DISTRICT COURT OF QUEENSLAND

1. [1]
   There are two appeals before this Court. The first is an appeal by the first defendant (No. 7 of 2002), and the second is an appeal by the second defendant (No. 8 of 2002). On the 3^rd May 2002, after a two day trial, Magistrate Mr Killeen gave judgment for the plaintiffs against both appellants in the amount of $5,571.00 together with interest and costs. Notwithstanding the various grounds of appeal pleaded and the lengthy outlines of argument filed, at the hearing of the appeals the grounds relied upon were significantly truncated. In relation to the appellant/first defendant, Mr Stubbins submitted that Clause 2.4 of the relevant contract precludes liability in the event of any breach by his client. He further submitted that if it was open to the learned Magistrate to find misrepresentation on the part of the appellant first defendant, Clause 6 of the contract precludes liability. He did not pursue estoppel or waiver nor did he pursue the grounds of appeal relating to Mr Killeen’s findings of fact. In relation to the appeal by the second defendant, the only ground actively pursued on appeal by Ms Pointing was that Mr Killeen’s findings of fact were against the weight of the evidence or unsupported by the evidence. The grounds based on causation and proximity and other alleged errors of law were not pursued.

Background

2. [2]
   On the 3^rd October 1999 the appellant first defendant and the respondents entered into a written contract whereby the appellants agreed to sell an 8.2 metre Kevla Cat vessel called “Sun Diver II” to the respondents. Relevantly to the issues ventilated on appeal the contract contained a number of terms:

3. [3]
   Clause 2.4 (under the section headed “2. Inspection”) provides:

“This agreement is conditional upon the special conditions specified in the Schedule (if any) being satisfied and the purchaser shall in the absence of written notice to the contrary given to the Vendor or the Broker within 72 hours of the expiration of any such period mentioned in the said Schedule be deemed conclusively to have been satisfied with the same, and therefore all such conditions shall thereupon be deemed to be satisfied.”

4. [4]
   The Schedule did contain a number of special conditions:

“SPECIAL CONDITIONS

This agreement shall be conditional upon:-

2. (a)
   The Purchaser obtaining by the Inspection date, an independent report as to the condition of the said Vessel and its appliances, equipment, fittings and appurtenances, such report to be satisfactory to the Purchaser and confirming such satisfaction by completing the Acceptance below and forwarding same to the Vendor or the Broker within 72 hours of the Inspection Date. Unless otherwise agreed all costs in relation to the slipping of the Vessel and the provision of the Marine Surveyor’s report shall be borne by the Purchaser. (Delete if not applicable)

2. (b)
   The Purchaser obtaining confirmation of finance approval from … T.B.A. … within 10 days from the date hereof. If the  Purchaser does not obtain such approval for any reason not being attributable to his own default, he may terminate the Agreement by notice in writing to the Broker. The Purchaser shall take all reasonable steps necessary to obtain such approval. If the Purchaser obtains such approval, he shall give notice in writing of such approval to the Broker promptly, in any event, no later than 72 hours after the approval date. (Delete if not applicable)

3. (c)
   (Any other conditions)

   Subject to conditions above of sea trial

   Marine survey

   Vessel to be delivered with current 2C Survey Certificate

5. [5]
   Although the contract was only signed by the respondents, nothing turns on that as it was common ground that the contract represented the agreement between the parties.

6. [6]
   Clause 6 (which is relevant to the misrepresentation argument) provides:

1. “6.

   Purchaser Acknowledgments

The Purchaser acknowledges that:-

1. 6.1
   no warranties or representations (except those given in this agreement) regarding the Vessel (including its suitability for any purpose, its quality or seaworthiness or otherwise) or this sale, have been made by the Vendor, the Broker or any person on their behalf;
2. 6.2
   The Purchaser relied upon his own enquiries, inspection, investigation and knowledge with respect to the Vessel and this sale and purchaser; and
3. 6.3
   the information in the Schedule and Inventory pertaining to the Vessel is correct to the best of the Vendor’s knowledge and belief;
4. 6.4
   he or she or they are eighteen (18) years of age or over,”

7. [7]
   As provided for by the contract, Mr Carrington, a Marine Surveyor carried out an “out of water” inspection of the vessel on the 16^th October 1999 on behalf of the respondents and his report was before Mr Killeen. Mr Carrington noted a number of areas that required rectification which he described as “more cosmetic” than structural. He noted a leak from the port steering arm, a missing anode form the starboard engine and that the listed life rafts (2) were not available for inspection. He set out a number of items that needed attention.

8. [8]
   It is common ground that Mr Cotterill (on behalf of both respondents) settled the contract on the 24^th November 1999 with full payment of the balance of purchase price; notwithstanding that the vessel was not available for inspection that day, and that the current 2C survey certificate was not available.

9. [9]
   Mr Killeen found that Mr Cotterill in fact took possession of the vessel on the Sunshine Coast on the 28^th November 1999, and with Mr Cork, an experienced mariner, sailed the vessel back to the Gold Coast. Evidence was given by both Cork and Cotterill of defects then discovered on the vessel, which evidence was accepted by Mr Killeen.

10. [10]
    Mr Killeen also found that a certificate of registration for a 2C vessel was issued by Queensland Transport on the 19^th November 1999, which was current at the date of settlement and the date of delivery. He construed the reference in the special conditions to a “current 2C survey certificate” as synonymous with “current Certificate of Registration for a 2C class vessel issued by Queensland Transport”. No challenge is made to those findings. In his judgment the Magistrate was understandably critical of Mr Cotterill’s “casual and negligent” approach to the purchase of the vessel, however, in my opinion, Mr Killeen correctly summarised the issues for his determination on page 3 of his written reasons (in bold type). His conclusions were largely based on his careful assessment of the evidence of the various witnesses.

11. [11]
    As to the presence of defects and absence of equipment, he accepted the evidence of Mr Cotterill who he described as a person with a trusting and “down to earth disposition”. He found that Mr Cotterill’s evidence was substantially corroborated by other witnesses who he accepted as credible witnesses of truth, namely Carrington, Cork, Wilkins (who inspected the vessel in January/February 2000) and Beon (who inspected the vessel in July 2001). On the other hand, Mr Killeen did not find the first defendant, in particular, or the second defendant to be convincing or reliable witnesses of truth. He found that there were substantial defects in the vessel at the time of settlement, and at the time of the second defendant’s inspection of the vessel in November 1999. The second defendant (Davis) provided a certificate on the 13^th November 1999 which lead to the issue of the Queensland Transport Certificate. Mr Killeen found that Mr Davis inspected the vessel on the 16^th November 1999 and that at the time a number of safety items and other equipment (certified by Mr Davis to be “stowed” on the vessel) were not on the vessel. In light of his findings of fact, Mr Killeen concluded:

“I am satisfied Mr Fackler was aware or should have been aware of the defective or missing or non-compliant equipment on the vessel at the time of settlement and on delivery of the vessel. I find that the vessel was not compliant for 2C vessel registration at the aforesaid times.”

12. [12]
    Mr Killeen then went on to find that “if Mr Davis did undertake an inspection of the vessel on the 16 November 1999, he conducted such inspections in a casual, careless and defective manner”. He found that the second defendant had issued his certificate of compliance on the 13^th November 1999 negligently. He found that if Queensland Transport had known of the true condition of the vessel, a certificate would not have issued on the 19^th November 1999. Clearly implicit in the findings of Mr Killeen is a conclusion that the second defendant owed to a class of persons such as the plaintiff a duty of care which he breached to the plaintiff’s detriment in the manner described by Mr Killeen. As I have noted, the ground of appeal relating to the existence of a duty of care was not pursued, which is not surprising in the light of the classical statement of Deane J. in Jaensch v. Coffey (1984) 155 CLR 549 at 584-585.

The argument for the appellant first defendant

13. [13]
    It was common ground on appeal that implicit in Mr Killeen’s finding is that he was satisfied that there was an implied term in the contract, namely, that the boat be compliant for registration and use as a commercial vessel, which term had been breached by the first defendant. The substantial issue argued by Mr Stubbins was that, accepting the Magistrate’s findings that there was an implied term in the contract which had been breached by his client, nevertheless, Clause 2.4 precludes liability. Clause 2.4 is an exclusion clause in the sense that it qualifies a purchaser’s rights by subjecting them to procedure. In Darlington Futures Ltd v. Delco Australia Pty. Ltd. (1986) 161 CLR 500, the Court (Mason, Wilson, Brennan, Deane, Dawson JJ), after reviewing the authorities relating to construction of exclusion clauses, said (at 510):

“These decisions clearly establish that the interpretation of an exclusion clause is to be determined by construing the clause according to its natural and ordinary meaning, read in the light of the contract as a whole, thereby giving due weight to the context in which the clause appears including the nature and object of the contract, and, where appropriate, construing the clause contra proferentem in case of ambiguity.”

14. [14]
    Construing Clause 2.4 according to its natural and ordinary meaning, I am satisfied that it relates to special conditions in the Schedule, none of which were found to have been breached by the learned Magistrate. As I have noted, it is accepted by Mr Stubbins that Mr Killeen found an implied term of the contract had been breached. I adopt Mr Cooper’s further submission, that even if I am wrong in that conclusion any ambiguity that the implied term may form part of the special conditions should be read against the appellant in any event. In this regard I am fortified by the observations of Walsh J (with whom Barwick CJ and Kitto J agreed) in H. & E. Van Der Sterren v. Cibernetics (Holdings) Pty. Ltd. (1970) 44 A.L.J.R. 157 at 158:

“The terms of exception clauses must sometimes be read down if they cannot be applied literally without creating an absurdity or defeating the main object of the contract: see Suisse Atlantique Société d’ Armement Maritime S.A. v. N.V. Rotterdamsche Kolen Centrale, [1967] 1 A.C. 361, at p.398. The express “exception clause” includes a clause limiting the time for taking action: see Smeaton Hanscomb & Co. Ltd. v. Sassoon I. Setty, Son & Co. (No. 1), [1953] 1 W.L.R. 1468, at p.1470, and Suisse Atlantique Société d’ Armement Maritime S.A. v. N.V. Rotterdamsche Kolen Centrale, [1967] 1 A.C. 361, at p.431, per Lord Wilberforce. But such a modification by implication of the language which the parties have used in an exception clause is not to be made unless it is necessary to give effect to what the parties must be understood to have intended. I adopt, with respect, the following statement made by Kitto J. concerning such a clause in his judgment in Sydney Corporation v. West (1965), 114 C.L.R. 481, at p.493. It was a dissenting judgment but his Honour’s statement does not conflict with the reasons of other members of the Court in that case and is, in my opinion, in conformity with the reasoning of their Lordships in the Suisse Atlantique case. His Honour said: “The problem is to determine the extent of the protection it gives, bearing in mind two things. One is that stipulations of this character, being framed as a rule by the party to be protected and in any case being inserted in his favour, are to be construed strictly. The other is that on established principles of interpretation an unexpressed qualification is not to be implied unless the implication is necessary, in the sense that it introduces only what is ‘so obvious that it goes without saying’: see per MacKinnon L.J. in Shirlaw v. Southern Foundries (1926) Ltd., [1939] 2 K.B. 206, at p.227.”

15. [15]
    It follows that the appeal of the first defendant must fail on this ground. The only other ground argued was misrepresentation. Mr Cooper submits that by reference to this passage (and others) in Mr Killeen’s judgment:

“On the evidence I am satisfied that there were substantial defects in the vessel at the time of settlement. I am also satisfied that these defects were present when the vessel was inspected by Mr Davis on 16.11.99”

the learned Magistrate found that the appellant either personally or by his agent (Mr Cox, his broker) made certain representations going to the condition of the boat which implicitly were untrue. Mr Stubbins submits that Mr Killeen did not find these representations were untrue, but, in any event liability for actionable misrepresentation is precluded by clause 6 of the contract.

16. [16]
    In view of my primary conclusions, it is not necessary for me to determine this issue.

The arguments of the appellant second defendant

17. [17]
    As I have noted, the grounds of appeal relating to proximity or causation were not pursued, nor was the argument relating to an intervening event. The sole grounds pursued related to Mr Killeen’s findings of fact. Mr Cooper submitted that the appellant had failed to comply with Practice Direction No. 4 of 1997 by filing and serving his outline more than 60 days after the Notice of Appeal. It is common ground that the outline of argument was not served until the 8^th October 2002, some 138 days after the filing of the Notice of Appeal on the 23^rd May 2002. Rule 775 UCPR gives the Court power to strike out appeals for want of prosecution where an appellant fails to comply with a rule or practice direction concerning outlines of argument. There is much merit in Mr Cooper’s argument particularly having regard to the matters to be considered in such applications: per Atkinson J in Tyler v. Custom Credit Corp Ltd. [2000] QCA 178, however, in light of the relatively straightforward grounds pursued by the appellant, I determined to hear the appeal on its merits notwithstanding the egregious delay in filing and serving the outline. Indeed, the outline was not filed until the 10^th October 2002, the day before the hearing of the appeal. Ms Pointing’s arguments can be dealt with quite quickly. An appeal court should only overturn a lower court’s findings of fact and/or drawing of inferences in cases in which it is clear that the inferior court acted on evidence that was inconsistent with established facts or was glaringly improbable: Brunskill v. Sovereign Marine & General Insurance Co. Ltd. (1985) 62 ALR 53, Devries v. Australian National Railways Commission (1993) 177 CLR 472, or mistook the facts or failed to take into account an important consideration: House v. R (1936) 55 CLR 499. Mr Killeen had the advantage of seeing and hearing all the witnesses including the appellant As I have noted, he formed an unfavourable view of the appellant’s evidence and concluded that where there was conflict in the evidence, he accepted the plaintiff and his witnesses in preference to that of the appellants. I can detect no error in the approach taken by the learned Magistrate in this regard, indeed, in light of his overall findings as to credibility, it was perfectly open to him to draw the inferences giving rise to his findings. This appeal must also fail. In both appeals the orders of the Court is:  Appeal dismissed with costs.

18. [18]
    In relation to the application to strike out the appeal, as I have indicated, there is considerable merit in the submissions made by Mr Cooper, but I determined that I would hear the appeal for the reasons stated. In my opinion this is one of those cases in which I should order the appellant second defendant to pay the respondent’s costs of the application, notwithstanding that the application did not succeed. As I have noted, the appellant failed to comply with the Practice Direction to a very significant extent; and really left Mr Cooper’s client no choice in the circumstances but to make the application. In that event, I order that the application to dismiss for want of prosecution be dismissed, but that the second defendant appellant pay the plaintiff respondent’s costs of that application on the standard basis.