Gannell v Seaquest Pleasure Boats Pty Ltd (In Liquidation)
[2012] VCC 893
•26 July 2012
| IN THE COUNTY COURT OF VICTORIA | Revised Not Restricted |
AT MELBOURNE
CIVIL DIVISION
DAMAGES AND COMPENSATION
GENERAL DIVISION
Case No. CI-10-02267
| ANDREW GANNELL | Plaintiff |
| v | |
| SEAQUEST PLEASURE BOATS PTY LTD (IN LIQUIDATION) (ACN 104 613 327) | Defendant |
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JUDGE: | HIS HONOUR JUDGE SMITH | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 5, 6, 7, 8, 12, 13, 14, 15, 18, 19, 20, 21, 22, 25, 26 and 27 June 2012 | |
DATE OF JUDGMENT: | 26 July 2012 | |
CASE MAY BE CITED AS: | Gannell v Seaquest Pleasure Boats Pty Ltd (In Liquidation) | |
MEDIUM NEUTRAL CITATION: | [2012] VCC 893 | |
REASONS FOR JUDGMENT
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SUBJECT – DAMAGES CLAIM
CATCHWORDS – Personal injury claim – negligence of boat builder – breach of contract of sale of boat – assessment of damages for pain and suffering and pecuniary loss
LEGISLATION CITED – Fair Trading Act 1999
CASES CITED – Schellenberg v Tunnel Holdings Pty Ltd (2000) 200 CLR 12; O’Donnell v Reichard [1975] VR 916
JUDGMENT – Judgment for the plaintiff.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M Titshall QC with Mr R Stanley | Wilmoth Field Warne |
| For the Defendant | Mr C Blanden SC with Mr T Messer | Hall & Wilcox |
HIS HONOUR:
1 On 19 November 2004, the plaintiff, Andrew Gannell, was the owner of a relatively new Razerline fishing boat. He had purchased it the previous year from the defendant, Seaquest Pleasure Boats Pty Ltd.
2 On that date, the plaintiff and a friend, Andrew Smithson, took the boat from Beaumaris and dropped anchor approximately 13 nautical miles west of Frankston. They proceeded to prepare fishing lines with a view to fishing.
3 At approximately 6.00 pm, about thirty or forty minutes after they had dropped anchor, the boat capsized and sank in approximately 21 metres of water.
4 The plaintiff and Mr Smithson remained in the water for approximately twelve hours before they were rescued at about 6.00 am the following morning.
5 The plaintiff alleges that:
(a)The defendant owed him a duty to take reasonable care to ensure that the boat was seaworthy, safe for its intended use as a recreational boat, stable and had adequate buoyancy.
(b)The boat capsized and sank as a consequence of a breach by the defendant of that duty.
(c)He had purchased the boat from the defendant pursuant to a sale agreement.
(d)There were terms of that agreement that the boat would be defect-free, seaworthy, stable, safe to use, and fit for its purpose of use as a recreational boat.
(e)There were implied terms of the sale agreement pursuant to ss.321 and 321A of the Fair Trading Act 1999 (“the Act”) that:
(i)the boat was of merchantable quality; and
(ii)the boat was fit for the particular purpose for which it was required, namely for use as a recreational boat, including being defect-free, seaworthy, stable and safe to use.
(f)The defendant breached those terms of the sale agreement and that those breaches were a cause of the boat capsizing and sinking.
6 He further alleges that, as a consequence of the accident, he suffered injury, loss and damage. He seeks damages for pain and suffering and for pecuniary loss.
7 The defendant admits that it sold and supplied the boat to the plaintiff pursuant to an agreement and that it owed a duty of care to the plaintiff as alleged. It does not contest that the boat sank or that the plaintiff spent some twelve hours in the waters of Port Phillip Bay before he was rescued the following morning.
8 The defendant denies that it was negligent and denies that it breached any term of the sale agreement. In the event that it is found to have been negligent, it alleges there was contributory negligence on the part of the plaintiff that was a cause of any injury, loss or damage suffered by him.
9 Although the plaintiff pleaded causes of action in negligence, breach of contract and breach of terms implied by the provisions of the Act, the parties agreed that a finding in favour of the plaintiff in respect of any of those causes of action would result in a finding for him in relation to each of them. Accordingly, if he succeeds in negligence, it will not be necessary to consider separately whether there had been a breach of the terms of the sale agreement.
10 The issues to be determined in this matter are:
(a)Why did the boat capsize and/or sink?
(b)Was there negligence on the part of the defendant that was a cause of the boat capsizing and/or sinking?
(c)Was there contributory negligence on the part of the plaintiff?
(d)What injuries were suffered by the plaintiff as a consequence of the accident?
(e)In what amount is it fair and reasonable to compensate the plaintiff in respect of his pain and suffering and pecuniary loss caused by the accident?
History of the Boat
11 The boat was a 7.2‑metre Razerline motor powered fishing boat. The plaintiff had seen a 6‑metre version of the boat at a boat sales business known as Mentone Marine in 2003. He preferred a slightly longer boat for his fishing purposes, and he was advised that a 7.2-metre version was available. It was ordered by the plaintiff through Mentone Marine. The boat was manufactured and supplied by the defendant at its Perth premises.
12 The boat was delivered by the defendant to Mentone Marine shortly before Christmas 2003. At that time it was fitted out by Mentone Marine with a 250‑horsepower motor and a number of other items, including radar, sounding equipment, anchor and electric winch, and a number of other electronic items.
13 The cost of the boat as purchased from the defendant was approximately $60,000. At that point the boat consisted of the hull, cabin, seats, various built in storage areas and an automatic bilge pump.
14 By the time it had been fully fitted out by Mentone Marine, the total cost of the boat was approximately $150,000. It was transportable by trailer.
15 The boat had been manufactured with a level aluminium deck welded at its edges to the transom and to the sides of the hull. It was intended that this would form a watertight buoyancy compartment consisting of the sides and base of the hull, the transom and the deck. Into this compartment various items had been fitted. A fuel tank had been inserted and fixed in position between the deck and the hull. In addition, a storage facility known as a catch tank (also referred to in evidence as a kill tank) had been inserted. The base of the catch tank was part of the hull of the boat. It had a small opening at the bottom which was able to be closed off by means of a plug. The purpose of the catch tank was to have a tank capable of being filled or partially filled with seawater into which fish could be placed after they had been caught. The level of water in the catch tank could never be higher than that of the surrounding sea level. The catch tank plug had two uses. It could be used to prevent sea water entering the catch tank if the operator wished the tank to be dry. It could be used when there was water in the catch tank to prevent the tank from draining when the boat was moving.
16 There were means of access to the buoyancy compartment:
(a) through a screw-in inspection disc situated just in front of the motor, well above the water line; and
(b) through a drainage hole at the central base of the transom. In normal use, the level of that drainage hole would be beneath the water line. There was a screw-in bung attached to the drainage hole. If the bung was not inserted and adequately screwed in, water would enter the buoyancy compartment when the boat was stationary, travelling in reverse or travelling forwards very slowly. If the boat was travelling forwards at a modest speed or more, water would not enter through the drainage hole in the transom and in fact water in the compartment would be sucked out through that hole.
17 The plaintiff launched the boat at Phillip Island in Western Port Bay in early 2004. Almost immediately, he noticed that the bow of the boat was lower than he considered it should be. There was a problem with the trim of the boat. Water that came onto the deck of the boat, instead of draining out to the rear, would flow to and remain in the bow of the boat. The plaintiff consulted personnel at Phillip Island Marine, a marine business located at or near to Cowes, where he had a beach house. He received advice from that business confirming his views that the boat was “bow heavy”.
18 The plaintiff contacted the defendant and spoke by telephone with its manager, Stewart Maughan. In due course, Mr Maughan travelled from Perth and inspected the boat in the water off Phillip Island. He agreed that the boat was “bow heavy”, and it was decided that the boat would be transported, at the defendant’s expense, back to Perth where the problem would be rectified. The boat was trucked to Perth in February 2004.
19 Various tests were carried out by the defendant to determine how to correct the problem. It was considered that the boat had to be made heavier in the stern.[1] Modifications made to achieve this consisted of:
(a)The insertion of two flood tanks within the hull of the boat at either side at its stern. When the boat was stationary, water was able to flow into these tanks by means of four openings cut into the transom of the boat, these being described by Mr Maugham as “freeing ports”. These are shown clearly in photograph P170, forming part of Exhibit Q. This caused the stern of the boat to sit a little lower in the water at rest. When the boat moved off forwards, water would flow out of the flood tanks.
(b)The fuel tank fitted under the deck of the boat was moved astern approximately 400 millimetres, thus moving the weight of the tank and fuel aft.
(c)Some 30 to 40 kilograms of lead was added to the stern of the boat within the swallow tails on either side of the stern, equally between port and starboard.
[1]Transcript (“T”) 1102
20 The boat was then tested in the sea off Perth. Mr Maughan was of the view that the problem with the trim of the boat had been solved. At rest, the boat now sat in a satisfactory position, slightly stern-down. The earlier bow-heavy problem had, he considered, been rectified. He tested the boat in the open water for a period of approximately one and three quarter hours. The conditions in which the boat was tested he described as a small chop or a 1‑metre swell. He considered that the boat performed well.
21 The boat was trucked back from Perth to Melbourne upon completion of the modifications referred to above. Mr Maughan’s evidence was that it was trucked back in late March 2004. The plaintiff’s evidence was that the boat was returned to Victoria shortly before the commencement of the snapper season which commenced in September 2004. I am unable to conclude which date is correct but, on the evidence before me, nothing of importance turns on this.
22 In any event, the plaintiff took the boat out on Western Port Bay approximately four times before the fishing competition of 19 November 2004. On each occasion his evidence was that he was on the water for a couple of hours in relatively calm conditions. He encountered no flotation problems on those occasions.
23 Mr Stewart Maughan was the manager of the defendant at the time the boat was manufactured and when it was modified in the manner previously described. He had personally performed much of the work. His evidence was that he had taken photographs of the boat in Perth shortly before it was trucked to Melbourne after those modifications had been completed. He identified these photographs as including those marked P170, P168, P169, P167, D73, D69, P173 and P172, which photographs form part of Exhibit 13.
24 When a photograph showing the stern of the boat before the boat left Perth following modification (P170) is compared with one taken after the salvage of the boat in August 2011 (D258), it is clear that additional modifications had been performed on the boat.
25 Photograph P170 can be contrasted with photograph P258. Mr Maughan and the two experts who gave evidence (Mr Johnston and Mr Isherwood) agreed that additional modifications had been made to the stern of the boat since photograph P170 was taken. The D‑shaped openings at the base of each of the duckboards had been enlarged. In addition, an aluminium plate had been welded over the two outer flood tank portals. Such modifications are clearly shown on those photographs.
26 There was no evidence as to the identity of the person or persons who performed those additional modifications or as to when or why they were performed. It is not possible to say whether or not other work was done on the boat by such persons. If so, it is not identified in oral evidence or on any of the photographs tendered.
27 The plaintiff professed to know nothing of such further modifications.
28 Mr Maughan (of the defendant) was certain that his company had not performed such work. I accept his evidence to that effect. I find that those additional modifications must have been performed after the boat had been returned to Melbourne in 2004 and before the accident.
29 Mr Maughan’s evidence was that such work was of the sort he would expect if it was intended to fit the boat with trim tabs. These are hydraulically operated flaps fitted to the stern of some boats in order to allow the trim of the boat to be adjusted by the operator whilst the boat is moving.
30 The plaintiff’s evidence was that he had stored the boat at Phillip Island Marine at times after its return from Perth. Charles Stevens of that firm gave evidence that he could not recall performing that work. He stated that welding of aluminium was a specialist type of welding and a task not performed by his firm.
31 This was a boat on which the plaintiff had spent some $150,000. Initially, there had been problems encountered with it which had justifiably concerned him and which the defendant acknowledged required attention. These additional modifications must have been made to the boat in the relatively short period between its return from Perth and the accident. I consider that it is extremely unlikely that such work would have been performed without the direction or permission of the plaintiff. I find his evidence that he knew nothing of it to be unconvincing. I am not satisfied that he has told the truth concerning the full history of modifications made to the boat before the date of the accident.
The Capsizing and Sinking of the Boat
32 On Friday 19 November 2004, the plaintiff entered a fishing competition on Port Phillip Bay. The competition involved a prize of some $50,000 to the person who could catch the biggest snapper over a 24‑hour period. A large number of boats competed. The plaintiff launched his boat from the Beaumaris boat ramp. He estimated that between thirty and fifty other boats involved in the competition launched from this point. Other boats would have launched from other points on the bay.
33 Mr Smithson, a neighbour of the plaintiff, had agreed to accompany him in the competition. Mr Smithson and two other persons had been out on the boat with the plaintiff in Western Port Bay about four days before, on the previous Tuesday. He observed no problem with the boat at that time.
34 The plaintiff and Mr Smithson towed the boat from Lysterfield to Beaumaris. They stopped at a service station on the way to purchase fuel for the boat. Whilst at the service station, the plaintiff’s evidence was that he inserted and screwed in the bung situated at the base of the transom of the boat. In cross-examination, he was not challenged in respect of this.
35 This was important evidence. If the bung had not been properly secured, water could enter the buoyancy compartment when the boat was launched and it would inevitably sink if it remained or became stationary.
36 The plaintiff and Mr Smithson launched the boat. The plaintiff’s evidence was that there was a third person, by the name of Baden, who was supposed to accompany them, but who failed to show up at the boat ramp. He stated that the boat was launched and that he and Mr Smithson waited at the jetty for some fifteen minutes before departing. The relevance of this is that, during that fifteen‑minute period, the plaintiff said that the boat showed no signs of taking in water or any other flotation problem. His evidence was that, if the bung at the stern of the boat had been left unconnected in that period, the boat would have rapidly taken on water and this would have been obvious to him and anyone else looking at the boat.
37 The plaintiff had elected to fish from a location approximately 13 nautical miles west of Frankston. He was a member of the Brighton Central Angling Club. He and other members of the club had various sites at which they enjoyed fishing. The boat was fitted with a GPS system which would allow it to be steered to a particular location with great accuracy. The plaintiff’s evidence was that he proceeded to a mark in accordance with GPS coordinates obtained by him from another member of the club. He proceeded to drop anchor on arrival at the mark. The conditions at the time were choppy, with waves of between 1 and 1.5 metres. He was aware that the weather forecast indicated that waves were likely to get up to 3 or 4 metres later in the night.
38 Mr Maugham and the two experts previously referred to were in agreement that a boat such as the plaintiff’s should have been able to cope with those conditions without difficulty. At worst, the conditions might have been described as uncomfortable, but not dangerous for a boat of that size.
39 It had taken approximately half an hour to get from Beaumaris to the place at which the plaintiff dropped anchor. His plan was to fish and see how they went. He might or might not have stayed out all night. He might have stayed at that mark or moved elsewhere. As I understood his evidence, it all depended on how the fishing went.
40 The anchor was connected to the boat by approximately 100 metres of chain. After dropping anchor, the plaintiff allowed out approximately 60 to 80 metres of that chain. He and Mr Smithson then prepared about eight fishing rods. They baited them up and cast them. This took approximately ten minutes.[2]
[2]T 81
41 The plaintiff’s evidence was that shortly afterwards he looked towards the back of the boat and saw that at the rear of the deck there was about 1.5 inches of water. After being at anchor for about twenty minutes, he estimated that there was approximately 2 inches (about 50 millimetres) of water at the back of the boat. He noted that the automatic bilge pump was operating and expelling water from the outlet on the starboard side of the boat. Notwithstanding, soon the water was about a foot (about 300 millimetres) deep at the rear of the deck.[3]
[3]T 83
42 The plaintiff proceeded to start the motor and attempted to drive forward. He asked Mr Smithson to commence bailing the water with a bucket. He believed that if he could get the boat to go forward this would assist in draining the water out of the interior of the vessel. He could not accelerate too much for fear of running over the anchor chain. As I understand his evidence, the plaintiff engaged forward gear and attempted to move forward towards the anchor whilst operating the anchor winch. He had difficulty steering the boat. Things got to a point where the motor at the rear of the boat was submerged. At that stage the bow was on an angle of 30 to 35 degrees. Within a short period of time the boat rolled to the starboard (or driver’s) side and capsized. The plaintiff and Mr Smithson were thrown into the water.
43 Mr Smithson’s evidence was, in many respects, consistent with plaintiff’s account. There were some differences. With regard to their evidence concerning the boat sinking, and what occurred up to the time of their rescue, I consider that they both gave evidence as accurately as their respective memories permitted.
44 Mr Smithson stated that he was aware by the previous Tuesday that it would only be him and the plaintiff on board the boat during the competition, as the proposed third man, Baden, had already pulled out of the venture by that time.
45 Mr Smithson said that, at the service station, he had got up onto the boat and used the petrol hose to fill the fuel tank after it was handed to him by the plaintiff. He stated that, on arrival at Beaumaris, he had backed the boat and trailer down the boat ramp. The plaintiff was on the boat. After launching the boat, he parked the motor vehicle and trailer a short distance away and walked straight to the boat at the jetty. They left straight away, at about 4.30 pm. In other words, Mr Smithson disagreed that the boat had been at the jetty for 15 minutes or so whilst waiting for a third person to arrive or for any other reason. I accept his evidence in relation to this issue. He was adamant that he was aware that Baden would not be accompanying them as early as the Tuesday before.
46 Mr Smithson agreed that, upon dropping anchor, it took about fifteen minutes to get the lines baited and out on the water. They had then sat down on the seats in the cockpit area for another fifteen minutes or so, enjoying the pleasant afternoon. At that point Mr Smithson observed a small area of water accumulating at the rear corner of the deck on the starboard side. The carpet in the corner was wet. This would have been thirty-five or forty minutes after dropping anchor. Approximately five minutes later, he observed that the water had pooled to about 10 millimetres in depth in that corner. He queried with the plaintiff whether that was normal. At that point, the plaintiff indicated that they would head back in, and they started to pull in the rods. Soon after, he commenced bailing by way of a bucket. This was of no effect. The water was coming into the boat faster than he could bail it out. He noticed that the boat was listing to the starboard side. Eventually one or more waves came over the starboard side of the boat. Within seconds they were tossed into the water as the boat capsized to starboard. His estimate was that it took only about five minutes from the time that he had first observed the water in the corner of the boat until it capsized. That evidence is essentially consistent with that of the plaintiff. I accept the plaintiff’s evidence that, when Mr Smithson was bailing, the water at the rear of the boat had progressed to about a foot in depth.
47 Both men, at that point, were in the water without life jackets or any other flotation device. The water was extremely cold. Both recalled that the boat did not sink immediately. It remained in what appears to have been a near vertical position with the bow of the boat protruding about a metre to a metre and a half above the surface for about fifteen to twenty minutes. For a time they clung to the protruding bow rail. During that time, both men made unsuccessful attempts to dive below the water to obtain a device known as an EPERB, an emergency alarm device situated in the dashboard in front of the driver’s seat. In due course, one life jacket appeared on the surface and, shortly afterwards, an inflated tubular fender appeared. The fender was tied on around the plaintiff so that he could support himself by placing his arms across it. Mr Smithson put the life jacket on. Waves increased to around 3 metres as the night progressed.
48 The men were not rescued until about 6.00 am the following morning. A passing fishing vessel spotted them. They were taken ashore and then to Frankston Hospital. On any view, they experienced an horrific night. I have no doubt that, for a large part of it, the plaintiff believed that they would probably drown.
Why did the boat capsize and/or sink?
49 A seemingly obvious explanation for the boating taking on water and sinking is that the bung on the transom had not been properly secured. Indeed, within a short time of the issuing of the proceeding it appears that this view was expressed by the defendant to the plaintiff or his solicitors. The plaintiff was advised by his legal advisers that he should attempt to locate the boat and obtain evidence that the bung was in situ.
50 For a number of years following the accident, the plaintiff had taken no steps to locate the boat. Nor, it appears did his insurer. The plaintiff said he had no means of determining the boat’s exact location. His record of the GPS co‑ordinates had gone down with the boat. The evidence did not disclose why he could not have contacted the angling club member who had originally provided him with those co-ordinates. In any event, in due course he received information that a commercial fisherman named Cini had located the boat. Mr Cini was apparently fishing above it when he brought up one or more aerials from the boat. He apparently found the site a good one from which to fish. Fish, I was told, often inhabit wrecks and it would seem that Mr Cini profited from knowledge of its whereabouts. The plaintiff learned that Mr Cini and perhaps others had dived down to it on a Christmas Day some years after the accident. Mr Cini was not prepared to divulge the GPS co-ordinates to the plaintiff. He did not want to lose or share a good fishing location. He eventually agreed to take the plaintiff to the site in order that the boat could be inspected where it lay in some 21 metres of water.
51 The plaintiff engaged one Colin Palmer, a commercial diver, to dive to the boat and take film of it, with particular emphasis on showing the position of the bung. This was done on 18 March 2011. Mr Palmer was taken to where the boat lay by Mr Cini. A DVD film taken by him on that date was Exhibit 18. A still picture from that film was Exhibit 19. The plaintiff’s legal advisers apparently noted that, although the film showed the bung apparently in place in the transom, it did not show the boat’s identification number. Mr Palmer was instructed to do a second dive on 27 March 2011 and did so. The second DVD film was Exhibit 3. This showed the boat’s identification number and the bung in place.
52 The defendant concedes that both DVD films and the still picture demonstrate that a bung is in situ on the transom of the boat.
53 In August 2011, about five months after the two films were taken, the defendant arranged for the boat to be salvaged. The boat was raised onto a barge by crane and taken to Williamstown where it was inspected by Sean Johnston and Simon Isherwood, experts respectively retained by the parties, each of whom gave evidence at the trial. They both were present when the boat was transferred to the shore. Present with them at that time was Trevor Rowlands, a materials engineer, who had also been engaged by the defendant’s solicitors to attend and inspect the bung. The evidence of the three men was that the bung appeared to be in place and properly seated. The bung was unscrewed and removed by Mr Rowlands using two fingers. He described that process as requiring light finger pressure. It was not unduly loose.
54 Following the salvage, an inspection of the hull of the boat was carried out by Mr Johnston, Mr Isherwood and also by the defendant’s manager, Mr Maughan. None of them found any evidence that the hull of the boat had been damaged or breached so as to explain water entering the buoyancy compartment or of any other breach of the hull which might explain why the boat had sunk or lost flotation.
55 Mr Johnston and Mr Isherwood both independently conducted tests involving filling the hull partially with water. Each test failed to disclose any leaks from the hull. Both agreed that the interior of the compartment contained a good deal of silt indicating that it had, prior to salvage, contained water. Both agreed that the boat would not have sunk unless water had entered the buoyancy compartment to the extent that it sufficiently displaced the buoyancy of the boat.
56 Both experts agreed that one explanation for the boat capsizing and later sinking would be that the bung had not been inserted or fitted properly. Both agreed that the absence of the bung would be consistent with the observations of the plaintiff and Mr Smithson between the time the anchor was dropped and the time the boat sank.
57 The evidence of Mr Johnston, Mr Isherwood and Mr Maughan concerning the bilge pump was:
(a) There was only one bilge pump installed on the boat;[4]
[4]Mr Maughan at T 1086; Mr Johnston at T 1443; Mr Isherwood at T 1442
(b) It was operated automatically when water in the buoyancy compartment reached a pre-determined level. There was no evidence as to the quantity or depth of water in the compartment necessary to cause the bilge pump to operate;
(c) The pump was fitted with a manual override switch, enabling the pump to be manually operated;
(d) It was not possible to disable the automatic bilge pump unless the wiring to it was disconnected.[5]
[5]Mr Maughan at T 1088
58 The plaintiff’s evidence was that, at the time that water was observed to be pooling at the rear of the deck, the bilge pump was operating and water was being pumped out.[6] His evidence that he then switched on the manual bilge pump is puzzling. There was no separate manual pump. If he did alter the position of the manual switch, I consider that it was unlikely to have any effect on the operation of the pump.
[6]T 82-3
59 I find that the automatic bilge pump was operating for some time prior to the boat capsizing and that it was operating because there was water in the buoyancy compartment at least to a level required to cause the pump to operate.
60 The means by which water had entered the compartment is unclear. The plaintiff gave evidence that he had secured the transom bung at the service station prior to launching the boat. Whilst Mr Smithson did not observe him doing so, his evidence was not inconsistent with that having occurred.
61 For a number of reasons discussed later, I did not consider the plaintiff to be a reliable witness in a number of respects. If his was the only evidence of the bung being in place, I would not have been satisfied on balance of probabilities that this was so. However, the evidence is that it was in place on the two occasions in March 2011 that Mr Palmer dived to the boat, and when the boat was salvaged in August 2011.
62 During the course of the trial, Counsel for the defendant indicated that it would be submitted that the appearance of the bung in the films and still photograph tendered was not consistent with the bung having been in situ since November 2004 as there was insufficient marine growth on and around the bung for this to be so. If that submission was accepted, it would necessarily follow that some person had inserted a bung in the transom at some time after the boat sank and before Mr Palmer’s films were taken. I found Mr Palmer to be a truthful witness. He had never met the plaintiff before being engaged by him to film the boat. The defendant did not suggest at any time that Mr Palmer had placed the bung in the transom.
63 In his closing address, Counsel for the defendant conceded that I should proceed on the basis that the bung was securely in position on the transom of the boat at the time it capsized and sunk. I find that was the case.
64 When asked to assume that the bung was properly in place at all times, the two experts were not in agreement as to how the boat came to capsize and sink.
65 In summary, Mr Isherwood’s evidence was that:
(a) The evidence of the plaintiff and Mr Smithson concerning the water coming on the deck, the listing of the boat to starboard and its capsize indicated that the boat was taking on water into the buoyancy compartment, causing loss of flotation and stability, leading to it capsizing.
(b) This would not have occurred unless the buoyancy compartment had been breached in some way, thus allowing water in. The fact that the automatic bilge pump was operating was only explicable if there was already water in the buoyancy compartment.
(c) Having inspected the hull, he could not explain water entering the buoyancy compartment unless, at the time, the bung was not fitted in the transom.
(d) If one accepts that the bung was properly inserted, water must have entered the buoyancy compartment in some way through the structure of the hull, such as through a weld.
66 In summary, Mr Johnston’s evidence was:
(a) The design of the boat was such that originally the stern sat low in the water at rest and that the modifications made to the boat by the defendant after delivery exacerbated that problem.
(b) The boat had insufficient freeboard, and was sensitive to weight change and movement.
(c) Those design effects had led to the boat capsizing but not immediately sinking.
(d) Once the boat capsized, the stern of the boat, being heavier than the bow (due to the motor, flood tanks, water on the deck, fuel, and additional lead), would have caused the stern of the boat to sit beneath the bow as it floated in the water and was consistent with the bow protruding 1 to 1.5 metres above the water for a time.
(e) Once in this semi-submerged position, water was likely to gradually gain access to the buoyancy compartment by means of the bilge pump outlet and other areas that would normally be above the level of surrounding water. As the buoyancy compartment gradually filled in this manner, the boat eventually sank to the bottom.
(f) The fact that the automatic bilge pump was operating was only explicable if there was already water in the buoyancy compartment.
(g) The later modifications evidenced by photograph D258 would have caused greater pressure on the amount of water flowing in though the scuppers, and onto the deck.
67 I find that the automatic bilge pump had been operating for some unknown time prior to the capsize of the boat and that this would not have been so unless there was water in the buoyancy compartment. There was no evidence as to what level or quantity of water was required to operate that pump. The evidence does not disclose for how long the pump had been operating when observed by the plaintiff. Mr Smithson gave no evidence that he had made any observation of it.
68 Identifying the source of that ingress of water into the buoyancy compartment prior to the capsize of the boat is difficult.
69 I accept the evidence of Mr Johnston, Mr Isherwood and Mr Maughan that a careful inspection of the hull did not reveal to any of them any damage or breach that would allow the entry of water. I further note that the tests performed by Mr Johnston and Mr Isherwood demonstrated, insofar as those tests went, that the hull was water tight.
70 The design of the stern of the boat was the subject of evidence from Mr Maughan, Mr Johnstone and Mr Isherwood.
71 In summary, Mr Maughan’s evidence concerning the design of the boat was that the defendant built boats pursuant to plans provided by a naval architect, Dave Jackman. Those plans provided for the design and size of the hull, proportions, and amount of freeboard (the distance from the waterline and the top of the gunwale).
72 The original Jackman design prepared for this style of boat was for a 6.6-metre boat. The plaintiff had wanted a little more deck space at the rear. He ordered and was supplied with a 7.2-metre boat. To construct a longer boat, alterations to the basic design were made by the defendant and in particular, by its shipwright, Sean Morton. Mr Morton did not give evidence. Mr Jackman died about ten years ago.
73 The design of the boat, as purchased by the plaintiff, is similar to that depicted in photographs on the page marked ‘C’ in Exhibit 13.[7] The boats depicted in photograph A in Exhibit 13 are also similar in design.
[7]T 1078-9
74 On both sides of the rear of the boat platform-like structures are fitted. These were referred to as duckboards. They can clearly be seen on photograph P170 in Exhibit 13 and are depicted in the drawing P163 by Mr Maughan. As I understand it, they can be used as a step when exiting or entering the boat from the stern. The duckboards protrude out from the transom by 650 millimetres. They are essentially triangular in design. They are largely hollow.
75 At the base of each duckboard there is a D‑shaped opening. Those openings are visible in photograph P170, but only barely so. Those openings allow water to enter and to exit the hollow interior or cavity of those duckboards.
76 At the forward end of that cavity, and towards the upper end of it, are circular holes in the transom – two on each of the port and starboard sides – 25-millimetres in diameter. The purpose of these holes is to allow water to drain from the deck of the boat, out through those holes and then down through the D‑shaped openings. These are the essential features of a self-draining deck design. Drainage by these means was referred to by Mr Maughan and the two expert witnesses as drainage through the scuppers. That term refers to both the 2-millimetre holes and the D‑shaped openings.
77 Mr Maughan’s evidence was that there was no direction or advice provided by Mr Jackman as to how far above the waterline the scupper outlets should be.[8] His evidence was that he thought that, when the boat was built, those 25 millimetre holes were supposed to be about 200 millimetres (or about 8 inches) above the waterline.[9]
[8]T 1156
[9]T 1159
78 The waterline was estimated to be at about the level of the upper surface of the duckboards as evidenced by photograph P172.[10] Having examined the boat on more than one occasion after it was salvaged, both Mr Johnston and Mr Isherwood estimated that the distance between the upper surface of the duckboards and the 25 millimetre holes was about 50 millimetres (about 2 inches).[11] That is, that the distance between the surface of the water and each of the four holes leading to the deck of the boat was only about 50 millimetres when the boat was at rest in calm water. Obviously, in conditions involving waves, the water level would rise and fall regularly.
[10]Exhibit 13
[11]T 1310-11; T 1421-2
79 Mr Johnston concluded that the design of the boat was unsafe because of the inadequate distance of the 25 millimetres holes above the water line. He considered that the freeboard of the boat was inadequate. In fact, he considered that those features of the design of the boat would have been evident even before the boat was returned to Perth in January 2004. He considered the modifications made by the defendant in Perth exacerbated that problem. The boat was prone to take on water through the scuppers which would result in the stern of the boat sitting lower in the water, which would, in turn, make it even more likely to take in water. In addition, he considered the design of the boat was such that it was sensitive to changes of weight. Once water entered the deck area it would contribute to it listing increasingly to one side or the other. Eventually, he considered that this process had led to the boat losing stability and capsizing in the manner described by the plaintiff and Mr Smithson.
80 Mr Johnston agreed that the operation of the bilge pump indicated the presence of some water in the buoyancy compartment but considered the design features referred to above as being the cause, and certainly a cause of the capsize.
81 Mr Isherwood did not agree that the design of the duckboards, the level of the 25 millimetres holes above the waterline or the self-draining design was a cause of the capsize. He considered that the cause of the boat settling as low in the stern as described by the plaintiff and Mr Smithson was the ingress of water to the buoyancy compartment leading to instability and the capsizing of the boat.
82 His initial explanation for the ingress of water in the buoyancy compartment was the absence of the transom bung. When asked to assume the bung was in fact in situ, he appeared to struggle for an explanation for the ingress of water. He suggested that one possible explanation would be the presence of water in the buoyancy compartment before the insertion of the bung dating back to a previous use of the boat on an earlier occasion. That, in my view, would be inconsistent with the boat sitting properly when launched on the day in question and still sitting normally in the water when initially anchored and at rest for some time. The evidence shows that the stern became noticeably lower from a time about thirty to forty minutes after the anchor was dropped. I find that there was a continuing ingress of water during that period.
83 Mr Isherwood conceded that if the transom bung was in place there must have been an ingress of water through some part of the structure of the boat, for example, through a weld.[12]
[12]T 1404-5
84 Both Mr Johnston and Mr Isherwood, in conducting their respective water-tightness tests on the hull of the boat, had filled the hull partially by hose. Neither filled the hull totally. In Mr Johnston’s case, he ceased filling the hull when he thought the additional weight of the water in the boat constituted a danger of the boat becoming unstable on its trailer.[13]
[13]T 1235
85 Mr Isherwood ceased to fill the boat when he considered the level was sufficient to establish that the hull was essentially watertight.
86 It appears that the neither of them filled the hull up to or beyond the level of the chines. It follows that neither test involved testing the efficacy of the welds associated with the upper edges of the two flood tanks where they attach to the interior of the transom, nor the welds where the flood tanks attach to the sides of the hull.
87 There is no positive evidence that any particular weld had failed or permitted ingress of water. However, in the absence of any other explanation, I find on the balance of probabilities, that:
(a) Water entered the buoyancy compartment of the boat through its hull and, in the absence of any other explanation, probably through one or other of the welds positioned at a level above that tested by Mr Isherwood or Mr Johnston.
(b) The most likely place of ingress might be thought to be one or more of the welds associated with upper edges of the flood tanks, most likely the starboard flood tank. Once the boat came to rest at anchor, those flood tanks were designed to fill with water. Any fault in those upper welds would likely enable water to enter the buoyancy compartment. Whilst the boat was moving at some speed between the boat ramp and the point where the anchor was dropped, the flood tanks would be empty.
88 It might be argued that such an explanation is not consistent with the testing of the boat in Perth by Mr Maughan in early 2004. There, the boat was obviously at rest in the water for some time. However, the photographs numbered P169, P172 and P173 show that the boat was, in various locations, at rest in very still conditions.
89 There is no evidence as to how long the boat was at rest at or near to the jetty in those Perth photographs. It may well have been for less than thirty to forty minutes. However, there is no evidence that any flotation problems or any other abnormality were encountered in Perth when those on-water tests had been performed. However, I find that the boat was not exposed to 1 to 1 ½ metre swells, at rest, in those Perth trials. It was exposed to such conditions but only whilst travelling forwards at some speed.
90 There was no evidence to suggest that the observed later additional modifications[14] would have resulted in water entering the buoyancy compartment. There was, however, an issue between the experts as to whether they may have increased the quantity of water coming through the scuppers and onto the deck.
[14]Evidenced in photograph D258
91 Mr Johnston considered that those additional modifications would not have contributed to the boat taking on water or capsizing. Although the outer D opening was larger, he considered the crucial points of entry onto the deck were the 25 millimetre openings which had not been enlarged. The quantity of water able to flow through those holes to and from the deck would not have increased.[15]
[15]T 1345
92 Mr Isherwood considered that the increased size of the D openings would lead to greater pressure of water contributing to more water entering the deck area.[16]
[16]T 1344
93 Neither expert considered that the aluminium plates welded onto the transom would have contributed to the capsizing or sinking of the boat.
94 On the evidence before me, I am satisfied that there was water in the buoyancy compartment which caused the automatic bilge pump to operate prior to the boat capsizing.
95 I am satisfied that the presence of water in the buoyancy compartment contributed to the lowering of the stern of the boat, and to the instability of the boat.
96 I am also satisfied that the design of the stern of the boat, particularly following the modifications undertaken by the defendant in early 2004, contributed to the ingress of excessive water through the scuppers and onto the deck, contributing to instability and, eventually, to the capsizing of the boat and to its sinking. That design, by reason of its reduced freeboard, rendered the boat likely, in the conditions prevailing at the relevant time, to take in water through the scupper holes in the transom, resulting in the boat listing to the point where waves entered the cockpit of the boat, leading to it capsizing.
97 I am satisfied, on balance of probabilities, that the evidence establishes that the above-mentioned design features were a cause of the boat capsizing and hence, later sinking.
98 Notwithstanding my concerns about the plaintiff’s evidence regarding the later modifications to the boat by persons unknown, the evidence does not enable me to conclude that they were a cause of the capsize or sinking of the boat.
Was there Negligence on the part of the Defendant that was a cause of the boat capsizing and later sinking?
The Design of the Boat
99 The original design of the boat resulted in it being bow-heavy. It required additional weight being added to the stern in order to raise the bow or, alternatively, lower the stern when the boat was at rest. This was achieved in the manner earlier described. Whilst this assisted in correcting the trim of the boat so as to solve the bow-heavy problem, it also resulted in the stern of the boat sitting lower in the water. The freeboard was reduced.
100 The boat had not been tested on the water prior to its original delivery to the plaintiff in early 2004, notwithstanding that its design was an altered version of that drawn for a 6.6-metre boat. Following the later modifications by the defendant, it was water tested but in a limited fashion. Photographs P169, P172 and P173 confirm that the boat was on calm water and stationary for some time whilst photographs were taken and observations made of its trim. It was taken out to sea but in relatively mild conditions.[17] There was no evidence that the boat had been tested whilst stationary in anything but the extremely calm conditions depicted in those photographs. The design of the flood tanks and the self-draining deck meant that whilst the boat was moving forwards, even at modest speed, it would not take on water through the scuppers. Similarly, the flood tanks would empty. The problems were likely to occur when the boat was stationary and in choppy or rough seas.
[17]T 1119
101 I find that a reasonably prudent boat builder in the position of the defendant would have conducted on-water tests both before the original delivery and after the early 2004 modifications in a variety of conditions. At that latter time, the defendant knew that its modifications had lowered the stern of the boat. Mr Maughan had initially understood that the distance between the waterline and the 25 millimetre scupper holes to be 200 millimetres (or about 8 inches). He should have appreciated that that distance had been reduced to a bare 50 millimetres following the modifications. The prospect of the boat taking in excessive water through the scuppers, especially in choppy conditions, ought to have been appreciated by him and the defendant. Had such tests been carried out in a suitable variety of conditions, I consider that it is likely that the shortfalls in the design of the boat, as found by Mr Johnston, would have been identified. The boat would not have been returned to the plaintiff in the condition in which it was.
102 Further, I find, on the balance of probabilities, that water had entered the buoyancy compartment most likely through faults in one or more of the welds associated with the hull of the boat and that such entry was also a cause of the boat capsizing and sinking. The entry of that water in that manner was likely caused by one or more incomplete or inadequate welds reflecting poor workmanship on the part of the defendant.
103 Accordingly, I find that there was negligence on the part of the defendant that was a cause of the boat capsizing and later sinking and hence, a cause of the plaintiff’s injuries suffered as a consequence of those events.
104 The plaintiff had also pleaded in Particulars of Negligence that he relied upon the doctrine of res ipsa loquitur. In view of my finding that there was identifiable negligence on the part of the defendant that was a cause of the boat capsizing and of consequential injury to the plaintiff, it is not a case where that principle could apply. Here, there is no absence of explanation of the occurrence that caused the injury.[18]
[18]Schellenberg v Tunnel Holdings Pty Ltd (2000) 200 CLR 121 at paragraphs [25] to [27] and [42]
105 It follows that I also find that the defendant breached the terms of the sale agreement, in that the boat was not fit for the purpose of use as a recreational fishing boat, and was not seaworthy.
Single buoyancy compartment and absence of foam flotation
106 In addition to the allegations of negligence relating to how the boat took on water prior to it capsizing, the plaintiff also relied upon the evidence of Mr Johnston that a reasonable boat manufacturer should have fitted more than one watertight buoyancy compartment (that is, divide the compartment into two or more compartments) and/or fitted buoyancy foam to those compartments. Mr Johnston considered that the boat would not have sunk had the boat had more than one buoyancy compartment or had buoyancy foam been added to those compartments.[19]
[19]pages 99 and 102
107 Although no regulations were tendered, it was common ground that, in 2003 and 2004 and at present, the regulations controlling the manufacture of boats did not require the fitting of foam flotation within the hull of the boat as was the case with commercial fishing vessels. Likewise, the regulations did not require manufacturers to provide two or more separate buoyancy compartments. To this day recreational boats are often constructed with just one.[20] Recreational boats were not, and are not required to conform to standards intended for commercial boats.[21]
[20]T 1148
[21]T 1084
108 There was no evidence concerning how common it was to install separate buoyancy compartments in recreational boats in 2003 or at present. I am not satisfied that the defendant’s supply of a boat with one buoyancy compartment could be described as unreasonable or as amounting to a breach of the duty of care owed by the defendant or of any breach of agreement by it.
109 Mr Maughan gave evidence concerning foam flotation:[22]
[22]T 1172-5
(a) He and the defendant company had recommended the use of foam flotation in its boats since about 2001 or 2002. Its current cost was about $2,500.
(b) The defendant normally sold only to dealers and had little contact with the actual purchaser. Foam flotation was an available option and was included as such on the quote form sent to dealers.
(c) The defendant had previously installed foam flotation on boats sold by it if it was requested and ordered.
(d) Then and now, foam flotation is not a standard fitting. It is an optional item.
(e) It was good boat building practice in 2002 to have foam flotation in a 7.2-metre boat.
(f) When asked what were the pros and cons of fitting foam buoyancy, he frankly stated that prevention was better than cure.[23] I interpret this as meaning that it would be better, regardless of how the hull of a boat might be breached, to prevent it from sinking completely. He did not identify any downside other than some additional cost.
[23]T 1083
110 However, there was no evidence from the plaintiff as to:
(a) whether he had any knowledge of foam flotation in boats;
(b) whether other boats owned by him before or since the accident had been fitted with foam flotation;
(c) whether Mentone Marine or Phillip Island Marine had ever recommended foam flotation to him;
(d) whether, had foam flotation been recommended or offered to him, he would have accepted that option.
111 I am not satisfied that, in the circumstances, the supply of this boat through Mentone Marine to the plaintiff without foam flotation amounts to negligence or breach of agreement on the part of the defendant. The evidence is that such boats were commonly supplied without such foam flotation and there were no regulations requiring such additional features on such recreational boats.
112 Further, I am not satisfied that the plaintiff has established that he would have opted to have foam flotation fitted to the boat had it been offered or recommended by the defendant.
113 In any event, I am not satisfied that it has been established that foam flotation would have prevented or lessened the risk of the boat capsizing in the circumstances, or that if the boat had merely capsized without sinking, the result for the plaintiff would have been substantially different. It would be speculative as to whether the plaintiff would have been rescued any earlier. The event occurred at about 6.00 pm in November. I do not consider that I should make assumptions about what could be seen at sea in waves of between 1 and 3 metres between dusk and dawn. Counsel for the plaintiff urged me not to speculate about such matters.[24]
[24]T 1615
Was there Contributory Negligence on the part of the Plaintiff?
114 At the commencement of the trial, the defendant was given leave to file and serve an amended defence. Whilst contributory negligence had previously been alleged, particulars were amended and somewhat reduced. Particulars pleaded were:
(a) Boarding the boat and travelling several kilometres from shore in the boat in rough and dangerous conditions.
(b) Failing to heed weather warnings in relation to boating conditions in Port Phillip Bay at the relevant time.
(c) Boarding and operating the boat he [described here as “the first defendant” perhaps indicating these were drawn for another related proceeding] lacked the expertise to control the boat in the prevailing and/or forecast conditions.
(d) Failing to exercise all due care and skill in operating and managing the boat.
(e) Failing to ensure that the bung screw in the transom was properly fitted and/or fastened.
(f) Boarding and operating the boat when the bung screw in the transom was not properly fitted and/or fastened.
(g) Failing to ensure that the bung screw in the catch tank was properly fitted and/or fastened.
(h) Boarding and operating the boat in rough conditions when the bung screw in the catch tank was not properly fitted and/or fastened.
115 Counsel for the defendant did not raise contributory negligence in his closing address. It is not clear as to whether he intended to abandon the allegation. In any event, I consider that there was no evidence to support any of the particulars pleaded. The onus is on the defendant to establish contributory negligence. I am able to comfortably conclude that that onus has not been discharged.
The Plaintiff’s Business and Recreational Background
116 Before any consideration can be given to an appropriate award of damages, it is necessary to look at the plaintiff’s business activities before and after the accident, injuries suffered in the accident and the consequences of those injuries.
117 The plaintiff is currently aged nearly fifty-two. In November 2004, he was aged forty-four. He left school aged sixteen and completed an apprenticeship as a sheet metal worker. He worked in that field for a number of years.
118 When aged about twenty-three, he commenced a business known Compupunch Engineering Pty Ltd which manufactured a variety of steel components. It emerged in cross-examination that that company went into liquidation.
119 He also conceded that he had had financial problems with Metal Craft, another company with which he had been involved.[25]
[25]T 240
120 An historical extract relating to a company named Ultimate Manufacturing Pty Ltd indicated that the plaintiff had become a director of that company in 1992, that a liquidator was appointed to that company in 1995 and that the company was eventually deregistered in 1998.[26]
[26]Exhibit Z
121 He became involved in the manufacture of wood stoves from about the mid‑1990s. Around this time, he was also involved in the manufacture of gaming machines. In due course he lost the gaming machine work and he concentrated on wood heaters.
122 He operated the business through a number of companies which were referred to in evidence as the Ultimate Group.
123 The heaters were manufactured at leased premises at 35 Greens Road, Dandenong and sold from a small number of retail stores owned by the group. In addition, the group operated as wholesalers, selling heaters to various dealers.
124 Up until the late 1990s, he had an interest in harness racing horses and had owned a number of them. He stated that he had had an unfortunate experience in relation to that pastime, believed that he had been taken for a ride and had ceased his interest in that area.[27]
[27]T 54
125 He developed an interest in thoroughbred racing and breeding.[28]
[28]T 55
126 He played golf weekly at the Heritage Golf Club.
127 He had an interest in fishing. He had owned a 7‑metre Haines boat. He had a beach house on Phillip Island from where he enjoyed fishing. He was a member of the Brighton Central Angling Club.
128 Prior to 1994, the plaintiff had dealings with an accountant named Chris Katos who worked with Price Waterhouse. In due course, Mr Katos became a financial advisor to the plaintiff’s business. The plaintiff conceded that he needed help with the financial aspects of the business.[29] In the late 1990s Mr Katos became more involved with the business and in about 2000 became an employee of it.
[29]T 52
129 Immediately prior to the employment of Mr Katos, the plaintiff’s evidence was that the business was successful. He said it had an annual turnover of over $24 million, stock of more than $5 million, three retail stores, a healthy wholesale network and $5 million in the bank. He described himself as a workaholic, being involved in all aspects of production, development and sales.[30]
[30]T 54, 56
130 The plaintiff’s evidence was that Mr Katos had advised and urged him to double the turnover of the business, float the business on the second tier of the stock exchange, increase the number of retail stores, and increase its product range.[31] He said that once Mr Katos came on board in about 2000, he left the expansion of the business to him. He described Mr Katos as the business’ Chief Financial Officer.[32]
[31]T 52-3
[32]T 57-58
131 The business did expand. Eighteen stores were opened nationally.
132 From this time, the plaintiff saw his role as being in the development area – developing new products. He thought his strengths were in that area.[33]
[33]T 58
The Demise of the Ultimate Group
133 The group borrowed heavily – about $10 million to $11 million from the National Australia Bank. The plaintiff personally guaranteed that debt.[34] The group could not service the debt. It refinanced through the Commonwealth Bank (“CBA”) to the tune of up to $13 million.[35]
[34]T 59
[35]T 59
134 The plaintiff acknowledged that the Ultimate Group was in financial trouble before the accident in November 2004.[36] He acknowledged that, before the accident, he knew it was likely that he would be made bankrupt.
[36]T 60
135 In due course the business failed. The CBA appointed receivers and the group of companies were placed in liquidation in March 2007. The plaintiff was made bankrupt in December 2007.
136 In short, the plaintiff laid the blame for the demise of his business at the feet of Mr Katos. The substance of his evidence was that Mr Katos had been responsible for turning a successful business into a failure by expanding it irresponsibly. Senior Counsel for the plaintiff opened the case with a description of Mr Katos providing the plaintiff with “unfortunate advice” and the plaintiff “naively” accepting that advice.[37] He described Mr Katos as having “these great big ideas”.[38] He described the plaintiff as taking “a backward step from the hands-on.” I have no doubt that Counsel made those comments in accordance with his instructions from the plaintiff.
[37]T 31
[38]T 31
137 This explanation for the demise of the business was at odds with evidence given by Anthony Clements. Mr Clements was a chartered accountant who had been the plaintiff’s personal accountant since the late 1980s. Before that, he had acted as accountant for the plaintiff’s father. Mr Clements was accountant for the plaintiff’s corporate group. He is currently accountant for the reconstituted business.
138 Mr Clements had a very different recollection of who was responsible for the expansion of the group. He stated that it was the plaintiff who wanted the business to get bigger and bigger and that Mr Katos had expressed concern about this to the point of complaining that expansion was out of control.[39] I accept Mr Clements’ evidence on this issue. Mr Clements made it clear that it was not Mr Katos’ strategies but poor business strategies of the plaintiff that led to the demise of the business.
[39]T 527-8
139 Notwithstanding the histories provide by the plaintiff to various doctors whose reports were tendered, it is not the plaintiff’s case that the business went “pear shaped” or into liquidation because of the accident.[40] The plaintiff’s case was, in effect, firstly that he had been a successful businessman up to the time of the accident and that secondly, since that time, had been prevented by his injuries from re-establishing himself and from continued business success. I consider that the evidence referred to casts substantial doubt at least as to the first aspect of that submission. I shall address the second aspect of that submission later in these reasons.
[40]T 33
140 The plaintiff claims that following the accident in November 2004, his business continued to deteriorate until its eventual demise in March 2007. He does not claim any loss of income during that period.
The Delaland Business
141 In 2006, a company named Illusion Open Gas Log Fires Pty Ltd was incorporated. One Walter Delaland was its director and shareholder. The plaintiff’s evidence was that he had known and dealt with Mr Delaland as a machinery dealer for a number of years.[41] It seems that around that time, Mr Delaland had commenced a business constructing gas fires (as opposed to open log fires). Up until that time, the plaintiff’s business had only constructed and sold open natural log fires. His evidence was that Mr Delaland’s company separately leased part of the premises at 35 Greens Road, Dandenong[42] – the same premises from which the plaintiff’s Ultimate Group carried on business.
[41]T 124
[42]T 388
142 The plaintiff’s evidence was that he had become involved with Mr Delaland in about 2006 (after the accident and before the original Ultimate Group going into liquidation). He described Delaland’s business as asset rich with no cash flow.[43] Mr Delaland had approached him to assist on a consultancy basis and he had agreed to do so. His evidence was that he worked between the two businesses – that is, for Mr Delaland’s business and for his original Ultimate Group up until its demise and soon thereafter with the purchaser of that business. His evidence as to time spread between the two businesses was, in my view, vague and confusing.[44]
[43]T 124
[44]T 124-5
143 The plaintiff’s evidence was that:
(a) Mr Delaland has approached him in 2006 and had expressed the view that, with the plaintiff’s expertise, he could set up a retail gas fire business where he could generate cash flow.[45] The plaintiff had agreed to help him on a consultancy basis, and did so.
[45]T 124
(b) In late 2007, Mr Delaland became ill. His business had more liabilities than assets. The plaintiff said that his son, Chris Gannell, had the opportunity to take over the business or it was to be folded up. I infer from this that the plaintiff’s consultancy work had not achieved much by way of increased cash flow. Why it was an opportunity for the plaintiff’s son to acquire the business rather than the plaintiff or somebody else was not explained.
(c) The plaintiff and Chris Gannell negotiated to acquire Mr Delaland’s business.[46]
[46]T 447
(d) Chris Gannell arranged, through the accountant, Mr Clements, to set up a company to acquire Mr Delaland’s business.
(e) The company used was a shelf company formerly owned by the plaintiff’s father and which had not traded for many years.
(f) That company was renamed Illusion Australia Pty Ltd. It acquired Mr Delaland’s business by agreeing to take over various debts owed by the business. No other money was paid.[47]
[47]T 389
(g) Illusion Australia Pty Ltd operated the Delaland business from July 2008.
(h) From that time, the plaintiff was employed by that company,[48] working 1.5 to 2 days per week doing the same sort of work as he performed for Ultimate Australia Ltd, to which I shall refer below.[49]
[48]T 126-7
[49]T 127
144 Chris Gannell’s evidence was that he had had nothing to do with Mr Delaland’s business before but was approached by him and various others with a view to taking over his business.[50] He had acquired Illusion Gas Log Fires from Mr Delaland on the basis that he took on its liabilities but paid no other money for the business.[51]
[50]T 388-9
[51]T 389
145 The defendant tendered a document entitled Deed of Acknowledgement executed by Mr Delaland and the plaintiff on 12 October 2007.[52] In that document, the plaintiff is puzzlingly described as operating a business of the retail sale and exchange of second-hand goods. The deed was drawn by the plaintiff’s current solicitors. In the deed, the plaintiff acknowledges that he is indebted to Mr Delaland in the sum of $280,000 and that that sum is repayable by 31 December 2008.
[52]Exhibit T
146 On the same date, 12 October 2007, the plaintiff executed a further document, described as a Deed Poll, also prepared by the same solicitors.[53] By that Deed Poll, the plaintiff assigned to Mr Delaland his rights and interest in the proceeds arising from and receivable pursuant to his insurance claim against Club Marine in relation to the loss of the boat in question, in part repayment of the loan of $280,000.
[53]Exhibit U
147 The plaintiff was asked about the $280,000 loan from Mr Delaland and the assignment. He could not recall the loan or its date or to what it related. His evidence was that he had had a loan form Mr Delaland “at one stage” which had been satisfied by the assignment of the insurance proceeds.[54] There was no evidence as to the amount recovered from the insurer under the claim. There was no evidence as to the nature of, date of, or purpose of the loan from Mr Delaland to the plaintiff. The Deed of Acknowledgement and the Deed Poll were prepared by the plaintiff’s solicitors and executed at about the time when Mr Delaland transferred his business to Chris Gannell’s company. It is difficult to avoid the conclusion that the $280,000 “loan” was directly related to the acquisition of that business. I do not accept that the plaintiff had no recollection of a loan of that amount, the circumstances in which it was made or the purpose for which that sum was borrowed. I do not consider that the plaintiff or Chris Gannell have provided the full truth concerning the acquisition of Mr Delaland’s business or the terms of it.
[54]T 144
The “Vickery Ultimate business”
148 The liquidator of the plaintiff’s original Ultimate Group was Korda Mentha. It administered the business for a short time after March 2007. In April 2007, that business was purchased from the liquidator by Powerlight Manufacturing Pty Ltd (“Powerlight”).
149 Powerlight was a dormant company owned by the plaintiff’s brother-in-law, Stewart Vickery. It was a company shell. It did not trade at that time and had not for many years. Its sole director and shareholder was Mr Vickery. I shall refer to it as “the Vickery company”.
150 The plaintiff gave evidence as to how the Vickery company came to purchase his old business from Korda Mentha.[55] He stated that:
[55]T 121
(a) Mr Vickery had known of the business of the Ultimate Group, that it had gone into liquidation, and that he expressed an interest in raising money to purchase it.
(b) Mr Vickery asked the plaintiff if he would be interested in having a job and in putting the business back together.
(c) Mr Vickery did not have sufficient funds to purchase the business and asked him if he would be able, through his contacts, to raise funds for Powerlight to purchase the business.
(d) The plaintiff had approached others to raise those funds and was successful in doing so.
(e) Powerlight purchased the business from Korda Mentha for approximately $1 million in towards the end of April 2007.
151 The plaintiff maintained that this was a bona fide purchase by the Vickery company and for Mr Vickery’s own benefit. I do not accept that evidence.
152 Mr Vickery was subpoenaed by the defendant to give evidence and did so. His evidence was almost totally at odds with that of the plaintiff. In summary, it was as follows:
(a) He, Mr Vickery, knew virtually nothing of the Ultimate Group business other than that it had been operated by the plaintiff for some years.
(b) He was aware that the Ultimate Group had gone into liquidation.
(c) He had his own electrical contracting business with which he was engaged full time. He was not seeking to expand or go into any other areas of business.
(d) The plaintiff had telephoned him and asked if he had a “business” that could be used to buy the assets of the Ultimate Group from the receiver. He replied that he did. That business or company was Powerlight, a company that was owned by Mr Vickery and which had not traded for many years.
(e) Mr Vickery and his wife (the plaintiff’s sister) agreed that they should help the plaintiff in any way they could. Going back over a number of years they had previously helped each other out by lending money when needed.
(f) On this occasion, Mr Vickery loaned $100,000 to the plaintiff to assist with the purchase of the business from the liquidator.
(g) Mr Vickery accompanied the plaintiff to the office of the plaintiff’s solicitors in the city. The plaintiff’s landlord (the owner of the Greens Road premises) was also present. There, the plaintiff explained to his solicitor, the landlord and to Mr Vickery, by means of figures on a white board, the value of the business’s goodwill and other assets. He recalled the plaintiff saying – “We can buy this business back with no debt, and we can turn it around.” The plaintiff had a cheque from one Andrew Peterson. Mr Vickery did not know the value of that cheque. The landlord had a cheque for $600,000 or $700,000. Mr Vickery had his cheque for $100,000.
(h) Mr Vickery had never met Mr Peterson as at that time. He had never met the landlord before that day. Mr Vickery had had nothing to do with raising any money from Mr Peterson, the landlord, nor from anyone else.
(i) Mr Vickery had nothing to do with negotiating the purchase of the business from the liquidator. His evidence was that this had been handled by the plaintiff.
(j) The business was purchased for $1 million from Korda Mentha in April 2007. The purchaser was Powerlight. Mr Vickery signed documents as director, on behalf of Powerlight.
(k) On the same date, Mr Vickery recalled signing a document whereby he transferred his shares in Powerlight to the landlord.
(l) Mr Vickery regarded his $100,000 to be a loan to the plaintiff to assist the plaintiff to buy his business back from the liquidator.
(m) Mr Vickery did not play any role at all in the management of the business following the purchase from Korda Mentha. His understanding from the plaintiff was that the business would be run by him (that is, by the plaintiff). At no time afterwards did Mr Vickery receive any reports concerning the progress of the business or any share of business profit. Nor did he expect to.
(n) Shortly after the purchase, Powerlight changed its name to Ultimate Australia Pty Ltd. Mr Vickery was asked to and did sign documents relating to that name change.
(o) The plaintiff had told Mr Vickery that his sons, Chris and Steven, would shortly be appointed directors. In the meantime, Mr Vickery remained the sole director of Powerlight/Ultimate Australia. The plaintiff assured him that this would be temporary and that, in the near future, Chris and Steven would become directors.
(p) Months passed and Mr Vickery became increasingly concerned about the fact that he was still the sole director of Powerlight/Ultimate Australia without having any involvement in that company’s affairs. His own accountant had warned him of the dangers of incurring personal liabilities under the Corporations Law.[56] The plaintiff repeatedly assured Mr Vickery that his sons would be appointed as directors as soon as various unidentified issues were finalised with the liquidator.
[56]Exhibit 7
(q) Mr Vickery had spoken with plaintiff at various family functions over the following months. The plaintiff had advised him that the business was going well and that he should soon be able to repay the loan to him.
(r) In late 2008, Mr Vickery received correspondence from the Australian Taxation Office (“ATO”) advising him, as a director, that Ultimate Australia Pty Ltd owed unpaid taxes of about $300,000. He was very concerned, and the next day went to the Greens Road premises and confronted the plaintiff and Darren Goss, who was employed as manager of the business at that time. He was assured by them that it was a mistake and that they would fix it.
(s) In January or February 2009, Mr Vickery received a notice from the ATO demanding a sum of about $700,000 be paid within seven days failing which he might be personally liable. He confronted the plaintiff the following day. The plaintiff appeared dumbfounded and offered no explanation or solution. Mr Vickery received advice from his own accountant to place the company in liquidation or else he, as director, risked being personally liable for its debt. He thereupon appointed a firm of accountants, Foremans, to act as liquidator.
(t) Ultimate Australia Pty Ltd was placed in liquidation in March 2009.
153 I consider that Mr Vickery was an impressive witness. Where his evidence is at odds with that of the plaintiff, I prefer that of Mr Vickery. I find that the purchase of the business from Korda Mentha was arranged and negotiated entirely by the plaintiff and that Mr Vickery’s role was merely that, in order to assist his brother-in-law, he supplied a shelf or dormant company and loaned the plaintiff $100,000 for the purpose of assisting him to buy back his old business from the liquidator.
154 I consider that the plaintiff’s evidence concerning that purchase and his version of Mr Vickery’s involvement was untruthful and a deliberate attempt to distance himself from that business.
155 The plaintiff’s evidence was that he performed consultancy work for the business but was not directly involved in its management. Indeed, a new manager, Darren Goss was appointed. Further, Mr Peterson, who had also loaned money to assist with the purchase, provided a financial advisory role.
156 Mr Peterson knew the plaintiff through his involvement with local cricket and football clubs. He had had no business dealings with him. He gave evidence that he, his twin brother Nick and one Errol Campbell had jointly loaned the plaintiff the sum of $200,000 to assist in the purchase of the business from Korda Mentha. This was a loan and not an investment in the business. He was aware that others were also loaning funds to assist with the purchase. Mr Peterson and Mr Campbell knew each other well and had had numerous business dealings over about forty years. Mr Peterson became involved in the loan at the suggestion of Mr Campbell, who he knew to be a friend of the plaintiff’s. His decision to contribute to the loan was made entirely on Mr Campbell’s advice. He said his only understanding of the arrangement was that the loan was made to help the plaintiff help his brother-in-law, Mr Vickery. That understanding must have been based on information from either the plaintiff or Mr Campbell. Mr Peterson had not met Mr Vickery at that time and had had no dealings with him.
157 Mr Peterson knew little or nothing about the plaintiff’s original business other than it had gone into liquidation owing a great deal of money. He said he was aware that it was likely that the plaintiff would be made bankrupt. Surprisingly, the $200,000 was loaned without security and without any personal guarantee, solely on the suggestion of Mr Campbell.
158 Mr Campbell appears to have been involved in the decision to lend money to assist with the purchase from the outset. Mr Peterson’s evidence was that it was Mr Campbell’s decision and advice to assist not the plaintiff, his friend, but the plaintiff’s brother-in-law, who he had not met. Such an account seems to me inherently unlikely. Mr Campbell was not called to give evidence, without explanation. In the circumstances, I am entitled to infer that his evidence would not have assisted the plaintiff’s case.[57] I am not persuaded that Mr Peterson’s evidence conveyed the full circumstances of the making of that loan or of the plaintiff’s involvement with the business.
[57]O’Donnell v Reichard [1975] VR 916
159 Mr Peterson was a chartered accountant. His evidence was that, after the purchase of the business, the plaintiff had contacted him and asked whether he would be generous enough to give a few hours here and there to try and build up a team to run the business. He agreed to do so.[58] For the first six months of the new business he played a role in its administration. He ceased all involvement by November 2007. His loan of $200,000 was repaid in full by the following year.[59]
213 Dr Merrigan referred to the plaintiff suffering from acute anxiety, panic attacks and infections. In July 2010, he considered that the plaintiff was suffering from depression and PTSD. The plaintiff had recurrent insomnia, chronic ruminations over the near-drowning experience, and memory disturbance with anxiety. He said that the plaintiff displayed avoidance behaviour which he thought was typical of PTSD and typical of someone suffering chronic anxiety. He did not specify what that avoidance behaviour consisted of. Dr Merrigan noted that the plaintiff had suffered from chronic binge drinking over the previous six years (that is from 2004 to 2010).
214 In a supplementary report dated 13 January 2011, Dr Merrigan opined that the plaintiff had a limited ability to work. He considered that he was impaired in decision-making and his ability to deal with people and to work in stressful situations. He thought that the plaintiff did have a capacity to work in a non-stressful situation, and thought he could only work in a menial position.
215 In that supplementary report, Dr Merrigan commented that legal proceedings were perceived by the plaintiff to be very stressful, in that he would have to relive the traumatic events, and, as such, he had steadfastly avoided them. This is inconsistent with the fact that the current legal proceeding was issued by May 2010.
216 In his report of 15 November 2011, Dr Merrigan opined that the plaintiff was still suffering PTSD with Depression, Anxiety, and substance abuse. The depression, he said, had been further complicated by substance abuse problems and binge drinking. If the substance abuse was something other than alcohol, it was not identified in his report or in evidence before me. Dr Merrigan thought that the plaintiff might show some improvement with time if he was prepared to attend for better treatment, but that this would involve counselling and psychotherapy sessions. The plaintiff’s avoidance behaviour (again unidentified) was said to have led to his diabetes further deteriorating, and the loss of his business and long-term relationship. It appears that Dr Merrigan is, or was at that time, still of the opinion that the problems with the plaintiff’s long-term de facto relationship stemmed from the accident, and likewise, the loss of his business. The evidence before me is to the contrary. Dr Merrigan was of the view that those losses had caused stress and served to exacerbate his anxiety and avoidance behaviour. To the extent that they did, I am not satisfied that this was a consequence of the accident.
217 Dr Merrigan opined that the plaintiff continued to remain in a stable, chronic, depressed condition and that there had been no observable improvement. His behaviour remained erratic, and, in terms of treatment, unsatisfactory and non-compliant. He opined that he effectively had no ability to work, and, if not employed by his family, would not be employable. He was unreliable, prone to fits of anger, had lowered concentration, impairment in decision-making, and inability to deal with people. He avoided stressful situations. These symptoms, Dr Merrigan opined, were caused by his PTSD, depression, and mental-health disorders, and made it impossible for the plaintiff to function in any work situation, especially in a management position. In that report, Dr Merrigan again stressed that the plaintiff had steadfastly avoided legal proceedings, which I found puzzling.
218 In his reports, both dated 3 June 2012, Dr Merrigan opined that the plaintiff was still suffering chronic mental-health disorder, PTSD with Depression and Anxiety, and substance abuse. He again referred to substance-abuse problems and binge drinking. The substance abused was again not identified. Again, Dr Merrigan thought that the plaintiff may show some improvement with time if prepared or able to attend for better treatment.
219 Dr Merrigan noted that on rare occasions the plaintiff has been fishing again, but that the plaintiff had told him that he felt extremely nervous, anxious and nauseated for much of the time, and had long periods of binge drinking afterwards. The evidence before me, whilst confirming that the plaintiff had indeed returned to his fishing activities, albeit less often than before the accident, made no reference to such outings resulting in nausea or periods of binge drinking afterwards.
220 From the reports tendered, I consider that much if not all of the opinions and comments made by Dr Merrigan were based upon what the plaintiff told him rather than physical observations or objective symptoms. I consider that Dr Merrigan’s views as to the plaintiff’s inability to work are at odds with my findings as to his involvement in the various businesses between 2004 and the present time.
221 Dr Ian Stuart, clinical neuro-psychologist, saw the plaintiff at the request of his solicitors on one occasion in February 2011. He conducted a number of tests on the plaintiff. He concluded that the plaintiff was a man of average intelligence, with some areas of cognitive strength, particularly relating to idea-generation. There was no evidence of impairment in his executive functioning. His planning and organisational skills were intact, and his high-level language skills were consistent with his intelligence. There were, however, signs of severe attentional difficulty. The plaintiff was unable to attend to more demanding tasks of attention and concentration, and performed poorly in some tests associated with that area.
222 Dr Stuart considered that the plaintiff’s attentional/memory and slow speed of information processing were caused by his depressed mood and PTSD. These problems he considered to be severe and to have a direct impact on many aspects of the plaintiff’s daily functioning as well as on his test performance. He considered that the plaintiff was no longer able to act in a planful and organised manner, even though he retains the cognitive skills to do so. He is affected by poor concentration and slow speed of information processing.[84] Dr Stuart had not examined or tested the plaintiff prior to the accident. It is not known as to how the plaintiff would have performed in the various tests but for the accident. Dr Stuart offers no opinion as to whether problems displayed by the plaintiff are permanent or otherwise.
[84]Exhibit 11
223 Dr Kornan, psychiatrist, has seen the plaintiff at the request of his solicitors in June 2009, October 2011 and June 2012.
224 Dr Kornan’s current view is that the plaintiff suffers from PTSD, Panic Disorder with some associated depressive features, and features of alcohol abuse which have substantially lifted. The plaintiff had complained of ongoing symptoms of constant tiredness and exhaustion, waking at night with a gasping or drowning-type of feeling, lethargy, feelings of depression, and the like. Dr Kornan considered that these ongoing symptoms were a result of the accident.
225 In his earliest report of June 2009, Dr Kornan took a history from the plaintiff that he had previously been in a relationship with a lady named Jenny for about two years, that they had been living together but had broken up about twelve months after the accident happened.[85] The history taken was that since then, he had been with a lady named Rachel for twelve or eighteen months. She was twenty-five years old. The plaintiff told Dr Kornan that he had broken up that relationship.
[85]Exhibit 10, Report of 11 June 2009
226 The evidence before the Court was that, by the time of the accident in November 2004, the plaintiff had been separated from his partner for some ten months.[86] The history taken by Dr Kornan that the relationship had broken up twelve months after the accident appears to be incorrect. There is no evidence at all before the Court concerning a relationship with Rachel. The plaintiff’s evidence was that he had commenced a romantic relationship with Ms Gavriel in 2007. On the account given by the plaintiff to Dr Kornan, the plaintiff appears to have had little difficulty in forming romantic relationships since the accident. Neither Jenny nor Rachel were called to give evidence in the proceeding.
[86]T 173-4
227 On each of the occasions that the plaintiff was seen by Dr Kornan, he provided information concerning the demise of his business. For example, in the report dated 31 October 2011, the history provided by the plaintiff was that before the accident, the business had three or four stores nationally, was turning over $23 million per year, and the business had been taken to another level where it could evidently be listed. After the accident, it was said that his friend, Chris, took over the business, got up to eighteen stores nationally and spent $4.5 million on research and development. The business then went into administration and the plaintiff indicated that he had lost everything.[87]
[87]Exhibit 10
228 This is a history that places much, if not all, of the demise of the business as occurring post-accident. Plainly, this was not the case. Before the accident, the plaintiff was aware that the business was in serious trouble and that it was likely he would go personally bankrupt.
229 Likewise, in Dr Kornan’s report dated 4 June 2012, he expressed the opinion that the plaintiff had taken a gamble putting on a man who clearly, seemingly, could not cope with the promises of improving the business. Dr Kornan opined that had the plaintiff been in normal health, he would have been significantly able to deal with the issues.
230 It is quite unclear to me how it is that Dr Kornan is able to form any such opinion. If he is merely expressing what the plaintiff told him, it would seem that the plaintiff did not give him a full or correct history of the demise of his business.
231 In Dr Kornan’s June 2009 report, prepared nearly five years after the accident, there was no complaint recorded of the plaintiff falling asleep at random times, but merely that he had feelings of lethargy. At the time of that report, Dr Kornan expressed the view that although the plaintiff was said to be currently working for his son, he suspected that he was guiding his son in the business and that he was the driving force behind the business. There is no view expressed in that report that his earning capacity or ability to work was impaired in any way.
232 In December 2010, Dr Kornan was provided by the plaintiff’s solicitors with a medical report of Professor Richard Ball, which he has clearly read. He adopted some findings from that report. There was no report tendered in evidence from Professor Ball in this proceeding for reasons that were unexplained.
233 At the later examinations in October 2011 and June 2012, a history was obtained by Dr Kornan from the plaintiff of a general feeling of exhaustion and, on the latter occasion, constant tiredness.
234 A report from a general practitioner, Dr Jigau, was tendered. She had seen the plaintiff on a number of occasions from July 2009. She considered that he was suffering from diabetes requiring insulin, hypertension, gastro‑oesophageal reflux, hypercholesterolaemia, PTSD, obesity and sleep apnoea. Dr Jigau had referred the plaintiff to a gastroenterologist, Mr Rusli, to a diabetologist, Professor Engler, and to a respiratory physician, Dr Michael Ho. The referral to Dr Ho was in response to the plaintiff’s complaint of sleeping in the day, lethargy and poor sleep. Dr Jigau suspected that he had obstructive sleep apnoea. No evidence was called from any of those three specialists.
235 The plaintiff’s complaints of sleeping poorly at night, suffering from exhaustion, falling asleep during the day and general lethargy are complaints which he submits stem from injuries caused by the accident. Those symptoms are alleged by him to be important in the context of his claim. The views of a treating specialist as to the cause and extent of these problems would clearly have been relevant to the matters under consideration here.
236 Likewise, Dr Merrigan opined that the plaintiff’s diabetic condition deteriorated following the accident. The views of a treating diabetes specialist as to the plaintiff’s diabetic condition, and whether or not any deterioration could be linked to the accident, would also have been of great relevance.
237 Although I am not permitted to speculate what evidence Professor Engler or Dr Ho might have given, I am able to infer that their evidence would not have advanced the plaintiff’s case.
238 On the evidence before me, I am not satisfied that the plaintiff has established that there has been any on-going deterioration in his diabetic condition as a consequence of the accident.
239 Likewise, Dr Jigau suspected that the plaintiff suffered from sleep apnoea, a condition that would affect his sleep and would be likely to lead to tiredness and lethargy. In circumstances where Dr Ho was, without explanation, not called, I am not satisfied that the plaintiff has established that his alleged sleeping problems, tiredness and lethargy are a consequence of the accident.
240 Dr Entwisle, psychiatrist, examined the plaintiff on 31 August 2011 at the request of the defendant’s solicitors. In his report he stated that, notwithstanding the frightening and stressful experience in the accident, the plaintiff’s symptoms did not meet the criteria for PTSD. He considered the diagnosis was of an Adjustment Disorder with Mixed Depressed and Anxious Mood of a mild to moderate severity, together with alcohol abuse. He considered that the plaintiff had a normal capacity for work and would not be regarded as incapacitated for work as a result of the accident. Importantly, he did not describe any panic attacks in normal daily life.[88]
[88]Exhibit O, page 5
241 The plaintiff described his sleep as severely affected, often waking at night due to a drowning effect. He told Dr Entwisle that his concentration and memory were reasonable. Dr Entwisle did not consider, on the history given to him, that the plaintiff was reclusive or withdrawn.
242 Dr Entwisle accepted that the plaintiff clearly had a frightening stressful experience in the accident. However, on the history taken by him, the plaintiff did not experience flashbacks nor panic attacks in general life. The plaintiff told him he had developed a phobia of closed spaces and found it difficult to travel by plane, although there was no mention of this in the plaintiff’s evidence.
243 Dr Entwisle considered that the collapse of the plaintiff’s business had been a devastating experience for him.
244 On the history given to Dr Entwisle, he considered that the plaintiff’s drinking had come under control now that he had formed a new relationship. I note that by that time, he had been in a relationship with Ms Gavriel for about four years.
245 It was Dr Entwisle’s understanding that the plaintiff had essentially continued to work following the accident and that his various work difficulties and changes of employment related to the failure of the business rather than the accident itself. He considered that the plaintiff had a normal capacity for work and would not be regarded as incapacitated as a result of the accident. His diabetes remained of considerable concern and Dr Entwisle noted that he had been referred to an endocrinologist for this.[89]
[89]Exhibit O, page 6
246 By way of summary, Dr Entwisle regarded the plaintiff’s prognosis as being reasonably good, noting that he continued to socialise with various boating friends and went fishing on a regular basis. He described his Adjustment Disorder with Depressed and Anxious Mood as being of mild to moderate severity. His alcohol abuse disorder had been in the moderate to severe category but was now under control. Dr Entwisle considered that the plaintiff’s symptoms relate to a combination of the boating accident and the failure of his business. He did not consider it likely that he would benefit from psychological or psychiatric treatment.[90]
[90]Exhibit O, page 7
247 Each of the medical opinions referred to above rely substantially on the history provided by the plaintiff. Whilst this is almost always the case in any personal injuries claim, it is especially so in a claim relating to non-physical injuries. In such cases, a reporting psychiatrist and general practitioner is dependent to a very large extent, on what the patient or client tells them by way of history and symptoms.
248 On balance, I consider that the plaintiff has suffered from PTSD accompanied by a degree of Depression and Anxiety as a consequence of his experience overnight in the water after the accident. I have no doubt that it was a frightening and deeply disturbing experience for him. I consider it likely that he still suffers from some symptoms of PTSD but that they are not severe so as to substantially interfere with his business or recreational life.
Damages
249 The plaintiff claims general damages for pain and suffering and loss of enjoyment of life and also for loss of earning capacity.
250 It is for the plaintiff to satisfy me as to the extent of the consequences of his injuries and the extent to which they have caused pain and suffering, loss of enjoyment of life and loss or impairment of earning capacity.
251 As previously indicated, I am not satisfied that I have been provided with anywhere near the truth of the plaintiff’s business activities or true income earning potential since the accident.
252 The plaintiff was aware before the accident that his business was in trouble and that it was likely that he would be made bankrupt. I consider that this would have been a very stressful time for him regardless of the accident. The plaintiff’s company group had been placed in liquidation, owing about $12 or $13 million. The histories provided by him to various doctors that the demise was the result of the accident or that the demise was the result of the strategies of Mr Katos, I find to be untrue.
253 Dr Entwisle considered that the demise of the plaintiff’s business had had a devastating effect on him. I consider that this is likely to have been the case.
254 I am satisfied that after the accident, the plaintiff has suffered symptoms of PTSD, including nightmares, some flashbacks, and increased alcohol consumption.
255 I am satisfied that for a time after the accident the plaintiff was reluctant to return to his keen hobby of fishing, and this is entirely understandable. However, there is evidence indicating that he has largely recovered from this aversion.
256 In 2010, Ms Gavriel, the plaintiff’s partner of some five to six years, arranged for his fiftieth birthday party to be held on a boat on the water. Further, she and the plaintiff’s sons arranged to buy a fiftieth birthday gift for him of a fishing boat valued at approximately $150,000. I do not consider that Ms Gavriel would have had anything to do with either of those matters if she was of the view that the plaintiff had an aversion or fear of boating or fishing. In any event, I do not accept that she and the plaintiff’s sons would have made such an expensive purchase unless they were confident that the plaintiff would appreciate it and make use of it.
257 The plaintiff conceded that he had been out fishing on many occasions since the accident. I accept that he no longer fishes alone or overnight or from positions a long way off-shore, although there was little evidence as to the extent to which he engaged in such activities before the accident. In any event, I find that the plaintiff’s aversion to boating and fishing has resolved to a large extent. Although there may still be some anxiety associated with those activities, it is not sufficient to prevent him from participating in most aspects of the sport and obtaining enjoyment from it.
258 Prior to the accident, the plaintiff had been involved in racing and breeding of horses, both standard bred and thoroughbred. There is no evidence that he would not be able to engage in those interests currently.
259 Prior to the accident, the plaintiff stated that he played golf regularly. There is no medical evidence that he is unable to partake in such activity at present and he does still play. He said that in his “good days” his handicap was as low as 8.[91] Around the 1990s, his handicap had gone out to 16 to 18 and “these days” is still 16 to 18.[92] I interpret this as indicating that the standard of his golf now is about the same as it was in the 1990s.
[91]T 55
[92]T 55
260 The history given to Dr Kornan, combined with the plaintiff’s oral evidence, indicates that since the accident, the plaintiff has been involved in three different romantic relationships, each lasting for some time. His current relationship with Ms Gavriel commenced in 2007. The history provided by him to Dr Entwisle was that he attends at the angling club on a weekly basis to socialise. I do not consider that the evidence as a whole indicates that he is socially withdrawn or that he finds it difficult to mix socially.
261 The plaintiff submits that his capacity to work has been all but destroyed as a consequence of injuries sustained in the accident. I do not accept that this is so. As previously stated, the onus is on the plaintiff to establish the extent of his injuries and the extent of his loss as a consequence. I am not satisfied that he has established that his ability to work in the business, now nominally operated by his son, has been significantly affected. I find that it is likely that the plaintiff played a substantial role in the business purchased from Korda Mentha in 2007, and later in the business purchased from Foremans in 2009. I am not satisfied that the plaintiff was truthful in his evidence concerning his role in those businesses.
262 The plaintiff’s evidence was that he worked one-and-a-half to two days for both the Vickery Ultimate business and the current Illusion business operated by his son.
263 The defendant called evidence of surveillance of the plaintiff over a five-day period in March 2011. It was put to the plaintiff in cross-examination that he had attended at the Greens Road, Dandenong premises for the large part of five consecutive working days at that time. He denied that this was so and raised the proposition that there had been an identity error. Film showed of the surveillance over this period confirmed that the person was indeed the plaintiff. Although there were some periods over those days in which the plaintiff himself was not seen, the vehicle driven by him was shown to be at the Greens Road premises at relevant times. I consider, on the balance of probabilities, that the plaintiff did attend at those premises for the large part of those five consecutive working days. This is quite at odds with his evidence and the evidence of Chris Gannell. It is true that the surveillance only concerned one week. However, the importance of that evidence is that the plaintiff would not concede that he had ever worked anything like those hours. Had he conceded that on one or more occasions he may have worked a full week, the relevance of that surveillance evidence would have been far less.
264 The evidence of the plaintiff’s brother-in-law, Stuart Vickery, was that he had continued to see the plaintiff regularly at family functions over the period of approximately four years following the accident. His evidence was that he had noted no particular difference in the demeanour, condition or health of the plaintiff. As previously indicated, I found Mr Vickery to be an honest and straightforward witness. Although he clearly had had a substantial falling out with the plaintiff over the demise of the Vickery Ultimate company, I accept him as an honest witness.
265 I further accept the evidence of Mr Smithson, who had also known and associated with the plaintiff before and after the accident. His evidence was that he observed no changes in the plaintiff following the accident. As he put it, the plaintiff appeared to have “dusted off and moved on”. Mr Smithson had been employed by the plaintiff’s original Ultimate Group from about March 2005 until March 2006. During that period, he worked between six and six- and-a-half days per week. His evidence was that the plaintiff attended generally five days a week over that period.
266 I appreciate that Mr Smithson had a falling out over financial matters with the plaintiff. However, I regard Mr Smithson as a truthful witness and I accept his evidence concerning his observations of the plaintiff.
267 The plaintiff’s evidence was that he had drunk very heavily after the accident. It may well be that his consumption of alcohol increased around this time. It is difficult to be confident as to whether the accident was the cause of this, or whether it was wholly or partly related to stress caused by the demise of his business. I note the evidence of Dr Stuart and Dr Kornan that increased consumption of alcohol is a common aftermath of PTSD.
268 Ms Gavriel was asked about the plaintiff’s consumption of alcohol in the period that she has been in a relationship with him. Her evidence was that he did consume alcohol but she certainly did not paint a picture of excessive consumption.[93] I would have expected such evidence to have been given at least by Chris Gannell and Ms Gavriel, had the consumption been significant. There was no evidence of the plaintiff ever being observed to be intoxicated or that alcohol had ever affected his ability to work. It seems that, insofar as he may have gone through a period of excessive consumption of alcohol, that is no longer a significant problem for him. The history taken by Dr Entwisle and Dr Kornan’s views tend to confirm this.
[93]T 782
269 I consider that, although the plaintiff has suffered from PTSD, together with a level of depression and anxiety, the effects of those conditions are not as severe as his evidence would indicate.
270 For reasons expressed earlier, I am not satisfied that the plaintiff has been truthful concerning his level of involvement in the Ultimate and Illusion businesses following the demise of his original business in 2007. I am not satisfied that the effects of his PTSD, depression and anxiety have been such as to prevent him from playing a major role in those businesses. Such a finding must be relevant to both pain and suffering and pecuniary loss damages.
271 I am satisfied that the plaintiff has suffered from depression and anxiety but not at a severe level. I am satisfied that he has suffered from some symptoms of PTSD, including nightmares and initially flashbacks. His consumption of alcohol may have increased from about the time of the accident but no witness gave evidence of any observation of significant alcohol consumption since. In summary, I find that although the plaintiff has suffered PTSD, depression and a degree of anxiety, such symptoms have not interfered significantly with his capacity for work nor his recreational activities.
272 I am not satisfied that any alteration in the plaintiff’s diabetes symptoms were a result of the accident or the conditions suffered by him and referred to above. Likewise, I am not satisfied that the plaintiff has established that his ongoing sleeping problems or sleep apnoea were caused by the accident. Evidence from Professor Engler and/or Dr Ho may have clarified those matters. Neither was called to give evidence.
273 In all of the circumstances, I consider that an award of pain and suffering damages of $125,000 is appropriate to fairly and adequately compensate the plaintiff. In reaching that figure I place significant weight on the frightening and distressing nature of the accident itself.
274 With regard to pecuniary loss damages, the plaintiff does not claim compensation in respect of the period prior to 21 January 2009. Hence, the claim relates to a period commencing more than four years after the accident.
275 The onus lies on the plaintiff to establish that he has suffered pecuniary loss as a consequence of injuries suffered in the accident, and the extent of that loss.
276 I am not satisfied that the plaintiff has established that, from 2009, his capacity to work and earn income has been impaired to any significant extent. In reaching that decision, I place importance on what I have found to be his lack of candour regarding his involvement with businesses purchased from Mr Delaland, from Korda Mentha and from Foremans. I am not satisfied that he has given truthful evidence concerning the extent of his role in each of those businesses. I am unable to be satisfied that, over the relevant period, his earning capacity has been affected.
277 In addition, the plaintiff’s case is at least partially based upon the premise that, before the accident, he was a successful businessman who, but for the accident, would have continued to be successful. Given his record with Compupunch Engineering Pty Ltd, Metal Craft, Ultimate Manufacturing Pty Ltd and the Ultimate Group of Companies, I am not persuaded this was the case.
Conclusion
278 Accordingly, there will be judgment for the plaintiff in the sum of $125,000 (One-Hundred-and-Twenty-Five Thousand Dollars).
279 I shall hear the parties in relation to any consequential orders sought.
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