SUPREME COURT OF QUEENSLAND

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8 builder Westcourt breached that term by using inferior or second quality limestone. That claim was upheld, but Mr Willshee was awarded damages by the trial judge only for the cost of cleaning and sealing the limestone and some repainting. Mr Willshee succeeded on appeal to recover damages for the amount required to put him in the position of having a house constructed using limestone which was of high quality. The damages reflected the cost of demolishing the exterior wall and replacing it with limestone which was of high quality. In considering the application of the qualification of unreasonableness, Martin CJ (with whom the other members of the court agreed) at [70] found that Westcourt’s breach “was a serious and significant breach, which had a significant impact upon the rate at which the external cladding of the house weathered and deteriorated, and which has had a significant impact upon the appearance of the house”. It was also noted by Martin CJ at [72] that the party wishing to rely upon the qualification to the “ruling principle” of damages carries the onus of proving the facts relevant to its application. [28] Tabcorp was followed in Clark v Macourt (2013) 253 CLR 1, in which the ruling principle was applied in assessing damages for breach of warranty in respect of some of the assets that were sold by the vendor company to Dr Clark. Dr Clark had agreed to purchase from the vendor company the assets attached to an artificial reproductive technology business including frozen sperm. The vendor warranted that it would provide Dr Clark records for the frozen sperm that complied with specified guidelines. Of the 3,513 straws of frozen sperm that were delivered, only 504 of those had compliant records and were therefore usable by Dr Clark in her artificial reproductive technology business. Dr Clark therefore had to acquire usable frozen sperm from a supplier in the United States. She charged her patients a fee which covered the costs in acquiring the usable frozen sperm from the United States. The parties agreed that Dr Clark should have expected to receive, in accordance with the warranty, an additional 1,996 compliant and usable sperm straws, apart from the 504 that were usable. At first instance damages were assessed at almost $1.3m as the value of the 1,996 compliant sperm straws as at the date of completion. The appeal had been allowed by the New South Wales Court of Appeal on the basis that Dr Clark had suffered no loss. Dr Clark appealed to the High Court. [29] By majority, the High Court allowed the appeal and reinstated the assessment of damages at first instance on the basis that damages for breach of contract were to put the promisee, so far as money could do it, in the same situation, as if the contract had been performed as promised (at [7], [26] and [106]). As damages were assessed at the date of breach and not at the date of trial, the subsequent dealings by Dr Clark left her neither better nor worse off than she was before she undertook the transactions (at [19], [37] and [128]- [129]). [30] The majority were therefore in agreement that the ruling principle governed the assessment of damages. Keane J noted at [107] that in Bellgrove the court at 617-618 “explained that the practical operation of the ruling principle may vary depending on the commercial context; but that the principle is always applied with a view to assuring to the purchaser the monetary value of faithful performance by the vendor of the bargain”. Keane J then stated at [109]: “The value to be paid in accordance with the ruling principle is assessed at the date of breach of contract, not as a matter of discretion, but as an integral aspect of the principle, which is concerned to give the purchaser the economic value of the performance of the contract at the time that performance was
9 promised. In this way, the measure of damages captures for the purchaser the benefit of the bargain and so compensates the purchaser for the loss of that benefit. (footnote omitted) [31] The defendant relies on a statement made by Leeming JA (with whom the other members of the court agreed) in Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 310 ALR 113 in dealing with what the plaintiff in a building case must prove to establish damages for breach of contract where there is a “global claim” for damages. Leeming JA confirmed at [186] that “there are no special legal principles that mean the plaintiffs in ‘building cases’ win or lose differently from plaintiffs in other classes of contractual case”. Leeming JA then stated at [187]-[188]: “[187] A plaintiff seeking damages will fail unless he, she or it establishes breach, causation and loss. [188] True it is that some decisions on breach of contract in building cases have used the language of ‘global claim’. Contrary to what was at the forefront of Mainteck’s written and oral submissions, this does not involve any special principles of fact or of law.” [32] There is nothing in these general observations by Leeming JA in Mainteck which detract from the authority of Bellgrove and Tabcorp in the application of the ruling principle to the assessment of damages for breach of contract. Are all material facts pleaded in the statement of claim? [33] The plaintiffs are not required to plead that they are seeking for the damages to be assessed by the application of the ruling principle, as that is law that applies to the plaintiffs’ claim in accordance with the relevant authorities. A subsidiary complaint which the defendant’s solicitors had made in the r 444 letter dated 12 November 2015 was that for the costs of rectification work to be recoverable as damages for breach as the plaintiffs had pleaded in their statement of claim “the dam must have been deficient in some way as a result of the alleged breaches” and asserted that the plaintiffs need to plead that each of those breaches created a deficiency in the dam and what the deficiency was. In similar vein, the defendant submitted on this application that no practical consequence from any defect in the dam, such as the dam not being reasonably fit for its purpose, is pleaded. The subsidiary point raised by the defendant is not supported by the relevant authorities. [34] In a claim for damages for breach of a construction contract in reliance on Bellgrove, the statement of claim must plead the relevant provisions of the contract, identify the breaches and then plead the action the plaintiffs assert must be taken to rectify the breaches to achieve conformity with the contract. This must be followed by the specification of the loss and damage arising from the costs of rectification. [35] The defendant’s submission which is critical of paragraph 20 (and also paragraph 21) of the statement of claim asserts that these are the paragraphs alleging loss and damage arising from the alleged breaches and that no attempt is made by the plaintiffs to identify or plead the causal nexus between breaches and the alleged loss and damage.
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