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[1997] FCA 913
Federal Court of Australia
1997-09-10
Lehane J
Original judgment source is linked above.
REASONS FOR JUDGMENT Introduction The applicants (Mr and Mrs Crago) own a farm at Bundarra, New South Wales. Since late 1990, the business conducted on that farm has included raising, and dealing in, ostriches; since late 1991 it has included the breeding of ostriches. The first respondent (Multiquip) has, since 1984, manufactured and sold equipment for use by those engaged in the poultry and avian industries; it manufactures and sells, particularly, equipment for incubating and hatching eggs. Since 1989 Multiquip has manufactured and sold incubators (otherwise known as "setters") and hatchers, made according to modified versions of designs which had been in use for a considerable time in the poultry industry, adapted to accommodate ostrich eggs. The second respondent (Dunogan) carries on business near Tamworth, New South Wales. It supplies equipment for use in the poultry industry. During 1991 Mr and Mrs Crago bought from Dunogan what were described as an E3O ATS incubator and an E2O hatcher, both manufactured by Multiquip; Multiquip supplied them to Dunogan. Mr and Mrs Crago allege that from October 1991 they attempted using the equipment which they thus acquired, to incubate and hatch a large number of fertile ostrich eggs. Five, they say, were successfully hatched in December 1991, though two of the chicks died shortly afterwards. They claim that all the others (numbering, they say, 85) either failed to hatch at all or produced chicks which were so weak or deformed that they could not (and did not) survive. They claim that this happened because of deficiencies in the Multiquip equipment. They claim to have lost, in consequence, potential sales of ostriches worth somewhat more than $2 million. They say also that the stress and anxiety resulting from those events led to the breakdown of their marriage. Mr and Mrs Crago claim that both Multiquip and Dunogan are liable in damages. The amount of damages claimed is a sum slightly exceeding $2 million for the lost eggs and chicks and a "substantial" sum for loss of the marriage relationship. Multiquip is said to be liable on a number of bases. First, it is said that the equipment comprised (within the meaning of s 74A(2)(a) of the Trade Practices Act 1974) goods of a kind ordinarily acquired for personal, domestic or household use or consumption, that Multiquip was the manufacturer of it and supplied it to Dunogan which resupplied it to the Cragos, who acquired it for a particular purpose made known either directly or through Dunogan to Multiquip; the equipment was not reasonably fit for that purpose; accordingly Multiquip is liable to compensate Mr and Mrs Crago (taken to be consumers because of s 4B) for the loss and damage they have suffered. Secondly, there is a claim in negligence based, broadly, on failure to design and manufacture the equipment so that it would effectively and safely incubate and hatch ostriches. Thirdly, it is said that Multiquip infringed s 52 of the Trade Practices Act 1974 by representing that the equipment would effectively and safely incubate and hatch ostriches, when it would not. Fourthly, Multiquip is said to have infringed s 53(a) by falsely representing the equipment to be of a particular standard or quality. Finally, in addition to s 74B, Mr and Mrs Crago rely on s 74D of the Trade Practices Act, alleging that the equipment which they bought was not of merchantable quality. The claim against Dunogan is based on the contract for sale of the equipment and s 19 of the Sale of Goods Act 1923 (NSW). Dunogan is said to have breached implied conditions that the equipment was reasonably fit for the purpose for which Mr and Mrs Crago had made known that they required it and was of merchantable quality. The defence of each respondent denies or puts in issue most of the elements of each claim against it. Multiquip also alleges failure to mitigate and that, if the Cragos have suffered loss, their own conduct caused or contributed to the loss. Facts in greater detail (a) The ostrich industry; ostrich breeding Ample evidence was led that, between the late 1980s and the latter part of 1995, breeding and dealing in ostriches could be a highly profitable business. For example, Mrs Crago's evidence, which in this respect was not challenged, was that in December 1991 she sold two three month old chicks for $7,000 each and that in April 1991 she sold six eight month old chicks for about $52,000 and bought an adult hen for $26,000. Mr Swaisiland, an ostrich breeder who gave evidence for Multiquip, said that in 1992 he paid about $6,000 or $6,500 each for three month old chicks, about $10,000 for six month old chicks and about $70,000 for a pair of adult birds. There is some lack of clarity in the evidence as to the precise price levels which prevailed at various times during the period, but it is clear that adult ostriches and ostrich chicks were valuable. The evidence suggests - and no doubt it is hardly surprising - that during the period the industry was an expanding one, in the sense that it attracted a number of new participants. The evidence establishes also that at about the end of 1995 the market collapsed. Mr Liugi Cusato gave evidence for Mr and Mrs Crago. Until 1996 he was a very substantial breeder of, and dealer in, ostriches. His evidence - about which there is no dispute - was that in November 1995 "all of a sudden birds stopped selling and nobody was interested anymore and the prices tumbled". He described the situation in late 1996, the time when he gave evidence: Now, it's become - the breeder market's finished, there's no such thing as a breeder market. You've got to be a farmer, you've got to be a commercial farmer. You've got to have a good farm like cattle or anything else and you've got to be able to produce your own grain, you've got to be able to graze the birds in lucerne paddocks and things and try and produce it because the retail market of a commercial bird is $400. Well, I'm not producing birds for $400. I couldn't. Couldn't raise it for that money. Expert evidence was given on both sides about the breeding, incubation and hatching of ostriches. Evidence was given also by a number of people with practical experience in the field. There are few significant areas of difference between the views expressed by the various witnesses on this subject, and the effect of the evidence may be summarised as follows. The successful breeding of ostriches depends on, among other things, the quality of the breeding pairs, appropriate nutrition and a high level of cleanliness in handling the eggs. Although the experts agreed that further scientific study might lead to refinements of present views and practices, it is generally accepted that successful incubation requires a constant temperature of about 97.5°F and a relative humidity of between 15% and 35%. Significant temperature fluctuations either upwards or downwards cause embryonic death and deformities of various kinds. The correct combination of temperature and relative humidity causes an ostrich egg to lose about 18% of its weight during the incubation period. That weight loss is necessary for successful hatching. Adequate air flow around the eggs is necessary also, for at least two reasons: one is that the temperature should be constant throughout the incubator; the other is that the eggs give off carbon dioxide (the shells are porous) and must absorb oxygen. In consequence, not only must the flow of air be sufficient but adequate fresh air must be taken into the incubator; it is not known precisely what minimum flow of fresh air through an incubator is adequate for that purpose. Finally, the eggs must be regularly turned, at least four times a day. The incubation period is usually about 42 days. The procedure normally adopted is that the eggs, shortly after they are laid and collected, are weighed and placed in an incubator. After about ten days they are "candled": that is a test for fertility, and is usually done by shining a torch through the egg in order to see whether an embryo is forming. Infertile eggs are then taken out of the incubator. It is usual at that point to weigh the fertile eggs again. The experts agreed that it was appropriate usually to weigh eggs at least once a fortnight during the incubation period, in order to ensure that weight loss was occurring at an appropriate rate. Some successful breeders might weigh eggs less often, perhaps not at all between "candling" and hatching, but that was appropriate only for a breeder who was thoroughly experienced with the performance of the equipment used. Finally, about two days before they are due to hatch, eggs are taken from the incubator and placed in a hatcher: there is no significant difference between an incubator and an hatcher save that whereas, in an incubator, eggs are turned regularly, in the hatcher they are kept still. There was a good deal of difference between the witnesses as to a reasonably achievable, or acceptable, rate of "hatchability". That term refers to the percentage of fertile eggs successfully hatched. Dr Douglas Black is a veterinary surgeon with particular qualifications in avian medicine and surgery. He gave evidence on behalf of Mr and Mrs Crago. His evidence was that if a breeder successfully hatches 50% of fertile eggs ("successfully" meaning that the chicks survive to three or four months of age), that is "a very good result". Mr Cusato said that he "probably would've hatched about 50 percent" of fertile eggs; that success rates vary "dramatically"; when asked what was the greatest success rate of which he knew, he replied: On imported birds probably about 98 per cent but no such thing with local birds. The local bird is a bird that's been bred in Australia, been here for a hundred years. Imported birds are birds that have come to this country in the last three or four years. He said that he had heard local breeders claiming success rates of 75 or 80% but expressed scepticism about such claims: All these people that told you they had 80 per cent, when you asked to look at the chicks you couldn't find them. Mr Cusato added, in cross examination, that of the 50% successfully hatched the proportion of those which "went on to become chicks that lived" varied greatly from year to year. "Normally you'd say probably on a good season 25". Mr Badley, a veterinary expert called by Multiquip, regarded 50% as an average hatchability rate but said that there were substantial variations between seasons and between breeders. He accepted that, all other things being equal, a particular breeder's hatchability rate should improve "because your knowledge of how to do things better will improve". In cross examination he said this: Is it possible for you to guess what improvement I could be expected to make, would I improve from 60 to 70 per cent or from 60 to 90 or ... ? - I think if you kept up with the latest sort of knowledge in terms of the way to do - the way to manage the eggs and to incubate the eggs, I can't see why - and you have good breeding birds and you're giving them good feed, I can't see why you shouldn't improve to notwithstanding adverse seasonal conditions or anything else, I can't see why you shouldn't be able to improve to 80 per cent. If I get to 80 per cent, after I get to 80 per cent it is not so easy to get to 90 per cent? - Probably not, no. But then again, even if you got to near 80 per cent in the following year you might drop back to 60 per cent for some reasons that's - I mean certainly people who get 80, 90 per cent hatchability do not necessarily always get that but they probably average around that. Mr Swaisiland claimed to achieve a relatively stable rate of about 62% of all eggs, fertile and infertile. Mr Robert Thomas, an ostrich farmer called by Multiquip, claimed a rate of 79% of fertile eggs in 1993 and 85% in 1994, but said that his rate had fallen to about 50% in 1995 ("I think we got 24 eggs from memory and hatched 12 chicks"). Mrs Crago herself claimed a hatchability rate of 85% for 1995 (by which time she was using equipment other than that acquired from Multiquip) and, in 1996, 100% (14 fertile eggs, all successfully hatched). (b) Multiquip and its equipment Multiquip was formed, and its shares are owned, by Mr Steve Mikosic and his wife. Mr Mikosic is the managing director of Multiquip and is responsible for the design of its products. Following an apprenticeship with John Heine & Son Engineering Pty Ltd, he obtained a fitter and machinist's certificate from Penrith Technical College. He has experience as a poultry farmer. Before 1984 poultry incubators had been manufactured by a company called Multiplo, the business of which was, in about 1981, taken over by Allied Mills. It is not entirely clear from Mr Mikosic's evidence precisely when Multiquip began manufacturing incubation equipment; by 1988, however, his evidence is that Allied Mills had ceased manufacturing incubators and Multiquip had begun to do so. Multiquip manufactured the incubators according to the same designs as those which Allied Mills had used; they were designs which Allied Mills had, in turn, inherited from Multiplo and which had remained substantially unchanged for about 30 years. There were two models of those incubators relevant to this case, the E2 and the E3. The difference between the two was that whereas the E2 had one chamber only, the E3 had two; it was thus twice the size of the E2 and would accommodate twice the number of eggs. Each met Mr Mikosic's basic description of an incubator, as: ...a kind of oven into which eggs are placed on trays and a means is provided for maintaining the temperature of the eggs at around the optimum temperature for the development of the embryo until the chick is hatched. Early in 1989 or thereabouts, Mr Cusato suggested that Multiquip modify its hen egg incubators for the incubation of ostrich eggs, which are considerably larger than hen eggs. The principal modification was the replacement of trays designed to accommodate hen eggs with trays which would hold the very much larger ostrich eggs. Additionally, (probably somewhat later) some modifications were made to the mechanism by which air was caused to circulate through the incubators. The resulting machines were called the E2O ("O" for ostrich) and the E3O. Additionally, each incubator might be fitted with a mechanism for turning the eggs automatically: the machines incorporating that mechanism were designated E2O ATS and E3O ATS. There was a good deal of evidence as to the way in which the Multiquip incubators function, and I inspected an E30 ATS model which was brought into Court. The description of the machines as resembling ovens is reasonably accurate. The E30 is divided horizontally by an insulating floor, above which are heating globes (similar to ordinary electric light globes) and fans, the purpose of which is to circulate air within the incubator. Below it are the two chambers in which the eggs are placed in trays: each chamber accommodates three trays and each tray will hold eight ostrich eggs. Between those two chambers there is a third vertical compartment: its walls are porous and air is directed downwards through that compartment and through the porous walls into the chambers containing the eggs. Air is drawn in through ventilation holes in the top of the incubator, at the centre (above the central chamber); it is exhausted through adjustable vents on each side of the top of the machine. The temperature within the incubator is adjusted by means of what was described as a bellows thermostat. It is placed near the top left hand corner of the incubator and is thus, as it was described, bathed in air which is exhausted from the left hand incubation chamber. The "bellows" thermostat comprises a dual wafer fluid-filled metal unit which expands or contracts according to the temperature. It is placed near a microswitch, which turns the heating globes on and off. The position of the microswitch, relative to the "wafer" unit, is adjusted by a knob so that, depending on its position, a greater or lesser degree of expansion is required in order to operate the microswitch so as to turn the heating globes off. That is the way in which the temperature to be maintained within the incubator is adjusted. The temperature is measured by a mercury thermometer which protrudes from the incubator a little below the thermostat. The relative humidity is measured by a "wet bulb" thermometer which may be read through a port hole in one of the doors of the incubator. The relative humidity may be increased by putting water in a plastic dish inside the incubator. Finally, the turners: the racks on which the trays of eggs are placed rotate through 90 degrees, 45 degrees each way from the horizontal; the racks in each chamber are rotated by an electric motor which is installed outside the chamber and towards the top of it. Each motor may be set at "automatic", "manual" or "off". When set at "automatic", the motor rotates the racks through 90 degrees at intervals selected by the operator (e.g. four times each day). When set at "manual", the motor rotates the racks constantly back and forth, through 90 degrees. The manual setting is ordinarily used to return the racks to the horizontal position so that eggs may be put in the incubator, taken from it, weighed or "candled". The E2O is similar; but as it has only one incubation chamber there is no central compartment; air is directed across the heating globes down the right hand side of the incubator and returns, passing the thermometer and thermostat, on the left hand side. Evidence - which was not disputed, so far as it related to a general practice - was given by employees of Multiquip as to the testing of machines before delivery to purchasers and as to the way in which they were packed: particularly, that a set of operating instructions was included. Although, as will be seen, I do not think much in the end turns on it, Mr and Mrs Crago deny that operating instructions were included with the machines which they purchased.
(c) Mr and Mrs Crago commence ostrich breeding; their purchase and use of Multiquip equipment In 1990, Mr and Mrs Crago ran their property as a cattle and sheep farm. During 1990 they considered the possibility of ostrich farming as a way of increasing their diminishing farm income. One of their neighbours was an early and established ostrich farmer. They spoke to ostrich farmers, read literature on ostrich farming and attended seminars. In about November 1990 they bought 12 three months old ostrich chicks for $3,000 each. Two died; the remaining 10 were sold at a profit: six were sold for $52,000 in about April 1991; two were sold at the age of 16 months for $20,000 each and one was sold aged 20 months for about $30,000. They retained one female, ultimately sold in January 1995 for $50,000. During 1991 they decided to investigate the possibility of undertaking their own incubating and breeding of ostrich chicks. Their evidence was that the detailed investigation of that possibility was undertaken principally by Mrs Crago. She said in her affidavit: ...I made numerous telephone attendances on other breeders in the area as well as breeders in South Australia, Western Australia, Queensland and New South Wales. I had many lengthy discussions with such breeders concerning the incubation process, the requirements for temperature stability and humidity, fumigation, cleanliness and generally all aspects involving the incubating and hatching of ostrich eggs. At the same time, I read many ostrich magazines and other literature relating to the incubation of ostrich eggs. Much of this literature and information came from the Ostrich Association which we had joined in 1990. Mrs Crago also gave evidence that she and her husband visited numerous properties in Queensland, South Australia and New South Wales: ...and obtained first hand information and knowledge on the incubation of ostriches from ostrich breeders who had been in the industry for some considerable time and were successfully incubating ostrich eggs. Both Mr and Mrs Crago gave evidence of attending a seminar at the Powerhouse Hotel in Tamworth during the latter part of 1990. Mr Crago's evidence was that at the rear of the room in which the seminar was held incubators were on show. He recalled browsing through a Multiquip pamphlet during the seminar. Mrs Crago, on the other hand, in oral evidence corrected a statement in her affidavit to the effect that she had seen a Multiquip brochure at the seminar: she maintained in cross examination that she had never seen such a brochure and that she had never heard the name "Multiquip" before July 1991, when she spoke on the telephone to Mr Duns, the principal of Dunogan. In about April 1991, according to the Cragos' evidence, they renovated an old shed and installed in it an air conditioner which they had borrowed (a new air-conditioner replaced the borrowed one in October 1992). Then on about 16 July 1991 Mrs Crago spoke to Mr Duns. Mr Crago's evidence was that he and his wife had agreed that they would make enquiries about the types of incubation equipment available on the market, and the prices of the equipment. Particularly, it was agreed that Mrs Crago would make enquiries of local distributors of farming equipment. He recounted being present when Mrs Crago rang Mitre 10 at Inverell, and her telling him that Mitre 10 did not sell ostrich incubation equipment. Mr Crago's evidence was that he then suggested that they look in the Yellow Pages, that he did so under "poultry equipment" and saw that Dunogan advertised poultry equipment. Mrs Crago then, he said, proceeded to telephone Mr Duns. Mrs Crago, in cross examination, gave the following evidence: Why did you decide to buy the Multiquip incubator? - Well, we didn't decide to buy a Multiquip incubator. I had to ring around and ask to find out about a (sic) incubator. All right. Yes? - And being that one at the time of a phone call and the sum of money being agreed with Peter and I that we could afford at the time, was the one we bought, purely because it was in our range of finance. What were the costs of the other incubators? - At the other seminars or.. The enquiries you made, or what - were told? - Much dearer, much dearer... On the information that you had, what was different to your mind or observation with the Multiquip incubators and the others"? - Well, the LSD (sic) incubators and the Westfan incubators a lot of people spoke highly of them and recommended them for incubation. They were the better machines. Yes. What did you hear about the Multiquip one then? - Well, I never heard anything at the time of purchase. Yes, right. All right. And did your husband tell you whether he had heard anything about the Multiquip incubator at the time of purchase? - No, he had not heard anything at the time of purchase either. And who actually ordered the incubator, you or your husband? - I phoned. Right, and you spoke to Mr Robert Dunns (sic)? - Yes. And did you only speak to him on one occasion prior to buying the Multiquip equipment? - Yes. Right. So that was a conversation, was it, over the telephone? - Yes. And it was on or about 16 July 1991? - Yes. Mrs Crago's evidence of her conversation with Mr Duns was as follows: I said to Mr Duns words to the following effect: "Do you have any incubation equipment that will do ostrich eggs?" to which he replied: "Yes, we sell Multiquip incubators but I would have to order them in from Sydney". I said to him words to the following effect: "Can you tell me about the machines and how much they are and whether or not they have automatic turners. We have three birds laying and we probably need a fifty-egg capacity". to which he replied: "There is the E3 which carries 48 eggs. It has automatic turners. The E2 Hatcher is manual with flat trays and carries 24 eggs. It will cost you around $5010, including freight for both of them". The equipment appeared to be well within our price range. As I had previously heard the name "Multiquip" at some of the seminars I had attended and recalled seeing a brochure at one of the seminars I had attended, I placed the order for this equipment and said words to the effect: "Could you order me those two?" To which he replied: "I will need to order the equipment from Sydney." I said words to the effect: "Let me know when they arrive from Sydney". Mrs Crago did not, in her oral evidence in chief, specifically correct that evidence that she had previously heard of the name "Multiquip" or seen a brochure (she corrected an earlier passage in the affidavit to that effect). She maintained in cross examination, however, that she had neither heard the name "Multiquip" previously nor seen a brochure. Mr Crago gave evidence that he heard the conversation. Though counsel for Dunogan cross examined Mrs Crago, Mr Duns did not give evidence and I do not, therefore, have the benefit of his recollection of the conversation. In the circumstances, I accept Mrs Crago's account of the conversation as substantially correct. Counsel for Dunogan obtained, in cross examination of Mrs Crago, the concession that the conversation with Mr Duns may have resulted, not from Mrs Crago ringing him directly but from Mr Duns returning a message left by Mrs Crago, the previous day, on his answering machine. That, if correct, means that Mr Crago's evidence of the sequence of events is not entirely accurate, but that does not seem to me to be a matter of any great significance. There is, in any event, no doubt that Mr Duns ordered the E3O ATS and the E2O from Multiquip (I shall refer to them (and to similar machines) simply as the E3 and E2), that Multiquip forwarded the equipment to Mr Duns or that, about a month after the phone call, Mr and Mrs Crago collected the equipment from Mr Duns and took it back to their property. There the equipment was unpacked; both Mr and Mrs Crago gave evidence that to their recollection no instructions as to installation or use were included with the equipment; each, however, gave evidence that there was a "warning" notice to the effect that the temperature in the machines should not be allowed to exceed 100° F. It was necessary, in order to get the machinery into the shed, to remove the shed door. Mr Crago gave evidence that he was assisted by a neighbour, Mr Ronald Bourke, in doing that and Mr Bourke gave evidence to the same effect. Both denied - and I see no reason not to accept their denials - that any parts - particularly the motors for the turners - were taken off the equipment in order to take it into the shed. Both Mr and Mrs Crago gave evidence that the equipment, once in the shed, was plugged in and turned on and that Mrs Crago then spent about three days "calibrating" the thermostat: that is, adjusting it so that a constant temperature of 97.5° F was maintained within the equipment. The "equipment" for this purpose was at least the E3: the evidence is in many respects extremely sketchy as to what was done with, and what use was made of, the E2: it is, among other things, by no means clear that the three-day calibration exercise extended to it as well as the E3. It is necessary to consider in some detail the evidence concerning the use made by the Cragos of the Multiquip equipment, the deficiencies which they claim it had and various modifications which were made to it. Mrs Crago said that she put the first ostrich egg into the E3 on about 16 October 1991. She said that she subsequently placed eggs in the E3 and the E2 on the days set out in certain "egg lists" which are in evidence. As will appear, there are some difficulties with the egg lists. One of the difficulties is that they do not in fact specify the date of which any egg was placed in either machine. The lists do, however, state, in the case of each egg, the date of which it was laid and, if relevant, the date of hatching. They also indicate whether each of the eggs was fertile. The first egg shown on the list is said to have been laid on 15 October 1991 and doubtless that is the egg which was placed in the E3 on about 16 October. Another four eggs are listed as laid during October and thirteen during November. Of the eggs laid during October and November all but ten, according to the lists, proved infertile. Of the fertile eggs, six hatched on various dates between 5 December 1991 and 1 January 1992; of those six, three of the chicks are said to have died early. The other fertile eggs, according to Mrs Crago's evidence, did not hatch. Before turning to the evidence about the first modification of the equipment, I should record that Mrs Crago's evidence was that in December, January and February a further 23 eggs were placed in the E3; of those, seven proved infertile; none of the fertile eggs hatched. Meantime, the evidence of Mr and Mrs Crago was that from 16 October they had serious difficulties with the E3, principally of two kinds. First, they noticed that the turners appeared to labour during the turning process and, when there were a number of eggs in the E3 which Mrs Crago put at about ten and Mr Crago put at about six or seven, to stop altogether. Secondly, they gave evidence of significant temperature fluctuations. Mr Crago gave evidence that in November he phoned Mr Bruce Wilks, an electrician who conducted an electrical business in Inverell. There is substantial agreement between Mr Wilks and Mr Crago about what happened. According to Mr Wilks, Mr Crago said to him: We are having problems with our ostrich incubator. The temperature fluctuates. Can you provide any assistance to us? In particular, we want an alarm system that is activated every time the temperature goes out 1° F from the set temperature of the unit. Mr Wilks said that he could install a temperature control unit with an alarm system (he had not previously fitted such a unit to Multiquip equipment). During the following week, Mr Wilks constructed an electronic temperature control unit and alarm system; on 20 November 1991 he visited the Cragos' farm and installed the equipment he had constructed. He described what he did as follows: I attached the control unit (which comprised a plastic box containing the abovementioned components) to the side of the incubator by drilling four small holes of one-eighth inch diameter into the external structure and affixing the unit to the side of the incubator. I disconnected two wires connecting the bellows thermostat (already installed in the incubator) to the heat lamps and connected the wires to the new electronic temperature control unit. I drilled a small hole of approximately three-eighths of an inch into the incubator and fed the wiring to the heat lamps through it. The wiring occupied the entirety of the hole leaving no room for air flow through the hole. I inserted a sensor in an existing air hole in the front of the incubator. This sensor was placed at such a point as to allow an accurate reading of the temperature within the incubator. This sensor was attached by wiring to the temperature control unit, and is designed to send a signal to the circuit board indicating the temperature within the incubator. The temperature control unit subsequently sends signals to the relay, which switches the heating lamps on and off according to the temperature within the unit. Mr Wilks gave evidence that when he installed the equipment there were no eggs in the incubator. That is somewhat surprising, since if Mrs Crago's evidence is to be taken literally, and assuming that infertile eggs were removed at ten days, there should have been about six eggs in it, including the three which successfully hatched. There were immediate difficulties with the equipment installed by Mr Wilks. About a week after he installed it, he received a telephone call from Mr Crago, who told him that there was something wrong with the digital alarm system and that it kept overheating. Mr Wilks returned to the farm, examined the equipment and discovered that the "contacts of the relay responsible for activating and deactivating the heat lamps had welded together". He replaced the relay with a heavier duty one. Again, Mr Wilks recalled that there were no eggs in the machine: Unfortunately, what happened was that you having put that modification in, it just did not work and that caused the temperature to just keep going? - Yes. I believe they did not have any eggs in the incubator at the time, they were still testing it out. So at the time that you put it in, were you told to the best of your knowledge and belief that there were no eggs being incubated? - I'm sure they certainly would have let me know if they had have destroyed some eggs. The evidence of the Cragos as to the performance of the E3 during the period when it had Mr Wilks' attachment is somewhat sketchy (indeed, much of their evidence lacks detail and precision), and the topic was not much explored in cross examination. Mr Crago's affidavit evidence was as follows: I ... recall the Second Applicant would complain to me several times each day to the following effect: "That alarm has gone off all day again. I just don't know what to do anymore. The temperature is fluctuating all over the place. I don't think I can take much more of this." 12A I recall on one occasion prior to the alarm being removed when we were entertaining my in-laws, the alarm was activated five times during the one afternoon. The Second Applicant and I would on each occasion rush to the incubation shed. I would observe the temperature had risen to around 102° F - 103° F. Either the Second Applicant or I would then open the incubator door and wait for the temperature to drop to 97.5° F. Eventually the alarm refused to deactivate even when the temperature had reached the 97.5° F. I switched the alarm off and telephone (sic) Mr Bruce Wilks of Wilks Electrical and said to him words to the effect: "Something is wrong with the digital readout and the alarm system again. It keeps going off and stayed on continuously. I had to switch it off." I recall Mr Wilks attending our farm on that day and I observed that the wires had fused together in the digital readout. I recall Mr Wilks said to me words to the effect: "I don't know what's wrong." I said to him words to the effect: "It's going off all the time. The heat keeps going up and down. You better take it off." The alarm was removed on that day having been in place for approximately two weeks only. In oral evidence, Mr Crago corrected the two weeks to two months. Plainly there is a degree of confusion in his evidence between the occasion when Mr Wilks called to repair the system he had installed and the later occasion when he removed it. Mrs Crago referred to "frequent and extensive heat fluctuations" throughout the period 16 October 1991 to 13 March 1992. Her affidavit evidence includes the following: ...I observed the alarm was going off on an average of three to four times per week. On one occasion, I recall that the alarm was activated five times during a period of three hours. On each occasion the alarm would go off, I would go to the incubation shed and would observe that the temperature had risen from the 97.5° F to often between 100° - 102° F. The First Applicant would often accompany me to the shed. I would open the door of the incubator in an attempt to cool the incuba (sic) down. The air-conditioning unit always remained in operation. The reference to the part played by the alarm in these events suggests that Mrs Crago's recollection relates principally to the period during which the Wilks' equipment was in operation. At all events it seems to be clear that, at Mr Crago's request, Mr Wilks removed what he had installed, probably towards the end of January 1992. He issued a credit note to Mr Crago dated 31 January 1992 in relation to the return of the equipment. Mr Wilks' evidence was that he removed the equipment, reattached the wires to the bellows thermostat and plugged the only hole which he had drilled into the interior of the incubator. It is evident - and perhaps not surprising - that Mr Wilks was not convinced of the wisdom of what he was asked to do. In cross examination he said this: In any event then you removed some of what you did in January? - Yes, well, Peter just rang me up and said, I don't like the lamps are switching on and off. He said it could damage them. I tried to explain to him it shouldn't but if he wanted it off, that's fair enough because that's the design of the system is to be switching the lamps on and off fairly regularly to keep - to maintain that set temperature. You believe that what you finally put in, what you put in, after (sic) November, should have continued to work? - Mm. The next matter relates to dealings between the Cragos and Multiquip leading to the replacement of the motors and gears driving the automatic turners in the E3. The detail of the conversations between the parties was left largely unexplored by cross examination. Mrs Crago's affidavit evidence, however, was as follows: In or about late December 1991 early January 1992, I decided to contact the manufacturer direct and recall speaking to Mr Robert Reed of the First Respondent on two three occasions. On one occasion, I said words to him to the following effect: "The incubator isn't turning the eggs properly and has now stopped. The eggs appear to be too heavy. To which he replied: "It probably has chicken turners on it. If you send it back we will replace it with a larger motor. The motor on it is too small". I said to him, words to the following effect: "When you buy a machine you do not expect this. We have eggs in the incubator. This machine is not doing a proper job. The temperature is all over the place as well. The temperature reading on the inside of the incubator is different from the outside and it keeps going up all the time. The alarm keeps going off. I am not happy with the machine, you can take it back". To which he replied: "I can't do that. Send it back and we will fix the turners and I will check the temperature. I will send you another thermometer as the one you have may be broken". I said words to the effect: "The thermometer does not look broken, and don't expect me to pay for the equipment to go up". To which he replied, with some reluctance: "If you send it by Comet, we'll foot the bill". Mr Crago gave affidavit evidence that his wife had mentioned such a conversation to him. The evidence of Mr Mikosic and Mr Reed, however, was that Mrs Crago did not speak to Mr Reed during the period mentioned, and could not have done so because Mr Reed was on holiday. Mr Reed's evidence was that on about 9 February 1992 he received a telephone call from Mr Crago who complained that the turners on the E3 appeared to be labouring. Mr Reed denies that there was any mention of temperature fluctuations. Mr Reed says that he agreed that Multiquip would, at no charge, fit a new turner with heavier gearing. He claims to have said words to the following effect: Multiquip is in fact engaged in a recall of the automatic turners on Ostrich incubators. This is because other customers have remarked that when the incubator is full of eggs, or eggs are placed unevenly on the trays, then the original automatic turner appears to labour. Multiquip is offering to replace the motor-gearbox unit on the automatic turners of the "E3O ATS" at no charge to you and with all freight paid. There is no doubt that one of the Cragos communicated with Multiquip during January and as a result Multiquip sent a new thermometer, which the documentary evidence indicates was dispatched on 14 January 1992. It is also established by the evidence - including documentary evidence - that the E3 was sent to Multiquip on 13 March 1992 and was returned, with the turners replaced, on 19 March. I see no reason to disbelieve the evidence of Mr Mikosic and Mr Reed as to Mr Reed's absence on holiday. Additionally, I think the objective facts substantially support Mr Reed's account. It seems highly unlikely that two or three conversations in late December or early January, of the kind deposed to by Mrs Crago, are likely to have led, without more, to the arrival in mid January of a replacement thermometer and the dispatch of the equipment, and replacement of the turners, in mid March. It is in any case to be remembered that during the period to which Mrs Crago refers the temperature in the equipment was controlled not by the bellows thermostat installed by Multiquip but by the equipment installed by Mr Wilks. Why, during that period, a new thermometer should have been asked for (if it was) or sent is a mystery but does not seem to me a particularly significant one. One other matter should be mentioned as possibly throwing some doubt on Mrs Crago's recollection of these events. Again it remained substantially unexplored by cross examination. Mrs Crago's evidence was that during the period when the E3 was absent, having its turners replaced, "the ostrich eggs were placed in the E2 Hatcher and were manually turned by me as the Hatcher does not have any automatic turners". However, the egg lists do not reveal any eggs laid after 28 February 1992 and before 28 August 1992. That circumstance is consistent with evidence as to the season during which ostrich hens ordinarily lay eggs. All the eggs recorded as laid during February, however, were infertile. In the ordinary course that would have become known after about ten days and the eggs would have been removed from the incubator. The most recently laid fertile egg is recorded as laid on 30 January 1992. The incubation period being about 42 days, if that egg were to hatch (the evidence was that it did not) it would have done so some days before 13 March. The timing of the return of the incubator is, in fact, consistent with the Cragos' incubation requirements. Taken together with the egg lists, it is not consistent with the existence of any eggs to be put in the E2 during the E3's absence. Before passing to the next stage of the history, I should record that, of the fertile eggs for the loss of which the Cragos claim damages, 21 are listed as laid during the period commencing on 20 November 1991 and ending on 30 January 1992: that is, the period before the turners were replaced. Mrs Crago's evidence was that all those eggs were placed in the E3. That being so, all of them except the last, possibly the second last (laid on 22 January 1992) and conceivably the third last (laid on 18 January 1992) thus spent some time in the incubator while the temperature was controlled by the equipment installed by Mr Wilks - in the case of most of the eggs, a considerable time. The Cragos gave evidence of further difficulties with the incubator after March 1992. Mrs Crago spoke of temperature fluctuations recorded by the thermometer, the temperature rising to between 100° and 102° F and then abruptly dropping down, often to under 97.5° F. She also spoke of testing separately, with a household thermometer, the temperature on each of the trays inside the incubator: this indicated, she said, a different temperature on each tray. Mr Crago gave somewhat more detailed evidence, but generally to the same effect. He recalled an occasion "some time after March 1992" when the new thermometer which had been supplied by Multiquip "was fixed on 140° F". He recalled another occasion in late 1992 when he checked the temperature and observed that it had risen to 109° F. Additionally, he gave evidence of further difficulties with the turners. Mr Crago's evidence was that "during 1992" Mrs Crago told him that the turners were "dropping and banging". He noticed that during its downward turn the tray would pick up speed and drop abruptly with a banging sound, causing the eggs to jar. He noticed that this seemed to be caused by a loose grub screw. He attempted to tighten it, and sought assistance from Mr Bourke. On several occasions Mr Bourke tightened the screw; ultimately Mr Bourke bored a hole in the shaft which effected a permanent repair. "Some time after that" he recalled the other turner continuing to turn non stop and he telephoned an electronics engineer, Mr David Cooper, and asked him to come to the farm and fix it, which Mr Cooper did. Mr Bourke gave evidence of frequent visits to the Cragos' property and particularly of visiting their incubation shed up to three times each week. He recalled first noticing the problem with the turner shortly after the E3 was returned by Multiquip in March 1992. He gave evidence of tightening the grub screw on the right hand turner on several occasions it was only when the problem had persisted "for approximately several months" that he overcame his reluctance to do anything other than tighten the screw, and drilled the hole. Mr Bourke gave evidence also of observing the "temperature readout" to exceed 100° F. He said also that he had seen many ostrich chicks dead in the shell at various developmental stages and many born with deformities. Mr Cooper gave evidence of first visiting the Cragos' farm "in approximately early 1993". Before his first visit, he said, he gave Mrs Crago some advice, over the telephone, as to the way in which to calibrate the temperature control on the incubation equipment. Mr Cooper did not mention, in his evidence, repairing the turner at that time, or being asked to do so. Having placed his first visit in approximately early 1993, he then said, in his affidavit evidence: I first inspected the First Respondent's equipment in approximately 1993. I discovered both thermostats in the Setter and Hatcher were not working properly. I observed that the original thermostat in the Setter appeared to have a hole in the bellows... . This in turn caused the internal fluids (which are alcohol based) to leak out and/or evaporate. As a result, the bellows were not functioning properly. The bellows are supposed to contract and expand if temperature varies, thereby actuating a micro switch which in turn controls the lamps at the top of the machine which in turn control the temperature. In cross examination, he placed this visit in late August or September 1993 and the Cragos' evidence is consistent with that timing. He did not repair the E3. Instead, after discussion with the Cragos and reading a pamphlet they provided, he advised them that it would be appropriate to install electronic "Bellsouth" controls: I shall deal later with what followed from that advice. Meantime it is clear on the evidence that after that visit by Mr Cooper the Cragos ceased using the E3 and, apart from a brief trial during 1994 (immaterial to the claims made by the Cragos), they did not use it again. Mrs Crago's evidence is that between 28 August 1992 and the end of August 1993 she placed many eggs in the E3. Of those a number proved infertile. The lists, however, show seven fertile eggs laid between 12 September and 12 November 1992 which, on Mrs Crago's evidence, were placed in the E3. They show three fertile eggs laid between 17 and 21 March 1993 and 15 laid between 1 May and 17 August 1993 all of which, again, Mrs Crago said were placed in the E3 and all of which are among those claimed to have been lost. Before proceeding to the next stage of the history, I should record that all the specific evidence of Mr and Mrs Crago, of Mr Bourke and of Mr Cooper relating to temperature fluctuations and other faults, and to "cooked" eggs and the hatching of deformed chicks, relates to the period ending towards the end of August 1993. Mrs Crago's affidavit evidence was that she ceased using Multiquip's equipment on or about 30 August 1993 when they "commenced to incubate [their] ostrich chicks with Neil Fraser of Hopetoun Ostrich Farm". Mr Crago's evidence was to the same effect; and Mrs Crago's affidavit evidence was that during the period ending on about 30 August 1993 they "lost a minimum of 85 fertile eggs". The fertile eggs to which I have so far referred do not number 85. After Mrs Crago's cross examination had proceeded some distance, counsel for the Cragos sought leave, which after argument I granted, to ask Mrs Crago further questions by way of examination in chief. Those questions elicited evidence that after August 1993 attempts were made to incubate a substantial number of eggs in the E2. Some of the evidence was by no means clear: particularly, a number of eggs laid between the beginning of September 1993 and 5 November 1993 appear to have been double counted, in the sense that there is evidence of Mrs Crago to the effect both that they were placed in the E2 and that they were sent to Mr Fraser for incubation. There were, however, in addition a total of 24 fertile eggs laid between 16 January and 27 February 1994 all of which, Mrs Crago said, were put in the E2 and none of which successfully hatched. Mr Cooper installed "Bellsouth" electronic controls and alarms on the E3 on 10 February 1994 and on the E2 on 11 March 1994 (he placed his repair of the turners as occurring during those visits: the Cragos' recollection of the timing of that seems to me more likely correct). Those were the dates he gave, by reference to his records, in cross examination and I see no reason to doubt his evidence in that respect. Although Mr Cooper did not mention this in his evidence, if Mrs Crago was correct in her evidence about the eggs laid in January and February, many of those eggs would have been in the E2 at the time the controls were installed on it; Mr Cooper does say that at some time in March, after completing the installation, he returned to check the machinery and that at that time the E3 was not being used but the E2 was in use. Apart from the brief period when Mr Crago tested the E3, there is no suggestion that any eggs were placed in either of the Multiquip machines at any time after February 1994; in any case, no claims are made in respect of any eggs laid after February 1994. At some time which the evidence does not make precisely clear, but apparently before June 1994, the Cragos purchased a Westfan incubator (more accurately, the evidence was that they acquired it in exchange for ostrich eggs) and that is the incubator which, according to their evidence, they have successfully used since that time. I have already mentioned the hatchability rates which the Cragos claim to have achieved with the Westfan incubator (a claim not challenged by cross examination). Both Mr and Mrs Crago gave evidence about their practices in managing the breeding ostriches (including their nutrition) and handling the eggs. Mrs Crago's evidence was that she did not weigh the eggs between the time they were first put in the incubator and day 38: that, on the expert evidence, may not have been desirable practice because there was, in effect, no monitoring of weight loss during incubation until it was too late to do very much about it. Additionally, about three months after acquiring the E3, she removed the wet bulb thermometer and water dish. Other than that, it is sufficient to say that nothing in the evidence as to the practices adopted by the Cragos suggests a reason (other than problems with the machinery or their use of it) for their almost complete lack of success in hatching eggs between late 1991 and early 1994. That view of the matter receives some support from evidence read by a veterinary pathologist, Dr Neill Sullivan, who examined two fertile eggs submitted by the Cragos on 7 July 1993 and a veterinary research officer, Mr Stephen Love, who examined a chick which had been hatched by the Cragos but which had a "rotated" leg. The Cragos attributed their failure entirely to failures and deficiencies in the Multiquip equipment which they bought and attempted to use. There is no suggestion that any complaint was made to Multiquip after the events of January, February and March 1992; Mrs Crago's explanation of that is that she considered there to be no point in contacting Multiquip because he had found Mr Reed unhelpful. Nor was any complaint made to Dunogan (though the Cragos ordered some heating globes from Dunogan in mid 1993).
(d) Evidence concerning marriage failure The evidence on this aspect of the case may be shortly summarised. Mr and Mrs Crago gave evidence that until 1991 their relationship was harmonious. Their difficulties with incubating ostrich eggs, however, had a number of consequences: because the ostrich breeding enterprise was not producing income, they had difficulty meeting their commitments to the bank and their debt to the bank increased; Mr Crago, in addition to his usual work on the farm, took on extra work of various kinds, much of it involving heavy labour, and as a result injured his back, causing severe pain and admission to hospital for surgery in late 1992; physical exhaustion and severe pain, coupled with financial worries, made Mr Crago extremely irritable, and he tended to blame Mrs Crago for the failure of the ostrich breeding enterprise. As a result, what had been a good relationship was destroyed by anxieties, irritations and disputes. Mr and Mrs Crago ceased to live together as man and wife in about February 1994; they continued, however, to run the farm together and Mr Crago continued to live on the property, though sleeping usually in what was described as a visitors' cabin or, when that was occupied, in the spare bedroom in the main house. Both gave evidence that they remain on friendly terms but, although as Mrs Crago put it in cross examination "I can't foretell the future", neither saw a prospect of restoration of the marriage relationship. Counsel for Multiquip placed some stress, in submissions, on answers that each gave in cross examination to the effect that they were probably better off as friends rather than as husband and wife. It is clear, however, that those answers were given having regard to the position as it existed when Mr and Mrs Crago were giving evidence rather than to the situation up to the end of 1991. Mr and Mrs Crago claim, therefore, that the loss of their marriage relationship was caused by the deficiencies and failures of the Multiquip equipment. (e) Evidence as to the performance of Multiquip incubators This evidence was of a number of distinct kinds. The first may be described as evidence, given by witnesses with engineering or electrical or electronics training or experience, relating to various aspects of the design of the machines, their components and their performance. The applicants called Dr Franklin Lohning, who had practised since 1967 as a consulting engineer, having previously held various positions with ASEA Electric. He had had substantial experience with heating and cooling equipment, though apparently no particular prior experience with incubators. He provided two reports. For the purposes of his earlier report Dr Lohning had available to him lists of component parts and technical drawings of the E2 and E3 incubators. He had not seen the equipment and lacked - as he pointed out in his report - a good deal of significant information. He concluded, however, that the "incubation unit" would not be capable of maintaining temperature within the range of 97.5° F plus or minus 1 or 2° F or humidity within the range of 65-68% relative humidity. His principal reasons for coming to those conclusions were the absence of any cooling mechanism and, apart from the water dish inside the machine, of any mechanism for regulating the relative humidity. Dr Lohning's second report followed a somewhat limited inspection of an E3 machine at Multiquip's premises. He was permitted to view the equipment, but not to test it or dismantle any of it. He reported that his opinion was unchanged: there was no cooling system, and "...to maintain a close tolerance on temperature with a rising ambient, cooling has to be supplied"; and the plastic water dish was "an extremely crude way of increasing humidity by adding water" not a means of controlling humidity. It should be noted that Dr Lohning made no adverse comment on the particular thermostat used: he said that no thermostat would control the temperature in the absence of a cooling system; his only other comment on that aspect of the design related to the lack of calibration on the knob used to adjust the thermostat. The applicants also called Dr J S Blakemore. Dr Blakemore is well qualified in science and engineering and conducts a management consulting and training practice. He examined an E3 incubator owned by Mr and Mrs Dallas (who also gave evidence). His evidence was to the effect that it would be possible to control the temperature within the incubator within reasonable parameters but that: The real problem is, that it is probably unreasonable for a non trained operator to use this device satisfactorily for the purpose of controlling the temperature of the eggs inside the incubator at the level of accuracy need for high efficiency. In oral evidence Dr Blakemore explained that by that statement he meant that it was not reasonable to expect a non trained operator to use the device satisfactorily. His evidence about humidity control was, perhaps, slightly equivocal: his written report suggested that the controls and design were "too primitive" to give reasonable control of humidity, but in oral evidence he suggested that the result achieved in his test could be regarded as "reasonable". Dr Blakemore in cross examination made it quite clear that in his view the proper operation of the controls required substantial training or experience. His principal concern, however, was with the airflow within the machine. He compared it with the airflow within a much larger machine known as the LS, within which the airflow was a good deal stronger. He illustrated his point by means of a video tape, which is in evidence, showing the movement of pieces of cotton inside each machine. He expressed the view that the circulation inside the E3 was insufficient to maintain temperature control and to permit the necessary exchange of oxygen for carbon dioxide. Mr R E Key, a licensed electrical contractor working in Glen Innes also gave evidence for the applicants. He too inspected and tested the E3 owned by Mr and Mrs Dallas. Using a device owned by Mrs Crago, he observed substantial temperature variations within the machine, and during a test of 60 minutes duration significant temperature fluctuations throughout the machine. He expressed his opinion in this way: The manufacturer could not guarantee an average temperature of 97.5° F could be maintained in the unit as the sensing devices are so antiquated by today's standard. Even modern thermocouple sensing devices only have a differential range of 1° C to 2° C. These units are very expensive but have to be used when all differences in temperatures are required to be monitored. The so-called thermostat only indicates to the operator increases and decreases in temperature. It is not scaled in any way to gage (sic) the approximate temperature of the unit. The thermometer is calibrated in 0.5° F intervals but because of parallax errors, the readings could be misunderstood by the operator. (The lack of practical commonsense which some of the witnesses were prepared to attribute to farmers operating incubators was surprising: presumably Mr Key was suggesting that the thermometer was inadequate as a measuring device because someone might read it not at its level, but looking down from above). Mr Key expressed opinions about other aspects of the machine; but I do not think his opinions on those other matters have any particular significance to the outcome of these proceedings. Finally, both Mr Wilks and Mr Cooper gave evidence that an electronic control unit would be a great deal more effective than the thermometer and "bellows" unit fitted by Multiquip. Particularly, Mr Cooper expressed the view that the bellows thermostat was incapable of maintaining a constant temperature; he also expressed the view that the circulation of air within the machine was inadequate. Multiquip called Mr Sailesh Rangoon, a consultant mechanical engineer. Mr Rangoon conducted tests at Multiquip's premises. The tests were conducted on three incubators, an E2O, E2O ATS and an E3O ATS. In the E3O ATS the temperature was measured by means of the factory installed thermometer and four thermometers one placed at about the centre, and one rather more than halfway between the centre and the bottom, of each of the two incubation chambers. Airflow was measured towards the bottom of each incubation chamber at the centre of the chamber, and again at the top of each incubation chamber where the air leaves the chamber. The room temperature was 22° C and the relative humidity 45%. Over a period of two hours the temperature as recorded by the factory installed thermometer fluctuated between 97° F and 97.5° F. The temperature at each of the other points was recorded as constant, at 97.5° F, at the time of each measurement: measurements were taken at intervals of 20 minutes. The airflow speed was recorded as 0.9 m/sec at the bottom of each chamber and 1.5 m/sec where the air left the chamber on each side. The temperature measurements in the E2O ATS were similar to those taken in the E3O ATS; the measured air speed was 0.4 m/sec at the bottom of the chamber and 2 m/sec at the top. On the E2O model Mr Rangoon checked the temperature as recorded by the factory installed thermometer for one minute at five second intervals and again recorded the fluctuation as between 97° F and 97.5° F; he also recorded the temperature as measured by the wet bulb thermometer at 20 minute intervals for two hours and recorded variations between 68.5° F and 69° F. Cross examination elicited the obvious facts that the test was made in controlled conditions, rather than in the "field", and that empty incubators were tested. That, of course, is equally true of other tests. It was also established that the accuracy of the test for airflow might be impaired at readings below 0.5 m/sec, but any inaccuracy was likely to be in the direction of understatement. The second category of evidence is that of the veterinary experts. Dr Black, who gave evidence for Mr and Mrs Crago, gave evidence that the E2 was in common use throughout Australia for the incubation of ostrich eggs. He added that he could not recall seeing an unmodified E2 successfully in use as an ostrich incubator: modifications were commonly used to improve performance. The modifications which he listed as being in common use include egg baskets designed to accommodate ostrich eggs (that of course is in any event part of the E2), automatic turning devices, additional fans to improve ventilation, an electronic temperature control box, improved exhausting by piping from the exhaust outlet to the open air, insulation, air-conditioning and dehumidification of the room in which the machine is housed and additional or enlarged air intake holes. Dr Black did not suggest that every E2 successfully used had all those modifications, only that all that he had seen had some of them. The modifications which he regarded as most significant were those designed to increase the flow of fresh air. Dr Black's evidence was that the E3 was far less commonly in use than the E2 but that the E3 could be successfully operated with similar modifications to those which improved the performance of the E2. Mr Badley was called by Multiquip. He surveyed 94 farms during the 1992-1993 season. He found that a little over half of them used E2s and between 5 and 10% E3s. In answer to a question, in which areas of the country were E2s used, Mr Badley replied: As I remember it they were used throughout the country. A lot of people - new farms should have started off with E2s and - because the number of eggs that people had were few and they particularly suited that purpose. From there they went to bigger machines. Mr Badley did not give evidence as to any modifications he had observed. The third category of evidence was given by ostrich breeders and farmers. Mrs S Cicchinelli was called by the Cragos. She gave evidence of purchasing an E3 or an E2 (it was not entirely clear which) from Multiquip and using it on one occasion only (by placing two recently hatched chicks in it) on which the temperature reached 110° F. She also gave some rather general evidence about difficulties experienced with temperature control in various Multiquip machines which she had owned and borrowed. I have already referred to Mr and Mrs Dallas. They bought an E3O ATS and an E2 in about September 1994. Their evidence related to the E3. They first placed eggs in it in early October 1994. They noticed significant temperature fluctuations and attempted various remedial measures suggested by the dealer from whom they bought the equipment, but without success. Mr Dallas then spoke to someone at Multiquip, who sent replacement thermostats; about two weeks later Mr Reed rang Mr Dallas, suggested that the microswitch might be faulty and sent a replacement; after that, Mr Dallas observed that the E3 appeared to function better and, when Mr Reed rang again shortly afterwards, Mr Dallas told him "it seems to be going OK now". However, the Dallases were still unsuccessful in their attempts to incubate eggs in the E3 and ceased using it to the end of April 1995. Shortly after that, Mr Dallas had a further conversation with Mr Reed who offered to come up and look at the machine "straight away"; later that same day Mr Reed spoke to Mrs Dallas and offered to pick up the incubator and refund the purchase price. Mrs Dallas also gave evidence that the turners laboured and jolted. Mr and Mrs Dallas were cross examined, but I think it is not an unfair summary to say that the substance of their evidence was not effectively challenged or impaired. Counsel for Mr and Mrs Crago read an affidavit of Mrs D L Kent, who was not required for cross examination. Her evidence was that having successfully used an E2 during the 1990-1991 and 1991-1992 seasons, she bought an E3 direct from Multiquip and commenced using it in late November 1993. She ceased using it on about 13 February 1994. During that period no eggs placed in the E3 were successfully hatched. She gave evidence of the turners labouring and "clunking", turner motors blowing out and temperature variations between 89° F and 103° F. Her evidence was also that she "observed that air circulation within the cabinet was very poor and appeared inadequate for ostrich incubation, particularly once the cabinet was functioning at half capacity or more". She had a conversation with Mr Reed, who ultimately agreed to take the equipment back at Multiquip's cost and to refund the price paid for it. Mr Cusato, in cross examination, gave the following evidence: In your travels I suppose you have come across a lot of Multiquip equipment being used or people, farmers who have used it? - Sure. And a lot of those farmers have been successful with it? - Sure. Would it be fair to say, give or take, say within a close hundred, there might be about a thousand Multiquip E2s or E3s out in the marketplace? - I don't know but it's a lot, there's a lot. But nearly all of them are E2s anyway? - Yes, 2s and 3s. I suppose 90% of them would be E2s at least? - Possibly more E2s than E3s, depending. If you had two pairs of birds an E2 is no good to you because you finished up you got too many eggs and they wouldn't fit so you had to have an E3. You have come across many farmers who have been completely happy with the Multiquip equipment, I suppose? - The most successful farmer in Australia today, right from about 1989 uses E2s and it was fantastic. Even today he is the most successful breeder of ostriches in Australia. Very high success rate? - Yes. He used to work on 85 or 90%. Would you say that the majority of those who use the Multiquip equipment have been successful? - Well, I don't know about the majority. You either got it right or you didn't, so if - I think you had to learn to drive your machine actually like you learn to drive a car. If you got it right and you knew what the problem was you sort of fixed and you were okay, but if you couldn't get it right and you got a bit frustrated you just - you threw it out and, you know, went for something else. But yes, there's a lot of machines, a lot of people are successful, a lot of people are not. Mr Cusato said that he did not know how much the machines had been altered. He also gave particular evidence about his own experience with the E3, which I shall consider in conjunction with the evidence of Mr Mikosic and Mr Reed. Multiquip called three ostrich farmers and breeders, Mr J F Swaisiland of Colo, New South Wales, Mr P L Thomas of Gympie, Queensland and Mr L G Hodges of Narrabri, New South Wales. Mr Swaisiland had been involved in the ostrich industry since 1990 and had held office in the Australian Ostrich Association for several years. Since 1991 he had also been the distributor of Multiquip ostrich incubators. He gave evidence of his use of a Multiplo incubator with Multiquip control equipment installed, an E3 incubator (since mid 1994) and an E2 hatcher. His evidence was that he achieved consistently good results with that equipment. Specifically, his evidence was that he had used the E3 fully loaded with eggs, that it was quiet and vibration-free, maintained a steady temperature and was adequately ventilated. He gave evidence that he had checked the temperature at various points within the incubation chamber and had found that the temperature throughout was substantially constant. There was no suggestion that he had modified his machine. In relation to the use of the machinery in various climates and environments he gave the following evidence: And as you say, growers have to compensate for their environment? - Yes. As far as you could tell, have growers compensated for environmental differences in their areas to make modifications to equipment? - They would vary the use of equipment and the way they do things but I am not so sure about - could you explain more when you say vary equipment? - You mean a piece of equipment modified or modify your technique of incubation? No, never mind the technique so much, just equipment leaving aside Multiquip for the moment altogether, have you yourself seen incubators of some particular brand used unmodified, say, in the south part of New South Wales and used in northern New South Wales or Queensland but with some modification? - The only sort of real modification that I am aware of is using other control devices. I mean, people are going to experiment, it was an industry where we had to experiment in the early days anyway. I am aware people do modify equipment, yes. Mr Thomas described himself as a very satisfied customer of Multiquip. Although his evidence on this point is not entirely clear, it appears that his experience was all with E2s. He had used an E2 belonging to another farmer and had then acquired Multiquip incubators (apparently E2s) of his own. After remedying what he regarded as problems with his own farming practices in early years, he claimed to have obtained consistently good results. His evidence was that the other farmer's incubator was not modified nor were his own, except that "the only thing we have done is put a ducting up from the side and up through the roof to take the exhaust air out of the incubation room". Mr Hodges bought an E2 in about July 1991 and an E3 in January or February 1992. He claimed to have operated each with success. It emerged in cross examination that he had modified the E2 by adding an additional fan and drilling an additional air exhaust hole, but he said that the modification made no appreciable difference. The E3 was unmodified. Mr Hodges' evidence was, particularly, that both machines maintained a stable temperature. That brings me to the evidence of Mr Mikosic and Mr Reed. It is fair to describe Mr Mikosic's evidence as defensive and marked by hostility towards those who criticised Multiquip equipment: it is sufficient, without discussing his responses in detail, to refer to his answers to questions relating to evidence given by Dr Blakemore and by the ostrich farmers called by the Cragos. Counsel for the Cragos suggested that I should treat his evidence with considerable reserve, relying, among other things, on Mr Mikosic's refusal to acknowledge that methods he adopted might probably be described as "trial and error", to accept that people reading Multiquip brochures might be expected to rely on them and to produce documents relating to certain tests. Counsel also criticised evidence given by Mr Mikosic in cross examination about the way in which an interrogatory as to tests had been answered. I place no weight on the last of those matters: the questions about the interrogatory were - unintentionally, I am sure - in my view confusing and I think Mr Mikosic was confused. I do not think much weight is to be attributed to the evidence about documents concerning tests: I think the tenor of Mr Mikosic's answers makes it clear that he intended to refer to documents which he believed had already been produced; it was suggested that he might find them overnight but he did not (having, he said, forgotten about it). I see no reason to regard Mr Mikosic's evidence of matters of fact as other than generally reliable. I think that in some respects his defensive and somewhat staccato manner of giving evidence may have done him rather less than justice. His evidence was that in about early 1989 Mr Cusato asked Multiquip to modify its hen egg incubator for the incubation of ostrich eggs. Multiquip did so, and Mr Cusato bought an E3O. Mr Mikosic's evidence was that he designed modifications to the E3 hen egg incubator: the modifications involved changing the trays and the turning equipment and modifying the way in which air flowed through the incubator so as to provide a greater flow of air. The modifications included redirecting the flow of air and increasing both air intake and exhaust flow. That was the context in which the question of test records arose. In relation to the extent of the difference in the flow of air between the modified and unmodified E3, the following exchange occurred: Now, did you attempt to measure that difference? - Yes, I have. When? - And you have the relevant information. When did you do that? - From the start of when we changed the incubator to that level. Right and what is that difference? - You'll have to look at the records which will provide it to you. You cannot tell me, is that what you are saying? - Not at all. I have not got the record in the front of me. That is what I am saying. Well, you'll be able to get them overnight. When you made that design change on the basis of your 25 years experience did you seek to obtain any advice or information from any outside source? - Yes. What was that? - That was the ostrich farmers. Who were they that you consulted? - I haven't consulted anyone personally. It came through Mr Robert Reed So, you received information from Mr Reed, did you? - Through Mr Reed, yes. That exchange deals with another matter of some significance: in modifying long established products to accommodate ostrich eggs (and bearing in mind that, on the evidence, ostrich breeding was, in Australia, a relatively new industry in 1989), Mr Mikosic relied principally upon his long experience of designing and selling equipment for incubating avian eggs, particularly poultry eggs, and feedback from ostrich farmers, relayed through Mr Reed. The only particular test identified by Mr Mikosic before the Cragos acquired their equipment was a test of the turners, carried out by placing sandbags weighing 20 to 30 kilos on them. There were no written records of customer feedback; it is evident, however, that the feedback did not result in any substantial design changes. There is no dispute about that, but it emerges in any event from the following exchange, which is also an illustration of the way in which Mr Mikosic gave his evidence: If the feedback that you have got suggests that you may need to make modifications does not that suggest that those results that you are getting fed back could be improved? - Yes, but I didn't have to make any modifications to my original design. I am not talking specifically about the E2 and the E3 at the moment, just in the abstract. The principle that you would modify a successful apparatus, the hen incubator for ostrich eggs, and you put it in the market and you see what feedback you get from your customers, in principle that is the application of trial of a design you thought best at the time and error to see if it works or not, is not it?- Not entirely correct. Partially correct? - Not even partially. Totally wrong, is it? - I would say so. Because I thought you told us yesterday that you were interested in the feedback you got through Mr Reed from your customers relating to their experiences with the E2 and E3 incubators? - I did say that. Did you mean it? - Yes. Was not the reason why you were interested to find out whether the things that you could do to the design might improve them? - I didn't have to do anything to the design. I understand that, but surely if you were interested to get customer feedback the interest was to see whether they had any suggestions that might make the product even better? - The product was good to start with. Is it really your position that as far as the E2 and the E3 incubators are concerned the product was good to start with and nothing has ever been shown to you to show that it could be improved? - The improvement was done on manufacturing procedure in order to make them go out quicker, cleaner, various manufacturing procedures, which has got nothing to do with the change of design to what we originally come out with. Particularly, Mr Mikosic saw no advantage in replacing the bellows or wafer thermostat with electronic controls. Mr Reed, the sales manager of Multiquip, has been involved in the manufacture, servicing and repair of egg incubation equipment since he graduated from the Hawkesbury Agriculture College in 1958. He worked with Multiplo as a service technician and, later, as a branch manager involved in marketing a brand of imported hen egg incubators; he worked for Multiplo until it was taken over by Allied Mills; with Allied Mills he became a product manager responsible for, among other things, incubators. In 1988 he became sales manager of Multiquip. Since about 1960 he has been a member of the Australian branch of the Worlds Poultry Science Association. He also gave evidence about the modifications to the E3. Particularly in relation to airflow, Mr Reed said that he carried out a "minor simple test" as to the effectiveness of the modifications. He described that as follows: I carried out a smoke test and I also carried out a field [clearly enough "feel" was intended] test and I felt that there was more air being exhausted out of the incubator than out of the small hole that was originally there. He gave evidence of tests made in 1960 in which probes had been placed in Multiplo incubators to determine the variation of temperature throughout the incubators and in which they "found that the temperature had a variation of half a degree or less". The following exchange then occurred: Have you, I think you obviously have, seen people in this case express views that this thermostat device cannot possibly limit temperature ranges within such fine parameters? - I don't agree with those views under normal circumstances. When you do not agree with them, are you not agreeing with them by reason of the testing you carried out 35 years ago? - The testing that I carried out 35 years ago when we were designing the incubators and my experience since then until the present date. In relation to the modifications, particularly in relation to airflow, Mr Reed gave evidence that he spent much time reading relevant literature, speaking to successful ostrich breeders and to the Victorian Department of Agriculture. My question to you was: as a result of all this inconclusive information was your decision simply to put additional vent holes in the top of the E3 chicken egg incubator? - I would accept that. Without knowing in any scientific way what the results of doing that actually was? - I personally don't like the word "scientific" because I don't recall any of the scientists and the ostrich incubator ever agreeing with each other. No, I approached it from a different angle, from a practical angle, and spoke to people that I trusted within the industry that had hatched out successfully ostrich eggs in similar incubators using similar ventilation. Counsel for the Cragos again suggested that I should treat Mr Reed's evidence with great reserve; he characterised it as speechmaking and criticised particularly Mr Reed's inability to repeat questions which had been put to him which he claimed to remember. I would not place much weight on the second of those matters. As to the former, again, I think, there was no doubt that Mr Reed wished to defend himself and his product: but, while it is perfectly true that some of his answers were somewhat lengthy and sometimes strayed from the precise point, I see no reason not to regard his evidence as truthful and generally accurate. It may be mentioned here that there are few differences of significance between the evidence of Mr Reed, particularly, and that of witnesses called by Mr and Mrs Crago. To the extent that the differences relate to dealings with the Cragos' witnesses in relation to their incubators, they are, I think, of very little significance in any event. On factual matters, there is no significant difference with the Cragos themselves other than in relation to the conversations which occurred between January and March 1992 and, as to the main elements of what occurred then, it seems to me that Mr Reed's version is, at least as to its main elements, more likely to be right than the Cragos' recollection. The evidence of two other witnesses must be considered briefly in conjunction with that of Mr Mikosic and Mr Reed. Those witnesses are Mr Cusato and Mr J A Finger. Mr Mikosic gave evidence that the original E3O was developed at the suggestion of Mr Cusato. He said that Mr Cusato "seemed pleased with the original unit we developed at his suggestion". Mr Cusato gave evidence that he successfully used an old wooden Multiquip incubator to hatch ostrich eggs. In mid 1989 he acquired an E3; his evidence as to precisely what happened is by no means crystal clear. It appears that the machine which he acquired was only a slightly modified version of the hen egg incubator. He described a visit to Multiquip's factory and a conversation with Mr Mikosic: Well, to my knowledge at the time Multiquip was the only incubator on the market that I knew of so I went to Multiquip place and said, look, I'm looking for an incubator and he took me down into the factory and showed me the incubators that were in the factory and that's when I looked inside of it and said, look, I can't get ostrich eggs in that machine. Just take the inside out of it just put some trays in it and it went from there. So that was it. You asked him to fix you up one? - Yes. And it was made for you virtually at the time? - Yes. Mr Cusato's evidence was that the machine was not a success and did not successfully incubate any eggs. Apparently he considered the problem to arise from lack of adequate temperature control or temperature variations. Mr Cusato's evidence, however, suggests also that the E3O, as later placed on the market, was further modified. It cannot be said, however, that his evidence on the subject is particularly clear or helpful. Mr Finger owns a company called Bellsouth Pty Ltd. He had, since 1985, been a distributor of Multiquip products. He manufactured electronic controls designed for installation, by way of modification, in Multiquip products; he also designed and sold his own brand of incubators. He had written a book about ostrich egg incubation. His company was the manufacturer of the controls which Mr Cooper installed in the Cragos' equipment. Mr Finger gave evidence about conversations he had with Mr Mikosic and Mr Reed between 1988 and 1994. Particularly, he discussed with each of them modifications which he made to the E2 affecting the airflow within it. He expressed the view that with his modification the machines would work under a wider range of conditions and circumstances. When asked what response Mr Reed made, he said: Well, his response was "we have people using our modified [sc unmodified] machines with adequate performance and that we don't see the need to do it". And I agree, I have people in Melbourne who are using the machines with unmodified original no extra fans and having quite adequate performance and don't see the need to pay the extra money for the extra options. As to the E3, he said that at some time he said to Mr Reed: That really our modifications were about - on the E2 machine - were about the range of where the machine would work and on the E3, I wasn't sure that I could things that would improve that range therefore I didn't feel comfortable about the machine therefore I didn't sell it, and that was the gist of our conversation at any time. Mr Mikosic agreed that Mr Finger might have mentioned doubts about the adequacy of the airflow; he also might have mentioned "in passing" that he regarded the bellows thermostat as insufficiently reliable for ostrich egg incubation. Mr Mikosic, however, regarded Mr Finger's remarks as affected by an "alternative motive", as Mr Finger was a competitor as well as a distributor. Some findings on the evidence Some matters are, I think, more satisfactorily dealt with when considering the elements of the various claims against Multiquip and Dunogan. There are some, however, which can conveniently be dealt with now. Few questions of credit arise. I shall consider later in this judgment the appropriate conclusions to draw from the expert evidence as to electrical, mechanical and engineering matters. There was substantial agreement between the veterinary experts and, so far as each gave evidence as to matters of fact, I accept that evidence. Subject to two qualifications, I accept the evidence of the ostrich farmers and breeders called by each party. The qualifications are, first, that while I do not doubt Mrs Cicchinelli's veracity, her evidence was, in respects which I have identified, somewhat confused and unclear and I do not find it of any particular help; secondly, there were inconsistencies - particularly as to prices - in Mr Cusato's evidence, and a degree of flamboyance carrying with it, I think, some lack of precision: the areas of which it is difficult to rely with confidence on his evidence are, in my view, the precise modifications which were made to the prototype E3O which he acquired and (as relevant to damages) the prices paid for ostriches of various ages at various times; otherwise I accept his evidence. I accept the evidence of Mr Wilks and Mr Bourke as to the matters of fact which they recounted. Neither was cross examined in any depth and it was not suggested that I should not accept their evidence. Likewise, except as to the matters (which I have already described) on which he was clearly confused or mistaken, I accept the evidence as to factual matters given by Mr Cooper. I have already indicated, in substance, my view of the evidence of Mr Mikosic and Mr Reed. Although their evidence is criticised in various ways, some of which I have described, there was no particular matter of fact on which it was suggested that I should hold their evidence to be incorrect or untruthful. I have indicated that I prefer their evidence to that of Mrs Crago as to the conversations in the early part of 1992. Given the conclusions to which I have come on the various claims made against Multiquip, it is unnecessary to say more about their evidence. I have dealt already with some aspects of the evidence of Mr and Mrs Crago, and I shall deal with some other aspects of it later in the reasons. My conclusion is that both were endeavouring to tell the truth as they recalled it and to a considerable extent their evidence was confirmed by other witnesses, particularly Mr Bourke. Particularly, I accept the evidence of the Cragos as to the practices they adopted for the handling and incubating of ostrich eggs, as to the particular difficulties which they experienced with the E3 and as to their more recent success using the Westfan incubator. Although Mrs Crago was cross examined in some detail as to the way in which she kept records and as to the egg lists, I accept that she compiled the egg lists from time to time from contemporaneous original records (now lost); I accept that the eggs which are described in the lists as fertile were (until the end of August 1993) placed in the E3 for incubation and (apart from those successfully hatched at the end of 1991) were not successfully incubated. With somewhat greater hesitation, arising from the way in which the evidence emerged, I accept that after August 1993 the eggs, other than those delivered to Mr Fraser for incubation, listed on the egg lists were placed in the E2 for incubation, and that none of the eggs listed as fertile were successfully hatched. Given my conclusions later in these reasons about the claimed design faults, the evidence does not enable me to be satisfied (according to the civil standard) as to the cause of the lack of success in using the E2 as an incubator. I am satisfied, however, that on numerous occasions between late November 1991 and late August 1993 the temperature within the E3 fluctuated markedly, and in particular on numerous occasions exceeded by several degrees the temperature range within which ostrich eggs will incubate. I am also satisfied that for a period of some months (it is impossible to be more precise) during 1992 the turners in the E3 jolted in a way which (the veterinary evidence establishes) was likely to cause damage to eggs in the trays. In my view it is more probable than not that those matters caused the failure of the Cragos to incubate successfully the eggs placed in the E3 between March 1992 and August 1993, and I so find. I turn now to the various claims made against each respondent. Do sections 74B and 74D apply? Both s 74B (actions in respect of unsuitable goods: goods not reasonably fit for the purpose for which a consumer acquired them) and s 74D (goods not of merchantable quality) impose a liability on a manufacturer of goods in favour of a consumer of the goods in certain circumstances where the manufacturer supplies the goods to another person who acquires them for resupply and that other person supplies them to the consumer. Thus the sections apply only where a manufacturer supplies goods and those goods are resupplied to a consumer. Both sections appear in Div 2A of Pt V of the Trade Practices Act, and s 74A(2)(a) defines "goods", for the purposes of that division, as follows: a reference to goods shall, unless the contrary intention appears, be read as a reference to goods of a kind ordinarily acquired for personal, domestic or household use or consumption. It is admitted on the pleadings, no doubt correctly, that s 4B requires the Cragos to be taken to have acquired the E2 and E3 as consumers. Curiously, Multiquip in its defence explicitly refrains from pleading to the allegation in the statement of claim to the effect that the E2 and the E3 were "goods" as defined by s 74A(2). Counsel for the Cragos did not take the point, however, and, as it was clear from the opening of this case that the allegation was taken to be in issue, clearly leave to amend the defence would have been granted if sought. I shall therefore proceed on the same basis as the parties did, that the Cragos say that the E2 and E3 are "goods" as defined by s 74A(2) and Multiquip says that they are not. It is common ground that that definition applies: it was not suggested (I do not think it could be maintained) that a contrary intention appears. Counsel for Mr and Mrs Crago cross examined Mr Mikosic about a promotional pamphlet issued by Multiquip in 1986 concerning its incubators. That, of course, was before the machines had been adapted to incubate ostrich eggs. The machines were described as suitable for incubating hen eggs. The brochure said, among other things: Can be used successfully for hatching turkey, duck, pheasant and other types of eggs. Especially suitable for pheasant and bantam egg hatching. The "Multiquip" Spacemaster Incubator is tailor made for educational work, too, for agricultural schools, colleges and universities. Operates in any room where temperatures do not drop much below 50° F or rise above 90° F. Stand it in a corner or wherever convenient. You can operate it in your bedroom, living room, office, classroom or laboratory, it is quiet and trouble free. A real space saver. The cross examination proceeded: Is it correct to say that you saw the market for these incubators as including laboratories? - Yes. Schools? - Yes. Offices of various kinds? - Yes. And people who apparently would have no other place but put it in their domestic environment in the bedroom or living room? - Correct. And for those people did you perceive them to be what you could call a small breeder? - No, they are perhaps people that want to incubate a certain number of chickens, quails, various other species, snakes, crocodiles, a number of things; perhaps that is more appropriate to them. But they would be doing that would they according to this potentially in a bedroom or living room? - Not potentially, they could if they wished so, yes. They might be doing it even as a hobby; is that right? - Correct. And you would be seeing them utilising the incubators for their personal use in that environment? - Yes. I know of no extended judicial exegesis of s 74A(2)(a) or of the corresponding language in s 4B(1)(a)(ii). It is clear that the fact that goods are ordinarily acquired for use on a farm does not require the conclusion that they are ordinarily acquired for domestic purposes: Jillawarra Grazing Co v John Shearer Ltd (1984) ATPR 40-441. Equally, I think, it must be clear, as counsel for the Cragos submitted, that goods may be of a kind ordinarily acquired for personal, domestic or household use or consumption even if goods of that same kind are in many cases, perhaps even a majority of cases, acquired for business use. However, if one or two people are so eccentric as to incubate crocodile eggs in the bedroom, it does not follow that machines adapted to the incubation of ostrich eggs are goods ordinarily acquired for personal, domestic or household use. In a number of reported cases, courts have been able to conclude with confidence, in the absence of evidence as to actual use, that the nature of particular goods is such that they are not of a kind ordinarily acquired for personal, domestic or household use: thus an airseeder is not ordinarily acquired for such use (Jillawara); neither is a large tractor (Atkinson v Hasting Deering (Queensland) Pty Ltd (1985) 6 FCR 331), a "reduction photocopier" Four Square Stores (Qld) Ltd v ABE Copiers Pty Ltd (1981) ATPR 40-232 at 43,115) or a prime mover (Minchillo v Ford Motor Company of Australia (1984) ATPR (Digest) 46-119). Equally, in the absence of particular evidence a court may, in the case of some kinds of goods, come confidently to the contrary conclusion: In my view "carpet" is a commodity, or goods, ordinarily acquired for domestic consumption, and it does not lose that description by reason of a commercial rating, or of some quality which makes it last longer than other carpet normally supplied for use in a domestic setting. (Carpet Call Pty Ltd v Chan (1987) ATPR (Digest) 46-065 at 53,072, Thomas J). But evidence must be admissible to prove either that a particular kind of goods is, or is not, ordinarily acquired for personal, domestic or household use or consumption and, if the matter depends on the onus of proof, clearly in my view the onus is on the party who claims an entitlement to compensation under Division 2A. The evidence given by Mr Mikosic to which I have referred throws, in my opinion, no light on the question whether equipment specifically adapted for the incubation of ostrich eggs is to be regarded as "goods" for the purposes of Division 2A. It is doubtful that it says anything about the use for which any incubators are (in fact) ordinarily acquired; certainly it says nothing about the nature of the use for which ostrich egg incubators are ordinarily acquired. The evidence spoke of an ostrich "industry". It established that, at the relevant time, ostriches and their eggs were traded at high prices. All those, about whose use of incubators evidence was given, used them in the course of a business. Certainly it cannot be regarded as a matter of common knowledge that an ostrich egg incubator is, like a carpet, a washing machine or a television set, ordinarily acquired for personal, household or domestic use. There was no evidence that anyone in fact acquired such incubators for such use. I must therefore hold that Mr and Mrs Crago have not established that the incubators they acquired are "goods" for purposes of Division 2A, and accordingly their claims under ss 74B and 74D must fail. Claim under s 52 and s 53(a) The submission of counsel for Mr and Mrs Crago proceeded, at least implicitly, on the basis that the claim under s 53(a) stood or fell with the claim under s 52. The representation relied upon was that Multiquip's E2O and E3O models would "do" ostrich eggs; that they were machines which would effectively incubate and hatch ostrich eggs; that they were reasonably fit for the purpose of doing so. If Multiquip made a representation in one of those forms, if it was to be regarded as a representation that the E2O and E3O were goods of a particular standard, quality, value, grade, composition, style or model and if it was false then equally Multiquip's conduct in making it, being clearly in trade or commerce, must have amounted to conduct that was misleading or deceptive or was likely to mislead or deceive. Conversely if such a representation was made but did not amount to conduct that was misleading or deceptive or was likely to mislead or deceive, then that in the circumstances could be so only if the representation was not, for the purposes of s 53(a), false. A second preliminary matter relates to Multiquip's brochures and documents, some in the form of letters, which it provided to its distributors and to others who enquired about ostrich incubators. The undisputed evidence is that Dunogan was not a Multiquip distributor, and there is no evidence that it received any of that material. Mr Crago may have glanced at some of it during the seminar at the Powerhouse Hotel; Mrs Crago insisted that she had not seen it. Certainly the Cragos must be taken to have disclaimed any reliance on it. A third, and obvious, preliminary matter relates to what it was about which the alleged representations were made. The representations did not relate to the particular machines which the Cragos bought, but to the E2O and E3O models generally. That fact differentiates the claim under ss 52 and 53(a) from those based on Div 2A. The substance of the case which Mr and Mrs Crago sought to make had two branches. One was that, when Mr Duns informed Mrs Crago that the E2O and E3O models would "do" ostrich eggs, he did so as agent of Multiquip. The other is that in putting the machines on the market with the designation "O", explained as indicating that the machines were adapted for use with ostrich eggs, Multiquip represented to the universe of potential buyers of ostrich egg incubators and hatchers that those two models would perform that function. The agency argument faces, I think, considerable difficulty, arising mainly from the evidence as to the precise circumstances surrounding Mrs Crago's conversation with Mr Duns. It will be recalled that her evidence was that she telephoned him on or about 16 July 1991 and that the conversation which she recounted then took place. Mr Crago's evidence was that he had looked up the Yellow Pages and that in his presence Mrs Crago then telephoned Dunogan and spoke to Mr Duns. In cross examination, Mrs Crago agreed that she may not have spoken to Mr Duns immediately when she telephoned, but may instead have left a message on his answering machine. Mr Reed in cross examination had no recollection of telephoning Mr Duns on 17 July 1991, returning a message from Mr Duns; specifically he had no recollection of recommending to Mr Duns an E3O ATS incubator and an E2O hatcher but was not prepared to deny that he had done so. He could, however, recall having discussions with Mr Duns "regarding our equipment in general and it would surprise me if I did not advise [Mr Duns] or give him information is a better word, on our, all our incubators including the ostrich incubators". That evidence, in my view, provides too flimsy a foundation for a conclusion that Mr Duns was authorised on behalf of Multiquip to make any particular representations. The other branch of the case is a different matter. If a manufacturer represents to the world at large that its product will perform a particular function, and that representation is false, misleading or deceptive there is no obvious reason to doubt that the conduct of the manufacturer, if it is a corporation and makes the representation in trade or commerce, infringes s 52. Whether a particular applicant can recover damages under s 82 depends, of course, on whether the applicant suffered loss "by" the conduct. But in the present case it may, I think, be inferred that Mr Duns was hardly likely to suggest the E2O and E3O but for his knowledge of Multiquip's assertion that they would incubate and hatch ostrich eggs; and if Mr and Mrs Crago, in deciding to buy the equipment, relied on what they were told by Mr Duns, and as a result of buying it suffered loss, I see no difficulty with the conclusion that the loss was caused by the manufacturer's misleading or deceptive conduct. The first question, then, is whether Multiquip, in describing and promoting the E2O and E3O products as it did, engaged in conduct which was misleading or deceptive or likely to mislead or deceive. There is no doubt that the E2O and E3O were designed and promoted as machines which would incubate and hatch ostrich eggs: that is precisely what the material which Multiquip sent to distributors and enquirers described as its purpose. And, on the evidence of both Mr Mikosic and Mr Reed, that is the purpose for which the equipment was designed and for which it was fit. Two formulations of the message conveyed to the market by Multiquip's conduct appeared in the Cragos' submissions: one is that the E2O and E3O could be used for the incubation of ostrich eggs; the other is that "the product is reasonably fit for the purpose designated by the descriptive words which Multiquip applied to it, i.e. reasonably fit for use as an incubator of ostrich eggs". Both formulations seem to me to be apt. Counsel for the Cragos relied on the series of cases dealing with the circumstances in which silence as to a particular matter may constitute, or form part of, misleading or deceptive conduct: Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 and the earlier cases there referred to; Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97 and Warner v Elders Rural Finance Ltd (1993) 41 FCR 399. It is not necessary, in my view, to rely on that line of authority in order to reach the conclusion already indicated as to the general nature of the representation inherent in Multiquip's conduct. No suggestion was made on the basis of those authorities that there were particular matters of which potential users ought to be warned, but of which no warning was given. It is, however, worth pointing out that the characteristics of those to whom Multiquip's message was directed are rather different from those of the audience, for example, of a television advertisement (see, for instance, Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1 at 48, 49; Kimberley-Clarke Australia Pty Ltd v Carter Holt Harvey Tissue Australia Ltd (1997) 37 IPR 293 at 298, 299). The relevant audience comprised people who either were engaged in or proposed to enter a business requiring significant capital, a class of persons of whom some degree of sophistication might be expected and who might be expected, if not having personal experience, to have made enquiry (as the Cragos did) as to what successful ostrich breeding required. In that context, it is relevant that the Multiquip products are at the inexpensive end of the spectrum. There was not a great deal of evidence as to the range of products available, but there was evidence of the existence of larger and more sophisticated equipment (e.g. the LS, apparently designed by Mr Cusato, and the Westfan) available for prices ranging from $15,000 to $30,000. For example (and disregarding Multiquip's operating instructions which the Cragos say they did not see) such an audience would hardly need to be told that the Multiquip machines had no cooling system, so that they would not work properly in an ambient temperature exceeding that at which ostrich eggs are successfully incubated, and provided no means of reducing humidity, so that in some climates air-conditioning or dehumidification might be required. Similarly, such an audience, I think, might be taken to realise that adequate oxygen was required for the incubation of ostrich eggs, so that incubation equipment would not operate effectively in an inadequately ventilated environment (the ability of the machines to take advantage of oxygen available in the environment is, of course, another matter). In the end, battle was joined over two aspects of the Multiquip design, temperature control and airflow. It was not suggested that the mechanism for turning the eggs was defective, in any general design sense, at least after the introduction, early in 1992, of the heavier duty egg-turning machinery. On the two matters of temperature control and airflow the Cragos relied on the expert evidence and also on the evidence of the performance of Multiquip machines in practice. The issue of temperature control had two aspects, one being that the bellows thermostat was claimed to be inadequate, the other that there was no cooling system so that other sources of heat within the incubator would cause the temperature to keep rising for a time even when the heating globes were switched off ("thermal lag" and "overshoot" being two terms used in the evidence in relation to this phenomenon). Additionally, it was said that the design did not give any assurance that the temperature in the incubation chamber was uniform from top to bottom and at all points within the chamber and that there was no "fail-safe" or "back-up" system for control failure. There is no doubt that both Mr Key and Mr Cooper thought that the bellows thermostat was "antiquated" and inefficient by comparison with electronic controls. Dr Lohning did not specifically compare the bellows thermostat with electronic controls: his opinion was simply that no thermostat would adequately control the temperature within the E3. Dr Blakemore, as I have mentioned, expressed the opinion that the bellows thermostat could be made to work "in relation to the temperature" (though he had strong views about air circulation) but his view was that electronic controls would be easier to use and more effective. Of the witnesses called by the Cragos as experts, only Mr Key gave evidence of an actual test. I have recorded what he did and what he found: in summary, temperature fluctuations over the period of the test (one hour) and variations in temperature within the chamber. Mr Rangoon, of course, conducted a similar though rather more extended test in circumstances which appear to have been not materially distinguishable (it was suggested that Mr Rangoon's test should be given little weight because it was not conducted in the field or with a full load of eggs; but Mr Key's test was conducted in an air-conditioned room also, apparently with an empty machine). But the real difficulty, in my view, with accepting the evidence led by the Cragos as establishing that the means of measuring and controlling temperature provided by Multiquip could never work properly so as to maintain a temperature within appropriate limits arises, from the evidence as to the actual use of the machines. It is clear on the evidence that the E2 is very widely and successfully used. It is equally true that the evidence, particularly that of Dr Black, establishes that it is common practice among farmers to make modifications to the machines and adjustments to the environment in which they operate: indeed, Dr Black said in re-examination that "the electronic temperature control seems to be something that I have seen on virtually every - well, every incubating E2 that I have come across in the field, and that is obviously to try and prevent any major fluctuations in temperature". But it was not in the end suggested that I should infer from the evidence that E2 machines successfully in use do not commonly retain the thermometer and thermostat installed by Multiquip. Such a suggestion would, I think, fly in the face of the probabilities: Mr Reed's evidence that he obtains feedback from customers has no air of improbability about it, and it is supported by the evidence of Mrs Kent and of Mr and Mrs Dallas as to their dealings with Multiquip. It is in the highest degree improbable (despite the firmness of Mr Mikosic's views) that Multiquip would continue obstinately to manufacture a machine (the E2, one of the most widely used of incubators) with its existing temperature controls if those controls were the subject of general complaint and if most of the many breeders who bought E2s could make them work effectively only by changing the temperature control system. That view of the probabilities is supported by the evidence of Mr Finger (to which I shall refer again, below). The evidence given by individual ostrich breeders is by no means inconsistent with such a conclusion. Mrs Kent's difficulties were with the E3 which she bought; but over many years she had good results with an E2 and there is no suggestion that it had been modified. Mr and Mrs Dallas had problems with the E3 which they purchased. The evidence of Mr Dallas, however, was that, using the replacement bellows thermostat and microswitch which were sent by Multiquip, he was able to maintain a constant temperature in the incubator. Mr and Mrs Dallas still did not successfully incubate any eggs with it, but that must have been for other reasons. Mr Dallas formed the view that the problem was inadequate airflow. Mr Hodges gave evidence that he obtained consistently good results with both an E2 and an E3, no modifications having been made to the temperature controls of either. Mr Thomas, equally, obtained good results from E2s in which the temperature control were, on his evidence, unmodified. Mr Swaisiland obtained good results from an unmodified E2 and an unmodified E3. I have already discussed the evidence of the other breeders who gave evidence, Mr Cusato and Mrs Cicchinelli; I do not think either should be treated as throwing any significant doubt on the general picture which emerges. It was submitted that I should treat the evidence, particularly, of Mr Swaisiland with reserve because his farm was at Colo, where the climate was very different from that at Bundarra. Counsel referred also to the evidence of Mr Finger to the effect that unmodified E2s were successfully used in Victoria. It was suggested that I should infer that whereas E2s might work satisfactorily in a relatively temperate climate, they might not do so elsewhere. The first comment to be made about that is that the ostrich breeders who gave evidence in the case carried on their farming activities in a wide variety of locations. The second is that there is no evidence that unmodified, as opposed to modified, Multiquip machines are clustered in areas enjoying a particular kind of climate: the evidence of Mr Finger does not go so far and no other evidence touches the question. Thirdly, the evidence suggests no theoretical basis for such a possibility. Obviously the machines, which heat but do not cool, must be operated in an environment where the temperature is somewhat below that at which the eggs are required to be maintained; equally, because the machines may increase humidity but will not reduce it, where the humidity of the surrounding air exceeds the maximum appropriate for successful incubation, air-conditioning and possibly dehumidification are required; apart from those matters, no reason is suggested why any particular climate may be more favourable to the operation of the Multiquip machines than any other. To put the matter shortly: Dr Lohning suggested that no thermostat would be capable of maintaining the temperature in the E3 incubator within acceptable tolerances, but the evidence discloses that the fact is that there are a very large number of Multiquip machines in successful operation a number of which are controlled by the bellows thermostat and a number of which are not; Dr Blakemore suggested that the bellows thermostat was difficult for an untrained operator to use, though with careful operation by a trained person might work acceptably and Messrs Key and Cooper (and Mr Wilks) expressed the view that only electronic controls would do the job in an acceptable way, but the evidence indicates that there are at least a substantial number of Multiquip machines successfully operating with the bellows thermostat and the evidence indicates also that the E2 is commonly regarded as a machine suitable for a "beginner" and, particularly, for operators with a small number of eggs only. There is no evidence that suggests that a greater proportion of beginners than of experienced breeders use electronic controls. In those circumstances, in my view it is not open to me to find that the temperature control system incorporated by Multiquip in the E2 and E3 machines represents such a design deficiency that the machines should be regarded as unfit for the purpose for which they are marketed. Before turning to the question of airflow, I should mention one aspect of the matter relevant both to temperature control and to ventilation and airflow. None of the parties in the end suggested that there was any relevant distinction between the E2 and the E3. Mr Cooper's evidence relates to both; so, of course, does Mr Rangoon's. Dr Lohning, Dr Blakemore and Mr Key considered only the E3. The particular evidence of difficulties arising from the use of Multiquip equipment except possibly that of Mrs Cicchinelli, (whose evidence as I have mentioned is by no means clear) relates to the E3. That is so in relation to Mr Cusato's experience with the prototype; it is true of Mrs Kent (she successfully used an E2); it is true of Mr and Mrs Dallas; and it is true, as to evidence of particular failures, of the evidence of Mr and Mrs Crago. But the argument of behalf of Mr and Mrs Crago was that there was no significant difference, other than size, between the E2 and the E3 and that I should treat the evidence suggesting deficiencies in the design of the E3 as equally applicable to the E2: I should therefore regard the Cragos' failure to incubate successfully in the E2 as resulting from deficiencies in design just as much as their failure to achieve success with the E3. Neither Multiquip nor Dunogan suggested that for these purposes there was a relevant distinction to draw between the two machines. Certainly it is difficult to see a theoretical basis in the evidence for doing so. The only witness who actually measured the airflow within the E3 and the E2 was Mr Rangoon. I have set out the effect of his evidence. Two things should be noticed. One is that the airflow measured at the bottom of the E3 was substantially greater than that measured at the bottom of the E2. Secondly, Mr Rangoon conceded that his measurements provided no necessary indication of the rate of airflow in those more central parts of the incubation chambers where the eggs are inserted. Dr Blakemore expressed the view that the airflow within the E3 was inadequate. He demonstrated by the use of strands of cotton hung in the machines that in about the middle of the incubation chamber there appeared to be a good deal less movement in the E3 than in the LS. Strands of cotton placed near the intake and exhaust vents of the E3 also did not show any great degree of agitation. There is no doubt on the evidence that one of the requisites of successful incubation is a flow of fresh air adequate to provide the necessary oxygen and to remove carbon dioxide. The veterinary evidence indicated, however, that there is no clear agreement as to the precise rate at which fresh air must be provided and stale air exhausted. Mr Badley gave the following evidence: Is it the situation that the current thinking is that there could be too little air or there could be too much air, you have to strike some sort of balance? - There could be, yes. But then again we don't really know what too much and too little is so we probably give it too much rather than too little. Is this because the ostrich industry is still in the stages of - still learning about itself and still learning as to what is appropriate? - Definitely. Certainly as far as artificial incubation is concerned. Dr Black gave evidence that of the "modifications" which he described those involving the exhausting of machines to the outside air were particularly important. He said this: The exhausting of the machine is almost an absolute essential, in that you can get a significant amount of carbon dioxide built-up within a machine, and particularly if its - with these machines, if they are loaded quite heavily, then you need to get rid of that carbon dioxide to avoid embryo deaths. And piping the machine outside the room is absolutely essential. It may be noted that what Dr Black appeared to be concerned about there was the exhausting of carbon dioxide to the outside atmosphere (though there was evidence also that to pipe exhaust air directly from the machine to the outside air would create a "venturi" effect, in turn increasing airflow). His evidence a little later on suggested, with some apparent logic, that "room modifications" were necessary for most if not all machines. Obviously enough, if the concern is that carbon dioxide should be vented to the outside air, successful results may not be achieved by using an incubator in a room in which the air is largely recirculated by an air-conditioner. But in any event, there is the evidence of Mr Finger as to the reasonably widespread use, in Victoria, of unmodified E2s; Mrs Kent's E2 apparently was unmodified; Mr Swaisiland's machines were unmodified; Mr Hodges successfully operated an unmodified E3; he had modified his E2 by adding an extra fan and drilling an additional air exhaust hole, but his evidence was that the machine operated satisfactorily without the alteration; Mr Thomas piped exhaust air from his machine through the roof of the incubation room. In short, the evidence in my view indicates that, although modifications of various sorts are frequently made, E2s, unmodified as to the mechanism of air intake, circulation and exhaust, are widely and successfully used. On the evidence I do not think it is possible to find that in this respect the design of the E2 and E3 is so deficient that the machines are not fit for the use for which they are marketed. Counsel for Mr and Mrs Crago submitted that the trial of their action should not become, in effect, an enquiry into the operation of every E2O and E3O incubator in use throughout Australia and that Mr and Mrs Crago do not have to account for the evident performance capabilities of every E2O and E3O incubator. That, so far as it goes, is true. On the other hand, the case which Mr and Mrs Crago seek to make against Multiquip under s 52 (and in negligence) does not rest on anything specific to the machines which they bought but on a claim that, in certain specific respects, the design of the E2O and E3O is deficient so that neither is fit for the purpose for which it is promoted and sold. It is not sufficient to show that the machines are not the best machines on the market, or that they could be improved. (It may be said in passing that, except for Dr Blakemore's cotton test, there is little detailed evidence as to the characteristics and performance of other incubators: there is evidence of the Cragos' success with a Westfan machine and the Dallas' success with an LS, but that is about as far as it goes). The Cragos do, however, have to establish their case to the civil standard: and in circumstances where the evidence is, first, that Multiquip machines are widely used with success, in many cases at least without relevant modification, secondly that particular breeders from various parts of the country have used the machines with success and thirdly that the evidence of lack of success in using E2s is slight (the Cragos gave no specific evidence as to failures of their E2 and the other evidence is that of Mrs Cicchinelli) and where it is common ground that there is no relevant distinction between the two Multiquip machines, the burden undertaken by Mr and Mrs Crago is a substantial one. In my view they have not discharged it. It is largely true, as counsel for Mr and Mrs Crago submitted, that a great part of their evidence and the evidence of their expert and lay witnesses was not substantially challenged. It is true also that, apart from the evidence of the tests conducted by Mr Rangoon, Multiquip called no independent expert witnesses to support its products against the criticisms of Dr Black, Dr Blakemore and Dr Lohning. But, for the reasons I have given, I do not think that the evidence called by Mr and Mrs Crago establishes the case which they seek to make. Claim against Multiquip based on negligence This claim was put on the basis that Multiquip owed retail purchasers of the E2O and E3O incubators a duty to take reasonable care to ensure that those incubators were reasonably fit for the purpose for which they were marketed, the incubation of ostrich eggs; Multiquip failed to take reasonable care; the incubators were not reasonably fit for the purpose; by reason of Multiquip's breach of duty the Cragos suffered loss and damage. Multiquip was said to have breached its duty in two principal respects: first, it had failed to obtain technical, scientific advice as to the requirements for successful artificial incubation of ostrich eggs before marketing the E2O and the E3O as suitable for ostrich egg incubation; secondly, Multiquip failed to pay sufficient regard to the warnings of Mr Finger as to an alleged need to improve the thermostat controls and to increase the airflow. Multiquip, furthermore, knew that Mr Finger conducted a successful business which included modifications to the E2O; Multiquip was aware also that Mr Finger had expressed particular concerns as to the airflow within the E3O. In my view it follows from my findings on the claim under s 52 that Multiquip has not been shown to have breached a duty of care of the sort proposed: I have found that Mr and Mrs Crago have not established that there was a deficiency in the design of the E2O or the E3O which resulted in either not being fit for use for the incubation of ostrich eggs. The claim in negligence accordingly fails. It is unnecessary for me to consider, therefore, the extent of the duty of care which a manufacturer of what may be characterised as a machine designed for the treatment of valuable goods owes to a retail purchaser of such a machine: it was common ground that such a duty arose but its extent was not explored, in argument, in any detail. Claim against Dunogan The claim is that the contract between Dunogan and Mr and Mrs Crago for the sale of the E2 and the E3 was one to which the Sale of Goods Act 1923 (NSW) applied (that is not in dispute); that the Cragos made known to Dunogan the particular purpose for which they required the goods so as to show that they relied on Dunogan's skill and judgment and that the goods were bought by description from Dunogan which dealt in goods of that description, so that the implied conditions in s 19(1) and (2) applied; that both implied conditions were breached; and that the Cragos suffered loss resulting from the breach. Subsections (1) and (2) of s 19 are stated as exceptions to a general rule that there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale. Their well known terms are as follows: (1) Where the buyer expressly or by implication makes known to the seller the particular purpose for which the goods are required so as to show that the buyer relies on the seller's skill or judgment, and the goods are of a description which it is in the course of the seller's business to supply (whether he be the manufacturer or not), there is an implied condition that the goods shall be reasonably fit for such purpose: Provided that in the case of a contract for the sale of a specified article under its patent or other trade name there is no implied condition as to its fitness for any particular purpose. (2) Where goods are bought by description from a seller who deals in goods of that description (whether he be the manufacturer or not), there is an implied condition that the goods shall be of merchantable quality: Provided that if the buyer has examined the goods there shall be no implied condition as regards defects which such examination ought to have revealed. My conclusions as to the claims against Multiquip do not, of course, determine the outcome of the claims against Dunogan. It follows from the findings I have already made that the claim against Dunogan must fail to the extent that it is based on the proposition that by reason of design defects no E2O or E3O made according to Multiquip's design could be regarded as fit for the purpose of incubating ostrich eggs or as commercially saleable as machinery for the incubation of ostrich eggs (that is, of merchantable quality: Hardwick Game Farm v Suffolk Agricultural and Poultry Producers Association [1969] 2 AC 31 at 75). It does not follow, however, that the two conditions were not implied in the contract with Dunogan or were not breached: breaches of the conditions commonly occur not because of a general deficiency of design but because of defects in particular goods bought. I shall consider s 19(2) first. Accepting in substance Mrs Crago's account of what occurred between herself and Mr Duns, it is clear enough that the goods were bought by description. Indeed, the contrary was not argued. It was, however, submitted that Dunogan did not deal "in goods of that description". It did not deal in ostrich incubators but in poultry incubators, which were different. I was referred to J S Robertson (Aust) Pty Ltd v Martin (1956) 94 CLR 30 in support of the proposition that where there is merely one isolated sale of goods of a particular description the seller is unlikely to be properly characterised as one who deals in goods of that description. I have some difficulty with that argument: J S Robertson was a case in which the difference between the goods that were sold and those in which the seller ordinarily dealt was substantially greater than the difference between poultry and ostrich incubators, and of the three members of the Court only two dealt with the question, briefly, probably obiter and certainly with hesitation: see particularly at 43, 44 (Dixon CJ) and at 60, 61 (Williams J). It is to remembered that Mr Duns did not give evidence. The position is, thus, that Dunogan held itself out as a dealer in equipment for poultry incubation. When asked about equipment for ostrich incubation Mr Duns showed, on the only evidence before me, some knowledge of the subject and readily agreed to order and supply the Multiquip equipment. I think it is proper to infer that Dunogan dealt in goods of the relevant description. It follows that there was implied in the contract a condition that the goods should be of merchantable quality. For similar reasons, I think it should be concluded that the E2 and E3 were goods of a description which (for the purposes of s 19(1)) it was in the course of Dunogan's business to supply. Mrs Crago said to Mr Duns that she was seeking equipment which would "do ostrich eggs". Clearly enough, she thus made known the particular purpose for which the goods were required (I was referred, in a somewhat different context, to the series of cases commencing with Preist v Last [1903] 2 KB 148 which establish that in the case of goods which have one purpose, a buyer - e.g. of a hot-water bottle - sufficiently makes known a particular purpose simply by asking for goods of the particular kind). Again accepting Mrs Crago's evidence, I find it difficult to see why what she said to Mr Duns did not sufficiently show that she relied on Dunogan's skill and judgment. That being so, there was implied in the contract, in my view, the s 19(1) condition. Acceptance of Mrs Crago's account excludes, of course, the application of the proviso to s 19(1). I should record that I reach that conclusion with some hesitation. One of the strange features of this case is that the Cragos, Mrs Crago in particular, on their own evidence made lengthy and detailed enquiries about what was involved in breeding ostriches before they purchased the equipment. They visited a number of farms; they spoke to a number of breeders on telephone; they attended seminars, including one at which Mr Reed was present and information about Multiquip incubators was on display. And all those enquiries, it must be remembered, were made in the context that Multiquip machinery was in common use and, particularly, that the Cragos' near neighbour Mr Schulz had a Multiquip incubator. It is plain that Mrs Crago obtained much relevant information: she knew, for example, about recommended temperatures and humidity levels; she knew about the required standard of cleanliness; she was aware that it was at least desirable to air-condition the room in which the incubator was placed. Matters such as these were, of course, stressed by counsel for Dunogan. But the question posed by s 19(1) is whether the buyer makes known to the seller the particular purpose for which goods are required so as to show that the buyer relies on the seller's skill and judgment. The conclusion I have indicated is, in my view, the one to which, on the evidence before it, the Court should come. It is necessary to consider, then, whether either condition was breached. In relation to the E2, my view is that Mr and Mrs Crago clearly have not established breach. All the evidence shows about the particular E2 is that it appears to have been successfully used as a hatcher in relation to the eggs successfully hatched towards the end of 1991; when, assuming the correctness of Mrs Crago's evidence, it was used as an incubator after August 1993, no fertile eggs were successfully incubated in it; and Mr Cooper discovered a problem, not precisely specified, with the thermostat - apparently in 1994. It is clear, in any event, that Mr Cooper's evidence about the E2 was at least on one point confused: he claimed to have found that there was a failure in its automatic turning mechanism; of course, it had none. I mention those particular aspects of the evidence, though they received no specific attention, on either side, in submissions. Perhaps they explain in part why no basis was submitted on which I should find that (apart from the claimed design deficiencies) there was any particular respect in which I should find that the E2 which Mr and Mrs Crago bought was not reasonably fit for its purpose or not of merchantable quality. There was a good deal of specific evidence about the performance of the E3. One matter which does seem to be clear is that the turners originally supplied by Multiquip laboured, and they were replaced by Multiquip in March. The evidence indicates that this was not a problem peculiar to the machine bought by Mr and Mrs Crago. Although, again, no particular submissions were made about this, it may be that in that respect there was a breach of one or both of the implied conditions in relation to the E3 as supplied. That is, however, an academic question, because there is no evidence of any particular loss flowing from any deficiency in the original turning mechanism. To the extent that the losses suffered by Mr and Mrs Crago resulted from defects or breakdowns in the replaced turning mechanism, that does not concern Dunogan. The remaining matter is temperature fluctuations. I have already mentioned that the evidence of the Cragos and of Mr Bourke is not at all specific as to the precise times at which particular events occured. Some things do emerge, however, clearly from the evidence. One is that at the outset (though only at the outset) the Cragos had reasonable success in hatching fertile eggs. Those which were successfully hatched were placed in the E3. That took place before Mr Wilks made his modification to the machine. There is no evidence as to matters occurring before the modification, in my view, which would support a finding that the thermostat was deficient. There is evidence - to which I have referred - of serious heat fluctuation during the period when Mr Wilks' equipment was operating. Particularly, during the first week, that happened because the contacts of the relay responsible for turning the lamps on and off welded together. After that was repaired, there is evidence of Mr and Mrs Crago to the effect that the alarm was activated on numerous occasions when substantial overheating - up to 102 or 103° F occurred. Mr Wilks then reattached the originally installed thermostat and finally, in August 1993, Mr Cooper found that it was defective (after a history of serious heat fluctuations in the meantime). There is evidence, which I see no reason to doubt, that the bellows thermostat can be harmed by overheating. Although not operating, it remained in the E3 throughout the period of operation of the Wilks modification. In the circumstances, although it seems clear that by August 1993 and probably a good deal earlier the thermostat was defective, in my view it is not open to me to find that it was defective at the time the Cragos bought the machine. In a somewhat different context, it was suggested that the Wilks modification could not be relied upon as affecting the subsequent operation of the E3. It was said that the cross examination of Mr Wilks was perfunctory (certainly it was not long or searching) and that the effect of his modifications was not put to Dr Black, Dr Blakemore or Dr Lohning, nor was it the subject of evidence by Mr Mikosic or Mr Reed. That was put in the context of a proposition that: What Mr Wilks did is set out in detail in paragraphs 7 and 8 of his affidavit. He installed a thermal alarm. When the alarm was removed in January 1992 Mr Wilks sealed the hole he had drilled in the incubation cabinet with a sealant. In fact, of course, he did more than install an alarm. He disconnected the bellows thermostat and replaced it with a thermostat of a different kind. There is evidence, which was not disputed, that excessive temperatures can damage a bellows thermostat. There seems to be no doubt that during the period of the Wilks modification the bellows thermostat was subjected to excessive temperature. Where the question to be answered is, have the Cragos established that the bellows were deficient at the time when they bought the machine, the matters referred to by counsel do not affect the conclusion that they have not. It follows that the claims under the Sale of Goods Act, the only claims made against Dunogan, fail also. Other matters There are some other questions which, in view of the conclusions I have reached, I need not decide but which should be mentioned. The first relates to matters such as the cause of particular loss, forseeability, contributory negligence and mitigation. It is unnecessary and perhaps undesirable that I attempt to deal with this aspect of the case with any great specifity; although these matters clearly are raised in the pleadings and, as will be seen, in the evidence, no very precise attention was directed to them in argument. The evidence, which I have accepted, is that over a period slightly shorter than two years and at a time when fertile ostrich eggs were a valuable commodity Mr and Mrs Crago persisted in unsuccessful attempts to incubate ostrich eggs by using the equipment they had bought from Dunogan. Problems with temperature control emerged at least in November 1991. On the evidence which I have accepted, they continued from March 1992 until August 1993. After the unsuccessful experiment with Mr Wilks' equipment, effectively nothing was done about the problem until Mr Cooper's visit in August 1993 when he expressed unwillingness to fit another bellows thermostat to the E3, after which (without further intervention) the Cragos (on Mrs Crago's evidence) attempted to incubate eggs in the E2 controlled by what, on Mr Cooper's evidence, was probably then a defective bellows thermostat. In November 1991 they called upon Mr Wilks, whose evidence was that he had never previously performed an operation on a Multiquip incubator such as that which he proceeded to perform on the E3. They had not previously complained, or sought assistance from, Multiquip or Dunogan. In August 1993 they called upon Mr Cooper, whose evidence was that he found the dealings with the E2 and E3, on which he then embarked, a learning experience. The Cragos had still made no contact with Dunogan, other than for the purpose of buying some heating globes (and without, so far as the evidence goes, mentioning any difficulty with the machines); no contact was made with Multiquip except in relation to the supply of a new thermometer in January 1992 and the replacement of the turning mechanism in March 1992. There is no evidence that Mr or Mrs Crago sought assistance (as they had before buying the equipment) from other breeders or anyone else experienced in the use of incubators. They simply persisted, using a machine (or machines) which, on their evidence, they knew could not be made to operate within the tolerances required for successful incubation and incurred losses which they put at over $2 million. The evidence indicates that they could have purchased a superior incubator for a sum between $15,000 and $30,000, or could, at least as a temporary measure, have arranged for contract incubation while they dealt with the problem. The difficulty with the turning mechanism, after March 1992, produced a similar reaction. Despite their dismay recorded in the evidence, the Cragos called only upon Mr Bourke and he made the repair which solved the problem only after "several months". The contrast with the prompt, vigorous and effective action taken by Mrs Kent and Mr and Mrs Dallas is obvious. In making those comments, I do not wish to minimise the serious misfortunes which Mr and Mrs Crago have suffered. I accept that I have all the advantages of hindsight. Nevertheless, the matters to which I have referred must, I think, pose real difficulties for the Cragos, even if I were wrong in my conclusions as to the claims under s 52 and in negligence, in recovering a substantial amount of the total loss which they claim to have suffered. It is unnecessary in the circumstances, and inappropriate given the limited extent to which these matters were canvassed in argument, to go further. The other matter to which I should refer is related to the issues I have just discussed. I would not be prepared to hold that damages would never, in a case such as the present, be awarded for loss of a marriage relationship in negligence (I was referred to Lampert v Eastern National Omnibus Co Ltd [1954] 1 WLR 1047), under s 82 of the Trade Practices Act (compare Pritchard v Racecage Pty Ltd (1997) 142 ALR 527) or possibly even in contract (though, given the nature of the contract, remoteness would in any event be an obvious difficulty: Baltic Shipping Company v Dillon (1993) 176 CLR 344). Multiquip, in written submissions, dealt with the claim for damages under that head simply by saying that the propositions put forward "are a mark of unreality. They are ludicrous". A more precise analysis would, in my view, lead to the rejection of the claim. Apart from the lack of medical evidence, to which counsel for Multiquip referred, as to the cause, extent and effects of Mr Crago's back injury (his evidence was that he sought medical advice and subsequently spent some time in hospital), in relation to the claim in negligence the head of damage is, in my view, in the circumstances I have recounted simply too remote (even more so, I should think, in relation to a claim in contract) and, so far as a claim under the Trade Practices Act is concerned, the loss in my view (assuming a breach of the Act) is to be treated as relevantly caused by acts and circumstances following, and independent of, reliance on any conduct of Multiquip (see, for example, Gould v Vaggelas (1985) 157 CLR 215 at 243, 244). Conclusion For the reasons I have given, the application, against each respondent, must be dismissed. I certify that this and the preceding fifty-seven (57) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Lehane
Counsel for the Applicant: Mr V R W Gray
Solicitor for the Applicant: Cashman & Partners
Counsel for the First Respondent: Mr R J Colquhoun
Solicitor for the First Respondent: Joseph M Blanco & Associates
Counsel for the Second Respondent: Mr D B McGovern
Solicitor for the Second Respondent: Lyons Barnett Kennedy
Date of Hearing: 2-6 December 1996, 9-10 December 1996, 24 March 1997
Date of Judgment: 10 September 1997
Jillawarra Grazing Co
John Shearer Ltd
(1985) 6 FCR 331
(1956) 94 CLR 30
(1992) 39 FCR 31
(1992) 39 FCR 97
(1993) 41 FCR 399
(1992) 38 FCR 1
(1997) 37 IPR 293
(1997) 142 ALR 527
(1993) 176 CLR 344
(1985) 157 CLR 215