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SPJ Nominees Pty Ltd v Black Watch Sports Fishing Boats Pty Ltd[2012] QDC 66

SPJ Nominees Pty Ltd v Black Watch Sports Fishing Boats Pty Ltd[2012] QDC 66

DISTRICT COURT OF QUEENSLAND

CITATION:

SPJ Nominees P/L & Ors v Black Watch Sports Fishing Boats P/L & Anor [2012] QDC 66

PARTIES:

SPJ NOMINEES PTY LTD

(ACN 063 672 864)

(first plaintiff)

and

CONWAY SAVIS

(second plaintiff)

and

ALISON SAVIS

(third plaintiff)

v

BLACK WATCH SPORTS FISHING BOATS PTY LTD

(ACN 106 639 294)

(first defendant)

and

ANDREW WILLIAM JOHNSON

(second defendant)

FILE NOS:

DC 167/2010; SC 47/2010

DIVISION:

Civil

PROCEEDING:

Proceeding pursuant to Supreme Court orders for assessment of damages, interest and costs

ORIGINATING COURT:

Townsville

DELIVERED ON:

24 April 2012

DELIVERED AT:

Townsville

HEARING DATES:

26, 27, 28, 29, 30 March and 2, 3, 4 April 2012

JUDGE:

Dorney QC, DCJ

ORDERS:

  1. That damages are assessed at $133,979.35 (inclusive of interest in the sum of $22,329.89).
  1. All parties have leave to file, and serve, written submissions on costs by 4:00pm on 1 May 2012.

CATCHWORDS:

Assessment of damages – whether issue estoppel arises from default judgment for breach of contract – whether loss of bargain damages available – whether mitigation applicable where third party offers made but not investigated

Ankar Pty Ltd & Arnick Holdings Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549

Blair & Perpetual Trustee Co Ltd v Curran (Adams' Will) (1939) 62 CLR 464

British Westinghouse Electric Company Ltd v Underground Electric Railways Company Ltd [1912] AC 673

Cachia v Isaacs (1985) 3 NSWLR 366

Castle Constructions Pty Ltd v Fekala Pty Ltd [2006] NSWCA 133

Clout & Ors v Klein & Ors [2001] QSC 401

Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500

Electricity Commission of New South Wales v Lapthorne (1971) 124 CLR 177

Grimsey (an infant), by her next friend Grimsey v Southern Regional Health Board (BC 9702895) (Wright J, 30 June 1997)

Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237

Hall v Busst (1960) 104 CLR 206

Hadley v Baxendale (1854) 9 Exch 341

Hoystead v Federal Commissioner of Taxation [1926] AC 155

Johnson v SPJ Nominees Pty Ltd & Ors [2011] QCA 121

Johnson v SPJ Nominees Pty Ltd & Ors [2011] QCA 263

KGK Constructions Pty Ltd v East Coast Earthmoving Pty Ltd [1985] 2 Qd R 13

Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993

Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115

Major Engineering Pty Ltd v Timelink Pacific Pty Ltd [2007] VSCA 228

Mango Boulevard Pty Ltd v Spencer [2010] QCA 207

Masters v Cameron (1954) 91 CLR 353

National Australia Bank Ltd v Maher (No 2) [1999] 3 VR 589

Payszu Ltd v Saunders [1919] 2 KB 581

Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17

Robinson v Harman (1848) 1 Exch 850

Smith v In Shoppe Pty Ltd (No 2) (1976) 33 FLR 107

Sotiros Shipping Inc v Sameiet Solholt (“the Solholt”) [1983] 1 Lloyd’s Rep 605

Stebercraft Pty Ltd v Sutton & Anor (“the Seapride”) [1996] NSWCA 502

Strutt v Whitnell & Anor [1975] 1 WLR 870

Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272

Watson Specialised Tooling Pty Ltd v Stevens [1991] 1 Qd R 85

COUNSEL:

L R Middleton for the Plaintiffs

P J Roney SC with J Creamer for the Defendants

SOLICITORS:

Lee Turnbull & Co for the Plaintiffs

Robinson & Robinson for the Defendants

Introduction

  1. [1]
    This proceeding began in the Townsville Registry of the Supreme Court of Queensland on 29 January 2010. As noted by McMurdo P in Johnson v SPJ Nominees Pty Ltd & Ors[1], the “sad and sorry history of this matter” to that time was set out comprehensively by Margaret Wilson AJA in Johnson v SPJ Nominees Pty Ltd & Ors[2] where the latter noted, amongst other relevant facts, that:
  • on 26 March 2010 default judgment was entered against the first defendant for damages to be assessed;
  • the first defendant filed an application on 7 June 2010 to set aside the default judgment;
  • that application came before Cullinane J on 11 June 2010;
  • in the meantime, on 9 June 2010 default judgment had been entered also against the second defendant for damages to be assessed by the District Court; and
  • Cullinane J treated the application as one by both defendants, dismissing the application and making orders affecting the first defendant (namely, that the assessment against it should proceed in the District Court as well).

: at page 3.

  1. [2]
    According to the Court of Appeal, on the adoption referred to above from [2011] QCA 121 and from their own conclusions, the following relevant matters have already been determined:
  • that the plaintiffs purported to terminate the contract to build a commercial fishing vessel for the plaintiffs, containing a guarantee by the second defendant, because of the first defendant’s failure to remedy certain defaults, namely, its failure to complete construction by the scheduled delivery date and its failure to complete specified items of work by certain dates;
  • that it is clear that the “only issue” now between the parties is the assessment of the plaintiffs’ damages against both defendants; and
  • that the “sole issue” left in dispute is the quantum of damages that the defendants must pay the plaintiffs.

: at [1], [5] and [6].

  1. [3]
    But simply to state it so belies the complexity of what became an 8 day trial. The complexity arises from the matters raised in the Amended Statement of Issues filed by the Defendants on 14 October 2011. The original Statement of Issues had been filed pursuant to procedural orders made by Durward SC DCJ on 15 March 2011 (the relevant order not being varied on appeal). That Amended Statement of Issues, besides raising matters such as damage caused to the vessel by the plaintiffs, the plaintiffs’ failure to mitigate and contests about items of damage claimed, raised other matters that might, at least on first reading, appear to be directed towards issues of liability, including:-
  • actions taken by the plaintiffs which the plaintiffs “ought to have but failed to take into account in their actions” (in a context where those actions potentially included termination);
  • a failure by the plaintiffs to apply obligatory dispute resolution procedures, alleged to be a matter which the plaintiffs “ought to have but failed to take into account in their actions”;
  • at the time of the termination of the contract, the plaintiffs themselves being in breach of contract and “not being at the time able to complete it”, such that, in the premises, the plaintiffs “did not suffer the claimed losses in consequence of” the first defendants’ “defaults”; and
  • claims for loss being beyond that which, pursuant to specified clauses of the contract, the plaintiffs are entitled (being restricted only to the re-supply of the goods and services to the requisite standard and quality), such that, in the premises, the claims made “are at law excluded by operation of the terms of the contract”.

In addition, it is clear from that Amended Statement of Issues that the defendants allege that the contract was “varied”.  This is despite there being no variation pleaded in the Statement of Claim.

  1. [4]
    As can be seen, this proceeding has not ended up as a simple determination of what items of damage might be recoverable in the directed “assessment” to be undertaken by this Court.

Background

  1. [5]
    The defendants, through their Senior Counsel, handed up a Chronology for the purpose of submissions. Since the plaintiffs’ counsel took no great issue with that Chronology, and since the facts led in evidence generally supported it, I will use it as a basis for outlining the background (save where it canvasses contested issues of fact for my determination).
  1. [6]
    Despite the Vessel Building Contract (“the Agreement”) [executed by the respective builder (the first defendant, “Black Watch”) and the guarantor (the second defendant) on 2 October 2008 and by the buyer(s) (the first plaintiff and the second and third plaintiffs), respectively, on an unstated date, and on 1 October 2008)] through Clause 18.1(b) stating that the Agreement records “the whole of the agreement” and “concludes all negotiations”, it was common ground that, while the parties had nominated the scheduled delivery date, by Clause 2.1, to be 15 March 2009, no party expected that delivery date to be reached until the beginning of the second half of 2009 (i.e. July/August).  It should be remarked at this point that it was the solicitors for the plaintiffs who drafted the relevant Agreement.
  1. [7]
    Part of the delay was caused by the plaintiffs’ changes to the initial agreement replacing the Zeus drives for the diesel engines for the Vessel, involving the first use of these relatively recent drives for such engines. So much is expressly comprehended by Clause 10.3 of the Agreement, although it is expressed in terms of a later timing (of changing back to “conventional shafts and rudders”).
  1. [8]
    It is also important to note that, despite Clause 14.1 of the Agreement stating that any variation of, or modification or addition to, the Agreement should be made in writing and executed by the parties (or their duly authorised representatives), variations were undertaken by agreement without resort to writing. As noted above, this matter is complicated by the absence of any variation being pleaded in the Statement of Claim. But, although it cannot affect liability, I have accepted that it is the varied Agreement that is relevant otherwise, estoppel apart.
  1. [9]
    Work on construction of the vessel began in the latter part of the second half of 2008. Progress claims were made, and paid, such that by the date of termination $472,998.90 had been paid by way of such progress payments. I find that the progress payments were scheduled in a way which did not reflect the value of the work performed to the date of payment, merely the completion of the specified items of work. Further, it is not in dispute that the plaintiffs had paid $36,348.70 for electronic equipment to be installed which was additional to the Agreement price of $621,000.00 “inclusive” of GST (despite Clause 6.1 stating that it was to be “exclusive” of GST – although nothing rides on that difference).
  1. [10]
    Additionally, the plaintiffs paid $121,990.00 for 2 Cummins engines, despite the price under the Agreement, by Schedule 2, including the cost of engines.
  1. [11]
    I will deal with various events that occurred from early October 2008 until well after the proceeding began in early 2010, later.
  1. [12]
    For the moment, it suffices to return to the allegations in the Statement of Claim about how this Agreement came to be terminated.
  1. [13]
    First, paragraph 2 of the Statement of Claim, by sub-paragraphs (g) and (h), sets out as relevant parts of the Agreement Clauses 9.1 and 9.2. The recitation is not entirely accurate; but does it convey sufficiently the import of those particular sub-clauses.
  1. [14]
    Leaving to one side the allegations about the Guarantee incorporated into the Agreement (there being no argument that the damages assessed should not differ as between defendants), paragraphs 4, 5 and 6 of the Statement of Claim allege the giving of a Default Notice on 26 August 2009, the failure to comply with that Default Notice, and the giving of a Notice of Termination dated 11 September 2009.
  1. [15]
    What is uncontroversial is the allegation in paragraph 7 of the Statement of Claim to the effect that, following termination of the Agreement, on 12 September 2009, the plaintiffs took possession of the relevant vessel (in its then state).
  1. [16]
    It is also not controversial – although the effect of the taking of such acts by the plaintiffs is – that the electronic equipment was sold over time on commission for $16,925.44, that the 2 Cummins engines were sold on 18 January 2011 for $27,000.00, and that the hull of the vessel was sold for $70,000.00 (following payment of a deposit of $20,000.00 on 19 April 2010, a further $10,000.00 on 28 April 2010, and the remaining $40,000.00 on 3 May 2010, in circumstances where a Tax Invoice dated 17 April 2010 was raised by the plaintiffs and invoiced to Mr Vic Micallef, for the full amount, and where a Deed executed by the plaintiffs and Mr Micallef was entered into on 28 April 2010).

Legal effect of default judgments

  1. [17]
    Before considering the actual terms of the allegations in the Statement of Claim, it is necessary to canvass the legal position that has arisen here. Each default judgment recited that the damages were “to be assessed upon the Plaintiff’s Statement of Claim”.
  1. [18]
    The Amended Statement of Issues was chosen as the relevant pleading rather than, say, a Defence limited to the issue of damages. Whether that would have produced any different kind of “pleading” probably does not matter, but the substance of the alleging of “defence” issues means that this Court must focus on what, in particular, paragraphs 2(g), 2(h), 4, 5, 6 and 7 of the Statement of Claim mean in terms of what is open to the defendants to contest.
  1. [19]
    Accordingly, it is necessary to look at what is encompassed by the principle of issue estoppel that arises from the default judgments given here (where they were made conditionally on an assessment of damages to be undertaken).

Finality of judgment

  1. [20]
    In Spencer Bower and Handley’s Res Judicata[3] it is stated that the relevant finality for the purposes of res judicata cannot be based on a judgment for payment of an amount “to be judicially determined” by the tribunal, or some person acting within its authority, such as “an interlocutory judgment for damages to be assessed”: at [5.08].  That statement in that text referred, by way of a footnote, to Electricity Commission of New South Wales v Lapthorne[4].  The page reference is to the major judgment of Barwick CJ, with whom McTiernan J agreed. The passage in question had, as its premise, the circumstance where damage is the gist of the cause of action, with the result that liability could not relevantly be divorced from the assessment of damages as a separate and independent matter.  But it is also clear from the discussion by Barwick CJ of Hall v Busst[5], particularly from the judgment of Sir Owen Dixon in that case, that a case of a breach of contract where damage is not the gist may well lead to a conclusion of finality in the judgment given: at 185.  Additionally, it is clear that Walsh J was of the view that Hall v Busst applied to the case in question (in any event recognising that he was in dissent).
  1. [21]
    Lapthorne has been recently considered by the Court of Appeal in Victoria.  Nettle JA, speaking for the court, in Major Engineering Pty Ltd v Timelink Pacific Pty Ltd[6], after referring to the preponderance of authority in Australia being that, in cases which damage is not the gist of the cause of action, a judgment for “damages to be assessed” is a final order, and referring, amongst other decisions, to Lapthorne, as well as an earlier decision of that Court of Appeal in National Australia Bank Ltd v Maher (No 2)[7], held that, while there were some suggestions about later High Court authority, as well as decisions of the Federal Court, which might be seen to be inconsistent, where the claim is one for breach of contract, and accordingly the position is controlled by Hall v Busst, a judge’s declaration of breach of contract is a final order: at [6]–[11].
  1. [22]
    In New South Wales, the Court of Appeal in Smith v In Shoppe Pty Ltd (No 2)[8], through Hutley JA expressly, Samuel JA impliedly, and Mahoney JA indifferently, held that the test is whether the judgment or order as made finally disposed of the rights of the parties and that that test is the one that had been applied in Lapthorne: at 114.
  1. [23]
    Therefore, where, as here, the order for judgment with damages to be assessed applies to a cause of action based upon breach of contract, the necessary finality is established.

Issue estoppel

  1. [24]
    The learned authors of Res Judicata contend that a res judicata estoppel may constitute either a cause of action estoppel or an issue estoppel: at [1.05].  
  1. [25]
    Before moving on to consider what kind of estoppel may apply here, it is important to note that the same authors state that the decision “need not be correct in law or fact”: at [1.14]. This, as they note, gives effect to the policy of the law that the parties to a judicial decision should not afterwards be allowed to relitigate the same question, even though the decision may be wrong. Quoting from one of the decisions relied upon, they state that:

“The doctrine (of res judicata) comes into its own only when the decision is wrong; if it is right it merely serves to save time and cost”: also at [1.14].

  1. [26]
    That last concern arises here because it is strongly arguable that one of the grounds relied upon in the Default Notice of 26 August 2009 is that the first defendant had failed to complete the construction of the Vessel “as agreed” by the relevant delivery date as appeared in the Schedule. As already observed, that was a date that both parties, at trial, agreed could not be met, partly because of an agreement to vary the terms of the written Agreement and the “late” delivery of the 2 Cummings engines by the plaintiffs.
  1. [27]
    There is nothing which has been brought to this Court’s attention which suggests that a default judgment which is a final judgment, as here, does not give rise to a consideration of issue estoppel. The contest is as to the boundaries of the liability issue which is concluded by these default judgments.
  1. [28]
    The Queensland Court of Appeal in Mango Boulevard Pty Ltd v Spencer[9], through the judgment of Fraser JA, not only conclusively determined that the matter there was one of issue estoppel but also that an order in the nature of a default judgment attracts “a much more restricted operation” in relation to any estoppel than does a judgment pronounced after a hearing on the merits, relying upon the Privy Council decision of Kok Hoong v Leong Cheong Kweng Mines Ltd[10]. Consequently, in determining what is the “precise matter (that) has already been necessarily and directly decided”, the circumstances “must always be scrutinised with extreme particularity for the purpose of ascertaining the bare essentials of what it must necessarily have decided”.  Referring to references made by the Court of Appeal, in an earlier decision, to Kok Hoong, Fraser JA quoted the requirement that the default judgment “can estop only what must ‘necessarily and with complete precision’ have been thereby determined”: also at [124].
  1. [29]
    Earlier in Mango Boulevard, Fraser JA referred to observations by Dixon J (as he then was) in Blair & Perpetual Trustee Co Ltd v Curran (Adams' Will)[11].  The important aspects for present purposes of those observations are:
  • the judicial determination can directly involve an issue of fact or of law;
  • the estoppel covers only those matters which the judgment necessarily establishes as the legal foundation or justification for its conclusion;
  • nothing but what is legally indispensable to the conclusion is thus finally closed or precluded;
  • in matters of fact, the issue estoppel is confined to those ultimate facts which form the ingredients in the cause of action (that is, the title to the right established);
  • the judicial determination concludes, not merely as to the point actually decided, but as to a matter which it was necessary to decide and which was actually decided as the groundwork of the decision itself, though not then directly the point at issue;
  • matters cardinal to the latter contention cannot be raised if to raise them is necessarily to assert that the former decision was erroneous;
  • a fact fundamental to the decision arrived at in the proceeding and the legal quality of the fact must be taken as finally and conclusively established – but matters of law or fact which are subsidiary or collateral are not covered by the estoppel (such that findings, however elaborate and formal, which concern only evidentiary facts and not ultimate facts forming the very title to rights give rise to no preclusion);
  • decisions upon matters of law which amount to no more than steps in a process of reasoning tending to establish or support the proposition upon which the rights depend do not estop the parties; and
  • the difficulty in the actual application of such conceptions is to distinguish the matters fundamental or cardinal to the judgment, or necessarily involved in it as its legal justification or foundation, from matters which even though actually raised and decided as being in the circumstances of the case the determining considerations, yet are not in point of law the essential foundation or groundwork of the judgment.

: at 531-533.

  1. [30]
    In the earlier Full Court decision in Queensland of KGK Constructions Pty Ltd v East Coast Earthmoving Pty Ltd[12]. McPherson J (as he then was), with whom Campbell J and Sheahan J agreed, held, on the then Rules in force governing pleadings, that a difficulty in which a defendant may find himself placed if he fails to plead to a plaintiff’s Statement of Claim is that, unless denied specifically or by necessary implication, every allegation in the Statement of Claim is taken to be admitted; and, hence, a defendant who fails to deliver a defence is taken to have admitted the allegations of fact in the Statement of Claim, such that the default judgment that follows is capable of giving rise to an estoppel per rem judicatam, referring to Kok Hoong: at 16. There is no similar rule in the Uniform Civil Procedure Rules 1999 (Qld); but, even so, it is difficult to accept that the allegations concerning liability, properly understood, can now be contested.
  1. [31]
    Before moving on to consider how the principles discussed are applicable to the judgment given by Cullinane J in this case, some attention needs to be paid to what inferences, or implications, can be drawn from the material available.
  1. [32]
    In Res Judicata, the learned authors state that a finding may be inferred from the judicial act in question; but, after noting that this can be difficult “if there are no pleadings”, further state that it was decided as long ago as 1747 that an issue “necessarily decided”, although not in express terms, could not be raised again between the parties, noting, however, that the “inferred” determination “must be reasonably clear”: at [8.08].  From the footnotes utilised, examples of the application of such conclusions include: that judgment for a defendant in an action for trespass to land makes title res judicata in an action for a declaration concerning it; and that a decision that a proceeding is not an abuse of process inferentially decides that the plaintiff has standing.  The text directly supports the proposition that where the decision necessarily involves a judicial determination of some issue of law or fact, because it could not have been legitimately or rationally pronounced without determining or assuming a particular answer, that determination, though not expressed, is an integral part of the decision: at [8.08].  But the text also warns that there is, otherwise, no such thing as an issue estoppel “by implication”: also at [8.08].
  1. [33]
    Such an estoppel by implication must, nevertheless, be distinguished from implications of the kind canvassed by the New South Wales Court of Appeal in Cachia v Isaacs[13].  There, there were no reasons whatever stated by the tribunal in a case where the court was concerned with the scope of any issue estoppel between the parties as a consequence of the tribunal’s determination.  Although Kirby P held that the issue conclusively determined was defined by the claim, the order and the decision, it also involved “the issues necessarily inferred as legally indispensible”: at 370.  Contrastingly, Hope JA held that the case in question was one whereby a fact essential to the plaintiff’s case was “assumed”, holding that this seemed to bring it squarely within the decision in Hoystead v Federal Commissioner of Taxation[14].  In a later extract from Hoystead, Hope JA picked up the principle of setting to rest rights of litigants as applying to a case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed – because in that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken: at 382.  McHugh JA, in dissent in the application of the issue estoppel, held that parties are also bound not only by decisions on the issues which they expressly litigate “but by any implied decisions on issues which are legally necessary to the success or failure of a claim or defence”, also rely upon Hoystead: at 386-387.   See, also, a discussion of these issues by Holmes J (as she then was) in Clout & Ors v Klein & Ors[15].
  1. [34]
    Although in the end perhaps of marginal relevance only, the decision of the Supreme Court of Tasmania in Grimsey (an infant), by her next friend Grimsey v Southern Regional Health Board[16] addressed similar concerns to the ones here. There, judgment was entered, “by consent”, “for damages to be assessed”.  Wright J noted that no case was referred to by counsel in which there had been a discussion as to the proper construction to be placed upon an interlocutory judgment for “damages to be assessed”: at 10.  After noting that such a formula is provided for a default judgment in respect of unliquidated claims, and that it was the formula adopted by the parties in proceedings before him, Wright J held that, if the facts supporting the general issue of liability had been disputed in the defence, it would be easy to appreciate that a judgment in such terms would have “nullified such denials of fact”: also at 10.  Unfortunately for present purposes, Wright J went on to distinguish between that case (which was a consent judgment) and a default judgment, such that his later observations are not of much utility here, apart from supporting an outcome that makes integral liability allegations in a Statement of Claim incontestable.
  1. [35]
    Lastly, dealing with the scope of an issue estoppel created by a default judgment, Res Judicata contends that such scope should not be governed by whether, under the rules of common law pleading, the issue could have been raised by a traverse, the general issue, or a plea in confession and avoidance, because such matters do not depend on technicalities: at [8.15].  Even so, the text contains the elaboration that, while a judgment in favour of the plaintiff, whether it be by default or otherwise, establishes the plaintiff had a cause of action and each essential element of it, it will not negative any matter extraneous to that cause of action which had to be raised by a plea in confession and avoidance, requiring proof by the defendant of additional facts: also at [8.15].

Application to facts

  1. [36]
    Clause 17.1 of the Agreement states that all notices required or permitted under the Agreement “shall be in writing and deemed to have been received” according to certain specified rules.
  1. [37]
    When Clause 17.1 is taken with Clause 9.2 it is, if the matter cannot be put in contest (as here), open to this Court to find – provided the allegations in the Statement of Claim can support it – a preclusion of any contention by the defendant that the relevant notice to terminate was ineffective, with the consequence (reciting the terms of Clause 9.2) that the “Agreement shall terminate” unless the builder makes good and remedies the default before the expiration of the relevant period.  
  1. [38]
    But the exact scope of what Clauses 9.1 and 9.2 cover must be precisely determined. In order to so determine, the following contractually defined steps relevant to termination need to have been properly taken:
  • there is a deemed default under Clause 9.1 of the Agreement if any act or omission constituting a serious and material breach of the Agreement on the part of the builder occurs;
  • in the event of such a deemed default under Clause 9.1 (which requires the “serious and material” breach to have occurred), the buyer can give 7 days’ notice in writing to the builder of an intention to terminate under Clause 9.2;
  • upon the expiration of that period of 7 days (bearing in mind the deemed receipt under Clause 17.1), only if the builder has not made good and remedied the default before the expiration of that period of 7 days does the Agreement terminate by solely the force and effect of Clause 9.2; and
  • finally, by Clause 9.3, upon such termination the buyer is entitled to exercise any one or more of the remedies available it under the Agreement or at law (being particularly entitled to proceed by exercising a right to remove the vessel).
  1. [39]
    According to paragraphs 4, 5, 6 and 7 of the Statement of Claim, the order of events was as follows:
  • on 26 August 2009 the plaintiffs “gave” a Default Notice “pursuant to” Clause 9.1 of the Agreement “to” the defendants asserting a failure to complete the construction as agreed by the delivery date in the relevant Schedule and a failure to complete specified items of work by specified dates (the latest of which was 21 August 2009), and stating that the first defendant was to remedy such “defaults” within 7 days from the date of the notice, “failing which” it was the plaintiffs’ “intention to exercise their rights under Clause 9.2” of the Agreement;
  • the first defendant failed to comply with the Default Notice “in that it failed to undertake any or all of the requiredworks to the Vessel in terms of the Default Notice” (emphasis added);
  • on 11 September 2009 the plaintiffs gave a Notice of Termination “terminating” the Agreement “as a consequence” of the failure to remedy the “defaults”; and
  • following termination, on 12 September 2009 the plaintiffs took possession of certain components or parts of the Vessel from the first defendant’s premises.
  1. [40]
    It can be immediately seen that there is significant tension between the terms of Clauses 9.1, 9.2 and 9.3 and the allegations in paragraphs 4, 5 and 6 of the Statement of Claim. First, and most importantly, under Clause 9.2 the Agreement ipso facto terminates if the default continued to the end of the notice period.  This is because of the fact that under that particular sub-clause the notice in writing requires the buyer to state its “intention” to terminate.  Hence, a buyer exercising its entitlement under Clause 9.2 of the Agreement need not give any Notice of Termination.  In fact, it would be redundant.  Secondly, the Default Notice of 26 August 2009 cannot be given “pursuant to” Clause 9.1 because Clause 9.1 does not give rise of itself to any entitlement as such to give such a notice.  The only act that accords with Clause 9.2 is the allegation in paragraph 4(c) of the Statement of Claim that the buyer gave 7 days’ notice in writing of its intention to terminate the agreement because of an “event of default” by the builder. 
  1. [41]
    Because of the principles concerning issue estoppel, and the accepted rule that a defendant cannot contest the claims against the defendant (and only those claims) except where there is a claim for unliquidated damages when all that is taken to be “admitted” is liability (see Watson Specialised Tooling Pty Ltd v Stevens[17]), the defendants cannot contest the integral allegations of fact contained in paragraphs 4, 5 and 6 of the Statement of Claim, noting that Clauses 9.1 and 9.2 have been pleaded reasonably accurately in paragraph 2 of it. 
  1. [42]
    But how, then, is the actual “issue” determined in favour of the plaintiffs formulated with complete precision, bearing in mind both inferential determinations (sometimes classified as a necessary implication) and the actual matters fundamental or cardinal to the judgment (or necessarily involved in the judgment as its legal justification or foundation)?

Content of issue estoppel

  1. [43]
    Firstly, Clauses 9.1 and 9.2 of the Agreement must be taken to be understood in the way alleged in sub-paragraphs 2(g) and 2(h) of the Statement of Claim.
  1. [44]
    Secondly, even if sub-paragraphs 4(a) and 4(b) were to be seen as being no more than part of the reasoning supporting the conclusion that the Statement of Claim alleges, the introductory words to paragraph 4 and the content of sub-paragraph 4(c) must be seen to be necessarily involved in the legal justification or foundation for the breach of contract alleged. Although it is inconsistent with the terms of Clause 9.1 of the Agreement that notice is given “pursuant to” it, the combination of the giving of notice in writing on 26 August 2009 (called “the Default Notice”) in terms that the first defendant was to remedy the “defaults” identified in the earlier sub-paragraphs and of the plaintiffs stating in that Default Notice that it was their “intention” to exercise their “rights” under Clause 9.2 of the Agreement, in the circumstance of the first defendant not remedying the default within seven days from the date of the Default Notice, raises a matter which is fundamental, or cardinal, to the default judgment. That is, the plaintiffs based their entitlement to termination on the exercise of the rights given to them under Clause 9.2 of the Agreement.
  1. [45]
    Thirdly, the allegations in paragraph 5 of the Statement of Claim then provide the trigger for the contractually imposed termination which the proper construction of Clause 9.2 of the Agreement yields. As such, it again is fundamental or cardinal, but the “failure” is limited to the “works” [which can only be a reference to paragraph 4(b)].
  1. [46]
    Fourthly, the fact that a Notice of Termination was given in writing on 11 September 2009 by the plaintiffs can be seen in one of two ways. The first way would be that it is simply redundant because the contract has already been contractually determined (as just outlined). The second way is to see it as an alternative allegation, contending that, as a consequence of the failure of the first defendant to remedy the “defaults” particularised in the Default Notice [i.e. those put forth in both paragraphs 4(a) and 4(b)], the plaintiffs relied upon those matters as a basis for termination. The difficulty about the second way is that it is not expressly alleged to be in the alternative. And the problem with the first way is that it is difficult to conclude that any allegation, particularly one not put in contest, has no purpose. In the end, I am inclined to interpret the allegations in paragraph 6 of the Statement of Claim as proposing an alternative method of termination. It will be necessary to develop the outcome further (later on).
  1. [47]
    Fifthly, paragraph 7 of the Statement of Claim then can be seen to be simply an exercise of rights following termination. On the acceptance that the plaintiffs had exercised their entitlement to terminate under the provisions of Clause 9.2 of the Agreement, then the taking of possession would simply have been an exercise of further rights under 9.3 of the Agreement. If it is to be seen in terms of the alternative discussed about (namely, a termination due to a breach for which the contract made provision), then it is simply a consequence of the termination of the Agreement and the exercise of the plaintiffs’ undoubted rights that the plaintiffs had under Clause 4.1 of the Agreement whereby the vessel became and remained the buyer’s property.
  1. [48]
    Dealing with the matter of whether a pleading in the alternative could give rise to some ambiguity or uncertainty in the identification of the content of the issue estoppel, it is my view that a judgment on liability with damages to be assessed where there are potentially alternative grounds for determining liability should not lead to a plaintiff, in that position, being deprived of a reliance on its best case, particularly given the circumstances surrounding the entry of a default judgment.
  1. [49]
    Accordingly, I conclude that the content of the issue estoppel is that the plaintiffs have terminated the Agreement by the exercise of their rights, or entitlements, under Clause 9.2 of the Agreement by the giving of the Default Notice (being a notice in writing) on 26 August 2009. It could not be put in dispute, as a fact, that that Default Notice was delivered to the first defendant on that date: see the introductory words to paragraph 4 of the Statement of Claim and, see, in any event, paragraph 22 of the affidavit of the second plaintiff filed 15 April 2011. The fact that the second defendant does not recall receiving it, on behalf of the first defendant, is not material, since the deeming provisions of Clause 17 of the Agreement deem such a receipt. Even if it is contestable, a non-recollection in the other circumstances just canvassed leads me to find, as a fact, that the Notice was received. Furthermore, it is not a matter of implication or inference that, for instance, the first defendant was in receipt of the Default Notice in circumstances where the pleading expressly alleges that it was “g(iven)” “to” it. Alternatively, the termination occurred by the giving of a Notice of Termination which relied on the failure to remedy the specified “defaults”, which included a “failure to complete the construction” (even if that is factually “wrong”).
  1. [50]
    That determination raises the further matter of whether, on that estoppel, the plaintiffs are entitled to claim “loss of bargain” damages.

Right to claim “loss of bargain” damages

  1. [51]
    As held by the High Court in Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd[18], under general contractual principles, an innocent promisee can terminate the contract, and recover loss of bargain damages, where there is repudiation, or a fundamental breach, or a breach of condition – i.e. a breach of an essential term: at 259 [58].  As the High Court went on to hold, under these principles, it is possible by express provision in the contract to make a term a condition, even if it would not be so in the absence of such provision – not only in order to support a power to terminate the contract, but also to support a power to recover loss of bargain damages: also at 259 [58].
  1. [52]
    But the fact of termination of a contract in the exercise of a contractual power is not, according to Mason J in Progressive Mailing House Pty Ltd v Tabali Pty Ltd[19], an affirmation of the contract “which debars the innocent party from suing for damages for breach on the ground of repudiation or fundamental breach”, because the termination, so far from insisting on performance by the party at fault, brings to an end that party’s obligation to perform the party’s promise in specie: at 31.  Also in Progressive Mailing House, Deane J held that, where a contractual right to terminate for past breach and the common law right to terminate it for repudiation or fundamental breach exist concurrently, the reliance upon the contract involved in the exercise of the contractual right to terminate “will not preclude the recovery of damages for loss of the future benefit of the contract by reason of repudiation or fundamental breach unless the contract expressly or impliedly so provides”: at 56.
  1. [53]
    In Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd[20] (“Sanpine”) the plurality of Gleeson CJ, Gummow, Heydon and Crennan JJ considered the relevant legal principles of termination for breach.  After referring to the use of the term “repudiation” in several different senses, the judgment held that it may refer to any breach of contract which justifies a termination by the other party, contrasting that with conduct which evinces an unwillingness or an inability to render substantial performance of the contract (where it is used in a relevantly different sense, which may be termed renunciation): at 135-136 [44]).  Turning to the matter of classifying breaches which justify termination, the plurality noted that there were at least two such circumstances in the case in question. They identified the first as where the obligation with which there had been a failure to comply had been agreed by the contracting parties to be essential – noting that such an obligation is “sometimes” described as a condition.  It held that what was of immediate significance, there, was that the question was one of construction of the contract [being divined from the common intention of the parties, expressed in the language of their contract, understood in the context of the relationship established by that contract and (at least in certain cases such as the one under consideration there) the commercial purpose it serves] in determining whether any breach of the term would justify termination as being “essential”: at 138 [48].  The plurality then moved to consider the second relevant circumstance, holding that it applies where there has been a sufficiently serious breach of a non-essential term: at 138 [49].  It was then held that the practical utility of a classification which includes intermediate terms, and the consequent greater flexibility of which the court spoke in Ankar Pty Ltd & Arnick Holdings Ltd v National Westminster Finance (Australia) Ltd[21], appeared from several consequences.  They were identified as: first, the interest of justice being promoted by limiting rights to rescind to instances of serious and substantial breaches of contract; and, secondly, the facilitating of just outcomes in cases where the breach is of a term which is inessential: at 139 [52].
  1. [54]
    Concerning the application of this doctrine respecting intermediate terms, the plurality in Sanpine stressed that it needed to be recognised that, at the time a contract is entered into, it may not be possible to say that any breach of a particular term will entitle the other party to terminate, noting that some breaches of a term may be serious enough to have that consequence and that such breaches are sometimes described as “going to the root of the contract”, being a conclusory description that takes account of the nature of the contract and the relationship it creates, the nature of the term, the kind and degree of the breach, and the consequences of the breach for the other party: at 140 [54].  Finally, the plurality stated that, since the corollary of a conclusion that there is no right to termination is likely to be that the party not in default is left to rely upon a general right to damages for breach only, the adequacy of damages as a remedy may be a material fact in deciding whether the breach goes to the root of the contract: also at 140 [54].

Conclusions concerning loss of bargain damages

  1. [55]
    Clause 9.1 of the Agreement contractually “deems” a default if there is any act or omission which constitutes “a serious and material breach”. In turn, Clause 9.2 can be triggered in the event of such a default and entitles the buyer to terminate.
  1. [56]
    Given the analysis here about what can be put in contest as outside the actual content of the issue estoppel, I conclude that the reliance by the plaintiffs on paragraphs 4(c) and 5 of the Statement of Claim is precluded from being put in contest by the defendants. That is, the defendants are estopped from contending that the plaintiffs did not exercise their rights, or entitlements, under Clause 9.2 of the Agreement.
  1. [57]
    That conclusion must mean that the issue estoppel covers the relevant default being characterised as “a serious and material breach”. The consequence of that must be that the plaintiffs have relied upon an express provision which has deemed the default to be in the nature of a “condition” which allows for the recovery of loss of bargain damages. Such a construction, consistently with Sanpine, is available here, given the terms in which it is expressed and the commercial purpose it serves.
  1. [58]
    In the circumstances of this case, were that conclusion not to be correct, then the contractual right to terminate pursuant to clause 9.2 of the Agreement would simply be merely that. Such an outcome would then require the analysis of whether the common law right to terminate for fundamental breach, existing concurrently, could be held to exist on the principles canvassed in Sanpine, noting, as well, the alternative claim of termination in paragraph 6 of the Statement of Claim.
  1. [59]
    For reasons which will be detailed later, I find that the specified items of work set out in the Default Notice were items of work that had been agreed between the authorised representatives of both the plaintiffs and the first defendant to be completed by the mutually agreed dates. I further find that the first defendant did not in any way attempt to actually complete such specified items of work by the end of period that the Default Notice defined. Therefore, on the analysis derived from Sanpine, taking account of the nature of the Agreement and the relationship it created between the plaintiffs and the defendants, the important (by then) nature of the terms of the Agreement covering such items of work and the kind and degree of the breach demonstrating a failure to complete the various items (with the consequence that the plaintiffs concluded that the contract was not being performed according to its terms for their benefit), would have made a mere right to damages flowing from such a breach inadequate.  That would establish that the breach in question went to the root of the contract because it did deprive the plaintiffs of a substantial part of the benefit to which they were entitled (namely, a timely completion of the construction of the Vessel, even apart from the issue estoppel precluding a contest about the “failure to complete” being able to be relied upon).
  1. [60]
    Hence, by either gateway, it is open to the plaintiffs to seek loss of bargain damages.
  1. [61]
    Before the court can direct its attention to what loss of bargain damages may entail in this proceeding, it is necessary to determine many other matters that were raised in the Amended of Statement of Issues filed by the defendants.

Contractual limitations on recovery

  1. [62]
    Here, the defendants’ submissions focussed almost entirely upon whether Clauses 12.8 and 12.12 of the Agreement - contended to be exclusion clauses - could be invalidated, or read down, or rendered inapplicable by reason of the doctrine of fundamental breach, or precluded by reason of the so-called “deviation rule”. But my primary concern is as to whether those clauses are even triggered in the circumstances. Only then could they be subject to the principles enunciated in Darlington Futures Ltd v Delco Australia Pty Ltd[22].
  1. [63]
    To the extent to which Darlington Futures is relevant, it is important that such clauses are construed according to their natural and ordinary meaning and are to be read in light of the contract as a whole (which gives weight to the context in which such clauses appear, including the nature and object of the contract itself): at 510.
  1. [64]
    Taking clause 12.8 of the Agreement first, it has as its premise the application of Clause 12.1. Clause 12.1 seeks to provide a “warranty” and “guarantee” for any defects in materials or poor workmanship, stated to apply for a period of 12 months from the “Actual Delivery Date”, and stated to be the “Warranty Period”. It is sufficiently clear that its natural and ordinary meaning in the context in which it appears is that it applies to a completed vessel and, perhaps more importantly, applies where the contract has not been terminated, but completed.
  1. [65]
    Also, it is not a case of ambiguity; it is simply a case where Clause 12.1 does not apply in this particular proceeding.
  1. [66]
    Consequently, clause 12.8 also becomes inapplicable.
  1. [67]
    Turning, then, to Clause 12.12 of the Agreement, it must be similarly construed. The liability in question under that provision is “for loss or damage” “arising from the construction and sale” (emphasis added) of the vessel to the buyer in terms of the Agreement.  In summary, the identified clauses relied upon by the defendants have not been triggered in the circumstances of this termination.

Dispute resolution procedures

  1. [68]
    Although the Amended Statement of Issues specifically raised what it called the “obligatory dispute resolution procedures” under Clause 15 to the Agreement as pointing to a failure on the plaintiffs’ part which they ought to have taken into account in their actions but failed to do so [paragraph 10 (e)], it is not addressed by the defendants in any meaningful way in the submissions made, either orally or in writing.
  1. [69]
    Such an approach is, perhaps, unsurprising given that Clause 15.1 is, as the introductory words announce, “save as expressly expressed to the contrary in this Agreement”. Quite obviously, reliance upon Clause 9.2, while it might otherwise be potentially characterised as being a “dispute”, makes, particularly where there was no response to the Default Notice by the first defendant, as builder, it difficult to see how it could possibly be triggered in the circumstances considered in this proceeding.
  1. [70]
    Thus, I do not intend to deal with this matter any further.

Remaining matters

  1. [71]
    The remaining matters cover areas that are commonly considered to be ones which arise in cases such as this of early termination. They deal with mitigation issues, the actual value of the work performed, what remained to be completed on the Vessel under the Agreement and whether certain losses would have been suffered in any event. These will now be dealt with in turn.

Mitigation

  1. [72]
    Any consideration that this matter must start with the “ruling principle” with respect to damages at common law for breach of contract, canvassed recently by the High Court in Tabcorp Holdings Ltd v Bowen Investments Pty Ltd[23]. There the court confirmed the meaning of that principle by restating what was held by Parke B in Robinson v Harman[24] to the effect that the rule is that where a party sustains a loss by reason of a breach of contract the party is, so far as money can do it, to be placed in the same situation with respect to damages as if the contract had been performed: at 286 [13].
  1. [73]
    In 1912, Viscount Haldane LC, speaking for the House of Lords in British Westinghouse Electric Company Ltd v Underground Electric Railways Company Ltd[25] noted that that principle is qualified by a second principle, which imposes on plaintiffs “the duty of taking all reasonable steps to mitigate the loss consequent on the breach”, debarring the plaintiffs from claiming “any part of the damage which is due to (the plaintiffs’) neglect to take such steps”: at 689.  Viscount Haldane LC, citing relevant authority, added that the person who has broken the contract is not to be exposed to additional cost “by reason of the plaintiffs not doing what they ought to have done as reasonable men, the plaintiffs not being under any obligation to do anything otherwise than in the ordinary course of business”: also at 689.  
  1. [74]
    Sir John Donaldson MR in Sotiros Shipping Inc v Sameiet Solholt (“the Solholt”)[26] elaborated on Viscount Haldane LC’s statement of principle concerning mitigation by noting:-
  • while a plaintiff is completely free to act as the plaintiff judges to be in the plaintiff’s best interests, a defendant is not liable for all loss suffered by the plaintiff in consequence of the plaintiff so acting;
  • a defendant is only liable for such part of the plaintiff’s loss as is properly to be regarded as caused by the defendant’s “breach of duty”;
  • it is trite law that a buyer has an unfettered right, in a case for the sale of a vessel which called for a delivery not later than a specified date and failing which the buyer has a right of cancellation, to affirm the contract of sale or to cancel it, with no question of mitigation arising at that stage; and
  • whether a loss is avoidable by reasonable action on the part of the plaintiff is a question of fact, not law.

: at 608.

  1. [75]
    In The “Solholt” Sir John Donaldson MR, in dealing with the argument that the buyers failed to take reasonable steps to mitigate their loss - because it was reasonable to expect them to seek to enter into a new contract for the purchase of the vessel and that, had they done so, they would have succeeded in purchasing it at the contract price, thereby extinguishing their loss - noted that it had been conceded that if, for example, the buyers “for good reason had decided that the ship was no longer for them or that they no longer wanted a vessel of this particular type”, the plea based upon their failure to mitigate would be of no avail, because it would be unreasonable to expect them to enter into a new contract to buy: at 609.
  1. [76]
    Looming large in the consideration of The “Solholt” was the earlier English Court of Appeal decision of Payszu Ltd v Saunders[27].  There, Scrutton LJ, an experienced commercial judge, noted that it was contrary to his experience that, in considering what steps should be taken to mitigate the damage suffered, all contractual relations with the party in default must be excluded, adding that, in commercial contracts, it is generally reasonable to accept an offer from the party in default, although it is always a question of fact: at 589.
  1. [77]
    Closer to home, the New South Wales Court of Appeal in Castle Constructions Pty Ltd v Fekala Pty Ltd[28] considered those two English decisions.  Mason P, with whom Beasley and Bryson JJA agreed, held that Payszu involved a plaintiff’s failure to accept a reasonable offer from the defendant made at a time when the defendant’s breach was causing loss “and/or” had the potential to increase the plaintiff’s loss unless remedied: at [80].  As for The “Solholt”, he held that it showed that an innocent plaintiff may be held to act unreasonably in not taking the initiative by making an offer to the defendant to accept the late delivery of the contractual product at the original price: at [81].  In reaching that conclusion, Mason P held that while no question of mitigation arose at the termination stage, the purchaser was found subsequent to that to have unreasonably failed to mitigate its loss, such finding being based on the conclusion that the vendor would have accepted an offer by the purchaser to purchase the vessel at the original price “subject to any claim it might have had for the delay”: also at [81].  Lastly, Mason P noted that the Court of Appeal in Payszu did not find that the party in breach was required to take the initiative, but rather that it depended upon whether in the circumstances it was reasonable to await an offer or whether the reasonable buyer would have taken the initiative: at [82].
  1. [78]
    The reason for the concentration on understanding reasonable behaviour in the context of an offer by the defaulting party is that it was a primary plank of the defendants’ mitigation argument that the plaintiffs unreasonably failed to negotiate for the sale of the partly completed Vessel to interested third parties, in circumstances where the potential contracts with such third parties would have greatly exceeded the return that the plaintiffs otherwise got from the various sales they undertook. If that argument is accepted, it then becomes unnecessary to consider an alternative argument based on remoteness of damage.

Credibility

  1. [79]
    I intend, at this stage, to express some general conclusions concerning the credibility of the witnesses called in this case. It has been necessary to reach conclusions on credibility because there are contests of recollection which go to matters which need to be determined.

Dr Conway Savis

  1. [80]
    Dr Savis was a major player for the plaintiffs (as the “buyer” under the Agreement). He was the one who had experience in commercial fishing vessels and, to a very large extent, both his wife, Mrs Alison Savis and the controlling mind of the first plaintiff, Dr Frank Quigley, yielded important decision making to him, although there was consultation on many of the relevant issues by both of those persons with Dr Savis.
  1. [81]
    Dr Savis adopted positions about certain events that, when faced with the reality of those events in cross-examination, either conceded or evaded any direct confrontation by an avoidance of answering the proposition directly. I was also unimpressed with his cavalier attitude to his disclosure obligations. I accept that he was a person who was originally quite impressed by the knowledge and capacity of both Mr Andrew Johnson and Black Watch, but later became disillusioned when the adjusted timeframes that inevitably occurred were not met to his satisfaction. I conclude that it was an important aspect of the position that he took, particularly after termination, that Mrs Savis had communicated to him that she was adamant that she did not wish to purchase another vessel, whether that be from Black Watch or anyone else.
  1. [82]
    With respect to contests of recollection between Dr Savis and Mr Johnson, particularly as to the relevant telephone calls contemporaneously recorded by Mr Johnson, I accept that, in so far as the recordings were reduced to written form, they were accurate.  But, nonetheless, I do not accept that they were complete, because I conclude that Mr Johnson omitted from the written record aspects of the conversations with Dr Savis which were negative to the defendants’ case. 
  1. [83]
    In particular, I accept that there was an agreement reached between Dr Savis, on behalf of the plaintiffs, and Mr Johnson, on behalf of Black Watch, that the tasks set out in the email of 26 July 2009, numbered 1 to 6, were agreed in the way detailed in that communication.
  1. [84]
    I accept that, post-termination, the previously reasonably good relationship between Dr Savis and Mr Johnson deteriorated to a stage where Dr Savis no longer trusted Mr Johnson. Nevertheless, objectively, Dr Savis ought to reasonably have considered what Mr Johnson was communicating concerning possible ways of resolving the extent of the loss that flowed from termination. This will be developed more fully later.

Dr Quigley

  1. [85]
    Dr Quigley was a person who was caught up in the deteriorating relationship between Dr Savis and Mr Johnson.
  1. [86]
    I accept that, for the most part, he adopted a more conciliatory attitude in discussions that he personally had with Mr Johnson. In the end, there appeared to be little significant difference in the recollection of the conversations between Mr Johnson and Dr Quigley.
  1. [87]
    To the extent that there was any difference in recollection between Dr Quigley and Mr Johnson, I accept the evidence of Dr Quigley which I adjudged to be forthright, considered and open to concession (when genuinely faced with difficulties of recollection or logic).

Mr Johnson

  1. [88]
    As already indicated, I accept the evidence of Mr Johnson to the extent to which Drs Savis and Quigley do not dispute it, to the extent of its accuracy in content (though not in extent) concerning the relevant telephone recordings made contemporaneously, and with respect to his dealings with potential third party purchasers of the uncompleted Vessel after the plaintiffs took possession in September 2009.
  1. [89]
    The reason that I do have difficulties with Mr Johnson’s evidence, which informs my general conclusion concerning his credibility, arises from what proved to be a peripheral matter so far as it affected the damages to be assessed. The peripheral matter concerned the existence of an actual test panel that was necessary for independent testing purposes before final certificates concerning the Vessel could be issued. It is not in contest that the University of Southern Queensland conducted tests on “a” test panel, the timing of which is relatively unimportant in this consideration.  What is important is whether that panel given to the University of Southern Queensland for testing was, in truth, a test panel produced during the relevant time when Mr Johnson asserts that Black Watch employees caused the hull to be made.  The evidence of Mr Johnson was adamant as to the test panel being so made at the relevant time.  As will be seen, I accept the evidence of Mr Jason Chipp, the production manager of Black Watch at all material times, that the relevant panel was not made as deposed to by Mr Johnson – even though it might otherwise have been “reflective of the fibre glass laminate” of the plaintiff’s Vessel – but was “made at a later date” as it was “not the one attached to the Vessel” when relevant fibreglass moulding was undertaken.  Mr Chipp answered positively to the question that this test panel was one that was manufactured solely, and specifically, for the purposes of sending it away for testing to the University of Southern Queensland.  I have no doubt that it was Mr Johnson’s intention, at all times both during the construction of the Vessel and in evidence given to this Court, to maintain that the test panel was one that was made in late 2008.  I therefore conclude that he was not being truthful with respect to it, although it ended up being a relatively insignificant matter in the end.  I find that it was indicative of the lengths to which Mr Johnson would go to create a positive impression to the court about the defendants’ case.
  1. [90]
    Consequently, as I have expressed above, where the evidence of Mr Johnson alone is considered I have doubts about its accuracy. This extends not only to his asserted lack of agreement as revealed in the above referred to email of 26 July 2009 (rejecting, as I do, his explanation for his total non-response as not wishing to aggravate Dr Savis further) but also with respect to events such as the non-receipt of the Notices of Default and Termination (rejecting, as I do his non-remembering of any such notification, particularly where he did not even question what rights Dr Savis was exercising when “possessing” the Vessel on 12 September 2009) - regardless of the significance of that evidence in the final determination.

Mr Blundell

  1. [91]
    Mr Toby Blundell was called on behalf of the plaintiffs. After ruling against his evidence so far as it purported to express opinions of an expert kind, I am of the view that the little that remained was unconnected with his credibility.
  1. [92]
    To the extent that his credibility needs to be considered, I accept that his subjective view of his own capacities was honestly held and the photographs that he took for the purposes of inspection of the Vessel after termination were not in contest.

Mr Chipp

  1. [93]
    I have already, indirectly, referred to Mr Chipp in the consideration of Mr Johnson.
  1. [94]
    I accept, generally, that he gave his evidence honestly, if at times with a careful view to choosing words which, while they might be seen to be accurate, could also be seen to be ambiguous in the sense of casting a favourable light on the defendants’ case, despite the truth not being so bright. An example of that is clearly his defence of the relevant test panel and the grudging concessions that he finally undertook concerning it.
  1. [95]
    Nevertheless, I accept that the photographs that he did take, as given in his evidence, of the interior of the Vessel and of fittings that had been dry fitted and removed, were in fact photographs of the Vessel in contention.

Mr Manwarring

  1. [96]
    Mr Trevor Manwarring was a qualified mechanical engineer and naval architect called on behalf of the defendants to give expert evidence.
  1. [97]
    I accept that this person was both qualified as an expert and gave his evidence in accordance with the requirements of this Court with respect to experts. I accept that his recollection of an examination of the Vessel, though earlier than any engagement to report, when taken with the extensive photographing done by Mr Blundell, does provide a proper basis for the report he eventually prepared. I do not accept that a “hearsay” conversation between Mr Johnson and Mr Micallef as to how much the latter “would” spend undermines this expert’s opinions where there is no evidence from either Mr Micallef or his “builder” as to the details and costing of what was in fact done.

Mr Somogyi and Mr Cran

  1. [98]
    Both Mr Peter Somogyi and Mr Ian Cran were persons who gave evidence that they were willing to make firm offers to purchase the Vessel in its post-termination state.
  1. [99]
    I accept that both of these witnesses were honest in the evidence that they gave and that nothing was established in the whole of the evidence that they gave that went to undermining them as genuine both in their interest in the potential purchase of the Vessel in that state and as to their financial capacity to complete any such purchase.
  1. [100]
    The defendants also relied upon an affidavit of Michael Morris filed 17 March 2011. He was not required, in the end, for cross-examination. I therefore accept what he briefly stated in that affidavit concerning his willingness to represent Mr Somogyi and his attempts to contact the then solicitors for the plaintiffs, Connelly Suthers.

Mr Hutchings

  1. [101]
    Mr Christopher Hutchings was a naval architect and marine surveyor called by the plaintiffs. Although his affidavit was one filed on 15 April 2011, he gave his evidence solely orally.
  1. [102]
    Because the cross-examination of Mr Hutchings was very limited and because he agreed with the particular proposition that in respect of the Vessel he was satisfied that he had carried out all the inspections that were required to be carried out for the stages that the Vessel had reached, there is no need to doubt that his evidence was given credibly.

Effect of failure of plaintiffs to accept defendants’ proposed “purchasers”

  1. [103]
    The principles governing the outcome of this matter have been canvassed. As indicated there, the determination is a matter of fact. Thus, while the principle requires a consideration of offers to purchase the Vessel in its post-termination state rather than sell it for $70,000.00, it is in the end a determination of whether such a course was reasonable in all the circumstances.
  1. [104]
    Given that the parties were in a commercial relationship - and certainly at arms’ length (especially where the plaintiffs’ solicitors were the drafters of the Agreement) - a preliminary conclusion is that the plaintiffs, in the position that they were in the first half of 2010, ought to have considered in an appropriately serious way any potential resolution which would have returned, for their outlay then on the boat alone of nearly $473,000.00, a price in excess of $70,000.00. As a background fact that needs to be determined initially, I conclude that the agreement with Mr Micallef fell within the first category determined by the High Court in Masters v Cameron[29], because there was a desire to draw up an agreement in a more formal document, which was consummated by the Deed executed by the plaintiffs and Mr Micaleff on 28 April 2010.
  1. [105]
    Thus, what needs to be determined is whether by 19 April 2010 there was sufficient definition in what was being proposed on behalf of the defendants as purchasing options to make it unreasonable for the plaintiffs to refuse to consider such proposals: see Strutt v Whitnell & Anor[30] per Cairns LJ at 873.
  1. [106]
    Given that possession of the Vessel in its post-termination state was given and taken in mid-September 2009, it cannot be said, in the circumstances then applying, that a sale by mid-April 2010 was a hasty decision in itself.
  1. [107]
    Rather, what has to be contemplated is what efforts had been made to sell the Vessel in that state (and with what success, if any the negotiations to that date had reached), in light of what the plaintiffs, or their representatives, knew about the defendants’ proposals.
  1. [108]
    It is not possible, as the defendants in written submissions have sought to do, to revisit the reasonableness of the actual termination of the Agreement. This is because of the issue estoppel conclusions canvassed earlier. Of course, the effect of the termination can be looked at. For instance, accepting the evidence of Mr Chipp, taken from the perspective of a production manager, even if termination had not occurred, the date when completion might have been otherwise expected would have been around 3 months later, “all going well”. That would have taken the completion date to the end of 2009.
  1. [109]
    But it is difficult otherwise to see the relevance of when, but for termination, the contract might have been completed, particularly when the act, and reasonableness, of termination is precluded from being revisited, apart from providing a context of timing for the application of a reasonable response.
  1. [110]
    The complicating feature that has arisen in this case is the involvement of Mr Blundell. I accept that both Dr Savis and Dr Quigley subjectively believed, at least originally, that this person was capable of giving expert opinions both as to the value of the Vessel as it then was and as to what would be the cost of completing the Vessel according to the Agreement. Reprising the remarks of Sheller JA in Stebercraft Pty Ltd v Sutton & Anor (“the Seapride”)[31], because of the strong advice that the plaintiffs had concerning the contract to build the fishing vessel, they were committed to the validity of their own case, even though they were not to know that the advice they were given “would not find favour” with the Court: at 22.  Even so, the fact that the plaintiffs hid the involvement of Mr Blundell does bespeak some concern on the plaintiffs’ part.  Although they were under no legal obligation to reveal any “expert” report they commissioned, it is difficult to understand why, given the course they followed, no revelation of either the involvement of Mr Blundell – who was known, and used for some purposes, by Black Watch - was made or any communication of the advice that he proffered was undertaken.
  1. [111]
    The upshot of not communicating to anyone the substance of Mr Blundell’s advice had two important consequences. First, in effect, its conclusions seem to have precluded any consideration of whether to renegotiate with Black Watch to complete the Vessel. While the plaintiffs did have doubts about the rate of progress that was being achieved by Black Watch in mid to late 2009 there was, on any reasonable basis, no reason to doubt, given the concession by Dr Savis that Mr Johnson had consistently maintained the position that Black Watch was both willing and able to complete (at least between mid-September 2009 and the end of 2009), that the Vessel could be so completed by the end of 2009.
  1. [112]
    It must be understood that Mr Blundell had advised that the costs of completing the Vessel to a satisfactory standard, without access to or the use of any moulds or equipment from the original manufacturer (i.e. without returning to the first defendant, or having its cooperation), was $628,120.00. Further, in his report of 2009, he “valued” the Vessel as inspected on 20 October 2009 at $80,000.00. It is impossible to evaluate the written quote by Mr Malouf and the oral quote by Mr Dibden to complete the Vessel because, both not being called, it cannot be determined whether the quotes were set deliberately high to dissuade any ensuing contractual discussion or, if not, what kind of inspections and calculations were indeed carried out. These are matters which must remain purely speculative.
  1. [113]
    Concerning the prospect of returning the Vessel to Black Watch to complete it, the relationship between Dr Savis and Mr Johnson had reached a stage where that was not practically a likely option, if only because the agreement reached on 26 July 2009 had in no way been effectively carried out by Black Watch.
  1. [114]
    Nevertheless, the vast disparity between the cost to complete as advised by Mr Blundell and the relatively small sum that would have still been due under the Agreement, together with the objectively open view that the valuation of the Vessel completed to the state it was then in was so very low considering the amount paid in progress payments, meant that the plaintiffs, reasonably, should have considered what steps should be taken to mitigate the huge loss that was seemingly facing them.
  1. [115]
    If the plaintiffs were not to approach Black Watch, through Mr Johnson, or even to ask Mr Chipp (who, at that time, they had no reason to distrust) about what it might cost were Black Watch to be given the opportunity to complete the Vessel, the plaintiffs should at least have been open to all reasonable potential offers to buy the Vessel.
  1. [116]
    Although Dr Quigley expressed the view that he could not consider offers substantially in excess of Mr Blundell’s “valuation” of $80,000.00 because he did not want the purchaser to be “misled”, that could easily have been avoided by the actual disclosure of Mr Blundell’s report. Yet Dr Quigley never contemplated that that could occur. When considering the issue of reasonableness, it is impossible to take into account concerning it, now, the evidence of Mr Manwarring that in the period under consideration the Vessel in its post-termination state had a market value of between $375,000.00 and $475,000.00. That information was in no way in the public domain or in any other way made known to Dr Savis and Dr Quigley. Nevertheless, offers such as that proposed by Mr Somogyi showed that any valuation as low as Mr Blundell’s should have been the subject of considerable concern as to its accuracy. Further, as I have already indicated, the sale of the Vessel “as is” could not reasonably be delayed endlessly. Therefore, what must be canvassed is whether there were proposals put to Dr Savis and Dr Quigley prior to mid-April 2010 that they should have reasonably considered.
  1. [117]
    The evidence concerning Mr Somogyi is that he entered into a contract with Black Watch to construct a somewhat similar vessel on 7 June 2010 and had been for some considerable time negotiating such a deal with Black Watch.  
  1. [118]
    As noted, this proceeding commenced on 29 January 2010. Nearly 2 months later, in telephone conversations contemporaneously recorded by Mr Johnson - noting the limitations I have placed on the completeness of such records - the following circumstances appear:-
  • in the telephone conversation of 17 March 2010 Mr Johnson expressed to Dr Quigley that the advertised offer (being $95,000.00 “ONO”) was “ridiculous”, that Mr Johnson had a number of offers for 40 ft boats and that Mr Johnson could divert such purchasers;
  • on 24 March 2010, by telephone call, Mr Johnson told Dr Quigley, again, about offers and diverting purchasers, as well as the advertised price being “absolutely ridiculous”;
  • on 13 April 2010, by telephone call, Mr Johnson told Dr Quigley that he has been working on various offers, that they were coming together well, and that the best offer would be for a completed vessel “at about a $600,000”, that the specification was “light” and that it should be able to be done “rapidly”, raising the possibility of the plaintiffs taking some money “now”, signing over the Vessel unencumbered, and receiving the rest of the money over time - and the conversation also included a statement by Mr Johnson that there were two other offers which were not quite as good, being around the “$500,000 mark” and “at $525,000 for a completed boat”, with the remark that in all cases “they” were willing to pay an amount upfront “for the vessel as is”; and
  • on 16 April 2009, by telephone call, Mr Johnson told Dr Quigley that the offer which would be made by Mr Micallef “will never be better than the offers we have”, asking whether the plaintiffs have a “contract for sale” that they wanted to use, with Dr Quigley telling Mr Johnson that the people making offers had to contact Dr Quigley directly – which Dr Quigley stated was his constantly repeated position - because the plaintiffs’ lawyer had said that the offers could not be from Mr Johnson and, when asked by Dr Quigley as to what was being offered, Mr Johnson said that the best offer was from a person “named Peter from Sydney”, offering $600,000.00 “completed”, and that the person thought that he needed to buy the boat unencumbered.
  1. [119]
    While it is not in contest that Dr Savis was the prime negotiator at all times, it was never asserted by Dr Savis, or his wife, that Dr Quigley was not authorised to have conversations with Mr Johnson. Given that, the information that came to the knowledge of Dr Quigley must be held to be information available to the plaintiffs as a whole.
  1. [120]
    Because I have held that the plaintiffs were in a contractual relationship with Mr Micallef on and from at least 19 April 2010, the circumstances that occurred thereafter become irrelevant for the purposes of considering what it was that was still reasonable for the plaintiffs to do up to that date in mid-April 2010, although events thereafter can show what might have been reasonably achieved. What can, nevertheless, be taken from the time of that contract relationship is that there still remained some – apparently legally advised – behaviour suggestive of potential co-operation to negotiate further, if legally permissible.
  1. [121]
    The conclusion that I reach is that, despite any misgivings that Dr Quigley may have had about misleading potential purchasers, and despite the view of Dr Savis that he did not trust Mr Johnson (and therefore Black Watch), I conclude – especially where there was no objective evidence to that time known to Dr Savis that Mr Johnson was untrustworthy or that Black Watch had “stolen” the plaintiffs’ money - that it was unreasonable for the plaintiffs not to attempt to ascertain what at least Mr Peter Somogyi was prepared to offer and, if necessary, enter into negotiations with him. I find that Mr Somogyi’s offer was the most accessible from the plaintiffs’ perspective, the most fleshed out, and the one most likely to be followed through, if properly investigated.
  1. [122]
    Thus, it is not to the point that the level of distrust that Dr Savis had, which had the effect of him not attempting himself, and persuading others not to attempt, to investigate potential third party purchasers (about whom Dr Savis made absolutely no enquiries), was a reasonable course to take. But even if Dr Savis was reluctant to do so, Dr Quigley at least should have engaged in that course of action.
  1. [123]
    On the evidence given by Mr Somogyi at trial, I conclude that he would have been open to negotiations in good faith to make an offer of $470,000.00, plus the cost of the two Cummins Engines and associated running gear. As well, I accept that Mr Johnson, as Black Watch’s representative, did honestly believe that a detailed costing to complete the boat to Mr Somogyi’s specifications would amount to some $68,480.00, particularly where he was prepared to have that costing verified independently, should the plaintiffs then have required it.
  1. [124]
    I accept from the evidence that Mr Somogyi gave, bearing in mind his later contract with Black Watch of 7 June 2010, that there would be an initial payment of $50,000.00 on receipt of a contract from the plaintiffs and then a further $50,000.00 within two weeks of the first payment (before title was to be passed), with, perhaps, a further contract with Black Watch for an additional $370,000.00 to complete the Vessel to Mr Somogyi’s specifications.
  1. [125]
    Both Dr Savis and Dr Quigley indicated in their evidence that they saw that as not significantly different from the agreement with Mr Micallef – although it must be recognised that it was some $30,000.00 (or 43%) more. The concern that was expressed was that the plaintiffs would receive only $50,000.00 in exchange for a transfer of title to the Vessel; but, objectively, that was never the true offer.
  1. [126]
    I accept that, simply in the form in which it was contemplated by Mr Somogyi in the series of telephone conversations he had with Mr Johnson in early April 2010, there might well be a reasonable concern on the plaintiffs’ part that they could be left with the sum of $100,000.00 only, with no title to the Vessel, and with relying on Mr Johnson’s “good will” concerning any further money.
  1. [127]
    But despite the general nature of the proposal of Mr Somogyi as put by Mr Johnson to Dr Quigley, given that no negotiations were entered into to adjust the terms to those that might have been more acceptable in the circumstances for the plaintiffs to agree to, and given that no enquiry at all was made into the financial capacity of Mr Somogyi to pay the $50,000.00 and then the second $50,000.00 within two weeks of the first payment, it is difficult to escape the finding that the plaintiffs reasonably failed to enter into negotiations, so as to either confirm their concerns or allay their fears. But that is only the first part of the fact finding.
  1. [128]
    Is it appropriate for this Court to decide that there has been unreasonable behaviour on the plaintiffs’ part when it cannot be determined for certain what would have been the outcome of such negotiations? In order to decide that, it is necessary to understand to what extent Mr Somogyi would have compromised from that initial offer should negotiations have proceeded. When it was put to him, concerning the figure of $370,000.00, that, if the plaintiffs insisted that Mr Somogyi agree to pay the balance to them after Black Watch’s costs of around $60,000.00 were paid, what he would do, he replied that he would have been agreeable. Additionally, he indicated, in evidence, which I accept, that he would have purchased the engines (which the plaintiffs also sold at a significant discount). Mr Somogyi stated that he would have been prepared to pay in the order of $130,000.00 for the engines themselves.
  1. [129]
    As held by the authorities that I have canvassed above concerning the reasonableness or not of further contractual involvement with the defaulting party, it is, in the end, a decision of fact, and not law. While there is some uncertainty, or lack of precision, about exactly what could have been negotiated (even to some kind of tri-partite agreement), in the particular circumstances of this case where – though acting upon advice (although in circumstances where the Court has found that there was no proper basis of expertise) – I conclude that it was unreasonable for the plaintiffs not to further negotiate when the sums for which they were selling the various parts that would have constituted a major proportion of a completed Vessel were sold significantly under either market value or cost. On the balance of probabilities, I find that a much more profitable outcome for the plaintiffs could have been obtained; namely, that Mr Somogyi would have bought the Vessel and that Black Watch would have accepted responsibility for achieving that outcome, leaving the plaintiffs to receive, or ultimately successfully sue for, the much lower sum of the cost to complete (namely, on Mr Manwarring’s figures, $71,508.00).

“Damage” caused by plaintiffs to Vessel

  1. [130]
    One of the aspects of mitigation raised by the defendants was that, on taking possession of the Vessel on termination, and thereafter, the plaintiffs caused damage to the Vessel which thereby adversely affected its value.
  1. [131]
    The problem that a determination of this matter faces is that there has been no expert evidence as to what, if any, diminution in value occurred because of it. Certainly, there is no evidence from Mr Micallef at all, much less that he paid some value different from what he otherwise would have paid apart from such “damage”.
  1. [132]
    Additionally, Mr Manwarring did not address the specific issue of what way, if any, it affected his valuation which had a span of $100,000.00 between the highest and lowest figures constituting the valuation; and Mr Johnson did not address it in the scenario involving Mr Somogyi. Hence, I am unable to determine how that could be brought into account.

Expenses claimed by plaintiffs

  1. [133]
    The defendants have not taken issue with the fact that the plaintiffs incurred the sums that they claim as damages by way of expenses. What they do submit is that, in each case where such expenses include insurance, marina costs, and travel and engine removal expenses, they are not recoverable, on the ground that none of those expenses were reasonably incurred because there was no reason for the plaintiffs not to accept the defendants offer to allow the Vessel to remain safely locked in Black Watch’s own premises, in circumstances where Black Watch acknowledged the plaintiffs’ right to possession of the Vessel. As to insurance in particular, it is contended that the plaintiffs would always have been required to insure the Vessel on completion, which would have covered the period for which they now claim that expense.
  1. [134]
    Lastly, the defendants submit that the report prepared by Mr Blundell should not be a cost in the cause of action. As to that report, it may have been arguable that it was a proper cost incurred if I had found that it was necessary for the plaintiffs to obtain a valuation report for the purposes of ensuring that any sale of the Vessel in its “as is” condition and any sale of the associated equipment was reasonably marketed. But where, as here, I have found that the report has no expert status, it is difficult to see the appropriate basis upon which the expense was reasonably justified.
  1. [135]
    Turning back, then to the other expenses claimed, I determine that it was reasonable in the circumstances for the plaintiffs to move the Vessel to premises under their own control and remove the 2 engines (as advised) while they made the decision as to what course they should follow. As I have already found, the slow progress which led to termination can justify removing the Vessel to a place over which the plaintiffs exercised control to the exclusion of Black Water. In the conclusions that I have reached, it was appropriate to advertise, even while negotiating with Mr Somogyi. But as for insurance premiums and travel expenses, it would be inevitable that those would have been incurred even if the contract had not been terminated. The first limb of the rule in Hadley v Baxendale[32] limits recovery of damages to “such as may fairly and reasonably be considered as arising naturally, i.e. according to the usual course of things, from such breach of contract itself, or such as may reasonable be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it”: at 354. The benefit under the contract for the plaintiffs was the Vessel, which they received (though in an incomplete form) – and for which they would have needed to travel to accept, in any event - and which they would have had to “protect” by such measures as insurance even if it was received in its complete form.

Damages

  1. [136]
    On the basis that loss of bargain damages are recoverable, and on the basis of my acceptance that it would have been reasonable to negotiate, successfully, with Mr Somogyi for the sale of the Vessel to him, Scenario 4 of the 6 Scenarios set out in the defendants’ submissions’ Schedule dealing with loss and damage would generate the proper assessment of damages here, apart from the items dealing with recoverable expenses. In schedule form the damages, then, are:-
  1. (a)
    Cost of work to date ($472,998.90) less the price obtained on sale to Mr Somogyi ($470,000.00), where the 2 Cummins Engines would have been purchased by Mr Somogyi for cost: a loss of $3,000.00.
  1. (b)
    Plus loss of sale on electronic equipment: $19,423.00 (there being no evidence that Mr Somogyi would have bought any such electronics).
  1. (c)
    Plus cost to complete because it would have increased the loss in (a) (on the evidence provided by Mr Manwarring to Mr Somogyi’s specifications): $71,508.00.
  1. (d)
    Plus cost of engine removal: $500.00.
  1. (e)
    Plus cost of storage: $17,016.63.
  1. (f)
    Plus advertising: $201.83.

 Total $111,649.46                              

Interest

  1. [137]
    It is appropriate to award interest at the rate applicable to interest on default judgments. Given that the Vessel was sold in April 2010 and that the predicated sale to Mr Somogyi was likely in that time frame, the damages can be held as reasonably accruing at that time.
  1. [138]
    Thus, in accordance with Supreme Court Practice Direction No 6 of 2007, I award interest at the rate of 10% per annum for 2 years.
  1. [139]
    Accordingly, the interest awarded is $22,329.89.                              .                     .

Costs

  1. [140]
    As for costs, considering that, substantially, the evidence of Mr Blundell was of no, or very little, utility to the plaintiffs’ case, I intend, subject to argument, to order that the defendants pay the plaintiffs costs of and incidental to the proceeding, fixed at 80% of the plaintiffs’ costs, to be assessed on the standard basis.

Orders

  1. [141]
    In summary, the orders that will be made are:
  1. (a)
    That damages are assessed at $133,979.35 (inclusive of interest in the sum of $22,329.89).
  1. (b)
    All parties have leave to file, and serve, written submissions on costs by 4:00pm on 1 May 2012.

Footnotes

[1] [2011] QCA 263.

[2] [2011] QCA 121.

[3] Spencer, Bower and Handley, Res Judicata, 4th ed  (2009).

[4] (1971) 124 CLR 177 at 184.

[5] (1960) 104 CLR 206.

[6] [2007] VSCA 228.

[7] [1999] 3 VR 589.

[8] (1976) 33 FLR 107.

[9] [2010] QCA 207.

[10] [1964] AC 993 at [124].

[11] (1939) 62 CLR 464 at [122].

[12] [1985] 2 Qd R 13.

[13] (1985) 3 NSWLR 366.

[14] [1926] AC 155 at 381.

[15] [2001] QSC 401 at [39]-[40].

[16] (BC 9702895) (Wright J,  30 June 1997).

[17] [1991] 1 Qd R 85 at 93-94.

[18] (2008) 234 CLR 237.

[19] (1985) 157 CLR 17.

[20] (2007) 233 CLR 115.

[21] (1987) 162 CLR 549 at 562.

[22] (1986) 161 CLR 500.

[23] (2009) 236 CLR 272.

[24] (1848) 1 Exch 850 at 855.

[25] [1912] AC 673.

[26] [1983] 1 Lloyd’s Rep 605.

[27] [1919] 2 KB 581.

[28] [2006] NSWCA 133.

[29] (1954) 91 CLR 353 at 353.

[30] [1975] 1 WLR 870.

[31] [1996] NSWCA 502.

[32] (1854) 9 Exch 341.

Close

Editorial Notes

  • Published Case Name:

    SPJ Nominees P/L & Ors v Black Watch Sports Fishing Boats P/L & Anor

  • Shortened Case Name:

    SPJ Nominees Pty Ltd v Black Watch Sports Fishing Boats Pty Ltd

  • MNC:

    [2012] QDC 66

  • Court:

    QDC

  • Judge(s):

    Dorney DCJ

  • Date:

    24 Apr 2012

Litigation History

EventCitation or FileDateNotes
Primary JudgmentSC No 47 of 2010 (no citation)11 Jun 2010First defendant contracted with the plaintiffs to build a vessel; second defendant guaranteed those obligations; plaintiffs terminated the contract for repudiation and took possession of part-completed vessel; plaintiffs claimed for amount of instalments paid less value of the vessel; default judgment entered on 26 March 2010 with damages to be assessed; defendants' application to set aside default judgment dismissed: Cullinane J
Primary JudgmentDC No 167 of 2010 (no citation)15 Mar 2011Programming orders made for the assessment of damages relating to default judgment, including an order that the trial proceed as an undefended hearing if the defendants did not provide sufficient disclosure: Durward DCJ
Primary JudgmentDC No 167 of 2010 (no citation)23 Mar 2011Dispute regarding defendants' compliance with orders of Durward DCJ dated 15 March 2011; defendants' conceded that disclosure was deficient; further programming orders entered including an order that the trial proceed as an undefended hearing if the defendants did not comply: Baulch DCJ
Primary Judgment[2012] QDC 6624 Apr 2012Assessment of damages pursuant to order of Cullinane J in SC No 47 of 2010; defendants largely successful in establishing plaintiffs' failure to mitigate; damages assessed in the sum of $133,979.35: Dorney DCJ
Primary Judgment[2012] QDC 9715 May 2012On the question of costs of the proceeding, appropriate to depart from general rule that costs follow the event; plaintiffs awarded 50 per cent of their costs, assessed on the standard basis, of the trial for assessment of damages: Dorney DCJ
QCA Interlocutory Judgment[2011] QCA 12108 Jun 2011Defendant applied for a stay pending appeal from District Court orders dated 15 and 23 March 2011; plaintiffs cross-applied for orders that the appeal be struck out, dismissing the application for a stay and for security for costs of the appeal; stay granted, conditional upon the giving of security for costs: M Wilson AJA
Appeal Determined (QCA)[2011] QCA 26330 Sep 2011Hearing of second defendant's appeal against District Court orders of 15 and 23 March 2011; extensions of time to apply for leave to appeal against those orders granted; applications for leave to appeal against those orders granted; appeal against those orders allowed and orders set aside: M McMurdo P, White JA and Fryberg J

Appeal Status

Appeal Determined (QCA)

Cases Cited

Case NameFull CitationFrequency
Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549
2 citations
Jump To
Cite 1 - (1987) 162 CLR 549
Cite 2 - (1987) 162 CLR 549
Blair v Curran (1939) 62 C.L.R., 464
2 citations
Jump To
Cite 1 - (1939) 62 C.L.R., 464
Cite 2 - (1939) 62 C.L.R., 464
British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd (1912) AC 673
2 citations
Jump To
Cite 1 - (1912) AC 673
Cite 2 - (1912) AC 673
Cachia v Isaacs (1985) 3 NSWLR 366
2 citations
Jump To
Cite 1 - (1985) 3 NSWLR 366
Cite 2 - (1985) 3 NSWLR 366
Castle Constructions Pty Ltd v Fekala Pty Ltd [2006] NSWCA 133
2 citations
Jump To
Cite 1 - [2006] NSWCA 133
Cite 2 - [2006] NSWCA 133
Clout v Klein [2001] QSC 401
2 citations
Jump To
Cite 1 - [2001] QSC 401
Cite 2 - [2001] QSC 401
Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500
2 citations
Jump To
Cite 1 - (1986) 161 CLR 500
Cite 2 - (1986) 161 CLR 500
Electricity Commission of New South Wales v Lapthorne (1971) 124 CLR 177
2 citations
Jump To
Cite 1 - (1971) 124 CLR 177
Cite 2 - (1971) 124 CLR 177
Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd (2008) 234 CLR 237
2 citations
Jump To
Cite 1 - (2008) 234 CLR 237
Cite 2 - (2008) 234 CLR 237
Hadley v Baxendale (1854) 9 Ex Ch 341
2 citations
Jump To
Cite 1 - (1854) 9 Ex Ch 341
Cite 2 - (1854) 9 Ex Ch 341
Hall v Busst (1960) 104 CLR 206
2 citations
Jump To
Cite 1 - (1960) 104 CLR 206
Cite 2 - (1960) 104 CLR 206
Hoystead v Commissioner of Taxation (1926) AC 155
2 citations
Jump To
Cite 1 - (1926) AC 155
Cite 2 - (1926) AC 155
Johnson v SPJ Nominees [2011] QCA 121
3 citations
Jump To
Cite 1 - [2011] QCA 121
Cite 2 - [2011] QCA 121
Cite 3 - [2011] QCA 121
Johnson v SPJ Nominees Pty Ltd [2011] QCA 263
2 citations
Jump To
Cite 1 - [2011] QCA 263
Cite 2 - [2011] QCA 263
KGK Constructions Pty Ltd v East Coast Earthmoving Pty Ltd [1985] 2 Qd R 13
2 citations
Jump To
Cite 1 - [1985] 2 Qd R 13
Cite 2 - [1985] 2 Qd R 13
Kok Hoong v Leong Cheong Kweng Mines Ltd (1964) AC 993
2 citations
Jump To
Cite 1 - (1964) AC 993
Cite 2 - (1964) AC 993
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115
2 citations
Jump To
Cite 1 - (2007) 233 CLR 115
Cite 2 - (2007) 233 CLR 115
Major Engineering Pty Ltd v Timelink Pacific Pty Ltd [2007] VSCA 228
2 citations
Jump To
Cite 1 - [2007] VSCA 228
Cite 2 - [2007] VSCA 228
Mango Boulevard Pty Ltd v Spencer [2010] QCA 207
2 citations
Jump To
Cite 1 - [2010] QCA 207
Cite 2 - [2010] QCA 207
Masters v Cameron (1954) 91 C.L.R 353
2 citations
Jump To
Cite 1 - (1954) 91 C.L.R 353
Cite 2 - (1954) 91 C.L.R 353
National Australia Bank Ltd v Maher (No 2) [1999] 3 VR 589
2 citations
Jump To
Cite 1 - [1999] 3 VR 589
Cite 2 - [1999] 3 VR 589
Payzu Limited v Saunders (1919) 2 KB 581
2 citations
Jump To
Cite 1 - (1919) 2 KB 581
Cite 2 - (1919) 2 KB 581
Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17
2 citations
Jump To
Cite 1 - (1985) 157 CLR 17
Cite 2 - (1985) 157 CLR 17
Robinson v Harman (1848) 1 Ex Ch 850
2 citations
Jump To
Cite 1 - (1848) 1 Ex Ch 850
Cite 2 - (1848) 1 Ex Ch 850
Smith v In Shoppe Pty Ltd (No 2) (1976) 33 FLR 107
2 citations
Jump To
Cite 1 - (1976) 33 FLR 107
Cite 2 - (1976) 33 FLR 107
Stebercraft Pty Ltd v Sutton & Anor (" the Seapride ") [1996] NSWCA 502
2 citations
Jump To
Cite 1 - [1996] NSWCA 502
Cite 2 - [1996] NSWCA 502
Strutt v Whitnell & Anor [1975] 1 WLR 870
2 citations
Jump To
Cite 1 - [1975] 1 WLR 870
Cite 2 - [1975] 1 WLR 870
Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272
2 citations
Jump To
Cite 1 - (2009) 236 CLR 272
Cite 2 - (2009) 236 CLR 272
Watson Specialised Tooling Pty Ltd v Stevens[1991] 1 Qd R 85; [1990] QSC 102
2 citations
Jump To
Cite 1 - [1991] 1 Qd R 85
Cite 2 - [1991] 1 Qd R 85

Cases Citing

Case NameFull CitationFrequency
Body Corporate for the Sunshine Towers v Keevers [2018] QMC 71 citation
SPJ Nominees Pty Ltd v Blackwatch Sports Fishing Boats Pty Ltd (No 2) [2012] QDC 971 citation
1

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