Carr v J A Berriman Pty Ltd

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(Judgment by: Fullagar J)

Carr
v. J A Berriman Pty Ltd

Court:

Judges: Dixon CJ
Williams J
Webb J

Fullagar JKitto J

Hearing date: 10 and 13 April, 5 June 1953
Judgment date: 5 June 1953

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Judgment by:
Fullagar J

We have before us two appeals from a judgment of the Full Court of New South Wales, which dismissed appeals from a judgment of Owen J. The judgment of Owen J was pronounced on the trial of two actions, which arose out of the same facts and were heard together. The first action, which was commenced on 20 February 1951, was brought by J A Berriman Pty Ltd against Tony Carr, claiming damages for breach of contract. The second action, which was commenced on 9 March 1951, was brought by Tony Carr against J A Berriman Pty Ltd, claiming damages for breach of the same contract. In the first action judgment was given for the plaintiff company for £2992 with costs. The second action was dismissed with costs. The Full Court dismissed appeals by Carr in both cases. The decision was that of a majority (Street CJ and Herron J). Sugerman J was of opinion that the company's action should be dismissed, and that in the other action judgment should be entered for Carr for damages to be assessed.

The contract in question, which was made on 3 May 1950, was a contract under which the company undertook to erect for Carr on certain land owned by him in Parramatta Rd, Flemington, a factory building in accordance with drawings and specifications prepared by Mr H P Oser, a Sydney architect. Mr Oser is the architect referred to in the contract. It is necessary to refer to a number of the provisions of this contract. Cl 1 provides that the builder will, upon and subject to the conditions annexed, execute and complete the works shown in the drawings and specifications, and cl 2 that the proprietor will pay to the builder the sum of £18,245 for the work or such other sum as may become payable in accordance with the conditions annexed.

The annexed conditions which are referred to in the contract are long and elaborate. Cl 1 is a long clause, but it is desirable to set out most of it. It provides:

The Builder shall carry out and complete the Works in accordance with this contract in every respect and in accordance with the directions and to the reasonable satisfaction of the Architect . . . The Architect may in his absolute discretion and from time to time issue further drawings, details and/or written instructions, written directions and written explanations (all of which are in these conditions collectively referred to as 'Architect's Instructions') in regard to:

(a)

The variation or modification of the design, quality or quantity of the Works or the addition or omission or substitution of any work.

(b)

Any discrepancy in or divergency between the Contract Drawings and/or Specification.

(c)

The removal from the site of any materials brought thereon by the Builder, and the substitution of any other materials therefor.

(d)

The removal and/or re-execution of any works executed by the Builder.

(e)

The postponement of any work to be executed under the provisions of this contract.

(f)

The dismissal from the Works of any person employed thereupon who may be incompetent or misconduct himself.

(g)

The opening up for inspection of any work covered up.

(h)

The amending and making good of any defects under clause 12 of those Conditions.

. . . The Builder shall forthwith comply with all Architect's Instructions . . . If compliance with Architect's Instructions involves any variation, such variation shall be dealt with under clause 9 of those conditions and the value thereof shall be added to or deducted from the Contract Sum. If compliance with Architect's Instructions involves the Builder in loss or expense beyond that provided for in or reasonably contemplated by this contract, then, unless such instructions were issued by reason of some breach of this contract by the Builder, the amount of such loss or expense shall be ascertained by the Architect and shall be added to the Contract Sum.

Cl 9 provides that no variation shall vitiate the contract, but, unless a price therefor shall have previously been agreed, all variations authorized by the architect or subsequently sanctioned by him shall be valued and such price or value shall be added to or deducted from the contract sum as the case may be. Cl 16 provides that on or before the date for possession stated in the appendix complete possession of the site shall be given to the builder subject nevertheless to provisions for extension of time contained in cl 18. Cl 18 provides for extension at the discretion of the architect of the time provided for the completion of the contract by the builder in certain specified events which do not involve delay or default on the part of the builder. Its actual terms need not be set out, because none of the events mentioned in it occurred. The date stated in the appendix on which possession of the site is to be given by the owner to the builder is 29 May 1950. Cl 20 provides that the contract may be determined by the builder in a number of events, and it provides what the respective rights and liabilities of the builder and the proprietor are to be in the event of a determination by the builder under any of its provisions. The presence of this clause is to be noted, but its actual provisions do not matter, for, again, none of the events contemplated by it took place. Cl 26 contains an arbitration clause in very wide terms providing for practically every possible kind of dispute which could arise under the contract. It provides that the award of the arbitrator shall be final and binding on both parties, and it further provides that neither party shall be entitled to commence or maintain any action upon any dispute or difference until such matter shall have been referred to or determined by the arbitrator, and then only for the amount of relief to which the arbitrator finds either party to be entitled. The contract contains a "rise and fall" clause in usual terms. This clause contains a provision that the builder shall within eight weeks of the date of the making of the contract enter into contracts for the supply of all necessary goods, services, & c.

The provision for arbitration contained in cl 26 might have given rise to difficulties in the cases. It is in what has come to be known as the Scott v Avery form, and it is very wide in scope. The provision that neither party shall be entitled to commence or maintain an action except upon an arbitrator's award might have been raised as a defence in each action: see Woolf v Collis Removal Service (1948) 1 KB 11. It has, however, doubtless deliberately, not been pleaded in either action, nor has any argument been based on it. In both courts below and also in this Court the cases were conducted by both parties without regard to the possible effect of that clause, and it seems to me that it is on that basis that we must deal with these appeals.

It is necessary to refer to two provisions in the specifications. Under the heading "A. Excavator", it is provided that the general excavation over the site will be carried out by the proprietor with his own plant. The contractor is to assume that the building site will be handed over to him with a level of 44' 0" throughout in respect to datum 40' 3" at kerb where shown on the site plan. This provision assumes great importance in the cases. So also does a provision under the head of "E. Steelwork". This part of the specification provides that all steel will be supplied by the proprietor and is to be manufactured by the contractor to engineer's and architect's details. This refers to the fabricating of all structural steel. It further refers to the bending and placing of all reinforcement bars. The structural steel is to be delivered by the proprietor to the contractor's or sub-contractor's yard provided such yard is within twenty miles of the Sydney GPO. It is to be noted that the specifications provided in a number of other cases for the provision of material and the doing of work by the proprietor himself.

The erection of the building was never, in fact, commenced. On 31 July 1950 the company's solicitor wrote to the architect, Mr Oser, in the following terms:

I am instructed to inform you that the site has not been excavated in accordance with the provisions of clause A 1 of the specifications and that my client immediately upon execution of the contract arranged with a company for fabrication of the steel pursuant to clause E 1 of the specifications. My client regards the proprietor's failure to prepare the site and his arrangements with Arcos Products Pty Ltd contrary to clause E 1 of the specifications as two distinct breaches of the building agreement. I therefore give you notice of cancellation of the contract in accordance with the provisions of clause 20(1) thereof and of my client's intention to institute immediate action for recovery of damages against the proprietor in accordance with the provisions of clauses 20(3)(ii) and (v) of the said agreement.

A similar notice of cancellation and claim for damages was given on the same day to Mr Carr. It is to be noted that cl 20 of the conditions, to which the letter refers, contains nothing which could justify the cancellation of the contract. It has not been suggested in argument that any of the events mentioned in cl 20 actually occurred. If, however, a right to rescind at common law had accrued to the builder on 31 July, the letter of that date will operate as an effective rescission, leaving the builder with a right to recover damages for loss of the contract. If, on the other hand, no such right had accrued to the builder, that letter is itself a repudiation of the building contract by the builder and entitles the building owner to sue forthwith to recover the damages, if any, which he suffers by loss of the contract. The central question in both cases, therefore, is whether a right in the builder to rescind had arisen on 31 July: see generally Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632, at pp 641 et seq; 55 WN 228 and Associated Newspapers Pty Ltd v Bancks (1951) 83 CLR 322

The letter of 31 July alleges two breaches of contract by the building owner as entitling the builder to rescind. The first is a "failure to prepare the site", and the second is the "making of an arrangement" with a company named Arcos Products Pty Ltd

With regard to the "preparation of the site" the matter stood thus. The site was a piece of land having a frontage of about 100 feet by a depth of about 200 feet. Cl E 1 of the specifications provided, as has been seen, that the proprietor should excavate the land to a given level and "hand it over" to the builder at that level, and cl 16 of the contract, read with the "Appendix", provided that complete possession of the site should be given to the builder on or before 29 May 1950. It is thus clear that the proprietor was required by the contract (1) to excavate the site to the prescribed level and (2) to give possession of it duly excavated to the builder on or before 29 May. With regard to what (if anything) had been done by way of excavation before 31 July, there was a conflict between Mr Oser and Mr Berriman, the managing director of the company. The evidence of the former, however, was very vague, and Owen J accepted the whole of Mr Berriman's evidence without any qualification. His Honour also accepted the evidence of the company's foreman, Morthen. (It is worthy of note that Mr Carr was not called as a witness.) From this evidence it appears that Berriman and Oser and Morthen and Carr's foreman went to the site about 15 or 18 May. There was then "heavy machinery all over it". From this and other evidence I gather that the site was practically covered by heavy material which would appear to have been purchased by Carr from the Commonwealth Disposals Commission. Oser said: "Good God, nothing has been done here", and asked Carr's foreman when they were going to get the material off the site. The foreman said that he had nowhere to put it. Oser pointed to vacant land adjoining the site and told him to "get it shifted over there". Oser also asked Carr's foreman if they could have the site cleared in three weeks, to which the reply was "yes". The 29 May was, of course, at that time about a fortnight ahead. Both Berriman and Morthen visited the site again both before and after 29 May, the former frequently, and both say that nothing whatever appeared to have been done. Not only did the material on the site remain there, but a quantity of additional heavy material, described as pontoons, was deposited on the adjacent land to which Oser had directed or suggested that the material on the site should be removed.

The material on the site and the material on the adjacent land was of such a nature that it could only be moved by mechanical means. It is common ground that the soil on the site was a heavy clay soil, and June and July were very wet months. Serious difficulties may well have attended the moving of the material during those months, but Morthen said that the weather up to the end of May would not have prevented the clearing and excavation of the site. From the time of the inspection about 18 May up to the middle of July, Berriman telephoned Oser "at least once a week" complaining that nothing was being done. Oser said that he would "get in touch with Carr to see if he could not get the thing hurried up", and later that he (Oser) was "doing all he could". During August, Oser and Carr were insisting that the contract had not been effectively determined but was still subsisting, but on 21 September 1950 Carr entered into a new contract with another builder. This contract did not fix a date for excavation and delivery of site. Berriman said that in the middle of September the land was still covered with heavy material. It was not until about Christmas that the land was in fact cleared of material and excavated to the required level.

With regard to the other breach of contract alleged in the letter written by the company's solicitor on 31 July, the matter stood thus. Cl E of the specification provided, as has been seen, that all steel should be supplied by the proprietor, and that all structural steel should be delivered by the proprietor to contractor's or sub-contractor's yard. The builder was to allow for the fabricating and erecting of all structural steel work. This means, of course, that the structural steel is to be supplied by the proprietor, but is to be fabricated by the contractor or by a sub-contractor to him. Before the making of the contract Mr Berriman had obtained a tender from a company named Hurll & Douglas Pty Ltd for the fabricating of this steel. The price quoted was £3948. On 7 June 1950 the company wrote to Hurll & Douglas, advising that this quotation was accepted. It was a term of the rise and fall clause of the contract that the builder should enter into all necessary sub-contracts within eight weeks of the signing of the contract. That period expired on 28 June. Oser was informed of the acceptance of the tender of Hurll & Douglas shortly after 7 June. On 19 July Oser wrote a letter to the company in the following terms:

I have been instructed to inform you that my clients, Messrs T Carr & Co, have made arrangements with Arcos Products Pty Ltd of Parramatta Road, Lidcombe, to supply and fabricate the structural steel work for the above job, and that the respective order has been placed with this firm. In explanation I would like to add that this arrangement was made necessary by the peculiar steel supply position of to-day. I shall be glad if you would kindly inform me at the earliest of your allowance for the fabrication of the steel, which thus becomes a deduction post (sic) from your contract.

It is not only fair to Mr Oser, but it is of very considerable importance, to point out that he was in no way responsible for the making of this contract between Carr and Arcos Products for the fabrication of the structural steel. He knew, as has been said, of the contract between Berriman and Hurll & Douglas, and he said that he was surprised when he heard that Carr had let the fabrication of the steel to Arcos. He said that it occurred to him that Berriman "might be a bit annoyed about it". Mr Berriman was in fact much more than "a bit annoyed". To use his own words, he was "very upset" -- as he well might be, seeing that he not only lost a profit which he estimated at about £450, but, being unable to carry out his contract with Hurll & Douglas, became liable in damages to that company. The fabrication of the structural steel represented, of course, a very substantial part of the contract. Mr Berriman immediately consulted his solicitor, who wrote on 20 July to Mr Oser, asking for a copy of the contract. Having obtained and considered the contract, he wrote the letter of 31 July which is set out above. On 20 July Mr Berriman had dismissed the company's foreman, Morthen.

The sequence of events leaves little room for doubt that it was the receipt of Mr Oser's letter of 19 July that operated decisively to lead to the cancellation, or purported cancellation, of the contract. There is no reason to doubt that Mr Berriman was extremely anxious to obtain possession of the building site, but up to 20 July he had done nothing but telephone Mr Oser and press that steps should be taken. On that date he received Mr Oser's letter, and the only reasonable inference from his immediate actions is, I think, that he made up his mind to cancel the contract if he were advised that he might lawfully do so.

It seems to have been assumed both before Owen J and before the Full Court that no breach of his contract with Berriman was involved when Mr Carr made the contract with Arcos Products for the fabrication of the structural steel for the building. Mr Ferguson, however, argued before us that the making of this contract with Arcos Products constituted a very serious breach of Carr's contract with Berriman, and the assumption to the contrary is not, in my opinion, well founded. It was doubtless based on the view that Mr Oser's letter of 19 July represented an exercise of the discretion conferred upon the architect by cl 1 of the building contract, so that the effect of that letter was simply to eliminate from that contract the provisions relating to the supply and fabrication of the structural steel. But I cannot think that this is a correct view.

The relevant part of cl 1 of the conditions (which has been set out above) is contained in the words: "The Architect may in his absolute discretion and from time to time issue . . . written instructions or written directions . . . in regard to the . . . omission . . . of any work . . . The Builder shall forthwith comply with all Architect's Instructions". Cl 1 is part of a printed form, and the powers conferred upon the architect extend to the giving of directions on a great variety of matters in addition to the "omission of any work". The clause is a common and useful clause, the obvious purpose of which -- so far as it is relevant to the present case -- is to enable the architect to direct additions to, or substitutions in, or omissions from, the building as planned, which may turn out, in his opinion, to be desirable in the course of the performance of the contract. The words quoted from it would authorize the architect (doubtless within certain limits, which were discussed in R v Peto (1826) 1 Y & J 37 (48 ER 577)) to direct that particular items of work included in the plans and specifications shall not be carried out. But they do not, in my opinion, authorize him to say that particular items so included shall be carried out not by the builder with whom the contract is made but by some other builder or contractor. The words used do not, in their natural meaning, extend so far, and a power in the architect to hand over at will any part of the contract to another contractor would be a most unreasonable power, which very clear words would be required to confer.

But in any case it is impossible to bring what was actually done in this case within the terms of cl 1 of the conditions. Let it be conceded, for the sake of argument, that the power given to the architect by that clause is wider than I think it is. Yet Mr Oser did not, in the exercise of his discretion, give any direction or instruction such as is contemplated by that clause. Mr Oser was never asked to exercise his discretion. On 12 July Arcos Products gave to Carr a quotation for the supply and fabrication of the structural steel. This offer appears to have been accepted in writing by Carr on 21 July, but the witness Kuner, the manager of Arcos Products, said that they had received an assurance from Carr some time earlier that they would receive the work. Carr then apparently informed Mr Oser that he had let the fabrication of the steel to Arcos Products. Mr Oser, as has been said, was "surprised" at this news. He knew that Berriman had long since made a contract with Hurll & Douglas for the fabrication of the steel. The position was that Carr was obliged by his contract to supply steel for fabrication to Berriman or to a sub-contractor nominated by Berriman. After Berriman had informed Oser that he had made his contract with Hurll & Douglas, he (Carr) was under a contractual duty to supply the structural steel required for the factory to Hurll & Douglas. He informed Oser that he intended to break his contract in this respect. Mr Oser was no doubt placed in a difficult position by the proprietor's arbitrary action. It seems to me that nothing that he could do at that stage could possibly alter the fact that Carr had repudiated his contract with Berriman as to a substantial part of it. His somewhat remarkable letter of 19 July to Berriman does not even purport to be a discretionary direction by an architect to omit work from a building contract. It simply informs Berriman that Carr has repudiated a part of the contract. It "explains" that this breach of contract was "necessary". It asks to be informed of the allowance made for the fabrication of the steel, which, it indicates, is to be deducted from the contract price. A mere deduction from the contract price was, of course, quite inappropriate to the situation which Carr had created. It is impossible, to my mind, to regard this letter as either more or less than a communication by architect to builder of a repudiation of part of the contract by the building owner.

For these reasons I am of opinion that the company's solicitor was fully justified in asserting, as he did in his letter of 31 July, that two breaches of contract had been committed by Carr. He had not given possession of the building site, duly excavated or at all, on the date required by the contract or thereafter. And he had repudiated his obligation to deliver the structural steel for fabrication. As soon as this position is realized, the case becomes, in my opinion, a reasonably clear one.

Both Owen J and the Full Court appear, as I have said, to have approached the matter on the assumption that the only breach committed by Carr before 31 July lay in his failure to excavate and deliver the site. It was held by Owen J and the majority of the Full Court that that breach did justify rescission. But there are difficulties about this view, and there is much force in the answer made to it by counsel for Carr. Where a contract contains a promise to do a particular thing on or before a specified day, time may or may not be of the essence of the promise. If time is of the essence, and the promise is not performed on the day, the promisee is entitled to rescind the contract, but he may elect not to exercise this right, and an election will be inferred from any conduct which is consistent only with the continued existence of the contract. If time is not of the essence of the promise, the promisee is not entitled to rescind for non-performance on the day. If either (a) time is not originally of the essence, or (b) time being originally of the essence, the right to rescind for non-performance on the day is lost by election, the promisee can, generally speaking, only rescind after he has given a notice requiring performance within a specified reasonable time and after non-compliance with that notice: see, eg, Taylor v Brown (1839) 2 Beav 180 (48 ER 1149); Stickney v Keeble (1915) AC 386; Panoutsos v Raymond Hadley Corporation of New York (1917) 2 KB 473

In the present case it is not necessary to determine whether time was of the essence of the building owner's promise to excavate and deliver the site on or before 29 May. For the company after 29 May did acts which seem consistent only with the continued existence of the contract after that date. It is sufficient to say that its contract with Hurll & Douglas was made after that date, and that up to the middle of July it continued to press for the commencement of the necessary work on the site. And no notice was ever given specifying a time within which performance of the promise to excavate and deliver was required. It cannot, in my opinion, be maintained that the right to rescind for breach of that promise as such had not been lost. Owen J was of opinion that there was a "continuing breach" of that promise: in other words he seems to have held that a fresh right to rescind accrued from day to day. But, as Dixon J pointed out in Larking v Great Western (Nepean) Gravel Ltd (1940) 64 CLR 221 "If a covenantor undertakes that he will do a definite act and omits to do it within the time allowed for the purpose, he has broken his covenant finally and his continued failure to do the act is nothing but a failure to remedy his past breach and not the commission of any further breach of his covenant" (1940) 64 CLR, at p 236

On the other hand, the effect of the builder's election not to rescind was to leave it open to the building owner to remedy his breach. If he did remedy it, the builder would be bound to accept the late performance, though entitled, of course, to sue for any damage suffered by him through the delay. The position thus remaining open, it is correct, in my opinion, to say, as Mr Ferguson said, that a failure to remedy the breach might continue so long and in such circumstances as to evince an intention on the part of the building owner no longer to be bound by the contract. In other words, the only legitimate inference might be that he is saying: "Not only have I broken my contract by not doing the thing on the due day, but I am not going to do the thing at all", or "I am not going to do the thing at all unless and until I find it convenient to do it". In this way a right to rescind might arise which is not based on breach of the particular promise as such. That promise, even if essential to begin with, has become non-essential by reason of the election of the promisee, but the promisee may nevertheless be able to establish that the conduct of the promisor with respect to his promise amounts to a refusal to be bound by the contract: cf Associated Newspapers Ltd v Bancks (1951) 83 CLR, at p 339. It was on this view of the present case that the majority of the Full Court dismissed the appeal. Their Honours thought that the failure to do anything at all towards performance of the contractual duty, the failure to make any attempt even to move any of the machinery from the site, the placing of further machinery on the adjoining land, the absence of any explanation or any assurance that any steps at all would be taken in the immediate future -- that all these things showed that the building owner intended to take steps towards the performance of his duty if and when it suited him and not before. In other words, they showed that he did not intend to be bound by the contract within the meaning of the authorities. This view of the case rests on a sound legal foundation: the only question is whether it is warranted by the facts. The chief difficulty about accepting it lies in the fact that much heavy rain fell during the whole of June and July, and, although evidence accepted by the learned trial judge indicates that what was required could have been done between 3 and 29 May, other evidence strongly suggests that the weather in June and July presented serious difficulties in connection with the removal of the machinery and the excavation of the site. And, as Mr Barwick rightly said, while the state of the weather is quite irrelevant on the question whether a breach of contract has been committed, it is very relevant on the question of the intention of the building owner with reference to the performance of the particular promise in question.

But the judgment under appeal leaves out of account the second breach of contract on the part of the building owner. And, when that second breach is brought into account, the difficulties of the case seem to me to disappear. This second breach went, as I have said, to a very substantial part of the contract. The estimated profit to the builder on the fabrication of the steel was £450, which was about one-fourth of the total estimated profit on the contract. The building owner's breach of contract meant that it lost that profit, and meant also, as the building owner must be taken to have known, that it became liable in damages under its own contract with Hurll & Douglas. Those damages were not likely to be less than £450. It is true that at a later date, on 21 August, the building owner's solicitors offered "to allow full and just allowances arising from" the placing of the fabrication of the steel in other hands. But this could not alter the position created by the breach of contract and by Mr Oser's letter of 19 July, which had announced that the amount allowed for the fabrication would simply be deducted from the contract price.

One would be disposed to think that this second breach alone amounted to such repudiation as justified rescission. It is to be remembered that Carr's action in placing the fabrication of the steel in other hands was deliberate. Mr Barwick cited the case of James Shaffer Ltd v Findlay Durham & Brodie (1953) 1 WLR 106, but that case seems to present a marked contrast with this case. In that case the defendants were desirous of doing, and were in fact doing, their very utmost to perform their contract. It is possible that Carr believed that the architect had power under the conditions of the contract to "omit" therefrom the fabrication of the steel and so leave him at liberty to make other arrangements for the doing of that work. But he had, in the words of Latham CJ in Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) 61 CLR, at p 304 "given" Berriman "the right to believe that the contract would not be performed according to its true construction". Moreover, the step was taken without inviting the exercise of any discretion on the part of the architect. Mr Oser seems simply to have been presented with a fait accompli and to have tried to make the best he could of it.

But, when this second breach is viewed alongside the existing position with regard to the site, the case does not seem to admit of doubt. An election not to rescind for failure to deliver the excavated site on the due date could not deprive that failure of all significance. When a second breach occurs, the two combined may have a significance which it might not be legitimate to attach to the first alone. The position when Mr Oser's letter was received was this. The site had not been delivered on the due day. It was covered with heavy material. Nothing had been done towards putting it into the state required for delivery, further material had been placed on adjoining land on which it had been proposed to place the material then on the site itself, and repeated requests to the building owner had failed to produce any assurance that anything would be done within a reasonable time. Possession of the site was, of course, a vitally important matter. It is in this state of affairs that the building owner announces that he has engaged another contractor to carry out a large part of the work comprised in the contract. A reasonable man could hardly draw any other inference than that the building owner does not intend to take the contract seriously, that he is prepared to carry out his part of the contract only if and when it suits him. The intention must be judged from acts: Robert A Munro & Co, Ltd v Meyer (1930) 2 KB 312, at p 331. The intention "evinced" here is an intention not to be bound by the contract. When such an intention is shown, the other party is entitled to rescind the contract. Mr Berriman thought that such an intention had been shown, and he acted accordingly. In my opinion, he was justified in the view which he took, and acted as he was legally entitled to act.

From this conclusion two things follow. On the one hand, the builder's solicitor's letter of 31 July effected not a repudiation but a lawful rescission of the contract. It affords, therefore, no cause of action to the building owner. It is not suggested that, apart from that letter, the builder had committed any breach of contract. On the other hand, the builder, having lawfully rescinded the contract, is entitled to recover damages for loss of the contract and for any particular loss suffered by it through any breach of contract committed by the building owner before rescission. The building owner's action, therefore, rightly failed, while that of the builder rightly succeeded.

The builder's damages were assessed by Owen J under three heads. In the first place, he awarded £1824 for loss of profit on the contract. No question seems to arise as to this. In the next place, he allowed a sum of £300 as an approximate estimate of expenditure incurred and wasted in "keeping a team of men together in anticipation of being able to start work on the job." Expenditure so incurred and wasted would be recoverable by way of damages, and the amount awarded under this head was not challenged. In the third place, his Honour awarded a sum of £868 as representing damages recoverable by Hurll & Douglas from the builder. How this sum was arrived at is by no means clear. The notice of appeal asserted, as one of the grounds of appeal, that no sum should have been awarded under this head. This ground of appeal, however, was not argued, and no attack was made on the amount awarded. It would appear to have been right to allow a substantial amount under this head, and, the amount actually awarded not being challenged, it seems to me that it should be allowed to stand.

Both appeals should be dismissed with costs.

The Chief Justice has authorized me to say that he agrees with this judgment.