McConaghy & Anor v The Ship MV 2000 & Anor (No 2)
[2023] QSC 274
•1 December 2023
SUPREME COURT OF QUEENSLAND
CITATION: McConaghy & Anor v The Ship MV 2000 & Anor (No 2)
[2023] QSC 274
PARTIES: LAWRENCE McCONAGHY
(First Plaintiff) and
JOANNE VERNEY
(Second Plaintiff)
v
THE SHIP MV 2000(First Defendant) and
FORTITUDE INVESTMENTS AUSTRALIA PTY LTD (ABN 47629489149)
(Second Defendant)FILENO/S:
189 of 2020
DIVISION: Trial Division PROCEEDING: Claim and Counterclaim ORIGINATING COURT: Supreme Court of Queensland at Cairns DELIVEREDON: 1 December 2023 DELIVEREDAT: Cairns HEARINGDATE: 29 - 30 August 2022, 20 - 24 February 2023, 17 - 20 July
2023.
JUDGE: Henry J ORDERS: 1. Judgment for the plaintiffs in the amount of
$25,466.87.
2. Judgment for the second defendant in the amount of $6,370.01.
3. I will hear the parties as to costs, if costs are not agreed in the meantime, and the release of Fortitude’s security at 9.00am 13 December 2023 (out of town parties having leave to appear by telephone or videolink).
CATCHWORDS: CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF
CONTRACTS – where the plaintiffs and the second defendant entered into an agreement for the restoration of a vessel – where the contract was informal and its terms disputed – where the plaintiffs claim for outstanding payments in connection
with project management of the restoration of the first defendant – where the second defendant counter claims for alleged losses from the repudiation and manner of performance of the plaintiffs’ project management – whether the plaintiffs repudiated the agreement and if so whether the second defendant suffered loss by reason of the repudiation – whether the plaintiffs breached the agreement when moving the vessel to another port – whether the plaintiffs breached the agreement by not performing their role to a proper standard – whether the plaintiffs are entitled to payment for now disputed cost categories of invoiced amounts – whether the plaintiffs were entitled to use of the second defendant’s credit card for now disputed categories of expenditure – whether alleged illegality against maritime law has consequences in the plaintiffs’ claim
Competition and Consumer Act 2010 (Cth), sch 2, s 60
Marine Insurance Act 1909 (Cth)
Marine Safety (Domestic Commercial Vessels) National Law Act 2012 (Cth), sch 2
Marine Safety (Domestic Commercial Vessels) National Law
2012 (Cth)
Astley v Austrust Ltd (1999) 197 CLR 1, cited
Auburn Municipal Council v ARC Engineering Pty Ltd [1973] 1 NSWLR 513, cited
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, applied
Brogden v Metropolitan Railway Co (1877) 2 App Cas 666, cited
McConaghy v The Ship “MV2000” [2020] QSC 283, cited Realestate.com.au Pty Ltd v Hardingham (2022) 97 ALJR 40, appliedShevill v Builders Licensing Board (1982) 149 CLR 620, cited Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410, cited
COUNSEL:
-
SOLICITORS: The first plaintiff appeared on his own behalf The second plaintiff appeared on her own behalf
Pacific Maritime Lawyers for the first and second defendants
Restoring second-hand boats is more complicated and costly than a novice might expect. It was in this case. Former acquaintances are now opposed. Each claim to be owed money in the wake of an ill-fated arrangement for one to restore the boat of the other.
Lawrence McConaghy and Joshua Johnson became acquainted with each other when Mr McConaghy, a mariner, operated a vessel acquired by Mr Johnson for a couple of months out of Perth in 2018. Mr Johnson ordinarily operated a substantial civil
construction business in Western Australia. But he also harboured a side ambition: to acquire commercial passenger vessels to conduct tourist day trips to sea in Western Australia.
In late 2019 Mr Johnson used his company, Fortitude, to buy a passenger vessel, the MV 2000, hoping to restore it. He paid for Mr McConaghy and his de facto wife Joanne Verney, who were Cairns based, to travel to the vessel near the Gold Coast and inspect it with a view to the vessel being made safe and then to navigate it to Western Australia. Once at the Gold Coast, Mr McConaghy and Ms Verney agreed with Mr Johnson, who acted throughout for Fortitude, that they would manage the vessel’s restoration before navigating it to Western Australia.
Mr McConaghy and Ms Verney intended to move the vessel to Urangan at Hervey Bay for the works but encountered problems at sea with the vessel once enroute. They diverted to the port of Brisbane where it was decided to lift the vessel and perform the restoration works at The Yard.
Within a few months the restoration project had become more challenging and expensive than these friends had anticipated in striking their agreement. Mr Johnson’s wife, Tanya Colclough, took over the financial administration of the hitherto loosely administered business arrangement. She expressed her adverse view of the financial management of her husband’s project to date in a robustly expressed email to Mr McConaghy and Ms Verney. This offended Mr McConaghy and Ms Verney, who, in an email of 21 February 2020, announced they were ceasing their involvement in the project, thus repudiating the agreement.
Mr Johnson travelled over to Brisbane and, after liaising with the departing Mr McConaghy and Ms Verney, made other arrangements for managing the works.
Mr McConaghy and Ms Verney were not paid all they invoiced Fortitude for. They pursued the unpaid amount by commencing this proceeding in rem in the Supreme Court as a maritime claim against the vessel, which had been arrested and released after payment of security. Fortitude later became second defendant, in circumstances explained in McConaghy v The Ship “MV2000”.1 Fortitude counterclaimed for alleged losses from the repudiation and manner of performance of the plaintiffs’ project management.
What are the rival claims?
The plaintiffs, Mr McConaghy and Ms Verney, claim $28,080.49 being the amount of outstanding payments due on invoices issued by them for their project management of the vessel’s restoration.
It is common ground the plaintiffs issued Fortitude 18 invoices, numbered 2001 to 2018, totalling $71,467.49, and that two payments of some of those invoices, totalling
$43,387, were made by Fortitude to them. The first payment, on 24 January 2020, was $24,302, which is the total of six invoices, numbered 2001 to 2006, all dated 10 January 2020. Fortitude now takes the position that was an overpayment. The second payment, on 20 February 2020, was $19,085. That figure is the total of three of a second set of six invoices, numbered 2007 to 2012, all dated 1 February 2020. The
[2020] QSC 283.
unpaid component of the second set of invoices reflects the total of three invoices for reimbursement of expenses, namely invoices 2008, 2010 and 2012. No payments at all were made in response to any of the remaining invoices rendered later in February 2020, namely invoices 2013 to 2018 inclusive.
The details of the invoices rendered and payments made are set out in Annexure A to these reasons. It also includes the detail of an earlier emailed claim for pre-agreement expenses and its payment. Additionally to the six invoices dated 10 January 2020 and six invoices dated 1 February 2020, other invoices were issued post-repudiation. The reason for invoices being sent in tranches approximately a month apart is that the plaintiffs had been told that Fortitude would do “a monthly payment run of invoices”.
As Annexure A shows, the unpaid amount of the total invoiced is $28,080.49, hence the quantum of the plaintiffs’ claim. The allegedly outstanding amount is said to be payable under the agreement or as restitutionary relief.
The defendants – referred to hereafter in the singular as Fortitude – dispute liability for various expenditure categories invoiced by the plaintiffs, alleging they were not within the scope of what was agreed. Fortitude also disputes liability because of the plaintiffs’ alleged maritime law breaches in moving the vessel. Its counterclaim additionally alleges breaches of the agreement by not moving the vessel to Urangan, the allegedly inadequate standard of their management and repudiating. Even if Fortitude’s denial of liability because of alleged breaches were to fail, they only concede they would have been liable to pay $38,441.98,2 which is $4,945.02 less than what they did pay.
Fortitude’s counterclaim is for $97,517.41, pleaded to be:
(a)$12,293.77 for a failure to remove the vessel to the agreed location;
(b)$2,354.13 for a misuse of Fortitude’s credit card;
(c)$20,179.51 for the cost of Mr Johnson and an additional project manager having to travel and be accommodated to enable completion of the works, which were incomplete when the plaintiffs abandoned the contract; and
(d)$62,690 damages said to arise in consequence of the plaintiffs’ allegedly substandard work.
What are the issues?
Both sides struggled to isolate and adhere to the viable foundations of their cases. The result was a trial in which a substantial amount of evidence was of no or limited assistance in resolving the real issues.
The issues to be determined are:
(a)What was agreed?
(b)Did the plaintiffs repudiate the agreement?
(c)Did the plaintiffs breach the agreement by not moving the vessel to Urangan?
Ex I for identification.
(d)Did the plaintiffs breach the agreement by not performing their role to a proper standard?
(e)Were the plaintiffs entitled to payment for now disputed cost categories of invoiced amounts?
(f)Were the plaintiffs entitled to use Fortitude’s credit card for now disputed categories of expenditure?
(g)What consequence does an alleged breach of maritime law in the vessel’s passage on 1 and 2 January 2020 have for the claim?
(h)What loss did Fortitude suffer because of the plaintiffs’ repudiation?
(a) What was agreed?
What degree of common ground is there?
There is no issue there was a contract.3 As much is clear from it being common ground on the pleadings that the plaintiffs and Fortitude entered into an agreement by which:
· the plaintiffs would perform duties of project managers in the restoration of the vessel (“project management fee”); and
· Fortitude would pay the plaintiffs $500 plus GST per day in consideration for the plaintiffs performing the duties of project managers.
Two other terms of the agreement which were common ground at trial were:
·Fortitude would pay for the plaintiffs’ accommodation while they were in the service of Fortitude’s project; and
·Fortitude would pay $1,000 plus GST per day in consideration for the plaintiffs relocating the vessel as required (“seafarer fee”).
There remained a debate at trial as to whether the project management fee and the seafarer fee could be charged on the same day and whether there were other contractual terms.
The other terms of the agreement, additionally alleged by the plaintiffs and denied by Fortitude are:
· Fortitude would pay $50 plus GST per hour for manual labour performed by the plaintiffs (“labour fee”);
· Fortitude would pay $50 plus GST per day for the use of the plaintiffs’ vehicle and trailer (“vehicle allowance”);
In closing addresses the self-represented plaintiffs argued there was no contract but that was because they seemed to misunderstand what was referred to as an “agreement” in the pleadings was at law a contract.
· Fortitude would indemnify the plaintiffs in respect of any expense reasonably incurred for the purpose of performing the management works (“reasonable expenses”).
Fortitude pleads the agreement was made on 8 December 2019, whereas the plaintiffs plead it was made over a period of time from 8 December 2019 to about 10 January 2020, the date on which they issued their first invoices. The parties plead the agreement was oral and each pleads in different ways that it was partly implied.
How is the determination of contractual terms to be approached?
This was an informal contract. The process of determining such a contract’s terms, recently explained by the High Court in Realestate.com.au Pty Ltd v Hardingham,4 may be summarised in light of that decision as follows:
(1) The task of ascertaining an informal contract’s terms is a factual inquiry requiring consideration of the parties’ words and conduct to determine what reasonable people with knowledge of the background circumstances known to the parties would be taken by their words and conduct to have agreed.5
(2) An inquiry directed at that objective assessment requires consideration not only of the parties’ evidence of what was said, which may be imprecise and coloured by uncommunicated subjective motives or intentions, but of their conduct, the objective surrounding facts and the apparent logic of events.6
(3) That inquiry may involve the drawing of inferences in reaching a conclusion as to what terms were in fact agreed, sometimes referred to as the express terms.7
(4) If, on completion of that inquiry’s finding of those agreed terms, consideration is also being given to implying a term as a matter of imputed intention, then it is necessary that the conditions stipulated in BP Refinery (Westernport) Pty Ltd v Shire of Hastings8 be met.9
(5) Those conditions are that the term must be reasonable and equitable, capable of clear expression, does not contradict the express terms of the contract, must give business efficacy to the contract and must be so obvious that it “goes without saying”.10
In the present case, the background circumstances of how Fortitude came to engage the plaintiffs is a significant starting point in ascertaining what was agreed.
(2022) 97 ALJR 40.
Realestate.com.au Pty Ltd v Hardingham (2022) 97 ALJR 40, 47 [15], 52 [47].
Realestate.com.au Pty Ltd v Hardingham (2022) 97 ALJR 40, 47 [17], 52 [46].
Realestate.com.au Pty Ltd v Hardingham (2022) 97 ALJR 40, 47 [16], 57 [75], 59 [85].
(1977) 180 CLR 266, 283.
Realestate.com.au Pty Ltd v Hardingham (2022) 97 ALJR 40, 47 [18], 63 [111], 64 [113].
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, 283.
How did Fortitude come to enlist the plaintiffs’ assistance?
In November 2019 Mr Johnson was making inquiries into passenger ferries on the market for sale. He consulted Mr McConaghy a number of times during that process, seeking his general views from afar. For example, Mr McConaghy urged him to obtain an out of water survey of a vessel before purchasing it, evidently because a vessel’s underlying defects may not be fully apparent without it being examined out of the water.
Mr Johnson eventually decided to purchase the MV 2000. That decision was not made at the urging of Mr McConaghy. Nor was it made with the benefit of an out of water survey.
The vessel was moored at Horizon Shores Marina, north of the Gold Coast. It had most recently been used as a party boat in the waterways of the Gold Coast. Mr Johnson telephoned Mr McConaghy, telling him of the purchase and asking him to help get the vessel “around to Geraldton and working”.
Mr McConaghy and Ms Verney were interested in delivering the vessel around to Western Australia and agreed to travel to the Gold Coast to take possession of the vessel. They flew down from Cairns on 3 December 2019 and on the 4th, after a representative of the seller’s agent showed them over the vessel, they took possession of it for Mr Johnson.
Mr Johnson arrived and they spent some days considering how they were going to get the boat to Geraldton. Mr Behan, a marine surveyor who inspected the vessel for Fortitude, provided a report on 5 December about what would be required for the vessel to obtain an Australian Maritime Safety Authority (“AMSA”) Certificate of Survey for the vessel. The report, exhibit 4, identified 31 required tasks, not the least of which was hauling the vessel out of water to perform an out of water survey. The boat’s former mechanic talked through the condition of the engines with Mr Johnson on Saturday the 7th.
By the 8th, when the plaintiffs and Mr Johnson were each due to fly home, Mr Johnson had decided the need for the vessel to be lifted out of the water was an opportunity to perform some modest refurbishment of it. On Mr McConaghy’s account he and Mr Johnson considered it would be too expensive to use Mr Behan’s business to supervise that, because it would deploy two employees charging $190 per hour for each.
What was agreed on the 8th?
Mr McConaghy testified they did a sea trial on the 8th with the vessel and Mr Johnson was discussing the need for a refit and needing someone to supervise it. On Mr McConaghy’s account, Mr Johnson was too busy to supervise the refit because of his business interests, “So he asked if Joanne and I would”. Ms Verney testified he “asked if we would project manage the job…[a]nd relocate the vessel around to Geraldton once that refit was finished”.11
T1-91 L20.
It is important to appreciate Mr Johnson’s enlisting of the plaintiffs for that purpose occurred in the context of him having drawn the plaintiffs to the vessel because they were known to him and had a maritime background and he intended that they would sail the vessel around to Western Australia. He did not enlist them because they were expert project managers or vessel restorers. Mr McConaghy and Ms Verney have worked around boats for many years. Mr McConaghy is a master (class 1), engineer (class 3) and a marine surveyor. However, there is no evidence he or Ms Verney were specialist boat restorers or had material expertise in project managing vessel restoration. The high point is that they had some ‘do it yourself’ experience in maintaining, refitting and keeping their vessel, and perhaps a few other vessels they had controlled, in survey.12 It is obvious Mr Johnson engaged the plaintiffs because he could not remain full-time in Queensland and he wanted someone he knew in place locally, with some maritime experience, whom he could entrust oversight of the slipping and refurbishment process to, in consultation with him from afar.
As at the 8th, Mr Johnson did not appreciate that process would need to be as extensive and expensive as it later turned out to be. The then known task of overseeing the slipping and refurbishment process may be correctly described, as it is in the pleadings, as acting as “project managers in the restoration of the vessel” but such language does not capture the naivety of these beginnings.
Mr McConaghy testified of the conversation on the 8th:
[Mr Johnson] asked us if we would supervise the slipping. So at that stage, the slipping was to be pull the boat the out of the water, take the shafts and the props off, crack test the tapers and just generally have a out-of-water inspection in front of a accredited marine surveyor. So that then that could go towards renewing the certificate of survey, and some cosmetic work, maybe a paint job, but a small paint job. So on the - the budget that Josh came up with on the 8th of December, I think was for about … 500-odd thousand. That was for the whole of the readying the vessel for the delivery around to Geraldton. And he allowed $40,000 for project management in that fee, so - so we agreed that we would do the delivery and take the vessel to the slipway. So at that time there was no - no money worked out as to what we were being paid, because at the time I thought $40,000 was a little bit excessive for project management of maybe a week or two of slipping of the vessel. So - and things evolved from there.”13
The budget referred to in this account is likely the same or similar to the following budget which Mr Johnson emailed to the plaintiffs two days later on 10 December 2019:
Survey $104,500.00 upper deck $86,500.00 lower deck $128,800.00 fore deck $6,000.00 trip around to Gero $60,000.00 Project management $40,000.00 berthing/Slipping $8,000.00
T1-87 L18; T7-35 LL23-45.
T 4-3 LL11-24.
liftout and in $6,000.00 contingency $20,000.00 Engine room $119,000.00 Nasal $2,000.00 Survey inspections $6,000.00 $586,800.00
In emailing that budget Mr Johnson wrote: “Frightening…
Let’s see how we go here. Please review and let me know if not correct or missed anything.
I have allowed 40k for you and Jo. Does that seem okay? Trip around is fuel and wages as well.
Main thing that will blow us out is Stability booklet and shaft. Paint may also be out but will have to cap it.
Main Engines unfortunately aren’t going to get replaced but will up the turbo’s injectors. Hopefully they will see us out for a few years to recoup some coin to replace them and gearboxes.14
That email is consistent with the accounts of the plaintiffs that the agreement on the 8th for them to manage the slipping and refurbishment additionally to conveying the vessel to Western Australia did not descend into specifics about daily rates for project management and seafaring or their other expenses. As Mr McConaghy credibly put it:
“So this contract can’t be pinned down to one day, because while we came to an agreement that we would supervise a refit, the money wasn’t talked about on that day, all we had was a simplistic budget that we knew was going to change.”15
Mr McConaghy testified to agreement being reached with Mr Johnson subsequent to the 8th regarding what rates and expenses Fortitude would pay the plaintiffs but he and Ms Verney were not specific as to when, where or on how many occasions. For the reasons which follow I accept that subsequent to the 8th the parties did progressively agree upon terms as pleaded by the plaintiffs as to a labour fee, a seafarer fee, vehicle allowance and expenses. It is not possible to reach a concluded view on when each of those agreements on terms were arrived at, though they must have occurred by prior to the issue of the plaintiffs’ first batch of invoices of 10 January 2020.
The imprecise nature of the plaintiffs’ testimony about what was agreed sometimes made it difficult to discern whether they were always testifying of actual agreement, as distinct from inferred understanding of what was appropriate, for the charging and paying of particular rates and expenses. However, that difficulty was eased by aspects
Ex 1.
T4-4 L20.
of the documented dealings between the parties. These reasons will shortly deal with how those documented dealings support the existence of the disputed terms.
Credibility
First it is convenient to address Fortitude’s argument that I ought hold such concerns as to the credibility of the plaintiffs that wherever their evidence diverges from that of Mr Johnson, I ought reject their evidence and accept the evidence of Mr Johnson. It is oversimplistic to approach a case involving such wide-ranging issues in that way. Two examples of conclusions explained later in these reasons immediately illustrate the point. Firstly, the documented dealings between the parties support the existence of the disputed terms, notwithstanding the denials of Mr Johnson. Secondly, the documentary evidence plainly demonstrates the plaintiffs repudiated the agreement, notwithstanding their denials that they did so. That I will reject such important aspects of each of these rival witnesses’ testimony will of course be borne in mind in weighing their testimony generally but it does not mean I must disbelieve them about everything else. Further, neither the plaintiffs nor Mr Johnson expressed their recollections with such precision as to suggest divergence between them was always a result of a lack of credibility, as distinct from a general difficulty which each of them had with precision of recollection.
Fortitude made much in its submission of the point that the plaintiffs, being a couple, could not be regarded as persuasively corroborative of each other. However, this is not a case in which each of them expressed their recollections so precisely that there is much potentially telling specific commonality in their recollections.
Other arguments about credit advanced by Fortitude included that Mr McConaghy was convicted on his plea of guilty to a charge of giving a false and misleading statement on 25 May 2020,16 apparently to the Australian Maritime Safety Authority (AMSA). Mr McConaghy’s evidence gave explanations for the event which resulted in this conviction; explanations which arguably went beyond the mitigating circumstances of the matter to whether his statement to AMSA had been knowingly false. Be that as it may, his plea of guilty to that charge involved a public acceptance of his guilt of the elements. Even if he did not personally consider himself to be guilty, his concession of his guilt in answer to that charge is a matter to be borne in mind by me in weighing the reliability of his testimony generally. Equally, it is to be borne in mind that matter apparently had no connection with the present matter and it should not be assumed, merely by reason of that matter, that I ought reject such of Mr McConaghy’s evidence as I otherwise consider to be reliable. To do so would be blind to the reality that aspects of the documented dealings between the parties to which I will shortly turn are materially more supportive of the positions of Mr McConaghy and Ms Verney than of Mr Johnson.
An aspect of the parties’ dealings dwelt upon by Fortitude in dealing with credibility was the degree of vindictiveness exhibited by the plaintiffs in the aftermath of the breakdown of the business relationship. This extended to the plaintiffs copying emails to contractors on the project so they would perceive there was an issue with Fortitude’s timely payment of accounts, asserting a purported lien over some receipts until their invoices were paid and then going to the extent of having the vessel arrested in April 2020. These aftermath actions were consistent with the plaintiffs being upset
Ex 92.
at Fortitude for not paying them but the plaintiffs evidently thought they were apt responses to their perceptions of Fortitude’s conduct. They are of no material assistance in weighing the reliability of the plaintiffs’ account about the nature of the agreement and what occurred when they were managing the project.
In a similar vein, the plaintiffs evidently regard Fortitude as vindictive for making a complaint to AMSA in late 2020 that the plaintiffs had operated the vessel illegally when they first moved it from the Gold Coast, and vindictive for frustrating their claim by belatedly pursuing what they perceive was a purely strategic, baseless counterclaim against them. A submission of Fortitude, that they were obliged to have made the complaint to AMSA, was unpersuasive. The tit-for-tat retaliatory quality of such behaviour is self-evident. That, as will be seen, much of the counterclaim lacked evidentiary support, doubtless did cause the plaintiffs to perceive a similar quality in that claim’s pursuit. Again however, that the plaintiffs may perceive a quality of vindictiveness about the decision of Fortitude to make a complaint to AMSA or to pursue a counterclaim is of no material assistance as to the reliability or otherwise of Mr Johnson’s evidence of the agreement and what occurred during the plaintiffs’ management of the project.
The upshot is that both sides harbour grievances about the reasonableness of the conduct of the other in the wake of the end of the business relationship. But such conduct at worst demonstrates each party’s disdain for the post event behaviour of the other. I bear that disdain in mind in weighing their reliability as witnesses, conscious it is a product of the diverting tendency occasionally suffered by litigants of focussing on the perceived wrongfulness of their opponent’s responses in the dispute’s aftermath rather than on the facts of the dispute. Of far more material assistance in weighing the reliability of each side’s account of facts relevant to that dispute is the documentary evidence in support of their account, a topic to which these reasons now turn.
How do the documented dealings between the parties support the existence of the disputed terms?
With one exception, there is little material corroborative assistance to be gleaned from the documented dealings between the parties in respect of the disputed terms. Those documented dealings are consistent with the agreed fact there was an agreement Mr McConaghy and Ms Verney would project manage the vessel’s restoration but they do not materially aid determination of specific terms of the agreement.
The exception is the record of what was invoiced and paid. That record, most of which is summarised in Annexure A to these reasons, is of telling assistance in weighing the reliability of the oral accounts of what was agreed.
Annexure A shows that on 16 January 2020 Fortitude paid the plaintiffs $2,468.55, which was the total of the expenses of Mr McConaghy and Ms Verney when they first came down to south-east Queensland at Mr Johnson’s behest. The expenses were listed in a summary along with annexed receipts forwarded by email from Mr McConaghy to Mr Johnson on 17 December 2019 and were described in that covering email as, “Expenses for trip down to look at MV 2000”. Those expenses included their flights to Brisbane on the 3rd and back to Cairns on 8 December 2019, along with expenses including taxi, car rental, fuel and meals. Those expenses of course
relate to an era leading to it being agreed the plaintiffs would project manage the vessel’s restoration, additionally to sailing it to Western Australia.
The expenses claimed in the email of 17 December in connection with that first trip included transportation, accommodation and meal costs. It is noteworthy that the first of the plaintiffs’ invoices, number 2001, which was also paid by Fortitude, charged a daily project management fee and expenses that included the entire period of the first trip. Thus the plaintiffs were paid not only for their time specifically at the boat but also for the cost of travelling to and living in south-east Queensland in order to assist Fortitude.
That the plaintiffs’ expenses for that first trip were in due course paid by Fortitude does not necessarily mean Fortitude also agreed it would pay such expenses for when the plaintiffs were managing the restoration of the boat. However, that it compensated the plaintiffs for their costs of travelling and living away from home in service of Fortitude’s needs at that stage elevates the probability it likewise agreed to do so during their ensuing service. The force of that probability might have been diluted, as not comparing like with like, if Fortitude had not additionally paid the plaintiffs a daily fee for providing their service from the outset of that first trip. But it did.
Annexure A further shows that on 24 January 2020 Fortitude paid the plaintiffs
$24,302, which was the total invoiced by the six invoices which had been rendered by the plaintiffs by that date, namely invoices 2001 to 2006 inclusive. Those invoices included, additionally to claims for the daily project management fee:
· claims for $1,000 a day for moving the vessel to the slipway in Brisbane, consistently with the plaintiffs’ case it was agreed such a seafarer fee would be paid in consideration for relocating the vessel from place to place;
· claims for $50 a day for use of the plaintiffs’ car and trailer, consistently with the plaintiffs’ case it was agreed that such a vehicle allowance would be paid in consideration for use of the plaintiffs’ vehicle and trailer;
· claims for $50 an hour for labour water blasting, consistently with the plaintiffs’ case it was agreed a labour fee would be paid at that rate for manual labour performed by the plaintiffs;
· claims for reimbursements for expenses, consistently in a general sense with the plaintiffs’ case it was agreed Fortitude would indemnify the plaintiffs in respect of reasonable expenses incurred for the purpose of performing the management works.
That those invoices were paid provides powerful support for the plaintiffs’ case it was agreed Fortitude would also pay the plaintiffs a seafarer fee, a vehicle allowance, a labour fee and their reasonable expenses.
Furthermore, Annexure A shows that on 20 February 2020 Fortitude paid the plaintiffs $19,085, an amount only $1,030.17 short of the total invoiced by six invoices rendered in the meantime, invoices 2007 to 2012 inclusive. The shortfall of
$1,030.17 is the total of three of the six invoices which claimed reimbursement for expenses, invoices 2008, 2010 and 2012. That it was not paid at that date, 20 February
2020, is consistent with that being when Mr Johnson’s wife, Ms Colclough was taking over the financial administration of the project, wanting to reconcile receipts attributable to expenses and not yet having done so. The fact of the non-payment as at that time is thus neutral as to the probability of what had been agreed.
More significant is the fact that the amount paid on 20 February, $19,085, was the total amount of three invoices, numbered 2007, 2009 and 2011, which included (additionally to claims for the daily project management fee):
·claims for $50 a day for use of the plaintiffs’ car and trailer, consistently with the plaintiffs’ case it was agreed that such a vehicle allowance would be paid in consideration for use of the plaintiffs’ vehicle and trailer;
·claims for $50 an hour for labour, consistently with the plaintiffs’ case it was agreed such a labour fee would be paid for manual labour performed by the plaintiffs.
As with the earlier paid invoices, that those three invoices were paid provides powerful support for the plaintiffs’ case it was agreed Fortitude would pay the plaintiffs for those things.
The pattern of invoice payment was clearly at odds with Fortitude’s position now. Addressing the fact Fortitude paid for things it now asserts it had not agreed to pay Mr Johnson testified that he “wasn’t really looking” at the invoices; “was just too busy in life” and “simply seen the bottom amount”. It was testimony which jarred as improbable when given.
Mr Johnson seemed to link that assertion with the fact he later handed over financial administration of the project over to his wife. That he did so was doubtless an incident of the problems he was encountering in administering a project which had grown significantly and in respect of which there were complaints of slow payment interfering with the plaintiffs’ capacity to manage the project effectively. However, it does not mean he had only been looking at the total charged by the invoices.
Context matters here. Mr Johnson was an experienced man of business. He was in ongoing consultation with the plaintiffs, repeatedly making budgetary decisions in respect of a project which he wanted to contain spending on. It is clear he was reading and responding to the plaintiffs’ communications with him about the project and the budgetary and other choices repeatedly needing to be made. It is implausible that he would abandon his repeatedly exhibited interest in the scale of the project’s cost when it came to the content of the plaintiffs’ invoices. I readily infer he perused the content of the invoices and reject the effect of his testimony to the contrary.
Another informative aspect of payments made by Fortitude is that it paid for the accommodation of Mr McConaghy and Ms Verney, not only for their first trip down, from 3 to 8 December 2019 but also for a second short preparatory trip done by Mr McConaghy on 13 to 14 December 2019 as well as for the duration of the agreement. Mr McConaghy explained that accommodation came to be paid for during the project on a credit card in Fortitude’s trading name, Abrolhos Adventures, which he testified Mr Johnson gave them to use on 8 December. This funding of accommodation accords with a term of the agreement, as pleaded by Fortitude, that it would provide accommodation for the plaintiffs during the period of the works. Such a term is
unsurprising because Mr McConaghy and Ms Verney were usually Cairns based. However, the existence of such a term, conceded by Fortitude, assists in weighing the probability that, as the plaintiffs allege, Fortitude also agreed to pay the plaintiffs a vehicle allowance and their reasonable expenses in the context of them living away from home in the service of Fortitude, managing the works. The point is well illustrated by reference to the car allowance.
Fortitude argue it is implausible it would have agreed to pay the plaintiffs $50 per day for use of their vehicle and trailer because the plaintiffs were contractors, not employees. Fortitude accepted that employers might pay employees amounts additional to their fixed income to cover discrete costs of working away from their home city, such as using their own vehicle for work purposes. In contrast, Fortitude emphasised, Mr McConaghy and Ms Verney were contractors, not employees. It submitted contractors commonly factor in their overall costs of providing their services, including the cost to them of taking on work away from their home city, in settling upon a fixed rate for their services. Yet, at odds with that submission, Fortitude did pay at least one such cost – the cost of the away from home accommodation of Mr McConaghy and Ms Verney. That Fortitude agreed to fund the plaintiffs’ accommodation additionally to their daily project management fee means it is at least plausible it would also have agreed to additionally fund a vehicle allowance for the plaintiffs.
The nature and location of the accommodation selected also supports the probability of a vehicle allowance being agreed to. That accommodation was self-contained accommodation at the Brisbane Gateway Resort, about 30 to 40 kilometres and half an hour’s drive from The Yard. Mr McConaghy explained they secured such self- contained accommodation in order to be able to cook for themselves, reducing the cost of having to purchase meals all the time. Mr McConaghy testified:
“[W]e basically found the cheapest accommodation we could. We got a long-term rate, and – well, all in order to save the defendant money on accommodation and – and the food.”
When asked if there was a conversation that dealt with how Mr Johnson would be paying for accommodation, Mr McConaghy testified:
“I can’t pin it down to one conversation, because I spoke to the defendant at least once, twice, three times a day. And I – I kept him up to date on what we were doing, what we were – what expenses we were incurring, and – and how we were trying to save money on the job.”
Further, the probability that Fortitude agreed to pay a vehicle allowance is heightened by the fact that Fortitude paid the transportation costs of Mr McConaghy and Ms Verney for their trip from Cairns to Brisbane, of 3 to 8 December 2019 and a second preparatory trip of 13 to 14 December 2019. Those costs included air flights, car rental and fuel.
The above circumstances inform the conclusions now reached as to the disputed terms of the agreement.
What was agreed about a labour fee?
Fortitude submitted the plaintiffs led no evidence of any conversation in which it was agreed that they would be paid an hourly fee for manual labour performed by them – “time on the tools” as it was sometimes described in conversations between Mr McConaghy and Mr Johnson.
However, there was evidence from Mr McConaghy that the plaintiffs’ charging of a labour fee of $50 an hour was “mutually agreed” between Mr McConaghy and Mr Johnson. That evidence of agreement, brief and imprecise as it was, did not stand alone. On Mr McConaghy’s account, Mr Johnson knew they were bringing their trailer and tools, consistent with them likely doing some physical tasks. More importantly, the documentary evidence powerfully supports the inference there was such agreement. That is because Fortitude paid invoices which expressly charged
$50 an hour for labour, namely invoices 2005, 2007, 2009 and 2011.
These reasons have already explained how Fortitude’s payment to the plaintiffs in respect of amounts charged to various costs categories supports the plaintiffs’ assertion Fortitude agreed to pay them in respect of those costs categories. To counter that effect, Fortitude submits there was nothing in the invoices which charged for labour to indicate to the reader the labour was actually performed by the plaintiffs as distinct from somebody else. However, these were invoices for payment to the plaintiff. In each instance the charges for labour were included in invoices that charged other costs categories that were directly attributable to the plaintiffs as distinct from some other person engaged to work in the project. That context alone would likely have conveyed to a reader of the invoices that the labour amounts charged related to labour provided by the plaintiffs. Further, Mr Johnson’s own understanding of what was occurring involved persons or businesses which performed work on the project, separately invoicing for payment for that work. It is unlikely he would have mistakenly thought the plaintiffs’ invoices for payment to them included charges for work by some other persons.
Fortitude emphasised, in trying to argue there had been no agreement to pay the plaintiffs for their labour, that in an email exchange of 20 February 2020, between Mr Johnson and Mr McConaghy, Mr Johnson was expressing concern that the plaintiffs’ time spent “on the tools” put too much pressure on their ability to manage the job. In that exchange, Mr McConaghy explained that his then four to six hours of “working with the hired help” during his 12-hour day was not causing difficulty with management of the job. It is important to appreciate that by this stage the project had grown into a much more significant undertaking than had initially been anticipated. Mr McConaghy was expressing concerns that Fortitude’s slow payment of persons engaged by the plaintiffs in the project was creating difficulty for its management.
The growth in scale of the project, and the way in which the tensions that created came to a head by February 2020, is discussed in greater detail below in dealing with the plaintiffs’ repudiation of the agreement. For present purposes, it is sufficient to observe that nothing in the written correspondence at that stage suggests Mr Johnson had hitherto been unaware that the plaintiffs were charging for their labour. To the contrary, the tenor of the communication’s end is entirely consistent with Mr Johnson earlier knowing of and having been untroubled by the fact that the plaintiffs were from time to time contributing their own labour to the project. The concern expressed
was not that they had been charging for it. It was a concern, given the growth in scale and complexity of the project, as to their capacity to continue to effectively manage the project whilst still contributing their labour.
Fortitude submitted the essence of the role of project management is one of planning, supervision and management, rather than it being a role in which the project managers directly undertake actual works. It was submitted project management is an inherently supervisory function as opposed to the function of directly executing works. However, such roles are scarcely mutually exclusive, particularly so in a small-scale project where the manager’s role would not be at odds with the provision of some occasional hands-on contribution or assistance in the interests of efficiency.
None of Fortitude’s arguments tell against the conclusion, powerfully supported by the documentary evidence, that it was a term of the agreement Fortitude would pay
$50 plus GST per hour for manual labour performed by the plaintiffs.
What was agreed about a seafarer fee?
Of the agreement to pay a seafarer fee, additional to a project management fee, Mr McConaghy testified:
“Part of the agreement was that we would work for a - as project managers, we would work for $500 per day plus GST combined, which was basically $250 per day for myself, $250 per day for Joanne. And when we were doing deliveries, ie using our marine qualifications, we would be charging $500 a day each, so - well, $1000 a day for the two of us because we were both crew on the vessel, we charge that as an additional fee.”17
That evidence was conclusory rather than specifically descriptive of the communication in which this term was agreed. However, that it was a term of the agreement is again powerfully supported by the documentary evidence. The seafarer fee was charged in invoice 2003 which described the work as “3 Delivery of vessel to slipway @ $1,000 p/d 31/12/19 to 2/1/20”. That invoice was paid.
Despite pleading a denial of the seafarer fee being a term of the contract Fortitude actually accepted at trial that there was agreement to pay such a seafarer fee. However, it contended the plaintiffs were not entitled, when charging their daily seafarer fee to, for the same day, charge their daily project management fee. It is apparent there was no agreement as to whether or not those daily fees could be charged on the same day – a topic returned to later in considering whether that issue is resolved by the implication of a term.
For the moment, the pertinent finding reached is that it was agreed the plaintiffs would be paid a seafarer fee of $1,000 a day plus GST in consideration for their relocation of the vessel as required.
T 5-11 L37.
What was agreed about a vehicle allowance?
Mr Johnson denied it was agreed Fortitude would pay the plaintiffs a vehicle allowance of $50 a day for the use of their vehicle and trailer. However, Mr McConaghy testified it was agreed, saying:
“That came from a verbal agreement between the defendant and myself. … We just put a nominal rate on it that hopefully covered wear and tear.”18
Mr McConaghy also testified that before the plaintiffs’ departure from Cairns by road on 27 December, likely around the middle of December, he had proposed to Mr Johnson that they would bring their car and trailer and tools and use their car and trailer to do all the “pickups” that they could in order to save Mr Johnson money.19 According to Mr McConaghy, Mr Johnson’s response to the arrangements that they would be paid to do so was, “If you’re happy, then I’m happy”.20
Again, such admittedly brief and imprecise evidence does not stand alone. Again, it is powerfully supported by the documentary evidence. Fortitude paid invoices which expressly charged $50 a day for “use of car/trailer”, namely invoices 2003, 2005, 2007, 2009 and 2011. The inference that there was agreement to pay the vehicle allowance is also supported by the circumstantial points earlier made in this context in connection with Fortitude’s payment of the pre-agreement transportation costs of the plaintiffs and Fortitude’s payment of the plaintiffs’ accommodation.
Fortitude argued it was implausible it would have agreed to pay the plaintiffs a vehicle allowance. Its arguments drew on common commercial practices between businesses and their employees and contractors.
For instance, it characterised Mr McConaghy and Ms Verney as contractors in contrast to employees, submitting it is in the nature of a contractor’s role that the contractor provides their own equipment with which to do the work. Yet this is to overlook the personal nature of the arrangement struck. Fortitude emphasised there had been no detailed evidence provided to the Court, such as logbooks records, to document the use of the car and trailer. Yet this is to overlook the improbability such evidence would have been required by Mr Johnson in the agreement he struck with acquaintances he lured from the opposite end of the state to help him out in his pet project. Fortitude contended it would have been financially unwise to agree to pay the plaintiffs to deploy their own vehicle and trailer rather than paying others for all deliveries or collections or putting an odd-jobs person on an hourly wage doing such things so that the plaintiffs were not distracted from tending to their project management tasks. Yet this is to overlook the initially perceived small scale of the project, as well as the incidental savings to Fortitude of being able to accommodate the plaintiffs using their vehicle at accommodation further from but inevitably less expensive than accommodation nearer in to the works.
The claim for the vehicle allowance was clearly set out on the face of the relevant invoices, including the dates in respect of which the allowance was being claimed. It would have been readily apparent to Mr Johnson that those amounts were being
T5-10 LL11-19.
T6-7 L35.
T6-8 L9.
claimed. The fact they were paid fortifies the reliability of Mr McConaghy’s evidence that a vehicle allowance was agreed.
It was a term of the agreement that Fortitude would pay $50 plus GST per day for the use of the plaintiffs’ vehicle and trailer.
What was agreed about reasonable expenses?
Mr Johnson testified there was no agreement to pay the plaintiffs’ expenses. Fortitude submitted the notion that it would have agreed to pay any of the plaintiffs’ expenses is at odds with having given them a credit card from the outset, with the consequence there was no need for the plaintiffs to be reimbursed for their expenses. But it is not apparent why use of the credit card would have been exclusive of the mechanism of the plaintiffs also paying for expenses and in turn being reimbursed for them by Fortitude.
Nor does the fact they had been issued with Fortitude’s credit card appear to be at odds with Fortitude agreeing the plaintiffs would be indemnified in respect of their expenses. Indeed, the handing over of the credit card from the outset bespeaks an intention on the part of Fortitude that it would cover the cost of expenditure incurred by the plaintiffs. The issue is what was or was not agreed as to which of the plaintiffs’ expenses Fortitude would cover.
There are two potential forms of expenses incurred by the plaintiffs to consider – project expenses and personal expenses. As to the former, the evidence does not suggest it was an agreed term that Fortitude would reimburse the plaintiffs for expenses incurred by them which were project expenses. However, it is uncontroversial that the conditions stipulated in BP Refinery (Westernport) Pty Ltd v Shire of Hastings21 are met and that it was an implied term of the contract that Fortitude would reimburse the expenses of the project which were met by the plaintiffs. As much was not in issue.
It was Fortitude’s obligation to reimburse the plaintiffs’ personal expenses which was in dispute. Fortitude denies there was any agreement to pay them. The plaintiffs contend there was agreement for Fortitude to reimburse them for food, fuel, carparking and tolls and vehicle improvement costs incurred by them during the periods when they were living away from home in service of Fortitude’s project.
Fortitude highlighted that the plaintiffs’ pleaded case, as to the relevant term of the agreement, was that Fortitude would indemnify the plaintiffs in respect of any expense “reasonably incurred for the purpose of performing the management works”. Fortitude drew a distinction between that description and Mr McConaghy’s testimony that the reimbursement was to be for expenses incurred in the service of the project. It contended that if it was to be found there was an agreement to reimburse their expenses, the plaintiffs should be held to the pleading that it related to expenses reasonably incurred for the purposes of performing the management works as distinct from, as Mr McConaghy testified, all expenses incurred in the service of the job.
That contention suggests Fortitude would have understood by the plaintiffs’ pleading that expenses reasonably incurred for the purpose of performing the management
(1977) 180 CLR 266, 283.
work was not so broad as to include the personal expenses incurred by the plaintiffs in the service of the project. Yet, such intended breadth is apparent from the content of the statement of claim.
Fortitude’s submissions were premised on the assumption that the expenses contemplated would only have been project expenses. The tighter meaning contended for by Fortitude would tend to exclude the cost of the plaintiffs having to live and work far removed from home base. That is immediately exposed as unrealistic when it is appreciated Fortitude paid for the plaintiffs’ accommodation. That it was paying for accommodation clearly raises the likelihood, as contended for in the plaintiffs’ case, that Fortitude agreed to cover the plaintiffs’ other travelling and living away from home expenses.
In a similar vein, the fact that Fortitude agreed to pay the plaintiffs’ a daily vehicle allowance, informs the assessment of the evidence of what was agreed about other expenses. Paying that allowance was obviously in Fortitude’s direct interest given the vehicle could be used for the direct purposes of the project, for example for collections and deliveries of goods and equipment for use in the project rather than paying suppliers or other businesses to deliver. However, that it was a flat daily rate rather than a payment determined by reference to use only in the project is consistent with Fortitude adopting an array of consideration, beyond payment for the plaintiffs’ services, to ease the burden imposed on the plaintiffs in their service of it by having to live and work far away from their home.
What was agreed about reimbursing the plaintiffs for food, fuel, carparking and tolls and vehicle improvement costs?
Mr Johnson denied there was agreement to pay for the plaintiffs’ food, fuel, carparking and tolls and vehicle improvement costs.
Mr McConaghy testified:
“There was an agreement between Josh Johnson and myself that we would be reimbursed for the expenses. …Living expenses. All expenses incurred in the service of the job. Living, food, fuel for the car, maintenance of the car, living expenses.”
His evidence it was agreed Fortitude would pay for food and fuel in the service of the job was obviously a reference to the plaintiffs’ expenses incurred in acquiring food and fuel while travelling to and living away from home in Brisbane in order to work on the project.
Dealing firstly with food, Mr McConaghy testified the plaintiffs took up self- contained accommodation at Brisbane Gateway Resort so they could cook for themselves, which would reduce the cost of meals.22 The receipts claimed for food appear modest.
Significantly when the plaintiffs first travelled down and back in early December 2019 they submitted their expenses for food and those expenses were paid. Then once the project was underway and their receipts for food were included with the
T5-18 L3.
reimbursement invoices 2002, 2004, 2006, dated 10 January 2020, those invoices were paid. That food was paid for is powerful evidence in support of the plaintiffs’ case that there was an agreement to pay for their food.
It is true that Fortitude did not pay later received reimbursement invoices, but by the time payment of the second batch of invoices was being tended to, on 20 February 2020, the relationship of the parties was in critical decline. The payment of the earlier invoices and the pre-contract request for reimbursement powerfully supports the reliability of the evidence that Mr Johnson did agree the plaintiffs’ food expenses would be reimbursed.
As earlier explained, I do not accept Mr Johnson’s evidence that he did not peruse the content of the invoices. The even numbered invoices for “Reimbursement for expenses” did not indicate what types of expenses were claimed – that information was found in the receipts annexed to the invoice. For the same reasons I concluded Mr Johnson perused the invoices I conclude he perused the receipts. It may be accepted he sufficiently trusted the plaintiffs not to have perused them in great detail. However, I readily infer from his background and his repeatedly exhibited interest in the cost of the project that he would at least have perused them sufficiently to check they fell within a category of expense payable to the plaintiffs.
I do not overlook in arriving at that conclusion that Mr Johnson asserted he did not receive receipts with the invoices. The plaintiffs on the other hand asserted the receipts were sent with the reimbursement invoices, consistently with those invoices including the words, “as per receipts”. Neither side produced other documentary evidence demonstrating the annexure or non-annexure of the receipts with the reimbursement invoices. In fairness to the plaintiffs, they may have inferred the desirability of adducing such additional evidence fell away after the following exchange on day 5 of the trial during the plaintiffs’ case, when Mr McConaghy was giving evidence and I was pressing Ms Verney on this very topic:
“HIS HONOUR: Do you see the problem? These guys are saying they didn’t get stuff. Can’t you produce the covering email that shows you were attaching the receipts? I am right about that, aren’t I? Your side – as I understand your conduct of cross-examination to date, is your side denies it ever got what the invoices the supporting receipts. If I’m wrong about that, you better tell me now.
MR MARINAC: Yes, your Honour, the – last night, we made a review of the materials. We’ve not come up with any emails where there is, as your Honour has described, an invoice and supporting receipts. We have found other emails that forwarded quantities of receipts, which we have, on a forensic review, realised are the email – are the receipts which relate to the invoices, or at least that is our assumption. And so I would not continue to advance the proposition that those receipts were never received.”23
It seems unlikely that such a concession would be made if such receipts had not at least been received prior to the obviously significant point in time in this case when Fortitude elected to pay the invoices to which they relate. I did not understand a
T5-8 LL33-44.
contrary view to be contended for by Fortitude in addresses. That view also fits the existence of evidence that there were inquiries made by Fortitude post-repudiation about the whereabouts of receipts for the use of their credit card,24 but apparently not the receipts in support of the invoices. In any event, the point of quoting the above exchange is it may have left the self-represented plaintiffs with the impression they did not need to go to the extent of adducing covering correspondence or emails to support their testimony that the receipts were sent with the invoices.
I accept the receipts were sent with the invoices and even if that finding is incorrect, they were at least received prior to the making of payment by Fortitude. I do not accept Mr Johnson would have approved payment of a reimbursement invoice without at least perusing the receipts relevant to it sufficiently to check that they fell within the category of expenses payable to the plaintiffs.
In light of this background I conclude it was agreed as a term of the contract that Fortitude would pay the plaintiffs’ expenses in acquiring food while travelling to and living away from home in Brisbane in order to work on the project.
In respect of fuel, carparking, tolls and vehicle improvement costs, beyond Mr McConaghy’s evidence quoted above, the topic was also dealt with in the following exchange in cross-examination of Mr McConaghy:
“I suggest to you that at no time was there a specific agreement made between the parties about the use of the vehicle or any of the other add-ons that I’ve mentioned?--- The – the specific agreement came into effect when the use of the motor vehicle and the trailer, which can’t be proven through documentary evidence, however, the evidence of the agreement comes in the defendant’s payment of invoices.
So listen again to the question. I’m suggesting to you that at no time was there agreement between the two of you where you specifically said, “We intend” – or words to the effect of – “We intend to use our car and we want you to pay $50 a day for it. And we’re going to replace the tyres, and we’re going to put fuel in that car, and we’re going to pay tolls, and we’re going to have a major service---?--- Yes, there was.
---and we’re going to replace the windscreen”?--- Yes, there was.”25
For reasons already given, Fortitude is not entitled to be compensated by the plaintiffs for this cost category.
Ex 65.9: $3,271.57 Qantas airfare Darryl McArthur Brisbane to Perth 23-24 March 2020
This category relates to the cost of the return flight of Fortitude employee Darryl, long after the transition period. It was presumably such an expensive flight because by 23-24 March 2020 the cost of airline travel escalated and ready flight seat availability diminished with the looming closure of state borders due to the COVID- 19 pandemic.
In one sense the cost of flying Mr McArthur home, given he had been flown over to locally manage the project, would not have been incurred but for the plaintiffs’ repudiation. However, it will be recalled I declined to burden Fortitude with funding the costs of the plaintiffs’ trip home subsequent to their repudiation. Restoring Fortitude to the position it would have been in but for the repudiation certainly required incurring the expense of Mr McArthur’s flight over to Queensland. However, once he was in place, Fortitude was restored to its previous position of its project manager being in place locally. Later paying for his travel home was an inherent cost of the project, not a consequence of the repudiation.
Fortitude is not entitled to be compensated by the plaintiffs for this cost category.
Ex 65.10: $3,017.77 Hertz rental vehicle 24 March 2020-5April 2020
Again, this cost category relates to Fortitude’s post-transition expenses. It is not entitled to be compensated by the plaintiffs for it.
Conclusion
Of the above discussed cost categories, Fortitude is entitled to be compensated by the plaintiffs for:
Airfare for Mr McArthur 24 February 2020 (Ex 65.1) $1,082.18
Airfares for Mr Johnson 23-28 February 2020 (Ex 65.2)
$1,784.25
Accommodation for Mr McArthur 27-28 February 2020 (Ex 65.3)
$ 66.00
Accommodation and restaurant for Mr Johnson and Mr McArthur 23-27 February 2020 (Ex 65.4)
$1,825.00
Hire car cost for 23-28 February 2020 (Ex 65.5)
$ 601.24
Total:
$5,358.67
Conclusion
Claim
In respect of the plaintiffs’ claim to the outstanding $28,080.49 allegedly remaining unpaid on the invoices these reasons have identified various invoiced amounts that were not payable. Those amounts have been recorded in Annexure A against the invoice they relate to. They total $6,668.59. It follows the claimed total should be reduced by that amount: $28,080.49 - $6,668.59 = $21,411.90.
The plaintiffs are thus entitled to be awarded $21,411.90 plus interest.
The total is effectively a consolidation of what was payable at the conclusion of the plaintiffs’ service of Fortitude on 23 February. Allowing for the monthly delay in payment which was part of the contractual arrangements I will assess interest as accruing from 24 March 2020. Deploying the Court’s pre-judgment interest calculator the interest payable on $21,411.90 from 24 March 2020 to the date of judgment, 1 December 2023, is $4,054.97. That gives rise to a total of: $21,411.90 +
$4,054.97 = $25,466.87.
The plaintiffs are entitled to an award of $25,466.87 on their claim.
Counterclaim
In respect of Fortitude’s counterclaim for $97,517.41 Fortitude has succeeded in establishing the plaintiffs’ liability to it for a loss of $5,358.67, occasioned by the plaintiffs’ repudiation.
Those losses were incurred in respect of the transition period ending 28 February 2020. Again, allowing the same hypothetical one month payment cycle delay to accrue, I will assess interest as accruing from 29 March 2020. Deploying the Court’s pre-judgment interest calculator the interest payable on $5,358.67 from 29 March 2020 to the date of judgment, 1 December 2023, is $1,011.34. That gives rise to a total of: $5,358.67 + $1,011.34 = $6,370.01.
Fortitude is entitled to an award of $6,370.01 on its counterclaim.
Orders
It will be recalled Fortitude made a payment into court as security for the vessel’s release. It will be necessary to hear the parties as to the appropriate release of that security having regard to the interplay of what is owing as between the parties.
It will also be necessary to hear the parties as to costs. While costs will ordinarily follow the event it will be necessary to consider that each party had mixed success, with the plaintiffs enjoying success in their claim to a greater proportionate degree than Fortitude did in its counterclaim
My orders are:
1. Judgment for the plaintiffs in the amount of $25,466.87.
2. Judgment for the second defendant in the amount of $6,370.01.
3. I will hear the parties as to costs, if costs are not agreed in the meantime, and the release of Fortitude’s security at 9.00am 13 December 2023 (out of town parties having leave to appear by telephone or videolink).
Annexure A: Invoices rendered and payments made
| Invoice No. | Date | Invoice Description | Sub- Totals (excl GST) | Total invoiced (*denotes plus GST) | Item not payable | |
| $ | Description | Amount | ||||
| Email1 | 17/12/19 | Expenses “for trip down to look at MV2000” 3/12/19 to 8/12/19: | $2,468.55 | |||
| · Qantas flight Cairns to Brisbane (both) | $367.82 | |||||
| · Accommodation Meriton Southport (3-6/12/19) | $636.41 | |||||
| · Accommodation Beenleigh Yatala Motor Inn (7-8/12/19) | $159.00 | |||||
| · Thrifty Car Rental | $189.18 | |||||
| · Car Insurance | $71.00 | |||||
| · Coles Express fuel receipts | $110.09 | |||||
| · Taxi to airport & return +1 | $88.96 | |||||
| · Qantas flight Brisbane to Cairns (both) | $485.00 | |||||
| · Meals | $273.00 | |||||
| · Padlocks for MV 2000 | $88.09 | |||||
| Total invoiced: | ||||||
| 2001 | 10/1/20 | 13 Days project management fee @ $500 p/d 3/12/19 to 19/12/19 | $6,500.00 | $7,150.00* | ||
| 2002 | 10/1/20 | · Reimbursement for expenses as per receipts 3/12/19 to 19/12/19 (sic: expenses only for 13/12/19 to 14/12/19) | $1,086.31 | |||
1 Ex 38.1.
| 2003 | 10/1/20 | · 9 Days project management fee @ $500 p/d 28/12/19 to 5/1/20 · 9 use of car/trailer @ $50 p/d 28/12/19 to 5/1/20 · Produce passage plan for delivery · 3 Delivery of vessel to slipway @ $1000 p/d 31/12/19 to 2/1/20 | $4,500.00 $450.00 $500.00 | $9,295.00* | · Produce passage plan for delivery · Seafarer fee 31/12/19 | $550.00 $1,100.00 |
| 2004 | 10/1/20 | Reimbursement for expenses as per receipts 28/12/19 to 5/1/20 | $1,579.68 | |||
| 2005 | 10/1/20 | · 6 Days project management fee @ $500 p/d 6/1/20 to 11/1/20 · 6 Use of car/trailer @ $50 p/d 6/1/20 to 11/1/20 · Move vessel onto slip · 11 Labour waterblasting @ $50 p/h 9/1/20 to 11/1/20 | $3,000.00 $300.00 $500.00 | $4,785.00* | ||
| 2006 | 10/1/20 | Reimbursement for expenses as per receipts 5/1/20 to 11/1/20 | $406.01 | |||
| Running total claimed: · 17/12/19 expenses email · Invoices 2001 to 2006 | $2,468.55 $24,302.00 | |||||
| 16/1/20 | Payment made by Fortitude (total expenses in email 17/12/19) | -$2,468.55 | ||||
| 24/1/20 | Payment made by Fortitude (total of invoices 2001-2006) | -$24,302.00 | ||||
| 24/1/20 | Total claimed amount outstanding post payment | $0.00 | ||||
| 2007 | 1/2/20 | · 7 Days project management fee @ $500 p/d 12/1/20 to 18/1/20 · 7 Use of car/trailer @ $50 p/d 12/1/20 to 18/1/20 · 16 Labour @ $50 p/h | $3,500.00 $350.00 $800.00 $4,650.00 | $5,115.00* | ||
| 2008 | 1/2/202 | Reimbursement for expenses as per receipts 12/1/20 to 18/1/20 | $598.19 | · Food 15/1/20 | $26.30 | |
| 2009 | 1/2/20 | · 7 Days project management fee @ $500 p/d 19/1/20 to 25/1/20 · 7 Use of car/trailer @ $50 p/d 19/1/20 to 25/1/20 · 54 Labour @ $50 p/h | $3,500.00 $350.00 $2,700.00 | $7,205.00* | ||
| 2010 | 1/2/203 | Reimbursement for expenses as per receipts 19/1/20 to 25/1/20 | $199.24 | |||
| 2011 | 1/2/20 | · 7 Days project management fee @ $500 p/d 26/1/20 to 1/2/20 · 7 Use of car/trailer @ $50 p/d 26/1/20 to 1/2/20 · 46 Labour @ $50 p/h | $3,500.00 $350.00 $2,300.00 | $6,765.00* | ||
| 2012 | 1/2/204 | Reimbursement for expenses as per receipts 26/1/20 to 1/2/20 | $232.74 | |||
| 20/2/20 | Running total invoiced since last payment | $20,115.17 | ||||
| 20/2/20 | Payment made by Fortitude (total of invoices 2007, 2009, 2011) | -$19,085.00 | ||||
| 20/2/20 | Total invoiced amount unpaid at this date | $1,030.17 (total of unpaid reimbursement invoices 2008, 2010, 2012) |
2 Dated erroneously in invoice as 2/1/20.
3 Dated erroneously in invoice as 2/1/20.
4 Dated erroneously in invoice as 2/1/20.
| 2013 | 22/2/20 | · 7 Days project management fee @ $500 p/d 2/2/20 to 8/2/20 · 7 Use of car/trailer @ $50 p/d 2/2/20 to 8/2/20 · 38 Labour @ $50 p/h | $3,500.00 $350.00 $1,900.00 $5,750.00 | $6,325.00* | ||
| 2014 | 25/2/20 | Reimbursement for expenses as per receipts 2/2/20 to 22/2/20 | $822.56 | · Food 6/2/20 · Food 18/2/20 · Food 21/2/20 | $38.20 $13.50 | |
| 2015 | 22/2/20 | · 7 Days project management fee @ $500 p/d 9/2/20 to 15/2/20 · 7 Use of car/trailer @ $50 p/d 9/2/20 to 15/2/20 · 47 Labour @ $50 p/h | $3,500.00 $350.00 $2,350.00 $6,200.00 | $6,820.00* | ||
| 2016 | 28/2/20 | Reimbursement for expenses as per receipts 23/2/20 to 27/2/20 | $1,807.76 | · 4 tyres, a windscreen and fuel and food post-23/2/20 | $1,780.195 | |
| 2017 | 22/2/20 | · 7 Days project management fee @ $500 p/d 16/2/20 to 22/2/20 · 7 Use of car/trailer @ $50 p/d 16/2/20 to 22/2/20 · 53 Labour @ $50 p/h | $3,500.00 $350.00 $2,650.00 $6,500.00 | $7,150.00* | ||
| 2019 | 28/2/20 | · 5 Days project management fee @ $500 p/d 23/2/20 to 27/2/20 · 5 Use of car/trailer @ $50 p/d 23/2/20 to 27/2/20 · 20 Labour @ $50 p/h | $2,500.00 $250.00 $1,000.00 $3,750.00 | $4,125.00* | · 4 days project management fee post 23/2/20 · 4 days use of car/trailer post 23/2/20 · 13 hours labour post 23/2/20 | $2,200.00 $220.00 $715.00 |
| Total invoiced amount unpaid | $28,080.49 |
5For invoice 2016 the only receipts for expenses prior to 24 February 2020 are two receipts for food totalling $27.57. Deducting that from the total invoiced leaves $1,780.19 which is not payable.
| Total not payable | $6,668.59 | ||
| Amountoutstanding: | $21,411.90 | ||
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