FEDERAL COURT OF AUSTRALIA

Wyzenbeek v Australasian Marine Imports Pty Ltd (No 2) [2018] FCA 1517

ORDERS

THE COURT ORDERS THAT:

1.    The first and second applicants have judgment against the first respondent in the sum of one hundred and sixty-eight thousand, three hundred dollars ($168,300.00).

2.    The first and second applicants and the first respondent are to bring in short minutes of orders in relation to the interest which ought be paid on the sum of $168,300.00 from 30 June 2012 to the date of judgment or, in the absence of agreement, the matter be relisted for hearing on that question.

3.    Otherwise the applicants’ claims against the first, second, third and fourth respondents are dismissed.

4.    The further hearing of the matter is adjourned to a date to be fixed.

5.    The parties are to be heard on the question of costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

DERRINGTON J:

Introduction

1    Norbert Andres Wyzenbeek (Mr Wyzenbeek) has been a keen sailor all his life and has, over the course of many years, owned several boats. Shortly prior to 2010, Mr Wyzenbeek had a 59 foot sailing yacht called “Swanky”. He acquired it in 1999 and, with his wife, Sharon Wyzenbeek (Mrs Wyzenbeek), sailed it on many occasions, including on international journeys. Indeed, after he acquired it in Finland they sailed it for three and a half years, concluding that voyage in Australia. The trip had taken them three quarters of the way around the globe and they harboured a continuing desire to complete a full circumnavigation. Unfortunately, Mrs Wyzenbeek’s health deteriorated and she was not able to cope with the rigors of sailing. That necessitated the abandoning of a sailing yacht in favour of a motor vessel.

2    Over the years Mr Wyzenbeek had come to know Dean Leigh-Smith (Dean) and Ryan Leigh-Smith (Ryan), each of whom were involved in the Gold Coast City Marina at Coomera. They were aware that Mr and Mrs Wyzenbeek wished to acquire a motor vessel capable of crossing oceans so that they might continue their travels and, in particular, to complete their circumnavigation of the world. They each promoted to the Wyzenbeeks vessels manufactured by Hampton Yachts in China, which were branded Endurance vessels. In doing so, and for the purposes of securing a sale of an Endurance vessel they represented, although mainly to Mr Wyzenbeek, the vessels in the Endurance range were, or would be, suitable for crossing oceans or for extended ocean voyages. Those representations were quite untrue and neither Ryan nor Dean had any reasonable basis for making them. Nevertheless, the representation had the intended consequence of inducing the Wyzenbeeks to purchase an Endurance vessel. The one acquired was an Endurance 750, Hampton yacht for which they paid $4 million and which they named “Cadeau”. The entry into of the contract of purchase followed extended discussions and Mr Wyzenbeek, who is a very astute businessman, secured a fairly good bargain on the purchase. Whilst the vessel was probably worth what the Wyzenbeeks paid for it, it was not suitable for the purposes for which they indicated they intended to use it.

3    They took possession of the vessel in early 2011 and, after approximately 20 months of use, including an unfortunate incident in October 2012, which caused substantial damage, Mr Wyzenbeek ascertained that Cadeau was not suitable for crossing oceans, or for extended ocean voyaging. Although at the time he made some complaints about having been misled as to its ocean-going capabilities, he and Mrs Wyzenbeek continued to use it for their sailing activities. Since its acquisition the value of the boat has depreciated significantly, as is the nature of such assets. On 31 July 2015, the applicants commenced this action and they seek damages from the company from which the vessel was purchased as well as from others whom, they allege, made the representations which induced its acquisition. The damages sought are intended to place them into a financial position whereby they might now acquire a new ocean-going vessel. A difficulty that confronted them by the time of trial was that the vendor company, Australian Marine Imports Pty Ltd (AMI), was in liquidation and the chances of recovery against it appeared somewhat minimal. Although it remained a party to the action, as the matter progressed the focus of the applicants’ claim has been their action, founded upon misleading or deceptive conduct, against the other parties.

4    The difficulty for Mr and Mrs Wyzenbeek is that it was not established the misleading conduct caused them loss. Although Cadeau was not suitable for crossing oceans, it was worth what they paid for it. Apart from inducing them to acquire Cadeau, it was not pleaded that the misrepresentations had any other consequence resulting in loss for the Wyzenbeeks, or in the diminution in their economic position. Whilst it is true the vessel has depreciated in value over the years since it was acquired, that is a consequence of its extensive use by Mr and Mrs Wyzenbeek and the effect of the effluxion of time on assets of this nature. The applicants submitted that the correct measure of loss should be the difference between the amounts spent on the vessel and its value at the date of trial. However, the twin difficulties with that submission in this case is that it seeks to award damages for losses which were extrinsic or supervening to, or independent of, the alleged misleading conduct and, additionally, the applicants were unable to establish the value of the vessel at trial.

5    The applicants are entitled to recover damages against AMI for breach of an implied term as to the fitness for purpose of the vessel, limited to the losses which are a consequence of the vessel not being of the required quality. Such damages are not, as the applicants argued, to compensate for any defect in the vessel no matter how insignificant and no matter how irrelevant to its ability to traverse oceans or engage in extended ocean voyaging.

6    The respondents vigorously fought every issue in the matter. In their defences they denied allegations which their witnesses freely admitted whilst giving evidence. They argued points of law which were not genuinely sustainable. Indeed, the overwhelming portion of the trial was taken up considering issues which, in the light of the evidence, were not truly in contest. The defences filed did more than merely put the applicants to proof, they contained denials which were very regularly shown to be disingenuous. Ultimately, the respondents’ success turned on the questions of causation and damage which, in the scheme of the case, were both fairly narrow issues.

Facts

7    Mr Wyzenbeek’s sailing history is important to the consideration of the issues in this matter. He has been a keen sailor for many years. In 1987, he took possession of a 38 foot yacht called “Upriver”, which he had caused to be constructed in the Philippines. The Wyzenbeeks sailed that vessel throughout Australian waters and around the South Pacific. In 1999, he took possession of Swanky, which he had built for him in Finland. The Wyzenbeeks then journeyed from Finland to Sydney over 3 and a half years. On that journey they visited numerous countries in Europe, the Atlantic and the South Pacific. Naturally enough, the successful completion of such sailing exploits requires substantial skill and experience. Mr Wyzenbeek has acquired those capabilities through his years of sailing and the completion of various courses.

8    Mr Wyzenbeek gave evidence that he and his wife wished to complete the global circumnavigation which they commenced in 1999. They also wished to journey more regularly and for longer periods. Those thoughts manifested themselves from around about 2002, during which time he was a regular visitor to the Gold Coast City Marina, a business operated by Gold Coast City Marina Pty Ltd (GCCM), the second respondent. Its business facilities consist of numerous moorings, hard stands and light industrial buildings as well as administration offices located in the Gold Coast suburb of Coomera and on the Coomera River. At all relevant times, Ryan was an employee of GCCM and was referred to as its “ship yard manager”. Dean was its director, as well as being a director and employee of AMI.

9    Mr Wyzenbeek gave evidence that he attended the marina at GCCM’s premises in 2002, 2004, 2005, 2007, 2009 and 2010. He said that on some of those occasions he spoke with Ryan or Dean or both of them about replacing Swanky and the general gist of the conversations was that he wanted a “trawler-style” motor vessel which would be suitable for completing his global circumnavigation.

10    By about 2009, Mr and Mrs Wyzenbeek’s desire to acquire a new motor vessel had intensified and in about October 2009, they, by Mr Wyzenbeek, provided to Dean a list of specifications which they desired in a trawler-style vessel. The document was headed “Specifications for Open Ocean Category “A” Trawler, September 2009”. The first specification read “Class A, US Coastguard and IMO Standard, Sea State 5, who rates CAT A vertical acceleration, stability”. The reference to “Open Ocean Category A” was apparently a reference to the European Union Standards of Vessel Classification, which identifies such vessels as being constructed to a standard that makes them safe to use for ocean cruising. That internationally recognised standard of categorisation seemed to be well known to the experts in this matter. It was not, however, known by Ryan or Dean, which was unusual because they purported to sell vessels for use in the open ocean.

11    Mr Wyzenbeek’s list was several pages long and consisted of minute requirements for the vessel he wanted and included a requirement for sea trials over a 50 hour period. He did not independently develop this list and it seems he obtained various specifications from the internet and, in particular, from the website of Marlow Yachts, a USA based boat manufacturer. The existence of Marlow Yachts as a manufacturer of ocean-going motor vessels is important as that was the source of an alternative vessel for the Wyzenbeeks had they not been misled into acquiring the Endurance 750. Mr Wyzenbeek had some familiarity with the Marlow vessels and immediately prior to entering into the contract to acquire the Endurance 750 he had in place plans to visit the Marlow factory in Florida, USA, or, so he said.

12    Mr Wyzenbeek gave evidence that, shortly after sending the specifications, he had a telephone conversation with Dean about them. He alleges that Dean said words to effect that yachts in the Endurance series were ideally suited to meet Mr Wyzenbeek’s purpose and specifications and they were suitable for trans-oceanic crossing. He further asserted Dean also said he would provide additional information to substantiate the suitability of Hampton yachts and the Endurance range of vessels. Dean could not recall this conversation, but I accept it occurred, generally in the manner stated by Mr Wyzenbeek, largely because it is consistent with subsequent comments made by Dean.

13    Shortly after this conversation, on 15 October 2009, Dean sent to Mr and Mrs Wyzenbeek an email concerning their recent discussions. In it he thanked them for their inquiry in relation to the Endurance range of luxury yachts. He said there were a number of vessels in the production line which may be of interest to them and he had possession of an Endurance 650#5, which was recently sold “here at GCCM”, and a Hampton 680 Pilothouse, which had been sold to a Sydney client. Dean also wrote that, as he had mentioned in their conversation, he, along with two of his engineers, frequented the Hampton factory regularly and worked to ensure that every boat sold is “100% right prior to departing the factory”. He then extolled the virtues of the brand in the following terms:

The Hampton yard is a very high quality facility turning out some amazing products. The Endurance range is particularly impressive as they can achieve terrific sea keeping with amazing economy. These points coupled with their impeccable standards of craftsmanship and construction techniques all add up to a winning combination. I must say words don’t do the product justice & an inspection is a must if you guys are potentially in the market for this style of vessel.

Dean also attached to the email a current price list as a guideline and said he wished to sit down with the Wyzenbeeks so they could create their “perfect vessel”. He further identified that the full Endurance range of vessels were viewable at Hampton Yacht’s website and attached some technical data relating to the vessel. In addition, he offered to give Mr Wyzenbeek a free berth at the GCCM for up to two nights to allow him to inspect the Endurance. This latter point is not insignificant as the marina was owned and operated by GCCM, but the respondents assert the sales were only conducted by AMI. Dean’s ability to offer free use of GCCM’s facilities suggest otherwise. The email also had a heading “Vessel Options/Suggestions as Requested”. Under that were a number of photographs of various vessels in the Endurance range and some brief details about them as well as links to the Leigh-Smith Cruiser Sales webpage.

14    The applicants rely upon the physical attributes of the correspondence sent by both Dean and Ryan as representations of the relationship of the respondents inter se and their authority to act on one another’s behalf. The signature block on Dean’s email identified him as “Director – Gold Coast City Marina; Dealer Principal – Leigh-Smith Cruiser Sales”. The website address of www.gccm.com.au appeared on two occasions in bold lettering and underlined. Dean’s email address was specified, the domain of which was “@gccm.com.au”. These references, especially the reference to GCCM’s website”, are important because they support the applicants’ argument that, at the time, Dean was acting for and on behalf of GCCM and, possibly, AMI too.

15    On 28 October 2009, Dean had further telephone conversations with Mr and Mrs Wyzenbeek. He then sent an email at 12.34pm in which he wrote he had requested information on the “Rating” of the Endurance range of yachts in various sea states. He indicated that he knew the Endurance Series had been tested in a Sea State 4, but he was awaiting advice from the manufacturer and naval architect. He also attached a document that, allegedly, recorded the speed curve test for the 650#5 vessel and indicated the range of that vessel was 2,000 nautical miles at around 9 knots. Dean’s signature block appeared again in this email and was unchanged.

16    At 2.38pm on 28 October 2009, a further email was sent to Mr and Mrs Wyzenbeek from Dean. He attached some comments from Mr Howard Apollonio, the naval architect who designed Hampton vessels. Dean identified those comments as being very positive. He also made reference to Mr Apollonio’s discussion of the Marlow Explorer vessel design, which took into account the Wyzenbeeks’ requirements. Dean accepted during cross-examination that those requirements included the vessel being suitable for trans-ocean travel. Perhaps unsurprisingly, the comments of Mr Apollonio spoke well of the Endurance vessels. He said because they were rated for ocean service to US Coastguard IMO standards, “they are thereby considered capable of handling anything that comes along in a long open sea voyage. That does not mean one should go challenge a hurricane. At least these boats have the speed to avoid such things”.

17    Later on 28 October 2009, there was some further email communication between Dean and Mr Wyzenbeek mostly concerning the capacity of the Caterpillar engines and the range of the Endurance vessels.

18    Mr Wyzenbeek asserted that around this time, being about October 2009, Ryan provided him with a brochure, or brochures, relating to the Endurance range of vessels. Whether Ryan handed that material to him personally or left it in Swanky does not matter. What is relevant is that Ryan attached to these brochures his business card, which identified him as the “Shipyard Manager” and had on it the logo and name of Gold Coast City Marina and Shipyard. It also had Ryan’s email address, the domain of which was also “@gccm.com.au”, and the website address of Gold Coast City Marina. Again, this assumes relevance in relation to the identity of the entities that made the representations to the Wyzenbeeks, particularly that the representations were made on behalf of GCCM.

19    On 13 November 2009, Mr Wyzenbeek undertook an inspection of a 650 Endurance yacht at the Gold Coast City Marina during which Dean gave him a specification sheet in relation to that vessel. On 16 November 2009, Mr Wyzenbeek provided to Ryan an alternative set of specifications for the 650 Endurance Skylounge vessel. In particular, it included the following:

(a)    A1 offshore rating supplied with vessel;

(b)    Increased fuel capacity to 11,000 litres; and

(c)    Vessel to be priced ex GST, ex duty, ex delivery include pre-delivery and commissioning Shanghai.

20    Dean immediately forwarded those specifications to Mr Chen of Hampton Yachts in China and sought a quote for a vessel constructed to satisfy them. He indicated that it was to be fully completed in China, collected there and immediately taken on international travel. Again Dean’s email contained his standard email signature block.

21    On 25 November 2009, Dean sent an email to Mr and Mrs Wyzenbeek, copying it to Ryan. It contained a quotation for the sale of a Hampton Endurance 65 foot Skylounge vessel built to a list of identified specifications. The price offered was $2,475,000 USD delivered ex Shanghai. Of importance was Dean’s observation that he was still awaiting the “A1 offshore rating to be supplied with the vessel – same as Marlow website”. He indicated that the Endurance was built for offshore conditions, but he had to investigate all liabilities and guarantees made by the factory before confirming them although, he added, this would not be a problem. One of the specifications and options identified was that there would be coordination to prepare a list for major spares required for immediate ocean crossing. The email included the comment:

I believe that the vessel we have specified is ideally suited to your requirements & will serve you both very well. I look forward to hearing from you soon to discuss further.

Although it finished with Dean’s standard email signature block highlighting Gold Coast City Marina, the content of the email indicated that AMI would be involved in the importation of the vessel. The applicants rely upon this as part of Dean’s representations that the vessel would be suitable for crossing oceans or extended ocean voyaging. Certainly, Dean was well aware that these were part of the Wyzenbeek’s requirements and his assertion that the specified vessel would meet them was an express affirmation that the Endurance vessels had that capability.

22    On 26 November 2009, Dean sent to the Wyzenbeeks an email in relation to that quotation. In it he said he believed the quotation accommodated all of the Wyzenbeeks’ requirements at that point. He also made himself and Ryan available to discuss the matter. In response, Mr Wyzenbeek sent to Dean his previous specification list. That document is headed “Partial specification and checklist”. It is to be observed that although reference to Class A US Coastguard and IMA standard remained, the reference to a “Category A” did not.

23    Dean replied to Mr Wyzenbeek on 27 November 2009 and suggested a meeting with himself and his engineers. He suggested that, after those discussions, Mr Wyzenbeek would appreciate that the initial specifications identified by Dean would have more benefits for cruising the east coast of Australia.

24    On 1 December 2009, Dean sent an email to Mr Wyzenbeek (again copied to Ryan) concerning the A1 offshore rating in relation to the Hampton Yachts. That email passed on some comments contained in an email from Mr Chen in which he asserted that the A1 offshore rating was a European EC rating and that the standard of the Endurance Series was equal to, or surpassed, such a rating. It was mentioned that to apply for and obtain an A1 offshore rating would take about 6 to 8 months and would add USD $40,000 to the total cost. Dean then proposed that Mr and Mrs Wyzenbeek meet with his engineers to discuss the full vessel inventory from bow to stern to “ensure that we have the best equipment on the vessel taking into account the trans-ocean crossing you will be undertaking with it before entering back to Australian waters”. He further said, “I know that you’re doing lots of research on your future vessel & greatly look forward to building you a superior Endurance yacht vessel which is tailored to your needs”.

25    At this point it did not appear to be in doubt that the Wyzenbeeks wished to use the vessel for crossing oceans and this was known to both Dean and Ryan. As appears from the correspondence, both Ryan and Dean conducted their communications on the basis that the Hampton vessel to be sold to the Wyzenbeeks would be suitable for trans-ocean crossing. In this context it should be observed that Mr Chen’s statement that the “A 1 offshore rating” was equivalent to a European EC rating was incorrect. The design categories of the CE Directive are Category A – Ocean or Category B – Offshore. There is neither an A1 category nor an A1 Offshore category in it.

26    From around this time Mr Wyzenbeek ceased dealing with Dean and, thereafter, dealt almost exclusively with Ryan. The reasons for this did not become particularly clear, however, in neutral terms, it might be said that Mr Wyzenbeek had a better working relationship with Ryan.

27    On 27 January 2010, Ryan contacted Mr Wyzenbeek via email to ascertain how he was proceeding on his purchase of a new vessel. He offered to show Mr Wyzenbeek a 65 foot Endurance which was presently in his possession. Ryan’s email signature block only referred to Gold Coast City Marina. Mr Wyzenbeek responded that he was planning to arrive at the Gold Coast City Marina around 28 March 2010, that he would require work to his vessel, Swanky, and that, presently, he preferred the Marlow vessel on the basis that it “is better built both hull and hardware”. That said, he did offer to visit the Shanghai factory of Hampton Yachts.

28    On 9 February 2010, Mr Wyzenbeek again emailed Ryan. In that email he indicated that his needs were for a 3,000 nautical mile range vessel and that he was still awaiting a quote from Marlow. Later that day Mr Wyzenbeek sent Ryan a further email in which he commented on the attributes of several vessels in the Endurance range. He attached a document containing a new list of specifications, which were substantially similar to those which he had previously sent. That document did not include a specification for a “Category A vessel”, but did refer to “Class A, US Coastguard and IMO Standard”. In the email Mr Wyzenbeek indicated that he had already booked his trip to the Fort Lauderdale Boat Show, where he would inspect the Marlow Yachts. He indicated that he could visit the Hampton Yachts factory on his return journey.

29    On 15 February 2010, Ryan sent the specifications to Mr Chen at Hampton Yachts. In the body of the email Ryan indicated that whilst Mr Wyzenbeek had been pursuing a Marlow for some months, he, that is Ryan, had convinced Mr Wyzenbeek to look at the Endurance range. He further indicated that the vessel Mr Wyzenbeek intended to acquire was to be immediately taken on a substantial ocean crossing and for that reason had to be fully commissioned at the factory. This email evidences Ryan’s appreciation of the Wyzenbeeks’ requirement that the vessel be capable of crossing oceans.

30    In the course of email correspondence on 16 February 2010, Ryan sent to Mr Wyzenbeek an email about Hampton Yachts pricing a vessel based on the specifications recently sent. Amongst other things, Ryan indicated that he was “excited about supplying in conjunction with Hampton Yachts your Endurance long range motor yacht”. In response Mr Wyzenbeek indicated there was no hurry with the quote as he was wanting to see a Hampton with a better layout, wiring and plumbing than the one he had been shown.

31    That seemed to generate some annoyance for Ryan who, on 17 February 2010, sent to Mr Wyzenbeek an email in which he stated:

I sent you the last email to prove to you we are serious about selling ocean going vessels…. If you wish to pursue Hampton “endurance” range please let me know. … Let me know honestly if you want me to proceed with the quoting process.

It was signed off, “Ryan Leigh-Smith, Shipyard Manager, Gold Coast City Marina”.

32    It cannot pass without comment that the statement in this email that Ryan was serious about selling ocean going vessels, is strongly supportive, by itself, of the applicants’ case that the respondents represented to the Wyzenbeeks that the vessels they were offering for sale were ocean going. This, along with other substantive evidence of the representations, renders quite disingenuous the respondents’ denial of the allegation they made them. Similarly, it is apparent that Ryan sent the email as a representative of GCCM and this adds to the large amount of evidence that he was acting on its behalf.

33    On 18 February 2010, Mr Wyzenbeek responded by an email in which he reiterated that he had reservations and would like to view an improved Hampton vessel. He indicated that the Hampton vessel he had viewed was disappointing for a number of reasons.

34    On 24 February 2010, Mr Wyzenbeek informed Ryan by email that he would be sailing from July until October in the Pacific and then, in October, he would be attending the Fort Lauderdale Boat Show and then going to China. He indicated the sailing venture mentioned was to be his last offshore voyage aboard Swanky before he acquired a motor vessel.

35    On or around 29 March 2010, Mr Wyzenbeek was at Gold Coast City Marina attending a boat show. He gave evidence that he spoke to Ryan about the Endurance range of vessels. His evidence was that Ryan said to him that he had received the specifications Mr Wyzenbeek had sent, that the list was detailed, and “that they could build a boat to suit that specification and that the vessel would be suitable for trans-oceanic - oceanic work, and that the vessel that they would provide would be – included in that vessel would be a commercial continuous C8 C-rated engine” (ts.303). Although there was some initial dispute about the precise terms of this conversation, Ryan indicated he may have told Mr Wyzenbeek that the Hampton Range was suitable to cross oceans and, under cross-examination, he acknowledged he said words to the effect that Hampton could build a vessel which would meet the specifications provided and that the Hampton range of vessels could be used for crossing oceans. There is nothing particularly unexpected about this as it is consistent with the substance of their previous discussions. What is surprising, however, was the respondents’ denial of these pivotal allegations in the pleadings.

36    Mr Wyzenbeek gave evidence that, at around this point in time, he indicated he was still leaning towards a Marlow vessel and he would be booking tickets to go to the United States to purchase such a vessel in 2010 for delivery in 2011. Under cross-examination, Ryan agreed Mr Wyzenbeek said this to him and, further, that he would need to be convinced the Endurance Series would be suitable for his needs.

37    Further support for Mr Wyzenbeek’s claim that it was represented to him the Endurance range would be suitable for his needs appears in an email from Ryan to Mr Chen of 26 May 2010. There, Ryan spoke about a quote for Mr Wyzenbeek on a 680 Endurance. He concluded by saying, “I believe we have presented a great package at the boat show and have now got him leaning towards the Endurance brand”.

38    Whilst there appears to have been a cooling of negotiations after March 2010, on 20 July 2010 Ryan sent to Mr Wyzenbeek an email in relation to an Endurance 750 yacht. That was a 75 foot long vessel which was a 68 foot vessel design although lengthened by 7 feet at the stern. After giving details of the vessel he stated:

The boat specific listing is on our brokerage website “Leigh-Smith cruiser sales” and can be viewed at: http://www.lscrusiersales.com.au/boats/endurance-75-skylounge-hampton-yachts.

39    The price was identified at between $3.95 million and a little over $ 4 million. The email was signed off with Ryan’s signature block which included the Gold Coast City Marina and Shipyard details and its website address. Under his name and asserted title of “Director of Gold Coast City Marina”, were the words “Leigh-Smith Cruiser Sales”. It is uncontentious that he was not, at any time, an employee of AMI, which operated under the business name of Leigh-Smith Cruiser Sales. This email is relevant to the issue of the identity of the parties who can be taken to have made the representations to Mr Wyzenbeek. Ryan’s reference to “our brokerage website”, supports the proposition that the Gold Coast City Marina and AMI businesses operated as one business. Even though he held himself out as a director of GCCM, it is not clear Ryan was actually a director of GCCM at that time. That his signature block indicated he was a director suggests he was permitted by the company to hold himself out as being one.

40    The email contained a number of attachments including a document titled “Endurance 750 Hardtop (680 plus 7)”. In it, the seagoing capabilities of the Endurance 750 were highlighted identifying that the vessel was perfect for long range cruising and could comfortably cruise the Coral Sea and many other long haul destinations in comfort and style.

41    Mr Wyzenbeek claims he relied upon this email of 20 July 2010 as indicating the Endurance 750 was better than the smaller vessels which he had been shown and was capable of trans-oceanic crossings. Certainly, at this stage, there is little doubt both Ryan and Dean were both aware of Mr Wyzenbeek’s intention to take the vessel he acquired across oceans. Considering the prior conversations and correspondence between Ryan, Dean and Mr Wyzenbeek, as well as the context in which the information about the 750 Skylounge Cruiser was provided it was reasonable for Mr Wyzenbeek to assume he was being informed the Endurance 750 was suitable for crossing oceans. Mr Wyzenbeek also gave evidence that his views were confirmed by the various articles published from October 2009 to July 2010 regarding the Hampton range of vessels. Those articles propounded the ability of the vessels to engage in oceangoing passages as well as continental circumnavigation and Pacific Island cruising. Whilst the existence of these articles is not unimportant, it is not clear they were made or promoted by the respondents. They do not form part of the representations on which the applicants rely to prosecute their case.

42    In September 2010, Mr Wyzenbeek returned to the Gold Coast City Marina for the purposes of having anti-fouling work and other maintenance performed on Swanky. In his evidence he says that, whilst he was there he had a number of conversations with Ryan and, in one, Ryan said he had been authorised by Patrick Gay, the chairman of Gold Coast City Marina, and Jeff Leigh-Smith, the director of Gold Coast City Marina, to make a trade-in offer on Swanky in respect of a purchase of an Endurance 750 which had been completed and could be shipped from China at the end of the month to arrive in November. Mr Wyzenbeek’s evidence was that Ryan told him the vessel had been built in Shanghai by Hamptons and was an Endurance 750. After Mr Wyzenbeek told Ryan he had already booked tickets to go to Florida to see the Marlow vessels, he alleges Ryan said a number of things that: Hamptons had built the 750 virtually to his (Mr Wyzenbeek’s) precise specifications; the vessel was complete and he could have it immediately; and, further, that it had a range of more than 3,000 nautical miles and redundant systems. Mr Wyzenbeek also says he was told the vessel had commercial continuous running C-18 engines and it was “American Bureau of Yachting Council compliant”. Although Ryan denies saying this, it would be surprising if that were not said. It is apparent the vessel was constructed in general accordance with most of Mr Wyzenbeek’s specifications and the negotiations, discussions and communications between Ryan, Dean and Mr Wyzenbeek, had often referred to similar capabilities of the vessel Mr Wyzenbeek wished to acquire. However, nothing really turns upon this.

43    After this conversation, Mr Wyzenbeek accompanied Ryan to Ryan’s office where he was given a sales brochure that contained the specifications for the Endurance 750. Mr Wyzenbeek gave evidence there was a discussion about the price, the specifications and the delivery time of the Endurance 750 as well as the trade-in price of Swanky. After that, and although no agreement had been concluded, Mr Wyzenbeek returned to his vessel, Swanky, which was then on a hard stand at GCCM.

44    Sometime later Ryan attended on Mr Wyzenbeek in the vicinity of Swanky. He said to Mr Wyzenbeek that Mr Gay and Mr Jeff Leigh-Smith had authorised him to make an offer to sell the Hampton Endurance 750 to him with Swanky being traded-in for $1 million. Ryan said that the Endurance 750 was virtually complete and would be available in November. That, apparently, was sufficient to finally induce Mr Wyzenbeek to agree to purchase the Endurance 750 and it seems he indicated he would do so. In his evidence he said that, in entering into the agreement, he relied upon the representations made to him that the Endurance 750 was suitable for trans-oceanic passage. Those representations were, he claims, contained in the various conversations he had and in email exchanges with Ryan and Dean.

45    Mr Wyzenbeek and Ryan returned to Ryan’s office for the purposes of considering the terms of a contract of purchase and, if suitable, executing it. On that occasion there was considerable discussion about the vessel and its specifications. It appears there were also discussions about the warranty on the vessel, other special conditions and the terms generally.

46    Ryan gave evidence the contract was signed on 10 September 2010 after its terms and the items on the specification sheet had been the subject of discussion between him and Mr Wyzenbeek.

47    Mr Wyzenbeek gave evidence the contract was entered into on 14 September, but I apprehend that he was mistaken in this. It seems the initial contract was entered into on the day on which the terms were finally negotiated in Ryan’s office at GCCM. Ultimately, the date on which it was entered into is not critical to the outcome of this matter and it is clear that it went through a number of iterations, especially in relation to the identity of the purchaser.

48    The contract for sale was contained in a pro forma contract for the sale of a vessel, but a number of special conditions were included in Item M of the Schedule. The broker was identified as “Leigh-Smith Cruiser Sales”, although the ABN provided below that name was that of GCCM. It was executed by Mr Wyzenbeek on behalf of the buyer. In this matter the respondents rely, particularly, upon clause 11 of the contract, which provided:

11.    BUYER ACKNOWLEDGMENTS

The Buyer acknowledges that:

(a)    No warranties or representations (except those given in this Agreement) regarding the Vessel (including its suitability for any purpose, its quality or seaworthiness or otherwise), have been made by the Seller, the Broker or any person on their behalf; and

(b)    The Buyer relies upon its own enquiries, inspection, investigation and knowledge with respect to the Vessel to enter in this Agreement.

(c)    The Broker in all instances is acting as the Sellers agent.

49    In the initial stages of the purchase there was some uncertainty as to the identity of the purchaser. Originally, the contract identified Eagle Hat Pty Ltd ATF The N&S Wyzenbeek Family Trust. From 10 September 2010, Ryan had various email communications with a Mr Nic Reynolds, an employee of Mr Wyzenbeek, in relation to whether Eagle Hat or the Wyzenbeeks ought to be the purchasers. After several discussions and on the receipt of advice from Mr Wyzenbeek’s accountant, on 25 January 2011, the contract of purchase was amended such that the purchasers were Mr and Mrs Wyzenbeek. All parties accept this was the agreement pursuant to which the sale took place.

50    There also appears to have been some subsequent discussions after 10 September 2010 as to the dates Mr Wyzenbeek would make the payments pursuant to the payment schedule and the manner in which he would pay them. Further, after the contract was entered into Mr Wyzenbeek sought personal guarantees from GCCM, whom Ryan identified as the substantial asset owner in the group. Subsequently, guarantees of the seller’s delivery obligations were provided from the directors of GCCM and AMI. They were contained in a document on AMI letterhead and were given in favour of Eagle Hat Pty Ltd as the purchaser of the vessel.

51    From about mid-September 2010, Mr Wyzenbeek engaged in email correspondence with Ryan as to numerous matters with respect to the vessel. These had not been agreed upon as at the date of the contract and, as the correspondence shows, Ryan attempted to accommodate what were effectively changes to the specifications of the vessel, or simply additional features Mr Wyzenbeek desired. Mr Wyzenbeek’s requests for additional benefits or alterations to what had been contractually agreed continued through the latter part of September 2010 at around which time he attended at the Hampton factory in Shanghai.

52    There appears to be some dispute about what exactly occurred during Mr Wyzenbeek’s visit to the factory in Shanghai. Ryan asserts Mr Wyzenbeek carefully considered the vessel and inspected all parts of it. Mr Wyzenbeek asserts that, given the vessel was substantially complete, he did not have a sufficient opportunity to inspect it in detail. Whilst it is apparent Mr Wyzenbeek was very inquisitive as to the minutia of the fittings on the vessel and somewhat pedantic about them, it does not appear he was able to ascertain the quality of the vessel’s structure in any way, nor the appropriateness of the fittings for use on an ocean going vessel. No party suggested he could assess the seaworthiness of the vessel by merely inspecting it as it was being completed.

Delivery of Cadeau to GCCM

53    The Endurance 750 Skylounge was transported to Gold Coast City Marina on 27 January 2011. By that time Mr Wyzenbeek had determined to name it “Cadeau”. However, on its arrival at the Gold Coast a number of issues had arisen. A window in the Skylounge had cracked; the batteries were not charging properly and were bulging; and, on the voyage from Brisbane to GCCM, an oil hose came lose causing oil to be sprayed in the engine room and on the gear box causing damage beyond repair. The repair and rectification of those issues was attended to by AMI or GCCM at the marina.

54    Although the commissioning of Cadeau commenced on 7 February 2011, it took substantially longer than anticipated. Some of the delay was probably caused by disputes as to the nature of the work to be done. Mr Wyzenbeek asserted that various matters with respect to the vessel were defects which required rectification, whereas Ryan and Dean alleged that they were modifications and were outside the contractual terms. It does not matter for the purposes of the action where the truth in that lies. However, there is no doubt that the vessel did contain some defects and, in particular, the engines which were fitted to the vessel were not Caterpillar C-18, but were in fact “D” rated. On the other hand, it certainly appears Mr Wyzenbeek, being the canny businessman he was, sought to obtain benefits not within the scope of the contract at no additional cost.

Post-handover defects

55    Mr and Mrs Wyzenbeek took possession of Cadeau in late March or early April 2011. All contractual payments had been made as well as a further $231,460.21 paid in respect of additions and modifications.

56    On 15 April 2011, Mr and Mrs Wyzenbeek motored Cadeau from the Gold Coast City Marina to Hamilton Island. During that voyage, and in the subsequent weeks, a number of defects appeared and the respondents, or at least AMI, attended to most of the required repairs. It did so by sending marine engineers to Hamilton Island or Cairns where the vessel was located so that the necessary remedial work and alterations could be undertaken.

57    Between 21 July 2011 and 16 August 2011, Mr and Mrs Wyzenbeek motored Cadeau from Cairns to the Torres Strait and returned again. During the course of this voyage a number of further defects were noted by them including:

(a)    A significant amount of sea water was found to be leaking into the vessel. It had apparently entered through the port lights, bollards and deck fittings;

(b)    There was significant delamination and cracks in the anchor locker leading to leaking; and

(c)    The batteries were overcharging to the point of destruction.

From 16 to 22 August 2011, remedial work was undertaken on the vessel by Mr Bone and Mr Furnance of AMI and by a Mr White from Wright Marine in Cairns. However, further leaking of seawater through the port lights, stanchions and fair leads occurred. Mr Wyzenbeek asserted that, at around this time, other defects in the vessel became apparent. On 8 September 2011, he caused Cadeau to be motored to the Gold Coast City Marina for further repairs to be carried out and some work was done between 8 and 22 September 2011, although not all of the identified defects were rectified.

58    Cadeau was motored to New Caledonia and back in the period from 22 September 2011 to 25 October 2011. On its return it was taken to GCCM for further repairs, which Mr Wyzenbeek claimed ought to be undertaken pursuant to the warranty obligations.

59    Over the following months Mr Wyzenbeek undertook a number of voyages and Cadeau was used for a not insignificant period of time. However, all of his sailing was not without concern and he frequently identified various issues with Cadeau, which he claimed ought to be repaired pursuant to the various warranties provided.

60    From the evidence adduced on this issue it can be said that, for some period after Cadeau’s acquisition, a number of defects in or issues with the vessel came to light. For its part, AMI or the companies associated with it, attended to the repairs or rectifications where it considered the defect or matter was covered by the warranties. Some of these issues, particularly those relating to the leaking port lights, were not insignificant. On the other hand, a number of the issues were properly recognised as “teething problems” which necessarily arise in the initial voyages of new vessels of this type.

Realisation by Dean and Ryan that the vessel was not suitable for trans-ocean crossing

61    Around this time, being approximately September 2011, there were a large number of warranty claims on foot with respect to Cadeau. Mr Wyzenbeek had also been making constant complaints about excessive leaking. This led to a series of emails between Dean and Mr Chen of Hampton Yachts. Ryan and a number of other Gold Coast City Marina and AMI staff were copied into this correspondence. The discussion touched upon the question of the appropriate rating of Cadeau and the standard to which she had been built. This issue arose in the context of the adequacy of the port lights on the vessel (being portholes on the hull of the vessel covered by glass in-set fittings). At the time, similar problems had occurred on another Hampton 750 yacht sold to a Mr Robert Tucker. That yacht is described as being the Hampton 750#8. In the correspondence, Dean opined that the port light fittings used in the construction of the Hampton 750s were inadequate and higher grade ones with “through-bolting” ought to have been used and should be used on any future vessels.

62    By an email of 19 September 2011, from Dean to Mr Chen (copied to Ryan and others) Dean said, amongst other things:

In short the existing PORTLIGHTS are not working… I expect that Hampton will “FIX THE PROBLEM”, your inference that “Norbert is using the vessel in extreme circumstances” is not the case. We sell every Endurance as being capable of “trans ocean crossings”. You market the boats on the Hampton website as “US Coast Guard Offshore Rating 1 vessel” & they are obviously falling short in this case. I’d ask that Hamptons stand by the product & uses the appropriate equipment.

Dean went on to identify why, in his opinion, the port lights used on Cadeau and other Hampton vessels were inadequate. He sought Hampton’s assurance that the issue was a warranty matter for which Hampton would pay.

63    By an email of 20 September 2011 from Mr Chen to Dean (and copied to Ryan and others), Mr Chen responded to Dean’s comments. He agreed that the port lights on Cadeau would be changed at Hampton’s cost. Importantly, in his email he also stated:

We want to clarify that we never advertise the Endurance to be Capable of “Trans Ocean Crossing”. In order to be Trans Ocean Crossing vessel, the vessel need to be Class Certified to R1 or R0. This is a total difference design criteria and construction method. We want to emphasis that we advertise the Endurance to be a Long Range Cruiser, and we should not mis-lead the customer.

(Grammatical errors in original).

Mr Chen also stated that there was no such criteria as US Coastguard Offshore Rating 1 and he did not know what it meant.

64    By an email on 20 September 2011, Dean wrote back to Mr Chen (copied to a range of people including Ryan) in which he said:

What is required to get your vessels built to CE STANDARD, we must provide products at CE Standard or ISO from herein. This European CE standard is recognized here in australia and we are being met with more strict rulings daily. Please comment.

65    It should be emphasised the email of 20 September 2011 from Mr Chen was admitted only for the fact that it was sent and received and it stated the matters in it. The tender of the email as evidence to prove the truth of its contents was objected to and that objection was upheld. The applicants did not seek its admission as any form of business record. In any event, Ryan was cross-examined on the document and said that he believed the contents of the email were true; namely, the Endurance vessels were not suitable for trans-ocean crossing. In this respect, he had been put forward by the respondents as extremely knowledgeable about boats of this nature and no objection was taken to his evidence about the correctness of Mr Chen’s statements. That renders the contents of the email evidence on which the Court can rely even though the inappropriateness of the vessel for ocean going use was established in other ways.

66    Whilst the email from Dean asserted every Endurance vessel had been marketed as capable of trans-ocean crossing, there is no suggestion the manufacturer’s contrary opinion was passed on to those to whom that statement had been made and who had acquired a vessel from the Endurance range. This new fact was not mentioned to Mr Wyzenbeek until the Port Macquarie incident, which occurred approximately a year later.

Port Macquarie incident

67    A matter which seemed to engage the parties in the production of a substantial amount of evidence was an incident that occurred whilst Cadeau was being motored across the bar at Port Macquarie in New South Wales. Although this topic assumed importance in the evidence in chief, very little cross examination occurred with respect to it and, at the end of the day, it is not a significant issue, which explains the absence of any emphasis on it in oral or written submissions.

68    On 21 October 2012, Mr and Mrs Wyzenbeek sailed Cadeau across the Port Macquarie bar and into the Hastings River. They remained at Port Macquarie for the following two days because conditions were not favourable for further travel to the south.

69    On 24 October 2012, in the early morning, Mr Wyzenbeek considered the weather conditions had calmed significantly and the sea was flat and calm with virtually no wind. He gave evidence he timed his crossing of the bar to occur at around 6 o’clock in the morning, shortly before sunrise. He says he followed the same route out of the bar that he had taken on his entry two days previously. Whilst crossing the bar Mr Wyzenbeek noted two waves came over Cadeau’s bow although they did not slow its speed. He said he had observed that on the bar there was a single line of occasional waves of approximately 1.6 metres and whist traversing the bar no spray from the waves coming over the bow blew onto the Skylounge windows. However, shortly after passing the bar Mrs Wyzenbeek heard water “sloshing around” below the Skylounge and fairly soon thereafter Cadeau lost electrical power. On investigation Mrs Wyzenbeek discovered a large amount of sea water and glass in the galley, dining room and saloon which had washed down into the lower areas of the vessel, including the engine room and sleeping quarters. She also saw that one of the fore windows of the galley had smashed and there were shards of glass of various sizes in the cabin. In addition, two doors (referred to as Portuguese Doors), which had been positioned on the forward deck of Cadeau, were found to have broken lose and were located to the aft of Cadeau.

70    Mr Wyzenbeek used Cadeau’s communication systems to seek assistance and after some discussion with Ryan and some other persons as to who might undertake repairs, Cadeau was motored back to the Gold Coast City Marina arriving at 2.30am on 25 October 2012.

71    At the marina, on 25 October 2012, Mr Wyzenbeek spoke to Dean and expressed his concern about the sufficiency of the glass in the vessel and, in particular, that it was not toughened glass. He also expressed his concern as to the adequacy of the Portuguese doors. He said to Dean that given these things and other defects in the boat, he was not confident it was suitable for trans-oceanic journeys. He says he was “absolutely flummoxed” when Dean said to him that the vessel was never designed for trans-oceanic voyaging. Although Dean’s evidence was that he did not say this, as appears later in these reasons, I do not accept that his recollection is correct. By this time he had been advised by Hampton Yachts that vessels in the Endurance Range were not suitable for crossing oceans. There is little reason to think he would not have said so when the issue arose.

72    Much occurred on and around Cadeau on 25 October 2012 including a consideration by various persons of the damage it had sustained. The next day Mr Wyzenbeek wrote to Ryan, Dean and Patrick Gay about his concerns in relation to the vessel. He expressed his surprise that the vessel was not designed to cross oceans. He said:

During discussions with Dean yesterday morning, he surprisingly said to me that Cadeau is not designed to cross oceans. You were both fully aware that crossing oceans was always our intentions. We relied in our purchase decision on yours and Hampton’s correspondence, marketing, brochures, specifications, websites and ‘YouTube’ clip http://www.youtube.com/watch?v=V4hAzqli4S4 etc states that the Hampton Endurance is an extended passage maker for open ocean service, built to exacting specifications with the finest attention to detail, creating a new benchmark that others can only attempt to emulate. We were advised that a team of designers, engineers, naval architects, and experienced craftsmen pour dedication and passion into every last detail. A passion to make our cruising a memorable and enjoyable experience. Please refer to the email below, the attachment above and also your emails dated 28th October, 2nd December 2009; and there are other emails that I have received from you regarding Hampton Endurance ocean sustainability, quality and engineering excellence.

Subsequently in the email Mr Wyzenbeek stated he expected the vessel to meet A1 offshore ratings in all respects, including in relation to the glass. He also said the Portuguese bridge doors were inadequate for their purpose of deflecting sea water.

73    A few days later Mr Wyzenbeek sent an email to the designer of the boat, Howard Apollonio, in which he also expressed his concern that the vessel was not suitable for open ocean service. He also said the Australian dealer sold Cadeau to him with the knowledge he would be using it for crossing oceans and perhaps circumnavigation of the globe.

74    Although there was subsequent communication from Dean to Mr Wyzenbeek, it is not irrelevant that Dean did not deny the content of Mr Wyzenbeek’s email and, in particular, that Mr Wyzenbeek had acquired the boat on the understanding that it was suitable for crossing oceans. In the light of the evidence set out above that is not surprising. On the other hand, Dean’s evidence that he did not say to Mr Wyzenbeek the day after the incident that the vessel was not suited to trans-ocean voyaging was dissembling.

Repairs made to Cadeau

75    Subsequent to the Port Macquarie incident the glass in the vessel was replaced and the Portuguese doors were repaired and improved. It is apparent some, if not all, of this rectification work was paid for by Mr Wyzenbeek’s marine insurer.

76    Thereafter, much disputation continued to occur in relation to various defects Mr Wyzenbeek claimed existed. Mr Wyzenbeek wished to have those defects remediated by AMI and/or GCCM. Subsequently, significant work to Cadeau was required to ensure it satisfied Australian standards. That work was necessary to enable Mr Wyzenbeek to obtain appropriate insurance.

77    Mr Wyzenbeek also claimed that, from March 2014 onwards, additional repair and rectification work was required, in this action he makes claims in respect of many of those items. In his witness statement he identified (at [169]) 725 days in the period from June 2011 to November 2016 during which, he says, he was unable to use Cadeau as a result of it being laid up for repair or rectification works. As will be discussed later in these reasons, when the vessel was not laid up for repair, as Mr Wyzenbeek claims, he and his wife continued to use it for their boating activities.

The claims as formulated

78    The Statement of Claim in this matter underwent a variety of amendments (see Wyzenbeek v Australasian Marine Imports Pty Ltd [2017] FCA 1460). Although initially the claims were broad and numerous, by the time the trial commenced in earnest they had been refined somewhat. The manner in which the case is now framed is as follows:

(a)    From about October 2009 AMI, GCCM, Dean or Ryan represented to the applicants (being Mr and Mrs Wyzenbeek and Eaglehat) that:

(i)    The vessels being offered for sale to the applicants were or would be suitable for trans-ocean crossing;

(ii)    The vessels being offered for sale to the applicants were or would be suitable for extended passage in open ocean service.

(b)    The representations were made orally or in correspondence and particulars have been provided as to the time and occasions on when they were made.

(c)    The applicants agreed to purchase an Endurance 750 Skylounge vessel manufactured by Hampton Yachts from AMI in reliance on the representations made to them.

(d)    A contract was subsequently entered into in reliance on the representations pursuant to which Eaglehat Pty Ltd agreed to purchase the vessel, however, Mr and Mrs Wyzenbeek were substituted as the purchasers in lieu of Eaglehat Pty Ltd in or around January 2011.

(e)    The price paid for the vessel was $3.95 million.

(f)    A term that Cadeau would be reasonably fit for crossing oceans, global circumnavigations and meeting the Wyzenbeeks’ specified requirements is allegedly implied pursuant to s 71(2) of the Trade Practices Act 1974 (Cth) (TPA).

(g)    In breach of that implied term, the vessel supplied by AMI and GCCM was not reasonably fit for the identified purposes.

(h)    AMI, GCCM, Dean and Ryan had made the representations referred to in trade or commerce and they were misleading or deceptive.

(i)    By reason of the making of the misleading or deceptive comments AMI, GCCM, Dean and Ryan engaged in conduct in contravention of s 52 of the TPA, s 38 of the Fair Trading Act 1987 (Cth) (FTA) and s 18 of the Australian Consumer Law (ACL).

(j)    By reason of the breach of the implied warranty of fitness for purpose, the applicants suffered loss and damage including:

(i)    Costs of repairing defects;

(ii)    Costs of and incidental to repairing and rectifying the vessel;

(iii)    Costs of rendering the vessel closer to fitness for the purpose for which it was purchased;

(iv)    Diminution in value of the vessel being the difference between the cost of the vessel and its present value;

(v)    Loss of use; and

(vi)    Other damages.

(k)    That the damages identified were also suffered as a result of the misleading or deceptive conduct engaged in by AMI, GCCM, Dean or Ryan.

79    Claims are also made in the Statement of Claim against certain insurers concerning their obligation to indemnify the directors of GCCM and AMI. It is not necessary at this stage to consider those claims because the parties agreed that a consideration of those issues will follow from the decision in relation to the liability of the first four respondents.

80    Despite the existence of the contractual claims in the Statement of Claim, little attention was focussed upon them in either the written or oral submissions. The reason appears to be the vendor of the vessel was AMI (as I find below), which is now in liquidation and it may be the parties believe that any liability for breach of contract is not covered by any policies of insurance. There is no need to speculate on why the claim was only faintly advanced.

The claim for misleading or deceptive conduct

81    An important aspect of the misleading or deceptive conduct claim concerns the attribution of liability to the corporate entities for statements made by Ryan and Dean. It is apparent the applicants wish to sheet home liability to GCCM because they are unlikely to obtain satisfaction from AMI. Conversely, the respondents appear somewhat content to allow AMI to be found liable for breach of contract and the resulting damage because it has no assets.

82    It does not seem to be in doubt that, at all material times, Ryan was the shipyard manager employed by GCCM. Dean was a director of that company and was also the principal dealer of Leigh-Smith Cruiser Sales. Leigh-Smith Cruiser Sales was the name under which AMI carried on business. The applicants assert that, in fact, the businesses of importing and selling vessels and of operating the marina were undertaken by AMI and of GCCM together without any real distinction. They submit that it follows any representation made by Ryan or Dean, either orally or in writing, was attributable to GCCM as well as AMI. Although there is substantial force in the applicants’ submission in this respect, it is not necessary to reach any final conclusion on that point. It would be sufficient for the applicants’ purposes if Ryan had authority from GCCM to make representations on its behalf. This issue is discussed below.

Were the representations made?

83    The applicants advanced their case in this respect on two bases. First, that express representations were made to the effect alleged and, second, that the representations arose over the whole of the conduct particularised.

The foundation of the discussions between the applicants and the respondents

84    Although disputed by the respondents, the foundation upon which the applicants, primarily, Mr Wyzenbeek, and the respondents, primarily, Dean and Ryan, negotiated was that the vessel Mr Wyzenbeek wished to acquire would be capable of trans-ocean crossings, or extended ocean voyaging. Ultimately, both Dean and Ryan accepted they were aware that these were the purposes for which Mr and Mrs Wyzenbeek wished to use any motor launch they acquired. Despite the fact that, in the course of his oral evidence, Mr Wyzenbeek was at pains to advance his case in this respect at every opportunity and, to that extent, he was somewhat dissembling, I nevertheless find he did inform Dean and Ryan that the purposes for which he wished to use any vessel acquired from them was for trans-ocean travel or extended ocean voyaging, including global circumnavigation. As the facts which are set out above reveal, this was the foundation of the Wyzenbeeks’ desire to obtain a replacement for Swanky which, itself, was a Category A vessel. It can be readily accepted that Mr Wyzenbeek indicated his desire to continue his circumnavigation of the world, being a venture which he had commenced in 1999. His advice to Ryan and Dean in this respect was buttressed by the specifications which he required for the vessel. Of significance was the requirement for the inclusion of long range fuel tanks and long running engines. Whilst it is true long range travel does not necessarily mean trans-ocean travel, it is undoubtedly true that such equipment is essential for trans-ocean travel. Moreover, in September 2009, when Mr Wyzenbeek first became serious about replacing Swanky, he sent to Dean his list of specifications. Those specifications specifically referred to an “open ocean Category A trawler”. The reference to Category A was a reference to an oceangoing vessel within the meaning of a “Category A vessel” as described in the CE Directive and a fairly clear indication of the type of vessel Mr Wyzenbeek was pursuing. Despite that, it must be acknowledged the reference to this requirement was not always clearly maintained although its occasional absence was not something noticed by Ryan or Dean.

85    In 2010, neither Dean nor Ryan understood the meaning of the classification “Category A” when used to describe vessels. That was somewhat startling given they were both involved in the sale of large ocean going vessels. The evidence adduced in this matter indicates neither of them had any reasonable level of knowledge of the requirements for ocean going vessels despite the fact that they purported to sell vessels as such. They either feigned knowledge of such matters or, ignorantly, believed they had sufficient knowledge and were prepared to give their imprimatur to the ocean going attributes of the Hampton range of vessels. In these circumstances, it is not surprising they made the representations they did.

Representations made by Dean

86    In the course of his evidence, Dean acknowledged he understood Mr Wyzenbeek was in the market for a vessel to replace Swanky that would be fit for use in the open ocean and for crossing oceans. There was no evidence, and nor was it suggested, Dean indicated to Mr Wyzenbeek that the vessels he was offering for sale were not capable of ocean going passage. On the contrary, the identified communications show he indicated that any of the vessels in the Hampton range which he was proffering would be suitable for Mr Wyzenbeek’s needs. The attempt by the respondents to suggest no specific representation was made about the Endurance 750 was, in the circumstances, somewhat disingenuous.

87    Mr Wyzenbeek gave evidence that, on or around 15 October 2009, he spoke to Dean by telephone about the list of specifications he had provided. His evidence was Dean said words to the effect that he had received the specifications and could make a vessel to suit Mr Wyzenbeek’s purposes which would be suitable for trans-ocean crossings. Dean did not recall such a conversation. Despite that, I accept it occurred as Mr Wyzenbeek related it although, of itself, it does not have significant weight given the stage of discussions and the generality of comment made. Nevertheless, it established the context in which future discussions took place. Shortly afterwards, by the email of 15 October 2009, Dean gave his imprimatur to the quality of the Hampton vessels. His comment in that email about working with his engineers on the vessel to ensure that “every boat is 100% right prior to departing the factory”, represented both a deep involvement in the construction of the vessel and a claim by him that it would be suitable to the customer’s requirements. That was emphasised by his comments extolling the high quality and turnout of the Hampton vessels. This email demonstrated, from a very early stage, Dean was averring the veracity of the information being given to the Wyzenbeeks about the quality of the Hampton vessels. Indeed, to an extent he and the companies which he represented, were taking credit for the quality of the vessel produced. He was representing the information about Hampton yachts provided by him came with his endorsement. In the email of 15 October 2009, (which included a commentary about the Endurance Passagemaker Series from Mr Apollonio), various additional statements were made by Dean as to the capabilities of the Hampton Endurance Series. In particular, that they met very high standards of construction and stability and were capable of being used for extended passage making in open ocean service.

88    Similarly, in his email of 28 October 2009 at 2.38pm, Dean effectively endorsed the comments of Mr Apollonio as to the suitability of the Hampton range of vessels to meet the requirements of Mr and Mrs Wyzenbeek. Although to some extent he was here merely passing on Mr Apollonio’s comments, his assertion that those comments were “very positive & I hope highlight the ‘facts’ pertaining to handling of Endurance”, indicates his support for them. In his comments Mr Apollonio had said the Hampton vessels were “considered capable of handling anything that comes along in a long ocean voyage”.

89    The context in which these emails passed between Dean and the Wyzenbeeks included other emails which reveal Dean’s awareness of the Wyzenbeeks’ requirement that any vessel acquired be suitable for trans-ocean crossings. That is especially so of Ryan’s email to him on 16 November 2009, which identified that Mr Wyzenbeek wanted a vessel with an A1 offshore rating and long range fuel tanks to be delivered in Shanghai and, further, that the vessel was to be equipped with the major spares required for immediate ocean crossing. Dean passed the specification requirements on to Mr Chen and, in doing so, emphasised the A1 offshore rating.

90    By a further email on 25 November 2009 from Dean to Mr and Mrs Wyzenbeek, he indicated that the Endurance 750 (being 68ft extended by 7ft) was a vessel which accommodated all of the Wyzenbeeks’ requirements at that point. The substance of that email was a quotation for the sale of a vessel at $USD 2,475,000 which was said to be a discounted price. One reason for the discount was it would not be subject to GST and Australian duties because Mr and Mrs Wyzenbeek were intending take delivery ex-Shanghai, immediately engage in an ocean crossing, and then remain off shore for two years. This vessel was offered by Dean as being “the ideal option for your vessel & its (sic) requirements” and as being “ideally suited to your requirements” which Dean knew to be trans-ocean crossings and extended ocean voyages. This was apparent from the face of the email and was accepted by Dean during cross-examination. It was a further representation that the Endurance vessels (especially those of around 68ft) were suitable for trans-ocean crossings. That is consistent with Dean’s subsequent email to Mr Chen on 19 September 2011, which noted he sold “every Endurance as being capable of ‘trans ocean crossings’”. By the email of 25 November 2009, Dean did note that he was still awaiting confirmation of the A1 offshore rating to be supplied with the vessel. However, he also indicated that obtaining relevant guarantees would not be a major issue.

91    In response to the email of 25 November, the following day Mr Wyzenbeek sent to Dean what was said to be a list of questions but was, in fact, a list of vessel specifications. It seems they were taken from the Marlow Yachts website and were a vague indication that Mr Wyzenbeek wished those items to be included on the Endurance 750.

92    Dean responded with an email on 27 November 2009, attaching the specifications for the Endurance 750 and indicating that it appears that Mr Wyzenbeek wanted a cross-check of the two specification lists. Dean indicated that it was essential for him to arrange a meeting at GCCM with the Wyzenbeeks and his two engineers so that they could work through the specifications identified by Mr Wyzenbeek and identify which ones were relevant and capable of being fitted to an Endurance yacht.

93    On 1 December 2009 Dean sent an email to Mr Wyzenbeek which included a response from Mr Chen as to the A1 Offshore rating. Mr Chen’s response was of limited utility because it merely related to stability rather than the vessel generally. That said, it did not appear Dean understood this and apprehended the rating related to the whole of the vessel. In any event Dean reiterated his erstwhile offer to get the vessel ready for trans-ocean crossing. He said:

As for the remainder of the specifications you sent us last week I would still propose that we sit down with you & my two engineers to discuss the full vessel inventory from bow to stern & ensure we have the best equipment on the vessel taking into account the trans-ocean crossing you will be undertaking with it before entering back to Australian waters at which point we will finalise suitable importation paper for an Australian vessel in conjunction with our company.

That email is relied upon by the applicants as Dean reiterating and confirming the suitability of the vessel to engage in passage across oceans. It can be readily accepted that was, in fact, what Dean was doing.

94    It was not until after the Port Macquarie incident that Dean eventually acknowledged the vessel was not suitable for trans-ocean crossing. Prior to then he was a party to subsequent email correspondence between Ryan and the Wyzenbeeks in which the ocean going capacity of the vessel was discussed and he did not demur to any of the suggestions that the vessel was so suited. Indeed, comments he made after the vessel was sold to the Wyzenbeeks are consistent with having that opinion. He appeared on a television program referred to as “Creek to Coast” in which he expressed his confidence in the vessel purchased by the Wyzenbeeks and stated it was a trans-Atlantic vessel, capable of doing around-the-world cruising. Dean gave evidence that this statement was based upon knowledge he acquired prior to his communications with Mr Wyzenbeek and this heightens confidence in the conclusion he had made similar statements to Mr Wyzenbeek prior to the vessel being purchased. The statement is also indicative of Dean’s position that he, himself, could give his imprimatur to the quality of the vessel and he was not merely passing on information. Whilst under cross-examination he claimed there was some “salesmanship” in that statement, Counsel for the applicants submitted that there is no reason that such salesmanship would not have been engaged in with Mr Wyzenbeek and that ought to be accepted.

95    It might be observed that a degree of recklessness is involved in engaging in “salesmanship” when the topic being discussed is the ability of a vessel to engage in open ocean travel or travel across oceans. Any attempted “salesmanship”, which I take to be a euphemism for “overstatement” or making misleading statements, in relation to the seakeeping capacities of a vessel is fraught with danger. Sea conditions on the open ocean can change dramatically and quickly and a vessel which is not constructed to standards which permit it to withstand the most serious of conditions will flounder and put the lives of crew and passengers at peril. Such comments can apply equally to vessels intended to be used for coastal service only. The sea conditions of coastal waters can also change rapidly and significantly and any overstatement as to the seakeeping abilities of such vessels is likely to render users overconfident as to their capabilities in dangerous conditions.

96    As has been indicated, the conclusion that Dean made the representations to Mr Wyzenbeek that the Endurance range of vessels were capable of trans-ocean crossing is strongly supported by his email in September 2011 to Mr Chen of Hampton Yachts wherein he stated that, “We sell every Endurance as being capable of trans ocean crossings”. On its face, that comment is confirmatory of Mr Wyzenbeek’s allegation. Although Dean said in evidence that there was also some “salesmanship” in that statement and he was lying to Mr Chen so that he could secure a benefit for Mr Wyzenbeek, I do not accept his oral evidence in this regard. There is no reason to believe that he did not regard the vessel as being capable of trans-ocean crossing. Indeed, he had represented that to Mr Wyzenbeek on a number of occasions. He was an extremely poor witness who was prone to give dissembling answers.

97    The applicants also pointed to a number of other matters to support the conclusion that Dean made the representations alleged. Amongst them is that on 9 March 2011, Ryan sent an email to Mr Chen seeking builder’s certificates for two 750 Endurance vessels including Cadeau. He wanted them so that the vessels could travel internationally. That email was copied to Dean and there appears to have been no response from Dean to suggest that the vessels would not be suitable for engaging in international travel. In addition, in his evidence Dean acknowledged that he did tell Mr Wyzenbeek that the engines in the vessel would be commercially rated. That being so, they would run for much longer than pleasure craft engines and that was important for trans-ocean crossings.

98    Given the above, it is apparent that Dean made both oral and written representations to Mr Wyzenbeek to the effect that the Endurance 750 motor vessel he was to acquire was suitable for trans-ocean crossings or extended ocean voyaging. He did so for his own benefit in that he would personally obtain a share of the commission for the sale of the vessel. He also did so on behalf of AMI. As is discussed below, he also made the representations on behalf of GCCM.

Representations by Ryan

99    In the course of his cross-examination, Ryan acknowledged that, prior to the sale of the vessel, he had told Mr Wyzenbeek the Hampton range of vessels was suitable for crossing oceans. He also acknowledged that, from his point of view, this capability was a selling point for the Hampton Endurance range. He, like Dean, had no reasonable basis for making that statement and it was equally reckless of him to do so. Although in the defence the respondents denied Ryan made any of the alleged representations, it is clear he did. The reason for those denials when the converse was so readily admitted by Ryan has not been explained.

100    From an early stage Ryan sought to be involved in the attempt to sell an Endurance vessel to Mr Wyzenbeek. His involvement in any sale would secure payment to him of some portion of the commission. He provided Mr Wyzenbeek with the Hampton Yacht’s brochure, to which he had stapled his GCCM business card and it identified him as an employee of that company. Although the brochure made positive statements as to the seakeeping abilities of the Endurance range, it did not expressly assert they were capable of being used to cross oceans. The statements made in those brochures might equally be taken as asserting their ability or suitability to engage in coastal cruising. Nevertheless, the import of Ryan’s actions was that he sought to cause the sale of the vessel to Mr Wyzenbeek in his capacity as an employee of GCCM. Dean and, more generally, GCCM were aware of Ryan’s activities and permitted them to occur. It was an accepted part of Dean’s duties in the course of his employment with GCCM, to participate in attempting to sell boats as part of AMI’s business.

101    Ryan was well aware of the Wyzenbeeks’ requirement for a vessel suitable for trans-ocean travel. He was also aware of, and party to, much of the email correspondence between Dean and the Wyzenbeeks which promoted the seakeeping abilities of the Endurance range as being suitable for crossing oceans. He said nothing to dispel the suggestion that the vessels in the range would not be suitable for their requirements. He, like Dean, also promoted the supply to Mr Wyzenbeek of a vessel which was not merely one constructed by Hampton Yachts. By an email of 27 January 2010, he encouraged Mr Wyzenbeek to meet with himself and persons he said were his engineers to discuss and formulate a “package” which would be put together for the purposes of meeting Mr Wyzenbeek’s requirements. At that time he was aware that Mr Wyzenbeek needed the vessel with a range of around 3,000nm and that Mr Wyzenbeek wanted to use it for ocean voyaging including trans-ocean crossings. That is evidenced by his email to Mr Chen of 15 February 2010, in which he identified that whilst Mr Wyzenbeek had been looking at the Marlow range of vessels he, Ryan, had convinced him “to look at the Endurance range”. He added that Mr Wyzenbeek had provided some specifications for what he wanted from an Endurance vessel and added the rider that Mr Wyzenbeek needed a fully commissioned vessel ex-factory, to be delivered to him in Shanghai and immediately taken on a substantial ocean crossing. This email removes any doubt that Ryan was aware that the Wyzenbeeks were looking for a vessel suitable for crossing oceans and it is clear he dealt with them on that basis. That was confirmed by Ryan’s email on 17 February 2010, referred to above, wherein he indicated he was “serious about selling ocean going vessels”.

102    On 16 February 2010, Ryan sent Mr Wyzenbeek an email in relation to the specifications Mr Wyzenbeek had required for an Endurance 65. The email is telling for a number of reasons. First, it identifies an intention to utilise engineers for the purposes of identifying the suitability of proposed specifications. That tends to suggest that Ryan was doing more than merely acting as a broker of a vessel manufactured by Hampton. Secondly, he said, “Looks like a great learning curve for the yard”. The “yard” is apparently a reference to the ship yard which was run by GCCM and that indicates its involvement in the sale. Thirdly, Ryan expressed his excitement about supplying “in conjunction with Hampton yachts” a long range Endurance motor yacht to Mr Wyzenbeek. Again, the reference to, “in conjunction with”, puts GCCM in the nature of a position of a “principal” in the transaction rather than merely an intermediary at least in relation to making representations as to the vessel’s capabilities.

103    By March 2010, the discussions between Ryan and Mr Wyzenbeek had turned to the 75 foot vessel, the Endurance 750. Mr Wyzenbeek gave evidence Ryan said to him in about March 2010 that they could build such a boat to suit or to meet the specifications required by him and the vessel would be suitable for trans-ocean work. He also said that Ryan represented that the vessel would be fitted with commercial continuous C-18 engines. Although in his witness statement Ryan denied he had mentioned the continuous C-18 engines, he admitted under cross-examination he said the engines were commercial engines, which were the same thing. He also admitted, despite having initially denied it, that at about this time he did tell Mr Wyzenbeek that the Endurance 750 or vessels in the Hampton range would be suitable to cross oceans. Ryan accepted the ability of a vessel to cross an ocean was a selling point for vessels of this size and he did tell Mr Wyzenbeek that they were so suited. Ryan’s evasiveness in answering direct questions put to him in cross-examination about what he said to Mr Wyzenbeek damaged his credibility as did his initial denials of the allegations.

104    Mr Smith, a former employee of GCCM, related a subsequent discussion between Mr Wyzenbeek and Ryan at a boat show in May 2010. Mr Smith asserts that he heard Mr Wyzenbeek say to those present, including Ryan, that he wanted to use any vessel he acquired for trans-oceanic crossing. This conversation was admitted for the fact that it was said and not its truth. However, in the context that became irrelevant as Ryan ultimately accepted he was aware of the purpose to which Mr Wyzenbeek wished to put his vessel. From time to time Ryan gave to Mr Wyzenbeek various materials relating to the Hampton range and to the Hampton Endurance 750 and that material tended to support the suggestion the vessel was an ocean-going vessel even if not specifically stating that fact.

105    Mr Wyzenbeek claimed that on 9 September 2010, being shortly prior to the entering into of the contract to acquire Cadeau, Ryan said to him words to the effect the vessel he intended to sell to him was built virtually to Mr Wyzenbeek’s specification and in particular that it had a 3,000 nautical mile range, redundant systems and commercial continuous C18 engines. Although some aspects of this conversation were disputed, I accept the statements were made and Ryan, under cross-examination, accepted this was the effect of the conversation.

106    Again, the conclusion Ryan made the above representations to Mr Wyzenbeek is confirmed by the post-contract conduct. In particular, Ryan was copied in on Dean’s correspondence with Mr Chen in September 2015, which concerned defects with Cadeau and, in particular, the substantial leaking of water into the vessel through the port lights. Subsequently, on 17 August 2011, Ryan wrote to Mr Chen about this issue and in particular said:

We are marketing these vessels as (Endurance) offshore motoryacht’s.

The situation, putting costs aside for a moment is risking our entire reputation and image that we have put out to market.

Apart from anything else the email is significant because it is indicative of Ryan’s involvement in the sale of the vessel. It was completed with Ryan’s extensive signature block, which emphasised his association with Gold Coast City Marina.

107    As mentioned previously, in September 2011 Dean wrote to Mr Chen (copied to Ryan) identifying that they were marketing “every” Endurance vessel as capable of trans-ocean crossings. It did not appear that Ryan demurred to that comment.

108    Although it was denied by the respondents for the whole of these proceedings, it is patently clear that Ryan made representations to Mr Wyzenbeek that the Endurance range of vessels, including the Endurance 750, were suitable for trans-ocean crossing and, necessarily, that they were also suitable for extended ocean voyages. The representations made were not merely that the vessel might be able to be used for crossing oceans given the right weather conditions. Ryan represented that the vessels were suited to the needs of Mr and Mrs Wyzenbeek and suitable for crossing oceans. His representations were both oral and in writing. In the latter respect they were made in the emails identified.

109    The capacity in which Ryan made the representations is discussed further below. For present purposes it can be accepted that Ryan’s made the oral and written (by email) representations on his own behalf because, on his own evidence, he was attempting to effect a sale of the vessel to Mr Wyzenbeek from which he personally would obtain a commission.

The representations were made for and on behalf of AMI

110    Dean was an employee of AMI and, as such, he was authorised and, indeed, it was part of his role, to persuade potential customers to purchase vessels which would be sold via a contract with AMI. It follows he made the representations on its behalf. Although not formally, an employee of AMI, Ryan also had a role in securing the sale of vessels through AMI. This was known to and encouraged by Dean, who was a director of AMI as well as a director of GCCM and, to that extent, Ryan was authorised by AMI to make the representations. To that extent the representations Ryan made were also made on its behalf.

The representations were made for and on behalf of GCCM

111    The applicants assert the representations were made by GCCM as well. Throughout the relevant period, being between 2009 and 2011, Dean was a director of GCCM and all of his correspondence identified him as acting in that capacity. In particular, his email signature block emphasised his association with Gold Coast City Marina. Immediately under his name appeared the words “Director – Gold Coast City Marina”. Whilst his identification as a dealer for Leigh-Smith Cruiser Sales was also mentioned, the webpage address of Gold Coast City Marina, www.gccm.com.au, was shown immediately under that latter reference. The domain name of his email address, “@gccm.com.au”, was also indicative of his connection with GCCM. The web address of GCCM appeared twice on the signature block and the name Gold Coast City Marina and Shipyard appeared prominently in stylised writing. The necessary conclusion of this is that, when Dean sent his emails with this signature block, he was sending them on behalf of GCCM. As a director, Dean had authority to act on behalf of the company by holding himself out as a director and sending the emails in that capacity. The use of the signature block by Dean continued throughout the period during which he dealt with Mr Wyzenbeek and, at the very least, the company must have acquiesced in its use. It is also relevant that the notice at the very end of the emails included a purported disclaimer which appeared to be on behalf of both Gold Coast City Marina and AMI. The fact that it refers to both entities, supports the conclusion that the businesses were run as a single entity. At the very least, when making the representations, Dean acted on behalf of and with the authority of GCCM.

112    Ryan’s email signature block was of a substantially similar nature. Although it also included a statement that he was a dealer at Leigh-Smith Cruiser Sales, the predominant references in it were to Gold Coast City Marina. At the times relevant to this action Ryan had no formal position at or with AMI/Leigh-Smith Cruiser Sales and was only, apparently, ever an employee of GCCM. However, if consideration was limited to his emails, it would be apparent that he was acting on behalf of both GCCM and AMI. It is apparent that GCCM permitted him to utilise his GCCM email address and signature block in the way he did and it was acknowledged that GCCM permitted him to engage in the sale of motor vessels. The fact that he annexed his GCCM business card to Endurance Yacht’s brochures and gave them to Mr Wyzenbeek is indicative of this. There was no evidence before the Court that, in engaging in the selling of yachts, Ryan was acting beyond the scope of his authority from GCCM. That, of course, is not surprising given the interconnectedness of GCCM’s and AMI’s businesses and that Dean, a director of GCCM, was aware of Ryan’s conduct. As mentioned, in his email of 20 July 2010 to Mr Wyzenbeek, Ryan’s signature block identified him as a Director of GCCM. It is not apparent that he formally held such a position, however, that he held himself out as one is indicative of the general authority he exercised on its behalf.

113    The evidence shows both companies held out the physical location of the Gold Coast City Marina premises as a place where vessels could be purchased, berthed and serviced such that the businesses of the various corporate entities were operated as one. The applicants specifically rely upon the fact that, when Dean was attempting to encourage Mr Wyzenbeek to acquire a Hampton vessel, he offered two free nights at a berth at the GCCM marina. This indicates the directors of the two companies, in fact, operated the businesses as one. That was supported by Ryan and Dean’s evidence that, in the course of their respective employment, they would assist each other in the work they were doing. The integration of the businesses is also somewhat apparent by the physical proximity of the businesses, each of which were located at the same business address. In this context it is not insignificant that, whilst Ryan was engaged in his activities of selling the yacht to Mr Wyzenbeek, he used his office which was in the business premises of GCCM. It was there, on around 9 October 2010, where the final details and terms of the agreement were negotiated and the contract was signed. On that occasion Mr Wyzenbeek noticed AMI’s name on the sales contract and was told by Ryan that this was the selling and importing arm of GCCM. Although Ryan denied this was said, the description is consistent with the evidence, including that of Mr Smith on this topic, and with the manner in which the businesses operated. Mr Wyzenbeek’s evidence on this ought to be accepted.

114    It is also not irrelevant that two former employees of GCCM and AMI, Mr Smith and Mr Furnance, gave evidence that there was no clear demarcation in the operation of the businesses of the two companies. They gave evidence that employees of one business would be used in the activities of the other business and the employee uniforms were interchangeable. They also identified that the administrative facilities of each business were intertwined. Mr Smith, a former employee and broker of Leigh-Smith Cruiser Sales, gave evidence that he was told to stress to potential customers that GCCM stood behind Leigh-Smith Cruiser Sales and AMI. Although it was suggested that Mr Smith was an unreliable witness, I did not find him to be such. His observations were supported by his actions and, in particular, by his email of 17 July 2011, where he referred to AMI as being “a division” of GCCM. His evidence was also consistent with the evidence referred to above.

115    Mr Smith gave further evidence that he was uncertain as to which businesses were owned by which company and, indeed, he apprehended Leigh-Smith Cruiser Sales was actually owned by GCCM. This too is consistent with the above evidence regarding the interconnectedness of the two businesses.

116    At every opportunity during their evidence both Dean and Ryan sought to advance the argument that AMI and GCCM were separate entities and were operated separately. For the reasons identified, that evidence is not consistent with the objective observable facts. Additionally, given their lack of creditworthiness, it is not possible to accept their evidence unless there is independent corroboration of the same.

117    The evidence established overwhelmingly that GCCM and AMI ran both businesses together and the effectively operated as one. Even though their accounts were maintained separately, it is apparent the employees of each business acted for and on behalf of both of the companies in what they did and said. This was particularly so in relation to the sale of vessels.

118    It should be accepted that in making the representations in the course of attempting to sell an Endurance yacht to Mr Wyzenbeek, both Ryan and Dean were engaged in conduct in the course of their employment or roles with, inter alia, GCCM and they acted with its authority. Their conduct was not unconnected with their employment or positions: Deatons Pty Ltd v Flew (1949) 79 CLR 370. Indeed, it is difficult to reach any conclusion other than that the representations were made in the course of their employment or office with GCCM and they were connected with that employment or office. In the case of Ryan, his employment provided both the opportunity for engaging in the conduct with the approval of his employer and indeed provided the occasion for it: Prince Alfred College Inc v ADC (2016) 258 CLR 134 at 156 [68], 159 [80].

Ryan and Dean did not act as intermediaries

119    The respondents suggested, albeit somewhat hopefully, Ryan and Dean merely passed on to the Wyzenbeeks information they had received from Hampton as to the attributes of the Endurance range of yachts. They sought to assert they were merely and obviously a conduit for the provision of information such that their actions fall within the scope of the principles referred to in Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592. As the recitation of evidence above discloses that submission is not even remotely sustainable. Not only did Dean and Ryan (on behalf of GCCM and AMI) give their imprimatur to the information provided, they advanced it as being relative to their own roles in the supply of the vessel. From the beginning it was represented to the Wyzenbeeks that the respondents were intimately involved in the production of Hampton vessels for their customers. On a number of occasions the Wyzenbeeks were offered the opportunity to meet with the engineers to discuss the specifications required for a long range, oceangoing vessel suitable to their needs. Further, the representations were often made orally without any caveat that what was being said was merely what had been said by Hamptons. At no time was anything said by Ryan or Dean to suggest that all they were doing was passing on information obtained from another source or disclaiming its accuracy. By their conduct Ryan and Dean gave the information as their own. The opinions expressed were expressed as their own opinions rather than those of a third party, or as the mere adoption of someone else’s. Additionally, to the extent to which the claim against them arises under the TPA, the representations were made over the telephone or by email as indicated and, therefore, prima facie, were within the extended operation scope of that Act.

120    It should be observed that the relevant representations concerning the ability of the Hampton range of vessels to cross oceans or to engage in extended ocean voyages were not representations made by Hampton Yachts in the first place. Indeed, the contrary is true. Hampton Yachts did not suggest their vessels had those capabilities and informed Ryan and Dean that they were not so suited. Rather than pass on that representation, Ryan and Dean kept that to themselves.

Representations as to a future matter

121    On one view, the substance and effect of the representations made by Ryan, Dean and through them, GCCM and AMI, was that the vessel or type of vessel being proffered for sale, the Endurance 750, was suitable for trans-ocean crossing and, necessarily, for extended passage making in open ocean voyages. On that basis those representations were as to an existing matter.

122    Equally, the representations could be taken as being that the vessel, which would be provided under a contract of sale for an Endurance 750 motor vessel, would be suitable for the Wyzenbeeks’ needs were they to take it on a trans-ocean crossing or on extended ocean voyaging. Such representations would be as to a future matter.

123    The applicants assert that the representations made were as to a future matter or future matters on the basis that, at the time the representations were made, the vessel was still under construction. That being the case, so the argument goes, as Cadeau was a partially bespoke vessel and not completely constructed, the representations must necessarily have been that the vessel, when constructed and finished, would be suitable for trans-ocean crossings or extended passage in the open ocean.

124    The applicants rely upon a similar factual situation in Barclay v English [2009] QSC 258. That case concerned alleged representations made as to the capabilities of a boat which to be constructed pursuant to a “design and build” contract. The representations were found to be misleading or deceptive. A Lyons J held that, when they were made, the representations related to the future likely performance of the vessel once it had been completed and were, therefore, representations as to a future matter.

125    In the present case a not dissimilar approach is valid. Here, the representations were, in substance, that Hampton Yachts would construct a vessel to meet the Wyzenbeeks’ specifications and, once complete, it would be suitable for open ocean voyaging or trans-ocean crossings. Indeed, on a number of occasions Dean and Ryan invited Mr and Mrs Wyzenbeek to meet with their engineers to discuss specifications such that the vessel when complete would meet their requirements. That being so, the representations that the vessel when complete would be suitable for open ocean voyaging or trans-ocean crossings were representations as to a future matter.

126    It can be acknowledged there exists an argument that the substance of the representation was merely that the Endurance range of vessels were manufactured to standards which rendered them suitable for open ocean voyaging or trans-ocean crossings. So construed, that would amount to a representation that the integrity of the design, structure and build of the vessels and of the equipment on them were of such a standard that rendered them suitable for the identified uses. However, the representations were made in relation to a vessel which was to be constructed in accordance with agreed specifications which were said to render it suitable for the identified purposes. That being so the representations were as to future matters rather than as to a particular existing state of affairs.

127    As appears from the following discussion, the difference between a representation of fact or of a future matter, being the reverse onus, is not important in this case as there is ample evidence that the Endurance 750 vessel was not suitable for crossing oceans or extended ocean voyaging. In this respect it is relevant the respondents held out Ryan has having substantial knowledge and expertise in relation to vessels of this type and he agreed that the vessel was not suitable for that use. That view was supported by expert opinion.

Whether there were reasonable grounds for the representations

128    On the assumption the representations were as to future matters, whether a person has reasonable grounds for making them is a question of fact to be determined as at the date those representations were made: Lyndel Nominees v Mobil Oil Australia Ltd (1997) 37 IPR 599. Further, what is sufficient to amount to “reasonable grounds” will depend upon the nature of the representation. Here, the representations were as to the seakeeping abilities of the vessel in the open ocean. Particularly, they were as to the ability of the vessel to be used for trans-ocean crossing. Representations about such matters to prospective purchasers ought not to be made lightly. If they are inaccurate but are relied upon by the use of the vessel in the open ocean, the result may well be that human lives are imperilled. The present case is a good example. Here, the representation that the vessel would, when completed, be suitable for crossing oceans was erroneous. If Mr and Mrs Wyzenbeek had taken the vessel into the open ocean and encountered significant sea conditions their lives and safety would have been put at great risk. It is no answer to say that the vessel was used to traverse ocean seas on its way to Noumea and no harm was suffered. Had the vessel encountered severe weather the result would have been the Wyzenbeeks would have found themselves on the high seas battling the elements in a vessel unsuited to the task. It follows, where a future representation pertains to the safety of human lives, the amount and veracity of information held by the representor before it can be said they had “reasonable grounds” for making the representation is likely to be greater than if the representation related to something more mundane.

129    Moreover, to represent that a vessel is suitable for trans-ocean crossing or extended ocean voyaging is to make a significant statement. It is conclusory of the quality of a number of the vessel’s characteristics, including the structural integrity of the hull and superstructure, its watertightness, its seahandling capabilities and of the plant and equipment on board. The representation encompasses an implied qualitative assessment that each such characteristic meets a standard which renders the vessel capable of being used in any condition which might be encountered on a long ocean voyage; namely, any conditions short of extraordinary. As appears from Mr Dovell’s evidence, such statements can be made if the vessel conforms to the requirements of an internationally recognised standard for ocean going vessel construction. Those standards have been developed over many years and the approved procedures pertaining to the mentioned characteristics have been rigorously tested. The complexity of such a standard can be seen from the discussion which appears later in these reasons. However, for present purposes it only need be observed that a representation that a vessel is suitable for trans-ocean crossing or extended ocean voyaging is tantamount to a representation that, in all respects, the vessel has been constructed to a quality equal to or better than that approved by the standard. It is pellucid that anyone making such a statement would need to be well informed of many aspects of the vessel’s construction before it can be said that they had a reasonable basis for its making.

130    In this matter there were ample sources of information easily available to Ryan and Dean in relation to the seakeeping capabilities of the Endurance range of yachts. In particular, there were a number of international standards which provided yardsticks by which vessels intended for open ocean use and trans-ocean crossings might be measured. The CE Directive is one of these. Despite that, it is apparent neither Ryan nor Dean made any attempt to ascertain whether the Endurance range of vessels complied with any of those standards prior to making the representations. Moreover, knowledge of the standard to which the Endurance range of yachts was built and whether they were suitable for being used to cross oceans could easily have been obtained from Hampton Yachts. It can reasonably be expected the manufacturer would have firsthand knowledge of the standards to which the Endurance range were built and whether they met the criteria in recognised construction standards for ocean going vessels. Had either Ryan or Dean bothered to ask Hampton Yachts or Mr Chen, in particular, it is presumed that they would have received the same response Mr Chen gave on 20 September 2011, where he said the vessels were only suitable for off-shore cruising. He further said, “In order to be Trans Ocean Crossing vessel, the vessel need to be Class Certified to R1 or R0. This is a total difference design criteria and construction method”. That observation from Mr Chen is not novel, as the expert evidence discussed below demonstrates. There is a substantial difference between off shore voyaging where safe harbours are nearby and crossing oceans where a vessel is required to be self-sufficient at all times. That remains true even though vessels cruising in off-shore conditions can encounter substantial seas.

131    There was ready information available to Ryan and Dean, had they bothered to look for it, which would have indicated that the vessel was not suitable for open ocean use or, at least, would have indicated that it could not be said that the vessel was so suited. In the absence of their having sought any of the identified sources of information, it is difficult to conclude they had reasonable grounds for making the representations they did.

132    As it was, Ryan and Dean merely relied upon their own beliefs as to the capabilities of the vessel which they had formed over time, albeit inferentially, from the various matters which are identified in their defences. Necessarily, because they did not seek to ascertain what the seakeeping capabilities of the vessel actually were, the materials relied upon only provide, at best, an indirect indication. However, the matters allegedly relied upon do not support the existence of any reasonable grounds for making the representations. In considering these matters it is apt to keep steadily in mind that neither Ryan nor Dean were qualified engineers, marine surveyors and nor were they naval architects. They did not have the necessary qualifications to form their own judgment of the quality of the construction or design of Hampton Yachts. Their experience in piloting and selling motor vessels over a number of years did not give them the necessary expertise to assess the many factors which must be considered in ascertaining whether a vessel is suited to crossing oceans. Neither is it relevant that there had been no complaints about the seakeeping qualities of another Endurance 750 sold prior to the contract with the Wyzenbeeks. It was not suggested that vessel had been used for trans-ocean crossings or had endured all the types of weather which might be encountered on such a voyage. Similarly, whilst the conducting of sea trials may show the vessel has good stability or handling, at least in the sea state in which the trials are conducted, that does not provide any confidence as to the structural integrity of the vessel and its ability to withstand the rigors of ocean voyaging. Even the fact that Ryan or Dean had operated some other vessels in the Endurance range in some significant seas is not sufficient for the purposes of assessing the ability of the vessel to be used for crossing oceans. That merely demonstrates that it was able to be used in those conditions at the time.

133    The applicants submitted the matters relied upon in the respondents’ defences as supporting the existence of reasonable grounds for the making of the representations do not have that effect. That submission should be accepted for the following reasons:

(a)    First, the absence of any complaints from the owners of other Hampton vessels and the condition in which such vessels remained after some years is beside the point. There was an absence of any evidence as to the uses to which those vessels had been put. Moreover, the evidence before the Court showed Ryan and Dean were aware of the existence of difficulties with those other vessels, in particular that they had significant leakage problems.

(b)    Secondly, the mere fact Ryan and Dean visited the Hampton Yacht’s factory in Shanghai was also of little or no moment. In the absence of any proper understanding as to the construction methods and integrity of the vessels, neither of them could gain any special insight as to the vessels’ sea keeping capabilities from such a visit. Whilst the internal fitout of the vessels was completed to a high standard, that is not greatly relevant to the suitability of the vessel for open ocean travel. Similarly, the mere fact Mr Smith, who appeared to have some knowledge of boat engineering, visited the Shanghai factory is also of little significance. It does not appear he had any involvement in or sufficient knowledge of the design of the vessels or the methods utilised for its construction.

(c)    Thirdly, the fact that Ryan and Dean were engaged in conducting sea trials on other Hampton vessels provides little foundation for the conclusion they had a reasonable basis for representing Cadeau was capable of trans-ocean travel. Very little information was provided as to the nature of the sea trials, the sea states in which they were conducted or any other such matter. It is necessary to keep in mind that the question is the suitability of the vessel for trans-ocean travel, which necessarily means its ability to withstand all but the most extreme conditions. Nothing in the sea trials in respect of which Ryan and Dean gave evidence suggested they encountered such conditions. It is worthy of comment that, although this matter was seriously advanced by the respondents as a foundation for the alleged reasonable belief in the capabilities of Cadeau, there was minimal evidence which rendered Ryan and Dean’s experiences relevant to the issues at hand.

(d)    Fourthly, the reliance by Dean and Ryan on information provided by Hampton Yachts and Mr Apollonio is not of great relevance. Generally, the information provided related to the design and shape of the hull and the stability of the vessel and it did not consider the build quality of the vessel or its capacity to withstand conditions in the open ocean. Additionally, they did not ask for the very information which would have provided them with a direct answer as to whether the vessel was suited to trans-ocean crossings. Had they done so, they would have been told the vessel was not so suited.

(e)    Fifthly, while some attempt was made by Ryan to have resort to the occurrence of “physical inspections” of the Hampton range of vessels as supplying a foundation for the reasonableness of his statements, he did not have any real knowledge of the nature and extent of the inspections or their results.

(f)    Sixthly, under cross-examination Ryan said words to the effect that he did not understand what the phrase “trans-oceanic voyaging” meant. If that were true, the making of a representation that the Endurance 750 was capable of trans-ocean crossings must necessarily be reckless in the extreme. In any event, in giving this answer he was completely disingenuous and attempting to promote his case. In the result this matter is not relevant to the conclusion there was an absence of reasonable grounds for the representations.

134    Even if the failure by Ryan and Dean to consider whether Endurance vessels were rated against any international standard as oceangoing vessels or to enquire from the manufacturer as to their suitability were put to one side, nothing advanced by the respondents can establish a reasonable basis for the representation as to the ocean crossing capabilities of the Endurance 750. The representation was, as Ryan and Dean both acknowledged, a selling point for them. It was obviously significant to any purchaser. Moreover, it was a matter which would greatly influence the use to which the vessel might be put. It would induce a purchaser to utilise the vessel in the open ocean for trans-oceanic voyaging. Any error in the representation would have the likelihood of exposing persons on the vessel to risk. Necessarily, something substantive would be required to establish reasonable grounds. Nothing advanced by the respondents, nor any of the matters taken together, are sufficient for that purpose.

135    The respondents paid very little attention to this issue in their written submissions and, given the above, that is probably not surprising.

136    It follows that to the extent to which the representation was as to a future matter, the respondents have not established the existence of reasonable grounds for making it and it was, therefore, misleading or deceptive.

The representation was misleading or deceptive in fact

137    On this issue the question is whether the applicants have established Cadeau was, in fact, not suitable for trans-ocean crossings or extended ocean voyaging. Here, it is important to keep in mind that the email from Mr Chen of Hampton Yachts which stated the vessel was not so suited, is not, of itself, evidence of that fact. It was admitted only for the fact that the statement was made. However, Ryan was asked in cross-examination whether he believed that statement to be true and he said that he did. There was no objection to that evidence and, given Ryan was put forward as being qualified to speak of such things, the absence of any objection is, perhaps, not surprising. That being so, his evidence can be taken as an admission of the applicants’ allegation that the vessel was not suitable for crossing oceans or for extended ocean voyaging.

138    Despite the above, the conclusion that Cadeau was not suitable for those purposes can be otherwise sustained. First, it must be observed, as the applicants submit, the question is whether Cadeau, being a Hampton 750 motor launch, was “suitable” for crossing oceans or extended ocean voyaging. It is not, as the respondents framed it, whether the Cadeau was “capable” of crossing oceans. Clearly any vessel of the size of Cadeau is capable of crossing an ocean given sufficiently favourable conditions. Here, however, the vessel was represented as being “suitable” for crossing oceans, which was the use to which the Wyzenbeeks intended to put it.

139    It is also important not to render this issue more complex than it ought to be. As the evidence established, the vessel delivered to Mr Wyzenbeek was obviously not suitable for trans-ocean crossings. Its port lights were defective in that they allowed the ingress of substantial amounts of water. That is not in contest. Further, the Portuguese doors at the front of the vessel were of insufficient strength to withstand green water waves breaking over the bow which is a not an unexpected event in ocean voyaging. Moreover, whether it be from the force of water coming over the bow or the Portuguese doors hitting the glass windows, it is obvious the windows on the forward cabin were not of sufficient quality to permit the use of the vessel at sea. Although these matters were remediated in one way or another, the short point is that, as delivered, Cadeau was not a vessel suited for oceangoing travel by reason of these matters alone. There is some degree of likelihood the vessel was not suitable for crossing oceans for other reasons, including its construction and design, but that was not in issue before the Court.

Were the regulatory requirements relevant?

140    It was not suggested by any party that Cadeau was built to any recognised standard of ship construction so as to qualify it as an oceangoing vessel. Had it been so constructed all doubt as to its seakeeping abilities in the open ocean would have been removed. Standards for the construction of oceangoing vessels are well established internationally. One such standard is the European Community Recreational Craft Directive (the RCD). That directive includes standards to which ocean going vessels, referred to as “Category A” vessels, must be constructed. That said, as the expert Mr Dovell identified, the directive permits the adoption of some standards (such as the ISO standards), which reflect the minimum permissible quality of build. Whilst Mr Dovell agreed it is not essential for a vessel to be suitable for trans-ocean crossing that its construction comply a recognised regulatory standard, it is not likely that it would be so suitable if it did not so satisfy some such standard. There is a great deal of logic in that observation. Whilst a duly qualified person might design and engineer from scratch a vessel which is, in all respects, suitable for crossing oceans, it would be an unusually inefficient process where that work already appears in the various standards. In addition, the recognised standards have the benefit of being proven by experience over the years and the methods and designs described in them have inherent efficiency as a result.

141    In Australia, there is no specific legislative or regulatory requirement or protocol for the construction of pleasure craft, even where such vessels are intended for trans-ocean voyaging. However, it does not follow that any vessel, however constructed, is suitable for use in the open ocean. It simply means that there are no relevant, Australian prescribed standards. Nevertheless, the RCD is a standard which is widely recognised here. The evidence disclosed that many of Hampton Yachts’ competitors advertised their boats as compliant with the RCD standard for Category A – ocean going vessels. In an email of September 2011, Dean exhorted Mr Chen to ensure that Hampton Yachts were built to the RCD standard which, he claimed, was widely recognised in Australia. Mr Dovell, an expert called by the applicants, observed the RCD terminology and categories of vessel are regularly utilised in Australian yachting competitions. From this it can be accepted that around the time Mr and Mrs Wyzenbeek acquired Cadeau, the RCD standard was widely known and applied in Australia.

142    The RCD establishes categories of vessels and then prescribes the standards to which the construction of vessels within those categories must meet. For present purposes it is only necessary to consider the defined meanings of “Category A” and “Category B” vessels. The former is defined as follows:

Category A –

Ocean: designed for extended voyages where conditions may exceed wind force 8 (Beaufort scale) and significant wave height of 4m and above but excluding abnormal conditions, and vessels largely self-sufficient.

The application guide to the amended RCD identifies the excluded abnormal conditions as being “hurricanes and tornadoes and extreme sea conditions or freak waves generated by abnormal conditions”. The guide also indicates that the standard set was to ensure that an ocean going vessel is one which would be able to withstand any conditions a vessel might encounter on a long voyage.

143    By contrast a Category B – “offshore” vessel is defined in the following terms:

Offshore: designed for offshore voyages where conditions up to and including wind force 8 and significant wave heights up to, and including, 4m may be experienced.

144    The apparent difference between the two standards is that the Ocean category of vessel must be able to withstand conditions which exceed 8 on the Beaufort wind scale and significant wave height exceeding 4m.

145    The concept that an oceangoing vessel ought to be designed and constructed so as to be capable of handling any of the sea conditions it might encounter on long sea voyages is logical. Ocean conditions can change dramatically and quickly, and a vessel which cannot handle all of the sea conditions which might be encountered on the open ocean, could not be regarded as being suitable for crossing oceans.

146    Cadeau was not built to any particular internationally recognised standard and none was suggested by the respondents. They were, or at least held themselves out as, experienced in dealing with vessels of this nature. They were in a position to know whether there was some standard to which the vessel complied and, particularly so, by reason of their close relationship with the builders, Hampton Yachts. The construction drawings of the vessel were not provided and no sufficient reason was given for their absence. That may be explicable because Hampton Yachts was not a party to the action, but it might have been expected that the relationship between it and the respondents would have permitted the latter to acquire those documents were they needed. As the recited facts demonstrate, both Ryan and Dean indicated that the respondents worked with Hampton Yachts and their engineers worked at the factory to ensure that the vessel was “100% right prior to departing the factory”. It is improbable that an entity with such a close connection to the builder of the vessel would not be able to acquire all relevant documentation relative to it were it so minded. There was no sufficient evidence that Hampton Yachts would not provide the respondents with information as to the vessel’s compliance with any recognised international construction standard or the construction drawings were they required. In Medtel Pty Ltd v Courtney (2003) 130 FCR 182 Branson J considered s 140 of the Evidence Act (Cth) relating to the standard of proof in civil proceedings and observed that it incorporated “the common law rule that evidence is to be weighed according to the proof which it was in the power of one party to produce and in the power of the other to contradict”. See also Apollo Shower Screens Pty Ltd v Building & Construction Industry Long Service Payments Corporation (1985) 1 NSWLR 561 at 565; Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970; Vautin v BY Winddown, Inc. (formerly Bertram Yachts) (No 4) [2018] FCA 426 at [145] (Vautin (No 4)). The respondents’ failure to produce anything which would demonstrate the vessel’s conformity to any recognised standard for ocean-going vessels suggested it did not have that capability.

147    The evidence provided by Ryan and Dean was that it was a “selling point” for vessels of this nature that they were capable of crossing oceans. In this context it is relevant that the marketing material from Hampton Yachts did not include any such statement in relation to the Endurance range or that they were constructed to a standard equivalent to a Category A vessel. Nor did that material suggest the Endurance range was designed and built to satisfy any other standard for oceangoing vessels. Whilst the material tended to represent that the Endurance range was of a high quality, the statements fell short of making the claim that they were suitable for trans-ocean crossings or that they complied with any internationally accepted protocols for seaworthiness. In his report, Mr Dovell commented that manufacturers of other vessels of a similar nature, such as Marlow, Fleming and Ferretti, advertised compliance with such a protocol as either standard or an additional feature. Given the marketing value of a vessel’s ocean-going capability, the absence of any such express statement in Hampton’s promotional material supports the conclusion that the Endurance range did not have this characteristic.

148    The respondents advanced an argument that if a vessel was capable of crossing oceans under any circumstances then it was an “ocean going vessel” or suitable for crossing oceans, even if it could not cross oceans under all conditions. That somewhat desperate submission must be rejected. In the context in which the representations were made, the statements that a Hampton vessel would be suited to Mr and Mrs Wyzenbeek’s objectives of crossing oceans or extended ocean voyaging and suitable for their needs, meant that it was constructed for and suited to that type of regular use. It was a representation that the vessel was of a kind which could be used to cross oceans safely in that it was of a construction which would withstand the rigours that might be encountered on such a voyage. It is to be kept in mind Mr Wyzenbeek expressly wanted a vessel which was a Category A ocean going vessel, the same standard as Swanky. That had been part of his specifications and requirements at the beginning and the respondents had indicated that the Endurance range could meet them.

149    The above is sufficient on which to determine that Cadeau was not suited for crossing oceans or for extended ocean crossings.

The suitability of Cadeau for trans-ocean crossings given its defects

150    The foregoing discussion concerned the suitability of Cadeau for crossing oceans based on the evidence surrounding its non-conformity with any internationally recognised standard of construction. Even if that conclusion were not open, the defects in it rendered it unsuited for those purposes. On this topic the applicants relied upon the expert evidence of Mr Andrew Dovell and the first to fourth respondents relied upon the evidence of Mr Burge and Mr Akacich. For the reasons which follow the evidence of Mr Dovell is to be preferred to that of Mr Burge and Mr Akacich.

151    Essentially, the question was a technical one, being whether Cadeau, as designed and constructed, was suitable for trans-ocean crossings. Of the relevant experts, only Mr Dovell was a qualified naval architect and the only one who possessed a full and complete understanding of design criteria and capabilities. His report (the “Dovell report”) dated 18 April 2017 was logical, well structured, well researched and founded upon clearly identified evidence. Whilst I do not reject the opinions of Messrs Burge and Akacich merely because they were not naval architects, much of their evidence was most unsatisfactory. In particular, they each sought to propound their client’s case and, as the cross-examination revealed, a number of their conclusions were based upon insufficient information and assumptions which they had made in favour of the respondents.

152    In his report, Mr Dovell considered Cadeau against some of the “essential requirements” of the RCD for ocean-going vessels. He said he did so because the boat building industry accepts that the RCD incorporates the minimum standards of build for the various categories of vessels. There did not appear to be any dispute about this. The RCD specification as described by Mr Dovell in his report (at [3.1] – [3.7] of the Dovell report) draws a distinction between the minimum requirements for vessels’ attributes of strength of construction, stability, engines and the like will vary depending upon the manner of intended use. Necessarily, higher standards of such attributes are required for vessels intended for use in the open ocean and lesser standards are appropriate for vessels which might only encounter less severe conditions. It is obvious that construction of vessels to the higher standards will be more expensive and, as a matter of economic reality, a vessel only intended for costal cruising would not be constructed to the standards required of an ocean going vessel.

153    Mr Dovell identified three aspects of Cadeau which rendered it unsuitable for open ocean voyaging. They were that the original port lights installed were inadequate, the original glass installed around the forward cabin was inadequate and the design and construction of the Portuguese doors was also inadequate.

The defective port lights

154    Mr Dovell’s analysis in relation to the port lights was compelling. He identified the ISO requirements (ISO 12216) contained in the RCD for port lights on Category A Ocean vessels and Category B Offshore vessels. Those requirements were dependent on where on the vessel the port lights are located. The requirements are most stringent for port lights located on the topside. The topside, which is referred to as “Area1”, is that area of the hull above the water line and below the first deck and port lights located there will necessarily be subject to water impact as the vessel passes through swells. The specification only permitted port lights of the highest standard to be located in that area. Mr Dovell identified the port lights originally fitted to Cadeau were of the brand, Manship, Model LO-0818 opening port lights. His investigations identified that the manufacturer’s catalogue information specifically stated that such port lights were CE approved only for Areas 3 and 4. They were, therefore, not compliant with the standard for use in the topsides of a vessel and their use on Cadeau had the consequence that its construction fell below the ISO standards. On that alone the vessel did not comply with the construction requirements for a Category A Ocean vessel.

155    Despite some opposition by the respondents, the reality was the topside port lights in Cadeau allowed considerable leakage of water into the vessel. Based on the evidence of Mr Wyzenbeek in relation to the significant amount of water entering the vessel through the port lights, which I accept, it is obvious they were insufficient to maintain the watertightness of Cadeau. That would appear to be corroboration of the ISO standard.

156    Ryan and Dean’s correspondence to Mr Chen in 2011 regularly expressed their dissatisfaction with the quality of the port lights on the Endurance range of vessels. They did not reject Mr Wyzenbeek’s assertion of the significant leaking through the port lights (as well as other areas). Indeed, they accepted that such was the case and it is relevant GCCM took possession of the vessel for the purposes of repairing damage caused by the ingress of water through these port lights. That repair work was substantial and it is not likely GCCM would have undertaken the warranty work if the port lights had not been leaking. It is not irrelevant the replacement of the portlights with ones which conformed to the ISO standard remedied the problem.

157    Dean’s email to Mr Chen of Hampton Yachts on 15 September 2011 is particularly important. At that point in time AMI and GCCM were dealing with a number of complaints concerning the leaking of port lights on two Endurance 750 vessels which had been sold to their customers. In the email Dean said:

I have a concern from herein with regards to all vessels fitted with “Category 3” PORTLIGHTS to date, if we have a situation whereby a PORTLIGHT fails at sea & an insurance company “Gets involved” we would end up in the situation of Hampton Yachts being “Liable” for loss/damages.

What course of action would you suggest we take? The reason for asking is that Norbert (Owner of 750#9) has produced the ManShip information showing us that the PORTLIGHTS in use aren’t rated for the application they are presently being used for.

The only recourse from here would be a letter from ManShip stating that they are “Suitable” for this use given their method of installation. Given the information is readily available on their website we could “all” end up in serious trouble if the worse were to happen.

158    This sufficiently evidences that Dean was aware the port lights fitted to the Endurance 750 vessels by Hampton were being used outside their rating. The email also demonstrated he was well aware of the serious consequences that might follow if a vessel were to sink because of the failure of the port lights. Although in evidence Dean sought to avoid the reality of the comment in his email, “if the worse were to happen”, it is clear he was referring to the consequences if the vessel were to sink. It was, therefore, apparent to Dean in September 2011 that the use of the port light fitting on the topside of Cadeau and another Endurance 750 vessel were outside of the ratings of those fittings and posed a serious risk to those vessels.

159    In a subsequent email, on 16 September 2011, in relation to this issue, Dean wrote to Mr Chen the following:

Further to the request on pricing of the “1” vs. “3” PORTLIGHTS I believe the other main point of difference is the “through-bolting method” of installation, this is a simply way to ensure we don’t have a reoccurrence of the very costly exercise experienced with 750#9. The through bolting of the units will obviously minimise / remove any movement between Hull & Liner subsequently ensuring the sealants don’t break down, crack or split subsequently letting water in …

…

After identifying the issue with Norbert’s boat I can almost guarantee that this is the same issue we have been encountering with 750#8 (Mr. Tuckers boat) Now we know what to do it’s a relatively quick fix, again his water leaks only presented once the boat at been steaming at sea for some time. (i.e. the anchor locker eventually fills up & leaks into cabin) His water ingress most commonly presented in the forward cabin at floor level which is in keeping with the fault identified with 750#9.

[The reference to 750#9 is a reference to Cadeau.]

160    And subsequently, on 19 September 2011, Dean again wrote to Mr Chen in relation to the port light issue. He said:

This is a “HAMPTON PROBLEM” & isn’t an upgrade, given the tens of thousands of dollars we’ve collectively spent fixing water ingress issues we simply want to get this problem resolved once & for all …

Please confirm in writing the position of Hampton Yachts & these PORTLIGHTS… It’s AMI’s position that they are not an “UPGRADE as we’ve been advised by ManShip that the existing PORTLIGHTS are for “Cabin/house use only” & not for hull use as is the case with all vessels to date. I have attached the advice from the ManShip website for reference. The “Heavy Duty” PORTLIGHT system has been used by DHS from our first boat & we’ve never had a problem to date.

161    Again, Dean acknowledged that incorrect port lights were used on the Endurance 750 vessels and he had confirmed with the manufacturer of the port lights that they were not suited to the use to which they had been put.

162    All of this supports Mr Dovell’s conclusion that neither the port lights themselves, nor their installation on Cadeau, complied with the requirements of the RCD for a Category A or B vessel. He was also confident they did not comply with the ABYC requirements with which Hampton Yachts claimed the vessel complied. He further concluded the port lights had not been appropriately installed. Aside from the failure to comply with relevant standards, the use of inappropriate port lights meant the vessel was not suitable for crossing oceans.

163    Mr Dovell’s conclusion that the port lights in the topside of Cadeau and their installation was substandard had the consequence the vessel failed to meet the requirements of the RCD for a Category A vessel. That was not seriously contested. Mr Burge and Mr Akacich took a somewhat remarkable position in relation to this issue. In the joint report, they challenged Mr Dovell’s conclusion as to the sea-worthiness of the vessel on the basis that the leaking was minor and that defect had been repaired under warranty. Their failure or refusal to appreciate that the leaking was substantial undermines their credibility on this point. The repairs undertaken to the interior of the vessel as a result of the leaking port lights was not insubstantial and supported the evidence of Mr Wyzenbeek as to the extent of water entry. Further, their reliance on the fact the topside port lights could be repaired or replaced does not alter the fact the vessel was defective when built and delivered. This somewhat disingenuous approach is emblematic of the evidence of Mr Burge and Mr Akacich as is discussed below.

164    In considering the extent of water damage caused by the leaking port lights, Mr Burge failed to take into account the detailed written report prepared by Mr Bone and Mr Fernance for the respondents in August 2011, which detailed the extensive damage to the interior of the vessel caused by water entry. His failure to consider this did his credibility no good at all. The report, by two of the employees of GCCM or AMI, identified significant water damage arising as a result of leaks, particularly through the port lights, and that their fitting was inadequate. It also identified a number of other areas where water leakage into Cadeau had occurred. Conversely, Mr Burge was prepared to accept and rely upon the opinion of Mr John Bennett, an engineer employed by the respondents, which was given some years after the event to the effect that the faults were minor. It was a matter of concern that Mr Burge relied upon this source which was not referred to in his report and he ignored the respondents’ own contemporaneous documents. The applicants submitted Mr Burge’s approach was “highly unsatisfactory” because it disclosed his failure to comply with the Federal Court’s Expert Witness Code and his opinions were formed in reliance on unreferenced hearsay. I am prepared to accept that description of Mr Burge’s report and evidence and for those reasons. I largely disregard it. I would have thought that a description of “disingenuous” is a more accurate description of his evidence in general and, specifically, in relation to this issue. It is impossible to have any confidence that Mr Burge undertook the preparation of his report in the manner expected by experts before this Court.

165    Similarly, the evidence of Mr Akacich must be treated with the same reticence. His thesis that Cadeau was suitable for ocean crossing was founded upon his opinion that the vessel had been used for some time in various wave and wind conditions without encountering any difficulties. That appeared to discount the extensive internal water damage Cadeau had sustained as a result of water leakage through the port light fittings, the existence of which was revealed in numerous contemporaneous emails. Somewhat incredibly, under cross-examination Mr Akacich acknowledged that he did not read those emails even though his report discloses that he was provided them as well as the witness outlines filed in this action which referred extensively to them and, on occasion, set out their contents. He said that he had relied on other unidentified sources of information in forming the opinions set out in his report. He revealed this information was what he had been told during the course of a briefing which had been provided by a person whose identity he could not recall. His only recollection was the briefing was provided by a person who was his naval architect and that person had provided his opinion on what wind and wave conditions Cadeau had experienced. His reliance on this briefing was not identified in his report. Similarly, he claimed he relied upon conversations with Mr Wyzenbeek which occurred from time to time although he could not, at the date of trial, remember the content of those conversations which were also not referenced in the report.

166    The above substantially diminishes the weight which can legitimately be given to Mr Akacich’s report and, indeed, removed the foundation for its admissibility in significant parts even though that point was not taken by the applicants. At best, Mr Akacich’s opinions on the integrity of Cadeau was uninformed speculation which appeared to be deliberately slanted in favour of the respondents. The cross-examination of Mr Akacich’s revealed that he did not understand the nature of his role as an expert witness. On the issue of the defective port lights his evidence ought to be rejected.

167    It is important to recognise that the substantial leaking of water through the port lights creates a significant hazard for a vessel in the open ocean. Even if it is the case that the amount of water entering the vessel is not sufficient to cause it to sink or lose stability, it has great potential to interfere with the electrical systems on the vessel causing them to fail or facilitating arcing with the consequent risk of fire.

The cabin glass on Cadeau

168    The second matter considered by Mr Dovell was the strength of the glass on the cabin windows of Cadeau. He determined the glass around the forward cabin and across the vessel was not of sufficient strength for any category of vessel under the RCD. In forming this opinion he relied upon the evidence of an email to the effect that the forward facing glass of the main cabin (which had been destroyed in the Port Macquarie incident) was laminated glass of two layers of annealed glass of 5mm thickness each. It followed that the total thickness of the glass was 10mm. Mr Dovell also relied upon the report of Mr Calverone to the effect that the glass on Cadeau was 10mm of annealed glass in approximately two 5mm sheets. The evidence of Mr Calverone was not questioned and provided a sound basis for Mr Dovell’s opinion. Mr Dovell opined that the glass in the centre window of the main cabin was of a thickness which was considerably less than the minimum specified in ISO12216 and would not have been compliant with the requirements of the RCD for Category A – ocean use. Indeed, he also concluded that the glass fitted to Cadeau was not compliant with the requirements of the RCD for any category of service. I accept his evidence in relation to this matter which was largely unchallenged. For that reason as well, the vessel was not suitable for crossing oceans.

169    As the incident Port Macquarie revealed, the forward facing glass in Cadeau was not of adequate strength for a vessel which might be used in trans-ocean crossings. That incident, which is discussed in more detail below, involved waves of no more than 1.6 metres. Whilst attempting to cross the bar there, Cadeau ploughed forward and downward into waves such that “green water” came over the deck, over the forward bulwark protection and onto the forward facing window. That window was of insufficient strength to take the force of the impact and it shattered allowing significant water to enter the cabin. Mr Akacich sought to minimise the contribution of the inadequate glass to the ingress of water and sought to cast blame for the incident on Mr Wyzenbeek’s inadequate seamanship. In particular, he asserted the attempted crossing of the bar was foolish given the existence of waves of 1.6 metres. However, as the RCD shows, a Category A Ocean vessel ought to be capable of handling seas with a significant wave height of 4 metres. That wave height is an average of the highest third of the waves experienced in the sea conditions, meaning it is likely to include waves of up to 6 metres in height. It can be accepted that swells on the open ocean may not necessarily have the same forces as breaking waves across a bar, nevertheless, the force of water coming over the bow of a vessel in rough seas on the ocean is likely to have a similar effect. This was acknowledged by Mr Akacich who accepted that seas of a significant wave height of 4 metres would be at least the equivalent of the conditions encountered by Cadeau on the Port Macquarie bar. Given that the forward facing glass of the main cabin on Cadeau was not able to withstand the 1.6m wave at Port Macquarie, it, most certainly, would be unlikely to be able to withstand waves encountered in a sea with a significant wave height of 4 metres. It follows, if anything, the Port Macquarie incident verified the requirements of the RCD standards and demonstrated the glass on the forward cabin of Cadeau was of insufficient thickness and strength for an ocean going vessel.

170    The inadequacy of the strength of the glass in the forward windows was a serious matter. The failure of that glass in rough seas would permit the ingress of significant amounts of water, as had occurred at Port Macquarie. That would most likely lead to interference with the electrical systems on the vessel, which was also the experience at Port Macquarie. However, on a rough ocean, the constant entry of water through a failed forward cabin window would necessarily cause the vessel to lose stability.

171    I accept Mr Dovell’s evidence that Cadeau was not suitable for crossing oceans or extended ocean voyages as a result of the forward cabin windows being of insufficient strength and falling well below the accepted international standards.

The Portuguese doors on Cadeau

172    Mr Dovell also considered the failure of the Portuguese doors on Cadeau in the Port Macquarie incident was indicative of their inadequacy in a manner which rendered them being non-compliant with the requirements of the RCD for Category A ocean use. He calculated the forces which doors in that position should be able to withstand and, whilst the structure of the doors themselves was adequate, the manner in which they were affixed to the superstructure was deficient. He identified the doors had not been screwed into a block of timber or aluminium, but into a block of “neat resin” which had poor mechanical properties and was brittle. That manner of attachment had the consequence that the load path for the hinge loads was a sheer stress between the block of the resin and the core. This created a very weak joint at this point. Such a joint would not, opined Mr Dovell, have been acceptable for the RCD protocol. Neither Mr Akacich nor Mr Burge contradicted that finding by Mr Dovell and I accept it.

173    Again, the fact the doors came away when impacted by a wave coming over the bow of Cadeau during the Port Macquarie incident is probably sufficient evidence of their unsuitability on a vessel intended for trans-ocean passage. According to the RCD, an oceangoing vessel ought to be capable of withstanding the rigours of Beaufort 8 winds and a significant wave height exceeding 4 metres. That is in excess of what was encountered on the Port Macquarie bar.

174    Mr Burge, in purported answer to Mr Dovell’s opinion, opined that the Portuguese doors were not designed or required to take impacts from waves. Whilst he was obviously correct about the insufficiency of the design, that observation supported, rather than undermined, the observations of Mr Dovell. The suggestion that an ocean going vessel might be fitted with doors on its forward deck not capable of withstanding the impact of waves coming over the bows, is difficult to accept. The breaking of waves over the forward deck is a not unexpected event for an ocean going vessel. If the Portuguese doors positioned on that deck were not capable of sustaining the impact of such waves, they might dislodge when impacted and be forced onto the cabin windows causing them to shatter. There was some suggestion that this was a possible scenario of the events which occurred at Port Macquarie. If that were true it, of itself, would render the vessel unseaworthy for trans-ocean passage. Alternatively, if the Portuguese doors were not designed to take the impact of waves it would necessitate that the forward windows of the main cabin would need to be constructed to a standard that would absorb such forces. It is clear that they were not so designed.

175    I accept the opinion of Mr Dovell that the inadequate design of the Portuguese doors also rendered the vessel unsuitable for trans-ocean voyaging and non-compliant with the RCD standards.

Dovell’s conclusion that Cadeau was not a vessel suitable for crossing oceans should be accepted

176    The three identified deficiencies in Cadeau each, independent of the others, rendered the vessel non-compliant with the RCD Category A requirements. That is sufficient to establish the conclusion that it was not suitable for trans-ocean passage or extended passage in the open ocean. Each of the deficiencies failed the ISO requirements which, I accept, are the minimum standards required for oceangoing vessels. That, however, is not to conflate conformity to the RCD protocol with the fact of a vessel being suitable for trans-ocean crossings. It is to accept that the ISO standards are recognised as being the minimum standard required under any protocol. I also accept the conclusions of Mr Dovell that the three identified deficiencies, taken together, singularly or in any combination, support the conclusion that the vessel was, in fact, not suitable for crossing oceans or for extended ocean voyages . That was established by significant water entering Cadeau via the substandard port lights during normal use and by the deficiencies in the cabin window glass and the Portuguese doors which became apparent after the Port Macquarie incident.

177    There was no suggestion Cadeau was built to comply with any standard or protocol for trans-ocean crossings or extended passage in the open ocean. The manufacturer did not assert it was and, in September 2011 Ryan, on being informed by Mr Chen that it was not so suited, believed that to be the case. There is no reason not to accept that as an admission against interest. Mr Dovell concluded the existence of the three identified defects led him to question the rest of the vessel’s structure (ts.644). Whilst it is not necessary to reach any conclusions about that, his doubt was well founded and there is support for it.

Mr Akacich and Mr Burge were not acceptable expert witnesses

178    Apart from the flaws exposed in the reasoning processes of Mr Akacich and Mr Burge which have been identified above, their evidence lacked credibility for other reasons.

179    Mr Akacich had a relatively close relationship with the respondents in this matter. Indeed, it was so close that he claimed to be able to give character evidence about Dean whom, he said, he knew very well. Under cross-examination he said that he had known Dean since he was 17 years of age and he was able to say that he was “a good human being”. It must be kept in mind Dean is a respondent in these proceedings and a person against whom a potential judgment in a large amount of money might be made. It is inappropriate that a person with such a close personal relationship to a party ought to be engaged to provide expert evidence. Were that not bad enough, Mr Akacich also had a business association with Dean, which had existed for over 20 years. On the website of Mr Akacich’s company, Black Pond Marine Consultants, Dean provided a glowing testimonial. In part he said:

Over the 20+ years I have worked with Joe Akacich (aka Black Joe) in many & varied aspects of the luxury yachting industry from refit, repair, construction, engineering & specifically of late the intimate one-on-one project management for Alaska Motor Yachts, Hampton Yachts, Endurance Yachts & other luxury yachts through our retail division & mother company Leigh-Smith Yachts. He’s also an Accredited Marine Surveyor which ensures his ability to “sign off on works” offers peace of mind to an importer & builder alike.

Dean then continued and extolled Mr Akacich’s skill and abilities.

180    The existence of this testimonial poses many concerns. Not in the least, it evidences the close relationship between Mr Akacich and Dean. More importantly, it identified that Mr Akacich and Dean have worked intimately together for the project management of, inter alia, Hampton and Endurance Yachts. In this context the expression “project management” refers to the preparation of vessels for delivery to customers or the refitting of vessels. That, of itself, makes it difficult, if not impossible, to believe that Mr Akacich could bring an impartial mind to the assessment of Cadeau, especially when a person he has worked with for more than 20 years might be damaged if he gave an adverse opinion. But the causes of the improbability of Mr Akacich’s supposed impartiality do not stop there. His future engagement to work on project managing Endurance Yachts and Hampton Yachts is dependent on AMI, GCCM, Dean or Ryan deciding to utilise his services. It is difficult to imagine he would put his future income at risk by forming a view of Cadeau contrary to the interests of respondents in this litigation. It is most unlikely that a person in his position would impartially assess the quality of the vessel.

181    That, unfortunately, is not the end of the matter. There are further factors which would influence Mr Akacich away from an impartial assessment of Cadeau. His company, Black Pond Marine Consultants, previously advertised on its website that it managed “all of the after sales servicing and warranty for LSY”. Those initials refer to “Leigh-Smith Yachts” which is the trading name of a company operated by Dean. Although Mr Akacich disclosed that he had consulted to Leigh-Smith Cruiser Sales, the business name of AMI, he did not disclose his consultancy to Leigh-Smith Yachts. Again, this would suggest that his opinions might not be impartial. Furthermore, Black Pond Marine Consultants is a lessee of premises at the Gold Coast City Marina which is owned and operated by GCCM such that Mr Akacich’s company has a continuing financial relationship with GCCM. Although this latter matter was also disclosed in the report and he asserted it did not affect his impartiality, that is most unlikely in the circumstances.