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Polyphemus Pty Ltd v JPH Enterprises Pty Ltd[2012] QSC 111

Polyphemus Pty Ltd v JPH Enterprises Pty Ltd[2012] QSC 111

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

Polyphemus Pty Ltd trading as Boxsell Hydroponics v JPH Enterprises Pty Ltd & Anor [2012] QSC 111

PARTIES:

POLYPHEMUS PTY LTD trading as BOXSELL HYDROPONICS

ACN 075 619 359
(Plaintiff)

v

JPH ENTERPRISES PTY LTD

ACN 077 656 850
(First Defendant)

and

JORGEN PILGAARD HANSEN
(Second Defendant)

FILE NO/S:

6515/04

DIVISION:

Trial

PROCEEDING:

Civil Trial

DELIVERED ON:

27 April 2012

DELIVERED AT:

Brisbane 

HEARING DATE:

24-31 October 2011, 1 November 2011

JUDGE:

Philippides J

ORDER:

1.There be judgment for the defendants on the plaintiff’s claim.

2.There be judgment for the first defendant on its counterclaim against the plaintiff in the amount of $1,842.50.

CATCHWORDS:

CONTRACT – contract for the supply of equipment for an extrusion line – whether express terms, including as to capacity of the extruder, reconditioning of the extruder and other equipment – whether express term as to commissioning equipment – implied terms – whether implied terms as to fitness for purpose and merchantable quality of equipment and performance of work with reasonable care – whether representations made  – whether breach of express or implied terms or Trade Practices Act 1974 (Cth) – claim for loss of profits and rectification costs

Sale of Goods Act 1896 (Qld)

Trade Practices Act 1974 (Cth)

Ray Teese Pty Ltd v Syntex Australia Ltd [1998] 1 Qd R 104

COUNSEL:

AC Harding for the plaintiff

CA Johnstone for the defendants

SOLICITORS:

MDR Lawyers for the plaintiff

Bennett and Philp for the defendants

PHILIPPIDES J:

  1. The plaintiff, Polyphemus Pty Ltd, a supplier of hydroponics equipment, has brought a claim for damages against the first defendant, JPH Enterprises Pty Ltd, a manufacturer of industrial equipment, and its director, Jorgen Hansen, for breach of express and implied terms of a contract to supply and manufacture certain equipment and the performance of work and for misleading and deceptive conduct under the Trade Practices Act 1974 (Cth) (TPA). 

The plaintiff’s case

  1. The plaintiff’s pleading alleged two alternative agreements. The first was an agreement between the plaintiff and the first defendant, entered into on 23 January 2002, which was partly oral and partly written, for the supply of certain equipment and the performance of work by the first defendant for an extrusion line for the production of polypropylene profile (which was also referred to as “lipped pipe” or “half pipe” in the evidence) and elliptical pipe (which was also referred to as “pipe”) at a rate of 100 to 150 kg per hour, by extruding heated plastic and forming it in a tank using either calibrators or formers.
  1. It was pleaded that the plaintiff was to provide certain items, which together with the equipment to be supplied by the first defendant, was to comprise the extrusion line. The equipment that the first defendant agreed to supply comprised:
  1. an oil cooled second-hand eight zone extruder with new cabinet and frame including an auger feeder;
  1. a tank into which calibrators or formers could be inserted;
  1. a haul-off machine with belt dimensions of 1m long by 200mm wide, 2 hp motors, a maximum speed of 10 to 12m per minute and a frequency drive;
  1. a saw/punch unit with a 300mm saw blade and 700mm travel, double clamp PLC controlled with a screen and a 50mm punch;
  1. a tilt table; and
  1. pins and dies suitable for extruding both profile and pipe in the required sizes.
  1. The items that the plaintiff was to supply was a “head” to be fitted to an extruder supplied by the first defendant, and “calibrators” and “formers” suitable for producing the two shapes of product (profile and pipe) in two sizes (120mm x 53mm and 183mm x 70mm).
  1. It was pleaded that there was also an express term that the first defendant would undertake the following work (para 7A(f)):
  1. the reconditioning and adapting of the head;
  1. the reconditioning of the extruder;
  1. the delivery, installation and commissioning of the equipment supplied by the plaintiff;
  1. the synchronisation of the haul-off machine with the extruder; and
  1. the commissioning of the extrusion line.
  1. The written components of the contract were pleaded as comprising a quotation dated 17 January 2002 from the first defendant to the plaintiff, a tax invoice dated 18 January 2002 from the first defendant to the plaintiff and the plaintiff’s purchase order dated 23 January 2002. The oral components of the agreement were pleaded as comprising four conversations between Mr Hansen and Mr Heggen between July 2001 and 2 October 2001, and a fifth conversation between them and Mr Boxsell on or about 18 January 2002.  (It was not disputed that at all material times the plaintiff was represented by its agents, Mr and Mrs Boxsell and Mr Heggen.)
  1. Alternatively, it was pleaded that the parties entered into a further agreement in or about September 2002 for the supply by the first defendant of further equipment and the performance of work for an extrusion line for the production of polypropylene pipe (paras 7C to 7G). That agreement was said to comprise both oral and written components. The written components consisted of the first defendant’s tax invoices numbered 3374, 3375, and 3376, dated 30 September 2002. The oral components consisted of statements made during a conversation between Mr Heggen and Mr Hansen on or before 22 August 2001 and statements made during a conversation between Mr Boxsell and Mr Hansen prior to 30 September 2002. 
  1. It was pleaded that, by the further agreement, it was expressly agreed that the plaintiff would supply formers suitable for pipe in the required sizes, and that the first defendant would supply the following equipment: pins and dies suitable for extruding pipe of the required sizes to fit the head, a vacuum tank and a holesaw to fit the saw/punch. Their intended use was also as a component in an extrusion line capable of producing food grade polypropylene pipe at a rate of 100 to 150 kg per hour, by extruding heated plastic and forming it in a vacuum tank using the formers supplied by the plaintiff. It was an express term that the first defendant would undertake the following further work (para 7G(e)):
  1. the manufacture, delivery, installation and commissioning of the equipment; and
  1. the commissioning of the extrusion line.
  1. It was alleged that under either pleaded agreement there were express terms that the intended use of each item of equipment supplied by the first defendant was as a component in an extrusion line which was capable of producing food grade polypropylene pipe at a rate of 100 to 150 kg per hour (paras 7A(c), 7G(c)) and that the extrusion line would be capable of producing pipe at the required rate by way of extrusion (paras 7A(g), 7G(f)). 
  1. The plaintiff also pleaded implied contractual terms as to fitness for purpose and merchantability pursuant to s 17(a) and (c) of the Sale of Goods Act 1896 (Qld) (paras 11 and 12) and implied terms that, in performing the work which the first defendant was contracted to perform, it would exercise reasonable care and skill (para 12A).  The plaintiff alleged that it had made known to the first defendant the purpose for which each item of equipment to be supplied by the first defendant was required so as to show that the plaintiff relied on the first defendant’s skill (paras 10 and 10A).
  1. It was also pleaded that the first defendant engaged in misleading and deceptive conduct in breach of s 52 and s 53 of the TPA.  Mr Hansen was said to be knowingly concerned in the first defendant’s breaches of the TPA (paras 19–21).
  1. The plaintiff pleaded, inter alia, that in respect of the equipment supplied and the work performed by the first defendant:
  1. the hopper in the extruder was not fit for the purpose of extruding talc filled polypropylene pipe;
  1. the extruder’s main control box overheated when the extruder was operated;
  1. the first defendant failed to recondition the extruder;
  1. the extruder could not operate as part of an extrusion line to produce either type of pipe at the required rate of 100 to 150 kg per hour provided by the express terms;
  1. the vacuum tank supplied by the first defendant under the further agreement was not fit for the intended purpose;
  1. the saw blade supplied by the first defendant did not operate properly;
  1. the tilt table was built too high;
  1. the first defendant went about the manufacturing of the equipment without reasonable care; and
  1. the first defendant did not deliver the equipment supplied under the agreements or commission the extrusion line.
  1. By reason of these matters, the plaintiff contended that the first defendant:
  1. breached the express and implied terms of the agreements;
  1. did not exercise reasonable care in the performance of the work undertaken; and
  1. made misleading and deceptive representations in relation to the suitability of the extruder for use in an extrusion line capable of producing profile and pipe at the required rate of 100 to 150 kg per hour.
  1. For purposes of both of these claims, including the alleged express term as to output capacity of the extruder and extrusion line, the plaintiff relied on the allegations pleaded concerning conversations with Mr Hansen.
  1. The plaintiff claims damages in the amount of $1,135,436.95 for loss of profits as a consequence of the first defendant’s alleged breach of contract.  Additionally, the plaintiff also claimed $23,443.43 for rectification costs.  In respect of the claim for misleading and deceptive conduct, the plaintiff conceded that no lost profits stemmed from that conduct, and sought nominal damages for that conduct. 

Defendants’ case

  1. The defendants disputed that there was one overarching agreement which included an express term that the items to be supplied by the first defendant would be as a component in an extrusion line which was capable of producing pipe at a rate of between 100 and 150 kg per hour.
  1. The defendants contended that there were two separate agreements. The first was for the supply of certain downstream equipment for the production of profile and included the supply of a second-hand extruder to be adapted to fit a second-hand head sourced by Mr Heggen. The agreement did not include a term that the first defendant would commission the extrusion line but rather that it would ensure that the items of machinery supplied were in good working order.
  1. The first defendant supplied the items of equipment and did the work in accordance with the quotation of 17 January 2002. Mr Hansen attended the plaintiff’s factory and ensured that the items supplied by the first defendant were in good operational and working condition.
  1. However, the plaintiff’s profile product failed for design reasons, at which stage the plaintiff decided to use the extrusion line to produce pipe. A second contract was therefore entered into for the supply of items of equipment required for the production of pipe.
  1. In respect of neither agreement was there an express term as to the output capacity of the extruder or extrusion line. In the alternative, the defendants submitted that, if there was such a term in respect of either agreement, it was not breached because the items supplied did form an extrusion line capable of producing pipe at the required rate.
  1. Further, the plaintiff did not rely on the first defendant’s skill or judgment in relation to the production of polypropylene pipe. The defendants also denied that the plaintiff had suffered any damages as a result of any conduct of the defendants, and disputed the quantification of damages by the plaintiff for both loss of profits and rectification costs.
  1. The first defendant makes a counterclaim for $1,842.50, being work completed on invoice number 3389 dated 29 November 2002, which the plaintiff disputed as owing, claiming it was rectification work necessary for the equipment supplied to conform to what was promised.

Evidence

  1. There were substantial affidavit evidence and experts reports relied upon by the parties. The following witnesses were called on behalf of the plaintiff: Mr and Mrs Boxsell, the directors of the plaintiff; their son Glenn Boxsell, an electrician who subsequently worked for the plaintiff on the machinery; Mr Heggen, the plaintiff’s agent who was asked to source equipment for the extrusion line; Mr Hetherington, who was initially an employee of the first defendant and later an employee of the plaintiff; Mr Dallman, who examined the extruder in question in 2003 and subsequently worked on it; Mr Haase, of Wagma Engineering, who worked on the extruder in 2004; Mr Naylon, a plastics extrusion expert who conducted testing of the machinery in question; and Mr Hackett, an expert chartered accountant who provided assistance as to quantum.
  1. On behalf of the defendants, the following witnesses were called: Mr Hansen; Mrs Hansen, who was employed by the first defendant at the relevant time; Mr Judson, an expert on electrical components used in the machinery in question; Mr Taylor, an expert in plastics production and extrusion; Mr Lipinski, a principal of one of the plaintiff’s business competitors; and Mr Hellen, an expert chartered accountant who provided assistance as to quantum.

Retainer of Heggen as agent

  1. The evidence revealed that in mid 2001, Mr Heggen was contacted by Mr Boxsell, whom he had known for some years, to discuss manufacturers and suppliers of equipment required to set up an extrusion line to produce polypropylene pipe for use in hydroponics. Mr Boxsell had been using PVC products in his hydroponics business but was dissatisfied with the product and the suppliers.
  1. Mr Heggen said that Mr Boxsell outlined that the machinery for the extrusion line would need to produce approximately 100 to 150 kg of product per hour, the machinery was to be new or reconditioned and that the machinery was to be installed. Mr Heggen agreed to assist Mr Boxsell with the project. This included agreeing to provide Mr Boxsell with training with regard to the operation of the extrusion line.  Mr Boxsell did not agree to pay Mr Heggen for sourcing the machinery, although there was mention at some stage of the prospect of Mr Heggen being given a job running the extrusion line.  Mr Heggen told Mr Boxsell that, based on the quantities of product that he wanted to produce, a three and a half inch extruder would be required.
  1. Mr Boxsell provided Mr Heggen with samples of PVC pipe that showed the dimensions that were required. Mr Heggen agreed to make enquiries with suppliers and manufacturers of extruders and downstream equipment.
  1. Mr Heggen had over 20 years experience in the plastics industry and operated a plastics information and expert witness analysis business known as “PIEWA”, in addition to a business called “Plastics Advisory Service”. While Mr Heggen stated that this venture was his first experience extruding a polypropylene product, Mr Heggen accepted that Mr Boxsell would be relying on him “to find for him the machinery which would do the job that he wanted”.

Evidence as to discussions to January 2002

Telephone discussion –  July 2001

  1. Mr Heggen contacted Mr Hansen in about July 2001 by telephone on behalf of the plaintiff. (Mr Hansen and Mr Heggen knew each other, Mr Hansen having done some work for clients of Mr Heggen and “Plastic Advisory Service”.)
  1. Mr Heggen said that he told Mr Hansen that he was looking for downstream equipment for an extrusion line for the production of food grade polypropylene and that both profile and pipe would be produced.  Mr Hansen’s evidence of this conversation, however, was that Mr Hansen only mentioned that he wanted prices for particular equipment, mentioning haul-offs and saws.

First meeting – 22 July 2001

  1. It is not disputed that soon after, Mr Hansen met Mr Heggen at the latter’s office.
  1. Mr Hansen stated that he was shown a sample of the PVC elliptical pipe, which had been cut so that it could be clicked together to form a single elliptical pipe. He said that Mr Heggen explained that this was a new hydroponics system to be made from talc filled polypropylene. Mr Hansen’s evidence, which was not disputed by Mr Heggen, was that he informed Mr Heggen that he had never worked with that material before.
  1. Mr Hansen’s evidence was that he showed Mr Heggen photos of a haul-off, saw and water trough (also referred to as a “water tank” or “calibration tank” in the evidence) he had supplied to another business. He was asked if he could provide prices on similar equipment, except that the haul-off belt would need to be wider than the one in photos. The items were to form part of an extrusion line required for the manufacture of profile.  Mr Hansen’s evidence was that a saw/punch unit and water trough could only be used for the production of profile, rather than pipe.  That accords with Mr Boxsell’s evidence as to the nature and purpose of those items.  Mr Hansen said that, while a haul-off is used for both, the particular haul‑off quoted was designed with profile in mind.  Mr Hansen’s evidence was that he indicated that he needed to know the speed of the haul-off, but not the speed of the extrusion line.  Mr Heggen told him that the haul-off was to run at 10 metres per minute and to have a belt 200mm in width.  This was recorded in a quotation dated 22 August 2001 for a haul-off, a saw/punch unit and a water trough, which Mr Hansen subsequently sent to Mr Heggen.  (It was not provided to Mr Boxsell and was not relied upon as forming part of the contract.)
  1. In giving evidence, Mr Heggen agreed that he asked Mr Hansen to quote on the three items, and accepted they would not have been capable of producing pipe. Mr Heggen maintained, however, that he also ran through Mr Boxsell’s requirements with Mr Hansen, these being that food-grade polypropylene was to be produced, the required capacity for the extrusion equipment was to be 100 to 150 kg per hour (100 kg per hour for profile, up to 150 kg per hour for pipe) and that the machinery was to be new.
  1. Contrary to the pleaded case, Mr Heggen’s oral evidence was that this was the only occasion on which the output capacity of between 100 to 150 kg per hour was discussed. Mr Hansen denied that he was informed of any requirement as to output.

Subsequent discussion including request for a quote on an extruder

  1. It is not disputed that there was a subsequent conversation between Mr Heggen and Mr Hansen in which Mr Heggen asked Mr Hansen whether he could supply an extruder. There was a dispute as to whether the discussion occurred over the phone (as Mr Heggen claimed), or at Mr Heggen’s office (as Mr Hansen maintained). But the importance of the discussion, in terms of the plaintiff’s case, was that, in the course of it, Mr Hansen was said to have told Mr Heggen that he had an extruder that he could “recondition”. 
  1. Mr Heggen’s evidence was that, when he phoned Mr Hansen to see if he knew anyone who could supply a three and a half inch extruder for the job, Mr Hansen said that he had two second-hand extruders that he could “recondition for the job”, but they would have to be refitted with a new electrical cabinet.
  1. Mr Hansen’s evidence, however, was that there was a meeting at Mr Heggen’s office, in about late August/early September 2001, at which the quote of 22 August 2001 was discussed.  Mr Heggen also asked Mr Hansen if he knew of any second-hand extruders.  He indicated he had two second-hand Bekum 70mm PVC extruders, and that he could fit one into a new frame and with a new cabinet.  Mr Hansen also gave evidence (which Mr Heggen disputed) that he asked whether that would do, to which Mr Heggen replied, “Yes”, and asked for that to be priced.
  1. Of the remainder of the conversation, Mr Hansen’s evidence was that he was also asked to give Mr Heggen a price on the die head and formers to suit, but that he was unable to do so until Mr Heggen gave him information about the size of the profile product to be produced. It is not disputed that on 13 September 2001 Mr Heggen faxed Mr Hansen two diagrams of cross-sections of the profile showing the dimensions required.
  1. Mr Hansen subsequently provided a quotation dated 19 September 2001 to Mr Heggen.  (It is not alleged that this quotation formed part of the contract.)  The quotation was for a second-hand extruder, a die head and formers and a tilt table.  The extruder quoted was not a three and a half inch extruder but a 70mm PVC extruder (as was apparent from the quote).
  1. Mr Hansen’s evidence was that he simply provided a quote for the supply of machinery as requested by Mr Heggen. He did not discuss with Mr Heggen whether the second-hand extruder quoted would meet Mr Boxsell’s needs and Mr Heggen did not ask about this.  In cross-examination Mr Heggen conceded that, after receiving the quote, he did not say anything to Mr Hansen about relying on him to ensure the output of the polypropylene.

Sourcing of the die head

  1. After the quotation of 19 September 2001, Mr Hansen received a phone call from Mr Heggen. According to Mr Hansen, Mr Heggen said that his estimate for a die head was a bit expensive. It was not disputed that Mr Heggen said he had found a second-hand die head and that he would also be looking after the formers. Mr Hansen accompanied Mr Heggen to inspect the die head in October/November 2001 at Pipemakers.  Mr Heggen’s evidence was he had previously worked at Pipemakers and used the head in a PVC pipe extruder to run stormwater pipe. 
  1. Mr Heggen agreed with Mr Hansen’s evidence that he also told Mr Hansen that he would use a round die head with a slitting knife to produce the profile. Mr Heggen also accepted that he told Mr Hansen that the head would “be alright”, when Mr Hansen queried whether the old and rusty head was what he wanted.  Mr Heggen asked for a quote to put the die head in a running condition.

Meeting at Hansen’s residence

  1. It was not disputed that Mr Heggen subsequently met Mr Hansen at the latter’s residence. Although Mr Heggen only recalled one meeting in late September 2001 or early October 2001, when Mrs Hansen was also present, Mr Hansen’s evidence was that there were two meetings at his house; the first meeting taking place in about October/November 2001, soon after the die head was inspected, and the second in early January 2002. It was not disputed that a number of handwritten notes were made at the Hansen residence.
  1. Mr Hansen’s recollection was that, at the first meeting, the price for doing work on the head was discussed and Mr Heggen asked for a price on synchronisation for the haul-off. Mr Hansen explained that he could make a stop/start and a speed controller on the extruder and supply an auger feeder for approximately $3,000. He said that Mrs Hansen, who was also present for most of the meeting, made a handwritten notation at the meeting on the first defendant’s copy of the quote for their reference.
  1. Mr Hansen’s evidence was that, at the second meeting, Mr Heggen said that he wanted to be paid a “commission” because he was going to set up the extrusion line and get the profile going. Mr Heggen accepted that he had, in discussions with Mr Hansen, raised the issue of being paid a commission and that his subsequent invoices to the first defendant referred to the payment as a “consultancy fee”. Mr Heggen conceded that his ability to be paid out of the transaction was dependant upon being able to present to Mr Boxsell a quotation which was palatable to him financially and enabled Mr Heggen to receive a commission payment from the manufacturer.  The prices ultimately quoted to Mr Boxsell were adjusted to include Mr Heggen’s commission. 
  1. Mr Heggen’s affidavit evidence was also that one of the notes made at the meeting at the Hansen residence was a note written by him and entitled “head”, and that it set out the requirements to “condition” the head to be supplied externally. That note (which specified an amount of $7,500 as the agreed figure for “conditioning” the head), also contained the following notations: “new elements”, “clean head”, “adaptor (sic) to ext”, “new bolts” and “tooling as is”.
  1. Mr Hansen’s evidence was that there was no discussion at either meeting about output rates, whether kg per hour or metres per minute or otherwise. The only specification of a speed requirement was that the maximum speed of the haul-off be approximately 10 metres per minute. Had other performance requirements been communicated to him, he would have recorded them in his written quotes, as was his practice.
  1. Mr Hansen’s evidence was that the quotation dated 17 January 2002 that was subsequently compiled was first sent to Mr Heggen for him to check (as had been agreed) before being provided to the plaintiff. Mr Heggen did not dispute that he saw the quotation before it was sent to the Boxsells.
  1. Mrs Hansen gave evidence which supported that of Mr Hansen.

Mr Heggen’s approximate costing

  1. Mr Heggen’s evidence was that on the basis of the discussions with Mr Hansen, he compiled an “approximate costing”, which he faxed to Mr Boxsell on 2 October 2001. It did not identify the first defendant as the supplier and the contents were not prepared in consultation with or shown to Mr Hansen.
  1. That document referred to a number of components for an extrusion line. Item one referred to an extruder and specified an output capacity for the extruder; it specified a “used 3 ½ 8 zone oil cooled German extruder new elements … plus hopper … and synchronisation 150 kgs per hour”. Mr Heggen conceded that none of the documentation that he had received from Mr Hansen had made any reference to an extrusion capacity of 150 kg per hour.

The quotation of 17 January 2002

  1. In respect of the first defendant’s quotation dated 17 January 2002 for $85,355 plus GST, which was faxed to the plaintiff, Mr Hansen’s evidence was that it effectively was a combination of the first defendant’s earlier two quotes provided to Mr Heggen, save that:
  • The prices were marked up to include Mr Heggen’s commission;
  • The quote included the haul-off synchronisation for the extruder as discussed at the meeting and noted by Mrs Hansen;
  • The initial quote for the production of a die head and formers had been replaced with a quote to clean the head and adapt it to the extruder; and
  • The description of the water trough was changed to accord with what had been discussed and noted down in the meetings with Mr Heggen.
  1. Included in the quotation were quotes in respect of the following items: a second‑hand extruder, a calibration tank, the manufacture of a haul-off, and the manufacture of a saw/punch unit, a tilt table and a head. 
  1. In respect of the item referred to as “a second hand extruder”, the following were specified: “70 PVC”, “oil cooled”, “with new cabinet and frame”, “8 zones”, “haul off synchronisation including auger feeder (as discussed)”. In respect of the item referred to as “head”, the following were specified: “new elements”, “clean head”, “adapt to ext”, “pins and dies for 2 sizes” and “adaption and reduce head/die length”.
  1. The quote clearly did not identify the extruder as being a three and a half inch extruder. There was no specification as to the output capacity of the extruder. Nor was there was reference to the extruder being “reconditioned”.
  1. Mr Heggen accepted that the calibration tank quoted could only be used for the production of profile and that the quotation did not provide for a vacuum tank (which was required for the production of pipe), but his evidence was that he was not expecting a vacuum tank until after a trial run of producing profile had been completed, at which time a vacuum tank would be ordered by Mr Boxsell. Mrs Boxsell also gave evidence that there was to be a trial run of profile, although Mr Boxsell, himself, made no mention of this in his statement or oral evidence, nor was that a matter which was pleaded.

Mr Heggen’s recommendation

  1. It appears that Mr Boxsell had obtained a competing quotation from CTS Plastics Machinery dated November 2001 for $98,000 for certain components for an extrusion line. It included an extruder and specified that a “new screw would be supplied” for the production of polypropylene “at output rates up to 150 kg/hr”. It also specifically provided that the barrel would be “honed and re-nitrided” so as to achieve new tolerances with the new screw.
  1. Mr Heggen’s affidavit evidence was that he reviewed that quotation, but considered that the first defendant’s was better, because the manufacturer and supplier were local, it was cheaper and the downstream equipment was new rather than second-hand, and recommended that Mr Boxsell accept it.

Meeting at Hansen’s factory with Boxsells and Heggen

  1. Following receipt of this quote, the Boxsells wanted to inspect the extruder. Mr Heggen went with them to Mr Hansen’s factory.
  1. Mr Boxsell’s evidence was that when he saw the extruder, he made a comment, “Well, that doesn’t look like it would do a hundred KG an hour let alone a hundred and 50” and that Mr Hansen laughed and said, “You will not be able to keep up with her once she’s going and redone.”  (He corrected that evidence by saying that the word used was not “redone” but “reconditioned”.)  He also said that Mrs Boxsell said it looked crappy.
  1. Mrs Boxsell’s evidence was that she remarked that the extruder looked “crappy” and that Mr Heggen said, “Don’t panic, the machine is to be fully reconditioned for you.” Mr Hansen then said, “Yes that’s right, I will be reconditioning one of them for you.” Mrs Boxsell recalled Mr Boxsell then saying that the head that Mr Heggen had purchased looked very large and that Mr Hansen responded by saying he would be adapting the head to fit the machine.  Mrs Boxsell also said that Mr Boxsell asked Mr Hansen, “Are you sure that it will run all of our channel (meaning pipe) in polypropylene, as it looks a bit small” and that Mr Hansen responded that it would.  According to Mrs Boxsell, her husband then asked Mr Hansen, “Are you sure that it will run 100 to 150 kgs per hour as that’s the output we require?” and Mr Hansen answered, “Yes it will, you won’t be able to keep up with it.”
  1. While Mr Heggen’s affidavit evidence was that he recalled Mr Boxsell asking about “the output” of the extruder, in cross-examination he conceded he could not remember much of the conversation that took place. He said he could hear “bits”, but “wasn’t taking a lot of notice”. He was standing away from Mr Boxsell and Mr Hansen. He could only remember Mr Hansen saying, “You won’t be able to keep up with it” (which was a “vivid” memory) and Mrs Boxsell describing the extruder as looking “crappy”. Mr Heggen acknowledged that, although he had the opportunity to inspect the extruder to satisfy himself that it would do what was required, he “just had one look over at the extruder and thought, ‘Well, okay.’”
  1. Mr Hansen’s affidavit evidence of the meeting was that he told Mr Heggen and the Boxsells that he was going to do the work set out in the quote of 17 January 2002. He also told them that he would not be able to check the operation of the extruder, because he had insufficient power to his workshop to run the extruder, and would therefore need to test it at the Boxsells’ factory when they had power on. They accepted this. According to Mr Hansen, there was no discussion as to whether the extruder would meet Mr Boxsell’s output requirements and no mention by anyone of output requirements. The Boxsells did not ask Mr Hansen about any of the performance characteristics of the extruder, or any other parts of the machinery, nor did they make any inquiries or statements about output requirements for the extruder or the extrusion line.
  1. Mr Hansen’s recollection is that at the end of the meeting, the Boxsells verbally accepted the quote of 17 January 2002. (The Boxsells’ evidence was that it was accepted in the following days.) It was discussed that half of the purchase price would be paid as a deposit, 25 per cent when the machinery had been delivered and the remaining 25 per cent after Mr Hansen had tested the equipment to be supplied. According to Mr and Mrs Hansen, it was arranged that the Hansens should send a single invoice referring to an “extrusion line” and that it would state that “the balance be paid on commission of the equipment”. The first defendant’s invoice, issued on 18 January 2002, reflected these instructions.
  1. Mr Hansen’s affidavit evidence was that he was never told or informed, at any time during the meeting, or subsequently, that his work was to be anything other than supplying the equipment as set out in the quote, and checking that each piece of equipment worked. He was never asked to quote for, or to undertake the tasks of, installing and aligning the machinery, or providing any training or getting the machinery up and running to produce the plaintiff’s product. This, he said, was consistent with his discussions with Mr Heggen. They had proceeded on the basis that Mr Heggen was responsible for sourcing the items of machinery to make up the extrusion line, Mr Hansen was to check the operation of the machinery once power was connected to the plaintiff’s premises and it would be for Mr Heggen and the plaintiff to work with and fine-tune the machinery that made up the extrusion line.
  1. In oral evidence, Mr Hansen firmly adhered to the statements in his affidavit, denying that he was told anything about output requirements of the extruder or extrusion line. He also denied making any statement about “reconditioning” the machine and did not recall Mrs Boxsell saying that the machine looked “crappy”.  Nor did he recall making any comment to the effect that Mr Boxsell would not be able to keep up with the machine once it got going.  He maintained that, if the work Mr Hansen was to do was to include any specification as to output or reconditioning, it would have appeared in the quotation for equipment and services to be provided.

Progress of the work

  1. Subsequent to this meeting, on 21 January 2002, Mrs Hansen faxed the invoice dated 18 January 2002 to Boxsell Hydroponics.  A deposit of $44,000 was paid on 25 January 2002.  The first defendant received a purchase order from the plaintiff for the supply of equipment as per the quote of 17 January 2002.  (Although dated 23 January 2002, it was sent on 23 May 2002 as shown on the fax header.)  The order referred to payments of the 50 per cent deposit on 23 January 2002 and 25 per cent on delivery, with the balance to be paid on commission of the equipment.
  1. It is not disputed that Mr Heggen sent a fax on 12 March 2002, which included diagrams, providing information as to the size of the formers, the height of the tank and the shrinkage of polypropylene (40 per cent talc). The information was required to build an appropriate size calibration tank and to make pins and dies that were able to be fitted to the head to be able to produce profile.
  1. According to the Hansens, during the period up to the time of completion of the equipment, Mr Heggen attended Mr Hansen’s workshop on a few occasions to inspect and check on the progress. Mr Heggen also made certain suggestions as to adjustments to be made to the machinery, particularly, with respect to the size of the calibration tank. Mr Heggen accepted that he advised on the size of the belt and on the size of the calibration tank in order to fit the formers.

Collection and testing of the equipment

  1. Mr Heggen and Mr Boxsell collected part of equipment in Mr Boxsell’s truck. It is not disputed that Mr Boxsell also left some formers at Mr Hansen’s workshop. Mr Hansen’s evidence was that Mr Boxsell had just picked up the formers from Hardie Iplex (they had been used to produce PVC pipe for Mr Boxsell) and off‑loaded them to make room in the truck for the machinery being collected.  Mr Boxsell said they would collect them later.
  1. The remainder of the machinery, including the extruder, was subsequently collected.  Mr Hansen’s evidence was that he told Mr Heggen and Mr Boxsell to contact him when they had power connected to Mr Boxsell’s new shed. 
  1. According to Mr Hansen, he subsequently went to Mr Boxsell’s premises to have a look at the machinery in Mr Boxsell’s new shed. The equipment had not been installed or put together and power had not been connected. About a week later, Mr Heggen telephoned Mr Hansen and asked him to come out to check on the equipment. It had by then been installed.
  1. Mr Hansen’s evidence was that he went to Mr Boxsell’s premises on 7 July 2002 and checked that the extruder was running satisfactorily. Three-phase power had been connected. Mr Hansen checked the operation of the extruder, including the heaters and motor, and in the days following returned to check the operation of the other machinery (including the haul-off and the saw), as reflected in the first defendant’s service reports. Mr Hansen’s evidence was that he simply checked the individual items of equipment to see that they were operational, which is what had been agreed. Mr Hansen did not check the overall performance of the entire extrusion line; he did not run any material through the extruder or the entire line. He said that both Mr Boxsell and Mr Heggen were present during the inspections and neither asked him to do anything further.
  1. Mr Heggen’s evidence largely accords with Mr Hansen’s as to these matters. Mr Heggen said that Mr Hansen attended the premises to ensure the machinery was all working, and that it was. Mr Heggen said he understood “commissioning” to mean, “Everything that’s been built and made, check and make sure they work.  That’s basically it.  You don’t have to run profiles or pipe or anything like that.”  His evidence was that that was what occurred when Mr Hansen attended.

Mr Hansen’s subsequent attendances and work performed

  1. There was an issue that arose on 12 July 2002, when Mr Heggen phoned Mr Hansen to say that they needed an “Allen” key for the head.  Mr Hansen attended and found the head had been leaking and required tightening.  Mr Boxsell’s evidence was that the leaking occurred when he and Mr Heggen “first test-fired to check the head”.  Mr Boxsell’s evidence was that the head had not been tightened after it was received from Mr Hansen and Mr Heggen conceded that the head may have leaked due to his failing to tighten the head.  Mr Hansen assisted Mr Boxsell in cleaning out the head.
  1. It is not disputed that on 7 August 2002, during another attendance by Mr Hansen (his evidence was that he attended to clean out a blockage in a valve), Mr Boxsell complained that Mr Heggen was getting nowhere in producing the profile product. Mr Boxsell’s evidence was that they had been trying for about six weeks, but each time they failed to produce satisfactory product and Mr Heggen would find one excuse or another. Mr Hansen offered to “have a go” at operating the extrusion line. He made some adjustments to the machinery and was able to run through a sample of profile.
  1. Mr Heggen’s evidence was that Mr Boxsell told him what had occurred and the following day he also ran the machine, but the profile produced was too thin. He told Mr Boxsell that the formers needed to be adjusted. They were sent to Macro Engineering, and when they were returned, Mr Heggen again ran the machinery and was able to produce profile.
  1. Mr Heggen said that after that he did not have a problem with the extrusion line, but that there was still a problem with the “belling” of the profile itself; that is, in the mechanics of connecting the pipes together. That accords with Mr Hansen’s observations that the profile made, when clipped together and placed on stands, would bow in the middle. Mr Boxsell’s evidence, however, was that the profile was not setting properly in the water tank because it was not cooling down sufficiently and also that there were problems with surging.
  1. Mr Hansen subsequently attended again in August 2002 in respect of a problem with the granulator, which had not been sourced from Mr Hansen. The work done was invoiced and paid for. Mr Hansen was also later asked to supply some further items, including a breaker plate, which were also invoiced and paid for. His evidence was that there was no complaint made to him about any of the equipment he supplied. The invoiced work and services for that period was paid in full.

Supply of vacuum tank and holesaw and modified pin and die

  1. The items the subject of the alternative agreement pleaded by the plaintiff concerned items ordered in September 2002.
  1. By about early September 2002, Mr Boxsell told Mr Hansen he was not producing any profile that was up to standard. He agreed that Mr Hansen suggested Mr Boxsell make pipe out of PVC, but Mr Boxsell was adamant that only polypropylene product be made.  He asked Mr Hansen for a quote on additional equipment and work needed for the production of pipe.  This comprised a vacuum tank, a holesaw and modifications to the pins and dies in accordance with specifications given by Mr Boxsell.  (Mr Heggen was not involved at this stage and had nothing to do with the subsequent production of pipe.)
  1. Mr Hansen’s evidence was that he told Mr Boxsell that he could build a small vacuum tank that would fit the smaller size pipe formers only, and would be pretty cheap. The formers to be used were still at Mr Hansen’s workshop, where they had been left by Mr Boxsell and Mr Heggen. As to the modification to the pin and die required to produce full oval pipe, Mr Hansen modified the pin and die to the dimensions given him by Mr Boxsell (for the production of the smaller pipe).  Mr Boxsell said, in respect of the dimensions for the modified pin and die, that he provided Mr Hansen with relevant information he had been given.
  1. The work to build the vacuum tank, holesaw machine, and manufacture a pin and die was completed in early September 2002. Mr Boxsell collected the equipment by late September 2002. All this additional work was invoiced and subsequently paid for. Mr Hansen was not involved in the trials of the machinery supplied.

Further work for the plaintiff

  1. Mr Hansen’s evidence was that in mid October 2002 and early November 2002, he performed further work at the request of Mr Boxsell, particularly in modifying and resizing pins for the purpose of producing 120mm pipe. Mr Hansen’s evidence was that usually Mr Boxsell would phone saying he wanted to resize the pin and die to his specifications. Generally, Mr Boxsell delivered the pin and die to Mr Hansen to be modified and would collect the equipment, once modified, to install on the head.  Mr Hansen’s evidence was that Mr Boxsell did not seek Mr Hansen’s advice on the dimensions to which the pin and die should be resized.
  1. Mr Hansen’s evidence was that during October to December 2002, he occasionally telephoned Mr Boxsell, but was not made aware of any significant problems or dissatisfaction with the machinery. Mr Hansen also visited the Boxsells’ premises in December 2002. Mr Boxsell accepted that the extrusion line was in operation for the duration of the visit (some two hours) and producing polypropylene pipe. Mr Boxsell conceded he made no complaint about the extrusion line on that occasion.
  1. On 17 December 2002, Mr Hansen sent a letter to the plaintiff seeking payment for three outstanding invoices. Two of these three invoices were subsequently paid. However, the third, invoice 3389 dated 29 November 2002 for $1,842.50, has never been paid. On 12 February 2003, a letter was sent to the plaintiff seeking payment of the amount outstanding.
  1. Mrs Boxsell responded on behalf of the plaintiff by letter dated 18 February 2003, seeking a description of the work charged in the invoice, which was provided.  In a further letter dated 18 February 2003, Mrs Boxsell also sought a credit of $3,520 in respect of the vacuum tank that had been provided, stating that they had tried for three months to produce quality 120mm channel using the vacuum tank and had been unsuccessful, notwithstanding that they had tried “many adjustments” to the vacuum tank.  Mr Hansen responded by a facsimile dated 3 March 2003, stating that he had not previously been notified of any problem with the vacuum tank and, as the adjustments had been made without authorisation, no refund would be made.
  1. On 5 March 2003, demand was made for $1,842.50 in respect of invoice 3389 through a debt recovery agency. That was met with a response from the plaintiff’s solicitors which foreshadowed a potential claim for breach of contract and/or breach of the TPA.  Mr Hansen did not hear anything more from the Boxsells until the proceedings were commenced in July 2004.

What was the agreement?

  1. The plaintiff conceded that the equipment ordered in September 2002, namely the pins and dies suitable for extruding pipe and the vacuum tank and the holesaw required for the production of pipe, “were ordered after the primary agreement and were the subject of separate invoices (and therefore to this extent comprised a separate agreement).” However, it was submitted that “it was always in contemplation between the plaintiff and the first defendant that these items would be supplied by the first defendant, and that the same express and implied terms governed the agreement for the supply of these items, as for the equipment and services supplied under the primary agreement.” Specifically, the plaintiff submitted that Mr Hansen “always knew that the extrusion line was for the production of profile and pipe”, notwithstanding that some of the items supplied under the initial agreement were specifically for the production of profile.
  1. The defendants’ case was that the agreement, as evidenced by the first defendant’s invoice of 18 January 2002, was simply for equipment and work for the production of profile and that there was never any agreement or understanding between the parties that pipe would be produced. Moreover, there was a second and distinct agreement to provide additional equipment for the production of pipe. That agreement did not incorporate the alleged express or implied terms which the plaintiff contended governed the primary agreement.
  1. While Mr Heggen’s evidence was in many respects supportive of Mr Hansen’s, there were critical areas of dispute, particularly as to whether the equipment provided by the first defendant was always to comprise an extrusion line for the production of both profile and pipe, and whether there was an express term that the extruder be capable of producing product at a rate of 100 to 150 kg per hour.
  1. In submitting that Mr Hansen always knew that the extrusion line was for the production of profile and pipe, reliance was placed by the plaintiff on Mr Heggen’s evidence of the initial telephone discussion with Mr Hansen, during which he claimed that he told Mr Hansen that the equipment was required for the production of both profile and pipe.  The plaintiff also sought to draw an inference as to Mr Hansen’s knowledge that the production of pipe was intended from the outset from Mr Heggen’s evidence that he specified a haul-off with two wide belts (which he said were required to grip the large pipe).  But Mr Heggen’s specification of a wide belt does not necessarily lead to any conclusion as to Mr Hansen’s knowledge.  To the extent that there is a conflict between the evidence of Mr Hansen and Mr Heggen, I found Mr Hansen a more credible witness.  Many aspects of his evidence were conceded and agreed to by Mr Heggen in cross‑examination.  Mr Heggen was evasive on a number of issues, including matters going to his expertise and to his arrangement with Mr Hansen to receive a commission, which he did not disclose to Mr Boxsell.
  1. Additionally, reliance was placed on the evidence of Mr Hetherington, that Mr Hansen mentioned to him that when Mr Boxsell starting producing pipe he would need a drill rather than a punch.  I did not find that evidence of particular assistance.  Reference was also made to the evidence that Mr Boxsell took the formers he had picked up from Iplex to the first defendant’s workshop.  In that regard, reliance was placed on Mr Boxsell’s evidence that this was done to ensure that, when the pins and dies to make pipe were manufactured, the first defendant would understand the outer dimensions required.  However, Mr Hansen gave a different and plausible explanation (to which reference has been made) as to why these items were left at his factory.  I am unable, therefore, to place much store on the evidence that the formers were left with the first defendant.
  1. Taking into account the totality of the evidence, I accept Mr Hansen’s evidence that he did not know that the plaintiff intended to produce pipe until approached by Mr Boxsell to produce the additional equipment in about September 2002.  I do not accept, therefore, that there was one overarching agreement, nor that the subsequent agreement for equipment for the production of pipe proceeded on the basis that any express or implied terms governing the primary agreement also applied to it.
  1. But even if one proceeds on the basis advanced by the plaintiff, that Mr Hansen always knew that the extrusion line would be used for the production of pipe, there remain difficulties in the case advanced by the plaintiff in respect of the other alleged express terms.

Express term about capacity

  1. As to the alleged express term that the extrusion line be capable of producing pipe at a rate of 100 to 150 kg per hour, the plaintiff’s case was that this was only specified by Mr Heggen at his first meeting with Mr Hansen. Mr Heggen insisted that he had told Mr Hansen about that matter so Mr Hansen could manufacture downstream equipment compatible with an extruder having that production rate. The plaintiff’s counsel argued that Mr Heggen’s evidence should be accepted because the rate of extrusion was relevant to the specifications of the downstream equipment, including the haul-off, the purpose of which was to pull extruded pipe from an extruder through a tank and then onto a bench to be cut. That is, the capacity of the haul-off clearly needed to at least match the proposed output of the extruder. The difficulty with that submission is that the quotation dated 22 August 2001 sent to Mr Heggen for a haul-off, a saw/punch unit and a water trough in fact stated: “to synchronise haul-off and extruder would depend on extruder control. When we know this we can give you a price.” That appears inconsistent with the proposition advanced in favour of Mr Heggen’s version.
  1. Given the asserted importance to Mr Boxsell of the extruder’s capacity, it is curious that output capacities were not discussed at any subsequent meeting between Mr Hansen and Mr Heggen. And of course the quotation of 17 January 2002 did not refer to any output capacity, let alone one of 100 to 150 kg per hour (as did that of CTS Plastics Machinery).  The only document received by the plaintiff, which contained a reference to a rate of 150 kg per hour, was Mr Heggen’s own handwritten “approximate costing”.  Although Mr Boxsell and Mr Heggen clearly discussed the matter of the extrusion line’s capacity, including the calculation of an output of 100 to 150 kg per hour, I do not accept Mr Heggen’s evidence that he specified it to Mr Hansen as a requirement at their first meeting (or indeed at all).
  1. As to the inspection by the Boxsells of the extruder at Mr Hansen’s factory, the evidence of Mr Boxsell and Mrs Boxsell as to what was said concerning the output of the extruder was somewhat different. Mr Boxsell’s evidence was only that he said, “that doesn’t look like it would do a hundred KG an hour, let alone a hundred and 50.” The reference to a capacity of 100 to 150 kg per hour had a particular significance to Mr Boxsell, but since (as I have found) there was no prior discussion with Mr Hansen of the required rate of output, I do not accept it had any significance to Mr Hansen.  Even if it is accepted that Mr Hansen responded by laughing and saying words to the effect that “you won’t be able to keep up with it”, I do not consider that, in the circumstances, that comment can result in there being an express term or representation as to the capacity of the extruder as alleged.
  1. I note that Mrs Boxsell gave evidence of a quite precise inquiry by Mr Boxsell about the extruder’s capacity. That evidence was not supported by the evidence of anyone else present and I am unable to accept it. My impression of Mrs Boxsell was that she tended to overstate matters which favoured the plaintiff’s case and understate those which she perceived were detrimental to it. Moreover, I note that, in the letter of 18 February 2003 in which complaint was made by Mrs Boxsell about the vacuum tank, no complaint was made about the failure to achieve any particular output capacity, nor that there had been a representation about output at all.
  1. I am not persuaded that there was (under either agreement pleaded) an express term as to capacity of the extruder or extrusion line, let alone any as to the extruder or extrusion line being able to have a capacity for output of 100 to 150 kg per hour. Nor was there any representation to that effect made by Mr Hansen.

Express term as to reconditioning

  1. As to the alleged express term that the extruder would be reconditioned, Mr Hansen denied agreeing to do work other than that specified in the quotation of 17 January 2002, which made no reference to “reconditioning”.
  1. But even if it was accepted that Mr Hansen said he had an extruder that he could “recondition” (as Mr Heggen claimed) or mentioned “reconditioning” the extruder at the meeting with the Boxsells (as the Boxsells claimed), Mr Heggen’s evidence was that what was required in that regard was set out in his handwritten note made at the Hansen residence. It merely reflected what was specified in the first quotation of 17 January 2002.
  1. The other alleged express terms, including as to the commissioning of the equipment and extrusion line, may conveniently be dealt with in relation to the plaintiff’s submissions as to the breaches alleged by it.

Implied terms and representations

  1. It was submitted by counsel for the plaintiff that, in the conversations to which reference has already been made, the required purpose of the equipment and services to be provided was made known to the first defendant. That purpose was said to be that each item of equipment supplied was to be included in an extrusion line capable of producing polypropylene pipe of two types (profile and pipe) and of two sizes (120mm x 53mm and 183mm x 70mm) and at a specified production capacity of 100 to 150 kg per hour. It was said that the required purpose was made known in circumstances where the clear inference was that the plaintiff was relying on the first defendant’s skill and judgment so as to give rise to implied terms as to fitness for purpose and merchantable quality, and reasonable care in the performance of the services rendered by the first defendant.
  1. It was also submitted that the first defendant represented to the plaintiff that the extruder to be used in the extrusion line was suitable for plaintiff’s required purpose and that the first defendant had the expertise and the capacity to perform its agreements with the plaintiff. It was alleged by the plaintiff that that constituted misleading and deceptive conduct, but a plea that the plaintiff acted on the first defendant’s conduct by not purchasing the equipment the subject of the alternative quotation was not pursued.
  1. The defendants admitted that it was an implied term of the agreements that it perform work for the plaintiff with reasonable care and skill but pleaded that it had done so. Further, the defendants denied that they were made aware by the plaintiff of the particular purpose contended for by the plaintiff and denied that there was reliance on the first defendant’s skill and judgment, in any event.
  1. I note that, as with other aspects of its pleading, the plaintiff’s pleading in respect of the claim for breach of implied terms and for misleading and deceptive conduct was confused and poorly articulated.
  1. Mr Heggen conceded that he knew that Mr Boxsell would be relying on him “to find for him the machinery which would do the job that he wanted”. Mr Heggen’s evidence was that he recommended the quotation provided by the first defendant over the competing quote.  This was notwithstanding that it was clearly not a quotation for a three and a half inch extruder (but a 70 mm PVC extruder) and that no output was specified.  Nor did it state, as the competing quote did, that the barrel would be honed and re‑nitrided.  Further, it was not Mr Hansen who determined whether the head would be suitable for use – on his own admission, it was Mr Heggen who decided that the head would be “all right”.  Mr Heggen conceded that, after receiving the quotation of 19 September 2001, he did not say anything to Mr Hansen about relying on him to ensure output of the polypropylene.  He also conceded that Mr Hansen told him that he had not worked with polypropylene before.  I accept Mr Hansen’s evidence that he was not involved in the testing of the equipment supplied by the first defendant by running the extrusion line to produce profile or pipe.  I accept the following affidavit evidence of Mr Hansen:

“At no time did I hold myself out as having expertise in the manufacture of plastic extruders, let alone extruders for the production of polypropylene.  At no time did Heggen or Boxsell make known to me that they were relying on me to ensure that the complete extrusion line could produce the plaintiff’s polypropylene product at a particular throughput.”

  1. I find that the plaintiff did not make known to the first defendant that its purpose included that the extruder or the extrusion line have a specified production capacity of 100 to 150 kg per hour. In the circumstances, there was no implied term that the equipment and services provided by the first defendant would be fit for that particular purpose. Further, I find that the first defendant did not represent to the plaintiff that the extruder or extrusion line was suitable to use for such a purpose. Moreover, for the reasons outlined below, I find that there was no breach of any implied term as to merchantable quality or reasonable care, nor any conduct in breach of the TPA.

Plaintiff’s submissions as to the first defendant’s breaches

  1. In written submissions counsel for the plaintiff outlined the alleged breaches by the first defendant as follows:

(a)The hopper was not fit for the purpose of extruding talc filled polypropylene because it had no dryer. 

  1. It was not disputed that talc filled polypropylene needed to be dry when fed into the extruder and that the hopper supplied by the first defendant did not have a dryer to dry the polypropylene. Mr Heggen’s evidence was that he understood the difference between PVC and polypropylene extrusion lines concerned the feeder hopper requirements and that in polypropylene extrusion it was preferable to use a dryer. Mr Heggen conceded that a hopper-dryer was a separate piece of equipment that would have had to be ordered specifically if required and that it had not been requested. The first defendant’s quotation accordingly did not provide for the supply of a hopper-dryer. In the circumstances, I do not find that this breach is made out.

(b)The extruder was not reconditioned.

  1. Mr Hansen’s evidence was that, if the first defendant had agreed to recondition the extruder, this would have meant cleaning it. As mentioned, Mr Heggen’s evidence was that the reconditioning requested in respect of the head was that specified in his handwritten note made at the Hansen residence. The plaintiff asserted that the extruder supplied contained foreign material and needed to be cleaned. Insofar as the complaint concerned the presence of some polyfin in the barrel, Mr Boxsell’s evidence was that Mr Heggen said, “don’t worry about that”, and it was able to be dealt with by purchasing a brush and cleaning it out. Certainly no request was made of Mr Hansen to attend to remedy it. Insofar as there was a suggestion that the “reconditioning” required was that the barrel to be “nitrided”, counsel for the plaintiff conceded that was not pleaded as a particular of the reconditioning required to be done. I am unable to accept the plaintiff’s submissions that there was a breach as alleged.

(c)The barrel and screw were worn when supplied.

  1. The extruder was inspected in late 2003 by Allied Engineering (which was then engaged to build up the flights of the screw, but not to nitride the barrel). In August 2004 Wagma Engineering was engaged to recondition the barrel by honing and nitriding it.
  1. It was submitted by the plaintiff that the court should infer that the barrel and screw were worn when supplied by the first defendant based on the following: (a) the evidence of Mr Dallman of Allied Engineering that both the barrel and screw were badly worn when he inspected them on 26 November 2003; (b) the opinion of Mr Haase of Wagma Engineering, based on his observations of the wear patterns of the barrel and screw in 2004, that neither had been “reconditioned” for at least four years; (c) Mr Glenn Boxsell’s evidence that the barrel and screw have not been reconditioned since this work was done by Wagma Engineering; and (d) the evidence of Messrs Naylon and Taylor that there was very little wear on the screw when they inspected it on 6 July 2008.
  1. This approach is unsatisfactorily speculative. Furthermore, Mr Hansen’s evidence was that he was not requested to rebuild the screw but quoted on an “as is basis”.  In any event, the evidence was that the extruder had been in use in the interim and Mr Dallman was unable to offer a view as to what may have caused the wear he had observed in the screw in late November 2003.  In the circumstances, I do not find this breach made out on the evidence.

(d)The extruder could not operate as part of an extrusion line producing pipe (or profile) at a rate of 100 to 150 kg per hour.

  1. There was a great deal of expert evidence on the issue of the output capacity of the extruder and extrusion line and the rate at which it could operate. The evidence was that the present potential capacity of the extruder was about 104 kg per hour.  However, given the finding I have made, that it was never an express term of any agreement with the first defendant that the extruder or extrusion line be capable of producing pipe at a rate of 100 to 150 kg per hour, and that there was no representation made by the defendants to that effect, this alleged breach has not been made out.

(e)The main control box overheated when the extruder was operated due to the lack of ventilation.

  1. The plaintiff asserted that there was a defect to do with the control box overheating. This was said to be due to the absence of vents in the cabinet and the absence of an extractor fan fitted to the cabinet to dissipate heat. It was submitted that the cabinet built by the first defendant should have included at least extractor fans. But there was no evidence that I accept of any complaint about the matter to Mr Hansen, who attended to deal with various problems that the plaintiff was experiencing. If lack of ventilation was a problem, one would have expected that to have been raised at the time. The plaintiff has not established that there was a breach as alleged.

(f)The second tank supplied by the first defendant was constructed with an aperture which was not large enough to fit the plaintiff’s 182 mm formers.

  1. On behalf of the plaintiff, it was submitted that I should find that Mr Boxsell and Mr Hansen had never discussed the first defendant building a tank which would only fit the smaller formers, let alone agreed that this should occur, or that the tank would only be “cheap”. However, I prefer Mr Hansen’s evidence on that matter to Mr Boxsell’s, as it reflects the impression that I am left with from the evidence as a whole, that cost was a factor in the items ordered by both Mr Heggen and Mr Boxsell.
  1. It was also alleged that the tank as supplied could not be operated without the water in it overheating and that pipe passing through the tank kept collapsing as a result. But no written complaint about the tank was made until the plaintiff’s demand for payment outstanding on its invoice (and no exception was taken to Mr Hansen’s response that there had not been any prior complaint).  I am not satisfied in the circumstances that any problems with the vacuum tank can be sheeted home to the first defendant.

(g)The saw blade supplied for the cut off was defective

  1. The plaintiff contended that there were defects in respect of the saw blade provided in that it did not operate properly. In that regard, it was asserted that the saw blade supplied for the cut off saw was a wood saw blade and was not suitable for cutting plastic. The drive motor for the saw blade was size 0.375 KW which was too small for the 10 inch blade fitted. The saw blade supplied was rated to 3800 rpm and the drive motor was rated to 1300 rpm. The plaintiff was unable to adjust the drive motor for the saw blade as there was insufficient room to mount a larger drive motor. The allegations were comprehensively dealt with by Mr Hansen, whose evidence I prefer over Mr Boxsell’s, given its detail and consistency.

(h)The tilt table was built too high and the legs had to be cut down to lower the height.

  1. This matter is of no consequence. The evidence was that table was adjusted with no difficulty and did not result in loss or damage.

(i)The first defendant went about manufacturing the equipment without reasonable care.

  1. Reliance was placed on Mr Hetherington’s evidence that the first defendant had no proper drawings for the manufacture of certain equipment supplied by the first defendant. I did not find this evidence of assistance. I prefer the detailed evidence provided by Mr Hansen as to what he did pursuant to the invoiced work over that of Mr Hetherington and do not consider there is any basis for the claim that Mr Hansen failed to exercise reasonable care as alleged.

(j)The first defendant did not deliver the equipment supplied under the agreements and failed to “commission” the extrusion line.

  1. There was some dispute as to whether the first defendant had agreed to deliver the equipment. It is a matter of triviality and was not a matter of complaint at the time. As to the question of “commissioning”, Mr Heggen’s evidence was clear and accorded with Mr Hansen’s.  All that was required was that Mr Hansen attend the plaintiff’s premises to ensure that the machinery was working.  Mr Heggen specifically agreed that this did not require Mr Hansen to run profile or pipe.  Mr Heggen also agreed that Mr Hansen did attend to do what was required and that the machinery all worked.
  1. In the circumstances, I find that there was no breach of any express and implied terms of any agreement. Nor is any cause of action under the TPA made out.

Damages claim

  1. It also follows that the plaintiff fails in its claim for rectification costs and for loss of profits.
  1. For completeness, I add that there were significant obstacles in respect of the claim for loss of profits. These included that, while the plaintiff’s claim for loss of profits covered a period from June 2002 to December 2003, Mr Boxsell accepted that, in any event, he could not produce pipe before September 2002, as the additional equipment required for the production of pipe was not ordered until then. There could be no basis for any claim in respect of loss of profits relating to pipe before September 2002, in any event.
  1. The plaintiff’s claim was also premised on the assumption that the extrusion line would operate at that rate for eight hours per day for five days per week. However, Mr Boxsell’s own evidence was that he had only “projected” a capacity of 100 to 150 kg.  He also said, “if I’m running a machine, I never go to full bore, you know, the 150, I would settle it back, same as we do now with the machine.”  Further, the claim for loss of profits was based on the proposition that the plaintiff would have been able to sell all the product produced with the extrusion line operating at either 100 kg per hour or 150 kg per hour.  Counsel for the plaintiff conceded that the strongest evidence that the plaintiff would have been able to sell all the product produced at those rates was simply Mr Boxsell’s evidence that when the extrusion line was working he was never able to keep up with demand.  That is not a sufficient basis, in the absence of other persuasive evidence of demand, upon which to conclude that the plaintiff sustained a loss of profits as claimed.  The evidence of demand required the drawing of speculative inferences and could not afford, in any event, a sufficient evidentiary basis for the claim sought to be made: Ray Teese Pty Ltd v Syntex Australia Ltd [1998] 1 Qd R 104 at 109. 
  1. An alternative submission was made as to damages; that if it was found that the plaintiff had not proved a loss, nominal damages ought to be awarded. There is no basis whatsoever for such an award.

Counterclaim

  1. In relation to the counterclaim, it was not disputed that the first defendant invoiced the plaintiff for work which included manufacturing a pin and die. The plaintiff contended that Mr Boxsell had not specified the dimensions of the pin and die and left them to Mr Hansen and the invoice was largely for work done in modifying the pin and die. This was simply rectification work necessary for the equipment supplied to conform to what was promised. In fact, Mr Boxsell’s evidence in cross-examination was that the invoice was not paid because one of the items on the invoice (for $682.50) was for “bore heads and weld up hole on head”. Mr Boxsell maintained that occurred in Mr Hansen’s workshop and was his responsibility.  It was that item and the fact that he claimed to be unable to produce marketable quality pipe which caused him not to pay the invoice.  The plaintiff’s inability to produce pipe was not attributable to any fault of the defendants.  The first defendant is entitled to be paid for the work invoiced which it had performed.
  1. The first defendant is entitled to payment of the sum of $1,842.50 claimed by its counterclaim.

Orders

  1. The orders I make are that there be judgment for the defendants on the plaintiff’s claim and that there be judgment for the first defendant on its counterclaim. I will hear submissions as to costs.
Close

Editorial Notes

  • Published Case Name:

    Polyphemus Pty Ltd trading as Boxsell Hydroponics v JPH Enterprises Pty Ltd & Anor

  • Shortened Case Name:

    Polyphemus Pty Ltd v JPH Enterprises Pty Ltd

  • MNC:

    [2012] QSC 111

  • Court:

    QSC

  • Judge(s):

    Philippides J

  • Date:

    27 Apr 2012

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Syntex Australia Limited v Ray Teese Pty Limited[1998] 1 Qd R 104; [1996] QCA 259
2 citations
Jump To
Cite 1 - [1998] 1 Qd R 104
Cite 2 - [1998] 1 Qd R 104

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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