| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : HOLST -v- SLIGHT & ORS [2005] WADC 115 CORAM : O'BRIEN DCJ HEARD : 2527 AUGUST 2004 & 1718 FEBRUARY 2005 DELIVERED : 16 JUNE 2005 FILE NO/S : CIV 3334 of 2000 BETWEEN : ALLAN JOHN HOLST Plaintiff
AND
WILLIAM ROBERT SLIGHT
PATRICIA JUNE SLIGHT
First Defendants
REGINALD GEOFFREY BISHOP
Second Defendant
Catchwords: Negligence - Misleading conduct - Breach of implied term of contract - Turns on own facts
Legislation: Nil
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Result:
Plaintiff's claim dismissed Representation:
Counsel:
Plaintiff : Mr D K Barker
First Defendants : Mr I A Morison
Second Defendant : Mr I A Morison
Solicitors:
Plaintiff : Chalmers & Partners
First Defendants : Williams & Co
Second Defendant : Williams & Co
Case(s) referred to in judgment(s):
Nil
Case(s) also cited:
Bateman v Slatyer (1987) 71 ALR 553
Benlist Pty Ltd v Olivetti Aust Pty Ltd (1990) ATPR 41043
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266
Bryan v Maloney (1995) 182 CLR 609
Haynes v Hirst (1927) 27 SR (NSW) 480
Henville v Walker (2001) ATPR 41841
James v ANZ Banking Group Ltd (1986) 64 ALR 347
Jones v Dunkel (1959) 101 CLR 298
March v E & M H Stramare Pty Ltd (1991) 171 CLR 506
Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370
Reg Glass Pty Ltd v Rivers Locking Systems Pty Ltd (1968) 120 CLR 516
Poseidon Ltd & Sellars v Adelaide Petroleum NL (1994) 179 CLR 332
Walker v Wilsher (1889) 23 QBD 335
Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514
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Introduction 1 On 9 February 2002, the plaintiff, Allan John Holst, bought a Bertram 28 fly bridge cruiser ("the boat") from Alan Michael. He had not owned such a boat before. The purchase price was $85,000. On 10 January 2002, he had made an offer to buy it subject to an inspection, as he wanted the boat to be trouble free. 2 William Robert Slight and Patricia June Slight, the first defendants, were at all material times the proprietors of a boat motor/trailer inspection business called Boatcheck. 3 On 17 January 2002, Mr Slight inspected the boat at Mr Holst's request. He faxed a report to Mr Holst on 28 January 2002 ("the first Boatcheck report"). This report only related to an inspection of the hull. Mr Slight told Mr Holst that he would need an engine inspection, and he engaged the second defendant, Reginald Geoffrey Bishop, to conduct the engine inspection. 4 Mr Bishop was the proprietor of a mechanical electrical, electronic and hull maintenance business called Action Marine Services WA. Mr Bishop conducted an inspection of the boat on 9 February and reported his findings to Mr Holst ("the Bishop report"). 5 In their respective defences, the defendants admit that Mr Bishop was the agent of the Slights when he conducted the inspection. 6 Also on 9 February 2002, Mr Slight provided another written report to Mr Holst ("the second Boatcheck report"). This incorporated Mr Bishop's findings but otherwise was identical to the first Boatcheck report. 7 On or about 28 February 2002, Mr Holst took the boat on a slow run from the South Perth Yacht Club to Hilarys Marina. He then stored the boat in its pen for a number of weeks before undertaking a boat-handling course. This took place in the marina over a period of about two hours. 8 On 27 March 2002, the Wednesday before Easter in 2002, Mr Holst had planned to take his daughter fishing. It was during his pre-sailing inspection that he noticed that the fresh water header tank was empty. On further inspection, he found a crack in the intercooler housing. He did not run the engine on 27 March 2002. Under cross-examination the plaintiff testified that on Easter Sunday (31 March 2002) he and a friend,
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Mr Wilson, changed the fresh water pump and refilled it. He then turned the motor on and ran it for about 20 seconds. He turned off the engine in accordance with the directions in the "manual". He then changed the oil pressure gauge from one motor to the other, turned the engine on again and "had the same result". 9 Craig Arnold, a marine technician, repaired the engine sometime in September 2002. The repairs cost $16,235.43. 10 The two Boatcheck reports and the Bishop report disclosed no mechanical or engine problems. 11 This summary of the relevant events is not in dispute.
The plaintiff's claim 12 The plaintiff's claim against the defendants has three limbs. They are: • Misleading conduct pursuant to s 9 of the Fair Trading Act (FTA) which induced Mr Holst to buy the boat; and/or • Negligence in that the defendants were under a duty to take care in making reports and breached the duty by failure to adequately inspect the boat's motors, and failure to adequately represent the condition of the boat as requested by Mr Holst; • Breach of an implied term of the contract between Mr Holst and the first defendants. That term was either implied in law, or alternatively, to give business efficacy to the agreement that the first defendants would exercise all reasonable care, skill, diligence and competence in carrying out the inspections and providing reports, that the reports would be correct and would not contain inaccuracies. The breach of the implied term is said to be the inaccurate and misleading reports on the condition of the boat's motor. 13 The plaintiff's case is that there was corrosion in the intercooler because for some unknown reason the O-rings 'failed', allowing water to enter the intercooler. The process of corrosion was progressive. The crack in the intercooler was caused by stress. This could have been brought about by progressive tension or by over-tightening the bolts. The relevance of the crack is that, if seen, it would have alerted Mr Bishop to a serious problem within the intercooler which he then should have reported to Mr Holst. As I understand the plaintiff's case, there was corrosion in the side of the intercooler, associated with
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corrosion in the turbo charger and starter motor. On visual inspection this may not have been noticed. However, the plaintiff claims that the crack and associated oozing of corrosive material, was visible at the time of inspection, and would have alerted Mr Bishop to a serious problem within the intercooler. 14 The plaintiff does not seek to establish the cause of the corrosion other than to claim that within the intercooler housing, it was caused by the failure of the O-rings. The cause of that failure is unknown and unexplained. 15 The plaintiff pleaded that the Slight's failed to inform the plaintiff that: 16 It is clear that unless the plaintiff can prove on the balance of probabilities that the crack was present and visible on 9 February 2002, the plaintiff's case must fail. 17 As there is no direct evidence as to the existence of the crack on 9 February 2002, the plaintiff relies on expert evidence relating to the process of corrosion and, in effect, asks the Court to draw the inference that the existence and visibility of the crack on 9 February 2002 is more probable than not. 18 The defendants' case is that the crack was not present at the time of inspection. They concede that if the crack and associated hole were present, then the second defendant was negligent in failing to observe them. However, the defendants submit that "these defects" did not cause the engine damage and that other explanations for the damage are "at least as likely".
Issues of fact to be determined 1. Whether there was at the time of the inspection on 9 February 2002 a crack on the top of the intercooler housing on the port engine which was associated with significant corrosion on the intercooler housing.
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The intercooler 19 The intercooler operates to cool down the "charge air" from the turbo-charger before it enters the engine. This allows the engine to produce more horsepower and to obtain complete combustion. The salt water is pumped through the "entry port", travels down one side of a tube stack, turns around and travels along side the other side of the tube stack and exits through the "exit port". 20 At each end of the intercooler is an "end cap" made of bronze. These are bolted on to the intercooler housing. There is a brass plate ("end plate") between the end cap and the tube stack. On either side of the end plate is an O-ring made of rubber neoprene. The O-rings operate as a seal to stop water entering the area where the air is. 21 The air exits the intercooler through six ports. 22 The damaged end of the intercooler is the end where the water turns to travel to the exit port. 23 I attached a diagram of the intercooler (exhibit 16). I have labelled various parts in accordance with the evidence. 24 The intercooler housing tendered in evidence had been cleaned some time after Mr Arnold dismantled the engine. No corrosive material is visible. There is a large "hole" on the underside of the intercooler. It is conceded that this would not have been visible on inspection. Adjacent to the crack is a hole referred to as the "side" hole. 25 Reference was made in the evidence to "blistering" of paint around the crack. On my close inspection of the intercooler, I noticed some very minor "bubbling" of the paint surface. This would remain unnoticed, in my view, unless one's attention was drawn to it. The photographs of the intercooler taken in early April 2002 (exhibits 3.1, 3.3 and 3.4), including those of the intercooler before it was removed from the engine, do not show any blistering or bubbling of paint as far as I can make out. 26 There is no evidence as to the storage, maintenance or continuity of the intercooler housing (exhibit 6).
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The inspections
27 Mr Slight inspected the boat on 17 January 2002 at the South Perth Yacht Club. Mr Holst testified that Mr Slight agreed to inspect the boat but was not able to inspect the motors as the boat was out of the water. He said that there were no terms discussed and nothing was put in writing at that stage. However, he did receive an oral report concerning the hull from Mr Slight after the inspection. 28 Mr Holst testified that he wanted a sea trial and a report on the condition of the motors. 29 On 28 January 2002, Mr Slight faxed the first Boatcheck report to Mr Holst which Mr Holst said he received on 29 January 2002 (Exhibit 10.1). 30 It was made clear to Mr Holst that Mr Slight was not in a position to inspect the motors. Mr Slight recommended to Mr Holst that he contact Mr Bishop to do so, and that is what Mr Holst did. 31 On 9 February 2002, in the company of Mr Michael and Mr Holst, Mr Bishop conducted what is referred to as a "sea trial" of the boat. 32 Mr Holst testified that he knew he would not get "the internal of the motor stripped down …". Prior to the sea trial, the boat was in the pen at the South Perth Yacht Club for about 20 or 30 minutes while the engine covers were off. Mr Bishop was inspecting the boat during this time. Mr Holst said that he had a clear view of both engines but he did not see any crack in the intercooler. 33 The sea trial took about 45 minutes to one hour. The whole inspection took about one and a half to two hours. 34 During the sea trial Mr Holst said he was standing at the stern of the boat, probably for about 15 or 20 minutes. The covers for the motors were off and he said that Mr Bishop was moving around. He said at one stage Mr Bishop was in between the motors and was moving around them. 35 Mr Holst said that Mr Bishop at one stage was lying on his stomach and undoing the top of the dip-stick in one of the gearboxes. He believed it was more than a visual inspection.
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36 Mr Holst testified that he left the stern of the boat and went up to the fly bridge with Mr Michael. After a short while he had a drive of the boat. He said he was overawed by the occasion, and was driving it quite slowly.
37 After the sea trial was over, the boat was put back in its pen at the South Perth Yacht Club. Mr Holst testified that he then asked Mr Bishop to come along the jetty with him, and they walked away from Mr Michael. He said he asked Mr Bishop what his "feelings" were on the boat and whether there were any problems. He said that Mr Bishop said that there had been a water leak at some time in the header tank, which appeared to have been fixed. Further, there appeared to be a small oil leak on the lift pump. Other than that, he said that Mr Bishop told him "the motors and the boat had been treated like a spoilt child". 38 In cross-examination, Mr Holst said that these words stuck with him. He interpreted them to mean that the boat had been looked after and everything that it needed was done. He relied on what Mr Bishop told him and believed that his inspection was sufficient to identify if anything was wrong with the work. 39 Mr Holst said that he again spoke to Mr Michael and asked him if he would be prepared to pay for the repair to the oil leak on the lift. Mr Michael bluntly said that he would not. The contract of sale was signed shortly thereafter. 40 A second Boatcheck report was compiled but received by Mr Holst after the contract had been executed. 41 Mr Bishop is a marine mechanic. He qualified 20 years ago and has been servicing and repairing marine engines since then. 42 Mr Bishop testified that on arrival at the South Perth Yacht Club the first thing "he did" was lift up all the engine covers, "got between the engines and checked the oil, coolants and for any visible damage". He said that he was between the engines for 15 or 20 minutes. 43 It was during this time that he found an oil leak on a lift pump and some water stains at the front of the engines. Thereafter the boat was run on the river at half throttle. 44 During this time he got down between the engines again. He then ran the boat "flat out" to check for any overheating. When the boat was returned to the pen, he again inspected the engine. He denied that when
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he spoke to Mr Holst after the sea trial that he used the "spoilt child" expression. However, in my view, nothing turns on this. 45 Mr Bishop did not see the crack. His evidence was unchallenged in cross-examination. The nature and quality of his inspection was also unchallenged.
Mr Holst's experience 46 Mr Holst testified that he had never owned such a boat before. When he saw the crack he said he was "bewildered". 47 In 2000, he had completed several subjects towards the Master Class 5/Skipper Grade 111 through the Swan Marine Institute (Inc). Those subjects included "ship knowledge" and "nautical knowledge". Counsel for the defendants tendered documentation of this after Mr Holst had completed his evidence and therefore he was not cross-examined on it. 48 Mr Holst said that he had complete trust in Mr Bishop as he was the "only person I knew that had expertise in this area. I was absolutely, totally dependent on him for help." 49 On balance, I find that Mr Holst had some knowledge of boats at the relevant time but no specific knowledge about the type of boat in question. In particular, he had little, if any, knowledge about diesel engines. That is why he wanted the reports before committing himself to the purchase of the boat.
Reliance on the reports 50 Mr Holst testified that he only scanned the first Boatcheck report. He was looking for [relevant] information. He did not read any "terms", warnings or disclaimers which appear in the report. Mr Holst seemed to be suggesting in cross-examination that he had already received the oral report, he wanted a written report, but he was basically relying on what he had been told orally. 51 Mr Holst said he did not organise an inspection which went beyond Mr Bishop's because of the advice he received from Mr Bishop which he believed was sufficient to tell him if there was anything wrong with the motor. 52 He agreed that Mr Bishop had told him that there was oil on a lift, and did not ask for, nor was given, an explanation of what that meant.
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He did not even know at that stage what a lift was, and simply "recited parrot fashion to Mr Michael" and asked if he would pay for it to be repaired. 53 In cross-examination, Mr Holst said that he had been told there was a crack at the top of the intercooler, and he would have asked Mr Bishop the implications of that. 54 In my view the evidence establishes that in making his final decision to buy the boat, Mr Holst relied on the substance of the second Boatcheck report in combination with his discussions with Mr Bishop.
Visibility of crack: direct evidence 55 Mr Holst testified that he did not see the crack until 27 March 2002. He only noticed the crack when he saw that the fresh water header tank was empty. He also saw what he described as "grey oozy gunk" in the area where it is now possible to see holes in the intercooler. 56 In cross-examination, he said he checked with his finger and this material felt like salt crystals. He said he was unable to put a hole through the casing with his finger. 57 Mr Holst took photographs of the intercooler and various other engine parts in early April 2002. Some of these show what appears to be a white substance in the area where holes are now visible in the subsequently cleaned casing. 58 After seeing the crack, Mr Holst made numerous telephone calls to Mr Bishop but received no response until mid April. Mr Bishop inspected the boat, observed the crack and told Mr Holst that it was not there when he inspected the boat. Mr Bishop undertook to obtain quotes, take the motor out and identify the problem but he did none of those things. 59 Mr Bishop testified that when he inspected the boat after being contacted by Mr Holst, he saw the crack "with some sort of grey stuff oozing out". However, he said that the crack was not as big as it now appears on the intercooler casing. 60 He said that Mr Holst asked him to enquire about obtaining a second-hand engine. He made some enquiries but was unable to find one. Mr Holst then asked him to recommend someone to do the repair work on the engine.
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61 Mr Holst engaged Mr Craig Arnold, a marine technician, to assess the problem.
62 Mr Holst engaged Mr Arnold in mid May. Mr Arnold testified that he removed the intercooler from the motor and found it was "very full and compact with salt". The intercooler tubes had buckled out of shape and were difficult to pull apart. He put this down to the compression of salt. He was also of the view that the salt had "obviously made the intercooler casing split". 63 Under cross-examination he said that there was a build up of salt around the holes which were in the intercooler casing. It was salty and discoloured, and "obviously got worse from getting pulled apart". He said that build up of salt was like frozen water, and there was a hard compact area and once that was chipped away the holes were left there. 64 He said that most of the material would have been reasonably intact until it was disturbed. 65 He agreed under cross-examination that the aluminium around the [hole] area was quite flaky, and that … he was trying to "bash" the tube stack out of the casing some aluminium would have fallen off. 66 He agreed that when something is in a corroded state it is quite easy for bits to break off and fall apart. He said that some of the aluminium was crumbling because it had gone soft. He saw this "probably" when he was trying to "bash the core out". He said that half a handful of salt came off as he was removing the tubes. He agreed that the aluminium was in a crumbly form and when it is wet, it is like a paste. He said when it is hit it will just "come off". 67 The plaintiff's case is that the crack would have been in the same state on 9 February 2002 as it was when seen by Mr Holst on 27 March 2002 and when photographed by him in early April. 68 The photograph of the intercooler in situ (exhibit 3.1) clearly shows the crack and some material oozing either from or adjacent to it. 69 On 9 February 2002 when Mr Bishop took the boat on a sea trial, and otherwise inspected it neither Mr Holst nor Mr Bishop saw a crack in the intercooler housing. There is no reason to doubt their evidence on this point.
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70 Mr Bishop spent some time in the engine well with a clear view of the engine. He identified other minor irregularities such as the oil leak and some water stains around the header tank. In my view inspection was not cursory. Apart from the claim that he failed to notice the crack, no other criticism is levelled at his inspection. The quality of his inspection was not addressed in cross-examination.
71 Given Mr Bishop's experience and expertise, the identification of minor irregularities and the unchallenged apparent thoroughness of his inspection on 9 February 2002, I would expect him to have noticed the crack had it been there. 72 Mr Holst was not a stranger to boat handling despite the fact that he had not owned a diesel-engined boat previously. He did not notice the crack prior to 27 March 2002 even though he was standing at the stern of the boat during the sea trial when the engine covers were removed. 73 It does not necessarily follow that because Mr Holst did not notice any crack that it was not there. However, given Mr Holst's formal training in boat knowledge and nautical knowledge, and the time he spent in the boat during the sea trial, I would also expect him to have at least noticed the crack, if not commented upon it, had it been visible. Given that he readily saw the crack on 27 March 2003, it is highly unlikely that either or both Mr Bishop or Mr Holst could have overlooked it on 9 February 2002 had it been present.
Visibility of the crack: circumstantial evidence 74 The parties called evidence from several experts as to the nature and progress of the corrosion. No one disputes that this had been present in the engine for some time prior to Mr Holst noticing the crack on 27 March 2002. 75 In my view, much of this evidence is not relevant to the determination of whether the crack was present on 9 February 2002. Some of the evidence, especially from the experts called by the defendants, relates to the nature of the engine damage, its cause and whether the corrosion caused the engine to over heat and thereby malfunction. 76 As the critical issue is whether the crack was present and visible on 9 February 2002 and that the respective cases of the plaintiff and defendants stands or falls on this finding I intend to concentrate on this issue. This is not to say that the defendants bear any burden of proof.
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The plaintiff bears the burden of proving on the balance of probabilities that the crack was present and visible on 9 February 2002. The relevant evidence of the experts on this issue is as follows.
The plaintiff's experts
77 John Edward McCoy is a corrosion engineer. He has had 44 years experience in that field including responsibility for "all aspects of corrosion, coatings and cathodic protection" whilst employed in the Public Works Department for 10 years. Since 1975 he has been the technical director/owner of his own company "principally involved with coatings and cathodic protection on steel and concrete". 78 Mr McCoy first inspected the intercooler housing in about October 2003. 79 He testified that the process of corrosion within the engine was progressive. He said that the depth of corrosion is normally expressed as a rate of one millimetre per annum. He said that the loss of metal on the intercooler housing was up to a depth of 15 millimetres and estimated that the corrosion would have been there for approximately 15 years. 80 On examining the intercooler and noting the amount of aluminium missing, Mr McCoy testified that the corrosion would have produced quite a mass of gelatinous aluminium hydroxide – a "gooey, sticky, gelatinous material". He noted perforations or pitting in the aluminium which he said would have become larger over time as the aluminium hydroxide came out of those holes. His view is that this corrosive material would have been present on 9 February 2002. 81 Mr McCoy considered that corrosive process occurred before the crack. Further, the crack was more recent than the side hole given the amount of corrosion product remaining on the surface of the crack. 82 Mr McCoy said that stress caused the crack. He could not categorically say whether the stress was caused by the pressure of the corrosive material or by over-tightening the bolts on the intercooler, or in some other way. He said that corrosion played a part in that it decreased the cross sectional area and therefore increased the stress which is a force per unit area.
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83 Mr McCoy testified about the paint blistering and the time required for that process. In my view, this exceeds his area of expertise. Further, he did not refer to the blistering in his initial written report (November 2003) because he was not paying "a lot of attention to the crack" at the time.
84 Mr McCoy referred to blistering paint, which he said was depicted in a close up photograph of the crack and side hole after the intercooler had been removed from the engine (exhibit 3.4). I have already observed that on inspection I cannot see the blistering. There is no evidence of blistering paint on 9 February 2002, on 27 or 31 March 2002, or when Mr Arnold dismantled the engine. There is no evidence of the continuity of possession of the intercooler between dismantling of the engine and the trial. 85 Any evidence from Mr McCoy concerning the blistering in my view carries no weight.
86 Kevin John Burrows is a mechanic by trade. Since he commenced his apprenticeship in 1959, he has been employed and owned his own business and his main area of work has been in reconditioning engines including diesel engines. Since 1982 he has worked as an independent consultant. Most of his evidence related to the cause of the engine failure. 87 The importance of his evidence relates whether the boat could operate with the intercooler in the damaged condition as inspected by Mr Arnold. He was of the view that the corrosion was progressive and no one disputes that. He testified that if the engine was running, the intercooler could not have been in its (presently) damaged condition. Under cross-examination, he said the engine would definitely not run in those circumstances. Further, he said that given the state of the intercooler (exhibit 6), the engine would not run, or at least not run "properly". He said that the engine, if it was able to operate at all, would be sluggish, as only five cylinders would operate. There would be quite noticeable clouds of black smoke and noticeable reduced power in the engine. 88 Mr Burrows testified that the damage to the engine was consistent with over-heating.
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The defendants' experts
89 Phillip John Somerville is a marine mechanic of considerable experience and expertise. He runs his own business repairing and maintaining marine engines. He testified on behalf of the defendants. 90 Mr Somerville was of the view that the crack was a stress related or expansion type crack. 91 The thread marks on one section of the intercooler housing indicate that the bolt used was an incorrect length. If the bolt were too long it would put stress in the area of the crack as it was wound in. 92 Mr Somerville was shown a photograph of cylinders number 6 and number 5. 93 Cylinder number 6 showed evidence of corrosion or "water type" damage. Cylinder number 5 had no damage. Mr Somerville concluded that the damage to number 6 cylinder could not have occurred while the engine was running. He said that if water was being sprayed into the running engine, the carbon on number 5 cylinder (visible in the photograph) would have been washed away by the water. He described it as a "steam cleaning process". 94 Mr Somerville said that the damage to number 6 cylinder is "water type damage" which has occurred when the engine was shut down. He said the engine certainly could not have been running with that type of damage. 95 He said that it was not possible to say whether the damage was caused by sea or fresh water without testing. For example, leaking coolant could have caused the corrosion. The coolant is a blue coloured liquid and would be visible if it had leaked into the boat. If it had leaked into the cylinder area, it would not have been obvious. 96 Mr Somerville was of the view that if the boat was running satisfactorily during the sea trial and boat handling course at Hilarys, that would indicate to him that the integrity of the intercooler housing was still intact and the engine would still be operating and achieving its normal boost pressure. The "airtight integrity" of the intercooler would still be intact. If the holes were such that air pressure was lost, there would be a noticeable difference in engine performance.
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97 Mr Dunning is a qualified metallurgist. 98 The evidence of Mr Dunning, which was flatly rejected by Mr McCoy, is that the corrosion surfaced only at the last minute of a long period of corrosion. He testified that the corrosion may have been present internally in the engine, but may not have been visible from an external examination. The corrosion progressed from the inside of the engine to the outside when it penetrated the outside surface of the intercooler casing. 99 Mr Dunning testified that even when the corrosion reached the surface, it might be obscured from view by the strong marine paint which provided a coating to protect against corrosion. Mr Arnold said that the material would be reasonably intact until disturbed [by dismantling the engine]. 100 Without finally determining the matter, given that there was no evidence of black smoke or reduced engine power at the times when the boat was run between 9 February 2002 and 27 March 2002, Mr Dunning's hypothesis about the paint masking, in effect, the internal corrosion process, is one which is quite possible. 101 I note also that Mr Dunning is of the view that whenever the crack occurred, it would have been the same size as is now seen on the intercooler casing. It is quite a significant crack which is readily visible and for reasons which I have already given, in my view, a person conducting a thorough investigation of the engine and the operation of the boat could not fail to notice it. Mr Bishop's evidence that he did not notice the crack was unchallenged by the plaintiff.
Factual findings 102 The uncontested evidence is that no one in a position to do so noticed a crack on 9 February 2002. 103 The evidence is that the corrosion present in the intercooler was progressive. I am prepared to accept that corrosion had commenced before 9 February 2002. 104 The consistent evidence of the experts, who testified on the issue, including Mr Burrows, was that the crack in the intercooler housing was caused by stress. Various causes were postulated but it is not necessary to
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make a finding as to the cause and, on the state of the evidence, it would not be possible to do so. 105 The preponderance of evidence is that the engine would not run or run properly given the damaged state of the intercooler housing. There would be noticeable signs of engine trouble if the engine was run with the damaged intercooler. 106 There is no evidence of any problems with the engine until 27 March 2002. 107 Mr Dunning's evidence that marine paint might have obscured or masked the corrosion, which was at or near the surface and the crack, provides a possible explanation as to why there was no sign of engine trouble until 27 March 2002. There is no cogent evidence contradicting this possibility. Given all the evidence in the trial, that explanation remains the only possibility as to why the engine appeared to function without signs of trouble until 27 March 2002. 108 In my view the only reasonable inference to draw from the above summary of the evidence is that either the crack occurred sometime after 9 February 2002 and before 27 March 2002, or, that if it occurred on or before 9 February 2002, it was masked in some way, possibly as postulated by Mr Dunning. 109 There is no evidence that Mr Bishop failed to adequately inspect the boat's motors. The quality of his inspection was not challenged in cross-examination. Given my finding concerning the presence and visibility of the crack, I find that he has not breached any duty of care to adequately inspect the motors. Similarly, I find that there was no breach of an implied term of the contract between Mr Holst and the first defendants as claimed by the plaintiff. 110 It follows that the defendants are not guilty of misleading conduct pursuant to the FTA. 111 I would therefore dismiss the plaintiff's claim against all three defendants.
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