Williams v Meredith
[2007] QMC 8
•25 October 2007
MAGISTRATES COURTS OF QUEENSLAND
CITATION:
Williams v Meredith & Anor [2007] QMC 8
PARTIES:
CRAIG WILLIAMS
(plaintiff)
v
DONALD MEREDITH
(first defendant)
SEATECH MARINE SERVICES PTY LTD
(second defendant)
FILE NO/S:
M5295/04
DIVISION:
Magistrates Courts
PROCEEDING:
Claim
ORIGINATING COURT:
Magistrates Court at Southport
DELIVERED ON:
25 October 2007
DELIVERED AT:
Southport
HEARING DATE:
12 September 2006, 13 September 2006, 8 May 2007
MAGISTRATE:
Costanzo JJ
ORDER:
The claim is dismissed
CATCHWORDS:
CONTRACTS — BREACH OF CONTRACT — Implied terms of contract — Misleading and deceptive conduct — negligent misstatement
Trade Practices Act 1974 (Cth), s 52, s 82
Fair Trading Act 1989 (Qld), s 28, s 40, s 99
Sale of Goods Act 1896 (Qld) s 1
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266; (1977) 45 LGRA 62; (1977) 16 ALR 363; (1977) 52 ALJR 20
Codelfa Construction Pty Ltd v State Rail Authority (NSW) (Codelfa / Eastern Suburbs Railway case) (1982) 149 CLR 337; (1982) 41 ALR 367; (1982) 56 ALJR 459
Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594; (1990) 92 ALR 193; (1990) 64 ALJR 293
Derbyshire Building Co Pty Ltd v Becker (1962) 107 CLR 633; [1962] ALR 796; (1962) 35 ALJR 498
Franich v Swannell (1993) 10 WAR 459
Helicopter Sales (Aust) Pty Ltd v Rotor-Work Pty Ltd (1974) 132 CLR 1; (1974) 4 ALR 77; (1974) 48 ALJR 390
O'Brien v Smolonogov (1983) 53 ALR 107
COUNSEL:
SOLICITORS:
The claim
The Plaintiff claims
a. Damages for breach of contract;
b. In the alternative, damages for negligent misstatement;
c. In the alternative, damages pursuant to s 82(1) Trade Practices Act 1974 (Cth) (herein “the TPA”) for contravention of s 52 of the TPA;
d. In the alternative, damages pursuant to s 99(1) Fair Trading Act 1989 (Qld) (herein “the FTA”) for contravention of s 38 and s 40(a), (b) and (e) of the FTA;
e. Interest;
f. Costs;
g. And such further or other relief as the Court may deem appropriate.
The facts
I am satisfied that by a written contract dated 18 July 2003 the Plaintiff purchased a second hand vessel described as a Trojan Express Cruiser, ‘Kokomo’, registration number ML247Q (“the Vessel”).
The vessel was about 14 years old at the date of purchase. A sales brochure (see Exhibit 1, 2) handed to the Plaintiff at a boat show stated the vessel had undergone a major refurbishment which was completed in July 2002. The evidence seems clear to me there was no representation that the refurbishment had all been done in July 2002 or in the last few months, but that it had taken about a year. It was also reasonable to expect that the refurbishment would have included both new and reconditioned parts and items. There was no representation that all parts were new.
The Plaintiff sought a second hand vessel because it was cheaper than a new or newer one.
The Plaintiff took possession of the vessel. He berthed it at Seatech Marine. He had servicing and various repairs done there. In about January 2004 the Plaintiff was informed, via the second defendant, that the exhaust system would soon require replacement. In March 2004, after some 54 or 55 hours of operation, the portside engine failed. That prevented the Plaintiff returning the vessel to the second defendant for its scheduled antifouling.
By then the ninety (90) day limited warranty period covering the vessel’s engine in clause 7 of the contract had expired. In fact it had expired in October 2003.
It seems the first time a service was arranged was in late January 2004. (Exhibit 5, 5A). Mr Leaning then identified that the manifolds and risers were starting to show wear and tear. He gave evidence about their limited life and how it was difficult to predict. This was all undertaken outside the 90 day warranty period. The First Defendant even arranged for the parts and labour to be provided at a “cost plus” arrangement for the new risers and manifolds needed. However, the Plaintiff did not respond with any suggestion or complaint about misrepresentation or breach of contract. Instead of taking the vessel to the First or Second Defendant the Plaintiff elected to take it elsewhere, to Ocean Power, as he was free to do because the warranty period was well and truly ended.
There were emails to suggest booking the vessel in for anti-fouling and a further communication from Mr Leaning that the works he had suggested previously be undertaken. The Plaintiff finally informed Mr Leaning that he had that work done elsewhere. (see exhibit 10)
The Plaintiff alleged while giving oral evidence that the vessel had failed again in late March. There is only the Plaintiff’s say so as to when and how this happened. The plaintiff said he lost confidence in the workmanship at Seatech over a number of annoying faults which needed fixing on several occasions and he decided to hire another marine firm (Ocean Power) to do the engine repairs.
[10]The First Defendant wanted Mr Leaning to attend the inspection of the Kokomo’s engines and to undertake diagnostic tests, but the engines had already been dismantled when he got there.
[11]Formal demands were made soon after this time.
The written contract
[12]The written contract (see Exhibits 3, 4) refers only to the First Defendant as vendor. It contains comprehensive general and special conditions.
[13]The general conditions include:
(5) All information available on “the Vessel” is believed to be true and correct and “the Vendor” offers the information in good faith but cannot guarantee the accuracy of the information or warrant the condition of “the Vessel”.
(6) Unless otherwise specified within this agreement, “the Vessel” is sold to “the Purchaser” complete as inspected, with the exception of “the Vendor’s” personal items, and is accepted by “the Purchaser” “as is where is” condition. No representations as to the condition of the boat has been made or is binding upon “the Vendor” other than those specifically set forth in the Agreement.
[14]Several ‘special conditions’ were inserted at the request of the Plaintiff and are clearly primarily for his benefit. The full text of all Special Conditions follows:
1) This agreement is subject to satisfactory out of the water hull inspection undertaken by "the Purchaser". Such inspection to be undertaken and finalised within seven (7) days of the acceptance date with all associated costs of inspection at "the Purchaser's" expense. If the vessel is lifted at the Sanctuary Cove marina for the purpose of such inspection, "the Vendor" agrees to cover the cost of the lifting fee.
2) The sale price includes the Zodiac brand inflatable tender and the Mercury outboard motor.
3) The sale price shall Include hull antifoul, oil and filter changes and full service to the two main engines and the Onan marine generator at the next due service interval.
4) The Vendor at his own cost will remove the existing Halon engine room fire extinguisher and replace it with acceptable fire fighting apparatus.
5) The Vendor at his own costs (sic) agrees to replace the engine room gas fume detector dash panel indicator and engine room sensor.
6) The Vendor agrees to carry out recommendations as mutually agreed from inspection report prior to handover.
7) The Vendor agrees to supply a ninety (90) day limited warranty period covering the vessel’s structural hull including underwater running gear, the main engine and Onan generator mechanicals. The total value of this express warranty is limited to the sum of $10,000.00 covering parts and labour. The parties agree that any warranty repair during the abovementioned warranty period is to be undertaken only by Seatech Marine Services Pty Ltd at their Sanctuary Cove Marina facility, with any consequential costs to deliver I transport the Vessel to and from Sanctuary Cove Marina at the expense of “the Purchaser".
8) The Vendor agrees to carry out oil and filter changes and a WearCheck oil analysis within three months time to monitor the Port engine. If the results then show that the sodium level is high we will carry out the same repair procedure on the port engine.
Issues
[15]There is no mistaking or doubting the fact that a written contract was concluded between the Plaintiff and First Defendant.
Was there a contract with the second defendant?
[16]An answer to this question is central to a determination of several other issues, including whether a claim can succeed under the TPA and FTA.
[17]The Plaintiff argues that there was a contract with the second defendant because “Seatech allowed Mr Meredith to sell the vessel from their place of business at a boat show open to members of the public.” The evidence is that at the time the contract was negotiated and concluded Meredith was a shareholder in, and his wife was the director of, the second defendant. The Plaintiff stated a Seatech employee handed him the brochure at the Boat Show. The plaintiff also stated he viewed the vessel several times at the premises of the second defendant.
[18]On one occasion the plaintiff attended the private address of the first defendant because the mooring there was closer to open water to be able to have a sea trial. Following the sea trial the plaintiff states he informed the first defendant of his interest in a newer vessel in Sydney. The first defendant informed the plaintiff that because of its age the boat in Sydney would be likely to need a new exhaust system. While the plaintiff could not recall the whole conversation precisely he stated the first defendant may have said the elbows and risers would need replacement on the boat in Sydney and that would not be the case with the Kokomo because that had already been done.
“In the course of that discussion Mr Meredith pointed out that a boat of five years old would, you know, potentially have problems needing a rises and manifolds and - and that replaced due to corrosion and that I would suffer - there - there was no need to have any consideration for this because the Kokomo had had all of that done as part of the major refurbishment and reconditioning of the engines.” (Transcript page 35 line 40, evidence of Williams).
[19]The Plaintiff also relied on a conversation with the first defendant whereby he is alleged to have referred to the second defendant’s business of buying, refurbishing and reselling boats:
“… he explained to me that what he - or the practise of the business was to purchase boats that were in need of reconditioning and that, and to give the staff at Seatech work over the winter period when business was quiet so they would refurbish the boat over the winter period; he would use it personally over the summer period and then in the autumn on-sell the boat, purchase another one and go through that process again. So which appeared to be bona fide in that we were in the autumn, the boat was on the market, the document indicated that it had been refurbished the previous winter.” (Transcript page 38 line 10, evidence of Williams).
[20]This was the only evidence before me that the second defendant was in the business of buying and selling boats. Meredith denied it. It should not have been too difficult to find other evidence capable of corroborating or proving this contention. Indeed Ross David Leaning, the Seatech Marine service manager, gave evidence (Transcript, pp266-267) that Seatech Marine was not in the business of buying and selling vessels on a professional basis.
[21]Further, Leaning was asked how the vessel came to be at Seatech's premises. He answered:
Well, Donald Meredith bought Kokomo for a boat to use himself. He, basically, bought it, by memory, the starboard engine had the heads off and he bought it, basically, to do up and use, to keep, for his family.
[22]The plaintiff submits the first defendant, having his own private email address continued to use the Seatech email address ([email protected]) which made no mention of his name. However, the plaintiff also used his employer’s email address throughout the negotiations.
[23]It was also submitted for the plaintiff that the dealings with Seatech staff member Ross Leaning in the lead up to contracting and throughout the warranty period, and use of Seatech letterhead when forwarding the contract of sale for signing, “indicated to the plaintiff that he was purchasing the boat from Seatech and that Don Meredith was the owner of the company, and accordingly, the boat.” The dealings with Mr Leaning after the contract was signed and throughout the warranty period could not be relevant to whom the plaintiff believed owned the boat, or who was selling it to him, or to the issue of who he believed he was contracting with at the time he entered the contract.
[24]It was further submitted that there was an inducement to enter the contract, and that the plaintiff believed he was contracting with the second defendant because of the first defendant’s ‘nexus’ with the second defendant, whose name appeared in the contract with respect to the warranty period.
[25]The written contract between the parties quite clearly specifies the parties to the sale only as between the First Defendant as vendor and the Plaintiff as purchaser. The submission by the plaintiff that he believed he was also contracting with the second defendant at the time of sale begs the question why he did not seek the insertion of the second defendant as a vendor in the written document. The plaintiff was an educated, knowledgeable and experienced business man. He had a Batchelor of Science degree and had owned a medical diagnostics company which he sold in 2000 and worked in until retiring in September 2003 (Transcript p 47 line 30). He negotiated the special conditions I have quoted above and they reflect matters he considered to be important before he would agree to the purchase.
[26]The vessel registration documentation listed only the First Defendant as registered owner prior to the sale (exhibit 23). Furthermore, the payments of deposit and the balance of the consideration were made to the first defendant personally. None were made to the second defendant. (exhibit 24). Indeed the first page of the contract sets out the payment method, and states the account into which the payments of deposit and the balance of the consideration are to be made is in the name ”Donald A. Meredith”.
[27]Having listened to each witness, read the transcript, and considered each exhibit, in my view the evidence clearly establishes there were only two contracting parties; that is, the plaintiff and first defendant. The evidence, as I view it, leaves no room to doubt the plaintiff understood, when negotiating and signing the contract, that the contracting parties did not include the second defendant. Nor do I accept that he believed the first defendant was acting as agent for the second defendant.
The claim under the TPA
[28]These conclusions necessarily exclude from further consideration the alternative claim for damages pursuant to s 82(1) Trade Practices Act (TPA) for contravention of s 52 TPA which applies only when misleading or deceptive conduct in trade or commerce is engaged in by a corporation. In this case, the second defendant (a corporation), as well as having no capacity to contract and not being a party to the contract (as it did not own the boat) did not engage in any misleading or deceptive conduct.
The claim under the FTA
[29]Furthermore, my conclusions exclude from further consideration the claim for damages pursuant to s 99(1) Fair Trading Act 1989 (Qld) (FTA) for contravention of s 38 and s 40 FTA in which each section respectively requires that the misleading or deceptive conduct or the false or misleading representations occur “in trade or commerce”. For the FTA, section 5 defines “trade or commerce” to include any business or professional activity, and further defines “business” to include “(a) a business not carried on for profit and (b) a trade or profession.” Here, I am satisfied the transaction was between two individuals and that the sale of the vessel by the first defendant was not for profit or reward in carrying on any business by him. In terms of liability the relevant authorities draw a distinction, between private and commercial transactions. For example, in O'Brien v Smolonogov (1983) 53 ALR 107 and Franich v Swannell (1993) 10 WAR 459 a vendor's misleading conduct in the course of the sale of lots of land or of a private residence was not actionable under the TPA. The use by Meredith of the business premises of Seatech Marine while not acting in the course of carrying on a business by him cannot transform a dealing which lacks any business character into something done in trade or commerce. See also Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594; 64 ALJR 293; 92 ALR 193; CLR at pp 602-603.
[30]Also, these conclusions consequently cast a shadow of doubt upon the credibility and reliability of the plaintiff’s evidence concerning other grounds of the claim dealt with below. (For example, see my discussion below about the claim for Negligent Misrepresentation concerning the unreliability and vagueness of the Plaintiff’s evidence of conversations that may have taken place between himself and Meredith about whether the elbows and risers had been replaced on The Kokomo).
[31]Unless I can be satisfied by independent and reliable evidence in support of the other grounds raised by the plaintiff I prefer the first defendant’s version over that of the plaintiff wherever they are in conflict.
The claim for breach of contract
Was there an implied term?
[32]The statement of claim pleads at paragraph 8 that “the contract includes an implied term, as a matter of law, that the vessel was free from defects”.
[33]Codelfa Construction Pty Ltd v State Rail Authority (NSW) (aka Codelfa / Eastern Suburbs Railway case) (1982) 149 CLR 337; (1982) 41 ALR 367; (1982) 56 ALJR 459 was, inter alia, about whether the High Court would imply a term in a construction contract where the mutually assumed method of performance was frustrated by injunctions preventing nuisance (i.e. noise) caused by the works being carried out nightly between 10 pm and 6 am The central issue to the question of whether to imply a term was whether “it goes without saying” that had the parties contemplated the possibility their legal advice was incorrect and that an injunction might be granted to restrain noise or other nuisance, they would have settled upon the term implied by the Court of Appeal or that implied by the arbitrator.
[34]At ALR 370, Mason J (as he then was) said:
“For obvious reasons the courts are slow to imply a term. In many cases, what the parties have actually agreed upon represents the totality of their willingness to agree; each may be prepared to take his chance in relation to an eventuality for which no provision is made. The more detailed and comprehensive the contract the less ground there is for supposing that the parties have failed to address their minds to the question at issue. And then there is the difficulty of identifying with any degree of certainty the term which the parties would have settled upon had they considered the question.”
[35]At ALR 371, Mason J further observed:
“… the conditions necessary to ground the implication of a term were summarized by the majority in BP Refinery Pty Ltd v Hastings Shire Council (1977) 52 ALJR 20 at 26:—
(1)it must be reasonable and equitable;
(2)it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;
(3)it must be so obvious that “it goes without saying”;
(4)it must be capable of clear expression;
(5)it must not contradict any express term of the contract.
[36]The plaintiff submits at para [18] of the written submission:
“As foreshadowed at the beginning of trial, the implied term sought to be included in the contract was one pursuant to section 71 of the Trade Practices Act that the vessel be fit for purpose or of merchantable quality.
[37]Section 71 TPA provides:
71 Implied undertakings as to quality or fitness
(1) Where a corporation supplies (otherwise than by way of sale by auction) goods to a consumer in the course of a business, there is an implied condition that the goods supplied under the contract for the supply of the goods are of merchantable quality, except that there is no such condition by virtue only of this section:
(a) as regards defects specifically drawn to the consumer’s attention before the contract is made; or
(b) if the consumer examines the goods before the contract is made, as regards defects which that examination ought to reveal.
(2) Where a corporation supplies (otherwise than by way of sale by auction) goods to a consumer in the course of a business and the consumer, expressly or by implication, makes known to the corporation or to the person by whom any antecedent negotiations are conducted any particular purpose for which the goods are being acquired, there is an implied condition that the goods supplied under the contract for the supply of the goods are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the consumer does not rely, or that it is unreasonable for him or her to rely, on the skill or judgment of the corporation or of that person.
(3) Subsections (1) and (2) apply to a contract for the supply of goods made by a person who in the course of a business is acting as agent for a corporation as they apply to a contract for the supply of goods made by a corporation in the course of a business, except where that corporation is not supplying in the course of a business and either the consumer knows that fact or reasonable steps are taken to bring it to the notice of the consumer before the contract is made.
[38]I am not satisfied the first defendant was acting as agent for the second defendant when the brochures were handed to Williams or to KPS Marine, or when Meredith negotiated the sale, took the plaintiff on a sea trial or signed the contract in his own name and took the deposit of monies and balance of the consideration into his personal account. In any case I make the following observations and findings.
[39]The plaintiff submits the phrase "free from defects" has been used interchangeably with the phrases "fit for purpose or of merchantable quality" in cases such as Derbyshire Building Co Pty Ltd v Becker (1962) 107 CLR 633; [1962] ALR 796; (1962) 35 ALJR 498 and Helicopter Sales (Aust) Pty Ltd v Rotor-Work Pty Ltd (1974) 132 CLR 1; (1974) 4 ALR 77; (1974) 48 ALJR 390. It was submitted The Kokomo, when sold, was not fit for the purpose for which it was sold; that it was not seaworthy. This is said to be evidenced in the reports by Mr Davies and by the evidence given by the Plaintiff the vessel operated for only some 55 hours before a major failure in the port engine.
[40]Here, the contract states the sale is on the basis "as is where is".
[41]It was submitted use of the phrase "as is where is" is informed by the sales brochure which advertises the boat to be in peak condition for a boat of its age, and that the brochure did not suggest that it is not in a seaworthy condition for sale. At para [22] of the written submissions it is not put any higher than that it may be implied that the different shaped pistons used (evidence of Donnelly and re-examination of Davies) may account for the failure in the port engine after only 55 hours use. I found the evidence of mechanical work done to the engines unconvincing in terms of proving on the balance of probabilities that the engine failure was due to the state of the engines prior to sale. There were other possible explanations here. There is a paucity of evidence as to how the vessel was used during the 55 hours of use. There was the intervention of Ocean Power.
[42]The plaintiff said he received a brochure in May 2003 (Exhibit 1) and that another slightly altered brochure was attached to the KPS Maritime report dated 11 July 2003 (exhibit 2) for the purpose of the pre-purchase inspection under the contract. Meredith said the brochure was a work in progress which he updated as the work progressed. He provided the brochure to KPS Marine.
[43]In fact under the heading “engine room”, amongst other things, exhibit 1 stated: “… Both 8.2lt V/8 big blocks have had all “Crusader” features replaced with Mercruiser marinised parts …”. In Exhibit 2 the word “all” had been replaced by the word “most”. This is a possible indication that Meredith was making a deliberate effort not to overstate the extent of the work done.
[44]Under the heading “July 2002 major refit”, amongst other things, both exhibit 1 and exhibit 2 stated: “This vessel recently underwent a major refurbishment (completed in July 2002). Repairs included: Main engines reconditioned: rings, bearings, seals, cylinder heads, carby overhauls, pump overhauls, manifolds, new exhaust risers and elbows. …” I have underlined the important features. The refurbishment would have obviously taken some time to a casual observer let alone a serious prospective purchaser. It would raise questions about how long ago the engine reconditioning had been done, who had done it and to what extent it was overhauled. Also, I do not believe it is reasonable to infer that every one of the risers and elbows were necessarily new. A person spending money to refurbish a second hand vessel will naturally minimise expenditure and replace parts with new parts when reconditioned parts would not do the same job.
[45]The brochures also contained the usual expected puffery at the end of the document: “Must be seen to appreciate. No more to spend.”
[46]While I accept that, as a matter of fairness and common sense, the use of the phrase "as is where is" is informed by the sales brochure which advertises the boat to be in peak condition for a boat of its age, I do not accept that the brochure, taken together with the discussions and negotiations resulting in the special and specific conditions leave any room to imply a warranty that the vessel was being sold free of any and every defect which could affect its seaworthiness.
[47]Also, The plaintiff has failed to show the repairs claimed for were reasonable and necessary in the circumstances where the repairs were done by a third party, Ocean Power, well after the warranty period had ended and during a period when the first defendant was expecting to see the return of the vessel because of discussions between his staff and the Plaintiff.
[48]In my view, the implication of a warranty of merchantable quality ought to be held to have been excluded by the particular circumstances of the present contract between the plaintiff and defendant.
[49]The nature of the negotiations between the parties indicated clearly to me that the contract document represents the totality of their willingness to agree; and that each was prepared to take his chance in relation to other eventualities for which no provision was made.
[50]The written contract is detailed and comprehensive and there is little ground for supposing the parties failed to address their minds to the question at issue.
[51]Indeed, the Sale of Goods Act 1896 (Qld) (SOGA), which is not relied upon by the plaintiff, expressly excludes any such warranty or condition being implied until specific requirements are met. For example, section 17 SOGA provides:
17 Implied conditions as to quality or fitness
Subject to the provisions of this Act and of any statute in that behalf, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows—
(a) when the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller’s skill or judgment, and the goods are of a description which it is in the course of the seller’s business to supply (whether the seller is the manufacturer or not), there is an implied condition that the goods shall be reasonably fit for such purpose;
(b) however, in the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose;
(c) when goods are bought by description from a seller who deals in goods of that description (whether the seller is the manufacturer or not) there is an implied condition that the goods shall be of merchantable quality;
(d) however, if the buyer has examined the goods, there is no implied condition as regards defects which such examination ought to have revealed;
(e) an implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade, if the usage is such as to bind both parties to the contract;
(f) an express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent therewith.
[52]None of the requirements in section 17 would have been met in this case. Indeed, this is a case where even though the contract contemplated a hull inspection and not an inspection of the engines, the vessel (including the engines) were tested during the sea trial, potential issues with the engines were discussed resulting in a special condition and a specific 90 day limited warranty, and the inspection of the vessel, had the purchaser chosen to do so, could have included a thorough inspection of the port engine. I am not satisfied by the evidence that any such inspection would necessarily have revealed any defect given the nine (9) month lapse of time since the plaintiff took possession, lack of evidence as to the usage during the 55 hours of use and the intervention (labour) by Ocean Power. In other words, these three factors negate any relationship between the alleged offending conduct by the defendant and the losses claimed.
The claim for negligent misstatement?
[53]The Plaintiff submits that “the first defendant, as agent of the second defendant negligently misrepresented the condition of the Kokomo in circumstances where it owed a duty to the plaintiff not to do so and where:
a) the plaintiff reasonably relied upon the statement as Mr Williams attested in his evidence in chief;
b) such reliance was reasonable in the circumstances and in this case, was so obvious as to be unnecessary to prove the reliance of Mr Williams was reasonable[1];
[1] Pullen -v- Gutteridge Haskings & Davey Pry Ltd [1993] VR 27.
c) the defendant was possessed of some special skill suggesting that "liability will extend to those whose profession or business it is to give advice or information, whether gratuitously or not[2] (Mr Meredith is a professional mechanic by trade);
[2] Shaddock & Associates Pry Ltd -v- Parramatta City Council (No 1) (1981) 150 CLR 225 per Murphy 1 at 256.
d) the plaintiff requested the advice which "certainly assists in demonstrating reliance, which is a cornerstone of liability for negligent misstatement" [3]; and
[3] San Sebastian Pry Ltd -v- Minister for Administering the Environmental Planning and Assessment Act 1979 (1986) 162 CLR 340 at 356-7 per Gibbs CJ, Mason Wilson and Dawson JJ.
e) the defendants stood to benefit financially from the advice given [4] although no actual payment was made to the second defendant by the first in respect of the work done (evidence of Meredith).”
[4] Presser -v- Caldwell Estates Pty Ltd [1971] 2 NSWLR 471 at 493 per Mason JA.
[54]It was submitted further that Williams “gave evidence to suggest” that he sought advice from the first defendant in his capacity as agent for the second defendant as to the advantages of buying the "Kokomo" over another boat in Sydney. However, the evidence suggests no more than that Williams said he signed a contract with Mr Meredith but that all negotiations were done through the office of Seatech. Furthermore, there was nothing unusual about a negotiation in which the buyer states he is interested in another vessel which is similar in style, size or price. It is more likely that such a buyer intends to hold that over the vendor in order to get something he wants out of the negotiation such as a reduced price or an added warranty.
[55]The advice given to the Plaintiff in respect of this transaction that the Kokomo had exhaust components replaced and that the vessel in Sydney would require expenditure, of course, also stood to benefit the defendant. However, the whole of the negotiation needs to be considered together and not in separate pieces. The Plaintiff arranged an independent pre-purchase inspection by KPS precisely because they were independent of the defendants (p 66):
So, did you go to KPS because they were independent of Mr Meredith and Seatech?‑‑ Yes.
And did you expect them to be able to advise you about anything that was requiring attention in this vessel, before you would be willing to purchase it?‑‑ That's correct, yes.
Including anything to do with the engines?‑‑ Yes.
Yes. So, when they told you that Seatech or Mr Meredith, whoever they said, would know more about the engine than they would, what did you do with that information?‑‑ I took it as face value because I had the brochure that said the engines had been reconditioned.
Did you then do anything further to obtain an independent report in relation to the engine?‑‑ Other than the Wear Check oil tests, no.
[56]The Plaintiff had negotiated the price and the warranty for the engines before the KPS report was in. He said he accepted the content of the brochure that stated the engines had been reconditioned. The warranty had been originally offered by Meredith to try and maintain the original asking price of $295,000. The Plaintiff offered a lower price than the $270,000 negotiated price and said he was not prepared to proceed unless a warranty was left in. As Mr Williams himself said in evidence – if someone offers a warranty they usually believe enough in their product and a 90 day warranty was conceded to be unusual in a second hand boat as old as this one, whereas a new one would only be warranted for 12 months.
[57]At p 66 Williams gave the following evidence:
So, did you go to KPS because they were independent of Mr Meredith and Seatech?‑‑ Yes.
And did you expect them to be able to advise you about anything that was requiring attention in this vessel, before you would be willing to purchase it?‑‑ That's correct, yes.
Including anything to do with the engines?‑‑ Yes.
Yes. So, when they told you that Seatech or Mr Meredith, whoever they said, would know more about the engine than they would, what did you do with that information?‑‑ I took it as face value because I had the brochure that said the engines had been reconditioned.
Did you then do anything further to obtain an independent report in relation to the engine?‑‑ Other than the Wear Check oil tests, no.
[58]The Plaintiff was asked what instructions he gave to KPS. He stated (p 36-37):
My instructions to KPS were rather general in that I wanted them to conduct a pre-purchase report on the condition of the boat. … The arrangement for the inspection was done directly between KPS and Seatech to arrange a time because Seatech had agreed to lift the boat at their charge rather than my expense. Because they had the facilities there to do that, so the arrangements were made directly between KPS and Seatech for the inspection. I actually had hoped to attend the inspection and arrived a little later than the nominated time but the inspection had been completed by the time I arrived. And when I got the report I made inquiries about the engines because it didn't cover the engines. … We discussed the engines and, given that they had the information regarding the rebuild of the engines, their opinion expressed to me was that Seatech would know more about the engines than they would be able to ascertain. But they explained to me the benefits or - or what could be discovered by doing an oil test. I wasn't familiar with - with oil tests at the - at the time, but following their explanation of it I saw that as a worthwhile process to undertake.
[59]The Plaintiff’s evidence continued at p 38. He stated he spoke to Mr Lockyer, who is the Marine Surveyor who prepared and signed the KPS Maritime report (Exhibit 2). Mr Williams said he accepted “the advice as to Seatech being in a better position having done the work on the engines, to appraise their condition”. He said:
“Yes, yes, I did. I was paying for professional advice and accepted it.
[60]Clearly, the Plaintiff had intended KPS would inspect the engines. So far as the engines are concerned, besides describing them, the KPS report states only that a sample of lubricating oil was taken form the sump of each engine for spectrographic analysis to detect the presence of wear metals and/or contaminants. The results of laboratory testing were to be forwarded under separate cover.
[61]The report also stated Mr Lockyer prepared the report on the basis of information provided by the owner. It does not state what that information was other than to attach and refer to the brochure which stated that “Both 8.2lt V/8 big blocks have had all “Crusader” features replaced with Mercruiser marinised parts …” as referred to above.
[62]Lockyer was not called to give evidence of his conversations with Meredith or with any other person at Seatech Marine Services.
[63]The Wear Check oil test results were received by Williams by email and forwarded to Don Meredith at Seatech Marine on 15 July 2003 (Exhibit 8A)
[64]Williams was asked how paragraph 8 of the special conditions (quoted above) got into the contract. The plaintiff said (p 60):
Because my concern was that we had an abnormal result which was resolved in that they found a pinprick leak in the gasket in the starboard engine. Now, the typical result as I understand it, and I am not an expert, so it was that there should be no sodium present. It was elevated, but - although not being abnormal I had concerns that the same problem was going to occur with the portside engine. And to allay my fears, Mr Meredith offered that they would undertake a further three months wear check oil test.
[65]Mr Meredith’s behaviour was therefore to allay Mr William’s concerns, not by lying about the problem but, by offering special conditions which could make any portside engine problem discoverable and able to be remedied during the 90 day warranty period.
[66]The defendant submits the claim for ‘negligent misrepresentation’ is conditional on my finding a representation which goes beyond the express terms of the contract and on my finding that the First Defendant owed a duty of care which necessarily involves an awareness that such a representation, if made, could or would be relied upon by the Plaintiff. However, the express provisions of the general conditions of the contract includes a “no representations” provision and for an ‘as is where is’ sale. Here, it is reasonable to infer a duty of care and that Williams acted on Meredith’s representations, his own business experience and on the KPS report.
[67]In my view it could be inferred that Meredith had some special expertise as to the general condition of the vessel seeing as he had seen to so much of the refurbishment or refit. As to the conditions of the two engines generally and as to the port side specifically it ought to have been obvious to KPS, and to the Plaintiff, that Meredith was not the person who pulled them apart or worked on them. It seems to me that Meredith gave to the Plaintiff an honest ‘heads up’ that there could be a future problem with the portside engine and offered a provision in the contract, accepted by the Plaintiff, for a mechanism to discover it and fix it if it developed within the warranty period.
[68]There is no report by Ocean Power. I did, however, hear much evidence about the work done to the engines at Ocean Power and about the piston to bore clearances to the number 4 cylinder on the portside engine.
[69]In February 2004 the only compression failure reported by Ocean Power was in the number 1 cylinder. The number 4 cylinder passed. Therefore, Ocean Power must have inspected the cylinders. Photographs taken after the works had been performed by Ocean Power show that water appears to have entered into the chamber. Evidence was received that such water entry would need to be addressed and brought to the attention of the owner. Ocean Power had not reported any such water entry when they did the initial engine work. One obvious and possible inference is that the damage occurred subsequent to the examination and works undertaken by Ocean Power.
[70]The defendant also submitted:
“The Plaintiff also relies on the accuracy of the Thomas Davies report. However, Davies based his report on the engine specifications supplied to him by Donnelly Engineering. However, as was shown on the last day of trial, Donnelly was relying upon an automotive engineering specification manual rather than the Crusader engine specification manual (exhibit 16/17/19). The Crusader specification manual allows approximately double the piston to cylinder clearance of the automotive specification that Donnelly had used. The evidence appears to be that the correct manual had been passed on to the Plaintiff when he purchased the vessel.
It was also based on Donnelly’s specification that Davies recommended that the port engine was “worn out and needed complete reconditioning”. Further, based on the Donnelly and Davies report, suspicion was then cast on the starboard engine which was removed from the boat, stripped down and measured by Donnelly, who again used the wrong automotive specification instead of the correct Crusader marine specifications. This resulted in the starboard engine also being condemned as being worn out and in need of reconditioning when in fact, if Donnelly’s measurements had been compared to the proper marine specifications, the engine was still within manufacturers specification and did not require reconditioning. The Plaintiff admitted in testimony that he had no problems at any time with the starboard engine, yet he is claiming for the complete reconditioning of that engine based on the findings of Davies.”
[71]I agree with these observations about the mechanical evidence.
[72]In any case, having listened to all the evidence about work to the engines, I am not satisfied that there is any conclusive evidence the portside engine had not been reconditioned, that it must – prior to purchase – have been in the defective state claimed by the Plaintiff so that its condition must have been misrepresented. The evidence simply lacks the clarity and weight required to make any such findings on the balance of probabilities.
[73]This ground must also fail.
ORDERS
[74]The claim is dismissed.
[75]The Plaintiff is to pay the Defendant’s costs. If the parties are unable to agree as to the sum, they are each at liberty to apply.
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