Charter Boat Owner Not Liable for Negligence Due to Anchor Mechanism

The Court dismissed the appeal, affirming the lower court's ruling that the boat was reasonably fit for the purpose of a leisure cruise despite the anchor mechanism's propensity to kink. The Court held that the respondents were not required to take additional precautions and that the claimant was aware of the risks involved.

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: [NAME] v [NAME] [2023] NSWCA 255 Hearing dates: 3 November 2022 Date of orders: 26 October 2023 Decision date: 26 October 2023 Before: Meagher JA; Mitchelmore JA; [NAME] Decision: (1) Appeal dismissed. (2) Cross-appeal dismissed. (3) The [NAME] are to pay the respondents' costs. Catchwords: NEGLIGENCE — Breach — Where first appellant injured hand in electric anchoring mechanism of boat — Whether owners of boat failed to take reasonable precautions such as installation of chain stripper and extension of spurling pipe — Whether warning needed to be given about use of anchor mechanism NEGLIGENCE — Causation — Failure to warn — Whether first appellant would have chartered boat if warning had been given APPEALS — Where claim abandoned by counsel at conclusion of trial — Whether claim can be reagitated on appeal CONSUMER LAW — Consumer guarantees — Where first appellant's purpose in chartering boat was to partake in leisure cruise — Whether services reasonably fit for purpose Legislation Cited: Civil Liability Act 2002 (NSW), ss 5B, 5C, 5M Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law, ss 61, 267(4) Supreme Court Act 1970 (NSW), ss 75A, 101(1)(a) Cases Cited: Blue Op Partner Pty Ltd v De Roma [2023] NSWCA 161 Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA 33 [NAME] v [COMPANY]; Massoud v Fox Sports Australia Pty Ltd (2022) 109 NSWLR 468; [2022] NSWCA 150 Menz v Wagga Wagga Show Society Inc (2020) 103 NSWLR 103; [2020] NSWCA 65 Roads and Traffic Authority of New South Wales v Dederer (2007) 234 CLR 330; [2007] HCA 42 Tapp v Australian Bushmen's Campdraft & Rodeo Association Limited (2022) 273 CLR 454; [2022] HCA 11 Uniting Church in Australia Property Trust (NSW) v [NAME]; Miller v Lithgow City Council (2015) 91 NSWLR 752; [2015] NSWCA 320 University of [NAME] v [NAME] (No 2) [1985] HCA 28; (1985) 59 ALJR 481 Texts Cited: Nil Category: Principal judgment Parties: [NAME] (First appellant) [COMPANY] (Second appellant) [NAME] (First respondent) [NAME] (Second respondent) [COMPANY] (Third respondent) Representation: Counsel: [redacted] J Turnbull SC and [NAME] (Respondents)

Solicitors: [redacted] [NAME] (Respondents) File Number(s): 2022/35553 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court Jurisdiction: Common Law Citation: [2022] NSWSC 20 Date of Decision: 28 January 2022 Before: Cavanagh J File Number(s): 2018/23640

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE [This headnote is not to be read as part of the judgment] The first appellant, [NAME], seriously injured his left hand when it became caught in the electric anchoring mechanism of a boat. He had chartered the boat through the [COMPANY] for the purpose of cruising around Pittwater over the Australia Day long weekend. The [NAME] were the owners of that boat. [NAME] alleged that the respondents were negligent by failing to take reasonable precautions, including the installation of a chain stripper and extension of the spurling pipe, and by failing to warn him of the risks associated with use of the anchor. He further alleged that the respondents had failed to comply with statutory guarantees owed under ss 60 and 61 of the Australian Consumer Law (ACL). The second appellant, [COMPANY], claimed damages for loss of income consequent upon [NAME]' injury. Each of the [NAME]' claims was rejected. The primary judge found that the respondents were not required to take any further precautions in circumstances where the anchor had previously been used without incident and where there was no recommendation made by repairers or maintenance persons that such precautions be taken. It was relevant that, contrary to [NAME]' evidence, the primary judge held that his hand had been pulled into the anchor after accidentally standing on the deck-mounted "up" switch. In relation to the failure to warn case, [NAME] had been aware of the risks associated with use of the anchor prior to the accident occurring. The primary judge did not substantively consider the claims under the ACL because of concessions made by counsel in closing oral submissions. The principal issues in the appeal are: (i) whether the respondents breached their duty by failing to take reasonable precautions, namely, the installation of a chain stripper and extension of the spurling pipe; (ii) whether the respondents breached their duty by failing to warn [NAME] of risks associated with use of the anchor prior to his departing on the boat; and (iii) whether the [NAME] should be permitted to revive an abandoned claim that the respondents breached the statutory guarantee owed to [NAME] under s 61(1) of the ACL. [ADDRESS] (Meagher JA, Mitchelmore JA and [NAME]) dismissed the appeal, holding: As to issue (i) (1) The precautions that a reasonable person would have taken in response to the relevant risk of harm, being the risk that a person might trap their hand whilst attempting to unjam the anchor chain, did not extend to the installation of a chain stripper or extended spurling pipe. The respondents were entitled to rely on the absence over time of any prior incident, the absence of any recommendations by repairers who had inspected the vessel, and the precautions they had already taken in forming a view that further safeguards were not required: [17]-[37]. Roads and Traffic Roads and Traffic Authority of New South Wales v Dederer (2007) 234 CLR 330; [2007] HCA 42; Uniting Church in Australia Property Trust (NSW) v [NAME]; Miller v Lithgow City Council (2015) 91 NSWLR 752; [2015] NSWCA 320; Tapp v Australian Bushmen's Campdraft & Rodeo Association Limited (2022) 273 CLR 454; [2022] HCA 11; Menz v Wagga Wagga Show Society Inc (2020) 103 NSWLR 103; [2020] NSWCA 65; Blue Op Partner Pty Ltd v De Roma [2023] NSWCA 161, referred to. As to issue (ii) (2) The [NAME] failed to establish why the duty to warn [NAME] of the propensity of the anchor chain to kink arose prior to the charter as opposed to prior to the time of the incident. Even accepting the premise of that submission, the evidence did not support a conclusion that [NAME] would not have chartered the boat had he known about any such propensity of the anchor chain: [38]-[52]. As to issue (iii) (3) The [NAME] accepted that the primary judge correctly understood the claim under s 61 of the ACL to have been abandoned. In circumstances where counsel made a strategic decision at trial to abandon that claim, and noting the importance accorded to the finality of litigation, the [NAME] should not be permitted to reagitate that claim under the ACL on appeal: [55]-[58]. University of [NAME] v [NAME] (No 2) [1985] HCA 28; (1985) 59 ALJR 481; Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA 33, referred to. (4) Even if the [NAME] were permitted to reagitate their claim under the ACL on appeal, that claim would fail. The fact that the anchor did not work precisely as intended did not mean that the boat was not reasonably fit for [NAME]' purpose in chartering it. Contrary to the [NAME]' submission, the primary judge made no finding that [NAME] presented to the respondents as somebody who was inexperienced in boating, nor did the evidence support that contention: [53]-[54], [59]-[63].

JUDGMENT 1. THE COURT: On 24 January 2015, the first appellant, [NAME], suffered serious injuries to his left hand when it became entangled in the electric anchor chain lowering and raising mechanism of a boat, the "[NAME]", which he had chartered the previous day. [NAME] claimed damages for negligence of, and for failure to comply with statutory guarantees by, the [NAME], the owners of [NAME], and the third respondent, their agent in chartering [NAME]. The second appellant, [COMPANY] ([NAME]), of which [NAME] and his wife are directors, claimed damages for economic loss consequent upon [NAME]' injury.

2. The [NAME] were wholly unsuccessful at first instance ([NAME] v [NAME] (No 3) [2022] NSWSC 20). The primary judge, Cavanagh J, contingently assessed damages for [NAME] in the sum of $622,000 and for [NAME] in the sum of $40,000.

3. By notice of appeal filed 14 April 2022, [NAME] and [NAME] appeal from those orders. The first four grounds of appeal challenge the primary judge's findings that the respondents were not negligent in failing to take precautions to prevent the anchor chain from kinking or in failing to warn [NAME] about that chain's propensity to kink. The remaining grounds are directed to an alleged failure to comply with the statutory guarantee in s 61 of the Australian Consumer Law (ACL). The respondents cross-appeal against the primary judge's notional assessment of damages and seek that it be reduced to $284,000 for [NAME] and to nil for [NAME]. 4. [NAME]' appeal and the respondents' cross-appeal against the contingent assessment of damages are as of right (Supreme Court Act 1970 (NSW), s 101(1)(a)). [NAME]'s claim (and the respondents' cross-appeal to the extent that they challenge the assessment of damages for [NAME]) arises from the same factual substratum as [NAME]' claim. In such circumstances "it is to say the least arguable" that leave is not required ([NAME] v [COMPANY]; Massoud v Fox Sports Australia Pty Ltd (2022) 109 NSWLR 468; [2022] NSWCA 150 at [31] ([NAME], Mitchelmore JA and [NAME] agreeing)). In any event, no party has disputed another's entitlement to appeal.

5. For the reasons that follow we would grant [NAME] leave to appeal if necessary and dismiss the appeal brought by [NAME] and [NAME]. It follows that the respondents' cross-appeal does not arise for consideration.

Factual background 1. [NAME] is a founding member and lead guitarist of the well-known band INXS, which experienced significant popularity and success in Australia between about 1977 and 1997.

2. In January 2015, [NAME], through the third respondent, arranged to charter [NAME] for the purpose of cruising around Pittwater with his wife over the Australia Day long weekend.

3. The [NAME] have owned [NAME] since April 1992. For many years they have made it available for charter through their agent, the third respondent. 4. [NAME] is equipped with an electric anchoring system, an image of which is provided below:

1. The electric anchoring system operates on a motorised winch, or windlass, over which the anchor chain moves. The anchor is raised and lowered by the windlass. On the right side of the windlass is attached the circular "[NAME]", which as it turns meshes with the links of the anchor chain thereby raising or lowering it. When the anchor is being raised, the chain passes over the front of the boat (the "bowsprit") and over the [NAME]. It then feeds downwards through a hollow tube called the "spurling pipe" and under the deck where it is stowed. The power to the winch is activated by two deck-mounted, foot-operated switches, one to lower the anchor (marked with a "down" arrow) and one to raise it (marked with an "up" arrow). The placement of those switches on the deck allows the user to raise or lower the anchor by compressing the switch with their foot. Each switch has a hinged protective cap, which must be lifted in order to turn the switch on.

2. The anchor is also capable of being raised and lowered manually. That is relevant because, at the time of [NAME]' chartering [NAME], the anchor chain had a propensity to "kink" or "jam" as it travelled over the [NAME] and down through the spurling pipe. The effect of that kinking was to trip the circuit breakers and disconnect the electric motor from its power source. The kinking appears to have occurred because, when the anchor was being raised, as the chain travelled over the [NAME] it did not then feed vertically into the spurling pipe but instead struck the lip of the spurling pipe at an angle that prevented the smooth flow of the chain through that pipe and into the deck below. This would at times cause the chain to bunch below the [NAME], jamming the mechanism.

3. On 23 January 2015, prior to taking out [NAME] was given an induction about certain features of the boat by [NAME], a director of the third respondent. 4. [NAME] departed on [NAME] at about 2:30 pm that same day. Only he and his wife were on board. That evening he moored the boat at a public marina, making it unnecessary to use the anchor.

5. The following day, being 24 January 2015, the couple boated to Akuna Bay. [NAME] was unable to find a mooring and attempted to drop anchor. He experienced difficulties due to the propensity of the anchor chain to kink or jam as described above. At one point the electric motor stopped because of the tripping of the circuit breaker. [NAME] sought assistance by telephone from [NAME] and was told how to reset the circuit breaker. He then did so. 6. [NAME] then decided to raise the anchor and move the boat closer to the marina at Akuna Bay. Having lifted the protective cap, he activated the power by stepping on the "up" switch but continued to experience difficulties in raising the anchor. In the process of attempting to unkink the chain and ensure that it ran smoothly into the spurling pipe and deck below, [NAME], facing the bow of the vessel, placed his left hand on the chain at a position between the [NAME] and bow (J[156]). The power unexpectedly activated and the windlass pulled the chain towards and across the [NAME], raising the anchor. [NAME]' left hand was still holding the chain, and it was pulled into the [NAME], severing his left ring finger.

7. Initially, it was [NAME]' case that the anchoring system had malfunctioned; that the malfunction had caused the anchor chain spontaneously and unexpectedly to begin moving; and that as a result [NAME]' hand was pulled "up" and into the [NAME] (i.e., from below the [NAME] as might occur if the chain was being let out and the anchor lowered) (J[29]). There were significant inconsistencies in his evidence. The primary judge ultimately rejected his version of events and found that the power had activated because [NAME] had accidentally trodden on the deck-mounted "up" switch, and that as a result his left hand had been pulled back into the [NAME] (i.e., from in front of the [NAME]) (J[120]). There is no challenge in this Court to any of the primary judge's factual findings.

Grounds 1 and 2 (failure to take reasonable precautions)

1. It is uncontroversial that each respondent owed [NAME] a duty of care. The thrust of appeal ground 1 is that the primary judge ought to have found that the respondents breached that duty by failing to take reasonable precautions against the risk that the anchor chain would kink or jam. Those precautions were the installation of a chain stripper and extension of the spurling pipe so as to guide the chain over the [NAME] and into the spurling pipe. By appeal ground 2 it is submitted that, if there were such a failure to take reasonable precautions, that breach was causative of [NAME]' injuries.

Identification of the risk of harm 1. It is convenient at this point to set out ss 5B and 5C of the Civil Liability Act 2002 (NSW) (CLA), which relevantly provide: 5B General principles (1) A person is not negligent in failing to take precautions against a risk of harm unless— (a) the risk was foreseeable (that is, it is a risk of which the person knew or ought to have known), and (b) the risk was not insignificant, and (c) in the circumstances, a reasonable person in the person's position would have taken those precautions. (2) In determining whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the following (amongst other relevant things)— (a) the probability that the harm would occur if care were not taken, (b) the likely seriousness of the harm, (c) the burden of taking precautions to avoid the risk of harm, (d) the social utility of the activity that creates the risk of harm. 5C Other principles In proceedings relating to liability for negligence— (a) the burden of taking precautions to avoid a risk of harm includes the burden of taking precautions to avoid similar risks of harm for which the person may be responsible, and (b) the fact that a risk of harm could have been avoided by doing something in a different way does not of itself give rise to or affect liability for the way in which the thing was done, and (c) the subsequent taking of action that would (had the action been taken earlier) have avoided a risk of harm does not of itself give rise to or affect liability in respect of the risk and does not of itself constitute an admission of liability in connection with the risk.

1. The identification of the risk of harm informs the nature and extent of precautions that the respondents ought reasonably to have taken in response to that risk (Roads and Traffic Authority of New South Wales v Dederer (2007) 234 CLR 330; [2007] HCA 42 at [59]). The risk should not be confined to the precise circumstances giving rise to [NAME]' injury, although it should be capable of encompassing those circumstances (Uniting Church in Australia Property Trust (NSW) v [NAME]; Miller v Lithgow City Council (2015) 91 NSWLR 752; [2015] NSWCA 320 at [118] ([NAME] and [NAME] agreeing)). Similar considerations apply when characterising the relevant risk of harm in the context of the "obvious risk" provisions of the CLA, as to which see Tapp v Australian Bushmen's Campdraft & Rodeo Association Limited (2022) 273 CLR 454; [2022] HCA 11 at [110]-[116]; Menz v Wagga Wagga Show Society Inc (2020) 103 NSWLR 103; [2020] NSWCA 65 at [70]-[72]; Blue Op Partner Pty Ltd v De Roma [2023] NSWCA 161 at [46].

2. At trial, the [NAME] identified the relevant risk of harm as being: "… that a person, such as [[NAME]], might trap their hand in the unguarded windlass while attempting to free the rusted anchor chain that had kinked, jammed or bunched" (ASOC [7(a)])

1. The respondents initially accepted that formulation. However, at the end of the trial they resiled from that position and contended for a narrower characterisation of the risk, namely, "that [[NAME]] might injure his hand by holding onto the chain and stepping on the deck button" (J[143]). They submit that this change in position was necessitated by the "dramatic change" in [NAME]' evidence as to the circumstances leading to his injuries (see [16] above).

2. It is evident that the [NAME]' formulation of that risk focused upon the condition of the chain and whether the anchor mechanism operated smoothly, whereas the respondents' formulation necessarily directed attention to [NAME]' own conduct in accidentally stepping on the deck-mounted switch whilst his hand was near the [NAME]. In that sense, as the primary judge observed at J[143], the two formulations of the risk of harm reflected the parties' differing views on the cause of [NAME]' injuries.

3. The primary judge adopted the plaintiffs' "broader" formulation of the risk of harm because it was capable of encompassing "a number of ways in which a person could hurt him/herself in the circumstances which arose, not all of which would involve the activation of the deck switch" (J[146]). That conclusion is not at issue in the appeal.

Was there a failure to take reasonable precautions? 1. The [NAME] pleaded no fewer than 22 precautions that they said ought to have been, but were not, taken by the respondents. The primary judge found that only two of those precautions, being the installation of a chain stripper and extension of the spurling pipe, were capable of being "causally relevant" to [NAME]' injuries (J[232]). The [NAME] do not contend on appeal that [NAME] erred in rejecting the other particularised precautions.

2. As explained above at [11], [NAME]'s anchor chain had a propensity to kink between the [NAME] and the entrance to the spurling pipe, preventing the smooth operation of the electric anchor mechanism. That kinking was caused by the chain striking the rim of the spurling pipe, rather than travelling down the middle of the pipe. That propensity, and the effect of adding a chain stripper, was subject to expert evidence and was summarised by the primary judge as follows: [208] I accept that both the chain stripper and additional spurling pipe could have been installed prior to the accident. [209] The installation of this additional componentry would have reduced the risk of the chain kinking or jamming because the chain would have fed more smoothly from the [NAME] into the deck below. [210] As [NAME] explained, the bunching occurs because, as the chain is pulled out of the [NAME] by gravity, the angle that it falls does not quite neatly bring it into the centre of the spurling pipe hole. [211] As it falls it is slightly offset to the spurling pipe, such that individual chain links could hit the side of the spurling pipe hole and bounce back up underneath the [NAME] and they would jam. The addition of a chain stripper would act as a guide to the chain, such that it would guide the chain links down the middle of the spurling pipe, such that it would assist in preventing jamming.

1. The primary judge therefore accepted that the respondents' taking of those precautions would have prevented the chain from kinking or jamming. The evidence was that these components were relatively inexpensive — in August 2015, the cost of a chain stripper was $332.50. [NAME] also found that the first respondent was "aware of the potential for the chain to kink as it was being pulled in" at the time of the incident (J[158]).

2. Despite those findings, [NAME] was not satisfied that the risk of harm, examined prospectively, was such as to require the respondents to take those precautions in discharge of their duty of care. While the risk of harm was foreseeable and not insignificant, the probability that harm would occur if the relevant precautions were not taken was low (J[231]-[232]).

3. Of significance to that finding was the absence of any prior complaint about or incident involving the anchor, and the fact that it had never been recommended to the respondents that those additional components be installed. [NAME] relevantly observed: [229] On the [[NAME]'] case the first and second [respondents] should have modified the winch system which had been on the boat for over 20 years, apparently without incident or complaint, so as to add a new component not ever recommended by any repairer or maintenance person or included by the [NAME] to avoid a risk which was on the evidence low and could only arise if the operator did what he or she was warned in the manual not to do, being to take a hold of the chain whilst it was operating under power. [230] In my view a reasonable person in the first and second [respondents'] position would not have taken that precaution. Manually pulling on an anchor chain may involve some risk but that is a risk faced by boat owners on a daily basis. This anchor system operated under power. Provided that the power was off there was no more danger in touching the anchor chain than in any other boat.

1. The [NAME] contend that [NAME] erred in placing weight on those considerations. They submit that the fact the anchor had been used by charterers for over 20 years without apparent complaint was of little probative value in circumstances where there was no evidence about how long the "defect" had existed in the anchor mechanism and where the majority of charterers would have used moorings in preference to anchoring. They further submit that the absence of any recommendations as to the installation of a chain stripper or extended spurling pipe was immaterial because there was no evidence that the respondents had brought the anchor chain's propensity to kink to the attention of a repairer or maintenance person. Nor, the [NAME] contend, was it material that the [NAME] had not included a chain stripper or additional spurling pipe. What was relevant was not whether the boat was defective at the time of manufacture, but rather whether the anchor mechanism was defective at the time [NAME] chartered the boat.

2. Those submissions overlook evidence given by the first respondent that [NAME], including the anchor mechanism, had been routinely surveyed since he purchased it in 1992. A major service had been carried out by the [NAME] of the winch, [NAME], in 2013. It was the first respondent's understanding that the winch complied with [NAME]'s recommendations; and he had never been advised to the contrary. Moreover, in December 2012, a risk evaluation of [NAME] had been undertaken for insurance purposes, which involved assessment of the quality of all the mechanics on the boat including the winch mechanism. The evaluation was in evidence and commented that the "[NAME]" were in good condition.

3. The respondents were entitled to rely on the absence of any recommendation by any of those persons who had inspected or serviced [NAME] for any adjustment to the anchor mechanism.

4. Finally, the [NAME] attack the finding that [NAME] acted contrary to an express warning in [NAME]'s safety manual to keep clear of the windlass when it was operating. That warning was in the following terms: "Always keep well clear of the windlass when releasing or retrieving chain and anchor. Keep fingers, hair and clothing well clear when the windlass is in operation."

1. The [NAME] argue, contrary to fact, that it was impossible for [NAME] to comply with this direction because "it was necessary for him as a direct result of the defect to manually handle the anchor chain while in the process of retrieving the anchor". That was not so. It was entirely possible for [NAME] to comply with that direction by only adjusting the anchor chain when the windlass was not "in operation". The reason why the windlass was in operation at the time of the incident was [NAME]' unintended action in stepping on the deck-mounted switch whilst its protective cap was lifted.

2. Equally unpersuasive is the [NAME]' submission that the respondents would not have included the warning about keeping clear of the windlass if they had considered that the probability that harm would be suffered was low. The (prudent) decision of the respondents to include such a warning had no necessary bearing on the probability that harm might otherwise occur.

3. For completeness, in the exercise of this Court's function under s 75A of the Supreme Court Act, we have reached the same conclusion as the primary judge. It may be accepted, as the primary judge did accept, that the propensity of the chain to kink created a risk that a charterer, in attempting to free the chain, might suffer some injury. However, provided any contact with the chain was made while the power was off, that risk was low to the point of being insignificant. The precautions that a reasonable person would have taken against the materialisation of harm from a risk of injury due to an attempt to untangle the chain while the power was on included the provision of safety caps on the deck switches and cautioning the [NAME] to keep hands and the like well clear of the windlass when it was in operation. Both of these precautions were taken.

4. The precautions that a reasonable person would, in the circumstances, have taken did not also extend to the installation of an extension to the spurling pipe, or the installation of a chain stripper.

5. None of the complaints made by the [NAME] in support of ground 1 is sustained. That ground must be dismissed. Ground 2, which is concerned with causation, does not then arise.

Grounds 3 and 4 (failure to warn)

1. The second aspect of the [NAME]' claim was that the respondents had been negligent because [NAME] had failed to instruct, warn, inform and induct [NAME] as to the features of [NAME], including the risks associated with use of the electric anchoring system.

2. It was common ground that [NAME] had given [NAME] an induction prior to his departing on [NAME] on 23 January 2015. [NAME] and [NAME] had different recollections of the content of that induction. Those differences were generally unresolved by the primary judge, though [NAME] did accept that [NAME] provided no instructions about how to deal with any kinking or jamming of the anchor chain (J[169]).

3. The reason why the primary judge made no findings about the precise circumstances of the induction was because [NAME] was satisfied that, regardless of whether [NAME] was required to warn [NAME] about the kinking of the anchor during the induction, any failure on his part to do so was not causative of [NAME]' injuries. [NAME] considered that before the incident [NAME] was aware, by reason of his telephone conversation with [NAME] about resetting the circuit breakers, the contents of [NAME]'s safety manual or otherwise through his own experience, that the anchor chain had a propensity to kink and that he should not manually adjust the chain with his hands while the electric motor was running. Relevant to that finding was that [NAME]' initial written evidence had been that he had moved to the left side of the winch before the incident happened for the specific reason that he "did not want to accidentally activate the deck buttons as [he] attempted to free the chain" (J[172]). While the primary judge did not accept that [NAME] had moved to the left side of the boat as described in that statement, [NAME] did find that [NAME] appreciated that there was a risk that he could accidentally activate the motor which lifted the anchor.

4. The [NAME]' written submissions accept that [NAME] was aware "by the time of the accident of the matters [of] which he should have been informed" prior to chartering [NAME]. However, they submit that the primary judge erred in failing to consider the narrower question whether [NAME] was aware of those defects "at the time of the hire". The premise of that submission is that [NAME] would not have chartered [NAME] had he been made aware of the propensity of the anchor to kink prior to the charter.

Accordingly, it is said on this alternative basis that the failure to warn was causative of [NAME]' injuries.

5. That was not the [NAME]' case on causation as run at trial, the thrust of which was summarised in their closing written submissions as follows:

39. The plaintiffs contend that causation is comfortably satisfied. If the defendants had taken the precautions alleged, the chain would not have jammed in the first instance, the [NAME] would not have freewheeled out and/or [NAME] would have been provided with tools and advice as to how to clear the fouled anchor chain without placing his left hand in the vicinity of the anchor chain or winch. (Emphasis added.)

1. Nor is it readily apparent why the respondents' obligation—assuming there was such an obligation—to warn [NAME] about the kinking of the anchor chain needed to be discharged during [NAME]'s induction as opposed to at any time prior to the accident occurring. That [NAME] might have responded to such a warning by refusing to charter [NAME] bears no necessary connection to the question whether the respondents discharged their duty of care by warning him of that risk. The primary judge's findings as to liability were not based on a conclusion that the respondents owed no duty of care to [NAME] because they gave him a "risk warning" within the meaning of CLA, s 5M, noting that, under subs (3), such a warning would have been required prior to [NAME] engaging in the relevant recreational activity.

2. Even accepting the [NAME]' submission as to the nature of the relevant causation inquiry, it is not apparent that [NAME] would not have proceeded with the charter, if warned sufficiently in advance of the propensity of the anchor chain to kink. The matters relied upon are as follows.

3. First, it is said that [NAME] had little experience in boats. That may be true. By reference to [NAME]' evidentiary statements the primary judge found at J[13] that he "presented as a person with little experience in boats". That is in contrast to [NAME]' response to a question addressed to that subject in the pro-forma charter contract that his experience was "extensive!" and the result of his previous ownership of "many boats". What is in fact the position is immaterial. What is material is that, on chartering [NAME] presented himself to the respondents, truthfully or otherwise, as a person who was experienced with boats. It is not likely that such a person would have refused to accept the boat as satisfactory because of potential, but relatively minor, problems in the anchor system which could be resolved with care and minimal effort.

4. That [NAME] presented himself as such was also consistent with [NAME]'s evidence that about fifteen years earlier he had hired a yacht to [NAME] which was of a similar size to [NAME] and possessed a similar anchor winch system. [NAME] recalled that hire because "his involvement with INXS was mentioned by some of my staff". That evidence was not challenged in cross-examination.

5. The second factor said to support the conclusion that [NAME] would not have proceeded with the charter was that the purpose of the charter was for a relaxing leisure cruise to celebrate his wedding anniversary. This consideration did not in our view make it more likely that [NAME] would not have proceeded with the charter. The potential problem with the anchor chain was one which could be dealt with without much difficulty on a leisure cruise on which [NAME] was also to be the navigator and only active sailor on the vessel.

6. The third factor said to point to the same conclusion was that: "It is a matter of common knowledge that the effective operation of the anchor system in a boat hired especially for overnight charter is a matter which is important to a relaxing experience."

1. There was no evidence of this so-called matter of common experience. There was evidence of [NAME] that charterers were discouraged from using the anchor, not because of problems with its mechanics, but because of the potential for the anchor to "drag" along the seabed. This third factor is not an obvious one and accordingly is not made good in the absence of evidence.

2. The fourth factor said to point to the conclusion was that the charter was over a long weekend, when moorings might be more difficult to obtain, making it more likely that it would be necessary to use the anchor. That may be so, but it remains the case that [NAME]' evidence was that he intended to use moorings rather than the anchor. In any event, he was evidently intent on proceeding with the charter and the cruise. The possibility of having to use the anchor, even if warned of some minor difficulty, was not likely to have deterred him.

3. Another factor, not raised in the submissions, concerns the content of the warning that the [NAME] claimed should have been given. That warning was confined to one which communicated the asserted fact that the anchor system "operated defectively" and a statement as to the nature of the defect. The "defect" was the propensity of the chain to kink or jam when the anchor was being raised or lowered. It may be speculated that, had such a warning been given, [NAME] would have gone on to explain how to deal with the problem — by turning off the power, and manually freeing the chain of kinking.

4. We are not satisfied that, had [NAME] been given the warning he says he should have been given, he would not have proceeded with the charter. None of the arguments advanced in support of grounds 3 and 4 is made out. It follows that those grounds are rejected.

Grounds 5 and 6 (failure to comply with statutory guarantee)

1. Section 61 of the ACL provides as follows: 61 Guarantees as to fitness for a particular purpose etc. (1) If: (a) a person (the supplier) supplies, in trade or commerce, services to a consumer; and (b) the consumer, expressly or by implication, makes known to the supplier any particular purpose for which the services are being acquired by the consumer; there is a guarantee that the services, and any product resulting from the services, will be reasonably fit for that purpose. … (3) This section does not apply if the circumstances show that the consumer did not rely on, or that it was unreasonable for the consumer to rely on, the skill or judgment of the supplier. (4) This section does not apply to a supply of services of a professional nature by a qualified architect or engineer.

1. The [NAME] submit that the primary judge erred in not finding that the respondents breached the guarantee in s 61(1) as given to [NAME]; and in failing to find that the breach caused or materially contributed to the [NAME]' loss and damage (ACL, s 267(4)).

2. Although the grounds of appeal are formulated as "failures" on the part of the primary judge to make certain findings on the s 61 claim, [NAME] did not make any findings specific to s 61, following an exchange with the [NAME]' counsel in closing oral submissions: [NAME]: But the reality of these sorts of cases is that plaintiffs often rely on the ACL because of a contractual defence raised by the defendant…It doesn't get any higher benefit to the plaintiff than an ordinary negligence case. What do you say about that, [NAME]? [NAME]: That's right, your Honour. You've identified the apparent logic and the chronology, and these questions should be dealt with and why. [NAME]: Unless someone says something to the contrary, I would intend to consider in reverse order. Normally, as you may know from some other judgments, or judgments I've written, normally I go through it step-by-step. But if I identify as it seemingly openly being perhaps raised, is a problem with the reliance on the indemnity, then I would simply propose to – would the parties be content that I deal with this matter in the judgment on ordinary negligence principles? [NAME], if you don't want to answer that question, please say so, but if you're otherwise satisfied that the only reason you're relying on the ACL is to overcome the indemnity, then that's an appropriate way of dealing with it. [NAME]: That's how your Honour should deal with it.

1. Having regard to this exchange, [NAME] accepts that the primary judge would have properly understood the claim under s 61 of the ACL to have been abandoned. Nonetheless, he submits that its abandonment below should not preclude him from agitating the point on appeal, in circumstances where the cause of action was fully argued by both parties before the concession we have extracted above was made, and the respondents had every opportunity to answer it.

2. That a party is bound by the conduct of his case has long been accepted as an elementary rule. Exceptional circumstances are required "to allow a party, after a case [has] been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so": University of [NAME] v [NAME] (No 2) [1985] HCA 28; (1985) 59 ALJR 481 at 483. The considerations that are relevant to the rule were referred to in Coulton v Holcombe (1986) 162 CLR 1 at 8; [1986] HCA 33 per Gibbs CJ, Wilson, Brennan and Dawson JJ, where their Honours cited with approval the following remarks of the Court of Appeal (in the same case): [The relevant considerations include] the finality of litigation; the difficulty of inducing an appeal court to consider new facts; the undesirability of encouraging tactical decisions not to present an issue at first instance; keeping it in reserve for appeal; and the need for vigilance to avoid injustice to a party having to meet new facts and new issues of law for the first time at the appeal court.

1. In the light of the importance accorded to the finality of litigation, it is significant that the argument regarding s 61 of the ACL was withdrawn by counsel at the point of closing oral submissions, by which point counsel may be assumed to have had a detailed understanding of their clients' case. Although the [NAME] relied on the timing of the withdrawal as limiting the prejudice to the respondents if the point were to be argued now, the timing highlights that an informed assessment was made towards the conclusion of the trial. The arguments that the [NAME] have advanced as to the absence of prejudice do not answer the prejudice to the administration of justice in permitting them now to traverse the strategic decision that they made at first instance.

2. In any event, if the [NAME] were permitted to run grounds 5 and 6, those grounds would fail. As it was argued on the appeal, the essence of [NAME]' claim pursuant to s 61 of the ACL was that he had made known to the respondents that he wished to "partake in a leisure cruise"; that he had made it known that he was not a regular user of such vessels; and that the respondents had represented that the vessel was in good working order, including having a functioning anchor mechanism. As the anchor mechanism did not function as intended (given the propensity of the anchor chain to kink), the services provided were not reasonably fit for the purpose he had made known to the respondents.

3. It was accepted on behalf of [NAME] that the usual purpose of chartering [NAME] was to "partake in a leisure cruise" (Tcpt 57.36). As noted above at [28], in over 20 years of chartering [NAME] there had been no incident or complaint, at least concerning the anchor. Further, charterers were advised to use moorings where available. Having regard to those circumstances, any intermittent kinking of the anchor chain and/or stalling of the anchor mechanism would not give rise to [NAME] not being reasonably fit for the purpose of a leisure cruise.

4. With that being the case, in order to succeed on the boat being not reasonably fit for purpose by reason of the issue that arose on his hiring [NAME], it would be necessary for [NAME] to establish that he had made his inexperience known to the respondents, such that it could follow, from the propensity of the anchor to kink and/or the mechanism to stall, that [NAME] was not reasonably fit for the purpose of [NAME] having a relaxing leisure cruise. Success on that argument would require a finding that [NAME] presented to the respondents as a person who was inexperienced in boating. In this regard the [NAME] placed significant weight on the following passage in the reasons of the primary judge about [NAME]' experience (we have already addressed J[13] above): [13] There is an issue as to the plaintiff's experience. Having regard to the content of his evidentiary statements, he presented as a person with little experience in boats. [14] The defendants put to the plaintiff that he had more experience than referred to in his evidentiary statement. Indeed, it turned out that he had owned a cruiser for a brief period. Further, he had hired boats previously. [15] He liked fishing. He purchased his cruiser back in 1989 but he said that he used to have a [NAME] operate the boat for him. It may be no coincidence that the purchase of the boat and the use of a [NAME] was in the 'heyday' of INXS. [16] The fact that he may have hired a boat in the past from time-to-time and even owned a boat in the circumstances to which I have referred does not necessarily mean that he had extensive experience in operating a boat. Ownership of a boat for a period does not necessarily equate with expertise and familiarity with all aspects of its operation. [17] I accept the plaintiff's description of his experience level. [18] Having said that, it does not seem to me that his level of experience is particularly critical to the outcome of this matter as, for the purposes of hiring the boat, it was not necessary that a person such as the plaintiff pass some test or demonstrate a certain level of experience. [19] In any event, the plaintiff plainly felt experienced enough to operate the boat.

1. However, as was raised with senior counsel for [NAME] during the hearing of the appeal, [NAME]'s findings in the above extract were directed to whether [NAME] presented to the court as a person who was experienced in boating. They said nothing about the way in which he presented to the respondents; as to which see [45]-[46] above. Nor was the primary judge invited to make factual findings on that point owing to the absence of argument about s 61 as separate to the claim for negligence.

2. Grounds 5 and 6 should be dismissed.

Conclusion 1. In the light of our findings on each of the [NAME]' grounds of appeal, it is unnecessary to consider the respondents' cross-appeal against the primary judge's contingent assessment of damages for [NAME] and [NAME]. 2. The following orders are made: 1. Appeal dismissed. 2. Cross-appeal dismissed. 3. The [NAME] are to pay the respondents' costs.

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