Knight v J Corp Pty Ltd - [1999] WADC 77

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: KNIGHT -v- J CORP PTY LTD [1999] WADC 77

CORAM: WISBEY DCJ

HEARD: 27-29 JANUARY, 29, 30 APRIL 1999

DELIVERED : 24 SEPTEMBER 1999

FILE NO/S: CIV 2484 of 1995

BETWEEN: MICHAEL JOHN KNIGHT
Plaintiff
AND
J CORP PTY LTD (009 063 076)
Defendant

Catchwords:

Contracts - Contract for building supervision - Alleged breach by plaintiff in performance of work - Termination - Whether implied term as to termination - Wrongful termination of contract by defendant - Assessment of damages for wrongful termination.

Legislation:

Nil

Result:

Judgment for plaintiff for $33,457.38.

Representation:

Counsel:

Plaintiff: Mr M Holler
Defendant: Mr M Zilko

Solicitors:

Plaintiff: Summers Partners
Defendant: Durack & Zilko

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

Associated Newspapers Ltd v Bancks (1951) 83 CLR 332
Codelfa Construction Proprietary Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Suisse Atlantique Société d'Armement Maritime SA v NV Rotterdamsche Kolen Centrale (1967) 1 AC 361

Case(s) also cited:

BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 16 ALR 363
Bunge Corporation New York v Tradax Export SA Panama [1981] 1 WLR 711
Derry v Peek (1889) 14 App Cas 337
Major v Bretherton (1928) 41 CLR 62
Sheppard v Council of Ryde (1957) 65 CLR 1
Shirlaw v Southern Foundries (1926) Limited [1939] 2 KB 206
Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632

WISBEY DCJ: Michael John Knight, a 52 year old builder, brings these proceedings against J Corp Pty Ltd, a building company having substantial involvement in the construction and sale of project homes.
In the statement of claim the plaintiff relevantly alleges that -
1.he commenced work with the defendant as a building supervisor in late 1993 on an annual salary of $36,000, the provision of a car, and reimbursement of motor vehicle and telephone expenses. The monetary component of the salary package was increased to $38,000 in or about January/February 1994.
2.In or about December 1994 the defendant's building construction manager, Ren Boorsboom, persuaded the plaintiff to work on a subcontract basis, representing that the plaintiff would be provided with a minimum of 30 constructions at all times during the contract. As a result of Boorsboom's representations the plaintiff entered into a written contract on or about 1 January 1995 which relevantly provided:
(a)the plaintiff would provide his services to the defendant as a building supervisor for a period of two years;
(b)the defendant would pay the plaintiff the sum of 1.2 per cent of the contract price of all building works supervised by him, the sum of $300 for each completed individual maintenance work, and with a guarantee that he would earn no less than $50,000 per annum;
(c)the plaintiff would not be responsible for any loss sustained by the defendant howsoever arising and connected in any way with any building works;
3.Further and in the alternative the plaintiff claimed that there was an oral agreement that he would be provided with a minimum of 30 individual building works to supervise at all material times during the contract.
4.The defendant failed to provide the plaintiff with 30 individual building works at all material times.
5.The defendant wrongfully terminated the contract on 15 May 1995.
6.The plaintiff suffered loss and damage in that:
(a)He was not paid the sum of $3,100 earned during the period before the contract was terminated;
(b)He was deprived of the opportunity to earn $196,153.83 commission during the term of the contract;
7.The plaintiff claims damages for breach of contract and/or for misleading and deceptive conduct pursuant to the provisions of ss52, 53(b) and 82 of the Trade Practices Act 1974.
In the defence the defendant:
1.denies the representations which it is claimed induced the plaintiff to enter into the contract.
2.admits the terms of the contract, and that it was terminated on or about 15 May 1995.
3.denies that the contract was wrongfully terminated, and that as a consequence thereof the plaintiff suffered loss.
4.states that in the contract the plaintiff represented himself to the defendant as a registered builder, such representation being false, as a result whereof the defendant was entitled at law to rescind the contract.
5.states that the plaintiff failed to actively direct and control the building works under his supervision, and in particular failed to control the quality of the materials and workmanship, and that as a consequence thereof the defendant was entitled at law by contractual implication to terminate the contract.
The plaintiff provided further and better particulars of statement of claim wherein he gave details of the circumstances in which the representation was made to him that he would have a minimum of 30 individual building works at any given time, and particularised his losses.
Further and better particulars of amended defence dated 31 March 1999 set out particulars of the plaintiff's lack of supervision and his other breaches of obligation under the contract.
As a result of a direction made during the hearing the parties filed a Scott schedule identifying the areas of dispute concerning the state of construction of the houses being supervised by the plaintiff.
Having set out the issues raised on the pleadings I now turn to a consideration of the evidence.
Agreed documentation
Certain documentation was admitted by consent at the commencement of the trial.
Exhibit 1.1 - a schedule entitled "jobs under construction by Perceptions in the period 1 January 1995 to 10 May 1995 including those under supervision by the plaintiff".
Exhibit 1.2 - a schedule entitled "number of Perceptions construction jobs under supervision of each supervisor as at date of each job progress report in the period 1 January 1995 to 10 May 1995".
Exhibit 2 - agreed bundle of documents.
Exhibit 3 - agreed schedule of jobs inherited by plaintiff from Malcolm Eppen on 1 February 1995.
Counsel indicated that Exhibits 1.1 and 1.2 which were tendered by the defendant, were exhibited for the purpose of illustrating the volume of jobs that the defendant in general, and the plaintiff in particular, had over the duration of the contract.
The written contract between the parties appears in Exhibit 2 (pp 1-3), and contains the following interesting provisions:
(a)A recital that the plaintiff was a registered builder pursuant to the provisions of the Builders Registration Act 1939.
(b)Operative paragraphs 2 and 3 set out the plaintiff's duties and responsibilities.
(c)Operative paragraph 4 defines the term of the contract as being for two years.
(d)Operative paragraph 5 provides that the plaintiff is not responsible for any loss sustained by the defendant howsoever arising and connected in any way with the building works.
(e)Operative paragraph 7 dealing with remuneration provides "the remuneration payable by the builder (defendant) to the contractor (plaintiff) shall be 1.2 per cent of the contract price of all building works performed by the contractor payable on fortnightly invoices or as agreed from time to time. (Maintenance works to be carried out by the contractor and to be paid at a rate of $300 paid in total. This sum to be paid on completion of maintenance list and reconciled to total expenditure on all jobs completed.) Total remuneration is to be not less than $50,000 per annum."
There is no reference in the contract to a requirement on the part of the defendant to provide the plaintiff with at least 30 jobs at any one time; and if that was the intention of the parties it would not have been necessary to provide a minimum annual remuneration.
A letter from the defendant to the plaintiff dated 15 May 1995 terminating the contract appears in Exhibit 2 (pp 4,5), and is interesting in that it seems to place store on the fact that the plaintiff was not a registered builder, and concludes with a suggestion that the defendant's building manager, Terry Myers, was, notwithstanding the alleged breaches of contract by the plaintiff, prepared to commend the plaintiff.
The plaintiff's case
The plaintiff
Mr Knight commenced working for the defendant in 1994, having worked the previous 12 months with a company related to the defendant. He stated that he commenced work as a building supervisor on an annual salary of $36,000, together with the provision of a car, and reimbursement of vehicle and telephone expenses. The salary component of the package was subsequently increased to $38,000. He was working for Perception Homes (a division of the defendant) and his duties were essentially related to the supervision of house construction. He was given a set of drawings, would call for materials as required, and had a discretion as to the selection of tradesmen. He was obliged to report to the building construction manager Ren Boorsboom. His role did not change upon becoming a contract supervisor. The plaintiff indicated that before becoming a contract supervisor, he generally had 35 to 40 houses under his supervision at any one time.
The plaintiff claimed that in December 1994 Mr Boorsboom enquired as to whether he would be interested in becoming a contract supervisor, remunerated on the basis of an agreed percentage of gross construction cost. When the plaintiff enquired as to the particulars of the proposed arrangement Mr Boorsboom told him that it would be all sorted out by Mr Myers. The plaintiff claimed that he met with Mr Myers shortly after the original approach by Mr Boorsboom and Mr Myers told him he would receive 1.2 per cent of the gross construction cost. The plaintiff claimed that he said to Mr Myers "I'll need about 30 houses at all times to do that" (that is keep his income at an appropriate level) and that Mr Myers responded "that's not a problem", indicating that if there was a downturn in building work he would put off other supervisors so as to ensure the plaintiff had a reasonable volume of work. The following day the plaintiff was presented with a contract, and he claimed that when he noticed the recital indicating that he was a registered builder, he pointed out to Mr Myers that was incorrect, and Mr Myers responded that it was not a problem. The plaintiff's evidence was that he was not a registered builder because he did not need registration to work as a building supervisor, and he suggested that it was simply a case of paying the registration fee to get appropriate accreditation. The recital remained, and the contract was executed.
The plaintiff stated that in February 1995 the number of houses he was supervising, decreased, and as a consequence he spoke with Mr Boorsboom who provided him with some extra jobs in the Bibra Lake area, previously supervised by Malcolm Eppen. The plaintiff referred to a job progress report (Exhibit 2, p 61,62) and stated that it was necessary to provide progress reports to a senior supervisor on a weekly basis so that the defendant could send out progress payment demands and have a record of the progress of the various jobs. In the plaintiff's case, the progress report necessarily dictated his entitlement to remuneration. The plaintiff's senior supervisor during the relevant period was a Mr Noordzy.
The plaintiff stated that the work he took over from Mr Eppen was rectification work in respect of houses in two streets in a Bibra Lake estate, which had been subject to damage and bad building practices, and which required substantial rectification. He did not get paid for that rectification work.
The plaintiff indicated that, for the purpose of having a consistent income, it was the practice of some supervisors, including himself, to hold progress points back, and average them out. He pointed out that assessment of the progress of work regulated the payment to subcontractors. It was his practice to certify payment due to regular subcontractors on the basis that they had completed their work, when in fact there might still be one or two days work for them to do before being entitled to payment. He referred to a job in Morgan Road, Armadale, where he certified payment for a bricklaying team, which in the event did not turn up and finish the job. He claimed that the star designation under a segment of the progress chart did not necessarily indicate that that stage had been completed, but only that the property was at that stage.
The plaintiff claimed that Mr Boorsboom told him that he would receive some consideration for his supervision of the Eppen jobs, but that it did not eventuate.
In about April 1995 the jobs being supervised by the plaintiff were decreasing.
On 5 May 1995 the plaintiff attended Mr Boorsboom's office at his request and was told that his contract was being terminated because of lack of progress on the jobs he was supervising. The plaintiff stated that he would take the matter up with Mr Myers, and did so on the same day, claiming that Mr Myers told him to continue working and he would sort it out. Ten days later the plaintiff was requested to attend Mr Myers' office where Mr Myers handed him the letter of termination. The plaintiff protested the situation and claimed that Mr Myers said that he could not go against Mr Boorsboom, but that if the plaintiff had been dealing with him the position would not have arisen.
The plaintiff stated that when he submitted his point sheet, the office would assess the stage that the job had reached, and that appears in the progress report. In fact it does appear from the evidence that the plaintiff had a call forward sheet (Exhibit 2, p 65, 66) which he would use while supervising the job, and a point sheet from which he would advise the supervisor weekly of the progress of the job, to enable the office to produce the job progress report. The plaintiff pointed out the obvious, namely that there is only 100 per cent in every job, so that if there was an overclaim at any stage, it would balance out as the job progressed.
The plaintiff referred to a handwritten schedule apparently prepared by the defendant which lists the job, the progress called as at 2 May 1995 and the claimed actual state as at 10 May 1995. He claimed that in respect of Lots 55, 56 and 61 Hartwell Parade, Jandakot, he had not made inappropriate progress calls because ceilings had been put in place before the float had been done, whereas generally the position was the reverse. The plaintiff denied that he had overstated the progress called on any jobs listed on the handwritten sheet and identified items where he claimed that there had been an underclaim. He accepted that there may well have been a modest overclaim in several of the jobs itemised, but that such overclaims would not have amounted to more than a 10 per cent overclaim - something of the order of $50 to $70. It is to be observed that counsel for the defendant advised the Court that the defendant did not in fact rely upon the handwritten schedule, nor the specific allegations in it.
The plaintiff gave general evidence concerning his supervision duties, stating that it was his practice to endeavour to attend daily at every house, and if faults were discovered in any work, the subcontractor would be called back to rectify the defective work. As the plaintiff consistently used the same subcontractors, and as the houses were generally in one area, this did not pose difficulty. He pointed out that the subcontractor did not get additional pay for rectifying defective work. He indicated that there was no set system of supervision, there being a discretion in the supervisor "providing the houses are finished, they are of good standard and they finish in a reasonable time".
At my direction the parties prepared a Scott schedule (Exhibit 5) which was put to the plaintiff. The plaintiff stated that notwithstanding the discussion he had with Mr Boorsboom on 5 May 1995 he continued supervision (although under some difficulty) until his contract was terminated on 15 May.
Turning to Exhibit 5, the plaintiff made the following additional comments to those set out in the schedule.
125 Hartwell Parade, Jandakot
The job was 59 per cent completed (Exhibit 2, p63) and consequently there was no real urgency about attending to the problems identified by the defendant. The fixing of Hardiflex was a 10 minute job.
126 Hartwell Parade, Jandakot
The progress sheet demonstrated it was 86 per cent complete. He was unable to specify how long it would take to complete the duct work to the granny flat, not being aware of the nature of the problem. He estimated that it would take 30 minutes to fit the ceiling. In respect to the plastering work he stated it was usual to get the plasterer back to do touching up after the cabinet maker had completed his work, and that money was held back to cover that requirement.
61 Hartwell Parade, Jandakot
The progress sheet demonstrated that it was 59 per cent complete. The plaintiff seemed to have difficulty understanding the defendant's complaints in respect of that house, and would not accept that he had failed to programme the job appropriately.
56 Hartwell Parade, Jandakot
The progress sheet demonstrated that it was 59 per cent complete. The plaintiff's evidence generally was that the complaints levelled against the job by the defendant were either incorrect or not of consequence, and would have been appropriately attended to as the job progressed.
55 Hartwell Parade, Jandakot
The progress sheet demonstrated that it was 59 per cent complete. The plaintiff seemed uncertain as to the nature of the ceiling problem alleged by the defendant, but in any event did not consider that it was going to pose major rectification difficulty.
The plaintiff explained that he understood practical completion to mean the stage reached when the house was habitable, even though there might be minor items to be attended to. Essentially it appeared that he regarded the house as practically completed when it was off the point sheet, and there was no more work to do on it apart from rectification items. The maintenance period was one of 120 days. The plaintiff's contract provided that he was to get $300 per house in respect of the maintenance responsibility.
375 Ploughshare Place, South Lake
The progress sheet showed it was 48 per cent complete. The plaintiff asserted that the defendant's criticisms did not relate to problems of a substantial nature, and could adequately be addressed during the balance of the construction period.
374 Ploughshare Place, South Lake
The plaintiff indicated that as the job had been put on hold, there was no requirement to do anything by way of supervision.
373 Ploughshare Place, South Lake
The progress sheet showed it was 37 per cent completed, and the plaintiff did not regard the problems asserted by the defendant as of consequence.
170 Ploughshare Place, South Lake
The plaintiff confirmed his response on Scott schedule.
380 Boulderwood Parade, South Lake
The plaintiff regarded the items the subject of criticism as very minimal.
397 Pomaderris Place, South Lake
The progress sheet noted that the job was 42 per cent complete and the plaintiff indicated on the Scott schedule that he regarded the problems identified as being referable to the drawings.
393 Catalpa Crescent, South Lake
The progress sheet showed it was 70 per cent complete, and the plaintiff regarded the problems identified as minor.
418 Leatherwood Rise, Parkwaters
The progress sheet showed that it was 60 per cent complete and the plaintiff was not satisfied that the problems referred to existed prior to the termination of his contract.
424 Catalpa Crescent, South Lake

The progress report showed that it was 94 per cent complete. The plaintiff did not have any particular recollection of the job, and did not regard the problems identified as of consequence.
205 Constitution Gardens, Bibra Lake
This was one of the Eppen jobs, and the plaintiff attributed the problems to that fact. The plaintiff exhibited a schedule of the Eppen jobs (Exhibit 3) stating that all the jobs required major rectification work. He pointed out that he had attended to a number of the jobs, those identified by the defendant being still outstanding.
216 Constitution Drive, Bibra Lake
Again this was an Eppen job and the plaintiff disputed the fact that the sanitation work had not been carried out.
Lot 229 Strathcona, St Pauls
The progress sheet indicated that it was 92 per cent complete.
249 Marshwood Parade, Bibra Lake
The progress sheet indicated that it was 37 per cent complete.
274 Marshwood Parade, Bibra Lake
This job was shown as 60 per cent complete. The plaintiff stated that the fact that something was not noted as called, on the called forward sheet, did not necessarily mean that it had not in fact been called, as the supervisor often kept such information in his head.
The plaintiff was referred to the practical completion certificate which relevantly read: "Practical completion of the works shall be deemed to have occurred when the building is structurally complete and reasonably fit … for occupation and notwithstanding any unfinished work to a minor nature which does not unduly interfere with the free and uninterrupted use of the premises by the owner", and he agreed that accorded with his understanding of practical completion.
The plaintiff tendered his bank statements for the period 21 November 1996 to 27 January 1997 (Exhibit 6).
In cross‑examination the plaintiff stated that he had been in the building industry since 1974, and agreed that he became a registered builder on 27 June 1996. He claimed that the reason he did not become registered for 13 months after leaving J Corp was financial, but I have some difficulty accepting that evidence. The plaintiff commenced his own building business just prior to Christmas 1996, initially in partnership with a Mr Child, the partnership lasting for about 12 months. He was emphatic that Mr Boorsboom approached him to become a contract supervisor.
When cross‑examined about the alleged agreement that he was to be provided with a minimum of 30 jobs at any one time, the plaintiff's response was vague, and I concluded that the assertion that they had agreed a minimum of 30 jobs, was an unreliable reconstruction of the conversation. It is also of significance that the plaintiff never complained to Mr Myers that he did not have sufficient jobs. He alleged that he complained to Mr Boorsboom about the fact, and that it was a result of the complaint that he was given the Eppen jobs. The plaintiff stated that he did not insist that the representation as to the number of jobs be recorded in the contract because he had a good relationship with Mr Myers and Mr Boorsboom, and had no reason to doubt that they would stand by the alleged undertaking given to him. The plaintiff agreed that it was his understanding that if he failed to perform his duties as required by the contract, the defendant would terminate the contract. He denied having approached Mr Noordzy to go into partnership with him. He also denied that he had a meeting with Mr Boorsboom in April 1995 concerning the standard of his work, and the defendant's concern about it. He agreed that for a supervisor, the two important documents relating to his supervision were the called forward schedule and the job progress report. He agreed that the call forward sheet was to ensure that the job progressed satisfactorily. He denied that the actual progress of the jobs being supervised by him was not accurately reflected in the progress sheet, and was emphatic that he did not have discussions with Mr Boorsboom about the problem on five or six occasions. The plaintiff stated that the defendant was not likely to suffer loss by reason of an overclaim because payments were fortnightly in arrears, and there were jobs subject to underclaim. It was his view that at the time a job reached practical completion it was 100 per cent complete, and not 94 per cent complete as asserted by the defendant.
The plaintiff was referred to a record of practical completion (Exhibit 2, p 84) and stated that he never filled in a maintenance date, simply proceeding on the basis that in respect of the houses he was supervising he did his own maintenance within 120 days of the house being handed over. Somewhat surprisingly he was unable to appreciate or unwilling to acknowledge the significance of the date of completion of the record of practical completion, and of the maintenance date, notwithstanding that the defects liability period ran from the date upon which maintenance was due to be completed. The plaintiff stated that he had always filled the forms out in the same manner, and there had never been any complaints. It is also noteworthy that three of the four record of practical completion certificates appearing in Exhibit 2 had not been signed off by the owners. The plaintiff seemed to accept that as a general rule it was appropriate to get tradesmen to return and attend to unsatisfactory workmanship as soon as possible.
It was obvious during cross‑examination that in responding to the defendant's complaints in the Scott schedule, the plaintiff was to an extent limited by his lack of appreciation of the extent and validity of the defendant's assertions. It was also apparent during cross‑examination that his assessment of how long some of the rectification work was going to take, was significantly under estimated. He stated that there was a lot of discretion in the hands of the supervisor as to the order in which maintenance items and unsatisfactory work were attended to. His response generally to the defendant's assertions in the Scott schedule was "if you're going to go nitpicking through faulty jobs to find little tiny pieces I need to know what they are to make a proper comment". The problem facing the plaintiff in responding to the Scott schedule was conceded by defence counsel who said "the difficulty one always has with these sorts of cases is that you have got lots of things that are put in general terms. It may well be that we might have to recall him after Mr Noordzy has given his evidence".
The plaintiff accepted that in respect of 205 Constitution Gardens, Bibra Lake, it was off the point sheet, and yet the external acrylic render had not been applied. His response was that there was only one company doing acrylic rendering, and in the circumstances there was nothing further he could do but wait for that company. In the result, in his view, his work on the house was finished.
The plaintiff agreed that he took over the Eppen jobs on or about 1 February 1995 and consequently had those jobs under his control for about three and a half months prior to the termination of the contract.
The plaintiff seemed to indicate that some of the defendant's criticisms would have been addressed by notes in his 1995 diary, but regrettably he was unable to produce the diary. He indicated that Mr Prosser, who represented a number of overseas clients, who were purchasers of properties in Constitution Drive, was unhappy about the quality of the work on the houses, and that together they tried to arrange appropriate rectification work.
When questioned about the record of practical completion and the ticks against the items referred to in the inspection section, the plaintiff stated that the ticks simply indicated that those items had been looked at and addressed in the presence of the owner, but did not mean that it was necessarily satisfactory (Exhibit 2, pp 81-84). The plaintiff's evidence in this respect was unsatisfactory.
Following termination of the contract, the plaintiff stated that he got a job as a building manager in Kalgoorlie, but because he had a son attending university, it proved too difficult to run two houses. After ceasing that work he tried unsuccessfully to get other work before commencing business on his own account late in 1996.
The plaintiff's evidence as to income received since the termination of the contract, and the sources thereof, was vague and unsatisfactory, and he denied having a business from which he derived an income of $5,789 as suggested (T p 140). He suggested that it might have been received from a superannuation pay out. He agreed that his business expenses whilst working for the defendant were running at about 50 per cent of his earnings. He stated that an amount of $9,149.15 received into his cheque account was in fact a superannuation refund.
The plaintiff was cross-examined on the basis that subsequent to the termination of the contract he received money which he did not declare - certainly his bank statements showed receipt of funds in respect of which he was unable to give any proper explanation. The plaintiff stated that he defaulted on his mortgage payments and on lease payments for his car, and the house appears to have been sold on mortgagee auction.
The plaintiff was recalled and referred to his bank statements, stating that a deposit of $9,149.15 resulted from a superannuation pay out, and that the figure of $5,789 was money earned in a weekend job. He was unable to come up with a satisfactory explanation for the deposit of $2,465 on 13 September. He was prepared to accept that a deposit of $1,350 on 15 November was income. He was unable to tell the Court what his net earnings were for the financial year ended 30 June 1997.
Leslie William Child
Mr Child had vocational experience in mechanical engineering, and as a builder in the United Kingdom. He came to Australia in October 1987 and commenced work as a building estimator for Home Style, a project builder, later becoming a supervisor, estimator, and maintenance manager, holding the latter position for five to six years. He worked for the defendant as a building estimator for about six months and the Home Style group was related to the defendant. He claimed that a building supervisor is provided with a file after the contract slab was laid, and has a wide discretion as to the supervision and progress of the job. His evidence essentially suggests that the task of a supervisor involved some lateral thinking, and improvisation. He stated that he came into contact with the plaintiff while he was maintenance manager in Home Style, and as at the date of trial they were occupying the same domestic accommodation. Mr Child was shown the Scott schedule, and confirmed that he had no personal knowledge of the houses listed on the schedule. Essentially he agreed with the plaintiff's comments in respect of each of the houses listed, expressing the view that the defendant's complaints could properly be categorised as minor. Mr Child considered that many of the items listed by the defendant were to be expected in construction work, and some of them would be addressed during the maintenance period - others as the work progressed. In discussing the point system Mr Child indicated that 100 points were reached by the time of the practical completion inspection; although in cross-examination he seemed prepared to accept that the position was that the job was 94 per cent complete at that stage.
Patrick Dennis Lavender
Mr Lavender, an experienced bricklayer, commenced working for the defendant in or about mid‑1994, and had dealings with the plaintiff. He referred to the Constitution Gardens houses, and stated that the brickwork particularly was in a disgusting state, and required substantial rectification. He stated that he would see the plaintiff at the Constitution Gardens jobs on a daily basis. Mr Lavender did the brickwork on the property at 170 Ploughshare Parade, South Lake, and confirmed the plaintiff's evidence that there was a casual arrangement whereby he would do the first floor brickwork when required. He also confirmed that there was a practice whereby supervisors arranged payment for subcontract work before that work was completed, because of the fact that payment was made in arrears. He also confirmed that there were occasionally reasonable delays before a subcontractor would be called back to rectify faulty work.
The defendant's case
Ren Boorsboom
Mr Boorsboom is a building construction manager with Perception Homes, a division of the defendant company. He had been a senior supervisor for some six or seven years prior to becoming building construction manager. He was not a registered builder but had spent all his working life in the building industry. He stated that he was senior supervisor when the plaintiff commenced with the defendant, and in that capacity was obliged to deal with the supervisors every Tuesday, particularly in respect of the progress points. By that he meant that each Tuesday the supervisors would come in and explain the stage each job had reached. The supervisor would attend the meeting with his point sheet, and Mr Boorsboom would rely upon the accuracy of that sheet. Mr Boorsboom explained in evidence how the points sheet worked, stating that the practical completion inspection took the point system up to 94 per cent. He emphasised that supervisors were not allowed to claim more than the percentage stage the job had reached.
Mr Boorsboom tendered a pro forma progress sheet (Exhibit 7). He also described the call forward report (Exhibit 2, p 65).
Mr Boorsboom's evidence seemed to support the assertion of the plaintiff and Child, that there was some discretion in the supervisor as to the supervision of the job. He emphasised that at practical completion stage the job was only 94 per cent complete.
Mr Boorsboom only became aware that the plaintiff had been put on contract when the plaintiff told him, and at that stage there was only one other supervisor on contract. He claimed that the plaintiff told him he wanted Mr Noordzy to join him in partnership. He stated that the Eppen jobs were not in a mess, making the interesting comment that "all jobs have problems but I have checked the accounts and there were no major problems in any of his jobs". He stated that the problems with Eppen's jobs were no greater than the usual run of problems experienced in building. He claimed that the ideal number of jobs for a supervisor to be handling at any one time was about 20 to 25 . He accepted that the plaintiff had requested 30 jobs or more, but stated that there had never been any discussion between the plaintiff and himself concerning the availability of that number of jobs. As a result of unfavourable information coming to him, Mr Boorsboom arranged for Mr Noordzy to check on the plaintiff's jobs, which revealed that the plaintiff was overclaiming on his points, and consequently he spoke to the plaintiff who undertook not to allow it to happen again. Unfortunately it did, and there were further discussions between them concerning the issue.
When referred to one of the records of practical completion in Exhibit 2 (p 81) Mr Boorsboom emphasised the importance of completing the date of the practical completion inspection, because the client's contractual rights were related to it in that the client had to nominate maintenance item requirements within three months of the practical completion date. When referring to the record of practical completion (Exhibit 2, p 83) Mr Boorsboom stated that if the house had the maintenance items listed as outstanding, it was far from the stage of practical completion. The same applied in respect of the house the subject of the certificate at p 84. Mr Boorsboom stated that he terminated the plaintiff's employment "because he was grossly incompetent - of being a supervisor". He stated that he had no documentary evidence but quite a few complaints from clients and suppliers, and the plaintiff was cheating on his points. When he terminated the contract, he did not give the plaintiff any reason therefor.
In cross-examination Mr Boorsboom stated that he was not a registered builder, and that all the defendant's houses were constructed under Mr Myers' certificate. He indicated that only two supervisors were registered builders. Mr Boorsboom had not inspected the jobs at the centre of this controversy before termination of the contract, or since. Mr Boorsboom said that it was some six to seven weeks before the termination of the contract that he asked Mr Noordzy to check on the plaintiff's points recorded. He claimed that the defendant had received written complaints concerning the plaintiff's supervision, but somewhat surprisingly such complaints had not been discovered nor produced. He admitted that they had no record of the plaintiff overclaiming points, save in respect of the jobs that were analysed subsequent to the termination of the plaintiff's contract, and it appears that the total amount involved in the overclaiming in respect of which there was documentary evidence was $855. Mr Boorsboom conceded that there was a procedure in place to claim back from subcontractors who did not complete their work satisfactorily, and the credit claim (Exhibit 8) related to such a situation concerning one of the plaintiff's jobs. He denied that he did not get on with the plaintiff and that there was a personality clash, and that that was the reason for terminating the contract. Mr Boorsboom confirmed that he had made the calculations of the overclaiming of points particularised in the pleadings, and the accounts department had worked out the financial consequences thereof.
Japp Noordzy
Mr Noordzy, a registered builder for 24 years, is a building supervisor with the defendant and has been in that position for 11 years. He stated that the duties of a building supervisor were to construct a home according to the contract documents, including organising the trades, checking on their work, and following the sequence of events from one trade to another. He stated that unless one followed the proper sequence, the job became messy. He referred to Exhibit 7 which he said set out the proper sequence for the construction of a house. Mr Noordzy stated that a house could be at the 100 per cent stage at the practical completion inspection if there were no outstanding matters requiring attention, and if there were outstanding items the house was deemed to be 94 per cent complete. Essentially what he meant was that the building reached the 100 per cent stage when it was ready to be signed off. He stated that the call forward sheet was a prompt to assist the supervisor to follow an orderly sequence during the construction, and he identified a call forward sheet (Exhibit 2, p 65). He stated that a progress meeting would be held every Tuesday where they would go through each individual job and discuss the stage the house had reached. It was at that meeting that supervisors claimed points. In Mr Noordzy's view it was not appropriate to claim points for any particular part of the construction unless and until that part of the construction was complete, although he did concede that it was permissible to claim a percentage of a particular stage of construction. Mr Noordzy indicated that it was his job to go on rounds and check on the jobs of supervisors in the south zone which was his area. He considered that during the plaintiff's time with the defendant each supervisor carried between 25 to 30 jobs allocated to them by the construction manager, Mr Boorsboom. He stated that the plaintiff suggested that they go into partnership, and he declined because contract work did not suit him. I thought his evidence on this particular issue was somewhat vague. Mr Noordzy stated that he made an inspection of the plaintiff's jobs every Wednesday following the progress meeting, and that he noticed that the job progress was not accurately stated; in addition there were some structural problems. Further, he noticed some overclaiming on progress points. He reported his concerns to Mr Boorsboom. It appears that he only observed discrepancies "over the last few weeks, I suppose, prior to Mike's demise". He clarified this as meaning over the last four weeks, but again his evidence lacked precision. He stated that he never raised the issue with the plaintiff because he was on contract, and simply reported the matter to Mr Boorsboom. He considered that the plaintiff's supervision was "below average". Mr Boorsboom subsequently told him that the plaintiff's contract had been terminated and requested that he take over the plaintiff's houses. When he did so he made notes as to defects, and those notes which were made on 17 May 1995 appear in Exhibit 2 (pp 88 to 96). He emphasised that not all the notes related to faults, and were in a number of cases a prompt for him. He stated "see they're all little things but they were a prompt for me to get the job moving again". When asked whether the various items should have been attended to prior to his taking over the round he said "Yes, because if you had left them any longer, it would make the job very, very hard to do". He stated that the plaintiff had not arranged to call forward trades and materials on the various jobs properly.

Referring to particular jobs Mr Noordzy noted that 205 Constitution Gardens, Bibra Lake, was off the point sheet, ie 100 per cent complete, whereas inspection revealed the position to be otherwise (Exhibit 2, p 93). In particular, the complete outside of the house had not been acrylic rendered, which meant that there was two to three days work to be done on that aspect. In addition, there were roof leaks, and the paving was down which would create difficulty when the acrylic render was applied.
Mr Noordzy stated that following a complete inspection on 17 and 18 May 1995 he concluded that the defendant was employing a supervisor who had not made the grade, and just had not done his job by properly supervising the various constructions.
Referring to 126 Hartwell Parade, Jandakot, Mr Noordzy was of the view that at least four hours work spread over two days was necessary to install the granny flat ceilings. In addition, there were a number of small items needing attention. His notes indicated that the roof was leaking badly because flashings were not installed.
In respect to 61 Hartwell Parade, Jandakot, he observed that a plasterer was required, but had not been called for. In addition there were other items requiring attention.
In respect to 56 Hartwell Parade, Jandakot, he observed that steel lintels had been installed, rather than thermolite lintels, with the result that it would not have been possible to plaster around the lintels and it was necessary to have the lintels replaced.
In respect to 55 Hartwell Parade, Jandakot, he indicated that there was a problem with the ceiling levels, with the result that ceilings had to be taken out and refitted, which was an issue that should have been addressed by the plaintiff.
In respect to 375 Ploughshare Way, there were problems with roof timber support which should have been addressed by the plaintiff. In addition, the dining room pillars were 90mm out. Mr Noordzy agreed that the latter problem was "not a big deal" but it was not correct according to plan, and it is significant that in the result they were not moved by the defendant.
In respect of 374 Ploughshare Place, South Lake, the house had reached lock-up stage but it was not completed.
In respect to 424 Catalpa Street, South Lake, Mr Noordzy stated that it was pathetic supervision to have the roof tiles applied before sealings were fitted when the construction required exposed rafters, because of the obvious impracticality of fixing the ceiling after the roof tiles had been applied.
Mr Noordzy was referred to explained and confirmed the defendant’s criticisms in the Scott schedule, in respect of the various jobs, the defendant's criticisms in the schedule having been identified and listed by him. It seemed from his evidence that he was very reliant on his notes, and not surprisingly after a lapse of four years did not have a clear recollection of the various constructions.
Mr Noordzy was referred to the further and better particulars of amended defence and confirmed that his inspection had revealed the number of points overclaimed as set out in the schedule, and that the cost thereof to the company had been calculated by the accounts department.
In cross‑examination Mr Noordzy was firm in his view about the overclaiming of points. He agreed that the construction timeframe for the houses concerned was of the order of 14 to 16 weeks. He referred particularly to the call forward report form appearing in Exhibit 2 (p 65), stating that it was the supervisor's bible, and was a very important document for programming a job. He accepted the supervisor might use his own diary, but stated that he had an obligation to complete the call forward report. He accepted that there were occasions when out of necessity a supervisor was required to "jump over trades". He agreed that, for reasons which he could not explain, some people did tend to save points and average out their progress. Mr Noordzy stated that at the material time he was overseeing three or four other supervisors including apparently Mr Eppen, and claimed that Eppen programmed his work correctly. When it was put to him that no supervisors achieved an ideal degree of supervision and had a smooth run or a perfect house, his response was "there's still not today. That is a fact of life". He agreed that often the trades were working on other houses in the same street or area, and that it did not pose insurmountable difficulty getting them back.
He confirmed that in preparing his schedule of points overclaimed, he did not take account of the fact that a percentage of the particular part of the construction may have taken place. Mr Noordzy also confirmed that it was not until the plaintiff's contract was terminated that he made any notes as to the unsatisfactory nature of the plaintiff's work. He was prepared to accept that some of the problems might have been related to vandals. He accepted that the termination of the plaintiff's contract might have provided partial explanation for non‑programming, although he stated that he had gone through the point sheets for the previous eight weeks prior to 17th, and not a lot had happened in that time.
When questioned as to the problem of acrylic render being placed too high on the windows so that drainage grooves were blocked, Mr Noordzy agreed that it was a common problem. It was put to him that the plaintiff made a conscious decision to brick up the breakfast bar at 375 Ploughshare Way, and he agreed that it could be done that way.
When it was put to him that a contract supervisor had a degree of flexibility and discretion, Mr Noordzy stated that if he was a contract supervisor he would not have operated in the way the plaintiff did. He stated that the building sequence outlined in Exhibit 7 was a common building sequence in the cottage industry.
Phillip Christopher Prosser
Mr Prosser, a marketing manager with a diploma in architectural drafting, and completing a diploma in applied science and building, worked for Bellcrest Homes as an architectural draftsman from 1980 to 1983; for Rossmore Homes as a contract administrator and drafting manager from 1983 to 1993; and as an administration manager for the defendant for 12 months between 1993 and 1994. Between 1994 and 1998 he worked as construction manager for Westaust Developments Pty Ltd which company had a number of clients in the south-east Asian area acquiring residential properties in Perth. Mr Prosser, on behalf of Westaust, arranged for homes to be built for these clients by companies such as Glenway Homes, Rossmoyne Homes and the defendant. It appears that Westaust acted as "middle man" arranging the contract between the client and the builder, and then acted on behalf of the client carrying out supervision inspections of the home during the construction. As Mr Prosser put it "My title was the construction manager and it was my duty and role to oversee the construction of all of the projects that were being constructed at that time, which included some of the projects that were being constructed by J Corp". Mr Prosser had regular contact with the defendant's building supervisors, and particularly with the plaintiff. He advised that some of the houses being constructed by the defendant, in which Westaust had an interest, were Lots 55, 56, 61, 125 and 126 Hartwell Place; Lots 393 and 424 Catalpa Crescent; Lot 4A Leatherwood Rise; Lots 205, 216 and 219 Constitution Gardens; Lot 229 Strathcona Rise; and Lot 291 Rainbow Gardens, all these properties being in the Jandakot, South Lake or Bibra Lake area, and being supervised by the plaintiff. When asked how he found the plaintiff as a supervisor, he said "He did his tasks and went about his work but yes I did have a few problems with some of the houses under construction". He identified those problems as a failure to have items completed in the expected timeframe. He stated that he had discussions with the plaintiff on a daily basis concerning the progress of the jobs and that "obviously, all the jobs were actually finished within their timeframes as far as the contract goes", although estimates given by the plaintiff were often inaccurate. He stated that he often met the plaintiff for practical completion inspections and discovered that the houses were not complete and was given excuses such as that trades had let the plaintiff down. Mr Prosser referred to the records of practical completion at pp 81-84 of Exhibit 2 . Page 81 referred to a property at 225 Constitution Gardens, the record of practical completion having been signed by Mr Prosser. Page 82 referred to Lot 223 Constitution Gardens, the practical completion certificate not having been signed by Mr Prosser. Page 83 referred to 218 Constitution Gardens, and again, the practical completion certificate had not been signed by Mr Prosser. In respect of that particular property he stated that when he attended the practical completion inspection the property was not at practical completion stage, and it appears Mr Prosser was very unhappy about that. Page 84 referred to a property at 217 Constitution Gardens and again the practical completion certificate was not signed by Mr Prosser, his view being that at the time of his inspection the house was not practically completed. He stated that he attended for a practical completion inspection at 393 Catalpa Crescent to find the house was nowhere near practical completion. There had been no brick paving, the house had not been painted, doors had not been fixed and various other items were not complete.
In cross‑examination Mr Prosser stated that he had complaints about all houses being supervised by the plaintiff, as there were a lot of outstanding items in respect to all of them. He stated that he had made verbal complaints to Mr Boorsboom and Mr Myers concerning the plaintiff's supervision.

Terrence Arthur Myers

Mr Myers is the plaintiff's group building manager, having held that position for about 13 years. He is a registered builder. He stated that his responsibilities were in respect of the onsite construction of all residential homes, including the quality of the construction, the timing of the construction and budgets. He confirmed that his building licence was used for all the defendant's activities. He had general responsibility for those under him, including construction managers, senior supervisors, supervisors, estimators and the like. He confirmed that he employed the plaintiff in or about 1993 as a building supervisor, the plaintiff being directly responsible to Mr Boorsboom. He confirmed that supervisors operated under a point system there being 100 points in every building contract, starting with two when the supervisor got the file, and concluding with a formal handover to the client. He confirmed that the building manager had authority to terminate a supervisor's employment. Dealing with the proposal that the plaintiff go on contract Mr Myers said:
"I actually was actively encouraging people to be looking for a production because at the time there were delays occurring and if I had an opportunity to provide incentive‑based programmes for individuals to achieve better than budget of times then I wished to reward them for it."
He indicated that the plaintiff had demonstrated his ability as a performing supervisor. He stated that it was agreed that the plaintiff would receive remuneration on the basis of 1.2 per cent and that the plaintiff would receive a minimum annual income of $50,000. He denied that there was any guarantee of a minimum number of jobs, but that there was general discussion that the plaintiff wanted as many jobs as he could get. He pointed out that by reason of the nature of the building industry it was not possible to give that sort of guarantee. Mr Myers stated that he instructed his secretary to prepare an agreement using as a precedent the contract for Peter Dulwich the other supervisor on contract, and his evidence establishes that the contract was executed quickly and casually.
Mr Myers stated that at all times he had an understanding that the plaintiff was a registered builder, but it does not appear that there was any discussion between the two of them concerning that fact. He claimed that he would not have allowed the plaintiff to go onto contract in the terms provided if he had known the plaintiff was not a registered builder, but I find that difficult to accept, particularly as he claimed that because he believed the plaintiff was a registered builder he thought that he had met an external and objective standard; whereas it was clear that he had made his assessment of the plaintiff's ability based on the plaintiff's prior working experience with the defendant.
Mr Myers denied that prior to the signing of the contract he had a conversation with the plaintiff who pointed out to him that he was not a registered builder. He stated that when the plaintiff commenced working under contract he had approximately 30 jobs under supervision, and that during the period of the operation of the contract it varied between 24 to 34. He stated that about a month before the contract was terminated he had a discussion with Mr Boorsboom concerning the plaintiff's performance and that Mr Boorsboom:
"… didn't feel that Mike was performing in his role. He had numerous complaints from various parties. He didn't have the trust in him that he was producing the job that was expected of him. He didn't feel that he was actually achieving and he felt that the reward system that I had placed him on was giving him an incentive to cheat on his points."
He stated that finally Mr Boorsboom advised that he had terminated the contract, and that shortly thereafter he had a conversation with the plaintiff when he apparently undertook to ascertain whether the termination was sound. Mr Myers stated that the plaintiff worked up until Friday the 15th when he received the termination letter. Mr Myers made the interesting statement that at this time "I guess there was more eyes looking at Mike's performance generally".
In cross‑examination Mr Myers confirmed that the plaintiff had never told him that he was a registered builder, and it seems apparent to me that it got into the contract because it was in the precedent. When asked to address the plaintiff's ability prior to going on contract Mr Myers said "I was happy with his production yes. I did have some concerns about his ability to complete the jobs". He confirmed that it was not necessary for a supervisor to be registered as a builder. He was emphatic that the plaintiff never told him prior to the execution of the agreement that he was not a registered builder.
Mr Myers' attention was drawn to his letter of termination dated 15 May 1995 and particularly the last sentence stating "personally I am sorry this situation has arisen and would speak on your behalf relevant to the effort and goodwill you have demonstrated before me". His explanation of that remark was unconvincing.
It is of interest that Mr Myers confirmed in cross‑examination that the only time he ever asked the plaintiff if he was a registered builder was after the contract was terminated.
Anthony Charles Cooper
Mr Cooper, the registrations manager of the Builders Registration Board, gave evidence that the plaintiff became registered as a builder on 27 June 1996, consequent upon him having completed a satisfactory assessment procedure earlier that year. It does appear, however, that prior thereto he was not in a position to obtain registration.
Findings of fact
The plaintiff's cause of action arises out of the termination of contract on 15 May 1995 and it is regrettable that the action did not come on for hearing until a period of approximately 3½ years had elapsed. I have no doubt in this case that the expiration of that period of time had an effect upon the reliability of the recollections of all the witnesses. I would also observe that the contract, the subject of the action, was entered into casually and hastily, without any real commercial consideration, and appears to have been derived from a precedent contract entered into by another party. Essentially the parties were agreeing that the plaintiff would continue performing as a subcontractor, the services he was already performing as an employee. The evidence must be considered against that background.
The terms of the contract
In his closing address counsel for the plaintiff properly conceded that the burden of the evidence was insufficient to establish the plaintiff's allegation that there had been an agreement between the parties that the plaintiff would be provided with a minimum of 30 individual building works to supervise at all times during the contract. As I have pointed out in these reasons, such a term would have made the requirement of a minimum remuneration stipulation, unnecessary and inappropriate. I have no doubt that there were discussions about the number of jobs that might be available to the plaintiff, but that those discussions simply reflected hope upon the plaintiff's part, and did not result in a contractual term.
The defendant contended that it was an essential term of the contract that the plaintiff was a registered builder, and that the plaintiff so represented in the agreement. It is clear from all the evidence, and particularly that of Mr Myers, that there was no oral representation of that fact by the plaintiff prior to the execution of the contract. It is also clear that the nature of the plaintiff's duties did not necessitate his holding that accreditation. He was merely going to continue to perform under the contract for services the duties he had been performing for the previous 12 months under a contract of service. I have no doubt that at the time of the execution of the contract it was not within the contemplation of the parties that the plaintiff was a registered builder or required so to be, and that the recital to that effect is the result of a transposition from the precedent contract.
Termination of the contract
Having resolved the matters referred to above, it is common ground that the parties were contractually bound by the terms of the contract dated 1 January 1995, and that the contract was determined by notice given by the defendant on 15 May 1995. The defendant carries the burden of establishing that the plaintiff breached the contract by failing to actively direct and control all building work under his supervision; failing to control the quality of the materials and workmanship in respect of building work under his supervision; and failing to ensure that the building work under his supervision was completed in accordance with the plans and specifications relevant to such work: The defendant asserts that it was an implied term of the contract that in the event of the plaintiff failing to carry out his duties in accordance with the terms of the contract, it was at liberty to terminate the contract. The contract having been terminated by the defendant, it carries the burden of establishing that it was lawfully terminated.
The legal position as to implied contractual terms is discussed in Codelfa Construction Proprietary Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 particularly by Mason J at 346-347 where he stated:
"The implication of a term is to be compared, and at the same time contrasted, with rectification of the contract. In each case the problem is caused by a deficiency in the expression of the consensual agreement. A term which should have been included has been omitted. The difference is that with rectification the term which has been omitted and should have been included was actually agreed upon; with implication the term is one which it is presumed that the parties would have agreed upon had they turned their minds to it - it is not a term that they have actually agreed upon. Thus, in the case of the implied term the deficiency in the expression of the consensual agreement is caused by the failure of the parties to direct their minds to a particular eventuality and to make explicit provision for it. Rectification ensures that the contract gives effect to the parties' actual intention; the implication of a term is designed to give effect to the parties' presumed intention.
For obvious reasons the courts are slow to imply a term. In many cases, what the parties have actually agreed upon represents the totality of their willingness to agree; each may be prepared to take his chance in relation to an eventuality for which no provision is made. The more detailed and comprehensive the contract the less ground there is for supposing that the parties have failed to address their minds to the question at issue. And then there is the difficulty of identifying with any degree of certainty the term which the parties would have settled upon had they considered the question.
Accordingly, the courts have been at pains to emphasize that it is not enough that it is reasonable to imply a term; it must be necessary to do so to give business efficacy to the contract.
…
The conditions necessary to ground the implication of a term were summarised by the majority in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council
'(i)It must be reasonable and equitable;
(ii)It must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it;
(iii)It must be so obvious that 'it goes without saying';
(iv)It must be capable of clear expression;
(v)It must not contradict any express term of the contract.' "

In my view the parties have identified the terms of the business arrangement between them in the contract and it is not appropriate nor necessary to give the contract business efficacy to imply the term proposed by the defendant. The more so having regard to operative clause 5 of the contract.
The position at law is that the defendant was only entitled to terminate the contract for any breach of a fundamental of essential term (ie one that goes to the root of the contract) Suisse Atlantique Société d'Armement Maritime SA v NV Rotterdamsche Kolen Centrale (1967) 1 AC 361 at 422.
In Associated Newspapers Ltd v Bancks (1951) 83 CLR 332 the Court dealt with the question of whether a term in a contract was a condition or essential term of the contract going to its very root, the breach of which would immediately entitle the defendant at his option to rescind the contract and sue for damages for the loss of the contract; or a mere warranty or non‑essential and subsidiary term, the breach of which would entitle the defendant to damages. The Court said at p 336:
"Various tests have been advanced by the courts from time to time to determine what is a condition as opposed to a warranty. In Bettini v Gye Blackburn J (as he then was) said that to determine this question the court must ascertain the intention of the parties to be collected from the instrument and the circumstances legally admissible with reference to which it is to be construed. Later in the same case his Lordship said that in the absence of any express declaration by the parties, as in the present case, 'we think that we are to look at the whole contract and applying the rules stated by Parke B to be acknowledged in Graves v Leg see whether the particular stipulation goes to the root of the matter, so that a failure to perform it would render the performance of the rest of the contract by the plaintiff a thing different in substance from what the defendant has stipulated for; or whether it merely partially affects it and may be compensated for in damages'."
The Court stated that in order to decide the question, one of the first things to look at is to what extent the truth of what is promised would be likely to effect the substance and foundation of the adventure which the contract is intended to carry out. Referring to C B Morison Principles of Rescission of Contracts (1916) at p 86:
"You look at the stipulation broken from the point of view of its probable effect or importance as an inducement to enter into the contract."
In its submission the defendant says that "the plaintiff's proper management and supervision of the building work undertaken by the defendant, the active direction and control of that building work, and the control of the quality of the materials and workmanship of that work, were all express terms and were fundamental or essential terms because they were of such importance to the defendant that it would not have entered into the contract unless it was assured of a substantial performance of them. The contract was a contract for the supply of services and the performance of the services went to the very heart of the contract". In general terms that is correct, and the question is whether the defendant has established that any default by the plaintiff in the performance of his role as a building supervisor, was of such order that it can be said that it amounted to a fundamental breach. I am not persuaded by the evidence that is the case, and I would observe that had an independent expert been brought in to assess the jobs being handled by the plaintiff immediately upon the termination of the contract, the issue may have been easier to resolve. Although the plaintiff's supervision was no more than average and his scheduling of jobs, inspection, and the like, left room for improvement, I am not persuaded that in the result he failed in the substantial performance of his obligation to ensure "the houses are finished, they were good standard and they finish in a reasonable time". He apparently achieved that result for 12 months as an employee, and it is difficult to accept that there was a dramatic adverse change in his capacity after going on contract. I am not required to determine why the defendant became disenchanted with the plaintiff, but have no doubt that having done so, and having terminated the contract, it scrutinised the plaintiff's jobs with a view to getting evidence in support of the action it had taken. There can be no doubt that there were problems but one cannot lose sight of the fact that Mr Boorsboom said "all jobs have problems"; Mr Noordzy observed discrepancies "over the last few weeks, I suppose, prior to Mike's demise", and indicated that an ideal degree of supervision, a smooth run, or a perfect house was a result very often not achieved, "being a fact of life". Mr Prosser said "he did his tasks and went about his work but yes I did have a few problems with some of the houses under construction", and "obviously, all the jobs were actually finished within their timeframes as far as the contract goes". The contract having been terminated, I am sure that any problems with the houses being supervised by the plaintiff assumed greater prominence for the defendant’s officers.
The view that I have formed of the plaintiff's capacity is corroborated by Mr Myers' statement in his letter of termination that he would "speak on your behalf relevant to the effort and goodwill you have demonstrated before me". It is not likely that he would have done so, had default been of fundamental consequence.
On the whole of the evidence I am not satisfied that the defendant was entitled to rescind the contract, and its actions in doing so constituted a breach entitling the plaintiff to damages. The plaintiff carries the burden of proof of establishing the damage suffered by him.
The plaintiff produced an agreed schedule of payments received from the defendant in respect of the jobs supervised by him during the term of the contract, which demonstrates that he received a gross amount of $31,552.19 over a 17 week period, or an average gross weekly income of $1,856.01. He submits that had the contract not been terminated, his weekly gross earnings would have been maintained at that rate for the duration of the contract.
Although I am satisfied that the plaintiff's performance under the contract did not afford the defendant a lawful reason for termination, the evidence establishes that his performance was at best average, or below average, and that the relationship between himself and the defendant's management was such that it is a necessary conclusion that the work being offered to him would have declined, his capacity lessened, and there would have been a corresponding reduction in his earnings. I am satisfied that in the balance of the 1995 calendar year he would have been unlikely to gross more than a further $30,000, and in the calendar year 1996 was unlikely to have received more than the guaranteed minimum of $50,000. That is, that his potential gross loss occasioned by the wrongful termination of the contract was of the order of $80,000. The plaintiff agreed in cross‑examination that his expenses during the contract were running at the order of 50 per cent of his gross earnings. Over a 12 month period I believe that 40 per cent is a more realistic figure, and consequently his loss before tax is reduced to $48,000.
The plaintiff's evidence concerning his attempts to get work, his vocational activities, and the earnings therefrom, over the period from the termination of the contract until 31 December 1996 was vague and unsatisfactory. The tax return for the year ended 30 June 1996 demonstrates that he had net earnings of $5,789 and he claims to have earned another $3,000 immediately prior to Christmas 1996. There were, however, deposits in his bank statements which he was unable to explain, and I believe that it is proper to conclude that he did earn, or was capable of earning, a total of approximately $14,000 during the balance of the contract period.
In the result his primary loss is $34,000 and after an appropriate deduction for tax is $27,000.
I allow interest thereon at 3 per cent for the period 16 May 1995‑31 December 1996 ($1318.38) and at 6 per cent for the period 1 January 1997‑24 September 1999 ($4425.00). I allow $714 interest on the sum of $3100 the subject of the interim judgment entered 19 March 1999.
The plaintiff is entitled to judgment for $33,457.38.