A buyer who signed up for an as new 48’ Princess cruiser after inspecting it at a marina refused to pay the purchase price because “a friend had told her she paid too much for the vessel”.

In September 2016 Cheng Shu made contact with Motor Yacht Sales Australia in response to an advertisement on boatsales.com.au. The listed price for the boat was $1.635 mil.

After inspecting the 48-foot Princess Open Sports Yacht V48 model with his mother Jian Cheng at the Rose Bay marina, Shu called the broker to say she wanted to go ahead with the buy and to arrange a time to inspect the vessel again and for his mother to complete the contract.

misleading conduct contract termination raised by wife of Chinese company chairmanNegotiations ensued and on 1 October Jian signed a written offer at $1.18 mil on MSYA’s standard form contract into which the broker had inserted handwritten special conditions concerning delivery, included accessories etc.

She paid a deposit of $20k by EFT with the balance due by 7 October.

That evening, broker Damien Johnson called Shu to inform him the offer had been accepted and to congratulate his family on the buy.

The following day, MYSA’s owner Neil Sutton motored the V48 Vessel to the family’s waterfront mansion at Woolwich where he boarded Jian and her husband – the chairman of a very large mainland China company – and several of their guests, for a harbour tour.

Out of the blue on 5 October Jian, Shu and his friend Rock arrived at the marina telling Johnson that if a further discount was not offered, they would terminate the deal during the “cooling off period”.

Johnson explained there was no cooling-off period and he could not offer any further discount. He demanded settlement on the due date.

But when that date arrived, Shu told Johnson by phone that his mother wanted to cancel the contract.

MYSA sold the vessel to mitigate its loss in January 2017 for $1.2 mil – by $600k in cash and by trade of a 39 foot Princess independently valued at $600k – generating a notional resale surplus of $20k.

The traded vessel was eventually offloaded with a resale price loss of $125k. When it sued Jian, MYSA included all the associated expenses ie maintenance, mooring fees, holding costs and sale costs to bring the total claim up to $425k.

Jian defended the inevitable lawsuit by alleging the sale of the yacht was contingent upon it being able to fit within the mooring at her Woolwich mansion which she claimed it was unable to do; and because – she claimed – the written contract had not been countersigned by both MYSA signatories before her offer to buy it had been withdrawn.

When the matter came before Justice Anthony Payne in the Supreme Court of New South Wales he concluded that there was no oral discussion or written term of the contract concerning the vessel “fitting into” her dock at Woolwich and that the story had been fabricated by Shu – whose evidence was “deliberately false” – and Jian.

He also found “the boat fitted easily into the dock” and noted that the vessel was not permitted to be moored there by reason of the terms of Ms Cheng’s lease of the dock from the NSW Roads and Maritime Services Department.

Adverse credit findings were also made against Rock for “tailoring his evidence to suit”.

Johnson (“vague and unimpressive”) and Sutton (“reconstruction” and “obfuscation”) received a lesser admonishment from the judge who rejected their evidence about the date on which they had signed the written contract. Ultimately this was of no consequence as His Honour found that the one signatory who had signed on the earlier date had implied authority to do so and to bind the company from that time.

The judge rejected MYSA’s submission that the losses on the traded 39’ vessel arose out of the failed sale to Jian – even though they resulted from a genuine attempt to mitigate its loss – as they were too remote.

He assessed damages at $103k including $39k for expenses incurred prior to its resale in relation to berthing, maintenance, repair, advertising, detailing, crewing, fuel and insurance.  The remaining $63k was the brokerage on the re-sale.

From this were deducted the $20k deposit and the $20k resale ‘profit’ to arrive at the net loss for which judgment was granted namely, $63k.

Although MYSA failed to recover a substantial part of the damages it claimed, Justice Payne observed that the “case was made much more complicated than it needed to be by the conduct of Ms Cheng” who was just one of three discredited witness in the plaintiff’s line up. For that reason she was ordered to pay all of MYSA’s legal costs of the dispute and the four day trial.

Motor Yacht Sales Australia Pty Ltd t/as The Boutique Boat Company v Cheng – [2021] NSWSC 1141 Payne J, 10 September 2021  Read case


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