A Hervey Bay property investor has sued a Sunshine Coast couple after the deck and fibreglass hull of the 20 m catamaran they sold him erupted in paint blisters from soon after its delivery in April 2007.
Trevor Pix’s interest in the catamaran Jalun began when he saw an online ad offering the “professionally built sailing flybridge catamaran” that was “under survey” for sale at $2.75 mil.
Pix signed up to buy of the boat through a broker from Michael and Kate Rider at $2.43 mil which included a $20k discount given that the cost price was handed over in cash.
Included in the deal was a three-year structural warranty from the boat’s builder – Suncoast Marine Pty Ltd (owned by the Riders) – from the date when the build was completed, in July 2006.
The Riders, via their partnership West Pacific Marine Services, paid Suncoast to build the vessel as a “demonstrator” for their new boat building venture that they later decided to abandon. It had in fact been on order for another buyer who decided not to proceed and by the date of sale to Pix, had logged more than 70 hrs on the water.
Soon after the buyer’s acceptance of the Jalun – on a sail to Fraser Island – Pix noted severe blistering in the vessel’s paintwork that only got worse.
Those defects were accepted as having been caused by a “fairing” compound – screeded onto the boat’s surfaces prior to painting – having been applied too dry, as a result of which it did not properly “cure” and contained numerous air pockets that expanded when exposed to sunlight.
Michael Rider had apparently allowed this process to be performed by unskilled workers apparently with some lack of supervision.
But for the deficiencies in the preparation and application of the compound, the Jalun’s paintwork could have been expected to last in good condition for at least 10 years.
Pix’s lawsuit over the defective paintwork – which was heard in the Supreme Court in Brisbane over five days in March and June 2018 – sought compensation from Suncoast and the Riders for negligence and breach of contract.
Chief Justice Cate Holmes rejected the proposition that the seller owed a duty of care arising simply by reason of the sale. Pix’s claim was after all, one for “pure economic loss” for which damages are generally not recoverable on the basis of negligence and foreseeability alone.
Neither could a Trade Practices Act s 71 claim against the Riders be made out in connection with the condition of the vessel at the time of sale because that section can be engaged only if the seller is a corporation.
Pix also sued under Sale of Goods Act s 17, alleging that the deficiencies in the paintwork was a breach of the boat vendor’s implied warranty that the vessel would be of “merchantable quality”.
To get up on that argument, it had to be shown that the boat was “goods bought by description from a seller who deals in goods of that description”.
Her honour cogitated on Michael Rider’s evidence that he and his wife had decided to build boats through Suncoast Marine but later decided to go no further with the boatbuilding business.
She was satisfied that the transaction was not a mere private sale but rather, was properly characterised as the sale of a vessel by them as meeting the Jalun’s description. And even though this was their first sale and no others would ever likely occur, the ought to be considered “dealers” in such boats.
Thus she concluded, the transaction was one in respect of which the “merchantable quality” warranty applied to the buyer’s benefit in respect of the blistering and cracking of the paintwork.
As a result of those defects, the vessel was not of merchantable quality and buyer Pix was entitled to the damages he sought.
Her honour allowed $418k by way of “diminution in value” – more or less equivalent to the cost rectification of the paintwork as at March 2007 – plus $126k for “loss of use”of the boat. Together with interest, a total award of $988k was made to Pix.