Motor Yacht Sales Australia Pty Ltd v Blann

Judgment

PAYNE JA: I agree with White JA.
WHITE JA: The appellant, Motor Yacht Sales Australia Pty Ltd ("MYSA") is in the business of importing and selling luxury vessels in Australia, including from the Rose Bay Marina. On or about 14 October 2016 it agreed to sell such a vessel to the respondent ("Mr Blann") for $2.4 million inclusive of GST. The price was agreed upon after hard bargaining. One of the terms of the agreement between MYSA and Mr Blann (contained in annexure "A" to the sale agreement) was: "1. The boat will be will be berthed at Rose Bay Marina for a period of three years at $5,500 per month with 4% (or CPI which ever the less) review at the end of 3 years. Berthing will be paid by the purchaser."
The agreement provided that the vessel would be berthed in pen No. 12 at Rose Bay Marina and that: "If berth 12 vacant MYMH will attempt to fill for a period of time to ofset [sic] cost."
Clause 2 of Annexure A to the contract stated that the sale would contain various inclusions. These included a term that MYSA would cover the insurance on the vessel for the first three years. This clause was linked to the clause providing that the vessel would be berthed at the Marina for three years because it was a requirement of the Marina that vessels be insured. Another inclusion in the sale was "[i]nitial three month free berthing at Rose Bay Marina."
Mr Blann sold the vessel through a related company of MYSA, namely, Motor Yacht Marine Brokers Pty Ltd, on 27 November 2017. The contract for sale included the following term: "The purchase of B72 'Calypso' excludes the obligation to take over the berth at Rose Bay."
The sale was completed on 31 March 2018. After the sale of the vessel Mr Blann ceased paying berthing fees at the Marina.
In proceedings commenced in the District Court MYSA sued for damages for Mr Blann's repudiation of his alleged obligation to pay berthing fees up to 31 March 2020. MYSA accepted that its claim should be confined to the period concluding on or about 14 October 2019 (being three years after the entry into the sale agreement).
MYSA pleaded that the sale agreement: "...was in writing as set out in the document titled 'Contract for the Sale of a Display Vessel Contract# 1779', together with the documents titled 'Annexure "A'", 'Annexure "B'" and 'Rose Bay Marina Berthing and Mooring Agreement Schedule A' (collectively, the Contract)."
The District Court (Strathdee DCJ) gave judgment for Mr Blann (Motor Yacht Sales Australia Pty Limited trading as The Boat Boutique Company v Robert Blann [2019] NSWDC 558).
On appeal MYSA sought judgment in the sum of $102,063.87 plus pre-judgment interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW).
By notice of motion dated 26 March 2020 Mr Blann sought an order dismissing the appeal as incompetent for want of leave to appeal and an extension of time to seek such an order. On 31 March 2020 Registrar Riznyczok ordered that the notice of motion be heard concurrently with the appeal. In written submissions Mr Blann argued that leave was required, but that argument was not pressed in oral submissions. It follows that the notice of motion ought to be dismissed with costs.
Annexure B to the sale agreement comprised a form of a "Berthing and Mooring Agreement" expressed to be between Rose Bay Marina Pty Ltd ("Rose Bay Marina") and the "boat owner". That form was later signed by Mr Blann and dated 1 December 2016. It provided for the berthing of the vessel at the Marina for a total monthly hire of $5,500 inclusive of GST. Its date of commencement was said to be 18 February 2017. The terms and conditions of this agreement included: "The Marina shall let the Mooring or Berth as identified in ltem 5 of Schedule A to the Owner and the Owner shall hire the mooring or berth from the Marina upon the terms and conditions herein contained. PROVIDED ALWAYS that such use of the berth or mooring shall not be exclusive."
Item 5 of Schedule A identified the relevant berth as berth 12.
The "Marina" was Rose Bay Marina Pty Ltd.
Clause 2.2 provided that the Owner (Mr Blann) should pay to the Marina a monthly hiring fee. Clause 3 provided: "3. COMMENCEMENT DATE AND HOLDING OVER PERIOD 3.1 The Commencement Date is set out in Item 7 of Schedule A. 3.2 At the review date as set out in Item 7 of Schedule A (if specified) of the current hire period, the hire term shall be monthly and the Hire Fee shall be monthly in advance if no review date is specified. 3.3 Unless the Owner notifies the Marina of his intention to the contrary at the commencement of the current quarter prior to the review date as set out in Item 7 of Schedule A the hire fee shall be monthly, the Marina will automatically renew this agreement for a further quarter and the Owner is obliged to and will pay a further hire fee as set out in Item 7 (or such amount as has been notified to him by the marina) one month before the expiration of the current hire period. 3.4 Notwithstanding Clause 3.3 the Marina is under no obligation to renew this Agreement."
The review date in Item 7 was left blank.
The purchase price was paid by Mr Blann on 17 November 2016 and the vessel was delivered to him on 19 November 2016. Following delivery of the vessel it was berthed at the Marina and Mr Blann was sent a letter from "Rose Bay and Point Piper Marina" welcoming him to the Marina. The letter set out the services the Marina provided and billing procedures. It also said: "You are legally required to provide one (1) month's written notice should you wish to vacate our facility which is otherwise subject to the 3 year minimum term".
On 5 December 2016 Mr Blann sent an email to Mr Neil Sutton, a director of MYSA, complaining about a delay in the provision of various items of work to the vessel. In that email Mr Blann said that "... I have the first three months' berthing free per our agreement starting 18-11-16 finishing 18-2-17. From there for the next 33 months I have the discounted fee of $5,000 per month plus GST. ... I'm happy to surrender the benefits of the berthing arrangements asap."
On 10 December 2016 Mr Blann wrote to Mr Sutton saying: "... It's unlikely I'll need the mooring facility in the future, we don't have to go over the pros and cons of that, both you and Sean are fully aware of them."
On 14 December 2016 Mr Blann wrote to Mr Sutton including the following: "As for the birth [sic], I would think being out of there would be a joy to both of us ( I take for granted the clause to relet when I'm not using the pen nullifies any suggestion of being locked in at below current rates Neil we both know you can fill the birth [sic] at current rates without any difficulty, apart from that I've given you 2 months notice to do so ( I am paid up to 18-2-17) I have given you permission to re let from now on."
Mr Sutton responded on 14 December 2016 as follows: "Bob Thanks for your email. There is no reason for us to go back and forth on this- the contract has been signed and your obligations are clear. As you said, 'we got there in the end'. This indicated to me that you clearly, after lengthy negotiations, understood your total obligation. We've entered into a binding contract which includes a marina berth for 3 years at $5,500 a month plus annual increases (clause 10). Breaching this part of your contract would not be fair play and in breach of our contractual arrangement. You agreed to this and signed the contract accordingly. Bob, you need to honour the agreement as contracted. There is nothing to discuss. Please don't force my hand on this. Thanks, Neil"
Lawyers became involved. On 14 December 2016 Pure Legal, acting for MYSA, wrote to Mr Blann stating that the contract: "... incorporates a term whereby you are liable for berthing fees of $5,500 per month for a term of 3 years. Accordingly, we enclose a direct debit authority and look forward to receiving this document from you by return. Please provide to us your bank account details so that a direct debit can be established for payment of the berthing fees. We note that berth 12 has been allocated for your vessel. In this regard, please let us know whether you propose to vacate berth 12 in which case our client will attempt to fill the berth for a period to offset the cost in accordance with clause 6 of Annexure A to the Contract between the parties."
On 21 December 2016 Kosmin & Associates, acting for Mr Blann, responded to Pure Legal's letter of 14 December 2016. Kosmin & Associates said that Mr Blann would not be making use of the berth and would not be paying any berthing fees. They asserted that Mr Blann was induced to enter into the contract on the basis that the berthing fee was at a discount and that the reduced berthing fee was for the benefit of Mr Blann only and could be waived by him on reasonable notice.
On 20 February 2017 Pure Legal responded to Kosmin & Associates' letter of 21 December 2016 and enclosed a draft statement of claim. In their letter of 20 February 2017 Pure Legal purported to terminate the "contract" (apparently meaning the contract for the provision of berthing facilities) on the basis that Mr Blann had repudiated the contract, and demanded payment of berthing fees that would have been payable to the end of the three-year term.
The dispute was resolved by correspondence between Kosmin & Associates and Pure Legal on 10 March 2017. On 10 March 2017 Kosmin & Associates wrote to Pure Legal as follows: "We refer to the above matter and our recent telephone conversations and confirm that agreement has now been reached between our respective clients in terms of the document headed Contract for the Sale of a Display Vessel Contract #1779 File #3626 including Annexure 'A' and Annexure 'B' subject to the following: 1. Our client is not required to provide a Direct Debit authority. 2. Our client will not be entitled to any set off against the berthing fee. 3. First payment due on or before 19 March 2017. 4. Our client to pay your client's costs of $5,682.00 (please advise to whom and to where this should be paid). Please confirm your client's acceptance of the above and advise account details to which the berthing fees can be paid."
Pure Legal responded on the same day as follows: "I refer to your letter of today's date. I am instructed that by this letter, my client agrees to enter into a new contract for berthing on the same terms and conditions as the contract between the parties dated 14 October 2016, subject to the following variations: 1. The contract is to be varied such that the parties agree that there will be no set-offs available to Mr Blann with respect to berthing fees payable. 2. We point out that the contract dated 14 October 2016, completed on 14 November 2016, provided for three months free berthing. As such, the first instalment was due and payable on 14 February 2017, not 14 March 2017. Whilst, it is usually the case that instalments are paid quarterly in advance, the former contract provides for payment by monthly instalments of $5,500 is payable in advance. Our client would prefer to bring this contract into alignment with other marina berth contracts. Accordingly, please provide evidence by return of a payment of each of the months of February and March 2017 for the total sum of $8,433.33 representing $5,500 for the one month commencing 14 February 2017 and $2,933.33 representing 16/30 days for April 2017 making a total payment of$8,433.33 up to 31 March2017 and to thereafter pay from I April 2017 a quarterly payment in advance of $16,500 to bring the payment into line with the Marina's standard terms and conditions. That payment should be made to: [Direct deposit details] Please provide evidence of the payment of $8,433.33. ..."
The only change to the substantive terms of the agreement of 14 October 2016 was that the berthing fee was to be paid quarterly as opposed to monthly. The direct deposit details provided in Pure Legal's letter of 10 March 2017 were the account details of Rose Bay Marina, not MYSA.
Mr James Thompson, the Group Operations Manager of MYSA, deposed that the Marina is leased by Roads and Maritime Service to Addenbrooke Pty Ltd which subleases part of the Marina to Enares Rose Bay Pty Ltd. He deposed that the Rose Bay Marina manages the operations of the Marina on behalf of Addenbrooke Pty Ltd and Enares Rose Bay Pty Ltd. Both MYSA and Enares Rose Bay Pty Ltd are wholly-owned subsidiaries of Enares Pty Ltd.
Mr Thompson deposed that MYSA was authorised on behalf of Enares Rose Bay Pty Ltd to rent the Enares' marina berths. That evidence was admitted on the basis that it was limited to "explaining the relevant corporate structure of the Enares group of companies". The evidence admitted on that basis was given under the heading "Corporate Structure of MYSA and Enares Rose Bay Pty Ltd and Interaction with Rose Bay Marina Pty Ltd". I do not understand the primary judge's ruling to confine the use to which the evidence could be put to evidence of shareholdings and directorships, but rather to extend to MYSA's authority to rent the Enares' marina berths.
As indicated above, from 31 March 2018, after the sale of the vessel, Mr Blann refused to pay any further berthing fees.
The primary judge held that once the vessel was sold and Mr Blann had no further need for the berth, he was no longer bound to continue to pay for the berth for the remainder of the three-year term (J [52]). Her Honour's reasoning in support of that conclusion was as follows: "53 The construction of the berthing term in this way recognises that the term was for the benefit of the defendant and part of the inducement to sell the vessel at a discounted price. 54 The construction of the term in this way is also consistent with the Mooring Agreement which clearly governed the operation of the berth in any event - as it allowed the occupier of the berth to give one month's notice of their wish to terminate such agreement, and thus extinguish their liability for berthing fees. The defendant gave such notice."
Mr Blann pleaded numerous defences, not all of which were maintained in final submissions. He denied that the plaintiff suffered any loss. This was on the basis that the berthing space was provided by Rose Bay Marina and berthing fees were payable to that company. That contention was not advanced in final submissions before the primary judge. On appeal, Mr Blann did not contend that the contract should be construed as a promise by him to MYSA to pay $5,500 per month for three years to Rose Bay Marina and that MYSA did not suffer loss as a result of a breach of that promise.
Mr Thompson gave evidence of unavailing efforts to fill the berth. Mr Blann did not plead that MYSA failed to take reasonable steps to attempt to mitigate its loss. In final submissions at trial he accepted that MYSA had not been able to rent the berth since 31 March 2018.
Mr Blann did not file a notice of contention seeking to uphold the judgment on any additional grounds from those articulated by the primary judge.
There was no dispute as to the principles to be applied in construing the contract. MYSA submitted: "14. The task of contractual construction [See generally Rinehart v Hancock Prospecting Pty Ltd; Rinehart v Rinehart [2019] HCA 13; (2019) 366 ALR 635 (Kiefel CJ, Gageler, Nettle, and Gordon JJ) at [44]; Cherry v Steele-Park [2017] NSWCA 295; (2017) 96 NSWLR 548 at [46], [72]; Wiggins Island Coal Export Terminal Pty Ltd v New Hope Construction Ltd; Northern Energy Corporation Ltd (in liquidation) v New Hope Corporation Ltd [2019] NSWCA 316 at [40]] involves ascertaining the meaning that a document would convey to a reasonable person having all the background knowledge that would be reasonably available to the contracting parties at the time of the contract. [Investors Compensation Scheme Ltd v west Bromwich Society [1998] 1 WLR 896 at 912; Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 181 at [11], Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 at [22].] This requires consideration of the language used in the contract, the surrounding circumstances known to the parties, and the commercial purposes or objects sought to be secured by the contract. [Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 at [35]; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 at [47].] Moreover the contract must be construed as a whole [Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99 at 109; CSR Ltd v Adecco (Australia) Pty Ltd [2017] NSWCA 121 at [156] and (in the case of a commercial contract) so as to avoid making commercial nonsense or working a commercial inconvenience. [Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 at [35]; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 at [51].]"
The respondent embraced that summary of the relevant legal principles and added the following: "a. Evidence of prior negotiations and relevant surrounding circumstances is admissible to the extent that it establishes objective facts known to both parties and the subject matter of the contract. [Cherry v Steele-Park [2017] NSWCA 295 at [46] (Leeming JA).] b. Such evidence can be used to assist in determining the natural meaning of words, but not to contradict meaning. [Cherry at [68] (Leeming JA) citing Codelfa Construction Pty Ltd v State Railway Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 at 352 (Mason J).] c. Ambiguity is a conclusion to be reached after consideration of evidence of surrounding circumstances rather than a precondition to the admissibility of evidence of surrounding circumstances. [Cherry at [76]-[85], [122]-[124].] d. A court will be reluctant to accept a construction which would achieve an unreasonable result. [Spunwill Pty Ltd v BAB Pty Ltd (1994) 36 NSWLR 290 at 299 (Santow J).] e. Where a commercial transaction is implemented by several contracts or documents, all of the contracts or documents may be read together for the purpose of ascertaining their proper construction and legal effect. [Zhang v BM Sydney Building Materials Pty Ltd [2016] NSWCA 166 (19 July 2016) at [45].]"
It is not a ground of appeal that the primary judge misstated any of the relevant principles in relation to the construction of commercial contracts.
The appeal grounds merely assert that the primary judge erred in her finding that the contract did not oblige Mr Blann to pay MYSA rental for the berth at the Marina up to 14 October 2019.
The primary judge found (at J 50) that the provision of the berthing fees in the final contract included an inducement offered by the plaintiff to facilitate the sale of the vessel. That finding was carefully expressed and was accurate. The berthing fee of $5,000 per month plus GST was a discount to the berthing fees charged by Rose Bay Marina. It thus included an inducement.
But it does not follow that the clause was wholly for the benefit of Mr Blann. By clause 6 of Annexure A quoted above, he agreed that the vessel would be berthed at the Marina for three years and that he would pay the berthing fee. The clause is unambiguous. The term was not solely for Mr Blann's benefit.
The more difficult question is the lack of congruence between clause 1 of Annexure A of the sale agreement with MYSA and the terms of the berthing and mooring agreement with Rose Bay Marina, the form of which was part of the sale agreement with MYSA. Under the berthing and mooring agreement with Rose Bay Marina the standard terms prescribed the fee for hire of the berth which was payable monthly and there was no specified term for the hire of the berth.
MYSA pleaded that by the correspondence through the parties' solicitors of 10 March 2017, Mr Blann offered, and MYSA accepted his offer, that he would be liable to pay MYSA $5,500 per month inclusive of GST for three years from 14 February 2017 with respect to renting at the berth.
In response, Mr Blann pleaded that the agreement referred to in the correspondence was a variation of the original contract of sale, but denied that the agreement bound him to take up a berthing space at the rate of $5,500 per month for three years. Thus Mr Blann accepted that the correspondence of 10 March 2017 was a variation of the original agreement. He did not plead that the consensus expressed in the correspondence did not amount to a binding agreement because there were some matters that were not agreed (for example, the quantum of costs payable by Mr Blann).
Read in the light of the correspondence that led to the agreement expressed in the correspondence of 10 March 2017, it is clear that Mr Blann did agree that he was liable to pay berthing fees for three years. That correspondence was part of the objective matrix of facts leading to the agreement of 10 March 2017, as it identified the point of dispute that was resolved. The resolution of the dispute was on the same terms as the existing contract. But Mr Blann resiled from his contention that he was not liable to pay berthing fees and clearly indicated his agreement that he was liable to pay berthing fees for the period provided for in the sale contract of 14 October 2016.
A possible construction of these arrangements is that Mr Blann agreed with MYSA that he would hire the berth from Rose Bay Marina for three years so that on his failure to do so he was liable to pay MYSA any loss that MYSA suffered as a result. That loss would not necessarily be nominal (Coulls v Bagot's Executor and Trustee Company Ltd (1967) 119 CLR 460 at 501-502 (Windeyer J); [1967] HCA 3). But there was no evidence as to what loss MYSA might itself have suffered if Mr Blann's promise were to pay berthing fees to Rose Bay Marina. Both Rose Bay Marina and Enares Rose Bay Pty Ltd issued invoices during the period the vessel was berthed at the Marina.
MYSA submitted that paragraph 2 of the letter of 10 March 2017 was a direction by MYSA to Mr Blann to pay berthing fees to the nominated account, which was the account of Rose Bay Marina. I agree.
By the agreement of 14 October 2016 Mr Blann agreed with MYSA to pay berthing fees for the vessel for three years. The attached berthing and mooring agreement that both parties expected Mr Blann to enter into with the Marina did not include such a term. Nonetheless, Mr Blann promised MYSA to berth the yacht at the Marina for three years and pay the berthing fees. On 10 March 2017, through his solicitors, he reiterated that promise after having attempted to resile from it. He did not then say, as he now says, that because the attached berthing and mooring agreement with the Marina did not include the same term, that he was not bound by it.
The specific promise made to MYSA in the agreement of 14 October 2016 and reiterated on 10 March 2017 by Mr Blann that the vessel would be berthed at the Marina for three years and he would pay the berthing fees, was not inconsistent with the form of berthing agreement that was Annexure B to the contract. Although that agreement with Rose Bay Marina provided for a monthly hiring fee and implied (cl 3.2) that hiring could be terminated on a month's notice (as the welcome letter stated) Mr Blann had agreed with MYSA to berth the vessel not on a month-to-month basis, but for three years. That more specific agreement is not inconsistent with Annexure B to the contract. But even if it were, the more specific provision would prevail over the standard terms (Dodds v Kennedy (No 2) (2011) 42 WAR 16; [2011] WASCA 131 at [25] and cases there cited).
Accordingly, on the basis on which the case was argued below and on appeal, the appeal must be allowed. There was no dispute as to the quantum of the judgment. Pre-judgment interest on the amount of $102,063.87 should be allowed pursued to s 100 of the Civil Procedure Act from the mid-point between 1 April 2018 (when Mr Blann ceased paying berthing fees) and 4 October 2019 (when Mr Blann ceased to be liable to continue to pay berthing fees). That date is 2 January 2019.
For these reasons I propose the following orders. 1. Order that the respondent's notice of motion dated 26 March 2020 be dismissed with costs. 2. Appeal allowed. 3. Set aside the orders of the District Court made on 11 October 2019. 4. In lieu thereof order that judgment be entered for the appellant in the amount of $102,063.87 plus pre-judgment interest pursuant to s 100 of the Civil Procedure Act calculated from 2 January 2019. 5. Order that the respondent pay the appellant's costs of the appeal and of the proceedings below.
EMMETT AJA: This appeal is concerned with the proper construction of a contract for sale (the Contract) of a pleasure yacht (the Yacht) by the appellant, Motor Yacht Sales Australia Pty Limited (trading as The Boutique Boat Company) (the Seller), to the respondent, Mr Robert Blann (the Buyer). The Contract contained a provision to the effect that the Yacht would be berthed at Rose Bay Marina for a period of three years for a fee of $5,500 per month. The purchase of the Yacht was completed and the Yacht was delivered to the Buyer. However, within approximately 12 months, the Buyer resold the Yacht to a third party. After the sale, the Buyer ceased paying the berthing fees. The question is whether, on the proper construction of the Contract, the Buyer was liable to pay the berthing fees to the Seller after he sold the Yacht.
The Seller sued the Buyer in the District Court of New South Wales claiming the unpaid berthing fees as a debt or, alternatively, as damages for breach of the Contract. A judge of the District Court (the primary judge), for reasons published on 11 October 2019, directed the entry of a verdict and judgment for the Buyer and ordered the Seller to pay the Buyer's costs of the proceedings. By a notice of appeal filed 23 December 2019, the Seller now appeals from the orders made by the primary judge.
By notice of motion dated 26 March 2020, the Buyer sought an order dismissing the appeal as incompetent for want of leave to appeal and an extension of time to seek such an order. On 31 March 2020, the Registrar ordered that the notice of motion be heard concurrently with the appeal. The contention that leave was required was not pressed in oral submissions. It follows that the notice of motion should be dismissed with costs.
There was some confusion as to precisely what constituted the Contract. A document entitled "Contract for the Sale of a Display Vessel" bears the date 14 October 2016 (the Operative Document). Attached to the Operative Document are two other documents entitled "Annexure A" and "Annexure B" respectively. Annexure "A", which was partly typed and partly handwritten, appears to be additional terms of the Operative Document. Annexure "B" includes a document entitled "Berthing and Mooring Agreement, Schedule A", which is expressed to be between Rose Bay Marina Pty Limited, as "The Marina", and the Buyer, as the "Boat-Owner" (the Berthing Agreement). However, the Berthing Agreement, bears the date 1 December 2016. The primary judge found that the Contract was made between 14 and 19 October 2016. The Berthing Agreement, if it was not signed until 1 December 2016, could not have been Annexure "B" of the Contract.
Any confusion, however, appears to have been eliminated by an exchange of correspondence between the respective solicitors for the Buyer and the Seller on 10 March 2017. The Buyer's solicitor wrote to the Seller's solicitor to confirm that agreement had been reached between their respective clients in terms of the contract dated 14 October 2016 including Annexure A and Annexure B, subject to four changes. The Seller's solicitors responded on the same day confirming that the Seller had agreed to enter into a new contract for berthing on the same terms and conditions as the contract between the parties dated 14 October 2016, subject to three variations as follows:

the contract was to be varied such that the parties agree that there will be no set offs available to the Buyer with respect to berthing fees payable;
the berthing fees will be payable quarterly in advance rather than monthly in advance; and
the Buyer will pay the Seller's legal costs in relation to the dispute resolved by the correspondence.

The letter from the Seller's solicitor also referred to comments made by the Buyer to the effect that, on the next occasion, the Buyer wished the Seller to take more proactive steps in sub-letting his marina berth. The letter said that any sub-letting must take place by the Buyer and that the Seller's consent would need to be obtained. The letter then referred to Annexure A and noted that the Seller's obligations with respect to several of the inclusions in the sale had been fulfilled. In the circumstances, it is appropriate to conclude that, as from 10 March 2017, the contractual arrangements between the Seller and Buyer with respect to the Yacht were evidenced by the Operative Document, Annexure A and the Berthing Agreement, together with the exchange of correspondence of 10 March 2017.
The critical provisions relied on by the Seller consist of cl 4 of the Operative Document and Annexure A. Clause 4 of the Operative document provided as follows: "Risk 4. (a) risk passes to the purchaser on the earlier of: (i) payment of the balance of the purchase price; or (ii) delivery of the Vessel to the delivery address; (b) the Purchaser must insure the Vessel from the date risk passes to the Purchaser under this clause." Annexure A relevantly provided as follows: "1. Settlement will take place on or before the 14th November, 2016. 2. The sale will include the following: … - initial 3 months free berthing at Rose Bay Marina. - Boat to be berthed in pen No. 12 at Rose Bay Marina. … - Covers on/off a maximum of 12 times per year, for three years, free of charge. … - Insurance cover for the 1st 3 years. … It is agreed between the parties that: 1. The boat will be berthed at Rose Bay Marina for a period of three years at $5,500 per month with 4% (or CPI which ever the less) review at the end of 3 years. Berthing will be paid by the purchaser. 2. … 3. … 4. … 5. … 6. If berth 12 vacant, MYMH will attempt to fill for a period of time to offset cost. …"
Item 5 of the Berthing Agreement specified "Berth No 12". Item 7 specified total hire of $5,500 monthly in advance with commencement on 18 February 2017. Provision for a review date was left blank.
The Operative Document provided as follows: "The [Buyer] agrees to buy from the Seller and the Seller agrees to sell to the [Buyer] the [Yacht] upon the following terms and conditions." Nine clauses followed thereafter with provision for special conditions, followed by a further four typed conditions under the heading "Miscellaneous". None of the provisions of the Operative Document referred to berthing for the Yacht.
The operative part of the Berthing Agreement, being the terms and conditions, provided as follows: "1. IT IS NOW AGREED AS FOLLOWS: [Rose Bay Marina Pty Limited] shall let the Mooring or Berth as identified in Item 5 of schedule A to the Owner and the Owner shall hire the mooring or berth from [Rose Bay Marina Pty Limited] upon the terms and conditions herein contained PROVIDED ALWAYS that such use of the berth or mooring shall not be exclusive." Clause 2.2 of the terms and conditions of the Berthing Agreement provided as follows: "The Owner shall pay to [Rose Bay Marina Pty Limited] a monthly Hiring Fee (or such other frequency as [Rose Bay Marina Pty Limited] may advise) (hereinafter called "the Hire") together with an Environmental Contribution, computed from the commencement date and payable in advance as particularised in Item 7 of Schedule A." Clause 3 of the Berthing Agreement, headed "Commencement date and holding over period", provided as follows: "3.1 The commencement date is set out in Item 7 of Schedule A. 3.2 At the review date as set out in Item 7 of Schedule A (if specified) of the current hire period, the hire terms shall be monthly and the Hire Fee shall be monthly in advance if no review date is specified. 3.3 Unless the Owner notifies [Rose Bay Marina Pty Limited] of his intention to the contrary at the commencement of the current quarter prior to the review date as set out in Item 7 of Schedule A the hire fee shall be monthly, [Rose Bay Marina Pty Limited] will automatically renew this agreement for a further quarter and the owner is obliged to and will pay a further hire fee as set out in Item 7 (or such amount as has been notified to him by [Rose Bay Marina Pty Limited]) one month before the expiration of the current hire period. 3.4 Notwithstanding Clause 3.3 [Rose Bay Marina Pty Limited] is under no obligation to renew this Agreement."

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