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Livingstone Fuels Pte Ltd v Palas Auto Service Ltd [2022] FJHC 25; HBC385.2019 (26 January 2022)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

Civil Action No. HBC 385 of 2019

BETWEEN: LIVINGSTONE FUELS PTE LIMITED

PLAINTIFF

A N D: PALAS AUTO SERVICE LIMITED

DEFENDANT

Counsel : Plaintiff: Mr J. Rabuku
: Defendant Mr D. Nair and Mr S. Wally
Date of Hearing : 15.12.2021
Date of Judgment : 26.01.2022

JUDGMENT

INTRODUCTION

1. Plaintiff purchased a new forklift from Defendant. Plaintiff was informed that services and maintenance to forklift done by Defendant. It was purchased on 31.1.2017 and on 15.11.2017 forklift was not operational and it was inspected by Defendant’s technician at site and later in its workshop. Plaintiff was informed that the defect in the fork lift was due to failure to replace lubricating oil in time. Plaintiff was informed that parts of engine was damaged beyond repair and needed replacement at Plaintiff’s cost. Statement of claim had not pleaded cause of action and should be struck off in limine. The basis of Plaintiff’s claim was not stated, instead only facts were stated without pleading a specific cause of action. Even if I am wrong, an item such as forklift which is a movable machine, once sold should be maintained and inspected regularly. This obligation cannot be shifted to seller irrespective of seller or dealer having their own records or services they attend. The obligation to maintain and service was with the owner of the forklift, who had purchased it. The cost of service or maintenance for some items, can be borne out by seller for some time or guaranteed usage, but this does not absolve Plaintiff of regular inspection such as nature of lubricating oil, battery terminals etc. In this instance there was no written warranty. Plaintiff had not established that it had maintained the vehicle with daily and or routine inspections as to the lubricating oil, which caused severe damage to parts of engine. The evidence before court was that Plaintiff or its agents had not maintained forklift with proper care and this had resulted permanent damage to engine and its replacement cost was a thing Plaintiff had to pay.

FACTS

2. In the Pre-trial conference following facts were admitted;
   
   1. Defendant was the sole dealer of Hangcha Forklifts in Fiji.
   2. On or about 31.1.2017 the Plaintiff purchases brand new forklifts valued at $45,000 each with financing from Merchant Finance Limited.
   100. Prior to taking possession of the forklifts Defendant inspected and checked the forklifts and service/maintenance cards were created for each of them.
   4. All service including tyre changes were to be done by the Defendant’s technicians and no other.
   5. The forklifts were covered by warranties.
   6. By January, 2018 forklift registration number IW 836 was delivered to the Defendant’s workshop for further inspection.
   7. On 13.5.2019 Plaintiff wrote to Defendant demanding the release of the service /maintenance report card together with the warranty of the forklift registration number for IW 836.
   8. Defendant confirmed that they do not have service or maintenance reports for vehicle IW 836 on 13.5.2019.
      
3. Plaintiff was never given any written warranty for fork lift IW 836. No such warranty was produced at hearing.
   
4. Forklift bearing registration IW 836 stopped operating on a site of a commercial entity which hired it at that time.
   
5. Defendant’s technical personnel inspected the forklift on site and observed that its battery terminal was fully decayed and difference in lubricating oil. So he requested the forklift to be transported to workshop for detailed inspection.
   
6. After detailed inspection technician of Defendant recommended replacement of engine at the cost of Plaintiff.
   
7. Plaintiff had not agreed to pay $18,475 for a new engine, and labour cost for it. So, forklift remained unusable for its purpose.
   
8. For Plaintiff one witness gave evidence he was the person who dealt with Defendant regarding the purchase of the forklift and also later hiring it to two commercial entities.
   
9. For the Defendant two witnesses gave evidence including the technical officer who experience in forklifts and Sales Manager of Defendant.
   
10. Neither party submitted written submissions.

ANALYSIS

11. At the outset Plaintiff had not pleaded a cause of action in the statement of claim. Apart from that, on what basis it had claimed for the full price of forklift as first prayer. This machine was not beyond repair and could have repaired with $18,475 and cost of labour for the replacement.
    
12. Defendant had submitted a quotation for replacement of entire engine with a new one and Plaintiff had refused that and claiming full price of forklift.
    
13. Apart from full price paid by Plaintiff for the forklift, Plaintiff is claiming cost of hiring from the date that forklift stopped operating for $82,944.
    
14. There was no written hiring agreement produced. Any delay in repair was due to Plaintiff’s refusal to pay for replacement of engine. So delay in repair cannot attribute to Defendant.
    
15. It is trite law that Plaintiff should take all reasonable actions to mitigate damages or loss hence future income from forklift was lost due to Plaintiff’s decision to pay a lesser cost for replacement of engine.
    
16. Plaintiff in the statement of claim had narrated facts relating to incident without pleading cause of action against Defendant.
    
17. Plaintiff had bought forklift bearing registration IW 836 from Defendant on or about 31.1.2017.
    
18. After purchase this forklift was hired to two commercial entities. First it was hired to Total at a daily rate and thereafter to a courier company at the rate of $24 per day for five working days per week.
    
19. There was no evidence of forklift being defective at the time of delivery of the same, and it had worked in two different commercial establishments without any issue till 15.11.2017
    
20. There was no evidence of any inspection schedule or condition of the forklift being examined by any of the commercial entities to which forklift was hired.
    
21. For the Plaintiff only Chief Executive Officer of Plaintiff gave evidence and he could not produce any documentation as to number of hours forklift worked and or maintenance of forklift.
    
22. Plaintiff did not call any person who operated forklift or maintained it. There were no records of as to how many hours it was used daily or any other acceptable time intervals.
    
23. There was no evidence of any daily inspection of forklift by Plaintiff and or employees of two entities it was rented at two different periods. So what can be deduced from evidence before me was the forklift was not subject to routine inspection and maintenance.
    
24. Plaintiff had no prior experience in forklifts and he had purchased them but was unable to produce even its operational manual or service schedule for the forklift. Apart from that daily inspection of any industrial machine such as forklift was needed and this was neglected by Plaintiff as well as operators.
    
25. Plaintiff’s only witness, in his evidence said that these two entities which hired the forklift know about forklifts so they must have maintain them properly. This is not a fact proved. It cannot be relied, unless direct evidence was given on this aspect.
    
26. The circumstantial evidence was that no such inspection carried out. If such inspection done decay of battery terminal would have observed much earlier and would have replaced.
    
27. Plaintiff’s expectation is not sufficient to rebut overwhelming evidence from Defendant that forklift bearing IW 836 was not inspected and service at all and the issue was due to not changing lubricating oil when due and severe damage to parts of engine .
    
28. So the evidence was that lubricating oil had become thick and lost its lubricating quality to a greater extent risking the damage to moving parts of engine.
    
29. Plaintiff’ s witness admitted that this was the first time that he or his company purchased a forklift but he could not produce any maintenance records or even the vehicle manual given to him. Plaintiff had relied on the party to which forklift was hired to maintain it, without actually verifying it.
    
30. This indicate that Plaintiff was negligent about the service or maintenance of forklift IW 836. Not only Plaintiff but also others who hired had not inspected the lubricating oil regularly.
    
31. There were no evidence as to hours of usage for a day or a shift. So there was no evidence as to proper care being taken regarding forklift. Any over usage or long hours of work can have adverse effects on lubricants. The manner in which , this machine was used such as constant use for short time periods, can shorten the time period of lubricant according to the evidence of technician who gave evidence for Defendant.
    
32. There were not records as to how this forklift was used and any inspection as to its condition or more specifically its quality of lubricant or any other part such as battery terminals.
    
33. Plaintiff had not requested for a written warranty for the forklift at the time of purchase till it was returned to Defendant’s workshop and was advised to replace the engine at his cost. So how could Plaintiff rely on undisclosed warranty?
    
34. Defendant did not produce a written warranty at the trial. But the issue before the court was the damage to the engine of forklift from over use of lubricant, which was a negligent act of users of forklift. This cannot be a thing Defendant has any control.
    
35. Defendant had called a witness with over ten years of experience in forklift repair and or hydraulic engineering. His expertise was not challenged. His opinion was not challenged as he had submitted a report with photographic evidence of engine of forklift. It shows thickened lubricant inside the chamber of engine. Hence on balance of probability his finding can be accepted.
    
36. His evidence as to the cause of engine of forklift stoppage was not challenged in cross examination at the trial or even prior to that as it was submitted to Plaintiff prior to this action being filed.
    
37. He gave evidence and stated that forklift was not a vehicle but a machine and needs proper maintenance. So it is a movable machine and needs to be treated accordingly when maintaining it at regular inspections.
    
38. He said that forklifts needs to be inspected every day on several aspects including condition of lubrication oil. According to him the engine had stopped working due to thickening of lubricating oil. Some photographic evidence was produced on that on item No 5 of Defendant’s bundle of documents. These photos show lubricant had become a sludge and struck to chamber instead with free flow for proper lubrication.
    
39. There was no oral or written evidence to contradict this fact. Defendant’s witness informed that engine of forklift had got damaged due to lubricating oil not being replaced after it had become thick.
    
40. Lubricant in an engine is vital for protection of its moving parts and loosing of its lubrication properties and conversion of oil in to a ‘sludge’ cannot happen overnight or even on a short duration of time. This was due to constantly not inspecting lubricating oil which was a responsibility of the operator and or owner. This cannot be shifted to dealer irrespective of alleged “warranty”. It was not a pragmatic thing for Defendant do as condition of such oil can change due to working condition, weather, type of operation etc.
    
41. Neither party produced terms of “warranty” though both parties had admitted there was a warranty for forklift. Such warranty cannot extend to daily inspection of lubricating oil.
    
42. When giving evidence neither party produced evidence as to the number of hours forklift had worked. It was admitted that there was a meter for this purpose and both Plaintiff and Defendant had not kept records of that. Warranty for forklift was directly related to number of hours it worked. This fact was immaterial as to findings as the issue related to not changing lubricant oil on time.
    
43. In the absence of written warranty Section 16 of Sale of Goods Act 1979 applies and it reads :

“16.-(1) Subject to the provisions of this or any other section of this or any other Act, there is no implied condition or warranty as to the quality or fitness for any particular purpose of goods supplied under a contract of sale.

(2) Where the seller sells goods in the course of a business there is an implied condition that the goods supplied under the contract are of merchantable quality, except that there is no such condition-

(a) as regards defects specifically drawn to the buyer's attention before the contract is made; or

(b) if the buyer examines the goods before the contract is made, as regards defects which that examination ought to reveal.

(3) Where the seller sells goods in the course of a business and the buyer, expressly or by implication, makes known to the seller any particular purpose for which the goods are being bought, there is an implied condition that the goods supplied under the contract are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, on the seller's skill or judgment.

(4) An implied condition or warranty as to quality or fitness for a particular purpose may be annexed to a contract of sale by usage.

(5) The foregoing provisions of this section apply to a sale by a person who, in the course of a business, is acting as agent for another as they apply to a sale by a principal in the course of a business, except where that other is not selling in the course of a business and either the buyer knows that fact or reasonable steps are taken to bring it to the notice of the buyer before the contract is made.

(6) In the application of subsection (3) to an agreement for the sale of goods under which the purchase price or part of it is payable by instalments, any reference to the seller shall include a reference to the person by whom any antecedent negotiations are conducted.”

44. Implied warranty of Section 16 of Sale of Goods Act 1979 was not breached in this instance by Defendant. Plaintiff had not pleaded such a breach in its statement of claim which had only pleaded facts without specifically pleading a cause of action or breach on the part of Defendant.
    
45. Forklift had worked without an issue till 15.11.2017 for commercial usage. There was no complaints as to defects during that time.
    
46. He said the cause of the issue with forklift IW 836 was thickening of lubricating oil. He said that lubricating oil needs to be changed depending on usage and many other factors such as leakage of air to engine from a worn Gas cut.
    
47. He also said that when he dismantled the engine the lubrication oil was stuck inside the chamber of engine and this can happen only when lubricant was not replaced as required. Photographic evidence was included in service report contained in item 5 of Defendant’s bundle of documents.
    
48. In the service report submitted by expert witness regarding forklift IW 386 stated that the lubricating oil was “slugged on the top of engine”. This can happen only due to long-term negligence on the part of operator or owner of forklift who had not examined oil for considerable time. There was no record of lubricating oil being changed, since purchase.
    
49. Said report contained in item 5 of Defendant’s documents, further stated that ‘Crankshaft, bearing worn badly’ and there were ‘metal chips’ in the oil sump. This indicates that forklift was operated with lubricating oil which had lost its lubrication qualities for a considerable time, thus damaging moving parts such as crankshafts and bearing and such damaged parts were found in the oil sump as they were heavier than oil.
    
50. There was no evidence of any obligation on the part Defendant to check lubricating oil of forklift sold to Plaintiff. It was not pragmatic due to obvious reasons.
    
51. As it was a machine, its lubrication and daily examination of such vital things cannot be done by Defendant for pragmatic reasons. There was no such warranty to inspect lubricating oil on regular time period by Defendant.
    
52. The fact that it should only be serviced by Defendant as the dealer and sole agent cannot be extended to daily inspection of vital indicators of a machine such as lubrication oil. This was clearly to prevent damages in repair an maintenance by unskilled personnel.
    
53. Defendant’s witness who examined the forklift on site told that even battery terminal was worn off and he could not switch on to find out how many hours it had worked when it stopped working on 15.11.2017.
    
54. This again indicate lack of any kind of supervision or inspection on daily and or any other time period by its operators as well as Plaintiff.
    
55. Any machine can extend its life time due to proper maintenance through constant inspection timely maintenance. At the same time negligence such as highlighted in this case can seriously damage vital parts and shorten life time of any machine with moving parts.
    
56. Plaintiff had an opportunity of repairing the forklift at a cost of $18,475 and cost of labour for $865, but did not do so and now Plaintiff is claiming full cost of the forklift for $41,284.40. This cannot be done and legally as it was Plaintiff’s fault to repair at a lesser cost.
    
57. Plaintiff is also claiming his monthly hiring cost from Defendant. This is also legally unsound as Plaintiff could have got this repaired through replacement of engine for a cost of $18,475 and $865. Without doing that Plaintiff cannot seek hiring cost amounting $82,944.00. This forklift’s engine which was damaged was replaceable at a sum lower than alleged damage and Plaintiff is obliged to take all reasonable steps to minimize damage.
    

CONCLUSION

58. The defect in the forklift is directly related to sluggish or thickening of lubricating oil. This cannot happen suddenly and if inspected could have been avoided. Due to allowing the engine to run on oil which had lost its lubricating quality some permanent damages had happened to vital parts of engine. Changing a lubricant in engine was not a responsibility of Defendant. Plaintiff’s action against Defendant is struck off. Considering circumstances of the case no cost awarded.

FINAL ORDERS

1. Plaintiff’s action is struck off.
2. No costs.
   

Dated at Suva this 26^th day of January, 2022.

.....................................

Justice Deepthi Amaratunga

High Court, Suva