Tape v Toyota Tsusho (PNG) Ltd [2015] PGNC 2; N5856 (3 February 2015)

N5856

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1106 OF 2012

BETWEEN:

TIMIL L. TAPE
Plaintiff

AND:

TOYOTA TSUSHO (PNG) LTD, TRADING AS ELA MOTORS
Defendant

Waigani: Davani .J
2014: 17th July, 6th August,
2015: ---3rd February,

SALE OF GOODS - plaintiff purchased bus – bus covered by warranty – engine defective during period of warranty – engine replaced by defendant

SALE OF GOODS – Warranty not a contract – plaintiff claims breach of warranty – claims damages – plaintiff not entitled to damages

PRACTICE AND PROCEDURE – Plaintiff relies on Goods Act – did not plead provisions of Goods Act – there must be specific pleading of statute and full particularization of claim

Facts:

The plaintiff purchased a 25 seater bus from the defendant. The bus was covered by a 3 month warranty. After a few weeks with the defendant, the bus began emitting black smoke. This happened during the warranty period. The plaintiff returned the bus and demanded a new bus. The defendant however, did not replace the bus with a new one because that condition was not covered by the warranty. The Defendant replaced and fitted a new engine to the bus at no cost to the plaintiff.

The plaintiff however, claims unconscionable conduct by the defendant and demands payment of damages for loss of business income during the period the bus was in the defendant's workshop.

Held:

1. A warranty is not a contract.
2. A party can claim damages for a breach of warranty but cannot repudiate the contract.
3. A warranty is a term, the breach of which gives rise to a claim for damages but not to a right to treat the contract as repudiated.
4. A party must specifically plead provisions of the statute they rely on more particularly if it forms the basis of their claim and must also fully particularize that part of the claims.
   

Cases cited:

Nil

Other References

Ritchie's NSW Supreme Court Rules

Counsel:

Mr S. Japson, for the Plaintiff
Mr T. Anis, for the Defendant

DECISION

3rd February, 2015

1. DAVANI .J: Before the Court for substantive hearing is Writ of Summons and Statement of Claim filed for and on behalf of the plaintiff by Japson & Associates Lawyers, on 18th October, 2012. The plaintiff seeks orders for breach of warranty and damages for loss of income in relation to the use of a 25 seater Toyota coaster bus registration no. BDK 719 ('the bus'). The warranty the subject of these proceeding is marked annexure 'H' to the plaintiff's affidavit, exhibit 'A' and was issued to the plaintiff by the defendant's sales representative, upon the plaintiff's purchase of the bus ('Warranty').
   
2. The defendant through its lawyers Bradshaw Lawyers, oppose the plaintiff's claim and do so by the filing of a Defence on 27th November, 2012 where it, amongst others, pleads that it did not breach the warranty and that as such, is not liable to the plaintiff. I discuss this further below.
   

Background facts

3. The plaintiff purchased the bus on 25th January, 2012 for K150,000.00. The defendants' representatives delivered the bus to the plaintiff on 8th February, 2012.
   
4. On 8th March, 2012, the plaintiff brought the bus to the defendant's workshop, for service. The defendant's representatives were informed that the bus's engine was faulty.
   
5. At that time then, the plaintiff requested that the bus be replaced with a new bus. However, rather than replace the bus with a new one, the defendant proceeded to order a new engine which it subsequently fitted in the bus.
   
6. On or about 16th October, 2012, the plaintiff picked up the bus from the defendant.
   

Evidence

7. In support of its case, the both parties tendered and relied on several affidavits. These are;
   

A. for the plaintiff

- Affidavit of Timil L. Tape, the plaintiff, sworn on 12th December, 2012 and filed on 13th December, 2012, marked exhibit 'A' for the plaintiff;

- Affidavit of Timil L. Tape, the plaintiff, sworn and filed on 14th October, 2013, marked exhibit 'B' for the plaintiff.

B. for the defendant

- Affidavit of Willard Stephen, sworn on 8th October, 2013 and filed on 9th October, 2013, marked exhibit '1' for the defendant;

- Affidavit of Jose Verroya sworn on 28th April, 2014 and filed on 29th April, 2014, marked exhibit '2' for the defendant.

Plaintiff's case

8. The plaintiff purchased the bus on 25th January, 2012, however was confronted with a faulty engine, where the bus's engine lacked power and was emitting black smoke. In accordance with the terms of the Warranty, on 8th March, 2012, the plaintiff took the bus to the defendant's service centre, for free service. However, on 11th March, 2012, the defendant's service advisor, informed the plaintiff that the bus had a faulty injector in its engine which had to be replaced and that the plaintiff is required to pay those costs as well as service fees.
   
9. The plaintiff paid a minimum deposit of K1,500.00 on 13th March, 2012, for work on the suspected faulty injector including service fees.
   
10. The plaintiff then followed up on the service of the bus on or about 19th March, 2012. He was informed that the defendant would order a new engine in accordance with the Warranty.
    
11. On 27th March, 2012, the plaintiff informed the defendant that because the defective engine was a "factory fault" (par. 9 of Statement of Claim), and because of the fact that he was suffering loss of business income, that the defendant ought to replace the bus with a new one.
    
12. However, the defendant refused that request maintaining that the Warranty over the bus required that only new parts were to be supplied to replace the defective part and not the total replacement of a new vehicle.
    
13. The plaintiff claims that it received the bus with the replacement engine about 224 days after the bus was placed in the defendant's workshop despite an assurance given by the defendant that a new engine would be replaced within 45 to 60 days.
    
14. In his statement of claim, the plaintiff pleads that he took the bus in for free service on 8th March, 2012, when he explained that the engine lacked power and was emitting black smoke (par. 6 of the Statement of claim).
    
15. He pleads that because the plaintiff had admitted on 30th March, 2012, that the fault in engine was a "manufactures fault" that this was a breach of an "implied warranty that the bus was of merchantable quality" and "further, in breach of an implied condition as to fitness of the bus under the Goods act" (par. 12 of Statement of Claim).
    

Defendant's case

16. The defendant by its Defence, pleads and submits that the bus was returned to the plaintiff and the deposit of K1,500.00 paid by the plaintiff, refunded to him on or about 23rd April, 2012.
    
17. The defendant further submits that it was then that it discovered that the fault in the engine was not a faulty cylinder injector, but rather, a faulty engine.
    
18. In relation to breach of Warranty, the defendant denies that there was a breach of implied warranties and that it did explain to the plaintiff why a new bus could not be given to him which explanation the plaintiff accepted.
    
19. Additionally, the defendant pleads and submits this;
    

- that it did not give an assurance that a new engine was to be replaced within 45 to 60 days

- that by its letter of 30th March, 2012 to the plaintiff, the defendant advised that a new engine would arrive within 45 to 60 days, to be fitted to the bus

- that it advised the plaintiff that although the Warranty did not include labour costs necessary to refit the engine, that the defendant would bear the labour costs including any corrections to install the new engine, just as a way of enhancing its customer service relationship.

- that it had always kept the plaintiff informed of the delay in awaiting shipment of the engine from the manufacturer in Japan and which explanation the plaintiff accepted.

- that by the plaintiff's letter to the defendant of 30th July, 2012 to the defendant, the plaintiff advised that he had changed his mind and that he wanted the bus back after the new engine had been fitted.

- that by the same letter of 30th July, 2012, the plaintiff stated that if there were any complications within 3 months of the bus's return to him, that he would hold the defendant responsible and to repair the bus.

- that by its letter of 15th October, 2012 to the plaintiff, the defendant confirmed it being in regular contact with the plaintiff and amongst others, had fitted in a new engine to the bus at no cost to the plaintiff.

- that after the engine was fitted into the bus and returned to the plaintiff, that the plaintiff accepted the bus

- that by the plaintiff's conduct in accepting the bus and the new engine including the terms in the letter sent to him by the defendant, dated 15th October, 2012, that the plaintiff is estopped from making claims for loss of income.

Issues

20. By the Statement of Agreed and Disputed Facts and Legal Issues endorsed by both counsel and filed on 6th May, 2014, the parties set these out to be the issues;
    

i. whether the defendant had breached the terms of its warranty or warranty implied pursuant to the Sale of Goods Act as to merchantable quality and/or implied condition as to fitness of the bus pursuant to the same statute?

ii. whether the plaintiff is estopped by his actions/conduct?

iii. if liability is established, what would be the appropriate damages allowable under law based on what is being claimed?

21. The Court's focus will only be in relation to issues i and ii. Issue no. iii will become relevant if the Court finds in favour of the plaintiff on liability.
    

Analysis of evidence and the law and issues

22. The plaintiff relies very much on the undisputed fact that the plaintiff is a leading vehicle sales company here in Papua New Guinea. In his written submissions, his lawyers refer to and rely on section 53 of the Goods Act which provides for breach of warranties. He also refers to and relies on section 15 of the same act which provides for implied conditions as to quality etc.
    
23. However, although there is mention of the Goods Act at par. 12 of the plaintiff's statement of claim, the plaintiff does not or has not specifically pleaded the sections that he now refers to in his written submissions. The pleading is also very rague because it is not fully particularized. The pleading in par. 12 of the Statement of claim reads as follows;
    

"12. The defendant was in breach of an implied warranty that the bus was of merchantable quality and further in breach of implied condition to fitness of the bus under the Goods Act 1951".

24. That pleading does not in any way support the plaintiff's submissions that I referred to above albeit sections 15 and 53 of the Goods Act and also does not particularize the claims is paragraph 12.
    

(i) Lack of pleading of specific provisions of the Goods Act

Does the non-pleading of ss. 15 and 53 of the Goods Act affect the plaintiff's case in any way?

25. In my view, it does so. I say this because, at par. 12 of the Statement of Claim, there is only a fleeting reference to the Goods Act whereas in the plaintiff's written submission, more particularly at pars. 17, 18, 19, 20, 21 and 22, the plaintiff discusses the law extensively as to how sections 15 and 53 ought to be applied and goes further by relying on the case Win v. General Auto Centre Limited (2009) N3680, where the Court applied sections 15 and 53 of the Goods Act.
    
26. The plaintiff has placed the defendant in a position where he is caught unaware as to the nature of the case being brought by the plaintiff. The two provisions relied on by the plaintiff are of such importance to the plaintiff's case that he ought to have specifically pleaded those provisions in the Statement of Claim. This would then have given the defendant the opportunity to properly respond to that pleading in its Defence. The plaintiff has not done that and also, has not fully particularized his statement of claim. I will demonstrate later below.
    
27. The only reference to warranties is at pars. 12 and 13 of the plaintiff's statement of claim. Par. 13 pleads as follows;
    

13. The breach of implied warranties as to merchantable quality and implied condition as to fitness of the bus are sufficient grounds to give a new bus to the plaintiff or alternatively set aside the contractual transaction and does refund the plaintiff's purchase price but the defendant did not accept either one of them.

28. The defendant's response to pars. 12 and 13 of the Statement of Claim are pleaded in pars. 6 and 7 of its Defence as follows;
    

"6. The defendant denies par. 12 of the Statement of Claim.

7. In answer to paragraph 13 of the statement of claim, the defendant;

i. denies the allegations concerning breach of implied warranties as to merchantable quality and implied condition as to fitness;

ii. says that it explained to the plaintiff the reasons why a new bus could not be given to the plaintiff and the plaintiff accepted the explanation;

iii. says that with respect to the allegation concerning refund of the purchase price, the plaintiff not only sought refund but also sought compensation for alleged loss of income;

iv. Does not admit the balance of the matters alleged."

29. The defendant's response to the plaintiff's case is as pleaded, demonstrated above. If the plaintiff had specifically pleaded ss. 15 and 53 of the Goods Act or fully particularized that paragraph, definitely, the defendant's response in his Defence would have been different to that set out above. It would have been more detailed, maybe particularized to a certain extent or there could also have been reference to certain provisions of the Goods Act. As it is, the plaintiff's pleading is very vague.
    
30. In practice, a lawyer does not wish to spend countless hours 'guessing' as to what his friend's case will be, hours that will be charged and for nothing or hours that are effectively non-chargeable. That is a real disservice to a lawyer's practice. And that can be avoided if the pleading is clear and specific so all parties are fully aware of each others' case.
    
31. Order 8 Rule 14 of the National Court Rules is the provision on Matters for specific pleading. It reads;
    

"14. Matters for specific pleading. (15/3)

In a defence or subsequent pleading the party pleading shall plead specifically any matter, for example, performance, release, any statute of limitation, fraud, or any fact showing illegality-

(a) Which he alleges makes any claim, defence or other case of the opposite party not maintainable; or

(b) Which, if not pleaded specifically, may take the opposite party by surprise; or

(c) Which raises matters of fact not arising out of the preceding pleadings."

32. Order 8 Rule 14 is based on Rule 15.13 of the New South Wales Supreme Court Rules. Rule 15.13 reads:
    

"[15.13] Matters for specific pleading

13. (1) the plaintiff shall, in his statement of claim, plead specifically any matter which,if not pleaded specifically, may take the defendant by surprise.

(2) In a defence or subsequent pleading the party pleading shall plead specifically any matter, for example, performance, release, any statute of limitation, extinction under Division 1 of Part 4 of the Limitation Act, 1969, of a right or title, voluntary assumption of risk, causation of accident by mechanical defect not known to, or discoverable by, the defendant, fraud or any fact showing illegality –

(a) which he alleges makes any claim, defence or other case of the opposite party not maintainable;

(b) which, if not pleaded specially, may take the opposite party by surprise; or

(c) which raises matters of fact not arising out of the preceding, pleading."

33. Ritchies Supreme Court Procedure NSW states again at par. 15.13.1;
    

"The requirement for specific pleading – a particular application for a wider principle." The requirement for specific pleading, particularly of any matters that might take the other party by surprise, complements many other rules designed to define the matters in issue and promote the "just, quick and cheap" disposal of proceedings... The consequence of the specific pleading requirement is that neither party can merely traverse.

"NOTES

[15.13.1] The requirement of specific pleading – a particular application of a wider principle. The requirement for specific pleading, particularly of any matters that might take the other party by surprise, complements many other rules designed to define the matters in issue and promote the "just, quick and cheap" disposal of proceedings. Those rules include the statement of overriding purpose in Pt 1 r 3, the provisions of Pt 15 r 2 and Pt 15 A) (relating to the definition and reasonableness of matters in issue) and the costs sanctions in Pt 52A rr 43, 43A. The consequent of the specific pleading requirement is that neither party can merely traverse the other's allegations where the party's true case involves either some positive assertion of fact, some special claim (such as a statutory cause of action or defence) or a claim that the other party's case is bad in law: Attorney General v. Lord Mayor of Sheffield (1912) 106 LT 367. The purpose of the requirement is to give the other party proper opportunity to prepare and present its case: Bright v. Sampson & Duncan Enterprises Pty Ltd (1985) 1 NSWLR 346; Re Robinson Settlement; Grant v. Hobbs [1912] UKLawRpCh 40; [1912] 1 Ch 717 at 728. The philosophy underlying the purpose of the requirement is that the interests of justice are best serviced by ensuring the real issues in dispute are litigated in a proper, timely and efficient manner. The ramifications of this philosophy for the proper conduct of litigation are illustrated in the observations of Allsop J in White v. Overland BC 200105643; [2001] FCA 1333 at [4] Allsop J said;

"... the parties should take steps to ensure that all relevant parties to the dispute are cognizant of what the issues are... where it is evident, or indeed suspected, that the other side is proceeding on the basis of a misconception or has not appreciated something, as a general rule, efficiency, common sense and an appreciation of the costs and resources (both public and private) likely to be wasted by confusion in litigation will mandate that a party...ensure that the other is not proceeding on a misconception or that the other does appreciate something that has been said. Litigation is not a game. It is a costly and stressful, though necessary, evil. To paraphrase Roscoe Pound from "The Causes of Popular Dissatisfaction with the Administration of Justice" (1906) 29 ABA Rep 395 at 404-6, the "sporting theory of justice" (1906) 29 ABA Rep 395 at 404-6, the "sporting theory of justice" and any behavioral manifestation of it should be seen as a survival, or better, relic, of the days when a lawsuit was a fight between two clans; cf Jackamarra v. Krakouer (1998) 195 CLR 516 at 526-7; 153 ALR 276 at 283 – 4 per Gummow and Hayne JJ. Representatives do not owe duties to the other side's client. They owe duties to their own client. But no one's interests are advanced by litigation proceeding on assumptions which are seen or suspected to be false... In the long run, the only consequence of keeping issues hidden or not clearly indentifying them is to disrupt the business of the court leading to the waste of valuable public resources and to lead to the incurring of unnecessary costs by the parties...

The same point is illustrated by the decision in Nowlan v. Marson Tansport Pty Ltd [2001] NSWCA 346; (2001) 53 NSWLR 116; 34 MVR 495 and Malone v. NSW National Parks and Wildlife Service BC200105899; [2001] NSWCA 345, where the Court of Appeal explicitly approved Allsop J's comments and allowed an appeal on the basis of further evidence on a factual issue that has not been specifically put in contest at the hearing below. See also Glover v. Australian Ultra Concrete Floors Pty Ltd BC200301878: [2003] NSWCA 80 (corroborative further evidence admitted on appeal, to rebut oral evidence of fabrication.)"

34. Ritches also discusses matters that should be specifically pleaded and I set these out below for the pleading connoisseur;
    

"[15.13.2] Matters for specific pleading – general examples. The plaintiff should plead matters relied upon in aggravation of damages. Millington v. Loring (1880) 6 QBD 190; Whitney v. Moignard [1890] UKLawRpKQB 57; (1890) 24 QBD 630. All matters of jurisdiction or excuse must be specially pleaded (Attorney General v. Lord Mayor of Sheffield (1912) 106 LT 367; Johnstone v. Pedlar [1921] UKHL 1; [1921] 2 AC 262); so must all defences of illegality or nullity: Thorby v. Goldberg [1964] HCA 41; (1964) 112 CLR 597 at 617; Davie v. New Merton Board Mills [1956] 1 All ER 379; [1956] 1 WLR 233; Castles v. Freidman Settlement; Gant v. Hobbs [1912] UKLawRpCh 40; [1912] 1 Ch 717 (moneylending legislation defence). Estoppel must be pleaded: Coppinger v. Norton [1902] 2 Ir R 232 and see also [15.13.4]. A defence of statutory authority must be pleaded: Coburn v. Collings [1887] UKLawRpCh 58; (1887) 35 Ch D 373; Hayward v. Lely (1887) 56 LT 418. Release must be pleaded: Proudfoot v. Stubbens (1886) 2 WN (NSW) 46. Payment must be pleaded. Young v. Queensland Trustees Ltd (1956) 99 CLR 560; [1956] ALR 939. Other matters which should be specially pleaded include a defence of non est factum (Gallie v. Lee [1971]. AC 1004); a defence raising the Statute of Frauds or its modern equivalents (Clarke v. Callow (1876) 46 LJQB 53; Olley v. Fisher [1886] UKLawRpCh 228; (1886) 34 Ch D 367); an allegation of fundamental breach: Hunt & Winterbottom (West of England) Ltd v. RRS (Parcels) Ltd [1962] 1 QB 617. Contributory negligence must be pleaded: Pt 15 r 14. The burden of proving a failure to mitigate lies on the defendant: Wenkart v. Pitman (1998) 46 NSWLR 502; TCN Channel 9 Pty Ltd v. Hayden Enterprises at 738. Accordingly, failure to mitigate damages should be pleaded – at least where the matters relied upon go beyond matters alleged in the plaintiff's claim: Plato Films Ltd v. Speidel [1961] Ac 1090 at 1105, 1145."
(my emphasis)

35. Indeed, the need to properly prepare in any case is vital. It is a real set back for a lawyer, when, after having spent hours preparing for a trial, it is only when all parties are before a Judge at the commencement of a trial or when making submissions, that submissions on certain provisions of a legislation are then thrust down a lawyer's throat, by the opposing counsel. There is no such thing as a trial by ambush. And learned writers of the law and seasoned practitioners, have re-emphasized this time and time again, always focusing on the saving of costs, being well prepared; and not being a trial by ambush. As Allsop .J said in White v. Overland BC (supra), above; one party must ensure that the other is not proceeding on a misconception because efficiency, common sense and an appreciation of costs, will be the driving force behind the proper pleading exercise.
    
36. And that the pleading of legislative provisions to be relied on in an action or a Defence is imperative, because, as the saying goes, all the cards are laid on the table.
    

(ii) Letters from Ela Motors to the plaintiff

37. The correspondence referred to by the defendant in its Defence are attached to Willard Stephen's affidavit, exhibit '1' for the defendant. It is evident from perusing these correspondence that the plaintiff did take the position, by his letter of 30th July, 2012 to the defendant that;
    

"despite this fact, I have decided to change my mind and have my bus back, after the engine is replaced. I therefore request as soon as the part arrives, have it replaced and return my bus."

38. The plaintiff's letter then becomes rather confusing and contradictory where he states;
    

"in relation to my proposed actions in my earlier letters, I reserve my right to take any of the action if I wish to do so. As such, my position relates only to return of my bus after the faulty engine is replaced without any further or other undertakings.

I look forward to the return of my bus after it is fixed.

I also put on you on notice that, if the bus faces any complication within 3 months after it is fixed and returned, and if such complication arises without any fault of mine, I will hold Ela Motors responsible to have it fixed."
(my emphasis)

39. The plaintiff's letter of 30th July, 2012, also refers to his earlier letter of 12th June, 2012 to the defendant where he asked to "replace the faulty bus with a new bus or if not, for "refund of the K150,000.00 paid plus the seat cover costs, a sum of K700.00.";
    
40. The defendant by its letter of 15th October, 2012 to the plaintiff's lawyer, acknowledges receipt of the plaintiff's letter of 30th July, 2012 and states further, amongst others;
    

"a. the replacement engine has been received and fitted to the vehicle;

b. the vehicle has been road tested to ensure no further issues (as encompassed in our letter to you dated 30th March, 2012) are present and the engine is now in good order;

c. Ela Motors value your custom (sic) and loyalty and as a matter of meeting customer satisfaction and good will, Ela Motors has rectified the issues with the vehicle's engine by ordering a replacement engine;

d. All costs of reinstallation and fitment of the replacement engine have been met by Ela Motors;

e. Ela Motors will also provide a warranty for period of 3 months or 5,000 kilometers whichever comes first (from the date of taking possession of the vehicle) specifically for the engine."
(my emphasis)

41. Soon after that letter, the plaintiff filed the present Writ of Summons on 18th October, 2012.
    
42. As far as I can tell, all misgivings, concerns and qualms the plaintiff had in relation to the replacement of the bus, is resolved by the defendant's letter of 15th October, 2012 because that letter is very clear and succinct as to the steps the defendant will take, in response to the plaintiff's queries.
    
43. However, the plaintiff filed proceedings anyway, despite the defendant's assurance and further reassurance of replacing the engine of the bus, at no cost to the plaintiff, which it did do.
    

iii. The Warranty

44. A copy of the Warranty is attached to the plaintiff's affidavit, exhibit 'A'. The Warranty is referred to in paragraph 16 of that affidavit. Therein, the plaintiff deposes that the defendant refused to replace the bus based on the Warranty that was issued to him at the time of the purchase of the bus. He states further in par. 16 that the Warranty does not specify that the engine is replaceable if it is faulty. He states that the Warranty is in ambiguous terms to a certain extent.
    
45. The Warranty was signed by both parties after the plaintiff attended to pick up the bus. According to Jose Verroya, in his affidavit sworn on 28th April, 2014 and filed on 29th April, 2014, exhibit '2' for the defendant, that as the defendant's National Customer Relations Manager, he has encountered and dealt with many customers. That he only places back orders for parts from Japan after both the customer and the defendant have reached agreement on what will occur. Mr Verroya deposes that an order would not have been placed for the engine if the plaintiff had not agreed to that arrangement because the order has to be sent to Japan and the vehicle part is then shipped over to PNG. He did so only after the plaintiff agreed that the engine could be ordered. That evidence is undisputed. And the bus has remained with the plaintiff, to this day.
    
46. Under the part "WHAT IS COVERED", the Warranty states this;
    

"Basic coverage period;

"Toyota warrants that it will either repair or replace any part that Toyota supplies that is defective in material or workmanship under normal use except those terms listed under "what is not covered" for a period of 24 months or 50,000,00 kilometers (30, 000 miles), whichever comes first."
(my emphasis)

47. The Warranty also provides for exceptions, items which are covered for periods other than the basic coverage. These items are battery, surface, rust and paint damage.
    
48. Items that are not covered are provided in the part "WHAT IS NOT COVERED". It reads as follows;
    

"Factors beyond the manufacturer's control

• repairs and adjustments required as a result of misuse (e.g. racing, overloading), negligence, modification, alteration, tampering, disconnection, improper adjustments or repairs, accident and use of add on parts/material are not covered.
  
• Cosmetic or surface corrosion from stone chips or scratches in the paint is not covered.
  
• damage or surface corrosion from the environment such as acid rain, airborne fall out, (chemicals, tree sap etc), salt, hail, windstorms, lightning, floods, other acts of God and the like is not covered.
  

Lack of maintenance or use of wrong fuel, oil or lubbes

• Repairs and adjustments caused by improper maintenance, lack of required maintenance, or the use of fluids other than the fluids specified in your owner's manual are not covered.
  

Maintenance is owners' expense

• Engine tune up, lubrication, cleaning and polishing, replacement of filters, coolant, spark plugs, fuses, worn wiper blades, worn brake pads, and linings or worn clutch linings are some of the normal maintenance services all vehicles require."
  

49. The defendant pleads in its Defence that although the Warranty did not include labour costs to refit the engine, that the defendant still bore the labour costs including the installation of the new engine, as part of its customer service relationship (par. 10 (iii)) of Defence.)
    
50. I assume it is in response to the terms of the Warranty, that the plaintiff's raise sections 15 and 53 of the Goods Act in their submissions. However, these provisions should have been specifically pleaded in the Statement of Claim because the plaintiff would have "placed its cards on the table" by telling the defendants which provisions of the Goods Act it relies on in its Defence.
    
51. In any event, the plaintiff's complaint is that the bus was not of merchantable quality. However, the evidence is that after the bus was returned to the defendant, the plaintiff agreed that a new engine would be fitted and which was done after the engine was received. And that is also not forgetting that the bus was in the plaintiff's possession for a few weeks before he returned it with the engine complaint.
    
52. Additionally, it is undisputed that the plaintiff had the bus in his possession from the 8th February, 2012 to about 8th March, 2012 about a month. As the bus began to emit black smoke from the exhaust pipe, the plaintiff took it in for service, well within the warranty period. The plaintiff then insisted that the defendant should replace the bus with another bus. However, the Warranty does not make provision for such an exchange. Not only that, there is no justification for the return of a vehicle for a new one because that is not how business is conducted in the real world. The defendant knew it could repair the bus and, although not covered by the Warranty, the defendant replaced the engine at no cost to the plaintiff.
    
53. The other fact which the plaintiff has not made known is that the bus was with him when it began to emit black smoke. The problem could have arisen because of the manner in which the plaintiff used the bus. But the defendant was prepared to repair the bus even to the extent of accepting that it could have been a manufacture's defect.
    
54. I accept that the defendant is unable to properly respond to the plaintiff's submissions without there being specific pleading of those provisions because the statement of claim is vague and lacks those and other particulars. That to do so now, would be speculative.
    
55. Alternatively, as to whether there is a breach of contract, the plaintiff's actions in accepting the bus with the newly fitted engine in itself is testament to his approval or acceptance to use the bus with the newly fitted engine.
    
56. Apart from that, since that time, the plaintiff has continued to use the bus for his business runs, clearly demonstrating his acceptance of the new engine. He cannot now return the bus and say that he has been denied the use of the bus. He is estopped from doing so, a fact pleaded by the Defendants in its defence.
    
57. Therefore, in relation to liability, I find that the plaintiff has not proven;
    

i. that there was a breach of warranty

ii. that the defendant's actions were unconscionable based on an unequal bargaining power in that the defendants wielded power when it maintained its position not to accede to the plaintiff's request to replace the bus.

iv. Whether a warranty is a contract

58. As to whether a warranty is a contract, I have been assisted by Mr Anis' submissions which I reproduce below. They read:
    

"The Concise Law Dictionary 7th Edition defines warranty at page 343 as follows;

"A guaranty or assurance. An agreement with reference to goods of which are subject of a contract of sale, but collateral to the main purpose of such contract, breach of which gives rise to a claim for damages, but not a right to reject the goods and treat the contract as repudiated (Sale of Goods Act 1979 s. 61(1)).

..."

At page 413 of the book WORDS AND PHRASES legally defined, Volume 4: R-Z warranty is defined as follows;

The term 'warranty' is not defined in the [Food Act 1984], but both at common law and by statute it has been contrasted with the term 'condition' when applied to the law of contract. It may be defined as a provision which is subsidiary or collateral to the main purpose of the contract, a breach of which gives the innocent party a right to damages but not a right to treat the contract as at an end. (18 Halsbury's Laws (4th edn) par 1299 n).

'Warranty is one of the most ill-used expressions in the legal dictionary, but in its essence it is contractual in nature and must be pleaded in terms sufficient to assert that contractual relationship. How a statement in a letter that a valuer has accomplished his task can support an allegation that by that letter a contract came into existence I cannot understand. The document is completely inconsistent with the conception of any contractual intent in writing. This is one of those cases where the word 'warranty' has been used, as it so frequently is, to try to manufacture a cause of action by calling something a warranty which on its face is clearly not contractual. Warranty is something collateral or incidental or collateral.' Finnegan v. Allen [1943] 1 KB 425 at 430, CA per Lord Greene MR.

...

59. I have, on additional research, noted in Tretitel's 'The Law of Contract' Eleventh Edition (2003), the description of the term Warranty at pg 788 as follows;
    

(3) Conditions, warranties and intermediate terms

(a) STATEMENT OF THE DISTINCTION English law has for some considerable time recognized a distinction between two classes of contractual terms; conditions and warranties. "Condition" is here used (in its promissory sense) to refer to a contractual terms, the breach of which gives the injured party the right to rescind the contract. Of course he need not rescind but may instead affirm; and he can claim damages whether he affirms or rescinds. A warranty, on the other hand, is a term "the breach of which gives rise to a claim for damages but not to a right...to treat the contract as repudiated. The injured party can generally set up the damages to which he is entitled by reason of a breach of warranty in diminution or extinction of the price and if they are equal to, or exceed the price he will not have to pay anything. Such an outcome may seem to resemble rescission (in the sense of refusal to pay); but the process differs from rescission in that it requires the injured party to prove both the breach and his loss, while rescission requires him to prove no more that the breach.

(my emphasis)

60. So effectively, I accept that, based on the above definitions, a warranty is a collateral term to the main terms of a contract. That a breach of the warranty will entitle the innocent party not to repudiate the contract but that the innocent party can sue for damages.
    
61. In this case, it is not the defendant who is at fault. Rather, the faulty engine is a manufacturing issue. I do not know of the contractual relationship between the manufacturer and the defendant because that evidence was not put before me by either party. There are also no submissions from either party on this. If there was a remedy available to the defendant for a manufacturing defect, that was also not made known to me. In this case, the defendant took it upon itself to replace the faulty engine under the Warranty, relying on the terms of the Warranty which reads;
    

"Toyota warrants that it will either repair or replace any part that Toyota supplies that is defective in material or workmanship under normal use..."

62. Clearly, the defendant is not at fault because in good faith, it remedied the loss suffered by replacing the defective engine with a new engine, done in accordance with the terms of the Warranty.
    
63. For those reasons, this Court makes the following conclusions;
    

1. Under the terms of the Warranty, the defendant can replace a defective engine with a new one;

2. the plaintiff cannot raise and rely on sections 12 and 53 of the Goods Act, without firstly pleading them and fully particularising;

3. the plaintiff is estopped from raising the argument that the defendant refused to return the bus to him.

64. I find that the defendant acted in good faith and that the plaintiff has failed to prove that the defendant was negligent or that the defendant's conduct was unconscionable.
    

Formal Orders;

65. Therefore, the Court orders that:
    
    1. the plaintiff's claim is dismissed in its entirety;
       

2. the plaintiff will pay the defendant's costs of the proceedings, to be taxed if not agreed.
___________________________________________________________
Japson & Associates Lawyers: Lawyers for the plaintiff
Bradshaw Lawyers: Lawyers for the defendant