Cambridge v Anastasopoulos
[2012] NSWCA 405
•11 December 2012
Court of Appeal
New South Wales
Case Title: Cambridge v Anastasopoulos Medium Neutral Citation: [2012] NSWCA 405 Hearing Date(s): 19 November 2012 Decision Date: 11 December 2012 Before: Meagher JA at [1];
Barrett JA at [55];
Sackville AJA at [56].Decision: (1) Appeal allowed.
(2) Orders (1), (2) and (3) of the District Court made on 11 March 2011 be set aside.
(3) Judgment for the respondent against the first appellant in the amount of $18,048.25 together with interest from 10 February 2009 to 11 March 2011.
(4) Judgment for the respondent against the second appellant in the amount of $18,048.25 together with interest from 10 February 2009 to 11 March 2011.
(5) Judgment for the respondent against the third appellant in the amount of $11,415.50 together with interest from 10 February 2009 to 11 March 2011.
(6) The judgments in orders (3), (4) and (5) above to take effect as at 11 March 2011.
(7) Direct the parties to lodge written submissions concerning the orders that should be made as to the costs of the proceedings before the primary judge and before this Court. The appellants to lodge and serve those written submissions within 14 days of the date of these orders and the respondent to lodge and serve his response within 28 days thereafter. The Court will then determine what orders should be made on the basis of those submissions.[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords: BAILMENT - whether possession taken on behalf of second respondent - agreement that first and second respondents take possession of motorboat and quote for work - first respondent took possession on behalf of second respondent pursuant to agreement - second respondent liable as joint bailee
EVIDENCE - expert evidence - admissibility - whether primary judge erred in admitting opinion as to value of motorboat - opinion not shown to be based on specialised knowledge in turn based on training or experience - assumptions on which opinion based not stated - no explanation for reasons for conclusion as to value - evidence should have been rejectedLegislation Cited: Civil Liability Act 2000
Evidence Act 1995Cases Cited: Bodney v Bennell [2008] FCAFC 63; 167 FCR 84
Butler v The Egg and Egg Pulp Marketing Board [1966] HCA 38; 114 CLR 185
Dasreef Pty Ltd v Hawchar [2011] HCA 21; 243 CLR 588
Dillingham Constructions Pty Ltd v Steel Mains Pty Ltd [1975] HCA 23; 132 CLR 323
East West Corpn v DKBS AF 1912 A/S [2003] QB 1509
English Exporters (London) Ltd v Eldonwall Ltd [1973] Ch 415
Hobbs v Petersham Transport Co Pty Ltd [1971] HCA 26; 124 CLR 220
James v Bradley [1980] WAR 11
Johnson v Perez [1988] HCA 64; 166 CLR 351
MMAL Rentals Pty Ltd v Bruning [2004] NSWCA 451; 63 NSWLR 167
Morris v CW Martin & Sons Ltd [1966] 1 QB 716
Performance Cars Ltd v Abraham [1962] 1 QB 33
Pitt Son & Badgery Ltd v Proulefco SA [1984] HCA 6; 153 CLR 644
PQ v Australian Red Cross Society [1992] 1 VR 19
R v Fazio (1997) 69 SASR 54
The Pioneer Container [1994] 2 AC 324
Tozer Kemsley & Millbourn (A'asia) Pty Ltd v Collier's Interstate Transport Service Ltd [1956] HCA 6; 94 CLR 384
Ultzen v Nicols [1894] 1 QB 92
WD & HO Wills (Australia) Ltd v State Rail Authority of New South Wales (1998) 43 NSWLR 338
Woods v Director of Public Prosecutions [2008] WASCA 188; 38 WAR 217Texts Cited: Palmer on Bailment, 3rd ed (2009) Thomson Reuters
Pollock and Wright, Possession in the Common Law (1888) Clarendon PressCategory: Principal judgment Parties: Stephen Paul Cambridge (First Appellant)
James Liascos (Second Appellant)
Gregory John Hodges (Third Appellant)
Peter Anastasopoulos (Respondent)Representation - Counsel: Counsel:
Dr A S Morrison SC, Ms P M Clingan (First Appellant)
Mr J R Young (Second Appellant)
Mr J Jobson (Third Appellant)
Mr A Joseph (Respondent)- Solicitors: Solicitors:
Macquarie Lawyers Burwood, Concord
(First and Third Appellants)
G&S Law Group, Parramatta
(Second Appellant)
George Gourlas Lawyer, Cronulla (Respondent)File Number(s): CA 2009/337501 Decision Under Appeal - Before: Balla DCJ - Court File Number(s): DC 2009/4475
JUDGMENT
MEAGHER JA: The respondent (Mr Anastasopoulos) was the owner of a 28-foot Donzi motorboat. He wished to have some repairs and improvements carried out to it. In January 2008 he arranged with the first appellant (Mr Cambridge) and the second appellant (Mr Liascos) that they would take the motorboat, which was at his factory premises in Peakhurst, to the first appellant's premises at Wilberforce so that they could provide a quote for and then carry out that work. On 13 April 2008 the motorboat, on its trailer, was towed by Mr Cambridge from Peakhurst to Wilberforce using his four wheel drive vehicle. In the course of leaving the Peakhurst premises the motorboat suffered some scraping damage when its hull came into contact with the exit door.
The motorboat was stored at the Wilberforce premises until 10 February 2009. During that period it was left uncovered and suffered significant water damage to its engines. On 10 February 2009, the motorboat, again on its trailer, was collected by the third appellant (Mr Hodges) using his tow-truck for transport from Wilberforce back to Peakhurst. A short way along that journey, the trailer dislodged from the towbar, its safety chain broke and it careered off the road through an old barbed wire fence into the Windsor Downs Nature Reserve, where it came to a rest against a tree. The motorboat and trailer suffered substantial damage.
The respondent sued the three appellants and a Mr Seymour for breach of duty as bailees and for negligence. He succeeded against the three appellants. Balla DCJ entered judgments against each of the first and second appellants for $55,048 plus interest. Her Honour also entered judgment against the third appellant for $85,416 plus interest. The appellants, the first and second by leave granted on 11 May 2012, appeal against those judgments.
The issues in the appeals
There is one issue which is common to each of the appeals. That is whether the primary judge erred in admitting and relying upon expert opinion evidence of Captain Kysil as to the value of the motorboat at the time it was damaged in February 2009. In his appeal, Mr Liascos also raises three further issues. Two relate to the finding as to his liability as a bailee. They are whether the primary judge erred in holding that he took possession of the motorboat with Mr Cambridge from 13 April 2008 when it was delivered to Mr Cambridge; and whether, if he was a bailee, the primary judge erred in failing to find that the damage which occurred on 10 February 2009 was not due to fault on Mr Liascos' part. The remaining issue raised by Mr Liascos is whether the primary judge erred when apportioning liability between the three appellants for the damage sustained on 10 February 2009. The outcome of this issue depends upon the outcome of the earlier issues.
For that reason, it is necessary to deal first with the issues concerning Mr Liascos' liability, then the issue concerning Captain Kysil's valuation evidence and finally apportionment.
Liability of Mr Liascos in bailment
The primary judge made the following findings of fact which are not challenged on appeal by Mr Liascos.
In late 2007 or early 2008 Mr Anastasopoulos wanted some refurbishment undertaken to the motorboat. He contacted Mr Liascos who told him that he and his partner, Mr Cambridge, did that type of work and were willing to do the refurbishment. In January 2008 there was a further conversation between Mr Cambridge, Mr Liascos and the respondent. In that conversation it was agreed that Mr Cambridge and Mr Liascos would take the boat to their premises "to be able to prepare a quote and then do the refurbishment" and that they would keep the boat "under cover and look after it" (Reasons, 17 December 2010, p 7).
On 13 April 2008 Mr Cambridge attended the Peakhurst premises and connected the motorboat and trailer to his four wheel drive using two 10mm chains and shackles provided by the respondent and a Mr Razzak, who owned a mechanical workshop situated in the same industrial complex (Reasons, pp 3, 4, 8). The trailer was then towed to Wilberforce where it remained for 10 months. During that time it was left uncovered for one or more periods and sustained water damage, particularly to the engines and engine bay.
On 7 February 2009 Mr Cambridge informed Mr Anastasopoulos that nothing had been done to the motorboat and that it had been left outside for three months. The respondent instructed him to fix the motorboat, have it cleaned and to return it in the same state as when delivered (Reasons, p 8). Mr Cambridge contacted Mr Hodges to arrange to have the motorboat and trailer transported back to Peakhurst. He used Mr Hodges following a recommendation from the local police. On 10 February 2009 Mr Hodges went to the Wilberforce premises with his tow-truck. Mr Cambridge and Mr Liascos were present. At that time the two safety chains and shackles which had been used on the journey from Peakhurst had been removed and replaced with a single 10mm safety chain attached to the front of the trailer by a bolt. Mr Hodges placed the trailer coupling onto the tow-ball attached to the rear of his tow-truck and secured the single safety chain to the tow-truck using a padlock. He checked and was satisfied that the chain was securely attached to the trailer. He then left Wilberforce towing the motorboat and trailer. A short way into the journey the accident described above occurred (Reasons, pp 14, 15).
The primary judge found that whilst the evidence showed that the coupling which fitted over the tow-ball had failed, it did not establish the reason for that failure. However, the trailer would not have detached from the tow-truck if the single safety chain and bolt connecting that chain to the trailer also had not failed. Her Honour found that Mr Cambridge and Mr Liascos were aware that only one safety chain connected to the trailer by a bolt was to be used on the return journey whereas two chains, each connected by a shackle to the trailer, had been used on the journey from Peakhurst. (In submissions to this Court, Mr Liascos points out that there is no finding that he was aware of the latter.) In the absence of evidence as to the origin of the single chain and bolt or an explanation as to why it was thought sufficient for the load to be towed using only one safety chain, the primary judge was not satisfied that Mr Cambridge and Mr Liascos had discharged the onus of proving that any failure on their part to take reasonable care had not contributed to the occurrence of the damage on 10 February 2009 (Reasons, p 18). The primary judge also found that Mr Hodges was negligent in using the single safety chain and bolt which was already fitted to the trailer (Reasons, p 22).
Mr Liascos submits that the primary judge erred in concluding that he was a bailee and in failing to be satisfied that the accident occurred without any neglect or default on his part. This second argument has a number of strands. The first is that he was not guilty of any neglect in relation to the use by Mr Hodges of only one safety chain because he was not aware that two chains and shackles had been used on the journey from Peakhurst. Another is that he had exercised reasonable care in arranging for an appropriately qualified tow-truck company to tow the motorboat and trailer to Peakhurst. A third is that these circumstances were sufficient to absolve him from liability for damage which occurred to the motorboat. This last proposition directs attention to whether delivery of the motorboat to Mr Hodges brought any bailment to Mr Cambridge and Mr Liascos to an end or whether delivery to Mr Hodges constituted him a sub-bailee for whose neglect and misconduct they remained liable. A question might also arise as to whether delivery to Mr Hodges was expressly or impliedly authorised by Mr Anastasopoulos. As will become apparent, it is not necessary to address these questions.
In support of his first argument, Mr Liascos says that there is no express finding by the primary judge that the motorboat was ever delivered to him or that he ever had possession of it. He submits that the primary judge's holding that the bailment arose out of a conversation and an agreement to take the motorboat to the premises at Wilberforce did not constitute or justify such a finding. He points out that whilst her Honour described those premises as "their" (suggesting the first and second appellants') premises, the statement of claim alleged that the premises were occupied by the first appellant.
Before turning to the way the primary judge dealt with these matters, it is necessary to note a few relevant principles. First, a bailment results from the voluntary taking of possession by a person or persons of the goods of another. That taking of possession does not require the bailor's consent: Hobbs v Petersham Transport Co Pty Ltd [1971] HCA 26; 124 CLR 220 at 238; The Pioneer Container [1994] 2 AC 324 at 341-342; WD & HO Wills (Australia) Ltd v State Rail Authority of New South Wales (1998) 43 NSWLR 338 at 353-354; East West Corpn v DKBS AF 1912 A/S [2003] QB 1509 at [24]; Palmer on Bailment, 3rd ed (2009) Thomson Reuters at para 1-012. Secondly, possession may be taken by delivery to the bailee or to a servant or agent on its behalf. Thus, a servant acting in the course of his employment or an agent acting for the purposes of his principal may take possession for the employer or principal and thereby constitute it a bailee: Pollock and Wright, Possession in the Common Law (1888) Clarendon Press at 57, 163; Ultzen v Nicols [1894] 1 QB 92; Morris v CW Martin & Sons Ltd [1966] 1 QB 716 at 725. Thirdly, a bailee with duties analogous to those of a bailee for reward, is liable if the subject matter of the bailment is damaged whilst in its possession unless it shows that the damage occurred without any neglect or default of itself or any servants to whom it delegated that duty: Tozer Kemsley & Millbourn (A'asia) Pty Ltd v Collier's Interstate Transport Service Ltd [1956] HCA 6; 94 CLR 384 at 397-398; Morris v CW Martin and Sons Ltd at 726, 729; Hobbs v Petersham Transport Co Pty Ltd at 233-234, 240-241; Pitt Son & Badgery Ltd v Proulefco SA [1984] HCA 6; 153 CLR 644 at 646, 649. Finally, if a bailee transfers actual possession to a third party for a limited period or specific purpose, and that sub-bailment is expressly or impliedly authorised by the bailor, the intermediate bailee must take reasonable care in the selection of the sub-bailee and may remain liable for harm resulting from a breach of duty on the part of that sub-bailee: Palmer on Bailment, 3rd ed at para 23-052; East West Corpn v DKBS AF 1912 A/S at [29], [57], [58].
Her Honour found that the bailment to Mr Cambridge and Mr Liascos was from 13 April 2008 until the accident on 10 February 2009. Her Honour described the bailment as arising out of the conversation in January 2008 during which Mr Cambridge and Mr Liascos agreed that they would take the motorboat to their premises for the purpose of preparing a quote and doing the refurbishment (Reasons, p 16).
Although the primary judge did not make an express finding that Mr Cambridge took possession of the motorboat on 13 April 2008 on behalf of himself and Mr Liascos, that finding is necessarily implicit in the finding that the bailment to both of them commenced on 13 April 2008. That conclusion was justified in the light of the evidence as to the arrangement that Mr Cambridge and Mr Liascos would take the motorboat to the Wilberforce premises so that they could prepare a quote and then do the work and that they would "look after" the motorboat. That evidence provided a sufficient basis for a finding that when Mr Cambridge took possession of the motorboat he did so in accordance with that arrangement and for himself and on behalf of Mr Liascos. Because in my view her Honour has made a finding to that effect, it is not necessary to affirm her decision on the basis that such a finding should have been made as the respondent contends by his notice of contention.
Once it is accepted that Mr Cambridge took possession for himself and Mr Liascos, they were liable as joint bailees for the damage which occurred on 13 April 2008 and during the 10 month storage period. They were also liable for the damage which occurred on 10 February 2009 unless they established that it occurred without any neglect or default on their part. Mr Liascos' argument does not challenge the primary judge's conclusions in relation to Mr Cambridge's knowledge and the failure on his part to communicate to Mr Hodges that different safety chains and shackles had been used on the journey from Peakhurst to Wilberforce. In the face of that finding, the primary judge did not err in concluding that Mr Cambridge and Mr Liascos had not discharged the onus of showing that a failure to take care on their part had not resulted in the damage to the motorboat and trailer.
In view of this conclusion it is unnecessary to consider whether, even if it had been established that there was no negligence on their part in relation to the safety chain, Mr Cambridge and Mr Liascos remained liable for the negligence of Mr Hodges in relation to his use of the single chain and bolt. Because it was not argued or found that the bailment to Mr Cambridge and Mr Liascos terminated on 10 February 2009 upon delivery to Mr Hodges, the fourth principle noted above would have required consideration as to whether they remained liable for the found negligence of Mr Hodges. That finding was not subject to challenge on appeal. That they were liable on that basis was not argued before the primary judge or this Court.
In the result the primary judge was correct to conclude that Mr Liascos was liable with Mr Cambridge in respect of the damage which occurred to the motorboat before 10 February 2009, and liable, with Mr Cambridge and Mr Hodges, for the damage which occurred in the accident on 10 February 2009.
The uncontested damages findings
The primary judge found that the amount which should be allowed for the cost of repairing the scraping damage which occurred on 13 April 2008 and the rust and sludge build up in the bilge which occurred as a result of the motorboat being left uncovered, was $2,750; that the amount which should be allowed for the cost of repairing the two engines as a result of that water damage was $26,931.10; and that the damaged engines had a salvage value of $5,000 (Reasons, pp 30, 31). None of these findings is challenged on appeal. The primary judge also found that as a result of the accident on 10 February 2009 the vessel had a salvage value of $5,000 and the trailer a salvage value of $500 (Reasons, p 32). The former reflected Captain Kysil's evidence that the hull had a residual value of about $5,000 (Black 612). Those findings are not challenged on appeal.
The primary judge correctly approached the assessment of damages on the basis that they should, so far as money can do, put Mr Anastasopoulos in the position he would have been in if the motorboat and trailer had not been damaged on 10 February 2009 (Reasons, p 30). Ordinarily, and in a case such as this, that requires an assessment of the amount by which the value of the property at the time of loss has been diminished: see Butler v The Egg and Egg Pulp Marketing Board [1966] HCA 38; 114 CLR 185 at 191; and Johnson v Perez [1988] HCA 64; 166 CLR 351 at 355-356, 367, 371, 380, 386. Because of the extent of damage to the motorboat and trailer, it was accepted that the measure of damages was the difference between their value at the time of the accident less their salvage value.
There was a question (which is pressed on appeal on behalf of Mr Liascos) as to whether that value should take account of the pre-existing scraping and water damage. In a second judgment delivered on 9 March 2011 the primary judge recorded an assessment of the damages "flowing from" the 10 February 2009 accident which made no allowance for that existing damage (Reasons, 9 March 2011, p 1). However, when apportioning liability between the three appellants with respect to that damage under Part 4 of the Civil Liability Act 2002, the primary judge took the fact of that earlier damage into account in a way which produced an overall outcome consistent with that which would have resulted from the correct application of the principles illustrated by cases such as Performance Cars Ltd v Abraham [1962] 1 QB 33. It will be necessary to return to this question later when addressing the assessment of damages and question of apportionment.
The principal issue with respect to damages was as to the value of the motorboat in February 2009. The respondent and the appellants sought to establish that value by reference to the cost of purchasing an equivalent replacement vessel in the United States.
The contested valuation evidence
Two witnesses gave evidence as to the value of the motorboat. They were Captain Kysil, qualified on behalf of Mr Anastasopoulos, and Mr Munroe, qualified on behalf of Mr Seymour, who was in the same interest as the appellants. Captain Kysil's evidence as to the value of the motorboat was admitted over objection. There was no objection to the admissibility of Mr Munroe's evidence. Each of the appellants submits that the primary judge erred in admitting the valuation evidence of Captain Kysil.
Captain Kysil estimated the value of the motorboat and trailer in February 2009 at $180,000. That valuation did not take account of the existing damage. It did take account of the fact that the motorboat required further refurbishment to put it in good working order. Captain Kysil estimated the cost of that refurbishment at about $20,000. In his oral evidence, he estimated the cost of transporting a replacement vessel to Australia at $20,000 (Black 562) and estimated the cost of replacing the trailer at $15,000 (Black 562). That oral evidence was not objected to.
Mr Munroe's opinion was that the value of the vessel in May 2010 was $25,000. That valuation also did not take account of the existing damage but did take account of the fact that, prior to the accident, the cost of bringing the vessel "to a working condition" would have been about $20,000. Mr Munroe arrived at the value of $25,000 by reference to the prices (in US dollars) for which two 1967 Donzi 28-foot motorboats were being offered for sale in the United States. He was unable to identify any pre-1990 Donzi vessels which had been sold or offered for sale in Australia. Mr Munroe took the average of those "expected sale prices" in the United States, converted it to Australian dollars, added a freight allowance of $10,000, deducted $20,000 as the estimated cost of bringing the vessel to good working condition, and rounded the number up to $25,000 by adding a "small allowance" ($3,129) for the value of the trailer.
The principles governing the admissibility of expert evidence under the exception to the opinion rule in s 79(1) of the Evidence Act 1995 are summarised in Dasreef Pty Ltd v Hawchar [2011] HCA 21; 243 CLR 588. The discussion in the judgment of the plurality (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ) at [31]-[42] emphasises the following matters. First, when addressing the admissibility of expert opinion, it is necessary to identify the fact or facts in issue to which the opinion is said to be relevant in the sense required by s 55(1) of the Act. Secondly, it is necessary to identify the specialised knowledge on which the expert's opinion is wholly or substantially based. It must also be shown that the specialised knowledge is based on training, study or experience. Thirdly, ordinarily the evidence must explain how the relevant field of specialised knowledge in which the witness is expert and on which the opinion is based, has been applied to produce the opinion propounded. Finally, a failure to demonstrate that an opinion is wholly or substantially based on specialised knowledge, which in turn is based on the witness's training, study or experience goes to the admissibility of the evidence and not merely to its weight.
Objection was taken to Captain Kysil's valuation evidence on two bases. First, it was said that he had no relevant specialised knowledge based on training, study or experience which qualified him to give opinion evidence as to the value of the motorboat. Secondly, it was said that his evidence did not clearly state the assumptions on which it was based or explain how his conclusion as to value was arrived at or demonstrate that it was based upon any specialised knowledge. The primary judge delivered reasons for admitting Captain Kysil's valuation evidence over those objections. Although a recording of those reasons appears to have been taken, no transcript was produced. As a result this Court must proceed on the basis that the primary judge addressed and rejected each of these objections to its admission.
In this Court the appellants argue that each of these objections should have been upheld and the evidence rejected. Before addressing this argument and Captain Kysil's qualifications and evidence, it is necessary to explain a little further the issues concerning the motorboat and its value.
The respondent's evidence, which the primary judge appears to have accepted (Reasons, 17 December 2010, p 7) was that he purchased the motorboat in 1996 or 1997 for $70,000 and replaced the engines in 2002 or 2003 at a cost of over $20,000 (Reasons, p 30). In his evidence in chief the respondent said that when sold to him the vessel was described as a Donzi 28-foot "off-shore" racer built in 1963 or 1964 which was of "historical value". However, when pressed in cross-examination, the respondent said that he could not recall how the boat was described to him when sold (Black 72-73). The respondent received no documents at that time which showed the provenance of the vessel or its date of manufacture or specification. The motorboat itself had no permanent hull or other identifier which established its date of manufacture, specification or correct description. There were admitted in evidence, over objection, printouts from a website which stated that the Donzi powerboat was first manufactured in Miami, Florida, in about 1964 and that there were off-shore racing specification versions of the motorboat produced as well as production versions. The admissibility of that evidence was not the subject of challenge on appeal.
It was this evidence which caused the primary judge to record that there were "difficulties in establishing with certainty, in 2010, whether the first Donzi boat was made in 1963 or 1964 or 1965" (Reasons, pp 28-29). However, the primary judge went on to record (Reasons, p 29):
"... the thrust of the evidence both from [Mr Anastasopoulos] and from [his] expert Captain Kysil was to the effect that the first boats made by Donzi were off shore racing craft and [that this] boat is one of those boats."
Her Honour concluded that the motorboat was "rare" and likely to have the value attributed to it by Captain Kysil (Reasons, pp 29-30).
Captain Kysil's evidence was relied upon to justify findings that the motorboat was an off-shore racer, as distinct from a production version of the Donzi 28 foot vessel, that it was manufactured in the mid-1960s, that it was for those reasons rare and that such a vessel had a value, in Australia, of $180,000.
Captain Kysil produced four written reports. They were dated 21 February 2009, 23 June 2009, 20 February 2010 and 10 June 2010. The last report was in response to Mr Munroe's report dated 12 May 2010. The reports which contained opinions as to value were those dated 21 February 2009 and 10 June 2010. The latter repeated the opinion as to value stated in the former. The report dated 20 February 2010 attached a copy of Captain Kysil's curriculum vitae and the Expert Witness Code of Conduct.
Paragraphs 30 and 31 of the first report and a concluding paragraph under the heading "Summary" set out Captain Kysil's evidence as to the value of the motorboat:
"30. Some research around the subject craft type indicates this significant early muscle boat classic example of the Donzie 28 may be very rare to find. Two 1967 examples of Donzie 28 muscle boats in the USA were found as comparitors. The subject craft may be one of the last remaining examples if not the only example of the 1963 Donzie 28 with an international reputation as a classic American offshore racing boat which represented the state of the art at the time.
31. Research indicates "Donzie boats connote images of speedboat excitement. Originally made for offshore powerboat racing, Donzie boats continue to make great waves among boating enthusiasts and even the boating media. Founded in 1963 by Don Aronow with a factory in North Miami, the Donzie boat served as an icon of America's greatness. Aronow, a legendary figure in the boating industry, applied his knowledge in building boats using fibreglass, in building the fist [sic] Donzie boats. Some of these notable designs that Aronow created for Donzie include the Ski Sporter 16, St. Tropez 19 and the 28 Sportsman. These models set Donzie's tradition for building boats with high performance and quality craftsmanship. To this day, Donzie boats are statements of quality workmanship, outstanding performance and distinctive styling.
...Summary
...
Based on comparitors evident on international web sites, the standard having been achieved for the subject craft prior to being damaged, the stage of refitting the vessel that had been achieved, it's rarity internationally and it's credentials, the craft in my view including the trailer had an international value of about $180,000 AUD. On completion the craft would have had an estimated potential value of at least $220,000."The curriculum vitae attached to the third report disclosed Captain Kysil's education, employment and business experience as follows:
"Education:
School Certificate, Higher School Certificate, Engineering Surveying Certificate Syd. Tech., Real Estate & Valuation Practise Syd. Uni., Cert. of Competency Master V Trading USL Code, Cert. of Competency Coxswain Trading & Fishing USL Code, Marine Personal Lifesaving & Survival Syd. Tech., Fire Prevention & Control Syd. Tech., Senior First Aid Red Cross.Employment & Business:
1967-1986 Employed as Local Government Engineer
1967-1980 Founding proprietor of Abco Design : Drafting Service Architectural Plan Service
1975-1990 design, construction of commercial charter craft such as Southern Belle, Lugarno Ferry, African Queen I, African Queen II.
Operator of charter boat services - Georges River, Sydney.
1975-1997 Proprietor of Georges River Boating Services marine consultancy.
1985-2009 Proprietor of BOAT CHECK - national pre-purchase marine craft assessments, general marine consultancy, boat broker and professional court witness in marine legal matters."The "Boat Check" letterhead on which the written reports and curriculum vitae were produced included in its heading the description "Insurance & Valuation Reports".
What is readily apparent from a consideration of these qualifications and the form and content of Captain Kysil's valuation opinion is that the primary judge erred in admitting it in evidence. It was not admissible for the reasons put to the primary judge on behalf of the appellants.
Captain Kysil was not shown to have had by training or experience any familiarity with the 1960s Donzi vessels which would answer the description "specialised knowledge" and enable him to express an opinion, by reference to the physical characteristics of the respondent's motorboat, as to its year of manufacture, whether it was an off-shore racer as distinct from a production version of the vessel, and whether by reference to the number manufactured or remaining in working order it was rare or unique. Nor was he shown to have had any "specialised knowledge" which enabled him to express an opinion as to the value of such an off-shore racer version manufactured in the mid-1960s; whether by reference to the price at which it might be bought or sold in the United States or on any other basis. His lack of those qualifications was a sufficient basis to require the rejection of his valuation opinion and any evidence he gave as to the year of manufacture and correct description of the vessel and its "rarity".
Captain Kysil's opinion should also have been rejected for at least two further reasons. First, it did not as required by cl 5(1)(b) of the Code of Conduct, state the assumptions of fact on which it was based. For example, it did not state, if it was the position, that Captain Kysil was making assumptions as to the correct description and characteristics of the motorboat, as to the number of such vessels and as to the number remaining in working order. Presumably, assumptions along those lines lay behind his references to the vessel's "rarity internationally" and its "credentials". Nor does Captain Kysil disclose the underlying information as to the offer prices of the "comparitors" to which he refers or any specific characteristics of those vessels.
Secondly, and more fundamentally, Captain Kysil did not give reasons for his conclusion as to value. In the absence of such reasons, his report did not and could not demonstrate that his opinion was based on any "specialised knowledge" which was in turn based on relevant training, study or experience. The reader of that report was left with no idea as to how the "international value of about $180,000" was arrived at or as to how reference to unspecified "comparitors", the vessel's "rarity internationally" and its "credentials" might justify such a value.
It remains to consider Captain Kysil's oral evidence. It was accepted in argument before this Court that if, in the course of that oral evidence, Captain Kysil gave evidence of specialised knowledge based on his training, study or experience and explained how his opinion was based on that specialised knowledge, the evidence previously inadmissible may have been rendered admissible. He did neither.
In cross-examination, Captain Kysil said that he had searched a number of websites to inform himself about the Donzi motorboat. That he did so was consistent with his having no relevant training, study or experience to express a view about the correct description of the vessel or as to its rarity. He explained that his conclusion that the vessel "may be rare" was due in part to the fact that the "information [he] received off the Internet was insufficient to give ... a more fulsome research background on the boat because there was insufficient evidence of the type of boat I was looking for" (Black 580). Captain Kysil did not identify or adopt as correct any information obtained from any particular website. Nor was it suggested or established that any of the websites to which he referred were sources of information which experienced valuers of Donzi motorboats treated as reliable and used when forming opinions as to value: as to the possible admissibility of such information, see English Exporters (London) Ltd v Eldonwall Ltd [1973] Ch 415 at 420; PQ v Australian Red Cross Society [1992] 1 VR 19 at 34-36; R v Fazio (1997) 69 SASR 54 at 63-64; Woods v Director of Public Prosecutions [2008] WASCA 188; 38 WAR 217 at [55]-[58]; Bodney v Bennell [2008] FCAFC 63; 167 FCR 84 at [92]-[93].
Again in cross-examination, Captain Kysil sought to justify his conclusion that the motorboat was "about a 1963 model". He asserted that there had been off-shore racing models manufactured before 1964, that production models were manufactured from 1964, and that there were minor changes to the off-shore and production models manufactured from that time. He described those changes in very general terms and as being to the hull and cockpit shape to make the vessel "more efficient and faster in the water" (Black 587). He gave no evidence, however, which qualified him to speak as to characteristics of versions of the vessel manufactured between 1964 and 1970 which enabled them to be identified as manufactured at a particular time or as an off-shore racer rather than a production model. At one point Captain Kysil sought to justify his statement that "the profile of Donzi was at a very high level internationally" in 1963 as being "that sort of information that you glean over many years of being in the industry, working in the industry day by day" (Black 581). That answer does not describe "specialised knowledge" based on training or experience which qualified him to give evidence of the kind referred to. Ultimately, he accepted that his description of the vessel as a "1963 model Donzi" was based on what he was told by Mr Anastasopoulos which was "in addition to my own research" (Black 585). That "research" did not qualify him to express any opinion as to the year of manufacture or correct description of the vessel. What he was told by the respondent was an assumption only.
In his oral evidence in chief (Black 561) Captain Kysil explained that his estimate of value was based on:
"... the crafts rarity, its design, specification, its origin, its uniqueness and status in the American boat market particularly as a significant early model offshore racing craft". (Black 561)
He agreed that the two comparable vessels to which he referred in his written report were 1967 28-foot Donzi vessels. Each was advertised for sale in February 2009, one for US$39,900 and the other for US$52,900. Those vessels were the same as those relied upon by Mr Munroe except that Mr Munroe had taken offer prices for those vessels as at May 2010. By that time the former was offered for sale for US$12,000 and the latter for US$49,900. Captain Kysil maintained that these vessels were in a "different category" to the respondent's vessel because it was an off-shore racing vessel whereas they were more standard production vessels. Ultimately he accepted that the defining characteristics which he had assumed the respondent's vessel had which those vessels did not have were that it was an off-shore racing vessel manufactured in 1963 and "rare". He was not qualified to express an opinion as to the correctness of either of those assumptions.
I conclude that the primary judge wrongly admitted Captain Kysil's written and oral evidence as to the year of manufacture and correct description of the respondent's vessel and as to its value. The primary judge relied upon that evidence to support the findings that the vessel was one of the first boats manufactured by Donzi in the mid-1960's and was an off-shore racing version of the vessel. Mr Anastasopoulos' evidence considered alone did not justify those findings. That evidence was hearsay and, as is noted above, in cross-examination the respondent conceded that he could not recall how the vessel was described to him when sold. In the absence of any evidence which established its year of manufacture and that it was an off-shore racing version, and for that reason "rare", the vessel's value for the purpose of awarding damages could only be assessed on the basis on which Mr Munroe valued it, namely as "an early - probably 1960s Donzi vessel" (Black 653).
Quantification of damages
It is necessary for the Court to address the vessel's value, so described, and on the basis of the remaining evidence. That evidence principally is the valuation evidence of Mr Munroe. The respondent argued that the value of the vessel as at February 2009 could also be determined by reference to its acquisition price in 1996 or 1997 ($70,000), taking into account that a further $20,000 was spent on new engines in 2002 or 2003. There is a difficulty with using that price as a starting point for determining the value of the vessel in 2009. That difficulty is that the evidence does not indicate what relationship the value of such vessels in 1996 bears or is likely to bear to their value in 2009. Here there is some evidence as to the vessel's likely value in 2009. In that circumstance there is no point in using its acquisition price thirteen years earlier as a starting point. For this reason one is driven back to the evidence of Mr Munroe.
In the absence of any evidence of sales at particular prices, Mr Munroe used asking prices as an indication of value. Although the circumstances in which an offer is admissible as evidence of value are limited (see the discussion of Spigelman CJ in MMAL Rentals Pty Ltd v Bruning [2004] NSWCA 451; 63 NSWLR 167 at [84]-[95]), no objection was taken to the evidence on that basis, and Mr Munroe's methodology was not criticised. The explanation for the absence of objection may be that the parties accepted, in the circumstances, that there was no other practical and cost-efficient means of assessing value. The value which Mr Munroe arrived at involved averaging asking prices current as at May 2010 rather than February 2009. At that earlier date the asking prices for the two vessels which he used were US$52,900 (not US$45,000) and US$39,900 (not US$12,000).
The reduction in the asking prices between those dates may be an indication that the level at which sales were likely to occur was falling. It could also be an indication, in relation to one vessel, that the vendor whose asking price dropped significantly was anxious. Or it could be that the earlier asking prices were inflated and exceeded the price at which a sale was likely to take place. Accepting that these possibilities cannot be resolved, it is nevertheless appropriate, in my view, to make some upwards adjustment to the average price arrived at by Mr Monroe to allow for his using offer prices current as at May 2010 rather than February 2009. To do so is consistent with the methodology adopted.
The midpoint of the asking prices current as at February 2009 was US$46,400. Taking a midpoint of US$37,500 (which is midway between US$46,400 and the midpoint of US$28,500 taken by Mr Munroe) and using the same exchange rate as he used, results in an average price expressed in Australian dollars of $42,000 rather than the $31,871 arrived at by Mr Munroe. That amount has to be adjusted to take account of the freight cost to get such a vessel to Australia and to the additional costs which the respondent would have had to incur to have a vessel in roughly the same state of refurbishment as those used as comparables in Mr Munroe's valuation. The primary judge allowed a freight cost of $20,000, preferring the evidence of Captain Kysil to that of Mr Munroe. In cross-examination Mr Munroe was not prepared to disagree that the freight cost could be $20,000 (Black 647). For that reason I prefer Captain Kysil's estimate. An allowance also has to be made for the estimated cost of $20,000 for completing the refurbishment of the vessel. Allowing for that cost and for freight leaves the value of the vessel at $42,000. That value does not include the trailer. Captain Kysil estimated the value of the trailer at $15,000. That evidence was given orally and not objected to or challenged in cross-examination. Mr Munroe allowed only the $3,129 involved in rounding up his valuation. Captain Kysil's estimate should be preferred. A deduction must then be made for the salvage value of the trailer, the hull and the engines. The primary judge allowed $5,500 as salvage for the trailer and hull and $5,000 for the engines (Reasons, pp 30, 32).
These assessments assume, subject to the refurbishment being completed, that the vessel was in good working order and condition in February 2009. On that basis the value of the motorboat and trailer at that time was $57,000. After allowing for the salvage values, damages assessed by reference to that condition would be $46,500. However, the motorboat had sustained scraping and water damage in the period before 10 February 2009.
The primary judge assessed that damage at $24,681. It must be taken into account when assessing the liability resulting from the February 2009 accident and the damages reduced accordingly: see Performance Cars Ltd v Abraham; Dillingham Constructions Pty Ltd v Steel Mains Pty Ltd [1975] HCA 23; 132 CLR 323 at 327, 330. In his argument in relation to apportionment Mr Liascos contended that because the motorboat and trailer were substantially damaged in the accident, with the result that they only had a salvage value, the damage which had already occurred was not to be taken into account when assessing the liability of the tortfeasors responsible for that accident. That argument is inconsistent with principle, and these authorities, and must be rejected.
I assess the damages for the incidents occurring before 10 February 2009 at $24,681. Mr Cambridge and Mr Liascos are liable for those damages as joint bailees. The damages for the accident on 10 February 2009 are $46,500 less $24,681 i.e. $21,819. To that amount must be added the cost incurred by the respondent in having the vessel and trailer towed from the scene of the accident. That cost was $1,012. The three appellants are liable for those damages of $22,831 resulting from that accident.
Apportionment of liability between the appellants
There were effectively two claims for damage to the motorboat. The first was against Mr Cambridge and Mr Liascos for the damage occurring before 10 February 2009. That claim to $24,681 is an "apportionable claim" within s 34(1)(a) of the Civil Liability Act. Each of Mr Cambridge and Mr Liascos is a "concurrent wrongdoer" in relation to that claim because each is a person whose acts or omissions jointly caused the damages. As joint bailees having equal responsibility for the failure to take reasonable care of the vessel, it is just that each should bear 50 per cent of that claim.
It is also necessary to apportion liability for the damage caused in the accident on 10 February 2009. Again that claim is an "apportionable claim" and the three appellants are "concurrent wrongdoers". The primary judge considered that as between the first and second appellants and the third appellant that liability should be borne equally. I agree with that assessment. It takes account of the fact that the first and second appellants did not advise the third appellant that two safety chains had been used for the journey from Peakhurst and of the fact that the third appellant was negligent in the respects found by the primary judge. The result of apportioning liability in that way is that the third appellant is liable for $11,415.50 (being 50 per cent of $22,831) and each of the first and second appellants is liable for $5,707.75.
When that last amount is added to the liabilities of the first and second appellants for the first claim, the judgments which should be entered against the appellants are as follows:
(1)Judgment for the respondent against the first appellant in the amount of $18,048.25 together with interest from 10 February 2009 to 11 March 2011;
(2)Judgment for the respondent against the second appellant in the amount of $18,048.25 together with interest from 10 February 2009 to 11 March 2011;
(3)Judgment for the respondent against the third appellant in the amount of $11,415.50 together with interest from 10 February 2009 to 11 March 2011.
Orders proposed
Accordingly the orders of the Court that I propose are:
(1)Appeal allowed.
(2)Orders (1), (2) and (3) of the District Court made on 11 March 2011 be set aside.
(3)Judgment for the respondent against the first appellant in the amount of $18,048.25 together with interest from 10 February 2009 to 11 March 2011.
(4)Judgment for the respondent against the second appellant in the amount of $18,048.25 together with interest from 10 February 2009 to 11 March 2011.
(5)Judgment for the respondent against the third appellant in the amount of $11,415.50 together with interest from 10 February 2009 to 11 March 2011.
(6)The judgments in orders (3), (4) and (5) above to take effect as at 11 March 2011.
(7)Direct the parties to lodge written submissions concerning the orders that should be made as to the costs of the proceedings before the primary judge and before this Court. The appellants to lodge and serve those written submissions within 14 days of the date of these orders and the respondent to lodge and serve his response within 28 days thereafter. The Court will then determine what orders should be made on the basis of those submissions.
BARRETT JA: I agree with Meagher JA.
SACKVILLE AJA: I agree with Meagher JA.
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