Sandford v Ausdale Enterprises Pty Ltd as Trustee for the Lovett Family Trust - [2005] WADC 165

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: SANDFORD -v- AUSDALE ENTERPRISES PTY LTD as Trustee for THE LOVETT FAMILY TRUST & ANOR [2005] WADC 165

CORAM: DEANE DCJ

HEARD: 26-27 OCTOBER 2004

DELIVERED : 25 AUGUST 2005

FILE NO/S: CIV 2183 of 2003

BETWEEN: GEOFFREY MICHAEL SANDFORD
Plaintiff
AND
AUSDALE ENTERPRISES PTY LTD as Trustee for THE LOVETT FAMILY TRUST (ACN 060 607 650)
First Defendant
DALE LOVETT
Second Defendant

Catchwords:

Breach of contract - Both contract and breach admitted by defendants - Whether defendants can amend defence and add a counterclaim - Whether terms of the contract constitute restraint of trade of defendants - Whether terms of contract are more than what is reasonably required to protect the plaintiff's interest - Whether contract enforceable - Claim for damages by plaintiff

Legislation:

Fair Trading Act 1987

Result:

Amendment to add counterclaim refused
Restraint of trade exists but is reasonable in the circumstances
Contract enforceable
Damages awarded to plaintiff

Representation:

Counsel:

Plaintiff:     Mr M F Holler
First Defendant              :     M J C Curthoys
Second Defendant         :     Mr J C Curthoys

Solicitors:

Plaintiff:     Mark Holler & Co Lawyers
First Defendant              :     Kaeser Kroon
Second Defendant         :     Kaeser Kroon

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

Aling v Olivier (1949) (1) SA 215
Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288
Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191
Arcadi v Colonial Mutual Life Assurance Society Ltd (1984) ATPR 40‑473 at 40,454
Bettini v Gye (1876) 1 QBD 183
Buckley v Tutty (1971) 125 CLR 353
Cream v Bushcolt Pty Ltd [2004] WASCA 82
Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26
Jekos Holdings Pty Ltd v Australian Horticultural Finance Pty Ltd [1994] 2 Qd R 515
Lindner v Murdock's Garage (1950) 83 CLR 628
Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181
Nordenfelt v Maxim Nordenfelt Guns & Ammunition Co Ltd [1894] AC 535
Peters (WA) Ltd v Petersville Ltd [2001] HCA 45
Stenhouse Australia Ltd v Phillips [1974] AC 391
Warner Brothers Pictures Inc v Nelson [1936] 3 All ER 160
Western Australia v Wardley Australia Ltd (1991) 30 FCR 245

Case(s) also cited:

Butt v Long (1953) 88 CLR 476
Herbert Morris Ltd v Saxelby [1916] 1 AC 688

DEANE DCJ:

The issues

In this matter the plaintiff, Mr Sandford, is an optometrist who on 3 August 2001 entered into a written contract with the first and second defendants to provide optometrical services to them on the express condition that the plaintiff would be the sole optometrist for the practice run by the first defendant. The contract, Exhibit 2, in its entirety is reproduced below but relevant to this matter contained certain terms and conditions, one of which was that the plaintiff was required to work four days a week providing services for the practice on an exclusive basis from 9 January 2002 save for public holidays or when the plaintiff was sick or on holiday.
Further the contract was for a period of five years from 3 August 2001, the date of signing by the parties, until 31 December 2006, at which time the plaintiff would have a five year option to continue providing his services. The defendants acknowledged that cl 2 of the contract was breached when the first defendant engaged an optometrist other than the plaintiff to work at the practice on an ongoing basis. The period of breach is alleged to be between 10 March 2003 and 30 November 2003, during which time that other optometrist allegedly provided services to the practice about two days a week when the plaintiff was not working there and when the plaintiff did not consent to that occurring.
"CONTRACT FOR OPTOMETRICAL SERVICES
This contract is made this 3rd day of August 2001
Between GEOFFREY MICHAEL SANDFORD of 8 Cowrie Crescent, Mount Pleasant in the State of Western Australia, optometrist, of the one part ('Geoff');
And
AUSDALE ENTERPRISES PTY LTD ACN 060607650 as Trustee for THE LOVETT FAMILY TRUST Trading as VISION PLUS BUNBURY ('the Company') trading from premises at Princep Street, Bunbury in the said State ('the Practice');
And
DALE LOVETT of Australind in the said State, as GUARANTOR of the obligations of the Company hereunder ('Dale').
The Parties hereto agree to enter into a contract to secure the services of Geoff as sole optometrist for the Practice on the following terms and conditions:
1.Geoff to work 4 days per week from 9/01/2002 except where allocated day falls on a public holiday.
2.No other optometrist to work at the Practice except when Geoff is sick or on holiday.
3.Geoff to have 4 weeks per annum holiday (unpaid and inclusive of sick leave). Geoff shall give Dale at least four weeks' prior notice of intended holiday dates.
4.Geoff to ensure that he is covered by professional indemnity insurance, and to always have a tidy, professional appearance.
5.Geoff to collect all medicare fees, contact lens fees, and half the profit on soft lens sales, where the prescription is provided by him. This is also to apply to repeat purchases. This is to apply from the date of signing of this agreement.
6.Dale to provide suitable accommodation or to pay for the expenses thereof from the date hereof until 30/6/2003. After this date, all accommodation expenses are Geoff's responsibility.
7.The term of this contract is from the date hereof until the 31/12/2006, with Geoff to have a five (5yr) year option, exercisable no later than three months from the date of expiration of the initial 5 year term of this contract.
8.This Contract shall be binding upon the heirs, executors, administrators, successors in title and assigns to the Practice, Dale and the Company. It shall be a condition of any sale or assignment of the Practice and the Company's business that the services of Geoff shall be retained in accordance with this contract for the duration of the term hereof and any option period."
The basis upon which the plaintiff claims damages for this period is also referred to later in the course of these reasons. Interest on that sum is claimed. Initially in their defence the defendants admitted the contract and its terms and conditions as well as conceding that on 10 March 2003 the first defendant engaged the services of a second optometrist in the manner alleged but denied that the defendants were in breach of the contract alleged or at all and therefore that the plaintiff has suffered any loss or damage by reason of which he is entitled to an award of damages.
At the commencement of the trial counsel for the defendants sought leave to amend the defence and add a counterclaim to it. The amendment to the defence is not problematic in the sense that both parties agree that the period of breach extends from 10 March 2003 until 30 November 2003. The amendment insofar as it relates to the addition of a counterclaim is opposed. The defendants now wish to allege that it was an express term of the contract that the plaintiff would ensure he was covered by professional indemnity insurance and he was in breach of the contract because he did not ensure that this was the case. Further it is alleged the plaintiff failed to inform the defendants that he was not so covered and that he continued to provide services to the first defendant without providing that information.
In addition it is said that the plaintiff failed to inform the defendants as to the reason why he did not have such insurance coverage and that his circumstances were such that it was unlikely he would be able to obtain such coverage. It is alleged that if the defendants had been informed prior to entering into the contract that the plaintiff's circumstances were such that it would be unlikely that he could obtain professional indemnity insurance they would not have entered into the contract and further, or alternatively, had the defendants been informed that this was the case and the reasons for it they would have terminated the contract. For this reason it is said that the plaintiff engaged in misleading and deceptive conduct contrary to s 10 of the Fair Trading Act ("the Act") and pursuant to s 77 of the Act the defendants seek an order declaring the contract to be void from its commencement or alternatively an order refusing to enforce the provisions of the contract and damages being the costs of the action on an indemnity basis.
It is necessary to determine the issue as to whether the defendants should be granted leave to add the proposed counterclaim to their defence. They acknowledge that the proposed amendment comes very late but say that it was only shortly prior to trial that it came to their notice the plaintiff did not have professional indemnity insurance for approximately the first two years of the contract, notwithstanding there was a clause in the contract that required the plaintiff to have such insurance.
It is not in dispute that the plaintiff at the time of entering into the contract on 3 August 2001 did not have professional indemnity insurance nor that he was not able to obtain such insurance until August 2003. The details of why this was so and what the plaintiff did with a view to resolving the problem are canvassed in his evidence which is referred to in this judgment.
On 15 September 2003 a letter was written on behalf of the defendants to the plaintiff's wife who acts for him, pointing out that the plaintiff was responsible for taking out professional indemnity insurance in respect of the services he provided to the defendants. By reply on 25 September 2003 the plaintiff's wife confirmed that her husband was a fully financial member of the Optometrists Association of Western Australia and thereby covered by professional indemnity insurance.
It was not until 14 September 2004 that the defendants claim they became aware that the plaintiff was not a member of that association for a period of time and so would not have had access to any professional indemnity insurance arrangements made for members by the association. As a result they wanted confirmation that the plaintiff had had such insurance in the light of the parties entering into the agreement on 3 August 2001.
The defendants did not consider the reply they received dated 5 October 2004 to be responsive to their specific enquiry. On 19 October 2004 counsel for the plaintiff advised the defendants' solicitor that the plaintiff had not in fact had professional indemnity insurance cover at all times since 3 August 2001 and it was on that basis the following day counsel for the defendants forwarded an unsealed amended defence and counterclaim to the plaintiff's legal representatives.
As matters unfolded at trial it became clear that there is no real dispute that the plaintiff was convicted of Medicare fraud on 21 February 1995 and that he was not covered by professional indemnity insurance at the time of entering the contract on 3 August 2001, nor for a period of time after that. Counsel for the defendants argues that there is little prejudice in allowing the late amendment. There is a dispute on the evidence as to whether or not the defendants were aware of the plaintiff's conviction at the time of entering the contract and the late amendment, if allowed, according to counsel for the plaintiff precludes any further investigation and discovery as to whether the second defendant in particular had such knowledge or was exposed to that information at the relevant time.
A more fundamental objection, however, was taken to the merits of the proposed addition of the counterclaim. A critical issue concerns the construction and meaning of the clause of the contract requiring the plaintiff "to ensure that he is covered by professional indemnity insurance, … ". Counsel for the plaintiff queries whether it means insurance had to be obtained immediately or as soon as reasonably possible. Even if the meaning of the clause was that the plaintiff was to be covered by professional indemnity insurance at the time of entering the contract or to obtain it immediately thereafter, it is put on his behalf that his breach is not of sufficiently serious nature to warrant termination of the contract as a matter of law because, for example, it is not a requirement of registration that an optometrist have such insurance but rather in these circumstances it was imposed by a term of the agreement.
Relevant to the merits of the proposed counterclaim counsel for the plaintiff argues that it is statute barred because s 77(4) of the Act requires that an application is brought "at any time within three years after the cause of action accrued". It is common ground that the contract was signed by the parties on 3 August 2001 and the defendants say in par 13 of the proposed counterclaim that had they been informed prior to entering the contract of the plaintiff's circumstances they would not have done so. For this reason the cause of action was complete more than three years ago on the plaintiff's argument and counsel for the plaintiff further submits that the Court will not grant leave where the amendment does not disclose a good cause of action.
In this case there is no existing counterclaim to be amended and so, according to counsel for the plaintiff's argument, no cause of action in respect of which relief has already been claimed by the defendants exists. Counsel for the plaintiff argues that it is well settled that a cause of action accrues when it can first be sued upon and even if one were to accept the defendants' assertion that had they known the plaintiff did not have professional indemnity insurance on 3 August 2001 they would not have entered into the contract, then clearly that cause of action accrued more than three years before the proposed amendment by way of counterclaim.
The same conclusion can be reached it is said in relation to the defendants' assertion that if they had learned that the plaintiff was not covered by professional indemnity insurance after they had entered into the contract, the defendants would have terminated it. Once again this cause of action accrued more than three years ago. In the alternative it is argued that the defendants have suffered no meaningful loss or no loss of such a nature to warrant the exercise of the Court's discretion in their favour as s 77 of the Act provides relief can be obtained when loss of damage is suffered but also when it is likely to be suffered.
Counsel for the defendants takes issue with the analysis as to when the cause of action accrued, arguing it was not necessarily as at the date the contract was entered into because there was ongoing conduct on the part of the plaintiff relevant to his not having professional indemnity insurance and not advising the defendants to this effect until at least 2003, so on that basis it is argued that the free elimination period would not arise until 2006.
Further it is said that the cause of action does not accrue until the full facts are known and revealed and on the defendants' case that was not until approximately September 2004, just before trial. At the conclusion of argument on this issue the amendment by way of the counterclaim was allowed on a provisional basis only, so that the trial could continue and witnesses called to give evidence. Further submissions were to be made in closing and a final ruling as to these issues will be made in this judgment.
Costs of the application to amend were awarded to the plaintiff in any event. Before revisiting the merits of this application I will turn to the issues raised on the original pleadings.
The action commenced with the plaintiff alleging that the defendants breached cl 2 of the contract because the first defendant engaged an optometrist other than the plaintiff to work at the practice during periods when the plaintiff was to work there exclusively. As can be seen, the contract for optometrical services was on an exclusive basis because for a specified period the parties to the contract agreed to secure the plaintiff's services as a sole optometrist for Vision Plus Bunbury on the terms and conditions specified in the contract.
Breach of the contract for the period 10 March 2003 to 30 November 2003 is admitted on behalf of the defendants. Nonetheless the defendants claim that exclusivity for the 10 year period is an unreasonable restraint of trade and therefore unenforceable. Unlike many cases in this area this is a matter where the restraint applied only during the duration of the contract and so does not involve, for example, an employee coventing not to complete with an employer or the vendor of business coventing not to complete with the purchaser so as to preserve goodwill.
Formerly the view was that the doctrine of restraint of trade did not apply during a contract; Warner Brothers Pictures Inc v Nelson [1936] 3 All ER 160. The more modern view is that it can do so; Buckley v Tutty (1971) 125 CLR 353 and J D Heydon "The Restraint of Trade Doctrine" 2nd ed Butterworths 1999 pp 54‑56. In the circumstances of this case the primary focus is whether the exclusivity provides the plaintiff with any more than adequate protection and so the question of reasonableness between the parties must be examined.
The defendants argue that the effect of cls 2 and 7 of the contract is to restrain the first defendant from engaging the services of other optometrists and further to prevent the first defendant from offering optometrical services to the public through Vision Plus Bunbury for six, as distinct from four days per week. The defendants nonetheless concede that there are a number of other optometrists providing services in the Bunbury area.
A covenant in restraint of trade is prima facie void and therefore unenforceable; Nordenfelt v Maxim Nordenfelt Guns & Ammunition Co Ltd [1894] AC 535; Peters (WA) Ltd v Petersville Ltd [2001] HCA 45 per Gleeson CJ, Gummow, Kirby and Hayne JJ. That is not to say a restraint can never be justified, but where it is sought to do so relevant to this matter by reference to the interests of the parties, the onus lies on the plaintiff. This is not a situation where the restraint is argued to be justified by reference to the interests of the public.
The question of whether a restraint of trade is reasonable is primarily a question of law; Cream v Bushcolt Pty Ltd [2004] WASCA 82. When considering the issue the Court is obliged to take into account public policy considerations because as Welsh J observed in Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288 at 307; "If a restraint is imposed which is more than that which is required (in the judgment of the Court) to protect the interests of the parties, this is a matter which is relevant to the considerations of public policy which underlie the whole doctrine, since to that extent the deprivation of a person of his liberty of action is regarded as detrimental to the public interest … ". That reflects the issue to be determined here, namely whether the restraint pursuant to the contract affords any more than adequate protection to the plaintiff who seeks to rely on the covenant. If it be the case that the restraint is greater than that required to protect the interests of the plaintiff then for public policy reasons the restraint should not be enforceable. Historically restraint of trade was seen to be against public policy because:
1.it causes a covenantee to lose their livelihood and bring suffering to their family;
2.it deprives the public of a useful worker; and
3.such contracts can be abused to create unfair advantages, eg master avoiding competition from a former apprentice.
Further whether a restraint is reasonable is not in the end result determined by the parties' view on the issue. The question in each case is whether the covenant goes no further than is necessary to afford the covenantee adequate protection in relation to the interests in respect of which he is entitled to be protected; Amoco Australia Pty Ltd v Rocco Bros Motor Engineering Co Pty Ltd (supra) at 306. The question whether a particular provision in a contract operates unreasonably in restraint of trade is to be determined not by the form in which the relevant provision is framed, but by its effect and operation in practice; Stenhouse Australia Ltd v Phillips [1974] AC 391. It is not to the point that the parties entering the contract freely bargained in relation to the restraint and so that will not preclude the application of the doctrine in relevant cases because all contractual restraints may be characterised in that way; Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181.

On the evidence it is clear that from time to time prior to entering the contract with the plaintiff, the defendants had encountered difficulty in obtaining consistent optometrical services for the business. The plaintiff was to benefit financially from the contract by receiving income from Medicare fees as a result of carrying out eye testing on clients and also income flowing from the profits of the sale of certain lenses through the defendants' business. The defendants were to benefit financially as a result of the profits flowing from the dispensing of glasses and lenses prescribed to clients by the plaintiff after eye testing. It should be noted that in his evidence the first defendant agreed that he retained all the profit from soft lens sales prescriptions issues by Mr Buckeridge (the other optician who was employed during the breach period) but only 50 per cent of the profit on soft sale lenses prescribed by the plaintiff.
Counsel for the defendants argues that exclusivity based on practising four days a week to the exclusion of others would give the plaintiff the secure practice he desires and would be reasonable. However, excluding other optometrists from working the remaining two days of the week is said to be a restraint that is more than what is required to protect the interests of the plaintiff, particularly given that such a restraint is to operate for at least five and perhaps 10 years under the contract.
Further it is submitted that relevant to the plaintiff's desire to have security of income it is open to him to work more than four days a week as he is currently doing and that the effect of cls 2 and 7 is to restrain the first defendant from engaging the services of another optometrist, except when the plaintiff is ill or on holiday and thus the first defendant's ability to engage in his trade is restricted, in the sense that he is only able to provide services of an optometrist to his customers for four rather than six days of the working week. Relevant to this aspect the plaintiff's evidence was that on the four days of the week which he works he has surplus capacity, in the sense that if the clients were available he could carry out more eyesight testing on those days.
It is certainly possible that the plaintiff could, if he wished, work a six day week instead of a four day week, but the evidence suggests that in his current circumstances he is not inclined to do so as he wishes to retain a balance between his work and family life. Although the defendants argue that such a personal "lifestyle" decision does not justify a restraint of trade, nonetheless this was a situation on the evidence that that was acceptable to the defendants given the nature and volume of trade in the business when the contract was signed.
The plaintiff gave firm evidence that given his history of conviction for Medicare fraud, obtaining employment as an optometrist was more difficult for him than those without such convictions and in my view this is a matter of commonsense. He was employed at the time the first defendant approached him with the offer of locum work and I accept that the plaintiff would have been loath to change those employment arrangements, particularly as he wanted financial security, without the assurance that his interests would be protected.
The contract does not guarantee minimum revenue or a minimum number of clients to be seen by the plaintiff per day or over his four day working week and I consider this is further reason why the plaintiff had a legitimate interest in ensuring that any contract he entered into would protect his opportunity to maximise his revenue earning capacity during those days on which he did work. This was particularly so as his personal circumstances meant he would be required to incur both travel and accommodation expenses and supply some specialist equipment by reason of travelling to Bunbury in order to provide services to the defendants' business.
The plaintiff was leaving secure employment for four days a week with one optical dispenser in Perth in order to provide the defendants' with his services four days a week in Bunbury. In these and the other circumstances he explained in his evidence including the assertion that this was also very likely to be the last long term job for the plaintiff, in my view he had a legitimate interest in ensuring that his commitment be for a relatively long time and therefore I accept his evidence that he would not have signed any contract for employment of less than 10 years duration.
Moreover, as he was not guaranteed a minimum number of patients per day it was reasonable for the plaintiff to protect his opportunity to be as fully booked as possible whilst he was working at the practice and therefore exclusivity was a reasonable means of ensuring that this occurred. When one examines the figures which demonstrate the decrease in the plaintiff's income during the breach period, this re‑enforces the argument that exclusivity was needed to maximise the plaintiff's opportunity to earn revenue during the four days he worked at the practice.
Importantly it should be noted that the terms of the contract are not exclusive in the sense that they do not preclude the defendants from utilising the services of another optometrist when the plaintiff is ill or on holiday. In addition the restraint does not extend beyond the life of the contract which could be at a minimum five years or at a maximum 10 years from August 2001.
There is evidence, which I accept, indicating that the defendants' business and the demand for optometrical services has grown considerably since Vision Plus Bunbury relocated to new and more visible premises. It would seem to me that this is in large part why the defendants' claim that the effect of the contract is now preventing expansion of the business which it is said is not reasonable. The circumstances relating to construction and reasonableness issues are to be judged with reference to those existing at the time the parties entered the contract although the Court may take into account future probabilities which could have been foreseen; Lindner v Murdock's Garage (1950) 83 CLR 628 at 653. This, however, is not a case where events which occurred after the relevant date, for example the growth of the business and demand for services, might assist throwing light on the circumstances existing at the date of the contract. Counsel for the plaintiff suggests not unreasonably in my view, that subsequent growth of the business and demand for optometrical services may provide an explanation for the late application to add a counterclaim to the defence.
In Aling v Olivier (1949) (1) SA 215 at 219 (TPD) Pryce J observed:
"If the validity of the restraint clause had to be tested by reference to the facts on any date other than the date when the agreement was made, the question of such validity would always remain uncertain. Events might interpose between the date of the contract and the date of the hearing of a case some of which might make a restraint clause invalid which was originally valid and then other events which might occur to make that clause valid again. If the validity of the clause had to be determined by events which had occurred after the date when the contract was entered into the enquiry would become arbitrary and artificial. The clause is valid or invalid ab initio, and therefore the only facts that are relevant are the facts at the moment the contract is signed."
On the evidence in this case I am satisfied that the plaintiff has established that the restraint is reasonable, in that his professional and financial future in moving to employment with the defendants in Bunbury were such that he had a legitimate interest in ensuring that they were protected in the best way possible. Both the exclusivity and the duration of the contract are no more than what was adequate and required to protect those interests. This is the case, although I reject the argument put on behalf of the plaintiff insofar as it urges the Court to find that the arrangement pursuant to the contract was a self‑employment arrangement and analogous to exclusive employment service contracts, which are typically not held to be in restraint of trade. As counsel for the defendants correctly submitted in this case it is not the plaintiff who was being restrained and exclusive employment contracts can be distinguished from this contract because the former generally restrained the employee.

The evidence

Mr Sandford, the plaintiff, is a qualified and registered optometrist. He was born on 23 September 1956 and completed a four year university course of study at Auckland University which led to him obtaining a diploma (which is now categorised as a degree) in 1982. The following year he came to Western Australia and began working as an optometrist in February 1983. He explained that a qualified optometrist is permitted to perform sight tests on patients and arrive at an optical prescription for that individual if necessary. An optometrist is allowed to test for the health of the patient's eyes and if a particular problem is detected, the optometrist will then refer the patient to an ophthalmologist for further testing. An optometrist is not permitted or indeed trained to perform any form of eye surgery. The plaintiff described his relationship with Mr Lovett, the second defendant, who is the sole director of Ausdale Enterprises Pty Ltd ("Ausdale") which trades as Vision Plus Bunbury as being symbiotic because the second defendant is not able to provide the services which the plaintiff is qualified to carry out. In this case Mr Lovett provided the plaintiff with an eyesight testing room at his business premises in Bunbury and he also provided the plaintiff with the services of the administrative and secretarial staff at the defendants' premises. In addition large items of equipment were supplied by the defendants to the plaintiff, but Mr Sandford supplied some of his own smaller items of equipment used in the process of eye testing or sight testing. The defendants benefit from this arrangement because once the plaintiff provides the patient, where necessary and appropriate, with a prescription, the spectacle frame and lenses or contact lenses if that be the case, are then sold to the patient by the defendants.
The plaintiff described that typically his work at Vision Plus in Bunbury involves a particular patient arriving at the premises at which time one of the defendants' staff takes the person's preliminary details and notes them on a card. The plaintiff then leaves his eye‑testing room to go out and meet the patient at which time he collects their patient card or record to which is attached the patient's Medicare card. The patient then accompanies the plaintiff to the room where an eyesight test is carried out. If the patient requires glasses the plaintiff provides an appropriate prescription for the lenses to a member of the defendants' staff in order that the frames selected by the patient and the prescribed lenses are dispensed to them. Mr Sandford told the court that if the patient is someone who wears contact lenses, as distinct from spectacles, then he carries out an eyesight test before writing out an account for the consultation if that patient is not claiming on Medicare. A prescription is also written out by the plaintiff for contact lenses and this prescription is provided to a member of the defendants' staff. When the plaintiff completes his consultation with a particular patient he notes the details of the sight test on their patient record card, which is then returned to a member of the defendants' staff and Medicare then pays the plaintiff on the details provided in the Medicare slip.
According to the plaintiff the Optometrists Act 1940 (as amended) does not specifically state that an optometrist is required to have professional indemnity insurance and, further, in Mr Sandford's career as an optometrist he said he had never had any claim for negligence made against him. He believed that the likelihood of such a claim was low because it would be unlikely to arise from an incorrect lens prescription being made, although he conceded that certainly if an optometrist failed to note a particular pathology in a patient and therefore failed to refer that individual to a specialist, then there would be a risk of a claim for negligence being made against the optometrist. Since the plaintiff has been practising in Western Australia he said he has worked for at least six opticians and most of those businesses did not require that the plaintiff have professional indemnity insurance. He did recall on one occasion when he was an employee of OPSM he did have such insurance because OPSM paid the premium on his behalf.
It was not in issue at trial that on 21 February 1995 in the Perth Court of Petty Sessions the plaintiff pleaded guilty to 59 counts of knowingly making a false statement relating to Medicare benefits. As a result the plaintiff was sentenced to 15 months imprisonment which was suspended provided the plaintiff was of good behaviour for a 15 month period and he also was given three months to pay a fine of $10,000. This is reflected in exhibit 1 being a report from the West Australian Newspaper ("WAN") of 22 February 1995. Although it is not clear what page the report appeared on, it is a relatively prominent article and in the plaintiff's view his convictions received relatively extensive publicity in that way. Further, he said the matter was reported in "Insight", a trade magazine which is sent to optometrists and optical dispensers. According to his evidence that magazine is freely available in the staff office room at the defendants' business premises in Bunbury. His recollection was that the matter was reported in that magazine on more than one occasion. The plaintiff also was required to travel to Sydney to appear before a disciplinary tribunal as a result of his criminal behaviour and that body barred the plaintiff from practising as an optometrist for six months. Mr Sandford's recollection was that this aspect of the matter was also reported and so overall he said the information concerning his convictions and punishment was widely disseminated within the comparatively small West Australian community of optometrists and optical dispensers.
The plaintiff's evidence was that following this event, perhaps not surprisingly, he found it difficult to obtain employment as an optometrist in Western Australia. However, Mr Lovett contacted the plaintiff by phone and asked if he would carry out some locum work in the Vision Plus store at Bunbury. The plaintiff agreed to this and said on that occasion Mr Lovett did not make any enquiries of the plaintiff as to whether he had any professional indemnity insurance. At that time the defendants did not stock any contact lenses and the plaintiff was keen to build up this side of the business. To this end he obtained contact lense stock and sold it himself to patients where appropriate and retained the profits from those sales. The plaintiff himself completed the relevant paperwork so that the patient could provide it to their relevant health fund in order to obtain a rebate.
It was in this context the plaintiff said that on one occasion during that period Mr Lovett approached the plaintiff and advised him that an invoice/receipt which the plaintiff had provided to a particular patient had been rejected by HBF because the plaintiff was not registered with Medicare at that time. On further investigation it transpired that the plaintiff had been removed from the Medicare provider list during his period of six months' suspension from practice, although the plaintiff assumed that he would be automatically reinstated after he had completed serving the suspension period. This proved to be incorrect, as Medicare advised the plaintiff that in the circumstances which prevailed, reinstatement on the provider list would only occur if they were given authorisation by the board which registered optometrists. It was the plaintiff's recollection that he was also informed that he would have to appear before a meeting of the disciplinary board the following week.
According to Mr Sandford he informed Mr Lovett of this situation and of his concerns that if the outcome of his appearance before the board was not favourable for the plaintiff, he would be unable to continue to practice and therefore unable to work as a locum for the defendants. This conversation he said occurred only a couple of days after he commenced carrying out locum work at Vision Plus in Bunbury. The plaintiff's wife, who is a qualified solicitor, represented him at the hearing, the result of which was that the plaintiff was permitted to continue to be registered as an optometrist. He was reinstated on the Medicare provider list and informed Mr Lovett of this. At this time in 1996, Mr Sandford said that at least one other optometrist was also providing services to the defendants and the plaintiff thought he was working one or two days a week in Bunbury because he was also working as an optometrist elsewhere.
In mid‑1996 the plaintiff, his wife and two young sons decided for personal reasons to travel to the United Kingdom where they remained for 18 months. As a result the plaintiff's working arrangement with Mr Lovett came to an end.
The plaintiff and his family returned to Australia in January 1998 and he obtained work with an optical dispenser but in order to supplement his income Mr Sandford contacted Mr Lovett to enquire if there was any locum work available in Mr Lovett's business. As a result the plaintiff then began to work for about one day per week for the defendants. That situation did not persist for very long because in mid‑1998 Mr Lovett engaged another optometrist on contract and the plaintiff was given one or two days notice to leave.
It appears that the plaintiff ceased contact with Mr Lovett until sometime in 2001 when Mr Lovett contacted the plaintiff and enquired if the plaintiff wanted to carry out some locum work for him in Bunbury. Mr Sandford agreed to do this for one or two days a week, as at that time he was working four days a week for another optical dispenser. The arrangement between the plaintiff and Mr Lovett progressed well, to the point where they began discussing a longer term arrangement. Mr Sandford's evidence was that as a result of studying the Vision Plus practice appointment book for patients he formed the view that Mr Lovett and his business had been receiving "patchy coverage" from other optometrists who had been working for Mr Lovett from time to time in the past. The plaintiff believed that he was providing Mr Lovett and his business with both better quality and more continuous coverage. These matters were discussed between them and eventually the subject turned to the question of a contract being drawn up. This is how Exhibit 2 came into being. In his evidence the plaintiff stressed that the most important features of the agreement in his view were reflected in cl 2 and cl 7 of the contract.
The plaintiff explained he considered that it was a major step to leave his current employment where he was working four days a week because the fact of his Medicare fraud conviction made it difficult for him to obtain steady employment and further, he needed financial security for a variety of reasons, including the fact that his sons were approaching high school age and he had that expense, particularly as he wanted them to be privately educated. For these reasons he required any employment offer to be for a relatively lengthy duration and so said he would not sign any contract for employment duration of less than 10 years. Relevant to cl 6 Mr Sandford said there were some discussions and negotiations as between himself and Mr Lovett which resolved themselves as reflected in, for example, that clause in the contract. They were unable to reach a satisfactory agreement regarding a guaranteed minimum number of patients to be seen by Mr Sandford per day in Mr Lovett's business and therefore there was no reference to that matter in the contract. According to the plaintiff Mr Lovett never queried the plaintiff's desires as reflected in either cl 2 or cl 7 in the contract, which was drawn up by the plaintiff's wife and presented to Mr Lovett for his approval and signature.

Clause 4 as can be seen states: "Geoff to ensure that he is covered by professional indemnity insurance, and to always have a tidy, professional appearance." Relevant to this clause Mr Sandford told the court that his appearance, as I understood it being a reference to his dress code and presentation was not an issue. He said further that Mr Lovett told him it was the franchisors (which would appear to be a reference to OPSM) required that the plaintiff have professional indemnity insurance. From this comment Mr Sandford said he understood that Mr Lovett was not referring to a personal requirement on his part.
The plaintiff said he always worked four days a week at Vision Plus in Bunbury. One week he would work a Tuesday and Wednesday from 10 am to 5 pm staying overnight in Bunbury on the Tuesday. The following and alternate week he would work on Thursday and Friday with the same arrangement applying and then he would alternate with the Friday and Saturday of the following week. From August 2001 the plaintiff said there was no further discussion between himself and Mr Lovett regarding the plaintiff ensuring that he be covered by professional indemnity insurance and further, Mr Lovett never enquired of the plaintiff about that matter nor did the plaintiff ever mention his situation regarding professional indemnity insurance, or his lack of such insurance in August 2001.
It is common ground that as at that date the plaintiff did not have professional indemnity insurance. In about September 2001 he sent an application concerning the subject to the Optometrists' Association but received no reply. He said he assumed that such insurance was to be in place by January 2002 because that is when the exclusivity of the plaintiff's employment of four days per week was to commence. When Mr Sandford did not receive a reply to his application he attempted to find out if there were alternative avenues whereby he could obtain professional indemnity insurance. He said for example, he enquired through various brokers and insurance companies but it became obvious to the plaintiff that they were not offering the type of insurance he was interested in obtaining. He said he even went about making enquiries concerning re‑registering as an optometrist in the United Kingdom and applying for professional indemnity insurance there, in the hope that it would also cover him in Australia. Apparently his enquiries regarding this possible solution took some time but he was finally informed that it was not possible. It was then that the plaintiff said he believed the only avenue open to him was to re‑apply to the relevant Optometrists' Association in Australia in order to find out if he could obtain professional indemnity insurance cover. He did that by way of exhibit 3 which includes an application for membership to the Optometrists' Association of Australia, Western Australia dated 17 October 2002.
Mr Sandford explained that this was not his first such application because he had made an earlier application dated 7 August 2003 which is also part of exhibit 3. He received no response to the first application and after exhausting other avenues of inquiry he forwarded a second application. It would appear that after considerable discussion the initial August application was finally accepted. He received correspondence from the Optometrists' Association dated 5 August 2003 confirming acceptance of the application for membership. Mr Sandford was advised, however, that inquiries would have to be made to ascertain if the insurance underwriters would be prepared to cover the plaintiff given his history. Whilst there was some confusion about the matter eventually it became apparent, by way of exhibit 14, that the plaintiff's professional indemnity insurance cover through the Optometrists' Association dated from the time of his membership on 11 August 2003. Exhibit 7 and exhibit 8 are both relevant to the confirmation and details of the plaintiff's membership to the Optometrists' Association of Australia.
As has been noted there is now no dispute between the parties that the defendants breached the contract between about 10 March 2003 and 30 November 2003 when another optometrist was in attendance at Vision Plus in Bunbury as well as the plaintiff. It is this period in relation to which the plaintiff claims damages. Mr Sandford pointed out that he did not claim that the breach occurred every week and he only took into account, in his calculations regarding damages he was claiming, those weeks where he was working four days a week. In order to calculate the loss and damage which the plaintiff claims he suffered by way of a negative impact on his earnings given the attendance of another optometrist, Mr Sandford undertook a comparison of his own earnings between March and November 2002 when he had exclusivity, and his earnings for the same period in 2003 when it is said that another optometrist, who I understand to be Mr Buckeridge, was also in attendance.
The method adopted as I understood the plaintiff's evidence, was that he perused the practice patient appointment book and counted the number of weeks when the other optometrist was working in breach of the contract. It was only those weeks that were counted for the relevant periods in both 2002 and 2003. Then the plaintiff referred to a number of statements from Medicare covering the plaintiff's income over those prospective periods. He also obtained a Health Insurance Commission report as to the number of patients whom the plaintiff saw during the relevant period. These statements which the plaintiff attached to a summary sheet show, according to his evidence, the patients in relation to whom the plaintiff made claims and in each instance how much was claimed relevant to the individual patient. The total is then seen at the bottom of the relevant column.
The method as I again understood the plaintiff's evidence, involved by way of example, taking the month of March 2002 and comparing it to that same information relevant to March 2003. As a result according to the plaintiff's calculations with reference to the relevant material, he discovered that in March 2002 he performed an average of 13.18 sight tests over the 11 days he worked that month. In March 2003, however, according to the plaintiff's calculations he performed an average of 11.3 sight tests over the 10 days that he worked in that month. He then performed the same comparative exercise for the remainder of the months being April to November inclusive for both 2002 and 2003. The end result on his calculations was that between March and November 2002 he performed an average of 13.63 sight tests per day whereas between March and November 2003 he performed an average of 11.77 sight tests per day, the result being that there was a decrease between those two periods as to the average number of sight tests the plaintiff performed per day over a four day period in each instance. At an average of $44 cost per sight test the plaintiff calculated that comparatively speaking he was earning $328.80 less per week for the period March to November 2003 than he was in the corresponding period in 2002.
According to Mr Sandford if he was fully booked on any working day he would be able to perform 18 sight tests per day and on occasion, for example on a Thursday when he worked from 10 am to 7 pm rather than 10 am to 5 pm, he was capable of carrying out 24 sight tests. On the occasions when the plaintiff worked on Saturday between the hours of 9 am and 2 pm he had the capacity to carry out 15 eyesight tests, although that might require that he worked through his lunch hour. Mr Sandford conceded that on the days when he worked he was not necessarily fully booked with patients and so, during such periods, he might, for example, sit and read a book.
The plaintiff's calculations as to his loss and damage did not, according to his evidence, include his loss on 50 per cent of the profits or sales of soft lenses, the other 50 per cent of profits going to Mr Lovett. He explained that this loss also encompasses a loss relevant to sight testing for contact lenses which cannot be claimed as a Medicare benefit and must often be billed privately. To this end an invoice is issued to the patient and at the end of the month Mr Sandford said that Mr Lovett arranged for those funds to be put into the plaintiff's bank account in combination with the plaintiff's share of any profits from the sale of soft lenses. On the plaintiff's estimate, in relation to which he did not provide documentation, loss in this regard was in the vicinity of $20 per week. As part of this exercise the plaintiff told the court that he also perused the practice patient appointment book and totalled up all the patients that Mr Buckeridge had seen over the same period, being the four day a week period which the plaintiff worked. Mr Sandford stressed this because he accepted that if he did not work a four day week as required, for example, if he was ill or on holidays then Mr Buckeridge was entitled to work at the practice on those days. On the other hand, where the plaintiff did work a four day week he said according to the contract, Exhibit 2, Mr Buckeridge was not entitled to work at the practice. For that reason the plaintiff pointed out that he was only claiming damages for the weeks between March and November 2003 when he worked a full four day week.
In March 2003 the plaintiff itemised each day that Mr Buckeridge worked at the practice in what was said to be contravention of the contract. He then proceeded to calculate the number of patients whom Mr Buckeridge saw over that particular period and totalled it for the month of March. Using this method Mr Sandford claimed that for five days being 10, 15, 24, 29 and 31 March, Mr Buckeridge saw a total of 63 patients. This averages on Mr Sandford's calculations to 12.6 patients a day which on a conservative estimate of $40 per eye test, results in what effectively on the plaintiff's evidence were earnings for Mr Buckeridge of $2,520 for March 2003. Mr Sandford carried out the same exercise relevant to the remaining months of April to November inclusive. In the end result Mr Sandford told the court he estimated that Mr Buckeridge earned about $33,000 from the practice of Vision Plus in Bunbury during the period of breach. The plaintiff accepted quite properly in my view that he could not have earned that total amount of $33,000 income during the period in question in 2003 and for that reason explained that his claim is considerably less. In his opinion the plaintiff could have earned a significant percentage of that sum of $33,000 because in his view if a patient could not be seen and tested on a day when Mr Buckeridge was in attendance then there would be a good chance that the patient would have been willing to be seen and tested by the plaintiff on another day when the plaintiff was in attendance.
Relevant to his calculations the plaintiff did not accept that the demand at Vision Plus Bunbury for patients to be seen and eye tested, exceeds the plaintiff's capacity to meet that demand in the four day period which he works each week. It was put to Mr Sandford that if, for example, some of his calculations demonstrated that he saw and tested an average of 13.63 patients per day but claimed he had the capacity to see 18, then on those figures it would appear that he had a capacity to see and test approximately four more patients per day. He disagreed because he said for example, on Thursdays when he worked it was a longer day so he could see more patients. Putting that aside, Mr Sandford still rejected the suggestion that on other days when he worked on his calculations he could see only four more patients per day and claimed it could be up to six additional patients per day if he saw them in his lunch hour or it was an urgent appointment. He conceded, however, that it was not normal for him on the four days he worked to consult with patients during his lunch hour. Mr Sandford did not necessarily accept that if he worked more hours per week he could increase his income and also suggested that if Mr Buckeridge had not worked at the practice then the patients he saw would have in all likelihood been channelled to the plaintiff. The plaintiff explained that it was his desire to work only four, as distinct from five days a week pursuant to the contract, because he did not want to be away from his family in Perth for more than two nights per week. Nonetheless he rejected this choice as being a lifestyle choice and explained rather it was an attempt to achieve an acceptable balance between work and family life. However, categorised the decision amounts to the same result in my view.
The plaintiff accepted that his fraud convictions were a matter of embarrassment and distress for him and said that in social situations this was not information that he would impart to others. He said, however, in a professional context if he was asked about the matter then he would provide that information. Mr Sandford claimed in his evidence that Mr Lovett was aware of his convictions. This opinion seemed to be based on a number of factors, including the plaintiff's assertion that the convictions received a certain amount of publicity in the press and trade magazine "Insight", the inference being that given the rather small community of optometrists and optical dispensers in Western Australia then Mr Lovett could not have failed to be privy to the information.
Further, Mr Sandford told the court that with reference to an eye testing card dated 5 October 2001, which the plaintiff had partly completed, he recalled a particular incident relevant to this aspect of the matter. On that date he was asked by Michelle Blurton, a former staff member at Vision Plus Bunbury if he would carry out an eye test on her which the plaintiff proceeded to do. For this purpose Ms Blurton gave Mr Sandford her Medicare card. At one point in the process the plaintiff said Mr Lovett was in the doorway of the eyesight testing room and said words to Ms Blurton to the effect of "keep your eye on that Medicare card – he might put it through twice". The plaintiff explained that this incident remained in his memory because as best as he could recall this was the first occasion that Mr Lovett had ever said anything remotely unpleasant to him and indeed a short time afterwards the plaintiff said Mr Lovett apologised to him for what he had said. As I understood the plaintiff's evidence, the clear inference that he drew from Mr Lovett's remark was that Mr Lovett was well aware of the plaintiff's criminal convictions for Medicare fraud. Mr Sandford denied that he informed Mr Lovett during a meal they had at a Chinese restaurant in Bunbury that the plaintiff had been part of a syndicate in relation to which an anomaly arose relevant to the way in which they were billing Medicare fees and that as a result the plaintiff had been dragged into the situation. He claimed, however, that he had informed Mr Lovett of the requirement that the plaintiff attend a hearing before the Optometrists Registration Board in the circumstances he previously explained in his evidence. The plaintiff accepted that he never informed the defendants that he did not have professional indemnity insurance between August 2001 and August 2003 or that in the intervening period he was experiencing problems in obtaining it.
Mr Sandford agreed, with reference to relevant documentation, that he took leave from the practice between 15 and 19 March 2003, 18 and 28 April 2003 and again between 25 and 29 May 2003. He accepted that the support staff employed in the business had grown from three to six, although one of those persons worked part time. Mr Sandford claimed that Mr Lovett did not ask him to work any extra days beyond the four day week but said that even if he had, the plaintiff may well have refused to do so.
Dr Abdul Rashid Munshi gave very brief evidence when called on behalf of the plaintiff. Dr Munshi, a qualified optometrist with his own business, agreed that at Mr Lovett's request he carried out some locum work for the defendants at Vision Plus in Bunbury between 1996 and 1998, either on a three or four day a week basis. He did not, however, recall very much social interaction between himself and Mr Lovett and was unclear and unsure whether there had been any mention of the plaintiff, Mr Sandford in their discussions. His evidence did not advance the matters before the Court in any appreciable way.
The second defendant, Mr Lovett, confirmed in his evidence the nature of what has been described as the symbiotic business relationship between the plaintiff and the defendants' business. Vision Plus in Bunbury is open for trade 56 hours a week being between 8.30 am and 5.00 pm Monday, Tuesday, Wednesday and Friday. Business hours on Thursday are between 8.30 pm and 9 pm and on Saturday between 8.30 am and 5.00 pm.
Mr Lovett also confirmed that in 2001 the plaintiff returned to work for him as a locum. After the contract was signed in August 2001 Vision Plus in Bunbury moved to new premises on 28 December 2002 which meant that it was much more visible to street trade and consequently he said the business grew quite substantially. The result of the arrangement whereby the plaintiff was working four days a week Mr Lovett meant that Mr Sandford was not always available to see customers, or potential customers, who walked in off the street.
By early 2003 the business was inundated with customers in the new premises and in fact Mr Lovett said that at times appointments were booked three weeks ahead. At Mr Lovett's request Mr Buckeridge came to his assistance and took over the eye‑testing when the plaintiff went on leave. He said that the plaintiff returned to work but again at Mr Lovett's request Mr Buckeridge continued to work on average three days over a two week period to provide customer service. Initially he said he did not discuss this arrangement with the plaintiff who was aware that there was a backlog but eventually the plaintiff raised concerns with Mr Lovett regarding the fact that Mr Buckeridge was working at the same time as the plaintiff, which was not contemplated in the exclusivity arrangement that the plaintiff and Mr Lovett had. In response Mr Lovett asked the plaintiff if he was able to work six days a week given he was not happy with Mr Buckeridge working in the business, but according to Mr Lovett the plaintiff refused to do so.
Mr Lovett's evidence was that the effect of cls 1, 2 and 7 of the contract was restricting the growth of his business in that given the plaintiff's working hours he was simply unable to service the demand by customers for eye‑testing. He further said that relevant to cl 4 of the contract, being the reference to the plaintiff ensuring he was covered by professional indemnity insurance, this was a requirement of the franchisors. He later qualified this in his evidence by saying that it was a requirement that Mr Edwin Grist advised Mr Lovett was necessary.
Mr Grist is the optometrist who according to Mr Lovett orchestrates the OPSM contracts and this information was given to Mr Lovett prior to him entering an agreement with an earlier optometrist, Mr Coveney, who worked for Mr Lovett for a time. He rejected the proposition that given the plaintiff's position there was quite a low risk of a claim being lodged against the plaintiff and pointed out that if such a claim were lodged then Mr Lovett would also be involved in the sense that the claim would also be against him.
Mr Lovett told the Court that if he had known prior to entering the contract with the plaintiff that Mr Sandford was unable to obtain professional indemnity insurance then Mr Lovett would not have entered into the contract. He further said that if he had become aware of this between entering the contract and the time when the plaintiff actually was able to obtain professional indemnity insurance in 2003 in Mr Lovett's words he would have "annulled" the contract as he considered that the risk to him and his business would be too great.

Whilst Mr Lovett admitted making the comment in question to Mr Sandford in front of Ms Blurton he said that this was simply a joke in bad taste, relevant to over‑servicing in the industry and was not a reference to the plaintiff's Medicare convictions. According to Mr Lovett, he was unaware of such convictions until he learnt of them through his solicitors a couple of weeks before trial. He agreed that prior to that time he had heard rumours about Mr Sandford's convictions and so not long after Mr Sandford began working for the defendants Mr Lovett said that he raised it with the plaintiff whilst they were having a meal in 1996 at a Chinese restaurant in Bunbury. He said the plaintiff explained to him that he had been part of a syndicate and there had been an anomaly in the way that the syndicate had been billing Medicare for fees and in some way Mr Sandford was drawn into the situation.
Mr Lovett said that he accepted this explanation and denied the plaintiff had advised him in that year that he was required to attend a disciplinary board hearing. He further denied that he was aware of the plaintiff's convictions through either reading about it in the newspaper or the "Insight" trade magazine, although he conceded that the magazine was delivered to his business premises.
He also denied that he was now raising the issue of the plaintiff not having professional indemnity insurance at the time of entering the contract or indeed until 2003, in order to assist the defendants' position at trial. He claimed that Mr Buckeridge's attendance and work at the business was always intended to be temporary and was not arranged in order to deprive the plaintiff of an income.

Application of legal principles to the evidence

The interpretation and meaning of cl 4 of the contract is an issue of some debate between the parties. Relevant to the debate it states that the plaintiff is "to ensure that he is covered by professional indemnity insurance, … ". A dictionary definition of the word "ensure" is "to make sure or certain to come, occur, etc". There is no dispute on the evidence that immediately prior to and at the time of entering the contract the plaintiff did not have professional indemnity insurance. His evidence canvassed in some detail why that was so and further the efforts he made between approximately September 2001 and August 2003 when he finally obtained professional indemnity insurance. He made the point that he did not understand in any event he was required to have such coverage until January of 2002.
Whilst I accept that the plaintiff did do all he could reasonably do to ensure he obtained such insurance and indeed was committed and persistent in his enquiries and endeavours to obtain it, I do not accept that the plain and logical meaning of cl 4 is that urged on the Court on behalf of the plaintiff. There is no doubt that the having or obtaining of professional indemnity insurance is not a requirement or condition for registration as an optometrist or the entitlement to practise as an optometrist. This is made clear in Part IV of the Optometrists Act 1940. The requirement in this case seems to have arisen by way of advice from Mr Grist to the first defendant, Mr Lovett, although the reasons underlying that advice were not the subject of any particular evidence at trial.
It is also the case that in the past when the plaintiff worked as a locum in the defendants' business he was not required to have nor was he asked to obtain professional indemnity insurance. This also seems to have been the case when he worked in other practices with the exception of one occasion when his employer OPSM paid the professional indemnity insurance premium. Nonetheless the wording of cl 4 in my view makes it plain that either at the time of entering the contract or immediately thereafter the plaintiff was to have such insurance.
It is common ground that the plaintiff did not inform Mr Lovett of his lack of professional indemnity insurance or of the endeavours he was making to obtain it. On the other hand Mr Lovett made no such enquiries of the plaintiff but I consider it very likely he failed to do so because Mr Lovett did not see it as an issue in the sense that he believed it had occurred or was in place. I accept the plaintiff's evidence that the fact of his convictions for Medicare fraud was broadcast in the community both by way of a relatively prominent article in the West Australian newspaper and in "Insight" the trade magazine which was distributed among optometrists and the optical dispensing community in Western Australia, including the defendants' business.
It is not, however, possible from this evidence to draw the inference that Mr Lovett was therefore aware of the plaintiff's convictions. It is also not possible to draw this inference from the comment that Mr Lovett made to the plaintiff at the time Mr Sandford was carrying out the eye test on Ms Blurton, that Mr Lovett was making a direct reference to the fact of those convictions and his knowledge about them, because it is equally possible, as Mr Lovett explained in his evidence, that he was making a joke in very poor taste which he later regretted doing.
Even if the plaintiff did give Mr Lovett the type of explanation which Mr Lovett recalls he received when they ate together at a Chinese restaurant in Bunbury, on Mr Lovett's recollection the nature of the information given to him was certainly not of a type which would necessarily cause him to know for a fact that the plaintiff had criminal convictions, particularly as in Mr Lovett's evidence he had only heard rumours about the plaintiff's situation. In any event on Mr Lovett's evidence the explanation satisfied him, which would not suggest that he construed from it that the plaintiff had criminal convictions for Medicare fraud and would have difficulties obtaining professional indemnity insurance.
The fact that the plaintiff was both persistent and diligent in his attempts to obtain professional indemnity insurance clearly suggests that he was well aware that pursuant to the contract it was important. Although he was not specifically questioned about the matter by Mr Lovett, given this realisation the plaintiff did not inform Mr Lovett that he did not have the required insurance or that he was having problems in obtaining it or why he was encountering such difficulties. It is understandable that the plaintiff was somewhat reticent about discussing his convictions as he said they were a matter of some shame and embarrassment to him, but nonetheless this was still information which was relevant and which he did not volunteer either at the time of entering the contract or subsequently.
Mr Lovett's evidence was that had the defendants been informed prior to entering the contract that the plaintiff would have difficulty obtaining professional indemnity insurance they would not have entered the contract. He also said that having entered the contract if the defendants had been told by the plaintiff that he did not have such insurance and the reasons why he did not have it or indeed that he was experiencing difficulties obtaining it the defendants would have terminated the contract. In these circumstances I find that the plaintiff did engage in misleading in deceptive conduct contrary to s 10 of the Fair Trading Act by in effect failing to speak or impart the information to the defendants.
In the light of this finding it is necessary to determine whether the nature of the plaintiff's conduct or breach was such that it was sufficient to warrant termination of the contract so that the defendants would have been entitled to terminate it. The contract makes no reference to an express right to terminate, therefore any such right would have to be implied. The right to terminate may be general, and arise on a breach of any term of the contract, or specific, and arise only on the breach of a particular term or a particular kind of breach. Sometimes it is difficult to classify the right, but the Court must do its best to arrive at an interpretation which corresponds with the parties' intention; Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191.
In considering the likely consequence of the plaintiff's conduct and in order to assess its gravity it is necessary to consider whether it "goes to the root of the matter" on the basis of whether the failure to perform it would render the rest of the performance of the contract by the plaintiff a thing different in substance from what the defendants have stipulated for"; Bettini v Gye (1876) 1 QBD 183 at 188. In other words will it give rise to an "event which will deprive the party not in default of substantially the whole benefit which it was intended that he should obtain from the contract"; Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 at 69.
I do not consider that the plaintiff's conduct was of such a critical or important nature that it in effect amounts to what might be described as a fundamental breach or a breach of such a type that in effect it altered the nature of the performance of the contract to something that was substantially different and for this reason as a consequence it would not warrant the termination of the contract by the defendants. It is commonplace these days for individuals in a variety of occupations and professions to have professional indemnity insurance, but as can be seen from Mr Sandford's evidence, on occasions he had worked as a locum without such insurance and indeed it is not required by the legislation under which he is licensed to practise as an optometrist. He was not carrying out work of a nature that might be done by an ophthalmologist such as surgery and certainly there was no evidence at trial which suggested that a claim had been made against either Mr Sandford or the defendants' business or indeed that any such claim or complaint has been foreshadowed.
Further there was no evidence that the defendants had had their franchise withdrawn or that this is likely to occur. In my view it is highly speculative to argue that if the plaintiff was not covered by professional indemnity insurance and was successfully sued, his presence at the defendants' practice might be seen to be as an endorsement of the plaintiff's competence by the defendants, which in turn could expose the defendants to legal action. At best Mr Lovett on his evidence now has peace of mind following the plaintiff obtaining professional indemnity insurance as from August 2003.
Arguably he is better off in that sense but it is not possible to identify or isolate any loss or damage to the defendants or any real likelihood of such loss or damage.
Given that the plaintiff's conduct or breach was not sufficiently grave or serious to either warrant termination of the contract or to entitle the defendants to terminate the contract there is not a great deal to be gained by engaging in a detailed analysis of what the defendants loss might have been, albeit for completeness that has been covered in these reasons. In the end result therefore the defendants are not entitled to orders pursuant to s 77 of the Fair Trading Act as claimed.
A critical issue which falls to be determined in these proceedings is whether or not the proposed amendment by way of the counterclaim to the defence is statute barred. Section 77(2) of the Fair Trading Act states:
"Whether or not other proceedings have been instituted under this Act in relation to a contravention, the Court may –
(a)on the application of a person who has suffered, or is likely to suffer, loss or damage by reason of the contravention; may make orders under this section. Section 77(4) further provides:
An application under subsection (2) in relation to a contravention of s 11 may be made at any time within two years after the cause of action accrued or, in any other case, at any time within three years after the cause of action accrued."
There is no dispute that the contract was entered into and signed by the parties on 3 August 2001. The date of the accrual of the cause of action which the defendants wish to pursue by way of the counterclaim must therefore be determined because if it accrued before or on 3 August 2001 then as at time of trial when the counterclaim was sought to be added to the defence, the defendants would be barred from doing so. It is generally accepted as a matter of law that a cause of action accrues when it can first be sued upon. That generally is a reference to the date on which the person seeking to take action has suffered, or is likely to suffer, loss or damage; Western Australia v Wardley Australia Ltd (1991) 30 FCR 245 which presumably will usually be the date on which the conduct complained of occurred; Miller's Annotated Trade Practices Act 1974 23 ed, Law Book Company 2003 p 773.
Further regarding the date of accrual of cause of action it has been said:
"The defining moment in the establishment of the limitation period in compensation claims based on misleading conduct is the date of accrual of the plaintiff's (in this case the defendants) cause of action. For that purpose, a 'cause of action' means 'every fact which it would be necessary for the plaintiff (defendants) to prove, if traversed, in order to support his right to the judgment of the court." Arcadi v Colonial Mutual Life Assurance Society Ltd (1984) ATPR 40‑473 at 40,454.
Section 77(2) of the Fair Trading Act is in part framed in similar terms to s 87(1A) of the Trade Practices Act which states that:
"Without limiting the generality of s 80, the Court may:
(a)on the application of a person who has suffered, or is likely to suffer, loss or damage by conduct of another person that was engaged in in contravention of Part IVA, IVB, V or VC."
In Jekos Holdings Pty Ltd v Australian Horticultural Finance Pty Ltd [1994] 2 Qd R 515 the Queensland Supreme Court held that s 87(1CA) constituted a bar to amendment to proceedings claiming relief under s 87(1A) where the application is made more than three years after the cause of action accrued.
In my view it is quite artificial to suggest that the cause of action only accrued in September or October 2004 when it came to the defendants' notice that the plaintiff had not been insured at the time of entering into the contract and indeed did not obtain professional indemnity insurance until August 2003. It is not a question of when the defendants gained the knowledge, but rather when as a matter of fact the plaintiff entered into the contract with the defendants.
In the proposed counterclaim the defendants assert that had they been informed prior to entering the contract of the plaintiff's circumstances or difficulties relevant to him obtaining professional indemnity insurance they would not have entered into the contract. Therefore again I accept the argument on behalf of the plaintiff that the cause of action accrued at or about that time. This is not a matter where the defendants are seeking to amend a previously pleaded counterclaim but rather to raise a counterclaim in effect at the door of the Court. There may be some prejudice occasioned to the plaintiff by way of the late proposed amendment insofar as there has been lack of discovery, but I accept the argument on behalf of the plaintiff that this in the end result is not the major issue. It is the issue as to whether or not the proposed amendment by way of addition of the counterclaim is barred by virtue of falling outside the three year limitation period and in my opinion it is so time barred.
In the event that the defendants did enter the contract, which is of course what occurred, then at law it would have been open to them to take legal action against the plaintiff on and as from that date. For these reasons although a ruling was made at trial provisionally allowing the counterclaim in order that the trial could proceed, there is in my view no sound basis in law for confirming that provisional ruling.
In the event that this view is incorrect, nonetheless there was no evidence before the Court which establishes that the defendants suffered any loss sufficient to warrant the exercise of the Court's discretion pursuant to s 77 of the Act for reasons previously stated.

Assessment of damages

As the contract, Exhibit 2, is enforceable and a breach has been admitted it is appropriate to assess damages for the plaintiff. It is clear from the material and evidence before the Court on this issue that it is not an exercise which is capable of mathematical precision, nonetheless the Court must do the best it can with the material which is available to it. Relevant to the assessment of damages the plaintiff produced materials which became Exhibit 10 and it was on this basis in part that he performed the calculation relevant to his claim.
I am prepared to accept generally the method of calculation that was adopted for the period in which damages are to be assessed namely between 10 March 2003 and 30 November 2003. The comparison between the plaintiff's figures relevant to his earnings in the practice for this period when Mr Buckeridge was also working, clearly demonstrate overall there was a decrease in the plaintiff's income for the corresponding period in 2002, when the plaintiff was the sole optometrist working at the practice.
The plaintiff in my opinion has adopted a relatively conservative approach to his claim, no doubt based in part on the fact that he conceded he did have the capacity to see additional patients each day, even on the days when he was the sole optometrist working at the practice. He also agreed that in 2003 he took holidays for various four day periods when in fact according to the contract another optometrist could work at the practice and therefore those periods are properly not claimed for in relation to damages.
In essence it was conceded on behalf of the plaintiff that during the period in question the contract was not breached every week and it is only for those weeks where the plaintiff worked for four full working days that he claims damages. For the purposes of the comparative analysis only the weeks that were taken to account in 2003 for the purposes of calculation were also taken into account in 2002. Although the period encompasses 38 weeks the plaintiff claims for only 32 weeks and further does not claim for 50 per cent of the profits from the sale of soft contact lenses to which he was entitled.
In the end result applying this method to the period in question the plaintiff's loss in earnings was approximately $328.80 per week. In my view taking into account the calculations are in relation to "averages" it is appropriate to round this down to $325 per week, which for the period in question equates to a sum of $10,400.
Interest on this amount is claimed at 6 per cent per annum pursuant to s 32 of the Supreme Court Rules from 21 August 2003 until date of judgment, which is approximately a two year period. When interest of $1,248 is added to the loss assessed there will be judgment for the plaintiff in the sum of $11,648.