James Spittles v Michael's Appliance Services Pty Ltd & Ors

Court of Appeal (NSW)|2008-08-26|Before: Bell JA, Barr J, Barr JA

Appeal Outcome: Special leave refused with costs by the High Court - 26 August 2008

CITATION: James Spittles v Michael's Appliance Services Pty Ltd & Ors [2008] NSWCA 76 This decision has been amended. Please see the end of the judgment for a list of the amendments.

DECISION: Appeal dismissed. Appellant is to pay the first respondent's costs of the appeal, and the second and third respondents have liberty to apply.

CATCHWORDS: TORT - Manufacturer - Statutory Liability for supply of defective goods - Supply - TRADE PRACTICES - Consumer Protection - Liability of Manufacturer for supply of defective goods - Supply

Symes v Stewart (1920) 28 CLR 386 CASES CITED: Commonwealth of Australia v Sterling Nicholas Duty Free Pty Ltd (1971) 126 CLR 297 Ex parte Turner re Hardy (1947) 48 SR 133 Cook v Pasminco Ltd (2000) 99 FCR 548

James Spittles (Appellant) PARTIES: Michael's Appliance Services Pty Ltd (First Respondent) Maytag (Australia) Pty Ltd (Second Respondent) Austmont Catering Equipment Pty Ltd (Third Respondent)

COUNSEL: B W Rayment QC/C P Locke (Appellant) A J McInerney (First Respondent)

Velleley & Asssociates (Appellant) SOLICITORS: Moroney Lawyers (First Respondent) DLA Phillips Fox (Second Respondent) A R Conolly & Company (Third Respondent)

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40306/07

BELL JA HANDLEY AJA BARR JA

14 April 2008 JAMES SPITTLES v MICHAEL'S APPLIANCE SERVICES PTY LTD & ORS

CATCHWORDS: TORT - Manufacturer - Statutory liability for supply of defective goods - Supply TRADE PRACTICES - Consumer protection - Liability of manufacturer for supply of defective goods - Supply. HEADNOTE The appellant injured his hand on razor sharp metal protruding from stainless steel panels on the door of his refrigerator. The refrigerator had been imported but the panels had been fitted by the respondent in Australia. The appellant sued the respondent for damages under s 75AD of the Trade Practices Act which makes a manufacturer who supplies defective goods liable to any person injured by the goods. It was common grounds that the respondent was the manufacturer but the trial judge held that it had not supplied the goods. On appeal HELD: The respondent had not supplied the refrigerator. It had worked on the goods as a licensee in the premises of another but had never had possession of them and had not delivered them to anyone. ORDERS Appeal dismissed. Appellant is to pay the first respondent's costs of the appeal, and the second and third respondents have liberty to apply.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40306/07

BELL JA HANDLEY AJA BARR JA

14 April 2008 JAMES SPITTLES v MICHAEL'S APPLIANCE SERVICES PTY LTD & ORS Judgment

1 BELL JA: I will ask Handley AJA to give the first judgment. 2 HANDLEY AJA: This is an appeal by the plaintiff from a judgment for the defendant, entered by Balla DCJ, in an action for personal injuries under s 75AD of the Trade Practices Act. The plaintiff was cleaning the stainless steel panels on the front of his new Maytag refrigerator when a finger of his right hand was cut on a razor-like burr on the bottom of one of the panels.

3 The trial judge is to be congratulated for her clear and concise findings of fact, which have not been challenged on the appeal. The only issue, one of mixed fact and law, is whether the defendant supplied the refrigerator within the meaning of s 75AD. Her Honour held that it had not done so and the section did not apply to the defendant.

4 The two-door refrigerator was manufactured in the United States and imported by the first cross-defendant Maytag Australia Pty Limited. It was delivered to a warehouse, operated by an organisation described as M3 Logistics, which was not otherwise identified. The arrangements under which Maytag Australia could store refrigerators and stainless steel panels on those premises, and arrange for work to be carried out on them, were not proved.

5 The refrigerators were black and, to improve their marketability in Australia the doors were covered in stainless steel cladding. The panels were sold by the second cross-defendant to Maytag Australia and delivered to the warehouse. The defendant was engaged by Maytag Australia to fix the panels to the refrigerators which were then delivered to retailers. The plaintiff purchased his refrigerator from Harvey Norman in 2003.

6 The defendant fixed the panels to the refrigerator in the warehouse. The panels were available to the defendant from pallets. The defendant did not acquire title to the refrigerators or the panels. Its contract was for work and labour as is evidenced by the purchase order and its invoice.

7 The defendant's work was carried out on the premises of another. While it had access to the refrigerators and the panels to enable it to carry out the work, and could move the goods within those premises for the purpose of working on them, in my judgment it never had possession of those goods. They remained at all relevant times on premises belonging to a third party, on which the defendant's employees entered and remained as mere licensees. The defendant was not entitled to remove the refrigerators or the panels from those premises, and did not have dominion over them.

8 In my judgment, the defendant never became a bailee of the refrigerator because it did not have possession. It never had a lien on the refrigerator for its charges.

9 Mr Rayment QC, who appeared for the appellant, referred to the discussion in Palmer on Bailment at p 501 and following dealing with bailment for hire of work and labour. Such a bailment occurs when a chattel is delivered by the bailor to the bailee for the purpose of having work done on it. However, as Palmer points out, there can be no bailment in such a case unless possession of the chattel is given to the party bound to do the work.

10 The point may be tested by considering the position of a subcontractor called in to do work on goods in the factory of the general manufacturer. In my judgment such a subcontractor would not have possession of the goods while he was working on them even if no-one else was working on them at the same time.

11 The issue is whether, in the circumstances outlined, the defendant supplied the refrigerator within the meaning of s 75AD which provides: "If: (a) a corporation, in trade or commerce, supplies goods manufactured by it; and (b) they have a defect; and (c) because of the defect, an individual suffers injuries; then: (d) the corporation is liable to compensate the individual for the amount of the individual's loss suffered as a result of the injuries; and (e) the individual may recover that amount by action against the corporation; …" 12 Manufactured as defined in s 75AA includes "assembled". The judge found that the defendant was a manufacturer because it had assembled the refrigerator in its final form by fixing the panels to it. The defendant has not challenged this finding. Section 4(1) defines supply as follows: " supply , when used as a verb, includes: (a) in relation to goods - supply (including re-supply) by way of sale, exchange, lease, hire or hire-purchase; … and, when used as a noun, has a corresponding meaning, and supplied and supplier have corresponding meanings." 13 Section 4C provides: "In this Act, unless the contrary intention appears: … (c) a reference to the supply of goods includes a reference to the supply of goods together with other property or services, or both; … (e) a reference to the re-supply of goods acquired from a person includes a reference to: (i) a supply of the goods to another person in an altered form or condition; and (ii) a supply to another person of goods in which the first-mentioned goods have been incorporated; …" 14 Section 75AD does not require the manufacturer to supply the goods directly to the plaintiff. Supply to any person in the contractual chain will suffice, but the section does not apply to every manufacturer. It only applies to a manufacturer who supplied the goods. The defendant supplied services under its contract for work and labour, but there appears to be no section corresponding to s 75AD dealing with the supply of services, and in any event the defendant was only sued under s 75AD.

15 The definition of supply is inclusive, and its normal meaning is available to the appellant. Its normal meaning was considered in Symes v Stewart (1920) 28 CLR 386 and held to include delivery by a bailee to his bailor. In Commonwealth of Australia v Sterling Nicholas Duty Free Pty Ltd (1971), 126 CLR 297 its normal meaning was held to include delivery by a seller to the buyer after the property had passed. In Ex parteTurner re Hardy (1947) 48 SR 133,135 Jordan CJ said: "Supplied … has, I think, the meaning which it has in common parlance, namely, provided by or on behalf of a person to whom the thing belongs to someone to whom it does not or did not belong." 16 We have also been referred to other authorities dealing with the ordinary meaning of the word including Cook v Pasminco Ltd (2000) 99 FCR 548, 552, a case under s 75AD, where Lindgren J, after referring to the statutory definition of supply, said: "It is true, as counsel for the applicants points out, that the definition is an inclusory one but it seems to me that an essential element of supply is that it is a bilateral and consensual process: … The definitions of 'supply' and 'acquire' are symmetrical: a supply of goods must occur as part of a bilateral 'transaction' or dealing under which the other party acquires them." 17 While the defendant's contract with Maytag Australia was a bilateral business transaction in trade and commerce, it was not by way of sale, exchange, lease, hire or hire purchase or any analogous transaction within the definition of supply in s 4 (1) and Maytag Australia did not acquire the goods from the defendant.

18 Although there was a supply of services by the defendant to Maytag Australia in my judgment there was no supply of goods. The refrigerator was never in the defendant's possession and when the defendant finished its work it did not deliver or re-deliver the refrigerator to Maytag Australia. As Mr Al-Masri said in his evidence the defendant's employees walked away leaving the refrigerator where it was. It may have been moved in the course of carrying out the work, but there was nothing in the nature of a re-delivery. The refrigerator was simply left where it was.

19 When the defendant completed its work and its employees left the premises of M3 Logistics it did not supply the refrigerator to Maytag Australia or anyone else.

20 Section 75AD does not apply to persons, such as the defendant, who work on goods under contract without ever acquiring title to, or possession of the goods. In my judgment the trial judge was correct for substantially the reasons she gave and the appeal must be dismissed.

21 BELL JA: I agree with the orders proposed by Justice Handley for the reasons that his Honour has given.

23 BELL JA: The orders of the Court will be appeal dismissed. The appellant is to pay the first respondent's costs of the appeal, and the second and third respondents have liberty to apply.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

Trade Practices Act 1974(Cth)

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (33 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (3)

Cited By (1)