HEARD : 23-27 OCTOBER 2006, 25 - 28 & 31 MARCH 2008

Building dispute - Claim by plastering sub-contractor against builder of unit development for payment of outstanding progress claim under sub-contracts - Alternative claim for quantum meruit - Whether sub-contract continued implied terms - Termination of sub-contract builder - Whether termination valid - Set­off and counterclaim by builder for cots of completing plastering work on development - Alternative set-off and counterclaim for damages for repudiation of sub­contract - Provisional findings on costs recoverable for purposes of set­off and counterclaim - Provisional assessment of damages on counterclaim

Supreme Court Act 1935 (WA)

1 COMMISSIONER LEY: The plaintiff is a plastering contractor and trades as Genesis Plastering. In April 2003, the plaintiff entered into a sub-contract agreement ("the sub-contract") with the defendant, a registered builder, pursuant to which the plaintiff agreed to perform certain plastering works on a three story multi-unit development being built by the defendant on the corner of Grand Boulevard and Shenton Avenue, Joondalup and known as "Kensington on Grande" ("the development").

2 The plaintiff commenced the plastering work the subject of the sub-contract on 14 April 2003 but, in June 2003, disputes arose between the plaintiff and the defendant and, on 21 July 2003, the defendant purported to terminate the sub-contract. By then, the defendant had paid the plaintiff for the work it had done under the sub-contract, and for which the plaintiff had claimed payment, up to and including 30 June 2003.

3 On 22 July 2003, immediately following the defendant's purported termination of the sub-contract, the plaintiff sent the defendant an invoice or progress claim for $51,622.13, which the plaintiff claimed was the balance of the amount to which it was entitled for the work which it had done under the sub-contract between 14 April and 17 July 2003, but in respect of which it had not previously claimed payment. At the trial, the plaintiff reduced its claim to $49,642.13, and interest on that amount. In the alternative, the plaintiff claims the same amount as a quantum meruit, being the reasonable value of the plastering work it has done for the defendant on the development and for which it has not been paid.

4 The defendant disputes the plaintiff's entitlement to be paid the amount of $49,642.13, either pursuant to the sub-contract or as a quantum meruit, but its resistance to the plaintiff's claim is largely based on a set-off and a counterclaim of the alleged cost to the defendant of having completed the plastering works on the development which had not been performed by the plaintiff at the time of the defendant's purported termination of the sub-contract. The defendant alleges that the cost of completing that plastering work was $209,383.85, which the defendant says it can recover as a debt due under the sub-contract. Accordingly, it seeks to set that amount off against the plaintiff's claim and also counterclaims it. Alternatively, the defendant sets off against the plaintiff's claim and counterclaims, as a debt due under the sub-contract, an amount of $107,515.98, which is the difference between $331,998.98, which the defendant says is the total of the amounts which it has paid and might be ordered to pay the plaintiff and the cost of having the plastering work on the development completed, and $224,483.00, which the defendant says is the amount which it would have paid the plaintiff if the sub-contract had not been terminated on 21 July 2003, and the plaintiff had completed the plastering work in accordance with the sub-contract.

5 In early March 2003, the principal of the plaintiff, Lorenzo Oliver DeVincentis ("DeVincentis"), saw an advertisement placed by the defendant in "The West Australian" newspaper, seeking tenders for plastering work on the development, which was already under construction. In late March 2003, DeVincentis telephoned the defendant, spoke to one of the defendant's contracts administrators, Daniel Rodney Luca ("Luca"), and expressed the plaintiff's interest in tendering for the plastering work on the development. Luca invited DeVincentis to the defendant's offices in Main Street, Osborne Park to inspect the plans of the development ("the plans"). DeVincentis duly attended the defendant's offices in late March 2003, met with Luca and inspected the plans. At that meeting, there was a general discussion about the plastering work to be done, but no agreement was reached.

6 A few days later, DeVincentis spoke to Luca again by telephone and Luca asked DeVincentis to make a final decision as to whether the plaintiff would undertake the plastering work on the development. As a result of that discussion, DeVincentis met with Luca again at the defendant's offices on 3 April 2003. On that day, there were further discussions between DeVincentis and Luca concerning the plaintiff undertaking the plastering work and, according to DeVincentis, there were also discussions between him and Dominic Bouvendura Di Latte ("Di Latte"), who was then the managing director of the defendant. The exact nature and content of the discussions which took place that day is a matter of some contention. I deal with the discussions in more detail below. At the conclusion of the discussions, DeVincentis, for and on behalf of the plaintiff, and Luca, for and on behalf of the defendant, executed a written sub-contract agreement for the plaintiff to do the plastering work on the development ("the written agreement"). The written agreement was admitted into evidence (Exhibit 1). In broad terms, it provides that the plaintiff would undertake plastering works on the development in accordance with the plans and specifications ("the specifications") for a lump sum of $218,000. I deal below with the relevant terms of the written agreement.

7 DeVincentis said in his evidence that, prior to executing the written agreement, he inspected the plans and calculated the number of metres of plaster that the plaintiff would be required to apply to the internal surfaces of the development, and made an approximation of the quantities of sand render which would be required for the external surfaces of the development. He said that he asked Luca whether all the external render shown on the plan was to be carried out and Luca told him it was. However, DeVincentis said that Luca also told him that he would not be required to plaster any concrete structures or surfaces. DeVincentis said that Luca told him that the defendant was not at that time sure what it would do with the concrete surfaces and that, if it eventually decided to have them rendered, it would give the plaintiff the appropriate direction and that work could be claimed as an extra to the sub-contract. DeVincentis said that Luca said that the only surfaces which required sand finish render at that stage were the external walls of the main structure and the hospital car park fence where indicated on the plans. DeVincentis said that Luca also said that the storerooms were not to be sand finish rendered. DeVincentis said that Luca also said that, contrary to the plans, the plaintiff would not be required to plaster the mouldings around the windows.

8 DeVincentis said that, at the end of that discussion, it was his understanding that the plastering work which the defendant required the plaintiff to perform and for which he was required to quote was that required for the inside and outside of the units of the main building. He said that it was his understanding that the plaintiff was not required to render any concrete surfaces or structures, including the storerooms and the other external structures. DeVincentis said that, on that basis, he calculated that the internal float and set would require 13,200 square metres of plaster. He quoted that work at $12 per square metre, giving a total amount of $158,400 for all the internal plastering. He calculated the figure for the sand finish render to the outside of the units and arrived at a figure of $59,600. The overall total was therefore $218,000.

9 DeVincentis said that he did not include any goods and services tax ("GST") in either of the figures which he quoted for the internal plastering and the external sand render. Accordingly, he said that his quote to the defendant was, in fact, to perform the plastering required for $218,000 plus GST of 10 per cent giving a total quote of $239,800. As I observe above, that was not the way it was recorded in the written agreement. However, at least one of the payment certificates issued by the defendant (Exhibit 23) indicated that, notwithstanding the terms of the written agreement, the defendant accepted that the sub-contract price was $239,800, including GST. During her address, counsel for the defendant conceded that the sub-contract price was indeed $239,800, including GST.

10 DeVincentis said that he wrote out his quote on one of his quotation forms and gave it to Luca. Luca told him that he needed to discuss the quote with Di Latte, and Luca then went into Di Latte's office while DeVincentis waited outside.

11 DeVincentis said that, after a few minutes, Di Latte came out of the office and introduced himself. Di Latte asked him how he had calculated his charge for the external render and DeVincentis told him that he had charged $16 per square metre for the plain render and $32 per square metre for those areas where line markings (a decorative feature) were to be run through the render. DeVincentis said that he also told Di Latte that some of the external plastering could not be seen on the plans and that that could mean that when the external plastering was done, there could turn out to be more than the area allowed in the quote. He said that he would measure those areas on site and, if there were additional areas to be plastered, the plaintiff would claim them as an extra. Di Latte told him that he was happy for him to do that, provided that he charged at the rates in his quote.

12 According to DeVincentis, Di Latte then said that the defendant accepted the plaintiff's quote for the work and they shook hands. Di Latte then went back into his office and left Luca and DeVincentis to sign the written agreement.

13 The account given by DeVincentis as to discussions with Luca and Di Latte prior to the execution of the written agreement was not supported by either Luca or Di Latte. Luca, in his evidence, generally displayed a poor recollection of events, both prior to the execution of the written agreement and during the performance of the work by the plaintiff. He said that he could not recall having had any discussions with DeVincentis on 3 April 2003 about the areas to be plastered and said that, as far as he was concerned, he had told DeVincentis that the plaintiff would be required to do all the plastering work shown on the plans. Di Latte gave rather strange evidence about the question of whether he had a discussion with DeVincentis prior to the execution of the written agreement. In his evidence-in-chief, which was given principally in the form of a written statement (Exhibit 41), he made no mention at all of having been present in the office of the defendant at the time the written agreement was executed. However, he said that he did not recall meeting either Luca or DeVincentis "at the site" on 3 April 2003 (the date on which the written agreement was executed), but said that he may have done so.

14 Under cross-examination, Di Latte said that he had met DeVincentis for the first time at the defendant's office in Osborne Park. He could not recall the date of that meeting, but said that it was at about the time the written agreement was executed. However, he said that when he met DeVincentis on that occasion, he did no more than shake his hand, and denied having had any discussions with him about the terms of the sub-contract.

15 It seems highly unlikely that Di Latte would have met Luca and DeVincentis on site on 3 April 2003. Both DeVincentis and Luca said that the negotiations for the sub-contract and the execution of the written agreement took place at the offices of the defendant in Main Street, Osborne Park, and not at the site in Joondalup. According to DeVincentis, the plaintiff's plasterers did not commence on site until 14 April 2003.

16 DeVincentis said that when the plaintiff commenced work on site, on 14 April 2003, he sent one plasterer and one labourer. After that, he gradually built up his plastering team on site by taking them off other jobs on other sites that they had completed.

17 In carrying out the internal plastering works on the development, the plaintiff applied two separate and distinct coats of plaster to the walls. The first coat was called the "float" and the second, applied over the float, was called the "set". Two different teams of plasterers applied the two coats. The plasterers who applied the float were known as "floaters" or solid plasterers. The plasterers who applied the set coat were called "setters".

18 DeVincentis said that, in the first few weeks of the Joondalup job, he and his plasterers had some difficulties because there were building materials and rubbish lying around on the floors of the units. He said that that made it difficult for them to gain access to the walls. He said that Vincente Salvatore Longo ("Longo"), an employee of the defendant, became the site supervisor after the plaintiff had been working on the site for about a week and that Longo gave the plaintiff a labourer to move some of the building materials and clean the units to enable the plasterers to have better access.

19 DeVincentis said that, after the plaintiff had been on site for a while, Luca approached him and told him that it had been decided that the wet areas in the units, which were shown in the plans as being tiled, would instead be plastered. That meant that the plaintiff would be obliged to apply float and set coats to an additional area of 1,200 square metres. However, DeVincentis had allowed in his original quote for 300 square metres of base (float) coat to be applied to the areas. That was because the tiles were to be laid over the base coat. When Luca asked him, instead, to apply float and set coats to all the wet areas, he decided to charge only $6 per square metre for that work, as a "gesture of goodwill" (Exhibit 27, par 57), and also deducted from the variation which he prepared (Exhibit 21) the original 300 metres of base coat at $12 per square metre. That reduced the variation from $7,200 to $3,600 (T276).

20 The plaintiff submitted the variation for $3,600 to the defendant, but, for reasons which did not appear, the defendant did not sign the variation.

21 DeVincentis gave evidence that, from the time the plaintiff commenced work on the site pursuant to the sub-contract, he was concerned about the issue of safety. He said that he and his adult son had visited the site prior to the plaintiff commencing work and his son had almost been struck by a falling plank. He produced photographs (Exhibit 2) which showed that the site was littered with bricks and building rubble and said that the stairwells to the units were often crowded with scaffolds. He said that, as a result, the secretary of the CFMEU had attended the site on one occasion.

22 DeVincentis said that the plaintiff also experienced difficulty on the site because the site was overcrowded with other trades. He said that the ceiling fixers, in particular, were at all times working in and around the plaintiff's plastering team, which made it difficult for the members of the team to gain access to the walls.

23 DeVincentis said that there was also a problem with the brickwork on the development. He said that many of the brick piers were bowed and out of plumb and that there were many holes in the brickwork that needed to be patched up with plaster. He said that he spoke to Longo on occasions about that and Longo told him to do the best he could, and that the defendant would pay for the cost of any additional work in that regard.

24 It was apparent from the evidence of all the witnesses who had been on site that the winter of 2003 was extremely wet. Adam Roglic, of A&D Roglic, plasterers ("Roglic"), who completed the majority of the plastering work on the development after the defendant had terminated the sub-contract, said that it was one of the wettest winters he could remember. He said that the rain began very early in the season and continued through until September 2003.

25 DeVincentis said that that also caused considerable problems when the plaintiff's teams were plastering the development between April and July 2003. He said that there was a problem with water getting into the units and making the walls wet to the point where they could not be plastered. He said that water was also getting onto walls which had been plastered, which made him concerned that they would suffer long term damage. Longo generally supported DeVincentis' evidence about that. He said that there was considerable water ingress to the units and that walls were often wet. However, both Longo and DeVincentis agreed that plaster could not be applied to a wet wall and that the plaintiff never attempted to do that. Nor was it suggested that Longo had required the plaintiff to do that.

26 Notwithstanding the evidence of DeVincentis about the difficulties which the plaintiff was experiencing on site, the first evidence of any real difficulties between the parties was contained in a facsimile sent by the defendant to the plaintiff on 12 June 2003 (Exhibit 28).

27 In that facsimile, Joe Stillisano, another contracts administrator employed by the defendant, expressed the defendant's concern that the plaintiff had allegedly sent his plasterers to a different site in the previous few days and put forward a plastering program, nominating the units which it required to be plastered between 16 and 20 June 2003. It seems that the plaintiff must have largely complied with those requirements because, in a facsimile from Luca to DeVincentis dated 8 July 2003 (Exhibit 29), in which Luca asked DeVincentis to apply the float and set coats and the external sand render to various specified units, only one of the units mentioned in the plastering program annexed to the facsimile dated 12 June 2003 (unit 38) was mentioned again. Even in that unit, Luca indicated that only one of the rooms remained to be plastered.

28 Also on 8 July 2003, Longo sent DeVincentis a facsimile asking him to finish two specified units (Exhibit 30). However, according to Longo, there was nothing untoward about that request. He said that he sent it more as a reminder or a courtesy which he gave to the plaintiff, after having noticed the unfinished units while he was doing a general inspection.

29 On 10 July 2003, a Thursday, the weather on site was noted by Longo in his site diary (Exhibit 48) as being showery and windy. He recorded that the site itself was "generally very wet under foot" and that many units were wet due to "wind driven rain". I was told that days such as that made it very difficult for the plasterers to work. However, Longo recorded that there were on that day four solid plasterers and three setters working on site.

30 It also seems that, on 10 July 2003, both the plaintiff and the defendant were becoming frustrated with the lack of progress with the plastering works. In the morning, DeVincentis gave Longo a handwritten program of the plastering work which the plaintiff would do the following day, Friday, 11 July 2003 (Exhibit 31). The program indicated that the float coat would be finished in units 55, 38 and 48 and would be started in unit 49. It also indicated that there would be setting in units 37, 38 and 42. The program also indicated that Longo would cause a cross-bar scaffold to be removed to enable floaters to plaster the window reveals in units 17 and 19.

31 Also on 10 July 2003, the defendant made the seventh progress payment to the plaintiff under the sub-contract. The payment was $7,860.60 and was made pursuant to a sub-contractor payment certificate dated 10 July 2003 (Exhibit 23). That certificate showed that the value of the works completed by the plaintiff, to the end of June 2003, was $100,193 (excluding GST). It also showed that the total amount retained by the defendant under the sub-contract was by then $11,021.24.

32 On Friday, 11 July 2003, Longo recorded in his diary that it was again very wet and that there had been 20 millimetres of rain overnight. Although the handwritten plastering program which DeVincentis had given to Longo the previous day had indicated that both floating and setting would be done on 11 July, Longo's diary indicated that there were, in fact, only three setters on site that day, and they left work at 10.30 am or 11 am to travel to Gosnells to collect their pay.

33 That prompted Longo to send a site instruction to DeVincentis later that day (Exhibit 32) in which he complained about the absence of solid plasterers on site and the early departure of the setters to collect their pay. Also on that day, but apparently unrelated to the facsimile sent by Longo earlier in the day, DeVincentis sent a facsimile to the defendant marked to the attention of Longo. In that facsimile, DeVincentis said:

"In view of the conditions at the site, this company requests that all other trades working in the same units as the floating and setting teams be removed on the day as requested. It is absolutely ridiculous with the conditions at the site, with many trades falling over one another and as a result individual trades are losing time swapping and changing from one room to another, or from one unit to another and then back again, therefore losing both the trades and Diploma precious time. I also feel that there is a safety issue with all these tradesmen working in and around one another.

You did not inform me of all the ceiling fixers that were to start and as a result I have to reschedule most of my works so I must stress that my employees are very agitated as they cannot do one unit without moving and dodging other trades in the same unit. You wonder why they have no incentive. This is the main reason why the float team did not work today, being Friday, 11/7/2003. The conditions are not acceptable, and it is an insult to this company.

No further works will be carried out if the conditions are not improved upon. Conditions of contracts state that "reasonable access be granted". Pathetic is the word I feel needs to be used in this case.

...

You in fact have pointed out to me that there is a problem with the roof not covering the balcony areas, and the result is the water draining into the units. It is obvious that there are other areas where the water is draining from as you pointed out to me in one particular unit, with a PVC drain pipe in the ceiling with water draining onto the walls beneath.

...

There is no excuse for the water draining in as I have told you many, many weeks ago of my concerns over this matter, and it is YOUR responsibility to make sure the units are ready to plaster. Many of the units were not totally ready. So I ask, why was the problem not rectified. If you had undertaken to fit the roof much earlier most of the unfinished units would have had the float coat finished, but there are many, many walls that are still to be done to finish individual units, taking much extra time and money to complete. As a result, this has caused this company to take a much longer time to plaster the units, jumping from one unit to another, then back again. I put it to you that this is a very unorganised project, and not only has Diploma lost valuable time and possibly money, but this company has also lost a very considerable amount of time and money.

That is the reason the decision not to continue works has been decided upon, until this company can enter units with no other trades in the way and progress the plastering works in a professional and safe manner, which I feel is a very reasonable request."

34 DeVincentis said that, notwithstanding the terms of that facsimile, he promised Longo, either that day or the day before, that he and possibly two other plasterers would work on site on Saturday, 12 July 2003 and that he would ask those two other plasterers whether they could also work on site on Sunday, 13 July 2003 (T381-2). DeVincentis said that, even after he had sent the facsimile, he had every intention of fulfilling his promise to Longo. However, in the result, neither he nor any other plasterers worked on 12 July 2003, although, according to Longo's diary, it was fine that day. In his evidence, DeVincentis could not recall why that had happened (T382).

35 On 12 July 2003, Longo sent another facsimile to DeVincentis informing him that no plasterers had attended site that day despite his promise that they would. It is clear from Longo's facsimile that he was becoming agitated and concerned by the delays. He pointed out to DeVincentis that time was of the essence.

36 There was no work on the project on Sunday, 13 July 2003. On Monday, 14 July 2003, Luca, on the letterhead of the defendant, sent a facsimile to the plaintiff (Exhibit 8) in the following terms:

"Further to your letter dated the 11/7/03, Diploma deny (sic) that all trades are working in and around one another. Diploma advice (sic) that Safety is of the Highest Standard, (sic) We therefore give you Notice that you are in breach of your Contract, pursuant to clause 8.1 Part A.

You are required to recommence work Tomorrow morning, Tuesday 15th July 2003, (sic) if you do not return to work your Contract will be Terminated. We reserve the right to deduct liquidated Damages and any other Costs that arise from your breach of Contract."

37 According to Longo's diary, Monday 14 July 2003 began with showers and drizzle. The showers continued throughout the day and late in the day Longo noted that it was "very wet". He also noted that there was one setter on site but no solid plasterers.

38 On 15 July 2003, Longo noted in his diary that the weather was fine but the site was wet under foot. He also noted that there were no solid plasterers on site but there were two setters. He obviously informed Luca of that because in a facsimile which Luca sent to the plaintiff later that day (Exhibit 9), he said:

"Thank You for Keeping two Setters on site, but it is imperative that the floaters commence tomorrow as it is causing delays to our Construction Programme."

39 Later that day, DeVincentis sent a facsimile to the defendant in response to the facsimiles from the defendant dated 14 and 15 July 2003 (Exhibit 10). In response to the facsimile dated 14 July 2003, DeVincentis really did no more than repeat what had been said in that document. In relation to the facsimile of 15 July 2003, DeVincentis said that he would not send the floaters to the site or complete the plastering work until the overcrowding problems were solved.

40 Also on that day, the plaintiff retained William Tyler ("Tyler"), a professional inspector with the West Australian Solid Plasterers Association, to inspect the plastering work which the plaintiff had performed on the site and to advise whether, because of water damage, it would need to be redone. At 5.24 pm on 15 July 2003 the plaintiff sent the defendant a facsimile informing the defendant of Tyler's appointment and advising that the plaintiff would not undertake any further works until Tyler had inspected the work and reported his findings to the plaintiff (Exhibit 11).

41 At 6.20 pm on 15 July 2003, the plaintiff responded by facsimile to the facsimile from the defendant which it had received at 5.51 pm that day (Exhibit 9). In that facsimile DeVincentis said that the plaintiff would undertake no further works on the project until Tyler's report was available (Exhibit 14).

42 Also on 15 July 2003, the defendant sent the plaintiff a facsimile (Exhibit 12) demanding that work was to be progressed immediately, that all units were available as per the defendant's advice of 14 July 2003 (Exhibit 34) and that the defendant required the plaintiff to have its full workforce on site.

43 According to Longo's diary, Wednesday 16 July 2003 was fine. Notwithstanding what the plaintiff had said in its facsimiles on 11 and 15 July 2003, there were two setters working on site that day but no solid plasterers. Longo noted that walls in many of the rooms in the units were dry and ready for plastering.

44 Thursday 17 July 2003 was also fine. There was one setter on site.

45 On Friday 18 July 2003 (another fine day) only DeVincentis came to the site. However, he did not do any plastering work. Instead he measured the work which had been done for the purpose of preparing a progress claim. He also measured the area of internal plastering remaining to be done. He spoke to Longo. He told him that he was "having problems" and would speak to Luca in an effort to resolve them.

46 On Saturday, 19 July 2003, DeVincentis sent a facsimile to Luca (Exhibit 15) advising that:

(a) he had seen that the tiles had been installed on the roof of the balcony areas of the units which would eradicate the problem of water draining and leaching into the units below;

(b) he had observed that there were still a number of tradesmen working in and around the remaining plaster works that had yet to be plaster float coated and that would cause further delays;

(c) he had instructed his setters to cease works as of 17 July 2003 until those issues were resolved;

(d) notwithstanding that, he would recommence setting on Monday, 21 July 2003 because it appeared that his setters could carry out plaster setting to some units unimpeded;

(e) he understood that progress must be kept on schedule;

(f) the plaintiff could finish plastering the remaining units in five to seven working days if they were covered and dry and the plaintiff had free access to the units with no other tradesmen in the way.

47 On Monday 21 July 2003, the two setters promised by DeVincentis in his facsimile dated 19 July 2003 attended site and commenced work. However, by then, the defendant had decided to terminate the written agreement. In a facsimile to DeVincentis dated 21 July 2003 and signed by Di Latte (Exhibit 18) the defendant said:

1.0 You have failed and defaulted as required by clause 8.1 of the Sub Contract to carry out the obligations under the Sub Contract referred to in our letters of 14/7/03, 15/7/03 and 15/7/03 including:

(b) your failure to exercise due skill, care and diligence in the performance of the works as explained in the above mentioned notices.

2.0 You have failed to carry them out and rectify such defaults within 3 days of becoming aware of such default.

3.0 As a consequence of the above, notice is hereby given that we terminate the sub contract under Clause 8.1 and otherwise, according to our rights, without prejudice to any other rights or remedies available to us under the subcontract or otherwise."

48 Also on that day, the defendant caused Adam Roglic to attend the site to measure and quote to complete the plastering works. Roglic commenced work the following day. After 21 July 2003, neither DeVincentis nor any of the plaintiff's plasterers returned to the site.

49 On 22 July 2003, DeVincentis sent the defendant Invoice 28 (Exhibit 22) which was, in effect, the plaintiff's claim for all the work which it claimed to have done pursuant to the sub-contract to that point, for which it had not yet been paid. In Invoice 28, DeVincentis said:

"Further to invoice 26 & Invoice 27. I have actually made an error of calculation on Invoice 26. I totalled up all amounts paid to Marula Pty Ltd by Diploma Constructions and calculated the balance due, without taking into account the extras amounts paid to date. In doing this I included the extras for all the ceiling works undertaken, which as the original contract states will be over and above the contract price. So in effect the extra amounts on invoice 20 dated, 26-5-2003 being $2,808.00, and extras amount on invoice 21 dated 9-6-2003 being $3,306.90, totalling $6,408.90, plus GST of 10%, being $640.80, making the total including GST $7,048.90 are over and above the contract price.

Below is a revised account for all works carried out by Marula Pty Ltd, and all moneys received by Diploma Constructions, and the balances due.

Original contract price for plaster float and setting coats

Less work still outstanding, as explained on invoice 26

Balance outstanding for works on original contract

Large triangle above windows, as per invoice 26

Small triangles above windows, as per invoice 26

Top of capping moulds on balconies, as per invoice 26

Extras as per invoice 20, dated 26-5-2003-07-22

Extras as per invoice 21, dated 9-6-2003-07-22

Variation to original contract for formally (sic) tiled areas in toilet, laundry, bathrooms areas to be plastered

Total all amounts owing including including (sic) GST

TOTAL OF AMOUNT OUTSTANDING TO MARULA PTY LTD FROM DIPLOMA CONSTRUCTIONS INCLUDING GST

50 As I say above, the figure of $51,622.13 was ultimately reduced to $49,642.13, at trial.

51 Also on 22 July 2003, the plaintiff's solicitors wrote to the defendant (Exhibit 26), referring to the defendant's facsimile to DeVincentis dated 21 July 2003, informing the defendant that the plaintiff denied that it had breached the terms of the sub-contract, claiming that the defendant had breached the terms of the sub-contract and purporting to accept the defendant's termination of the sub-contract as a repudiation thereof.

52 On 18 August 2003, the plaintiff instituted these proceedings against the defendant.

53 Between 22 July and 13 October 2003, Roglic and another plastering company, Plasterwise, completed the plastering work on the development.

54 The written agreement expressly and relevantly provides:

"The parties agree to be bound by the terms of the Contract and acknowledge that those terms comprise:

1. The Annexure to the Subcontract.
2. Schedule 1- Description of Scope of Works.
3. Schedule 2 - Schedule of Supply Items.
4. Schedule 3 - Schedule of Rates.
5. Schedule 4 - Contract Drawings and Specification and Construction Program.
6. Schedule 5 - Conditions of Contract.

1. SUBCONTRACT DOCUMENTS - (COMPLEMENTARY DOCUMENTS NO ORDER OF PRECEDENCE)

(a) This Subcontract including this Annexure and Schedule 1, 2 and 4 inclusive.

(e) Other Documents: Diploma's Construction Program as per Schedule 4

SCHEDULE 1

DESCRIPTION OF SCOPE OF WORKS

[see clause 1.1]

PLASTERER

Scope of Work

Supply of all labour, plant to complete the Float, Set and Render in accordance with the contract documents, including but not limited to the following;

• Allow for Float and set in accordance with the Specification
• Allow for Render and Corbelling as per Specifications
• Supply all Cement, Lime, Beads and Sundries as required
• Allow for Skimcoat and flushing to Ceilings as per Specifications.

...

SCHEDULE 4

CONTRACT DRAWINGS, SPECIFICATION AND PROGRAM

• The Plastering Specification, Section P, pages 128 - 131 inclusive
• The Finishes Schedules, Section B, pages 46 - 48 inclusive
• Architectural Drawings as per Drawing Register Dated 3/04/03
• Construction Programme dated 21/10/02
• This subcontract agreement

"Annexure" means the Annexure attached to this Subcontract and signed on behalf of the parties.

"Item" means an item referred to in the Annexure.

"Subcontract" includes each of the documents referred to in Item 8 and any other document, paper, declaration or order issued or given in writing in accordance with this Subcontract."

The Subcontract contains the full and complete understanding of the parties and supersedes any agreements, undertakings, covenants and representations between the parties, express or implied, made or dated prior to the commencement of this Subcontract.

(a) The Subcontractor (the plaintiff) must perform the Works (the plastering works) in accordance with this Subcontract (including directions from Diploma (the defendant) to the Subcontractor given under this Subcontract) and to the entire satisfaction of Diploma.

(b) The right of the Subcontractor to the Site is not exclusive and the Subcontractor must co-ordinate its work and not prevent access to the Site by all other subcontractors on site, persons carrying out the Head Contract Works from time to time and the Proprietor and Proprietor's representatives.

(a) Diploma may vary the Works from time to time by notice to the Subcontractor.

(b) No claim may be made by the Subcontractor in respect of any additional work of omission unless the claim is allowable as being related to a Variation.

(c) Diploma in order to comply with its obligations under the Head Contract but without limiting its rights of instruction to the Subcontractor may direct the Subcontractor to:

(1) increase, decrease or omit any portion of the Works;

(2) change the character or quality of any material or work;

(3) change the levels, lines, positions or dimensions or any part of the Works;

(a) Retention applies to this Subcontract at the rate of 10% of the progress claim as determined under clause 5.4 until a cumulative amount totalling 5% of the Subcontract Sum (as varied) is held as retention by Diploma.

(b) The Retention Sum will be retained by Diploma until the Date of Practical Completion of the Head Contract Works at which time it will be reduced to a sum equal 2.5% of the Subcontract Sum (as varied). This reduction amount will be returned to the Subcontractor within 60 days of the Date of Practical Completion of the Head Contract Works and upon receipt of a duly signed form of release in the form contained in Schedule 6. The remaining 2.5% of the Subcontract Sum (as varied) will be retained until the later of the expiration of the Defects Liability Period, any further defects liability period under the Head Contract or the receipt by Diploma of retention monies due under the Head Contract. The balance of the Retention Sum, if any, will be returned to the Subcontractor within a further 28 days.

(a) If the Subcontractor is delayed in the performance of the Works for any cause, the Subcontractor must notify Diploma immediately of the delay.

(b) Where the progress of the Works has been delayed by any cause beyond the control of the Subcontractor and that delay might reasonably be expected to result in a delay in the completion of the Works, the Subcontractor must, if it desires to claim an extension of time for completion of the Works, give to Diploma notice of its claim for and extension of time.

(a) fails to carry out any of its obligations under this Subcontract and fails to rectify the default within 3 days of becoming aware of details of the default (by notice from Broad or otherwise);

Diploma may, at any time and without prejudice to any other rights or remedies available to it under this Subcontract or otherwise, by notice to the Subcontractor terminate this Subcontract.

If Diploma terminates this Subcontract Diploma has the right in its absolute discretion as the case may require and in addition to its other rights under this Subcontract;

(a) to employ and pay other persons to carry out and complete the Works at the expense of the Subcontractor;

8.4 Subcontractor's Liability for Costs and Losses

(a) Any costs, expenses of losses (including direct, indirect and consequential) incurred by Diploma, or claimed from Diploma, or monies payable to Diploma as a result of any failure by the Subcontractor to comply with its obligations under this Subcontract will be deemed to be a debt due and payable by the Subcontractor to Diploma on demand by Diploma and may be deducted of set-off against any amount then owing or to become owing by Diploma to the Subcontractor, including the Retention Sum.

(b) Clause 8.4 continues to apply after the termination of this Subcontract."

55 The pleadings were amended during the trial. In its amended statement of claim, the plaintiff:

(a) alleges that the sub-contract was partly written, partly oral and partly to be implied;

(b) alleges that, to the extent that it was implied, the sub-contract contained implied terms that, in effect:

(i) the defendant would allow the plaintiff sufficient unimpeded access to those areas of the site where the plastering works were to be undertaken from time to time so that the plaintiff could reasonably complete the plastering works;

(ii) the defendant would permit the plaintiff to proceed with the plastering works in a reasonable manner without any undue or unreasonable delay;

(iii) the defendant would do all things reasonably necessary to enable the plaintiff to progress the plastering works;

(iv) the works previously completed by the defendant's other sub-contractors would be of an acceptable standard such that the plaintiff would be able to complete the plastering works with due care and skill and in a workmanlike manner; and

(v) the plaintiff would be entitled to suspend the plastering works in the event that the defendant was in breach of the sub-contract;

(c) alleges that those terms were to be implied by trade usage, or, alternatively, in fact;

(d) alleges that, during the course of the sub-contract, the defendant breached the first four implied terms described above and that, as a result, pursuant to the fifth implied term, the plaintiff was entitled to suspend the plastering works;

(e) alleges that, on or about 17 July 2003, the plaintiff suspended the plastering works;

(f) alleges that, on or about 21 July 2003, the defendant engaged Roglic to complete the plastering work and thereby repudiated the sub-contract;

(g) claims that the defendant is indebted to the plaintiff, pursuant to the sub-contract, in the amount of $49,642.13, being the work the subject of Invoice 28 and being work done by the plaintiff pursuant to the sub-contract, for which it has not been paid;

(h) alternatively, claims the amount of $49,642.13 on a quantum meruit.

56 In its amended defence, set-off and counterclaim, the defendant:

(a) denies that the sub-contract was partly written, partly oral and partly to be implied;

(b) says that the entire sub-contract was contained in the written agreement;

(c) denies that the implied terms alleged by the plaintiff could be implied into the sub-contract;

(d) admits that, on or about 17 July 2003, the plaintiff purported to suspend the plastering works;

(e) denies that the plaintiff was entitled to suspend the plastering works;

(f) alleges that it was an express term of the sub-contract that, in the event that the plaintiff failed to carry out any of its obligations under the sub-contract and failed to rectify any defect within three days of being notified thereof, the defendant was entitled to terminate the sub-contract;

(g) alleges that the facsimiles which had sent to the plaintiff on 14 and 15 July 2003, requiring the plaintiff to recommence work on site and to immediately progress work on site, constituted notices for the purposes of clause 8.1(a) of the sub-contract;

(h) alleges that the plaintiff failed to rectify the defects the subject of the facsimiles dated 14 and 15 July 2003 within three days and thereby repudiated the sub-contract;

(i) alleges that, by reason of the plaintiff's failure to rectify the defects and/or the plaintiff's repudiation of the sub-contract, it was entitled to terminate the sub-contract;

(j) says that, by its facsimile dated 21 July 2003, it terminated the sub-contract;

(k) denies that the plaintiff is entitled to the payment of the amount of $49,642.13 and says that the work the subject of Invoice 28 was part of the scope of works in the sub-contract, for which the plaintiff has already been paid by the defendant on a progressive basis under the sub-contract; and

(l) alleges that, pursuant to its termination of the sub-contract, it engaged Roglic and Plasterwise to complete the plastering works not completed by the plaintiff and that, as a result, it has incurred additional costs of $209,383.85 or, alternatively, $107,515.98, which it sets off against any amount which it is found to owe to the plaintiff, and counterclaims any amount over and above the amount of the set-off.

57 Although the plaintiff alleges in the amended statement of claim that the sub-contract contains various implied terms, the alleged breach of which by the defendant the plaintiff says entitled it to suspend the plastering work, those implied terms are not relevant to the plaintiff's claim, which is simply for work done pursuant to the sub-contract or work done for which the plaintiff claims payment on a quantum meruit.

58 The plaintiff originally made its claim in Invoice 28, which DeVincentis calculated by:

(a) beginning with the plaintiff's original quote of $158,400 for all the internal plastering;

(b) deducting from that amount, an amount of $100,193, being the total amount which the defendant had paid the plaintiff to that time, including amounts of $2,808 and $3,606.90 (together $6,414.90), which the defendant had paid the plaintiff for extra work over and above the sub-contract works ("the extra works");

(c) deducting from the balance of $58,207, the value of the internal plastering which the plaintiff had not completed, which DeVincentis had measured on 18 July 2003, and the value of which he had calculated as being $37,596;

(d) adding to the balance of $20,611, an amount of $1,276, which he said was the balance owing for fixing 616 exangle metal beads to the units where internal plastering had been completed;

(e) adding an amount of $1,200 for general patching work to a number of the units which had been identified in an earlier invoice;

(f) adding an amount of $2,080 for doing some rendering to external walls, which he had measured on 18 July 2003;

(g) adding an amount of $896 for plastering some large triangle areas above some windows, $192 for plastering some small triangle areas above some windows, $520 for plastering some window mould surrounds and $120 for plastering the top of capping moulds on balconies;

(h) adding back the amount of $6,414.90, being the plaintiff's charges for the extra works (on the basis that the defendant had already paid the plaintiff for the extra works, but that payment was included in the total payment of $100,193, which meant that the plaintiff had not received payment for internal plastering to the same value, which it had completed);

(i) adding the amount of $3,600, for work done in respect of the variation to the sub-contract, whereby areas in the toilets, laundries and bathrooms of the units, originally shown as tiled, had to be plastered (Exhibit 21) (in his oral evidence (T297)), DeVincentis said that only half of this work had actually been completed and, accordingly, the claim should be reduced to $1,800); and

59 The adjustment of the claim for the variation was what reduced the plaintiff's claim from $51,622.13 to $49,642.13.

60 I now turn to consider whether the plaintiff is entitled to be paid for all of the components of its adjusted claim.

61 First, there did not appear to be any dispute that the plaintiff had originally quoted $158,400 for the internal plastering. Accordingly, I find that the plaintiff was entitled to start with that figure when calculating the amount owing by the defendant to the plaintiff pursuant to the sub-contract.

62 Secondly, there was no dispute that the total amount which had been paid by the defendant to the plaintiff pursuant to the sub-contract by 22 July 2003 was $100,193 (Exhibit 23). Nor was there any dispute that the plaintiff was entitled to charge the total sum of $6,414.90 for the extra works. In fact, the defendant had already paid the plaintiff that amount for the extra works. Accordingly, I find that the plaintiff was entitled to deduct from its starting figure of $158,400, the amount of $100,193, which I find included the amount of $6,414.90, for the extra works. After that deduction, the balance was $58,207.

63 Thirdly, DeVincentis gave evidence that, on 18 July 2003, he had measured the area of internal plastering which the plaintiff had agreed to carry out but which, as at that date, it had not carried out, and had calculated the value of that work as being $37,596. Neither his measurements nor his calculations were challenged by the defendant. Accordingly, I find that, as at 22 July 2003, the value of the internal plastering work on the development remaining to be performed by the plaintiff pursuant to the sub-contract was $37,596, and that the plaintiff was entitled to deduct that amount from the balance of $58,207, in calculating the amount owing by the defendant to the plaintiff pursuant to the sub-contract.

64 Fourthly, the plaintiff claims $1,276, which was said to be the balance owing for fixing 616 exangle metal beads to the units where internal plastering had been completed. Although no detailed particulars of that work were given in Invoice 28, such particulars were given in an earlier invoice, Invoice 27, which was issued on 21 July 2003 (Exhibit 19). The supply of beads was within the scope of work under the sub-contract: see Schedule 1 to the written agreement. According to Exhibit 19, the defendant had already paid the plaintiff $5,000 for the beads. There is in fact no provision in the written agreement as to the rate at which the plaintiff could charge for supplying the beads (Schedule 3 to the written agreement had at one time provided that the beads would be charged at $10 each, but that had been deleted, apparently when the written agreement was signed). In Invoice 27, which was also prepared by DeVincentis, it was said that he and Luca had agreed that the plaintiff would be entitled to charge $10 per bead. He was not challenged about that and Luca gave no evidence to the contrary. Accordingly, I find that the plaintiff did fix 616 metal exangle beads as part of the internal plastering of the units in the development, that that was part of the scope of the work the subject of the sub-contract, that it had been agreed between DeVincentis and Luca that the plaintiff would charge $10 per bead for such work, and that the defendant had paid the plaintiff $5,000 for that work, leaving an outstanding balance of $1,160. In preparing Invoice 28, the plaintiff also added GST, which increased the claim to $1,276. However, as GST of 10 per cent was added to Invoice 28 as a whole, I consider that the plaintiff's claim in relation to the beads should be confined to the amount of $1,160.

65 Fifthly, the plaintiff claims $1,200 for "general patch to date". In his evidence, DeVincentis explained that this claim was for patching work, done mainly by him, but also by plasterers contracted to the plaintiff, to repair damage to plastering which had been caused by trades which followed the plaintiff. He said that the patching work was done to the interior plastering work in 24 units. He said that he had discussed this work with Longo and that Longo had authorised the completion of this work and had agreed to the plaintiff charging $50 per unit for the work (T269 & 470). Longo confirmed that when he gave his evidence (T842).

66 The defendant denied that the plaintiff was entitled to the amount of $1,200 because the patching work was an extra to the sub-contract, but was not the subject of a written variation pursuant to cl 5.1 of the written agreement. However, cl 5.1 does not require variations to be in writing. It provides only that the defendant may vary the Works from time to time by notice to the plaintiff and that no claim for the cost of additional work may be made by the plaintiff unless it is allowable as being related to a variation. Clause 5.1(a) provides that the defendant may vary the Works from time to time by notice to the plaintiff. Clause 15 provides that all notices under the sub-contract must be in writing. However, I consider that if the defendant orally requested the plaintiff to vary the Works and the plaintiff did that work, which was accepted by the defendant, the defendant would not be able to escape liability to pay for the variation simply by saying its original request was not in writing. In my opinion, the patching work fell into that category. DeVincentis saw that it was required and discussed it with the defendant's representative, Longo, who authorised the plaintiff to do the work and agreed to pay $50 per unit for the work. It did not matter that there was no written variation signed on behalf of the defendant. Clause 5.1 did not require that.

67 Accordingly, I find that the plaintiff was entitled to be paid the amount of $1,200 for the general patching work.

68 The plaintiff's next claims in Invoice 28 relate to sand finish works which it claims to have done. In that regard, the plaintiff claims $2,080 for render to external walls, $896 for large triangles above windows and $192 for small triangles above windows.

69 DeVincentis said that this was the only part of the external plastering which the plaintiff did. He said that the plan was to complete all the internal plastering and then start the external sand finish in accordance with the plans. However, the sub-contract was terminated before the plaintiff even completed the internal plastering. Nevertheless, the plaintiff did some external work, at the express request of the defendant. That was within the original scope of works under the sub-contract. The amount allowed in the contract price for external plastering was $59,600, which was for 3,725 square metres of plastering, at $16 per square metre.

70 DeVincentis said that, when he visited the site on 18 July 2003, he measured the sand finish to the external walls at 130 square metres, the large triangle area over the windows at 56 square metres and the small triangle areas over the windows at 12 square metres. In accordance with the plaintiff's original quote for the external plastering, he charged for all of that work at the rate of $16 per square metre.

71 In those circumstances, I find that the plaintiff was entitled to be paid the amount of $2,080 for the sand finish render to the external walls, $896 for the sand finish render to the large triangle areas above the windows and $192 for the sand finish render to the small triangle areas above the windows.

72 The plaintiff's next claims are for $520, for plastering window mould surrounds on 26 windows at $20 each, and for $120, for plastering capping moulds on three balconies at $40 each. These were extras to the sub-contract.

73 In his evidence-in-chief, DeVincentis said that, a little over a month before the sub-contract was terminated, Longo told him that the defendant wanted the plaintiff to plaster the window mould surrounds on 26 windows and plaster the top of capping moulds on three balconies. DeVincentis said that he agreed with Longo that the plaintiff would charge $20 for plastering each of the window mould surrounds and $40 for plastering the top of the capping moulds on each of the balconies (T214-5). Longo, on the other hand, could remember asking DeVincentis to have the plaintiff plaster the window mould surrounds and the tops of the capping moulds on some of the balconies, but could not remember how many the plaintiff did or whether or not they were part of the sub-contract, and denied that he had agreed any prices for that work (T842-3).

74 The recollection of DeVincentis about these matters appeared much better than that of Longo. Although Longo denied having agreed any prices for the work, he admitted having agreed a price for the general patching. It was obviously not unheard of for him to agree prices for extra work to be done by a sub-contractor. For those reasons, I prefer the evidence of DeVincentis to that of Longo and find that the defendant asked the plaintiff to do the extra plastering work and agreed the plaintiff's charges for that work as DeVintentis said. On that basis, I would allow this aspect of the plaintiff's claim.

75 The plaintiff's next claims, for $2,808 and $3,606.90, also relate to extras. However, unlike the previous two claims, each of these was claimed as a variation in the proper way. The defendant does not dispute that these were valid claims for variations, but says that it had previously admitted and had paid these claims. DeVincentis agreed that the defendant had paid these claims, but said that he had included them in Invoice 28 because the defendant's payment of $6414.90 in respect of these claims was included in the total amount of $100,193, which the defendant had paid the plaintiff to that time. By reason of the method used by DeVincentis in calculating Invoice 28 (starting with the original contract price for the internal plastering and deducting the total amount paid to that time), that meant that there was $6,414.90 worth of internal plastering for which the plaintiff was not receiving credit. It was for that reason that DeVincentis added back the claims for these extras in Invoice 28.

76 I find that the plaintiff was entitled to do that and that the total amount of $6,414.90 should be added back in calculating the amount owing by the defendant to the plaintiff under the sub-contract.

77 I have already mentioned the claim for $3,600 for the variation in respect of the additional plastering to the toilets, laundries and bathrooms in the units, which became necessary when the defendant decided to have those areas plastered rather than tiled. That was obviously a true variation and was claimed by the plaintiff, in writing, but, for some reason, the written variation submitted to the defendant by the plaintiff was not signed by a representative of the defendant and, therefore, was not formally approved, in writing, by the defendant. I was not told why not. I asked DeVincentis about it, but he could not tell me. Luca, who was the defendant's representative in relation to such matters, gave no evidence about it. However, it seems unlikely that the defendant would have had any difficulty with the variation. DeVincentis was not challenged in respect of his evidence that the variation had become necessary as the result of a change in the finishes required by the defendant. The plaintiff calculated the variation at the rate of $6 per square metre, which was half the rate at which it otherwise charged for applying the base coat of plaster under the sub-contract. I infer that the variation was not formally approved by the defendant's oversight, but would have been approved by Luca, if he had turned his mind to it.

78 However, DeVincentis also said that, ultimately, the plaintiff carried out the additional plastering work to only half the units and that, as a result, the claim should be reduced from $3,600 to $1,800 (T279).

79 On that basis, I find that the plaintiff was entitled to be paid $1,800 in respect of this claim.

80 Finally, the plaintiff claims $11,021.24 for retention. The plaintiff claims that that amount is the total of all the amounts which had been retained by the defendant to that time by deducting 10 per cent of each of the progress claims, as the defendant was entitled to do pursuant to cl 5.5(a) of the written agreement. The defendant does not dispute that it has retained the amount of $11,021.24.

81 However, pursuant to cl 5.5(b) of the written agreement, the defendant is not obliged to return the retention sum to the plaintiff until the date of practical completion of the Head Contract Works, when it is obliged to refund an amount equal to 2.5 per cent of the sub-contract price, which would be half the sum retained. The other half is not refundable until the expiration of the defects liability period. Pursuant to cl 4.17(c) of and Item 16 of the Annexure to the written agreement, the defects liability period expired 52 weeks after practical completion.

82 Di Latte gave evidence that the Head Contract Works were completed in December 2003. Therefore, the plaintiff was entitled to be paid half the retention sum then and the other half in December 2004. However, it was not entitled to be paid any part of the retention sum on 22 July 2003, when the plaintiff issued Invoice 28, or on 18 August 2003, when these proceedings were issued.

83 Accordingly, the retention sum is not recoverable by the plaintiff from the defendant in these proceedings.

84 In summary, I consider that the plaintiff is entitled to be paid by the plaintiff, pursuant to the sub-contract, the amount of $38,493.29, comprised as follows:

Original contract price for plaster float and setting coats

Sand finish render to large triangle areas over windows

Sand finish render to small triangle areas over windows

85 Pursuant to s 32 of the Supreme Court Act 1935 (WA), I would also award the plaintiff interest on the amount of $38,493.29 at the rate of 6 per cent per annum from 22 July 2003 to judgment, which, by my calculations, would amount to a further $12,712.28. Accordingly, subject to the defendant's claim for a set-off, the defendant is obliged to pay the plaintiff a total amount of $51,205.57.

86 As an alternative to its claim pursuant to the sub-contract, the plaintiff claims from the defendant an amount assessed by the court as reasonable for the work done. Such a claim is known as a quantum meruit.

87 A claim in quantum meruit arises not out of contract but out of obligation imposed by law: Povey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221. To establish a claim, it is necessary that the applicable facts give rise to a prima facie obligation to make restitution, in the sense of compensation for the benefit of unjust enrichment, to the person who has sustained the countervailing detriment: Pohlmann v Harrison (1993) 12(2) ACLR 80 at 82. The essential basis for a claim in quantum meruit is execution of work by one party for another, acceptance of the work by the party for whom the work was done and the lack of any enforceable contract pursuant to which the party who did the work can recover payment from the party for whom the work was done; Pohlmann v Harrison, (supra).

88 It has also been held that where there is a contract but the contract is repudiated by the party for whom the work was done, entitling the party who did the work to accept the other's repudiation and sue for damages for breach, that party may, instead, sue on a quantum meruit for the value of the work done: Lodder v Slowey [1904] AC 442; Gabriel v Sea & Retaining Wall Construction Pty Ltd (1987) 3 BCL 162 at 167.

89 However, although the plaintiff alleged in its amended statement of claim that the defendant had repudiated the sub-contract by engaging an alternative plastering contractor, it did not allege that it had accepted the defendant's repudiation and had thereby brought the sub-contract to an end. Nor did the plaintiff claim damages for breach. Its claim was essentially for the work which it had done but for which it had not been paid at the time the defendant terminated the sub-contract. Its claim was based largely on the terms of the sub-contract. In those circumstances, I do not consider that the plaintiff was in a position to make a claim in quantum meruit.

90 As I have already said, the defendant alleges that, by reason of the plaintiff's failure to rectify certain "defects", specified in facsimiles dated 14 and 15 July 2003, which the defendant says were notices for the purposes of cl 8.1(a) of the written agreement, and/or the plaintiff's repudiation of the sub-contract, the defendant was entitled to terminate the sub-contract pursuant to cl 8.1 of the written agreement, and it did so by notice dated 21 July 2003. The defendant says that, pursuant to that termination, it retained A & D Roglic and Plasterwise to complete the plastering works not completed by the plaintiff, and it thereby incurred additional costs of $209,383.85 or, alternatively, $107,515.98, which it sets off against the plaintiff's claim and counterclaims.

91 The plaintiff seeks to answer the defendant's set-off and counterclaim by relying upon the terms which it says should be implied into the sub-contract. I have already described those terms in my review of the pleadings. They are to the effect that the defendant would allow the plaintiff unimpeded access to the site, that the defendant would allow the plaintiff to proceed with the plastering works without undue delay, that the defendant would do all things necessary to enable the plaintiff to progress the plastering works, that the work completed by the defendant's other sub-contractors would be of an acceptable standard and would allow the plaintiff to complete its work in a proper and workmanlike manner and that the plaintiff could suspend the works if the defendant was in breach of the sub-contract.

92 The plaintiff alleged that those terms should be implied into the sub-contract by trade usage or, alternatively, in fact. However, the plaintiff called no evidence of trade usage and, accordingly, they cannot be implied on that basis. Terms will only be implied in fact where they are reasonable and equitable, are necessary to give business efficacy to the contract, are so obvious that they go without saying, are capable of clear expression and do not contradict any express term of the contract: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337.

93 An obvious impediment to the implication of any terms is cl 1.4 of the written agreement, which provides that the written agreement is the full and complete agreement and understanding between the parties and supersedes any agreements, undertakings, covenants and representations, whether express or implied. In my opinion, that clause would not prevent the implication of a term if it was obvious and was necessary to give business efficacy to the sub-contract. However, I am not satisfied that any of the terms sought to be implied falls into either of those categories. In addition, the proposed implied term which would give the plaintiff the right to suspend the sub-contract in the event that the defendant was in breach would seem to me to contradict the provisions of cl 9 of the written agreement, which deals specifically with the rights of the plaintiff in the event of a default by the defendant (and even gives a right to suspend the works in certain circumstances), and cl 5.7 and cl 5.8, which deal with applications by the plaintiff for extensions of time within which to perform the sub-contract works.

94 In my opinion, there is no basis for the implication of the terms sought by the plaintiff.

95 In its amended defence and counterclaim, the defendant alleges that it was a term of the sub-contract that in the event that the plaintiff failed to carry out any of its obligations under the sub-contract and failed to rectify any "defect" within three days of notification thereof, the defendant was entitled to terminate the sub-contract, pursuant to cl 8.1(a) of the written agreement. It then alleges that, on 11 July 2003, the plaintiff sent the defendant a facsimile stating that it intended to suspend the plastering works unless the defendant rectified various matters (I have previously set out the relevant parts of that facsimile). The defendant then says that, on 14 and 15 July 2003, it sent the plaintiff three facsimiles, which it claims constituted notices for the purposes of cl 8.1(a) of the written agreement, calling upon the plaintiff to recommence plastering works on site, which, it says, "the plaintiff failed to rectify within 3 days as required thereunder": par 19(f) of the amended defence and counterclaim. The defendant says that, by stating that it intended to suspend the plastering works, the plaintiff breached and repudiated the sub-contract and that, as a result, the defendant was entitled to terminate the sub-contract, which it did by its facsimile to the plaintiff dated 21 July 2003. The defendant then purports to set off against the plaintiff's claim and counterclaims what it says were its costs of having the plastering work completed following the termination of the sub-contract. It says that those costs totalled $209,383.85, and seeks to recover those, pursuant to cl 8.2 and cl 8.3 of the written agreement. In the alternative, the defendant purports to set off against the plaintiff's claim and counterclaims a liquidated amount of $107,515.98, which it says is the difference between what it would have paid the plaintiff if it had completed the plastering sub-contract and what it paid the plaintiff and others (including A & D Roglic and Plasterwise) to have the plastering work completed. Although that is claimed as a liquidated amount, it would appear to be more in the nature of a counterclaim for damages for the plaintiff's alleged repudiation of the sub-contract.

96 The first question to be determined, therefore, is whether the defendant was entitled to terminate the sub-contract on 21 July 2003. In that regard, the defendant bears the onus of proving that it was entitled to terminate the sub-contract and also bears the onus of proving the default by the plaintiff on which the defendant relied in terminating the sub-contract and the effect of that default: Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61 at [26].

97 The defendant seeks to discharge its onus by relying upon the facsimiles which it sent to the plaintiff on 14 and 15 July 2003. There is no question that each of those facsimiles was received by the plaintiff. What fails to be determined is whether the plaintiff was in default of any of its obligations at the time any of the facsimiles was sent and, if it was, whether any or all of the facsimiles constituted sufficient notice for the purposes of clause 8.1(a) of the written agreement.

98 In par 19 of its amended defence and counterclaim, in which the defendant alleges that it was entitled to terminate the sub-contract, pursuant to cl 8.1(a) of the written agreement, the defendant appears to allege that the defendant was in default of its obligations under the sub-contract because it had given notice, in its facsimile dated 11 July 2003, of its intention to suspend the plastering works, in circumstances in which it was not entitled to suspend the works: see par 19(b) and par 19(d) of the amended defence and counterclaim. However, in her closing submissions, counsel for the defendant did not appear to rely upon the plaintiff's purported suspension of the plastering works as constituting the default, but appeared to suggest instead that the plaintiff's default was its failure to comply with cl 4.2 of the written agreement, which required the plaintiff to perform the plastering works in accordance with the sub-contract to the satisfaction of the defendant and, as part of that obligation, to comply with directions from the defendant given under the sub-contract. Although counsel for the defendant did not provide, in her written submissions, any instances of the plaintiff failing to comply with a direction of the defendant under the sub-contract, she referred, in her oral submissions, to Longo's "site instruction", sent by facsimile on 11 July 2003 (Exhibit 32), and a further facsimile which he sent on 12 July 2003 (Exhibit 33). I have already mentioned those facsimiles. In the first, Longo complained about the absence of solid plasterers on site that day and complained also that the setting plasterers who were on site had left at 11 am to collect their pay. In the second, Longo referred to the promise made by DeVincentis that he and two other plasterers would work on Saturday, 12 July 2003 and Sunday, 13 July 2003, and complained that, despite that promise, no plastering work had been done on 12 July 2003. Longo then went on to point out that the plaintiff had lost the opportunity to complete two days work during fine weather. He also reminded the plaintiff that "you need to complete the works" and said that "time is the essence of this contract".

99 In my opinion, neither of those facsimiles contained a direction of the type contemplated by cl 4.2 of the written agreement. Neither of them actually required the plaintiff to do anything at all. In the first facsimile, Longo complained about what had happened on site that day, in terms of plastering, and, in the second, he complained about the failure of DeVincentis to keep his promise to work on 12 and 13 July 2003. I do not consider that his comments to the effect that the plaintiff needed to complete the works and that time was of the essence amounted to a direction of any kind. Therefore, I do not consider that the plaintiff breached its obligations under cl 4.2 by failing to take any action following receipt of either of those facsimiles.

100 Nor do I believe that, despite what DeVincentis had said in his facsimile dated 11 July 2003, the plaintiff actually suspended the plastering works under the sub-contract. I say that because there were obviously plasterers on site on 11 July 2003, and, although no plasterers attended site on 12 or 13 July 2003, there was a setter on site on 14 July 2003 (even though it was "very wet"), two on 15 and 16 July and one on 17 July. Whilst those numbers may not have completely satisfied the defendant, they were not consistent with a total suspension of the works. For those reasons, I do not consider that the plaintiff was in breach of its obligations under the sub-contract simply because it sent a facsimile to the plaintiff stating that it intended to suspend the works.

101 Accordingly, it is my opinion that when the defendant sent its facsimile to the plaintiff on 14 July 2003, alleging that the plaintiff was "in breach" of the sub-contract, the plaintiff was not in breach and, in the terms of cl 8.1(a) of the written agreement, was not in "default". Nor was the plaintiff in breach or default when the defendant sent its facsimiles on 15 July 2003.

102 It follows that the defendant was not entitled to give notice of default to the plaintiff on either 14 or 15 July 2003. There was then nothing for the plaintiff to "rectify". It also follows that, because the defendant was not entitled to give the plaintiff a notice of default on 14 and 15 July 2003, it was not entitled either to terminate the sub-contract, as it purported to do on 21 July 2003, or to recover from the plaintiff pursuant to cl 8.2 and cl 8.3 of the written agreement its costs of having the plastering work on the development completed.

103 In case I am later found to be wrong in my view that, as at 14 and 15 July 2003, the plaintiff was not in breach of its obligations under the sub-contract, I will consider whether, if the plaintiff had been in default, the facsimiles dated 14 and 15 July 2003 were sufficient notices for the purposes of cl 8.1(a) of the written agreement to entitle the defendant to terminate the sub-contract and recover from the plaintiff its costs of having the plastering work completed.

104 Clause 8.1(a) of the written agreement provides that if the plaintiff failed to carry out any of its obligations under the sub-contract and failed to "rectify the default within 3 days of becoming aware of details of the default (by notice from Broad or otherwise)", the defendant could terminate the sub-contract by notice (which, by virtue of cl 15(a) of the written agreement, would have to be written) to the plaintiff. The reference to "Broad" is obviously an error and suggests that the written agreement may have been based on another agreement in which "Broad" was a party. I will take that as a reference to the defendant.

105 The terms of the clause do not prescribe what the notice of default should provide, but it seems reasonably clear that the notice should at least contain details of the alleged default, require that the plaintiff rectify the default within three days of receipt of the notice and inform the plaintiff that, should it fail to do so, the defendant might terminate the sub-contract by notice. The notice should be unequivocal in order to convey what is amiss so as to identify the default: Yendex Pty Ltd v Prince Constructions Pty Ltd (1988) 15 BCL 74 at 75.

106 The facsimile dated 14 July 2003 was written in response to the plaintiff's facsimile dated 11 July 2003, in which the plaintiff had made various complaints about the conditions on site, one of which was that the works program had not been properly organised by the defendant and that, as a result, many different tradesmen, including the plaintiff's plasterers, were being forced to work "in and around one another". The plaintiff said that no further plastering works would be carried out if those conditions were not improved. Notwithstanding the terms of that facsimile, DeVincentis said in evidence that, on either 10 or 11 July 2003, he promised Longo that he and two other plasterers would work on 12 July 2003 (a Saturday, when usually there was no work) and that he would also ask those same plasterers if they could work on Sunday, 13 July 2003. However, in the result, neither DeVincentis nor any of the plaintiff's plasterers worked on either of those days. As I observe above, it was the failure by DeVincentis to keep that promise which led to the facsimile which Longo sent to the plaintiff on 12 July 2003.

107 The defendant's facsimile dated 14 July 2003 began with a denial of the plaintiff's allegation that trades were being forced to work in and around one another. Then it appeared to claim that the defendant's site safety was of the highest standard. The defendant then said that "therefore" it gave notice that the plaintiff was "in breach" of the sub-contract "pursuant to cl 8.1 Part A". This was presumably a reference to cl 8.1(a) of the written agreement. There is no "Part A" in cl 8.1. However, other than making the bald statement that the plaintiff was "in breach", the defendant gave no details of the breach, and did not say what was "amiss".

108 Then the defendant said that the plaintiff was required "to recommence work tomorrow morning, Tuesday 15 July 2003", and said that if the plaintiff failed to do that, the sub-contract would be terminated.

109 In my opinion, the facsimile dated 14 July 2003 was insufficient to constitute a notice for the purposes of cl 8.1(a) of the written agreement. I have already mentioned that it gave no details of the breach. In my view, that was in no way rectified by the requirement that the plaintiff "recommence work". As at 14 July 2003, the plaintiff had not stopped working. It had a setter on site, even though the conditions were "very wet". It had had three setters on site on 11 July 2003, which had been the last usual working day. It would have been difficult for the plaintiff to glean from the notice that it was in breach because it had stopped working. In addition, the notice gave the plaintiff insufficient time to "rectify" its default, even if it had known what that default was. Clause 8.1(a) provided that the defendant should give the plaintiff three days notice, whereas the facsimile required the plaintiff to recommence work the following morning or the sub-contract would be terminated.

110 Accordingly, even if I had been of the view that the plaintiff was in default of its obligations under the sub-contract at the time the facsimile was sent, I would not have found that that facsimile was a sufficient notice to entitle the defendant to terminate the sub-contract.

111 I do not consider that the facsimiles sent on 15 July 2003 were sufficient notices either. The first of those made no reference to any breach of the sub-contract and imposed no time within which the plaintiff was to rectify any alleged default. It said simply that there had been two setters on site that day, but that it was "imperative" that the floaters commence the following day, 16 July 2003. The second of the two facsimiles sent by the defendant on 15 July 2003 made no reference to an alleged breach and imposed no time limits either. It simply demanded that the plastering work be progressed immediately and said that the defendant required the plaintiff to have its full workforce on site.

112 Accordingly, even if I had been of the view that the plaintiff had been in breach, I would not have found that these facsimiles, either separately or together, or together with the facsimile sent on 14 July 2003, provided the defendant with a sufficient basis for its termination of the sub-contract on 21 July 2003.

113 In the alternative to its set off and counterclaim based on its termination of the sub-contract, the defendant alleges that the plaintiff was in breach of the sub-contract, that that breach constituted a repudiation of the sub-contract and that the defendant accepted the plaintiff's repudiation by issuing its notice of termination on 21 July 2003. The defendant alleges that the plaintiff repudiated the sub-contract by sending the facsimile dated 11 July 2003, stating that it intended to suspend the plastering works.

114 A party will be found to have repudiated a contract if, viewed objectively, that party's conduct has been such as to convey to a reasonable person, in the position of the other contracting party, that the first party repudiates or disavows the whole contract or a fundamental obligation under it: Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623 at 658; see also Koompahtoo (supra) at [44].

115 I have already found that, as at 14 and 15 July 2003, and notwithstanding its facsimile dated 11 July 2003, the plaintiff was not in breach of the sub-contract. Nor do I consider that it was in breach as at 21 July 2003, when the defendant purported to terminate the sub-contract. It must follow that, as at that date, it had not repudiated the sub-contract either.

116 In those circumstances, the defendant's claim to a set-off and its counterclaim based on the plaintiff's alleged repudiation of the sub-contract cannot be sustained.

117 In case I am later found to be wrong in my views that the defendant's set-off and counterclaim in respect of its costs of completing the plastering work on the development and its set-off and counterclaim of its damages for the plaintiff's alleged repudiation of the sub-contract cannot be sustained, I will provisionally determine whether, if the defendant had been entitled to terminate the sub-contract, it would have been able to set-off and counterclaim all the costs which it claims it incurred in completing the plastering work, and, if the plaintiff had repudiated the sub-contract, the defendant would have been able to set-off and counterclaim what it claims are the damages which it suffered as a result of the plaintiff's repudiation.

118 It is clear that, if the defendant had been entitled to terminate the sub-contract as it did, cl 8.3 and cl 8.4 of the written agreement entitled it to engage another contractor to complete the plastering work and to recover the costs of completing the plastering work from the plaintiff as a debt.

119 After the defendant had terminated the sub-contract, it engaged A & D Roglic to complete the plastering work. Those plasterers completed the work, for which they charged a total of $167,245.85. The defendant also engaged Plasterwise, which undertook work which Roglic was unable to do, and for which Plasterwise charged $12,936.00. Therefore, the total cost of the additional plastering work was $180,183.85.

120 The plaintiff disputed that the work done by Roglic was within the original scope of the sub-contract. The plaintiff suggested that the original sub-contract provided that the plaintiff was required to plaster the internal walls of the development and to provide sand finish render to the outside walls of the main structure, but not to provide any sand finish render to any other concrete surfaces or structures, including the storerooms and other external structures. However, that argument was based upon the evidence of DeVincentis that, at the time the written agreement was signed, it was orally agreed between Luca, on behalf of the defendant, and him, on behalf of the plaintiff, that sand finish render would only be required to the outside walls of the main structure. Luca disputed that there was any such agreement and, in any event, DeVincentis and Luca then signed the written agreement, which expressly incorporated the architectural drawings (Exhibit 4). Those drawings indicate that sand finish render was required to all external structures, and not just to the external walls of the main structure.

121 The defendant also alleges that, in addition to its direct costs of having the plastering work completed, it incurred further costs of $24,000, for employing additional personnel in the period of four weeks for which completion of the development was delayed as a result of the termination of the sub-contract, and incurred further labour costs of $5,200, for other personnel to supervise Roglic in completing the plastering work. However, the defendant was unable to adduce the evidence necessary to establish either of these claims. Even if I had found that the defendant was entitled to recover its costs of completing the plastering work, I would not have allowed either of these claims.

122 Accordingly, I find that the plastering work performed by Roglic and Plasterwise was within the original scope of the sub-contract and, on the basis of the evidence given by the principals of Roglic and Plasterwise, that their charges for that work were reasonable. Therefore, if I had found that the defendant had validly terminated the sub-contract I would also have found that it was entitled to set-off against the plaintiff's claim, which I have allowed in the sum of $51,205.57, the sum of $180,183.85, plus interest at the rate of 6 per cent per annum from December 2003 to judgment.

123 If, on the other hand, I had found that the plaintiff had repudiated the sub-contract, that its repudiation had been accepted by the defendant and that the defendant was entitled to recover damages from the plaintiff in respect of that repudiation, I would have assessed those damages at $105,398.38, comprised as follows:

Plus: Plaintiff's claim herein (as allowed but excluding interest)

Less: Original sub-contract sum plus approved variations

124 In addition, I would have awarded the defendant interest on its damages of $105,398.38, calculated at the rate of 6 per cent per annum from December 2003 to judgment, pursuant to s 32 of the Supreme Court Act 1935 (WA).

125 For the reasons I have given, I consider that the plaintiff's claim should be allowed in the sum of $51,205.57, including interest, and the defendant's counterclaim should be dismissed.