Sands v Vanderkyl[2015] QDC 125

DISTRICT COURT OF QUEENSLAND

The proceeding

1. [1]
   In July 2008 the plaintiff Graham Arthur Sands (“Mr Sands”) borrowed from the Queensland Country Credit Union (“QCCU”) the sum of $65,680.32. He bought a boat (“the Norsaga”) from James Michael Vanderkyl and Raye Jean Vanderkyl (“the defendants”) for the sum of $55,000.00. He expended some or all of the balance of the loan on repairs to his home at 123 Soldiers Road, Bowen, or on or in respect of the Norsaga.

2. [2]
   Mr Sands applied for the loan so that he could make a “sea change” in his life: he intended to repair his house and sell it and make a new home on the water, living on the Norsaga.

3. [3]
   It is alleged in the plaintiff’s case that Mr Sands made the contract of sale of the Norsaga whilst under a special disability, being primarily an impaired mental capacity.

4. [4]
   It is alleged in the plaintiff’s case that the Norsaga was unseaworthy, beyond his means of repair, unfit for sale and that Mr Sands could not possibly have lived in it on the water.

History of this and the associated proceeding

5. [5]
   QCCU brought a proceeding against Mr Sands to take possession of his house because he had not made any, or at least much by way of, loan repayments and because the loan was in arrears.

6. [6]
   Mr Sands brought a proceeding against the defendants to recover damages for breach of contract and for Declarations in relation to the sale and purchase of the Norsaga.

7. [7]
   Mr Sands was a party to both proceedings, by his Litigation Guardian Mr Brian Hildebrandt, who had been appointed as the Administrator for Mr Sands by the Queensland Civil and Administrative Tribunal (“QCAT”) on 29 July 2011 (exhibit V19) until his removal and the appointment of The Public Trustee of Queensland, by an Administration Order made by on 30 October 2012 (exhibit 20), whose office assumed responsibility as Administrator for Mr Sands for all financial matters, pursuant to the Guardianship and Administration Act 2000.

8. [8]
   The two proceedings were heard together following an order made by his Honour Judge Baulch SC pursuant to rule 79 of the Uniform Civil Procedure Rules 1999 (“UCPR”), on 29 August 2013.

9. [9]
   The hearing of the two proceedings commenced in the District Court at Bowen, on 24 February 2014. I directed that the evidence on the hearing of the two proceedings was to be evidence for both proceedings: r 395 UCPR and McCann v West Australian Ltd [2006] QCA 175, per Muir JA at [104].

10. [10]
    The QCCU Claim against Mr Sands was resolved on the third day of the trial. The plaintiff filed a Notice of Discontinuance, with the consent of the Litigation Guardian Mr Hildebrandt, on 31 March 2014.

The subject proceeding

11. [11]
    The hearing of Mr Sands’ claim against Mr & Mrs Vanderkyl continued for a further day and was then adjourned to a date to be fixed. The proceeding resumed on 20 May 2014 and concluded on 22 May 2014. Counsel made oral submissions in Brisbane on 23 July 2014.

Plaintiff’s claim

12. [12]
    The plaintiff has claimed the sum of $55,000.00 damages for breach of contract; and sought Declarations that the contract is voidable, on each of the following grounds: lack of capacity or unsoundness of mind; unconscionable conduct; the principle of non est factum; and the exercise of undue influence over the plaintiff.

The pleadings

13. [13]
    The plaintiff’s Claim – specifically the Statement of Claim – is quite discursive and contains evidence and some matters of particularisation beyond that permitted by rule 149 UCPR. The Defence responds to some of those matters and the Reply in turn arguably does so. However, the plaintiff was represented by counsel without an instructing solicitor and was in the matter in the first place potentially, depending on the outcome of the litigation, on a pro-bono basis. The defendants’ lawyers very fairly and reasonably, in the circumstances, prepared some joint material that might otherwise have been undertaken by lawyers for the plaintiff.

14. [14]
    Hence no pleading points were taken when the hearing commenced or indeed, at earlier stages of the proceeding, the long history of which is recorded on file but does not need to be referred to here. There was in final submissions a point taken about the pleadings in respect of a head of damages said to have arisen on the evidence but in respect of which no leave to amend or amendment was made by the plaintiff. I will deal with that matter in the course of the judgment.

15. [15]
    Insofar as is relevant, rule 150 UCPR has been complied with.

16. [16]
    The parties were content, at least implicitly, to deal with the allegations in the pleadings in respect of those matters that the rules permit to be pleaded. To the extent that any party might be said to have been disadvantaged [although I do not think that is the case] it is more likely to have been the plaintiff than the defendants. The litigable issues were agreed and the focus in the hearing was on those issues.

17. [17]
    The contract was partly written and partly oral. It comprised both a written “Agreement for Sale” and conversations said to have occurred in the weeks leading up to the date of the sale that occurred in a number of locations in Bowen. The “Agreement for Sale” includes three specific provisions in addition to the supply of the Norsaga. The document speaks for itself. The entirety of the written and oral terms constitute the ‘Agreement for Sale’ and that expression has that meaning where it is used in this judgment.

The Agreement for Sale made on or about 21 July 2008

18. [18]
    The written terms of the Agreement for Sale are as follows:

“AGREEMENT BETWEEN GRAEME ARTHUR SANDS HEREAFTER KNOWN AS THE PURCHASER AND JAMES MICHAEL AND RAY JEAN VANDERKYL HEREAFTER KNOWN AS THE VENDORS.

The purchaser agrees to pay the sum of FIFTY FIVE THOUSAND DOLLARS $55,000 for the yacht NORSAGA. 

THE VENDORS agree to pay the mooring fee in Bowen Boat Harbour which then will be current until 30 June 2009. THE PURCHASER agrees to reimburse the VENDORS for the amount of the mooring fee, $799.90. 

  THE VENDORS agree to provide the following:

• Reasonable training in the operation and maintenance of the said yacht.
• A manual of operation and maintenance.
• All items of equipment are listed separately.

SIGNED BY THE CONCERNED PARTIES ...”

19. [19]
    The agreement was signed by Mr Sands and by Mr & Mrs Vanderkyl. It was witnessed by a Mr Radford. There was a separate handwritten list of other items of equipment included in the sale, prepared by Mr Vanderkyl. That list of course forms part of the written terms of the Agreement for Sale. The handwritten list has since been lost or disposed of in some way.

20. [20]
    Mr Sands’ first given name is spelt incorrectly in the Agreement for Sale. In the Pleadings and in the QCAT documents (supra) the spelling is “Graham” In the Agreement for Sale the spelling is “Graeme”. This error was not referred to in evidence or in submissions, by counsel. Mr Sands either did not notice it or if he did, he said nothing about it in his evidence when he read the document aloud in cross-examination.

Oral terms

21. [21]
    The material terms of the oral agreement were that:

• “The defendants would repair the remote steering on the yacht so that it was in good working order;
• The defendants would check out the debris on the deck that the plaintiff had noticed to make sure any defect was rectified;
• The defendants represented to the plaintiff that the debris on the deck was not a problem and there was nothing to be rectified; and
• ‘Norsaga’ was in good working order and that the plaintiff would have no difficulties sailing it or living on it.”

The Bill of Sale dated 28 July 2008

22. [22]
    The Bill of Sale (document 20 in the Agreed Bundle of documents provided by the parties with respect to both trials) was attached to a covering latter addressed to Mr Sands at his residential address in Bowen. The Bill of sale records the transfer of 64 shares in the Norsaga from the defendants to Mr Sands (for the purposes of the Australian Shipping Registration Office) and is dated 28 July 2008. The defendants’ address is stated as ‘1A George Street, Bowen’, which was their residential property. The witness to the signatures of the defendants is Mr Radford (to whom I will refer later). Mr Sands’ name and address is recorded as the ‘Buyer’. His first name is correctly spelt as ‘Graham’ in this document, as it is in the covering letter. It seems to me that the Bill of Sale is not a document that Mr Sands would have seen before it was submitted by Mr Vanderkyl for the transfer of the shares.

Pleadings Table

23. [23]
    The following Table details the specific allegations of importance (in light of the way the case was litigated in the course of the hearing) and in the context of my observations that the pleadings did not comply fully with the rules; and the Defence of the defendants and the Reply.

TABLE

24. [24]
    The plaintiff had made a request for Further and Better Particulars. The Response of the defendants was:

• The defendants provided training and the documentation referred to in the agreement for sale.
• The pest inspector who carried out the inspection for the defendants was John McElhinney.
• The engine refurbishment occurred over a period unknown in 2008. The engine was removed by crane and taken to the first defendant’s property where the work was carried out by the first defendant. Bowen Engineering supplied parts and machined valves at the request of the first defendant.
• The parts cost was estimated to have been $900 - $1,000. Bowen Engineering was paid by cash.
• The voyages in the ten years prior to and in 2008 comprised twenty or more conducted in the Bowen Whitsunday waters. Consumables were paid for by cash and no documentary record was made or kept.

Preface

25. [25]
    In 1986 Mr Sands was injured in a motor vehicle accident. He suffered head injuries, a skull fracture and encephalomalacia involving his left temporal lobe that caused an acquired brain injury.

26. [26]
    Those injuries included a number of medical conditions, including complex partial seizures, post-traumatic epilepsy and a severe reactionary form of anxiety depressive state, the latter due to his chronic illness and living conditions.

27. [27]
    The consequence of the acquired brain injury was that Mr Sands lacked the capacity to maintain his employment and was awarded a disability support pension.

28. [28]
    After 1986, it is alleged that he had and he continues to have, impaired mental capacity to understand and make financial decisions or major life decisions.

Issues for determination

29. [29]
    There are two issues:

A.Whether Mr Sands was under a special disability in dealing with the defendants in the sale and purchase of the Norsaga by reason of an acquired brain injury, epileptic state and anxiety-depressive state, attributable to injury caused in a motor vehicle accident in 1986, and whether he lacked the capacity to make the contract;

and

B.Whether the Norsaga was in a fit and proper state of seaworthiness and repair so as to be merchantable and fit to be sold.

Agreed facts

30. [30]
    The parties agreed on the following facts:

1. The plaintiff and defendants entered into a contract for the sale of a yacht, “Norsaga”, to the plaintiff on 21 July 2008.

2. The contract for sale was comprised of a written document and oral terms with a consideration of $55,000.00. 

3. The terms of the contract included that the seller would provide to the buyer:

1. (a)
   reasonable training in operation and maintenance of the yacht;

2. (b)
   a manual of operation and maintenance;

3. (c)
   items of equipment listed separately.

4. The plaintiff paid to the defendants the agreed consideration of $55,000.00.

5. The yacht Norsaga was taken possession of by the plaintiff.

6. The yacht Norsaga was slipped in dry dock at Bowen on 21 July 2008.

7. On about 25 June 2012 the yacht Norsaga sank and the hull was fully submerged.

31. [31]
    I have written the judgment in two parts insofar as the two issues for determination are concerned: Part A: Special Disability; and Part B: Seaworthiness of the Norsaga.

PART A:  SPECIAL DISABILITY

The agreed matters in issue on the allegation of special disability

32. [32]
    The parties agreed that the matters in issue on the allegation of special disability were as follows:

1. Whether the plaintiff had capacity to enter into a contract for the purchase of the Norsaga for $55,000.00?

2. If the plaintiff lacked capacity for the transaction, whether the defendants knew or ought to have known he lacked the relevant capacity?

3. If the defendants knew or ought to have known that the plaintiff had a relevant incapacity, was the sale of the Norsaga to the plaintiff by the defendants thereby unconscionable?

4. Did the defendants exercise undue influence over the plaintiff in the purchase of the Norsaga?

5. Whether the contract signed was essentially different from what the plaintiff thought he was signing?

The evidence

Mr Sands

33. [33]
    Mr Sands’ employment at the Collinsville mine was terminated in 1999 because of his disability that manifested as an epileptic condition. Whilst other persons, including his wife, told him that he had epileptic episodes, Mr Sands said that he questioned that he was an epileptic:

“… even to this day I still question it, because I don’t feel it come on. I don’t feel having it. I don’t feel it unless I’ve got battle wounds to recognise it.”

34. [34]
    As to why he questioned [the diagnosis], he said:

“… I don’t feel it. I don’t recognise it. I don’t understand it.”

35. [35]
    Whilst at times he told others – ambulance officers, for example – that he had recognised he had experienced an epileptic episode it was because of the battle wounds. He said:

“… otherwise I don’t know. Sometimes I’ve been wandering around and thinking that something might have happened, but I don’t really know.”

36. [36]
    Mr Sands was asked by Mr Honchin if he told Dr Futter that he didn’t remember having seizures and he replied:

“See, this is what people don’t understand.  I try to tell them, and even when I [was] down in Southport, I had six neuros and even those guys didn’t seem to understand this.  I don’t feel it coming on… I don’t feel it when I have it, and after it, sometimes I wander around unless I’ve got a battle wound or I see something different like a bit of blood or whatever.  I wouldn’t have a clue whether I’ve had it or not and sometimes I never known whether I’ve had it and it’s the only time when I’ve got something that’s out of the ordinary or a battle wound or something is the only time I ever known that I’ve had it.” 

37. [37]
    Mr Sands was asked whether he had been told and knew that he had epilepsy and he replied: “Everyone just keeps telling me, yeah, and I’ve defied it a lot of times.”  He was asked if he knew that that was the diagnosis and he said, “So they tell me.” 

He was asked whether he had from time to time stopped taking the medication and he denied that was the case.  He did not agree with Mr Honchin that he told Mrs Darwen that he had ‘gone off his medication’ and that she would encourage him to get back on to it. Mr Sands said:

“I haven’t been off my medication – I have changed my medication because that Lipitor stuff – I didn’t like that … I stopped taking my medication years and years ago because I couldn’t stand waking up in the morning and getting on it because during the day I would fall off me push bike or something on it and I reckon that’s because I was on that stuff … So I only take it only when I go to bed at night.”  He was asked whether he knew that if he had seizures and had a blank he wouldn’t know what would happen until, “he came around” and Mr Sands said he “wouldn’t have a clue”. 

38. [38]
    He was asked how he was going to deal with that scenario living on a boat and Mr Sands replied, “Well, back then I was going to throw the medication away and live a normal life  … right from the word go.”

39. [39]
    In the QCCU hearing, when shown the loan agreement document and questioned about it, Mr Sands said:

“I didn’t read any of this. I just signed it.”

and

“I didn’t even go to school, mate, so I wouldn’t have a clue what that [a reference in the loan agreement to a ‘Code of Practice’] is.”

40. [40]
    He had first seen the Norsaga many years before that. He spoke to the defendants, which was about a week before applying for the loan. He said that when the loan was made, “I went down and bought the boat”. 

41. [41]
    As to when the idea came to him to live on a boat he said that had been so since he was young. Mr Sands said he spoke to a person or persons - who were ‘carers’, [because he used the word “they”] – who were from “Flexi Care”. They had been driving him to buy groceries, which he said he stopped doing “so they could give [the time] to someone who had a harder time than I did”. The idea came up from the woman who was driving the car. She suggested that he should “… try and get a loan and see if you can get the boat”. Mr Sands said that “… before that, it never really came up, because I could never afford it – to get a boat.” He thought then that “Wow … maybe have a go at it” and he decided to “… have a go and see if I could get [a loan]”.

42. [42]
    He spoke to the defendant Mr Vanderkyl at the boat harbour and asked him if he was thinking of selling the boat. Mr Vanderkyl responded that there was some guy in Western Australia who was thinking about buying it. Mr Sands said he was thinking about buying it himself and he asked “how much”.  He was told “$55,000.00”.

43. [43]
    Mr Sands wanted to know a bit more about the boat and went back to see Mr Vanderkyl later and told him he was going to see if he could get a loan.

44. [44]
    He said the Norsaga one day was put on the slipway. The two of them, he and Mr Vanderkyl, cleared the hull, doing one side each. He asked Mr Vanderkyl how to operate the boat.  The autopilot was not working and they had to work on that.  He said, “The only thing that was real good was the radio, a beautiful radio.” He said he took “things” [debris or frass] off the deck of the boat and put them in a container, and went to the defendants’ house, gave it to them and asked them to check and find out what it was. Some days later he was told there was nothing to worry about. The “things” appear to be that shown in Exhibit V3; that is, the black particles.  I will say something further about this in the course of reviewing the evidence.

45. [45]
    Mr Sands did not ‘negotiate’ the price but just paid it. He was aware that the defendants had already paid for 12 months’ berthing fees so “that was part of the deal of buying the boat, I could stay at the same spot at the marina.”  Mr Sands said, “I don’t bargain for things like that.  If he’s true with me, then I’ll be true with him.  And this is probably what’s let me down all my life, trusting in people.  I’m straight up with him.  I wanted him to be straight up with me… I got cut down again.  I’ve been cut down all my life. … That’s just the way it works.”

The QAS and QCCU documents

46. [46]
    Four “Queensland Ambulance Service’ (“QAS”) Reports and one QCCU ‘Critical Incident Report’ (items 64 to 68 in exhibit V1, the Agreed Bundle of Documents) refer to incidents of epilepsy affecting Mr Sands.

47. [47]
    The Reports relevantly state:

• QAS - 21 February, 2008 – Seen to fall to ground apparently unconscious for a few seconds when talking over fence to neighbour – asymptomatic prior – patient stated he had a history of short duration blackouts caused by his epilepsy.

• QCCU - 08 July, 2008 – stumble and fall against QCCU Branch partition. ‘Loss of consciousness only for a matter of seconds, then he sat up’ Assisted to a seat. He was “… very vague’ and had “no obvious injuries”; and “Now asymptomatic and wished to self-manage his condition … advised to see his MO”.

• QAS - 08 July, 2008 (the same incident) – Unconscious/faint/single event – post-syncope episode. He ‘denies CU staff statement that he fell to the ground while in-line at the tellers. Staff informed QAS that because of patient’s back-pack on his back he did not hit his head. Patient poor with medical history and not really interested in assistance from QAS. Patient informed QAS that he felt fine. Patient informed QAS that he had an appointment in Townsville tomorrow for his annual check-up. Patient stated that it is common for him to have episodes such as todays approximately 2 – 3 times a week.’

• QAS – 11 November, 2008 – Unconscious/faint. On boat Rambling Rose in harbour – wet (fell overboard) – assessed ‘tonic clonic seizure; post immersion’.

• QAS – 09 February, 2008 – Australian Hotel, Bowen – Unconscious/faint/single event – ‘Collapse in Main Street. Patient known to QAS. Suffering epilepsy and has regular fits. Patient is stated to of [sic] collapsed on footpath and then was very vague to talk and wasn’t making any sense to by-standers on scene.’ Abrasion and graze. ‘Patient made aware that he most likely had a seizure but patient declined transport for further investigation. Patient aware of what happened and states this is normal for him.’

Mr Hildebrandt

48. [48]
    Mr Hildebrandt had owned power boats most of his adult life. He operated boats in the barrier reef. His boats included timber boats. He met Mr Sands in about 2008. He had not known him prior to that year. He said that he became very close to Mr Sands because he “could discern that this man had a problem, a mental problem, and he would come down to the boat harbour and I would talk to him and then I’d heard he was thinking about buying a sailing boat, which concerned me greatly”. He said that he told Mr Sands never to buy a boat.

49. [49]
    He spoke of an occasion when he was on Mr Goodall’s boat. Mr Vanderkyl was present and he asked him not to sell the boat to Mr Sands. He told Mr Sands again not to buy the boat. However, Mr Sands did not take that advice and Mr Hildebrandt was upset when he found out about the sale of the Norsaga to Mr Sands. He said that Mr Sands was hopeless at tying ropes and did not know what a “seacock” was.

50. [50]
    Mr Hildebrandt was appointed Administrator for Mr Sands on 29 July 2011. That administration was replaced by the appointment of the Public Trustee on and from 30 October 2012.

Mr Vanderkyl

51. [51]
    Mr Vanderkyl had spent most of his life with boats and he had met Mr Sands in Bowen on one occasion prior to 2008. Later, in about June 2008, Mr Sands approached him about the Norsaga and said he would like to buy it but that he did not have any money.

52. [52]
    A few weeks later Mr Sands came to his house and enquired about the Norsaga again and asked about the price. He was told it was $55,000.00. Mrs Vanderkyl was also present. Mr Sands had responded that he thought it was a ‘fair price’. Mr Vanderkyl said he was “a little surprised”. He said that exchange did not alert him to anything in particular. When asked if he regarded Mr Sands as an astute boat buyer, Mr Vanderkyl answered, “To be honest, maybe not … I found him a little bit naïve at times.”

53. [53]
    He said he met a boat broker, Mr Hinton, on a boat that belonged to Mr Goodall. He says Mrs Goodall and Mr Hildebrandt were not present, to his knowledge, although he did not personally know Mr Hildebrandt at the time.

54. [54]
    Mr Vanderkyl described a meeting with Mr Sands in the following terms:

“He [Mr Sands] sat down at our outdoor dining area and we had a cup of coffee and he asked me questions about the boat. I told him what he wanted to know. I showed him some photos of sailing.”

The conversation in the meeting continued:

 “Q.What sort of questions did he ask you?

A. Oh, how many sails it had, would it be okay to handle it on your own and I told him that, yes, I handle it on my own. It’s just no drama. He asked me hard it was to manoeuvre in and out of tight spots and that type of thing. He asked me how often I painted it.

Q.Did you talk to him about his boating experience at all?

A.Yes, I did. 

Q.What did he say?

A.He told me that he’d done a bit of sailing on boats with other people. He informed me that he was at Hamilton Island one weekend when we raced down there and he had been on board our boat before.  All I can remember is him being on our boat at that time. But it would’ve been a social occasion when everybody was on board.

Q.And did he tell you whether he’d owned boats previously?

A.He told me that he’d owned a trimaran some years before.

Q.Did he talk much about his sailing experience?

A.Oh, yes. We chatted about places we’d been, did he like going down the Whitsundays, did he … you know, Bonner [sic] Bay, Montes Resort. 

Q.Did you form an opinion in terms of his bona fides about purchasing the boat?

A.Yes, he presented as quite a personable man. He presented as someone who is keen and wanted to live on the boat.

Q.So he expressed something about living on the boat?  Is that what he wanted to do?

A.I thought that was pretty good.  I said to him I should be living on the boat, because it would make it a lot easier to look after it.  Because all the varnish needed doing again and when you are there all of the time, it’s easier. 

Q.How long’s he at your place having this conversation for?

A.Would’ve started – I’m guessing at the date.  It was about the 20^th or 21^st June 2008 when he first approached me.

Q.How long was he there at your home talking to you?

A.Oh probably two hours.

Q.Is that the occasion where you told him the price was $55,000?A.Yes, I did.”

55. [55]
    Mr Sands told him he was going to take out a loan for the money and sell his house. Following that meeting, Mr Vanderkyl saw Mr Sands every two to three days. He would come to his house by pushbike. They also went to the Norsaga. Mr Sands would stand and watch Mr Vanderkyl open the seacocks, start the motor and wash the decks down. Mr Vanderkyl said, “I didn’t really think that he was an expert, by any means, but he was willing to learn … and I thought that was okay.”

56. [56]
    Mr Sands had asked about training and was told that it would be “reasonable training”. Mr Sands knew Mr Radford and after the agreement had been signed and witnessed, Mr Sands paid the money to Mr Vanderkyl.

Mr Sands was with Mr Vanderkyl subsequently when maintenance was done and the Norsaga was occasionally manoeuvred in the water. Mr Sands was not controlling the Norsaga but did put the mainsail up on one occasion after being instructed how to do it. Mr Vanderkyl said he was happy “that with a bit more practise, he’d be okay [handling the boat]”. Mr Sands was also with Mr Vanderkyl when he was trying to get the boat off the slipway cradle and when the boat was being operated. However, he did not let Mr Sands handle the boat until after he had paid the money.

57. [57]
    Mr Vanderkyl said that Mr Sands discussed his epilepsy with him on about the second or third visit in June 2008, about a month before the sale. He was told that Mr Sands was in the care of a general practitioner and a specialist. Mr Vanderkyl said he was a ‘little concerned’ about whether or not Mr Sands had it under control. However, he never saw Mr Sands have a seizure. He said he never saw Mr Sands in any difficulty. He knew what a seizure was because he had a sister who suffered epilepsy and he had worked for the Endeavour Foundation for a period of time.

Mr Baker

58. [58]
    Mr Baker was previously a branch manager at QCCU in Bowen in 2008. He dealt with Mr Sands with respect to the QCCU loan application. He said he had been aware that Mr Sands had been in a road accident and he had served him quite frequently in the QCCU branch – probably fortnightly over a period of about ten years. He said he assisted Mr Sands with basic transactions such as withdrawals, deposits and assistance with his bill-paying account. He said in evidence-in-chief that he was not aware of any health problem or condition, or mental incapacity.

59. [59]
    He said he knew Mr Sands had begun receiving an invalid pension and he knew there was some issue about his health. There had been an incident in July 2008. Mr Sands had been at the “member write-up area” and was seen to stumble and fall against a queue partition. An ambulance was called to attend the QCCU branch and Mr Sands was assisted to a seat in Mr Baker’s office. Whilst he “appeared ok although was very vague and stayed with me until the ambulance arrived”. Mr Baker signed off the QCCU internal report. The Queensland Ambulance Service report states that Mr Sands denied the Credit Union staff statement that he fell to the ground whilst in line at the tellers.

60. [60]
    Within the exhibits, there were reports from the Queensland Ambulance Service about other incidents of Mr Sands falling, all of which appear to be related to his medical condition: on 21 February 2008, 08 July 2008 (the QCCU incident), 11 November 2008 and 09 February 2009. Mr Baker said that he did not make further enquiries after the QCCU incident.

61. [61]
    However, he said that Mr Sands had told him “he did have a medical condition of some type and was being monitored and was on medication”. He agreed in cross-examination that in hindsight he possibly should have made further enquiry as to Mr Sands’ capacity to enter into the loan transaction with QCCU. With respect to the loan transaction, Mr Baker believed that he had explained to Mr Sands what was involved and believed he understood. He said he had never had to stop a loan process on the basis of an incapacity to understand in the past and he had done thousands of loan applications. 

Mrs Vanderkyl

62. [62]
    Mrs Vanderkyl in evidence simply adopted what her husband had said about all matters relevant to the hearing, which is not particularly useful. She said she had no concerns about Mr Sands’ mental capacity or ability to function. However, she had driven Mr Sands home a couple of times from her home. In general conversation Mr Sands had told her that he had epilepsy. She knew her husband’s sister had epilepsy. There were no seizures whilst Mr Sands was in her company.

Mr Radford

63. [63]
    Mr Radford, who witnessed the sale agreement, knew Mr Sands from having worked at the mines at Collinsville. He said he had no concerns about Mr Sands generally. However, he said Mr Sands had told him how good he was doing in the mines. When asked about this in cross-examination, Mr Radford said he was not aware that Mr Sands had in fact left the mines [and no longer worked there].

Mrs Darwen

64. [64]
    Mrs Darwen met Mr Sands at the Collinsville mines in the early 1980s. She said she knew Mr Sands had owned a boat in those times. In 2008 she met Mr Sands in Bowen. She said she saw Mr Sands for social conversations at her shop in Bowen, after 1996 and before 2008.

65. [65]
    She said that she had been aware when living in Collinsville that Mr Sands was an epileptic. She said Mr Sands had been a truck driver at the mines. She thought his buying a boat was a great idea and said Mr Sands had been very excited about it. She said they had always talked about his health, the medication and dosages. He had told her that he had ‘gone off’ his medication. He had told her he was going to buy a boat to live on.

Mrs Goodall

66. [66]
    Mrs Goodall gave evidence that she was on her and her husband’s boat in 2008 and that Mr Vanderkyl and Mr Hildebrandt were present, with others. She said that Mr Sands’ name had come up in conversation and that Mr Hildebrandt asked Mr Vanderkyl not to sell the boat to Mr Sands because he had ‘brain damage and epilepsy’, that he was sick and wouldn’t be capable of operating the boat. She said to those present that all of this was ‘common knowledge’ in the Bowen boat harbour. She said Mr Hildebrandt mentioned the issues about Mr Sands a couple of times. She knew Mr Sands had problems. He had fallen in the water on one day and had to be fished out. She said that “everyone knew he had problems”. 

67. [67]
    She said she only recalled this conversation in 2014 after being reminded about the meeting that occurred on her and her husband’s boat, but maintained that she had an independent recollection of it once prompted about the meeting.

The medical evidence

1.Dr Trezise

68. [68]
    Dr Trezise has been Mr Sands’ treating general practitioner since August 1999. He said that Mr Sands had a very complicated and severe form of epilepsy which was also associated with a psychiatric condition.

69. [69]
    Dr Trezise said that he regularly had consultations with Mr Sands and in the 12 months prior to the hearing he had seen him 14 times. He surmised that the average consultation timing would be just over once a month.

70. [70]
    Dr Trezise recalled one consultation where Mr Sands informed him of his intention to have a change of lifestyle which included buying a sailing boat which would replace his residence on the land. He was not aware of any previous history of, or association with boats or sailing, but he was concerned with the stated intention in the sense of it being quite devastating and worrying to him because of Mr Sands’ medical condition.

71. [71]
    He said that the medical condition at that time was that the epilepsy was very much uncontrolled and he also had a severe reactionary form of anxiety-depressive state due to his chronic illness and living conditions. A neurologist was consulted at about that time. He said that Mr Sands had frequently had epileptic fits and that there were some difficulties with his compliance with medication, which he self-adjusted by reducing his own dose, from time to time. When he had suffered a seizure, he would be often unsure of whether he had taken the medication. He said that Mr Sands would be aware that he suffered epileptic fits.

72. [72]
    Dr Trezise considered that there had been no significant change in Mr Sands’ capacity to understand significant financial transactions, such as a loan to buy a boat or what might flow by way of consequence from the purchase of a boat, between 2008, when he understood the transactions in question had taken place, and the time of the hearing in February 2014.

73. [73]
    He considered that the simple concept of buying something and having to pay money for it was within Mr Sands’ understanding, but the consequences of what might flow from a transaction was not. It was the future consequences that concerned Dr Trezise as far as an understanding of a contractual transaction were concerned even if he had been aware that if you borrow money from a lender it has to be repaid. However, the doctor was not sure that he would understand that in default of payment the security taken for the loan might be recovered by the lender [in this case, the house over which the loan had been secured].

74. [74]
    Dr Trezise said that the epileptic state was one where after each seizure there was a post-ictheral state which was a period of vagueness which was indeterminate of time and in respect of which it was difficult to determine how long a particular patient would stay in that state. However, he agreed that even in the post-ictheral condition its presentation could be subtle and be unnoticed by an observer.

75. [75]
    Insofar as dementia was concerned, Dr Trezise did not express a view save for a reference made by a psychiatrist in a document that he had read.

2.Dr Reimers

76. [76]
    Dr Reimers, consultant neurologist, in several reports made the following comments:

11 June 1998 – there was “an abnormal recording showing a focal slow-wave disturbance over the left anterior temporal region”.  He considered associated epilepsy could be possible.

19 June 1998 – “This man’s history is very suggestive of a seizure disorder. I think the history would suggest that recently he has been having complex partial seizures.  I have told him that I would not regard him as being fit to drive either a motor vehicle or, particularly, a bulldozer at heights. He would need to be seizure-free and compliant with medication for at least six months before I would consider allowing him to resume driving.”

4 May 1999 – “I have seen this man on a number of occasions. He suffers from post-traumatic epilepsy.  He was commenced on Dilantin in June of last year and since starting this drug his seizure control has been better, although according to his wife he still suffers from occasional complex partial seizures. Because of his seizure disorder I would not regard him as being fit to work in the coal industry.”

27 November 2008 – “There has been no significant change in his seizure frequency.  He experiences about two to three complex partial seizures per week.  There is no aura.  He is reported to stare and may dribble and fall to the ground.  Past medical history has otherwise been unremarkable.  The story here is very suggestive of recurrent complex partial seizures.”

3.Dr Futter

77. [77]
    Dr Futter, consultant psychiatrist, was asked on behalf of the plaintiff to comment on whether a person with no medical training would be aware of Mr Sands having an impaired cognitive capacity.

78. [78]
    Dr Futter said that the MRI scan of Mr Sands showed severe head injury with significant structural brain damage and encephalomalacia (softening of the brain) so that the usual anatomic divisions of the brain are not easily discernible. He said that neuropsychological testing could in fact give a false positive by suggesting that a patient’s decision making capacity is intact when in fact on clinical testing, becomes apparent that the person is not capable of decision making.

79. [79]
    Dr Futter said that for a patient to be deemed to have the capacity to make a decision, three criteria have to be satisfied, namely: that the person has to understand the nature and effect of the decision; and the person has to be able to freely and voluntarily make the decision; and the person has to be able to reasonably communicate the decision.

80. [80]
    Dr Futter administered a mini mental status examination (MMSE) which scored 23 out of 30. He said that “this score puts him into the range for the diagnosis of a dementia due to an organic brain injury”.  He opined that the motorcycle accident that gave rise to that injury would have resulted in a cognitive decline that would have remained unchanged in the ensuing period.  Dr Futter said the use of the MMSE was not to establish or diagnose this and not to come to any conclusion about the patient’s capacity.  It was to establish the existence of a degree of cognitive impairment.  He said that incapacity was not dependent on any specific diagnosis.  Rather, it was dependent on the ability of the person to understand and act on information relevant to making a specific decision and to appreciate the consequences of that decision.

81. [81]
    He opined that the decision to take out a loan and to buy a boat with the understanding that he would have to live on the boat together with the consequence of the financial arrangements necessary were not matters that Mr Sands would have understood. That included the consequence of the risk of falling from the boat into the water if he had an epileptic seizure. He said that Mr Sands’ capacity to know about the consequences of receiving a loan were impaired. He said that Mr Sands thought “very concretely” and whilst he was capable of sustaining a “superficial conversation”, when any detail was sought he was unable to comply. Dr Futter referred to Mr Sands not being able to explain why he was on a disability pension and not having any idea how much his pension was or what deductions had to be made from it. He also did not understand the concept of having to pay rates for a house.

82. [82]
    He said that if an average person stood behind Mr Sands in a supermarket queue and engaged him in light conversation, they may have no idea of his capacity. However, when asked specific questions the cognitive difficulties would soon become evident. Dr Futter considered that if Mr Sands had been interviewed with respect to an application for a loan, an average lay person employed by the financial institution should have noted the impaired cognitive capacity of the customer. Similarly, he said that if the average lay person sat with Mr Sands to negotiate the terms of the contract for sale of a boat then they would be alerted to his impaired cognitive capacity and put on notice that he did not have sufficient capacity to enter a transaction.

83. [83]
    He said that Mr Sands’ severe brain injury at the time of his accident was enough to impair his decision making capacity and testing the different domains of cognitive functioning would not throw any further light on the issue.

84. [84]
    Dr Futter concluded that Mr Sands was not able to understand the nature or effect of the decision to buy a boat or to apply for a loan to buy it. He said the dementia to which he referred was due to brain injury. It was not of a progressive nature such as may be suffered by other persons. He considered that the evidence of dementia would be a matter for anecdotal evidence, in effect, from persons who knew Mr Sands before and after the accident.

85. [85]
    Dr Futter’s view was that as a result of the impaired cognitive capacity and his lack of insight into his epileptic state, Mr Sands lacked the capacity to make significant decisions about his financial affairs and that such lack of capacity would have existed in 2008 when the negotiation and purchase of the boat occurred.

86. [86]
    In the oral evidence at the hearing, Dr Futter confirmed that Mr Hildebrandt had been present at the consultation. It seems that Mr Hildebrandt provided information and support for Mr Sands, to him. He had relied on the referral material and Dr Reimer’s reports. He said so far as epileptic seizures were concerned, a person would not necessarily know that one had occurred. Insight about seizures may fluctuate. He said that the consequences of buying a house were different from those of buying a boat, in Mr Sands’ circumstances.

87. [87]
    At the end of further cross-examination by Mr Hockings (for the QCCU) he was asked a question on a hypothetical basis: that if Mr Sands was buying a house on dry land would he have the capacity to enter into a loan contract and mortgage? Dr Futter replied that, “On the day that I saw him, I’d have to say that he probably would understand, but I didn’t have any specific questions relating to buying a house.  You see, that’s why the clinical assessment of capacity relates to the decision at hand.”

88. [88]
    However, in re-examination by Mr Byrne, Dr Futter said he would have to retract his statement about the capacity to obtain a loan to buy the house because, in effect, it was contrary to his earlier evidence that Mr Sands’ did not know how much his pension was, what deductions had to be made from the pension and he failed to understand any concept of paying rates for a house. He explained that he had been somewhat fixated on the consequences of, rather than the ability to understand, such a contract and to act on information relevant to making a specific decision.

4.Dr Varghese

89. [89]
    Dr Varghese, consultant psychiatrist, provided an opinion to the lawyers for the QCCU in respect of the case it made against Mr Sands. Dr Varghese did not consult with Sands. His opinion was based on documents, including those relating to the QCCU loan and the medical reports provided by other medical practitioners, including another consultant psychiatrist. Dr Varghese primarily focussed on the latter reports in forming his opinion.

90. [90]
    Whilst he was retained for the purpose of an opinion by QCCU and therefore focussed on the loan transaction made by that financial institution to Mr Sands, nevertheless the opinion has some comparative relevance to the subject litigation which concerns the action by Mr Sands against the present defendants about the sale and purchase of the boat.

91. [91]
    Dr Varghese summarised what he understood of the reports of Dr Trezise, Dr Reimers and Dr Futter and expressed opinions about them. 

92. [92]
    With respect to the report of Dr Trezise, he expressed a doubt that an “anxiety depression state” of itself would impair a person’s capacity to enter into a financial contract unless it was so severe as to amount to a state of dementia. He contrasted failure to make ‘good decisions’ with ‘impaired capacity’ and distinguished those relative states.

93. [93]
    Dr Varghese did not consider epilepsy to be directly relevant. However, “post- ictheral confusion” (that is, episodic post-fit seizure mental impairment) could be relevant, but would need to be noticeable although it could present as a subtle state to an observer. He considered poorly controlled epilepsy can be associated with gradual intellectual decline.

94. [94]
    With respect to the reports of Dr Reimers, he said that there was definitely evidence of a brain injury and it was probable that the epilepsy resulted from that injury. He expressed the view that a person who has a ‘complex partial seizure’, “may present as odd movements, speech difficulties and clouding of consciousness which can sometimes be subtle but there is decreased awareness of the environment to varying degrees”.  In such a state (which is mostly brief but can be prolonged), an individual would not have the capacity to enter into a financial contract at the time.

95. [95]
    With respect to the report of Dr Futter, he questioned some of the bases that Dr Futter relied on in arriving at his opinion that Sands had an impaired capacity.  He did not agree that the MMSE result obtained in the analysis made by Dr Futter indicated dementia to the extent of impairment of capacity.  He referred to the MMSE as being a screening instrument which might indicate a need for further and more specific investigation before any determinative finding could be made. 

96. [96]
    Dr Varghese considered that a lack of insight into epilepsy may indicate frontal lobe damage in addition to the temporal lobe damage.

97. [97]
    He doubted the presence of dementia because Mr Sands would not have been able to work as a coal miner prior to the emergence of the epilepsy. In oral evidence before me, Dr Varghese was asked about the work history of Mr Sands on the basis that Mr Sands’ employment in the mines as a’ bulldozer operator’ had been terminated because of the emergence of epilepsy. He agreed with Mr Byrne that if the employer knew that an employee was having seizures whilst employed as a ‘truck driver’, that would be extremely negligent conduct by the employer. Dr Varghese said that the fact that someone with epilepsy was having seizures did not of itself remove capacity unless that person was engaged in a [contractual negotiation/agreement] at the time of a partial complex seizure or during a pre or post-seizure stage, because epilepsy was an intermittent condition.

98. [98]
    Dr Varghese expressed the view that despite the brain injury if Mr Sands was able to work in a reasonably skilled occupation which would require a certain degree of cognitive function, it would be unlikely that there would have been deterioration in his state unless the epilepsy had been so poorly controlled that he had experienced periods of ‘anoxia’ which could have led to the deterioration.

99. [99]
    He was asked about impulsivity in the context of the purchase of the house by Mr Sands being impulsive, having for example occurred without an inspection being made of the property. He referred to persons who had made bad decisions as a consequence of impulsivity and said that did not mean that the persons necessarily lacked capacity. However he did say that frontal lobe dysfunction would certainly affect capacity. Whether capacity was fully lost would be debatable but there would certainly be impairment.

100. [100]
     The issue of psycho-social functioning was one which Dr Varghese thought might reflect on the issue of capacity in the sense of adding another layer of information upon which an analysis could be made. This included things such as work history, financial dealings, marriage relationship and whether there were issues of compensation being paid for specific conditions.

101. [101]
     Dr Varghese considered that there was insufficient documentary data to indicate capacity or not. He expressed his view that he could not say one way or the other, in the following terms:

“Given the head injury and demonstrable brain damage as evidenced by the CT scan and the MRI leaving aside the question of epilepsy, it may well be that Mr Sands lacks capacity or is impaired in capacity with respect to entering the contract.  However, as discussed in my comments with respect to the report of Dr Futter, one could not conclude from the report that there was indeed loss or impairment of capacity.  Please note again that the MMSE result of 23 out of 30 is not meaningful on its own and that the instrument is a screening instrument. Further detailed neuro-psychiatric assessment is required and perhaps neuro-physiological assessment.”

102. [102]
     Dr Varghese agreed in cross-examination by Mr Byrne that he could not give an opinion on whether Sands had capacity or not.

PART B: SEAWORTHINESS OF THE NORSAGA

The agreed matters in issue on the allegation of unseaworthiness of the Norsaga

103. [103]
     The agreed matters in issue were:

1. The seaworthiness and general condition of the Norsaga at the time of sale.

2. Did the defendants meet the terms of the sale agreement?

104. [104]
     The word “seaworthy” is defined in The Macquarie Dictionary, 2^nd Revised Edition as “adj. (of a ship) adequately and safely constructed and equipped to sail at sea.” The word “seaworthiness” is the noun.

The evidence

Mr Sands

105. [105]
     Mr Sands said to Mr Honchin that when he lived in Collinsville he had bought an old fibreglass trimaran and had it for about eighteen months. He said that it had been a boat wreck that the sellers had found and had fixed up. He was asked if he had raced the boat and he replied, “I could never race a boat by myself at that stage, no way in the world.”  He said he learned to sail and that’s why he ended up buying the trimaran and he felt quite comfortable doing that himself and that he did go out overnight on the trimaran.  He did not do any extended voyages.  He would have loved to spend more time on the trimaran “especially to learn more about how to handle a boat myself and all that stuff.  That was the whole idea of it.” This appears to have been at a time prior to Mr Sands’ motor vehicle accident.

106. [106]
     Mr Sands said he did not doing anything to check out the soundness of the boat or whether the boat was okay because “… I trusted him”.  He did not engage a marine surveyor or boat labourer or someone to have a look at the boat.  Mr Sands said that he was told by Mr Vanderkyl that there was:

“… a little bit on the deck that needed to be done because when I first seen him, he was up there sanding it back with a big sander or a big disk sander, and he told me about that, but otherwise no. The rest of it was supposed to be in good nick. He’d just ripped the motor out and fixed it up and that was ready to go. The only other thing is trying to get the autopilot and those particular things going.”

107. [107]
     Prior to the sale Mr Sands had taken one trip on the Norsaga around Stone Island in ‘the port’.

108. [108]
     He said that Mr Vanderkyl told him that the boat was in “good condition” and he said he told Mr Vanderkyl he intended to live on the boat. He said he didn’t think he needed to do anything, such as checking the soundness of the hull by tapping it with a hammer “or something like that”, even when they were cleaning it down.  He said the boat was “flat on the water”. Mr Sands said that prior to the sale he was shown the engine compartment in the boat. He described it as a “… bit of a nightmare, most of the wiring and all that. A few things he was still playing with through [sic] that stuff to check it out and make sure it worked and all that stuff’. I’m not a technician or anything like that, it was a nightmare trying to work that stuff out myself.”

109. [109]
     He had been present when the Norsaga was put into the “dry dock” by Mr Vanderkyl.. He continued,

“Q… Mr Vanderkyl had you manoeuvring the vessel while he indicated left or right for him?

A.Oh no.  No.  No.  No. That’s his baby, mate, not mine.

Q.I put it to you that as part of the process of showing you how to handle  and operate the boat …? 

A.Oh, no.  No. No. No.  No.  No.  I couldn’t do that.  No way in the wide world.  When you put me between two piers he showed me how to do it with the ropes?  … I understand that, but no, no, no, no, no, not putting it on a slipway. That’s out of my league, mate.

Q.Well, you were going to have do that at some point in time weren’t you?

A.Yeah.  But that was my problem later on down the track.  That wasn’t then.

Q.Okay? 

A.That wasn’t even in my boat.”

110. [110]
     Mr Sands said Mr Vanderkyl showed him how to “come up, how to approach”.  He said he only had “a day run to do that, that night run to do that, the trip around Stoney to do that, and that was it.”  He said he also “… had to go up and pick up the rope … ready to grab the rope, ready to hook up in the front … when you are hooking up that rope in front and hook it up you had to reverse back into the back one to grab the back one … and that was a number one priority he gave me on that one and it worked spot on.”

111. [111]
     He said he had a feel of the tiller. Mr Vanderkyl showed him how the sail went up. He said, “Nearly every sailing boat’s the same – got that same little bit of gear, but with the back mizzen-masts and all that, I have never put one of them up in me life – still haven’t put it up.”  He was asked whether he felt comfortable about operating the boat and he replied, “I was excited … to think I was going to get the boat.  Yes.”

112. [112]
     Mr Sands said that the autopilot had not been fixed. He denied telling the defendants that he would fix the auto-steering saying in evidence, “I wouldn’t have a clue how to do, no, he was doing that”. He said he did not tell the defendants that he had a relative who was an electrician and who could do it. 

113. [113]
     Mr Sands described a trip across Port Dalrymple to Gloucester Island that he took on the Norsaga with his brother. They motored a fair distance and then they sailed with just the ’genoa’ up. When they anchored they could not find any lights that worked properly and the following morning the motor would not start. The batteries were flat. They pulled the anchor up and sailed back to Bowen but had to anchor outside the harbour because they could not enter without motor power. Mr Vanderkyl was contacted and he brought a battery out to the Norsaga and the motor was then started.

114. [114]
     Mr Sands was asked about the battery being drained on the journey to Gloucester Island and Mr Honchin asked him about whether the fridge was left operating through the night. Mr Sands said, “The fridge works off the motor.  It can only work up and charge up – it had to have the motor going to charge the fridge up.”  He said he didn’t run the motor all the time.  He said that the charging of the fridge “was one of the first things Mr Vanderkyl showed him and referred to “these little wheels you had to turn on”.  Mr Honchin said to him, “Two little wheels, a clutch arrangement?” and Mr Sands replied, “What’s the clutch?  I don’t know what the clutch is” and then added, “The only thing I could think of were the clutch thing would be a compressor.  We used to have them on the machines at the mine.”

115. [115]
     He was asked whether looking after the boat required a lot of work and he said, “Well, later on I found out it did but at the time … I was just quite happy with the fact that I was getting a boat.”  He was asked if he put his mind to the ongoing maintenance and he replied, “I knew from what I had seen and read and that sort of stuff but when it comes down to later on, I didn’t understand it.”  He said that after he purchased the boat there was oil in the bilge and that became a constant problem to pump out. Mr Sands made this observation: “… and to this day, and you can go around there now, it is still running out now. It has never stopped running out of that and I mean it come out like syrup, out of the bottom of it, and it’s never stopped.” That statement is curious because it is common ground in this matter that the Norsaga had been for a long time and was at the time of the hearing, a wreck.

116. [116]
     He had tried to move his possessions onto the boat but the rain started and he had to go back home. The water was leaking through the deck and he described it as being “like a sieve”. The boat was flooded. He was asked if he washed the decks down with salt water and he replied, “I tried all that sort of stuff and especially through wet weather and all that sort of gear and it drives you nuts when it leaks all through it and you have got to keep pumping the dam thing out  … it’s been a nightmare.”  He said he couldn’t live on the boat because there was rain just pouring in on it and he said there was a period after he first bought the boat in July 2008 when he was away for about five weeks.

117. [117]
     Mr Sands described several photographs (Exhibits V4 to V13) and made the following comments [I have added observations from my own appreciation of what is depicted in each photograph]:

• V4 – he recognised the motor, hoses and wiring, and said that the motor was in the condition depicted in the photo when he purchased the Norsaga. 

[the photograph shows a jumble of hoses and wiring, some showing corrosion, in a significantly damaged or deteriorated condition.]

• V5 – he described the photo as depicting the engine but in a little bit worse condition than when he purchased the Norsaga.

[the photograph shows a pulley in a rusty condition and pulley cables deteriorated condition.]

• V6 – he said the photo depicted the new pump that he had to get.  The old one that was replaced fell apart when an attempt was made to repair it.

[the photograph part of a pump in a rusty and deteriorated condition.]

• V7 – he described some timber that was rotting out on the starboard side exterior that required a bung to be inserted. He said that he had not seen it prior to the purchase of the boat.

[the photograph shows the starboard side of the Norsaga amidships to stern.]

• V8 – he described a view of the boat as you walk into the deck cabin. The condition was close to what it was when he purchased it. 

[the photograph shows insect detritus on the deck where it meets the base of the deck cabin wall.]

• V9 – he referred to the hole in the starboard side of the boat and said it was about eight or 10 months after the purchase that he first noticed it.

[the photograph shows the ‘bung’ or ‘doughy patch’ (depending on witness descriptions – infra – on the starboard side of the Norsaga.]

• V10 – the photograph depicted the Norsaga about 18 months after purchase.  The motor was pretty clean at the time of purchase and the condition shown in the photograph was because the rain and everything was coming down off the deck onto it.  There had been a little bit of salt around the bolts on the right-hand side of the engine, when he first saw it..

[the photograph shows part of the engine and pipework

• V11 – it depicted part of the inside of the cabin as at the time of purchase. However, it was not as bad and the timber needed to be cleaned up in order to improve it.

[the photograph actually shows a padlock and key and timber although it is not readily identifiable as being within the deck cabin.]

• V12 – he said was similar to V11. The condition shown was a little worse in the photograph than when the boat was purchased. 

[the photograph shows a pulley in a rusty condition and pulley cables in a deteriorated condition.]

• V13 – it depicted part of the pump that had to be replaced, maybe five or six months after purchase.  He described the “stuff around the outside edge” appeared like that because the boat was ‘sitting’ and not moving. It made it look worse. He said “the wall and everything on the outside and on the left hand side” was originally like that. In other words, there was some extra rust because the engine was not working.

[the photograph machinery in a rusty and deteriorated condition.]

118. [118]
     Mr Sands was asked if he remembered the signed agreement and he replied, “Yeah, but I wasn’t thinking of that [because he was excited about the boat].”  He was shown the sale agreement and read it aloud in court but said that at the time he didn’t read it but just signed it “because we’d already talked about that”.  He didn’t have to read it.  He told Mr Honchin that he was “happy that the terms that he had read over [in court] were consistent with what he had agreed to.” He said that Mr Vanderkyl briefly spoke to him about the general maintenance of the boat: 

“He showed me how to start the boat, how to turn the main key on and off and all that part of it – that’s as far as we went at that point.” 

119. [119]
     He said that he did not prior to the purchase do a walk around of the boat and he was not shown the air nodes that had to be replaced from time to time. It was dark at that time. He had been on the top deck when it was moored but not when it was on the slipway. He said that he had got a zodiac (a rubber dinghy) and “that was given to me later on and is not in the best condition”. 

120. [120]
     Mr Sands said that Mr Hildebrandt had said that it was up to him if he was going to buy the boat but he didn’t think that Mr Sands should. He said he was the only one that ever came and said, “No” to him.  He said that he did not get everything that he was supposed to get and things were supposed to be fixed up but Mr Vanderkyl never did.  He said the sails were all rotten and the only ones that were any good were the ones that were hanging up on the boat.  The other stuff he took home with him and he eventually opened them up and they were “had it”.  That was several months after the purchase.  He said that Mr Vanderkyl did not do what he was going to do or if he did do it, it didn’t work.

121. [121]
     Mr Honchin asked him whether the list of things that were to be provided were in fact given to him and he agreed he got them but added, “I wouldn’t have a clue what’s in them though, I’ve never read them.” He asked Mr Sands about the deficiencies on the boat and suggested that he had never spoken to Mr Vanderkyl about them. Mr Sands said that he went away for a few weeks after he bought the boat and when he came back Mr Vanderkyl had gone away on holidays and that in any event he virtually owned the boat at that time.  He said, “… I can’t do anything to him.  I can’t hold him down and make him do things…” Mr Honchin asked him,

“Q.Well you are suing him aren’t you?”

A.Me? 

Q.Yeah?  Well that’s what you’re doing isn’t it Mr Sands?  We’re here for five days because you are suing Mr Vanderkyl and Mrs Vanderkyl?

A.Back then I didn’t have a clue what was going on at all.  Right?  It’s only after all this period of time that I’ve had a guardian and assistance to end up in this situation now.  Otherwise, back then the only thing I had left was to throw everything in the bin and just give everything – let the dam boat sit out there in the middle of the water and sink, which it’s done twice, and these people have rescued me because it can’t even float.”

122. [122]
     He was asked whether his previous boat that he owned was not a wooden hulled or wooden deck vessel and whether he had any understanding of what was required in terms of the maintenance of a wooden hulled vessel and he responded, “No … I was about to learn.” 

123. [123]
     He said that he had talked to Mrs Darwen about selling his house and buying a boat and living on the boat. Mr Honchin asked him if she had said that it sounded like a good idea and Mr Sands responded, “Well, she didn’t say that, but she said that she used to sleep on the boat. She said it was beautiful to sleep on, and that was part of the conversation.”

124. [124]
     Mr Sands said the engine had ceased to work on the Norsaga by March 2009. He said he had never slipped the boat because he didn’t think he had to. He knew the hull had to be scraped down from time to time but he planned to do that himself by diving in the water and scraping it while he was diving. He never even thought of having it slipped. He did not think of getting a surveyor to look over the boat before he purchased it. He said, “Well I was talking straight up to the guy I was buying it off and we were just one on one, straight to each other.” 

125. [125]
     He said the boat had sunk twice, the second time only “several months ago”. It half sank the first time and it fully sank the second time. The second time the hull went under the water, but not the first time. 

126. [126]
     He was asked about the salt and corrosion and Mr Sands that “a lot of that started right after it first started raining.” He said that when he first got the boat, you would walk on the deck and it was soft.  It got worse.  He said, “I thought at that stage that I could overcome that, whatever it was.  I didn’t know what it was at that stage.  But you are talking about maintenance, and that was the whole reason for that, which I didn’t understand at that stage either.”

127. [127]
     In cross-examination by Mr Honchin, Mr Sands said:

“Q.When you purchased the boat you had plenty of opportunity to look over the boat?

A.Yes.

Q.You had an opportunity, if you wished, to get a surveyor?

A.Yes. 

Q.Or someone else to come and have a look at it?

A.I could have.  Yes.

Q.But you chose to simply go ahead and purchase the boat?

A.Yes.

Q.It’s a boat that you’ve seen in the past. It’s a boat that you wanted?

A.I’d talked to the owner about it.  Yes.

Q.You’d talked to the owner about it and it’s a boat that you wanted?

A.Hey?

Q.And it was a boat that you wanted? 

A.Yes. At that stage.  Yes - the boat I thought I was getting.”

128. [128]
     Mr Sands said that he had not given any instructions to Mr McFarlane about a survey of the boat and believe that was something that Mr Hildebrandt had done. He referred to Mr Hildebrandt giving him a hand and doing things on the boat for him. He was asked about the oil that was in the bilge and he said, “I didn’t really know there was much of it.” He said, “I didn’t know it was there at the time when I bought the boat.  I didn’t have a clue it was there.” 

129. [129]
     Mr Sands said that he had only seen the boat out sailing out once many years earlier and it didn’t even have the sails up. It was only motoring. He was asked whether when he was purchasing the boat he asked Mr Vanderkyl whether or not he had insurance on the boat and he replied, “No.  That’s his business, not mine.” He was asked if he knew that insurance was required for the boat if it was to be in the harbour and he replied that he had not planned on that. He couldn’t afford after the twelve months to stay in the marina and he was going to just park it out in the bay.

130. [130]
     He was cross-examined about the use of drugs when he and his brother took the boat on the trip to Gloucester Island. He said that he ‘turned cold turkey’ in 1998. I interpreted that as meaning he did not use drugs on that trip and that he had given up using drugs many years ago. He implied that his brother had been on a hospital prescribed methadone program about that time I am not sure what the questions were directed to, but I consider them to be irrelevant.

131. [131]
     He confirmed that there had been a collision when the boat was outside the harbour at night time but only on one occasion when a fishing boat bumped into the Norsaga.

Mr Hildebrandt

132. [132]
     Mr Hildebrandt had owned boats since he was a young man. He had been involved in boating all his life and was in a live trout fishing business in the last five years or so. He had never owned a sailing boat, however he had owned timber boats and he had now had a 30 foot ‘timber ply with fibreglass cover’ boat. He had many years of experience maintaining timber boats. He agreed that a wooden hulled yacht required a lot of careful maintenance.

133. [133]
     He had not known Mr Sands prior to a short time before the sale and purchase of the Norsaga. He said that his relationship was one where [iterating the passage cited in the summary of evidence of Mr Hildebrandt in PART A] he was “very close because even that time I could discern that this man had a problem, a mental problem, and he would come down to the boat harbour there and I would talk to him and then I’d heard he was thinking about buying a sailing boat, which concerned me greatly.” He did not know when he met him that Mr Sands suffered from epilepsy, but he “knew he had a mental problem”.

134. [134]
     Mr Hildebrandt subsequently was appointed as Administrator for Mr Sands up until the time the Public Trustee of Queensland became Administrator..

135. [135]
     He is Mr Sands’ Litigation Guardian in this proceeding.

136. [136]
     Mr Hildebrandt gave some evidence about Mr Sands’ capacity to manage tasks on a sailing boat, specifying two matters in particular: he said that Mr Sands was hopeless at tying knots in ropes; and that Mr Sands did not know what a’ seacock’ was. Mr Hildebrandt described a ‘seacock’ as a valve that drew salt water from the ocean to the pump for the heat exchanger [on the motor] and exited out the muffler. He said that if there was a leak [in the valve or circulation system] and Mr Sands didn’t know where it was, the vessel would likely sink.

137. [137]
     He realised after meeting Mr Sands that he had a very short period of experience with boats. Mr Sands had told him that he had wanted to live on the boat. He said another man, a Mr Tom Walls, warned Mr Sands against buying a boat. He was present when this occurred, he believed, at Mr Sands’ house.

138. [138]
     He agreed that he offered advice ‘about not ever buying a boat’ to Mr Sands but that Mr Sands did not take that advice.

139. [139]
     There was an occasion when he had been invited onto the vessel owned by Mr and Mrs Goodall. He said that Mr Vanderkyl and a ship broker from ‘Ensign’, Mr Hinton, were also on board. He sat at the end of a table with Mr Goodall, Mr Vanderkyl, Mrs Goodall and Mr Hinton seated around it. There were conversations about the Norsaga being for sale. Mr Vanderkyl said he may have a buyer for the boat. Mr Hildebrandt said:

“… that’s when I came in and I said I hope it’s not a gentleman who rides a push bike and sometimes tows a trailer behind. And he said, ‘Yeah, that’s him’. And I said, please, do not sell your boat to this man.  He has brain damage and he has severe epilepsy… I explained he had an accident in Collinsville.”

140. [140]
     Mr Vanderkyl didn’t say anything to him. He again said to Mr Vanderkyl, “… please, do not sell your boat to this man, because brain damage, severe epilepsy and boats do not mix.”

141. [141]
     He said Mr Vanderkyl had also told him that Mr Sands has said to him, on an occasion when he had kept coming around to Mr Vanderkyl’s home, that “… he had been to Townsville.  He caught a bus, went to Townsville and saw his specialist doctor, and the doctor said that he could own and operate a 40 foot vessel.”  Mr Hildebrandt said that he had remonstrated with Mr Vanderkyl about such a thing having been said and he did not believe it had been.

142. [142]
     He had asked if he could inspect the Norsaga and Mr Vanderkyl replied, “Yeah. No worries.” He said Mr Vanderkyl told him there were a couple of leaks in the Norsaga but “all boats leak”. He said he found the vessel “shocking. The decks were all spongy. He had been sanding the deck. I went down below, looked at the motor and I was disgusted and I walked up top again.” Mr Hildebrandt told Mr Sands that the Norsaga was in terrible condition and told him not to buy the vessel or any other vessel. 

143. [143]
     Mr Sands subsequently purchased the Norsaga whilst Mr Hildebrandt was away on holidays. When Mr Sands told him the boat had been purchased, Mr Hildebrandt took the view that there was nothing further that he could effectively do, in effect, to reverse that position.

144. [144]
     However, he had asked Mr Vanderkyl in early October 2013 to take the Norsaga back. He asked him to make an offer, even if it was only half of the purchase price. Mr Vanderkyl did not take up the invitation. Mr Hildebrandt had attempted to put the Norsaga on the market and whilst there were some expressions of interest, no offers were made. The litigation had commenced towards the end of October 2013 and the factual circumstances described in the Statement of Claim were related to him by Mr Sands.

145. [145]
     He had seen water coming out on a daily basis from the vessel, as a consequence he believed of the operation of an automatic bilge pump. The motor had become seized about five months after Mr Sands purchased it. The Norsaga had taken on water and getting lower in the water [half sunk] because the plimsol line was under water. He first noticed oil in the bilge after Mr Sands had bought the Norsaga. He said it was not usual for oil to be in the bilge and that it should not happen.

146. [146]
     He described the imposition upon his own time having to be spent in starting the generator to charge the batteries daily, or sometimes every second day, in order for the equipment on the Norsaga to work.

147. [147]
     He believed the Norsaga sank around [Bowen] Show Day, the date being the 25 July 2012.

148. [148]
     Mr Hildebrandt had taken a series of photographs [exhibits V3 to V13]. One of the photographs which he said was taken about nine months after the purchase of the Norsaga by Mr Sands (that is, in early 2009), showed the detritus of insects on the deck of the Norsaga. He took the detritus (or a sample of it) shown in photograph exhibit V3 to the local pest control technician (Mr Geiszler). He also referred to a photograph showing what he described as a “bung” in the starboard side of the vessel. He said he subsequently put a patch over the bung.

149. [149]
     A further twentythree photographs [exhibit V18] were taken by him about eighteen months prior to the hearing. He described some of those in evidence. They show the Norsaga afloat but in a significantly damaged or deteriorated condition, structurally and internally.

150. [150]
     The photographs [exhibit V22.1 to V22.4] were taken about eighteen months prior to [the commencement of] the hearing. Photograph V22.1 is marked with an inscription “where she now lies since January 2013”. The four photographs show the Norsaga lying on its port side, de-masted and appearing as a “wreck”.

151. [151]
     Mr Hildebrandt said in respect of the seven colour photographs of the Norsaga, [exhibit V2.1 to V2.7], that “… it looked nothing like that when Graham bought it” and that “the vessel didn’t look anywhere near as good as that”. He said that the photographs were not photographs of the Norsaga at the time of the sale of the vessel. These depict the Norsaga moored in the harbour (showing the starboard side, deck and deck cabin) with a ‘For Sale’ sign and selling agent name ‘National’ with a mobile phone contact number, fixed to the fore-mast (exhibit V2.1); the hand tiller and stern deck (exhibit V2.2); and the interior of the deck cabin (exhibits V2.3 to V2.7)

152. [152]
     Mr Hildebrandt agreed that he had sent a letter to the Credit Ombudsman dated 16 October 2009. The admissible part of the letter is the second paragraph [which is exhibit 24]. It refers to Mr Hildebrandt’s account of the meeting on the boat belonging to the Goodall’s and contains reference to other persons, namely the Goodall’s, Mr Vanderkyl and a marine broker. Whilst there was no statement in the letter about his observations of the Norsaga on his inspection of the boat at the time that he had been on the Goodall’s boat, his recollection was that the observations were recorded in many other documents. In exhibit 24 a copy of the Agreement for Sale was said to be attached to the letter to the Credit Ombudsman.

153. [153]
     He also sent an Application dated 15 February 2013 to QPILCH. The admissible part of the Application is a paragraph expressed in similar terms [which is exhibit 25] to the paragraph in the letter.

154. [154]
     At the end of the hearing of evidence on 22 May 2014, there was a discussion about photographs of the Norsaga (that is, exhibits V3 to V13) also being attached. Mr Hildebrandt had not been asked about this, but Mr Byrne had recently acquired instructions to that effect and wanted to seek some further evidence from the Office of the Credit Ombudsman. The issue was not resolved in that way but rather by way of an Admission made on behalf of the defendants, expressed as follows:

“That the photographs V3 to V13 were attached to the letter to the Credit Ombudsman dated the 16 October 2009 (exhibit 24) and therefore were taken no later than 16 October 2009”

155. [155]
     Mr Hildebrandt had said that the photographs (exhibits V3 to V13) were taken about 9 months after the sale of the Norsaga to Mr Sands, which could have been about 6 months prior to the date in the Admission.

156. [156]
     Mr Hildebrandt had compiled a list of monthly costs that he estimated Mr Sands would have incurred through ownership of the Norsaga. The monthly total was $1,222.20 made up of the loan repayment to the QCCU, mooring fees, slipping and antifouling annually, vessel registration, rental of a shed in the town and operational consumables. Insurance and maintenance costs were not included. I doubt that Mr Sands would have been able to afford such costs on his disability pension.

Mr Vanderkyl

157. [157]
     Mr Vanderkyl had been involved with recreational boats since he was 15 years of age. He had been in the navy for ten years. He was a fitter/machinist by trade and had acquired advanced trade qualifications in diesel engines and was qualified to operate steam engines. He had held a boat licence for many years.

158. [158]
     He met the builder of the Norsaga, Mr Shale, in about 1975 in Brisbane. He said he purchased the Norsaga in about 1983. He described the Norsaga as a classic type vessel with a forty foot six inch deck length. It was a ketch rig (two masts). The Norsaga had a 1976 Ford Lees 80 horsepower diesel engine.

159. [159]
     He sailed it frequently, a including a voyage overseas in 1979. He also sailed between New Caledonia and Brisbane between 1986 and 1989. He lived on the boat for that period of four years. He also sailed it up and down the Queensland coast and to Papua New Guinea. In Bowen it sometimes was in the harbour for months and at other times it might sail every weekend.

160. [160]
     He did his own maintenance on the engine – he of course was qualified so to do. He also did marine engine work for another or others. He described the work that he did on the engine. He said the engine was not “using oil”. Whenever he replaced parts in the engine, it started normally.

161. [161]
     He and his wife decided towards the end of 2007 to sell the Norsaga. He was going caravanning around Australia and he would not be able to maintain the Norsaga whilst he was away, “because if you’re not down there at least once a week pouring water on the decks and that kind of thing, it’s not going to last long.” 

162. [162]
     He slipped the Norsaga every six months and said he “never” missed. He said he never saw anything untoward with respect to the hull of the Norsaga: “you’d go round it with a fine tooth comb”. On the last occasion the vessel was slipped he did the work himself with Mr Sands helping him. The slipway charged him for the use of the facility.

163. [163]
     In March 2008 the engine was removed from the Norsaga and he “cleaned it up” in his workshop at home. He said its operation after this was “perfect”. He said he did this work for the purpose of sale of the Norsaga.

164. [164]
     He tendered an invoice from Bowen Engine Centre Pty Ltd (undated) which purports to be a tax invoice addressed to him at an address at 42 Orchid Drive, Burrum Heads which refers to the supply of items, namely a set of conrod bearings, a VRS gasket set and an engine gasket for a total cost of $201.05 including GST and freight. The method of payment is not stated nor is the date of supply. He agreed that the invoice/receipt had only recently been obtained, upon his request to the company to provide it. It was the only one he had in his possession. It was put to him that there were not enough parts for a refurbishment referred to in the invoice. I do not think there could be any dispute about that.

165. [165]
     With respect to the photographs showing the Norsaga at the mooring with the ‘For Sale’ sign fixed to the mast, he agreed that there was no photograph of the engine compartment, despite its refurbishment and repainting earlier in 2008. It was suggested to him in cross-examination that the engine was not refurbished. He was asked:

Q.“But your refurbished engine, if it’s just run a couple of times, there’s no chance of it pouring oil in [the bottom of the boat], is there?

No. No chance at all.

Q.Because it’s refurbished. So if there’s oil there, it hasn’t really been refurbished, has it?

That’s not true. It was refurbished.”

166. [166]
     Mr Vanderkyl had painted the engine red at home. In cross-examination he said the hoses could have paint on them from other painting. He was asked:

Q.“What it looks like is that someone’s painted the engine and sprayed the green pipe red, doesn’t it?

Yeah, it does.

Q.So it looks like the engine has been painted in the boat, doesn’t it?

Yeah.”

167. [167]
     In re-examination he said he had painted the engine previously and suggested that the paint could have got on the metal hose on that or those occasions.

168. [168]
     When shown photographs V5, V6, V12 and V13 he described the corrosion as horrendous. If the boat had been above the water it would not have happened. With ordinary use it would take a long time to get to that condition. It would have to have salt water over it or on it. It looked nothing like the engine that he had refurbished.

169. [169]
     He denied that the engine compartment looked as it did in the photographs that showed its deterioration. So far as salt water affecting the engine was concerned, he referred to hose seals leaking salt water. He said the engine was never submerged prior to the sale. He said it could happen if the bilge contents came up over the engine or if the boat sank. He said the damage “would take a while” to get to that state if the boat was sitting above the water. Under ordinary usage, if cleaned, it would take a long time.

170. [170]
     Mr Vanderkyl described the maintenance requirements for a timber decked yacht and the routine maintenance and care regime necessary to maintain such a vessel.

171. [171]
     In June 2008 Mr Sands was shown photographs of and about the Norsaga and Mr Vanderkyl answered questions from Mr Sands about the number of sails and if he could handle the boat on his own. Mr Vanderkyl said that Mr Sands “presented as … quite a personable man … someone who was keen and who wanted to live on the boat, because it’d make it a lot easier to look after it. And … because all the varnish needed doing again …” Mr Sands was at the boat every 2 or 3 days until it was sold to him, being shown things. Mr Vanderkyl said “I didn’t really think he was an expert, by any means, but he was willing to learn”.

172. [172]
     He spoke about the occasion when there was a group of people on the boat that belonged to the Goodall’s. He said they were on their old boat and he went there, looked in the cabin and saw Mr Goodall and Hinton. He denied that the Goodall’s were on their new boat at the pontoon and that Hildebrandt had joined them. He said that Mr Hinton, Mr Goodall and another man he did not know, were present. He had rowed over to the boat but did not go into the cabin. He said that Mr Hildebrandt was not there, “not to my knowledge”. He did not know Mr Hildebrandt at that time. He conceded in cross-examination that Mr Hildebrandt could have been there present. He denied the conversation related by Mr Hildebrandt.

173. [173]
     He went back to the Norsaga and Mr Hinton, a ship broker, came over after him. There was a discussion about the Norsaga, but there was no one else there. Mr Hinton had told Mr Vanderkyl that he should receive about $80,000.00 for the sale of the Norsaga but he would have to settle for less to sell it then.. He thought that the amount of $55,000.00 came up in discussions with Mr Hinton.

174. [174]
     He said that Mr Hinton was associated with “National Ship Brokers” - hence the ‘For Sale’ sign on the mast of the Norsaga. He said the photographs V2.1 to V 2.7 were taken in about early June 2008.

175. [175]
     He made enquiries as to the whereabouts of Mr Hinton. He was not able to find him.

176. [176]
     Mr Vanderkyl said he thought with respect to the sale of the Norsaga to Mr Sands, “If it was me I would want to see it [the Norsaga] on the slipway cradle”. However, because Mr Sands had come around with the cheque for $55,000.00 he had thought, “Oh well”.” The slipway cradle had been out of operation prior to that time and the next day he put it on the cradle and did work on it, describing to Mr Sands what he was looking for and what he was doing. Mr Sands “was with me most of the time”. Neither he nor Mr Sands arranged any inspection prior to the sale. The last inspection of the vessel was in 2006.

177. [177]
     Mr Vanderkyl said that gear was given by him to Mr Sands to take to his shed. The ‘gear’ was spare equipment, sails and parts, a dinghy and outboard motor and a Zodiac dinghy. The log book and maintenance records for the Norsaga were given to Mr Sands. He said he provided training: that is, how to leave and return to the mooring, about the sails and he gave tips to Mr Sands about sailing the boat. He said that Mr Sands said his brother would fix the electrics.

178. [178]
     The Norsaga had been insured by Mr Vanderkyl. Insurance documents were tendered (exhibitsV1, items 4 and 5). Item 4 is a “Renewal Invitation for Marine Insurance – Boat” issued by QBE/Marine, for the Norsaga (dated 25 November 2006) addressed to “JM & RJ Vanderkyl” in the sum of $1,440.98. The insured values were:

  Hull  $109,199

  Motor 1 $    8,000

  M-S-SR $           1

  Total  $117,200

179. [179]
     Mr Vanderkyl cancelled the insurance policy the day after the sale. Item 5 is a Notice of Cancellation of “Marine Insurance/Boat” (dated 06 August 2008) for the Norsaga, addressed to JM & RJ Vanderkyl, stating an amount refundable of $507.28.

180. [180]
     On the occasion when Mr Sands found the batteries flat when he had taken a trip out of the harbour, Mr Vanderkyl borrowed a dinghy, went to meet the Norsaga and when he checked the engine, he found the clutch was ’on’ which would have run down the batteries. The day after the battery incident, he and Mrs Vanderkyl left Bowen and went caravanning for four to five months, returning in about January 2009. He said he was contactable during that time. On return to Bowen he saw the Norsaga at the mooring.

181. [181]
     He referred to the occasion in 2010 when Mr Hildebrandt came to him and told him that he should not have sold the Norsaga to Mr Sands and he should buy it back. He declined because he had seen the condition of the Norsaga [from which I infer was very poor at that time]. He had seen Mr Sands in a supermarket in 2012 and there were simple exchanges of greetings but nothing more. He subsequently received the plaintiff’s Claim.

182. [182]
     Mr Vanderkyl said that photographs V3 to V13 [note the admission made on behalf of the defendants, referred to elsewhere in this judgment, that they were taken “no later than 16 October 2009”] did not show the condition of the Norsaga when it was sold. 

183. [183]
     He said that the colour photographs exhibits V2.1 to V2.7 were taken four to six weeks before the sale.

184. [184]
     He said that the autopilot did not work when he went on one sailing occasion with Mr Sands. However the engine was used on about six occasions when he was manoeuvring the vessel with Mr Sands. He recalled having to remove a belt [associated with the machinery] one day.

185. [185]
     He said that Mr Sands on an occasion prior to the sale said that he was going to Townsville on a bus to see a specialist to get the okay to sail the boat.

186. [186]
     Mr Vanderkyl said he was told by the pest inspector Mr McElhinney that the debris was “castings” and it was not an issue. However he had no record of this and he said that a complete inspection was not done. When he was shown photograph exhibit V3 [the debris on the deck] he said he had seen about 10% debris in that spot prior to the sale. He had only seen debris once: that is, on that occasion. He had never heard of ‘carpenter ants’. He said that it was a bit of a mystery both to him and apparently to Mr McElhinney. He had asked McElhinney how the debris might have got there. He did not ask him if he had expertise about insects in wood on boats. He never saw a plastic bag of debris brought to his house by Mr Sands and denied having told Mr Sands that he would have a pest inspector test it.

187. [187]
     He had located Mr McElhinney, but he was reluctant to be a witness.

188. [188]
     He agreed that the boat would not have been in a “good working order” if the hull/timber was affected by insects. He was asked in cross-examination”

“Q.Mr Sands gave evidence that … after he‘d purchased the boat [after] the start of the wet season, he’d moved on with all his goods?

Yep.

Q.First downpour, just poured through the decks and wet everything. He took it all home. Do you recall that?

I recall him saying that, yes.

Q.If that occurred, that is not a boat in good condition, is it?

No, it isn’t.”

189. [189]
     The image in photograph V4 did not show it as he had seen it. He had no idea how long it would take for the ‘bung’ shown in photographs V7 and V9 to appear and described its appearance as like ‘wood or filler’. He said he never put something like that into the boat. He was asked in cross-examination:

“Q.And you’ve never filled this boat, put a bung in it, noticed dry rot, ever?

No.

Q.Thank you. Are you sure?

I’m pretty sure.”

190. [190]
     It was to him in cross-examination that rotten timber could be covered by, say fibreglass and then painted. He was asked:

“Q.… You wouldn’t know there was any rot there, would you?

No.

Q.You did cover-up some rot on the boat, didn’t you?

No, I didn’t.

Q.Near where … the debris was found on the boat the inspector looked at, you put in fibreglass and covered it, didn’t you?

No.

Q.And then painted it, didn’t you, before the sale?

No, I didn’t.”

191. [191]
     At the time of the sale, he was not aware of the presence of any dry rot on the boat. In re-examination he was asked what the presence of dry rot in the place where the debris was found, meant. Mr Vanderkyl said that it meant “we had missed something” and it would be repaired as a part of ordinary maintenance. It did not mean that the whole boat was damaged.

Mr Smith

192. [192]
     Mr Smith was the Bowen Harbour Control Officer for twenty years. He was responsible for day to day operations and management of the harbour. He had owned three yachts, steel and timber, over a period of twenty years and had maintained them.

193. [193]
     He said the Norsaga was in the harbour when he commenced work in about 1995. The last time the Norsaga was in the harbour was in about July 2009. He and others towed the Norsaga out of the harbour and anchored it outside harbour limits. Within three months there were issues with keeping the vessel afloat and pumping was ongoing. He never looked at the engine of the vessel. After twelve months the Norsaga was back in the harbour.

194. [194]
     He referred to photographs exhibit V11 and said that it looked like the Norsaga was when it was taken out of the harbour. When it was outside the harbour and he was on board, the deck felt soft/springy – you could feel it “give a bit”.  The vessel was in very poor condition and had dry rot and the timbers around the coach house [cabin] were “opening up”.

195. [195]
     He said in cross-examination that the Norsaga never came to his attention adversely in the period 1995 to 2008. He thought from about 2008 insurance requirements were introduced if the vessel was to be moored in the harbour. When the vessel was outside the harbour it was about 250 metres away. It dragged the chain once and had to be repositioned. A decision was made to bring it back into the harbour because of the risks outside and because it had become unmanageable. He referred to the vessel sinking once in the harbour “completely below the water’s surface” with the mast still sticking out of the water. He said when shown Photograph V2.1 [the Norsaga moored in the harbour with the National ‘For Sale’ sign fixed to the fore-mast] that it was generally what the Norsaga looked like.

Mr Tapp

196. [196]
     Mr Tapp had been the assistant Bowen Harbour Controller and had been there since 2001. He was involved in towing the Norsaga outside the harbour. He said it was a nice looking boat but when it was outside the harbour he noticed it “going down” and he would have to go and pump it out.

197. [197]
     He referred to a “… doughy looking patch” on the “starboard side, a little back from mid-ship probably a foot or so up from the water line …” and “you could see … it looked like a bung in the middle and … you could see where the paint … was starting to come off.”

198. [198]
     He never went inside where the engine was. He said there were boats in the harbour at the time of the hearing that had “doughy decks”. 

199. [199]
     In cross-examination he said the Norsaga had never been brought adversely to his attention in the harbour prior to about 2009. The insurance requirement led to a few boats having to leave the harbour.

200. [200]
     He said photograph (exhibit V2.1) showed the Norsaga as it was in the harbour. He said the ‘doughy patch’ on the starboard side was “straight down from the life raft” [which is in a container on top of the deck cabin] although it is not visible in the photo. He recognised the “bung” on the starboard side in photographs (exhibits V2.7 and V2.9), which is in the same location as he described in exhibit V2.1 it is readily identifiable and visible in those photographs.

Mr McFarlane

201. [201]
     Mr McFarlane was a boat builder, shipwright and marine insurance surveyor. He prepared two reports about the Norsaga, compiled after his inspection of the boat in about December 2012 (exhibits V16 and V17).

202. [202]
     The first report (exhibit V16) in about January 2014, stated (so far as was admissible on the hearing, the deletions identified by blank dot points entries), the following:

• “S.v. Norsaga is unseaworthy.

• Although lack of maintenance in the past four years is obvious, the deterioration of this vessel has happened over a much longer period of time.

• All sea-going vessels should be slipped once per year. With timber vessels this is imperative.

• This vessel should have been surveyed prior to sale.

• The beech decks and under-lying plywood are rotten, bowed and dangerous, so much so, I was hesitant to walk on them.

• The hull planking is rotten and dangerous. The hull has been patched in various places with plywood in an attempt preventing the vessel from sinking.

• Sections of the hull are so weak that it is possible to push your finger through it.

• It would be impossible to insure this vessel.

• It would not be a viable proposition to even attempt restoration

• The diesel engine is rusted and seized.

• The sails are rotten and unusable.

• The two alloy masts appear to be in reasonable good condition and could be salvaged and sold.

• In my professional capacity as a marine Surveyor, & Wooden Boat-Builder, the vessel should be condemned.

• Had the owner of this boat been more astute, he would not have entered into any contract with the previous owner …”

203. [203]
     Mr McFarlane said that he believed the degeneration had started well before 2008. A wooden boat needed to be slipped often, up to a maximum of maybe every eighteen months to two years, but definitely no longer than that. He said he could not see that the wood rot would have started from the day Mr Sands bought the vessel and continued until the time of inspection (a period of about four years).

204. [204]
     The second report (exhibit V17) in about February 2014, stated the following:

“The vessel Norsaga was full of rot from stem to stern on the deck.  To walk the length of the vessel was an effort I would not like to contemplate undertaking again, in fact I would not.

The top-sides were in no better condition with dry rot and Putty Bug. The underwater hull contaminated with Teredo Worm, a burrowing mollusc, which, if not stopped, will burrow the length of all timbers. To prevent this happening, a timber vessel is slipped every 12 months in the tropics. 

205. [205]
     Mr McFarlane gave an estimate of the salvage or recoverable value of the Norsaga ‘as at the time of sale’ of $5,000.00, less transport expenses. I have referred to this in more detail (infra) under the heading ‘Quantum”.

206. [206]
     He was not able to speak of the condition of the boat prior to his inspection (because he had not seen it prior to about December 2012). Hence his statement per se as to value of the Norsaga “at the time of sale to Mr Graham Sands” is speculative at best, although it may have some relevance if supported by other evidence contemporary with the condition of the Norsaga at the time of the sale. It may also be relevant – if accepted – to value at the time of the inspection.

207. [207]
     Mr McFarlane was shown photographs exhibits V3 to 13. He variously described depiction of ant debris, dry rot, a patch on the starboard side of the Norsaga and the engine which he said was ‘not real good’ and ‘rusty’. He said that the boat had been sunk prior to when he saw the motor and the motor was seized, the implication being that the condition of the motor had been affected by the sinking in salt water. He agreed in cross-examination that rust and corrosion from a sinking of the vessel after sale might have resulted from that occurrence and it had the appearance of being present from some twelve months to six years prior to the sale.

208. [208]
     He said that if timber decking dried out, the planks would open up a bit and when it rained, fresh water would enter the vessel. He said rot would have started before the purchase in 2008 and a lack of maintenance meant that the rot would have continued. Regular maintenance would otherwise have kept the rot ‘at bay’.

209. [209]
     Mr McFarlane said at the time of the sale he could understand worm being present if the Norsaga had not been slipped and anti-fouled, but a lot of dry rot would have been in the timber. It had just got worse and out of control. He said in re-examination that slipping would not help dry rot if that was happening at the time of the sale. He described the dry rot by reference to photograph V8 [which shows insect detritus on the deck and against the wall of the deck cabin], and explained how it occurred: “… they [ants] get into where the dry rot is and they push all the rotten stuff out so they can, I guess, lay their eggs and do whatever ants do.”

210. [210]
     Mr McFarlane was shown the five pages of “slipping documents” [part of exhibit V1]. He said they appeared to be “pretty good”. The documents are photocopies of what appear to be record cards and have entries that describe antifouling and slipping of the Norsaga from about April 1990 to July 2008. The latter (and last) entry on the documents was partly incomprehensible but I made a note on my copy of it, of its interpretation (I do not recall by whom) as “Slipped – 18.07.08 – 1 day hard stand but no W13. He did all the work.” These records of course cover an ownership period of Mr and Mrs Vanderkyl. I understand that the reference to ‘he’ is a reference to Mr Vanderkyl.

211. [211]
     Mr McFarlane said that if the Norsaga had not been slipped in the four years from 2008 to 2012, “there would be worm in it”. 

212. [212]
     Mr McFarlane was shown the seven colour photographs of the Norsaga [exhibit V2.1 to 2.7] but says one could not tell if the boat was well maintained from photographs. He could not say when the patching to the side of the boat had occurred.

He said that a survey was the responsibility of the purchaser and that it was not an industry practice for a seller to commission a survey report. He described a ’survey’ as involving the following:

“You look at everything that goes out of the water.  You have a look at the bottom, the condition of the propeller, the shaft. I am not a mechanic and I am not a rigger and I put that on my survey reports and if they want to get a rigger to check the rigging and a mechanic to check the motor – all I do is just go and have a look.  If there’s a fibreglass boat, if there’s osmosis, make sure the engine is suitably bolted down and all that sort of stuff.  He said he would test all the wood and that one could normally tell if there was worm in the wood – Teredo Worm – and you just go along with a little spike and you [test it].  He said that he could not see the rot getting so bad in a period of four years and there was a lot of worm in the vessel.”

213. [213]
     With respect to the photographs [exhibits V2.1 to 2.7] Mr McFarlane was asked to comment on a proposition, namely that if the boat had been moored for three or four months in the harbour in a dry period and not washed down with sea water, if it then rained heavily, would water:

“… pour through the decks of a boat that looks that good?”

214. [214]
     He answered:

“probably not, but it … would’ve if there’s dry rot in it, yeah, it would”,

and

“as you’ve only got the plywood deck and then the timber lying on top of it and if it’s open – normally the plywood – the water will run underneath in between the plywood and the teak deck and if it’s pouring with rain and it’s leaking all over the place, well, it must be rotten.”

Mrs Vanderkyl

215. [215]
     Mrs Vanderkyl said she told Mr Hildebrandt that as a half owner of the Norsaga if he had anything to say about its sale, he should say it to her in addition to her husband.

216. [216]
     She said there were a number of items to be delivered to Mr Sands in the terms of the agreement and she helped transfer them from her garage on to a utility destined for a storage facility of Mr Sands. Her husband had made a list of those items but she had no idea what happened to the list.

217. [217]
     In cross-examination she was shown photograph V2 [a photo of the Norsaga docked in the harbour]. She said that photograph [and by implication, photographs V3 to V7] were taken when the Norsaga was for sale. As far as she knew, with respect to the “For Sale” sign on the mast and the reference to the selling agent as ‘National’, was a reference to the selling agent ‘Ensign’ and that ‘National’ was part of the selling agent ‘Ensign’.

218. [218]
     She said if the photograph had been taken in 2008, it was probably taken to the ‘show the boat at its very best’. She was asked if she had thought to suggest to her husband that “we’ve just refurbished the motor, it looks stunning, we should photograph it?”  Her response was “No … not really.” 

219. [219]
     She was shown photograph V3 [insect detritus on the deck] and said she had never seen anything like that on the Norsaga when it was owned by her and her husband.

220. [220]
     She said in re-examination that there were no problems with insects prior to 2008.

Mr Shale

221. [221]
     Mr Shale was a boat builder, marine surveyor and held a masters ticket. He built the Norsaga in the late 1970s. He described it in the following way:

“It’s carvel-planked.  It’s all spotted gum hardwood backboned, stringers, ribs. It’s hardwood planked on the bottom.  Maple topside.  Ply deck which has got a beech overlay on it. And wooden … cabin.” 

222. [222]
     Mr Shale said that maintenance of a wooden boat was virtually on-going. The boat has to be slipped

“a maximum of every twelve months and pulled out of the water”.  Antifouling. Any maintenance carried on under water.  Seacocks, spurn gear, that sort of thing. That boat, the [timber decks] … require salt water put on them probably at least once or twice a week and had a fair area of varnish work which requires re-varnishing about every six weeks.”.

223. [223]
     He continued:

“… if you use fresh water the timber will rot in a very short time.  That’s why any time … after prolonged rain or something like that, you normally … went to the boat and put a few buckets of salt water over it, just to stop it rotting.” 

224. [224]
     When he used the expression “rotting”, he said:

“… a lot of people refer to it as dry rot, but it’s actually wet rot … when it’s on a marina in the water, it gets fresh water on it. Then you get rot spores which blow from the land onto it, land on it and then it starts to rot very quickly from there.” 

225. [225]
     He continued:

“So salt water is the best cure for it. If not, sometimes even you take a few handfuls of salt and just scatter it over the decks of the boat and leave it there, which permeates its way into small cracks and seams and that sort of assists in stopping the rot.”

226. [226]
     He said with respect to how fast the rot set in, it depended on the quality of the timber:.

“If you have fat wood in timber … the rot could start, you know, within three months. The better quality of the timber, the longer it takes to start and rot.”

227. [227]
     He was asked, “When the rot starts, are you able to stop it?” and replied:

“Well, normally you observe it … if you start and see it, normally you’ll cut that area out. There are rot preventative treatments, various chemicals and that, and replace the piece of timber.”

228. [228]
     In cross-examination he was asked if a boat is in the harbour for an extended dry period of time - two to three months – was rot likely to set in, in those conditions? He replied:

“Not as much as when it’s – the rain is falling.  But the only trouble with the extended dry period, the timber dries out and will tend to crack and open up. So again the best cure for that is to put salt water over it.”

Mr Martin

229. [229]
     Mr Martin had sailing experience and was a sailing coach. He had been on the Norsaga once sailing in the 1980s or early 1990s and also saw it when it was slipped in Bowen. He saw it slipped and said, “I couldn’t see any big problems at all … no problems actually.” He had seen Mr Vanderkyl doing maintenance work on the boat.  He had seen water from the exhaust which indicated to him that the motor was running.  He was shown photograph exhibit V2 [the Norsaga moored in the harbour with the National ‘For Sale’ sign fixed to the fore-mast] and said the boat was depicted as it always was.  He could not recall any noticeable structural damage when the boat was in the water.

Mrs Darwen

230. [230]
     I have previously referred to the evidence of Mrs Darwen in respect of the medical and health status of Mr Sands. She had known him for many years. She knew about his health and his epileptic status.

231. [231]
     When Mr Sands told her he had “gone off his medication” on the occasion that he and his brother had taken the boat out, after the sale had been concluded, she said to him, “You need to take your medication.  You can’t just go off medication.”  She said that they always talked about his medication and his dosages.  He had also previously told her that he had gone off his medication.

232. [232]
     She said that [after Mr Sands had bought the Norsaga] the boat was neglected when it was left out of the harbour and it required constant pumping to remove water. She said that the boat sank on one occasion and, by her description, that was fairly significant.

233. [233]
     She had experience with wooden boats. She said that if repairs were not made to dents or cracks in timber decking, water would enter and make the timber soft. Leaks into the boat would then occur. She said dry rot could also occur from damage to the timber.

234. [234]
     She said that the insurance requirements for vessels commenced, in her recollection, in about 2004.

235. [235]
     In cross-examination she was shown a number of photographs. She agreed that photographs exhibits V2 and V6 depicted the Norsaga when it was “for sale” in 2004. She recalled that year, it seems, because she had her own boat for sale in 2002.

236. [236]
     She commented on photographs V7 and V9, which showed damage to the side of the boat. She said this was not the same damage as she had seen which was closer to the bow, although on the same side, which she described as “impact damage”. She was sufficiently familiar with the latter to be able to describe it in that way. She did not see the damage depicted in photograph exhibit V7 prior to the sale of the boat to Mr Sands in 2008.

Mr Darwen

237. [237]
     Mr Darwen had known Mr Vanderkyl for twenty or more years. He sailed on the Norsaga twice in about 1985. In 2008 the Norsaga was moored alongside his boat in the harbour.

238. [238]
     He referred to the need to salt-water wash timber decks. He said the vessel had been kept in good condition by Mr Vanderkyl who would put the vessel on the slipway cradle on his own: “… quite a feat of seamanship, I thought, at the time, because it’s quite a heavy vessel …”

239. [239]
     The motor was in excellent condition when he last saw it in about 1985. In photo V2 it showed the Norsaga and his own vessel, behind the Norsaga. He believed the Norsaga was in the condition shown when it was sold.

Mr Geiszler

240. [240]
     Mr Geiszler is a licensed pest management technician of about ten years’ experience. His expertise to give evidence about the occurrence and behaviour of timber pests in wooden marine vessels was challenged by Mr Honchin. I decided to hear the evidence in full and determine what to do with the question of expertise and the admissibility of the evidence in the judgment.

Qualifying a Witness as an expert

241. [241]
     Qualifying an expert requires consideration of the customary features of expertise which have been the subject of authority over a long period of time. However, there is it seems to me a broader discretion in this area now because of the proliferation of areas of expertise, the scope of a qualification and the way in which training is provided.

242. [242]
     The qualification of a witness as an expert is a matter for determination by the Court. That determination requires an assessment of the following:

1. Is the field of knowledge one on which an expert can be called? The use of the expression “field of knowledge” generally means “from an accepted and organised branch of science”.

2. Is an ordinary person able to form a view about the subject matter without the assistance of a person with special skill or knowledge?  That is, is the evidence something within the jury’s common experience?

3. Is the subject a part of a body of organised knowledge or experience that is reliable and can be of assistance to the Court?

4. Is the skill of the witness in question acceptable?  This requires the identification of the precise issue upon which the evidence is to be led. The factual basis of the evidence thus relied upon must be clearly identified and proved.

Submissions about the expertise issue

243. [243]
     Mr Byrne submitted that Mr Geiszler was licensed in his speciality, had undertaken prescribed courses of study and supervised training, the latter involving on-the-job evaluations and had sat and passed relevant examinations. This was sufficient to enable him to give opinion evidence as an expert.

244. [244]
     Mr Honchin submitted that Mr Geiszler was disadvantaged by the fact that he did not see the Norsaga at the time of the sale in 2008. The implication in the submission is that Mr Geiszler could not give the opinion evidence that he gave and his evidence should be disregarded.

Is Mr Geiszler an expert?

245. [245]
     There is no precise rule governing the qualification of an expert or the admission of expert evidence. It is very much a question of fact: Clark v Ryan (1960) 103 CLR 486 at 503 per Menzies J.

246. [246]
     Mr Geiszler qualified for his license through completion of modules of training with respect to general pests and timber pests. He specialises in timber pest inspections for home owners and purchasers. The authorising agency and certifying authority for his licence is Queensland Health. His technician’s licence is issued under the Pest Management Act 2001. He is also licensed through the Building Services Authority of Queensland. There is a threshold requirement that a person undertaking training in timber pest management must first complete at least two years of general pest management. There is a requirement before licensing of the completion of 25 inspections and 15 treatments, under supervision. He gave evidence that timber pest management is a more specialised area than the general domestic and commercial pest management and control. The more specialised licence requires further training and testing on the job work under supervision and formal examinations.

247. [247]
     Whilst there were no specific components of the training for marine vessels, he had undertaken a number of inspections of vessels (probably five, he thought) between 2008 and 2014. Those vessels were constructed of work and bond wood. During his training there had been an inspection of one vessel on the slipway in Townsville, supervised by the training manager from Amalgamated Pest Control. His training generally included physical examination of various pest insects and their excretions visually and with magnifying glass and he was taught to differentiate between different types of insect excretion.

248. [248]
     In my view Mr Geiszler is an expert in a scientific field that requires special knowledge beyond that of an ordinary person and not within such person’s common knowledge. His field of knowledge is within the ambit of what has been described as an ‘accepted and organised branch of science’, in the context of the ’broader discretion’ to which I have referred. He is qualified by training and experience to give opinion evidence about timber pests and carpenter ants and the effects of carpenter ant activity in timber. The fact that the timber in this case has been used in a marine application and is subject to a marine environment is not relevant to my assessment. The course of study and training included a module that had a marine element in any event, but I am otherwise satisfied that there is no material practical difference between timber in land structures and timber in a marine environment. The four customary ‘benchmarks’ that fall for consideration and to which I have referred above, have been established to my satisfaction.

Evidence of Mr Geiszler

249. [249]
     Mr Geiszler described the term “timber pests” as covering insects such as termites, borers - both softwood and hardwood – and described ‘wood decay’ or ‘wood rot’. There was a similarity between inspecting timber on a boat or timber in a land structure. There was no difference because the assessment of timber was common. One looked for delignification: it is a chemical action which breaks down the lignin cellulose wall of the cells within timber, hardwood and softwood breaking down at a different rate. The chemical process affects the degradation of the overall solidity of the timber. It can be caused by moisture or fungal spoor or in some cases secretion excreted by insects. The end result is soft powdery timber that is no longer structurally sound and can appear in different forms from a white powdery appearance to a brown mould.

250. [250]
     Mr Geiszler did not inspect the Norsaga in 2008. However, he made the following observations about the photograph [exhibit V3] that shows a powdery material on the deck of the Norsaga. He described it as “frass”, the common term used for faeces and detritus that insects in timber expel from the areas they are living and working in. He described the frass in the photograph as being typical of a ‘carpenter ant’ infestation, which he confirmed under magnification of the detritus that included small particles of insect bodies.

251. [251]
     He described ‘carpenter ants’ as a predatory insect (they consume other insects) and distinguished their excrement from that of other insects. He said ‘carpenter ants’ excavate waste rather than eat timber. They typically enter damaged or decayed timber, caused by wood rot or wood decay. He said that wood decay, once commenced in a damaged site and giving rise to the quantity of frass shown in photograph exhibit V3, in the high humidity, high moisture, and fairly warm conditions of the subtropics could have started perhaps five to ten years previously. He estimated that the wood rot in this case would have been there “at least four years, possibly longer”. The detritus shown in photograph exhibit V3 could be produced in one day or so and would disappear by natural causes on a regular basis if it was not collected.

252. [252]
     He was asked questions by Mr Honchin about the necessity of washing down timber decks of vessels with sea water in order to maintain their integrity and prevent the timber opening up so as to admit rain water. He did not give a responsive answer, instead referring to the treatment of the timber and the effect that might be caused. I am not sure that he understood the question in the first place, given the way it was asked. Be that as it may, his evidence was about timber infestation by insects rather than the maintenance routine of an owner of a timber boat.

253. [253]
     In re-examination he said that an owner of the boat, if vigilant, should see the amount of frass shown in the photograph. If it was produced by a small colony of ants it would be closer to the wall [of the deck-top structure].

Failures by the parties to call a witness

254. [254]
     Mr Honchin submitted that the plaintiff had the opportunity to produce at the hearing as a witness the shipping broker, Mr Hinton, but failed so to do. He referred to Jones v Dunkel (1959) 101 CLR 298 and submitted that this was a matter relevant and critical to the issue of whether the conversation on the Goodall’s boat took place. 

255. [255]
     During the preliminary submissions on Day 1 of the hearing (T1-25.37) Mr Byrne informed the court that he had not “… actually got a commitment from Mr Hinton yet. I haven’t found him.” I granted leave for Mr Hinton to give telephone evidence [if he could be found]. In his opening of the plaintiff’s case later on Day 1 of the hearing (T1-37.47) Mr Byrne said, “There is evidence … of Steve Hinton, the ship broker from Gladstone, if we’re able to find him.  And that will be by telephone …”

256. [256]
     Mr Honchin in his opening of the defendant’s case on Day One said, “Mr Vanderkyl will say that he has no recollection of whether or not Mr Hildebrandt was on board the boat when he went on board (the vessel owned by the Goodall’s …) Mr Hinton was engaged by the Goodall’s to sell another (fishing boat) they owned.”

257. [257]
     As it transpired Mr Hinton was not produced as a witness in the trial. The implication inherent in Mr Byrne’s statements from the outset was that he was not able to locate Mr Hinton. It would also appear that no Statement of Witness had been obtained from him that might have been the subject of an application to adduce his evidence other than orally. The plaintiff’s case was closed without evidence being adduced from Mr Hinton.

258. [258]
     To the extent that Mr Hinton’s evidence may have corroborated Mr Hildebrandt’s account of the meeting, which is disputed by Mr Vanderkyl, there is no doubt that had Mr Hinton given evidence to the same effect, the fact of the conversation would be incontrovertible.

259. [259]
     However, there is other evidence about and from persons who were present at the time of Mr Hildebrandt’s visit to the Goodall’s boat. There is also evidence that Mr Hildebrandt has made a similar statement to others - the Credit Ombudsman and to QPILCH,(exhibits 24 and 25) which would make any submission by the defendants that this was a matter of recent invention impossible to sustain.

260. [260]
     There was also evidence from Mrs Goodall which supports Mr Hildebrandt. Whilst she was taken to task about the timing of her recollection of the conversation and its content, she nevertheless gave what seemed to me to be a reasonable explanation for her recent recollection of the event.

261. [261]
     Further, one might have thought that the defendant’s would have regarded Mr Hinton as a critical witness for their case. So much is apparent from Mr Vanderkyl’s evidence that he made enquiries as to the whereabouts of Mr Hinton, but was unable to find him. Mr Hinton’s advice to Mr Vanderkyl was, according to Mr Vanderkyl that the Norsaga had a sale valuation of $80,000.00 but that the defendants would have to accept a lower price to achieve a quicker sale and a price of $55,000.00 was discussed. That evidence, which seems to me to imply at least that the Norsaga was in a good or sound condition that warranted such a valuation, would have afforded some independent answer to the plaintiff’s case on the seaworthiness issue.

262. [262]
     In those circumstances the defendant’s submission that about the failure of the plaintiff to produce Mr Hinton is, in my view somewhat ‘shallow’.

263. [263]
     The failure to call Mr Hinton was not a failure “per se” but rather the inability the plaintiff to locate Mr Hinton (as was the case for the defendants), a matter that was foreshadowed by Mr Byrne from the outset on Day One.

264. [264]
     Insofar as proof in the plaintiff’s case is concerned, I do not consider that the absence of evidence from Mr Hinton in the circumstances to which I have referred, diminishes the accuracy of Mr Hildebrandt’s evidence in this regard. However, the same cannot be said with respect to the defendant’s case, in the absence of independent evidence tending to support Mr Vanderkyl’s evidence about valuation and the implication it has as to the condition of the Norsaga.

265. [265]
     Whilst the plaintiff did not make a similar reference to the ‘absence as a witness’ in the defendants’ case of the pest inspector, Mr McElhinney - to whom reference was made in the defendant’s pleadings - nevertheless it remains that a denial of the plaintiff’s assertions about the debris found on the deck of the Norsaga, that a sample was given to McElhinney and that he informed the plaintiff that there was no problem and that the debris was droppings, is equally a matter of a failure to call a witness. The explanation given by Mr Honchin was that McElhinney was “reluctant to be involved in the case as a witness”. 

266. [266]
     He could have been subpoenaed. His non-attendance leaves open the inference that his reluctance, not having been otherwise explained or justified, may have been because he would not have provided proof of the allegations made on behalf of the defendants in the Defence. The principle in Jones v Dunkel (1959) 101 CLR 298 equally applies to this situation.

267. [267]
     Moreover, Mr Honchin challenged the expertise of Mr Geiszler. I have accepted the evidence of Mr Geiszler. Mr Vanderkyl is not such an expert, despite his ownership of the Norsaga and his boating and sailing experience. Without evidence from Mr McElhinney, about whom I know nothing material including whether he is an expert or not, the conclusions advanced by Mr Vanderkyl about the debris are unsupported and contradicted by other evidence, including that of Mr Geiszler. I am in that circumstance unablet to accept the defendant’s case in that regard; that is, that the debris was inspected by a pest inspector, that it was said to be droppings and no problem and that the plaintiff had been informed of that.

Submissions

Mr Byrne

268. [268]
     Mr Byrne submitted that Mr Sands had a special disability, established on the evidence of Dr Futter and Dr Trezise and conceded by Dr Varghese and by the conduct of Mr Sands in the loan application process, the lack of negotiation about the sale price of the Norsaga and his naïve reliance on ‘trust’.

269. [269]
     The defendants knew of Mr Sands’ lack of capacity to enter the contract or cognitive impairment (brain damage and epilepsy), because Mr Hildebrandt had told Mr Vanderkyl directly in the conversation on the Goodall’s boat, the incapacity was common knowledge around the Bowen harbour and Mr Vanderkyl otherwise should have known of the incapacity through his dealings with Mr Sands about the Norsaga.

270. [270]
     Mr Byrne submitted that undue influence and non est factum arise in the following circumstances: the undue influence alleged is the advantage taken by the defendants in the context of their knowledge of his incapacity; and the principle of ‘non-est-factum’ is alleged to be engaged because it appears to be submitted that Mr Sands did not fully appreciate what he was contracting for in fact (a boat not fit for sale and that he could not manage, maintain or live on).

271. [271]
     He submitted that the Norsaga had little real value because of wood rot and ant infestation, leaking and poor mechanics. The statement about the condition of the boat by Mr Vanderkyl was untrue. The real condition of the Norsaga at the time of the sale was that referred to by Mr McFarlane and Mr Geiszler and the subsequent leaking of the boat supported their opinions. The bung in the starboard side of the boat was evidence of the constructional integrity of the boat being affected by deterioration in its condition.

272. [272]
     He submitted that the evidence of Mr Vanderkyl was inconsistent with other evidence, unreliable and unsupported by any specific independent evidence: the ‘National’ v ‘Ensign’ (ship brokers) issue; the photographs and dates they were taken; and the removal or not of the engine.

273. [273]
     Mr Byrne submitted that the Norsaga was unseaworthy at the date of sale. The purchase price was excessive because the boat had wood rot and ant infestation prior to sale, leaked excessively through the hull and the decks, oil leaked into the bilge, the engine was corroded, painted-over and in poor condition and the remote steering was not repaired. The boat was not in ‘good working order’ and could ‘not be lived on’, contrary to the representation of the defendants. They did not deliver the gear and the training was incomplete or deficient. There should be judgment for the plaintiff.

Mr Honchin

274. [274]
     Mr Sands’ epilepsy, whilst admitted by the defendants, was not such that they were on notice or knew that his condition meant that Mr Sands could not understand the contract or its import; the defendants were familiar with epilepsy through the epileptic condition of Mr Vanderkyl’s sister, his experience in health work, Mr Sands’ sailing experience and past ownership of a yacht, his insistence in buying the boat, his capacity to pay the price and his desire to live on the Norsaga.

275. [275]
     There was conflict between Mr Sands’ protestations about seizures and the QAS/QCCU documents about actual epileptic events, and Dr Futters acceptance of Mr Sands’ explanations of his condition. Dr Futter maintained what was in effect a polarised view about Mr Sands condition: for example, he maintained that Mr Sands was not able to live on a boat but Mr Sands believed he could and was determined to do so.

276. [276]
     He submitted that according to Dr Tresize, Mr Sands could understand simple contractual concepts – borrow and repay – and implied that the contract in this case was similar: a simple sell and buy contract.

277. [277]
     Mr Sands was clear and forthright in his evidence and was aware of his condition and the management of it.

278. [278]
     There was no evidence that the defendant’s had any knowledge of any actual or constructive special incapacity such as pleaded by the plaintiff.

279. [279]
     He submitted that Mr Sands was a keen buyer. He had sailing experience. He could borrow money for the purchase of a boat. When he bought the boat, Mr Sands left for five weeks and did not make arrangements for its maintenance. There was wet weather when he went away. He had not had the boat surveyed prior to sale.

280. [280]
     Mr Honchin submitted that Mr Hinton was not produced. That was a critical failure in the plaintiff’s case and Mr Hildebrandt’s account of a conversation on the boat of the Goodalls should not be accepted. Mr Hildebrandt was an advocate for Mr Sands and prone to exaggeration. In effect, he implied that he should be regarded as a partial witness whose reliability was doubtful.

281. [281]
     The condition of the Norsaga soon after the sale was not the fault of the defendants. Prior to the sale the boat was insured, it was properly maintained, it was regularly slipped, the engine was refurbished, there was no known issue about carpenter ant infestation and the boat had not come to the adverse attention of the harbour staff.

282. [282]
     After the sale the Norsaga was not maintained by Mr Sands. It was immersed in salt water either wholly or partially. It was inconceivable that Mr Vanderkyl would allow the engine, for example, to deteriorate to the extent that was shown in some photos. In effect, Mr Honchin said that the deterioration was due to Mr Sands’ neglect.

283. [283]
     There were no ‘latent defects’. A submission to that effect was highly speculative. With respect to the auto-pilot issue, Mr Sands did not pursue the defendants about it nor seek to have it repaired in another way and look for to them for payment.

284. [284]
     There was no evidence of unconscionable conduct by the defendants. No breach of contract has been proved. The other grounds pleaded are not relevant or are not supported by the facts and circumstances.

285. [285]
     Mr Honchin submitted that the plaintiff’s case was not proved and he had not discharged the standard of proof with respect to both the Special disability issue and the seaworthiness and the contractual terms issues.

Summary of findings from the evidence of witnesses

286. [286]
     I accept the evidence of Mr Sands. He often answered questions without looking at the counsel asking them and looked around the courtroom as he answered. He sometimes volunteered information whether relevant or not to the question. When answering he sometimes kept talking until stopped and brought back to the matter at hand. I thought he was often ‘disarmingly frank’ in answering some questions (for example, his answers about operating the Norsaga and boating incidents and in describing photographs). My impression throughout his evidence was that he was a guileless and somewhat naive man who had an unusual presentation. Whilst he was at times superficially articulate there remained something odd about his demeanour and manner of expression.

287. [287]
     I accept the evidence of Mr Hildebrandt. Whilst he was very concerned about what he clearly believed was an injustice suffered by Mr Sands and expressed his views adamantly and with few (if any) concessions, I do not regard those matters as diminishing the strength and cogency of his evidence. To the extent that he could be said to be an advocate for Mr Sands, that is not a failing or a matter that makes his evidence unreliable or unsatisfactory. Quite to the contrary, he had no financial or economic interest in the matter, had invested time and resources in caring for a man that at the beginning he had very little experience of and had undertaken the responsibility for administration of the financial affairs of Mr Sands and of Litigation Guardian in the proceedings.             

288. [288]
     I do not accept the evidence of Mr Vanderkyl where it is in conflict with that of Mr Sands or Mr Hildebrandt. His evidence supports the contentions in the plaintiff’s case that the defendants took advantage of Mr Sands in the transaction. There is evidence that I accept that the defendants knew that Mr Sands had a ‘special disability’ as pleaded but pressed ahead with the sale nevertheless.

289. [289]
     Mr Vanderkyl should have known that Mr Sands would have been expected to maintain the Norsaga, as he said he had done and it must have been apparent to him that this was beyond the capacity of Mr Sands to do.

290. [290]
     Mr Vanderkyl’s evidence about the boat did not impress me. Whilst he made some concessions and admissions, I found his evidence about the condition of the boat to be unreliable.

291. [291]
     I did not believe his evidence about the meeting or conversation on the boat of the Goodalls. His evidence about when photographs were taken (other than those the subject of the admission), his evidence about the ‘National’ and the ‘Ensign’ ship brokers unsatisfactory. His answers about the rust and corrosion defy the fact that the sinking occurred in 2012, not prior to the October 2009 date when the photographs showing that deterioration must have been taken.

292. [292]
     Having made those observations, it is nevertheless clear that the engine did operate for a short time at least after the sale: it manoeuvred in the harbour to the slipway cradle and motored some of the distance to and from Gloucester Island. However, I do not accept that it was in the ‘perfect’ condition that Mr Vanderkyl would have the court believe.

293. [293]
     I accept the evidence of Mr Baker. His experience with Mr Sands, however, was with a man who was doing things he was practiced at doing and familiar with.

294. [294]
     I accept the evidence of Mr Smith about the history of the Norsaga when it was moored or anchored inside the harbour and anchored outside the harbour.

295. [295]
     I accept the evidence of Mr Tapp about the history of the Norsaga when it was moored or anchored in the harbour and anchored outside the harbour and his observations of the Norsaga.

296. [296]
     I accept the evidence of Mrs Goodall, particularly with respect to the conversation that she recalls Mr Hildebrandt and Mr Vanderkyl having on her boat. I consider that she was a reliable and independent witness.

297. [297]
     I accept the evidence of Mr McFarlane. Whilst he did not see the boat at the time of the sale his evidence is such that a reasonable inference as to the condition of the Norsaga at the time of sale can be drawn. That inference is that the boat was not seaworthy, was not merchantable and not fit for sale.

298. [298]
     I did not find Mrs Vanderkyl’s evidence particularly helpful. It does not carry much weight where matters of credibility arise, because her husband gave evidence for both of them to a large extent – they both being registered owners of the Norsaga - and she remained in court for the whole of her husband’s evidence. The matters of credibility in her case are the statements about the ‘selling agents’, her evidence that the photographs exhibits V2 to V7 depicted the Norsaga when it was for sale in 2008 and her not having seen or been aware of insect problems or detritus on the Norsaga prior to 2008. I prefer the evidence of other witnesses about those matters.

299. [299]
     I accept the evidence, to which I have referred, of Mr Shale. His evidence about timber rot and timber maintenance is not controversial in the context of this case in my view.

300. [300]
     Mr Martin’s evidence is not particularly helpful. It was non-specific and generalised. I prefer the evidence of other witnesses about the matters he referred to.

301. [301]
     I considered that Mrs Darwen was a partial witness for the defendants. Her confidence the accuracy of her recollection did not inspire the same confidence in me.

302. [302]
     I do not accept the evidence of Mr Darwen about the implication that the photograph (exhibit V2) showed the condition of the Norsaga in July 2008. I thought his evidence was partial in favour of his friends the defendants in that regard. However, I accept his evidence that the Norsaga was a heavy vessel and the implication that its manoeuvrability required good seamanship skills.

303. [303]
     The evidence of Dr Trezise, Dr Futter and Dr Varghese was very helpful. Dr Varghese had the disadvantage of not having consulted with Mr Sands. Whilst Dr Futter had formed a very firm and strong view about Mr Sands condition and capacity, I accept his evidence despite Mr Honchin’s submission that he was an advocate for Mr Sands and therefore a partial witness. I do not think that his correction of an answer in re-examination affects the cogency of his evidence. I consider that he was confused about the question and had the disadvantage of giving evidence by telephone. I preferred the evidence of Dr Futter over that of Dr Varghese where their views differed.

304. [304]
     I accept the evidence of Mr Geiszler. His assessment of the condition of the boat was independent and consistent with observations of other witnesses whose evidence I have accepted. His opinions were based on reasonable observations and assessments and he was qualified to make them.

305. [305]
     The QAS and QCCU incident reports are not inconsistent with Mr Sands evidence of his knowledge of his condition. Rather, they demonstrate the extent of it and his mental disability: his denial of the patently obvious fact of his epilepsy.

Discussion

Incapacity

306. [306]
     The law is that stated by the High Court in Gibbons v Wright (1954) 91 CLR 423.  The High Court held at p 449:

“Upon the authorities as they now stand, it appears to us that we ought to regard it as settled law that an instrument of conveyance executed by a person incapable of understanding its effect, in the sense of its general purport, is not on that account void, though in the circumstances it may be voidable by the conveyor or his representatives.”

307. [307]
     Dixon CJ wrote that:

“… a disposition of property made for valuable consideration by a person incapable of understanding its effect is not wholly void, but is voidable if, and only if, the disponee knew or had reasonable grounds to know of the disponor's lack of understanding and did not act in good faith.”

308. [308]
     In order to avoid the contract Mr Sands must discharge the onus of showing that he was suffering from such a degree of mental disability at the time of his making the contract that he was incapable of understanding it and that the defendants were aware or ought to have been aware of this.

309. [309]
     However, the law in Australia is more akin to that of unconscionability and its application is arguably more flexible.

310. [310]
     ‘Incapacity of understanding’ is not to be equated with ‘unfairness’. The principle is not about unfairness as between the parties, but whether the defendants, knowing or at least having constructive knowledge of this incapacity, took an “unconscientious advantage” over Mr Sands: Hart v O'Connor [1985] AC 1000 at p 1027. 

311. [311]
     However, if Mr Sands made the contract at a time when he was not suffering mental disability, he would be bound by it. The ;Special disability’ in this case is the acquired brain injury – impaired mental capacity – and the incidence of a complicated and severe form of epilepsy.

Two of the equitable grounds

312. [312]
     Mr Sands has asserted in his pleadings several grounds of invalidity of the contract. I can dispose of two of them in relatively brief terms because they do not arise in the circumstances of this case. They are the equitable principle of ‘undue influence’ and the equitable principle of ‘non-est-factum’.

Undue influence

313. [313]
     Elements which must be established by a party impugning a transaction for undue influence, in the absence of an antecedent relationship of influence, are as follows:

• Capacity to influence the other party by the party seeking to uphold the validity of the contract.
• Wrongful exertion of influence or pressure by or on behalf of the party seeking to uphold the validity of the contract.
• Influence or pressure that in fact caused or contributed to the other party agreeing to/executing the contract.

314. [314]
     Actual undue influence must be proved in cases where there is no evidence of a special relationship of influence. However, the case authorities mainly reflect antecedent special relationships of influence. There is no such special relationship in this case.

315. [315]
     Undue influence is akin to unconscionability in the sense that in some circumstances the principles on the facts being considered are capable of being merged. There is authority that refers to the similarity between the equitable principles of undue influence and unconscionable conduct. However, in the context of this case they are distinguishable. Nevertheless, in the circumstances of this case I do not consider that undue influence per se has been established by Mr Sands.

316. [316]
     Deane J in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 (“Amadio”), wrote at p474:

“The equitable principles relating to relief against unconscionable dealing and the principles relating to undue influence are closely related. The two doctrines are, however, distinct. Undue influence, like common law duress, looks to the quality of the consent or assent of the weaker party… unconscionable dealing looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so. The adverse circumstances which may constitute a special disability for the purposes of the principles relating to relief against unconscionable dealing may take a wide variety of forms and are not susceptible to being comprehensively catalogued.”

317. [317]
     The distinction between unconscionable dealing and undue influence, referred to by Deane J in Amadio, was confirmed in Bridgewater & Ors v Leahy & Ors [1998] HCA 66, a case that involved the application of principles developed in the High Court, primarily concerning unconscionable conduct.  Amongst other things the High Court contrasted Amadio (which represents the law in Australia, and for that matter in New Zealand) with that in the United Kingdom (see Hart v O'Connor [1985] AC 1000 at 1024), so far as unconscionable conduct is described.  See also the contrast with the English cases Lloyds Bank Ltd v Bundy [1975] 1 QB 326 and National Westminster Bank Plc v Morgan [1985] AC 686.

318. [318]
     As far as independent advice in this case is concerned, Mr Sands did not consult a lawyer during the course of the events leading to the execution of the contract, but he did have Mr Hildebrand in his ear telling him not to buy the boat and why he should not do so.  On the other hand, he also received encouragement to buy a boat from other people he knew or were involved in his care. However, lack of independent legal advice does not arise as a basis for impugning the validity of the contract. 

The principle of ‘non est factum’

319. [319]
     A person suffering from mental incapacity at the time of contracting may be able to rely on a plea of non est factum, but in the context of this case it would only arise in respect of a lack of understanding about the effect of the contract, rather than a lack of understanding about the execution of the contract. A lack of understanding as to effect may make the contract voidable, whereas a lack of understanding about the execution of it may make the contract void.

320. [320]
     The principle of non est factum means literally that the document constituting the agreement “is not the deed” of the person seeking to avoid the contract. The principle has been discussed in Blomley v Ryan (1956) 99 CLR 362. A seller sold a grazing property at gross undervalue when he was intoxicated and incapable of forming a rational judgement of the terms of the business transaction, his intoxication and incapacity having been patently obvious to the other parties. Fullagar J listed some examples of the special disability, at p 406:

“… poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary.”

321. [321]
     His Honour observed at p475 that the common characteristic of such an ‘adverse circumstance’ “seems to be that they have the effect of placing one party at a serious disadvantage vis-à-vis the other”.

Conclusion on undue influence and non est factum.

322. [322]
     In my view, undue influence per se as a ground for avoiding the contract is not relevant in the circumstances of this case; and the principle of ‘non est factum’ as a ground for avoiding the contract is not relevant in the circumstances of this case.

323. [323]
     It follows that neither of those grounds, undue influence and non est factum, can succeed.

The contractual and unconscionable conduct grounds

324. [324]
     The further grounds of invalidity of the contract that warrant greater consideration are the allegation of breach of contract; and the equitable principle of unconscionable conduct.

Breach of contract

325. [325]
     In paragraph 8(a) of the Defence, the defendants admit that they represented to the plaintiff that the Norsaga “was in good working order and that the plaintiff would have no difficulties sailing it or living on it”. That is the critical oral representation and term of the contract.

326. [326]
     Whilst the admission is arguably expressed in general terms, its unequivocal meaning is that the boat was sound, safe, fully equipped and operational to sail and motor and was in a condition that enabled Mr Sands to live on it as his home, with all of the expectations that accompany that concept.

The use of the boat as his home was a critical factor in the interest of Mr Sands in buying the Norsaga. The boat did not meet that meaning or the expectation.

Unconscionable conduct

327. [327]
     The meaning of “unconscionability” really depends on the particular circumstances that are being considered. It has been described, even if not defined as such, as meaning “irreconcilable with what is right or reasonable”: Harley v McDonald’s Australia Ltd [1999] FCA 144, at 163-168; or “so unreasonable and oppressive so as to affront minimal standards of fair dealing”: Commonwealth v Verwayen (1990) 170 CLR 394. 

328. [328]
     When negotiations for a contract are affected by unconscionable conduct, the contract may be voidable at the suit of the party asserting unconscionability. A transaction will be set aside as being unconscionable wherever one party by reason of some condition or circumstance is placed at a special disadvantage vis-à-vis another and unfair, as unconscientious advantage is then taken of the opportunity thereby created: Amadio. The latter case is the principal authority dealing with unconscionable conduct. 

329. [329]
     In Amadio, elderly parents with no good command of the English language signed an agreement for a loan to their son whose business was in jeopardy and required an investment of money to continue to survive.  The bank’s branch manager (one Virgo) had a social and business relationship with the son. He secured the signatures of the elderly parents to the loan agreement.  The business subsequently failed and the bank sought to recover the loan from the parents. 

330. [330]
     Mason J, wrote at pp466 - 468 that:

“It must have been obvious to Mr Virgo, as to anyone else having knowledge of the facts, that the transaction was improvident from the viewpoint of the respondents. In these circumstances it is inconceivable that the possibility did not occur to Mr Virgo that the respondents’ entry into the transaction was due to their inability to make a judgment as to what was in their best interests, owing to their reliance on their son, whose interests would inevitably incline him to urge them to sign the instrument put forward by the bank.

Indeed, the inquiry by Mr Amadio senior as to the duration of the arrangement should have alerted Mr Virgo to the likelihood that [the son] had not adequately or accurately explained the intended transaction to them, let alone the possible or probable consequences which attended it.

Whether it be correct or incorrect to attribute to Mr Virgo knowledge of this possibility, the facts as known to him were such as to raise in the mind of any reasonable person a very real question as to the respondents’ ability to make a judgment as to what was in their own best interests. In Owen and Gutch v Homan [(1853) 4 HLC, at p 1035; 10 ER, at page 767)], Lord Cranworth L.C. said:

‘. . . it may safely be stated that if the dealings are such as fairly to lead a reasonable man to believe that fraud must have been used in order to obtain’ [the concurrence of the surety], ‘he is bound to make inquiry, and cannot shelter himself under the plea that he was not called on to ask, and did not ask, any questions on the subject. In some cases wilful ignorance is not to be distinguished in its equitable consequences from knowledge.’

The principle there stated applies with equal force to this case. The concept of fraud in equity is not limited to common law deceit; it extends to conduct of the kind engaged in by the respondents’ son when he took advantage of the confidence and reliance reposed in him to induce his parents to enter into a transaction in order to serve his ends, thereby depriving them of the ability to make a judgment as to what is in their interests.

As we have seen, if A having actual knowledge that B occupies a situation of special disadvantage in relation to an intended transaction, so that B cannot make a judgment as to what is in his own interests, takes unfair advantage of his (A’s) superior bargaining power or position by entering into that transaction, his conduct in so doing is unconscionable. And if, instead of having actual knowledge of that situation, A is aware of the possibility that that situation may exist or is aware of facts that would raise that possibility in the mind of any reasonable person, the result will be the same.

The knowledge of Mr Virgo was the knowledge of the bank. Whether we treat Mr Virgo as having knowledge of the possibility already discussed or as having knowledge of facts which would raise that possibility in the mind of any reasonable person the inevitable conclusion is that the bank was guilty of unconscionable conduct by entering into the transaction without disclosing such facts as may have enabled the respondents to form a judgment for themselves and without ensuring that they obtained independent advice.”

331. [331]
     Deane J at p474 wrote:

“The jurisdiction of courts of equity to relieve against unconscionable dealing developed from the jurisdiction which the Court of Chancery assumed, at a very early period, to set aside transactions in which expectant heirs had dealt with their expectations without being adequately protected against the pressure put upon them by their poverty (see O'Rorke v. Bolingbroke [(1877) 2 App Cas 814, at p 822)]. The jurisdiction is long established as extending generally to circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them and (ii) that disability was sufficiently evident to the stronger party to make it prima facie unfair or ‘unconscientious’ that he procure, or accept, the weaker party’s assent to the impugned transaction in the circumstances in which he procured or accepted it. Where such circumstances are shown to have existed, an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable:

‘the burthen of shewing the fairness of the transaction is thrown on the person who seeks to obtain the benefit of the contract’…”.

332. [332]
     Mason J stated the doctrine in the following terms:

“… whenever one party by reason of some condition of circumstance is placed at a special disadvantage vis-à-vis another and unfair or unconscientious advantage is then taken of the opportunity thereby created”,

the court will set aside the transaction. 

333. [333]
     His Honour emphasised that inequality of bargaining power by itself, is not sufficient [462]. In other words, the stronger party must have actual or constructive knowledge of the special disability or inequity in bargaining power arising therefrom.

334. [334]
     In ACCC v Berbatis Holdings Pty Ltd [2000] FCA 1376, French J (as he then was) made the point that an allegation of unconscionable conduct substantially depends on the context in which it arises:

“The elements of inequality, disadvantage or disability on the one hand in the unfair conduct of the stronger party taking advantage of them on the other are not, in my opinion, to be weighed up as though independent. It is conduct in context which has to be judged. A party may take advantage of the disadvantage of another without necessarily acting unfairly or so unfairly, having regard to the nature of the disadvantage, that equity would intervene. Where the disadvantage or inequality is great it may take less to discern unconscientious exploitation of it than in a situation involving less disadvantage or inequality.”

335. [335]
     The particular circumstances of a case really drive one’s judgment as to whether particular consequences, facts and circumstances may amount to unconscionable dealing. The Berbatis case is a good example of that because whilst his Honour held that insisting on a term in a lease renewal contract that released the landlord from any claim made by the tenant was, in the circumstances, unconscionable, on appeal the Full Court of the Federal Court held that such conduct in the circumstances of that case was not unconscionable.

336. [336]
     In Blomley v Ryan (supra) Kitto J referred to the principle of unconscionability as being a ‘well-known head of equity’ which:

“…applies whenever one party to a transaction is at a special disadvantage in dealing with the other party because illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affect his ability to conserve his own interests, and the other party unconscientiously takes advantage of the opportunity thus placed in his hands.”

337. [337]
     In this case Mr Vanderkyl was the dominant party in a position of strength. Mr Sands was the weaker and patently vulnerable party. The issue however, is whether the defendants knew or had constructive knowledge of Mr Sands’ vulnerability, through his ‘special disability’.

Onus of proof

338. [338]
     The onus of proof is ultimately borne by the plaintiff. However, in respect of some issues the onus is either borne by the defendants or equally by the parties: that is, the party who bears the legal proof on an issue also bears the burden of adducing evidence on that issue. The defendants shared the onus of proof in respect of the value of the Norsaga and with respect to the condition of the boat, by reason of his lengthy ownership of it and his seafaring experience with it, as at the date of sale; and the extent and significance of the timber rot and the insect or ant infestation. To the extent that the onus in respect of those matters rested with them, it has not been discharged. However, the plaintiff has discharged the onus of proof borne by him, with respect to those matters.

Intervening event?

339. [339]
     Neither the sinking in 2012 of the Norsaga or any earlier partial sinking of the boat amount to an intervening event sufficient to break the causal connection between the seaworthiness of the Norsaga at the time of sale and the condition of the boat in early 2013, when it was clearly a wreck and good only for salvage.

Conclusions

Part A: Special disability

Was Mr Sands’ mental capacity relevantly impaired?

340. [340]
     Question: did the plaintiff had capacity to enter into a contract for the purchase of the Norsaga for $55,000.00?

Answer: No.

341. [341]
     Question: if the plaintiff lacked capacity for the transaction, did the defendants know, or ought they to have known that he lacked the relevant capacity?

Answer: Yes, they either knew or ought to have known that is, had constructive knowledge of that.

342. [342]
     Question: if the defendants knew or ought to have known that the plaintiff had a relevant incapacity, was the sale of the Norsaga to the plaintiff by the defendants thereby unconscionable?

Answer: Yes.

343. [343]
     Question: did the defendants exercise undue influence over the plaintiff in the purchase of the Norsaga?

Answer: No.

344. [344]
     Question: was the contract essentially different from what the plaintiff thought he was signing (non est factum)?

Answer: No

Was the Norsaga seaworthy and fit for sale?

345. [345]
     Question: was the Norsaga seaworthy and in good working order and able to be sailed and lived on at the time of sale?

Answer: No, it was not seaworthy. It had motored in harbour and protected waters, after the sale.. However, it was not otherwise in good working order and could not be lived on.

346. [346]
     Question: did the defendants meet the terms of the sale agreement?

Answer: No, not in terms of seaworthiness and fitness for sale.

Determination of liability

Special disability

347. [347]
     Mr Sands was a person with a ‘special disability’ at and prior to the date of sale and purchase of the Norsaga. His epileptic condition (admitted by the defendants) was proved. However, it is the concurrent cognitive condition that in my view made him a naïve and vulnerable party to a contract that had consequences [in the ownership, operation and maintenance of a large heavy boat] that were beyond any realistic or reasonable appreciation and understanding by him and in respect of which he had very little or no capacity to deal with.

348. [348]
     Mr Sands’ simplistic statement that he later found out that the boat required a lot of work, but that he was just happy to be getting a boat illustrates his disability, as does his statement that he would dive in the water and scrape the hull rather than slipping the boat. He said that he did not understand the maintenance requirements and that maintaining the boat had become a ‘nightmare’. He had not read the Agreement for Sale.

349. [349]
     The medical evidence establishes the ‘special disability’ as a matter of fact. The evidence of Dr Tresize and Dr Futter establishes the extent of the disability. The concession by Dr Varghese that he was not able to say whether Mr Sands had the capacity to contract, is significant.

350. [350]
     Mr Sands had a complicated and severe form of epilepsy. Dr Trezise said he was devastated and worried about Mr Sands plans. There had been no significant change to Mr Sands’ capacity to know the consequences of a significant financial transaction. Dr Reimers reported that Mr Sands was not fit to drive (he rode a pushbike) and he suffered recurrent partial seizures. Dr Futter said that Mr Sands was not capable of decision-making. Dr Futter said that an average lay-person in a contractual negotiation with Mr Sands would br put on notice that he did not have sufficient capacity to enter a transaction. He lacked the capacity to make the contract. Dr Varghese said that there was definite evidence of brain injury. A frontal lobe dysfunction would affect capacity – it would certainly be impaired. He could not say whether Mr Sands suffered incapacity.

351. [351]
     The defendants knew or ought to have known, that is, had constructive knowledge of that ‘special disability’. They met, conversed and interacted with Mr Sands who must have presented as a man with an odd and naïve persona. They knew he suffered from epilepsy and ought to have been aware from what they were told and from what was said to have been common knowledge around the harbour (which they frequented regularly and were part of a common community of persons interested or engaged in owning, sailing and maintenance of boats) about Mr Sands, who visited the harbour frequently and was known around the town (he rode a pushbike, sometimes, pulling a trailer and was not licensed to drive), medical condition and odd persona; Mr Vanderkyl was told by Mr Hildebrandt not to sell the boat to Mr Sands; Mr Vanderkyl thought it was strange that the failure of Mr Sands to negotiate price and to have the boat inspected prior to sale was unusual; the questions asked by Mr Sands about the boat and the operation of it ought to have alerted the defendants to Mr Sands lack of experience in boat-handling and created a real doubt that he would ever manage the rigours, with which they were well aware, of ownership, operation and maintenance of the Norsaga.

352. [352]
     Mr Sands’ presentation and circumstances such as were known to Mr Vanderkyle, would have raised in the mind of a reasonable person a very real question as to Mr sands’ ability to make a judgment as to his capacity to own, operate and maintain a large and heavy, pre-owned timber decked sailing boat.

353. [353]
     The experience of Mr Vanderkyl and the paucity of experience of Mr Sands are poles apart, the first that of a long term experiences seafarer (the latter according to Mr Darwen) and the second that of an occasional boat user here experience is not recent but historical.

354. [354]
     The plaintiff has discharged his onus of proof on the ‘special disability’ claim and has proved that the defendants had knew or had constructive knowledge of that. The defendants have not shown that they either had no knowledge or constructive knowledge of the ‘special disability’. The plaintiff is entitled to succeed on this ground. The contract is voidable at the suit of the plaintiff and should be set aside.

Breach of contract

355. [355]
     An essential condition of the contract was that the Norsaga was in good working condition and able to be sailed and lived on. It could be sailed or motored at least in the short term and in protected waters. However, it was not in good working condition and it was not able to be lived on. The defendants were therefore in breach of those terms of the contract.

356. [356]
     However, the plaintiff has not proved that the reasonable training contemplated in general terms in the contract was not provided or that the equipment and boat documentation were not delivered to him.

Non-seaworthiness

357. [357]
     It seems to me that Mr Vanderkyl wanted a quick sale to free him and his wife to take their planned caravanning trip and that Mr Sands presented them with that opportunity. Mr Vanderkyl wilfully ignored the warning signs and statements that Mr Sands was incompetent in operating the boat alone and incapable of maintaining it, He put his and his wife’s interests ahead of the interests of Mr Sands and closed the deal despite his admitted reservations about Mr Sands’ conduct during the sale arrangements.

358. [358]
     The plaintiff has discharged the onus of proof with respect to the ground of his claim of the unseaworthiness of the Norsaga and its non-fitness for sale.

359. [359]
     The defendants took advantage of the plaintiff in a way that was unconscionable in all of the circumstances to which I have referred. The contract is voidable at the suit of the plaintiff.

360. [360]
     The defendants are liable for the plaintiff’s loss and damage. The plaintiff has proved his claim on three grounds of his claim and is entitled to recover compensation by way of damages.

Quantum

The state of the Norsaga at the end of the hearing in July 2014

361. [361]
     Mr Vanderkyl said that he saw the Norsaga when it was “sitting on the bottom”. The condition of the Norsaga is shown in the 23 photographs (exhibit V18) where there is evidence of significant and extensive damage and deterioration; and in its similarly deteriorated condition, beached and lying on its side, at some time in or after January 2013. It appears that it is now on “the hard” and is a ‘wreck’.

Delay and mitigation of damages

Submissions

362. [362]
     In oral submissions Mr Honchin referred to the passage of time between the sale and when the Claim was made (30 October, 2013), about five years and three months. He submitted that it was not possible to say what deterioration, if any, was pre-existing and what was due to post-sale lack of maintenance and the subsequent sinking of the Norsaga. He submitted that the boat floated, sailed and motored in the five weeks immediately after the sale. It was not possible to have the boat that was sold, returned: it’s condition was now an unusable wreck.

363. [363]
     Mr Honchin referred to Clark v Dickson (1858) 120 ER 463, at 465 to the effect that one cannot consume a product and expect to retain it too.

364. [364]
     Mr Byrne submitted that the Norsaga had not motored (there was some sailing) other than in the harbour or in protected waters and no great distance, never its former long journeys. He drew an analogy with an old car: it could go around the block, but not on a trip out of town.

365. [365]
     He submitted that Mr Sands did not get what he thought he was buying: a used but sound boat that “was in good working order and able to be sailed and lived on”.

366. [366]
     He referred to delay per se as well as the issue of what was left of the boat in the context of damages. He said there had been no ‘confirmation’ of the deal, inactivity or acquiescence by the plaintiff. He referred to Allcard v Skinner (1887) 36 Ch R 145 and distinguished Mr Sands’ situation from that of Ms Allcard.

Discussion

367. [367]
     Whilst delay or laches is not pleaded by the defendants per se and I do not need to determine such an issue (Mr Byrne seemed to think that he needed to do so in submissions), I would if that had been necessary have taken into account the following in rejecting that allegation: Mr Sands disability, Mr Hildebrandt’s request to the defendants to buy the boat back, the contacts on behalf of Mr Sands with the Credit Ombudsman and QPILCH, the issuing of the Claim within the Limitation Period and the QCCU Claim filed 06 December, 2011.

368. [368]
     All of the latter matters were at the initiation of Mr Hildebrandt who had no commercial or financial interest in the matter but acted voluntarily in his own time. He became Administrator for financial affairs of Mr Sands on 29 July 2011 and is Litigation Guardian for Mr Sands. Mr Byrne subsequently has acted as a counsel uninstructed by a solicitor, for Mr Sands.

369. [369]
     I do not consider delay per se is a relevant factor in the circumstances of this case. The Norsaga was sold at a price that I infer, from the evidence of the speed of deterioration of the boat generally, but specifically the photographs that are the subject of the Admission on behalf of the defendants and the evidence of Mr Sands and Mr Hildebrandt, Mr McFarlane and Mr Geiszler about the condition of the Norsaga, was more than the boat was worth. The defendant’s evidence of what Mr Hinton purportedly told Mr Vanderkyl is unsupported by any independent evidence about the condition of the boat and by implication its value, in the holistic sense.

370. [370]
     Whilst the Norsaga is now a wreck and its value is in the salvage or recoverable items, there had been four years six months deterioration post-sale up to mid-2013, which is apparent from the photographs taken in January 2013 and the boat had sunk significantly once, in 2012 its condition was, when sold, on the evidence I have accepted such that its realisable value then must have been significantly less than the sale price.

371. [371]
     Whilst the defendants, if the Norsaga was returned to them, would not get the boat back fully ‘in specie’, they would be in a position to recover its salvage value. The quantum of that value may or may not be equivalent to the value of the Norsaga at the time of sale, but it is impossible to be specific about that.

372. [372]
     Damages cannot be recovered for any loss which could have been prevented by reasonable mitigating action by the plaintiff. However, all that is required is for the plaintiff to take reasonable steps: Unity Insurance Brokers Pty Ltd v Rocco Pezzaro Pty Ltd (1999) 192 CLR 603 at 607 per Brennan CJ and 654 per Haines J.

373. [373]
     The onus of proving a failure to mitigate lies on the defendants: TC Industrial Plant Pty Ltd v Roberts Queensland Pty Ltd (1963) 180 CLR 130, at 138; AHR Constructions Pty Ltd v Maloney (1994) 1 Qd R 461.

374. [374]
     As far as mitigation of damage here is concerned, maintenance of the boat seems to have been beyond the capacity of Mr Sands to understand or to execute. Mr Hildebrandt and the harbour officers worked long and hard to try to maintain the boat and to keep it afloat, but that eventually became an impossible task to continue indefinitely.

375. [375]
     With the benefit of hindsight the boat would have been better preserved if it had been taken out of the water and put on a hard stand. However, that did not happen. I think that would have been unreasonable, in any event. The significant sinking event in 2012 was probably the catalyst for further deterioration in its condition, although it is not possible to quantify that with any precision.

376. [376]
     If I were to find that the boat was unseaworthy, in the broad sense of that word, at the time of the sale, then the defendants would be primarily liable in damages. However, there would also be an element of failure to mitigate damages which the plaintiff would have to bear because the defendants cannot be held entirely responsible for the Norsaga eventually becoming a wreck by early 2013. To that limited extent, the defendants have discharged the onus on this issue. The determination of that division of liability is very difficult, but nevertheless must be made in determining the proper measure of damages.

Salvage or recoverable value

377. [377]
     Mr Vanderkyl estimated the salvage or recoverable value of the Norsaga as follows: lead ballast $8,000.00, bronze fittings $2,000.00 to $3,000.00 and copper components $2,500.00, a total of perhaps $15,000.00 to $20,000.00 value, recoverable as scrap metal. The masts were retained in the slipway and were “not in bad condition” [impliedly having a residual value included in the above total]. There were costs of transport of the wreck to Townsville for recovery purposes that needed to be deducted.  

378. [378]
     Mr McFarlane said (in exhibit 17) that “The value of this vessel at the time of sale to Graham Sands would in my opinion have been whatever amount of money one would get from the sale of the two masts (not including rigging), the winches which are outdated, and whatever other fittings could be salvaged, therefore an absolute maximum of $5,000.00 could have possibly been realised. This amount of money would evaporate once the rest of the vessel was demolished and taken to the refuse station.”

379. [379]
     Mr Hildebrandt had sought information from other people about the cost of disposal of the wreck, including an amount of $7,270.00 plus GST to remove the vessel to the dump.

General submissions on quantum

Mr Byrne

380. [380]
     Mr Byrne submitted that the plaintiff should be returned to the position he was in before the sale: that is, that he be awarded the sum of $55,000.00 plus interest and damages for wasted expenditure, including interest paid on the loan from QCCU.

381. [381]
     He submitted that the wreck of the Norsaga should be returned to the defendants for salvage and recovery of such value as it rendered.

Mr Honchin

Mr Honchin addressed the issue of wasted expenditure and opposed the claim on the ground that it was not pleaded or litigated, the issue of the salvage and recoverable value of the Norsaga, which he said was hardly worth considering on the evidence adduced in the case; and submitted that the parties could not be equitable returned to their respective positions as at the time of the sale of the Norsaga.

Damages for wasted expenditure

Submissions

382. [382]
     Mr Byrne submitted that the plaintiff was entitled to recover damages for wasted expenditure. The claim is predicated on Mr Sands’ evidence of having spent part or all of the sum of $10,000.00 – part of the loan money he was given by QCCU – on or in respect of the Norsaga, rather than on or in respect of his house and that there was an interest component of the loan that should also be taken into account.

Mr Honchin submitted – correctly – that the claim was not pleaded and no application was made to amend the pleadings. However, Mr Byrne submitted that the claim arose from the evidence, which had not been objected to, and from the course of the hearing, the defendants having acquiesced in that course.

Discussion

383. [383]
     I have referred to the pleadings and the way in which the case has been litigated, with Agreed Facts and Agreed Issues having primacy over the pleadings per se. However, this is a matter that should have been pleaded or raised as an Agreed Issue. It was not identified specifically in the course of the hearing. Some of the evidence is drawn from the QCCU case (the purpose of for which the money was lent) and not simply from what Mr Sands may have said about that purpose.

384. [384]
     Whilst the evidence on one proceeding was to be evidence on the other, this claim was not raised in the course of the hearing other than in written submissions. I do not agree that the defendants have ‘acquiesced in a course of conduct’ in the case. I consider that this submission has arisen adventitiously. The quantum of this head of damage is not precisely known. Of course, difficulty in determining a quantum sum is not a bar to the successful proof of a head of damage and there is also an element of speculation about the figure of $10,000.00.

385. [385]
     The defendants could not have been aware that this claim was part of the case they had to meet: The Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; Banque Commerciale SAV, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279.

386. [386]
     The claim on this head of damages is refused.

Further discussion about damages

387. [387]
     The object of an award of damages is to compensate for loss. The general principle in an award of damages in contract is to put the plaintiff in the same position as if the contract had been performed: Wenham v Ella (1972) 127 CLR 454, at 471 per Gibbs J; Commonwealth v Amann Aviation Pty Ltd (supra).

388. [388]
     Damages are generally assessed at the time of the breach of contract: Wenham and Amann, supra. However, damages can be assessed at another date if this allows for fairness in compensation: Johnson v Perez (1988) 166 CLR 351; Hungerfords v Waller (1989 171 CLR 125, at 146, 163; including at the date of hearing: Cade Pty Ltd v Thomson Simmons [1998] SASR 6912.

389. [389]
     The calculation of damages may be a difficult exercise and may involve some degree of instinct or intuition. However, difficulty in assessing damages is not a bar to an assessment being made. This difficulty is a feature of this case, as I have observed.

Conclusion: quantum

390. [390]
     The plaintiff can only be restored to his position at the time of the breach, which I have determined was the date of sale, by an award of damages. The quantum of those damages would ordinarily be assessed as the purchase price paid. However, whilst I have found that the Norsaga was not seaworthy as at the date of sale it must have had some value in excess of the salvage value as at early 2013, but less than the purchase price paid.

391. [391]
     The risk of the gross deterioration of the boat in the years following the date of sale and up to early 2013 when it was by all accounts a wreck and suitable only for salvage, was created by the condition of the Norsaga at the time of its sale. There was in my view a concurrency of causation in the condition of the boat at the date of sale and through the subsequent events until early 2013: see generally, Caltex Oil (Australia) Pty Ltd v The Dredge Willemstad (1976) 136 CLR 529, at 543 per Gibbs J and 583 per Stephen J.

392. [392]
     However, there is as a matter of fairness a need to ameliorate the incidence of damages on the defendants in the circumstances of this case, on account of the further deterioration of the boat between July 2008 and early 2013. Whether that is a recognition of some failure to mitigate damages or otherwise is not necessary for me to state definitively in the circumstances of this case. It is essentially a matter of fairness and one that requires an exercise of discretion as best as I can achieve. It requires an instinctive albeit difficult assessment task, as at a date other than the date of sale.

393. [393]
     I assess damages at 70% of the purchase price: that is, the sum of $38,500.00.

Interest

394. [394]
     The plaintiff is entitled to interest on the judgment sum. However, I will hear the parties on the rate and the period over which interest should be calculated.

Costs

395. [395]
     Costs generally follow the event: that is, the successful party is entitled to his costs of the proceedings on the standard basis. The plaintiff was substantially successful. However, I will hear the parties further as to costs.

ORDERS

1Declaration that the contract, written and oral, made on 21 July 2008 is voidable at the suit of the plaintiff on the grounds of lack of capacity and/or unconscionable conduct and is set aside.

2further and in the alternative the defendants were in breach otf the terms of the Agreement for sale made on 21 July 2008.

3the plaintiff is entitled to be compensated for loss arising from the setting aside of the agreement for sale or the breach of the Agreement for Sale, by an award of damages.

4Judgment for the plaintiff against the defendants in the sum of $38,500.00, plus interest.

5That upon payment of the judgment sum including costs by the defendants to the plaintiff, the plaintiff give possession of the wreck of the vessel ‘Norsaga’ and the two masts to the defendants.

6I will hear the parties as to the rate and period over which interest should be calculated.

7I will hear the parties further as to costs.