Bowie & Bowie v Wort [1997] QSC 142

IN THE SUPREME COURT OF QUEENSLAND Mackay District Registry Before the Hon. Justice Williams [Bowie & Anor v. Wort] BETWEEN: AND: ROBERT MITCHELL BOWIE and SANDRA BOWIE JIM WORT JUDGMENT - WILLIAMS J. Judgment delivered 19/0811997 No. 28 of 1995 Plaintiffs Defendant CATCHWORDS Negligence - valuer - valuation of boat for prospective purchaser- measure of damages Counsel: Ms A. Philippides for Plaintiffs Mr D. Ryan for Defendant Solicitors: Barry Beaverson & Stenson for Plaintiffs Gadens Ridgeway for Defendant Hearing Dates: 20,21,22 May 1997 -- 1 of 21 -- IN THE SUPREME COURT OF QUEENSLAND Mackay District Registry [Bowie & Anor v. Wort] BETWEEN: AND: ROBERT NITTCHELL BOvnE and SANDRA BOvnE JIM WORT REASONS FOR JUDGMENT - WILLIAMS J Judgment delivered 19/8/1997 No 28 of 1995 Plaintiffs Defendant By an undated contract executed on or about 3 February 1994, and settled on or about 31 March 1994, Robert Mitchell Bowie and Sandra Bowie, the plaintiffs, agreed to purchase from Einbeck Pty Ltd a tourist charter boat business, including the vessel "Trinity", for a total purchase price of $127,000. In that contract the parties apportioned the sale price as follows: plant, furniture, chattels and fixtures $90,163 and goodwill $36,837. Prior to entering into that contract the plaintiffs had asked Jim Wort, the defendant, to survey and value the boat for them; the defendant carried on business as a marine consultant which included valuing and carrying out surveys of various types of vessels. He carried on that work in the Airlie Beach-Whitsunday area for some time. -- 2 of 21 -- 3 In paragraph 3 of the statement of claim it was alleged that the plaintiffs engaged the defendant to do the following: "(a) To inspect and survey the vessel; (b) To provide a valuation of the vessel; (c) To advise as to whether the vessel was seaworthy; (d) To advise on the general condition of the vessel and especially the state of repair of the vessel; (e) To advise whether the vessel was a worthwhile investment; (t) To advise of any matter which would be relevant for the plaintiff to know as prospective purchasers of the vessel." In the defence the defendant admitted particulars ( a) to (d) inclusive. The statement of claim also alleged that the plaintiffs informed the defendants to the effect that they were not seasoned or experienced sailors and had not previously been engaged in the boating industry; those allegations were admitted. There was an additional allegation that the plaintiffs were relying on the defendant's advice in deciding whether to purchase the business; that was put in issue. There is no doubt that on or about 2 February the defendant handed the plaintiffs his valuation, the document which became exhibit l. It was headed "survey report and valuation", and placed an overall value on the "Trinity" and its equipment of $96,400. It will be necessary to say more about that valuation and the conversation which occurred between the parties on 2 February. The plaintiffs pleaded that they entered into the contract to purchase in reliance on the representations and advice given by the defendant in his written valuation and oral communications on 2 February. It was then alleged that the defendant acted negligently in carrying out the survey and providing the advice and various particulars were alleged in support of that allegation. One of the particulars was that the vessel's value was not in the vicinity of $96,400 but rather in the vicinity of $32,000. -- 3 of 21 -- 4 At the outset of the trial counsel for the defendant admitted liability and said that the only issues upon which evidence would be required would be the damage which was caused and the measure of damages. When questioned from the bench as to what was meant in the circumstances by the statement that liability was admitted counsel reframed the admission to admit that the defendant was in breach of his duty to provide a market valuation as at the date of his inspection; that is the "market value was wrong". Mention was made in that context that the valuation provided by the defendant was of the order of $20,000 too high. It was clear from the outset that there was a difference of opinion between counsel as to the proper measure of damages and counsel for the plaintiffs also wished to establish a broader base for liability than was admitted by counsel for the defendant. In consequence the admission of liability did not significantly reduce the evidence canvassed at the trial. Though the plaintiffs had no previous experience with the boating industry, they were experienced business people. Their evidence discloses significant business investments and activities both prior to and at the time of entering into this contract. There is no doubt that the plaintiffs were experienced in assessing the viability of a business (including a business of the type in question) and they observed the business activities of the vendor and made enquiries as to the popularity of the business prior to engaging the services of the defendant. In her evidence in chief the female plaintiff said: "We had done our own homework as far as goodwill, observing the boat for quite a period oftime." She also said: "We had substantial goodwill. Trinity was appealing to us because she'd been there for 25 years. We had an experienced crew that was prepared to stay on until my husband got his commercial ticket. " The male plaintiff spoke of becoming aware that the tourist charter boat business called Whitsunday Trinity Cruises was for sale and referred to conversations with the vendor. He went on: "Had a look at the vessel and the mariner while we chatted, then over the next couple of -- 4 of 21 -- 5 weeks we sort of watched the boat coming and going, checking numbers. We visited some of the travel agents in town, or the booking offices, and sought their opinions as to the trip; whether it was a good trip, bad trip, what sort of reaction they had, and the reaction they received from any passengers that came back." He then referred to obtaining the report from the defendant and went on: "We had already worked out roughly what we considered a fair price for goodwill as it's called and that's how we worked out a price." The accountant for the plaintiffs, DN Watts, was consulted at an early stage, but Watts could not recall giving specific advice as to the value of goodwill. The figure of $36,837 stated in the contract for goodwill appears to be a figure arrived at independently by the plaintiffs relying on their previous business experience and assessment of this business in particular. In subsequent financial accounts (for example the balance sheet as at 30 June 1994, exhibit 21) the value of goodwill was shown as $40,174. The accountant explained that the higher figure included capitalisation of some of the costs of acquisitions, such as stamp duty. Particularly in the light of that evidence I am not satisfied, and do not find, that the defendant was engaged to advise on whether the vessel was a worthwhile investment, or to advise on any matters which would be relevant for the plaintiffs to know as prospective purchasers of the vessel (other than matters particularised in paragraphs 3(a) to (d) inclusive of the statement of claim). The plaintiffs did not make it known to the defendant that they were relying on his advice on matters other than what is particularised in paragraphs 3(a) to (d) inclusive in deciding whether to purchase the business. The contract to acquire the business was executed probably within about 24 hours of the plaintiffs having the discussion with the defendant on 2 February. The bank statements show the debiting ofthe deposit amount on 4 February. Rodriguez had been asking $130,000 for the boat -- 5 of 21 -- 6 and business but the plaintiffs made a counter-offer of $127,000 after receiving the defendant's valuation on 2 February. That counter-offer was accepted. The defendant was familiar with the "Trinity" prior to his being engaged by the plaintiffs to value it. He had valued the vessel on 30 May 1992 for L. Rodriguez, who was the principal ofEinbeck Pty Ltd the vendor to the plaintiffs. This valuation was prepared for Rodriguez at the time he purchased the vessel and the business from its previous owner. That valuation became exhibit 12 and in summary it showed: Hull and permanent fittings Machinery and electrical Masts, sails and dinghy Special equipment TOTAL: $65,300 $11,500 $12,400 $1,400 $90,600 In early December 1993 Rodriguez decided to put the business, including the Trinity, on the market and retained the defendant to prepare a valuation to assist in determining the sale price. The defendant prepared that valuation dated 6 December 1993; it became exhibit 13. In summary it provided: Hull and permanent fittings Machinery and electrical Masts, sails and dinghy Special equipment TOTAL: $68,850 $10,810 $15,900 $840 $96,400 On the same date as that report, 6 December 1993, SJ Whalley, a shipping inspector with the Queensland Department of Transport, issued a Vessel Defect Notice with respect to the Trinity (exhibit 15). It detailed 18 matters which required attention before the Certificate of Survey and Registration would be renewed. It seems clear that the defendant was aware of that Vessel Defect Notice when he made his valuation of 6.12.1993 because in it he says "some outstanding survey defects are also now being attended to". -- 6 of 21 -- 7 On 24 January 1994 Whalley noted that a number of the requisitions in exhibit 15 had been attended to, but a number remained to be completed. He recorded an undertaking by the then owner to complete those matters by 15 February 1994. Those matters are specified in the document exhibit 17. On that date a Permit to Operate was granted until 24 March 1994 (exhibit 18). That was the position when the defendant inspected the Trinity on or about 31 January 1994 for the purpose of preparing his valuation, exhibit 1. I have no doubt that in preparing exhibit 1 the defendant relied heavily on his previous inspections and valuations, particularly that of 6 December 1993. Because he considered he was familiar with the vessel I am satisfied that his inspection for purposes of preparing exhibit 1 was less thorough than otherwise it would have been. His broad approach was to consider what reasons, if any, there were for departing from his earlier valuations. The vessel was said to be "in sound condition." He did record in exhibit 1 that the vessel was "being refurbished" and that "some outstanding survey defects are now being attended to"; mention was made of the fact that some "dry rot" had been "replaced". I am satisfied he was aware of the defects identified by Whalley in exhibit 15. The valuation summary in exhibit 1 is as follows: Hull and permanent fittings Machinery and electrical Masts, sails and dinghy Special equipment TOTAL: $68,850 $10,810 $12,400 $840 $96,400 Despite detailed examination in chief and cross-examination of the defendant neither counsel apparently noted that those figures in exhibit 1 just do not add up. The total of the particular items comes to $92,900 not $96,400. It is interesting to have regard in this context to the comparative document covering exhibits 12, 13 and 1 prepared by counsel for the plaintiffs -- 7 of 21 -- 8 and used in her cross-examination of the defendant. It was not formally marked as an exhibit. It sets out the summary of the valuations particularised above. It can be seen that the only difference in the valuation of particular items between exhibits 13 and 1 is the figure for masts, sails and dinghy. That is shown as $15,900 in exhibit 13 and $12,400 in exhibit l. Counsel for the defendant specifically asked the defendant in chief the reason for that drop, and the answer referred to the diminution in value of the genoa sale. One needs the figure of $15,900 rather than $12,400 in order to arrive at the total $96,400. The figure $12,400 for masts, sails and dinghy is the same as the value put on those items in exhibit 12. That error highlights to my mind how and why the defendant was negligent in preparing this valuation. He was overly reliant on what he had done previously and the figures he had arrived at on his earlier valuations. Exhibit 1 was not so much a valuation prepared after considering objectively all relevant information as at 31 January 1994, but rather a document which summarised the defendant's valuation and assessment of the vessel as at 30 May 1992 and 6 December 1993. I am satisfied that the defendant made it clear to the plaintiffs that his total valuation (and the component figures) were given on the assumption that the matters referred to in the defect notice of 6 December 1993 were properly attended to. It should also be noted that there was a disclaimer alerting the plaintiffs to possible "hidden defects". There was some conflict in the evidence as to what was said on 2 February when the report exhibit 1 was handed over. I am satisfied there was mention of the requisitions being attended to by the then owner. I am also satisfied that there was a statement made by the defendant to the broad effect that the boat was tired but sound for its age - 28 years; certainly the plaintiffs were aware of its age. Something was also said by the defendant to the effect that cost of renovations was not reflected in the value of such a vessel. Neither side made any notes of the -- 8 of 21 -- 9 conversation and recollections of words used were poor. Probably the defendant made some reference to the fact that ongoing repairs, of the type which a handyman could do, would be required from time to time. Such an observation was understandable and obvious given the fact that this was a 28 year old wooden hulled vessel. But subject to that I am not satisfied on the evidence that any oral representations were made by the defendant which went beyond anything stated in exhibit 1. It is also clear from the evidence of the female plaintiff that the defendant was not told that the plaintiffs were borrowing money in order to purchase the business. The plaintiffs and their legal advisers were clearly aware when the contract was drawn up of Whalley's requisitions detailed in exhibit 15. Clause 3 8( c) of that contract, so far as is relevant, was in these terms:- "... the Vendor undertakes and warrants to the Purchaser that prior to the date for completion, the Vendor will at its own cost and in a proper and workmanlike manner, attend to satisfaction of all Harbours and Marine Board Survey Requisitions issued in respect of the Vessel known as "Trinity" Registration No. 3359QR so that the Vessel is in a condition capable of issue to it of Harbours and Marine Board Survey Certificate. In the event the Vendor fails to undertake and/or is unable to comply (through no fault of its own) with its obligation pursuant to this special condition on or prior to the date for completion, then the Vendor hereby authorises and directs a portion of the settlement moneys being an amount of Ten Thousand Dollars ($10,000) to be retained in the Purchasers' Solicitor's Trust Account pending the Vendor's compliance and satisfaction of this special condition. The Purchaser agrees it will accept as evidence of the Vendor's compliance with this special condition, written confirmation from the Harbours and Marine Board that all survey requisitions have been attended to the Board's satisfaction. " As already noted, Whalley had in fact made a progress inspection of the work required to be carried out pursuant to the requisition of 6 December 1993 on 24 January 1994, and he then certified that some of the work had been satisfactorily completed. He noted a written undertaking given by Rodriguez to complete the remaining work (items 8, 9, 13, 14, 15 and 16) by 15 February 1994. On 24 January he also issued a permit to operate the vessel for a period of two months on the basis that within that time all hull repairs would be completed and reinspected. -- 9 of 21 -- 10 That would appear to be the position when the contract of sale between the parties was executed. Whalley's next inspection was on 24 February 1994 and his "final renewal reinspection report" bearing that date became exhibit 19. The items specified in the previous report as not having been completed were certified as having been satisfactorily completed. That report noted that the "structural integrity of the vessel has been enhanced by this work" and it specifically stated that "repairs are accepted". In consequence of that a Certificate of Survey and Registration (exhibit 20) was issued on 2 March 1994. The specified conditions of operation were as follows: "Within the area known as 'Port of Molle' (Whitsunday Area). Daylight and favourable weather only- twenty (20) passengers plus one (1) crew." The evidence does not make it clear whether or not the plaintiffs saw exhibit 19, but they clearly obtained possession of exhibit 20. The female plaintiff in her evidence said that the contract was only settled after Whalley had put the "rubber stamp" on the requisitions. She was also aware of the conditions imposed by exhibit 20 before completion. Settlement in fact took place on 31 March 1994. According to the evidence of the male plaintiff on the first trip after settlement of the contract he noticed water entering the vessel, particularly the port pontoon. Over the next few trips he noted "quite a few cracks allowing the water in". During the first couple of weeks the "outboard motor on the tender ceased operation". The male plaintiff also spoke of the main engine blowing a lot of smoke from underneath the exhaust. It appears that the plaintiffs operated the vessel for about a month before it was decided to have repair work carried out. An arrangement was made with a Mr Blundell to do that work whilst the vessel was beached at Muddy Bay. After Blundell and his men had been working for about a week and had removed some of the plywood hull, Whalley arrived unexpectedly and inspected the vessel on 6 May. Whalley said he "wasn't surprised" by what he saw, and issued a "Vessel Defect Notice -- 10 of 21 -- 11 Addendum" on 6 May 1994 (exhibit 4). The following extracts indicate the main matters of concern: "Noted approximately 50% of hull sheeting, above water line, of port pontoon hull has been removed to expose internal structure. Repairs are to be effected on web frames, longitudinal stringers, main deck beams, intermediate deck beams. Sections of under wing sheeting to be removed and internal framing to be repaired as necessary. 1. Condition of structural attachment of the starboard pontoon hull is unsatisfactory, with evidence of significant movement, failure of plywood sheeting in at least one location on main pontoon hull ... 2. Main box beam across aft section of vessel which supports port and starboard pontoon hulls to be repaired. Under panel of plywood to be renewed throughout 3. Cracking at sheer on outboard side of starboard pontoon hull to be repaired 5. During all repair work all transverse beams, longitudinal stringers, deck battens, web frames, framing gussets, ... are to be repaired or replaced at the repair agent's discretion. All work listed is to be completed at this occasion of repair. This list is not comprehensive and serves to highlight primary areas of concern only. During repairs any additional deficient or deteriorated structure is to be repaired on the repair agent's initiative. Additional work may be requested at future inspection. " Whalley next saw the vessel on 9 May 1994 (exhibit 28) and noted that repair work was progressing satisfactorily. That was also his comment when he inspected the vessel again on 16 May 1994 (exhibit 27). By 23 May 1994 the vessel was afloat; it was seen by Whalley on that day (exhibit 29) and he noted that the refit was still in progress. He stated in that report that the workmanship appeared satisfactory. It is clear from the whole of the evidence that when Blundell's work was completed Whalley was satisfied that the vessel was seaworthy and that its Certificate should remain in force. -- 11 of 21 -- 12 Whalley's general evidence indicates that many of the defects he noted in May 1994 would probably have been present in December 1993 but he was not then aware of them because the plywood hull sheeting needed to be removed before the defects were obvious. Some of the defects may in fact not have been present in December 1993 but could have developed subsequently. According to Whalley such defects as he noted in May could have become manifest at any time because of the age of the vessel. As already noted he was not surprised by what he found in May 1994, and considered most, if not all, of those defects reasonable for a vessel of its age. Notwithstanding a deal of evidence relating to the cost of repairs, and even after having regard to the bundle of invoices comprising exhibit 24 and the document which became exhibit 34, it is impossible to determine the precise cost of the repairs carried out in consequence of Whalley's defect notice of6 May 1994. There is no specific evidence from either of the plaintiffs or Blundell as to the amount paid to the latter for the work then carried out. There is no direct evidence linking many of the invoices in exhibit 24 with the work carried out at that time; one can only, at best, draw an inference from the date of the invoice. In the long run it is not necessary to find a precise figure for the cost of repairs then carried out, but after considering the material just referred to I have come to the conclusion that the approximate cost of repairs carried out in May 1994 was $15,000. It is clear on the evidence that the outboard motor for use on the Trinity's tender was in very bad condition as at February 1994. In his valuation (exhibit 1) the defendant described it as a 30hp Johnson which was one year old. That was just not so. The evidence of Rodriguez would suggest that it had been on the tender for about one year, but was a reconditioned engine when acquired by him. Rodriguez says he informed the defendant of that. The evidence would suggest -- 12 of 21 -- 13 that it was virtually useless as at February 1994, and in April 1994 the plaintiffs were obliged to replace it with a new motor at a cost of some $2,300. As exhibit 34 and the associated invoices indicate there were additional expenses incurred from time to time between April 1994 when the plaintiffs began operating the vessel and December 1996 when they sold it. None of those items of expenditure in my view are relevant for present purposes; they merely indicate the ongoing cost of maintaining a vessel of the age and construction of the Trinity. Much was said in the course of the evidence about the state of the main engine. It certainly was not new when the plaintiffs purchased the vessel, and it required sums of money to be spent on it from time to time. In his valuation the defendant referred to it as "worn working well". But what is important, in my view, is that the engine continued to operate the vessel throughout the time the plaintiffs owned it, and it was still in the vessel, functioning, at the time of the on-sale in December 1996. The evidence discloses that the vessel was sold by contract dated 15 December 1996 for a total price, including goodwill associated with the business, of $80,000. That consideration was divided in terms of the contract into $55,000 for plant and $25,000 for goodwill. The figures are not of critical importance for present purposes, but it cannot ignored that there was some evidence to the effect that there had been a downturn in the tourist trade in the Whitsunday area by December 1996. This is an opportune time to reiterate that the plaintiffs' cause of action is not based on misrepresentation by the vendor as to the condition of the vessel as at the date of sale, but rather against the marine surveyor and valuer they retained; the cause of action is for damages on the basis that they received negligent advice and a negligent valuation in circumstances where it was known that a purchase of the vessel was contemplated. -- 13 of 21 -- 14 The critical witness for the plaintiffs was Marston, a marine surveyor. It has to be acknowledged that he had a vast experience and was well qualified to give evidence as to the condition and value of a vessel such as the Trinity at a particular time. However, having regard to my impression gained whilst he was in the witness box and to the whole of the evidence given in the case, I have come to the conclusion that he allowed himself to become too closely involved with the plaintiffs and became an advocate for their cause rather than an objective expert witness on the issues of the vessel's condition and valuation. I have no doubt that the evidence which he gave in May 1997 was based largely on knowledge of events which had occurred after settlement of the contract by which the plaintiffs purchased the vessel. His report, exhibit 5, establishes that the date of his inspection was 8 and 9 June 1994, that is after Blundell had completed all the repair work which needed to be done consequent upon Whalley's defect notice of 6 May 1994; in other words his inspection was made after Whalley had certified that all necessary repair work had been satisfactorily completed and the appropriate Certificate should remain in force with respect to the vessel. Nevertheless it was Marston's evidence that as at 9 June 1994 a further $50,000 had to be expended in order to bring the vessel up to "an acceptable standard ". Given the totality of the evidence in this case, and in particular the evidence given by Whalley, the defendant, and Ward, I reject the proposition that as at June 1994 an additional $50,000 had to be expended in order to give the plaintiffs a vessel of the standard they had bargained for in their agreement to purchase. When asked what was the value of the vessel as it "then stood" as at 9 June 1994 Marston replied "somewhere around $30,000". He then went on to say that if repairs costing around $50,000 were carried out the value of the vessel would probably have increased to "$40,000 to $45,000 probably at the very most". In exhibit 5 he had expressed the opinion that the value of -- 14 of 21 -- 15 the vessel as at June 1994, including fittings and equipment but without the dinghy, was $37,400. Particulars are as follows: Hull Motors and equipment Masts Sails Equipment TOTAL: $32,000 $2,500 $1,100 $800 $1,000 $37,400 Marston's valuation does not appear to place any significance on the fact that in June 1994 the vessel was daily operating its tourist venture in the Whitsunday area with appropriate certification and without any apparent major concern either to the plaintiffs or those enjoying a day's outing on the vessel. I have already indicated that the defendant's negligence was in placing too much reliance upon his previous valuations of the vessel in compiling his valuation, exhibit 1. He frankly conceded in evidence that he looked at his earlier reports before completing that valuation. He also admitted in evidence in chief that he was somewhat surprised that Rodriguez was slow in remedying defects which Whalley had noted with respect to the vessel in December 1993. Further, he also conceded that the value he placed on the vessel in exhibit 1 was on the basis that the defects identified by Whalley in December 1993 had been satisfactorily attended to. At the end of the trial I was more impressed with the valuation placed on the vessel by the marine surveyor, DJ Ward, called on behalf of the defence. In broad terms I accept his evidence as to the vessel's condition and valuation at the material time. In January 1994 when Einbeck Pty Ltd was interested in disposing of the vessel, the diving instructor then on the vessel daily, A McDonald, was interested in purchasing it. He engaged Ward to provide a valuation and the inspection for that purpose was carried out on 14 January 1994. His written valuation was exhibit -- 15 of 21 -- 16 6. As therein disclosed he arrived at a total valuation for the vessel and its fittings of $80,000 without diving equipment. Particulars are as follows: Hull, fixtures and fittings Machinery Equipment Dinghy and outboard Masts, spars, sails, rigging TOTAL: $45,000 $9,000 $3,000 $9,000 $14,000 $80,000 McDonald was aware of the fact that the vessel made some water in bad weather and told Ward of that. Ward's examination revealed small areas of rot in the plywood, and it was obvious that the vessel, particularly given its age, was in need of ongoing repairs. Ward was aware of the defect notice of 6 December 1993 and his valuation was based on the premise that all matters therein particularised had been satisfactorily attended to. When the underlying defects which became apparent in May 1994 were made known to Ward he said that such defects would result in a reduction of the value of the vessel by some 10-15%;that is the value of hull fixtures and fittings which he placed at $45,000 should be reduced by some 10-15% (that would bring the value of the hull down to between $38,250 and $40,500). He expressed the view in evidence, which I accept, that the vessel was at that time "sufficiently sound" to continue in operation as a "day passenger charter vessel in the Whitsunday area". I find that at all material times there was a relevant Certificate of Survey and Registration in force with respect to the Trinity and that it was at all material times seaworthy. The plaintiffs continuously operated the vessel and the business from April 1994 until they sold it in December 1996. There was no suggestion that the profits of the business suffered because of the state of the vessel. The Trinity is apparently still in survey. The plaintiffs elected to borrow funds from their bank to finance the purchase of the Trinity, rather than liquify other assets they then owned. As already noted they did not inform the -- 16 of 21 -- 17 defendant of that, but a reasonable marine surveyor in the position of the defendant may have foreseen the likelihood that some funds would be borrowed. However without knowing details of the client's financial position no valuer in the position ofthe defendant could reasonably foresee losses stemming from actual borrowings. The evidence establishes that the borrowed funds have been kept in a separate account, and interest thereon has accrued thereon from April 1994 to April 1997 in the total sum of$40,211.95. It is in those circumstances that the court must consider the defendant's concession that his valuation was negligent and determine the amount of damages to which the plaintiffs are entitled consequent thereon. As I have frequently mentioned throughout these reasons the cause of action relied on by the plaintiffs was the giving of negligent advice, in particular advice as to the state of repair and value of the vessel. There is no allegation of fraud made in the pleadings, though there was frequent mention, particularly by counsel for the plaintiffs, to reported decisions dealing with the assessment of damages for deceit. There are some passages in Gould v. Vag gel as (1985) 157 CLR 215 which are of some assistance for present purposes, but it must be stressed that was a case essentially dealing with the measure of damages for deceit. The High Court did discuss the different measures for assessing damages for deceit and damages for negligence in South Australia v. Johnson (1982) 42 ALR 161 at 169-70. There, Gibbs Cl Mason, Murphy, Wilson and Brennan JI., said: "The principle which underlines the award of damages in tort is, generally speaking, that of restitutio in integrum. The object is to restore the plaintiff to the position in which he would have been placed if the wrongful act had not been committed. The measure will vary as between deceit and negligence. In deceit, the plaintiff recovers the difference between the amount paid and the value of the property acquired, the object being to place him in a position equivalent to that which he would have occupied had the transaction not taken place. The defendant being guilty of a deliberate wrong, the damages will include the whole loss directly -- 17 of 21 -- 18 flowing from the fraudulent inducement because ... "it does not lie in the mouth of the fraudulent person to say that they could not reasonably have been foreseen". It is otherwise in cases of negligent misrepresentation. Although the wrong doer is liable for the damage which flows directly from his wrongful act or omission, the plaintiffs damages are limited to that which was reasonably foreseeable. This limitation applies in accordance with the general principles in negligence. Subject to this limitation, the consequence is that if the effect of the negligent misrepresentation is that the victim has lost profits or income which he would otherwise have earned, he should recover damages in respect of them. . . . In Shaddock, as no question of loss of profits arose, it was appropriate to award the plaintiff compensation by reference to the difference between the amount paid by the plaintiff for the property, and its actual value plus other incidental expenses. The precise application of these principles will depend upon the circumstances of the case." The reference there was to L. Shaddock & Associates Pty Ltd v. Council of the City of Parramatta (1981) 150 CLR 225. In that case it was held that the measure of damages for negligent misstatement was the amount necessary to restore the plaintiff to the position he was in before the statement, subject to the loss being foreseeable. In the circumstances of that case the court concluded that the purchasers would not have concluded the transaction if they had been given the proper information, and in consequence the damages should put them in the same position as if they had not made the purchase. In this case counsel for the plaintiffs contended that her clients would not have entered into the contract if they had known of the substantial repairs required in the foreseeable future to the vessel or that it was of lesser value than advised by the defendant. I am not satisfied on the evidence that such is the case. I have already referred to passages from the evidence of each of the plaintiffs in which it was acknowledged that the business operations of the vessel were observed for some time and the plaintiffs were satisfied that the business was profitable; they -- 18 of 21 -- 19 determined what would be an appropriate figure for its goodwill. They undoubtedly relied on the defendant's valuation to some extent in determining the quantum of the counter offer to the vendor, but I am satisfied, particularly on evidence given by the male plaintiff, that if the defendant's valuation had been lower the only consequence would have been that the counter offer would have been for a lesser figure reflecting that valuation. At the time of entering into the contract the plaintiffs were fully aware of the defects referred to in the notice of 6 December 1993; that did not deter them. The defendant was negligent in not appreciating the effect of the necessity to make the repairs requisitioned in December 1993 on the value of the vessel, and in failing to appreciate the likelihood offurther major repairs being required in the foreseeable future reducing the value. If, for example, the vessel had been valued by the defendant at about $70,000.00 there is little doubt on the male plaintiffs evidence that the plaintiffs would have endeavoured to negotiate a sale at a correspondingly lower price; only to that extent would their conduct have been different. It is clear that Rodriguez considered the defendant to be a competent and reliable valuer and it is, in all the circumstances, unlikely that he would have ignored an offer based on a lower value determined by the defendant. The consequence of the defendant giving a correct valuation at a lower figure than he did would have been that the sale probably would have gone through at a lower price. In all the circumstances I am not satisfied that the plaintiffs would not have purchased the vessel if they had been aware that the vessel had a lower value. Legal fees, stamp duty and insurance at about the same cost would have been incurred. It was obvious to the plaintiffs that they were acquiring an old boat with old fittings. They were informed that ongoing repairs would be necessary to properly maintain the vessel. It must have been foreseeable to them that over a period of years costly repairs would be necessary. The negligence of the defendant lay in not specifically informing them that costly repairs could become -- 19 of 21 -- 20 necessary during the early period of their ownership. Again I am not satisfied that if they had been informed of that possibility they would have walked away from the transaction. The result of the plaintiffs being properly informed as to future repairs would at most have resulted in a reduction in the purchase price. Ward, with the knowledge of the requisitions of 6 December 1993, valued the hull (on the basis such requisitions were adequately attended to) at $45,000. That in my view was the true value of the hull when the defendant prepared his valuation exhibit 1. It follows that in lieu of the defendant's value of $68,850 there should have been a figure of $45,000. In other words the defendant's valuation was $23,850 too high. Further, the defendant was negligent in failing to recognise that the outboard motor on the dingy was old and virtually useless. All other components in the defendant's valuation are within range (given the evidence of Mastern and Ward). It follows that looked at overall the defendant's valuation was some $25,000 too high. Ward says that ifhe was aware of what subsequently came to light in May 1994 he would have reduced his valuation of the hull by 10-15%, a figure of $6,750. I have already found that some $15,000 was spent by the plaintiffs on repairs in about May of 1994. Bearing in mind the measure of damages discussed above, my findings, and the matters recently discussed, I am of the view that $40,000 represents the loss suffered by the plaintiffs because of the negligence of the defendant. As already noted there is no claim for loss of profits. There is no allegation of deceit. The plaintiffs continued operating the vessel until December 1996, and at all material times it held the necessary certification of seaworthiness. The plaintiffs had not disclosed to the defendant matters relevant to their personal finances or the way in which they proposed financing the venture so as to make it reasonably foreseeable that interest charges of the order of $40,000 would be incurred over a period oftime. -- 20 of 21 -- 21 It follows that the plaintiffs are entitled to judgment against the defendant for $40,000. -- 21 of 21 --