Vautin v BY Winddown, Inc.

Introduction 1 The applicant, Mr Vautin, purchased a recreational fishing vessel in October 2011. As a pleasure craft it is of the larger type, being some 74 feet long. Vessels of this type are marketed and sold for ocean going travel and as being capable of withstanding all but the most extraordinary sea conditions. Mr Vautin paid a substantial amount of money for his vessel, specifically the combined sums of US$3,000,000 and AU$1,200,000 (this latter amount being the ascribed trade-in value of a vessel he previously owned). The vessel was sold to Mr Vautin by the second respondent, Eagle Yachts Pty Ltd (Eagle Yachts). It had been constructed by the first respondent whose name at the time was Bertram Yachts Inc (Bertram), a company incorporated under the laws of the State of Delaware in the United States of America and carrying on business in and from the State of Florida. All parties agree that the vessel acquired by Mr Vautin, which is named "Revive", is defective. The defect had its origins in the manufacturing process as a result of which the laminated PVC foam core of the vessel (being the hull, the decks and the superstructure) were not constructed in accordance with any known specification or, as has been found, Bertram's own specifications. To date, the consequence of the defective manufacture has been that those areas of the vessel's hull which have been subject to the most buffeting, have "delaminated" (being the separation of the outer laminate layers from the PVC foam core). Necessarily, this renders the vessel unseaworthy and not capable of being used for the purposes for which it was acquired. It certainly cannot be used in the open seas. It is possible that other parts of the vessel will delaminate or fail in the future. 2 Mr Vautin is, understandably, unhappy with this situation. He brings this action against Bertram as the manufacturer of the vessel and against Eagle Yachts as the entity which sold it to him. Various causes of action are pursued, including a number which arise pursuant to the Australian Consumer Law (ACL) (Sch 2 to the Competition and Consumer Act 2010 (Cth)). 3 The respondents do not assert that Mr Vautin is not entitled to some form of remedy. However, they dispute the nature of the remedy to which he is entitled; the quantum of any damages payable; and, the identity of the respondent whom ought to be liable to Mr Vautin. A central issue is the extent to which the defective manufacture of the vessel has rendered it unfit for its intended purposes. Mr Vautin asserts that all of the defectively manufactured shell of the vessel requires rectification to make it comply with a relevant specification. The total cost of doing so is in the vicinity of $2.975m. The respondents, on the other hand, assert remediation need only occur in the areas of the vessel where the defects have, to date, resulted in delamination. As an alternative, they submit the remediation can be limited to the hull area of the vessel.

The facts 4 Some of the issues in this matter arise as a result of the residency of the parties. Mr Vautin is a resident of Australia. Eagle Yachts is incorporated in Australia and has carried on business as a seller of boats here. Bertram, on the other hand, is an American company, incorporated in Delaware and engaged in the manufacture of motor vessels in the State of Florida. 5 The relationship between Eagle Yachts and Bertram was, effectively, governed by an exclusive dealership agreement. In summary, that consisted of a written agreement entered into in May 2005 between Bertram and Eagle Yachts whereby the latter became the exclusive supplier in Australia of "pleasure yachts" manufactured by Bertram. That agreement was entitled "Bertram Yacht, Inc Dealer Agreement 2005-2008". By its terms that agreement terminated on 31 August 2008. However, it is accepted as between Bertram and Eagle Yachts, that the parties continued to be bound by and continued to perform the terms of the agreement (exclusive of the termination clause) subsequent to that nominated termination date. On 28 October 2013, Eagle Yachts provided two months' written notice to Bertram that it would terminate the agreement. Consequently, on 27 December 2013, the agreement came to an end. The terms of the exclusive dealership agreement and the manner in which they were carried out are important in the context of the question of whether Bertram was carrying on business in Australia. They are discussed in detail below. 6 Mr Vautin enjoys boating in motor yachts, including engaging in marlin fishing. Prior to acquiring Revive, he had been the owner of four other vessels, all of which were made by Bertram, the last of which was a 63ft vessel. He had purchased that vessel from Eagle Yachts and, at the time of buying it, he had indicated to Eagle Yachts that he wanted to use the vessel for recreational deep-sea fishing and to use it to fish for marlin during the North Queensland marlin season. 7 In or about mid July 2010, Mr Vautin received a telephone call from Mr Brad Rodgers who was the sales manager with Eagle Yachts and who had sold him the 63ft vessel. Mr Rodgers called to offer to Mr Vautin a larger vessel; being one in the Bertram 700 series. The particular vessel offered was especially attractive to Mr Vautin as it had an enclosed flybridge. 8 Subsequently, on or about 6 October 2011, Mr Vautin entered into the contract to purchase a Bertram 700 Enclosed Bridge motor yacht (hull #009). He agreed to pay a purchase price of the combined amounts of US$3,000,000 plus AUD$1,200,000, the latter amount being satisfied by the trading in of his existing vessel. He also agreed to pay the sum of US$75,000 representing the cost of having the vessel shipped to Australia. 9 At the time of purchasing the vessel, Mr Vautin also purchased from Bertram upgrades to the vessel which cost US$235,290. He has also spent a considerable amount of money making his own additions to the vessel, including the installation of a satellite telephone, a marlin tower and associated electronics, a tender on the bow, a duckboard on the stern, a fridge / freezer in the cockpit, and two monitors in the helm with connected boat cameras. 10 It is an agreed fact between the parties that, prior to and at the time that Mr Vautin purchased the vessel from Eagle Yachts, he disclosed to Eagle Yachts by implication that the purpose for which the vessel was being acquired by him was for motoring on the open ocean. It is also agreed that Eagle Yachts represented to him that the vessel was reasonably fit for the purpose of motoring on the open ocean. Given the size and type of vessel in question these matters are somewhat axiomatic. 11 Another agreed fact is that Mr Vautin paid the purchase price and the shipping costs in accordance with the terms of the agreement. 12 Pursuant to the dealership agreement, a vessel of the type required to fulfil the order placed by Mr Vautin was ordered by Eagle Yachts from Bertram. The latter manufactured the vessel at its factory in Florida. It did so using a hull constructed some years previously. The completed vessel was delivered to Eagle Yachts at Bertram's Florida premises and it was shipped to Australia. It was received in Australia by Eagle Yachts in or around February 2012 and delivered to Mr Vautin on 5 March 2012. 13 On around 4 February 2012, Eagle Yachts, by Mr Rodgers, gave to Mr Vautin a Bertram Warranty Card in accordance with its obligations under the dealership agreement. Mr Vautin completed the card which was immediately returned to Mr Rodgers who forwarded it to Bertram in Florida. There is no dispute between the parties that Mr Vautin received the manufacturer's warranty from Bertram as he was entitled to under the contract of purchase and there is no dispute that the warranty card was returned to Bertram. 14 After acquiring it, Mr Vautin used the vessel solely for the purposes of recreational motor cruising and game fishing. He has not used it for any other purpose. There is no evidence that it was used other than in accordance with its intended uses and within its intended capabilities. Mr Vautin employed a full time skipper for the vessel, being Mr Leigh Bradshaw. It has been part of Mr Bradshaw's duties to maintain the vessel in first class condition and, apart from the damage to the vessel caused by the testing for the purposes of this litigation, it is apparent that he has fulfilled that obligation. Mr Bradshaw has incurred expenses for the maintenance and upkeep of the vessel from time to time on behalf of Mr Vautin. 15 Shortly after the vessel was acquired, Bertram undertook a number of warranty jobs on the vessel. When such work was required the warranty claims were made through Mr Rodgers at Eagle Yachts. Eagle Yachts undertook the required work to fulfil Bertram's obligations under its warranty. 16 In November 2014, the vessel was sailed from Cairns to Brisbane after the completion of the marlin fishing season. In the course of that journey the skipper of the vessel, Mr Bradshaw, noticed damage occurring in the forward portside part of the hull. In particular, he observed that there was delamination of the inside skin in the topside of the bow. He immediately telephoned Mr Vautin who, the next day, travelled to the Gold Coast to inspect the damage. 17 Shortly after Mr Vautin arrived on the Gold Coast and inspected the damage to Revive, he telephoned Mr Rodgers and advised him of what had occurred. Within a day or so Mr Rodgers arrived on the Gold Coast also to inspect the damage. Mr Rodgers was the employee at Eagle Yachts who sold Revive to Mr Vautin. At this point in time, Eagle Yachts had ceased to be the exclusive dealer of Bertram Yachts in Australia. That said, it was apparently still handling warranty claims on Bertram's behalf. 18 On 15 November 2014, and prior to leaving for the Gold Coast, Mr Rodgers sent an email to Bertram (by that time referred to as the Ferretti Group) and, in particular, to Mr Frederico Ferrando. In that email he advised that the vessel sold to Mr Vautin (referred to by its code 700/009) had started to delaminate on the port forward hull in an area of about 2 metres wide running down to just above the water line. Mr Rodgers advised that Mr Vautin would like to contact them to discuss a way forward to address the situation. 19 A reply email to Mr Rodgers came from Mr Ferrando on 17 November 2014 the effect of which was that he would discuss the matter with Mr Rodgers the following day. 20 It does not appear that Mr Ferrando did contact or communicate with Mr Rodgers on the following day as, on 19 November 2014, Mr Rodgers sent a further email to Mr Ferrando advising him that he was flying to Queensland to inspect the vessel and to review the damage and, further, that Mr Vautin was inquiring of Mr Rodgers as to what assistance would be provided by Bertram and/or the Ferretti Group in the future. Mr Rodgers sought information as to what steps would be taken and what assistance Ferretti would provide. He asked for an urgent response. Unfortunately there did not appear to be any response, urgent or otherwise, from Bertram, the Ferretti Group or from Mr Ferrando. Despite being entitled in this action to call evidence as it saw fit, Bertram remained completely silent as to why it did not respond to the requests for assistance in relation to the delamination on Revive. 21 On 4 December 2014, Bertram and Eagle Yachts were notified of the damage in a letter from Mr Vautin. The letter was directed to Mr Ferrando as the Logistic and Commissioning Manager Americas Ferretti Group in Ft Lauderdale, Florida. In the letter Mr Vautin formally advised of the defect in the hull of the Revive, that the defect appeared to fall within the scope of the Bertram warranty, that the vessel was unseaworthy and awaiting repair by Bertram or on its behalf. Mr Vautin sought an acknowledgment of the Notice of Defect as a matter of urgency together with advice as to how the repairs would be undertaken. The letter was sent by registered mail and, apparently, was received. 22 Bertram did not respond to that letter. Again, despite being a party to this action, it called no evidence as to why it did not reply to the letter or act to fulfil its warranty obligations. It has refused to fulfil its obligations under the warranty which it gave and has provided no justification for that refusal. 23 It appears that Mr Vautin's insurers, Club Marine, engaged Marine & Leisure Assess Pty Ltd to undertake an assessment of the damage to the vessel. A report was produced on 24 November 2014. The report identified substantial delamination on the portside hull and on the portside deck above the gunwale. It also identified cracking in the gel-coat and the external port deck. The report identified that it was not possible to estimate the cost of rectification at that time; it also recommended that the vessel not be used until further investigations were conducted. 24 A subsequent report was undertaken by marine assessors, Navsafe Marine Pty Ltd. It is dated 9 December 2014. There were a number of inspections of the vessel for the purposes of this report, including one on 4 December 2014 where some removal of inner structural laminate occurred. That investigation revealed the core bonding had failed. Various photographs were taken of the removed panel and of the condition of the core. The evidence revealed "the core bonding between both the inner structural and outer structural laminates has failed in large areas of the portside hull topside matrix". Navsafe reported that there was sufficient evidence to justify a conclusion that the structural integrity of the composite hull topside laminate matrix was compromised on the external portside in the vicinity of the anchor chain locker space. It postulated that the deficiencies might extend aft of the collision bulkhead on the forward cabin area. It pointed out that the nature and extent of the deficiencies could not be identified at that time. Most poignantly for present purposes is the conclusion in the report in relation to the delamination defect: 3. This will be an ongoing and increasing defect in cost and physical size and in time will cause a catastrophic failure of the hull structure if not immediately repaired. 25 On 15 February 2015, Mr Clive J Seares of Reanu Services Pty Ltd, a loss adjuster, sent further correspondence to the Ferretti Group and, in particular, to a Mr Brian Kelley. He advised that he was assisting Mr Vautin with the coordination of the warranty claim along with Mr Brad Rodgers. It appears that Mr Seares enclosed with the email a copy of the Navsafe Survey Report. In that email Mr Seares identified that there may be very extensive repairs as the surveyor had found delamination, or signs of delamination, in a number of areas of the yacht. He identified that the structural integrity of the hull topside had been compromised in a number of places and that further examination was required to determine the full extent of the affected areas. It was further identified that unless the hull areas were repaired there would be a catastrophic failure of the hull structure. Mr Seares identified that he looked forward to receiving an indication of any further information that Ferretti may require in order to proceed with the warranty repairs. 26 This letter apparently followed from an email of Mr Rodgers of 9 February 2015 to Mr Kelley about the matter and Mr Kelley's response on 10 February 2015 requesting that Mr Rodgers submit the survey and repair quotes ASAP. It is not apparent that any response was provided to Mr Seares in respect of the email which he sent. 27 Subsequently, on 27 April 2015 Mr Seares wrote to Mr Kelley of the Ferretti Group (via an email) in which it was advised that a detailed draft "scope of work" and estimate/quote for warranty repairs to the yacht was attached. The work which was identified as being necessary was based on the recommendations of the Navsafe Marine Report and in the expectation that in undertaking repairs of the currently visible damage, further failures would be found to involve the entire port and starboard topsides. The quote was for repair of those areas and the total cost was $856,054. In his email Mr Seares requested that Mr Kelley provide him with full construction drawings, a detailed laminate schedule for the inner and outer hull shell laminate, information as to how all secondary internal bonding was achieved, and identification of the core material and bonding agents used. He also sought authorisation of the repairs under the warranty. 28 Again, Bertram did not respond to that email. Again, it chose not to call any evidence as to why it did not respond to the email nor comply with its warranty obligations. 29 On 26 June 2015, Mr Vautin sent by registered mail to Mr Ferrando a copy of the letter of Mr Seares together with the repair quote. Mr Vautin's letter identified that there had been no response to the email of 27 April and that he looked forward to hearing from the Ferretti Group. 30 Bertram did not respond to that letter and has called no evidence as to why it did not. 31 As a consequence of the reports obtained by Mr Vautin as to the potential for the existence of substantial defects in the vessel, by letter of 23 July 2015, Mr Andrew Dovell was engaged to prepare an expert's report in relation to the defects. For the purposes of preparing that report Mr Dovell inspected the Revive on a number of occasions. First, between 3 and 4 August 2015, and then on 31 August 2015. Mr Dovell obtained "cored" samples of the hull structure which he sent to the University of Southern Queensland for testing. A report was received from that University and it was considered by Mr Dovell for the purposes of his report. 32 On 9 December 2015, Mr Dovell completed his expert report in relation to the Revive. It is damning of the structure of the vessel. 33 On 16 March 2016 Mr Vautin, by his solicitors, Banki Haddock Fiora, sent a letter to Eagle Yachts in which Mr Vautin purported to reject the vessel on the basis that Revive was not reasonably fit to motor on the open seas and that Eagle Yachts had failed to comply with the guarantees in ss 54(1) and 55(1) of the ACL. Further, on the basis of the damage to the vessel and that, due to its size, it was incapable of being returned to Eagle Yachts which was now located in Western Australia, Eagle Yachts was informed of its obligation to collect the vessel. 34 That purported rejection of the vessel was not accepted by Eagle Yachts 35 On 18 April 2016, the present proceedings were commenced by Mr Vautin against Eagle Yachts and Bertram. In turn, Eagle Yachts has pursued a cross-claim against Bertram in reliance upon a right of indemnity under the dealership agreement.

The issues in dispute between the parties 36 Two central issues arise in relation to the defective construction of Revive. The first is as to the nature and extent of the defects that exist consequent upon the defective method of manufacture adopted by Bertram. The second is how that defect might be characterised for the purposes of the implied guarantees imposed by the ACL. The resolution of these issues will determine whether relief is available to Mr Vautin and, if so, to what extent. 37 In relation to Bertram only, the major issue concerns whether it is subject to liability under the operation of the ACL. To some extent that involves a question as to whether it carried on business in Australia. Mr Vautin has also brought a claim in negligence against Bertram, which responds by asserting that the relevant law to apply to such a claim is the law of Florida, which allegedly excludes such a claim. 38 Bertram appears to accept that it is liable to indemnify Eagle Yachts in relation to the valid claims of Mr Vautin. It asserts, however, that the totality of the quantum claimed by Mr Vautin cannot be sheeted home to it by reason of the contractual indemnity.

The defective construction of Revive 39 As mentioned, by the time of trial, the parties agreed that the vessel is defective. They and their experts agreed that the method by which the cored construction of the hull, decking and super structure was carried out was not in accordance with good boat building practices. Indeed, it appears that the method of constructing those areas of cored panels was not in compliance with Bertram's own construction specifications, nor in accordance with an appropriate and accepted standard for this type of build. The parties also agreed that the CE Directive 94/25/CE, as amended by Directive 2003/44/CE, was an appropriate protocol for the construction of the cored panels of this vessel and that the construction did not meet the standards identified in that Directive. Despite that apparent agreement, the parties remain in dispute as to the nature and extent of the defects in the vessel.

The PVC foam core construction technique 40 The topsides (being that area of the hull above the waterline), the decking and the superstructure of Revive is largely constructed of a rigid, PVC foam core which is bonded onto internal and external fibreglass laminates. The layer of PVC core is approximately 30mm in thickness whereas the fibreglass laminates are about 5mm. The PVC core is bonded to the outer and inner skins by bonding paste and resin. This type of construction is referred to as a "sandwich core construction". The hull below the waterline is constructed of solid fibreglass, but is not relevant for present purposes. 41 An important part of this sandwich core construction concerns the manner in which it is used to create the variable or curved surfaces necessary for constructing this type of boat in which very few parts are flat. The PVC core (which are manufactured as flat rectangular boards) must be adapted to meet the variety of shapes required. That is achieved by the introduction of what are known as "kerfs" into the foam core. A "kerf" is, in effect a cut or a groove which is made through the PVC core. They are made across the length and breadth of the core material through its depth at intervals of approximately 35mm. The result of making kerfs in the core material is that it ceases to be a continuous panel of foam and, instead, is turned into a series of rectangular prisms of approximately 35mm x 35mm x 30mm. The grid of pieces is held together by a light fibreglass "scrim" on the back of the sheet of core material. Kerfs allow the PVC core pieces to be manoeuvred relative to each other to create the contours required for the various parts of the vessel. It would appear that this general method is adapted for different parts of the vessel and, in some sections, there are two layers of core material instead of one. 42 In the reports of the various experts, and in their evidence, they occasionally refer to parts of the sandwich foam core laminate as being a "panel". As it was explained, that term has no special meaning and, in this context, it is merely a convenient reference to a section of the vessel's shell between two different boundaries of support. I adopt that expression such that in these reasons, the expression "sandwich core panel", refers to a "panel" of sandwich core laminate construction. 43 A central issue in this case relating to the construction of Revive is the efficacy of the construction materials used to cause the adhesion of the PVC core material to the inner and outer fibreglass laminate skins. The existence of the gaps caused by the kerfs and the fact that the inner and outer skins form curved and molded surfaces, necessitates the adoption of certain construction techniques to ensure that the outer skins of the cored panel effectively adhere to the foam core. These require that: (a) the kerfs (or the gaps created by the kerfs) in the PVC foam are completely filled up with resin or putty prior to the foam being affixed to the laminates; (b) the surfaces of the kerfs of all of the cored construction are coated with resin; and (c) the outside surface of the core is effectively primed with resin prior to being installed against the skins. 44 It is apparent that a significant benefit of filling the kerfs with putty, bonding paste or resin is that it ensures the curved surface of the foam core provides an even and continuous plane on which to adhere the outer skin. Further, if the kerfs are not filled, a penetration to the outer skin of the panel might allow the ingress of water, which may then flow through the unfilled kerfs and allow the accumulation of moisture within a wide area of the foam core. The existence of such moisture may subsequently cause deterioration and loss of balance in the vessel. 45 There is no disagreement as between the parties that Bertram did not apply the above identified techniques in the construction of the Revive.

The damage appearing in the vessel 46 There is also no argument between the parties as to the extent of the visible damage sustained to the vessel as a result of the techniques used in its construction. This is because the occasions on which the damage was first noted and through the investigations which followed, photographic records of the observations have been made. 47 The first instance of damage appearing in the hull was the identification, in around November 2014, of delamination in the forward section of the hull, both internally and externally in the area of the port-side anchor locker. That is an area on the forward part of the topside of the hull which, in the ordinary course, is exposed to regular wave impact. The inner side of the topside was removed by NavSafe Marine on its initial inspection and the photographs then taken have been viewed by the experts who gave evidence before the Court. There is no dispute that those photos show that there was a failure of the bond between the PVC core and skins. In particular, there were signs of gaps existing between the core and skins indicating a failure of the bond. 48 The photographic evidence reveals that the kerfs in the foam core used in the construction of the forward topside areas of the hull were not filled with adhesive paste or putty. They were left as voids. It also is not in doubt that, prior to being installed, the surfaces of the PVC core in the kerfs were neither primed nor resin coated. 49 Samples of other parts of the vessel were taken where the core construction technique was used and, again, there does not appear to be any dispute that the kerfs were not filled. Voids remained and little or no priming of the core took place prior to its installation as appears from the fact that the surfaces of all of the kerfs which were exposed were raw. The samples taken from the vessel were tendered as exhibits and they display the qualities which are identified. 50 The expert engaged by Mr Vautin, Mr Dovell, also undertook inspections of the deck and the superstructure of the vessel. His investigations disclosed that the sandwich core construction in these areas also suffered from the same deficiencies. Specifically, that the core was not primed as its surfaces were raw on inspection, there was no sign of resin being applied directly or of any drainage from the priming of the outer surface of the core prisms, and the kerfs were left unfilled. In these areas the manner of construction did not use a bonding paste between the foam core and the outer skin. Rather, a layer of chopped fibreglass with a bonding agent was used. 51 None of the experts called by the respondents suggested that the above observations were incorrect. Indeed, they are apparent from a consideration of the photographs attached to the expert report of Mr Dovell and the samples tendered in evidence.

The extent of the alleged deficient manner of construction 52 A number of experts have produced reports for the purposes of the trial in relation to the manner of the construction of the cored components of Revive. The central experts were Mr Andrew Dovell, Mr Christopher Hutchings and Mr Paul Stanyon. They have also produced a joint report dated 12 May 2017, which identifies the areas of agreement and disagreement. The experts agree that the topside of the vessel is of a sandwich cored construction using contoured foam throughout and also agree that the hull bottom, below the lower chine, is of single skin construction throughout. They also agree that the deck and superstructure are of cored construction using contoured foam throughout. 53 For present purposes the following agreed findings are important to the determination of this matter: … 7. Based on all evidence the kerfs of all of the cored construction have remained unfilled. Agree CCH, PS, ACD. 8. Based on all evidence the surfaces of the kerfs of all of the cored construction were not coated with resin. Agree CCH, PS, ACD. 9. The evidence indicates that the outside surface, (the scrim side of the contour foam), of the core was not effectively primed with resin prior to being installed in the hull against the outside skin. Agree CCH, PS, ACD. … 12. Very little of the applied core bonding paste has penetrated the kerfs of the core. Agree CCH, PS, ACD. 13. Based on the evidence it appears that the inside surface of the core has had sufficient resin applied to affect an adequate bond between it and the inside skins. Agree CCH, PS, ACD. … 21. The best measure of fitness for purpose for the design and construction of a pleasure boat similar to REVIVE is the application of an appropriate and accepted standard of which the CE Directive 94/25/CE as amended by directive 2003/44/CE is one. Agree PS, CCH, ACD" 54 Central to this case are the consequences of the above identified deficient methods of construction to the integrity of Revive. At the very least, all of the experts agree that these methods of construction were inappropriate for those areas where delamination has already occurred. That would appear to be self-evident. All parties agree that these parts of the vessel require remediation work. What divides them is the qualitative impact of the use of this apparently defective construction method on those other parts of the vessel where delamination has not occurred, or not yet occurred.

Consequences of defective construction 55 The joint experts agree that the consequence of the defective construction is that the sandwich core panels have a reduced shear capacity. In the briefest of terms, the shear capacity of the panel is its ability to withstand forces impacting perpendicularly upon it. Once the forces on a panel exceed the shear capacity the panel will rupture and fracture which may, but not necessarily, entail a complete breakage through the whole width of the panel, or the inner core. That will often involve the inner core separating from the laminate skins as occurred in this case. If that occurs, the only protection from external forces will be the outer laminate skin which has minimal shear capacity. If that outer skin fails the vessel ceases to be watertight and is liable to be seriously compromised. 56 Whilst the experts agree that the construction method used in this case meant the laminated core panels had a reduced shear capacity, they were not entirely ad idem as to the extent of that reduction. In considering this issue they all had reference to a scientific article by Berger, Loiselet, and Dransfeld entitled "Filling or Not Filling the Slits in Contourable Sandwich Cores With Resin? - Effect on the Properties of the Sandwich Construction". In that article the authors identified that where the kerfs / groves in foam core laminate are not filled, the shear capacity is 50% less than where the kerfs / groves are filled. Additionally, fatigue tests showed that the unfilled kerf configuration had a substantially shorter life span than did a filled kerf configuration. 57 In their joint expert reports Messrs Dovell (ACD), Stanyon (PS) and Hutchings (CCH) recorded the following: The cored panels as built will have a reduced shear capacity in the order of 50% as suggested by the paper of BERGER, LOISELET, and DRANSFELD due to the fact that the cored panels as built in REVIVE have unfilled kerfs per the paper. Agree PS, ACD. Disagree CCH. CCH Disagrees with this statement for the following reasons: a. The paper of BERGER, LOISELET, and DRANSFELD relies on the testing of a sandwich panel consisting of a 20mm core and 1.5mm thick inner and outer skins; whereas REVIVE consists of a sandwich panel that has a 30mm core, 7.5mm thick outer skin and 3mm thick inner skin. CCH believes that due to the significant difference in skin thickness between REVIVE and the test panel the magnitude of core shear failure could be different. b. The cored panels as built will have reduced shear capacity relative to a panel built with the kerfs filled, however quantifying that loss would require testing of a panel cut from the vessel. 58 In other words, Mr Hutchings was of the opinion that the sandwich core panels, as built, has a reduced shear capacity relative to a panel built with kerfs filled. He asserts, however, that quantifying the level of reduction requires testing of a panel cut from the vessel. Messrs Dovell and Stanyon relied upon a scientific paper of Berger, Loiselet and Dransfeld to conclude that the shear capacity reduction of the panels on Revive was in the order of 50%. On the other hand, Mr Hutchings opined that the variation between the panels which were tested for the purposes of the article and those used in the construction of Revive, means that the magnitude of their reduced shear capacity could well be different. All of the experts agreed that the actual loss of shear capacity in the "as built" core panels of Revive may not directly correlate to the loss in the panels referred to in the Berger et al article because they were of a different construction. On the other hand, Messrs Dovell and Stanyon remained of the view that the article supported the conclusion that the panels in Revive had a loss of shear capacity in the order of 50%. All agreed that the most accurate quantification of the loss of shear capacity of the panels as built would require destructive testing of panels from the vessel. 59 The experts also agreed that, putting aside the loss of shear capacity, there were other deleterious effects of the kerfs not being filled. Those deleterious effects included: a. If the kerfs are filled, water ingress due to damage is limited to the area of impact. Without the kerfs filled water can track away from the area of the damage potentially filling all of the kerfs below the waterline in the cored zone. Long term exposure of the unprotected foam and laminates to seawater will have a deleterious effect on the strength of the panel. Agree PS, CCH, ACD. b. This is also the case of any penetration of the inside skin in associated of any fitting screwed to the inside skin surface or similar. These penetrations are not in association with damage. Agree PS, CCH, ACD. 60 The experts further agreed as to the best measure of fitness for purpose for the design and construction of a pleasure boat such as Revive in the following terms: The best measure of fitness for purpose for the design and construction of a pleasure boat similar to REVIVE is the application of an appropriate and accepted standard of which the CE directive 94/25/CE as amended by directive 2003/44/CE is one. Agree PS, CCH. ACD.

Conclusions concerning the veracity of the expert opinions 61 There is no doubt that all of the experts who gave evidence concerning the defects in the sandwich core panels of Revive, Messrs Dovell, Stanyon and Hutchings, were qualified in the area of expertise. To the extent to which they differed in their opinions, I preferred the conclusions reached by Mr Dovell to those expressed by Messrs Stanyon and Hutchings. 62 Mr Dovell's prepared report and evidence caused me to conclude that he was a more careful and thorough expert. He was more able to clearly explain his conclusions and his observations and assertions withstood cross-examination. In the "hot-tubbing" process he was, generally, prepared to give direct and clear answers and displayed a willingness to consider all views. Messrs Hutchings and Stanyon were far more reluctant to do this. 63 In his written and oral submissions, Mr Vautin was critical of Mr Hutchings and the manner in which he gave his evidence. Those criticisms are not without merit. Under cross-examination Mr Hutchings was somewhat evasive and sought to avoid making admissions which were contrary to Bertram's contentions. He often did so by resorting to theoretical possibilities which were lacking in reality. For instance, it became apparent from the various inspections and testing on the vessel that it had not been constructed in accordance with any known standard for a vessel of a sandwich core construction. Mr Dovell identified in his report the manner in which the panels on Revive did not meet the standards required of the ISO Standard, which he identified as the reasonable minimum structural design and construction standard for this type of vessel. He opined that "boats designed and built in accordance with accepted good practice would, at a minimum, meet the ISO Standard". There did not appear to be any serious disagreement with these points. In answer to this, Mr Hutchings suggested that the ISO Standard did not necessarily apply and that some other standard might be applicable (ts.283). Whilst it is theoretically possible the construction of the vessel might have complied with another standard, if one did exist, Mr Hutchings did not identify it. It appears that none of the experts were aware of any standard for the sandwich core construction of vessels that permitted leaving the kerfs unfilled and Mr Hutchings could not identify one despite applying his 20 years of knowledge, study and expertise which he drew upon for the purposes of giving evidence (ts.350). In the context of the ISO Standard being the minimum standard, Mr Hutchings hypothesis that the construction might satisfy another standard, without identifying it or even suggesting that one existed, was somewhat facetious. That response gave the appearance that he was not being entirely impartial in his answers nor attempting to assist the Court to reach the correct conclusions in relation to the factual matters under discussion. 64 Similarly, I considered that Mr Hutchings was somewhat dissembling when he sought to explain away Bertram's omission to prime the core, prior to adhering it to the inner and outer skins, by suggesting the panel might be overdesigned and so strengthened in some other way (ts.264 - 267). There was no suggestion the sandwich core construction was "overdesigned" and nothing was pointed to that suggested it was. Certainly an expert in Mr Hutchings' position ought to have been able to point to some factor to support that proposition. He did not do so and his answer appeared to be an attempt to obfuscate. That was particularly so because, while Mr Dovell calculated the panels on Revive were designed (if constructed properly) to have only 106% of the minimum shear strength capacity for that type of construction, Mr Hutchings made no detailed or effective analysis of that calculation. Moreover, even if the panels were otherwise overdesigned, there was nothing to suggest the redundancies in the design would be sufficient to counterbalance the reduction in shear capacity caused by the failure to fill the kerfs or to prime the core. The suggestion was also self-evidently false because, if the panels were "over-designed", it is most unlikely they would have delaminated as they did. 65 Mr Hutchings' attitude was also revealed when he opined that other standards, of which he was aware, did not specifically prohibit kerfs being left unfilled. That was a somewhat blatant attempt to diminish the import of standards that required kerfs to be filled. Eventually, he admitted that those other standards actually provided that the kerfs should be filled (ts.351). In these respects, Mr Hutchings answers tended to obfuscate rather than clarify the nature and extent of the consequences of the defects in the construction of the vessel. It is unfortunate his answers appeared to be attempts to minimise the impact of points in favour of Mr Vautin's case, rather than to ensure that the Court was accurately apprised of the issues. 66 My perception of Mr Hutchings was that, whilst he is obviously intelligent and capable in his field of expertise, he appeared to attempt to agitate his client's cause rather than make appropriate concessions as and when required. Overall, I preferred the evidence of Mr Dovell to that of Mr Hutchings. 67 Mr Stanyon also revealed an inclination to advance the interests of his client, Eagle Yachts, in his reluctance to accept that the Revive was a category A vessel and, being such, was designed to withstand Beaufort eight winds and significant seas at four metres (ts.326). He, like Mr Hutchings, also sought to obscure the failure of the construction of Revive to comply with any known or accepted international standard by resorting to speculation that there might exist a standard to which the construction complied. In attempting to do so he made the following comment in relation to standards (at ts 342-343): There may be a couple of smaller ones from other European countries, but - so this is issue of kerf filling, we would have to know intimately every single one of those standards. Like there are plenty of Czechoslovakian built production boats in - that are compliant with CE and may be they use their own national standard, I don't know. … 68 I considered that Mr Stanyon's reference to Czechoslovakian standards was bordering upon disingenuousness. First, given the dissolution of Czechoslovakia in the early 1990's, any Czechoslovakian standards would necessarily be almost a quarter of a century old. Second, his response in this respect was grasping at straws given he was unable to identify whether there was any standard that permitted the construction of the cored panel without the filling of the kerfs. 69 The failure of Mr Hutchings and Mr Stanyon to volunteer that they were not aware of any relevant standard to which the vessel complied is concerning. As experts they were entitled to advance the proposition that compliance with the ISO standards was not the only way to satisfy the CE Directive. However, that left the Court with the perception of the distinct possibility that the construction of the vessel might have complied with some other standard. Their failure to volunteer, or freely acknowledge when confronted, that there was no other standard of which they were aware and to which the building methods in fact complied, renders it less safe to rely upon their expressed views. 70 Whilst Mr Stanyon was otherwise mostly responsive to questions put to him, he tended to attempt to protect his client's interests where possible. In relation to the question of what conditions vessels, of the type of which Revive was one, were designed to be able to cope, Mr Stanyon's answer was evasive. He attempted to suggest they should be capable of coastal use in the normal levels of wind and wave that might be expected on the Eastern Australian Coast (ts.326). He ultimately accepted the vessel was designed as a "Category A" vessel under the CE Directive described as an "Ocean" vessel. That this was its design category should have been obvious to Mr Stanyon and his attempt to suggest otherwise gave the strong appearance that he was attempting to advance his client's case. 71 For these reasons and for the reasons which appear below, I prefer the evidence of Mr Dovell over the evidence of Mr Hutchings or Mr Stanyon where they disagree.

Compliance with relevant standards 72 As is identified above, all of the experts agreed that the best measure of fitness for purpose for vessels such as Revive, is its compliance or otherwise with an industry-accepted standard. The respondents were not able to identify any standard with which the sandwich core construction panels of Revive or the vessel in general complied. 73 In his second report Mr Dovell identified the European Union's Recreational Craft Directive (RDC) as being an appropriate standard which should be followed in the design and construction of pleasure craft similar to the size and type of Revive. As its title suggests that document imposes EU requirements for the design and construction of pleasure craft. It was not suggested by the other experts that the application of this protocol would be inappropriate. Indeed, Bertram had caused the design and construction methods for the building of Bertram 700 series to be certified under that Directive. Such certification was not of the actual construction of Revive, but as to the design and proposed methods of construction of Bertram's 70ft vessels. 74 A copy of the RDC is attached to Mr Dovell's second report. The RDC provides at article 1(1) that it is applicable to the design and construction of, inter alia, recreational craft. Article 3 provides under the heading "Essential Requirements": The products referred to in Article 1(1) shall meet the essential safety, health, environmental protection and consumer protection requirements set out in Annex 1. 75 Item A of Annex 1 is entitled "Essential Safety Requirements for the Design and Construction of Recreational Craft" and it identifies that for the Boat Design Category of "Ocean vessels" (of which Revive is one) the vessel is to be able to accommodate a wind force (on the Beaufort scale) "exceeding 8" and "Significant wave height (H 1/3, metres) "exceeding 4". The statement of explanation of what is encompassed by this is: OCEAN: Designed for extended voyages where conditions may exceed wind force 8 (Beaufort scale) and significant wave heights of 4 m and above but excluding abnormal conditions, and vessels largely self sufficient. The exclusion of abnormal conditions excludes hurricanes and tornadoes and extreme sea conditions or freak waves generated by abnormal conditions. As the notes to the article indicate, vessels of this category have to be able to meet extreme conditions as they reflect the type of conditions which might be encountered on long ocean voyages where conditions may change suddenly and dramatically. 76 Item A of Article 1 goes on to explain that: Craft in each Category must be designed and constructed to withstand these parameters in respect of stability, buoyancy and other relevant essential requirements listed in Annex 1 and to have good handling characteristics. 77 Item 3 of Item A of Annex 1 is headed "Integrity and structural requirements". Relevantly it provides: 3.1 Structure The choice and combination of materials and its construction shall ensure that the craft is strong enough in all respects. Special attention shall be paid to the design category according to section 1, and the manufacturer's maximum recommended load in accordance with section 3.6 Relevant Harmonised Standards: … EN ISO 12215-2:2000: Small craft - Hull construction and scantlings - Part 2: Materials: Core materials for sandwich construction, embedded materials (ISO 12215-2:2000) … EN ISO 12215-4:2000: Small craft - Hull construction and scantlings - Part 4: Workshop and manufacturing (ISO 12215-4:2000) It was not contested that the meaning of the above was that the ISO Standard relating to Hull Construction and scantlings was an applicable standard for the construction of ocean going vessels. 78 That international standard is also annexed to the report of Mr Dovell. The scope of that Standard is identified as being: This part of ISO 12215 specifies the requirements for core materials for structural use and materials that are embedded in sandwich construction. It is applicable to small craft with a hull length … of up to 24 metres. NOTE The underlying reason for preparing this part of ISO 12215 is that sandwich structures of small craft require careful selection of core materials from a multitude of choices, and that the manufacturing has to follow certain procedures to achieve the intended long-term durability under the expected loads and environmental conditions. 79 Part 2 of the Standard entitled, "Materials: Core materials for sandwich construction, embedded materials" the following appears in relation to Sandwich core properties: 3.1 Sandwich structure A sandwich structure is a composite composed of lightweight core material to which two relatively thin, dense and high-strength functional laminate skins are adhered. 3.2 Structural requirements 3.2.1 Core materials for sandwich construction of small craft shall only be used if the following requirements of the final structure are fulfilled. The material shall have adequate properties to enable the sandwich structure to fulfil the requirements specified in ISO 12215-5 for a normal service life in a marine environment, with special regard to - in-plane forces, acting in the direction of sandwich layers, e.g. tension, compression, shear; - out-of-plane forces, acting transversely to the sandwich layers, e.g. compression, tension, shear. … 3.3 Material requirements, general 3.3.1 Core materials shall have stable mechanical properties consistent with the designated use of the craft. 3.3.2 Resin applied to the core material or its protective sheathing/coating shall be compatible with its surface. 3.3.3 Core materials forming part of a sandwich structure shall - limit the penetration of water beyond the area of a possible fracture of the skin laminate. This requirement does not apply for core materials that consist of a three-dimensional open structure bonded to both skin laminates, e.g. honeycomb or three-dimensional fabrics. - … 3.3.4 Core material shall be capable of transferring the shear loads specified in ISO 12215-5. 80 In Part 4 (Workshop and manufacturing) of that same standard the following appears: 3.7 Manufacturing requirements, sandwich construction 3.7.1 Sandwich construction using female moulds 3.7.1.1 Core surface cavities and other irregularities shall be removed or coated with filler, resin or sandwich adhesive according to the material manufacturer's specification and depending on the following skin lay-up. When using scored core material, a sufficient amount of resin or adhesive shall be used in the bond to fill the gaps. 81 The matters in items 3.3.3 and 3.7.1.1 are particularly relevant for present purposes as they require the filling of any kerfs in the construction of the sandwich core structure. Where Item 3.3.3 is not complied with, if the kerfs are not filled, water which enters in the structure (whether due to holing or penetration) will spread throughout the structure. 82 All three expert witnesses agreed that the construction of the sandwich core structures of Revive did not meet the ISO standards, including because the kerfs were not filled. 83 Although it was submitted that the standard as a whole identified itself as setting requirements which were towards the minimum standard, it does not appear that the words used in Part 5 of the Standard necessarily have that effect. There, the reference is to "design standards" rather than "construction standards" although it can be accepted that the two are closely related. In any event, Mr Dovell and Mr Stayon (if not also Mr Hutchings) agreed that the ISO standard was appropriately identified as setting minimum standards for "all regulatory grounds" for the construction of vessels of this type (ts.338 - 339). 84 What can be taken from the above is that the actual construction of Revive did not comply with the ISO standard for the manufacture of vessels of that type. However, a point of difference arose as between the experts as to the relevance or consequence of that failure. Mr Hutchings and Mr Stanyon identified that the official guide to the application of the CE Directive noted that it was not necessary manufacturers comply with the ISO standard in order to meet the requirements of the Directive. They relied upon the following passage: The "essential requirements" as referred to in Article 3 and detailed in Annex I have to be met by products referred to in Article 1(1) of the Directive. The application by a manufacturer of a harmonised standard in order to fulfil the essential requirements gives a presumption of conformity. However, application of a harmonised standard remains voluntary and is not the only method available to demonstrate conformity with the essential requirements. The manufacturer can choose whether or not he refers to harmonised standards, as long as his products fulfil the essential requirements. However, if a manufacturer chooses not to follow a harmonised standard, he has the obligation to prove that his product is in conformity with the essential requirements by the use of other means of his own choice (e.g. by means of any existing technical specifications). 85 The argument advanced by the respondents was that, whilst Mr Vautin has established the actual construction of Revive does not comply with the ISO standards, it has not shown that the essential requirements of the CE Directive have not otherwise been met. In essence, the arguments advanced by Mr Hutchings and Mr Stanyon on behalf of their clients (the respondents) were that there may have been some other standard with which the sandwich core construction undertaken by Bertram complied so as to satisfy the directive. In the light of the evidence as it emerged, I considered that these two witnesses dissembled somewhat by the advancing of this argument and in doing so they damaged their reliability as expert witnesses. 86 Mr Stanyon's position appeared to be that the vessel may have met the requirements of the CE Directive because there may have been some other standard or standards which the construction satisfied. When questioned about this he acknowledged that he was not aware whether any of those permitted the construction of sandwich core structures in vessels without filling the kerfs. As I have mentioned, in attempting to suggest the construction of the Revive cored panels by Bertram somehow may have met an appropriate standard, he resorted to hypothesising about Czechoslovakian standards, although he was not aware of their content (ts 342-343). 87 The argument advanced by Mr Hutchings' on this was that the CE directive, whilst identifying the ISO standards as being appropriate, also gave a builder the opportunity to build to an equal standard. He reasoned, therefore, that it could not be said the vessel was not built to an appropriate specification. Whilst his comments on this were, perhaps, technically accurate, he refrained from volunteering that he had not located any alternative specification which permitted sandwich core construction without filling the kerfs. He eventually admitted under cross-examination that he could not point to any such standard and that was despite his 20 years of knowledge and study and expertise in this area (ts.350). The standards with which he was familiar all required the filling of kerfs. This being the case, it is safe to conclude, as I do, that there is no relevant standard for the construction of sandwich core components for vessels to which the building of Revive complied. 88 The failure of Mr Hutchings and indeed, Mr Stanyon, to volunteer that they were not aware of any relevant standard to which the vessel complied is concerning. As experts they were entitled to advance the proposition that compliance with the ISO standards was not the only way to satisfy the specifications. However, their failure to volunteer that there was no other standard of which they were aware and to which the building methods in fact complied, was conduct below that expected of experts who appear in this Court and, as I have mentioned, that necessarily rendered it less safe to rely upon their expressed views. 89 Of course, the question of whether Revive was built to an appropriate standard could be resolved by reference to the construction drawings used to build it. They would indicate the existence of any relevant standards which needed to be complied with for the vessel's construction. In the ordinary course such drawings would be in the possession of the manufacturer. In this case, that is Bertram. Although Mr Vautin issued a Notice to Produce in respect of them to Bertram, they were not produced. Bertram offered no excuse for the failure to produce them save to assert they were not available. No explanation was given as to why they were not available. Bertram chose not to call any witness to explain their non-production. That being so, it is possible to draw an inference that their production would not have assisted Bertram's case in this respect (Jones v Dunkel (1959) 101 CLR 298). 90 Given the inability of either of Mr Hutchings or Mr Stanyon to identify any standard for the construction of sandwich core structures on vessels which did not require the filling of the kerfs or the priming of the core I find that, on the balance of probabilities, no such standard existed. I am comforted in reaching that finding by the fact that if there existed such a standard, it is extremely likely that Bertram would have known about it and produced it. Its failure to do so supports my conclusion. 91 It should be observed that no party suggested the vessel, as constructed, actually met the essential requirements of the CE Directive. As the following discussion shows, that is not surprising given failing to prime the core and fill the kerfs was unconventional, if not poor, boat building practice. As is discussed below, the consequence of the utilisation of those boat building practices meant that the shear strength of the panels was significantly reduced and the hull began to delaminate. That being so, the essential requirements of the CE Directive could not have been fulfilled. 92 It follows from the above that the construction of Revive did not comply with CE Directive under which the design methods of the model of vessel in question was certified.

The construction techniques were poor boat building practices 93 During the construction of Revive, Bertram did not fill the kerfs and so it did not comply with the ISO Standard and the CE Directive. Further, the method of construction was poor boat building practice. In his report Mr Stanyon said: There is no doubt that kerfs should be entirely filled with core bond or thickened resin or resin. This is supported by Best Practice, manufacturer's recommendations, classification society's in-house procedure and technical manuals and hands-on experience. They dictate that the core is to be free of voids and discontinuities if it is to perform as per design calculations and to ensure longevity of the laminates structural life. Both Mr Hutchings and Mr Dovell agreed with this statement. 94 It is also apparent that the panels on Revive were constructed without there being any or any adequate priming of the core before being affixed to the laminate skins. Mr Dovell identified that priming was vital to ensure the bonding between the core and the skin of the laminate was appropriately strong. In particular, Mr Dovell observed that Revive was constructed with the core installed onto a bed of adhesive paste without a sufficient resin content in the paste to completely wet its surface. This would result in a dry bond line with significant void content between the core and the adhesive paste. He identified this was evident in the photos of the hull of the vessel where delamination had occurred (see paragraphs 4.12 - 4.13 of the first report of Mr Dovell and the corresponding photo). The result was the "outside skin to core join" in the whole of the topside of the vessel had a significantly lower shear strength than it would have if the correct installation procedure had been followed (see paragraphs 4.16 of the first report of Mr Dovell). In his second report, Mr Dovell extended this opinion to cover all areas where the sandwich core construction had been used on the vessel, including the decking and superstructure. 95 Mr Stanyon, who was the expert engaged by Eagle Yachts, was adamant that the failure to prime the core was inappropriate in a sandwich core construction of such vessels. At ts.264 he said: MR STANYON: Yes. Well, priming is an essential function and it's something that you don't scrimp on. You don't - you don't - you do it properly. You - you - you don't worry about the quantity of resin you're using. It's just a job that is essential to the integral laminate 96 Mr Hutchings agreed that the failure to prime the core would result in reduced shear strength of the sandwich core construction (ts.264 - 265). He was reluctant to agree with the proposition that it was bad boat building practice not to prime the core before adhesion to the skins: DR BELL: And you would agree with that, Mr Hutchings, wouldn't you? MR HUTCHINGS: I would agree it's good boatbuilding practice DR BELL: Well, you would agree it was essential, wouldn't you? MR HUTCHINGS: to actually - to actually do it. My belief is it's good boatbuilding practice to do it. It's rare for it - for it not to be done. DR BELL: It's not good boatbuilding practice not to do it. MR HUTCHINGS: I believe that's what I just said. DR BELL: It's bad boatbuilding practice not to do it, isn't it? MR HUTCHINGS: As I said, I believe it - it would be - it would be - it's good boatbuilding practice to do it. DR BELL: Yes. And I'm putting to you that it's bad boatbuilding practice not to do it. MR HUTCHINGS: Yes, I agree. 97 Subsequently, Mr Hutchings agreed that it "was deeply imprudent not to prime". He also said that he would recommend priming as part of any relevant boat building exercise and he would never recommend not to do it (ts.265). He further agreed that to ensure that a vessel was able to withstand the roughest conditions (which Bertram had represented Revive was capable of doing) it would be prudent to prime the core in the construction process (ts.267). 98 The initial reluctance of Mr Hutchings to accept such relatively obvious propositions and his attempt to obfuscate them when they appeared to undermine his client's case, further rendered his evidence less useful than it might otherwise have been. 99 Ultimately, the failure to fill the kerfs and the failure to prime the core with resin has resulted in the sandwich core construction in the vessel having a substantially reduced shear capacity. In his report, Mr Dovell considered the paper by Berger et al to the effect that failure to fill kerfs in the construction of sandwich core panels will result in a reduction in the shear capacity of the panels by more than 50% of what it would have been had those construction defects not been present. Indeed, the loss of strength in the panels is increased to 60% when fatigue is considered. Mr Dovell did not merely accept that the conclusions drawn in that paper applied to panels of the type in Revive. He undertook his own calculations to ensure that the critical parameters were appropriate to the dimensions on the Revive panels and satisfied himself that the reduction in shear strength of those panels would be in the order of 50% (ts.287 and exhibit 17). Mr Stanyon also accepted the conclusions of that paper and that it applied to the panels in Revive. Although Mr Hutchings asserted that he could not be sure that the reduction in shear strength was 50% and that destructive testing on the actual panels from Revive would be required, I prefer the evidence of Mr Dovell and Mr Stanyon on this part of the evidence and, in particular, the more carefully considered views of Mr Dovell who had taken the time to consider the applicability of the conclusions in the published paper to the physical dimensions of the sandwich core panels on the vessel.

Non-compliance with PVC foam manufacturer's requirements 100 Mr Stanyon identified in his report that the PVC foam used in the construction of the Revive was of a brand called "Airex Divinicel H80", which had GRP inner and outer skins. Mr Dovell could not be certain that this was the foam that was used in Revive's construction, however, he did conclude that it was "almost certainly made from a PVC foam that is effectively identical to the "Airex PVC foam Core Product". The processing guidelines for that product are attached to Mr Dovell's first report and they identify that debonding and subsequent catastrophic failure can occur if the correct installation procedures are not followed. The installation instructions for the foam product in the production of sandwich core panels identified that optimal quality was obtained from obtaining a strong bond between laminate and foam and by filling up the slits (kerfs) with resin or putty. The instructions also identified that the surfaces of the foam should be primed with resin (including the inside faces of the kerfs) prior to bedding into the outside skin. Mr Dovell found that the failure by Bertram to comply with such installation instructions resulted in a dry bond line between the core and the inner and outer skins and represented a significant construction defect. There was no real disputation about this evidence and I find, on the balance of probabilities, that the foam core material was the Airex PVC foam Core Product and that it had not been installed as required by the manufacturer's specifications.

The real question is whether Revive can be effectively repaired? 101 Revive cannot be used as a motor vessel save in the calmest of waters. The delamination of the topside means that it cannot be used in the open ocean even for short periods of time. The shear strength of the outer skin is all that presently protects the vessel at its prow (generally on the portside) and if that area sustained a significant impact it would, most likely, fail. That would inevitably lead to the entry of water and give rise to a risk that the vessel would sink. There seems to be no dispute between the parties that the vessel is not seaworthy in its present state. There is also no relevant dispute that the guarantees as to the quality of the vessel imposed by the ACL were not met. 102 The respondents assert the construction defects in the topsides in the area where the delamination has occurred can be repaired at a relatively low cost of approximately $106,200 plus GST. Alternatively, they say that the construction defects in the whole of the topsides can be repaired for somewhere between $856,054 and approximately $1.4m (based on Mr Acacich's evidence). They say that the effect of those repairs would render the vessel seaworthy and, effectively, put the vessel in a condition such that it would comply with the guarantees as to fitness imposed by the ACL. As a result they contend that the former amount of money (or alternatively, the second) represents Mr Vautin's damages. 103 Mr Vautin denies that such repairs to Revive would be effective to cause it to comply with the guarantees imposed by the ACL. In particular, he asserts that even if the topsides were rectified, the sandwich core components of the decking and the superstructure of Revive will still contain the defects such that the vessel will remain not fit for purpose. The total cost of these repairs would be in the order of $2.7m. 104 It follows that the real debate is whether the repairs which the respondents propose for Revive will render it compliant with the guarantees of fitness and quality as imposed by the ACL

The nature and extent of the defects 105 As has been determined, the sandwich core panels in Revive (being throughout the topsides, the decking and the superstructure) contained manufacturing defects consisting of unfilled kerfs and the core not adequately primed with resin. This created a dry bond line between the cores and skins and panels such that the panels had a substantially reduced shear capacity. This reduced capacity is of the order of 50% and had the consequence of delamination occurring in those areas of the vessel which met with constant impacts in the course of its use. 106 The experts, however, disagree with the consequences of the above. The respondents' experts assert the vessel can be adequately repaired if the areas where the delamination has occurred are repaired (by the core being primed and the kerfs being filled). On the other hand, Mr Dovell asserts that will not be sufficient to cure the defects that have resulted in a substantial reduction in the shear capacity of all sandwich core panels.

Safety 107 Mr Vautin submits, relying on the evidence of Mr Dovell, that the construction defects which exist in all of the sandwich core panels throughout the vessel, have the result that the vessel is less safe than it would be had it been properly constructed. He submits that, even if the topsides were repaired, the deck and the superstructure would have about half the strength they should have. He also submits that, as constructed, the sandwich core panels in those areas would not prevent the permeation of water throughout the core as a consequence of penetrations. There is much force in these submissions. The sandwich core panels were not designed to 200% of their required capacity. There would be no reason for that to be the case. It follows that the reduction of shear capacity below 50% of what the panels should be renders them inadequate for their purposes. That is, their shear capacity is below that which is necessary and appropriate for a vessel of this type. This represents a serious safety concern in an ocean-going vessel such as the Revive. It is intended to be used for extended journeys on the open seas and that, necessarily, means it is intended for use in very heavy conditions (being wind force 8 on the Beaufort scale and significant wave height of in excess of 4m, but falling short of abnormal conditions such as hurricanes and tornadoes). In such conditions, the vessel may be buffeted on the deck and the superstructure by those sea conditions. That being so, there is a real risk that sandwich core panels, which have less than half the designed shear capacity, will fail with catastrophic consequences. In the result, I find that the effect of the construction defects is that the vessel is unsafe for use in all of the sea conditions for which it was intended. It is not safe to be used in conditions up to wind force 8 and seas with a wave height of in excess of 4m. 108 Even if it were the case that it was not possible to find that the vessel was actually unsafe for its intended use by reason of the construction defects, there can be little doubt that the construction defects create great uncertainty about its safety. Even Mr Hutchings was prepared to accept the existence of that uncertainty (ts.353) and he further accepted that this was something which an owner of a premium, high quality, very expensive vessel should not have to endure. By this, I understood Mr Hutchings to agree that vessels such as Revive, which are extremely expensive and are intended to be "top of the range" ocean going vessels, should be built to a standard which excludes safety concerns arising from the manner in which they are constructed. That is somewhat self-evident. 109 Mr Stanyon was slightly more forthright than Mr Hutchings when he agreed that, because of the construction defects, he would not use the vessel in conditions which he would if it did not have those defects. He agreed he would take a "more conservative approach" to the use of the vessel. From that, I understood Mr Stanyon accepted that the construction defects probably rendered it less safe for use in harsher conditions.

Durability 110 There was some agreement between the experts that the sandwich core panels on Revive were less durable than they would have been if the defects did not exist. Mr Dovell was of the opinion that the vessel was not durable because the panels might fail in rough conditions due to their reduced shear capacity, that the fatigue strength (the weakening of the panels which are exposed to the usual forces arising from use) of the panels was reduced by reason of their manner of construction, and that there is a risk of core degeneration because of the possibility of water entry and dispersal in the foam core. In this latter respect he said the entry of water into the core would spread widely due to the unfilled kerfs and would eventually reduce the life of the panel. 111 Mr Stanyon also seemed to accept that the absence of a homogeneous core material would hasten the consequence of a reduction in the strength of the panels (fatigue), which occurs as a result of the use of a vessel (ts.295). In this case it is undoubted that the construction defects caused the delamination in the bow areas of the port topside which were often exposed to waves whilst the vessel was in use. There seems to be no reason why that principle would not apply to all parts of the vessel which had the same construction defect even if the delamination or weakening may take longer as those parts are not exposed to the same regularity of impact. I apprehend that when Mr Stanyon said that if the Revive was his vessel he would monitor it and look for evidence of other issues, he intended to convey it was more than probable that the construction defects would generate delamination in other areas of the vessel (the decking and superstructure) if only the topside was rectified (ts.348-349). 112 Mr Stanyon also agreed that entry of water into the foam core would cause its deterioration in the sense of reducing the foam's body and resilience (ts.254). Both Mr Hutchings and Mr Doveall agreed with Mr Stanyon's report where he opined there was no doubt that the kerfs were required to be filled if the sandwich core structure is to perform in accordance with its design calculations and is to have the longevity it is supposed to (see section 4 of the report of Mr Stanyon and ts.285-296). 113 The evidence establishes that the failure to fill the kerfs will render the sandwich core structures on the vessel less durable than they would be if the kerfs were filled.

Fitness for purpose 114 There was substantial evidence from the experts as to whether the construction defects in the sandwich core panels on Revive rendered it "fit for purpose". It is unfortunate, however, that there was not a great deal of commonality in the use of that expression. It did not appear the experts necessarily intended their opinions to relate to the requirement in s 55 of the ACL Schedule 2 that goods are to be "reasonably fit" for any disclosed purpose or to the requirement of "acceptable quality" in s 54. That renders some of their opinions in this respect slightly less valuable. 115 In relation to the issue of fitness for purpose, the question is not, directly, how the sandwich core panels were constructed. It is, what is the effect of the defective construction on the nature and quality of the vessel and the uses to which it might be put? If the vessel as constructed (or with the bow sections of the topsides rectified) was able to be used as an ocean-going vessel for all the purposes for which it was intended, then it is likely to be fit for purpose regardless of the extant construction defects. Of course, a determination to that effect would be difficult given the findings which have been made. It would also require a conclusion that the structure of the vessel was significantly "over designed" such that the construction defects that remained were inconsequential to the manner in which the vessel might be used. 116 In his supplementary report Mr Dovell concluded the best measure of "fitness for purpose" of a pleasure craft such as Revive, was compliance with design and construction with an appropriate set of standards. This was agreed to by all of the experts in the joint report who also agreed that the CE Directive 94/25/CE, as amended by directive 2003/44/CE, was an appropriate standard. Again, whether the vessel was or was not constructed to an accepted set of standards does not necessarily dictate the uses to which it might actually be put. However, the joint statement of the experts (in paragraph 21 of their report) seems to connote that "fitness for purpose" in relation to a vessel includes an element of assurance that the vessel will be known to be safe to use in intended conditions. They appear to agree that a vessel is fit for purpose if it is built in accordance with a recognised set of standards particular to that type of vessel. If that is so the experts agree a user can be confident the vessel can be used in the sea conditions appropriate to the type or class of vessel. Conversely, their view incorporates the supposition that a vessel will not be fit for purpose if it is not constructed in accordance with the recognised standards. This is because safe use of the vessel (in sea conditions relevant to its type) cannot be guaranteed. Given the catastrophic consequences that may follow from a vessel not being constructed in a manner which the industry recognises will render it safe for use, there is much sense in the collective views of the experts in this regard. 117 Mr Dovell also concluded the failure to fill the kerfs in this case would have resulted in a significant reduction of the shear strength of the sandwich core panels so as to render the vessel not fit for purpose. He concluded that, in order to render the vessel fit for purpose it would be necessary that all of the sandwich core components were rectified. He disagreed with the conclusions of the other experts that the vessel could be rendered fit for purpose if the remediation was limited to filling the kerfs in the topsides of the vessel. 118 Mr Stanyon and Mr Hutching expressed the view that the vessel would be fit for purpose regardless of the non-compliance with any standard. It is not clear how they reach that conclusion and it appears to be inconsistent with what they agreed to in paragraph 21 of the joint expert report. 119 In oral evidence, Mr Stanyon considered the topsides could be repaired in a manner which met the ISO standards and this would be sufficient to render the vessel fit for use. Mr Dovell, however, identified that the remainder of the vessel would have sandwich core components with substantially reduced shear strength (> 50%) such that the boat would not be safe to take out in a sea state of wind at Beaufort 8 or significant wave height of 4m. In this respect I accept Mr Dovell's calculation that the shear capacity of the topside panels was approximately 106% of the minimum requirement and that indicated that they were deliberately designed although not with unfilled kerfs. I also accept that his conclusion the panels in the rest of the vessel were not designed with redundancies in excess of 100% of the minimum strength which would compensate for the unfilled kerfs. The other experts generally agreed with Mr Dovell's conclusions in this latter respect (ts 273-274). Given that it is not only the forward part of the hull which might encounter significant forces in rough sea conditions, Mr Dovell considered that the decks would be defective as well because they were not likely to be able to withstand the pressures of waves breaking onto them. I accept that evidence and it seems that the other experts agreed that the decks and superstructure of Revive might encounter harsh punishment in rough seas. 120 On the basis of the evidence of Mr Stanyon and Mr Dovell, I have concluded the failure to prime the core of the sandwich components and the failure to fill the kerfs caused the shear strength of the panels to be substantially reduced such that they would not withstand all the conditions which vessels of this type should. There is good evidence that this is so as the bow sections of the topsides had failed even though they had not been used in any unusually rough conditions. The failure of these sections support Messrs Stanyon's and Dovell's evidence as to the essentiality of priming and confirms the shear strength of the panels was significantly lower than it ought to have been. 121 The respondents submitted the question of the suitability of the vessel (in terms of in what conditions it could be used) would be resolved by destructive testing of representative panels from the vessel. To this Mr Dovell identified that such a process would require unreasonable expense, although that topic was not further explored. He later identified that a panel of 750mm x 300mm would have to be tested but that the value of any results from tests undertaken by re-creation in the laboratory, would be questionable. Importantly, any test panel would have to be flat (and such panels are not easy to locate) and it would be necessary to take multiple samples from different parts of the vessel. He observed that many samples would have to be taken such that the vessel would essentially end up skinless. He also identified that destructive testing would not be the complete picture without the rest of the design information such that much guessing would still be required. 122 The value of the debate on the necessity or otherwise of destructive testing was negated to some extent when the experts, including Mr Hutchings, agreed it would be unreasonable for the purchaser of a $4.5m vessel to subject it to destructive testing so as to be able to ascertain whether it is fit for use in the conditions which a vessel of that type is usually used (ts.292). This is relevant to the issue of the degree of certainty which an owner of vessel of this type ought to be able to have in its inherent safety consequent upon its proper construction. Here, the failure of Bertram to construct the vessel in accordance with any known and accepted standard has rendered its sandwich core components defective. The defects have resulted in delamination and their existence throughout the vessel (even assuming that the topsides were repaired) gives rise to significant uncertainty as to whether the vessel is safe to use in conditions in which vessels of that nature are usually used, or intended to be used. Resolving that uncertainty would require the owner to undertake destructive testing of nearly all sandwich core panels on the vessel. 123 The experts all agreed that the Revive was designed as a Category A vessel, as per the CE Directive, and should have been capable to withstanding all but the most extreme conditions such as hurricanes and tornadoes. Clearly it could not be so used with delamination occurring in the topsides. 124 On the question of the use to which the vessel might be put if the topsides were repaired by the kerfs being filled, there was some difference of opinion. 125 In his evidence Mr Hutchings expressed the opinion that if the topside area around the anchor locker was satisfactorily repaired, the structural integrity of the vessel would be restored (ts.348). He reached this conclusion on the basis that there was no evidence of any structural failure anywhere else on the vessel. Subsequently, he retreated from that position by agreeing that, from a structural integrity point of view, he could not put his name to the proposition that the vessel would be fit for purpose (ts.353). He acknowledged that the construction defects in the vessel were of such a nature that there would be a level of uncertainty with the vessel into the future. He also agreed that the level of uncertainty was something which the owner of a premium, high quality, very expensive vessel should not have to endure (ts.353). By this I understood him to mean that vessels like Revive were not fit for purpose if there existed uncertainty as to their structural integrity. 126 Mr Stanyon also seemed to initially suggest Revive would be fit for purpose if the topsides were repaired, although he also said that he would be monitoring the vessel and the management of it, including voyaging plans, to look for evidence of other issues (ts 348 - 349). I understood this as indicating an acceptance that the constructions defects rendered the occurrence of future delamination more likely than would have been the case if they did not exist. Under cross-examination Mr Stanyon acknowledged that knowing what he knew about the construction of the vessel (presumably with the topsides repaired) he would be more careful in his use of the vessel than would otherwise be the case. He further agreed that he would take a more conservative approach to the use of the vessel than would otherwise have been the case (ts.350). This also appears to be an acceptance of the proposition that given the construction defects, even when the topsides are repaired, it should not be used to the full extent to which it might be used if the defects did not exist. 127 The evidence discloses that the sandwich core components of Revive were not constructed in accordance with the CE Directive under which the design of the vessel had been certified. The vessel ought to have been constructed to the standard of a Category A vessel. It was not. The construction of the components did not comply with the ISO standards or any other relevant standards principally because the kerfs were not filled and the core was not primed. None of the three experts knew of any standard which permitted the construction of such components with unfilled kerfs. They were only aware of standards that required the kerfs to be filled. Even if the sandwich core panels on the topsides of the vessel were repaired, the sandwich core components of the decks and the superstructure would not comply with any known standard and their construction would remain the result of the adoption of bad boat building practices. 128 Further, the construction defects in the sandwich core components had the effect of reducing their shear capacity by more than 50% from what it ought to have been and rendered them and the vessel less durable. Consequently, the owner of the vessel would have to be watchful of further damage arising in the future. They also created substantial uncertainty as to the structural integrity of the vessel. That meant the vessel could not be used to the full extent to which it would be able to be used if it did comply with an appropriate standard. This is true of the vessel in its present state and of the state it would be in if the topside area of the prow, where delamination had occurred, was repaired. 129 It follows that the vessel was not fit for purpose both because it was not constructed in accordance with any acceptable standard, and, because it is not fit to be used as a Category A vessel.

Claims under the Australian Consumer Law 130 Mr Vautin makes a number of claims under the ACL in relation to the supply of the vessel to it in respect of which the following provisions are relevant. 131 Section 54 provides: 54 Guarantee as to acceptable quality (1) If: (a) a person supplies, in trade or commerce, goods to a consumer; and (b) the supply does not occur by way of sale by auction; there is a guarantee that the goods are of acceptable quality. (2) Goods are of acceptable quality if they are as: (a) fit for all the purposes for which goods of that kind are commonly supplied; and (b) acceptable in appearance and finish; and (c) free from defects; and (d) safe; and (e) durable; as a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects of the goods), would regard as acceptable having regard to the matters in subsection (3). (3) The matters for the purposes of subsection (2) are: (a) the nature of the goods; and (b) the price of the goods (if relevant); and (c) any statements made about the goods on any packaging or label on the goods; and (d) any representation made about the goods by the supplier or manufacturer of the goods; and (e) any other relevant circumstances relating to the supply of the goods. 132 Section 55 is also relied upon and it provides: 55 Guarantee as to fitness for any disclosed purpose etc. (1) If: (a) a person (the supplier) supplies, in trade or commerce, goods to a consumer; and (b) the supply does not occur by way of sale by auction; there is a guarantee that the goods are reasonably fit for any disclosed purpose, and for any purpose for which the supplier represents that they are reasonably fit. (2) A disclosed purpose is a particular purpose (whether or not that purpose is a purpose for which the goods are commonly supplied) for which the goods are being acquired by the consumer and that: (a) the consumer makes known, expressly or by implication, to: (i) the supplier; or (ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made; or (b) the consumer makes known to the manufacturer of the goods either directly or through the supplier or the person referred to in paragraph (a)(ii). (3) This section does not apply if the circumstances show that the consumer did not rely on, or that it was unreasonable for the consumer to rely on, the skill or judgment of the supplier, the person referred to in subsection (2)(a)(ii) or the manufacturer, as the case may be. 133 A guarantee of compliance of any express warranty given by a manufacturer is provided for in s 59, which provides: 59 Guarantee as to express warranties (1) If: (a) a person supplies, in trade or commerce, goods to a consumer; and (b) the supply does not occur by way of sale by auction; there is a guarantee that the manufacturer of the goods will comply with any express warranty given or made by the manufacturer in relation to the goods. 134 Part 5-4 deals with remedies relating to guarantees. Division 1 of that Part concerns actions against suppliers and within that division s 259 provides: 259 Action against suppliers of goods (1) A consumer may take action under this section if: (a) a person (the supplier) supplies, in trade or commerce, goods to the consumer; and (b) a guarantee that applies to the supply under Subdivision A of Division 1 of Part 3-2 (other than sections 58 and 59(1)) is not complied with. … (3) If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may: (a) subject to section 262, notify the supplier that the consumer rejects the goods and of the ground or grounds for the rejection; or (b) by action against the supplier, recover compensation for any reduction in the value of the goods below the price paid or payable by the consumer for the goods. (4) The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure. 135 For the purposes of s 259, s 260 identifies the occasions on which a failure to comply with a guarantee is a "major failure": 260 When a failure to comply with a guarantee is a major failure A failure to comply with a guarantee referred to in section 259(1)(b) that applies to a supply of goods is a major failure if: (a) the goods would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure; or (b) the goods depart in one or more significant respects: (i) if they were supplied by description - from that description; or (ii) if they were supplied by reference to a sample or demonstration model - from that sample or demonstration model; or (c) the goods are substantially unfit for a purpose for which goods of the same kind are commonly supplied and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or (d) the goods are unfit for a disclosed purpose that was made known to: (i) the supplier of the goods; or (ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made; and they cannot, easily and within a reasonable time, be remedied to make them fit for such a purpose; or (e) the goods are not of acceptable quality because they are unsafe. 136 Section 262 provides limitations upon the entitlement to reject the goods as provided for in s 259(3)(a): 262 When consumers are not entitled to reject goods (1) A consumer is not entitled, under section 259, to notify a supplier of goods that the consumer rejects the goods if: (a) the rejection period for the goods has ended; or (b) the goods have been lost, destroyed or disposed of by the consumer; or (c) the goods were damaged after being delivered to the consumer for reasons not related to their state or condition at the time of supply; or (d) the goods have been attached to, or incorporated in, any real or personal property and they cannot be detached or isolated without damaging them. (2) The rejection period for goods is the period from the time of the supply of the goods to the consumer within which it would be reasonable to expect the relevant failure to comply with a guarantee referred to in section 259(1)(b) to become apparent having regard to: (a) the type of goods; and (b) the use to which a consumer is likely to put them; and (c) the length of time for which it is reasonable for them to be used; and (d) the amount of use to which it is reasonable for them to be put before such a failure becomes apparent. 137 Division 2 of Chapter 5 provides for actions against manufacturers. Mr Vautin relies upon s 271 which affords consumers a right to enforce the guarantees imposed by s 54 against a manufacturer. That section provides: 271 Action for damages against manufacturers of goods (1) If: (a) the guarantee under section 54 applies to a supply of goods to a consumer; and (b) the guarantee is not complied with; an affected person in relation to the goods may, by action against the manufacturer of the goods, recover damages from the manufacturer. … (5) If: (a) the guarantee under section 58 or 59(1) applies to a supply of goods to a consumer; and (b) the guarantee is not complied with; an affected person in relation to the goods may, by action against the manufacturer of the goods, recover damages from the manufacturer. 138 The above provisions apply in relation to the supply of goods to a consumer. The expression "consumer" is defined by s 3 as being: 3 Meaning of consumer Acquiring goods as a consumer (1) A person is taken to have acquired particular goods as a consumer if, and only if: (a) the amount paid or payable for the goods, as worked out under subsections (4) to (9), did not exceed: (i) $40,000; or (ii) if a greater amount is prescribed for the purposes of this paragraph - that greater amount; or (b) the goods were of a kind ordinarily acquired for personal, domestic or household use or consumption; or (c) the goods consisted of a vehicle or trailer acquired for use principally in the transport of goods on public roads.

Application of the ACL 139 Ultimately, there was no dispute that the Revive was within the meaning of "goods" for the purposes of Division 1 of Part 3-2 of the ACL. The vessel, being a fishing / cruising vessel, was a recreational one acquired by Mr Vautin so that he may pursue his passion of boating and marlin fishing and he used it for those purposes when he could. There was no evidence to the contrary. 140 Bertram was, at all material times, incorporated under the laws of Delaware and was a foreign corporation. It constructed the vessel in the United States of America and it was sold to Eagle Yachts, which imported it to Australia. That being so, for his claim against Bertram, Mr Vautin, in part, relies upon the extended operation of the Competition and Consumer Act 2010 (Cth) (CCA) afforded by s 5(1) which, relevantly, provides: 5 Extended application of this Act to conduct outside Australia (1) Each of the following provisions: (a) Part IV; (b) Part XI; (c) the Australian Consumer Law (other than Part 5 3); (f) the remaining provisions of this Act (to the extent to which they relate to any of the provisions covered by paragraph (a), (b) or (c)); extends to the engaging in conduct outside Australia by: (g) bodies corporate incorporated or carrying on business within Australia; or (h) Australian citizens; or (i) persons ordinarily resident within Australia. 141 Mr Vautin asserts that Bertram was carrying on business in Australia such that, to the extent any offending conduct occurred outside of Australia, it will be caught by this provision. That said, his primary position is that the relevant conduct of Bertram occurred within Australia such that the ACL applied to it without recourse to the extraterritorial operation of the Act. This issue is considered in detail below.

Non-compliance with the guarantees imposed by the Australian Consumer Law

Guarantee as to acceptable quality 142 Mr Vautin asserts that the existence of the construction defects in the sandwich core panels of Revive means that the vessel is not of an "acceptable quality" within the meaning of the guarantee imposed by s 54 of the ACL. In determining whether the guarantee in that section is contravened the following matters are relevant: (a) The test as to whether goods are of an "acceptable quality" is an objective one; being taken from the perspective of a "reasonable consumer" (APS Satellite Pty Ltd (formerly known as "Sky Mesh Pty Ltd") v Ipstar Australia Pty Ltd [2016] NSWSC 1898 at [57]; Merck Sharp & Dohme (Australia) Pty Ltd v Peterson (2011) 196 FCR 145). (b) The question for the "reasonable consumer" is whether the goods in question have the identified qualities enumerated in 54(2) to an "acceptable standard". This requirement is derived from the words "as a reasonable consumer … would regard as acceptable". (c) The "acceptable standard" is used as the yardstick against which the qualities of the goods are to be measured. It is ascertained by a consideration of the matters referred to in s 54(3); the nature of the goods, their price, any statement made about the goods on packaging or labels, any representations made about the goods by the supplier or manufacturer, and any other circumstance relating to their supply. (d) It is necessary the goods have all of the qualities identified in s 54(2) to the ascertained acceptable standard. Those qualities are that the goods are fit for all the purposes for which goods of that kind are commonly supplied, acceptable in appearance and finish, free from defects, safe and durable. (e) In the assessment of whether the goods meet that relevant standard, the reasonable consumer is taken to be fully acquainted with the state and condition of the goods (including any hidden defects of the goods). (f) If the goods supplied do not have all of the identified qualities to the acceptable standard, they will not be of an "acceptable quality". 143 In compendious terms, the issue is whether, objectively, the goods supplied (when taking into account their actual quality including any latent defects) are, to an acceptable standard, fit for all the purposes for which goods of that kind are commonly supplied, acceptable in appearance and finish, free from defects, safe and durable when measured by a standard which reflects the nature of the goods, their price, statements about the good as per their packaging, representations made about the goods and any other relevant circumstance. In Prestige Auto Traders Australia Ltd v Bonnefin [2017] NSWSC 149; [132] N Adams J identified the manner in which s 54 should be applied in the following way: The relevant test in s 54(2) of the ACL of whether or not goods are of "acceptable quality" is an objective one based on whether a reasonable consumer who was aware of the "defects" in the goods at the time of the supply would have considered them to be of acceptable quality. There was no issue taken that the determination of what is objectively reasonable for a consumer to expect is to be made taking into account the relevant information known as at the time of the trial, including "after-acquired knowledge": Medtel v Courtney at [66] and [70]. 144 Whether this new regime had the effect of replacing the allegedly "archaic" or "ambiguous" concept of "merchantable quality" with modernised terms which are easier for consumers and businesses to understand (see the Explanatory Memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill para.25.85) is yet to be determined. That said, the test of "acceptable quality" is not vastly dissimilar to the test of "merchantable quality" in s 74D of the TPA. It is, however, apparent that the scope of the concept of "acceptable quality" is wider than that of "merchantable quality". An important difference is that s 54 specifically imposes an obligation that the goods in question are free from defects as well as being fit for all of the purposes for which they were commonly supplied (APS Satellite Pty Ltd (formerly known as "SkyMesh Pty Ltd") v Ipstar Australia Pty Ltd [2016] NSWSC 1898, [59]). This affords a wider scope of protection for consumers. 145 The circumstances of this case have some similarities (in a legal sense) with issues which arose in Medtel Pty Ltd v Courtney (2003) 130 FCR 182, although the issues in that case arose by reference to whether the goods were of "merchantable quality" as that term was used in s 74D of the TPA. There, an action was brought on behalf of persons who had heart pace-makers fitted against the Australian distributor of the product. The design and construction of the pacemaker had given rise to an increased risk of short-circuiting. At first instance the trial judge had determined that the solder used in the manufacturing process had created a super-added risk of premature failure and, for that reason, the pacemakers were not of merchantable quality. The distributor appealed on the basis that the trial judge had erred in reaching that conclusion because the pacemaker in question had not, at that stage, short circuited and had continued to function. The issue before the Full Court was identified by Branson J at p 202, [54] as being: whether a product which, at the time of trial, can be demonstrated to have performed, and to be continuing to perform, satisfactorily can nonetheless be found to be "not of merchantable quality" within the meaning of s 74D(1) of the Trade Practices Act 1974 (Cth) In the present case the vessel, Revive, is obviously not performing. The delamination of the topside is evidence of that. However, the question which needs to be answered is whether the vessel would be of "acceptable quality" after that delamination has been repaired. The respondents say that it will so that Mr Vautin is entitled to an amount sufficient to achieve that. 146 In Medtel Pty Ltd v Courtney, Branson J observed (at pp 203-204, [58]) that s 74D was concerned with the quality of the goods supplied and, in particular, the quality of the goods at the date on which they were supplied. The trial judge, Sackville J, had found the pacemaker in question was not of merchantable quality due to the superadded risk of premature failure, but he also found it had always functioned as it ought to and, that on the balance of probabilities, it would not have ceased to function properly. The appellant argued the trial judge ought to have found the pacemaker was of merchantable quality and, that was particularly so given the "after-acquired information" to the effect that it had not suffered from premature battery depletion. In this respect Branson J held (at p 205, [64]) the requirement of "merchantable quality" is defined by what is objectively reasonable to expect at the time of the supply of the goods. It required a comparison between the goods in question and what would be reasonable to expect, in terms of fitness for purpose, in all of the relevant circumstances. That comparison would no doubt be affected by the type of goods in question as well as their price. 147 In her Honour's reasons, at pp 206-207, [71]ff, an interesting discussion occurs concerning the merchantable quality of goods where there exists a risk they are defective. The discussion concerned the scenario of a case of 100 cartons of yoghurt sold to a grocer where three were contaminated with arsenic. Whilst the 100 cartons sold to the grocer may have been unmerchantable, it was argued that the uncontaminated 97 cartons to individual consumers would not be because they were not defective and the consumers would not have suffered any loss. That reasoning was rejected by her Honour who identified that it could not be said that the cartons of yoghurt were merchantable where there was a slight but appreciable risk of contamination by a deadly poison. Her Honour said at p 207, [73] - [74]: [73] It seems to me that to deny that all, or any, of the purchasers in the above classes purchased goods of a kind that were not as fit for human consumption as it is reasonable to expect is to read into the test of merchantable quality a requirement concerning loss or damage. Section 74D(1)(c) is not concerned with loss or damage. It is s 74D(1)(d) that imports into the statutory cause of action created by s 74D the requirement that the consumer suffers loss and damage by reason that the goods are not of merchantable quality. [74] I reject the argument that the mere fact that it was known at the time of trial that Mr Courtney's pacemaker had not failed prematurely meant that it could not be demonstrated that Mr Courtney's pacemaker was not of merchantable quality within the meaning of s 74D at the time of its supply to Mr Courtney. 148 The Full Court (Branson J with whom Jacobson J agreed) at pp 208-209, [78] could find no fault in the conclusion of the trial judge that a pacemaker which had only the ordinary or usual risk of premature failure is more fit for purpose than one which had, by reason of its manufacture, an appreciably higher risk of failure. It was reasonable to expect, at the time of its sale, that the pacemaker was manufactured in a way which gave rise to the ordinary or usual risk of failure. See also the observations of Moore J at [14]. 149 It should be kept steadily in mind that the question for the Court in relation to s 54 (or s 74D) concerns the quality of the goods supplied. That includes issues as to their safety or durability and fitness. It is not concerned with reaching a conclusion that the goods in question will necessarily fail under any or particular circumstances. The section is also not concerned with loss or damage. In cases where the product in question has not failed, the issue which needs to be addressed is whether the product in question carries the "inherent risk" which renders it not of an acceptable quality (see APS Satellite Pty Ltd (formerly known as "SkyMesh Pty Ltd") v Ipstar Australia Pty Ltd [2016] NSWSC 1898, [79]; Protec Pacific Pty Ltd v Steuler Services GmBH & Co KG [2014] VSCA 338 [528]). The discussion by the Court in Protec at [516] - [531] of the application of the principles identified in Medtel is useful and identifies the appropriate approach of establishing the unsuitability of a product which has not actually failed. Their Honours (Tate, Santamaria and Kyrou JJA) said at [528]: While it follows from Medtel v Courtney that it is permissible to demonstrate unsuitability on the basis of an inherent risk associated with a type of product, without the particular product purchased having actually failed, it is first necessary to establish that the type of product carries the inherent risk alleged. In our opinion, this is what BHP has failed to do. 150 Although Medtel concerned the operation of s 74D of the TPA, the principles observed are useful to a consideration of s 54(2) of the ACL. If goods could not be described as being of merchantable quality, neither would they be of an acceptable quality (see APS Satellite Pty Ltd (formerly known as "SkyMesh Pty Ltd") v Ipstar Australia Pty Ltd [2016] NSWSC 1898, [57]). 151 In the present case the respondents submitted Mr Vautin could not establish Revive was not of an acceptable quality (once the repairs to the topsides were complete) because other sandwich core panels had not failed at this point in time. This submission ought to also be rejected. At the very least, the evidence established before the Court indicates that those panels carry with them an added and unreasonable risk of failure.

Setting the standard of acceptable quality 152 In order to establish the standard of "acceptable quality" against which a reasonable consumer would measure the attributes of Revive, it is necessary to consider the matters identified in s 54(3); namely, the nature of the goods, their price, any statement made about the goods on packaging or labels, any representations made about the goods by the supplier or manufacturer, and any other circumstance relating to the supply of the goods. 153 In relation to the first matter, Revive was an ocean-going, cruising vessel. It was described as a Category A (Ocean) vessel in the CE Certificate relating to the model type and, importantly for present purposes, it was so described in the Owner's Manual. If constructed to the requirements of that categorisation it would have been capable of being used in conditions which may exceed wind force 8 (Beaufort scale) and significant wave heights of 4 m and above, but excluding abnormal conditions, and be largely self-sufficient in such conditions. In effect, it ought to have been capable of being used in all conditions short of a hurricane or tornadoes and extreme sea conditions or freak waves. 154 It was also a large vessel, being in excess of 74ft, which was capable of carrying a maximum of 18 persons. It had a 7600 litre fuel tank capacity, which indicated it was intended to be capable of being used for extended voyages and, it follows, capable of handling all weather conditions which might arise on such voyages. The consequences of such a vessel failing at sea could include the loss of life, so Revive could only be of an acceptable quality if it was constructed to the safest standards possible and its components did not carry a risk of failure. 155 These above features, by themselves, suggest that, given the type of vessel, the overall structural integrity of Revive ought to have rendered it capable of successfully encountering extremely rough conditions. It did not meet this standard. 156 Had the Revive been constructed in accordance with any identified acceptable standard, it would have been a vessel which a manufacturer or seller might reasonably hold out as having substantial sea capabilities. In the promotional material which was provided to Mr Vautin it was asserted by Bertram that: (a) The Bertram vessels were "the most seaworthy collection of crafts on the water today" (Tab 24 of the Joint Bundle, p 97); (b) "Hardcore performance is at the heart of the Bertram legacy", "every Bertram is engineered for strength" and Bertrams are built "for strength and hull performance" (Tab 24 of the Joint Bundle, p 99); and (c) Bertram produces "innovative yachts with remarkable performance, durability and beauty" (Tab 24 of the Joint Bundle, p 167). 157 More particularly, in a 2011 brochure produced by Bertram in relation to the Bertram 700 range of vessels, of which Revive was one, the following representations were made: (a) That Bertram boats "stand up to the test of time", that they "are purpose-built for fishing under the most hostile conditions", that "[t]hey hold up in rough conditions and stand the test of time", and "[h]istorical tales of how owners and captains were thankful that their Bertrams got them through unexpected rogue seas are known across the world" (Tab 23 of the Joint Bundle, p 33); (b) "Bertram's quest to reduce risk in unforeseen adverse sea conditions and make the best sea keeping vessel is a major part of Bertram's 50-year legacy of legendary yacht building" (Tab 23 of the Joint Bundle, p 35); (c) competitors have not "matched the strength, rigidity and durability of a Bertram" (Tab 23 of the Joint Bundle, p 35); (d) Bertram builds "sport fishing machines; 'battle wagons' as they are commonly referred to. Getting you out where you need to be - even in the roughest conditions. … Running before a storm through high seas to reach safe harbor." (Tab 23 of the Joint Bundle, p 35); and (e) the Bertram experience "will get you, your family and guests safely out and back, as you brave conditions that keep lesser vessels in port. That's Bertram. That's peace of mind." (Tab 23 of the Joint Bundle, p 35). 158 In a 2012 brochure (which was apparently produced after the sales of Revive to Mr Vautin) the key selling points of Bertram vessels were identified as being that they were built to withstand the roughest conditions and every part of the vessel was structurally bonded to provide robustness including, but not limited to, furniture, soles and all bulkheads. Mr Rodgers, a former employee of Eagle Yachts, identified that these were the type of messages used by Bertram representatives to market the yachts in Australia. He confirmed (at ts.195) that the vessels were marketed as being constructed to withstand anything short of a hurricane. 159 Although Mr Vautin also relied upon other statements in the brochures which extoled the claimed virtues of the Bertram range of vessel and, in particular, the 700 series, the above is sufficient to identify that the vessel was sold as one being at the "top of the range" of vessels of that nature. The statements in the promotional material indicated Bertram vessels were constructed to ensure they were as safe as it was reasonably possible to make them, if not safer. The representations emphasised the vessel were of robust strength and design and close to statements the vessel are as safe as they might possibly be. The statements made in the marketing of Revive had the result that the "acceptable quality" of the attributes identified in s 54 must be towards the highest level capable of being reached by boat builders. Clearly, the actuality did not reflect the marketing statements. 160 In the above circumstances, it is not surprising that the price at which Revive was sold was in excess of $AUD4 million. The contract required the payment of $USD3 million and the trade-in of Mr Vautin's previous vessel valued at $AUD1.275 million. At that time there was near parity between the USD and the AUD. On any view, that is a substantial amount of money to spend acquiring a pleasure craft. The price suggests the vessel is a "high end" vessel being constructed to a standard and finish at the higher end of vessels of that type. As Mr Rodgers accepted, it was "right at the top of the market" (ts.197). There does not appear to be any dispute about that in this case. 161 It might also be observed that at the time of acquiring Revive, Mr Vautin informed Eagle Yachts he intended to use the vessel for ocean going voyages. Again, that was not disputed and there was no suggestion it was not suitable for that type of use. 162 Again all these statements indicate that, for the purposes of s 54, the quality of the vessels' attributes were necessarily to be at the highest level.

The expectations of a reasonable consumer 163 Mr Brad Rodgers, who had a history of dealing in vessels of this nature and who held a Masters Certificate, gave evidence as to his appreciation of what customers of vessels of the type under consideration would expect. He was well qualified to do so and there was no objection to his evidence in this respect. Indeed, it was he who had sold Revive to Mr Vautin. He gave evidence, which was not disputed, that owners of vessels of the type under consideration wanted a high degree of assurance as to safety and structural soundness (ts.195). 164 The manner vessels of this nature were held out to potential purchasers was important in relation to the expectations of reasonable customers. Mr Rodgers acknowledged the Bertram vessels were held out as being able to withstand the roughest conditions and, in the case of a Bertram 700, they were held out as being able to withstand gale force winds, including winds up to the Beaufort 8 scale. He accepted that persons who might be interested in acquiring such expensive vessels would wish to use them offshore and safety was a priority, particularly because sea conditions can change quickly. He further accepted that, for such potential purchasers, structural soundness was necessary and such persons would require that the vessel was built to specification and certified as such. He further acknowledged that vessels of the nature of Revive which are ocean going may encounter waves or swells of up to 4 to 5 metres. Such vessels are designed to go into such seas and he agreed the forces which might there impact on the vessel could be significant. Those forces would impact not just the hull of the vessel, but also upon the superstructure including the deck and the structure built above it. Mr Rodgers admitted that, for these reasons, the deck and the super structure required structural integrity and that purchasers who might acquire such vessels would insist on that integrity (ts.196 - 197). 165 Mr Rodgers also agreed that ocean going vessels, such as the Revive, would be subject to minor collisions at sea with, for example, flotsam and jetsam, whales or large fish. He acknowledged that part of the structural design of such a vessel was to localise the effect of any such impacts. This concept of localising the effect of impacts is important. If the consequence of an impact which pierces the outer skin of the vessel is that water will permeate throughout the hull, deck or super structure, the consequence can be deterioration in the foam core which can impact upon balance and performance as a result of adding weight to the vessel. It would also impact upon the durability of the vessel. Mr Rodgers agreed that these could be the sequela of water permeating throughout the sandwich core panels and that, in terms of both cost and the features of the vessel, such circumstances are not intended. The filling of kerfs in the construction of a sandwich core panel prevents water spreading throughout the structure such that the effect of any penetration is localised. For this reason, potential purchasers of vessels such as Revive would expect their manner of construction would prevent the dispersal of water which enters the structure through a penetration. 166 Mr Rodgers also accepted (at ts.198) that a purchaser of a vessel such as Revive would not consider it acceptable that: (a) the shear capacity of the material used in the core construction of the vessel was up to 50% less than it was designed to be; (b) the material used in the construction of the core had not been installed in accordance with the manufacturer's specifications; and (c) the vessel had been constructed in a way that departed from accepted international maritime construction standards. 167 Mr Rodgers further agreed that, in terms of the safe use of the vessel, it would be imprudent to take a defective vessel such as Revive onto the ocean if an experienced naval architect had advised not to do so until it was completely repaired (ts.200). That evidence was not, however, sufficiently particular for the purposes of the issues in the present case, although it does reveal persons who use such vessels necessarily demand that the design and construction of their craft be extremely high. It is axiomatic that the structural failure of a vessel at sea and in heavy conditions, generates a great risk of loss of life. In that respect, he also agreed that, due to the extensive nature of its structural impairments, there was no market for a defective vessel like Revive in the state in which she is in as she could not be enjoyed in the way that it is intended she should be (ts.201). 168 Taking into account all of the above circumstances, in order for Revive to be of an "acceptable quality" it would need to have the characteristics identified in s 54(2)(a)-(e) to an extremely high standard.

Failure to comply with manufacturer's specifications 169 Mr Vautin also relied upon the failure of the vessel to be constructed using materials (the PVC foam core) incorporated in accordance with the manufacturer's specifications. Above I have concluded that there has been such a failure in this case in relation to the PVC foam core and I agree with the uncontested evidence of Mr Rodgers that purchasers of vessels like Revive would not find it acceptable for the vessel to have been so constructed.

Contraventions of the guarantee imposed by s 54 of the ACL 170 In light of the above, taking into account the after acquired knowledge, it is possible to make the following findings in relation to whether Revive was of an acceptable quality at the time it was supplied.

Revive was not of an acceptable quality at the time of supply 171 Revive was not of an acceptable quality at the time at which it was supplied by virtue of the defective construction of the sandwich core panels. By the time of trial, that was not seriously in dispute. It had been disputed on the pleadings however, in its final submissions Eagle Yachts expressly eschewed asserting the yacht complied with the guarantees in ss 54 or 59 of the ACL. Bertram did, however, contest that Mr Vautin had not established that the vessel was not fit for purpose within the meaning of s 55. Similarly, by the end of the trial the second respondent, Eagle Yachts, had also capitulated in relation to the non-compliance of the yacht with the statutorily imposed guarantees. It acknowledged that the vessel, when supplied, failed to comply with the guarantees found in ss 54, 55 or 59 of the ACL. 172 In the light of the evidence and, in particular, the joint experts' report, the concessions made by the respondents were inevitable. The deficient method of manufacture for those sandwich core panels meant their shear strength was substantially reduced. I have accepted it was reduced by approximately 50%, as opined by Mr Stanyon and Mr Dovell. The presently appearing consequence of the defective construction is that the forward parts of the topsides which had been exposed to the most regular forces have delaminated and particularly on the port side. It was agreed between the experts that the vessel could not be used in the ocean in that condition. Were it to be so used the only shear strength of those parts of the topside would be in the laminate skins which was minimal and their failure would be catastrophic for the vessel. Necessarily, with those construction defects the vessel was not fit for all of the purposes for which it commonly supplied, it was not free from defects, it was not safe, and it was not durable. It was also not fit for purpose within s 55 of the ACL.

Revive was not of an acceptable quality even with some repairs being effected 173 The central question agitated in this case was whether Revive would be of an acceptable quality with the forward parts of the topside repaired. Those repairs were, in effect, the removal of the delaminated panels and their reconstruction using appropriate construction methods including priming the core and filling the kerfs. It was the respondents' contention that this would have the effect of rendering the vessel of an acceptable quality and, thereby, putting Mr Vautin into the position which he ought to have been had there been compliance with the statutory guarantees when the vessel was supplied. In the context of the evidence as it emerged, the question became whether given the construction defects permeated all of the topsides, the decks and the superstructure, it could be said the vessel was of an acceptable quality once the delaminated portions had been repaired. Largely, this goes to the question of damages rather than liability given the initial finding that the vessel was not of an acceptable quality. An alternative case advanced by the respondents was that if all of the sandwich core panels on the topside were repaired, the vessel would then comply with the statutory warranties. Necessarily, in that scenario the cost of repairs would be substantially greater. 174 It follows that it is necessary to consider the hypothetical position that would exist if the hull or forward part of the hull was repaired.

Not fit for all the purposes for which goods of that kind are commonly supplied 175 All parties accept the defective construction extended to all parts of the vessel containing a sandwich core. I accept the defective method of construction resulted in the shear strength of those panels being reduced in the order of 50%. This defect created a heightened risk that those parts of the sandwich core panels which were not repaired might fail, or delaminate and then fail, if exposed to the forces they might expect to receive in conditions a Category A vessel should be able to withstand. The delamination would have the effect that the laminate skins would rupture under the pressure of further impact forces and the vessel would not remain watertight. That generates a risk of loss of life for passengers and crew and any such risk is, obviously, unacceptable. 176 Even if it could not be positively established the vessel was so defective it could not be used in all of the conditions which a Category A vessel should be able to withstand, the defective construction generates a significant risk that the vessel would not be able to withstand such conditions. This conclusion is supported by the experts to which I have referred. Mr Dovell, whom I have found to be reliable, said that he would not use the repaired vessel in the rough conditions which a Category A vessel should be able to withstand. Similarly, Mr Stanyon agreed he would not use the vessel in all the conditions that he would if the vessel did not contain the construction defects. Mr Hutchings accepted that even with the identified repairs there would be uncertainty in the use of the vessel (ts.353) and such uncertainty was unacceptable in relation to a high end vessel of this type. 177 The uncertainty surrounding the integrity of the vessel as a result of the defective construction (even with the delamination repaired) meant it would not be fit for all of the purposes it would be commonly used. Specifically, for ocean going voyages where it might encounter very heavy conditions. For this reason it would not be of an acceptable quality even if the identified repairs were carried out.

Free from defects 178 Even if the delaminated parts of the vessel were repaired, Revive would still contain defects in the form of the defectively manufactured sandwich core panels. Those panels have substantially reduced shear capacity from that which they ought to have, or were designed to have. Those defects are likely to lead to future delamination if the vessel is used for the purposes for which it was designed. I have accepted that Mr Stanyon indicated further delamination of the vessel is a distinct likelihood. Indeed, the defective panels on the deck and in the superstructure may fail in rough conditions. Moreover, the unfilled kerfs have the consequence that penetrations for the affixing of fittings and the like are likely to permit water to enter the core and permeate throughout it. Over time that would lead to imbalance if a sufficient amount of water entered and it is also likely to lead to the deterioration of the bonding or adhesion in the sandwich core panels. For this reason as well, even if the repairs identified were effected, Revive would not be of acceptable quality by reason of the continued existence of defects.

Safety 179 As appears from the above discussion, even if the existing delamination is remediated, the defective condition of the remaining sandwich core panels means that the vessel is not as safe as it should be. In particular, it is not safe for use in all conditions which a Category A vessel should be able to withstand. In this respect I accept the opinions of Mr Stanyon and Mr Dovell to the effect that, even with the defects repaired, they would not use the vessel in all of the conditions in which it could be used if the construction defects did not exist. Even Mr Hutchings accepted that the uncertainty surrounding the safety of the vessel was unacceptable in a high end vessel of this nature. Either because the vessel is unsafe, as I have found, or because there is a substantial risk that it is not safe for use in all relevant conditions, it is not of an acceptable quality.

Durability 180 It necessarily follows from the above that, even with the identified repairs being completed, Revive will not be as durable as it would have been in the absence of the construction defects. The panels that are not repaired have only half the shear strength of a properly constructed panel and are likely to fail in conditions which they are designed to encounter. Mr Dovell identified that the fatigue strength of the panels will be reduced. That seems to be supported by Mr Stanyon's opinion that if he had the vessel (which was repaired) he would constantly inspect the vessel for further delamination. Mr Dovell further said that the unfilled kerfs would allow water entering the panels to permeate the whole panel and cause deterioration. On the evidence of the experts it is likely the sandwich core panels will deteriorate faster than if they were properly constructed. It must also be kept in mind that Revive is a very expensive vessel; being one that is sold as being at the "top of the market". That being so a reasonable consumer would expect the vessel to be as durable as good boat building practice could make it. The defective construction has prevented it from meeting that standard. Therefore, even if the existing delamination was repaired, Revive would not be of an acceptable quality because it would not be as durable as a reasonable consumer would expect it to be.

Conclusion on non-compliance with s 54 181 It follows that for each of the above reasons, if the panels where the delamination had occurred were repaired, the vessel would still not be of an acceptable quality. As s 54 requires that the goods supplied have each of the identified attributes, the vessel is not of an acceptable quality for each of those reasons individually or any combination of them. The same conclusion is reached even if the topsides were completely repaired.

Non-compliance with the guarantee for fitness for purpose under s 55 182 As mentioned, Bertram did not admit that the vessel, as supplied, did not meet the guarantee imposed by s 55. The brief submissions made were to the effect that Mr Vautin had failed to establish the shear capacity of the un-remediated panels would be lower than the CE "essential requirements", or that the construction did not comply with the construction plans approved by the Royal Institution of Naval Architects (RINA). It followed, so the argument went, that Mr Vautin had not established the vessel was not fit for purpose. 183 Pursuant to s 55, if certain conditions exist, the goods supplied must be reasonably fit for any disclosed purpose, and for any purpose for which the supplier has represented that they are reasonably fit. In the circumstances of this case it was accepted that the relevant "purpose" was that the vessel could be used as a Category A vessel capable of ocean travel and being able to withstand conditions that may exceed wind force 8 (Beaufort scale) and significant wave heights of 4 m and above, but excluding abnormal conditions, and being largely self-sufficient. 184 It is not clear whether Bertram's position is that Revive is fit for purpose in its present state or that it would be if the delamination was repaired. In its present state, the fact the defective construction of the sandwich core panels resulted in delamination in those parts of the topside which, to date, have received the impact of repetitive forces occurring under ordinary operation, means the vessel is not reasonably fit for its disclosed purpose and that it was not so fit when supplied. 185 It follows that it must be Bertram's contention that Mr Vautin has not established that, if the construction defects in the forward parts of the topsides are repaired, or the whole of the topside is repaired, the vessel is not reasonably fit for purpose. This seems to be founded on its submission that it has not been shown the panels are of inadequate shear strength or the vessel was not constructed in accordance with the RINA approved construction plans. 186 Bertram's submissions in this respect must be rejected. As a matter of fact, the sandwich core panels have reduced shear capacity in the order of 50% compared to a panel constructed with the core primed and the kerfs filled. The consequence of that defective construction to date has been delamination in those areas which have received the most repeated impacts under normal conditions of usage. That evidence establishes that the shear strength of the sandwich core panels on the vessel is inadequate to withstand the forces encountered under normal or ordinary conditions. There is no reason to believe that other areas of the vessel made of the same sandwich core panels which have, as yet, not been subject to similar forces will not delaminate in time. There was no suggestion from any of the experts that this is not likely to occur and, indeed, it seemed implicit from Mr Stanyon's evidence (ts 348 - 349). Further, there was no evidence to suggest that the panels on the vessel would perform any better in conditions which are harsher than those which have been experienced to date. The evidence before the Court was that in harsh sea conditions the vessel could be impacted across all areas including the decks and superstructure with substantial forces. Those conditions might involve large waves crashing onto the deck or against the superstructure. On the basis of Mr Dovell's evidence which I accept, the shear capacity of the sandwich core panels are, on the balance of probabilities, well less than that which is adequate for such panels with the consequence that it is more likely than not they will fail when exposed to constant regular forces in ordinary use or to substantial forces in harsh conditions. It can be added that the lower standard of durability would also prevent the vessel being used for all of its usual purposes. Those conclusions render the vessel unfit for the purposes for which it is commonly used or for the purposes for which the supplier represented that it could be used. To that extent there was non-compliance with the statutory guarantee in s 55 of the ACL. 187 The issue of whether or not the vessel was "fit for purpose" was misdirected, to some extent, by the joint experts' report. As I have set out above, the experts agreed upon the following statement in their report: 21. The best measure of fitness for purpose for the design and construction of a pleasure boat similar to REVIVE is the application of an appropriate and accepted standard of which the CE Directive 94/25/CE as amended by directive 2003/44/CE is one. Agree PS, CCH, ACD 188 There is logic to the point of view expressed in that paragraph in that the standards which are incorporated into the CE Directive are carefully developed to provide appropriate methods and standards of construction which, when met, will ensure the safety and seaworthiness of the constructed craft. That is, a vessel constructed to the appropriate standard will be free from the risk that it is not seaworthy. 189 However, as a result of the approach adopted by the experts, much of the debate concerned whether it had been established that the construction of Revive did not comply with the requirements of the CE Directive or, the Bertram construction plans. In particular, the respondents alleged it had not been established the sandwich core construction did not comply with some standard which was consistent with the requirements of the CE Directive. Whilst it may be correct to conclude Mr Vautin was not able to prove directly and conclusively there was no standard to which construction of the sandwich core panels complied, it can be found, by way of inference, that such was the case. There was evidence before the Court from three marine experts who were naval architects, had other professional qualifications and, between them, had many years of experience. They were aware of the standard of construction which were required by the CE Directive and of the ISO standard. It was agreed by them that the ISO standard was, effectively, the minimum requirement for the construction of sandwich core laminates for vessels of the type under consideration. They also agreed, although Mr Hutchings did so reluctantly, that the failure to prime the core was bad boat building practice, that it was prudent to fill the kerfs, and that was something they would always advise a boat builder to do. In such circumstances, it was extremely unlikely there would exist a standard for the construction of sandwich core panels which did not require the priming or the filling of kerfs. 190 In order to make good their submission the respondents contend that, although the failure to prime the core would be bad boat building practice and the filling of the kerfs is something that should be done, there might be a standard acceptable to the CE Directive requirements which does not require both of those practices. Whilst that remote possibility cannot be excluded beyond all doubt, I find on the balance of probabilities that no such standard existed. Given that all of the experts agreed that priming the core and filling the kerfs were important manufacturing techniques, which should be done, the chances of their being some standard that does not require both is most improbable. Moreover, it is not likely that the experts, in preparing to give evidence in this case, would not have ascertained the existence of such a standard if one existed. 191 It follows that it is possible to infer that the construction of Revive did not comply with the ISO Standard (which is not disputed), nor any standard which might have been within the requirements of the CE Directive. It was, therefore, not constructed in accordance with that Directive. 192 The respondents further submitted that compliance with the ISO standard was not the only manner in which a manufacturer of vessels might comply with the CE Directive (see Article 5 of the CE Directive). They assert that the manufacturer can, if it chooses, not refer to a harmonised standard for the construction of a vessel with the result that Mr Vautin must establish the construction of the Revive did not meet the essential requirements of the CE Directive. That argument is misconceived. The entitlement of a manufacturer to refer to an alternative standard, for the purposes of obtaining compliance with the CE Directive, necessitates that the manufacturer prove their product is in conformity with the essential requirements of the Directive by use of the other means. If the vessel had been constructed in accordance with some other standard or the vessel as built did conform with the essential requirements, that would be something which would be peculiarly within the knowledge of Bertram and it has not produced any evidence of the existence of some other standard or evidence of the compliance of Revive with the essential requirements. 193 In Medtel Branson J referred to s 140 of the Evidence Act (Cth) concerning the standard of proof in civil proceedings and observed that it incorporated "the common law rule that evidence is to be weighed according to the proof which it was in the power of one party to produce and in the power of the other to contradict". Her Honour referred to Apollo Shower Screens Pty Ltd v Building and Construction Industry Long Service Payments Corp [1985] 1 NSWLR 561, 565 citing Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970. Here, if the construction of Revive does conform to the essential requirements of the CE Directive by reason of some special building technique that is something of which Bertram has peculiar knowledge, its failure to adduce any evidence of that lends support to the conclusion that the vessel does not so conform. 194 In support of his client's case, Mr Hutchings asserted it was not possible to determine whether the vessel was fit for purpose by reason of its compliance with the directive without consideration of the construction plans. Such drawings would disclose the design of the sandwich core panels and it would be possible to ascertain whether the construction of the vessel conformed to that design. It was apparently within the power of Bertram to produce the construction plans for Revive. If it had it could have been determined whether the vessel was built in accordance with them and whether the vessel complied with the essential requirements. Bertram chose not to produce those plans. There was some evidence the "plans could not be produced", but that rather vague statement was not elaborated upon. The cause of the inability was not clarified and no attempt was made by Bertram to call evidence in that respect or even to attempt to explain why no evidence was being called. Again, adopting the approach of Branson J in Medtel, it can be inferred that Bertram is not able to establish Revive was built in compliance with its construction plans or satisfied the essential requirements of the Directive. 195 I add that the above discussion is somewhat hypothetical or otiose in the circumstances of this case. It may be true that establishing that a vessel did not comply with any internationally accepted construction standard or the CE Directive, will establish that a vessel is not fit for purpose. However, that is not the only method of showing unfitness. In this case the construction defects in the sandwich core panels have been shown to have rendered them inadequate in a vessel such as Revive. Those defects prevent it from being used as a Category A vessel. That proposition is true whether the topsides are repaired or not. It has been established here, as a matter of fact, the vessel cannot be used for the purposes for which such vessels are commonly used and that establishes the breach of s 55.

Revive is not fit for purpose 196 In the result I conclude that Revive is not fit for its purpose of being used as an ocean going vessel.

Compliance with manufacturer's warranty 197 Bertram provided a warranty in relation to Revive when Mr Vautin purchased it. That provided that Bertram "will repair or replace defects in (a) items manufactured by BERTRAM for two (2) years, and (b) the yacht's hull and its fiberglass structural components for five (5) years." If the provisions of s 59 of the ACL apply to Bertram, a statutory guarantee is created to the effect that Bertram will comply with that warranty. 198 For the purposes of that warranty and guarantee, the construction defects in the sandwich core panels are "defects" within the meaning of the warranty. The respondents do no assert to the contrary, at least to the extent to which they exist in the forward parts of the topside where the delamination has occurred. However, as appears from the above discussion, the construction defects also constitute defects in other sandwich core panels of the vessel because their existence in those other parts of the vessel render it unfit for purpose and not of an acceptable quality. 199 However, for Bertram to be liable under s 59, it is necessary that it is within the definition of "manufacturer" in s 7 of the ACL which provides: 7 Meaning of manufacturer (1) A manufacturer includes the following: (a) a person who grows, extracts, produces, processes or assembles goods; (b) a person who holds himself or herself out to the public as the manufacturer of goods; (c) a person who causes or permits the name of the person, a name by which the person carries on business or a brand or mark of the person to be applied to goods supplied by the person; (d) a person (the first person) who causes or permits another person, in connection with: (i) the supply or possible supply of goods by that other person; or (ii) the promotion by that other person by any means of the supply or use of goods; to hold out the first person to the public as the manufacturer of the goods; (e) a person who imports goods into Australia if: (i) the person is not the manufacturer of the goods; and (ii) at the time of the importation, the manufacturer of the goods does not have a place of business in Australia. 200 It does not appear to be in doubt that, prima facie, Bertram would fall within each of sub-paragraphs (a) - (d) of subsection (1). It produced and assembled the vessel and held itself out as manufacturing it. Its branding is upon the vessel and, through the dealership agreement, it caused Eagle Yachts to hold it out as the manufacturer of the vessel. 201 However, here, the vessel was manufactured in the United States and sold there to Eagle Yachts. It was the latter which imported it to Australia. So the question which arises is whether Bertram is subject to the operation of the ACL and, in particular, the obligations imposed by s 59? 202 By s 131 of the CCA the provisions of the ACL apply to the conduct of corporations. That section provides: 131 Application of the Australian Consumer Law in relation to corporations etc. (1) Schedule 2 applies as a law of the Commonwealth to the conduct of corporations, and in relation to contraventions of Chapter 2, 3 or 4 of Schedule 2 by corporations. Note: Sections 5 and 6 of this Act extend the application of this Part (and therefore extend the application of the Australian Consumer Law as a law of the Commonwealth). 203 Section 4(2)(b) and (c) of the CCA provides a definition of "conduct" as being: (b) a reference to conduct, when that expression is used as a noun otherwise than as mentioned in paragraph (a), shall be read as a reference to the doing of or the refusing to do any act, including the making of, or the giving effect to a provision of, a contract or arrangement, the arriving at, or the giving effect to a provision of, an understanding or the engaging in of a concerted practice; (c) a reference to refusing to do an act includes a reference to: (i) refraining (otherwise than inadvertently) from doing that act; or (ii) making it known that that act will not be done; … 204 Section 4 also defines the expression "corporation" as including a "foreign corporation" which, in turn, is defined as including a foreign corporation within the meaning of paragraph 51(xx) of the Constitution. 205 Although there is nothing in s 131 or in s 59 (or in the definition of "manufacturer" in s 7) to suggest that the operation of the Act is confined to persons or corporations within Australia, or who have some connection with Australia, as a matter of statutory construction, it is generally accepted that an enactment will be presumed to apply only to the territory or nationals over which the Australian Government has jurisdiction. In Meyer Heine Pty Ltd v The China Navigation Co Ltd (1966) 115 CLR 10, 23, Kitto J cited the relevant principle from the speech of Lord Russell of Killowen in Reg v Jameson [1896] 2 QB 425, 430 as being: if any construction otherwise be possible, an Act will not be construed as applying to foreigners in respect to acts done by them outside the dominions of the sovereign power enacting 206 In Bray v F Hoffman-La Roche Ltd (2002) 118 FCR 1, 15 [47] Merkel J phrased that principle as, "a general canon of construction that an enactment will not be construed as applying to foreigners in respect of acts done by them outside the dominions of the sovereign power enacting" and identified it as being based on international comity whereby sovereign powers are bound to respect the subjects and the rights of all other sovereign powers outside its own territory. In both Bray and Meyer Heine it was recognised that the existence of a statutory provision extending the territorial operation of an enactment can usually only be accounted for on the basis that the Act, as a whole, has been framed upon the assumption that when conduct is made a contravention of the Act, such conduct is limited to that which occurs in Australia or to conduct to which the extraterritorial provisions apply. 207 In respect of the ACL, s 5 of the CCA identifies the extent of its extraterritorial operation such that, for conduct outside of Australia to contravene any of its provisions, that conduct must be within the scope of that section. That section indicates that, generally, the provisions of the legislation apply only to conduct in Australia or to conduct outside of Australia where there is a sufficient nexus between the relevant actor and Australia. It provides: 5 Extended application of this Act to conduct outside Australia (1) Each of the following provisions: (a) Part IV; (b) Part XI; (c) the Australian Consumer Law (other than Part 5-3); … (f) the remaining provisions of this Act (to the extent to which they relate to any of the provisions covered by paragraph (a), (b) or (c)); extends to the engaging in conduct outside Australia by: (g) bodies corporate incorporated or carrying on business within Australia; or (h) Australian citizens; or (i) persons ordinarily resident within Australia. 208 The necessary implication of s 5 is that the Act, as a whole, applies to conduct in Australia by, inter alia, the entities mentioned in sub-paragraphs (g) to (i). If the Act expressly extends its scope to the conduct of those entities engaged in beyond Australian territorial limits, it is axiomatic that their conduct within Australia is also within the Act's operational scope. It follows that if an entity is carrying on business within Australia its conduct, either within or outside of Australia, is subject to the liabilities imposed by the Act. 209 For the purposes of this matter the issue resolves to one of the application of the ACL to the conduct of Bertram in the manufacture of the vessel in the United States and as well as, or in the alternative, its provision of a warranty to Mr Vautin in respect of Revive. Bertram will be subject to the operation of the ACL if relevant conduct occurred in Australia or if, at the relevant time, it carried on business in Australia. Here Mr Vautin contends that both connections existed in 2011 and 2012 when the vessel was supplied to Mr Vautin.

Conduct in Australia 210 With respect to the submission that Bertram engaged in relevant "conduct" in Australia, Mr Vautin relies upon the terms of s 59 and s 271(5), the latter of which gives an affected person a cause of action where a guarantee is not complied with. It provides: (5) If: (a) the guarantee under section 58 or 59(1) applies to a supply of goods to a consumer; and (b) the guarantee is not complied with; an affected person in relation to the goods may, by action against the manufacturer of the goods, recover damages from the manufacturer. 211 Mr Vautin's first submission is that all that is required for Bertram to be subject to the operation of the ACL is that there has been a supply of goods to the consumer and that such a supply does not need to be a supply directly by the manufacturer (see Spittles v Michaels' Appliance Services Pty Ltd (2008) 71 NSWLR 115, 118 per Handley JA at [14]). He submits that, here, that requirement has been satisfied by the supply of the vessel by Eagle Yachts to Mr Vautin. 212 That submission should not be accepted. The question is one of the liability of an overseas manufacturer who has sold goods in the USA to Eagle Yachts and the latter has imported them to Australia and supplied them to Mr Vautin. On a proper construction of the ACL the liability imposed on the manufacturer under s 271(5) does not arise merely by reason of the supply of the goods to a consumer by some third party (such as a retailer). That alone is insufficient and, as was identified in Bray v Hoffman-La Roche Ltd, the nexus with Australia must be, at least, conduct by the manufacturer. Moreover, that relevant conduct must be conduct in relation to the relevant contravention and, indeed, it is probably necessary that it relate to the gravamen of the statutory cause of action being pursued. In Australian Competition and Consumer Commission v Valve Corp (No 3) (2016) 337 ALR 647 (Valve Corp (No 3)) Edelman J considered (for the purposes of a misrepresentation claim under the ACL) whether statements made by the respondent on the internet was conduct in Australia. His Honour noted that in Bray, Merkel J had recourse to comparisons with the rules relating to the jurisdiction of a court when the question in issue concerned where a cause of action arose. The cases so considered, which included Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 567-8; Distillers Co (Bio-chemicals) Ltd v Thompson [1971] AC 458 and Jackson v Spittall (1870) LR5CP 542, supported the proposition that the test for determining whether a cause of action arose in the jurisdiction required ascertaining the place of "the act on the part of the defendant which gives the plaintiff his cause for complaint". However, Edelman J rejected that as the test for determining whether there was relevant conduct in Australia. In relation to the matter before him (being one of misleading conduct) he agreed with French J in Paper Products Pty Ltd v Tomlinsons (Rochdale) Ltd (No 2) (1993) 44 FCR 485 at 493, that the question of whether there was relevant conduct in Australia would be answered by ascertaining "where the conduct relied upon took place". His Honour concluded that the conduct in question, being the making of the representations, occurred in Australia. That conclusion was reached upon a consideration of all of the circumstances surrounding their making. 213 Although his Honour had rejected the proposition that the test in Voth should be automatically applied in determining whether relevant conduct occurred in Australia, he acknowledged that the common law approach which was applied in that case had occasionally informed the statutory approach. His Honour did not formulate any test for ascertaining the relevant conduct which must occur in Australia before the ACL applies. That said, his close consideration of the circumstances pertaining to the making of the misrepresentations indicates he was concerned with the conduct which was central to the contravention of the statutory prohibition, being the conduct which violated the statutory norms. 214 Under s 271(5) the liability of a manufacturer of goods arises where the guarantee imposed by s 59 is not complied with. It might be said, however, that a necessary precondition to that is that the express guarantee had been given by the manufacturer to the consumer so as to enliven the operation of s 59. Here Mr Vautin relies upon both the giving of the guarantee in Australia and the failure to perform it here as being the relevant connections which cause s 59 to have operative effect. He submits that either of these are a sufficient nexus for the operation of the Act. 215 In relation to the "giving" of the warranty, it was uncontested that the offer of a manufacturer's warranty was one of the selling points in respect of the vessel (ts.190.43 - 191.4) and the warranty card was provided to Mr Vautin in Australia when the vessel was delivered. Under the purchase agreement Eagle Yachts was obliged to provide the purchaser with all the details of the manufacturer's warranties and do all things to enable the buyer to have the benefit of such warranty. The undisputed evidence is that the warranty card was given to Mr Vautin by Mr Rodgers on 4 February 2012. Mr Vautin immediately completed it and returned it to Mr Rodgers who, in turn, returned it to Bertram. By its terms the warranty was to commence from the earlier of the transfer of title to the yacht, or its delivery. In this case that was apparently 4 February 2012 although the particular date is not relevant to the outcome. 216 The manner in which the warranty was given to Mr Vautin as customer was in accordance with the terms of the dealership agreement. By cl 6.4 of that agreement Bertram agreed it would furnish, through the dealer, its written limited warranty at the time of the delivery of the vessel to the dealer. The dealer agreed to make the warranty known to the purchaser. 217 Bertram submitted that the granting of the warranty occurred in the United States because the warranty would not come into effect unless and until the warranty card, as completed by the purchaser, was returned to it at its address in the United States. It is also said that the warranty was subject to the laws of Florida with the result that it was "given" in Florida. This, so the argument goes, has the consequence that there was no conduct by Bertram in Australia to bring it within the scope of s 59 or s 271. 218 It is noted that the terms of the warranty contemplate the repairs will be carried out by the dealer who sold the vessel to the customer. Under the heading "Procedures" the following words appear in relation to the effecting of repairs, "The dealer must obtain BERTRAM's written approval before repairing the yacht and must follow all applicable BERTRAM procedures". That is an indication, which accords with the practice of Bertram, that pursuant to the dealership agreements, the dealers would undertake the warranty repairs at the direction of Bertram and on its behalf. It was not suggested that Bertram would only perform its warranty if the vessel was returned to Florida. Although it is not express in the warranty, it seems to be necessarily implicit that Bertram would undertake the repairs through its dealers and return the remediated vessel to the owner where the owner is located. 219 On these facts the question to be answered is whether, within the meaning of s 59, any express warranty was made or given by Bertram to Mr Vautin in Australia? In this respect Bertram submitted that the proper law of the collateral agreement pursuant to which the warranty was given, is the law of Florida. Mr Vautin did not contend otherwise. It might also be accepted, as Bertram submitted, that the agreement was made in Florida where the condition requiring the receipt of the warranty card was fulfilled. However, the matter raised by the statute is where the warranty was "made or given". Whilst it might be said that, in the circumstances, the making of the promise occurred where the agreement was finally completed, being Florida, it does not necessarily follow that that is also where the promise was "given". 220 Section 59 refers to the manufacturer "giving" the warranty and that connotes the bestowing of the benefit of the obligation on the purchaser. In ordinary parlance the word "give" is associated with the placing of an item or thing in the possession or in the hands of another person with the added connotation that the recipient may keep the item as their own (see Strouds Judicial Dictionary of Words and Phrases (8th ed), 2012, p 1211 and Words and Phrases Judicially Defined, Lexis Nexis, 2007, p 1035). In the context of "giving a warranty" it would appear that the undertaking of the obligation of the person giving the warranty to act in accordance with a promise to repair or keep harmless etc gives the person receiving the warranty the concomitant right to enforce that obligation. In this way, to give a warranty appears to be to create and bestow on a person a right to enforce the obligation which is the subject of the warranty. 221 It follows that, when he purchased Revive from Eagle Yachts, Mr Vautin was "given" Bertram's warranty in that he received or obtained the enforceable right to require Bertram to repair defects in the vessel. It is not doubted that, at all relevant times, Mr Vautin was relevantly in Australia and, in particular, when he received from Bertram the enforceable right to require the repair of any defects in the vessel. That being so, it is difficult to conclude other than that the vesting in him of a right to require performance of the warranty occurred in Australia. A conclusion that Mr Vautin was "given" the warranty in the United States has the obvious difficulty that he was not, when the warranty was given, in the United States. Whilst it may be the case that the right to enforce the warranty was delayed or did not crystallise until the Warranty Card was received in Florida, once it was so received, Bertram had "given" and Mr Vautin had received an enforceable right to require Bertram undertake repairs of any defects in the vessel. The vesting of that right in Mr Vautin does not alter merely because the arrangement which gave rise to its existence materialised in the United States or that the laws of Florida control or purport to control its exercise. 222 Whilst it was obviously within the contemplation of the parties that the warranty would be performed by Bertram in Australia through Eagle Yachts, that does not make any difference as to where the warranty was "given" to Mr Vautin within the meaning of the Act. Nor is it relevant where the Warranty Card was physically handed to Mr Vautin by Eagle Yachts on behalf of Bertram. The giving of the card to Mr Vautin merely afforded him the opportunity to perfect the warranty obligations of Bertram by sending the card back to it in Florida. 223 Although the parties made very limited submissions in relation to this important issue, on the basis of the matters referred to above, the warranty was "given" by Bertram to Mr Vautin in Australia. This conduct by Bertram had the effect of attracting the operation of the ACL and, it follows, that Bertram also became liable to Mr Vautin by reason of the statutorily imposed guarantee. 224 However, the conduct which gives rise to liability under the ACL and, in particular, s 271 is not the giving of the warranty by the manufacturer. All that does is generate the additional statutory guarantee. The conduct which gives rise to liability under s 271 is the non-compliance with that statutory guarantee and, necessarily, the express warranty. The statutory norm which is sought to be remedied by an award of damages under s 271 is the omission to comply with the obligations of the warranty which were given by the manufacturer and replicated as a statutory obligation. That non-compliance accords the consumer the right to recover damages from the manufacturer in respect of defectively manufactured goods. The nature and scope of damages available are identified in s 272(1) as the reduction in the value of the goods resulting from the failure to comply with the guarantee and any loss or damage arising as a consequence of the failure to comply with the guarantee. 225 Here, the warranty (or guarantee) was not complied with in Australia. The terms of the warranty contemplated that the repairs to any vessel would be undertaken by the dealer who had sold it and on behalf of Bertram. Further, the undisputed evidence from Mr Rodgers was that, at the relevant times, warranty repairs were, in fact, undertaken in Australia by or through Eagle Yachts on behalf of Bertram. It appears that Bertram accepted the warranty was to be performed in Australia by Eagle Yachts on its behalf. It follows that the conduct which was central to the violation of the statutory norms occurred in Australia and, consistently with the approach of Edelman J in Valve Corp (No 3), that conduct is sufficient to attract the operation of the ACL. Although the failure to comply with the warranty is a more surer foundation for the attraction of liability under the ACL, it does not follow that the "giving" of the warranty by the manufacturer was not, also, conduct which attracted its operation. 226 The above conclusion as to the operation of the ACL is coherent with the consumer protection objectives and a contrary construction would be likely to render nugatory the rights of consumers to enforce, in Australia, manufacturers' warranties which are provided as part of the rights acquired on the acquisition of goods in Australia and, no doubt, offered to induce purchasers to acquire the products. Such a construction is also consistent with the observations of Mason CJ in Devenish v Jewel Food Stores Pty Ltd (1991) 172 CLR 32, 44 where the Chief Justice (although referring to other sections of the TPA) identified that legislation of a remedial character should be construed so as to give the fullest relief which the fair meaning of the words used will permit and that it is reasonable to assume that the Parliament intended that protective provisions should be accorded the widest scope possible. Those comments, although in a dissenting judgment, have been referred to with approval in subsequent decisions of the High Court such as Deal v Father Pius Kodakkathanath (2016) 258 CLR 281, 295 [36]. 227 With appropriate respect to the careful and thoughtful submissions of the respondents on this point, it would be an unusual operation of the ACL to conclude that a manufacturer who gives to consumers in Australia a warranty in respect of their goods which are supplied in Australia that it will remedy in Australia any defects in the product and fails to do so, falls outside of the Act's operation. The offering of a manufacturer's warranty is no doubt an intended inducement to potential purchasers to acquire the product in question. That is more so in respect of goods which are marketed as "high end" or quality goods which have been produced by a manufacturer who propounds its own reputation. Sections 59 and 271 facilitate the enforcement of manufacturer's warranties where the manufacturer has failed to comply with its agreement. Where that refusal to perform the warranty obligation has occurred in Australia, it is difficult to ascertain any reason why the CCA would be construed in such a way as not to attach to such conduct. That is so regardless of the fact that the warranty may have been generated by an agreement which was formed outside of Australia, given by a company which was outside of Australia and the warranty is governed by and enforceable under a foreign law. The failure to perform in Australia the promised obligations of warranty is sufficient conduct to cause the statutory regime to apply. 228 It should be noted that the above conclusion as to the operation of the CCA (and ACL) does not create any obvious unfairness for overseas manufacturers. On the above construction they will only become liable under s 59 if they choose to give to consumers of their products, warranties in relation to the goods supplied in Australia. The overseas manufacturer is not bound to offer Australian consumers any promise to repair any defects in the products which they have produced. They are able to avoid liability potential under s 59 and s 271 by simply not offering any warranty in relation to their goods which are supplied in Australia. However, once they do so, they cannot avoid the operation of the consumer protection provisions of the ACL by making the proper law of the warranty a foreign law or making it enforceable in a foreign jurisdiction.

Liability arising under ss 95 and 271 229 It follows that ss 95 and 271 are engaged in this case because Bertram gave the warranty to Mr Vautin in Australia and, or alternatively, it failed to comply with the terms of the warranty in Australia.

Whether Bertram carried on business in Australia? 230 In the alternative to the above, the CCA and ACL apply to the warranty given by Bertram because Bertram carried on business in Australia. The above discussion concerning the operation of s 5 of the CCA regarding the extraterritorial operation of the CCA shows the Act applies to a foreign corporation carrying on business here. 231 There was much dispute about whether Bertram carried on business in Australia during the course of the openings in this matter. However, the evidence of Mr Rodgers as to the conduct of Bertram's employees and agents in Australia in negotiating the sale of their vessels, in controlling the advertising of Bertram's products, and in controlling the performance of its warranty obligations tended to remove most of the doubt around this issue. 232 During the respective openings the submissions concerning the issue of whether Bertram carried on business in Australia were confined to those activities which appeared to be non-contentious, being those matters arising out of Bertram's obligations under the exclusive dealership agreement with Eagle Yachts. In support of the submission that these facts were sufficient to establish that Bertram was carrying on business in Australia, reference was made to, first, the obligation imposed by Bertram on Eagle Yachts to furnish Bertram's limited warranty card at the time of the delivery of the product to the customer (clause 6.4); second, the obligation of Eagle Yachts to provide service facilities under Bertram's limited warranty to any Bertram yacht owner regardless of where in the world the yacht may have been purchased (see clauses 4.2 and 4.9); and, last, Eagle Yachts' obligation to promote Bertram's products in accordance with Bertram's approved materials (see clause 4.1). These topics were the subject of the decision of Rares J in Vautin v BY Winddown Inc (No 2) [2016] FCA 1235 [42] (Vautin No 2) which concerned an application by Bertram to set aside the service of these proceedings on it or for a stay of them. Based upon these matters his Honour reached the conclusion that Bertram's acts which were designed to advance its goodwill in Australia, amounted to the carrying on of business in Australia for the purposes of s 5(1)(g) of the CCA. It should be kept in mind that in that matter his Honour was only considering whether there existed a prima facie case that Bertram was carrying on business in Australia and, necessarily, his Honour's conclusions were based upon limited information. 233 The facts as they have emerged at trial more solidly support the conclusion that Bertram relevantly carried on business in Australia. In this respect the evidence which was given by Mr Rodgers under cross-examination was rather compelling. For an extended period of time Mr Rodgers was a director of Eagle Yachts and aware of its business dealings with Bertram during the period of the exclusive dealership agreement and its continuation after the contractual expiry date. Amongst other matters relating to the activities of Bertram in Australia, Mr Rodgers identified the following: (a) that Bertram approved all advertisements and publications relating to Bertram Yachts in Australia. During the period of the exclusive dealership there were many and substantial advertising campaigns; (b) representatives of Bertram attended in Australia regularly, being yearly, to represent Bertram at annual boat shows. There were three main boat shows in Australia and they were located at the Gold Coast, Sydney and Perth. The Bertram representatives from the United States would, during the course of these boat shows, be located on or around the Bertram vessels and would engage in conversations with prospective purchasers and advise those persons of the benefits and attributes of the vessels. In essence they would promote the sale of Bertram vessels; (c) at the boat shows Bertram representatives would take the lead in attempting to sell the vessels to the clients. They would explain the variety of options that were available to prospective customers; (d) the pattern of attendance of the Bertram personnel at the three annual boat shows continued over the eight year period of the relationship between Bertram and Eagle Yachts; (e) representatives of Bertram would bring to Australia marketing material for use in marketing the vessels. Such materials included glossy brochures relating to particular models. Bertram also sent such brochures from the United States to Australia for use by Eagle Yachts; (f) at the boat shows and generally, Eagle Yachts' obligation in relation to selling the vessel was to promote the benefit of the manufacturer's warranty in relation to the vessel. Under the dealership agreement its obligations to purchasers of Bertram vessels was to bring the warranty to those purchasers' attention and to provide them with the warranty cards; (g) apart from attending boat shows, Bertram representatives came to Australia for other purposes, including purposes relating to the fulfilment of Bertram's warranty obligations. Mr Rodgers referred to occasions when Bertram representatives came to Australia to inspect hulls of vessels and, in particular, the hulls of the Bertram 630 models where delamination had occurred; (h) that he had regular contact with Bertram in the United States in relation to marketing issues, the notification of new models of boats and in relation to warranty claims and repairs; (i) in relation to contact with Bertram more generally, he was aware that Eagle Yachts was not able to undertake repair work pursuant to a warranty claim unless and until it was authorised by Bertram. He identified that over time there were many warranty claims made and acknowledged that at the end of the dealership agreement there were a number of outstanding warranty jobs to be fulfilled. Mr Rodgers gave evidence to the effect that there was regular contact between Bertram and Eagle Yachts to ensure that the latter had an entitlement to undertake repairs; (j) for the duration of the eight year relationship, Eagle Yachts was focussed exclusively on the sale of Bertram vessels. Indeed, he acknowledged that the name of Eagle Yachts was derived from Bertram's symbol; (k) the sales and service manuals provided by Bertram to Eagle Yachts, a copy of which was tendered, was reissued periodically and it contained detailed instructions from Bertram as to how the Bertram products were to be marketed; (l) Bertram kept a tight control on marketing and repair services. Mr Rodgers also identified that the engagement of Eagle Yachts for the purposes of servicing Bertram Yachts was to ensure the development of goodwill for Bertram in Australia. He acknowledged that it was part of Eagle Yacht's business to build up the Bertram brand in Australia. 234 As has been discussed above, Bertram gave to the purchasers of vessels a warranty in relation to defects in the vessel. Amongst other matters, the terms of the warranty included the following: The Limited Warranty Bertram Yachts, Inc. ("BERTRAM") warrants, subject to the limitations below, to the first retail purchaser of this yacht ("First Owner") provided the First Owner completes, signs and returns the BERTRAM Warranty Registration Card to BERTRAM at the address below by certified mail, return receipt requested, within ten (10) days of the First Owner's purchase of the yacht, and any properly registered subsequent owners, that it will repair or replace defects in (a) items manufactured by BERTRAM for two (2) years, and (b) the yacht's hull and its fiberglass structural components for five (5) years. These warranties run from the earlier of the date title is transferred, or actual delivery of the yacht, to the First Owner. Unless prohibited by applicable state law, legal claims relating to any alleged problem with this yacht will be barred unless suit is commenced within one (1) year from the date the cause of action accrues, regardless of the time remaining in the applicable warranty period. BERTRAM's Obligation. BERTRAM's obligation is solely and exclusively limited to repairing or replacing, at its option, any covered items found by BERTRAM to be defective at a facility designated by BERTRAM. The foregoing is the Owner's SOLE and EXCLUSIVE REMEDY. Repaired or replaced items shall be warranted as provided herein for the remainder of the applicable warranty period. Defective parts or components that are replaced shall thereupon become BERTRAM's property.

The authorities concerning "carrying on a business" 235 In Valve Corp (No 3) Edelman J also considered the alternative proposition that the CCA applied because Valve Corp was "carrying on business in Australia". There, his Honour referred to the observations in Bray where Merkel J considered that the expression in s 5(1)(g), "carrying on business", should be broadly interpreted in the light of its purposes of consumer protection. Merkel J identified that, for the purposes of the operation of the TPA, the legislature recognised that comity required that there be a nexus with Australia in relation to any acts occurring outside of Australia which were to be brought within the scope of the Act. That was in the form of citizenship, residence by a person or a corporation, or the carrying on of business by that corporation. Thereafter, Edelman J observed (at [197]): As his Honour concluded, the ordinary meaning of "carrying on business" usually involves (by the words "carrying on") a series or repetition of acts. Those acts will commonly involve "activities undertaken as a commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and repetitive basis": see Thiel v Federal Commissioner of Taxation (1990) 171 CLR 338at 350 ; 94 ALR 647at 654 (Dawson J); Pioneer Concrete Services Ltd v Galli [1985] VR 675at 705 ; (1985) 4 IPR 227at 235 (the Court); Hope v Bathurst City Council (1980) 144 CLR 1at 8-9 ; 29 ALR 577at 582 (Mason J; Gibbs, Stephen and Aickin JJ agreeing). 236 In that passage Edelman J's emphasis was on the concept of "carry on" within the phrase under consideration. It is apt to keep in mind that there is a difference between "engaging in" business in a place and "carrying on" business there. The latter requires the repetition of acts which are usually in the nature of commercial activities and which possess something of a permanent character (see Hope v Bathurst City Council (1980) 144 CLR 1, 8). Additionally, as Gibbs J said in Luckins (Receiver and Manager of Australia Trailways Pty Ltd) v Highway Motel (Carnarvon) Pty Ltd (1975) 133 CLR 164, 178, carrying on a business usually connotes at least "the doing of a succession of acts designed to advance some enterprise of the company pursued with a view to pecuniary gain". 237 The above authorities were considered by Rares J in Vautin No 2, in respect of a leave to appeal application concerning BY Winddown Inc v Vautin (2016) 249 FCR 262. His Honour concluded that the activities of Bertram in requiring Eagle Yachts to provide service facilities to all owners of Bertram Yachts in respect of all warranty claims regardless of where the vessel was acquired and in requiring Eagle Yachts to provide the warranty card to "first use purchasers" from Eagle Yachts, were sufficient to justify the conclusion that Bertram was carrying on business in Australia. His Honour said at [50]: Bertram engaged in a succession of acts designed to advance Bertram's overall worldwide goodwill, including its goodwill in Australia, and to promote sales of its products by being able to offer persons who purchased those products from whichever dealer, or other source as the original purchaser of a newly manufactured yacht, the ability to obtain service for those yachts throughout the world, including from Eagle Yachts in Australia: Hope 144 CLR at 8; Luckins 133 CLR at 178. Accordingly, I am satisfied that Bertram did carry on business within Australia for the purposes of s 5(1)(g) of the Competition and Consumer Act.

Conclusion as to carrying on business in Australia by Bertram 238 I would respectfully agree with the conclusion of Rares J and there is nothing in relation to the facts as they emerged more clearly at trial which might diminish its force. The actions of Bertram through Eagle Yachts in relation to the provision of the warranty cards to purchasers, the provision of service facilities to Bertram owners and the enforcement of Eagle Yachts obligation to promote Bertram vessels by use of Bertram approved materials was sufficient to reach the conclusion that it carried on business in Australia. 239 However, the evidence at trial disclosed significantly more numerous repetitive business activities by Bertram in Australia during the relevant period. Importantly, many of these activities were undertaken by it directly rather than indirectly through Eagle Yachts as its dealer. The evidence of Mr Rodgers, which is set out above, discloses the carrying on of business in Australia by Bertram occurred through additional repetitive business activities designed to advance its overall worldwide goodwill and promotion of sales. Bertram had control of the advertising of its products in Australia by regulating any advertisements and publications relating to its vessels. Its employees and agents regularly attended in Australia over the relevant eight year period to engage in the promotion, negotiation for sale and sale of its vessels. Bertram by its agents brought into Australia promotional material to use to generate sales and sent similar material from the United States. It provided detailed instructions to Eagle Yachts as to how the vessels were to be marketed. Bertram's employees also regularly attended in Australia for the purpose of overseeing issues relating to the fulfilment of its warranty obligations and it generally supervised the undertaking of warranty repairs by regular contact with Eagle Yachts as its agent to carry out those repairs. In other words, Bertram, by itself, engaged in a succession of various acts in Australia in relation to the sale, promotion and servicing of its vessels which acts were designed to advance its overall goodwill in Australia and to promote its sales with a view to pecuniary gain. 240 It follows that the evidence, as it emerged at trial, shows that independently of the matters relied upon by Rares J, Bertram engaged in conduct that amounted to the carrying on of business in Australia. On either basis, or taking the two sets of activities together, I find that in the period during the dealership agreement as it was extended and at all times relevant to the events in this matter, Bertram carried on business in Australia. For that reason also, Bertram's conduct in the giving of the warranty and its failure to comply with its terms, was subject to the operation CCA and the ACL.

Conclusions on liability under the ACL 241 Given the above, it is possible to reach some conclusions as to the liability of the various respondents pursuant to the provisions of the ACL.

Eagle Yachts 242 As mentioned there is no real dispute that, when it was supplied, Revive was not of an acceptable quality as a result of the construction defects. On the basis of the matters identified above I find that is so. The delamination in the bow section of the topside, which did occur, had the result that the vessel could not be used in ordinary conditions for extended periods, let alone the conditions which a Category A vessel should be able to meet. Accordingly, it was not fit for all of the purposes for which goods of that kind were commonly supplied, it was not free from defects, nor was it safe and it was not durable. 243 Consequently Eagle Yachts failed to comply with the statutory warranty imposed by s 54 of the ACL. 244 On that basis Mr Vautin is entitled to enforce certain of the statutory remedies against Eagle Yachts as are provided for in Subdivision A of Division 1 of Part 5-4 of the ACL. 245 The respondents submit that in the calculation of the damages or in the determination of whether Mr Vautin is entitled to relief under 259(3)(a), the vessel would be of an acceptable quality once the areas where delamination has occurred are repaired. However, on the facts as found above, even if the delamination on the topsides was repaired, as is suggested, the vessel would not be of an acceptable quality. The same conclusion is reached in relation to the scenario if the whole of the topsides were repaired. Given the existence of defects which have reduced the shear strength, the decking and the superstructure by around 50% and, or alternatively, that it is known that sandwich core panels constructed in the manner in which they have been will delaminate after constant exposure to forces, the vessel is not fit for use in the all of the conditions which a Category A vessel should handle, it is not free from defects and nor is it safe or durable. 246 That being so, at the time of the supply, the vessel was not of acceptable quality even if the topsides had been repaired in whole or in part. Section 54 of the ACL will not be complied with on either scenario. 247 For the same reasons, at the time of supply, Revive was not fit for the purpose which had been disclosed, being that of ocean going voyaging, such that there was a breach of the warranty imposed by s 55 of the ACL.

Bertram 248 Bertram gave to Mr Vautin an express warranty that it will repair or replace defects in (a) items manufactured by BERTRAM for two (2) years, and (b) the yacht's hull and its fiberglass structural components for five (5) years. By reason of the operation of s 59 there was also a statutory guarantee to that effect. As I have found above, the construction defects in the sandwich core panels are "defects" within the meaning of the express warranty. They are in the hull and superstructure manufactured by Bertram. Those defects render the vessel unfit for purpose and that remains the position even if the delamination was repaired. 249 Mr Vautin called upon Bertram to comply with its obligations under the warranty which it gave, namely to rectify the defects in the hull and fibreglass structures of the vessel. Bertram did not comply with the warranty which it gave and, it follows, did not comply with the statutory guarantee. As appears from the events in 2014 and 2015, it is apparent that Bertram assiduously sought to avoid compliance with the warranty it had given. In the result, Bertram has failed to comply with its warranty and the statutory guarantee imposed by s 59. 250 In addition, the Revive did not comply with the statutory guarantees imposed by s 54 with the result that Bertram is liable under s 271 for the damages suffered by Mr Vautin in that respect as well.

Relief under the ACL 251 The nature of the relief to which Mr Vautin is entitled depends on whether there has been a "major failure" to comply with a guarantee. If the failure was a "major failure" he had a right under s 259(3) to reject the goods.

The failure to comply with the guarantees were "major failures" 252 Section 260 identifies the circumstances in which a failure to comply with a guarantee is a "major failure". In the present case, based on the above findings as to the condition of Revive when it was supplied, the failures to comply with the guarantees under ss 54 and 55 were "major failures". That is true regardless of whether the delamination of the topsides was repaired or even if all of the topsides was repaired. In either state: (a) Revive would not have been acquired by a reasonable consumer fully acquainted with the nature and the extent of the defects. The nature of the defects in the vessel are so serious that no purchaser of acquainted with them would have acquired it. As identified below, no purchaser would have acquired the vessel at any price given the extent of the defects. (b) Revive is unfit for the purpose for which vessels of that nature are commonly supplied; being ocean going voyaging and fishing. The defects cannot be remedied within a reasonable time. To properly repair the vessel will take an inordinate amount of time and money. (c) Revive is unfit for the purpose for which it was acquired and which was made known to Eagle Yachts, namely ocean going voyaging and it cannot be easily repaired within a reasonable time to make it fit for that purpose; (d) Revive is not fit for purpose because the defects make it unsafe.

Rejection of the vessel 253 Mr Vautin has purported to reject the vessel. He purported to do so by a letter to Eagle Yachts from his solicitors dated 16 March 2016. Eagle Yachts assert that he is not entitled to reject the vessel because he took possession of the vessel on about 5 March 2012 and he ought to reasonably have become aware of the relevant defects around the time of the receipt of a report from NavSafe Marine in November 2014. That report identified that there were substantial manufacturing defects in the hull of the vessel and warned of potentially catastrophic damage unless the vessel was repaired immediately. Eagle Yachts seems to also submit, as an alternative, that after receipt of the report from Mr Dovell in late 2015, Mr Vautin was fully aware of the nature and extent of the defects in the vessel such that he ought to have then rejected it then rather than waiting for three months and just prior to the commencement of this litigation. 254 Section 262 provides limitations upon the entitlement of the consumer to reject goods. Relevantly for present purposes, a consumer is not entitled to reject the goods where the "rejection period" has ended or they have been attached to or incorporated in any real or personal property and they cannot be detached or isolated without damage. The "rejection period" is obscurely defined in s 262(2) as being "the period from the time of the supply of the goods within which it would reasonable to expect the relevant failure to comply with a guarantee referred to in section 259(1)(b) to become apparent". The reasonableness of the time is determined by having regard to: (a) the type of goods; and (b) the use to which a consumer is likely to put them; and (c) the length of time for which it is reasonable for them to be used; and (d) the amount of use to which it is reasonable for them to be put before such a failure becomes apparent. 255 It can immediately be noticed that the section contains an apparent anomaly in that the "rejection period" ends on the day on which it would be reasonable to expect the relevant failure to become apparent. Once that time has expired the goods can no longer be rejected. It follows that a consumer must know of the failure before the time when it is reasonable that the failure to comply with the guarantee becomes apparent, so that the rejection can occur before that period. It is not likely that this consumer protection provision operates in accordance with the literal meaning of the words used by the legislative draftsman. 256 It must be kept steadily in mind that the "relevant failure" referred to in the definition of "rejection period" is not solely the existence or manifestation of the defect in the goods. The failure is the failure of the goods to comply with the statutory guarantee. Whilst in many cases the existence of an apparent defect will have the consequence that it can be easily discerned that a guarantee has not been complied with, that will not always be the case. A good may contain some form of defect although it may not render it unfit for any disclosed purpose. Further, whilst the consequences of a defect in goods may become manifest, it may not be immediately apparent that the manifestation is of a defect as opposed to some other issue. It may take some time before a consumer might be able to ascertain that the cause of a problem with the goods is the failure of a supplier to comply with a statutory guarantee.

Nesbit v Porter [2000] 2 NZLR 465 257 Eagle Yachts relies upon the decision of the New Zealand Court of Appeal in Nesbit v Porter [2000] 2 NZLR 465 (Nesbit v Porter) in support of its submission that the period in which Mr Vautin might have rejected the vessel had expired prior to his sending his letter of rejection. That case concerned the acquisition by Mr and Mrs Nesbit of a used, four-wheel drive utility motor vehicle from the respondent, Porter Motors. Five months after taking possession the Nesbits became aware of certain defects in the car. They approached Porter Motors seeking to return the car or to be refunded the cost of the repairs, however, they did not receive a response. The Nesbits unsuccessfully pursued Porter Motors through the Motor Vehicle Dealers Institute which rejected their claim on the basis that the vehicle was a commercial vehicle. Some nine months after the supply of the vehicle and after it had travelled more than 16,000kms the Nesbits purported to return the vehicle. The matter proceeded to the District Court which disallowed the claim on the basis that the vehicle was not within the description of having been acquired for personal, domestic or household use or consumption, the consequence of which was that the Nesbits were not "consumers" within the meaning of the Consumer Guarantees Act 1993 (NZ). The Court of Appeal overturned that finding and the question then considered was whether, in the circumstances, the Nesbits were entitled to return the vehicle. In particular, the Court dealt with the question of whether the Nesbits lost the right to do so because it was not returned within a "reasonable time" within s 20 of the Consumer Guarantees Act. Specifically, a period from the time of supply of the goods in which it would be reasonable to expect the defect to become apparent having regard to the enumerated matters. 258 It is to be noted that the legislation considered in Nesbit v Porter was in slightly different terms to the ACL. Under the Consumer Guarantees Act (NZ) the question concerned when "the defect" became apparent. The correlative issue under the ACL is more complex because it requires a determination of when it would be reasonable for the failure to comply with a guarantee to become apparent. Where a matter involves the failure to comply with the guarantee of acceptable quality, issues of qualitative assessment arise and that is substantially different to merely identifying whether a good has a defect or is lacking in durability. However, despite the terms of the Consumer Guarantees Act, the Court of Appeal determined that the reference in the Act to "defect" must have meant "any failure of goods to comply with a guarantee of acceptable quality" (see paragraph [33] of the reasons of the Court). 259 In relation to the operation the s 20 the New Zealand Court of Appeal made the following observations: (a) The defect or failure is that which is actually encountered by the consumer; (b) The period must be reasonable in relation to the defect or combination of defects causing the buyer to reject the goods; (at [35]) (c) Whilst the actual experience of the consumer in relation to the circumstances of experiencing the defect are relevant, the matter is one tested against objective criteria. In particular, the length of time which is reasonable for the goods to be used is tested on the objective criteria and not on the actual usage of the goods by the consumer; (at [35]) (d) As a general rule, the period during which it is reasonable to detect the defect is longer in relation to new goods than is the case in relation to used goods, although that will vary depending upon the type of goods and the usual manner in which they might be used; (at [36]) (e) A reasonable time for the detection of defects may also depend on whether regular inspections of the goods are likely as in the case of a motor car; (at [37]) (f) The fact that under the Act a consumer may return goods to a supplier after there has been a failure by the supplier to remedy a defect does not extend the length of time of the rejection period and nor does the consumer making complaints or taking other action against the supplier; (at [38]) (g) In relation to the determination of what is a "reasonable time" in relation to non-compliance with a qualitative deficiency in the goods the Court said (at [39]): A reasonable time under s20 [s 54 in the ACL] must accordingly be one which suffices to enable the consumer to become fully acquainted with the nature of the defect, which, where the cause of a breakage or malfunction is not apparent the consumer can be expected to do by taking the goods to someone, usually and preferably the supplier, for inspection. In this context, therefore, a defect is not "apparent" until its cause has been identified and the buyer knows what has to be done to fix it, and what that will cost; in other words, until the buyer is in a position to determine whether the defect is substantial. (h) A reasonable time does not elapse until the consumer has had the opportunity to become "properly informed about the nature of the defect and has also had a little time then to consider an appropriate decision, whether or not to reject the goods." (at [40]). (The logic and pragmatism of allowing a consumer "a little time" after the detection of the non-compliance in which to reject the goods is undeniable, although it has no foundation in the literal reading of s 20 of the Consumer Guarantees Act or s 262 of the ACL). 260 In Nesbit v Porter, the defects relied upon were extensive rust and problems with the steering box and shock absorbers, which were latent but became apparent a little more than six months after acquisition. The Court considered that the vehicle was an aging vehicle of more than 11 years old, of uncertain history and with no warranty given as to the correctness of the odometer readings. The ordinary use of such a vehicle is for heavy off-road driving and the ordinary life span of the car was somewhat limited. In those circumstances and given that it could be expected that the vessel would be used immediately and for extensive periods, it was reasonable to expect that the latent defects would become apparent relatively soon after supply and a motor dealer should be free of any obligation to take back the vessel after a period of six months (being around the time of the mandatory fitness check). Their Honours said at [48]: In our view the motor vehicle dealer should generally be freed from the burden of having to accept rejection of a vehicle of this age and pedigree after the time for the next mandatory six monthly Warrant of Fitness check has passed. If, at the latest, a defect of the kind found in the Navara has not manifested itself on such an inspection, it would be an unfair burden upon the supplier if a buyer of such a vehicle, which must be assumed to have been in daily use, sometimes in rough conditions, should thereafter be able to reject it. Bearing in mind, however, that most people do not have their vehicles tested until the six month period is expiring, there is a need for some latitude to give time to decide whether to exercise that right. 261 The Court did, however, consider that a longer time might be appropriate in relation to defects which were unlikely to be revealed by a vehicle check or which was difficult to resolve. Ultimately, it held that the rejection period expired prior to the purported return of the car. 262 It can be observed that although the Court of Appeal held that "defect" equalled non-compliance with a guarantee, it did not seem to maintain the distinction between a defect simpliciter and the non-compliance with a guarantee in the course of its reasons. The Court appeared to be generally concerned as to when the physical manifestation of a defect arose. This appears to be a too restrictive reading of the terms of the legislation. What s 20 of the Consumer Guarantees Act required (according to the construction of the Court of Appeal) and what is required by s 262, in relation to the rejection period, is ascertaining the time when it would be reasonable to expect that the right to claim that a statutory guarantee has been breached has become apparent. Knowledge of the defect in the goods or even the cause of the defect is not necessarily sufficient. The relevant question focuses upon the failure of the goods to meet the terms of the statutory guarantee and when that non-compliance becomes apparent. 263 It must also be remembered that, in relation to the non-compliance with the requirements of s 54, the issue of non-compliance concerns the state of the goods at the time of supply. It does not concern the state of the goods at some later time when the defect manifests itself. Therefore, where a latent defect results in the manifestation of a deficiency in the goods at some subsequent date, one element in it becoming apparent that the guarantee in s 54 was not complied with is knowledge that the defect, which was latent in the goods at the time of the supply, was causative of the manifested deficiency. That is particularly relevant in the circumstances of the present case.

The relevant failure 264 In the definition of "rejection period" the expression "relevant failure" is used. That latter expression must mean that "major failure" to comply with a guarantee on which the consumer relies or is entitled to rely to reject the goods. Where the manifestation of the failure to comply with a guarantee is patent, the period in which it would be reasonable to expect it to become apparent will be relatively short and easy to identify. Where the item acquired does not work at all and the cause of that is the failure of the product rather than the manner of its use, it can be readily inferred that there has been a failure which is the result of the goods not being of an acceptable quality. Different considerations arise where the defect in the goods is latent and the defect does not manifest itself for some period of time. Indeed, even when the latent defect does manifest itself, it may not be clear that the cause is the failure to comply with a guarantee. Additionally, even when a latent defects manifests itself to some degree and the cause is known, it may not be apparent for some time thereafter how the latent defect will, if at all, further manifest itself or what are the consequences of its existence. In Nesbit v Porter the Court of Appeal (NZ) determined that the "reasonable time" for identification of the failure included time for the consumer to become aware of the nature and extent of the defect and what it will cost to fix it. That is, until these matters are known it cannot be said that the failure to comply with a guarantee has "become apparent". 265 The use of the expression "become apparent" in s 262(2) is also problematical. Something is apparent when it meets the eyes or shows itself, is open to sight, visible or plainly seen (Oxford English Dictionary, online service). Or, as the Macquarie Dictionary defines the word, "capable of being clearly perceived or understood; plain or clear", "ostensible" or "exposed to sight; open to view". In other words, the section requires a sufficiently high level of certainty in relation to the knowledge of the relevant failure including its nature and extent and what it will cost to remediate it. If the level of knowledge required is as identified above, it follows that if there exists doubt about the consequences of a defect in an item and, therefore, the cost of repairing it, the failure of the statutory guarantee has not become apparent. The circumstances of the present case provide an example. In general terms Mr Dovell asserts that, in order to make the vessel safe and capable of being used for all of the purposes for which such a vessel is commonly used, it would be necessary for all of the panels to be repaired. That includes those comprising the decking and the superstructure as well as those on the topsides where no delamination has occurred. On the other hand, Mr Hutchings asserts, and has for some time, that if the topsides where the delamination has occurred are repaired, the vessel could be put to most of the uses to which such vessels are commonly put. Although I have preferred the evidence of Mr Dovell, that conclusion on the balance of probabilities, is not equal to a conclusion that knowledge of the defective construction throughout the vessel made it "apparent" that there had been failure to comply with a guarantee at the time of supply. 266 Additionally, Mr Hutchings agreed that the degree to which the shear capacity of the panels might be diminished could be ascertained by the destructive testing of a number of panels (see Mr Hutching's report of 13 April 2017 at paragraphs 5.23 and 5.26 and ts 271 and ts 283). This, he said, would involve removing a sample of them from the vessel and testing them individually. Mr Stanyon, however, asserted that such a course would require the dismantling of the entire shell of the vessel as most of the panels were of different shapes and so all would have to be tested to ascertain their actual strength and that the vessel would end up skinless (ts 290). In other words, as at the date of the trial there existed a difference of opinion by experts as to the ability to ascertain the extent of the structural deficiencies arising from the defective construction. That fact alone would suggest the extent of the defective nature of the vessel is still not apparent. I have accepted, on the balance of probabilities, that the evidence of Mr Dovell and Mr Stanyon is to be preferred on this topic, namely that all of the defectively constructed panels have a reduced shear capacity of about 50%. However, that also does not necessarily equate to a conclusion under s 262 of the ACL that one would reasonably expect that the extent of the failure to comply with the guarantee (being the extent of the deficiency) was "apparent" at any particular time. 267 To the above can be added the fact that, although Mr Stanyon and Mr Dovell agree on the reduction in the shear capacity of the panels consequent upon their defective construction, they differ on the consequence of that reduction. Mr Stanyon gave evidence to the effect that (if the delamination in the prow was repaired) the vessel might be used in most of the conditions for which a Category A vessel was constructed. Mr Dovell disagreed and considered that without all of the panels being rectified, the vessel remained unsafe and not fit for ordinary use. Although I have accepted Mr Dovell's evidence on this topic there were, nevertheless, substantial, conflicting expert opinions. It follows that there existed and continues to exist differing opinions as to the consequences of the construction defects in the vessel. If one returns to the issues in Nesbit v Porter for the purposes of identifying that point in time when it would be reasonable to expect that the amount which it will cost to remediate the vessel would be apparent, it is possible that it is still not "apparent" in the sense of being visible or clearly perceived or understood. It is also still not "apparent", in the sense in which the word is used, that the vessel can be remediated short of the reconstruction of all the panels. 268 It was submitted by the respondents that Mr Vautin has failed to make reasonable efforts to secure the construction drawings for the vessel and that a consideration of these drawings would have enabled a more clear determination to be made as to the structural integrity of the vessel. As has been indicated above, Bertram has refused to provide those drawings to Mr Vautin despite his requests. A notice to produce was served upon Bertram requiring that it produce these documents, but it has failed to do so without providing any explanation for that refusal. Bertram and Eagle Yachts submitted that Mr Vautin might have acquired them from RINA although there is no evidence that the documents would be released to him. I find that the failure to obtain these documents does not assist the respondents in this matter. 269 It might have been argued that the rejection period ends under s 262 once it is reasonable to expect that the relevant failure can be seen to be a "major failure" within s 260. On such a construction, at that time the consumer will be aware that the defect is serious and they would be entitled to return the goods. However, such a construction tends to confine the rights of consumers and it is not consistent with Nesbit v Porter. Even where a consumer has become aware of the existence of a major failure and the right of rejection, they are still entitled to ascertain the nature and extent of the defect and how much it will cost to repair, before being put to an election. The circumstances of this case provide good reasons why this is so. Here Mr Vautin was obviously desirous of owning a Bertram 700 vessel and he paid a large amount of money to acquire one. Although the defect in the vessel became apparent after some 20 months of ownership and the cause of the defect (the defective construction) soon thereafter, there remained much doubt about the extent of the defect, the effect of the defect on the usefulness of the vessel there was also much doubt as to the amount of money that it would take to put the vessel into a useable condition. There is nothing in the section which compels the conclusion that prior to that point in time where Mr Vautin can be reasonably aware of these latter matters, the rejection period would have ended. One might ask rhetorically, why should a consumer be required to elect between returning the goods or repairing them prior to that point in time when they are in a position to make an informed choice. That would appear to be the approach adopted in Nesbit v Porter where the Court of Appeal held that the failure to comply with the guarantee was not apparent prior to that point in time where the extent of the defect is known as well as the cost to fix it.

Application of the to the circumstances of the present case 270 In considering the duration of the rejection period it is necessary to have regard to the matters enumerated in s 262(2). However, those matters do not have a great impact in the circumstances of this case and none of them tend to shorten the period greatly, if at all. 271 The fact that Revive is an ocean going game fishing vessel suggests that it would be extremely durable and it would not be likely that structural defects, or the consequences of structural defects, would appear within a short time after supply. Such matters are only likely to appear after the vessel is used over a period of time. That is especially so when it is considered that Revive was a very expensive vessel and regarded as being "top of the range". 272 The vessel was used for the purposes for which it was made, being game fishing and cruising. It is not suggested that it was used for purposes other than those to which it might usually be put. It was also not suggested it was used in a more conservative manner than is likely for a vessel of this nature such that it took longer for the defects to arise. The reference in s 262(2)(c) to the length of time for which it is reasonable to use the vessel appears to be a reference to the length of time which a vessel of that nature might be used on one occasion or in the ordinary manner in which such vessels are used. In either case, there is nothing in the circumstances of this case which suggests that Revive was overused on a single occasion or that it was not used in an ordinary manner. It was not suggested that the vessel was used less than vessels of this nature are ordinarily used. A consumer is likely to use a vessel of the nature of Revive on a periodic basis. As a vessel acquired for personal or domestic purposes it is not intended to be used on a commercial basis such that it would be used more frequently. Here, it is not suggested that the time taken for the consequences of the construction defects to appear was other than to be expected in the ordinary course of events. 273 None of the above matters suggests that, in the circumstances of this case, the rejection period ended prior to March 2016 when Mr Vautin sent his letter rejecting the goods.

Conclusion on whether the failure to comply with the guarantee was apparent 274 The necessary conclusion from the above is that the existence of the nature and extent of the latent defects in the vessel and the consequential failure to comply with the guarantees were not fully apparent before the letter of rejection was sent. The consequential lack of shear capacity of the sandwich core panels is still not apparent, even if it can be determined on the balance of probabilities that there has been a reduction of around 50%. The extent to which the vessel needs to be repaired in order to make it of an acceptable quality and, therefore, the cost of necessary remediation is also not "apparent" within the terms of the section. At the very least neither matter was "apparent" before the trial commenced. In this situation the failure to comply with the relevant guarantee (being a guarantee on which the consumer might rely to return the goods) was not apparent as at the time of trial. 275 Mr Vautin gave notice of his rejection of the vessel on 16 March 2016, which was shortly prior to the action being commenced. That being so the rejection of the goods was within the "rejection period".

The loss of the right of rejection due to attachment to personal property 276 In paragraphs 70 to 72 of its written submissions, Eagle Yachts asserts Mr Vautin's right to reject the vessel was lost by reason of the operation of s 262(1)(d). That sub-section provides the right to reject the goods is lost if: the goods have been attached to, or incorporated in, any real or personal property and they cannot be detached or isolated without damaging them. 277 The foundation of Eagle Yachts defence in this respect was twofold. First, that Mr Vautin caused a marlin tower to be attached to Revive and, second, that he caused parts of the engine to be chromed. Somewhat curiously, there was very little evidence adduced at trial in relation to this defence. That curiosity is ameliorated to some extent when it is recognised that a defence based upon s 262(1)(d) it is not raised in either of the filed defences. All that is relied upon by Eagle Yachts in its defence is the effluxion of time. It is, perhaps, for that reason that no direct evidence was called by Eagle Yachts to the effect that the removal of the marlin tower or the chrome from the engines would damage the vessel or its parts, though there was some cross-examination of Mr Vautin in relation to the former. 278 In his submissions in reply, Mr Vautin asserts that the respondents carry the onus of satisfying the Court of the matters that support the allegation that he lost his right of rejection. I accept that submission. The issue sought to be agitated by the respondents is in the nature of a defence to Mr Vautin's claim that he be entitled to reject the vessel pursuant to s 259(3). If the matter were the subject of a pleading one would have expected it to have been raised by the respondents and facts would have been asserted which supported a conclusion that s 262(1) applied. Given the structure of s 252, Mr Vautin has the onus of showing that the failure is a "major failure" or cannot be remedied and that they have notified the supplier that they have rejected the goods and of the grounds of the rejection. Although s 259(3) is expressed to be "subject to section 262", it is for a respondent who asserts that the consumer is not entitled to reject the goods to plead and prove the facts in one or more of s 262(1)(a) to (d). It does not appear that it is an essential element of the consumer's cause of action under the ACL to negate the existence of the matters in s 262(1). Those matters constitute good defences which will avoid the claim which an applicant prima facie has (see the comments of Walsh JA in Currie v Dempsey (1967) 69 SR (NSW) 116 at 125; Murray's Transport NSW Pty Ltd v CGU Insurance Ltd (2013) 118 SASR 11, 14-15; [6] - [8]). 279 Section s 262(1)(d) is concerned with the separation of the goods supplied from, inter alia, other goods "without damaging" the goods supplied. In this respect I accept Mr Vautin's submissions that there is no evidence that the removal of the marlin tower will cause damage to Revive. The vessel was sold with plates fitted such that a tower might be added to the vessel and one was fitted at a cost of approximately $200,000.00. Whilst there is no doubt that the removal of the tower might require the electrical wiring of the vessel to be returned to its original state there is nothing in the evidence which would suggest that this might cause damage to the vessel. Eagle Yachts was not able to make good its submission in this regard. 280 Similarly, there is no evidence at all that the chrome cannot be removed from the engines on the vessel without damaging them. Mr Prince, for Eagle Yachts, put to Mr Vautin that the chroming of the engines made a significant change in their appearance. He did not, however, suggest that the removal of the chrome would cause any damage. Eagle Yachts has not made out this defence which, in any event, was not pleaded. 281 In the result, Mr Vautin was not prevented from rejecting the goods on the basis of the matters referred to in s 262(1)(d).

Returning the vessel to Eagle Yachts 282 Eagle Yachts submitted that Mr Vautin has not rejected the vessel because he has not returned it pursuant to s 263(2). In response Mr Vautin submits he is not required to return it to Eagle Yachts because of the exception in s 263(2)(b) which provides: (2) The consumer must return the goods to the supplier unless: … (b) the goods cannot be returned, removed or transported without significant cost to the consumer because of: (i) the nature of the failure to comply with the guarantee to which the rejection relates; or (ii) the size, height, or method of attachment of the goods. 283 One of the difficulties in this matter is that in December 2013, Eagles Yachts closed its office on the Gold Coast. Thereafter, its only business premises were in Perth, Western Australia. There was no disputing that once the delamination of the vessel had occurred Revive could not be sailed to Western Australia under its own steam. Indeed, it could only be used in calm, inland waters. It is also evident that the vessel was too large to be transported by road due to its size. That seems to be axiomatic given that it was in excess of 70ft long. The Revive may have been shipped to Perth although the evidence was that would have cost in the vicinity of $200,000.00. On any view, that is a "significant cost" within the meaning of s 263(2)(b). 284 Therefore, the nature of the failure to comply with the guarantee as to acceptable quality, as well as the size and height of the vessel, had the result that it could not be returned to Eagle Yachts because it could not be returned or transported without significant costs. For those reasons it was not necessary that the vessel be physically returned to Eagle Yachts. 285 At paragraph 79 of its written submissions, Eagle Yachts asserts that Mr Vautin might have returned the vessel to it by simply transferring title and handing over the keys to it. It cited no authority for that proposition and none has been able to be located. Section 263(2) requires the physical return of the goods and not the retransferring of title as the submission would suggest. This is apparent as s 263(6) provides that title to the goods is transferred to the supplier on the notification of the rejection. No authority was cited in support of the submission that the handing over of keys to the vessel would have been sufficient to return physical possession of the vessel to Eagle Yachts. That might amount to the return of the keys and perhaps title to the keys, but it says nothing as to the returning of the possession of the vessel itself. There is no validity in the submission that the return of a set of keys to a vessel or vehicle is the equivalent of returning the vessel itself. Whilst it may possibly be a symbolic gesture on the part of a consumer indicating an intention to pass title it is not, however, an act by which the goods are physically returned to the supplier. 286 It follows that, in the circumstances of this matter, the operation of s 263(2) had the effect that Mr Vautin was not required to physically return the vessel to Eagle Yachts. Consequently, s 263(3) had the effect of obliging Eagle Yachts to collect it within a reasonable time and at its expense. It is not contested that it has failed to do so. By Mr Vautin's letter of rejection of the vessel dated 16 March 2016, he sought a refund of the purchase price which he had paid. Pursuant to s 263(4) Eagle Yachts was obliged to pay that amount to Mr Vautin. That would include a sum representing the value of the vessel which he used as part payment for Revive. In total that amount was $4,200,000. It is not disputed that Eagle Yachts has not paid that amount to Mr Vautin and he is entitled to judgment for an equivalent amount.

Deferral of the obligation to return the vessel 287 At the conclusion of the trial Mr Vautin sought an order that he not be required to return Revive or, more accurately, allow Eagle Yachts to take possession of it, until he receives the repayment of the purchase price. He did so because he was concerned that Eagle Yachts might become insolvent such that, if he returned the vessel, his only right would be to participate in its winding up. His concern in this regard was well placed. Since the hearing Eagle Yachts has, indeed, been placed into liquidation. An application was made by Mr Vautin for leave to proceed against it despite the winding up and such orders were granted. On one view that might be said to increase his desire to retain possession of the vessel pending repayment of the purchase price lest he is in a worse position than he is now. To some extent that submission is inconsistent with his submission that, in its present state, the vessel is of no commercial worth. If the vessel were worth something his concern would be well founded, however, as I have found that the cost of repairing it is greater than its present as-is value, he is not likely to be in any worse position if no such order is made. 288 Mr Vautin seeks the orders in question pursuant to s 237 of the ACL which is the descendent of s 87 of the TPA. Whilst that is a broad power, it is limited by s 237(2) which requires that the Court be satisfied that any order made under it will compensate the injured person or prevent or reduce the loss or damage suffered or likely to be suffered (see Awad v Twin Creeks Properties Pty Ltd [2012] NSWCA 200, [43] and Ferraro v DBN Holdings Aust Pty Ltd [2015] FCAA 1127, [23] - [26]). In that latter decision, Besanko J was concerned that the power in the section not be used for the purposes of affording a creditor increased rights in the liquidation of the supplier than the Act envisages. 289 In the present circumstances the only benefit to Mr Vautin by the making of the order is to effectively generate a security for him which he might propound in the winding up. That is not within the intention of s 237. Moreover, the case as agitated by Mr Vautin was that the vessel was of no commercial worth and, indeed, was a constant drain on his resources given the cost of maintaining it. Those submissions have been accepted. That being so, the making of the proposed order could not reduce the losses which Mr Vautin is suffering and I decline to make them.

Damages claim against Eagle Yachts for breach of ss 54 and 55

General propositions in relation to damages claims 290 On the basis of the above findings Eagle Yachts has breached the statutory guarantee of acceptable quality (s 54) and fitness for disclosed purpose (s 55) and Mr Vautin is entitled to recover damages against it pursuant to s 259. Section 259(3) makes provision for the consumer to reject the goods where the failure to comply with the guarantee is a "major failure" or to "recover compensation for any reduction in the value of the goods below the price paid or payable by the consumer for the goods". Further, s 259(4) makes provision for the recovery of additional consequential damages. That sub-section provides: (4) The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure. 291 In relation to consumer protection, the move by the legislature from the implied term approach, as had been the case in the Sale of Goods Acts and in the Trade Practices Act 1974 (Cth), to the statutory guarantee approach would appear to have altered the nature of the relief to which a consumer is entitled where defective goods have been delivered. Under the former "implied term" regimes the consumer would have been entitled to the contractual measure of damages following upon a breach of a term. That is, they would have been entitled to be put into the position which they would have been had the supplier complied with the implied term. If the effect of pre-contract negotiations were to the effect that the goods to be supplied were to be of a particular quality, or might be used for a particular use, the implied term regime operated to impose the obligation of the supplier to meet those specifications. If the supplier fell short, it was obliged to pay damages which would, as far as money might do it, put the consumer into the position they would have been in had the implied term as to quality been performed or met. The consumer would be entitled to "expectation losses" and that is so even where the supplier had made a bad bargain. 292 The new scheme of statutory guarantees in the ACL appears to have abandoned that regime in favour of one which apparently imposes standards of normative behaviour in relation to the quality of goods produced by manufacturers and supplied by suppliers. The damages available for breaches of the guarantees indicate the relief to which a consumer is entitled is that which reverses any worsening of the consumer's economic position by reason of the failure of the guarantee. Where the failure to comply is a "major failure" the consumer is entitled to, effectively, rescind the agreement and recover the consideration which was paid (see s 259(3)(a)). Alternatively, the consumer is entitled to retain the goods in question and recover an amount that represents the difference between the price paid for the goods and the value of the goods (see s 259 (3)(b)). Presumably this difference is one which is attributed to the failure of the goods to comply with the guarantee although that is not specifically stated in the sections. It might also be presumed that the difference is measured as at the date of supply which is the relevant date to consider when ascertaining whether there was a failure to comply with the guarantee. 293 In addition to the right to return the goods or to damages representing the diminution in value, the consumer is entitled to recover loss or damage suffered "because of" the failure to comply with the guarantee if that loss was reasonably foreseeable (see s 259(4)). This second limb of damages appears to cover those losses which are sustained consequent upon the acquisition of the defective goods. The scope of that "head of damage" would include property loss which has occurred as a result of the defective goods (such as where a faulty electrical appliance causes a house to burn down); the cost of attempting to ascertain the defects in the goods; or, the cost of preserving the goods. It would appear that this sub-section is concerned with the recovery of "reliance losses" as the inclusion of the limitation of "reasonable foreseeability" pertains to such losses rather than expectation losses. Section 259(6) makes it clear the remedy for recovery of damages caused by the non-compliance with the guarantee is in addition to the alternative remedies of returning the goods or recovering an amount that represents the diminution in value of the goods.

Damages claims consequent upon the rejection of the vessel 294 Mr Vautin pursues his damages claim in various ways. First, he claims that he is entitled to reject the vessel, recover its purchase price and obtain damages under s 259(4) for the losses he has sustained consequent upon the existence of the construction defects. Whilst there is no doubt he cannot obtain more than his actual loss such that "double recovery" is impermissible, there is nothing in s 259(4) to suggest a consumer cannot recover under it if they have suffered loss or damage by reason of the failure of a guarantee which is not compensated for by the return of the purchase price. Here, the primary relief sought is for the repayment of the purchase price which I have determined is available to Mr Vautin. That being so, he is not entitled to recover any diminution in the value of the vessel by reason of the existence of the breach of the guarantee. However, where loss has been sustained an applicant in the position of Mr Vautin is entitled to recover consequential damages under s 259(4). In that respect he claims damages for loss of use and enjoyment of the vessel, loss of expenses incurred in relation to the vessel, loss of the value of certain additions to the vessel and for the cost of its upkeep and maintenance.

Alternative claim for damages 295 The second basis on which Mr Vautin advances his damages claim is an alternative one. He submits (at paragraph 145 of his written submissions) that, if he is not entitled to reject the vessel, then he is entitled to the following damages: (a) Compensation in the amount of the reduction in the value of the vessel below the price paid and contributed by him for the vessel (or alternatively the cost of repairs); (b) Damages for diminution in the value of the vessel; (c) Damages for loss of enjoyment of the use of the vessel since 19 November 2014; (d) The cost of upkeep and maintenance of the vessel (including mooring and insurance) and the lost expenditure incurred in relation to the vessel since November 2014 when it ceased to be useable. 296 It should be kept in mind that some of the claims for consequential loss are available to Mr Vautin regardless of whether or not he rejected the vessel. The ability to recover other consequential losses will depend upon whether or not the right to reject the vessel was, as has been found, effectively exercised.

Entitlement to refund consequent upon rejection 297 Mr Vautin is entitled to be refunded the purchase price of the vessel as from 16 March 2016 when he sent his letter of rejection. The purchase price was, in Australian currency, $4,233,801.03.

Cost of shipping to Australia 298 The vessel was shipped to Australia from Florida at Mr Vautin's cost of $75,000. Necessarily that cost of acquisition has been lost by reason of the fact that he rightly rejected the vessel. It is not an amount which would not be recoverable as damages if Mr Vautin had lost the right of rejection.

Damages if the right to reject had been lost 299 Although I have determined that Mr Vautin has effectively exercised the right to reject the vessel, it is convenient at this stage to consider the primary loss which he would have sustained had the contrary been found.

The value of Revive at time of supply if the defects were known 300 As at the date the vessel was delivered it was newly constructed and it can be accepted that it was worth its purchase price of $4,233,801.03. The contrary was not suggested by any party and the contract to acquire it appears to have been an arm's length transaction. As will be discussed below, the value of these types of vessels depreciates rapidly over time and a determination of its value as at the date of trial needs to take into account that decline in value. However, such questions of depreciation are not relevant to its value when it was brand new. That being so a relatively rough calculation can be made as to the value of the vessel as at the date of supply on the assumption that the putative purchaser would have been aware of the existence of the defects in the vessel as well as the cost of remedying them. On the basis that the total cost of putting Revive into the condition of a Category A vessel would be $2,995,505.70 (as is discussed below), prima facie, its value as at the date of supply was no more than the purchase price less that amount or approximately $1,238,295.33. 301 However, that calculation assumes that at the date of supply the putative purchaser would have known what the defect was, how it would manifest itself, the nature and extent of the defect, and the cost of remediating the defect. As I have indicated above, those matters do not encompass the full extent of the nature of the defects of which a purchaser, fully acquainted with the vessel, would be aware. The notional purchaser would also be aware that it contained a latent defect which might take some time to manifest itself, that a significant but uncertain amount of time would be required to ascertain what had caused the damage and further significant time, also uncertain in duration, would be required to ascertain the nature and extent of the construction defect and the amount which would be required to repair it. By reason of that, the notional purchaser would also know that the vessel would be out of service for an extended time, would require mooring, maintenance and upkeep expenses to be paid and its value would significantly depreciate during that period. It is not conceivable that a purchaser who was acquainted with these matters would not take them into account in determining the price which they would be willing to pay for the vessel. Of these items the value of the vessel lost by depreciation caused by the effluxion of time whilst the vessel was unusable would amount to $1,270,140 (which is discussed below). On a straight calculation that would reduce the value of the vessel to nil, however, it is not clear that such a calculation can be made and there is no evidence before the Court as to how a potential purchaser would approach the acquisition of Revive were they to have been fully informed of the nature and extent of the defects. That is a matter for expert evidence and none was adduced. 302 Overall, and accepting that a broad-brush approach is necessary in the assessment of damages, it is not appropriate for the Court to hazard a guess as to the valuation figure of Revive at the date of sale. That is a matter on which the Court requires expert evidence and none was adduced at trial. The best that can be done on the evidence which was adduced is to conclude that, at the date of the supply, Revive's value was, at the most, the purchase price less the cost of undertaking the necessary repairs to render it fit as a Category A vessel or $1,238,295.33. The amount of the diminution in value of the vessel is equal to the cost of repairs at $2,995,505.70.

The present value of Revive 303 There was, however, some evidence of Revive's value at the time of trial when taking into account the known defects. That evidence came largely from the cross-examination of Mr Rodgers who was experienced in the sale of vessels of this type (at ts.200 - 201): Yes. Thank you. Now, if you were trying to sell the Revive in its current condition to somebody else and you had knowledge of the existence of detailed reports by a senior naval architect indicating it needed extensive repair, you would, of course, have to disclose all of that material to any potential purchaser?---I would have to advise the potential purchaser of the issues - - - Yes?--- - - - that I'm aware of, yes. Yes. And it would be, to put it politely, a very unattractive prospect to a potential purchaser to look to purchase a boat with what a naval architect had described as very extensive manufacturing defects; correct?---Correct. Potential purchasers in this industry, as I think we've already established, want comfort about safety and structural reliability, do they not?---That's correct, yes. Your expectation is that told of the existence of extensive structural impairment, a purchaser would walk away - a potential purchaser wanting to take the boat into the open ocean with passengers, crew, etcetera, would simply walk away and say, "Try and sell me something which doesn't have that history"?---In the - in the context of the vessel being in that 5 situation, yes. Yes. The vessel with those defects is a white elephant, to put it colloquially; correct?---Well, that - that's pretty well it, yes. 304 Much of Mr Rodgers' evidence as to the expectations of potential purchasers of vessels of the type of Revive has been identified above in relation to the question of whether Revive was of an acceptable quality. The failure of the vessel to meet those standards is self-evidently relevant to the vessel's value and his conclusion that, in its current state, it is worthless is somewhat axiomatic. Mr Rodgers was not challenged in any way in respect of this evidence and I accept his conclusion, although not directly expressed, that the vessel was not saleable in its current condition for use as a motor vessel. No party sought to suggest that the vessel had any salvageable value. It is not possible to assume it did. Although it might be accepted that parts of the vessel such as the engines and other mechanical parts might have some value, there is no evidence that the cost of removing, reconditioning and selling the same would be worth anything to any party. 305 Mr Rodger's conclusion - that a potential purchaser wanting to take the boat into the open ocean with passengers, crew and guests would simply walk away from the vessel such that its value is nil - can be supported by other evidence before the Court. By the time of trial Revive was a number of years old and, merely by the effluxion of time, it had depreciated in value. Its hull had been constructed in 2009. Moreover, it required extensive repair work to put it into a condition whereby it could be safely used in the ocean. Any potential purchaser who was prepared to assume the risk of undertaking the repair work to make it seaworthy would necessarily assess its existing value against the remediation costs. 306 In this respect it can be concluded that the present value of Revive is nil as the cost of repairing Revive to bring it up to a Category A state, would exceed its current market value (absent any defects) in any event. The evidence about this was also somewhat sparse and, again, it came from Mr Rodgers. He gave evidence to the effect that vessels of this nature will halve in value after about five or seven years and that is especially so given that the manufacturer's warranty will have expired (ts.185 - 188). In giving that evidence he made references to the sale of other Bertram vessels similar to Revive. That evidence was substantially unchallenged and I accept it. It is consistent with his evidence that in 2015 a Bertram 700 vessel (like Revive) which was about six years old sold for $2.5million (ts.187). In the present case Revive was acquired in 2011 for approximately $USD4.2million. If it had been constructed and supplied in compliance with the statutory guarantees, by the time of trial it will have depreciated by approximately 50% and so be worth around $2.1m. Given the evidence is that the cost of putting it into a condition whereby it will be of an acceptable quality will be $2,995,505.70, the cost of repairing it exceeds its value once restored. Again, this evidence was not seriously contested. This supports Mr Rodgers's evidence to the effect that Revive is unsaleable because of its present condition. 307 In the result, I find that given the existence of the construction defects in the sandwich core panels in Revive, its present value is nil. That said, I am unconvinced the present value of the vessel is directly relevant to the compensation to be awarded in this matter.

Loss of enjoyment of the vessel 308 Mr Vautin also seeks to recover damages for the loss of enjoyment of the vessel although very little attention was paid to this head of damage in the written submissions and no relevant authority cited in support of it. It might be accepted that an award of general damages might be made in some limited circumstances to compensate for a breach of a promise to provide enjoyment or pleasure or to prevent harassment, vexation or annoyance (see generally Fink v Fink (1946) 74 CLR 127, 142-3; Stone v Chappel (2017) 128 SASR 165, 187 [85]). However, the rule remains that damages for non-pecuniary losses are not generally available in contract claims save where the contract in question had, as its object, the provision of enjoyment, relaxation and freedom from molestation. In Baltic Shipping Co v Dillon (1993) 176 CLR 344, 365 Mason CJ identified the general rule as being: it is preferable to adopt the rule that damages for disappointment and distress are not recoverable unless they proceed from physical inconvenience caused by the breach or unless the contract is one the object of which is to provide enjoyment, relaxation or freedom from molestation. In that case the contract was for the provision of a "pleasure cruise" and it was considered that one of the contract's objects was to provide enjoyment and relaxation. As a result, damages were awarded for distress. 309 Whilst it can be accepted that Revive is colloquially referred to as a "pleasure craft" and it is conceivable that some people may derive pleasure and even enjoyment from its use, the contract of the sale was merely for the delivery of and transfer of title to a boat. It may well have been within the contemplation of the parties that the vessel would be used by Mr Vautin for the purposes of deriving pleasure, however, the provision of enjoyment or pleasure was not the object of the agreement. That being so, damages for loss of enjoyment are not available to Mr Vautin for breach of contract and for similar reasons they are not available under the ACL.

Loss of use of boats and ships 310 On the other hand, it should be recognised that the loss of use of a non-profit making chattel such as a boat or ship has been regarded as compensable as part of general damages. In Yates v Mobile Marine Repairs Pty Ltd [2007] NSWSC 1463, Palmer J considered the situation whereby the repair of the engines of a pleasure craft, being a 58ft game fishing vessel, had been conducted negligently with the result that they were damaged and the vessel was unable to be used for approximately a year. The owner of the vessel claimed damages for loss of use of the vessel. In his reasons Palmer J held that damages for loss of use of the vessel were available as part of an award of general damages even though the chattel in question was not used for profit making. In so doing his Honour relied upon the speech of Lord Halsbury LC in the House of Lords in Owners of the Steamship "Mediana" v Owners, Master & Crew of Lightship "Comet" ("The Mediana") [1900] AC 113, 117. There, the Lord Chancellor (at 116) stated what he perceived to be the general principle for recovery of damages in tort as being, "that where by the wrongful act of one man something belonging to another is either itself so injured as not to be capable of being used or is taken away so that it cannot be used at all, that of itself is a ground for damages." In that case the plaintiff was the Mersey Docks and Harbour Board whose lightship, "Comet", was sunk by the steamship Mediana. The Comet was used by the plaintiff Board to fulfil its statutory duty of lighting the approaches to the river Mersey. Whilst the Comet was out of action, the Board used one of its reserve vessels (which was not required for any other use) to undertake the work which would have been undertaken by the Comet. The question was whether the Board was entitled to damages for loss of use of the Comet even though it was not a profit-making chattel? It was held that where a person, by a wrongful act, deprives another of the use of their chattel, the person so deprived is entitled to recover damages for that loss of use and that is so regardless of the use to which the owner of the chattel might have put it. The position would be different if special damages were sought. However, where loss of use is sought as part of general damages, the amount is what the arbiter of fact considers to be the "the proper equivalent for the unlawful withdrawal of the subject-matter then in question" (at 118). 311 A not dissimilar situation arose in Admiralty Commissioners v SS Susquehanna [1926] AC 655, where an oil tanker, the Prestol, used by the Admiralty to fuel Navy vessels, was damaged in a collision with the respondent's steamship. The Admiralty was required to use one of its standby vessels in substitution for the Prestol. Neither the Prestol nor the replacement vessel would have been used as charter vessels at the relevant time. In allowing the claim for loss of use the House of Lords held that damages should not be assessed on the footing that the oil tanker was a commercial vessel, but on the basis of rates of interest and depreciation which might justify the award. In that calculation Viscount Dunedin observed that it was necessary to take into account when assessing an amount for general damages the cost of capital used up in the remediation of the circumstances created by the wrongful act. The purpose of this is to ensure the award, so far as money can do it, will compensate for the detriment which, in the whole of the circumstances, was imposed on the party who has been deprived of the use of the goods. This approach was said to be applicable to actions in tort and contract. Lord Sumner identified the foundation of the principle as being at p 663: All the same the Prestol's services during the time of repair were lost, and accordingly the principle of The Greta Holme may be applied, with such rates of interest and depreciation as the evidence may justify. In other words, the loss of user for the time of repair, in effect, made the Prestol's then capital value infructuous for the time being, even though by special effort more benefit was got out of other ships, in which other capital was invested, than would otherwise have been the case. 312 The decision of the House of Lords in Admiralty Commissioners v SS Chekiang [1926] AC 637, which was delivered on the same day as the decision in Admiralty Commissioners v SS Susquehanna, considered a substantially similar issue. There, one of the Admiralty's cruisers had been injured in a collision and she was laid up for 21 days whilst she was repaired. One issue in the case was the correct measure of damages for the loss of use of the vessel. Whilst Viscount Dunedin and Lord Sumner acknowledged that such damages might be calculated on the basis of a percentage of the capital cost of the vessel per day during which the vessel could not be used (at 640), they held that this was not the only method of calculating such damages. 313 The above Admiralty decisions were cited by the House in Dimond v Lovell [2002] 1 AC 384, 406 for the proposition that even where a chattel is non-profit earning, there may be scope for allowing general damages for loss of use. A similar principle has been applied in Australia in Anthanasopoulos v Moseley (2001) 52 NSWLR 262, 273-4, [58]. 314 It follows that where a vessel suffers depreciation for the period during which she is laid up, the owner is entitled to recover an amount (as part of general damages) to compensate for the depreciation in the value of the ship during that time (see The Hebridean Coast [1961] AC 545). In Consort Express Lines Ltd v J-Mac Pty Ltd (No 2) (2006) 232 ALR 341, 356, [87] Rares J referred to The Hebridean Coast when identifying the following principle: With a nonprofit-earning ship, if no harm were proved apart from the mere fact that the owner is deprived of her services during the period of repairs, the court awards damages based on interest and depreciation on the value of the ship 315 There seems to be no difference in principle in this respect between damages in tort and damages in contract as was identified by Viscount Dunedin in Admiralty Commissioners v SS Susquehanna. Whether the damages are to restore the wronged party to the position which they ought to have been in had the contract been performed, or if the wrong had not occurred does not matter, the principle remains the same. They are designed to compensate for the loss of use of the vessel. In any event, the damages recoverable under s 259(4) appear to be in respect of tortious damages or reliance losses, rather than expectation losses such that the cases concerning damages for property damage would appear to have a direct relevance. 316 It follows that general damages might be awarded for loss of use of a non-profit making chattel such as the Revive for the period during which the wrongful act has caused it to be unusable or its value to be "infructuous". Here there is evidence that vessels like the Revive is one, depreciate at an effective rate of approximately 10% of the original purchase price per annum. Mr Rodgers gave evidence to the effect that a vessel like Revive will decrease in value by about 50% over five or six years (ts.187) being a reduction of between 10% to 8.3% of the original purchase price each year. That was not challenged in any way by either of the respondents and I accept that evidence although I readily accept that it is a somewhat broad brush approach. 317 In this case, the failure to comply with the guarantees was the consequence of a latent defect in the vessel which was incorporated during construction. It was not immediately detectable and, even when it manifested in delamination, the nature and extent of the failure to comply with the guarantee and the cost of remediation has taken some years to become ascertainable. In rough terms that was from November 2014 to the time of trial in October 2017, being about three years. The loss of use continues to this day. That being so, by reason of the failure to comply with the guarantees given by Eagle Yachts (and by Bertram) Mr Vautin has been denied the use of his vessel for that period of time. Taking a broad-brush approach, I adopt the higher rate of 10% and limit the period to three years such that an amount of $423,380 per annum or a total amount of $1,270,140 should be allowed as general damages for the loss of use of Revive for the period of approximately three years.

Rejection of goods is inconsistent with damages for loss of use 318 Compensation for loss of use of a vessel as part of general damages is appropriate because the owner has lost the entitlement or ability to utilise the vessel and the degree of depreciation suffered by the vessel during the period which the vessel is "infructuous" is an acceptable measure of the loss. It represents the capital value of the vessel which the owner has not been able to utilise. However, where due to the defect, the owner is entitled to recover the purchase price of the defective vessel they are restored to their original economic position so far as their capital assets are concerned. Here, Mr Vautin rejected the goods and became entitled to a refund of the full purchase price and that is not consistent with an award of general damages for loss of use. 319 The conclusion from the above is that if Mr Vautin had not rejected the goods, he would have been entitled to recover the sum of $1,270,140 as damages for loss of use.

Mooring fees, insurance etc 320 In addition to the other claims for a refund of the purchase price or damages, Mr Vautin seeks to recover as damages the costs which he has had to expend on maintaining the upkeep of the vessel. There was little in the way of dispute by the respondents as to the types of consequential damage which might be recovered by Mr Vautin pursuant to s 259(4). In relation to such damages there are two periods of loss which have to be considered. The first are the losses to the date on which the vessel was rejected, being 16 March 2016 and, second, the period thereafter. Whilst it may have been the case that once the notice of rejection had been given title re-vested in Eagle Yachts such that the onus of maintaining the vessel fell on it, it refused to take possession of the vessel and it denied Mr Vautin's entitlement to reject it. In that situation of uncertainty it cannot be said that the cost of the continued upkeep of the vessel, including insurance and mooring fees and the like, were not appropriate expenses nor that the loss caused by the making of that expenditure was not reasonably foreseeable as the result of the non-compliance with the guarantees. Neither of the respondents seriously contested that the losses caused by the expense of the maintaining of the vessel should not be allowed for the period after the date on which Eagle Yachts ought to have retaken possession of the vessel. 321 It must be kept steadily in mind that the situation which arose is one where Mr Vautin found himself in possession of a vessel which he could not use to any great degree. Certainly, he could not use it for the purposes for which he acquired it. This situation existed because Eagle Yachts and Bertram had breached the guarantees imposed upon them under the ACL. At no time did either acknowledge their liability as I have found it to be. Neither took possession of the vessel for the purposes of maintaining it pending the resolution of the dispute. It follows that, having acquired, and come into possession of the vessel, Mr Vautin was required to maintain it and it is apparent he maintained it in immaculate condition. He cannot be criticised for doing that. 322 Necessarily, the cost of insuring the vessel pending the resolution of the dispute was a loss caused by the breaches of the guarantees and was reasonably foreseeable as arising from them. The expenditure is a loss because it was wasted as Revive could not be used for that extended period. A sum of $89,580.10 ought to be allowed for the cost of insuring the vessel during the period from November 2014. 323 Similarly, the expense incurred by Mr Vautin in the maintenance and upkeep of the vessel during this period is a loss to him arising because of the breaches of warranties by Eagle Yachts and Bertram. I accept the amounts claimed by Mr Vautin in the schedule to his submissions as evidenced by the documents in the joint bundle. There was little if any disputation as to the expenditure and nor was there any serious argument that such losses did not occur because of the breach of the guarantees. 324 That being so I allow the amount of $217,499.91 in relation to the claim for the wasted costs of maintenance and upkeep incurred, and wasted, as a result of the failure of the vessel to comply with the statutory guarantees.

Cost of full time manning of the vessel 325 Mr Vautin has also sought to recover the cost of manning the vessel. For the period in question he employed a full time captain, Mr Bradshaw. He claims that this expenditure was necessary for the purposes of maintaining the vessel. He seeks to recover an amount of $260,007.67 in this respect which represents the cost of employing Mr Bradshaw on a full time basis since November 2014. 326 The evidence about this issue was somewhat thin from all parties. Mr Vautin asserted Mr Bradshaw was required to keep Revive in perfect condition so that it would be available for him to go out in it at any time (ts 138). However, it was apparent that from 2014 it could not be used in the manner Mr Vautin wished to use it and he did not use it. Whilst there is little doubt that a vessel of this nature requires a significant amount of attention, I was not convinced on the balance of probabilities that Mr Bradshaw's full time attention was required for the vessel. It would appear that Mr Vautin sought to keep on a good employee to whom he had provided employment and he was reluctant to terminate his engagement. Although the evidence was sparse, on that which is available, I find that in order to adequately maintain the vessel in the relevant period would require a part-time employee working two thirds of the time of a full time employee. For that reason I allow the sum of $173,333.45 for this head of damages.

Cost of upgrades 327 Mr Vautin claims the cost of the upgrades which he has made to Revive. It seems that the basis of this claim is that the benefit of the upgrades will have been lost to him because vessel became unusable and he has now rejected the goods. The damages claimed in this respect would not be available if Mr Vautin had not rejected the vessel.

Upgrades provided by Eagle Yachts 328 In addition to the vessel as per the contracted amount, Eagle Yachts sold a number of additional upgrades to Mr Vautin. These included an additional electronics package, hydraulic crane, swim platform and a custom mast. The total cost of all of these additional items for the vessel was $232,200.38. The loss of the vessel includes the loss of these additional items and it was not seriously contested that the cost of these elements would not form part of the losses sustained in circumstances where the vessel is returned.

Marlin tower 329 The next item in respect of which loss is claimed concerns the Marlin tower which was installed on the vessel. The difficulty in relation to this claim is that Mr Vautin has argued, and I have accepted, that it can be removed without causing damage to the vessel. He is entitled to do that and he will be left with the parts of the tower when the vessel is returned. The amount of claimed loss, in the sum of $205,067.75, was not explained in any detail in the course of oral or written submissions on behalf of Mr Vautin. The Court was provided with a bundle of documents representing this item of damage and a perusal of them discloses that the significant portion of the cost involved in the installation of the Marlin tower is in the labour rather than the component parts even if the latter are not without their expense. No attempt was made to show that the parts of the Marlin tower once removed from the vessel were without value or had lost value once installed. Although a broad brush approach to the assessment of damages is the established method, some evidence is required before a court can act. A court is not entitled to merely guess a residual value for the Marlin tower. Again, in the face of somewhat thin evidence on this topic and the lack of explanation by Mr Vautin in his submissions, doing the best that I am able, I assess the wasted cost of the installation of the Marlin tower at the labour cost of installing it at $130,000.00 in round figures.

Upgrades added by Mr Vautin after purchase 330 Mr Vautin also seeks to claim the cost of other upgrades to Revive in the sum of $68,860.63. Again, the evidence as to these matters was adduced by the provision of a bundle of documents such as invoices, receipts and the like without any explanation in the oral or written submissions. The evidence identifies a number of minor improvements which were done to the vessel including the upgrading of various lights (including navigation lights), underwater lights, meters, sound equipment, electrics, power boards, refrigeration facilities, additional plating and the like. These items, as identified in the Court Bundle, constitute minor improvements to the vessel and in most cases the cost of installing them appears to a major portion of the overall amount claimed. That indicates that it is likely that there would be a significant cost to remove them and restore the lesser quality items. 331 The cost of acquiring and installing these items will be lost because of the failure of Eagle Yachts and Bertram to comply with their respective guarantees under the ACL. The respondents made no substantive submissions in relation to this head of damage. That being so, I allow the amount of $68,860.63 in respect of these losses.

Repair costs 332 If it were the case that Mr Vautin had not rejected the vessel in accordance with the ACL, he would be entitled to recover damages in respect of the diminution in the value of the vessel or the cost of remediating the defects in it. If the consequence of remediating the vessel was still that its value was diminished, he would have been entitled to damages for diminution in value as well as the cost of remediation. Above I have indicated that the present value of the vessel as it is, is nil although the relevance of that conclusion would appear to be minimal. One basis on which that conclusion was reached was that the cost of repairing the vessel exceeded its diminished value. In reaching that conclusion I accepted the evidence of Mr Akacich who was called by Mr Vautin. 333 As I have already found, in order to remedy the construction defects in the vessel so as to render it of acceptable quality it would be necessary to rectify all of the sandwich core panels. As Eagle Yachts conceded in the course of argument (see paragraph 41 of its closing submissions) it was the scope of the repair which was at the heart of identifying the quantum of the remediation costs. That being so the only evidence which was available at trial as to the cost of undertaking the full remediation work was that of Mr Akacich and I accept that the primary cost of undertaking the same is in the amount of $2,425,792 as appears in his report. Other repairers did not quote or give evidence as to the repair of the entire vessel. The evidence from them was in relation to lesser repairs. I also accept that Mr Akacich's proposed method of repairing the vessel would be necessary in order to ensure that the vessel met the standards of a Category A vessel. Mr Akacich's evidence was not damaged in cross-examination. 334 I also accept that the nature of the work required to repair the vessel is substantial and, given the size of such a project, it would require extensive preparation requiring a large amount of planning. Mr Akacich gave evidence that the cost of undertaking that task is $297,395 and that sum ought to be allowed as an additional cost of undertaking the repairs. Again, there was no real contest as to the correctness of this evidence. Therefore, the total cost of putting Revive into an acceptable condition is $2,723,187. 335 Further, Mr Vautin is entitled to a margin of 10% of the total cost as a margin for unforeseen expenses. The margin amount would be $272,318.70. Given the size of the remediation project and the obvious difficulties associated with the preparation for and undertaking of the stripping the vessel and the reconstruction of the hull and all of the superstructure, a margin for unforeseen expenses is warranted. This amount was also not greatly disputed by the respondents. 336 It follows that the total costs which will be incurred to ensure that Revive is of an acceptable quality within the meaning of that term as it is used in s 54 of the ACL is $2,995,505.70. If Mr Vautin had not returned the vessel he would be entitled to that amount.

Operation of ss 64 and 64A of the ACL 337 Eagle Yachts submitted that any claim for damages by Mr Vautin was limited by cl 8.8 of the agreement for the purchase of Revive. That clause purported to limit Eagle Yacht's liability for breach of a term or of a warranty to repair the vessel, to payment of the costs of repair, its replacement or paying the cost of replacement. However, s 64 of the ACL renders such contractual clauses void to the extent to which they might exclude, restrict or modify the effect of the remedies provided in the ACL. Eagle Yachts further submitted that the exclusion clause in the contract of sale was saved by the proviso in s 64A of the ACL. However, that proviso only applies in relation to goods which are other than those acquired for personal, domestic or household use or consumption. In this case Revive was acquired for personal use with the result that the agreement does not fall within the proviso. It follows that to the extent to which it might otherwise have applied, cl 8.8 is rendered void and the entitlements of Mr Vautin under the ACL are not diminished by it.

Damages entitlements against Bertram 338 Mr Vautin's entitlement to damages against Bertram, which have been occasioned by the failure to comply with the statutory guarantees in s 54 and 59, is provided by s 272. That section provides: 272 Damages that may be recovered by action against manufacturers of goods (1) In an action for damages under this Division, an affected person in relation to goods is entitled to recover damages for: (a) any reduction in the value of the goods, resulting from the failure to comply with the guarantee to which the action relates, below whichever of the following prices is lower: (i) the price paid or payable by the consumer for the goods; (ii) the average retail price of the goods at the time of supply; and (b) any loss or damage suffered by the affected person because of the failure to comply with the guarantee to which the action relates if it was reasonably foreseeable that the affected person would suffer such loss or damage as a result of such a failure. (2) Without limiting subsection (1)(b), the cost of inspecting and returning the goods to the manufacturer is taken to be a reasonably foreseeable loss suffered by the affected person as a result of the failure to comply with the guarantee.

Reduction in value 339 As has been discussed above, Mr Vautin became entitled to reject the vessel and he did so. That being the case, title to it vested in Eagle Yachts and he became entitled to recover the full amount of the purchase price. On that basis, Mr Vautin is not entitled to recover damages from Bertram in respect of the diminution in the value of the vessel because he has not sustained any. As he is entitled to recover the purchase price the fact that Revive is worth less than the price he paid for it, causes him no loss. 340 If Mr Vautin had not been able to return the vessel and sought damages against Bertram for the diminution in the value of the vessel, the amount which Mr Vautin could recover for against Bertram would be the same amount as that which is recoverable against Eagle Yachts. I have found that to be in the amount of the cost of remediating the vessel in accordance with Mr Akacich's evidence at $2,995,505.70. That is so because, in relation to the failure of the guarantee relating to acceptable quality, both Eagle Yachts and Bertram are liable. In any event, all of the defective construction work falls within the scope of the warranty provided by Bertram in respect of the hull and fibreglass shell. That being so Bertram is liable for damages for breach of the statutory guarantee imposed by s 59 of the ACL. There did not appear to be any assertion by Bertram to the contrary. 341 It follows that if Mr Vautin had not rejected the vessel, Bertram would have been liable for the reduction in value of Revive occurring by reason of the failure of the guarantees in the sum of $2,995,505.70.

Consequential losses 342 Pursuant to ss 272(1)(b) Mr Vautin is also entitled to recover damages from Bertram for the loss or damage suffered by him because of the failure to comply with the guarantee as to acceptable quality, as well as the failure to comply with the guarantee imposed by s 59. In that respect the quantum of the damage is the same as that for which Eagle Yachts is liable and the quantum will differ in the various scenarios identified above; being whether the vessel was rejected or not.

Summary of the established claims against the respondents

Claims against Eagle Yachts 343 It follows from the above that Mr Vautin has established that Eagle Yachts breached both the statutory guarantees in s 54 and 55 of the ACL. The failures of the guarantees were "major failures" and he was, therefore, entitled to reject the vessel, which he did. He is entitled to a refund of the purchase price in the amount of $4,233,801.03 as well as damages representing: (a) the wasted cost of transporting the vessel to Australia in the sum of $75,000.00; (b) the wasted cost of upgrades undertaken with respect to the vessel (aside from the Marlin tower) in the sum of $301,061.01 (in the Australian Dollar equivalent); (c) the lost value of the installation of the Marlin tower in the sum of $130,000.00; (d) the wasted cost of insuring the vessel whilst it was not able to be used in the sum of $89,580.10; (e) the wasted cost of manning the vessel during the period for which it was not able to be used in the sum of $173,333.45; and (f) the wasted costs of upkeep and maintenance of the vessel in the sum of $217,499.91. 344 Therefore Mr Vautin is entitled to recover the sum of $4,233,801.03 (as the refund) plus the sum of $986,474.56 or $5,220,275.59. 345 Were that entitlement to reject not been available or were it the case that Mr Vautin had not rejected the vessel within the rejection period he would have been entitled to damages against Eagle Yachts for: (a) the diminution in the value of the vessel or the cost of undertaking repairs in the sum of $2,995,505.70; (b) loss of use of the vessel in the sum of $1,270,140 (being the depreciation of the vessel for three years whilst it could not be used); (c) the wasted cost of manning the vessel during the period for which it was not able to be used in the sum of $173,333.45; (d) the wasted cost of insuring the vessel whilst it was not able to be used in the sum of $89,580.10; and (e) the costs of upkeep and maintenance of the vessel in the sum of $217,499.91. 346 Therefore, if it were the case that Mr Vautin was not entitled to or did not effectively reject the vessel, he would be entitled to retain it and recover the sum of $4,746,059.06.

Claims against Bertram under the ACL 347 From the above it follows that if Mr Vautin has validly rejected the vessel, as I have found he did, he is entitled to recover damages against Bertram for breach of the guarantee as to acceptable quality and the statutorily entrenched express warranty in the following amounts: (a) the wasted cost of transporting the vessel to Australia in the sum of $75,000.00; (b) the wasted cost of upgrades undertaken with respect to the vessel (aside from the Marlin tower) in the sum of $301,061.01 (in the Australian Dollar equivalent); (c) the lost value of the installation of the Marlin tower in the sum of $130,000.00; (d) the wasted cost of insuring the vessel whilst it was not able to be used in the sum of $89,580.10; (e) the wasted cost of manning the vessel during the period for which it was not able to be used in the sum of $173,333.45; and (f) the wasted costs of upkeep and maintenance of the vessel in the sum of $217,499.91. 348 On that scenario he is entitled to recover from Bertram the sum of $986,474.56. 349 If the right to reject the goods had been lost, Mr Vautin would have been entitled to recover against Bertram damages in the sum of $4,746,059.06 comprising of the following: (a) the diminution in the value of the vessel or the cost of undertaking repairs in the sum of $2,995,505.70; (b) loss of use of the vessel in the sum of $1,270,140 (being the depreciation of the vessel for three years whilst it could not be used); (c) the wasted cost of manning the vessel during the period for which it was not able to be used in the sum of $173,333.45; (d) the wasted cost of insuring the vessel whilst it was not able to be used in the sum of $89,580.10; and (e) the costs of upkeep and maintenance of the vessel in the sum of $217,499.91.

Interest on judgment sums 350 Mr Vautin is entitled to recover interest on the amounts for which judgment is given. As the quantum of the judgment granted does not accord with Mr Vautin's submissions, it is appropriate to allow the parties to make submissions as to the appropriate order for interest.

Right to recover judgment against Eagle Yachts and Bertram 351 In these proceedings Eagle Yachts admits it breached the statutory guarantees in s 54 and 55 by reason of the existence of the construction defects. Its main defences concerned the extent of the damage and the cost of repairs. However, it also submits that judgment should not be entered against it because judgment might be entered against Bertram for the same losses. The basis for this submission was somewhat obscure. It seemed to be based upon a combination of the doctrine of implied repeal and the maxim, generalia specialibus non derogrant. It was submitted that the right to recover damages under s 259 against a supplier is a general remedy and that it "yields" to the more specific remedy against a manufacturer under s 270. It was further submitted that the inconsistency between s 259 and s 271 resulted in a consumer being able to recover 100% of their loss against the supplier and 100% of their damages against the manufacturer and there is no provision in the ACL that permits joint and several liability to apply in respect of damages awarded in favour of the consumer. This, it is alleged, is further supported by the fact that there are no provisions which permit an apportionment as between the manufacturer and the supplier. 352 Although Eagle Yachts relied upon the observations of Gleeson CJ, Gummow and Hayne JJ in the High Court in Alexander v Perpetual Trustees WA Ltd (2004) 216 CLR 109, 122 [27], that paragraph actually supports the opposite conclusion. There, the High Court recognised that the legislature often seeks to remediate the situation where two wrongdoers are severally liable to a plaintiff who chooses to pursue one of them with that person not being able to obtain contribution from the concurrent wrongdoer. The mere fact that some injustice may arise in relation to concurrent wrongdoers who are severally liable to a single consumer does not result in the Court not giving effect to the variety of relief which is available to the consumer under the ACL. 353 There is no conflict between the operation of ss 259 and 271. They are both statutory causes of action and they are given to the consumer against different entities in the supply chain. Even if it were the case that the breach of the statutory guarantees by the supplier and the manufacturer caused the same damage to the consumer, there is nothing in the ACL which suggests that the consumer is limited to pursuing the manufacturer only. On Eagle Yacht's argument, if it were the case that both a supplier and manufacturer were liable to a consumer, the consumer might only proceed against the manufacturer even if the manufacturer were insolvent. That would be a most unusual construction of consumer protection legislation. There is nothing which was said by Lockhart J in George Zaravinos v Dairy Farmers Co-operative Ltd (1985) 7 FCR 195, 198 that alters the above conclusion. In that case his Honour considered Division 2A of the Trade Practices Act which concerned remedies against manufacturers and those comments do not touch upon the question of whether the consumer might pursue whichever remedy or remedies they consider appropriate. Moreover, there is nothing in the ACL which would support the restrictive construction which is advanced by Eagle Yachts and the authorities have not regarded the rights of consumers to be so restricted (see Leeks v FXC Corporation (2002) 118 FCR 299 which concerned proceedings against two manufacturers for the same damage). 354 It is also relevant that the causes of action and relief available against the supplier and the manufacturer are not identical. As the circumstances of this case reveals, the consumer is entitled to recover the purchase price as against the supplier if the goods are rejected although that relief does not appear to be available against the manufacturer. As a result, there will be differences in the amounts recoverable against each respondent. 355 The construction of the legislation which permits the consumer to pursue both the supplier and the manufacturer for their respective breaches of the statutory guarantees does not result in the consumer recovering more than the loss or damage suffered. It is well established that a party cannot recover twice in respect of the same damage, nor recover more that their actual loss (see Baxter v Obacelo Pty Ltd (2001) 205 CLR 635, 656 [46] - [47]). As was correctly submitted by Counsel for Mr Vautin, so long as an applicant does not recover more than his loss against one or more their respondents, he is entitled to pursue both in a proceedings and he is not required to elect before recovering judgment against any of the respondents. 356 It follows that Eagle Yacht's submission that Mr Vautin may not recover judgment against both it and Bertram in the same action cannot succeed.

The negligence claim 357 Mr Vautin also advances a claim against Bertram in negligence, but only in the circumstance where Bertram is not liable to Mr Vautin under the ACL. Although I have found that Bertram is liable under the ACL, it remains necessary to consider this cause of action. 358 Given the evidence which I have assayed above there can be little doubt that Bertram's manufacture of Revive was negligent. That conclusion can be derived from Bertram's own expert, Mr Hutchings, to the effect that the construction of the sandwich core panels occurred without filling the kerfs, with minimal penetration of resin to the core to inner skin bond line and without an effective bond between the core bond and the laminate. Ultimately, all of the experts, in effect, agree that the construction of Revive involved "bad boat building practices". 359 It was not disputed that, in the circumstances of this matter, Bertram owed a duty in the manufacture of Revive to Mr Vautin to exercise reasonable care in the construction. It would be difficult to see how that proposition could be disputed under Australian law in the circumstances of this case. 360 However, here, the manufacture of the vessel occurred in Florida. Although, Mr Vautin submitted to the contrary, in this case the lex loci delicti would appear to be the law of that State. As was identified in Dow Jones & Co Inc v Gutnick (2002) 210 CLR 575, the question is where in substance did the cause of action arise. In cases of negligent manufacture, the place where the product was made is the usual or typical place where the cause of action arises. That is the place where the negligent act or omission occurred and that is so despite the fact that the damage manifested elsewhere (see McGowan v Hills Ltd [2015] VSC 674, [16]-[17]; see also Nye's Conflict of Law para [20.9]). Here Bertram constructed the vessel for Mr Vautin in Florida. Its failure to meet any relevant construction specifications in the building of the vessel occurred in Florida. The failure to fills the kerfs and the failure to appropriately prime the core occurred in Florida. Once complete, the vessel had been negligently manufactured. It follows that the substance of Bertram's negligence occurred in Florida. 361 It can be accepted that the vessel was intended to be supplied to Mr Vautin in Australia. However, pursuant to the agreement between Bertram and Eagle Yachts, Bertram supplied the vessel to Eagle Yachts in Florida. The vessel was delivered to Eagle Yachts "ex works" there. It follows that the answer to the question of where, in substance, did the cause of action arise, is Florida and that State's law is the lex loci delicti. 362 There was ultimately no dispute as to the content of the law of Florida. It was contained in an expert report of Mr Allen Von Spiegelfeld dated 17 July 2017. Mr Spiegelfeld is an attorney based in Tampa, Florida. His summary of the law of Florida with respect to the issue of the entitlement of a consumer to recover damages in negligence from a manufacturer is set out at page 3 of his report. It is as follows: Florida law is very clear on the issue of recoverable damages in a matter where the purchaser of a product asserts that the product is defective and the defect has damaged only the product, as opposed to causing personal injury or third party damages. Under Florida law, as set forth in the cases of Indemnity Insurance Co. v American Aviation, 891 So.2d 532 (Fla. 2004), Tiara Condominium Association v Marsh & McLennan, 110 So.3d 399 (Fla. 2013), citing and adopting East River Steamship Corporation v Transamerica Delaval, Inc, 476 U.S. 858,106 S.Ct. 2295 (1986) adopts the doctrine of Economic Loss Rule. Pursuant to the Economic Loss Rule, a manufacturer of a product, who issues a warranty, cannot be sued in tort for a defect in the property that does not damage anything other than itself, which is true whether there is privity between the owner of the product and the manufacturer or not. 363 I accept that this is an accurate statement of the law and it follows that Mr Vautin has no claim in negligence against Bertram in respect of the defective construction of Revive. He may only claim pursuant to the warranty which was given to him. In reaching this conclusion I am comforted by the analysis of Atkinson J in Tarangau Game Fishing Charters Pty Ltd v Eagle Yachts Pty Ltd [2017] QSC 306 [348]-[363]. In that case Atkinson J considered a similar claim against Eagle Yachts and Bertram. There too Bertram relied upon the law of Florida as being applicable to the claim against it in negligence. It would appear that in the reasons of Atkinson J, her Honour relied upon similar evidence by Mr Von Spiegelfeld. At [350] of her Honour's reasons the almost exact same passage as that identified above was cited. 364 In the result, Mr Vautin's claim in negligence against Bertram fails.

Eagle Yacht's crossclaim against Bertram 365 Pursuant to its crossclaim, Eagle Yachts seeks indemnity from Bertram pursuant cl 5 of Addendum A to the dealership agreement. That clause provided: Bertram shall indemnify, defend and hold harmless, Eagle Yachts from and against any loss, costs, or expense, including judgments, claims, demands and attorneys' fees (collectively "Losses") related to or arising out of any personal injuries or property damage sustained as a result of the defective manufacture of the Products. 366 The products, of course, were the Bertram constructed vessels. It was not disputed as between Bertram and Eagle Yachts that the dealership agreement operated when Eagle Yachts sold Revive to Mr Vautin. 367 In the course of the hearing Bertram acknowledged its liability to Eagle Yachts. It was said on behalf of Bertram that "there is no basis on which the first respondent would resist an indemnity in relation to any primary liability found against the second respondent. Costs may be a different matter". 368 It is not contested that Bertram failed to respond to Eagle Yachts' claim for indemnification of it under the indemnity in the dealership agreement. 369 Eagle Yachts tendered an expert report of Mr Steven Ellison, an attorney-at-law in Florida. He gave evidence relating to Eagle Yachts' right to be indemnified by Bertram if orders are made against Eagle Yachts in the present proceedings. The factual background on which he bases his conclusion was established by the evidence. On that foundation he concluded that Eagle Yachts would be entitled to indemnity from Bertram for both any obligation imposed upon Eagle Yachts to pay money to Mr Vautin in this action, as well as its costs and expenses incurred in defending Mr Vautin's claims. 370 Bertram did not cross examine Mr Ellison or adduce evidence to the contrary. I accept his evidence as to the effect of the law of Florida in relation to the indemnity claim against Bertram. 371 It follows that to the extent to which Eagle Yachts is liable to Mr Vautin, Eagle Yachts has a concomitant right to indemnity from Bertram. That includes any order as to costs.

An irrelevant issue 372 The handing down of these reasons was originally listed for 4 April 2018, however, on that occasion I raised with the parties a matter for their consideration. That was that on 28 September 2017, and after the hearing of the evidence, one of the experts who had given evidence had a chance encounter with my former Associate at Sydney airport. In that encounter the expert made an unsolicited, derogatory comment about the vessel. The comment was mentioned to me although I ignored it and it almost immediately passed from my mind. I had forgotten about it when the matter was resumed the following month when submissions were made. Had I recalled it on that occasion I would have made mention of it at that time. I expect that the comment was merely a matter of casual conversation and there was no intention on the part of the expert to seek to influence the outcome of the case. Nevertheless, it is of the greatest importance that actions be determined on the evidence which is made admissible at trial and presented in Court such that it is to be open to scrutiny and consideration by all parties. Information should not be communicated deliberately or even accidently to the Court about a case without the knowledge and consent of all persons who have an interest in the litigation. For this reason, on 4 April, I mentioned the occasion on which the comment was made and allowed the parties an opportunity to consider their position. The delivery of judgment was, subsequently, adjourned to 10 April. I requested that if any party wished to re-open the hearing they ought to inform my present Associate in sufficient time so that arrangements could be made to re-list the matter if that were needed. At the time of preparation of these reasons there was no indication from any party that they wish to reopen the case. That is appropriate since the comment has played no part in the determination of the issues in this case. It was an unsworn statement which was made out of Court. It had no evidentiary value or relevance whatsoever and was not considered for the purpose of making the findings on which the judgment is based.

Conclusion 373 It follows that there will be judgment for Mr Vautin against Eagle Yachts and Bertram in the terms of the orders. 374 The parties ought to be heard on the question of costs. I certify that the preceding three hundred and seventy-four (374) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Derrington.