Where a buyer sends an independent expert to inspect goods and report, the expert's reliance on the seller's skill or judgment will not automatically be attributed to the buyer for the purposes of the implied condition of fitness under the Sale of Goods Act; the buyer must show its own actual reliance on the seller communicated to the seller.
Later decisions that cite Dependable Motors Pty Ltd v Ashford Shire Council
Decisions cited by Dependable Motors Pty Ltd v Ashford Shire Council
DEPENDABLE MOTORS PTY. LTD. v. ASHFORD SHIRE COUNCIL [1959] HCA 25; (1959) 101 CLR 265
Sale of Goods
High Court of Australia
Dixon C.J.(1), McTiernan(2), Kitto(3), Taylor(4) and Menzies(5) JJ.
CATCHWORDS
Sale of Goods - Sale of tractor - Implied warranty - Fitness for particular purpose - Reliance upon seller's skill and judgment - Inspection of tractor by person appointed by purchaser - Reliance by person appointed - Whether his reliance that of purchaser - Sale of Goods Act 1923-1953 (N.S.W.), s. 19 (1).
HEARING
Sydney, 1958, November 26, 27; 1959, May 8. 8:5:1959DECISION
May 8.2. The appeal comes to this Court from an order of the Full Court of the Supreme Court of New South Wales (Owen and Herron JJ., Hardie J. dissenting) (1958) 3 LGRA 236 allowing an appeal from a judgment given by Ferguson J. at the trial of an action without a jury. Ferguson J. entered judgment for the defendant but that judgment was reversed upon one count in the declaration. The action was brought by the purchaser of a tractor against the vendor and the count alleged an implied warranty of fitness for the purpose for which the tractor was purchased and claimed damages for breach of the warranty. It is the only count with which it is necessary for me to deal. Ferguson J. held that the count was not made out because it was not shown that the buyer relied upon the skill and judgment of the seller. The majority of the Full Court were of the contrary opinion. (at p269)
3. The story of the tractor can be told briefly. In the early part of the year 1951 the Council of the Shire of Ashford, which is the plaintiff in the action and the respondent in this Court, found itself in need, more or less immediate need, of an additional piece of road-making equipment. What it needed was a crawler tractor fitted with a "dozer blade". It possessed a power control unit and did not want another for the machine. But it needed a tractor with a capacity to draw a scraper scoop or the like. At that time any of the well-known American or English machines of the kind the council required was unprocurable, at all events it could not be obtained without waiting a long time. But an agent for motor vehicles and machinery at Inverell brought under the notice of the shire clerk and president the fact that there was or might be available a tractor made in Italy and called by the name Breda. The agent represented the Dependable Motors Pty. Ltd., a company which is the defendant in the action and the appellant in this Court. At its premises in Sydney the defendant company had one or two Breda tractors on hand, Model 70D. They had been obtained for "distribution" from another company which doubtless was the importer. The tractors were in fact produced by the Societa Italiano Ernesto Breda. When complaints reached the Italian Societa later about the failure of the performance of the tractor as a road implement, they wrote that it was supplied by them for agriculture and not for industrial use. In fact there was a brass plate upon the tractor bearing the words "Trattori Agricoli" and it is now common ground that it was not fit for the heavy work of road making and maintenance, the only purpose for which the council wanted it. When the agent at Inverell told the shire clerk of the Breda tractors at Dependable Motors Pty. Ltd. he gave him a pamphlet depicting them and some further particulars. The shire clerk discussed the matter with the president and over the telephone with some councillors. It was a country shire, the councillors lived in different places many miles apart and notwithstanding that the purchase of so costly a machine can scarcely have been regarded as a small matter, that was the way of doing business. With their approval and perhaps at the instance of the president the clerk took the next step. Very shortly before this time the council had appointed a new engineer. He was to take up his duties on 2nd April 1951, that is in about three weeks time. He was the engineer of another shire and the time of his service with that municipality had not quite come to an end, but he had gone down to Sydney to attend the Annual Conference of Local Government Engineers. The step which the shire clerk took was to telephone to the engineer designate in Sydney and request him to go to the showrooms or shop of Dependable Motors Pty. Ltd., ask for a Mr. Corney, inspect the tractor and see if it was suitable for the work required. The engineer designate followed his instructions and then telephoned to the shire clerk. The visit to Dependable Motors Pty. Ltd. seems to have been on Monday, 12th March 1951, and the clerk says that the engineer telephoned back within a day or two of his message. The witnesses were deposing to conversations which took place nearly six years before and it would not be surprising if they gave only a condensed account of what was said. At all events the account of the clerk of the telephone report was simply that the engineer told him that he had inspected the tractor and that it seemed to him to have plenty of horse-power and was big enough for the work required. On this being communicated, doubtless by telephone, to the president and the councillors, the clerk was instructed to purchase the tractor. The shire clerk on 16th March 1951 sent an order, on the shire council's order form, to Dependable Motors Pty. Ltd. in Sydney; the order was expressed to be for "1 Breda 70D Crawler Tractor equipped with cable dozer but not a P.C.U. as quoted by your Inverell agent" naming him. P.C.U. stands for power control unit. The fact that the order was from a shire council and that the tractor was to be equipped with a cable dozer necessarily meant that the implement was bought for road work. Indeed Mr. Corney in his evidence said that there could be only one purpose for the dozer blade and that was road work and the fact that a shire council wanted the tractor for its operation meant that it was going to be used for road construction and the like. Moreover he said that his company had advertised the Breda 70D tractor as suitable for road work and tried to sell that model for road work. (at p271)
4. In due course the machine was invoiced and delivered to the council. The invoice described the implement and gave the price under two headings, first a "New Breda Crawler Tractor model 70D Serial No. 4942; 5,915 pounds": second a "cable-controlled trail-builder fitted to tractor: 830 pounds". The invoice stated that a P.C.U. was not supplied and the net price ex store was 6,745 pounds. For this price a cheque was sent by the council. The invoice, as will be seen, showed that a tractor equipped for road work was the subject of the sale. There is no doubt that the machine was not fit for that work. This was shown by the hard experience of the council in its attempts to employ the tractor for the purpose and the fact is no longer denied by the defendant. (at p271)
5. I would imagine that if the liability of the seller in such circumstances were governed by the common law and not by the statutory formula a simple finding that the vendor sold the implement for the purpose of road making by the vendee would spell a warranty of fitness for that purpose. At all events that is what Best C.J. thought. "If a man sells an article, he thereby warrants that it is merchantable - that it is fit for some purpose . . . . If he sells it for a particular purpose, he thereby warrants it fit for that purpose": Jones v. Bright [1829] EngR 487; (1829) 5 Bing 533, at p 544 [1829] EngR 487; (130 ER 1167, at p 1172) . Best C.J. stated the position simply. While the rule was affirmed without much loss of its simplicity of form, the underlying principle was expounded by Brett L.J. for the Court of Appeal in Randall v. Newson (1877) 2 QBD 102 . With perhaps more flexibility than the code allows, the law, so it appeared, sought the intention of the parties by determining the real commercial or business description of the thing forming the subject-matter of the transaction. "If the subject-matter be an article or commodity to be used for a particular purpose the thing offered or delivered must answer that description, that is to say, it must be that article or commodity, and reasonably fit for the particular purpose." (1877) 2 QBD, at p 109 . It is, of course, a matter of fact but I should say with some confidence that the true sense of the transaction as it appears from the facts stated so far was the sale of a tractor for the particular purpose of road work, that is, road making and maintenance. It was never necessary that the purpose should, so to speak, be written out large. It was enough if the intention clearly appeared from the circumstances and the spoken and written word, the contract not being wholly reduced to writing. But the provision of the Sale of Goods Act sets a criterion which is not necessarily the same, though it may be more exact in its application, and it is that criterion which must govern the matter. It requires that the buyer shall expressly or by implication make known to the seller the particular purpose for which the goods are required so as to show that the buyer relies on the seller's skill or judgment. It is said that the buyer, the shire council, never did this; and it was upon that ground that judgment passed for the defendant Dependable Motors Pty. Ltd. at the trial before Ferguson J. There is, of course, an additional condition prescribed by the provision of the Sale of Goods Act, viz. the goods must be of a description which it is in the course of the seller's business to supply, but that condition was undeniably fulfilled. (at p272)
6. The reason why it was held that the first condition was not satisfied was not because the particular purpose was not made known to the seller, Dependable Motors Pty. Ltd., but because it was not made known so as to show that the buyer, the shire council, relied on the company's skill or judgment and perhaps also because in any case it was not the shire council that so made it known. (at p272)
7. Now there is very strong ground in the evidence of the engineer designate for concluding that at the interview on 12th March 1951 between the engineer designate of the shire council and Mr. Corney at the premises in Sydney of Dependable Motors Pty. Ltd., the engineer did make known to that gentleman the particular purpose for which the implement was required by the shire council and made it known so as to show that reliance was being placed on his skill and judgment. Mr. Corney was managing director of the company and there could be no question of his authority to speak for it on such a subject. But what is said is that when he spoke he did not speak to an agent of the shire council authorised in that behalf. Any reliance on his skill and judgment or on that of his company was the reliance of the engineer designate not of the shire council; the president and councillors had obtained what guidance they needed from the shire clerk's report of what the engineer designate had said to the latter over the telephone, not from Mr. Corney. (at p272)
8. This view of the matter I am unable to accept. It appears to me to depend upon distinctions between the capacities of the persons by whom the corporation's part of the business was transacted which reflects nothing that the provision of the Sale of Goods Act requires, still less the law of agency. In effect it means a transfer of the responsibility for every step in the transaction to the president and councillors and regards them as the persons who must exhibit a reliance, which is their own personally, upon the skill and judgment of Mr. Corney or of his company. Or if it does not do that it treats the engineer designate as a stranger to the corporation who did not represent it in his discussion with Mr. Corney and could not speak on its behalf. In neither of these views can I agree. After all, when we speak of the Council of the Shire of Ashford and so name the plaintiff in the proceedings we are naming the corporate body not the president and the councillors. If there were no provisions in the Local Government Act 1919 (N.S.W.) such as s. 516 such a transaction as that in question might go through and none of the latter might ever be called upon even to give their assent to it. The corporation must act by servants and agents. In any transaction carried through by a corporation different steps may be taken by different persons on its behalf and it often may be that it is only by combining their various actions that legal completeness can be given to a transaction. I see no reason why this should not be so in the negotiation of a contract for the purchase of goods and why the process should not be thus accomplished of making it known to the seller that the corporation as buyer relies by its servants and agents upon the seller's skill and judgment. As to the capacity in which the engineer designate went to Dependable Motors Pty. Ltd. to inspect the tractor and to see Mr. Corney, I can feel little doubt notwithstanding the brevity of the account given of his instructions from the shire clerk over the telephone. He was an engineer about to take over the office for the shire council involving the responsibility for road construction and maintenance. If he had assumed office he would be the natural, the inevitable, person to go into the proposal to purchase a tractor, to discuss the technical or engineering aspects with the suppliers, to inspect the implement and to advise the shire council. That is how he understood his commission, if one is to judge by what he did, and I should infer that that is what he was meant to do. According to his own account when he saw Mr. Corney on 12th March 1951, he gave him his name "and so on" and said that he was there on behalf of the Ashford shire council. Mr. Corney says that he introduced himself as the shire engineer. The evidence of the engineer is that he inspected the tractor with Mr. Corney and that they had a long discussion about its various features including its weight and horse-power. Then the engineer's evidence proceeded: "He said, 'It is a very reputable firm. It is a very big firm engaged in the manufacture of locomotives as well as tractors. It is quite an outstanding firm in Italy', and he added that there was no doubt about the quality of the machine or the quality of the tracks. Then I said to him, 'Will this machine do the work we expect it to do?' and he replied, 'What do you expect it to do?' I said, 'It will be engaged entirely on road construction work', and he said, 'What does that entail?' I said, 'Clearing, some clearing and a lot of dozer work, and quite a lot of scoop work. The council had already purchased a 6-8 yard scraper scoop'. . . . I then said, 'this tractor will be required to haul that scoop. Will it be capable of doing that?' and he replied 'Yes. That is the type of work the tractor is built for. It is just the type of work to suit it.' I then said, 'The Council does require a dozer blade', and he said, 'Yes. I know something about that. They want the dozer blade to fit on to the tractor'. I then said, 'That is right. Do you know a reputable firm which is capable of building a good blade?'" Mr. Corney named the firm he would employ and the conversation ended with a question from the engineer about the blade being capable of doing the work and being suitable for the machine, to which Mr. Corney gave an affirmative reply, adding that he would see that a proper sized blade was fitted to the machine. (at p274)
9. Evidence as to the engineer's beliefs, as to the result upon his mind of this conversation, was shut out but there can be no doubt that his reliance on Mr. Corney's skill and judgment was sufficient to satisfy the standard set by the provisions of the Sale of Goods Act. There is no point in discussing in this case the precise degree of actual reliance required, how it must be exhibited and what presumptively shows it. As Hardie J. pointed out in his dissenting judgment (1958) 3 LGRA, at p 248 a divergence of view about some matters affecting the application of the provision may be found in utterances of high authority; among such matters are those I have mentioned. Cf. the cases cited by his Honour, Manchester Liners Ltd. v. Rea Ltd. (1922) 2 AC 74 ; the extract from the opinion of Lord Summer in Medway Oil and Storage Co. Ltd. v. Silica Gel Corporation, reported (1928) 33 Com Cas 195, at p 196 and set out (1933) 50 CLR, at p 415 ; and Cammell Laird & Co. v. The Manganese Bronze and Brass Co. Ltd. (1934) AC 402 . There is no point here in discussing these matters because so far as the engineer designate is concerned plainly his evidence means that he exhibited an ample reliance on the seller's skilll and judgment and in respect of the very matters which in the result involved the unfitness of the implement. A real difficulty arises because Mr. Corney in his evidence denied that the critical statement was actually made that the implement was to be used for road making or that the question was asked whether it would do the work. He says that he knew that that was the purpose for which the shire council wanted the tractor and the dozer blade, it was the only purpose for wanting an implement so equipped, and he says that he would not have hesitated to tell the engineer that the implement was suitable for the shire council's roadwork had he been asked, but he denies that he was asked. Unfortunately in his judgment Ferguson J. does not explicitly resolve the conflict. His Honour, referring to the evidence that Mr. Corney was informed of the purpose for which the tractor was required, said: "Mr. Corney says he was not specifically so informed; but as it was a shire council that required it - and with a dozer blade attached - he knew it would be used for Council operations, including road work. On this evidence, and from the terms of the order subsequently sent, I am satisfied that the plaintiff, if not expressly, at least impliedly made known to the defendant the particular purpose for which the tractor was required." Any course is to be preferred to sending this case down for further hearing after all the years that have passed since the transaction took place and in the Supreme Court Herron J. after a full examination of the record felt that he was justified in going beyond the precise statement of Ferguson J. and carrying the findings of fact to their full conclusion. It is indeed difficult to believe that in the interview in question one way or another the purpose for which the implement was required was not made known to Mr. Corney so as to show that reliance was being placed on his skill or judgment or that of Dependable Motors Pty. Ltd. speaking through him. In the circumstances I think that the appeal should be decided on this basis of fact. (at p275)
10. The case seems to me on that footing to come down not so much to a question of the effect of s. 19 (1) of the Sale of Goods Act 1923- 1953 (N.S.W.) as to one's conception of how a corporation or any other business organisation may proceed through its servants and agents in negotiating an important purchase. True the engineer designate was only proleptically the servant of the corporation. But that did not prevent his being its agent for the purpose of dealing with the fitness of the implement and moreover, he held himself out as the engineer. There was no reason why he should distinguish, for the purpose in hand, between his then position as a designate and his position when three weeks later he should enter upon his duties. Nor does there seem to me to be any reason to trouble about the scope of his authority. Of course he had no authority to conclude a contract. But for purposes of ascertaining the suitability of the implement for the shire council's purposes he "represented" the corporation on that occasion. Doubtless his instructions, as deposed to by the shire clerk, may read as compendious to the point of casualness. It is not however the custom of the country to expatiate upon what is obviously involved in the competent performance of a commission, particularly when it is entrusted to a man who is on his own ground in executing it. He himself was not asked about his instructions. But in any case he performed his mission in the manner he described and all he did has been adopted by the corporation. (at p276)
11. In my opinion the appeal should be dismissed. (at p276)
McTIERNAN J. The contract of sale now being considered resulted from the acceptance and completion by the appellant of a written order, specifying a "Breda 70D Crawler Tractor" equipped with a cable dozer. The order was sent by the respondent's shire clerk with the approval of the president and the other members of the council. The tractor was the product of the Breda company of Italy. The manufacturer's label indicated that it was a farm tractor. This tractor is an automotive vehicle provided with a crawling tread. It seems that its use in agriculture would be to draw or haul agricultural implements. A cable dozer fitted to a tractor is a permanent attachment. In the combination, the tractor is a prime mover for working the bulldozer, backwards and forwards. The tractor however may still be used to drag an earth-moving implement such as a scraper scoop. The combination of tractor and dozer blade purchased by the respondent from the appellant was used, by the respondent, in the course of making roads, to clear trees from land and to drag a scraper scoop to shift soil. The tractor was an efficient machine of its type. Its power but not its weight was adequate for the road-making operations, and its tracks were not strong enough. The result was that in a short time the tractor became unserviceable. (at p276)
2. In the action the respondent alleged under s. 19 sub-s. (1) of the Sale of Goods Act 1923-1953 (N.S.W.) that it was an implied condition of the contract of sale that the tractor should be fit for the purpose of operating the dozer blade fitted to it and a scoop, in the course of making roads. (at p276)
3. The first question is whether the respondent expressly or by implication made known to the appellant the particular purpose for which the tractor was required. The principles governing the application of the opening words of s. 19 (1) on which this question depends, are explained in Manchester Liners Ltd. v. Rea Ltd. (1922) 2 AC 74 and Cammell, Laird & Co. v. The Manganese Bronze and Brass Co. Ltd. (1934) AC, at pp 422, 423 . The order as expressed was not merely for a tractor, but for the tractor of the type specified, made, in effect, into a bulldozer. I am of opinion that the appellant as a trader in tractors and bulldozing equipment must have known that the making of roads was a responsibility of a shire council. I think that the right conclusion to draw from the terms of the order, and the identity of the buyer, is that the particular purpose for which the respondent wanted the tractor was for road work, which necessitated bulldozing and the shifting of earth by a scoop drawn by the tractor. Mr. Corney, the respondent's managing director, admitted in cross-examination the the wording of the order suggested that the purpose for which the tractor was required was road work, because the order included the dozer blade. (at p277)
4. The tractor was inspected by Mr. Bowman before the order was given. He was then not in the service of the respondent, but the council had decided to appoint him as its shire engineer, a position which was then vacant. He said in evidence that at the inspection he told Corney that the respondent required the tractor for bulldozing and shifting soil, by means of a scraper scoop, in the course of making roads. Corney denied this, and the conflict of evidence was not resolved at the trial. It was contended for the appellant that if Bowman's evidence on the point is correct he, and not the respondent, made known the purposes for which the tractor was required, because Bowman's only part in the transaction was that of an expert advising the buyer, and he had no authority from the respondent to negotiate a sale. However, his inspection of the tractor and interview with Corney were connected with the proposed sale. If Bowman, in fact, told Corney that the respondent required the tractor for the particular purposes which have been mentioned, that fact was relevant to the issue whether the buyer had made known those purposes to the seller. Before the inspection took place, the appellant's agent at Inverell, whose name was Wilkins, had in effect offered the tractor for sale to the respondent. The inspection was a sequel to the agent's communication of the offer to the shire clerk. Lord Sumner said in Medway Oil and Storage Co. Ltd. v. Silica Gel Corporation (1928) 33 Com Cas 195 : "The buyer's reliance is a question of fact to be answered by examining all that was said or done with regard to the proposed transaction on either side from its first inception to the conclusion of the agreement to purchase" (1928) 33 Com Cas, at p 196 . I think that if Bowman mentioned the particular work which the respondent wanted to carry out with the tractor, that fact would be relevant to the issue whether the respondent made known to the appellant, before it purchased the tractor, the particular purpose for which it was required. I think it is not necessary to resolve the conflict of evidence to see whether the respondent's case as to making the purpose known was supported by that fact, because in my opinion its case on that point is made out upon the terms of the order and by the fact that the buyer was a shire council. It must be assumed, as I have said, that the appellant knew that it is a responsibility of a shire council to make and maintain roads. (at p278)
5. The next question is whether the respondent made known the particular purpose for which the tractor was required so as to show that, as buyer, it relied on the skill or judgment of the respondent as seller. Lord Wright said in Cammell, Laird & Co. v. The Manganese Bronze and Brass Co. Ltd. (1934) AC 402 : "Such a reliance must be affirmatively shown; the buyer must bring home to the mind of the seller that he is relying on him in such a way that the seller can be taken to have contracted on that footing. The reliance is to be the basis of a contractual obligation." (1934) AC, at p 423 (at p278)
6. The circumstances in which the appellant's agent, Wilkins, notified the shire clerk that his principals had a Breda tractor for sale were that the respondent was in urgent need of a tractor to operate a scraper scoop which it had in its possession. The respondent was apparently more used to tractors of English and American manufacture than to those of the type offered by Wilkins. The respondent had decided to appoint Bowman as its shire engineer, and knew that his experience extended to road construction and to the use of tractors and other machinery for that purpose. The respondent had no shire engineer of its own. Bowman had not yet resigned from the service of another council, but he was away attending an engineers' conference in Sydney. Bowman's appointment by the respondent as shire engineer took effect after the order for the tractor was given. He did not make the inspection of the tractor in the capacity of a temporary servant of the respondent. His mission to the appellant's premises was to have a look at the tractor spoken of by Wilkins, and see if he thought it was suitable for the respondent's purposes. Bowman met Corney, and said that he came on behalf of the respondent, and that he understood the respondent was interested in a tractor which the appellant had for sale. According to Bowman's evidence, he said to Corney: "Can you tell me anything about it?" and Corney said that it was made of special steel with "high wear-resistance qualities". Bowman said that he pointed out to Corney that its tracks were "unorthodox" and both of them inspected it underneath; also that he asked Corney whether the tractor's weight was "a bit low", compared with its high horse-power, and Corney said it was not. Then, according to Bowman, he told Corney that the respondent required the tractor for use in making roads and in answer to Corney's questions, gave details of what that involved. The last thing which Bowman said to Corney was "I will tell the clerk about this view and he will probably send you an order for the tractor". This statement would have conveyed to Corney that Bowman intended to tell the shire clerk about what he himself observed at the inspection rather than what Corney said about it. Bowman did not, in fact, report to the shire clerk anything which Corney told him. His report was an oral one. It stated that the tractor "seemed to have plenty of horse-power and was big enough for the work we required". The report was communicated by the shire clerk, Mr. Heywood, to all the members of the council. Subsequently, he received instructions from the president, Mr. Black, to purchase the tractor. The order was then sent by Mr. Heywood to the appellant. Mr. Black gave this evidence: "Q. Do you remember the shire clerk ringing up concerning the possibility of purchasing a Breda tractor? A. Yes. Q. Did you give him certain instructions so far as Mr. Bowman was concerned? A. He was to see the tractor. He came down to the Engineers' conference in Sydney and he was to look at the tractor while he was down here and to report on it - to tell us whether it was suitable or not. Q. Subsequent to that conversation with the shire clerk did he contact you on the telephone again - subsequent to Mr. Bowman's visit to Mr. Corney? A. I cannot remember any other subsequent conversation, except that he rang me up at one period and asked for council's - that was a later date, when I asked him to ring council and get their approval. Q. That is what I want? A. He rang me up and I instructed him to ring other councillors. We had a report from Mr. Bowman, apparently, that the tractor was suitable for the work which we required it for. Q. Had the shire clerk told you that? A. Yes. I instructed him to ring the other councillors. Those councillors live from 30 to 40 miles apart. It is not possible to call a meeting at all times. We ring them up. When he rang back and said the rest of the councillors were quite in accordance with the buying of the new tractor I instructed the shire clerk to put in a formal order for the tractor. Q. Did you rely on the engineer's report? A. I had nothing else to rely on. Q. Did you rely on it? A. Yes. I did. Q. Was that the reason why you purchased the tractor? A. Yes." (at p279)
7. Ferguson J., who tried the action, was of opinion that the respondent did not affirmatively show that it relied on the appellant's skill or judgment. His view was that the evidence was "more susceptible to the inference that there was no such reliance than that there was". He found that it was Bowman's report "and not any reliance upon the seller's skill or judgment that induced the purchase". Ferguson J. added "Indeed so far as the president is concerned, he said so". (at p280)
8. The Full Court had power in the appeal, which the present respondent brought, to make findings of fact, and to assess damages: Supreme Court Procedure Act 1900 (N.S.W.), s. 5. The court, by a majority, reversed the decision of Ferguson J. on the question whether the respondent had relied on the appellant's skill or judgment. Owen J. with whom Herron J., in a separate judgment, agreed said: "It is true, as the learned trial Judge said, that the plaintiff relied upon its agent Bowman's favourable report, but does that necessarily end the matter?" (1958) 3 LGRA, at p 240 Both learned judges thought not. Their view was that Bowman relied on what Corney told him, and as the respondent relied on Bowman's report, made as it was after his interview with Corney, it followed that the respondent relied through Bowman on Corney's skill or judgment. (at p280)
9. Dixon J. (as he then was) pointed out in Australian Knitting Mills Ltd. v. Grant [1933] HCA 35; (1933) 50 CLR 387 that the propositions of Lord Sumner in Medway Oil and Storage Co. Ltd. v. Silica Gel Corporation (1928) 33 Com Cas 195 emphasise that the words of s. 14 (1) of the Sale of Goods Act 1893 (Imp.) require "actual reliance upon the skill or judgment of the seller as a material inducement to the buyer" (1933) 50 CLR, at p 416 . Section 19 (1) of the Sale of Goods Act 1923-1953 (N.S.W.) is identical with s. 14 (1) of the Sale of Goods Act 1893 (Imp.). Reliance by the buyer on the seller's skill or judgment may be shown to have been made vicariously. In such a case the reliance is actual. (at p280)
10. Lord Sumner said in the Medway Oil and Storage Co. Ltd. v. Silica Gel Corporation (1928) 33 Com Cas 195 that the words of s. 14 (1) do not mean that "reliance on the seller's skill or judgment is to be exclusive of all reliance on anything else, on the advice, for example, of the buyer's own experts . . . . Indeed it would not be possible to be sure that the element of reliance on the seller entered into the matter at all unless the buyer made some statement to that effect. It follows that the reliance in question must be such as to constitute a substantial and effective inducement which leads the buyer to agree to purchase the commodity." (1928) Com Cas, at p 196 By sending Bowman, an expert, to look at the tractor the respondent scarcely exhibited to Corney that it was relying upon the seller's skill or judgment and nothing else. If independently of Bowman, the respondent relied at all on the appellant's skill or judgment, the evidence of Mr. Black proved that such reliance was not the substantial and effective inducement that led to the purchase. Even though Bowman was not familiar with the tractor, and by asking Corney questions appeared to be relying on his skill or judgment, Bowman was exhibiting his own reliance, not that of the respondent as buyer. I cannot infer from the evidence that the respondent showed reliance by the agency of Bowman on the appellant's skill or judgment. It seems to me to be a contradiction to say that an expert appointed by a person proposing to buy a commodity, to advise him whether or not he should do so, is an agent by whom that person manifests to the person who has the commodity for sale that the former relies on his skill or judgment. If he does rely on the seller's skill or judgment such reliance is not exhibited by the agency of the expert. It cannot be supposed that any signs of reliance by Bowman on Corney's skill or judgment were manifestations to Corney that the respondent relied on his skill or judgment. (at p281)
11. Lord Sumner said in Medway Oil and Storage Co. Ltd. v. Silica Gel Corporation (1928) 33 Com Cas 195 : "This warranty though no doubt an implied one is still contractual; and just as the seller may refuse to contract except upon terms of an express exclusion of it, so he cannot be supposed to consent to the liability which it involves, unless the buyer's reliance on him, on which the liability rests, is shown and shown to him." (1928) Com Cas, at p 196 Whatever reliance on Corney's skill or judgment Bowman exhibited was, in fact, his own reliance, not the respondent's. It is not in my opinion a correct application of the sub-section to impute Bowman's reliance, if any, to the respondent. If his reliance is imputed to the respondent on the footing that it was induced by Bowman's report, the reliance would be only notional or suppositional, so far as the respondent was concerned. But the words of the sub-section require, as stated above, an actual reliance by the buyer on the seller's skill or judgment operating as the material inducement. It is clear that the respondent's intention was to rely upon Bowman's advice. He had no instructions to report what Corney or any salesman said. Indeed, Bowman was asked to base a report on what he observed, not on what he was told. The respondent expected that Bowman would make up his own mind about the tractor, not merely gather information from the appellant on which the respondent could make a decision. In fact, Bowman did not report anything that Corney said to him. Bowman's report was the product of his own skill and judgment as an expert, not of Corney's skill or judgment. In my view, Ferguson J. in referring to Bowman as the council's "own engineer" meant by that expression that Bowman was present in the capacity of an independent expert and not as an officer or servant of the respondent. I am of opinion that the respondent was not led by reliance on the appellant's skill or judgment to purchase the tractor and the decision of Ferguson J. was right. (at p282)
12. It was contended for the respondent that Bowman's instructions were limited to matters discoverable by looking at the tractor, and that the instructions left room for sufficient reliance by the respondent on the appellant's skill or judgment in respect of matters intrinsic to the design; and that these matters were the cause of the failure of the tractor. In regard to these contentions, it is sufficient to say that the evidence does not admit of any such limitation being placed upon the instructions. (at p282)
13. I would allow the appeal and restore the verdict and judgment for the defendant on the first count of the declaration at the trial. (at p282)
KITTO J. This appeal relates to the sale of a tractor by the appellant to the respondent, and the only question on the appeal is whether there was in the contract of sale an implied condition as to the fitness of the tractor for a particular purpose. That depends on s. 19 (1) of the Sale of Goods Act 1923-1953 (N.S.W.). The appellant, a company dealing in motor vehicles, does not deny that to supply goods of a description which comprehends such a tractor as it sold to the respondent was within the course of its business. The respondent, the council of a local government area, required a tractor fit for the particular purpose of road construction work involving clearing and the dragging of a scoop. Before the sale, this purpose was made known to the appellant, for an engineer named Bowman, in the course of inspecting the tractor at the request of the council, explained to the appellant's managing director, a man named Corney, for what work the tractor was required, and Corney assured Bowman that the tractor was fit for that purpose. (At the trial there was a conflict of evidence as to this between Bowman and Corney, but in the Full Court of the Supreme Court Bowman's evidence on this point was treated as correct, and in this Court the appellant's counsel, no doubt because the prospect of a new trial was uninviting, agreed that we should do likewise. Moreover, Bowman's evidence on the point accords with the probabilities.) But the terms of s. 19 (1) were not satisfied unless the evidence established (1) that the making known of the purpose to the appellant by Bowman was a making known (a) by the council and (b) so as to show that the council was relying on the appellant's skill and judgment, and (2) that the council in buying the tractor did in fact rely on the appellant's skill and judgment. (at p283)
2. I shall not go through the details of the evidence, for they appear sufficiently in the judgments of other members of the Court. It is clear, I think, that the explanation of the purpose which Bowman gave to Corney was given in such terms and in such a context that a reliance at least by Bowman upon Corney's skill and judgment was a matter of reasonable inference to Corney and is a matter of reasonable inference to the Court - to adapt the language of Lord Sumner in Manchester Liners Ltd. v. Rea Ltd. (1922) 2 AC, at p 90 . The explanation was given in reply to a question which Corney asked in order to be in a position to answer the question put him by Bowman, whether the tractor would do the work which the council expected of it; and that question Corney could not have supposed that Bowman was asking for any other reason than that he was placing reliance on Corney's knowledge of the capabilities of the tractor and his judgment of their sufficiency for the contemplated work. And why should the Court take a different view? We were invited to do so on the ground that Bowman had large experience both of tractors and of the relevant type of work, and that he had no reason to suppose that Corney knew as much about either as he did himself. But this particular type of tractor was new to Bowman, whereas it was the business of Corney, as the dealer, to know for what purposes he was justified in supplying his goods. There was nothing to suggest that in this respect Corney had less knowledge than Bowman might fairly have expected him to have or than he purported to have in fact. (at p283)
3. But was Bowman's position such that his making known to Corney the purpose for which the tractor was required was a making known by the council? And, if so, was it a matter of reasonable inference to Corney, and is it a matter of reasonable inference to the Court, that a reliance was placed upon Corney's skill and judgment, not by Bowman alone but by the council? The first question depends upon the interpretation to be placed upon the conversation between Bowman and the shire clerk which led Bowman to interview Corney. Bowman, of course, was not yet on the staff of the council, but he had been appointed its shire engineer as from a date about three weeks ahead. The shire clerk knew that the appellant had a Breda tractor for sale at its premises in Sydney; and he had ascertained where the premises were and that Corney was the appropriate person in the appellant's organisation to interview about the tractor. All this information he communicated to Bowman, and, having authority to do so, he made on behalf of the council a request which he described in evidence as being that Bowman should "go to Dependable Motors and have a look at the tractor, and see if he thought that it was sufficient for the work we required". Bowman understood, and the shire clerk obviously knew that he understood, the nature of the work referred to. (at p284)
4. What was the task which the council thus entrusted Bowman? The answer contended for by the appellant is, in effect, that Bowman was to qualify himself to express a personal opinion as to the fitness of the tractor for the council's purposes, and was to express that opinion to the council, and that is all. It was no doubt contemplated, says the appellant, that Bowman, besides inspecting the machine, might also discuss it with Corney; but whatever he might do was to be done on his own account only, and for the sole purpose of making up his own mind as to how he should reply to the shire clerk's question. To give a reply with which he was himself satisfied, and that alone, was what the council wanted him to do. (at p284)
5. I would not deny the possibility that a request to a consulting engineer to make an expert examination of a piece of machinery and to report whether he thought it fit for a particular purpose might in some circumstances have such a limited meaning, but the terms of the request and the circumstances surrounding it would need to be very different from those which we have here to consider. The shire clerk's words as recounted in the evidence were terse in the extreme. But by concentrating too much on the limited terms in which he is said to have expressed himself and not enough on the situation as a whole, it is possible to miss, as I think the appellant's argument has missed, the true significance of the occasion. The council, being a corporation, had to get someone to carry out for it that portion of the transaction which consisted in interviewing the sellers and inspecting the tractor for the purpose of deciding whether the councillors should consider the sale on the footing that the machine was fit for the contemplated work. The fact that Bowman was being sent off to inspect the machine at the seller's premises as the council's engineer ad hoc, was enough, I should think, to convey to anyone, in the absence of anything to suggest otherwise, that this, and no less, was what the council wanted him to do. The appellant's argument seizes upon the portion of the shire clerk's request which invited Bowman to report what he himself thought; it insists that what Bowman might think and what the council might think were two different things, and the shire clerk was keeping them quite distinct for the reason that Bowman's opinion, when communicated to him, was to constitute simply the material, or some of the material, on which the council would make up its own mind as to the fitness of the tractor. In my judgment, that is not the natural sense of the matter. Obviously the council was not contemplating that anyone but Bowman should look at the tractor in the council's interests, or should discuss with the seller its technical features or its adequacy for the work in view, or should sit in judgment on Bowman's opinion. To Bowman, the implication must have been clear, unless more was said than the evidence suggests, that the question of the fitness of the tractor for the council's purpose was being handed over to him, so that he should have the responsibility of acting in all respects as a prospective buyer would act, up to the point of making up his mind - and that would mean for all practical purposes the council's mind - whether the tractor was a suitable machine for the council to buy. (at p285)
6. From this it must follow that the making known by Bowman to the appellant of the particular purpose of the council was a making known by the council itself so as to show a reliance by it on the appellant's skill and judgment. And Corney could not have thought otherwise. Bowman had introduced himself as the council's engineer, and Corney, as he acknowledged in giving evidence, dealt with him as such. Bowman, in speaking to Corney of what the council expected, referred to the council as "we"; and that entirely natural use of language provides a straw which shows exactly how the wind was blowing: they were dealing with one another on the basis that Bowman was to be identified with the council so far as considering the fitness of the tractor for its work was concerned. (at p285)
7. Again, it follows from the interpretation which I have placed on the telephone conversation between the shire clerk and Bowman that the latter's reliance on Corney's skill and judgment was the council's reliance. But, it is said, the council's reliance, if it is to be sufficient for the purposes of s. 19 (1), must continue up to the making of the contract of sale, and Bowman's reliance ceased with the making of his report to the shire clerk. The report is described in the evidence in language as sketchy as that of the shire clerk's request. Bowman is said to have told the shire clerk that he had inspected the tractor, that it seemed to him to have plenty of horsepower, and that it was big enough for the work that was required. There was, so far as appears, not a word about Corney's assurance as to its fitness, or about any reliance by Bowman on Corney's judgment. But if the shire clerk's original request to Bowman had the meaning which I have ascribed to it, the report made in answer to it must necessarily have been intended to convey, and must have conveyed in fact, much more than it said. In terms it gave reasons but no conclusion; it left to inference even the answer to the precise question that had been asked, whether the tractor was suitable. But, considered in all the circumstances, it must have been intended, and must have been understood, to imply that Bowman had done what he considered a prudent buyer would do in order to satisfy himself on the subject of fitness, and that in the light of all that had happened in the course of his attending to the matter he had decided to report in favour of the purchase. The councillors, of course, did not interrogate him about the foundations of his opinion; they took them on trust without inquiry. Bowman had handled the matter as he had thought the occasion required, and it was on the basis which his handling of it had provided that the order for the tractor was given. (at p286)
8. Taking this view of the case, I think that the decision of the Supreme Court was correct, and that the appeal should be dismissed. (at p286)
TAYLOR J. On 16th March 1951 the respondent shire forwarded to the appellant a written order for a "Breda 70D Crawler Tractor equipped with cable dozer . . . as quoted by your Inverell agent, A. V. C. Wilkins". The order was signed by one, Heywood, who was the shire clerk and he was authorised by the council to forward it to the appellant. The tractor and so-called dozer were duly supplied by the appellant and paid for by the respondent but at a later stage it was found that some parts of the equipment were not sufficiently robust for the purpose for which it was required, that is to say, heavy and constant operation in connection with road construction work. Thereafter, on 30th March 1954, the respondent shire instituted proceedings against the appellant to recover damages for breach of contract. The action was heard by a judge of the Supreme Court without a jury and he directed that judgment in the action should be entered for the appellant. Subsequently, on appeal to the Full Court, the present respondent succeeded in having the order of the learned trial judge set aside and, in lieu thereof, obtained judgment for 4,915 pounds. Damages in this amount were awarded in respect of the cause of action disclosed by the first count of the declaration and it is that cause of action with which we are concerned upon this appeal from the order of the Full Court. (at p286)
2. It is alleged by the first count that the respondent made known to the appellant that it required the tractor and dozer for road construction work and that in such road construction work the tractor would be required to push a "dozer" blade, to drag a 6-8 yard capacity "carry-all scoop" and to clear land. Further it was alleged "that the respondent relied on the appellant's skill and judgment" and other matters were set forth in a somewhat imperfect attempt to allege that the agreement sued upon was made in circumstances calculated to attract the operation of s. 19 (1) of the Sale of Goods Act 1923-1953 (N.S.W.). The case has, however, at all times been contested on the basis that the pleadings were sufficient to raise the appropriate issues of fact which require investigation where the provisions of that section are invoked. (at p287)
3. The question which has been debated upon the appeal lies in a very small compass. There is no question that the contract goods were of a description which it was in the course of the appellant's business to supply and the appeal has been conducted on the assumption that it was made known to the appellant that the equipment was required for the purposes specified in the first count. The questions which do arise, however, are whether, upon the evidence, the purposes for which the goods were required were made known to the appellant by the respondent, whether these purposes were made known so as to show that the respondent relied upon the appellant's skill and judgment and, finally, whether it is possible to say that the respondent did, in fact, rely upon the appellant's skill and judgment. The learned trial judge, whilst of the opinion that the seller did either expressly or by implication make its purpose known to the respondent, took the view upon the facts that the respondent did not rely upon the appellant's skill and judgment. This view was rejected by a majority of the Full Court for reasons which will presently appear. (at p287)
4. The Shire of Ashford is situated in the north-western part of New South Wales and, prior to March 1951, the council was desirous of acquiring a tractor for use in connexion with road making operations but there were difficulties in the way of obtaining prompt delivery of well-known English or American tractors which would have suited its purposes. But early in 1951 the shire clerk, Heywood, communicated with one, Wilkins, at Inverell concerning the possibility of obtaining a Breda tractor. This was an agricultural tractor of Italian construction and Wilkins was the local agent for the appellant company. After some discussion with Wilkins - the nature of which is not revealed by the evidence - Heywood informed a number of members of the council that such a tractor was available for purchase and he was instructed to make further inquiries concerning it. Shortly before the occurrence of these events the council had resolved to appoint a new shire engineer and it had informed one, Bowman, that he would shortly be so appointed. But at this time he had not been appointed and he was not then ready to take up the duties of such an appointment. In fact at the relevant time he was in Sydney attending a conference of local government engineers and, since he was said to have a "sufficient" knowledge of earth-moving equipment, the president of the shire council instructed Heywood to communicate with Bowman and ask him to look at the tractor in question while he was in Sydney and "to report on it - to tell us whether it was suitable or not". This Heywood did. He telephoned Bowman in Sydney and asked him if he would "go to Dependable Motors and have a look at the tractor and see if he thought that it was suitable for the work we required". According to Bowman Heywood asked him whether he "would be so kind as to go and have a look at the tractor. It could be seen at Dependable Motors, Parramatta Road". This Bowman said he would do and he, in fact, inspected the tractor within a day or two and then telephoned to Heywood and made his so-called report. The only evidence concerning the character of the report made by Bowman is that contained in Heywood's evidence and according to this witness Bowman said that he had inspected the tractor and that "it seemed to him to have plenty of horsepower and was big enough for the work we required". Thereupon the council decided to purchase the tractor and upon the evidence of the president of the shire council this decision was made in reliance upon Bowman's report. (at p288)
5. If the evidence went no further it would be quite impossible to say that the allegations made in the first count were supported by the evidence. But evidence was led concerning discussions which took place between Bowman and one, Corney, the managing director of the appellant company, on the occasion when Bowman inspected the tractor. Bowman was present at the appellant's premises for a considerable time and, not unnaturally, there was a good deal of conversation between him and Corney. Further, it may be said that, in spite of the fact that Bowman spent some time examining the machine, it was not possible for him to acquaint himself with all of the details of its construction though, doubtless, if he had cared to do so, he might have made a much more extensive examination than he did. However, he says that during the course of the conversation with Corney he asked the latter whether the machine would "do the work we expect it to do". In reply Corney said: "What do you expect it to do?" and Bowman answered: "It will be engaged entirely on road construction work". To Corney's inquiry "What does that entail?", Bowman's answer was, "Clearing, some clearing and a lot of dozer work, and quite a lot of scoop work." Then, having informed Corney that the council had already purchased a 6-8 yard scraper scoop and that the tractor would be required to haul that scoop, he inquired whether the tractor would be capable of doing that. Corney's answer was "Yes. That is the type of work the tractor is built for. It is just the type of work to suit it". For the purposes of this appeal this evidence was not challenged and it seems fairly obvious that Corney must be taken to have become aware, at this stage, of the fact that the tractor was required for the purposes alleged in the first count of the declaration. Upon this evidence the question arises whether the circumstances of the sale were such as to attract the operation of s. 19 (1) of the Sale of Goods Act. (at p289)
6. Upon the trial the learned trial judge was not prepared to find that the buyer had, in fact, relied upon the skill and knowledge of the seller (see Medway Oil and Storage Co. Ltd. v. Silica Gel Corporation (1928) 33 Com Cas 195 ). Indeed it seemed to him that the evidence was "more susceptible to the inference that there was no such reliance than that there was". "What the council required, before purchasing the goods, was" he said, "a favourable report from its own engineer, which it received" and it seemed to him "that it was that report and not any reliance upon the seller's skill or judgment that induced the purchase". Thereafter his Honour pointed out that, as far as the shire president was concerned, his evidence was expressly to that effect. Indeed, as his Honour so clearly indicated, there was no evidence whatever that the respondent council, by any servant or agent, had the slightest knowledge of the conversation which had taken place between Bowman and Corney and, therefore, no grounds upon which it could be held that the council, in making the purchase, had relied upon Corney's statements. In passing it should be observed that it is obvious that his Honour's reference to the "council's own engineer" was not intended to characterise Bowman as a servant or agent of the council; the relevant passage is intended to denote only that his Honour thought that the facts established that what the council desired was a report from an engineer of its own selection. (at p289)
7. Upon appeal, neither Owen J. nor Herron J. considered it fatal to the present respondent's case that no person other than Bowman (except of course Corney) had any knowledge of the material conversation. Those learned judges, however, differed somewhat in their approach, firstly, to the question whether the evidence showed that the respondent had made known to the appellant the particular purpose for which the goods were required so as to show that the respondent relied upon the appellant's skill and judgment and, again, to the question whether the respondent had in fact relied upon the appellant's skill and knowledge. Herron J. thought the inference clear that Bowman "was the agent of the council to introduce the question of the purchase of the tractor to the defendant and to initiate the transaction although he was not an agent to purchase the tractor". "It was" he said, "implicit in the instructions given to Mr. Bowman, if it became appropriate that he could interview someone in the position of a salesman for the defendant in order to satisfy himself that the tractor was suitable for the work required by the council" (1958) 3 LGRA, at p 244 . Of course if Bowman was the agent of the council for these purposes there would be little difficulty in the matter and considerable justification might be found for the proposition that Bowman was "authorised to make known to the seller the purpose for which the buyer required the tractor". But the fact is that Bowman was not invested with any authority to represent or act for the respondent; he was an engineer, he was said to have considerable knowledge of earth-moving plant and, since his appointment as shire engineer was imminent and his qualifications were known to the respondent and he happened to be in Sydney at the time, the respondent sought the benefit of his advice in the matter. He was merely asked to inspect the tractor whilst he was in Sydney and to report on it. In his own words he was asked "if he would be so kind as to go and have a look at the tractor". I am quite unable to understand how this request could constitute Bowman an agent of the council for any purpose; it gave him no authority to speak for the council or to engage in discussions concerning, or negotiations with respect to, the purchase of the tractor though, perhaps, if he had reported to the respondent the substance of his conversation with Corney, the initial foundations might have been laid for the assertion that the respondent, in some substantial measure, relied upon the skill and judgment of the appellant. As appears from the evidence Corney thought that he was dealing with the shire engineer and there would be much to be said for the proposition that Corney intended that the substance of the discussion should be passed on to those whose responsibility it was to make the decision to purchase. But this did not occur and, since Bowman did not in any sense represent the council and had no authority to speak or deal on its behalf, it is impossible to conclude that the respondent relied upon the appellant's skill or judgment unless that conclusion ought to be reached upon the line of reasoning which appealed to Owen J. (at p290)
8. Before proceeding to consider that line of reasoning, however, it is convenient to add that the considerations already mentioned are, in my opinion, also sufficient to dispose of the antecedent question whether the respondent made known to the appellant the particular purpose for which the goods were required so as to show that the former relied upon the latter's skill or judgment. The plain fact is that the respondent did not make its purpose known to Corney. What it sought was the benefit of Bowman's knowledge and experience and what steps he took upon the occasion of the inspection to satisfy himself concerning the suitability of the tractor were a matter for his own independent judgment and when he discussed the tractor with Corney he did so on his own behalf and not on behalf of the respondent. (at p291)
9. Each of these conclusions rests ultimately upon the view that the critical discussion did not form part of the "dealings" or "negotiations" of the parties antecedently to or concurrently with the making of the contract and it is, of course, to such dealings or negotiations that s. 19 is directed. I do not, however, understand Herron J. to suggest otherwise. Rather, he took the view that the evidence disclosed that Bowman was invested with authority to act for the respondent in making known its purpose to the appellant. But with respect to the learned judge the evidence falls far short of this. (at p291)
10. In his approach to the problems in the case Owen J. referred to Bowman as
the "agent of the Council to report to it on the capabilities
of the tractor
for road construction work" (1958) 3 LGRA, at p 238 . But his final conclusion
does not depend upon this characterisation
of Bowman. That conclusion he
reached by a series of steps which are set out in his Honour's reasons.
According to his Honour there
were two questions in the case, the first being
whether "Bowman, in making known to Corney the purpose for which the plaintiff
required
the tractor, did so in such a way as to show Corney that reliance was
being placed on his skill and judgment" (1958) 3 LGRA, at p
240 and, the
second, whether the respondent "did in fact rely upon the seller's skill and
judgment when it decided to purchase the
tractor" (1958) 3 LGRA, at p 240 .
The first of these two questions is, however, stated in a form which, to my
mind, tends to obscure
the critical problem. The critical problem was whether
there was a "making known" by the respondent in such a way as to show that
it
relied upon the appellant's skill or judgment. Perhaps in the circumstances of
the case it may be said that the real question
was whether the "making known"
took place in the course of antecedent or concurrent dealings between the
parties and, if so, whether
the circumstances were such as to show that the
respondent relied upon the appellant's skill and judgment in deciding to
purchase
the tractor. The second question his Honour resolved in the following
manner. He said: "It is true, as the learned trial judge said,
that the
plaintiff relied upon its agent Bowman's favourable report, but does that
necessarily end the matter? If that report was
made, as I think it was, in
reliance to a material extent upon Corney's skill and judgment, and the
plaintiff in its turn relied
upon the report, can it not be said that it in
fact purchased in reliance on the skill and judgment of the seller? If Bowman
had
reported to the plaintiff that his favourable opinion of the fitness of
the tractor for road construction work was based in part
on his own inspection
of it and in part on what Corney had told him as to its fitness for that
purpose, and the plaintiff had acted
upon that report, I am of the opinion
that the plaintiff would have been entitled to a verdict on the first count.
The facts, as
I see them, are as follows:-
(1) Corney knew that Bowman was inspecting the tractor on behalf of the
plaintiff which was considering purchasing it. (2) Corney
knew that Bowman was
to make a report to the plaintiff on the suitability of the tractor, for road
construction work. (3) Corney
knew that Bowman, in forming his opinion and
reporting on the suitability of the tractor, was relying to a material extent
on Corney's
skill and judgment. (4) In making his report to the plaintiff,
Bowman did in fact rely to a material extent on Corney's skill and
judgment.
(5) The plaintiff purchased the tractor in reliance on Bowman's report. In
these circumstances I am of opinion that s.
19 (1) operated" (1958) 3 LGRA, at
p 240 . This latter conclusion is not in any way based upon the notion that
Bowman was the agent
or servant of the respondent. It is reached merely by
asserting that because Bowman relied upon Corney's statements in making his
report and, thereafter, the respondent relied upon the report, it must be
taken to have relied upon Corney's skill or judgment. With
respect to Owen J.
I do not agree. The report expressed Bowman's opinion only and it is, in my
opinion, impossible to say that the
respondent, which was not a party to and
had no knowledge of what had passed between Bowman and Corney, relied upon the
skill and
judgment of the latter in deciding upon the purchase. For the
reasons already given I am of the opinion that both of the questions
raised by
Owen J. should have been answered adversely to the respondent. But,
additionally there are reasons for doubting the validity
of some of the
propositions involved in the steps by which the learned judge reached his
conclusion on the second question as stated
by him. Proposition (3) is that
Corney knew that Bowman, in forming his opinion and reporting on the
suitability of the tractor,
was relying to a material extent on Corney's skill
and judgment. I doubt very much if such a conclusion is possible upon the
facts.
No doubt there was considerable discussion between Corney and Bowman
but it does not appear from the evidence that Corney was aware
of the nature
of the report which Bowman proposed to make or that he knew that Bowman -
himself an engineer with considerable experience
of earth-moving equipment -
would rely to any extent upon Corney's skill or judgment. The next proposition
in his Honour's series
of steps is that in making his report to the respondent
Bowman did, in fact, rely to a material extent on Corney's skill and judgment.
Again I doubt whether such a conclusion is possible upon the evidence. The
report which Bowman made was that " . . . he had inspected
the tractor. It
seemed to him to have plenty of horse-power and was big enough for the work we
required". It is, of course, true
that he said that in making this report, he
did rely upon the statements made to him by Corney but the condition for
breach of which
the respondent sought to recover damages was based upon
Corney's alleged assertions that the tractor was reasonably fit for road
construction work and reasonably fit to push a "dozer" blade, to drag a 6-8
yard carry-all scoop and to clear land. It seems to me
that these assertions
cannot fairly be said to have played any part in inducing the report which
Bowman, in fact, made. His report
dealt with his own conclusions based,
apparently, upon a consideration of the horse-power and the size or weight of
the tractor and
not upon the subject matter of the claims which Corney had
made for it. To my mind these constitute additional reasons for thinking
that
the respondent did not make out a case. (at p293)
11. For the reasons given I am of opinion that the appeal should be allowed, the order of the Full Court set aside and that of the trial judge's restored. (at p293)
MENZIES J. The appellant (Dependable Motors) sold the respondent (the council) a Breda 70D crawler type tractor equipped with a cable dozer blade for 6,751 pounds 14s. 0d. When it was discovered that the tractor was not suitable for road work the council brought an action for damages for, inter alia, breach of an implied warranty of reasonable fitness for the purpose of road work, arising, so it was alleged, under s. 19 (1) of the Sale of Goods Act 1923-1953 (N.S.W.). The action was heard by Ferguson J. and at the trial it was admitted that it was in the course of the business of Dependable Motors to supply goods of the description of tractors so equipped and it was not contended that the sale was of a specified article under its trade name. The learned trial judge found that the tractor was not reasonably fit for road work and that the council had made known to Dependable Motors that it required the tractor for that purpose. He found however that it had not done so in such a way as to show that it relied upon the seller's skill or judgment; accordingly he gave judgment for Dependable Motors. From this judgment the council appealed to the Full Court which by a majority (Owen and Herron JJ., Hardie J. dissenting) (1) allowed the appeal and entered judgment for the plaintiff for 4,915 pounds. It is from that judgment that Dependable Motors appeals to the Court. The only question in issue is whether the buyer made known to the seller that it required the tractor for road work so as to show that it relied upon the seller's skill and judgment sufficiently for the purposes of the section. (at p294)
2. The evidence upon this issue was that the council required a heavy tractor
for road work and the shire secretary, A. N. Heywood,
communicated with one
Wilkins of Inverell, who, it seems, was the local agent of Dependable Motors
and from whom Heywood found out
that a Breda tractor could be purchased from
Dependable Motors. Wilkins provided Heywood with one of Dependable Motors'
pamphlets
relating to the Breda tractor and this pamphlet showed it fitted
with a dozer blade. No more is known of what passed between Heywood
and
Wilkins nor is there any evidence of the use that was made of the pamphlet.
Heywood then telephoned some members of the council
including the shire
president, J. R. Black, and on 12th March 1951, in accordance with the
instructions given to him, he telephoned
F. E. Bowman who was then in Sydney
attending the Local Government Engineers' Annual Conference and asked him to
"go to Dependable
Motors and have a look at the tractor and see if he thought
that it was suitable for the work we required." This could not have been
the
whole of the conversation because apart from anything else it is clear that
Heywood gave Bowman the name of Albert Corney as
the man to see at the
premises of Dependable Motors in Parramatta Road but beyond this, what was
said is matter only for speculation.
Bowman was an engineer with experience of
earth moving equipment who had by this time been appointed shire engineer to
the council
but his appointment had not become effective and he was still
employed by another municipality; he did not take up duty with the
council
until early in April. Bowman without loss of time went to the premises of
Dependable Motors and there saw Corney. Bowman's
account of what took place
was that he told Corney that he was there on behalf of the Ashford Shire
Council which he understood was
interested in a tractor that Dependable Motors
had for sale and asked to see it. Corney pointed the tractor out and there was
conversation
in the course of which he told Corney that the tractor was
required for road work with a dozer blade and a scraper scoop, and in
response
to his enquiry whether it would do such work Corney told him that the tractor
was built to do just that sort of work. Corney's
account of what happened was
that Bowman introduced himself as the shire engineer from the Ashford Council
and asked to see a Breda
tractor 70D Model. He was shown the tractor and asked
a number of questions and was given a pamphlet. This was another copy of the
pamphlet that Wilkins had previously given Heywood. Corney's evidence was that
he was not asked whether the tractor was suitable
for road work and that he
did not say that it was, although he gave evidence that he knew it was wanted
for road work, that he believed
it was suitable for road work and had
advertised that it was. It is common ground that part of the conversation
related to getting
a firm called "Brown and Bunyan" to fit a blade to the
tractor. Bowman stated that at the end of the conversation he said "All right,
I will tell the clerk about this view and he will probably send you an order
for the tractor." After this visit Bowman rang Heywood
and Heywood's evidence
of what Bowman said was "He told me that he had inspected the tractor. It
seemed to him to have plenty of
horse-power and was big enough for the work we
required." Heywood then spoke to various members of the council including the
president
and was told to buy the tractor. On 16th March an order from the
council was addressed to Dependable Motors in these terms: "1 Breda
70D
Crawler Tractor equipped with cable dozer but not a P.C.U. as quoted by your
Inverell agent, A.V.C. Wilkins." Dependable Motors
then sent an invoice for
6,745 pounds, made up of two items as follows:-
One New Breda Crawler Tractor Model 70D Serial No. 4942 .. .. .. .. .. ..
.. .. .. .. .. .. 5,915 pounds One Cable controlled
Traibuilder fitted to
Tractor 830
The council paid Dependable Motors 6,751 pounds 14s. 0d. by cheque on 28th
April and received a receipt dated 2nd May. The tractor
equipped with the
cable dozer was delivered to the council by Wilkins in about the middle of
May. (at p295)
3. It is only necessary to add that the shire president gave the following evidence: "Q. Do you remember the Shire Clerk ringing up concerning the possibility of purchasing a Breda tractor? A. Yes. Q. Did you give him certain instructions so far as Mr Bowman was concerned? A. He was to see the tractor. He came down to the Engineers' conference in Sydney and he was to look at the tractor while he was down here and to report on it - to tell us whether it was suitable or not. Q. Subsequent to that conversation with the Shire Clerk did he contact you on the telephone again - subsequent to Mr. Bowman's visit to Mr. Corney? A. I cannot remeber any other subsequent conversation, except that he rang me up at one period and asked for council's - that was a later date, when I asked him to ring council and get their approval. Q. That is what I want? A. He rang me up and I instructed him to ring other councillors. We had a report from Mr Bowman, apparently, that the tractor was suitable for the work which we required it for. Q. Had the shire clerk told you that? A. Yes. I instructed him to ring the other councillors. Those councillors live from 30 to 40 miles apart. It is not possible to call a meeting at all times. We ring them up. When he rang back and said the rest of the councillors were quite in accordance with the buying of the new tractor I instructed the shire clerk to put in a formal order for the tractor. Q. Did you rely on the engineer's report? A. I had nothing else to rely on. Q. Did you rely on it? A. Yes. I did. Q. Was that the reason why you purchased the tractor? A. Yes." (at p296)
4. In Medway Oil and Storage Co. Ltd. v. Silica Gel Corporation (1928) 33 Com Cas 195 , the judgment of the House of Lords delivered by Lord Sumner stresses that actual reliance by a buyer upon the seller's skill or judgment must be proved or inferred. Without this it could not be said that the buyer made known its reliance to the seller; it could not make known something which did not exist. In this case, Ferguson J. said: - "It seems to me that the evidence is more susceptible to the inference that there was no such reliance than that there was". The evidence which the learned judge had in mind in making this observation was not merely the evidence of the shire president quoted earlier but, more importantly, the terms of Bowman's instructions from Heywood and his report to Heywood. As to these latter matters, which I regard as of critical importance, I am ready enough to believe that the evidence is not a complete record of what occurred and I acknowledge the possibility that, in doing what he says he did at Dependable Motors, Bowman did what he was told by Heywood to do. If I could be satisfied that this was the case, I would have no difficulty in concluding both that the council relied upon Dependable Motors and that this reliance was communicated to Dependable Motors when Bowman told Corney the purpose for which the council required a tractor and asked whether the Breda would do such work, because to tell Bowman to find out from Dependable Motors whether the Breda tractor was suitable for the roadwork for which the council required a tractor would be token reliance by the council to some extent upon Dependable Motors. I have, however, come to the conclusion that the evidence does not warrant my substituting such a finding for that of the learned trial judge. Indeed, I agree with him that the evidence, as it stands, points to the inference that the council was relying upon Bowman to the exclusion of Dependable Motors. Nor do I think, having regard to the instructions that the evidence shows he received, is it possible to treat Bowman as part of the council so that his reliance can be regarded as that of the council itself. His job was to inspect and report his own opinion, and that was all. (at p297)
5. It is then necessary to decide whether, because Bowman relied upon what Corney told him, and I have no doubt he did, and the council in turn relied upon Bowman's opinion, that, as the Full Court decided, is sufficient to bring the section into operation. (at p297)
6. As to this, I do not think it is sufficient to bring the case within the section to show that Bowman, in making known to Corney the purpose for which the council required the tractor, did so in such a way as to show Corney that he was relying upon the skill or judgment of the vendor for the purpose of making a report and then to find second-hand reliance by the council upon Dependable Motors by saying that the council, in turn, relied upon Bowman's report. The section, as I read it and understand its exposition in Medway Oil and Storage Co. Ltd. v. Silica Gel Corporation (1928) 33 Com Cas 195 , requires that the seller should have communicated to it not merely that reliance was being placed upon its skill or judgment but that the reliance was that of the buyer, and that this communication should follow from making known to the seller of the buyer's purpose. It is such a communicated reliance by the council that appears to me to be lacking on the evidence as it stands. (at p297)
7. It is for these reasons I would allow the appeal. (at p297)
ORDER
Appeal allowed with costs. Order of the Full Court of the Supreme Court discharged. In lieu thereof order that the appeal to the Full Court of the Supreme Court be dismissed with costs and that the verdict and judgment in the action for the defendant with costs be confirmed.