Supreme Court of WA|2009-07-30|Before: Martin J

WAVEMASTER INTERNATIONAL PTY LTD (In liq) -v- JR MARINE SYSTEMS PTE LTD [2009] WASC 203 (30 July 2009)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : WAVEMASTER INTERNATIONAL PTY LTD (In liq) -v- JR MARINE SYSTEMS PTE LTD [2009] WASC 203

BETWEEN : WAVEMASTER INTERNATIONAL PTY LTD (In liq) (ACN 009 100 314)

Contract - Written Shipbuilding Agreement - Instalments payments not made - Default - Oral contract - Collateral - Claim for rectification - Claim for conventional estoppel - Damages for breach of contract

Judgment for the plaintiff for deposit amount and for common law damages

Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Company Ltd [2008] WASCA 119

Bell Group Ltd (in liq) v Westpac Banking Corp (No 9) [2008] WASC 239; (2008) 225 FLR 1

Chint Australasia Pty Ltd v Cosmoluce Pty Ltd [2008] NSWSC 635

Concut Pty Ltd v Worrell [2000] HCA 64; 75 ALJR 312

Connor v Blacktown District Hospital [1971] 1 NSWLR 713

Equuscorp v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471

GEC Marioni Systems Pty Ltd v BHP Information Technology [2003] FCA 50; (2003) 128 FCR 1

Hoyts v Spencer (1919) 24 CLR 133

Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; (2007) 233 CLR 115

L'Estrange v Graucob Ltd [1934] KB 394

Mander Pty Ltd v Clements [2005] WASCA 67; (2005) 30 WAR 46

Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353

McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457

Newmont Power Pty Ltd v Barrick Gold of Australia [2008] WASCA 74

Ryledar Pty Ltd t/as Volume Plus v Euphaic Pty Ltd [2007] NSWCA 65; (2007) 69 NSWR 603

1 The plaintiff corporation, now in liquidation, carried on business from Western Australia as a commercial shipbuilder. By this action commenced in 2006, it claims liquidated sums, alternatively damages, against the defendant, grounded upon a written shipbuilding agreement (the Shipbuilding Agreement) entered between itself and the defendant, a Singaporean corporation, in or about late September or early October 2003.

2 Apart from the plaintiff and the defendant, there is a further party to the Shipbuilding Agreement, Penang Shipbuilding and Construction Sdn Bhd (PSC). PSC is a Malaysian corporation and, at relevant times, was the plaintiff's ultimate corporate parent. Although PSC is made a party to the Shipbuilding Agreement, the contents of that document do not reveal PSC as bearing any particular obligations of performance thereunder, notwithstanding that it is referred to as the 'Main Contractor'.

3 In the Shipbuilding Agreement, the plaintiff is described as the Builder and the defendant is described as the Purchaser.

4 By its action, the plaintiff pursues liquidated sums which it contends are due and payable by the defendant to it under the Shipbuilding Agreement, but which are entirely unpaid. Alternatively, the plaintiff claims damages, predicated upon alleged breach of the Shipbuilding Agreement, essentially by the defendant failing to make good its payment obligations as purchaser, after being invoiced for instalment payments.

5 The Shipbuilding Agreement itself relates to the construction of a vessel, sometimes referred to as Yard 207 or Y 207. It is undisputed that the plaintiff never completed the construction of the vessel, which, upon completion, was designed to be a commercially operating ferry.

6 The plaintiff allows to the defendant a credit in the amount of $AUD803,000, being funds the plaintiff was ultimately able to obtain in March 2005 upon its sale of the incomplete vessel, which was Yard 207.

7 The defendant, acknowledging that it is a party to the Shipbuilding Agreement, nevertheless seeks to raise various defences under its defence and counterclaim. Essentially, it contends that the Shipbuilding Agreement is the subject of an unfulfilled condition precedent going to its very formation as a binding agreement, pursuant to which the plaintiff first needed to obtain, for the defendant, purchaser finance - so as to enable the defendant as Purchaser to proceed with the acquisition of Yard 207.

8 The defendant further contends that undocumented arrangements in respect of the plaintiff's obligation to procure for it purchaser finance in respect of Yard 207 were the subject of an earlier oral agreement, entered into as between two individual directors of the plaintiff and the defendant, respectively, in Kuala Lumpur during September 2003 and prior to the written Shipbuilding Agreement being formally executed by the three corporate parties thereto.

9 The anterior oral agreement is said by the defendant to have been entered for it by its director, Mr Mohd Zin Bin Arif (Mr Arif). The defendant alleges that one of the plaintiff's directors, Mr Mohd Noordin Bin Dato' Abdullah (Mr Abdullah) reached these oral arrangements on behalf of the plaintiff at a meeting in person as between the two men, at Mr Abdullah's business premises on the 10th floor of the Ming Building in Kuala Lumpur, some time during September 2003.

10 The defendant then seeks rectification of the written Shipbuilding Agreement, so as to augment its written content by the addition of a condition precedent going to the formation of any agreement, and by which the Shipbuilding Agreement is expressly rendered conditional upon the obligation of the plaintiff to first obtain purchaser finance for the defendant.

11 In addition, the defendant raises various other defences, largely dependent upon the content and outcome of the September 2003 oral discussion between Mr Abdullah and Mr Arif at Kuala Lumpur, prior to the subsequent entry into of the Shipbuilding Agreement by its corporate participants. The defendant advances an estoppel as between it and the plaintiff, seeking essentially to bar the plaintiff from being heard to contend that the Shipbuilding Agreement may be enforced against it, absent the plaintiff first having procured for the defendant purchaser finance for Yard 207.

12 The defendant also contends that an oral, mutually agreed, abandonment of the Shipbuilding Agreement's performance obligations was reached by Mr Arif and Mr Abdullah, on behalf of the defendant and the plaintiff, some time during late 2004, and by which the parties are said to have accepted that the terms of the Shipbuilding Agreement could not be enforced as against the defendant (purchaser finance for Yard 207 for the defendant not having by then been arranged by the plaintiff). So the plaintiff was then looking to obtain a substitute purchaser for Yard 207 and, as a result, it is said, the defendant's obligations under the Shipbuilding Agreement were ended, by mutual agreement.

13 Apart from the defences which I have now mentioned and which go to the core issue of what I will call the 'purchaser finance obligation condition', the defendant also raises other matters - going towards the issue of whether the plaintiff met or strictly complied with its obligations under the Shipbuilding Agreement, so as to thereby entitle the plaintiff to take the benefit in its favour of certain terms of the Shipbuilding Agreement, entitling the plaintiff to receive liquidated amounts as instalment payments thereunder from the defendant. Essentially, the defendant contends that some strict prerequisites imposed under the terms of the Shipbuilding Agreement have not been complied with by the plaintiff, resulting in its inability to validly pursue liquidated sums or damages against it.

14 In summary, therefore, the defendant essentially asserts that it owes no monies to the plaintiff under the Shipbuilding Agreement, and furthermore, that it is not, in any event, to be held liable to the plaintiff for damages for breach of the Shipbuilding Agreement, as it contends that it has committed no breach thereof.

15 It is noteworthy, that examination of the written content of the Shipbuilding Agreement discloses no reference within that instrument to it having been made conditional, either in its formation, or as to its performance - upon a basis of the plaintiff being obliged to procure for the defendant any level of purchaser finance in respect of Yard 207.

16 It will be seen, however, that the Shipbuilding Agreement does contain (see exhibit TB(D), page 667) an express condition at its outset in the following terms:

The Agreement is subject to ratification by the Board of Directors of the Builder and of the Main Contractor (either in meeting or by Circular Resolution) and comes into effect on and from the later of such acts of ratification.

17 The phraseology of this condition goes to the very formation of a binding Shipbuilding Agreement (ie, via the words, 'comes into effect on and from').

18 On the defendant's case, it is pursuing the establishment of a further condition of similar moment, said to have been settled upon orally as between Messrs Arif and Abdullah at the September 2003 Kuala Lumpur meeting between them, prior to subsequent execution of the written Shipbuilding Agreement, albeit not finding its way into the terms of that instrument, as executed.

19 Having made these preliminary observations by way of overview, I turn to consider more fully some of the precise terms of the tripartite Shipbuilding Agreement.

20 The Shipbuilding Agreement was uncontroversially received into evidence - see exhibit TB(D), pages 667-773.

21 It will be seen that the written instrument, upon its face page (667), shows a space in the opening line - into which a date for a day in September 2003 was to be inserted. A longhand annotation upon the face of the written instrument shows the insertion of '2nd' (ie, second) as being the day nominated in September 2003. Notwithstanding that annotation, the burden of the evidence at trial suggests that the Shipbuilding Agreement was executed as between the parties thereto in Malaysia, either in very late September 2003, or in early October 2003, by directors of the parties concerned, whilst those directors were gathered to attend a military air show at the resort location of Langkawi, Malaysia.

22 On behalf of the defendant as 'Purchaser', the written Shipbuilding Agreement is executed by its director, Mr Arif (see page 696). No argument was put at trial that Mr Arif had not validly bound the defendant to the Shipbuilding Agreement by his signature - notwithstanding that no common seal for the defendant can be seen as applied. See also exhibit TB(D), pages 828 - 833, being notice and minutes of an extraordinary general meeting of the defendant, chaired by Mr Arif and signed by him, containing the defendant's board of directors minuted approval for the purchase of vessels to be built for it by the plaintiff (828).

23 On behalf of the plaintiff, the Shipbuilding Agreement was signed by two of its then directors, Mr Maurice Gerkens and Mr Goran Dubljevic. The common seal of the plaintiff is seen to have been applied. No issue was pleaded or raised during the trial concerning any potential difficulty over the plaintiff not having complied with the ratification pre-condition as seen at page 1 of the Shipbuilding Agreement (667), and to which I have referred at [16].

24 I have already observed that the Shipbuilding Agreement is also executed by PSC, as Main Contractor. At page 696, the document is seen to carry the signature of a director of PSC. Whilst there was reference at trial to the signing ceremony attended by the plaintiff's directors, as well as representatives of the plaintiff's ultimate Malaysian parent and a person referred to as the dominating personality on behalf of PSC at the time, (Mr Amin Shah), it is not totally clear that Mr Shah actually signed on behalf of PSC. Someone obviously did, however.

25 Each page of the Shipbuilding Agreement, between 667 and 773, appears to have been initialled by one person's common initial. At pages 771 and 772 of the trial bundle, two further typed pages are seen to have been added to the otherwise pro forma written instrument, as part of the specifications for Yard 207. Page 771 reveals the reference to discussions held on 26 September 2003, between Mr Dubljevic, on behalf of the plaintiff, and a Mr T C Leong, on behalf of the defendant. The document continues:

We are pleased to confirm and clarify that the following at no extra cost to the original price quoted in the Main Contract, will now be incorporated into the relevant clauses of the specification document. ...

26 Little emerged during the trial concerning the content of any discussions on 26 September 2003 as between Mr Dubljevic and Mr Leong, on behalf of the defendant. The reference at page 771 does, however, indicate that matters of detail, at least concerning the specifications for Yard 207, had been under discussion as between the parties' representatives as late as 26 September 2003, a time which would be after any earlier oral discussion at Kuala Lumpur as between Mr Abdullah and Mr Arif.

27 The Shipbuilding Agreement document, in unexecuted form, would appear to have been prepared at the plaintiff's Henderson offices in Fremantle, Western Australia, and then been taken by Messrs Gerkens or Dubljevic from Perth to Malaysia. There, at Langkawi, the document came to be executed at a signing ceremony by Mr Arif, on behalf of the defendant, and Messrs Gerkens and Mr Dubljevic, on behalf of the plaintiff. It may be that Mr Amin Shah executed the agreement on behalf of PSC at Langkawi, although that is not entirely clear, and it is unnecessary to reach a conclusion as to who actually executed the document for PSC as Main Contractor.

28 The Shipbuilding Agreement is expressed to be governed by the laws of the State of Western Australia, with all the parties submitting to the jurisdiction of the courts of Western Australia (see cl 1.9).

29 It is now necessary to refer precisely to some of the more important clauses within the Shipbuilding Agreement, in order to assist the proper comprehension of the contractual issues in contention as between the parties.

30 The Shipbuilding Agreement is made subject to the fundamental qualifying condition relating to ratification by the plaintiff and by PSC, to which I have already referred. Whilst no issue at trial arises over any argued absence of ratification to satisfy that condition, as regards the boards of the plaintiff and PSC, nevertheless, in the context of the defendant's overall case asserting a claim for rectification of the Shipbuilding Agreement, the presence of an express ratification precondition, clearly stated, is of some negative weight, I think, against the defendant's pursuit of rectification to add a second precondition. It is to be seen that, at least in respect of one precondition, the parties, viewed objectively, apply their minds to a positive need for insertion of a ratification precondition bearing upon when the Shipbuilding Agreement 'comes into effect'.

31 Given that the parties can be seen to have chosen to nominate, clearly enough, a chosen precondition in express terms, that is a circumstance well capable of bearing upon the ultimate assessment about the probability of whether these parties are likely to have mistakenly left out of the same written instrument an equally important precondition going to its very formation, as the defendant contends. By its rectification case, the defendant argues for a new cl 1 of the Shipbuilding Agreement to be inserted to precede the definition and interpretation clause (currently cl 1 of the Shipbuilding Agreement), and which new clause is in the following terms (as handed up during counsel for the defendant's closing address at trial):

1.1 Subject to the condition contained in clause 8.1A, the Builder will build and the Purchaser will buy the vessel.

1.2 This Agreement is entirely subject to clause 1.1.

32 It will be seen that the defendant, through this formulated pre-condition, as sought to be incorporated into the Shipbuilding Agreement by rectification, goes as far essentially as to erect a condition precedent which would govern the reaching of any binding agreement as between the parties. As to this type of precondition, see Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353 at 360 - 361, where Dixon CJ and McTiernan and Kitto JJ said:

Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.

...

Cases of the third class are fundamentally different. They are cases in which the terms of agreement are not intended to have, and therefore do not have, any binding effect of their own ...

33 I will deal further with the defendant's rectification case in the context of assessment of the evidence advanced at trial in the defendant's pursuit of that equitable remedy.

34 I now mention certain governing definitions found in cl 1.1 of the Shipbuilding Agreement:

Basic Purchase Price means the amount stated in Annexure A, as adjusted from time to time in accordance with the provisions of this Agreement.

...

Deposit means the total amount of the first progress payment set out in Annexure B, which shall be paid by the Purchaser to the Builder, in accordance with the provisions of this Agreement.

...

Interim Stage Certificate means an Interim Stage Certificate substantially in the form of Schedule 3.

...

Progress Payment means a payment described as a progress payment in cl 8.1 and includes the Deposit as the first progress payment.

...

Vessel means a vessel having the dimensions, speed and specifications described in the Specification (Annexure D), with the designated yard or hull number allocated to it by the Builder, to be, or being constructed or awaiting delivery, or being delivered, as the case may be.

35 It is of some significance that the Shipbuilding Agreement contains an entire agreement clause (cl 1.6). Such a clause obviously sits both uncomfortably and inconsistently with a number of aspects of the defendant's case, namely the alleged existence of a prior (inconsistent) oral collateral contract and the pursuit of rectification on the basis of a missing fundamental precondition going to the very existence of a binding agreement as between the parties in terms of the Shipbuilding Agreement, and upon the defendant's argument for an estoppel based upon the plaintiff's alleged prior obligation regarding procurement of purchaser finance for the defendant - in order for it to be required to proceed with the acquisition of Yard 207.

36 The entire agreement clause is in the following terms:

1.6 Entire Agreement

This Agreement sets forth the full and complete understanding of the parties as of the date of execution of this agreement and supersedes any and all written or oral agreements and representations made or dated prior to the date of execution of this Agreement.

37 Further clauses of the Shipbuilding Agreement relate to construction, property and title, and the purchase price and payment, in the following terms:

2.1.1 The Builder agrees to design, build, trial, sell and deliver the Vessel to the Purchaser for the Basic Purchase Price in accordance with the terms of this Agreement.

2.2.2 The Purchaser agrees to purchase the Vessel for the Basic Purchase Price and to accept delivery of the Vessel, in accordance with the terms of this Agreement.

...

5.1.1 The Vessel shall be the property of the Purchaser at all times.

5.1.2 The Builder shall have a charge on the Vessel (hereinafter 'Builder's Charge') in respect of any payment due to the Builder and the Purchaser agrees that under no circumstances will the Builder be obliged to give possession of the Vessel to the Purchaser until the final purchase price has been paid.

...

The Purchaser shall pay to the Builder the Deposit, as the first progress payment in the amount calculated as the percentage of Basic Purchase Price specified in the Payment Schedule (Annexure B) immediately against delivery of the documents specified in the Payment Schedule (Annexure B).
The Basic Purchase Price includes:

(i) The cost of transport, insurance and shipment of the Vessel to the Place of Delivery; and

(ii) All sales taxes, fees, charges, levies, import duties and taxes which may be imposed on the Vessel in Australia.

In the event that the Vessel is lawfully rejected by the Purchaser in accordance with the terms of this Agreement, or this Agreement is lawfully rescinded by the Purchaser in accordance with the terms of this Agreement, before the Actual Delivery Date, then, provided such rejection or rescission is not disputed by the Builder, the Builder shall refund to the Purchaser the full amount of all Progress Payments paid by the Purchaser to the Builder upon which event, all right title and interest in the vessel shall vest in the Builder.
...
The Purchaser shall on the Actual Delivery Date pay to the Builder the Final Payment plus, where applicable, GST by delivering to the Builder against delivery of the Vessel a bank cheque payable to the Builder in the amount of the Final Payment.

38 Whilst mentioning cl 8, concerning purchase price, it is timely to observe that although cl 8.1A is somewhat less than perfect in terms of its clarity of drafting - as regards the setting up of an instalment payment regime by reference to a series of progress payments - since cl 8.1A only refers to the payment of the Deposit as the first progress payment - nevertheless, once the ensuing provisions of cl 8.1 as a whole are considered, particularly, subcl 8.1D and F, they, when also read with the content of Annexure B as referred to, do in my assessment, provide an adequate edifice to reach a conclusion, as a matter of construction, that the Shipbuilding Agreement sets down a regime of what are, in effect, a minimum of six separate progress instalment payments to be made over time by the Purchaser to the Builder, as the construction of Yard 207 is progressively advanced.

39 A remaining drafting component of the defendant's proposed rectification surgery to the Shipbuilding Agreement, seeks to further insert additional words at the commencement of cl 8.1A of the Shipbuilding Agreement, in the following terms:

8.1A Subject to the Builder obtaining purchase finance for the Purchaser, the Purchaser shall pay to the Builder ...

40 It is now necessary for me to set out the content of Annexure B to the Shipbuilding Agreement, by which the contemplated multiple instalment payment regime by the Purchaser to the Builder, is more clearly seen:

DOCUMENTS TO BE DELIVERED BY BUILDER TO THE PURCHASER

Completion and signing of this Agreement by Main Contractor, Builder and Purchaser

Invoice
Certified copy of fully executed Agreement signed by Main Contractor, Builder and Purchaser

Interim stage Certificate issued by Builder and countersigned by the Classification Society

Interim stage Certificate issued by Builder and countersigned by the Classification Society

Interim stage Certificate issued by Builder and countersigned by the Classification Society

Interim stage Certificate issued by Builder and countersigned by the Classification Society

Invoice
Other delivery documents as set out in this Agreement and the Specifications

41 I now examine certain clauses of the Shipbuilding Agreement dealing with issues relating to default by the Purchaser. I set out the following extracts from cl 9 of the Shipbuilding Agreement, in the following terms:

9.1 Definition of Default by the Purchaser

The Purchaser shall be deemed to be in default hereunder in the following circumstances:

If the Purchaser fails to pay the Deposit or any Progress Payment due and payable hereunder (which is not reasonably disputed) within three (3) days after notice has been received from the Builder of such failure to make payment;

42 Clause 9.2 then sets out the Builder's entitlement to interest against the Purchaser in certain circumstances, at the rate per annum stated in Annexure A to the Shipbuilding Agreement, from the date when payment was otherwise due.

43 Importantly to the plaintiff's alternative claim for relief in (liquidated) damages, cl 9.3 provides in these terms:

9.3 Consequence of Termination

Where the Purchaser is in default and the default has not been remedied within fourteen (14) days after the Purchaser has received notice from the Builder requiring the Purchaser to remedy the default, the Builder may terminate the Agreement by notice in writing. In the event of termination:

This Agreement shall come to an end, save for this clause, and clause 5, which shall apply for the benefit of both parties.
The Builder, at its option, shall be at liberty, without further notice, either:

(i) To sell the Vessel; and/or

(ii) To complete construction of the Vessel in accordance with this Agreement and sell it after completion.

(i) ...

(ii) The Builder shall account for all reasonable costs, charges, expenses or liabilities reasonably incurred by the Builder in connection with:

Such sale; and/or
The reasonable costs, charges, expenses and liabilities incurred by the Builder in connection with completion of construction as provided in Clause 9.3B, which shall include the cost of employment of subcontractors, and an amount equal to gross profit calculated at the rate of 11 per cent (collectively 'Builder's Damages').

... [Note: As far as I can ascertain, there is no cl 9.3E in the Shipbuilding Agreement.]
If there is any surplus of Cash Receipts over Builder's Damages, the Builder shall within fourteen (14) days after receipt of proceeds of the said sale, pay the surplus to the Purchaser. If there is any deficiency of Cash Receipts over the Builder's Damages, the Purchaser shall pay the deficiency with fourteen (14) days after written demand.

44 The term 'Builder's Damages', as used in cl 9.3F, is seen to be defined by that term's earlier use in cl 9.3D(ii)(b).

45 Clause 9.3F, as regards its use of the term 'Builder's Damages', is important to the alternative case that the plaintiff brings for what are, in effect, liquidated damages - claimed under the Shipbuilding Agreement, in circumstances of alleged breach by the defendant as purchaser - in the event that the plaintiff is not successful in establishing a primary entitlement to liquidated instalment amounts due and payable under the Shipbuilding Agreement.

46 A further provision of the Shipbuilding Agreement, concerns the way in which it prescribes its own mechanism for the proper addressing and despatch of notices, as between the parties. Clause 22 is in the following terms:

22.1 Address for Notices

Any notice to be given hereunder to the Purchaser shall be addressed to the Representative of the respective party at the address sated in Annexure A or such other address as either party may from time to time by notice in writing to the other party designate for that purpose.

22.2 Method of Sending Notices

All notices to be sent hereunder shall be sent by post or facsimile transmission and shall be deemed to have been received in the case of fax transmission on the next business day in the country of the recipient following dispatch thereof and in the case of a letter seven (7) days after the same is posted by prepaid registered airmail. To dispel doubt, time limits resulting from the giving or serving of notice under this Agreement commence from the date of receipt of the notice by the party affected by the time limit.

47 The address nominated in Annexure A for the defendant, is to be seen at page 36 of the Shipbuilding Agreement (exhibit TB(D), page 703), as:

Addresses for service of notices

Purchaser

2 Maritime Square

#03-03 SPI Building

Singapore, 099255

48 Having referred to the relevant provisions of the Shipbuilding Agreement, I can now proceed to review the significant evidence received at trial.

49 Essentially, the plaintiff sought to advance its case for relief primarily by reliance upon documents. In this regard, the trial bundle comprised some seven volumes of documents, containing therein 110 documents. The content of the trial bundle as admissible evidence was, by the end of the trial, wholly uncontroversial as between the parties. Accordingly, the seven bound trial bundle books were tendered and received into evidence respectively, as exhibits TB(A) through (G) - as regards the content of 110 documents variously included therein, and subindexed within each of those seven bound books.

50 The plaintiff called, as its only witness, Mr Malcolm Swaddle who, for a period of approximately some 14 months commencing in September 2003, occupied a position as the plaintiff's general manager, until the plaintiff was placed into administration on 4 November 2004.

51 The defendant called evidence from two witnesses at trial, Mr Arif, and Mr Abdullah, to whom I have already referred.

52 I now set out my observations in respect of the evidence of these three witnesses.

53 Although he was its general manager, Mr Swaddle was never a director of the plaintiff. Accordingly, he did not ever occupy the position of managing director, as had his predecessor general manager, Mr Christopher Gerrard, between 17 March 1997 and 14 August 2003.

54 Mr Swaddle gave evidence about an urgent telephone call he received, the consequence of which was to deny him the opportunity of viewing, from Perth, a live telecast of the 2003 AFL grand final (held on the last Saturday of September each year). Instead, Mr Swaddle was required to urgently catch a plane that Saturday to Singapore, in order to meet with the ultimate controlling personality of the PSC Group, Mr Amin Shah. Mr Swaddle did meet with Mr Shah in Singapore, and from there was flown in Mr Shah's private jet to Kuala Lumpur. Mr Swaddle was travelling with his directors, Goran Dubljevic and Maurice Gerkens. From Kuala Lumpur, Mr Swaddle flew on to the Malaysian resort destination of Langkawi, where a military air show was being held over the course of the ensuing week. There appear to have been a number of exhibitors at the air show, including the PSC Group, and including as part of that, an exhibition by the plaintiff of its shipbuilding wares, as one PSC Group subsidiary.

55 Whilst he was at Langkawi, Mr Swaddle learned of a ceremony proposed in respect of the signing of the Shipbuilding Agreement in respect of the sale of Yard 207. At that time, early in the period of his appointment as general manager, Mr Swaddle knew that a partially complete hull had been under construction by the plaintiff at its Henderson yard, but which remained substantially incomplete.

56 Mr Swaddle was broadly aware that the hull being constructed by the plaintiff had been begun by the plaintiff, in contemplation of it being sold to an overseas buyer who had expressed in an interest in acquiring such a vessel or vessels. Unfortunately for the plaintiff, the Italian corporation concerned, Ustica Lines S.p.A, had, in the end, decided not to exercise its option to acquire Yard 207, leaving the plaintiff in need of a replacement purchaser. Accordingly, a sale of Yard 207 to the defendant was fortuitous at this time, since the plaintiff was facing tight financial constraints in funding the completion of Yard 207, and was also reliant upon a regular receipt of funds from its Malaysian parent entities in the PSC Group in order to provide it with a measure of necessary liquidity at the time.

57 Mr Swaddle was not responsible for assembling the sale contract documentation that the plaintiff prepared in respect of a shipbuilding agreement in respect of Yard 207 with the defendant. One or other of his directors, Gerkens or Dubljevic, he thought, carried that responsibility.

58 Mr Swaddle was aware, however, that there was a signing ceremony planned in respect of the Shipbuilding Agreement for Yard 207 to be conducted at Langkawi during the week of the military air show. At one point, he had been under the impression that the then Malaysian Prime Minister, Dr Mahatir, was to attend that ceremony as a witness. Whilst a signing ceremony did take place, in the end, it seems that Dr Mahatir did not attend.

59 Mr Swaddle was not directly involved in the signing ceremony for the Shipbuilding Agreement, although he was in a crowd of persons that were on the perimeter of a signing ceremony as it took place. He did not actually get to observe what occurred, since this mainly involved his directors, Gerkens and Dubljevic, much more than it did him. He did not meet with Mr Arif whilst at Langkawi. Nor does it appear that Mr Swaddle met with anyone else on behalf of the defendant whilst at Langkawi in late September/early October 2003.

60 Mr Swaddle gave some contentious evidence conveying his belief as to the plaintiff's likely despatch of invoices to the defendant at Singapore for Yard 207. This type of administrative work had, he said, been generally attended to by his subordinate, Mr Pip Mangano, who was the plaintiff's Project Manager at its Henderson premises, outside Fremantle. The four invoices of the plaintiff to the defendant concerned are respectively dated 8 October 2003 (W207001); 15 October 2003 for Stage 2 (W207002); 28 October 2003 for Stage 3 (W207003); and for Stage 4, dated 5 March 2004 (W207004).

61 Mr Swaddle said that he reported, in his first period of months as general manager, to directors Dubljevic (operations director) and Gerkens (chairman). Subsequently they had resigned as directors in about early May 2004, and from that point, he then reported to another director of the plaintiff, Mr Abdullah (see ts 125).

62 It does not appear that Mr Swaddle ever met at any stage with the defendant's director concerned with the Shipbuilding Agreement, namely Mr Arif.

63 Mr Swaddle knew nothing at all of any meeting as between Mr Abdullah and Mr Arif in Kuala Lumpur in or around September 2003, and prior to the signing of the Shipbuilding Agreement at Langkawi.

64 Mr Swaddle was cross-examined about a likely despatch of the progress payment invoices by Mr Mangano, particularly for Stages 1, 2 and 3 (ts 140). Essentially, however, Mr Swaddle was not the person physically responsible for the actual despatch of those invoices, by facsimile or otherwise, and his evidence was directed towards his knowledge of the plaintiff's business practices in that respect, as well as his knowledge of Mr Mangano's practices, as regards reliable despatch of the plaintiff's invoices generally. It was Mr Swaddle's belief that Mr Mangano would have despatched the progress payment invoices to the defendant (ts 140). It is my assessment, on the balance of probabilities, that it was likely that all four invoices were properly prepared and sent by Mr Mangano to the defendant's nominated Singapore receipt address, pursuant to cl 22 and Annexure A of the Shipbuilding Agreement. This approach is supported by a decision concerning evidence as to reliable business practice (see Connor v Blacktown District Hospital [1971] 1 NSWLR 713 per Asprey JA at 721A - E, Mason JA at 722).

65 Apart from the issue concerning proper despatch of the four invoices for progress payments to the defendant, Mr Swaddle's other evidence concerning his relatively brief 15-month term as the plaintiff's general manager was largely uncontroversial, notwithstanding that he was extensively cross-examined. Mr Swaddle was asked a number of questions about documents either created prior to his commencement as general manager of the plaintiff in September 2003, or which were of a financial or accounting character, and so largely outside the realm of his direct knowledge.

66 In my assessment, Mr Swaddle did his best to answer all questions posed to him in cross-examination. He presented to me as a witness of truth, doing his best to answer honestly and to the best of his, at times somewhat limited, overall knowledge. In a number of instances of questioning under cross-examination, his knowledge proved to be limited, but that, in my assessment, does not detract from the veracity of his evidence overall and my assessment of Mr Swaddle as a reliable witness.

67 To the extent that it was put to Mr Swaddle in cross-examination that the plaintiff had either given up, or abandoned rights to receive amounts as progress instalment payments under the Shipbuilding Agreement from the defendant, essentially by reason of the failure by the plaintiff in 2004 to press the defendant for proper payment, or perhaps to press harder for payment during 2004, I do not draw that conclusion from his evidence overall. Indeed, my assessment would be to the contrary.

68 It is true that the plaintiff faced financial difficulties during Mr Swaddle's time as general manager, and the plaintiff was significantly dependent, in a number of respects, upon the plaintiff's 'up the line' Malaysian parent corporations at times for the funds required to meet local salaries and other overheads of the plaintiff associated with its Western Australia shipbuilding business operations. Because of that dependency upon receiving offshore funds from the PSC Group, Mr Swaddle needed to be sensitive to directions from superiors in the plaintiff's parent corporations overseas, and it does appear that some of his superiors were, during 2004, unwilling to see the plaintiff press the defendant too hard for payment of the Yard 207 instalment amounts the subject of the plaintiff's four instalment invoices.

69 As a result, Mr Swaddle himself did not press harder against the defendant for those instalments through 2004. That lassitude in pressing for payment, however, hardly constitutes a sufficient basis, in my assessment, to contend, without more, for the perpetual abandonment of the plaintiff's ultimate entitlement to such moneys under the Shipbuilding Agreement at some time.

70 By 11 November 2004, Mr Oren Zohar and Mr Brian McMaster had been appointed administrators of the plaintiff. Subsequently, they became the plaintiff's liquidators, as from 15 February 2005.

71 Mr Arif gave evidence as a continuing director of the defendant, using an interpreter who translated from Malay to English and vice versa, to assist Mr Arif in giving his evidence. Mr Arif's evidence-in-chief was submitted to the court via the medium of a witness statement, exhibit D115, also translated to English.

72 Mr Arif was, at first, briefly a director of the defendant between May 2001 and March 2002. In late June 2003, after the resignation of another director, Mr Arif was reappointed as a director of the defendant, and he has continued in that capacity to date.

73 It is necessary for me to set out certain parts of Mr Arif's evidence-in-chief from exhibit D115:

In or about September 2003, Mr Mohd Noordin Bin Dato Abdullah (Abdullah) who was then a director of the Plaintiff, met me with a view to getting the Defendant to buy a vessel from the Plaintiff.
At that time I was the director of the Defendant and in charge of operations.
In or about September 2003, there was a meeting between Mr Abdullah and I at his office at PSCSB in Malaysia along Jalan Bukit Nanas, Kuala Lumpur.
At that meeting Mr Abdullah said words to the effect:-

that the Plaintiff had a hull of a Vessel that had been constructed for another customer who was not proceeding with the construction; 2. requesting the Defendant to purchase the Vessel to be built with the hull; and

requesting help from the Defendant to purchase the Vessel.
At that time, I did not know that the vessel referred to by Mr Abdullah was the Vessel or Yard 207. It was only at the end of 2004 or early 2005 that I realized that the Vessel discussed between Mr Abdullah and I was Yard 207.
I told Mr Abdullah words to the effect that:-

we would help him by buying the Vessel provided that the Plaintiff would assist the Defendant to get financing to buy the Vessel; 2. we needed the financing as we could not pay for the Vessel from our own funds;

without the Plaintiff getting the financing for us, the Defendant cannot commit to purchasing the Vessel; and

from the revenue generated by the Vessel ferrying passengers and goods, the Defendant could then apply the proceeds to repay the finance loan.
Mr Abdullah, then, agreed to raise financing for us so that we could purchase the Vessel.
On the basis of the above discussion I had with Mr Abdullah, it was the understanding between Mr Abdullah and I that:-
1. I agreed to purchase the Vessel if the Plaintiff raised the financing for the Defendant to do so; and
2. unless and until the Plaintiff had procured financing for the Defendant, the Plaintiff would not continue with the building of the Vessel, ie, that the defendant was not required to purchase the Vessel; nor to pay any deposit.
When I left Mr Abdullah's office, it was clear in my mind that the Plaintiff had to procure financing for us to purchase the Vessel.

It was round about September 2003 that Mr Abdullah:-
1. asked me to sign the Agreement, i.e., the agreement to purchase the Vessel; and
2. said that he needed the Agreement signed so that he could obtain financing to meet the cashflow problems encountered by the Plaintiff.
I said words to the effect that the Defendant will help the Plaintiff. But I told Mr Abdullah that it must be on the basis that the Plaintiff procured financing for the Defendant to purchase the Vessel.
Mr Abdullah told me that I should not worry as he would raise financing for the Defendant to purchase the Vessel.
I signed the Agreement without reviewing each paragraph in the Agreement.
In November 2003 and December 2003, I sought approvals from the board of directors and shareholders of Defendant in respect of signing the Agreement for and on behalf of the Defendant. I refer to these meetings below.
The minutes of the respective directors' meetings and shareholders' meetings did not show that I had informed about the Plaintiff procuring the financing for us to purchase the Vessel before we are committed to buying the Vessel. Unfortunately, I cannot read English well enough. (emphasis added)

74 Some passages which I have set out above in exhibit D115, (see pars 16 and 17, passages in italics) were objected to by the plaintiff, on the basis that they strayed beyond the bounds of the parol evidence rule by seeking to elicit what was in Mr Arif's mind in terms of his subjective and uncommunicated understanding of discussions concerning the Shipbuilding Agreement, for instance, par 17, ie, 'clear in my mind'. But the defendant sought to support these paragraphs upon the basis of its claim to rectification of the Shipbuilding Agreement. Bearing in mind observations of the New South Wales Court of Appeal in a recent decision Ryledar Pty Ltd t/as Volume Plus v Euphaic Pty Ltd [2007] NSWCA 65; (2007) 69 NSWR 603, particularly per Tobias JA at [182] and [187] and Campbell JA at [269] and [304], I admitted this evidence provisionally, on the basis that it would be considered in the overall context of delivering my final reasons for judgment, particularly going to the issue of rectification. Having regard to the observations of Tobias and Campbell JJA in Ryledar, I will allow the evidence seen in pars 16 and 17, on a basis that when also read with Mr Abdullah's evidence, to which I shall next refer, there may be a basis that it could be relevant to the overall circumstances of ascertaining an ultimate understanding as between Mr Arif and Mr Abdullah, which was, on analysis, common and continuing (see Ryledar [187] and [281]). I will return to resolve the issue of rectification as contended for by the defendant, after I have completed my analysis of the evidence of Mr Abdullah.

75 Subsequently, by his witness statement (par 24), Mr Arif refers to a discussion in which Mr Abdullah is said to have informed Mr Arif that his (ie, Mr Abdullah's) attempts to raise financing for the defendant to purchase the vessel had to that point been unsuccessful, but how Mr Arif 'trusted Mr Abdullah' because of their 'business relationship', and that in or about September 2004 (par 27), Mr Abdullah informed him that he was unable to procure any financing for the defendant and that he would offer to sell the vessel to another party. Mr Arif then said, '[a]fter that I did not think much about the agreement.'

76 Mr Arif concludes his witness statement by relating that on 20 December 2004, in response to a 25 November 2004 letter from Clayton Utz as solicitors for the plaintiff, that the defendant's Singapore solicitors, M & A Law Corporation, responded to Clayton Utz, stating that, 'the Agreement was terminated by the Plaintiff's conduct as it marketed the Vessel to another third party without informing the Defendant.'

77 Mr Arif also denied, in exhibit D115, that the defendant had received any of the four invoices despatched by the plaintiff for progress payments in respect of Yard 207, but did not elaborate on the bare assertions by way of denial.

78 Mr Arif was then extensively cross-examined in respect of his witness statement, exhibit D115. Even allowing for the fact that he needed to give his evidence using the assistance of a translator from the Malay language into English and vice versa, it soon became apparent to me, as Mr Arif's cross-examination proceeded, that any ostensible reliability as to his evidence arising from use of a written witness statement to convey his evidence-in-chief, was illusory. It soon became apparent that:

(a) Mr Arif, by his own admission on many occasions during cross-examination, had a very poor memory of relevant events: see generally his cross-examination at ts 223, 245, 258 and 262, as illustrations.

(b) Notwithstanding what he had put in his witness statement, he professed at first not to have ever seen the Shipbuilding Agreement before - see ts 232 - notwithstanding that it bears his signature as director on behalf of the defendant - see exhibit TB(D) at page 696. This was surprising evidence, in light of the fact that his witness statement, at pars 18 to 23, purports to deal with the very circumstances in which he signed the Shipbuilding Agreement as a director of the defendant, albeit he says, at par 21, that he did not review each paragraph.

(c) Mr Arif was initially uncertain and confused in his evidence about whether or not he was a 'blacklisted' director in Malaysia and as such, subject to travel restrictions imposed by the Malaysian government. Eventually it emerged that, by reason of what appears to be an unsatisfied judgment debt in Malaysia in respect of another corporation that Mr Arif is associated with, he is subject to travel restrictions from Malaysia. Hence, it seems, he needed permission from the Malaysian authorities to attend Australia to give evidence in this trial, by reason of that restriction, see ts 221 - 222, and see in re-examination, ts 268 - 269. The debt appears to be in respect of non-payment of customs tax.

(d) Whilst Mr Arif had been prepared, in exhibit D115, to make some sweeping negative general conclusions about documents either not being in the possession of the defendant, or not being received by the defendant, it emerged under cross-examination that Mr Arif's own efforts in terms of his seeking to locate relevant documents of the defendant, were less than adequate. The locations for documents possibly held by the defendant was relevant in respect of Mr Arif's reference in his witness statement to his attempts to locate a 'Term Sheet' prepared by Credit Suisse First Boston (CSFB): see exhibit D115, par 26. The inadequacy of Mr Arif's efforts to locate documents, was also relevant to the plaintiff's invoices for progress payments said to have been despatched from Perth to Singapore by the plaintiff, as to which Mr Arif in his witness statement denied receipt by the defendant (see par 29 witness statement).

Under cross-examination, however, it was plain that Mr Arif's own efforts were wholly inadequate to reliably ascertain what documents might or might not have been held at the defendant's Singapore office. Mr Arif attempted to explain that inadequacy of inquiries (as to what might or might not have been held at the defendant's Singapore office), see ts 251 - 252, essentially on a basis that because he was located in Kuala Lumpur, he did not have ready access to Singapore records of the defendant. In my view, however, this explanation was a feeble attempt to justify the unjustifiable. The gross inadequacy of Mr Arif's efforts to locate documents strongly detracts from the reliability of the bare negative assertions by way of an asserted conclusion of non-receipt by the defendant in his witness statement which are a central plank of the defendant's case to the effect that the plaintiff's four instalment invoices were not received at Singapore, or at all.

(f) Mr Arif also gave inconsistent evidence on many occasions. A particular illustration can be seen at ts 242, as regards the issue of what he had (not) reported to his Board concerning the alleged oral arrangements reached with Mr Abdullah concerning the plaintiff's obligation to arrange the purchaser finance for the defendant, as regards acquisition of Yard 207. Initially, Mr Arif could not recall making any report to his Board on the issue, either written or oral, as to the circumstances in which he came to execute the shipbuilding agreement. His attention was drawn to certain minutes of a board meeting of the defendant (which refer to Mr Arif chairing that meeting - see exhibit TB(D), page 845) that contain no mention of the Arif/Abdullah conversations. Then followed this evidence under cross-examination - ts 242:

You have said to me that you did not tell the board, orally or in writing, about the shipbuilding agreement?---Yes, I did inform the board.

Now you are saying you did inform the board?---Yes, I did inform the board of directors.

What did you inform them?---I told the board of directors that we intend to purchase a boat from Abdullah if we get the finance from them.

Why is that not in the minutes?---That I don't know.

(e) Mr Arif was also unable to explain why it was that after receipt of a letter of demand from the plaintiff's solicitors (see exhibit TB(D), page 911) dated 25 November 2004, in circumstances where Mr Arif was admittedly the director responsible for the conduct of the defendant's defence to this litigation, a response from the defendant's Singaporean lawyers, M & A Law Corporation Advocates and Solicitors (exhibit TB(D), page 916 and 919) makes no reference whatsoever to any oral arrangements involving Mr Arif and Mr Abdullah concerning the arrangement of purchaser finance for the defendant by the plaintiff. The response merely asserts (see page 919):

Our client is of the view that the contract between Wavemaster International Pty Ltd (Wavemaster) and JR Marine Systems Pte Ltd was terminated by Wavemaster's conduct on the basis that Wavemaster acted inconsistently with the terms of Contract by attempting to market the vessel to a third party without informing J R Marine of its actions.

In the circumstances, our clients deny being indebted to Wavemaster, as claimed or at all. All our clients' rights are expressly reserved.

[It emerged that the defendant's first Defence filed in these proceedings, dated 12 April 2006 (of some ten paragraphs) also makes no reference to any oral arrangements concerning the plaintiff's alleged obligation to secure the purchaser finance for the defendant's acquisition of Yard 207.] All this, I think, bears strongly against the credibility of such a fundamental cornerstone of that defence premise as is now pursued by the defendant. I would have expected such a pivotal matter to have been raised in defence against the plaintiff far earlier in the litigation.

79 All in all, then, I found Mr Abdullah's evidence, once exposed by cross-examination, to be wholly unreliable.

80 As regards the defendant's claim for rectification of the written Shipbuilding Agreement by insertion of a further qualifying clause, essentially making formation of the Shipbuilding Agreement conditional upon the plaintiff's prior procurement of purchaser finance for the defendant, a critical exchange occurred during Mr Arif's cross-examination - see ts 233 - 234. Mr Arif had been taken to an earlier affidavit he had sworn in those proceedings on 13 July 2006 - resisting (successfully) the plaintiff's then attempt to obtain summary judgment. Mr Arif had said this, at pars 11 and 12 of his July 2006 affidavit:

I had known some of the directors of Wavemaster for a long time as they were also involved in the shipbuilding business. The friendship is for more than 5 years, since 2001. J R Marine did lend some money to Wavemaster ($275,957) on an interest free friendly loan basis. None of the monies lent were for the account of the vessel. This relationship and the interest free loan is the reason why neither Mr Haij Mohd Noordin Bin Abdullah nor myself needed to put the above verbal agreement into the Shipbuilding Agreement.
I am endeavouring to locate Mr Haij Mohn Noordin Bin Abdullah. It seems he is in Ghana on business. I will attempt to have him read this affidavit and swear an affidavit to corroborate mine as soon as possible.

81 The following exchange occurred by reference to Mr Arif being taken to paragraph 11 of his July 2006 affidavit, see ts 233 - 234:

You don't agree that that sentence says that 'This relationship and the interest free loan is the reason why neither Mr Abdullah nor myself needed to put the above verbal agreement into the shipbuilding agreement'. You don't think it says that?

THE INTERPRETER: He is asking whether this 'needed to put' means you want agreement - I and Mr Abdullah needed to put agreement - this thing into agreement. Is that what you mean?

No. This is his evidence, it's his affidavit. He has previously sworn this statement. He has said that there was some verbal agreement and because of the relationship and the interest-free loan that existed, that was the reason why he and Mr Abdullah did not need to put the verbal agreement into the shipbuilding agreement?---Yes.

That's true?---It's true.

So there was a decision made not to put it in the agreement because it was not necessary?---Yes.

82 To my mind, those last two answers from Mr Arif as quoted above, are fatal to the premise underlying the defendant's claim for rectification, namely that the content of the written Shipbuilding Agreement, by omission or mistake, somehow failed to encapsulate the complete extent of the bargain as between the parties, and in particular, as regards any issue of an accepted obligation by the plaintiff to first secure purchaser finance for the defendant.

83 Counsel for the defendant attempted to rehabilitate this issue in re-examination - see ts 271 - by questions to Mr Arif in the following terms:

It was said to you yesterday that a decision was made not to put the oral agreement for purchase finance into the agreement. I'm confused about what you said. What is your answer to that question? Was a decision made or not?---My answer was it should be by right, should be included.

But did you and Mr Abdullah decide to make an actual decision to leave it out of the shipbuilding agreement?---Please repeat the question.

Did you and Mr Abdullah actually decide, positively make a decision, to leave it out, the oral agreement, out of the shipbuilding agreement?---No.

84 In my view, even putting aside the global unreliability of Mr Arif's evidence, as I assess it, that evidence in re-examination does not go far enough towards grounding a platform for rectification of the Shipbuilding Agreement. What is required to obtain the equitable remedy of rectification is cogent, reliable evidence that a term or provision which the parties commonly intended be part of their written agreement has, by reason of error or omission, not found its way into the final written instrument. The evidence from Mr Arif on this issue overall falls far short of establishing any, let alone a convincing basis for rectification, in my view.

85 Mr Arif was also asked, towards the end of his cross-examination, about a document submitted to the Australian Taxation Office in September 2004 (16 September 2004) by Mr Abdullah, on behalf of the plaintiff. See exhibit TB(E) commencing at page 1142, bearing Mr Abdullah's signature at 1145, and underneath carrying a declaration to the effect that the information supplied in the application to the Australian Taxation Office was true and correct, and that all relevant information had been included.

86 That application on behalf of the plaintiff to enter an arrangement to remit tax by instalments, contained this question, at page 1150:

Reasons why the business is unable to pay its debt. State fully the reason[s] why you cannot pay in full by the due date

87 Underneath this heading, was provided the following response:

Our business source of revenue is from shipbuilding contract payments signed with client. In the past, all our clients have fulfilled their payments obligation and so far we never failed to meet our tax payment. However, our Singaporean client namely, JR Marine Systems Pte Ltd, is unable to honour their payments obligation for the construction of a 37.5 metres fast monohull ferry known as Yard 207 worth AUD5.935 million. The progress claims due to us is AUD4,748,000 and in view of the non-payment of our progress claims, our cashflow was affected and therefore we are unable to reach the tax payment on its due date.

Are the business financial difficulties temporary?

If yes, when is it expected that the financial situation will improve?

We anticipate our financial situation will improve by December 2004.

88 Questioned in cross-examination about what Mr Abdullah had declared to be correct information, Mr Arif, naturally enough, took issue with this, see ts 267 and 268.

89 Mr Abdullah was called as the defendant's next witness, notwithstanding that he was at material times, a director of the plaintiff.

Mohd Noordin Bin Dato' Abdullah (witness statements, exhibits D120A and D120B))

90 Mr Abdullah described himself as a director of the plaintiff and chairman of WaveMaster International Pte Ltd. Notwithstanding a prima facie alignment to the plaintiff's side of the case, Mr Abdullah was called as a witness by the defendant at the trial. His witness statement, D120A and D120B, were tendered as his evidence-in-chief on behalf of the defendant.

91 Mr Abdullah (par 7) referred to PSC Industries Berhad, a Malaysian listed company at the apex of the PSC Group of companies. The PSC Group of companies had included the plaintiff, Penang Shipbuilding and Construction Sdn Bhd (PSCSB) and PSC Naval Dockyard Sdn Bhd.

92 By his witness statement, Mr Abdullah related that between March 2002 and September 2002, he was personally aware that the plaintiff had commenced construction of two vessels known as Yards 207 and 208, and that this had begun in the year 2001. He observed that the chairman of the board of directors, Mr Tan Sri Dato' Amin Shah (Amin Shah) 'would fund the construction of Yard 207 and Yard 208'. Further, he said that there were 'some negotiations between the Plaintiff and the Defendant about the purchase of two vessels from the Plaintiff'.

93 Mr Abdullah related that to his knowledge, negotiations about the two vessels with the defendant were carried out by the then managing director of the plaintiff, Mr Gerrard. He provided no further detail.

94 He also related that, to his knowledge, in January 2003 the plaintiff had entered into an agreement with the Italian company, Usticia Lines S.p.A., to buy another vessel to be constructed, Yard 208, and with an option for it also to buy Yard 207.

... both the plaintiff's construction finance for Yard 208, as well as Usticia Lines S.p.A.'s purchase finance were approved by Caterpillar Finance Europe, and drawn down.

As to the business relationship of the plaintiff with the defendant, Mr Abdullah said:

I had known some of the directors of the Defendant for a long time as they were involved in the same business.
It was based on that relationship that in or about March 2002, the Defendant advanced an interest-free loan in the sum of $488,787 to the Plaintiff.

96 Mr Abdullah said that in or about August 2003, the plaintiff was experiencing cashflow problems, so that the construction of Yard 207 was progressing very slowly as a result. At pars 16 through to 22 of his witness statement Mr Abdullah described what he refers to as a September 2003 meeting with Mr Arif. He said:

In or about September 2003, I met Mr Mohd Zin Bin Arif (Arif), whom I have known for some time, and who was a director of the Defendant, with a view to getting the Defendant to buy Yard 207 from the Plaintiff.
At that time, i.e., on or about September 2003, there was a meeting between Mr Arif and I at my office at PSCSB in Malaysia along Jalan Bukit Nanas.

97 In par 18, Mr Abdullah seeks to relate what occurred at the meeting at his office.

98 It is not necessary for me to set out par 18 of Mr Abdullah's witness statement. It substantially replicates pars 12a, b and c of Mr Arif's witness statement, which I have earlier set out verbatim above. Mr Abdullah says that during that meeting he did not say that the vessel to which he referred was either 'the vessel or Yard 207' (substantially replicating what Mr Arif says in par 13 of his statement).

99 Paragraph 20 of Mr Abdullah's statement seeks to relate certain words which he says Mr Arif said to him at this meeting. Again, there is no need for me to set them out, as they substantially replicate what Mr Arif says in pars 14a, b, c and d of his own statement.

100 Mr Abdullah, at par 21, next says that he said words to Mr Arif to the effect that, 'the Plaintiff will raise financing for the Defendant so it could purchase the Vessel', thereby substantially replicating what Mr Arif said Mr Abdullah said to him, at par 15 of Mr Arif's statement.

101 Mr Abdullah was extensively cross-examined as regards the content of his witness statements.

102 It is apparent that Mr Abdullah's witness statement, exhibit 120A, had been constructed to closely mirror the evidence-in-chief seen in the witness statement of Mr Arif, thereby presumably seeking, on behalf of the defendant, to create, as regards their respective evidence, a degree of apparent consistency, particularly as to the critical meeting between Mr Abdullah and Mr Arif at Mr Abdullah's offices in Kuala Lumpur in September 2003, prior to the execution by the parties of the written Shipbuilding Agreement at Langkawi. However, the intellectual scrutiny of the cross-examination process swiftly exposed Mr Abdullah, in my assessment, as an unreliable witness in many respects. I mention the following matters, causing me to form, overall, a negative impression as to the reliability of Mr Abdullah's evidence:

(a) Mr Abdullah was forced to accept that he, like Mr Arif, also suffered from a weakness of memory in a number of respects. Once taken away from the refuge of a witness statement, his grasp of detail presented as very shaky. On occasions he sought to attribute this to his age of 68 years, characterising himself as an 'old man'. One illustration of Mr Abdullah's poor memory concerned the issue of his being asked whether he had ever read an affidavit or statement by Mr Arif (dealing with the events concerning the alleged oral agreement reached between them at his office in Kuala Lumpur, prior to execution of the Shipbuilding Agreement). Initially, Mr Abdullah believed he had not seen any affidavits or statements by Mr Arif. However, it soon became apparent that his memory in that respect was unreliable. He was shown his own earlier affidavit of 28 May 2007 in these proceedings, at par 6, which expressly referred to his having read an affidavit of Mr Arif of 23 May 2007 (and which, at par 7, deals with the events of the alleged Kuala Lumpur meeting between the two men). Paragraph 6 of Mr Abdullah's affidavit said:

I have read the affidavit of Mohd Zin Bin Arif sworn 23 May 2007 (Arif's affidavit) and I corroborate the facts deposed to in paragraph 7 of Arif's affidavit. In particular, the meeting I referred to in the above paragraph 5, is the same meeting referred to in paragraph 7 of Arif's affidavit.

(b) This exchange also shows that as far back as May 2007, Messrs Abdullah and Arif had seen each others respective versions of events concerning their meeting. In Mr Arif's affidavit of 23 May 2007, at par 13, he had said:

I am endeavouring to locate Mr Mohd Noordin Bin Dato' Abdullah. I believe he is in Ghana on business. I will attempt to have him read this affidavit and swear an affidavit to corroborate mine as soon as possible.

Mr Arif, in his cross-examination, had initially denied any collaboration with Mr Abdullah, as regards the men's respective versions of events - until confronted with the content of par 13 of his own affidavit.

(c) At times Mr Abdullah, in my assessment, sought to obfuscate, rather than directly answer questions put to him, particularly in situations where he thought a direct answer might not advantage the defendant's case. This recurring phenomenon of unresponsiveness in his answers to questions in cross-examination, can be illustrated by one exchange at ts 296 - 297, concerning the issue of whether Mr Abdullah had ever personally attempted to raise finance for the defendant (purchaser finance), subsequent to the entry of the Shipbuilding Agreement. At ts 297, this exchange occurred:

You yourself made no attempt to raise finance - you yourself?---I myself?

Yes?---Personally?

Yes?---Not me; the group, yes - the person.

Mr Abdullah was then taken to par 29 of his witness statement, exhibit D120A, which is in these terms:

Sometime in early 2004, I did attempt to raise financing for the Defendant to purchase the Vessel from Credit Suisse First Boston, Singapore (CSFB). CSFB issued a draft term sheet specifying the terms and conditions of the loan. I cannot find it now.

When that inconsistency was put to Mr Abdullah, the following exchange occurred - ts 297:

I am just trying to understand whether what you have sworn to in this statement ...?---And what I have just said to you - - -

- - -is consistent?---It's not consistent.

It's not. You would agree with me?---Yes.

It's inconsistent?---But then the story is the same.

Mr Abdullah, is what you have said in paragraph 29 correct or incorrect?---I did attempt - the group is going, but I did - I'm part of the group.

Did you personally attempt to raise finance or did Shamsul [another director of the plaintiff] attempt to raise finance?---Shamsul. If that's the question you want, Shamsul.

Not you?---Not me personally, but a group, yes.

DHARMANANDA, MR: So that's incorrect?---The way you put it that way, yes.

Yes. So are you saying that whenever you use the pronoun 'I' it could mean anyone?---It could mean the group or the team that we look for for the financing, but I being the director, 1.11 put myself as 'I' all the time.

To my mind, this most unsatisfactory exchange, was but one illustration of the lack of overall responsiveness in regard to answers by Mr Abdullah and also illustrates a base inability on his part to differentiate as between his personal conduct, in contrast to conduct of the plaintiff by its agents or employees. That vice permeates Mr Abdullah's evidence generally, in my assessment.

(d) It was confirmed that there were no written notes or records by Mr Abdullah (or by Mr Arif, for that matter) concerning the important (from the defendant's perspective) face to face meeting held at his office with Mr Arif in September 2003, prior to the execution of the Shipbuilding Agreement.

(e) When questioned about whether the outcome of the Kuala Lumpur meeting concerning an alleged obligation upon the plaintiff to secure purchaser finance for the defendant had been reported to his fellow directors of the plaintiff, Mr Abdullah was, again, uncertain in his response: see ts 300, concerning Mr Abdullah's asserted belief that he told his fellow director, Shamsul, but with speculation as to whether or not he told his fellow directors, Gerkens or Dubljevic - ts 300 - 301.

(f) Mr Abdullah was taken through a series of documents in exhibit TB(D) at pages 813, 842 and 861, respectively. The content of those documents, particularly the document of 8 December 2003, at 842, is difficult to align with Mr Abdullah's recognition of any obligation in the plaintiff by way of precondition, as regards the prior obtaining of purchaser finance for the plaintiff. In exhibit TB(D), page 842, Mr Abdullah is seen to write to the plaintiff's management and other Malaysian personnel associated with the plaintiff's parent companies, on 8 December 2003, under the subject heading, Financing for JR Marine Ferries, stating:

With reference to the above matter, JR Marine finance application to Caterpillar for the purchase of ferries built by WMI may not go through. However, it is understood that WMI will make an application to CAT directly in its own name and pay it back as the progress payment is received from JR Marine.

Implicit in what was written by Mr Abdullah on 8 December 2003, as to progress payments being expected to be received by JR Marine, in circumstances where a finance application by it or on its behalf to Caterpillar was not going through, is that the defendant remained obligated to the plaintiff. That premise is fundamentally inconsistent with the purchaser finance precondition, said to have been settled upon, as between Mr Arif and Mr Abdullah at Kuala Lumpur, prior to the Shipbuilding Agreement being executed.

Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Company Ltd

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (338 paragraphs)

WAVEMASTER INTERNATIONAL PTY LTD (In liq) -v- JR MARINE SYSTEMS PTE LTD [2009] WASC 203 (30 July 2009)

Mohd Noordin Bin Dato' Abdullah (witness statements, exhibits D120A and D120B))

Parties

Cases Cited (8)