Yancic v Australian Fishing Enterprises Pty Ltd No. Scciv-98-1491

YANCIC v AUSTRALIAN FISHING ENTERPRISES PTY LTD
[2001] SASC 220
Civil

BLEBY J.
Background and nature of the plaintiff’s claim
The plaintiff is presently aged 40. Since leaving school at the age of 16 he has been engaged in the fishing industry, first as a deckhand, having then gained an engineering certificate and subsequently a Class 4 Masters Certificate. He has worked on a number of fishing boats out of Port Lincoln.
The defendant, Australian Fishing Enterprises Pty Ltd (“AFE”) carries on a fishing business in Port Lincoln. It was the owner and operator of a number of fishing vessels, including the “Sea Princess” and “Monika”. At all material times it has been entitled to catch in excess of 400 tonnes of tuna each year pursuant to the quota allocated to it.
The plaintiff’s claim against the defendant is for damages for breach of contract. He says that in about October 1990 he entered into an oral agreement with Mr Sarin, a director of AFE, to act as skipper and operator of the Sea Princess for a five year period commencing with the 1990/91 fishing season. The tuna season runs from November to May. He alleges that it was a condition of the contract that AFE would allocate to him 400 tonnes of quota per year for five years, that the crew would be paid 30 per cent of the annual catch, which included 10 per cent of the annual catch for the plaintiff. There would be no lease fee for the quota.
The plaintiff claims that the agreement was reached with Mr Sarin at a barbecue at the home of Mr Valcic, the plaintiff’s brother‑in‑law, on 4 November 1990. Mr Sarin denies any such agreement.
The plaintiff further alleges that in about January 1992 the contract was varied whereby, under the same conditions, the plaintiff would be skipper and operator of the Monika for a further five year period from that time. He claims that the variation to the contract was contained in or to be inferred from a further conversation between himself and Mr Sarin at the office of AFE at Windsor Avenue, Port Lincoln. Mr Sarin denies any such conversation.
The plaintiff alleges that a breach of the contract occurred in early November 1992 when AFE repudiated the contract, having leased its quota for the purposes of an Australian‑Japanese joint venture. He was told that he was no longer required for the Monika. By way of damages he claims the difference between what he would have earned as skipper of the Monika under the agreed conditions for five consecutive seasons from November 1992, less what he in fact received by way of payment for other work he was able to obtain.
There is no doubt that the plaintiff was engaged by AFE as skipper of the Sea Princess for the 1990/91 tuna season, and again for the 1991/92 season. There is also no doubt that he was not engaged on the Monika for the 1992/93 season. The Monika was not then equipped for tuna fishing. He was not engaged by AFE at all for that season or for subsequent seasons except for the 1995/96 season, when the Monika had been refitted for tuna pole fishing, and he was engaged as its skipper for that season.
Besides denying the existence of any oral agreements, the defendant’s case was that, as was customary for itself and in the industry generally, fishing boat crews, including their skippers, were engaged for a single season. Furthermore, in the case of AFE, they were engaged pursuant to a pro forma written share fishing agreement for a particular season. Copies of two such agreements were produced signed by the plaintiff. One bore no indication of the season or period to which it applied. The other was to commence on 1 July 1995. The defendant’s case was that other agreements in similar form signed by the plaintiff had been destroyed with the passage of time.
The key witnesses
Whether the plaintiff succeeds in proving a contract in the terms alleged therefore turns on whether his evidence to that effect is accepted, or whether the evidence of Mr Sarin is to be preferred. It also depends to some extent on the evidence of Mr Turner, the General Manager of AFE, for if what he says about the engagement of crews in fact occurred, it is inconsistent with the arrangements to which the plaintiff deposed.
I will have occasion to refer to their evidence in due course, but there are unsatisfactory aspects about the evidence of each of them. Both the plaintiff and Mr Sarin, whilst in direct conflict on whether the crucial conversations occurred, both sought to justify their own respective positions, were both adamant about directly relevant events and detail, but less certain about other equally important events in their lives. They were both advocates in their own cause and eager to justify their respective positions. Some of the relevant events occurred over 10 years ago, and the evidence of both was affected by this lapse of time.
Mr Turner was an unsatisfactory witness for different reasons. His memory was also affected by the passage of time, but he relied on practice and reconstruction rather than direct memory of particular events. The plaintiff was able to point to a number of inconsistencies in his evidence, some of which may be explained by a misunderstanding of instructions to and from the company’s solicitors in the course of preparation for this litigation. I do not regard him as being deceitful or deliberately lying. In some aspects of his evidence I believe he was possibly mistaken, but he did rely on habit or practice without a complete understanding of the consequences of that practice. The result is that his evidence too is unreliable in some respects, and must be treated with great caution in matters of detail.
In order to reach any conclusion on the balance of probabilities as to what occurred, it is necessary to review the evidence of these three witnesses in particular against a number of external facts about which there can be no doubt, or which I am persuaded in fact occurred. It is therefore necessary to review what was happening in the tuna fishing industry in the 1980s and early 1990s, to review some of the background to the formation of AFE and its significant role in the industry, to review the plaintiff’s history in the industry and other events which can be shown to have happened involving the plaintiff at or about the time of the alleged contract and both prior to and subsequent to the alleged breach of contract. These events will all have an important bearing on whether the contract, as alleged by the plaintiff, was made.
The tuna industry
As to the conduct of the tuna fishing industry generally, I have relied heavily on the evidence of Mr Jeffriess. Prior to 1988 he was Executive Officer of the South Australian Fishing Council and Chairman of the National Council. Since 1988 he had been President of the Australian Tuna Boat Owners Association (ATBOA), and at the time of giving evidence was Deputy Chairman of the Australian Fisheries Management Authority. He is a man of wide experience in the fishing industry generally and in the tuna industry in particular, extending over many years. He has been involved in negotiations with the Federal Government as to the management of the Australian tuna fishery, in negotiations with Japanese and other authorities as to the management of tuna fishing on the high seas and in negotiations with other arms of government concerning regulation of the industry in various aspects. That has included negotiations on behalf of a great many tuna boat licence holders with the Australian Taxation Office to obtain approval to both common and individual forms of crew agreement. I have no hesitation in accepting his evidence without qualification, although some allowance must be made for the accuracy of his recollection as to the detail of some events and the timing of them, owing to the passage of time and his lack of access, while giving evidence, to relevant documents which may have been able to refresh his memory.
I have also been assisted in understanding the nature of the industry and its development in the 1980s and 1990s by some of the evidence of Mr Sarin. Where his evidence is in conflict with that of the plaintiff as to the formation of any alleged agreement, I have had to view his evidence on relationships with the plaintiff with some circumspection and caution. However, he too is a man of long and wide experience in the fishing industry based in Port Lincoln, and I accept his evidence as to developments which occurred in the industry generally. In the 1970s and 1980s Mr Sarin had interests from time to time in a number of fishing vessels, in ship‑building and in the business known as Port Lincoln Tuna Processors. As will be seen, he played a significant part in the formation of AFE. Some of the plaintiff’s evidence has also been helpful in an understanding of the nature of the industry and of the various methods of tuna fishing.
The traditional method of tuna fishing, at least in Australian tuna boats, was by poling the fish. This was done by locating, by various means of surveillance, a school of tuna, driving the boat into the school, releasing live bait which attracted tuna to the boat, enabling individual fish to be poled into the boat by means of a trace on the end of a line. The efficiency of this method was increased in the 1980s by the building of purse seiners, being specially constructed vessels capable of shooting a net around the school, with the fish then being poled either into accompanying poling vessels or lifted into the purse seiner itself. Fish thus caught were either returned to port for processing or, with the development of the lucrative Japanese market for whole fish, were exported as fresh fish or frozen at sea and transferred at sea to larger vessels, usually for transport direct to Japan as whole fish. Japanese fishers, on the other hand, had developed a process of long lining, involving shooting baited lines of between 30 and 60 kilometres in length, followed by a trawling operation of up to 16 hours. Boats were required to be set up and equipped quite differently for this type of fishing.
In the early 1980s there were no restrictions on fishing for tuna in Australian waters. Prior to the introduction of quotas, the total catch for vessels based in Western Australia, South Australia and New South Wales was approximately 28,000 tonnes per annum. Quotas were introduced in 1984, reducing the total catch to 14,500 tonnes. They remained at that level until the 1988/89 season when the quota was reduced to 6,250 tonnes, and again in the 1989/90 season to 5,265 tonnes. That in itself constituted a reduction of 67 per cent over a two year period. Owing to uncertainties as to the effects of the quota impositions, there was talk in the industry of further reductions and even of a three year moratorium on tuna fishing in Australian waters.
In addition to the quota reductions, the industry itself had imposed a voluntary freeze in 1986 consequent upon an agreement with the Japanese tuna industry which, for practical purposes reduced the then quota by 3,000 tonnes. That continued for the 1987/88 season, but with the drastic reductions in quota which followed, and in order to accommodate what was known as a real time monitoring programme in respect of fishing on the high seas, the actual quota available to Australian licensees in 1989/90 was 4,465 tonnes.
The reduction in quota, particularly that which occurred between 1988 and 1990 had a devastating effect on the industry. An operator’s entitlement to a quota was the primary security taken by banks and financial institutions for the financing of the industry. With the reduction, the number of operating boats was substantially reduced. The Port Lincoln fleet was reduced from about 35 to, on one estimate, 10 or 12 boats. Other estimates suggested that as few as 2 or 3 boats were actually engaged in tuna fishing. There was a corresponding surplus of former skippers and crew. Mr Jeffriess described the industry, from the early 1990s, as being either in official receivership or in de facto receivership or under the control of the banks. That problem coincided with the collapse, in 1988, of the traditional small sashimi quality market which accounted for a substantial portion of Australian exports to Japan.
ATBOA had become and was to remain a major force in negotiations with both Australian and Japanese governments and in setting up what was to become a rescue package for the industry.
The events of the late 1980s caused a massive restructuring in the ownership, size and operation of the tuna fleet based at Port Lincoln. AFE became one of the four major operators in Port Lincoln, and by 1991 held 28 per cent of the national quota. It was during 1991 that Mr Jeffriess, through the ATBOA, and by means of intense negotiations with the Australian Government and the Japanese tuna industry, was able to negotiate a significant joint venture agreement between the ATBOA and the Japanese industry whereby the Association would undertake to provide certain minimum quota entitlements for a three year period, and Japanese long line vessels would undertake the fishing. This necessarily involved a commitment, on the part of Australian licensees willing to participate, to lease a substantial proportion of their combined quota to the ATBOA for use in the joint venture. There were significant financial incentives to do so. The then sale price to the Port Lincoln cannery was approximately $1.30 per kilo. The price on the Japanese market for poling fish was between $4.00 and $6.00 per kilo, from which all operational costs had to be deducted. The price offered for lease of the quota was 3,150 yen per kilo or approximately $4.50 on the then rate of exchange, with no costs. This was an amount which, in Australian dollars, could be guaranteed over the period with appropriate hedging. Banks were highly influential in either encouraging or requiring operators to take the more profitable return on their investment.
AFE was one of the four processors which had an entitlement to a significant quota - about 1200‑1400 tonnes. The ATBOA was actively soliciting the commitment of a large portion of this quota to the joint venture during 1991, as two other companies with large quotas were negotiating separately for a joint venture with some Korean interests. By November 1991, AFE had committed a substantial proportion of its quota to the joint venture for the following three years.
The 1991/92 season was highly successful for the joint venture, and the Japanese were interested in taking up more quota in the following season. There were negotiations during 1992, leading to an increased commitment by AFE to the joint venture, encouraged by its banker. In fact AFE committed all but 120 tonnes of its quota to the joint venture. It retained that quota for fish farming which was then in its infancy.
Trials for the farming of tuna had begun in 1991. They continued, although described as “semi‑commercial”, during 1992. The 1992/93 season was the second season of what was described as semi‑commercial farming. This process initially involved the poling of live tuna, the storage of them in bait tanks on the vessels themselves while they returned to port, there to release them into netted enclosures for fattening before processing and sale, principally to Japan.
AFE was part of a joint venture developing this process, to which it contributed the remainder of its 120 tonne quota for the 1992/93 season. Over time the process of catching fish for farming became more efficient by the use of purse seiners and the transfer, at sea, to fish farm enclosures which were then towed back, with their catch, to Boston Bay for fattening.
From the early 1990s, the quantity of tuna being poled in Australian waters was not significant. By the mid‑1990s pole fishing had become largely uneconomic, the preferred methods being by long lining and tuna farming, then rapidly developing.
It became clear that by the 1992/93 season, the major portion of the Australian tuna quota would be committed to the joint venture negotiated by ATBOA, at least for the balance of that three year period. Part of the joint venture arrangement was that the Japanese industry would train Australian fishers in long lining techniques. For that purpose, ATBOA reached an agreement with AFE to lease the vessel, Sea Princess, from AFE. In 1992 it was equipped for long line fishing. Each of the quota holders, members of the ATBOA, were required to contribute portion of their quota to be taken up by the Sea Princess. I will need to return to this aspect of the joint venture, as the plaintiff was engaged on that vessel when it first began its long lining under the joint venture.
The other observation that needs to be made about the industry generally is that the crews of fishing vessels were normally engaged for a single season or voyage by way of share fishing agreement. In his wide experience, Mr Jeffriess had never known a contract to extend beyond one season. That does not mean that it did not happen, of course. Mr Jeffriess was only able to speak of his own experience. Nevertheless, his experience was supported by that of Mr Sarin, Mr Turner and other boat operators who gave evidence.
Formation of AFE
AFE was formed in 1988 as a result of the first and most drastic reduction in the tuna quota. That reduction rendered the operations of most individual boat owners uneconomic. A number of people who had various interests in different boats, and some of whom were also shareholders in the Port Lincoln Tuna Processors business, formed in the 1970s, came together to pool their operations and quota. This meant the retirement of some of their boats from the fleet for the 1988/89 season and subsequent seasons and their later redeployment to other activities.
The shares in AFE were owned by Mr Sarin, the plaintiff’s brother‑in‑law Mr Valcic, Mr Sarunic, Mr Blaslov and a Mr Schultz. Mr Sarin was the Managing Director of AFE and was also a close friend of the plaintiff’s family.
Because of its association with the plaintiff, it is necessary to trace, briefly, the history of Mr Valcic’s interests in the industry prior to his joining AFE.
The vessel Monika
A company known as Simone Fishery Pty Ltd was formed in order to build and operate the vessel Monika. She was a pole fishing boat. The equal shareholders in Simone Fishery Pty Ltd were Mr Valcic and a Mr Vince Mislov. Construction of the vessel was completed in about March 1981, in time for the end of the 1980/81 tuna season. Mr Mislov was the skipper of the vessel until he sold his interest in the company to Mr Sarin. That seems to have occurred either in 1983 or 1984. The date is not material. With Mr Mislov’s departure, the plaintiff became the skipper of the Monika, having previously served as its engineer. He was skipper of the Monika for each season up to the end of the 1987/88 season. Although Mr Sarin had become an equal shareholder in the company, he had a number of other interests, and Mr Valcic remained in charge of the operation of the Monika. Almost all the catch of the Monika over those years was sold to the Port Lincoln cannery.
With the reduction in quota that occurred after the 1987/88 season, Simone Fishery Pty Ltd, then controlled by Mr Valcic and Mr Sarin, transferred its quota and its interest in the Monika to AFE on its formation. The Monika was one of the boats which was retired from the tuna fleet, and the plaintiff was told that he could not be engaged for the 1988/89 season.
The plaintiff claimed that AFE operated the Monika for the whole time that he was its skipper. In that, as in other parts of his evidence, he was plainly wrong. But it caused him to convey the impression by his evidence that, as a long term skipper for the company, he had been passed over in 1988 in favour of Mr Tony Mislov as skipper of the Sea Princess, another boat acquired by AFE on its formation. The Sea Princess was one of the few boats that did go tuna fishing in the 1988/89 season. It was the plaintiff’s evidence that attempts were made to find him a job in another boat of the AFE fleet, as if he were a long term employee of AFE, but that they failed, forcing him to pursue other activities.

The defendant’s case was that, with the drastic reduction in quota in 1988 and the absorption of the interest of Simone Pty Ltd in the Monika and its quota into AFE, the plaintiff saw the emerging difficulty for the tuna industry and himself and because of that, chose to commence his own business in crayfishing. I think that the latter is the more inherently likely. In addition, the acquisition of a crayfishing boat required considerable planning and the realization of some of the plaintiff’s assets. I reject the plaintiff’s evidence that he was effectively dismissed by AFE.
Purchase of the Untouchable
The plaintiff, with two other friends, purchased a crayfishing boat, the Untouchable, and the licence to operate 50 craypots. The plaintiff had a half interest in the boat and Messrs Ricov and Skoljarev each had a one quarter share. Between them, the purchasers found $200,000. $100,000 was provided by the plaintiff and $50,000 each by the other partners. They borrowed in excess of $320,000 from Westpac Bank, in order to complete the purchase. The crayfishing season began on 1 November, and for the 1988/89 season the plaintiff was the skipper. The venture was not a commercial success, as the price of crayfish went down and interest rates rose sharply.
The plaintiff returns to tuna fishing
As already mentioned, one of the boats acquired by AFE on its formation was the Sea Princess. It was larger, and no doubt more economic to operate, than the Monika and other smaller boats. It was skippered in 1988/89 by Mr Tony Mislov.
During 1989 there were further discussions between Mr Sarin and the plaintiff, during which the plaintiff was invited to return to tuna fishing, notwithstanding his interest in the cray boat. He claims that, as an experienced tuna boat skipper, he was urged to return by Mr Sarin. Mr Sarin claimed that it was the plaintiff who wanted to return because he could earn much more by tuna fishing than by skippering the Untouchable. I think both were right. It was a mutually satisfactory arrangement. After consultation with his cray boat partners, the plaintiff did in fact return to AFE to skipper the Sea Princess in the 1989/90 season. He retained his interest in the Untouchable, which for that season was skippered by one of his partners. The Sea Princess was also a pole fishing boat. That season it was allocated 400 tonnes of the AFE quota, which the plaintiff managed to achieve.
During the 1989/90 season the Monika was converted from a tuna poling vessel to a deep sea trawler. At the end of the tuna season the plaintiff took the Monika to Tasmania for several months trawling for orange roughie. That was a temporary arrangement only, whilst the crew developed their familiarisation with the handling of the boat. The plaintiff returned from Tasmania to Port Lincoln in about August of 1990. He then began to face a financial crisis in relation to the operation of the Untouchable, resolution of which was to play a significant part in what he claimed was the formation of the contract in November 1990.
A financial crisis and formation of the contract - plaintiff’s version
When the Untouchable was purchased, besides the $200,000 equity contributed by the partners, approximately $320,000 was borrowed from the Westpac Bank by way of term loan. In addition, the operating company, Seaspray Pty Ltd, operated an overdraft account with the Westpac Bank for the purpose of financing operations. Seaspray Pty Ltd suffered substantial trading losses in the first two years of operation of the crayfishing boat. Such losses were particularly heavy in the 1989/90 season, the season for which the plaintiff skippered the Sea Princess while one of his partners skippered the Untouchable. By October 1990 the total indebtedness to the bank had risen to in excess of $446,000.
According to the plaintiff’s evidence, he attended a meeting at the bank at which he was told the bank required that he return to be skipper of the Untouchable or that he arrange for the sale of the boat. He said that he then approached Mr Sarin who, along with Mr Valcic, agreed to try and buy the interests of the other partners in the boat. This was no doubt with a view to reducing the debt to the bank, and according to the plaintiff, to “keep me involved in it (the cray boat) to keep me tuna fishing”. The plaintiff and Mr Sarin had another meeting with the bank manager at which this proposal was put forward. The plaintiff then says that at Mr Sarin’s request he arranged for the drawing up of a contract by a solicitor. There was some urgency, because if Mr Sarin was to take an interest in the boat he wanted it by 1 November, the beginning of the crayfish season. The plaintiff’s evidence was that the agreement was prepared, but it did not go ahead because the price being offered by Mr Sarin and Mr Valcic was too low for the other partners. Mr Skoljarev, one of the other partners, said that he would find another buyer.
The plaintiff said that he then had another meeting with the bank on 26 October 1990. His memory as to the date had been refreshed by a letter addressed to Seaspray Pty Ltd from the bank. By the time of that meeting the possibility of Mr Sarin and Mr Valcic purchasing the interests of the other partners had disappeared. He was given an ultimatum by the bank that he would have to go back as skipper of the Untouchable or that he would have to sell the boat. His evidence was that the bank would not require repayment of the then outstanding debt if he went back as skipper. He told the bank manager that he would require some time to think about it.
As the crayfishing season opened on 1 November, and as Seaspray Pty Ltd was in urgent need of cash, he took the Untouchable on its first voyage for the season. It was because he was able to pinpoint the time of the meeting with the bank and the fact that the crucial conversation relating to the formation of the contract occurred at a barbecue when he returned from the first voyage, that he was able to say that the conversation in which the contract was made took place on 4 November 1990 at the barbecue at Mr Valcic’s home. His evidence was that he told Mr Sarin that, as a result of the bank’s ultimatum, he might have to leave tuna fishing and go back to the cray boat, or else the vessel would have to be sold and he would lose a lot of money. His evidence was that Sarin encouraged him to sell the boat and stay tuna fishing. He claimed that Sarin pointed out to him that the crayfishing season was seven months work every day, while tuna fishing was only four months. He also suggested to the plaintiff that if he lost on the sale of the boat, he would recover the loss in a year or two by tuna fishing. There is no doubt that the plaintiff portrayed himself as the reluctant tuna boat skipper being enticed back into tuna fishing by Mr Sarin. It was his evidence that he said to Sarin “Oh well, if I sell the boat Sam how do I know I won’t lose my job like I did in 88, 87/88 when Mish (Tony Mislov) took the boat and I lost my job?” to which Sarin replied “Oh we fucked up there, we should have given you the job. We thought Mish was older, more experienced than you.”. It was then that Sarin was said to have made the offer to the plaintiff to continue skippering the Sea Princess upon the terms which I have already set out.
In the meantime, one of the plaintiff’s partners in the Untouchable had obtained an offer from a Mr Laurie Gobin to purchase the boat outright at a price which was acceptable to the partners. Sarin was aware of this offer during the conversation and that it was for significantly more than he and Valcic had been prepared to pay. The plaintiff told Sarin that he would accept his offer of employment and would sell the Untouchable to Mr Gobin. He asked Sarin about having a written contract, to which Sarin is alleged to have replied “Don’t panic Jamo, no need to worry. Your brother‑in‑law, your sister’s in the company, I’m good friends with your mum and dad and there’s no need to. I’m a man of my word, there’s no need to make a written contract.”. He said the deal was made and they shook hands on it.
It was the plaintiff’s evidence that Valcic heard part of the conversation and agreed that it would be best if he sold the cray boat. He was not there for the whole conversation, as he was also attending to the barbecue. However, he was said to have been aware of the negotiation and witnessed the handshake. There were no other witnesses to the agreement.
The plaintiff and his partners proceeded with the sale of the Untouchable to Mr Gobin, although he continued to work the boat for most of November until he began preparing the Sea Princess for sea and the forthcoming tuna season.
He claims that Mr Sarin’s commitment was reaffirmed during 1991 when, on informing Mr Sarin that he was contemplating buying a house in Port Lincoln, Sarin allegedly told him that his job was secure. The inference was that the job was that agreed upon the previous November.
The defendant’s case
Mr Sarin’s evidence was that he was approached by Mr Valcic, not the plaintiff, because of some distress being experienced by the plaintiff’s parents (also his wife’s parents) at the possibility of losing their home, which was part of the bank’s security for the financing of the Untouchable. He eventually went with the plaintiff to the Westpac Bank and informed the manager that he would be getting involved in the project with Mr Valcic, and that the bank should leave the house alone. The bank manager agreed.
He and Valcic agreed on a proposal to buy out the other shareholders in the business based on the extent of the company’s then indebtedness to the bank, which he understood was of the order of $480,000. He arranged with the plaintiff to consult a solicitor to draw up an appropriate agreement. Nothing eventuated from that proposal, and he was later told that the vessel had been sold to Mr Gobin. Following that, an arrangement was made with the plaintiff to skipper the Sea Princess for that season. The arrangement was made at the plaintiff’s father’s house. He remembered telling the plaintiff that he could make more money if he wanted to continue fishing in the tuna boat, but at no stage was there any mention of any period or any undertaking given as to quota. There was no suggestion that the plaintiff decided to join in selling the Untouchable because he was offered a contract on the Sea Princess.
Mr Valcic first became aware of the cray boat problem when he received a telephone call from the plaintiff when Valcic was in Canberra. The plaintiff was looking for some assistance. He undertook to see if Mr Sarin could assist. He too had become aware that the plaintiff’s parents’ house was part of the bank security. With some reluctance he agreed to join in an offer with Sarin to buy out the other partners’ shares, but nothing eventuated.
He denied any conversation of the type deposed to by the plaintiff at a barbecue at his house. He denied that it could even have been contemplated. He said:
“To say such a thing to anybody at the time when we was down to - because we couldn’t even breathe from the banks and the pressure and going broke and God knows what. Who would dare say that, who would possibly could offer anything like that to anyone?”
He also denied witnessing the shaking of hands suggesting the conclusion of some agreement.
The defendant’s case was also that the plaintiff, as he had done for the 1989/90 season, had signed a standard form of AFE share fishing agreement at the commencement of the 1990/91 season and again when he also skippered the Sea Princess, for the 1991/92 season. Searches of the defendant’s records had failed to produce the relevant agreements. As I have already mentioned, two pro forma agreements were produced which had been signed by the plaintiff. One purported to be in respect of the Sea Princess for a period commencing 1 July 1995. The other was in respect of the Monika for which no date or period was specified. However, the only time that the plaintiff worked on the Monika for AFE was in 1990 when he took it to Tasmania as a trawler and for the 1995/96 season when he was engaged to skipper the Monika for that season. He did acknowledge having signed an agreement for that season, saying that he would not have had a job unless he did.
That accounts for one of the signed forms. The other, in relation to the Sea Princess, for a period commencing 1 July 1995, may be explained by an answer given by the plaintiff in rebuttal to a suggestion that in 1995/96 he got a job with AFE to go pole fishing on the Monika, to which he replied “It was to go long lining on the Princess and tuna fishing on the Monika, yes.”.
However, the plaintiff acknowledged having signed in blank and under protest a pro forma agreement in respect of his first season with the Sea Princess in 1989/90. He agreed that it was standard practice that a contract would be signed each season and that as skipper, he would work out with Mr Turner what the shares of respective crew members would be out of the 30 per cent allocated to the crew and after deduction of his 10 per cent. He also agreed that he was presented with a blank form of agreement by Mr Turner late in November or early in December 1990. He handed it back to Mr Turner because he informed him of his special agreement with Mr Sarin and suggested that he ask Sarin about it. His evidence was that Turner did so and returned in due course saying that he did not have to sign the agreement. Given that, at the time of making the agreement, he had requested Mr Sarin for a written agreement, it is perhaps surprising that he did not then take the opportunity to complete the pro forma embodying the conditions he had allegedly agreed with Mr Sarin.
It was Mr Turner’s evidence that the plaintiff did sign the pro‑forma agreement in 1990. It was his unfailing practice to require such forms to be signed along with an application for personal accident insurance before he would allow the vessel to go to sea. There was never any variation to this practice. He denied any conversation with the plaintiff suggesting that there was no need to have the agreement completed, and he denied any conversation with Mr Sarin about an exemption for the plaintiff.
The plaintiff’s evidence rejected
Despite my misgivings about the evidence of both Mr Sarin and Mr Turner, I accept their evidence in preference to that of the plaintiff.
His evidence gains no support from Mr Valcic. As mentioned above, he was the plaintiff’s brother‑in‑law and had employed the plaintiff for a number of years on the Monika before the formation of AFE. He was a director of AFE and appears to have taken a reasonably close interest in the affairs of the plaintiff. It would be surprising if, the plaintiff having reached such an agreement with Mr Sarin, Mr Valcic would not soon have become aware of it, even if he did not witness its full terms at the time it was made. Moreover, Mr Valcic’s evidence accords much more closely with Mr Sarin’s evidence than with that of the plaintiff in many matters of detail in which the plaintiff and Mr Sarin are opposed.
More importantly, however, the plaintiff’s version and sequence of events relating to the solution of the financial crisis over the Untouchable giving rise to the agreement with Mr Sarin is inconsistent with other objective evidence, and that other evidence is consistent with the evidence of Mr Sarin and Mr Valcic. It will be remembered that it was the plaintiff’s case that by 26 October when he saw the bank manager, and certainly by 4 November, when the agreement was made, Mr Sarin and Mr Valcic had no further interest in purchasing a share in the Untouchable. It was his case that Mr Sarin was urging him to sell the vessel and was assuring him that any losses would be overcome by a much more rewarding career in the tuna industry, that Sarin was anxious to secure the plaintiff’s services and accordingly offered him the five year contract. It was because of that inducement that he agreed to the sale of the Untouchable.
The letter dated 23 October 1990 from Westpac Banking Corporation to Seaspray Pty Ltd which required attendance at a meeting to discuss the matter on 26 October included the following:
“Kindly note that no further drawings will be permitted on the above accounts and that all moneys received to your credit therein will be applied in permanent reduction of your indebtedness to the Bank.
A No 2 working account to allow you to commence the season may be opened and is to be conducted strictly in credit.
Please note that this is the first step by the Bank to recover the full amount of the debts outstanding by legal action under its securities.”
It would be surprising if, as suggested by the plaintiff, when the meeting occurred on 26 October, the bank had changed its mind and would no longer require repayment if he returned to skipper the Untouchable.
The plaintiff also received a letter from Tony Bassett and Partners, a firm of solicitors in Port Lincoln whom he had instructed. The letter was dated 15 November 1990. From the content of that letter it was evident that the plaintiff had been contemplating selling his own interest in the Untouchable to Mr Skoljarev based upon a valuation of $480,000. That was never mentioned by the plaintiff in evidence. The letter confirmed instructions received from the plaintiff by telephone that day, 15 November, that he was no longer prepared to agree to a sale to Mr Skoljarev and that the solicitors were to advise Mr Skoljarev’s representatives that instead he (the plaintiff) was offering to buy the vessel with Messrs Sarin and Valcic based upon a valuation of the same figure. The letter continued:
“We confirm that you have taken the decision as outlined above in the full knowledge that Westpac Banking Corporation have indicated that they will take formal steps to exercise their rights as mortgagee over the boat and also their rights as mortgagee of your parents home, Mr. John Yancic’s property, Mr. Skoljarev’s block of land and two houses owned by Mr. Ricov’s parents.”
If, as appears to be the case, such instructions were given on 15 November, it is not consistent with the plaintiff having reached the agreement that he said he had with Mr Sarin on 4 November, Mr Sarin and Mr Valcic having by then been excluded from consideration as purchasers. Furthermore, if the letter accurately records the attitude of the bank at that time, it does not accord with the plaintiff’s evidence that by 26 October the bank was not seeking repayment if the plaintiff resumed as skipper of the Untouchable.
There is other evidence also inconsistent with that of the plaintiff. From documents produced from the file of another firm of solicitors, Jenkins Anderson and Co, it is clear that the plaintiff gave instructions to Mr Anderson on 30 October 1990 to prepare a draft agreement for the purchase by Messrs Sarin and Valcic of the one‑half interest in the Untouchable held by the plaintiff’s partners for the sum of $240,000. It is equally clear from the instruction note that the Westpac debt was then $480,000 and that Westpac would repossess the boat if not sold. A draft agreement was subsequently prepared and delivered to the plaintiff. That was entirely consistent with the instructions given to Tony Bassett & Partners on 15 November that the plaintiff, with the assistance of Messrs Sarin and Valcic would be seeking to buy out the interests of the other two partners. It is inconsistent with the plaintiff’s evidence that the plaintiff’s future was settled in the manner suggested by him in a discussion which took place on 4 November. Mr Gobin’s offer could not have been made at the time of the alleged conversation. The events are, however, consistent with Mr Sarin’s version of events concerning his and Mr Valcic’s offer to purchase shares in the Untouchable and with what happened thereafter.

The Untouchable venture was in deep financial trouble. Seaspray Pty Ltd and the owners of the various properties which secured the bank loan remained under threat from the bank. The only way out would appear to be either for one or more partners to sell their interest and use the proceeds to reduce the bank’s debt or to sell the boat and the crayfishing licence in order to discharge the whole of the bank’s debt. Immediate and precipitate action by the bank, especially in respect of the plaintiff’s parents’ house, was avoided by the undertaking, conveyed to the bank, of Messrs Sarin and Yancic to purchase a one half share for one half of the outstanding debt. Although unattractive to the existing partners, it gave them an opportunity to secure a sale at a more attractive price, which they did. The best commercial result was obtained by a sale to Mr Gobin. The plaintiff’s need for ongoing work was precipitated by the termination of the cray boat venture under pressure from the bank. Sale of the boat was precipitated by the bank and not by the plaintiff’s offer of long term employment by AFE, as was the thrust of the plaintiff’s case.
In order to refute any suggestion of recent invention in his evidence, the plaintiff sought to rely on the file note of a solicitor he consulted on 10 June 1993 as to a possible remedy for the alleged breach of contract with AFE. The general thrust of the instructions recorded by the solicitor were similar to the plaintiff’s present claim. There were, however, some important differences which reflect poorly on the plaintiff’s reliability. He instructed his solicitor that he spent the 1989/90 season on the Untouchable. That was inconsistent with his and everyone else’s evidence that he skippered the Sea Princess for the that season.
The essence of the instructions was that the plaintiff had been sought out by Messrs Sarin and Valcic to skipper the Sea Princess in 1990 with a suggestion that he could make much more money by skippering that vessel than by remaining on the cray boat. His instructions were that he wanted to protect his interest in the cray boat and that a plan by Sarin and Valcic to buy out the other partners was generated in order to assist him to maintain his interest in the boat while still working for AFE. He did not mention in the instructions the financial trouble that the Untouchable was in or the pressure that was then being brought to bear on him by the bank. I regard that as a significant omission and an important factor that the plaintiff sought to downplay in his evidence. Furthermore, when giving instructions as to the terms of the contract, his instructions were that the 400 tonne quota committed to him was subject to reduction if the company’s quota was reduced by the government. That was never mentioned as part of the conditions in the plaintiff’s evidence.
The foregoing factors are sufficient to justify the rejection of the plaintiff’s evidence. However, in addition, it is inherently unlikely that Mr Sarin would have made an offer of that nature at that time. By 1990 the tuna industry had been brought to its knees. There had been two successive substantial reductions in the quota. There was talk of further reductions or even a moratorium on tuna fishing. The major operators were all in de facto receivership at the instance of financial institutions. There had been a limited joint venture with Japanese interests for three seasons ending after the 1990/91 season involving the leasing of some of the Australian quota for the real time monitoring programme. The future of any joint venture with the Japanese after that was uncertain, but the possibility existed of further leasing of quotas by Australian producers as part of a joint venture with Japanese or Korean interests. Those negotiations in fact firmed during 1991, and in the case of AFE, involved the leasing of a substantial portion of its quota to ATBOA for use in the joint venture. There were also uncertainties as to how tuna fishing would be carried out. In order to survive, the industry had to develop and was in fact developing new and improved methods of fishing. The Japanese had developed long line fishing, which was virtually unknown to Australian operators. AFE, along with others, was beginning to look at the possibility of fish farming, with the first experimental farm being planned for 1991.
1990 was therefore a time of great uncertainty both for the industry and for the financial survival of the operators. That uncertainty affected AFE as much as anyone. It was inherently unlikely that an operator as experienced as Mr Sarin would, in those circumstances, make a five year commitment to one individual based on the use of one boat and in respect of a significant proportion of the company’s quota. Mr Valcic, whose evidence I accept, said as much in evidence.
Furthermore, all witnesses engaged in the industry gave evidence of the universal practice of engagement for a single season or voyage. While the plaintiff may well have had an expectation or hope that, if he was able to rid himself of involvement in the Untouchable, he might have a reasonably secure future as an experienced skipper in the tuna industry, and whilst he may have even believed that his standing with those involved in AFE might well ensure some long term employment, there was no evidence led by the plaintiff or by AFE to suggest that there were any circumstances which would justify AFE in making what would have been a most unusual commercial decision of that nature. There was no evidence that it was important to AFE to be able to secure the services of the plaintiff for a period of five years. Indeed, all the indications were to the contrary. The future of the tuna fishing industry was most uncertain, and there were many experienced skippers available with the sudden contraction of the industry.
I reject the plaintiff’s evidence that an agreement of the nature that he claimed was made. I find that he was in fact engaged for the 1990/91 season only and again for 1991/92 season to skipper the Sea Princess. I find on the balance of probabilities that he signed, probably in blank, pro forma share fishing agreements for each of those seasons. I accept Mr Turner’s evidence that his policy was not to allow any ship to go to sea without all members of the crew having signed an agreement, and that there were never any exceptions. Although Mr Turner’s evidence was based on what he claimed to be his unswerving practice, if there had been an exception, I think he would have remembered it.
The Variation Agreement
Having found that there was no agreement as alleged by the plaintiff entered into by the plaintiff and the defendant in November 1990, there can have been no variation to the agreement as alleged by the plaintiff early in 1992. Nevertheless, there are additional reasons why the plaintiff’s evidence as to that agreement must also be rejected.
The Variation Agreement - Plaintiff’s Case
In January 1992 the plaintiff became aware that consideration was being given to converting the Sea Princess to a long liner for use in the Japanese joint venture with ATBOA. The plaintiff and his fiancée had found a house they wished to purchase. Before committing themselves to such a purchase, the plaintiff wanted some reassurance from Mr Sarin that his employment would continue. He says that he spoke to Mr Sarin in January 1992 at the Windsor Avenue office of Mr Sarin. He expressed concern about the possible commitment on a house and of his intention to get married, and explained that he wanted to make sure about his job security and about the deal they had when he sold the cray boat. Sarin allegedly said that that was “Not a problem”. He asked Mr Sarin about the future of the Sea Princess, to which he replied that the Monika was returning that winter and they intended to convert her back to tuna fishing. Being a smaller boat she would be able to unload at Streaky Bay. He expressed confidence in the Japanese fresh fish market and said “I’ll give you another five years, Jamo. You go buy your house, get married, you go on a little honeymoon and come back, help the Sea Princess get converted to a long liner, go fishing on the Sea Princess for a month or two and then you come back and we’ll get the Monika ready for the 1992/93 season.”. There was further conversation about inspecting the house, following which Mr Sarin was alleged to have said “Well, no need to worry, Jamo, you’ve got an extra five years, 400 tonne, you’ll be right. You’ll have your house paid off in no time.” Sarin again said that he was a man of his word and they shook hands.
The plaintiff and his fiancée bought the house and were married on 15 June 1992.
It will be noted that, on the plaintiff’s case, the extension of a further five years on the Monika beginning with the 1992/93 season was linked with a short spell on the Sea Princess after its conversion to a long liner. The plaintiff’s case was that, after his marriage, he assisted in the conversion of the Sea Princess, for which he was paid a flat rate. Following sea trials it was agreed with Mr Turner that he would skipper the Sea Princess for a month or two and then come back to get the Monika ready for the 1992/93 season. The Sea Princess was to go long lining of the east coast of Australia, and he was to be paid a guaranteed wage of approximately $1,000 per week. AFE required his ticket to enable the boat to go to sea, and after a month or two, he said, they would be able to find someone else, and it would give the plaintiff time to teach other people how to run the vessel properly. The vessel was to have a part Japanese crew, with a Japanese fishing master, to instruct in the art of long lining.
The plaintiff took the Sea Princess to sea off the east coast of Australia, but after a short time there were substantial disagreements with the Japanese crew members, particularly with the fishing master. As a result of one incident the plaintiff had to intervene to prevent his engineer from attacking the fishing master. The plaintiff spoke to Mr Sarin and Mr Turner who encouraged him to see the time out. However, the plaintiff took the boat to Sydney and there met Mr Jeffriess who had flown to Sydney to try and sort out the problem on the boat. The plaintiff explained that he wanted more control of the boat, but Mr Jeffriess would not allow it, and so the plaintiff left the boat in Sydney and returned to Port Lincoln. He claims that he had previously been told by Mr Sarin and Mr Turner, while at sea, that if he could not see it out he could come back and help to get the Monika ready.
The engagement on the Sea Princess for the long lining venture assumes some significance because it was said to be part of the arrangement made with Mr Sarin in January of 1992, and to be of only a temporary nature pending the refitting of the Monika.
The Variation Agreement - Defendant’s Case
Mr Sarin denied any conversation in January 1992 of the type to which the plaintiff testified. There were no witnesses to the alleged conversation. Mr Jeffriess’ evidence also differed significantly from that of the plaintiff. He had negotiated the joint venture agreement between ATBOA and the Japanese interests. As mentioned above, part of that involved the training by Japanese fishers of Australian crews in long lining. ATBOA was to provide the vessel. Mr Jeffriess negotiated a lease of the Sea Princess from AFE. It was intended that the vessel would be engaged in this training programme for two to three years. It was Mr Jeffriess who engaged the initial crew for that venture during 1992. The plaintiff was recommended to him as a suitable person. He was unclear as to the precise details of the negotiations, but the plaintiff was to be in charge of the crew on the vessel and to assist in the selection of the crew. Because of the uncertainty of successful catches during the venture, the plaintiff was guaranteed approximately $1,000 a week plus some share of the catch when the 40 per cent allocated to the crew exceeded the guaranteed minimum wages promised to the crew. Mr Jeffriess’ arrangement with the Japan Tuna Federation and the Japanese government was that he would deliver a long term crew. It had to be a long term arrangement for proper training and instruction in long lining. There was no question of his engaging any member of the crew for only a short time. He told the crew as much. He was not party to any arrangement whereby the plaintiff was only to be engaged for a matter of a month or two.
He became aware of the dissention aboard the vessel and he went to Sydney to try and resolve the dispute. He decided that the Japanese members should remain on the crew, with the result that the plaintiff and two other members of the crew left. The plaintiff was replaced as skipper by Mr Gerrie, whose previous position had been engineer on the vessel - the man whom the plaintiff claimed he had had to prevent attacking the Japanese fishing master.
The Variation Agreement - Conclusion
Before making any findings as to whether an agreement was reached between the plaintiff and Mr Sarin in January 1992, it is necessary to consider the nature of the arrangement entered into for the plaintiff’s service on the Sea Princess when it began as a long lining training ship. There are fundamental differences between the plaintiff and Mr Jeffries as to the nature of that arrangement. The plaintiff maintains that it was a short term and temporary arrangement negotiated with Mr Sarin, due to come to an end at or about the time when it did. Mr Jeffriess, who was responsible for the joint venture arrangements, asserts that he appointed the plaintiff on a recommendation from, among others, Mr Turner, and that there was no question of its being a short term appointment. That would be inconsistent with the nature of the agreements he had with the Japanese fishing authorities.
I have no hesitation in accepting the evidence of Mr Jeffriess in preference to that of the plaintiff. I find that the plaintiff was engaged for an indefinite period by ATBOA to serve as skipper of the Sea Princess for the long line training. There was no expectation on either side that this would be a short term project. The arrangement came to an abrupt and unexpected end following a dispute between the plaintiff and certain members of the Australian crew, on the one hand, and the Japanese fishing master on the other. The plaintiff terminated the arrangement in Sydney and returned to Port Lincoln. It is also most unlikely that the plaintiff had been told that he could return to prepare the Monika, as by then discussions were underway between Mr Sarin and Mr Jeffriess for the leasing of all but a small part of AFE’s quota for 1992/93.
It is a necessary consequence of these findings that I must disbelieve the plaintiff when he alleges that the arrangement with Mr Sarin in January 1992 was that he would see out a month or two on the Sea Princess before returning to prepare the Monika for the 1992/93 season. His engagement as skipper of the Sea Princess for an indefinite term was quite inconsistent with the arrangement which he maintains he had made with Mr Sarin in January. It is also inherently unlikely that Mr Sarin would have made such an arrangement, largely for reasons which I have previously explained. Uncertainty was still pervading the industry. The first year of the three year joint venture with Japan involving the leasing of Australian quota was proving successful. If an opportunity arose to increase the amount of quota leased, it would be commercially advantageous to grasp it. 1992 was the first year of semi‑commercial tuna farming, thus casting an increasing cloud over the future of pole fishing. There was no reason why Mr Sarin would want to depart from the usual seasonal engagement, if indeed any of AFE’s vessels might still be engaged in pole fishing in the following season.
Accordingly, I find that no such agreement was made between the plaintiff and Mr Sarin as alleged. I have little doubt than when the plaintiff returned from the Sea Princess he had a hope and possibly an expectation that he would be able to skipper the Monika for the ensuing tuna season, and I can well understand his disappointment at being told that AFE had leased almost all of its quota to ATBOA for the joint venture, and that the Monika would not be fishing that season. Disappointing as it may have been, I cannot find that it was in breach of any contract between the plaintiff and the defendant.
It follows that the plaintiff’s claim for damages is dismissed.

[2001] SASC 220

29 June 2001