Wicks v New Westcoaster Pty Ltd
[2005] QSC 76
•22 March 2005
SUPREME COURT OF QUEENSLAND
CITATION:
Wicks & Ors v New Westcoaster Pty Ltd & Ors [2005] QSC 076
PARTIES:
MICHAEL PAUL WICKS
(First Plaintiff)
AUDREY DAPHNE WICKS
(Second Plaintiff)
WONGA FISHERIES PTY LTD (ACN 064 455 625)
(Third Plaintiff)
NEW WESTCOASTER PTY LTD (ACN 071 061 964)
(First Defendant)
ROBERT BLOM
(Second Defendant)
ROBERT L LAMASON
(Third Defendant)
JAMES LECKIE
(Fourth Defendant)FILE NO/S:
SC No 49 of 2000
DIVISION:
Trial
PROCEEDING:
Claim
ORIGINATING COURT:
Supreme Court at Cairns
DELIVERED ON:
22 March 2005
DELIVERED AT:
Cairns
HEARING DATE:
1 November 2004; 2 November 2004; 3 November 2004
JUDGE:
Jones J
ORDER:
That the fourth defendant have judgment against the plaintiffs with costs to be assessed on the standard basis
CATCHWORDS:
TRADE PRACTICES AND RELATED MATTERS – MISLEADING AND DECEPTIVE CONDUCT
Construction of marine vessel – marine surveyor was retained to inspect construction of vessel and report to financier – payments of financier to builders of vessel were subject to surveyor’s reports – vessel suffered structural defects – whether surveyor’s reports were misleading or deceptive – reports not misleading or deceptive having regard to nature and scope of retainerTrade Practices Act 1974 (Cth), ss 6(3), 52, 82
Parkdale Custom Building Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191, considered
Ford Motor Company of Australia Limited v Arrowcrest Group Pty Ltd [2003] FCAFC 313, applied
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514, considered
Taco Company of Australia Inc v Taco Bell Pty Ltd & Ors (1982) 42 ALR 177, applied
Rhone-Pulenc Agrochimie SA v UIM Chemical Services Pty Ltd. (1986) 12 FCR 77, considered
Demogogue Pty Ltd v Ramensky (1992) 39 FCR 31, considered
Costa Vraca Pty Ltd v Berryim Weed & Pest Control Pty Ltd (1998) 155 ALR 714, applied
COUNSEL:
A Philp SC for the plaintiffs.
R Bickford for the fourth defendant.
SOLICITORS:
LyonSmith Commercial Lawyers for the plaintiffs.
Minter Ellison for the fourth defendant.
The first and second plaintiffs are the directors of the third plaintiff which carries on the business of commercial fishing based at Cairns. On 17 November 1997 the third plaintiff contracted with the first defendant (hereinafter “the builder”) to build and supply a “custom designed New Westcoaster 15 m catamaran fishing vessel” according to certain specifications. In May 1998 the first and second plaintiffs were substituted as the contracting party and their performance of contractual obligations was guaranteed by the third plaintiff. For the purpose of this determination it is not necessary to distinguish between their interests.
At all relevant times, the first defendant carried on the business of boat building at Fremantle, Western Australia. The second and third defendants were the directors of the first defendant.
The construction/purchase of the vessel was to be financed by borrowings of $715,000 from AGC/Westpac Bank (hereinafter “AGC”). These borrowings were guaranteed by the first and second plaintiffs and secured by a ship’s mortgage over the vessel. The purchase price was to be paid by progress payments at agreed stages of construction.
The fourth defendant is a marine surveyor holding degrees of Bachelor of Science in Naval Architecture and a Master of Engineering. Since 1980 he has practised as a consultant naval architect and surveyor in Western Australia. He was engaged to undertake routine survey inspections of the vessel whilst it was under construction in order to advise AGC on the appropriateness of claims for progress payments.
By order made on 25 July 2003, the question of the fourth defendant’s liability to the plaintiffs falls to be determined as a separate question. The plaintiffs initially mounted claims against the fourth defendant in contract and tort but these claims have been abandoned. The sole cause of action now is a claim for damages pursuant to s 82 of the Trade Practices Act 1974 (Cth) (“the TPA”) for alleged contraventions of s 52 – namely that his reports to AGC, by not identifying certain defects in the vessel and deviations from specifications, constituted misleading or deceptive conduct.
Background facts
The engagement of the fourth defendant came by way of a recommendation by the builders to Mr Bathersby, the North Queensland Finance Manager for AGC. Mr Bathersby had negotiated with the plaintiffs and arranged the finance necessary for them to undertake the purchase of the vessel. Mr Bathersby independently checked with his company’s office in Perth and was satisfied that the fourth defendant was suitably qualified to undertake the engagement. It is common ground that the fourth defendant was retained solely to look after the interests of AGC and not engaged on behalf of the plaintiffs. Mr Bathersby stated his expectations were that the fourth defendant would report on whether –
(a) The material set out in the schedule/invoice had been acquired by the builder;
(b) The work set out in the schedule/invoice had been completed;
(c) The value of the work and materials accorded with the amount of the work completed to date and from which a progress payment could be calculated.[1]
[1]Ex 15 para 7
In his evidence the following exchange occurred:-
“It wasn’t your expectation that the marine surveyor would undertake any kind of detailed survey or review of the construction of the vessel? – No, not – not in particular detail.
No. And you didn’t expect the marine surveyor to certify that the vessel was being constructed in accordance with any design specification? – Well not necessarily, but I would suggest that he would have had a copy of the plans initially.”[2]
[2]T 48/30-40
The fourth defendant having previously carried out similar such assignments on behalf of financiers understood that these were the matters on which he had to report.[3]
[3]Ex 21 Statement of Leckie para 5
The fee for each inspection undertaken was $80 which the fourth defendant said was his standard fee. This sum closely approximates the hourly rate for a person engaged in this specialty. Allowing for travelling and report writing the actual inspection time would be somewhat less than one hour’s duration. Like the fourth defendant, Mr Bathersby was uncertain as to whether the precise amount of the fee was discussed at the time of the engagement but this was the fee claimed and actually paid at an early stage in the retainer. So it is clear that both AGC and the fourth defendant understood the amount of the fee and further that the amount of fee was indicative of the scope of the inspection.
There is no suggestion of any agreement or even contact between the plaintiffs and the fourth defendant as to the latter’s role and obligation. The plaintiffs paid the inspection fee but this appears to have been sought as part of the expenses of borrowing. The Loan Agreement (ex 2) contains the following terms:-
“1.5 The Lender shall have no obligation to provide any of the advances as specified in clause 1.4 unless:-
…(d) the Lender is wholly satisfied (at its sole discretion) that:-
…
(iv) construction of the vessel is being monitored on a monthly basis by a registered marine valuer and that such person has valued the plans before any advance is made to ensure that the cost to complete construction of the vessel does not exceed the Principal Sum.”
This appears to have been the basis upon which Mr Bathersby retained the fourth defendant to undertake the inspection at the fee referred to above. Mr Leckie said had he been engaged to look after the plaintiffs’ interest his fee would have approximated $10,000.[4]
[4]Transcript 122/40
The scope of the retainer obviously impacts on the amount of information able to be gained by the marine surveyor. Mr Fossey, a marine surveyor who gave expert evidence on behalf of the plaintiffs, said he would not have accepted a retainer on such limited terms. His practice was different and consequently his evidence as to the desirable level of the reporting must be regarded in the light of his own practice. Whilst the practice of other surveyors may have been relevant to claims in tort or in contract it is not the measure by which the fourth defendant’s conduct is to be assessed for the purposes of the TPA claim.
As a commercial vessel, the vessel was required to be surveyed by the Western Australian Transport Department (“the department”). The department was required to certify the vessel’s compliance with specified codes and other legislation. This certification included the initial step of the approval of various plans. Some of the plans included in ex 1 bear a certification of approval dated 20 April 1998 –
General Arrangement Plan – Ref WIK-756
Construction Arrangement Plan
(structural plan and profile) Ref WIK-755
Construction Arrangement Plan
(structural frame and bulkheads) Ref WIK-754
Wheelhouse and deckhouse construction
arrangement – Ref WIK-753
Other plans bearing that date are not relevant to the issues and need not be listed here. Some plans relevant to the construction details bear approval certification dated 21 May 1998 e.g. fuel tank survey (ex 10).
The department documented inspections by its officers on various dates between 19 March – 1 May 1998 during which period the hull, top and side frame, and deck were constructed. The ostensible purpose of this inspection was to ensure the correct laying-up of the fibreglass materials to create the abovementioned parts of the vessel. Ex 10 records that the department undertook some 10 inspections prior to the approval of plans on 14 March 1998. Mr Fossey explained that in assessing lay-up compliance, the department inspectors because they were usually not present during the actual work, relied upon records maintained by the builder.[5]
[5]Transcript 18/50
The fourth defendant’s first inspection occurred on 30 April 1998. That inspection led to his report dated 1 May 1998. By this time the vessel had been under construction for some months and the initial four progress payments had already been paid. A condensed progress payment plan had been agreed upon providing for a further five claims to be made at predetermined stages of construction. They were numbered Nos 7, 8, 9, 10 and 11.[6]
[6]Ex 21 Affidavit Leckie ex “JL1” folios 393-397
The documents which were either given to the fourth defendant or available for his inspection included the Contract, Building Specifications, General Arrangement Plan, condensed Progress Payment Schedule.[7] Mr Leckie could not recall whether he looked at the plan or the specifications before any particular inspection.[8] To whatever extent he did look at specifications, he did not notice any “difference between what was required in the specifications and what was actually built.”[9] Mr Leckie did not have any construction drawings nor approved plans with which the construction would have to comply. When asked in re-examination about the fitting of bulkheads he said:-
“…ultimately I could not check to see that because I did not have any construction drawings which would have been the approved construction drawing. I had no approved plans to confirm whether or not the bulkheads were there. I obviously – well, to me I would rely on the Department of Transport, the statutory body, or confirming that the approved plans were in fact the ones off which the boat was built. It’s not – not my function to do that.”[10]
[7]Ex 21 Affidavit of James Leckie para [6] T167/35-168/20
[8]T 172/15
[9]T172/30
[10]T 183/35
At the time of his first inspection a number of claims for progress payment had been made in a short time and this required inspections by the fourth defendant on 3 June, 11 June and 12 June. The reports of 4 June and 16 June followed these inspections. For convenience of reference I will set out the relevant terms of all the reports:
Report 1 – 1 May 1998 – For Progress Payment No. 5:
“Hull essentially structurally complete including bulbous bow mouldings. Portside keel moulding attached, starboard keel completed.
Work deck grp formed and presently in the shed awaiting assembly on board, also wheelhouse structure moulding and upperdeck moulding including wheelhouse portion both now complete and similarly awaiting installation on board.”
Report 2 - 4 June 1998 – For Progress Payment No. 6:
“Hull form and internal framing moulded sections structurally complete; keel mouldings attached and completed.
Both stainless fuel tanks completed c/w fittings and lowered into location – one per hull; grp water tanks are integral with the hull in the bilge and are formed up. All 4 fish holds, bulkheads in place and insulation fitted; forward and transom bulkheads fitted.
Work deck in it’s completed form now ready to be fitted.”[11]
[11](A comma has been inserted as noted in evidence T 166/10)
Report 3 - 16 June 1998 – For Progress Payment Nos. 7 & 8: “Main work deck and bulwarks, forecastle c/w stainless railings fitted and hatch accesses mouldings being installed. Internal accommodation spaces forward and in wheelhouse area with ply linings and sub frame joinery being installed.”
Report 4 – 23 July 1998 – For Progress Payment No. 9:
“All whole and topsides structural work including bulwarks, hatch coamings, internal ply moulded in bulkheads on upper deck now completed and sub-frame groundings for modular installed. Carpentry e.g. cupboards, benches and seats in place. Modular pre-erected joinery also assembled in shed prior to installation.
Both main engines and gen-set are presently alongside vessel or waiting installation upon completion of engine room exhausts, pipe work and cabling systems.
Further, we have sighted in store outfit components and/or supporting purchase order documentation for the following –
Muir ‘cheetah’ anchor windlass and gypsy; anchors, chain and moorings outfit; engine room CO2 fire extinguisher system and extinguishers, fitments; marine duty safety windows; compass, clock, barometer; complete navigation and electronics inventory as per final specification.”Report 5 – 22 September 1998 – For Progress Payment No.10:
“Hull fibreglass outfit and permanent fixtures e.g. stainless work, windows now complete and external detailing underway prior to painting. Internal accommodation spaces forward and in wheelhouse area now all with soft headlining and berths, cabinets, seating installed.
Engine beds in place and systems installation underway with subcontractors invoices sighted or in place for electrical (Marlec) and mechanical (Stainalloy) installation work – total A$87,000. Invoice for propellers (Veem Props) sighted for A$8218.
Report 6 – 30 October 1998 – For Progress Payment No. 11 “Practical completion prior to leaving factory to water”:
Internal accommodation and wheelhouse areas now structurally complete with only soft furnishings and loose installed outfit items still to be positioned (left in store for security); galley outfit items in place. Navigation and electronics outfit in place and wiring connections and testing underway.
Engines, controls in place and systems installation completing with shafts to be installed prior to lining up afloat.
Final on deck detailing completing, mast erected and after deck pillars, bulwark hatches, coamings and crane on board.”[12]
[12]Ibid at folios 408-410
Each of the above reports concluded with the fourth defendant’s certification that the relevant claim for progress payment was, in his opinion, fair and reasonable. The fourth defendant then set out the total value of the work completed to that date. I construe that certification not to mean the actual value of the vessel but rather “the value added” since the previous inspection. Therefore the financier to whom the fourth defendant was reporting this was its main concern in meeting its contractual obligations to the plaintiffs and to the builder.
On 18 June 1998 the first-named plaintiff Mr Wicks personally inspected the vessel. The extent of the construction as at that date is depicted in photos taken by him. See exs 5 & 6. One photo shows quite clearly the wheelhouse to be constructed of plywood. This differed from the specifications which nominated grp foam sandwich construction, however the plywood construction otherwise complied with the approved plans. Other photos bear the date 23 June 1998 which leads me to infer that there was more than one visit to the builder’s shipyard during this period. One of the photos taken at that time also showed the gunwhale belting already attached to the vessel (ex 6). By way of general comment one expects that whatever defects that were observable on visual inspection at that time would have been noticed also by Mr Wicks. He was an experienced fisherman and the ultimate user of the vessel. He would have viewed the construction with an owners eye. There is no record of his having made any complaint of these features which are now alleged to be deviations from the specifications. I can only infer therefore that these and similar deviations observable at that date were acceptable to him. This would have included the fuel tank which then had already been installed, and inspected by the department on 1 June 1998 (ex 10). The fact that the tank was of aluminium construction and not steel as required by the specifications would also have been observable. Consequently a number of the plaintiffs’ complaints as to non-compliance with specifications must have been observed by him.
Another complaint was that the fourth defendant failed to observe the manner in which the deck had been attached to the hull. The gunwhale belting would disguise this joint from the outside and the question was raised as to whether the defects should have been observable by visual inspection on the inside. If so, I would have expected this too would have been observed by Mr Wicks. The extent to which defects were observable can be gauged by Mr Wicks’ lack of reaction at this time. The matters will be canvassed in more detail below.
The fourth defendant inspected the boat on 22 July, 22 September and finally on 28 October 1998. The respective reports relevant to these inspections are dated 23 July, 22 September and 30 October 1998.[13] This last report was made some weeks before the vessel was launched in the expectation that construction work was continuing. As can be seen above the reports relate to the general fitting out of the vessel, the installation of engines and equipment and the supply of various parts. Some items (for example the diving platforms) may have been installed between the last inspection and the launch of the vessel on 16 November 1998.[14] Other items were fitted after the launch. The fourth defendant saw his obligation in this respect as sighting evidence that the items had in fact been supplied.[15] On matters such as the fibreglass lay up details and compliance with approved plans, the fourth defendant simply relied upon the fact that these had been inspected by departmental officers and met with the department’s requirements.[16]
[13]Ibid Folios 412-414
[14]Transcript 173/1-22
[15]Transcript 179/20-30
[16]Transcript 183/30
Prior to the launch of the vessel the builders were required by the department to complete a Certificate of Completion (ex 11) and a Master Survey sheet (ex 12). The vessel was launched on 16 November 1998. Mr Wicks was there at this time. Photos taken on that day (ex 7) show the engine exhaust outlets located on the wall of the tunnel rather than emerging through the transom as provided in the specifications. This variation is complained of as locating the exhaust too close to the water line with a risk of an inefficient operation of the engine. But again there was no record of any complaint by Mr Wicks at that time. I am not persuaded that the variation materially altered the value of the vessel.
After the sea trials the vessel was accepted by the plaintiffs and on 18 December 1998 it commenced its delivery voyage to Cairns. The voyage revealed serious structural deficits. These deficits resulted in the vessel undergoing repairs in Geraldton, Fremantle and later in Cairns. The nature of these defects and the damages resulting have been the subject of litigation between the plaintiffs and the first defendant, which has now been resolved.
The issues
By para 54 of the Further Amended Statement of Claim the plaintiffs list some 16 allegations of deceptive and misleading conduct arising out of the fourth defendants reports to AGC. Before turning to the specific allegations it is necessary to identify the relevant legal principles.
Legal principles
To succeed in any of their claims, the plaintiffs must show that the fourth defendant contravened s 52(1) of TPA and thereby caused damage to them. Section 52(1) provides:-
“The corporation shall not, in trade or commerce, engage in conduct that is misleading of deceptive or is likely to mislead or deceive.”
The fourth defendant is not a corporation but the parties accept that he is bound by the section by reason of s 6(3) of TPA because his conduct involved “the use of postal, telegraphic or telephonic services”. He accepts also that his conduct was in the course of “trade or commerce”.
The conduct will only be misleading or deceptive if it is capable of inducing error. The court must decide objectively whether the conduct is misleading or deceptive or likely to mislead or deceive. Parkdale Custom Building Furniture Pty Ltd v Puxu Pty Ltd.[17] Of such a determination Gibbs CJ said (at p 199):-
“The conduct of a defendant must be viewed as a whole. It would be wrong to select some words or act, which, alone, would be likely to mislead if those words or acts, when viewed in their context, were not capable of misleading. It is obvious that where the conduct complained of consists of words it would not be right to select some words only and to ignore others which provided the context which gave meaning to the particular words. The same is true of acts.”
Gibbs CJ also stated:-
“The heavy burdens which the section creates cannot have been intended to be imposed for the benefit of persons who fail to take reasonable care of their own interests. What is reasonable will of course depend on all the circumstances.”[18]
[17](1982) 149 CLR 191
[18]Ibid at p 199
This latter passage is material to the complaints made of the deviations from specifications which were, or ought to have been, obvious to Mr Wicks at the time of his inspection of the vessel in June 1998.
Here the plaintiffs’ allegation of misleading conduct relates quite specifically to their being deceived. Whether AGC was deceived or not is quite irrelevant. In such circumstances it is incumbent on the plaintiffs to identify that there was a misrepresentation and further, that they suffered damage by relying upon it.
In Taco Company of Australia Inc v Taco Bell Pty Ltd & Ors[19] the joint judgment of Deane and Fitzgerald JJ reads (at p 202):-
“Irrespective of whether conduct produces or is likely to produce confusion or misconception, it cannot, for the purposes of s 52, be categorized as misleading or deceptive unless it contains or conveys, in all the circumstances of the case, a misrepresentation. The difficulty which will commonly arise in a s 52 case is in determining whether the conduct contains or conveys, in all the circumstances, a misrepresentation and in assessing the significance to that question of evidence that one or more persons were in fact led into error. In extreme, but not necessarily infrequent, cases, it may be correct to hold that, as a matter of law, conduct said to contravene s 52 is incapable of conveying the true meaning alleged or any other false meaning. Such cases aside, whether or not conduct amounts to a misrepresentation is a question of fact to be decided by considering what is said and done against the background of all surrounding circumstances.”
[19](1982) 42 ALR 177
The second element that the misrepresentation caused damage is made necessary by the terms of s 82 of TPA which provides relief to “a person who suffers loss or damage by conduct of another that was done in contravention of” the relevant provision. For this connection to be found in a case where the conduct relates to a misrepresentation of an existing fact, the acts done by the representee in reliance upon the misrepresentation constitutes sufficient connection to satisfy the concept of causation. Wardley Australia Ltd v Western Australia.[20]
[20](1992) 175 CLR 514 at p 525
This concept was discussed in Ford Motor Company of Australia Limited v Arrowcrest Group Pty Ltd[21] where the authorities concerning reliance on misrepresentations by a third party were considered. These authorities[22] lead to the proposition “that an applicant may establish causation in such a case by proving that a third party relied upon the misrepresentation and that party’s reliance caused the applicant’s damage”. Ford Motor Company at para [123].
[21][2003] FCAFC 313
[22]Hampic Pty Ltd v Adams (2000) ATPR 41 – 737; McCarthy v McIntyre (1999) FCA 805; Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494.
Included amongst the plaintiffs’ allegations against the fourth defendant is the fact that he failed in his reports to advise of certain defects and/or deviations from the specifications. This raises the question of whether the fourth defendant’s silence on such matters constituted conduct which did, or was likely to, mislead or deceive the plaintiffs. The answer to this question requires reference to the terms of s 4(2) of TPA where conduct is defined as “doing or refusing to do any act” and where refusing to do any act is defined as “refraining (otherwise than inadvertently) from doing that act”. Silence thus will be relevant conduct when the refusal to disclose is “deliberately engaged in.” Rhone-Pulenc Agrochimie SA v UIM Chemical Services Pty Ltd.[23] See also Demogogue Pty Ltd v Ramensky[24] where Gummow J (at p 41) said:-
“But, consistently with regard to the natural meaning of the terms of s 52, the question is whether in the light of all relevant circumstances constituted by acts, omissions, statements of silence, there has been conduct which is or is likely to be misleading or deceptive.”
These principles were discussed in detail by Finkelstein J in Costa Vraca Pty Ltd v Berryim Weed & Pest Control Pty Ltd.[25]
[23](1986) 12 FCR 77
[24](1992) 39 FCR 31
[25](1998) 155 ALR 714
Application of principles
Based on these authorities, for the plaintiffs to succeed in this claim they need to establish that the fourth defendant’s conduct in making false statements or by deliberately refraining from disclosing information caused AGC to make the progress payments and that the plaintiffs have thereby suffered damage.
In paragraph 54 of the Amended Statement of Claim the plaintiffs identify 16 facts from which they contend the reports of the fourth defendant were misleading in their terms or misleading by reason of silence. It will be convenient to deal with each allegation in turn. The fourth defendant is not personally aware of these facts but the evidence upon which the existence of these facts is founded is not in dispute and has been identified in Counsels’ respective submissions. As the issues turn upon the fourth defendant’s conduct and whether such conduct was in fact misleading or deceptive, I shall not refer to the source of the undisputed evidence but only to those circumstances which impact upon my findings.
The plaintiffs rely on the following conduct and circumstances:-
The Wicked was not constructed of grp with a solid hull and foam sandwich superstructure;(a)
The work deck was partly constructed from plywood rather than foam sandwich fibreglass; and was not securely grouted into position.(b)
By these allegations the plaintiffs submit there was a deliberate refraining by the fourth defendant from disclosing information. The information in question was that the construction of the hull and the wheelhouse had not been done in accordance with specifications. Whilst the specification required foam construction for the superstructure, the Leckie report dated 1 May 1998 contains an accurate description of what Mr Leckie actually saw. The construction work was undertaken in accordance with the approved plans as it had to be. Any deviation from the specifications on this part of the construction would have been visible to the plaintiffs when they inspected the vessel a short time later. Consequently there can be no damage to the plaintiffs by reason of this alleged failure. I find that there was no deliberate withholding of the information on the part of Mr Leckie, such as to amount to any breach of the TPA.
The Wicked’s hull was not finished in white gelcoat;(c)
The wheelhouse was not finished in white gelcoat(d)
Again these allegations depend upon a misleading by silence based upon his failure to mention the deviation from specifications. Mr Leckie said he did not inspect the coating on the hull.[26] The hull was already painted at the time of his inspection. Mr Leckie made no mention of this deviation in his reports but his failure to do so was not in my view the consequence of any deliberation not to. The oversight does not lead to a conclusion that his conduct was either misleading or deceptive.
[26]T 159/40
(c) The diving platforms on the Wicked were not built into the transom of each hull.
Mr Leckie did not notice whether or not the diving platforms had been attached at the time of his final inspection. The relevant report simply advised of final fit out and of practical completion of the vessel. The approved plans made no reference to the attachment of the platforms, although the specifications required them to be built into the transom. Mr Leckie obviously had little or no regard to the specifications at the time of his inspection. He said in evidence that the platforms could have been attached after his final visit.[27] Had he been aware of the terms of the specification and minded to ensure its strict compliance he would have been aware of the difference. He did not believe that level of awareness was required under the terms of his retainer. Similarly, if the plaintiffs were present at the launch they would have noticed the difference also. But there is simply no evidence that Mr Leckie saw the state of the platforms at the time of any of his inspections and nor have the plaintiffs established that he deliberately withheld information from them. His direct statement in report No. 4 that “all hull and topsides structural work …now completed” was accurate in accordance both with the approved plans and his understanding of the work to be done. I find no misleading or deceptive conduct as alleged.
[27]T 172/55
(d) See paragraph (b) above
(e) Unsatisfactory method of attachment between the bow and the main deck.
I have already observed in paragraph 17 above that at the time of the June inspections the gunwale belting had already been fitted and inspections undertaken by the Department of Transport. Asked if he noted the attachment Mr Leckie said:-
“All right. Now, did you, in your inspections – did you, in your inspections, note the attachment of the deck to the hull? – No, they were not visible.[28]
[28]T179/10-12
…Well, it would not have necessarily been apparent because the belting would’ve attached – could – could – or was attached by then, hiding the gap, and I would not be expected – nor would I expect to request them to remove the belting so that I could confirm whether there was a gap or not.[29]
[29]T179/55-60
Accepting that evidence to be the case the plaintiffs have not satisfied me that there was any deliberate withholding of information such as to establish a breach of the TPA.
(f)The exhaust system did not comply with USL code
(i)The exhaust systems did not exit through the transom
Mr Leckie admits that he may have seen the location of the exhaust system but he had no recall of it.[30] The location of the exhaust is the type of change from design that follows from the relocation of other items such as the fuel tank or a pump.[31] Whilst there is some doubt about whether there was compliance this was not a matter to which Mr Leckie was expected to have regard. He was entitled to rely upon the officers of the department to ensure compliance. I accept that to a person undertaking the inspections of the kind in which Mr Leckie was engaged the position of the exhaust may not be a matter of great moment.[32] Any failure to mention this matter which was also observable to the owners at launch does not amount to misleading or deceptive conduct. Moreover, I am not satisfied that this change in design has resulted in any damage.
[30]T 161/35
[31]T 175/30-40
[32]T 175/55-176/2
(g) Main engine mountings not painted in accordance with specifications. Mr Leckie could not recall whether he noticed the state of the engine mounts. Had he done so it would not have concerned him because the painting of the mounts is often carried out after sea trials.[33] Again there is no suggestion of any deliberate withholding of information about the state of the engine mounts such as to establish a breach of s 52 of the TPA.
[33]T 163/30
(h) The gunwale belting was not properly fitted.
The problem about the gunwhale belting was noticed during the course of inspections following major failure of the various components of the vessel. Mr Leckie said he did not notice anything untoward in the fitting of the belt nor does it seem to me that such defects would be visible on the cursory inspection. The plaintiffs have not established that there was any deliberate withholding of information in this connection.
(i) See paragraph (f) above.
(j) The water tanks were not built into the forward section of the engine room.
The water tanks were installed in accordance with the plans approved by the Department of Transport. Mr Leckie said his only interest was to ensure that the tanks were in fact there (170/40). It was not of concern to him that they were not placed in precisely the position specified. I find that his failure to mention this fact in any report to the financier did not result in misleading conduct on his part nor did it result in any damage to the plaintiffs.
(k) The transom of hull at work deck was not built with removable safety rails.
This item identifies a conflict between the specification and the approved plans. It is the latter which had to be complied with and which were in fact complied with. The plaintiffs have not demonstrated any deliberate withholding of information or any loss arising from these differences.
(l) See paragraph (a) above.
(m) No fabricated bollards fitted to foredeck, midships or after of vessel; and
(n) No heavy duty stainless steel fabricated main front bollard fitted.
Mr Leckie claimed he did not notice any deviation from the specifications concerning the bollards.[34] He was not looking out for any particular deviation from the specifications or for defective workmanship.[35] Significantly he made no reference to the bollards in his final report, which simply observed that there was practical completion of construction prior to the vessel leaving the factory. As already noted work was continuing at the time of Mr Leckie’s report and the lesser bollards could have been fitted after that time. Failure to mention the variation in type and construction of the main bollard is again the result of not having regard to the specifications. The plaintiffs have not established any deliberate withholding on his part such as to satisfy the requirements for a breach of the TPA.
[34]T 172/40
[35]T 165/20
(o) The laying of the grp laminate was not to the specifications.
The fact that the lay-up of the grp laminate was not carried out in accordance with the specification is a matter that passed not only the scrutiny of Mr Leckie but also of the Department of Transport inspectors. It is a defect which would have been impossible for Mr Leckie to detect in the limited inspection required of him. He was entitled to rely upon the department’s acceptance of this work. In his report Mr Leckie stated that “their whole form and internal framing moulded section is structurally complete”. On his visual inspection the defect complained about would not have been obvious. His statement in those circumstances would have been correct from his point of view. I find that in his reporting of what he saw there was no conduct which was misleading or deceptive.
(o) A bulkhead, integral to the structural strength, which should have been on top of frame 3 had not been fitted.
Mr Leckie said he did not notice any deviation between the plans that he had perused at the time he was retained and the construction of the bulkhead. Obviously he was not concerned in his cursory inspections to look closely at the detail of this construction. His report on this item (report No.2) stated that the “bulkheads in place”. In his evidence, Mr Leckie said he inspected the bulkheads “to the extent they were accessible.”[36] His statement “bulkheads in place” cannot be said to be inaccurate in terms of his inspection. It is not therefore misleading in its terms. Whilst the construction of the bulkhead at frame 3 was not continuous as required by the specifications, I am satisfied that Mr Leckie did not notice this detail. He did not believe that his retainer required him to pay attention to such matters. His failure to inform AGC of this detail is not in my view a deliberate withholding of information such as to constitute a breach of the TPA.
[36]T 167/1
Conclusion
It follows from what I have said that the plaintiffs have not satisfied me that any of the alleged defects upon which they rely constitute a breach of s 52 of the TPA by the fourth defendant. As this is a trial simply to determine the issue of liability, it is unnecessary to comment at length on the question of damages. It is the case that the vessel was repaired without cost to the plaintiffs and other deficits in the vessel have been compensated for by the compromise of legal proceedings. The plaintiffs have also received some, though perhaps not full, compensation for the effects on their business. To the extent that there remains some damage not yet accounted for, it is difficult to see how those damages could flow directly from the allegations made against the fourth defendant which would not also give right to a claim against the other defendants.
For present purposes I find that the plaintiffs’ case has not been made out and that the fourth defendant is entitled to judgment.
Order
I order that the fourth defendant have judgment against the plaintiffs with costs to be assessed on the standard basis.
0
5
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