Citation : TOWN OF VICTORIA PARK -v- MORRISON [2005] WADC 218

Appeal - Contract - "Post­contractual" conduct - Mitigation of damages - Turns on own facts

1 WHEELER JA: This is an appeal from a decision of Groves DCJ, given in the District Court on 24 November 2005. The background is as follows.

2 The appellant is a freelance Aboriginal artist. In July 2001 he was contacted by an employee of the respondent, a Mr Mark Armstrong, who asked the appellant if he would like to be involved in the production of an artwork for what was known as the Kensington Bushland Place Project. On 19 July 2001, the appellant and Mr Armstrong met to discuss the proposal. They visited the intended site for the project and went to see the town's engraver, as the proposed artwork involved a bronze plaque.

3 It was the evidence of the appellant that he and Mr Armstrong had formed a contract, and that they had agreed on $2700 as his fee for the completion of the art project. When asked by the Magistrate how the $2700 was made up, the appellant said "[w]ell, that was made up by Mr Armstrong's agreement that $2700 was left over from the budget. In his words, he said that it had to be used, so if I wanted to agree to that amount, it could be for the artwork for the public art". The appellant contended that Mr Armstrong had said that he would get a job number for the appellant and "fix everything up".

4 Mr Armstrong's evidence, on the other hand, was that a concluded agreement had not been reached. He said that he told the appellant to submit a quotation for the job that was the "final figure", which would have included the engraving works. As to the figure of $2700, Mr Armstrong said "[s]o knowing that there was a certain amount of dollars left in the budget, that figure was given to Mr Morrison to give him an indication on how many dollars I had within that budget that I could - - to do the project". According to Mr Armstrong, the purpose of the meeting with the engraver was to introduce the appellant to the engraver so that they could liaise as to a "total price" for the artwork.

5 Shortly after the meeting with the appellant on 19 July 2001, Mr Armstrong had a chance encounter with a Mr Richard Wilkes, an Aboriginal person, who apparently expressed an opinion that it was not appropriate for the appellant to undertake the work, and also expressed concerns in relation to an Aboriginal seasonal calendar interpreted in the artwork. In light of this information, the respondent wrote to the Aboriginal Affairs Department conveying the concerns expressed by Mr Wilkes and seeking advice as to whether the proposed calendar was suitable and acceptable. Mr Armstrong then telephoned the appellant to inform him of this. The appellant's evidence is that during this conversation Mr Armstrong told him that his "job had been terminated" because a Mr Wilkes had said the appellant was "not allowed to work in Perth". Mr Armstrong denied that he told the appellant that he was terminated, instead alleging that he again asked the appellant for a final quote for the completion of the artwork.

6 The appellant wrote to the respondent on 27 July 2001, apparently outlining concerns in relation to the action taken by the respondent. This letter was not tendered. On 3 August 2001, the respondent wrote to the appellant, confirming that further enquiries had revealed "that it may not be culturally possible to include the calendar, as proposed". Referring to previous negotiations between the appellant and Mr Armstrong, the letter then stated:

"During this liaison, it was requested that you provide a staged quotation to the Town for the work and this request remains whilst our enquiries/investigation on the correct course for the Town in this matter continue."

The appellant responded by way of a letter dated 10 August 2001. This letter was not formally tendered, but was read out by counsel for the defendant (respondent) during the trial. The appellant did not provide a "staged quotation", but said, inter alia:

"During this year I was asked by Mr Mark Armstrong if I would like to be employed as an artist, to design a concept or public art within the Town of Victoria Park. I accepted it, as it was a great opportunity to further my experience in this field. A few days later Mr Armstrong telephoned me and said he was to terminate my position, the reason being that a Mr Richard Wilkes said I should not be employed."

7 The Aboriginal Affairs Department replied to the respondent on 31 August 2001 advising that in the Department's view, the proposed seasonal calendar artwork was suitable and acceptable. The respondent conveyed that information to the appellant by a letter dated 11 September 2001, and stated:

"Based upon this information the Town is keen to proceed with this project and would appreciate your advising if you are interested in undertaking the work."

The appellant replied to the respondent on 13 September 2001, requesting that the respondent raise certain matters with the Aboriginal Affairs Department, but did not directly indicate whether he was interested in undertaking the work. The respondent wrote to the appellant again on 20 September 2001, indicating that it was satisfied with the responses already received from the Aboriginal Affairs Department in relation to the proposed calendar, and again requesting the appellant advise the respondent if he was interested in undertaking the work. In his letter dated 23 September 2001, the appellant referred to the respondent having previously denied the appellant employment and requested a better employment relationship. Ultimately the issue was not resolved and the appellant brought an action against the respondent for breach of contract.

8 The matter came before Magistrate Boothman on 15 February 2005. The learned Magistrate found that a contract had been formed between the appellant and respondent for an agreed price, being $2700, and that the respondent had unlawfully terminated that contract. It is necessary to set out the reasons of the Magistrate in some detail:

"It is quite clear that the plaintiff and the defendant, through Mr Armstrong, entered into a form of agreement. That form of agreement was that Morrison, the plaintiff, would carry out work on behalf of the Town of Victoria Park. It is quite clear that he was engaged by Mr Armstrong. Mr Armstrong said 'I have this much money', and I accept and find as a fact that that was the amount of money which was available to Morrison, and not necessarily the engraver. ... The issue of the engraving was not discussed until after the fact of the $2700 being told to Morrison, the plaintiff - that it was available.

I am inclined to accept Morrison's view that this was the sum for him to act as a consultant, if indeed he was to act as a consultant throughout this matter. Subsequently, any disbursements, for example, to an engraver, would have been a different thing. It is the case that I have no doubt that Morrison was engaged; I have no doubt that he was engaged - and I find as a fact that he was engaged - to carry out the work that he was to do for the sum of $2700. ...

Mr Wilkes basically put a dampener on the possibility of Morrison working, but Wilkes had absolutely nothing to do with this contract. The contract was between the Town of Victoria Park through its officer, Mr Armstrong, and the plaintiff. Wilkes, I repeat, had nothing to do with this matter. I do find that the telephone call to the plaintiff was in fact the defendant withdrawing from a validly entered-into contract between the two parties for the sum of $2700.

In relation to the evidence given by Mr Armstrong, I noted on a number of occasions that he was not willing to give clear evidence or to deny emphatically the evidence given by the plaintiff. Although he sat in the court and heard the evidence of the plaintiff, he did not deny the evidence of the plaintiff in relation to the dismissal, as it was described in the claim, of Morrison. Morrison was quite clear in his evidence that he was dismissed because Wilkes had become involved in the matter. It is also the case that any denial, if there was a denial by Mr Armstrong, was couched in the terms of: 'Well, things have become muddy'. The Aboriginal Affairs had become muddy. He repeated that on a number of occasions. That, with respect, goes nowhere in relation to the issue of the contractual relationship between the town and the plaintiff.

The fact that it had become muddy was simply caused by the Town of Victoria Park itself. It had no need to deal with anyone other than the plaintiff, because they had entered into a contract with that man. In respect of the matter, it is quite clear from the evidence of Mr Armstrong that he had taken steps to clarify the issues; he had spoken to a Mr Walley; he had spoken to someone else at the Department of CALM; he had satisfied himself that Morrison was the man. He said so himself. That was his evidence. He thus entered into that contract.

In withdrawing from the contract, which was described, it would seem to me, by the defendant, as being a conditional contract - that is conditional upon the plaintiff supplying the Town of Vincent [sic - Victoria Park] with a quotation, I'm not satisfied that that was indeed the nature of the contract. I am satisfied that the plaintiff expected to get a job number from the defendant through Mr Armstrong. That was the job number which he said could have clarified the issues for him; but if he submitted a document, the town would merely say, in the plaintiff's words, 'What is this?' That is why he did not file any documentation; but in any event, the fact is that it was the defendant who terminated the contract, in my view unlawfully. They terminated the contract because of some external issue in relation to a Mr Wilkes, who was an entire stranger to the contractual relationship between the town and the artist/plaintiff. That is not a lawful reason for them to terminate the contract.

That being so, I am of the view that the defendant unlawfully terminated the contract, in breach of a valid contract entered into by the Town of Vincent [sic - Victoria Park] through Mr Armstrong, and the plaintiff, for the sum of $2700. The plaintiff could reasonably have expected to earn the sum of $2700; his loss of chance or expectation in this matter is easily worked out. It is the sum of $2700, which was the agreed price.

The subsequent letters which the town wrote are, in my view, merely self-serving, to try and assure itself that it was still ready and willing to proceed with the contract. But it was not. It in fact terminated the contract some days after the plaintiff had started work. It is the case that the plaintiff did start work. The evidence given by Mr Humphries [the engraver] quite clearly indicated - and he is a stranger to this matter - that the plaintiff had come to his place of business in relation to the casting of some bronze material. It is quite clear that the plaintiff had carried out some artwork, and in respect of all those matters, the plaintiff was ready, willing and able to carry out his side of the task. The Town of Victoria Park was not."

Respondent's (defendant's) appeal to the District Court

9 The respondent appealed the decision of the Magistrate to the District Court, on the basis that:

(a) a contract had not been formed, and the Magistrate erred in finding that the subsequent correspondence was not relevant to the question of whether a contract had been formed;

(b) the parties had not agreed on a price for the contract;

(c) the contract negotiations were about the production of an artwork, not for consulting services;

(d) if a contract had been formed, and the Town had terminated that contract, Mr Morrison should not have received damages at the full price of the contract when there was (1) no admissible evidence of work done and (2) Mr Morrison had the opportunity to mitigate his loss by responding to the Town's subsequent correspondence.

10 Groves DCJ upheld the appeal, emphasising that the trial was an "oath against oath" trial, and that the onus was on Mr Morrison to prove his claim. The learned Judge asserted that the Magistrate had made no finding as to the credibility of either Mr Morrison or Mr Armstrong and had not enunciated the basis on which he found there to be an agreement. On his review of the evidence, Groves DCJ found no reason to prefer the evidence of Mr Morrison to that of Mr Armstrong.

11 His Honour held that the Magistrate had erred in "ignoring" the subsequent correspondence, when "the correspondence subsequent to the alleged termination date of the alleged contract is relevant to the question of whether or not there was a contract in the first place" (at [24]). His Honour listed evidence that was before the Court as to the alleged contract, including the subsequent correspondence, and determined that the communications of the Town "can only be reasonably construed as a statement of intention as to a future course of action rather than an offer intended to give rise to legally binding relations" (at [27]). He further held that:

"The circumstantial evidence, viz, the correspondence, is consistent with Mr Armstrong's account of the discussions which he had with Mr Morrison. In my opinion, the weight of evidence was against Mr Morrison. In the circumstances, it was not open to the Magistrate to conclude that there was '... a form of agreement' or any agreement at all." (at [28])

12 In favouring the evidence of Mr Armstrong, his Honour concluded that no price had been agreed upon, and further, that "Mr Morrison was not engaged on a consultancy basis, but rather if there was a contract, it was for the production of a specific artwork" (at [29]).

13 The learned Judge then addressed the issue of whether Mr Morrison had performed work pursuant to the purported contract, stating that "[a]n examination of the transcript of evidence indicates that there was no evidence before the Court that the work, the subject of the purported contract was ever performed" (at [30]). He referred to the project report that Mr Morrison had been "doing up" when Mr Armstrong called, but concluded Mr Morrison "had not undertaken the work itself". His Honour also referred to Mr Morrison's statement that artwork "was produced", but dismissed it because the statement was made in closing submissions, as opposed to being made in evidence, and Mr Morrison had not provided "any factual basis for such a statement". The Judge also relied on the evidence of Mr Armstrong, who said that the work, and the project generally, was never completed. The Judge then turned to the evidence of Mr Humphries, the Town engraver, who had produced job sheets that supported the evidence of Mr Morrison. However, Mr Humphries had stated that the relevant meeting had taken place on 12 June 2001, when the evidence of Mr Morrison and Mr Armstrong was that the meeting had taken place on 19 July 2001. The learned Judge therefore asserted that "[i]n those circumstances, the evidence of Mr Humphries cannot be considered to offer any proof of work undertaken or completed by the plaintiff".

14 As to whether the contract was terminated, the Judge reiterated the point that the onus was on Mr Morrison to satisfy the Court on the balance of probabilities that his account was the factually true version. He said:

"Given the conflicting evidence and the consistency of the position of the Town as stated in its correspondence, it is difficult to see without reasons as to the basis for his so finding how the Magistrate concluded that he should accept Mr Morrison's evidence on that issue and reject absolutely the evidence of Mr Armstrong." (at [34])

15 Finally, the Judge turned to the question of mitigation. He noted the correspondence from the Town inviting Mr Morrison to indicate whether he was still interested in undertaking the work. The Judge held that, by not pursing the possibility of entering into a further or substitute contract with the Town, Mr Morrison had acted unreasonably and was therefore not entitled to the full contract price as damages in any event.

16 The appellant appeals the decision of Groves DCJ to this Court, seeking to reinstate the original decision of the Magistrate. The two principal questions that need to be addressed are (1) was it open to the Magistrate to find that a contract had been made between the appellant and respondent, and that that contract had been wrongfully terminated by the respondent, and (2) if so, was it open to the Magistrate to award damages at the full contract price.

Was it open to the Magistrate to find a contract?

17 The respondent argues that Groves DCJ was correct in finding that the weight of evidence was against the appellant, and that no concluded agreement had been reached between the appellant and respondent. In making this finding, his Honour placed particular emphasis on the letters written by the respondent subsequent to the alleged termination, in that they confirmed Mr Armstrong's account that the respondent did not have the requisite intention to enter into the contract with the appellant at that stage. Groves DCJ found that the Magistrate was in error because he had "ignored" the subsequent correspondence entirely.

18 "Post-contractual" conduct is admissible on the question of whether a contract was formed, as distinct from the question of what a contract means: Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 at [25]; Howard Smith & Co Ltd v Varawa [1907] HCA 38; (1907) 5 CLR 68 at 77; Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1908] HCA 88; (1908) 5 CLR 647 at 668, 669 and 672. It is therefore necessary to analyse the reasons of the Magistrate to determine whether, in fact, the Magistrate did "ignore" the correspondence. At no stage did the Magistrate indicate that he refused to take the correspondence into account. Groves DCJ seemed to rely on the Magistrate's characterisation of the evidence as "self-serving" as indicating that he ignored that evidence. I shall return to this proposition in a moment. At the appeal hearing, counsel for the respondent also directed us to the following observations, which were made by the learned Magistrate during the hearing:

"The plaintiff simply says he was offered the job, summed as the letter; he was dismissed by the person who offered him the job, by telephone. Anything that comes after that is neither here nor there. The contract is what happened between the offer and the rejection of him. That's what it's about. Anything subsequent to that is neither here nor there, in my view, as the plaintiff has said." (trial t/s at 8)

19 Counsel submitted that these remarks show that the Magistrate had concluded at that point that the subsequent correspondence was not relevant at all to the issue of whether or not a contract had been formed. However, the view stated by the Magistrate in that passage was expressed during the course of cross-examination of the appellant, and the Magistrate may simply have been commenting on the limited usefulness of counsel's line of questioning, given the appellant's view that the dispute had already arisen by the time he received the letters.

20 As stated by Groves DCJ (at [23]), it is open to the Court to consider the whole of the evidence. It is true that the subsequent letters of the respondent are consistent with the evidence given by Mr Armstrong. However, the Magistrate was equally entitled to take into account the letter of the appellant to the respondent, dated 10 August 2001, which was consistent with his own version of events. Further, the evidence of Mr Humphries, the Town engraver, was consistent with the evidence of the appellant. Mr Humphries stated:

"I record here [on the job sheet, 12 June] that the customer was the Town of Vic. Park, and the contact person was Mark Armstrong. The meeting took place in the presence of Toogarr. At that meeting, Mark and Toogarr described to me in very brief terms the concept of a public art project which Toogarr was involved with, and it was to discuss with me the practicalities of how we might approach the manufacture of that piece. I was given a number of photocopied documents which were described in the Noongar calendar ... [O]n the 23rd of June following, I presented a written quotation to the Town of Vic. Park, for the attention of Mark Armstrong, which described the recent discussions we had with Toogarr and Mark ... That was followed on the 23rd of July when Toogarr came back to my office. I have a second job sheet record of that meeting at which meeting Toogarr gave me some other artwork that I'd not seen before, which were the Bibbulman seasons of the Noongar calendar ... There were no further meetings." (trial t/s at 11)

21 While the dates provided by Mr Humphries do not correspond with the dates of the meeting provided by the appellant and Mr Armstrong, it was admitted by the respondent that the appellant and Mr Armstrong had met with Mr Humphries, and it was not suggested that the appellant and Mr Armstrong had met with Mr Humphries in relation to any other proposed work. It would appear that Mr Humphries had simply made a mistake in relation to the relevant dates. In my view Groves DCJ erred in holding that "the evidence of Mr Humphries cannot be considered to offer any proof of work undertaken or completed by the plaintiff". It was open to the Magistrate to find that, despite Mr Humphries' error as to the dates, the rest of his evidence was accurate.

22 The Magistrate was entitled to place less weight on the subsequent correspondence than on the oral evidence of the parties as to what took place. There are inherent problems in relying heavily on conduct that occurred after the alleged contract was formed, and after a dispute has arisen between the parties. In Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 the New South Wales Court of Appeal summarised the dangers as follows, in the context of explaining why post-contractual conduct should not be used as an aid in the construction of a contract:

"The dangers and disadvantages of permitting reference to post-contract conduct by the parties to the contract are obvious. The parties may tailor their post-contract behaviour to suit the case which they believe they may later have to present in court ... They may seek to advance their understanding of the agreement, although they do not expect that the disputes will end up in court: simply to persuade their contracting partner towards accepting their construction of it. The expansion of the field of inquiry by reference to post-contract conduct adds to the burden of fact finding. It consequently adds to the time and cost of litigation. The conduct of the parties may be based on an erroneous understanding of their legal rights." (at 315 - 316)

23 And in New South Wales Medical Defence Union Ltd v Transport Industries Insurance Co Ltd (1986) 6 NSWLR 740 it was said:

"It is necessary to exercise caution, however, in receiving evidence of post-contractual conduct by a party because this may provide no evidence of his intention prior to, and at, the time of execution of the contract, but only of a later intention which may have been different." (at 752)

24 In the present case, it is possible that the respondent, by way of its subsequent correspondence, was simply trying to place itself in a better position with regard to future negotiations with the appellant. That, it appears to me, was what the Magistrate meant, in describing the correspondence as "self-serving".

25 So far as credibility was concerned, the Magistrate was in the best position to observe the demeanour of the witnesses and was best placed to judge their credibility (as to which see State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) [1999] HCA 3 (1999); 160 ALR 588) and he concluded that the evidence of Mr Armstrong was not as strong as the unequivocal evidence of the appellant. It is clear from the comments about the witnesses, which I quoted earlier, that the Magistrate preferred the evidence of the appellant, and that his reasons for this finding were sufficient: see Rowland v Police [2001] SASC 179; (2001) 79 SASR 569 at [26] - [35], R v Keyte [2000] SASC 382; (2000) 78 SASR 68; Vellar v Stidston [2005] TASSC 83 and Pettitt v Dunkley [1971] 1 NSWLR 376.

26 I can see no error of law or fact in the approach taken to the evidence by the Magistrate. He considered the entirety of the evidence, and his finding as to the self-serving nature of the respondent's letters was a finding that was open to him.

Sufficient certainty and nature of the contract

27 Even accepting the evidence of the appellant about the conversation he had with Mr Armstrong, there is a separate issue as to whether, as a matter of objective construction, the agreement between the appellant and respondent was sufficiently certain. Before us, counsel for the respondent submitted that no agreement could have been entered into until there was greater consensus as to what precisely was to be done, stating that the respondent would have wanted to view and approve any proposed artwork before finalising the contract. However, there is nothing in the evidence to suggest that there was a further approval stage that the appellant was required to pass before the parties were legally bound.

28 One possible interpretation of the evidence is that the appellant was hired on a consultancy basis, and this was the conclusion reached by the Magistrate. This view is supported by the evidence of Mr Humphries, who stated that he was told by the respondent to deal directly with the respondent, and that he would be remunerated by it accordingly. That would explain why Mr Humphries provided a quotation to the respondent. The respondent did not pass that document to the appellant, as one would have expected it to do if, as Mr Armstrong's evidence suggested, it was waiting for some final proposal from the appellant concerning the total price and scope of work. By way of explanation, the respondent says that it has no record of receiving a quote from Mr Humphries.

29 The Magistrate's finding that the sum of $2700 was to be paid for the appellant to "act as a consultant" was open to him on the evidence. The references by the appellant to being engaged for "public art" or "an artwork" are not inconsistent with his acting as a consultant to prepare material from which Mr Humphries would produce a work.

30 Even if the appellant was not engaged on a consultancy basis, it may be that this case would fall into the second class of contracts referred to in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353, being one where the parties exchanged promises to be legally bound, on the understanding that further details of the contract were to be worked out at a later stage. It is unnecessary to determine this point, however.

31 The Magistrate made certain findings as to the work performed by the appellant. The learned Judge overturned these findings, holding that "an examination of the transcript of the evidence indicates that there is no evidence before the Court that the work, the subject of the purported contract, was actually performed". With respect to his Honour, this is incorrect. Evidence was given by the appellant as to work he had completed:

"I did some work on the park, contractual work. I went down there and looked at the design of the layout; looked at the design of some trees that Mr Armstrong said he would be pulling down; looked at the way the sun shone down on different aspects of where the park would be, and how people would take notice of the design of the park, so it would not injure anyone. I was just doing up the report of that when I got a phone call from Mr Armstrong ..."

32 In his reasons for decision, the Magistrate stated the following:

"On the strength of the agreement [between the appellant and respondent] the plaintiff [appellant] says that he made arrangements to commence work on the bushland project and he did some work at his home. That is not disputed."

33 The appellant also stated that he had presented work to Mr Humphries. This was confirmed by Mr Humphries' evidence:

"I was given a number of photocopied documents which were described in the Noongar calendar ... I have a second job sheet record of that meeting at which meeting Toogar gave me some other artwork that I'd not seen before, which were the Bibbulman seasons of the Noongar calendar."

34 Further, there was a picture held up by the appellant during his closing submissions at trial, as evidence of work performed. In referring to the picture, the Magistrate said "[the appellant] delivered work, a copy of which was shown here, but has not been handed up as an exhibit". It is unfortunate that the picture was not formally tendered in evidence. However, the respondent, which was legally represented before the Magistrate, made no objection to the appellant's production of the picture. The learned Magistrate should have clarified whether the picture, or a copy of it, was sought to be tendered. However, given that it did not contradict the only evidence on the point (that of the appellant and of Mr Humphries), and in the absence of objection, I would regard the absence of formal tender as an irregularity only.

35 A finding that the appellant had performed work was open to the Magistrate.

36 As to whether the contract was unlawfully terminated, it was the evidence of the appellant that Mr Armstrong had told him that the agreement was terminated because a Mr Wilkes said that the appellant was "not allowed to work in Perth". This was a factual matter. The Magistrate preferred, on the whole, the evidence of the appellant to Mr Armstrong, and there was not a sufficient basis for the learned Judge to overturn the Magistrate's findings. In any case, it is clear from the respondent's subsequent letters, for example, the letter dated 11 September 2001 in which it asked the appellant to indicate "if" he would like to proceed, that in the respondent's view there was no valid contract at that point.

37 The learned Judge also found that the appellant had failed to mitigate his loss by not entering into a further or substitute contract with the respondent, and was therefore not entitled to the full contract price as damages. It is the case that a plaintiff who has suffered loss through a breach of contract by a defendant must act reasonably to endeavour to mitigate that loss. However, the standard is not a high one because the defendant is the wrongdoer: Sacher Investments Pty Ltd v Forma Stereo Consultants Pty Ltd (1976) 1 NSWLR 5 at 9. The onus rests upon the defendant to prove that the plaintiff has not taken reasonable steps to mitigate its loss: Watts v Rake [1960] HCA 58; (1960) 108 CLR 158, Metal Fabrications (Vic) Pty Ltd v Kelcey [1986] VicRp 52; [1986] VR 507. As was said by the New South Wales Court of Appeal in Wenkart v Pitman (1998) 46 NSWLR 502:

"The generally accepted view is that the onus of proof on the issue of mitigation is on the defendant, it following that, if he fails to show that the plaintiff ought reasonably to have taken certain mitigating steps, then the normal measure of damages would apply." (at 523 per Powell JA)

38 The respondent must therefore show that the appellant acted unreasonably in responding to the respondent's letters in the way that he did. What constitutes unreasonable conduct depends upon the circumstances of the case. In Yetton v Eastwoods Froy Ltd [1966] 3 All ER 353 at 364, Blain J quoted the following passage of James LJ in Dunkirk Colliery Co v Lever (1878) 9 Ch D 20 at 25:

"It is plain that the question of what is reasonable for a person to do in mitigation of his damages cannot be a question of law, but must be one of fact in the circumstances of each particular case. There may be cases where as matter of fact, it would be unreasonable to expect a plaintiff, in view of the treatment he has received from the defendant, to consider any offer made."

39 That principle was confirmed by Le Miere J in Glentham Pty Ltd v Luxer Holdings Pty Ltd [2006] WASC 132 at [67]:

"Whether the plaintiff has acted reasonably or unreasonably in refusing such an offer [of substituted performance] or not pursuing such a prospect depends on the circumstances of each case".

40 In the present case, the letters from the respondent to the appellant did not constitute an offer, or even a clear proposal. They did no more than, in effect, suggest that some new agreement could be reached and invite the appellant to indicate whether he was interested in undertaking the work. From the appellant's point of view, the issue regarding the termination of his original contract with the respondent had not at that stage been resolved. As summarised by the appellant:

"The main issue of this here was why I was sacked, and I believed if that would have got out of the way, there would have been a much more better understanding of where this was going. But it seems like they wouldn't answer me those questions, and all the letters ... [were] not addressing the question of why I was sacked."

41 It is clear that the appellant was concerned about the way in which his original agreement with the respondent had been affected by the comments of Mr Wilkes. He stated:

"[T]hey sacked me ... with the advice of an Aboriginal elder. This is where I couldn't make sense of where they were coming from. I asked them all the time if we could talk through the Aboriginal Affairs to this Aboriginal elder, and make sense of that issue ... "

42 In its letter dated 11 September 2001, the respondent affirmed the recommendation of the Department that "liaison between [the appellant] and the Aboriginal elders would be preferable" in relation to any work done by the appellant. Given the issues that had been raised by the respondent's involvement of the Department, it was reasonable for the appellant to make enquiries of the respondent, as well as consulting with other members of the community (as recommended by the letter from the Department) before negotiating any new contract with the respondent.

43 As to why he did not provide an invoice for work already completed, the appellant's evidence was that Mr Armstrong had told him that he would be given a job number prior to putting in an invoice, so that he could "quote the number on it". No job number was given to him.

44 The Court does not require every plaintiff to enter into a new agreement with a defendant after termination of the contract. In the case of Yetton (supra), the appellant's employment had been terminated by the respondent. The respondent made the appellant a new offer of employment, which, although at the same salary, involved a reduction of status. The appellant refused that offer. In holding that the appellant had not acted unreasonably in refusing the new contract, Blain J noted:

"[I]t is a plain question of fact for the court in any particular case, whether any particular refusal to accept alternative employment which would reduce a plaintiff's loss is a reasonable or unreasonable refusal, and factually, even if not as a strict matter of law, personal factors clearly are more likely to be of weight or are likely to be of greater weight in cases of personal services than in what I call (for want of a better word) soulless cases of sale of goods contracts where money may often be the only important factor."

45 In the present case, the working relationship between the parties had been damaged. The appellant understood there to be some issue about "consultation" with other Aboriginal persons. The respondent did not offer a new contract to the appellant, and was essentially waiting for the appellant to make a suggestion as to a future agreement. In my view, the appellant did not act unreasonably in his response to the subsequent correspondence of the respondent, and the Magistrate was entitled to find that no reduction in the amount of damages was warranted.

46 I would allow the appeal and set aside the decision of Groves DCJ, and instead substitute an order that the appeal from the decision of Magistrate Boothman be dismissed.