FEDERAL COURT OF AUSTRALIA
ACN 055 378 240 Pty Ltd (formerly Marine & Civil Construction Company Pty Ltd) v SGS Australia Pty Ltd [2013] FCAFC 46
IN THE FEDERAL COURT OF AUSTRALIA | |
ACN 055 378 240 PTY LTD (FORMERLY MARINE & CIVIL CONSTRUCTION COMPANY PTY LTD) Appellant | |
AND: | SGS AUSTRALIA PTY LTD (ACN 000 964 278) Respondent |
DATE OF ORDER: | |
WHERE MADE: |
THE COURT ORDERS THAT:
2. The appellant pay the respondent’s costs of the appeal.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
WESTERN AUSTRALIA DISTRICT REGISTRY | |
GENERAL DIVISION | WAD 244 of 2012 |
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA |
BETWEEN: | ACN 055 378 240 PTY LTD (FORMERLY MARINE & CIVIL CONSTRUCTION COMPANY PTY LTD) Appellant
|
AND: | SGS AUSTRALIA PTY LTD (ACN 000 964 278) Respondent
|
JUDGES: | NORTH, JACOBSON AND GILMOUR JJ |
DATE: | 16 MAY 2013 |
PLACE: | PERTH |
REASONS FOR JUDGMENT
NORTH J:
introduction
1 This appeal is brought by a company which at the time of the hearing by the primary judge was called Marine & Civil Construction Company Pty Ltd (M&C). M&C was engaged to provide engineering services in relation to the construction of an iron ore offloading wharf at Koolan Island, off the coast of Western Australia. In the course of that project M&C arranged to transport a 250 tonne lifting capacity crane with other equipment on a barge towed by a tug from Dampier to Koolan Island.
2 M&C engaged the respondent, SGS Australia Pty Ltd (SGS), to provide marine surveying services. The scope of its task lies at the centre of the controversy in this case.
3 SGS inspected the barge with the crane loaded on it prior to the voyage to Koolan Island. On 28 April 2006, SGS produced a written report including about the sea fastenings of the crane and other equipment on the barge. The next day, in the course of the voyage, the boom of the crane broke loose from the sea fastenings, swung 180 degrees, and caused damage to itself and to the other equipment including a motor vehicle onboard.
4 M&C claimed that SGS engaged in misleading or deceptive conduct in the provision of the survey report in contravention of s 52 of the Trade Practices Act 1974 (Cth). The conduct involved the making of express and implied representations about the capacity of the sea fastenings of the boom to perform on the voyage. M&C claimed that this conduct caused loss and damage, and sought damages from SGS.
5 The primary judge rejected the claims of M&C. He found, so far as is relevant to this appeal, that M&C had not established that SGS made the representations alleged.
6 I agree with the conclusion of the primary judge. In order to explain my reasons, these reasons for judgment will outline the relevant facts, the reasoning of the primary judge, the grounds of appeal and the arguments on the appeal, and finally will give consideration to those arguments.
The Facts
7 The primary judge set out the factual background comprehensively and with clarity. The following is taken largely from that account. The primary judge recorded that his account of these facts represented his findings of fact in relation to those subjects.
8 When M&C agreed to provide engineering consultancy services for the Koolan Island project, it engaged International Maritime Consultants Pty Ltd (IMC) to advise on measures to be taken to ensure the stability of the barge and the crane for the voyage from Dampier to Koolan Island.
9 After a meeting between employees of IMC and M&C in early 2006, and several email exchanges, on 2 February 2006, Mr Tiju Augustine, a naval architect employed by IMC, sent M&C a towing configuration analysis which contemplated that the boom of the crane would be held in position by a boom rest on the barge supporting the boom at mid span.
10 About a month later Mr Augustine emailed Mr Julian van der Meer, the project manager for the project employed by M&C, recommending that M&C seek advice from the crane manufacturer about the preferred method of securing the boom. The manufacturer advised that the boom could not be supported mid span. Mr van der Meer informed Mr Augustine of this advice. Mr Augustine said he would have a look at the proposal of the manufacturer that the boom be secured by soft slings to prevent lateral movement.
11 On 8 March 2006, Mr Augustine sent Mr Steve Seclier, who was the piling foreman/supervisor employed by M&C on the project, an email attaching drawings of the sea fastenings for the base of the crane. These drawings did not contain any drawings for the sea fastenings for the boom of the crane.
12 Around this time Mr Neil Brown, an insurance broker from Gault Armstrong Kemble Pty Ltd (GAK), advised Mr Alan Sweet, who was the contracts manager employed by M&C, that a warranty survey report would be required as a condition for insurance cover. Mr Brown said a report from SGS would be acceptable.
13 Mr Sweet then contacted Mr Christopher James Tickner, the operations coordinator of SGS in Perth. In an email dated 20 March 2006 Mr Sweet wrote:
Subject: Warranty Survey for Koolan Island Project
As discussed last week Marine and Civil are constructing the iron ore offloading berth at Koolan Island. We require maritime survey to be completed for onhire/offhire reports and warranty survey for towing purposes for tugs and crane barges mobilised from the following locations;
Dampier
Port Hedland
Fremantle
Koolan Island (off Derby)
Could you please advise contact details and fee structures for SGS that would be suitable to allow these works to be organised.
14 Mr Tickner relevantly responded by email on the same day (the SGS March email) as follows:
Thanks for your inquiry and we are pleased to offer you our following rates and information.
For Onhire / Offhire reports:
1) Dampier – AU$1200.00 + AU$0.70 / km
2) Port Hedland – AU$1200.00 + AU$0.70 / km (would be serviced from Dampier)
3) Fremantle – AU$700.00
4) Koolan Island (off Derby) – AU$1500.00 + Airfares, Accommodation, Meals, Vehicle Hire = At cost + 15% (would be serviced from Perth)
Warranty Surveys are only conducted by the Classification Society however we are able to provide you with a survey report. This is a report of our findings at time and place of intervention but I must stipulate is not a Certificate of Seaworthiness for towing.
(Emphasis added.)
All work conducted is in accordance with SGS General Conditions of Service which I have attached for your reference.
15 In late March and early April 2006, Mr Augustine of IMC sent M&C several documents concerning the towing plan and calculations for the voyage. None of these documents provided for sea fastenings for the boom of the crane.
16 Between 13 and 16 April 2006, the crane was assembled in Dampier. Mr Seclier supervised the welding of the sea fastenings on the barge for the base of the crane. He followed the drawings provided by IMC. These drawings did not provide for any sea fastenings for the boom of the crane.
17 On 19 April 2006, Mr Ric Clarke of GAK, insurance brokers, sent an email to Mr Patrick Quinlan, a project engineer employed by M&C, which stated:
Further to our earlier telecon. To [sic] enable facilitation of terms for the voyage/transit risk we need details of the loading/lashing/stowage arrangements. As the cranes once loaded onboard will affect the barges stability have you engaged any external consultants to provide confirmation that the stowage/towage is sound etc etc.
It is customary for underwriters to be presented with some form of survey report that attests to the stowage and towage arrangements therefore I would appreciate this advice as a matter of urgency.
We are unable to bind cover until such time as we can present this information to underwriters and I look forward to your early reply as we discussed.
18 The next day, 20 April 2006, Mr Sweet rang Captain Narinder Bhalla of SGS and said that M&C needed a survey report done on the barge to be towed from Dampier to Koolan Island. Later that day Mr Sweet emailed Captain Bhalla (the M&C April email) a description of the scope of work as follows:
Thank you for your assistance this afternoon.
As discussed please find following a brief scope of requirement for the survey report required prior to towing the Miclyn 131 Piling Barge from Dampier to Koolan Island;
• Miclyn 131 Barge loaded with 200Tn Crane, Piling Hammer and miscellaneous construction equipment
• Departs from Mermaid Marine Supply Base in Dampier (planned pm Monday 24 April 2006 dependent on weather).
• Date and time of survey Monday 24 April 2006 approx 9am at the Mermaid Supply Base in Dampier
• Destination is Koolan Island for the Aztec Iron Ore Project (Construction).
• Towage by Mermaid Marine (vessel likely to be the Commando).
• M&C site representative Mr Steve Seclier who is available on Mobile…in Dampier.
• Insurance requires an independent report prior to accepting cover for the coastal tow.
• SGS scope of services to provide an independent survey report that verifies towing bridle and seafastenings (design and certification by International Maritime Consultants) prior to departure. My collegue [sic] Mr Julian Van der Meer will send copies of the tow plan and the approved seafastenings by seperate [sic] e-mail. The vessel details and towing winch are to be verified by the operator (Mermaid).
(Emphasis added.)
Survey Report to be sent via e-mail or fax to my address…with any issues communicated to M&C Site Superintendent Mr Steve Seclier who is preparing the barge in Dampier.
I have been provided with the SGS terms and conditions by Chris Tickner and agree with those terms – could you please send an account application form by fax to our office on…marked attention Ms Kay Giles and we will complete and return to you am Friday 21 April 2006.
19 Captain Bhalla replied as follows:
Thank you very much for the appointment. We hereby pleased [sic] to confirm our attendance as independent inspectors for the same.
- Inspection will be carried out as per SGS general conditions of service (a copy of which is attached).
- The cost of the inspection will be
A$1000 + GST
- Please fill up the attached “SGS new A/C application Form”
20 Mr Quinlan of M&C emailed IMC and Mr Ric Clarke, copying in Mr van der Meer, a memorandum entitled: “Koolan Island Ore Offloading Wharf: Tie-Down Works Methodology” (Method Statement) on 20 April 2006. The Method Statement incorporated photographs taken by Mr Seclier of M&C, of the sea fastenings which Mr Seclier had effected on the barge. The Method Statement provided:
Introduction
This method statement applies to the tie-down of the crane, hammer & powerpack aboard the “Miclyn 131 Piling Barge”, which will be towed from Dampier to Koolan Island.
The objective is to outline the methodology and controls to prevent any accidents or incidents, which could arise in the event of the crane, hammer, powerpack or other equipment moving freely aboard the Micyln 131 whilst under tow.
Crane Tie-Down
1. Having successfully walked the crane onboard the Miclyn 131, the crane has been positioned and fixed directly to the deck for the entire journey.
2. To ensure that the crane is not liable to any movement, steel stubs are welded to the deck at the front & rear of the crane’s tracks and wedged with timber sections to minimise any possible movement. This can be seen in photos 1.1 & 1.2.
3. The crane boom has been lowered to 30 degrees & restrained to the deck by ropes tied to the boom.
21 There was no photograph in the Method Statement which showed the tie down arrangements in respect of the crane boom. The photographs did show the tie down arrangements for the plant and equipment which was to be secured to the barge.
22 Mr van der Meer of M&C then, in the morning on 21 April 2006, emailed Captain Bhalla attaching the calculations supporting the towing arrangement report prepared by IMC. This email did not include any document showing the “approved seafastenings” which was referred to in the M&C April email. Nor was any document showing the “approved seafastenings” sent to SGS by M&C at any time thereafter.
23 On 21 April 2006, Mr Williams of IMC rang Mr Seclier, referred to Mr Quinlan’s Method Statement, said that the crane and tie downs looked okay, but asked Mr Seclier to add extra fastenings for some other equipment on the barge. Mr Seclier did that and supervised the final securing of the crane and the other equipment on the barge. He also supervised the securing of the boom which was fastened to the deck of the barge by 11 mm steel wire rope and eyelet, tensioner and metal hook on each side at the mid span of the boom.
24 On 24 April 2006, Captain Raj Kumar Sharma of SGS inspected the barge with the crane onboard in Dampier. Captain Sharma asked for the test certificates for the towing bridle and these certificates were emailed to Captain Bhalla of SGS by Mr Sweet that day.
25 On 27 April 2006, Mr Clarke of GAK, insurance brokers, emailed Mr Sweet stating that he had received initial advices from SGS relating to issuing the pre-voyage towage and stowage surveys. The email concluded:
You will note the cover is subject to the warranty that you comply with SGS recommendations and it would be customary for SGS to issue a towage and stowage approval certificates in confirmation.
26 On the following day, Mr Clarke emailed Mr Sweet to say that the insurance cover was finalised and was subject to a warranty that:
SGS Australia Pty Ltd to undertake a pre-voyage towage survey. Lashing/stowage of cargo to comply with project engineers recommendations.
27 A copy of Mr Quinlan’s Method Statement was attached to the insurance cover binding slip. The binding slip recorded that the insurer had been informed that SGS would be undertaking a pre-voyage towage survey.
28 On 28 April 2006, Captain Bhalla emailed Mr Sweet and Mr Brown of GAK, and others, a document described as the inspection report. The report relevantly read:
SURVEY REPORT
DATE: 24 April 2006
OUR REF:…
In accordance with instructions received from Mr. Alan Sweet of Marine & Civil Construction Co. Pty Ltd. Our surveyors attended aboard the Dumb Barge Miclyn 131 on 24th April 2006 at 0815 hrs, at Mermaid Marine Supply Base, Dampier, to inspect “Arrangement of Towing bridle and Seafastenings (design and certification by International Maritime Consultants) [sic].
(Emphasis added.)
Particulars of Vessel
Name Miclyn 131
…
GENERAL DESCRIPTION OF VESSEL
The Barge “Miclyn 131” is a Welded Steel flat top pontoon type dumb barge, with two Skegs Aft and Forward Round Bar. The vessel was built in 2000. There is a strengthened sheer strake running down each side continuing around the bow and stern. Slight to moderate marine growth was observed starting from just above the waterline to the area under water.
The Deck area was moderately rusted all over with thick rust patches and indentations in some places. There was no sign of any coating visible.
There is a Stockless Anchor and a manually operated winch on port side forward.
SURVEYOR REMARKS
At the time of inspection, the barge was found to be afloat drawing a draft of 1.00 meter (for’d & aft) and was reported to be without any ballast water in the ballast tanks. Inspection of the barge was carried [out] with the assistance of Mr Steve Seclier, of Marine & Civil Construction Co. Pty Ltd. Our surveyor checked following items which were loaded and secured on deck of barge.
Items were:
1. One number – winches/power pack.
2. One number 20 feet container.
3. Two numbers 10 feet containers.
4. Gas cylinder cage.
5. One no crane with the boom at an angle of 30 degrees to the weather deck.
6. One number vehicle (Make: land cruiser).
…
22. Two numbers – towing bridles (specifications as per drawing)
(Emphasis added.)
…
All these items were observed to be secured on deck with straps and eyes pads & plates (welded on to the deck).
Towing bridles were found to be secured on vessel’s deck. We examined bridles with shackles in the stowed position. Bridles and Shackles attached to the Bridles were found to confirm with the drawing supplied to us.
Seas [sic] fastening were checked by us, with barge in static condition. In that condition they appeared to be satisfactory (Please note that we were not provided with test certificates of the lashing material).
(Emphasis added.)
Please refer to the photographs attached with this report.
This report is submitted in good faith and constitutes our opinion of the “Arrangement of Towing bridle and Sea fastenings (design and certification by International Maritime Consultants) [sic]. The surveyor assumes no responsibility for any defects and is to be held harmless for conditions subsequently arising.
(Emphasis added.)
This report is issued, attendance made and opinions formed all without prejudice to any party concerned.
29 Mr Sweet emailed a copy of the report to an employee of the tug owner who then advised the skipper of the tug that the sea fastenings had been approved.
30 The next day, 29 April 2006, the tug left Dampier with the barge in tow. Conditions at sea became rough, and early next morning, the crew noticed that the fastenings on the boom had failed. The boom had swung around 180 degrees and damaged the crane and other equipment on the barge. The wire ropes swung free because the hooks holding them to the deck of the barge had straightened under pressure.
31 The cost of repairing the crane and the boom amounted to $605,349.17.
32 M&C issued the proceedings against SGS and also against IMC. It later joined the tug owner, Svitzer Pty Ltd. The claim against IMC was settled, without an admission of liability, for $220,000 of which $50,000 was allocated to legal costs. The claim against Svitzer Pty Ltd was settled, without an admission of liability, for $50,000 of which $10,000 was allocated to legal costs. The claims against IMC and Svitzer Pty Ltd were settled before trial. At trial the remaining claim against SGS was for $395,349.17, being the balance of the cost of repairs after deducting the amounts received from the two settlements, apart from the amounts allocated to legal costs.
The reasons of the primary judge
33 The primary judge explained the misleading or deceptive conduct claim made by M&C against SGS by reference to the case pleaded in the statement of claim.
34 M&C pleaded in [4] of the statement of claim that:
On 20 April 2006 … [M&C] retained… [SGS] to provide a survey report on the towing bridle and sea fastenings for the barge loaded with the Crane, which report was expressed to be required prior to a proposed sea voyage of the Miclyn 131 under tow from Dampier to Koolan Island and to be required for insurance before cover was accepted for tow
(Original emphasis.)
35 M&C then pleaded at [6] that the written report sent by SGS to Mr Sweet on 28 April 2006 represented to M&C that:
(a) A marine surveyor…had attended aboard the loaded barge to inspect the arrangements for towing bridle and sea fastenings;
(b) The Crane and boom were secured on deck with straps and eye pads and plates welded onto the deck;
(c) The sea fastenings were checked and appeared to be satisfactory.
36 M&C then pleaded in [7] of the statement of claim, that:
The sea fastenings did not appear to be satisfactory, and the arrangements for securing the boom of the Crane and the proposed method of transporting the Crane by barge with its boom assembled and erected were not safe satisfactory or suitable arrangements for transporting the Crane and its boom from Dampier to Koolan Island, in that:
(a) The boom was secured to the barge on each of the port and starboard sides by a single part 11 mm wire and eyelet, a tensioner and metal hook, all with a safe working load of no greater than 1.6 tonnes, which sea fastenings were grossly inadequate for and would not have survived the proposed tow of a 250 tonne Crane with its boom extended;
(b) The boom required, but did not have, on each of the port and starboard sides high tensile chains and high tensile securing components that secured the boom to the barge;
(c) And/or alternatively:
(i) The Crane with its boom fully assembled and extended could not be transported from Dampier to Koolan Island on a barge towed by a tug without significant risk of damage from the forces that may result from the wind and wave conditions that occurred in that area; and
(ii) The safe method of transporting the Crane and boom by ocean going vessel entailed dismantling the boom and transporting it in pieces.
37 M&C then pleaded in [8] of the statement of claim that SGS did not tell it of the matters pleaded in [7] of the statement of claim.
38 M&C then pleaded in [9] of the statement of claim, that by its conduct as pleaded in [4], [6] and [8], SGS, in trade or commerce:
(a) Expressly represented that the sea fastenings appeared satisfactory and were satisfactory;
(b) Impliedly represented that there were no matters the subject of the survey that required further investigation before the proposed sea voyage from Dampier to Koolan Island;
(c) Impliedly represented that in relation to the sea fastenings of the boom there was no significant risk of damage occurring on the sea voyage.
39 The primary judge then referred to matters of causation and reliance which do not arise on this appeal.
40 The primary judge posed a central issue, which he then addressed, as follows:
However, at the centre of SGS’s case was the contention that Marine & Civil had failed to demonstrate that SGS had made either the express or implied representations pleaded by Marine & Civil. A primary contention of SGS was that before it was retained SGS advised Marine & Civil that it would only issue a survey report on the loaded barge in a “static” as opposed to a “dynamic” state, and this is what it did. I now consider this question.
Express Representation
41 The primary judge first considered whether SGS made the express representation “that the sea fastenings appeared satisfactory and were satisfactory”. His Honour held that M&C failed to establish that SGS made the express representation in the terms pleaded. The terms used by the SGS survey report were:
Seas [sic] fastening were checked by us, with barge in static condition. In that condition they appeared to be satisfactory (Please note we were not provided with test certificates of the lashing material).
42 The primary judge said at [99]:
In my view, it is apparent that the author of the report did not make an unqualified statement that the sea fastenings appeared to be satisfactory and were satisfactory. Rather, the author qualified the statement as to the sea fastenings by stating that they were inspected with the barge in a static condition and, in that condition, the sea fastenings appeared to be satisfactory. Also, the statement was further qualified by the reference to the fact that SGS had not been provided with test certificates of the lashing material.
43 And at [100]:
[T]he language used by SGS did not make an express representation that stated that the sea fastenings were satisfactory for transporting the crane and its boom from Dampier to Koolan Island.
Implied Representations
44 After again identifying the alleged implied misrepresentations, the primary judge referred to a passage in the judgment of French CJ and Kiefel J in Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited (2010) 241 CLR 357 at [5]; [2010] HCA 31 at [5], which included:
Where silence or non-disclosure is relied upon, the pleading should identify whether it is alleged of itself to be, in the circumstances of the case, misleading or deceptive conduct or whether it is an element of conduct, including other acts or omissions, said to be misleading or deceptive.
45 His Honour then observed that M&C relied on the surrounding circumstances referred to in [4] and [6] of the statement of claim, and said that this conduct:
must be assessed objectively by reference to the conduct as a whole in light of the relevant surrounding circumstances.
46 The primary judge relied on the approach taken in Butcher v Lachlan Elder Realty Pty Limited (2004) 218 CLR 592 (Butcher), described in the judgment of McHugh J at [109] as follows:
The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. In determining whether a contravention of s 52 has occurred, the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself.
(Footnote omitted.)
47 The primary judge explained that M&C relied particularly on the following part of the M&C April email:
• Insurance requires an independent report prior to accepting cover for the coastal tow.
• SGS scope of services to provide an independent survey report that verifies towing bridle and seafastenings (design and certification by International Maritime Consultants) prior to departure. My collegue [sic] Mr Julian Van der Meer will send copies of the tow plan and the approved seafastenings by seperate [sic] e-mail. The vessel details and towing winch are to be verified by the operator (Mermaid).
48 M&C emphasised that the insurance was sought for a coastal tow and that suggested that the opinion was sought in respect of a dynamic event, namely the tow from Dampier to Koolan Island.
49 The primary judge then said that SGS denied the implied representations and relied on the terms of the report and on the SGS March email.
50 His Honour next explained why he found that SGS did not make the implied representations.
51 The report did not purport to express an opinion about the fitness of the loaded barge or the sea fastening for the purpose of undertaking the tow from Dampier to Koolan Island because the report was qualified in two respects. First, the report stated that the surveyor attended onboard to inspect the “Arrangement of Towing bridle and Seafastenings (design and certification by International Maritime Consultants)”. The same expression was used near the end of the report to explain the nature of the opinion being expressed. The primary judge said at [117]:
The reference in two separate places to the fact of the sea fastenings having been designed and certified by IMC is significant. This is because it is an indication that the surveyor was not taking responsibility for the suitability of the independent consultant’s design and certification of the sea fastenings for the conduct of the tow. Further, Marine & Civil did not provide Captain Sharma with any drawings of the sea fastenings.
52 The second qualification of the report was that the sea fastenings were checked in “static condition”, and in that condition, the sea fastenings appeared to be satisfactory. The limitation was emphasised by the notation:
“Please note that we were not provided with test certificates in respect of the lashing material”.
53 His Honour then accepted the evidence of Captain Hughes that a reasonable person in the maritime industry would not have relied on the report as a basis for being satisfied that the crane was appropriately secured for the voyage. The primary judge did not accept the evidence of Captain Hughes that his view was inapplicable to M&C because M&C lacked the necessary experience in such matters. His Honour rejected a distinction sought to be made between experience in the maritime industry and experience, which M&C had, in marine construction. He found that the opinion adopted by Captain Hughes addressed the question of how a reasonable client who had commissioned a marine surveyor to provide a report in respect of a proposed tow of a loaded barge would have understood the report. His Honour explained:
122 … the relevant participants are marine surveyors and their clients who are organising sea going voyages and tows, and require a survey report. Mr Sweet accepted in cross-examination that Marine & Civil was experienced in organising charters, tows and surveys, and it was commonplace for Marine & Civil to receive and read documents related to these activities.
123 I find, on that basis, that Marine & Civil was not inexperienced in dealing with marine surveyors in relation to the procuring of survey reports for proposed charters or tows. Further, Mr Sweet deposed during cross-examination, that he had dealt with and obtained survey warranties from at least two other marine surveyors. It follows that I do not accept Captain Hughes’ evidence that his opinion expressed…above, did not apply to Marine & Civil because it was not experienced in the maritime industry.
54 The primary judge then addressed M&C’s contention that SGS made the implied representations by not mentioning the risks attending the voyage in the context of the relevant surrounding circumstances.
55 SGS particularly relied on the SGS March email which included the following:
Warranty Surveys are only conducted by the Classification Society however we are able to provide you with a survey report. This is a report of our findings at time and place of intervention but I must stipulate is not a Certificate of Seaworthiness for towing.
56 M&C argued that in assessing what M&C knew or should be taken to have known from previous dealings with SGS, the inquiry should be confined to the M&C April email, and should leave out of account the SGS March email. His Honour rejected that argument.
57 Not only was there reference in the M&C April email to matters dealt with in the SGS March email, but Mr Sweet, in cross-examination, accepted that he knew of the limitations of the nature of the report SGS was prepared to provide. His Honour referred to two passages from the cross-examination of Mr Sweet as follows:
So what you understood from that email [the SGS March email] that they were equipped to provide was on hire off hire reports; correct?---Yes.
And a report of findings at the time and place of intervention?---I read it that they could provide a survey report but they wouldn’t be providing a warranty – warranty survey.
Yes, and they could provide a survey report which was a report of findings at the time and place of intervention?---Yes.
And would not be a certificate for seaworthiness for towing?---Yes.
…
Now, the fact that you didn’t refer to “warranty survey” or “certificate” in that email [the M&C April email] was quite deliberate, wasn’t it?---That’s correct.
Because you knew that all that you had been told by SGS in the email of 20 March 2006 [SGS March email] was that they could provide “a report of our findings at the time and place of intervention, but I must stipulate it’s not a certificate of seaworthiness for towing”?---That’s correct. I knew SGS were not giving a warranty survey, that they were doing a survey before towing.
No. You knew that what they had told you they could do was “a report of our findings at time and place of intervention which would not be a certificate of seaworthiness for towing”?---Correct. I acknowledge that.
58 The primary judge therefore found that the SGS March email should be taken into account in assessing Mr Sweet’s knowledge in relation to whether SGS made the implied representations.
59 In taking into account the SGS March email, the primary judge considered an argument advanced by M&C concerning the use of the term “Certificate of Seaworthiness” in the email. M&C contended that, although the phrase was capitalised, there was no evidence that it was used as a term of art. Hence, there was no basis on which the expression should be viewed as being used in contrast to the expression “survey report” and, consequently, should not be treated as an indication that SGS indicated that it would not pronounce on the seaworthiness of the barge for the voyage.
60 The primary judge rejected the argument of M&C. He said:
135 …the juxtaposition of the words, in the first part of the sentence, that the survey report would be a report as to the findings “at time and place of intervention” in relation to the words which followed, “but I must stipulate is not a Certificate of Seaworthiness for towing”, was intended to contrast the difference between two types of reports; and to emphasise that SGS would not report on the sea-worthiness of the loaded barge for the proposed tow.
61 Further, his Honour found that Mr Sweet acknowledged in cross-examination that he understood from the SGS March email that SGS would not be providing a certificate of seaworthiness for the barge for the purposes of the tow. His Honour referred to two passages in the evidence of Mr Sweet as follows:
And the communications that you had back from the insurer, referred to “Please forward certificate” report/certificate?---Yes, that’s correct. I read that as the SGS report.
But you agree with me that obtaining a towage tow worthiness certificate from SGS, was something that as from 20 March 2006, you knew you couldn’t get from SGS? Correct, yes, not a warranty. As I said before, I thought that the certificate was part of the warranty survey.
Yes. The point is whether it’s a warranty survey or a separate certificate or whether the certificate is part of it, neither of those you knew you could get from SGS? That’s correct.
…
Well, it says “In that condition.” It does not say, “We checked within static condition and they appeared satisfactory for the tow,” did it?---It doesn’t say that, no, but - - -
And you knew from what you had been told before that they wouldn’t provide a certificate as to the satisfactory nature for the purposes of a tow?---That’s correct. They weren’t doing a towage certificate.
You were the only one, I want to suggest, that knew that that was the limitation that they had already indicated to you, because you were the only recipient of that email of 20 March 2006?---You have established that before, but as I said, I believe I discussed it with the insurer but I can’t explain it more than I already have.
62 The primary judge then made the following finding:
139 I find, therefore, that from 20 March 2006, Mr Sweet, on behalf of Marine & Civil, knew from Mr Tickner’s email [SGS March email] that any survey report which would be provided by SGS would be confined to expressing an opinion as to the surveyor’s “findings at time and place of intervention” and would not provide a report which certified suitability of the loaded barge and the sea fastenings to undertake the proposed tow from Dampier to Koolan Island.
63 The primary judge then considered certain cross-examination of Mr Sweet as follows:
145 Mr Sweet deposed in cross-examination, that, notwithstanding, Mr Tickner’s email, he believed that SGS would report on the suitability of the loaded barge and the sea fastenings to undertake the voyage to Koolan Island. To the extent that Mr Sweet may have believed, when he sent the email of 20 April 2006 [M&C April email], that SGS would provide a report which opined upon the suitability of the loaded barge to undertake the proposed voyage, that belief was not objectively warranted, for the reasons referred to in the preceding paragraphs. Likewise, a belief or understanding that because, following the receipt of Mr Sweet’s email of 20 April 2006 [M&C April email], SGS did not refer in its report to the matters pleaded in para 7 of the statement of claim, SGS, thereby, made the implied representations, was objectively not warranted by a person possessed of the knowledge which Mr Sweet then held or is to be taken to have held. This is because the absence of any express reference in the report to the suitability of the loaded barge to undertake the voyage to Koolan Island, was explicable on a basis other than that SGS had agreed to opine upon the sea-worthiness of the loaded barge and was of the opinion that the loaded barge was suitable for the undertaking of the voyage. The other explanation was that in issuing a report which did not address the sea-worthiness of the loaded barge, SGS was doing what it said it would do in Mr Tickner’s email of 20 March 2006 [SGS March email]. It is this explanation which is objectively warranted having regard to what each of the parties knew, or is to be taken to have known, about the other party.
64 His Honour concluded:
146 …having regard to the qualified nature of the language used in the SGS survey report, the expert evidence as to the manner in which the SGS survey report would be understood by a reasonably experienced person in the maritime industry, and, having regard to what each of the parties knew, or is to be taken to have known about the other party, I find that, applying an objective test, SGS did not make the implied representations pleaded by Marine and Civil.
The appellant’s arguments on the appeal
65 The grounds of appeal relevantly challenged the primary judge’s finding that M&C had not established that SGS made either the express or the implied representations. M&C contended that the terms of the report and the surrounding circumstances showed that SGS offered its opinion on the suitability of the sea fastenings for the voyage from Dampier to Koolan Island.
66 The purpose of the report was made clear in the conversation between Mr Sweet and Captain Bhalla. Mr Sweet said:
We need a survey report done on our barge, Miclyn 131, which is to be towed from Dampier to Koolan Island on 29 April. I’ll send you a scope of work.
67 The same purpose is recorded in the heading of the M&C April email. It read:
Subject: Tow of Piling Barge Miclyn 131 – Dampier to Koolan – Survey Report
68 M&C also drew attention to the references to the voyage in the M&C April email as follows:
• Destination is Koolan Island for the Aztec Iron Ore Project (Construction).
…
• Insurance requires an independent report prior to accepting cover for the coastal tow.
69 The final scope of work item in the M&C April email required SGS to verify the “seafastenings (design and certification by International Maritime Consultants)”. IMC however did not design any sea fastenings which could be verified. So SGS could not undertake the task which the agreement required. It was known to both SGS and M&C that IMC had not provided any design for the sea fastenings. Consequently, the comment in the report on the sea fastenings was not made for the purpose of the original contractual task of verification. What SGS did in relation to the sea fastenings was outside the terms of the agreement. That was the background in which the report was provided.
70 The report was intended to relate to an inspection. It was entitled “Inspection Report”. It described the instructions as to inspect. Under the heading “Surveyors Remarks” the report made observations “[a]t the time of inspection” and it was the “inspection” which was stated to have been carried out with the assistance of Mr Seclier of M&C. The implication in this argument was that the function of inspecting related to the suitability of the equipment for the voyage.
71 M&C then pointed to the way in which the report dealt with the towing bridles which IMC had designed. The report stated that they conformed with the drawings supplied.
72 The language of the report in relation to the sea fastenings in the following paragraph contrasted with the language of verification concerning the towing bridles. SGS could not perform the same verification task in relation to the sea fastenings because IMC had not provided a design for them. In relation to the sea fastenings the report explained that they were checked and appeared to be satisfactory.
73 Mr Sullivan QC, who appeared with Ms K Williams for M&C, submitted that from these circumstances:
The ordinary person with the qualifications and skill base of Marine & Civil would say that that amounted to a statement that, “Well, looking at these sea fastenings securing the boom, as they appear on the barge in a static condition, ie, as it’s moored alongside the wharf in the sheltered harbour of Dampier, but without having the benefit of seeing the IMC design materials or the test certificates, those sea fastenings appear satisfactory for the proposed voyage.
74 Counsel elaborated by contending that where the report said that the sea fastenings appeared satisfactory it meant that there was nothing obviously observable by a marine surveyor which made the sea fastenings appear unsatisfactory for the voyage.
75 The reference to the inspection of the sea fastenings with the barge “in static condition” indicated only that the inspection had not been conducted in the course of sailing at sea. But, in context, the report was saying that the sea fastenings were, when observed in the static condition, satisfactory for the voyage.
76 The core of the argument was expressed by counsel thus:
There must be some meaningful content … given to an expert’s report for a considerable sum of money which was given in the context of this voyage with the knowledge that this report was needed for insurance purposes for the voyage.
77 It was submitted that for the report to say nothing about what would happen when the loaded barge went to sea is a “useless statement”. Where the report said that the sea fastenings appeared to be satisfactory caused one to ask “satisfactory for what?”. The report could not mean that the sea fastenings were satisfactory for allowing the barge to stay alongside the wharf in Dampier. That would have been meaningless information. Mr Sweet said as much in cross-examination as follows:
That is exactly what you had been told was the limitations of the report that SGS could provide back in – on 20 March? [SGS March email] ---That they would do a survey in position, yes.
That’s what they said, that that’s what you would do every time.
That it is a report of our findings at time and place of intervention, but I must stipulate it is not a certificate of seaworthiness for towing.
?---That’s correct.
So you knew when you saw that it was a reference to it being in static condition, that that carried with it what you had been told before, that you couldn’t draw any conclusion about a tow capacity in relation to that, because that was an express limitation that was put on the reports when you first inquired? ---I didn’t read it that way, no. The barge in the static condition means it wasn’t being towed. That’s the way – I expected that they would get on the barge when it was alongside the wharf in a static condition. That’s when they can do the inspection. I didn’t read it in the negative. I read it that they were saying that they carried out the survey in the static condition, which is alongside the wharf and that they considered it is satisfactory. So I didn’t read it being under tow.
78 M&C argued that this evidence showed that Mr Sweet understood the reference to static condition to relate only to the circumstances in which the inspection took place and not to the circumstances about which the view of the sea fastenings was being expressed.
79 M&C also contended that the primary judge made both legal and factual errors in dealing with the evidence of Captain Hughes.
80 The legal error involved a failure to address the relevant person who was the subject of the representations. The distinction between relevant classes was explained in Butcher in the judgment of Gleeson CJ, Hayne and Heydon JJ at [36] and [37] as follows:
36 … Questions of allegedly misleading conduct, including questions as to what the conduct was, can be analysed from two points of view. One is employed in relation to “members of a class to which the conduct in question [is] directed in a general sense”. The other, urged by the purchasers here, is employed where the objects of the conduct are “identified individuals to whom a particular misrepresentation has been made or from whom a relevant fact, circumstance or proposal was withheld”; they are considered quite apart from any class into which they fall. Adoption of the former point of view requires isolation by some criterion or criteria of a representative member of the class.
37 … But the former approach is inappropriate, and the latter is inevitable, in cases like the present, where monetary relief is sought by a plaintiff who alleges that a particular misrepresentation was made to identified persons, of whom the plaintiff was one. The plaintiff must establish a causal link between the impugned conduct and the loss that is claimed. That depends on analysing the conduct of the defendant in relation to that plaintiff alone. So here, it is necessary to consider the character of the particular conduct of the particular agent in relation to the particular purchasers, bearing in mind what matters of fact each knew about the other as a result of the nature of their dealings and the conversations between them, or which each may be taken to have known.
(Footnotes omitted.)
(Emphasis added.)
81 M&C argued that Captain Hughes gave evidence, which was accepted, directed to the understanding of the report by a reasonable person. But this was a case, so it was argued, in which the representation was made to a particular person, namely, M&C. The hypothetical reasonable person was irrelevant to the inquiry. The question was not what a reasonable person with experience in the maritime industry would see was conveyed by the report, but rather what the report would convey to M&C.
82 The factual error was that when Captain Hughes said that a reasonable person in the maritime industry would not rely on the report, he meant another marine surveyor in the maritime industry would not rely on the report. M&C was not a marine surveyor and hence Captain Hughes’ view did not apply to M&C. The primary judge erred, so it was contended, in treating Captain Hughes’ opinion as applicable to M&C and Mr Sweet.
consideration
83 The oral argument on the appeal concentrated on a challenge to the primary judge’s finding that the implied representations had not been made out, although the written submissions also sought to challenge the finding that the express representation had not been made out.
84 It was common ground that whether the implied representations were made out must be judged objectively, and by reference to the surrounding circumstances in which they were alleged to have been made. The surrounding circumstances include what each party knew about each other, or might be taken to have known about each other, as a result of the nature of their dealings and the conversations between them.
85 The central contention on the appeal was that the primary judge should have found that the purpose of M&C obtaining the report was for the voyage and hence the report must be read as expressing the view that the sea fastenings were satisfactory for the purpose of the voyage.
86 For the reasons which are now set out, a consideration of the surrounding circumstances, of what the parties knew or should be taken to have known about each other, and of the terms of the report shows that the primary judge was correct in finding that SGS did not express a view in the report that the sea fastenings were satisfactory for the voyage, and hence did not make the implied representations alleged.
87 Before M&C approached SGS, M&C had engaged IMC to advise on the design of the sea fastenings for the crane and the boom, M&C had provided an analysis of the towing configuration including of the boom, and had provided drawings for the sea fastenings for the base of the crane.
88 The approach by M&C to SGS was initiated as a result of Mr Brown of GAK, insurance brokers, requiring a warranty survey report for the tow, and saying that a report from SGS would be acceptable. That led Mr Sweet of M&C to email Mr Tickner of SGS. In his email dated 20 March 2006 Mr Sweet asked for “a warranty survey for towing purposes for tugs and crane barges”. Mr Tickner replied in the SGS March email:
Warranty Surveys are only conducted by the Classification Society however we are able to provide you with a survey report. This is a report of our findings at time and place of intervention but I must stipulate is not a Certificate of Seaworthiness for towing.
89 This response of Mr Tickner set the scene for the future transaction between M&C and SGS. Mr Tickner made plain that SGS could only undertake a survey report. That report would provide findings at the time and place of intervention. Mr Tickner used emphatic language when he stated that he “must stipulate” that the report would not be a “Certificate of Seaworthiness for towing”.
90 Shortly after this exchange, M&C had further dealings with IMC concerning towing calculations and plans, but no plans for the sea fastenings for the boom were produced.
91 It was a reminder from Mr Clarke of GAK, insurance brokers, on 19 April 2006 that he needed a survey report which seems to have spurred Mr Sweet into further contact with SGS. He set out the scope of the work relating to the sea fastenings required by M&C in the M&C April email as follows:
SGS scope of services to provide an independent survey report that verifies towing bridle and seafastenings (design and certification by International Maritime Consultants) prior to departure. My collegue [sic] Mr Julian Van der Meer will send copies of the tow plan and the approved seafastenings by seperate [sic] e-mail. The vessel details and towing winch are to be verified by the operator (Mermaid).
92 This description of the work made it plain that SGS was asked to verify the sea fastenings. The design and certification was to be done by IMC. The function described in the scope of work was a checking function. It amounted to a recognition by Mr Sweet of the limitations on what SGS could do as explained to him in the SGS March email.
93 In the passages extracted at [57] of these reasons, and relied on by the primary judge, Mr Sweet acknowledged when he sent the M&C April email that he understood the limitations on what SGS was able to provide by way of a report.
94 In another passage from the cross-examination of Mr Sweet relied upon by SGS on the appeal, Mr Sweet explained:
Yes?—And I had engaged SGS to verify that the work completed on the barge was in accordance with the design and that was in the instructions to them.
And that was an engagement of SGS, because the verification or the fact that the methodology had been sent to IMC and IMC had not raised any concerns, was not something that you understood was enough for the insurer?---No, it’s an independent verification, so regardless of towing or other procedures, then in some cases with the engineering works that we undertake, there is an independent verification, so this was a similar process where a design is completed by someone and we would normally like to involve the designer in what is actually being built, which is the purpose of the method statement and then the SGS survey was a verification by a third person to verify that the building or the actual construction on the barge and the sea fastening was in accordance with the design.
(Emphasis added.)
95 Then, when, on 24 April 2006, Captain Sharma inspected the barge, he asked for the test certificates for the towing bridle, and Mr Sweet sent the certificates by email on the same day.
96 This was the background in which the report was given.
97 The report commenced by recording the instructions:
… to inspect “Arrangement of Towing bridle and Seafastenings (design and certification by International Maritime Consultants).
98 The report concluded by stating that it constituted SGS’s opinion of:
“Arrangement of Towing bridle and Sea fastenings (design and certification by International Maritime Consultants).
99 The report concerning the towing bridles and shackles verified the IMC design. That equipment was found to conform “with the drawing supplied to [SGS]”.
100 To that point in the report, what SGS was required to do and what it did was a task of observation and comparison of drawings of designs made by IMC. There was no element of assessment of the suitability of the bridles or shackles for the voyage, or any exercise of judgment involved.
101 The sea fastenings had to be dealt with differently because SGS did not have drawings for them. But the report explained that SGS performed a similar function. It stated that the sea fastenings were checked in a static condition. The report then emphasised that the observations related to that condition. In other words, the report restricted itself to the function of observation alongside the wharf. Without plans, SGS could only report that the sea fastenings were in place. When the report stated that the sea fastening had an appearance of being satisfactory, it was making a comment only that the equipment was in place and appeared to be equipment in the nature of sea fastenings. In other words, the equipment conformed to the description of a sea fastening. The fact that SGS was not offering an opinion on the suitability of the sea fastenings for the voyage is confirmed by the note that SGS was not provided with the test certificates for the lashing material.
102 To read the four lines concerning sea fastenings in the report as offering an opinion about their suitability for the voyage would be inconsistent with the task undertaken by SGS as described in the SGS March email and M&C April email, and reflected elsewhere throughout the report.
103 Then, M&C argued that the primary judge erred in his treatment of the evidence of Captain Hughes. Captain Hughes gave evidence for M&C that a reasonable person with experience in the maritime industry would not have relied on the report as a basis for being satisfied that the crane was secured for the voyage. The primary judge accepted this part of the evidence. However, he then examined the experience of M&C and found, contrary to Captain Hughes’ view, that M&C’s familiarity with tows, charters and surveys meant that this general view did apply to M&C.
104 M&C argued that the primary judge wrongly approached the question of M&C’s understanding of the report by reference to a reasonable person in the industry rather than by reference to the particular circumstances of M&C. This approach, M&C argued, was contrary to that required by Butcher. According to Butcher, evidence of the understanding of the reasonable person was irrelevant in circumstances such as the present case.
105 The primary contention of SGS was that this argument was of no consequence to the appeal. Counsel for SGS argued that the primary judge relied on three foundations for his finding that SGS did not make the implied representations. He relied on the qualified nature of the language used in the report, the knowledge which each of the parties had or was taken to have had about the other party, and also the expert evidence of Captain Hughes as to the manner in which the report would be understood by a reasonably experienced person in the maritime industry. The present argument took issue with the last of these grounds. SGS contended that even if the primary judge erred as alleged, the other two grounds justified his Honour’s conclusion that SGS did not make the implied representations.
106 This analysis is correct. Without the evidence of Captain Hughes on the way the report would be understood by a reasonable person with experience in the maritime industry, the qualified nature of the language used in the report taken with what the parties knew or must be taken to have known about each other establish that SGS did not make the implied representations.
107 In any event, M&C did not establish that the primary judge erred in this regard. Butcher explains that where a representation is made to a particular person rather than to members of a class in a general sense it is necessary to analyse the conduct in relation to the particular person alone. The primary judge was aware of the need to adopt this approach. He cited and extracted the relevant passage from Butcher. Whilst he used Captain Hughes’ evidence as a starting point, in the end, his conclusion was based on an analysis of the understanding of the report which M&C had as a result of particular circumstances of its experience of organising charters, tows and surveys. The primary judge found that it was commonplace for M&C to receive and read documents related to these activities.
108 Finally, M&C contended that the primary judge made a factual error concerning Captain Hughes’ evidence. Captain Hughes gave evidence that a reasonable person with experience in the maritime industry would not have relied on the SGS report as a basis for being satisfied that the crane was appropriately secured for the voyage. But Captain Hughes said that M&C was not experienced in the maritime industry. Thus, on his evidence as a whole, M&C would have relied on the SGS report in the manner suggested. The primary judge, however, found that M&C was experienced in the maritime industry, and hence did not rely on the report. M&C argued that Captain Hughes clarified his evidence in re-examination by explaining that, by a reasonable person in the maritime industry, he meant a marine surveyor. As M&C was not a marine surveyor, Captain Hughes’ opinion that only such a person would not rely on the report, did not apply.
109 The passage in re-examination relied upon by M&C was as follows:
Captain Hughes, you remember you were asked some questions about what you said about which Captain Douglas had said about a reasonable person with maritime experience. You’re a qualified mariner, marine surveyor?---Yes.
What is a reasonable person with maritime experience?---Well, I would think Captain Sharma would, I suppose, fit into that, being a marine surveyor.
Someone with the level of qualification of Captain Sharma?---No. His expertise may have been something quite different from towage and lashing of cargoes. I don’t know what his experience is, but being a marine – having marine backing – I would think he should have seen any shortcomings in the lashing arrangements.
…
Because you have – you were taken to what Captain Douglas said. A reasonable person with experience in the maritime industry and certain things about one not relying on SGS reports and you agreed with that. So what is a reasonable person with maritime experience?---Well, it should be a marine surveyor.
110 This exchange was confused. Captain Hughes’ answers suggest that they were not directed to the experience of the recipient of the report, but with the experience of the person undertaking the inspection. Of course, that person would, as Captain Hughes said, be a marine surveyor. The primary judge was correct in his treatment of Captain Hughes’ evidence.
111 The primary judge was correct in finding that, objectively viewed in the surrounding circumstances in which it was made, the report did not offer a view of the suitability of the sea fastenings for the voyage. The primary judge was also correct to find that to the extent mentioned in part of his cross examination that Mr Sweet believed that the report proffered such an opinion, that belief was not objectively warranted. His Honour was thus correct to conclude that SGS did not make the alleged express or implied representations.
proportionate liability
112 The primary judge held that, if he had found that SGS was liable to M&C, he would have found that IMC was a concurrent wrongdoer for the purposes of s 87CD of the Trade Practices Act 1974 (Cth). As a consequence, the amount of the liability of SGS to M&C would have been reduced.
113 M&C appealed against this aspect of the judgment of the primary judge. However, as the conclusion on the appeal is that SGS is not liable to M&C, it is unnecessary to address the ground of appeal concerned with proportionate liability.
Conclusion
114 For the above reasons, the primary judge did not err in concluding that M&C did not establish that SGS made the representations alleged.
115 The appeal must be dismissed with costs.
I certify that the preceding one hundred and fifteen (115) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North. |
Associate:
Date: 16 May 2013
IN THE FEDERAL COURT OF AUSTRALIA | |
WESTERN AUSTRALIA DISTRICT REGISTRY | |
GENERAL DIVISION | WAD 244 of 2012 |
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA |
BETWEEN: | ACN 055 378 240 PTY LTD (FORMERLY MARINE & CIVIL CONSTRUCTION COMPANY PTY LTD) Appellant
|
AND: | SGS AUSTRALIA PTY LTD (ACN 000 964 278) Respondent
|
JUDGES: | NORTH, JACOBSON and GILMOUR JJ |
DATE: | 16 MAY 2013 |
PLACE: | PERTH |
REASONS FOR JUDGMENT
JACOBSON J:
116 I have had the benefit of reading the draft reasons for judgment of North J and Gilmour J. I agree with their Honours that the appeal must be dismissed with costs.
117 In my opinion the primary judge correctly found in accordance with established authority that the conduct of SGS, considered as a whole and in its full context, did not amount to misleading or deceptive conduct.
118 This was because there were qualifications in the text of the survey report provided by SGS to M&C on 28 April 2006, which indicated that SGS was not taking responsibility for the suitability of the independent consultant’s design of the sea fastenings for the conduct of the tow of the barge to Koolan Island.
119 Importantly, those qualifications were in accordance with earlier indications given by SGS, in particular in the email exchange between Mr Sweet and Mr Tickner on 20 March 2006, that SGS was not prepared to provide a warranty survey and that its task was limited to a survey report at the time and place of intervention.
120 In my opinion, the decisive consideration was the primary judge’s finding that when Mr Sweet sent his email of 20 April 2006 to SGS, he was conscious of the limitations on the nature of the report which SGS was prepared to provide.
121 This finding was amply supported by the evidence given under cross-examination by Mr Sweet that the survey would not be a certificate for seaworthiness for towing.
122 The finding provides a complete answer to the rhetorical question posed by Senior Counsel for M&C in relation to the terms of the survey: “satisfactory for what?”
123 The answer to that question did not turn upon the reaction of the hypothetical representative member of a class of persons because the impugned conduct occurred in dealings between M&C and SGS. Accordingly, the question was to be answered by analysing the conduct of SGS in relation to M&C alone: Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 at [37]; Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at [26] – [28]; Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited (2010) 241 CLR 357 at [20].
124 This principle also provides an answer to the submissions which addressed the effect of the evidence of Captain Hughes. There was no challenge to Captain Hughes’ evidence that the boom restraints were manifestly inadequate for the proposed voyage. But the answer to that evidence was, as the primary judge found, that Mr Sweet knew from 20 March 2006 that SGS would not provide a survey report which certified the suitability of the loaded barge and the sea fastenings for the proposed voyage to Koolan Island.
125 The primary judge took into account Captain Hughes’ evidence as to the way in which the SGS report would be understood by a reasonably experienced person in the maritime industry in order to reinforce his finding that the conduct was not misleading. That seems to me, with respect, to be at odds with the correct approach which required attention to the dealings between the parties. However, I agree with Gilmour J that this does not distract from his Honour’s findings which were otherwise well founded.
I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. |
Associate:
IN THE FEDERAL COURT OF AUSTRALIA | |
WESTERN AUSTRALIA DISTRICT REGISTRY | |
GENERAL DIVISION | WAD 244 of 2012 |
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA |
BETWEEN: | ACN 055 378 240 PTY LTD (FORMERLY MARINE & CIVIL CONSTRUCTION COMPANY PTY LTD) Appellant
|
AND: | SGS AUSTRALIA PTY LTD (ACN 000 964 278) Respondent
|
JUDGES: | NORTH, JACOBSON and GILMOUR JJ |
DATE: | 16 May 2013 |
PLACE: | PERTH |
REASONS FOR JUDGMENT
Gilmour J:
126 On 20 and 21 April 2006, at Dampier, Western Australia, the appellant, ACN 055 378 240 Pty Ltd, formerly Marine & Civil Construction Company Pty Ltd (M&C) loaded a 250 tonne lifting capacity crane on to the barge, Miclyn 131. The boom of the crane was fully assembled and extended when the crane was loaded on to the barge. M&C secured the boom of the crane to the barge by sea-fastenings. Other equipment was also loaded on to, and secured to, the barge. On 24 April 2006, a marine surveyor, employed by the respondent, SGS Australia Pty Ltd (SGS), a company providing marine surveying services, inspected the loaded barge for the purposes of producing a survey report. On 28 April 2006, SGS provided the written survey report to M&C.
127 The following day, a tug commenced towing the fully loaded barge on the ocean voyage from Dampier to Koolan Island off the Kimberley coast. During the voyage, the sea-fastenings securing the boom of the crane to the barge, failed and the boom slewed 180°. This caused extensive damage to the crane and other property as a result of which M&C suffered loss and damage. The M&C’s case below was that the damage was caused, relevantly, by SGS in that it had engaged in misleading or deceptive conduct in relation to its provision of the survey report.
128 Central to this appeal is whether the primary judge erred in concluding that SGS had engaged in misleading and deceptive conduct for the purposes of s 52 of the Trade Practices Act 1974 (Cth) (the Act) in relation to its provision of the survey report.
129 If the Court is persuaded that the relevant representations, contrary to the findings of the primary judge, were in fact made, then SGS has quite properly conceded that those representations were misleading or deceptive within the meaning of s 52 of the Act, and further, that M&C relied upon those representations.
130 I am of the opinion for reasons which follow that the primary judge was correct in finding that the alleged representations were not established. This is sufficient to dispose of the appeal. I do not, in the circumstances, consider it necessary to deal with the issue of apportionment of liability under s 87CD of the Act. This was a plea raised by SGS below in the event that it was found liable to M&C. There are now concurrent findings that it is not.
Grounds of appeal
131 The live grounds of appeal are whether the primary judge erred in finding that:
1. SGS had not expressly represented that the sea-fastenings appeared to be, and were, satisfactory for the proposed sea voyage from Dampier to Koolan Island.
2. SGS did not make an implied representation that there were no matters the subject of the survey that required further investigation before the voyage from Dampier to Koolan Island.
132 The implied representation was said to arise from the statement that the sea-fastenings appeared satisfactory, made in the context in which SGS inspected the barge and provided the survey report.
Relevant principles
133 It is common ground that determining whether liability for misleading and deceptive conduct arises requires a consideration of circumstances and context. As part of the inquiry, it is relevant to consider what the words are capable of conveying. If they cannot convey that which is claimed, then there is no misleading conduct. However, it is necessary to determine what was conveyed by the words in all the circumstances having regard to the characteristics and knowledge of the person to whom they were addressed and what else was known to the parties through their dealings or otherwise.
134 These general principles are well established: Butcher v Lachlan Elder Realty Pty Limited (2004) 218 CLR 592 at [37]-[39], [109]-[112], [139]; Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited (2010) 241 CLR 357 at [14]-[15], [20], [87], [91].
135 The inquiry is an objective one concerning what was conveyed to the claimant. This is the “anterior question”. The intentions of the party engaging in the conduct and the subjective beliefs of the claimant are both irrelevant in answering this question. Only if the conduct is objectively misleading do subjective questions of reliance arise: Butcher at [37]; Miller at [85] and Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd (2011) 248 FLR 193 at [62], [82], [220]-[222], [234]-[235].
136 The trial judge properly approached the matter on that basis: Marine & Civil Construction Company Pty Ltd v SGS Australia Pty Ltd [2012] FCA 907 at [109]-[110], [145]-[146].
Background facts
137 The following background facts form part of the relevant context to a greater or lesser degree. They are not controversial and are largely taken from the reasons of the primary judge.
138 In October 2005, M&C entered into an agreement with Aztec Resources to provide engineering services to assist in the development of a proposed iron ore offloading wharf at Koolan Island, off the coast of Western Australia, by providing engineering consultancy services. Mr Julian van der Meer, an employee of M&C, was the project manager for the Koolan Island wharf project. Other employees of M&C who worked on the project at the relevant time were Mr Alan Sweet, the contracts manager, Mr Steve Seclier, a piling foreman/supervisor, and Mr Patrick Quinlan, a project engineer.
139 One of the tasks which M&C was required to perform pursuant to its contract with Aztec Resources, was to arrange for the transport of a crane loaded on a barge, from Dampier, Western Australia, to Koolan Island. The crane and the barge were to be used in the construction of the iron ore offloading wharf at Koolan Island.
140 M&C decided to obtain advice from International Maritime Consultants Pty Ltd (IMC) in relation to the measures to be taken to ensure the stability of the barge and crane for the voyage from Dampier to Koolan Island and the undertaking of the piling works intended to be carried out at Koolan Island.
141 On 20 January 2006, Mr van der Meer and Mr Seclier met with Mr Robert Williams and Mr Tiju Augustine, who were employed by IMC. During the course of the meeting, Mr van der Meer said words to the effect that M&C was thinking of towing the barge with the crane onboard from Dampier to Koolan Island and that as M&C did not have a means of assembling the crane at Koolan Island, it would need to be towed with the boom assembled so that it would be ready for use when it arrived. Mr van der Meer then asked whether IMC could undertake the design for the sea-fastenings of the onboard equipment and the crane, and prepare a towing plan and undertake a barge stability analysis. Mr Williams, on behalf of IMC, replied that IMC could meet the requirements of M&C.
142 Mr van der Meer sent a facsimile to Mr Williams dated 20 January 2006, in the following terms:
We are planning to mobilise the barge to Koolan Island in the following sequence:
1. Take delivery of barge from mooring in Dampier around mid February.
2. Assemble 250T Sumitomo Crawler Crane onto barge in Dampier. Note that the crane will need to be fully assembled for mobilisation to Koolan Island, which will require the fabrication of a boom rest. Note that the boom length will be 67.05m.
3. Tow barge to Port Hedland for completion of equipment installation.
4. Tow barge to Koolan Island, where the storm mooring will be installed, and piling operations will commence.
Also attached is the specification for the tug that will be chartered for the duration of the works. Structural drawings and stability books for the two other construction barges will follow in the coming week.
Please advise us of your fee for the above works and invoice quoting the number on the attached purchase order.
143 On 2 February 2006, Mr Augustine sent M&C a stability analysis in respect of the barge and crane. This analysis dealt with the proposed towing configuration and the piling configuration. In respect of the towing configuration, the analysis was made on the assumption that the boom of the crane would be held in position by a boom rest which would be located on the barge, and would support the boom at mid-span.
144 On 2 March 2006, Mr Augustine sent Mr van der Meer an email suggesting that advice be obtained from the manufacturer of the crane about the capacity of the crane to withstand bending movement during the transportation because this would determine the boom cradle position and arrangement. Mr van der Meer then contacted Mr John Buntain of Tutt Bryant Crane Hire (Tutt Bryant), the company from which M&C intended to hire the crane, and asked him whether the crane boom could be supported mid-span. Mr Buntain advised shortly thereafter, that the boom could only be supported at the butt and the head and was not designed to be supported anywhere else.
145 Mr van der Meer then relayed the content of his conversation with Mr Buntain to Mr Augustine. Mr van der Meer said to Mr Augustine:
Perhaps we should simply lash the boom back with soft slings on either side, as suggested by John, so that the boom will be self-supporting but the slings will restrain it from moving laterally.
146 Mr Augustine then said that he would “have a look at that”.
147 On 7 March 2006, there was a meeting between Mr Seclier and Mr van der Meer on behalf of M&C and Mr Williams and Mr Augustine on behalf of IMC. Nothing was said at that meeting to suggest that the advice from Tutt Bryant would cause a problem with the manner in which the crane was to be transported, or that the crane could not be transported safely in an assembled form.
148 On 8 March 2006, Mr Augustine sent Mr Seclier an email which attached the drawings for the sea-fastenings for the base of the crane. Importantly, these drawings did not contain any drawing of sea-fastenings for the boom of the crane.
149 At around this time, Mr Neil Brown, an insurance broker from Gault Armstrong Kemble Pty Ltd (GAK), insurance brokers, advised Mr Sweet that a warranty survey report would be needed as a condition for insurance cover. Mr Brown said that a report from SGS would be acceptable.
150 Accordingly, Mr Sweet sent an email to Mr Christopher James Tickner, the operations coordinator of SGS in Perth. The email dated 20 March 2006, read:
Subject: Warranty Survey for Koolan Island Project
As discussed last week Marine and Civil are constructing the iron ore offloading berth at Koolan Island. We require [a] maritime survey to be completed for onhire/offhire reports and warranty survey for towing purposes for tugs and crane barges mobilised from the following locations;
Dampier
Port Hedland
Fremantle
Koolan Island (off Derby)
Could you please advise contact details and fee structures for SGS that would be suitable to allow these works to be organised.
151 Later that day, Mr Tickner sent an email in response to Mr Sweet’s email. The email stated:
Thanks for your inquiry and we are pleased to offer you our following rates and information.
For Onhire / Offhire reports:
1) Dampier – AU$1200.00 + AU$0.70 / km
2) Port Hedland – AU$1200.00 + AU$0.70 / km (would be serviced from Dampier)
3) Fremantle – AU$700.00
4) Koolan Island (off Derby) – AU$1500.00 + Airfares, Accommodation, Meals, Vehicle Hire = At cost + 15% (would be serviced from Perth)
Warranty Surveys are only conducted by the Classification Society however we are able to provide you with a survey report. This is a report of our findings at time and place of intervention but I must stipulate is not a Certificate of Seaworthiness for towing.
All work conducted is in accordance with SGS General Conditions of Service which I have attached for your reference.
Captain Leo Rego is our Shipping Manager and his contact details are as follows:
…
Please do not hesitate to contact myself or Leo to discuss further.
152 On 28 March 2006, Mr Augustine sent Mr Seclier an email enclosing a document entitled “Towing Arrangement”. The document contained towing resistance calculations but did not address the sea-fastening arrangements for the boom of the crane.
153 On 10 April 2006, Mr van der Meer had a telephone conversation with Mr Russell Parker from Tutt Bryant. Mr Parker told Mr van der Meer:
When tying the boom back, soft slings must be used as there are fine tolerances on allowable damage to the boom. The boom must be restrained in two directions with equal tension on either side of the boom.
154 Mr van der Meer relayed this conversation to Mr Seclier. However, Mr van der Meer did not relay this information to IMC.
155 By email dated 11 April 2006, Mr Augustine forwarded to Mr van der Meer, the document referred to as “the towing plan” for the barge. This document did not reflect any sea-fastening arrangements in respect of the boom of the crane.
156 On 12 April 2006, the crane was delivered in pieces to the Dampier site by Tutt Bryant. During the period 13 April 2006 to 16 April 2006, Mr Seclier, who was in Dampier, supervised the assembly of the crane. Mr Seclier, also, oversaw the welding operations of the sea-fastenings on to the barge and the tie down. Mr Seclier followed the drawings prepared by IMC for the sea-fastenings for the base of the crane to the deck of the barge, which did not include any sea-fastenings for the securing of the boom of the crane to the barge. Otherwise, Mr Seclier used the lashings he deemed appropriate. Photographs were taken of the sea-fastenings which had been effected by Mr Seclier and sent to Mr Quinlan. The photographs were then used by Mr Quinlan, subsequently, when he prepared his “Tie-Down Works Methodology” document, to which I will refer later in these reasons.
157 On 19 April 2006, there was a meeting of employees of M&C. Mr van der Meer was present. Notes were kept of the meeting which included the following notation:
1. Mobilisation
…
Piling barge: - in Dampier, due to leave 24/4 (Mon),
- warranty survey
- towing bridle
…
3. Design + Fabrication
…
Tie down: - …
- Crane as per IMC spec
158 By an email sent at 4:39 pm on 19 April 2006, Mr Ric Clarke of GAK, insurance brokers, engaged by M&C for the purposes of procuring insurance, sent Mr Quinlan an email in the following terms:
Further to our earlier telecon. To enable facilitation of terms for the voyage/transit risk we need details of the loading/lashing/stowage arrangements. As the cranes once loaded onboard will affect the barges stability have you engaged any external consultants to provide confirmation that the stowage/towage is sound etc etc.
It is customary for underwriters to be presented with some form of survey report that attests to the stowage and towage arrangements therefore I would appreciate this advice as a matter of urgency.
We are unable to bind cover until such time as we can present this information to underwriters and I look forward to your early reply as we discussed.
159 On 20 April 2006, Mr Sweet had a telephone conversation with Captain Narinder Bhalla of SGS. During the course of the conversation, Mr Sweet said:
We need a survey report done on our barge Miclyn 131 which is to be towed from Dampier to Koolan Island on 29 April. I’ll send you a scope of work.
160 Later that day, Mr Sweet sent an email to Captain Bhalla, in the following terms:
Thank you for your assistance this afternoon.
As discussed please find following a brief scope of requirement for the survey report required prior to towing the Miclyn 131 Piling Barge from Dampier to Koolan Island;
Miclyn 131 Barge loaded with 200Tn Crane, Piling Hammer and miscellaneous construction equipment
Departs from Mermaid Marine Supply Base in Dampier (planned pm Monday 24 April 2006 dependent on weather).
Date and time of survey Monday 24 April 2006 approx 9am at the Mermaid Supply Base in Dampier
Destination is Koolan Island for the Aztec Iron Ore Project (Construction).
Towage by Mermaid Marine (vessel likely to be the Commando).
M&C site representative Mr Steve Seclier who is available on…in Dampier.
Insurance requires an independent report prior to accepting cover for the coastal tow.
SGS scope of services to provide an independent survey report that verifies towing bridle and seafastenings (design and certification by International Maritime Consultants) prior to departure. My collegue [sic] Mr Julian Van der Meer will send copies of the tow plan and the approved seafastenings by seperate [sic] e-mail. The vessel details and towing winch are to be verified by the operator (Mermaid).
Survey Report to be sent via e-mail or fax to my address…with any issues communicated to M&C Site Superintendent Mr Steve Seclier who is preparing the barge in Dampier.
I have been provided with the SGS terms and conditions by Chris Tickner and agree with those terms – could you please send an account application form by fax to our office on…marked attention Ms Kay Giles and we will complete and return to you am Friday 21 April 2006. (Original emphasis.)
161 Captain Bhalla responded to the email in the following terms:
Thank you very much for the appointment. We hereby pleased [sic] to confirm our attendance as independent inspectors for the same.
- Inspection will be carried out as per SGS general conditions of service (a copy of which is attached).
- The cost of the inspection will be
A$1000 + GST.
- Please fill up the attached “SGS new A/C application Form”.
162 Also, on 20 April 2006, Mr Quinlan sent by an email addressed to IMC and Mr Ric Clarke, with a copy to Mr van der Meer, a memorandum he had written, entitled: “Koolan Island Ore Offloading Wharf: Tie-Down Works Methodology”. Incorporated within the memorandum were the photographs, taken by Mr Seclier, of the sea-fastenings which Mr Seclier had effected on the barge. Mr Quinlan’s memorandum stated:
Introduction
This method statement applies to the tie-down of the crane, hammer & powerpack aboard the “Miclyn 131 Piling Barge”, which will be towed from Dampier to Koolan Island.
The objective is to outline the methodology and controls to prevent any accidents or incidents, which could arise in the event of the crane, hammer, powerpack or other equipment moving freely aboard the Micyln 131 whilst under tow.
Crane Tie-Down
1. Having successfully walked the crane onboard the Miclyn 131, the crane has been positioned and fixed directly to the deck for the entire journey.
2. To ensure that the crane is not liable to any movement, steel stubs are welded to the deck at the front & rear of the crane’s tracks and wedged with timber sections to minimise any possible movement. This can be seen in photos 1.1 & 1.2.
3. The crane boom has been lowered to 30 degrees & restrained to the deck by ropes tied to the boom.
163 There was no photograph among the photographs attached, which showed the tie down arrangements in respect of the crane boom. The photographs did show the tie down arrangements for the plant and equipment which was to be secured to the barge.
164 On 21 April 2006, in the morning, Mr van der Meer of M&C, sent an email to Captain Bhalla which attached the calculations supporting the towing arrangement report prepared by IMC. This email did not include any document showing the “approved seafastenings” which was referred to in the email of 20 April 2006 from Mr Sweet of M&C, to Captain Bhalla. Nor was any document showing the “approved seafastenings” sent to SGS by M&C, at any time thereafter.
165 On 21 April 2006, Mr Seclier of M&C, received a telephone call from Mr Williams of IMC. Mr Williams said:
I have seen the method statement sent to me by Patrick Quinlan. Everything looks OK. The crane looks OK. The tie downs look OK. However, I would like some extra fastenings or lugs on the hydraulic power pack for the hammer. These should be applied to the front and back of the power pack. Can you do that and email me some photos.
166 Mr Seclier agreed to do that. Mr Seclier carried out the works recommended by Mr Williams and took photographs of the additional tie down points to the hydraulic power pack for the hammer, which Mr Williams had recommended. Mr Seclier emailed the photographs to Mr Williams.
167 On 21 April 2006, Mr Seclier supervised and finalised the securing of the crane and the plant and equipment to the barge. Mr Seclier also supervised the securing of the boom to the barge. The boom was secured on the port and starboard sides by a single part 11 mm steel wire rope and eyelet, a tensioner and a metal hook, which were attached to the deck of the barge. The 11 mm steel wire rope was, also, attached to the boom at mid-span.
168 On 24 April 2006, Captain Raj Kumar Sharma of SGS, inspected the barge with the crane onboard in Dampier. At the time that Captain Sharma inspected the barge, the boom of the crane was secured in the manner which had been finalised by Mr Seclier. Mr Seclier advised Mr Sweet that Captain Sharma wished to be sent copies of the test certificates for the towing bridle.
169 On 24 April 2006, Mr Sweet sent an email to Captain Bhalla in the following terms:
Thank you for your survey today. As discussed between Steve and your Surveyor – please find attached copies of the certificates for the towing bridle and the emergency lines for your report.
170 By the morning of 27 April 2006, the survey report had still not been produced by SGS. At 11:04 am on 27 April 2006, Mr Sweet sent an email to SGS asking that SGS issue the survey report for the Miclyn 131.
171 Shortly after midday on 27 April 2006, Mr Clarke of GAK, insurance brokers, sent Mr Sweet an email in the following terms:
We confirm having received the Cyclone Contingency Plan and initial SGS advices relative to issuing the pre voyage towage and stowage surveys. We attach details of cover secured with Liberty International (transit/voyage only the operational cover having been bound with QBE) and we request:
1. your acceptance
2. date of voyage.
You will note the cover is subject to the warranty that you comply with SGS recommendations and it would be customary for SGS to issue a towage and stowage approval certificates in confirmation.
172 On 27 April 2006, M&C were engaged in negotiations for entry into a time charter party with Adsteam Harbour Pty Ltd (Adsteam) for the charter of the tug, MV “Stirling Skate”, for the purpose of undertaking the tow of the barge with the crane onboard from Dampier to Koolan Island. Adsteam sent Mr Sweet an email on 27 April 2006, whereby Adsteam asked that an additional clause be added to the standard clauses of the “Supplytime 89” uniform charter party in respect of the proposed charter of the MV “Stirling Skate”. Adsteam proposed that cl 37 state:
Clause 37 – Charterers to Provide.
In addition to the items detailed in Clause 8 of this Charter Party the Charterer will provide the following in their time and at their cost:-
(i) Towing bridle for barge “Miclyn 131”.
…
(iv) Obtain the necessary Towage Approval, and Tow Worthiness certificates for the barge “Miclyn 131”.
173 Mr Sweet then emailed a copy of the proposed additional clause to Mr Clarke of GAK and asked whether he was “okay” with the proposed additional clause. Mr Clarke replied by email sent at 4:08 pm on 27 April 2006, that a charter party which included the proposed new clause, was acceptable.
174 On 27 April 2006, M&C entered into the time charter party with Adsteam for the charter of the MV “Stirling Skate”. The charter party included cl 37 and, also, cl 12, which was an exclusion clause which provided that Adsteam was not liable in contract and tort and that its employees were not liable in tort, for any loss or damage to any property towed by the tug.
175 By an email dated 28 April 2006, at 10:32 am, Mr Clarke advised Mr Sweet as follows:
We have bound cover as instructed and I would ask that you note 3 minor changes.
1. The prevoyage towage/stowage survey has been introduced into the schedule as a warranty.
2. Information to underwriters reflects Adsteam tow and Supplytime C/P.
3. Stamp duty is not payable thus premium reduction of $1,595.00.
Please forward SGS report/certificate when issued.
176 In the document headed: “Binding Slip Marine Cargo–Voyage Cover” attached to the email from Mr Clarke to Mr Sweet dated 28 April 2006, the following was recorded:
WARRANTY
SGS Australia Pty Ltd to undertake a pre-voyage towage survey. Lashing/stowage of cargo to comply with project engineers recommendations.
177 Under the heading, “INFORMATION GIVEN TO INSURERS” the following was recorded:
We attach a copy of the Method Statement in relation to the Stowage and Tie Down arrangements.
SGS Australia Pty Ltd will be undertaking a pre-voyage towage survey.
178 The reference to “Method Statement” was a reference to the statement prepared by Mr Quinlan.
179 On 28 April 2006, at 5:18 pm, Captain Bhalla sent Mr Sweet and, among others, Mr Neil Brown of GAK an email attaching what he referred to as the “inspection report”. This is the survey report which M&C alleged contained and gave rise to the relevant representation said to have been misleading and deceptive.
180 The attached SGS survey report relevantly stated:
SURVEY REPORT
DATE: 24 April 2006
OUR REF:…
In accordance with instructions received from Mr Alan Sweet of Marine & Civil Construction Co Pty Ltd. Our surveyors attended aboard the Dumb Barge Miclyn 131 on 24th April 2006 at 0815 hrs, at Mermaid Marine Supply Base, Dampier, to inspect “Arrangement of Towing bridle and Seafastenings (design and certification by International Maritime Consultants).
Particulars of Vessel
Name Miclyn 131
…
GENERAL DESCRIPTION OF VESSEL
The Barge “Miclyn 131” is a Welded Steel Flat top pontoon type dumb barge, with two Skegs Aft and Forward Round Bar. The vessel was built in 2000. There is a strengthened sheer strake running down each side continuing around the bow and stern. Slight to moderate marine growth was observed starting from just above the waterline to the area under water.
The Deck area was moderately rusted all over with thick rust patches and indentations in some places. There was no sign of any coating visible.
There is a Stockless Anchor and a manually operated winch on port side forward.
SURVEYOR REMARKS
At the time of inspection, the barge was found to be afloat drawing a draft of 1.00 meter (for’d & aft) and was reported to be without any ballast water in the ballast tanks. Inspection of the barge was carried [sic] with the assistance of Mr Steve Seclier, of Marine & Civil Construction Co Pty Ltd. Our surveyor checked following items which were loaded and secured on deck of barge.
Items were:
1. One number – winches/power pack.
2. One number 20 feet container.
3. Two numbers 10 feet containers.
4. Gas cylinder cage.
5. One no crane with the boom at an angle of 30 degrees to the weather deck.
6. One number vehicle (Make: land cruiser).
…
22. Two numbers – towing bridles (specifications as per drawing)
…
All these items were observed to be secured on deck with straps and eyes pads & plates (welded on to the deck).
Towing bridles were found to be secured on vessel’s deck. We examined bridles with shackles in the stowed position. Bridles and Shackles attached to the Bridles were found to confirm with the drawing supplied to us.
Seas fastening were checked by us, with barge in static condition. In that condition they appeared to be satisfactory (Please note that we were not provided with test certificates of the lashing material).
Please refer to the photographs attached with this report.
This report is submitted in good faith and constitutes our opinion of the “Arrangement of Towing bridle and Sea fastenings (design and certification by International Maritime Consultants). The surveyor assumes no responsibility for any defects and is to be held harmless for conditions subsequently arising.
This report is issued, attendance made and opinions formed all without prejudice to any party concerned.
(Emphasis added.)
181 The text particularly relied upon by M&C in its case are those highlighted in the paragraph above.
182 Mr Sweet first saw the SGS survey report when he opened Captain Bhalla’s email on his home computer on the evening of 28 April 2006. Later that evening, at about 8:30 pm, Mr Sweet emailed a copy of the SGS survey report to Mr Peter Harris of Adsteam.
183 After having received the SGS survey report from Mr Sweet, Mr Harris advised the skipper of the MV “Stirling Skate” that he had a copy of the SGS survey report and that the sea-fastenings had been approved.
M&C’s misleading or deceptive conduct claim
184 In the final iteration of its statement of claim, M&C alleged that in providing the survey report, SGS had engaged in misleading or deceptive conduct in contravention of s 52 of the Act.
185 M&C pleaded at para 4 of the statement of claim, that on 20 April 2006, it retained SGS to provide a survey report on sea-fastenings for the barge with the crane “which report was expressed to be required prior to a proposed sea voyage of the Miclyn 131 under tow from Dampier to Koolan Island and to be required for insurance before cover was accepted for tow” (original emphasis).
186 M&C then pleaded that the written report was sent by SGS to Mr Sweet by an email on 28 April 2006 and that by the report SGS represented to M&C that:
(a) A marine surveyor…had attended aboard the loaded barge to inspect the arrangements for towing bridle and sea fastenings;
(b) The Crane and boom were secured on deck with straps and eye pads and plates welded onto the deck;
(c) The sea fastenings were checked and appeared to be satisfactory.
187 M&C then pleaded in para 7 of the statement of claim, that the sea-fastenings did not appear to be satisfactory, and the arrangements for securing the boom of the crane and the proposed method of transporting the crane by barge with its boom assembled and erected were not safe, satisfactory or suitable arrangements for transporting the crane and its boom from Dampier to Koolan Island, because:
(a) The boom was secured to the barge on each of the port and starboard sides by a single part 11 mm wire and eyelet, a tensioner and metal hook, all with a safe working load of no greater than 1.6 tonnes, which the sea fastenings were grossly inadequate for and would not have survived the proposed tow of a 250 tonne Crane with its boom extended;
(b) The boom required, but did not have, on each of the port and starboard sides high tensile chains and high tensile securing components that secured the boom to the barge;
(c) And/or alternatively:
(i) The Crane with its boom fully assembled and extended could not be transported from Dampier to Koolan Island on a barge towed by a tug without significant risk of damage from the forces that may result from the wind and wave conditions that occurred in that area; and
(ii) The safe method of transporting the Crane and boom by ocean going vessel entailed dismantling the boom and transporting it in pieces.
188 M&C went on to plead, in para 8 of the statement of claim, that SGS did not tell it of the matters pleaded in para 7 of the statement of claim.
189 It was then pleaded in para 9 of the statement of claim, that by reason of its conduct as pleaded, SGS, in trade or commerce:
(a) Expressly represented that the sea fastenings appeared satisfactory and were satisfactory;
(b) Impliedly represented that there were no matters the subject of the survey that required further investigation before the proposed sea voyage from Dampier to Koolan Island;
(c) Impliedly represented that in relation to the sea fastenings of the boom there was no significant risk of damage occurring on the sea voyage.
190 The primary judge found that the author of the survey report did not make an express unqualified statement that the sea-fastenings appeared to be satisfactory and were satisfactory but rather, qualified the statement as to the sea-fastenings by stating that they were inspected with the barge in a static condition and, in that condition, the sea-fastenings appeared to be satisfactory. Also, his Honour found that the statement was further qualified by the reference to the fact that SGS had not been provided with test certificates of the lashing material.
191 As the primary judge found, it is apparent from the matters pleaded in para 7 of the statement of claim in falsification of the representation, that M&C contended that the SGS representation was false because the sea-fastenings were not satisfactory for transporting the crane and its boom from Dampier to Koolan Island. However, his Honour found that the express language used by SGS did not make an express representation that stated that the sea-fastenings were satisfactory for transporting the crane and its boom from Dampier to Koolan Island.
192 However, M&C submit that these supposed qualifications did not detract from what was represented.
193 As to the first qualification, it submits that the sea-fastenings were necessarily checked with the barge in static condition because the barge was not under tow at the time of the inspection. It contends that the statement that the sea-fastenings “appeared to be satisfactory” in that condition raises the question: satisfactory for what? Given that SGS was expressly retained to prepare an “independent survey report that verifies towing bridle and sea-fastenings” that was “required prior to towing the Miclyn 131 Piling Barge from Dampier to Koolan Island”, this, M&C submits, must mean satisfactory for that voyage. It argues that SGS cannot have intended to convey to M&C that the sea-fastenings were satisfactory for the purpose of the barge remaining in its then position, because SGS well knew that the voyage was imminent and that its report was required for the purpose of M&C obtaining insurance cover for the voyage.
194 Moreover, it submits that the statement in the survey report concerning the absence of test certificates did not qualify the representations as to the adequacy of the sea-fastenings in any meaningful way. Its argument goes this way. Mr Sweet’s evidence was that SGS did not request test certificates for the lashing material prior to issuing the report. If the express statement that the sea-fastenings appeared to be satisfactory was subject to a proviso that SGS could not say whether or not they were satisfactory without reviewing test certificates for the lashing material, one would expect that to be clearly stated in the report. It was not. It is clear from Captain Hughes’ unchallenged evidence that the inadequacy of the wires for the purpose of securing the crane boom to the barge would have been obvious to an experienced marine surveyor without test certificates. The safe working load (or SWL) of the steel wires could be calculated without test certificates, and it would have been obvious to an experienced marine surveyor in any event that wires of substantially higher gauge, more wires or chains were required. In addition, the tensioners were stamped with a 1.6 tonne SWL. That set the maximum SWL for the entirety of each lashing, and was obviously inadequate for the weight of the crane boom. It was the hooks which formed part of the tensioners that failed.
195 The primary judge was correct to find that the express representation alleged was not established. His Honour’s reasoning referrable to the two qualifications contained in the survey report was apt.
196 The survey report was not commissioned nor provided, according to the terms of the retainer and the survey report itself, to give M&C advice as to the sufficiency of the sea-fastenings for a sea voyage. Captain Hughes’ evidence does not alter this fact. I will return to this when considering the alleged implied representation.
197 It is evident from M&C’s submissions, and from the rhetorical questions posed, that it necessarily looks beyond the express language used to the context in which the survey report was commissioned and provided. This approach, as I have mentioned, is orthodoxy in this area and was the approach adopted by the primary judge. This leads to a consideration of the asserted implied representation.
198 In order to challenge the finding of the primary judge concerning the representations, the appellant must demonstrate that the words used in the report conveyed the representations as alleged when considered in the context of all the circumstances.
199 The primary judge referred to Butcher v Lachlan Elder Realty Pty Limited (2004) 218 CLR 592, in which Gleeson CJ, Hayne and Heydon JJ stated at [37]:
The plaintiff must establish a causal link between the impugned conduct and the loss that is claimed. That depends on analysing the conduct of the defendant in relation to that plaintiff alone. So here, it is necessary to consider the character of the particular conduct of the particular agent in relation to the particular purchasers, bearing in mind what matters of fact each knew about the other as a result of the nature of their dealings and the conversations between them, or which each may be taken to have known.
and McHugh J observed at [109]:
The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. In determining whether a contravention of s 52 has occurred, the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself. (Footnote omitted.)
200 At trial, M&C had contended, in particular, that by providing the SGS survey report in the context of the pleaded retainer, SGS made the implied representations pleaded. In support of its contention, M&C referred to the two last dot points of the email sent by Mr Sweet to Captain Bhalla on 20 April 2006, and placed particular emphasis on the fact that the email had stated that “[i]nsurance requires an independent report prior to accepting cover for the coastal tow”. M&C had contended that the reference to insurance for a coastal tow implied that an opinion was sought in respect of a “dynamic” event, namely, the tow from Dampier to Koolan Island.
201 SGS denied that it made the implied representations pleaded by M&C. SGS relied particularly on the terms of its survey report, and also, as part of the surrounding circumstances, on the email exchange between Mr Sweet and Mr Tickner on 20 March 2006. This clearly stated that SGS would not be providing a “warranty survey for towing purposes” but only a “survey report” which it said was “a report of our findings at time and place of intervention” and further stipulated that it was “not a Certificate of Seaworthiness for towing”.
202 As to the meaning of a “warranty survey”, Captain Hughes had agreed with a statement, which had been made in an expert report by Captain Douglas, that a warranty survey was a survey of guaranteed quality that was frequently used by marine insurers. Captain Hughes also accepted, in cross-examination, that a warranty survey would not refer to the state of the vessel in a “static” condition.
203 The primary judge, correctly in my view, found that an important qualification to the survey report was the express statement in it that the surveyor attended onboard the barge to inspect the “Arrangement of Towing bridle and Seafastenings (design and certification by International Maritime Consultants)”. In the penultimate paragraph of the report, the writer refers to the report as expressing “our opinion of the Arrangement of Towing bridle and Seafastenings (design and certification by International Maritime Consultants)”. The reference in two separate places to the fact of the sea-fastenings having been designed and certified by IMC was, as the primary judge correctly observed, significant. This is because, as his Honour reasoned, it is an indication that the surveyor was not taking responsibility for the suitability of the independent consultant’s design and certification of the sea-fastenings for the conduct of the tow. His Honour, in my opinion, was correct to so find. Further, M&C did not provide Captain Sharma with any drawings of the sea-fastenings. These qualifications were entirely consistent with the limited nature of the survey report as described in the 20 March email from SGS to M&C.
204 The second qualification as found by the primary judge was that the survey report stated specifically that the sea-fastenings were checked in “static condition” and, in that condition, the fastenings “appeared to be satisfactory”. The report emphasised this limitation on its opinion by stating expressly: “Please note that we were not provided with test certificates in respect of the lashing material”. Indeed, it seems to me, that the author was stating that, unlike the towing bridles, he had not been able to confirm the sea-fastenings conformed to the test certificates. In other words, he was stating that because he did not have the certificates he could not “verify” the sea-fastenings. The words “appeared to be satisfactory” require to be considered in that context. Most importantly, this phrase was not referrable to the seaworthiness of the sea-fastenings.
205 Importantly, as the primary judge noted, Mr Sweet, during cross-examination, accepted that at the time of sending the email of 20 April 2006, he was conscious of the limitations on the nature of the report which SGS was prepared to provide, referred to by Mr Tickner in his email of 20 March 2006. During cross-examination, Mr Sweet said:
So what you understood from that email that they were equipped to provide was on hire off hire reports; correct?---Yes.
And a report of findings at the time and place of intervention?---I read it that they could provide a survey report but they wouldn’t be providing a warranty – warranty survey.
Yes, and they could provide a survey report which was a report of findings at the time and place of intervention?---Yes.
And would not be a certificate for seaworthiness for towing?---Yes.
206 Further, Mr Sweet was cross-examined about the language he used in his email to SGS on 20 April 2006 as follows:
Now, the fact that you didn’t refer to “warranty survey” or “certificate” in that email was quite deliberate, wasn’t it?---That’s correct.
Because you knew that all that you had been told by SGS in the email of 20 March 2006 was that they could provide “a report of our findings at the time and place of intervention, but I must stipulate it’s not a certificate of seaworthiness for towing”?---That’s correct. I knew SGS were not giving a warranty survey, that they were doing a survey before towing.
No. You knew that what they had told you they could do was “a report of our findings at time and place of intervention which would not be a certificate of seaworthiness for towing”?---Correct. I acknowledge that.
207 The primary judge correctly concluded that there was an influential relationship between the email correspondence of 20 March 2006 and the later email correspondence between SGS and M&C on 20 April 2006, and, in particular, in concluding that the earlier correspondence should be taken into account in assessing Mr Sweet’s knowledge in relation to the question of whether SGS made the implied representations alleged.
208 Moreover, Mr Sweet gave the following evidence:
And the communications that you had back from the insurer, referred to “Please forward certificate” report/certificate?---Yes, that’s correct. I read that as the SGS report.
But you agree with me that obtaining a towage tow worthiness certificate from SGS, was something that as from 20 March 2006, you knew you couldn’t get from SGS?---Correct, yes, not a warranty. As I said before, I thought that the certificate was part of the warranty survey.
Yes. The point is whether it’s a warranty survey or a separate certificate or whether the certificate is part of it, neither of those you knew you could get from SGS?---That’s correct.
209 Further, the following exchange occurred with Mr Sweet:
Well, it says “In that condition.” It does not say, “We checked within static condition and they appeared satisfactory for the tow,” did it?---It doesn’t say that, no, but - - -
And you knew from what you had been told before that they wouldn’t provide a certificate as to the satisfactory nature for the purposes of a tow?---That’s correct. They weren’t doing a towage certificate.
You were the only one, I want to suggest, that knew that that was the limitation that they had already indicated to you, because you were the only recipient of that email of 20 March 2006?---You have established that before, but as I said, I believe I discussed it with the insurer but I can’t explain it more than I already have.
210 There was ample evidence, therefore, to support the finding of the primary judge that from 20 March 2006, Mr Sweet, on behalf of M&C, knew from Mr Tickner’s email that any survey report which would be provided by SGS would be confined to expressing an opinion as to the surveyor’s “findings at time and place of intervention” and would not provide a report which certified suitability of the loaded barge and the sea-fastenings to undertake the proposed tow from Dampier to Koolan Island.
211 M&C, in support of its contention that SGS had made the implied representations, placed considerable emphasis on the fact that Mr Sweet’s email of 20 April 2006, stated that “[i]nsurance” required an independent report before accepting cover for the coastal tow. The question is what each party knew, or is to be taken to have known, about each other, in relation to this matter. The primary judge was correct to reject Captain Hughes’ evidence on this matter because his opinion did not take account of the impact of Mr Tickner’s email.
212 As the primary judge correctly found, SGS would, after 20 March 2006, have known, or at least must be taken to have known, that Mr Tickner had advised Mr Sweet that SGS would only be prepared to provide a survey report that reported on their findings at the time and place of intervention, and would not provide a report certifying the seaworthiness of the loaded barge for the tow. SGS was entitled to think, as the primary judge held, that its retainer to provide the report was subject to the conditions previously stated by Mr Tickner. SGS would also be taken, therefore, to have regarded Mr Sweet’s reference to the need for the report for insurance purposes, as being consistent with the previously stated limitations on the nature of the survey report which it was prepared to provide. SGS would be taken to have concluded that Mr Sweet had made the limitations known to M&C’s insurance brokers and the insurance brokers were content for a survey report of limited scope to be provided.
213 Mr Sweet was aware of the terms of the email from Mr Tickner and accepted in his evidence that he knew that SGS was only prepared to report on the state of the loaded barge at the time of its intervention, and was not prepared to provide a report which certified the suitability of the loaded barge to undertake the voyage from Dampier to Koolan Island.
214 The primary judge, in these circumstances, was correct in concluding that the failure of SGS to refer to the matters in para 7 of the statement of claim was not to be taken as an element of conduct giving rise to the implied representations pleaded. Accordingly, there was a clear foundation in the evidence for the primary judge to find as he did that having regard to the qualified nature of the language used in the survey report, and having regard to what each of the parties knew, or is to be taken to have known about the other party, and applying an objective test, that SGS did not make the implied representations pleaded by M&C.
215 M&C submits that SGS accepted an appointment to provide an independent report verifying the sea-fastenings prior to the voyage. It then submits that in that context, it does not follow from the fact that SGS believed the sea-fastenings had been designed by a third party that it made no implied representation that the sea-fastenings did not require further investigation prior to the voyage. It poses the rhetorical questions: What was SGS verifying? What were they inspecting and in what sense were they doing so independently? What value was SGS adding for the $1,000 fee charged to M&C?
216 The answer to these rhetorical questions is, as was found by the primary judge, that SGS’s retainer was to inspect and to report as to their findings: what was on board in a static condition, and particularly relevantly, whether the towing bridles and sea-fasteners were in position and conformed to IMC’s specifications. The bridles and sea-fasteners might, for example, have not been present at the time of the inspection by SGS. SGS was not, as M&C well knew, and as the primary judge found, taking any responsibility for the suitability of the design and certification of the sea-fastenings for the conduct of the tow. Indeed, it was M&C’s insurers, not M&C, who required an inspection by SGS, and ultimately expressed the requirement of the survey by SGS as concerning “[l]ashing/stowage of cargo to comply with project engineers recommendations”. This, of itself, provides utility to the survey report and is a further answer to the rhetorical questions. Mr Sweet of M&C understood the reference to project engineers specifications by the insurers to be a reference to IMC. This is entirely consistent with the terms of the SGS retainer considered in context. The scope of services provided by M&C to SGS expressly referred to the fact that design and certification of the sea-fastenings, and therefore their suitability for the voyage, was to be by IMC. M&C had taken detailed advice from IMC about the design and suitability of the sea-fastenings that were required for the voyage. M&C dealt in detail with IMC about whether the lashings that were in place on the barge conformed to IMC’s advice and SGS was not involved in that process. Further, M&C had taken its own steps with IMC to make sure IMC was happy with what had been done. M&C itself did not need verification.
217 As it happens, SGS could report nothing about whether the sea-fastenings conformed to the IMC’s specifications. M&C seeks to place an interpretation on the expression in the 20 April 2006 email from Mr Sweet to Captain Bhalla of SGS “… an independent survey report that verifies … sea fastenings (design and certification by (IMC) …” as though SGS were to express an opinion as to the suitability and reliability of the design and materials employed in the sea-fastenings. It was quite evident, as the primary judge correctly held, that this was not the case.
218 The evidence of marine surveyor Captain Hughes, that the boom restraints were “manifestly inadequate” and “would have failed as soon as the barge experienced open ocean conditions, even in the lightest of weather conditions” does not alter this conclusion. The SGS retainer specifically excluded the provision of the kind of opinion Captain Hughes proffered. The content of the survey report necessarily requires to be considered in that light as was the approach of the primary judge. The M&C effectively seeks to avoid the fact that the report emphasises that its findings as to the sea-fastenings were in a “static condition”. It asks again, rhetorically: what would be the point of that given that the barge was to embark on a sea voyage? Actually, the converse is the case. It is the inclusion of the expression “static condition” that points up that it is not representing anything about suitability for a sea voyage. As SGS submits, and I accept, a person providing advice as to the suitability of the lashings for a voyage would not qualify the statement that they appeared to be satisfactory by reference to the static condition of the barge. The qualification is fundamentally inconsistent with any such representation. Further, the notation about not having the certificates following what was said in relation to the towing bridle is consistent with providing a report limited to what could be seen and whether it conformed to IMC’s design. Consideration of other matters referred to in the report is also consistent with this character. For example, the survey report concluded by following the terms of the scope of services provided by M&C. It stated “This report is submitted in good faith and constitutes our opinion of the Arrangement of Towing bridle and Sea fastenings (design and certification by International Maritime Consultants). The surveyor assumes no responsibility for any defects and is to be held harmless for conditions subsequently arising”. This qualification shows that the survey report was confined to the terms of engagement which was to provide an inspection not a warranty survey.
219 Nor is it to the point to consider what a reasonable person with experience in the maritime industry or even a reasonable marine surveyor with such experience would have considered was meant by what had been stated in the survey report. Such evidence is of little value when the contextual material, necessary to understand what if any representations were made, would not be known by such a person. To the extent that the primary judge held a view concerning the first of these hypothetical persons does not detract from his conclusions otherwise well-founded. As for M&C, it submits that the evidence was irrelevant. I accept that submission.
220 The appellant has failed to establish that the findings of the primary judge as to the alleged representations were erroneous. To the contrary, the evidence well supports his conclusion that the respondent did not engage in misleading or deceptive conduct.
221 I would dismiss the appeal with costs.
I certify that the preceding ninety six (96) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. |
Associate:
Date: 16 May 2013
