Transpacific Fish Exports Pty Ltd v Austmarine Pty Ltd - [2005] SASC 147

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
TRANSPACIFIC FISH EXPORTS PTY LTD & ORS v AUSTMARINE PTY LTD & ANOR
Judgment of The Honourable Justice Bleby
19 April 2005
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - PERFORMANCE OF WORK - TIME
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - PERFORMANCE OF WORK - REMEDIES FOR BREACH OF CONTRACT - DAMAGES - OTHER MATTERS
TRADE AND COMMERCE - TRADE PRACTICES AND RELATED MATTERS - CONSUMER PROTECTION - MISLEADING, DECEPTIVE OR UNCONSCIONABLE CONDUCT - CHARACTER AND ATTRIBUTES OF CONDUCT - REPRESENTATIONS - AS TO FUTURE MATTERS
Action for damages for breach of contract, misleading and deceptive conduct and false or misleading representations – Contract by defendant to build and install fish holding tanks – Whether implied term that work would not commence until plaintiff complied with condition of contract regarding finance – Whether defendants represented that construction was not conditional upon plaintiffs obtaining finance – Effect of delay by plaintiffs in fulfilling finance condition – Variation of contract as to completion date – Whether representation as to earlier completion – Held no breach of contract, no misleading conduct or actionable misrepresentation – Discussion of claims for losses – Failure of plaintiffs to substantiate losses claimed – Failure of plaintiffs to identify contractual or other relationships between themselves – Action for damages dismissed.
Trade Practices Act 1974 s 52 and s 53, referred to.
Fitzgerald v Masters (1956) 95 CLR 420; Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310; Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107; March v E & MH Stramare Pty Ltd (1991) 171 CLR 506; Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413; Alfred McAlpine Constructions Ltd v Panatown Ltd [2001] 1 AC 518; Wallera Pty Ltd v CGM Investments Pty Ltd [2003] FCAFC 279, considered.

TRANSPACIFIC FISH EXPORTS PTY LTD & ORS v AUSTMARINE PTY LTD & ANOR
[2005] SASC 147
BLEBY J:
Introduction

The third plaintiff, Barry John Bowyer (“Mr Bowyer”) is a fisherman. For some time he and his brother, the fourth plaintiff Wayne Wilkin Bowyer, had conducted a partnership known as “Lobster Enterprises”. That was a fishing and farming partnership conducted at Robe and Port Lincoln. In 1997 the farm was sold. At all material times Mr Bowyer’s principal activity was conducting the partnership’s lobster fishing activities near Robe.
Mr Bowyer is married to Katrina Bowyer. They are the directors and shareholders of the first plaintiff Transpacific Fish Exports Pty Ltd (“Transpacific”).
Katrina Bowyer was also a director and vice president of the second plaintiff Katrianna Pacific Corporation (“KPC”) which was incorporated in the State of Hawaii in the USA on 3 June 1996. She was also a 30% shareholder in KPC. A Dr Jim Prescott, a US resident, and a business associate of Mr and Mrs Bowyer, was the majority shareholder in order to comply with United States law. KPC was incorporated to obtain a fishing licence and to carry out fishing activities from Hawaii. At all material times it was intended that KPC would carry out lobster fishing during the Hawaiian rock lobster season and that live lobster would be stored in tanks and exported to Asia and Europe.
The first defendant Austmarine Pty Ltd (“Austmarine”) carried on business in the State of Queensland as a builder of live fish tanks. In December 1996 Transpacific entered into a contract with Austmarine for the supply and delivery of six large fish storage tanks, each of 5 tonnes capacity, to be installed in leasehold premises in Honolulu, Hawaii. In the events which happened the premises were leased by KPC for the conduct of its business. The finance for the purchase of the tanks was negotiated through the partnership of BJ and WW Bowyer (the “Bowyer Partnership”) by way of commercial lease of the tanks by three financial institutions who leased them to the Bowyer Partnership, although they were never used in the business of that partnership. The commercial arrangements or other relationships between the Bowyer Partnership, Transpacific and KPC were never proved.
The second defendant Michael Graeme Hanrahan (“Mr Hanrahan”) was a director of Austmarine and conducted most of the negotiations in the formation and execution of the contract between Austmarine and Transpacific.
The third defendant Business and Professional Leasing Pty Ltd (“B & P”) was a finance broker introduced to Mr and Mrs Bowyer by Mr Hanrahan with the intention that it might obtain finance for Mr and Mrs Bowyer for the purchase of the storage tanks.
Nature of the fishery and the plaintiffs’ intentions
Mr and Mrs Bowyer were married in Honolulu in 1982. They spent their honeymoon in Hawaii and developed a liking for the islands. From late 1994 they considered moving to the United States and applied for a Green Card to live and work there. Through Dr Jim Prescott, a marine biologist in charge of the Rock Lobster Research Program in South Australia and who was also a citizen of the United States, they learned that there was an opportunity to purchase a permit to fish for lobster in Hawaii.
The Hawaiian rock lobster season commenced on 1 July. That was at a time of the year at which the availability of live lobster throughout the world was limited. With limited availability, the price for live lobster escalated. The Bowyers saw a commercial opportunity to catch lobster in Hawaii, store them in live tanks and sell them into Asia. They consulted Mr David Carr, an accountant, who gave them certain advice in 1995 about appropriate corporate structures for what was then intended to be an Australian export venture as well as an operation in the US. That advice included reference to the availability of an export market development grant from the Australian Government and a strong suggestion that before entering into any expenditure or contractual commitments they should prepare a detailed business plan. There was no evidence that that was ever done before the contract in question was entered into.
With a view to establishing operations in Hawaii, Mrs Bowyer visited Honolulu on a number of occasions and obtained a lobster permit in her own name for the 1996 season. She arranged for the incorporation of KPC and acquired a fishing vessel, the Paradise Queen.
During the Hawaiian rock lobster season, the North West Hawaiian Island Fishery operated on a quota system, the quota being the total number of lobsters which would be taken for the whole fishery. There were no individual quotas. From the start of each season (1 July) a licensed vessel could take as much lobster as it was able. Daily catches were verified by a National Marine Fisheries service officer on board the vessel and were relayed to headquarters in Honolulu. When the total allowable catch was achieved, the fishery was closed. The season generally ran for about three weeks. In fact, the 1997 season closed on 22 July.
It was the intention of the Bowyers to begin their Hawaiian live lobster business in the 1997 season. The intention was to store live on board the fishing vessel as much lobster as possible during the season, to return to Hawaii at the end of the season, to transfer the live lobster into the then installed and operating storage tanks and later pack them in ice for export by air to various Asian destinations as live lobster. The tanks were to be of a total capacity of 30 tonnes of lobster. Their intention was to buy in lobster from other licensed fishers as well to supplement their own catch. From their point of view it was imperative that the tanks be installed, commissioned and be operating ready to receive the live lobster from their vessel and from others when they returned at the end of the 1997 season.
The contract between Transpacific and Austmarine was entered into in December 1996. It will be necessary to examine in more detail the terms of that contract. However, for present purposes it is sufficient to note that it provided for installation of the tanks in May 1997 and for practical completion in June 1997, in time for the 1997 lobster season. It was the plaintiffs’ case that the defendants made representations as to the availability of finance for the project through B & P, although ultimately it was their case that the contract was unconditional in the sense that it was not dependent upon the provision of finance during construction and installation. In fact finance for the project was not arranged until April and May 1997 by way of the leasing of two of the six tanks by each of National Australia Bank Ltd, Australian Guarantee Corporation Limited and GIO Finance Limited.
On the defendants’ case the delay in provision of finance meant that installation by May 1997 became impossible. Nevertheless the plaintiffs relied on later representations allegedly made by Mr Hanrahan as to delivery in July. The tanks could not be installed in July, and as a consequence alternative arrangements had to be made for handling KPC’s 1997 lobster catch from the Paradise Queen, as a result of which the plaintiffs claim to have incurred substantial losses.
The causes of action
The statement of claim contains a number of causes of action at the instance of Transpacific, KPC and the Bowyer Partnership.
Transpacific brings an action against Austmarine for breach of contract in failing to deliver the tanks within the time specified. Transpacific also sues Austmarine and Mr Hanrahan for damages for alleged breaches of s 52 and s 53 of the Trade Practices Act 1974. It relies on a number of alleged representations. The first is a pre-contractual representation as to Austmarine’s capacity to deliver on time. Other alleged representations were as to Austmarine’s capacity to commence production immediately; representations as to quality of the tanks; some post-contractual representations as to the arrangement of finance; and representations as to work being performed in a timely manner, such representations being made between 6 December 1996 and early April 1997; some further alleged representations as to work being done in a timely manner in April and May 1997; and further representations as to delivery by 25 July 1997, such representations being made between 29 May and 7 July 1997.
As against B & P Transpacific alleges a series of misleading and deceptive conduct between October 1996 and April 1997 relating to the provision of finance. However, the action against B & P was discontinued during the early stages of the trial. It is therefore not necessary to comment further on those allegations.
KPC sues Austmarine for breach of contract by failing to supply the tanks on time. It alleges breaches by Austmarine and Mr Hanrahan of s 52 and s 53 of the Trade Practices Act as follow:
·Between September 1996 and December 1996 as to Austmarine’s capacity to perform as to time and quality of the tanks and as to the purported commencement of production;
·Between 6 December 1996 and April 1997 that finance had been arranged through B & P and that work was proceeding in a timely fashion;
·Between October 1996 and April 1997 that finance would be arranged;
·During April and May 1997 that the tanks had been manufactured and would be delivered and ready for operation by 1 July 1997, as a result of which KPC entered in the lease of a warehouse.
The Bowyer Partnership alleges misleading and deceptive conduct on the part of Austmarine and Mr Hanrahan by representing, in April and May 1997 that the tanks had been manufactured and that they would be commissioned in time for the 1997 season. They also allege misleading and deceptive conduct by B & P but, as mentioned above, the action against B & P was discontinued.
By way of damages, Transpacific claims loss of profits for the 1997 season as a joint venture with KPC, overpayment of installation costs and the amount of the debt allegedly due to the Bowyer Partnership for the amount paid to Austmarine for the tanks. KPC claims losses due to entering into the lease of the warehouse in Hawaii, loss of profits and costs and modification of the tanks, costs of refitting the vessel, costs to fit out premises in Hawaii and additional customs clearance costs, together with additional costs of assembling the tanks.
The Bowyer Partnership claims losses by virtue of Mr Bowyer not being able to fish in South Australia in 1997, loss of profits by having to engage an alternative and less experienced skipper in South Australia, diminution in value of the tanks, loss of lease payments made to financiers for the tanks and loss of opportunity to use the assets to fund other projects.
Nature of the evidence
Most of the relevant documentary evidence was contained in three volumes of tender documents admitted as part of the plaintiffs’ case and with the consent of the defendants. They were admitted as evidence of the contents of the documents and of their authorship and as documents from which all proper inferences could be drawn both as to the occurrence of various acts and events referred to in them and as to the sending and receipt of the documents. In addition, further documentary evidence was admitted in respect of discrete aspects of the plaintiffs’ and defendants’ case, including a notebook kept by Mrs Bowyer and Mr Hanrahan’s 1997 diary. In some cases the originals of documents contained in the volumes of tender documents were also tendered, particularly where they were shown to differ from those in the tender documents.
For the plaintiffs, both Mr & Mrs Bowyer gave evidence, along with Mr Carr, their accountant, who was allegedly involved in making some of the financial arrangements. Mr Wayne Bowyer was called but could say nothing about the contractual and other negotiations with Mr Hanrahan. He appears merely to have lent his name to the leasing of the tanks at his brother’s request. The plaintiffs also called a Mr Shelley who was experienced in building live fish tanks of various types and who eventually assembled the tanks in Hawaii and commissioned two of them. Mr David Kennedy, an accountant, who spoke to the various trading figures and budgets of the plaintiffs, was called in support of their claim for damages.
The only witness for the defendants was Mr Hanrahan.
The principal witnesses were Mr & Mrs Bowyer and Mr Hanrahan and, to a lesser extent, Mr Carr.
The principal witnesses
It is necessary to make some observations and findings concerning the credibility of the principal witnesses, as the success or otherwise of the plaintiffs is highly dependent upon findings as to their credibility.
I consider that the oral evidence of Mr & Mrs Bowyer was unreliable. Each attempted to manipulate the truth to suit their own interests and position. Neither impressed me as a witness. In many crucial respects their evidence was not supported by the documents, and in some cases was directly contrary to them. As a result, where their evidence is disputed, I am not prepared to accept the evidence of either of them unless it is corroborated by some undisputed facts or supporting documentary evidence. This creates an obvious difficulty for the plaintiffs, who bear the onus of proof.
Apart from their demeanour, a few examples of their evidence will indicate why I take this view. One of the issues in the case is whether the contract provided for the payment of a deposit before commencement of construction of the tanks. The document signed by Mrs Bowyer on behalf of the plaintiffs makes no reference to a deposit, whereas an earlier document which she had been asked to sign did contain such a reference, and referred to a deposit of 40% of the contract price. I find that Mrs Bowyer requested Mr Hanrahan to delete reference to the deposit in the document before she would sign it, knowing full well that a deposit or part payment was required, so she could obtain maximum advantage in obtaining finance for the project from her bank.
Mrs Bowyer was prepared to proffer any explanation which she considered would suit her case, whether or not it was supported by objective facts. On her own admission, she had attempted to manipulate situations to her commercial advantage in the past, such situations having nothing directly to do with the defendants. In negotiating a lease of the warehouse for the installation of the tanks in Honolulu she was prepared to make any representation to the landlord which would then suit her case. Documentation for the lease had been negotiated with a commencement date of May 1997. When it became apparent that there was a delay in the shipping of the tanks from Australia, she falsely claimed a need for an environmental assessment of the premises in order to avoid having to commit to entering into the lease from May, and to avoid paying rent for one or two months, whilst admitting in this Court that she always intended to proceed with the lease regardless of the assessment. Later, after the lease had been executed and it suited the plaintiffs to try and extricate themselves from the lease, they attempted to rely on the failure to provide the very same environmental assessment as grounds for cancelling the lease. In particular, Mrs Bowyer was prepared to blame others for her problems while being less than frank with those with whom she was dealing.
The plaintiffs also manipulated the truth in arranging finance for the project. When it became apparent that the conditions offered to them by B & P were unacceptable, they were anxious, with the aid of Mr Carr, to secure alternative financial arrangements as soon as possible so that the project could go ahead. They negotiated through another broker for a leasing arrangement of the goods from three Australian financial institutions. The leasing arrangement meant that property in the goods was transferred to the financial institutions in order that, if default were made, the financial institution would be in a position to sell the goods as its own. Obviously, the security available to the financial institutions would be quite unattractive if it were known that the tanks were to be installed not in Australia but in the USA, possibly becoming fixtures. That was an obvious disadvantage which the plaintiffs had to overcome. In order to do so, in the case of the National Australia Bank they did not disclose in their finance application the intended location of the goods. In the case of Australian Guarantee Corporation Ltd they described the location of the goods as “Lot 230 Hundred of Waterhouse, Morphett Street, Robe, SA, 5276”. In the case of GIO Finance Ltd they described the intended location of the goods as “Morphett Street, Robe, SA, 5276”. Furthermore, in each case the intended lessees were Mr Bowyer and his brother, not Transpacific. In the case of each of the three financial institutions, Mr Hanrahan was instructed by Mr Bowyer to direct invoices to them in order to obtain payment of the full amount of the goods, namely $150,000 in each case for the two tanks, the subject of the particular leasing agreement. Mr Hanrahan was instructed to insert in the invoice to National Australia Bank Limited “For delivery to BJ & WW Bowyer, Morphett Street, Robe, 5276”. The invoice was directed accordingly. The invoice directed to Australian Guarantee Corporation Ltd was, on Mr Bowyer’s instructions, endorsed “For delivery to BJ & WW Bowyer”, whose address in the lease document was shown as Morphett Street, Robe. Similarly, the invoice directed to GIO Finance Ltd was endorsed “For delivery to BJ & WW Bowyer, Morphett Street, Robe, SA, 5276”.

That constituted deliberate misleading of the finance companies in order to induce them to provide the necessary leasing finance. It is likely that, if true disclosure had been made, funding for an international project by that means would have been highly unlikely to be forthcoming.
Not only did the plaintiffs mislead the financial institutions, but they also attempted to mislead the Court in a serious and deceitful way. The book of tender documents prepared by the plaintiffs contained copies of the various lease documents. That relating to the National Australia Bank appears to be a complete copy. As I said, there was no reference in that documentation to the intended location of the goods. The misleading of the National Australia Bank was in the invoice sent, at the plaintiffs’ request, by Austmarine to National Australia Bank. In the case of the Australian Guarantee Corporation lease, that part disclosing the intended location of the goods had been deliberately obscured from the document comprising the lease in the tender documents so that it would not be apparent to the reader that any misrepresentation had occurred: compare Exhibit A38. In the case of the lease documents from GIO Finance Limited, certain parts of the document indicating the intended location of the goods had also been deliberately obscured in the tender documents: compare Exhibit A39. These were blatant and deliberate attempts to conceal from the Court the fact that the plaintiffs had submitted false information to the financial institutions in order to secure the finance that they desperately needed.
Mr & Mrs Bowyer both knew that, one way or another, they would have to provide finance for the acquisition of the tanks in an amount in excess of $400,000. Yet they asserted in their evidence that they believed that finance for the project was committed through B & P, and that they were assured by Mr Stupar of B & P and by Mr Hanrahan that finance was effectively guaranteed at a time when they had not even lodged an application for finance with B & P or any supporting material necessary for a financier to consider granting a facility of that order.
Throughout his evidence Mr Bowyer continued to assert matters which he saw as being necessary or desirable to his case despite the fact that they were demonstrably untrue. It was his evidence that Mrs Bowyer had told him that Mr Hanrahan had waived any requirement for a deposit and that there was therefore no need to pay any money to Austmarine until after the tanks were installed. That evidence was quite at odds with his own conduct, evidenced by the documents, of pursuing Mr Carr and others for interim finance, and with his communications with Mr Hanrahan acknowledging the delays in production brought about by the lack of any financial arrangements to ensure that Austmarine could be paid. Similarly, the acknowledged need for financial arrangements to be put in place, evidenced by numerous documents, was also contrary to the oral evidence of Mrs Bowyer and her assertion that the contract was unconditional and not dependent on the provision of finance.
Because the oral evidence of the plaintiffs is quite unreliable, where it is disputed I have had to make my findings of fact based largely on inferences drawn from contemporary written records. I have also relied on the fact that the plaintiffs were experienced business people, aware of the practical realities of acquiring and financing substantial capital items. In some cases the documentary evidence accords with evidence led by the plaintiffs. More often, however, where there is a dispute, it accords with the oral evidence of Mr Hanrahan, and often contradicts Mr & Mrs Bowyer’s oral evidence.
I consider that Mr & Mrs Bowyer have little respect for the truth. They were prepared to manipulate their evidence to suit their cause. I have little doubt that they were driven by their dream of starting a thriving business of exporting live lobster from Hawaii. Such was their enthusiasm for the project that, when it ran into difficulty, they were desperate to find a solution, and when it failed they were desperate to blame someone else for their misfortune. Unfortunately, the major casualty of their desperation was the truth.
I have also had to view Mr Hanrahan’s evidence with some caution. Although assisted by some diary entries, he was prone to reconstruction and self‑justification. He is intensely proud of his product and an aggressive salesman. I have little doubt that, in the early stages of negotiation, he encouraged Mr & Mrs Bowyer to become his agent in Hawaii. Through that channel he believed he could anticipate more sales. However, I reject Mrs Bowyer’s evidence that his approaches in that regard were unwanted. Mr & Mrs Bowyer were anxious to pay the lowest price they could for the tanks they required. They could see some advantage in paying a lower cost by acting as Austmarine’s agent in Hawaii than if they were not.
It must also be borne in mind that Mr Hanrahan was prepared to be complicit in the deception of the financial institutions by rendering invoices bearing a delivery address which he knew was not true. However, whilst his evidence must necessarily be viewed with some scepticism, and making allowance for his salesman-like approach, most of his evidence was supported by the documents, and where it is in conflict with that of Mr or Mrs Bowyer, I prefer the evidence of Mr Hanrahan.
However, I should mention two particular attacks on Mr Hanrahan’s evidence by counsel for the plaintiffs. It was suggested that his credibility was adversely affected because, after the commencement of proceedings by the plaintiffs against Austmarine, it was alleged that he had arranged for the transfer of Austmarine’s assets to a new company, Austmarine Manufacturing Pty Ltd, for the purpose of frustrating any judgment that the plaintiffs might obtain against Austmarine. In particular, he was attacked for deposing in an affidavit in support of setting aside a Mareva injunction that “Austmarine does not propose to dispose of any of its assets save as may otherwise be appropriate or necessary in the usual course of conducting its business”. Evidence was introduced of the Austmarine and Austmarine Manufacturing bank accounts which is consistent with the business activity of Austmarine running down from October 1997, shortly after the commencement of proceedings, to the end of March 1998, and the commencement of trading in the former Austmarine business by Austmarine Manufacturing Pty Ltd, the latter having been incorporated on 17 October 1997. The inter partes summons in this matter was served on 26 September 1997. The evidence also showed that on 24 July 1997 Austmarine had been served with the statutory demand under the Corporations Law for the sum of $154,225.51 at the instance of the Deputy Commissioner for Taxation. An application by the Commissioner for the winding up of Austmarine was filed in the Supreme Court of Queensland on 12 November 1997. There was evidence that within days of service of the proceedings in this matter Mr Hanrahan had consulted solicitors about a corporate restructure involving the interposition of a holding company over Austmarine and the new company to be formed, Austmarine Manufacturing Pty Ltd.
I reject the suggestion that this was done for the purpose of defeating Austmarine’s creditors. I accept Mr Hanrahan’s evidence that a proposed restructure had been contemplated before service of the proceedings in this matter, prompted by a previous failed joint venture resulting in a substantial assessment for income tax, together with a desire for a corporate structure which would better accommodate the introduction of additional capital. The liability for income tax became the subject of the notice of demand. Negotiations ensued with the Deputy Commissioner for Taxation. They appear to have been successful, as the application to wind up Austmarine was dismissed by consent on 20 February 1998. In pursuance of that reconstruction there was in fact a winding down of the business previously carried on by Austmarine and the commencement of a similar business by Austmarine Manufacturing Pty Ltd. I am satisfied, however, that there was no effective transfer of assets. Austmarine still exists and continues to own a number of assets for use in the business, including all the intellectual property rights associated with the design and manufacture of the tanks. I am not prepared to find that there was a transfer of assets for the purpose of defeating the plaintiffs or any other creditors.
Mr Hanrahan was also attacked for the alleged alteration of the date of a memorandum which he generated on a laptop computer whilst he was in Hawaii at the end of February 1997. He went to Hawaii at the request of the plaintiffs to view the proposed warehouse in which the tanks were to be installed and to see for himself what local works would have to be undertaken to accommodate the installation. Whilst there he produced a memorandum addressed to Mrs Bowyer making a number of suggestions about terms and conditions relevant to the proposed lease of the property. The document faxed to Mrs Bowyer, in Hawaii, was dated 2 March 1997. A copy of the document produced from Austmarine’s files was dated 27 February 1997. The allegation was that, for some reason, Mr Hanrahan had deliberately altered the date from 2 March to 27 February in order to gain some unidentified advantage to himself, and that he was lying when he asserted that the document was in fact prepared on 27 February. The plaintiffs relied on information derived from the hard disk of the laptop computer that the document was first saved to the hard disk on 1 March and could not have been dated 27 February.
There are a number of possible explanations for the different date on Austmarine’s copy of the document. There was evidence, not in dispute, that on his arrival in Hawaii on 27 February Mr Hanrahan had inspected the warehouse. It was his evidence that he began compiling the list of items of concern that night after the inspection. That was probably the undated abbreviated list contained in Exhibit A55, and it was probably that document which Mr Hanrahan had printed in the business centre of the hotel in which he was staying. There was also evidence from his diary that he spent some time considering and preparing recommendations on 28 February. It is possible, but unlikely, that the document in question was created on 27 February. It is likely that it was created in Honolulu on 28 February by Mr Hanrahan either typing in the wrong date or typing in the date as relating to the date of his inspection. The fact that the computer records show that it was first saved on 1 March does not detract from that because Mr Hanrahan had brought his laptop computer from Australia with him. Its time was set on Queensland time, and therefore if the document was saved at any time during most of the day on 28 February in Hawaii it would have been recorded on the computer as having been saved on 1 March. In any event, although the faxed document was dated 2 March, a date which may well have been generated automatically by the computer, it was in fact received on the Bowyers’ fax machine during the evening of 1 March, again the discrepancy being explained by the international time difference.
A comparison of the two documents indicates that there were also other minor but not easily detectable changes made in other parts of the document. It was not merely a change in date. Because of a number of possible explanations I consider that there is nothing sinister in the change of date. There was no change in the substance of the memorandum. Furthermore, the difference seems to have been of little consequence. There was no advantage to Mr Hanrahan or to Austmarine in deliberately changing the date. I consider that this was an act of desperation in an attempt to undermine the credibility of Mr Hanrahan. The attempt failed.
Subject to the reservations I have already expressed, I have been prepared to accept the general thrust of Mr Hanrahan’s evidence. Where it is in conflict with the evidence of Mr & Mrs Bowyer, I prefer Mr Hanrahan’s evidence.
It would appear that Mr Carr, the plaintiffs’ accountant, was called to support the evidence of Mr & Mrs Bowyer concerning representations that the tanks had been completed and would be installed in time for the 1997 lobster season. The problem faced by Mr Carr was that he had no contemporaneous notes or records from his own practice from which he could refresh his memory. He was extremely vague on the detail of conversations. All he was able to say, in effect, was that he understood that the tanks were required for the 1997 season. He was not even sure when that was, and he was unaware of the state of construction of the tanks in April and May 1997 at the time when he was negotiating the leasing arrangements on behalf of the plaintiffs. Mr Carr’s evidence added little to what could be inferred from the documents in evidence. He did not undermine Mr Hanrahan’s evidence, nor was he able to support the assertions of Mr & Mrs Bowyer.
With those observations on the principal witnesses in mind I turn to consider the facts.
Pre-contractual negotiations
During September and October 1996 there were negotiations between Mr Hanrahan and Mr & Mrs Bowyer concerning, initially, the supply of a model MC1000 tank with a capacity of 1,000 kg. Some of the correspondence from Mr Hanrahan suggests that an oral agreement was actually reached for the supply of such a tank for $43,500. At this time there were also discussions regarding Mr and Mrs Bowyer acting as agents for Austmarine in Hawaii. Discussions on both those propositions came to nought. Mr & Mrs Bowyer’s real interest was in a 30 tonne system, although there appears to have been more than a passing interest on the part of Mr & Mrs Bowyer in becoming agents for the purpose of negotiating a lower price for the system.
There is no doubt that during October 1996 there were discussions concerning the larger tank system and the means of finance. Mr Hanrahan suggested to Mrs Bowyer that they might contact B & P, a finance broker with whom Austmarine had dealt satisfactorily in the past in relation to financing the purchase of similar tanks. On 28 October 1996 Mr Stupar of B & P sent a fax to Mrs Bowyer, I infer at her request, giving a quote for leasing costs of seafood tanks on an assumed capital cost of $500,000 for a term of five years with a residual value of 20%, the monthly payment, including stamp duty and FID being $9,929.27. At that stage there was no suggestion of any formal application being made or of any concluded finance agreement being reached. Mrs Bowyer acknowledged that facsimile as “an understanding of what our costs would be”. She indicated that she would get back to him when she had obtained a more accurate quote to work from.
At that stage there was still discussion concerning the MC1000 tank as being additional to the 30 tonne system. On 30 October 1996 Mr Hanrahan faxed to Mrs Bowyer a proforma “Live Seafood Unit Order” duly completed by him for an MC1000 tank. By this time the price had been reduced to $40,000 plus a transportation charge of $7,500. The form indicated payment of a 40% deposit of $19,000, with a balance owing of $28,500. The specified delivery date was said to be 20 January 1996, although that would appear to be a mistake.
I mention that not because any contract was concluded for the purchase of such a tank but because it was made clear both in the proforma and in the accompanying facsimile that Austmarine required payment of a deposit of 40%. Mr & Mrs Bowyer were at least aware at that stage of Austmarine’s usual trading terms.
In November 1996 there were still discussions about the supply of an MC1000 tank, the price having dropped to $34,700 on the assumption that Mr & Mrs Bowyer would be sales agents for Austmarine’s products in Hawaii.
On 11 November 1996 Mr Hanrahan sent a fax to Mrs Bowyer setting out in some detail the intended specifications of the 30 tonne plant, and nominating a price of $409,490 plus $30,000 freight. The price did not include the cost of preparatory works needed to be done on site or accommodation costs in Hawaii during installation.
Telephone discussions ensued, and by a further facsimile of 5 December 1996 Mr Hanrahan confirmed their revised price of $358,000. At this stage there was still discussion about entering into a marketing licence agreement with the ability thereby to attract Austrade grants. That was followed up by a further fax on 6 December 1996 to which was attached a completed “Live Seafood Unit Order” nominating the price of $358,000 with an estimated transportation charge of $22,500. Included in the order was the following notation:
“Payment terms are 40% deposit followed with a number of progress up to the practical completion and commissioning of the plant. These payments will be detailed with the nominated finance institution or with your company.”
The boxed sections of the form included reference to payment of a 40% deposit, namely, $143,200, leaving a balance owing of $237,300. Delivery was specified as “May 1997”.
The facsimile which accompanied the order form included the following:
“As soon as the completion of the signing of the Sales Contract documents and other Leasing documents [has] been completed, we would like to immediately place orders with various component manufacturers and with the fibreglass construction so the delivery time can be smoothly maintained.” (The words in brackets do not appear in the photocopied tender documents as there appears to have been an obliteration from the documents copied.)
Once again, reference to the 40% deposit was clear and obvious as an apparently usual condition of trade. It was also clear that construction, and hence delivery time, was dependent upon completion of finance arrangements.
At this time there were also telephone discussions taking place, and Mr Hanrahan gave evidence, which I accept, and which is consistent with the delivery date stated in the order form, that he told Mrs Bowyer that the project would take some five months to complete, including the need to obtain electric pumps and other electrical equipment from the U.S. because of the need to install the plant in Hawaii and therefore to accommodate the 115 volt U.S. power supply.
Mr Hanrahan also gave evidence that after faxing the initial order on 6 December 1996, he spoke to Mrs Bowyer who asked him to send another form with the deposit requirement whited out so that she could submit it to her bank. I accept that evidence, as it is consistent with what then followed.
A contract is signed
On 10 December 1996 Mr Hanrahan sent another facsimile to Mrs Bowyer which made specific reference to her bank and which was accompanied by another order form for the same purchase price. The text of the facsimile was as follows:
“Dear Katrina,
Can you or your husband sign the attached Confirmation Order so we can get some items for your project started, ie, thermo-plastic moulds for your tanks and order confirmations for projected supply of pumps and compressors.
As soon as the documents have been completed with your bank, perhaps you can have the Bank Officer at your Bank contact us to arrange the payment schedule. If you would like, we can copy this to you now as the Project Timeline has been estimated. Do you have an approximate idea of processing time for your bank so we nail down our start to manufacture date.
We look forward to starting your project.
Best regards,
Mike Hanrahan.”
That was accompanied by a further document entitled “Confirmation of Sales Order”. These two documents are out of order in the tender documents, but the facsimile machine imprints indicate that they were transmitted together, a fact confirmed by Mr Hanrahan’s original, Exhibit P7. The “Confirmation” form contained a description of the plant, and in the boxed sections of the form indicated that the method of purchase was “Finance”, not “Cash”. It specified the required practical completion date as “June 1997” and the projected installation date as “May 1997”. The price remained the same. There was no reference to a deposit, but in a box opposite the price details under the heading “Payment Method” appeared: “A number of progress payments to be made from the Finance institution. Payment amounts and period to be set up by Austmarine”. That form had been signed by Mr Hanrahan on behalf of Austmarine. It was subsequently signed by Mrs Bowyer and returned with a facsimile to Austmarine on 11 December 1996. In that facsimile Mrs Bowyer said:
“I will inform you of the Finance details as soon as possible. There may be a chance of being able to discuss matters further with Michael Stupar. If this is possible of course the processing time will be a lot smaller which will enable us to go ahead as previously planned.”

A number of observations need to be made about the contents of those documents and the sequence of events. As mentioned previously, reference to the deposit had been deleted at the request of Mrs Bowyer for the purpose of negotiating with her bank. Although the “Confirmation of Sales Order” contained no reference to a deposit, it was clear from the document, the accompanying facsimile from Mr Hanrahan and from the context giving rise to the sending of the revised form, that the contract was conditional upon a number of “progress payments” being agreed and made once the plaintiffs’ finance institution was identified and payments “set up” by Austmarine. The accompanying facsimile dated 10 December from Austmarine to Transpacific made specific reference to the latter’s bank and the need to arrange the payment schedule. Significantly, Mr Hanrahan asked in the facsimile whether Mrs Bowyer had an approximate idea of processing time for her bank “so we nail down our start to manufacture date”. That would not have been said or have been necessary if the contract was not dependent on satisfactory finance arrangements being made.
Although none of the payments was now called a deposit, I find that there was an implied term in the contract that work would not commence until the plaintiffs’ finance institution had been identified and a series of progress payments agreed. There can be no other explanation for the form of the document and Mr Hanrahan’s accompanying facsimile. This was clearly understood by Mrs Bowyer at the time. I reject Mrs Bowyer’s evidence to the effect that she understood there to be no longer any requirement to make progress payments. I also reject Mr Bowyer’s evidence that his wife had told him that the deposit requirement had been waived. It is apparent from Mrs Bowyer’s facsimile response of 11 December, to which the signed Order form was attached, that there was a recognition of the need to have finance details settled as soon as possible, given the delivery date which had been negotiated and given the estimated length of time needed for construction of which she had previously been made aware. Importantly, she was aware that work would only progress once progress payments had been agreed.
Not only did both parties know that work would not commence without an agreed schedule of progress payments, but, as will be seen, both parties conducted themselves thereafter on the basis that progress payments were necessary to ensure commencement and continuation of construction.
Finance negotiations
During the time leading up to the signing of the confirmation of sales order by Mrs Bowyer, there had been further discussions about finance. Mrs Bowyer claimed in evidence that on 6 December Mr Stupar had told her that finance with B & P had been approved. I reject that evidence. The most that Mrs Bowyer then had was a quote from B & P as to estimated leasing fees based on an assumed capital cost of $500,000. No application for finance or for leasing had been made to B & P. I also reject Mrs Bowyer’s evidence that Mr Stupar told her in October that approval would be granted “within a few days” or that Mr Hanrahan told her likewise.
Mrs Bowyer told Mr Hanrahan that she was negotiating with her bank. I find that to be the case. It was the bank to which she wanted to take the amended order form bearing no reference to a deposit. It is clear from the content of Austmarine’s facsimile of 10 December that Mr Hanrahan was waiting confirmation from Transpacific’s bank, and he could only have got that information from Mrs or Mr Bowyer. The lack of any reference at that time to B & P is significant.
In order to support their submission that the plaintiffs had been told that finance was available through B & P, the plaintiffs relied heavily on an entry in Mr Hanrahan’s diary of 14 January 1997 which reads:
“B & P – 1^st progress payment in 48 hrs.”
This was followed on the next line by a reference to Barry Bowyer, from which the plaintiffs invited the drawing of an inference that Mr Hanrahan had told Mr Bowyer on that day that the first progress payment would be available from B & P within 48 hours. I reject that submission. I decline to draw such an inference. At that stage, the plaintiffs had not even submitted an application for finance to B & P and were quite unaware of B & P’s requirements for the consideration of such an application. Those requirements were first mentioned in a facsimile from Mr Stupar addressed to Mr Bowyer dated 16 January 1997. That letter referred to a discussion and listed a set of particulars which B & P required in order to process Transpacific’s finance application. The details specified included an application form and statement of assets and liabilities, copies of year end tax returns for 1994, 1995 and 1996 both for the borrowing company and its directors. If the borrower was to be a newly established company, they required details of financial data of existing trading companies. They also required income projections for the new operation and particulars of property offered as security, including its location and value and some outline of the proposed nature of the new venture. The letter concluded:
“Upon receipt of the above information we should be able to offer a suitable proposal for your consideration.”
The timing of that letter suggests that it was initiated after negotiations with the plaintiffs’ bank had broken down. Indeed that is confirmed by Mr Hanrahan’s evidence that at about this time Mr Bowyer told him that he had problems with the bank and that he (Hanrahan) had recommended again that Mr Bowyer contact B & P. I find that he then did, resulting in the letter of 16 January 1997.
What the entry in Mr Hanrahan’s diary means remains uncertain. Mr Hanrahan was having dealings with B & P concerning a number of his customers. It may have related to one of those. It may have been an indication that the first payment would be available within 48 hours of approval of the financial arrangement. What is clear is that on 14 January 1997 there was no arrangement in place with B & P to provide finance to the plaintiffs, that at that time no application to B & P had even been made by the plaintiffs, and that any payment on account of Transpacific’s contract with Austmarine could not have been made by B & P within 48 hours of 14 January.
Finance delayed
During late December 1996 and early January 1997 Mr & Mrs Bowyer moved to Hawaii. During the ensuing months they were engaged in on-site preparations for their new venture. They engaged a Mr Barth Baron as a business consultant and project manager. They were engaged in the identification and negotiations for the lease of suitable premises for the installation. They arranged for the conversion of the Paradise Queen from principally a long line fishing vessel to a live lobster holding vessel. They were aware of and from time to time were reminded of the effect of delays on the installation of the tanks.
There were further telephone discussions between Mr Bowyer and Mr Hanrahan during January about design and possible layout of the tanks. In a facsimile sent to Mr Bowyer on 17 January 1997, Mr Hanrahan, having referred to those conversations, asked Mr Bowyer to forward a set of plans for the intended warehouse premises in order that he could design the layout, final tank dimensions, plant room size and length of piping runs. He added:
“Since there is a criteria (sic) of the start of a crayfish season to be fully operational for, we need a certain time for the proper production of all tanks and equipment. One part of this production is the injection moulded tanks where there are no short-cuts in production time. We need to start this process now.”
Mr Bowyer was obviously concerned about the effect on commencement of the construction of the failure to have any financial arrangements in place. There were telephone discussions about this. On 23 January Mr Bowyer sent a facsimile to Mr Hanrahan in the following terms:
“Mike, further to our conversation by telephone earlier this afternoon with a view to kickstart our tanks production by means of getting you a direct deposit, I have just spoken with Mike Stupar of B & P Finance. Mike has suggested that among other things, from a taxation perspective B & P would need to make full payment for ‘the goods’ to you. Accordingly he has suggested that perhaps the simplest and most practical mechanism for what we wish to achieve, is for Austmarine to undertake to refund the ‘kickstart’ deposit directly to ‘Transpacific Fish Exports’ once Austmarine’s first progress payment has been met in full by B & P Finance. No doubt your first progress payment required from B & P would take account of this, as well as the development stage of completed works at that point.
In taking note of Mike’s suggestion should this also be acceptable to Austmarine, then if you would be happy to fax me back that you are willing to refund what we can describe perhaps as the ‘interim deposit’ Mike, under the circumstances outlined then I am sure that I will be much more easily able to so arrange for a minnimum (sic) $75,000 deposit to be forwarded you as soon as possible. I will try in fact to arrange $100,000.
Should this tactic be successful we will save a good deal of time which will otherwise be unnecessarily squandered by any tardiness that might be expected in meeting B & P Finances (sic) preconditions for leasing approval – particularly where it is necessary for our accountant to finalise our last year’s accounts. I include a copy of B & P’s preconditions for your information which I am working on putting together as soon as possible.
Mike, I look forward to your return fax so we can get production started as soon as possible. Transpacific Fish Exports of course understands that the deposit monies referred to will be applied or utilised fully at the complete discretion of Austmarine meanwhile.”
A number of points need to be made about that facsimile. It is clear that Mr Bowyer was still negotiating with B & P but that no decision had yet been made. He was anxious to have the work started as soon as possible by offering to pay a “kickstart” deposit. There was express recognition by Mr Bowyer that no production work would be commenced without payment to Austmarine. Mr Bowyer was encountering delays in B & P processing the application, one of the reasons being that their accountant had not then finalised their accounts for the previous financial year, and that otherwise Mr Bowyer was still working on putting together the information required by B & P.
Mr Hanrahan’s facsimile response, also on 23 January merely confirmed that work could not start without payment. Mr Hanrahan agreed to the proposal and said in the facsimile, “… the method of getting the project started by yourself issuing the first progress payment is quite acceptable to our company. … We look forward to starting this project as soon as possible so the plant will be operational at least one month prior to the start of the season in Honolulu”.
Mr Bowyer had trouble raising the amount of the deposit that he had foreshadowed. Transpacific and the Bowyers’ bank was Bank SA. It is evident from correspondence from Bank SA to Mr Bowyer that the group was fully drawn to its overdraft limit in November, and that certain payments then had to be deferred. From a facsimile dated 30 January 1997 to Bank SA Card Services it appears that Mr Bowyer negotiated a $20,000 loan with a repayment schedule of $2,000 per month. It is also clear that he met Mr Stupar in Sydney on Thursday 30 January 1997 and discussed the finance package with him, as well, for the first time, as giving him a set of written background information concerning their business proposal. The budget disclosed in that proposal was based on a sale price of live lobster at $40 per kg, although it is far from clear in the document whether that was U.S. or Australian dollars. The document did not meet all the requirements specified in Mr Stupar’s letter of 16 January. The evidence does not disclose when that information, particularly the various financial statements, were supplied. In a facsimile dated 1 February to Mr Hanrahan Mr Bowyer said:
“Mike, I met with Mike Stupar Thursday in Sydney and discussed the finance package for the tanks. Mike was positive about the project and the information I supplied him. I believe we can do business with B & P Finance.
Meanwhile, I trust you received a transfer into your Bank A/c of $20,000 as a part payment of deposit to begin fibreglass work on the project …”.
He informed Mr Hanrahan in that facsimile that he had spoken to Mr Carr who had “ok’d an additional $80,000” which would be transferred to Austmarine’s account. He expressed the view that by the time that Austmarine had utilised the $100,000 “the necessary details will have been attended between ourselves and B & P such as to allow any further draw downs you might require as the project continues construction. Mike has mentioned that he needs to discuss draw down schedules with you …”.
This facsimile also demonstrates Mr Bowyer’s clear belief and understanding that no arrangement had yet been finalised with B & P. The evidence of Mr & Mrs Bowyer that by this time they believed that the B & P finance was in place must be rejected. The facsimile also confirms Mr Bowyer’s understanding that no construction would be done by Austmarine without payment.
Austmarine received the initial payment of $20,000 on 1 February 1997. On 3 February Mr Hanrahan arranged for the commencement of certain fibreglass works in connection with the tanks.
The intended $80,000 was not forthcoming from Mr Carr. By 6 February Mr Bowyer believed that Mr Carr would be forwarding a further $40,000 to Austmarine on his behalf. Mr Bowyer assured Mr Hanrahan that this would be forthcoming. However, on 18 February Mr Hanrahan sent a facsimile to Mr Bowyer which reported that the payment from Mr Carr had not eventuated “even though we have called numerous times and received numerous promises from David”. Mr Hanrahan also said:
“Mike from B & P is still processing all of your paperwork, there is quite a lot seeing that you have 8 companies. He expects it to be finalized any day, but it has to be signed off by three people due to the size and nature of the deal.
In the interim, so we can keep the flow going on your job, can you T/T the $40,000 from Honolulu that you mentioned.”
Once again, it was made clear to Mr Bowyer that no work would be done beyond the value of the amount received by Austmarine.
In the meantime, Mr & Mrs Bowyer were receiving other warnings about time and delay. In a letter addressed to them from Mr Baron dated 25 February, he said, among other things:
“Time is not your friend. This summer’s lobster season is going to start soon. What you can’t get to happen in the next month or so will cost you a year’s delay in your success.”
However, it was also evident from that letter that Mr Baron was quite unable to give any indication of the likely profitability of the venture. It is clear that no business plan had been prepared at that time.
On 22 February 1997 Austmarine received a payment of $30,000 from Mr Carr. It was neither the $80,000 nor the $40,000 promised. Nevertheless, Mr Hanrahan instructed fibreglass works to recommence and placed orders for pumps for the system.
On 27 February 1997 Mr Hanrahan flew to Hawaii to inspect the proposed warehouse building and to give advice on what steps would need to be taken before installation of the system could proceed. It was during this visit that Mr Hanrahan produced his list of recommendations referred to earlier. As a result of discussions in Hawaii Mr Hanrahan subsequently received from the land agent engaged by Mr & Mrs Bowyer a copy of the proposed lease, in respect of which he sent by facsimile some comments to Mrs Bowyer on 5 March after his return to Australia.
On the following day Mrs Bowyer sent a facsimile to Mr Hanrahan saying that she was returning to Australia for a time but reporting as to arrangements then in train. Mr & Mrs Bowyer continued to engage Mr Baron and they continued negotiating terms of the lease. They also entered negotiations with a firm known as Senator Seafood concerning sales arrangements for the live lobster.
Nothing further happened in relation to provision of finance. Mr Hanrahan arranged for further fibreglass work to be done to the extent of the $50,000 deposit paid. When no further funds were forthcoming he placed the order for pumps and other equipment on hold.
Mrs Bowyer said in her evidence that by early March she was embarrassed that funding had not been approved, but she understood that Mr Hanrahan was funding the project himself. She asserted her belief that the completion date was still scheduled for May. I reject that evidence. She was aware that no funding was in place, and she must have known, from the earlier estimates given by Mr Hanrahan, that the chances of having any installation completed in May were diminishing. She expressed her belief that at that time the process would take six to eight weeks to complete. It was unclear if that included installation in Hawaii, but what is clear is that it did not include shipping time. However, there was no evidence as to the foundation of that belief. Nothing had been said to qualify Mr Hanrahan’s previous estimate of five months. Mrs Bowyer may have been confusing that estimate with an earlier estimate that Mr Hanrahan had given when they were discussing the acquisition of a model MC1000 tank. He had said that six to eight weeks was the normal build time for that model.
There were occasions during March when Mr Hanrahan spoke to Mr Stupar and may well have discussed the financing of Transpacific’s project. However, there is no evidence of any representations having been made by Mr Stupar that finance had been approved or was about to be approved. There were no such representations conveyed by Mr Hanrahan to Mr or Mrs Bowyer.
Mr Hanrahan said that towards the end of March he had told Mr Bowyer that there was nothing further happening by way of production. Whether in fact that occurred, Mr & Mrs Bowyer must have been under no illusions that the relatively small amount of money that they had paid, together with several broken promises as to payment, would not have generated much by way of production. Furthermore, as they were aware, Mr Hanrahan had incurred expenditure by his trip to Hawaii at the end of February.
The plaintiffs relied on a diary entry of Mr Hanrahan of 25 March 1997 to say that the money through B & P was available that day. The plaintiffs read more into that entry than Mr Hanrahan was able to and more than I am prepared to. Among other entries on the page there was a reference to B & P, opposite which was a column of five names or events, each with an asterisk in front of them. One of those lines was relevant to the plaintiffs. What was written was “Bowyer → today”. I am not prepared to infer from that entry that someone from B & P spoke to Mr Hanrahan that day and said that the Bowyers’ finance was available that day. It may have been a reminder that for some reason Mr Hanrahan had to contact Mr Bowyer that day. It may represent his understanding that B & P were intending to write to Mr Bowyer that day. I am quite unable to draw any satisfactory inferences from that diary entry.
What is not in doubt is that on 1 April 1997 B & P wrote to Mr & Mrs Bowyer in the following terms:
“Dear Sir/Madam
Re: Commercial Hire Purchase Facility Amount $450,000
As per our recent discussion we wish to confirm that an application amounting to $450,000 has been approved and the conditions are as follows:-
1.Facility to be fully secured by a Bank Guarantee amounting to $500,000 and personal guarantee’s (sic) of Directors.
Reasons for this is that your Bankers currently appear to be oversecured with real estate which you provided and all they would be required to do is up stamp their existing all money’s mortgage. This method is substantially cheaper and quicker.
Please call me at your earliest convenience to discuss this further.
Yours faithfully,
MICHAEL STUPAR
Consultant”

Those conditions were unacceptable to Mr & Mrs Bowyer. They did not accept the offer. This meant that they then had to set about negotiating alternative sources of finance. Once again, they engaged the assistance of Mr Carr who, through a finance broker, negotiated the three leasing arrangements with the respective financial institutions as previously described.
It was suggested that during this time Mr Hanrahan told Mr Carr that the tanks were substantially complete. There is no acceptable evidence of this, and Mr Hanrahan had no reason to say so. He had received only a little money with no advice that finance was arranged. In fact Mr Hanrahan had many calls to Mr Carr seeking, initially, his promised contribution to the “kickstart” deposit and, after 1 April, progress as to the provision of alternative finance. It must have been clear from those conversations that work could not proceed without payments being made.
I find, supported by Mr Hanrahan’s diary entry, that it was not until 22 April 1997 that Mr Hanrahan was told that finance had been arranged, at least in part, with the National Australia Bank, and that the instruction was then given to him to render an invoice to that bank for $150,000 for delivery of the goods to BJ & WW Bowyer at their Robe address. Austmarine’s invoice to the National Australia Bank for that amount was dated the same day, although the formal notification of acceptance from the National Australia Bank to Mr Bowyer and his brother was dated 23 April 1997. I find that when Mr Hanrahan was informed of the National Australia Bank finance being granted he thereupon proceeded to reactivate the orders for pumps from suppliers in the United States.
I accept Mr Hanrahan’s evidence that when he was told of the new arrangement by Mr Bowyer on 22 April he told Mr Bowyer that he would not be able to meet the original schedule, and that he “didn’t have any hope at all of making this July season, at that point in time, too much time had been lost”. Even if he was not told, that should have been obvious to Mr Bowyer.
The National Australia Bank lease was executed on 2 May 1997, and Austmarine received $150,000 from the bank on that day.
Mr Hanrahan was instructed on or about 30 April to render an invoice to Australian Guarantee Corporation. The invoice is dated that day. The lease was executed on 5 May and payment of $150,000 from Australian Guarantee Corporation Ltd was received by Austmarine on 6 May.
I infer from the date of the invoice that Mr Hanrahan was instructed to render an invoice to GIO Finance Ltd on or about 14 May. The GIO lease was executed on 21 May and payment of $150,000 to Austmarine was made by GIO on 22 May.
There was now no financial impairment to Austmarine proceeding with the work, although delivery of the tanks to Hawaii in May was plainly out of the question.
I reject the suggestion that, by rendering the invoices, Austmarine was representing that construction was complete. Mr & Mrs Bowyer well knew that the only way that work could progress was by payment of money. It was Mr Bowyer who organised for the financial institutions to be misled by requesting the invoices to be sent. Mr Hanrahan may have participated in misleading conduct towards the financial institutions. There was no misleading of the plaintiffs in that regard.
I find that, with the payment of the total sum of $450,000 to Austmarine, the contract was varied so that construction was no longer dependent upon payment of further instalments but became unconditional in that regard. However, because of the failure by the plaintiffs to arrange finance until that time, the obligation to deliver and install the tanks was to do so within a reasonable time, having regard to the preliminary work earlier carried out. Delivery in May and installation in June was, by then, out of the question.
Post-finance discussions and the letter of 29 May
Mrs Bowyer gave evidence that early in May she had been told that the tanks would arrive on 22 June 1997. She was unclear about when she was told that the tanks would not be available in May. Her assertion as to an arrival date of 22 June was based on an entry in her notebook (Exhibit A40) of a conversation between herself and Mr Bowyer on 17 May. By way of background she had had to avoid a starting date of 1 May for the lease, as the rental expense was considerable. The rest of the entries for that note are based on an assumed start date of 20 July, and what they would have to achieve before that. The entry “tanking system will arrive about 22nd June, will start up 2nd week in July” would appear to relate to Mrs Bowyer’s and Mr Baron’s calculations as to necessary dates if the system was to be ready for start up on 20 July. There is other documentary evidence which suggests that Mrs Bowyer did not, at that time, know when the delivery date would be.
Following that meeting, on 18 May, Mr Baron sent a facsimile to Mr Bowyer, then in Australia, with a copy to Mrs Bowyer, reporting on the present position. He noted at the outset that “Katrina contributed helpful corrections to this report’s draft”. Among other things the report referred to negotiations concerning the lease of the warehouse, the commencement date of which was dependent upon other events. Mr Baron said:
“We know the hard starting date for the lobster operations, July 1^st, but not the first date live product will be in Honolulu. Until you say otherwise, I’ll use July 21^st. A later date gives us more time and conserves cash. An earlier date consumes cash faster (whether for expenses or deposits) and adds pressure for an earlier occupancy date.”
There was then a discussion in the report about staggering the receipt of live product. Mr Baron observed that a proposed meeting between Mr Bowyer and Messrs Ray, Knutsen & Gunn, other fishing boat operators, to be held on or about June 22^nd would be “too late to start documentation in order for us to make the decisions and take the actions needed to successfully (and economically) set up the warehouse operations”.
Later in the report Mr Baron asked:
“Can you give the shipping schedule now in place for the tank system? Also, I know the uncertainties, but the best possible time for tank set-up would be helpful. We’ll be better able to select electricians, plumbers and other contractors with as firm a schedule as possible.
Boards of Health and Agriculture permitting should not start until we’ve a commitment from the warehouse, and then with the boards preliminary inspections. This will get all their required changes on record at the earliest moment and prevent having to re-do any work.
From what I see, this is the current schedule of events:
May 20^th. Final review of new offer to lease. I’ll ask Mark to send you the docs on Monday …
May 23^rd. Execute and deliver our lease offer. If possible, it would help if a $7,908.13 check for at least for the first month’s rent (September) is attached to our offer.
June 2^nd. Landlord executes lease agreement. If we did not tender the first month’s rent payment of $7,908.13, we must do so now. Hopefully, this check will be returned to us, uncashed, on June 16^th (targeted occupancy date). This date is important on the money management side, in that this should be the day we tender the total of $33,558.92 in Certificates of Deposit …
June 15^th. Latest acceptable occupancy date. We have to expect that some of the landlord’s work will still be going on through the end of the month, and some scheduling conflicts will result.
The last time we spoke you mentioned that funds for our start up in Honolulu may take two or three weeks to get in place. I am assuming that I am safe with using, therefore, June 2, 1997 as a good availability date. Until I hear from you, I will make no representations to anyone. …
We are going to need a “Czar” to direct the set-up. I will be happy to do this for you, but need some guidance. The earlier this guidance is given, the easier it will be to pick and support the new plant manager. …”
In that memorandum, among other things, Mr Baron was advising Mr & Mrs Bowyer as to the necessary time lines needed to be in place, assuming a start up of the new plant on 21 July. At that stage he was not aware of any delivery date for the tanks and had not been told that by Mrs Bowyer, who had assisted him in drafting the report. It is significant that he noted June 15^th as the latest acceptable occupancy date and that there could be some conflict between works to be undertaken by the landlord and those relating to installation of the plant. The advice appears to have been accepted, because on 28 May Mrs Bowyer signed an offer to lease the premises providing for a commencement date of 15 June 1997. That offer was accepted subject to the tenants accepting certain changes specified by the landlord. However, it was not until 30 June that Mrs Bowyer actually signed a lease which was executed on behalf of the landlord on 8 July 1997.
On 19 May 1997, two days after the meeting with Mr Baron, Mrs Bowyer sent a facsimile to Mr Hanrahan. She reported developments towards entering into the lease and said:
“What I also need to know Mike is the shipping details of the arrival of the tanks. Name of shipping company and estimated date of arrival because all transport arrangements need to be pre-booked. As you would remember from your short trip over here that they definately (sic) have their own system and I don’t think now is a good time to test it out.”
This is quite inconsistent with Mrs Bowyer’s assertion in evidence that two days before she was aware that the tanks were due to arrive on 22 June.
At the time when Mr Hanrahan received Mrs Bowyer’s facsimile of 19 May, Austmarine was continuing as normal with the construction of the tanks in accordance with the original timing, now delayed. Mr Hanrahan had already pointed out to Mr Bowyer that he did not have any hope of making the July season because too much time had been lost. From Austmarine’s point of view, any hope of making the 1997 season had vanished. It was not then working to meet that deadline. It is not surprising, therefore, that Mr Hanrahan did not respond immediately to Mrs Bowyer’s request for shipping information. From his point of view, to do so at that time would have been premature.
Although it was denied by Mr Bowyer, there was a meeting between Mr Hanrahan, Mr Bowyer and a Mr Darryl Symonds at 3 pm on Friday, 23 May 1997 in Mr Bowyer’s room at the Sheraton Hotel in Sydney. They were there principally to discuss the provision of tanks for a different investment that the two were planning in South Australia. After that meeting there was a further discussion between Mr Hanrahan and Mr Bowyer concerning the Hawaii project.
In the first place, there was a request by Mr Bowyer for Austmarine to pay out of the funds it had received from the financial institutions the sum of $40,000 to Mr Carr, being return of the $30,000 advanced by Mr Carr plus an extra $10,000 that Mr Bowyer wanted Mr Hanrahan to pay into Mr Carr’s account. He also asked for a payment of $10,000 to himself and $65,000 to KPC. The justification for that was to appear in a subsequent facsimile dated 28 May 1997 from Mr Bowyer to Mr Hanrahan. There was also a request by Mr Bowyer to try and have the tanks completed for the 1997 season. Mr Hanrahan’s evidence on that topic, which I accept, was as follows:
“During that meeting, that's when Barry Bowyer then asked me if I could somehow pick up the pace on the production. He wanted to try and make this July season and I said 'We haven't got a hope at this point in time'. I said 'We are already into May now' and he really put a lot of pressure on me to try to come up with some solution, formula, to pick up speed in production, to try to have the equipment up there during that actual season. So after some discussion, toing and froing of ideas, I said 'Look, let me think about it. It's going to mean a huge amount of overtime by my factory staff'. I point out to you even though you've got a great number of production hours, it equates to so many production days and the days can be reduced by doing a lot of overtime but there's also a cut-off point when your staff can only do so much overtime' and I said to him 'On top of that you've also got all the electrical, mechanical componentry for this project which has to be imported into the country because its all USA voltage; it's all coming in from the US itself, or Europe, so you've got these importation times as well as taking into consideration, while you can work it out in theory, it's all very well but in the plan -'. I asked him whether I could think about what I could do with regard to reducing the production days. On top of that he also asked if I knew what the shipping schedule was for July. I said 'I don't really know, I'll have to inquire about that', then we discussed that shipping schedule. I said 'If we are going to try to even get any containers out at all you have to at least book the space, otherwise - you just can't turn up, expect them to load one, two, three containers. You have got to lock the space in'.”
Later that day Mr Hanrahan consulted his shipping agent and was told that the only shipping available to Honolulu would leave on 11 July and arrive on 25 July with a “cut off” date of 7 July.
Mr Hanrahan tried to work out what could be done. One of the suggestions he discussed on the telephone with Mr Bowyer was changing the layout of the tanks and equipment that could speed up the installation time. Mr Bowyer sent another facsimile to Mr Hanrahan on 28 May 1997. He claimed in evidence that this was in response to Mr Hanrahan’s facsimile of 29 May, the contents of which are set out below. I reject that evidence. Exhibit A29, being the copy of the facsimile as received by Mr Hanrahan, shows a transmission time of 28 May 1997 beginning at 9.59 am, being Hawaii time, or 5.59 am on 29 May, Brisbane time. Mr Hanrahan’s facsimile to which Mr Bowyer alleged that he was replying, the original of which comprises Exhibit A56, discloses a transmission time in Brisbane of 6.49 pm on 29 May, well after the time of transmission of Mr Bowyer’s facsimile to Mr Hanrahan.
Mr Bowyer’s facsimile repeated the request to transfer $65,000 to KPC in Honolulu. The reason stated was because he could not “close the warehouse deal” until he had the funds, and that he had a limited time to do so. He continued:
“I have just informed Barth (Baron) of the projected delay with tank delivery. Apart from highlighting the obvious financial disadvantages which the delivery delay will cause, Barth was personally embarrassed in his representations as project manager on our behalf.
Barth requested an immediate and comprehensive written schedule of operations by which some reliance can be held to, whereby an installation timetable can be progressively set out from now to a start up date for the tanks.
I appreciate your being very busy Mike, however Katrina requested this from you already on 19^th May at Barth’s request …
I have to say at this point that I am angry with Mike Stupar in not getting back to us two months at least before he did so the project could have flowed on under alternative financing arrangements which also would have had time to have been more satisfactorily arranged!”
As he explained in that facsimile, the justification for the return of the $65,000 to KPC was as follows:
Deposit paid (himself and Mr Carr)  50,000
Lease funds received  450,000
$500,000
Less:
Contract price  358,000
Estimated transport  22,500
Amount returned to Mr Carr  40,000
Amount paid to BJ & WW Bowyer, Robe 10,000
Transfer to KPC       65,000
$495,500
It was said that this would leave a balance in hand, including shipping costs, of $27,000.
He also asked Mr Hanrahan to estimate additional costs of flying appropriate equipment over in time with Mr Hanrahan’s modified plan with a view to making up lost time, and stated that he would “put sufficient funds in place to cover your estimates in addittion (sic) to the $27,000 you currently hold”.
Needless to say, it had never been disclosed to any of the three financial institutions that the funds that they were providing were proposed to be used for other purposes or that there had been an over-estimation of the cost of the tanks and equipment.
The facsimile sent by Mr Hanrahan to Mr & Mrs Bowyer on 29 May is important. I set it out in full:
“Barry & Katrina Bowyer
Honolulu, Hawaii
Dear Barry,
Subject: Transfer of Money
Further to recent telephone conversations, the transfers of money has been effected on Tuesday for BJ Bowyer and on Wednesday for David Carr and your Honolulu transfer.
The shipping schedule for the 40 foot containers is the 11^th July the departure date, arriving in Honolulu on the 25^th July. Unfortunately, because of the huge delay in the initial funding of this project, you can appreciate there is quite a lot of man hours to be spent in the production of the equipment, and now we are doing all things possible to decrease the length of days by increasing the work hours each day on your production. Basically, we are doing all the mechanical production in half the time span.
Our freight forwarder suggest that if all the containers are deposited to the ship early, then the ship will sail immediately to Honolulu. If this occurs, we may pick up 7 days of early time. In the interim, I suggest we fly all the PVC pipe, fittings, and pipe insulation to Honolulu on the 11^th or 14^th July, along with two of our staff and myself to install all the PVC pipes and concrete plinths prior to the containers arriving. This will save considerable time for the final connection of the machinery units to the tanks.
Keep in mind that after each tank has been assembled on site, each tank requires 24 to 48 hours for the adhesives to properly dry. As I said to you here, we will start with 2 or 3 tanks / units first so you can immediatedly (sic) get the loading of tanks started. I anticpate (sic) final hook-up and assembly to be complete within one week of the containers arriving on site.
It would be an advantage if the vessels can sail slowly back to port, holding the crayfish in their wells, so to give maximum time for the installation.
Best regards,
Mike Hanrahan (Business Fax)
Managing Director
Austmarine”
It will be noted that the opening words of the facsimile refer to recent telephone conversations. Mr Hanrahan said in evidence that one of them was between the two facsimiles just referred to. In that conversation Mr Hanrahan said to Mr Bowyer: “I won’t guarantee we are going to make this but we’ll have a go at trying to pick up the pace and speed things up and try to get one, two or three containers loaded. I can’t guarantee it because of the enormous amount of production hours required, plus the importation of componentry”. I accept Mr Hanrahan’s evidence as to that conversation. The facsimile therefore needs to be read in that light and in the light of the conversation of 23 May. It was not only responding to Mr Bowyer’s request for information concerning possible shipping times in July, but was in effect saying what Austmarine would do if production could be completed within that time. However, the facsimile also contained a warning, namely that assembly would take one week from the containers arriving on site, and that after each tank was assembled, it required 28 to 48 hours for the adhesive properly to dry. At the earliest, that would seem to suggest a completion time not before 3 August, on the assumption that the containers arrived in the warehouse on the same day that they arrived in the port of Honolulu. That allowed no time for customs clearance, which Mr Bowyer acknowledged would take several days at the minimum. When the containers did eventually arrive clearance took more than one month. Furthermore, the timing stated by Mr Hanrahan in the penultimate paragraph of the facsimile made no allowance for filling the tanks with sea water, commissioning the system and ensuring that the correct temperature of the water was obtained and maintained. As will be seen from a later facsimile, in the meantime, Mr Bowyer had also been warned by representatives of Senator Seafood that there might be a need of some two to three weeks of culture time to be undertaken to prepare the tanks for full effectiveness for the receipt of live lobster.

The substantial losses at sea had nothing to do with the delay in installation of the storage tanks. Apart from the relatively small anticipated mortality during storage, none of the mortality was attributable to the use of the Kona Cold tanks. There appear to have been deficiencies in the method of packing and transportation, because the substantial mortality occurred between packing and arrival at the respective destinations. None of that loss has been shown to have occurred as a result of the failure to have the tanks installed for the 1997 season. There was some suggestion of lack of temperature control at the time of packing, but there was no evidence to suggest that that would have been any different had the tanks been installed as planned, and the major losses appear to have occurred as a result of substantial variations in temperature during the course of transit. I cannot find the losses due to mortality were caused or contributed in any way by the use of the Kona Cold facility.
The price obtained for the live lobster was not influenced in any way by the non-delivery of the tanks. It was substantially below the cost of taking or purchasing the lobster and of processing and transport.
The plaintiffs’ causes of action
I turn to consider the plaintiffs’ causes of action as they were developed in final submissions. In doing so I treat the plaintiffs as being parties to common causes of action, although the claim in contract can only be brought by Transpacific, that being the only party to the contract.
Misleading conduct prior to entry into the contract
I find that there was a pre-contractual representation that Austmarine would, subject to entering into a contract, deliver the tanks in May 1997 and install them in June 1997. There was nothing misleading or deceptive about that representation. It was necessarily subject to the parties entering into a contract in December whereby Austmarine would be able to and would be required to commence work on construction shortly after that time, and subject also to the contract enabling such work to continue at a reasonable rate after commencement.
There was no representation that Austmarine would commence work immediately upon the execution of the contract without Transpacific complying with any condition of the contract requiring payment of a deposit or payment by instalments. There was never any discussion or correspondence to qualify Austmarine’s requirement that if a contract were entered into, performance of the work would be subject to payment of a deposit or an agreed program of instalments. Furthermore, prior to entering into the contract, there was nothing in the conduct of Austmarine or of Mr Hanrahan which would suggest that some form of financial arrangement had been entered into between Austmarine and B & P which would enable the contract to proceed without further provision of finance by Transpacific. It was clear at all material times that the responsibility for providing finance rested with Transpacific.
Misleading conduct after entering into the contract
I have already found that there was an implied term in the contract that work would not commence until the plaintiffs’ financial institution had been identified and a series of progress payments agreed. There was never any representation made by Mr Hanrahan or anyone else on behalf of Austmarine that appropriate financial arrangements had been made between Austmarine and B & P to ensure that Austmarine could complete its contract with Transpacific. There was never any representation made by Mr Hanrahan that work was proceeding notwithstanding the lack of finance, other than when payment of the “kickstart” deposit was made. There was no representation that work would proceed without further payment beyond the value of that deposit. There was no representation that work was proceeding in a manner that would satisfy the contractual obligation to deliver in May and install in June. There was certainly no representation, as suggested by Mr & Mrs Bowyer, that Austmarine was proceeding to fund the project itself.
Representations to Mr Carr
There were no representations to Mr Carr during April and May 1997 that the tanks had been manufactured or that manufacture was proceeding. On the contrary, at the various times when Mr Hanrahan spoke to Mr Carr he was stressing the need for the payment of money in order for construction to proceed. At all material times it was obvious to Mr & Mrs Bowyer that construction could not proceed without appropriate financial arrangements being put in place.
The facsimile of 29 May 1997
I find that the facsimile of 29 May 1997, in the context of conversations between Mr Hanrahan and Mr Bowyer which had immediately preceded it, did not constitute any representation that the tanks would be delivered at the port of Honolulu on 25 July. In any event, whatever the effect of that facsimile, there was no reliance by the plaintiffs on that date. Even in their own minds, there was and could be no assurance that delivery in the port of Honolulu on 25 July would enable the tanks to be installed in time to receive live lobster from the 1997 season catch. It is also clear from their subsequent conduct that there was no reliance on that possible delivery date.
Breach of contract
Although the contract provided for delivery of the tanks to Honolulu in May and their installation in June, the contract was subject to a condition precedent that work would only proceed when the plaintiffs’ financial institution had been identified and a series of progress payments agreed. The plaintiffs failed to comply with that condition precedent, thereby relieving Austmarine from compliance with the delivery date specified in the contract. Once the three payments were made in April and May 1997 Austmarine became subject to a contractual obligation to deliver and install the tanks within a reasonable time. Given that the normal construction time for an order of that nature would be five months, and allowing for some work which had been undertaken upon payment of the “kickstart” deposit, a reasonable time for the delivery was well beyond the completion of the 1997 lobster season. There was then no contractual obligation on the part of Austmarine to deliver and install the tanks in time to accommodate the 1997 live lobster catch.
In regard to the facsimile of 29 May 1997, that did not constitute a variation of the contract to provide for delivery at the Port of Honolulu on 25 July. The only variation effected by the conversations which preceded that facsimile and the facsimile itself was that Austmarine would use its reasonable endeavours by working substantial overtime and transporting some of the components by air instead of sea, all of which would be at the additional cost of Transpacific, in an endeavour to have the containers arrive at the port of Honolulu on 25 July.
Misleading conduct in June 1997
I find that there was no misleading conduct on the part of Mr Hanrahan or Austmarine during June 1997 as to the delivery of the tanks in Honolulu by 25 July. In any event, the plaintiffs and their advisers remained uncertain as to whether the components would arrive in Honolulu on 25 July until Mr Hanrahan’s facsimile of 7 July.
It follows that none of the plaintiffs’ alleged losses by virtue of their entering into commitments for leasing premises to accommodate the tanks and none of the expenditure in relation to the commencement and conduct of the business of harvesting live lobster in 1997 was undertaken in reliance on any contractual obligation imposed on Austmarine, nor was it as a result of any misleading conduct on the part of Austmarine or Mr Hanrahan.
The losses allegedly incurred by the plaintiffs and failure to make a profit
In view of the fact that the plaintiffs fail in their claims for alleged breach of contract and misleading conduct, it is not strictly necessary to consider their claim for damages. However, I find that in any event their several claims cannot be substantiated. The claim for damages is based upon losses said to have occurred and their failure to make a profit as a result of the inability to make use of the tanks for live lobster taken in the 1997 lobster season. There was no evidence that the tanks were proposed to be used for other purposes during the rest of the year. The lobster was to be sold live into markets where the price, at that time of the year, was said to be high. They were not to be kept but were to be sold and transported live as soon as possible after transfer to the holdings tanks. That is what happened in fact for the 1997 live lobster catch.
Warehouse leasing costs
KPC paid a security deposit of US$47,975 upon entering into the lease. When the lease was sought to be avoided the security deposit was forfeited. As a result of the litigation KPC paid the sum of US$11,500 to the landlord. I accept for present purposes that they paid US$6,119 legal costs as a result of the dispute of the landlord. Whether or not those costs were properly incurred may be open to question. For present purposes I accept that the sum of those three figures, namely US$65,594, were leasing costs incurred by virtue of entering into the lease at a time when it was believed that the tanks would be available to be installed for the 1997 season. The plaintiffs say that they are costs which would not have been incurred had they been aware that the tanks would not be available for installation for the 1997 season.
Be that as it may, the lease entered into, although it commenced as from 15 June 1997, provided for a monthly base rent from 15 August 1997 to 30 June 1998 of US$8,097.92. There were to be increases in subsequent years. In addition to that, KPC was to pay a share of certain project expenses incurred by the landlord together with the cost of all utilities supplied and property damage insurance. No doubt there would have been other expenses associated with the conduct of the business from the premises. There is no evidence that any of these additional expenses, other than the three items listed above, were incurred. If the project had gone ahead as planned, KPC would have to have paid 10½ months rent to 30 June 1998 or the sum of $85,028.16 – an amount which exceeds that which it in fact paid, to say nothing of the saving in other operating expenses. In the circumstances, the cancellation of the lease, notwithstanding that that involved some expense, involved less cost to KPC than would have been incurred if the lease had been maintained as intended, and the leasing would have generated no additional income.
Trading losses and loss of profits
KPC incurred substantial trading losses for the 1997/98 financial year. A major head of damages claimed was in respect of recoupment of those losses and compensation for the failure to make a profit in that financial year.
Even if the plaintiffs succeeded in their allegations of breach of contract and misleading conduct, they would still have to establish that the relevant loss was caused by the breach or misconduct in question. Merely because losses are incurred which follow a breach will not justify an award of damages for those losses: cf Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310. The question whether a particular loss was caused by a particular breach is determined by applying criteria of common sense: March v E & M.H. Stramare Pty Ltd (1991) 171 CLR 506 at 515, 522 and 524; Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 at 426; 456-457; Alexander v Cambridge Credit Corporation Ltd (supra) at 316, 357.
It would appear that the plaintiffs’ substantial trading losses were brought about by mortality of lobster on the Paradise Queen, by the relatively low prices obtained for the live lobster and the substantial loss through mortality in the transport of live lobster. None of these factors were caused by or related in any way to the failure to supply the storage tanks on time. The same losses would have been incurred had the storage tanks been installed. No attempt has been made by the plaintiffs to compare the actual costs paid to Kona Cold with the costs that would have been incurred by KPC engaging its own staff and conducting its own operations for the month or two between delivery of live lobster to the tanks and their shipment overseas.
Indeed, it is reasonable to conclude that had the projects gone ahead as intended, the trading losses would have been even greater. KPC had been negotiating with the owners of at least two other vessels to acquire their catch as well to place in temporary storage. A small proportion of the total delivered to Kona Cold was in fact acquired from other boats. There is no evidence that, had a greater proportion of the catch of other boats been acquired, that would have been sold at any higher price. Had the same rate of mortality occurred and the same prices been obtained, each of which seems to be an inevitable conclusion, the losses to KPC would have been even greater. The offer to purchase the catch from those other boats was withdrawn when it was appreciated that, even if the tanks did arrive as hoped for, they could not all be installed to deal with a 30 tonne capacity in the first year. Had substantial quantities of lobster been obtained from other fishers because the tanks were installed, the inevitable conclusion is that the losses to KPC would have been even greater.
Customs fees
It is alleged that as a result of the termination of the lease of the building, KPC incurred storage fees to Hawaiian customs because the plaintiffs were not able to take delivery of the tank components. The amount claimed is US$21,219.
It is claimed that Mrs Bowyer expressly asked Mr Hanrahan not to ship the second and third containers at a time when the shipping could have been cancelled. I accept that there was a request by Mrs Bowyer to delay shipping of the second and third containers. However, I accept Mr Hanrahan’s evidence that the request was made after the containers had been shipped.
There appears to have been some delay in clearing the goods through Hawaiian customs due, so the plaintiffs submitted, to Mr Bowyer not having detailed lists of the contents of the containers. I accept that all relevant information was faxed by Austmarine at the time of shipping. Whatever delays there were in clearing customs, they appear to relate to the failure of the plaintiffs or their agents to take appropriate action to clear the goods because by then the plaintiffs had nowhere to put them.. I would not have allowed this claim.
Payments to Mr Baron
The amount claimed by the plaintiffs under this head is US$28,850. Mr Baron was retained as project manager not only to negotiate the lease but to advise the plaintiffs on and to manage the setting up their whole business, including their negotiations with potential vendors of lobster to KPC and with sales agents appointed by KPC. There were many aspects of the business, including the operation of the Paradise Queen, on which Mr Baron was asked to advise. Mr Baron had no direct dealing with Austmarine. It is not possible to say what proportion of his fees were related to negotiation of the leasing of the premises which might reasonably be added to the lease costs discussed above. They would be insufficient to cause those costs to exceed the lease payments that would have been incurred had the project gone ahead. The balance of the fees would have been incurred in any event in relation to the setting up of the business in Hawaii. They are not a loss flowing from any failure to deliver tanks on time.
Losses on long line fishing and Paradise Queen fit-out
It is claimed that the total cost of the fit-out of Paradise Queen for taking live lobster was US$21,398. It was argued that a portion of this expenditure should be recovered “because but for the misleading conduct there would be no need to refit the boat for live lobster fishing”. The amount claimed under this head was US$11,000. No justification was advanced for the proportion of the cost claimed. No justification was advanced for claiming the cost of the fit-out which would have been incurred in any event. At worst from the plaintiffs’ point of view, the fit-out was undertaken prematurely, in that the taking of fresh lobster could have been deferred for 12 months. It might be said that the plaintiffs thereby lost the use of the money expended on refitting the vessel for that period. The vessel was used in the 1998 season for taking live lobster. The short answer is that the vessel was in fact used in 1997 for the taking of live lobster. The losses that the plaintiffs incurred were not through failure to deliver the tanks but through high rates of mortality and the low export price for live lobster. I would disallow this item.
Associated with this item is a claim for US$6,486 losses on long line fishing whilst the fit-out occurred. This claim was based on the average profit generated by the ship per long line trip in 1997. There is no substance in this claim, as the fitting out of the vessel would have occurred in any event.
In relation to both aspects of this claim, it is not entirely clear when the fit-out occurred, but it must have been at the time when the plaintiffs knew that they did not have finance organised for the purpose of acquiring the tanks. They took a gamble on having the work performed at the time they did.
Damages for failure to install
Transpacific claims the amount of A$30,000 being the amount paid to Grazan Pty Ltd to install the tanks. The course taken was that chosen by the plaintiffs. Austmarine was at all material times willing and able to undertake the installation in accordance with its contractual requirements. Installation did not proceed immediately upon arrival of the components because there was nowhere for them to be installed. Austmarine expressed its willingness to install. KPC chose to engage Grazan Pty Ltd. In those circumstances it cannot claim that loss against Austmarine. There was no failure of consideration. A choice was made by the plaintiffs to have another party carry out that aspect of the contract.
At the time when these proceedings were commenced there was no evidence that the contract had been abandoned, even though it may have been the plaintiffs’ then intention not to ask Austmarine to undertake the installation of the tanks in Hawaii. As subsequent events showed, it was the intention of the plaintiffs to install the tanks. Mr Hanrahan had expressed a continuing willingness to do so. There was no evidence of conduct which could lead to a conclusion that the contract had been abandoned by both parties or that it had been discharged by agreement: see Fitzgerald v Masters (1956) 95 CLR 420, Dixon CJ and Fullagar J at 432; Wallera Pty Ltd v CGM Investments Pty Ltd [2003] FCAFC 279.
During the course of his submissions counsel for the plaintiffs sought to argue that the contract had been repudiated by Austmarine. This had never been pleaded by the plaintiffs, and in any event there was no evidence of such repudiation. Austmarine remained ready and willing at all times to complete the installation or to arrange for its completion, notwithstanding that the nature of Austmarine’s business may have changed.
Although it was not pursued in final argument, the statement of claim alleges that modifications were necessary to the tanks because of poor design features and poor construction of the tanks by Austmarine, the need for such modifications constituting a breach of warranty to supply tanks which would fulfil their function. There was no evidence to establish any poor design feature or poor construction. The tanks were not installed in accordance with Austmarine’s own design. The incurring of costs to install the tanks and to do so in a different manner was a result of the plaintiffs’ own decisions.
Claim for overpayment of purchase price
As I understand it this claim was an alternative to the previous one, namely that there was a certain amount unexpended by Austmarine for installation, said to be the amount of A$8,640 for six tanks. In addition it was said that there was a requirement to account for $14,500 retained by Austmarine over and above the purchase price. I have already dealt with the claim relating to installation. The actual cost of shipping of the containers was never identified beyond the contractual estimate of $22,700. Assuming that to be the price, after repayment of the “kickstart” deposits and other amounts requested by Mr Bowyer, there was an amount of $4,500 held by Austmarine over and above the contract price. As I have indicated, this was more than accounted for by additional costs incurred by Austmarine both through Mr Hanrahan travelling to Hawaii at the request of the plaintiffs in February 1997 and through the additional costs relating to the acceleration of production.
Claim for lease payments

The plaintiffs claim the whole of the payment made under the three commercial leases amounting to A$545,000. In the alternative, they claim lease payments for the year 1997 of $79,946, or alternatively interest on lease payments for that year of $5,995.
The first alternative claim is based on the alleged misleading conduct of the defendants by representing to Mr Carr in April 1997 that the tanks had been manufactured, and the representations to Mr & Mrs Bowyer that the tanks would be delivered in May and installed in June. The plaintiffs plead, in effect, that if the relevant representations had not been made, the leasing contracts would not have been entered into.
The claim can only relate to representations allegedly made prior to entering into the lease agreements. There were no such representations which could possibly have induced the entry into the lease agreements. This was before there was any attempt to accelerate production, and at a time when it should have been, and indeed was, quite clear to the plaintiffs that the tanks would not be installed in time for the 1997 season. In any event, the plaintiffs proceeded to install and to make use of the tanks, and there is no evidence that they attempted to mitigate their supposed losses under this head by selling or otherwise disposing of the tanks.
The alternative claim for one year’s lease payments could only be made on the basis that the plaintiffs were induced by the conduct of the defendants to enter into the leasing commitments one year earlier than was necessary, had they been aware of the true situation. As with the primary claim, the entry into the leasing arrangements and the commitment to make the lease payments was entered into with the knowledge that the tanks would not, in the normal course of events, be constructed in time for the 1997 season. Whatever happened after the leases were entered into by Mr Bowyer and his brother cannot affect the liability to make the lease payments. In any event, as with the premises to be leased, the tanks would have remained idle for most of the following financial year in any event thereby affecting the profitability of the plaintiffs had the venture gone ahead as planned. It is difficult to see how any of these alternatives would be justified, even putting the plaintiffs’ claim at its highest.
Other partnership losses
Although it was not mentioned in final submissions, the statement of claim alleges loss to the partnership of Lobster Enterprises as a result of the absence of Mr Bowyer from the partnership business at the end of 1996 and into 1997. The statement of claim alleges that that necessitated the engagement of a less skilled fisherman as a replacement, and caused the partnership to fail to catch its quota of lobster off the South Australian coast for that season.
No such loss is made out on the evidence. There is no evidence as to the ability of the replacement skipper and no explanation for any shortfall in the catch or productivity of the South Australian venture in 1996/1997. The decision of the plaintiffs to set up their business in Hawaii, which required Mr Bowyer’s time, was quite independent of any action of the defendants.
The identity of the parties
Thus far I have treated all the parties as being a single entity. Given my other conclusions it is not necessary to dwell further on the relationship between the plaintiffs. However, had it been necessary, the plaintiffs are faced with further not insubstantial difficulties. The contract to provide the tanks was between Transpacific and Austmarine. The leasing finance was provided not to Transpacific nor to KPC but to Mr Bowyer and his brother who became the lessees of the tanks. The tanks were owned by the three financial institutions, having been sold to them by Austmarine at the direction of Transpacific. Transpacific appears to have had no interest in the tanks when completed. Neither did KPC. Yet they were to be used by KPC and to be installed in premises leased by KPC. The contract to carry out the installation of the tanks was between Grazan Pty Ltd and KPC. Yet KPC was not a party to the contract, and there was no evidence that Transpacific suffered any loss.
Apart from the shareholding and directorships of the two corporate entities, there was no evidence of the commercial, contractual or other relationship between any of these entities. None of them were ultimately owned or controlled by the same entities or persons. It is not as though this was a group of companies with common directors or a common ultimate ownership. There was no evidence from which one could infer that Transpacific was trustee of a promise on behalf of either of the other entities in the sense discussed by Mason CJ and Wilson J in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 at 118-119. See also Toohey J at 169 and Gaudron J at 173.
This was certainly not a contract to provide a benefit to third parties as was the case in Trident itself.
Argument was addressed by the plaintiffs that this case fell into the exception to the rule that only a party to the contract can recover damages for its own losses, that exception being of the type discussed by Lord Clyde in Alfred McAlpine Constructions Ltd v Panatown Ltd [2001] 1 AC 518 at 528-531. In the circumstances it is not necessary to resolve the question whether the plaintiffs in this case fall into that exception. There is a singular lack of evidence to disclose how or why the various contractual situations arose. In any event, it could only affect the claim for damages for breach of contract, and I am satisfied that there was no breach of contract by Austmarine. So far as the claims based on misleading conduct are concerned, it is not necessary that a contractual relationship be established for those to succeed. In respect of those claims the plaintiffs fail on other grounds.
Conclusion
For all these reasons it follows that the plaintiffs’ claims must be dismissed. Judgment must be entered for the defendants on the whole of the plaintiffs’ claim.