MCGRUDDY v SPOTLESS FACILITY SERVICES (NZ) LTD [2020] NZHC 2471

MCGRUDDY v SPOTLESS FACILITY SERVICES (NZ) LTD [2020] NZHC 2471 [25 September 2020]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2020-404-483[2020] NZHC 2471IN THE MATTER of an appeal under s 124 of the District CourtAct 2016BETWEEN PAUL DESMOND MCGRUDDYAppellantAND SPOTLESS FACILITY SERVICES (NZ)LTDRespondentHearing: 16 July 2020Counsel: A C Beck for AppellantA L Harlowe for RespondentJudgment: 25 September 2020JUDGMENT OF THOMAS JThis judgment was delivered by meon 25 September 2020 at 4.30 pm pursuant tor 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Solicitors:Gawith Burridge, Masterton for AppellantCouch Harlowe Kovacevich, Auckland for RespondentTable of contentsAppeal [2]The approach on appeal [4]Background [5]Did the Judge err in his finding of waiver by estoppel? [20]The pleadings [22]The District Court decision [27]Submissions on appeal [32]The law [38]Assessment [45]The away allowance [65]Termination [68]District Court [70]Assessment [71]Damages [75]Promissory estoppel [89]General damages [95]Result [101]Costs [102][1] Paul McGruddy carried out painting work for Spotless Facility Services (NZ)Ltd (Spotless) between October 2010 and October 2015. There was first an oralcontract and then a written contract. Both contracts allowed Mr McGruddy to chargefor mileage costs. Mr McGruddy carried out 248 jobs for Spotless but charged formileage 15 times only, in respect of work carried out by his brother. After Spotlessterminated his contract, Mr McGruddy issued retrospective mileage claims datingback to 2010. In the District Court, Mr McGruddy failed in his action to enforcepayment of his claim, the Judge finding that there was a waiver by estoppel.1Mr McGruddy appeals against this and other findings.Appeal[2] Mr McGruddy contends that the District Court was wrong in fact and law, andin particular:(a) finding there was a "waiver by estoppel" preventing Mr McGruddyfrom claiming mileage expenses because:1 McGruddy v Spotless Facility Services (NZ) Ltd [2020] NZDC 2800 [District Court Judgment].(i) the argument of waiver by estoppel was not pleaded; and(ii) the written contract between the parties which commenced on16 October 2013 (the Contract) precluded any modificationother than in writing;(b) finding the Contract came to an end because there was no further workavailable for Mr McGruddy;(c) holding that Mr McGruddy was not entitled to written notice 30 daysprior to termination or compensation for failure to give such notice;(d) holding that Mr McGruddy was not entitled to loss of earnings as aresult of waiting for jobs that had been promised to him (promissoryestoppel); and(e) holding that general damages are not recoverable for a breach of acommercial contract.[3] Mr McGruddy seeks orders quashing the whole of the District Court judgmentand instead granting judgment in his favour.The approach on appeal[4] In considering the appeal, I apply the principles articulated by the SupremeCourt in Austin, Nichols & Co Inc v Stichting Lodestar.2 Those principles are:(a) I must make my own assessment of the merits of the parties' cases.(b) The District Court may have had a particular advantage, such as theopportunity to assess the credibility of witnesses. Where such anassessment is important, the High Court may rightly hesitate toconclude that the findings of fact, or fact and degree, are wrong and it2 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141.may take the view that it has no basis to reject the reasoning of theDistrict Court and the decision should stand.(c) Mr McGruddy bears the onus of satisfying me I should differ from theDistrict Court's conclusions.(d) It is only if I consider the District Court was wrong that I am justifiedin interfering with its judgment.(e) If my view is different from the conclusions of the District Court, thenthe decision is wrong, even if it is a conclusion upon which minds mightreasonably differ.(f) In such circumstances I should not defer to the District Court'sassessment of the acceptability and weight to be accorded to theevidence rather than my own judgement.Background[5] Spotless was contracted by New Zealand Steel to undertake painting workcovered by warranty claims in respect of defective Colorsteel coating on rooves.Spotless subcontracted painting contractors throughout the country to carry out thiswork, which began in 2010 with 642 painting jobs. The work declined over the nextfour years and came to an end in 2017. As the work declined, so did the number ofpainting contractors, there being 13 at the start, only five by 2015 and one in the finalyear.[6] Mr McGruddy was one of those painting contractors. He started work forSpotless in October 2010 when his manager was a Spotless employee, Martin Bright.Spotless and Mr McGruddy entered into an oral contract (the Oral Contract) wherebyhe could claim mileage at a specified rate beyond the first 100 kilometres travelled,accommodation costs and an overnight allowance. It seems there was no specifiedtime within which any claims were to be submitted to Spotless for payment.[7] In October 2013, Frank Fox commenced employment with Spotless andassumed management of the painting contracts. The Contract commenced on16 October 2013. The background section of the Contract provided as follows:Background: Spotless has agreed to provide the Services to various Principalsunder the Head Contracts. Spotless may from time to time, by issuing aPurchase Order or by other direction engage Contractor to provide theServices, and Contractor makes a standing offer to Spotless to provide theServices, in accordance with the terms and conditions contained in thisAgreement.[8] There was no guarantee of any work:Contractor acknowledges and agrees that:(a) This Agreement does not confer any right on contractor to provideany, or any particular level of, services under the Agreement;(b) Spotless may elect to perform any or all work in respect of the servicesor which might otherwise have been part of the services, itself, or tohave that work carried out by another party.[9] In respect of payment, the Contract provided:On or after the first day of each month, contractor must make a claim forpayment for each docket or work order completed in the previous month byissuing to Spotless nominated representative written claims for eachcompleted docket or work order (including details of any deductions Spotlessis entitled to make to such claim). [10] Spotless would approve an amount for payment after assessingMr McGruddy's claim and it would in turn charge New Zealand Steel for the repaircosts of each job.[11] The Contract included a specific provision for termination by 30 days' writtennotice. Clause 8.2 provided:Spotless may terminate this Agreement (in whole or in part) with immediateeffect if any Principal requests Spotless to remove Contractor from theperformance of the Services. In addition, Spotless may terminate thisAgreement (in whole or in part) for convenience at any time and for any reasonby giving 30 days' notice in writing to the Contractor.[12] Clause 15 of the Contract provided:The provisions of this Agreement may only be varied by further writtenagreement of the parties.[13] The Contract was headed: "Subcontractor agreement" and appears to be thestandard form used by all subcontractors. Spotless and Mr McGruddy agreed to deletea provision of the standard form whereby Mr McGruddy's fee would have beendiscounted as his income increased. There were no other amendments to the standardform.[14] Spotless engaged several painters in different areas, assigning work to thesubcontractors in their local area in order to avoid paying the mileage fee,accommodation and overnight allowance. At times, painters were allocated workoutside their contracted areas. Mr McGruddy's area was Masterton and the lowerNorth Island.[15] In February 2015, Mr McGruddy informed Frank Fox that he was going toRuawai, a small town south of Dargaville, to complete a job and stay with his daughter.Frank Fox warned him there was no guarantee of further work in the area and that alocal contractor could do what work there was. Mr McGruddy went to Ruawai, thenstayed in Russell. He telephoned Mr Fox requesting work but was informed there wasnone. Nevertheless, Spotless tried to find some work for Mr McGruddy and he wasadvised of this in April 2015.[16] On 27 May 2015, Mr McGruddy invoiced Spotless for mileage for the period1 January to 26 May 2015 and for the costs of accommodation in Russell during theperiod March and April 2015. In June 2015, Spotless paid the mileage claim and oneof the two accommodation claims. Although Mr McGruddy had never claimed fortravel costs previously, Spotless decided to pay the invoice in the interests of therelationship.[17] There was an issue regarding a job Mr McGruddy had carried out in Mastertonin the 2014/2015 season. The time taken on the job meant scaffolding was erected fora relatively lengthy period and Spotless was charged for scaffolding costs of around$16,000. There was clearly some tension between Spotless and Mr McGruddy overthis issue.[18] Around the second week of October 2015, Daniel Fox, who had by then takenover from his father as painting manager for Spotless, advised Mr McGruddy that therewould be no further work for him that season.[19] On 15 October 2015, Mr McGruddy issued a retrospective mileage claim for$42,296.56 ($48,641.04 including GST) covering the period 2010 to 2015 (theInvoice). The Invoice included $3,200 in respect of an away allowance claim.Did the Judge err in his finding of waiver by estoppel?[20] This issue relates to the first cause of action alleging breach of contract inrespect of the unpaid Invoice.[21] The appeal is on the basis that the defence of waiver was not pleaded or raisedin argument. Mr Beck characterised this as a case "where the Court has gone off onits own inquiry without any proper basis".The pleadings[22] In its amended statement of defence dated 8 November 2018, Spotless admittedit received the Invoice but denied any liability to pay it because Mr McGruddy failedto comply with the Contract's payment procedure; he had represented on a number ofoccasions that he would not charge mileage or accommodation, or the away allowance;in respect of a portion of the claim, Spotless had not on-charged the costs; many of theclaims occurred over six years prior to the proceedings and were statute barred;3 and,in any event, the amount claimed was incorrect.[23] Spotless pleaded three affirmative defences: estoppel, limitation and acontractual exclusion of liability.[24] The defence of estoppel relied on the pleading that, while the Contractprovided for Mr McGruddy to be paid allowances:(a) During 2013 Mr McGruddy approached Spotless' Painting Manager,Mr Frank Fox, seeking work outside of the Masterton area.3 Limitation Act 1950 and/or 2010.(b) Mr Fox explained that such work is assigned to subcontractors in therelevant area(s), as they are not required to travel over 100 kilometresfor such work.(c) Mr McGruddy represented to Mr Fox that he would not chargeSpotless for any mileage expenses or for accommodation and awayallowance when working in certain areas in which he had familyand/or friends.(d) Prior to October 2015, Spotless did not charge for mileage expenseswhen issuing invoices for work that he completed.[25] Spotless pleaded that Mr McGruddy had represented to it on a number ofoccasions that he would not charge for mileage and Spotless relied upon thatrepresentation to its detriment in that:(a) In reliance on the representation, Spotless engaged Mr McGruddy toundertake work the subject of Mr McGruddy's mileage claim ratherthan engaging subcontractors based in the area(s) in which the jobswere located.(b) In reliance on the representation, and the fact that Mr McGruddy didnot invoice for his mileage at the same time as he invoiced for therelated services, Spotless did not recover any mileage expenses fromits customers and will not be able to recover such expenses given thetime that has passed.[26] Spotless claimed it was reasonable to rely upon the representation and it wouldbe unconscionable for Mr McGruddy to resile from it because that would causedetriment to Spotless.The District Court decision[27] Judge Harrison addressed Mr McGruddy's claim by noting that Spotlessdenied any liability, essentially on the basis that Mr McGruddy had waived any rightto claim travel expenses in return for which he was given work he would otherwisenot have received.[28] The Judge referred to the affidavit evidence of Frank Fox and cited thefollowing passage:414. I distinctly recall on my first day at Spotless, Mr McGruddy called meto introduce himself. He was eager to let me know right away that he4 District Court Judgment, above n 1, at [28].had an agreement with Spotless that he would not charge for mileageso that he could get more jobs out of town. He appeared to be veryanxious about securing out of town work. I was happy to continueissuing Mr McGruddy jobs out of his area of Masterton on this basis,although I would also defer to the local contractor first.15. It was important to me that Mr McGruddy did not charge Spotless formileage because I wanted to keep Spotless costs down as much aspossible, while also helping Mr McGruddy to take on additional workas he had requested. If Mr McGruddy was going to charge formileage, Spotless would not have provided him with work outside ofthe Masterton area where there was someone else available in the area.[29] The Judge noted that Mr McGruddy made no claim for travel costs in respectof work carried out for Spotless up to 1 January 2015, although he would have beenentitled to, given the terms of the Contract. He observed that Mr McGruddy did notreply to the affidavit of Frank Fox although he did file an affidavit in reply in respectof affidavits of Michael Smith, another painting contractor for Spotless at the relevanttime, and Daniel Fox. In cross-examination, Mr McGruddy denied telling anyone atSpotless he would not charge for mileage, although acknowledged he had not done so.[30] The Judge did not accept Mr McGruddy's evidence and preferred the evidenceof Frank Fox, accepting that the telephone conversation he described (theConversation) took place. The Judge gave his reasons for that preference, saying:[32] I do not accept the evidence of Mr McGruddy. I prefer the evidenceof Mr Frank Fox and accept that the conversation he described took place. Atthat time Mr McGruddy knew how the system worked. He was confrontedwith a new Manager. He wanted to ensure the continuation of work outsidethe Masterton area which would only be given to him if he did not chargemileage. As a consequence he continued to receive work outside that area anddid not charge for mileage. Indeed, at one stage Mr McGruddy's brother wasundertaking work in the Wellington area and a special arrangement wasentered into whereby he was paid mileage because he preferred to return tohis home in the evening, and so Spotless did not have to pay accommodationand agreed to pay the travel costs instead.[31] The Judge concluded that there was a waiver by estoppel in Mr McGruddy'sagreement not to charge travel costs, which resulted in him receiving additional workfrom Spotless which he would not otherwise have received. He relied on the followingpassage from Chitty on Contracts:55 Hugh Beale (ed) Chitty on Contracts (33rd ed, Sweet & Maxwell, London, 2019) at [22-040].Where one party voluntarily accedes to a request by the other that he shouldforbear to insist on the mode of performance fixed by the Contract, the Courtmay hold that he has waived his right to require the Contract to be performedin this respect according to its original tenor. Waiver (in the sense of "waiverby estoppel" rather than "waiver by election") may also be held to haveoccurred if, without any request, one party represents to the other that he willforbear to enforce or rely on a term of the Contract to be performed orobserved by the other party, and the other party acts in reliance on thatrepresentation.Submissions on appeal[32] Mr Beck contends that, as waiver was not in issue on the pleadings, there wasno jurisdiction for the Court to make findings on this matter, citing Manukau GolfClub Inc v Shoye Venture Ltd (Manukau Golf Club).6 Furthermore, in his submission,findings should not be made against a party without that party having notice of theallegation and an opportunity to respond to it.7[33] In any event, in his submission, the evidence cannot properly be interpreted assupporting a finding of waiver. Mr Beck says this because, in his submission, therewas no evidence of waiver in relation to the Oral Contract; the obligation to pay travelexpenses was a "fundamental and express" term of the Contract which contains anentire agreement provision; and the Contract was signed on 16 October 2013, meaningany waiver must have occurred before then because the Conversation pre-dated theContract. In Mr Beck's submission, the suggestion that Mr McGruddy waived hisrights prior to signing the Contract makes no sense and, had there been the intentionto depart from the terms of the Contract, then it would have been amended.[34] Mr Beck then submits that the alleged waiver concerned "a substantial aspect"of the Contract. He cited Watson v Healy Lands Ltd in support of the proposition thata significant modification which affects the structure of a contract should be regardedas a variation rather than a waiver.8 The process for a variation had not, however, beenfollowed (as it was not recorded in writing) and therefore there was no basis forconcluding a variation had been agreed.6 Manukau Golf Club Inc v Shoye Venture Ltd [2012] NZCA 154, (2012) 21 PRNZ 235 [ManukauGolf Club] at [26]; only the issue of costs was reversed by the Supreme Court in Manukau GoldClub Inc v Shoye Venture Ltd [2012] NZSC 109, [2013] 1 NZLR 305.7 Manukau Golf Club, above n 6, at [27].8 Watson v Healy Lands Ltd [1965] NZLR 511 at 513.[35] Referring to the need for the party claiming waiver to prove a clear statementmade by the other party to depart from contractual rights,9 and the intention to do so,10Mr Beck submits that Spotless had neither pleaded an intention to waive nor addressedit in evidence. Therefore, he contends, the elements of waiver were not established.[36] Added to that, in Mr Beck's submission, the District Court's finding that itwould be unconscionable for Mr McGruddy to seek payment of travel costs whenSpotless could not recover them from New Zealand Steel was in conflict with theevidence of Frank Fox that Spotless did not ever recover travel expenses fromNew Zealand Steel. Therefore, in Mr Beck's submission, the conclusion onunconscionability cannot stand.[37] Finally, he said that the question of overnight allowances was not addressed bythe Court. There was no suggestion the right to claim this had been waived – thisamounted to $3,200.The law[38] Before deciding whether the District Court was in error, it is necessary toaddress the law.[39] Historically, there have been many different doctrines of estoppel, the threestrands recognised in equity being estoppel by representation, promissory estoppel,and proprietary estoppel.11 The New Zealand courts now recognise a unified doctrineof equitable estoppel with its overall requirement of unconscionability.12 As thelearned authors of Equity and Trusts in New Zealand say:13The basic principle behind the modern doctrine of equitable estoppel can besimply stated: a party will not be permitted to deny an assumption, belief orexpectation that it has allowed another to rely on where such a denial wouldbe unconscionable.9 Watson v Healy Lands Ltd, above n 8, at 513.10 Bell v BDO Spicers Manawatū Ltd [2012] NZHC 1598.11 Sutherland v Lane [2020] NZHC 721 at [129] citing Andrew Butler (ed) Equity and Trusts inNew Zealand (2nd ed, Brookers NZ, Wellington, 2009) at 605.12 Gold Star Insurance Co Ltd v Gaunt [1998] 3 NZLR 80 (CA) at 86.13 Equity and Trusts in New Zealand, above n 11, at 602.[40] To establish equitable estoppel, a claimant must show:14(a) a belief or expectation on the part of the claimant that was created orencouraged by the words or conduct of the defendant;(b) the belief or expectation has been reasonably relied on by the claimant;(c) detriment will be suffered if the belief or expectation is departed from;15and(d) it would be unconscionable for the defendant to depart from the beliefor expectation.[41] A waiver requires:(a) a clear, unequivocal representation by the waiving party, which can bemade orally or by conduct;(b) the intention to waive must be made known to the other party expresslyor by conduct;16 and(c) the person relying on the waiver must demonstrate that they have reliedon the representation made.[42] Waivers are distinct from variations of a contract in that variations tend torequire consideration and tend to be in writing while a waiver does not require thosethings.17 However distinguishing between a waiver from a variation, in practice, is14 Equity and Trusts in New Zealand, above n 11, at 613; Gold Star Insurance, above n 12, at 86 perHolland J; and Gillies v Keogh [1989] 2 NZLR 327, (1989) 5 FRNZ 490 (CA) at 346 perRichardson J.15 While recent Court of Appeal cases describe this requirement as a claimant's reasonable relianceto its detriment, this conflates requirements (b) and (c), perhaps reflecting the facts of the cases.See Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd [2014] NZCA 407, [2014] 3 NZLR567 at [44]; and Vervoort v Forrest [2016] NZCA 375, [2016] 3 NZLR 807 at [80].16 At 776; and Eagle Flight Training Ltd v Aerospace Invest Pte Ltd [2018] NZHC 966.17 Jeremy Finn, Stephen Todd and Matthew Barber Burrows, Finn and Todd on the Law of Contractin New Zealand (6th ed, LexisNexis, Wellington, 2018) [Burrows, Finn and Todd] at 774.difficult. Woodhouse J attempted to distinguish the two concepts in Watson v HealyLands Ltd:18[A]t least I think it can be said that where the modified version of the originalcontract involves such changes in the contractual obligations of the parties thatits structure is clearly affected, then the change goes beyond any question ofwaiver and must be regarded as a variation.[43] The authors of Burrows, Finn and Todd suggest that, in recent times, therelevance of the doctrine of waiver (and therefore estoppel by waiver) is in decline.First, the authors observe that variation is overshadowing the doctrine of waiver inlight of the new era where consideration might no longer be necessary for a variationof contract. However, a waiver may still be relevant in that writing is still not requiredand can be retracted with proper notice whereas a variation changes the substance ofthe contract itself.19 Secondly, "the doctrine of promissory estoppel has, to a largeextent, overtaken the doctrine of waiver", to the extent that "it is not easy to think ofa case of waiver which could not equally well be dealt with as one of promissoryestoppel. However, the position is not cut and dried".20[44] The distinction between equitable estoppel and waiver is a very fine one. Theelements are almost identical. The main difference is the need in the case of waiverto prove intention on the part of the party who is claimed to have granted theindulgence. As Williams J observed in Bell v BDO Spicers Manawatū Ltd (Bell):21Waiver is also distinct from the equitable doctrine of promissory estoppel,although the two doctrines share many of the same features. As the learnedauthors of Law of Contract in New Zealand observe, both doctrines require aclear representation by words or conduct, proof the plaintiff has relied on therepresentation and the absence of any retraction before reliance.22 Thedifference is that waiver focuses on the scope of the intention of the party (orparties) granting the forbearance, whereas estoppel focuses on the conduct ofthat party and its effect on the other party.23 Still, in some recent cases, thedoctrines have been argued as alternatives.2418 Watson v Healy Lands Ltd, above n 8, at 513.19 Burrows, Finn and Todd, above n 17, at 775.20 At 775 and 777.21 Bell v BDO Spicers Manawatū Ltd, above n 10.22 Burrows, Finn and Todd, above n 17, at 773-777.23 Edwin Peel (ed) Treitel on The Law of Contract (13th ed, Sweet & Maxwell, London, 2011) at[3-077].24 See, for example, Hudson Bay Holdings Ltd v Waitākere Properties Ltd HC AucklandCIV-2009-404-1134, 28 March 2011; and Minaret Resources Ltd v McLellan (2003) 5 NZCPR161 (HC).Assessment[45] The District Court said:25I do not think that the agreement with Mr Frank Fox not to charge mileageamounts to an estoppel as such. In my view the answer lies in whether or notthe failure to charge mileage amounts to a waiver or forbearance.[46] It is unfortunate that the Judge did not elaborate on his reasons for rejecting thepleaded defence, particularly given his finding of waiver and the fine distinctionbetween equitable estoppel and waiver as discussed above.[47] The Bell case involved an appeal from the District Court which had decided acontract had been varied orally. Williams J, in the High Court, decided, despite therebeing no pleading to this effect, that it was really a case of mutual waiver. Thisapproach underscores the need to look at cases of this nature on the basis of the factualposition and the correct legal remedy. A claim of merit should not be dismissedbecause the pleadings have been framed on a certain interpretation of the law wherethere is room for different approaches, subject to there being no prejudice to thedefendant.[48] That is clearly the position in this case. There is no dispute that, except for hisbrother's mileage costs, Mr McGruddy made no claim for mileage, despite beingentitled to do so under both the Oral Contract and the Contract. When there was achange of management in 2013, Mr McGruddy told the new management of hisprevious approach under the Oral Contract, with the clear inference that that was hisintention and indeed expectation going forward. That applied notwithstanding the facthe (might have) entered into the Contract shortly thereafter. When testifying,Frank Fox explained the position as follows:26I had started with Spotless – I could have only been there a couple of weeks,maybe a month, I'm not quite sure because I started in the off-season no onewas at work yet so the contractors weren't actually working andMr McGruddy phoned me the very first time and introduced himself to meand he said to me – and he was quite keen to get it out, it was a bit of a strangephone call because normally you'd have a chat and get to know each other25 District Court Judgment, above n 1, at [38].26 It is therefore not necessarily correct to say that the conversation took place before the Contractwas signed.maybe a little bit, you know, but it was straight into it, "Listen I had anagreement with your predecessor Martin Bright that I would not chargemileage if you gave me away work," and I said to him, "Well if that's theagreement you had, you know, I'll honour that agreement and we can carry onand build a relationship from here."[49] Frank Fox was not cross-examined about the Conversation.[50] The evidence as to what Mr McGruddy said in the Conversation was confirmedby his actions, that is, he did not charge for mileage either before the Contract or afterit. Furthermore, Mr McGruddy did not dispute Spotless' evidence that, had he chargedfor mileage, he would not have been used for out of town work. Notably, Frank Foxsaid the reason for that was that Mr McGruddy's jobs had a higher than average cost.[51] In his affidavit, Michael Smith said that he and others knew Mr McGruddy didnot charge for mileage for out of town work and that Mr McGruddy received workoutside Masterton because he did not charge for mileage. Mr Smith wascross-examined on this evidence.[52] When giving evidence, Mr McGruddy was pressed on the issue of intention.It was put to him that, each time he issued an invoice, there was never any intentionto charge for mileage. Mr McGruddy continually obfuscated in his responses, sayingthat he did not include mileage.[53] Any claims for payment were due "on or after the first day of each month".Spotless did not insist on strict compliance with that requirement and Mr McGruddybilled Spotless at the end of each job rather than monthly. Spotless did not have anyconcerns with his invoices. That he billed at the end of each job provides furtherevidence of Mr McGruddy's intention to waive his entitlement to claim mileage.[54] Mr McGruddy was also asked whether he ever told Spotless that at some stagehe would charge for mileage. Again, he had to be pressed on the point and eventuallyreplied:No, I didn't. I would have no reason to.[55] Notably, Mr McGruddy did discuss mileage with Frank Fox in respect of theWellington jobs undertaken by Mr McGruddy's brother. Those invoices includedmileage and were paid by Spotless.[56] The Judge found, for the reasons he gave, that the Conversation took place andthat Mr McGruddy represented to Frank Fox that he did not charge for mileage, inreturn for which he would be allocated jobs outside Masterton. It was open to theDistrict Court to find on the evidence that, from the time of the Conversation,Mr McGruddy would not charge for out of town mileage and that, given he had notdone so prior, he had overall intentionally waived any such right.[57] A finding that the elements of equitable estoppel were established was equallyavailable to the Judge on the evidence.[58] I reject the contention that Mr McGruddy was prejudiced because the case wasnot pleaded on the basis of waiver by estoppel. It is difficult to see how the claimwould have proceeded differently had that been the affirmative defence. Mr Becksuggested Mr McGruddy would have called evidence from Mr Bright, the Spotlessmanager under the Oral Contract, and that waiver could not be established without thatevidence. I do not accept that. The intention to be proved was that of Mr McGruddy,whose evidence is discussed above.[59] Manukau Golf Club is not apposite because there was a lack of any pleadedaffirmative defence in that case whereas the affirmative defence of estoppel waspleaded by Spotless.27 Mr McGruddy was on notice that at issue was the allegedrepresentation by words and action that he would not claim his contractual entitlement.He therefore had the opportunity to respond to that contention.[60] I also reject the argument that the Judge was precluded from finding as he didbecause the evidence of waiver was by conduct, as opposed to words, as pleaded. Awaiver may be oral or written or inferred from conduct.28 Mr McGruddy knew beforethe hearing that the evidence on behalf of Spotless covered both what Mr McGruddy27 Manukau Golf Club, above n 6, at [27] citing Proprietors of Māwhera v Māori Land Court [1995]2 NZLR 620 (HC) at 631 and Ali v Deportation Review Tribunal [1997] NZAR 208 (HC) at 220.28 Burrows, Finn and Todd, above n 17, at 292 and Chitty, above n 5, at [22-041].said and what he did. Spotless' amended statement of defence specifically said thatMr McGruddy's failure to invoice Spotless for any mileage expenses until May 2015induced in Spotless the belief that Mr McGruddy would not claim for mileageexpenses. The amended statement of defence therefore gave the necessary particularsthat informed the Court and Mr McGruddy of the defence, as required under r 5.50(5)of the District Court Rules 2014.[61] I have already observed that the case could just as easily have been determinedon the basis of estoppel by representation as was pleaded. As discussed, the law hasmoved on from the different categories of estoppel to a unified doctrine of equitableestoppel with the requirement that the plaintiff show a belief or expectationencouraged by the words or conduct of another. On the evidence, this was clearlyproved.[62] The evidence revealed that Spotless relied on Mr McGruddy's representationsthat he would not charge mileage when it offered him work in areas outside his maincontracted area. The Judge found on the evidence that Mr McGruddy's position notto charge travel costs resulted in him receiving additional work which he would nototherwise have received. Reliance was proved.[63] The final element of unconscionability was clearly met in the circumstanceswhere Mr McGruddy issued the Invoice on a date after he had billed for completedjobs (in most cases, years after). Whether or not Spotless always recovered those costsfrom New Zealand Steel is not the point. The unconscionability comes from the factthat, in reliance on the representations, Spotless had made a business decision to givework to Mr McGruddy which he would not otherwise have received. That decisionwas clearly made on the basis of what Mr McGruddy would charge. He is now tryingto charge something different. It would be unconscionable to allow him to do so.[64] Given this analysis, there is no need to address the argument on variation.The away allowance[65] Although the Judge did not in terms address the claim for the away allowancewhich was included in the Invoice, it can be taken that exactly the same reasoningapplied. I accept that the Conversation might not have referred to the away allowance.Relevantly, however, the away allowance claim dated back to 2011. It would havebeen governed by the Oral Contract. Again, Mr McGruddy can be taken to havewaived any entitlement to be paid that amount.[66] Estoppel by representation would also apply. By not invoicing for the awayallowance since 2011, Mr McGruddy represented that he would not claim theallowance. Spotless relied on this representation, as it did with Mr McGruddy'srepresentation that he would not claim for mileage for work outside his maincontracted area. Similarly, Spotless would suffer detriment if it now had to pay theaway allowance. In these circumstances, it would be unconscionable forMr McGruddy to depart from this representation.[67] For these reasons, the first ground of appeal fails.Termination[68] In Mr Beck's submission, the District Court failed to engage with the legalissues that formed the basis of Mr McGruddy's claim that Spotless was in breach ofthe Contract by failing to give Mr McGruddy 30 days' written notice of termination asrequired by cl 8.2. The claim was that, as a result of having no such notice,Mr McGruddy was unable to make other arrangements for work prior to receiving nomore work from Spotless. He claimed $12,596.29, calculated on the basis of hisaverage monthly income from Spotless between 1 April 2011 and 31 March 2015.[69] Spotless, by its statement of defence, relied on the terms of the Contract andits nature as a standing offer, together with cl 8.5 which provides:With the exception of payment for Services performed in accordance thisAgreement before the effective date of termination or expiration, Contractorwill not be entitled to any compensation or to make any claim against Spotlessfollowing termination for any reason or following the expiry of thisAgreement.District Court[70] The Judge referred to the evidence that Daniel Fox called Mr McGruddy inOctober 2015 and said there would be no further jobs for the next season. That formeda basis of the claim the Contract was terminated. The Judge found that, pursuant tothe Contract, Spotless was not obliged to give work to Mr McGruddy, even if workwere available. The Contract would therefore come to an end when no further workwas offered to Mr McGruddy, whether or not a notice of termination was given. Thatled the District Court to reject the claim for 30 days' income. In any event, the DistrictCourt relied on the terms of the Contract, which precluded any claim.Assessment[71] Mr Beck says the evidence disclosed that Spotless continued to allocate workto various contractors until 2018 and that, in evidence, Daniel Fox accepted work wasgiven to other contractors after he decided not to use Mr McGruddy.[72] Daniel Fox had emailed another person on 25 June 2015 saying that he was notgoing to use Mr McGruddy in the next season. In the email, Daniel Fox noted thatMr McGruddy took too long with his work and that he, Daniel Fox, could not trustMr McGruddy. Under cross-examination, Daniel Fox reiterated this concern abouttrust. In his affidavit, Daniel Fox said that termination was due to the remainingnumber of paint jobs as well as the fact that Mr McGruddy's charges were higher thanthe average.[73] On 15 October 2015, Daniel Fox telephoned Mr McGruddy and told him thatthere would be no more jobs for him. In evidence, Daniel Fox accepted he made acommercial decision in October 2015 not to allocate any work to Mr McGruddy andhe told Mr McGruddy that. He said Mr McGruddy already had a contract in Mastertonand all the other jobs had been allocated so there were no jobs left to do. He deniedMr McGruddy was dismissed as such. He said:So it wasn't like a whole lot of jobs I could allocate him, I would have to starttaking jobs off other contractors and then they wouldn't have had enough tofill their season.[74] I accept that the evidence was that Spotless made a conscious decision not togive Mr McGruddy any further work and it communicated that decision to him. It is,in my view, too simplistic to say the Contract came to an end simply because the workhad run out. The limited amount of work remaining was one of several reasons behindSpotless' decision to terminate the Contract.Damages[75] Mr Beck contends that the approach taken by the District Court meant thatcl 8.2 of the Contract was meaningless. The fact no jobs were guaranteed under theContract was not the issue. Mr Beck submits it is not a question of what work couldhave been available to Mr McGruddy but "a question of putting some value on theright to notice at the time it should have been given". Mr Beck says, had notice beengiven in accordance with the Contract, Mr McGruddy would have been able to takeaction a month earlier and would have had the opportunity to arrange to take on otherwork. On that basis, average monthly earnings were a reasonable way to calculate theloss. Mr Beck clarifies that this was not a claim for loss of profits or indirect orconsequential loss (which is precluded by cl 8.5 of the Contract) but a claim fordamages for breach of contract.[76] Mr McGruddy was aware that there was a limited amount of work to be doneand that the work was going to run out at some point. It was for that reason that hemade inquiries of Frank Fox in January 2015 about the workload for the next season.Frank Fox's evidence was that Spotless had little idea how much forward work therewould be at any one time because it was dependent upon receiving jobs fromNew Zealand Steel. He said there was no way to guarantee work from one week tothe next.[77] The Contract constituted a standing offer from Mr McGruddy to Spotless. TheContract also specifically provided that it did not confer any right on him to provideany, or any particular, level of service under it. This form of contract has beendescribed as follows:2929 Laws of New Zealand Offer and Invitation to Treat (online ed) at [20].An exceptional form of contractual relationship which may arise out of atender amount to a "standing offer": that is, a tender which indicates acontinuing willingness to supply such goods or to perform such services,without stipulation as to the particular quantum of goods or the extent ofservices, as may be requested by the offeree from time to time. In such a casethe acceptance of the tender on any one occasion leaves the offer in existencefor the future and there may be repeated acceptances, each giving rise to aseparate contract.[78] The offeror cannot sue the offeree for not ordering any goods or requiring anyservices but if the offeree does order or require any, the condition of the offer isfulfilled and there is a complete contract which the offeror is bound to perform.30[79] In Mr Harlowe's submission, Mr McGruddy could not therefore prove any lossflowing from the breach of contract. He accepts that might make the notice provisiona meaningless one in the particular circumstances but, when it came to assessing anydamages for breach, that was the position.[80] The learned authors in Burrows, Finn and Todd on the Law of Contract inNew Zealand note that a claim for damages raises two questions.31 The first is themeasure of damages, which concerns the principles upon which damage must beevaluated or quantified in terms of money. The second is the kind of damage for whichthe plaintiff is entitled to recover compensation: for instance, a plaintiff has no claimwhen losses are too remote.32[81] Turning to the first question, the underlying principle is that a plaintiff whosustains loss from a breach of contract that is not too remote must, so far as money cando it, be restored to the position they would have been in had the breach of contractnot occurred.33 Loss can be characterised into three interests which a plaintiff mighthave following a breach of contract: a restitution interest, a reliance interest or anexpectation interest. Mr McGruddy's claim does not fall within any of thesecategories.30 Tairua Golden Hills Ltd v McKane (1911) 31 NZLR 108 at 116.31 Burrows, Finn and Todd, above n 17, at 815–816.32 At 816; citing Hadley v Baxendale (1854) 9 Exch 341.33 At 816 citing Robinson v Harman (1848) 1 Exch 850 at 855.[82] A restitution interest is a right to have a valuable benefit restored.34 Such aninterest arises when the plaintiff, in relying on the promise of the defendant, hasconferred some value to the defendant and the defendant then fails to perform thepromise. The purpose is to prevent unjust enrichment.[83] A reliance interest is the right to compensation for loss for steps taken by aplaintiff in reliance upon a contract to put a plaintiff in the position they would havebeen in had the contract not been entered into.35 A reliance interest arises when theplaintiff, in relying on the promise, incurs costs (or "wasted expenditure")36 for thepurposes of performing the contract or incurs costs in the ultimately vain expectationthat the defaulting party would perform his or her side of the bargain.37[84] Both restitution and reliance interests involve actual loss to the plaintiff.Mr McGruddy cannot demonstrate any such loss.[85] Mr McGruddy's claim can best be considered as falling into the category of an"expectation interest", that is, the right to compensation for loss of the bargain, in orderto financially restore the plaintiff to the position they would have occupied had thecontract been performed.38 Mr McGruddy provided a standing offer to Spotless butthere was no guarantee of work, something the Contract made clear. He was told,although not in writing, he would not get more work. Had the breach not occurredand Spotless provided written notice to Mr McGruddy terminating the Contract, whichit was entitled to do, Mr McGruddy would be in the same position. As Mr Harlowesubmitted, Spotless could simply have failed to give Mr McGruddy any more workand there was nothing he could have done about it. There was therefore no expectationinterest.[86] While there is no need to take this issue any further, I would also observe thatMr McGruddy has failed to prove any damages. Mr Beck suggests using "average34 Newmans Tours Ltd v Rainier Investments Ltd [1992] 2 NZLR 68 (HC) [Newmans Tours Ltd]at 86.35 Dunes Café and Bar Ltd v 623 Rocks Road Ltd (in liq) [2010] BCL 341 (HC) at [39]; citingNewmans Tours Ltd, above n 34, at 86.36 Peter Blanchard Civil Remedies in New Zealand (2nd ed, Thomson Reuters, Wellington) at 34.37 Newmans Tours Ltd, above n 34, at 86.38 At 86.monthly earnings", as Mr McGruddy "would have been able to take that action amonth earlier had timely notice been given, and he would have had the opportunity toarrange to take on other work".[87] Such a claim would fail for two reasons. First, there was no evidence to supportthe claim. Secondly, Mr McGruddy was obliged to take reasonable steps to mitigatethe loss.39 Mr McGruddy had received verbal notice there would be no more work inOctober 2015. Even though this was not in the prescribed written form, this did notpreclude him from seeking alternative work and undertaking the forward planning MrBeck contends would have been the benefit of written notice.[88] Therefore, while Spotless breached the Contract by not providing notice oftermination in writing, there is no entitlement to damages in the circumstances.Promissory estoppel[89] Somewhat ironically, given the defence to the first cause of action,Mr McGruddy then relied on promissory estoppel in his claim for loss of earnings. Hepleaded that, in February 2015, Spotless told him it had work for him in Auckland and,in reliance on that, he remained in Auckland to be available for work. Mr McGruddyclaimed that Spotless delayed sending him the job as a result of which he had no workfor 17 days. He lost income of $6,907.64 plus GST because he relied on Spotless'promise.[90] Spotless denied the claim and, in any event, relied on cl 6.2 of the Contract topreclude any claim for loss of profits:Notwithstanding any other provision of this Agreement, to the maximumextent permitted by law, Spotless will not be liable to Contractor for any claimin the nature of loss of profits or revenue or for any indirect or consequentialloss whatsoever related to or in any way in connection with the subject matterof this Agreement or the Services.[91] The District Court dealt with this issue as follows:39 Burrows, Finn and Todd, above n 17, at 870; citing British Westinghouse Electric andManufacturing Co v Underground Electric Rly Co of London [1912] AC 673 (HL) at 689 perLord Haldane.[53] In his affidavit Mr Fox said:21. In around February 2015 I received a phone call fromMr McGruddy. He told me that he was going to theCoromandel to visit his daughter and to do some work andafter that he was going to complete a job in Ruawai remainingfrom the 2013/2014 season. I advised Mr McGruddy againstgoing to Ruawai as there were no other jobs up there for himand as such I would not be able to allocate him any work inthe area. I would have got the local contractor up North totake care of that job. Mr McGruddy said that he had to go upNorth any way to do some work for a friend. SinceMr McGruddy insisted on going to Ruawai, I agreed to theRuawai job but told him not to expect any other work.[54] Mr McGruddy also claimed that there was a job in Ruakaka. Mr Foxsaid that in February 2015 that job did not exist. It was issued on 23 March2015 and assigned to Mr McGruddy by Daniel Fox on 13 April 2015.[55] There were inconsistencies in Mr McGruddy's evidence. He wasunsure of the dates when he alleged that he was promised the job in Ruakaka.While allegedly waiting for these jobs to be referred to him Mr McGruddystayed in Russell which is a substantial distance from both job locations.Mr McGruddy admitted that he had a friend in Russell although denied doingany work for him. Furthermore, while staying in Russell he had an unfinishedjob back in Masterton where Spotless had been incurring costs for scaffolding.New Zealand Steel refused to pay those costs.[56] In April 2015 Mr Daniel Fox offered Mr McGruddy four jobs inPokeno, Hibiscus Coast, Western Springs and the Ruakaka job.Mr McGruddy accepted the jobs at Pokeno and Ruakaka but declined theothers as being too difficult for him to undertake.[57] I accordingly reject the claim for loss of earnings on the basis that thatclaim has not been proved, and that when jobs became available they wereoffered to Mr McGruddy, he accepting two of the four that were available.Furthermore, in the event that this amounted to a valid claim it was againprecluded by clause 6.2 of the Contract.[92] The appeal is essentially a challenge to the District Court's factual findings, itbeing contended that Mr McGruddy consistently maintained his position and "there isno reason for him to have made this up".[93] The evidence was that the conversation at issue did not occur untilMr McGruddy was already in the north of the country in any event. Mr McGruddywas in Ruawai in March and he accepted that the telephone conversation withFrank Fox took place in March.[94] The District Court therefore had good reason for discounting Mr McGruddy'sversion of events. The Judge found he had failed to prove the claim and he was entitledon the basis of the evidence to do so. There was no error and this ground of appeal isdismissed.General damages[95] Mr McGruddy claimed, as a result of Spotless' breaches of contract andpromises, he suffered substantial inconvenience and disruption to his business. Hetherefore claimed general damages of $20,000.[96] The District Court described this as a claim for distress damages and said:[59] that would require findings in favour of Mr McGruddy which hasnot been the case. In any event, such damages are not [recoverable] for breachof an ordinary commercial contract – Mouat v Clark Boyce.40[97] In Mr Beck's submission, the Judge had failed to grapple with the context thatMr McGruddy had been effectively working full-time for Spotless for about five yearsand the relationship was "summarily terminated". In Mr Beck's submission, generaldamages are now available for inconvenience and disruption.[98] The Courts have generally not awarded damages for emotional and mentaldistress for a breach of contract unless an object of the contract is to avoid suchdistress,41 although the authors of Burrows, Finn and Todd have noted that awardingdamages for a breach of contract causing distress has been a matter of controversy.42[99] I note the analysis undertaken by Mallon J in Bruce v IAG NZ Ltd:[166] As also discussed in McGregor on Damages, it was once the law thatno damages could be recovered in contract for injury to the feelings. The lawhas developed since then, going through a period of expansion when suchawards were made, then a downturn, followed be a re-emergence of such40 Mouat v Clark Boyce (No 2) [1992] 2 NZLR 559 (CA) at 569.41 Bloxham v Robinson (1996) 7 TCLR 122 (CA) cited in Huljich v Huljich [2018] NZHC 3429at [141].42 Burrows, Finn and Todd, above n 17, at 859.awards led by the important and influential decision of Ruxley Electronics vForsyth.43 The learned authors conclude:44The above views appearing in cases at the highest level, admittedly ofan obiter nature, suggest that the general rule in [Addis v GramophoneCo Ltd]45 may soon be abandoned and that, in addition, one shouldnot adhere too closely to the somewhat limiting test, for recovery ofdamages for mental distress, of whether a principal object of thecontract is to promote enjoyment or avoid distress but simply to applythe wider, more principled test of whether recovery for the particularloss is within the contemplation of the contracting parties. This is howit was put by Lord Millett: "In such cases [namely, cases of ordinarycommercial contracts]", he said in Unisys, "non-pecuniary loss suchas mental suffering consequent on breach is not within thecontemplation of the parties and is accordingly too remote."[100] While I have concluded that Spotless was technically in breach of the Contractby failing to provide written notice of termination, the whole tenor of the Contract andits nature of a standing offer would not support a finding that recovery for mentaldistress was within the contemplation of the parties.Result[101] With the exception of the finding of breach of contract by failing to give writtennotice of termination, in respect of which there is no award of damages in thecircumstances, the appeal is dismissed.Costs[102] Costs are awarded to Spotless. If the parties cannot agree, brief memorandaare to be filed within 28 days of the date of this judgment.Thomas J43 Ruxley Electronics v Forsyth [1995] UKHL 8, [1996] AC 344.44 Chitty, above n 5, at [5-034]. See, also, Burrows, Finn and Todd, above n 17, at 865-867 and thedecision of the Supreme Court of Canada in Fidler v Sun Assurance Co of Canada [2006] 2 SCR 3.45 Addis v Gramophone Co Ltd [1909] UKHL 1, [1909], [1909] AC 488. In that case, a wrongfullydismissed employee could recover damages for the loss of salary and commission but not forinjured feelings. See also Burrows, Finn and Todd, above n 17, at 859.