Shelton v Oaktech Pty Ltd [2011] NTSC 11

Goods Act 1958 (Vic), s 19(a), s 19(b)

Sutton's Sales and Consumer Law, 4th Ed, LBC Information Services, 1995

Ho v Powell [2001] NSWCA 168; (2001) 51 NSWLR 572; distinguished

Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298; Mobasa Pty Ltd v Nikic (1987) 47 NTR 48; Payne v Parker (1976) 1 NSWLR 191; Shelton v Eureka Garages & Sheds [2010] NTMC 059; Sun Alliance Insurance Ltd v Massoud [1989] VicRp 2; [1989] VR 8; referred to

Shelton v Oaktech Pty Ltd [2011] NTSC 11

[1] This is an appeal from the Local Court sitting at Alice Springs. An appeal from the Local Court to this Court is limited to a question of law only.

[2] In 2007, the appellant was a mechanical repairer of all sorts of heavy machinery and light four-wheel drive vehicles. Prior to 2007, the appellant was operating his business from 12 Power Street, Alice Springs. As the lease on the premises from which he was operating was due to expire, the appellant decided to erect an appropriate workshop on commercial land which he purchased at 5 Minahan Road, Alice Springs. At some time, either in late 2006 or early 2007, the appellant made contact with the respondent which carried on business in Victoria as a manufacturer of garages and sheds under the style of Eureka Garages and Sheds.

[3] Sometime before 22 March 2007, the respondent sent to the appellant a quotation for a shed 24m wide, 26m long and 6m high with 6.5m bays. The quotation indicated that the main doors to the shed were 6.5m wide and 5m high sliding doors. Originally, there were three such doors. The quoted price, ex factory Laverton in Victoria, was $78,740 including GST.

[4] The written quote contained the following note in small print at the bottom of the page:

Due to the size of the doors Eureka Garages and Sheds cannot gauranee (sic) the doors performance in high wind situations.

[5] During the course of negotiations, the features of the shed changed. The number of bays were altered, the size of the shed was changed, the number of sliding doors was changed which resulted in two different quotations in March 2007.

[6] The contract between the parties was finalised by a quotation dated 14 June 2007, which was accepted by the appellant for a total price of $62,291. This quotation provided for four sliding doors, two on each side. The dimensions of the shed were 20m by 24m by 5.150m high from ground level to the eaves.

[7] The respondent then manufactured the shed. The appellant paid for and arranged for the transport of the shed in kit form from the respondent's place of business in Melbourne to the appellant's premises in Alice Springs. The transport was carried out by an independent carrier. The shed arrived in Alice Springs in kit form on or about 21 February 2008.

[8] The learned Magistrate found that it was a term of the agreement between the parties that the appellant and not the respondent would be responsible for the erection of the shed on the appellant's land. The respondent did provide the appellant with the name of an experienced person to erect the shed. The learned Magistrate found that the appellant alone made all the arrangements for the erection of the shed in Alice Springs by Steeltrue Constructions Pty Ltd, the principal of which was a Mr Frank Matiuzzio.

[9] The learned Magistrate found that the appellant through Mr Shelton made known to a Mr Hutchinson on behalf of the respondent what he had in mind and what he needed. His Honour found that the appellant explained that he needed a shed with two bays with four sliding doors which could be slid back. The shed needed to be 4.6m tall so that a road train fitted with a stock crate could be driven into it; it needed to have opening doors at both ends so that the road train could be driven right through without having to reverse. He explained that the shed was to be used for mechanical repairs and that he needed two open bays, one closed bay and one bay that was not enclosed providing four bays all up. The learned Magistrate found that it was perfectly clear that the shed was to have these sliding doors and they would perform the function of doors, namely to be able to be opened and closed.

[10] The learned Magistrate found that Mr Shelton on behalf of the appellant instructed Mr Matiuzzio to hang the sliding doors from their top supports before they could be supported at the bottom because the concrete slab had not yet been poured for the floor of the shed and the sliding doors bottom rail could not then be laid. The learned Magistrate found that Mr Matiuzzio warned Mr Shelton against hanging the sliding doors without bottom support because of the risk of overloading the top tracks, that is to say a C-purlin and its bracing, but that Mr Shelton nevertheless proceeded to do so with full knowledge of that risk.

[11] In its amended statement of claim, the appellant pleaded that in May 2008 and ongoing various defects became apparent in the shed. These were:

1. the top C-purlin structure along the roof line bowed;

2. there was buckling in the top leading tracks to the sliding doors;

3. the support braces where the sliding doors guides were fixed to the shed were bending;

4. flashing all around the guttering along the roof line was coming apart and bending as a result of wind force;

5. flashing (wrap around) on a number of corners of the shed were insufficient for the purpose; and

6. dislocation of sliding shed doors and buckling of door frames and sheet metal as a result of wind force.

[12] The appellant pleaded that the contract contained implied terms as to quality and fitness and that the respondent was in breach of those terms as a result of which the appellant has suffered loss and damage.

[13] The learned Magistrate found that the contract arose in Victoria, the goods the subject of the contract were manufactured in Victoria and the supply (delivery) of the goods to the appellant occurred in Victoria and that the proper law of the contract was the law of Victoria.

[14] The appellant in its statement of claim sought damages based upon terms implied by the Trade Practices Act (Cth), the Consumer Affairs and Fair Trading Act (NT) and the Sale of Goods Act (NT) and on a common law implied term. At the hearing, the appellant abandoned any reliance on the Trade Practices Act. The learned Magistrate found that the appellant had no remedies under the Northern Territory Acts or at common law. His Honour also found that the appellant had no remedy under the Fair Trading Act (Vic) because s 32D of the Victorian Act limited the operation of the relevant part of the Act to contracts for goods having a price of not more than $40,000, except for goods supplied for personal, domestic or household use or consumption and that as the shed was supplied for commercial purposes and it cost more than $40,000 that Act did not apply. His Honour held however that the Goods Act 1958 (Vic) did apply to the contract, in particular s 19(a) and s 19(b). His Honour found that there was a condition implied in the contract pursuant to s 19(a) that the shed, including its large sliding doors, would be reasonably fit for the purposes made known to the respondent. His Honour found that the successful operation of the sliding doors was an integral part of the purpose of the shed as made known by the appellant to the respondent both expressly and by implication. His Honour also found that for the unassembled shed to be reasonably fit for that purpose, the large sliding doors and their associated structures had to be designed and the necessary components supplied so that once correctly assembled and erected, the doors would be capable on an ongoing basis of being opened and closed with reasonable efficiency.

[15] However, his Honour also found that the appellant was aware of the respondent's reservation as to the performance of the sliding doors in high wind situations and therefore the appellant did not rely on the respondent's skill or judgment in that regard. His Honour, after referring to the fourth edition of Sutton's Sales and Consumer Law[1] held that the appellant was told of the specific defect in relation to the doors relevant to their performance in high wind situations and to that extent was unable to rely upon the statutory condition contained in s 19(a) as to the fitness of the shed for its purpose, with respect to the performance of the doors in high wind situations.

[16] In relation to a claim based upon s 19(b) of the Goods Act 1958 (Vic) which provided for an implied condition that goods should be of merchantable quality where goods are bought by description, his Honour found that the sale of the shed in its unassembled kit form was a sale by description, but that as the appellant was aware of the respondent's reservation as to the performance of the sliding doors in high wind situations, the appellant did not rely on the respondent's skill or judgment in that regard. Accordingly, the statutory condition in s 19(b) of the Goods Act, although it applied in this case, did not apply to attributes of any components relevant to the performance of the doors in high wind situations.

[17] So far as the defects alleged were concerned, his Honour found that the hanging of the unclad doors, unsupported at the bottom, caused each of the first three defects at or very shortly after the time the doors were hung. His Honour further found that the cause of a bend in the support braces to the sliding door guides would not have occurred if the doors had been correctly installed and would have given sufficient bracing for the C-purlin if the shed had been correctly erected. Accordingly, his Honour found that the respondent had no responsibility for the first three defects and he dismissed those claims.

[18] His Honour found that on 22 September 2008, Alice Springs experienced very high winds, peaking at 101.9 km/h at 1:23 pm that day. At that time, Mr Shelton was working in the shed with the others. He described seeing the sliding doors on the western side of the shed flexing inwards with each gust of wind and eventually the doors blew into the workshop.

[19] His Honour found that under-gauge steel of the wrong grade was used in the construction of the frames of the sliding doors. However, there was no evidence that the provision of the inadequate frames alone was or might have been a problem for the operation of the sliding doors, except in high wind situations. His Honour found that the inadequate frames contributed in part to the failure of the doors in that they dislocated and buckled on 22 September 2008, but that this failure contributed only to a minor degree to the cause. His Honour found that the first three defects together with the replacement of the top rollers with a pin and use of tech screws instead of welding were overwhelmingly responsible for the failure of the door on 22 September 2008. So far as the replacement of the top rollers with a pin and the use of tech screws instead of welding were concerned, his Honour found that these were matters for which the appellant was responsible and not the respondent. His Honour further found that the implied condition as to merchantable quality and/or fitness for purpose did not apply to the doors in high wind situations and therefore in any event the claim for the dislocation of the sliding shed doors and the buckling of the door frames and sheet metal as result of wind force could not be sustained.

[20] As to the flashings, his Honour found that these were caused by Steeltrue Construction Pty Ltd during the erection of the shed.

[21] In the end result, the claim was dismissed.

[22] The Notice of Appeal sets out 12 grounds of appeal. Ground 12 was formally abandoned at the hearing. The Counsel for the appellant, Mr Floreani, reduced the grounds of appeal at the hearing to four grounds. He advised that these four grounds effectively encapsulated all of the remaining grounds in the Notice of Appeal, but to the extent that the grounds as argued differed in any respect from the grounds set out in the Notice of Appeal, the Court was invited to deal with the appeal solely on the grounds as argued with any matters not dealt with to be treated as abandoned.

[23] The first ground of appeal was that the learned Magistrate erred in finding that the Consumer Affairs and Fair Trading Act (NT) did not apply to the contract. This ground was abandoned formally by Mr Floreani.

[24] Mr Floreani submitted that the learned Magistrate erred in finding that the appellant had not relied on the respondent's skill or judgment in relation to the performance of the doors in high wind situations.

[25] The nub of Mr Floreani's submission was that there was no evidence upon which the learned Magistrate could find that the appellant did not rely on the respondent's skill or judgment in relation to the performance of the doors in high wind situations. The basis of the learned Magistrate's reasoning was that he found that it was more probable than not that Mr Shelton had read the reservation at the footnote of the undated first quotation which became Exhibit D23 in the Court below.

[26] I think it was open to the learned Magistrate to find as a fact that the appellant read the "reservation" on Exhibit D23 at a time well before the subsequent quotes were obtained in March and June 2007. This was a matter of inference to be drawn from the facts as a whole. However, I agree with Mr Floreani that even if the appellant was aware of the "reservation" this is a reservation related to entirely different doors and not to the doors the subject of the contract. It is to be noted that the size of the doors in Exhibit D23 were 6.5m wide by 5m high which is a total surface area of 32.5m². The size of the doors changed to 6m by 5m high in the contract Exhibit P14.7 dated 23 July 2007. The doors therefore had only a total surface area of 30m². Interestingly, the plans, Exhibit P16, which show the doors as "6m sliding doors" only measure 4.701m by 6.100m which is a total surface area of 28.6761m².

[27] Moreover, Exhibit D23 provided for three sliding doors all on one side of the building whereas the ultimate contract provided for four sliding doors with two doors on each side of the building. Further, it is entirely unclear what is meant by "high wind situations". What is clear and what the learned Magistrate found is that under gauge steel of the wrong grade was used in the frames of the sliding doors referring to the various engineers reports. In the report of Duncan Ward, Exhibit P2, Mr Ward's evidence was that the vertical members were unable to carry a wind load from a 1:2 year event let alone the minimum 1:100 year requirement of the NT building legislation, in particular Australian Standard AS/NZS1170.2:2002 "Wind Actions" as referenced in the Building Code of Australia. Mr Liney, another engineer, in his report, Exhibit P13, stated that the rolled steel hollow section members used to construct the sliding door frame were grossly inadequate for both strength and serviceability regardless of whether the members were welded or adequately tech screwed together. The respondent's engineer, to which the learned Magistrate also referred, said at pages 261-262 of the transcript that the completed door framework with a wall thickness of 1.6mm was inadequate and required a minimum wall thickness of at least 2mm. It is not entirely clear to me whether the engineers were referring to the same standard and it may well be that there are different standards in different regions of Australia depending upon, for example, whether they are in cyclone areas. In any event, Alice Springs is not in a cyclone prone area. None of this elucidates what is meant by "high wind situations". Is this a reference to a direct force upon the doors when closed of winds gusting to 100km/h, 110 km/h, 150km/h or what? I note that in any event, according to the report of Mr Liney, wind loading is a value based on the wind pressure created by a three second gust with average recurrence intervals of 1:100 years, so does this mean that a high wind situation must be a gust which lasts for three seconds or longer, but does not include a gust of less than three seconds? In my opinion, the so-called reservation is so vague that it lacks the necessary quality of putting the appellant on notice that the doors are subject to a latent defect in that they are likely to fail in a situation which brings home to the buyer the circumstances under which that failure might occur.

[28] In my opinion, there was no evidence upon which the learned Magistrate could find that these particular doors were subject to a reservation as to their quality or fitness so as to exclude liability for damage to the doors as a result of the storm. I would therefore allow this ground of the appeal.

[29] In this ground, the appellant complains that the learned Magistrate's finding that the bowing of the C-purlin along the roofline, the buckling of the top leading tracks to the sliding door and the bending of the support braces were the appellant's responsibility. The appellant complains that the learned Magistrate failed to have proper regard to the evidence of the structural engineers, Mr Ward and Mr Liney, and failed to give any adequate reasons for his rejection of their evidence that the insufficient doorframe members and inadequate C-purlins were a cause for the doors failing in the storm event of 22 September. Further, it was complained that the learned Magistrate has based his finding that the hanging of the doors unclad and unsupported at the bottom caused each of the first defects at or shortly after the doors were hung when there was insufficient evidence to support this finding. It was submitted that the engineer called by the respondent, Mr Proud, whose opinion was that the distortion of the C-purlin was caused by the hanging of the doors was based on the incorrect assumption that the doors had been hung with the cladding on and that he had miscalculated the total weight of the door frame by incorrectly assuming that the door frame members were 2mm when they were in fact 1.6mm. It was submitted that these incorrect assumptions undermined Mr Proud's opinion to such an extent that his opinion should not have prevailed.

[30] As Mr McConnel, for the respondent, correctly submitted, there was evidence to support his Honour's finding that the twisting of the purlin, the buckling of the top track and the bent bridging beams all occurred well before the storm. The learned Magistrate, in commenting upon Mr Ward's evidence, observed that Mr Ward was not aware when he prepared his report that the sliding doors had been hung without bottom support. His Honour observed that this affected his conclusions as to the causes of the problems with the sliding doors and that he had given no evidence on the possible or probable effects on the top structures of hanging the sliding doors unsupported at the bottom.

[31] I think it was open to the learned Magistrate to accept Mr Proud's evidence that the C-purlin was deflected because the door was hung from the top unsupported from the bottom and also that this was contributed to by the failure of the appellant's builder to attach the second supporting struts.

[32] Mr Liney's evidence went to the adequacy of the purling as a structural support for the doors on the assumption they were intended to be top hung. As the learned Magistrate observed, this assumption was incorrect and it affected his conclusions as to the adequacy of the structures at the top of the doors. Further, Mr Liney was instructed, or at least understood, that the buckling of the bridging member bracing the C-purlin occurred during the high wind event when in fact the evidence was that this occurred quite some time before that occurrence.

[33] At para [55] of his Honour's judgment,[2] his Honour found that Mr Liney had expressed the opinion that the vertical weights on the doors resulted in significant torsional forces on the light gauge section which would have rotated the bottom flange into the building. His Honour referred to Mr Liney's opinion that the effect of the dead door weight constituted a significant proportion of the total contribution to the twisting inwards of the C-purlin. That was consistent, so Mr McConnel submitted, with the learned Magistrate's acceptance of the evidence of Mr Proud that it did not matter how long the doors hung unsupported. The deflection of the C-purlin would have occurred as soon as it took the weight of the doors unless the buckled strut was replaced. Furthermore, Mr Proud's evidence was that the effect of tying up the doors at one end whilst hung unsupported would have doubled the concentration of their load at the point where they were hung which would have increased the deflection of the C-purlin.

[34] I note that in para [61] of his Honour's reasons, his Honour noted that Mr Proud had assumed in the preparation of his report that the doors had been hung unsupported with their cladding in place when in fact the cladding was not in place. However, his Honour noted that this did not effect Mr Proud's conclusion because the weight of the doors, even unclad, was still sufficient to deflect the C-purlin once hung unsupported.

[35] So far as the insufficient door frame members are concerned, it is clear that his Honour accepted the evidence of Mr Ward and Mr Liney that the frames were inadequate.

[36] I am not satisfied that the learned Magistrate failed to adequately consider the evidence of the respective experts nor am I satisfied that he failed to give adequate reasons in respect of this aspect of the judgment. These were matters of fact for the learned Magistrate to decide. Although his Honour only dealt briefly with the expert evidence, the test as to whether his reasons are inadequate is whether the Court on appeal is unable to ascertain the reasons upon which the decision is based, or whether justice is not seen to have been done.[3] In my opinion, the learned Magistrate gave clear reasons as to which evidence he accepted and rejected, and why.

[37] I would therefore dismiss this ground of appeal.

[38] This ground dealt with the evidence relating to the bridging struts. Mr Proud had given evidence that the design for the doors should have provided for two rather than only one bridging strut. Had it done so, this would have given sufficient bracing to the C-purlin if the doors had been correctly installed. The respondent called Mr Sabatino, a director of the appellant, who gave evidence that he supplied additional bridging struts with the unassembled shed to allow two struts to be installed and he gave evidence that he advised Mr Matiuzzio that this extra bridging had been supplied and should be used for this purpose. Mr Sabatino also said that he had told Mr Matiuzzio not to hang the doors unsupported at the bottom and to weld the four panels of the doors together. At trial, counsel for the appellant attacked Mr Sabatino's credibility on each of these issues. He also submitted that the respondent's failure to draw Mr Matiuzzio in the respondent's case to corroborate Mr Sabatino's evidence should have led the learned Magistrate to call an inference adverse to Mr Sabatino, namely that Mr Matiuzzio's evidence if called would not have assisted the respondent's case, in accordance with the well known principles referred to in Jones v Dunkel.[4]

[39] The learned Magistrate rejected this submission. The learned Magistrate said:[5]

It was Mr Floreani on behalf of the plaintiff who claimed that the evidence of Mr Matiuzzio would elucidate the facts. However, "the facts" in form of Mr Sabatino's evidence did not need elucidation. They were quite clear. He gave his evidence of events of which he had first hand knowledge, duly affirmed, and he was not shaken in cross-examination. It is the plaintiff which wishes to advance the proposition that Mr Sabatino's evidence concerning his meeting with Mr Matiuzzio should not be believed. It is the plaintiff which settled its action against Mr Matiuzzio's company in these proceedings on undisclosed terms. It is the plaintiff which did not call Mr Matiuzzio in this case notwithstanding his close involvement with the relevant events of the case. It is the plaintiff which did not seek leave to reopen its case to adduce evidence from Mr Matiuzzio after the evidence of Mr Sabatino in the defendant's case. It is the plaintiff which bears the onus of proof.

The principle in Jones v Dunkel is indeed relevant in these circumstances, however the inference to be drawn arising from the failure to call Mr Matiuzzio is drawn adversely to the plaintiff rather than to the defendant in all of the circumstances identified above.

I infer the evidence of Mr Matiuzzio if it had been called would not have assisted the plaintiff's case. I accept on the balance of probabilities the evidence of Mr Sabatino in relation to his relevant meeting with Mr Matiuzzio and the matters discussed at that meeting and in the subsequent telephone conversation.

[40] Mr Floreani submitted that the inference should have been drawn against the respondent because what took place between Mr Sabatino and Mr Matiuzzio was "uniquely in the knowledge of the respondent" relying upon Ho v Powell.[6]

[41] In my opinion, the case of Ho is distinguishable for two reasons. First, the case deals with the situation where a party is not called to give evidence. Secondly, the case emphasises that the principle is more likely to be applied in circumstances where a party fails to give evidence where that party bears the onus of proof.

[42] There is no reason to draw an adverse inference against a party who has already called evidence on an issue to call further evidence to support that evidence. If the evidence is not contradicted and is inherently reasonable, probable and conclusive of an issue, in general, a court is bound to accept it.[7] In any event, Mr Matiuzzio was equally available to the appellant to be called as a witness. In Payne v Parker,[8] Glass JA observed that whether the principle can or should be applied depends upon whether the conditions for its operation exist. There are three conditions, the first of which is that the missing witness would be expected to be called by one party rather than the other. If the witness is equally available to both parties, generally speaking, this condition will be unsatisfied. It is clear that the approach of the learned Magistrate was that Mr Matiuzzio was not in the respondent's camp. If anything, he was in the appellant's camp, bearing in mind that the appellant had already settled on undisclosed terms the action which the appellant had against Mr Matiuzzio's company, but leaving this aside, at the very least, he was available to the appellant and it would have been open to the appellant to have applied to have called him in rebuttal if the appellant had not been able to anticipate the need to call this witness in the appellant's own case. It was therefore not incorrect for the learned Magistrate to reject the appellant's contention that the inference for failing to call Mr Matiuzzio should be drawn adversely against Mr Sabatino.

[43] It may be another matter as to whether the learned Magistrate was correct in drawing the inference adversely against the appellant. As noted before, this depends upon the learned Magistrate's view as to whether this witness would have been available to the appellant rather than to the respondent. As noted before this seems to have been the conclusion that the learned Magistrate drew from the circumstances. I am not persuaded that the conclusion which he drew was incorrect. I would dismiss this ground of appeal.

[44] The end result is that the appeal must be allowed in part. It is not possible for the Court to decide to what extent the appellant is entitled to an award of damages. There is a finding that the inadequate support structures was a cause of the damage suffered by the appellant and no doubt there is evidence that will need to be considered as to the cost of rectification. There is a pleading of contributory negligence on the part of the appellant which will need to be considered and findings of a more accurate kind made. Furthermore, damages have to be assessed and the quantum of damages is disputed. These issues can be dealt with only by the learned Magistrate. In these circumstances, the appropriate order is that the appeal is allowed and the matter remitted to the learned Magistrate for reconsideration in accordance with these reasons.

[45] I will hear the parties as to costs.

[2] Shelton v Eureka Garages & Sheds [2010] NTMC 059.

[3] See Sun Alliance Insurance Ltd v Massoud [1989] VicRp 2; [1989] VR 8; Mobasa Pty Ltd v Nikic (1987) 47 NTR 48 at 50.

[4] [1959] HCA 8; (1959) 101 CLR 298.

[6] [2001] NSWCA 168; (2001) 51 NSWLR 572 at para 15.

[7] Hardy v Gillette [1976] VicRp 36; [1976] VR 392 at 396.

[8] (1976) 1 NSWLR 191 at 201-202.