Allen-Britten & Anor v Abels [2009] EWHC 1614 (TCC)

Case No 7BS9036

[2009] EWHC 1614 (TCC)

IN THE HIGH COURT OF JUSTICE

Technology and Construction Court

Venue Bristol District Registry

St Dunstan’s House,

Venue 131 – 137 Fetter Lane,

London ,

EC4A 1HD

Date 9 July 2009

Before

HH Judge Thornton QC

Between

Corrine Allen-BrittenClaimants

Arbi’n’Tap LimitedClaimant

David Arthur AbelsDefendant

Mr Andrew Marsden (instructed by Sims Cook & Teague, Bristol) for Claimants

Ms Camille Slow (instructed by Clarke & Company, Bournemouth) for Defendant

Hearing Hearing dates: 27 & 28 October and 4, 5 & 6 December 2008

Judgment

A.Introduction

[1]In 2003, Mrs Corrine Allen-Britten decided to open up what has been referred to as a floating café/restaurant with her son Mr Dwight Britten and her daughter Ms Marin Britten. This would be a new venture located on a new purpose-built vessel moored in Bristol Floating Harbour. She acquired commercial mooring rights and, on the recommendation of the Bristol City Docks manager, approached Mr David Abels, an experienced Bristol boat builder who contracted to design and build a vessel which would be permanently moored and would have no engine or means of propulsion. It would, in function, be a floating café/restaurant built in the form of a vessel. The vessel was designed, built and towed into position and the new café/restaurant opened on 24 November 2004. The business did not go well and, after a series of disasters which Mrs Allen-Britten attributes to various breaches of contract by Mr Abels, she closed the café/restaurant business on 7 August 2006. The vessel was repaired in dry dock and was then towed back to its mooring and leased out for the same purpose on 28 February 2008. Mrs Allen-Britten and her company which was formed to run the business now claim damages from Mr Abels.

[2]The vessel, called the ‘Corrine Marin’, was bought by the company formed to run the café/restaurant business, Arbi’n’Tap Ltd. That company is the principal claimant. However, Mr Abels contended that he had contracted with Mrs Allen-Britten personally so she is also a claimant in the event that it is determined that Mr Abels’ contention is correct. Essentially, the claim is for the losses caused to the business whilst the café/restaurant was trading and by the café/restaurant business being closed. All these losses are claimed as being directly attributable to Mr Abels’ breaches of contract. There are smaller individual claims based on the cost of carrying out various repairs or replacement work, all of which are also attributed to various breaches of contract. Mr Abels denies any liability for any of the alleged breaches and also disputes that any of his breaches caused any of the claimed losses which, in any event he also contends were not incurred.

[3]The action is therefore concerned with a claim for breaches of contract which are claimed under various heads and total about £131,000. Mr Abels has made a counterclaim for the recovery of various alleged extras that he supplied, and for which he has not yet been paid, in the total sum of about £16,000.

[4]The factual and technical issues gradually simplified during the trial which lasted for five days, two in Bristol in October 2008 and three in London in December 2008. By the end of the trial, the dispute was confined to five groups of issues:(1) Who was the purchaser and what were the relevant terms of the contract?

(2) What breaches of contract occurred?

(3) Did those breaches cause the claimed losses?

(4) What damages are recoverable by the claimants as the buyer?

(5) What additional unpaid sums is Mr Abels entitled to recover as the seller? B. Who was the purchaser and what were the relevant terms of the contract? (1). Relevant factual matrix

[5]Mrs Allen-Britten had a concept in mind for her café/restaurant. She wanted to take advantage of what she considered to be the available market in the newly emerging revitalised Bristol Floating Harbour area. She wanted a floating venue which would serve modern, preferably organic, foods. She did not see herself being constrained to conventional meal times. The premises would be open long hours and serve refreshment ranging from Expresso coffee and wine to light snacks and bistro meals. What she wanted to offer the public was, in her words, “a café in the modern sense”. She prepared a budget and worked out that she had a maximum of £150,000 to spend on buying the newly-built vessel and was particularly keen to open in July 2004 so as to take advantage of the summer trade when her business was seeking to gain a place in the market. Having received the Bristol City Docks Manager’s recommendation, she contacted Mr Abels and they arranged to meet.

[6]Mr Abels is an experienced boat builder who has traded from Albion Dockyard, Bristol for over twenty eight years. He obtains most of his orders from the recommendations of others and he estimated that he had built one hundred and twenty eight vessels in all. He is a sole unincorporated trader who employs a number of staff including a designer, Mr Andrew Summerell. Mrs Allen-Britten and her son had a number of meetings with Mr Abels and Mr Andrew Summerell in February and March 2004.

[7]Neither Mrs Allen-Britten nor her son has any technical knowledge of vessel design or vessel building or indeed of maritime matters generally. They wanted to buy the fitted out floating café/restaurant as a bespoke finished product. It was clear to Mr Abels from the start that Mrs Allen-Britten did not have a professional marine architect working for her to assist in the design work or to inspect or undertake any form of quality control of the vessel as it was being built. In the early meetings, Mrs Allen-Britten conveyed her requirements which included a fully functioning commercial kitchen, disabled access including a lift, two large toilets, a bar and a large storage area. Mr Abels suggested a number of alternative designs and recommended a beam of about five metres to allow for additional space and increased stability. The recommended design that was selected was a replica of a River Severn Trow barge, particularly favoured by Mrs Allen-Britten because of its associations with Bristol Harbour and the City Docks areas.

[8]These meetings culminated in Mr Abels writing to Mrs Allen-Britten on 10 March 2004. This letter and the specification produced on 11 March 2004 were accepted by Mrs Allen-Britten at a meeting on 15 March 2004 and in a letter to Mr Abels dated 16 March 2004. The contract for the design, build and delivery of the vessel is therefore set out in the specification dated 11 March 1004, being version 3 of the specification, the attached general arrangement drawing, the offer letter dated 10 March 2004, Mr Abels’ invoice dated 11 March 2004 providing for the first stage payment due on the signing of contracts and Mrs Allen-Britten’s letter of acceptance dated 16 March 2009.

[9]It was suggested to Mrs Allen-Britten that her intention at the time of the pre-contract discussions was to use the vessel as a coffee shop serving light meals and snacks and that her intentions grew after she had taken delivery of the vessel when she decided to use it as a restaurant. Mrs Allen-Britten disagreed. She stated that it had always been her intention to use the vessel for providing a full range of food and meals ranging from light refreshment eaten with a cup of coffee to full-blown meals. That was what she considered to be the modern form of café/restaurant and the one most likely to attract a wide range of customers. It is clear that this was her intention from long before she entered into the contract with Mr Abel and that she explained this intention to him during their early pre-contract meetings.

[10]There were a number of particular features of this contract which must be borne in mind. Firstly, the contract was one for the sale of goods, in the form of a vessel built to the requirements of the buyer. Thus, the provisions of the Sale of Goods Act are applicable to this contract. Secondly, this was the first occasion that Mr Abel and his designer Mr Summerell had designed and built a Trow barge. Thirdly, this was only the second occasion that Mr Abels had built a vessel whose intended use was a static commercial use as a café or restaurant and which had no means of power or propulsion. Fourthly, this contract was one of the few contracts where the client did not appoint a superintending naval architect or surveyor to carry out independent checks on the design and construction of the vessel whilst it was being constructed and who could provide any appropriate user manual or instruction for potential users of the vessel. The buyers were, therefore, entirely reliant on the seller for the production of a suitably designed and constructed vessel. Moreover, Mrs Allen-Britten considered such an appointment to be an unnecessary additional expense and Mr Abels accepted this decision. Fifthly, this vessel was not subject to any statutory code relating to its design. For all sea-going vessels, the finished product must conform to stability criteria applicable to its particular class. These criteria are set out in MCA regulations. For all land-based structures, the design must conform to the building regulations. However, for non-seagoing vessels that are to be permanently moored, the design is not subject to statutory regulation under either code. Of course, contractual obligations relating to the design and performance of the vessel must till be met, as would fire regulations and other health and safety regulations since the vessel would have to be fit for its purpose as a public access trading facility. Sixthly, no instruction manual, maintenance instructions or guide as to how to use and operate the floating café/restaurant were ever provided by Mr Abels even though Mrs Allen-Britten and her son and daughter had no knowledge of how to use and maintain a floating permanently moored vessel in constant use by customers of the business. (2). Contracting parties

[11]Mrs Allen-Britten set up a new company that would run her café/restaurant business which she called Arbi’n’Tap Ltd. This company was not incorporated until 19 March 2004. Mrs Allen-Britten was the chairman and majority shareholder and her son and daughter were directors and minority shareholders. However, the discussions between Mrs Allen-Britten and Mr Abels had reached the point, prior to Arbi’n’Tap Ltd’s incorporation when Mr Abels was in the position of being able to making an offer. This offer was achieved by his sending to Mrs Allen-Britten a letter dated 10 March 2004 which enclosed the final version of the specification that he had drafted, dated 11 March 2004, an accompanying general arrangement drawing that he had also prepared and an invoice also dated 11 March 2004 for the first stage payment which was stated to be due “On signing contracts 10% £15,483.80 Mid March.” This invoice related to the first of the stage payments making up the contract price that were provided for in the letter. The letter referred to the proposed contract as a turn key contract and it was clear from these the four documents that they were to be read together and that they comprised an offer to sell a vessel to be constructed by Mr Abels for a fixed price payable by defined instalments on the dates set out and that the contract would come into being at the moment when the first instalment was paid

[12]The specification and general arrangement drawing referred to the buyer as “Arbi’n’Tap” Coffee Company. The accompanying letter and the first “on signing contracts” invoice were both addressed to Mrs Allen-Britten. A final meeting took place on 15 March 2004 at which Mrs Allen-Britten confirmed that she agreed that her company would buy the vessel. The parties metaphorically shook hands at that meeting on the vessel-building and vessel-delivery contract.

[13]Mrs Allen-Britten then sent a reply, dated 16 March 2004, to Mr Abels which read as follows: “Arbi’n’Tap Ltd Arb’n’Tap [address] Coffee afloat Dear David Further to your invoice no 564 and our meeting of 15 March 2004 we accept your offer to build the vessel ‘Corrine Marin’. In order that our paperwork is correct we would be grateful if you could also amend the invoice addressee, substituting Arbi’n’Tap Ltd for Ms C Britten. … Corrine Allen-Britten For Arbi’n’Tap” [address] Coffee afloat Dear David

Corrine Allen-Britten

[14]On receipt of this letter, Mr Abels replied very shortly afterwards by sending a further invoice in exactly the same terms as the previous invoice and still dated 11 March 2004 but addressed to Arbi’n’Tap Ltd. This re-issued invoice was clearly intended to supersede the previous invoice. It is not known when this invoice was sent out or received by Mrs Allen-Britten but, having received it, she made a direct bank transfer of the invoiced sum of £15,483.80 to Mr Abels on 22 March 2004 out of an account opened in the name of Arbi’n’Tap and Mr Abels wrote on the invoice:

“Received with Thanks D.A. Abels 22.3.04”

It so happened that the money had been loaned to Arbi’n’Tap Ltd by Mrs Allen-Britten as a director’s loan but the payment was made by Arbi’n’Tap Ltd and not by Mrs Allen-Britten

[15]The obvious construction of these documents is that the contractual offer was addressed to Mrs Allen-Britten and one of the proposed terms was that the contract would only come into being when the first payment was made, a payment which was to be made “on signing contracts”. Mrs Allen-Britten asked Mr Abels to re-address the invoice to Arbi’n’Tap Ltd and, in so doing, was confirming her acceptance of the offer but making it clear that that company and not she personally was to be the contracting party. Her letter was, in effect, a counter-offer for the company to contract with Mr Abels on the terms set out in his offer. That counter-offer was accepted by the invoice being resubmitted in the company’s name and the contract came into being on 22 March 2004 by the acceptance by conduct of Arbi’n’Tap Ltd by making a payment made in the name of Arbi’n’Tap Ltd out of its account and by Mr Abels acknowledging that acceptance by signing the receipt on the invoice addressed to Arbi’n’Tap Ltd on that day. The company had been incorporated on 19 March 2004, presumably because it was about to purchase the vessel, and one of its first acts had been the payment of the invoiced sum “payable on signing contracts” into Mr Abels’ account.

[16]It follows that the contract was not actually made until after Arbi’n’Tap Ltd's incorporation. It is clear that Mr Abel thought he was contracting with Arbi’n’Tap Ltd. He addressed all his invoices to that company and, on 8 August 2005, in a letter about VAT, he stated:

“The vessel was sold to the Arbi’n’Tap Ltd company as instructed in your letter of 16th March 2004 and is clearly an asset of the company, to which you have made directors’ loans in settling the invoice you have paid with a personal cheque.”

[17]Somewhat surprisingly, and for apparently tactical reasons, Mr Abels’ case at the trial was that the contract had been entered into with Mrs Allen-Britten personally because she accepted his offer by her letter of 16 March 2004 before Arbi’n’Tap Ltd had been incorporated. However, as the sequence of events already set out clearly shows, the contract was not made until Mr Abels’ counter-counter-offer made by his resubmitting an invoice for the first instalment and the acceptance of that counter-counter offer by her conduct in paying Mr Abels first invoice and his acceptance of that first payment. Moreover, having represented to Mrs Allen-Britten that the sale had been to the company, it would seem that Mr Abels is now estopped from asserting that he contracted with Mrs Allen-Britten.

[18]I conclude that Mr Abel contracted with Arbi’n’Tap Ltd for the sale of the vessel, which was sold to that company and registered in its name as the “Corrine Marin.” (3). Relevant terms

[19]The particularly relevant terms of the contract of sale relate to the date property in the vessel was to pass, the price and the overriding obligations as to the design of the vessel.

[20]Price. The price was £154,838.00 and it was to be paid by stage payments or instalments. The price was broken down into component parts in the specification but those individual sums have no contractual significance since, as with any sale of goods, the price reflects the consideration for the whole and not for individual sums making up the parts. The breakdown would, of course, have relevance if additional work was carried out or contracted for work was omitted with no specific agreement as to the cost of those additions or omissions. Some as yet undetailed work was anticipated as the build proceeded since some details had not yet been finalised. However, this undetailed work would only count as an extra for which additional payment would be required if that work was not envisaged by the terms of the specification and drawing and was not reasonably necessary to enable the specified work to be completed. The nature of the contract so far as price was concerned was made clear by Mr Abels who stated in his offer letter that:

“There will be lots of small decisions etc to be made as we go along. I usually record these on a list that grows so we can both keep a track of small items. The intention is to supply you with a “turn key” build with no “extra items”

. If there are any items that may fall outside the scope of the agree specification, I will always get your approval. You will never receive any costs that you have not agreed to before hand.”

[21]Date for completion. The eight stage payments were linked to stages of completion and each stage was clearly linked to the contractual build programme since each stage, being a percentage of the price, was linked to either the middle of a month or the end of a month. Thus, the first stage was to be due in mid-March and the last, on handover at St Augustine’s Reach, was to be due at the end of July. There were three further stages in May, one in June and the final two, the launch of vessel and handover, were stated to be, respectively, Mid-July and End-July. When the handover stage payment was paid, being 5%, the total payment would equal 100% of the contract sum. Those provisions are the clearest possible express statement that delivery or handover, the vital date for a contract for the sale of goods, was to be 31 July 2004. In contractual terms, the contract clearly and unequivocally provided, when properly construed against the relevant factual matrix, that the parties’ intentions were that property was to pass on the date of the delivery of the vessel and that that date would be the date of the completion of the vessel. The date for all three events was to be the same date, namely 31 July 2004.

[22]Mr Abels disputed that there was an agreed date for completion. He contended that he never gave anything more than an approximate estimate of the time that would be needed to construct the vessel, a period of approximately four months, and that the stage payment dates were no more than what he described as a suggested best case scenario. He also disputed that the offer letter contained a date for delivery notwithstanding the wording of the stage payment provisions. Mrs Allen-Britten was adamant in her evidence that a delivery date was discussed and agreed. She obviously needed a date for the delivery of the vessel so that she could plan for the opening and start up of the café/restaurant. Moreover, she was particularly anxious to open for the weekend of the Bristol Harbour Festival which was to be the weekend of 31 July and 1 August since it would be an ideal moment to open up given the large number of visitors to the Harbour that would be attracted by the Festival. That event focused their discussions about the delivery date and she was prepared to accept the 31 July because Mr Abels assured her that the vessel would in fact be delivered a day or two before that date.

[23]Mr Abels also contended that there could not have been a date for delivery since the contract did not make time of the essence. There was, it is true, no liquidated damages provision in the event of late delivery as there would normally be in a vessel-building contract nor any mechanism for extending the time for delivery in the event of unforeseen, or buyer-induced, delays. However, it is not necessary to make a delivery date a contractual term for the contract to provide expressly that time is of the essence albeit that, if delivery is delayed, it might not be possible for the buyer to rescind unless time is first made of the essence.

[24]I conclude, therefore, that Mr Abels accepted the end of July 2004 as a firm date for the delivery of the vessel, a date selected as giving him a little over four months to build the vessel and so as to fit in with Mrs Allen-Britten's plans for opening the café/restaurant at that time so that the opening coincided with the Bristol Harbour Festival. Thus, the terms of the contract, taken in their context in the light of the pre-contract discussions, clearly have the effect that the date for delivery was to be on or before 31 July 2004.

[25]Design. The design of the vessel was to be carried out entirely by Mr Abels, using Mr Summerell as his designer. Mr Summerell was a trusted employee of Mr Abels’ business and had worked for him for at least ten years. He prepared the drawings and drafted the specification. The design was carried out in a design cycle ordinarily used by Mr Abels when designing and building his vessels. An outline design was first produced and a scantlings structure was then applied. A weight estimate then began to evolve. Specialist software, VesselCad, was then used to produce three-dimensional wire frame images and basic hydrostatic information was assessed. The CAD drawings were then evolved, structural calculations were produced and adjustments were then made. The stability analysis was then completed and the hull was then in its final form. As the build was executed, adjustments had inevitably to be made, particularly to incorporate additional features that were requested by the buyer or necessitated by statutory or other requirements. Thus, Mr Abels had overall obligations to produce a turn key vessel that complied with Mrs Allen-Britten’s overall requirements. These obligations were subject to the usual statutorily implied terms as to fitness, quality and description that arise in any sale of goods contract.

[26]Abel’n’Tap Ltd overall requirements. At the trial, Mr Abels was insistent that Mrs Allen-Britten had made it clear that the design needed only to be sufficient for a sandwich and coffee bar since she only intended to open up such a bar on the vessel. He stated that Mrs Allen-Britten had made this clear in the meetings when she explained her intentions to him. Indeed, as confirmation of her limited intentions, it was put to Mrs Allen-Britten that in her application for a discharge of planning conditions dated 21 July 2004 sent to the planning authority, she had stated this as her intention in connection with a condition concerning ventilation in these terms:

“It is not anticipated that the levels of cooking smells/fumes will reach much higher a capacity than a residential property our menu consisting largely of pastries, salads, sandwiches and soups but nevertheless a kitchen extraction and ventilation system will be fitted in order to comply with all environmental demands.”

It was suggested that this showed that the intention at the time the contract was entered into and the café/restaurant started up was only to serve cold snacks and coffee.

[27]Mrs Allen-Britten disagreed. Both she and Mr Dwight Britten were adamant that their intention had always been to open up an establishment selling a whole range of foods from formal restaurant meals to snacks and coffee. She pointed out that the document she had been referred to was a planning document concerned with the terms of the conditions to be attached to the general planning permission that would be necessary to enable her to open a café/restaurant and the relevant statement in that document was specifically referring to conditions relating to ventilation of the cooking smells that would be generated and the acceptable means of producing satisfactory smell removal. It is clear from the document that that was all that the statement was concerned with. In fact, the consequent grant of planning permission allowed for any Class A3 use on the vessel. This is a general use for the sale of food or drink for consumption on the premises whether as a restaurant, café, coffee bar or fast food outlet.

[28]A clear indication of Mrs Allen-Britten’s pre-contract intention was to be found in a business plan drawn up early in 2004 before she had first approached Mr Abels. This describes the intended café/restaurant in these terms:

“Arbi’n’Tap’s main competition comes mainly from land based coffee houses and floating restaurants predominantly within the Bristol city centre … However none of these establishments have the same unique combination of lifestyle, comprehensive coffee and tea menu, restaurant menu, select speciality foods, opening hours and a no need to book water experience.”

[29]In the light of the wording of the letter and the general intention of Mrs Allen-Britten and Mr Britten in relation to the type of establishment they were intending to start up, I accept Mrs Allen-Britten and her son’s evidence and conclude that the overall purpose to which the vessel was to be put was as a café/restaurant of any of the different types described in her business plan. In other words, the vessel had to be designed and constructed so as to accommodate any food provision business from the service of coffee up to its use as a full restaurant with all the facilities that would be needed to prepare and serve food in such an establishment It is also clear, and I accept Mrs Allen-Britten’s evidence on this point, that this intention was clearly explained to, and accepted by, Mr Abels during their pre-contract discussions.

[30]Stability. A crucial obligation imposed on any vessel-builder is that the vessel that is built and delivered must be stable. This is a vital feature of the design of any vessel, even for those that are not to be used for any other purpose than as a floating structure. Detailed stability tests and calculations are carried out during the construction of the vessel so as to assess, calculate and test that the vessel has the requisite stability. The specification, clearly with these important considerations in mind, provided:

“25. Completion and Delivery The vessel will be floated and a stability investigation undertaken, to produce a statement of stability in the form required for a passenger vessel in this application. The intact stability achieved will be equivalent to that required for a passenger ship in a similar application.”

It followed that the goods being purchased were not merely a vessel nor even a vessel to be used as a floating café/restaurant but a vessel accompanied by a statement of stability provided in a particular form and certifying that the vessel had achieved a particular intact stability. The statement therefore would have to be delivered with the vessel and it was to confirm that the vessel conformed to its contractual description:

“its intact stability achieved will be equivalent to that required for a passenger ship in a similar application.”

This requirement of the specification was drafted and inserted into the specification by Mr Abels and Mr Summerell. The stability that was prescribed was clearly and specifically designated by Mr Abels when drafting the contract. It followed that the stability of the vessel had to be such that the vessel and its stability were suitable for its use as a café/restaurant and, so long as that gave it sufficient stability, such that the specified stability requirements were satisfied.

[31]In fact, Mr Abels did not provide the contractually required statement of stability when the vessel was delivered and no stability testing and experimentation was undertaken before delivery and following floatation. At best, informal calculations were made which satisfied Mr Abels of the vessel’s stability but none of these calculations were disclosed and it was not established at the trial what had actually been ascertained. Mr Abels contended that there was no need for these formalities because the vessel was not subject to the MCA regulations that govern all but the smallest vessels that are to be used dynamically. Mr Abels contended that there was no need for these regulations and any consequently required stability testing to be satisfied or complied with in this case since the vessel was not to be used for any purpose except to be permanently moored within the Bristol Harbour complex. He insisted that both he and his designer ensured, as part of the design process, that the vessel was appropriately stable and he had been able to demonstrate that when he provided appropriate documentation in April 2006 when he was asked by Mrs Allen-Britten for the vessel’s statement of stability that she had been asked for by the vessel’s insurance company.

[32]Overall, Mr Abels’ attitude was that there was no contractual stipulation for a statement of stability or for any stipulated minimum stability standards since these were not appropriate for a vessel with no engine which was to be permanently moored. However, that is not the effect of the specification he inserted into the contract. It might be difficult, without appropriate expertise, to determine how the specification requirements were to be met for this vessel but what is clear is that there were contractual requirements relating to both stability and a statement of stability which had to be met.

[33]Build obligation. The location of the vessel at St Augustine’s Reach was known and the deck height, access, the means of protection from rust and permanent mooring, deck width, safe collection and removal of waste including kitchen waste and keeping the inside dry and the essential fitting out all had to be provided for in the design. The kitchen equipment, office furniture, serving bar furniture, seating and tables would all be supplied by Abri’n’Tap Ltd to Mr Abels’ Albion Dockyard and would then be fitted by him. The waste would be collected in two wing tanks fitted within the hull structure, each having a capacity of 16,000 litres. The tanks would be discharged into land-based tanker vehicles and removed by road and this means of discharge was to use a suction method. A third small tank would also be supplied for the kitchen sinks and is contents pumped into the waste tanks. Cooking oil and grease were foreseen as possible contents of the kitchen waste because the specification warned that if these were put down the kitchen waste, the kitchen tank and the pump would require cleaning as a regular maintenance task. Bilge pumps would be fitted. Provision was made for windows and portholes, some fixed and some opening.

[34]Implied terms. The contract contained the usual implied terms. Thus, this contract contained terms that:(1) The vessel and all that had been fitted by Mr Abels, save for the items supplied by Arbi’n’Tap, would be of satisfactory quality and reasonably fit for their overall and respective purposes.

(2) The purposes that had to be complied with were for use as any form of food provision, including the cooking and processing of the cooking waste of a restaurant, whilst permanently moored in St Augstine’s Reach such that the vessel would be safe for all lawfully using the vessel at all times and that it would comply with all fire and other statutory safety requirements and such as the vessel could be reasonably maintained by the owners or operators of the café/restaurant whilst fitted with all designed features and fittings.

(3) The implied term as to suitability was not limited by anything specifically brought to Arbi’n’Tap’s attention before the contract was made and the circumstances were such that Arbi’n’Tap, as buyer, was relying totally on the skill and judgment of Mr Abels, as seller, in relation to all parts of the vessel and its fittings save for those fittings supplied by Arbi’n’Tap for which Mr Abels’ obligation extended only to fitting out and associated work following their delivery to his yard.

(4) The sale conformed to the description that the vessel was supplied with a statement of stability and that both conformed to the contractual stipulation that both that statement and the delivered vessel provided for intact stability equivalent to that required for a passenger ship in a similar application. C. What breaches of contract occurred? (1). Late Delivery

[35]It became obvious from an early stage in the construction of the vessel that progress was well behind schedule. It seemed to Mrs Allen-Britten that Mr Abels was short of available skilled labour in various skills needed for the construction of the vessel. The vessel was eventually moved out of dry dock to make room for another vessel that Mr Abels wanted to work on and was moored alongside the dock to allow further fitting out to be undertaken. In the entire build period, Mrs Allen-Britten stated that she was repeatedly pestering Mr Abels and Mr Summerell to deliver the vessel and Mr Abels finally agreed that the vessel would be delivered before the fitting out and snagging work was finished. He therefore finally agreed to deliver the vessel before it was fully complete and that he would finish off the remaining work after the café/restaurant had opened. Mrs Allen-Britten reluctantly accepted this modified delivery obligation on the basis that the vessel would be completed promptly following delivery.

[36]During the course of the vessel building, a number of additional items of work were agreed. It has never been suggested that these postponed the date for delivery or that they could not be accommodated within the progress schedule incorporated into the contract. Indeed, many of the items of work discussed with Mrs Allen-Britten were extra in the sense that they were not expressly provided for in the contract specification or drawing but which were not items entitling Mr Abels to further payment since they were necessarily to be inferred from the details shown in the contract documents.

[37]Mr Abels’ case has always been that there was no contractual date for delivery and that he was entitled to take as long as was needed to complete and deliver the vessel even if that meant that the vessel took twice as long to build and be delivered as the originally planned and provided for four-month period. He did not advance an alternative case that if there had been a contractual delivery date, that date was replaced by an obligation to complete and deliver within a reasonable time as a result of the additional work instructed by Abel’n’Tap Ltd. It was clear from the evidence that such extras as were ordered need not have added significantly to the period of four months and two weeks that the contract stipulated and provided for.

[38]Mrs Allen-Britten attended Mr Abels’ yard most days during the construction period. She observed that the work was initially delayed after the steel welding, one of the first operations to be carried out, had been completed. There seemed to be a shortage of skilled workmen, particularly plumbers, fitters and painters and these parts of the work were delayed from the outset. Despite repeated complaints, progress didn’t improve and, indeed slowed down since little work was undertaken during July and August 2004. For many weeks, Mr Abels was constantly badgered by both Mrs Allen-Britten and Mr Britten during which Mr Abels seemed remarkably indifferent to their complaints. His staff informed Mrs Allen-Britten on one occasion that that few vessels were ever completed on time and that the yard was working on other priority jobs, particularly as the work had been under-priced and Mr Abels was losing money as a result.

[39]In October, Mr Abels floated the vessel and moved it out of dry dock in order to make way for another vessel. The vessel was moored at the end of Mr Abels’ dock space whilst Mr Summerell, doubling up as a fitter, fitted the wooden floor and the doors. Finally, Mr Abels agreed to deliver the vessel before the fitting out and snagging work had been finished. It was towed to Narrow Quay in early November. This date was chosen although the vessel was not yet fully ready because otherwise Mrs Allen-Britten would have lost her only slot for this exercise to be carried out that was available for the foreseeable future. Mrs Allen-Britten was adamant that Mr Abels agreed with her that his men would complete the work once it had been permanently berthed. In fact, once the vessel had been moored in position, Mrs Allen-Britten and Mr Britten with help from friends, did much of the outstanding work themselves. They varnished the entire main cabin floor, finished off the plumbing, and fitted Saniflo toilets. Mr Abels attended to fit the fire escape but did not finish that because it would not fit properly. The Fire Officer, when he attended soon afterwards, required a temporary steel gantry to be built in situ before the vessel could be opened to the public. Mr Abels also brought over the gangway connecting the vessel to the dock. This he dropped into the harbour by mistake and divers were commissioned to retrieve it. The vessel finally opened to the public on 24 November 2004 with a hastily arranged opening party. That date is the date that Arbi’n’Tap took delivery albeit without a statement of stability and in an incomplete state. The whole period between 1 August 2004 and 24 November 2004 constitutes a period of delay which is wholly attributable to Mr Abels’ breach of contract in delivering the vessel later than the contracted date for delivery. (2). Omissions, snagging items and repairs

[40]The next fifteen months were, for Arbi’n’Tap Ltd and Mrs Allen-Britten and her and daughter a nightmare period in which they made continuous attempts to complete the unfinished work, the snagging items and the repairs and replacements that had to be attended to. I will summarise the principal events in this history. During the opening night party, Mr Abels spent much time running water from sinks in the kitchen and the men’s toilets into the waste fluid tanks. Only much later did Mrs Allen-Britten and her son realise the significance of this, namely the need to level the vessel by filling the starboard holding tank with water.

[41]A list of outstanding works was drawn up during a meeting on site between the Mrs Allen-Britten and her son, Mr Abels and Mr Summerell at the end of December 2004 which it was agreed that Mr Abels would arrange to be completed by 31 January 2005. This list, which did not include a number of missing items, was typed up by Mrs Allen-Britten and sent to Mr Abels after the meeting. The items on the list were all items of work provided for in the specification. Only one of those items, the placing of edging around the waste door in the kitchen, was attended to. This level of service left Mrs Allen-Britten so frustrated that she wrote to Mr Abels an undated letter on Arbi’n’Tap letterhead and sent in March 2005 to give notice of what the letter described as “severing the contract between us”. This summed up her feelings as follows: “In March 2004, a contract was agreed by Abels Vessel Builders and Ms C Britten. The contract set out the schedule of works and stated that Abels would design, build and deliver a replica Severn Trow to its intended mooring in St Augustine’s Reach at the end of July 2004. Stage payments were agreed.

[42]Although payments were made on time, in fact some were paid at your request ahead of the relevant stage, the build was at no time on schedule and the vessel was finally delivered to St Augustine’s Reach in November 2004 unfinished and unfit for its intended purpose as a café/restaurant. With promises from you that work would continue and having already lost several months revenue, I enlisted the help of family and friends to assist yourself and your employees with work on the vessel. In order to get the vessel ready to trade, we concentrated on works that would affect the health and safety of its customers and staff to enable the business to finally open to the public on 24 November 2004.

[43]At the end of December 2004 a meeting between myself, my son Dwight, your employee Andrew and yourself took place in order to try and resolve the problem of the immense amount of work outstanding. A list was drawn up, read through and agreed with a completion date of 31st January 2005. At today’s date only numbers 2 and 3 of the kitchen list are complete and only numbers 4 and 7 of the Upper deck and Outside list have been started. So once again very little has been done and we are now in March.

[44]Throughout the build further issues have arisen that have yet to be resolved the magnitude of which were not realised at the time of the meeting and were therefore not included in our agreed list. For example, the issue of your employee incorrectly fitting a commercial dishwasher into the ship such that it literally “blew up”, has now resulted in a bill for £920. Another example is the fact that the office floor is warped and “seesaws” an extraordinary amount by the end of the day, which, if advised correctly by a member of your staff, that to resolve the problem we would have to close the ship for a week and take out the entire floor and kitchen ceiling, seems to me an almost insurmountable obstacle.

[45]Much of the unfinished work is now having an adverse effect on my business, for example the unfinished state of the emergency exit means that seating next to or near to it is unusable, most particularly on windy days. I have therefore taken the decision to employ another building company to complete the unfinished work. The final payment which I have withheld will be used for this purpose, although I anticipate the cost to be more than the outstanding invoices.”

[46]Mr Abels did not reply to this letter, his attitude being as he explained in evidence, that Mrs Allen-Britten had already got more than she had paid for and was intent on finding fault and on holding him responsible for her own inefficient business methods. Indeed, he contended in a subsequent letter to Mrs Allen-Britten dated 8 August 2005 that he only received this letter sometime in July 2005. I am satisfied that the letter was sent on or immediately following 16 March 2005 and that Mr Abels’ implication that Mrs Allen-Britten was trying to rewrite history by sending out a letter some weeks after it was dated was both unfair and ill-founded. I also find that Mrs Allen-Britten, on behalf of Arbi’n’Tap Ltd, was entitled to treat Mr Abels’ conduct in failing to complete the vessel as amounting to his repudiation of his remaining obligations under the contract and that this letter amounted to an acceptance of that repudiation.

[47]In April 2005, the vessel almost broke free from its moorings because the rope connections provided by Mr Abels had been undone by vandals. The harbour master required Arbi’n’Tap Ltd to install the permanent steel moorings that should have been supplied and fitted originally. At about the same time, the system of sensors and lights that indicated the volume of fluid in the main tanks and the need for a pump out failed. These had been located within the tanks and there was no way of obtaining access to them to repair them. From then on, the tanks were emptied twice a week as a precautionary measure because there was no way of ascertaining the current level of waste within these tanks.

[48]A series of further problems emerged. It became necessary to fit a new sump tank in the kitchen because the existing tank kept overflowing with dirty water and sewage. It turned out that this problem was caused by the use of the wrong kind of pump which, when installed, did not move dirty water. Moreover, the location of the tank led to repeated disinfection of the floor when it overflowed and also prevented any repair work from being carried out to it. A new tank was installed in the stores areas with a new pumping system and a grease trap was fitted into the space vacate by the old tank. At the same time, a non-return valve was fitted to the pipe on the main tank so as to enable allow access to be obtained to clean the floor area of the kitchen underneath the tank.

[49]In May 2005, catering maintenance contractors were called in to attend to a problem with the grille and they discovered that the gas installation was dangerous. This led to the closure of the business for two days whilst the problem was repaired. In June 2005, a copper water inlet pipe split open because it had been installed in such a way that it had rubbed constantly against the adjacent steel. This split caused the bottom of the vessel to be flooded. It was then discovered that the kitchen ceiling and the office floor above it had both buckled because no insulation had been placed in much of the cavity leading to a deformation of the floor due to a build up of heat throughout the working day.

[50]In June 2005, Mrs Allen-Britten sent Mr Abels a list of items of repair that she had already had carried out and put him on notice that she would be looking to him for reimbursement of the costs incurred to date of £15,370. She also explained again why she had withheld payment of the last stage payment. This had been withheld due to the non-completion of the vessel, Mr Abels’ repudiation of his completion obligations and the significant extent and cost of repair of all the defects that had emerged to date.

[51]Between September 2005 and January 2006, a number of the defects were repaired by Trident Developments and others. Mrs Allen-Britten decided in November 2005 to instruct a marine surveyor to inspect the vessel and report on its condition compared to the condition provided for by the specification. One purpose of this survey was to enable her to produce a definitive list of the omissions, errors and inadequate or unsuitable features of the vessel so as to be able to present a final claim against Mr Abels, given that she was withholding the last instalment of the price on account of her cross-claim and she also wanted to bring the long running taking over vessel-acquisition saga to an end.

[52]This survey was carried out on 16 November and 12 December 2005. It is unfortunate that the survey report was not completed and available to Mrs Allen-Britten by 16 December 2005 when the vessel shipped a considerable quantity of water through a porthole. This is because the report recommended that, due to their proximity to the waterline, the particular portholes in the hull which were 28 cm above the waterline should be permanently kept closed to prevent the vessel from flooding via the potentially dangerous feature of these portholes being capable of being opened.

[53]The report listed a long list of matters that required attention or which were substandard. These included defects or deficiencies to the rubber fenders, paintwork, bulkhead, office steel floor, emergency fire exit door, fire escape arrangements, bilge pumping system, plumbing systems, cathodic protection, internal kitchen fittings, a hatch that had not been installed into the main seating area, ceiling panelling, lift and general quality of finish.

[54]The report particularly advised that the vessel should be provided with a stability booklet and that advice should be obtained to enable the waste tanks to be balanced in a safe manner and that the bilge water should be segregated.

[55]All the matters referred to were breaches of either or both implied terms as to quality and purpose and many were also breaches of specific provisions of the specification and some were also breaches of the obligation to provide a vessel conforming to its contractual description. (3). Portholes, Tanks and bilges

[56]Portholes. On 26 April 2004, with construction work having been in progress for about five weeks,, Mrs Allen-Britten asked Mr Abels whether portholes could be provided in the below deck space forward of the water tanks. Three portholes, two being fixed and one being opening, were added to the port side and two, one fixed and one opening, were added to the starboard side. Mr Abels agreed and additional holes were drilled into the structure and these portholes were added. The decision to provide an opening facility for the two openable portholes was taken by Mr Abels and he assumed full responsibility for this feature of these portholes being fit for its purpose. The portholes had limited headroom above the waterline and both marine experts considered that the two portholes capable of being opened should not have been located in that position or should have been closed portholes like the others that were fitted there. Mr Abels gave no thought to the stability implications of positioning the openable portholes so close to the waterline. These portholes were not fit for purpose since they presented an unacceptable risk of admitting water if the vessel listed and the porthole on the side of the list happened to be open.

[57]Tanks. The two tanks were designed in such a way that they frequently caused the vessel to list, more frequently the list being towards the quay. The reason for this listing was that these tanks were filled from different sources. The quay side tank was filled from the women’s toilets and the bar waste, the other side was filled from the men’s toilets and the kitchen. These tanks were, and had to be for stability reasons, completely separate from each other, at least when anyone was on the vessel, due to the risk of severe listing from the free water effect that cross-movement between the tanks would cause. From the opening party onwards, listing caused problems on a regular basis because of the regular significant differential volume of liquid and waste passing into each tank. For example, during the day, women and children used the female toilets to a much greater extent than the men used the men’s toilets and bar waste was much greater in volume than kitchen waste. Hence, the vessel would list towards the quay. The only way of dealing with this problem was to run the men’s toilet tap for long periods in order to add significant volumes of water to the harbour side tank in order to equalise the tank volumes.

[58]The tanks were not fitted with a workable way of indicating the levels within each of them so that appropriate measures could be taken to equalise the volumes in each tank or to empty the tanks as soon as they became imbalanced or too full. The installed system involved indicator lights which could not readily be seen, became tangled up with and knotted and were inaccurate because their location prevented them providing an accurate method of indicating the actual level within each tank.

[59]What was needed, but had not been provided, was a safe way of equalising levels within the two tanks and a reliable and easily useable method of checking both levels at all times. Even if these had been provided, the vessel as delivered was insufficiently stable because the waste mass represented such a significant proportion of vessel displacement that any movement of the waste mass could substantially influence the vessel’s stability. These design shortcomings left the tanks unfit for purpose and were also a breach of the express and implied obligations that the vessel would be stable at all times and in all possible states of use.

[60]Bilges. The bilges were placed on a wide flat deck and were supplied and installed without a sump yet they could not be triggered until a significant head of water had built up. If the vessel shipped water, it could not have been pumped out until so much water had been taken in that the vessel would have already capsized before the bilges were triggered. This design rendered the bilges unfit for purpose. (4). Stability and Statement of Stability

[61]Stability – general considerations. A vessel’s stability or stiffness is its ability to stay afloat by virtue of its buoyancy, weight and centre of gravity, to remain upright in the water and to return towards the upright condition after being displaced to an angle of heel and released. When a vessel heels, its buoyancy distribution changes, resulting in a righting moment being applied to return the vessel to the upright. A smaller and lighter vessel such as the ‘Corrine Marin’ is likely to heel more easily than large heavy vessels because the amount of buoyancy a smaller vessel can apply to counter an upsetting weight is likely to be less.

[62]Free Surface Effect. The ‘Corrine Marin’ contains two large tanks in her hull, each with a capacity for 15,000 litres of liquid waste. Fluids in large tanks within the vessel can have a significant effect on its stability. If the vessel is heeled, the surface fluid within the tank runs “downhill” which will have a tendency to increase the angle of the heel, particularly when the tank is large relative to the size of the vessel. This will increase the vessel’s instability significantly. It is for this reason that the two tanks should never have been interconnected when the vessel was occupied. It is for the same reason that a vessel that has shipped water into its inside immediately becomes dangerously unstable.

[63]Stability determination. The method of determining the stability of a vessel is complex. It involves determining the vertical centre of gravity (VCG) and the centre of buoyancy. The stability of the vessel is expressed in terms of the vertical distance from the VCG to an imaginary point called the Metacentre (M). This point is the point where a vertical line from the centre of buoyancy, when the vessel is heeled, intercepts the vessel’s centreline. The distance along this line from M to a point, G, being the vertical distance from the VCG to M, is derived. This length, GM, identifies the stability of the vessel in any given condition. The greater the GM, the more stable the vessel is in the upright condition. It will show greater resistance to an offset load and thus heel to a lesser angle and is, in consequence, stiffer. Since M is a fixed point for a given hull shape, the only way to improve stability is to lower G.

[64]Passenger ships require a safety certificate before they can operate. This is issued by the MCA and regulations prescribe the acceptable stability characteristics that must be satisfied in order for a certificate to be issued. These are set out in a prescribed statutory guide, issued as part of a Merchant Shipping Notice, MSN 1699 (M), in Schedules 1 and 2 to that Notice. Most of the criteria are not relevant for the ‘Corrine Marin’ since they relate to the dynamic use of a vessel when subjected to waves and other dynamic variables. There are some criteria however that are accepted as being relevant for a vessel that will remain in constant static use. In particular the initial GM and the angle of GZ are appropriate.

[65]However, these criteria selected from the guide were not the only relevant stability criteria applicable to the ‘Corrine Marin’ for these reasons:(1) The VCG is required be ascertained from measurements taken from inclining experiments carried out immediately prior to the completion of the vessel. This is particularly the case where a vessel of the type in question, as with the ‘Corrine Marin’, has not previously been constructed by the vessel-builder. Mr Abels did not undertake any inclining experiments. In such a case, the VCG can only be derived by calculations using the weight and weight distribution of the vessel. These calculations are complex, approximate and prone to error and they involve judgment in how to distribute or manipulate the vessel’s overall weight into its different sectors. Since the overall weight was also not available from Mr Abels, a complex assessment of the weight from the available drawings disclosed by Mr Abels had to be made by the expert marine architects before the further manipulation and distribution exercise could be undertaken by them in order to ascertain by assessment and calculation the ‘Corrine Marin’s as-build VCG. This long after-the-fact assessment process could not provide a reliable or accurate VCG and was inherently unsuitable as a means of determining this figure.

(2) Since the ‘Corrine Marine’s resulting VCG was assessed by estimation and calculation rather than obtained by experimentation and measurement, there was room for an informed professional difference of opinion as to whether the MSN guide was appropriate at all since that does not permit the use of an estimated VCG for stability assessment due to the inherent unreliability of an estimation method of deriving the VCG. Mr Reay, Arbi’n’Tap Ltd’s marine architect expert, therefore concluded, reasonably, that it would be appropriate to adopt a more stringent guide to determine whether the ‘Corrine Marin’ was sufficiently stable. This alternative guide does allow the use of an estimated VCG but at the expense of providing for more stringent minimum requirements than those of the MSN guide. Mr Reay recommended that the ISO12217 guide be used. This is the only guide allowing the use of an estimated VCG and is intended for use for small craft so his choice of the use of this guide was both reasonable and defensible, particularly given that an estimated method had to be used long after the date of delivery solely because of Mr Abels’ failure to provide stability test results in the first place.

(3) It is also necessary to fix the limiting operating conditions to be used for the calculations. In the case of the ‘Corrine Marin’, there were three factors requiring particular attention: the overall number of passengers to be provided for, whether any passengers, and if so how many, should be positioned on deck for the purpose of the calculations and whether an allowance should be made for a possible free surface effect created by the inter-connection of the two tanks and as to how full these should be taken to be.

[66]There was significant disagreement between the two sides’ experts about these matters. This was because Mr Colman, ultimately instructed on behalf of Mr Abels, adopted the method used by Mr Abels when Mr Abels somewhat belatedly produced his statement of stability. This method which had taken unduly narrow operating parameters relating to the number and positioning of passengers and had erroneously ignored the possibility of a free surface effect notwithstanding the potential for the filled tanks being inter-connected. It also relied on the inherently inaccurate calculated method of ascertaining the VCG whereas Mr Reay had undertaken two separate inclining experiments to measure the VCG.

[67]Evidence of instability. The vessel had appeared to be unstable on many occasions before December 2005. When the vessel was being towed into position in November 2004, Mrs Allen-Britten noticed how much it appeared to list but was re-assured by Mr Abels, erroneously as it turned out, that that was not a matter of concern and was necessary to allow water accumulating on the deck to be removed. On the opening night party, Mr Abels spent much time trying to fill the vessel’s waste tanks in order to try and level the vessel. He did this, it is now realised, because the tanks were filing at a differential rate and thereby causing the vessel to list and the additional water was being used to remover or reduce the difference in levels in the two tanks. This problem of differential loads in the two tanks and the vessel’s consequent listing was noted on many occasions during the use of the vessel and Mr Britten frequently had to take water from the men’s toilets and fill one or other of the tanks to reduce its listing.

[68]On 17 November 2005, the vessel was subject to a particularly heavy list whilst the port tank was being pumped out. This caused a large number of items to be broken as they slipped onto the deck. The stove slipped across the kitchen and the grill nearly crashed onto the floor. Mrs Allen-Britten telephoned Mr Abels to ask where she could get ballast that she had been advised by Mr Powell was desirable to place in the bottom of the vessel to stabilise it. Mr Powell had just carried out his first inspection and survey of conditions and had provided this advice during that inspection. Mr Abels came over to inspect the vessel. He categorically ruled out ballast as a way of stabilising the vessel and suggested instead that a valve should be placed in the pipe before the inlet into the starboard tank so that the surplus waste could be diverted into the port tank if the levels had become unequal. This proposal had in fact already been considered and reasonably rejected as being impractical by Mr Britten some months previously.

[69]On 16 December 2005, a near disaster occurred. The café/restaurant was full with a large pre-Christmas party and the tables and placements were arranged so that a majority of the guests were dining on the left hand side of the vessel nearest the quay. There were also a majority of women dining that evening so that there would have been a greater volume of waste generated from the women’s toilets into the quayside tank. At about 9.00 pm, the vessel suddenly listed heavily to port and water started pouring through the open port hole on that side of the vessel. The evidence, which I accept, of Mr Britten who was on the quayside when the list occurred emptying some waste into a waste bin, was clear. He stated that the list was rapid and occurred in a matter of a very short space of time which I conclude must have been less than a minute. The degree of list he estimated to have been at least 8 degrees. This estimate was confirmed as not being an excessive estimate by the resting position of the vessel when this was observed on the following day. The totality of the evidence would suggest that that is likely to have been too low an estimate but it was an excessive list whatever its precise magnitude had been.

[70]Fortunately, Mr Britten was able to shut the port hole and stop the water ingress at the point when the adjacent floor was covered with water to about an inch in depth. The vessel was rapidly evacuated. In the course of this occurrence, the women’s toilets backed up because the quayside tank was completely full causing large amounts of soiled waste to spill into the vessel.

[71]Cause of the listing. Mr Reay, relying on the factual explanation of what had occurred, considered that the cause of the listing was a combination of the weight of the tanks, particularly the harbour side tank which was full or even overflowing, coupled with the weight of diners unevenly distributed in the dining area and possibly further influenced by the free surface effect caused by the tanks being cross-connected. This had led to a rapid port list sufficient to bring the open porthole on that side of the vessel below the water line and a rapid inflow of at least 1,000 litres of water which had led to further free surface effect and further listing. Mr Reay assumed that the tanks had been cross-connected since this was the most likely explanation for the apparently rapid listing. He accepted that it was possible that the vessel had listed more slowly and that that had not been noticed in its early stages and that the sudden listing occurred when water started to flow through the porthole, with or without significant additional differential loading occurring on the port side as a result of a rapid build up in that tank and a shift in position of a number of diners.

[72]Mr Coleman relied on Mr Abels for a quite different chain of causation of the listing. Mr Abels only came up with this explanation having heard the evidence of Mr Britten. His explanation was that the water level in the harbour had dropped by about 250 – 300 mls when, as happened periodically, the Cumberland Basin to the west of the harbour was emptied with the falling tide. As a result, he postulated that the gangway over the quay had been caught above the quay. This would have prevented the vessel from freely lowering in harmony with the reduced water level or from freely heeling as the port tank filled more rapidly than the starboard tank. This lack of free movement was exacerbated by the fitting of two arms bolted at one end to the vessel and at the other end to the quay. These arms had only, he contended, recently been bolted into position at Mrs Allen-Britten’s instructions by a company called Waterside Forge. Mr Abels explained his hypothesis for the sudden listing to port in this way:

“On December 16th the harbour water level was lowered as usual. The port tank was filled more than the starboard tank until it was overflowing and therefore the heeling moment had occurred over the preceding days. The vessel did not heel to port because the gangway prevented it from freely heeling as it was jammed against the quay. The harbour slowly refilled restoring the water level. At some point the gangway became free from jamming against the quay as the water level rose. This would have created an instantaneous change and sudden movement in the vessel. The vessel was then free to assume the normal angle of heel cause by the weight imbalance.”

[73]There are three insuperable difficulties with Mr Abels’ hypothesis, based as it is on his speculation of what might have occurred rather than on any observation of what had occurred. The first difficulty is that he produced no evidence to show that the harbour water levels were falling and rising in the suggested way at times that would fit in with the time of this incident at about 9.00 pm on 15 December 2005. The harbour master and his staff kept records of the water levels in the harbour and the times of each measurement. The only evidence of this cyclical movement produced by Mr Abels related to suggested movements of this kind on 30 October 2008 and 1 November 2008 in the form of photographs taken at 6.30 am on 30 October 2008. Mr Abels then asserted, without any basis for the time or date of this asserted fact:

“In summary therefore on December 16th the harbour water level was lowered as usual.”

Mr Reay, who was shown this evidence very shortly before he had his joint statement meeting with Mr Coleman, recorded this statement:

“AML (Mr Reay’s professional practice) has confirmed verbally and in a document that there was no change in water level on the day of the stability incident. AML conclude that the mechanism proposed by (Mr Abels) cannot thus apply.”

[74]The second difficulty is that photographs taken before the vessel was ballasted and in the condition it was in at the time of the incident show that the gangways were riding well above the dockside and were not trapped, or capable of being trapped, by movement of the kind postulated. This again shows that the postulated mechanism could not have caused the incident.

[75]The third difficulty is that Mr Abels’ hypothesis does not explain satisfactorily the precise movement of the vessel as it listed rapidly as a result of the water level slowly rising in the harbour and whilst still under the restraining influence of the fixed restraints and the restrained gangplank. He has produced no visual evidence of the phenomenon that he postulated nor any photograph, simulation, calculation, tank modelling or other physical or visual means to demonstrates the feasibility of the precise movements that would have been involved in this suggested phenomenon. Mr Abels has therefore not established on the balance of probabilities that this postulated movement occurred or, indeed, could have occurred.

[76]For all these reasons, Mr Abels’ hypothesis must be rejected. As to the assumption by Mr Reay that the cross-connection between the tanks was open, the only relevant evidence given at the trial was by Mr Britten whose recollection was that the cross-connection had remained closed throughout the evening. He was the only person who would have opened this cross-connection and I accept his recollection that it had not been opened by him. Mr Reay accepted that the listing could have resulted by a sudden shift of load, whether in the port tank or amongst the diners, that could have resulted in this listing and I find that that was the immediate cause of the listing and consequent water entry through the port hole. At least 1000 litres of water entered and this water created a free surface effect and rapidly caused further listing to occur.

[77]Contractual stability statement. Mr Summerell stated that no inclining or stability experiments were carried out when the vessel was first floated since it was not a requirement for the type of vessel in question. He did undertake a weight estimate calculation and he undertook an assessment of the MSN 99 stability criteria. Mr Abels stated in evidence that the VCG was about 2.3, although this had been adjusted by him, for no good or satisfactorily explained reason, to the reduced figure of 1.79. Mr Summerell, at some stage prior to delivery, which he could not identify with any more precision, satisfied himself that the vessel’s stability satisfied the relevant criteria he had chosen from MSN 99. Mr Summerell stated in evidence that if he was again involved in another exercise, that is in undertaking the design work for Mr Abels to construct a similar vessel, he would arrange for stability experiments, including an inclining experiment, to be carried out.

[78]Mr Abels insisted that he had no obligation to produce any written statement of stability or to undertake any inclining experiments or to apply any of the stability assessments provided for by MSN 99 or any other stability guide. He also stated that it was not necessary to produce a statement of the design assumptions because it was a small project. Somewhat inconsistently, he stated later in his evidence that he had not provided Mrs Allen-Britten with a statement of stability because she had not paid him the last instalment of the contract price.

[79]Since the vessel had been delivered and handed over, at his request, prior to it being completed, he should have provided the statement of stability provided for by the specification on delivery even though the final instalment of the contract price would not have been due until a later date when he had completed all remaining work and snagging work. The contract statement of stability had to be delivered, as part of the vessel to be delivered, on delivery. Delivery, at the request of Mr Abels, as the seller, had been agreed with Mrs Allen-Britten, as the buyer, to take place prior to the completion of the vessel.(1) It is clear that to comply with the specification obligations, what was required by the obligation to provide a statement of stability for this vessel in the circumstances under which it was to be operated, were the following:

(2) A statement of which provisions of which guidelines had been applied and the date on which those assessments had been carried out.

(3) A clear identification of the physical condition of the vessel to which the statement applied. That would be, in reality, be complied with by the supply of a dated set of the as-built drawings and a specification that took account of any changes to the contract specification that had been built into the vessel.

(4) The results of the inclining experiments and a clear identification of the VCG.

(5) The weight of the vessel and other relevant data relating to weight distribution used in assessing stability.

(6) Since no inclining experiments had been carried out, notwithstanding the stipulation in the MSN method of assessment that was being used that they should be carried out, a set of the relevant weights, assessments and calculations used to identify the VCG should have been included with a statement of why no inclining experiments had been carried out and an explanation of what if any adaptation of the MSN method being applied had been made to take account of the assessments that had been used in substitution for the inclining experiments.

(7) A full statement of the design assumptions with regard to loads, distribution and any other matters relevant to stability and which had been taken account of in determining the limits which the stability assessment had taken account of.

(8) A statement of the results of the stability assessment that had using the matters listed above.

(9) The date of the stability statement and the signature of Mr Abels who was issuing it.

[80]These requirements can be deduced from the wording of the relevant specification item which is, to repeat:

“The vessel will be floated and a stability investigation undertaken, to produce a statement of stability in the form required for a passenger vessel in this application. The intact stability achieved will be equivalent to that required for a passenger ship in a similar application.”

The timing of the investigation and of the state of the vessel to be considered is fixed by the requirement that the stability investigation will be undertaken when the vessel is floated. The intact stability is to be investigated and that stability is to be equivalent to that required for a passenger ship in a similar application. That defines an ad hoc or one-off stability requirement which the seller is to devise using as the investigation’s reference point, being the equivalent features of a stability investigation that would have been carried out for a passenger vessel “in this application” even though there is no such defined investigation. Thus, the stability statement to be produced for this vessel must not only state the results of that investigation but identify fully the method of investigation chosen by the certifier since the statement is a one-off that the seller has devised for this particular application.

[81]The only document that was produced by Mr Abels is an undated document which he must have drafted when it was sent to Mrs Allen-Britten in about March or April 2006. It does not satisfy the basic requirements of the stability investigation or of the statement defined by the specification and its conclusion can now be seen, in the light of the expert evidence, to be erroneous. This is:

“The initial stability of the vessel is significantly higher that that required for passenger craft that proceed to sea and all other factors are well in excess of statutory requirements.”

As significantly, the statement is not signed by Mr Abels and it does not contain or is not issued with or by reference to any of the matters listed in paragraphs (1) – (6) in paragraph 77 above save for identifying the benchmark that had been adopted as being MSN 1699 (M) schedule 2. This benchmark was accepted by the three Marine Architect expert witnesses who gave written and oral evidence at the trial as being an acceptable starting point although Mr Reay considered that it had been applied incorrectly in significant respects.

[82]Mrs Allen-Britten had repeatedly asked for this statement. She first asked sometime in 2005 when the insurance broker asked for a copy when processing her insurance arrangements for public liability insurance and for the vessel. Following the advice of the marine surveyor received in the first survey carried out of the vessel in December 2005 that a stability statement should have been provided, Mrs Allen-Britten asked again and she repeated her request on a number of other occasions. When Mr Abels met Mrs Allen-Britten on 30 January 2006 in order to inspect the vessel and the long list of matters that she was complaining about, he informed her that there was a stability document in existence and that the stability of the vessel was six times that required for an ordinary passenger vessel. That statement was untrue because the document that was finally sent or handed to Mrs Allen-Britten, probably in about April or May 2006, had not been prepared by that date and was only prepared because of the growing insistence that he provide one, since Mrs Allen-Britten was becoming desperate due to what appeared, in the aftermath of the incident of 16 December 2005, to be the case, namely that she had bought an unstable and unsafe vessel.

[83]Thus, Mr Abels was in significant breach of a vital condition of the contract for the sale of this vessel. In particular, he had failed to undertake appropriate stability investigations prior to delivery. He had failed to define the full nature and extent of the required stability investigations and to set these out in an appropriate statement of stability. He had failed to produce a statement of stability. Following the incident on 16 December 2005; he continued to fail to produce all the necessary data,, such as the VCG and weight of the as-built vessel and its as-built drawings, that any investigation of the cause of the instability that manifested itself on that date would need. He never produced a signed and certified statement of stability of any kind. He only produced a rudimentary draft of the required documents too late to be of assistance to the investigations. Finally, when those investigations had been completed, it became clear that his statement was inaccurate in wrongly identifying the vessel as being stable and by wrongly identifying it to be stable by reference to the guidelines his statement was purporting to apply.

[84]Naval Architects’ investigations. There have been five separate investigations into the stability of the vessel since December 2005. Three were carried out by Mr Alasdair Reay, the managing director of CEproof Group Ltd, Naval Architecture Consultants working with Mr David Gray, a director of Ace Marine Ltd, Naval Architecture Consultants based in Fife. Both are highly qualified and experienced Naval Architects who have worked in the regulatory field for many years. Mr Reay had been a senior member of Ace Marine Ltd for a short period and had taken on Mrs Allen-Britten’s instructions and he retained the lead when he moved from Ace Marine Ltd in 2007 to form his own consultancy group of companies. The other two investigations were carried out by two senior members of Burness Corlett – Three Quays (Southampton) Ltd (BCTQ), Mr Timothy Welch, who carried out the first, and Mr Jeremy Colman, who carried out the second. Both are Naval Architects, both are highly qualified and both had only limited time to carry out their respective investigations.

[85]The investigations were as follows:(1) An inclining experiment was carried out on 10 July 2006 at the vessel’s permanent berth by Mr Reay and he reported on 28 July 2006. He concluded that: (i) The vessel as currently operating had marginal stability assuming that the large tanks were not cross-connected. The large tanks were cross-connected and, if that cross-connection was opened, the stability deteriorated rapidly to negative values in certain load conditions. (ii) The statement of stability issued by Mr Abels was based on a highly unrealistic position of the centre of gravity (1.79 compared to 2.706 as found by Mr Reay), was based on inapplicable criteria and it made no reference to passenger heeling criteria. It was in consequence invalid. (iii) The additional cover provided for the top deck by Mrs Allen-Britten made no appreciable difference to the initial stability of the vessel. (iv) Ballast should be provided in the waste tanks to allow the vessel to meet MCA approved standards, portlights should be closed at all times and a contingency plan devised in the event of glass being broken in relation to any water ingress that might in consequence occur. This plan should include the provision of a sump and pumping arrangements related to water accumulation in that sump.

(2) A second inclining experiment was carried out on 13 October 2006. This was carried out following the receipt of a detailed critique of the first inclining experiment by BCTQ dated August 2006. They had been consulted by Mr Abels when he had received a copy of the first Reay report. Their conclusion was that the only reliable way to measure displacement and centre of gravity was to follow the strictures specified for performing the same task on a large commercial vessel. The second inclining experiment was performed at Narrow Quay. The test was carried out on the vessel with her tanks completely dry, the stock of food having been removed, and the mooring arms unpinned from the dockside. The relevant IACS instructions for conducting the experiments were taken on board and followed throughout. The condition of the vessel and the weather could not have been more conducive to conducting an accurate inclining experiment and the results were considered to be as accurate as it was possible to achieve. The conclusions drawn from this test were identical to those drawn following the previous test.

(3) A third investigation was carried out by Mr Welch of BCTQ and was reported in October 2008. He had been instructed at short notice to prepare a report for use at the forthcoming trial. It was based on an estimate of the lightship weight using the original weight sheet and making appropriate adjustments. Crucially, the investigation took account of the removal of the cross-connection between the tanks which had, by then been filled with concrete ballast. It also assumed that there would be no passengers on deck and that the awning installed by Mrs Allen-Britten had been removed. The conclusions were: (i) The vessel was stable and the GM, GZ max and Angle deg characteristics compliant with MCN criteria. (ii) There was no fundamental flaw in Mr Reay’s calculations but there was a substantial and unexplained difference between the Reay figures and the weight and centres estimates produced by Mr Welch. (iii) A further inclining experiment should be undertaken to arrive at a mutually agreed lightship weight and centres that took account of the large amounts of concrete ballast that had been installed.

(4) A fourth investigation was then carried out by Mr Colman of BDTQ at very short notice in November 2008. Mr Welch was indisposed and Mr Colman was instructed to prepare a supplementary report for use at the adjourned hearing of the trial. He undertook a complete re-assessment of the VCG and sought to demolish the accuracy and reliability of the second inclining experiment carried out by Mr Reay. He also concluded that the incident on 15 December 2005 had been caused by the means put forward in Mr Abels’ hypothesis. He concluded: (i) The vessel’s stability was adequate in all respects for safe operation of the vessel with proper precaution as a floating café/restaurant. (ii) The computed weights and their centres, as reworked by Mr Colman, were not significantly different from those in the vessel as first built. (iii) Both inclining experiments carried out by Mr Reah were unreliable and suffered from serious errors and inaccuracies. (iv) There was no need to fill the tanks with concrete ballast. (v) The operating incident on 16 December 2005 was not caused by instability but by the distortions caused by the jamming of the gangplank and the attachments to the quayside following the reduction in water level in the harbour as hypothesised by Mr Abels.

(5) Mr Reay responded to Mr Abels’ complete change of case resulting from Mr Coleman’s report with a summary instability report dated 17 November 2008 and in his answers to the joint statement he signed following his experts’ meeting with Mr Coleman on 26 November 2008. His conclusions, as expressed in these documents and as confirmed in his oral evidence were as follows: (i) Mr Coleman’s derived VCG was substantially different from Mr Welch’s derived VCG. The difference was based on the same spreadsheet of weights and was explained by Mr Coleman’s manipulation of two significant weight figures in unexplained and unjustifiable respects. In particular, both these manipulations involved moving the very highest weights to other lower parts of the vessel. (ii) The use of an estimated VCG was not permitted by the MSN method or by any other statutory method because of its inherent unreliability. If an estimated method had to be used, the only method that allowed this method, being the ISO12217 method applicable for small craft, required a significant safety factor to be built in to counteract the danger arising from method’s unreliability due to the use of an estimated VCG. (iii) If the VCG put forward by Mr Welch at the meeting of experts on 13 October 2009 was adjusted to accord with the current weight figures and for the safety margin referred to in (ii) above, the BCTQ estimated VCG would be 2.422 compared with the Reay figure of 2.511, an acceptable difference of 11%. (iv) Mr Coleman’s critique of the second inclining experiment was rejected. Mr Coleman had undertaken a desk critique that overlooked the permitted use of permitted alternative requirements introduced into the experiment for good reasons and the internal consistency of the clear, linear results of his second inclining experiment, which produced a similar result to his first, showed the inherent reliability of both of the inclining experiments. (v) Mr Coleman’s stability assessment took no sufficient account of the adverse effects of the tanks, particularly their built in cross-connections which were capable of being opened nor of passengers located on deck. These matters identified that an initial GM of 0.15 was inadequate. (vi) There was no factual basis for adopting the trapped gangplank as an explanation of the incident on 16 December 2005. (vii) Mr Reay maintained his opinion that the vessel’s stability was inadequate. He also concluded that it was erroneous for Mr Coleman to conclude that the vessel was adequately stable since this could only be concluded by first imposing unacceptable operating limits such as the provision of a cross-connection for the tanks, even if its use was prohibited during operating conditions which had not been the case since no clear, written operating procedures were ever provided, and the prohibition of passengers using the top deck. The only satisfactory way of producing acceptable stability would have been to remove the cross-connections of the tanks and to add ballast into the hull so as to reduce significantly the vessel’s VCG.

[86]Breaches of Contract related to stability. I do not accept the case put forward by Mr Abels or by either of his expert navel architects on the issues related to stability. Mr Abels was unwilling and unable to accept the consequences of his entering into a turn key contract with a specification that he had drafted with the consequence that the vessel had to be fit for its purpose of being a café/restaurant. In particular, he was unwilling to accept that the contract, as it did, imposed on him an obligation to design tanks that maintained a stable vessel in whatever condition they were operated in, to produce a stable vessel when fully occupied including being occupied on deck and to produce a statement of stability which was properly prepared and which demonstrated a stable vessel even when operated in a worst case scenario with cross-connected tanks subject to a free surface water effect. He was unwilling to accept that the incident on 16 December 2005 was caused by vessel instability.

[87]Much time and effort was unnecessarily expended in unsuccessful attempts to discredit Mr Reay’s inclining experiments which were only necessitated by his breaches of contract in not undertaking such experiments himself initially. Mr Reay’s experiments, whatever imperfections of method were used, demonstrated that the vessel was unstable and required the addition of ballast to make it stable and the stability assessments of Mr Welch and, particularly, Mr Coleman contained so many errors that they could not be relied on.

[88]In short, Arbi’n’Tap Ltd’s case succeeded in full and Mr Abels’ case failed completely on all these stability issues.

[89]The following breaches of contract occurred as a result of these problems:(1) Statement of stability. Mr Abels failed to undertake appropriate inclining experiments to ascertain the vessel’s VCG. These were necessary because he had never previously built a Trow Barge-type vessel, because of the unusual features of a vessel with such a significant proportion of its volume taken up by waste tanks with a built-in cross-connection with no sufficient safe operating procedures to ensure this was not used when the vessel was occupied and because of the use of the MSN method of stability assessment which stipulated that the VCG should be ascertained by inclining experimentation and not derived from calculations. He also failed to produce or provide a statement of stability of any kind until some eighteen months after delivery and, when it was provided, it was inadequate, inaccurate and ascertained on an incorrect basis. All this significant failings were breaches of the express and implied terms of the contract.

(2) Stability. The vessel was unstable due to these features of the vessel: (1) The provision of two large tanks capable of being cross-connected and of being differentially loaded, with no suitable method of monitoring the volume of material within the tanks or of equalising their contents before the tanks became unbalanced; (2) A GM which was too low at 0.15 and with inadequate ballast;

(3) No method of ensuring that the opening of the tanks’ cross-connections would be prevented whilst the vessel was occupied;

(4) No allowance was made for passengers to use the deck, this being both permitted and within the purposes for which the vessel was designed. There had been no prohibition placed on the use of the decks in this way;

(5) The provision of opening port holes close to the water line with no warning that these should remain closed and bolted at all times whilst the vessel was occupied; and

(6) The provision of inadequate bilge pumping arrangements capable of coping with water ingress into the hold area.

[90]Overall conclusion. The overall conclusion is that each of the breaches of contract relied on by Arbi’n’Tap have been established. D. Did those breaches cause the claimed losses?

[91]Determination of the contract and cessation of trading as a café/restaurant. The failure to carry out necessary snagging and completion works justified and entitled Arbi’n’Tap Ltd in treating the contract as having been repudiated by Mr Abels and in accepting that repudiation and terminating the contract in March 2005.

[92]Mrs Allen-Britten was never able to build up her clientele sufficiently to enable Arbi’n’Tap Ltd to trade to anything like its full potential. The business was forced to start up over six months late, given that the opening was only four weeks before the Christmas break in 2004. The vessel then remained in an incomplete and unsatisfactory state throughout 2005 with much remedial and finishing off work causing further continuous disruption to trading conditions. Throughout that period, the waste arrangements were completely unsatisfactory and led to repeated instability of the vessel. Just when it looked as if trading could begin to build towards a satisfactory limit, the business was thrown into virtual limbo by the incident on 16 December 2005 and it never recovered. It took Mrs Allen-Britten six months to ascertain just how bad the vessel’s stability problem really was and, on discovering that the vessel had to be returned to dry dock in order to be fitted out with ballast, she realised that she could no longer afford to keep the business running and she had by then lost the will to continue. She therefore decided to close down the café/restaurant business at the beginning of August 2006. This was the reasonable, direct and foreseeable consequence of the totality of Mr Abels’ breaches of contract. E. Aribi’n’Tap Ltd’s Recoverable Damages (1). Recoverable damages – general.

[93]The loss that is claimed for the totality of these breaches of contract is of four kinds. These are:(1) The loss of all trading income in the period between 1 August and 23 November 2004;

(2) The loss of partial trading income between 24 November 2004 and 31 December 2005;

(3) The loss of all trading income in the period 6 August 2006 to 31 December 2006; and

(4) The cost of repairing, completing or adapting the vessel so as to enable it to be put into a condition in which it is fit for its purpose as a floating café/restaurant moored in Bristol Harbour.

[94]In considering what damages are recoverable and the basis upon which those damages should be assessed, it is first necessary to consider the general principles that should govern Arbi’n’Tap Ltd’s claims. These are as follows:(1) Arbi’n’Tap Ltd, the buyer, contracted to buy a vessel which was to be designed, constructed and delivered by Mr Abels, the seller. Arbi’n’Tap Ltd’s only stipulation was related to the general size, use, location of mooring and maximum price of this vessel. The remaining details were matters that it left to the seller in reliance on the seller’s skill and judgment. Thus, Arbi’n’Tap Ltd did not stipulate that it had to have, for example, two inter-connected tanks or any limitation on the use of the kitchen. It accepted the proposals for these and all other matters put forward by Mr Abels on the understanding that those proposals would provide, and were suitable for, the very general requirements that I it had provided.

(2) It was always within the contemplation of the parties that Arbi’n’Tap Ltd would use the vessel, on delivery, as the means of starting up and trading as a café/restaurant and that Mrs Allen-Britten, its principal, was starting this business from scratch. Thus, any directly incurred loss of business income or other loss that was incurred and which resulted from breaches by Mr Abel of both the express and implied terms of the contract of sale were foreseeable and recoverable under the second limb of the general rules of recovery of contractual damages usually referred to as the Hadley v Baxendale rules. This is because the specific purposes and potential losses of the buyer had been made known to the seller in advance of the contract being entered into.

(3) Particularly significantly, the vessel was required to be delivered on time, albeit that time was not made of the essence. The vessel had to be safe and useable as a place where a large number of members of the public would be gathering to consume food of all kinds. The stability of the vessel needed to be such that it was safe, sufficiently firm and stiff when moored as to satisfy public perceptions of safety and comfort and the vessel had to be capable of being used by the operators in a way that would not allow its stability to become impaired even when used to the limits and in a manner that was ill-advised. This was because no clear and rigid operating rules were provided in a form which would become known to any successors of the initial operators and which included any reasonably necessary safety locks to prevent any ill-advised use such as a fail-safe locking mechanism on the inter-connection of the tanks whilst the vessel was occupied.

(4) The vessel was never completed since it was delivered, handed over and accepted prior to completion on the clear understanding that the seller would complete the vessel after delivery at his expense. Thus, the final instalment of the price never formally became due.

(5) The buyer accepted the seller’s repudiation of the contract, a repudiation caused by its refusal to complete the remaining work, and the contract came to an end in March 2005.

(6) The buyer ceased trading as a café/restaurant business and, in mitigation of loss, rented out the vessel to a similar business having adapted it so as to make it fit for purpose. In particular, the tanks were removed and replaced by ballast. This chain of events was the direct and foreseeable consequence of the many significant and serious breaches of the conditions of the contract. These breaches related to a failure to prove the stability of the vessel before delivery, the failure of the seller to undertake and complete all necessary repairs and completion works after delivery and the failure to deliver a vessel which was stable and safe such that it nearly sank whilst fully occupied and the failure ever to provide a statement of stability which was accurate, complete and which clearly and accurately identified the vessel’s safe operating limits .

(7) Arbi’n’Tap Ltd has never been able to trade to its full potential or to the market turnover that it could have achieved as a direct result of the long series of breaches of contract that culminated in the seller’s repudiation of the contract and in its enforced cessation of its food supply business.

(8) The actual income and turnover that Arbi’n’Tap Ltd achieved is no guide to the income that could have been achieved but for the breaches. The only satisfactory way of determining Arbi’n’Tap Ltd’s losses resulting from its lost income is to assess what the income would have been using the actual turnover as no more than one factor to be taken into account in making a predictive assessment on the balance of probabilities.

(9) The only basis for quantifying the loss caused by the lack of quality, unfitness and other physical imperfections of the vessel is to identify the actual or estimated cost of repair of all imperfections resulting from the many breaches of contract and to award that sum as at the date trading ceased, irrespective of whether the vessel, or any specific item of breach, had or had not been repaired.

(10) Each breach of contract had to be remedied and, whilst any breach remained unremedied, the value of the vessel was thereby reduced. The reasonable and ordinary measure of damages for loss in a situation where the damage has not been remedied and the chattel is thereby reduced in value, would be the diminution in the value of the chattel. Where the chattel has not been repaired but is a delivered vessel constructed to order, the diminution in value caused by such a breach is ordinarily measured by reference to the estimated cost of repair.

(11) It was a reasonable decision, taken in mitigation of the loss being suffered, to cease trading, and to let out the vessel on a long lease to a similar business. The losses being incurred at the time of business cessation could no longer be carried by Arbi’n’Tap Ltd, a small start-up business with no capital or income and facing insolvency. Arbi’n’Tap, in reasonable mitigation of loss, decided to cease to trade as a café/restaurant and to let out the vessel, once completely remedied, to another restaurant business. This was the only way it was able to stem the losses and start to generate an income sufficient to meet its outgoings. There was no available market to sell the vessel and it was reasonable to claim loss of turnover as a head of loss for a period of five months after the business was closed whilst the vessel was being repaired and a tenant was found.

(12) The sale, being one of a sale of goods manufactured to order, required the seller to provide, as part of the fixed price, everything that was specified and any additional unspecified item which was necessary in order to enable the vessel to be fit for its purpose. This follows from the fact that the price is inclusive of all necessary features, whether specified or not, needed to enable the vessel to be fit for its purpose. (2). Loss of all trading income in the period between 1 August and 23 November 2004 and of partial trading income between 24 November 2004 and 31 December 2005

[95]The first part of the loss of trading income claim is for the period of delay pending the delivery of the vessel and the second part starts on the date of delivery and ceases on 31 December 2005.

[96]These losses have been estimated by Arbi’n’Tap Ltd’s accountant, Mr Steve Copson, in this way:(1) The takings in the period August – November 2005, being the comparable period of trading in the subsequent year in the period in question, were taken and these were then adjusted downwards to take account of inflation in the period between 2004 and 2005.

(2) The actual takings in 2005 were taken and then adjusted to take account of the estimated growth in business that could reasonably have been achieved in that period but for the breaches of contract. This estimate was arrived at for these reasons, quoting Mr Copson’s report: “The level of this growth factor is subjective, but given the nature of the business, (organic restaurant) and its location, a prudent factor of 10% has been applied to each month.”

(3) The resulting figures for takings were then adjusted using normal accounting principles to produce a loss of profits.

[97]The accountant instructed by Mr Abels, Mr William Law, adopted a different method of identifying the loss of profits. He analysed the takings spreadsheets and book-keeping records produced and provided by Arbi’n’Tap in the periods it was trading as a café/restaurant. He concluded that there was an overall difference between the recorded takings and the statutory accounts and that the spreadsheet figures were greater by about £39,000. He then concluded that there were doubts as to the accuracy of the statutory accounts. He then assumed that the turnover in the period of trading was at its maximum, given the structure of the business at that time and he used those figures to seek to show that the business would have made a loss in both periods even if there had been no breaches of contract. He finally, sought to take into his accounting exercise the increased value of the vessel between the date of delivery and the date on which trading ceased.

[98]Not surprisingly, no meaningful statement of agreements and disagreements resulted from these two divergent approaches. In my judgment, Mr Law’s approach is fundamentally flawed as a means of assessing the losses that Arbi’n’Tap Ltd may recover as damages for the many, varied and significant breaches of contract that it suffered at the hands of Mr Abels. No account has been taken of the fact that the business was run in a different way to the intended way of trading and that it had never been able to start up and grow in the structured way that it could have achieved. His assessment is based on his no doubt correct determination that there was a lack of control exerted over cash takings during the period of trading and that the business, based on its structure in that period, could not have generated any more turnover or profit. This approach takes no account of Mr Abel’s breaches of contract and their effect on the achievable turnover had everything gone according to both plan and the terms of the contract. Mr Law did not attempt a critique of Mr Copson’s approach. Mr Copson, although he attempted to agree some of Mr Copson’s figures, could not do so given the errors in Mr Law’s approach. Mr Law, should have been instructed to assume that all the pleaded breaches of contract had been proved and then to consider what loss was caused to Arbi’n’Tap Ltd by those many breaches which had left the vessel incapable of being used satisfactorily as a café/restaurant, had amounted to a repudiation of the contract and had directly caused the enforced cessation of café/restaurant trading.

[99]I conclude that Mr Copson’s figures were proved on a balance of probabilities and represented a fair and reasonable way to calculate the losses flowing from the established breaches of contract. They are recoverable in full under the second limb Hadley v Baxendale. No account should, however, be taken of the increased value of the vessel. This would have occurred in any event and is not a factor which has resulted from the breaches of contract or one which fairness suggests should be credited against any damages otherwise recoverable. The sum established by Mr Copson was, for both period added together, £37,268.00. (3). Loss of income due to cessation of trading as a restaurant in the period 6 August 2006 to 31 December 2006

[100]The second part of the loss of income claim starts on the day that the café/restaurant business ceased and it ends on 31st December 2006. The claim is recoverable for these reasons:(1) Following the near capsize of the vessel and its apparently unsafe instability as demonstrated by the incident on 15 December 2005, it was reasonable for Arbi’n’Tap Ltd to commission a full stability investigation and for that process to take several months to be completed.

(2) Following the receipt of the commissioned report and based upon it, the decision was taken that the vessel required to be provided with ballast and a new system of waste disposal that did not involve large unballasted tanks located within the vessel, whether inter-connected or not. This was a reasonable decision, based as it was on the recommendation of a naval architect who had undertaken appropriate stability experiments and stability assessments before making that recommendation. a period of enforced closure would on any view have occurred whilst the vessel’s stability was achieved by the extensive repairs involved in carrying out a second stability experiment and providing ballast to the vessel and an alternative means of disposing of its waste.

(3) It was reasonable to delay taking these steps until August 2006 given the difficulties in ascertaining whether the vessel was unstable, difficulties arising solely out of a failure to provide an accurate statement of stability based on appropriate inclining experiments.

(4) That refitting took three months to be completed and the café/restaurant business had to be closed down in that period.

(5) Mrs Allen-Britten decided that Arbi’n’Tap Ltd’s business had to close since its poor trading and other delays and disruption caused by Mr Abels had left it in the situation in which it could not survive financially. This was a reasonable decision.

(6) There was no readily available market for selling the vessel, whether as a going concern or as it stood. a reasonable decision was taken to lease the vessel at a long lease and a market rent. This was finally achieved in 2008.

(7) A reasonable period was needed to enable a new tenant to be obtained and a new lease arranged following the completion of the fitting out works. That period was reasonably taken to be three months.

(8) The recoverable loss is, therefore, a six-month period after 6 August 2006 being the three-month fitting out period and a further three-month period whilst a new lease could have been arranged.

[101]The loss of income in that period has been calculated on the same basis as the loss of income in the first two periods of loss already dealt with save that the relevant period used as a starting point was 2005, the year preceding the loss in question. For the reasons now set out, this loss was established on the balance of probabilities by Mr Copson in the total sum of £36,836.00. (4). Cost of repairing so as to enable vessel to be put into a condition in which it is fit for its purpose as a floating café/restaurant moored in Bristol Harbour

[102]Arbi’n’Tap Ltd has listed out in the greatest of detail the specific items of repair, reinstatement or adjustment that resulted from Mr Abels’ breaches of contract supported by a series of inspection reports from both a surveyor and a marine architect and, for the relevant items, a kitchen equipment surveyor. These items of claim are supported by invoices, estimates and other documentation. Mr Abels has countered this evidence with no more than generalised assertions that Arbi’n’Tap Ltd got what they paid for and that he has made a most generous allowance for such defects as he admits, which are minimal compared to the total range of defects that his breaches actually caused. That allowance is, in reality, a token allowance. No other expert evidence was adduced and Mr Abels’ case at trial amounted to assertions that Arbi’n’Tap Ltd is not entitled to damages for any repair work not yet executed, that it has not satisfactorily proved the relevant reasonable cost of repair where repairs have actually been completed, that the complaints do not amount to breaches of contract and that Mrs Allen-Britten is a most unreasonable person who is attempting to recover at his expense a better quality vessel than she both bargained for and paid for.

[103]I have carefully considered the mass of detailed evidence adduced by Arbi’n’Tap Ltd to support its claims which is in the form of detailed oral and written evidence from Mr Britten, photographs, estimates, invoices, several survey reports, a detailed schedule and the more general but still highly relevant oral and written evidence from Mrs Allen-Britten. I am satisfied that each item of breach was established and the pleaded cost of repair, whether it be the actual or estimated cost, is reasonable. For the reasons already given, it follows that Arbi’n’Tap Ltd is entitled to recover the entirety of its loss established for these items of claim. F. What additional unpaid sums is Mr Abels entitled to recover?

[104]Since Mr Abels never completed the vessel, he is not entitled to recover any further sum since his remaining claim would only have been due and payable on completion. However, by way of a set off against the cost of repairs that he must now pay damages for, he may set off the balance of the contract sum unpaid, being £7,741.00 plus VAT and a further sum for unpaid extras. Having carefully considered the schedule of claimed extras, I accept Arbi’n’Tap Ltd’s admitted sum of £2,903 plus VAT for these extras.

G. Conclusion

[105]Arbi’n’Tap may recover the following:(1) Loss of profits: £37,268.00 plus £36,836.00;

(2) Cost of repairs and estimated cost of repairs: £41,132.00 plus £15,636.00 plus any recoverable VAT.

(3) Interest on these sums at an appropriate rate or rates from the date that business ceased which should be taken to be 6 August 2006.

[106]Mr Abels may set off against these sums the sum of £7,741.90 and £2,903.00 plus VAT. He is not entitled to interest on these sums because they never became due until he was able to set them off against damages otherwise recoverable from him.

[107]Account must be taken of any VAT payable on the damages and on the set off sums less any VAT that the parties have not incurred a liability to pay. HH Judge Thornton July 2009