Williams & Williams v Cadillac Transport Repairs Propriety Ltd [2004] NTSC 57

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Williams & Williams v Cadillac Transport Repairs Propriety Ltd [2004] NTSC 57

PARTIES: WILLIAMS, Brian and WILLIAMS, Christine

v

CADILLAC TRANSPORT REPAIRS PROPRIETY LIMITED

TITLE OF COURT: SUPREME COURT OF THE NORTHERN TERRITORY

JURISDICTION: SUPREME COURT OF THE TERRITORY EXERCISING APPELLATE JURISDICTION

FILE NO: 20204328

DELIVERED: 22 October 2004

HEARING DATES: 16 September 2004

JUDGMENT OF: MARTIN (BR) CJ

CATCHWORDS:

CONTRACT
Breach of contract – damages for breach – whether defendants’ benefited from contract – rescission.

CROSS-APPEAL
Whether Magistrate erred in law in reaching conclusion – whether evidence existed to support the ultimate conclusion – cross-appeal dismissed.

APPEAL
Pleadings – whether defence based on statutory or common law regime – whether Magistrate erred in not giving general law remedy of damages, restitution; rescission – whether common law damages has to be specifically pleaded for Magistrate to consider – appeal allowed.

Trade Practices Act 1974 (Cth), s 75A; Consumer Affairs and Fair Trading Act (NT), s 67; Local Court Act (NT), s 19; Local Court Rules (NT)

Wilson v Lowery (1993) 110 FLR 142 at 146; Nicolia v Commissioner for Railways (NSW) (1970) 45 ALJR 465 at 466; Konskier v B Goodman Limited [1928] 1 KB 421 at 427; Kirby v Sanderson Motors Pty Ltd (2002) 54 NSWLR 135 at 143; Philip Morris Incorporated and Another v Adam P Brown Male Fashions Proprietary Limited (1981) 148 CLR 457 at 472, applied.
Young v Northern Territory Australia and Gutsche [2004] NTSC 16, considered.
Water Board v Moustakas (1987) 180 CLR 491, distinguished.

REPRESENTATION:

Counsel:
Appellant: T Young
Respondent: R Bruxner

Solicitors:
Appellant: Cassandra Tys
Respondent: Graham Cole

Judgment category classification: B
Judgment ID Number: Mar0411
Number of pages: 51

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN

Williams & Williams v Cadillac Transport Repairs Propriety Ltd
[2004] NTSC 57
No. 20204328

BETWEEN:

BRIAN WILLIAMS and CHRISTINE WILLIAMS
Appellants

AND

CADILLAC TRANSPORT REPAIRS PROPRIETY LIMITED
Respondent

CORAM: MARTIN (BR) CJ

REASONS FOR JUDGMENT

(Delivered 22 October 2004)

[1] This is an appeal and cross-appeal against a decision of a Magistrate by which his Worship found for the defendants on the plaintiff’s claim for unpaid monies and found for the plaintiff on the defendants’ counterclaim for damages for breach of contract.
[2] The plaintiff carried on the business of mechanical repairs in Katherine. In October 2000 the defendants’ bus motor overheated and they took the bus to the plaintiff. The parties reached an oral agreement that the plaintiff would rebuild the motor for a fair and reasonable price. No time within which the work would be completed was discussed. There is no dispute that it was an implied term of the agreement that the plaintiff would exercise reasonable care and skill in the performance of the work and that the materials used would be reasonably fit for the purpose intended.
[3] The principal of the plaintiff, Mr Rodger, has been an A grade diesel mechanic for about 30 years. He gave evidence that the diesel engine of the bus was approximately 30 years old. He described in detail how the engine was pulled down and rebuilt.
[4] The work was completed in about September 2001 and an account for $16,035 was rendered by the plaintiff to the defendants. The defendants paid $12,335 leaving a balance of $4,300. The balance was not paid and was the subject of the plaintiff’s claim in these proceedings. It is common ground that if the defendants fail to prove a breach of contract the plaintiff must succeed.
[5] A friend of the defendants, Mr Hone, took possession of the bus from the plaintiff on behalf of the defendants in October 2001. He drove it to his premises in Katherine and retained possession of it until November 2001 when the defendant’s returned to Katherine and took possession.
[6] Mr Hone said that when he took possession the gauges were not working. It appears that rodents had chewed through the wiring. Mr Williams repaired the wiring and replaced part of the oil pressure gauge. In the words of Mr Williams, “I just fixed the gauges up and the motor sounded really good”.
[7] After the gauges had been fixed, the defendants took the bus for a test drive. Approximately five or six kilometres out of Katherine, according to the gauges the motor was losing oil pressure and the temperature increased. The defendants stopped the bus and contacted the plaintiff. A mechanic employed by the plaintiff attended and expressed the view that there was nothing wrong with the motor. He said the problem was in the gauges.
[8] The defendants subsequently attempted to drive the bus to Beswick. About ten kilometres into the drive the same problems occurred. According to Mr Williams the motor sounded good and, relying upon what he had been told by the mechanic, he continued to drive.
[9] The defendants requested that the plaintiff attend at Beswick and examine the motor, but the plaintiff did not do so. In December 2001 the plaintiff requested that the defendants bring the bus to Katherine for a further inspection. During the journey the motor overheated and water shot out of it. The motor became very rattly. Ultimately the bus was towed back to Beswick.
[10] In January 2002 a mechanic employed by the plaintiff attended at Beswick and removed the motor. According to Mr Rodger, when the engine was again stripped he found that the crankshaft was beyond repair. The plaintiff was unable to find another crankshaft and, without contacting the defendants, decided to purchase a replacement short motor at a cost of $3,000. Having obtained the short motor Mr Rodger contacted Mr Williams and put an offer to him in the following terms:
“What we put to him is that we were good enough to let him have his bus, without fully paying the bill to start with, now we’ve given him the benefit of the doubt on the problem, not quite being able to nail down exactly what happened to it. Give him the benefit of the doubt of it, and said, “I’ll foot the bill for this block. Just pay the original amount, the original bill, which was $4,300 and we’d fit the engine, and he could be on his way”.”
[11] That offer was rejected by the defendants. The balance of $4,300 remained unpaid.
[12] The plaintiffs issued their proceedings in March 2002. The trial proceeded twelve months later on 10 March 2003. The evidence was heard in one day. The first set of written submissions was provided to the Magistrate on about 30 May 2003. The final set of written submissions on the substantive issues was filed in July 2003. Such a delay in the provision of written submissions should not have been permitted.
[13] The learned Magistrate gave his decision and delivered his reasons on 1 June 2004. It appears from the Court file that his Worship was ready to give his decision on 10 May 2004, but further delay was caused by additional submissions concerning costs. To say the least, a delay from July 2003 to May 2004 was highly undesirable.
[14] The first question to be determined by the Magistrate was whether the defendant had established a breach of contract by the plaintiff. In evidence Mr Rodger denied that the failure of the motor was due to faulty workmanship or the use of parts which were not fit for their purpose. He advanced other reasons why the motor might have failed, but admitted that he was unable to determine a cause with any certainty. Expert evidence led by the defendants as to possible causes was found by the Magistrate to be of no assistance because the witness did not examine the parts and his evidence was based upon what had been told to him by his sister, Mrs Williams. There is no challenge to his Worship’s conclusion that the evidence of the expert called by the defendants was of no assistance to him.
[15] The Magistrate made a number of findings of fact. For present purposes, in addition to findings as to the nature of the contract, the essential findings were as follows:
(i) When Mr Hone collected the bus in October 2001, the bus was in a grubby condition and the gauges were not working.
(ii) In November 2001 the defendants took possession of the bus from Mr Hone. After the bus had been driven a short distance it began overheating. A mechanic of the plaintiff stated it was just the gauges and that it was okay to drive.
(iii) The bus was driven from Katherine to Beswick during which it exhibited problems.
(iv) In December 2001 Mr Rodger requested that the defendants bring the bus to Katherine for further inspection. On route the bus broke down and has not worked since.
(v) “Generally, the gauges weren’t working, the centre unit for the oil gauge wasn’t working, wiring to the number plate was cut, the temperature light wasn’t working, even after repaired the motor was blowing excess fumes.”

(vi) The motor failed shortly after it came into the possession of the defendants.
(vii) The bus was towed back to Beswick. In January 2002 a mechanic of the plaintiff removed the motor and indicated it was not repairable.
(viii) In February 2002 Mr Williams took the motor to the premises of the plaintiff.
(ix) The defendants paid $550 in costs to transport the bus after it had broken down. Expenses of $600 for repairs to the floor of the bus and $440 were incurred for cleaning the bus.
(x) The motor was rebuilt by a mechanic of the plaintiff who undertook 80% of the work, and who was not called, and Mr Rodger who undertook 20% of the work.
[16] His Worship did not expressly accept or reject the evidence of Mr Rodger. After summarising the evidence and making the findings to which I have referred, in the following passage the Magistrate found that he was unable to determine a specific cause for the failure of the motor:
“The reason for failure at the end of the day is sufficiently unclear for me to be able to state categorically the failure. Mr Devine attempted to suggest reasons based upon his expertise but of course he didn’t examine any of the motor parts as none were provided to him; therefore, his evidence is of no real assistance in determining the failure.
Mr Rodger sought to explain the reasons why the engine might fail but conceded at the end of the day that he didn’t really know.”
[17] The Magistrate then posed the question for determination in the following terms:
“In determining the issue of whether or not I’m satisfied on the balance of probabilities that the plaintiff in providing its skill and labour and appropriate materials had done so reasonably, I have only the evidence of the motor’s failure and that of Mr Rodger.”
[18] That passage has caused me some concern as to the Magistrate’s approach to the burden of proof. It was not for the plaintiff to establish on the balance of probabilities that “in providing its skill and labour and appropriate material [it] had done so reasonably”. It was for the defendants to establish a breach of contract. However, this passage was not the subject of a ground of appeal and neither counsel addressed any submissions suggesting that the Magistrate erred in this regard. Subsequently his Worship stated the test correctly when he found that the work had not been completed in accordance with the agreement.
[19] The Magistrate then proceeded to consider the evidence of Mr Rodger as to his response to the circumstances in purchasing the short motor without first obtaining the approval of the defendants. After referring to the evidence of Mr Rodger which is cited earlier in these reasons, his Worship referred to other passages of Mr Rodger’s evidence including the following:
“Q. Was there any reason why you purchased the new block, without talking to Mr Williams first?
A. We were busy at the time, Your Honour, we were working in East Timor. I was away, and a couple of my other mechanics were away as well, and we were back an forth fairly regular, over there. They need their bus as they live in it, and I said, when I was in Timor, I said to my wife, I said, ‘Just get it going – get it going, so they can get going, they can live in it, whatever, we’ll sort it out later’. Like I said, I had faith in letting them take it in the first place, so – but when they – when we got it back together, got the engine back together, and said, ‘Well, you show a bit of good faith here as well, and pay the bill, and that’s when they reneged on that.’….
Q. Now you said that you – now you bought this new – well, not new, but you – I’ll rephrase that. You bought a – you found a short motor, is that right? ---
A. That’s correct.
Q. That short motor cost you $3000, is that right?
A. That’s correct.
Q. That short motor – it has never been put back in the bus?
A. No.
Q. And you said why you did it, there’s – I believe words, and I’ll stand corrected, was that you said that you gave them the benefit of the doubt. Those are the words you used, in examination in chief, is that correct?
A. Mm, yeah.
Q So you went – you went to the trouble of buying a replacement, short motor?
A. That’s right.
Q. To complete this contract?
A. That’s right.
Q. But you have never fitted the replacement short motor, have you?
A. No, we still have that.
Q. So I put it to you that you’ve never actually completed the contract?
A. A second engine.
Q. But …?
A. We completed the first one, it then left the yard.
Q. But you said that you’d given them the benefit of the doubt?
A. As to what might happen.
Q. As to might happen, so you’d given them the benefit of the doubt, in other words, that there was something wrong with what you’d done?
A. Maybe or maybe not. The benefit of the doubt goes 50/50, so it’s a stalemate, so you don’t know until you pull the actual engine down, and have a look at it. You pull it down, no worries, so then I thought, ‘Well, at the time we were busy, as I said, in Timor. I wasn’t there’, I said to my wife, ‘Just find another crank, get the motor back together, we’ll work it out when I get home’. She found another short motor, and I said, ‘Well, just put it back together, and then we’ll work it out’.
Q. And that was to be at no cost to them, is that’s (sic) right?
A. That’s right.
Q. And no account has been rendered, in relation to that motor?
A. That’s right.

Q. But what you were doing, was attempting to complete the job, by putting in a short motor?
A. That’s right, I was – I complete any job, every job.
Q. And you’ve never put that motor in, have you?
A. No.
Q. So why do you demand the sum of $4300?
A. To fix up the original bill, If I hadn’t of let it go through, as a (inaudible) and said, ‘Well, no, no vehicle – no money, no vehicle. I wouldn’t have been here looking for me $4300. But I give it to them, I said, ‘Yes, no worries, please take it, pay it off’. They promised, and I said, ‘No worries.’ So I went (inaudible) and said, ‘Okay’. Now I’ve gone to all the trouble, as I see it, to actually get another engine to keep them going, and I said, ‘Look, just fix it up, pay the $4300 we put it in, you’re on your way’. Which they refused. So you can’t get any fairer than that.”

[20] The Magistrate did not cite any more evidence given by Mr Rodger, but following on immediately from the end of the passage cited, Mr Rodger gave this evidence which was also of relevance to the question of his response to the circumstances and why he purchased a short motor without reference to the defendants:
“Q. Whether or not it was fair, that was your own decision taken, to complete this job?
A. To complete it, yes.
Q. So it wouldn’t have then been true, that the money would only be payable after you completed the job?
A. No. As we hadn’t assessed, as to what happened.
Q But you’d given them the benefit of the doubt?
A. That’s right.
Q. Some doubt existed in your mind, that you hadn’t performed this job, fully?
A. As I wasn’t here, I couldn’t – I was away in Timor at the time it exactly happened. I was – you know, it was when I instructed my wife, to just grab another short block – or another crank. I said, ‘Get another crank, and get it in here, then I’ll have a look at it when I get back’.
Q. But doubt existed though, didn’t it?
A. Well, I wouldn’t say doubt, undecided.
Q. Well okay, undecided. And therefore you embarked on a course of action, to complete the job, but you’d never actually put the motor in?
A. We did put the motor in. The motor was completed at one stage, and left the other.
Q. No, no, this second motor?
A. The second motor, no.”

[21] Against the background of uncertainty as to the cause of the failure and the evidence of Mr Rodger concerning the purchase of the short motor, the Magistrate reached the conclusion that the plaintiff failed to carry out the work with due care and skill. His Worship’s reasons for that finding are found in the following remarks:
“Taking this evidence at its highest and from the most favourable perspective to the plaintiff, the only reasonable inference in my view to be drawn from it is that the plaintiff failed in proving due care and skill in the rebuild of the motor. In fact, it is in my view an admission of liability as, why else, would the plaintiff seek to provide at its own cost a replacement short motor and make the concession. It did in Mr Rodger’s evidence.
I am also satisfied on the evidence before me that the rebuild work had not been completed in accordance with the agreement between the parties and the return of the bus either directly or indirectly does not impact on the completion of the agreement. The fact of the bus being out of the plaintiff’s hands and with the defendants or Mr Hone for some 2 months does not support the plaintiff’s evidence that the agreement between the parties was complied with.
It’s the plaintiff’s contention the pleadings do not raise a defence and only particularise the unconscionable conduct. I’m not satisfied that’s the case. The pleadings, in my view, state the common law position and if unsuccessful, rely upon the statutory defences. I’m satisfied on the evidence before me that the plaintiff has not performed the work it was engaged to with reasonable skill and care.
This in my view amounts to a substantial breach of the contract which entitled the defendants to rescind the agreement between them. I agree with the statement of His Honour Angel J in Canning v Dee Jay Engineering Propriety Limited, and I quote:
“The legal responsibility for the defendant’s inability to satisfactorily fix a ZF gearbox must, in the circumstances of its engagement, fall on it. The defendant is so liable quite apart from any question of negligence or the fitting of parts in the wrong position.”
Although no specific negligent act by the plaintiff’s been pointed to in the motor rebuild, the plaintiffs acceptance of liability through Mr Rodger is sufficient to reach the same conclusion as Angel J did in Canning’s case. I’m satisfied, therefore, the plaintiff in carrying out the works on the motor has breached the implied warranties of reasonable skill and care in the conduct of his work.
The defendants have received no benefit from the plaintiff’s work and the plaintiff is therefore not entitled to recover the sum of $4300 from the defendants (see Cooper & Ors v Australian Electrical Company [1922] WAR 66). Accordingly on the plaintiff’s claim, I would enter a verdict for the defendants. There is, having reached this conclusion, no need to consider the statutory regime in relation to the defendants’ defence on the plaintiff’s claim.” (my emphasis).
[22] The appeal and cross-appeal are not be way of rehearing. They are brought pursuant to s 19 of the Local Court Act 1989 which provides that a party to a proceeding may appeal to the Supreme Court only on a question of law. In its cross-appeal, the plaintiff complains that the magistrate erred in law in finding that the plaintiff, through the evidence of Mr Rodger, had admitted or accepted liability or had made a concession that it had failed to provide due care and skill in the performance of the contract.
[23] Counsel for the defendants conceded that the conduct of Mr Rodger and the evidence of Mr Rodger were not capable of amounting to an admission of liability. In my opinion, that concession was properly made. Mr Rodger plainly stated that there were causes other than the failure to properly carry out the repairs which could have caused the damage to the crankshaft, but frankly admitted that he was uncertain. Being uncertain as to the cause, Mr Rodger admitted no more than indecision or uncertainty as to whether the damage had been caused by the failure of the plaintiff to properly carry out the repairs. If accepted, that evidence could not amount to any more than a concession that Mr Rodger was uncertain as to the cause and recognised that it was possible that the damage was caused by the failure of the plaintiff to properly carry out the repairs.
[24] As to the significance of the conduct of Mr Rodger in arranging for the purchase of a short motor without consulting the defendants, that conduct must be viewed in the context of the circumstances in which it occurred. As Mr Rodger explained, the defendants needed the bus because they lived in it. He was operating a business that was busy and involved the presence of Mr Rodger and his mechanics in Timor. It was in those circumstances, and in the context of Mr Rodger’s uncertainty as to the cause of the damage, that Mr Rodger sought a solution through the purchase and use of the short motor.
[25] Unless the Magistrate rejected Mr Rodger’s evidence, the conduct of Mr Rodger and his evidence could not amount to an admission or acceptance of liability by Mr Rodger on behalf of the plaintiff. That conduct and evidence were not in themselves capable of supporting a conclusion that the plaintiff failed to provide due care and skill in rebuilding the motor.
[26] The Magistrate’s misuse of the evidence and error of reasoning were fundamental to his finding that the plaintiff failed to carry out the work in accordance with the contract and was in substantial breach of the contract. On an appeal by way of rehearing such a significant error would, in the absence of compelling reasons, vitiate the judgment. Notwithstanding the fundamental nature of the error, however, the defendants submitted that it was not an error of law for the purposes of s 19 of the Local Court Act.
[27] The principles to be applied in determining whether an error of law has occurred are set out in Wilson v Lowery (1993) 110 FLR 142 at 146. Those principles are discussed in Young v Northern Territory of Australia and Gutsche [2004] NTSC 16 and it is unnecessary to repeat that discussion. The statement of the principles in Wilson v Lowery was as follows (146):
“1. In the process of arriving at an ultimate conclusion a trial judge goes through a number of stages. The first stage is to find the preliminary facts. This may involve the evaluation of witnesses who gave conflicting accounts as to those facts. If the trial judge prefers one account to another, that decision is a question of fact to be determined by him and is not reviewable on appeal. It may be that the reason given for preferring one witness to another is patently wrong. Nevertheless, no appeal lies: ….
2. Regardless of the trial judge’s reasons, if there is evidence which, if believed, would support the finding, there is no error of law: … .
3. If, on the other hand, there is no evidence to support a finding of fact which is crucial to an ultimate finding that the case fell within the words of the statute (for example, that injury by accident arose out of the course of the employment, or that the failure to give notice was occasioned by mistake), there is an error of law: ….
4. But, a finding of fact cannot be disturbed on the basis that it is “perverse”, or “against the evidence or the weight of the evidence or contrary to the overwhelming weight of evidence”. Nor may this Court review a finding of fact merely because it is alleged to ignore the probative force of evidence which is all one way, even if no reasonable person could have arrived at the decision made, and even if the reasoning was demonstrably unsound: … .
5. The second stage is the drawing of inferences by the trial judge from the primary facts to arrive at secondary facts. This is subject to the same limitations that apply to primary facts.
6. If there are no primary facts upon which a secondary fact could be inferred, and the secondary fact is crucial to the ultimate finding as to whether or not the case fell within the words of the statute, there is an error of law. If there are primary facts upon which a secondary fact might be inferred, there is no error of law.
7. It is not sufficient that an appellate court would have drawn a different inference from those facts. The question is, whether there were facts upon which the inference might be drawn. If a tribunal draws an inference which cannot reasonably be drawn, it errs in point of law and its decision can be reviewed by the courts:.. .” (citations omitted).
[28] Although the conduct and evidence of Mr Rodger was incapable of supporting of a finding that the plaintiff admitted or accepted that it was in breach of the contract, nevertheless that evidence was not irrelevant. It was evidence of circumstances to be considered in conjunction with other proven facts.
[29] When the proven facts are considered in their entirety, in my opinion those facts were capable of supporting the magistrate’s ultimate conclusion that the plaintiff was in breach of the contract. In brief, the following combination of facts found proven by the magistrate was capable of supporting the ultimate finding:
(i) Contrary to the agreement, when the bus was delivered by the plaintiff to Mr Hone on behalf of the defendants it was in a very grubby condition.
(ii) When the bus was delivered, the wiring for the gauges was in a damaged condition having been chewed by rodents.
(iii) As a consequence of the damage to the wiring, at the time of delivery a number of gauges were not working.
(iv) At the time of delivery, the sender unit for the oil gauge was not working.
(v) Prior to delivery the plaintiff was unable to properly test the operation of the motor because the gauges were inoperable.
(vi) After delivery the bus was driven only a short distance before it began overheating and the oil pressure dropped.
(vii) The plaintiff paid for transport of the bus back to Katherine.
(viii) Without communication with the defendants, the plaintiff purchased a new short motor at a cost of approximately $3000. The plaintiff offered to install the motor in return for the balance owing of $4300.
(ix) The plaintiff was unable to exclude the possibility that the damage to the crank shaft resulted from the plaintiff’s faulty workmanship or the use of faulty parts.
(x) By its conduct, the plaintiff acknowledged that it was uncertain as to the cause of the damage to the motor and recognised that it was possible that the damage was caused by the failure of the plaintiff to properly carry out the repairs.
[30] It appears that although the Magistrate made a number of findings of fact, he overlooked the cumulative effect of those findings. After making the findings, his Worship concentrated on whether the proven facts were capable of establishing such a specific cause and concluded that he was unable to be satisfied as to a specific cause of the failure of the motor. Having found that the facts were insufficient to identify the specific cause, his Worship then stated that in determining the ultimate question as to a breach of contract he had “only the evidence of the motor’s failure and that of Mr Rodger”. His Worship did not refer to the cumulative effect of the proven facts when he turned to consider whether or not he was satisfied that a breach of contract had occurred by reason of some fault that could not be specifically identified.
[31] The general principle is that even if the reasoning of the Magistrate is faulty, provided there is evidence to support the ultimate conclusion, no error of law has occurred. In Nicolia v Commissioner for Railways (NSW) (1970) 45 ALJR 465, the High Court was concerned with an award by a Workers’ Compensation Commission (“the Commission”) of compensation made under the Workers’ Compensation Act 1926 following the death of a worker. The evidence disclosed that the worker had a history of coronary artery disease not associated with his employment. There was evidence from which a conclusion could have been drawn that in the course of his employment the worker fell and struck his head with sufficient force to cause bleeding. The majority of the High Court was of the view that the Commission could properly have concluded that the blow to the head at least contributed to the death of the worker.
[32] Significantly for the purposes of the present discussion, having observed that the reasons of the Commission lacked clarity, Barwick CJ said (466):
“But, in the first place the appeal will not turn on what his Honour said: it will turn on whether or not there was evidence before the Commission which, if believed would support the award actually made.”
[33] Windeyer J was of the same view. His Honour emphasised the fundamental question as to whether there was evidence upon which the conclusion could have been drawn by the Commission.
[34] Consistent with the principles applicable to appeals limited to questions of law, notwithstanding the failure of the magistrate to refer to the combination of facts set out in paragraph [29] of these reasons, in my opinion, by reason of the existence of that evidence, the error by the Magistrate in connection with the use of the evidence of Mr Rodger as an admission or concession of liability was not an error of law justifying interference by this court. Ground 2 of the amended notice of cross appeal which complains that the Magistrate erred in law in finding that the plaintiff was in breach of the contract is not made out.
Dismissal of Counterclaim - Pleadings
[35] After dismissing the plaintiff’s claim, the Magistrate turned to the defendants’ counterclaim. His Worship noted that the counterclaim had “been pleaded on the basis of a statutory regime and not the common law.” After referring to a submission by counsel for the defendants in which counsel denied any reliance upon common law damages for breach of contract, his Worship said:
“It’s the defendants’ contention, based upon its submission, they have a claim to common law and I could so find as I’ve done in relation to the plaintiff’s case. Of course, that may well be so but for the court to deal with that issue it must be pleaded and it has not.”
[36] The Magistrate referred to a letter of 26 February 2002 in which the defendants sought to rescind the agreement pursuant to s 67 of the Consumer Affairs and Fair Trading Act 1990 (NT) and s 75A of the Trade Practices Act 1974 (Cth) (“consumer legislation”). He found that the contract was rescinded by that letter pursuant to the statutory regime and not pursuant to any common law right:
“The defendants submit the common law power to rescind can be found and is set out in Associated Newspapers Limited v Bancks (1951) 83 CLR 322, but as I’ve already mentioned the contract was rescinded by the defendants’ letter of 26 February 2002 pursuant to the statutory regime and not any common law right; therefore, based on the pleadings as they stand, the defendants’ common law rights have not been raised in the counterclaim and I am unable to deal with it.”
[37] The Magistrate then proceeded to find that the defendants had failed to make out the various claims pleaded in the counterclaim pursuant to the consumer legislation. Counsel for the defendants on this appeal conceded that the defendants’ claim based on statutory remedies was doomed to failure and abandoned any complaint about that aspect of the decision of the Magistrate.
[38] At the heart of the defendants’ appeal are complaints that the Magistrate erred in law in not giving the defendants the general law remedy of damages for breach of contract or, alternatively, restitution. In the alternative, the defendants assert that the Magistrate erred in law in failing to give the appellants the general law remedy of an order for rescission and the return of the amount paid by the defendants to the plaintiff for work done together with other costs incurred by the defendants for transport, cleaning and repairs carried out by the defendants.
[39] The statement of claim was filed on 21 March 2002. The first defence and counterclaim is dated 2 April 2002. In the defence the defendants denied liability for the amount of $4,300 on the ground that the plaintiff was in breach of the agreement. In addition, the defence alleged breaches of the legislation to which I have referred.
[40] The counterclaim commenced in the following terms:
“The defendants claim against the plaintiff the amount of $14,640.00 plus costs and interest by way of refund to the defendants of money paid to the plaintiff for work to be performed by the plaintiff which work was not performed to a satisfactory standard in breach of the agreement between the parties and in breach of the Consumer Affairs and Fair Trading Act (NT) and the Trade Practices Act (Cth), and by way of reimbursement to the defendants for their loss and damage suffered due to the plaintiff’s breaches.
And the defendants seek against the plaintiff an order that the plaintiff returns the bus to the condition it was in prior to the plaintiff commencing work upon it so that a true and full rescission can take place.”
[41] The counterclaim then set out what were described as the “grounds” on which the claim was based. The terms of the agreement, the fact of the payment of $12,335 and the particulars of the conduct that was said to amount to a breach of the contract were all specified. Paragraphs 4- 6 also alleged that the plaintiff was in breach of the consumer legislation.
[42] The counterclaim then concluded in the following terms:
“7. Because of the breaches referred to in paragraph 3, 4, 5 and 6 above the defendants have suffered loss and damage.
Particulars of loss and damage
7.1 The defendants have paid $12,335.00 to the plaintiff;
7.2 The defendants were required to pay $550.00 on or about 7th March 2002 to move the bus from Beswick to Katherine;
7.3 The defendants were required to clean the bus after the plaintiff’s failed to care for it and keep it clean whilst it was in their care as bailee, and as was agreed between the parties, which work to clean the bus was quoted by a professional cleaner at $440.00.
7.4 The defendants were required to strip the vinyl floor of the bus and replace it at a cost of $600.00 ($200.00 for materials and labour of the defendant estimated at $400.00); and
7.5 The defendants were required to engage a solicitor when the plaintiff refused to repair the vehicle under warranty, at a cost of the defendants of $770.00.
8. Pursuant to section 91 of the Consumer Affairs and Fair Trading Act (NT) and section 82 of the Trade Practices Act (Cth) the defendants are entitled to damages for the above mentioned breaches.
AND THE DEFENDANTS SEEK an order that the plaintiff return the bus to its working condition at the time the agreement was entered into AND that the plaintiff pay the defendants the sum of $12,335.00 in order to give effect to a rescission of the agreement between the parties;
AND THE DEFENDANTS CLAIM the sum of $2,305.00 plus costs and interest by way of damages for the plaintiff’s breaches.”
[43] On 1 July 2002 the defendants filed an amended notice of defence and counterclaim. Paragraph 1 of the defence was in the following terms:
“1. The defendants deny that they are liable to the plaintiff for the sum of $4,300.00 or at all on the grounds that the plaintiff is in breach of an agreement between the parties entered into in or about October 2000 pursuant to which the plaintiff was to carry out work for the defendant.”

[44] Particulars of the agreement were then pleaded together with particulars of the breach by the plaintiff. Paragraph 2 of the defence was in the following terms:
“2. Because of the plaintiff’s breaches referred to in paragraph 1 herein the defendants deny that they are liable to the plaintiffs under the agreement in the sum specified or at all.”
[45] Paragraph 3 of the defence alleged that “further and in the alternative” the plaintiff was in breach of the various provisions of the consumer legislation. Particulars of alleged unconscionable conduct were set out. In paragraph 4 the defendants sought an order that the Court refuse to enforce the agreement by not requiring the defendants to pay the balance of $4,300. In paragraph 5 the defendants sought damages and referred to particulars claimed in the amended counterclaim.
[46] The amended counterclaim began in the following terms:
“The defendants claim against the plaintiff the amount of $13,925.00 plus costs and interest for rescission of all contractual relations between the parties.
And the defendants seek against the plaintiff an order that the plaintiff returns the bus to the condition it was in prior to the plaintiff commencing work upon it or as near to that condition as is practicable under the circumstances so that a true and full rescission can take place.
And the defendants claim general damages against the plaintiff for unconscionable conduct.”
[47] The grounds upon which the claim was made were then set out. Paragraph 1 set out the particulars of the agreement and para 2 asserted payment of the sum of $12,335. Paragraph 3 set out alleged breaches of the contract by the plaintiff.
[48] Paragraph 4 alleged that the plaintiff was in breach of the consumer legislation. Particulars of unconscionable conduct were asserted.
[49] Paragraph 5 was in the following terms:
“5. Because of the breaches referred to in paragraph 3 and 4 above, the defendants rescinded the agreement between the parties on 26 February 2002 pursuant to s 67 of the Consumer Affairs and Fair Trading Act (NT) and s 75A of the Trade Practices Act (Cth), and in accordance with those provisions the motor has been returned to the plaintiff and notice has been given in writing of the particulars of the breaches.”
[50] Paragraph 6 was expressed in the alternative and sought an order pursuant to the Trade Practices Act that the agreement between the parties be declared void ab initio.
[51] Paragraph 7 was in the following terms:
“7. To give effect to the defendant’s rescission of the agreement referred to in paragraph 5 herein or to give effect to an order that the agreement is void ab initio pursuant to paragraph 6 herein the defendants seek ancillary orders as follows:
7.1 That the plaintiff pay to the defendants the sum of $12,335.00 which was paid by the defendants by way of remuneration.
7.2 That the plaintiff pay to the defendants the sum of $550.00 which the defendants were required to spend to move the bus from Beswick to Katherine on or about 7 March 2002, which payment will return the defendants to the position they were in before the agreement.
7.3 That the plaintiff pay to the defendants the sum of $440.00 for cleaning the bus to return it to the condition it was in prior to the agreement.
7.4 That the plaintiff pay to the defendants the sum of $600.00 for repairs to the bus carried out by the defendants to return it to the condition it was in prior to the agreement.
7.5 That the plaintiff at its own expense return the bus as near as possible to the condition it was in prior to the agreement, namely, in working order.”
[52] Finally, paras 8 and 9 sought various remedies pursuant to the consumer legislation including the refund of monies paid, an order that the plaintiff repair the bus and return it to a workable condition and general damages.
[53] In the context of those pleadings, at the commencement of the trial the plaintiff applied for an order striking out the amended defence and counterclaim. Counsel for the plaintiff suggested that a cursory glance of the proceedings indicated that the case was concerned with poor workmanship arising out of a contract to repair the motor. Counsel told the Magistrate that he had held this view of the case for a considerable time. He added, however, that on the pleadings it was not a breach of contract case, but was a case about unconscionable conduct pursuant to the relevant consumer legislation. Counsel submitted that the question as to whether it was a breach of contract case or an unconscionable conduct case should be clarified.
[54] In response, counsel for the defendants said the pleadings implied it was a breach of contract at common law and referred to the pleadings by which the defendants denied liability to the plaintiff. He put to the Magistrate that the matter should proceed and be argued on the merits after hearing the evidence.
[55] In the course of a discussion about standing the matter down in order for counsel to confer, counsel for the plaintiff made the following observation:
“I guess I fell for the trick in relation to the breach of contract claim. There are about three links in the chain of alleging breach of contract, the last two aren’t there. There’s no allegation that damages were suffered from the breach, there’s no claim for damages arising out of the breach. So I’m putting it to your Worship that there’s no claim for breach of contract. There’s a summary at the start of the amended statement of claim which lists the type of damages the defendants have (inaudible). A breach of contract’s not in there so haven’t prepared for.”
[56] In response counsel for the defendants spoke of the Magistrate hearing the evidence and then determining what remedies were attracted by the evidence. He maintained that the defendant had pleaded breach of contract as a consequence of which no monies were owing. The submissions continued:
“Your Worship, they [the defendants] are unable to plead damages in relation to exact quantified amounts but I would submit, your Worship, that they can simply say the work hasn’t been carried out, the money isn’t owing, that’s a contract question.”
[57] After further somewhat confusing discussion, the Magistrate adjourned for a short period. Upon resumption counsel for the defendants advised the Magistrate that it was the case for the defendants that the implied terms in the contract were implied both at common law and pursuant to s 74 of the Trade Practices Act. Submissions followed concerning expert evidence and Mr Rodger commenced his evidence.
[58] During cross-examination of Mr Rodger, questions were put suggesting that as a consequence of the defendants following Mr Rodger’s advice to drive the bus from Beswick to Katherine, the bus ended up being rendered useless. Mr Rodger agreed with that proposition. In the middle of the next question which suggested that if Mr Rodger had gone to Beswick he would have discovered the problems, further reference was made to the nature of the case in the following discussion:
“Plaintiff (counsel): Mr Whelan and I’ve agreed, and we probably should have told you this earlier, that this is not a breach of contract case. So there’s no counterclaim for breach of contract. It’s a case about unconscionable conduct, and wisdom’s got nothing to do with unconscionable conduct, sir. So I object to this line of questioning.
Defendants (counsel): Your Worship, that is not what we had agreed. The pleadings say there’s a breach of agreement. What I’m not seeking is common law damages for the breach of the contract. Now the pleadings all deal with that there is a breach of the contract. I mentioned that at the start, your Worship, that there were implied matters and that they were implied both at common law and …
His Worship: Well, the pleadings stand, of course, gentlemen, unless there’re amended.
Defendants: Now, see, I agree, Mr Cole, I am not alleging that there is a claim, counterclaim, for contractual damages at common law, for breach of contract. We’re not in a position to run that, and I do agree with it.
Plaintiff: Is there a counterclaim for breach of contract?
Defendant: There is – your Worship, I – Mr Cole has asked me is there a counterclaim for breach of contract, and if the remedies, as I understood – I pointed out to him, the remedies I was seeking, pursuant to the Trade Practices Act, and I believe that one of those remedies is for repayment of the monies, and I think that’s the track that I was going down … (my emphasis)

His Worship: The pleadings say that defendants claim against the plaintiff, the amount of $13,925 plus costs, and interest or rescission of all contractual relations between the parties.
Defendants: Yes.
His Worship: Now that’s pretty plain but …
Defendants: But I think what Mr Cole is getting at is that you could make a claim for contractual damages, and I don’t want to get into what I think he’s saying, but that it would cost $20,000, for instance, to put – to redo the whole job, we’re not making that claim. I think that’s what we agree on. I’m sorry I misunderstood.
Plaintiff: Well, I think, this is where, and I hate to say, I told you so, that these matters (inaudible) earlier, should have been addressed. For example, rescission, it sounds like it’s a cause of action in its own right.
His Worship: Well, that’s what’s in the pleadings, Mr Cole.
Plaintiff: That’s what’s in the pleading, and it’s dead wrong ... .
His Worship: And the Court will deal with the claim on the basis of the pleadings.
Plaintiff: Sorry, sir?
His Worship: And I’ll have to deal with the matter on the basis of the pleadings.
Plaintiff: Only if they’re correct, sir, otherwise your Worship won’t be able to deal with them.”
[59] There does not appear to have been any further discussion about the nature of the remedies being sought by the defendants.
[60] The written submissions of the plaintiff dated 30 May 2003 submitted that although O 8, r 4 of the Local Court Rules permits a money claim, including a damages claim, to be a defence, the defendants had not pleaded damages sustained as a result of the breach and had not claimed damages. The submission added that “no damages at common law are claimed in this proceeding by the defendants only damages pursuant to the CAFTA and the TPA”.
[61] As to the counterclaim, the plaintiff’s written submission advanced the following proposition:
“In the counterclaim the defendants do not claim damages for the breach either but they do claim payments arising out of a “rescission” – but this is another issue. So it seems that the breaches of the contract are included as particulars of unconscionable conduct not as defences or a counterclaim.”
[62] The plaintiff’s written submissions did not refer again to the question of common law damages. Rescission was addressed as a rescission under the “CAFTA”. The plaintiff contended that although the defendants appeared to treat rescission as a cause of action in its own right, it was really “a remedy”.
[63] Under the heading of “Orders sought by the defendants”, the plaintiff’s written submissions referred to the claim that the plaintiff pay the defendants the amount of $13,925 being $12,335 monies paid by the defendants to the plaintiff, $555 paid for transporting the bus from Beswick to Katherine, $440 for cleaning and $600 for repairs.
[64] The written submissions filed by the defendants asserted that, at common law, the breach of the agreement by the plaintiff coupled with the absence of any benefit to the defendants amounted to a full defence at common law in respect of the claim for the balance of $4,300. Submissions were also advanced concerning statutory defences.
[65] As to the counterclaim, the defendants’ submission asserted a breach at common law of the agreement and, as a consequence, a right in the defendants to be repaid the sum of $12,335 already paid. Reliance was placed upon para 7.1 of the counterclaim.
[66] Immediately after the submission for repayment of the $12,335 at common law, the written submissions proceeded as follows:
“Incidentally, the defendants have not sought common law damages in this matter because there is no practical way for the defendants to quantify such damages. Common law damages in this situation would be: the cost to the defendants of repairing the bus to effectively undo the work done by the plaintiff. The plaintiff was engaged to rebuild the bus motor. At the time the plaintiff was engaged, the bus motor was running. Now that the plaintiff has failed to perform this task, the bus motor is completely unserviceable and irreparable. The job cannot be redone, and the motor now cannot be rebuilt. The defendant cannot put forward a case for how much it would cost them to now rebuild the motor so that they would be in the same position as they would have been in had the plaintiff successfully completed the contract. …
On that basis, the defendants have sought the only quantifiable remedy available to them – to undo the contract and return them to the position that they were in before the contract was entered into. The contract has been rescinded through a letter dated 26 February 2002. The common law power to rescind can be found in the attached case of Bancks. This is pleaded at paragraph 5 of the Counterclaim …
Either way, it is clear that the fair and equitable outcome of this matter is to return the defendants to the position that they were in prior to the agreement – the case of Canning shows that the plaintiff is entitled to no remuneration for a failure to perform, and Canning also says that a wronged party is entitled to “consequential damages”. It is argued that these are akin to the general damages sought under s 82 of the TPA, at clause 9 of the Counterclaim. Whether the $12,335.00 paid to the plaintiff is repaid under a rescission argument, or considered to be general damages under section 82 (both of which have been pleaded), it is clear that the plaintiff should be ordered to refund this money to the defendants.” (my emphasis)
[67] The balance of the written submissions concerning the defendants’ claim at common law sought recovery of the other expenses incurred by the defendants.
[68] In written submissions in reply to the defendants’ submissions, the following was advanced concerning the claim at common law and rescission:
“ “Rescission at common law” and “Defendants’ claim at common law”
6. The defendants wrongfully pleaded rescission pursuant to TPA and CAFTA. Now they argue that the rescission was pursuant to a “common law power” and was pleaded in paragraph 5 of the counterclaim. That is not the case. The rescission was expressed to be in accordance with the terms of the two Acts and not otherwise. Next, whilst the defendants’ submissions suggest there is a “claim at common law” there is none in either the defence or counterclaim.”
[69] Paragraph 7 of the first counterclaim asserted that as a consequence of the breaches of contract pleaded in earlier paragraphs, the defendants had suffered loss and damage. The particulars of the loss and damage included the $12,335 paid to the plaintiff and the other expenses incurred by the defendants. That claim as pleaded in para 7 of the first counterclaim was dropped from the amended counterclaim. In its place was a claim for repayment of $12,335 and the other expenses as “ancillary orders” to “give effect to the defendant’s rescission of the agreement referred to in paragraph 5” of the counterclaim. Paragraph 5 referred to the rescission on 26 February 2002 pursuant to the Consumer Affairs and Fair Trading Act and Trade Practices Act.
[70] Counsel for the defendants submitted that notwithstanding the form of the pleadings, which he accepted were inadequate, the Magistrate was required to give the relief to which the defendants were entitled according to the evidence and his Worship’s findings. That relief included damages at common law. Counsel contended that the defendants were entitled to such relief notwithstanding the statements to the contrary at trial by counsel for the defendants. He argued that, properly understood, counsel was abandoning the expectation damages, but not reliance damages.
[71] Rule 9.02 of the Local Court Rules provides that a counterclaim is to contain a concise statement of the nature of the defendant’s claim, particulars of the claim and a statement of the amount, relief or remedy sought. Rule 5.09 is a general rule applicable to all pleadings and directs that a pleading is to contain, in a summary form, a statement of all the material facts on which the party relies, but not the evidence by which those facts are to be proved. This Rule also provides that the pleading is to state specifically the amount of compensation sought or relief or remedies sought. Rule 5.09(2) states that in a pleading a party may raise a point of law and plead a conclusion of law if the material facts supporting the conclusion are pleaded.
[72] As reflected in the Rules, pleadings in the Local Court are designed to provide a statement in summary form of the material facts upon which a party relies. The facts pleaded must disclose a cause of action, but it is not necessary to identify a particular cause of action in the pleading. In Cairns, Australian Civil Procedure, 5th Ed, the learned author states (161):
“Although it is usual for a party to plead the claim for a particular cause of action, the party’s formulation is not binding on the court. Pleadings in personal injury cases are cast in terms of allegations and particulars that are relevant only to a breach of a duty of care, or breach of a statutory duty. Allegations in contractual disputes are cast in terms relevant only to contract. None of this is binding on the court. So long as the facts proved show the plaintiff to be entitled to relief, the plaintiff obtains judgment. In giving judgment, the court does not necessarily accept the cause of action on which the plaintiff pleaded the claim. At the end of the trial, the court applies the law to the facts as proved.” (citations omitted).
[73] In a later passage, the learned author observes (165):
“Since the first requirements of pleading is that only material facts are to be alleged, then obviously matters of law, or legal conclusions or inferences, must not normally be alleged in the pleadings. The court draws whatever legal inferences are open on the findings of fact. It gives judgment on the basis of the findings of fact and the allegations in the pleadings. A party must not plead a conclusion of law as a material fact. Strictly, for the plaintiff to allege, as a purported material fact, a particular cause of action is usually an assertion of conclusion of law. So long as the facts alleged in the pleadings show a cause of action, the pleading is sufficient. The plaintiff need not actually name which cause of action is asserted.
The same is true for the defendant. Where the defendant asserts an affirmative defence, the defendant need only plead facts that show a defence. Which defence is actually raised is a conclusion of law for the court.”
[74] The principle that a court is bound to apply the law to the facts proved is found in the decision of the Court of Appeal in Konskier v B. Goodman Limited [1928] 1 KB 421. The plaintiff sued in negligence alleging damage caused by neighbouring demolition work. The claim in negligence succeeded, but on appeal while accepting that the claim in negligence should have failed, the Court held that the facts proven established a trespass. Notwithstanding the absence of any plea of trespass, the judgment was upheld. Scrutton LJ observed (427):
“It follows from that case that if the present action had been brought in trespass there would have been no answer to the claim. But a plaintiff is not now bound to state the legal effect of the facts on which he relies; he is only bound to state the facts themselves, and we cannot see that the respondent has suffered any injustice in the way of being shut out from giving evidence which he might have given if the action had been treated as an action of trespass. We therefore think that the judgment should stand as a judgment in an action of trespass and that the appeal should be dismissed.”
[75] The principle in Konskier v Goodman that a pleading need only allege material facts relied upon and not their legal effect was followed by Blow J in Jones v Clyde Welshpool Pty Ltd (1999) 9 Tas R 391 and by the New South Wales Court of Appeal in Wickstead v Browne (1992) 30 NSWLR 1 at 15 and Bebonis v Angelos (2003) 56 NSWLR 127 at [50]. None of these cases was concerned with substituting or adding a cause of action not relied upon at trial as occurred in Konskier v Goodman.
[76] In Kirby v Sanderson Motors Pty Ltd (2002) 54 NSWLR 135, the New South Wales Court of Appeal expressed the following qualification in respect of the principle emanating from Konskier v Goodman (143):
“…I do not take cases such as Konskier as establishing that there is never any requirement to do more than set out facts. Where there is a danger of surprise, which arises particularly where there is a lack of precision and clarity in the pleading, it may well be appropriate to require a plaintiff, either in a statement of claim or in particulars, to explicitly relate the facts it pleads to specified causes of action.”
[77] The remarks of the court in Kirby v Sanderson were made in the context of rules which provided that a pleading should only contain a statement in summary form of the material facts on which the party relies and that the party was required to plead specifically any matter which, if not pleaded specifically, might take the opposing party by surprise. In addition, another rule required that a statement of claim should contain a statement of each cause of action. The court regarded the last mentioned rule as merely making it clear that the statement of material facts should be so presented as to amount also to a statement of a cause or causes of action.
[78] Notwithstanding the context in which the remarks were made, there is considerable force in the following general observation made by the court in Kirby v Sanderson (143):
“The general requirement to avoid surprise means that material facts must be stated in such a way that a defendant can understand the materiality of the facts, that is, how they are material to a cause of action.”
[79] The following observations of Barwick CJ in Philip Morris Incorporated v Adam P Brown Male Fashions Proprietary Limited (1981) 148 CLR 457 at 472 are also pertinent:
“It is worth observing at this point that in what has come to be known as judicature or fact pleading, it is not necessary for the pleader to set out or to limit himself to a cause or causes of action which he asserts as basis for the relief he claims. Indeed, he need not specify a cause of action (using that expression in the pre-judicature sense) at all: it is sufficient that he alleges the facts he seeks to prove and the relief he claims.”
[80] Counsel for the plaintiff submitted that having regard to the pleadings and the manner in which the litigation was conducted, the Magistrate was not in error in failing to address common law damages or rescission. He relied upon the decision of the High Court in Water Board v Moustakas (1987) 180 CLR 491.
[81] In Water Board v Moustakas, the plaintiff was employed by the Water Board. During his employment he was injured when hit by a bus. At trial it was the plaintiff’s case that he remained in the first lane of a roadway near an excavation and that the bus crossed from the second lane into the first lane where it struck him. The plaintiff’s claim was dismissed. On appeal the plaintiff asserted that the trial Judge should have held that the employer was negligent in not having erected a barrier in order to prevent the plaintiff from moving into the second lane and into the path of the bus. That point was not advanced during the trial as the plaintiff maintained at trial that he remained in the first lane where he was struck by the bus.
[82] The Court of Appeal held that as reference was made at trial to the erection of a barricade, a case of negligence by the employer on that basis had “emerged” at the trial. The Court concluded it would be unfair to enter judgment against the Board “on a set of facts to which it has never had an opportunity to presenting a defence”. A retrial was ordered.
[83] On appeal to the High Court, in a joint judgment four Justices made the following observations (497):
“In deciding whether or not a point was raised at trial no narrow or technical view should be taken. Ordinarily the pleadings will be of assistance for it is one of their functions to define the issues so that each party knows the case which he is to meet. In cases where the breach of duty of care is alleged, the particulars should mark out the area of dispute. The particulars may not be decisive if the evidence has been allowed to travel beyond them, although where this happens and fresh issues are raised, the particulars should be amended to reflect the actual conduct of the proceedings.

It is necessary to look to the actual conduct of the proceedings to see whether a point was or was not taken at trial, especially where a particular is equivocal. The particular in question in this case falls into that category. The allegation that the employer failed to provide adequate barriers did not indicate the purpose for which it was contended that barriers ought to have been provided. The case presented by the plaintiff, however, made it quite clear that it was being alleged that the barriers ought to have been provided to prevent traffic from crossing into the first lane. The plaintiff could have presented his case in the alternative, upon the basis that the employer was negligent in failing to provide a barrier to prevent him from straying into the second lane. The relevant particular, because of its breadth, would have allowed such a case to be put. But it was not put. The plaintiff presented his case solely on the basis that he remained in the first lane and the imposition of the relevant particular cannot be the means of attributing to the plaintiff a case which he did not make.
The employer was never required to meet a case that the plaintiff was hit by the bus in the second lane and it was entitled in conducting its defence to rely upon the case which was actually put. Had the plaintiff alleged in the alternative that the accident occurred in the second lane, the employer may have been compelled to address in a different way the question of its failure to erect adequate barriers, if necessary calling evidence concerning the feasibility of adopting such a measure.”
[84] In Water Board v Moustakas the High Court was not concerned with different causes of action in circumstances such as those that existed in Konskier v Goodman. The High Court was concerned with changing the factual basis of an alleged breach of duty of care between the trial and the appeal. However, their Honours’ observation that one of the functions of pleadings is to define the issues so that each party knows the case which the party is required to meet is of relevance to matter under consideration.
[85] The overriding purpose of pleadings is to assist in the fair and efficient administration of justice. Pleadings are not intended to provide a weapon by means of which a party can deprive an opponent of pursuing rights under a cause of action which is disclosed by the material facts alleged in the pleadings. I cannot help but gain the strong impression that counsel for the plaintiff perceived an opportunity to frustrate and confine the defendants counterclaim by taking advantage of the inadequacy of the pleadings. The opportunity to successfully pursue such a course was enhanced by the lack of understanding displayed by counsel for the defendants as to the causes of action and remedies that were available to the defendants on the pleaded material facts.
[86] I do not accept the submission that, properly understood, the defendants abandoned only expectation damages and not reliance damages. It is readily apparent that counsel for the defendants did not understand the difference between expectation and reliance damages. Counsel did not appreciate that if the material facts pleaded were proved, at the least the defendants were entitled to damages at common law to the extent of restitution of the amount of $12,335 paid to the plaintiff.
[87] It was due to the lack of understanding of counsel for the defendants as to the legal rights of the defendants that counsel for the defendants abandoned any claim to damages at common law based on the plaintiff’s breach of contract. Counsel went to the extent of explaining that the defendants were not pursuing such damages because the defendants were not in a position to prove the quantum of damages. That explanation well demonstrates the erroneous view that counsel held of the law.
[88] As a consequence of the defendants having expressly disavowed reliance upon any form of damages at common law, the trial was conducted on the basis that such damages could not be quantified or awarded. In those circumstances, it is not surprising that the Magistrate determined that he was unable to deal with the issue of common law damages because that issue had not been pleaded.
[89] The Magistrate proceeded upon an erroneous view of the law. His Worship erroneously determined that for the court to deal with the issue of common law damages, that issue had to be pleaded. As the authorities to which I have referred demonstrate, provided the material facts were pleaded, it was not necessary for the defendants to specifically plead that they were entitled to damages at common law.
[90] The material facts necessary to sustain the defendants’ case that the plaintiff was in breach of the contract and, as a consequence, that the defendants suffered damages at common law, had been pleaded. As a matter of legal principle, notwithstanding that the pleadings sought only statutory remedies, the Magistrate was bound to apply the common law to the breach of contract and the issue of damages. If his Worship had correctly applied the common law to the proven facts, he would have given judgment for the defendants on the counterclaim for at least the amount of $12,335 paid by the defendants to the plaintiff plus the amount of $550 paid by the defendants to transport the bus after it had broken down.
[91] In dismissing the defendants’ counterclaim, the Magistrate erred in law. Having been misled by the parties, his Worship acted upon an incorrect view of the legal effect of pleadings. This is not a case in which his Worship considered the question of damages at common law and erred in the application of the legal principles or in the assessment of the evidence. His Worship failed to consider the question of common law damages.
[92] An error of law having occurred, s 19(6) of the Local Court Act provides that this Court may make such order as it thinks fit, including an order remitting the case for rehearing. Notwithstanding the conduct of the defendants at trial through their counsel, the defendants seek judgment on the counterclaim in the amount of $13,925. The defendants do not seek larger damages by way of an attempt to put themselves in the position they were in before entry into the contract with the plaintiff. The plaintiff submitted that the appropriate course is to remit the matter to the Local Court for rehearing.
[93] The defendants pleaded the material facts necessary to establish a breach of contract by the plaintiff and damages suffered by the defendants as a consequence of that breach. The trial was fought on the basis that the defendants were alleging a breach by the plaintiff which was denied by the plaintiff. This was the critical issue of fact to which the parties addressed most of their attention. The Magistrate found for the defendants. As set out earlier in these reasons, although that finding was accompanied by a misuse of evidence, it was not attended by an error of law and the appeal against that finding fails.
[94] At trial, it was plain that the defendants were alleging that as a consequence of the breach of contract by the plaintiff the defendants were entitled to recover from the plaintiff the amount paid of $12,335 together with expenses of $1,595 incurred in respect of transporting, cleaning and repairing the bus. There was no dispute that the defendants had paid $12,335 to the plaintiff. There was no dispute that the defendants had paid $550 to transport the bus after it had broken down. The claims for $600 for cost of the repairing the floor and $440 cleaning expenses were contested.
[95] The basis on which counsel for the defendants abandoned a claim for common law damages was not centred on any concession that the contract had not been breached or that the damages had not been suffered. The defendants continued to assert a breach at common law of the contract and the suffering of the damages to which I have referred. The abandonment was based on counsel’s misconceived view of the law relating to common law damages and the quantification of such damages.
[96] The abandonment of a claim for damages at common law did not result in any change to the evidence. Leaving aside the possibility of evidence relating to a relatively minor benefit to the defendants notwithstanding the breach of contract, a topic which is discussed later in these reasons, if the defendants had pursued the claim for damages at common law the evidence would not have been different. The controversial issues at trial concerned whether a breach of contract had been established and, if so, whether a claim for statutory relief had been made out.
[97] In substance, the plaintiff knew the case it had to meet as to the facts alleged by the defendants which the defendants asserted amounted to a breach of contract. Similarly, the plaintiff knew the case it had to meet as to the quantum of damages that the defendants asserted they had suffered as a consequence of the breach of the contract. What the plaintiff was led by the defendants’ conduct not to address was a particular legal effect of the proven facts, namely, the remedy of damages at common law. But leaving aside two minor amounts, those damages to the extent they comprised the payment of $12,335 to the plaintiff and the payment of $550 for transport costs were not in dispute.
[98] In these circumstances, the Magistrate having found a breach by the plaintiff, had his Worship correctly applied the law the plaintiff could not have resisted judgment for the defendants on the counterclaim for at least $12,885. In my opinion, therefore, notwithstanding the conduct of the defendants at trial, there is no unfairness to the plaintiff in giving judgment for the defendants in that amount. On the other hand, it would be grossly unfair and serve no useful purpose to remit the matter for further hearing in respect of those amounts.
[99] As to the repairs to the floor of the bus, there is no evidence which would justify a finding that a breach of contract by the plaintiff resulted in damage to the floor which necessitated the repair. In addition, the male defendant having carried out the repairs himself, the basis upon which the amount of $600 was calculated was not established by the evidence.
[100] The claim for $400 for cleaning of the bus is based upon an assertion that it was part of the contract that the plaintiff would keep the bus clean. The Magistrate found in favour of the defendants in that regard. His Worship also found the bus was in a grubby condition when collected from the plaintiff.
[101] The female defendant said that she and her husband cleaned the bus over a period of three days. The basis upon which the amount of $440 was calculated was not identified in the evidence. In my view the evidence was too vague to establish this aspect of damages.
Contention – Benefit
[102] In submissions on this appeal, counsel for the plaintiff urged that should the finding of the Magistrate as to a breach of contract be upheld, this Court should not substitute a judgment for the defendants on any part of the counterclaim. He argued that by reason of the defendants’ conduct at trial the plaintiff was denied the opportunity of leading evidence to establish that notwithstanding a breach, the defendants had received a benefit from the work carried out by the plaintiff. Pressed to identify the benefit that the plaintiff would otherwise have sought to prove, counsel could refer only to work in connection with the radiator and water pump.
[103] In the context of any benefit to the defendants, it should be noted that the defendants do not have possession of the motor. The plaintiff has retained possession of the motor since it was given to the plaintiff for the purposes of determining the cause of the break down and further repair.
[104] The Magistrate found that the defendants had not received any benefit from the work of the plaintiff and, therefore, the plaintiff was not entitled to recover the sum of $4,300 from the defendants. In this Court the plaintiff contended that the Magistrate erred in finding that the defendants had not received any benefit because that issue was not before his Worship.
[105] As I have said, regardless of the deficiencies in the pleadings, at trial it was plain that the defendants were claiming that the plaintiff was in breach of the contract and that, as a consequence, they were not liable to pay the balance of $4,300. It was also plain that the defendants were claiming that they were entitled to the refund of $12,335 paid to the plaintiff. In those circumstances, the issue of whether the defendants derived any benefit from the work of the plaintiff was a live issue at trial because the Magistrate might have found that the plaintiff was in breach of the contract. It was a matter for the plaintiff whether the plaintiff led evidence to prove that, should the Magistrate be satisfied there was a breach, nevertheless the defendants’ derived benefit from the work performed by the plaintiff.
[106] The only evidence led as to a possible benefit was that of Mr Rodger concerning the radiator and water pump. His evidence was as follows:
“Well, we sourced out the other problems that was part of it, such as the radiator, water pump, hoses, bits and pieces, idol bearings, pullies, they all went – the radiator went off to the radiator shop, and it was beyond repair, it was old and corroded, so there was a new core for that. Idler bearings, that were old and worn, they were replaced, balanced, fan bearing, (inaudible) bits and pieces.”
[107] The invoices tendered during the trial do not relate to parts provided in connection with the radiator and the water pump. There is no invoice which identifies the labour component of the work carried out with respect to those two items.
[108] In written submissions to the Magistrate filed in about June 2003 the defendants advanced the following submission:
“The fact is that the defendants have derived no benefit from the plaintiff’s work and the plaintiff therefore should not be entitled to recover anything for the work performed.”
[109] That submission was repeated in the following passage:
“The defendants have derived no benefit whatsoever from the plaintiff’s work. On that basis the plaintiff is not entitled to recover the balance of their account – according to Angel J in Canning [Canning v Dee Jay Engineering Pty Ltd unreported 31 July 1991] it should receive no remuneration at all. The defendants have already paid to the plaintiff $12,335 … for no benefit at all.”
[110] The submission was subsequently repeated in the following terms:
“Indeed at equity, and as already stated, given that the defendants derived no benefit whatsoever from the plaintiff’s work, it follows that to require them to pay the rest of the money owing would be harsh and unreasonable, and certainly inequitable.”
[111] In written submissions filed on about 16 July 2003, the plaintiff did not refer to the assertion that the defendants failed to derive any benefit from the plaintiff’s work. There was no objection on the basis that the issue was not before the Magistrate.
[112] The plaintiff chose not to prove the value of the work carried out with respect to the water pump and radiator. Perhaps it was thought unnecessary to do so because of the relatively small amounts involved. Bearing in mind that even if the defendants succeeded at trial in recovering the amount paid to the plaintiff they were still left with a bus without a motor, perhaps the plaintiff did not consider the value of the work carried out with respect to the radiator and water pump to be of any moment.
[113] In all the circumstances, in my opinion the Magistrate was not in error in dealing with this issue nor in finding that the defendants did not derive any benefit. The plaintiff having elected not to prove the value of the work done in connection with the radiator and the water pump, in my view it is not unfair to give judgment for the defendants on this appeal in the amount of $12,885.
[114] Having reached the conclusion that the defendants should succeed on this appeal on the basis of an award of damages at common law, it is unnecessary for me to consider in detail the claim based upon rescission. However, as that issue was argued, I will indicate briefly my views.
Rescission
[115] The counterclaim commenced by pleading a claim against the plaintiff for the amount of $13,925 plus costs and interest “for rescission of all contractual relations between the parties”. The pleading then sought an order that the plaintiff return the bus to the condition it was in prior to the plaintiff commencing work upon the bus or as near to that condition as is practicable “so that a true and full rescission can take place”. In addition, the defendants pleaded in para 5 of the counterclaim that by reason of the breaches of the contract the defendants rescinded the agreement on 26 February 2002 pursuant to provisions of the consumer legislation. Paragraph 7 sought orders for payment of the amount of $12,335 and the other lesser amounts in order to “give effect to the defendants’ rescission of the agreement referred to in paragraph 5” of the counterclaim.
[116] The letter of 26 February 2002 does not appear to have been tendered at trial. I have been provided with a copy of that letter. The relevant section of the letter was in the following terms:
“On my clients’ instructions I give notice that my clients rescind their contract with you to rebuild the motor of their bus on the basis of breaches committed by you under the Consumer Affairs and Fair Trading Act (NT) and under the Trade Practices Act (Cth). Particularly:
• you have breached section 66(1) of CAFTA in that the services you provided were not rendered with due care and skill, causing the bus to break down shortly after it was returned to my clients. I am instructed that all of the gauges and the sender unit were inoperable, and that there was no oil pressure;
• further, the condition in which you returned the bus, and the additional damage you or your agents did to it would also be deemed unconscionable conduct under section 43(1). I am instructed that the bus was left open to the elements, and there was substantial damage to the floor and to the wiring;
• finally, on my instructions you have breached section 44(a)&(b) in that the services you have supplied were not of the standard, quality or grade you represented.”
[117] In the written submissions presented to the Magistrate, the defendants asserted that the contract had been rescinded by the letter dated 26 February 2002 pursuant to a common law power. Reference was made to the case of Associated Newspapers Limited v Bancks (1951) 83 CLR 322 and to the pleading at para 5 of the counterclaim. In response the plaintiff asserted that the rescission was expressed as pursuant to the consumer legislation and was not pleaded at para 5 as pursuant to a common law power.
[118] As set out in para [36] of these reasons, the Magistrate determined that he was unable to deal with the question of rescission at common law because the rights of the defendants at common law to rescind the contract had not been raised on the pleadings.
[119] Although the letter of 26 February 2002 referred to breaches of the contract under consumer legislation, the essence of the letter was to rescind the contract on the basis of the plaintiff’s breach of contract. Regardless of the reference to consumer legislation, the fundamental purpose of the letter was advice by the defendants that, the plaintiff having breached the contract, the defendants elected to treat the contract as no longer binding upon them.
[120] Again, the pleadings were inadequate. Paragraph 5 referred to rescission pursuant to the consumer legislation. Nevertheless, the critical issue of breach and whether rescission was justified were live issues at the trial.
[121] In my opinion, the Magistrate erred in law in determining that the letter of 26 February 2002 did not serve to rescind the contract at common law. Similarly, his Worship erred in his determination as to the legal effect of the pleadings.
[122] In my view, the letter of 26 February 2002 had the substantive effect of rescinding the contract pursuant to the common law rights of the defendants. In those circumstances, the causes of action which had accrued from the breach of contract remained in existence. On the findings of the Magistrate the defendants were entitled to judgment on the counterclaim in the amount of $12,885. (Equity (Doctrines and Remedies) – Meagher, Gummow and Lehane – 4th ed – [24-005]).
Orders
[123] The defendants’ appeal is allowed. The order of the Magistrate dismissing the counterclaim is set aside. I order judgment for the defendants on the counterclaim in the amount of $12,885.
[124] The plaintiff’s cross appeal is dismissed.
[125] I will hear the parties as to further orders concerning costs at the Local Court proceedings and of this appeal.
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