill and judgment because although Mr Zuvela informed the plaintiff that the backhoe was in "as traded" condition, he said nothing further about the machine being in an inoperable condition but made it plain that it had only just come to the defendants as a trade and as they were not a John Deere dealer, Mr Zuvela was anxious that the backhoe be moved off his lot.

117 In the context of considering merchantable quality as defined in s 38(2) of the Fair Trading Act, it is necessary to consider relevant to this case the circumstances surrounding the opportunity provided to the plaintiff by the defendants to fully test and operate the backhoe before purchase and whether such examination ought to have revealed defects which would have made it apparent that the backhoe was not of merchantable quality. Although the plaintiff only attended the premises on two occasions, he was very clear and firm in his evidence in the markings he made on the relevant exhibit as to the location of items including the backhoe at the time of his first attendance. He was also very clear and consistent in his evidence as to why he was restricted in his ability to test the machine.

118 It is apparent from all of the evidence that given the type of business conducted by the defendants, the particular backhoe in question was not standing in isolation on the lot. I accept the plaintiff's evidence that it was surrounded by other machinery and equipment and he therefore had only a limited area in the vicinity of the workshop where he could carry out testing. It is common ground that the machine was unlicensed and for this reason alone no doubt the plaintiff was, as he suggested in his evidence, nervous and apprehensive about taking it on a public road in order to gain access to the vacant lot next door which was the only access that the plaintiff could see was available at the time.

119 I accept that Mr Zuvela informed the plaintiff that he could go next door and operate the machine on the vacant lot, but this of itself did not provide the plaintiff with an opportunity to fully test and operate the machine. Notwithstanding that Mr Zuvela may have taken the view that the access way to Lot 104 from Lot 105 was clear and did not involve having to go on to a public road, he gave Mr Geiger no specific or correct information about this, but rather seemed to assume that Mr Geiger knew what he, Mr Zuvela, was talking about. He did not tell Mr Geiger that the defendants owned the adjacent lot nor did he inform the plaintiff that the lot did not have water or electric services connected to it.

120 In those circumstances, putting aside the difficulties which the plaintiff perceived with access to the adjacent vacant block, it would have been most imprudent and possibly dangerous for the plaintiff to simply drive the backhoe on to the vacant lot and commence digging with it and fully testing the machine. In addition, both the plaintiff and Mr Zuvela gave evidence that the vacant lot did have machinery parked on it again making full testing of the backhoe difficult in the circumstances. For these reasons the plaintiff had a very limited opportunity in a confined space to test the machine in order to fully trial its functions as a backhoe.

121 I accept his evidence that he did note at that time the machine was very slow to start moving but as the plaintiff was not a mechanic it was not unreasonable in my view for the him to consider that this was a problem which could be resolved by a matter of adjustment.

122 Many, although not all of the defects in relation to the machine only became apparent when mechanics at CJD examined it closely in the light of the plaintiff's complaints and dismantled parts of the backhoe. Whilst the plaintiff was aware that the machine had problems starting relevant to the battery, he was assured that the problem would be rectified and was given a similar assurance in relation to a faulty fuel line. Although both Mr Zuvela and Mr Oxley said that the defendants had a refund policy I find that the plaintiff was certainly not informed about this at the time of purchasing the machine. Mr Oxley indicated in his evidence that the policy was not commonly applied and on Mr Zuvela's evidence it would appear he only informed the plaintiff about the existence of the policy when Mr Geiger confronted him after the first series of repairs had been carried out by CJD. The plaintiff gave no specific evidence about being informed of the refund policy or of saying to Mr Zuvela that he should have returned the machine to the defendants for repairs.

123 I find that little or no weight can be attached to Mr Zuvela's evidence that the backhoe had been tested serious defects in the hydraulics and transmission would have been evident as he said he personally did not test it and further he did not see the plaintiff testing it in the sense of he did not see how, when or exactly what the plaintiff did by way of testing those particular matters.

124 In my view one must seriously question the merits of a refund policy which is not communicated to consumers at the time of purchase of goods, particularly when Mr Zuvela claimed that policy exists because of the defendants' concern with their business reputation and customer satisfaction. The application of the policy must be further questioned when on Mr Zuvela's own evidence, having been alerted to the plaintiff's concerns after the first series of repairs had been completed, he failed to respond in any way to the plaintiff's request that the defendants consider contributing towards the cost of the repairs. The waiving of the relatively modest cartage fee by the defendants in that context has little or no weight in my view.

125 I accept the plaintiff's evidence that when he purchased the backhoe Mr Zuvela told him that the defendants were not dealers in John Deere machinery and given the overall lack of interest that the defendants through Mr Zuvela exhibited in relation to the backhoe at the time of and subsequent to its delivery to the defendants' premises I have no hesitation in finding that Mr Zuvela informed the plaintiff that his concern was simply in getting the machine off the defendants' lot.

126 In the circumstances I do not accept the submission on behalf of the defendants that the plaintiff failed to act reasonably to mitigate his loss by failing to terminate the contract and seeking a refund of the purchase price given that he was not made aware of such a policy, if it existed, until after the first series of repairs had been carried out. In the circumstances and given what appears to have been Mr Zuvela's lack of interest in accommodating the plaintiff's concerns on that occasion the plaintiff cannot be criticised or penalised for failing to attempt to negotiate a new contract.

127 The information that the defendants had a workshop on site and employed 20 people capable of carrying out repairs on machinery, was never conveyed by Mr Zuvela to the plaintiff and the plaintiff could hardly have divined the existence and capacity of such a service on the two occasions that he attended the defendants' premises. There is no suggestion that CJD were not appropriate or qualified to carry out the repairs which were done.

128 Further in relation to the cost of repairs, which will be canvassed in more detail later in these reasons, I reject the submission that the plaintiff has not proved payment of the alleged cost of repairs, as it was never suggested at trial to Mr Geiger, the plaintiff or Mr Grunwell that the repairs undertaken were not carried out and paid for. The defendants had ample opportunity to pursue this matter and there was considerable detailed examination-in-chief and cross-examination, particularly of Mr Grunwell, as to the details of the nature and cost of the repairs as well as of the necessity for such repairs being undertaken.

129 In this regard I do not consider that Mr Oxley's evidence assisted the Court because he had no direct dealings with the machine in question or any repairs undertaken in relation to it. His compilation of Exhibit 18 was almost entirely based on hearsay and was to a degree speculative, albeit this is in no way intended as a criticism of Mr Oxley who was not in a position, so it would seem, to do other than he did.

130 In the alternative counsel for the defendants argues that if the cost of rectification is considered appropriate by the Court, the plaintiff is not entitled to recover the costs of the repairs claimed not only because he failed to return the backhoe to the defendants for repair, but also because he spent more than four times the capital value of the machine on repairs with CJD without reference to the defendants, in particular in relation to the second series of repairs. In view of the response or more particularly the lack of response by Mr Zuvela to the plaintiff's approach to the defendants after the first series of repairs, it can hardly be said that the plaintiff acted unreasonably in failing to refer the matter insofar as it related to the second series of repairs to the defendants before the plaintiff returned the backhoe to CJD for further repairs.

131 It is correct that the plaintiff on his claim expended considerably more on repairs than he initially paid for the machine and he explained this by in effect saying he felt "trapped" and as I understood his evidence, having expended money on the first series of repairs he was of the view that the only sensible and economically viable decision was to continue with an attempt to repair the machine so that it did function as a backhoe.

132 In this regard the Court in Lloyds & Scottish Finance Ltd v Modern Cars and Caravan (Kingston) Ltd [1966] 1 QB 764 observed at 782:

"... But it is well established that a plaintiff may recover expenses incurred in an effort to mitigate the damage resulting from a defendant's wrongdoing."

133 In this context par 161 Mayne & McGregor on Damages, 12th ed, (1961) was referred to by the Court:

"... Recovery for losses and expenses reasonably incurred in mitigation even though the resulting damage is in the event greater than it would have been had the mitigating steps not been taken."

134 The principle was also recognised by Lord Atkinson in Wilson v United Counties Bank [1920] AC 102 at 125 where his Honour observed:

"If one man inflicts an injury upon another the resort by the sufferer to reasonable expedients for the bona fide purpose of counter-acting, curing or lessening the evil effects of the injury done him, does not necessarily absorb the wrongdoer, even though the sufferer's efforts should, in the result, undesignedly aggravate the result of the injury."

135 I accept the plaintiff's assertion that at the outset he had a budget in mind for repairs to the backhoe and it was clear from his evidence that when he first discussed the problems with the backhoe with Mr Grunwell, the plaintiff not only told Mr Grunwell of the budget but also enquired whether his expectation in the circumstances was reasonable. Whilst Mr Grunwell, perhaps understandably, was not prepared to commit himself precisely to the cost of repairs, it was quite apparent from his evidence that he was well aware of the plaintiff's concern regarding costs and it would appear to me that Mr Grunwell was very professional and diligent in overseeing the repairs and attempting to ensure that insofar as possible the repair costs did not spiral out of control, for example, by using secondhand or used parts where that was possible and appropriate. He carefully checked the costs on both Exhibits 5 and 7.

136 For the above reasons I find that the plaintiff has established a breach of contract in that the defendants breached an implied condition as to merchantable quality of the backhoe which they sold to the plaintiff because it was not reasonably fit for the purpose or purposes for which it was acquired in the circumstances which prevailed.

137 It is necessary to also deal with the plaintiff's claim for misleading and deceptive conduct as pleaded. In large part the claim is based on similar or the same evidence as has previously been canvassed. Findings have been made as to the alleged representations and conduct (by silence) so it is unnecessary to revisit this matter in detail. Although it was not clear from the evidence that the plaintiff was told by Mr Zuvela that an external battery unit was needed to start the backhoe as it had been some considerable time since it had last been operated, Mr Zuvela said in his evidence that the machine did need to be started in this manner and he added that "Aerostart" fluid was used because the machine was an old model and therefore can have low compression from worn valves or a worn head. He did not convey this to the plaintiff.

138 In my view nothing turns on the fact that Exhibits 9, 10 and 11 make no reference to any specific misrepresentations by the defendants. The plaintiff's concerns and complaints are made very clear in those documents and I reject the submission on behalf of the defendants that the lack of reference to misrepresentations by the defendants suggests that they are a recent invention on the part of the plaintiff, insofar as I have found representations occurred.

139 Mr Geiger was not in my view a dishonest or practised witness and I found his evidence to be both credible and consistent. It is not surprising that having obtained professional legal advice there was reference, albeit in no particular detail, of alleged misrepresentations by the plaintiff's current solicitors in Exhibit 12. Once more by his silence, knowing that the plaintiff required the backhoe to carry out specific work on his rural property, Mr Zuvela failed to advise the plaintiff of the capacity of the machine to carry out this work but simply left it to the plaintiff to test the machine himself in circumstances that did not permit of a full and proper testing process, or a testing process that in the circumstances ought to have revealed certain defects.

140 Again I am satisfied that the plaintiff has established, on the balance of probabilities, that in those circumstances he purchased the backhoe on the understanding that it was a functioning machine which could carry out the purposes for which it was designed, when clearly this was not the case as subsequent events revealed. The machine could not at the time of purchase perform any of the basic functions which it was designed to carry out. The fact that it could be started with artificial assistance and moved backwards and forwards in a confined space over a short period of time and the fact that the hydraulics operated on very brief, limited testing in my view is insufficient to contradict this finding.

141 Although the plaintiff was clearly in the market for a "cheap", in the sense of a modestly priced backhoe, it is not probable that he would have purchased this particular machine to carry out the tasks he nominated if the plaintiff had been aware that a considerable number of its primary functions and requirements such as the engine and hydraulic systems being operable, were for all intents and purposes non-functioning.

142 In view of the findings on the evidence the plaintiff has suffered loss and damage and is entitled to an award reflecting cost of those repairs to the tractor that were undertaken in order to render it a functioning and operative backhoe. There are some repairs reflected in both Exhibit 5 and Exhibit 7 that I do not consider fall into this category as they were carried out for convenience or cosmetic reasons or fall into what might be more properly described as a general servicing category. I have carefully considered the issue of whether or not the budget for possible repairs that the plaintiff had in mind should it be necessary, be deducted from any award of damages made to the plaintiff.

143 In the end I accept the argument on behalf of the plaintiff that in the circumstances there is no basis for deducting any such sum for the reason that the backhoe was not a functioning and operative machine in the first instance. If the plaintiff had purchased a machine which was of merchantable quality and functioned as a backhoe it may well be that improvements to it by way of repairs to enhance its performance were required, and in that situation this sum could be taken into account. The fact that the backhoe was operated for approximately 30 hours after the first series of repairs were carried out, but prior to the second series of repairs being undertaken, is of no particular weight. I accept that the second series of repairs were generally of a major nature and it is highly unlikely in my view that these problems arose as a result of the number of hours for which the plaintiff used the intervening period or the work that he undertook using the machine, which was work of a comparatively unremarkable nature, in the sense that it was the very type of work that one would expect a functioning backhoe to be able to perform without incident.

144 In relation to the repairs carried out as reflected in Exhibit 5, based in particular on the evidence and observations of Mr Grunwell referred to earlier in these reasons, the items of repair that are allowed by way of damages are item 1 as the backhoe could not operate with the transmission in the state it was when the machine was purchased and shortly after when it was examined by mechanics at CJD. Item 2 is allowed as the pump is a vital piece of equipment and was too worn to operate. Similarly item 3 to replace the corroded and leaking radiator is allowed. Items 4 and 5 are allowed. Item 6 is allowed because the injectors were incapable of being repaired and it was necessary that they function properly as the engine could not start normally otherwise. Part of item 8, being the mechanical repair to the operator's seat to render it stable, is allowed as the machine could not function properly or safely with the seat in the condition it was. Item 9 whereby the battery was cleaned and topped up is allowed because the defendants said the battery would be replaced at the time of purchase and clearly if this was done, it was inadequate. Item 11 is allowed as the engine rebuild occurred because Mr Grunwell was of the opinion that the machine could not be used with the engine in the condition it was when sold. Item 14 was a repair which was necessary to avoid which was a considerable danger and fire hazard so it is also allowed and finally item 17 is allowed because the proper operation of this instrumentation is essential to the working of the machine.

145 It should be noted that none of the items of repair which have been allowed are items that would have been visible, or were visible, to the plaintiff on his inspection or limited testing in the circumstances that prevailed at the time. Item 7 on Exhibit 5 is not included in the award of damages as it was a normal maintenance item and one would not necessarily expect that it would impact on the actual ability of the machine to perform its function, albeit that it would no doubt perform more effectively if the machine had been regularly greased and oiled. Similarly the re-covering of the operator's seat referred to in item 8 is not the subject of an award of damages, being a purely cosmetic item.

146 Item 13 is essentially cosmetic in nature and in any event the type of bucket and its general appearance was or would have been evident to the plaintiff on inspection. The same comment is made in relation to item 12 whereby the front grill protector was installed. Item 10 is not the subject of an award of damages as the muffler functioned, albeit that it was insecure. Item 15 is not allowed as the removal or cutting off of the brackets was carried out for the plaintiff's convenience.

147 It is unclear from Mr Grunwell's evidence why the repair relevant to item 16 was carried out and the plaintiff's evidence does not advance this aspect of the matter therefore an award is not made for damages relevant to this item. In relation to Exhibit 5 when one deducts those items for which damages are not awarded, the total cost of the repairs carried out is $14,240.73.

148 Relevant to the repairs carried out as indicated in Exhibit 7, item 1, cartage is allowed as is item 2 being a major repair, which if not carried out rendered the machine non-functioning and extremely dangerous. The welding problem would not have been evident on inspection. Item 3 is allowed as it is relevant to the performance of the machine, as are items 4 and 7 relating to repairs to the braking system of the machine. Item 6 in relation to the repairs to the hydraulic system which was over-heating, are allowed as again this is directly related to the functioning of the machine as a backhoe and further it is a defect which could not, or would not, have been evident to the plaintiff on inspection, or in the circumstances of his testing of the machine.

149 Item 9 is allowed as the machine was not an operative and functioning machine if the stability of its bucket when loaded, was such that it was unstable and therefore did not and was not functioning as a backhoe. Item 5 is not allowed as it was simply a follow-up to the first series of repairs and would appear from Mr Grunwell's evidence not to have been totally necessary, but rather a prudent repair to give the plaintiff confidence in the transmission of the machine. Item 8 relating to the cut-off or the removal or cutting off of brackets again is simply cosmetic and would appear to have been done for the plaintiff's convenience, rather than being related to the functioning of the machine as a backhoe and therefore it is not allowed.

150 In relation to the repairs carried out as reflected in Exhibit 7 when one deducts claims for the two items which are not allowed, the total repair bill for that series of repairs is $15,817.66. The award for damages being the claims for the repairs which are allowed is therefore $30,058.39. The plaintiff claims interest on any award of damages made by the Court as from 6 August 2001 until the date of judgment. In the circumstances of this particular case I consider that interest should be allowed at the rate of 4 per cent per annum. This results in a total interest payment of $5,108 and a total award of damages in the sum of $35,166.39.