Adventure Island Whitsundays Pty Ltd v Engwirda Marine Pty Ltd [2015] QDC 210

DISTRICT COURT OF QUEENSLAND CITATION: Adventure Island Whitsundays Pty Ltd v Engwirda Marine Pty Ltd [2015] QDC 210 PARTIES: ADVENTURE ISLAND WHITSUNDAYS PTY LTD (ACN 101 127 397) (appellant) v ENGWIRDA MARINE PTY LTD (ACN 096 191 178) (respondent) FILE NO/S: 37/2015 DIVISION: Civil PROCEEDING: Appeal ORIGINATING COURT: Magistrates Court at Proserpine DELIVERED ON: 25 August 2015 DELIVERED AT: Brisbane HEARING DATE: 7 August 2015 JUDGE: Smith DCJA ORDER: 1. The appeal is dismissed. 2. I will hear the parties on the question of costs. CATCHWORDS: CONTRACTS – DISCHARGE, BREACH – performance – whether to be personally performed CONTRACTS – CONSTRUCTION AND INTERPRETATION – whether vessel to be salvaged or saved SHIPPING AND NAVIGATION – SALVAGE – meaning of salvage District Court of Queensland Act 1967 (Q) s 113 Magistrates Court Act 1921 (Q) s 47 Uniform Civil Procedure Rules 1999 (Q) rr 765, 785 Allesch v Maunz (2000) 203 CLR 172 Australis Media Holdings Pty Ltd v Telstra Corporation Limited (1998) 43 NSWLR 104 British Waggon Company and the Parkgate Waggon Co v Lea & Co (1880) 5 QBD 149 -- 1 of 20 -- 2 Davies v Collins [1945] 1 All ER 247 Dunlop v Higgins (1848) 1 HLC 381; 9 ER 805 Edwards v Newland & Co [1950] 2 KB 534 Fox v Percy (2003) 214 CLR 118. Fratelli Sorrentino v Buerger [1915] 3 KB 367 JJ Richards & Sons Pty Ltd v Precast Concrete Pty Ltd [2010] QDC 272 Johnson v Raylton, Dixon & Co (1881) 7 QBD 438 Parsons v Raby [2007] QCA 98 Southway Group Ltd v Wolff (1991) 57 BLR 33 Stephens v John Broomfield (The Great Pacific) (1869) UKPC 42; 16 ER 683 Teelow v Commissioner of Police [2009] 2 Qd R 489 The Butler Machine Tool Co Ltd v Ex-Cell-O Corporation (England) Ltd [1979] 1 WLR 401; 1 All ER 965; [1977] EWCA Civ 9. The Charlotte (1848) 3 W. Rob. 68; 166 ER 888 Warren v Coombes (1979) 142 CLR 531 Wilson v Anderson (2002) 213 CLR 401 COUNSEL: Mr S McLennan for the appellant Mr S Deaves for the respondent SOLICITORS: R J Taylor Law for the appellant Macrossan and Amiet for the respondent Introduction [1] This is an appeal against the decision of the Magistrates Court at Proserpine on 23 March 2015 to give judgment in favour of the respondent (plaintiff) against the appellant (defendant) in the sum of $110,000 plus interest and costs. Grounds of appeal [2] The appellant pleads the following grounds of appeal: 1. The contract was a personal contract which precluded the respondent from subcontracting. The respondent breached the contract by subcontracting the performance of the contract. 2. The contract included a contingent condition that was triggered when the vessel was rendered unsalvageable. The contract was then either discharged or dischargeable by the appellant. -- 2 of 20 -- 3 3. The respondent breached the contract by changing the method of performance.1 Nature of appeal [3] The appeal is pursuant to s 47 of the Magistrates Court Act 1921 (Q). This section provides “47 Jurisdiction of the District Court On the hearing of an appeal or special case, the District Court may do any of the following— (a) draw inferences of fact from facts found by the Magistrates Court, or from admitted facts or facts not disputed; (b) order a new trial on such terms as it thinks just; (c) order judgment to be entered for any party; (d) make any other order, on such terms as it thinks proper, to ensure the determination on the merits of the real questions in controversy between the parties; (e) as regards any special case, remit the matter to the Magistrates Court with the opinion of the District Court thereon; (f) make such order with respect to the costs of the appeal or special case as it thinks proper.” [4] Further, s 113 of the District Court of Queensland Act 1967 (Q) provides: “The District Court has, for an appeal from a Magistrates Court, the same powers as the Court of Appeal has to hear an appeal.” [5] In JJ Richards & Sons Pty Ltd v Precast Concrete Pty Ltd2 McGill SC DCJ noted that r 785 of the Uniform Civil Procedure Rules 1999 (Q) also applies such that r 765(1) is picked up. Therefore, this appeal is by way of rehearing. In such an appeal the Court must make up its own mind on the evidence that was before the Magistrates Court giving “due reference, deference and weight” to the learned magistrate’s view but ultimately the appellant must show the decision appealed from was wrong.3 In Warren v Coombes4 their Honours stated: “Where the question depends on the proper inference to be drawn from undisputed facts, the appellant court, although to form its own conclusions, will still give proper regard to the findings of the trial judge at first instance.” [6] I note that in Fox v Percy5 Gleeson CJ, Gummow and Kirby JJ noted that in particular cases where there are incontrovertible facts or uncontested testimony, it may be that a trial judge’s conclusions are erroneous even if based on findings of credibility. 1 This ground was abandoned in the appellant’s submissions; see page 12. 2 [2010] QDC 272. 3 See Parsons v Raby [2007] QCA 98 at [24]; Allesch v Maunz (2000) 203 CLR 172 at 180-1; and Teelow v Commissioner of Police [2009] 2 Qd R 489 at [4] per Muir JA. 4 (1979) 142 CLR 531 at 551. 5 (2003) 214 CLR 118 at [28]. -- 3 of 20 -- 4 Background [7] The appellant owned a sailing boat called The Card. The Card broke free of its moorings at South Molle Island sometime in late May 2012. It ran aground at Armit Island. The appellant was issued with an order to remove the vessel on 21 May 2012 under the Great Barrier Reef Marine Park Regulations 1983 (Q) requiring removal of the vessel. It was also issued with a direction under the Transport Operation (Marine Safety) Act 1995 (Q) on 18 June 2012 requiring the vessel to be taken to a place on land where repairs would be carried out. [8] The appellant consulted with the respondent; David Edge Marine Contracting Pty Ltd and Gordon Simmons concerning its removal. The appellant ended up engaging the respondent to remove the vessel and return it to the mainland. The respondent provided a quote of $150,000 plus GST on 19 June 2012 to do this. The respondent was engaged to carry out the removal by the appellant on 20 June 2012. [9] Bad weather delayed the operation and the vessel sustained further damage. The vessel was recovered and returned to Shute Harbour by 13 August 2012. The appellant was dissatisfied as to the condition of the vessel and refused to pay more than the $55,000 already paid. The action then was over the balance. Pleadings [10] The statement of claim sought the sum of $120,000 for damages for breach of contract or unjust enrichment. It alleges that on or about 20 June 2012 the plaintiff and the defendant entered into an agreement whereby the plaintiff was to provide services to salvage or recover the wreck of the vessel The Card (paragraph 3). The total sum agreed was $150,000 plus GST but the defendant had only paid $45,000 (paragraph 4). [11] The amended defence alleges: (a) the contract contained an express term that the plaintiff would not engage Simmons as a subcontractor (paragraph 2(c)(iv)); (b) The Salvor would be present during the operation at all times (paragraph 2(c)(v)); (c) the defendant’s director Mr Ross would be present during the operation to determine whether the vessel was salvageable (paragraph 2(c)(vi)) ; (d) if not salvageable, a wreck removal contractor would be engaged (paragraph 2 (c)(vii)); (e) the plaintiff breached the terms of the agreement as it failed to ensure the plaintiff’s director Mr Engwirda personally undertook the operation; it engaged Simmons to take part in the operation; it failed to ensure The Salvor was present; it failed to arrange for Mr Ross to be present; it failed to ensure that if the vessel was not salvageable the operation did not proceed (paragraph 5(d)); (f) the plaintiff fundamentally breached the contract and was not entitled to be paid the contract price. A reasonable value for the work was $25,000 (paragraph 5(e)); (g) the defendant also brought a counterclaim which it sought to be set off against the plaintiff’s claim (paragraph 5(g); -- 4 of 20 -- 5 (h) in the counterclaim the same breaches were relied upon and further it was alleged the plaintiff breached the agreement by failing to perform the contract in accordance with its express terms; failed to perform the operation in a skilful manner; failed to perform the operation with care and skill, etc. (paragraph 14); (i) the defendant was owed a duty of care by the plaintiff to act with care and skill and these duties were breached in that the salvage operation was not performed with reasonable care and skill (paragraph 16); (j) as a result loss and damage in the sum of $1,037,500.00 was suffered by the defendant (paragraph 21). [12] In the reply and answer the plaintiff: (a) says that the agreement was for recovery of the vessel (paragraph 2(a)); (b) denies the express terms alleged by the defendant (paragraph 9); (c) says that the plaintiff’s director Mr Engwirda attended on the vessel with The Salvor on or about 28 June 2012 but it was not possible to use safely at the scene as the barge weighed 200 tonnes and due to the location of the reef and tidal flow. It was necessary to use a smaller vessel and as a result the plaintiff engaged Simmons (the owner of a smaller vessel) to carry out the recovery. Poor weather prevented recovery until 12 July 2012. The poor weather caused major damage to the vessel (paragraph 11); (d) says the remains were delivered to Shute Harbour on 15 July 2012 (paragraph 11(i)); (e) denies it failed to carry out the operation without reasonable care and skill (paragraph 14(b)); (f) denies it breached and express terms of any duties owed (paragraph 15(a); (g) denies that any loss or damage suffered by the defendant was as a result of the plaintiff’s actions (paragraph 21). [13] The matter was listed for hearing in the Supreme Court at Mackay in the sittings commencing 5 May 2014. [14] On 5 May 2014 the appellant was granted leave to discontinue its counterclaim against the respondent. [15] The trial occurred in the Magistrates Court at Proserpine on 14 August 2014. As noted earlier judgment was given on 23 March 2015. Evidence The respondent’s case James Engwirda [16] Mr Engwirda (the representative of the respondent) gave evidence his company is a specialist salvage and construction company. -- 5 of 20 -- 6 [17] He and Mr Ross (the representative of the appellant) had worked together on several projects over the years.6 [18] The evidence revealed that on 30 May 2012 the Great Barrier Reef Marine Park Authority (“GBRMPA”) issued a removal order for The Card under regulation 94 of the Great Barrier Reef Marine Park Regulations 1983 (Cth). It is noteworthy the order required the salvage plan had to be approved by the GBRMPA.7 [19] Further there was a Shipping Inspector’s direction dated 18 June 2012 under s 171 of the Transport Operations (Marine Safety) Act 1994 (Q) to take the ship to a place on land where repairs could be carried out.8 [20] The appellant arranged for Mr Engwirda to inspect the vessel which was on the rocks at Armit Island to give an opinion on how it could be recovered.9 [21] On 6 June 2012, Mr Engwirda spent six hours inspecting the vessel. In his opinion the vessel would not float by itself – it was a wreck. The vessel was stranded on a very hostile and rocky foreshore. The vessel was punctured and held firmly against the foreshore.10 Exhibit 3 was photographs of the vessel in situ. [22] The vessel had suffered severe damage. All electrical, safety and mechanical systems on board had been destroyed and there was damage to the hull. There was structural damage where the keel met the hull and the rudder section was damaged.11 The vessel would have to be extensively repaired. The vessel would not be able to be floated home on its own. It would have to be carried home as a wreck.12 [23] In the following weeks there were many conversations with Mr Ross concerning recovery. Also, Mr Engwirda offered a salvage plan to the Great Barrier Reef Marine Park Authority (“GBRMPA”). [24] On 19 June 2012, the respondent sent Exhibit 7 to the appellant (this is an email dated 19 June 2012). The email read: “Hi Craig, Below is a letter that I sent to GBRMPA. We are able to commence work on the recovery as soon as the weather allows. We offer our services to attempt to recover the vessel with as little damage as possible, however should the vessel sustain further damage during the recovery process we will deliver the recovered remains to Shute Harbour, where they will remain your property and the contract will be considered complete. The salvage fee will be payable when GBRMPA have issued an advice that the removal notice has been complied with. This contract is for the rec removal of the ‘The Carding’ and is for the amount of $150,000 plus GST. To accept our offer, please confirm your agreement in writing and deposit $25,000 into the following account.” 6 Transcript page 1-8.10. 7 Exhibit 17. 8 Exhibit 18. 9 Transcript page 1-8.27. 10 Transcript page 1-10.32. 11 Transcript page 1-12.10. 12 Transcript page 1-13.10. -- 6 of 20 -- 7 [25] The enclosed letter to GBRMPA was tendered as Exhibit 5. This read: “As discussed, we had been approached by Craig Ross to recover ‘The Card’ from her current location. If we are able to secure a contract with Mr Ross, our intention would be to re-float the vessel with airlift bag equipment. We believe that we would be able to rig the vessel in a manner that would enable us to control the angle of heel and final draft, so that we could cross the reef on a reasonable spring tide. Care and attention will be taken to ensure that fuel, oil or other pollutants would not be able to escape from the vessel throughout the recovery process. We would ensure that all tanks and machinery was sealed prior to any other work taking place. We believe that the best approach to minimise damage to both the vessel and surround area, would be to hold the vessel on her side to reduce her normal draft of 14 feet to less than 10 feet, which would be necessary to clear the reef on the available tide. To achieve this, we will attach 5,000kg capacity, enclosed lift bags, to points both inside the vessel as well as beneath the hull and keel. This together with ballast attached to the rigging, will provide the forces required to manipulate the vessel as required. We propose to position our recovery vessel ‘Salvor’ as close as practical to the casualty, to enable the transfer of equipment with minimal impact to the environment. Our intention would be to remain on site for the duration of the recovery. The time required to complete the works would be approximately three weeks from commencement. This of course does not cover weather and tide constraints which may be encountered. In any case, we would progress the project as quickly as possible.” [26] On 20 June 2012, the appellant sent an email (Exhibit 8) to the respondent stating: “Further to our phone conversation today I confirm the following. That we agree to all we can to save the vessel, the process outlined I have an agreement with re GBRMPA. I have chosen to go with your company after consultation with three other marine salvage contractors purely on you (sic) professional approach and your commitment to do all you can to save the vessel and transport it to port for repair and further that you thought I will give up on the rescue before you would. Of the contractors considered were all much less than your price, but I had no assurance the vessel would be delivered safely to port. I was particularly concerned with regards to this comment… should the vessel sustain further damage during the recovery process we will deliver the recovered remains to Shute Harbour. -- 7 of 20 -- 8 From our conversation we agree that we will jointly make the decision if and in the unlikely event the vehicle becomes unsalvageable, I will come to site and we will jointly access the best outcome to take from that position. I will be on site as much as possible, the vessel is of significant importance and should be saved where possible. As previously discussed at this stage I would like the vessel to be ferried to Shute Harbour Motel, from that point we intend to hire a crane to lift the vessel onto land for repair. As we are not yet certain of the state of the vessel it may be necessary to take the vessel to another location to be confirmed, conditions dependent. I will transfer my account transfer limit of $20,000 today.” [27] Mr Engwirda said that his role was to recover the vessel to satisfy the orders placed against the appellant and to do their best to return the vessel intact.13 He also discussed the possibility the vessel may become unsalvageable with Mr Ross. Mr Ross was opposed to the vessel being cut up and if that became necessary options available would be discussed.14 [28] On 26 June 2012 the appellant sent a further email (Exhibit 9) to the respondent: “Hi Jim, I am advise (sic) that if the Card has suffered further damage we may have to readjust the plan. As previously discussed the quote for doing all we can to save the vessel. Once you have reinspected the vessel please discuss your thoughts with me in agreeing to a way forward. Will you please let me know when you are will be going to site so I can have someone join you.” [29] Mr Engwirda made preparations of equipment and vessels to attend the site. He attended the site on 28 June 2012. He then subcontracted Gordon Simmons and his vessel to recover the vessel. He said, “We still used my technical equipment and knowledge to recover the vessel from a very difficult location.”15 [30] On about 3 July 2012 there was a bad weather event which prevented the plaintiff from attending the site. This event lasted for about nine days. During this time he could not access the site.16 [31] It was also during this time that the vessel suffered further significant damage because it was ground away with each tide cycle and wave action.17 Most of the starboard side had broken away, as did the keel. The removal occurred after 12 July 2012. [32] They re-rigged the vessel to float it away and cleaned up the damage and sections partially broken by the storm.18 The main structure of the vessel was returned to Shute Harbour on 25 July 2012. 13 Transcript page 1-16.10. 14 Transcript page 1-17.3. 15 Transcript page 1-51.35. 16 Transcript page 1-18.25. 17 Transcript page 1-18.36. 18 Transcript page 1-18.45. -- 8 of 20 -- 9 [33] On 25 July 2012, the appellant sent an email to the respondent wanting to know where the keel, anchor and mast were (Exhibit 11). On 26 July 2012, the respondent responded stating the keel, anchor and mizzen were being recovered and it was expected wreck removal would be completed by the end of the month (Exhibit 12). [34] Mr Engwirda gave evidence that the respondent incurred a number of costs in carrying out the removal namely subcontract labour, vessels, the provision of its equipment which in fact was damaged by the weather.19 They contracted The Lady Mitchell and its operator Gordon Simmons as it was small enough to get to the vessel.20 [35] On 13 August 2012, the respondent wrote to the appellant informing it that wreck removal was complete (Exhibit 13). A tax invoice for $145,000 including GST was sent. The appellant paid a further $35,000 in two payments. [36] On 29 August 2012 GBRMPA issued a written direction advising the appellant that the direction to move had been complied with (Exhibit 22). [37] Mr Engwirda gave evidence that it became obvious to him that Mr Ross was discontented in about September of 2012.21 [38] In cross-examination it was Mr Engwirda’s opinion that as at 5 July 2012 the vessel had already sustained sufficient damage to be written off, but it could potentially sail again but not commercially.22 By 12 July 2012 though it had suffered further damage.23 Mr Engwirda considered it was not possible for him to “save” the vessel as he could not prevent the damage sustained.24 The contract was to remove the wreckage and comply with the notices which is what they did.25 [39] He denied there was any custom of not being paid if the vessel could not be repaired.26 [40] Mr Engwirda denied that Mr Ross told him after 20 June 2012 he did not accept the $150,000 price regardless of whether the vessel was salvageable or not.27 He also denied Mr Ross told him that he had received a quote from David Edge for $20,000 to $30,000.28 He denied there was a conversation with Mr Ross in which he agreed to contact Mr Ross to come to the site if the vessel was no longer salvageable.29 [41] Mr Engwirda said he was successful in salvaging the vessel.30 He denied contributing to damage to the vessel.31 In his opinion the vessel did not become unsalvageable.32 19 Transcript page 1-22.41. 20 Transcript page 1-23.5. 21 Transcript page 1-24.45. 22 Transcript page 1-26.20. 23 Transcript page 1-26.30. 24 Transcript page 1-28.15-45. 25 Transcript page 1-28.40. 26 Transcript page 1-29.26. 27 Transcript page 1-30.45. 28 Transcript page 1-31.10. 29 Transcript page 1-31.20. 30 Transcript page 1-31.42 and 1-35.30. 31 Transcript page 1-32.5. 32 Transcript page 1-34.35. -- 9 of 20 -- 10 [42] The reason for the deposit of $20,000 rather than the $25,000 was because $20,000 was Mr Ross’ maximum transfer limit.33 He said that when the crew attended the site after the bad weather they told him as to the further damage which information he passed onto Mr Ross.34 His crew (the subcontractors) attended the site. [43] He also said that he provided the equipment to Gordon Simmons and his crew with The Lady Mitchell to do the project and instructed them on how to carry out the work.35 It was a very aggressive site and for that reason he did not put a vessel the size of The Salvor there.36 He disagreed there was any discussion with Mr Ross of a rate of $10,000 per day with a discount of $2,000 per day.37 He said that the methodology was The Salvor would support the operation and the quote was based on removing the vessel with airlift bags which occurred.38 [44] He denied that Mr Ross told him he did not want Mr Simmons involved or that Mr Engwirda had called Mr Simmons a cowboy.39 Whilst he was not there he managed the project and his representative was there.40 Phillip Koloi [45] Mr Koloi was from the GBRMPA. He gave evidence as to the removal order. Mr Ross contracted Mr Engwirda to do the salvage which plan was approved.41 Ben Morgan [46] Mr Morgan was from Marine Safety Queensland. He gave evidence of the directions he gave to Mr Ross. The appellant’s case David Edge [47] Mr Edge said that in early June 2012 he was approached by the appellant to salvage the vessel. He quoted $100,000 plus $10,000 or so for a barge to do the work.42 He inspected the vessel in situ noting it had sunk having been smashed on the rocks.43 He subsequently quoted $30,000 for a wreck removal.44 [48] In cross examination he said Mr Ross did not go ahead with the work as he said he had received a quote from elsewhere.45 33 Transcript page 1-37.30. 34 Transcript page 1-40.27. 35 Transcript page 1-41.35. 36 Transcript page 1-43.5. 37 Transcript page 1-45.8. 38 Transcript page 1-47.10. 39 Transcript page 1-51.1-5. 40 Transcript page 1-52-10. 41 Transcript page 1-57.20. 42 Transcript page 1-76.10. 43 Transcript page 1-75.15. 44 Transcript page 1-76.30. 45 Transcript page 1-77.40. -- 10 of 20 -- 11 Craig Ross [49] Mr Ross gave evidence that he was the director of the appellant. [50] The Card was built by NBC at a cost of US$5.5 million. [51] In May 2012 he was informed that The Card had come free of its mooring. It was discovered on Armit Island sitting lightly on the rocks with no damage.46 They were unsuccessful in trying to remove it a high tide. [52] He then went to the site with David Edge. Mr Edge thought that they needed a large crane to lift the vessel onto a dumb barge. He quoted $100,000 for this process.47 [53] Mr Ross also sought a quote from Gordon Simmons. He said that Mr Simmons had come up with a harebrained scheme to use ping pong balls to float it off.48 [54] He first spoke to Mr Engwirda in early June 2012. He said he told Mr Engwirda his biggest concern was to save the vessel but also to ensure it did not drop off into deep water. Mr Engwirda said he would use The Salvor with slings to cradle the vessel off.49 [55] Mr Ross said that Mr Engwirda quoted him $10,000 per day but would give him a discount to $8,000 and he would “save the vessel”.50 I might say it would be quite difficult for someone to guarantee that the vessel would be saved definitively in the circumstances as distinct from express hope it would be. [56] Mr Ross said he was convinced to use the respondent as Mr Engwirda was very professional, had the equipment and gear and had experience.51 Mr Ross said that Mr Engwirda said that The Salvor was going to be at the site for the entire time i.e. 14 days to three weeks.52 [57] With respect to Exhibit 8, he said that he was convinced the vessel would be salvaged successfully and there was never any suggestion that the vessel would not be saved.53 [58] He alleged that “many times” Mr Engwirda told him that if the weather conditions changed and the vessel sustained further damage Mr Ross would go to the vessel with him.54 He would then give Jim the opportunity to quote on wreck removal.55 He rejected Mr Engwirda’s evidence that he was only going to be contacted if the vessel was to be cut up.56 [59] He alleged he had told Mr Engwirda about the ping pong ball plan and Mr Engwirda said that Mr Simmons was a cowboy.57 46 Transcript page 1-80.3. 47 Transcript page 1-80.25-30. 48 Transcript page 1-80.40 49 Transcript page 1-81.20. 50 Transcript page 1-81.35. 51 Transcript page 1-81.30. 52 Transcript page 1-81.40. 53 Transcript page 1-83.10. 54 Transcript page 1-83.28. 55 Transcript page 1-84.1. 56 Transcript page 1-84.15. 57 Transcript page 1-84.40. -- 11 of 20 -- 12 [60] At no stage was he told The Salvor was not being used. He understood it would be at the site the whole time.58 He was not told Mr Simmons had been engaged.59 Mr Engwirda was going to use his own crew the entire time.60 If he had been told the vessel was a wreck he would have stopped the contract and used someone else to do a wreck removal.61 He was devastated when he saw the vessel at Shute Harbour.62 [61] It appears the Mr Ross was non-responsive at the start of the cross-examination.63 [62] Mr Ross agreed that the notices served by the GBRMPA and MSQ required him to remove the vessel.64 He had time limits to comply with these.65 [63] He was asked, “And during the course of that telephone conversation Mr Engwirda assured you that he would do everything he could do to salvage the vessel to get it off the rocks of Armit Island in the best condition he could that’s correct isn’t it?” Mr Ross did not answer the question and said, “To do all the best he could doesn’t mean you subcontract it out to some cowboy that doesn’t have the equipment … that was commissioned in this salvage.”66 [64] Despite the requirements in the statutory notices he alleged that Mr Engwirda had to “save” the vessel.67 He accepted bad weather came in for around nine days.68 Mr Ross could not say whether the nine day weather event caused further damage to the vessel.69 [65] He said Mr Engwirda informed him of the use of the sea crane with slings.70 [66] He sent an email to the respondent on 25 July 2012 (Exhibit 11) after he became aware of its state.71 There appears to be no complaint made in this email.72 Similarly, in an email dated 28 August 2012 Mr Ross made no complaint as to the vessel’s state (Exhibit 16).73 Further, Mr Ross made two further payments totalling $35,000. Mr Ross claimed that Mr Engwirda agreed on $55,000.74 Yet, this was not put to Mr Engwirda in cross-examination nor was it pleaded. [67] Mr Ross seemed to be of the opinion that someone, but not the weather, was responsible for the damage.75 58 Transcript page 1-85.30. 59 Transcript page 1-86.5. 60 Transcript page 1-86.11. 61 Transcript page 1-86.32. 62 Transcript page 1-86.40. 63 Transcript page 1-88. 64 Transcript page 1-90.30. 65 Transcript page 1-90.40. 66 Transcript page 1-93.25. 67 Transcript page 1-94.20. 68 Transcript page 1-94.41. 69 Transcript page 1-95.45. 70 Transcript page 1-97.40. 71 Transcript page 1-99.3. 72 Transcript page 1-99.10. 73 Transcript page 1-101.10. 74 Transcript page 1-102.10. 75 Transcript page 1-103.40. -- 12 of 20 -- 13 [68] In re-examination he explained why he made no complaints in the emails.76 Decision by the magistrate [69] The magistrate accepted Mr Engwirda’s evidence over that of Mr Ross.77 The magistrate was satisfied the plaintiff had proved its claim on the balance of probabilities.78 As to the argument there was a breach of this contract as it was not personally performed, the magistrate did not accept Mr Ross’s evidence that there was a specific agreement that the operation was not to be subcontracted.79 The magistrate was not satisfied that there was an element of skill or expertise to make performance of the contract personal to the respondent.80 The magistrate considered it was relevant that David Edge would subcontract work out,81 which was not dissimilar to the subcontract with Gordon Simmons.82 As to the argument that the damage to the vessel was caused by the respondent by failing to use The Salvor, the magistrate rejected this argument as there was conclusively no evidence to support this.83 He noted that the respondent had withdrawn its claim for $1,037,500 in the Supreme Court.84 [70] I do not need to consider the magistrate’s findings concerning the method of performance as there were no grounds of appeal relating to this. [71] As to the appellant’s argument that the contract was breached because the vessel was not “saved” the magistrate found the respondent carried out its end of the bargain. He found the vessel was removed, salvaged, saved and returned to Shute Harbour.85 [72] Further, his Honour found that the contract in this case was clear from the terms of Exhibit 7.86 Ground 1 Appellant’s submissions [73] The appellant alleges the contract was a personal one which precluded the respondent from subcontracting its obligations. The appellant submits that the magistrate erred in finding that there was no element of skill or expertise to make the contract personal to the respondent.87 The appellant submits the magistrate erred in failing to draw appropriate inferences, wrongly taking into account the appellant’s negotiations with another marine salvage contractor and wrongly taking into account the results achieved. 76 Transcript page 1-107.22. 77 Reasons page 27.3. 78 Reasons page 29. 79 Reasons page 20.6. 80 Reasons page 22.3. 81 Reasons page 21.3. 82 Reasons page 21.4. 83 Reasons page 22.6. 84 Reasons page 22.20. 85 Reasons page 27.2. 86 Reasons page 28.1. 87 Reasons page 22.5. -- 13 of 20 -- 14 [74] It is submitted that the only conclusion to be reached is that this was a personal contract as: (a) the nature of the contract was such that it required personal performance due to the salvage from a very aggressive site; (b) the respondent had previously salvaged a vessel for the appellant and the appellant relied on the respondent’s expertise and diligence; (c) the appellant consulted three or more contractors before contracting the respondent; (d) the appellant relied on the respondent’s representations;88 (e) in an email the appellant noted it had decided to go with the respondent as “I am personally encouraged by your words that you will do all you can to save the vessel…”; (f) the respondent, in evidence, submitted it knew the appellant had rejected Simmons.89 [75] The appellant submits the respondent subcontracted Simmons in secret and did not tell the appellant about this until late July or August 2012.90 [76] The appellant further submits that any negotiations with David Edge were not relevant and the magistrate erred in relying on the fact he would have used subcontractors. [77] It is submitted that by using Simmons the respondent breached the contract and, as a result, the contract could not be enforced. As a result of the breach the appellant alleges it lost the chance to contract with another marine salvage contractor at a lower contract price and lost its chance to maximise the vessel was not further damaged. Respondent’s submissions [78] The respondent, on the other hand, submits that in this case the fundamental flaw of the appellant’s argument is that it assumes the appellant was deprived of the expertise and experience of the respondent. In this case, Mr Engwirda (the respondent) devised the method and manner of removal of the vessel; liaised with the authorities; supplied the equipment used to remove the vessel; attended the site on at least two occasions; observed the vessel for a full tide cycle prior to devising the method and manner of removal; directed the subcontractor as to the method of removal and had a representative on board during the removal operation. [79] It is submitted that no evidence was advanced as to the importance of the tasks by Mr Engwirda and the respondent’s representative, what tasks the subcontractor performed or the importance of those tasks. There was no difference in the method and manner of removal whether it was the respondent’s vessel The Salvor or The Lady Mitchell (Simmons’ vessel). The magistrate clearly turned his mind to this issue.91 It was appropriate for the magistrate to take into account the appellant’s lack of concern with Mr Edge’s contention to subcontract out. 88 I note no counter claim was brought for misrepresentation under common law or statute. 89 Transcript page 51.15. 90 I note there was no counterclaim for unconscionable conduct brought by the appellant. 91 Reasons page 21-22. -- 14 of 20 -- 15 Relevant law [80] I firstly observe that many of the cases relied upon by the appellant are old ones. It might be thought that in times past there was a greater expectation that persons would personally carry out the terms of a contract. [81] Lord Green MR in Davies v Collins92 noted that whether a contract can be carried out by a subcontractor depends on inferences to be drawn from the contract itself, the subject matter of it, and the surrounding circumstances. This case involved a personal agreement to carry out dry cleaning. [82] There is a distinction between the subcontracting out of the entirety of the services involved and subcontracting out other than the “substance of the contract itself”.93 In British Waggon Company & Anor v Lea & Co94 it was held that where there is a contract for personal performance, if not personally performed, the wronged party is entitled to treat the contract as at an end. Personal performance in such circumstances is the essence of the contract. [83] I note in British Waggon Company the court was concerned with whether a contract for the repair of wagons was required to be personally performed. Cockburn CJ at p 153 noted: “All that the hirers, the defendants cared for in this stipulation was that the wagons should be kept in repair; it was indifferent to them by whom the repairs should be done.” [84] In Edwards v Newland & Co95 the English Court of Appeal held that a contract to store the plaintiff’s furniture was a personal one. The defendants in fact stored the plaintiff’s furniture somewhere completely different in the hands of a third party. I consider a bailment case to be different from the instant one. In such a case e.g. the bailor is entitled to a return of the goods on demand from the bailee. [85] Fratelli Sorrentino v Buerger & Anor96 was a case where it was held that a shipowner needed to perform the charter party personally. This was not a dissimilar situation to that in Edwards. [86] Johnson and Anor v Raylton, Dixon & Co97 is also a different case to the instant one. In that case there was evidence that in the iron trade there was a custom that in the absence of contrary stipulation a party was to provide iron plates of their own make. There was no accepted evidence of custom like this in the instant case. Indeed Mr Engwirda denied he worked under a custom. [87] Australis Media Holdings Pty Ltd v Telstra98 provides me the greatest assistance. The judge at first instance had enjoined the defendant from transferring broadcasting services. The appeal was allowed. The New South Wales Court of Appeal noted that 92 [1945] 1 All ER 247 at p 250.2. Also see Southway Group Ltd v Wolff [1991] 57 BLR 33. 93 See also Australis Media Holdings Pty Ltd v Telstra Corporation Limited (1998) 43 NSWLR 104 at p 120. 94 (1880) 5 QBD 149. 95 [1950] 2 KB 534. 96 [1915] 3 KB 367. 97 (1881) 7 QBD 438. 98 Op. Cit. 93. -- 15 of 20 -- 16 whilst it may be impermissible to subcontract out the whole of the contract parts of the contract may be.99 It was held that the parties had contracted through corporate structures contemplating many changes in execution, employees, employment structures and in technology. It was said: “In the absence of express indications precluding subcontracts or restructuring per se we see no basis for implying the same.”100 Disposition of ground 1 [88] I accept the respondent’s arguments. [89] Giving due weight to the Magistrate’s factual findings on the evidence I accept Mr Engwirda’s evidence. I find his evidence more likely. I find there was no express or implied agreement that he only would carry out the work. [90] Even if reliance on the Edge evidence was an error I disregard that evidence in reaching my conclusions on this appeal. [91] In my view it is a relevant fact that a company was to perform this contract. On the evidence it seems that one person could not have carried out this endeavour. Other people whether it be employees or subcontractors needed to assist Mr Engwirda in recovering the vessel. [92] It is my view that even if it can be said that this was a contract for personal service, this did not prevent the respondent company from subcontracting out part of the work. [93] As I say on the evidence this would have been a job which involved a number of people to carry out the salvage, not just Mr Engwirda. On the facts of the case he did not entirely subcontract out the job. I find on the evidence he devised the method and manner of removal of the vessel; he liaised with the authorities; he supplied the equipment to recover the vessel, he visited the site and observed the vessel and his company had a representative on board during the recovery process. [94] As I later note concerning ground 2, the real imperative in this matter was for Mr Ross to comply with the statutory notices. The plaintiff achieved this purpose. [95] The evidence revealed that because of the difficult position of the boat, a smaller vessel than The Salvor needed to be used and this is why The Lady Mitchell was used. [96] The respondent did not entirely subcontract out performance. His company carried out performance of the contract. The Card was removed and returned to Shute Harbour. In those circumstances I find the respondent did not breach the contract as alleged. [97] Even though if the respondent did breach it, the fact is the contract was (subject to a discussion of count 2) performed. There was no counterclaim for damages on the basis that loss and damage was suffered by the appellant because the contract was carried out by somebody else.101 Accordingly, the pleading did not support a reduction of the amount sued for. 99 Op. Cit. 93 at p 120.B. 100 Op. Cit. 93 at p 120.E. 101 See Davies v Collins at p 250.A. -- 16 of 20 -- 17 [98] The appellant in oral argument alleged it was relevant that the respondent knew that Simmons had been rejected and despite this engaged Simmons and only paid him $37,500 and “pocketed” the rest. I do not consider this helps the appellant. There was no ground of appeal on the basis of unconscionable conduct or misrepresentation. In any event it is not correct to say he “pocketed” the rest. The respondent’s equipment was used, the system was devised by the respondent, its representative was present and the respondent’s time was used negotiating with the authorities. [99] In my opinion the magistrate was right to dismiss the appellant’s arguments and I therefore reject this ground appeal. Ground 2 Appellant’s arguments [100] The appellant argues that the contract included a contingent condition that was triggered when the vessel was rendered unsalvageable and the contract was discharged or dischargeable by the appellant. [101] It is submitted that the magistrate erred in in failing to find there was a counter offer by the appellant accepted by the respondent. It is said that Exhibit 7 was an offer by the respondent to the appellant. Following Exhibit 7 there was a phone conversation between Mr Ross (of the appellant) and Mr Engwirda (of the respondent). After this Exhibit 8 (an email dated 20 June 2012) was sent by Mr Ross to Mr Engwirda. Exhibit 8 read inter alia “… of the contractors considered were all much less than your price, but I have no assurance the vessel will be delivered safely to port.” [102] It is submitted that the magistrate erred in failing to find this was a counter offer accepted by the plaintiff (respondent). It is submitted that the acceptance is proved by the fact that $20,000 was accepted by the respondent as a deposit rather than the $25,000 mentioned in Exhibit 7. [103] It is then submitted, as a matter of construction of the contract, it was a term that the respondent deliver the vessel in a state such that it could be repaired. It is submitted that the magistrate erred in concluding the contract was carried out because the vessel was saved i.e. salvaged.102 [104] It is further submitted Exhibit 9 supports the appellant’s argument. In the result the submission is the vessel could not be salvaged and the contract was discharged. Respondent’s arguments [105] The respondent, on the other hand, submits that the law is clear – salvage of a vessel has nothing to do with whether a vessel can be economically repaired. As to Exhibit 8, this merely confirmed the telephone discussion as to the contents of Exhibit 7. The factual dispute was found in favour of the respondent. In any event, there was uncontradicted evidence the vessel had been salvaged. Exhibit 9 does not contain any proposed terms. 102 Reasons page 26. -- 17 of 20 -- 18 The law [106] Gleeson CJ in Wilson v Anderson103 said that the object of construction is to ascertain and give effect to the intention of the parties. This is a question of law to be performed objectively. “The common intention is to be ascertained by reference to what a reasonable person would understand at the language use by the parties to express their agreement.” [107] Relevant is the law of salvage. Any service rendered at sea to a vessel in danger or distress constitutes salvage.104 A vessel, even wrecked, is still salvageable.105 A vessel that is so wrecked “as to become a mere congereies of planks… may be salvage of its materials to a considerable amount.”106 The Australian Concise Oxford Dictionary inter alia defines “salvage” as “the rescue of a ship, its cargo , or other property, from loss at sea, destruction by fire etc.” [108] The appellant has relied on The Butler Machine Tool Co Ltd v Ex-Cell-O Corporation (England) Ltd.107 However unlike the instant case that matter was decided on the documents without any oral evidence. The buyers counter offer contained crystal clear terms and conditions. It also contained a clear rejection of the seller’s offer. This case may be distinguished. [109] In Contract Law of Australia108 it is said, “In other cases an acceptance will be effective even though accompanied by a request for some indulgence as to the manner in which the obligations under the contract are to be performed.” The example given is where the buyer requests that delivery be made upon a certain date, provided acceptance is not conditioned upon such agreement.109 Disposition of ground 2 [110] It is firstly necessary to consider the relevant factual findings. [111] Turning to Exhibit 7, in my view a clear offer was made by the respondent to the appellant. There was a telephone discussion after this. Mr Engwirda said that in this discussion he told Mr Ross that because of its position it may be that the vessel had to be segmented and removed in pieces and Mr Ross was opposed to this. They agreed that prior to any cutting up of the vessel Mr Ross would be contacted and they would discuss how to go about the removal.110 Mr Ross (whose evidence was not accepted) alleged that Mr Engwirda agreed that if the vessel sustained further damage i.e. a wreck removal Mr Ross would go to the vessel and he would offer Mr Engwirda the “opportunity to quote on the wreck removal”.111 [112] I find Mr Ross’ evidence unlikely. It is unlikely that a party would go to the trouble of going out to the vessel with the strong possibility it might have to agree on a 103 (2002) 213 CLR 401 at 418. 104 The Charlotte (1848) 3 W. Rob. 68; 166 ER 888 at 890. 105 Stephens v John Broomfield (The Great Pacific) (1869) UKPC 42; 16 ER 683 at 687. 106 Ibid. at p 4. 107 [1979] 1 WLR 401; 1 All ER 965; [1977] EWCA Civ 9. 108 6th edition 2013 Carter at [3-22]. 109 Dunlop v Higgins (1848) 1 HLC 381; 9 ER 805. 110 Transcript page 1-16.25. 111 Transcript page 1-83.20 and 1-84.3. -- 18 of 20 -- 19 completely different contract potentially for far less money when it had all of the men and equipment in situ. There is nothing in the documents to suggest there was any agreement to carry out a different contract for any lesser sum than that mentioned in Exhibit 7. [113] Aside from the unlikelihood of Mr Ross’ version, the terms of Exhibit 8 do not bear his evidence out. In Exhibit 8 he wrote, “From our conversation we will jointly make the decision if in the unlikely event the vessel becomes unsalvageable, I will come to site and we will jointly assess the best outcome and tack to take from that position.” [114] Unsalvageable objectively defined means in effect lost or destroyed. I consider Exhibit 8 fits in better with Mr Engwirda’s version. Indeed I note Mr Ross was specifically concerned about the vessel dropping off into deep water.112 [115] On the evidence the real imperative was compliance with the statutory notices. I find there was no agreement as to the contingent condition alleged by the appellant. The vessel on the evidence was still salvageable within the meaning of that term- at law and by the dictionary [116] In my view, looking at the evidence as a whole, a reasonable person would construe this agreement to be salvage of this vessel – whether repairable or not. [117] Giving due weight to the magistrate’s findings, I accept Mr Engwirda’s evidence. His evidence was more likely. It would be impossible for someone to guarantee the vessel was in good condition when recovered and if not, not charge a fee for the recovery. [118] I find that Exhibit 7 was the offer by the respondent accepted by the appellant. I do not consider that Exhibit 8 was a counter offer. I consider the words used in Exhibit 8 to be an expression of hope (i.e. the vessel would be saved), rather than a condition of the contract. In any event Mr Engwirda (whose evidence is accepted) denied he agreed to this alleged condition. [119] Further, all exhibit 8 did was to record the discussion that if the vessel became unsalvageable there would be a further discussion as to the options. [120] Objectively the intention of the parties was to recover the vessel and remove it to Shute Harbour. This was because the appellant had to comply with the statutory notices. [121] Even if Exhibit 8 could be regarded as a counter offer, at worst for the respondent (in light of the accepted discussion between the parties and the words used) Exhibit 8 only varied the original offer to the extent that if the vessel was so badly damaged such that it needed to be cut up then Mr Engwirda would contact Mr Ross to discuss options at that point. The vessel was despite its further damage, still salvageable.113 Thus any condition in Exhibit 8 did not “kick in”. [122] It is unlikely Mr Ross could have been mistaken about this, but this does not matter because mistake was not pleaded or argued. It is unlikely because Mr Engwirda has in fact carried out a wreck removal for Mr Ross previously.114 112 Transcript page 1-81.20 and 1-109.11. 113 As defined in the cases and in the Oxford Dictionary. 114 Transcript page 1-26.5. -- 19 of 20 -- 20 [123] As to Exhibit 9 I consider this was a unilateral attempt to change the agreement by the appellant. The agreement has already been formed at that point. It was different in its terms to Exhibit 8. Indeed Mr Engwirda did not receive this email as he was already at sea engaged in carrying out the contract.115 [124] I might say there were good reasons for preferring Mr Engwirda’s evidence over Mr Ross. I note that Mr Ross claimed in his evidence he sent SMS messages to Mr Engwirda but these were never produced.116 Mr Ross seemed non-responsive at times in his evidence.117 He alleged that there was a specific agreement that they would “finish it off at $50,000”118 when this had not been put in cross-examination or pleaded. [125] I therefore consider the magistrate was correct in his approach to this case. [126] I therefore find that there was no such term as alleged by the appellant. This ground of appeal is rejected. Conclusion [127] In conclusion, for the reasons I have given, I dismiss the appeal. I will hear the parties as to costs. 115 Transcript page 1-41.42. 116 Transcript page 1-102.25. 117 See e.g. transcript pages 1-88, 1-99.35. 118 Transcript page 1-102.10. -- 20 of 20 --