Boxhall v King [2012] QCAT 481

CITATION: Boxhall v King [2012] QCAT 481 PARTIES: Chris Boxhall v Benjamin Lyle King APPLICATION NUMBER: MCDO1274-11 MATTER TYPE: Other minor civil dispute matters HEARING DATE: 16 January 2012 HEARD AT: Brisbane DECISION OF: Jim Allen, Member DELIVERED ON: 27 September 2012 DELIVERED AT: Brisbane ORDERS MADE: 1. The application is dismissed. CATCHWORDS: Minor Civil Dispute – private contract – interstate contract – purchase of second hand car engine – jurisdiction – claim of total failure of consideration Sale of Goods Act 1896 Queensland Civil and Administrative Act 2009 Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256 Schib Packaging Srl v Emrich Industries Pty Ltd [2005] VR 268 Rothenberger Australia Pty Ltd v Lumley General Insurance [2003] NSWC 788 Rowland v Divall [1923] 2 KB 500 Yeoman Credit Ltd v Apps [1962] 2 QB 508 APPEARANCES and REPRESENTATION (if any): APPLICANT: Mr Boxhall appeared in person RESPONDENT: Mr King appeared by telephone REASONS FOR DECISION Introduction -- 1 of 6 -- 2 [1] Mr Boxhall purchased a second hand reconditioned engine from Mr King. Mr King resides in the Northern Territory and the engine was rail freighted to Brisbane. Upon inspection Mr Boxhall was not satisfied with the engine and is now attempting to obtain a refund of the money he paid for it and his costs. Mr Boxhall’s evidence [2] Mr Boxhall purchased a RB26 short engine to be used in his 1990 Nissan GTR Skyline Turbo from Mr King in April 2010 after having seen the engine advertised on an internet forum. Mr Boxhall phoned Mr King and Mr King accepted an offer of $6,300 for the engine. The first instalment was paid on 21 April 2010 and the second of $5,300 on 6 May 2010. [3] There was some engineering work required to the engine and once that was completed Mr King shipped it by rail from Alice Springs in the Northern Territory on 11 May 2010 for delivery to Mr Boxhall‟s mechanic, Allstar Tuning in Brisbane. The engine arrived on 19 May 2010. [4] Mr Boxhall stated in his application that the engine arrived wrapped in a tarp and not shrink wrapped as had been promised by Mr King and that dirt and grime had gotten in to the bottom end in transit. This was confirmed by Mr Boxhall‟s mechanic, Mr Chaseling, who stated that it was covered in dust and had to be disassembled. Mr King denies this and stated that he witnessed the engine being prepared and that it was wrapped in clear plastic shrink wrap, then black industrial plastic and then a tarp. [5] Mr Chaseling stated that when disassembled the engine was found to have dirt in it. There were also found to be cracks in the engine block water jacket area; the ring gaps were not to the manufacturer‟s specifications and the bearings had been assembled with dirt in them. The crank shaft was sent away for testing and there was found to be a hairline crack in the journal. There needed to be a replacement crankshaft. The engine block also had a sleeve in one cylinder which would usually be ok but not in the case of an engine of this type. [6] Mr Chaseling advised Mr Boxhall that this was a high-torque high powered engine and he should not use the engine block for what he wanted to do. He said he would not install the engine in any vehicle. The dirt and grime were too much trouble. He said that the block and crank shaft were scrap though the pistons and conrods were brand new and could be re-used. [7] Mr Boxhall stated that after he had received this advice from Mr Chaseling he called Mr King and told him about the faults and requested his money back as the part was no good and cannot be used. Mr King is quoted as saying “No it is all bullshit and there‟s no chance you will get your money back.” Mr Boxhall states that he has not been able to get Mr King to answer or return his calls since that conversation. [8] Mr King stated that Mr Boxhall made one attempt to contact him some time after the sale. Mr King states that Mr Boxhall was told that the -- 2 of 6 -- 3 allegations regarding the short motor were not believed and that a refund/return was not part of the agreed verbal sale conditions. Since that conversation no contact has been attempted by Mr Boxhall either written or verbal. [9] Mr Boxhall confirmed that the engine has not been re-assembled. He has some parts of the engine at home and some are with Allstar Tuning. [10] Mr Boxhall is claiming a refund of the amount of $6,300; the costs to disassemble and clean the engine of $665; an engineering report for the block $135; a crack test report for the crankshaft $70 and the filing fee of $92. A total of $7,349. Mr Boxhall produced an invoice from Allstar Tuning in respect of the amounts claimed. Mr King’s evidence [11] Mr King asked that the Tribunal dismiss the application as there was no way to prove the allegations 11 months after the sale of the second-hand item between two individuals in different states/territories. He contended that the Tribunal could only deal with sales made in Queensland. Here the sale was in the Northern Territory. [12] He stated at the hearing that if there was contamination on the freight train he is not responsible. The freight cost from Alice Springs to Brisbane was $3,000. The block and crank was assessed by engineers at Rick Corbett Engineering. The crankshaft and block were second hand and at no time was mentioned to the buyer as new. The crank shaft was tested and x- rayed prior to the rebore. The engineers have no report of the crank being bent or the block being cracked. New bearings pistons/rings and conrods were used in the assembly. [13] The ring gaps were within CP piston tolerances, and the buyer was never informed that they would be the same or standard. The bearing sizes were not standard size as the crank was machined and bigger bearings used. The bores were not scored as a rebore to 87mm which removes all scores was performed by Rick Corbett engineers. The block/short motor was assembled by a qualified mechanic with over 40 years‟ experience. [14] Mr King was concerned that there is no way to prove that if in fact any damage is present it was not the direct result of Mr Boxhall or mechanics on behalf of Mr Boxhall. He contended that once disassembly by Mr Boxhall proceeded, then this is out of the original assembler and owner‟s control. [15] No warranty was ever mentioned or implied as although some new parts were used in the assembly, the short engine sold was still regarded as a second hand item, and sold as is. He had sold a reconditioned short engine as a private seller. He was an electrician by trade and not a qualified mechanic. Mr Boxhall agreed at the hearing that there was no warranty on the engine and that he did not see Mr King as a business person. [16] Mr King stated that there was no formal written contract agreed upon and the contract was all verbally arranged. This included sale price, shipping arrangements item part assembly / specifics and return / refund -- 3 of 6 -- 4 arrangement. As a private sale of a second hand item a „buyer beware‟ attitude should have been adopted by Mr Boxhall. [17] At the hearing Mr King confirmed that there was no way he was going to take the engine back once it was disassembled. Mr Boxhall did not reassemble engine so he can‟t return it. [18] Mr King stated at the hearing that the piston rings and conrods were worth over $3,000. Mr Boxhall agreed that he could re-use the pistons and conrods which were in a secure place and he would need another block and crankshaft. [19] Mr Boxhall considered that a new block would cost $2,700 and a second hand one between $500 to $1,000. The crankshaft would cost $2,700 new and second hand would cost $500. The pistons were worth $1,500 and the conrods $2,500. Both parties agreed that the value of the serviceable engine parts was $4,000. Jurisdiction and legal basis of claim [20] Mr King has alleged that the contract in this case was made in the Northern Territory and that the Tribunal has no jurisdiction. Under contract law principles his advertisement on the internet forum would constitute an invitation to treat1, that is an invitation for another to make an offer. In this case Mr Boxhall offered to purchase the engine and that offer was accepted by Mr King. [21] This all occurred over the telephone and the contract is formed when and where the offeror receives communication of the acceptance2, that is in Queensland as Mr Boxhall, the offeror, resides in Queensland. A claim can then be made in Queensland in respect of the matter. [22] The Tribunal has original jurisdiction in regard to minor civil disputes3 its other jurisdictions are those given to it by enabling Acts4. There is no enabling Act which gives jurisdiction in relation to a contractual dispute of this nature. [23] Minor civil dispute is defined to include: a) A claim to recover a debt or liquidated demand; and b) A claim arising out of a contract between a consumer and trader, or a contract between two or more traders5. [24] Mr Boxhall accepted at the hearing that Mr King was not acting as a business person for the purpose of the contract and so the claim cannot be made on the basis of it being a dispute between a consumer and trader6 as defined in the Act. [25] While there is no debt owing by Mr King to Mr Boxhall the question then is whether the claim can be characterised as one involving a liquidated 1 Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256. 2 Schib Packaging Srl v Emrich Industries Pty Ltd [2005] VR 268 at 272. 3 Section 11 of the Queensland Civil and Administrative Tribunal Act 2009. 4 Sections 6 and 9 of the Queensland Civil and Administrative Tribunal Act 2009. 5 Schedule 3 Dictionary of the Queensland Civil and Administrative Tribunal Act 2009. 6 Schedule 3 Dictionary of the Queensland Civil and Administrative Tribunal Act 2009. -- 4 of 6 -- 5 demand. In regard to a liquidated demand it has been held that “anything other than a debt recovered upon a “liquidated demand” is “liquidated damages”…where in Scholl’s J’s words, “the claim was for a specific amount, not involving the calculation thereof elements the selection whereof was dependant upon the opinion of the jury. The relevant distinction, in my view, is that between agreed compensation calculated and quantified in a way specified in or ascertainable from the contract itself and damages to be assessed according to the ordinary principles for determining damages for breach of contract”7. [26] In this case Mr King is claiming a full refund of the amount paid for the engine, that is $6,300, on the basis that the faulty part is of no use to him. It is clear that if the Tribunal holds Mr Boxhall is entitled to his refund that the amount of the claim would be $6,300.00, on its face that appears to represent a liquidated amount. [27] Is it possible though that Mr Boxhall may be entitled to a lesser amount which would have to be calculated as unliquidated damages? [28] This will depend on the basis upon which Mr Boxhall may have an entitlement to recover. In this case both parties have agreed that there was no warranty given by Mr King in regard to the engine. There are then two bases for the claim either a statutory warranty or a claim for total failure of consideration. [29] The applicable statute is the Sale of Goods Act 18968 which has implied conditions as to sale by description9 and quality or fitness10. While it may be arguable that the goods in this case have not met their description the implied condition as to quality or fitness only apply where the goods have been supplied in the course of the seller‟s business which is not the case here. [30] The implied condition as to description may have been of some assistance to Mr Boxhall but where as in this case Mr Boxhall has disassembled the engine he is deemed to have accepted it11 and is not entitled to a remedy under that implied condition. [31] The applicable claim is then for total failure of consideration. This type of claim is premised on the fact that Mr Boxhall has received no consideration for his or her payment. There are two cases which illustrate this type of claim. In Rowland v Divall12 a motor vehicle was purchased and used for several months. It later became apparent that the person that had sold the vehicle did not have title to it and so had no right to sell and the buyer was forced to return it to its true owner. The buyer succeeded in recovering the purchase price as he did not receive any part 7 Rothenberger Australia Pty Ltd v Lumley General Insurance Limited [2003] NSWC 788 at para 19. 8 Fair Trading Act 1989 has no applicable provisions and the Australian Consumer Law does not apply where the goods have not been supplied in trade or commerce. 9 Section 16 of the Sale of Goods Act 1896. 10 Section 17 of the Sale of Goods Act 1896. 11 Section 37 of the Sale of Goods Act 1896. 12 [1923] 2 KB 500. -- 5 of 6 -- 6 of what he had bargained for, that is the property and the right to possession. [32] By contrast in Yeoman Credit Ltd v Apps13 where a motor vehicle was found to be so unsafe and unroadworthy that the seller was in fundamental breach of the contract and could not rely on a clause in the contract excluding liability in regard to the condition of the motor vehicle. Despite this the buyer could not succeed because there was no total failure of consideration as the buyer had possession of the car, used the car and effected repairs to it. [33] The Tribunal is satisfied that it has jurisdiction to hear the application on the basis that it is claim for total failure of consideration and if Mr Boxhall succeeds then he is entitled to a refund of the amount that he paid for the engine and as that amount is certain it is a liquidated demand. [34] The Tribunal notes that in the circumstances of a claim between two consumers where there was no warranty given in regard to the goods that there is no other claim which is available to Mr Boxhall in contract law or under any Act. Order [35] As a consequence of this while the Tribunal has jurisdiction it is clear on Mr Boxhall‟s own evidence that he has parts which have been salvaged from the engine and which both parties agree have a value of $4,000.00. [36] On this basis there has been no total failure of consideration and the application must be dismissed. 13 [1962] 2 QB 508. -- 6 of 6 --