Tallow Tree Service Pty Ltd ATF the Trotta Family Trust v Ontime Transport Australia Pty Ltd

File Number(s): 2024/257009

Publication restriction: Nil

JUDGMENT

Introduction

1. By a Statement of Claim filed on 12 July 2024 the plaintiff Tallow Tree Services Pty Ltd (Tallow) alleged that it was the owner of a Vermeer BC 2100XL Vegetation Chipper registered number XV21LI (the chipper). On 7 June 2023 Tallow engaged Ontime Transport Australia Pty Ltd (Ontime) to transport the chipper from Sydney to Bangalow. Ontime collected the chipper on 11 June 2023 and began transporting it. While in transit, the chipper fell off the Ontime vehicle, damaging it to the extent of a total loss.

2. Tallow sued Ontime in negligence and for breach of a contract of bailment. The damages for each cause of action are assessed in the same fashion.

3. The plaintiff Tallow has obtained a judgment on liability, for damages to be assessed, as the defendant Ontime has never filed a Defence.

Notice to the Defendant of the Assessment Hearing

4. The defendant was advised of the Assessment Hearing by email (PX4).

Extent of the Damage

5. The extent of damage to the chipper and certain consequential loss caused by that damage is proved by the expert report of Mr Payne dated 10 December 2024 (PX3). The extent of that direct loss is as follows:

| (1) Total loss of the woodchipper | $345,090.91 | | (2) Less salvage | ($118,111.82) | | (3) Towing and storage | $3,891.75 | | (4) Assessment fees | $1,284.00 | | (5) Loss of replacement parts of woodchipper | $20,977.60 | | Total | $253,132.44 |

6. Interest on that amount will be allowed at court rates from 11 November 2023 to the date of judgment 18 March 2025.

Direct Loss of Profit

7. When a profit-earning chattel is damaged or destroyed, the plaintiff may claim for loss of profits.

8. Mr Andre Trotta, a director of Tallow, provided an Affidavit in relation to economic loss (PX2). Mr Trotta annexed to his affidavit copies of the profit and loss statements for Tallow for the period 11 June to 10 November for the years 2019 to 2023. Tallow was unable to earn income by using the chipper for commercial purposes between 11 June 2023 (when the chipper was destroyed in transit) and 10 November 2023 (when Tallow received its insurance payout for the chipper).

9. Mr Trotta said that comparing the 2022 and the 2023 profit and loss statements there was a difference in profit between those years of $261,895.24. Mr Trotta acknowledged that part of the difference in profit related to the expenditure of $91,476.71 relating to a shed upgrade. At the hearing I pointed out to the solicitor for Tallow that there was also an “asset purchase” of $47,602.16. There was no evidence to explain what this line item related to, but that expenditure decreased the profit for 2023 compared to 2022. I will deduct that figure from the amount claimed.

10. I find that the direct loss of income caused by destruction of the chipper was as follows:

| (1) Difference in profit between 2022 and 2023 | $261,895.24 | | (2) Less cost of shed | ($91,476.71) | | (3) Less asset purchase | ($47,602.16) | | (4) Less reduction of fuel costs | ($6,497.64) | | Total | $116,318.73 |

11. Interest on that amount will be allowed at court rates from 11 November 2023 to the date of judgment 18 March 2025.

Further Claim for Loss of Profit

12. The loss of a chance to earn income, providing it is substantial and not entirely speculative, is compensable. Damages must be discounted according to the probability of success in gaining those profits: Sellars v Adelaide Petroleum [1994] HCA 4; (1994) 179 CLR 332 at 355-356.

13. Mr Trotta said in his affidavit that the destroyed chipper was capable of processing 100 to 120 cubic meters of vegetation per hour, whereas the old chipper which was sold and replaced by the new chipper was only capable of processing 60 cubic meters of vegetation per hour. Mr Trotta said the new chipper, if it was not destroyed, would have represented a 66.67% increase in productivity. In para 16 of PX3 Mr Trotta then applied this increased productivity figure to the average net profit, making a calculation that there would have been a daily profit increase of $291.38. There were 152 days between the loss of the chipper and the insurance payout, and thus the machine with an increased capacity might have earned a projected additional net profit of $44,289.76.

14. There was no certainty that the additional profit of $44,289.76 could have been earned. There was no evidence of an increased demand for vegetation chipping services which could not be satisfied. There was always the possibility that the new chipper may not perform as expected, or may have required service or maintenance from time to time. It certainly would have used more fuel than the old chipper. Economic conditions and weather conditions may have affected the ability to earn this additional net profit. Further, the new chipper would not have been employed for every hour of the day, as it would have to be transported from one job to another, and in that time, and in any setting up time, the chipper would not have been in operation.

15. In the absence of evidence, and doing the best I can, I allow an additional $15,000 for this head of damage.

16. Interest will also be allowed at court rates on this second head of damages for economic loss between 11 November 2023 and the date of judgment 18 March 2025.

17. There was no submission made as to whether the award for economic loss should be made net of income tax or on a gross basis. As a matter of law, awards for lost profits in relation to negligent property damage are taxable. Thus, recovery should be at the gross rate: Commissioner of Taxation (NSW) v Meeks [1915] HCA 34; (1915) 19 CLR 568 at 580. The figures to be awarded for economic loss in this judgment are gross figures and will have to be brought to account between Tallow and the Australian Taxation Office.

Conclusion and Orders

18. The plaintiff is entitled to damages for the following amounts:

| (1) Direct loss of the chipper: | $253,132.44 | | (2) Loss of profits: | $116,318.73 | | (3) Loss of a chance to earn additional profits: | $15,000.00 | | Total: | $385,451.17 |

19. Interest at court rates from 11 November 2023 to the date of judgment 18 March 2025 will be added on this total figure. The calculation is:

| Start Date | End Date | Days | Rate | Per Day | Total | | 11/Nov/2023 | 31/Dec/2023 | 51 | 8.1% | $85.5385 | $4,362.46 | | 01/Jan/2024 | 30/Jun/2024 | 182 | 8.35% | $87.9376 | $16,004.65 | | 01/Jul/2024 | 31/Dec/2024 | 184 | 8.35% | $87.9376 | $16,180.52 | | 01/Jan/2025 | 18/Mar/2025 | 77 | 8.35% | $88.1786 | $6,789.75 | | Total | | | | | $43,337.38 |

20. The total of the damages and interest is: $385,451.17 + $43,337.38 = $428,788.55.

21. The orders of the court are:

22. Judgment for the plaintiff against the defendant for $428,788.55.

23. Order the defendant to pay the plaintiff’s costs of the proceedings.