Pacific Western Equipment Incorporated v Dillingham Construction (Queensland) Proprietary Ltd [1979] FijiLawRp 34; [1979] 25 FLR 99 (11 January 1979)

[1979] 25 FLR 99

 

IN THE SUPREME COURT OF FIJI

 

PACIFIC WESTERN EQUIPMENT INCORPORATED

 

v.

 

DILLINGHAM CONSTRUCTION (QUEENSLAND) PROPRIETARY LTD

 

[SUPREME COURT Kermode, J., 11 January 1979]
Civil Jurisdiction

 

Contract - Fundamental breaches - test of repudiation - accepted - damages
 
Newman Q.C. with V. Parmanandam for the Plaintiff
Bainton Q.C. with M. Johnson for the Defendant
 
Plaintiff sued for damages for breach of contract in relation to the sale to it by the defendant of certain earth moving equipment and spare parts therefore for $875,000.
 
After the contract was entered into, Petersen (the plaintiff s senior executive) told Williams who represented the defendant that he proposed reselling some of the equipment to persons at a profit. One such purchaser was Merriman who did not finally receive any of the equipment because, according to Petersen, the defendant, kept changing the dates of availability.
 
Generally speaking the items were to be available at many times, as their use by the defendant in construction the highway from Suva to Nadi was no longer required i.e. as the project approached completion, so that they could have been released by the defendant as intended and sold.
 
There were originally 42 items of plant to be available at various dates. Each had a price attached to it making up part of the purchase pace total of $875,000.
 
The plaintiff as the defendant knew, proposed selling the equipment as and when it could. This meant that the available dates were of great significance.
 
If an item to be sold was promised to be available on a specific date and the plaintiff arranged to sell it relying on that date, and the date was not met, plaintiff would have difficulty with its own purchaser, to whom it had undertaken delivery.
 
The Court made findings as to the interpretation of the contract including:
 

“available” in certain schedules of equipment to be sold to the plaintiff meant available for release or delivery.

 
If the plaintiff had first paid for any equipment before a stated release date, the defendant would have been committed to deliver that equipment on that date.
 
The defendant was not committed to deliver equipment until paid for and then only when the plaintiff was ready to ship.
 
Plaintiff was not legally obliged to take delivery on the defendant’s stated delivery dates but defendant was obliged to deliver the equipment on or after those dates, provided plaintiff had first paid for them.
 
The defendant did contract to hold the items in schedules mentioned available for release to the plaintiff on the dates there indicated; these were firm availability dates.
 
Held: Defendant was in breach of contract when it altered or did not adhere to delivery dates. Plaintiff did not acquiescence in this.
 
Also the defendant was in breach of its contractual obligation to maintain the equipment (to be sold) in accordance with its own 1977 standard.
 
Defendant repudiated the contract when by conduct it was clear it did not intend to honour this obligation in it.
 
The breaches regarding availability dates and maintenance were of conditions, fundamental, and entitling plaintiff treat the contract as discharged.
 
Defendant did not after breach affirm the contract but made it clear was no longer prepared to be bound by it and intended seeking damages. He elected to treat the contract as cancelled.
 
The trial Judge referred to difficulties in fixing damages, due to lack of evidence. There was no acceptable evidence of the market value of the equipment if maintained.
 
The only way in the circumstances referred to in evidence to fix damages was to assess a reasonable percentage of profit based on the contract price of the unsold equipment.
 
A fair return to the plaintiff was 15% on the balance of the equipment to be purchased for $670,000, i.e. approximately $100,000.
 
Judgment for the plaintiff for $100,000. Counterclaim dismissed.
 
Cases referred to:

 

Tramways Advertising Pty. Ltd., v. Luna Park (NSW) Ltd.  (1938) 38 S.R. N.S.W. 632.

Associated Newspapers, Ltd. v. Banks  (1951) 83 C.L.R. 332.

Hong Kong Fir Shipping Co., Ltd. v. Kawasaki Kisen Kaisha, Ltd. (1962) 2 Q.B. 26.

Suisse Atlantique d’Armement Maritime S.A. v. N.V. Rotterdamsche Kolem Centrale  (1966) 2 All E.R. 61.

Scarf & Jardine  (1882) 7 App. Cas. 345.

Heyman v. Darwins Ltd.  (1942) 2 A.C. 356.

W.L. Thompson. Ltd. v. Robinson (Gunmakers) Ltd. (1955) Ch. 177.

Hadley v. Baxendale  9 Ex. 341.

Patrick v. Russo-British Grain Export Co. (1927) L.R. 235.

Hammond v. Bussey  (1988) 20 Q.B.D. 79.

Household Machines, Ltd. v. Cosmos Exporters, Ltd. (1947) 1 K.B. 217.
 
KERMODE, J.
 

JUDGMENT

 
In this action the plaintiff is seeking damages from the defendant for breach of contract. The defendant by way of counterclaim is also seeking damages alleging the plaintiff repudiated the contract.
 
The contract was for sale by the defendant to the plaintiff of some 42 items of used earthmoving equipment for $875,000 and spare parts pertaining to such equipment, at cost price to the defendant. There is some doubt as to the precise date the contract was in fact entered into but, since it is not disputed that the parties entered into a valid binding contract, the precise date is not material. There is also some doubt as to whether the contract was legally entered into in Fiji or America, but I do not consider it necessary to resolve such doubt, I treat the contract as having been entered into in Fiji, which is where the defendant in its defence contends it was entered into.
 
Mr. Newman Q.C. and with him Mr. Parmandam appeared for the plaintiff and Mr. Bainton Q.C with Mr. Miles Johnson for the defendant.
 
The hearing, which was originally estimated to take 3 days, took 26 days to conclude and this had its effect on junior counsel. Mr. Newman was often without the assistance of his junior as was Mr. Bainton to a much lesser extent towards the end of the hearing.
 
I propose to first set out the background to the dispute between the parties, which necessitates reference to matters that occurred before the contract was entered into.
 
The plaintiff, whom I shall hereinafter refer to as PWE, is a American based firm of which Mr. Howard Petersen is the president and sole shareholder, PWE are international dealers in used logging and construction equipment. Most of PWE’s sales were to dealers in such used equipment but a small percentage of their sales were to end users.
 
The defendant, whom I shall hereinafter refer to as DWG, is a consortium of three overseas firm engaged by the Fiji Government to construct the Suva/Nadi Highway. For the construction of the highway DWG had assembled a large quantity of earthmoving equipment.
 
When PWE and DWG entered into the contract, about June, 1977, DWG was then engaged on the third and last stage of the highway. Up to the end of 1976 DWG had sold some equipment considered surplus to DWG’s requirements. Mr. Williams, DWG’s administration manager, handled those sales for DWG as he did the sale to PWE.
 
It is convenient at this stage to state and find as a fact that there is no dispute that DWG was at all relevant times aware that PWE was a dealer in used earthmoving equipment and was purchasing the equipment with a view to reselling it at a profit.
 
Early in 1977 the construction of the last stage of the highway had reached the state when DWG considered it could plan for the disposal of all its equipment progressively as and when such equipment became surplus to requirements. Mr. Williams was given the task of planning and effecting the sale of this equipment
 
Purely for the purposes of brevity, I will hereafter refer to Mr. Petersen and Williams and similarly with other named persons after the initial references to their names.
 
Williams, between the 14^th January and 5^th May 1977, wrote 3 letters to Carpenters Tractor and Equipment Ltd a Fiji Company (Exhibits GGG 1,2 and 3). In GGG 2 he advised that company he was preparing a schedule of all DWG’s construction equipment “showing sale prices and likely availability”. With GGG 3 he forwarded that schedule and stated in the letter:
 

“Please note the hours and availability dates given in this schedule are indicative only”.
 
Although the schedule attached to GGG 3 had a column headed “available” showing each item of the Caterpillar equipment as being either immediately available or as stated month and year, Williams’ correspondence indicates the availability dates may not have been firm dates.
 
A copy of this schedule was one of the schedules given by Williams to Petersen some three weeks later, but no letter was then given to Petersen which would indicate to him that the availability dates were not firm dates. DWG relies on Exhibits GGG 2 and GGG 3 and what was said by Williams and MR Clark, DWG’s project manager, to Petersen on 28^th May 1977 in support of their contention that it was made clear to Petersen before he made his offer that the dates were probable or approximate dates only.
 
I do not accept GGG 2 and 3 as evidence that DWG, who had made it apparent to Carpenters three weeks before negotiating with Petersen that the dates they had given Carpenters were not firm dates, must have acted consistently and likewise made it clear to Petersen that the dates were not firm dates. What I have to determine on this issue is what was in fact discussed and understood by the parties before Petersen made his offer for the equipment.
 
Carpenters are Caterpillar equipment dealers and was the only company in Fiji likely to be interested in DWG’s equipment. DWG’s asking price as $1,202,500, but DWG was prepared to give a discount of 15% for bulk purchase. Carpenters were not interested in the equipment and it must have then been apparent to Williams that only an overseas international dealer would be interested. He had previously sent a list of DWG’s equipment to a Mr. Thom of Dillingham Corporation of Australia advising Thom the equipment would become available progressively from June, 1977 onwards.
 
Thom made up a list of equipment said to be available from various sites which he sent with a letter to a Mr. Schriefer of Hawaiian Dredging Company in Honolulu. This company is a subsidiary of the Dillingham Group and a Mr. Bajadali was connected with that company. The letter (Ex. K) stated the equipment listed was available for disposal. Neither the letter nor the schedule attached to it, on which the Fiji equipment is listed, reflects Williams’ advice to Thom that the Fiji equipment would be available progressively from June, 1977 onwards. Bajadali was in contract with Petersen and informed him of the availability of the Fiji equipment, and the outcome of this advice resulted in both of them coming to Fiji on the 28^th May 1977 to inspect the equipment. PWE is not a large firm with large financial resources. If PWE did purchase the Fiji equipment it would need to find about one million dollars. Before coming to Fiji Petersen made arrangements while in Japan for $1,000,000 finance to be available if required. The information he then had was that all the equipment was available, but he learned when he came to Fiji that the equipment would be progressively available over a period of about one year. He decided the spread of availability dates made it possible for him to finance the propose transaction himself without the Japanese finance.
 
Petersen and Bajadali on their May visit inspected most of the equipment on their way from Nadi to Suva and noted the condition of the equipment and the work on which it was engaged. They met up with Williams on the 28^th May 1977 who took them on a tour of inspection returning to Fisherman’s Lodge, DWG’s headquarters, about noon that day.
 
Petersen said he was given a copy of Exhibit N, which is a copy of the schedule attached to GGG 3, by Williams. Williams says Petersen was given one or more of Exhibits 13, 14 and 15. It appears to me likely that he was given copies of all three. Exhibit 13 is a copy of Exhibit N. Exhibit 14 and 15 have a list of equipment including Hyster Compactors and P & H Cranes, equipment not listed on Exhibits N or 13 and which Petersen agreed to purchase.
 
Exhibits 13, 14 and 15 all have a column marked "Available" with a month and year (1977 or 1978) against each items of equipment.
 
Petersen said most of the discussion with Williams in Williams' office on the 28^th May 1977 before going into lunch at Fisherman’s lodge and that, before going into lunch where they met Clark, he had made a verbal offer of $875,000 for the purchase of 42 items of equipment.
 
A Mr. Simonson came to Fiji in November 1977 and Petersen said he sold him item 12 which was never made available to Petersen.
 
Peterson left Fiji and went to Singapore where he met Elwood and renegotiated the sale of the six graders. The November list showed that grader 180 was to be available on 31 December 1977. There is abundant evidence which I accept, that DWG never made item 180 available.
 
Williams was specifically advised by Petersen of the amended deal with Emeco by letter dated 12^th December 1977 (Ex. G). He referred in that letter to the contractual arrangement for specified release dates and he asked for ‘substantive remuneration’ or in other words compensation.
 
On 21 December 1977 Petersen wrote to Hawaiian Dredging Company after a discussion he had had with a Mr. Lee of that firm (Ex. YY). He set out his problems in that letter and was seeking assistance in obtaining a reduced price on the remaining DWG items.
 
The last schedule in Ex. YY indicates Petersen was seeking to claim $197,300 by way of rental for extended use of the equipment beyond the original specified release dates. This sum approximates the $200,000 Petersen in January 1978 sought to have taken off the purchase price in discussion he then had with DWG. This claim to a rental is apparently not unusual with equipment dealers. Ex. 9(14) written by Tractor Singapore to Emeco complaining about delay in delivery of two graders had sold to Emeco also mentions $5000 rental a month for usage of the tractors beyond the contractual delivery dates.
 
Exhibit UU are some notes that Petersen made at a meeting with Williams on 18 November 1977. Very little was said in evidence about these notes or the contents thereof. I accept only that Williams and Petersen did discuss delivery of about 13 items for shipment on the Hobart Star early in November 1978 and that they would be tidied up before delivery as other evidence discloses DWG did get  eleven items ready for shipment on that vessel and deliver them to Carpenters yard.
 
On the 13^th January, 1978 Petersen came to Fiji and inspected these 11 items in Carpenters yard. Petersen said he was shocked by the appearance of the equipment and he was of the view that DWG was in breach of its contractual obligation to maintain the equipment pending delivery to him. This is a matter I have to fully consider later in the judgment. He complained both to Clark and Williams who denied any breach of contract by DWG.
 
Amongst other things said by Petersen at the time was that his balance debt should be reduced by at least $200,000 which he considered generous. DWG rejected his suggestion.
 
At Petersen’s suggestion a meeting between the parties was held in Messrs. Cromptons’ office on the 21^st January 1978. This was a “without prejudice” meeting but during the hearing of this action both parties agreed to waive privilege and DWG’s notes of that meeting were introduced into evidence (Ex. WW). No settlement of the dispute resulted from this meeting and on 26 January 1978 PWE commenced this action. There is one other matter which is of some relevancy.
 
Prior to the meeting in Cromptons office Petersen wrote letter (Ex. J) on the 18^th January 1978 which he handed to Williams. He made therein an offer to purchase the balance of the equipment on different terms for US$500,000 an intimated that if the offer was not accepted it would be better if DWG resold the equipment and that PWE seek damages. Williams admitted that Petersen when handing him Exhibit J made it clear that he, Petersen, was not carrying on with the contract. The offer was not accepted.
 
The foregoing is broadly the background to the dispute but before considering and determining the nature of the contract between the parties it is necessary to explain the reasons for DWG changing the original schedule or schedules.
 
I referred earlier to DWG’s contract for the construction of the Suva/Nadi Highway and the fact that the stage had been reached when DWG was considering the ultimate disposal of its remaining equipment.
 
DWG put in evidence a document (Ex. 65) relating to section II of the Highway Contract, that is the last stage from Suva to Deuba. Ex:65 is of assistance as it fully describes the status of the Project as at 28^th May 1977 when Petersen made his written offer to purchase the equipment. It is apparent from Ex. 65 that there still remained a considerable amount of work to be done to complete section III which would require utilisation of most of DWG’s earthmoving equipment.
 
With the tender to the Fiji Government DWG had submitted a construction programme. This was current in May 1977. A photocopy was admitted in evidence Ex. 66. Exhibit 66 is a detailed programme showing dates work was to be done and the specific items of equipment to be used for such work. It indicates ,that section III would be substantially completed by 30 March 1978. This programme was used by DWG to decide when equipment could be released and was used to compile the original schedules of equipment showing availability dates.
 
At the time the first schedule of equipment was prepared DWG must have thoroughly considered the programme for the remainder of the work. Being competent and experienced engineers with several years of experience of local conditions gained while completing the earlier stages of the highway contract it can be assumed that the programme DWG had drawn up made due allowances for foreseeable factors which might delay completion.
 
Exhibit 67 indicates however, that there were factors which were not foreseen or fully considered by DWG which resulted in delays and two further programmes being drawn up after Ex. 67, one in September 1977 and another in February 1978. The September programme showed completion date as 18 May 1978 some 7 weeks later than the date shown in Ex. 66. This gave rise to the September amended schedule where dates were put back 6 weeks. Exhibit 67 summarises the factors which resulted in the change of programme dates. They are-
 

(i) Lower productivity achieved than planned;

 

(ii) Wet weather not allowed for;

 

(iii) Additional work due to variations or under - assessment of work required or both;

 

(iv) Changed methods of working;

 

(v) Lower equipment availability than planned;

 

(vi) Unforeseen conditions affecting item (1).
 
There was between May and November 1977 wide spread drought conditions. This resulted in gravel production being reduced to less than 50% of that programmed. Bulldozers were required to work double shifts and at night.
 
In June 1977 it was discovered that a section of the work had been constructed to incorrect levels and had to be redone.
 
The delays caused by these factors resulted in equipment not being available for disposal at the times first programmed and resulted in the changed schedules of availability dates given by Williams to Petersen. In addition equipment, particularly bulldozers, were after May 1977 used much more extensively than Petersen stated Williams informed him would be the case when he and Williams in May 1977 discussed the future use of the equipment.
 
The foregoing is a summary of sufficient of the background facts gleaned from over 200 pages of typed up notes of evidence and perusal of over 200 documentary exhibits to indicate what is in dispute between the parties and how it arose.
 
I have now to consider and determine the nature of the contract. It is common ground that a partly written partly verbal contract was entered into by the parties in or about June 1977. It is however mainly a verbal contract followed by written confirmation of matters agreed.
 
There is a dispute as to only two of the agreed terms and as to what those terms mean, so it is not necessary to spell out all the terms which were agreed. I have set out earlier the full contents of Exhibit B, the confirmation of a verbal offer, and Exhibit A confirmation of verbal acceptance of the offer. These exhibits refer to the basic terms which were agreed and in particular refer to availability and the standards of maintenance the two matters very much in issue in the instant action.
 
Ignoring at this stage any verbal agreement or understanding which might qualify or limit the clear stated availability dates in the schedules, the first matter to consider is what “available” means in schedules 13, 14 and 15. There can be no doubt that ‘available’ in its context means available for release or delivery. If PWE had first paid for any equipment before a stated release date, DWG would have been committed to deliver that equipment on that date.
 
The statement of claim which was amended on more than one occasion indicates that, whoever prepared the document, did not fully appreciate that, DWG were not committed to release or deliver equipment until it was paid for. In the amended statement of claim, paragraph 11, three is a correct reference to ‘delivery dates’ having expired. While ‘available’ clearly in my view means available for release or delivery it did not follow that the actual release or delivery dates would be the same as in the schedules. While the dates could be the same, the evidence indicates that delivery was only to be made by DWG after PWE paid for available equipment and then only when PWE was ready to ship the equipment. DWG may not have fully appreciated this aspect of the contract for some time after entering into it. In August 1977 Williams was pressing Petersen for payment of available equipment only to be informed by Petersen that he did not have to pay until he shipped the equipment.
 
That Petersen was correct in his view of the arrangements regarding payment can be confirmed from Exhibits B & A. In the second last paragraph of Exhibit B Petersen specified that PWE “will pay all further money as directed by you before shipment from Fiji is made as the equipment becomes available.” Williams in Exhibit A states “It is confirmed that payment for each shipment will be made by you prior to shipment.”
 
On my interpretation of the contract PWE was not legally obliged to take delivery on the DWG stated available dates but DWG were, on the other hand, committed to deliver on or after those dates provided PWE had first paid for the equipment. This, I believe, is the reason why Petersen in Ex. B stated PWE would make payment in full by the 30^th May 1978. Williams was correct in his oft repeated statement in Court that the only firm delivery date envisaged by the contract was 30^th May 1978. What DWG may have failed to appreciate is, that as and when equipment became available for release according to the scheduled dates, dates for delivery became firm when PWE paid for such equipment and DWG was then obligated to deliver within a reasonable time after the date of payment. While I have expressed some doubt and have made some assumptions there is evidence that strongly suggests that Williams did at first appreciate the situation regarding PWE’s obligation to take delivery. The loading of the prices of the individual pieces of equipment which were listed for earlier delivery could work to PWE’s disadvantage if delivery was not sought by PWE when the equipment became available for release by DWG. Equipment in use deteriorates very rapidly and the longer PWE delayed in seeking delivery for equipment purchased at a premium price the less profit PWE stood to gain on a resale of that equipment. The arrangement did have advantages and disadvantages for PWE. The advantages were that PWE could seek purchasers of the equipment and the finance from such sales would be available to pay DWG since PWE’s sale contract would require payment before shipment from Fiji. For him it was a flexible arrangement which made it easier for him to resell.
 
The evidence also indicates that DWG appreciated that PWE would be shipping the equipment out of Fiji. There is not a frequent cargo service to the West Coast of America and some of the heavy equipment could only be lifted by vessels with powerful winches. Not all vessels visiting Fiji have such winches. DWG, I consider, must have appreciated that PWE could have problems if there was insistence on PWE taking delivery on the stated available dates and that is the reason they agreed to PWE paying before shipment. It is a reasonable assumption that DWG did however seek to make it unprofitable to PWE to delay seeking delivery by loading the prices of the equipment for earlier delivery and 30 May 1978 was fixed as full completion date, when PWE had to pay the full purchase price.
 
Notwithstanding the unqualified dates in the schedules, DWG’s case on this issue is that those dates were not firm dates. On the documentary evidence they were firm dates in so far as DWG were committed to have and hold the equipment available for release or delivery to PWE as and when PWE paid for it. DWG however contends that Exhibit A and discussions both Williams and Clark had with Petersen on the 28^th May, before an offer was made for the equipment, made it clear to Petersen that the availability dates were not firm dates. Exhibit A, which as I have stated, purports to be confirmation of what Williams and Petersen discussed on the 28^th May refers to the attached list “showing indicative availability dates”. DWG contend that the use of the word ‘indicative’ in that context conveys the meaning that the dates are not firm dates but probable or estimated dates. Petersen for his part denies that Williams used the word ‘indicative’ when they discussed availability dates, and that he was led to believe the dates were for the dates some equipment could be available earlier than listed. Williams admitted he did tell Petersen some equipment could be received earlier but he also said he told Petersen some could be available later than listed.
 
‘Indicates’ in its various forms is a word with various shades of meaning according to the context in which it is used. Williams when giving evidence used the word no less than 14 times on Mr. Newman’s count.
 
‘Indicative’ is defined in The Shorter Oxford Dictionary as “that points out, states or declares that hints or suggests”. In its context in Ex. A I do not consider the word has been used to hint or suggest dates thereby implying uncertainty as to the dates. Any uncertainty could be disclosed by using words such as ‘probable’ ‘likely’ or ‘estimated’. Where difficulty in interpretation arises, if the word means ‘points out’ or ‘states’, is its use following the word ‘showing’. ‘Showing availability dates’ and showing dates that state or disclose availability to my mind convey the same meaning. The word could safely be omitted and its inclusion in my view adds nothing to the meaning. I do not consider the word conveys any uncertainty as DWG contends.
 
There is however another aspect. Exhibit A is Williams’ understanding and confirmation of what was discussed some days before and attaches a schedule which was not in existence when the discussion took place. What I am concerned with is what said, understood, or agreed by the parties during discussions on the 28^th May. The exhibit A schedule is one Williams prepared and unilaterally altered from schedules 13, 14 and 15 by adding a specific day to each date, although I do not consider such alteration a material one, as it merely adds the last day to each month. Petersen and Williams never discussed Schedule A before the contract was entered into and I do not consider Williams’ later preparation of and reference to that schedule is material. Petersen was handed exhibits 13, 14 and 15 which states specific months and years without qualification.
 
Having considered all the evidence, I am of the view and hold as a fact, that DWG did contract to hold the relevant items shown on Exhibits 13, 14 and 15 available for release to PWE on the dates indicated on those schedule which were later but more specifically shown on the Exhibit A schedule and such dates were firm dates.
 
My reasons for this finding of fact necessitates a somewhat lengthy review of the evidence. The contract was an unusual one. It was not a sale on a “as is where is” basis. It involved the future sale and purchase of a large quantity of used equipment the bulk of which was still in use and which would become available to the purchase progressively over a period of almost a year.
 
Factors which a dealer purchase like would have taken into account on purchasing the equipment and in assessing what price he should offer would be the following:
 

1. Age of the equipment

 

2. Hours machines had worked

 

3. Condition of machines and inspection

 

4. Nature of the work machines were and would later be doing

 

5. When machines would be available for delivery

 

6. Standard of maintenance on machines before delivery.
 
Petersen had particulars of the year of manufacture of such machines and DWG’s stated hours each machine had previously inspected all but a few of the machines and seen the nature of the work on which they were then employed and he was told what further work had to be done. The schedules handed to him by Williams informed him when machines would be available for release by DWG. His inspection of the equipment would have given him some idea of the quality of the maintenance that had been carried out prior to his inspection and he was at pains to see that DWG continued to maintain the equipment until he took delivery.
 
Petersen in his business sold equipment in America, Hawaii, Japan, Singapore and Australia. To enable him to sell in any of those countries he had to be assured equipment would be available to him on the dates stated. That Petersen was well aware of these factors is apparent from his discussions with Williams before making his offer.
 
Petersen was accompanied by Bajadali on his May 1977 visit and both were present when discussions took place with Williams. At one stage Clark joined the three of them. These four persons all testified as to what was said about availability of the equipment and it is necessary to scrutinise their evidence.
 
Petersen stated that when he arrived in Fiji he asked Williams for a list of the equipment and was handed a copy of Exhibit N which in the last column showed the availability of each item on the list. He stated that Williams told him availability was shown on the list and some units could be available earlier than listed.
 
Williams in cross - examination admits he told Petersen some equipment could be available earlier but he went on to say that he also told Petersen some would be available later. I do not believe that Williams told Petersen some of the equipment would be available later than the dates stated in the schedule. This would immediately have alerted Petersen to the fact that availability dates were not firm dates, a matter of vital interest to him. Petersen strenuously maintained under cross - examination that availability and condition of the equipment was very important to him and that he would not have offered the price he did otherwise.
 
DWG rely very heavily on a conversation which they alleged took place at or during lunch in the Fisherman’s Lodge on the 28^th May, 1978. Clark’s version of this conversation is that he was introduced to Petersen and Bajadali in the lunch room at Fisherman’s Lodge and had a conversation with them lasting 15 - 20 minutes at the most. He said Bajadali’s conversation was of a social nature only. Clark said he told Petersen he wanted Petersen to have his dealings with Williams. Since Petersen’s only contract with DWG up to that time was with Williams it is difficult to understand why Clark made such a statement. Clark said he went on to describe DWG’s D contract with the Fiji Government and pointed out to Petersen how it differed from an American contract. Amongst other things he told Petersen that if the engineers directed them to do additional work DWG was obliged to do it. He told Petersen because of the reasons he had stated the availability times for the equipment which Williams was advising Petersen were DWG’ best estimates only. Clark also told him that DWG were at that time carrying out a review of their programme, I very much doubt that any such review was then under consideration as from the evidence before me DWG were not then aware of the factors which cause delay. It was not until September 1977 that a revised programme was drawn up by DWG. Clark said Petersen then asked what were Clark’s thoughts when all the equipment would be finished with and Clark told him about the end of May 1978. The DWG programme current in May 1977 indicated work would be completed to 30 March 1978. Petersen according to Clark then said that that sounded all right and would DWG let him know of any changes as DWG went along so Petersen could plan his selling with his customers.
 
Williams’ version of this conversation was that the conversation lasted 10 minutes and Clark did most of the talking. He confirmed that Clark did mention American contracts and pointed out major differences between those contracts and DWG’s contract. He said that Clark had pointed out and told Petersen that it was not possible to precisely indicate when equipment would become available but that the schedule of dates insists DWG’s then present state of DWG programme. Peterson’s reaction was that he did not consider any major problems would arise. Williams sat there saying little and he did not remember Bajadali saying much at all. Both Petersen and Bajadali deny that a conversation of the nature described by Clark and Williams took place.
 
If this conversation did take place then Petersen had knowledge that the availability dates were estimates only and not firm dates.
 
Clark under cross - examination did remember parts of the alleged conversation which he had not related in evidence in chief and which Williams also did not mention. Clark said he asked Petersen if he had seen the equipment. He also said he introduced the subject of availability by asking Petersen if Williams had mentioned availability and was told Williams had done so. Clark then mentioned the nature of the availability.
 
Williams was at the time a very senior executive officer of DWG who had previously been responsible for sales of DWG equipment. I find it very strange that Clark, knowing that Williams had already mentioned the subject of availability to Petersen, should then embark on a detailed description of DWG and American contracts to explain the emphasise why the times Williams had advised Petersen the equipment would be available were only DWG’s best estimates. Clark was involved in preparation of and had seen the schedules which showed the dates equipment was to be available. DWG could on those lists have clearly indicated dates were estimates only. Clark considered the matter important and should be made clear to Petersen. All he need have done was to ask Petersen did he appreciate the availability dates he had been given by Williams were estimates only. Clark did admit that Williams was quite capable of making the position clear to Peterson and that to Petersen delivery dates would be important.
 
Williams as a witness did not impress me. While giving evidence he was often vague and hesitant. It was strange to find him hesitant in his evidence in chief when being examined by Mr. Bainton. Williams was asked about availability of equipment and what Petersen had said. The hesitation was so noticeable and I noted this fact in my notes at the time I recorded his evidence. He said in answer to a question as to what Petersen had said about availability “I may have been asked if list accurate”. He also said “I can not remember saying we had hire machinery to do the hard work and would continue to do so. Can not recall mentioning hire equipment.” In fact DWG were at the time hiring equipment to do the hard work of gravel extraction, a matter which was of interest to Petersen and which he said he raised with Williams.
 
Williams was, however, very definite about Clark’s conversation albeit Williams’ version differed in some respects. He was in the habit of taking notes and did make notes of his discussions with Petersen on the 28^th May. He admitted that he made notes on that occasion and that he made no reference therein to the availability of equipment other than all equipment was to be released by May 31, 1978 nor did he make any mention of Clark’s conversation with Petersen.
 
I find it incredible, if that conversation did take place, that Williams should make no mention of Clark’s conversation in his notes. Clark was his senior and was, if he is to be believed, at pains to point out that dates of availability were not firm dates. It was an important matter in Clark’s mind and Williams should have realised that the availability of the equipment was of paramount importance to purchaser.
 
Williams did not when writing letter Ex. A and preparing schedule attached thereto to make it clear that dates were probable dates. Williams had to admit he wrote an inter office memorandum (Ex. 126) to Croll and Stirrat on 15 December 1977. They were two officers of the company responsible for the equipment. The memo commences:
 

“Please note we have a firm commitment to Pacific Western Equipment Inc. to have the following items of equipment .......... ready for shipment on the Hobart Star, ETD Suva 10.1.78.”
 
Williams did not enhance his credibility when, in re - examination, he said Ex. 126 was purely a device to ensure Croll and Stirrat had the equipment ready for shipment. He was clearly uncomfortable when being questioned about this memorandum.
 
Petersen on the other hand did impress me as being an honest witness. He was subjected to a lengthy and very able cross - examination by Mr. Bainton. He did have lapses of memory and did make some mistakes which is not surprising to consider the details he had to remember. He is not an aggressive type of dealer but apparently a competent one. It is clear from his evidence that most of his transactions were conducted on mutual trust without written contracts and his failure to properly record all the terms of the contract is of no moment. His conduct after the 28^th May 1977 is consistent with his understanding at the time he made his offer that the dates were firm dates.
 
His next visit to Fiji after May, 1977 was on 4 July 1977. On that visit Williams handed him Ex. R which has specific dates on it but the date column is not marked ‘available’ but availability is obviously what the dates refer to.
 
Petersen had Merryman with him on the July visit and Petersen told Williams that he hoped to sell some of the equipment in Fiji. Williams prepared Ex. R as a result of this advice to assist Petersen. If the dates on the list attached to Exhibit A, were not firm dates, then that visit of Petersen’s was an occasion for Williams to warn Petersen and point out to him that the dates were not firm dates and before entering into any sale he should first contact DWG to check whether equipment would be available. He did not do so, but he did on that visit introduce Petersen to a number of people in Fiji who might have been interested in the equipment. Possible sales in Fiji were discussed and gave rise to the preparation of Ex. R. It must have been apparent then to Williams that Petersen was planning sales and that if Petersen made a sale he would be asking for delivery to him of the equipment sold.
 
Williams’ actions are hardly consistent with his contention that the only firm dates for availability was 31 May 1978 some 10 months away. On the other hand Petersen’s actions were entirely consistent with his stated understanding that the dates given him were firm dates. He would hardly otherwise have entered into arrangements to sell Merryman, one of his best customers, a number of items of equipment and bring him to Fiji to inspect the equipment.
 
About 23 July 1977 Petersen returned to Fiji. Williams could only recollect a discussion about local sales. He had however received Exhibit V a letter written by Peterson about payment for equipment which Petersen says was discussed on that visit.
 
At the beginning of September 1977 Petersen again came to Fiji to arrange for his first large shipment. He had advertised sale of equipment in the ‘Fiji Times’ which Williams admits he saw.
 
He was on the September visit handed Ex.H by Williams which was an amended schedule of availability dates. Petersen said Williams told him there had been delays. That there were delays to DWG’s programme is a fact. Williams told Petersen DWG had reviewed the availability schedule in the list of changes in the programme and Ex.H which he handed to Petersen represented the current status. Ex.H shows definite dates of availability without qualification. Williams said Petersen did not offer any comment at all.
 
I find it difficult to credit that Petersen would offer no comment at all when handed a schedule in September 1977 showing availability dates had been changed. Petersen in his evidence was quite vocal on the point and says he told Williams the change caused him problems and he had come to Fiji to arrange his large shipment. Petersen says that the next day he told Williams he should be rewarded by getting lower prices on some other equipment. Williams denied that and said Petersen was not upset and neither consented to nor opposed the alterations.
 
Petersen did however in his sales campaign then work from the September list and negotiated with Elwood of Emeco to sell Emeco 6 of the DWG graders.
 
In November Petersen returned with some of his customers. On that visit Williams handed him a further amended schedule of availability Ex. 1. Williams had not previously advised Petersen that dates were again being changed. There is no dispute that after being handed Ex. 1 Petersen did complain bitterly about the problems caused by the further changes and Williams was advised that Petersen had sold the graders to Emeco. Williams admitted that Petersen on the November visit had also complained about the standard of maintenance of the equipment. Sales Petersen had negotiated were aborted by the fact that DWG kept changing the availability dates of the equipment.
 
I accept Petersen’s version of the discussion which led up to his entering into the contract. The documentary record of availability dates also clearly indicates firm dates. I do not believe Clark or Williams about the conversation of the nature related by them did in fact occur particularly with reference to the availability dates. I could not imagine any conversation more designed to put off a prospective purchaser of used equipment who intended to resell. To a purchaser who is a dealer, firm availability dates would be a key factor in his offering to purchase and without firm dates he could not himself enter into firm contracts to sell and deliver equipment. It was not until 13 September 1977 when Williams wrote Ex. AA to PWE, that he advised Petersen of the preparation of a revised schedule of “probable availability”. The September schedule is dated 6^th September and the date of Ex. AA would appear to indicate that a week after the September schedule was prepared DWG were again considering altering that schedule. This was at the time when DWG had had problems which had caused delay. Until that time all Williams’ actions were consistent with Petersen’s contentions that dates were firm dates.
 
I believe the increase in the prices of items for earlier delivery and reduction of prices for items for later delivery, to which I have already referred must be viewed as evidence that the dates on schedule A were intended by DWG to be firm dates. What this arrangement also signified to me is that specific identifiable items were to be held available for release by DWG on those dates. It was not open to DWG to switch those items around, which they did on more than one occasion, notably with items 111 and 112. It is inconceivable that PWE would have agreed to pay a premium price for those two items, originally to be available on 31 October 1977, if availability could be changed for example to 31 May 1978. 111 was in fact still in use in February 1978 and 112 in April 1978.
 
Item 111 in November 1977 was undergoing overhaul preparatory to being released on 19 November 1977. On Clark’s instructions both item l11 and 112 were put back to work pushing up gravel and items 105 and 107 were taken out of service. In the November schedule items 105 and 107 were to be available on 30 April 1978. In fact they were made available in January 1978 and were two of the machines Petersen contended has been badly neglected.
 
I am of the view that Clark switched the machines around because items 105 and 107 were in imminent danger of breaking down. I do not believe there was any mistake made, as Clark alleged, in 111 and 112 being listed as, being available on 19 November 1977, in the amended November schedule prepared only 12 days before that date.
 
I find as a fact that the dates in Ex. 13,14 and 15 and in schedule Ex. A relating to the equipment PWE was to purchase were firm availability dates. When those dates were changed in September and November 1917 as far as DWG was concerned they were still firm dates.
 
I have now to consider whether DWG committed any breach of their obligation to have and hold the equipment available for delivery on the agreed specified dates.
 
There were in my view a number of breaches. DWG committed a breach when they unilaterally altered the availability dates in September and again in November 1977.
 
There were several other breaches in respect of specific items of equipment which Petersen had negotiated to sell and was prevented from completing the sales by DWG’s notification that equipment would not be available on the dates stated by them.
 
One such proposed transaction was the negotiation for sale of items 105,107,109 (106 as alternative) 162 and 165. Merryman stated in evidence that he had agreed to purchase those items on the availability dates appearing on Exhibit 18.

 
Dates DWG informed Petersen those items would be available in schedule A, the September and November lists varied considerably as the following table clearly indicates:
 

Item                     Schedule A                     September Ex. H                November Ex. I

 

105                      Sep. 30, 77                     Nov. 15, 77                       April 30, 78

 

106                      Sep. 30, 77                     Nov. 15, 77                       Nov. 19, 78

 

107                      Sep. 30, 77                     Nov. 15, 77                       April 30, 78

 

109                      Oct. 31, 77                     Dec. 15, 77                        Feb. 28, 78

 

162                      Oct. 31, 77                     Dec. 15 77                         Jan. 31, 78

 

165                      Oct. 31, 77                     Dec. 15, 77                        Dec. 31, 78

 
In respect of items 105 and 107 PWE was expected to pay premium prices for availability September 30 but DWG proposed to continue use of the machines for a further 7 months until April 30,1978. In fact DWG made these machines available in January, 1978 in a condition which Petersen alleges showed neglect of proper maintenance. There was never any offer or suggestion by DWG to Petersen that they would compensate Petersen for this extra use. They rejected all his claims for compensation. There was also the proposed sale of 6 graders to Emeco and re - negotiated sale. DWG did not make the tractors available. There was the intended sale of item 111 to Lion Machinery Limited which DWG prevented by putting 111 back to work. There was the intended sale of item 112 to Simonson which did not eventuate as 112 was put back to work.
 
While PWE did not adequately prove the terms of all these sales, which would have been necessary had PWE sought loss or profit on those sales, I am satisfied on the evidence that Petersen negotiated the sales and was prevented from concluding there by DWG altering the availability dates.
 
I hold as a fact that initially DWG was in breach of contract in September 1977 when, they altered the availability dates and were again in breach with the November 1977 alterations. Specifically they were also in breach on each occasion when with knowledge that Petersen had negotiated sales they made it clear by altering schedules or not making equipment available that items involved in such sales were not available to PWE.
 
Having dealt with the issue of availability and breaches thereof by DWG I turn now to the other issue as to whether DWGH was in breach of its obligation to maintain the equipment pending delivery to PWE.
 
In Exhibit A Williams set out the agreement reached by the parties. He stated “As agreed the Joint Venture will continue to uphold its present standards of maintenance and all equipment will be in working order at time of despatch.”
 
PWE alleges that DWG are in breach of the obligation to properly maintain the equipment and relies mainly on the condition of certain equipment sent by DWG to Carpenters yard in January 1978 preparatory to shipment by PWE. DWG deny the allegation and has introduced into evidence very detailed and comprehensive documentary evidence in rebuttal of PWE’s allegations.
 
I first consider what standard of maintenance DWG was obligated to maintain. There is evidence given by Clark, to which I will be referring later, that there were two standards, one for a machine going back to work and one for a machine not going back to work to ensure it was in a saleable condition.
 
Williams’ letter does refer to “present standards of maintenance” that is more than one standard.
 
There is an abundance of evidence to indicate that DWG’s ‘present standards’ were in May, 1977. The standard was a high one as some of the witnesses stated and Petersen expected that standard to be maintained until he took delivery of the equipment. He certainly was not advised by Williams that DWG had two standards, one for a machine going back to work and one for a machine to be sold. There could be different standards of maintenance dependent on the type of machine and the use to which it was put. AD6 tractor used in heavy work would require higher standard of maintenance than say a grader.
 
Williams’ letter conveys to me, that since the machines were to continue in use until available, to PWE DWG would maintain them on the basis that they were to continue to work and not in the knowledge they were being sold and reduce their standards by putting off repairs and necessary maintenance. Petersen expected DWG to keep the machines in approximately the same condition as when he inspected them. Subject to normal wear and tear that is a reasonable expectation for any purchaser of used equipment to be delivered in the future after further use.
Petersen inspected the equipment in May 1977. He gave no detailed evidence as to the then condition of the equipment but did state he found the standard of maintenance very good.
 
Merryman inspected the equipment in July 1977 and did give detailed evidence of the condition of most of the equipment. He did point out certain defects but in the main he described most machines as being ‘clean machines’.
 
Petersen’s impression of the equipment in July 1977 was that the equipment was generally in the same condition as when he inspected it in May 1977, He had no complaints on his September 1977 visit.
 
On his November 1977 visit, however, Petersen testified he found the condition of the equipment had deteriorated quite badly since his September 1977 visit and he gave instances of what he noticed on that visit.
 
Petersen complained about lack of maintenance to Williams and Williams brought Stirrat into the discussion. Stirrat said he would put new track guards on item 111 and replace damaged rollers with good rollers.
 
Stirrat professed in cross-examination not to specifically remember any discussion with Petersen about D6 Nos. 111 and 112. He had no difficulty remembering in examination in chief. He testified that Petersen asked him about the work they were doing on items 111 and 112 and Stirrat told him. He said also that items 111 and 112 had got to the stage where they were not available for river work due to the condition of the undercarriages. He also said he understood they were going back to work a statement which I do not believe as it was not until about December 15 that Clark gave orders for items 111 and 112 to go back to work.
 
As regards item 111, he did in fact put on rock guards although Clark’s alleged explicit instructions were that they were not to be replaced. Stirrat’s explanation for putting on the rock guards in breach of Clark’s alleged specific instructions to leave them off was not very convincing. He said he put them on because he was doing a full rebuild of the carriage.
 
I believe he put rock guards on pursuant to Petersen’s complaints as Stirrat promised he would do. Williams confirmed that Petersen was concerned about a number of maintenance matters on his November 1977 visit and that he asked Stirrat to come to his office to discuss the matter. Williams however professed not to clearly recollect what then occurred. He could only recollect a complaint about dirty radiators.
 
I do not consider either Williams or Stirrat were telling the whole truth about Petersen’s complaints about maintenance in November 1977.
 
In the amended November schedule D6 dozer item 111 was scheduled to be available on 19 November 1977 and Petersen had agreed to sell this tractor to Lion Machinery Limited (Ex. EE).
 
I believe item 111 was, as Petersen stated Williams advised him, in November 1977 in the DWG storage yard being tidied up for delivery. Clark however by his decision to put units 111 and 112 back to work embarrassed both Williams and Stirrat. When questioned about this machine they did not look comfortable and I formed the view that they were backing up Clark and were on that matter not telling the truth.
 
Petersen wrote to Williams on December 12, 1977 (Ex. G). In that letter he did not specifically complain about lack of maintenance but did complain about delay in releasing the equipment.
 
In his letter (Ex. YY) to Hawaiian Dredging and conversation of December 22, 1977 Petersen was still concerned with delays and does not mention lack of maintenance.
 
It appears that, while in November 1977 Petersen was worried about maintenance and complained about lack of maintenance, he was more concerned about the delays in DWG releasing the equipment. Up to his visit to Fiji on January 13, 1977 it is clear that Petersen was not too worried about lack of maintenance to the extent of seeking to make it an issue but he was concerned to get compensation for the machines used beyond the dates that they should have been made available to him.
 
On January 13, 1978 he went to inspect equipment that DWG had sent Carpenters’ yard preparatory to delivery to him. This was equipment DWG which, if Williams’ written instructions had been carried out (Ex. 126), had been tidied up and was ready for shipment by Petersen on the Hobart Star about the 10^th January, 1978.
 
Petersen testified that on his inspection the equipment was in a very bad condition and he gave details of what he noticed and called witnesses who had also inspected the equipment. The witnesses were Latham, Carpenters’ Service Manager, Thoms a former sales manager for Carptrac, Joy a bulldozer driver formerly employed by DWG, Saunders the manager of Lions Machinery and Bajadali. All these witnesses had experience with caterpillar equipment.
 
Joy did not impress the and I do not propose to consider his evidence, nor do I propose to consider Bajadali’s evidence about his inspection of the equipment.
 
Mr. Bainton has pointed out in his written submission that Bajadali can not be believed when he testified he did not see nor was he told about Latham’s report HHH before he made his report. The comparison Mr. Bainton has made of Latham’s and Bafadali’s evidence satisfies me that Bajadali did know of Latham’s report before Bajadali did know of Latham’s report before Bafadali made his report.
 
Although Saunders did have trouble with DWG over the export of a tractor Saunders had purchased from Petersen and which was delivered to Saunders’ company. I do not consider Saunders was a prejudiced witness. He impressed me as a witness who was telling the truth and I consider and treat him as an independent witness.
 
The equipment delivered to Carpenters included the following: Items 144, 146, 147, 105, 107, 108, 101, 102, 104, 160 and 161.
 
Latham’s report Ex. HHH covers 8 of the items and from the serial numbers given in the report the items numbers can be obtained from the schedule to Exhibit A which contains both items and serial numbers. The first machine on Latham’s list is a 950 loader item No. 161.
 
Latham’s report describes the condition of item 161. Some of the matters he reports on can be ignored but there are others which appear to indicate a lack of proper maintenance notably, bucked bottom plate thin and peeling, covers missing, frame cracked both sides in front of hitch, bucket positioner missing. Seat back rest missing, radiator guard badly bent, rear light broken. If this machine had been tidied up as instructed by Williams it would have been in a sorrier state before Latham inspected it.
 
Thoms did not specifically refer to item 161 but he testified that between June and November 1977 he used to call on DWG. He noticed a deterioration I the standard of maintenance. He saw machines with guards being left off, equipment being welded rather than being replaced: certain parts worn beyond serviceable condition. He also saw the equipment in Carpenters yard but he did not testify as to condition of any particular machine. The D6 machines he considered needed major work to be carried out on them and were not in a saleable condition. He said the equipment was in a condition which made them unattractive for sale.
 
Saunders also inspected equipment in Carpenters yard and described their general condition as “very rough” and gave details of what he noticed but he did not give evidence as to the condition of any particular identifiable machine. He did state that equipment was not in an acceptable condition for sale to his company.
 
Latham’s report is the only acceptable detailed report by an independent person: I have referred to his report on item 161.
 
The next item on his list is 950 loader item 160. This had bucket position missing and lights missing.
 
The next on the list is a D4 item 108. The seat needed repair, right hand battery box cover was missing also missing was the fender mounted valve cover and radiator caps.
 
The next listed in the report is D6 tractor item 107. It had no seats and no roller guards, the track frame guard was missing, battery cover was missing, lights broken. The mold board was patched and there were holes on the left side.
 
I do not propose to refer in detail to items 105,101 and 102. The cutting edges and cover tips of two machines were unserviceable which made them useless as bulldozers. Parts were missing on all three machines. The report includes matters which I consider should have been attended to if proper maintenance had been carried out on them.
 
I do not propose to refer to the last machine mentioned in the report a D8 Item 104.
 
The mold board was patched and patches were worn through. The cutting edges and corners of the blade were 100% worn - no life in them at all. Right hand sprocket was welded. Radiator guard was chewed and patched. Roller and track roller frame guards were missing. Ripper tyres were missing. (This machine was supposed to be complete with ripper vide Ex. 126). The exhaust stack, seats and lights were missing and there was an oil leak at the tilt cylinder.
 
I have not so far in referring to Latham’s report referred to the worn condition of the undercarriages. There is a conflict of opinion as to when repairs should be carried out. Latham’s inspection of undercarriages of the tractors shows that they varied from 75% worn to 90% worn. Under cross - examination Latham said as regards item 104 (75% worn undercarriage) in Fiji conditions some components of the undercarriage would need replacement He mentioned grouser plates pins and bushings as being the first components due for replacement.
 
With item 102 (80% worn undercarriage) he said 80% would indicate some parts would be about to be replaced.
 
Latham did not refer to position where undercarriage 90% worn - two machines showed 90%. If at 75% and 80% worn certain components were due to be replaced at 90% worn I would imagine the time had come or passed when certain parts should have been replaced if there was not a need for a major overhaul.
 
According to Thoms undercarriages would have a life of 2000 hours. 10% remaining life would be 200 hours which on the evidence before me would be almost one month’s work for a tractor. I do not consider that DWG following its usual programme of maintenance would have let 2 machines reach 90% worn undercarriage and risk a major breakdown before carrying out repairs. Stirrat however said 95% was near end of life of undercarriage but they aimed for 100%.
 
Clark gave very detailed evidence about DWG’s maintenance programme. He stated it was not relevant what the equipment would be worth at the end of the contract. He stated the first arm of the DWG programme was to ensure equipment was available for work assigned to it. The second arm was to ensure that the equipment at the end of the contract period was in a condition for sale.
 
This is clear evidence of two standards and this was borne out by Stirrat’s evidence. He on a number of occasions stated that if a machine was going back to work he would do certain repairs. The inference from this evidence is that if the machine was not going back to work he would not do certain work. In this regard the contract called for the equipment to be in working condition when delivered by DWG.
 
What DWG contracted to do was to continue the standards of maintenance on the machines sold to PWE and deliver them in working condition, that is the first arm of their programme referred to by Clark. Even if this was not so the condition of the equipment in Carpenters yard showed it had not been maintained according to the second arm of the programme to ensure it was in a saleable condition. Witness after witness stated they were not in a condition which made them saleable.
 
The picture to me is clear. PWE was committed to purchase the equipment. There was after May 1977 due to unforeseen circumstances use of the equipment to an extent not anticipated by the parties. The wear and tear on the tractors working double shifts shifting gravel was extreme use for such equipment and should have resulted in more than usual maintenance. I do not believe Clark when he said he could have continued to use items 105 and 109. I believe due to very hard usage there was a risk of a major breakdown to these machines and that was the reason he ordered items 111 and 112 which were scheduled for release on 19 November 1977 and had been repaired and overhauled, back to work on gravel operations. According to exhibit 74 item 105, 107 did no work after November 1977.
 
Exhibit 81 indicates quite extensive work was carried out on item 105 in June and July 1977 but nothing thereafter. Item 107 had no work done on it after August 1977 according to Exhibit 83.
 
The condition of tractors 105 and 107 as described by Latham when he inspected them in January 1978 convinces me that DWG made no effort to carry out any maintenance on them after they ceased working and this is borne out by Exhibits 81 and 83. In fact the report discloses they may have further deteriorated. 104 had parts missing and cutting edges and corners were unserviceable. In other words it could not operate as a bulldozer until repairs were carried out. It was not in working order, 107 also had parts missing and in particular it had no roller guards and a track frame guard was missing. It had no seat and could not operate as a tractor without a seat.
 
There was considerable evidence given about roller guards whether they should be used or not and such evidence was conflicting. The machines are fitted with these guards and they are an expensive item. If they are taken off when a machine is used.
 
Machines in Carpenters yard in January 1978 had been therefore 10 days when Latham inspected them. I do not accept Stirrat’s statement that certain missing parts were to be replaced. DWG had ample time to replace them. The equipment was in the condition DWG had prepared them for delivery.
 
The totality of the evidence satisfied me that DWG did not maintain the equipment delivered to Carpenters yard in accordance with their standards of maintenance which were prevailing in May 1977. I believe DWG got the maximum use out of the equipment with the minimum of maintenance. In the knowledge that machines were not going back to work their maintenance standards deteriorated. I find as a fact that DWG was in breach of its contractual obligation to maintain the equipment delivered to Carpenters yard in accordance with its standards prevailing in May 1977. There were 11 items of equipment delivered to Carpenters of a total sale value of $217,000. It was to be a large shipment.
 
There is no evidence that DWG did not properly maintain the engines of any of the machines. Nor is there any specific evidence that graders, R200 cranes, Hyster compactors and loaders (apart from Nos. 160, 161 and 169) were not properly maintained.
 
I do not consider this lack of evidence in any way alters my finding. DWG's contract was to maintain all equipment sold to PWE in accordance with its May 1977 standards, which I accept were high standards and deliver in working conditions.
 
There is evidence, which I have accepted that DWG did net properly maintain 8 of the remaining 36 items. That is a substantial breach and I do not consider it was incumbent on PWE to give detailed evidence of the condition of all the other machines. As the other machines were still in use I have no doubt that DWG was continuing to maintain them but whether to their usual standards is doubtful in view of Thoms' evidence that standards generally lead deteriorated.
 
I have now to consider the remedies PWE has for the breaches of the contract which I have held DWG committed.
 
There were breaches of contract by DWG in respect of its obligation to have equipment available for delivery on stated dates or after those dates when PWE made payment and required delivery and there were breaches of their obligation to properly maintain that equipment until delivery.
 
Since DWG were not committed to deliver until PWE paid for the equipment specific breaches occurred when Petersen had sold or contracted to sell equipment and DWG did not make it available. He entered into negotiations to sell equipment to Merryman, Emeco, and Lion Machinery Limited, but before he could pay DWG and call for delivery he was presented with changed availability dates which aborted his negotiations.
 
Petersen could have taken action earlier as a result of DWG's breaches of contract. He accepted the September changes and also the November changes although on both occasions he said in evidence had he asked for compensation. He complained that DWG did not even abide by the November changes.
 
Tractor 111 was to be available on 19 November 1977 and Petersen negotiated to sell this tractor to Lions Machinery Limited. Although DWG had knowledge of this sale the tractor after being repaired was put back to work on Clark's instructions.
 
A grader was to be available on 31 December 1977. This was the first of the six graders Petersen had agreed to sell to Emeco after being compelled to renegotiate with Emeco after DWG changed availability dates in September.
 
Exhibit 9(1) to (17) covers the Emeco transaction as regards the graders and emphasises the frustrating experience that both PWE and Emeco went through due to DWG’s changes of availability dates. Exhibit 9(11) indicates that there was a further change after the November, 1977 changes when DWG changed availability date of one grader from end of December 1977 to the end of April, 1978.
 
I am satisfied that Petersen never acquiesced in the change of date for the grader to be available on 31 December 1977 nor in tractors 111 and 112 not being made available. He was however prepared to waive these breaches if he was compensated. His request for compensation was rejected by DWG as was his offer to purchase the remaining items for US$500,000. It is clear from the evidence that Petersen then made it very clear to DWG that he was not carrying on with the contract and intended instituting an action for damages.
 
There were two types of breaches by DWG. One as regards availability for delivery and breach of obligation to properly maintain the equipment. I have next to consider whether these breaches entitled PWE to treat the contract as at an end or as repudiated by DWG’s conduct, or whether his only remedy lies in damages.
 
The right of a party to treat a contract as discharged arises in only two types of cases. Namely where a party has repudiated the contract before performance is due or before it is fully performed and where the party in default has committed a fundamental breach.
 
DWG did in my view repudiate the contract in the sense that they by their conduct made it clear they did not intend to honour their obligations in the manner envisaged by the contract. I am also concerned whether their breaches were in any event fundamental breaches entitling P.W.5 to treat the contract as discharged.
 
One of the tests adopted by Courts to determine whether a breach is a fundamental one is the importance the parties would seem to have attached to the terms of the contract which has been broken.
 
Jordan C.J. in the Australian case of Tramway Advertising Pty. Ltd., v Luna Park (NSW). Ltd.  (1938) 38 S.R.N.S.W. 632 at page 641 said:
 

“The test of essentiality is whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promise that he would not have entered into the contract unless he had been assured of a strict or substantial performance of the promise, as the case may be, and that this ought to have been apparent to the promissor.”
 
While the learned Chief Justice's decision was reversed on appeal his test of essentiality was unanimously approved by the High Court of Australia in the later case of Associated Newspapers, Ltd. v. Banks  (1951) 83 C.L.R. 332. DWG was, perfectly well aware before the contract was entered into that Petersen was a dealer and intended to resell the equipment outside Fiji and that most if not all of the equipment would have to be shipped out of Fiji.
 
To Petersen availability to him of the equipment for delivery was of paramount importance. He could not arrange shipping or enter into contracts to sell the equipment unless he himself could deliver on a stated date. He also based his offer to purchase on the stated availability dates. His valuation of each item of equipment in addition to the use it would be put to was based on such availability. Petersen’s discussions with Williams makes it clear Petersen considered those dates of paramount importance and I have no doubt this must have been apparent to Williams.
 
The maintaining of the equipment which would be in use until available was also a very important matter to Petersen and Williams must also have been aware of this, which is why DWG specifically agreed to continue maintenance on their then existing standards. Petersen also based his price offered on the explicit understanding that DWG would maintain the equipment to their then existing standards. I have no doubt at all that if DWG had stated, either that they could not promise delivery of any item before May 1978, or that stated availability dates were not firm dates, or that they would not properly maintain the equipment no contract between the parties would have eventuated.
 
Mr Bainton argued that if there were breaches by DWG they only entitled PWE to damages and did not entitle PWE to cancel the contract. He quoted in support two cases: Hong Kong Fir Shipping Co., Ltd. v. Kawasaki Kisen Kaisha, Ltd (1962)2 Q.B. 26 at p. 70 and Suisse Atlantique d'Armement Maritime S.A. v. N.V Rotterdamsche Kolen Centrale  (1966) 2 All E.R. 61.
 
In the Hong Kong Fir Shipping Co. Ltd