| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : HARLE -v- AMORAN PTY LTD & ANOR [2003] WADC 232 CORAM : MACKNAY DCJ HEARD : 7, 8 AUGUST 2003 DELIVERED : 30 OCTOBER 2003 FILE NO/S : CIV 2214 of 2002 BETWEEN : GARY ALEXANDER HARLE Plaintiff
AND
AMORAN PTY LTD (ACN 009 365 897)
First Defendant
JOEL LAURENCE DULLARD
Second Defendant
Catchwords: Contracts - Sale of Goods - Offer and acceptance - Formalities of contract - Damages for breach of contract - Turns on own facts
Legislation: Sale of Goods Act 1895 WA s 49, s 50
Trade Practices Act 1974 Cth s 52
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Result:
Plaintiff entitled to judgment in the sum $27,096.55 Representation:
Counsel:
Plaintiff : Mr M L Bennett
First Defendant : Mr I N Wilson
Second Defendant : Mr I N Wilson
Solicitors:
Plaintiff : Bennett & Co
First Defendant : Ian Wilson
Second Defendant : Ian Wilson
Case(s) referred to in judgment(s):
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537
Case(s) also cited:
Ansett Transport Industries (Operations) Pty Ltd v Commonwealth of Australia (1977) 139 CLR 54
Bill Acceptance Corporation Ltd v G W A Ltd (1983) 50 ALR 242
Broughton v Snook [1938] Ch 505
Compaq Computer Australia Pty Ltd v Merry, Payes, Bunnett, Sharp, Bassat, Kras, Hormon & Thomson (1998) 157 ALR 1
Elias v George Sahely & Co (Barbados) Ltd [1983] 1 AC 646
Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 4 FCR 450
Equity Access Pty Ltd v Westpac Banking Corporation (1990) ATPR 40-994
Geebung Investments Pty Ltd v Varga Group Investments (No8) Pty Ltd (1995) 7 BPR 14,551
Harvey v Edwards Dunlop & Co Ltd (1927) 39 CLR 302
Hasell v Bagot Shakes & Lewis Ltd (1911) 13 CLR 374
Keehn v Medical Benefits Fund of Australia Ltd (1977) ATPR 40-047
Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281
Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 36 FLR 134
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Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494
Masters v Cameron (1954) 91 CLR 353
Niesmann v Collingridge (1921) 29 CLR 177
Nullagine Investments Pty Ltd v Western Australian Club Inc (1993) 177 CLR 635
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) ATPR 40-307
Placer Development Ltd v Commonwealth (1969) 121 CLR 353
Rossiter & Curtis v Miller (1878) 3 App Cas 1124
Sinclair Scott & Co Ltd v Naughton (1929) 43 CLR 310
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418
Thomson v McInnes (1911) 12 CLR 562
Walker Corporation Limited v Australia N I D Pty Ltd (1995) ATPR 41-430
Wardley Australia Ltd v State of Western Australia (Rothwells Loan case) (1992) 175 CLR 514
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Introduction 1 In April 2001 the first defendant, which traded under the name "Nautica International Yacht Sales", and of which the second defendant was a director, had for sale as principal a motorised pleasure craft which it had earlier imported second-hand from Singapore. 2 That vessel was a "Sea Ray 350" cruiser named "Friday Night", and was of American manufacture (the defendant's vessel). 3 At the same time the plaintiff had for sale a smaller vessel (the plaintiff's vessel) a "Sea Ray 250DA", for an advertised price of $72,250 and was in the market to purchase a larger vessel. 4 Following the advertising of the defendant's vessel in the "Sunday Times" of 15 April 2001, for a price of "$150,000 ono", and the following day, Monday 16 April 2001, the plaintiff contacted the second defendant by telephone about the vessel. 5 After various contacts and inspections in the course of the week the plaintiff and his father, Mr Bruce Harle, met with the second defendant at the Hillarys boat harbour, the defendant's vessel then being on the hard standing there, on Saturday 21 April. 6 Following a further inspection by the plaintiff and Mr Harle snr and discussions with the second defendant an arrangement was made by the parties. 7 The plaintiff says that arrangement amounted to a legally binding contract for the purchase by him of the defendant's vessel for $140,000, with the first defendant to acquire, by way of trade in, the plaintiff's vessel for $70,000, subject to a number of conditions relating to replacement or repair of various items on or in the defendant's vessel. 8 The plaintiff further says that the parties agreed that they would later execute a formal written contract. 9 The defendants deny that any binding contract was made, although it is pleaded that the parties agreed "to some pre-contractual terms", those being the same matters alleged by the plaintiff to be conditions, with the exception that the defendants also allege there were terms as to the survey or sea trial of the vessels.
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10 The defendants then plead that at the same time the plaintiff asked for a written contract "to give contractual effect" to the sale of the first defendant's vessel and that at all material times the parties contemplated that a standard marine broking form of contract "was a necessity if contractual effect was to be given to the sale and purchase of the (defendant's vessel) incorporating (inter alia) the pre-contractual terms".
11 The arrangement did not proceed, the second defendant selling the defendants' vessel shortly afterwards to another party. 12 The plaintiff later sold his vessel and purchased another, larger, Sea Ray cruiser in Sydney, having it transported to Perth. 13 The plaintiff pleads that the first defendant is liable to him in damages for any expenses and loss associated with those things. 14 The plaintiff also says that the first defendant is in breach of the Trade Practices Act 1974 Cth s 52, that the second defendant was knowingly involved in that breach, and that each is therefore also liable to him in damages on that account. 15 The defendants deny any liability of any kind to the plaintiff.
Evidence 16 The plaintiff, a relationship executive with the Commonwealth Bank of Australia, said that he first saw the defendant's vessel on the Monday night, with his family. 17 There was then a discussion and the plaintiff said he told the second defendant he was keen to purchase the first defendant's vessel for $140,000, and to trade his own vessel, which was in "pristine condition" and at Royal Perth Yacht Club, to which the second defendant replied that he would need to see it. 18 The plaintiff said that he then gave the second defendant the pen number and his mobile telephone number, informed him the vessel was a "250DA Sea Ray Sundancer" with an overall length – from pulpit to fixed marlin board – of 27ft 6 in, in the same way that the defendants' vessel was 39 ft overall, that the second defendant could view photographs of the plaintiff's vessel on the Boatlocator website, and that he wanted at least $70,000 for his vessel as a trade in on the defendants' vessel.
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19 The plaintiff said that following the discussion the second defendant telephoned him, said that he was on the yacht club jetty, that the plaintiff's vessel looked "fine" and he would agree on the prices and the parties had a "deal".
20 In response the plaintiff said he told the second defendant that he would like his father, who had sold Sea Ray vessels, to inspect the defendants' vessel prior to any deal being concluded, and that he would only be able to be there on the following Saturday at 2.00 pm, that time then being agreed. 21 On Saturday 21 April 2001 the plaintiff said he returned to the defendant's vessel with his family, father and mother, and that with his father he identified a number of items which required attention, those being repair of the windscreen, the fitting of new anodes, the fitting of a new transformer, and the cleaning of the cabin and removal of mould. 22 A short time later the plaintiff said two other men came on board to inspect the vessel and after an expression of interest one spoke to the second defendant who said "no, the boat's been sold to Gary", whereupon they left. 23 The plaintiff said that he then spoke to the second defendant and said things needed to be done for him to go ahead, following which there was a discussion about the above matters together with a need for the boat to be polished, for the rear cockpit trim to be repaired and for the port motor to be rebuilt. 24 On agreement being reached that the second defendant would arrange for all of those items to be repaired at the defendants' cost, with the exception of the port motor, for which the parties would share the cost, the plaintiff said that he asked "so if we agreed on the price and we meet half the cost of the engine do we have a deal?" to which the second defendant replied "Yes, we have a deal", following which the plaintiff shook the second defendant's hand, he in turn shaking the plaintiff's father's hand. 25 After the second defendant had locked the vessel up the plaintiff said he asked "about the paperwork to get this sorted out", and was told the second defendant did not have the paperwork with him, his house having been "raided" by Customs the previous week and several of his papers removed, but that he had others at the house and would call the plaintiff on Sunday and make an arrangement to sign the necessary paperwork, the plaintiff agreeing to that.
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26 As to the paperwork the plaintiff said he expected there would be a form of contract of sale which would have "standard terms and conditions for selling a boat" contained within it.
27 He agreed the second defendant had said to him that the trade in would have to undergo a sea trial and survey and said that if the second defendant found that it was not suitable then he would have had to rectify any problem, revise the trade in price or exclude his vessel from the sale. 28 As he and his father left the area the plaintiff said the second defendant went and spoke to the two men who had come aboard the defendants' vessel. 29 The plaintiff attempted to telephone the second defendant the next day, Sunday 22 April 2002. 30 At about 1.00 pm on that day the second defendant then called him back, the plaintiff said, and informed him "that he had sold the boat to the two brothers that had visited the boat the day before", also saying that "their offer was an outright purchase and that they didn't have a trade". 31 The plaintiff said that he protested that, without effect, and after discussion with his father sent a letter to the second defendant by facsimile transmission the same afternoon. 32 The following day the plaintiff's solicitors wrote to the second defendant, as regional managing director of the first defendant. 33 On 24 April the plaintiff's solicitors then advised the second defendant that a writ had issued, but that the plaintiff was still ready to complete the contract. 34 The second defendant responded in writing to the plaintiff on the same day, as follows: "I refer to your letter of the 22nd April and that from your solicitor dated 23 April 2001. As you are well aware the conditional verbal agreement was subject to reciprocal sea trials inspection and survey of 'Friday Night and your craft 'Sea Ray'. I further confirm you represented your craft as a 28' long. This remains to be verified.
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35 After a further letter from the plaintiff's solicitor the second defendant's solicitor then wrote, stating inter alia that the "execution of a formal document was a condition precedent to the formation of any binding contract," and that the plaintiff was "seeking to elevate an 'in principal' (sic) agreement as might occur in a car sales yard to that of a concluded contract". An offer to negotiate with a view to making an agreement was however also made in the letter. 36 After some further correspondence the action proceeded. 37 The plaintiff said that he was unable to find another Sea Ray vessel in Perth comparable to the first defendant's vessel and in July 2001, after travelling to Sydney with his father, purchased a 39 ft Sea Ray for $140,000. 38 That vessel was a year older than the first defendant's vessel, and was based on an earlier design, but was otherwise similar, the plaintiff said. 39 Costs incurred in obtaining that vessel included the sum of $11,550 in transport charges, the plaintiff said, together with various travel expenses. 40 The plaintiff's original vessel was not able to be sold until January 2002, he said, by which time the events of 11 September 2001 had affected the market, so that he only obtained $56,000 for it, and apart from commission of $3,360 it had been necessary for him to contribute $2,500 to engine repairs sought by the purchaser, those being by way of improvement to the vessel, which he considered was already in pristine condition. 41 His vessel had appeared in 2001 on the Boatlocator website as "28 foot" in length at the suggestion of Mr Ian Hatfield, the proprietor of the website, after a discussion in which he had informed Mr Hatfield that the vessel was 27 ft 6 in in length according to American methodology,
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although in hindsight he should have advertised the vessel as "27 ft 6 in overall", the plaintiff said. 42 The plaintiff said the hull of the vessel was embossed with the model number, 250DA, year of manufacture and serial number, and he had pointed that out to the second defendant prior to his inspection. 43 The plaintiff's father, Mr Bruce Harle, said he had operated a business, Oxford Marine, for a long period, and had imported Sea Ray vessels from the United States during part of that time. 44 After the inspection of the defendants' vessel on 21 April 2001, and a discussion about the defects identified by the plaintiff in his evidence, which included advice from him as to possible methods of rectification, Mr Harle snr also said the second defendant informed the two other men who had come aboard that "the boat was sold to Gary", after which there was further discussion between the plaintiff and second defendant. 45 Mr Harle snr said that at the end of those discussions: "I in fact introduced the fact that the deal was reaching or had reached a conclusion that we were in agreement that certain things would be done to the boat prior to us – prior to Gary taking possession. I said to Gary, 'If you're happy with what we've discussed here and with what you've seen this afternoon, then we should consider the thing a deal.' Mr Dullard and Gary shook hands and he agreed that it's a deal. He shook hands with me and confirmed it and at that point I considered the boat was bought. Did your son say anything else to Mr Dullard?---Well, we asked about the conveyancing, the documentation that needed to be done to conclude the thing and Mr Dullard said – I might add that he had been talking to these other two fellows while we were still pottering around the boat. Mr Dullard said, 'I can't do anything immediately. I don't have any paperwork with me. You'll have to come to my house in Sorrento tomorrow whereupon we'll get the thing all tidied up,' commit what we'd discussed and what he'd agreed to do and of course nothing could happen until – the document that we were asking, 'Could we sign it now?' needs to be signed in order to expedite transfers, details for insurance, statutory requirements, and he said he didn't have any paperwork with him which I found very odd, strange to say the least."
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46 The plaintiff then arranged for the transaction to be concluded the following day, he said.
47 The second defendant said he had started business in 2000 when he began to import vessels from overseas and had done that with a number of larger vessels for the purpose of resale in Perth and elsewhere, selling three other vessels before his contact with the plaintiff. 48 The plaintiff and his family did inspect the defendants' vessel, on Monday or Tuesday night, and the plaintiff informed him that he had a "Sea Ray 28" which he wished to trade, the second defendant said. 49 On Thursday or Friday he inspected the plaintiff's vessel, the second defendant said, without seeing the model number, and made a number of calls to the plaintiff whilst on the jetty, in the second of which, after he had said the plaintiff's vessel looked "generally okay", the plaintiff said he wished his father to inspect the defendants' vessel, to which the second defendant said he replied that he would require a survey and sea trial for the plaintiff's vessel. 50 An agreement was later made for the plaintiff to inspect the defendants' vessel on the following Saturday, when it was to be out of the water, the plaintiff said. 51 About 3.00 pm on Saturday 21 April 2001 the second defendant said he appeared, and after the plaintiff and his father had inspected the vessel there was a discussion in which they asked about things to be repaired or done on it. 52 When the discussion reached the windscreen the defendant said he called over Travis Mansfield who "had arrived at some – because he had a boat on the hardstand he was working on anyway. So he was there with his brother". 53 There was then a discussion about repair or replacement of the windscreen, the defendant said, which had included Mr Mansfield. 54 Following that, and a discussion about a need to obtain quotes, the parties had separated, with an acknowledgment of a "deal in principle but (with) … a number of things that had to be attended to earlier in the week before we could finalise anything, those being quotes on the engines …". 55 The second defendant said he was asked about paperwork and had replied that it was at Malaga but he would not be doing any paperwork
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until the cost of the engines, transformers and windscreens had been clarified. 56 Prior to the plaintiff and his father departing the second defendant said that Travis Mansfield and his brother climbed back on the vessel, and he later joined them there. 57 Prior to the plaintiff leaving the second defendant said the following exchange occurred: "They said, 'Do you want to write an offer?' or, 'Do you have any paperwork to write an offer?' and I said, 'No, I'm not – I don't have any paperwork on me.' I said, 'I didn't bring any paperwork with me because the boat wasn't ready for sale. It was on the hard stand to get an engine put back in the boat. It wasn't prepared and ready for sale and he was only coming up there that weekend to have a look over it with his father and he says – and the deal wasn't a done deal at that stage so – and I said that once I have got the quotes on the engine and the windscreen and transformer, then we would look at, like, maybe formalising a deal if it was going to go that way.' " 58 After the plaintiff's departure there followed a conversation in which Mr Mansfield asked the second defendant whether the vessel had been sold, and was told "no", although also told there was a contingent offer on it, the second defendant said, and on being told of the prospective trade in Mr Mansfield informed the second defendant it would be almost certainly 25 feet in length and not 28 feet, and "if it’s a 250 or a 25 foot boat" the price sought was $20,000 too high. 59 "Travis and his brother then indicated that they would be interested in buying the boat", the second defendant said. 60 An offer to buy the vessel "as is, where is" was then made, the second defendant said, and on Sunday morning they met for breakfast and Mr Mansfield paid a deposit. 61 When the plaintiff called later he was informed of the sale, and it was put to him that he had misled the second defendant about the length of his own vessel, the second defendant said, the plaintiff then becoming hesitant "and jumped around on that", although maintaining there was a deal.
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62 On 30 April 2001 a written agreement was executed with Mr Mansfield for the sale of the first defendant's vessel, the second defendant said.
63 In cross-examination, and on his letter of 24 April 2001 being put to him, the second defendant said he did not infer in the letter that any sea trial and survey would proceed, but rather only that the defendants would have had the right to do that if the plaintiff's agreement had been formalised. 64 When his solicitor wrote on 27 April that he was prepared to negotiate an agreement with the plaintiff, that had been earlier discussed with Mr Mansfield, the second defendant said, that his intention was that "at the end of the day the deal with (the plaintiff) would not proceed". 65 The second defendant agreed initially that he had been desperate to sell the vessel in April 2001, and also agreed that he had discovered the vessel's engines were blown after it had arrived in Perth, that he had been raided by Customs officers during the relevant week, and that there was a difference between hull length and overall length, the latter in the case of the plaintiff's vessel being 28 feet 4 inches. 66 Ian Hatfield, the proprietor of Boatlocator, said the plaintiff provided him with the information for the listing, but had also told him other things about the vessel which he had not noted and did not recall. 67 Travis Mansfield is a shipwright and now boat broker, and said he had seen the defendant's vessel advertised "a few months at least" earlier, had kept a "close eye on it", and had spoken to the second defendant a "couple of months" before the sale about the vessel. 68 After he and two others had sold their own boat Mr Mansfield said he again contacted the second defendant on Saturday 21 April and asked if they could inspect the defendant's vessel. 69 Mr Mansfield and his brother then went to the boat harbour, he said, and on seeing other people on the vessel, waited for them to leave until the second defendant asked him to come over and sought advice about a windscreen. 70 Once the others had gone Mr Mansfield said he and his brother inspected the first defendant's vessel, had a discussion with the second defendant and made a cash offer of $125,000.
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71 In the course of the conversation there was a discussion about the plaintiff and his trade in, Mr Mansfield said, the second defendant stating "it was a smaller Sea Ray … a 28 footer – 28 or something like that".
72 Mr Mansfield said that he "was sort of trying to make it clear that we're taking the boat, as is, where is, no trade" and the second defendant said that he would think about it and speak to them the following day. 73 On Sunday morning the second defendant then called him, Mr Mansfield said, and they met at the marina and a deposit was paid. 74 Later that week the second defendant told him the plaintiff was upset about the sale, Mr Mansfield said, but did not ask him whether the defendants could proceed with a sale to the plaintiff, with or without any withdrawal from it.
Conclusions 75 The plaintiff does of course bear the onus of proof. 76 There is a clear conflict in the evidence between the accounts given by or on behalf of the plaintiff and by the second defendant as to the events of 21 April. 77 The second defendant's evidence as to those events and generally was unsatisfactory in several respects. 78 The letter of 24 April from the second defendant sets out what he claimed was not the true position, and the second defendant completely failed to provide any credible explanation for having sent it. 79 The letter of 27 April from the defendants' solicitor, as explained by the second defendant, reveals a preparedness on his part to act in a manner that would have been less than honest. 80 The second defendant's assertion that he had expressly refused on 21 April to do "any paperwork" until the cost of the various items had been ascertained was contrary to the plea in the defence and not to be found in the contemporary correspondence, despite the significance that would attach to it. 81 The second defendant made no reference in his evidence to the prior dealings with Travis Mansfield about a possible sale to him, or the reason for his presence at the boat harbour on 21 April, and the latter denied any
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arrangement that might have permitted the assertion in the defendants' solicitor's letter of a readiness to negotiate on 27 April, as claimed by the second defendant in his evidence. 82 In those regards I would prefer the evidence of Travis Mansfield, called as a witness by the defendants, and not involved in the dealings with the plaintiff, and having heard the evidence. 83 There was also a shifting of ground by the second defendant as to the defendants' degree of need to sell, the initial admission that he was "desperate" to sell being borne out by the second defendant's preparedness to make a bargain via his mobile telephone from the yacht club jetty after a most cursory look at the plaintiff's vessel. 84 Further, had the matter been left as claimed by the second defendant on 21 April there would have been no reason why the plaintiff would have acted as he did the following day. 85 The plaintiff's evidence was consistent both internally and with the contemporaneous documents and objective facts, and I consider I can rely on it and prefer it to that of the second defendant, on which I feel unable to generally rely. 86 I also accept the evidence of Mr Harle snr. 87 For the above reasons I am satisfied on the balance of probabilities that the events surrounding the negotiations for the purchase of the first defendant's vessel, and those after, occurred as described by the plaintiff. 88 As to the plaintiff's trade in, I accept that the second defendant was informed that the vessel was a Sea Ray 250DA Sundancer, with an overall length of 27 feet 6 inches, with an explanation of what was meant by that. 89 The vessel was in good condition and there is nothing to indicate it would not have passed a survey and sea trial, nor is that alleged.
Legal position 90 The central issue that arises is whether a legally binding contract came into existence. 91 A number of possibilities flow where parties arrive at an agreement of some kind but intend to go on and execute a formal document.
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92 Those possibilities are succinctly set out in Cheshire and Fifoot's Law of Contract 8th Aust ed (2002) par 5.24:
"The High Court in Masters v Cameron ((1954) 91 CLR 353) pointed out that: 1. the parties may intend to be bound immediately, though expressing a desire to draw up their agreement in a more formal document at a later stage; or 2. they intend to be bound immediately but may wish the operation of a particular clause or term to be delayed pending the drawing up of a more formal document; or 3. they intend to postpone the creation of contractual relations until a formal contract is drawn up and executed. A fourth category, by way of variation of category 1, has been added, namely, where the parties intend to be bound immediately by the terms which they have agreed upon, while expecting to make a further contract in substitution for the first contract containing, by consent, additional terms. Whether the parties have reached final agreement, or intend to postpone contractual relations or the operation of a particular term, is ultimately a question of intention, objectively ascertained from the language the parties have used or inferred from their conduct. Such factors as the high value of the subject matter may be relevant in determining whether the parties intend to be bound immediately or only after being professionally advised. The complexity of the contemplated deal may indicate that it is less likely that the parties intended to commit to contract by informal means, but, in the end, it is the disclosed intention of the parties that is decisive.
As already noted, the use of the words 'subject to contract' raises a strong presumption that the parties intend to postpone the creation of contractual relations until a formal document has been executed. By contrast, words indicating an intention to be immediately bound will be taken to mean what they say. In GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd ((1986) 40 NSWLR 631, 634-635) the parties expressed
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their intention to enter into a 'legally binding agreement in principle'. This was held to be a clear intention to be bound immediately."
93 Here it is in my view clear from the plaintiff's evidence that the parties intended subjectively, and objectively, to be immediately bound by their agreement, on the basis that additional terms would be added in formal contract, with the consent of both parties.
94 The agreement was subject to a number of conditions, including a condition that the first defendant be satisfied with a sea trial and survey of the plaintiff's vessel.
95 That condition was subsequent to the formation of the agreement: Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537.
96 There was thus a binding agreement.
97 The first defendant by its action in reselling the defendants' vessel repudiated the agreement, and the plaintiff elected ultimately to accept that repudiation, rescind the agreement, and claim damages from the first defendant for breach of contract, as he was entitled to do.
98 The plaintiff did not seek to pursue the Trade Practices Act claim in the event that he was entitled to relief for breach of contract, and I accordingly do not consider that further against either defendant.
Damages
99 The plaintiff's entitlement is to damages for "the estimated loss directly and naturally resulting, in the ordinary course of events, from the (sellers/buyers) breach of contract": Sale of Goods Act 1895 WA s 49 and s 50.
100 The plaintiff's claim is for: Cost of transportation of boat purchased | | Cost of travel and accommodation to Sydney to purchase the boat | | Deduction in sale price of 'Silver Summer' from trade in price |
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- $56,000 (purchaser price)
+ $ 3,360 (commission) - $ 2,500 (repairs to boat) $14,860 $27,096.55 | 101 I accept the evidence of the plaintiff as to those things, and am of the view that each is a loss of the requisite kind. 102 The plaintiff is therefore entitled to judgment in the sum of $27,096.55.
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