Motor Yacht Sales Australia Pty Ltd v Blann

The Court of Appeal (Payne and White JJA and Emmett AJA), allowed the appeal, holding:

1. [1]

   PAYNE JA: I agree with White JA.

2. [2]

   WHITE JA: The appellant, Motor Yacht Sales Australia Pty Ltd (“MYSA”) is in the business of importing and selling luxury vessels in Australia, including from the Rose Bay Marina. On or about 14 October 2016 it agreed to sell such a vessel to the respondent (“Mr Blann”) for $2.4 million inclusive of GST. The price was agreed upon after hard bargaining. One of the terms of the agreement between MYSA and Mr Blann (contained in annexure “A” to the sale agreement) was:

3. [3]

   The agreement provided that the vessel would be berthed in pen No. 12 at Rose Bay Marina and that:

4. [4]

   Clause 2 of Annexure A to the contract stated that the sale would contain various inclusions. These included a term that MYSA would cover the insurance on the vessel for the first three years. This clause was linked to the clause providing that the vessel would be berthed at the Marina for three years because it was a requirement of the Marina that vessels be insured. Another inclusion in the sale was “[i]nitial three month free berthing at Rose Bay Marina.”

5. [5]

   Mr Blann sold the vessel through a related company of MYSA, namely, Motor Yacht Marine Brokers Pty Ltd, on 27 November 2017. The contract for sale included the following term:

6. [6]

   The sale was completed on 31 March 2018. After the sale of the vessel Mr Blann ceased paying berthing fees at the Marina.

7. [7]

   In proceedings commenced in the District Court MYSA sued for damages for Mr Blann’s repudiation of his alleged obligation to pay berthing fees up to 31 March 2020. MYSA accepted that its claim should be confined to the period concluding on or about 14 October 2019 (being three years after the entry into the sale agreement).

8. [8]

   MYSA pleaded that the sale agreement:

9. [9]

   The District Court (Strathdee DCJ) gave judgment for Mr Blann (Motor Yacht Sales Australia Pty Limited trading as The Boat Boutique Company v Robert Blann [2019] NSWDC 558).

10. [10]

    On appeal MYSA sought judgment in the sum of $102,063.87 plus pre-judgment interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW).

11. [11]

    By notice of motion dated 26 March 2020 Mr Blann sought an order dismissing the appeal as incompetent for want of leave to appeal and an extension of time to seek such an order. On 31 March 2020 Registrar Riznyczok ordered that the notice of motion be heard concurrently with the appeal. In written submissions Mr Blann argued that leave was required, but that argument was not pressed in oral submissions. It follows that the notice of motion ought to be dismissed with costs.

12. [12]

    Annexure B to the sale agreement comprised a form of a “Berthing and Mooring Agreement” expressed to be between Rose Bay Marina Pty Ltd (“Rose Bay Marina”) and the “boat owner”. That form was later signed by Mr Blann and dated 1 December 2016. It provided for the berthing of the vessel at the Marina for a total monthly hire of $5,500 inclusive of GST. Its date of commencement was said to be 18 February 2017. The terms and conditions of this agreement included:

13. [13]

    Item 5 of Schedule A identified the relevant berth as berth 12.

14. [14]

    The “Marina” was Rose Bay Marina Pty Ltd.

15. [15]

    Clause 2.2 provided that the Owner (Mr Blann) should pay to the Marina a monthly hiring fee. Clause 3 provided:

16. [16]

    The review date in Item 7 was left blank.

17. [17]

    The purchase price was paid by Mr Blann on 17 November 2016 and the vessel was delivered to him on 19 November 2016. Following delivery of the vessel it was berthed at the Marina and Mr Blann was sent a letter from “Rose Bay and Point Piper Marina” welcoming him to the Marina. The letter set out the services the Marina provided and billing procedures. It also said:

18. [18]

    On 5 December 2016 Mr Blann sent an email to Mr Neil Sutton, a director of MYSA, complaining about a delay in the provision of various items of work to the vessel. In that email Mr Blann said that

19. [19]

    On 10 December 2016 Mr Blann wrote to Mr Sutton saying:

20. [20]

    On 14 December 2016 Mr Blann wrote to Mr Sutton including the following:

21. [21]

    Mr Sutton responded on 14 December 2016 as follows:

22. [22]

    Lawyers became involved. On 14 December 2016 Pure Legal, acting for MYSA, wrote to Mr Blann stating that the contract:

23. [23]

    On 21 December 2016 Kosmin & Associates, acting for Mr Blann, responded to Pure Legal’s letter of 14 December 2016. Kosmin & Associates said that Mr Blann would not be making use of the berth and would not be paying any berthing fees. They asserted that Mr Blann was induced to enter into the contract on the basis that the berthing fee was at a discount and that the reduced berthing fee was for the benefit of Mr Blann only and could be waived by him on reasonable notice.

24. [24]

    On 20 February 2017 Pure Legal responded to Kosmin & Associates’ letter of 21 December 2016 and enclosed a draft statement of claim. In their letter of 20 February 2017 Pure Legal purported to terminate the “contract” (apparently meaning the contract for the provision of berthing facilities) on the basis that Mr Blann had repudiated the contract, and demanded payment of berthing fees that would have been payable to the end of the three-year term.

25. [25]

    The dispute was resolved by correspondence between Kosmin & Associates and Pure Legal on 10 March 2017. On 10 March 2017 Kosmin & Associates wrote to Pure Legal as follows:

26. [26]

    Pure Legal responded on the same day as follows:

27. [27]

    The only change to the substantive terms of the agreement of 14 October 2016 was that the berthing fee was to be paid quarterly as opposed to monthly. The direct deposit details provided in Pure Legal’s letter of 10 March 2017 were the account details of Rose Bay Marina, not MYSA.

28. [28]

    Mr James Thompson, the Group Operations Manager of MYSA, deposed that the Marina is leased by Roads and Maritime Service to Addenbrooke Pty Ltd which subleases part of the Marina to Enares Rose Bay Pty Ltd. He deposed that the Rose Bay Marina manages the operations of the Marina on behalf of Addenbrooke Pty Ltd and Enares Rose Bay Pty Ltd. Both MYSA and Enares Rose Bay Pty Ltd are wholly-owned subsidiaries of Enares Pty Ltd.

29. [29]

    Mr Thompson deposed that MYSA was authorised on behalf of Enares Rose Bay Pty Ltd to rent the Enares’ marina berths. That evidence was admitted on the basis that it was limited to “explaining the relevant corporate structure of the Enares group of companies”. The evidence admitted on that basis was given under the heading “Corporate Structure of MYSA and Enares Rose Bay Pty Ltd and Interaction with Rose Bay Marina Pty Ltd”. I do not understand the primary judge’s ruling to confine the use to which the evidence could be put to evidence of shareholdings and directorships, but rather to extend to MYSA’s authority to rent the Enares’ marina berths.

30. [30]

    As indicated above, from 31 March 2018, after the sale of the vessel, Mr Blann refused to pay any further berthing fees.

31. [31]

    The primary judge held that once the vessel was sold and Mr Blann had no further need for the berth, he was no longer bound to continue to pay for the berth for the remainder of the three-year term (J [52]). Her Honour’s reasoning in support of that conclusion was as follows:

32. [32]

    Mr Blann pleaded numerous defences, not all of which were maintained in final submissions. He denied that the plaintiff suffered any loss. This was on the basis that the berthing space was provided by Rose Bay Marina and berthing fees were payable to that company. That contention was not advanced in final submissions before the primary judge. On appeal, Mr Blann did not contend that the contract should be construed as a promise by him to MYSA to pay $5,500 per month for three years to Rose Bay Marina and that MYSA did not suffer loss as a result of a breach of that promise.

33. [33]

    Mr Thompson gave evidence of unavailing efforts to fill the berth. Mr Blann did not plead that MYSA failed to take reasonable steps to attempt to mitigate its loss. In final submissions at trial he accepted that MYSA had not been able to rent the berth since 31 March 2018.

34. [34]

    Mr Blann did not file a notice of contention seeking to uphold the judgment on any additional grounds from those articulated by the primary judge.

35. [35]

    There was no dispute as to the principles to be applied in construing the contract. MYSA submitted:

36. [36]

    The respondent embraced that summary of the relevant legal principles and added the following:

37. [37]

    It is not a ground of appeal that the primary judge misstated any of the relevant principles in relation to the construction of commercial contracts.

38. [38]

    The appeal grounds merely assert that the primary judge erred in her finding that the contract did not oblige Mr Blann to pay MYSA rental for the berth at the Marina up to 14 October 2019.

39. [39]

    The primary judge found (at J [50](12)) that the provision of the berthing fees in the final contract included an inducement offered by the plaintiff to facilitate the sale of the vessel. That finding was carefully expressed and was accurate. The berthing fee of $5,000 per month plus GST was a discount to the berthing fees charged by Rose Bay Marina. It thus included an inducement.

40. [40]

    But it does not follow that the clause was wholly for the benefit of Mr Blann. By clause 6 of Annexure A quoted above, he agreed that the vessel would be berthed at the Marina for three years and that he would pay the berthing fee. The clause is unambiguous. The term was not solely for Mr Blann’s benefit.

41. [41]

    The more difficult question is the lack of congruence between clause 1 of Annexure A of the sale agreement with MYSA and the terms of the berthing and mooring agreement with Rose Bay Marina, the form of which was part of the sale agreement with MYSA. Under the berthing and mooring agreement with Rose Bay Marina the standard terms prescribed the fee for hire of the berth which was payable monthly and there was no specified term for the hire of the berth.

42. [42]

    MYSA pleaded that by the correspondence through the parties’ solicitors of 10 March 2017, Mr Blann offered, and MYSA accepted his offer, that he would be liable to pay MYSA $5,500 per month inclusive of GST for three years from 14 February 2017 with respect to renting at the berth.

43. [43]

    In response, Mr Blann pleaded that the agreement referred to in the correspondence was a variation of the original contract of sale, but denied that the agreement bound him to take up a berthing space at the rate of $5,500 per month for three years. Thus Mr Blann accepted that the correspondence of 10 March 2017 was a variation of the original agreement. He did not plead that the consensus expressed in the correspondence did not amount to a binding agreement because there were some matters that were not agreed (for example, the quantum of costs payable by Mr Blann).

44. [44]

    Read in the light of the correspondence that led to the agreement expressed in the correspondence of 10 March 2017, it is clear that Mr Blann did agree that he was liable to pay berthing fees for three years. That correspondence was part of the objective matrix of facts leading to the agreement of 10 March 2017, as it identified the point of dispute that was resolved. The resolution of the dispute was on the same terms as the existing contract. But Mr Blann resiled from his contention that he was not liable to pay berthing fees and clearly indicated his agreement that he was liable to pay berthing fees for the period provided for in the sale contract of 14 October 2016.

45. [45]

    A possible construction of these arrangements is that Mr Blann agreed with MYSA that he would hire the berth from Rose Bay Marina for three years so that on his failure to do so he was liable to pay MYSA any loss that MYSA suffered as a result. That loss would not necessarily be nominal (Coulls v Bagot’s Executor and Trustee Company Ltd (1967) 119 CLR 460 at 501-502 (Windeyer J); [1967] HCA 3). But there was no evidence as to what loss MYSA might itself have suffered if Mr Blann’s promise were to pay berthing fees to Rose Bay Marina. Both Rose Bay Marina and Enares Rose Bay Pty Ltd issued invoices during the period the vessel was berthed at the Marina.

46. [46]

    MYSA submitted that paragraph 2 of the letter of 10 March 2017 was a direction by MYSA to Mr Blann to pay berthing fees to the nominated account, which was the account of Rose Bay Marina. I agree.

47. [47]

    By the agreement of 14 October 2016 Mr Blann agreed with MYSA to pay berthing fees for the vessel for three years. The attached berthing and mooring agreement that both parties expected Mr Blann to enter into with the Marina did not include such a term. Nonetheless, Mr Blann promised MYSA to berth the yacht at the Marina for three years and pay the berthing fees. On 10 March 2017, through his solicitors, he reiterated that promise after having attempted to resile from it. He did not then say, as he now says, that because the attached berthing and mooring agreement with the Marina did not include the same term, that he was not bound by it.

48. [48]

    The specific promise made to MYSA in the agreement of 14 October 2016 and reiterated on 10 March 2017 by Mr Blann that the vessel would be berthed at the Marina for three years and he would pay the berthing fees, was not inconsistent with the form of berthing agreement that was Annexure B to the contract. Although that agreement with Rose Bay Marina provided for a monthly hiring fee and implied (cl 3.2) that hiring could be terminated on a month’s notice (as the welcome letter stated) Mr Blann had agreed with MYSA to berth the vessel not on a month-to-month basis, but for three years. That more specific agreement is not inconsistent with Annexure B to the contract. But even if it were, the more specific provision would prevail over the standard terms (Dodds v Kennedy (No 2) (2011) 42 WAR 16; [2011] WASCA 131 at [25] and cases there cited).

49. [49]

    Accordingly, on the basis on which the case was argued below and on appeal, the appeal must be allowed. There was no dispute as to the quantum of the judgment. Pre-judgment interest on the amount of $102,063.87 should be allowed pursued to s 100 of the Civil Procedure Act from the mid-point between 1 April 2018 (when Mr Blann ceased paying berthing fees) and 4 October 2019 (when Mr Blann ceased to be liable to continue to pay berthing fees). That date is 2 January 2019.

50. [50]

    For these reasons I propose the following orders.

    1. (1)

       Order that the respondent’s notice of motion dated 26 March 2020 be dismissed with costs.

    2. (2)

       Appeal allowed.

    3. (3)

       Set aside the orders of the District Court made on 11 October 2019.

    4. (4)

       In lieu thereof order that judgment be entered for the appellant in the amount of $102,063.87 plus pre-judgment interest pursuant to s 100 of the Civil Procedure Act calculated from 2 January 2019.

    5. (5)

       Order that the respondent pay the appellant’s costs of the appeal and of the proceedings below.

51. [51]

    EMMETT AJA: This appeal is concerned with the proper construction of a contract for sale (the Contract) of a pleasure yacht (the Yacht) by the appellant, Motor Yacht Sales Australia Pty Limited (trading as The Boutique Boat Company) (the Seller), to the respondent, Mr Robert Blann (the Buyer). The Contract contained a provision to the effect that the Yacht would be berthed at Rose Bay Marina for a period of three years for a fee of $5,500 per month. The purchase of the Yacht was completed and the Yacht was delivered to the Buyer. However, within approximately 12 months, the Buyer resold the Yacht to a third party. After the sale, the Buyer ceased paying the berthing fees. The question is whether, on the proper construction of the Contract, the Buyer was liable to pay the berthing fees to the Seller after he sold the Yacht.

52. [52]

    The Seller sued the Buyer in the District Court of New South Wales claiming the unpaid berthing fees as a debt or, alternatively, as damages for breach of the Contract. A judge of the District Court (the primary judge), for reasons published on 11 October 2019, directed the entry of a verdict and judgment for the Buyer and ordered the Seller to pay the Buyer’s costs of the proceedings. By a notice of appeal filed 23 December 2019, the Seller now appeals from the orders made by the primary judge.

53. [53]

    By notice of motion dated 26 March 2020, the Buyer sought an order dismissing the appeal as incompetent for want of leave to appeal and an extension of time to seek such an order. On 31 March 2020, the Registrar ordered that the notice of motion be heard concurrently with the appeal. The contention that leave was required was not pressed in oral submissions. It follows that the notice of motion should be dismissed with costs.

54. [54]

    There was some confusion as to precisely what constituted the Contract. A document entitled “Contract for the Sale of a Display Vessel” bears the date 14 October 2016 (the Operative Document). Attached to the Operative Document are two other documents entitled “Annexure A” and “Annexure B” respectively. Annexure “A”, which was partly typed and partly handwritten, appears to be additional terms of the Operative Document. Annexure “B” includes a document entitled “Berthing and Mooring Agreement, Schedule A”, which is expressed to be between Rose Bay Marina Pty Limited, as “The Marina”, and the Buyer, as the “Boat-Owner” (the Berthing Agreement). However, the Berthing Agreement, bears the date 1 December 2016. The primary judge found that the Contract was made between 14 and 19 October 2016. The Berthing Agreement, if it was not signed until 1 December 2016, could not have been Annexure “B” of the Contract.

55. [55]

    Any confusion, however, appears to have been eliminated by an exchange of correspondence between the respective solicitors for the Buyer and the Seller on 10 March 2017. The Buyer’s solicitor wrote to the Seller’s solicitor to confirm that agreement had been reached between their respective clients in terms of the contract dated 14 October 2016 including Annexure A and Annexure B, subject to four changes. The Seller’s solicitors responded on the same day confirming that the Seller had agreed to enter into a new contract for berthing on the same terms and conditions as the contract between the parties dated 14 October 2016, subject to three variations as follows:

56. [56]

    The letter from the Seller’s solicitor also referred to comments made by the Buyer to the effect that, on the next occasion, the Buyer wished the Seller to take more proactive steps in sub-letting his marina berth. The letter said that any sub-letting must take place by the Buyer and that the Seller’s consent would need to be obtained. The letter then referred to Annexure A and noted that the Seller’s obligations with respect to several of the inclusions in the sale had been fulfilled. In the circumstances, it is appropriate to conclude that, as from 10 March 2017, the contractual arrangements between the Seller and Buyer with respect to the Yacht were evidenced by the Operative Document, Annexure A and the Berthing Agreement, together with the exchange of correspondence of 10 March 2017.

57. [57]

    The critical provisions relied on by the Seller consist of cl 4 of the Operative Document and Annexure A. Clause 4 of the Operative document provided as follows:

58. [58]

    Item 5 of the Berthing Agreement specified “Berth No 12”. Item 7 specified total hire of $5,500 monthly in advance with commencement on 18 February 2017. Provision for a review date was left blank.

59. [59]

    The Operative Document provided as follows:

60. [60]

    The operative part of the Berthing Agreement, being the terms and conditions, provided as follows:

61. [61]

    On completion of the sale and delivery of the Yacht to the Buyer under the Contract on 14 November 2016, the Buyer was provided with a three page “welcome” document (the Welcome) signed by the Marina Manager of “Rose Bay and Point Piper Marina”. The Welcome began as follows:

62. [62]

    The reference to “MYMH” in handwritten cl 6 of Annexure A appears to be a reference to Motor Yacht Marine Holdings Pty Limited, which is a wholly owned subsidiary of Enares Pty Limited (Enares), an entity controlled by Mr Neil Sutton. The Seller was another subsidiary of Enares. The Seller was described as an importer of luxury vessels and “ribs” from overseas for retail sale, sale of yacht toys and renter of “Enares Marina Berths”. Another subsidiary of Enares, Enares Rose Bay Pty Limited, was described as the sole sub-lessor of 19 berths at Rose Bay Marina the subject of a sublease from “Rose Bay Marina Pty Ltd”, which were termed the “Enares Marina Berths”.

63. [63]

    Berth 12 is one of the Enares Marina Berths. Enares Rose Bay Pty Limited is the holder of a 43 year sublease for Enares’ Marina Berths and receives a rental income from the Seller or Rose Bay Marina Pty Limited as applicable. Motor Yacht Marine Brokers Pty Limited is another subsidiary of Enares. That company offers boat brokerage services including on behalf of the Seller and employs sales and boat staff for the sale of vessels and rental of marina berths. Finally, Motor Yacht Marine Holdings Pty Limited employs executive staff and holds assets. The offices for all of those companies are located at the Rose Bay Marina, where the executive offices of the group are also located.

64. [64]

    The essential question in the appeal is whether the provision in Annexure A providing for the Yacht to be berthed at the Rose Bay Marina and for berthing to be paid for by the Buyer created an obligation on the Buyer to pay to the Seller berthing fees at the rate of $5,500 per month for the period of three years. That question must be considered in the context of all of the documents that make up the Contract.

65. [65]

    It seems clear enough that the Buyer entered into a contractual arrangement with Rose Bay Marina Pty Limited in the terms of the Berthing Agreement. That has some significance for the construction of the clause in question in Annexure A. Having regard to the existence of the Berthing Agreement, one view of the disputed clause is that it conferred an obligation on the Seller to procure an arrangement for the Yacht to be berthed at the Rose Bay Marina for a period of three years at a fee of $5,500 per month payable by the Buyer. That obligation appears to have been satisfied by the arrangement for the Buyer to enter into the Berthing Agreement with Rose Bay Marina Pty Limited. There has been no complaint by the Buyer that he did not have the security of a berth for the Yacht for the period of three years at a rate of $5,500 per month.

66. [66]

    The primary judge concluded that it would be unreasonable to construe the disputed clause as requiring the Buyer to pay berthing fees after he ceased to be the owner of the Yacht. I would not construe the disputed clause in that way. I would have been disposed to conclude that here was no obligation on the Buyer to pay any part of the berthing fees to the Seller. Berthing fees were to be payable to Rose Bay Marina Pty Limited under the Berthing Agreement. Rose Bay Marina Pty Limited is not a party to the proceedings and has made no claim for payment of fees following the sale of the yacht by the Buyer. The disputed clause imposed no obligation on the Buyer to pay berthing fees to the Seller.

67. [67]

    However, that does not appear to be the way in which the case was argued before the primary judge and, in the absence of submissions to this Court to that effect, supported by a notice of contention, there is no basis for deciding the appeal on that basis. I have had the advantage of reading in draft form the reasons of White JA for allowing the appeal. In the circumstances, I agree with his Honour’s reasons and the orders proposed by him.