FEDERAL COURT OF AUSTRALIA
Stingray Boats v Denmeade [2003] FCA 83
ADMIRALTY – claim in respect of construction of a ship
CONTRACT - whether there was agreement as to amount owing for “extras” – whether promise to pay given under duress
Admiralty Act 1988 (Cth) s 4(3)(n)
STINGRAY BOATS (a firm) v PHILIP DENMEADE (The Owner of the 12m Aluminium Ship Identification Number 25230)
No Q 159 of 2002
SPENDER J
BRISBANE
14 FEBRUARY 2003
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IN THE FEDERAL COURT OF AUSTRALIA |
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QUEENSLAND DISTRICT REGISTRY IN ADMIRALTY |
No Q 159 OF 2002 |
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BETWEEN: |
STINGRAY BOATS (a firm) PLAINTIFF
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AND: |
PHILIP DENMEADE (The Owner of the 12m Aluminium Ship Identification Number 25230) DEFENDANT
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SPENDER J |
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DATE OF ORDER: |
14 FEBRUARY 2003 |
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WHERE MADE: |
BRISBANE |
THE COURT ORDERS:
1. Judgment for the plaintiff against the defendant in the sum of $21,500.
2. The defendant is to pay the plaintiff’s costs, to be taxed if not agreed.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
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IN THE FEDERAL COURT OF AUSTRALIA |
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QUEENSLAND DISTRICT REGISTRY IN ADMIRALTY |
No Q 159 OF 2002 |
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BETWEEN: |
STINGRAY BOATS (a firm) PLAINTIFF
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AND: |
PHILIP DENMEADE (The Owner of the 12m Aluminium Ship Identification Number 25230) DEFENDANT
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JUDGE: |
SPENDER J |
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DATE: |
14 FEBRUARY 2003 |
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PLACE: |
BRISBANE |
REASONS FOR JUDGMENT
Introduction
1 This action is a general maritime claim within s 4(3)(n) of the Admiralty Act 1988 (Cth) (“the Act”) being a claim in respect of the construction of a ship.
2 The plaintiff is Stingray Boats (a firm) which at the relevant time carried on business in Brisbane as a builder of small aluminium ships. By a writ filed on 10 October 2002, the plaintiff claimed the sum of $20,500 as “the balance due to the plaintiff for the construction of the ship”. The statement of claim filed 10 October 2002 asserts that between 17 April and 10 September 2002 the plaintiff assembled and built, at its business premises in Brisbane, from plans drawn by Stephen & Gravlev Pty Ltd, an aluminium single hull vessel that was 12 metres in length, powered by three 225 hp Yamaha outboard engines, registered number 2523Q (“the ship”). The statement of claim alleges further that the plaintiff’s part in the construction of the ship was terminated on 10 September 2002 when the ship was taken from the plaintiff’s premises by the defendant.
3 The particulars of the $20,500 claimed in the statement of claim allege a contract price, including GST, of $79,200, acknowledges moneys totalling $73,000 as having been paid, and claims extras:
“comprising bilge system, supply and fit front and rear door, aft toilet house and storeroom, console, canopy frame, rails, rear engine pod, dive ladders, bollards, front and rear anchor lockers, and fuel venting system”
of $13,000 plus GST on that sum of $1,300, leaving the balance unpaid at $20,500.
4 Mr Philip Denmeade (“the defendant”) filed a defence on 6 December 2002. The defence was obviously filed by Mr Denmeade personally. In it the defendant claims:
“The plaintiff did not install the three motors. He did not finish constructing the boat.”
The defendant claims that:
“a. By contract dated 15 March, 2002 the plaintiff agreed to construct the boat as designed by Stephen & Gravlev, including all superstructure fabrication for $79,200.
b. It was to meet 1C survey standard.
c. Items including seating were designed by Stephen & Gravlev but not built.”
5 The defendant alleges that he did not terminate the plaintiff’s part in the construction of the ship as the statement of claim alleges, but claims that the boat was moved for painting as planned with the plaintiff, and that the plaintiff terminated the contract on 11 September 2002, refusing to complete the construction. The defendant pleads, in par 6 of his defence:
“6. The plaintiff used economic duress against the defendant on 9 September 2002 to force acceptance of an additional charge of $13,000.
PARTICULARS:
a. The plaintiff refused to release the vessel unless the defendant agreed to a higher contract sum for work already done. This was without any notice with the defendant under pressure.
7. No amount is now due under the contract and it should be voided.
8. The plaintiff, in consequence, is not entitled to the relief sought.”
The defence continues:
“COUNTERCLAIM:
9. The plaintiff delayed construction of the boat.
10. The plaintiff did not finish the contract.
11. In consequence the defendant has suffered loss. …”
6 In a document called “AMENDED REPLY AND DEFENCE TO CROSS-CLAIM” filed 9 December 2002, amongst other things the plaintiff says in par 4C:
“… it is, by reason of the conduct of the defendant, entitled to recover from the defendant the sum of $34,273.40 in place of the sums sought in paragraph 4 of the statement of claim.”
The particulars of that substituted claim are:
“Particulars
Construction contract – excludes following
expenses which were at additional owner costs:
- Computer cut kit
- Surveyor and all survey costs
- All metal folding and rolling costs
- Engines and jet units
Contract sum (net of GST) 72,000.00
Engines/jet/fuel and filter system: 3,600.00
Installation (net of GST) – 2 x sides @ $1800 per side ________
75,600.00
GST on above 7,560.00
TOTAL for contract 83,160.00
Supply of ‘Kit’ (GST inclusive) 40,500.00
Surveyor and survey costs incurred for owner (all
Net of GST)
- Bilge system installation 2,250.00
- Valves and manifolds for bilge system 250.00
- Installation of required rails 1,485.00
- Materials for rail 275.00
- Fuel vent installation 180.00
4,440.00
GST on above 444.00
TOTAL for surveyor and survey costs 4,884.00
Metal folding and rolling costs incurred for owner
(GST inclusive) 5,296.50
Extras to ‘kit’ – supplied at owner request (all net
of GST)
- Console construction labour costs 675.00
- Console materials 295.00
- Canopy frame construction labour cost 1,440.00
- Canopy frame materials 435.00
- Dive ladder construction labour cost 1,125.00
- Dive ladder materials 130.00
- Bollards installation labour cost 135.00
- Bollards materials 25.00
- Front (2) and rear (1) anchor locker installation
labour cost 1,575.00
- Anchor locker materials 870.00
- Front and rear door installation labour costs 2,790.00
- Front and rear door materials 585.00
- Aft toilet house and door installation labour costs 3,240.00
- Aft toilet house and door installation materials 955.00
- Aft storeroom house and door installation labour costs 3,240.00
- Aft storeroom house materials 955.00
- Targa bar installation labour costs 270.00
- Targa bar materials costs 95.00
18,835.00
GST on above 1,883.50
TOTAL for extras 20,718.50
Contract variations at owner request (all net of GST)
- Change engine installation to triple outboard pod -
alloy costs 1,520.00
- Labour – pod construction 2,340.00
3,860.00
GST on above 386.00
TOTAL for variations 4,246.00
Total due 158,805.00
Less –
Gross payments received 184,531.60
Adjustment for amount rebated to
Customer for paint and motors 60,000 124,531.60
Balance outstanding $34,273.40”
_________
7
8 The “AMENDED REPLY AND DEFENCE TO CROSS-CLAIM” continues:
“5. Further, and in the alternative:
a. the plaintiff has performed the work and supplied the goods to the defendant as particularised in paragraph 4c. herein;
b. the defendant in each case particularised requested the goods to be supplied and the work to be performed;
c. the defendant freely accepted the goods supplied and the work performed by taking possession of the vessel on 10 September 2002;
d. the defendant has failed to pay the plaintiff for the amounts outstanding pertaining to the work performed and the goods supplied; and
e. as a consequence, the defendant is unjustly enriched; and
f. the defendants enrichment has occurred at the expense of the plaintiff.”
History of the Matter
9 On 13 January 2002, Philip Denmeade met with Jens Gravlev, a designer, in Brisbane regarding the design of a boat. A contract was drawn up, received and signed by the defendant in January 2002 from Stephen & Gravlev, Naval Architects, which was drafted by James Stephen and Jens Gravlev, for the design and drawing of a twelve metre ship to carry twenty-eight passengers and two crew. Pursuant to this contract, Stephen & Gravlev completed plans for the ship dated 20 February 2002, which were provided to the defendant.
10 The plaintiff was recommended to the defendant by Stephen & Gravlev. Accounts of Mr Mc Court (whom I will refer to, conveniently if inaccurately, as “the plaintiff”) and the defendant as to the contractual arrangements between them differ, the plaintiff seeking to emphasise that the agreement was merely to assemble a kit, with everything else to be at the defendant’s costs, while the defendant asserts that the agreement was to build the boat at a set price, with the defendant to pay for the aluminium and engines. The plaintiff says that in March 2002 the defendant phoned him. In his affidavit filed 9 December 2002, he says:
“When Mr Denmeade rang me, he said, ‘I want a dive boat constructed, and they suggested I contact you, because you are able to assemble a computer cut kit. I would like to get a price from Stingray Boats to assemble for me a computer cut kit of a 12 metre dive boat. Can you work out a price for me?’ I said, ‘Who is the designer because I will have to talk to the designers.’
Mr Denmeade said, ‘The designers are Stephen & Gravlev at Manly. Can you give me a price to assemble the boat because I want the price quickly and I want to start the boat pretty soon. I am retiring from the New South Wales Police Force and I want to line up for myself up a job in Townsville.’
He said, ‘I want to use the boat for diving and snorkelling work out of Townsville.’ I said to Mr Denmeade, ‘I will get a price for you but I will need to talk to the designers first.’
I then telephoned Stephen & Gravlev Pty Ltd and spoke to Mr Jens Gravlev. I had previously assembled and welded aluminium vessels designed by Stephen & Gravlev Pty Ltd with two longitudinal girders, full height, with transverse full height frames and a T bar construction on the bottom every 200 ml.
Although I was not provided with any plans of the vessel, I rang Mr Denmeade back a few days later. I said to him, ‘Stingray Boats can assemble the boat and weld it to class 1C survey standard for $72,000 plus GST’.
I said, ‘That price does not include any engine installation, any survey costs, namely costs of the surveyor and any associated costs that come from a surveyor being involved, such as safety equipment and any extra work that has to be done because a surveyor has asked that some extra work be done.’
I added, ‘The quote does not include the kit itself, or any fit out or any folding or metal rolling that may have to be done, since the costs of any folding or metal rolling would have to be paid by you as extra’s. I cannot give you any idea as to what they will be because the amounts are not known to me.’ Mr Denmeade said, ‘That price sounds good.’
I said ‘I have not had any cost analysis from any prospective suppliers for the costs of the boat kit, and I will get you some quotes from Steelmark, Laser Dynamics and another supplier.’ He said ‘that will be good because I live and work in Sydney.’ I said: ‘We’ll get a contract drawn up and sent down to you’.”
The plaintiff says that the defendant later signed the contract and returned it to him on or about 17 April 2002, together with a payment of $20,000. The plaintiff says:
“The agreement that I had with Mr Denmeade was partly in writing and was, to my mind, also partly oral.”
11 The defendant’s version is set out in his affidavit filed 18 December 2002 as follows:
“4. In early March I rang Tim McCourt of Stingray Boats and said, ‘I’m looking to build a twelve metre aluminium monohull boat. It has inflatable like tubes made of aluminium in a D shape.
He said, ‘What are you going to use it for?’
I said, ‘I live in Sydney and we are moving to Magnetic Island near Townsville. We are going to run diving and snorkelling trips. I was hoping to get a quote from you. Jens Gravlev has been doing the design for me. He suggested I give you a call and said you might be able to build the boat.’
He said, ‘We built a boat for the Coast Guard which they are happy with. It was designed by Jens and James.
I said, ‘Can you let me know if you are able to build the boat. I would pay for the aluminium and engines and pay you a set price for building the boat.’
He said, ‘I’ll talk to Jens and James and get a price.’
5. Tim McCourt later said, ‘I’ve spoken to Jens. I can build the boat for you
I said, ‘It needs to be 1C survey for Queensland because we are going to operate to the reef with more than twelve passengers.
He said, ‘I understand. I’ve worked out a price for you. Its $72,000 plus GST to build the boat. That’s for my part in building the boat.’
I said, ‘That sounds alright.’
He said, ‘I will draw up a contract and email it down to you.’
6. On Wednesday 13th March, 2002 I received a contract from Tim McCourt by email. The contract was dated 15th March, 2002. I later printed the contract. After reading it several times I signed and forwarded the contract by mail. The entire contract was created by the plaintiff. I had no part in the wording and made no alterations. I later sent a $20,000 deposit.
7. On the 9 May, 2002 Jens Gravlev suggested changing the design to outboard motors from diesel. After discussing this with Jens and Tim McCourt by telephone that day I agreed.”
12 The written contract provided as follows:
“AGREEMENT made this 15th day of March, 2002.
BETWEEN TIMOTHY JAMES MCCOURT AND SUZANNE CAROL MCCOURT TRADING AS STINGRAY BOATS BN 4824337
Of 10 Pannikin Place Tingalpa 4173 in the State of Queensland (hereinafter called “the builder”) of the one part.
AND PHILLIP MARK DENMEADE
Of flat 10/1 Railway Pde. Westmead NSW 2145 (hereinafter called “the owner”) of the one part.
CONTRACT
INCLUSIONS The construction of one twelve metre tube boat as designed by Stevens and Gravlev. The computer cut kit will be supplied by the Owner and construction will begin immediately upon receiving the said kit. The boat will be constructed to meet 1C Survey requirements.
PURCHASE PRICEFor this contract, the Owner shall pay to the Builder a total sum of ($72,000.00) (seventy-two thousand dollars) plus the GST, herein referred to as “the Contract Sum”.
PAYMENTS An initial deposit of (twenty thousand dollars) shall be paid to the Builder on signing of this contract. A further (twenty thousand dollars) shall be paid to the builder on completion of the welding of the hull. Upon completion of all superstructure fabrication a further (twelve thousand dollars) shall be paid to the builder.
In addition to the contract sum, the cost for dual engine and jet installation, of approximately ($1,800.00) per side plus GST, is to be paid by the Owner. This includes the installation of a fuel system and filters to 1C standard.
Surveyor and all survey costs are to be born by the Owner in addition to the contract sum.
All folding and metal rolling costs for the tubes is to be born by the Owner in addition to the contract sum.
Upon installation of the Owner supplied engines and jet units, and the completion of all hot work, the final (twenty thousand dollars) plus GST shall be paid to the Builder.
WARRANTY The boat is guaranteed for twelve months for structural defects but does not warrant for accident or storm damage. The warranty covers commercial use in reasonable sea conditions
SIGNED SEALED AND DELIVERED )
By the said TIMOTHY JAMES MCCOURT )
In the presence of:
A Justice of the Peace/Solicitor
SIGNED SEALED AND DELIVERED )
By the said SUZANNE CAROL MCCOURT )
In the presence of:
A Justice of the Peace/Solicitor
SIGNED SEALED AND DELIVERED )
By the said )
In the presence of:
A Justice of the Peace/Solicitor
DATED this day of ,2001.
SALE AGREEMENT
BETWEEN: TIMOTHY JAMES MCCOURT AND SUZANNE CAROL MCCOURT TRADING AS STINGRAY BOATS BN 4824337
(“the builders”)
AND: PHILLIP MARK DENMEADE
13 (“the owner”)
14 In my opinion, the agreement between the parties was as per the written document, and was an agreement for the construction of the ship with the liability for the extra matters referred to there being assumed by the defendant. I therefore prefer the thrust of the version of the agreement by the defendant. This is confirmed, in my view, by the evidence of the surveyor, Mr Robert Wyvill, engaged by Mr McCourt to undertake the construction survey of the ship the subject of the agreement. Mr Wyvill says in an affidavit filed 9 December 2002:
“4. On 7 June 2002, I received a phone call from Mr T McCourt of Stingray Boats. Mr McCourt said to me, and I verily believe the same to be true, ‘Stingray Boats have been asked to build a ship for Philip Denmeade of Sydney. Would you be prepared to undertake a construction survey of the ship during the construction period?’ He added that the assembly of the ship would commence as soon as the aluminium sections were delivered to his workshop. Mr McCourt further said to me, ‘The construction survey fee and the registration fees will be paid by Mr Denmeade. Stephens & Gravlev, Naval Architects, are providing construction plans for the ship.”
Mr Wyvill also says that he wrote on 8 June a short letter to Mr Denmeade, advising that the cost to complete a construction survey and, when appropriate, issue certificates of compliance for survey and safety equipment for a 12 metre class 1C ship was $2500.
15 Between 30 May and 18 June 2002, following requests from the plaintiff, the defendant made six payments for materials. On 24 June a further $20,000 was paid. I accept that Tim McCourt said that he needed this sum to keep operating.
16 Between 30 May and 18 June 2002, following requests from the plaintiff, the defendant made six payments for materials. On 24 June a further $20,000 was paid, which was said by Tim McCourt to be needed to keep operating.
17 In early July 2002, the defendant organised for a Bill Gardner of Coffs Harbour Paint and Panel to paint and anti-foul the ship. On 10 July, the defendant told Tim McCourt he was planning to drive up on the weekend and asked if he thought the ship would be turned over, to which Mr McCourt responded that they were going to try and turn the ship over on Friday. The defendant responded that he would be there on Sunday.
18 On Sunday, the defendant drove with Mr Gardner to Brisbane to allow him to inspect the ship for future painting. The ship had not been turned over, so it was arranged with Mr McCourt and Mr Gardner to return to Brisbane to paint the ship on 11 August 2002. The defendant asked Mr McCourt if the ship would be ready for painting by then, to which Mr McCourt replied: “It should be damn close”. Mr McCourt agreed to find a shed for the ship to be painted in.
19 Further payments were made by the defendant at the plaintiff’s request. The defendant states at par 11 of his affidavit: “Tim McCourt kept asking for the advances to keep in business.” Further requests for wages in advance were made on 15 and 18 July. The defendant paid the money requested as “I feared having an unfinished boat or losing the boat”. Further payments were made on 19, 25 and 30 July.
20 On 31 July 2002 Tim McCourt told the defendant that he needed a further advance of $2,000 to pay his employee’s wages if he was to keep his business open. The defendant asked “Will the boat be reading for painting?” to which Mr McCourt replied “It should be close. You can do the sanding in our shed.” When asked if he had found a shed in which to paint the ship in, Mr McCourt replied that he hadn’t got around to it yet.
21 On 2 August 2002, the defendant arranged for $90,000 to be paid to the plaintiff by Esanda Finance, $49,000 of which was to be paid by the plaintiff to Wynnum Marine, $11,000 of which was to be paid by the plaintiff to Coffs Harbour Paint and Panel, with the remaining $30,000 to be retained by the plaintiff with $5,000 for materials and $25,000 for labour. Following this payment, $72,000 had been paid to the plaintiff pursuant to the contract. The remaining amount, comprised of GST, was due, pursuant to the contract, following completion of the plaintiff’s work, as Mr McCourt conceded.
22 On the afternoon of Friday 9 August 2002, Mr Gardiner phoned Mr McCourt and asked: “Will the boat be ready for painting next week?” to which Mr McCourt said: “She will be right to start on Monday.”
23 On 12 August 2002, the defendant and Mr Gardner arrived in Brisbane to paint the ship, yet the ship was again not ready for painting. Mr McCourt said the ship would be ready for painting in “A few days”, so the defendant and Mr Gardner arranged with Mr McCourt to return to Brisbane to paint the ship over two weeks commencing 1 September 2002.
24 The defendant arranged for Michael Bryant, a marine electrician, to complete the electrical work on the ship for the week starting 16 September 2002, after the planned two weeks of painting, an arrangement of which Mr McCourt was informed. At that time, Mr McCourt requested a further $2,000 for wages, which was paid to him by the defendant on 19 August.
25 On 22 August 2002, the defendant again flew to Brisbane to inspect the ship, at which time the canopy had been almost completed. The defendant was assured that the ship should be ready for painting by 30 August. On 29 August 2002, Mr McCourt requested a further payment for “bits and pieces”. The defendant paid a further $1,000 on 30 August 2002, believing the further payment to be for the plaintiff’s employees’ wages.
26 On 1 September 2002, the defendant and Mr Gardner travelled to Brisbane to paint the ship for the third time to find that the work on the ship had progressed little. They left and returned on 5 September. At this time, they found that Mr McCourt had not arranged anywhere to paint the ship. The defendant unsuccessfully attempted to locate a place to paint the ship in Murarrie, then secured a place at the Brisbane Ship Lifts at Hemmant. The defendant arranged a crane, wide load truck and escort vehicles to transport the ship to Hemmant. The arrangements were confirmed with Mr McCourt on 6 September for the following Monday 9 September.
27 I accept that the events of 9 September 2002 are as set out in the defendant’s affidavit of 18 December 2002:
“25. On Monday morning I was called by Steve Evans whilst driving to Stingray Boats. He said, ‘The cranes have been sent away.’ I said, ‘Wait until I get there.’ I arrived in five minutes with Bill Gardner. Outside I spoke with Steve Evans. He said, ‘The franna (crane) was sent away before we got here. I can ring him and get him back. I said, ‘Yes, we need the crane.’
26. With Bill Gardner I went inside and spoke to Tim McCourt.
I said, ‘What’s happening?’
Tim McCourt said, ‘The boats not going anywhere. This is a $300,000 boat. I want to be paid for the extra work I’ve done.’
I said, ‘What extra work?’
He said, ‘The front door. That took me a week. The toilet and other things. All the bilge piping.’
I said, ‘They are all part of the boat. We had a contract. You never wanted to change it.”
He said, ‘Its not leaving the shed unless I get paid an extra $13,000.’
I was standing outside the shed with a crane, two escort vehicles, a wide load truck and the painting contractor.
I said to Bill Gardner, ‘What can I do? I don’t owe him any extra. I had a contract. He can jam the boat here for six months, the Police won’t do anything. I’ll never get the boat, you won’t be able to paint it and I’ll be out of business.’
Bill Gardner said, ‘What choice do you have? He’s got you screwed. Can you pay him?’
I said, ‘My money from work is due. But I don’t owe him this.’
Bill said, ‘Tell him that but he can just lock his shed up.’ McCourt walked outside.
I said, ‘What about the contract we had? You never mentioned anything like this.’
McCourt said, ‘The boats not moving unless you agree to pay the extras
27. The boat was moved to Brisbane Ship lifts. …”.
28 I accept that what occurred so as to permit the boat to be moved was that Mr McCourt refused to let the boat go until the defendant agreed to pay the sum which Mr McCourt claimed was the balance owing, and that he promised to pay what Mr McCourt said was the balance of the outstanding funds so as to be able to take possession of the boat. The account of the events of 9 September 2002 given by Mr McCourt in his affidavit filed 10 October 2002 as to the circumstances in which the boat was moved incorrectly claims that Mr Denmeade’s arrival on 9 September was unexpected, but I accept his account of what he said was the balance of money owed for the plaintiff’s work on the boat and for extras, and the agreement by the defendant to pay that amount on the following day.:
“13. On 9 September Mr Denmeade arrived unexpectedly at the plaintiff’s premises with a large crane. Since the plaintiffs had not quite completed their works I asked the owners representative, Philip Denmeade, then of flat 10, 1 Railway Parade, Westmead, Sydney, why the owners wanted to take the ship away. Mr Denmeade said to me, and I believed the same to be true: ‘We want to take the boat away for painting.’
14. I said, ‘What about paying us the balance of the money you owe us for our work on the boat and the extras? I cannot let the boat go without being paid because I do not want to have to come and chase you to get paid the rest of our money.’
15. Mr Denmeade said, and I believed the same to be true: ‘I will pay you tomorrow if you let the boat go today.’ I did believe him and showed him a copy of invoice 64, and asked him to confirm the moneys then owing by signing the invoice. After he had done so, I allowed the ship to leave our workshop. Now produced and shown to me and marked exhibit ‘3’ is a copy of the said invoice bearing my signature and that of Mr Denmeade dated 9 September 2002.
16. That invoice overstates the amount of money owed by the owners to the plaintiff by $1800, due to errors in my calculation of the exact amount of applicable GST. In fact, the true amount owing is as set in paragraph 10 hereof. [namely $20,500]”
29 On 10 October 2002, an arrest warrant was filed in the Court by the plaintiff because of the failure on the part of the defendant to pay the plaintiff the balance of the moneys due to it, the sum of $20,500. The arrest warrant provided as follows:
“TO the Marshal:
Arrest 12 metre Aluminium Ship registered number 25230 or 2523Q
Warrant taken out by Stingray Boats (a firm)
Filed in the Brisbane District Registry on 10 October 2002.”
Pursuant to this arrest warrant, the ship was arrested by the Court Marshal on 10 October 2002.
30 The plaintiff claims it was entitled to be reimbursed for the costs incurred by it in fabricating and installing each extra, as well as to be paid a reasonable price by way of labour for each extra item of work done by it in or about the construction of the ship. The plaintiff asserts that, by reason of the conduct of the defendant, it is entitled to recover from the defendant the sum of $34,273.40 in place of the amount of $20,500 sought in the statement of claim.
Findings
31 The scope of the agreement in respect of the ship is the central issue in this dispute. Notwithstanding the claim by the plaintiff that the agreement merely contemplated fabrication of a kit, in my opinion the agreement was for the construction of a ship in accordance with the plans; it was the defendant’s responsibility to pay for those items said to be the defendant’s responsibility in the contract. Therefore, the defendant was required to pay the contract price of $72,000 plus $7,200 GST, but was also liable to pay for the cost of extra items which, pursuant to the agreement, he was to provide or pay for.
32 The real problems that arise concerning the present dispute may be attributed to the uncertainty in the contract as to the scope of work and the responsibility for payment of various components in respect of the ship. It is by no means clear just what was to be covered by the payment of the agreed sum of $72,000, and what truly were to be “extras”, to be paid for in addition to that sum. It would seem that the plaintiff proceeded to commence work on the ship, and the defendant commenced payments by instalment for the work, without the finer details of the contract ever having been clarified. The contract was for:
“The construction of one twelve metre tube boat as designed by Stevens and Gravlev. The computer cut kit will be supplied by the Owner and construction will begin immediately upon receiving the said kit. The boat will be constructed to meet 1C Survey requirements.”
Some “extras”, such as the “dual engine and jet installation, surveyor and all survey costs”, and “folding and metal rolling costs”, are specifically designated as extras by the contract. Others, such as the front door, the toilet and the bilge piping are not specifically designated as such.
33 The evidence establishes that a total payment of $73,000 was made by the time the ship was taken, but clearly some “extras” had been performed for which the defendant was liable. There was therefore some moneys owing by the defendant to the plaintiff at the time the ship was removed.
34 It is not necessary, or even possible on the material, to quantify what precisely was that figure. The plaintiff quantified it at $13,000, in addition to an amount for GST, by its demand that the ship would not be released unless the defendant promised to pay that sum as being the sum necessary to discharge the entirety of the defendant’s obligation to the plaintiff in respect of the construction of the ship. Notwithstanding the protestations by the defendant that he acknowledged a liability for “extras” of $13,000 together with GST on the original contract price and on the extras only under duress, he promised to pay that amount so he could remove the ship. By signing the invoice, in my opinion the defendant indicated his acceptance of this debt. Notwithstanding the defendant’s promise to pay $13,000 and the relevant amounts for GST, he has failed to pay that sum, or any part thereof. On the other hand, the plaintiff now asserts that $34,273.40 is owing.
35 It is said by Mr McCourt on behalf of the plaintiff that the figure of $13,000 was arrived at in great haste on 9 September, and is in fact an underestimate of the amount that should have been paid in extras, for extras such as the bilge system, fuel system and survey costs. However, the amount claimed in the statement of claim for extras was quantified at $13,000, no doubt on the basis that this was the figure demanded of the defendant at the time. The plaintiff now claims that, following a reconciliation of the monies received and expended during the course of the construction of the ship, conducted by the plaintiff’s accountant, the amount in fact owing to the plaintiff by the defendant is $34,273.40.
36 In my judgment, by agreeing to pay to the plaintiff the sum of $13,000 plus $8,000 GST, in addition to the $73,000 already paid, the defendant accepted that there were “extras” paid for by the plaintiff, for which the plaintiff would have to be paid. By requesting payment of $13,000 for extras, the plaintiff nominated this sum as the value of the materials and labour of providing such extras. The defendant accepted liability for this amount by signing the invoice, taking possession of the ship and promising to pay the amount demanded by the plaintiff. It is not necessary for the Court to attempt to work out what items were in fact extras and the monetary value to be attributed to those items. The GST claimed is uncontroversial as it is specifically covered by the original written contract.
37 Time was not of the essence in relation to the construction of the ship. The plaintiff failed to honour assurances he gave as to when the ship would be ready for painting. By taking the ship, the defendant relieved the plaintiff of whatever further work it might have been obliged to perform to complete its obligations under the contract. The plaintiff, by its conduct concerning the preparation and signing of the invoice, and releasing the ship on the defendant’s promise to pay that amount, quantified the extent of its contractual claims. By signing the invoice, taking possession of the ship and promising to pay the amount of $13,000, together with the relevant GST amounts, the defendant acknowledged that he was indebted to the plaintiff in this amount.
38 After the ship was taken from the plaintiff’s yard, work was done on the ship, at the defendant’s request, by a firm Morgans Marine, which claims $6,619.40, and B.D. & R.G. Hunt, who claim $2,241.61. A bill was rendered by the surveyor, Mr Wyvill, for $2,500.00 to the defendant, which apparently is unpaid. Those matters do not involve any liability on the part of the plaintiff to the defendant.
39 There will be judgment for the plaintiff against the defendant for $21,500. That sum is made up of $13,000 plus $1,300 GST, as acknowledged in the invoice signed by the defendant on 9 September 2002, and $7,200 GST as being the correct amount for GST on the contract sum of $72,000. The defendant is to pay the plaintiff’s costs, to be taxed if not agreed.
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I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender |
Associate:
Dated: 14 February 2003
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Counsel for the Plaintiff: |
Mr A. Cooper |
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Solicitor for the Plaintiff: |
LyonSmith Commercial Lawyers |
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Counsel for the Defendant: |
Mr S. Miller, with Mr J.W. Moore |
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Solicitor for the Defendant: |
Direct Access Brief |
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Date of Hearing: |
20 December 2002 |
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Date of Judgment: |
14 February 2003 |
