Kevin David Smith and Dianne Violet Smith v Nylex Corporation Ltd Trading as Exacto Plastics No. SCGRG 93/1106 Judgment No. 4637 Number of Pages 21 Damages Measure and Remoteness of Damages in Actions for..

[1994] SASC 4637

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA BOLLEN J

CWDS
Damages - measure and remoteness of damages in actions for breach of contract - Trade Practices Act (1974) s52 and Fair Trading Acts 56. Hungerfords v Walker (1990) 171 CLR 125, applied.

HRNG ADELAIDE, 23-25 May 1994 #DATE 30:6:1994

Counsel for plaintiffs:     Mr J Sulan QC with
  Ms C Mitchell

Solicitors for plaintiffs:    Cowell Clarke

Counsel for defendant:        Mr L Glick

Solicitors for defendant:     Clayton Utz

ORDER
Judgment for plaintiff.

JUDGE1 BOLLEN J At all relevant times the plaintiffs carried on business in partnership as carriers of goods by motor vehicle. They owned an 8 tonne truck and a trailer.

2. At all relevant times the defendant carried on business as the manufacturer of plastic components for motor vehicles. The defendant made many such components for Mitsubishi. It needed to have a carrier to take parts to the premises of Mitsubishi. It engaged carriers on contract to carry to these premises and to carry to the premises of other customers of the defendant.

3. On 30 October 1987 the parties entered into a contract for carriage by the plaintiffs for the defendant. Evidence was given of the negotiations preceding the execution of that contract. Those negotiations were carried on by the male plaintiff on behalf of the plaintiffs and by Alfred Graeme Edge on behalf of the defendant. Edge was then financial controller of the defendant.

4. That contract (the 1987 contract) was satisfactorily performed on each side as provided by the contract. During the course of working under the contract the plaintiffs learnt that Mitsubishi wanted its loads to be covered. Covering by tarpaulin was not really satisfactory. The male plaintiff spoke to Edge about this and wrote to him. The plaintiffs got quotes for the fixing of canopies to the vehicle. At first the plaintiffs thought that the defendant would pay for it. The defendant was not prepared to do that. The quotes were for about $30,000.

5. The male plaintiff wrote and talked to Edge about the consequences of the plaintiffs' paying for the canopy. Mr Sulan QC, for the plaintiffs, summed up the evidence given by Smith in his opening address accurately thus:-
    "There had been discussions between Mr Edge and Mr
    Smith, and the point that Mr Smith had been making
    throughout these discussions was that if he was to pay
    for the canopies then he'd have to secure a minimum rate
    and a minimum amount of work, because otherwise he might
    be caught short with a very large liability to the
    financiers, and with his truck and trailer, and he
    needed to ensure a minimum term of the contract, a
    minimum hourly rate, and a minimum number of hours per
    week in order that he could meet these expenses."

6. Edge was amenable to the suggestions which the male plaintiff made about minimum hours and minimum rate of pay.

7. The 1989 contract (subject to clause 3) expired on 31 October 1989. But the plaintiff continued to carry for the defendant while the parties negotiated to prepare what became "the 1989 contract". This is the important contract. Nothing turns on the 1987 contract. As I have mentioned clause 3 of the 1987 contract had some importance. That was because it provided for a renewal of the contract.

8. The 1987 contract was executed on 1 November 1989 and was expressed to commence on 18 January 1990 - after industry resumed following the Christmas break.

9. The 1989 contract is at least partly in writing. There was oral evidence, as I have said, about the negotiations preceding its execution. The plaintiffs assert in their pleadings and in argument that the contract was partly in writing and partly oral. But, in my opinion, every point discussed in the negotiations was taken into the written document. There was undoubtedly an expectation between the parties that the defendant would, in each week where there was no "rostered day off" (which really means a public holiday), receive not less than 40 hours work. But it is not proved that there was any guarantee that the defendant would give 40 hours work in each "full" week. But as will be seen if 40 hours was not reached the parties would, under the contract, be expected to negotiate. The evidence of Smith suggested that he may have thought that he had been given a guarantee of 40 hours. But that is not correct.

10. The 1989 contract is:-
    "AGREEMENT between K.D. and D.V. SMITH of 46 Doctors
    Road, Hackham, S.A., 5163 (referred to as the 'Carrier')
    and EXACTO PLASTICS of 15 Alfred Avenue, Beverley, S.A.,
    5007 (referred to as the 'Customer') WHEREBY it is
    agreed as follows -
    1. The Carrier agrees:
    (a) To supply an eight (8) tonne truck and trailer;
    (b) The tray area and trailer are to be enclosed with a
    taughtliner cover;
    (c) To charge the Customer at the agreed rate of
    forty-four dollars ($44.00) per hour;
    (d) To exercise at all times due and proper care to
    ensure the security and safe transport of the Customers'
    goods during the course of this agreement;
    (e) The agreed rates are applicable for a minimum forty
    (40) hours per week or thirty-two (32) hours per week
    where a rostered day off at Mitsubishi Motors Australia
    Ltd. has been scheduled. This shall not apply where
    closedown periods have been advised, i.e. Christmas and
    Easter;
    (f) Any increase in the hourly charge shall be subject
    to the C.P.I. and negotiation between the Carrier and
    Customer, notwithstanding an 8% increase per annum to
    cover the costs of the Carrier.

2. The Customer agrees:
    (a) To engage the services of the Carrier for a term of
    three (3) years and subject to satisfactory performance
    of the Carrier's service this agreement will be offered
    to the Carrier for renewal for a further three (3)
    years.
    (b) To pay the Carrier the fee referred to in 1.(c)
    within seven (7) days from receipt of invoice/timebook.
    (c) That a minimum of hours referred to in 1.(e) will be
    charged by the Carrier and payable at the rate
    applicable;
    (d) That the rates are to be negotiated if a minimum
    forty (40) hours are not reached;
    (e) That any increase in hourly charge is subject to
    C.P.I. and negotiation between the Customer and Carrier
    notwithstanding an 8% increase per annum to cover the
    costs of the Carrier;
    (f) That the Customer shall not be liable for any
    charges of the Carrier in respect of injury, strike, or
    disablement where the Carrier is unable to perform
    his/her duties.

3. Although the Customer does not envisage losing the
    Carrier's services earlier than stipulated in 2.(a) it
    recognises that there may be circumstances available to
    the Customer and the Carrier for termination of this
    agreement. These are:
    (a) The Carrier may terminate this agreement by giving
    three (3) months notice or where circumstances arise the
    Carrier may transfer the truck and trailer and the
    obligations of this agreement.
(b) The agreement may be terminated where both parties
    mutually agree;
    (c) The agreement may be terminated where either party
    makes application for bankruptcy, winding up or
    insolvency.

This agreement replaces all previous agreements,
    arrangements, and understandings (expressed or implied).
    This agreement commences January 18, 1990. 5 (signed)
    1st November 1989 For and on behalf of (Date) K.D. and
    D.V. Smith (signed) 1st November 1989 For and on behalf
    of (Date) "
    Exacto Plastics

11. As I said that contract "commenced" on 18 January 1990. During the three years for which it in fact ran, work given to the plaintiff and payments made went along swimmingly. The plaintiffs kept time books. They were received in evidence. Mr Sulan QC prepared a schedule of "hours worked/rates fixed". It was received as Exhibit P4. Mr Sulan QC had prepared it from the time books. It is:-
    "SCHEDULE Hours Worked/Rates Paid Taken from Time Books
    1/7/91 - 19/12/91 Rate $47.75 per hour 1117.75 hours 25
    weeks 44.7 hours per week average $53,372.56 paid
    21/1/92 - 30/6/92 Rate $51.50 per hour 953.5 hours 21
    weeks 45.4 hours per week average $49,105.25 paid
    1/7/92 - 15/1/93 Rate $51.50 1211.25 hours 27 weeks 44.8
    hours per week average $62,379.37 paid
    18/1/93 - 25/1/93 Rate $55.25 50.75 hours 6 days
    $2,803.93 paid"

12. It will be seen that the average hours per week worked from July 1991 right through until the last few days in early 1993 during which the contracts or contract were alive well exceeded 40 hours per week.

13. Indeed in the last few days in the life of the 1989 contract the hours had risen to as much as 50.75. But from 1 July 1992 to 15 January 1993 the hours on the average were 44.8 per week.

14. The male plaintiff gave evidence that there was an abundance of carrying to Mitsubishi available, that he worked hard and that nobody had complained in any way about his work. It is extremely important to notice that there had been no complaint from anybody about his work. Nor was any suggested on behalf of the defendant in the course of the hearing. Speaking broadly, the 1989 contract required the defendant to offer renewal of the same contract provided that there had been satisfactory performance of the work by the plaintiffs. I am able to find that the work was satisfactorily performed. Indeed I accept all the evidence which Smith gave about his work.

15. Speaking very generally for the moment, the end of the 1989 contract came, after periodic blows administered to it, on 26 January 1993.

16. The plaintiffs claim that the defendant repudiated and broke the contract. The plaintiffs seek damages for breach of contract. The defendant puts forward a different interpretation of the contract to that advanced by the plaintiffs, denies any breach and asserts that there was no breach and that the plaintiffs sustained no loss.

17. In the statement of claim the plaintiffs set up mutual mistake about the 1989 contract and claim rectification. That was abandoned at trial. In the statement of claim the plaintiffs claimed damages for misrepresentation. Misrepresentation was not proved. The plaintiffs further claim:-
    "(1) A declaration that Exacto has engaged in conduct
    constituting a contravention of Section 52 of the Trade
    Practices Act and/or Section 56 of the Fair Trading Act.

(2) Recovery of loss and damage pursuant to Section 82
    of the Trade Practices Act and/or Section 84 of the Fair
    Trading Act."

18. No conduct amounting to breach of the sections mentioned in these subparagraphs was proved. I dismiss summarily the claims for damage for misrepresentation and for orders for damages "under" the Trade Practices Act and "under" the Fair Trading Act.

19. The live issue, the real issue, in this case is the claim for damages for breach of contract.

20. Mr Glick, for the defendant, was probably correct in submitting as he did that we must look at the words written in the 1989 contract for our interpretation of it. If we travel beyond that it would certainly not help the defendant. Why not? The answer is that I found the evidence of the male plaintiff reliable and that of Edge unreliable. Edge was honest in attempting to tell the truth. But he did not have a clear memory of what was said between Smith and him. Smith was a steady, methodical man with a good memory. His evidence was convincing.

21. Let us then examine the written contract. I proceed on the basis which I think to be probably correct that we must glean its meaning from the words in the document. True it is that it promises no guarantee of 40 hours work in each full week. But it goes very close. Clause 1(e) shows that 40 hours for weeks without rostered day off was contemplated by the parties as the expected number of hours work to be given the plaintiffs by the defendant. So do clauses 1(c) and 1(d). There can be no doubt that 40 hours was regarded as the expected, regular week's work.

22. I reject any suggestion to the contrary. Yet I adhere to my statement that there was no actual guarantee of 40 hours week.

23. I paid careful attention at the time, and have done so since in reading the transcript, to the submissions so well presented by Mr Glick. But I do not think that they can stand in the light of the words of the document. I do not think, for example, that the question of guarantee or no, nor the concentration on the word "negotiation" in clause 1(d) attacks the real issue.

24. The real issue lies in and emerges from clause 2(a). In that clause the defendant promised the plaintiff just exactly what the clause says. I will repeat that clause for emphasis:-
    "2. The Customer agrees:
    (a) To engage the services of the Carrier for a term of
    three (3) years and subject to satisfactory performance
    of the Carrier's service this agreement will be offered
    to the Carrier for renewal for a further three (3)
    years."

25. No qualification. No if or but. A clear promise, plump and plain by the defendant to engage the plaintiffs for three years and after that time to offer a renewal of the contract to the plaintiffs subject to "satisfactory performance". The defendant, as at 18 January 1990, stood bound to engage the services of the plaintiffs for three years.

26. By May 1992 the defendant was, as the evidence reveals, finding the services of the plaintiffs too expensive. On that day it sent a document headed "Internal Correspondence No. 92/094". It said:-
    "From: J. Cloonan To: Kevin Smith.
    cc; N. Thorn, R. Jenkinson
    Subject: EXACTO FREIGHT
    We are currently reviewing our total cost of freight and
    projected freight cost over the next 2 years. It is our
    intention that our total freight service, which includes
    those supplied by yourself, will be offered for open
    tender. Therefore, will you please submit your
    quotation to supply freight service to Exacto Plastics
    by no later than Friday, 12th June, 1992. This
    quotation is to include as one your truck and trailer,
    and your truck only. Initial indications are that your
    current prices are exorbitant. If you wish to continue
    with subcontracting to Exacto Plastics, you must give
    serious consideration to not only your current charges,
    but also your new quotation if you anticipate remaining
    a contractor to Exacto Plastics. Your earliest
    submission would be appreciated. (signed) J. Cloonan,
    General Manager."

27. It is not a document which reflects any credit on the defendant. It tells the plaintiffs that the defendant proposes to break a condition of its contract with the plaintiffs - the condition binding the defendant to offer renewal. It says that if the plaintiffs want to remain "a contractor to Exacto Plastics" they will have to reduce the rates which the defendant is contractually bound to pay. It is an announcement of rejecting the obligations under the 1989 contract.

28. The plaintiffs were not bound to tender as the document asked them to do. They had the benefit of the existing contract. They did not tender. Work went on under the contract perfectly satisfactory in the sense that adequate work was given, performed and paid for.

29. The defendant struck again on 13 January 1993. It sent another document entitled "Internal Correspondence" to the plaintiffs. It is:-
    "From: R. Jenkins To: K. Smith
    cc. J. Cloonan, N. Thorn, K. Halleday
    Subject: MITSUBISHI MOTORS FREIGHT CONTRACT
    As you declined to re-tender your contract as carrier
    for Mitsubishi Motors product, we have negotiated an
    alternative contract with another freight company. As
    your present agreement expires on the 18th January 1993,
    your services will no longer be required, as from this
    date. I would like to take this opportunity to thankyou
    for your support and loyalty to Exacto Plastics during
    this period of time, and wish you well in your future
    employment. Best regards (signed) R. Jenkinson
    PRODUCTION PLANNING MANAGER"

30. The document is a plain statement of breach of contract as from 18 January 1993. It is a repudiation of obligations imposed by contract on the defendant. The defendant was either then in breach of contract or well on the way towards it.

31. The defendant misjudged the plaintiffs. They were not disposed to endure the arrogant attempt to set the plaintiffs' rights at nought. The plaintiffs fought, or attempted to fight as best they could. On 15 January 1993 the plaintiffs wrote the following sensible and legally sound letter to the defendant:-
    "15 January, 1993.
    K.D. and D.V. Smith,
    46 Doctors Road, HACKHAM S.A. 5163
    Mr. R. Jenkinson,
    The Production Planning Manager,
    Exacto Plastics,
    15 Alfred Avenue, BEVERLEY, SA, 5009
    Dear Sir,
    RE: CONTRACT OF CARRIAGE
    We refer to the current contract of carriage, dated 1
    November, 1989. Also to your memo dated 13 January,
    1993. The following points are made:
    a) Clause 2 of the contract - according to my legal
    advice - effectively requires Exacto to renew the
    contract for a further three years unless our
    performance under the contract has been unsatisfactory.
    b) No notice has ever been received from Exacto alleging
    unsatisfactory performance. Therefore Exacto must offer
    the renewal - which we accept.
    c) From the outset (refer our letter dated 25 June,
    1989) it was made clear to you that the term of the
    contract must be for at least five years in order for it
    to be viable. Exacto by its conduct (eg. the terms of
    the current contract) acceded to that point, and we have
    conducted our affairs accordingly.
    d) The memo requiring us to 'retender' was not valid
    given the terms of our contract. Further, we note that
    it did not even indicate that any failure to respond
    might result in 12 Exacto attempting to seek to contract
    the relevant work with a third party.
    e) No further correspondence was received from Exacto
    regarding that memo since May of last year]
    f) We believe that Exacto has no alternative, legally,
    but to offer a renewal - which we hereby accept. We
    remain ready, willing and able to perform the terms of
    that renewed contract, on the same terms and conditions.
    Yours faithfully, K.D. and D.V. SMITH
    KEVIN D. SMITH - Partner"

32. The defendant reconsidered. Perhaps it took advice as a recitation of the effect of some evidence later in these reasons will suggest.

33. On 19 January 1993 the defendant replied thus:-
    "Mr Kevin D Smith KD and DV Smith
    46 Doctors Road
    Hackham SA 5163
    RE: CONTRACT OF CARRIAGE EXECUTED ON NOVEMBER 1, 1989
    Dear Sir,
    We refer to the abovementioned contract made between you
    and us, which commenced on 18 January, 1990 for a term
    of 3 years. Sub-clause 2(a) of the contract provides
    that, subject to satisfactory performance of your
    service, the contract will be offered to you for renewal
    for a further 3 year term. By your letter dated 15
    January, 1993 you indicated that it is your intention to
    proceed on the basis that a new contract, for a further
    3 years, has been concluded on the same terms and
    conditions. Whilst we do not agree that a renewal could
    be effected without our agreement we are proceeding on
    the basis that the contract has been renewed.
    Sub-clauses 1(e and 2(c) provide that you will charge
    the agreed rate of $44 per hour (increased each year by
    8%) when we use your services for 40 hours or more per
    week or 32 hours per week where a rostered day off at
    Mitsubishi Motors Australia Ltd has been scheduled.
    Sub-clause 2(d) provides that 13 the rates are to be
    negotiated if we use your services for less than 40
    hours per week. As we are unlikely to be using your
    services for 40 hours or more per week, would you please
    contact us to negotiate a new rate in accordance with
    sub-clause 2(d).
    Yours faithfully,
    EXACTO PLASTICS

    (signed) J.T. Cloonan, General Manager."

34. The defendant had decided to take the stand that the contract had been renewed. What then should it have done? It should have adhered to the obligation to provide work, by engaging the services of the plaintiffs, to the extent and at the rate and subject to the conditions of the contract which should have been renewed no later than 18 January 1993. Had it done that a time may have been reached when the defendant may have been entitled to require negotiation of rates. Perhaps a situation would have been reached where a minimum of forty (40) hours a week had truly and genuinely not been reached. The words used in clause 2(d) speaking of negotiation if rates are not reached are "are not reached". That phrase connotes the passing of some time and some action. The clause does not say "If the customer does not wish to offer 40 hours work". The clause contemplates the passing of some time during which action under the contract shows that 40 hours has not or cannot be reached. The passing time need not be very long. But there must be some time during which forty hours cannot be reached. The defendant could not lawfully, for example, say on the first day of action under the renewed contract "Oh, work has been slow this day, we will not reach 40 hours, we demand negotiation". But that, or worse than that, is what the defendant has sought to do by the letter of 19 January 1993. The defendant has said to the plaintiffs "We are unlikely to be using your services of 40 hours. We demand that you negotiate a new rate in accordance with clause 2(d)." There had not been time for the operation of that clause. No time or action had happened to show that 40 hours could not be reached.

35. It was a situation contrived by the defendant. It was not a situation that grew from genuine action under the contract. The defendant was trying to get rid of the plaintiffs. The plaintiffs replied on 20 January 1993 thus:-
    "Mr J T Cloonan
    General Manager
    Exacto Plastics
    15 Alfred Ave Beverley SA 5009
    Dear Sir,
    RE: CONTRACT OF CARRIAGE
    Thank you for your letter dated 19/1/93. It raises some
    points which need clarification, and these are dealt
    with below. We believe that those points can be ironed
    out during discussions between us, rather than resort to
    lawyers. Those points are:
    a) as verbally requested, we confirm that the hourly
    rate from 18 January is $55.25. This is calculated
    along the lines of clause 2(e) of our contract.
    b) the terms of our contract were extensively negotiated
    in 1989. Initial discussions were held between Kevin
    Smith and Graeme Edge, who would then talk to the
    General Manager at the time before confirming the terms.
    c) the intention of both Exacto and us was that we were
    guaranteed the minimum hours of work - and therefore pay
    - set out in clause 1(e). It was Exacto's obligation to
    arrange carriage work for those hours.
    d) the purpose of clause 2(d) - called "2(b)" in the
    contract - was to cover the possibility that Exacto did
    not provide us with work for 15 the minimum hours, for
    reasons outside its control and after it had honestly
    tried to do so. In that case the rate for the period
    would be negotiated upwards so that our pay under the
    contract did not suffer.
    e) obviously clause 2(d) could not mean that the rate
    would be negotiated downwards, because that is totally
    contrary to clause 1(e).
    f) as you were not involved in the negotiations we can
    understand why you did not know the meaning of clause
    2(d), and appear to have misinterpreted it.
    g) the last paragraph of your letter, therefore, is not
    correct and obviously we do not have to respond to it at
    the moment.

It seems that these misunderstandings can be cleared
    away quickly, now that you know more of the history and
    intention of the contract. We certainly hope this will
    happen during discussions soon, so that the next three
    years of our renewed contract can be as smooth as the
    last three.
    Yours faithfully, KD and DV SMITH per. Kevin Smith"

36. The defendant replied on the 22 January 1993:-
    "January 22, 1993.
    Mr Kevin D Smith KD and DV Smith
    46 Doctors Road
    Hackham SA 5163
    RE: CONTRACT OF CARRIAGE EXECUTED ON 1 NOVEMBER 1989
    Dear Sir,
    We refer to your letter dated 20 January, 1993. We
    respond to each of the points raised in your letter as
    follows:
    (a) Sub-clauses 2(e) and 1(f) provide for increases to
    an hourly rate which has already been agreed. The
    hourly rate of $55.25 is the annually increased agreed
    rate which applies when we use your services for 40
    hours or more per week in accordance with sub-clauses
    1(e) and 2(c).
    (b) It is not constructive to raise pre-contractual
    negotiations. This merely confuses the issue of the
    terms agreed to in the contract which was eventually
    signed.
    (c) We do not agree that it was our intention to legally
    bind ourselves to arranging any particular level of work
    or pay. Nor do we believe that the contract binds us as
    to any minimum level of work or pay.
    (d) Your subjective interpretation of sub-clause 2(d)
    does not accord with the clear objective reading of that
    sub-clause. We disagree with your belief as to the
    purpose of sub-clause 2(d).
    (e) We disagree with your reasoning and your conclusion.
    Sub-clause 2(d) provides for the rates to be negotiated
    if we use your services for less than 40 hours per week,
    whether or not the rate resulting from the negotiation
    is less than or greater than the agreed rate which
    applies when we use your services for 40 hours or more
    per week.
    (f) We do not believe we have misinterpreted the meaning
    of sub-clause 2(d). Nor do we believe that the
    respective subjective aims and desires of the
    negotiating parties prior to entering into the contract
    alters the clear objective meaning of sub-clause 2(d).
    (g) We reiterate our request that you negotiate with us
    forthwith a new rate in accordance with sub-clause 2(d).
    Clearly no further work can be performed under the
    contract until a new rate has been negotiated.

Yours faithfully, EXACTO PLASTICS"

37. The plaintiff replied on 25 January:-
    "Dear Sir,
    RE: Contract of Carriage
    We refer to your letter dated 22nd January 1993, as well
    as our discussion on the same day. We still remain
    ready, willing and able to perform our duties under the
    terms of our existing contract. At this point in time
    we believe that it is inappropriate to negotiate. We
    will be discussing the points raised in your above
    mentioned letter with our legal advisers as and when
    they become available later in the week. Yours
    faithfully KD and DV Smith per (Kevin Smith signed)"

38. The defendant remained obdurate. It wrote on 26 January 1993 thus:-
    "January 26th, 1993.
    Mr Kevin D Smith KD and DV Smith
    46 Doctors Road Hackham SA 5163
    RE: CONTRACT OF CARRIAGE EXECUTED ON 1 NOVEMBER 1989
    Dear Kevin,
    Thank you for your letter dated 21.1.93. As advised our
    position is unchanged from that identified in our letter
    dated 22.1.93. I wish to reiterate our request that you
    negotiate with us forthwith a new rate in accordance
    with sub-clause 2(d). Clearly, work cannot be
    performed under the contract until a new rate has been
    negotiated. I am available at your convenience and am
    most willing to resolve this matter at the earliest.
    Regards,
    EXACTO PLASTICS (signed) J. T. Cloonan, General
    Manager."

39. On 3 February 1993 the solicitors for the plaintiffs wrote. Amongst other things he said:-
    "According to my instructions you have now made it
    clear, by your words and actions, that Exacto will not
    honour fundamental aspects of the contract. This
    constitutes wrongful repudiation. I am instructed to
    inform you that my clients now see no alternative but to
    accept your unequivocal repudiation and treat the
    contract as at an end. The only matter left is to
    quantify their substantial damages."

40. This stand was correct in law. I will not recite the further correspondence between solicitors. Action was joined.

41. A mere recitation of the correspondence demonstrates the repudiation of the contract by the defendant and its breach of contract. Failure to offer renewal was a breach of contract on the part of the defendant. It is the failure to renew which is the real breach. The defendant sought to resile from its repudiation and to say that it would assume renewal had happened. But far from really resiling from that view the defendant prematurely seized on clause 2(d), and impermissibly sought to demand negotiation.

42. As I have said I attended to the arguments of Mr Glick at the time and have since studied them in the transcript. Suffice it to say that, despite their earnestness and ingenuity, I do not think that they can defeat the clear meaning of the contract nor the consequences which follows from the conduct of the defendant.

43. The plaintiffs would not readily give up efforts to keep the contract alive. The male plaintiff kept turning up in his vehicle at the premise of the defendant seeking work. He announced that he was carrying on under the contract. Speaking of the time from 15 January 1993 the male plaintiff gave evidence that he had attended with his vehicle on 15 January 1993. He went again on Monday 18th January 1993. On that day he met with Mr Cloonan (the manager of the defendant), he told Cloonan that he had not tendered a 1992 because he and his wife had decided not to do so. He went on to say "I believe I still have a contract that runs for another three years and that I didn't have to tender for it". This meeting ended with Cloonan saying that he wanted to take advice. The male plaintiff worked a full day's work on 18 January 1993. The male plaintiff went to the defendant's premises and spoke with Cloonan again on 19 January 1993. In the end the male plaintiff gave up attending when, in effect, he was threatened with police action that he did not leave.

44. The male plaintiff gave this evidence:-
    "Q. What did you say to him.
     A. I said to him that in regard to the letter that I
    would have to take further legal advice before I could
    do any more negotiations, and that my legal advisors at
    the time were going interstate and had told me that and
    that I felt that without being able to speak to my legal
    people that I should not enter into any negotiation type
    discussion until I had spoken to my legal people.
    Q. What did he say.
    A. He said 'Well, you have got till Monday afternoon to
    get back to us with this, otherwise at the end of Monday
    afternoon's work, you can get your so and so truck and
    trailer and everything off the property'.
    Q. Did he say 'so and so truck and trailer'."

and at page 51 of the transcript:-
    "Q. Did you, as a consequence of that conversation, and
    in particular him indicating that you had to respond by
    Monday afternoon, did you prepare a letter.
    A. Yes.
    Q. When did you prepare that letter.
    A. I prepared that over the weekend, on the Saturday,
    as I recall.
    Q. Looking at p.30, is that the letter that you
    prepared.
    A. Yes.
    Q. Why did you prepare that letter.
    A. Because my legal advisors still hadn't returned from
    their interstate trip, and I didn't know at that stage
    when they were going to return, and I felt that I had to
    respond in some way to try and keep negotiations, all
    possible negotiations open.
    Q. Did you take the letter with you on the Monday.
    A. Yes.
    Q. Did you go to work on the Monday.
    A. Yes.
    Q. Did you try and contact your legal advisor on the
    Monday.
    A. Yes, I tried various times throughout the day
    Q. Had you handed the letter over at that stage
    A. No, I had not
    Q. To anyone
    A. No
    Q. Tell us what happened on the Monday
    A. Well, I did my day's, or I worked till shortly after
    lunch. I tried to contact my legal people, as I said,
    during the day, but could not contact them. I got back
    to work after my first load after lunch, and was told by
    the store supervisor, Gary Chambers, that that was the
    end of work for the day for me, there was nothing else
    for me to do, and that he had been instructed to tell me
    to leave the premises and I said to him that I realised
    that it wasn't his fault, that he was just a pawn in the
    game, and to go back to, because it was Richard
    Jenkinson that had passed this message to Gary Chambers,
    and I said to Gary 'Well, I would like you to go back
    and see Richard and to tell him that I have a letter for
    John Cloonan, and that if I'm required to leave the
    premises I want in writing the reasons why' and so he
    went and conveyed that message.
    Q. You don't know what he did with it, do you
    A. No
    Q. Did he come back, or did someone come back and speak
    to you.
    A. Yes
    Q. Who came back
    A. Jenkinson came back
    Q. What did he say to you
    A. I then was asked by Jenkinson to go into Cloonan's
    office
    Q. Did you go to Cloonan's office
    A. I did
    Q. What did you do in his office
    A. I handed the letter that I had with me to John, he
    read it, more or less said 'too late' or 'hard luck' or
    words to that effect. I said well, I haven't been able
    to get in touch with my legal advisors, and said again
    that I can't - until I've spoken to them - I can't do
    any more with the negotiations side of it.
    Q. What did he say
    A. So I was told to get my truck and trailer and get
    off the premises, that the contract no longer existed,
    because I had refused to negotiate
    Q. So did you get your truck and trailer off the
    premises
    A. Yes, I did
    Q. Had you refused to negotiate
    A. No.
    HIS HONOUR Q. But you did not really feel that there
    was anything much to negotiate, did you. You felt you
    had a contract still in subsistence
    A. Yes.
    XN Q. Did you get your truck and trailer off the
    premises
    A. Yes, I did
    Q. What happened the next day, 26 January
    A. 26 January I arrived at work as normal with my truck
    and trailer. Proceeded to the normal loading area.
    Undid the curtains ready for the truck to be loaded and
    that was at about quarter to seven in the morning, and
    then Gary Chambers, the store supervisor arrived, and I
    said to him 'Have you got loading for me? Have you got
    work for me to take?' I said 'I realise that you're just
    caught up in this, but' I said 'is there loads for me to
    take?' He said 'There are loads there, but I am not able
    to give them to you'. I said 'Okay Gary. I understand.
    It's not your problem' so I said 'Therefore I'll wait
    until Richard, or somebody arrives that you can go and
    speak to' before he loaded me, so that's what happened,
    and then approximately 8 o'clock Jenkinson arrived.
    Gary must have spoken to him. He came over to me and he
    said had anything changed since the meeting that I had
    had with Cloonan, did I know something that he didn't
    know. I said nothing had changed from that meeting, so
    then he proceeded to ask me what was I doing there and
    again I would rather not say the word in front of the
    women. Then I said 'Well, I'm here to perform my duties
    under the contract'. He said 'You have been told you
    have no contract. You were told that by Cloonan on
    Friday' - sorry on Monday - and he said 'You can get off
    the property' and at that stage Adrian Dix -
    Q. What was his position
    A. I'm not sure at this stage. I think he was to take
    over from Richard Jenkinson, but to my knowledge he had
    only been working for EXACTO a day and a half, or
    whatever at that stage
    Q. What did Adrian Dix do
    A. Jenkinson and Dix were talking to me together, and I
    said that I was there to perform my duties under the
    contract. I was told by Dix the same as Jenkinson, that
    I had no contract. That I had been told that and that I
    was to leave the premises with the truck and trailer.
    That I was on private property and that the police, like
    if I refused to leave, the police would be called, and
    that they would remove me and they would tow my vehicles
    away. It was also said to me that I should take - do
    myself a favour and get some other legal advice, because
    the people that I was using were obviously putting me at
    jeopardy.
    HIS HONOUR Q. Who told you that
    A. Adrian Dix and Richard Jenkinson. I can't say who
    said exactly what
    Q. Between the two of them it was said
    A. But they both were saying that. That I had no
    contract, yes, and that I should take a second opinion
    on legal advice. That they had access to the best legal
    advice and I said that I believed they had access to the
    second best legal advice, and I realised at that stage
    that the police being called, or whatever, would
    prove nothing as far as I was concerned. That I was on
    private property - although I did have permission to
    have my truck and trailer on there in writing - so in
    the end complied with their wishes and took the truck
    and trailer and myself off the property and then I took
    the truck and trailer next door again to the yard and I
    stayed there all day watching and logging the movements
    of transport in and out of EXACTO. Mainly logging the
    movements of the trucks that were actually doing work
    that I normally did."

45. The male plaintiff noted down movements on and to and from the premises of the defendant. He made notes of what he saw on 26 January 1994 (Exhibit P5). There was some discussion between the parties thereafter but nothing was resolved. The male plaintiff did not work after 26 January 1993. When he took his vehicle to premises near to the premises of the defendant on 26 January 1993 he said that he saw vehicles carrying the components which he would have been expected to carry. That is to say there was plenty of work still for him to have done but someone else had been engaged to do it.

46. On 13 January the defendant had completed negotiations for a contract with someone else to carry to Mitsubishi. That is to do as Mr Sulan QC said "... the very Mitsubishi work that Mr Smith had been doing and had been doing satisfactorily".

47. Mr R.H. Kanofski, Operations and Marketing Manager, for Brambles Distributors, gave evidence that he concluded negotiations for his company to carry for the defendant in late 1992 and that the contract commenced operating on 18 January 1993. So at more or less the time when the defendant had assumed that the plaintiffs' contract had been renewed and at the time when the defendant spoke of negotiation it had no intention at all of conducting genuine negotiations. It had entered into a contract with someone else to carry to Mitsubishi.

48. In my opinion the defendant was in breach of its contract with the plaintiffs. In particular it was in breach of the term requiring it to offer renewal. It should have offered renewal on the same terms subject to necessary changes in such matters as dates.

49. The correspondence, the fact of the entry into the contract with Brambles and the conduct of the defendant cries aloud that the defendant found the plaintiffs too expensive and decided to get rid of them - contract or no. No evidence to silence this crying aloud was called. I find that that is what happened.

50. I do not think that the plaintiffs have suffered no loss. I do not think that the idea that any loss exists is illusory as suggested by Mr Glick is sound. The plaintiffs have suffered a real loss. They have lost a valuable contract. They have lost the three years of work under that contract which they should have had. The work was and is there. It has, on the evidence, continued at something over 40 hours per week on the average. It has been given to someone else.

51. I do not think that the assessment of damages is easy. I think that the plaintiffs must (as nearly as possible) be put into the position in which they would have been had the contract run its course.

52. The plaintiffs called their accountant, Mr R.M. Kennedy. He prepared and proffered a report to which there was an additional sheet tendered separately. They were received into evidence. The report and additional sheet speak for themselves. The additional sheet contains lists of matters for consideration and the result on the assumption that 40 hours per week and no more would have been received in the period from 18 January 1993 to 18 January 1996. The sheet under the heading "Edwards Marshall and Co Report" calculates loss on the assumption that the weekly hours worked on an average would have been 47.82 weeks. To the right of that on the sheet under the heading "Adjusted" are the calculations on the assumption that only 40 hours per week would have been worked in the lost three years. I think that I should work on the basis of that the adjusted sheet is the better yard stick. I think that to allow for the continued receipt of 47.82, or indeed anything beyond the 40 hours work per week, would probably produce a profit for the plaintiffs.

53. Mr Kennedy calculated that had the plaintiffs in those lost three years have received work of about 47 hours per week then in each of those years respectively the plaintiffs would have made $124,000, $134,000 and $145,000 (in round figures). He was entitled to take that rate into account by reason of clause 1(f) of the 1989 contract. But as I have already mentioned I think that the adjusted scale is better. Mr Kennedy calculated that if 40 hours per week were taken as the hours been worked in those years the income for each of the three years from the time of the breaking of the contract would have been $103,000, $112,000 and $121,000 in round figures. I annex a copy of the additional sheet. We have seen that Mr Kennedy took into account various expenses. He took into account that an award of damages would be received all at once. Mr Kennedy said:
    "A. He is getting it now. I assumed he was getting it
    18 January 1993. I have brought it back to a sum
    which at 5 percent would enable you to have those moneys
    in those years.
    Q. That is the right way to do it for such a short
    period as three years.
    A. Yes, it is no different from saying for 40 years.
    XN Q. You have brought it back to 18 January 1993.
    A. That is correct.
    Q. That has left you with a figure of $296,195.
    A. Yes."

54. Consistently (as I think) with the case of Hungerford v Walker (1990) 171 CLR 125, Mr Kennedy made allowance for lost income which could have been generated from investment of income earned had it been received under the contract. The plaintiffs had substantial amounts in the savings banks and would have been able to put income received pursuant to the contract into the running of the business or into investment. Mr Kennedy said:-
    "Q. Assume for a moment that on 18 January 1993, Mr Smith or
    the partnership of the Smiths received those funds, the
    $296,195.
    A. Yes.
    Q And at that time and right up to the time that those
    moneys were received, the Smiths had a savings account.
    A. Yes.
    Q And at all times that account was in credit
    A. Yes.
    Q. If those moneys had been received as at 18 January
    1993, they would have been placed in the account and
    earned interest.
    A. Yes.
    Q. Have you then computed out to today's figure or the
    figure as at 23 May what that would have earned.
    A. Yes.
    Q. What is the result
    A. $316,715 at 5 percent.
    Q. Why have you applied 5 percent
    A. Five percent is approximately the rate that you
    would get on a term deposit at the bank. In fact it
    depends upon which term you take, but you could take
    varying terms."

55. Mr Glick did not quarrel with 5%. In these circumstances the figure arrived at compounding to 23 May 1994 (time of trial) as appears in the additional sheet produced $263,514. I think it correct to assess in the way in which Mr Kennedy went about it. Subject to the consideration of the issue of mitigation of damages I think that damages should be assessed at $263,514.

56. There is no doubt that the law required that the plaintiffs take reasonable steps to mitigate their loss. Reasonable, not perfect. In an attempt to avoid litigation the defendant proffered a draft contract to the plaintiffs in or about November 1993. But it was not acceptable to the plaintiffs. Nor could one expect them to go back to the defendant after the treatment meted out to them by the defendant. Nor was the preferred contract one which I think satisfactory as a contract in replacement of that which should have been offered.

57. The male plaintiff gave evidence of extensive enquiries which it made to get work. He had recorded them. He could not get even a day's work. He had offered himself for casual work as well as full time work. I accept his evidence. Eventually he put his truck up for sale. It sold in March 1994. The plaintiff still had the trailer. The male plaintiff gave evidence of the efforts to get work after March 1994.
    "A. Yes, I have sold the truck now.
    Q. When did you sell it.
    A. 15 March, I believe.
    Q. This year.
    A. This year.
    Q. And have you still got the trailer.
    A. I still have the trailer and I am still advertising
    the trailer.
    Q. At the same time you were trying to get work for the
    truck and trailer did you subsequently also try and get
    other kinds of work.
    A. Yes.
    Q. Were you qualified in anyway.
    A. No.
    Q. What kind of work did you do prior to going into the
    transport industry.
    A. I was employed by Hills Industries for approximately
    nine and a half years. When I worked there I started
    off as a process worker. I then became a jig setter,
    setting up some of the bending and drilling machines
    they used. I also was a fork-lift driver for sometime.
    I was also a leading hand in a section or in two
    sections. Do you want me to go back before that?
    Q. Is the type of work that you had done prior to
    becoming a truck driver unskilled and semi-skilled work.
    A. Yes.
    Q. Are you trained to do anything other than unskilled
    or semi-skilled work.
    A. No, I am not.
    Q. Did you then start to look, as from March, for work
    that was as an unskilled or semi-skilled person.
    A. Yes.
    Q. Did you then approach various organisations.
    A. I approached various organisations.
    Q. Have you got any restriction on the type of
    unskilled work you can do.
    A. I cannot do a lot of lifting. I cannot work above
    my head as in like a ceiling fixer something like that.
    Q. Why is that.
    A. I have what is known as Serman's disease in my 7th
    and 8th vertebrae. That restricts the sorts of things I
    can do.
    Q. And were you required to disclose that to people who
    you approached.
    A. Most times yes, because they give you forms to fill
    out whatever. That request is on the forms that you
    have to disclose.
    Q. Did you disclose it when you were requested.
    A. I did.
    Q. Did you prepare a running list of the organisations
    that you approached.
    A. Yes.
    Q. Were these notes made at the time.
    A. Yes.
    Q. Would you look at the two pages now produced with
    the list and the dates.
    A. Yes.
    Q. Are they the various organisations of people you
    approached for work over the period which is listed on
    the two pages.
    A. Yes. They are.
    Q. Were you able to obtain any work from any of those
    organisations.
    A. No. I was not.
    HIS HONOUR Q. Not even a day's work.
    A. Not even a day's work.
    EXHIBIT P7 List of organisations that plaintiff
    approached for work, two pages, tendered by Mr Sulan.
    Admitted.
    Q. Did you offer yourself for casual work.
    A. Yes.
    Q. At the time the partnership stopped providing
    contract work for Exacto did the partnership have a bank
    account.
    A. Yes.
    Q. Did the partnership have money.
    A. Yes.
    Q. How much money.
    A. Approximately $90,000 odd.
    Q. Since you stopped work and were unable to work has
    the partnership used any of those funds.
    A. Yes.
    Q. What's it used those funds for.
    A. It has used the bulk of the funds for paying - I
    still had to pay the canopies of the truck and trailer
    off for a year after I was put off, so that was
    approximately $10,000 I had to repay on the canopies. I
    also had to keep the truck and trailer registered and
    insured through that time, and that was approximately
    $1,200 each for insuring and registering. I have had to
    pay legal fees etcetera out of that money, and we have
    had to supplement my wife's income at times out of that
    money.
    Q. Does your wife work.
    A. Yes.
    Q. Has she always worked.
    A. Yes.
    Q. Was she working prior to January 1993.
    A. Yes.
    Q. Right through the period from 1987.
    A. Yes.
    Q. Is her work unrelated to the work you were doing for
    the partnership.
    A. Yes.
    Q. Since you have stopped working have you relied on
    her salary.
    A. Yes.
    Q. Supplemented from some of these monies from the
    partnership.
    A. Yes.
    HIS HONOUR Q. Have you a family.
    A. No.
    XN Q. If you had received monies pursuant to the
    contract over the period of time what would have
    happened to those monies.
    A. They would have been banked, along with the rest.
    Q. In the partnership.
    A. In the partnership, yes.
    Q. Has the partnership account been in debit since
    1993.
    A. No.
    Q. Had it been in debit prior to 1993.
    A. No.
    Q. It's always been in credit.
    A. Yes.
    Q. Did the monies in the account receive interest.
    A. Yes.
    Q. What were your plans if the contract had run its
    full period to 1996.
    A. Hopefully it would have been renewed, but on the
    pretence that it wasn't renewed my intention was to sell
    the truck and trailer and try and get into some other
    sort of business. Nothing specific in mind, only my
    wife and I had talked about it and I said well, if
    the contract is not renewed in 1996 I am going to have
    to find myself some other sort of work to do that I can
    do, and that may have been in another sort of business
    of some description.
    Q. Why was that. Why did you regard yourself as having
    to go into another business if the contract wasn't
    renewed in 1996.
    A. Because of my age and my back disability I feel that
    I would probably be pretty limited in the sort of work
    that I may be able to obtain, and the only thing that I
    could probably do was to work for myself in some other
    capacity."

58. I accept all this evidence. In addition there was ample evidence of the difficulties of getting work at the relevant times.

59. Some of the evidence of difficulties of getting work was given by Professor M. Wooden, Associate Professor at Flinders University and the National Institute of Labour Studies. I accept his evidence, although it is general rather than particular.

60. Some evidence was called from an organisation called IPEC and from Brambles to suggest that had Smith applied to those organisations they would have given him some work. But cross examination of each witness left me in doubt whether they would really have been able to offer work to the plaintiff. The evidence from those representatives of each of the organisations does not suggest that either made large increases to its fleet or the fleet of subcontractors doing work for it at the relevant period.

61. But, be that as it may, I do not think that the defendant has discharged the onus of proving that the plaintiffs failed to take reasonable steps to mitigate their loss in the circumstances. I think it would be a counsel of perfection to say that more should have been done. And we must remember that 33 for some of the time between 26 January 1993 and 15 March 1994 the plaintiffs were seeking to sell the truck. The male plaintiff needed to be on hand to show it. Moreover, it would have been unfortunate if in, say, doing work on one day the vehicle had been badly damaged by an accident.

62. There will be judgment for the plaintiffs in the sum of $263,514. The defendant's counterclaim for a declaration as therein expressed is dismissed.