Pat O'Donnell & Company Ltd v Truck and Machinery Sales Ltd

JurisdictionIreland
JudgeLynch J.,BARRON J.
Judgment Date01 April 1998
Neutral Citation1998 WJSC-SC 11287
Docket Number[S.C. Nos. 418 of 1995, 179 and 197 of 1996],418/95
CourtSupreme Court
Date01 April 1998

1998 WJSC-SC 11287

THE SUPREME COURT

O'Flaherty J.,

Lynch J.,

Barron J.,

418/95
179/96
197/96
O'DONNELL & COMPANY LTD v. TRUCK & MACHINERY SALES LTD
AN CHUIRT UACHTARACH
PAT O'DONNELL AND COMPANY LIMITED
Plaintiff/Appellant
.V.
TRUCK AND MACHINERY SALES LIMITED
Defendant/Respondent

Citations:

SALE OF GOODS ACT 1893 S14

SALE OF GOODS & SUPPLY OF SERVICES ACT 1980 S45

KENNEDY V AIB PLC UNREP SUPREME 29.10.1996

HENDERSON V MERRETT 1995 2 AC 145

CENTRAL TRUST CO V RAFUSE 1986 31 DLR 4d 481

BRYAN V MALONEY 1995 182 CLR 609

ALUMINIUM PRODUCTS (QUEENSLAND) PTY LTD V HILL 1981 QD R 33

MACPHERSON & KELLY V KEVIN J PRUNTY & ASSOCIATES 1983 1 VR 573

ROWLANDS V COLLOW 1992 1 NZLR 178

FLEMING LAW OF TORTS 8ED 187

PROSSER & KEETON LAW OF TORTS (1984) 444

FINLAY V MURTAGH 1979 IR 249

DONOGHUE V STEVENSON 1932 AC 562

HEDLEY BYRNE & CO LTD V HELLER & PARTNERS LTD 1964 AC 465

SECURITIES TRUST LTD V HUGH MOORE & ALEXANDER LTD 1964 IR 417

ESSO PETROLEUM CO LTD V MARDON 1976 2 AER 5

DOOLAN V MURRAY UNREP KEANE 21.12.1993 1994/2/414

SALE OF GOODS & SUPPLY OF SERVICES ACT 1980 S10

DUNLOP PNEUMATIC TYRE CO LTD V NEW GARAGE & MOTOR CO LTD 1915 AC 79

HEYNES V DIXON; DIXON, IN RE 1900 2 CH 561

REYNOLDS V PITT 1812 19 VES 134

BRIDGE V CAMPBELL DISCOUNT CO LTD 1962 1 AER 385

LONDON CHATHAM & DOVER RAILWAY CO V SOUTH EASTERN RAILWAY 1893 AC 429

GOODCHAP V ROBERTS, ROBERTS, IN RE 14 CH D 49

ECONOMIC LIFE ASSURANCE SOCIETY V USBORNE 1902 AC 147

LAW V ROBERTS (NO 2) 1964 IR 306

WALLINGFORD V MUTUAL SOCIETY LR 5 HL 685

INTERMEDIATE LTD V SMITH UNREP CA 22.3.1991 (UK)

Synopsis

Contract Law

Contract; sale of goods; misrepresentation; contractual interest; representation as to quality of goods; whether representation constituted negligent or statutory misrepresentation; whether silence could constitute misrepresentation; whether concurrent remedies available in contract and tort; whether clause providing for interest on overdue payments an unenforceable penalty clause; whether interest rate in excess of subsisting commercial rate; s. 14 Sale of Goods Act, 1893; s. 45 Sale of Goods and Supply of Services Act, 1980 Held: Representation as to quality of goods did not constitute negligent or statutory misrepresentation; interest rate in excess of subsisting commercial rate; matter remitted to High Court to assess commercial rate subsisting at time of breach O'Donnell & Company Ltd. v. Truck & Machinery Sales Ltd. - Supreme Court: O'Flaherty J., Lynch J., Barron J. - 01/04/1998 - [1998] 4 IR 191

1

Judgment delivered on the 1st day of April, 1998, by O'Flaherty J.

2

In the judgment which he is about to deliver Lynch J. will claborate on the background facts to this litigation. I agree with his reasoning and his conclusion that there is no basis for allowing the defendant company's counterclaim.

3

However, I would wish to comment to some extent on such issues of law as are discernible in the litigation and for that purpose I will set forth the bare essentials of the case so as to provide some background information though, of course, resort should be had to Lynch J.'s Judgment for a fuller exposition of the matters in debate.

4

The two protagonists in the litigation are Mr. O'Donnell, managing director of the plaintiff company, Pat O'Donnell and Company Limited,andMr. Mansfield, managing director of the defendant company, Truck and Machinery Sales Limited. For ease of narrative, I shall simply refer to the two gentlemen in question without involving their respective companies unduly. Both are extremely experienced as regards heavy duty machinery. One as a salesman; the other as a hirer and seller of suchmachinery.

5

This case is concerned with mechanical shovels.

6

In 1991, Mr. Mansfield was having trouble with cleven shovels that he had bought from the Zettelmeyer company. Mr. Mansfield wanted to be rid of these shovels and at that time Volvo was developing a shovel called the L150 which they hoped would rival the market leader in the field, the American Caterpillar 966. Mr. O'Donnell had the franchise in this country for the safe of Volvo shovels and he was particularly taken with the L150 and set out to promote it actively.

7

Mr. Mansfield was prepared to deal with him if he could swap his eleven Zettelmeyers for eleven new L150's. He then pledged that he would take an additional nine L150s at the price of £100,000 each. It was common case. I think, that he was probably paying something over the odds at £100,000, but since he was getting a good deal on a straight swap for the moribund Zettelmeyers, both parties werehappy.

8

At this stage Volvo had taken over the Zettelmeyer company and wanted to be rid of the litigation brought by Mr. Mansfield that was pending against the latter company. In effect, Mr. O'Donnell acted as an honest broker to bring about an amicable resolution to all matters in dispute. It is important to emphasise, however, that he was not acting as an agent for Volvo in this transaction.

9

Ultimately, an agreement was drawn up providing for the settlement of the litigation as well as the swap and purchase of the respective shovels - the consent is reproduced in Lynch J.'s judgment.

10

The trial judge found that there had been no breach of the implied conditions and warranties under the Sale of Goods Act, 1893, as amended by the Sale of Goods and Supply of Services Act, 1980. The goods were of merchantable quality and were reasonably fit for the purpose for which they were required: so he held and he had evidence for so holding. And, of course, no breach of any express term of the agreement as embodied in the consent had ever been alleged.

11

But the judge did find some fault on Mr. O'Donnell's part in relation to the pre-contractual discussions that were held between the parties. It appears that these conversations were very brief indeed. The thing that was paramount in the minds of both parties, and as so held by the trial judge, was the need tobe shut of the problems created by the Zettelmeyer shovels. But something that was also prominent in Mr. Mansfield's considerations was the fact that the L150 had a smaller wheel than suited him. He wanted a larger wheel on the machines than that provided for in the specifications. One that would be the same size as the Caterpillar 966 and, thus equipped, the machine could command a higher rental. He asked Mr. O'Donnell to check with Volvo. whether the larger wheel could be fitted. There is no doubt that Mr. O'Donnell did check with Volvo. When they met again, as to what was said, the accounts diverge. Mr. O'Donnell gave evidence that, on Volvo's advice, he discouraged Mr. Mansfield from having the larger wheel fitted. It did not suit the specifications of this model, but he said that Mr. Mansfield was determined to have the larger wheel. Mr. Mansfield's account of what Mr. O'Donnell said to him at this meeting, which was held on the 12th February, 1992, was that he had good news and bad news for him. The good news was that, yes, the larger wheel could be fitted alright but the bad news was that Mr. Mansfield would have to pay more. Mr. Mansfield stuck to his position that he was not going to pay more than £100,000 per machine and, with that, the parties shook hands on the deal. He denied that Mr. O'Donnell had actively discouraged him from having the larger wheel fitted though he did agree that Mr. O'Donnell was pressing him to take delivery of the L150s in stages. He thought the motive forthis was that since the larger wheels costed more - and since he was sticking to his position that he would not pay more than he had agreed, viz. £100,000 for each shovel - he should be discouraged from insisting on the modified versions.

12

While the trial judge rejected much of Mr. Mansfield's evidence, he appears to have held that his evidence had a measure of credibility in relation to the discourse had at this meeting. I find this surprising because, aside from the judge's finding against Mr. Mansfield's evidence on most issues, Mr. Mansfield himself in evidence gave a good account of Mr. O'Donnell's credibility. He said he always found him a man of his word and that he would be surprised if he represented something as having been said, if it had not been said.

13

There is no doubt that Mr. O'Donnell from the start had represented that the L150 was as good as, or in some ways better than, the Caterpillar 966. But it is clear that in fact this is so. It was conceded by Mr. Mansfield that the L150 did some jobs better than the Caterpillar. He appreciated that with the larger wheel it was less efficient in traction and breakout force in quarrying. That eight of the machines were destined for Dubai and ultimate sale to the Pakistan Army, and which lead to much of the trouble culminating in this litigation, is not in doubt. The amount of quarrying that they might be expected to do for the Pakistan Army was not explored in the course of the litigation. Thejudgefound that Mr. Mansfield was an accomplished and experienced businessman who was able to recall in evidence that he had purchased £10million worth of equipment in the Falkland Islands (this without ever having had it inspected); he went on to say:-

"He was well versed in the practicalities of mechanical shovels. He insisted on the relatively radical departure from the then standard specification for his own commercial reasons, in the knowledge that it must to some degree impact negatively upon performance, albeit not to the extent of general sluggishness."

14

Nevertheless the judge resolved the pre-contractual aspect of the matter by saying:-

"I am inclined to the view that no serious or adequate warning was given by or on behalf of the vendors with regard to the unsuitability of larger tyres for the existing specification."

15

But it is clear from his evidence that Mr. Mansfield was placing the blame for getting machines with wheels and tyres which he said...

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