Bohn v Vanuatu Maritime Authority [2001] VUSC 127; Civil Case 115 of 2000 (9 September 2001)

IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU
Civil Jurisdiction

CIVIL CASE NO. 115 of 2000

BETWEEN

ROBERT MURRAY BOHN trading as WESTERN
PACIFIC MARINE
Plaintiff

AND

VANUATU MARITIME AUTHORITY
of P.O. Box 320, Port Vila, VANUATU
Defendant

Coram. Chief Justice
Mr. Nigel for the Plaintiff
Mr. Hurley for the defendant

JUDGEMENT

The Plaintiff and the Defendant entered into a contractual agreement on the 31^st of May 1999. The written agreement was purposely for the salvage of M/V LIH PENG and M/V LAUDOREK. The two derelict vessels posed a threat to public health and safety, property, navigation, and the marine environment in the Port Vila harbor. Briefly, the plaintiff is to provide competent salvage crew and facilities for salvage work.

The total remuneration for salvage work under the agreement was VT27, 000,000. Half of the remuneration was paid up front.

The term of salvage operations was not to exceed 30 days from the commencement of the contractual agreement. The plaintiff sought to comply with the terms and conditions of the contract, however, found problems.

There was lack of competent qualified personal in Vanuatu. There was lack of equipment at the early stages of the contract. It is understood that such problems are to be solved by the plaintiff. The plaintiff formally sought a contract extension. The defendant did not reply.

There were lack of co-operation and increasing difficulties between the two parties. At last French divers were brought. They established a work program to competently raise the two vessels. Work was carried out competently. The Lih Peng salvage was completed. The Laudorek salvage was completed other than approximately 10% vessel in small pieces.

The defendant by then realized that the plaintiff failed to work within the time limit as specified in the contract, he then terminated the contract.

ISSUES

There were various issues that the court considered-

1. Was there ever any effective termination of the agreement?
   
2. What were the legal relations between the parties after the defendant’s letter of 21 December 1999 to the plaintiff?
   
3. Is the Plaintiff estopped by reason of-
   
   • (i) payment of VT27 million only entitled to be paid on full completion of works
     
   • (ii) time of the essence in the contract
     
4. Is the Plaintiff entitled to further payment under the agreement or on quantum merit from the defendant?
   

PLAINTIFF’S EVIDENCE

The plaintiff provided five witnesses. The first witness who is Mr. Bohn said he acquired his salvage business in about April 1999. The contract was made between himself and the defendant on the 31^st of May 1999. He said the terms of the contract were drawn between the defendant and Mr. Bernard. Mr. Bohn was involved with the financial side of the contract. Mr. Bernard was responsible of the day to day running of the contract.

Mr. Bohn sought to comply with the terms and conditions of the contract. He failed because he encountered problems. He said there were lack of qualified personal and equipment in Vanuatu at the early stages of the contract. By letter dated the 7^th of July he formally sought a contract extension. The defendant gave no response. Mr. Bohn then proceeded only on an implicit understanding.

Beyond the 30^th of September 1999, there was lack of co-operation and increasing difficulties between the parties. Mr. Bohn said the defendant gave a negative response to the entirely similar request of assistance in respect in bringing overseas divers. Mr. Bohn said he went to overseas in November and December. He left the final invoices with Mr. Bernard on departure in anticipation of completion. To that end, the French divers were present. They established the work program to competently raise the Lih Peng.

Mr. Bohn said there were explosions at the Laudorek site and she was being further broken into pieces. He said he did not envisage the delays caused by Roosens failure to confirm appropriate disposal site. He said he did not envisage the detention of the Kimbe, which was expected to assist with the final disposal. Mr. Bohn said he was stunned and unaccepting termination letter dated 21 December 1999 from Roosen. He wrote on the 28^th and 31 December 1999 to Roosen. Mr. Bohn put Roosen on notice that the salvaged vessels would be disposed off. He requested a formal observer from the defendant. Roosen was overseas. Roosen’s response came after the scuttling of the Lih Peng.

Mr. Bohn said he was also a member of the VMA board in that period. He complained of lack of minutes or agenda’s being circulated by Roosen. He said Roosen appeared to be acting in an obstructive manner towards him. He said he endeavored to establish a warm working relationship with Roosen. He claimed that Lih Peng salvage was completed. He said the Laudorek salvage was completed other than approximately 10% vessel in small pieces in shallow water.

The second witness is Mr. Daniel Oddi. He said he was well qualified in explosives and salvage. He said he found Bernard to be a professional supervisor to work for. He said he found the elements of expertise (explosions) well managed. He said he was involved in respect to the Laudorek in-

1. Cutting
2. First explosion to loosen from sand base
3. Further cutting
4. Second explosion to break into parts
5. Further cutting
6. Securing and attaching pieces to the stern of the Pertiwi in readiness for its removal to deepwater on the high tide.
   

He said between the 4^th and 6^th January he returned to work the next day and found out that pieces secured the previous day were gone. He said he did not travel to Pertiwi or release these pieces. He said he dived the sight of the buoy attached to the bow. He did not recognize that as part of the Laudorek. He saw small pieces of the Laudorek remaining in shallow water. He thought there were more pieces in shallow water that he remembered. He said he believed the contract work had been completed in a good and proper manner.

The third witness for the plaintiff is Mr. Anasa Rakawa. He said he came to Port Vila in about 1999 on Yacht Harmony. He rented a mooring. He dived and surveyed the harbour to find a free mooring. He located a vessel bow section. He said he put a marker on it. He said after explosions on the Laudorek he took up the mooring in early 2000. He said his marker had been moved but relocated the same bow section. He said there were other and new pieces of wreckage ‘nearby’ and in the general vicinity. He confirmed by evidence that whatever vessel it was it cannot be Laudorek. He said his bow mooring was clearly identified and the bow was videoed at 28m.

The fourth witness is Mr. Guy Bernard. He was the plaintiff’s project manager. Mr. Bohn relied on him to liaise with Mr. Roosen to advance the project. He said it was impossible task because they are different people. He said the contract was settled when Roosen was ‘fresh off the boat’. He said Roosen know little or nothing about the Vanuatu environment. He said the 30 days contractual period was entirely unrealistic when Noumea and international equipment vessels from Fletcher became immediately unavailable.

He said local divers were unrealistic and projects could only be completed with proper overseas expertise. He said there were alternatives to disposal sites, which were explored and promoted together with third parties. He said Roosen entirely changed the relationship between the parties in October when he demanded salvage plan with specifications according to international standards. Mr. Bernard said he complied with the request.

An important meeting was held on the 25^th of November with Roosen. He said a tour on the salvage side was completed. He said Roosen actively encouraged him to complete the salvages. He said the main discussions related to the disposal and whether Ifira’s land disposal site was acceptable. He said Roosen went away to liase with his board. He was left to complete the salvage pending those decisions.

He said there was suspension of Kimbe in mid December. The suspension was made and then lifted. The Kimbe had already been used on the Salvage project. The Kimbe had removed the house from the Laudorek to dry land. She was to remove the remaining pieces. It became impossible. There were no suitable vessels available to the Plaintiff.

He said the Lih Peng salvage was completed. He said the Laudorek salvage was completed other than 10% of vessel in shallow water. He said by 21 December 1999 the contract had moved to an entirely different basis from that of 31 May 1999 and particularly time was not of essence.

The last witness was Captain Paul Peter. He said he witnessed the scuttling of the Lih Peng. He said he did not see the disposal of the Laudorek because he was on leave on the New Year. He was in Port Vila for a couple of days after New Year. He said the Laudorek was disposed of between the 4^th and the 6^th of January 2000. He said he viewed the explosions and played and official role in their supervision. In his evidence he said the supervision was properly managed.

DEFENDANT'S EVIDENCE

The first witness for the defendants was Mr. Ian Lockley. He said if he was told his contract was expired he would either endeavour to re-negotiate it or he would continue ‘voluntarily’ and seek reward. He said it was not uncommon in the salvage industry for a contract to be completed in that manner.

He said he dived into unidentified bow section. It had a mast. The Laudorek did not have a mast. He said he saw the 10% of scattered pieces of the Laudorek remained in relatively shallow water. He went with other divers to locate the pieces of the Laudorek. He said nothing was located. He said the Pertiwi would have had difficulty moving 30 to 40 tons of salvage wreckage on her stern and within the time frames detailed in the logbook.

He said he did not captain any such vessel himself, only steered one in controlled conditions. He agreed in cross-examination that his information relative to his report was gained solely from defence persons. He said he made no contract with any of the actual salvage operators. He even agreed that-

(i) the pricing for the job was on the low side
(ii) the use of the local divers is unrealistic
(iii) it is not safe to do salvage work in conditions of heavy rain
(iv) good communication is an important asset in the salvage industry
(v) some of the delays in the project were at the behest of the defendant
(vi) The Lih Peng salvage job was complete
(vii) The Pertiwi 9 had the capacity to lift and move individual piece of salvage material up to 30 tons.

The second witness for the defendant is Mr. John Roosen. He said he was an employee in the VMA. He said Mr. Bernard was not co-operative nor responsive to direct questions in correspondence put by him on behalf of the VMA. Mr. Roosen said he lost confidence with the plaintiff’s ability to carry out the work because of-

(i) The lengthy delays
(ii) The ongoing excuses
(iii) Safety issues, including, the slipping of the Lih Peng with divers nearly and the flying piece of debris from the Laudorek
(iv) Lack of progress to carry out the contract at the time of the termination letter
(v) Doubts about the competency of those engaged on behalf of the plaintiff.

Mr. Roosen said his actions did not delay the plaintiff from carrying out their responsibilities in accordance with the contractual terms. He said he was never informed by anyone on behalf of the plaintiff to the timing of the explosions. He said he had to dispatch someone to keep an eye on the operations.

He further said he had the authority to enter into the contract. He said Kimbe was unauthorized to carry out activities relating to the salvage operations. Mr. Roosen said the contract had expired on 30^th of September 1999. He said no written requests were made for an extension of the contract in the post –30^th of September 1999 period. In his evidence he said he completely lost faith in the Plaintiff’s ability to ever carry out the salvage operations competently. He said there is no legal reason to prevent him to terminate the contract.

He said he wants to employ the overseas expert to complete the job which has been inaccurately advertised and at the Plaintiffs expense. He said the plaintiff has made the salvage of the Laudorek vessel far more difficult and more expensive than if the plaintiff had never commenced his activities.

The third witness for the defendant is Mr. Conroy. He said he saw a flying piece of debris of approximately 1 to 11/2 square meters from the detonation of the Laudoreck on 24 November 1999. He said he saw them flying from one side of Iririki Island to the other. He said his evidence is significant to an extent that it was one of the reasons, which influenced Mr. Roosen in loosing faith with the Plaintiffs ability to safely and competently carry out the salvage operations in accordance with the contractual terms.

He said he was also on board the ‘Jackpot’ vessel on 28 February 2002, when the echo sounder screen identified parts of a vessel in the Paray Bay area.

The fourth witness for the defendant is Mr. Peter Philips. He said he has dived in the Paray Bay area and identified the same ‘bow section’ of the Laudoreck. He said on the 11^th March 2002 he went with another diving instructor, Mr. Philips took underwater photographs. In one of the photographs he identified part of the vessel he had seen on the videotape.

Mr. Philip identified where he moored his dingy on 11 March 2002 at approximately yellow sticker ‘25’ on Exh D12 and then moved towards yellow stick ‘16’ on Exh D12, a distance of 100 metres or so.

Mr. Philips gave evidence that the reason why he was unable to take any underwater photographs when he dived from the ‘Jackpot’ vessel on 28 February 2002 was because the visibility was so poor.

The fifth witness is Mr. Denis Swan. He said the bow mooring for the vessel ‘Harmony was not the Laudoreck. He said the mooring was created before the Laudoreck was moved from its salvage site’ Mr. Swan said he witnessed two different explosions in relation to the Laudoreck vessel. He also saw the Kimbe vessel being used as a basis for cutting the welding work that was being undertaken to the Laudoreck. Mr. Swan said he also saw a line attached to the Pertiwi, which appeared to be dragging something into the inner harbor.

Mr. Swan estimates that he has seen approximately 25% to 30% of the bow section and other pieces of the Laudoreck which is still in the Paray Bay area.

The sixth witness was Mr. Supkit Poorahong. He gave evidence that the Noumea divers release wreckage into the inner harbour. He said that Guy Bernard was on the Pertiwi throughout the Laudorek dumping process. He said Mr. Guy Benard gave all instructions to the French divers from on board the Pertiwi. Mr. Poorahong said that the echo sounder on the Peertiwi was used to find deepwater in Paray Bay.

Mr. Poorahong said that Mr. Benard instructed him to make additional entries in the Pertiwi 9 logbook to falsify the position of the disposal of the Laudoreck. He said large pieces of the Laudoreck, which had been cut up on the Plaintiff’s behalf, were dumped in Paray Bay.

The last witness is Mr. Joel Moses. He said the Laudoreck had been pulled ‘close up to the Marine Wharf. He said he saw the ‘house ‘ of the Laudorek on or beside the Wharf.

FINDINGS

The Court took ample consideration of the facts and evidence brought by the parties. It is apparent and clear that both parties executed the contract on the 31^st of May 1999. The contract was specific in nature. It is specific because the term of salvage operations was not to exceed 30 days from the commencement of the Agreement. The plaintiff has in law, a duty to comply with the terms and conditions of the contract. This is regardless of unforeseeable weather conditions and difficulties that might suffice. The contract has, unfortunately, fail to clarify its terms in relation to such unforeseeable circumstances.

The local circumstances in Vanuatu are unique given its weak nature of technology and professionals. A high minded person may find it terrible and a lot of times, frustrating. Both parties felt the same. The defendant was frustrated because work was been done slowly. He wanted the plaintiff to comply with the terms of the contract. The plaintiff on the other hand were experiencing difficulties. Such difficulties were expressed in their evidence. Disregarding such difficulties by the plaintiff and the amount of work competently done the defendant terminated the contract.

The defendant has the right to terminate the contract. Thus, it is legally valid for the defendant to terminate the contract on the basis that the plaintiff did fail to comply with its term and conditions. The conditions that the salvage operations must not exceed 30 days. That the plaintiff must provide for competent salvage crew and facilities for salvage work. The defendant said work was not competently done.

From the evidence brought before this court, the plaintiff said work was competently done in that the salvage operation was carried out professionally. The defendant in his own official capacity terminated the contract.

The question is what circumstances hindered the plaintiff from fulfilling the terms and conditions of the contract?

The evidenced shows that the contract was settled when the defendant was ‘fresh off the boat’. The defendant knew little or nothing about the circumstances of Vanuatu. The term of 30 days was executed as a time limit for completion of the contract. The plaintiff experienced difficulties and problems. There was lack of competent qualified personal in Vanuatu. There was also lack of equipment at the early stages of the contract. Of course that is a personal matter for the plaintiff to administer, however such difficulties affected the very nature of the contract to which the defendant must consider positively the circumstances.

By letter dated 7^th of July 1999, the plaintiff sought a contract extension. The defendant failed to reply in such a difficult and cloudy situation. The plaintiff then proceeded on an implicit understanding. That is to say that the work continued. Overseas-qualified personals were brought in. The salvage of the two vessels was developed.

There was lack of co-operation and increasing difficulties between the parties. There were different personalities who ensured the survival of the contract. The defendant speaks English and the plaintiff speaks French. The defendant went overseas and stayed for two weeks. The communication was broken. The plaintiff wanted to advance the matter, however, they failed due to such constraint. The weather was bad for sometimes. This caused delay in the operation.

The Lih Peng salvage was completed competently by the plaintiff. The Laudorek was completed other than 10% of the vessel in shallow water. The contract had moved to an entirely different basis from that of 31 May 1999. Unfortunately, the defendant terminated the contract. He said the contractual term as to the time limit has not been complied with. The defendant said the work had not been carried out competently. The Plaintiff claimed that part of the work was competently completed. Thus, they are seeking redress in this respect.

APPLICATION OF LAW

1. QUANTUM MERUIT
   

A party may claim quantum meruit, the reasonable value of the work done. Where a party is injured by a breach of contract has, at the time when the breach occurs, done part, but not all, of that which he is bound to do under the contract, and is seeking to be recompensed for the value of what he has done. (Ansons Law of Contract, 24^th ed @ p555)

Suppose that by the terms of a contract A is to do a certain piece of work for B for a lump sum, payable on its completion. B repudiates the contract when A has done part of the work.

It is clear that if, for whatever reason, A fails to complete the work as stipulated he cannot demand any remuneration for it under the contract. But it would be most unjust if the law provided him with no remedy when his failure is due to B’s breach. In such a case, whatever the contract may say, if what A has done can be estimated at the money value, the law ought to give redress, and so it does- it says he may claim quantum meruit, the reasonable value of the work done. (Ansons Law of Contract, 24^th ed @ p555)

APPLICATION OF LAW TO THE FACTS

The contract was executed on the 31^st of May 1999. The term of Salvage operations is not to exceed 30 days from the commencement of the agreement. The defendant terminated the contract because the plaintiff failed to work within the time limit of 30 days. The defendant was lawfully entitled to terminate the contract. In his letter of 21 December 1999, he said the time for completion of the work has been exceeded and the contract has not been performed.

From the evidence adduced in court, the contract was partly performed. The work was competently done. The salvage of M/V Lih Peng was almost completed when the plaintiff received the letter of termination of contract.

In situations such as this, the question the court must ask is ‘what are the circumstances that leads to the failure of a contract being fully performed?

The plaintiff said he sought to comply with the terms and conditions of the contract. He said he encountered problems and difficulties. There were lack of competent qualified personal in Vanuatu. There were lack of equipment at the early stages of the contract. The plaintiff formally sought a contract extension by a letter dated 7^th July 1999. The defendant failed to make a response. The plaintiff by then proceeded on an implicit understanding.

Beyond the 30 of September 1999, there was an increasing difficulties with the parties. There was no co-operation between the plaintiff and the defendant. The plaintiff left to overseas on November and December. By then the French divers were already in Vanuatu. They established the work program to competently raise the Lih Peng. The contract had move to an entirely different basis from that of 31 May 1999.

From the evidence adduced in Court, the Lih Peng salvage was completed. The Laudorek salvage was completed other than 10% of vessel in shallow water.

The plaintiff cited the case of Reardon Smith Line Ltd v. Yngvar Hansen – Tangan 1976 1 WLR 989, Lord Wilberforce explained that, when constructing a contract, the Court must ‘place itself in thought in the same factual matrix as that in which the parties were when the contract was made. Therefore, notwithstanding the parole evidence rule, the Court is able to receive evidence of the circumstances surrounding the contract, and the aim, object or commercial purpose of the contract on the basis that it forms part of the factual matrix against which the parties contracted.

The defendant rejected the above case. The defendant said the case is not helpful to the Court. The defendant said the terms of the contract dated 31 May 1999 are express and clear. They alleged that it is clear by the evidence that the first extension to the contract expired on 30 September 1999 and thereafter the plaintiff assumed the role of a volunteer salvor in relation to the expired contract.

The Court accepts the plaintiff’s case on the basis that the Court must place itself in thought in the same factual matrix as that in which the parties were when the contract was made. Notwithstanding the parole evidence rule, the Court is able to receive evidence of the circumstances surrounding the contract, and the aim, object or commercial purpose of the contract...

The circumstances surrounding the contract are clearly stated above. The Court takes note of the circumstances.

The Court is mindful of the fact that the salvage of the two vessels was competently done in part. The law is clear to that effect that it must give redress to parties who seek refuge for the hard work done when the contract was terminated.

In such a case, whatever the contract may say, if what a party has done can be estimated at a money value, the law ought to give him some redress, and it does- It says that he may claim quantum meruit, the reasonable value of the work done.

The issue is whether the plaintiff’s work can be estimated in money value. The Court says yes. Having considered the circumstances surrounding the case, the salvage of Lih Peng was completed. The Laudorek was completed other than approximately 10% vessel in small pieces in shallow water. Overseas professionals did the operation.

The Court upheld the orders made on the 9^th of September 2001.