Zahra v Hockley

Texts Cited: JD Heydon, Heydon on Contract (2019, Thomson Reuters)

Category: Principal judgment

Parties: David Zahra (Plaintiff)
Michael Hockley (Defendant)

Representation: Counsel:
Mr J Trebeck (Plaintiff)
Mr S Duggan (Defendant)
Solicitors:
Harris & Company Solicitors (Plaintiff)
Accolade Lawyers (Defendant)

File Number(s): 2023/00353503

Publication restriction: Nil

JUDGMENT

Background

1. In late 2021 or early 2022, the plaintiff decided to buy himself a Ford Falcon GT motor vehicle from the early 1970s.

2. To that end, the plaintiff started searching through various online sites and, on 25 January 2022, he came across an advertisement on Facebook Marketplace for a vehicle which was identified as a Ford Falcon XY GT. [1] This piqued the plaintiff’s interest, describing in his evidence before me how he had dreamed of owning a genuine Ford Falcon GT since he was a teenager.

3. The vehicle which the plaintiff saw advertised was owned by the defendant. The asking price was $220,000.

4. The plaintiff contacted the defendant. They met soon afterwards at a service station suggested by the defendant where the plaintiff, along with a friend, inspected the vehicle, following which the plaintiff agreed to buy the vehicle for $195,000, being a price consistent with the value of a genuine Ford XY GT at that time.

5. The money was paid promptly, and the plaintiff was seemingly content in the belief that he had acquired a genuine example of his dream car.

6. The plaintiff had some health problems and, as a result, in about October 2022, he decided to sell the vehicle at auction. In that process, at the auctioneers’ suggestion, to assist with the sale, the plaintiff had the vehicle inspected for the purposes of authentication.

7. On 25 November 2022, the plaintiff was given the bad news that the car was not genuine and in fact could only be sold as a replica GT with a value of less than half of what he had paid for it.

8. Historically, the defendant had purchased the car some five years earlier from a friend for $75,000. The evidence establishes that the defendant paid slightly below what was the fair market value for the vehicle, as a replica, whereas the fair market value of a genuine 1971 GT Falcon at the time the defendant purchased the vehicle was between $182,500 and $187,500. The defendant’s evidence was that, at all times, he believed the vehicle to be a genuine Ford Falcon GT. That evidence was not challenged.

9. It is against that background that the plaintiff brings these proceedings to recover damages from the defendant for breach of contract. A claim in negligent misrepresentation was also pleaded but ultimately was not pressed by the plaintiff.

Factual Overview

10. The plaintiff says that the body of the Facebook listing he observed referred to a “genuine Ford XY Falcon GT in original condition”. There is, however, a dispute as to whether the advertisement referred to the vehicle being “genuine” or in “original condition”. The advertisement has since been deleted from Facebook and the material tendered by the plaintiff contains only what the plaintiff describes as the “partial Facebook advertisement” which contains photographs of the vehicle and the words “XY Gt $220,000 AUD”.

11. There is no dispute that amongst the thumbnail photographs provided to the plaintiff by the defendant after the plaintiff initiated his enquiry, are photographs of the vehicle’s compliance plate and a letter from the Ford Motor Company going to the authenticity of the vehicle (the Ford Letter).

12. The plaintiff’s evidence is that he understood from the Facebook advertisement and the material provided to him by the defendant that the vehicle was a genuine Ford XY GT.

13. The plaintiff gave evidence that, after messaging the defendant and receiving photographs, he then telephoned the defendant on 25 January 2022, when as he recounts it, the defendant said:

“The car is in original condition, it is a genuine XY, the only thing that has changed is the automatic gearbox to a manual. I have a letter from Ford authenticating the vehicle and all the corresponding tags for it as well.”

14. Following that conversation steps were put in train to organise an inspection, and, on 27 January 2022, the plaintiff says he again telephoned the defendant. In the conversation which followed, on the plaintiff’s account, he told the defendant he would like to test drive the car, however because he had problems with his left knee following surgery, he would bring a family friend to drive the vehicle. The plaintiff says the defendant agreed to that and said:

“The car was only listed a few days ago, but I’ve got a lot of interest in it. It’s hard to find a genuine GT XY.”

15. The defendant gave evidence of a number of people being interested in the car after he placed the advertisement and agreed he received a message from the plaintiff on 25 January 2022. He said he then had a conversation with the plaintiff in which he told the plaintiff, “[t]he car is a matching number car, it was factory auto but had been changed to manual at some stage before”.

16. The defendant says he told the plaintiff he had owned the car for approximately five years and that a friend from school had it for 15-20 years prior to that. The plaintiff recalled the defendant saying he had owned the vehicle for 15 years but conceded he could have been mistaken about that. I accept the defendant’s evidence on this point, corroborated as it is by his wife. I expect the plaintiff has simply conflated or misremembered what the defendant said.

17. In cross-examination, the defendant resisted the proposition that he told the plaintiff the car was a “matching number GT”, saying he only ever described it as a matching number car.

18. However, when he was taken to the terms of the defence he had verified, the defendant agreed he in fact told the plaintiff it was a “matching number GT”.

19. There was a debate about when this occurred, nonetheless the defendant agreed that, in describing the vehicle as a matching number GT, he was telling the plaintiff that the numbers on the compliance plate matched the numbers on the vehicle.

20. On that issue there was the following exchange in cross-examination of the defendant (Tcpt 98.10-98.20):

“Q. By telling Mr Zahra that the vehicle was a matching number GT, you were telling him that the numbers on the compliance plate matched the numbers on the vehicle. Correct?

A. Correct. Yes.

Q. That was important to you when you purchased the vehicle?

A. Yes. Correct.

Q. You knew that to be important to Mr Zahra, as well?

A. Yes.

Q. By telling him that you were telling him that the car was genuine. Correct?

A. To the best of my knowledge, yes.”

21. It is not clear to me why the defendant initially resisted the proposition that he had described the car as a matching number GT, when, on his evidence, he believed it to be so.

22. The defendant also firmly denied that in this initial conversation he had described the car as being in original condition and a genuine XY. It is of course possible the defendant did not describe it that way. However, given that, on his evidence, the defendant believed the vehicle to be genuine, one would expect in a conversation aimed at promoting a sale of the vehicle, those characteristics, which were intrinsic to the value of the vehicle, would have been mentioned.

23. The defendant agreed that his purpose in providing the plaintiff with a copy of the Ford Letter was to encourage the plaintiff to believe the car was a genuine Ford Falcon GT (Tcpt 98.40).

24. The defendant said he did not qualify his statements about the authenticity of the vehicle and left it to the plaintiff to make his own decision about the vehicle’s authenticity.

25. The defendant’s evidence was that he was aware the plaintiff would rely in part on the Ford Letter as verification that the vehicle was a genuine Ford Falcon GT. He considered the compliance plate, the engine numbers and the vehicle identification number (VIN) would also provide checks.

26. When the plaintiff was confronted with the proposition that he did not rely on the defendant’s opinion or belief as to the genuineness of the vehicle or anything he said about it, the plaintiff’s response was “[n]o, I did believe his comments. Multiple times he told me it was a genuine car” (Tcpt 49.10).

27. There is a factual dispute as to whether the plaintiff told the defendant he was proposing to bring someone with him to drive the car because of his injured knee. The defendant rejected that proposition, saying that the plaintiff had said he wanted to bring a friend to have a look at the car because he knew more about these cars than did the plaintiff.

28. Whilst the plaintiff accepted that he possibly told the defendant he would like to bring a friend that knew more about these cars than he did (Tcpt 34.43), he maintained that the main reason his friend was there was to drive the car because of the plaintiff’s knee problems (Tcpt 36.05 – 36.10)

29. Mr Sant is the friend who attended with the plaintiff on 27 January 2022, when he met the defendant and the defendant’s wife to inspect the car at the service station.

30. The defendant describes Mr Sant as being quite involved in the inspection, with Mr Sant and the plaintiff looking inside the boot, lifting the carpet and thoroughly inspecting inside, as well as looking under the bonnet to compare numbers.

31. The defendant said that, at one point, Mr Sant said that the engine number was in the wrong position, prompting the defendant to quickly do an internet search on his mobile phone which verified that the engine number was correctly positioned. The defendant’s wife, Rachel Hockley, corroborated that account. Whilst neither the plaintiff nor Mr Sant recalled that happening, both said it was possible.

32. The defendant said Mr Sant was leading the inspection, and the plaintiff was following him around the car.

33. The plaintiff said he and Mr Sant looked in the boot of the vehicle to check for rust, they checked for rust around the window seals, they looked inside the vehicle for any water smells, and otherwise just had a general look over. The plaintiff was prepared to accept that Mr Sant might be described as leading the inspection but said they were both looking over the vehicle. He said Mr Sant was doing more than him because the plaintiff had physical restrictions at the time, given his knee problem.

34. The plaintiff rejected the proposition that Mr Sant was there to determine whether the car was genuine or whether it was a “tribute car” (Tcpt 36.05-36.26)

35. The plaintiff did not consider Mr Sant was present to advise about cars in general. He said Mr Sant was there to advise on the condition of this vehicle. The plaintiff agreed that Mr Sant said something to the effect of “everything looks good to me”, which the plaintiff said he understood to relate to the body of the vehicle (Tcpt 45.13)

36. The plaintiff said that he and Mr Sant cross-referenced the numbers on the vehicle to make sure they matched the compliance plate. He agreed that was to verify the vehicle was genuine. Mr Sant gave similar evidence on that point.

37. There was a factual dispute when it came to the circumstances of the test drive.

38. The plaintiff’s case is that the defendant drove, as he was not prepared to allow anyone else drive the vehicle. The plaintiff and Mr Sant went as passengers, along with the defendant’s wife.

39. On the defendant’s account, the plaintiff was asked whether he wanted to drive and said to the defendant, “you can drive”.

40. Mr Sant verified the plaintiff’s account of this aspect of the evidence and the defendant’s wife verified the defendant’s account.

41. It is common ground that the plaintiff was provided with the vehicle’s compliance plate at the inspection on 27 January 2022. The compliance plate had been detached from the vehicle. The defendant’s unchallenged evidence was that this was a security measure as the car would be worth nothing without it. The plaintiff says the defendant told him the compliance plate was kept separate for security purposes, “because of the value of a genuine Ford XY Falcon GT”.

42. It is also common ground that the Ford Letter was provided to the plaintiff at the inspection on 27 January 2022. The plaintiff says it was shown to him by the defendant, whilst the defendant’s evidence and that of his wife is that she provided the Ford Letter to the plaintiff.

43. It is appropriate that I explain the relevance of, and interaction between, the compliance plate and the Ford Letter.

44. The compliance plate, which would normally be fixed to the vehicle’s engine bay, contains information about the car. This includes the model of the vehicle, in this case “Falcon GT”, the body serial number, as well as the VIN and designations which indicate the paint colour (in this case ultra white) and the trim (in this case saddle interior), as well as the transmission (in this case designated “B” which meant an automatic transmission).

45. The Ford Letter, which is dated 27 April 2009 and is addressed to Mr Scott Cameron, the owner of the vehicle before the defendant, is a response to a letter apparently sent by Mr Cameron to the Ford Motor Company. The Ford Letter says, “[w]e are pleased to inform you that the above-mentioned vehicle was built as a genuine Ford Falcon GT and has the following specifications”. The letter then explains the various codes contained in the compliance plate and concludes with “[t]his vehicle was built to comply with Australian design rules applicable at the date of manufacture. We are unable to comment on its present specification or condition, as modifications or alterations may have been made to the vehicle since its production”.

46. As events would ultimately disclose, the compliance plate was not from the vehicle the defendant was selling. Rather the defendant’s vehicle had been modified to replicate various specifications on the compliance plate, which included grinding off the original VIN and chassis serial numbers, and stamping onto the vehicle the numbers contained in the compliance plate.

47. Accordingly, whilst the compliance plate was apparently legitimate, the vehicle was not that to which the compliance plate was attached when manufactured.

48. The Ford Letter proceeded on the assumption that the vehicle was that to which the compliance plate referred.

49. The vehicle in fact had a manual transmission and not automatic as indicated by the compliance plate. However, the evidence is that the defendant was told the vehicle had at some time been converted from automatic to manual and he advised the plaintiff of this fact. The plaintiff accepted this caused him no concern because “matching numbers would be the shell of the vehicle, the VIN tag and the motor. There’s no numbers on a gearbox” (Tcpt 37.20).

50. A matter which received some attention during the trial was the presence and significance of a Ford GT sticker affixed to the vehicle. The plaintiff says that, after inspecting the vehicle, the defendant specifically showed him the Falcon GT Owners Club of NSW sticker and said to him “[t]his is a Falcon GT club sticker; you only get the stickers if your car is a genuine GT”.

51. The defendant disputes that evidence and says the conversation simply did not occur. His evidence was that, in response to the plaintiff’s affidavit evidence on this point, he had researched the matter and found that the sticker can be given to anyone who has an interest in the Falcon GT Club, not just a member or the owner of genuine Falcon GT. In support of that proposition, the defendant annexed the Constitution of the Falcon GT Club to his affidavit.

52. That evidence from the defendant was found wanting when he was tested in relation to his assertions. When pressed about the contents of the Constitution of the Falcon GT Club, the defendant said he had not read the Constitution “fully” and that he hadn’t “read it all” (Tcpt 106.40-106.50). As it turned out, the defendant he had not read any of the Constitution (Tcpt 109.05-109.08) and was unable to deal with the proposition that the Constitution said nothing about stickers. He accepted that his solicitor had drafted the paragraph of his affidavit in question and downloaded a copy of the Constitution. He agreed that the words in the relevant paragraph of his affidavit were the solicitor’s words and not his. The defendant’s positive evidence was that his research had shown him that the sticker could be given to anyone with an interest in the Falcon GT Club. However, as it transpired, this was just an assumption and the research the defendant deposed to, was in fact “just general knowledge, a bit of googling” (Tcpt 109.20).

53. It was put to the plaintiff that the defendant did not say those things deposed to by the plaintiff in relation to the sticker and that the plaintiff’s evidence on that subject was concocted to help his case. The plaintiff rejected those propositions and said the sticker was one of the things that helped him form his opinion that the car was authentic (Tcpt 49.40-50.15).

54. I accept the plaintiff’s evidence about the sticker, not only because it is entirely believable in the context of the defendant advocating that the car was a genuine GT, but also because I found the defendant’s sworn evidence about having read the Constitution and researching the point, in order to debunk the plaintiff’s version of these events, to be unconvincing and misleading at best.

55. The defendant’s wife, Mrs Hockley, gave evidence that the defendant had allowed other prospective purchasers to test drive the vehicle. She confirmed the defendant’s evidence that the plaintiff had declined to test drive the vehicle. She also corroborated the defendant’s evidence that Mr Sant had said the vehicle looked good to him. As mentioned earlier, Mrs Hockley confirmed the defendant’s evidence that Mr Sant had raised an issue about the incorrect positioning of the engine number which the defendant allayed by doing a search on his mobile phone.

56. In cross-examination, Mrs Hockley confirmed that when she was preparing her statement in the matter, she and the defendant had discussed their recollections and that she had read the defendant’s statement. Ultimately, Mrs Hockley agreed that in certain respects her statement was almost identical to that of the defendant and that her affidavit and the defendant’s affidavit were “a combined effort” (Tcpt 130.50-132.06).

Plaintiff’s Submissions

57. The plaintiff’s primary argument is that:

(a) There was an express term of the contract that the defendant would provide a Ford Falcon XY GT with designated numbers. (b) The defendant did not do so. Rather he provided something very different, namely, a re-shelled Ford Falcon XW, which was not a GT. (c) As such, the defendant breached the contract and is liable to the plaintiff for the monetary difference between what the plaintiff paid and what the supplied vehicle is worth.

58. The plaintiff submits that the contract is clear, as is the breach, and puts it this way, “[t]he defendant didn’t deliver what he contracted to sell, and failure to do so was a breach of contract, and he’s liable for damages. It’s a very simple case”.

59. Most of the evidence, as the plaintiff acknowledges, was focused on the alternative case, namely, whether the transaction involved a sale by description which engages the operation of s 18 of the Sale of Goods Act 1923 (NSW).

60. In this respect, the plaintiff says there are two possible scenarios. Firstly, if the goods are sold as a thing strictly corresponding to a description given in writing (or chosen by the plaintiff because of its specific description), there will be a sale by description. If, however, the description was no more than a means by which the vehicle was identified, there is no sale by description.

61. The plaintiff acknowledges that a transaction will not normally involve a sale by description where the buyer has had the opportunity to inspect the goods. However, the plaintiff contends the position is otherwise if “the deviation of the goods from the description is not apparent”.

62. The plaintiff argues the fact that the vehicle was not a genuine Ford XY GT was not apparent on inspection and could be discovered only by invasive testing and detailed observation by experts.

63. The plaintiff says that Mr Sant falls short of being such an expert, and, in any event, did not have the opportunity to discover the fact that the vehicle was not what it was said to be.

64. The description of the vehicle, says the plaintiff,

“[W]as more than a mere identification of the goods sold; rather, it was sold because of its specific description as a GT and in consequence was a sale by description. Accordingly, there was an implied condition the goods correspond to that description. As it has been established that the vehicle is not the GT described, the condition implied by s 18 has been breached and the defendant is liable in damages”.

65. The plaintiff’s assessment of damages was revised following oral submissions by an amended schedule provided on 27 September 2024. The plaintiff claims $110,000, being the difference between the purchase price of the vehicle ($195,000) and the actual value ($85,000). The plaintiff also claims what is said to be the costs of towing, being $1350 to transport the vehicle to Queensland for the proposed auction and $1350 to transport the vehicle back to Sydney after the auction was aborted. Interest is claimed on damages from 27 January 2022.

Defendant’s Submissions

66. The defendant argues that the express term upon which the plaintiff sues is, as pleaded, entirely documentary and reflects those matters contained in the documents defined in paragraph 5 of the Statement of Claim, namely:

(a) The Listing, being the advertisement on Facebook Marketplace. (b) The Facebook message being the photographs and messages in the group chat between the plaintiff and the defendant dated 27 January 2022. (c) The Ford Letter. (d) The Compliance Plate.

67. This, the defendant says, renders largely irrelevant much of the dispute as to what was said as to the vehicle being original or genuine.

68. The defendant relies heavily of the decision of Bromwich J in Walker v Sell (2016) FCR 308; [2016] FCA 1259 which he contends contains significant parallels both in terms of the facts and the principles to be applied.

69. The defendant emphasises what Bromwich J referred to as “objective reliance” and argues that statements as to the authenticity of the car were no more than statements as to the defendant’s belief rather than a contractual promise or warranty.

70. On the defendant’s case he and the plaintiff are indistinguishable in terms of their ability to know about the genuineness of the car and the defendant’s representations objectively do not rise to an express term that the car was a Falcon XY GT.

71. The defendant argues that factual considerations overlap when determining the content of any express term and the application of the Sale of Goods Act. Again, says the defendant, one looks to “objective reliance” in considering whether this transaction involved a sale by description.

72. Relying on the approach taken in Walker v Sell, the defendant contends that, unlike the purchaser in Beale v Taylor [1967] 1 WLR 1193; [1967] 3 All ER 253, the plaintiff did not “take for granted” the fact that it was a Ford Falcon XY GT and the inspection also went to the car’s provenance. Accordingly, the defendant argues, there being no objective and unqualified reliance on the description provided by the defendant, this was not a sale by description within the meaning of s 18.

73. In terms of the quantification of damages, the defendant parts company with the plaintiff in respect of the claimed towing expenses which the defendant contends ought not form part of damages recoverable for contractual breach in the circumstances.

Conclusions and Findings on the Evidence

74. As can be seen from the earlier discussion there are a number of areas of disagreement in relation to the dealings between the plaintiff and the defendant.

75. A significant area of dispute surrounds the plaintiff’s assertion that, on numerous occasions, the defendant had referred to the vehicle as a genuine GT or otherwise described it as being in “original condition”.

76. The defendant denied describing the vehicle in that way, contending that he had described it as a matching numbers vehicle although, as I have said, he ultimately conceded he had in fact described it as a “matching numbers GT”.

77. I consider the defendant’s denial of describing the vehicle as an “original GT” or a “genuine GT” to be implausible. The defendant was selling a vehicle which was priced at $220,000 which is consistent with the then market value of a Ford XY GT. He acknowledged that the Facebook advertisement he placed specifically described the vehicle as an XY GT and said he believed the vehicle to be a genuine Ford XY GT.

78. In the knowledge that the intrinsic value of the vehicle lies in the fact that it was a genuine GT Falcon, it seems to me there is no reason why the defendant would not mention that fact. It was the very selling point attached to what, on any view of it, was a considerable amount of money for a vehicle more than 50 years old.

79. Whilst carefully limiting the description to “matching numbers” or “matching numbers GT”, without reference to the vehicle being original or genuine might occur if the seller had doubts about authenticity, that is not the defendant’s case. The defendant told me he believed it to be a genuine vehicle. His denial that he mentioned that fact struck me as calculated, rather than reliable.

80. Overall, I find the plaintiff’s account as to the way in which the defendant described the vehicle to be far more credible and reliable. That account was corroborated by Mr Sant who I also found to be a straightforward and credible witness. In the end result, I accept the plaintiff’s evidence as to their discussions in which the defendant described the vehicle as a “genuine” or “original” XY GT Falcon.

81. I also prefer the plaintiff’s evidence in relation to the conversation with the defendant as to why Mr Sant would be attending the inspection, namely to drive the vehicle because of the plaintiff’s recent knee surgery. This is consistent not only with Mr Sant’s evidence but also the evidence that the plaintiff underwent an arthroscopy of the knee in the days before that conversation.

82. I do not accept the defendant’s contention that Mr Sant was present to conduct an inspection as to the authenticity of the vehicle. Whilst the evidence establishes that, like the plaintiff, Mr Sant checked that the numbers on the compliance plate married up with those on the vehicle, that is, in my view, what one would expect in the circumstances and involves no specialised knowledge. A misguided query as to the location of the engine number tends to the conclusion that Mr Sant did not have any particular expertise. If a comment was made by Mr Sant about the location of the engine number, on all of the evidence I would regard it as inconsequential. At the end of the day, the evidence establishes that Mr Sant had neither the qualifications nor the experience to verify the authenticity of the vehicle and I do not accept he was there for that purpose.

83. I am satisfied that Mr Sant was present to do what he said, namely, to drive the car if needed, because of the plaintiff’s knee problems. Whilst the evidence establishes Mr Sant was actively involved in the inspection of the vehicle along with the plaintiff, I found Mr Sant’s explanation for that to be credible. Mr Sant owned an XY Falcon 500, which was not a GT. To use his words he had a “sticky beak” as to the condition of the defendant’s car (Tcpt 65.43), which again I consider to be plausible and is consistent with the plaintiff’s evidence.

84. Accordingly, I have come to the conclusion and find that the inspection was intended to ascertain the condition of the vehicle, not to verify its authenticity.

85. In coming to my conclusions, I do not ignore the evidence of Mrs Hockley where it departs from that of the plaintiff and Mr Sant, and/or corroborates the defendant. In those respects, Mrs Hockley’s evidence does not overcome the strong impressions of reliability I have formed in relation to the evidence of the plaintiff and Mr Sant. I am mindful also of the potential for Mrs Hockley’s evidence to have been coloured or influenced by her discussions with the defendant and reading his account of the events.

Consideration

Breach of an Express Term of the Contract

86. When interpreting contested terms of a contract, one starts from the proposition that the enquiry is focussed on objective considerations. As Allsop P explained in Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407 at [4]:

“There can be no doubt that until the High Court of Australia says otherwise the underpinning legal theory in the law concerning the formation, construction and interpretation of contracts is the so-called objective theory of contract: Taylor v Johnson [1983] HCA 5; 151 CLR 422 at 428-432 and especially 429 where Mason ACJ, Murphy J and Deane J said that ‘the clear trend in decided cases and academic writings has been to leave the objective theory in command of the field’; Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; 209 CLR 95 at 105 [25] where Gaudron J, McHugh J, Hayne J and Callinan J stated clearly that contract formation was to be objectively assessed; Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451 at 461-462 [22] where the Court (Gleeson CJ, Gummow J, Hayne J, Callinan J and Heydon J) made clear the objective task of ascertaining the meaning of documents; Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; 218 CLR 471 at 484 [34] where the Court (Gleeson CJ, McHugh J, Kirby J, Hayne J and Callinan J) referred with approval to the expression of the matter by Gleeson CJ in the New South Wales Court of Appeal in Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 549 that the ‘general test of objectivity … is of pervasive influence in the law of contract’; and Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52; 219 CLR 165 at 179-182 [40]-[46] where the Court (Gleeson CJ, Gummow J, Hayne J, Callinan J and Heydon J) reiterated the primacy of the objective theory in the determination of rights and liabilities in contract.”

87. When undertaking an objective construction and interpretation of the contract between the parties in the present case, it is helpful to consider the following observations of the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 (Alphapharm) at [40], one of the authorities referred to by Allsop P in the above analysis:

“It is not the subjective beliefs or understandings of the parties about their rights and obligations that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.”

88. Whilst the principles may be well-established, as the many authorities on the subject attest, the ultimate outcome of a contractual dispute is steeped in the interpretation of particular facts. Hence, there is a need for caution when drawing parallels with outcomes in other cases.

89. The plaintiff took me to first principles as discussed in JD Heydon, Heydon on Contract (2019, Thomson Reuters) (at [7.40]), namely:

“How is a court to decide whether a statement is a representation or a contractual term? It must consider whether the circumstances indicate that a reasonable person in the position of the person to whom the statement was made would consider that the person who made the statement intended there should be contractual liability in respect of the accuracy of the statement. This is another example of the objective theory of contract.”

90. In the paragraph which follows on from the above quote, the learned author outlines various factors, being neither exhaustive nor decisive, which may apply to the analysis of circumstances as viewed by reasonable people in the position of the parties. These include propositions potentially relevant to the present case namely, “the more the truth of the statement is important, the more likely it is to be characterised as a term”, whereas on the other hand, “a statement made to a person who would ordinarily be expected to verify it is unlikely to be a term”, citing the example of a statement by a vendor of land to a prospective purchaser.

91. I accept, and do not understand the plaintiff to dispute, the defendant’s proposition that the express term relied upon by the plaintiff is that as pleaded in paragraph 6 of the Statement of Claim and particularised in the documents referred to at paragraph [66] above. However, the Statement of Claim in paragraph 3C pleads that the contract was partly oral and partly in writing, with the oral component comprising the conversation between the parties on 27 January 2022, to the effect that the vehicle was a genuine 1970 Ford XY Falcon GT with VIN JG33KG5104K. In my view, representations made by the parties are, as contemplated in the authorities discussed above, potentially relevant in objectively construing the express term contended for.

92. As outlined earlier, the decision in Beale v Taylor is an authority that received some attention during the course of argument.

93. While Beale v Taylor is a decision, which on its face, may be seen to assist the plaintiff, the defendant also embraces it on the basis that the point of distinction with the present case highlights why there was no express term that the car was a genuine Ford Falcon XY GT.

94. Beale v Taylor, which was decided in 1967, involved a vendor who advertised a 1961 Triumph Herald convertible motor vehicle for sale. In due course the plaintiff and her son inspected and drove the vehicle which the plaintiff agreed to purchase. Although badged appropriately, as it turned out, the vehicle was not what it appeared to be and in fact, as the purchaser later discovered, was made up of two vehicles which had been joined together, one of which was an earlier model Triumph than that advertised.

95. One of the arguments advanced by the vendor, who was unaware of the discrepancy, was that the purchaser and her son had inspected the vehicle and bought it based on their assessment of its value.

96. The primary judge found in favour of the vendor. However, that decision was reversed by the English Court of Appeal.

97. The purchaser ultimately succeeded on the United Kingdom equivalent of s 18 of the Sale of Goods Act. However, the defendant argues the case is of assistance in the construction of the express term alleged by the plaintiff in the present proceedings.

98. Those arguments place particular reliance on the fact that, in concluding that the purchaser had formed her own judgment as to the condition of the car, Sellers LJ placed weight on the fact that she “took it for granted” that the vehicle was a 1961 Herald convertible, as it has been advertised to be, rather than what it in fact was.

99. The defendant argues that in the present case the plaintiff cannot be said to have “taken it for granted” that the vehicle was a Ford Falcon XY GT. Accordingly, the defendant contends that, there being effectively no guarantee as to the provenance of the vehicle, at an objective level the description of the vehicle must be construed as reflecting only the defendant’s belief that it was an XY GT.

100. Walker v Sell was also the subject of some considerable focus by the parties, particularly the defendant, having regard to some factual similarities with the present dispute.

101. In that case, the plaintiff, Mr Walker, had purchased a car from the defendant, Mr Sell, for $135,000. The car was believed by both parties to be a genuine 1970 GTHO Ford Falcon sedan, albeit with some modifications involving a change of colour and engine block. In fact, the car was not genuine, something which the plaintiff discovered soon after taking possession of the vehicle, when a person inspecting it on a hoist found a number of signs indicating it was not authentic.

102. As it turned out the vehicle was a Ford Falcon of lesser value and not a GTHO. It was accepted the defendant, who had purchased the vehicle some 30 years beforehand, had no knowledge of the lack of authenticity.

103. It is important to note that the matter came before Bromwich J on appeal from a judge of the Federal Circuit Court of Australia, who had drawn certain conclusions adverse to the plaintiff.

104. The plaintiff had argued it was an express term of the contract between the parties that the car was “an original 1970 XW GTHO Ford Falcon”. Additionally, or alternatively the plaintiff contended it was an implied term of the contract that the car would correspond with the description by which it was sold pursuant to the Victorian equivalent of s 18 of the Sale of Goods Act. It was argued that the express and/or the implied terms had been breached.

105. Certain facts had been agreed between the parties, which included:

106. The vendor had advertised the vehicle for sale on an internet site describing it as a “1974 GTHO Falcon sedan”.

107. The vendor had represented to the purchaser that apart from the vehicle’s engine block and colour it was a 1970 Ford GTHO Falcon.

108. The purchaser inspected the vehicle before agreeing to purchase it.

109. The vendor had provided the purchaser with a letter from the Ford Motor Company purportedly describing the vehicle as a Ford XW GTHO sedan.

110. The purchaser and the vendor had signed a document recording the vehicle as a “GTHO 1970”.

111. The purchaser paid the purchase price over the course of the next 12 months.

112. The purchaser did not have the vehicle inspected by an expert at any time prior to taking possession.

113. The evidence disclosed that the purchaser had inspected the vehicle prior to agreeing to the purchase and that inspection had included observing the VIN and confirming it was identical with the compliance plate. There were conversations between the vendor and purchaser in relation to the vehicle having a new engine and having been re-sprayed a different colour to the original colour recorded on the compliance plate.

114. There was a dispute as to whether the seller had qualified his comments about the originality of the vehicle by indicating it was original “to the best of his knowledge”.

115. Bromwich J noted (at [115]) that the purchaser had given direct evidence that he purchased the car based on his own inspection, albeit that evidence was said by the purchaser to have been a slip of the tongue.

116. It is clear (at [110]) that Bromwich J placed significant emphasis on the extended settlement period of 12 months during which it was agreed an independent inspection of the vehicle could take place. His Honour concluded that was an objective fact derogating from reliance on what the vendor had told the purchaser.

117. Bromwich J accepted (at [111]) it was open to the primary judge to conclude that the purchaser did not in fact rely in a material way on anything said by the vendor and to make adverse findings as to the purchaser’s evidence in order to resolve conflicts in the evidence.

118. Notably (at [113]) Bromwich J accepted it was open to conclude independently on the evidence of the vendor that he said things to the purchaser that would have conveyed to a reasonable person that what he was saying about the genuineness of the car was based on nothing more than his belief.

119. His Honour went on to conclude (at [120]) that it could be objectively determined the vendor was not proffering an expert or absolute view that the car was in fact what it purported to be, as opposed to his belief as to what it was, relying on the expertise or views of others.

120. Ultimately Bromwich J took the view that objectively a reasonable person would have understood representations by the vendor as to the genuineness of the car were based only on his belief that it was so.

121. Whilst there are some factual parallels between Walker v Sell and the present case, as the plaintiff submits there are nonetheless significant points of distinction.

122. In particular, the plaintiff says (as Bromwich J found) that the extended settlement period in Walker v Sell of nearly 12 months, with the right to inspect during that period, dilutes the existence of an express term that the vehicle being sold was a genuine item, whereas in the present case there was no objective basis to imply any qualification to the defendant’s description of the vehicle.

123. Of course, the contract is formed at the point where the offer is accepted, on the terms objectively agreed between the parties framed by the background representations and communications between them.

124. At the point where the contract was formed in the present case I am satisfied, for the reasons outlined earlier, that the defendant had represented he was selling a genuine XY GT Falcon with a designated VIN.

125. The plaintiff says that the concept of it being a “genuine” vehicle is, in any event, somewhat tautologous and the fact is that the defendant was offering to sell a specific model Falcon that matched the compliance plate and he did not do so.

126. When grappling with the issues and arguments in the present case, it is in my view a distraction to focus overly on the factual outcome in Walker v Sell. As I have said, there are a number of factual differences between that case and this. At the end of the day, Bromwich J, informed by the facts of that case and the conclusions of the judge at first instance, concluded that, objectively, the terms of the contract included a qualification to limit the description of the vehicle to reflect only the seller’s belief.

127. I do not reach that conclusion in the present case. Objectively in my view the following can be said:

128. The Facebook Marketplace advertisement unequivocally represented that the vehicle was a (Ford) XY GT.

129. The defendant provided the plaintiff with photographs of the vehicle representing it to be what it was advertised to be.

130. On my findings, the defendant made a number of express representations and held the vehicle out to be a genuine Ford XY GT prior to the formation of the contract.

131. The defendant presented the plaintiff with material, being the Ford Letter, the compliance plate, and the Ford GT sticker intended to verify the authenticity of the vehicle as a Ford XY GT.

132. The asking price and purchase price reflected the market value of a genuine Ford XY GT in the condition of the vehicle offered for sale.

133. The inspection of the vehicle prior to the contract being formed was undertaken on the premise that the vehicle was what it was advertised and represented to be. On my findings the inspection objectively, was intended to ascertain the condition of the vehicle, not to determine its authenticity.

134. The inspection did not put the plaintiff on notice that the vehicle was not as represented, nor in my view could it objectively have been expected to.

135. There is, in my view, much force in the plaintiff’s submission that there was objectively an express term whereby a reasonable person in the position of the plaintiff would, on the representations made by the defendant, have concluded that the defendant was contractually bound to the supply of a genuine Ford XY GT Falcon as reflected by the compliance plate.

136. The defendant’s representations that the vehicle was a genuine Ford XY GT were of fundamental importance and in my view, objectively constitute an express term of the contract. Effectively in my view, at an objective level the defendant was saying “this is a genuine Ford XY GT and here (in the compliance plate, the Ford Letter and the Ford GT sticker) is the material that proves it.”

137. In my view, there is no warrant on the present facts to dilute that objective term by adding a qualification that the vehicle was only believed to be as represented. That is not the bargain that was struck. In my view, at an objective level the plaintiff would not understand the term to be so and the defendant was not limiting his representations in that way.

138. It is common ground that the defendant did not supply an XY GT Falcon. It follows, on my conclusions, that the defendant has breached the express term of his contract with the plaintiff.

Breach of the Sale of Goods Ac**t

125. Section 18 of the Sale of Goods Act provides:

18 Sale by description

Where there is a contract for the sale of goods by description, there is an implied condition that the goods shall correspond with the description; and if the sale be by sample as well as by description, it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description.

126. Just about every sale of goods will involve some description of the item being sold. However, to be a sale by description, for the purposes of s 18, the description must be more than a mere identification of the item being sold. Rather, a sale by description will occur where the item “is sold not merely as the specific thing but as a thing corresponding to the description”. [2]

127. As Bromwich J pointed out in Walker v Sell, there is inevitably some overlap of considerations as to whether descriptions formed an express essential term of the contract and whether the circumstances of the sale amount to a sale by description for the purposes of s 18.

128. In circumstances where a described item is sold without being seen or inspected by a purchaser, there will, almost invariably, be a sale by description.

129. As the plaintiff acknowledges, a sale of specific goods will not usually be a sale by description within the meaning of s 18 where the goods have been inspected. The rationale for that lies in the fact that, objectively, once there has been an inspection, there is no longer any reliance on the description. This is the position advanced by the defendant, relying heavily on the reasoning of Bromwich J in Walker v Sell to distinguish those authorities where a sale by description was found, notwithstanding an inspection by the purchaser.

130. The defendant argues that, unlike the purchasers in Beale v Taylor, the plaintiff had not “taken it for granted” that the vehicle was a genuine Ford GT and thus there was no objective reliance on the description. Whilst the terminology of something being “taken for granted” is extracted from the decision in Beale v Taylor, it ought not be elevated to something akin to statutory force and needs to be understood in the context of that decision. In that case there was no particular significance as to the provenance of the Triumph vehicle being sold. It was taken for granted that it was what it was said to be. Here, the provenance and originality of the Ford was a matter of importance. Hence the description of the vehicle was an integral part of the contract.

131. In fact, Bromwich J, discussed a number of cases decided along the path leading to the decision in Beale v Taylor before concluding (at [106]) that for a sale to be a sale by description:

“The description must, objectively, be relied upon to a sufficient degree, and be so influential, that it is an essential term. It must be ‘within the reasonable contemplation of the parties that the buyer is relying on the description’ for it to be a sale by description.”

132. As his Honour’s observations recognise, reliance on the description must be an influential, although not necessarily the exclusive, factor relied upon by a purchaser.

133. The finding that the plaintiff did not establish objective reliance on the description in Walker v Sell is not the conclusion I have reached in the present case, although his Honour’s comments as to the overlap of considerations as to the objective terms of the contract and the application of s 18 are apt.

134. For the reasons explained earlier, I am satisfied that the plaintiff relied heavily on the description of the vehicle provided by the defendant. I do not consider the facility for an inspection per se operates on the facts of this case to nullify the description, as compared to the reservation of a right to have an expert inspection that could be exercised over an extended settlement period, as occurred in Walker v Sell.

135. Nonetheless, there remains a question of whether the inspection undertaken by the defendant ought have disclosed the fact that the vehicle was a replica, thus undermining the reliance placed on the description.

136. In that regard, the plaintiff draws my attention to the decision of Sheppard J in Elder Smith Goldsbrough Mort Ltd v McBride and Anor [1976] 2 NSWLR 631 at 641-642, which stands for the undoubtedly correct proposition, that an inspection will not preclude a sale by description in circumstances where the deviation from the description is not reasonably apparent from that inspection.

137. It is clear enough from the expert evidence before me that the signs indicating a lack of authenticity of the defendant’s vehicle were not something that would have been reasonably apparent from the inspection that took place at the service station by the plaintiff and Mr Sant. [3] That evidence established that the vehicle had been disguised to appear like a genuine Ford XY GT. The signs going to lack of authenticity included, for example, the forged chassis numbers re-stamped onto the vehicle having an ovoid G letter as opposed to the correct straight backed G; smaller tail light openings than an original vehicle; the fuel cap breather tube having an undersized hole in the boot floor; configuration of the under carriage to disguise the cables used for the hand brake, as well as various other seemingly well concealed signs. These in my view reflect deviations not reasonably apparent to the plaintiff or Mr Sant.

138. For those reasons I am satisfied that the vehicle was sold by description within the meaning of s 18 and that in supplying a vehicle not corresponding with that description, the defendant has breached the condition implied by that section.

Damages

139. There is no issue that the difference in value between the purchase price and the actual value of the vehicle is $110,000. That, in my view, is the appropriate measure of damages for the defendant’s breach of contract.

140. I have come to the conclusion that the so called towing costs claimed by the plaintiff are not recoverable as damages causally related to the breach of contract for the following reasons:

141. Transport costs of taking the vehicle to Queensland for sale by auction occurred as a product of the plaintiff’s decision to sell the vehicle which was made before the plaintiff became aware the vehicle was not genuine. In other words, those costs have nothing to do with the breach of contract and would have been incurred in any event.

142. The decision to transport the vehicle back to Sydney occurred after the plaintiff became aware of the breach of contract however, I am unable on the evidence to conclude that those costs were causally related to the breach. The plaintiff could have gone ahead and sold the vehicle at auction as a replica, as contended by the defendant. In my view however, it was not unreasonable to bring the vehicle back to Sydney in the circumstances, so that the plaintiff could consider his position and also provide the defendant with the opportunity to refund the purchase price and take the vehicle back or reimburse the plaintiff for the difference in value. More to the point however, I do not have any evidence as to auction clearance rates or any firm foundation to conclude the vehicle, if genuine, would have sold at auction. Clearly this was a unique vehicle and one can imagine that market forces may mean the vehicle could have been passed in and thus returned to Sydney in any event. To attach that cost to the breach in my view requires some evidence establishing, on the probabilities, the vehicle would have sold at auction. As it stands that aspect of the claim is attended with uncertainty, or at least requires speculation, and is not established.

Disposition

141. For those reasons, I propose to enter judgment for the plaintiff in the sum of $110,000 plus pre-judgment interest.

142. While there was no issue joined in relation to entitlement to, or rates of, interest, the amount to be awarded however needs to be brought up to date.

143. I propose to order that costs follow the event and the defendant pay the plaintiff’s costs, subject to any application for, or agreement as to, a different costs order.

Orders

144. Accordingly, I make the following orders and directions:

145. Judgment for the plaintiff against the defendant. I direct the parties to bring in Short Minutes of Order in respect of the judgment sum and costs in accordance with these reasons within seven days.

146. In the event of an application for a different costs order to that which I have proposed, or if there are otherwise any issues as to the terms of the Short Minutes of Order, the matter is to be relisted by arrangement with my Associate.

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Endnotes

The designation “XY” relates to the model and year of manufacture.

Grant v Australian Knitting Mills (1935) 54 CLR 49 at 61.

See evidence of Mark Barraclough, affidavit affirmed 30 August 2024 (Exhibit PX-6), and Spiros Vasilakis, affidavit affirmed 2 September 2024 (Exhibit PX-7).

Amendments

20 March 2025

Caselaw heading format amended to remove paragraph numbers. Typographical amendment in par [144].