Metro Plating Pty Ltd v NQEA Australia Pty Ltd
[1996] FCA 315
•3 MAY 1996
CATCHWORDS
Contract - paintwork on hull of motor yacht - implied term requiring reasonable care and skill appropriate to a competent and skilled yacht painter - whether respondent in breach of implied term in preparation or inspection of surface for painting - appeal against findings of fact at trial - no point of principle involved.
Matter No. QG162 of 1995
METRO PLATING PTY LIMITED v NQEA AUSTRALIA PTY LIMITED
von Doussa, Tamberlin & Kiefel JJ
Brisbane
3 May 1996
IN THE FEDERAL COURT )
OF AUSTRALIA )
QUEENSLAND DISTRICT REGISTRY)
GENERAL DIVISION ) No. QG162 of 1995
BETWEEN: METRO PLATING PTY LIMITED
Appellant
AND : NQEA AUSTRALIA PTY LIMITED
Respondent
MINUTES OF ORDER
JUDGES MAKING ORDER : VON DOUSSA, TAMBERLIN &
KIEFEL JJ
PLACE ORDER MADE : BRISBANE
DATE ORDER MADE : 3 MAY 1996
THE COURT ORDERS THAT:
The appeal be dismissed.
The appellant pay the respondent's costs of the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT )
OF AUSTRALIA )
QUEENSLAND DISTRICT REGISTRY)
GENERAL DIVISION ) No. QG162 of 1995
BETWEEN: METRO PLATING PTY LIMITED
Appellant
AND : NQEA AUSTRALIA PTY LIMITED
Respondent
Coram: von Doussa, Tamberlin & Kiefel JJ
Place: Brisbane
Date : 3 May 1996
THE COURT:
REASONS FOR JUDGMENT
This is an appeal against the dismissal of the appellant's claim in the admiralty jurisdiction for damages for breach of contract and negligence.
The appellant is the owner of the "Mustique" an aluminium motor yacht approximately 32.3 metres in length which is used for charter work. The respondent carries on an engineering and shipbuilding business. Following the acceptance by the appellant of a written quotation from the respondent dated 6 April 1990, the respondent carried out certain repairs and painting to the Mustique including the provision of skilled labour to recoat the vessel from waterline up. The appellant by its statement of claim alleges that the respondent negligently and in breach of contract failed to carry out the work skilfully and to a satisfactory standard and quality.
Experts instructed by each of the parties examined the vessel in 1993 and 1994, and, by direction from the Court, then conferred with a view to determining the extent to which they could agree on the nature and extent of the defects, if any, in the paintwork the subject of the dispute; as to the cause of the defects, if any; and as to the work reasonably necessary to remedy any defects. The experts reached agreement that there were defects of four kinds, namely soft primer, soft filler, corrosion blisters and visible residues of spot repairs. The first two kinds of defect were to the transom. The other defects were to the hull.
The learned trial judge found that the soft primer and soft filler defects, and the corrosion blisters were not due to the respondent's work. The appellant does not appeal against the dismissal of these aspects of its claim.
The visible residues of spot repairs were described by the experts as surface only defects, that is the defects were visual blemishes apparent in places on the paint surface of the hull above the water line, but they did not affect the integrity of the paint as a protective layer to the underlying fabric of the vessel. The trial judge accepted this description.
During the course of the construction of the vessel the hull had been treated with a fairing compound to provide a smooth and level surface to which a high gloss marine paint system was applied. In the ordinary course of use the paint system had a life of some 2-4 years. The vessel was launched in 1987. The work the subject of the claim included the vessel's first repainting. To perform the repainting it was necessary to first sand back the existing paint. When that work commenced, many small areas of corrosion and airholes in the fairing were discovered. These had to be ground out and the craters created in this process primed, filled with fairing compound, and sanded back flush with the original paint system before the new paint system was applied.
When the experts examined the vessel the surface only defects were found to overlie these spot repairs. The defects were very hard to see and could only be detected in certain lights and when viewed from certain angles. They were not of sufficient prominence to be visible in photographs. The experts agreed they were caused by a failure to completely sand back the fairing compound, but the extraneous compound did not exceed, at points of maximum thickness to the original topcoat, 50 microns - that is about 1/200th of a millimetre. Put in perspective the extraneous product not removed by sanding was not more than 40% thicker than a Tally-Ho cigarette paper. (The appellant challenges the findings to this effect by the trial judge, but the Court is satisfied that his Honour correctly understood the evidence).
The evidence accepted by the trial judge was to the effect that the surface defects were not visible when the application of the new paint system was completed, and that it was many months if not as much as two years before specific complaint was made by the appellant about the surface only defects. The delay before the defects became visible is explained by the process of "shrink back" in both the undercoat and the gloss topcoat of the new paint system both of which comprise a majority of solvents which are slowly and progressively released from the paints. The blemishes became visible as the paintwork aged and shrink back occurred.
The terms of the contract under which the respondent carried out the recoating work did not warrant a particular result. Under the contract the work of sanding and painting was to be shared between the parties. Relevantly the express terms of the contract provided that the respondent:
"Supply skilled labour only to recoat vessel from waterline up as directed
Owner to supply all unskilled labour and material
Allowing for maximum of 3 men x 8 weeks - 33,600.00."
The "3 men" allowed for were skilled painters to be made available by a sub-contractor nominated by the appellant, and the 8 week period was only an estimate nominated by the appellant. In fact the painting work took longer and the appellant paid hourly rates for all time spent by the painters. As to the interpretation of this contractual term, the trial judge held that within the boundaries of the paint specification (which was provided by the supplier of the paint system selected by the appellant) the painters were to perform the works exercising reasonable care and skill and in accordance with ordinary and acceptable trade practice. This interpretation is not challenged by the appellant.
When the defects that required the spot repairs became evident after the sanding of the original paintwork commenced, the appellant engaged Mr Freestone an expert fairer to execute the spot repairs. He was paid for by the appellant, and was under the direction of the appellant, not the respondent.
The trial judge concluded that the appellant had not established that the painters failed to use reasonable care and skill in the performance of the contracted work, or that in preparing the surface for painting they had failed to adequately or properly fair the surface at the site of repairs which had been effected by Mr Freestone. His Honour observed that no reasonably competent painter exercising ordinary care and skill would apply paint to a surface which had not been properly or competently faired, but it was a matter of judgment and degree, not to mention time and cost, as to when by sight of eye a line is sufficiently straight, a curve is sufficiently smooth or a surface sufficiently free from hollow or lump to represent a surface which a reasonably skilled painter would regard as sufficiently and properly prepared and suitable to be painted.
Although it was not strictly necessary for him to do so, the trial judge went on to consider the question of damages. The contract was not one for a fixed sum nor was it for a specified result in terms of a surface free from any irregularities. Under the terms of the contract insofar as sanding was necessary to remove extraneous fairing compound, the cost of that work was payable by the appellant. A more uniform finish could have been achieved had the fairing been conducted in ways other than the way in which it was performed at additional cost variously estimated by witnesses as between $2,880 and $17,280. His Honour concluded that as the appellant had not paid out the cost of the additional sanding, it had not lost that sum. At the time of trial the vessel was due to be recoated again on account of ordinary wear and tear since 1990, and to award that sum to enable the additional work to be done would amount to an unreasonable enhancement of the appellant's position. His Honour also concluded that the appellant had not lost the cost of labour and materials represented by the application of the paint system by the respondent as the paint system had performed functionally for its ordinary and expected life. The defect was only cosmetic, and moreover it did not appear until a reasonable time into the life of the paint. The blemishes were not obvious and not something which would be likely to attract the attention of a casual observer, particularly someone boarding the vessel for pleasure in the course of the appellant's business. They were not such as to justify immediate rectification when they became evident, and this had not occurred. As the resanding of the blemishes could be carried out in conjunction with the imminent repainting, any additional time taken in further sanding and refairing would be offset by the time saved in 1990 when that work was not done. There was no evidence that additional costs or downtime would be incurred at the time of the repaint over what would have been the position in 1990 had additional time been taken to do the extra sanding. Hence, his Honour held that there was no basis on which to award anything for lost profits.
The appellant now challenges these conclusions. The appellant argues that as the expert witnesses were agreed, and the parties by their conduct of the trial accepted, that the surface only defects were due to extraneous fairing compound at the locations of the spot repairs, the defects should have been detected at the time and that the respondent should have directed that the extraneous material be removed by sanding. As this did not occur the appellant contends that there should have been a finding that the painters failed to exercise reasonable care and skill. The appellant concedes the duty of care in tort is similar to, but no higher than, the contractual duty, and this finding which should have been made would result in the appellant succeeding on both causes of action. It is contended that as the respondent and its painters failed in the exercise of an appropriate level of skill the appellant must now meet the cost of the extra sanding during the next repaint, and this cost is a loss which should be compensated in damages. The Court is invited to assess the damages on the evidence which shows the range of the extra sanding costs to be between $2,880 and $17,280. It is not suggested that any other heads of loss are recoverable.
The primary submissions of counsel for the appellant concentrate on the question whether the painters had failed to exercise reasonable care and skill in the performance of their work, and upon errors said to be evident in the reasoning of the trial judge that led him to conclude that there had been no breach of duty. However, in our opinion, even if these submissions were to be accepted the appeal nonetheless must fail as we agree with the conclusions of the trial judge that the appellant has failed to establish any loss.
Had the painters in 1990 detected unacceptable extraneous fairing compound at the locations of the spot repairs and directed or undertaken the performance of extra work necessary to remove it, the work then required, on the evidence, was not greater than the work which is now required and which can be carried out in conjunction with a routine repaint. The nominal dollar cost of that work may have been somewhat less in 1990, although the evidence fails to quantify what differences may have occurred in labour costs. If the cost were somewhat less, then the appellant has retained the use of that money, and must now meet the cost - if it chooses to incur it - in the deflated dollars of today. There is no evidence to support a finding that there is any difference in real cost between 1990 and the date of trial. The trial judge was correct to hold that as the cost was not expended in 1990, no loss was suffered because the sanding was not then carried out. It is not disputed on the evidence that the extraneous fairing compound has caused only cosmetic blemishes. The description given to the blemishes by the experts - surface only defects - correctly indicates that the defects have no more serious consequence. The paint system has performed its protective function for its expected life. There is no evidence that justifies a finding of loss on account of the blemishes which became visible as the paint aged. As already noted those blemishes were only visible in certain conditions, and would not be likely to be noticed by a casual observer. There is no basis in the evidence to hold that a loss has arisen either in respect of remedial work or loss of profits.
Notwithstanding this conclusion, the Court has carefully considered all the criticisms made of the reasoning and conclusions of the trial judge. Those criticisms concern findings of fact only and raise no point of law or principle. The Court is not persuaded that the trial judge made any of the errors alleged by the appellant's contentions. In particular the Court does not accept the contention, which is central to much of the appellant's argument, that because there must have been extraneous fairing compound present when the painting took place, the painters failed to exercise reasonable care and skill in not detecting that fact.
A breach of duty is not established merely by showing that the painters failed to detect extraneous fairing compound. We agree with the trial judge that questions of judgment and degree are involved. The degree of extraneous material was minute. His Honour had the benefit of seeing and hearing the witnesses giving their evidence, and of a viewing of the vessel. He was entitled to accept their evidence, as he did, that the degree of extraneous material was not detectable by visual examination at the time when they applied first the white undercoat - which had a dry thickness of some 125 microns - and then the top coat. Whether there was a breach of duty turns not on the mere existence of extraneous material, but on whether the failure to detect it, and to take remedial action, constituted a failure to exercise reasonable care and skill. The painters and Mr Freestone were highly skilled tradesmen. The trial judge was entitled to accept their evidence that the quality of their work and the standard that was achieved was that which ought reasonably be expected for that type of vessel and for the type of spot repairs which had taken place. Mr Hanley, the senior painter whose evidence the trial judge accepted, when asked his opinion about their work after the experts' joint opinion had been brought to his attention, described it as good. The evidence of Mr Rendell, another of the painters, and Mr Freestone is that the vessel prior to painting was on close visual inspection properly and adequately sanded. At the time, in their opinion the surface was properly prepared.
Mr Biddle who inspected the vessel as the painting was taking place as representative of the paint manufacturer was called by the respondent. He is an experienced shipwright and painting contractor. It was not suggested to him in cross-examination that there was anything about the work of the painters which suggested any want of skill or care on their part. Counsel for the appellant has not suggested that there is any direct evidence of a want of skill or care that contradicts the evidence which the trial judge accepted. The appellant's case is based solely on the opinion of the experts in their joint report that there existed extraneous fairing compound at the locations of the spot repairs. As we have said, the mere fact of the extraneous material to the minor degree detected does not establish a breach of duty. The appellant carried the onus of establishing that the existence of the extraneous material is not consistent with the exercise of due skill and care, and it failed to adduce evidence to establish that this was the case.
Counsel for the appellant contended that the trial judge misunderstood, or failed to deal with, certain answers in the cross-examination given by Mr Hanley and Mr Rendell. Counsel submitted that these answers, properly understood, amounted to admissions that the surface only defects that were evident in late 1993 indicated that the painting was not performed in 1990 with reasonable care and skill. We are unable to agree. The trial judge did consider this evidence. We agree with his Honour's conclusion that the answers relied on are to be understood to mean in context that the vessel by late 1993 needed a repaint, and part of that repaint work would be to remove the surface only defects which had become visible with the passage of time since 1990. When fairly read in context these answers, far from being admissions, make it clear that the witnesses are saying that the work carried out in 1990 was executed in a proper and workmanlike manner at that time and without negligence.
In our opinion the appeal should be dismissed.
I certify that this and
the preceding 11 pages are
a true copy of the Reasons
for Judgment of the Court.Associate:
Dated:
Counsel for the appellant : Mr G McVay
Solicitors for the appellant : Bowles & Company
Counsel for the respondent : Mr M Amerena
Solicitors for the respondent : MacDonnells
Dates of hearing : 29 and 30 April 1996
0
0
0