Supreme Court
Action No. 320 of 1982
8th March, 1984
Rajasingham, J., Q.C.

Mr. Denys Barrow for the Plaintiff.
Mr. Philip Zuniga for the Defendant.

Contract of employment - Oral agreement - Breach of agreement - Whether Plaintiff justified to cease work due to default by the Defendant on a secondary agreement albeit related to employment agreement - Whether the Plaintiff's cessation of work was a material breach of employment agreement - Whether Defendant justified to treat employment agreement as at an end.

J U D G M E N T

The Plaintiff's Action is based on an agreement to build three boats for the Defendant. The consideration agreed upon for each boat is not contested except in so far as the first and largest boat is concerned. However, even in relation to that boat, the disagreement is centered on the question of whether admitted weekly payments were payments towards the agreed consideration or not. The entire transaction is made far more complicated by what was evidently a close and trusting relationship between the parties. This relationship reduced the contractual relationship to a casual arrangement which was not fully understood by either party. When in due course financial strains were put on the relationship each party felt aggrieved at the apparent capriciousness of the other.

The facts as became apparent from the evidence are as follows:-

In or about the month of May, 1981 the Defendant was having a 32 foot boat (which the Defendant kept referring to as a 34 footer) being built by a young fellow. The Defendant, who was a good friend of the Plaintiff's brother, asked the Plaintiff to have a look at the boat and tell him what he thought of it. The Plaintiff did not report favourably on that boat and the Defendant asked the Plaintiff to supervise its construction. The Plaintiff reluctantly agreed to it. Within a very short time the Plaintiff and the fellow working on the boat fell out and the Defendant was forced to terminate the services of that fellow. There appears to be some slight disagreement as to whether the Plaintiff was himself building a 40-foot boat for the Defendant when this happened or whether he commenced building it after the young fellow was dismissed. It is of little consequence. What is relevant is that shortly before the time the young fellow's services were terminated or shortly thereafter the Plaintiff commenced work on a 40-footer for the Defendant. I am inclined to believe this agreement was entered into after the Plaintiff had commenced work on the 32 footer, because the agreement was so casually entered into by both men that one is forced to the conclusion that they had developed a very close relationship of trust by that time. Each man's understanding of this agreement varied from that of the other. The Plaintiff drew a plan of the proposed boat and asked for a sum of $20,000.00 as consideration for his labour. The Plaintiff repeatedly referred to this sum as being "for labour". The Defendant, according to the Plaintiff, while agreeing to the sum of $20,000.00 proposed that he would pay the Plaintiff $200.00 a week. The Plaintiff commenced work on this basis under the apparent belief that this weekly wage was over and above the $20,000.00 he had asked for as consideration for his labour. The Defendant had, however, intended that this sum should be a weekly payment towards the $20,000.00 asked for by the Plaintiff. These payments commenced in May, 1981 and were increased to $250.00 in July, 1981, and to $300.00 a week in December, 1981.

I am satisfied that these payments were made towards the agreed consideration of $20,000.00; to hold otherwise would be to hold that, whereas the Plaintiff valued his labour at $20,000.00, the Defendant was paying him almost twice as much as the Plaintiff stipulated. The Plaintiff asked for and was to receive $20,000.00 for building a 40 foot boat; the Defendant, perhaps for his own convenience preferred to pay it as a weekly wage. I am supported in this finding by the fact that the Plaintiff was, at the time he went to work with the Defendant, receiving a weekly wage of $150.00 at Hoare's dockyard. I am fully aware that factors such as the Defendant asking the Plaintiff to stop work on the 40 footer and work on the 32 footer or the 20 footer appear to militate against such a finding. I am convinced that these things are amply explained by the relationship between the parties. I am also convinced that the Plaintiff worked on the Defendant's farm for some three or four days as a friendly gesture and not for wages. Mr. Barrow argued that the payment of the weekly wages continuing while the Plaintiff worked on the farm or on the other boats could only be explained if the Plaintiff was working on a weekly wage which was to be paid in addition to the lump sum consideration. I think it is more easily explained by the casual and mutually trusting manner in which these two men behaved towards each other. I do not think either of them gave their minds to the financial implications of the Plaintiff spending three or four days assisting the Defendant on his farm. The Defendant himself said, and I am inclined to believe him, that he was quite willing to let the Plaintiff earn more than the agreed consideration in the event the $20,000.00 ran out before the 40 footer was completed. Since they were simultaneously working on the 32-footer and the 20-footer, these weekly payments could have been continued until the $10,000.00 for the 32-footer and the $2,000.00 for the 20-footer were exhausted too.

The final argument against the Plaintiff's understanding of the arrangement is that he was to receive only $10,000.00 for the 32-footer and $2,000.00 for the 20 footer and not those sums plus a weekly wage. Against that, a sum, of $20,000.00 which was his own estimate, appears more than reasonable for his labour on the 40 footer.

The Defendant claims, and the Plaintiff does not seriously challenge, that a sum of $18,000.00 was paid in weekly wages and a sum of $2,000.00 was paid for the 20 footer. Here again I am struck by the closeness of the relationship between these men; neither has actually bothered to maintain an account of these payments and yet there is no conflict about the payments. I cannot help but feel that both men are losers as a result of this litigation, because each has lost a friend.

Be that as it may, the next question that arises for consideration is what sum is owing to the Plaintiff from the Defendant as monies advanced by the Plaintiff for materials and labour. The Defendant admits that a sum of $30,100.00 is due. The Plaintiff claims a sum of $30,532.65 as being the balance due on advances of $26,532.65 and $10,000.00. The Plaintiff has produced a notebook in which he has kept a note of the money advanced by him. His evidence and that notebook show that he had advanced the sums of $26,532.65 and $10,000.00 for and on behalf of the Defendant and was repaid a sum of $6,000.00. The Defendant has not challenged that account beyond stating that he thinks his debt is $30,100.00. I accept that the sum involved is $30,532.65.

The evidence is that the Plaintiff, fearing a devaluation of the Belize dollar, sought to ensure that he would not lose if that should happen. He did this by asking the Defendant to give him United States currency in exchange for his Belize dollars. The Defendant says he once gave the Plaintiff $1,500.00 in United States currency in exchange for Belizean currency. He thereafter decided to use the Plaintiff's money to meet his expenses on the boat building in Belize and says he told the Plaintiff that when the Plaintiff's money ran out he, the Defendant, would make bank transfers in favour of the Plaintiff and would see to it that the Plaintiff would not lose by any devaluation. I cannot accept this explanation of the transaction as it would achieve little or nothing for the Plaintiff. I believe they both agreed to repayment in United States dollars, at the rate prevailing at the time, in the event of any subsequent devaluation. I believe the Defendant is, by his evidence of how repayment was to be made, trying to get away from his having agreed to what he thought was an illegality. In an attempt to avoid the consequences of devaluation the Plaintiff advanced his monies and went on to withdraw money he had in a fixed deposit account to advance that too to the Defendant. The Plaintiff says the Defendant was shown a bank slip stating that interest was payable at the rate of 18% per annum at that time and that the Defendant authorised him to go ahead and borrow from the bank at that rate. At first the Plaintiff said he borrowed from the bank and then he said he used his son's money and finally admitted that he used his own money which he had in the bank in a joint account with his son. The Defendant denied being shown any bank slip setting out any interest rate. I am not satisfied with the Plaintiff's evidence on this aspect and believe that the Plaintiff withdrew the sum of $10,000.00 in order to convert that too into United States currency and avoid the feared devaluation.

Mr. Zuniga argued that this transaction was an illegal transaction in contravention of the exchange control laws and was therefore unenforceable. I do not agree with this submission for the reason that the agreement per se was not illegal although the receipt of the repayment in foreign currency without the requisite Central Bank authorisation would have made it illegal. The transaction never reached that stage, although according to the Defendant he did, prior to such agreement, give the Plaintiff $1,500.00 in United States currency for its equivalent in Belize currency. That single transaction may have been illegal, but the subsequent agreement to repay monies spent on the boats in United States currency was not.

I come now to the difficult question of termination of the agreement. The Plaintiff says that after his money was exhausted, the Defendant arranged for remittances to be credited to the Plaintiff's account at the Royal Bank. This commenced in or about March, 1982. These remittances often proved insufficient to meet payments and on occasion the Plaintiff had to go without pay until the next remittance. The Plaintiff finally confronted the Defendant and the Defendant reacted to the Plaintiff's shouting at him by shouting back words to the effect that 'all Belize people thought about was money' and offered the Plaintiff his ring. The Plaintiff's reaction to this clearly shows that the Plaintiff was demanding all the money owed to him and not merely any small arrears due at that time as his weekly wages. The Plaintiff told the Defendant "Mr. Russell, if that ring value what you say, before I clear the door the Police will arrest me". The Plaintiff said he then used his own money to pay the workmen that day which was a Saturday. He said the Defendant came there and smoothed things over saying the money would be there on the Monday or Tuesday and by buying beers for everyone. The Plaintiff says the money was in fact received on the Monday and the workmen were paid, which presumably included the Plaintiff. Thereafter that same day at noon, the Defendant went there and a quarrel ensued between him and the Plaintiff. In the course of it the Plaintiff told the Defendant he wanted a "settlement" and demanded that the Defendant should pay the Plaintiff "what he owe(d)" him. The Plaintiff added that he would not work until the Defendant paid him. The reference to a "settlement" and to "what he owe", to my mind, clearly shows that what was being demanded was repayment of all monies advanced rather than arrears of salary. The evidence of Russell Garbutt is that the Plaintiff told Garbutt that some money was also owed to him as wages at that time. When the Plaintiff said he was going to stop work, the Defendant said "you can't do that; you and I have an agreement!". To this the Plaintiff said he said "I want my money" and the Defendant replied "we will settle that in Court". Plaintiff said he then packed up his tools, locked the tool-house and gave the key to the workmen and left. Russell Garbutt says the Plaintiff told him he was going to strike but that Garbutt should not do so. The Plaintiff said he came back every morning and gave instructions to the workmen but this is not supported by the evidence of Russell Garbutt; Garbutt says the Plaintiff came back for glue or tools from the tool house. About two weeks or so later the Defendant changed the lock on the tool house door to prevent the Plaintiff getting into it. There is a curious discrepancy in the Plaintiff's evidence on this aspect; the Plaintiff says he gave the tool house key to the workmen when he left and yet says the Defendant had to change the lock to keep him out. It would seem the Plaintiff retained a key to the tool house. This to my mind suggests that the Plaintiff had some intention of continuing his work. I am convinced that the Defendant also intended that the Plaintiff should so continue as is evident from his protest when the Plaintiff told him he was stopping work. The Defendant subsequently in changing the tool house lock was perhaps to prevent the Plaintiff using the Defendant's materials and tools on other work because the Plaintiff had already removed all his own tools. Thus I am led inevitably to the conclusion that neither man intended to terminate the agreement but was led by his stubbornness into a situation which became a de-facto termination of the agreement. However, it was the Plaintiff who started this chain of events by stopping work. It, therefore, becomes relevant to ascertain whether the Plaintiff was justified in stopping work when the monies advanced by him were not repaid on demand. The Plaintiff's evidence is that this was an arrangement independent of the agreement to build the boats and one which he sought for reasons of his own. I do not think that the fact that the money advanced by him was spent on the boats makes the transaction any the less a transaction quite independent of the agreement to build the boats. Thus I must conclude that he was not justified in stopping work for that reason, although he may have been justified in stopping work until his arrears of wages were paid. These arrears, even by his own evidence constituted a relatively insignificant sum and would have been paid if the disagreement had been focused on that. Even the Plaintiff does not say what arrears of wages remained unpaid for long or that falling into arrears was not something that had not happened before and been accepted by him. If, therefore, he had said "I am not coming to work until my arrears of wages are paid", I have no doubt, in view of the way things had been conducted up to that time that they would have been made up. The fact that the Plaintiff did, after he had stopped work, receive another remittance on behalf of the Defendant and the fact that he did not help himself to all his arrears from that remittance reinforces me in my belief that what the Plaintiff stopped work over was the failure to repay his advances for materials and labour under their secondary arrangement. Thus I am led to the conclusion that the Plaintiff's stoppage of work because his advances had not been repaid was a breach of the agreement between him and the Defendant. As this was a fundamental breach of the agreement, the Defendant was entitled to treat the agreement as terminated by the Plaintiff. The Plaintiff claims, and the Defendant has not disproved that claim, that the Plaintiff is owed a sum of $1,200.00 as arrears of wages.

The evidence is that the Plaintiff worked alternatively on one or other of the three boats. He completed the smallest boat and was paid the agreed $2,000.00 for it. He completed between half and two thirds each of the 40 footer and of the 32 footer; this is the evidence of the Plaintiff and Russell Garbutt respectively and is not seriously contradicted by the Defendant. The Plaintiff was paid a sum of $18,000.00 towards his labour on these boats and is to be paid a further sum of $1,200.00 as arrears due to him, thus making a total outlay of $19,200.00. The Defendant would have incurred a sum of $30,000.00 on these two boats if they had been completed under the agreement. The Defendant has, according to his counterclaim, incurred a sum of $4,285.00 in completing work on the boats. The Defendant has thus failed to establish that he has suffered any loss by the breach of the agreement by the Plaintiff, and his counterclaim must therefore fail. This also disposes of the Plaintiff's alternative claim for reasonable consideration for his labour. The Plaintiff himself claimed that he had completed half the work on each of the two boats, but Russell Garbutt estimates that two thirds of the work on each boat had been completed when the Plaintiff stopped work. These estimates are at best rough estimates. The Plaintiff has received $18,000.00 already and would have received $19,200.00 when he receives his arrears of wages. This constitutes almost exactly two thirds of the consideration for the two boats. Thus the Plaintiff has received reasonable consideration for his labour. In view of the fact that almost from the very commencement of the boat building the Defendant was paying a second man for labour as an assistant to the Plaintiff, the boats ultimately cost the Defendant far in excess of the price at which the Plaintiff had agreed to construct them himself.

In conclusion I hold that the weekly payments made by the Defendant to the Plaintiff were payments towards the agreed consideration of $20,000.00 for the construction of the 40 footer and the agreed consideration of $10,000.00 for the construction of the 32 footer because the Plaintiff was working on both of them at the relevant time. I accept the Defendant's evidence on this aspect of the case when he says he started paying these weekly sums and continued to do so while the Plaintiff worked on one or other of these boats and the 20-foot skiff. Upon completion of the 20-foot skiff the Plaintiff accepts that he was paid $2,000.00. Hence these weekly payments have to be credited towards that part of the Plaintiff's labour that was unpaid for at the termination of agreement. I hold that the Plaintiff received a sum of $18,000.00 for his labour on these two boats. I further find that the Plaintiff was owed a sum of $1,200.00 as wages at the time of the said termination, which sum he is entitled to received both as arrears of wages and as reasonable consideration for his labour.

I find that the Defendant owes the Plaintiff a sum of $30,532.65 as monies advanced by the Plaintiff for the material and labour expended on the construction of the Defendant's boats.

I hold that the Plaintiff was in breach of the agreement when he ceased work on the boats because the Defendant failed to repay the money advanced by the Plaintiff voluntarily in an attempt to avoid the consequences of a feared devaluation. This was a breach so material to the agreement as to justify the Defendant in treating the agreement as being at an end. This appears to be what the Defendant did, although perhaps not consciously, when he proceeded to continue the construction of the boats with other hired help. This did not cost the Defendant any more than it would have cost him if the boats had been completed under the agreement. I, therefore, dismiss the Plaintiff's claim for damages and the Defendant's counterclaim for $4,285.00 and for damages.

In view of my finding that the Plaintiff has received reasonable consideration for his labour, I dismiss the Plaintiff's alternative claim upon a quantum meruit.

I award the Plaintiff a sum of $31,732.65, being a sum of $1,200.00 as arrears of wages and $30,532.65 as being money advanced by the Plaintiff for materials and labour expended on the construction of the Defendant's boats. I also award costs and interest on the said sum from 30th September, 1982. In doing so I am fully cognisant of Mr. Zuniga's letter inviting the Plaintiff to receive "certain" money, an offer which does not appear entirely bona fide on the part of the Defendant in view of the several denials in the defence filed in this action.

I dismiss the Plaintiff's claim for a sum of $10,000.00 for construction of the 32- footer in view of my finding that the Plaintiff has received payment for so much of that work as he completed before he ceased work.

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