Hobby v Dinah Beach Cruising Yacht Club Inc - [2008] NTSC 20

Hobby v Dinah Beach Cruising Yacht Club Inc [2008] NTSC 20
PARTIES:HOBBY, Ann Marion (as Executrix of the Estate of the late James Stanley Hobby)

v
DINAH BEACH CRUISING YACHT CLUB INC

TITLE OF COURT:  SUPREME COURT OF THE NORTHERN TERRITORY
JURISDICTION:  SUPREME COURT OF THE NORTHERN TERRITORY exercising Territory jurisdiction
FILE NO:34/07 (20708959)
DELIVERED:  28 April 2008
HEARING DATES:  3-7 March 2008
JUDGMENT OF:  THOMAS J
CATCHWORDS:

NEGLIGENCE – ASSESSMENT OF DAMAGES
Negligence – liability admitted – assessment of damages – whether damage reparable – whether ship a write-off – no intention to repair – liability of defendants to pay storage fees.
Law Reform (Miscellaneous Provisions) Act, s 5.
Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452; The Wagon Mound No. 1 [1961] AC 388, referred to.
REPRESENTATION:
Counsel:
Plaintiff:A Young
Defendant:I Morris
Solicitors:
Plaintiff:Pipers Barristers & Solicitors
Defendant:Cridlands Lawyers
Judgment category classification:        C
Judgment ID Number:  tho200801
Number of pages:  55

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN
Hobby v Dinah Beach Cruising Yacht Club Inc [2008] NTSC 20
No. 34/07 (20708959)

BETWEEN:
HOBBY, Ann Marion

Plaintiff
AND:
DINAH BEACH CRUISING YACHT CLUB INC

Defendant

CORAM: THOMAS J
REASONS FOR JUDGMENT
(Delivered 28 April 2008)

This is a claim by the plaintiff for damages to a 17 metre yacht named “Leao Do Mar” referred to hereafter as “the Leao”. The yacht was damaged when it was involved in an accident at the wharf at the Dinah Beach Cruising Yacht Club on 25 June 2005. The plaintiff is the Executrix pursuant to a grant of probate dated 9 March 2006 of the Estate of the late James Stanley Hobby who died on 12 September 2005. This action is brought pursuant to s 5 of the Law Reform (Miscellaneous Provisions) Act.
Shortly before this trial commenced, the defendant accepted liability for the accident. Accordingly, the trial proceeded as an assessment of damages.
The plaintiff claims $305,000 being the pre accident value of the Leao, less salvage value of $20,000 leaving a loss of $285,000. In the alternative, the plaintiff claims the cost of repairing the yacht as being $205,600.
The parties have agreed on the sum of $13,000 for the loss of personal items.
There is also a claim for storage fees at Spot On Marine from a period of approximately one month after the accident to the date of trial in the sum of $28,946.43 and continuing.
The position of the defendant is as follows:
“The defendant says that the evidence demonstrates that the yacht is not a constructive write-off and is capable of being repaired. Alternatively if the yacht is a constructive write-off then [its] pre-accident value was between $120,000-$190,000 and salvage value of approximately $20,000 should be allowed leaving a loss of between $100,000-$170,000.
The defendant’s experts place the cost of repairs at a level below that claim by the plaintiff and [the] defendant says that the evidence demonstrates that the claim for damages ought to be assessed somewhere in the region of $90,000-$135,000.
The defendant says that the cost of storage of the vessel should be reduced by approximately half to cater for the time between the accident and March 2007. The plaintiff says that following communications in March 2007 there was no reason for the yacht to be kept on a hardstand as it was clear that liability for the damage claimed was denied. Further, the defendant says that the yacht would have to have been stored somewhere in any event and the cost of that storage should be deducted from any amount allowed.”
Introduction
In 2002, James Hobby was the Maintenance Manager for a Westfield Shopping Centre in Perth. He held qualifications as an electrician and refrigeration mechanic. In or about May 2002, Mr Hobby purchased the Leao. He had a dream to travel around Australia and go to Vanuatu with his wife and family. They sold their house for $185,000. Mr Hobby cashed in his superannuation which was about $12,000. Ann Marion Hobby, James Hobby’s wife, gave evidence that her husband sold their three cars and some of his equipment. The family owned two Mercedes and a van, one vehicle was worth $10,000. Mrs Hobby did not know the purchase price for the Leao. She knew they sold all their assets to purchase it. For the first few months after purchasing the boat, Mr Hobby worked on it with Mrs Hobby, replacing equipment and generally preparing the boat for the family to live on board.
From Perth the family travelled on the Leao to Lancelin, Julien Bay, Dongara, Carnarvon, Dampier and then onto Darwin. During this period, Mr Hobby worked on maintaining the boat and also engaged in work for other people on a casual basis.
In October 2004 the Leao arrived in Darwin and was originally moored at the marina at Tipperary Waters. Mr Hobby continued to work on his boat. He also did work for others at the marina, usually refrigeration electrics. He was paid for this work. At times he would work on the gate at Tipperary Waters marina. Shortly after arriving in Darwin, Mr Hobby was diagnosed with cancer and commenced chemotherapy treatment.
In June 2005, arrangements were made to take the vessel to the Dinah Beach wharf so that it could be taken out of the water for painting and general maintenance. Painting had to be done about every two years.
Whilst the Leao was at the wharf at the Dinah Beach Cruising Yacht Club it fell and toppled onto the starboard side causing damage. The defendant, the Dinah Beach Cruising Yacht Club Inc, has admitted liability for the accident. For this reason I have not detailed the circumstances surrounding the accident.
Following the accident, the Leao was motored to Fannie Bay and anchored offshore for approximately three weeks. It was then taken to Spot On Marine where it continues to be stored.
At the time the Leao was taken from Tipperary Waters to Dinah Beach wharf, Mr Hobby had been diagnosed with cancer. Mrs Hobby was his full time carer. Mr Hobby died on 12 September 2005.
Mrs Hobby gave evidence that Mr Michael Onn, at Spot On Marine, advised he would obtain quotes to carry out the repairs. After some weeks, and upon Mrs Hobby making further enquiries, she was informed that the work could not be carried out by Spot On Marine. Mrs Hobby has made further enquiries, however, for varying reasons the Leao is still at Spot On Marine. Mrs Hobby has not been able to sell the yacht nor arrange for anyone else to undertake repairs. The Leao has been on the premises of Spot On Marine since approximately one month after the accident. Substantial storage fees have been incurred. The plaintiff claims an amount of $28,946.43 to 3 March 2008 and increasing at $46.20 daily.
The accident
The evidence as to what happened in the accident at the wharf has been given by Mrs Hobby, who was on board the ship when it slipped from its mooring. Late in the morning of 25 June 2005, the Leao was moored against the wharf at the Dinah Beach Cruising Yacht Club. It was sitting on the seabed as the tide was receding. Mrs Hobby was walking down the jetty, she turned and saw that the mast was shaking. This concerned her because it meant the boat was unsteady. She ran back, climbed a few steps down the ladder and jumped on top of the cabin of the boat. The boat was still upright. Mrs Hobby went to the main mast, which had a rope, and tried to get the rope to the wharf. The rope would not reach. She had wanted to tie the rope to the wharf to secure the boat. She then went down into the coach house of the boat to get a longer rope. She felt the boat go straight up at the bow and down at the stern. Mrs Hobby went back up on deck. “Phil”, who was the water park manager for the Dinah Beach Cruising Yacht Club, threw her a rope to tie to the short rope that was attached to the main mast. She was then to throw the rope back to him. Mrs Hobby tied the two ropes together and as she threw it back, and before it could be attached, the boat fell. Mrs Hobby described the fall as “a sudden jolt, then a bit of a bounce”. She fell onto the cabin. She noted that the mizzen mast was bent. The bent mizzen mast can be seen in Photo 4 (Exhibit P2). Mrs Hobby observed that the rope tied to the mizzen was very tight. Phil asked her to go down to the bilge and check it before getting off the boat. Mrs Hobby went below to do this. She was underneath the navigation room in the hold of the vessel. She heard someone call out “we’ve got to cut this rope”. She felt the boat fall very suddenly and hit hard. There were two very sudden big moves. The batteries, of which Mrs Hobby believed there were twelve, tipped over. Two fell into the bilge, the others fell on her feet and acid was spilled throughout. Her feet fell into the groove round the hull and this stopped the batteries from squashing her feet. The batteries weigh 90 kilograms. Two of the batteries smashed and bits broke off the top of others. Acid poured out and was running down into the bilge, around the edges and down into the bottom of the hull. Mrs Hobby heard people talking upstairs, shouting directions and calling out “Ann, are you all right?”. Later she observed the rope from the mizzen mast had been cut. There was a large piece of rope on the mizzen mast and a small piece on the jetty. The rope appeared frayed and was severed.
When the battery acid spilled, Mrs Hobby climbed over the starboard side of the boat which was tilted toward the ground. She climbed onto mud, there was no deep water there, and she got off the boat at a point in line with the cabin door. Because of the angle of the boat she had to slide down over the side. She then walked to the front of the boat through the mud up to the Dinah Beach Clubhouse. She did not have to swim or wade through any water.
Mrs Hobby gave evidence that Photo 5 (Exhibit P2), is about how it was when she got off the boat. This photo shows the Leao tilted far over on the starboard side resting on the seabed with the water channel at the stern of the boat and muddy flats surrounding the boat. Mrs Hobby identified Photos 6 and 7 (Exhibit P2) as showing the position of the boat and the surrounding muddy seabed at the time of the accident.
After she scrambled off the boat, Mrs Hobby went home to get some buckets and a pump. She and her son Lawrence then returned to the Dinah Beach Cruising Yacht Club. They filled the buckets with water from the tap, walked out to the boat, which was still on its starboard side and climbed on board by grabbing hold of the boson’s chair. They then poured the water that was still in the buckets down where the acid was in the hold. The purpose of this was to pour water on the acid to dilute it so that it would do less damage. Mrs Hobby made three attempts to pour fresh water into the hold. On the fourth attempt she gave up because the spillage of water from the buckets, as they were climbing over the starboard side of the boat, meant there was very little water left in the buckets.
Mrs Hobby and her son Lawrence walked up to the Club and washed the mud off themselves. In places they had sunk in up to their thighs. A person came to her assistance and sealed parts of the boat so that when the tide came back in seawater would not get into the boat. The exhaust was covered, the rudder had some silicone put around it, drums were put under the side at the front and the windows were taped. Other persons came to help and plugged the outlets. This was all in an endeavour to stop seawater flooding into the boat when the tide came back in. When the tide did rise, water covered the stern and came up to the hatch. The walking side of the deck at the back was covered with seawater which flooded into the cabin and flooded the double bed on the starboard side. People told her to get off the boat which she did by sliding down the starboard side as she had done before. This time the water level round the boat was high up on her legs. She then stood on the shore for a while and watched the tide come in. As the tide came in the vessel righted itself. Pumps were put in by someone to pump the water out. Mrs Hobby used a fire brigade hose in a attempt to wash the acid away. Mrs Hobby had to stop and start during this process because she had difficulty breathing as the acid fumes filled up the enclosed area. The pumps kept operating for some time. Mrs Hobby could not be sure for exactly how long. Ropes were used to hold the boat to the wharf. Between Mrs Hobby and her son Lawrence, they kept watch on the boat overnight and also had to take turns in caring for her husband James, who needed full time care at this stage of his illness.
The next day the boat went under the wharf at the Dinah Beach Cruising Yacht Club which became a problem and the vessel had to be removed from under the wharf. The ladder on the wharf, that was in line with the boat, had become rusted and buckled. The whole vessel on the port side went under the wharf. Some people put tyres there which left marks on the port side of the boat but did not hold it and the back of the boat went under the wharf. The boat remained at the Dinah Beach wharf one further night. On the following Monday, Mr Warwick Hill organised to move the boat away from the Dinah Beach wharf. The electronics on board the boat were not working. The motor started but then conked out and was restarted. Mr Hill had brought his own battery on board. Mrs Hobby noted that the mizzen mast at the back was bent and was “flogging around”. There were wires flying everywhere and the wind generator was broken. Mrs Hobby had gone back on board on the Sunday night after the water had been pumped out. There were puddles of seawater in the coach where the instruments were. There was an oily film on the walls in the rooms at the stern and the saloon had mud on the walls. Instruments had fallen into the water and were greasy and muddy. There was still a strong smell of acid.
The extent of the damage
During the course of the trial, the Court had the benefit of a view and inspection of the Leao where it is presently stored at Spot On Marine. In addition to this, evidence has been presented by a number of experts on the issue of the extent of the damage.
Mr Ighaniyan is an engineer with expertise as a Stress Analysis Engineer. Mr Ighaniyan stated that in his opinion the hull of the Leao was warped as a consequence of the incident at the Dinah Beach Cruising Yacht Club. This was essentially based on his observations of the peeling of paint and rust on the hull. He concluded that the vessel was unsafe and unseaworthy as a consequence of the damage and that no attempt should be made to rectify the damage.
Mr Stephen Earp is a qualified marine surveyor and registered boat builder. Since beginning his own consultancy business in 1994, he has surveyed and/or valued about 3,000 boats of varying dimensions, including cruising yachts. He relied on his own experience and the Marine Surveyor’s Association Guidelines in arriving at his valuations. Mr Earp described the physical inspection of the Leao that he undertook and his method of arriving at a valuation of $305,000. He noted that a significant factor in his valuation was that the boat is constructed to Class 1B standard of the Uniform Shipping Laws Code in 1995 which he gave evidence means the boat is professionally constructed according to proper standards. Mr Earp stated the value of $305,000 was consistent with the discounted value approach of the various components of the vessel which he itemised.
Mr Earp detailed his assessment of the cost of repairing the Leao as follows: “Spars, rigging and sails $65,000”.
In arriving at this assessment, Mr Earp relied on his own experience as well as a quotation from Nautical Supplies Pty Ltd, a Darwin firm. Mr Earp concluded it was not practical to repair the main mast and that it would be necessary to replace it.
Electrical repairs   $47,600: Mr Earp relied on what he considered to be a reasonable quote from Mr Sheil who is a qualified maritime electrician.
Hull blasting and recoating   $16,500: This includes both sandblasting and recoating required because of the dent to the hull and because of the hull damage from spilt battery acid.
Steel plating repair   $12,000: Mr Earp stated in his report that the primary work required on the hull is the removal of the dent on the starboard side where, as he says, the Leao appears “to have struck a hard object as she fell over and the damage on the inside of the hull from spilt battery acid.” He referred to the difficulties of estimating the extent of the hull damage due to acid, until the hull plate is removed. He stated damage from battery acid could include 30-40 per cent of the hull area. He detailed the extensive work that was required to be done to investigate the full extent of the damage from battery acid. In his evidence Mr Earp referred to the fact that he could “still smell acid” when he carried out his inspection of the boat. This was on 20 April 2007 almost two years after the accident.
Internal timberwork and linings   $40,000: This was required for internal timberwork and linings damaged directly by water ingress and in combination with the effects of Darwin’s hot humid climate which has contributed to further damage from condensation as a result of the boat not being used and ventilated while closed up on the hardstand. He considered the job was a complex one requiring a skilled cabinet maker with a shipwright background.
Rudder shaft, bracket and bearings   $4,500: This included cost of removal and replacement of the bent rudder skeg. The rudder shaft has been found to be straight and undamaged.
Haul out hardstand crane fees   $20,000: A crane lift and hardstand fees for nine months whilst repairs are being effected.
The estimate for the total cost of repairs to the Leao is $205,600.
Mr Earp was asked in his report to comment on the report received from Mr Ighaniyan. Mr Earp states in his report that he did not see evidence of hull deformation, apart from the dent on the starboard side. However, he stated that the possibility of hull deformation affecting the structural integrity of the hull could not be excluded. He could not warrant the hull was sound. It would be necessary to inspect the steel frame thoroughly which is a complex and expensive process. Mr Earp estimated the cost of such an examination to be $35,000.
Mr Earp also referred to the detrimental affect the situation with the hull could have on any future sale. Mr Earp estimates this factor diminishes the value of the vessel even further which he estimates to be $35,000 if not corrected by repair.
Mr Earp inspected the vessel on 20 April 2007. He sighted photographs of the Leao pre and post accident. He noted the vessel has a professional Jarrah and Tasmanian Oak fit out with quality timberwork employed throughout. In his Inspection for Valuation, Mr Earp has listed the equipment and accessories he sighted. These had been removed from the vessel to allow initial cleaning of water damaged areas and to prevent theft from the vessel. Several of the items were damaged either directly or indirectly through water condensation and moisture damage. He estimated the value of these salvageable items at $18,500.
Mrs Hobby gave evidence that at the time she had very little boating skills. She could not have managed the boat without her husband. At the time of the accident, Mrs Hobby was engaged as a full time carer for her husband. Mr Hobby died on 12 September 2005. Had the boat not been damaged by the incident at the Dinah Beach Cruising Yacht Club, it is Mrs Hobby’s evidence that she would have sold the boat as soon as possible for financial reasons. Her evidence is that she did not have the resources to repair the boat herself. She had not disposed of the boat as she was allowing the defendant an opportunity to inspect the boat.

It is agreed between the parties that the storage fees at Spot On Marine up to 3 March 2008, amounted to $28,946.43. This amount increases by $46.20 a day, including GST, until the boat leaves the yard. Mrs Hobby has paid an amount of $4,800 toward these storage fees.
Mrs Hobby gave further evidence that the various defects and damage to the Leao referred to in the reports of Mr Earp, Mr Halstead and Mr Cross, were not there prior to the accident on 25 June 2005. Prior to that date, all the equipment on board, including the electronics, were in working order. There was some rust at the bottom of the main mast which was going to be treated. Three of the staunches were a bit loose. Her husband was working on the electronics and was going to do some wiring. The dent to the starboard hull of the vessel was not there before 25 June 2005 and there was no cracked paint in that area. Mrs Hobby used to dive under the boat regularly and clean the hull. The hull was in good order. The rudder and the rudder skeg had been in good order as were the internal timber and linings on the vessel. The woodwork was a professional fit out of Tasmanian Oak and Jarrah. They were always shiny and in good condition. The timber around the cockpit of the vessel and the hatches were in very good condition. Mrs Hobby used to oil the woodwork regularly and keep it in good condition. I accept the evidence given by Ms Hobby, I found her to be a credible witness.
A report prepared by Justin Sheil is Exhibit P5. Mr Sheil has been a licensed electrical contractor since 1986. He also holds qualifications as an automotive electrician, automatic controls in shipping and marine qualifications. He has been Master in Charge of numerous vessels and been employed by the Defence Maritime Services Pty Ltd at Garden Island. Mr Sheil prepared a quote for repair of the electrical system of the boat. This is contained in his statement (Exhibit P5) including complete work history and qualifications. His observations include the fact that new batteries are required and he noted that as the batteries fell they also ripped cabling out to the start points. He noted water entered the engine room and that new wiring is required in the engine room. He also noted that wiring for the navigation and communication systems must be replaced. He stated the generator needed to be replaced. He estimated the total cost of replacement or repair in the engine room to be $27,500.
Mr Sheil concluded that the cabling in the switch panel was destroyed by water and that cost of replacement materials in the main cabin would amount to $13,400.
The cost of repairing damage caused to equipment attached to the mizzen mast i.e. down lights, rigging radio antennae and radio equipment was estimated at $3,100.
The estimated cost of the main mast wiring replacement including materials and labour was $3,900.
This is a total of $47,900.
Mr Sheil gave evidence to the Court. He stated in cross examination that he was unable to undertake electrical testing of the equipment as he was not able to power up any of the systems. He stated the wiring was in such a “destroyed” state that if he did power it up this ran the risk of setting the boat on fire. The damage was caused to the wiring when the batteries ripped out causing damage to the batteries and associated wiring. The second cause of damage is seawater encryption into the wiring in the engine room. Thirdly, there was damage caused consequentially by attempts made to make the vessel operational. He did his first inspection of the Leao in September 2005. He had inspected the boat again on the Sunday before the date he gave evidence. He stated the condition of the wiring is consistent with it being laid up for two and a half years in regards to green capillary action on the wiring and the general deterioration of the electronics within the vessel. Under cross examination Mr Sheil stated the reason he considered the generator needed to be replaced was because it had leaked oil, other items in the engine room had fallen against it and there looked to be water damage. Replacement was cheaper than trying to rebuild it. He explained how the $2,500 for sundries was made up. He also described the difficulties within the confines of a boat of replacing wiring and the necessity to replace panels and open up the ship which, together with the fact that there are no wiring diagrams for ships, contributes to the expense of replacing the wiring. He also described the cabling that had been pulled over by the mast and the difficulty of testing equipment in situ.
I accept the evidence of Mr Sheil and accept the quote he prepared for repair and replacement of items within the electrical system.
The view
Mr Young, counsel for the plaintiff, organised a viewing of the Leao where it is stored on a hard stand at Spot On Marine. The viewing was attended by Mrs Hobby, counsel and instructing solicitors for the respective parties and the Court. This took place on the morning of 4 March 2008.
Mrs Hobby subsequently gave evidence as to the state of the woodwork inside the vessel at the present time. The floor of the coach house, or wheelhouse, has lifted and buckled, the underlying plywood is splitting and rotten. All the woodwork inside the boat has deteriorated except for a few items including a table. The doors to the cabin, kitchen, shower and toilet, have swollen and none of them will close properly. They are no longer shiny and are not in good condition. The woodwork in the cockpit area is dry, cracked and lifting whereas before the accident it was firm, well secured, shiny and in good condition.
Mrs Hobby described the dent on the outside of the starboard hull as a dent on the chine on both sides of one rib. Mrs Hobby described other scratches and marks and a dent on the starboard side of the hull, together with signs of rusting and cracking of paint.
I accept the evidence given by Mrs Hobby, as to the condition of the vessel on the morning of 4 March 2008, is accurate. Her evidence is substantially supported by the evidence of Mr Earp. The vessel appears to be in very poor condition.
The aftermath of the accident
Mrs Hobby gave further evidence that toward the end of 2005 early 2006, she had been offered $20,000 to sell the vessel. She did advertise the vessel for sale in August 2007 but has not received any offers.
It is Mrs Hobby’s evidence that she did consider other alternatives for storing the Leao. Because of what she perceived as problems with the rudder and mizzen mast, mooring was not feasible and moving the Leao to another jetty could be expensive and risky. Mrs Hobby gave evidence that she had no knowledge herself about boats and relied on the advice of experts that the boat should not be moved from Spot On Marine.
Under cross examination Mrs Hobby gave evidence that the boat needed painting a little under every two years. She confirmed that after leaving the Dinah Beach wharf following the accident, the boat was taken to Fannie Bay where it was moored for about a month and then taken to Spot On Marine. She stated the boat was not in a condition to be left in the sea. It was not feasible to attend to the acid in the bilge. At this time Mrs Hobby was occupied full time in caring for her husband. She had arranged for someone to keep an eye on the boat while it was moored at Fannie Bay. Her husband instructed her to take the boat to Spot On Marine and enquire about having a shipwright assess the damage. She described the difficulties in obtaining that assistance. Mrs Hobby gave evidence that when the Leao was taken to Spot On Marine, she had approached the person in charge, Michael Onn, who stated he would assess the boat with a view to undertaking repairs. He advised her that because of his other work commitments, he could not start for about another month. Mrs Hobby gave evidence she telephoned a number of times after the expiration of a month. Mr Onn kept postponing her request because he advised he was busy with other work. Eventually, Mr Onn recommended other persons she could approach. It is the evidence of Mrs Hobby that she approached Mr Cross who originally said he would do the job but then subsequently advised her he was too busy. Mr Halstead was approached. It is the evidence of Mrs Hobby that when Mr Halstead was informed there was a legal action pending he stated he was not interested in doing the job as he did not like sitting around at court. She took steps herself to preserve the boat and went to Spot On Marine continuously till mid 2007. In the middle of 2007 she secured a job at Berrimah and was not able to continue the maintenance work on the boat. After she obtained probate of her husband’s estate, the boat was registered in her name and she became the owner. She gave evidence about herself and others removing certain items from the boat after the accident while it was still at Dinah Beach wharf.
Mrs Hobby gave evidence under cross examination that on the way from Perth to Darwin the Leao had run aground at Shark Bay. It was sitting in soft white sand in shallow water and when the tide came back in the boat came up with the tide.
Mrs Hobby was asked in cross examination about entries in her husband’s writing in a log book (Exhibit D8). She was asked about an entry on page 8 the paragraph starting “arrived Lancelin”. There is a reference to “bottomed out at low tide at 6am October 13”. Mrs Hobby stated they were anchored at a mooring they were advised they could use. She said the boat did touch the bottom but the water was not low enough to cause them to lean over. Mrs Hobby was then referred to page 12 in the log book and an entry relating to heading up the narrow channel toward Head Island “ran the poor old thing up on to a rock too shallow. A passing crayfish boat pulled us off”. There was then a reference to returning to the main channel and there were too many sand flats. Mrs Hobby gave evidence the boat did not run up onto the rocks. She stated that as soon as the boat touched they stopped and waited for someone to come to their aid.
When asked about the further reference in the log book to moving back to the main channel and preparing to lay the ship on her side at low tide Mrs Hobby stated this was the incident she had earlier referred to which was running aground in shallow water at Shark Bay. She stated this was “not a big deal”. Someone had pulled the boat back off the sand. She said Shark Bay is full of moving sandbars and that the maps do not tell you exactly where the sandbars are. A photocopy of these pages in the log book are Exhibit D8. There is no evidence the Leao was damaged as a consequence of either of the two incidents. Under re-examination, Mrs Hobby stated there was no damage to the vessel when it ran aground and none when it was pulled off the sand.
I found Mrs Hobby to be a credible and truthful witness. I accept her description of what happened in the accident on 25 June 2005 and the damage that was done to the Leao as a consequence. I accept her evidence that the Leao had not been damaged in the two incidents referred to in the log book (Exhibit D8).
Four photographs of the Leao taken by Mr Brian Cassells, shortly after the accident, show the bow sprit on the vessel which is on its side. The bow sprit appears to be intact. The four photographs are Exhibit D7. Mrs Hobby does not know what happened to the bow sprit after the accident.
Other evidence relevant to the accident and its aftermath was given by Mr Hill. Mr Hill works as a tug driver on Darwin Harbour on a causal basis. He is also a shipwright. He holds a Master and Marine Fishing Skipper qualification. This entitles him to drive commercial vessels of 25 metres or less to a 200 mile limit offshore. He has subsequently obtained certificates which allow him to carry passengers and a Marine Engine Driver Grade 2. This allows him to be an engineer on board vessels up to 35 metres. Mr Hill is the owner of a yacht measuring 18.9 metres in length which he built himself and has sailed extensively between Indonesia and Darwin. Mr Hill met Mr and Mrs Hobby when they were neighbours on the marina wharf at Tipperary Waters. Mr Hill is very familiar with the area of the Dinah Beach wharf. He has spent the last four and a half years operating his vessel out of there. His mooring is the closest to the Dinah Beach Cruising Yacht Club. He has utilised the poles and the wall there to careen his own boat on numerous occasions. He passes it every day on high and low tide. He knows the area where the Leao fell over. It is soft mud on the surface with a hard rocky gully underneath. The sea bottom at this point varies with each season. In the wet season it washes back to almost being a fairly bare gully of rock. During the dry season it tends to silt up with a bit more mud. It varies by a matter of feet to inches. All the way through it is a “foul zone” which means it is undesirable to nestle a boat on that ground. Mr Hill stated he was involved in helping Mrs Hobby in the aftermath of the fall of the Leao on 25 June 2005. There was toppling and damage going on inside the vessel and the mizzen had been damaged during the process of the fall. They had to wait for the incoming tide to see whether the boat was going to refloat on her own accord. At different stages he got on and off the boat to check things. Water entered into the vessel with the incoming tide after she fell. Mr Hill assisted to stem the flow of water into the boat. A day prior to the accident 25 June, he had steered the Leao out of the Tipperary Waters marina to Dinah Beach. He could see that Mr Hobby was suffering from deteriorating health and Mr Hobby had asked him to take over for him.
For three to six months prior to this time, the Leao had been moored next to Mr Hill’s own boat at Tipperary Waters. Mr Hill gave evidence that he observed the rigging on the Leao to be in working order, the hull looked in good condition, the deck was in the process of being given an uplift to remove the wood and take the deck back to the original steel. The steering on the vessel was working well and Mr Hill was able to dock effortlessly at Dinah Beach. Following the accident to the Leao and again at the request of Mr Hobby, Mr Hill drove the boat to an anchorage off the Fannie Bay Yacht Club. Mr Hill gave evident there was a lot wrong with the vessel including the rigging which was broken in the accident at the wharf. The boat was anchored at Fannie Bay for about two to three weeks. Mr Hill stated he had concerns about leaving the boat at Fannie Bay with nobody living aboard. He took the boat from Fannie Bay to Spot On Marine.
Mr Hill gave evidence that in delivering the Leao to Spot On Marine and driving into their cradle, he had to do a hard starboard turn, bow first. The steering completely failed. Mr Hill lost all steerage and had to manhandle the boat into the cradle. The loss of steerage meant that when he turned the wheel there was no action at all on the rudder. Mr Hill said it seemed to be a hydraulic problem but that he did not find out the exact nature of the problem. He gave evidence he would not have taken the vessel out of Spot On Marine in the condition it was in when he last saw it because there was no steerage and it could not be driven. It would not have been desirable to leave the vessel anchored at Fannie Bay particularly as there was no one who could check on it on a daily basis. This is for a number of reasons, including the possibility of a leak forming on board and the boat sinking, a storm releasing the anchor, a shackle releasing or a bollard breaking off in rough conditions or thieves coming onto the boat. Mr Hill stated that the same situation would apply if the boat was anchored at Sadgroves Creek, but that in addition the boat would not be sheltered from south-easterly conditions and prevailing winds. Mr Hill was adamant the boat could not be taken from Spot On Marine until, at the very least, the steering was rectified.
Under cross examination Mr Hill agreed that a mooring at Sadgroves Creek would be desirable and that they do become available from time to time but it is necessary to book ahead. Mr Hill gave further evidence under cross examination that the marina at Tipperary Waters was much in demand and that the place occupied by the Leao was filled almost immediately after Mr and Mrs Hobby left there. His memory is that at that time of year, moorings are in high demand. He agreed under cross examination that if there were a berth available the boat could have been taken into the marina at Tipperary Waters.
When asked about the failure of the steering system of the vessel when he had taken it to Spot On Marine, Mr Hill stated there was some problem in the system but whether it was a hydraulic line inside or not he could not be sure. He observed there are an infinite amount of things that could go wrong with the boat.
Under re-examination, Mr Hill gave evidence that he would not have wanted to take the vessel into the Tipperary Waters marina and lose control of the steering because it is a confined area full of expensive fibre glass boats and that the Leao was a big steel boat. There are no facilities at Tipperary Waters for extensive repairs to a vessel. It is predominantly for storage of fibreglass boats and for living aboard. He stated that you are not allowed to work on the boat in Tipperary Waters marina, welding is not tolerated and you cannot use sanding or grinding machines.
Mr Hill confirmed the evidence given by Mrs Hobby that the purpose of taking the Leao to the Dinah Beach wharf was to lift the boat out of the water to paint the hull and do some work on the boat. Mr Hill considered this to be the sensible thing to do when they could no longer live on the boat.
I accept the evidence given by Mr Hill. In particular, I accept his evidence as to the area adjacent to the Dinah Beach wharf where the Leao fell. The fact that it was on a rocky gully covered with varying thickness of mud has significance when I consider the evidence of Mr Halstead.
I accept the evidence of Mr Hill as to the good condition of the Leao prior to the accident and the damage he subsequently saw to the vessel. I accept his evidence as to the desirability of taking the vessel to Spot On Marine and the undesirable aspects of the other suggested places to leave the vessel. I accept his evidence that something went wrong with the steering when he pulled the vessel hard to starboard in taking it on to the cradle at Spot On Marine. Mr Hill was not able to specifically identify what had gone wrong but he was certain there was no longer any control over the steering. From subsequent evidence, and my own observation, it would appear there is nothing wrong with the rudder, which is still manoeuvrable. However, from the evidence of Mr Hill, the loss of steering could have been due to other faults in the system. I accept the steering was faulty. There is no direct evidence that the fault in the steering was caused by the accident. However, it is an added reason why the vessel could not be removed from Spot On Marine.
The age of the Leao
A builder’s certificate and a registration certificate produced by the Australian Shipping Register Office are Exhibit D11. This shows that an application to register the vessel was made in September 1991. The application anticipated the construction would be complete in May 1992.
Mr Earp gave evidence that he knew of people who started construction on a boat and registered the vessel several years before launching it. The registration is not an annual fee, it is a one off payment. Builders will do this so they can place the number within the hull. The requirements for a metal vessel are that the number needs to be stamped into the hull permanently or welded onto the metal hull or transom and displayed on a continuous beam inside the vessel. The metal plate is about the size of a cigarette carton and has an O.N. or “Official Number”. Mr Earp gave evidence that most people prefer to do this while the vessel is under construction and agreed it would be unusual to do this without there having already been some construction of the boat being undertaken.

Included in Exhibit P3 is copy of a letter from the Department of Planning and Infrastructure, Government of Western Australia to Mrs Hobby. This letter is dated 2 April 2007. This letter states that the vessel was constructed structurally to Class 1B of the Universal Shipping Laws Code in 1995. It is further stated that the vessel has been operating privately since that time.
The submission made by Mr Morris, counsel for the defendant, is that the vessel was probably in construction from 1991 and completed in 1995.
Mr Earp was asked about the significance of the classification of 1B. He stated this meant the vessel had been built to a recognised standard. The impact of this, on the value of the boat, is that it is in the region of 20-30 per cent more valuable than a non-approved design. It affects the overall value of the vessel because of the commercial potential. The classification 1B is a passenger going vessel considered to be suitable for offshore operations up to 200 nautical miles from land or safe haven.
Mr Earp gave evidence that he had concluded that the vessel had been launched in 1998. If it were five years or older than that, the value would reduce by 10-20 per cent.
I accept the evidence of Mr Earp that the year of launching was 1998. However, even if this were not correct there is only three years between the Defence position as to the date construction of the boat was completed, which they maintain is 1995, and the evidence presented by the plaintiff that it was launched 1998. There would not be a significant difference in value particularly in light of the evidence as to the extensive maintenance and repair work that was carried out by Mr Hobby, with the assistance of his wife, since the boat was purchased in 2002.
Defendant’s expert evidence
The defendant presented evidence from two experts:
Mr Robert Halstead is a specialist engineer and managing/director of R.B. Halstead and Associates Pty Ltd, Marine Consultants and Surveyors. He is also a naval hull surveyor with the Royal Australian Navy. Mr Halstead prepared a report dated 23 January 2008 (Exhibit D6).
Mr Halstead did not receive correct information as to how this accident to the Leao occurred. He states on page 8 of his report under the heading “Report states that the vessel toppled over on its side and collided with the ground” that:
“It was reported by Mr. Warwick Hill that the vessel had moved away from the dockside wall during his absence from the vessel between 0900 hours and 0930 hours on 25 June 2005.
It is hard to conceive that the yacht would have landed heavily on its side at that time of day on 25 June 2005 as the morning high tide on 25 June 2005 was predicted for 0847 hours at 7.29 metres height with next low water at 1431 hours at a height of 2.39 metres. On that day, the height of water at 0930 hours, some 43 minutes after predicted high water, would have been 7.03 metres, indicating that water would still have been flooded in the dock area where “LEAO DO MAR” had been berthed.
If this was the actual case and the yacht had toppled over to the starboard side, the starboard side of the hull would have dropped onto the surface of the water and then gradually settled to lay on her starboard side hard chine as the tide receded.”
This does not accord with all the evidence presented to the Court as to how the accident occurred. The vessel fell over at a time of low tide onto a rocky gully which was covered with varying depths of mud.
Mr Halstead has detailed the damage he observed to the vessel under the heading “Pre-accident value of vessel & equipment”. On page 12 of the report Mr Halstead states:
“The yacht ‘LEAO DO MAR’ had not been inspected or known of by the undersigned prior to the alleged fall from the dockside at Dinah Beach Cruising Yacht Association on 25 June 2007 [sic].
A pre-accident valuation has been estimated from the information provided by Cridlands Lawyers and records held in this office.
The valuation has been based on the age and dimensions of the yacht, the type and arrangement of the yacht, the yacht’s internal fit out, masts and rigging as fitted and quality of metal fabrication workmanship performed during the hull construction.
It is considered that a fair and reasonable marked valuation of ‘LEAO DO MAR’ at the time immediately prior to the alleged fall from the dockside at Dinah Beach Cruising Yacht Association on 25 June 2005 would be:-
A.$190,000.00
(ONE HUNDRED AND NINETY THOUSAND AUSTRALIAN DOLLARS)”
Mr Halstead also provides an estimate of the costs of repairs to the ship as at the date of his report as follows:
electrical
Damaged electrical cable and wiring to be renewed.
Damaged panel sections to be repaired or replaced.
Damaged batteries to be renewed complete.
estimated cost of repairs for the above
Estimated cost of repairs at present day:-
Hull Plating Repairs  $   7,700.00
Storage During Repairs      1,800.00
Recoating   4,200.00
Mast & Rigging   51,300.00
Internal Fit-Out     9,400.00
Electrical   12,600.00
--------------


Total            $ 87,000.00
  --------------
Estimated cost of repairs in July 2005
Hull Plating Repairs  $   6,800.00
Storage During Repairs     1,600.00
Recoating      3,600.00
Mast & Rigging   45,000.00
Internal Fit-Out      8,200.00
Electrical   10,500.00

--------------
  Total            $ 75,700.00
--------------
A quote for the electrical work was not included in Mr Halstead’s report. Mr Halstead is not a qualified marine electrician but stated in cross examination that he inquired and received a verbal quote from someone who had just finished a similar yacht.
In his evidence to this Court, Mr Halstead agreed that when he prepared the report he had not seen the letter from the Department of Infrastructure in Western Australia dated 2 April 2007 stating that the vessel “was constructed structurally to Class 1B of the Universal Shipping Laws Code in 1995”. In his report, Mr Halstead had stated there was “no documentation available to confirm vessel is constructed to Class 1B”. In his evidence, Mr Halstead said, as he did not see the document, he did not take that fact into account. He agreed that if a vessel did not have that classification it would reduce the value of the vessel. Mr Halstead gave evidence that when he checked the rudder it was moving freely and was undamaged. He said he did not inspect the hydraulics inside. He agreed an acid spill has the potential to weaken plates and weaken welds. Mr Halstead stated that he had not made allowance for the effects of an acid spill when he made his report. He gave evidence this was because it was only two weeks before the date of his giving evidence that he found out about the acid spill. He did state in the report that batteries had been damaged and cracked. He discussed the various ways the extent of any damage from acid spill could be checked. He agreed he had not raised this matter with the defendant or their lawyers.
Mr Halstead was cross examined about the allowance he had made for repairs to internal fittings and woodwork. He said he had not made an allowance for fixing doors that no longer fit. He stated he did not consider that as being part of the “collapse fall over”. When asked about the cost of the materials, he stated he had obtained a verbal quote from a marine electrician with respect to the electrical work. Mr Halstead was cross examined about the time he allowed, being 42 days, for the vessel to be repaired, bearing in mind the different number of contractors who would need to be engaged. Mr Halstead maintained this was a reasonable time and stated “if it was a commercial job, they’d have that done in less than a week”.
The second expert called for the defence was Mr Alistair Cross. Mr Cross is a boat builder and shipwright. He inspected the Leao on 7 February 2007 and prepared a report which is Exhibit D9. In his report at page 2, Mr Cross sets out his general observations of the vessel as follows:
“The vessel was visually inspected inside and out. The overall impression of the vessel was that everything has been left while it was part way through a re-fit. Rusting steel work on the outside has been partly repaired and left to rust. Every fitting on the deck (mast and rigging excluded) needed overhauling or replacing. Externally the vessel needed sandblasting and repainting. The masts on the vessel seem to be radio tower sections. Inside the vessel maintenance and refit was required.
The engine and generator looked reasonable however neither was started. Electrical and plumbing systems needed serious attention.
The standard of fit out was tired and needed refreshing with paint and varnish. In general the vessel was in very poor order.”
Then under the heading “The pre-accident value of the vessel and equipment” Mr Cross states:
“The market value of the vessel in 2005 immediately prior to the accident would be $120,000 based on the equipment list as supplied by Stephen Earp
Hull including accessories & equip. Normally sold

with hull  $ 30,000
Motors/machinery including auxillary controls

and running gear  $ 40,000
Sails, spars and rigging  $ 45,000
Equipment and accessories e.g nav aids, tender,

solar panels etc  $ 45,000
Total  $120,000
Searches for similar vessels conducted by me at about the time of my inspection revealed
·     A similar vessel for sale at $70,000;
·     A sister ship in survey for 42 passengers with a good rig and real masts at $175,000
Details of such vessels are attached.”
N.B. In adding up the figures arrived at by Mr Cross in the above calculation, it would appear the correct total should be $160,000.
Mr Cross then sets out details of his assessment as to the cost of repairing the vessel as at March 2008 which totals $80,275.
Under cross examination Mr Cross agreed he did not know the extent of the acid spill. He stated he was not an expert on the effect of acid on steelwork and welds. Mr Cross is of the opinion that the main mast did not need to be replaced or repaired. He agreed he had not carried out any tests on the main mast. It is the evidence of Mr Cross that the plumbing systems on the vessel through lack of maintenance mean the vessel is unseaworthy. Mr Cross did not have a specific recollection of the doors in the vessel. He stated he could not state specifically what woodwork needed repairing. He had made a general assessment of what needed to be done.
The report of Mr Joseph Gordon, dated 13 October 2005, was tendered by agreement between the parties for the limited purpose of helping to explain the report from Mr Cross. On this basis the report of Mr Gordon was tendered as Exhibit D10.
Pre-accident value of the Leao
I am not able to make a finding as to the purchase price of the Leao. There is however, extensive evidence from Mrs Hobby as to the work her husband performed on the boat and the items he replaced or installed after the purchase. Mrs Hobby prepared a schedule titled “Boat Maintenance” which is Exhibit P1.
Mrs Hobby gave evidence her husband worked continually on the boat in the few months before they set sail up the coast of Western Australia. He changed all the ropes, checked and changed fittings, checked the engine and did some general maintenance on the boat. Mrs Hobby was on the boat at the time and was doing such things as buying linen and looking after the bedding. Her evidence is that she and her husband replaced the majority of the equipment on board the boat. Mrs Hobby was referred to the list of “Equipment and Accessories Sighted” in the first report of Mr Earp (Exhibit P3). She gave evidence that her husband purchased all of those items except the first item, the large compass, the four burner stainless steel stove and the fire extinguishers. Mrs Hobby gave evidence that the items in her list (Exhibit P1) were acquired after the purchase of the boat in or about May 2002. She stated during this time her husband was constantly maintaining the boat. He would work on other people’s boats and from the money he earned he would purchase items for his boat. The list is divided into segments being the places where work was done or items purchased. Where Mrs Hobby has inserted a price for labour carried out by her husband, that is based on what a person with his qualifications would charge for the work done. Mrs Hobby took notes at the time with respect to some of these items and was present when her husband carried out the work. She gave evidence she assisted with such things as cleaning the bottom of the hull.
With respect to the claim for $16,500 claimed under the heading “Dongara”, it is Mrs Hobby’s evidence that the figure was arrived at by Mr Hobby and was put down in a journal. Mrs Hobby gave details of the amount claimed under the heading “Carnarvon”. She was present when her husband measured up for the new sail and ordered it by telephone. She still has the sail. She was present when her husband organised the purchase of the stainless steel cover for the desalinator. She described the purchase and purpose of an LCD screen for the computer. Mrs Hobby gave evidence concerning the purchase and installation of a Course Master Auto Pilot.
With respect to the items under “Darwin”, Mrs Hobby stated that the life raft had actually been purchased in Perth. Similarly, the bulk of the maps had been purchased before they left Perth. Batteries for putting on solar power were purchased in Darwin. The list (Exhibit P1) was originally tendered on the basis that this was a list of items Mrs Hobby recalled were purchased, the value of those items was to be proved by other evidence.
Mrs Hobby gave evidence that after they arrived at Tipperary Waters her husband worked on the boat and also fixed things for others at the jetty, usually refrigeration and electrics. He would also help at the gate from time to time in return for a discount in his rent. Mrs Hobby gave evidence the streaking that appears on the hull in some of the photographs are rust marks running off the deck and are easily wiped off. Mrs Hobby stated when the boat was purchased, the deck was covered with caulk and there was timber trimmings around various parts of the vessel including around the cabin windows, the door of the hatch and sides of the cabin. This was all being removed to prevent moisture collecting between the wood and the steel causing rust. They had started painting the undercoat and throwing grit on part of the walkway areas to prevent slipping.
Photo 1 in Exhibit P2 is a photograph of the Leao at Dongara before it was painted. Photo 2 is of the vessel after it was painted at Dongara. Photo 3 is also a photo of the vessel reversing at Dongara after it had been painted.
Following a further objection by Mr Morris, counsel for the defendant, to the tender of Exhibit P1, Mr Young, counsel for the plaintiff then proceeded to take Mrs Hobby through the list of items under the heading “Boat Maintenance” in more detail.
Mr Hobby worked substantially on maintaining the vessel. This must be taken into account in assessing the value of the boat.
The evidence that I accept, supporting purchases made, is that Mr Hobby started work on improvements and purchasing items for the boat from the first day he purchased the vessel.
Perth
Purchase 100 metres of 12MMR Braid rope

(Mrs Hobby saw the receipt)   247.00
Freshwater filter urn   360.00
LCD Flutron flat screen

(Mrs Hobby remembers this being purchased)   600.00
15 inch LCD screen with high frequency LG

(Mrs Hobby saw the receipt)   1200.00
Portholes x 6

(Mrs Hobby obtained the receipt)   2000.00
Satellite phone

(Mrs Hobby was present when this was purchased)                  1000.00
Bolson Chair

(Mrs Hobby’s own memory)   160.00
Inverter Voyager Ultra Pine Sinewave Solar Enger Aust.

(Mrs Hobby’s own knowledge, she was there at time

of the purchase)   2466.00
Windgenerator Air x 400 watt turbine

serial 63820   800.00
Maps

(Mrs Hobby was present at the purchase)   1000.00
Work performed by Mr Hobby on the auto pilot   900.00
Rheem hot water system

(Mrs Hobby’s own knowledge)   500.00
Dongara
Radar Furler 46nm with manual

(Mrs Hobby was present at the time of purchase)                    4000.00
Dinghy   800.00
(own knowledge) Labour performed by Mr Hobby

for plumbing and installing emaciating marine toilets             1600.00
Carnarvon
Sail (Mrs Hobby was present at the purchase)   700.00
Forward Sounder

(Mrs Hobby made this purchase)   3100.00
Desalination cover

(Mrs Hobby was present at the purchase)   360.00
LCD Screen 17 inch Bene Q

(Mrs Hobby was present at the purchase)   750.00
Waeco Fridge

(Mrs Hobby was present during negotiations to purchase)       1800.00
Dampier
New Course Master Auto Pilot

(Mrs Hobby’s own knowledge)   2000.00
Sensor to replace the Roberts

(Mrs Hobby made the purchase)   550.00
Darwin
Life raft

(Mrs Hobby purchased)   2500.00
Life jackets
(Mrs Hobby purchased)   510.00

Maps

(Purchased by Mrs Hobby)   1000.00


__________
Total             $30,903.00
__________
The tender of Exhibit P1 was on the basis that it was limited to those items of which Mrs Hobby had knowledge as distinct from hearsay evidence. I have listed those items above. The ones that have been omitted from that list are those items where Mrs Hobby was relying upon hearsay evidence and such evidence was not admissible.
Under cross examination Mrs Hobby gave evidence that from the time they purchased the boat until the time they left Perth in October 2002, Mr Hobby worked on the boat carrying out general maintenance and overhauling the vessel. He painted the boat before they left Perth and also whilst they were staying at Dongara. The reason the boat was taken to the Dinah Beach Cruising Yacht Club was so that it be lifted out of the water so it could be painted. Painting was done a little under every two years.
Mrs Hobby gave evidence that a lot of items were removed from the boat immediately following the accident at the Dinah Beach wharf. Mrs Hobby agreed Mr Earp saw a lot of these items at her premises when he came up to inspect the boat. He did not test these items. She has not tried to sell any of these items.
Assessing the evidence of each of the experts, I prefer the evidence given by Mr Earp. Mr Earp is a qualified marine surveyor and registered boat builder. He has extensive experience as a valuer of commercial and recreational vessels. At the time of preparing his statement he was valuing about three boats a week. He conducted a very detailed and careful assessment of the damaged sustained by the Leao in the accident of 25 June 2005.
I accept his valuation of the Leao prior to the accident as being $305,000.
I prefer his assessment as to the cost of effecting repairs to the Leao which amounts to, on my calculations, $205,600.
With respect to the pre-accident value of the yacht I make the following findings:
There is no clear evidence as to the exact purchase price paid by Mr Hobby for the yacht. I accept the evidence of Mrs Hobby that after the purchase of the yacht, James Hobby, who was a skilled tradesman, carried out a considerable amount of maintenance and improvements to the yacht. He was assisted in this by his wife Ann Hobby and their son Lawrence Hobby. I do not accept the submission made by Mr Morris, on behalf of the defendant, that the yacht was damaged when it ran aground in 2005. There is no evidence of such damage. I accept the evidence of Mrs Hobby that the yacht went aground on the sand bars in Shark Bay. These sand bars move and are not accurately mapped. The yacht was pulled off the sand bar without problem. This does not support a finding that the yacht was damaged at that time. Mrs Hobby was cross examined about two incidents involving the Leao that Mr Hobby referred to in the journal (Exhibit D8). I have already stated that I accept the evidence of Mrs Hobby that there was no damage caused to the Leao on either of these occasions. The evidence is that the purpose of taking the yacht to Dinah Beach wharf was to organise for it to be dry docked and the hull painted. This was the normal regular painting of the hull that was required to be done approximately every two years together with some maintenance.

I do not accept the evidence of Mr Ighaniyan that the hull was twisted. His observation is not supported by the other expert evidence. Mr Ighaniyan made an assumption that the paint work on the hull was in perfect condition at the time of the accident. The photographs taken on 25 June 2005, shortly after the accident, show brown streaking on the hull and do not support such an assumption. I accept Mrs Hobby’s evidence that the brown streaks on the hull are rust marks and that they wipe off “very easily”. Mr Ighaniyan conceded that the flaking and lifting of paint on both the sides of the yacht and the keel, was consistent with weathering. Mr Ighaniyan did not take any detailed measurements of the hull to support his theory that the hull was twisted in the accident. He did make one measurement from which he concluded there was a difference in the alignment of the rudder shaft and that this inturn indicated there had been forces transferred through the hull at the time of the accident which resulted in the rudder being bent. None of the other experts considered the rudder to be bent. The observations made of the rudder, when a view of the yacht was conducted during the course of the trial, did not support Mr Ighaniyan’s statement concerning the rudder.
I accept the statement made by Mr Earp that the appropriate method to be used in determining whether the hull was twisted or warped was to engage a plumb bob and go to each quarter of the vessel, use a dumpy level and take significant readings around the hull at particular points. This was not done. There is no objective evidence to base a finding that the hull was twisted in the accident. However, it is significant that Mr Earp was of the opinion that the possibility of hull deformation cannot be excluded. He said he could not warrant the hull was sound. The cost of further investigation of the hull would be a further $35,000. He referred to the detrimental affect the situation with the hull could have on a future sale.
In addition to the specific items of damage found by Mr Earp to be in need of repair, and the problem with the hull, there are other matters which would need to be taken into account in deciding whether the vessel could be repaired for less than the pre-accident value.
Mr Earp has given evidence concerning the effect of the acid spill. He stated that it could affect 30-40 per cent of the hull area but he cannot be sure without testing the steel and the structural weld. It could be an area of four to five metres by the beam of the vessel. From his visual inspection, Mr Earp noted that the paint had lifted inside the area and the compartment still had a slight odour of battery acid. This was as at the date of his inspection which was almost two years after the accident. Mr Earp described how that acid spill should have been dealt with. This was by hosing the entire area and treating with alkaline which would need to be done on a hard stand, unless there was chemical pumping equipment available to pump it out of the vessel. The area would need to be ventilated and would have to be done quickly so that the acid does not have a chance to eat into the metal affected. The evidence of Mrs Hobby is that on the day of the accident, she tried to wash the area where the acid had spilled by carrying buckets of water over the starboard side as the vessel lay on its side on the seabed. This was a futile exercise because so much water spilled from the buckets before she could reach the affected area. After the ship was righted, Mrs Hobby spent some time hosing down the area with the fire extinguisher and washing it down with a substance someone had given her. She did not have access to the facilities Mr Earp stated would be required to properly deal with the acid spill. Her attempts to remove the acid were not adequate as evidenced by the fact there was still a slight odour of battery acid when Mr Earp inspected the vessel two years later. When the vessel arrived at Spot On Marine, Mrs Hobby was anticipating that Mr Onn, at Spot On Marine, would assess the vessel for repairs. This did not occur and the vessel has sat at Spot On Marine for approximately two years and nine months. It is not possible to put an exact figure on the cost of repairing the damage from the acid spill. However, I am satisfied on the balance of probabilities this would be an additional cost over and above that which has already been assessed.
There are other problem areas which may increase the cost of repairing the Leao. Mr Earp made reference to the fact the vessel had been left unattended following the incident and is in a “poor state of repair now”. Mr Earp stated that he believed a lot of the timber work had been affected by subsequent condensation, linings were lifting and doors could not be properly closed. He stated there is corrosion in the door fittings and hinges. These observations, as to the general dilapidated state of the woodwork on doors and panels, accord with what was apparent when the Court went on a view of the vessel.
A further unknown factor is the effect of the seawater entering the vessel as the tide rose following the accident. Mr Earp gave evidence that he would not personally go to sea knowing that the vessel had been swamped, the fuel tanks had possibly been contaminated and there had been an ingress of water through the air filter or into the sump. There is the evidence of Mrs Hobby as to the extent the seawater entered the vessel as the tide rose, including entering the cabin at the aft of the vessel. I consider that on the balance of probabilities the effects of seawater flooding the vessel could result in additional cost to repair over and above that allowed for by the experts.
There is an issue between the parties as to whether the generator needed to be replaced. The position taken for the defendant is that there is not sufficient evidence that the generator was actually damaged in the accident, to justify a finding that it needs either replacement or repair. The plaintiff relies on the report from the marine electrician Mr Sheil. Mr Sheil stated he believed the generator on the vessel needed repair and showed signs of water damage. He said it was not safe to put to sea with a suspect generator. I accept the evidence of Mr Sheil. It may not be possible to put an exact figure on the cost of repairing the generator as there have been no tests conducted on it. In his statement Mr Sheil says “A new generator is required”. Under cross examination Mr Sheil gave evidence the reasons the generator needed to be replaced was because it had leaked oil, other items in the engine room had fallen against it and there looked to be water damage. He gave evidence replacement was cheaper than trying to rebuild it. I accept the evidence of Mr Sheil.
Mr Halstead put the pre-accident value of the yacht at $190,000. Mr Halstead also carried out a careful examination of the vessel. However, there were significant matters of which he had not been made aware when he compiled his report. This was the way in which the accident occurred as described by Mrs Hobby. Mrs Hobby gave evidence about there being a sudden jolt and a bit of a bounce. She says the boat fell very suddenly and hit hard. This evidence needs to be considered with the evidence of Mr Hill who is very familiar with the area adjacent to the wharf and describes it as a rocky gully. The Leao did not sink gently onto the seabed on the falling tide as Mr Halstead assumed.
It was not till after he concluded his report that Mr Halstead was made aware that the vessel was constructed structurally to Class 1B of the Universal Shipping Laws Code 1995. Mr Halstead agreed in cross examination he did not take this into account when he arrived at a valuation. Mr Earp gave evidence that the fact the Leao was built to a recognised design and an approved standard improves the value of the hull. I accept the evidence of Mr Earp on this point.
Mr Halstead was not made aware of the extent of the acid spill when the batteries toppled over in the accident. Mr Halstead makes a brief reference to the acid spill on page 11 of his report under the heading “Equipment”. Mr Halstead says:
“It was reported that thirteen lead acid batteries had sustained damages by having their casings cracked, connecting terminals broken off and loss of electrolyte. Paint coatings were reported to have been effected due to the electrolyte from the batteries and spillage onto the paintwork.”
On the evidence I have found that the acid spill was extensive, that it was not completely attended to immediately after the accident for reasons beyond the plaintiff’s control and the acid was still present two years later when Mr Earp inspected the vessel.
I am satisfied on the balance of probabilities the acid has done considerable damage, the existence of which was not recognised by either Mr Halstead or Mr Cross.
I accept the evidence of Mr Earp as to the damage the acid would have caused to the vessel which was more extensive than Mr Halstead or Mr Cross have allowed for. Mr Halstead agreed in cross examination that battery acid, if it is loose inside a steel hull, has the potential to cause damage. He agreed this damage can be potentially very serious. It can weaken plates and weaken welds. When asked why he had not made allowance for the repairs needed following an acid spill in his report, Mr Halstead replied that he had only found out about the acid spill a couple of weeks before giving evidence. He agreed that to be sure about the extent of the damage it would involve further inspection and testing. He agreed he had not had the opportunity of suggesting to those who had retained his services the further investigation that could be carried out to ascertain the damage from acid spill.
Mr Halstead is a marine surveyor and engineer of long experience. His curriculum vitae does not make reference to any work he may have done as a valuer. The evidence is that Mr Earp has done extensive work as a valuer in addition to his other qualifications. For the purpose of assessing the value of the Leao, Mr Earp’s qualifications would appear to be more relevant.
Similarly, Mr Cross is very experienced in his field as a shipwright/boat builder. The major projects he has undertaken since 1998 indicate extensive experience in salvaging, refitting and repairing yachts. Whilst I accept he is very skilled in these areas, he does not refer to any experience in carrying out valuation of ships which is the more relevant experience of Mr Earp. Mr Cross in his report, puts a pre-accident value on the Leao at $120,000 [this should read $160,000 – see paragraph [77] of these reasons]. Part of the material he relied upon was the advertisement for the sale of John Pugh Charter Ketch which had been reduced to $170,000. That cannot be regarded as a comparable sale for the reasons expressed by Mr Earp.
The evidence presented by Mr Earp on this issue is his comment on the report made by Mr Alistair Cross following the inspection of the Leao by Mr Cross on 7 February 2007. Mr Cross arrived at a pre-accident value of the vessel as $160,000. Mr Cross referred to a comparative vessel being a sister vessel named the John Pugh Charter Ketch, which he says in his report (Exhibit D9) sold at about the time of his inspection of the Leao for $175,000. The details of this vessel are attached to the report prepared by Mr Cross which shows it was advertised for sale at $170,000. Mr Earp gave evidence this did not change his mind as to the value he had placed on the Leao. This was because of the year the John Pugh Charter Ketch was launched, which was 1979. This is about 20 years prior to the date of the launch of the Leao and would reduce the value.
In addition to this, Mr Earp placed emphasis on the fact that the John Pugh Charter Ketch is built to Class E and Class D classification “for smooth and partially smooth waters” whereas the Leao was constructed to USL Class 1B which would enable it to be taken up to 200 km offshore and increases the commercial value of the Leao.
I accept these are good reasons to value the Leao considerably higher than the sale price of the John Pugh Charter Ketch referred to by Mr Cross.
I note also that the advertisement for the John Pugh Charter Ketch contains the following words, “owner has reduced price and has other commitments and is ready to sell urgently”. This would indicate there may be other reasons why the price was set at $170,000.
Mr Cross was not aware of the extent of the acid spill from the batteries, or the effect this could have on the hull. It is the evidence of Mr Cross that the main mast was not damaged and was not in need of repair. This conclusion is not supported by the evidence of Mr Halstead who assessed the cost of repair to the mast and rigging as at the present time as amounting to $51,300. Mr Earp concluded the main mast needed to be replaced because there was a bend in it and it was not practicable to repair it. Mr Sheil supports this in his own report which refers to the masts wiring replacement and stated “cabling running from masts to cabin needed to be replaced over its whole length”. I prefer the evidence of Mr Earp, Mr Halstead and Mr Sheil with respect to the damage to the main mast.
I find that the pre accident value of the Leao was $305,000.
The decision I am now required to make is whether the vessel should be regarded as a write off and Mrs Hobby award the $305,000 or whether the vessel is capable of being repaired.
From the $305,000 would have to be deducted the salvage value of the vessel which is $20,000 and the value of the equipment salvaged from the Leao, and in the possession of Mrs Hobby, which Mr Earp has assessed at $18,500. This leaves a balance of $266,500.
I have accepted the most reliable cost of repair is that proposed by Mr Earp being, on my calculations, $205,600. However, to this I must add an amount to cover the cost of certain unknown factors. These have been referred to under the heading “Pre-accident value of the Leao” which I summarise as follows:
(1)The added cost of a further investigation of the hull which Mr Earp could not warrant was sound - $35,000.
(2)The full extent of damage from the acid spill which cannot be quantified until further investigation is carried out but could be serious and I have found on the balance of probabilities, is more extensive than allowed for by any of the experts.
(3)The length of time the vessel has been left unattended and its continuing deterioration, in particular, the woodwork which apart from a table was in a very poor condition and affected by condensation. Neither Mr Halstead nor Mr Cross appear to have given any detailed attention to the deteriorating state of the woodwork. Mr Cross said he made a general assessment. I agree with the submission made by Mr Young, counsel for the defendant, that the amount they each allowed for repair to the woodwork is clearly inadequate.
(4)The effect of seawater entering the vessel on the rising tide following the accident which was extensive.
I am satisfied that the damage I have found was caused to the Leao on 25 June 2005 was a reasonably foreseeable result of the accident at the wharf of the Dinah Beach Cruising Yacht Club. Accordingly, the defendant is liable for such damage (The Wagon Mound No. 1 [1961] AC 388).
I am further satisfied on the balance of probabilities that the cost of repairing the damage would exceed the write off value of $266,500.
Storage fees
The purpose of bringing the Leao to the wharf at the Dinah Beach Cruising Yacht Club was because it was to be dry docked, the hull painted and maintenance work to be carried out. Following the accident the vessel was righted and then motored to Fannie Bay where it was anchored for three weeks. Mr & Mrs Hobby had been asked by the defendant to remove the yacht from the wharf at the Dinah Beach Cruising Yacht Club. It was then taken to Spot On Marine and placed on a hard stand. It has remained there since then. At that time it was not realistic to take the boat anywhere else. From the evidence of Mr Hill the berth at Tipperary Waters would have been filled soon after Mr and Mrs Hobby vacated it. This was substantially confirmed by the evidence of Mr Dermody who is the Lock Master of Tipperary Waters Marina. There are no facilities at Tipperary Waters to carry out repairs. In fact, the use of machinery at the marina is not allowed. I accept the evidence that it would not be safe to anchor or moor the boat at Fannie Bay or Sadgroves Creek with no one living aboard. At that time Mrs Hobby was a full time carer for her husband and subsequently did not have the skills or resources necessary to maintain the vessel at a mooring.
The accident to the Leao occurred on 25 June 2005. The Leao has been on a hardstand at Spot On Marine since three weeks after that date. The defendant admitted liability for the accident a few days prior to the commencement of the trial in March 2008. No reason has been put forward as to why the admission of liability was not made at a much earlier date. I do not accept the submission made by Mr Morris that this would not have affected the length of time in bringing the matter to resolution. Until a few days prior to the trial the plaintiff was required to prepare her case on the basis that the onus was upon her to prove the liability of the defendant on the claim issued on 30 March 2007. A Notice of Appearance was filed on behalf of the defendant on 11 April 2007. Mr Halstead attended to inspect the vessel on 26 November 2007 and then on 21-22 January 2008. Mr Cross inspected the vessel on 7 February 2007. Mrs Hobby has been in an invidious position. She was required to move the yacht from the wharf at the Dinah Beach Cruising Yacht Club. There was no realistic alternative to leaving the boat at Spot On Marine. Mrs Hobby has not been able to sell the vessel and had nowhere else to take it. She did not have the resources to organise repair of the vessel and was unable to find anyone who could do the job. There is no evidence that finding anyone to repair the ship would be easier in the future. Meanwhile storage fees at Spot On Marine have been mounting up.
Mr Piper is the solicitor for the plaintiff. He gave evidence about there being correspondence between Mrs Hobby and the defendant in July 2005. On 15 August 2006, he formally advised the defendant of the claim against them by his client. The insurance company for the defendant replied in September 2006. By letter dated 31 January 2007, Mr Piper raised the issue of the ongoing storage expenses of the vessel. He invited the insurers for the defendant to look into entering an arrangement with Spot On Marine to enable the vessel to be kept in storage pending the outcome of legal proceedings. Mr Piper had advised of the financial difficulty Mrs Hobby faced in keeping the vessel stored and indicated he was concerned the insurance company have an opportunity to inspect the Leao.
The insurance company replied on 6 February 2007 stating they wanted to have the vessel assessed prior to sale and were not prepared to enter into an agreement to assist with storage fees at Spot On Marine pending the outcome of the case. The vessel was assessed. Mr Piper wrote again on 15 February 2007 about the expert advice he had that the hull was warped and whether their assessor agreed with this as that was relevant to whether the vessel should be kept. On 21 February 2007 he received a telephone call from the claims officer saying the insurers were arranging for a boat builder to inspect the boat. On 7 March 2007, Mr Piper received a letter indicating the claim would be defended.
The next relevant correspondence was from solicitors for the defendant dated 26 September 2007 noting they were anticipating instructions to arrange a further inspection of the Leao. Mr Piper replied on 2 October 2007 noting the defendant wanted to make a further inspection of the vessel for the purpose of litigation and asking them to accept liability for ongoing storage fees.

On 21 November 2007, Mr Piper received an e-mail from solicitors for the defendant advising that their expert, Mr Ron Halstead, would be inspecting the vessel on 26 November 2007. This inspection did not proceed because the vessel was locked. There is other evidence that Mr Halstead carried out his inspection on 21-22 January 2008.
Under cross examination Mr Piper referred to the predicament that Mrs Hobby found herself in. She could not afford the ongoing storage fees, she wanted to sell the vessel but felt she could not because she knew it could be relevant to the legal proceedings.
The defendant, or certainly their insurers, have been well aware at least since January 2007 that the vessel was at Spot On Marine incurring storage fees. Mrs Hobby has been in an invidious position. There was no practical alternative for storage of the vessel. She has not been able to pay the storage fees or to sell the vessel. I consider the plaintiff is entitled to recover the storage fees at Spot On Marine for which she has become liable, up to date of the trial, being an amount of $28,946.43 and continuing at $46.20 per day up to 31 May 2008 or such earlier date as the vessel is removed from Spot On Marine.
I am satisfied on all the evidence that Mrs Hobby was placed in a difficult situation by reason of the breach of duty owed to her by the defendant. I am satisfied that she acted reasonably in the circumstances. There is no evidence that she had a viable alternative to leaving the vessel at Spot On Marine. Even if the defendant could show the cost of some other placement was less, this does not disentitle her to the recovery of storage fees at Spot On Marine (Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452 at 506).
Summary of Orders:
Write off value of the Leao  $ 266,500.00
Interest (the rate was agreed between the parties)

as from 25 June 2005 @ 5.64% x 266,500 x 2.8        $   42,085.68
Value of personal items lost as agreed between

the parties  $   13,000.00
Storage fees up to 3 March 2008  $   28,946.43
___________
Total  $ 350,532.11
___________
Storage fees at $46.20 per day from 3 March 2008 up to 31 May 2008 or such earlier date as the Leao is removed from Spot On Marine.
The parties are at liberty to apply on the question of costs if agreement cannot be reached.

______________________________