Austen & Anor v Pearl Motor Yachts Ltd

Where a contractual specification has been breached, the claimant must establish causation on the balance of probabilities. The relevant question may be whether the same damage would have occurred if the goods had complied with the specification. A comparison between the actual condition and the specified condition must be based on the evidence of the forces and circumstances causing the damage. Greater theoretical strength does not itself prove that compliant goods would have avoided the damage. Expert evidence, physical damage, flooding rates and the sequence of events may together establish that compliant goods would probably have performed differently.

The claimants owned a motor yacht built and sold by the defendant. During a grounding, the hull was breached near a P-bracket and the yacht suffered extensive damage and flooding.

The defendant admitted that the hull laminate around the P-bracket recess had been constructed at approximately 7mm rather than the contractually specified 20mm thickness. It argued that the breach caused no loss because the same damage would have occurred even with a compliant hull. The claimants also pleaded an alternative claim under Sale of Goods Act 1979, section 14. The central issue was whether the same damage would probably have occurred had the yacht complied with the contractual specification.

1. Claim succeeded. The defendant’s admission that the hull laminate breached the contractual specification established breach, but the claimants still had to prove that the breach caused their loss.
2. The burden was on the claimants to establish, on the balance of probabilities, that the same damage would not have occurred if the hull laminate had been constructed to the specified 20mm thickness.
3. The court rejected the submission that the relative strength figures alone resolved causation. The as-designed laminate was calculated to be substantially stronger than the as-built laminate, but that did not show that it would have withstood the grounding. If the grounding forces exceeded the failure strength of the compliant laminate, the breach would have made no difference.
4. The relevant evidence included the deformation of the propeller shaft, the size and development of the initial crack, the absence of obliteration of the recess, the calculated water-flow rates, the practical capacity of the bilge pumps and the time taken for the yacht to reach its maximum heel. The general descriptions of the grounding were of limited assistance because the location, magnitude and direction of grounding forces could not reliably be estimated from them alone.
5. The court preferred the evidence of Mr Humphries where it was supported by the detailed calculations. The evidence indicated that the initial crack was no more than approximately six inches and that the relevant vertical force was probably about 7.7kN, or at least substantially below 40.5kN. The flooding sequence was consistent with progressive rather than catastrophic flooding.
6. On the balance of probabilities, a compliant 20mm hull laminate would not have fractured so as to permit the ingress of water. It was therefore unnecessary to decide the alternative section 14 claim. Quantum was agreed, and the parties were invited to agree the consequential order and costs.