Metro Plating Pty Ltd v NQEA Australia Pty Ltd
[1995] FCA 746
•15 SEPTEMBER 1995
CATCHWORDS
CONTRACT - Implied terms - paint work on hull of motor yacht - whether plaintiff contracted for particular visual effect or paint surface or underlying surface within specified and reasonable physical attributes and tolerances - whether defendant in breach of implied term to use reasonable care and skill in preparation of work contracted for or preparation of surface for painting - whether defendant failed to take reasonable steps to remove observable or ascertainable areas of corrosion - whether defendant caused damage to vessel or carried out defective repair work - duty to exercise skill and care appropriate to a competent and skilled yacht painter.
Codelfa Constructions Pty Ltd v. State Rail Authority of New South Wales (1982) 149 CLR 337
Hawkins v. Clayton (1988) 164 CLR 539
Commonwealth v. Amaan Aviation Pty Ltd (1991) 174 CLR 64
Auburn Municipal Council v. ARC Engineering Ltd [1973] 1 NSWLR 513
Smail v. D.L. Starbuck Pty Ltd [1971] VR 449
Metro Plating Pty Limited v. NQEA Australia Pty Limited
No. NG569 of 1993
Cooper J., Brisbane, 15 September 1995
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
IN ADMIRALTY
No. NG569 of 1993
BETWEEN:
METRO PLATING PTY. LIMITED
(A.C.N. 000 754 969)
Plaintiff
AND:
NQEA AUSTRALIA PTY. LIMITED
(A.C.N. 009 679 207)
Defendant
JUDGE MAKING ORDER: Cooper J.
WHERE MADE: Brisbane
DATE OF ORDER: 15 September 1995
MINUTES OF ORDER
THE COURT ORDERS THAT:
The action be dismissed and judgment be entered in favour of the defendant against the plaintiff.
The plaintiff pay the defendant's costs of and incidental to the action, including reserved costs, to be taxed if not agreed.
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
IN ADMIRALTY
No. NG569 of 1993
BETWEEN:
METRO PLATING PTY. LIMITED
(A.C.N. 000 754 969)
Plaintiff
AND:
NQEA AUSTRALIA PTY. LIMITED
(A.C.N. 009 679 207)
Defendant
CORAM: Cooper J.
PLACE: Brisbane
DATE: 15 September 1995
REASONS FOR JUDGMENT
The vessel "Mustique" is an aluminium motor yacht of approximately 32.3 metres in length and 7.3 metres beam. The vessel was launched in 1987. The hull of the vessel during the course of construction was treated and fairing compound was applied to provide a smooth and level surface to which a high gloss paint system was applied. The fairing compound is applied, shaped and sanded ("faired") to enhance and smooth out the contours of the vessel's shape and to remove irregularities in the surface of the underlying aluminium plating. There was, I find, on the "Mustique" fairing compound under virtually all of the original paintwork. At all material times to these proceedings the vessel was owned by the plaintiff, Metro Plating Pty Limited.
The "Mustique" was a charter vessel which operated in conjunction with game fishing vessels including in particular the "Kanahoe", which vessel was also owned
by the plaintiff. The "Mustique" was not a game fishing vessel; rather it provided accommodation and general charter services. At all material times Brian Felton was the Master of the "Kanahoe" and Thomas Doreian was the Master of the "Mustique". Both men were employed by the plaintiff and their dealings with the plaintiff were with Paul Coughlan, a director of it.
In late 1989 Mr Doreian had discussions with Francis James concerning a repaint of the "Mustique" in 1990. In early 1990 and prior to April 1990, the plaintiff by Mr Doreian again approached Mr James, the slipway manager of the NQEA Australia Pty Limited, to obtain a price for the defendant to perform certain work on the vessel. The work involved the defendant undertaking a repaint of the "Mustique" with the complete work being performed and all materials being supplied by the defendant. A price in the order of $96,000.00 was quoted for such painting work. The quote was unacceptable to the plaintiff. In consequence, I find, Mr Coughlan in March 1990 instructed Mr Felton to approach Mr James to discuss a price for the repainting of the vessel. At this time the vessel had suffered storm damage which included damage to side doors on the upper deck, damage to the paintwork in the vicinity of the doors, damage to the deck timbers, transom and other damage which involved the repair and replacement of part of the fabric of the vessel and equipment. Repair of the storm damage involved some repainting of the vessel. The storm damage was subject to an insurance claim.
John Hanley at all material times was the principal of Luxury Yacht Refinishers, whose business was that of expert boat painters. Mr Hanley was the painter of the vessel "Kanahoe" and was known to Mr Felton. Mr Hanley and his business were
also well known in the Cairns area as that of expert painters specialising in the luxury end of the market. Mr Felton approached Mr Hanley to discuss his doing the painting work on the "Mustique". Mr Felton had previously worked with Mr Hanley on the painting of the "Kanahoe" where Mr Hanley provided the painting skills and Mr Felton provided the unskilled labour and materials. I find that this approach occurred prior to Mr Felton meeting with Mr James at the defendant's slipway to discuss a repaint of the vessel. Further, I find that Mr Hanley had expressed his interest in undertaking the painting work and that he accompanied Mr Felton when they called on Mr James to discuss the matter in early April 1990.
I accept the evidence of Mr Hanley and Mr James as to what occurred at that meeting. Mr Hanley was not challenged as to his recollection of what occurred.
The proposal discussed with Mr James and put by Mr Felton was, I find, that Mr Hanley's business as a sub-contractor of the plaintiff, would supply three skilled painters, including Mr Hanley, to repaint the vessel and that the plaintiff would supply all necessary paint, materials and other labour. In the discussion I find that Mr Felton was the person who estimated that the work would be completed in eight weeks and in this regard rejected the opinion of Mr James that the work would take a longer period to complete. However, the quotation sought was on the basis of a price per hour for each of the skilled painters. The period of eight weeks for three painters was no more than an estimate and the ultimate cost was to be charged out at the hourly rate for the time actually expended up to a maximum of three skilled painters for eight weeks. There was also discussion, I find, as to the work to be done as storm damage repairs and the extent to which the repainting could be recovered under this head. Mr Felton requested that Mr James prepare a written quotation and submit it to Mr Felton.
On 6 April 1990 Mr James had prepared the following written quotation :-
"Cairns Charter Boat Service,
63 Beresford Ave.,
GREENACRE..2190
For Attention - Mr. P. Coughlan, Mr. A. Doreian, Mr. B. Felton.
Reference - `MUSTIQUE'
Dear Sirs,
We thank you for your enquiry regarding the refit and repairs to this vessel and set out hereunder our quotations for such work as we are now able following our several discussions.
Other heavy weather damage repairs as may be required can be quoted for after docking and subsequent issue of a defect advice notice from your underwriters surveyor.
1.DOCKING
a)Docking and undocking of vessel 1,000.00
b)Docking rental - per day - 150.00
2.CLEANING & PAINTING - UNDERWATER
a)Clean hull below waterline with high
pressure waterblast 480.00
b)Recoat below waterline with paints as
supplied by owner 2,380.00
3.SWIM PLATFORM/FUEL TANKS
Supply new platform comprising platform and tank
to Lloyds Survey Standard. Platform covering to
be of white beech with "D mould" rubber fendering
Tank to be microballooned and coated to same
standard as hull 27,000.00
Quotation for fitting will be given after docking
and damage assessment.
4.TOPSIDE PAINTING
a)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
b)Allowance for heavy weather damaged
paintwork to ships sideways, engine room
transom ect. at full coat 23,448.00
5.WHARF FACILITY
Supply of berth to carry out topside painting
after docking and including power, water, air
as required - per day - 60.00
Yours faithfully"
This quotation was delivered by Mr James to Mr Felton's residence at about 5.00 p.m. on 6 April 1990. The quotation was either accepted on that evening by Mr Felton or within a few days thereafter when both Mr Doreian and Mr Felton independently orally advised Mr James to proceed with the work the subject of the 6 April 1990 quotation which work included the painting.
The words "supply skilled labour only to recoat vessel from waterline up as directed" means and were understood by the parties to mean that the defendant would supply the labour of Mr Hanley and two other skilled painters to perform the tasks ordinarily undertaken by such painters in the preparation of the surfaces to be painted and the application of all preparatory coatings and final coat, such work to be undertaken
exercising all the care and skill of a reasonably competent yacht painter. The phrase "as directed" in the context of this agreement meant that the areas to be painted and the paint system to be used and the specification as to the manner and method of its application were to be determined by the plaintiff itself or in consultation with others and to be conveyed to the skilled painters as a direction as to the work to be undertaken and to the manner of its performance. Within the boundaries of the paint specification and a direction as to the work to be done, the painters were to perform the works exercising reasonable care and skill and in accordance with ordinary and acceptable trade practice. The obligation of the defendant was to provide the specified number of skilled painters and to procure their performance of the necessary repainting work. I do not accept that the total extent of the defendant's obligations was to make available three painters on site to do the work.
The defendant was responsible, in my view, for the provision of the painters, for their undertaking painting work as directed up to the maximum period specified and for the workmanship and care exercised by the painters in the performance of their work. In a practical sense, responsibility for the work performed by the three painters necessarily involved supervision of them whether or not having regard to their experience the defendant chose to exercise such supervision.
The plaintiff chose for the painting of the "Mustique" an Epiglass paint system manufactured by Epiglass Australia Pty Ltd. That paint system was supplied by Cairns Wholesale Paint and Cleaning Supplies to the plaintiff for use on the "Mustique". Additionally, there was supplied by the manufacturer a written specification No. E/G 755/90Q dated 15 May 1990. A copy of the specification was supplied to Mr Hanley for use by himself and his two employees and a copy was available on site when the work was undertaken. In addition to the written specification the manufacturer supplied the services of one of its employees, Kelvin Biddle, to act as an on-site consultant and adviser to the plaintiff and, acting in the manufacturer's interests, to satisfy himself that the paint system was being properly applied in accordance with the specification. Neither the defendant, nor Mr Hanley and his employees, had anything to do with the system chosen or the preparation of the specification. Those were matters which were dealt with and determined independently between the plaintiff and the paint supplier and/or the manufacturer.
As appears from the specification for "Surface Preparation" being part of E/G 755/90Q and the painting specification thereto specified painting work was to a faired surface of the vessel. It was not part of the painting specification nor part of the contract agreed to by the defendant that it or the three skilled painters it would supply would repair and reinstate any defective original fairing compound in the vessel surface nor re-fair the entire vessel in consequence of any such repair work being performed.
In addition to the materials, including the paint system, the plaintiff was responsible for the supply of all other necessary labour. This follows from the specification of the defendant' obligation in terms of "skilled labour only to recoat vessel". This skilled labour meant and was understood by the parties to mean skilled painters. All other necessary labour was unskilled in the sense of not being skilled painters and the term unskilled labour should be understood accordingly. The unskilled labour included workers to remove all fittings to enable surfaces to be prepared and painted, and, to replace the fittings after painting and generally to undertake such other work as did not fall into the category of skilled painting work. The plaintiff supplied crew members from the "Mustique" and the "Kanahoe" to perform such work. Although such unskilled labour was under the direction and control of the plaintiff which paid the workmen directly, in a practical sense the unskilled labour had to work in conjunction with the painters to progress the works. This necessitated the painters telling the unskilled workers what tasks to do and the order in which they were to be done. As appears from the evidence of Mr Hanley and Mr Rendell, which I accept, this is what in fact occurred, although the level of attendance and enthusiasm for the work on the part of the unskilled labour seems to have waned over time.
The plaintiff also engaged Geoffrey Freestone to undertake fairing work on the vessel. Mr Freestone was the builder of the "Kanahoe" which he completed in the mid-1980's. He had known Mr Felton since that time. Mr Freestone gave the following evidence in his affidavit which was not challenged on cross-examination :-
" Felton spoke to me in early 1990 to ask me whether I was interested in doing the fairing work on the vessel `Mustique' when it was to come up for painting later that year. I told him that I was interested. Some time later, he again spoke to me and told me that I was on. When I first inspected the `Mustique', John Hanley, Dave Rendell and Dennis Bourgine had already commenced sanding down the surfaces to be painted. The crew of the `Mustique' were also supposed to provide unskilled work during the course of painting of the `Mustique'. They mainly assisted with the sanding work. Ron Dibley also did some work on the vessel for a short period. He assisted with sanding, washing and other preparation work, generally work that was within the competence of a labourer."
Fairing of a hull involves the placement of epoxy filler material onto the original hull sheeting to remove irregularities in the surface of the sheeting material and to smooth out or make fair the lines and the contours of the hull shape. It is a process of finishing off a hull shape prior to painting and is not part of the painting process. Fairing of a vessel involves skill in the preparation of the surface to accept the filler, or in the removal and reinstatement of defective filler, and having an eye for straight line, curve and contour and being able to work and finish the filler to achieve the desired line, curve and contour. During the life of a vessel, particularly where there are dissimilar metal to metal contacts on a hull, corrosion and pitting occurs. Such corrosion may extend along a metal surface under the fairing filler. In order to remove the corrosion it becomes necessary to break open and remove the filler to allow for the corrosion to be ground out with a grinder going back to the metal hull sheeting. Also where corrosion has broken and lifted the filler, it is necessary to grind out the affected area to remove the corrosion and damaged filler. This process leaves craters or holes in the filling compound which require reinstatement to bring the hull shape back to a faired surface. This was the job Mr Freestone was engaged by Mr Felton to perform for the plaintiff. The work he undertook to perform for the plaintiff was to provide a faired surface to the vessel upon which the painters would perform the specified painting works in accordance with E/G 755/90Q. Mr Freestone was neither engaged nor paid by the defendant. He was paid by the plaintiff by cheques drawn and signed by Mr Doreian. He was subject to the control and direction of the plaintiff and when directed by Mr Doreian to leave the site due to there allegedly being insufficient work to justify his presence on site, Mr Freestone complied with the direction.
On the "Mustique", as well as grinding out and reinstating corrosion damage, Mr Felton was required to reinstate substantial areas where air pockets in the original fairing compound were exposed by ordinary sanding undertaken to prepare the surface for painting. Once the air voids were exposed it was necessary to grind out the affected area back to solid filing material or bare metal as the case may be and then reinstate these areas. This work was undertaken by Mr Freestone.
Whether or not skilled painters are also required to be skilled fairers or whether surface preparation ordinarily requires that surface patches be sanded flat or fair to the adjoining surfaces, is not relevant for present purposes. The balance of the expert evidence on the trial was that where there is substantial patching, as in the case of the "Mustique", the entire vessel must be re-faired. The restoration of the fairing work by Mr Freestone and the re-fairing of the vessel was no part of the work agreed to be undertaken by the painters or the defendant. Once the work of the fairer was complete it was the responsibility of the painters that the entire surface to be painted ie. original fairing and paintwork and reinstated fairing, was adequately and properly sanded and prepared for painting in accordance with the written specification. This did not include further sanding to fair or shape the hull lines and contours of the vessel.
The allegation made by the defendant in paragraph 5(b)(ii) of its defence that the plaintiff agreed to supervise the work of all workmen, including the painters, is not made out on the evidence. What in fact was agreed was that each party would be responsible for the performance of so much of the work which it undertook to provide. The obligations of the defendant were limited to the provision of the three skilled painters and their performance of such painting work as they were directed to do. The plaintiff
for its part was responsible for all other necessary material and labour inputs as were necessary for the repainting and it sought to discharge this obligation under the direction and supervision of Mr Doreian and by provision of the paint, materials and specification E/G 755/90Q.
As was acknowledged by Mr Hanley, his employee Mr Rendell and Mr Freestone, the decision whether or not a surface was properly and adequately prepared for painting and to apply the paint was a decision for the painters and no reasonably competent painter exercising ordinary care and skill would apply paint to a surface which had not been properly or competently faired. It is however a question of judgment and degree, not to mention a question of time and cost, as to when by sight of eye a line is sufficiently straight, a curve sufficiently smooth or a surface sufficiently free from hollow or hump to represent a surface which a reasonably skilful painter would regard as sufficiently and properly prepared and suitable to be painted. I accept the evidence of Mr Hanley, Mr Rendell and Mr Freestone that the vessel, prior to painting, was visually properly and adequately faired and the surface properly prepared for the application of paint.
In the instant case the painting of vessel, including the removal of fittings and sanding back, commenced on or about 9 May 1990 and was not completed until 23 August 1990. Mr Doreian was the owner's representative on site and in that capacity he made decisions and sought to enforce standards of acceptable workmanship and finish. For example, he refused to accept paintwork which was dull when a glossy finish was required and negotiated with the paint supplier a credit in respect of the defective product which had produced a dull finish. He also ordered Mr Freestone off the site on the basis that there was insufficient work to justify his presence on site. Mr Freestone was subsequently brought back on site by Mr Felton and allowed to continue with his fairing work. Mr Doreian, I find, also advised Mr James after the expiration of the eight week period that the painters were to be kept on site to continue with the painting work which was then incomplete.
After completion of the fairing work by Mr Freestone there is no suggestion that the surface was visually defective because reinstated fairing compound was standing proud of and/or overlapping adjoining original fairing filler. Nor is there any evidence that there was discongruity of the surface at the sites where the fairing filler had been restored which was observable to the naked eye of a person paying particular attention to the finish, let alone a casual observer of the surface of the vessel paying no particular attention to any specific location. Mr. Doreian did not complain to the defendant or the fairer or painters that the faired surface prior to painting was unacceptably uneven. Nor did Mr Freestone or the painters come to such a conclusion and I so find. Likewise after the painting was completed in August 1990 it was not rejected or complained of by Mr Doreian, Mr Felton or any other person acting on behalf of the plaintiff. In fact there was no complaint as to the standard of finish of the paintwork until August 1992 when the plaintiff sought leave to amend its defence in action 109 of 1990 in the Supreme Court of Queensland between the defendant and the ship "Mustique" wherein the defendant sought to recover the outstanding balance of the monies due by the plaintiff for the work performed by the defendant between May and August 1990. For the first time the plaintiff alleged that the paintwork undertaken by the defendant was defective. However, as appears from the plaintiff's solicitor's correspondence at and prior to this time, the complaint is with "bubbling" and "peeling" paint and it is difficult to determine whether the complaint is in respect of corrosion damage or surface only defects.
The plaintiff obtained a report of Penlia & Co., consultants, dated 30 November 1993 consequent upon a discussion with the plaintiff's solicitors on 3 September 1992 "regarding a paint problem with the ship Mustique" and an inspection of the vessel on 4 and 5 September 1992. This report gave rise to the defective workmanship alleged in paragraph 6 of the statement of claim filed in this court on 30 July 1993. The Penlia & Co. report was admitted into evidence as Exhibit 31. For its part the defendant obtained a report of Scientific & Engineering Consultants Pty Ltd dated 3 February 1994 (Exhibit 35).
By order of the court, Mr Pennisi of Penlia & Co. and Mr Peachey of Scientific & Engineering Consultants met and discussed the matter with a view to determining the extent to which they could agree, or the area of disagreement, in relation to the following matters :-
(a)the nature and extent of the defects, if any, in the paintwork that is the subject of the dispute;
(b)the cause of the defects, if any; and
(c)what work is reasonably necessary to remedy the defects, if any.
Other questions referred to were not addressed by these experts.
A joint report was furnished by both experts on 12 August 1994. In respect of questions (a) and (b), they said :-
"OUTCOME:
It is likely that 4 only types of defect have been associated with the Mustique repaint.
Two (2) such defects were common to the Penlia and SciEng reports. These are, paint system blistering due to corrosion AND, surface only defects in paint immediately overlaying/corresponding with spot repairs to the original paint system and/or original surface finish of the vessel.
The remaining defects were soft primer and soft repair filler found at the transom. One only of each such incidence was found and reported by Penlia & Co. However, no such soft defects have been detected elsewhere about the vessel by either investigating company. The soft filler was readily distinguished by colour from fairing compound(s) found in association with other defects whereas the soft primer (now hard) was in all physical respects the same as primer found in association with those defects.
SciEng did not thoroughly investigate the transom of the vessel. No paint defects (nor evidence of previous destructive investigations by Penlia & Co. and others) were detected. It was confirmed that the transom had been refurbished at about September 1992. This meant that at the time of SciEng's inspection (in December 1993) the transom had been refurbished/repainted over and above the original repairs and repainting completed by NQEA. More than that this meant that at the time of the SciEng inspection the transom was compromised as a source of representative investigative material (because the earlier repairs could not be reasonably distinguished from the more recent refurbishment).
The identifiable defects can be described as follows:-
·Soft primer.
·Soft filler (different to the fairing compound used to effect repairs).
·Corrosion blisters.
·Visible residues of spot repairs (which are surface only defects).
The likely occurrence of these defects are as follows:-
Soft primer
Soft filler
Corrosion blisters
Visible spot repairs
Found on the transom only
Found on the transom only
Scattered about the vessel; likely population = 5 to 10% of all defects
Predominantly on the hulls; likely population = 90 to 95% of all defects
The cause and relevance of each defect type is as follows:
·Soft primer defect(s) could not be readily explained from the perspective of both investigative companies. Nonetheless the phenomenon is of limited occurrence and only found on the transom of the vessel.
·Soft filler defect(s) can be attributed to incorrect batching/mixing of a repair filler. The phenomenon is of limited occurrence (at the transom) and may even be an isolated event.
·Corrosion blister defects have been attributed to the opportunistic localized attack of the aluminium substrate by an aggressive (tropical) marine environment.
·Visible repair defects have been attributed to repairs not having been sanded fair (which means smooth and flush) to the original top coat prior to repainting. This has been confirmed in one sample of Penlia & Co. and the SciEng samples and means that the repairs sit proud of the existing surface, thus making them visible.
What this means is that corrosion blister defects are in a peculiar category of their own. Further, the soft component defects were of restricted occurrence (at the transom) which in turn means that visible repair defects are the principal issue in dispute."
The surface only defects were counted and measurements taken of samples removed from the vessel by Mr Peachey. Mr Peachey was able to identify forty-three (43) surface only defects on the starboard side of the vessel above the rubbing strake and two (2) below the rubbing strake. On the port side he identified one hundred and ten (110) above the rubbing strake. Each of those defects was in the paint surface
immediately overlaying the location of repair work to the original painting system or the original fairing compound forming the original surface of the vessel. That is, at the site of the re-instatement work performed by Mr Freestone. These defects were cosmetic only and were caused by the paint following the outline of the filler material which had not been taken back flush with the surrounding original surface filler and paintwork.
Mr Peachey measured by analytical microscopy the thickness of the new material standing proud of the surrounding material on the samples he took. The maximum thickness of the extraneous material to the original top coat was measured at 50mm (50 microns). That is, the maximum measurement was 0.005mm (or 1/200th mm). Mr Peachey also expressed the opinion, which I accept, that due to the presence of the solvents in the new paintwork immediately after its application, the work more probably than not was visually and aesthetically totally acceptable and that over time and as the paintwork aged and shrunk back, there appeared sufficient surface discontinuity to detect an irregularity. These surface irregularities remain as a raising of the paint surface by a maximum 1/200th mm to the surrounding paint surface, which variation is minute. The variations are only visible to the naked eye by viewing the affected areas at a shallow angle to the surface or by reflections on the surface. The irregularities cannot be photographed by conventional photography techniques. The defects are now exposed by the characteristic of the paint system to shrink back with age around the raised material and to leave it exposed in comparison with the surrounding material. This, I find, was not a phenomena present at the time Mr Hanley and his employees completed the final top coats when the work was completed in August 1990.
It is important to remember that the plaintiff did not contract for a particular visual effect, nor did it specify for a paint surface or underlying prepared surface having a finish within specified and measurable physical attributes or tolerances. Likewise the defendant did not contract to produce a particular result or warrant that the completed painted surface would be free of defects. The contract, as originally agreed, did not require the defendant to complete the repainting of the vessel above the waterline. Rather, it was to provide labour to undertake that work until completion or the expiration of eight weeks, whichever was the earlier. If the painting works were not complete at the expiration of eight weeks, there was no obligation on the defendant to continue in the absence of further agreement which is in fact what occurred. Nor will the law imply such a condition or warranty to produce a particular result or a paint finish free from any defect simply arising out of the relationship of provider and user of the labour in the nature of skilled painter services. There is also nothing in the circumstances which would support the implication of such a term by reference to the criteria laid down in Codelfa Constructions Pty Ltd v. State Rail Authority of New South Wales (1982) 149 CLR 337 at 347. The only term implied by law is that the defendant, by its servants or agents, exercise reasonable care and skill in the execution of the painting work being such care and skill as an ordinarily competent painter experienced in the painting of vessels similar to the "Mustique" would possess and exercise.
The surface only defects have, in the pleadings and on the evidence, been treated separately from alleged defects in workmanship on the transom of the vessel and have been isolated to the hull and superstructure. By paragraph 6 of the amended statement of claim of 1 September 1994, the plaintiff alleges :-
"6. In breach of the said express and implied terms the Defendant failed to carry out the work skilfully and of a good quality and standard.
PARTICULARS
As to Transom
(i)The paintwork applied by the Defendant has blistered and spalled;
(ii)Prime coat was not applied to the aluminium hull in all areas of repair;
(iii)Where prime coating was applied it was not hard and did not adequately adhere to the aluminium hull;
(iv)Bog applied to the ship's hull had not completely cured;
(v)Etch prime coat was applied to existing bog prior to the application of new bog effectively placing a barrier coat between the existing bog and the later applied repair bog;
(vi)Seawater penetrated the coats of paint and on evaporation left salts behind causing blistering in the paint and spalling;
(vii)Delamination of white top coat from previous top coat; and
(viii)The defendant incorrectly batched/mixed repair filler causing the defects referred to in (i) above.
As to hull and superstructure
(i)The paintwork applied by the defendant has blistered and corroded;
(ii)The paintwork contains surface defects immediately overlaying areas where the defendant carried out spot repairs to the original paint system or the original surface;
(iii)The defendant failed to prevent attack to the aluminium substrate by the tropical marine environment in that the defendant failed to cover with paint specified in specification E/G:002/90Q the surfaces of dissimilar metals where those surfaces meet; and
(iv)The defendant failed to sand fair the repairs carried out by the defendant to the original top coat prior to repainting."
The only allegation against the defendant in respect of the surface only defects is that by its servants or agents it failed to sand fair the repairs carried out to the original top coat. There is no evidence that a reasonably competent painter in the position of Mr Hanley or his workmen would have undertaken additional sanding after Mr Freestone finished fairing the surface, or required Mr Freestone to undertake further fairing to remove surface irregularities of 50 microns and less in the areas where repairs had been undertaken to the original fairing compound and top coat or refrained from painting the surface of the vessel in the absence of such additional fairing. As I have previously said, I accept the evidence of Mr Hanley, Mr Rendell and Mr Freestone that when the top coat was applied to the surfaces they were visually fair. There is no evidence that such minute variations were or would have been visible to the naked eye immediately prior to application of the top coats of paint or immediately thereafter. Such evidence as there is, is all the other way.
It was submitted by the plaintiff that Mr Hanley agreed that the surface only defects needed rectification. However that was only in the context that the vessel needed a refit (repaint) and as part of that repaint, work would be done on the raised fairing. He did not agree that the visual defects of themselves were sufficient to justify rectification in the manner contended for by the plaintiff. Mr Hanley said (transcript p.112) :-
"MR McVAY: ... Be that as it may, assume if you would not mind, please, and just for the purpose of the question, wherever Mr Fresstone [sic] applied filler assume that where he did so now is proud of the hull, or the surrounding surfaces of the hull, and that you painted over that. Please assume that. Now, sitting here today, and having regard to what you saw a year ago, you would agree with me that what you saw does not represent a good job?---Like, the boat is ready for a refit now. It is - - -
I am not asking you to think about the whole boat, I am asking you to look at - I am directing, I am inviting your attention to those bubbles which you can assume, please, are - - -?---I would say they need rectification work.
Thank you.Thank you for that?---And a refit.
And when you say rectification work you mean they need to be taken back or got rid of so they are no longer proud of the remaining surface?---Yes, if you were going to repaint the boat, that's what you would do.
And it is fair to say, is not it, that that rectification work that you were talking about, that could have been done back in 1990 when the original work was done, could not it?---What so it wouldn't stand proud now?
Yes, Yes?---Well, it was.
Well, I want you to assume, please, if you would not mind, assume that it was not. Assume that it is fact, please, that there are 150 or so locations which are proud of the hull, of the surface of the hull. Please accept that as a fact. Now, you would agree with me that the rectification work to take those away, that you agreed needed to be done, could have been done back in 1990?---And it was, because I would have picked it up straightaway. On my first coat of paint I would have picked them up straightaway, and we would have just stopped spraying."
It was also submitted by the plaintiff that Mr Rendell conceded that the present surface only defects were not a satisfactory outcome. In context, Mr Rendell was saying no more than if he was painting the vessel at the time of giving evidence and the result was a finish with the surface only defects which were then apparent the paint finish in his opinion would not be a satisfactory outcome. He was at pains to point out that that was not the situation when the painting in question was originally done.
Although there is evidence that the imperfections may be further reduced by additional sanding which the plaintiff now says ought to have been undertaken as part of the original work, the plaintiff's expert witness Mr Coxon detailed that additional work in terms of man hours and cost in his Witness Statement of 2nd September 1994 (Exhibit 24). He said :-
"2. I have inspected the Vessel Mustique. I did so about twelve months ago in Port Douglas. I spent three to four hours on and around the Vessel. I have seen the surface only defects which are referred to in the joint report dated 12th August 1994 of Mr Pennisi and Mr Peachey.
3.I have seen the surface only defects on the Hulls of the Vessel above and below the Rubbing Strake.
.....
7. I have been told that a Mr Rendell has informed the Court that the job of removing the surface only defects could be carried out in the following times and with the labour indicated:
Guide Coat2 Men x 1 Hour 2 Hours
Board Sand Fair 6 Men x 16 Hours 96 Hours
Application of Hi-Build 2 Men x 4 Hours 8 Hours
Sanding of Hi-Build 6 Men x 16 Hours 96 Hours
Applying Indicator 2 Hours
Mask up if Vessel to be
painted indoors 48 Hours
Mask up if Vessel to be
painted outdoors 64 Hours
8. I agree with the times of 2 Hours for application of Guide Coat and 8 Hours for applying Hi-Build and 2 Hours for applying the indicator.
9. I say that to perform the work to a high standard that would be necessary on the Mustique the time allowed for sanding of 96 Hours would be totally inadequate. My standards are to achieve an accuracy of fair of a variation of no more than 1mm variation over a 6m distance.
10. To achieve this level of accuracy of finish could not be achieved by 6 men in 2 days. I estimate that it would take 6 men 12 days to sand the surface only defects which I saw to the high standard of 1mm variation over a 6m distance. I have no doubt that this is the time I would expect a team of 6 skilled fairers to sand those defects to fair to the standard I have indicated. Such defects require very close working to be made fair.
11. I also cannot accept that 6 men working 2 days could sand the Hi-Build primer to the appropriate standard in the time. This part of the work still requires extreme accuracy. The Hi-Build seals off and protects the fairing compound which is exposed by the sanding of the surface of the defects. It is over this surface that a primer has to be placed and on which the final topcoat is placed. The sanding of the Hi-Build is very important as a base for the 545 followed by the topcoat.
12. A primer coat of 545 sealing primer is absolutely necessary. The primer seals off and protects the Hi-Build and fairing below from the elements. The sealing primer is then sanded back with fine grit paper as this then provides the surface on which the top coat of paint is applied.
13. I estimate 6 men would take 10 1/2 days to carry out the sanding of the top coat. I would expect a team of 6 fairers to take this time to reach the appropriate standard. I know this sounds a long time but that is what it takes to get a high standard finish and why such work on vessels is so expensive.
14.I estimate that the 545 sealing primer would be applied on the 11th day.
15. As a full time professional in this area of work I say that what I have said to be the times taken for work are the times actually taken in the industry to do such work.
16.As to the hours for masking the vessel I say that I agree.
17. All of the above work would be necessary to remove the defects and would have to be done even if the entire vessel was to be repaint [sic]."
Mr Coxon estimates the additional cost of applying the guide coat and sanding at $17,340.00 and the application and sanding of the Hi-Build primer coat at $15,360.00 such labour being costed at $30.00 per hour. The plaintiff never intended to employ anything like the manpower or man hours Mr Coxon has deposed to in additional sanding and preparation over and above the work undertaken in fact by Mr Freestone and Mr Hanley and his painters to reduce the height of material standing proud of the original surface by not more than 50 microns. The complaint is that the sanding stopped short of what needed to be done. However the plaintiff, I find, would not have agreed to an additional 576 man hours in sanding at $30.00 per hour being undertaken to remove imperfections standing no more than 50 microns proud of the surrounding surface. The plaintiff's own estimate was that the entire repainting would take no more than 960 man hours of skilled painters time and that labour would cost no more than $33,600.00. That estimate did not include the manpower and man hours Mr Coxon contends is necessary to achieve a high standard finish free from the visual defects of which the plaintiff now complains.
What the plaintiff now contends for, as is clear from the evidence of Mr Coxon upon which the plaintiff relies, is that it is entitled to a finished surface wherein any variations do not exceed 1mm over a distance of 6 metres. On Mr Coxon's evidence that is a high standard which is time consuming, labour intensive and expensive to achieve; but it was not a standard contracted for by the plaintiff and nor was it one it was prepared to pay the original cost of. What is perhaps more important is that there is no evidence that the surface finish achieved by Mr Freestone and Mr Hanley and his painters did not meet the standard of 1mm over 6 metres in any event. What the plaintiff in fact contends for is that it is entitled to a finish where no repair work stands proud of any adjoining original surface to any degree whatsoever and the faired finish of the hull and the paint surface as completed do not contain variations in excess of 1mm over 6 metres.
In all the circumstances the plaintiff has failed to establish that the defendant was in breach of the implied term to use reasonable care and skill in the performance of the work contracted for or that in preparing the surface for painting it failed to adequately or properly fair the surface at the site of repairs which had been effected by Mr Freestone to the original fairing compound and paint system. If the surface at the site of the repairs required further fairing to achieve a better visual effect when the paint system had aged and shrunk back on the underlying surface, then such
fairing on the evidence of Mr Hunter and Mr Coxon, on which the plaintiff relied, was necessarily fairing of the vessel as a whole and not spot sanding. Such work was the responsibility of Mr Freestone and under the contract ultimately the responsibility of the plaintiff.
I turn now to the question of corrosion. It is not possible to prevent corrosion of metal vessels, particularly in tropical locations where the vessel "Mustique" operates, and I so find. At best the process is one to inhibit and retard the development of corrosion over time. As well as the application of inhibiters and paint systems, anti-corrosion techniques require ongoing maintenance to the vessel and paintwork. In or about December 1990 or early 1991 corrosion maintenance on board the "Mustique" ceased on the instruction of Mr. Coughlan as conveyed to Mr Doreian until at least December 1991 when Mr Doreian ceased to be master of the vessel. The state of the vessel when inspected by Mr Pennisi in late 1992 and Mr Peachey in 1993, insofar as corrosion was concerned, reflected the state of the vessel in the absence of any active maintenance program in this regard at least for the year 1991. The experts both concluded that the corrosion observed was a result of ordinary wear and tear over the life of the vessel in the environment in which it operated.
There is no evidence that the defendant, by its servants or agents, failed to take any step which it ought reasonably to have taken to remove observable or ascertainable areas of concealed corrosion. The evidence is that all such corrosion was ground out either by Mr Freestone or Mr Hanley and his employees with the assistance of the unskilled labour. Nor is there any evidence that the defendant, by its servants or agents, failed to take any step which they ought to have taken as an anti-corrosion measure. Mr Hanley and Mr Rendell say that the specification was complied with to the satisfaction of Mr Biddle, there being one approved alteration to the specification. Where the use of etch primer on bare metal was specified, Mr Biddle said he observed its application on occasions. He did not suggest that there were any occasions which he observed where there was a failure to apply it. Further, neither Mr Pennisi nor Mr Peachey could identify any location where they had sighted corrosion caused by a failure to adhere to the paint specification. I accept the evidence of Mr Rendell as to what was done by way of treating and taking steps to inhibit corrosion, including advising the plaintiff's labourers to apply barium chromate to the surface before replacing metal fittings where there would be a metal to metal contact of dissimilar metals. I do not accept that the appearance of corrosion again in the months following the work in areas where corrosion had previously been removed is evidence of any failure on the part of the defendant to exercise reasonable care and skill. The evidence of Mr Biddle upon which the plaintiff sought to rely for such a finding was that if corrosion reappears within six months "in an identical spot if they are pinpointed identically", it would indicate that the work had not been done to remove them properly. There was no evidence establishing the condition that Mr Biddle prefaced his opinion upon. Further, there was other evidence as to why corrosion would reappear in the same general area without there being any want of care or skill on the part of the workmen in removing existing corrosion or repainting at the site.
Finally, I turn to the allegations as to the repair work to the transom of the vessel. The evidence establishes that work was done to the transom by Mr Downes in the six months prior to March 1990 when he was the mate on the vessel. It appears that it was not unheard of or unknown for any minor damage to the transom to be bogged up by the crew, faired and painted (eg. see the evidence of Mr Welsh as to the repair of the transom in late 1992).
I do not accept the evidence of Mr Doreian that all of the problems with the paint surface on the transom arose after the work was done by the defendant. Mr Doreian in his statements and in his evidence was less than frank as to his involvement in the works and the retaining of Mr Freestone to undertake the fairing work for the plaintiff. Mr Doreian's allegations that epoxy compound as specified and supplied was not used by Mr Freestone and that all the filler was of a type used for car repairs was overstated to say the least and simply false when the expert evidence is considered. The use of car repair bog to fill pinhead air holes is acceptable trade practice and a necessary step to get a smooth surface. It is not possible to identify any particular area of defective paintwork on the transom of the vessel and identify a cause of that defect which is attributable to any act or default of the defendant or its servants or agents in undertaking painting work in the period May-August 1990. Even the evidence of Mr Pennisi as to soft primer behind one sample leads nowhere when the evidence is that the sample had to be removed by use of a hammer and chisel. There was therefore no structural failure in the repair work or paintwork. Putting aside corrosion bubbling, there is no evidence identifying an observable defect in the paintwork on the transom and the cause of such defect which cause is attributable to any act or default of the defendant or the painters.
To the extent that there were areas of observable corrosion on the transom, I find that like the areas elsewhere on the ship, the corrosion was the result of fair wear and tear.
Such complaints as to the condition of the transom as relate to the repair and rebuilding of the original fairing compound and paint system do not relate to painting work to be undertaken by Mr Hanley and his painters. That work was done by Mr Freestone as part of the reinstatement and fairing work. In consequence it was not work for which the defendant was responsible.
The plaintiff has not made out a case that the defendant failed to carry out the contracted work skilfully or to the quality or standard of a reasonably competent and skilled yacht painter exercising ordinary care and skills in painting the "Mustique". In consequence the plaintiff fails on the case pleaded in paragraphs 5 and 6 of the amended statement of claim.
Contrary to the allegation contained in paragraph 7 of the amended statement of claim, the defendant did no damage to the vessel as alleged or at all. Nor did it carry out defective repair work to the vessel as alleged in paragraph 7A as alleged or at all.
Having regard to the fact that the plaintiff, as I find, chose the painting system itself, chose Mr Hanley and his employees as the painters to undertake the painting work on the vessel and engaged Mr Freestone to undertake the fairing work, it cannot reasonably be said that the plaintiff relied upon the skills of the defendant to carry
out the repainting of the vessel to a satisfactory quality and standard. The choice of the labour and the paint system had already been done by the plaintiff. All that was left was for the defendant to supervise the work done by the painters to ensure that they exercised reasonable care and skill and that the skilled labour did the painting work as directed because the defendant was itself under a duty to ensure that such care and skill was exercised in the doing of the work and that in consequence the work was performed to a standard consistent with the exercise of ordinary skill and care by a competent and skilled yacht painter. Such duty of care on the part of the defendant, if any, as arose in tort could only arise out of a relationship of proximity created by the contract and the duty of care in tort would be co-extensive with the duty of care fixed by the contract (Hawkins v. Clayton (1988) 164 CLR 539 at 544, 582-583). The duty of care would extend no further than a duty to exercise such reasonable care and skill as is appropriate to a competent and skilled yacht painter in the execution of the works. This duty was not breached.
It is not necessary, having regard to my finding that there was no actionable wrong maintainable against the defendant, to deal with the question of loss or damage. However, lest this matter go further, I shall make some brief comments and some findings.
By the time of the trial the paint system which had been applied to the vessel in May-August 1990 would in the ordinary course have required to be replaced. On the balance of the evidence I accept on this issue, being the evidence of Biddle, Thus, Wilks, Hunter and Hanley, the system after four years would be approaching the end of
its useful life and to maintain the gloss finish of the vessel, re-painting would be necessary. The repair work to the original fairing compound and paint system performed by Mr Freestone and the paint system as applied in 1990 were structurally sound and have performed in all respects both physically and functionally. Any complaint is that aesthetically after a period of time with the aging of the paint system irregularities are observable in the surface of the paintwork when viewed from certain directions and in certain light.
The object of damages for breach of contract is to place the party not in breach in the position it would have been in if the contract had been performed so far as money can do so (Commonwealth v. Amaan Aviation Pty Ltd (1991) 174 CLR 64 at 99). It is not a function of damages for breach of contract to place a party in a position it would have been in only if it had entered into a different contract from that which it in fact entered into. Nor is it a function of damages to require the party in default to pay the cost of different or additional work which the party not in default would have had to pay for in any event to receive the benefit of the different or additional work (Auburn Municipal Council v. ARC Engineering Ltd [1973] 1 NSWLR 513 at 526, 533-535; Smail v. D.L. Starbuck Pty Ltd [1971] VR 449 at 453).
In the instant case the contract was not one for a fixed sum, nor was it for a specified result in terms of a surface free of any irregularities or irregularities falling within specified tolerances. On the evidence, what was required of Mr Freestone or the painters to remove the repair work standing proud of the original work was more sanding in the nature of fairing of the vessel using long boards. The cost of that work was payable to the defendant by the plaintiff if the work was performed by the painters as subcontractors of the defendant, at the rate of $35.00 per hour. Consequently to achieve a smoother finish than that obtained, the plaintiff would have had to expend on Mr Rendell's estimates a further $2,880.00 or on Mr Coxon's estimate a further $17,280.00 for additional labour to achieve a standard of finish which the plaintiff now contends it was entitled to expect. The plaintiff has not paid out that sum, nor has it lost it; to award that sum to enable the additional work to be done would amount to an unreasonable enhancement of the plaintiff's position.
Can it be said that in applying the paint to the surface the plaintiff has lost the cost of the labour and materials represented by the cost of undercoating and final coating the vessel? In my view it cannot. The paint performed functionally as it was intended for its ordinary and expected life. The defect alleged is cosmetic. However, it did not appear until a reasonable time into the life of the paint and when it did, it was not sufficient to cause any complaint to be communicated until 1992 when the plaintiff was attempting to defend a claim for the balance unpaid to the defendant.
I find that the visual defect was not obvious and not something which would be likely to attract the attention of the casual observer, particularly one boarding the vessel for pleasure and relaxation. If there had been any basis to award damages to cover the cost of re-sanding the irregularities, then it would have been unreasonable to have carried out such work other than in conjunction with a repaint which at the time of trial was then due or reasonably imminent. The nature of the visual defect when it became apparent was not such as would have justified immediate rectification by way of a complete re-sand and re-fairing above the waterline and a total repaint of the sides of the hull and all the above deck superstructure. If the remedial work was carried out as part of an ordinary refit and repaint, any additional time taken in further sanding and re-fairing the vessel would be offset by the time saved in 1990 when the additional work was not done. In consequence there would be no basis to award any sum for loss of profits during the period of the re-sanding, there being no evidence that additional losses would have been incurred in 1994 over what would have been the position in 1990 if the additional time had been taken to do the extra fairing.
There will be judgment for the defendant with costs.
THE COURT ORDERS THAT:
The action be dismissed and judgment be entered in favour of the defendant against the plaintiff.
The plaintiff pay the defendant's costs of and incidental to the action, including reserved costs, to be taxed if not agreed.
I certify that this and the preceding thirty (30) pages are a true copy of the reasons for judgment herein of his Honour Justice Cooper.
Date:15 September 1995
Associate
Counsel for the Plaintiff: Mr G McVay
Solicitor for the Plaintiff: Bowles & Co.
Counsel for the Defendant: Mr M Amerena
Solicitor for the Defendant: MacDonnells
Dates of Hearing: 31 August 1994, 1, 2, 5, 6, 8 September 1995
Place of Hearing: Cairns and Brisbane
Date of Judgment: 15 September 1995
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