Wyzenbeek v Australasian Marine Imports Pty Ltd - [2018] FCA 1517 - FCA 2018 case summary — Zoe

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Wyzenbeek v Australasian Marine Imports Pty Ltd

[2018] FCA 1517

Federal Court of Australia|2018-10-10|Before: Derrington J

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Court

Federal Court of Australia

Decision date

2018-10-10

Before

Derrington J

Source

Original judgment source is linked above.

Judgment (64 paragraphs)

[1]

Introduction 1 Norbert Andres Wyzenbeek (Mr Wyzenbeek) has been a keen sailor all his life and has, over the course of many years, owned several boats. Shortly prior to 2010, Mr Wyzenbeek had a 59 foot sailing yacht called "Swanky". He acquired it in 1999 and, with his wife, Sharon Wyzenbeek (Mrs Wyzenbeek), sailed it on many occasions, including on international journeys. Indeed, after he acquired it in Finland they sailed it for three and a half years, concluding that voyage in Australia. The trip had taken them three quarters of the way around the globe and they harboured a continuing desire to complete a full circumnavigation. Unfortunately, Mrs Wyzenbeek's health deteriorated and she was not able to cope with the rigors of sailing. That necessitated the abandoning of a sailing yacht in favour of a motor vessel. 2 Over the years Mr Wyzenbeek had come to know Dean Leigh-Smith (Dean) and Ryan Leigh-Smith (Ryan), each of whom were involved in the Gold Coast City Marina at Coomera. They were aware that Mr and Mrs Wyzenbeek wished to acquire a motor vessel capable of crossing oceans so that they might continue their travels and, in particular, to complete their circumnavigation of the world. They each promoted to the Wyzenbeeks vessels manufactured by Hampton Yachts in China, which were branded Endurance vessels. In doing so, and for the purposes of securing a sale of an Endurance vessel they represented, although mainly to Mr Wyzenbeek, the vessels in the Endurance range were, or would be, suitable for crossing oceans or for extended ocean voyages. Those representations were quite untrue and neither Ryan nor Dean had any reasonable basis for making them. Nevertheless, the representation had the intended consequence of inducing the Wyzenbeeks to purchase an Endurance vessel. The one acquired was an Endurance 750, Hampton yacht for which they paid $4 million and which they named "Cadeau". The entry into of the contract of purchase followed extended discussions and Mr Wyzenbeek, who is a very astute businessman, secured a fairly good bargain on the purchase. Whilst the vessel was probably worth what the Wyzenbeeks paid for it, it was not suitable for the purposes for which they indicated they intended to use it. 3 They took possession of the vessel in early 2011 and, after approximately 20 months of use, including an unfortunate incident in October 2012, which caused substantial damage, Mr Wyzenbeek ascertained that Cadeau was not suitable for crossing oceans, or for extended ocean voyaging. Although at the time he made some complaints about having been misled as to its ocean-going capabilities, he and Mrs Wyzenbeek continued to use it for their sailing activities. Since its acquisition the value of the boat has depreciated significantly, as is the nature of such assets. On 31 July 2015, the applicants commenced this action and they seek damages from the company from which the vessel was purchased as well as from others whom, they allege, made the representations which induced its acquisition. The damages sought are intended to place them into a financial position whereby they might now acquire a new ocean-going vessel. A difficulty that confronted them by the time of trial was that the vendor company, Australian Marine Imports Pty Ltd (AMI), was in liquidation and the chances of recovery against it appeared somewhat minimal. Although it remained a party to the action, as the matter progressed the focus of the applicants' claim has been their action, founded upon misleading or deceptive conduct, against the other parties. 4 The difficulty for Mr and Mrs Wyzenbeek is that it was not established the misleading conduct caused them loss. Although Cadeau was not suitable for crossing oceans, it was worth what they paid for it. Apart from inducing them to acquire Cadeau, it was not pleaded that the misrepresentations had any other consequence resulting in loss for the Wyzenbeeks, or in the diminution in their economic position. Whilst it is true the vessel has depreciated in value over the years since it was acquired, that is a consequence of its extensive use by Mr and Mrs Wyzenbeek and the effect of the effluxion of time on assets of this nature. The applicants submitted that the correct measure of loss should be the difference between the amounts spent on the vessel and its value at the date of trial. However, the twin difficulties with that submission in this case is that it seeks to award damages for losses which were extrinsic or supervening to, or independent of, the alleged misleading conduct and, additionally, the applicants were unable to establish the value of the vessel at trial. 5 The applicants are entitled to recover damages against AMI for breach of an implied term as to the fitness for purpose of the vessel, limited to the losses which are a consequence of the vessel not being of the required quality. Such damages are not, as the applicants argued, to compensate for any defect in the vessel no matter how insignificant and no matter how irrelevant to its ability to traverse oceans or engage in extended ocean voyaging. 6 The respondents vigorously fought every issue in the matter. In their defences they denied allegations which their witnesses freely admitted whilst giving evidence. They argued points of law which were not genuinely sustainable. Indeed, the overwhelming portion of the trial was taken up considering issues which, in the light of the evidence, were not truly in contest. The defences filed did more than merely put the applicants to proof, they contained denials which were very regularly shown to be disingenuous. Ultimately, the respondents' success turned on the questions of causation and damage which, in the scheme of the case, were both fairly narrow issues.

[2]

Facts 7 Mr Wyzenbeek's sailing history is important to the consideration of the issues in this matter. He has been a keen sailor for many years. In 1987, he took possession of a 38 foot yacht called "Upriver", which he had caused to be constructed in the Philippines. The Wyzenbeeks sailed that vessel throughout Australian waters and around the South Pacific. In 1999, he took possession of Swanky, which he had built for him in Finland. The Wyzenbeeks then journeyed from Finland to Sydney over 3 and a half years. On that journey they visited numerous countries in Europe, the Atlantic and the South Pacific. Naturally enough, the successful completion of such sailing exploits requires substantial skill and experience. Mr Wyzenbeek has acquired those capabilities through his years of sailing and the completion of various courses. 8 Mr Wyzenbeek gave evidence that he and his wife wished to complete the global circumnavigation which they commenced in 1999. They also wished to journey more regularly and for longer periods. Those thoughts manifested themselves from around about 2002, during which time he was a regular visitor to the Gold Coast City Marina, a business operated by Gold Coast City Marina Pty Ltd (GCCM), the second respondent. Its business facilities consist of numerous moorings, hard stands and light industrial buildings as well as administration offices located in the Gold Coast suburb of Coomera and on the Coomera River. At all relevant times, Ryan was an employee of GCCM and was referred to as its "ship yard manager". Dean was its director, as well as being a director and employee of AMI. 9 Mr Wyzenbeek gave evidence that he attended the marina at GCCM's premises in 2002, 2004, 2005, 2007, 2009 and 2010. He said that on some of those occasions he spoke with Ryan or Dean or both of them about replacing Swanky and the general gist of the conversations was that he wanted a "trawler-style" motor vessel which would be suitable for completing his global circumnavigation. 10 By about 2009, Mr and Mrs Wyzenbeek's desire to acquire a new motor vessel had intensified and in about October 2009, they, by Mr Wyzenbeek, provided to Dean a list of specifications which they desired in a trawler-style vessel. The document was headed "Specifications for Open Ocean Category "A" Trawler, September 2009". The first specification read "Class A, US Coastguard and IMO Standard, Sea State 5, who rates CAT A vertical acceleration, stability". The reference to "Open Ocean Category A" was apparently a reference to the European Union Standards of Vessel Classification, which identifies such vessels as being constructed to a standard that makes them safe to use for ocean cruising. That internationally recognised standard of categorisation seemed to be well known to the experts in this matter. It was not, however, known by Ryan or Dean, which was unusual because they purported to sell vessels for use in the open ocean. 11 Mr Wyzenbeek's list was several pages long and consisted of minute requirements for the vessel he wanted and included a requirement for sea trials over a 50 hour period. He did not independently develop this list and it seems he obtained various specifications from the internet and, in particular, from the website of Marlow Yachts, a USA based boat manufacturer. The existence of Marlow Yachts as a manufacturer of ocean-going motor vessels is important as that was the source of an alternative vessel for the Wyzenbeeks had they not been misled into acquiring the Endurance 750. Mr Wyzenbeek had some familiarity with the Marlow vessels and immediately prior to entering into the contract to acquire the Endurance 750 he had in place plans to visit the Marlow factory in Florida, USA, or, so he said. 12 Mr Wyzenbeek gave evidence that, shortly after sending the specifications, he had a telephone conversation with Dean about them. He alleges that Dean said words to effect that yachts in the Endurance series were ideally suited to meet Mr Wyzenbeek's purpose and specifications and they were suitable for trans-oceanic crossing. He further asserted Dean also said he would provide additional information to substantiate the suitability of Hampton yachts and the Endurance range of vessels. Dean could not recall this conversation, but I accept it occurred, generally in the manner stated by Mr Wyzenbeek, largely because it is consistent with subsequent comments made by Dean. 13 Shortly after this conversation, on 15 October 2009, Dean sent to Mr and Mrs Wyzenbeek an email concerning their recent discussions. In it he thanked them for their inquiry in relation to the Endurance range of luxury yachts. He said there were a number of vessels in the production line which may be of interest to them and he had possession of an Endurance 650#5, which was recently sold "here at GCCM", and a Hampton 680 Pilothouse, which had been sold to a Sydney client. Dean also wrote that, as he had mentioned in their conversation, he, along with two of his engineers, frequented the Hampton factory regularly and worked to ensure that every boat sold is "100% right prior to departing the factory". He then extolled the virtues of the brand in the following terms: The Hampton yard is a very high quality facility turning out some amazing products. The Endurance range is particularly impressive as they can achieve terrific sea keeping with amazing economy. These points coupled with their impeccable standards of craftsmanship and construction techniques all add up to a winning combination. I must say words don't do the product justice & an inspection is a must if you guys are potentially in the market for this style of vessel. Dean also attached to the email a current price list as a guideline and said he wished to sit down with the Wyzenbeeks so they could create their "perfect vessel". He further identified that the full Endurance range of vessels were viewable at Hampton Yacht's website and attached some technical data relating to the vessel. In addition, he offered to give Mr Wyzenbeek a free berth at the GCCM for up to two nights to allow him to inspect the Endurance. This latter point is not insignificant as the marina was owned and operated by GCCM, but the respondents assert the sales were only conducted by AMI. Dean's ability to offer free use of GCCM's facilities suggest otherwise. The email also had a heading "Vessel Options/Suggestions as Requested". Under that were a number of photographs of various vessels in the Endurance range and some brief details about them as well as links to the Leigh-Smith Cruiser Sales webpage. 14 The applicants rely upon the physical attributes of the correspondence sent by both Dean and Ryan as representations of the relationship of the respondents inter se and their authority to act on one another's behalf. The signature block on Dean's email identified him as "Director - Gold Coast City Marina; Dealer Principal - Leigh-Smith Cruiser Sales". The website address of www.gccm.com.au appeared on two occasions in bold lettering and underlined. Dean's email address was specified, the domain of which was "@gccm.com.au". These references, especially the reference to GCCM's website", are important because they support the applicants' argument that, at the time, Dean was acting for and on behalf of GCCM and, possibly, AMI too. 15 On 28 October 2009, Dean had further telephone conversations with Mr and Mrs Wyzenbeek. He then sent an email at 12.34pm in which he wrote he had requested information on the "Rating" of the Endurance range of yachts in various sea states. He indicated that he knew the Endurance Series had been tested in a Sea State 4, but he was awaiting advice from the manufacturer and naval architect. He also attached a document that, allegedly, recorded the speed curve test for the 650#5 vessel and indicated the range of that vessel was 2,000 nautical miles at around 9 knots. Dean's signature block appeared again in this email and was unchanged. 16 At 2.38pm on 28 October 2009, a further email was sent to Mr and Mrs Wyzenbeek from Dean. He attached some comments from Mr Howard Apollonio, the naval architect who designed Hampton vessels. Dean identified those comments as being very positive. He also made reference to Mr Apollonio's discussion of the Marlow Explorer vessel design, which took into account the Wyzenbeeks' requirements. Dean accepted during cross-examination that those requirements included the vessel being suitable for trans-ocean travel. Perhaps unsurprisingly, the comments of Mr Apollonio spoke well of the Endurance vessels. He said because they were rated for ocean service to US Coastguard IMO standards, "they are thereby considered capable of handling anything that comes along in a long open sea voyage. That does not mean one should go challenge a hurricane. At least these boats have the speed to avoid such things". 17 Later on 28 October 2009, there was some further email communication between Dean and Mr Wyzenbeek mostly concerning the capacity of the Caterpillar engines and the range of the Endurance vessels. 18 Mr Wyzenbeek asserted that around this time, being about October 2009, Ryan provided him with a brochure, or brochures, relating to the Endurance range of vessels. Whether Ryan handed that material to him personally or left it in Swanky does not matter. What is relevant is that Ryan attached to these brochures his business card, which identified him as the "Shipyard Manager" and had on it the logo and name of Gold Coast City Marina and Shipyard. It also had Ryan's email address, the domain of which was also "@gccm.com.au", and the website address of Gold Coast City Marina. Again, this assumes relevance in relation to the identity of the entities that made the representations to the Wyzenbeeks, particularly that the representations were made on behalf of GCCM. 19 On 13 November 2009, Mr Wyzenbeek undertook an inspection of a 650 Endurance yacht at the Gold Coast City Marina during which Dean gave him a specification sheet in relation to that vessel. On 16 November 2009, Mr Wyzenbeek provided to Ryan an alternative set of specifications for the 650 Endurance Skylounge vessel. In particular, it included the following: (a) A1 offshore rating supplied with vessel; (b) Increased fuel capacity to 11,000 litres; and (c) Vessel to be priced ex GST, ex duty, ex delivery include pre-delivery and commissioning Shanghai. 20 Dean immediately forwarded those specifications to Mr Chen of Hampton Yachts in China and sought a quote for a vessel constructed to satisfy them. He indicated that it was to be fully completed in China, collected there and immediately taken on international travel. Again Dean's email contained his standard email signature block. 21 On 25 November 2009, Dean sent an email to Mr and Mrs Wyzenbeek, copying it to Ryan. It contained a quotation for the sale of a Hampton Endurance 65 foot Skylounge vessel built to a list of identified specifications. The price offered was $2,475,000 USD delivered ex Shanghai. Of importance was Dean's observation that he was still awaiting the "A1 offshore rating to be supplied with the vessel - same as Marlow website". He indicated that the Endurance was built for offshore conditions, but he had to investigate all liabilities and guarantees made by the factory before confirming them although, he added, this would not be a problem. One of the specifications and options identified was that there would be coordination to prepare a list for major spares required for immediate ocean crossing. The email included the comment: I believe that the vessel we have specified is ideally suited to your requirements & will serve you both very well. I look forward to hearing from you soon to discuss further. Although it finished with Dean's standard email signature block highlighting Gold Coast City Marina, the content of the email indicated that AMI would be involved in the importation of the vessel. The applicants rely upon this as part of Dean's representations that the vessel would be suitable for crossing oceans or extended ocean voyaging. Certainly, Dean was well aware that these were part of the Wyzenbeek's requirements and his assertion that the specified vessel would meet them was an express affirmation that the Endurance vessels had that capability. 22 On 26 November 2009, Dean sent to the Wyzenbeeks an email in relation to that quotation. In it he said he believed the quotation accommodated all of the Wyzenbeeks' requirements at that point. He also made himself and Ryan available to discuss the matter. In response, Mr Wyzenbeek sent to Dean his previous specification list. That document is headed "Partial specification and checklist". It is to be observed that although reference to Class A US Coastguard and IMA standard remained, the reference to a "Category A" did not. 23 Dean replied to Mr Wyzenbeek on 27 November 2009 and suggested a meeting with himself and his engineers. He suggested that, after those discussions, Mr Wyzenbeek would appreciate that the initial specifications identified by Dean would have more benefits for cruising the east coast of Australia. 24 On 1 December 2009, Dean sent an email to Mr Wyzenbeek (again copied to Ryan) concerning the A1 offshore rating in relation to the Hampton Yachts. That email passed on some comments contained in an email from Mr Chen in which he asserted that the A1 offshore rating was a European EC rating and that the standard of the Endurance Series was equal to, or surpassed, such a rating. It was mentioned that to apply for and obtain an A1 offshore rating would take about 6 to 8 months and would add USD $40,000 to the total cost. Dean then proposed that Mr and Mrs Wyzenbeek meet with his engineers to discuss the full vessel inventory from bow to stern to "ensure that we have the best equipment on the vessel taking into account the trans-ocean crossing you will be undertaking with it before entering back to Australian waters". He further said, "I know that you're doing lots of research on your future vessel & greatly look forward to building you a superior Endurance yacht vessel which is tailored to your needs". 25 At this point it did not appear to be in doubt that the Wyzenbeeks wished to use the vessel for crossing oceans and this was known to both Dean and Ryan. As appears from the correspondence, both Ryan and Dean conducted their communications on the basis that the Hampton vessel to be sold to the Wyzenbeeks would be suitable for trans-ocean crossing. In this context it should be observed that Mr Chen's statement that the "A 1 offshore rating" was equivalent to a European EC rating was incorrect. The design categories of the CE Directive are Category A - Ocean or Category B - Offshore. There is neither an A1 category nor an A1 Offshore category in it. 26 From around this time Mr Wyzenbeek ceased dealing with Dean and, thereafter, dealt almost exclusively with Ryan. The reasons for this did not become particularly clear, however, in neutral terms, it might be said that Mr Wyzenbeek had a better working relationship with Ryan. 27 On 27 January 2010, Ryan contacted Mr Wyzenbeek via email to ascertain how he was proceeding on his purchase of a new vessel. He offered to show Mr Wyzenbeek a 65 foot Endurance which was presently in his possession. Ryan's email signature block only referred to Gold Coast City Marina. Mr Wyzenbeek responded that he was planning to arrive at the Gold Coast City Marina around 28 March 2010, that he would require work to his vessel, Swanky, and that, presently, he preferred the Marlow vessel on the basis that it "is better built both hull and hardware". That said, he did offer to visit the Shanghai factory of Hampton Yachts. 28 On 9 February 2010, Mr Wyzenbeek again emailed Ryan. In that email he indicated that his needs were for a 3,000 nautical mile range vessel and that he was still awaiting a quote from Marlow. Later that day Mr Wyzenbeek sent Ryan a further email in which he commented on the attributes of several vessels in the Endurance range. He attached a document containing a new list of specifications, which were substantially similar to those which he had previously sent. That document did not include a specification for a "Category A vessel", but did refer to "Class A, US Coastguard and IMO Standard". In the email Mr Wyzenbeek indicated that he had already booked his trip to the Fort Lauderdale Boat Show, where he would inspect the Marlow Yachts. He indicated that he could visit the Hampton Yachts factory on his return journey. 29 On 15 February 2010, Ryan sent the specifications to Mr Chen at Hampton Yachts. In the body of the email Ryan indicated that whilst Mr Wyzenbeek had been pursuing a Marlow for some months, he, that is Ryan, had convinced Mr Wyzenbeek to look at the Endurance range. He further indicated that the vessel Mr Wyzenbeek intended to acquire was to be immediately taken on a substantial ocean crossing and for that reason had to be fully commissioned at the factory. This email evidences Ryan's appreciation of the Wyzenbeeks' requirement that the vessel be capable of crossing oceans. 30 In the course of email correspondence on 16 February 2010, Ryan sent to Mr Wyzenbeek an email about Hampton Yachts pricing a vessel based on the specifications recently sent. Amongst other things, Ryan indicated that he was "excited about supplying in conjunction with Hampton Yachts your Endurance long range motor yacht". In response Mr Wyzenbeek indicated there was no hurry with the quote as he was wanting to see a Hampton with a better layout, wiring and plumbing than the one he had been shown. 31 That seemed to generate some annoyance for Ryan who, on 17 February 2010, sent to Mr Wyzenbeek an email in which he stated: I sent you the last email to prove to you we are serious about selling ocean going vessels…. If you wish to pursue Hampton "endurance" range please let me know. … Let me know honestly if you want me to proceed with the quoting process. It was signed off, "Ryan Leigh-Smith, Shipyard Manager, Gold Coast City Marina". 32 It cannot pass without comment that the statement in this email that Ryan was serious about selling ocean going vessels, is strongly supportive, by itself, of the applicants' case that the respondents represented to the Wyzenbeeks that the vessels they were offering for sale were ocean going. This, along with other substantive evidence of the representations, renders quite disingenuous the respondents' denial of the allegation they made them. Similarly, it is apparent that Ryan sent the email as a representative of GCCM and this adds to the large amount of evidence that he was acting on its behalf. 33 On 18 February 2010, Mr Wyzenbeek responded by an email in which he reiterated that he had reservations and would like to view an improved Hampton vessel. He indicated that the Hampton vessel he had viewed was disappointing for a number of reasons. 34 On 24 February 2010, Mr Wyzenbeek informed Ryan by email that he would be sailing from July until October in the Pacific and then, in October, he would be attending the Fort Lauderdale Boat Show and then going to China. He indicated the sailing venture mentioned was to be his last offshore voyage aboard Swanky before he acquired a motor vessel. 35 On or around 29 March 2010, Mr Wyzenbeek was at Gold Coast City Marina attending a boat show. He gave evidence that he spoke to Ryan about the Endurance range of vessels. His evidence was that Ryan said to him that he had received the specifications Mr Wyzenbeek had sent, that the list was detailed, and "that they could build a boat to suit that specification and that the vessel would be suitable for trans-oceanic - oceanic work, and that the vessel that they would provide would be - included in that vessel would be a commercial continuous C8 C-rated engine" (ts.303). Although there was some initial dispute about the precise terms of this conversation, Ryan indicated he may have told Mr Wyzenbeek that the Hampton Range was suitable to cross oceans and, under cross-examination, he acknowledged he said words to the effect that Hampton could build a vessel which would meet the specifications provided and that the Hampton range of vessels could be used for crossing oceans. There is nothing particularly unexpected about this as it is consistent with the substance of their previous discussions. What is surprising, however, was the respondents' denial of these pivotal allegations in the pleadings. 36 Mr Wyzenbeek gave evidence that, at around this point in time, he indicated he was still leaning towards a Marlow vessel and he would be booking tickets to go to the United States to purchase such a vessel in 2010 for delivery in 2011. Under cross-examination, Ryan agreed Mr Wyzenbeek said this to him and, further, that he would need to be convinced the Endurance Series would be suitable for his needs. 37 Further support for Mr Wyzenbeek's claim that it was represented to him the Endurance range would be suitable for his needs appears in an email from Ryan to Mr Chen of 26 May 2010. There, Ryan spoke about a quote for Mr Wyzenbeek on a 680 Endurance. He concluded by saying, "I believe we have presented a great package at the boat show and have now got him leaning towards the Endurance brand". 38 Whilst there appears to have been a cooling of negotiations after March 2010, on 20 July 2010 Ryan sent to Mr Wyzenbeek an email in relation to an Endurance 750 yacht. That was a 75 foot long vessel which was a 68 foot vessel design although lengthened by 7 feet at the stern. After giving details of the vessel he stated: The boat specific listing is on our brokerage website "Leigh-Smith cruiser sales" and can be viewed at: http://www.lscrusiersales.com.au/boats/endurance-75-skylounge-hampton-yachts. 39 The price was identified at between $3.95 million and a little over $ 4 million. The email was signed off with Ryan's signature block which included the Gold Coast City Marina and Shipyard details and its website address. Under his name and asserted title of "Director of Gold Coast City Marina", were the words "Leigh-Smith Cruiser Sales". It is uncontentious that he was not, at any time, an employee of AMI, which operated under the business name of Leigh-Smith Cruiser Sales. This email is relevant to the issue of the identity of the parties who can be taken to have made the representations to Mr Wyzenbeek. Ryan's reference to "our brokerage website", supports the proposition that the Gold Coast City Marina and AMI businesses operated as one business. Even though he held himself out as a director of GCCM, it is not clear Ryan was actually a director of GCCM at that time. That his signature block indicated he was a director suggests he was permitted by the company to hold himself out as being one. 40 The email contained a number of attachments including a document titled "Endurance 750 Hardtop (680 plus 7)". In it, the seagoing capabilities of the Endurance 750 were highlighted identifying that the vessel was perfect for long range cruising and could comfortably cruise the Coral Sea and many other long haul destinations in comfort and style. 41 Mr Wyzenbeek claims he relied upon this email of 20 July 2010 as indicating the Endurance 750 was better than the smaller vessels which he had been shown and was capable of trans-oceanic crossings. Certainly, at this stage, there is little doubt both Ryan and Dean were both aware of Mr Wyzenbeek's intention to take the vessel he acquired across oceans. Considering the prior conversations and correspondence between Ryan, Dean and Mr Wyzenbeek, as well as the context in which the information about the 750 Skylounge Cruiser was provided it was reasonable for Mr Wyzenbeek to assume he was being informed the Endurance 750 was suitable for crossing oceans. Mr Wyzenbeek also gave evidence that his views were confirmed by the various articles published from October 2009 to July 2010 regarding the Hampton range of vessels. Those articles propounded the ability of the vessels to engage in oceangoing passages as well as continental circumnavigation and Pacific Island cruising. Whilst the existence of these articles is not unimportant, it is not clear they were made or promoted by the respondents. They do not form part of the representations on which the applicants rely to prosecute their case. 42 In September 2010, Mr Wyzenbeek returned to the Gold Coast City Marina for the purposes of having anti-fouling work and other maintenance performed on Swanky. In his evidence he says that, whilst he was there he had a number of conversations with Ryan and, in one, Ryan said he had been authorised by Patrick Gay, the chairman of Gold Coast City Marina, and Jeff Leigh-Smith, the director of Gold Coast City Marina, to make a trade-in offer on Swanky in respect of a purchase of an Endurance 750 which had been completed and could be shipped from China at the end of the month to arrive in November. Mr Wyzenbeek's evidence was that Ryan told him the vessel had been built in Shanghai by Hamptons and was an Endurance 750. After Mr Wyzenbeek told Ryan he had already booked tickets to go to Florida to see the Marlow vessels, he alleges Ryan said a number of things that: Hamptons had built the 750 virtually to his (Mr Wyzenbeek's) precise specifications; the vessel was complete and he could have it immediately; and, further, that it had a range of more than 3,000 nautical miles and redundant systems. Mr Wyzenbeek also says he was told the vessel had commercial continuous running C-18 engines and it was "American Bureau of Yachting Council compliant". Although Ryan denies saying this, it would be surprising if that were not said. It is apparent the vessel was constructed in general accordance with most of Mr Wyzenbeek's specifications and the negotiations, discussions and communications between Ryan, Dean and Mr Wyzenbeek, had often referred to similar capabilities of the vessel Mr Wyzenbeek wished to acquire. However, nothing really turns upon this. 43 After this conversation, Mr Wyzenbeek accompanied Ryan to Ryan's office where he was given a sales brochure that contained the specifications for the Endurance 750. Mr Wyzenbeek gave evidence there was a discussion about the price, the specifications and the delivery time of the Endurance 750 as well as the trade-in price of Swanky. After that, and although no agreement had been concluded, Mr Wyzenbeek returned to his vessel, Swanky, which was then on a hard stand at GCCM. 44 Sometime later Ryan attended on Mr Wyzenbeek in the vicinity of Swanky. He said to Mr Wyzenbeek that Mr Gay and Mr Jeff Leigh-Smith had authorised him to make an offer to sell the Hampton Endurance 750 to him with Swanky being traded-in for $1 million. Ryan said that the Endurance 750 was virtually complete and would be available in November. That, apparently, was sufficient to finally induce Mr Wyzenbeek to agree to purchase the Endurance 750 and it seems he indicated he would do so. In his evidence he said that, in entering into the agreement, he relied upon the representations made to him that the Endurance 750 was suitable for trans-oceanic passage. Those representations were, he claims, contained in the various conversations he had and in email exchanges with Ryan and Dean. 45 Mr Wyzenbeek and Ryan returned to Ryan's office for the purposes of considering the terms of a contract of purchase and, if suitable, executing it. On that occasion there was considerable discussion about the vessel and its specifications. It appears there were also discussions about the warranty on the vessel, other special conditions and the terms generally. 46 Ryan gave evidence the contract was signed on 10 September 2010 after its terms and the items on the specification sheet had been the subject of discussion between him and Mr Wyzenbeek. 47 Mr Wyzenbeek gave evidence the contract was entered into on 14 September, but I apprehend that he was mistaken in this. It seems the initial contract was entered into on the day on which the terms were finally negotiated in Ryan's office at GCCM. Ultimately, the date on which it was entered into is not critical to the outcome of this matter and it is clear that it went through a number of iterations, especially in relation to the identity of the purchaser. 48 The contract for sale was contained in a pro forma contract for the sale of a vessel, but a number of special conditions were included in Item M of the Schedule. The broker was identified as "Leigh-Smith Cruiser Sales", although the ABN provided below that name was that of GCCM. It was executed by Mr Wyzenbeek on behalf of the buyer. In this matter the respondents rely, particularly, upon clause 11 of the contract, which provided: 11. BUYER ACKNOWLEDGMENTS The Buyer acknowledges that: (a) No warranties or representations (except those given in this Agreement) regarding the Vessel (including its suitability for any purpose, its quality or seaworthiness or otherwise), have been made by the Seller, the Broker or any person on their behalf; and (b) The Buyer relies upon its own enquiries, inspection, investigation and knowledge with respect to the Vessel to enter in this Agreement. (c) The Broker in all instances is acting as the Sellers agent. 49 In the initial stages of the purchase there was some uncertainty as to the identity of the purchaser. Originally, the contract identified Eagle Hat Pty Ltd ATF The N&S Wyzenbeek Family Trust. From 10 September 2010, Ryan had various email communications with a Mr Nic Reynolds, an employee of Mr Wyzenbeek, in relation to whether Eagle Hat or the Wyzenbeeks ought to be the purchasers. After several discussions and on the receipt of advice from Mr Wyzenbeek's accountant, on 25 January 2011, the contract of purchase was amended such that the purchasers were Mr and Mrs Wyzenbeek. All parties accept this was the agreement pursuant to which the sale took place. 50 There also appears to have been some subsequent discussions after 10 September 2010 as to the dates Mr Wyzenbeek would make the payments pursuant to the payment schedule and the manner in which he would pay them. Further, after the contract was entered into Mr Wyzenbeek sought personal guarantees from GCCM, whom Ryan identified as the substantial asset owner in the group. Subsequently, guarantees of the seller's delivery obligations were provided from the directors of GCCM and AMI. They were contained in a document on AMI letterhead and were given in favour of Eagle Hat Pty Ltd as the purchaser of the vessel. 51 From about mid-September 2010, Mr Wyzenbeek engaged in email correspondence with Ryan as to numerous matters with respect to the vessel. These had not been agreed upon as at the date of the contract and, as the correspondence shows, Ryan attempted to accommodate what were effectively changes to the specifications of the vessel, or simply additional features Mr Wyzenbeek desired. Mr Wyzenbeek's requests for additional benefits or alterations to what had been contractually agreed continued through the latter part of September 2010 at around which time he attended at the Hampton factory in Shanghai. 52 There appears to be some dispute about what exactly occurred during Mr Wyzenbeek's visit to the factory in Shanghai. Ryan asserts Mr Wyzenbeek carefully considered the vessel and inspected all parts of it. Mr Wyzenbeek asserts that, given the vessel was substantially complete, he did not have a sufficient opportunity to inspect it in detail. Whilst it is apparent Mr Wyzenbeek was very inquisitive as to the minutia of the fittings on the vessel and somewhat pedantic about them, it does not appear he was able to ascertain the quality of the vessel's structure in any way, nor the appropriateness of the fittings for use on an ocean going vessel. No party suggested he could assess the seaworthiness of the vessel by merely inspecting it as it was being completed.

[4]

Post-handover defects 55 Mr and Mrs Wyzenbeek took possession of Cadeau in late March or early April 2011. All contractual payments had been made as well as a further $231,460.21 paid in respect of additions and modifications. 56 On 15 April 2011, Mr and Mrs Wyzenbeek motored Cadeau from the Gold Coast City Marina to Hamilton Island. During that voyage, and in the subsequent weeks, a number of defects appeared and the respondents, or at least AMI, attended to most of the required repairs. It did so by sending marine engineers to Hamilton Island or Cairns where the vessel was located so that the necessary remedial work and alterations could be undertaken. 57 Between 21 July 2011 and 16 August 2011, Mr and Mrs Wyzenbeek motored Cadeau from Cairns to the Torres Strait and returned again. During the course of this voyage a number of further defects were noted by them including: (a) A significant amount of sea water was found to be leaking into the vessel. It had apparently entered through the port lights, bollards and deck fittings; (b) There was significant delamination and cracks in the anchor locker leading to leaking; and (c) The batteries were overcharging to the point of destruction. From 16 to 22 August 2011, remedial work was undertaken on the vessel by Mr Bone and Mr Furnance of AMI and by a Mr White from Wright Marine in Cairns. However, further leaking of seawater through the port lights, stanchions and fair leads occurred. Mr Wyzenbeek asserted that, at around this time, other defects in the vessel became apparent. On 8 September 2011, he caused Cadeau to be motored to the Gold Coast City Marina for further repairs to be carried out and some work was done between 8 and 22 September 2011, although not all of the identified defects were rectified. 58 Cadeau was motored to New Caledonia and back in the period from 22 September 2011 to 25 October 2011. On its return it was taken to GCCM for further repairs, which Mr Wyzenbeek claimed ought to be undertaken pursuant to the warranty obligations. 59 Over the following months Mr Wyzenbeek undertook a number of voyages and Cadeau was used for a not insignificant period of time. However, all of his sailing was not without concern and he frequently identified various issues with Cadeau, which he claimed ought to be repaired pursuant to the various warranties provided. 60 From the evidence adduced on this issue it can be said that, for some period after Cadeau's acquisition, a number of defects in or issues with the vessel came to light. For its part, AMI or the companies associated with it, attended to the repairs or rectifications where it considered the defect or matter was covered by the warranties. Some of these issues, particularly those relating to the leaking port lights, were not insignificant. On the other hand, a number of the issues were properly recognised as "teething problems" which necessarily arise in the initial voyages of new vessels of this type.

[5]

Realisation by Dean and Ryan that the vessel was not suitable for trans-ocean crossing 61 Around this time, being approximately September 2011, there were a large number of warranty claims on foot with respect to Cadeau. Mr Wyzenbeek had also been making constant complaints about excessive leaking. This led to a series of emails between Dean and Mr Chen of Hampton Yachts. Ryan and a number of other Gold Coast City Marina and AMI staff were copied into this correspondence. The discussion touched upon the question of the appropriate rating of Cadeau and the standard to which she had been built. This issue arose in the context of the adequacy of the port lights on the vessel (being portholes on the hull of the vessel covered by glass in-set fittings). At the time, similar problems had occurred on another Hampton 750 yacht sold to a Mr Robert Tucker. That yacht is described as being the Hampton 750#8. In the correspondence, Dean opined that the port light fittings used in the construction of the Hampton 750s were inadequate and higher grade ones with "through-bolting" ought to have been used and should be used on any future vessels. 62 By an email of 19 September 2011, from Dean to Mr Chen (copied to Ryan and others) Dean said, amongst other things: In short the existing PORTLIGHTS are not working… I expect that Hampton will "FIX THE PROBLEM", your inference that "Norbert is using the vessel in extreme circumstances" is not the case. We sell every Endurance as being capable of "trans ocean crossings". You market the boats on the Hampton website as "US Coast Guard Offshore Rating 1 vessel" & they are obviously falling short in this case. I'd ask that Hamptons stand by the product & uses the appropriate equipment. Dean went on to identify why, in his opinion, the port lights used on Cadeau and other Hampton vessels were inadequate. He sought Hampton's assurance that the issue was a warranty matter for which Hampton would pay. 63 By an email of 20 September 2011 from Mr Chen to Dean (and copied to Ryan and others), Mr Chen responded to Dean's comments. He agreed that the port lights on Cadeau would be changed at Hampton's cost. Importantly, in his email he also stated: We want to clarify that we never advertise the Endurance to be Capable of "Trans Ocean Crossing". In order to be Trans Ocean Crossing vessel, the vessel need to be Class Certified to R1 or R0. This is a total difference design criteria and construction method. We want to emphasis that we advertise the Endurance to be a Long Range Cruiser, and we should not mis-lead the customer. (Grammatical errors in original). Mr Chen also stated that there was no such criteria as US Coastguard Offshore Rating 1 and he did not know what it meant. 64 By an email on 20 September 2011, Dean wrote back to Mr Chen (copied to a range of people including Ryan) in which he said: What is required to get your vessels built to CE STANDARD, we must provide products at CE Standard or ISO from herein. This European CE standard is recognized here in australia and we are being met with more strict rulings daily. Please comment. 65 It should be emphasised the email of 20 September 2011 from Mr Chen was admitted only for the fact that it was sent and received and it stated the matters in it. The tender of the email as evidence to prove the truth of its contents was objected to and that objection was upheld. The applicants did not seek its admission as any form of business record. In any event, Ryan was cross-examined on the document and said that he believed the contents of the email were true; namely, the Endurance vessels were not suitable for trans-ocean crossing. In this respect, he had been put forward by the respondents as extremely knowledgeable about boats of this nature and no objection was taken to his evidence about the correctness of Mr Chen's statements. That renders the contents of the email evidence on which the Court can rely even though the inappropriateness of the vessel for ocean going use was established in other ways. 66 Whilst the email from Dean asserted every Endurance vessel had been marketed as capable of trans-ocean crossing, there is no suggestion the manufacturer's contrary opinion was passed on to those to whom that statement had been made and who had acquired a vessel from the Endurance range. This new fact was not mentioned to Mr Wyzenbeek until the Port Macquarie incident, which occurred approximately a year later.

[6]

Port Macquarie incident 67 A matter which seemed to engage the parties in the production of a substantial amount of evidence was an incident that occurred whilst Cadeau was being motored across the bar at Port Macquarie in New South Wales. Although this topic assumed importance in the evidence in chief, very little cross examination occurred with respect to it and, at the end of the day, it is not a significant issue, which explains the absence of any emphasis on it in oral or written submissions. 68 On 21 October 2012, Mr and Mrs Wyzenbeek sailed Cadeau across the Port Macquarie bar and into the Hastings River. They remained at Port Macquarie for the following two days because conditions were not favourable for further travel to the south. 69 On 24 October 2012, in the early morning, Mr Wyzenbeek considered the weather conditions had calmed significantly and the sea was flat and calm with virtually no wind. He gave evidence he timed his crossing of the bar to occur at around 6 o'clock in the morning, shortly before sunrise. He says he followed the same route out of the bar that he had taken on his entry two days previously. Whilst crossing the bar Mr Wyzenbeek noted two waves came over Cadeau's bow although they did not slow its speed. He said he had observed that on the bar there was a single line of occasional waves of approximately 1.6 metres and whist traversing the bar no spray from the waves coming over the bow blew onto the Skylounge windows. However, shortly after passing the bar Mrs Wyzenbeek heard water "sloshing around" below the Skylounge and fairly soon thereafter Cadeau lost electrical power. On investigation Mrs Wyzenbeek discovered a large amount of sea water and glass in the galley, dining room and saloon which had washed down into the lower areas of the vessel, including the engine room and sleeping quarters. She also saw that one of the fore windows of the galley had smashed and there were shards of glass of various sizes in the cabin. In addition, two doors (referred to as Portuguese Doors), which had been positioned on the forward deck of Cadeau, were found to have broken lose and were located to the aft of Cadeau. 70 Mr Wyzenbeek used Cadeau's communication systems to seek assistance and after some discussion with Ryan and some other persons as to who might undertake repairs, Cadeau was motored back to the Gold Coast City Marina arriving at 2.30am on 25 October 2012. 71 At the marina, on 25 October 2012, Mr Wyzenbeek spoke to Dean and expressed his concern about the sufficiency of the glass in the vessel and, in particular, that it was not toughened glass. He also expressed his concern as to the adequacy of the Portuguese doors. He said to Dean that given these things and other defects in the boat, he was not confident it was suitable for trans-oceanic journeys. He says he was "absolutely flummoxed" when Dean said to him that the vessel was never designed for trans-oceanic voyaging. Although Dean's evidence was that he did not say this, as appears later in these reasons, I do not accept that his recollection is correct. By this time he had been advised by Hampton Yachts that vessels in the Endurance Range were not suitable for crossing oceans. There is little reason to think he would not have said so when the issue arose. 72 Much occurred on and around Cadeau on 25 October 2012 including a consideration by various persons of the damage it had sustained. The next day Mr Wyzenbeek wrote to Ryan, Dean and Patrick Gay about his concerns in relation to the vessel. He expressed his surprise that the vessel was not designed to cross oceans. He said: During discussions with Dean yesterday morning, he surprisingly said to me that Cadeau is not designed to cross oceans. You were both fully aware that crossing oceans was always our intentions. We relied in our purchase decision on yours and Hampton's correspondence, marketing, brochures, specifications, websites and 'YouTube' clip http://www.youtube.com/watch?v=V4hAzqli4S4 etc states that the Hampton Endurance is an extended passage maker for open ocean service, built to exacting specifications with the finest attention to detail, creating a new benchmark that others can only attempt to emulate. We were advised that a team of designers, engineers, naval architects, and experienced craftsmen pour dedication and passion into every last detail. A passion to make our cruising a memorable and enjoyable experience. Please refer to the email below, the attachment above and also your emails dated 28th October, 2nd December 2009; and there are other emails that I have received from you regarding Hampton Endurance ocean sustainability, quality and engineering excellence. Subsequently in the email Mr Wyzenbeek stated he expected the vessel to meet A1 offshore ratings in all respects, including in relation to the glass. He also said the Portuguese bridge doors were inadequate for their purpose of deflecting sea water. 73 A few days later Mr Wyzenbeek sent an email to the designer of the boat, Howard Apollonio, in which he also expressed his concern that the vessel was not suitable for open ocean service. He also said the Australian dealer sold Cadeau to him with the knowledge he would be using it for crossing oceans and perhaps circumnavigation of the globe. 74 Although there was subsequent communication from Dean to Mr Wyzenbeek, it is not irrelevant that Dean did not deny the content of Mr Wyzenbeek's email and, in particular, that Mr Wyzenbeek had acquired the boat on the understanding that it was suitable for crossing oceans. In the light of the evidence set out above that is not surprising. On the other hand, Dean's evidence that he did not say to Mr Wyzenbeek the day after the incident that the vessel was not suited to trans-ocean voyaging was dissembling.

[8]

The claims as formulated 78 The Statement of Claim in this matter underwent a variety of amendments (see Wyzenbeek v Australasian Marine Imports Pty Ltd [2017] FCA 1460). Although initially the claims were broad and numerous, by the time the trial commenced in earnest they had been refined somewhat. The manner in which the case is now framed is as follows: (a) From about October 2009 AMI, GCCM, Dean or Ryan represented to the applicants (being Mr and Mrs Wyzenbeek and Eaglehat) that: (i) The vessels being offered for sale to the applicants were or would be suitable for trans-ocean crossing; (ii) The vessels being offered for sale to the applicants were or would be suitable for extended passage in open ocean service. (b) The representations were made orally or in correspondence and particulars have been provided as to the time and occasions on when they were made. (c) The applicants agreed to purchase an Endurance 750 Skylounge vessel manufactured by Hampton Yachts from AMI in reliance on the representations made to them. (d) A contract was subsequently entered into in reliance on the representations pursuant to which Eaglehat Pty Ltd agreed to purchase the vessel, however, Mr and Mrs Wyzenbeek were substituted as the purchasers in lieu of Eaglehat Pty Ltd in or around January 2011. (e) The price paid for the vessel was $3.95 million. (f) A term that Cadeau would be reasonably fit for crossing oceans, global circumnavigations and meeting the Wyzenbeeks' specified requirements is allegedly implied pursuant to s 71(2) of the Trade Practices Act 1974 (Cth) (TPA). (g) In breach of that implied term, the vessel supplied by AMI and GCCM was not reasonably fit for the identified purposes. (h) AMI, GCCM, Dean and Ryan had made the representations referred to in trade or commerce and they were misleading or deceptive. (i) By reason of the making of the misleading or deceptive comments AMI, GCCM, Dean and Ryan engaged in conduct in contravention of s 52 of the TPA, s 38 of the Fair Trading Act 1987 (Cth) (FTA) and s 18 of the Australian Consumer Law (ACL). (j) By reason of the breach of the implied warranty of fitness for purpose, the applicants suffered loss and damage including: (i) Costs of repairing defects; (ii) Costs of and incidental to repairing and rectifying the vessel; (iii) Costs of rendering the vessel closer to fitness for the purpose for which it was purchased; (iv) Diminution in value of the vessel being the difference between the cost of the vessel and its present value; (v) Loss of use; and (vi) Other damages. (k) That the damages identified were also suffered as a result of the misleading or deceptive conduct engaged in by AMI, GCCM, Dean or Ryan. 79 Claims are also made in the Statement of Claim against certain insurers concerning their obligation to indemnify the directors of GCCM and AMI. It is not necessary at this stage to consider those claims because the parties agreed that a consideration of those issues will follow from the decision in relation to the liability of the first four respondents. 80 Despite the existence of the contractual claims in the Statement of Claim, little attention was focussed upon them in either the written or oral submissions. The reason appears to be the vendor of the vessel was AMI (as I find below), which is now in liquidation and it may be the parties believe that any liability for breach of contract is not covered by any policies of insurance. There is no need to speculate on why the claim was only faintly advanced.

[11]

The foundation of the discussions between the applicants and the respondents 84 Although disputed by the respondents, the foundation upon which the applicants, primarily, Mr Wyzenbeek, and the respondents, primarily, Dean and Ryan, negotiated was that the vessel Mr Wyzenbeek wished to acquire would be capable of trans-ocean crossings, or extended ocean voyaging. Ultimately, both Dean and Ryan accepted they were aware that these were the purposes for which Mr and Mrs Wyzenbeek wished to use any motor launch they acquired. Despite the fact that, in the course of his oral evidence, Mr Wyzenbeek was at pains to advance his case in this respect at every opportunity and, to that extent, he was somewhat dissembling, I nevertheless find he did inform Dean and Ryan that the purposes for which he wished to use any vessel acquired from them was for trans-ocean travel or extended ocean voyaging, including global circumnavigation. As the facts which are set out above reveal, this was the foundation of the Wyzenbeeks' desire to obtain a replacement for Swanky which, itself, was a Category A vessel. It can be readily accepted that Mr Wyzenbeek indicated his desire to continue his circumnavigation of the world, being a venture which he had commenced in 1999. His advice to Ryan and Dean in this respect was buttressed by the specifications which he required for the vessel. Of significance was the requirement for the inclusion of long range fuel tanks and long running engines. Whilst it is true long range travel does not necessarily mean trans-ocean travel, it is undoubtedly true that such equipment is essential for trans-ocean travel. Moreover, in September 2009, when Mr Wyzenbeek first became serious about replacing Swanky, he sent to Dean his list of specifications. Those specifications specifically referred to an "open ocean Category A trawler". The reference to Category A was a reference to an oceangoing vessel within the meaning of a "Category A vessel" as described in the CE Directive and a fairly clear indication of the type of vessel Mr Wyzenbeek was pursuing. Despite that, it must be acknowledged the reference to this requirement was not always clearly maintained although its occasional absence was not something noticed by Ryan or Dean. 85 In 2010, neither Dean nor Ryan understood the meaning of the classification "Category A" when used to describe vessels. That was somewhat startling given they were both involved in the sale of large ocean going vessels. The evidence adduced in this matter indicates neither of them had any reasonable level of knowledge of the requirements for ocean going vessels despite the fact that they purported to sell vessels as such. They either feigned knowledge of such matters or, ignorantly, believed they had sufficient knowledge and were prepared to give their imprimatur to the ocean going attributes of the Hampton range of vessels. In these circumstances, it is not surprising they made the representations they did.

[12]

Representations made by Dean 86 In the course of his evidence, Dean acknowledged he understood Mr Wyzenbeek was in the market for a vessel to replace Swanky that would be fit for use in the open ocean and for crossing oceans. There was no evidence, and nor was it suggested, Dean indicated to Mr Wyzenbeek that the vessels he was offering for sale were not capable of ocean going passage. On the contrary, the identified communications show he indicated that any of the vessels in the Hampton range which he was proffering would be suitable for Mr Wyzenbeek's needs. The attempt by the respondents to suggest no specific representation was made about the Endurance 750 was, in the circumstances, somewhat disingenuous. 87 Mr Wyzenbeek gave evidence that, on or around 15 October 2009, he spoke to Dean by telephone about the list of specifications he had provided. His evidence was Dean said words to the effect that he had received the specifications and could make a vessel to suit Mr Wyzenbeek's purposes which would be suitable for trans-ocean crossings. Dean did not recall such a conversation. Despite that, I accept it occurred as Mr Wyzenbeek related it although, of itself, it does not have significant weight given the stage of discussions and the generality of comment made. Nevertheless, it established the context in which future discussions took place. Shortly afterwards, by the email of 15 October 2009, Dean gave his imprimatur to the quality of the Hampton vessels. His comment in that email about working with his engineers on the vessel to ensure that "every boat is 100% right prior to departing the factory", represented both a deep involvement in the construction of the vessel and a claim by him that it would be suitable to the customer's requirements. That was emphasised by his comments extolling the high quality and turnout of the Hampton vessels. This email demonstrated, from a very early stage, Dean was averring the veracity of the information being given to the Wyzenbeeks about the quality of the Hampton vessels. Indeed, to an extent he and the companies which he represented, were taking credit for the quality of the vessel produced. He was representing the information about Hampton yachts provided by him came with his endorsement. In the email of 15 October 2009, (which included a commentary about the Endurance Passagemaker Series from Mr Apollonio), various additional statements were made by Dean as to the capabilities of the Hampton Endurance Series. In particular, that they met very high standards of construction and stability and were capable of being used for extended passage making in open ocean service. 88 Similarly, in his email of 28 October 2009 at 2.38pm, Dean effectively endorsed the comments of Mr Apollonio as to the suitability of the Hampton range of vessels to meet the requirements of Mr and Mrs Wyzenbeek. Although to some extent he was here merely passing on Mr Apollonio's comments, his assertion that those comments were "very positive & I hope highlight the 'facts' pertaining to handling of Endurance", indicates his support for them. In his comments Mr Apollonio had said the Hampton vessels were "considered capable of handling anything that comes along in a long ocean voyage". 89 The context in which these emails passed between Dean and the Wyzenbeeks included other emails which reveal Dean's awareness of the Wyzenbeeks' requirement that any vessel acquired be suitable for trans-ocean crossings. That is especially so of Ryan's email to him on 16 November 2009, which identified that Mr Wyzenbeek wanted a vessel with an A1 offshore rating and long range fuel tanks to be delivered in Shanghai and, further, that the vessel was to be equipped with the major spares required for immediate ocean crossing. Dean passed the specification requirements on to Mr Chen and, in doing so, emphasised the A1 offshore rating. 90 By a further email on 25 November 2009 from Dean to Mr and Mrs Wyzenbeek, he indicated that the Endurance 750 (being 68ft extended by 7ft) was a vessel which accommodated all of the Wyzenbeeks' requirements at that point. The substance of that email was a quotation for the sale of a vessel at $USD 2,475,000 which was said to be a discounted price. One reason for the discount was it would not be subject to GST and Australian duties because Mr and Mrs Wyzenbeek were intending take delivery ex-Shanghai, immediately engage in an ocean crossing, and then remain off shore for two years. This vessel was offered by Dean as being "the ideal option for your vessel & its (sic) requirements" and as being "ideally suited to your requirements" which Dean knew to be trans-ocean crossings and extended ocean voyages. This was apparent from the face of the email and was accepted by Dean during cross-examination. It was a further representation that the Endurance vessels (especially those of around 68ft) were suitable for trans-ocean crossings. That is consistent with Dean's subsequent email to Mr Chen on 19 September 2011, which noted he sold "every Endurance as being capable of 'trans ocean crossings'". By the email of 25 November 2009, Dean did note that he was still awaiting confirmation of the A1 offshore rating to be supplied with the vessel. However, he also indicated that obtaining relevant guarantees would not be a major issue. 91 In response to the email of 25 November, the following day Mr Wyzenbeek sent to Dean what was said to be a list of questions but was, in fact, a list of vessel specifications. It seems they were taken from the Marlow Yachts website and were a vague indication that Mr Wyzenbeek wished those items to be included on the Endurance 750. 92 Dean responded with an email on 27 November 2009, attaching the specifications for the Endurance 750 and indicating that it appears that Mr Wyzenbeek wanted a cross-check of the two specification lists. Dean indicated that it was essential for him to arrange a meeting at GCCM with the Wyzenbeeks and his two engineers so that they could work through the specifications identified by Mr Wyzenbeek and identify which ones were relevant and capable of being fitted to an Endurance yacht. 93 On 1 December 2009 Dean sent an email to Mr Wyzenbeek which included a response from Mr Chen as to the A1 Offshore rating. Mr Chen's response was of limited utility because it merely related to stability rather than the vessel generally. That said, it did not appear Dean understood this and apprehended the rating related to the whole of the vessel. In any event Dean reiterated his erstwhile offer to get the vessel ready for trans-ocean crossing. He said: As for the remainder of the specifications you sent us last week I would still propose that we sit down with you & my two engineers to discuss the full vessel inventory from bow to stern & ensure we have the best equipment on the vessel taking into account the trans-ocean crossing you will be undertaking with it before entering back to Australian waters at which point we will finalise suitable importation paper for an Australian vessel in conjunction with our company. That email is relied upon by the applicants as Dean reiterating and confirming the suitability of the vessel to engage in passage across oceans. It can be readily accepted that was, in fact, what Dean was doing. 94 It was not until after the Port Macquarie incident that Dean eventually acknowledged the vessel was not suitable for trans-ocean crossing. Prior to then he was a party to subsequent email correspondence between Ryan and the Wyzenbeeks in which the ocean going capacity of the vessel was discussed and he did not demur to any of the suggestions that the vessel was so suited. Indeed, comments he made after the vessel was sold to the Wyzenbeeks are consistent with having that opinion. He appeared on a television program referred to as "Creek to Coast" in which he expressed his confidence in the vessel purchased by the Wyzenbeeks and stated it was a trans-Atlantic vessel, capable of doing around-the-world cruising. Dean gave evidence that this statement was based upon knowledge he acquired prior to his communications with Mr Wyzenbeek and this heightens confidence in the conclusion he had made similar statements to Mr Wyzenbeek prior to the vessel being purchased. The statement is also indicative of Dean's position that he, himself, could give his imprimatur to the quality of the vessel and he was not merely passing on information. Whilst under cross-examination he claimed there was some "salesmanship" in that statement, Counsel for the applicants submitted that there is no reason that such salesmanship would not have been engaged in with Mr Wyzenbeek and that ought to be accepted. 95 It might be observed that a degree of recklessness is involved in engaging in "salesmanship" when the topic being discussed is the ability of a vessel to engage in open ocean travel or travel across oceans. Any attempted "salesmanship", which I take to be a euphemism for "overstatement" or making misleading statements, in relation to the seakeeping capacities of a vessel is fraught with danger. Sea conditions on the open ocean can change dramatically and quickly and a vessel which is not constructed to standards which permit it to withstand the most serious of conditions will flounder and put the lives of crew and passengers at peril. Such comments can apply equally to vessels intended to be used for coastal service only. The sea conditions of coastal waters can also change rapidly and significantly and any overstatement as to the seakeeping abilities of such vessels is likely to render users overconfident as to their capabilities in dangerous conditions. 96 As has been indicated, the conclusion that Dean made the representations to Mr Wyzenbeek that the Endurance range of vessels were capable of trans-ocean crossing is strongly supported by his email in September 2011 to Mr Chen of Hampton Yachts wherein he stated that, "We sell every Endurance as being capable of trans ocean crossings". On its face, that comment is confirmatory of Mr Wyzenbeek's allegation. Although Dean said in evidence that there was also some "salesmanship" in that statement and he was lying to Mr Chen so that he could secure a benefit for Mr Wyzenbeek, I do not accept his oral evidence in this regard. There is no reason to believe that he did not regard the vessel as being capable of trans-ocean crossing. Indeed, he had represented that to Mr Wyzenbeek on a number of occasions. He was an extremely poor witness who was prone to give dissembling answers. 97 The applicants also pointed to a number of other matters to support the conclusion that Dean made the representations alleged. Amongst them is that on 9 March 2011, Ryan sent an email to Mr Chen seeking builder's certificates for two 750 Endurance vessels including Cadeau. He wanted them so that the vessels could travel internationally. That email was copied to Dean and there appears to have been no response from Dean to suggest that the vessels would not be suitable for engaging in international travel. In addition, in his evidence Dean acknowledged that he did tell Mr Wyzenbeek that the engines in the vessel would be commercially rated. That being so, they would run for much longer than pleasure craft engines and that was important for trans-ocean crossings. 98 Given the above, it is apparent that Dean made both oral and written representations to Mr Wyzenbeek to the effect that the Endurance 750 motor vessel he was to acquire was suitable for trans-ocean crossings or extended ocean voyaging. He did so for his own benefit in that he would personally obtain a share of the commission for the sale of the vessel. He also did so on behalf of AMI. As is discussed below, he also made the representations on behalf of GCCM.

[13]

Representations by Ryan 99 In the course of his cross-examination, Ryan acknowledged that, prior to the sale of the vessel, he had told Mr Wyzenbeek the Hampton range of vessels was suitable for crossing oceans. He also acknowledged that, from his point of view, this capability was a selling point for the Hampton Endurance range. He, like Dean, had no reasonable basis for making that statement and it was equally reckless of him to do so. Although in the defence the respondents denied Ryan made any of the alleged representations, it is clear he did. The reason for those denials when the converse was so readily admitted by Ryan has not been explained. 100 From an early stage Ryan sought to be involved in the attempt to sell an Endurance vessel to Mr Wyzenbeek. His involvement in any sale would secure payment to him of some portion of the commission. He provided Mr Wyzenbeek with the Hampton Yacht's brochure, to which he had stapled his GCCM business card and it identified him as an employee of that company. Although the brochure made positive statements as to the seakeeping abilities of the Endurance range, it did not expressly assert they were capable of being used to cross oceans. The statements made in those brochures might equally be taken as asserting their ability or suitability to engage in coastal cruising. Nevertheless, the import of Ryan's actions was that he sought to cause the sale of the vessel to Mr Wyzenbeek in his capacity as an employee of GCCM. Dean and, more generally, GCCM were aware of Ryan's activities and permitted them to occur. It was an accepted part of Dean's duties in the course of his employment with GCCM, to participate in attempting to sell boats as part of AMI's business. 101 Ryan was well aware of the Wyzenbeeks' requirement for a vessel suitable for trans-ocean travel. He was also aware of, and party to, much of the email correspondence between Dean and the Wyzenbeeks which promoted the seakeeping abilities of the Endurance range as being suitable for crossing oceans. He said nothing to dispel the suggestion that the vessels in the range would not be suitable for their requirements. He, like Dean, also promoted the supply to Mr Wyzenbeek of a vessel which was not merely one constructed by Hampton Yachts. By an email of 27 January 2010, he encouraged Mr Wyzenbeek to meet with himself and persons he said were his engineers to discuss and formulate a "package" which would be put together for the purposes of meeting Mr Wyzenbeek's requirements. At that time he was aware that Mr Wyzenbeek needed the vessel with a range of around 3,000nm and that Mr Wyzenbeek wanted to use it for ocean voyaging including trans-ocean crossings. That is evidenced by his email to Mr Chen of 15 February 2010, in which he identified that whilst Mr Wyzenbeek had been looking at the Marlow range of vessels he, Ryan, had convinced him "to look at the Endurance range". He added that Mr Wyzenbeek had provided some specifications for what he wanted from an Endurance vessel and added the rider that Mr Wyzenbeek needed a fully commissioned vessel ex-factory, to be delivered to him in Shanghai and immediately taken on a substantial ocean crossing. This email removes any doubt that Ryan was aware that the Wyzenbeeks were looking for a vessel suitable for crossing oceans and it is clear he dealt with them on that basis. That was confirmed by Ryan's email on 17 February 2010, referred to above, wherein he indicated he was "serious about selling ocean going vessels". 102 On 16 February 2010, Ryan sent Mr Wyzenbeek an email in relation to the specifications Mr Wyzenbeek had required for an Endurance 65. The email is telling for a number of reasons. First, it identifies an intention to utilise engineers for the purposes of identifying the suitability of proposed specifications. That tends to suggest that Ryan was doing more than merely acting as a broker of a vessel manufactured by Hampton. Secondly, he said, "Looks like a great learning curve for the yard". The "yard" is apparently a reference to the ship yard which was run by GCCM and that indicates its involvement in the sale. Thirdly, Ryan expressed his excitement about supplying "in conjunction with Hampton yachts" a long range Endurance motor yacht to Mr Wyzenbeek. Again, the reference to, "in conjunction with", puts GCCM in the nature of a position of a "principal" in the transaction rather than merely an intermediary at least in relation to making representations as to the vessel's capabilities. 103 By March 2010, the discussions between Ryan and Mr Wyzenbeek had turned to the 75 foot vessel, the Endurance 750. Mr Wyzenbeek gave evidence Ryan said to him in about March 2010 that they could build such a boat to suit or to meet the specifications required by him and the vessel would be suitable for trans-ocean work. He also said that Ryan represented that the vessel would be fitted with commercial continuous C-18 engines. Although in his witness statement Ryan denied he had mentioned the continuous C-18 engines, he admitted under cross-examination he said the engines were commercial engines, which were the same thing. He also admitted, despite having initially denied it, that at about this time he did tell Mr Wyzenbeek that the Endurance 750 or vessels in the Hampton range would be suitable to cross oceans. Ryan accepted the ability of a vessel to cross an ocean was a selling point for vessels of this size and he did tell Mr Wyzenbeek that they were so suited. Ryan's evasiveness in answering direct questions put to him in cross-examination about what he said to Mr Wyzenbeek damaged his credibility as did his initial denials of the allegations. 104 Mr Smith, a former employee of GCCM, related a subsequent discussion between Mr Wyzenbeek and Ryan at a boat show in May 2010. Mr Smith asserts that he heard Mr Wyzenbeek say to those present, including Ryan, that he wanted to use any vessel he acquired for trans-oceanic crossing. This conversation was admitted for the fact that it was said and not its truth. However, in the context that became irrelevant as Ryan ultimately accepted he was aware of the purpose to which Mr Wyzenbeek wished to put his vessel. From time to time Ryan gave to Mr Wyzenbeek various materials relating to the Hampton range and to the Hampton Endurance 750 and that material tended to support the suggestion the vessel was an ocean-going vessel even if not specifically stating that fact. 105 Mr Wyzenbeek claimed that on 9 September 2010, being shortly prior to the entering into of the contract to acquire Cadeau, Ryan said to him words to the effect the vessel he intended to sell to him was built virtually to Mr Wyzenbeek's specification and in particular that it had a 3,000 nautical mile range, redundant systems and commercial continuous C18 engines. Although some aspects of this conversation were disputed, I accept the statements were made and Ryan, under cross-examination, accepted this was the effect of the conversation. 106 Again, the conclusion Ryan made the above representations to Mr Wyzenbeek is confirmed by the post-contract conduct. In particular, Ryan was copied in on Dean's correspondence with Mr Chen in September 2015, which concerned defects with Cadeau and, in particular, the substantial leaking of water into the vessel through the port lights. Subsequently, on 17 August 2011, Ryan wrote to Mr Chen about this issue and in particular said: We are marketing these vessels as (Endurance) offshore motoryacht's. The situation, putting costs aside for a moment is risking our entire reputation and image that we have put out to market. Apart from anything else the email is significant because it is indicative of Ryan's involvement in the sale of the vessel. It was completed with Ryan's extensive signature block, which emphasised his association with Gold Coast City Marina. 107 As mentioned previously, in September 2011 Dean wrote to Mr Chen (copied to Ryan) identifying that they were marketing "every" Endurance vessel as capable of trans-ocean crossings. It did not appear that Ryan demurred to that comment. 108 Although it was denied by the respondents for the whole of these proceedings, it is patently clear that Ryan made representations to Mr Wyzenbeek that the Endurance range of vessels, including the Endurance 750, were suitable for trans-ocean crossing and, necessarily, that they were also suitable for extended ocean voyages. The representations made were not merely that the vessel might be able to be used for crossing oceans given the right weather conditions. Ryan represented that the vessels were suited to the needs of Mr and Mrs Wyzenbeek and suitable for crossing oceans. His representations were both oral and in writing. In the latter respect they were made in the emails identified. 109 The capacity in which Ryan made the representations is discussed further below. For present purposes it can be accepted that Ryan's made the oral and written (by email) representations on his own behalf because, on his own evidence, he was attempting to effect a sale of the vessel to Mr Wyzenbeek from which he personally would obtain a commission.

[15]

The representations were made for and on behalf of GCCM 111 The applicants assert the representations were made by GCCM as well. Throughout the relevant period, being between 2009 and 2011, Dean was a director of GCCM and all of his correspondence identified him as acting in that capacity. In particular, his email signature block emphasised his association with Gold Coast City Marina. Immediately under his name appeared the words "Director - Gold Coast City Marina". Whilst his identification as a dealer for Leigh-Smith Cruiser Sales was also mentioned, the webpage address of Gold Coast City Marina, www.gccm.com.au, was shown immediately under that latter reference. The domain name of his email address, "@gccm.com.au", was also indicative of his connection with GCCM. The web address of GCCM appeared twice on the signature block and the name Gold Coast City Marina and Shipyard appeared prominently in stylised writing. The necessary conclusion of this is that, when Dean sent his emails with this signature block, he was sending them on behalf of GCCM. As a director, Dean had authority to act on behalf of the company by holding himself out as a director and sending the emails in that capacity. The use of the signature block by Dean continued throughout the period during which he dealt with Mr Wyzenbeek and, at the very least, the company must have acquiesced in its use. It is also relevant that the notice at the very end of the emails included a purported disclaimer which appeared to be on behalf of both Gold Coast City Marina and AMI. The fact that it refers to both entities, supports the conclusion that the businesses were run as a single entity. At the very least, when making the representations, Dean acted on behalf of and with the authority of GCCM. 112 Ryan's email signature block was of a substantially similar nature. Although it also included a statement that he was a dealer at Leigh-Smith Cruiser Sales, the predominant references in it were to Gold Coast City Marina. At the times relevant to this action Ryan had no formal position at or with AMI/Leigh-Smith Cruiser Sales and was only, apparently, ever an employee of GCCM. However, if consideration was limited to his emails, it would be apparent that he was acting on behalf of both GCCM and AMI. It is apparent that GCCM permitted him to utilise his GCCM email address and signature block in the way he did and it was acknowledged that GCCM permitted him to engage in the sale of motor vessels. The fact that he annexed his GCCM business card to Endurance Yacht's brochures and gave them to Mr Wyzenbeek is indicative of this. There was no evidence before the Court that, in engaging in the selling of yachts, Ryan was acting beyond the scope of his authority from GCCM. That, of course, is not surprising given the interconnectedness of GCCM's and AMI's businesses and that Dean, a director of GCCM, was aware of Ryan's conduct. As mentioned, in his email of 20 July 2010 to Mr Wyzenbeek, Ryan's signature block identified him as a Director of GCCM. It is not apparent that he formally held such a position, however, that he held himself out as one is indicative of the general authority he exercised on its behalf. 113 The evidence shows both companies held out the physical location of the Gold Coast City Marina premises as a place where vessels could be purchased, berthed and serviced such that the businesses of the various corporate entities were operated as one. The applicants specifically rely upon the fact that, when Dean was attempting to encourage Mr Wyzenbeek to acquire a Hampton vessel, he offered two free nights at a berth at the GCCM marina. This indicates the directors of the two companies, in fact, operated the businesses as one. That was supported by Ryan and Dean's evidence that, in the course of their respective employment, they would assist each other in the work they were doing. The integration of the businesses is also somewhat apparent by the physical proximity of the businesses, each of which were located at the same business address. In this context it is not insignificant that, whilst Ryan was engaged in his activities of selling the yacht to Mr Wyzenbeek, he used his office which was in the business premises of GCCM. It was there, on around 9 October 2010, where the final details and terms of the agreement were negotiated and the contract was signed. On that occasion Mr Wyzenbeek noticed AMI's name on the sales contract and was told by Ryan that this was the selling and importing arm of GCCM. Although Ryan denied this was said, the description is consistent with the evidence, including that of Mr Smith on this topic, and with the manner in which the businesses operated. Mr Wyzenbeek's evidence on this ought to be accepted. 114 It is also not irrelevant that two former employees of GCCM and AMI, Mr Smith and Mr Furnance, gave evidence that there was no clear demarcation in the operation of the businesses of the two companies. They gave evidence that employees of one business would be used in the activities of the other business and the employee uniforms were interchangeable. They also identified that the administrative facilities of each business were intertwined. Mr Smith, a former employee and broker of Leigh-Smith Cruiser Sales, gave evidence that he was told to stress to potential customers that GCCM stood behind Leigh-Smith Cruiser Sales and AMI. Although it was suggested that Mr Smith was an unreliable witness, I did not find him to be such. His observations were supported by his actions and, in particular, by his email of 17 July 2011, where he referred to AMI as being "a division" of GCCM. His evidence was also consistent with the evidence referred to above. 115 Mr Smith gave further evidence that he was uncertain as to which businesses were owned by which company and, indeed, he apprehended Leigh-Smith Cruiser Sales was actually owned by GCCM. This too is consistent with the above evidence regarding the interconnectedness of the two businesses. 116 At every opportunity during their evidence both Dean and Ryan sought to advance the argument that AMI and GCCM were separate entities and were operated separately. For the reasons identified, that evidence is not consistent with the objective observable facts. Additionally, given their lack of creditworthiness, it is not possible to accept their evidence unless there is independent corroboration of the same. 117 The evidence established overwhelmingly that GCCM and AMI ran both businesses together and the effectively operated as one. Even though their accounts were maintained separately, it is apparent the employees of each business acted for and on behalf of both of the companies in what they did and said. This was particularly so in relation to the sale of vessels. 118 It should be accepted that in making the representations in the course of attempting to sell an Endurance yacht to Mr Wyzenbeek, both Ryan and Dean were engaged in conduct in the course of their employment or roles with, inter alia, GCCM and they acted with its authority. Their conduct was not unconnected with their employment or positions: Deatons Pty Ltd v Flew (1949) 79 CLR 370. Indeed, it is difficult to reach any conclusion other than that the representations were made in the course of their employment or office with GCCM and they were connected with that employment or office. In the case of Ryan, his employment provided both the opportunity for engaging in the conduct with the approval of his employer and indeed provided the occasion for it: Prince Alfred College Inc v ADC (2016) 258 CLR 134 at 156 [68], 159 [80].

[16]

Ryan and Dean did not act as intermediaries 119 The respondents suggested, albeit somewhat hopefully, Ryan and Dean merely passed on to the Wyzenbeeks information they had received from Hampton as to the attributes of the Endurance range of yachts. They sought to assert they were merely and obviously a conduit for the provision of information such that their actions fall within the scope of the principles referred to in Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592. As the recitation of evidence above discloses that submission is not even remotely sustainable. Not only did Dean and Ryan (on behalf of GCCM and AMI) give their imprimatur to the information provided, they advanced it as being relative to their own roles in the supply of the vessel. From the beginning it was represented to the Wyzenbeeks that the respondents were intimately involved in the production of Hampton vessels for their customers. On a number of occasions the Wyzenbeeks were offered the opportunity to meet with the engineers to discuss the specifications required for a long range, oceangoing vessel suitable to their needs. Further, the representations were often made orally without any caveat that what was being said was merely what had been said by Hamptons. At no time was anything said by Ryan or Dean to suggest that all they were doing was passing on information obtained from another source or disclaiming its accuracy. By their conduct Ryan and Dean gave the information as their own. The opinions expressed were expressed as their own opinions rather than those of a third party, or as the mere adoption of someone else's. Additionally, to the extent to which the claim against them arises under the TPA, the representations were made over the telephone or by email as indicated and, therefore, prima facie, were within the extended operation scope of that Act. 120 It should be observed that the relevant representations concerning the ability of the Hampton range of vessels to cross oceans or to engage in extended ocean voyages were not representations made by Hampton Yachts in the first place. Indeed, the contrary is true. Hampton Yachts did not suggest their vessels had those capabilities and informed Ryan and Dean that they were not so suited. Rather than pass on that representation, Ryan and Dean kept that to themselves.

[17]

Representations as to a future matter 121 On one view, the substance and effect of the representations made by Ryan, Dean and through them, GCCM and AMI, was that the vessel or type of vessel being proffered for sale, the Endurance 750, was suitable for trans-ocean crossing and, necessarily, for extended passage making in open ocean voyages. On that basis those representations were as to an existing matter. 122 Equally, the representations could be taken as being that the vessel, which would be provided under a contract of sale for an Endurance 750 motor vessel, would be suitable for the Wyzenbeeks' needs were they to take it on a trans-ocean crossing or on extended ocean voyaging. Such representations would be as to a future matter. 123 The applicants assert that the representations made were as to a future matter or future matters on the basis that, at the time the representations were made, the vessel was still under construction. That being the case, so the argument goes, as Cadeau was a partially bespoke vessel and not completely constructed, the representations must necessarily have been that the vessel, when constructed and finished, would be suitable for trans-ocean crossings or extended passage in the open ocean. 124 The applicants rely upon a similar factual situation in Barclay v English [2009] QSC 258. That case concerned alleged representations made as to the capabilities of a boat which to be constructed pursuant to a "design and build" contract. The representations were found to be misleading or deceptive. A Lyons J held that, when they were made, the representations related to the future likely performance of the vessel once it had been completed and were, therefore, representations as to a future matter. 125 In the present case a not dissimilar approach is valid. Here, the representations were, in substance, that Hampton Yachts would construct a vessel to meet the Wyzenbeeks' specifications and, once complete, it would be suitable for open ocean voyaging or trans-ocean crossings. Indeed, on a number of occasions Dean and Ryan invited Mr and Mrs Wyzenbeek to meet with their engineers to discuss specifications such that the vessel when complete would meet their requirements. That being so, the representations that the vessel when complete would be suitable for open ocean voyaging or trans-ocean crossings were representations as to a future matter. 126 It can be acknowledged there exists an argument that the substance of the representation was merely that the Endurance range of vessels were manufactured to standards which rendered them suitable for open ocean voyaging or trans-ocean crossings. So construed, that would amount to a representation that the integrity of the design, structure and build of the vessels and of the equipment on them were of such a standard that rendered them suitable for the identified uses. However, the representations were made in relation to a vessel which was to be constructed in accordance with agreed specifications which were said to render it suitable for the identified purposes. That being so the representations were as to future matters rather than as to a particular existing state of affairs. 127 As appears from the following discussion, the difference between a representation of fact or of a future matter, being the reverse onus, is not important in this case as there is ample evidence that the Endurance 750 vessel was not suitable for crossing oceans or extended ocean voyaging. In this respect it is relevant the respondents held out Ryan has having substantial knowledge and expertise in relation to vessels of this type and he agreed that the vessel was not suitable for that use. That view was supported by expert opinion.

[18]

Whether there were reasonable grounds for the representations 128 On the assumption the representations were as to future matters, whether a person has reasonable grounds for making them is a question of fact to be determined as at the date those representations were made: Lyndel Nominees v Mobil Oil Australia Ltd (1997) 37 IPR 599. Further, what is sufficient to amount to "reasonable grounds" will depend upon the nature of the representation. Here, the representations were as to the seakeeping abilities of the vessel in the open ocean. Particularly, they were as to the ability of the vessel to be used for trans-ocean crossing. Representations about such matters to prospective purchasers ought not to be made lightly. If they are inaccurate but are relied upon by the use of the vessel in the open ocean, the result may well be that human lives are imperilled. The present case is a good example. Here, the representation that the vessel would, when completed, be suitable for crossing oceans was erroneous. If Mr and Mrs Wyzenbeek had taken the vessel into the open ocean and encountered significant sea conditions their lives and safety would have been put at great risk. It is no answer to say that the vessel was used to traverse ocean seas on its way to Noumea and no harm was suffered. Had the vessel encountered severe weather the result would have been the Wyzenbeeks would have found themselves on the high seas battling the elements in a vessel unsuited to the task. It follows, where a future representation pertains to the safety of human lives, the amount and veracity of information held by the representor before it can be said they had "reasonable grounds" for making the representation is likely to be greater than if the representation related to something more mundane. 129 Moreover, to represent that a vessel is suitable for trans-ocean crossing or extended ocean voyaging is to make a significant statement. It is conclusory of the quality of a number of the vessel's characteristics, including the structural integrity of the hull and superstructure, its watertightness, its seahandling capabilities and of the plant and equipment on board. The representation encompasses an implied qualitative assessment that each such characteristic meets a standard which renders the vessel capable of being used in any condition which might be encountered on a long ocean voyage; namely, any conditions short of extraordinary. As appears from Mr Dovell's evidence, such statements can be made if the vessel conforms to the requirements of an internationally recognised standard for ocean going vessel construction. Those standards have been developed over many years and the approved procedures pertaining to the mentioned characteristics have been rigorously tested. The complexity of such a standard can be seen from the discussion which appears later in these reasons. However, for present purposes it only need be observed that a representation that a vessel is suitable for trans-ocean crossing or extended ocean voyaging is tantamount to a representation that, in all respects, the vessel has been constructed to a quality equal to or better than that approved by the standard. It is pellucid that anyone making such a statement would need to be well informed of many aspects of the vessel's construction before it can be said that they had a reasonable basis for its making. 130 In this matter there were ample sources of information easily available to Ryan and Dean in relation to the seakeeping capabilities of the Endurance range of yachts. In particular, there were a number of international standards which provided yardsticks by which vessels intended for open ocean use and trans-ocean crossings might be measured. The CE Directive is one of these. Despite that, it is apparent neither Ryan nor Dean made any attempt to ascertain whether the Endurance range of vessels complied with any of those standards prior to making the representations. Moreover, knowledge of the standard to which the Endurance range of yachts was built and whether they were suitable for being used to cross oceans could easily have been obtained from Hampton Yachts. It can reasonably be expected the manufacturer would have firsthand knowledge of the standards to which the Endurance range were built and whether they met the criteria in recognised construction standards for ocean going vessels. Had either Ryan or Dean bothered to ask Hampton Yachts or Mr Chen, in particular, it is presumed that they would have received the same response Mr Chen gave on 20 September 2011, where he said the vessels were only suitable for off-shore cruising. He further said, "In order to be Trans Ocean Crossing vessel, the vessel need to be Class Certified to R1 or R0. This is a total difference design criteria and construction method". That observation from Mr Chen is not novel, as the expert evidence discussed below demonstrates. There is a substantial difference between off shore voyaging where safe harbours are nearby and crossing oceans where a vessel is required to be self-sufficient at all times. That remains true even though vessels cruising in off-shore conditions can encounter substantial seas. 131 There was ready information available to Ryan and Dean, had they bothered to look for it, which would have indicated that the vessel was not suitable for open ocean use or, at least, would have indicated that it could not be said that the vessel was so suited. In the absence of their having sought any of the identified sources of information, it is difficult to conclude they had reasonable grounds for making the representations they did. 132 As it was, Ryan and Dean merely relied upon their own beliefs as to the capabilities of the vessel which they had formed over time, albeit inferentially, from the various matters which are identified in their defences. Necessarily, because they did not seek to ascertain what the seakeeping capabilities of the vessel actually were, the materials relied upon only provide, at best, an indirect indication. However, the matters allegedly relied upon do not support the existence of any reasonable grounds for making the representations. In considering these matters it is apt to keep steadily in mind that neither Ryan nor Dean were qualified engineers, marine surveyors and nor were they naval architects. They did not have the necessary qualifications to form their own judgment of the quality of the construction or design of Hampton Yachts. Their experience in piloting and selling motor vessels over a number of years did not give them the necessary expertise to assess the many factors which must be considered in ascertaining whether a vessel is suited to crossing oceans. Neither is it relevant that there had been no complaints about the seakeeping qualities of another Endurance 750 sold prior to the contract with the Wyzenbeeks. It was not suggested that vessel had been used for trans-ocean crossings or had endured all the types of weather which might be encountered on such a voyage. Similarly, whilst the conducting of sea trials may show the vessel has good stability or handling, at least in the sea state in which the trials are conducted, that does not provide any confidence as to the structural integrity of the vessel and its ability to withstand the rigors of ocean voyaging. Even the fact that Ryan or Dean had operated some other vessels in the Endurance range in some significant seas is not sufficient for the purposes of assessing the ability of the vessel to be used for crossing oceans. That merely demonstrates that it was able to be used in those conditions at the time. 133 The applicants submitted the matters relied upon in the respondents' defences as supporting the existence of reasonable grounds for the making of the representations do not have that effect. That submission should be accepted for the following reasons: (a) First, the absence of any complaints from the owners of other Hampton vessels and the condition in which such vessels remained after some years is beside the point. There was an absence of any evidence as to the uses to which those vessels had been put. Moreover, the evidence before the Court showed Ryan and Dean were aware of the existence of difficulties with those other vessels, in particular that they had significant leakage problems. (b) Secondly, the mere fact Ryan and Dean visited the Hampton Yacht's factory in Shanghai was also of little or no moment. In the absence of any proper understanding as to the construction methods and integrity of the vessels, neither of them could gain any special insight as to the vessels' sea keeping capabilities from such a visit. Whilst the internal fitout of the vessels was completed to a high standard, that is not greatly relevant to the suitability of the vessel for open ocean travel. Similarly, the mere fact Mr Smith, who appeared to have some knowledge of boat engineering, visited the Shanghai factory is also of little significance. It does not appear he had any involvement in or sufficient knowledge of the design of the vessels or the methods utilised for its construction. (c) Thirdly, the fact that Ryan and Dean were engaged in conducting sea trials on other Hampton vessels provides little foundation for the conclusion they had a reasonable basis for representing Cadeau was capable of trans-ocean travel. Very little information was provided as to the nature of the sea trials, the sea states in which they were conducted or any other such matter. It is necessary to keep in mind that the question is the suitability of the vessel for trans-ocean travel, which necessarily means its ability to withstand all but the most extreme conditions. Nothing in the sea trials in respect of which Ryan and Dean gave evidence suggested they encountered such conditions. It is worthy of comment that, although this matter was seriously advanced by the respondents as a foundation for the alleged reasonable belief in the capabilities of Cadeau, there was minimal evidence which rendered Ryan and Dean's experiences relevant to the issues at hand. (d) Fourthly, the reliance by Dean and Ryan on information provided by Hampton Yachts and Mr Apollonio is not of great relevance. Generally, the information provided related to the design and shape of the hull and the stability of the vessel and it did not consider the build quality of the vessel or its capacity to withstand conditions in the open ocean. Additionally, they did not ask for the very information which would have provided them with a direct answer as to whether the vessel was suited to trans-ocean crossings. Had they done so, they would have been told the vessel was not so suited. (e) Fifthly, while some attempt was made by Ryan to have resort to the occurrence of "physical inspections" of the Hampton range of vessels as supplying a foundation for the reasonableness of his statements, he did not have any real knowledge of the nature and extent of the inspections or their results. (f) Sixthly, under cross-examination Ryan said words to the effect that he did not understand what the phrase "trans-oceanic voyaging" meant. If that were true, the making of a representation that the Endurance 750 was capable of trans-ocean crossings must necessarily be reckless in the extreme. In any event, in giving this answer he was completely disingenuous and attempting to promote his case. In the result this matter is not relevant to the conclusion there was an absence of reasonable grounds for the representations. 134 Even if the failure by Ryan and Dean to consider whether Endurance vessels were rated against any international standard as oceangoing vessels or to enquire from the manufacturer as to their suitability were put to one side, nothing advanced by the respondents can establish a reasonable basis for the representation as to the ocean crossing capabilities of the Endurance 750. The representation was, as Ryan and Dean both acknowledged, a selling point for them. It was obviously significant to any purchaser. Moreover, it was a matter which would greatly influence the use to which the vessel might be put. It would induce a purchaser to utilise the vessel in the open ocean for trans-oceanic voyaging. Any error in the representation would have the likelihood of exposing persons on the vessel to risk. Necessarily, something substantive would be required to establish reasonable grounds. Nothing advanced by the respondents, nor any of the matters taken together, are sufficient for that purpose. 135 The respondents paid very little attention to this issue in their written submissions and, given the above, that is probably not surprising. 136 It follows that to the extent to which the representation was as to a future matter, the respondents have not established the existence of reasonable grounds for making it and it was, therefore, misleading or deceptive.

[19]

The representation was misleading or deceptive in fact 137 On this issue the question is whether the applicants have established Cadeau was, in fact, not suitable for trans-ocean crossings or extended ocean voyaging. Here, it is important to keep in mind that the email from Mr Chen of Hampton Yachts which stated the vessel was not so suited, is not, of itself, evidence of that fact. It was admitted only for the fact that the statement was made. However, Ryan was asked in cross-examination whether he believed that statement to be true and he said that he did. There was no objection to that evidence and, given Ryan was put forward as being qualified to speak of such things, the absence of any objection is, perhaps, not surprising. That being so, his evidence can be taken as an admission of the applicants' allegation that the vessel was not suitable for crossing oceans or for extended ocean voyaging. 138 Despite the above, the conclusion that Cadeau was not suitable for those purposes can be otherwise sustained. First, it must be observed, as the applicants submit, the question is whether Cadeau, being a Hampton 750 motor launch, was "suitable" for crossing oceans or extended ocean voyaging. It is not, as the respondents framed it, whether the Cadeau was "capable" of crossing oceans. Clearly any vessel of the size of Cadeau is capable of crossing an ocean given sufficiently favourable conditions. Here, however, the vessel was represented as being "suitable" for crossing oceans, which was the use to which the Wyzenbeeks intended to put it. 139 It is also important not to render this issue more complex than it ought to be. As the evidence established, the vessel delivered to Mr Wyzenbeek was obviously not suitable for trans-ocean crossings. Its port lights were defective in that they allowed the ingress of substantial amounts of water. That is not in contest. Further, the Portuguese doors at the front of the vessel were of insufficient strength to withstand green water waves breaking over the bow which is a not an unexpected event in ocean voyaging. Moreover, whether it be from the force of water coming over the bow or the Portuguese doors hitting the glass windows, it is obvious the windows on the forward cabin were not of sufficient quality to permit the use of the vessel at sea. Although these matters were remediated in one way or another, the short point is that, as delivered, Cadeau was not a vessel suited for oceangoing travel by reason of these matters alone. There is some degree of likelihood the vessel was not suitable for crossing oceans for other reasons, including its construction and design, but that was not in issue before the Court.

[20]

Were the regulatory requirements relevant? 140 It was not suggested by any party that Cadeau was built to any recognised standard of ship construction so as to qualify it as an oceangoing vessel. Had it been so constructed all doubt as to its seakeeping abilities in the open ocean would have been removed. Standards for the construction of oceangoing vessels are well established internationally. One such standard is the European Community Recreational Craft Directive (the RCD). That directive includes standards to which ocean going vessels, referred to as "Category A" vessels, must be constructed. That said, as the expert Mr Dovell identified, the directive permits the adoption of some standards (such as the ISO standards), which reflect the minimum permissible quality of build. Whilst Mr Dovell agreed it is not essential for a vessel to be suitable for trans-ocean crossing that its construction comply a recognised regulatory standard, it is not likely that it would be so suitable if it did not so satisfy some such standard. There is a great deal of logic in that observation. Whilst a duly qualified person might design and engineer from scratch a vessel which is, in all respects, suitable for crossing oceans, it would be an unusually inefficient process where that work already appears in the various standards. In addition, the recognised standards have the benefit of being proven by experience over the years and the methods and designs described in them have inherent efficiency as a result. 141 In Australia, there is no specific legislative or regulatory requirement or protocol for the construction of pleasure craft, even where such vessels are intended for trans-ocean voyaging. However, it does not follow that any vessel, however constructed, is suitable for use in the open ocean. It simply means that there are no relevant, Australian prescribed standards. Nevertheless, the RCD is a standard which is widely recognised here. The evidence disclosed that many of Hampton Yachts' competitors advertised their boats as compliant with the RCD standard for Category A - ocean going vessels. In an email of September 2011, Dean exhorted Mr Chen to ensure that Hampton Yachts were built to the RCD standard which, he claimed, was widely recognised in Australia. Mr Dovell, an expert called by the applicants, observed the RCD terminology and categories of vessel are regularly utilised in Australian yachting competitions. From this it can be accepted that around the time Mr and Mrs Wyzenbeek acquired Cadeau, the RCD standard was widely known and applied in Australia. 142 The RCD establishes categories of vessels and then prescribes the standards to which the construction of vessels within those categories must meet. For present purposes it is only necessary to consider the defined meanings of "Category A" and "Category B" vessels. The former is defined as follows: Category A - Ocean: designed for extended voyages where conditions may exceed wind force 8 (Beaufort scale) and significant wave height of 4m and above but excluding abnormal conditions, and vessels largely self-sufficient. The application guide to the amended RCD identifies the excluded abnormal conditions as being "hurricanes and tornadoes and extreme sea conditions or freak waves generated by abnormal conditions". The guide also indicates that the standard set was to ensure that an ocean going vessel is one which would be able to withstand any conditions a vessel might encounter on a long voyage. 143 By contrast a Category B - "offshore" vessel is defined in the following terms: Offshore: designed for offshore voyages where conditions up to and including wind force 8 and significant wave heights up to, and including, 4m may be experienced. 144 The apparent difference between the two standards is that the Ocean category of vessel must be able to withstand conditions which exceed 8 on the Beaufort wind scale and significant wave height exceeding 4m. 145 The concept that an oceangoing vessel ought to be designed and constructed so as to be capable of handling any of the sea conditions it might encounter on long sea voyages is logical. Ocean conditions can change dramatically and quickly, and a vessel which cannot handle all of the sea conditions which might be encountered on the open ocean, could not be regarded as being suitable for crossing oceans. 146 Cadeau was not built to any particular internationally recognised standard and none was suggested by the respondents. They were, or at least held themselves out as, experienced in dealing with vessels of this nature. They were in a position to know whether there was some standard to which the vessel complied and, particularly so, by reason of their close relationship with the builders, Hampton Yachts. The construction drawings of the vessel were not provided and no sufficient reason was given for their absence. That may be explicable because Hampton Yachts was not a party to the action, but it might have been expected that the relationship between it and the respondents would have permitted the latter to acquire those documents were they needed. As the recited facts demonstrate, both Ryan and Dean indicated that the respondents worked with Hampton Yachts and their engineers worked at the factory to ensure that the vessel was "100% right prior to departing the factory". It is improbable that an entity with such a close connection to the builder of the vessel would not be able to acquire all relevant documentation relative to it were it so minded. There was no sufficient evidence that Hampton Yachts would not provide the respondents with information as to the vessel's compliance with any recognised international construction standard or the construction drawings were they required. In Medtel Pty Ltd v Courtney (2003) 130 FCR 182 Branson J considered s 140 of the Evidence Act (Cth) relating to 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". See also Apollo Shower Screens Pty Ltd v Building & Construction Industry Long Service Payments Corporation (1985) 1 NSWLR 561 at 565; Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970; Vautin v BY Winddown, Inc. (formerly Bertram Yachts) (No 4) [2018] FCA 426 at [145] (Vautin (No 4)). The respondents' failure to produce anything which would demonstrate the vessel's conformity to any recognised standard for ocean-going vessels suggested it did not have that capability. 147 The evidence provided by Ryan and Dean was that it was a "selling point" for vessels of this nature that they were capable of crossing oceans. In this context it is relevant that the marketing material from Hampton Yachts did not include any such statement in relation to the Endurance range or that they were constructed to a standard equivalent to a Category A vessel. Nor did that material suggest the Endurance range was designed and built to satisfy any other standard for oceangoing vessels. Whilst the material tended to represent that the Endurance range was of a high quality, the statements fell short of making the claim that they were suitable for trans-ocean crossings or that they complied with any internationally accepted protocols for seaworthiness. In his report, Mr Dovell commented that manufacturers of other vessels of a similar nature, such as Marlow, Fleming and Ferretti, advertised compliance with such a protocol as either standard or an additional feature. Given the marketing value of a vessel's ocean-going capability, the absence of any such express statement in Hampton's promotional material supports the conclusion that the Endurance range did not have this characteristic. 148 The respondents advanced an argument that if a vessel was capable of crossing oceans under any circumstances then it was an "ocean going vessel" or suitable for crossing oceans, even if it could not cross oceans under all conditions. That somewhat desperate submission must be rejected. In the context in which the representations were made, the statements that a Hampton vessel would be suited to Mr and Mrs Wyzenbeek's objectives of crossing oceans or extended ocean voyaging and suitable for their needs, meant that it was constructed for and suited to that type of regular use. It was a representation that the vessel was of a kind which could be used to cross oceans safely in that it was of a construction which would withstand the rigours that might be encountered on such a voyage. It is to be kept in mind Mr Wyzenbeek expressly wanted a vessel which was a Category A ocean going vessel, the same standard as Swanky. That had been part of his specifications and requirements at the beginning and the respondents had indicated that the Endurance range could meet them. 149 The above is sufficient on which to determine that Cadeau was not suited for crossing oceans or for extended ocean crossings.

[21]

The suitability of Cadeau for trans-ocean crossings given its defects 150 The foregoing discussion concerned the suitability of Cadeau for crossing oceans based on the evidence surrounding its non-conformity with any internationally recognised standard of construction. Even if that conclusion were not open, the defects in it rendered it unsuited for those purposes. On this topic the applicants relied upon the expert evidence of Mr Andrew Dovell and the first to fourth respondents relied upon the evidence of Mr Burge and Mr Akacich. For the reasons which follow the evidence of Mr Dovell is to be preferred to that of Mr Burge and Mr Akacich. 151 Essentially, the question was a technical one, being whether Cadeau, as designed and constructed, was suitable for trans-ocean crossings. Of the relevant experts, only Mr Dovell was a qualified naval architect and the only one who possessed a full and complete understanding of design criteria and capabilities. His report (the "Dovell report") dated 18 April 2017 was logical, well structured, well researched and founded upon clearly identified evidence. Whilst I do not reject the opinions of Messrs Burge and Akacich merely because they were not naval architects, much of their evidence was most unsatisfactory. In particular, they each sought to propound their client's case and, as the cross-examination revealed, a number of their conclusions were based upon insufficient information and assumptions which they had made in favour of the respondents. 152 In his report, Mr Dovell considered Cadeau against some of the "essential requirements" of the RCD for ocean-going vessels. He said he did so because the boat building industry accepts that the RCD incorporates the minimum standards of build for the various categories of vessels. There did not appear to be any dispute about this. The RCD specification as described by Mr Dovell in his report (at [3.1] - [3.7] of the Dovell report) draws a distinction between the minimum requirements for vessels' attributes of strength of construction, stability, engines and the like will vary depending upon the manner of intended use. Necessarily, higher standards of such attributes are required for vessels intended for use in the open ocean and lesser standards are appropriate for vessels which might only encounter less severe conditions. It is obvious that construction of vessels to the higher standards will be more expensive and, as a matter of economic reality, a vessel only intended for costal cruising would not be constructed to the standards required of an ocean going vessel. 153 Mr Dovell identified three aspects of Cadeau which rendered it unsuitable for open ocean voyaging. They were that the original port lights installed were inadequate, the original glass installed around the forward cabin was inadequate and the design and construction of the Portuguese doors was also inadequate.

[22]

The defective port lights 154 Mr Dovell's analysis in relation to the port lights was compelling. He identified the ISO requirements (ISO 12216) contained in the RCD for port lights on Category A Ocean vessels and Category B Offshore vessels. Those requirements were dependent on where on the vessel the port lights are located. The requirements are most stringent for port lights located on the topside. The topside, which is referred to as "Area1", is that area of the hull above the water line and below the first deck and port lights located there will necessarily be subject to water impact as the vessel passes through swells. The specification only permitted port lights of the highest standard to be located in that area. Mr Dovell identified the port lights originally fitted to Cadeau were of the brand, Manship, Model LO-0818 opening port lights. His investigations identified that the manufacturer's catalogue information specifically stated that such port lights were CE approved only for Areas 3 and 4. They were, therefore, not compliant with the standard for use in the topsides of a vessel and their use on Cadeau had the consequence that its construction fell below the ISO standards. On that alone the vessel did not comply with the construction requirements for a Category A Ocean vessel. 155 Despite some opposition by the respondents, the reality was the topside port lights in Cadeau allowed considerable leakage of water into the vessel. Based on the evidence of Mr Wyzenbeek in relation to the significant amount of water entering the vessel through the port lights, which I accept, it is obvious they were insufficient to maintain the watertightness of Cadeau. That would appear to be corroboration of the ISO standard. 156 Ryan and Dean's correspondence to Mr Chen in 2011 regularly expressed their dissatisfaction with the quality of the port lights on the Endurance range of vessels. They did not reject Mr Wyzenbeek's assertion of the significant leaking through the port lights (as well as other areas). Indeed, they accepted that such was the case and it is relevant GCCM took possession of the vessel for the purposes of repairing damage caused by the ingress of water through these port lights. That repair work was substantial and it is not likely GCCM would have undertaken the warranty work if the port lights had not been leaking. It is not irrelevant the replacement of the portlights with ones which conformed to the ISO standard remedied the problem. 157 Dean's email to Mr Chen of Hampton Yachts on 15 September 2011 is particularly important. At that point in time AMI and GCCM were dealing with a number of complaints concerning the leaking of port lights on two Endurance 750 vessels which had been sold to their customers. In the email Dean said: I have a concern from herein with regards to all vessels fitted with "Category 3" PORTLIGHTS to date, if we have a situation whereby a PORTLIGHT fails at sea & an insurance company "Gets involved" we would end up in the situation of Hampton Yachts being "Liable" for loss/damages. What course of action would you suggest we take? The reason for asking is that Norbert (Owner of 750#9) has produced the ManShip information showing us that the PORTLIGHTS in use aren't rated for the application they are presently being used for. The only recourse from here would be a letter from ManShip stating that they are "Suitable" for this use given their method of installation. Given the information is readily available on their website we could "all" end up in serious trouble if the worse were to happen. 158 This sufficiently evidences that Dean was aware the port lights fitted to the Endurance 750 vessels by Hampton were being used outside their rating. The email also demonstrated he was well aware of the serious consequences that might follow if a vessel were to sink because of the failure of the port lights. Although in evidence Dean sought to avoid the reality of the comment in his email, "if the worse were to happen", it is clear he was referring to the consequences if the vessel were to sink. It was, therefore, apparent to Dean in September 2011 that the use of the port light fitting on the topside of Cadeau and another Endurance 750 vessel were outside of the ratings of those fittings and posed a serious risk to those vessels. 159 In a subsequent email, on 16 September 2011, in relation to this issue, Dean wrote to Mr Chen the following: Further to the request on pricing of the "1" vs. "3" PORTLIGHTS I believe the other main point of difference is the "through-bolting method" of installation, this is a simply way to ensure we don't have a reoccurrence of the very costly exercise experienced with 750#9. The through bolting of the units will obviously minimise / remove any movement between Hull & Liner subsequently ensuring the sealants don't break down, crack or split subsequently letting water in … … After identifying the issue with Norbert's boat I can almost guarantee that this is the same issue we have been encountering with 750#8 (Mr. Tuckers boat) Now we know what to do it's a relatively quick fix, again his water leaks only presented once the boat at been steaming at sea for some time. (i.e. the anchor locker eventually fills up & leaks into cabin) His water ingress most commonly presented in the forward cabin at floor level which is in keeping with the fault identified with 750#9. [The reference to 750#9 is a reference to Cadeau.] 160 And subsequently, on 19 September 2011, Dean again wrote to Mr Chen in relation to the port light issue. He said: This is a "HAMPTON PROBLEM" & isn't an upgrade, given the tens of thousands of dollars we've collectively spent fixing water ingress issues we simply want to get this problem resolved once & for all … Please confirm in writing the position of Hampton Yachts & these PORTLIGHTS… It's AMI's position that they are not an "UPGRADE as we've been advised by ManShip that the existing PORTLIGHTS are for "Cabin/house use only" & not for hull use as is the case with all vessels to date. I have attached the advice from the ManShip website for reference. The "Heavy Duty" PORTLIGHT system has been used by DHS from our first boat & we've never had a problem to date. 161 Again, Dean acknowledged that incorrect port lights were used on the Endurance 750 vessels and he had confirmed with the manufacturer of the port lights that they were not suited to the use to which they had been put. 162 All of this supports Mr Dovell's conclusion that neither the port lights themselves, nor their installation on Cadeau, complied with the requirements of the RCD for a Category A or B vessel. He was also confident they did not comply with the ABYC requirements with which Hampton Yachts claimed the vessel complied. He further concluded the port lights had not been appropriately installed. Aside from the failure to comply with relevant standards, the use of inappropriate port lights meant the vessel was not suitable for crossing oceans. 163 Mr Dovell's conclusion that the port lights in the topside of Cadeau and their installation was substandard had the consequence the vessel failed to meet the requirements of the RCD for a Category A vessel. That was not seriously contested. Mr Burge and Mr Akacich took a somewhat remarkable position in relation to this issue. In the joint report, they challenged Mr Dovell's conclusion as to the sea-worthiness of the vessel on the basis that the leaking was minor and that defect had been repaired under warranty. Their failure or refusal to appreciate that the leaking was substantial undermines their credibility on this point. The repairs undertaken to the interior of the vessel as a result of the leaking port lights was not insubstantial and supported the evidence of Mr Wyzenbeek as to the extent of water entry. Further, their reliance on the fact the topside port lights could be repaired or replaced does not alter the fact the vessel was defective when built and delivered. This somewhat disingenuous approach is emblematic of the evidence of Mr Burge and Mr Akacich as is discussed below. 164 In considering the extent of water damage caused by the leaking port lights, Mr Burge failed to take into account the detailed written report prepared by Mr Bone and Mr Fernance for the respondents in August 2011, which detailed the extensive damage to the interior of the vessel caused by water entry. His failure to consider this did his credibility no good at all. The report, by two of the employees of GCCM or AMI, identified significant water damage arising as a result of leaks, particularly through the port lights, and that their fitting was inadequate. It also identified a number of other areas where water leakage into Cadeau had occurred. Conversely, Mr Burge was prepared to accept and rely upon the opinion of Mr John Bennett, an engineer employed by the respondents, which was given some years after the event to the effect that the faults were minor. It was a matter of concern that Mr Burge relied upon this source which was not referred to in his report and he ignored the respondents' own contemporaneous documents. The applicants submitted Mr Burge's approach was "highly unsatisfactory" because it disclosed his failure to comply with the Federal Court's Expert Witness Code and his opinions were formed in reliance on unreferenced hearsay. I am prepared to accept that description of Mr Burge's report and evidence and for those reasons. I largely disregard it. I would have thought that a description of "disingenuous" is a more accurate description of his evidence in general and, specifically, in relation to this issue. It is impossible to have any confidence that Mr Burge undertook the preparation of his report in the manner expected by experts before this Court. 165 Similarly, the evidence of Mr Akacich must be treated with the same reticence. His thesis that Cadeau was suitable for ocean crossing was founded upon his opinion that the vessel had been used for some time in various wave and wind conditions without encountering any difficulties. That appeared to discount the extensive internal water damage Cadeau had sustained as a result of water leakage through the port light fittings, the existence of which was revealed in numerous contemporaneous emails. Somewhat incredibly, under cross-examination Mr Akacich acknowledged that he did not read those emails even though his report discloses that he was provided them as well as the witness outlines filed in this action which referred extensively to them and, on occasion, set out their contents. He said that he had relied on other unidentified sources of information in forming the opinions set out in his report. He revealed this information was what he had been told during the course of a briefing which had been provided by a person whose identity he could not recall. His only recollection was the briefing was provided by a person who was his naval architect and that person had provided his opinion on what wind and wave conditions Cadeau had experienced. His reliance on this briefing was not identified in his report. Similarly, he claimed he relied upon conversations with Mr Wyzenbeek which occurred from time to time although he could not, at the date of trial, remember the content of those conversations which were also not referenced in the report. 166 The above substantially diminishes the weight which can legitimately be given to Mr Akacich's report and, indeed, removed the foundation for its admissibility in significant parts even though that point was not taken by the applicants. At best, Mr Akacich's opinions on the integrity of Cadeau was uninformed speculation which appeared to be deliberately slanted in favour of the respondents. The cross-examination of Mr Akacich's revealed that he did not understand the nature of his role as an expert witness. On the issue of the defective port lights his evidence ought to be rejected. 167 It is important to recognise that the substantial leaking of water through the port lights creates a significant hazard for a vessel in the open ocean. Even if it is the case that the amount of water entering the vessel is not sufficient to cause it to sink or lose stability, it has great potential to interfere with the electrical systems on the vessel causing them to fail or facilitating arcing with the consequent risk of fire.

[23]

The cabin glass on Cadeau 168 The second matter considered by Mr Dovell was the strength of the glass on the cabin windows of Cadeau. He determined the glass around the forward cabin and across the vessel was not of sufficient strength for any category of vessel under the RCD. In forming this opinion he relied upon the evidence of an email to the effect that the forward facing glass of the main cabin (which had been destroyed in the Port Macquarie incident) was laminated glass of two layers of annealed glass of 5mm thickness each. It followed that the total thickness of the glass was 10mm. Mr Dovell also relied upon the report of Mr Calverone to the effect that the glass on Cadeau was 10mm of annealed glass in approximately two 5mm sheets. The evidence of Mr Calverone was not questioned and provided a sound basis for Mr Dovell's opinion. Mr Dovell opined that the glass in the centre window of the main cabin was of a thickness which was considerably less than the minimum specified in ISO12216 and would not have been compliant with the requirements of the RCD for Category A - ocean use. Indeed, he also concluded that the glass fitted to Cadeau was not compliant with the requirements of the RCD for any category of service. I accept his evidence in relation to this matter which was largely unchallenged. For that reason as well, the vessel was not suitable for crossing oceans. 169 As the incident Port Macquarie revealed, the forward facing glass in Cadeau was not of adequate strength for a vessel which might be used in trans-ocean crossings. That incident, which is discussed in more detail below, involved waves of no more than 1.6 metres. Whilst attempting to cross the bar there, Cadeau ploughed forward and downward into waves such that "green water" came over the deck, over the forward bulwark protection and onto the forward facing window. That window was of insufficient strength to take the force of the impact and it shattered allowing significant water to enter the cabin. Mr Akacich sought to minimise the contribution of the inadequate glass to the ingress of water and sought to cast blame for the incident on Mr Wyzenbeek's inadequate seamanship. In particular, he asserted the attempted crossing of the bar was foolish given the existence of waves of 1.6 metres. However, as the RCD shows, a Category A Ocean vessel ought to be capable of handling seas with a significant wave height of 4 metres. That wave height is an average of the highest third of the waves experienced in the sea conditions, meaning it is likely to include waves of up to 6 metres in height. It can be accepted that swells on the open ocean may not necessarily have the same forces as breaking waves across a bar, nevertheless, the force of water coming over the bow of a vessel in rough seas on the ocean is likely to have a similar effect. This was acknowledged by Mr Akacich who accepted that seas of a significant wave height of 4 metres would be at least the equivalent of the conditions encountered by Cadeau on the Port Macquarie bar. Given that the forward facing glass of the main cabin on Cadeau was not able to withstand the 1.6m wave at Port Macquarie, it, most certainly, would be unlikely to be able to withstand waves encountered in a sea with a significant wave height of 4 metres. It follows, if anything, the Port Macquarie incident verified the requirements of the RCD standards and demonstrated the glass on the forward cabin of Cadeau was of insufficient thickness and strength for an ocean going vessel. 170 The inadequacy of the strength of the glass in the forward windows was a serious matter. The failure of that glass in rough seas would permit the ingress of significant amounts of water, as had occurred at Port Macquarie. That would most likely lead to interference with the electrical systems on the vessel, which was also the experience at Port Macquarie. However, on a rough ocean, the constant entry of water through a failed forward cabin window would necessarily cause the vessel to lose stability. 171 I accept Mr Dovell's evidence that Cadeau was not suitable for crossing oceans or extended ocean voyages as a result of the forward cabin windows being of insufficient strength and falling well below the accepted international standards.

[24]

The Portuguese doors on Cadeau 172 Mr Dovell also considered the failure of the Portuguese doors on Cadeau in the Port Macquarie incident was indicative of their inadequacy in a manner which rendered them being non-compliant with the requirements of the RCD for Category A ocean use. He calculated the forces which doors in that position should be able to withstand and, whilst the structure of the doors themselves was adequate, the manner in which they were affixed to the superstructure was deficient. He identified the doors had not been screwed into a block of timber or aluminium, but into a block of "neat resin" which had poor mechanical properties and was brittle. That manner of attachment had the consequence that the load path for the hinge loads was a sheer stress between the block of the resin and the core. This created a very weak joint at this point. Such a joint would not, opined Mr Dovell, have been acceptable for the RCD protocol. Neither Mr Akacich nor Mr Burge contradicted that finding by Mr Dovell and I accept it. 173 Again, the fact the doors came away when impacted by a wave coming over the bow of Cadeau during the Port Macquarie incident is probably sufficient evidence of their unsuitability on a vessel intended for trans-ocean passage. According to the RCD, an oceangoing vessel ought to be capable of withstanding the rigours of Beaufort 8 winds and a significant wave height exceeding 4 metres. That is in excess of what was encountered on the Port Macquarie bar. 174 Mr Burge, in purported answer to Mr Dovell's opinion, opined that the Portuguese doors were not designed or required to take impacts from waves. Whilst he was obviously correct about the insufficiency of the design, that observation supported, rather than undermined, the observations of Mr Dovell. The suggestion that an ocean going vessel might be fitted with doors on its forward deck not capable of withstanding the impact of waves coming over the bows, is difficult to accept. The breaking of waves over the forward deck is a not unexpected event for an ocean going vessel. If the Portuguese doors positioned on that deck were not capable of sustaining the impact of such waves, they might dislodge when impacted and be forced onto the cabin windows causing them to shatter. There was some suggestion that this was a possible scenario of the events which occurred at Port Macquarie. If that were true it, of itself, would render the vessel unseaworthy for trans-ocean passage. Alternatively, if the Portuguese doors were not designed to take the impact of waves it would necessitate that the forward windows of the main cabin would need to be constructed to a standard that would absorb such forces. It is clear that they were not so designed. 175 I accept the opinion of Mr Dovell that the inadequate design of the Portuguese doors also rendered the vessel unsuitable for trans-ocean voyaging and non-compliant with the RCD standards.

[26]

Mr Akacich and Mr Burge were not acceptable expert witnesses 178 Apart from the flaws exposed in the reasoning processes of Mr Akacich and Mr Burge which have been identified above, their evidence lacked credibility for other reasons. 179 Mr Akacich had a relatively close relationship with the respondents in this matter. Indeed, it was so close that he claimed to be able to give character evidence about Dean whom, he said, he knew very well. Under cross-examination he said that he had known Dean since he was 17 years of age and he was able to say that he was "a good human being". It must be kept in mind Dean is a respondent in these proceedings and a person against whom a potential judgment in a large amount of money might be made. It is inappropriate that a person with such a close personal relationship to a party ought to be engaged to provide expert evidence. Were that not bad enough, Mr Akacich also had a business association with Dean, which had existed for over 20 years. On the website of Mr Akacich's company, Black Pond Marine Consultants, Dean provided a glowing testimonial. In part he said: Over the 20+ years I have worked with Joe Akacich (aka Black Joe) in many & varied aspects of the luxury yachting industry from refit, repair, construction, engineering & specifically of late the intimate one-on-one project management for Alaska Motor Yachts, Hampton Yachts, Endurance Yachts & other luxury yachts through our retail division & mother company Leigh-Smith Yachts. He's also an Accredited Marine Surveyor which ensures his ability to "sign off on works" offers peace of mind to an importer & builder alike. Dean then continued and extolled Mr Akacich's skill and abilities. 180 The existence of this testimonial poses many concerns. Not in the least, it evidences the close relationship between Mr Akacich and Dean. More importantly, it identified that Mr Akacich and Dean have worked intimately together for the project management of, inter alia, Hampton and Endurance Yachts. In this context the expression "project management" refers to the preparation of vessels for delivery to customers or the refitting of vessels. That, of itself, makes it difficult, if not impossible, to believe that Mr Akacich could bring an impartial mind to the assessment of Cadeau, especially when a person he has worked with for more than 20 years might be damaged if he gave an adverse opinion. But the causes of the improbability of Mr Akacich's supposed impartiality do not stop there. His future engagement to work on project managing Endurance Yachts and Hampton Yachts is dependent on AMI, GCCM, Dean or Ryan deciding to utilise his services. It is difficult to imagine he would put his future income at risk by forming a view of Cadeau contrary to the interests of respondents in this litigation. It is most unlikely that a person in his position would impartially assess the quality of the vessel. 181 That, unfortunately, is not the end of the matter. There are further factors which would influence Mr Akacich away from an impartial assessment of Cadeau. His company, Black Pond Marine Consultants, previously advertised on its website that it managed "all of the after sales servicing and warranty for LSY". Those initials refer to "Leigh-Smith Yachts" which is the trading name of a company operated by Dean. Although Mr Akacich disclosed that he had consulted to Leigh-Smith Cruiser Sales, the business name of AMI, he did not disclose his consultancy to Leigh-Smith Yachts. Again, this would suggest that his opinions might not be impartial. Furthermore, Black Pond Marine Consultants is a lessee of premises at the Gold Coast City Marina which is owned and operated by GCCM such that Mr Akacich's company has a continuing financial relationship with GCCM. Although this latter matter was also disclosed in the report and he asserted it did not affect his impartiality, that is most unlikely in the circumstances. 182 Mr Akacich's close relationship to a number of the respondents over many years renders him an inappropriate expert, as does his continuing close relationship with them. The legitimate criticisms which the applicants have made of his report and evidence reveal, most clearly, he has allowed his previous and existing close relationship with the respondents to cloud his judgment. 183 Otherwise, it would appear the opinions of Mr Akacich and Mr Burge were founded on rather weak foundations. The applicants refer to their supposition as to the wind conditions in which Mr Wyzenbeek had operated Cadeau. They relied upon emails from Mrs Wyzenbeek in which she described the vessel encountering difficult conditions. For the purposes of preparing their reports they ought to have considered the Bureau of Meteorology records in the relevant area as being an appropriate source of information. Had they done so they would have seen that the conditions were, perhaps, nowhere near as difficult as they might have appeared to Mrs Wyzenbeek. While it was not inappropriate to take into account Mrs Wyzenbeek's statements, it was lacking in any investigative skill and impartiality not to consider all of the available information. It is apparent they both chose the evidence which would best advance the respondents' case. 184 This also demonstrated a significant inconsistency in Mr Burge's approach. Although he placed emphasis on Mrs Wyzenbeek's emails when ascertaining the wind conditions in which Cadeau had been used, he was prepared to completely discount her contemporaneous emails in which she described very substantial leaking of water into the vessel through the port lights. He gave evidence that, in forming his view of the amount of water leaking into the vessel, he relied on the views of a Mr Bennetts, albeit expressed some years after the event, to the effect that the faults were minor. Although the evidence was vague, Mr Bennetts seems to have been an engineer whom had previously been employed by the respondents. The inconsistent treatment of the information emanating from Mrs Wyzenbeek was not explained by Mr Burge, but it did suggest he used the available material in a selective manner to advance the interests of the respondents. To exacerbate matters, his reliance on Mr Bennetts' opinion was not referenced in his report and nor was the information which was allegedly provided. Apart from contravening the Expert Witnesses Code and being an entirely unacceptable approach to the assessment of facts, I accept the applicants' submissions it revealed partiality on Mr Burge's part. 185 I also accept Mr Burge and Mr Akacich were prone to overstatement and exaggeration. Mr Burge's description of the conditions at the Port Macquarie bar on the occasion of the Port Macquarie incident is a good example. There, he described them as "extreme conditions" however, his only rationale for that conclusion was the vessel had suffered significant damage when it ploughed into some waves. As the applicants submit, that reasoning is somewhat circular when considering the question of the suitability of the vessel. If the vessel was suitable for ocean crossings it would not have suffered the damage it did, but if it was not, it is not surprising it was damaged when the bow was breached by a wave. Moreover, Mr Burge's conclusion did not take into account all the available evidence to make that assessment, including Mr Wyzenbeek's observations that the conditions at the time of the incident were relatively calm. Again, Mr Burge can be seen to have been prone to accept the material favourable to the respondents' case and ignored or minimised material which was to the contrary. 186 In a similar way, Mr Akacich was prone to criticise Mr Wyzenbeek on the basis of insufficient evidence. He criticised him for being "foolish and dangerous" on 30 July 2011, for sailing Cadeau from its safe harbour into dangerous conditions. He accused Mr Wyzenbeek of failing to follow "appropriate protocols" and for failing to keep a proper watch. Under cross-examination it became apparent that this conclusion was based upon something he had been told by a person whose identity he could not recall but was identified as a naval architect. That alleged information was not referenced in his report. Such an approach to the provision of opinion evidence is unacceptable and, particularly so, when the opinion is formed without regard to evidence which did exist as to the actual circumstances.

[28]

Relevance of the use to which Cadeau has been put 188 Messrs Burge and Akacich concluded, separately or otherwise, that Cadeau was suitable for trans-ocean crossings or extended passage in the open ocean because it had been used for those purposes for some time and had not failed. That reasoning is fallacious for two reasons. First, because it is bereft of logic and, secondly, because it is based on a misapprehension of the facts. 189 Whilst it may be the Wyzenbeeks had successfully sailed the vessel to Noumea in a partial crossing of the Pacific Ocean, it does not follow the vessel was suitable for such ventures. All it meant was the vessel was able to be used on that occasion, given the prevailing wind and sea conditions. The mere fact a vessel has been successfully taken on a voyage is not evidence it is one which is suitable for such voyaging. From time to time adventurers attempt ocean crossings in vessels which are obviously not intended for such voyages. The mere fact that the voyage is completed does not support the conclusion the vessel was "suitable" for that type of expedition. Indeed, it is usually because the vessel is not so suited that the voyage involves heightened risk which apparently adds to the adventure. There is no suggestion that Mr and Mrs Wyzenbeek wished their trans-ocean crossings include an element of adventure involving questions of whether their vessel could handle the conditions which might be encountered. As has been indicated previously, here the representation the vessel was suitable for trans-ocean crossing can only have meant it was constructed and equipped to a standard which rendered it capable of meeting the any of the conditions which might be encountered on trans-ocean crossings. At the time of the making of the representations there were in existence well known standards for vessels which were suitable for crossing oceans including those contained in the RCD which identified such a class of boat as being "Category A". That was the type of vessel which Mr Wyzenbeek had indicated he was seeking and Ryan and Dean's representations were to the effect that the Endurance range were of that type. 190 In his report, Mr Burge, concluded that as Cadeau had travelled many thousands of nautical miles around the east coast of Australia and to New Caledonia without incident it had practically demonstrated its seaworthiness. There are two significant issues with that comment. The first is that it did not take into account the actual conditions in which the vessel sailed. The second is the conclusion the vessel handled the conditions without incident was made in ignorance or, more probably, in disregard of the many difficulties which arose. It appears that Mr Burge did not read or, if he did, he ignored the warranty repairs report of August 2011 prepared by Mr Bone and Mr Furnance. A perusal of that report would have revealed the difficulties with water leakage into the vessel through the port lights amongst other things. That leakage and difficulties with the engines are only the more significant of the many issues with the vessel which were encountered by the Wyzenbeeks. Moreover, the inability of Cadeau to withstand waves breaking over her bow as occurred at Port Macquarie belies Mr Burge's comment. 191 At Annexure A to the applicants' written submissions the large number of difficulties and issues arising from the use of Cadeau from April 2011 to October 2012 are identified. Whilst not all of them would necessarily have the consequence the vessel was not an oceangoing vessel, a number of them, including the lack of water tightness of the vessel, would be. The evidence referred to in the annexure supports those identified deficiencies. 192 The applicants' submissions in this respect are supported by the email of Ryan to Mr Chen of 17 August 2011, concerning the excessive leaking of Cadeau. There he said: I felt I must contact you directly and voice my concern on the matter. It seems that (all) fairleads, Staunchions, cleats and port holes are leaking in the vessel from the master cabin forward. Ryan also indicated that this situation was risking their entire reputation and image which they had created in the market. If Ryan's statement is taken at face value, the excessive leaking of Cadeau which occurred in ordinary use was sufficient to risk the reputation of the respondents. There is no reason to doubt Ryan's comments in this respect and he confirmed them during cross-examination. It is not clear why Mr Burge did not refer to or rely upon the admission by Ryan in this email as to the nature and extent of the leaking of Cadeau when concluding the vessel had been used extensively without incident. 193 The email communications from Dean and Ryan to Mr Chen in September 2011 concerning the number of warranty defects with Cadeau and, in particular, the inadequacy of the performance of the port lights also demonstrates the vessel was not suitable for crossing oceans. Again, these matters were assiduously disregarded by Messrs Burge and Akacich. 194 They also failed to consider the evidence of Cadeau's lack of sea keeping abilities as demonstrated by the failure of the Portuguese doors and cabin glass which occurred during the Port Macquarie incident. Although they each sought to attribute blame to Mr Wyzenbeek for putting the vessel into the situation where waves came across its bow, even if that was true, it does not alter the fact the vessel was not able to handle those conditions which were not dissimilar to those which might be encountered on an ocean voyage. 195 A further indicator of Cadeau's lack of suitability for the uses to which it was put, were the number of days during which it was not able to be used because it was under repair. Mr Wyzenbeek gave evidence that, in its first year of operation, being 15 April 2011 to the end of the year, Cadeau was laid up for 76 days whilst being rectified. In 2012 it was laid up for rectification work between 8 March to 8 May, 4 June to 19 October and subsequently from 25 October 2012 until 20 July 2013. It also spent 64 days being rectified in 2014 and a further 21 days in 2015. Although Mr Wyzenbeek claimed that all of this work related to rectification, that was not entirely true. Some of it related to modifications and additions although not to a substantial degree. Ultimately, it can be concluded that the rectification work required on Cadeau in the period since its acquisition to the date of trial, tended to support the conclusion it was not suitable for the uses to which it was being put. Certainly, it undermined the conclusions of Messrs Burge and Akacich that it was seaworthy because it had been used extensively and "without incident".

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Reliance 199 An essential element of the applicants' case under the TPA and ACL is that they relied upon the misrepresentations. In this case it is quite apparent that they did. The evidence disclosed that Mr Wyzenbeek was the driving force behind the acquisition of Cadeau. Whilst it may have been purchased in the joint names of Mr and Mrs Wyzenbeek, the inescapable inference from the dealings between Mr Wyzenbeek on the one hand and the respondents on the other, was that it was his decision to acquire the vessel which was determinative. It was he who engaged in the provision of specifications, the answering of queries, the negotiations and the inspections. Whilst Mrs Wyzenbeek might have been part of that, it was plain it was Mr Wyzenbeek who made the ultimate decision and there is no doubt the respondents approached the negotiations on that basis. Although Mrs Wyzenbeek did not give evidence, the necessary inference from what occurred is that she went along with whatever her husband decided. 200 The respondents submitted, apparently seriously, that the representations made were not material. There was no foundation for that submission and, indeed, the evidence was to the contrary. Both Dean and Ryan acknowledged the representation the vessel was suitable for crossing oceans was a "selling point", being one which would be made to induce a sale. It is beyond doubt that it was a material representation and, save that the respondents were determined to take every conceivable point in the case, it is unclear why they would submit the contrary. 201 Mr Wyzenbeek claimed he relied upon the representations in acquiring Cadeau. Again, there can be little doubt that this was so. He gave evidence that one of the purposes of acquiring it was so he and his wife might continue their circumnavigation of the world. Another purpose was to engage in long range ocean crossings. The history of Mr Wyzenbeek's boating activities and his expressed desire, as admitted and acknowledged by Ryan and Dean, to use the vessel for trans-ocean crossings leaves no doubt this was his intended purpose. Although in his evidence he said his intention to use the vessel for crossing oceans was mentioned regularly in his discussions with Ryan and Dean, I do not accept that to be entirely accurate. I accept it was discussed on occasion as I have indicated, but I also have no doubt that in giving his evidence Mr Wyzenbeek exaggerated the number of times the issue was raised. Despite that, it is also clear that, prior to acquiring Cadeau, he was examining other oceangoing vessels which were available from other leading manufacturers such as Marlow Yachts and Grand Banks. There was more than sufficient evidence to accept his assertion that, in the absence of any representation the Endurance 750 was suitable for crossing oceans, he would not have acquired it. The representation was a significant factor in Mr Wyzenbeek's decision. 202 The respondents submitted Mr Wyzenbeek did not rely upon the representations made to him by Ryan and Dean that the vessel was suitable for trans-ocean crossings. However, that submission must be rejected for the following reasons: (a) Whilst it is true Mr Wyzenbeek was given technical information from the boat's naval architect and as to the sea states in which it had been tested, that information was more confirmatory of the representations than contradictory. The information provided by Mr Apollonio extolled the virtues of his design rather than diminished it. True it is, Mr Apollonio did discuss the sea states in which the vessel had been tested, however that does not counter the conclusion it was suitable for crossing oceans. Indeed, in his email of 28 October 2009 Mr Apollonio asserted the vessel's capability extended well beyond seas states 3 and 4 and that sea state 5 would not be a problem and sea state 6 should be ok. In the same email he said the Endurance hull enables the vessels to be capable of handling anything that comes along in a long open sea voyage. Indeed, Mr Apollonio's observation that the vessel could handle a sea state 6 (presumably on the Douglas scale) is not irrelevant. That sea state probably overlaps with Beaufort 8 conditions and correlates to the RCD Category A vessel. In this manner the information supported rather than contradicted the representations made. (b) The respondents submitted the main purpose of the acquisition of the boat was as an "expeditionary vessel". This expression is taken from an email of Mrs Wyzenbeek of 30 July 2011, although it is not entirely clear what the expression means. However, whatever be the main purpose for which the vessel was purchased, it was always intended it would be used for crossings oceans and the respondents represented it would be suitable for that use. (c) The respondents relied upon cl 11 of the contract of purchase. That clause is referred to above and is a buyer's acknowledgment that no warranties or representations were made by the seller. Unfortunately, it does not appear Mr Wyzenbeek was squarely confronted with the effect of this clause during cross-examination. However, such clauses are of limited utility in actions for misleading or deceptive conduct. Here the acquisition of Cadeau proceeded on the basis it was a vessel capable of crossing oceans and there is no suggestion in the evidence Mr Wyzenbeek considered this clause altered the force of the representations. It is also of relevance that the acknowledgment only related to any vendor's representation. In this case that was AMI and so it says nothing of representations by other entities such as Ryan, Dean or GCCM. (d) It was also submitted that if the capacity of Cadeau to cross oceans was important to Mr Wyzenbeek, he could have required a clause to that effect in the contract. Whilst that may have been a course open to him, it is not significant in circumstances where Mr Wyzenbeek obviously trusted Dean and Ryan with whom he had dealt for a number of years. That submission also tends to invert the sequence of events relevant to the question of reliance. It was because Mr Wyzenbeek had been induced to believe that Cadeau was suitable for crossing oceans he determined to purchase it and enter into the contract. Having believed the representations which Ryan and Dean made to him it was not necessary to include a warranty to that effect. (e) The respondents placed emphasis upon the email of Mr Wyzenbeek of 26 October 2012, being the day after the Port Macquarie incident, where he identified his reliance on representations about the vessel being suitable for making extended passage in open oceans. The respondents submitted that absent from the email was any assertion of oral representations. Whilst it is true the oral representations are not expressly referred to in Mr Wyzenbeek's email, that was not necessarily the occasion for setting out the length and breadth of the representations made to him. Mr Wyzenbeek referred to the information which he then recalled as giving rise to the representation and it is not surprising that, the day after a harrowing experience, he did not recall to mind all of the occasions on which the oral representations were made. This submission also loses much of its weight when it is to be recalled that Ryan admitted making the oral representation as, effectively, did Dean. (f) The respondents further rely upon a letter sent to AMI after the Port Macquarie incident by the firm HWL Ebsworth on behalf of Mr Wyzenbeek. That letter discussed the suitability and seaworthiness of the vessel for "ocean service". It is said there was no mention of trans-ocean crossings or any allegation that a representation to that effect was made. Again there is no substance in this submission. A representation as to a vessel's suitability for ocean service would include trans-ocean crossings. The letter also intended to pick up earlier correspondence from Mr Wyzenbeek to Dean and, moreover, it does not even seek to touch upon the circumstances which influenced the acquisition of the vessel. (g) The respondents also relied upon a letter from DLA Piper to Dean of 12 March 2014. It is said that in certain paragraphs of that letter "there is not a single mention of pre-contractual representations". Whilst it may be the case the pre-contractual representations were not expressly referred to in the identified paragraphs, they are alluded to in paragraphs 2 and 3 of the letter. Again, this submission is somewhat otiose in the circumstances where Ryan admitted the making of the oral representations and that the substance of them was a selling point. The representations were clearly made and intended to be relied upon. The submission they were not relied upon is untenable. 203 The respondents also placed some emphasis upon the contractual provisions creating a "pre-purchase inspection date" and a "trial run date". The buyer was permitted to conduct an inspection and obtain reports from the experts and, if not satisfied, terminate the contract by 5pm on the "pre-inspection purchase date". If the buyer did not terminate by that date, it could still terminate the agreement by 5pm on the "trial run date" if it is was not "satisfied" with the trial run of the vessel. The respondents submitted this meant Mr Wyzenbeek had two opportunities of relinquishing the contract without financial penalty but did not do so. The relevance of this submission is not entirely clear. It was not suggested any pre-inspection of the vessel or any sea trial disclosed the vessel's inadequacies. On the contrary, it would appear they were not disclosed on either occasion. 204 It is abundantly clear Mr Wyzenbeek (and through him, Mrs Wyzenbeek) did rely upon the representations. The respondents' submissions to the contrary were lacking in any substance. 205 The respondents also submitted the reliance by Mr Wyzenbeek on the representations made to him was not reasonable: Tepko Pty Ltd v Waterboard (2001) 206 CLR 1 at 16-17 [47]. In the circumstances that is, again, a most unlikely submission. Both Ryan and Dean held themselves out to the Court as being extremely knowledgeable about boats of this nature. Dean even propounded himself and his abilities to the public on television programs albeit that was after the purchase. Moreover, the emails from Dean and Ryan emphasised their ability, along with their engineers, to have a vessel produced which met the Wyzenbeeks' requirements and to ensure that it was "100% right prior to departing the factory". By this they represented they had expertise and ability in delivering a quality product and the respondents adduced no evidence to suggest Mr and Mrs Wyzenbeek ought not have relied upon these comments. Although, as the facts show, neither Dean nor Ryan actually had any reasonable basis for making the representations, their self-asserted standing in the boating community nevertheless made it reasonable for Mr Wyzenbeek to have relied upon them. It follows, to the extent to which an applicant's lack of reasonable care may be relevant to the statutory causes of action: Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112: I reject the respondents' submission that Mr and Mrs Wyzenbeeks' reliance was not reasonable. 206 The respondents also submitted Mrs Wyzenbeek did not give evidence in her own cause such that there is no evidence she relied upon the representations. As has been indicated above, it is apparent from the circumstances that, as between herself and her husband, it was the latter whose decision was determinative of their course of action. There is more than sufficient objective evidence of the relationship between Mr Wyzenbeek and Mrs Wyzenbeek to infer that she was prepared to do what Mr Wyzenbeek decided. 207 The evidence shows that the representations made by Ryan and Dean on behalf of themselves and AMI and GCCM were relied upon by Mr Wyzenbeek and, through him Mrs Wyzenbeek.

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Loss and damage 208 The applicants claimed they suffered loss and damage by the misleading or deceptive conduct of the respondents. They submitted that, had the representations not been made, they would not have entered into the contract to acquire Cadeau. They further said the damage suffered by them as a consequence of the misleading conduct is to be ascertained by adding to the purchase price of the vessel, the cost of remedying the defects in it and subtracting from that its present value. In this respect they submitted this was a "no transaction" case and the damage is best ascertained by examining the value of the asset acquired as at the date of trial, being the value of the asset which is left in their hands and comparing that to the purchase price: HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 (Astonland). 209 The respondents submitted this case does not fall within the concept of a "no transaction" case. Their submission was that, had the representations not been made, the Wyzenbeeks would have acquired a different vessel, quite probably a Marlow Yacht, and they would be in substantially the same position they are now if they had done so. 210 From the submissions made it is apparent there is a difference between the applicants and respondents as to the meaning of the nomenclature, "no transaction case". The applicants freely admitted that, had they known the true position, they would not have entered into any transaction to acquire a Hampton 750 and they would have acquired a different vessel probably from a different seller. In essence, whilst they would not have acquired an Endurance 750, they would have acquired a large, ocean going motor vessel. Contrary to that being a "no transaction" case scenario, those submissions suggest this is a "different transaction" case. However, as Applegarth J in Westpac Banking Corporation v Jamieson [2016] 1 Qd R 495 at 543 [143]-[144] (Westpac v Jamieson) explained, the use of labels such as "no transaction" and "different transaction" case tend to obscure the real issue, being to assess the loss or damage sustained by the applicant because of, or by reason of, the misleading or deceptive conduct. That undertaking necessitates a comparison between the position of the applicant prior to the misleading or deceptive conduct, or more accurately prior to it being acted upon, and their subsequent position. In cases where the applicant claims to have suffered loss as a consequence of relying upon the misleading or deceptive conduct by engaging in a course of conduct, a necessary consideration is to ascertain what the position of the applicant would have been had the misleading or deceptive conduct not occurred. In other words, it requires an assessment of the hypothetical scenario which the applicant would be in if they had not been induced to act by reason of the misleading or deceptive conduct. That position is sometimes referred to as the "counterfactual", which may be a different transaction or simply the position the applicant was in immediately prior to acting on the misrepresentation.

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General principles 211 Section 236(1), of which s 82 of the TPA is the progenitor, provides for the recovery of damages in circumstances, inter alia, where a corporation or person has engaged in misleading or deceptive conduct in contravention of the s 18 of the ACL: 236 Action for damages (1) Recovery of loss or damage If: (a) a person (the claimant) suffers loss or damage because of the conduct of another person; and (b) the conduct contravened a provision of Chapter 2 or 3 the claimant may recover the amount of the loss or damage by action against that other person, or against any other person involved in the contravention. 212 Despite the simplicity of the provision's structure, issues of causation and damage in relation to claims for statutory misleading or deceptive conduct have provided fertile ground for extensive debate and diverging opinions, especially in relation to causation and assessment of loss. However, a review of the more recent authorities suggest that some general principles have now crystallised. 213 The statutory prohibition on misleading and deceptive conduct under s 18 of the ACL (or s 52 of the TPA) concerns conduct engaged in "in trade or commerce". The reference to "trade and commerce" suggests the section is usually focused upon the detrimental impact on the economic interests of those affected by a breach of it. It is not limited to conduct impacting the economic interests of consumers. It proscribes certain conduct in all forms of trade and all forms of commerce. As such it establishes a legislatively imposed standard of normative behaviour for persons (now both corporations and individuals alike) in relation to their activities in trade or commerce, the main object of which is to avoid damaging the economic interests of others by engaging in misleading conduct. 214 Section 236 (as did s 82 of the TPA) affords the claimant an entitlement to the payment of a sum of money to compensate them for the loss or damage which has occurred "because of" ("by" under the TPA) the misleading or deceptive conduct which was engaged in "trade or commerce". It provides for the awarding of damages to compensate for the diminution of the claimant's economic position caused by the wrongdoer's contravention of the standard of behaviour imposed by the statute. The decisions in Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 at 503-4 [17] (Marks v GIO) and Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 at 407 [45] (Murphy v Overton) left open compensation for other forms of "prejudice" or "detriment", although the nature and content of that relief is unclear. In this case, where the only compensation sought is for economic loss, there is no need to consider what might constitute that alternative relief. 215 Neither s 18 nor s 236 requires the claimant to act in reliance on the misleading or deceptive conduct in order for compensable damage to arise, albeit that is the most common scenario. For instance, misleading conduct in the nature of "passing off" causes loss to the claimant although it is the potential consumers of the claimant's products or services who have acted in reliance on the conduct. 216 Although recent authorities reveal some general uncertainty remains concerning the principles of causation and assessment of damage in misleading or deceptive conduct cases, in broad terms, the following general propositions appear to have emerged: (a) The overriding concern is to compensate the claimant for any diminution in their economic position which has been caused "by" or occurred "because of" the misleading conduct. (b) It is important to keep steadily in mind that the causal nexus between the misleading conduct and recoverable loss is essential. A contravention of the statutory norm prohibiting misleading or deceptive conduct, of itself, does nothing to the economic interests of others. It is "in the wind" and has no consequence unless and until it is perceived and relied upon such that some further act or omission occurs as a result. Where the representation is a "public" one, the claimant may suffer loss where its potential customers are deterred from doing business with it on the faith of the truth of the misleading conduct. Where the representation is "private" and between a limited number of parties, loss usually arises consequent upon the representee/claimant relying on the representation, by act or omission, with the consequence their economic position is diminished. That might occur in a variety of ways although the two most usual scenarios are that the claimant enters into a transaction which is to their immediate economic disadvantage (even if not immediately ascertainable) or, enters into a transaction where they have assumed a risk to their economic position which is greater than they had contemplated, and that risk eventuates. The reliance may also be the omission to act in a particular manner with the consequence that the claimant maintains their existing economic position which transpires to be disadvantageous. (c) Reliance on misleading conduct has multiple aspects. In many cases it will induce the claimant to enter into a particular transaction which they would not otherwise have pursued. It is also frequently the case that, because the claimant entered into that transaction, they will not have entered into an alternative transaction which they might have done save for the misleading conduct. In the assessment of the claimant's loss it is necessary to consider the economic consequences of entering into the transaction which they did, which usually involves sustaining loss and, if applicable, the economic impact of not having pursued an alternative transaction which may add to or lessen that loss. Presently, it is not a requirement for the existence of a valid cause of action for a claimant to postulate some positive counterfactual position which represents an enhanced economic position to the one in which they assumed because of the misleading conduct: Westpac v Jamieson. They may simply seek to recover the immediate losses arising from entering into a new transaction. But such an approach implicitly assumes that, in the absence of the misleading conduct, the claimant would have retained the money which they expended on the transaction and that, of itself, represents a counterfactual scenario. Even where the claimant does not assert the existence of a counterfactual scenario, the respondent may do so and seek to establish that, in the absence of the misleading conduct, the claimant would have acted in a manner which would have had the effect of lessening or negating the transactional losses which were sustained by adopting a new economic position. (d) The entitlement to relief under the statutory provisions is dependent upon the damage being caused by (s 82 of the TPA) or arising because of (s 236 of the ACL) the contravention of the statutory norm. Putting aside relief for other "detriment" or "prejudice" as was referred to in Murphy v Overton and Marks v GIO, misleading or deceptive conduct must have resulted in an act or omission to act which has diminished the claimant's economic position from that which it would otherwise have been. Often the claimant will have entered into an improvident transaction in reliance on the misleading conduct with the consequence that their economic position is diminished from that which it would have been had the transaction not been entered into or a different transaction had been entered into. Although in Travel Compensation Fund v Tambree (t/as R Tambree and Associates) (2005) 224 CLR 627 at 640 [32], Gleeson CJ referred to that type of damage as being "indirect", it is probably as immediate as damage can arise consequentially upon misleading or deceptive conduct. (e) A common consequence of misleading or deceptive conduct is entry by the claimant into a transaction where they are exposed to additional risks which they had not intended to assume. In such cases, the claimant may not suffer any actual immediate loss on entry into the transaction and the additional risks may not materialise or become apparent for some time or have the immediate effect of reducing the value of the thing acquired. Nevertheless, the claimant has altered their economic position by adopting a more hazardous economic position than they would have otherwise. If the risks, which were the subject of the misleading or deceptive conduct, subsequently materialise and cause loss, "it is consistent with the purpose of the statute to treat the loss as resulting from the misleading conduct": Travel Compensation Fund v Tambree (t/as R Tambree and Associates) at 640 [32] per Gleeson CJ. The use of the word "treat" does not suggest the adoption of a convenient fiction by which liability for loss is attributed to the contravenor. Leaving aside matters such as a break in the chain of causation, the diminution in the claimant's economic position arising by reason of the materialisation of the risk which was the subject of the misleading conduct, is self-evidently loss caused by that conduct. If the misleading conduct concerning the risk has induced the representee to adopt (by act or omission) an economic position they would not otherwise have and loss occurs consequent upon the risk materialising, the conduct is causative of that loss. The loss is intimately connected with the misleading conduct: cf Agricultural Land Management Ltd v Jackson (No 2) (2014) 48 WAR 1 at 85-6 [452]. (f) The calculation of loss does not assume the claimant's pre-representation economic position would have remained static from the point in time when the relevant transaction was entered into. The loss is measured as the difference between the economic position the claimant is in as a result of the conduct and that which they would have been in had the conduct not occurred. Regularly, claimants will assert a counterfactual which involves them entering into an alternative and more advantageous transaction to the one they did. If that counterfactual is established, the calculation of loss includes the value of the lost opportunity of entering into an alternative transaction. This postulated hypothetical scenario necessarily involves a "subjective consideration" of what the plaintiff claims they would have done had the misleading conduct not occurred: Jamieson v Westpac Banking Corporation (2014) 98 ACSR 63 at [140] (Jamieson v Westpac); Chappell v Hart (1998) 195 CLR 232 at 246 [32]. Conversely, a respondent might assert that had the misleading conduct not occurred, the claimant would have entered into an alternative transaction which would have left them in the same or a worse economic position than has the transaction which they did enter. If that is so, those matters must be taken into consideration to accurately measure the true detrimental impact, if any, of the claimant altering the economic position in reliance on the misleading conduct. (g) Whether the loss arising from a person acting on the misleading or deceptive conduct is referred to as "direct", "primary" or "immediate" does not matter. The claimant is only compensated for the diminution in their economic interest which has been caused by the contravention of the statutory norm. More needs to be shown than the loss would not have occurred "but for" the conduct. Whilst satisfaction of that test is necessary, it is not sufficient. Compensation is for loss caused by the misleading conduct, not for loss that is sustained only because the misleading conduct placed the claimant in a position where loss was suffered from other causes. The position is different where the claimant cannot reasonably extricate themselves from their altered economic position and, as a consequence, they suffer additional loss from causes unrelated to the misleading conduct. (h) Difficulties arise where the diminution of the claimant's economic position has been contributed to by other factors which are not a direct consequence of the misleading conduct. In such circumstances, it is necessary to quantify the amount of loss which the contravener's conduct has caused and, in that process, exclude losses arising from those other causes. This may be done in in various ways. The approaches afforded by the rule in Potts v Miller (1940) 64 CLR 282 or by ascertaining the value of what is left in the claimant's hands at the date of the assessment of damages and deducting that from the price paid (referred to herein as the Astonland measure), are quantification tools, applied in appropriate cases, to accurately identify the actual losses caused by the misleading conduct. The rule in Potts v Miller is useful where, subsequent to the claimant assuming a less favourable economic position induced by the misleading conduct, further diminution in the economic position occurs as a result of factors which are "extrinsic" or "supervening" to or "independent" of, the misleading conduct. Here such factors are referred to by the shorthand "extraneous factors". The rule in Potts v Miller easily eschews those subsequent extraneous influences by considering the diminution of the claimant's economic position immediately consequent upon entering into the transaction and by using the "true value" of the thing acquired as the comparator to the purchase price. The consideration of the value of the thing acquired as at the date of its acquisition, temporally removes causes of loss of value which arise after the transaction. The use of the concept of "true value" ensures that the damages awarded reflect the actual diminution of the claimant's economic position caused by the wrongful conduct, albeit taking into account subsequent events which are not extraneous. On the other hand the Astonland measure is most applicable where the consequences of the misleading conduct persists causing the claimant's economic position to further deteriorate and where extraneous factors do not independently contribute to the deterioration. That may occur where the claimant is not able to extricate themselves from the position which they have been induced to assume with the consequence they sustain additional damage from factors which, by themselves, would not otherwise have been connected with the misleading conduct. An example may be where trading losses are sustained after the acquisition of a business in reliance upon misleading conduct if those losses were unavoidable and are not compensated for by an award of damages for the primary loss: Gould v Vaggelas (1985) 157 CLR 215 at 220. However, the Court is not limited to these two approaches and some other point in time might be more appropriate for the assessment of loss caused by the misleading conduct. Whichever date is selected, the losses subsumed in the calculation must be causally related to the misleading conduct and losses which are only connected by the application of the "but for" test are excluded: Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 at 457. Both the rule in Potts v Miller and the Astonland measure are directed to valuing the loss or damage which has actually been caused by the misleading or deceptive conduct and eschewing the loss or damage caused by factors which are not connected to it: Travel Compensation Fund v Tambree (t/as R Tambree and Associates) at 640 [32] per Gleeson CJ. (i) In the calculation of loss suffered by a claimant because of misleading conduct, matters which causally vitiate the wrongdoer's liability, either in part or in whole, are to be excluded such as losses contributed to by claimant's own conduct: s 137B ACL. (j) The necessary concomitant of the foregoing is that compensation under s 236 of the ACL (or s 82 of the TPA) is concerned with remediating the loss actually suffered or the diminution in the claimant's economic position. That is, providing compensation. It is not concerned with perfecting "bargained for" benefits or affording protection in relation to that which was promised but did not materialise: Jamieson v Westpac at 93 [170]; Bennett v Elysium Noosa Pty Ltd (in liq) (2012) 291 ALR 191 at 260-261 [259]. 217 The above does not improperly seek to conflate the statutory entitlements for loss or damage with that of a common law formulation applicable in respect of tortious conduct. All it does is to independently apply the words of the statute, which require remediating the loss or damage which the claimant has sustained, to their economic position "by" or "because of" the impact of the conduct engaged in in contravention of the statutory norm: Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494, 512 at [41]. Although this is similar to the objective of damages in tort, being to put the claimant into the economic position which they would have been in had the tort not been committed, that similarity occurs merely because both s 236 and the principles of damages at common law are concerned with remediating the consequences of the violation of standards of normative behaviour: Jamieson v Westpac at 93 [172]; Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 at 39. Neither are concerned with the protection of benefits which have been "bargained for" by a party who has provided consideration as is the case with contractual damages. Without descending into the debate concerning the differences between "reliance" losses and "expectation" losses, the very clear reason why a claimant cannot recover under the ACL for the non-fulfilment of a misrepresented benefit in a transaction is because that non-fulfilment did not amount to a loss; being a diminution in their economic position. The mere making of a representation that a benefit will be conferred does not, at law, afford the claimant an entitlement to its receipt in the absence of consideration and the non-conferment of that benefit does not cause the claimant a "loss" of that benefit.

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The rule in Potts v Miller 218 The "rule in Potts v Miller" was discussed at length during the submissions in this matter and it requires detailed independent consideration. That rule quantifies damage by considering the claimant's economic position prior to and immediately after the impact of the misleading conduct. This is often done by comparing the purchase price paid for the acquisition of the subject matter of the transaction with its "true value" at the date of the transaction. The purpose of assessing the loss at that point in time is to ensure losses not caused by the misleading inducement or which arise from extraneous factors are excluded from the calculation of damages. Necessarily, it excludes losses only connected to the conduct by the "but for" analysis: Potts v Miller at 198. The rule is most suitable in circumstances where the claimant has suffered a singular and complete diminution of their economic position on the entering into of the transaction and, subsequently, only unconnected, extraneous factors have contributed to further loss. But that is not to say that the rule restricts the Court's consideration of "true value" to matters known at the time of the acquisition of the asset. The requirement to consider the asset's "true value" necessitates a wider consideration of the factors affecting its value. In Astonland at 656-657 [35] the High Court noted the flexibility in the rule: One key qualification of the rule which prevents it from being inflexible is that the test depends not on the difference between price and "market value", but price and "real value" or "fair value" or "fair or real value" or "intrinsic" value or "true value" or "actual value" or what the asset was "truly worth" or "really worth" or "what would have been a fair price to be paid … in the circumstances … at the time of the purchase". This distinction is sometimes difficult to draw, but it is old and fundamental. 219 The concept of "true value" is, itself, not without difficulty. It has been said that in ascertaining it, a court may take into account matters that diminish the value of the asset which are "intrinsic" or "inherent" in the asset itself. In Potts v Miller at 298-9, Dixon J relied upon the example given by Cockburn CJ in Twycross v Grant (1877) 2 CPD 469 at 544 that if a person was induced to acquire a racehorse on a misrepresentation as to its racing abilities although it was, in fact, greatly inferior but the horse dies of a latent disease inherent in it at the date of acquisition, the purchaser may recover the entire amount of the purchase price paid. If, however, the horse was healthy when acquired but subsequently contracted a disease and died the purchaser could only recover the difference between the price paid and the real value of the horse. Whatever the applicability of that example to actions in deceit, its application to the assessment of damages under the ACL or the TPA, is problematic. Not in the least it looks very much like the application of a "but for" measure of damages, rather than limiting damages to compensate for the losses which have flowed directly from the misrepresentation. However, Twycross v Grant, being a case concerning fraudulent misrepresentation, involved consideration of the measure of damages usually applied in actions for deceit where the wrongdoer is liable for all of the consequences of the tort save for those which arise as a result of supervening events: Gould v Vaggelas (1984) 157 CLR 215 at 266; Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd [1997] AC 254 at 278 - 279 (Smith New Court Securities). That approach is, perhaps, derivative of the maxim fraus omnia corrumpit (fraud unravels all), such that a person who has been fraudulently induced to enter into a transaction is entitled to be placed in the position they would be if everything that occurred as a result of the fraud is undone. 220 For the purposes of assessing damage in respect of torts where the scope of recoverable damages is not as wide as in deceit, the factors contributing to the diminution in the value of the thing acquired which might be excluded as extraneous when ascertaining "true value", will be greater. Necessarily the scope of the "true value" test must be coherent with the scope of recoverable damages for the tort generally. This is implicitly identified in more modern statements of the "true value" test that, for the purposes of the rule in Potts v Miller, ascertaining a thing's "true value" necessitates disregarding those causes of the diminution in value which are "independent", "extrinsic", "supervening" or "accidental" to the fraudulent inducement: Gould v Vaggelas at 220 per Gibb CJ; Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281 at 291 (Kizbeau); Astonland at 660 [43]: and which have occurred later in the history of the asset: Westpac v Jamieson at 537-8 [119] per Applegarth J. The italicised words, "to the fraudulent inducement", are important and emphasise the damages for which a wrongdoer is liable are those which have been caused by the misrepresentation. 221 The objective of the rule in Potts v Miller, as is the case with the Astonland measure, is to calculate damages to reflect that loss which is actually caused by the contravening conduct. In cases such as the present, the adoption of the appropriate measure is determined, to some extent, by the nature of the misleading conduct and the manner in which damage is claimed to flow from it. If the conduct in question is referrable to some enduring characteristic of the asset acquired which has the consequence that the effect of the conduct continues until subsequent events reveal its misleading nature, the rule in Potts v Miller may well be inapposite. A comparison between the sale price and true value will not necessarily or appropriately expose the full extent of the damage caused by the conduct. In ABN AMRO Bank v Bathurst Regional Council (2014) 224 FCR 1 at 186 [963] (ABN AMRO) the Full Court of this Court referenced this issue in the context of identifying that the causes of the diminution in the value of the assets acquired in that case, which were investment notes, were characteristics of those notes to which the misleading conduct was directed. The Court said at 189 [971]: Here, the questions posed by Potts v Miller are inapposite because, as we have explained when assessing the "scope of liability" or normative assessment of causation, the loss was caused by the inability of the notes, inconsistent with a AAA rating, to survive relatively rapid credit spread widening without mean-reverting in the short to medium term. That loss was attributable to the characteristics of the notes themselves (and the characteristic of the notes to which the negligent and misleading statement made by each of ABN Amro and S&P was directed), not an extraneous event: at J[3417], [3427] and [3455]-[3456]. The primary judge was correct to conclude that in those circumstances, the true measure of LGFS' loss is the amount paid by LGFS for the notes less the amount it received on the notes being sold to LGSS: at J[3462] . 222 The words in parenthesis are reflective of those used by the High Court in Astonland where their Honours indicated that causes which were "independent", "extrinsic", "supervening" or "accidental" to the fraudulent inducement were excluded. In ABN AMRO the characteristic of the notes which caused them to lose value was intimately connected to the representation and not extraneous to it. 223 In Astonland, the High Court identified the decline in rental levels (and therefore the value of the arcade) as being a similarly inherent cause of the diminution of the true value. Their Honours compared it to the inherent weakness in the horse as per the example used by Dixon J. The rental levels were said to be "pregnant with disaster", such that the arcade was doomed from the start because it would always be adversely affected by the new shopping centre. This weakness in the rental values was intimately connected with, and therefore not extraneous to, the misleading conduct, being the erroneous advice that the opening of the new shopping centre was not likely to affect existing retail tenancy levels. As the Court said, the subsequent events arose from the nature of the arcade and its commercial and geographical environment. They were not events which arose from "sources supervening upon or extraneous to the fraudulent inducement" (Astonland at 660 [43]). This essential connection between the diminution in price of the thing acquired and the misleading inducement was also emphasised in Kizbeau at p 291. 224 The rule in Potts v Miller, as refined by the decisions in Astonland, Gould v Vaggelas and Kizbeau, will regularly be an appropriate formula for the assessment of damages for misleading conduct where the only effect of the conduct is the acquisition of an asset which results in a diminution of the claimant's economic position. The assessment of "true value" by reference to those causes of loss which are not extraneous to the misrepresentation, ensures that the assessment of damage reflects the loss the claimant sustained "by" or "because of" the misrepresentation. 225 It follows that the rule is generally inapplicable where the impact of the misleading or deceptive conduct does not occur immediately, but is experienced over an extended period such as where the operative representations relate to an assets future performance or value. The facts in Astonland provides a good example. There, the representations (which concerned the existing and future value of the shopping arcade) related to its future performance as affected by the opening of a new shopping complex nearby. The representations continued to have effect until the opening of the new shopping complex caused the rents of the arcade shops to decline. This circumstance should not be confused with the situation where the misleading conduct only has an immediate impact but the claimant only becomes aware of the falsity some time later. 226 Similarly, the rule is not an appropriate measure of loss where the representee cannot easily extricate themselves from their altered economic position, as a result of which they are exposed to additional loss causing events. As was said by Applegarth J in Westpac v Jamieson at 538 [120]: [120] The rule in Potts v Miller has been said to be a test which may well produce a fair result if the asset is "a readily marketable asset". It does not normally apply when either the misrepresentation continues to operate after the date of the acquisition so as to induce the plaintiff to retain the asset or that the circumstances are such that the plaintiff is "locked into the property". (footnotes omitted)

[35]

Benefits left in the plaintiff's hands - The Astonland measure 227 The authorities demonstrate that in many cases the loss or damage suffered on the acquisition of property consequent upon misleading conduct can be greater than the difference between the price paid and the true value of the asset at the time of purchase: ABN AMRO. That is particularly so where the transaction entered into has an anticipated temporal element to it, such as where the claimant is induced to acquire an investment which will mature in a number of years and the inducing conduct concerned the veracity of that investment for its duration. There, the measurement of loss at the expiry of the investment is necessarily a more apposite consideration as any decline in the investment's value over time is likely to be associated with the nature of the inducing representation. Similarly, where the misleading conduct continues to have an operative effect or the claimant is "locked into" the investment or asset for an extended time, there is little reason to limit the assessment of damages to the "true value" at the date of sale: ABN AMRO at 188-9 [971]-[972]). 228 The preferred approach to assessing damages in circumstances such as those described immediately above was identified in Astonland as being the calculation of the difference between the price paid for the thing acquired less the value of the benefits left in the plaintiff's hands: at 666-668 [63] - [67]. That approach has the same overriding objective as the rule in Potts v Miller, being the ascertainment of the diminution of the claimant's economic position occurring by or because of the misleading conduct. As the description indicates, it involves measuring the claimant's loss by reference to the value of the asset acquired as at the date of trial (or, perhaps, at some other date subsequent to its acquisition). In Astonland, the Court relied upon the observations of Lord Steyn in Smith New Court Securities at 284 that the rule in Potts v Miller is simply a second order rule, applicable where the valuation method is employed and, where that method is inapposite, the Court should simply assess loss flowing directly from the transaction. At 667-668 [65] the High Court identified the purpose of the rule in Potts v Miller was the exclusion of the losses resulting from extraneous causes occurring later in the history of the asset. However, it regarded the case before it as being "an unusually pure one", in that the only cause of the diminution of the value of the arcade over time was the impact of the opening of the new shopping centre which was the very thing which had been represented would not affect the rental levels of the retail tenancies. As there was no other cause of the decline in the value of the arcade, there was no need to consider a comparison of the purchase price with the true value at the date of acquisition. The High Court (at 668 [66]) also approved the observations of the House of Lords to the effect that the rule in Potts v Miller may well produce a fair result if the asset acquired was readily marketable and there was nothing which tied the purchaser to the asset, such as a continuing representation or the purchaser being financially locked into the business acquired. In the matter before it, the misrepresentation had locked Astonland into the arcade well after the impact of the misrepresentation was felt and was known because, as the difficulties with its viable operations appeared, it ceased to be a readily saleable asset.

[38]

Jamieson v Westpac 231 Any consideration of the principles surrounding loss or damage for misleading or deceptive conduct necessarily requires an understanding of the analyses of Jackson J in Jamieson v Westpac and of Applegarth J on appeal in Westpac v Jamieson. 232 The facts in the Jamieson matters concerned the provision of advice to Mr and Mrs Jamieson as trustees of a self-managed superannuation fund by a financial planner employed by Westpac Banking Corporation (Westpac). The advice given was that the Jamiesons should borrow a substantial amount of money to invest in a managed investment scheme and borrow a further substantial sum in order to make contributions to their superannuation fund. The investment was unsuccessful and the superannuation contribution did not achieve the represented outcome. The Jamiesons commenced an action against Westpac which included a claim under s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) which imposed a similar prohibition on misleading or deceptive conduct to that in s 18 of the ACL. It was found Westpac had engaged in misleading or deceptive conduct by failing to mention the investments involved the capitalisation of interest in a significant amount. It was also found that had Westpac not failed to mention this, the Jamiesons would not have made either investment. Westpac submitted that it had not shown there was any difference between the price which was paid for the investments and their value at the time of investing and, on the application of Potts v Miller, the plaintiffs had failed to establish the suffering of any loss or damage. It also alleged that the Jamiesons would have entered into some other similar transaction had they not entered into the advised investments and, for that reason also, they suffered no loss. 233 In his Honour's consideration of the quantification of loss and damage, Jackson J referred to the decision of the House of Lords in Smith New Court Securities on which the High Court had relied in Astonland, as supporting the calculation of compensation by deducting the value of the asset at the date of trial from its purchase price. His Honour held that, unlike the approach in the rule in Potts v Miller, this alternative approach would compensate the plaintiff for losses which were, of themselves, extraneous to or independent of the wrongdoers conduct. He said: [202] Given that Astonland expressly recognised the possibility of a net gains or losses approach, is it appropriate to apply that approach in the present case, in preference to the rule in Potts? [203] At the outset, it must be recognised that the two approaches capture different things. Because the rule in Potts measures the difference between price and value at the date when the plaintiff acquires the property acting under the inducement of the fraudulent inducement, it excludes subsequent or continuing losses, such as a later fall in general market value. These are not treated as part of the plaintiff's loss arising from the wrong. [204] On the other hand, because the net gains or losses approach looks at the position as at the date of the trial it will necessarily pick up gains or losses which occur after the acquisition. It thus operates to include gains or losses irrespective of whether they would otherwise be seen as attributable to the plaintiff's wrong. 234 I respectfully adopt his Honour's elucidation of the two approaches to the assessment of damages. The net gains or losses approach would entitle the claimant to recover any losses which were, of themselves, "independent", "extrinsic", "supervening" or "accidental" to the inducement in the sense used in Astonland. That was the approach adopted in Smith New Court Securities where Lord Brown-Wilkinson made it clear it was founded upon the decision in Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158. In that latter case it was held there may be circumstances where it was appropriate to assess damages by reference to the sale proceeds of the asset the claimant had been induced to acquire, provided that the person had acted reasonably in retaining it until it was sold. Such circumstances were identified by Lord Brown-Wilkinson at 265 as including where the "defendant's fraud has had an effect continuing after the transaction is completed" or where the nature of the asset acquired "locks in" the purchaser to hold it until a sale can be effected. An example of the latter situation would be where a person is misled into acquiring a franchise business which often involves the franchisee entering into leases with third parties from which they cannot readily extricate themselves. The calculation of losses in such a case would include compensation for the diminution in the claimant's economic position due to factors which are extraneous to the misrepresentations and which occur in the period until it is no longer reasonable for the claimant to remain in possession of the business. 235 Necessarily, the Astonland measure permits the computation of loss to include the diminution in the economic position of the plaintiff which is not directly referable to the misleading conduct, such as a general market decline for the value of the thing acquired. But this is entirely justified. Where the misleading conduct caused the claimant to enter into a transaction and it is reasonable for them to remain in that transaction, they are entitled to claim compensation for the entire reduction in their economic position regardless of whether the causes of the reduction, themselves, are directly referable or "attributable" to the misleading conduct. In these cases, the misleading conduct has a wider economic impact than merely causing damage which is directly referable to the wrongful conduct. It causes the claimant to adopt an economic position susceptible to "extraneous" or "independent" sources of loss. In Smith New Court Securities at 265 a number of examples of this scenario were considered. To those can be added the situation where the misleading conduct is as to a future matter and the misleading nature of the conduct does not reveal itself until well after the transaction has been entered into. In effect, a continuing representation of the kind considered in Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413. There, an insurer, entered into a mortgage insurance contract acting on the misrepresentation of a valuer that the proposed mortgage would be suitable security over the duration of the loan. When the security was enforced some years later, it was found wanting. The insurer was entitled to recover the whole of the loss (effectively the difference between the price paid and the realised proceeds of the sale of the security) rather than the amount which would have been calculated on the Potts v Miller approach. That would include amounts referable to deteriorations in the value of the security caused by the general market decline. 236 In Jamieson v Westpac Jackson J held that in the circumstances before him it was not appropriate to calculate damages using the Potts v Miller approach. The plaintiff had acquired units in a managed investment trust, however that was only part of the transaction which had been induced by the misleading conduct. The transaction also involved the plaintiff entering into a three year loan on particular terms and conditions. It was not apparent that the plaintiff was able to withdraw from the transaction without penalty and there was nothing to suggest that the units were readily saleable or that the whole structured investment might be sold on-market. In effect, it was an illiquid investment. Consequently, a measure of damages based upon the difference between the price paid and the true value was not appropriate. His Honour said at 102-103: [212] In my view, once it is accepted that there will be cases where it is appropriate to assess damages at a date later than the time of the transaction, on the principle of net gains and losses, that approach may be appropriate in a "transactional" case where it is difficult to attempt an assessment of damages as at the date of the wrong because of the lack of an available market or information as to value, or where the plaintiff was unable to sell the thing acquired and should not have acted to sell the thing acquired before the trial or some earlier date when the loss crystallised. [213] In those circumstances, the loss or damage suffered by the plaintiff as measured by a net gains or losses approach is the actual loss, not a hypothetical amount of loss that would have been suffered in hypothetical circumstances that did not and could not reasonably have occurred. As well, it is important that there be no circumstances justifying why the losses which were sustained should be treated as not having been caused by the contravening conduct in whole or in part. The guiding principle remains: a plaintiff should be restored to the position as if it had not acted detrimentally on the inducement of the misleading representation. 237 His Honour's reasoning in relation to the appropriate measure of damages was upheld by the Court of Appeal in Westpac v Jamieson. Before that Court, Westpac Bank argued that an approach which compares the purchase price with the value of the asset at trial impermissibly allows the assessment of damages to take into account extraneous or supervening causes such as a general decline in the market as, in that case, was caused by the global financial crisis. However, as Applegarth J correctly identified at 539-540 [127]-[132], the advice the Bank ought to have given, instead of the misleading advice, should have protected Mr Jamieson against the very risks which eventuated as a result of the general market decline. In that way, the general fall in the market was not "extraneous" or "supervening" to, or "independent" of, the misleading conduct. It was the very thing which the advice sought by Mr Jamieson was to guard against. However, it may be his Honour's observations in this respect, although entirely correct, were perhaps, unnecessary. Once the conclusion is reached that the appropriate method of assessing damages is one which considers the value of the asset in the hands of the claimant at the date of the trial (or some earlier date if sold before trial), there is no need to further consider whether the various causes of decline in the value of the asset are "extraneous" or "independent" or "supervening". Necessarily, the circumstances of the case have led to the conclusion that the impact of the misleading conduct was such that it was not reasonable for the plaintiffs to have extricated themselves from the transaction earlier. Once that conclusion is reached all causes of the diminution of the plaintiff's economic position are consequential upon the misleading conduct which caused the plaintiff to assume a position which exposed them to a diminution in their economic circumstances.

[39]

When the Astonland measure is appropriate 238 The above consideration of the various authorities reveal some of the overlapping circumstances which render the application of the Astonland measure an appropriate measure of damage: (a) First, where the misleading conduct has a continuing operative effect which induces the person misled to maintain the economic position they were induced to adopt. Whilst the representation continues to so operate, loss caused by factors extraneous or supervening to the representation, such as general market declines, should be compensable on the basis that the misleading conduct continues to expose the claimant to that loss. It must be stressed that the issue is not whether the claimant remains unaware of the falsity of the misleading conduct. It is its continuing impact which is relevant. (b) Secondly, where the claimant is unable to reasonably extract themselves from the economic position which they were induced to adopt, the extraneous or supervening losses are similarly compensable. Again, the adopted economic position has exposed the claimant to these losses. (c) Third, as in the circumstances described by Applegarth J in Westpac v Jamieson, where the misleading conduct concerns the suitability of an investment or acquisition over the long term, risks which crystallise in that period and cause loss ought also to be compensated. As was indicated by Applegarth J, such losses may not be properly regarded as extraneous to the misleading conduct. They may be the result of the risks associated with that conduct such that they are directly "caused by" the conduct. For example, a decline in the general market is a risk which is intimately connected to a representation that an investment will maintain is value over the long term. 239 The difference between the first and third situations is that in the latter the causes of loss in respect of which the claimant is compensated are not necessarily extraneous at all. They are not "extraneous" or "independent" or "supervening" to the misleading conduct but are directly related to it.

[41]

The extent to which the claimant or defendant must demonstrate the counterfactual 241 Regardless of which method of assessment is applied to the calculation of damage consequent upon the claimant having been induced to enter into a transaction, a further issue arises as to what they would have done had they not been so induced. This is a separate step to the quantification of loss arising directly from the entry into the transaction and concerns the claimant's counterfactual economic position. The claimant may rely upon the existence of the counterfactual to assert that its loss is greater because it forewent a valuable opportunity to enter into a different transaction. Alternatively, the defendant may assert the existence of the counterfactual in an attempt to diminish the quantum of damages on the basis that the claimant would have entered into a different transaction to the one it did and would have suffered loss in any event. 242 As is apparent from the above, the damages to which a claimant is entitled will depend upon how the claim is framed and the nature of the evidence adduced. Of critical importance is the identification of the claimant's act or omission which occurred in consequence of the misleading conduct and, additionally, what the claimant claims they would have done or omitted to do had the conduct not occurred. In relation to the latter issue, it is apparently not a requirement for establishing loss that the claimant allege and prove the existence of a counterfactual that demonstrates the loss consequent upon acting on the misleading conduct would not have occurred in an alternative manner. The respondent might, in an appropriate case, seek to allege and prove that, but it is not necessary for the applicant to do so. These difficult issues were identified by Applegarth J, in his Honour's usual clarity, in Westpac v Jamieson at 543: [143] For the reasons which follow I do not accept the unqualified proposition that it is irrelevant to inquire into what a claimant in a case such as this would have done if the negligent and misleading advice had not been given and the claimant had not entered into the loss-making transaction in reliance upon it. A claimant is not necessarily required to plead and prove an alternative transaction in order to establish loss. A defendant may seek to demonstrate that a different, loss-making transaction probably would have been undertaken. In a particular case a court may determine that an award of compensation should take into account a hypothetical, alternative transaction which probably would have resulted in a loss. In doing so the court is not engaging in impermissible speculation. [144] If it is apparent that the claimant would have entered into a different, loss-making transaction, then this fact can hardly be irrelevant. Its relevance follows from the basic compensatory principle that the object of compensation is to place the claimant in the position he or she would have been in if the contract had been performed, the defendant not been negligent or the relevant statute not been contravened. The present case does not concern differences between compensation for breach of contract based upon disappointed expectations and the usual measure of damages in tort. Proper performance of the contract required the bank to exercise reasonable care. Both Mr Jamieson's contract claim and his negligence claim involve an inquiry into the position he would have been in if reasonable care had been taken. Also, in this case one is not concerned with different approaches to compensation in respect of intentional wrongdoers and merely careless defendants, including the policy considerations which may apply in cases of deceit. However, even in deceit cases, "it is a question of determining how much worse off the plaintiff is as a result of entering into the transaction which the representation induced him to enter than he would have been had the transaction not taken place". (footnotes omitted) 243 His Honour also identified that in a so-called "no transaction" case the claimant is not required to prove what alternative transaction would have been undertaken (at 543-544 [146]) and it may be sufficient to prove that they would not have entered into the subject transaction. However, where the evidence is that had the claimant not been induced to enter into the subject transaction, they would have entered into a similar transaction which would have caused the same or similar loss, the court is entitled to take that into account. But if that is the case, the onus is upon the defendant to establish it. In this respect in Westpac v Jamieson Applegarth J at 545-546 [153] relied upon the following passage of Leggat J in Yam Seng Pte Ltd v International Trade Corporation Ltd [2013] EWHC 111 (QB) at [217]: (4) There is no difference in principle between an alternative transaction which would have been more profitable and one which would have been less profitable than the actual transaction such that it can be relevant to take account of the former but not the latter. (5) The evidential burden will be on the defendant, however, to show that if the misrepresentation had not been made the claimant would have incurred a loss. In seeking to discharge this burden, the defendant (unlike the claimant) does not have the benefit of the principle that if the financial outcome of the alternative transaction is uncertain the court will make reasonable assumptions in its favour (for example by allowing damages to be calculated on a loss of a chance basis) to assist in the proof of loss. (6) Unless the defendant can demonstrate with a reasonable degree of certainty, therefore, both the fact that the claimant would probably have suffered a loss from entering into an alternative transaction and the amount of that loss, the damages will not be reduced on that account. In this respect there is a disparity, but a principled one, between hypothetical transactions which would have made the claimant worse off and those which would have made the claimant better off.

[43]

The interest sought to be protected in this case 245 In Jamieson v Westpac at 89 [146] Jackson J correctly identified that the starting point in any determination of damage is to characterise the kind of interest and loss under consideration. Here the pleaded case at paragraph 16 of the third further amended statement of claim was that the representations induced the applicants to enter into the contract to purchase Cadeau. By that it is asserted that they altered their economic position by exchanging money, effectively in the sum of $4m, for ownership of Cadeau. It follows that the Applicant's interest which was at risk by reliance on the representations was, in economic terms, the veracity of the exchange of the $4m for the boat. Although it is not alleged here, it is not difficult to imagine a case in which it might be said that misrepresentations about the sea-keeping abilities of a vessel caused a purchaser to use it in conditions for which it was not suited, with the result that it sustained damage. In such a case the interest which would be at risk if the representations were not true would be maintenance of the economic value of the vessel during the course of its use. 246 Here the only pleaded consequence of the misrepresentations was the entry into the contract of purchase. I do not ignore the exceptionally general allegation in paragraph 60 that "as a result of" the misleading conduct the identified loss and damage was suffered and that included costs of repairing defects, the cost of repairing and rectifying the vessel, the cost of rendering the vessel closer to fitness for purpose, loss of use and diminution in the value of the vessel. It is surprising that these allegations appeared in the latest iteration of the pleading given the reasons in the interlocutory judgment in Wyzenbeek v Australasian Marine Imports Pty Ltd [2017] FCA 1460 at [84], identified the numerous cases where that type of pleading of loss and damage was regarded as deficient. There is no sufficient pleading of material facts which give rise to any inference that the alleged acts complained of and the alleged later events stand to each other in the relation of cause and effect: Southern Cross Mine Management Pty Ltd v Ensham Resources Pty Ltd [2004] QSC 457 at [15], per Chesterman J. 247 It was neither pleaded by the applicants and they called no evidence to the effect that, once acted on, the representations continued to operate upon and affect their interests. Nor was it suggested that the representations had the effect that they were "locked in" to ownership of Cadeau. In fact, the evidence was that there existed a buoyant market for motor vessels including used vessels of this type around 2010 - 2011. It may be true that the applicants were not aware of the falsity of the representations for some twenty months after taking delivery of Cadeau, however, there is no plea that it had any continuing effect or that they continued to rely upon it or that such reliance caused them loss.

[44]

The rule Potts v Miller is the appropriate method of assessing damages 248 Here, the most appropriate method of assessing the damage sustained because the misrepresentation that the vessel was suitable for trans-ocean crossing or extended open ocean passage caused the applicants to purchase it, is the application of the rule in Potts v Miller; being the difference between the price paid for Cadeau and its "true value" as at the date of sale. That is particularly so for two reasons. First, as pleaded, the interest of the Wyzenbeeks which was to be protected by the statutory norm in s 18, was the veracity of the exchange of the purchase price for the Endurance 750 vessel. They were interested to pay an appropriate amount in exchange for the ocean-going vessel and the representations caused them to part with the purchase price in exchange for the vessel. Secondly, it is apparent that the application of the Astonland measure would include losses, particularly amounts in respect of depreciation, which bear no relation to the impact of the contravening conduct and are extrinsic, supervening to or independent of it. 249 The applicants did not seek to adduce any evidence as to the vessel's "true value" at the date of purchase and there is no evidence from which it might be derived. Although there was evidence the claimed suitability of the Endurance range of vessels for trans-ocean voyaging was a "selling point", suggesting that a reasonable purchaser might pay more for a vessel with such a capability, there was no evidence of what that might be. Indeed, there is no evidence to suggest that the price actually paid for Cadeau was not equivalent to its value as a coastal cruiser, assuming it was suitable for that purpose. Mr Wyzenbeek was and is a very experienced businessman who has spent many years in commerce. It is also apparent that he was acutely aware of his superior bargaining position when it existed and he was not concerned to exercise that when it suited him. This extended to, effectively, forcing the renegotiation of contractual terms after an agreement had been entered into. He was not hurried into the purchase of Cadeau and he took his time after considering a wide range of vessels. In the course of negotiations he indicated to Dean and Ryan that he had already booked his passage to America to view the Marlow range of yachts. This seemed to bring about a better offer on the purchase price of Cadeau by AMI increasing the amount which it was prepared to accept for the trade-in of Swanky to $1 million. It is not possible to reach the conclusion that Mr Wyzenbeek paid more for Cadeau than a vessel of that size and type was worth, regardless of whether it was suitable for ocean crossing or extended ocean voyaging. In this respect it is apt to keep in mind that Cadeau was not entirely unique. It was a 75ft motor launch of which different types were available. That can be seen from the fact that Mr Wyzenbeek had a variety of brand options to choose from when deciding on his purchase. Whilst the various different types, sizes and personal modifications reflected their price they were, in a general sense, interchangeable and substitutable commodities in that particular market. This is not to overlook that Mr Wyzenbeek was desirous of obtaining a vessel with an ocean-going ability. It is to observe that, although he did not obtain what he wanted, his economic position was essentially unaffected by paying $4 million for Cadeau. 250 Another significant factor supporting the adoption of the Potts v Miller approach, is that the vessel was readily saleable. Although much of the evidence of Mr Lack, an expert engaged by the applicants, was inadmissible the evidence which was admissible, as well as other evidence relating to the sale of second hand vessels, shows there existed a market for such vessels and there was nothing which suggested that Cadeau could not have been sold by Mr and Mrs Wyzenbeek at any time. In no sense were the applicants "locked in" to retaining it. 251 The applicants submitted that the Court should not apply the rule in Potts v Miller because it would leave them "under compensated". That submission may have been prompted by the absence of evidence of the vessel's true value at the date of sale (despite a strained submission to the contrary in paragraph 70(a) of the written submissions). It was submitted that even if the vessel was worth close to the purchase price that would be inadequate because the applicants did not acquire it for what it was worth, but for what they believed it would do and it cannot do those things. However, that submission misunderstands the nature of damages for misleading conduct under the Act. They are to compensate the claimant for any loss occasioned "because of" or "by" the contravention of the statutory norm. They do not apply to improve the claimant's position by putting them into a better position than if the representation was not made. The damages provision of the TPA and ACL do not permit compensating a claimant for bargained-for benefits which do not materialise in actions founded upon misleading or deceptive conduct. At the very least, they do not do so in this case. 252 The applicants also submitted that the representation had a continuing effect until the Port Macquarie incident or, even to the present because the respondents do not admit that the vessel is not suitable for trans-ocean voyaging. That submission also must be rejected. As mentioned, the question is not whether the claimant remained unaware of the falsity of the representation and oblivious to the true situation. It is whether the representation had a continuing operative effect on the claimant which prevented them from ascertaining the true position and thereupon avoiding the continuing loss. Here, the operative effect of the representation and, indeed, the only pleaded operative effect, was to induce the purchase of the vessel. There is no other pleaded reliance on it. In any event, as the evidence emerged, when the applicants became aware of the falsity of the representation after the Port Macquarie incident, they retained the vessel and continued to use it for a number of years. In a similar situation, a case might be agitated that in reliance on the representation the vessel was purchased and then used for trans-ocean crossing but, because it was not so suitable, it was lost or damaged. In that scenario, the continuing operative effect of the representation would be relevant to the method of assessing damages, but nothing of the like arises in the present case. 253 One specific matter which should be addressed is the applicants' submission that the assessment of damages should be undertaken by calculating the value of Cadeau at the date of trial because the vessel was acquired for a specific purpose. They relied upon the decision in Henville v Walker for the proposition that where something is acquired for a specific purpose the rule in Potts v Miller is not applicable. However, no such principle exists. The facts of Henville v Walker did not concern misrepresentations which induced the purchase of an asset. It concerned misleading conduct inducing the plaintiff to undertake a development project which would not have been undertaken had the misleading conduct not occurred. In the result, the damage which was caused by the conduct was the loss suffered on the project, less extraneous causes of loss: per Gleeson CJ at [44]. There, the interest of the plaintiff which was imperilled by the misleading conduct was the economic viability of the project which it was induced to pursue. Here, the only alteration of the applicants' economic position occasioned by the representation was the acquisition of the boat. There was no continuing operative effect of the representation which caused them to further alter their economic position in reliance on its accuracy. 254 The applicants further relied upon the decision of A Lyons J in Barclay v English [2009] QSC 258. That case also concerned the sale of a motor vessel with which the purchaser was dissatisfied. When received, it did not meet the specifications contained in the contract for its purchase and, in particular, it was not suitable as an ocean going vessel. A Lyons J assessed damages on the misleading conduct claim by subtracting from the amount spent on acquiring the vessel, its value at trial. This was on the basis that if the representations had not been made the vessel would not have been acquired. However, there was no contradictor in that case and the judgment was given after an uncontested hearing. None of the above authorities concerning the various issues relating to the different methods of assessing damages pursuant to TPA or ACL misleading conduct causes of actions were referred to her Honour and there was no discussion of them in the reasons for judgment. In those circumstances the authority of that decision is of little assistance in the present matter.

[45]

Depreciation 255 One of the significant difficulties of adopting the Astonland measure of damages in this case is that the loss in value of the vessel cannot be said to have been caused by the misrepresentations. It is apparent that vessels of this nature depreciate at a relatively rapid rate. In his evidence Mr Lack said these types of vessels depreciate at a rate of between 3% and 6% annually or indeed at a greater rate. At the higher rate of depreciation, 6%, the value of Cadeau, caused merely by the effluxion of time and ordinary use, would fall to about $2.8m after five years and about $2.67m after six years. The applicants' approach would have the consequence that the respondents would pay them, as damages, an amount for the depreciation which occurred regardless of the fact that the vessel had been used extensively by them and of the fact that, had the misrepresentations not been made, they would have acquired an alternative vessel which, itself, would have depreciated at around the same rate. 256 The respondents' submissions must be accepted on this point. The Wyzenbeeks have used Cadeau extensively since they acquired it. That included numerous voyages up and down the East Coast of Australia and to the Torres Strait and New Guinea as well as to New Caledonia. In the period prior to trial the vessel's engines had been in use for between 2,750 hours and around 2,900 hours, which is a significant amount of time. The evidence of Mr Fernance, a yacht manager and a person who had worked on large motor boats like Cadeau for many years, was that a vessel of this nature would use its engines for about 300 hours per year. On that basis, it is apparent, in a general sense, that Cadeau was used by Mr and Mrs Wyzenbeek, since 27 January 2011 somewhat more frequently than vessels of its type are usually used. 257 The evidence from the vessel's log also discloses the Wyzenbeeks made significant use of Cadeau, including after the Port Macquarie incident. Prior to that occasion they had used it for traversing the Coral Sea to travel to New Caledonia and back. Given what is now known of its suitability for that type of use, the voyage may have been dangerous, however, it was completed without serious difficulty. Nevertheless, in the period prior to the incident they used the vessel as they wished and in the belief it was capable of trans-ocean crossings and, during that period, it depreciated in value as would any vessel of that type. After the incident and after being informed that Cadeau was not suitable for trans-ocean travel, the Wyzenbeeks retained ownership of it and again used it extensively for coastal cruising. During this period it depreciated even further. If the applicants preferred approach to assessing damages was adopted, the respondents would compensate them for the depreciation in the value of the vessel consequent upon their extensive use of it and the usual effects of aging. There is no foundation for making the respondents liable in this respect and the "loss", if it be such, was not caused by the representations. It is "supervening" or "extraneous" or "independent" to the misleading conduct. 258 One method of ascertaining whether loss is "extraneous" or "independent" or "supervening" to the misleading conduct is to consider whether it would have been sustained had the conduct not occurred. As will be discussed below, on the uncontested evidence before the Court, if Mr Wyzenbeek had not acquired Cadeau, he would have acquired an alternative vessel and, most likely, a Marlow Yacht. There is no reason to believe he would not have used that vessel as he did Cadeau. The value of that vessel would also have depreciated over time and with use. That being so, if the Wyzenbeeks are to be put into the position which they would have been had the representation not been made, it must be assumed that they would have spent a relatively similar amount of money on a vessel which would also have been used in a similar way and depreciated in a similar amount. 259 Mr Sirtes SC was correct to submit that the Wyzenbeeks were always going to enter into a "loss-making" transaction in that, regardless of which vessel they acquired, it would be a depreciating asset. This is not a case of a person being induced to enter into an investment upon misleading information as to its veracity with the suggestion that it will be profitable or, at least, not be a loss making proposition. On the contrary, this was a case where the applicants intended to acquire an asset which they would use up over time whilst pursuing their own enjoyment. Regardless of which vessel was acquired, their economic position, vis-à-vis the boat, would decrease over time due to its inherent nature. The loss of value due to the natural and expected depreciation in the value of the vessel was not something which was "caused by" or arose "because of" the representations. It would have depreciated at the same rate and to the same extent if they had been true. 260 The fact that any vessel which the Wyzenbeeks acquired would depreciate is, of itself, justification for not using the Astonland method of assessment of loss. That process would not remove from the quantification of damages this cause of loss which is extraneous to the misleading conduct. 261 In the result the applicants' submission that the assessment of loss and damage should not be undertaken by the rule in Potts v Miller ought to be rejected. On the application of that method of assessing damages there is no evidence that the applicants suffered any loss as a result of being induced to acquire Cadeau at the price they paid. That being so, their claims for damages for misleading conduct must fail.

[48]

Admissibility of report 264 The essential difficulty with Mr Lack's report concerned the admissibility of certain factual matters on which he founded his opinion as to Cadeau's present value. In the course of describing his methodology he said he "researched list and sale prices of both 'like for like' and 'comparable vessels' both online and in person and over the telephone with yacht brokers". 265 That methodology was explained further in Mr Lack's report where he identified his sources of information for identifying comparable vessels were internet listings of vessels for sale and/or sold, his own personal knowledge based on past experience, consultation with shipbrokers whom he knew and industry magazine classified advertisements as well as vessel reviews. After considering what he said were 20 comparable vessels, he narrowed the usable list down to six which were identified as: 1. Marlow 72 Explorer sold in 2016 for approximately $1.65 million 2. Horizon E73 sold in 2017 for approximately $3.2 million 3. Grand Banks 72 sold in 2017 for approximately $3.85 million 4. Hampton 72 Endurance sold in 2017 for approximately $2.65 million 5. Hampton 72 Sky lounge currently listed for $3.1 million [refer to appendix D] 6. Hampton 72 Sky lounge currently listed for $2.99 million on www.lsyachts.com.au 266 Those alleged comparable sales will be referred to Sales 1 to 6 respectively. Of those sales, only Sale 3, relating to a Grand Banks vessel sold in 2017, was a sale of which Mr Lack had personal knowledge. He had participated in that sale on behalf of one of the parties. Sales 1, 2 and 4 were sales which he said he had been told about by brokers whom he had contacted personally. He said the information had been provided to him in confidence and he was not prepared to reveal the identity of the brokers who gave him that information. He claimed the market for luxury vessels of this nature is somewhat secretive and sellers and purchasers were conscious of protecting their privacy and did not wish the sale prices to be disclosed. That being so, there is very little public data about the actual sale prices. 267 Sales 5 and 6 were not actual sales at all. They were the content or substance of advertisements for the sale of the identified vessels which Mr Lack had located. 268 Based on the above, Mr Lack adjusted the value of the comparable "sales" by averaging the subject vessels' value and age and calculated an averaged, unadjusted sale price of $2.9 million and an average sale year of 2011. That figure was then adjusted for market sentiment, for market pedigree or reputation and, in this respect, Hampton Vessels had a poor reputation in the Australian market, adjustment for capital improvements and adjustment for age and condition. By that process he identified the value of Cadeau at 22 June 2017 as being $2.46 million. 269 Some faint submissions were made by the first to fourth respondents to the effect that Mr Lack did not have any specialised knowledge based on his training, study or experience. That submission cannot be accepted given Mr Lack's credentials and it is clear that he is a person who is frequently involved in the sale of large motor vessels and has a detailed knowledge of them. 270 The real dispute as to admissibility, concerned the purported comparable sales and, particularly, Sales 1, 2 and 4. As the first to fourth respondents submitted, the attempt by Mr Lack to introduce evidence of those sale prices contravenes the rules against hearsay and, as such, they ought to be excluded. That submission must be accepted. The evidence is undoubtedly hearsay and inadmissible for that reason alone. That difficulty was exacerbated by the fact that the source of the evidence was not identified. Whilst Mr Lack says he was told these things by "other boat brokers" that is insufficient and would be, even if the circumstances were such that hearsay evidence might be admitted. 271 Mr Giles SC for the applicants submitted the evidence of Sales 1, 2 and 4 ought to be admitted pursuant to ss 63 or 64 of the Evidence Act. However, those sections only apply where the person who has made a representation is "not available" to give evidence. In this respect Mr Giles SC relied upon cl 4 of Part 2 of the dictionary to the Evidence Act and, in particular, subcl (1)(g) that "all reasonable steps have been taken by the party seeking to prove the person is not available, to compel the person to give the evidence, but without success". He submitted the applicants are not able to secure the attendance of the brokers who knew the information because they do not know who they are and Mr Lack will not tell them and, further, because Mr Lack is an independent witness the applicants have no ability to compel him to divulge the information. 272 These submissions must be rejected. First, there is an inadequacy of evidence that all reasonable steps had been taken by the applicants to compel the unidentified brokers to give the evidence. All that occurred was that Mr Lack said he would not reveal their identity. There was no suggestion that subpoenas were issued to Mr Lack for his working documents or documents disclosing the identity of those persons. Indeed, he was not asked when giving evidence who the persons were. Had he been so asked he would have been compelled to answer. 273 There was very little evidence about the critical issue of whether Mr Lack would disclose his sources of information. Some evidence was tendered as to the existence of a draft affidavit which it was hoped that Mr Lack would sign. It purported to assert that Mr Lack would not be prepared to disclose the identity of the brokers to whom he had spoken. Curiously, and without explanation, that affidavit was not executed. Its relevance is not immediately apparent. 274 In the result, all that existed was Mr Lack's statement in his report that he is not able to divulge his sources of information because he told the brokers he would not do so. In reality, there is no evidence the applicants, by themselves or their solicitors, have taken any real steps to ascertain the identity of the brokers. The requirements of cl 4 were not satisfied in this respect. 275 In addition, the test in cl 4(1)(g) of the dictionary of the Evidence Act concerning the unavailability of persons requires that the steps taken be "all reasonable steps". A consideration of what is reasonable will depend upon the nature of the evidence the party is seeking to adduce. Here, the evidence is of an important nature going to a substantive issue in dispute. The parties are at odds as to the value of Cadeau and expert evidence is required for determining the point. The evidence of sales which might underpin an expert's opinion in this respect are significant to the outcome of this issue. It necessarily follows that a party seeking to adduce hearsay evidence on this point would need to establish that substantive steps had been taken to compel those persons who had actual knowledge of the matters to attend. Here such evidence is lacking. 276 I would also accept the approach of Nicholson J in Daniel v State of Western Australia (2000) 173 ALR 51 where his Honour considered the application of s 64(2) of the Evidence Act 1995 (Cth). In that case there was no evidence of the identity of the originator of any statement. His Honour accepted a corollary of that is there is no basis on which to apply the exception in s 64(2) because there is no person in relation to whom the requirements of the exception can be tested. That is equally applicable in this case. There is no evidence as to the identity of the brokers and it cannot be ascertained whether any reasonable attempts have been made to compel them to attend. 277 It followed the evidence of sales 1, 2 and 4 in Mr Lack's report was inadmissible. Even if the applicants were able to rely upon ss 63 or 64, I would have been prepared to exercise the discretion under s 135 of the Evidence Act to refuse to admit the evidence. Given the respondents would not have been able to cross-examine on the veracity of the evidence or, indeed, on its provenance, it would be unfairly prejudicial to allow its admission. That is in line with Taub v R (2017) 95 NSWLR 388 and Kyluk Pty Ltd v Chief Executive, Office of Environment and Heritage (2013) 298 ALR 532. 278 In the result, the opinion expressed by Mr Lack in his report, which was based upon the identified comparable sales could not be sustained and was inadmissible along with the other hearsay statements. The evidence of Sales 1, 2 and 4 was excluded as was paragraph numbered 17 in section 18 of the report which was obviously founded upon inadmissible hearsay evidence. Similarly, the statements in Mr Lack's report on page 25 which were founded on his discussions with other brokers were excluded. Necessarily the opinions of Mr Lack based on that evidence fell with them. 279 Mr Lack was permitted to give a further opinion in the witness box based upon what information remained available to him. Apart from Sale 3, that information included what was referred to as Sales 5 and 6. As mentioned, those "sales" were not, in fact, sales at all. They were advertisements for the sale of vessels at particular prices. That evidence might have been admissible per se given that Mr Lack had seen the advertisement, however, the utility or relevance of that evidence was questionable. This is considered below.

[49]

The further opinion of Mr Lack 280 Consequent upon the above ruling, all that was left for Mr Lack to rely upon in making an assessment of Cadeau's value for the purposes of the trial, was Sale 3 of which he had personal knowledge and the two identified advertisements offering for sale what were said to be comparable vessels, being Sale 5 and Sale 6. In providing a reformulated valuation whilst in the witness box, Mr Lack sought to "adjust" the value attributed to Sale 3 by reducing it substantially. He said he did so because he was aware the price paid was above the market price. The fact that this was not referred to in his original report and appears to have been brought into consideration only after the other sales were excluded was concerning. However, he proceeded to use the discounted value of Sale 3 and calculated an average "price" of Sales 3, 5 and 6. He then made adjustments for market conditions, pedigree and reputation as well as age and condition. By that method he reached a value of $2.7m as being Cadeau's value. 281 The difficulty here is that Mr Lack's methodology was fatally flawed. It relied upon the advertised prices of two vessels for sale, neither of which reflect market price. The prices indicated in the advertisements are, perhaps, the prices at which the owners might be willing to part with their boats, but that is the only evidential value which might be extracted from them. It is now well established that the prices at which things are offered for sale are not evidence of their value: McDonald v Deputy Federal Commissioner of Land Tax (Cth) (1915) 20 CLR 231; Goold v Commonwealth (1993) 42 FCR 51 at 57-60; Upside Property Group Pty Ltd v Tekin (2016) 18 BPR 36,191 at [89]. Even offers to purchase things are of limited value. That being so, Mr Lack's revised opinion of the value of Cadeau cannot be accepted. The price arrived at was neither its market value nor its true value. 282 Under cross-examination from Mr Robertson, Counsel for the sixth respondent, Mr Lack admitted he was not able to apply his methodology if the evidence of price was limited to one comparative vessel (ts 782-783). On that basis, his evidence as to the value of Cadeau must be rejected. When the evidence of Sales 5 and 6 are excluded, as they must be, there was insufficient evidence of comparative values for Mr Lack to apply any methodology which was suited to the valuing of Cadeau. 283 It follows that there was no evidence of the value of Cadeau at the date of trial on which the Astonland measure could be applied, even assuming that it would be an appropriate method. 284 It is relevant that a large part of Mr Lack's valuation of Cadeau was based upon vessels of this nature depreciating at a significant rate. The values of other vessels which he sought to use for comparison purposes were the depreciated values and his purported valuation of Cadeau was calculated on the basis that its value had declined due to use and the ordinary effect of the passage of time. He said that the reasonable useful life of a vessel of this nature is 25 years though he did not indicate whether the rate of depreciation was constant or, as might normally be expected for such goods, occurred at a faster rate during the early years and then tailed off over time. 285 In any event, the purpose of the valuation was to support the application of the Astonland measure of loss by reference to the value of Cadeau at the date of the trial. On that basis they sought to recover as part of the damage allegedly caused by the representations, the depreciation in the value of the vessel which has been used constantly since it was acquired in 2011. In effect, they wish to be put into the economic position whereby they may, after seven years of boating in Cadeau, have the equivalent of a new ocean going vessel. It is relevant that they also seek interest on the award of damages from 2011. This analysis demonstrates just how inapplicable the Astonland measure is in the present circumstances and if it were used it would vastly overcompensate the applicants.

[51]

Other damages claimed 288 The applicants also claim as damages in relation to the s 52 claim (or the s 18 claim) the amounts which they have expended on the purchase, repair or rectification of Cadeau over time. They claim (at para 78 of their written submissions) that they are entitled to recover: all amounts expended on Cadeau to date, including expenses involved in purchasing Cadeau, expenses involved in rectifying, repairing and upgrading Cadeau and some other incidental expenses on the basis that had the misleading and deceptive conduct not occurred, the vessel would not have been purchased and such amounts would not have been expended on it. The total amount is identified as $4,896,765.50. 289 These damages are sought on the basis that once the value of the vessel at the time of trial is deducted from that amount, the remaining deficit will reflect their loss. Given the conclusion that Astonland method of assessment is not appropriate in this case, it is possibly not technically necessary to consider this issue, however, in deference to the submissions made it is appropriate to make findings as to their veracity. 290 A number of issues were raised by the respondents with respect to the variously claimed items of damages although, ultimately, not all of them were examined in the course of the hearing. That is not a criticism and the issues raised by the cross-examination of Mr Wyzenbeek, revealed that the expenditure claimed could not be regarded as a loss let alone a loss caused by the misleading conduct. I deal with some of these as follows: (a) Mr Wyzenbeek made a claim for an amount of $3,419.60 for a life raft and an additional amount for a cradle for the raft which was affixed to Cadeau. Initially he acquired the life raft for use on Swanky but it seems that they were subsequently used on Cadeau. However, herein lies the difficulty. Both the life raft and the cradle were purchased and have been used by the Wyzenbeeks. They have not suffered the loss of the expenditure by reason of entering into the transaction. First, they have had the use and benefit of that expenditure over the six or seven years since Cadeau was acquired and they will continue to have the use of it. If they sell Cadeau "lock, stock and barrel" they will recover an amount attributable to the residual value of these items. Secondly, on the counterfactual scenario, similar expenses would have been incurred and the benefit from those expenses would have been derived. (b) Similarly, an item for freezer baskets is claimed by Mr Wyzenbeek. These were utilised in the freezers on Cadeau. Again, such baskets were used for the past seven years by the applicants, and will they will probably continue to use them for as long as they own the vessel. They have suffered no loss by acquiring and using such items. Moreover, it is probable that items of a similar nature would have been acquired for use on any other vessel purchased. (c) Other expenses identified included the upgrading of aspects of Cadeau. Reference was specifically made to the upgrading of shades from manual operation to motorised operation. Again, such expenses were incurred by the Wyzenbeeks for their own benefit, they have utilised those items over the years and they retain the residual benefit of that expenditure. Again, in no way could such expenditure be said to have been caused by or arisen because of the misrepresentations and it cannot be said they have suffered loss as a result of the expenditure. (d) A question was raised as to the cost of batteries on Cadeau. Initially, Mr Wyzenbeek agreed to pay for the batteries at the time of acquiring the vessel. The applicants claim this as an amount which would not have been expended had Cadeau not been purchased. Again, the applicants apply the simple "but for" test of causation in relation to this item of damage. That is not a correct method of identifying damages for this type of claim as the alleged loss sought is not related to the alleged misrepresentation. Moreover, the same position applies as has been identified above. The Wyzenbeeks have had the benefit of the batteries over seven years and, it is also most likely that had they not acquired these batteries they would have had to have acquired other batteries for use in a different vessel. It was also said that the batteries were defective and had to be replaced because of problems with the electrics and batteries in Cadeau. That fact became known at a later date. However, that alleged loss is not a loss that was caused by the misrepresentation or connected with it. 291 A number of other matters should be said of the list of claimed costs and damages. First, a large number of them are for costs and expenses which were expended on Cadeau after the Port Macquarie incident. It is to be recalled that, on the day after that incident, Mr Wyzenbeek was informed by Dean that Cadeau was not a vessel suitable for trans-ocean travel. Although some attempt was made to diminish the impact of this statement, it was sufficient to remove the falsity of the representations which had previously been made. From that point on it would appear that the misrepresentations had ceased to have any effect whatsoever. The position in relation to the expenses incurred thereafter is that they were incurred on Cadeau in the full knowledge that she was not a trans-ocean going vessel. For whatever reason those amounts were expended, it was not because they were caused by the misrepresentations. 292 Secondly, as with the expenses referred to above, from the limited information available, it is clear that they were incurred in making improvements to or repairs to Cadeau. That expenditure was "used up" or continues to be used up by the Wyzenbeeks in their subsequent and continuing use of the vessel. Like the vessel itself, both time and use will diminish their value. One might expect in relation to many of these costs that had the Wyzenbeeks acquired a different vessel, even one of trans-ocean going ability, they would have expended similar amounts on similar items. Even if it were assumed that such expenses were in some way justified as being consequential upon the acquisition of Cadeau in reliance upon the representations, the applicants' claim for them only go to show that the Astonland measure of assessing damages in a case of this nature is inapposite. Indeed, one would doubt its applicability in any case where the acquisition in question was of, and was intended to be of, a depreciating asset. Whilst Cadeau did not have all of the qualities which the Wyzenbeeks wished, they have made use of it and enjoyed it over the past seven years. Their travel on it has been extensive. There is nothing in the TPA or the ACL which would justify an award of damages which included the costs of operating, repairing, upgrading and maintaining a vessel over the years whilst it is being used. Indeed, the evidence before the Court was that, in the ordinary course, a vessel of this nature costs approximately $100,000 a year to repair and maintain and Mr Wyzenbeek has sought to impose that liability on the respondents. 293 Thirdly, the evidential process by which the applicants asked the Court to assess damages was inappropriate. A schedule of the items of damages claimed was handed to the Court with the written submissions. It contained, in relation to each item, information as to the provider, invoice number, date of invoice, total amount invoiced and the evidence reference number. That latter is a reference to a document or documents in the tender bundle which often turned out to be a tax invoice. Whilst some of the invoices provided a brief description of the work done, the need for the work was not identified and nor was there any indication that the work was reasonably required. This is an inappropriate way to attempt to prove a damages case and, to a large extent, it requires the Court to speculate about a number of the above matters.

[56]

Parties to the contract of sale 299 On the contract of sale as it was ultimately varied, the broker was identified as Leigh-Smith Cruiser Sales, the seller was identified as AMI and the purchasers were identified as Mr and Mrs Wyzenbeek. The applicants assert that GCCM was also a party to the contract. They do so by identifying that in the contract schedule under the name Leigh-Smith Cruiser Sales, appears an ABN number, "ABN: 42 083 695 283", which belongs to GCCM. Ryan gave evidence that this had occurred by reason of an office assistant accidently inserting the wrong ABN into the pro forma contract. No objection was taken to that evidence and it can be accepted. 300 In the circumstances it is difficult to reach the conclusion that GCCM was intended to be the seller or the broker. Importantly, it is usual for parties to a contract to identify the contracting entities by their names. In this case there is no suggestion that GCCM was a named party. It would appear that the contract terms were proffered to Mr and Mrs Wyzenbeek as a contract in which AMI was the seller and Leigh-Smith Cruiser Sales was identified as the broker. It is not likely that any party considered that GCCM was a participant in the agreement. Objectively, there is nothing to suggest that any reasonable person would have considered GCCM to be a party: Lederberger and Scheiner v Mediterranean Olives Financial Pty Ltd (2012) 38 VR 509 at 516-517 [19]. 301 The applicants submitted the broker and the seller could not be the same entity for the purposes of the contract. There is no reason why that is so despite the applicants submitting that it was illogical or a nonsense. They did not refer to any contractual clauses which would render it impossible, or even difficult in performance, if AMI were both the broker and the seller. Although the terms of the contract refer to the "broker" and "seller" separately, there is nothing in their operation which suggests that they have to be different entities. 302 The applicants further submitted that Mr Wyzenbeek was told that AMI and LSCS were different "arms" of GCCM. To the extent to which Mr Wyzenbeek was told any such thing it does not make any difference to the conclusions in this regard. Any representation relating to those matters was vague and did not convey a statement that the various corporations were one-and-the-same entity. Indeed, Mr Wyzenbeek who, himself, was a director of many companies, may well have been of the impression that the selling and broking entities were subsidiaries of GCCM which was not a party to the agreement. 303 The applicants also submitted that Ryan had informed Mr Wyzenbeek that director's guarantees could be offered from GCCM and AMI and that GCCM was the substantial asset owner in the group. It is also said that Ryan told Mr Wyzenbeek that AMI was the trading company for importing the vessel. These statements were said to have been made on 14 September 2010 and, on the applicants' case, prior to the contract being finalised. However, if they were made, the statement that AMI was the trading company for importing the vessel must have given Mr Wyzenbeek a clear indication that it was separate to GCCM and was the entity which would sell him the vessel. 304 On the facts, there is nothing in the objective circumstances known to the parties at the time which would suggest that GCCM was a party to the contract. The misadventure of the inclusion of the wrong ABN was not, apparently, known at the time and it was not suggested otherwise.

[58]

Representation as to fitness for purpose 307 Ryan and Dean both made representations to the effect that Cadeau or an Endurance 750 vessel (or an Endurance 650 for that matter) would be suitable for crossing oceans or for extended passage in the open ocean and the circumstances were such that they were aware that Mr and Mrs Wyzenbeek would rely on them in this respect. The discussions between the parties proceeded on that basis and the respondents' various representations that the vessel would be so suitable were representations as to its quality and purpose. Their knowledge of the purpose for which the vessel was required, was also knowledge of AMI. 308 The respondents submitted there was no specification in the contract the vessel would be suitable for crossing oceans or extended open ocean passage in the contract. Whilst that is true, it adds little because the vessel was promoted as having that capacity and, indeed, some of the specifications were designed around it. 309 It follows that a term pursuant to s 71(2) of the TPA was implied into the contract for the supply of Cadeau that it was reasonably fit for the purpose of crossing oceans or extended open ocean passage. That prima facie implication can be rebutted if the circumstances are such as to show that the consumer did not rely on the skill and judgment of the seller. But here, whilst Mr Wyzenbeek was anxious to have close involvement in the specifications of the vessel, his knowledge was not such that he would have been aware of its suitability for crossing oceans or extended open ocean passage. That was principally a matter of its design and construction and there is no suggestion that he had any knowledge or understanding of these things. On the other hand, both Ryan and Dean admitted to making the representations in relation to the vessel in the course of promoting it to Mr Wyzenbeek because they believed the statements to be selling points. This tends to suggest an assumption of responsibility by them for the accuracy of the representations and the circumstances were such that they were aware that Mr Wyzenbeek relied upon their observations as to the quality of that range of vessel and their suitability for the disclosed use. The respondents, or some of them, obviously had a close arrangement with Hampton Yachts in relation to the Endurance vessels and they might be expected to know the capability of the vessels. Reference has been made previously to the occasions when Ryan and Dean identified themselves as being integral to the preparation with the vessel along with their engineers. They sought to promote their involvement with it as contributing to its quality. Again, this adds to the reasonableness of the Wyzenbeeks reliance upon their skill and judgment. Further still, it is apparent from their business as boat brokers that Ryan and Dean held themselves out as being knowledgeable in the area. 310 Although some clauses of the contract of sale purport to negate the effect of s 71(2), they are void to that extent. See s 68(1) of the TPA.

[59]

Cadeau was not fit for purpose 311 On the basis of the findings which have been made above, the vessel supplied to the Wyzenbeeks was not fit for the purpose of being used for trans-ocean passage or extended passage in the open ocean. It was not suitable for those uses and, in fact, the absence of compliance with any internationally recognised standard for the construction of vessels which might be used for those purposes, renders that fact almost axiomatic: Vautin (No 4) at [182]-[195]. 312 It has also been found that Cadeau was not fit for the purpose of crossing oceans because of the inadequate port lights, inadequately secured Portuguese doors and the insufficient strength of the cabin glass. Whilst it may be that its hull design and construction would also have rendered it unfit for those purposes, that was not agitated and no case or claim for damages is founded upon that proposition. 313 One difficulty with the applicants' pleaded case is that the breach of the implied term of fitness for purpose was the only breach relied upon for the purposes of their contractual damages claim. The claim founded on the allegation the vessel was not of merchantable quality was abandoned. Such a claim may have entitled the applicants to recover the cost of repairing a number of the relatively minor defects in Cadeau which were not related to its suitability for crossing oceans, but that need not now be considered. 314 The other difficulty is that the pleaded case does not make any attempt to precisely identify the manner in which the claimed damage has flowed from the breach of the implied term of fitness for purpose. It uses the generalised statement of causation that "as a result of" the breach of the term the applicants suffered loss and damage. The alleged particulars are: i. Cost of repairing defects; ii. Costs of and incidental to repairing and rectifying the Vessel; iii. Costs of rendering the Vessel closer to fitness for the purpose for which it was purchased; iv. Diminution in value of the Vessel in other words the difference between the cost of the vessel and its present value; and v. Loss of use; and vi. The damages as further particularised in the substitute Schedule of Damages provided to the Court in Applicants' opening oral submissions. 315 The plea of causation is inadequate in that it makes no attempt to connect the claimed damages with the breach save, perhaps, for item (ii). Even then there is no indication in the remainder of the pleading or the written submissions of what costs were expended in rendering the vessel closer to the contractual requirement. The schedule of damages did not assist and nor did the oral submissions. A schedule ultimately relied upon by the applicants was annexed to their final written submissions. Again, it was of limited use and the headings used in it were difficult to follow. 316 Nevertheless, the evidence disclosed that had the port lights been of an appropriate quality and appropriately installed such that they met the requirements of an ocean crossing vessel it is apparent they would not have leaked as they did. Similarly, as Mr Dovell's report disclosed, the Port Macquarie incident revealed the Portuguese doors and the cabin window glass were not of a quality required in an ocean going vessel. Had those items been of an appropriate quality and strength to withstand conditions which might be encountered at sea, they would not have failed as they did during the Port Macquarie incident. It follows that the damage which flowed from those defects was the result of the vessel not being fit for its purpose, even though the damage was not sustained while the vessel was crossing an ocean.

[61]

The applicants' broad claims for damages 320 The applicants assert that significant amounts of money have been spent on Cadeau to date in purchasing and rectifying it, but the circumstances are such that it could probably not meet the condition of being suitable for open ocean crossings. They submitted that it followed the appropriate measure of damage is the amount of money spent by Mr and Mrs Wyzenbeek on Cadeau less its current value as that will permit them to go elsewhere and acquire a vessel which meets the implied conditions. The totality of their submissions on this point were as follows: 104. The law with regard to contractual damages is well known. In short, damages are to compensate the applicants for the breach of the implied condition, being an amount which reflects what it would cost to ensure that the implied condition was met. Very significant amounts of money have been spent on Cadeau to date both in purchasing and rectifying the vessel but the likelihood is that it cannot meet that condition, given the manner in which it was designed and manufactured. Therefore, the appropriate measure of damage is the money spent by Mr and Mrs Wyzenbeek on Cadeau (less the value of Cadeau currently) so they can go elsewhere and buy a vessel which does meet the implied condition. Therefore, the applicants seek the same damages in respect of their contract claim as the misleading and deceptive conduct claim referred to in Section B.4.3 above. 321 There is little doubt that the paucity of the submissions on this topic is reflective of the fact that AMI, which is the party liable for the contractual damages, is insolvent and in liquidation and the chance of recovery is remote. Nevertheless, the submissions have been advanced, albeit tentatively, and must be considered. 322 In the ordinary case, the measure of damage for breach of contract is ascertained, in the first instance, as at the date of the contract. Whilst this might vary in circumstances where certainty as to whether loss is suffered is dependent upon subsequent events, that is not this case. It would have been possible for the applicants, had they so chosen, to call evidence as to the cost, as at the date of the supply, of putting the vessel into a condition which would permit it to engage in open ocean travel. They did not do that. The cost of repairing minor defects in the vessel, modifying it or making improvements are not the costs of putting it into a condition which meets the statutory warranty. At the least, there was no evidence of that. 323 The applicants' submission that the vessel could not be put into a state whereby it would be suitable for crossing oceans or extended ocean voyaging is made without any sufficient evidential foundation. The three matters relied upon by Mr Dovell which rendered it unfit for those purposes were the leaking portlights, the inadequate structure of the Portuguese doors and the glass of the forward cabin being of insufficient strength. Those matters have been rectified. Whilst it can be accepted that there is a degree of likelihood that the vessel did not otherwise meet the structural or build requirements of an ocean going vessel that, was not a case agitated by the applicants and the parties did not call evidence in relation to it. Nor was there any evidence to support the conclusion that any other defect was of a nature which rendered the vessel unsuited for the identified purposes. The applicants' submission in this respect cannot be accepted. 324 The method of assessing damages as proposed by the applicants has no place in a contractual claim. The true measure of damage is that amount which, so far as money can do it, will put them into the position which they would have been had the contract been performed. If it is the case that Cadeau was not able to be altered to render it suitable for crossing oceans, the measure of damage would be the extra amount of money, if any, which the applicants would have been required to expend at the date of the contract to acquire a 75ft ocean going vessel. There was no evidence of what that amount of money would have been. Otherwise, there is no basis for awarding contractual damages in the manner asserted by the applicants. If, as the applicants submit, Cadeau cannot be made into a vessel suitable for crossing oceans, the money expended by them was not spent for remediating the breach. 325 Similarly, the losses alleged are not, for the most part, losses which are consequential upon the alleged breach of contract. It has not been shown, save in relation to the three defects identified by Mr Dovell, the repairs and improvements were consequential upon the vessel not being fit for purpose. Additionally, as the above analysis demonstrates, the applicants approach seeks to recover the depreciation in the value of Cadeau, which they have used regularly over the past six or seven years. Such losses are not recoverable under the contractual measure. 326 Although from time to time in their submissions the applicants claimed much of the work they did on the vessel was for the purposes of making it an oceangoing vessel, that was mere assertion. There has been no identification of the expenses which were necessary to put the vessel into a condition which would make it, or was intended to make it, suitable for crossing oceans or extended open ocean passage.

[62]

Loss of use of the vessel 327 Whilst Cadeau was being repaired from time to time it was not capable of being used by Mr and Mrs Wyzenbeek and the applicants claim damages for their inability to use it during that period. Such damages are recoverable where, as a consequence of a wrong done with respect to a vessel, even a non-profit making vessel, it is laid up for repairs. The authorities on this topic were discussed in detail in Vautin (No 4) at [308]-[317]. Whilst such damages are usually sought in collision cases there is no reason why they would also not be available as consequential losses in claims for breach of contract where repairs or rectification are required to put the vessel into the condition which it ought to have been had the contract been performed. The respondents did not submit to the contrary. 328 However, here again, the applicants have generally failed to establish with any clarity that the loss of use of the vessel was caused by the breach of the implied contractual term that it was fit for its purpose of being used for crossing oceans. The only exceptions are those periods of time during which repairs were required as a result of the leaking portlights and after the Port Macquarie incident. As has been found, if the vessel were fit for purpose the portlights would not have leaked and the vessel would not have sustained damage when crossing the bar at Port Macquarie due to insufficiently constructed Portuguese doors and cabin windows. In the latter respect, if the Portuguese doors were of adequate construction they would not have detached and would have deflected the waves. Similarly, if the glass around the forward cabin was of sufficient strength it would withstood the force of the waves coming over the bow of the vessel and the damage to the interior would have been averted. 329 The periods of time during which Cadeau was out of commission for the purposes of effecting repairs which were attributable to the defects which rendered it unfit for the purpose of ocean crossing were 22 days in 2011 (being from 16 August 2011 to 24 August 2011 and from 8 September 2011 to 22 September 2011) and for around eight months from 25 October 2012, being the period immediately after the Port Macquarie incident. When all the evidence is taken into account there was a period of about 9 months in the second year of ownership during which the vessel was out of commission. As appears from the discussion in Vautin (No 4), the often used measure of damages for loss of use during periods of repair is the amount by which the vessel has deteriorated whilst laid up. 330 In the absence of any other evidence, I take the depreciation rate in respect of Cadeau as being 6%. It would follow that in the second year of service, it would have been worth $3,760,000.00. In broadbrush terms the vessel was out of commission for nine months of the following year. That being so, three quarters of the depreciation sustained by the vessel in that following year ($224,400.00) amounted to $168,300.00. 331 If the vessel had met the contractual standard and was reasonably fit for crossing oceans and, therefore, did not have the defects identified by Mr Dovell, those defects would not have caused the damage they did and the vessel would not have been out of commission for that nine month period. The loss of the use of the vessel for that time can be compensated by an award of damages in an amount representing the depreciation which occurred while it could not be used. On that basis, Mr and Mrs Wyzenbeek are entitled to damages against AMI in the amount of $168,300.00 representing the only amount of loss proven to have been caused by the breach of the condition that the vessel was not reasonably fit for the purpose of crossing oceans or engaging in extended ocean passage.

Parties

Applicant/Plaintiff:

Wyzenbeek

Respondent/Defendant:

Australasian Marine Imports Pty Ltd

Legislation Cited (6)

Australian Consumer Law Evidence Act 1995(Cth)

Fair Trading Act 1987(Cth)

Trade Practices Act 1974(Cth)

Australian Securities and Investments Commission Act 2001(Cth)

Competition and Consumer Act 2010(Cth)

Evidence Act 1995(Cth)

Cases Cited (35)

Henville v Walker (2001) 206 CLR 459 Holdway v Arcuri Lawyers (a firm) [2009] 2 Qd R 18 HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 Jamieson v Westpac Banking Corporation (2014) 98 ACSR 63 Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281 Kyluk Pty Ltd v Chief Executive, Office of Environment and Heritage (2013) 298 ALR 532 Lederberger and Scheiner v Mediterranean Olives Financial Pty Ltd (2012) 38 VR 509 Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 Lyndel Nominees v Mobil Oil Australia Ltd (1997) 37 IPR 599 Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 McDonald v Deputy Federal Commissioner of Land Tax (Cth) (1915) 20 CLR 231 Medtel Pty Ltd v Courtney (2003) 130 FCR 182 Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 Potts v Miller (1940) 64 CLR 282 Prince Alfred College Inc v ADC (2016) 258 CLR 134 Selman v Minogue (1937) 37 SR (NSW) 280 Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd [1997] AC 254 Southern Cross Mine Management Pty Ltd v Ensham Resources Pty Ltd [2004] QSC 457 Taub v R (2017) 95 NSWLR 388 Tepko Pty Ltd v Waterboard (2001) 206 CLR 1 Travel Compensation Fund v Tambree (t/as R Tambree and Associates) (2005) 224 CLR 627 Twycross v Grant (1877) 2 CPD 469 Upside Property Group Pty Ltd v Tekin (2016) 18 BPR 36,19 Vautin v BY Winddown, Inc. (formerly Bertram Yachts) (No 4) [2018] FCA 426 Westpac Banking Corporation v Jamieson [2016] 1 Qd R 495 Wyzenbeek v Australasian Marine Imports Pty Ltd [2017] FCA 1460 Yam Seng Pte Ltd v International Trade Corporation Ltd [2013] EWHC 111 (QB)

[2009] QSC 258

[2004] QSC 457

(2014) 224 FCR 1

(2014) 48 WAR 1

(1985) 1 NSWLR 561

(1990) 26 FCR 112

(1990) 169 CLR 279

(2012) 291 ALR 191

(2004) 218 CLR 592

(1998) 195 CLR 232

(2000) 173 ALR 51

(1949) 79 CLR 370