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CITE

Unreported Judgment
Appeal Determined (QCA)

Rivergate Marina & Shipyard Pty Ltd v Morphett[2017] QDC 141McGill DCJ
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Rivergate Marina & Shipyard Pty Ltd v Morphett[2017] QDC 141

DISTRICT COURT OF QUEENSLAND

CITATION:	Rivergate Marina & Shipyard Pty Ltd v Morphett [2017] QDC 141
PARTIES:	RIVERGATE MARINA & SHIPYARD PTY LTD (plaintiff) v ALEXANDRA MORPHETT (first defendant, second plaintiff by counterclaim) and JOHN HARVEY (second defendant) and HUNTER VALLEY DENTAL SURGERY PTY LTD (third defendant, first plaintiff by counterclaim)
FILE NO/S:	BM3735/2012; BD1516/2014
DIVISION:
PROCEEDING:	Civil Trial
ORIGINATING COURT:	Magistrates Court at Brisbane
DELIVERED ON:	31 May 2017
DELIVERED AT:	Townsville
HEARING DATE:	30, 31 January, 1, 2 February 2017
JUDGE:	McGill SC DCJ
ORDER:	Judgment that the first defendant pay the plaintiff $85,231.01, including $25,468.11 by way of interest. Claim against the second defendant dismissed. Counterclaim of the first defendant dismissed.
CATCHWORDS:	BAILMENT – duties of bailee – exercise of lien – whether reasonable care taken of boat – ownership of boat – assessment of damages. Aqua Marine Pty Ltd v The Ship “Condor of Bermuda” [1999] QDC 46 – cited. BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 – applied. Blue Corp Pty Ltd v ANZ Executors and Trustee Co Ltd [1995] QCA 487 – cited. Challenge Charter Pty Ltd v Curtain Bros (Qld) Pty Ltd [2004] VSC 1 – followed. Chasteauneuf v Capeyron (1882) 7 App Cas 127 – cited. China Pacific SA v Food Corporation of India [1982] AC 939 – cited. Devine Shipping Pty Ltd v BP Melbourne (1994) 3 Tas R 456 – cited. Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220 – cited. McDonald v Deputy Commissioner of Land Tax (1915) 20 CLR 231 – cited. Mentink v Registrar of the Australian Register of Ships [2014] FCA 1138 – cited. Nightingale v Tildsley [1980] CLY 134 – cited. Ontario Ltd v Commissioner of Stamps (1990) 53 SASR 274 – cited. Palmer St. Developments Pty Ltd v J&E Vanjak Pty Ltd [2016] QCA 138 – cited. Soames v British Empire Shipping Co (1860) 8 HLC 338 – cited. Spencer v The Commonwealth (1907) 5 CLR 418 - cited. “The Sisters” (1804) 5 C.Rob. 155, 165 ER 731 – cited. Thiess Services Pty Ltd v Mirvac Queensland Pty Ltd [2006] QCA 50 – cited. Tottenham Investments Pty Ltd v Carburettor Services Pty Ltd (1994) Aust Torts Rep 81-292 – cited.
COUNSEL:	MH Ferrett for the plaintiff P Sommers for the first and second defendants
SOLICITORS:	Archibald & Brown Lawyers for the plaintiff Bennett & Philp Lawyers for the first and second defendants

[1]
This is a case about a boat. The C-Princess was built in America in 1965, as a wooden hulled motor cabin cruiser, of a kind which is or was at one time popular in America, but rare in Australia. It was purchased in 2004 in America for $US150,000.^[1] Since then, a lot of money has been spent on it.^[2] It is now, for practical purposes, worthless.

[2]
In late 2010, the boat came into the plaintiff’s shipyard on the Brisbane River where some work was done on it by various subcontractors. Some of that work was paid for, but not all of it. In September 2011 the second defendant advised that he would be taking possession of the boat in order to take it to the Hawkesbury River, but the plaintiff refused to release it until the balance of its charges had been paid. That has never occurred; no further sums have been paid to the plaintiff in respect of the boat, although at the trial it was conceded on behalf of the defendants that part of the plaintiff’s claim was properly payable.

[3]
The boat remained moored in the plaintiff’s marina until one day it sank at its moorings. It was salvaged and stored on land, where it has deteriorated further. By this proceeding, the plaintiff seeks to recover the balance of its repair charges. The first defendant and the third defendant, a company associated with the other defendants, counterclaimed against the plaintiff, for damages for negligence, to recover the loss suffered because the boat sank.

History of the proceeding

[4]
This action has had a long and undistinguished history. It began in the Magistrates Court on 10 February 2012 with the filing of a claim and statement of claim against the first and second defendants, claiming $86,950.72. A notice of intention to defend and defence were filed on 14 August 2012, together with a counterclaim for damages for wrongful detention, brought by the first defendant and the company, which alleged that the company was the owner of the boat; the first defendant asserted a claim as director and shareholder of the company, which gave her no cause of action.^[3] A reply and answer was filed on 20 September 2012. On 2 August 2013 an application for summary judgment on both the claim and the counterclaim was filed by the plaintiff. That application was heard and dismissed on 14 October 2013. On the same day, an application by the counterclaiming parties, for preservation of property, was adjourned to a date to be fixed. It appears never to have resurfaced.

[5]
An amended statement of claim was filed on 8 November 2013, which added a claim for the cost of berthing the vessel between January 2012 and October 2013, and continuing. On 15 November 2013 an application for further disclosure was filed on behalf of the plaintiff, as a result of which on 10 December 2013 a magistrate made an order that certain documents be disclosed. An amended reply and answer was filed on 13 January 2014. The next matter of significance was that on 28 April 2014, the counterclaiming first defendant and the company applied to have the proceeding transferred to the District Court, because they wished to amend the counterclaim to increase the damages claimed to $300,000, and together with further ongoing damages of $2,600 per month from April 2014, as a result of the sinking of the boat.

[6]
A consent order for the transfer was made by a registrar on 24 June 2014, and on 26 June 2014, a further amended defence and counterclaim was filed. Again, the claim was by both plaintiffs by counterclaim, though both of those parties alleged that it was the company that was the owner of the vessel, but an alternative counterclaim by the first defendant was also pleaded as arising “in the event that it is found that [the first defendant] is the owner of the vessel”: counterclaim, para 64. On 4 August 2014, on the plaintiff’s application, the company was joined as the third defendant to the proceeding. As a result, an amended claim and statement of claim was filed on 5 August 2014, a defence and counterclaim in response was filed on 3 September 2014 and a reply and answer was filed on 26 September 2014.

[7]
On 12 June 2015, an application was made by the plaintiff to place the matter on the commercial list. Another judge purported to make such an order on 26 June 2015 and gave some directions. The matter first came before me on 12 October 2015, when I placed the matter on the commercial list^[4] and listed it for trial for four days on a date to be fixed in November or December 2015. Some time thereafter the trial dates were fixed as four days commencing 14 December 2015. On 8 December 2015, however those trial dates were vacated after it emerged that the company had been placed in liquidation on the application of the Australian Taxation Office.

[8]
This occurred after the defendants’ solicitors had advised that the company “is unlikely to be wound up and the Supreme Court of New South Wales proceeding is unlikely to affect the hearing of this matter”.^[5] Directions were given for further amended pleadings, and the costs of the adjournment were reserved. Another version of the statement of claim was filed on 6 January 2016. Then on 18 January 2016, after email communications with those parties, I varied the directions and listed the matter for review on 19 February. On 25 January 2016 an amended defence and amended counterclaim were filed on behalf of the first and second defendants, but on 17 February 2016 there was yet another version of the statement of claim filed, and on 19 February the review was adjourned to not before 14 March. The matter was adjourned from time to time because I was told that an application was to be filed to set aside the liquidation.

[9]
On 19 August 2016 a solicitor for the liquidators of the company appeared before me. An affidavit he read included a statement that, although liquidators had been informed that an application to terminate the liquidation would be made, it had not yet been made. On 22 September 2016 I gave some further directions in relation to expert evidence, and for further pleadings, and listed the matter for further review on 3 November 2016. On 22 September 2016, an affidavit was filed and read before me in which the solicitors for the first and second defendants advised that their clients were proceeding with an application to set aside the liquidation, which was to be filed on that day. By 3 November 2016 nothing of significance had occurred, my patience was exhausted, and the matter was set down for trial on 30 January 2015. When the trial was called on the company did not appear, and on that basis its counterclaim was dismissed under UCPR r 476.

Background

[10]
In October 2010 the boat was in another shipyard in Brisbane, where some work had been done on it.^[6] A claim had been made by the company operating that shipyard for payment for work supposedly done on the boat, as a result of which proceedings were taken in the Supreme Court in its Admiralty jurisdiction, and the boat had been arrested.^[7] That company however then went into receivership, and the second defendant negotiated a compromise of that company’s claim by which the release of the boat was secured: Exhibit 65. At one point the plaintiff had been asked to provide a quote to slip and lift the boat and perform antifouling and other basic maintenance on it^[8] but on 28 October 2010 Mr Cannon, then the manager of the plaintiff’s shipyard, met the second defendant and Mr Mynott and went to the other yard and had a look at the boat.^[9] Mr Mynott is a distant relative by marriage of the first defendant, and had met the defendants at a wedding; p 19. He was later asked by the second defendant to keep an eye on things in Brisbane for them.^[10]

[11]
In early November^[11] the boat was towed from the other yard to the plaintiff’s yard: p 64. Mr Cannon said that at the time the boat arrived it was in a very poor state in general, the interior being riddled with mould and with signs of wood rot in various areas: p 65. There were also some signs of rot in the hull, and cracking in between the planks. It also appeared that the deck was not watertight, which had led to water damage inside the boat: p 66.

[12]
The second defendant signed Exhibit 2, a marina and shipyard agreement dated 8 November 2010 with the plaintiff, signing “for and behalf of owner.” The document identified “the owner” as the first defendant. That agreement had been provided by the plaintiff to Mr Mynott (Exhibit 19), and was emailed to the second defendant on 9 November 2010: Exhibit 20.^[12] Shortly after, Mr Cannon sent an email to both Mr Mynott and the second defendant clarifying that the agreement was for both lifting the vessel and berthing, and continuing:

“This document will cover the boat when she is lifted and any works which are undertaken upon the owners’ approval. This document outlines our standard terms and conditions but again, works will be quoted as required in a separate document.”^[13]

[13]
Mr Cannon gave an initial estimate of the cost of the work required of about $300,000; he did not recommend that the work be done because he did not think that to spend so much would be economically viable for that boat: p 66. On 10 November 2010, Mr Cannon sent an email to Mr Mynott setting out a quote for the work required to bring the boat back to a sound condition, on the basis of carrying out the best quality work using top quality products: Exhibit 22. The email noted that the hull had fairly substantial signs of wood rot, and that there was a possibility that further problems would be found once the area was opened up. The work was described in general terms and some of it was speculative, in that it depended upon inspections which had not yet been carried out properly, but was based on the sort of work which was likely to be required; the total cost was $295,000. Mr Cannon said that this involved replacement of large sections of the vessel and that there were ways to bring the cost down, such as by using cheaper products, for example for the paint.

[14]
Mr Mynott in reply indicated that this was well above what he had expected, but that he could understand where the money went, that a much newer boat could be purchased for that money, and that he needed to go through this with the second defendant: Exhibit 22. The second defendant decided that he would have done just the work necessary to get the boat into a state where it could proceed to the Hawkesbury River, where he expected to be able to get further work done on it more economically, and he gave Mr Mynott instructions to arrange this.^[14] Hence, Mr Mynott sent an email to Mr Cannon on 15 November 2010 seeking quotes for a list of specific work: Exhibit 23. On 16 November 2010, Mr Mynott sent a further email to Mr Cannon, just to do what was necessary to get the boat waterproof and able to get down south for further work to be done there, but again seeking quotes for specific work: Exhibit 24.

[15]
The same day Mr Cannon sent to Mr Mynott an email setting out prices for a number of specific tasks, although this did not include mechanical work: Exhibit 7. On 17 November 2010, Mr Mynott sent an email to Mr Cannon with instructions to perform seven specific items of work said to be agreed as quoted, and indicating some willingness to accept a quote which was yet to come for mechanical work and servicing: Exhibit 7. I need not detail the work covered by this quote, because there was no dispute that this work had been paid for. Mr Cannon sent Mr Mynott an email on 22 November 2010, attaching a spreadsheet for work quoted and approved, and promised to inform him as the work progressed: Exhibit 8. Mr Mynott replied that he was really happy with the work to date.

[16]
On 24 November 2010 Mr Cannon sent Mr Mynott an email forwarding quotes for installing a 240 volt electrical system within the boat, though the quotes were estimates only, along with some figures for the cost of making some other changes consequent upon the removal of a 110 volt electrical system: Exhibit 9. The following day, Mr Mynott sent an email not accepting any of these quotes: Exhibit 9. Ultimately, some 240 volt wiring and equipment was put into the boat.

[17]
On 2 December 2010, Mr Cannon sent Mr Mynott an email identifying an additional four items of work which he said needed to be rectified in conjunction with the works already quoted, explaining that this emerged in the course of doing the other work: Exhibit 10. On 3 December, Mr Mynott gave instructions to proceed with a stainless steel stem brace, and to go back to a timber hand rail and screen, approved the work quoted on the aft cabin sides with some indication of what was required, with clarification sought in relation to the port side wood cabin windows: Exhibit 10. On 9 December 2010, Mr Cannon sent a further email to Mr Mynott identifying some additional planks on each side of the vessel which needed to be replaced to make the vessel seaworthy: Exhibit 11. He also said that there was a problem with the steering which was not operating from the flybridge, and included a quote for further work on the steering. Mr Mynott accepted the former quote: Exhibit 11.

[18]
On 17 December a surveyor, Mr Carrington, saw the boat and reported to the second defendant that it was in poor condition, with rot in the hull and superstructure, and damage to rudders: Exhibit 47. He recommended that more work and further testing occur before a passage to Pittwater was attempted, but this advice was rejected by the second defendant: Exhibit 47.

[19]
The boat was to be ready to deliver before the 2010 Christmas/New Year period: p 66. Work was done and the boat was put in the water the day before Christmas (p 67), and a crew arrived, but they were not able to leave on Christmas Eve because of problems with the generator on the boat: p 68. The boat left on Christmas morning, but had not travelled far when a gearbox seal failed, and it returned to the plaintiff’s yard. It was still there in January 2011 when the yard was adversely affected by flooding in the river, and the boat sustained some minor damage: p 27. That damage was repaired by the plaintiff on instructions from insurers of the boat: p 68. In addition, at that time Mr Mynott asked for some cabinet work to be undertaken in the main cabin to accommodate a TV and DVD player: p 69. Signs of more rot were found in a couple of planks, and on 2 February 2011 the plaintiff quoted to replace them and do some further work in the master cabin: Exhibit 26.

[20]
Mr Cannon said that in the new year a certain amount of work was undertaken on the boat after conversations between Mr Mynott and various contractors working for the plaintiff directly (p 70), as illustrated by an exchange of emails on 7 February 2011: Exhibit 12. Mr Mynott confirmed that the work in this email was work the second defendant wanted done: p 28, 29.

[21]
Then on 16 February 2011, Mr Cannon sent Mr Mynott a further quote for 11 specific items of work, noting that some of this work was already underway: Exhibit 15.^[15] Later that evening My Mynott replied, saying that the quote was over budget and asking if anything could be trimmed: Exhibit 14. On 23 February 2011, Mr Cannon sent Mr Mynott an email saying that there was little room to move on pricing, the only way to cut the cost was to eliminate some of the items of work, and again seeking some discussion or further instructions: Exhibit 17. Later there was a telephone conversation between them in which Mr Cannon said that the price for the work could not be reduced, and Mr Mynott said to proceed with it: p 94. On 24 February, Mr Mynott sent Mr Cannon an email (Exhibit 17) giving instructions to proceed with the work in the quote, provided that the cost did not go over the figures “you sent me”, presumably a reference to the figures in the quote, Exhibit 15. There were some further instructions outstanding in relation to an oven on the boat. On 17 March 2011 Mr Cannon sent Mr Mynott a Gantt chart with the original work, the insurance work and the additional quoted work on it: Exhibit 45.

[22]
Work in fact progressed on the boat. Mr Cannon said that it was carried out on the basis that Mr Mynott was regularly at the site, and had given instructions to various contractors who did work on the boat, and who all billed the plaintiff: p 72. Mr Cannon did not speak of instructions to do the work coming through him: p 71. Mr Cannon said that when bills came in from the contractors he would confirm that the work had been done, and then pass everything on to Mr Mynott: p 72.^[16] Mr Cannon said that as the work progressed they saw less of Mr Mynott, and at about the time the boat was put back in the water^[17] Mr Mynott ceased to come to the yard or contact the plaintiff: p 72.^[18]

[23]
On 13 July 2011 the plaintiff sent to the third defendant an invoice for $23,256.45: Exhibit 28.^[19] There had been two previous invoices in respect of the work in the February quote, which had been paid, and this invoice represented the balance of the quoted sum, together with two additional tasks, identified as Items Z3 and Z4: pp 72, 98. This amount has not been paid: p 73. The defendants, in submissions, conceded that the amount of this invoice was properly payable to the plaintiff and unpaid.

[24]
In late July, the second defendant telephoned to advise that he was coming to have a look at the boat, and he did so on 14 August 2011 when he and Mr Cannon went over it together.^[20] The conversation that day was recorded by Mr Cannon. A transcript became Exhibit 29. It was not disputed that the transcript accurately reproduced what was recorded, but there was a dispute as to whether the entire conversation was recorded. Mr Cannon said that it was, that he turned on the recorder as he walked down the ramp to the boat, and left it on until he came off the boat: p 74.

[25]
The second defendant said that at the beginning of the conversation, before the part that is included in the transcript Exhibit 29, there was an exchange of greetings and Mr Cannon had volunteered the proposition that the contractors had done more work than had been quoted for without getting authority to do it: p 4-12. Mr Cannon said that he did not recall such a statement being made, and that he believed that the recording, and hence the transcript, covered the entire conversation: p 2-39.^[21] There is no such statement in Exhibit 29. What was said in the course of the conversation in the transcript was that additional work done beyond the work that had been quoted was going to cost about $25,000 (446)^[22] and even that figure involved cutting down on what the contractors were justified in charging just on an hourly rate for work done. For example, the shipwright had done work worth more than that, having to do substantial work in the ensuites which was not included in the original job: 457. The flybridge was pretty much replaced, and stands built on both sides, and there were more hull plates replaced and things like that, in areas which had just been patched with bog and painted over.

[26]
Mr Cannon said in the conversation that contractors had told him that Mr Mynott had asked them to do these things^[23] and he (Mr Cannon) had complained about them not providing quotes, which in the end was not done: 450, 452. The second defendant said that he would organise paying the bill that he had already received (492) and the plaintiff was to send a breakdown of what else had been done and further work that was needed and they would talk about it: 533, 544, 551. In the course of the discussion, the second defendant said that the work that had been done was wonderful (544) and otherwise expressed satisfaction with it, and there were several passages where the second defendant gave instructions for further work to be done, usually just finishing off work: 57, 109, 153, 270. There was some discussion about when the work would be finished, referring to “what we agreed to get finished” (551). There was currently some work covered by quotes which had yet to be finished, door handles and some electrical work, and then “what we want in addition” (558), some venetian blinds, some work on portholes and fitting some panels. I consider what was said then amounted to instructions to do that work.^[24]

[27]
In view of the content of Exhibit 29, I consider the proposition that there was the additional conversation not recorded prior to it in the terms stated by the second defendant implausible, as it would be inconsistent with what was recorded. Mr Cannon would not have said at one time that work had been done without getting authority to do it, and later, that work had been done at the request of Mr Mynott. It is plausible that he said that work had been done without getting written quotes, as he said in the recorded conversation, but I do not accept that he said it was done without authority. In view of this, and my assessment of the credibility of the second defendant’s evidence generally, I do not accept his evidence about this conversation.

[28]
There were two other things said in the conversation, to the significance of which I shall return. At one point (13) the second defendant said “my wife didn’t buy the boat”, and at one point he said (611): “Whilst it’s away, I don’t really have to look after it.” Mr Cannon responded (612): “That’s true.”

[29]
Mr Cannon said that in September he received an email from the second defendant saying that he had some people coming to pick up the boat, and he still had not seen the spreadsheet with the additional works, which in fact Mr Cannon had not finalised: p 75. Mr Cannon said in response he telephoned the second defendant and asked him to pay for the balance of the quoted works (the invoice not now disputed), and was asked whether the position was that without paying that bill he could not have the boat. The second defendant was told “yes”, and said that they could speak to his lawyers: p 75.

[30]
On 14 September 2011, after the conversation, Mr Cannon wrote to the second defendant setting out details of what work had been done by the contractors, listing various areas where work had been quoted on, and the amount of work actually done in the various areas, and setting out a list of additional works to be invoiced, which came to $33,386.85: Exhibit 31. He explained that this still left a debt of over $20,000 to subcontractors which the plaintiff was proposing to absorb. He pointed out that little in the way of mechanical work had been done, and advised the defendant to undertake sea trials before any substantial journey in the boat. Mr Cannon also noted that he was deleting the berthing invoices so that there would be no charge either for berthing or for hardstand when it was out of the water.^[25] With this was sent an invoice for $33,386.85 of the same date: Exhibit 33. Mr Cannon said that he personally checked all of the work claimed in the detailed list, which had been compiled by the shipwright, and related it to the different categories of work, and also checked on-board the boat to ensure that the particular work had been done: p 78.

[31]
On 15 September 2011 the plaintiff received a fax from solicitors who said that they acted for the first and second defendants, who had instructed that the plaintiff was acting as project manager on work done on “our client’s boat.” The letter, in effect, sought to have the boat released while additional charges were negotiated separately, but said nothing about the quoted charges which were unpaid, and which the second defendant had said on 14 August would be paid: Exhibit 37. In the event no payment was made, the boat was not released and it remained in the plaintiff’s marina.

[32]
On 1 September 2011, the plaintiff sent a further invoice for $22,004.52, being the amount covered by the contractor’s timesheets which was not included in the previous invoice: Exhibit 34. Then in March 2012 the two invoices, Exhibits 33 and 34, were reversed (Exhibit 35) and replaced with a single invoice for the total amount, $55,391.37: Exhibit 36. The next thing that happened was the commencement of proceedings on 10 February 2012.

[33]
On 19 June 2013 the plaintiff’s solicitors wrote to the defendants drawing attention to the need for routine maintenance on the boat, setting out a list of suggested monthly tasks, and drawing attention to other matters referred to as underlying issues, including further work to stop leaks to the superstructure, mould and rot removal and work on sealing portholes and windows: Exhibit 39. The letter pointed out that the plaintiff was willing to undertake the work if paid in advance, or for the defendants to have others do it, for which purpose access would be allowed to the boat. It estimates an annual maintenance cost of $15,000. There was no response from the defendants.

[34]
On 16 September 2013 there was a further letter, which added that rot was causing the hull to leak, and expressing concern that the boat might sink if the defendants continued to neglect it: Exhibit 40. It foreshadowed an application under UCPR r 250 in relation to the maintenance on the boat. Mr Cannon verified what was said about the condition of the boat, and agreed that it could have sunk as a result of the deterioration: p 2-53, 55. This letter produced a reply, Exhibit 41, which asserted (without citation of authority) that as the plaintiff was exercising a lien, it was responsible to maintain the boat, and suggested that representatives of the third defendant had not been allowed to inspect it, although there was no evidence of any attempt to do so: Exhibit 41. There was a reply rejecting that position, and again foreshadowing an application under r 250, though in fact one was never brought, by either party.

The boat sank

[35]
The boat remained moored in the marina until January 2014. It was equipped with automatic bilge pumps, and from time to time someone would go on board the boat and check that the bilge pumps were working.^[26] They were powered by electricity from shore power, which was kept connected to the boat.^[27] Apart from that, the vessel was seen in the water not showing signs of being out of the ordinary (p 2-97) until 18 January 2014. That day, a Saturday, the dock master, Mr Buckley, went to the fuel wharf at the marina soon after 8 am, took readings and provided fuel for a boat, and at about 8.30 am was walking back to the office when he noticed a slight list on the boat, about 150 mm down on the starboard side: p 2-95. He said he returned to the office to try to find out if the bilges had been pumped out recently, and about 15 minutes later he went outside again to check it and found that it then had a serious list to starboard: p 2-96. He tried to contact someone,^[28] and about 15 to 20 minutes later he went out again, by which time the starboard flybridge wings were resting on the marina, and the boat sunk at its moorings before Mr Cannon arrived: p 83.

[36]
The boat was fitted with five automatic bilge pumps, which were set up with float valves so that if the depth of water in the bilge rose to a pre-determined level the pump would switch on and pump out the bilge.^[29] The pumps were not ideal, not being very powerful and being susceptible to any kinking in the flexible pipes running from the pump to the bilge outlet, but evidently they were ordinarily able to control such ingress of water as was occurring. So long as these bilge pumps were able to do that, the result would be that the boat would float at about the same level anyway regardless of the rate of ingress of water.^[30] The pumps would ordinarily keep the water down to the level at which they were triggered, regardless of whether this required pumping only very rarely, or for most of the time. Once the water began to flow into the bilge faster than the bilge pumps were able to remove it, even if running continuously, or if a bilge pump then failed, that I expect could produce some list fairly quickly.^[31]

[37]
The hull had a number of penetrations which were not far above the waterline, including a number which were fitted with seacocks which after it was salvaged were found to be open: Exhibit 53, pp 12, 13. There was one on the starboard side actually below water level, and another 5 less than 100 mm above it. None of these had been installed by the plaintiff. They were much closed to the water level than allowed in modern practice: Exhibit 53 p 12. As a result, the vessel would not need to list very much before water began to flow in through these penetrations, which would add to the rate at which water entered the vessel apart from the original leak, and accelerate its rate of listing and sinking. This is only a theory, but one of the expert witnesses agreed that it was a plausible theory which would explain the boat having sunk at its moorings quite quickly and without much warning. If it is necessary for me to make a findings as to exactly why the boat sank, that in my view was the immediate cause.

[38]
Mr Behan, a marine surveyor, prepared a report in which he expressed the opinion that the boat sank as a result of water coming in through leaks in the superstructure, in glands for the propeller and rudder shafts, and to some extent the hull: Exhibit 53. This would have caused it to settle in the water until water could also enter through hull penetrations, when it would have sunk more quickly.^[32] His report was however based on an examination of the bilge pumps after the salvage, when he found only two of them working, and he said those two would not have operated properly because a hose was kinked or was obstructed by non-return valves. He said that the sinking would not have affected the pumps, but on his explanation the boat would have been slowly sinking at its moorings for some time before it actually sank, which was not consistent with the evidence of the witnesses who had seen the boat prior to 18 January, which evidence I accept.

[39]
It occurs to me that some of the seams which were letting in water when he tested the boat could have opened up, or paint or sealant cracked, in the salvage process, so the boat may not have been as bad before it sank as when he examined it.^[33] There were aspects of Mr Behan’s evidence which I did not find convincing, such as his proposition that the bilge pumps would not have kept the boat afloat even if all had been operating: p 2-85.^[34] On the other hand, he did seem to have good practical knowledge of wooden hulled boats: p 2-90, 91. On the whole, I think it more likely that before 18 January there was at least one effective bilge pump, which would have prevented significant settling, but it may have been the failure of this pump which produced the quick sinking which I accept occurred on that day. I do not accept his view that the process of sinking was initially slowly over some time, but I accept that the boat sank because it was not properly maintained, and the position of the hull penetrations, the condition of the hull and glands, and deficiencies in the bilge pump arrangements all contributed to this.

[40]
It was subsequently taken out of the water,^[35] where it was found not to be in a very good state. No more work has been done on it since then by the plaintiff, and it has further deteriorated. It essentially remains as a piece of useless clutter in the plaintiff’s yard: p 2-56.

Plaintiff’s claim

[41]
The plaintiff’s claim falls into three categories, identified in the statement of claim^[36] as the outstanding invoices (three invoices totalling $78,647.82 listed in paragraph 35), berthing fees in the sum of $33,005, and salvage expenses in the sum of $43,545.50 together with storage costs thereafter. These different aspects of the claim need to be considered separately. As to the three invoices, the plaintiff claimed payment of the amounts of invoice 16360, $23,256.45, a progress invoice in respect of the February 2011 quote, invoice 16907 in the sum of $33,386.85, part of what was referred to in the pleadings as additional works, and invoice 17712 for $22,004.52, described in the pleadings as the second invoice for additional works. The first and second defendants in written submissions conceded that the plaintiff is entitled to payment of the first invoice in the sum of $23,256.45, but submitted that that sum was payable by the true owner of the vessel.

[42]
The plaintiff’s claim is that all of the commercial relationship between the parties was pursuant to the Marina & Shipyard Agreement,^[37] a document entered into by the second defendant as agent for the first defendant, so that the first defendant is the party liable under that agreement for any monies properly payable pursuant to that agreement, which it was submitted includes most of the monies claimed, and in particular the amounts covered by the unpaid invoices. I agree with that proposition. As it happens, the approach of the defendants produced the same result, on the basis that their case at trial was that the first defendant was the owner of the boat. In my opinion however the issue in relation to the liability for payment of unpaid invoices depends on who the other party to the contract with the plaintiff was, rather than who was the true owner of the vessel.

[43]
It is true that the contract, which is on a standard printed form, referred to the “owner’s details” when identifying the party liable to the plaintiff under the contract, but the term “owner” is defined in clause 1.1(20) as “the party specified as such in the reference schedule”. In the reference schedule, the name of the first defendant is written opposite the word “name” within the section “owner’s details”. The submission for the defendants, that the contract was formulated in a way which showed an intention to contract with the true owner, is without substance. On the contrary, the contract strikes me as being clearly formulated on the basis that the intention was to contract with the person identified in the document as the owner, regardless of the true situation. Apart from anything else, the form requires a credit card authorisation to be provided by “the owner” on execution of this agreement, and such an authorisation was provided by reference to a credit card in the name of the first defendant.

[44]
One would expect that with an agreement of this nature, the important consideration was the identification of the person liable to pay, and the agreement in my view is framed in such a way that it is that person who is identified as “the owner” for the purposes of the agreement. No doubt in practice, given the nature of the plaintiff’s business, ordinarily the person entering into an agreement with it would be the owner of the vessel, and that explains the use of that terminology, but I do not consider the terminology, on the true interpretation of the document, showed an objective intention that a contract would be made, not necessarily with the person identified as the owner, but with whoever happened to be the true owner, a matter which might not be readily susceptible of identification to someone in the position of the plaintiff.^[38]

[45]
Some point was made of that fact that the words “Hunter Valley Dental Surgery” appear under the name of the first defendant, and it was submitted in the alternative that the first and third defendants owned the boat jointly. I do not accept that as an interpretation of the document; the words “Hunter Valley Dental Surgery” appear opposite the word “address”, and are followed by the street address which was otherwise referred to as the address of that surgery. In my opinion, the natural reading of that part of Exhibit 2, and hence the correct interpretation of the document, is that the words “Hunter Valley Dental Surgery” form part of the address of the first defendant for the purposes of that document.

[46]
The contract was on its face signed by the second defendant for and on behalf of the owner, that is, the first defendant, but there was no issue at the trial as to the second defendant being authorised by the first defendant to make the contract; so much was admitted by the first defendant in evidence. In my opinion therefore, the contract, Exhibit 2, was made between the plaintiff and the first defendant. It is true that that contract document did not in itself specify for any particular work to be done, but it was the document which established the basic contractual relationship between the parties, and provided a frame of reference within which any subsequent agreement between the parties as to any particular work to be done was to be placed.

[47]
The agreement covered, among other things, “additional services”, defined as goods or services provided by the plaintiff at the request of the owner, and this was referred to in clause 2.3 as services provided “in accordance with this agreement,” with the fees payable for the additional services to be “as agreed between the parties or if there is no agreed price for the additional services a reasonable amount will be determined by RMS”. That parallels the position at common law where, if the parties agree on a price for work done and materials supplied, that is the price payable, otherwise if one party requests the other to do work and provide materials, if that is done the law implies an obligation to pay a reasonable price. Under the contract therefore to show an entitlement to be paid for additional services, which is the entitlement the plaintiff seeks to enforce in relation to the unpaid invoices, it is necessary to show that the amount recovered is an agreed price for particular services, or a reasonable price for particular services provided at the request of the first defendant. It was not disputed that the second defendant was also the agent of the first defendant for the purpose of requesting that work be done on the boat.

[48]
In these circumstances, the effect of the concession by the defendants that the plaintiff is entitled to payment for the first invoice is that this amount is payable by the first defendant. In relation to the work covered by the second and third invoices, it is necessary, in order for the plaintiff to recover, to show that the work in respect of which payment is claimed was work requested by or on behalf of the first defendant, that it was done by or on behalf of the plaintiff in response to that request, and that the amount claimed by the plaintiff for doing that work was reasonable. The plaintiff’s claim in respect of additional works was particularised as the works identified in paragraph 31 of the statement of claim. The defendants did not admit that these additional works were requested or carried out: defence, para 20(a).^[39]

[49]
The basis upon which the plaintiff claims an entitlement for those works was set out in paragraphs 32 and 33 of the statement of claim: between 7 February and 14 September 2011, Mr Mynott spoke with the second defendant at various times during which the second defendant, on behalf of the first defendant, instructed Mr Mynott to request the plaintiff to carry out those additional works, and on various dates within that period Mr Mynott passed on to Mr Cannon in person or by telephone that request. This way of putting the case gave the defendants the opportunity (which they took) to deny that the second defendant had instructed Mr Mynott to request the additional work be carried out: defence, para 21(a).

[50]
Mr Mynott was identified in the contract, Exhibit 2, as the “owner’s representative”. The contract does not expressly provide the significance of that identification, but the ordinary interpretation of it would be that, relevantly, the person so identified would represent the owner for the purpose of requesting additional services under the contract. In circumstances where Mr Mynott has been in this way held out by the first defendant as being her agent for that purpose, what matters is whether Mr Mynott requested the work, not whether he was expressly authorised to request the work. Pleading that he had been expressly authorised to request the work was surplusage, and raised a false issue. What matters is whether additional services were requested by the first defendant, either personally or by the representative specified in the contract, Mr Mynott, or by the second defendant, who was on her own admission her agent for that purpose. In fact, there was no evidence of any request by her personally, nor was such a case pleaded.

[51]
For completeness, paragraph 33 was also denied by the defendants: defence, para 22. A more substantial difficulty for the plaintiff however is that the evidence led for the plaintiff did not prove the case as pleaded. Mr Cannon’s evidence was to the effect that, after the communications with him about the quote dated 16 February 2011 (Exhibit 15), further instructions to do work did not come through him, but were as he understood, provided directly to various contractors who did work on the boat for which they subsequently billed the plaintiff. On his evidence, contact that he had with Mr Mynott was limited to his confirming to Mr Mynott that particular work had been done. Specifically, he conceded under cross-examination that he could not say from his own knowledge what work Mr Mynott authorised: p 2-37. In essence, Mr Cannon did not give evidence that any request for any additional work was made to him by Mr Mynott.

[52]
On 14 September 2011 when Mr Cannon wrote to the second defendant (Exhibit 31) the basis of liability for the additional works there put forward was that the need for the additional works had become apparent while the quoted work was being carried out, that Mr Mynott had been present and was aware of the need for this work, and that he had requested (presumably to the contractors) that it be undertaken. That was consistent with Mr Cannon’s evidence at the trial, though not with the pleaded case.

[53]
There were of course some requests to do additional work made by the second defendant to Mr Cannon directly during the meeting on 14 August 2011, as mentioned earlier. The difficulty with claiming for that work however is that there is no pleading that any part of the additional works was requested by the second defendant, and I cannot identify any works requested by the second defendant during that meeting among the additional works particularised in paragraph 31, which are the particular additional works, payment for which is in contention in this proceeding.

[54]
What Mr Mynott said also did not match the statement of claim. Mr Mynott said that he was discussing the work being done regularly with the second defendant, including work not covered by quotes, and that the second defendant never told him not to do any particular work: pp 35, 61, 52. Mr Mynott said that he spoke to the second defendant about everything: p 33. He said that the process was that, if problems were pointed out to him by a contractor, he would look at them, ring the second defendant, explain what had to be done, and then hand the phone over to the contractor, presumably for the second defendant to request the contractor to do the work: p 35. Mr Mynott did not say that he had ever requested any of the additional works of Mr Cannon, nor for that matter did he identify any specific additional works which he had requested any of the contractors to do. He said he gave instructions only to Mr Cannon: p 24.

[55]
Two contractors were called, Mr Bowman, the boat builder who was responsible for doing most of the work on the boat, either personally or through employees, and Mr Long, an electrician who did some work on the boat. The former said that after the work which was done on the instructions of the insurance company in early 2011, he was asked to do more work on the boat by Mr Cannon and Mr Mynott (p 3-22) and that some of the extra work had been quoted but all of it had been requested: p 3-24. He verified a number of invoices that were produced by him, though it appears the last four of those all related to work covered by the last quote, which was not contentious.^[40] Under cross-examination he conceded that this related to quoted work (p 3-25) as did the timesheets he produced which were in Exhibit 32: p 3-30. The effect of Mr Bowman’s evidence is that he did not at any point verify that he was given instructions to do any of the work referred to in paragraph 31 of the statement of claim by Mr Mynott (or for that matter, by Mr Cannon). Mr Bowman did not confirm that Mr Mynott requested him to do any of the work particularised in paragraph 31 of the statement of claim.

[56]
Mr Long said that instructions came from Mr Cannon, Mr Mynott and the second defendant, but did not define from whom he received any particular instructions,^[41] and in particular did not say from whom he received any instructions covering any of the work included in paragraph 31 of the statement of claim: p 3-6.

[57]
Unsurprisingly, in evidence in chief the second defendant did not say that he had directly requested the contractors to do any of the additional work on the boat, nor did he say that he had instructed Mr Mynott to make such a request. It was not put to him in cross-examination that he had directly spoken to contractors and requested additional work to be done on the boat, no doubt because that was not the plaintiff’s case; indeed it was not either of the plaintiff’s cases, either the case as pleaded which was that the request came from Mr Mynott to Mr Cannon, or the case which was apparently being run at the trial, which was that the request came from Mr Mynott, direct to the contractors.

[58]
Ultimately therefore the plaintiff’s difficulties are two-fold. First, the pleaded case has not been made out. There is ample authority that, at least ordinarily, it is not appropriate to uphold a claim other than on the basis pleaded, at least unless it is clear that the trial has in fact been conducted on that other basis.^[42] Accordingly, if the plaintiff has not made out the pleaded case, it must fail in relation to the second and third invoices. There is the further difficulty for the plaintiff, that it seems to me that there is no direct evidence of the proposition that the additional work was actually requested by Mr Mynott at all; Mr Mynott did not give evidence of having done so, and neither of the contractors to whom the requests were supposed to have been made gave evidence identifying any particular piece of additional work requested. Mr Long said that the second defendant personally approved the lighting plan, but providing new down lighting throughout the interior was part of the work quoted in Exhibit 15.

[59]
It is apparent from the terms of Exhibit 31 that Mr Cannon believed that Mr Mynott had requested all of the relevant work, but anything he could say on the subject was necessarily hearsay. Mr Mynott himself gave no evidence in support of the proposition that he had requested anything not covered by a quote, and the evidence of Mr Long and Mr Bowman was too vague to provide any proper support for the plaintiff’s case. I accept that Mr Mynott was, during the early part of 2011, regularly looking at the work being undertaken on the boat, and was aware of the difficulties which emerged in the course of doing the work, but the plaintiff is really asking me to find that the work was requested on the basis that the work was done, and Mr Mynott was aware of the work, so that there was at least an implied request, if not an express request, from him to do the work. Accepting for the moment that the work was done, I am not prepared to draw that inference, on the balance of probabilities.

[60]
Even where that is the standard of proof, a trial judge should not make a finding of fact unless affirmatively satisfied, on that standard, that the fact existed. In the present case, I lack that affirmative satisfaction. Given the history of the matter, and the fact that it was obvious to Mr Mynott that the defendants were not willing simply to spend whatever it took on the boat, there is an inherent implausibility about Mr Mynott’s having requested all this additional work. A lot of it does not sound like the sort of work which would have to be done in order to make the boat ship-shape for a voyage to the Hawkesbury in fair weather, which was all that was planned in December. There was no clear indication that that attitude had changed subsequently.

[61]
There is a further complication, that it is a general principle of contract law that if a party agrees to do certain work for a particular price and, because of a physical situation which was not apparent to that party at the time of the contract, the existence of which was discovered later, it is more difficult and more expensive to do the work than had been anticipated when the contract was made, prima facie this does not give rise to an entitlement to further remuneration for performance of the contract of work.^[43] Mr Cannon pointed this out in his letter in Exhibit 31, for example in the statement that the poor condition of the vessel “resulted in additional rectification works being undertaken simply to enable the quoted works to be performed”. On a strict application of the common law principle, the plaintiff was not entitled to further remunerations for that additional work, although the situation would have been different if Mr Mynott had requested additional, or different and more expensive, work in response to this.

[62]
There may also be issues about the scope of the work covered by the quote. One matter quoted for was to “cut out rotten sections of flybridge, plywood sheet sections and glass, fill and fare, prime and paint repaired areas”. Part of the claim for additional works is for additional works to flybridge, “cut out both external sides of flybridge and replace”. This was sought to be justified on the basis that the area of rot proved to be much more extensive than had previously been realised, but that raises the question of whether the quote for this work should be interpreted as cutting out and replacing all of the sections of the flybridge identified as rotten by the plaintiff at the time the quote was given, or whether it extended to all sections of the flybridge which were in fact rotten, in which case there would be no right to charge any more than the amount specified in the accepted quote.

[63]
These were not issues which were particularly debated as such at the trial, and their relevance arises really only as matters which contribute to my reluctance to draw the inference that the plaintiff seeks as to the existence of a request to do all of the additional work, or indeed for that matter any of it, in the absence of better evidence of the making of that request. Even on the basis of the plaintiff’s case as conducted, I am not persuaded that the plaintiff has proved that the additional work listed in paragraph 31 of the statement of claim was actually requested by Mr Mynott on behalf of the first defendant. It follows that the plaintiff’s claim in respect of the second and third invoices referred to in paragraph 35 must fail.

[64]
In these circumstances, it is not necessary for me to deal with the remaining issues of whether the work was done and whether the price charged by the plaintiff was reasonable. There was however no particular issue at the trial about whether the work claimed by the plaintiff was done, and I accept Mr Cannon’s evidence that he did personally inspect the boat and ensured that the works claimed to be done had in fact been done, and that he only included in the first invoice for additional work charges in respect of additional work actually done. I would therefore be prepared to find that the plaintiff had proved that the matters listed as additional work in paragraph 31 of the statement of claim was done. It appears that the work was in fact done by contractors to the plaintiff, and the amount charged by the plaintiff was based heavily on the charges made by those contractors, although it is apparent from a comparison between the invoices from Mr Bowmen, Exhibit 57, and the plaintiff’s invoices that the plaintiff was applying a (fairly modest) loading to the amount charged by Mr Bowmen’s company, which strikes me as reasonable in the circumstances.

[65]
There was no evidence directed specifically to reasonableness, but no particular point was made by the defendants about it, and no reason to think that the charges imposed were other than the ordinary rate of charge made by the plaintiff for such work. My impression of Mr Cannon’s evidence was that, at least at the time when invoice 16907 was prepared, he went to some trouble to keep the cost to the defendants as low as possible. In all the circumstances, I would be prepared to find that the amounts charged in invoice 16907 were reasonable remuneration for the work in fact done.

[66]
The final invoice issue is as to invoice 17712, the invoice issued subsequently by the plaintiff, in effect covering all the amounts charged by subcontractors, even amounts which Mr Cannon had initially been reluctant to pass on to the defendants. It appears that Mr Cannon’s reluctance was based to some extent on the fact that the contractors were charging more for quoted work than their original quotes, and he thought that some of the additional charges were for things which should have been treated as covered by their quotes, so he limited the charge, on the principle referred to earlier. The effect of his evidence, which was very frank, was that invoice 16907 reflected such charges as he thought could reasonably be made for the work in fact done in the circumstances, whereas invoice 17712 represented an additional amount being charged on the basis of charging for everything claimed by contractors, without regard to reasonableness or whether particular work should have been included within the scope of the quoted work, and hence the quoted prices. There was therefore no evidence to support the proposition that the amount charged in invoice 17712 was reasonable remuneration for the work done, and even if the plaintiff had been otherwise successful the plaintiff would not have recovered in respect of that invoice. In these circumstances, it is unnecessary to consider whether, by Exhibit 31, the plaintiff waived the right to charge more than the amount claimed in invoice 16907 for the additional works.^[44]

Berthing fees

[67]
It is alleged in the statement of claim at para 37 that under the agreement, Exhibit 2, berthing fees of $943 per month were payable to the plaintiff. Paragraph 37(a) referred to clause 5, concerned with a charge for retaining the vessel “on the hard stand”, that is, storing the vessel out of the water at the shipyard, and did not relate to berthing fees. Clause 4.4 gave an entitlement to charge a reasonable amount for the period that the vessel remained at the complex “if the owner fails to remove the vessel on the expiry of the term”. The “term” was defined in clause 1.1(30) as the period starting on the date of this agreement and ending on the date that the authorised services have been completed. The “authorised services” was defined as including the additional services, that is, the services provided at the request of the owner.

[68]
Assuming for the moment that this is confined to the services covered by the accepted quote, which were the only services proved to have been so requested, the date when those services were completed was not clearly established in the evidence. Indeed, some of the things said during the inspection on 14 August 2011 in Exhibit 29 suggested that there were aspects of the quoted works which had not been completed even then. In Exhibit 31, timesheets for the various aspects of the quoted work were identified which appear to me to show that part of the headliner work was done on 4 August; part of the V berth work was done on 3 August; part of the galley work was done on 3 and 4 August; work on the master cabin was done on 3 August; work on bathrooms under the heading of “miscellaneous” extended to 3 August; and work on the new stairs extended to a date in August. In these circumstances it appears that authorised services were not complete prior to 4 August, even apart from any further tidying up work required after the inspection on 14 August. On the face of it therefore there was no entitlement to charge birthing fees until after 3 August, but if some of the work not finished on 14 August was work covered by the quote, there was no right to charge until that work was also finished. Since there was no work shown in Exhibit 31after 14 August, and it was apparently correct as at 14 September 2011, this suggests that the work incomplete on 14 August was in fact never finished.

[69]
In any case, at best there would be one month between the completion of the works and the exercise by the plaintiff of a lien over the boat. That occurred when the plaintiff told the second defendant that the boat would not be released until the invoices had been paid.^[45] It is a well-established principle that a party retaining property in the exercise of a lien is not entitled to charge the owner (or other person liable under a contract) for storage of the property, since in that situation the storage with the party claiming the lien is not voluntary so far as the other party is concerned, but is for the benefit of the party claiming the lien.^[46] The lien was recognised in the contract, Exhibit 2, in clause 14.3(3). I cannot find any provision in the contract which would expressly override that general principle. Accordingly, once the plaintiff claimed the lien over the boat, the right to charge berthing fees ceased.

[70]
At best the plaintiff can claim one month’s berthing fees. There is however a difficulty about quantum. The contract, Exhibit 2, did not provide any specific amount for the charge for a berth fee in the reference schedule, nor was there any evidence that any other specific amount was agreed.^[47] Nor indeed was there any evidence that the amount referred to in the pleading and in the statement Exhibit 78 was a reasonable amount, or even that it was the usual amount charged by the plaintiff in such circumstances. In my opinion the position is that the plaintiff is not entitled to more than one month’s berthing fee, and the plaintiff has failed to prove the amount recoverable in respect of that month. This part of the plaintiff’s claim therefore fails.

Salvage charges

[71]
After the boat sank, the plaintiff incurred various costs associated with the salvage of the boat, the major part of which was the amount paid to a specialist boat salvage service, in an amount of over $21,000. A number of invoices were put in evidence as invoices in respect of the salvage of the boat, which had been paid by the plaintiff: p 2-59; Exhibit 50. The major invoice was for the sum of $21,463.11 from the salvage firm, which was apparently referable to salvage of the boat. There was also the hire of some equipment at a cost of $13,200, the cost of acquiring some material to assist in preventing water pollution from fuel and oil leaking from the boat at a cost of $1,551.55, and an invoice which included the purchase of three tubes of silicon sealant at a cost of $25.59. A specialist company was engaged to remove the remaining fuel in the tanks on the boat at a cost of $266.20. These costs which all included GST appear to relate to the salvage of the boat, and total $36,506.45.

[72]
There is also in Exhibit 50 an invoice to recover footage from two surveillance cameras at a cost of $144.10. The relevance of this to the salvage of the vessel was not demonstrated by evidence, and is not obvious. It may have been part of the cost of collecting evidence. There was an invoice from some marine surveyors, at a total including GST of $5,280, essentially to attend the salvage, observe and photograph it, and inspect and photograph the vessel, report on the salvage and provide an opinion regarding possible causes of the sinking and other opinions relating to the vessel. Again, this is not a cost of the salvage, but may be part of the cost of gathering evidence. It appears from another invoice which was part of Exhibit 50 that this was actually paid by some insurance assessors, who also charged $1,901.70 for their time in relation to an investigation that they made, presumably in respect of a claim by the plaintiff on its insurers. Again, this is not part of the cost of the salvage. The amounts in these invoices are not allowable.

[73]
The plaintiff also had employees assisting with the salvage, Mr Cannon, Mr Hoy, Mr Hampsey and Mr Patterson, who spent a number of hours doing particular things associated with the salvage as set out in the timesheets, Exhibit 51. This was said, in the schedule handed up as part of the submissions for the plaintiff, to involve a cost of labour of $2,569, but there was no evidence to support this figure, or of the basis on which it was calculated. There ought to be salvage costs associated with the use of the plaintiff’s personnel, but they were simply not quantified by the evidence and so cannot be recovered.^[48]

[74]
The plaintiff’s case in relation to salvage costs was based entirely on the contract; counsel for the plaintiff conceded that no claim had been pleaded for any entitlement to reimbursement of salvage costs under the general law. The parts of that the contract relied on were clauses 11.1, or in the alternative, 15.1. Clause 11.1 provided:

“The owner agrees that:

(1)
it is responsible for any damage to the complex or to any property on the complex or for any injury to persons using the complex arising from any act, omission, neglect or default by the owner; and

(2)
it must give immediate notice to [the plaintiff] of any damage, accident, or defect in the complex, property on the complex or the vessel of which it becomes aware.”

[75]
It is apparent from the second part of this clause that a distinction was drawn between “property on the complex” and “the vessel” for the purposes of that clause, so that the clause does not involve any acceptance of responsibility by the owner for any damage to “the vessel”, that is to say the boat the subject of the agreement: clause 1.1(31). It follows that there is no entitlement to indemnity under clause 11.1.

[76]
Clause 15.1 provided:

“The owner indemnifies [the plaintiff] against all losses, damages, costs and expenses including legal costs on a full indemnity basis arising from the acts, omissions, or negligence of the owner or the owner’s representatives at the complex or under this agreement that results in any of the following:

personal injury or the death of any person; or

loss of or damage to or loss of use of any property, including the property of [the plaintiff]; or

economic loss including consequential loss to [the plaintiff] or any other person.”

[77]
The basis of the plaintiff’s case was that the plaintiff had incurred salvage costs because of the omission of the first defendant properly to maintain the vessel while it was in the plaintiff’s marina, which amounted to economic loss suffered by the plaintiff within the terms of the indemnity. The plaintiff also referred to clause 10.1(1) of the contract which provided under the heading “owner’s obligations” that “the owner must…ensure that the vessel is kept in a clean, sound, seaworthy and watertight condition, and free of any vermin, pests and insects.” It was submitted on behalf of the plaintiff that the defendant had neglected routine maintenance on the boat, as a result of which it become unsound, unseaworthy, and no longer watertight, and it was the breach of this obligation which led to the boat’s sinking. Once the boat had sunk in the marina, it was reasonable for the plaintiff to arrange for salvage of the boat, because it was not obliged to accept a derelict boat cluttering up its marina until such time as it rotted away. This cost was economic loss, in respect of which the first defendant had agreed by clause 15 to indemnify the plaintiff.

[78]
The defendants submitted that, in circumstances where the plaintiff was exercising a lien over the boat, it had a duty to exercise reasonable care to protect the boat from harm, which extended to the performance of such routine maintenance as was necessary to keep the boat in a sufficiently good condition as to prevent it from sinking. For practical purposes, while the lien was being exercised it was a matter for the plaintiff to maintain the boat. The plaintiff denied that its duty of care extended so far as to carry out routine maintenance on the boat.

[79]
It is therefore appropriate at this time to consider the scope of the obligation of the plaintiff as a bailor exercising a lien in respect the boat. This issue is closely related to the counterclaim, because, if the boat sank because of a failure on the part of the plaintiff to take reasonable care of it, there can be no question of any liability on the part of the defendants to the plaintiff for any omission properly to maintain the boat.

Duty on plaintiff as bailee

[80]
A bailment in order to enable the bailee to do work on the chattel for reward is a species of bailment for reward.^[49] If the bailee then exercises a lien over the chattel, this is characterised as a continuation of the bailment for reward. A bailee for reward has a duty to take reasonable care of the bailed goods, being such care as is reasonable in the circumstances.^[50] It has been characterised as such care as a person would take in respect of that person’s own goods, though the test is an objective one to be assessed by reference to the care an ordinary, reasonable person would take in respect of one’s own goods.^[51] It is established in the case of such a bailment that the onus of disproving negligence lies on the bailee, here the plaintiff.^[52] The question is whether anything was not done which ought reasonably to have been done, and which if done would have avoided the loss of or damage to the chattel. That is a matter which must be determined on the basis of all of the circumstances in the case.

[81]
Commonly the issue arises in the circumstances where the loss or damage to the goods occurred because of some specific external event, such as theft of the goods.^[53] In such a case, the question is whether the bailee has taken reasonable care to avoid the theft of the goods, something which depends on the nature of the goods and the conditions under which they are being stored. It is also accepted that if goods are perishable, the method of storage of the goods should be such as would normally be used for such goods, so that perishable goods may need to be refrigerated if such goods were ordinarily kept refrigerated, or stored out of the weather if that was usual for such goods.^[54] The difficulty however is that the issue here does not turn upon any particular mode of storage. The boat was not stolen, and it was stored by being moored in a marina, which is how such boats are commonly stored. There was evidence that storage out of water causes hull planks to dry out and gaps to open up, so that in general storage in water is preferable.

[82]
The issue in the present case arises from the very nature of a boat such as this. There was expert evidence which I accept that a boat such as this has an inherent tendency to deteriorate as result of ordinary exposure to the elements, so that it requires significant routine maintenance in order to keep it sound and seaworthy.^[55] One expert suggested that the cost of such routine maintenance for a boat such as this would be of the order of $15,000 - $20,000 per annum.^[56] Parts in ferrous metals rust, and those in other metals may suffer corrosion or a deterioration of appearance, paint and varnish tend to deteriorate over time, wood may rot, and if wood has begun to rot, it will tend to continue to rot. A boat is expected to be exposed to the elements, but the ordinary result of exposure of a boat to the elements is that the boat tends to deteriorate, and requires maintenance.

[83]
General statements about the obligations of a bailee to take reasonable care do not throw any light upon whether that obligation extends, in circumstances where the chattel bailed is a boat such as this, to an obligation to undertake the sort of routine maintenance required in order to keep the boat in a sound and seaworthy condition.^[57] That question is also complicated in this case by the fact that there was evidence that there were significant problems with the boat, in terms of its not being sound and seaworthy, at the time when it came into the plaintiff’s possession.^[58] Whatever the content of the duty of the plaintiff to take reasonable care, it can hardly extend to an obligation to improve the boat, and make it better than it was when it was received by the plaintiff. If the boat has some inherent vice, such as established wood rot in the wooden hull, the obligation of a bailee to take reasonable care cannot in my opinion extend to an obligation to eradicate the wood rot merely because, if the wood continues to rot, there is a risk that the hull would become unsound to the point where the boat sinks.^[59] Boats, and vessels generally, have been around for a long time, and no doubt liens have been exercised over them in the past,^[60] but counsel for the defendants was not able to refer me to any authority which established that the duty of a bailee exercising a lien over a vessel extended to an obligation to carry out routine maintenance on the vessel at the expense of the bailee. The only case dealing with that question to which I was referred is authority to the contrary.

[84]
Challenge Charter Pty Ltd v Curtain Bros (Qld) Pty Ltd [2004] VSC 1 involved a number of disputes in relation to a ship which had been towed to a dockyard in Papua New Guinea where it was left by the owner. The vessel when received by the shipyard was in poor condition; indeed after inspection it was described as essentially a write-off: [209]. There was extensive corrosion of the hull from the inside, with the result that much of it was unsound. The owner of the boat argued that the dockyard should have carried out work and incurred expense to arrest the natural deterioration and corrosion of the vessel, a claim which was characterised as audacious in circumstances where the owner “was not prepared to spend one cent on her to achieve the same result”: [211].

[85]
The bailment was characterised in that case as a gratuitous bailment, since the shipyard was not exercising a lien, and indeed was keen for the vessel to be removed. Gillard J however proceeded on the basis that on the authorities there was no distinction between the obligation of a gratuitous bailee and a bailee for reward: [217]. The obligation was characterised at [217] as one “to take that degree of care which is reasonable having regard to all the circumstances,” which on the authorities is a way of expressing the test for the duty of a bailee for reward. His Honour referred to China Pacific SA v Food Corporation of India [1982] AC 939 and Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220 at 240.

[86]
His Honour held that in fact there had been no loss suffered by the owner because the owner had not proved that there had been any reduction in the value of the vessel while it was in the hands of the shipyard, essentially on the basis that it had no real value from the start: [249]. However he went on to pose the question of whether “the duty resting on the bailee in these circumstances required it to expend substantial sums of money in arresting the natural deterioration, an expense that the owner was not prepared to incur”: [254]. He rejected that proposition. A distinction was drawn between a ship which was suffering natural deterioration and perishable goods, and at [257] he described the deterioration as:

“Due to an inherent vice and was not due to the bailee’s want of care. In my opinion, the duty should not extend to expending substantial sums of money on the vessel to arrest the natural progression of deterioration when the vessel was delivered by [the owner] in that condition…The deterioration in the vessel’s condition was not due to any breach of the bailee’s obligation.”

[87]
That admittedly was a stronger case because, although the evidence is that this boat was old, tired and not in good condition when the plaintiff received it, the vessel in that case was in a worse condition. It was not just that it was not reasonable to expect the shipyard to spend money to maintain it; in effect no one in his right mind would spend money to maintain it, and it had deteriorated to the point where it was not worth maintaining.^[61] Nevertheless, the proposition that the duty of care of the bailee does not extend to undertaking routine maintenance on a ship seems to me to be of general application, and applies in the present case. Although that was a stronger case, it was the only authority on point cited to me, and the only authority of which I am aware.

[88]
There is also the similarity with that case, that the owner of this boat was also unwilling to “spend one cent” on its maintenance while with the plaintiff, even after advised that the plaintiff was not maintaining it. At that point, the owner could have arranged for the plaintiff or someone else to perform the recommended, or at least some, maintenance. Or the owner could have applied to the court for an order under r 250 about the preservation of the boat, or applied to the court, under the Civil Proceedings Act 2011 s 24 or the general equitable jurisdiction under s 69 of the District Court of Queensland Act, for the boat to be released in return for alternative security. Instead, the owner just did nothing as the boat deteriorated. This suggests the owner did not regard the boat as something worth spending money on.

[89]
In my opinion, the duty of care undertaken by a bailee in respect of a chattel which requires expensive routine maintenance in order to maintain it in working condition does not extend to the provision of that routine maintenance. Given the cost of such maintenance for a boat such as this, I regard a duty to provide it as more than what is required by reasonable care. The harm against which a bailee must take reasonable care to guard the chattel does not extend to ordinary deterioration due to the inherent nature of the chattel. Like Gillard J, I think there is a distinction in principle between an obligation to provide appropriate storage for perishable goods, or goods which should be kept out of the weather, and an obligation to provide routine maintenance. The fact that a repairer is exercising a lien because of a failure of the owner to pay for work done on the chattel does not in my view impose on the repairer an obligation to undertake further work, even if undertaking further work would be something which would be done by the owner of the chattel in the ordinary course of things if the owner had possession of it.

[90]
The defendants relied on the exchange recorded towards the end of the conversation in Exhibit 29, referred to earlier, as amounting to an agreement between the parties that the plaintiff would be carrying out routine maintenance on the vessel while it was in its possession, or a representation that it would do so. I reject that argument for two reasons. The first is that it appears obvious that the conversation was a light-hearted remark by the second defendant, and I am not persuaded that there was any intention thereby on the part of either party to create legal relations. The second is that the matter was already the subject of an express term of the contract between the first defendant and the plaintiff, clause 10.1 referred to earlier, which placed the obligation to undertake routine maintenance on the vessel squarely on the first defendant. There was no reason to think objectively that the parties were in that brief exchange intending to vary that term of the contract so as to place that obligation instead on the plaintiff, and I do not accept that there was either a variation of the contract by oral agreement at that point or any representation giving rise to an estoppel.

[91]
What the plaintiff in fact did by way of taking care of the boat was keep it connected to shore power so that the electric bilge pumps would continue to operate, and from time to time check those pumps in order to ensure that they were in operating condition. That in my opinion amounted to reasonable care in the circumstances. No doubt as time passed the boat did deteriorate and tended to become less watertight, both above and below the water line, and in that way the bilge pumps had more to do, but as explained earlier, so long as the bilge pumps were not actually overwhelmed it would not be obvious to an observer that a problem was developing. The boat was in a relatively small marina and inevitably the plaintiff’s employees were able to keep an eye on it, and I accept the evidence they did so.

[92]
The conditions which led to the boat sinking in my opinion arose from manifestation of inherent vice on the part of the boat and not from a want of reasonable care on the part of the plaintiff. Its nature as an old wooden hulled boat, which had not been thoroughly freed from wood rot and mould, and with problems with drive shaft and propeller penetrations, gave it an inherent tendency to leak. Because of the design of the boat, and in particular because of the presence of various hull penetrations, a significant list to starboard would produce a situation where water would flow fairly quickly into the boat, so that it could sink quickly if a problem developed. So long as the bilge pumps appeared to be controlling the situation, there was no reason to take it out of the water, and good reason not to. This does mean however that there is a risk from a sudden catastrophic event.^[62] Problems with rainwater leaks arose from a failure to keep the superstructure maintained.

[93]
There were problems with the topside planks according to Mr Behan (Exhibit 53), and it was suggested by Mr Carrington that the boat should have been fitted with a calico skirt to preserve its paintwork from deterioration from the sun.^[63] On the other hand, another expert said that such things were not used these days, as modern hull coatings are more durable, and such a skirt is not necessary: Behan p 2-90. That makes sense, and I accept his evidence. The hull was repainted by the previous repairers, as noted by Mr Carrington, so this should not have been a problem. In any case, long before the boat had sunk enough for water to come through the topside planks, it would have been flowing readily through hull penetrations, and the boat was doomed. Hence the omission to provide a calico skirt was irrelevant to the sinking of the boat. No other specific omission emerged with which I must deal. I am persuaded that the plaintiff has discharged the onus of showing that the sinking of the boat occurred without a lack of reasonable care on its part.

[94]
Apart from that, however, the duties of a bailee are subject to the terms of the contract. There is nothing in the contract which caused it to come to an end as a result of the exercise of the lien by the plaintiff; indeed the passage referred to earlier expressly contemplates the exercise of such a lien. If I am wrong about the position at common law, and a bailee exercising a lien does have a duty to carry out routine maintenance, I consider that clause 10.1 was an effective modification of the obligation so that any obligation to undertake routine maintenance on the boat while in the plaintiff’s possession, including during the exercise of a lien, fell on the first defendant. That obligation was not performed.

[95]
It follows that, in my opinion, the boat did sink as a result of the failure of the first defendant’s obligation to keep it in a sound, seaworthy and watertight condition in accordance with clause 10.1 of the contract. In those circumstances, the economic loss suffered by the plaintiff as a result of having incurred expense in salvaging the boat was a loss incurred arising from the omission of the first defendant, and therefore a loss in respect of which the plaintiff is entitled to be indemnified by the first defendant under clause 15.1. That loss which the plaintiff has proved to be a loss incurred as a result of the need to salvage the boat is therefore recoverable from the first defendant under the agreement.

Conclusion on claim

[96]
It follows that the plaintiff has made out two aspects of its claim, the claim for payment of invoice 16306 in the sum of $23,256.45, and the claim for payment of salvage costs in the sum of $36,506.45, a total of $59,762.90.

[97]
The plaintiff also claimed interest pursuant to clause 6.1(3) of the agreement or pursuant to the provisions of the Civil Proceedings Act 2011, s 58. If the agreement applies, s 58 does not: s 58(2)(b). Clause 6.1(3) of Exhibit 2 provided that “the owner agrees that…interest of 10 percent per annum, compounded daily, will be charged on any fees due to [the plaintiff] under this agreement but unpaid for seven days”. That applies to that part of the plaintiff’s claim for fees which has been made out. Accordingly, the plaintiff is entitled to interest under that clause on the amount payable in respect of invoice 16360 from 20 July 2011 to the date of judgment, which I calculate at $19,243.37.

[98]
There is however a limitation in clause 6.1(3) in that it only applies to “fees due to [the plaintiff] under this agreement” and the term “fees” is defined in clause 1.1(9) as “all amounts payable by the owner to [the plaintiff] for the provision of the authorised services”, plus GST. Accordingly, clause 6.1(3) does not apply to amounts otherwise payable under the contract, and in particular to amounts payable under a right of indemnity. Accordingly, the claim for interest in respect of the amount recoverable as salvage costs is not covered by the agreement, and arises pursuant to s 58.

[99]
The obligation to pay in respect of the salvage costs arose at the time the liability accrued to the plaintiff: clause 15.2. That occurred when the amounts were paid. The major amount was paid by cheque dated 10 February 2014, as appears in Exhibit 50, but it would not be appropriate to allow interest prior to a date when the first defendant was notified of the particulars of the claim. So far as appears from the material before me, that first occurred when the amended claim and statement of claim were filed in this court on 5 August 2014, and presumably served at or about that time. I will therefore allow interest under s 58 in accordance with the practice direction on that part of the claim from 5 August 2014 to the date of judgment. According to the court calculator, the interest payable on this part of the plaintiff’s claim is $6,224.74.

[100]
There will be therefore judgment on the plaintiff’s claim against the first defendant for $85,231.01, including $25,468.11 by way of interest.

Counterclaim

[101]
There was originally a counterclaim by the first and third defendants, but the counterclaim of the third defendant was dismissed at the beginning of the trial because of the non-appearance of the third defendant at the trial. The first defendant’s counterclaim was based on the proposition that she was the owner of the boat, and that accordingly she suffered the loss when the boat sank. The case was dependant on the existence of a duty to take reasonable care of the vessel, arising either from the bailment or as an implied term of the contract. There was no implied term to this effect insofar as it concerns the obligation to perform ordinary maintenance on the vessel, because such an implied term would be inconsistent with the express term in clause 10.1.^[64] For reasons I have already given, in my opinion, there was no breach of duty in bailment on the part of the plaintiff. Therefore, the counterclaim necessarily fails.

[102]
There is however a further reason why the counterclaim by the first defendant necessarily fails; I am not prepared to find on the evidence before me that the first defendant was at the relevant time the owner of the boat. A good deal of time at the trial was devoted to the question of the ownership of the boat, and both defendants gave evidence that the first defendant was the owner of the boat, at least at the relevant time. I am however not prepared to accept that evidence, because it is inconsistent with contemporaneous documentation, and previous statements, including statements on oath, of both defendants.^[65]

[103]
The contemporaneous documentation starts with the contract to purchase the boat, and what appears to be a conveyance of title to the boat pursuant to that contract: Exhibit 1. There was in evidence a two page document headed “earnest money, receipt and purchase agreement” on a standard form of a dealer in used boats which was signed by the second defendant on 5 May 2004, and signed by a person as seller on 6 May in that year. The agreement identified the purchaser as “Hunter Valley Dental Surgery” and acknowledges receipt from that purchaser of a sum of $US10,000, as “earnest money as an indication of good faith” in respect of an offer to purchase the boat for the sum of $US150,000. Evidently, the term “earnest money” is the equivalent of what Australian lawyers refer to as a “deposit”. The contract provided that the transaction was to be completed no later than 15 May 2004. Although the abbreviations “Pty Ltd” were not used in the contract, on the face of it, this is a contract made by the second defendant on behalf of the third defendant.

[104]
The second defendant gave as the explanation for the use of the third defendant’s name here was that it was to facilitate a future claim for a tax deduction in respect of the boat: p 4.37. It would certainly be appropriate for the boat to be purchased by the third defendant, and title taken by the third defendant, if the intention was that in the future the third defendant would be claiming a tax deduction in relation to the boat. The real point is that you want the name on the document to be the same as the name of the taxpayer claiming the deduction, because deductions arising from ownership should be claimed by the owner. If the boat had been bought by the first defendant, she could have claimed the deductions. This shows that taking title in the name of the third defendant at that time was deliberate.

[105]
Attached to that document is a one page form headed “bill of sale”, apparently produced by the Department of Transportation US Coast Guard. The use of the term “bill of sale” is significant. Although there was no evidence before me of the law in relation to the sale of such an item in the state of Washington in the United States of America, the use of a bill of sale to convey title to a vessel is of venerable provenance. In MacLachlan’s Law of Merchant Shipping (5^th edition, 1911) it is said at p 31:

“By the law of England and of Scotland, the transfer of property and chattels may be made by sale without writing. Yet the custom of owners, in dealing with ship property, to commit their transactions to the evidence of written documents, comes down to our own day from an age so distant, that judges have declined to give an opinion whether a transfer of such property without writing would be valid at common law. It seems to be a fact common to all the maritime nations of Europe, that with the growth of intelligence and education sprang up a desire to create written muniments of title in respect of all those kinds of property, such as land and ships, of which the owner could not always conveniently have and give manual possession, and to displace the rude symbolical modes of transfer that had sufficed for the simplicity of early times, by others better adapted to the use of letters inherited by our own day.”

[106]
The text went on to cite a passage from the judgement of Lord Stowell (then Sir William Scott of the Admiralty Court) in “The Sisters”:^[66]

“According to the ideas which I have always entertained on this question, a bill of sale is the proper title to which the maritime courts of all countries would look. It is the universal instrument of transfer of ships in the usage of all maritime countries; and in no degree a peculiar title deed or conveyance known only to the law of England: It is what the maritime law expects, what the Court of Admiralty would in its ordinary practice always require, and what the legislature of this country has now made absolutely necessary, with regard to British subjects, by the regulations of the statute law.”^[67]

[107]
In these circumstances, I am prepared to assume that the “bill of sale” was a document of conveyance of title to the boat under the law in force in Seattle. The “buyer” identified in the form was “John Harvey dba Hunter Valley Dental Surgery Pty Ltd”. It is not difficult to conclude that the expression “dba” was an abbreviation for “doing business as”. The address given was the address of the dental practice. There may be room for argument as to the correct interpretation of that expression of the identity of the buyer but it would be because of some ambiguity as between the second and third defendants. There is nothing in that document to suggest the boat was conveyed to the first defendant. My opinion is that the effect of the document was to convey title to the third defendant.

[108]
The boat was not registered under the Commonwealth Act, but was registered under a New South Wales Act, apparently the Marine Safety Act 1998, with the first defendant identified as “controller”: Exhibit 62. There is nothing in that Act which makes registration under it a system of title by registration. Indeed, the registration certificate states that it is “not proof of ownership”. I accept that this is some evidence of ownership of the boat by the first defendant, but it is not conclusive evidence.^[68]

[109]
For a number of years the boat was shown as an asset of the third defendant in the accounts prepared by an accountant of that company, and apparently tax returns were submitted by that company on that basis: Exhibit 3. The first defendant, as sole director of the third defendant, signed those accounts as being correct. When the original notice of intention to defend and defence were filed in the Magistrates Court on 14 August 2012, one of the matters pleaded in the defence was that the company “is and was at all material times the owner of the vessel”: para 2(a), and the counterclaim was brought by the company and the first defendant, though repeating the assertion that it was the company that was the legal owner of the vessel: para 20(a)(ii).^[69] That pleading was filed on behalf of those parties by a firm of solicitors and one would expect that the issue of the identification of the correct owner was a matter which received some attention by those solicitors at that stage. Further, that position was maintained in subsequent versions of the defence and counterclaim until 2016, when the defendants, for the first time, asserted that the boat was owned by the first defendant. It is I think no coincidence that this version of events emerged only after the third defendant was placed in liquidation, in November 2015.^[70] I regard the change in evidence as opportunistic.

[110]
The company accounts for the third defendant have, since the 2006 financial year, listed the boat among the assets of the company. The account shows the cost at $366,328, and a further $33,073 for “additional fitout costs” but no provision for depreciation.^[71] The figure for original cost is much more than the actual cost of the boat, even including the cost of shipping it to Australia, as was conceded by the second defendant (p 4-58), although he could not explain how the accountant at the time originally obtained that figure. The expenses in the accounts include amounts for fuel and insurance “– boat”. The figures for the boat as an asset were repeated in the 2007, 2008, 2009 and 2010 accounts of the third defendant: Exhibit 3.

[111]
At least as at November 2010, the boat was insured under a policy issued to the third defendant as insurer,^[72] which was issued on the basis of an agreed value of $280,000. When marine surveyor Mr Carrington was retained to inspect the boat in 2008 and 2009, he was retained by the third defendant: Exhibit 48. In December 2013 the second defendant was instructing their then accountant, not the one who was involved earlier, that financial statements must show all expenses for the boat, which were to be reimbursed by the third defendant: Exhibit 83.

[112]
The company accounts for 2011, 2012, 2013 and 2014 were not prepared until 2015: Exhibit 72. They were prepared by a different accountant from the earlier accounts. The 2011 accounts do not refer specifically to the boat but include in the balance sheet among non-current assets, under plant and equipment, “boating equipment – Bar Point $428,008.”^[73] The second defendant conceded that this was a reference to the same two boats referred to in the earlier accounts, and that the other one was not worth more than $18,000, but asserted that a boat like this one was worth $350,000 to $380,000 in America, supporting a valuation in Australia of about $400,000: p 4-53.^[74] The same figure appears in the 2012 accounts, where however there is a depreciation schedule, which shows no amount claimed for depreciation and repeats the cost price of the boat of $366,328.^[75] The position is the same with the 2013 and 2014 accounts.

[113]
There have in the past been affidavits by the defendants filed in response to an application for summary judgment which verified the proposition that it was the third defendant that was the owner of the boat. An affidavit by the first defendant, sworn 11 October 2013 (Exhibit 3), said among other things:

“There has been no change in ownership of the ‘C Princess’ in the last five years. That is, at all material times HVDS^[76] has been the legal owner of the C Princess.”

[114]
The first defendant, in an affidavit sworn by her on 2 September 2013 (Exhibit 70) said at para 5:

“The C Princess was purchased by HVDS in 2004. My husband and I use HVDS and other corporate entities as the main vehicles to run our business and to hold assets. It is not our practice to purchase assets in our own names.”

[115]
On 2 September 2013 the second defendant swore an affidavit (Exhibit 80) which among other things said that the company purchased the boat for $US150,000 on 5 May 2004 (para 6), and that “at the time it was the intention of HVDS to establish a bed and breakfast business on the Hawkesbury River, north of Sydney, and to use the ‘C Princess’ as part of that business venture” (para 7). The affidavit also contained an explanation for the registration of the boat in the name of the first defendant, in para 103(b) and (c):

“When it was originally cruising from Brisbane to Brooklyn a NSW maritime services officer inspected the vessel and insisted that it have a HIN number fitted before it could continue its voyage to Brooklyn. The officer advised me that if we wanted HVDS’s name included as part of the HIN number we would need to use the company seal to sign the application. It was a Sunday and we did not have the company seal. The officer suggested we use Alexandra’s name as she was the sole director of HVDS. I was subsequently advised by the local maritime services officer at Brooklyn that to moor the vessel at Bar Point, the vessel needed to be registered in an individual’s name and not a company’s name if the boat was not in survey.”^[77]

[116]
The second defendant swore a further affidavit in this proceeding on 17 May 2016 (Exhibit 82) in which among other things he said at para 15:

“We have never received advice from any legal representative as to the true owner of the vessel and neither I nor Alexandra turned our mind to precisely which entity was the legal owner of the vessel.”

[117]
In cross-examination, the second defendant was asked about this passage and said that what was stated there was true (p 4-36) but soon afterwards, at p 4-40, said that in 2016 “I was advised that whoever paid for the boat…by my solicitors at that time…when we signed that final affidavit…” At p 4-43 he then said that the earlier affidavits were “made purely on the belief that both Alexandra and myself as to the state of the vessel are not based on legal advice”. But when it was pointed out (on the same page) that he had conceded that he had discussed the contents of his affidavit with his lawyers at the time, he said “But the legal advice was based on the accountant saying the boat was owned by Hunter Valley Dental”. Either the statement that the defendants had not received legal advice was a lie, or this statement and the statement that he was advised by his solicitor that whoever paid for the boat was the owner of the boat were lies.

[118]
As to the significance of who paid for the boat, it is true that money was borrowed by the first and second defendants in their names and used to pay for the boat.^[78] But I note that in the accounts of the third defendant for 2006 there is reference to another loan, shown as a liability of the third defendant, with a note that the borrowing was made in the joint names of the first and second defendants: Exhibit 3 p 18. I suspect that this was money borrowed to purchase the Bar Point property. Evidently the identity of the borrowers were not of great significance in the circumstances; it may have been dictated by the practical consideration that it was more difficult to obtain a loan in the name of the third defendant. This is not of importance in my view. The practical source of money to repay the loan (and for everything else) was the third defendant, since it received the income of the dental practice, as appears from its bank statements, Exhibit 72. Hence its problem with unpaid tax. The various bank statements in evidence suggest that money was then moved around as was convenient at any moment. The immediate source of any payment is irrelevant.

[119]
A further difficulty with that answer is that the material in the earlier affidavits provided detailed support for the proposition that it was the third defendant that owned the boat; but they made no reference to any accountant’s advice to that effect. The defendants did not in evidence provide a plausible explanation for the existence of this material if the facts were otherwise. It cannot easily be dismissed as merely corroborative detail, intended to give artistic verisimilitude to an otherwise bald and unconvincing narrative.^[79]

[120]
The argument that the earlier assertions were based on false advice from the accountant is further weakened by a difference between the defendants as to what advice they did receive. The first defendant did assert that the advice from the accountant was that the company owned the boat,^[80] and initially that was the evidence of the second defendant: p 4-32. Later however when the second defendant was asked again about the advice from the accountant, his evidence changed to:

“His advice to us was that he would be putting in the statements of the company, but … we wouldn’t be transferring the ownership of the boat until the boat became a valuable asset … that could be used to make income” (p 4-44, ll 29-32).

[121]
I asked him to clarify what he was referring to about transferring the boat, and then asked whether he was saying that the accountant told him that the accountant was putting the boat in the accounts of the company as an asset of the company even though the accountant said that the boat had not been transferred to the company, and he agreed: p 4-45. When he was asked if the accountant was proposing that the accounts be prepared dishonestly, his answer was:

“Well, all I’m saying to you is that we had the discussion with him and he said that he would not be transferring the ownership of the boat from John Harvey and Alexandra Morphett until the boat became a useful asset of the company.”

[122]
He agreed that both he and his wife were present at that discussion,^[81] and added:

“The bottom line is that we were assured that the name – the ownership of the vessel was not going to change until that asset became a money-making opportunity for the company…We’ve had three accountants and each one made that assertion. And when I moved from one to the other I told them that [the first accountant] had put that in there, and that he told us at the time that this was the case. And as I went to the next accountant, exactly the same thing.”

[123]
To run into one dishonest accountant may be a misfortune, but to strike three in a row is more of a coincidence than I am prepared to swallow. There is a big difference between saying that the boat is the property of the company, and saying that the boat is not the property of the company but I am going to prepare accounts for the company pretending that it is. I have difficulty in believing that even one accountant would be found who would be dishonest enough to give that advice. I have no difficulty in concluding that no honest client would accept it. The second defendant admitted that he was the person who particularly dealt with accountants as between himself and his wife,^[82] but he claimed that this advice was given when the first defendant was present, though it is quite different from her evidence as to the advice she was given by the accountant. The inference is irresistible that this evidence by the second defendant was simply an attempt to reconcile the state of the third defendant’s accounts with an assertion that it was actually the first defendant who was the owner of the boat.

[124]
There were other reasons to be concerned about the creditability of the second defendant. When being asked why he completed Exhibit 1 in the way he did, he gave the account already referred to but conceded at p 4-39 that this was completely irreconcilable for what he had said in his affidavit, Exhibit 80, para 25. The second defendant’s explanation of the importance of having the boat purchased in the name of the company in order to enable the company to obtain a tax deduction, already referred to (p 4-37), was quite inconsistent with his evidence at p 3-98 that:

“We decided that we shouldn’t be buying something that may not achieve our objective, and we didn’t want to have a situation where we bought a boat in the name of Hunter Valley Dental Surgery as such…bought in the name of the company…because we wanted to make sure that the business would work first.”

[125]
He enlarged on that at p 3-101, 2, where he said:

“That would be the point that I mentioned earlier, where the boat would be in a position where it was a viable proposition and wouldn’t provide embarrassment to the company and will be able to be used as an asset-gaining venture…and that would then be – the ownership of the boat would be – because it was in survey, it would be able to be transferred to Hunter Valley Dental Surgery Pty Ltd…and then that boat, because of the work done on it, would be able to claim those costs.”

[126]
If the boat was transferred to the company that would not entitle the company to claim deductions for costs incurred prior to the transfer, though it would mean that there would be a capacity to claim depreciation and other costs incurred subsequently. It seems very curious that, if the boat was obtained as a profit earning chattel, to be used in conjunction with another aspect of the company’s business, it would not be transferred to the company to facilitate claiming a deduction in respect of costs incurred in setting up the business, as the second defendant said at p 4-37.

[127]
There are also problems with the evidence of the first defendant, apart from the difficulty in reconciling her evidence at trial with her earlier statements. The defendants put in evidence the application for finance made by them personally to the bank when the loan was obtained which was in fact applied to purchase the boat: Exhibit 59. On the second page of this document, the first defendant is claimed to be the owner of the property in Cessnock where the dental surgery is constructed, said to have a market value of $260,000. But the company accounts in Exhibit 3 said that this was the property of the third defendant, having been acquired on 29 October 1999 for $133,863.^[83] Further, when the earlier shipyard, from which the boat was moved to the plaintiff’s shipyard in late 2010, sued the ship in order to recover what were alleged to be unpaid charges, the first defendant on 1 June 2009 entered an appearance in the proceeding as the owner of the boat: Exhibit 65, the terms of settlement of the claim of that shipyard signed by the first defendant as “the relevant person in respect of the ship, ‘C Princess’” in November 2010.^[84] This must have been after the accountant gave his advice about the company accounts in 2008 or earlier, but before the early affidavits in this matter, supposedly based on that advice that the company owned the boat.

[128]
The first defendant also said in her affidavit Exhibit 70 in para 9 that she did not authorise the second defendant to sign the shipyard agreement, Exhibit 2, on her behalf, though by the time of the trial that position had changed and she conceded, as was admitted on the pleadings, that the second defendant had her authority: p 3-39. The proposition that they do not purchase assets in their own names is inconsistent with the finance application, Exhibit 59, which apart from the dental surgery also claimed that the first defendant was the owner of a property worth $1.2 million in which they live. As well, the first defendant was evasive in the witness box, and often took refuge in an implausible inability to recall things, such as when the accountant gave the crucial advice that the boat belonged to the third defendant (p 3-54, 55), or that she was the director of the corporate trustee of a superannuation fund, and had been for years: p 3-67; cf Exhibit 71. Generally, she was a singularly unconvincing witness.

[129]
Overall, I do not regard either the first or the second defendant as a credible witness. I consider that they are prepared to swear to anything which they think at the time will advance their interests. In the circumstances I am not prepared to accept their evidence that the first defendant is the owner of the boat. The true position in my view is that title to the boat was conveyed to the third defendant in 2004, and there is no credible evidence that that situation has ever subsequently changed.

[130]
Whether or not the explanation offered by the second defendant in his affidavit for the registration of the boat in the first defendant’s name was true, the registration is not conclusive and the fact that the boat came to be registered in her name by these defendants does not I think carry any significance as to the identification of the true owner. The fact that the company accounts greatly overstate the acquisition cost of the boat detracts from their significance, but for what it is worth they are consistent with the situation established by Exhibit 1 not having changed. In all the circumstances, if I had to make a positive finding about the ownership of the boat I would find that the third defendant was and is the owner, but it is sufficient for present purposes for me to say that the first defendant has not discharged the onus of proving that at any relevant time she was the owner of the boat. She can therefore have no counterclaim based on ownership, and for that reason also her counterclaim is dismissed.

Quantum

[131]
In these circumstances, it is not strictly necessary for me to make any findings about the value of the boat, but I will deal with quantum on a precautionary basis. There was expert evidence called from two marine surveyors in relation to this. The defendants called evidence from Mr Cupitt. He obtained a degree of Bachelor of Applied Science and Physics with Honours from QIT in 1984, is a member of the Chartered Institute of Transport, is an experienced marine surveyor and was appointed a Lloyds agent in Brisbane in 2007. He inspected the boat on 31 January 2014, after it had sunk in the marina and had been salvaged and placed on hard stand. He reported (Exhibit 79) that during an inspection of the boat there was seen physical damage to the bow, cracks and physical damage to the hull, and damage to the portholes, splits in timber planks below water and an absence of caulking, generally the hull was in poor condition with evidence of woodworm at the bow, sacrificial anodes wasted or missing, propellers, shafts and rudders in poor condition, and all the equipment and accommodation was severely damaged. He expressed the view (which I accept) that the physical damage to the hull and superstructure was likely to have been caused by the salvage operation. During his inspection he noticed the presence of a notice placed on the boat by the Queensland Maritime Safety Authority, shown in the photographs on p 20 of Exhibit 79, which he said was to the effect that the boat is not seaworthy and could not go back into the water: p 4-20.

[132]
Mr Cupitt gave an estimate of the value of the vessel if repaired satisfactorily into a good condition of $300,000, but he was not able to estimate the repair costs, which he said would be greater than the estimated market value of the vessel if maintained in good repair and order prior to the sinking: p 5. However at p 6 he expressed the view that the boat had a market value in August 2011 in the region of $250,000 to $300,000, “taking into account the condition likely prior to refitting and the considerable work reflected in the documentation provided as said to have been completed by” the plaintiff. He said at page 7 that his valuation as at January 2014 was based on similar vessels located in USA for sale from $US124,900 to $US195,000, plus approximately $US50,000 to ship to Australia. No similar vessels were located for sale in Australia. He expressed the view that the market value in existing conditions in January 2014 before sinking would be difficult to estimate but the vessel had apparently deteriorated significantly in condition and value. Mr Cupitt had not personally seen the boat on any earlier occasion, and was acting on earlier reports in documentation provided to him: p 4-21.

[133]
Mr Cupitt said that attention was paid to the asking prices of boats for sale, because the actual sale prices were not normally available: p 4-21. That may well be true, and it may make it very difficult to give a market value for a boat, but traditionally the approach has been adopted in valuing things that asking prices are not evidence of market value,^[85] and it would be unsurprising if many, perhaps most of the boats ended up selling for less than the asking price, or even not at all. He conceded that as a wooden vessel it had some value as a collector’s item, but it would appeal to a more specialist market: pp 4-21, 22. It did not appear however that it was really a recognised collectible: he put it more in the class of a Discovery rather than a Range Rover, or a Porsche rather than an E-Type Jaguar.

[134]
He conceded that his valuations were on the assumption that everything had been fixed up on the vessel, which would include for example getting rid of any rot in the timbers. He confirmed that if used commercially the vessel would have to meet strict requirements under the applicable codes and be “in survey”: p 4-24. His valuation was not based on the assumption that the vessel was in survey.

[135]
There is a further difficulty with Mr Cupitt’s valuation, in that it is apparent from the reasons given in his report that what he was really doing was assessing replacement value. But market value is assessed by reference to what the property being valued would have achieved on a sale in the market, that is a sale in Brisbane between a willing but not anxious seller and a willing but not anxious buyer.^[86] Given the very specialised nature of the vessel, the fact that it is likely to appeal only to a wooden boat enthusiast,^[87] and the fact that it is a type of boat not often found in Australia, and therefore unlikely to have many fans in this country, it occurs to me that the number of willing buyers for what is on the face of it a very old and high maintenance boat would be likely to be very small. Because of this, and because it is based on offers, not sales, it is not difficult to conclude that Mr Cupitt’s valuation is overly optimistic.

[136]
The plaintiff led some evidence of value from another marine surveyor, Mr Carrington. Mr Carrington had been a marine surveyor since 1965 (p 2-2). He had originally been retained by the third defendant to inspect the boat while she was in the custody of the previous shipyard, on 12 December 2008 (out of the water) and on 24 March 2009, back in the water: Exhibit 48. On those inspections he found the hull in apparently good condition, with the topsides having been refitted, all areas sanded back and recoated with acceptable marine coating. A major refit had taken place internally with a fair bit of work remaining to do, but most of the boat appeared to be in reasonable condition although it required repair of broken port lights on the starboard side, and an upgrade of safety equipment before the vessel had any significant use. Some further work remained to be completed. This was progressing well at the time of the first inspection but had come to a stop at the time of the second inspection apparently as a result of a dispute between the parties.

[137]
There was another inspection on 9 December 2010, again apparently carried out on the instructions of the third defendant, this time at the plaintiff’s premises: Exhibit 48. At that stage he recommended that all areas of ingress should be attended, all loose items fully stowed and the anchor windlass proved to be operational, and ground tackle in acceptable condition. Subject to that, the vessel ought to be able to operate in partially smooth and smooth waters until it was finally fully refitted to an acceptable standard. There were further recommendations which could be completed at the owner’s convenience or included in a programme of routine maintenance. At that stage the vessel was found to have deteriorated considerably since the inspection in March 2009, apparently due to a lack of ongoing maintenance and incomplete repairs. This included numerous seams in the topsides having opened up, with areas where surface rot had been filled and painted over. It was said that six planks on the portside and five on the starboard side had been replaced with new timber.

[138]
It seems a lot of work had been done replacing rotten wood on the saloon cabin sides though it was said that a great deal of work was still required to bring it to an acceptable standard. There was damage to both rudders, and through hull fittings appeared to have received no maintenance since 2008. At the time of inspection a new deck was being installed, but there had been considerable rainwater ingress and rot had developed as a result of the vessel being unprotected from the elements for some two years. More work was required on the hatches to remove rot, and the cracked port lights had not been repaired. The report listed a number of other matters that required attention and concluded that major ongoing works were required to bring both the superstructure and the boat’s interior to a fully acceptable standard.

[139]
Mr Carrington said that when he inspected the boat in March 2009 the finish looked very good, but it became apparent that areas of rot had been treated by filling the timber with bog, sanding it back and painting it, rather than by taking out the timber and replacing it: p 2-8. Indeed he was able to dig a sample of rotted timber out of the hull, which he produced at the trial and which became Exhibit 46. Mr Carrington said that rot is caused by rain water, and that salt water does not cause rot: p 2-6. He said that a vessel of this type really needs regular maintenance.

[140]
Mr Carrington in a letter, Exhibit 49, expressed the view that in the condition the boat would have been in on about 8 November 2010, that is prior to any work being done on it by the plaintiff, fair market value would have been about $30,000. He expressed the opinion that if the major advised repairs had never eventuated, the value in December 2011 would have dropped to about $20,000, though depending on the condition of the equipment the value might have been even lower. He added that after the vessel sank in January 2014 and it was salvaged it had no commercial value at all. The last proposition was uncontroversial and I accept it, bearing in mind the comments of Mr Cupitt on the boat after it had been salvaged. In evidence he gave a market value of the boat today, if brought into good condition, of $150,000: p 2-10.

[141]
His 2010 valuation was essentially on the basis of the value of the machinery and equipment which could be salvaged from the boat and realised second-hand, that is, as scrap value. There was some issue raised on behalf of the defendants as to his ability to value the boat a month earlier then when he had inspected it, but he was obviously assessing the value prior to any work being done on it by the plaintiff. Essentially his proposition was that at that stage the boat had no commercial value except for scrap. He conceded that that was not based on any comparable sale evidence, but this is an unusual type of boat and (hopefully) in an unusually poor condition, so the absence of comparable sale evidence is understandable.

[142]
His valuation is consistent with other evidence. The plaintiff gave an initial quote for fixing up the boat of $300,000. That seems to me to have been essentially a quote to do the work necessary to put the boat into the condition assumed by Mr Cupitt’s valuation. Nobody regarded the proposition of spending $300,000 on this boat as a sensible one,^[88] which is consistent with Mr Cupitt’s opinion that in that state it would at best have been worth that, but would probably have been worth less. That strikes me as generally consistent with the evidence of Mr Carrington, and indeed all of the evidence to the effect that at the time when the boat arrived in the plaintiff’s yard it was in very poor condition.^[89]

[143]
I consider it is unrealistic to talk in terms of the market value of the boat if it had been properly fixed up. At the time the plaintiff received the boat it had not been properly fixed up, and it required the expenditure of a very substantial amount, probably more than the boat would have been worth after it had been fixed up, to achieve that state. Some work had been done on it thereafter, but it is not clear that doing that work would have enhanced the market value of the boat simply by the value of the work done, in circumstances where it remained the situation that money still had to be spent on the boat to put it into good condition.

[144]
After the plaintiff obtained possession of the boat, it did do quite a lot of work on it, which was paid for. Leaving aside an amount paid for fuel, the insurance excess, and an initial birthing fee paid on 11 November 2010, the plaintiff was paid by a defendant a total of $203,426.90: Exhibit 78. Taking into account the additional payment which I have found the first defendant to be liable for, the defendants will have paid a total of $226,683.30 for work done on this boat, which has now become worthless. There was a further $55,391.37 which the plaintiff sought to charge for work done on the boat, but which I have held not to be recoverable. It also appears from Exhibit 29 that even when all of this work had been done, there was more to do on the boat before it was fully fixed up, so as to meet the assumptions of Mr Cupitt’s valuation. This was something not proved with any degree of precision, but obviously some additional work would have been necessary.

[145]
Doing the best I can with the evidence available, I consider that a realistic figure for the market value of the boat in September 2011 is $180,000. It would have deteriorated between then and when it sank, and allowing for that I assess its value at the time it sank, ignoring whatever made it sink, at $120,000. I acknowledge that that means that the boat is worth less than the plaintiff had already been paid to do work on it, but given the nature of the boat I think that is unsurprising. It is really a reflection of the fact that, when the plaintiff took possession of the boat, it was in a bad way, indeed really beyond economic repair, and it is a boat which inherently deteriorates quickly.

[146]
There is however a complication in this assessment arising from the fact that it assumes that the boat was in the state it was in after the plaintiff had in fact done on it all of the additional work covered by the two invoices which I have held not recoverable from the first defendant. It seems to me that it is inherently unfair for the owner of the boat to recover damages for its loss assessed by reference to its condition after that work had been done on it by the plaintiff, but not to give any credit to the plaintiff for doing that work. As a general proposition, if A does work which improves the value of B’s property but was not requested by B to do so, B is under no obligation to pay for it.^[90] One exception to this however is that if B is aware of the work being done, and stands by and allows it to be done then, at least in certain circumstances, B will be liable to pay, to the extent to which the value of B’s property has been enhanced by that work being done. In these circumstances, B can be categorised as having knowingly accepted the benefit of the work, and in those circumstances, has come under a restitutionary obligation to pay a reasonable price for it, based on the enhanced value to B as a result of the work.

[147]
There was no claim of this nature advanced in the present case, because it was not pleaded and because it would lie only against the true owner of the boat, and at the trial the plaintiff’s case was that the true owner was the third defendant. In my opinion, for the defendant owner of the boat to claim damages from the plaintiff on the basis of the value of the boat in the state in which it was in after work had been done, in respect of which there is no contractual remedy, and in that way is taking the benefit of that work, that would amount to voluntary acceptance of the benefit of that work, so that either the plaintiff would be entitled to recover in respect of that additional work to the extent that it had enhanced the value of the boat, or the owner of the boat would have to give credit to the plaintiff in the assessment of damages by reference to the extent to which the value of that boat had been enhanced by that work. In the alternative, one could say that the true measure of damages is the value prior to that work having been done.

[148]
There is of course no evidence of the extent to which the value of the boat was enhanced by this work, but I accept Mr Carrington’s opinion that when the plaintiff received the boat it was worth $30,000, and I have therefore found that all of the work done on it increased its value by $90,000. That figure should be apportioned on the basis of a reasonable allowance for the requested work, which I cannot calculate from the evidence, but which would lie between $33,386.85 and $55,391.37, and doing the best I can, I allow $45,000 for the unrequested work. The plaintiff was paid, or has recovered, a total of $226,683.30 for requested work, so a pro-rata apportionment of the increase in value comes to $14,907. Accordingly, if the plaintiff were liable for damages to a defendant because of the sinking of the boat, I would assess those damages at $105,093.

Conclusion

[149]
For the reasons given, on the plaintiff’s claim, I give judgment that the first defendant pay the plaintiff $85,231.01, including $25,468.11 by way of interest. The claim against the second defendant is dismissed. The first defendant’s counterclaim is dismissed. I shall invite submissions as to costs in writing after these reasons are published.

Footnotes

[1] Exhibit 1.

[2] Over $200,000 was paid to the plaintiff, and more to another ship repairer.

[3] The initial counterclaim was for damages for detention, on the basis that the company would otherwise have been leasing the boat to the Oak Hotel Cessnock Pty Ltd at $2,600 per month. In addition, it was alleged that during that period the company had been prevented from properly maintaining the vessel, as a result of which it had suffered damage.

[4] The first order was ineffective, as only a Commercial List judge can do this.

[5] Affidavit of Moore filed 8 December 2015, para 6, read before me on 8 December 2015. The third defendant was apparently in fact wound up on 26 November 2015: Exhibit 82, para 3.

[6] Exhibit 5; suggesting it had been in the other yard for 2 years. See also Harvey, p 102.

[7] Harvey, p 104.

[8]Cannon p 63; Mynott p 23; Exhibit 27, 28 July 2010.

[9] Cannon p 64; Mynott p 21.

[10] Mynott p 20, 24; Harvey p 44, p 4-29; Mr Mynott worked at that time close to the plaintiff’s premises.

[11] Probably by 8 November 2010, Exhibit 6; Cannon p 65.

[12] Mr Mynott had no recollection of seeing it at that time; p 22.

[13] Exhibit 21.

[14] Harvey, p 4-5.

[15] This covered additional work identified in the course of repairing the flood damage: p 92.

[16] In preparing invoices the practice was to relate the charges to quoted work, or additional or emergent work: p 71.

[17] The boat was taken out of the water to effect the insurance repairs, and stayed out thereafter until early June 2011: p 2-36.

[18] This was in May 2011, when he moved to Cessnock: p 33. I reject the evidence that the move was in March 2011 (p 57, 58) in view of the inference from Exhibit 74, Cannon p 99, and Harvey p 4-10.

[19] The second defendant claimed this was handed to him on 14 August 2011: p 4-11.

[20] Cannon p 74. Mr Bowman was also present, but had little recollection of the event: p 3-29.

[21] Mr Bowman accepted as likely that there was some salutations at the start of the conversation, and on that basis that it was likely that the whole conversation was not recorded: p 3-29. I had the distinct impression that this was just an assumption on his part, not recollection.

[22] Statements in Exhibit 29 are numbered and I will use those numbers for reference.

[23] This is inconsistent with the statement put to Mr Cannon in cross-examination at p 2-39.

[24] That is academic, as this work was not shown to be included in the work in paragraph 31 of the statement of claim.

[25] The plaintiff had charged birthing fees, but they were not paid: p 88.

[26] Cannon, p 2-57 – every couple of months: Hoy, p 2-67 – every couple of weeks. He said the water in the bilges stayed at much the same level: p 2-70. The pumps were seen to operate: Long p 3-12.

[27] Cannon, p 85. On occasions he would also turn over the engines.

[28] He rang Mr Cannon and said it had a list, and later that he thought it was sinking: Cannon, p 83. He also phoned Mr Hoy: p 2-65.

[29] Cannon, p 2-57; Exhibit 53 p 8.

[30] Lockyer p 3-90. A timber hull of this age would be likely to let some water into the bilges: Exhibit 53 p 10.

[31] Mr Lockyer, a marine surveyor, regarded this as a sensible theory: p 3-89-91. He was not convinced the boat sank through the accumulation of rain water in the bilge: p 3-88.

[32] The first two hull penetrations to admit water when it was put back in the water were on the starboard side, which could explain the list to starboard: Exhibit 53 p 7.

[33] Cupitt Exhibit 79: damage caused by the salvage operation.

[34] Obviously they did for over two and a half years.

[35] By a salvage company, paid by the plaintiff: p 2-59; Exhibit 50. There was also some time taken by the plaintiff’s employees: Exhibit 51.

[36] The current statement of claim is that filed on 17 February 2016.

[37] Exhibit 2.

[38] As shown by the fact that even after a four day trial the question of who is the true owner of this boat is not entirely clear to me.

[39] The current defence is the further amended defence to the fourth amended statement of claim and amended counterclaim, filed by leave on the first day of the trial.

[40] The invoices were Exhibit 57 (p 3-19, 21).

[41] Except that the second defendant approved the lighting plan: p 3-14. This could well be part of the work covered by the quote, under “Electrical work”.

[42] A recent example of the application of this principle was Palmer St. Developments Pty Ltd v J&E Vanjak Pty Ltd [2016] QCA 138, where the matter was put as a breach of the principle of natural justice. There is exception if an issue is raised in timely way at trial, so that the parties have the opportunity to respond to it, at least where the issue is one of law.

[43] Thiess Services Pty Ltd v Mirvac Queensland Pty Ltd [2006] QCA 50; hence the prevalence in the standard forms of building contracts of conditions for additional remuneration in the event of latent conditions: Bailey & Bell “Construction Law in Australia” (3rd Ed, 2011) p 228.

[44] Defence, para 36(b).

[45] In September 2011: Cannon p 75.

[46] See RD Elliot “The Artificer’s Lien” (Law Book Company, 1967) p 8; Soames v British Empire Shipping Co (1860) 8 HLC 338; China Pacific SA v Food Corporation of India [1982] AC 939 at 962; Halsbury, 4th ed. vol 28 para 544. See also LE Hall “Possessory Liens in English Law”, Sweet and Maxwell 1917, p 64; Palmer on Bailment, (3rd Ed, 2009) para 15-088.

[47] In November 2010 $585.50 was charged and paid: Exhibit 78. A different amount had been quoted in July 2010: Exhibit 27.

[48] The plaintiff’s allegations about the quantum of the salvage costs and that they were incurred by the plaintiff were not admitted: defence, para 30(a).

[49] Palmer on Bailment (3rd Ed, 2009) p 183.

[50] Ibid, para 15-087.

[51] Ibid, para 15-019; China Pacific SA v Food Corporation of India (supra) at 960.

[52] Palmer, op cit, para 15-020; Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220 at 233.

[53] Palmer, op cit, para 15-022; Tottenham Investments Pty Ltd v Carburettor Services Pty Ltd (1994) Aust Torts Rep 81-292.

[54] Animals must be fed and otherwise cared for, and cows milked, but the bailee can keep the milk.

[55] Exhibit 53 p 18; Carrington p 2-13; Lockyer p 3-91.

[56] Carrington p 2-13.

[57] Palmer, op cit, para 15-087 referred to Nightingale v Tildsley [1980] CLY 134, a decision of the crown court that a repairer of a motor vehicle did not need to carry out routine maintenance while exercising a lien over it. In that case a lot of deterioration occurred over 5 years, not all of it due to a lack of maintenance.

[58] Evidence of Mr Carrington: Exhibit 48, discussed below. See also Exhibit 53 p 12, 13 re hull penetrations; evidence of wood rot and mould, noted elsewhere.

[59] That was not on the evidence the cause of the sinking here, although the evidence suggests that to some extent the hull was leaking. The point is made to illustrate my reasoning.

[60] One was upheld in Aqua Marine Pty Ltd v The Ship “Condor of Bermuda” [1999] QDC 46.

[61] There was nothing about that ship to interest an enthusiast, whereas a wooden boat enthusiast might have been willing to do the considerable work needed on this boat to put it into good order.

[62] Lockyer p 3-87: Not much you can do in that situation.

[63] Carrington p 2-28.

[64] BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283.

[65] I am not saying that I regard their affidavit evidence on the earlier occasions as being more reliable; rather, I regard them as such unreliable witnesses that I would not be prepared to give any evidentiary weight to any assertion by them.

[66] (1804) 5 C.Rob. 155 at 159, 165 ER 731 at 732. The passage was cited with approval by the Privy Council in Chasteauneuf v Capeyron (1882) 7 App Cas 127 at 134.

[67] I have not been able to identify the statute referred to by his Lordship. See Shipping Registration Act 1981 (Cth), s 36(1) requiring transfer of a ship or share in the ship covered by that Act by a “bill of sale laid in accordance with the regulations”. Under that Act it is the bill of sale which passes legal title: Blue Corp Pty Ltd v ANZ Executors and Trustee Co Ltd [1995] QCA 487 at 19. There is modern authority that a bill of sale is not now required to pass title except to registered ships: Ontario Ltd v Commissioner of Stamps (1990) 53 SASR 274; Devine Shipping Pty Ltd v BP Melbourne (1994) 3 Tas R 456.

[68] The position may be contrasted with the situation of land registered under the Land Title Act and other Torrens title systems, and indeed of vessels registered under the Commonwealth Act, as to which see Mentink v Registrar of the Australian Register of Ships [2014] FCA 1138 at [87].

[69] The basis of the counterclaim by the first defendant at that stage was unclear.

[70] Morphett p 3-45.

[71] Exhibit 3, p 16.

[72] Exhibit 84.

[73] Bar Point was the location of a property on the Hawkesbury River accessible only by water which was made available on short term rentals by the third defendant: Harvey, p 3-96; Morphett p 3-33, 3-40 The intention was to moor the boat there, and to use it in connection with that business once it was “in survey”, so that it could be licensed for commercial use: Harvey, p 3-97, 3-101.

[74] Aside from any issue arising from the poor condition of the boat at material times, I doubt if replacement cost is an appropriate method to value the boat for the purpose of company accounts.

[75] The balance is made up of $33,073 for the additional fitout costs referred to earlier, $18,000 for the runabout and $2,607 for the mooring at Bar Point.

[76] The third defendant.

[77] Contrast the explanation given by the first defendant: p 3-39.

[78] Exhibits 59, 60, 61; Morphett p 3-37; Harvey p 3-97, 98.

[79] WS Gilbert “The Mikado” Act II.

[80] Morphett, p 3-45.

[81] Contra Morphett p 3-60.

[82] Harvey p 4-30; see also Morphett p 3-33.

[83] Perhaps the accountant gave the same advice about this land.

[84] See also Morphett p 3-43; Exhibit 64.

[85] McDonald v Deputy Commissioner of Land Tax (1915) 20 CLR 231.

[86] Spencer v The Commonwealth (1907) 5 CLR 418 at 432, 441.

[87] There are not a lot of wooden boats left: Carrington p 2-29.

[88] Mr Carrington would not have spent $200,000 on it: p 2-13.

[89] Cannon p 65; Exhibit 22; Long p 3-7; Bowman p 3-18.

[90] See generally Goff & Jones “The Law of Restitution” (4th Ed 1993) p 166.

Editorial Notes

Published Case Name:
Rivergate Marina & Shipyard Pty Ltd v Morphett
Shortened Case Name:
Rivergate Marina & Shipyard Pty Ltd v Morphett
MNC:
[2017] QDC 141
Court:
QDC
Judge(s):
McGill DCJ
Date:
31 May 2017

Litigation History

Event	Citation or File	Date	Notes
Primary Judgment	[2017] QDC 141	31 May 2017	McGill SC DCJ.
Notice of Appeal Filed	File Number: 6425/17	27 Jun 2017	-
Appeal Determined (QCA)	[2018] QCA 15	23 Feb 2018	Application for leave to appeal refused: Sofronoff P, Morrison JA and Jackson J.

Appeal Status

Appeal Determined (QCA)

Cases Cited List of Cases Cited by this judgment

Case Name	Full Citation	Frequency
Aqua Marine Pty Ltd v The Ship "Condor of Bermuda"	[1999] QDC 46	2 citations Jump To Cite 1 - [1999] QDC 46 Cite 2 - [1999] QDC 46
Bluecorp Pty Ltd v ANZ Executors & Trustee Company Limited	[1995] QCA 487	2 citations Jump To Cite 1 - [1995] QCA 487 Cite 2 - [1995] QCA 487
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council	View on:JADE(1977) 180 CLR 266	2 citations Jump To Cite 1 - (1977) 180 CLR 266 Cite 2 - (1977) 180 CLR 266
BP Refinery (Westernport) Pty Ltd v Shire of Hastings	(1804) 5 C.Rob. 155	2 citations Jump To Cite 1 - (1804) 5 C.Rob. 155 Cite 2 - (1804) 5 C.Rob. 155
Challenge Charter Pty Ltd v Curtain Bros (Qld) Pty Ltd	View on:JADE[2004] VSC 1	4 citations Jump To Cite 1 - [2004] VSC 1 Cite 2 - [2004] VSC 1 Cite 3 - [2004] VSC 1 Cite 4 - [2004] VSC 1
Chasteauneuf v Capeyron	(1882) 7 App Cas 127	2 citations Jump To Cite 1 - (1882) 7 App Cas 127 Cite 2 - (1882) 7 App Cas 127
China Pacific SA v Food Corporation of India	View on:ICLRUK[1982] AC 939	4 citations Jump To Cite 1 - [1982] AC 939 Cite 2 - [1982] AC 939 Cite 3 - [1982] AC 939 Cite 4 - [1982] AC 939
Devine Shipping Pty Ltd v BP Melbourne	(1994) 3 Tas R 456	2 citations Jump To Cite 1 - (1994) 3 Tas R 456 Cite 2 - (1994) 3 Tas R 456
Hobbs v Petersham Transport Co Pty Ltd	View on:JADE(1971) 124 CLR 220	3 citations Jump To Cite 1 - (1971) 124 CLR 220 Cite 2 - (1971) 124 CLR 220 Cite 3 - (1971) 124 CLR 220
McDonald v Deputy Federal Commissioner of Taxation	View on:JADE(1915) 20 CLR 231	2 citations Jump To Cite 1 - (1915) 20 CLR 231 Cite 2 - (1915) 20 CLR 231
Mentink v Registrar of the Australian Register of Ships	View on:JADE[2014] FCA 1138	2 citations Jump To Cite 1 - [2014] FCA 1138 Cite 2 - [2014] FCA 1138
Nightingale v Tildsley	[1980] CLY 134	2 citations Jump To Cite 1 - [1980] CLY 134 Cite 2 - [1980] CLY 134
Ontario Ltd v Commissioner of Stamps	(1990) 53 SASR 274	2 citations Jump To Cite 1 - (1990) 53 SASR 274 Cite 2 - (1990) 53 SASR 274
Palmer St Developments Pty Ltd v J & E Vanjak Pty Ltd	[2016] QCA 138	2 citations Jump To Cite 1 - [2016] QCA 138 Cite 2 - [2016] QCA 138
Soames v British Empire Shipping Co	(1860) 8 HLC 338	2 citations Jump To Cite 1 - (1860) 8 HLC 338 Cite 2 - (1860) 8 HLC 338
Spencer v The Commonwealth	View on:JADE(1907) 5 CLR 418	2 citations Jump To Cite 1 - (1907) 5 CLR 418 Cite 2 - (1907) 5 CLR 418
Thiess Services Pty Ltd v Mirvac Queensland Pty Ltd	[2006] QCA 50	2 citations Jump To Cite 1 - [2006] QCA 50 Cite 2 - [2006] QCA 50
Tottenham Investments Pty Ltd v Carburettor Services Pty Ltd	(1994) Aust Torts Reports 81-292	2 citations Jump To Cite 1 - (1994) Aust Torts Reports 81-292 Cite 2 - (1994) Aust Torts Reports 81-292
“The Sisters”	[1804] 165 ER 731	2 citations Jump To Cite 1 - [1804] 165 ER 731 Cite 2 - [1804] 165 ER 731

Cases Citing List of cases on Queensland Judgments citing this Judgment

Case Name	Full Citation	Frequency
Morphett v Rivergate Marina & Shipyard Pty Ltd	[2018] QCA 15	15 citations

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Rivergate Marina & Shipyard Pty Ltd v Morphett[2017] QDC 141