Rarotonga Rental Ltd v Moore [1998] CKCA 4; CA 6 1997 (10 August 1998)

IN THE COURT OF APPEAL OF THE COOK ISLANDS
HELD AT AUCKLAND

CA 6/97

BETWEEN

RAROTONGA RENTAL LIMITED
a company incorporated at Rarotonga
Appellant

AND

TRAVIS MOORE
of Rarotonga, Company Director
Respondent

Hearing: 16 July 1998

Coram: Sir Maurice Casey
Hillyer J
Dillon J

Counsel: Mr Mitchell for Appellant
Mr Manarangi for Respondent

Judgment: 10 August 1998

JUDGMENT OF THE COURT DELIVERED BY HILLYER J

This is an appeal against a decision of Quilliam CJ given in the High Court of the Cook Islands at Rarotonga on 2 September 1997

The respondent purchased a Lada station wagon from the appellant and took delivery on 13 April 1994. He paid the sum of $14,500 for the vehicle. The statement of claim alleged three causes of action but the parties agreed that there was only one issue in the matter and that is whether the car was of merchantable quality.

Section 16(b) of the Sale of Goods Act 1908 which applies in the Cook Islands is as follows:

"Where goods are bought by description from a seller who deals in goods of that description (whether he is the manufacturer or not), there is an implied condition that the goods shall be of merchantable quality:

Provided that if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed:

The case was heard on 1 September 1997. The transcript of the evidence was not available but counsel have helpfully provided us with an agreed record of evidence. This shows that the car was a new car and that the price paid was $14,500. The respondent took possession of the car on 13 April 1994 and shortly thereafter rust appeared on the car. There was some difference between counsel as to whether the rust appeared on the car within or after 6 months of delivery, but both counsel accepted that the rust appeared "at about 6 months".

The respondent took the car to a representative of the appellant who said the car must have rusted as a result of the car being kept outside and not being regularly cleaned and waxed. The respondent said he did not clean the car but that his wife did and his wife gave evidence that she regularly cleaned and waxed the car.

A quotation was produced from Auto Painters Limited for the cost of dealing with the rust in the sum of $2,650 but this was not obtained until 18 November 1996. It appears that neither party did anything to deal with the rust at that time. The learned Chief Justice at the request of the parties inspected the vehicle and said that there was no doubt that its present (ie 2 September 1997) condition was "appalling". He drew however the inference only, that at the time he inspected the car it would be difficult to accept that a buyer could be found for it for more than a nominal amount. He did comment that it was unfortunate that remedial work was not carried out by either the appellant or the respondent.

He held that because of the very early appearance of the rust there was no escape from the conclusion that there must have been some inherent defect and that the car could not have been of merchantable quality. He said however that that did not mean that the appellant would be liable on the basis of the present condition of the car. He said the respondent was aware of what had happened and was obliged so far as he reasonably could, to minimise his loss. Equally he said that the appellant could when shown the initial rust have taken more positive steps to deal with the problem. It was clear that in Rarotonga the conditions are likely to have a much greater effect on a vehicle than the conditions experienced in New Zealand, but that for rust to have started to appear within such a short time after delivery of the vehicle the respondent must be entitled to some recompense. He came to the conclusion that a proper amount to recompense the respondent would be the sum of $2000 and gave judgment to the respondent for that amount together with costs, disbursements and witness expenses as fixed by the Registrar.

The appellant submitted that there was no proper evidential basis for making a finding that the vehicle was not of merchantable quality. But on the evidence as set out above we are of the view that there was adequate evidence to justify such a finding. The inspection of the vehicle was used by the Chief Justice only to understand the evidence that was given to him as to the condition of the vehicle at the time he saw it. The finding as to merchantable quality was based on the fact that the rust appeared so early.

The appellant submitted that the learned Judge erred in reaching conclusions that were founded on presumptions and assumptions that had no evidential foundation. But in our view there was adequate basis for the findings made.

Counsel for the respondent accepted that the respondent was not seeking damages of $7000 for breach of the condition as to merchantable quality as the learned Chief Justice appeared to believe, but that mistake was not material to the outcome of the case in the High Court.

In all the circumstances we are of the view the decision was a proper one and the appeal is dismissed with costs of $2000 to the respondent to cover appearances in the lower Court and in this Court plus disbursements and witnesses expenses to be fixed by a Registrar.

By the Court

P G Hillyer J