FARDIG v NEWBID Nominees Pty Ltd - [1999] WADC 124

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: FARDIG -v- NEWBID NOMINEES PTY LTD & ANOR [1999] WADC 124

CORAM: MACKNAY DCJ

HEARD: 30, 31 AUGUST 1999

DELIVERED : 19 NOVEMBER 1999

FILE NO/S: CIV 1862 of 1998

BETWEEN: GRAEME MICHAEL FARDIG
Plaintiff
AND
NEWBID NOMINEES PTY LTD
First Defendant
GRAHAM KEITH DOWNS
Second Defendant

Catchwords:

Contracts - General contractual principles - Discharge, breach and defences to action for breach - Parties to contract - Termination of contract - Claim for damages - Assessment of damages - Turns on own facts

Legislation:

Nil

Result:

Judgment for plaintiff $31,748.20 and interest

Representation:

Counsel:

Plaintiff:     Mr A Metaxas
First Defendant              :     Mr H J Rigby
Second Defendant         :     Mr H J Rigby

Solicitors:

Plaintiff:     Arthur Metaxas & Co
First Defendant              :     Haydn J R Rigby & Associates
Second Defendant         :     Haydn J R Rigby & Associates

Case(s) referred to in judgment(s):

Nil

Case(s) also cited:

Nil

MACKNAY DCJ:

Introduction

This was a pleaded claim by the plaintiff for payment by the first defendant, alternatively the first defendant and the second defendant, alternatively the second defendant, of two sums, $22,150 and $12,529 respectively, alternatively damages in the sum of $33,679, alternatively a quantum meruit in the sum of $33,679.
The plaintiff alleges he made a contract with one or other of the first defendant or the second defendant for the fit-out by him of the Merriwa Tavern on or about 5 February 1998, the consideration being a promise of payment of $49,500, to be paid by weekly draw downs and a final payment, but despite work having been done there was a failure to pay for all of it followed by a repudiation which took the form of the plaintiff being excluded from site, which repudiation the plaintiff duly accepted.
The plaintiff abandoned the claim in debt at trial and relied solely on his claim for damages.
Liability is denied in the defence of the defendants, by the second defendant initially on the basis that he did not contract in a personal capacity, and then with the first defendant on the basis that the contract was made not with the plaintiff personally but with Oceanmist Holdings Pty Ltd trading as Attwater Projects (Attwater Projects), that earlier contractual arrangements, made with other entities, had involved an advance payment in respect of plant for the tavern and the fit-out work of $48,000, that it was a term of the contract between Attwater Projects and the first defendant that such sum be credited against any work done, that work in excess of that amount was not done and that the contract was not repudiated by the first defendant. A resulting trust is also alleged.
There is also a counterclaim.
Prior history
The plaintiff was between 25 January 1995 and 26 January 1998 a bankrupt, being discharged from that bankruptcy on the latter date.
Notwithstanding the bankruptcy the plaintiff was involved in the operations of a company the Phoenix Group (Australasia) Pty Ltd (Phoenix) which subsequently changed its name to Allstruct (WA) Pty Ltd (Allstruct).
In June 1997 the plaintiff described his position with Allstruct as "sales manager" although the second defendant, who met him at about that time, said the plaintiff represented himself "as a business", at that stage Phoenix.
The plaintiff denied he had ever been a director or shareholder of Allstruct. On being shown that he was listed as a director of the Phoenix/Allstruct entity until May 1995 the plaintiff said the business Allstruct had only commenced in 1997. He agreed he was also shown as a shareholder, but that was not further explored.
In any event, in August 1997 the plaintiff as sales manager of Allstruct and the second defendant on behalf of "Jacks Corporation" trading as Merriwa Tavern signed a quote or an informal contract in relation to the internal fit‑out of the Merriwa Tavern.
The total cost of that, including provisional cost (PC) items for carpet, air conditioning, and internal fixtures and fittings, was $440,050.
The plaintiff said he had suggested to the second defendant at a subsequent meeting that if secondhand refrigeration equipment was purchased that would save money.
The second defendant subsequently gave him, on behalf of Allstruct, two cheques to a total of $48,000, the plaintiff agreed.
Although Allstruct was "supposed to" utilise the funds to purchase refrigeration equipment, that did not occur, the plaintiff also agreed, although he did not know what the funds were used for.
The second defendant said that in July 1997 he had been a director of Jacks Corporation, and in effect a partner in the business conducted by that company. In July 1997 Jacks Corporation had won a tender to lease the then unbuilt Merriwa Tavern.
After the contract was signed with Allstruct the second defendant said there was a meeting between the plaintiff, the second defendant and another partner in Jacks Corporation, Lester Weston.
The second defendant said that followed advice from the plaintiff that there was some secondhand equipment available which could be used at the tavern and which could be purchased at a reduced price. That equipment was duly purchased on behalf of Jacks Corporation, although delivery had not then occurred.
The plaintiff came back, the second defendant said, with a proposal that if substantial deposits were paid the prices of various named contractors would be fixed, which would be beneficial as it was likely to be seven or eight months before those persons worked on the site, and rises were due. That had also been agreed to, he said.
Two cheques were then paid to the plaintiff, one for the equipment in the sum of $13,000, and the other being for $35,000, according to the second defendant.
The plaintiff said that he ceased employment with Allstruct in late December 1997 or early January 1998, and was then unemployed.
Contract negotiation
On a day around 25 January 1998 the plaintiff said that he met with the second defendant at the latter's office and advised the second defendant that Allstruct "were going broke" (sic), a fact that he said it transpired was already known to the second defendant.
According to the plaintiff the second defendant had then asked him "(w)ell we've lost $48,000. How can we recoup that?", and the plaintiff had stated that if Allstruct went bankrupt and he came out of bankruptcy he could probably "take on the contract for just the cabinet work only" if the other elements were sublet to other contractors, whom the plaintiff could supervise.
That left from the original contract with Allstruct work with a price of $110,000, but the plaintiff said that, after informing the second defendant the $48,000 had been lost, he had stated that "the only way I can help out is the fact that the job is worth $110,000 and I can give you a $48,000 deduction and that will bring it up to about $62,000".
A few days later there was a further discussion, and the plaintiff said that the second defendant asked for "documentation" proving that the sum of $48,000 had been paid to Allstruct.
The plaintiff said that as a consequence he had the first page of the original contract between Allstruct and Jacks Corporation reproduced.
That document, dated 29 January 1998, was engrossed on Attwater Projects' letterhead. The plaintiff said the reason for that was that he was still an undischarged bankrupt, although he had been given verbal confirmation of his discharge. He had told the second defendant of that and of an inability to act in his own right until confirmation was received, the plaintiff said.
The Attwater Projects' page was to be attached to the balance of the original contract, the plaintiff said.
The plaintiff also had prepared a letter addressed to the finance broker for Jacks Corporation, Mr S Whitney of Westminster Finance, which stated:
"Confirmation of payments made by the Jacks Corporation for the Merriwa Tavern project Merriwa.
First payment 12/9/97 for $13,000.
Second payment 25/9/97 for $35,000
TOTAL OF PAYMENTS TO DATE: $48,000."
That letter was signed by the plaintiff as "Project Manager".
The two documents were then given to the second defendant, on about 29 January 1998, the plaintiff said.
On about 1 or 2 February 1998 there was a telephone conversation between the second defendant and the plaintiff, the latter said, and the second defendant directed him to "just draw up a new contract or a new letter stating that all you were going to do is the internal works with a deduction of $48,000".
A letter dated 5 February 1998, addressed to Jacks Corporation and signed by the plaintiff, was then prepared and given to the second defendant.
That relevantly read as follows:
"RE: INTERNAL FIT OUT TO THE MERRIWA TAVERN
All timber works to both Bars and Servery
All panelling to walls ready for painting or polishing
Fitting of all sports memorabilia supplied by owners
Gyprock bulkhead to both bars only
P.C. sum of $2500 for extra lighting specified by designers.
P.C. sum of $18,000 for tables, chairs, stools and standup tables.
Painting or polishing of timber panelling as required.
TOTAL  110,000.00
Less monies paid on previous contract       48,000.00
BALANCE  $ 62,000.00"
========
The second defendant, on receipt of the letter, informed the plaintiff that he might be leaving the Jacks Corporation partnership, the plaintiff said, and asked the plaintiff to delete the two PC sums, for the extra lighting and furniture respectively and to have the contract drawn in his name. The plaintiff said in relation to the latter that he was able to do that as he had received the discharge from bankruptcy and could then act in his own right.
The plaintiff said that he then prepared a further letter, which set out his own name and particulars at its head, was addressed to the second defendant, and stated in part:
"CONTRACT PRICES NEGOTIATED TO DATE
P C SUM for internal fixtures and fittings                 $110,000
Deletion of previous payment made to others               48,000
P C sum for chairs and table   18,000
P C sum for extra lighting  2,500
leaving a balance payable during the contract             41,500
FOR THE FOLLOWING WORK
All panel to walls in both bars approximately 100 meters
Bar server tops to both bars approximately 24 meters
Brass foot rail to both bars.
Fitting of memorabilia to both bars.
Fit out of office as required.
Supply one server counter to bottle shop 2.4 meters
Gyprock bulkhead to both bars.
Cabinets to coolroom behind both bars, including shelving and panels above cabinets 17 meters.
The cost of the back bar cabinets as agreed from item three BAR COUNTER        8,000
$ 49,500"
That letter also provided for weekly draw downs for labour and materials delivered and installed with final payment on completion. Provision was made for each of the plaintiff and the second defendant to sign the letter, and the plaintiff said he signed and dated it on 5 February 1998 and handed the signed copy to the second defendant.
The copy of the letter tendered, which is not dated apart from that endorsed from the plaintiff, also bears an endorsement "delivered 11/3/98", and the plaintiff said that he had asked the second defendant to sign the letter, and on being told that he did not have a copy, had delivered another copy to the second defendant.
The letter had been addressed to the second defendant as he had said he would prefer it to be in his own name until he reorganised his finance or partnership, the plaintiff said. The second defendant had made mention of the first defendant, and had not wished to sign the letter himself, the plaintiff agreed in cross‑examination.
After the letter had been handed to the second defendant the plaintiff said that he had been told "you now start work", so that "was the conclusion of the new contract in my mind".
The plaintiff said that he then embarked on preparation for the carrying out of the work.
The plaintiff also tendered a notice of discharge of bankruptcy addressed to him and dated 27 January 1998.
In relation to the two earlier letters which had been on Attwater Projects' letterhead, the plaintiff said those were prepared by Mrs Cheryl Jones at his request.
Mrs Jones gave evidence and said that she had been employed by Allstruct as bookkeeper. When she left the employment of Allstruct in early January 1998 she had "started" Oceanmist Holdings Pty Ltd as she was a sole parent and had wished to do work at home by way of typing, letters and simple bookkeeping for those who wished to utilise her services. The plaintiff had asked her to type some letters for him, Mrs Jones said.
The company had subsequently been deregistered without trading, Mrs Jones said. The plaintiff had not been a project manager of Attwater Projects, but Mrs Jones said that she simply typed the letter in the form that the plaintiff required it.
The second defendant said that in early January 1998 he met the plaintiff, after hearing that the premises of Allstruct were empty, and the plaintiff had assured him that everything was alright and that Allstruct had decided to shut the office and operate from home.
Towards the end of January the second defendant said that he then heard that Allstruct was going into liquidation and he had contacted the plaintiff again. The second defendant said the plaintiff then told him:
"They'd had a bit of a problem with the company. Our contract was going to be taken over by another company which they were reforming and the deposits that we had used would be transferred across."
The second defendant said that the plaintiff assured him that the deposits that were supposed to have been paid had been paid, and documentation to that effect was then requested, including for the bank who were arranging finance.
The plaintiff had then produced the first Attwater Projects' letter, the second defendant said. The second Attwater Projects' letter, addressed to Mr Whitney, had been sent direct to him, the second defendant also said.
As to the terms of the contract with Attwater Projects, the second defendant said:
"… Yeah, there was a quote given which was the same as what the previous company were going to - the terms were going to be the same as the previous company. All I was told it was just a name change, and all funds that had been paid would remain part of the contract."
In early February the second defendant said that he then advised the plaintiff that there was a partnership problem and that he would take over the Merriwa Tavern himself.
The second defendant said in cross‑examination that his state of mind at the end of February 1998 was that the $48,000 "had been transferred to another company that had taken over the contract". The money had thus not been lost, he said. At the end of April, when claims were put to his bank and the bank had asked why payments were being sought for work that should have already been paid for in the earlier payments, the second defendant said that he realised that was not the case.
The second defendant agreed that he had gone to a creditors' meeting of Allstruct on 20 February 1998 and had asked the liquidator what had happened to the $48,000 payment, and that he had then thought the money was lost. He later said that he had not had that much money to lose, and at that stage he was not sure where the money was, and was being told "lots of different things".
The second defendant also agreed that he had subsequently received an invoice dated 4 April 1998 purportedly from the plaintiff, and that he had personally given the plaintiff a cheque for $11,250 in response.
On it being put to the second defendant that in October 1998 he had stated in an affidavit that:
"On 5 February 1998, (the plaintiff) in his personal capacity, tendered a quote addressed to myself personally for the fit out work at the Merriwa Tavern,"
the second defendant did not seek to resile from that statement.
In relation to that letter from the plaintiff to the second defendant, which as stated had been signed by the plaintiff on 5 February 1998, when asked whether such represented a confirmation of an agreement reached with the plaintiff, the second defendant said:
"… I have said yes but it's not the way it was - we were spoke on it. (sic) It’s a confirmation on his words (sic). I have explained to you, yes, I agree with the document and how it was to be paid and things like that. That's what I said. I agree with the document but the proceeds of where they were being paid was not being said in here, and that's what I'm explaining to you."
The second defendant said that the furniture was always being provided by him. The plaintiff had offered to do additional cabinet work for a further $8,000, but that had not been accepted.
Carrying out of the work
The plaintiff duly commenced to arrange and do the work agreed to be done at the tavern, and he said materials began to be put on site in March 1998.
The arrangements included contracts being made between the plaintiff and a variety of building suppliers, contractors and tradesmen for either or both of the supply of materials or the provision of services.
The plaintiff's contractors included the principal contractor for the tavern building, Keywest Constructions Pty Ltd (Keywest), there being an arrangement for some brickwork to be done by Keywest for him, the plaintiff said.
The plaintiff's first invoice had been for only $11,250 as the second defendant had "inferred" his finance was not finalised so that he was only able to pay a certain amount, the plaintiff said, and that invoice had been given to the second defendant together with the plaintiff's second invoice for $22,150 on about 4 April 1998, with the payment in respect of the first invoice about five days later.
On 14 April 1998 there was a site meeting attended by the plaintiff, second defendant and Keywest, the plaintiff said, and it was then agreed the plaintiff would be given possession of the site by Keywest to complete his part of the work, there being on the following day written confirmation from Keywest of the handover of "the Lounge and Public bar areas for your fit out".
The second defendant did not pay the second invoice, and the plaintiff said that caused him financial problems, so that he was not able to pay many contractors, including Keywest, whilst the second defendant had explained the delay by saying his finance arrangements were not yet complete.
At the request of the second defendant the plaintiff said he had then prepared a further letter, dated 3 May 1998, and addressed to the Bank of Western Australia Ltd (the bank), that being headed "Total invoice for the internal cabinet and carpentry fit out and associated works".
After setting out various items of work and materials, and the purported cost thereof, the document concluded:
"Total  $89,500
Holding deposit of   $49,500
Received from holding deposit                 $11,250
Balance  $38,250"
The plaintiff said the second defendant had said he needed a document showing "the $110,000" to the bank, and "I didn't want to do it but because I thought I was going to get paid … ."
The sum of $89,500 represented the original sum of $110,000 less the PC items for chairs and tables of $18,000 and extra lighting of $2,500, the plaintiff said, and the use of the term "holding deposit" had been requested by the second defendant and Mr Whitney.
There was another site meeting, the plaintiff said, on Thursday 11 May 1998, with the second defendant, Mr Whitney and two bank representatives, and that had resulted in the second invoice being redrawn so as to be directed to the bank and to make reference to the holding deposit.
In cross‑examination the plaintiff said the invoice was drawn in that form as the second defendant "wanted to get from the bank the $110,000 that was the original $110,000 on the part of the contract," and "because he wanted to inflate it … I've inflated it to the $110,000 which was the original contract, because I knew what happened previously".

The plaintiff said he had been told the bank would pay the invoice, but that did not occur.
As a result, on Monday 15 May 1998 the plaintiff said he rang the second defendant about payment but was told that because he had not paid Keywest:
"You are not allowed back on site. No further work to take place."
The second defendant also told him that he had "been paid $48,000 plus $11,000", and had been overpaid and would not receive any further payment, the plaintiff said.
After speaking to Keywest and being told it would not be in his interest to return to site the plaintiff said he "didn't go any further", and engaged a solicitor.
The work then still to be done was described by the plaintiff as:
"Well, I had the brass foot rails to put in, the mirrors and shelves for the back bar area and I had a servery top for the kitchen, which was that photo that you saw, and the bar tops themselves which all materials had been done, sitting in the factory ready to finish off. We had templates that we made, so it was only a couple of days work to finalise all that, including then the painting and putting up memorabilia."
The invoices rendered had not represented all of the work that he had done, the plaintiff said.
The plaintiff was later recalled for further cross‑examination and agreed that in the course of the telephone conversation with the second defendant on Monday 15 May 1998 he "may have said" that he was not in a financial position to continue and the second defendant would have to find someone else and said that he "was acknowledging I couldn't complete the contract until I got paid, and I wasn't prepared probably to do any more work until I got paid. I had to take a stance too".
The plaintiff further said, however, that he would have been able to complete the work had he not been told at that time that he was not allowed on site.
The second defendant agreed that he had received the plaintiff's invoice for $22,500 but said he had never indicated that that would be paid. The further version of that invoice, which included the reference to a "holding deposit" had been drawn at the request of the bank, the defendant said, as the bank "at all times … asked for the previous deposits which he had verified were being held to be shown so it formed part of the payment down … ".
The defendant denied that the prices in the redrawn document had been inflated at his request, and said that was "utter lies".
There was a site meeting in April with Keywest and the site was handed over by that entity, the second defendant agreed, although he said the handover was in reality to him.
The second defendant also agreed there had been a further site meeting with bank representatives in May. However, at that meeting the plaintiff had not been promised money but had been told that when more work was done money would come through, the second defendant said.
In May 1998 Keywest informed the second defendant, he said, that the plaintiff was not to go on site whilst its contractors were still there, as the plaintiff was using those contractors but had not paid them. As a consequence the plaintiff was excluded from the site, but the defendant said the site was to be returned by Keywest in approximately seven to nine days, and the plaintiff had been told that.
The plaintiff then informed the second defendant that he would not finish the job as he did not have sufficient funds to carry on, the second defendant said. The plaintiff also "begged" the second defendant to lend him some money, but the second defendant declined and said the bank advice was that he should not release moneys "unaccounted" as the moneys were being paid out on invoices.
The second defendant said that he also mentioned at that time "numerous items" of unsatisfactory work to the plaintiff, including a timber rail around the walls which was not wide enough to stand a glass on and the bar front and servery wall, both of which were constructed in brick instead of timber. The second defendant did say "the work had been done".
In relation to the total of $48,000 originally paid to Allstruct, the second defendant said that the plaintiff "was paying his contractors out of that".
The second defendant agreed that when following his exclusion the plaintiff had said that he could not complete the job he said that "he needed more money to finish the job and the answer from me was that the funds were there but they needed more work on site to pay more site - there was progressive payments on the site" (sic).
In relation to the pleadings, the plaintiff alleged in the statement of claim that he had been excluded from the site on 11 May 1998.
That was denied in the defence, which however alleged, inter alia, "that access to the Merriwa Tavern was denied to Attwater Projects or alternatively the plaintiff since Attwater Projects were in breach of the contract …, " (sic) the breaches being later particularised as a failure to utilise the $48,000 paid to Allstruct towards work and materials supplied in respect of the tavern fit out, or to otherwise account for it, and a failure to complete the work by 6 June 1998, it being said the contract contained an express provision to that effect, whilst the work had not progressed from early April 1998, and was not all of a suitable standard or in accordance with the contract drawings and specifications.
The defence then said that those matters evinced conduct on the part of Attwater Projects or alternatively the plaintiff which amounted to a repudiation of the contract, which repudiation had been accepted by the defendants on or about 11 May 1998 by the refusal of access to the site.
No reference was made in the course of the second defendant's evidence about either a failure to progress the work from early April 1998 or a completion date of 6 June 1998 until cross‑examination, and when raised the second defendant then initially asserted the former, but not the latter.
As to the acceptance of any repudiation, the second defendant in cross‑examination apparently sought to rely on the plaintiff's advice that he lacked funds to finish the work, as justification for the termination of the contract.
Mr Whitney said that the plaintiff's invoice for $22,150 had not been paid as the second defendant "was unhappy with the work that had been performed to date …". He did not recall any suggestion that if the invoice was altered then the bank would pay it.
When the first defendant had taken over the project from Jacks Corporation it had been necessary for a further application for finance to be made, Mr Whitney said, and that had occurred on 11 March 1998.
The evidence of Ms Fong, a bank employee, was that the finance had then been approved in April 1998.

Conclusions as to contract

Although it is convenient at this point to set out my findings as to the relevant contractual matters I should note that such are based on a consideration of the whole of the evidence, including that dealt with below.
Those findings are:
It was not suggested to the plaintiff, and I would not find, that the sums totalling $48,000 paid to Allstruct were received by or fell into the plaintiff's hands.
After the demise of Allstruct, however, the initial purpose of the plaintiff was, I think, to insinuate that some advantage would be gained if the second defendant or any associated entity did business with the plaintiff in relation to the completion of the tavern fit out, because of the plaintiff's prior association with Allstruct and the payment of those sums.
The plaintiff did initially present himself as Attwater Projects, because of his bankruptcy, but there can be no doubt that by the time of any arrangement the plaintiff purported to act on his own behalf, and the second defendant was both aware of that and acknowledged it.
Similarly, although as a result of the plaintiff's insinuation the second defendant might have initially been uncertain as to the fate of the $48,000 previously paid, by the time of the receipt of the letter signed by the plaintiff on 5 February 1998 the second defendant must have been aware, in my view, that the plaintiff was not in possession of those amounts. In that regard the second defendant's conduct in attending the Allstruct creditors' meeting on 20 February 1998 is inconsistent with the existence of any other state of mind.
I accept the evidence of the plaintiff that following receipt of the letter signed on 5 February 1998 the second defendant had told him to commence work, and find that together the letter and that advice amounted to a binding contract.
The price of the work and materials to be supplied by the plaintiff under the contract was $49,500, and it was a term of the contract that there be weekly draw downs for labour and materials supplied.
Although the initial contract was probably made with the second defendant, the intention of the parties was always that the second defendant might nominate a corporate entity and at some point the first defendant assumed the benefit and burden of the contract.
When viewed from the outside, it is difficult to see how the plaintiff expected to make anything other than a loss, given the large discount that he had in effect agreed to. However, the plaintiff was never cross‑examined about that and in those circumstances and in the absence of any analysis of the question I do not consider that I ought make any finding in relation to that.
The plaintiff's invoice for $11,250 was received by the second defendant on behalf of the first defendant prior to finance being approved, and was for that reason paid by the second defendant. Given the fact that work was being carried out prior to the financial arrangements being put in place I prefer the plaintiff's evidence as to the second defendant's difficulties at the time the invoice was rendered, and would find that the second defendant was not in a position to meet any large claim from the funds then available.
The further consequence was that when the bank became the financier of the project the second defendant was dependent on the bank's approval before funds could be paid out to the plaintiff. It is clear from the second defendant's own evidence that the bank was under the misapprehension that the plaintiff had available to him the sums to a total of $48,000 previously paid to Allstruct, although at the time of the first defendant's finance application to the bank the second defendant was himself aware that was not the case.
The position then was that the plaintiff was denied further funds because of that apprehension, although pursuant to the contract the plaintiff was entitled to a payment beyond the $11,250 that he had already received.
The first defendant did not in May 1998 have the right under the contract to prevent the plaintiff from continuing with the work, and the plaintiff's exclusion from the site amounted to a breach of the contract. I do not find that exclusion was expressed to be only for approximately seven days, although it was not expressed to be a permanent exclusion, as is evidenced by the fact that the plaintiff on 15 May 1998 told the second defendant he would have to find someone else to finish the job, unless the plaintiff was paid further monies.
That breach, when coupled with the failure of the first defendant to pay for the work as it progressed in my view gave the plaintiff a right to treat the first defendant's conduct as a repudiation, and to rescind the contract.
The plaintiff was therefore entitled to rescind the contract, as he purported to do.
The plaintiff is therefore entitled to damages for loss of the benefit of the contract.
I should say that it is possible to feel a degree of sympathy for the second defendant, as principal of the first defendant, in that the failure of Allstruct, which caused the loss of the $48,000, was not due to any fault on his part, whilst as stated his subsequent decision to negotiate with the plaintiff was initially in circumstances where there was some murkiness in the plaintiff's actions.
However, the second defendant's sense of grievance, brought on by those things, resulted in a refusal to acknowledge his own role or other facts adverse to his cause, some plain, and that effected the reliability of his evidence.
It was of course the second defendant's preparedness to seek to take advantage of payments that had been made to a company which subsequently went into liquidation which caused him to negotiate with the plaintiff, and at that time the payments, if such were still available, existed only for the benefit of all of the creditors of the company and not just the second defendant.
There were aspects of the plaintiff's evidence which I also considered to be unsatisfactory, but in the light of the contemporary documents and the other evidence given I am satisfied that events occurred as set out above.
Work done and damages
The plaintiff called evidence from a number of tradesmen and suppliers who had done work at the site on his behalf, and some invoices were produced.
It appears from that evidence that the plaintiff's total liability in relation to those suppliers had been in excess of $39,000, and over one half of that amount remained outstanding.
The plaintiff in opening relied on the claim in damages which arose from the rescission of the contract, the measure being, it was said, the unpaid balance of the contract price less the value of the materials or work the plaintiff did not have to supply or carry out, those being painting at a cost of $2,500, and brass foot rails $2,241.80 less a cancellation fee the plaintiff had to pay of $240. The amount to which the plaintiff was entitled was then, it was said, $33,748.20.
The second defendant's evidence as to work not correctly done revealed an apparent lack of knowledge of the specific work required under the plans and specifications that were produced.
An interior designer who had prepared those documents, Mr Peter McCormack, also gave evidence, and said that in a number of respects the fit out work done differed from his design or material or colour requirements.
Mr McCormack's evidence did not, however, distinguish between work done or materials supplied by the plaintiff and those things supplied by other tradesmen employed by the defendants after the plaintiff had left the site, and it was apparent from the evidence given by such persons that a number of the items referred to by Mr McCormack related to the work or materials supplied by those persons.
Further, no suggestion was made in relation to other work that it was necessary for such to be replaced, or that any further work would be done, or as to the cost of any further work.
Although counsel for the defendants suggested in closing that some deduction ought be made from the plaintiff's claim to reflect that aspect, he conceded that he was not able to quantify such a discount.
In the circumstances I do not consider any deduction can be made for such matters, given the state of the evidence.
A deduction should, however, be made to reflect the work that the plaintiff was not himself required to do to complete the contract and, doing the best I can, I would deduct $2,000 for that.
The plaintiff is then entitled to an award against the first defendant in the sum of $31,748.20, and I would allow interest on that sum for 12 months at the rate of 5 per cent, which produces an amount of $1,587.40.
The plaintiff is then entitled to judgment against the first defendant in the sum of $33,335.60.