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.