Breaksea Fishing Company Pty Ltd v Pretar Pty Ltd
[2023] WADC 106
•22 SEPTEMBER 2023
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: BREAKSEA FISHING COMPANY PTY LTD -v- PRETAR PTY LTD [2023] WADC 106
CORAM: GETHING DCJ
HEARD: 30 & 31 MARCH 2023
DELIVERED : 22 SEPTEMBER 2023
FILE NO/S: APP 53 of 2022
BETWEEN: BREAKSEA FISHING COMPANY PTY LTD
Appellant
AND
PRETAR PTY LTD
First Respondent
STEPHEN CHARLES MCWHIRTER
Second Respondent
ON APPEAL FROM:
Jurisdiction : MAGISTRATES COURT OF WESTERN AUSTRALIA
Coram: MAGISTRATE HUSTON
File Number : GCLM/1011/2016
Catchwords:
Appeals - Principles governing the determination of errors of law, fact and discretion - Whether Magistrate's reasons were adequate
Contract - Principles by which a court construes a commercial contract - Whether a term to the effect that a vessel be kept in good working order should be implied at law into a sale contract by which possession was immediate, but the price to be paid by instalment, with ownership passing upon full payment
Contract - Effect of termination - Whether a purchaser of property has a right to repayment of instalments of purchase price if the sale does not proceed
Contract - Whether conduct amounted to an anticipatory breach - Whether conduct amounts to repudiation - Whether an invalid termination of a contract amounts to a repudiation of the contract by the party who invalidly terminated the contract
Contract- Damages - Whether damages for rectification work are to be inclusive of GST
Restitution - Total failure of consideration - Whether a purchaser of property has a right to repayment of instalments of purchase price if the sale does not proceed
Tort - Conversion - Whether damages are to be inclusive of GST
Interest - Principles by which pre-judgment interest is awarded in the Magistrates Court - Whether Magistrate erred in allowing pre-judgment interest at the rate of 6%
Costs - Principles by which costs are awarded in the Magistrates Court - Appropriate order where claimant successful on claim and defendant successful on counterclaim
Legislation:
District Court Act 1969 (WA), s 64
Magistrates Court (Civil Proceedings) Act 2004 (WA), s 12, s 25, s 40, s 43
Magistrates Court Act 2004 (WA), s 31
Result:
Appeal allowed in part
Decision of the Magistrate set aside
Judgment in the Magistrates Court for the Appellant against the First Respondent in the amount of $34,791.87 and the Second Respondent in the amount of $19,292
Representation:
Counsel:
| Appellant | : | Mr B P Wheatley |
| First Respondent | : | Mr D Tassone |
| Second Respondent | : | Mr D Tassone |
Solicitors:
| Appellant | : | Brian Wheatley |
| First Respondent | : | Williams & Hughes |
| Second Respondent | : | Williams & Hughes |
Case(s) referred to in decision(s):
1110 Hay Pty Ltd as trustee for The Hay Street Trust v Metso Minerals (Australia) Ltd [No 2] [2018] WASC 227
Ailakis v Olivero (No 2) (2014) 100 ACSR 524
Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172
Ammon v Colonial Leisure Group Pty Ltd [2019] WASCA 158
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Aquitania Investments Pty Ltd atf Elizabeth Mckay Trust t/as Aqua Pump & Irrigation v Glenn Patrick Lucassen t/as Kool Temp Refrigeration and Air Conditioning Services (No 2) [2022] WADC 39
Armada Balnaves Pte Ltd v Woodside Energy Julimar Pty Ltd [2022] WASCA 69
Attorney-General (Botswana) v Aussie Diamond Products Pty Ltd (No 3) [2010] WASC 141
Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321
Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98
Australian Securities and Investments Commission v Kobelt [2019] HCA 18
Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424
Avsar v Binning [2009] WASCA 219
AWAP SGT 26 Investment Ltd v CN 2000 Holdings Ltd [2020] WASCA 74
Badran v Public Transport Authority of Western Australia [2017] WASCA 28
Baltic Shipping Company Ltd v Dillon (1993) 176 CLR 344
Banque Commerciale SA v Akhil Holding Ltd (1990) 169 CLR 279
Becker Group Ltd v Motion Picture Co of Australia Ltd [2004] FCA 630
Bell Group NV (in Liq) v Insurance Commission of Western Australia [2017] WASCA 229
Bellgrove v Eldridge (1954) 90 CLR 613
Bennett v Goodwin [2005] NSWSC 930; (2005) 62 ATR 515
Binningup Nominees Pty Ltd v Mirvac (WA) Pty Ltd [2021] WASCA 130
Borg v Northern Rivers Finance Pty Ltd [2003] QSC 376
Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39 (S)
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266
Breaksea Fishing Company Pty Ltd v Pretar Pty Ltd [2020] WADC 116
Brown v Churchill [2006] WASCA 17; (2006) 31 WAR 246
Browne v Browne [2019] WASCA 1
Butler v Egg and The Egg Pulp Marketing Board (1966) 114 CLR 185
CA & Associates Pty Ltd v Fini Group Pty Ltd [2020] WASCA 31
Chep Australia Limited v Bunnings Group Limited [2010] NSWSC 301
Chester v WA Country Health Service [2022] WASCA 57
Chief Executive Officer, Department for Child Protection v IGR [2019] WASCA 20; (2019) 54 WAR 222
City Motors (1933) Pty Ltd v Southern Aerial Super Service Pty Ltd (1961) 106 CLR 477
Clambake Pty Ltd v Tipperary Projects Pty Ltd [No 3] [2009] WASC 52
Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194
Coats v Sarich [1964] WAR 2
Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337
Cowan v Stanhill Properties (1967) VLR 461
Craft Decor Pty Ltd v Oteri [2012] WASCA 46
Craig-Bridges v NSW Trustee and Guardian [2017] NSWCA 197
Dare v Pulham (1982) 148 CLR 658
Defendi v Eden Hill Plasterers [2008] WASCA 269
Defendi v Szigligeti [2019] WASCA 115
Dies v British and International Mining & Finance Corporation Ltd [1939] 1 KB 724
Du Buisson Perrine v Chan [2016] WASCA 18
East Metropolitan Health Service v Ellis (by his Next Friend Christopher Graham Ellis) [2020] WASCA 147
Elkhoury v Farrow Mortgage Services Pty Ltd (in liq) (1993) 114 ALR 541
Ellis v East Metropolitan Health Service [2018] WADC 36
Enviro Constructions Australia Pty Ltd v Mandurah Homes Pty Ltd [2013] WADC 163
Equuscorp Pty Ltd v Haxton [2012] HCA 7; (2012) 246 CLR 498
Euphoric Pty Ltd v Ryledar Pty Ltd [2006] NSWSC 2
Finesky Holdings Pty Ltd v Minister for Transport for Western Australia [2001] WASC 87
Foran v Wight (1989) 168 CLR 385
Fox v Percy [2003] HCA 22
Gagner Pty Ltd v Canturi Corporation Pty Ltd [2009] NSWCA 413; (2009) 236 FLR 401
Gerrard v Slamar [2004] WASCA 253
Godden v Alford [1960] WAR 235
Gold Valley Iron Pty Ltd (in liq) v OPS Screening & Crushing Equipment Pty Ltd [2022] WASCA 134
Goodrich Aerospace Pty Limited v Arsic (2006) 66 NSWLR 186
Grincelis v House [2000] HCA 42; (2000) 201 CLR 321
H2 Migration & Education Pty Ltd v Gu [2023] WASC 199
Holland v Wiltshire (1954) 90 CLR 409
House v The King (1936) 55 CLR 499
Hughes v St Barbara Ltd [2011] WASCA 234 (S)
Hungerfords v Walker (1989) 171 CLR 125
Hutton v Meston [2004] WASCA 178
International Finance Trust Co Ltd v New South Wales Crime Commission [2009] HCA 49; (2009) 240 CLR 319
Johnson v Perez [1988] HCA 64; (1988) 166 CLR 351
Jones v Darkan Hotel [2014] WASCA 133
JR Marine Systems Pte Ltd v Wavemaster International Pty Ltd (in liq) [2011] WASCA 16
KND v The State of Western Australia [2017] WASCA 36
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; (2007) 233 CLR 115
Lacco v Director of Public Prosecutions (WA) [2022] WASC 168
Latoudis v Casey (1990) 170 CLR 534
Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623
Lawrence v Province Leader of the Oceania Province of the Congregation of the Christian Brothers [2020] WADC 27 (S)
Lee v Lee [2019] HCA 28; (2019) 93 ALJR 993
Lep Air Services Ltd v Rolloswin Investments Ltd [1973] AC 331
Love v Simmons [2016] WASCA 176
Luxer Holdings Pty Ltd v Glentham Pty Ltd [2007] WASCA 209
Mann v Paterson Constructions Pty Ltd [2019] HCA 32; (2019) 267 CLR 560
Manonai v Burns [2011] WASCA 165
Marks v Coles Supermarkets [2021] WASCA 176
Matthews v Cool Or Cosy Pty Ltd [2004] WASCA 114
McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457
McKessar v Pascoe [2020] WASCA 106
Merilla Pty Ltd v Commonwealth of Australia[2015] WASC 309 (S)
Mighty River International Ltd v Mineral Resources Ltd [2020] WASCA 44
Millington v Wastewise Environmental Pty Ltd [2015] VSC 167
Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 17] [2018] WASC 8
Minister for Immigration and Border Protection v SZVFW [2018] HCA 30; (2018) 264 CLR 541
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Mirvac (WA) Pty Ltd v Binningup Nominees Pty Ltd [2020] WASC 28
Moffet Farms v Pauls Services & Sales Pty Ltd [1991] 7 SR (WA) 351
Motium Pty Ltd v Arrow Electronics Australia Pty Ltd [2011] WASCA 65
Naidoo v Williamson [2008] WASCA 179 ; (2008) 37 WAR 516
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Nudrill Pty Ltd v La Rosa [2010] WASCA 158
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Webb v Tang [2021] WASC 344
Wellington City v Singh [1971] NZLR 1025
West Australian Newspapers Ltd v Bond [2009] WASCA 127
Western Credits Pty Ltd v Dragan Motors Pty Ltd [1973] WAR 184
Williams v Smith (1960) 103 CLR 539
Yara Australia Pty Ltd v Oswal (No 2) [2013] WASCA 187
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Table of Contents
1. Introduction
2. Evidence at the trial
2.1 Overview
2.2 Managed fishing licences
2.3 Evidence of Christopher Barry Black
Background
Sale Contract
Initial Condition of the Vessel
Payments made by Breaksea
Damages sustained in May 2015 and consequences
Sublease of the MFL Units and efforts to sell the Vessel
Advertisements and subsequent conversations
Repossession
Conversion Claim
Repair Costs Counterclaim
MFL Fees Counterclaim
Unit Fees Counterclaim/ Unconsumed Units Claim
Letters of demand
2.4 Evidence of Barry Black
2.5 Evidence of Allan Andrew Gove
2.6 Evidence of Reed William May
2.7 Evidence of James Graham Niccol
2.8 Evidence of Mark Robinson
2.9 Evidence of Stephen Charles McWhirter
Background
The Sale Contract
Condition of the Vessel at the time of purchase
Payments by Breaksea
Transfer to MFL Units to Mr Scimone
Damage to the Vessel in May 2015
Advertising of the Vessel for sale
Advertisement of the MFL Units
Repossession of the Vessel
Conversion Claim
Repair Costs Counterclaim
Ian Stockbridge
2.10 Exhibits
3. Proceedings in the Magistrates Court
3.1 Overview
3.2 Issues arising at the commencement of the hearing on 5 November 2018
3.3 Issues arising at the conclusion of the hearing on 6 November 2018
4. Parties' positions at the close of evidence
4.1 Principles
4.2 Documents
4.3 Parties
4.4 The Sale Contract
4.5 Payments made
4.6 MFL Units Fees payments
4.7 Did Pretar repudiate the Sale Contract?
4.8 Purchase Price Claim
4.9 Insurance Claim
4.10 Unconsumed Units Claim
4.11 Conversion Claim
4.12 Did Breaksea repudiate the Sale Contract by wrongfully purporting to terminate it?
4.13 Was Pretar entitled to terminate the Sale Contract as a result of Breaksea's breaches of the payment terms?
4.14 Was Pretar entitled to terminate the Sale Contract as a result of Breaksea's breach of a term to maintain the Vessel?
4.15 Purchase Price Counterclaim
4.16 Unit Fees Counterclaim
4.17 MFL Fees Counterclaim
4.18 Repair Costs Counterclaim
4.19 Credibility
4.20 Jurisdiction of the Magistrates Court
5. Decisions of the Magistrate
5.1 First Decision
Overview
General factual background and findings
Core factual findings
Credibility issues
Who repudiated the Sale Contract
Other breaches by Breaksea
Breaches by Pretar
Determination of the Claim
Determination of the Counterclaim
Order made
5.2 The Second Decision
5.3 The Third Decision
6. Appeals to the District Court
6.1 Procedural history
6.2 Principles governing the Appeal
6.3 Issues in the appeal
7. Did the Magistrate err in dismissing the Purchase Price Claim and allowing the Purchase Price Counterclaim?
7.1 Overview
7.2 Magistrate's decision
7.3 Grounds of appeal
7.4 Breaksea's submissions
7.5 Respondents' submissions
7.6 Determination - Parties to the Sale Contract
7.7 Determination - Contract
Nature of the appellate review
Proper construction of the payment terms of the Sale Contract
What is the effect of the termination of the Sale Contract?
7.8 Determination - Restitution
7.9 Determination - Repudiation
Utility
Facts which are not in dispute
Scope of the issue
Determination
8. Did the Magistrate err in allowing Unit Fees Counterclaim?
8.1 Facts which are not in dispute
8.2 Respondents' counterclaim
8.3 Magistrate's decision
8.4 Grounds of appeal
8.5 Breaksea's submissions
8.6 Respondents' submissions
8.7 Determination
9. Did the Magistrate err in allowing the MFL Fees Counterclaim?
9.1 Facts which are not in dispute
9.2 Respondents' counterclaim
9.3 Magistrate's decision
9.4 Grounds of appeal
9.5 Breaksea's submissions
9.6 Respondents' submissions
9.7 Determination
10. Did the Magistrate err in allowing the Repair Costs Counterclaim?
10.1 Facts which are not in dispute
10.2 Repair Costs Counterclaim
10.3 Magistrate's decision
10.4 Grounds of appeal
10.5 Breaksea's submissions
10.6 Respondents' submissions
10.7 Determination - Adequacy of Reasons
10.8 Determination - Expense Term
10.9 Determination - Repair Implied Term
10.10 Determination - Scope of the Repair Costs Counterclaim
10.11 Determination - Breach and Damages
Principles - Breach and assessment of damages
Principles - Appellate review where there is a factual dispute based on credibility
Determination - Condition of the Vessel generally
Determination - GST
Interim Gearbox
Determination - Compass Survey
Determination - Life raft
Determination - Fishing Nets
Determination - Repairs to the hull
Determination - Re-commissioning starboard generator
Determination - Broken rope cutters
Determination - Recommissioning VMS
Determination - Cost of anchor rope, net weights and pink floats
Determination - Summary
11. Did the Magistrate err in dismissing the Insurance Claim?
11.1 Facts which are not in dispute
11.2 Breaksea's claim
11.3 Magistrate's decision
11.4 Grounds of appeal
11.5 Breaksea's submissions
11.6 Respondents' submissions
11.7 Determination
12. Did the Magistrate err in not allowing Breaksea to bring Unconsumed Units Claim?
12.1 Facts which are not in issue
12.2 Magistrate's decision
12.3 Grounds of appeal
12.4 Breaksea's submissions
12.5 Respondents' submissions
12.6 Determination
13. Did the Magistrate err in dismissing the Conversion Claim?
13.1 Breaksea's claim
13.2 Magistrate's decision
13.3 Ground of appeal
13.4 Determination - Sufficiency of reasons
13.5 Determination - Overview
13.6 Determination - Undisputed Items
Factual basis
Respondents' submissions
Breaksea's submissions
Determination
13.7 Determination - Genset
Factual basis
Respondents' submissions
Breaksea's submissions
Determination
13.8 Determination - Disputed Items
Breaksea's submissions
Respondents' submissions
General facts and matters
Item D - EPIRB
Item K - Diesel fuel
Item M - 2 x spare Davey pumps
Item O - 24 volt stop solenoid for m/engine
Item P - 12 volt inverter/converter
Item S - Medical kit
Item T - Rags
Item U - Nets
Item V - 24 volt heavy duty battery charger
13.9 Summary
14. Did the Magistrate err in awarding the Respondents interest on the damages it was awarded?
14.1 Pretar's claim
14.2 Magistrate's decision
14.3 Grounds of appeal
14.4 Breaksea's submissions
14.5 Respondents' submissions
14.6 Determination
15. What final orders are appropriate
15.1 Summary of findings
15.2 Interest
General matters
Purchase Price Claim
MFL Fees Counterclaim
Repair Costs Counterclaim
Insurance Claim
Conversion Claim
15.3 Net judgment
15.4 Costs of the Magistrates Court proceedings
15.5 Costs of the Appeal
15.6 Summary of proposed final orders
ANNEXURE A
ANNEXURE B
GETHING DCJ:
Introduction
In August 2014 Breaksea Fishing Company Pty Ltd (Breaksea), the Appellant, entered into a contract (Sale Contract) to purchase from Pretar Pty Ltd (Pretar) a commercial fishing vessel by the name of Elizabeth Maria II (the Vessel). The offer followed negotiations between Christopher Black, a director of Breaksea, and Stephen McWhirter, a director of Pretar. Both Mr McWhirter and Mr Black had been involved in the commercial fishing industry in Western Australia, the former for much longer than the latter, and had known each other for some time. I will refer to Mr McWhirter and Pretar collectively as 'the Respondents'.
The Sale Contract provided for the payment of the purchase price for the Vessel on terms including interest over the following four years. It also provided for Pretar to lease to Breaksea certain Managed Fishing Licence Units (MFL Units), which I describe in section 2.2. On or about 10 August 2014 Breaksea took possession of the Vessel and began to operate it in accordance with the terms of the Sale Contract.
Things did not go well for Breaksea. In particular, on or about 8 May 2015, the Vessel suffered damage to its propeller, propeller shaft and rudder when it fouled an anchor rope which had been lost from another vessel. For this and other reasons, it was not capable of operation from that date through to the end of December 2015. Breaksea made no payments of capital or interest after 30 June 2015.
In November 2015, Mr McWhirter advertised some of the MFL Units for sale. There were telephone conversations between Mr Black and Mr McWhirter about this advertisement. In December 2015, Mr McWhirter placed a second advertisement, this time for the sale of all of the MFL Units.
It is not in issue that on 27 December 2015 Mr Black and Mr McWhirter had a telephone conversation. Nor is it in issue that in this conversation, Mr Black informed Mr McWhirter that the Sale Contract was at an end.
Breaksea asserts that Mr McWhirter's actions in placing the two advertisements amounted to a repudiation of the Sale Contract which entitled it to terminate the Sale Contract.
Pretar asserts that Mr McWhirter's actions in placing the two advertisements did not amount to a repudiation of the Sale Contract, and that Breaksea's purported termination of the Sale Contract in the 27 December 2015 conversation itself amounted to a repudiation.
It is not in issue that on 1 January 2016, Mr McWhirter, on behalf of Pretar, retook possession of the Vessel.
On 21 January 2016, Breaksea commenced proceedings in the Magistrates Court against Pretar and Mr McWhirter. Its claim then had three components:
(a)damages in the amount of the instalments of purchase price paid and interest paid by it (Purchase Price Claim);
(b)damages in respect of insurance which Breaksea paid for the period after the Respondents took possession of the Vessel (Insurance Claim); and
(c)damages in respect of property of Breaksea which was said to be on the Vessel when Pretar took possession of it which, notwithstanding demand, had not been returned (Conversion Claim).
Breaksea limited its claim for damages to $75,000 so as to keep the case in the jurisdiction of the Magistrates Court.
The Respondents defended the claim on the basis that is was Breaksea who repudiated the Sale Contract. It counterclaimed, with four components:
(a)damages arising out of the poor condition of the Vessel when it was repossessed (Repair Costs Counterclaim);
(b)damages for the instalments of the purchase price and interest due and payable on 30 September 2015 and 31 December 2015 (Purchase Price Counterclaim);
(c)damages for unpaid lease fees for MFL Units for the period 1 June 2015 to 1 January 2016 (Unit Fees Counterclaim); and
(d)damages for proportion of fees payable to the Department of Fisheries (DOF) for the period 1 June 2015 to 1 January 2016, which Breaksea was required to pay under the Sale Contract (MFL Fees Counterclaim).
The matter proceeded to trial which took place on 12, 13, 14, 15 and 16 February and 5 and 6 November 2018. In Part 2 I set out the evidence adduced at the trial.
A number of issues arose which caused delay in the Magistrate handing down a decision and generally finalising the claim. I set these out in detail in Part 3.
In Part 4 I outline the positions of the parties following the trial. This defined the issues for determination by the Magistrate.
In the end, the Magistrate made three decisions.
The first decision was made on 13 May 2020 (First Decision), which I set out in section 5.1. The Magistrate dismissed Breaksea's claim against each Respondent, that is, the Purchase Price Claim, the Insurance Claim and the Conversion Claim. The Magistrate allowed the Respondents' counterclaim, assessing damages at $35,585 in relation to the Repair Costs Counterclaim. The Magistrate made programming orders made to assess the remaining damages claimed.
The second decision was made on 29 March 2022 (Second Decision), which I set out in section 5.2. The Magistrate allowed the Purchase Price Counterclaim, the Unit Fees Counterclaim and the MFL Fees Counterclaim. The Magistrate also allowed certain additional damages in respect of the Repair Costs Counterclaim. In total, the Magistrate assessed damages in the amount of $55,427.56, and awarded the Respondents interest to be assessed. There were then some further programming orders made in relation to the claim by the Respondents for replacement of the gearbox of the Vessel.
The third decision was made on 20 June 2022 (Third Decision) which I set out in section 5.3. Prior to the hearing, the Respondents elected not to press the claim in relation to the gearbox. The parties agreed that the programming orders be set aside. In summary, the Magistrate assessed interest at $16,498.82. The Magistrate also ordered Breaksea to pay the costs of the claim and counterclaim, to be taxed if not agreed.
Breaksea has appealed each decision (Part 6). The parties prepared a comprehensive Appeal Book.[1]
[1] Which I will refer to as 'AB'.
For the reasons which follow, the Magistrate:
(a)erred in dismissing the Purchase Price Claim (Part 7);
(b)erred in dismissing the Insurance Claim (Part 11);
(c)erred in dismissing the Conversion Claim in its entirety, and should have allowed it in part in the amount of $13,200 (exclusive of interest) (Part 13);
(d)erred in allowing the Purchase Price Counterclaim (Part 7);
(e)did not err in allowing the Repair Costs Counterclaim, save for the issue of deducting GST, making the claim $37,235.73 (exclusive of interest) (Part 10);
(f)erred in allowing the Unit Fees Counterclaim (Part 8); and
(g)did not err in allowing the MFL Fees Counterclaim (Part 9).
The net result is that Breaksea is entitled to judgment against Pretar in the net amount of $34,791.87 and to judgment against Mr McWhirter personally in the amount of $19,292 (all amounts inclusive of interest).
Throughout this decision, I have sought to adopt common terms and abbreviations in order to make the reasons as intelligible as possible. This means that where it aids in understanding, I have referred to matters using my common term, as opposed to the different language used to describe the same matter in the source materials. For the same reason, I have referred to the Appellant throughout these reasons as 'Breaksea' and the Respondents, collectively, 'the Respondents'.
Evidence at the trial
2.1 Overview
As mentioned, the trial of the matter took place on 12, 13, 14, 15 and 16 February and 5 and 6 November 2018.
For Breaksea, Mr Black gave evidence. Breaksea also called Barry Black, Mr Black's father, whom I will refer to as Mr Black Snr. The other witnesses called by Breaksea were:
(a)Allan Andrew Gove, Breaksea's accountant;
(b)Reed William May, a fabrication contractor engaged by Breaksea;
(c)James Graham Niccol, a marine engineer and surveyor; and
(d)Mark Robinson, who had previously worked on the Vessel.
The way the trial progressed, Mr Gove and Mr Black Snr gave evidence before Mr Black. However, in order for the evidence to make sense chronologically, in this decision I begin with the evidence of Mr Black.
For the Respondents Mr McWhirter gave evidence. The Respondents also called Ian Stockbridge, a marine surveyor, however in the end did not rely on his evidence.
The evidence‑in‑chief of each witness was largely in terms of their Form 32A Statement of Intended Evidence of a Witness.
2.2 Managed fishing licences
Before setting out the evidence of each witness, it is instructive to set out the evidence in relation to the Managed Fishing Licences or MFLs. This evidence was not in issue either at trial or in the appeal. It forms a necessary context in which to consider the remainder of the evidence.
The MFLs in the present case were for the Southern Demersal Gill net and Demersal Longline Managed Fishery. This fishing zone is from Walpole to Eucla (117 degrees longitude to 129 degrees longitude). The primary species targeted is sharks.[2]
[2] AB 139 - AB 141, AB 493.
A MFL is for a number of 'units'. Each unit is for a net 270 m long and 20 m deep. The net is laid on the ocean floor to trap the sharks that swim near the ocean floor. The unit regulates the hours that a fishing boat can operate in the specified zone. Specifically, each unit could be used to fish for 20 days per month and for 19 hours per day.[3]
[3] AB 141, AB 493 - AB 494.
An MFL is perpetual. There is a requirement to pay an annual licence fee to the DOF in respect of a MFL. MFLs are issued for a year commencing 1 June and ending 31 May.[4]
[4] AB 139 - AB 141, AB 493.
Mr McWhirter had two MFLs. I note that in his witness statement, Mr McWhirter says that the units were owned by Pretar.[5] However, the copies of the licences in evidence were in Mr McWhirter's name.[6] I return to the significance of this in section 4.3. The first, licence number MFL 2005 was for 40.5 units.[7] The second, licence number MFL 2060, was for 67.5 units.[8] At some point, the DOF multiplied the original units by 10, so that 40.5 units became 405 units and 67.5 units became 675 units.[9]
[5] AB 493 - AB 494.
[6] AB 177 - AB 180.
[7] AB 177 - AB 178 (Exhibit 6); AB 490 (Exhibit 16).
[8] AB 179 - AB 180 (Exhibit 6); AB 491 (Exhibit 17).
[9] AB 139, AB 637 (opening submissions).
Each MFL is expressed to be attached to the Vessel. However, the units in the MFLs are transferrable from boat to boat. They are also transferrable between owners. They could also be leased for a season, then revert back to the owner.[10]
[10] AB 139 - AB 141, AB 177 - AB 180, AB 493 - AB 494.
MFLs are comprised by units, which are 'consumed' based on the metres of net and number of hours used.[11]
2.3 Evidence of Christopher Barry Black
Background
[11] AB 637, AB 644 (opening submissions), AB 353, AB 761.
The witness statement of Mr Black was tendered, along with numerous attachments to it.[12] There were some corrections of some dates which I have integrated into the summary which follows.[13] There were also some objections, which, where necessary, I refer to below.
[12] AB, 637, AB 644. The statement is at AB 131 - AB 170.
[13] AB 771.
Mr Black holds a commercial fishing licence, and has been operating as a commercial fisherman since 1986.
Mr Black is a director of Breaksea, along with his wife, Tristen Black. Breaksea was incorporated on 25 November 2011 to carry on a fishing business from Esperance.
In or about September or October 2011, Mr Black entered into an agreement to purchase a fishing vessel by the name of Gwendolyn by instalments. It leased some MFL Units from the vendor. The Gwendolyn ended up not being big enough for Breaksea's needs.
On 9 October 2013, Breaksea was approved for a processing licence to permit it to process fresh fish at sea.
On 29 December 2014 Breaksea purchased a fishing vessel 'Jurabi', which at the time of giving evidence was then known as 'Southern Viking'. Among other things, this boat had a larger fish hold than the Gwendolyn.
Sale Contract
In or about June 2014, Mr McWhirter approached Mr Black to work the Vessel, paying her off 'as we go through the fishing season, utilising and consuming' the MFLs owned by Mr McWhirter.[14] Mr Black gave evidence that:[15]
This arrangement benefited both parties as McWhirter was able to utilise the units in his MFLs and make money from an old vessel he was unable to manage or operate himself and Breaksea was able to get established in the fishing industry.
[14] AB 134.
[15] AB 134.
Mr Black gave evidence that Mr McWhirter told him that he was unable to get anyone to skipper the Vessel.
Mr Black offered to purchase the Vessel on the same terms as he purchased the Gwendolyn, apart from the payment of MFL Unit Fees for the units payable to the DOF, as he was not required to pay licence fees on the Gwendolyn. He agreed upon the terms of the purchase with Mr McWhirter. He said:[16]
I had to work the vessel to catch fish and earn money in order to pay for the boat and lease the units plus running costs. If the vessel wasn't operating there would be no income to pay for the boat and the units would not be used and paid for.
[16] AB 135.
In cross-examination, Mr Black accepted that he inspected the vessel on a 'surface level' before proceeding to enter into the Sale Contract.[17]
[17] AB 807 - AB 808.
Mr Black said that Mr McWhirter told him that the main generator that generates power for the fridges and lights for the boat, which was a 30 KVA Seawasp, was not generating power. Mr McWhirter also told him that the main engine had only done 8,000 hours since its overhaul rebuild and that the gearbox had a complete overhaul rebuild five years prior. Mr Black said that both of the last two statements were inconsistent with subsequent repairs required for the engine and gearbox.
On or about 22 July 2014, Mr Black asked his father, Mr Black Snr, who trades as Phoenix Diesel Services (Phoenix) to inspect the main genset to arrange for its repair or replacement as it was not working. I interpose here to observe that the conversation about the genset in [44] must then have predated first voyage on 10 August 2014 and the execution of the Sale Contract. Mr Black Snr subsequently purchased and installed a new 30 KVA Isuzu Genset (Genset), as to which see [150] ‑ [151] below.
Mr Black confirmed in cross-examination that Breaksea took possession of the Vessel a few days before 9 August 2014, and made the first trip in the Vessel on 10 August 2014.[18]
[18] AB 865.
Mr Black gave evidence that he and Mr McWhirter devised what he described as a basic contract at the same time as a payment schedule. Specifically:[19]
On or about 9 August 2014 (which was one day prior to the vessel heading to sea for its first fishing trip under Breaksea control) I set out the terms of the agreement with the [Respondents] for Breaksea to purchase the [Vessel] from Pretar Pty Ltd ('Pretar'), as requested by McWhirter, for $165,000 capital and $32,787 interest by 17 instalments totalling $197,787.00 and to lease the MFL units at $500/unit which is the standard rate in the fishing industry for the lease of zone 2 MFL units.
The payment schedule is the third page of Annexure A to these reasons.[20]
[19] AB 135.
[20] AB 135, AB 171.
Mr Black goes on to say that they did not originally sign a contract for sale, and only did so on or about 2 September 2014. He said that Mr McWhirter and his wife came to his home and 'insisted that there was a contract as they needed to try and secure a financial loan for what reason I have no idea'.[21] Mr Black's version of the signed Sale Contract is Annexure A to these reasons.[22]
[21] AB 136.
[22] AB 128 - AB 130 (Exhibit 5); also AB 172 - AB 173.
Mr Black gave further oral evidence in relation to the Sale Contract, which is Annexure A. He said that he signed the document in blue ink. However, the words 'EXECUTED IN ACCORDANCE WITH THE CONSTITUTION OF BREAKSEA FISHING COMPANY PTY LTD', which were in black ink, were written by either Mr or Mrs McWhirter when they were at his house when he signed the document.[23]
[23] AB 772 - AB 773.
In cross-examination Mr Black was taken to the two versions of the Sale Contract which were in evidence. The first is Annexure A to these reasons, tendered by Mr Black. The second is Annexure B to these reasons, which was later tendered through Mr McWhirter (see [203], [209]).
Mr Black confirmed that he signed the second page of the document which is at Annexure A.[24] He confirmed that the signature of page 2 of the document which is Annexure B was his. He said that the signature on page one looked like his, but could not recall signing the first page. And said it was unlikely that he did.[25] As this portion of the cross‑examination was relied on by the Magistrate, it is necessary to quote it:[26]
LENHOFF, MR: Thank you, your Honour. Now, Mr Black, it's just a yes or no to this question, which is that page, the first page of the original - that document I handed up to you in the sleeve. If you would look at the bottom righthand corner, is that your signature?---It looks like my signature, yes.
Okay. Did you sign it?---No. I cannot recall signing the bottom of the page.
Okay. So it is then, is it not, your evidence that somebody has done that?---Well.
Well?
[24] AB 791 - AB 792.
[25] AB 793 - AB 799.
[26] AB 795.
Mr Black accepted that the Vessel was sold 'as is, where is' which meant that Breaksea purchased it in the condition that it was in at the time.[27]
[27] AB 870.
Mr Black's evidence in his statement was that there was no agreement that Breaksea was to maintain and keep the Vessel in good working order. Specifically:[28]
There was no agreement that Breaksea was to maintain and keep the vessel in good working order as I was already committed to pay for the vessel and its running costs and expenses and would not have agreed to this due to the very poor condition of the vessel.
[28] AB 138.
However, he resiled from this in cross-examination. He was taken to page 3 of the document which is Annexure B, which set out two clauses that were not in the version of the Sale Contract which is Annexure A. They read:[29]
All responsibilities, running costs and expenses, including fuel, insurance and fees to be paid by Breaksea Fishing Company; and
At any one time, Pretar Proprietary Limited may come aboard vessel without notification and, at any one time, have access to all compartments of vessel.
Mr Black accepted that those clauses formed part of the terms of the Sale Contract.[30] He also accepted that the first clause required him to keep the Vessel in working order.[31] He agreed that 'in circumstances where the title of the [Vessel] remained with Pretar until Breaksea paid in full, that it was Breaksea's responsibility to ensure that the [Vessel] remained in good working order'.[32]
[29] AB 799 - AB 800.
[30] AB 171, AB 800, AB 862. A point later accepted by counsel for Breaksea: AB 832, see also AB 838.
[31] AB 862.
[32] AB 862.
Mr Black was cross-examined on whether or not GST was payable on the instalment payments and lease payments. He accepted that he paid GST on the fishing units after the fifth trip.[33]
[33] AB 808 - AB 814. See also AB 913 - AB 914.
Mr Black said that it was agreed that the insurance was to be in the names of both Breaksea and Pretar. This was what occurred. Mr Black annexed to his statement a tax invoice for the insurance for the Vessel in the names of Pretar and Breaksea, for the period 21 February 2015 to 21 February 2016.[34]
[34] AB 174 - AB 176.
Mr Black gave evidence that Mr McWhirter insisted that if the deal was to go through, Breaksea must pay half of the MFL Units Fees for the 2014/2015 fishing season upfront. Mr Black requested Mr Black Snr to pay half the MFL licence fee for $6,756.40 as a loan. Mr Black Snr paid this amount by cheque to Mr McWhirter on or about 25 July 2014. Mr Black Snr was subsequently repaid by Mr Black.
Mr Black gave evidence as to the importance to him of the MFL's. He said that both the Vessel and the Gwendolyn were very old, and continually needed maintenance. His plan was to 'outdate the old boat' and bring in the Southern Viking. This could accommodate the MFLs held by both the vendor of the Gwendolyn and Pretar. Mr Black said that he had conversations with Mr McWhirter to the effect that he was going to outdate the old boats, and put all the licences on the Southern Viking, and in the process sell the Vessel.[35]
Initial Condition of the Vessel
[35] AB 761 - AB 762.
Mr Black gave evidence that when Breaksea purchased the Vessel it was in a very poor condition. Its genset was not working. It had no nets apart from the 1150 m already on the net drum, that is, 2.5 nets by 460 m. It was lacking exhaust lagging. Exhaust leaks had made the engine room dark and dirty. It had no oils, no filters, no fuel, no fishing gear, no spare pump or electric motors or starter motors and no battery chargers. Its fuel tanks were empty, and Breaksea had to pay for the fuel. Mr Black describes the Vessel as 'basically stripped and the only items bolted or wired to the Vessel remained'.[36]
[36] AB 137 - 138.
Mr Black said that whenever the Vessel came back to port, he always had to get work done to get on top of the Vessel's upkeep and to comply with the 'DOT regulations'.[37]
[37] AB 137 - 138.
Mr Black said that from the time Breaksea took possession of the Vessel in July 2016 until when Mr McWhirter took possession in January 2016, Mr McWhirter never requested him to carry out work on the Vessel and never once complained that Breaksea had not properly maintained and kept the Vessel in good working order.
Payments made by Breaksea
Mr Black gave evidence about payment arrangements in the fishing industry. He said:[38]
The payment arrangements were flexible due to the nature of the fishing industry, which was at all times subject to weather conditions, other financial commitments, breakdowns, crew management and variations in unloaded dates of the catch, all of which may prevent payment on time.
[38] AB 142.
Mr Black also sought to give evidence as to the payment arrangements between Breaksea and the vendor of the Gwendolyn. This was objected to by counsel for the Respondents on the basis that this was irrelevant as it did not relate to the contract between Pretar and Breaksea. Although it is not entirely clear, it appears that counsel for the claimant did not ultimately press for the inclusion of this evidence.[39]
[39] AB 762 - AB 768.
As to the payment arrangements between Breaksea and Pretar, Mr Black gave evidence in the following terms:[40]
There was no agreement that the instalments were to be punctually paid and I would not have agreed to such a term given the uncertainties and variables in the fishing industry.
I continue to make payments to Pretar in reliance that payments were not required to be made strictly on time. Mr McWhirter used to continually say to me that I only need 'one good trip to catch up'.
[40] AB 142 - AB 143.
Mr Black gave evidence that Breaksea paid the capital and interest payments for the September 2014 quarter, December 2014 quarter, March 2015 quarter and June 2015 quarter. His evidence is summarised in the following table:[41]
[41] AB 143 - AB 144.
Date paid Type Amount Sub total 10.10.14 Interest $3,547.50 10.10.14 Capital $5,000 04.12.14 GST $500 September 2014 quarter $9,047.50 2.1.15 Capital, interest, plus GST $8,940 9.2.15 Capital plus GST $5,500 December 2014 quarter $14,400 7.4.15 Capital plus GST $11,000 7.4.15 Interest $3,225 March 2015 quarter $14,225 8.10.15 Capital $5,000 15.11.15 Capital plus GST $6,000 2.12.15 Interest $3,010 June 2015 quarter $14,010
Mr Black added that, although the Vessel was damaged in early May 2015, 'we were still attempting to perform the contract'[42] (see [74] below). The June 2015 quarter payment was paid from income from the Gwendolyn. Mr Black also gave evidence that although the payments were late, the Respondents accepted the payments and did not give notice the payments had to be made strictly on time. He said that he kept Mr McWhirter informed at all times what was going on with financial commitments with the Vessel and its repairs. He said that Mr McWhirter knew exactly what was going on with the Vessel at all times. Mr McWhirter did not demand payment while the Vessel was out of service.
[42] AB 144.
Mr Black also gave evidence that Breaksea paid for the lease of the MFL Units. He identified 16 payments over the period 3 September 2014 to 25 May 2015 and a total of $48,715.55. He described this as for 'units consumed'.[43]
[43] AB 146.
Breaksea also made three further payments for what he described as 'unconsumed units'. These were:[44]
(a)8 August 2015 - $5,000;
(b)29 August 2015 - $3,000; and
(c)17 September 2015 - $2,144.45.
The subtotal was $10,144.45. I will refer to this amount as the 'Unconsumed Units Payments'.
[44] AB 146.
Breaksea also paid two further amounts for units consumed in the 2015/2016 fishing season. These were:[45]
(a)$675.67 paid on 9 September 2015; and
(b)$362.65, paid on 8 October 2015.
[45] AB 24 (Claim par 8).
Mr Black observed that a number of these payments included GST, 'even though this was not included in our agreement'.[46]
[46] AB 147.
Mr Black's evidence of these payments was not challenged in cross‑examination.
In relation to the timing of the instalment payments, Mr Black accepted in cross-examination that the Sale Contract provided for the payment to be at the end of each financial quarter, but said, in effect, that while every effort was to be made to make the payment on time, payment afterwards was nonetheless acceptable given the issues which arise in the fishing industry.[47]
[47] AB 862 - AB 864.
Mr Black accepted that eventually Breaksea had trouble making the instalment payments due on the Vessel, though 'for very just reasons'.[48]
Damages sustained in May 2015 and consequences
[48] AB 868.
Mr Black gave evidence that on or about 8 May 2015, the Vessel suffered damage to its propeller, propeller shaft and rudder when it fouled the anchor rope from the Gwendolyn. This had been lost by the Gwendolyn and was floating just below the surface. The Vessel had to be penned for repairs. In particular, the gearbox stopped working and had to be replaced.
On 12 May 2015 the Department of Transport (DOT) placed a work order on the Vessel.
In or about July 2015 Breaksea made arrangements with Phoenix to fit a replacement gearbox to the Vessel. Mr Black said that the old one was completely worn out 'consistent with it being a 20‑year‑old gearbox, and not one that had a complete overhaul rebuild five years ago, as originally represented to me'.[49]
[49] AB 149.
The Vessel went out for a sea trial on 23 August 2015. Prior to this, the work order imposed by the DOT was cleared. Mr Black was the skipper. The purpose of the sea trial was to test the replacement gearbox. The replacement gearbox proved unsatisfactory due to vibration.
Mr Black attempted to address the cause of the vibration by removing the rope cutters on the propeller shaft in front of the propeller. He believed this may have been the cause of the vibration. The Vessel went out for a second sea trial on 28 September 2015 to test the replacement gearbox. However, there was still bad vibration throughout the Vessel.
As a result, in or about October 2015 Mr Black sent the replacement gearbox back to Phoenix for further work. The reconditioning of the replacement gearbox was covered by warranty from the Singaporean supplier.
On or about 9 December 2015, Mr Black received the replacement gearbox back from Phoenix for installation on the Vessel. He intended to install it with Mr Black Snr through the Christmas break. Mr Black also said that a compass survey was due to be carried out after the new gearbox was installed to bring it into line with the rest of the vessel surveys. Mr Black said that Phoenix assisted in carrying out the repairs to the Vessel and supplied parts at a reduced cost and labour free of charge. He said he was also in constant contact with Mr McWhirter regarding the repairs.[50]
[50] See also: AB 916.
Mr Black also gave evidence itemising a number of other repairs which Breaksea carried out to the Vessel in the period after September 2014. In total, Breaksea incurred expenses in excess of $67,000 for work done and materials supplied to the Vessel.
Mr Black was cross-examined on his evidence that Breaksea had expended $67,000 on the Vessel as itemised in the invoices attached to his statement. He confirmed that each invoice had in fact been paid. He did accept that some of the $67,000 related to work done on the damaged propellor shaft and gearbox.[51]
[51] AB 896 - AB 898.
Mr Black's evidence was that the Vessel was in fact in a lot better condition than when purchased:[52]
The Vessel is in fact in a lot better condition than when purchase. We also installed all brand new spares and in view of the repairs and upgrades by Breaksea which were obtained at a reduced rate through Phoenix together with labour supplied by Phoenix free of charge, Pretar has now received the benefit of a vessel in far better condition than it was originally in, that it now has a boat with a new genset, new starter motors, new bilge pump, new water pumps, new propeller shaft bearing, new jabsco pump, new electrical stop solenoid for the fuel pump, new cooling plumbing for the main engine, new hydraulic hose on the winch, new 500 watt flood search light, new first aid kit, new nets, running gear (propeller, propeller shaft and gearbox etc), upgrades and consumables (oils, filters and twine, etc).
[52] AB 154 - AB 155.
Mr Black said as a result of the problems with the Vessel including repairs to the propeller and gearbox, together with difficulties in obtaining a competent skipper, it was not capable of operation between May 2015 and December 2015.
Mr Black reiterated in cross-examination on the efforts he and his father went to find a replacement gearbox after it had been damaged. He confirmed that a fully rebuilt gearbox had arrived in Esperance in the second week of December to be installed on the Vessel. He also confirmed that Breaksea had made a claim on the insurance policy, and that in total it had received $64,000 in respect of the claim.[53]
[53] AB 872 - AB 875.
Mr Black said that:[54]
In spite of these difficulties, Breaksea continued to make payments to Pretar in December 2015 and intended to install the reconditioned gearbox it received on or about 9 December 2015 from Phoenix and continue with its contract with Pretar to lease and eventually purchase the 108 units in McWhirter's MFLs.
[54] AB 159.
Mr Black said that he kept Mr McWhirter fully informed of the problems with the Vessel. Mr McWhirter did not demand payment of the instalments after the June 2015 quarter. Mr Black referred to his telephone records, which record 124 calls by him to Mr McWhirter from the period 14 March 2015 to 2 January 2016. This included a telephone call on 27 December 2015 for 30.28 minutes 'when I believed I informed him the contract was at an end'.[55]
Sublease of the MFL Units and efforts to sell the Vessel
[55] AB 157.
Mr Black said that in or about July 2015, Breaksea agreed to sublease 50 units (500 units in the new scale), to one Jason Scimone for the rest of the season (which ran from 1 June 2015 to 31 May 2016). This was because Breaksea was unable to use these units due to the Vessel being penned for repairs. He said that Breaksea only agreed to a sublease for one season as it intended to use all the leased MFL Units once the Vessel was fully operational.[56] I note here that Mr McWhirter says that Mr Scimone's first name is 'Brian' not Jason ([238]). Mr McWhirter's evidence is consistent with the documentary evidence.[57] Ultimately, nothing turns on Mr Scimone's first name.
[56] AB 157.
[57] AB 487.
In cross-examination, Mr Black agreed that on 1 June 2015 at the beginning of the fishing year, under the Sale Contract there were 1,080 units which Breaksea could use. In or around August 2015, 500 of those units were leased by Mr McWhirter to Mr Scimone, something which Mr Black had agreed to and facilitated. Mr Black said that he wanted to keep the remaining units as he had every intention of getting the Vessel operating and needed the remaining units.[58]
[58] AB 887 - AB 888.
Mr Black gave evidence that in or about April 2015, Breaksea had listed the Gwendolyn and the Vessel for sale with Melbourne Shipbrokers. It did not receive any offers for the Vessel. He said that this was done with the agreement of both the vendor of the Gwendolyn and Mr McWhirter. He said that:[59]
We would not have made any decision regarding the sale of the [Vessel] without reaching agreement with McWhirter.
[59] AB 158.
Mr Black said that he believed that in about September 2015 Mr McWhirter told him he had a prospective buyer for the Vessel. Mr Black told him he was not prepared to sell the Vessel until after the pending hull survey of the Gwendolyn.
Mr Black said that if either the Gwendolyn or the Vessel was sold, he would have used the funds to complete the Southern Viking and continue to consume the MFL Units of Mr McWhirter and of the vendor of the Gwendolyn.
Mr Black said on 15 October 2015 Gwendolyn's hull survey was carried out by the DOT. He said that although it passed, he was uncertain that it would pass and 'we needed to keep our livelihood and fishing trip turning over'.[60]
[60] AB 159.
In cross-examination, Mr Black confirmed that it put the Vessel up for sale in about April 2015 with Melbourne Shipbrokers.[61] He was taken to the specification sheet which he provided to Melbourne Shipbrokers.[62] Around mid-May he was taking steps to advertise the Vessel through Melbourne Shipbrokers.[63] He also advertised the Vessel for sale with Salter Boats, which he did with the authority of Mr McWhirter.[64] As far as Mr Black was aware, the advertisements for the sale of the Vessel with both Melbourne Shipbrokers and Salter Boats remained up during the 2015 calendar year.[65] He agreed that he was keen to sell the Vessel from April 2015 onwards, but, disagreed that at that time was struggling to make the payments on the Vessel.[66] He disagreed that he was selling the Vessel as he could not afford to make the financial payments.[67]
[61] AB 869, AB 876.
[62] AB 412 (Exhibit 11).
[63] AB 879.
[64] AB 880 - AB 881.
[65] AB 884 - AB 885.
[66] AB 881 - AB 884.
[67] AB 884.
Mr Black accepted in cross-examination that if the Vessel was sold the MFL Units would not remain with the Vessel. However, he did not accept that they would no longer be available to Breaksea under the Sale Contract. He conceded that he had never thought that the sale of the Vessel would bring the Sale Contract to an end. In Mr Black's mind, he would be selling the Vessel in order to raise capital to refit the Southern Viking, something that he said Mr McWhirter was aware of.[68]
[68] AB 885 - 886.
In re-examination, Mr Black was asked as to what would happen to the MFL Units if the Vessel was sold. His answer was:[69]
[69] AB 909 - AB 910.
WHEATLEY, MR: Mr Black, you were cross-examined about the sale of the boat that upon the sale of the boat the contract would come to an end; do you recall that?---Vaguely, yes.
Right. If the contract came to an end on the sale of the boat, what would happen to the units?---Sorry, Brian, can you ask me again? Sorry.
You were cross-examined about the sale of the boat and that the contract would come to an end if the boat was sold; do you recall that?---Yes.
Right. What would happen to the units if the boat was sold?---The units were to be utilised still with Breaksea between – well, mostly it was for the Southern Viking because the funds that were going to be raised from the sale of Elizabeth Maria, the balance of what was left over from our capital investment in the boat was to be utilised on refitting the Southern Viking. Both Steve and Manuel, both owners of the fishing companies, were both on the same page, all three of us were aware that this was the situation, this was the situation for both vessels being listed, it was all in aid of raising capital funds to complete the refit on the Southern Viking to replace the old boats with the new.
All right. Now, that's what you say would happen from the proceeds of sale, you would refit the new fits, I think. My question was: what would happen to the units?---The units would have just obviously stayed with Pretar and I would have continued to either sublease or utilise the units on the Gwendoline and as soon as the Southern Viking was up and running, the units would have gone on to the Southern Viking.
All right. Did you have discussions with Mr McWhirter about that?---Often. Often about that.
And did he agree to that?---100 per cent agreed about that.
And was that in April 2015 - - -?---Yes, that was - - -
- - - when the boat was advertised?---Yes.
Mr Black also said that if the Vessel was sold, the plan was for Mr McWhirter to get the balance of what was owing, and for him to get the remainder, which he would use on refitting the Southern Viking. He said that this was agreed with Mr McWhirter, before the Vessel was put up for sale.[70]
Advertisements and subsequent conversations
[70] AB 910.
Mr Black gave evidence that on or about 27 September 2015, Mr McWhirter advertised on the internet '80 shark units' (being 8 units in the old scale) for sale at $1,000 each, totalling $80,000. Mr Black said that this exceeded the then market rate. He also said that it was done without notice to him.
Mr Black then said that on 10 November 2015 he received an email from Mr Scimone. This annexed a copy of an advertisement showing 80 shark units for sale by Mr McWhirter.[71] The terms of this advertisement were as follows (September Advertisement):[72]
Shark Units for sale
Shark Units Zone 2 South Coast, 80 units for sale at $1000 each, $80k total.
Can be sold with current years use available or already leased and discounted accordingly.
[71] AB 160, AB 351 - AB 352.
[72] AB 352 (being Annexure O to Mr Black's witness statement). See also: AB 931.
Mr Black then said:[73]
On 13 November 2015 when I got back into port from a fishing trip on the Gwendolyn, I saw this and rang McWhirter on his mobile number … and asked him what he was doing and he responded that he was just testing the market. I said I was not happy with this.
[73] AB 160.
Mr Black referred to his mobile telephone records which identified three calls to Mr McWhirter's mobile phone on 13 November 2015, the last of which lasted 23.45 minutes. He added that he would not have continued to make payments after this unless he accepted that he, being Mr McWhirter, was just testing the market.
In cross-examination, Mr Black accepted that at the time of this conversation, Breaksea had not paid the quarterly instalment due on 30 September 2015.[74] Mr Black reiterated his evidence that Mr McWhirter had told him that he was merely testing the market.[75]
[74] AB 889 - AB 890.
[75] AB 890.
Mr Black confirmed that at the time of the 13 November 2015 telephone conversation there was an agreement or understanding between him and Mr McWhirter that the Vessel would be put up for sale. However, Mr Black disagreed with the proposition that, given this agreement or understanding, it was reasonable for Mr McWhirter to test the market by advertising the MFL Units.[76]
[76] AB 891.
Mr Black then gave evidence that in or about late December 2015 he became aware of a second advertisement of units. He said at this time he received a telephone call from Mr Scimone saying that Mr McWhirter was advertising a further 1,000 units (100 units in the old scale) for sale or lease. He said:[77]
I subsequently searched this advertisement on the Internet on the Gumtree site and saw that McWhirter was not advertising the balance of the 1000 units for sale or lease. This advertisement was for the sale of the original 80 units plus a further 1000 units for sale or lease and showed that it had been edited on 24 December 2015. This represented the total 108 units now multiplied by 10 to give 1080 units which were leased to Breaksea.
The printout from Gumtree containing this advertisement was annexed to Mr Black's statement (December Advertisement).[78] The text of the December Advertisement is in the following terms:
Shark Units for Sale
Shark Units Zone 2 South Coast. 80 units for sale at $1000 each. $80k total.
Can be sold with current years use available or already leased and discounted accordingly.
EACH UNIT GIVES ACCESS OF 20 HOURS PER DAY FOR 19 DAYS USING 27 METRES OF MESH IN THE ZONE 2 SHARK FISHERY. A FURTHER 1000 UNITS AVAILABLE BY NEGOTIATION TO BUY OR TO LEASE ON AN ANNUAL BASIS.
[77] AB 161. The advertisement is at AB 353 - AB 354.
[78] AB 353. (Annexure P to Mr Black's statement).
Mr Black's evidence is then as follows:[79]
This was extremely concerning to me that McWhirter did not once tell me that he was reselling or leasing his MFLs, particularly when made every effort to keep him updated with the progress of the [Vessel] and the fact this was contrary to what we had discussed and were working towards.
It made no sense that McWhirter was trying to sell the units as I was still paying the boat off and if he sold the units I wouldn't be able to operate the vessel or have the ability to use them in the future.
On 27 December 2015, telephoned McWhirter and told him that I had seen his latest advertisement, that he clearly did not intend to honour the agreement and that the agreement was ended. I couldn't pay for the boat without the use of the units in the MFLs. Breaksea's telephone records show a 30.28 minute call to McWhirter's mobile phone number … on that day.
McWhirter kept pleading with me to keep the [Vessel] going. I told him he could have the boat back with a gearbox installed. He kept stating you can't do that, what am I going to do for a genset. I also told him I wanted our property back.
[79] AB 161 - AB 162.
Mr Black was cross-examined about the December Advertisement. He accepted that as at December 2015, Mr Scimone had 500 units and Breaksea had 580 units for the 2015/2016 fishing year. Given this, Mr Black was then asked if he accepted that Pretar could not have leased the advertised fishing rights to a third party for that fishing year. Mr Black accepted this. Mr Black did not, however, accept the proposition that all that could have happened in response to the December Advertisement was that a third party could have expressed an interest in the fishing rights for the 2016/2017 fishing year. He said that this 'was not our agreement'.[80]
[80] AB 891 - AB 893.
Mr Black accepted that there was nothing in the Sale Contract which prevented Pretar or Mr McWhirter from selling the MFL Units. He agreed (somewhat reluctantly in my assessment) that if this sale was done on the basis that the units were subject to Breaksea's rights under the Sale Contract, Breaksea would be in no worse position.[81]
[81] AB 894 - AB 895.
In his witness statement, Mr Black said:[82]
On 27 December 2015, I telephoned McWhirter and told him that I had seen his latest advertisement, that he clearly did not intend to honour the agreement and that the agreement was ended.
He confirmed this was his evidence in cross-examination.[83]
[82] AB 162.
[83] AB 895.
Mr Black confirmed that, as far as he was aware, as at 27 December 2015, Pretar had not leased any units to a third party, only Breaksea and Mr Scimone. He also accepted that as at this date, Pretar had not sold any of the units to a third party, and that Breaksea still had 580 units which it was leasing.[84]
[84] AB 896.
Mr Black also confirmed in cross-examination that as at 27 December 2015 Breaksea was in arrears of the instalment payments due under the Sale Contract.[85]
Repossession
[85] AB 896.
Mr Black gave evidence that on 1 January 2016, without notice to Breaksea, Mr McWhirter took possession of the Vessel by cutting off the padlocks belonging to Breaksea and chaining up the net drum and posting a notice stating 'vessel to be the property of Pretar'.[86]
Conversion Claim
[86] A copy of the notice is at AB 355.
Mr Black gave evidence that a number of items of equipment belonging to Breaksea were on the Vessel when it was seized. These are set out in a list which is Annexure T to his statement.[87]
[87] AB 362.
In cross-examination, Mr Black accepted that an offer had been made by Pretar for him to collect various goods that were on the Vessel when it was seized, and that as at the date of trial the goods were still available for collection.[88] Counsel for the Respondents took Mr Black through the list of items which he says were taken when the Vessel was seized, matching it against the items the Respondents say they have. From that reconciliation, the following items were identified as being the Respondents' possessions:
[88] AB 899 - AB 900.
Item Item in Annexure T to Mr Black's statement [89] Paragraph in Mr Black's statement [90] Paragraph number of defence [91] 1 x computer mouse A 90(a) 14.1 1 x television B 90(b) 14.2 1 x television mount C 90(c) 14.3 1 x drum oil 15w‑40 E 90(e) 14.4 1 x drum hydal F 90(f) 14.5 1 x half box mobile greased G 90(g) 14.6 Assorted tools I 90(i) 14.7 Assorted engine filters L
90(l) 14.8 1 x 24 volt battery charger Q 90(q) 14.10 2 x extension leads R 90(r) 14.11 [89] AB 362.
[90] AB 163 - 164.
[91] AB 36 - AB 37.
I will refer to the items in this table as the 'Undisputed Items'.
Reconciling the list in Annexure T, and leaving the Genset to one side for the moment, Mr Black's evidence is that the following items were also seized with the Vessel (which I will refer to as the 'Disputed Items').
Item Item in Annexure T to Mr Black's statement Paragraph in Mr Black's statement [92] 1 x EPIRB D 90(d) 1 x 24 volt bilge pump H 90(h) 4 x padlocks J 90(j) Diesel fuel 2,000 litres K 90(k) 2 x spare Davey pump M 90(m) 24 volt stop solenoid for m/engine O 90(o) 12 volt inverter
(sometimes described as a converter)P 90(p) Medical kit S 90(s) Rags T 90(t) Nets U 90(u) 24 volt heavy duty battery charger V 90(v) [92] AB 163 - AB 164.
The Genset (item N) is dealt with at [121] - [123]. Mr Black was not cross‑examined to the effect that the Disputed Items were not on the Vessel when it was repossessed.
In cross-examination, Mr Black accepted that there was no evidence in his witness statement that Breaksea in fact paid for the invoices from which the value claimed is derived.[93] However, in re‑examination he gave evidence that each amount had been paid, going into detail by reference to his bank statements which had been produced during the trial. Mr Black's evidence is most convoluted. In the end, he gave evidence that the value claimed of each item said to have been seized was in accordance with the purchase price paid by Breaksea as summarised in the following table:[94]
[93] AB 901.
[94] AB 941 - AB 960.
Undisputed Items
Item Paragraph in Mr Black's statement [95] Value claimed
(Closing submissions)
AB reference to Mr Black's evidence AB reference to supporting documents 1 x computer mouse 90(a) $17.95 AB 942 AB 363, 414 1 x television
90(b) $399.00 AB 960 AB 364, 415 1 x television mount 90(c) $39.98 AB 960 AB 364, 415 1 x drum oil 15w-40 90(e) $100.00
($84.36)
AB 960 - 961 AB 368, 375, 416 1 x drum hydral
90(f) $100.00
$88.55
AB 942 AB 368 1 x half box mobile greased 90(g) $50.00
($51.55)
Not mentioned AB 370 1 x 24 volt bilge pump 90(h) $115.00 AB 960 AB 371, 415 Assorted tools
90(i) $400.00
($287.95)
AB 984 – 990 AB 372, 418 - 420
4 x padlocks
90(j) $60.00 Not mentioned AB 373 Assorted engine filters 90(l) $300.00
AB 960 - 961 AB 368, 375, 416 1 x 24 volt battery charger 90(q) $149.00 AB 968 – 971, 995 - 997 AB 382, 426 - 428
2 x extension leads 90(r) $30.00 Not mentioned No invoices [95] AB 163 - AB 164.
Disputed Items
Item Paragraph in Mr Black's statement [96] Value claimed in Claim
(Closing submissions)
AB reference to Mr Black's evidence AB reference to supporting documents 1 x EPIRB 90(d) $400.00
($300.00)
(original cost but now quotes as $199.00)
AB 442 AB 365 - 367, 573
Diesel fuel 2,000 litres 90(k) $2,300.00 AB 901 - 902, 964 - 965 AB 374, 422 2 x spare Davey pump 90(m) $1,095.21
($1,038.57)
AB 992 - 994 AB 273, 370, 376 - 377, 423
24 volt stop solenoid for m/engine 90(o) $181.50 AB 942, 960 AB 380, 414 12 volt inverter
(sometimes described as a converter)
90(p) $160.00
($170.00)
AB 968 AB 381, 424 - 425
Medical kit
90(s) $653.00 Not Mentioned AB 273, 264, 383 Rags
90(t) $20.00 AB 960 - 961 AB 375, 416 Nets
90(u) $9,559.00 AB 999 – 1001, 1010 - 1013 AB 276, 384 - 386, 429 - 431 24 volt heavy duty battery charger 90(v) $695.20 Not Mentioned AB 387 [96] AB 163 - AB 164.
In relation to the diesel fuel, in cross-examination Mr Black was taken to an invoice from South East Petroleum dated 25 September 2015 for 2,000 litres. He said that this was at the time the Vessel was taken for a sea trial run with the replacement gearbox. Mr Black disagreed with the suggestion put to him by counsel for the Respondents that 2,000 litres 'was an excessively large amount of diesel for a vessel without a working gearbox'. He had previously said that the Vessel's fuel capacity was 6,000 litres. However, counsel for the Respondents did not actually put to Mr Black the assertion that there was not in fact 2,000 litres of fuel in the Vessel at the time it was repossessed.[97]
[97] AB 901 - AB 902, AB 374.
As to the fishing nets, Mr Black's evidence in relation to the fishing nets on the Vessel when it was repossessed was set out in his statement:[98]
93.All the original nets were in very bad condition (as a result of being hauled directly over the engine room hatch which ripped holes in the nets) and had to be remade. See the photographs annexed, which show the location of the engine room hatch.
94.When taking the EM II on there was a total of 2 and a half nets. One net equals 460 metres long and a half net equals 230 metres long, making a total of 1150 metres of net.
95.On 10 August 2014, Breaksea paid $5060.00 to EFP to purchase mesh and twine for new nets for the EM II but not ropes. On 19 January 2015 Breaksea paid $1,265.00 to EFP for net and twine for new nets for the EM II. Breaksea's crew sling the nets, which took almost 3 weeks to make and totalled approximately 2350 metres, i.e. 5 nets. Tax invoices from EFP for the mesh and twine forms part of Annexure 'T' above at item u. If ropes and labour was added this would have exceeded $10,000.00.
96.Breaksea subsequently paid $3,234.00 on 16 February 2015 to EFP for new nets which increased Breaksea nets to 4000 metres and later 4300 metres making a total of 6 nets (ie 460m x 6 = 2760 metres). A tax invoice from EFP for those nets forms part of Annexure 'T' above at item u.
97.A total of 3500 metres of net was originally nominated to the Department of Fisheries for the EM II as as referred to in the Red Log Book for the EM II being annexure 'I' above and Breaksea was originally paying lease fees at the rate of $17.05/hour for 3500 metres as per our above arrangement. This subsequently increased to 4000 metres from 30 January 2015 (trip 12) and to 43000 metres from 26 April 2015 (trip 16), however, Breaksea had removed approximately 1000 metres of net before the vessel was seized.
98.When Pretar took back control of the EM II there was approximately 2500 metres of net left on the net drum. Approximately 1150 metres of net belonged to Pretar and approximately 1350 metres of net belonged to Breaksea with a value of approximately $14,848.00 (i.e. 1350m divided by 460 = 2.9 nets x 5120/net (which includes material and labour) equals $14,848.00.
[98] AB 165 - AB 168.
In relation to the nets, in cross-examination, Mr Black confirmed his evidence that when he took possession of the Vessel it had only two and a half nets. He rejected Mr McWhirter's evidence that there was a 'full fleet' of nets, about seven. He said that there was approximately 2,300 m of rope, but the mesh in between the float rope and the lead line (which is designed to sink to the ocean floor) had been cut away. Mr Black said he knew that the nets had been stripped before he entered into the Sale Contract.[99]
[99] AB 869 - AB 871.
In cross-examination, it was put to Mr Black that there were no fishing nets on the Vessel when it was repossessed. He disagreed, saying that they were on the Vessel.[100]
[100] AB 906 - AB 907, AB 1008, AB 1012.
In cross-examination, it was not put to Mr Black that any of the remaining Disputed Items were not on the Vessel when it was repossessed. His evidence of the purchase price of the remaining items was not challenged in cross-examination.
The final item claimed in the Conversion Claim is the Genset. This is item N in Annexure T[101] and par 90(n) of Mr Black's statement.[102] Mr Black's evidence was that the Genset was purchased new from Zenith Engineering Pty Ltd for $18,218.20 and was installed in early September 2014.[103] It is claimed at this value. As at the time the Vessel was repossessed the Genset had about 2,000 to 2,500 hours of use.[104] Mr Black's evidence is that Mr McWhirter did not offer that he could come and collect the Genset.[105]
[101] AB 362.
[102] AB 164.
[103] AB 725.
[104] AB 725.
[105] AB 899 - AB 900.
Mr Black said that he made an offer to Mr McWhirter to install the reconditioned gearbox in the following terms:[106]
88.On 2 January 2016 I spoke to McWhirter and told him we would install the reconditioned gearbox if he returned all our goods however he would not agree to this as he wouldn't have a genset.
[106] AB 163.
In cross-examination, Mr Black agreed that Phoenix was the owner of the Genset.[107] He accepted that if removed from the Vessel on 31 December 2015 and put on the market, it would not have sold for $18,000, as claimed.[108]
Repair Costs Counterclaim
[107] AB 1009.
[108] AB 899.
In relation to the Repair Costs Counterclaim, Mr Black sets out in his evidence in some detail the poor condition of the Vessel at the point in time in which Breaksea took possession of it.
Mr Black in his witness statement gives evidence in relation to a number of the items in the Repair Costs Counterclaim.
In relation to the gearbox, I set out Mr Black's evidence at [74] ‑ [87]. Mr Black did not give any evidence in relation to the need for, or cost of, an interim gearbox.
In relation to the compass survey, as mentioned ([80]) Mr Black's evidence was that a compass survey was due to be carried out after the new gearbox was installed to bring it into line with the rest of the Vessel surveys. However, Mr Black did not give any evidence as to the cost of a compass survey.
In relation to the life raft, Mr Black said in his statement:[109]
108.Breaksea traded the old out of survey liferaft to West Offshore Products in exchange for new fully surveyed liferaft at no cost to ensure the safety of the crew.
He did not give any evidence challenging the amount claimed by Pretar.
[109] AB 169.
In cross‑examination, Mr Black confirmed that there was a life raft on the Vessel when he took possession of it, but it was an old one. He exchanged it in for a leased life raft.[110] However, it was not specifically put to Mr Black that there was no life raft on the Vessel when it was repossessed.
[110] AB 903 - AB 904.
In relation to the fishing nets on the Vessel when it was repossessed, at [117] I set out Mr Black's evidence on this issue.
Mr Black did not give any evidence as to the repairs to the hull of the Vessel. Nor did he give any evidence challenging the amount claimed by Pretar.
In relation to the starboard generator, Mr Black gave evidence that:[111]
102.The starboard (right hand side) genset needed repair, as it was an old, noisy 3 cylinder Perkins. It could not handle running with any load on it. It would run hot and would emit huge amounts of black smoke making it very uncomfortable to run the vessel.
He did not give any evidence challenging the amount claimed by Pretar.
[111] AB 168.
In relation to the rope cutters, Mr Black gave evidence that:[112]
103.The rope cutters were removed to prevent vibration and were left on the vessel in the galley storage area in perfect condition.
He did not give any evidence challenging the amount claimed by Pretar.
[112] AB 168.
In cross-examination, Mr Black confirmed that he removed the rope cutters from the Vessel in an attempt to address vibration that was being experienced on the Vessel. However, they were back on the Vessel by 1 January 2016.[113]
[113] AB 904 - AB 905, AB 907.
In relation to the Vessel Monitoring System (VMS), Mr Black said:[114]
105.The two out of date laptop computers being the Vessel Monitoring System (VMS) laptop required by the Department of Fisheries and the Toshiba laptop which contained the maxsea plotter program were not left on the vessel to prevent theft and have been delivered to Aly Jennings, a Department of Fisheries officer at Bandy Creek Boat Harbour, Esperance.
He did not give any evidence challenging the amount claimed by Pretar.
[114] AB 168 - AB 169.
In cross-examination, Mr Black said that the two computers claimed by the Respondents had been given to the DOF, one of which was a 'GoBook'.[115]
[115] AB 907.
In relation to the claim for anchor rope, net weights and floats, Mr Black said:[116]
99.When Breaksea took over the EM II it had approximately 2300m of stripped ropes being striped ropes being striped leadline and striped headropes (floatline) which were all worn and old particularly the headropes which were extremely light for our industry, in fact only 10mm and 12mm ropes. The poor quality of the ropes is referred to in the note to trip 12A in the Red Log Book being Annexure 'I'. All the ropers I use are between 14mm and 16mm. All of Pretar's old ropes are in our boat storage shed.
100.There were buoy lines still left on board EM II in the back compartment including the bridles and swivels.
…
106.The original old anchor rope was stowed in the back steering compartment as a spare when McWhirter repossessed the vessel. We replaced the old anchor rope with a new anchor rope and grounds tackle set up.
However, he did not give any evidence challenging the amount claimed by Pretar.
[116] AB 167 - AB 169.
More generally as to the condition of the Vessel when it was repossessed, Mr Black said:
101.Other repairs and replacing were due to the age and poor condition of the vessel, the deterioration of all hoses, hydraulic hoses, electrical parts and wiring and particularly the cooling pipes and plumping for the main engine room.
MFL Fees Counterclaim
In relation to the MFL Fees Counterclaim, Mr Black says the following:[117]
Breaksea did not agree with the [Respondents] to pay 50% of the Department of Fisheries Management Fees for 1 June 2015 to 1 January 2016 while the vessel was out of service and in or about July 2015 I agreed with McWhirter that Breaksea would pay its share of access fees (ie, 25% as Scimone had paid 25%) once we were back to normal fishing conditions and he agreed to this, but this didn't happen as the units were pay as we consume in accordance with our agreement dated 9 August 2014.
[117] AB 169 - AB 170.
In cross-examination, Mr Black accepted that the Sale Contract provided that: 'At the beginning of each fishing season, half the fees on the MFL are to be paid by Breaksea Fishing Co to Pretar'.[118] He accepted that Breaksea paid half of the MFL fees for the fishing seas that went from 1 June 2014 to 31 May 2015.[119] Mr Black asserted that he was only responsible for paying 25% of the MFL fees for the 2015 fishing season, that Mr Scimones would pay the other 25%, and that he agreed with Mr McWhirter that his amount would be paid once the Vessel started fishing and producing an income.[120]
Unit Fees Counterclaim/ Unconsumed Units Claim
[118] AB 814.
[119] AB 816 - AB 817.
[120] AB 818.
In relation to the payments of MFL Unit Fees, Mr Black confirmed that in the 2014/2015 fishing season, Breaksea paid the full $54,000 lease payment. This was even though it did not use all 500 units. The last three invoices which it paid were for fishing units it did not consume (being the 'Unconsumed Units Payments' ([68])).[121]
[121] AB 856 - AB 861, referring to the invoices at AB 242, AB 244, AB 245.
The parties were content for the issue to be determined on the papers. Each filed responsive submissions dated 11 October 2023.
Neither party took issue with the principles governing costs in the Magistrates Court and in this court which I set out in the Appeal Decision. However, counsel for the Respondents added this framework the principles relevant to Calderbank offers, which I will return to later in these reasons.
Costs of the Magistrates Court proceedings
2.1 Breaksea's submissions
Breaksea submits that the costs of the action should be considered overall based upon the outcome of both the claim and the counterclaim, which supports a finding of equality. Where the flow of money is to it, particularly when the order as to costs of the action has been set aside, it is not just that it be required to pay any costs of the action. Rather, approaching the matter with a broad brush, a just outcome would be that there be no order as to costs of the action.
Breaksea submits that it did not act unreasonably in not accepting the Respondents' offers of settlement which were contingent on the return of goods, payment by instalments, the settlement of insurance claims and other matters not the subject of claims proceeded within the action.
2.2 Respondents' evidence and submissions
The Respondents' position is based on a detailed exchange of settlement correspondence between November 2017 and January 2018, just prior to the trial commencing on 12 February 2018. This is annexed to Ms Thurbron's affidavit. The correspondence was marked 'without prejudice save as to costs' and was quite properly not before the court until the substantive issues were determined.
The operative offers in my view are those in December 2017. These offers were made in the context of detailed settlement correspondence over the preceding two or so months, including the exchange of offers. In particular, they were made in the context of the insurer of the Vessel agreeing to pay $20,000 for damage to the Vessel on its return to Pretar, provided that each of Pretar and Breaksea signed a deed releasing the insurer from any further claims in relation to the Vessel.[843]
[843] Thurbron Affidavit, page 22.
By email dated 14 December 2017 (as amended by email dated 15 December 2017), Breaksea offered to settle on the basis that:[844]
(a)the Respondents pay Breaksea the sum of $40,000 by three instalments, being $15,000 prior to 25 December 2017, $15,000 by 31 January 2018 and $10,000 by 28 February 2018;
(b)all parties retain all items in their respective possession;
(c)subject to compliance with (a), each party discontinue their claims with no orders as to costs; and
(d)the parties execute consent orders giving effect to the above.
[844] Thurbron Affidavit, pages 25 - 27.
The Respondents accepted the offer in [14] by email on 15 December 2017, though in effect making a counter offer: [845]
Dear Brian
I refer to your letter dated 14 December 2017 and to your email below.
I confirm we are instructed to accept the terms of the offer as set out in that correspondence. For the sake of clarity I also confirm that, as part of the offer, your client will agree to sign the attached deed which settles the insurance claim made by Pretar in respect of the damages claimed by Pretar against Breaksea in Pretar's counterclaim.
As to the dates for payment referred to in the letter of 14 December 2017, I refer to our telephone conversation today. In summary, Pretar will transfer to Breaksea the full $20,000 received from the insurance settlement and then pay the balance in accordance with the dates listed. Please confirm if your client will agree to this.
Otherwise, we will begin preparing a settlement deed for the Magistrates Court proceedings for you to review.
Regards,
Daniel Tassone
[845] Thurbron Affidavit, page 28.
Breaksea's lawyer responded by email of 19 December 2017 in the following terms:[846]
Dear Daniel,
I attach Release signed by my client without any admission of liability, the original of which has been sent to you by express post yesterday.
I confirm that my client maintains the payment dates set out in my letter dated 14 December 2017, failing which it reserves the right to proceed with the action.
Regards,
Brain Wheatley.
[846] Thurbron Affidavit, page 36.
The Respondents' lawyer responded by email of the same day in the following terms:[847]
[847] Thurbron Affidavit, page 43.
Hi Brian
I just spoke to my client about the payment dates proposed by your client for the settlement deed.
I'm instructed that my client is unlikely to be able to make the initial $15,000 payment by 25 December 2017. However, my client takes no issue with the other dates for payment proposed by your client. My client essentially requires an extension of a fortnight or so to be able to meet the initial payment.
On that basis my client proposes:
Option 1
1.The insurance deed of settlement ("insurance deed") be returned tomorrow with payment made to Pretar. As discussed on the phone, the insurer is willing to transfer the funds as soon as the deed is received. This means the $20,000 in insurance settlement proceeds should be received by Pretar sometime next week.
2.To ensure the first payment date is met (or as close to it as possible), my client will transfer the $20,000 to your client as soon as those funds are received by them. As we can't put a firm date on when those funds will be received from the insurer, I propose putting a term a term in the claim settlement deed ("claim deed") which obliges Pretar to transfer those funds as soon as they are received. This results in your client receiving an additional $5,000 (i.e. ahead of schedule) in exchange for the deadline being extended.
3.Pretar then makes payment of the balance in accordance with the schedule. I do have instructions to propose that the 31 January 2018 payment be increased to $15,000 with the remaining $5,000 to be paid by 28 February 2018.
Option 2
Option 2 is effectively the same as Option 1, however it results in the insurance settlement proceeds being paid directly to Breaksea. If this is your client's preference (which my client has no objection to in principle) then my client requires your client to provide the executed claim deed and and (sic) consent orders to me before I provide the executed insurance deed to the insurer. This way, your client will receive the $20,000 insurance settlement proceeds directly and then have a right to the remaining $20,000 in accordance with the deed.
I look forward to hearing from you.
Regards,
Daniel Tassone.
Breaksea's lawyer responded by email of 20 December 2017:[848]
[848] Thurbron Affidavit, page 45.
Dear Mr Tassone,
I am instructed that my client agrees to the following:
1.an extension of time from 25 December 2017 to 8 January 2018, provided that if payment is not made by any of the agreed dates the Defendants will pay an additional sum of $5000.00 for each late payment.
2.the insurance monies to be paid to my client's bank account.
3.I retained the settlement deed signed by my client pending payment in full as agreed.
Regards,
Brain Wheatley
The Respondents' lawyer sent an email dated 20 December 2017 seeking clarification of the position in [18]. In response, Breaksea's lawyer advised by email on the same day:[849]
[849] Thurbron Affidavit, page 48.
Dear Mr Tassone,
I respond to your email below as follows:
1.The payments remain the same however the insurance money will be offset as per Clause 4.1(c) of the settlement deed.
The late fee is to ensure no late payments and as your client assures quick payment, it should not be a problem.
2.You have advised that the insurer has assured expedited payment so there shouldn't be a problem.
3.The trial can be adjourned pending compliance with the agreed payment schedule. Your client is not without a remedy if it partly performs the settlement agreement.
4.I will provide my personal undertaking that I hold the signed settlement agreement,
I am instructed that unless the 3 conditions are accepted there is no prospect of settlement,
Regards,
Brian Wheatley
The response of the Respondents' lawyer was as follows:[850]
[850] Thurbron Affidavit, page 51.
Dear Mr Wheatley
While I have been advised by the insurer that they will try to expedite payment, obviously we cannot guarantee that they will do so. Nor can we control the bank's transfer timeline over a period with several public holidays. It is therefore unreasonable to hold my client to a deadline over which it does not have any control.
On 15 December 2017 the parties reached a settlement agreement on terms, in effect that:
1.Pretar would pay to Breaksea $40,000;
2.Breaksea would execute the insurance settlement deed resulting in a payment of $20,000 to Pretar which would then be transferred to Breaksea in part payment of the settlement sum above; and
3.The parties would discontinue their claims against each other with no order as to costs.
The only matter to negotiate was the first date of the payment schedule. Put another way, the parties reached agreement as to the terms of the settlement but proposed only to restate those terms in a formal deed and to clarify the first date of the payment schedule. The fundamental terms of the settlement agreement were agreed to.
It is entirely unreasonable and beyond the scope of the settlement terms agreed to by email on 15 December 2017 (following a telephone conversation between us earlier that day) to seek to insert a $5,000 penalty for late payment.
In addition, it was never agreed that the funds from the insurance settlement would be paid to your client directly or that the trial would be adjourned pending receipt of the settlement sum. Indeed, my email of that day expressly refers to the insurance funds being paid to Pretar. Despite that, you have inserted Breaksea's bank details into the insurance settlement deed and have now attempted to unilaterally alter the terms of settlement by requiring the trial dates to be adjourned rather than the matter discontinued.
As indicated in my email yesterday, following your insertion of Breaksea's bank details into the insurance deed, my client's position has been that they agree to the insurance funds being deposited directly to your client's account so that your client will receive $20,000 (being half the settlement sum) within the first fortnight (at latest) of the new year. This should obviate any need for insistence on the first $15,000 being paid by 8 January 2018 and is an entirely reasonable position to take in the circumstances.
I am instructed my client's do not agree to the terms you propose in your email below as they fundamentally alter the settlement agreement reached on 15 December 2017.
Consisted with the terms of the agreement reached on 15 December 2017, my client is still ready, willing and able to:
1.pay your client $40,000 on the following basis:
•$20,000 to be transferred to your client by the insurer as soon as possible as set out in the terms of the insurance settlement deed;
•$10,000 by 31 January;
•$10,000 by 28 February; and
2.discontinue its claims against your client on the basis that your client discontinues its claims against my client with no order as to costs.
Please advise whether your client intends to perform the settlement agreement reached on 15 December 2017.
Regards,
Daniel Tassone.
Breaksea's lawyer sought to close down the settlement process in an email later that day (sent 6.06 pm):[851]
[851] Thurbron Affidavit, page 55.
Dear Mr Tassone,
The agreed payment dates were as set out in my letter dated 14 December 2017 and the settlement deed you sent to me.
My above letter clearly stated that subject to compliance with the specified payments that each party discontinue their claims with no orders as to costs. This is not negotiable and my client will not discontinue the action without payment of the agreed settlement sum and that has always been its position.
Your client has attempted to vary the above terms however the parties have been unable to reach agreement.
Given your assurances that payment will be made according to your proposed amended timetable the provision for later payment is both reasonable and sensible.
In view of the above and your correspondence below it is clear that the parties have been unable to agree terms of settlement and the matter will have to proceed to trial.
My client will however continue to consider any further offers of settlement generally consistent with the terms previously proposed and I confirm that if you wish to put an alternative proposal my client will give it genuine consideration as we are so close to settling this matter.
Regards,
Brian Wheatley
The Respondents' lawyer sought to keep the settlement process alive in an email sent at 7.01 pm:[852]
[852] Thurbron Affidavit, page 60.
Dear Mr Wheatley
My client agrees that discontinuance of the action be subject to payment of the settlement amount. That is, my client agrees to the parties executing consent orders vacating the trial dates pending payment of the settlement amounts, with discontinuance to follow once the payments are made.
The obligation to make the payments on the proposed timetable is secured by deed and accordingly your client has recourse via an action for breach of the deed if the payment dates are not met. My client cannot agree to a $5,000 late payment penalty if your client insists on receiving $20,000 directly from the insurer. This is particularly so in circumstances where Pretar has incurred the cost of negotiating that payment from the insurer and has received the payment to settle an insurance claim for damage to the vessel caused while it was in your client's possession.
Notwithstanding this, my client is prepared to concede payment of the insurance settlement funds directly to Breaksea. This results in your client receiving $20,000 ahead of schedule. However given that payment date (from the insurer to Breaksea) is beyond my client's control, my client cannot agree to be penalised for failing to meet the 8 January 2018 deadline particularly given it is the Christmas period and offices are closed.
On that basis, my client's offer is:
1.To make payment of the $40,000 as follows:
a.$20,000 to be paid to Breaksea directly from the insurer;
b.$15,000 to be paid by Pretar by 31 January 2018; and
c.$5,000 to be paid by Pretar by 28 February; and
2.The parties vacate the trial dates pending payment of the above sum with Breaksea reserving the right to re-list the trial for the balance of the sum it claims in its general procedure claim if the payment dates are not strictly adhered to.
I reiterate that the executed insurance deed is ready to be provided to the insurer who can then facilitate payment as soon as possible.
The above proposal is entirely reasonable in the circumstances and ultimately results in your client being paid ahead of its own proposed schedule. Please let me know your client's position as soon as possible.
Regards,
Daniel Tassone.
I will refer to this as the Final December Offer.
There is no response to this email in the affidavit evidence before the court, so the Final December Offer must be taken to have been rejected.
There was then an offer made by Pretar on 31 January 2018 in relation to the counterclaim. For the purposes of determining costs, I do not need to consider this offer.
The Respondents submit that it is clear from the correspondence annexed to the Thurbron Affidavit that Pretar made repeated attempts to compromise this action before trial, with a detailed rationale underpinning the offers.
The Respondents invite the court to find that in the Final December Offer (and in the earlier offers) Pretar offered to pay Breaksea more than the sum it ultimately was entitled to on the net judgment orders made on 22 September 2023. It says that the assessment should be made on the basis of excluding the 6 years of pre‑judgment interest that would not otherwise have accrued if the Offers were accepted.[853]
[853] Respondents' submissions, par 21.
The Respondent say that, in rejecting the offers, Breaksea caused the parties to incur the substantial legal costs of a 7-day trial of the Magistrates Court action and a 2-day appeal (including 6 years of pre‑judgment interest that accrued between the making of the Offers and the appeal judgment), only to end up in a worse position than it would have been in had it accepted any of Pretar's offers.
On this basis, the Respondents assert that the appropriate costs order is that sought in their minute filed 4 October 2023.
In the event the Court does not agree the offers have costs consequences, then the Respondents accept that the appropriate order is that the parties bear their own costs of the Magistrates Court action and the Appeal.
2.3 Determination
In addition to the principles set out in section 15.4, Magistrates Court (Civil Proceedings) Rules 2005 (WA) (MCCPR) r 65 is relevant. MCCPR pt 12 div 2 sets out a regime for making offers to settle which have costs consequences. MCCPR r 65 provides the costs consequences of the offer:
65.Post‑offer costs, orders for
(1)In this rule -
claimant means a party which makes a claim;
defendant means a party against which a claim is made;
post‑offer costs means costs from and after the day when an offer is made.
(2)If -
(a)a claimant makes an offer of settlement that specifies an amount to be paid by the defendant; and
(b)the defendant does not accept the offer; and
(c)judgment is given for the claimant for an amount that is not less than the amount specified in the offer; and
(d)under the Act section 25(1) the Court makes an order under which the claimant is entitled to, among any other costs, its post‑offer costs,
the post‑offer costs are to be assessed on a party and party basis.
(3)If -
(a)a defendant makes an offer of settlement that specifies an amount to be paid by the defendant; and
(b)the claimant does not accept the offer; and
(c)judgment is given for the claimant for an amount that is not more than the amount specified in the offer; and
(d)under the Act section 25(2) the Court, after considering that there is good reason not to make an order for the claimant for post‑offer costs, makes an order for the defendant for post‑offer costs,
the post‑offer costs are to be assessed on a party and party basis.
The offer of settlement must be in the approved form.[854] The offer is made by way of Magistrates Court Form 39 'Offer of Settlement'. The offer can be accepted by Form 42 'Acceptance of Offer of Settlement'. As the Final December Offer was not in this form, MCCPR r 65 does not directly apply, and is relevant only for context. However, there is nothing in the Magistrates Court (Civil Proceedings) Act 2004 (WA) (MCCPA) or MCCPR to the effect that only an offer in the approved form can have costs consequences. Put slightly differently, there is nothing in the MCCPA or MCCPR which precludes the court taking into account a Calderbank offer in exercising the discretion in MCCPA s 25.
[854] MCCPR r 57(2).
The chain of correspondence leading up to and including the Final December Offer is marked 'without prejudice save as to costs'. This is sufficient to invoke the principles outlined in Calderbank v Calderbank.[855] The principles are those governing a Calderbank offer are well established and may, for present purposes, be summarised in the following terms:[856]
[855] Calderbank v Calderbank [1976] Fam 93.
[856] Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1 [19] (judgment of the court); Shephard v Tuanie Paul Galea as executor and trustee of the estate of The Late Joseph Galea [2020] WASCA 152 [192] (judgment of the court); McKay v Commissioner of Roads [No 7] [2011] WASC 223 (S) [92] - [130] (Beech J); Italiano v The Water Corporation [No 2] [2020] WASC 112 (S) [36] - [47] (Martin CJ).
(a)Calderbank offers are informal offers made on terms expressed to be without prejudice save as to costs;
(b)a Calderbank offer can be considered as a relevant factor in the exercise of the costs discretion;
(c)the court's approach takes into account the private and public benefits of encouraging reasonable settlements, including by possible costs consequences for the party rejecting the offer;
(d)the policy of encouraging reasonable settlement of an action is a factor in the exercise of discretion on costs;
(e)the party who makes a Calderbank offer takes the chance that, when the court exercises its discretion in all the circumstances, the offer will lead to costs consequences;
(f)the weight to be given to a Calderbank offer is a matter for the discretion of the court in all the circumstances of the case;
(g)a Calderbank offer may be used in support of an application for indemnity costs or for an order that the party who rejected the offer pay the costs of the party who made offer on a party‑party basis;
(h)a Calderbank offer will not justify an award of indemnity costs unless its rejection was unreasonable;
(i)there is a lower threshold for an award of party‑party costs than for indemnity costs, the power to order which is exceptional in character;
(j)a finding that a Calderbank offer was unreasonably rejected, judged at the time of the offer, is not a precondition to the power to award party‑party costs based on a Calderbank offer;
(k)however, the reasonableness, or otherwise, the conduct of a party in rejecting a Calderbank offer may be relevant to determining whether and to what extent the Calderbank offer sustains an exercise of the costs discretion adverse to the party who rejected the offer;
(l)the assessment of the unreasonableness of the rejection of a Calderbank offer is to be made at the time that the offer is considered, and without the benefit of hindsight, so that the issue of unreasonableness is not to be determined by adopting the judgment sum as a yard stick;
(m)the mere fact that the recipient of a Calderbank offer is ultimately worse off than he or she would have been had the offer been accepted, does not mean that its rejection was unreasonable;
(n)more specifically, a Calderbank offer in an amount that exceeds the judgment sum does not give rise to a presumptive entitlement to indemnity costs;
(o)all the relevant facts and circumstances must be considered in determining whether the rejection of the offer was unreasonable; and
(p)in assessing whether the rejection of the offer was unreasonable relevant facts include the stage of the proceeding at which the offer was received, the time allowed to the offeree to consider the offer, the extent of the compromise offered, the offeree's prospects of success, assessed as at the date of the offer, the clarity with which the terms of the offer were expressed and whether the offer foreshadowed an application for costs (including indemnity costs) in the event of the offeree's rejecting it.
The Final December Offer was made in the lead up to the trial which commenced on 12 February 2018, at a point where the issues and evidence had crystallised.
Breaksea had what was, in my view, a reasonable amount of time to consider the Final December Offer, in particular as it was made in the context of negotiations going back to October 2017.
In the Final December Offer, the Respondents made a significant compromise given the amount which they were then counterclaiming.
The Final December Offer was in clear terms.
The Final December Offer was expressed in terms making it clear that the Respondents would be relying on it for costs purposes.
Breaksea did not do better in the net judgment than it would have done if it had accepted the Final December Offer. Had the Magistrate determined the action according to what I have found to be the law, it would have been entitled to net damages of $23,779.24 plus interest (which would have been a total figure less than the $34,791.87 which I have determined it would have been given earlier).
Another relevant factor going to the reasonableness of Breaksea's conduct in rejecting the Final December Offer is the likely costs of taking the case through to trial. I am cautious here to consider the position in December 2017, and not to consider the position in the light of the extraordinarily protracted manner in which the case ultimately proceeded to final determination. Even then, there was a high likelihood that the five-day trial then scheduled would involve the parties incurring legal costs out of proportion to the amounts in issue (as to which, see [45]).
I do not consider that the fact that the Final December Offer involved a payment by the insurer of the Vessel to have been a reason for either Breaksea not accepting it or insisting on a penalty for late payment. The settlement deed with the insurer was concise and clear. Also, by the time of the Final December Offer, the settlement was not complicated by any return of property. Neither do I consider that the fact that the payments were to be made by instalment to have been a reason to have reasonably rejected it. By the time that the trial was scheduled to have commenced on 12 February 2018, Breaksea would have received $30,000 of the $40,000 settlement proceeds.
In my view, Breaksea acted unreasonably in rejecting the Final December Offer at the time it was made.
In my view, the policy of encouraging reasonable settlements of actions is of particular importance in the Magistrates Court, perhaps even more so than in the District Court or the Supreme Court. This is because the risk of the costs of pursuing an action being out of proportion to the amounts in issue is much more acute in this jurisdiction (as the present case demonstrates).
The conclusions in [41] and [42] should be given significant weight. When I add them into the discretionary framework and factors which I set out at in section 15.4 of the Appeal Decision, I reach a different conclusion than the preliminary view I have expressed. This is that Breaksea should make a significant contribution to the Respondents' costs of litigating the claim and counterclaim after the date on which the Final December Offer should, reasonably, have been accepted. I assess this to be 31 December 2017. The costs should be assessed on a party and party basis. The reasons I have set out above constitute a good reason to depart from the default position set out in MCCPA s 25.
I do not want to add to the protracted nature of this litigation by requiring the Respondents to tax their costs (see Appeal Decision [1006]). Rather, I will determine an amount which I consider to be appropriate in all the circumstances. Although I am not strictly fixing the Respondents' costs, in determining an appropriate amount, I bear in mind the principles in relation to fixing costs. Specifically, in fixing costs, the court is able to apply a 'much broader brush' than would be applied on taxation, however, the approach must nonetheless be 'logical, fair and reasonable'.[857]
[857] Brookvista Pty Ltd v Meloni [2009] WASCA 180 [26] - [27] (judgment of the court); Tey v Optima Financial Group Pty Ltd [2012] WASCA 193 [42] (judgment of the court).
In my view, a logical, fair and reasonable way to estimate the party and party costs the Respondents would have incurred after 31 December 2017 is to consider the scale allowances for the trial. They are as follows:
Item
Date
Scale
Item
Rate
Getting up for trial
2016[858]
13
$20,350
Fee on brief (2 days preparation and ½ day of trial)
12.02.18
2016
15(a)
$8,250
Second half day of trial
12.02.18
2016
15(b)
$1,650
Trial day 2
13.02.18
2016
15(e)
$3,300
Trial day 3
14.02.18
2016
15(e)
$3,300
Trial day 4
15.02.18
2016
15(e)
$3,300
Trial day 5
16.02.18
2016
15(e)
$3,300
Trial day 6
05.11.18
2018[859]
15(e)
$3,410
Trial day 7
06.11.18
2018
15(e)
$3,410
Total
$50,270
[858] Legal Profession (Magistrates Court) (Civil) Determination 2016 (WA).
[859] Legal Profession (Magistrates Court) (Civil) Determination 2018 (WA).
On the one hand, the total of $50,270 is overstated as an estimate. This is because the amount for getting up would include some amounts incurred before 31 December 2017. On the other hand, it is significantly understated as it does not include an allowance for the considerable amount of work undertaken after the conclusion of the trial on 6 November 2018, as set out in part 3 of the Appeal Decision. This included detailed written closing submissions and numerous hearings.
In my view, an amount in the vicinity of $50,000 would be a just contribution to the Respondents' party and party costs following the rejection of the Final December Offer. For reasons which will become apparent at [61] and [65], I consider it appropriate that the Appellants pay the Respondents an amount of $47,945.38 by way of contribution to the Respondents' costs of the proceedings in the Magistrates Court incurred after 31 December 2017.
Costs of the Appeal
3.1 Breaksea's submissions
Breaksea submits that the Respondents only succeeded on arguments fully raised for the first time on appeal namely, repudiation not based upon subjective considerations and the counterclaim based upon an implied term.
Breaksea submits that, in substance, it was the successful party in the appeal. It says the sum of $34,791.87 referred to at Appeal Decision [991] does not take into account the amounts of the counterclaim which were also set aside as follows:
(a) unpaid purchase price (Appeal Decision [449] and [605(b)]) ‑ $27,377.00;
(b) unpaid purchase price interest (Appeal Decision [565] and [605(b)]) - $9,208.86;
(c) unpaid license fees (Appeal Decision [644] and [659]) - $17,570.01;
(d) unpaid license fees interest (Appeal Decision [645]) - $6,585.14;
(e)further repairs - VMS $4,000, gearbox $37,708, hull damage $6,600: (AB1487 and Appeal Decision [1488] and [742]) - $48,308.00; and
(f) GST on repair costs (Appeal Decision [768], [778], [809], [817], [828] and [837]) - $1,348.80.
These amounts total $110,397.81. It says that as a result of the appeal the flow of money to Breaksea is $145,189.68 ($34,791.87 + $110,397.81).
In submissions, counsel for Breaksea assesses the taxed costs at $26,307.02 by reference to the relevant scale items. Breaksea's position is that a just result would be to reduce these costs by 50% to allow for the 'success of the separate and independent Repudiation/Counterclaim claims plus any reserved costs'. This gives rise to an amount of $13,153.51.
3.2 Respondents' submissions
The Respondents say that pre-trial offers are relevant to the exercise of the Court's discretion in relation to the costs of a subsequent appeal, citing Hughes v St Barbara Ltd.[860] Hence they assert that Breaksea should pay 50% of the Respondents' costs of the appeal.
3.3 Determination
[860] Hughes v St Barbara Ltd [2011] WASCA 234 (S) [24] (judgment of the court) (Hughes).
I do not accept Breaksea's submission that the argument that repudiation not based upon subjective considerations was only fully raised for the first time on appeal. The position I ultimately accepted was that advanced by the Respondents before trial as set out in section 4.12 of the Appeal Decision.
Nor do I accept the argument that the counterclaim based upon an implied term was only fully raised for the first time on appeal. As set out in sections 4.14 and 4.18 of the Appeal Decision, the Respondents' position that Breaksea breached the implied term was clearly before the Magistrates Court.
As to Breaksea's submission that, in substance, it was the successful party in the appeal, Breaksea is correct to say that in the summary of findings at Appeal Decision [975], I need to add the finding that the Magistrate erred in allowing Pretar to add the claims for hull damage and the replacement VMS (see section 10.10). However, the figures in [49] are overstated because the Respondents did not press the gearbox claim, being for $37,708.
Having said that, I do accept that from an economic perspective, Breaksea was successful. Another way of expressing Breaksea's submission is that it went from a net position of having to pay Pretar the sum of $107,516.38 (as set out in the following table) to a net position of it receiving $34,791.87 from Pretar.
Date of Order Item Amount 13 May 2020 Repair Costs Counterclaim $35,585.00 29 March 2022 Purchase price counterclaim due on or by 30 September 2015 $12,797.00 29 March 2022 Purchase price counterclaim due on or by 31 December 2015 $12,585.00 29 March 2022 Unit Fees Counterclaim $17,570.01 29 March 2022 MFL Fees Counterclaim $1,880.55 29 March 2022 Repair Costs Counterclaim - Recommissioning VMS $4,000.00 29 March 2022 Repair Costs Counterclaim - Repairs to the Hull $6,600.00 2 August 2022 Interest unpaid instalment of purchase price that was due on or by 30 September 2015 $4,491.88 2 August 2022 Interest unpaid instalment of purchase price that was due on or by 31 December 2015 $4,716.98 2 August 2022 Interest Unit Fees Counterclaim $6,585.14 2 August 2022 Interest MFL Fees Counterclaim $704.82 Total $107,516.38
As to the Respondents' position, while they are correct to say that pre‑trial offers are relevant to the exercise of the Court's discretion in relation to the costs of a subsequent appeal, it is instructive to place the observations of the Court of Appeal in Hughes in context:[861]
The normal practice would suggest that costs should follow the event. That would mean that the appellant should be awarded costs. However, the respondents advanced several reasons why the normal practice should not be followed. First, they pointed out that the appellant succeeded on liability on a ground which was suggested by the court and adopted by the appellant during the course of the proceedings. Secondly, they referred to the fact that the appellant's unreasonable approach to quantum persisted at the appeal. Although its claim for $350 million had been abandoned, the appellant still contended on appeal for judgment in an excessive amount, namely $13.79 million. Thirdly, the respondent submits that if the Calderbank offers made during the trial had been accepted, there would have been no trial and no appeal.
The latter reason may be true in point of fact, but it ignores the circumstance that proceedings by way of appeal were necessary to remedy the erroneous dismissal of the appellant's claim. This is not to say that pre‑trial offers are irrelevant when it comes to the appeal …
However, the existence of a pre‑trial offer should be given less weight than an offer made during the appeal. The appellant accepted that the existence of the pre‑trial offer was relevant to the question of the appropriate order for costs on the appeal.
Just as the existence of a pre‑trial offer is relevant in relation to the costs of the appeal, so the lack of any O 24A offer or any Calderbank offer during the appeal proceedings is also a relevant factor …
[861] Hughes [23] - [26] (references omitted).
There is no evidence suggesting that the Respondents made any offer to settle in the course of the appeal.
I accept the point that proceedings by way of the Appeal were necessary to remedy the errors which I have identified to have been made by the Magistrate. Though, on the other hand, had the Final December Offer been accepted, the Respondents would not have incurred the costs of the Appeal.
Bringing all these matters into the discretionary framework set out in section 15.5 of the Appeal Decision, and taking into account the other considerations I have identified, the appropriate order is that suggested by counsel for Breaksea, being that the Respondents pay Breaksea's costs of the appeal fixed at $13,153.51 (being 50% of its taxed costs). I consider that the amount of taxed costs calculated by counsel for Breaksea is logical, fair and reasonable. The fixed costs include the costs of submissions in relation to costs.
What final orders are appropriate?
The costs awarded to the Respondents should be set off against the judgment against them and the costs of the Appeal.[862]
[862] Patterson v Humfrey [No 2][2016] WASC 343 [21] - [22] (Le Miere J) .
Given the orders which I consider appropriate, the amount of security for costs of $30,000 should be paid out to Breaksea.
The only other loose end is what is to become of the 'Undisputed Items' (Appeal Decision [113], [891] - [893]). Some practical orders are required.
The appropriate final orders are:
1.The Appellant pay the Respondents' costs of the proceedings in the Magistrates Court fixed at $47,945.38.
2.The Respondents pay the Appellant's costs of the appeal fixed at $13,153.51.
3. The amount in paragraph 1 is to be set off against the amount in paragraph 2 and the judgment in paragraph 4 of the orders made on 22 September 2023.
4.The sum of $30,000.00 paid into Court be paid out to the Appellant.
5.Within 14 days of the date of this order, the Respondents are to make available the Undisputed Items for the Appellant to collect from an address in the Perth metropolitan area, and notify the Appellant in writing of that address.
6.If within 14 days of the notification in paragraph 5, the Undisputed Items have not been collected, the Respondents are at liberty to dispose of the items.
7.The orders in paragraphs 5 and 6 are subject to agreement to the contrary by the parties, and otherwise are the subject to liberty to apply.
As I mention in the Appeal Decision ([999]), the court 'should carefully examine the realities of the case in hand, and should so frame its order that justice shall, so far as costs are concerned, be nearly as possible done between the parties'.[863] The effect of the orders at [64] is to create a zero balance between the parties. I consider that this outcome is, as nearly as possible, one that does justice between the parties. Or perhaps, like many mediated outcomes in the court, it is one that leaves each party mutually dissatisfied.[864]
[863] Godden v Alford [1960] WAR 235 at 237 (judgment of the court).
[864] McArthur v Gerhard Janssen as attorney pursuant to section 34 Administration Act for Veronika Logar [2023] WASC 59 [8] (Sanderson M).
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
LL
Associate
19 OCTOBER 2023
Naidoo v Williamson[2008] WASCA 179 ; (2008) 37 WAR 516 [39] (Steytler P, with whom Pullin JA & Murray AJA agreed); Lawrence v Province Leader of the Oceania Province of the Congregation of the Christian Brothers[2020] WADC 27 (S) [14] (Herron DCJ).
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