Bacon v Vicsail PTY LTD

1. [1]

   This judgment concerns an application by the plaintiff for leave to join a United States corporation known as Farr Yacht Design Limited (‘Farr’) as a third defendant to these proceedings. The plaintiff also requests leave to amend his statement of claim and transfer the matter to the Admiralty list.

2. [2]

   The plaintiff is John Bacon (‘Bacon’). The first defendant is Vicsail Pty Limited (‘Vicsail’), the second defendant is Bret Perry (‘Perry’), the third defendant Farr is sought to be joined in the proceedings. The plaintiff is represented by J.M Ireland KC of counsel. The first defendant is represented by C.L.W Street of counsel. The third defendant is represented by K. Lewis. The second defendant did not oppose the orders sought. The plaintiff and the second defendant have agreed to costs of this motion between themselves.

3. [3]

   By way of notice of motion filed 5 July 2024 the plaintiff relevantly seeks,

   1. (1)

      Leave to join a United States (Delaware) corporation, namely Farr Yacht Design Limited as third defendant in these proceedings.

   2. (2)

      Leave to amend its statement of claim.

4. [4]

   There is no opposition from Vicsail nor Perry to the making of the order in [1] of this notice of motion. However, this court must be satisfied that there is jurisdiction to enable such an order to be made.

5. [5]

   In September 2020 Bacon ordered from Vicsail an ocean-going racing yacht. The yacht was the first of its type and it was designed by Farr, which is an established yacht designer located in Delaware in the United States of America. The design work was carried out by Farr overseas.

6. [6]

   Vicsail made arrangements to obtain and pay for the major component parts for the yacht, that were to be manufactured overseas. The yacht was then to be assembled and commissioned here in Australia. That work was carried out in Sydney, New South Wales between about April and June 2022.

7. [7]

   The second defendant, Perry, worked on the assembly and commissioning of the yacht here in Australia, including the attachment of the keel to the hull of the yacht as it was prepared for a first ocean voyage on 1 July 2022.

8. [8]

   In the early hours of 2 July 2022, the plaintiff’s yacht capsized off the east coast of Australia, eventually washing up near Wollongong. Its two crew members were eventually rescued by the Australian Navy. The yacht was a total loss.

9. [9]

   Bacon pleads claims of breach of contract and negligence against Vicsail. By its defence filed on 21 July 2023 at [32-35] Vicsail now alleges that Farr was a concurrent tortfeasor under part IV of the Civil Liability Act 2002 (NSW) (‘CLA’) and seeks a finding of proportionate liability.

10. [10]

    The claims by the existing defendants under part IV of the CLA bring the issue of whether Farr has a liability to the plaintiff for negligent design of the yacht.

Service outside the Jurisdiction

1. [11]

   The plaintiff submitted that Farr can be served out of the jurisdiction in the State of Delaware in the United States of America without leave of the Court by virtue of UCPR 11.4 and subparagraphs (a) (h) and (j) of schedule 6 of the rules.

2. [12]

   Rule 11.4 of the Uniform Civil Procedure Rules 2005 (NSW) (‘UCPR’) reads:

3. [13]

   Schedule 6 of the UCPR provides:

4. [14]

   Rule 11.4 permits the originating process to be served without leave. Leave can be granted that Farr be ordered to join the proceedings as they are a company that is incorporated outside of Australia and in the State of Delaware in the United States of America. The United States is a signatory to the Hague Convention.

5. [15]

   It is my view that Farr is a proper party to these proceedings for the loss or damage to the yacht which was sustained in Australian waters. Farr’s role was to carry out the design work. The acts or omissions occurred in Australia and the loss and damage was sustained in Australia. This is enough to ground jurisdiction under the legislation, but Farr is entitled to challenge jurisdiction once it is served the ASC. For these reasons, I make the order that the plaintiff is permitted to serve Farr outside Australia in the state of Delaware in the United States of America.

6. [16]

   Vicsail opposes the amendments made against it.

7. [17]

   Section 64 of the Civil Procedure Act 2005 provides,

8. [18]

   Part 19 of the Uniform Civil Procedure Rules (‘UCPR’) relevantly 2005 states,

9. [19]

   Bacon seeks to make the following amendments in the PASC against Vicsail. It seeks to add a claim in negligence, relying on the same factual pleading in contract in the statement of claim. The plaintiff also seeks to add a claim for damages for contravention of s 18 of the Australian Consumer Law (‘ACL’). Section 18 of the ACL reads,

10. [20]

    The elements needed to satisfy s 18 of the ACL include,

    1. (1)

       Conduct. The conduct must involve some form of representation whether through, words, action or silence. Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83

    2. (2)

       Misleading and deceptive. The conduct must be misleading or deceptive or likely to mislead or deceive. Intent is not a necessary factor for breach. Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR

    3. (3)

       Trade or commerce. The conduct must be deemed to have occurred within the scope of trade or commerce. The conduct must be within the context of business and commercial activities. Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594

    4. (4)

       Causation. The conduct must have caused or materially contributed to the loss suffered. It is not a requirement that the conduct is the sole reason for the loss suffered. I & L Securities Pty Limited v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109, 128 [57]

    5. (5)

       Loss. It is necessary for the plaintiff to satisfy the Court that the misleading or deceptive conduct led to the making of a decision or consequential conduct by the plaintiff or person who suffered damage. Commissioner for Fair Trading v Jonval Builders Pty Ltd [2019] NSWSC 1893, [20].

11. [21]

    The plaintiff has pleaded that, at the request of Vicsail in 2020 Farr prepared the FarrX2 Design. In or about 2020, Farr issued to Vicsail a series of documents as follows:

    1. (1)

       A proposed design layout, design No. 857, drawing No. 1402;

    2. (2)

       A stage 2 Preliminary Performance Prediction — Design #857;

    3. (3)

       A standard specification - updated edition dated 27 July 2020 (‘updated specification’);

    4. (4)

       Designer Comments for the Farr X2 Vessel No. #857.

12. [22]

    In preparing the Farr X2 Design for the Vessel, Farr was under a duty of care to persons including Mr Bacon:

    1. (1)

       To ensure that the system adopted by Farr in the design for the attachment of the keel to the hull of the Vessel was adequate to avoid the keel separating from the hull when the Vessel was sailing;

    2. (2)

       To ensure that the specification issued by Fan to those involved in the construction and the supply of the Vessel to its purchaser identified fully and accurately the components required for the appropriate and adequate attachment of the keel to the hull of the Vessel:

    3. (3)

       To ensure that the specification issued by Farr to those involved in the construction and the supply of the Vessel identified a torsion, to be applied to the bolts attaching the keel to the hull of the Vessel, which was sufficient to avoid the loosening of the bolts when the Vessel was sailing and the consequent separation of the keel from the hull.

13. [23]

    On 1 February 2021 Vicsail, Farr and Perry issued Bacon with an updated specification for the vessel.

14. [24]

    In the updated specification for the Vessel each of Vicsail, Farr and Perry represented to Bacon:

    1. (1)

       That the hull design, engineering and workmanship for the Vessel throughout would be consistent with the construction of a light hull, without compromising strength or stiffness and would be in accordance with ISO standard requirements; and

    2. (2)

       That the keel and bulb for the Vessel was designed and would be built above current ISO Standard requirements.

15. [25]

    [33] In breach of the implied terms of the Agreement pleaded in paragraph 1, above, Vicsail failed to take necessary steps to:

    1. (1)

       Ensure that the engineering system used for securing the keel to the hull of the Vessel was adequate for that purpose;

    2. (2)

       Ensure that work carried out to secure the keel to the hull of the Vessel was carried out in a proper and workmanlike matter; or

    3. (3)

       Supervise the work undertaken by Mr Perry in respect of the construction, assembly and commissioning of the Vessel, so as to ensure that the keel fitted to the Vessel was safely and adequately secured to the hull.

16. [26]

    Paragraphs [35] to [36] pleaded that further to or in the alternative to the allegations of breach of contract pleaded in [33].

17. [27]

    [35] In undertaking to supply the yacht to Bacon and in engaging and authorising Perry to carry out the work identified in paragraphs [22] and [25] above, Vicsail owed a duty of care to Bacon to:

    1. (1)

       Ensure that the engineering system used for securing the keel to the hull of the Vessel was adequate for that purpose;

    2. (2)

       Ensure that work carried out to secure the keel to the hull of the Vessel was carried out in a proper and workmanlike matter; and

    3. (3)

       Supervise the work undertaken by Perry in respect of the construction, assembly and commissioning of the yacht so as to ensure that the keel fitted to the Vessel was safely and adequately secured to the hull.

18. [28]

    [36] In the circumstances pleaded, the duty of care pleaded in the preceding [35] was a non-delegable duty and Vicsail became vicariously liable to Bacon for negligence on the part of Perry as pleaded in [37] below.

19. [29]

    In carrying out the work and supervision which he undertook in relation to the construction and commissioning of the Vessel referred to in paragraph above and the inspection referred to in [25] above, Perry negligently:

    1. (1)

       Failed to ensure that the keel was attached securely to the hull of the yacht;

    2. (2)

       Failed to adopt an engineering system which safely secured the keel to the hull of the yacht;

    3. (3)

       Failed to adopt the torque recommended by Farr when tightening the bolts which attached the keel to the hull of the yacht;

    4. (4)

       Failed to ensure that the bolts used to secure the keel to the hull of the yacht were tightened to an appropriate torque to create an adequate and secure attachment between hull and keel. Failed to adequately inspect the yacht on 9 June 2022 at Royal Prince Alfred Yacht Club prior to its ocean voyage to check and ensure that the keel was adequately secured to the hull of the yacht;

    5. (5)

       Failed to take account of the observable cracking of the paintwork at the point of attachment between the keel and the hull of the yacht when he inspected the yacht on 29 June 2022;

    6. (6)

       Failed to advise Bacon or the crew of the yacht of the observable

    7. (7)

       cracking of the paintwork and the consequent risk of separation of the keel from the hull when the yacht was sailing;

    8. (8)

       Failed to take adequate steps on 29 June 2022 following his inspection to ensure that the attachment of the keel to the hull of the yacht safe and adequate;

    9. (9)

       Failed to meet the requirements of the applicable and current ISO standards; and

    10. (10)

        Failed on 29 June 2022 to carry out the inspection procedure prescribed by:

20. [30]

    At [6] and [7] of the defence filed 21 July 2023, Vicsail admits that,

    1. (1)

       Bacon paid Vicsail a sum of US$15,000.

21. [31]

    In relation to paragraph [7] Vicsail admits that:

    1. (1)

       It entered into a written contract with Bacon on about 21 August 2020 which was signed by the parties;

    2. (2)

       contract for the sale of new vessel, terms and conditions;

    3. (3)

       says that the agreement was the subject of a written Addendum on or about 15 September 2020 signed by the parties;

    4. (4)

       Farr X2 Contract No X2001 Appendix;

    5. (5)

       understands that the reference to the Agreement is intended to refer to the written contract and addendum particularised above; and

    6. (6)

       otherwise denies [7].

22. [32]

    Bacon sought the expert report of Mr David Lyons (‘the Lyons report’). That report was dated 29 February 2024 and was served on Vicsail on 1 March 2024. A copy is exhibited to Mr Balog’s affidavit of 5 July 2024. The Lyons report expresses the opinion that Farr’s design of the yacht may well have contributed to the failure of the keel, its separation from the hull and the consequent capsize of the yacht on its initial ocean voyage on 2 July 2022. The Lyons report also supports the view that Perry’s inspection of the yacht on 29 June 2022, just prior to its ocean voyage on 1 July 2022, ought to have revealed the defect(s) of the yacht.

23. [33]

    Vicsail objected to the filling of the amended statement of claim (‘ASC’) on the basis set out in its solicitor’s letter dated 9 February 2024 (Ex 1). It relevantly states,

24. [34]

    In oral submissions, counsel for Vicsail specified that the amendments to the PASC were not properly pleaded. I accept the proposed negligence claim in the PASC does not plead s 5B to 5D of the CLA nor does it properly plead the claim in relation to contravention of s 18 of the ACL.

25. [35]

    It was also submitted that Vicsail is not liable for Perry’s negligence as Perry was not an agent of Vicsail. Agency is pleaded in the PASC. Whether or not Perry was an agent of Vicsail is a matter for trial.

26. [36]

    Vicsail conceded that to grant leave to file an ASC avoids multiplying proceedings,

27. [37]

    It is my view that while there was some small delay in obtaining its expert report, the interests of justice favour the granting of leave to the plaintiff to file the PASC that incorporates proper pleadings of negligence and the contravention of s 18 of the ACL. There are several deficiencies in the current PASC. Duty of care, breach of duty and causation under the CLA as well as the cause of action under s 18 of the ACL are not properly pleaded. Bacon needs to make these additional pleadings to the PASC.

28. [38]

    Amendments should be granted to allow s 56 (1) of the Civil Procedure Act 2005 (NSW) which states,

29. [39]

    Vicsail does not allege any prejudice in these circumstances. Justice demands that Bacon should be granted leave to file the PASC, provided it properly pleads negligence under the CLA and misleading and deceptive conduct under s 18 of the ACL.

30. [40]

    Vicsail sought that the proceedings be transferred to the admiralty division of this Court. In the end, counsel for the plaintiff neither consented to nor opposed the transfer to the Admiralty division. These proceedings involve knowledge of yacht construction and the reasons as to why the yacht capsized. Hence, it is my view that it is appropriate for these proceedings to be transferred to the Admiralty list.

31. [41]

    I make that order; the matter is to be listed for a directions hearing in the Admiralty list on 3 October 2024

Costs

1. [42]

   Costs are discretionary. Costs normally follow the event. While the plaintiff has been granted an indulgence to file his PASC, the first defendant failed in his opposition to the filling of the PASC. In these circumstances, it is my view that the appropriate order for costs is that as between the plaintiff and the first defendant, the costs of the motion dated 12 July 2024 be costs in the cause.

   1. (1)

      The plaintiff file his amended statement of claim and serve the same on the first and second defendants by 26 September 2024.

   2. (2)

      The first and second defendants file and serve their amended defences to the Amended Statement of Claim by 10 October 2024.

   3. (3)

      The proceedings be listed for further directions before the Judge in the Admiralty List on 17 October 2024

   4. (4)

      The plaintiff is to serve a copy of this judgment together with the amended statement of claim on the third defendant.

   5. (5)

      Costs of the plaintiff’s notice of motion dated 12 July 2024 be plaintiffs or the first defendant’s costs in the motion.