New South Wales Court of Appeal CITATION: Hanson Construction Materials Pty Ltd v Siely Pty Ltd [2009] NSWCA 48 HEARING DATE(S): 2 March 2009 JUDGMENT DATE: 16 March 2009 JUDGMENT OF: Ipp JA at 1; Macfarlan JA at 67; Sackville AJA at 68 (a) The appeal succeeds and the cross appeal succeeds. (b) The verdict and judgment for the respondent in the sum of $216,156 is set aside. DECISION: (c) The respondent to have a verdict and judgment in the sum of $66,000. (d) The respondent to have interest on the sum of $66,000 at the rate of 10 percent per annum from 7 August 2006 to date of payment. (e) The respondent to pay the appellant's costs of the appeal and the appellant to pay the respondent's costs of the cross appeal. (f) Both parties to have certificates under the Suitor's Fund Act 1951 if otherwise entitled. CATCHWORDS: CONTRACTS - general contractual principles - discharge, breach and defences to action for breach - independent contract - whether termination of contract lawful - whether serious misconduct - relevance of terminating party's subjective belief - whether quantum of damages excessive LEGISLATION CITED: Suitor's Fund Act 1951 CATEGORY: Principal judgment CASES CITED: Shepherd v Felt & Textiles of Australia Limited (1931) 45 CLR 359 PARTIES: Hanson Construction Materials Pty Ltd (Appellant) K H Siely Pty Ltd (Respondent) FILE NUMBER(S): CA 40217/08 COUNSEL: A P Stenmark SC with Y Shariff (Appellant) JJE Fernon SC with TJ Boyd (Respondent) SOLICITORS: Mark Diamond & Associates (Appellant) Herbert Weller (Respondent) LOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): 2583/07 LOWER COURT JUDICIAL OFFICER: Rolfe DCJ LOWER COURT DATE OF DECISION: 8 July 2008 - 17 - IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40217/08 IPP JA MACFARLAN JA SACKVILLE AJA 16 March 2009 Hanson Construction Materials Pty Ltd v K H Siely Pty Ltd Judgment 1 IPP JA: On 28 April 2005 the appellant entered into a contract (the "Contract") with the respondent whereby the respondent, as an independent contractor, agreed to undertake concrete cartage for the appellant. The term of the Contract was from 1 May 2005 until 31 October 2014. 2 On 7 August 2006 the appellant terminated the Contract. The respondent contended that the termination was unlawful and claimed damages calculated on the basis that the Contract had come to an end on that date. The parties conducted the ensuing litigation on the basis that the Contract had indeed so come to an end. 3 The respondent commenced proceedings in the District Court for damages it had suffered by reason of the appellant's alleged unlawful termination. Rolfe DCJ upheld the respondent's claim and awarded it $201,076, exclusive of interest. 4 Clauses 3.2(a) and (b) of the Contract governed its termination. These clauses provided as follows: " Termination of Contracts of Carriage (a) From 1 November 2004 if the Contractor decides to terminate a contract of carriage for any reason other than serious misconduct the Contractor shall pay to the Carrier an immediate termination payment of $66,000.00 and the contract shall terminate forthwith. In addition to the termination payment the Contractor shall offer to purchase the truck owned by the Carrier at the relevant market value at that time. The Carrier may choose to accept or reject the offer of the Contractor. (b) Where the Contractor terminates a contract of carriage at any time by reason of serious misconduct by the Carrier then the Contractor has the right to terminate the contract without notice and without an obligation to make compensation payment to the Carrier. For the purpose of this Arrangement "serious misconduct" may include acts of physical violence, serious theft, serious threats made to a person, gross negligence." 5 The appellant purported to terminate the Contract on the ground of "serious misconduct" on the part of the respondent (that is, in terms of cl 3.2(a)). Rolfe DCJ, however, held that the respondent was not guilty of serious misconduct. 6 His Honour found that, no later than two years after 30 June 2006, the appellant would have exercised its right to terminate the Contract under cl 3.2(a) otherwise than by relying on serious misconduct. On this basis, his Honour awarded the respondent damages for loss of income from the date of termination to 30 June 2008. 7 The respondent owned and operated a concrete truck that it used to perform its contractual duties. Under cl 3.2(a), the appellant, on termination other than for serious misconduct, was required to offer to purchase the truck at market value. Rolfe DCJ held that the respondent was entitled to damages of $79,036 because the appellant had not purchased its truck. 8 The judge held, additionally, that the respondent had failed to mitigate its damages and reduced the damages he awarded so as to take account of the need to mitigate. 9 On these bases, his Honour held that the respondent was entitled to damages as follows: (a) Loss of income for the first after 30 June 2006 $78,352 (b) The loss of income for the second year after 30 June 2006 $72,688 (c) "Clause 3.2(a) entitlement" $66,000 (d) Allowance for sale of truck to appellant $79,036 Sub total $296,076 (e) Allowance for failure to mitigate $95,000 Total $ 201,076 10 His Honour applied interest at the rate at 10 percent per annum on the sum of $201,076 and arrived at an amount of $15,080. He granted judgment and a verdict in favour of the respondent in the sum of $216,156. 11 The appellant appeals against his Honour's decision, both as to liability and as to damages. The respondent cross-appeals against the finding that it should have, but failed, to mitigate its damages. 12 In determining that the respondent had established that the appellant terminated the Contract without serious misconduct on its part, Rolfe DCJ focussed on the evidence of Mr Clarkson, one of the appellant's managers. His Honour undertook an investigation into whether Mr Clarkson, personally, was satisfied that there was sufficient evidence available to justify termination of the Contract on the ground of serious misconduct. 13 The appellant submitted that this was the wrong question. The existence of serious misconduct had to be determined objectively, without reference to Mr Clarkson's state of mind. This submission is undoubtedly correct: Shepherd v Felt & Textiles of Australia Limited (1931) 45 CLR 359. To be fair to the primary judge, however, it should be noted that Shepherd v Felt & Textiles of Australia Limited was not drawn to his attention at the trial. 14 Since his Honour proceeded on an incorrect basis, it is therefore necessary for this Court to undertake an examination of the relevant evidence afresh. It is able to do so as virtually all the important evidence and, in particular, all the direct evidence of serious misconduct on which the appellant relied, was documentary. 15 When the trial opened, the respondent/plaintiff tendered certain documentary evidence and then closed its case. Mr K J Siely, who was the alter ego of the respondent company, did not testify. Counsel for the appellant informed the Court that he wished to cross-examine Mr Siely. Mr Fernon SC (who together with Mr Boyd appeared at trial and on appeal for the respondent) pointed out that the appellant did not have a right to cross-examine Mr Siely as he had not been called to testify and no affidavit by him had been read. 16 The appellant thereupon opened its case and tendered Mr Clarkson's affidavit. Exhibited to this affidavit were unsworn statements by employees or contractors employed by the appellant containing complaints about Mr Siely's conduct. This was the evidence on which the appellant relied to rebut the allegation that Mr Siely was not guilty of serious misconduct. Mr Fernon objected to those statements being produced as proof of their contents and they were not admitted into evidence. 17 Mr Clarkson testified orally and was cross-examined by Mr Fernon. Thereupon, Mr Fernon withdrew his objection to the tender of the unsworn statements, which were admitted into evidence. Counsel for the appellant offered to make the persons who had made the statements available for cross-examination. Mr Fernon declined the invitation. The statements then went into evidence without the persons being called and without the statements being sworn. 18 Exhibited to Mr Clarkson's affidavit was a letter dated 13 June 2006 written by Mr Siely to the appellant in which Mr Siely dealt with various complaints concerning his conduct which the appellant had identified. 19 The complaints of serious misconduct on which the appellant relied fell into two categories. These were referred to as the "April 2006 Allegations" and the "June 2006 Allegations". To the extent that his Honour discussed the April 2006 Allegations, he did so largely in the context of Mr Clarkson's knowledge and view of them. His Honour appears to have, substantially, accepted the June 2006 Allegations (although in some instances he again assessed their weight only by reference to Mr Clarkson's knowledge and view of them), but in effect held that they did not establish breaches of any importance. The appellant submitted that his Honour failed to assess the combined, overall effect of the two sets of allegations. There is force in this submission. 20 During the course of argument on appeal, it became clear that the appellant's arguments as to liability required factual findings to be made, if possible, as to the objective merits of each of the allegations of breach, and then, having regard to those findings, a value judgment to be made as to whether the respondent had proved that he had not been guilty of serious misconduct. 21 Mr Fernon submitted that, by cl 3.2(b), the parties had agreed that the only circumstances relevant to the determination of "serious misconduct" as used in the clause were those to which the respondent had regard when it in fact decided to terminate the Contract. In my view, however, there is nothing in cl 3.2(b) that justifies such a construction. The rule laid down in Shepherd v Felt & Textiles of Australia Limited must be applied. 22 Mr Fernon submitted that the reference in the second sentence of cl 3.2(b) to "acts of physical violence, serious theft, serious threats made to a person, gross negligence" indicates that, by "serious misconduct", the parties had in mind misconduct of a particularly grave kind. I accept this submission, although I do not think that the concept of "serious misconduct" in cl 3.2(a) differs in substance from the critical elements necessary under the general law for the exercise of the right to terminate a contract for breach of a condition. In other words, I do not think that the requirement of "serious misconduct" differs in substance from the requirement that a breach go to the root of the contract or be fundamental in character. 23 Mr Fernon accepted that the respondent, as plaintiff, bore the onus of proving that he had not been guilty of serious misconduct (in other words, that the appellant, in terminating the Contract, committed a breach thereof). He submitted, nevertheless, that the appellant bore an evidentiary onus to adduce evidence to support its contention that it legitimately terminated the Contract on the grounds of serious misconduct. I would accept that submission. 24 Before proceeding to consider the individual allegations, there are certain evidentiary matters that should be mentioned. 25 The first is that no witness gave sworn evidence of the various incidents said by the appellant to constitute, individually or collectively, "serious misconduct" for the purposes of cl 3.2(b) of the Contract. The evidence adduced by the appellant comprised unsworn out of court statements, some of which were prepared months after the relevant events. For example, Mr Morgan, a manager of the appellant, gave an account of an incident in which the respondent was said to have grabbed Mr Morgan's throat. The account was contained in an undated document apparently prepared about six months after the alleged incident took place. There is nothing to indicate that a formal report or complaint about the respondent's behaviour was made at the time. 26 Some of the statements complain about the appellant's behaviour, but give few details. For example, Mr Vicary, the General Manager of a company associated with the appellant, alleged in a statement dated 10 April 2006, that the respondent had breached yard rules relating to the washing of trucks on "numerous occasions" over a period of twelve months. Mr Vicary's statement provided no particulars of these allegations. 27 It is necessary to take into account that the respondent's counsel elected not to cross-examine the makers of these statements. Even so, it is difficult for a Court to make factual findings in relation to contested events on the truncated evidence adduced in this case. 28 Secondly, Mr Siely's letter of 13 June 2006 (setting out his answers to various complaints by the appellant) was admitted into evidence by act of the appellant. The appellant tendered the letter as an exhibit to Mr Clarkson's affidavit. This is a factor that has to be borne mind when balancing the weight to be attributed to the statements made by Mr Siely in this letter, on the one hand, and the statements on which the appellant relies, on the other. The point is that, while the respondent had the opportunity to cross-examine the makers of the statements relied on by the appellant (albeit that the respondent declined that opportunity), the appellant was given no opportunity to cross-examine Mr Siely. 29 Mr Fernon drew attention to evidence by Mr Clarkson to the effect that as at 1 May 2006 he was of the opinion that there was insufficient evidence to justify the appellant terminating the Contract on the grounds of serious misconduct. Mr Clarkson had formed this opinion after the appellant had received a report from an experienced investigator it had retained to investigate the complaints that by then had been made against Mr Siely. The investigator's report was not before the Court and the investigator did not testify. Mr Fernon submitted that Mr Clarkson's opinion constituted an admission by the appellant that, in effect, supported Mr Siely's statements made in his letter of 13 June 2006. 30 Mr Clarkson's opinion was largely based on hearsay evidence, but also involved his assessment of the seriousness of the contested allegations against the respondent. Moreover, Mr Clarkson testified that, in arriving at his opinion, he took into account the fact that the appellant had no documentary evidence "of explanations being given to Mr Siely of what was required". Having regard to the fact that the statements relied on by the appellant were admitted into evidence without objection and the respondent declined to cross-examine the makers of those statements, as a general proposition, not a great deal of weight can be attributed to Mr Clarkson's opinion. Mr Clarkson's opinion does, however, become relevant to some limited aspects of the case, as I indicate below. 31 The April 2006 allegations were as follows: "(a) Mr Siely had made an insulting gesture and flicked a lit cigarette towards Mr Haddad, a driver engaged by WSC; (b) Mr Siely had gripped Mr Haddad's throat firmly and would not release his grip until Mr Haddad put water from a hose on him; (c) Mr Siely called Mr Haddad a "stupid fucking wog "; (d) Mr Siely had repeatedly disobeyed yard rules relating to the use of fresh (as opposed to recycled) water to clean the agitator on his truck despite being orally instructed not to do this by Mr Morgan; (e) Mr Siely had ignored Mr Morgan's instructions and had a disregard for plant rules and broke plant equipment; (f) on 18 March 2006, Mr Siely interrupted Mr Morgan's performance of his duties, told him to " get fucked ", placed his hands on Mr Morgan's chest and pushed him back, then said " Come on and have a go "; (g) despite being previously instructed by Mr Vicary not to use the photocopier, on 18 March 2006 Mr Siely attempted to do so again. When Mr Vicary approached him to ask him to stop using the photocopier, Mr Siely defied Mr Vicary's orders and restrained him from interrupting him. Mr Siely then accused Mr Vicary of assaulting him; and (h) on 4 April 2006, Mr Siely again defied Mr Vicary's orders, this time in relation to the use of the slump stand. When Mr Vicary intervened, Mr Siely pushed him away and said " I'm going to fucking hit you ". Mr Siely later approached Mr Vicary with his fist up and said " You are an arrogant prick, you fucking wog ". 32 As regards the matters complained of in (a), (b) and (c), it appears from a statement by Mr Morgan (a manager of the appellant) that a confrontation occurred between Mr Haddad (a contractor) and Mr Siely after Mr Haddad had hosed the cabin of Mr Siely's truck while Mr Siely was in the driver's seat. This led to an angry exchange between the two men. Save for the allegation in (a), Mr Siely's reaction appears to have been provoked by Mr Haddad's conduct. The violence involved was of a short duration and not of a serious nature. The conduct described in (a) was of minor significance. In these circumstances, the matters complained of in (a), (b) and (c) do not come anywhere near "serious misconduct" within the meaning of the phrase in cl 3.2(b). 33 Mr Siely did not respond to the allegation in (d) that he had "repeatedly disobeyed yard rules relating to the use of fresh (as opposed to recycled) water to clean the agitator on his truck". The evidence does not disclose the significance of this kind of disobedience. In the absence of such evidence, Mr Clarkson's opinion has relevance. That is to say, the fact that Mr Clarkson does not appear to have thought this allegation to be of particular importance supports the inference that the disobedience alleged was not significant. 34 The reference in para (e) to ignoring Mr Morgan's instructions and having a disregard for plant rules appears to be based on two allegations. The first is the same as that made in para (d). The second is that Mr Siely ignored instructions to wash his truck out at the "slump stand". Mr Siely's answer to this allegation appears from his letter of 13 June 2006. According to Mr Siely, although he did not wash the truck out at the slump stand, he did so elsewhere. According to him, as he had a "full tank of water" he had "no need to stop at the slump stand". Again, there is no evidence as to the implications of this category of disobedience. On its face, it does not appear to be serious. 35 The appellant's references to the evidentiary material said to support the complaint made in para (e) of breaking plant equipment do not bear out the allegations made. There is evidence in the statement of Mr Vicary (a manager of the appellant) that the lock of an electrical board had to be repaired after a confrontation that occurred between Mr Siely and Mr Morgan, but it is not clear from the statement which of the two men was responsible for the breakage. 36 I do not regard the complaints set out in (e) as constituting "serious misconduct". 37 The complaints set out in para (f) appear from the appellant's own material to have occurred in a confrontation between Mr Siely and Mr Morgan. On the evidentiary material it is difficult to conclude who was primarily to blame for the confrontation. The evidence does not suggest that what occurred was serious. 38 As regards (g), Mr Vicary complained that Mr Siely used the photocopier when he was told not to do so. This disobedience, of itself, cannot be regarded as serious misconduct. Mr Vicary's account of the accompanying circumstances suggests that both he and Mr Siely contributed to an altercation which turned out to be fleeting. 39 The complaints referred to in (h) also derive from angry confrontations between the two men concerned in circumstances where it is not possible to determine who was to blame for what occurred. On Mr Vicary's own statement, it would seem that he provoked the behaviour about which he complains. 40 I now turn to the June 2006 Allegations. These were said by the appellant to be the following: "(a) Mr Siely had not checked the load at the slump stand (where it should have been checked) before leaving the site, which meant that he had again failed to comply with the appellant's procedures; (b) Mr Siely had engaged in dangerous driving; (c) Mr Siely had reversed his truck at high speed with the intention of running into another driver's truck; (d) Mr Siely had intentionally hosed another driver at a customer's site; and (e) Mr Siely threatened another driver by inviting him to fight with him." 41 The complaint in para (a) raises the same allegation as that in para (h) of the April 2006 Allegations, namely, Mr Siely's failure to comply with instructions in regard to the use of the slump stand. It is to be inferred that Mr Siely's answer to para (a) is the same as that which he gave to para (h) of the April Allegations. That is, while he did not check the load at the slump stand, he did so at the loading dock; he did not disobey the instruction through deliberate obstructionism but because he had a full tank of water and had no need to stop at the slump stand. I reiterate my view that this behaviour does not constitute serious misconduct. 42 The complaint of dangerous driving, referred to in sub-para (b), is based on a statement by another contractor, Mr Ianni. Mr Ianni stated: "I noticed Ken was very close to me whilst driving on the private road and I found myself being pushed by Ken in a manner that was very dangerous to myself and the public. Twice I was forced to go through orange lights fearing Ken would crash into me if I tried to stop. I am sure he would have gone through red lights whilst doing this." 43 Mr Siely, in his letter of 13 June 2006, referred to the incident described by Mr Ianni and set out his version of what occurred. He alleged that he was not driving dangerously on the day in question. Having regard to the absence of any oral evidence on this issue and to the lack of specificity in Mr Ianni's allegation, it is difficult to determine with any confidence what happened. In these circumstances, I would regard Mr Siely as successfully having rebutted the evidence adduced by the appellant in connection with this allegation. 44 In para (c) the appellant complains that Mr Siely reversed his truck at high speed with the intention of running into another driver's truck. This complaint is again based on a statement by Mr Ianni. Mr Siely, in his letter, sought to explain what occurred on the basis that he reversed in error. According to him, he did not intend to endanger Mr Ianni's vehicle. Again, there are serious difficulties in determining the truth of what occurred and, in the circumstances in which the evidence was adduced, I consider that Mr Siely successfully rebutted the evidentiary onus of proof on the appellant in connection with this allegation. 45 In para (d) it is alleged that Mr Siely intentionally hosed another driver. Again this allegation is based on a statement by Mr Ianni. According to Mr Siely's letter of 13 June 2006, Mr Siely may have wet Mr Ianni in error when he, Mr Siely, was washing his vehicle. According to Mr Siely, this wetting was not deliberate. Again, it is simply not possible to make any determination as to the truth as to what occurred and I draw the same inference as I have in regard to the previous two complaints. 46 Paragraph (e) alleges that Mr Siely threatened another driver by inviting him to fight with him. This allegation is based on a statement by Mr Kinchela, another contractor. According to Mr Kinchela's statement, there was an altercation between him and Mr Siely in which Mr Siely threatened to fight him. Nothing, however, came of this and tempers seemed to have cooled reasonably rapidly. Mr Kinchela's statement does not establish serious misconduct on Mr Siely's part. 47 The question arises whether the April 2006 Allegations and the June 2006 Allegations, taken together, constitute serious misconduct. This is a matter of evaluative judgment. Taking into account the comments I have already made in relation to each individual allegation, the difficulties of proof to which I have referred, and the requirement that the misconduct, as a whole, be sufficiently grave so as to constitute a fundamental breach of the contract, I consider that the respondent established that he was not guilty of serious misconduct. Accordingly, I would not uphold the appeal in regard to liability. 48 As I have indicated, the appellant's appeal in regard to damages for loss of income focuses on the finding that, had it not purported to terminate on 7 August 2006 (on the grounds of serious misconduct) it would have waited until 30 June 2008 before terminating under cl 3.2(a) otherwise than on the ground of serious misconduct. 49 Mr Fernon rightly accepted that the question of when the appellant would have terminated the Contract must be approached objectively on the hypothesis that the appellant must be taken to have known on 7 August 2006 that it was not entitled to terminate on the ground of serious misconduct. The appellant contended that, had it known on 7 August 2006 that it was not then entitled to terminate on the ground of serious misconduct, it would have terminated on the other basis set out in cl 3.2(a) at the earliest possible opportunity (by amongst other things, paying the respondent $66,000). 50 Rolfe DCJ found that the appellant terminated the Contract "because it wanted to get Mr Siely out of its yard and did not want to have to compensate him." According to his Honour, Mr Clarkson considered that compensating the respondent under cl 3.2(a) "would be sending out the wrong message" to other contractors and employees. 51 The only material that supported these findings was contained in a memo from Mr Clarkson dated 1 May 2006 which, although exhibited to Mr Clarkson's affidavit, was not admitted into evidence. His Honour erred in placing any reliance on that document. 52 Rolfe DCJ made no credibility finding against Mr Clarkson. Mr Clarkson reiterated several times in testimony that the appellant intended, if necessary, to pay the respondent $66,000 in order to terminate the Contract. 53 The respondent did not adduce any evidence in support of his claim for loss of income, generally. In particular he adduced no evidence tending to prove that the appellant would have waited for a period of two years or any other period before otherwise terminating the Contract. 54 Once his Honour's finding that the appellant would not have compensated the respondent because that would be sending out a wrong message is not accepted (as must follow from the fact that the material on which he relied was not admitted into evidence), his Honour's finding that the appellant would have waited for two years after 30 June 2006 before otherwise terminating the Contract cannot stand. 55 I have referred to the fact that Rolfe DCJ made no credibility finding against Mr Clarkson. Indeed, he relied on aspects of Mr Clarkson's testimony in making some of the findings that he did. Mr Clarkson was adamant in his testimony that, if necessary, the appellant would pay the respondent $66,000, as cl 3.2(a) required (that is, should serious misconduct not be proved) in order to terminate the Contract. 56 In the circumstances, the respondent failed to establish it had suffered any loss of income and the appeal in respect of the awards made by his Honour for loss of income succeeds. Those awards must be set aside. 57 The appellant also appealed against the award of $79,036 being the allowance for the sale of the respondent's truck to the appellant. The respondent's claim in this regard was based on that part of cl 3.2(a) which provides that on termination otherwise than by reason of serious misconduct "the contractor shall offer to purchase the truck owned by the carrier at the relevant market value at that time" and "the Carrier may chose to accept or reject the offer of a Contractor". 58 The rationale of his Honour's award of damages for the market value of the truck was that "under cl 3.2(a) the [respondent] was entitled to be paid the market value of the truck at the time, ie 30 June 2008". There was evidence that as at 30 June 2006 the truck was worth $96,600. The judge accepted that the truck depreciated in value at the rate of $8,782 per annum. Allowing for two years depreciation, his Honour arrived at the sum of $79, 036 which he awarded as damages. 59 There are two major difficulties with his Honour's findings. Firstly, it is not correct that, without more, the respondent was entitled to the market value of the truck under cl 3.2(a). The clause required the appellant, at the time of termination, to offer to purchase the respondent's truck at the relevant market value; the clause further provided that the respondent was entitled to accept or reject that offer. There was no evidence that tended to prove that the respondent would probably have accepted such an offer, had one been made. Secondly, as there was evidence of the market value of the truck, it is to be inferred that, at the date of the notional termination of the Contract, the respondent could have sold the truck in the market at the value at which the judge accepted. On that basis, the respondent suffered no damage arising out of any failure on the part of the appellant to purchase the truck. 60 Accordingly, the appeal in relation to the award of damages of $79,036 in respect of the allowance for the sale of the truck must succeed. 61 His Honour deducted $95,000 from the aggregate damages award being "allowance for failure to mitigate". His Honour held that, taking into account the evidence that the truck was worth $96,600 as at 30 June 2006, the respondent could have sold the truck by 31 August 2006 for $95,000. His Honour, on this reasoning, deducted the sum of $95,000 from the respondent's damages. This was the subject of the cross-appeal. 62 Once the respondent is not entitled to any award of damages in respect of the notional sale of the truck to the appellant (and I have so held), there is no basis for holding that the respondent ought to have mitigated its loss by selling the truck. His Honour's finding in regard to mitigation must be set aside. 63 In summary, I would set aside the awards of $78,352 and $72,688 in respect of loss of income and the award of $79,036 in respect of the sale of the truck. I would also set aside the allowance of $95,000 for the failure to mitigate. It follows that I would hold that the respondent is entitled to $66,000 damages, this being, to use his Honour's terminology, the respondent's "cl 3.2(a) entitlement". 64 His Honour awarded interest at $15,080 on the damages he assessed. As that damages award is now to be varied, the award for interest must be set aside. I would order the appellant to pay interest on the sum of $66,000 as from 7 August 2006 at the rate of 10 percent per annum to date of payment. 65 I would order the respondent to pay the appellant's costs of the appeal and the appellant to pay the respondent's costs of the cross appeal. 66 Thus the orders I propose are: (a) The appeal succeeds and the cross appeal succeeds. (b) The verdict and judgment for the respondent in the sum of $216,156 is set aside. (c) The respondent to have a verdict and judgment in the sum of $66,000. (d) The respondent to have interest on the sum of $66,000 at the rate of 10 percent per annum from 7 August 2006 to date of payment. (e) The respondent to pay the appellant's costs of the appeal and the appellant to pay the respondent's costs of the cross appeal. (f) Both parties to have certificates under the Suitor's Fund Act 1951 if otherwise entitled. 67 MACFARLAN JA: I agree with Ipp JA. 68 SACKVILLE AJA: I agree with Ipp JA. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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