BETWEEN : R J BAKER NOMINEES PTY LTD (ACN 008 852 168)

Contract - Offer and acceptance - Whether offer stipulated an exclusive mode of acceptance - Whether parties made a contract and, if so, on what terms - Turns on own facts

Restitution and unjust enrichment - Quantum meruit - Services provided at defendant's request - Whether services a benefit to defendant - Whether fact that work done on land owned by another meant that services requested by the defendant not proved to be of benefit to defendant - Whether services requested and accepted by defendant - Whether defendant obliged to pay reasonable remuneration - Quantification of reasonable remuneration

Plaintiff's claim for part payment by transfer of lots dismissed

ABB Power Generation Ltd v Chapple [2001] WASCA 412; (2001) 25 WAR 158

Alma Hill Constructions Pty Ltd v Onal [2007] VSC 86; (2007) 16 VR 190

Andrew Shelton & Co Pty Ltd v Alpha Healthcare Ltd [2002] VSC 248; (2002) 5 VR 577

Angelopoulos v Sabatino [1995] SASC 5230; (1995) 65 SASR 1

Australian Competition & Consumer Commission v Leahy Petroleum Pty Ltd [2007] FCA 794; (2007) 160 FCR 321

Brenner v First Artists Management Pty Ltd [1993] VicRp 71; [1993] 2 VR 221

Damberg v Damberg [2001] NSWCA 87; (2001) 52 NSWLR 492

Ermogenous v Greek Orthodox Community of SA (Inc) [2002] HCA 8; (2002) 209 CLR 95

Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89

Geebung Investments Pty Ltd v Varga Group Investments (No 8) Pty Ltd (1995) 7 BPR 14,551

George Hudson Holdings Ltd v Rudder [1973] HCA 10; (1973) 128 CLR 387

Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298

Kriketos v Livschitz [2009] NSWCA 96

Laidlaw v Hillier Hewitt Elsley Pty Ltd [2009] NSWCA 44

Latec Finance Pty Ltd v Knight [1969] 2 NSWR 79

Lighting By Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23; (2008) 35 WAR 520

Lumbers v W Cook Builders Pty Ltd (in liq) [2008] HCA 27; (2008) 232 CLR 635

Mitchell v Schofield [2007] WASC 303

Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221

Robophone Facilities Ltd v Blank [1966] 3 All ER 128

RPS v The Queen [2000] HCA 3; (2000) 199 CLR 620

Schellenberg v Tunnel Holdings Pty Ltd [2000] HCA 18; (2000) 200 CLR 121

The Bell Group Limited (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239

1 BEECH J: The plaintiff claims the alleged agreed price of work it performed for the defendant on a subdivision in late 2005 and 2006. The plaintiff's primary claim is that the defendant contracted to transfer two pieces of land to the plaintiff in partial satisfaction of the price of the work.

2 The plaintiff pleads that the parties made a contract in several alternative ways.

3 First, the plaintiff claims that an oral agreement was made in October 2005. In overview, the plaintiff claims that:

(a) it provided a quote on 17 August 2005 for it to perform certain work;

(c) the parties agreed that the defendant would transfer to the plaintiff two lots in the subdivision at a total price of $190,000 plus GST, in partial satisfaction of the price of the work.

4 Secondly, the plaintiff claims that an agreement between the parties, substantially to the same effect, is to be inferred from the communications and conduct of the parties from 31 October 2005 to December 2005.

5 Thirdly, the plaintiff claims that an oral agreement was reached on 18 January 2006, which was confirmed by letters in February 2006. The agreement is said to be substantially to the same effect, except that this agreement is alleged to include a term that the plaintiff perform certain further works for which it would be paid on a costs plus 10% basis.

6 In the alternative to all of these claims, the plaintiff's secondary claim is that it made an agreement to do the works for the agreed price (without a term for payment by transfer of lots in the subdivision).

7 Finally, in the alternative to the contract claims, the plaintiff says it is entitled to quantum meruit in the amounts in the quote of 17 August 2005 and on the basis discussed at the meeting of 18 January 2006.

8 There is no issue that the plaintiff did the work in question.

9 The defendant contends that at no time was any contract formed between the parties, and that any apparent agreement was uncertain or incomplete. The defendant also denies it is liable on the quantum meruit claim.

10 I begin by outlining some largely uncontroversial facts. I then turn to the main issues, which are:

(1) did the parties make a contract which included a term that the defendant would pay in part for the plaintiff's work by transferring two lots at a total price of $190,000 plus GST;

(2) did the parties make a contract for the plaintiff to do the works for the defendant at an agreed price; and

(3) if not, is the plaintiff entitled to recover a reasonable remuneration for its work on a 'quantum meruit' basis?

11 Most of the following facts are not controversial.

12 Chadway Holdings Pty Ltd was a company associated with the defendant, Parsons Management Group Pty Ltd (PMG). The sole director and shareholder of Chadway was Mr Kerry Parsons. He and his son, Mr Craig Parsons, were also the directors and shareholders of PMG.

13 In 2005 Chadway was proposing to subdivide land it owned at lot 74 Harold Street, Gosnells.

14 The plaintiff, R J Baker Nominees Pty Ltd (RJB Nominees), had previously done work for the Parsons group of companies and the parties had a good relationship. Mr Ronald Baker and his wife, Ms Nina Baker, are the directors of RJB Nominees.

15 On 4 March 2005 consulting civil engineers Dennis, Price & Miller (WA) Pty Ltd put out an invitation to tender to a number of contractors, one of which was RJB Nominees (exhibit A pages 1-12). The conditions of tender stated that the preparatory earthworks (the Forward Earthworks) would be done by other contractors.

16 On 20 May 2005 the plaintiff provided quotation number 320 in the sum of $160,454 plus GST in respect of work associated with the road construction of lot 74 Harold Street, Gosnells. The scope of work in that quotation (the Original Scope of Work) matched the scope of work the subject of the invitation to tender. It comprised:

(a) road construction of approximately 1,100 square metres;

(b) construction and laying of concrete kerbing of approximately 370 linear metres;

17 Conditions of the quotation were evidently set out on the reverse side of the quote, but are not in evidence before me.

18 In late May or early June 2005 Mr Craig Parsons asked Mr Baker if RJB Nominees would be interested in taking two lots in the subdivision in part payment for the work to be done (exhibit C [14]). Mr Baker said to Mr Craig Parsons that RJB Nominees was willing to negotiate to receive two of the blocks in the subdivision in part payment for the work to be done by it (ts 45, 72).

19 By letter dated 8 June 2005 Mr Craig Parsons, on behalf of PMG, made a counter offer to RJB Nominees to the following effect:

(a) PMG would pay RJB Nominees $130,000 plus GST for the Original Scope of Work;

(b) payment by PMG for the Original Scope of Work would be effected by the transfer of two lots in the subdivision for a price of $190,000 for both lots;

(c) the difference between the $190,000 price, the $130,000 for the Original Scope of Work, and any further work performed by RJB Nominees with PMG's authority, would be paid to PMG by RJB Nominees;

(d) RJB Nominees would advise PMG which subdivided blocks it wished to have transferred to it.

20 RJB Nominees did not accept PMG's counter offer of 8 June 2005.

21 In about August 2005 PMG requested that RJB Nominees provide a quotation for the Original Scope of Work and for additional work for the subdivision. In response, RJB Nominees provided to PMG quotation number 320B (exhibit A page 31) (the Second Quotation) in the total sum of $193,254 plus GST. This quotation included:

(1) $160,454 plus GST (ie, the amount of RJB Nominees' quote of 20 May 2005) for the Original Scope of Work; and

(2) $32,800 plus GST for the additional work (the Additional Work) which comprised:

(b) demolishing and disposing of kerbing on Harold Street and reinstating a new kerb;

(c) construction and installation of 445 square metres of footpath with two disabled ramps; and

22 The quotation contains a note in the following terms:

NOTE: To accept this quotation and the conditions shown on reverse side, please sign where shown and return to [RJB Nominees].

23 Below that on the quotation was a place for the name, signature and date of the person signing on behalf of PMG.

24 RJB Nominees pleads that in about October 2005, Mr Baker on its behalf and Mr Craig Parsons on behalf of PMG orally agreed two things. PMG admits one of them and denies the other. What is admitted is that Mr Craig Parsons informed Mr Baker that PMG accepted the Second Quotation. What is denied is RJB Nominees' allegation that Mr Baker told Mr Craig Parsons that, subject to acceptance of the Second Quotation by PMG, RJB Nominees would accept in part payment for the work in the Second Quotation the transfer to it of lots 81 and 83 in the subdivision for the total price of $190,000 plus GST.

25 This is a major issue in the action. PMG says that no agreement was reached as to the acceptance of lots 81 and 83 for a consideration of $190,000. Further, PMG says that the Second Quotation could be accepted only in writing.

26 I will outline Mr Baker's evidence about this issue when I deal with that claim in the next section of these reasons.

27 On 27 October 2005 Sue Kinnear, on behalf of PMG, sent a facsimile to Mr Baker (exhibit A page 35). The text of the facsimile was:

Don't forget you promised [Mr Craig Parsons] that you would go out to Harold Street before the end of the week.

28 Prior to that date, Mr Craig Parsons had made various attempts to contact Mr Baker to ask him to start work (ts 49 - 50).

29 On 31 October 2005 Mr Craig Parsons wrote on behalf of PMG to Mr Baker. The letter was in the following terms:

RE: - LOT 74, HAROLD STREET, GOSNELLS

After numerous phone calls, with no success. You have disillusioned me to the point that I am writing this letter.

I waited for a extra 2 months for the quote, and now you can not give us an exact time when you will be on site and to when the work will be started and completed.

As per our previous written conversation we agreed to $190,000.00 plus GST and Stamp duty for the 2 blocks that you required, but since then the blocks have been valued at $220,000.00-$240,000.00 and we are waiting to work on the titles, but require the work to be done by yourself. It is our opinion that if the work does not start within the next 5 days then we feel strongly that there should be a new agreement made based on the above.

I await your reply, if have any queries please do not hesitate to contact me on PH: (08) 9455 3899. (original emphasis)

30 RJB Nominees relies on the third paragraph of this letter as an admission that the parties had, by then, agreed that two blocks would be transferred at an agreed price of $190,000. I will deal with that submission in the next section of these reasons.

31 On 24 October 2005 a real estate agent, L J Hooker, sent a facsimile to PMG's offices. It listed suggested marketing prices for 11 of the 13 lots in the subdivision. Two of the lots (described as Lot 1 and Lot 4) were described as 'contractor' with no suggested price stated. This is consistent with PMG contemplating by then that those two lots would be transferred to RJB Nominees. However, it does not assist in determining whether any binding and complete contract for transfer of the lots at a specific price had by then been concluded.

32 On 4 November 2005 Mr Craig Parsons wrote again on behalf of PMG to Mr Baker (exhibit A page 38). The letter was in the following terms.

As per our previous correspondence on the 31st October 05, I relayed that we (Parsons Management) had contacted you numerous times, with no still success. You relayed to me earlier this week that someone would be on site this week. We drove out to look today and no workers were on site and no work had been done.

This led me to write this letter.

This is not satisfactory. I have worked with you on many previous jobs and we have never had this problem and I thought our working relationship was good. If there is not substantial work done next week we will then value the 2 blocks at $240,000.00 plus GST and Stamp duty.

If this is not acceptable than we will have to look for an alternative contractor.

I await your reply, as soon as possible so that I can plan the development. (original emphasis)

33 By 4 November 2005 the Forward Earthworks had not been commenced by any other contractor, or by RJB Nominees.

34 On 8 November 2005 RJB Nominees engaged MiniQuip Earthmovers to perform work on the land by stripping grass from within the road reserves. Mr Baker said in evidence that this was to permit RJB Nominees to evaluate the extent of work required for the Forward Earthworks (ts 50).

35 On 17 November 2005 RJB Nominees engaged Assured Tree Services to cut down and mulch trees within the road reserve.

36 On 25 November 2005 PMG sent a facsimile to RJB Nominees (exhibit A page 41). In the facsimile Mr Craig Parsons asked when RJB Nominees would be back out at the Gosnells site, and when they could have a meeting down at the Fremantle Boat Park to go through the next-door site. The latter question related to work at a different site.

37 On 28 November 2005 RJB Nominees engaged a subcontractor to dig out tree stumps on the road reserve.

38 On 30 November 2005 RJB Nominees invoiced PMG in respect of the engagement of the three contractors (exhibit A page 43). The amount of the invoice including GST was $1,596.10. The subject matter of the invoice was described as 'pre-start forward works'.

39 On 8 December 2005 Mr Peter Golder, of Dennis, Price & Miller, PMG's consulting civil engineers, sent a facsimile to Mr Baker on behalf of PMG. By the facsimile Mr Golder requested that RJB Nominees install the power, Telstra, gas and water duct crossings for the future stage 3 of the subdivision in accordance with the plan provided to RJB Nominees by PMG.

40 In December 2005 RJB Nominees engaged Premium Corporation Pty Ltd as a subcontractor to perform drainage work, part of the Original Scope of Work. This was the first part of the Original Scope of Work commenced by RJB Nominees (ts 51).

41 On 5 December 2005 Mr John Rechichi of L J Hooker Thornlie, Chadway's real estate agent for the sale of the proposed lots in the subdivision, sent a facsimile to RJB Nominees requesting that it execute an authority for L J Hooker Thornlie to act as its agent to sell lots 84 and 81. Mr Baker says in his witness statement that he telephoned Mr Rechichi and told him that he could not commit to Mr Rechichi's firm until he had written confirmation of his arrangement with Mr Craig Parsons (exhibit C [33]). Words to this effect are handwritten on the facsimile. Underneath those handwritten notes Mr Baker wrote 'confirmed intended lots 83 and 81'.

42 Near the top of the facsimile, Mr Baker made a handwritten change to alter the reference to 'lot 84' to 'lot 83'. He dated that alteration 20 January 2006 and initialled it. Having taken those steps, I infer that he then sent the fax back to Mr Rechichi on or shortly after 20 January 2006.

43 RJB Nominees pleads that the facts stated in [29], [32] - [37] and [39] - [41] above support the conclusion that there was an implied agreement between the parties.

44 On 11 January 2006 Premium Corporation Pty Ltd, a subcontractor engaged by RJB Nominees, submitted a progress payment claim in the amount of $38,449.95 (exhibit A pages 50 - 51).

45 On 18 January 2006 Mr Baker and Mr Craig Parsons met at PMG's office on Mews Road, Fremantle. RJB Nominees pleads, and PMG denies, that the parties made an oral agreement at that meeting, subsequently confirmed by letters of 1 February 2006 and 15 February 2006. I will outline the evidence about the meeting on 18 January 2006 in the next section of these reasons.

46 On 18 January 2006 Sue, an employee of PMG, sent a facsimile to Mr Baker saying 'Thanks for coming to see us today' and asking for confirmation that the blocks RJB Nominees was taking were lots 81 and 83 because PMG needed to know for the valuer.

47 On 1 February 2006 Mr Craig Parsons on behalf of PMG wrote to Mr Baker. The letter was in the following terms.

As per our meeting on the 18th January 06, I thought that I would formalise the meeting in point form:-

- Ron J Baker & Co to take blocks 81 & 83.

- Parsons Management Group accept the first quote for $160,500.00

- Parsons Management Group accept the second quote for $32,800.00

- Parsons Management Group accept that Ron J Baker & Co will organise the forward works at cost plus 10% (invoices to be forwarded)

- Ron J Baker & Co to move 500-750mm of the POS, to be placed on the blocks.

- Ron J Baker & Co organise the power quote.

- Ron J Baker & Co and Parsons Management Group to make sure that the power contractor has all the appropriate insurance details.

- Ron [Baker] to liaise with Peter Golder, regarding the site / drainage.

The final point that was raised is that I believe that the 2 blocks are to be valued at $100,000.00.

I await your reply, to let me know the state of play, hope all is well.

48 Mr Baker accepted in cross-examination that the eight matters listed with dashes correctly recorded things agreed at the meeting of 18 January 2006 (ts 55).

49 Mr Craig Parsons wrote a further letter dated 15 February 2006 to RJB Nominees. The letter was sent on 16 February 2006 (exhibit A page 58), and was in the following terms:

Since our meeting on the 18th January 06, I can not see any work that has been done.

You relayed to me earlier this week that someone would be on site this week, I drove out to look today and no workers were on site and it looked like only a few loads of soil had been dropped [off] and no work had been done.

I have Real estate agents / partners complaining to me (Weekly), when the work will be completed.

Also as per my letter to you on the 1st February, 06, the work on the POS has not been done and I still have not received a power quote (as we require).

You have left me with no option that if the box out and sub grade of the road has not been done within seven (7) days [then] our agreement is voided.

I have contacted Peter Golder and he assures me that there are no reasons that you should be delaying this project.

I await your reply.

50 On 16 February 2006 RJB Nominees wrote to PMG in response to Mr Craig Parsons' letter of 1 February 2006. The letter included the following:

I agree with all items mentioned in your letter of acceptance, save for the final point the figure we agreed was for $190,000 for both blocks. I am intending to commence roadwork's next week 22/2/06.

Please confirm your intention to standby the original agreement.

51 On 17 February 2006 Mr Kerry Parsons met with Mr Baker. They discussed the Gosnells subdivision: exhibit C [41]. Mr Kerry Parsons said that:

(a) lots 81 and 83 would not be transferred to RJB Nominees for $190,000;

(b) RJB Nominees had dragged its feet on the project;

(c) PMG would pay RJB Nominees cash, or transfer the blocks at 10% less than valuation.

52 Mr Baker said he was not interested in being paid cash. Mr Kerry Parsons told Mr Baker that he should think it over.

53 About 20 minutes after the meeting Mr Baker called Mr Kerry Parsons and said that he 'intended to stick to the original agreement': exhibit C [42].

54 On the same day Mr Kerry Parsons wrote to Mr Baker. The letter stated that the options under which PMG was prepared to accept RJB Nominees continuing the work were:

(2) 'We continue with the two-block payment' but it is based upon prices at completion less 10%, and net of GST and commission.

55 The letter stated that option 2 would give the plaintiff at least a $30,000 minimum windfall profit.

56 Mr Baker responded to the letter by facsimile dated 9 March 2006. The letter included the following.

With regard to your letter of 23 February 2006 and referring to our site meeting at Fremantle Boat Park on 17 February 2006 I acknowledge the points 1 and 2 made at our meeting (this action was necessary due to Ron J Baker & Co dragging their feet, according to you). I told you at the time that I preferred Option 3 which was to stick to the original agreement, which was cruisy, cruisy since I had to service other jobs to carry this work. You told me to go away and think on it over the weekend and that you would put it in writing. I rang you back within 20 minutes of that discussion when I reached my next site meeting at Tony Ale's at Jandakot to confirm my intention to stick to the original agreement. I also stated that I would assist with completing the forward works and helping where possible to redress the apparent deterioration of our standing in your eyes. I took a chance on committing myself to accept these two blocks as payment and can't help but wonder if we would have had this conversation if the price/valuation went the other way.

I know that you are a very honest, capable, ethical, decent business man. I have always looked up to you and admired you and I am supremely confident that you will do the right thing and stick to the original agreement.

57 In response, on 14 March 2006 an email was sent from Mr Craig Parsons' email address, under the name Kerry Parsons, to Mr Baker. The email stated that 'I would have adhered to the original agreement if you had'. It also said if the blocks had gone down in price he would have asked for compensation for PMG's losses because of RJB Nominees' late start.

58 On 23 March 2006 Mr Baker on behalf of RJB Nominees wrote to Mr Kerry Parsons of PMG. Mr Baker set out what he said was the history of the matter. He said that the term that the price was payable by purchase of lots 81 and 83 for $190,000 was first proposed in Mr Craig Parsons' letter of 8 June 2005, and reaffirmed in the letter of 31 October 2005 and implicitly the letter of 4 November 2005. The letter required PMG to comply with what Mr Baker said were the terms of the agreement.

59 Mr Kerry Parsons wrote a letter to RJB Nominees on 24 April 2006 (exhibit A page 95). The letter said that Mr Baker had said on a previous occasion that he would make an offer regarding the pricing of the blocks and any compromise he was prepared to make. The letter stated that the last sale of a lot in the subdivision was for $150,000. It proposed the blocks be transferred at a total price of $252,000, which Mr Parsons described as a fair compromise.

60 On 12 April 2006 RJB Nominees completed the Original Scope of Work and the Additional Work.

61 On 26 April 2006 Mr Baker wrote to Mr Kerry Parsons of PMG. The letter stated that RJB Nominees was in the process of finalising its account and requested that an offer and acceptance be made out in the name of RJB Nominees for an agreed price of $190,000 for both blocks.

62 Mr Kerry Parsons wrote in response on 28 April 2006 (exhibit A page 98). The letter stated that:

(a) there would not be any paperwork regarding the blocks for the price of $190,000 as 'there no longer exists any such agreement';

(b) 'there was an agreement early last year but as per your verbal response, if not all then a substantial part of the massive delays were caused by you, hence any agreement was negated by your negligence'; and

(c) because both blocks have increased in value substantially, the price increase would be applied to the blocks if RJB Nominees wished to proceed.

63 By 24 July 2006 RJB Nominees had completed all of the Forward Earthworks.

64 By 21 July 2006 the plan of subdivision, including lots 81 and 83, was in order for dealing at Landgate.

Did the parties make a contract which included a term that PMG would transfer two lots to RJB Nominees for a total price of $190,000?

66 RJB Nominees pleads three alternative agreements said to contain a term that PMG would transfer lots 81 and 83 to RJB Nominees for a total price of $190,000.

67 The alleged First Agreement pleaded is that in about October 2005 in discussions between Mr Baker and Mr Craig Parsons it was agreed that RJB Nominees would undertake the work the subject of the Second Quotation for a price of $193,254 plus GST ($212,579.40), in partial satisfaction of which RJB Nominees would accept the transfer of lots 81 and 83 for a total price of $190,000 plus GST (statement of claim pars 12 and 13).

68 The alleged Second Agreement is in terms substantially to the same effect. It is alleged (statement of claim par 27) that the Second Agreement was to be implied from the conduct pleaded in pars 16 - 26 of the statement of claim, being the facts and matters set out at [29], [32] - [37] and [39] - [41] of these reasons.

69 The alleged Third Agreement is said to have been made orally at a meeting on 18 January 2006 between Mr Craig Parsons and Mr Baker, and confirmed by PMG's letter of 1 February 2006 and RJB Nominees' letter of 16 February 2006. The Third Agreement includes substantially the same terms as the First Agreement and Second Agreement, with an additional term that RJB Nominees would do further work, namely the Forward Earthworks, for which it was to be paid costs plus 10%.

70 That brings me to the evidence relating to these pleaded contracts.

71 The only witness called at the trial of the action was Mr Baker. PMG did not adduce any evidence.

72 RJB Nominees' submissions emphasised the absence of evidence from any witness on behalf of PMG.

73 The unexplained failure by a party to give evidence or to call a witness may, in appropriate circumstances, lead to an inference that the uncalled evidence would not have assisted the party's case: Jones v Dunkel [1959] HCA 8; [1959] HCA 8; (1959) 101 CLR 298, 308, 312 and 320 - 321.

74 The failure to call a witness can allow evidence which might have been contradicted by such a witness to be more readily accepted. Further, where an inference is open from facts proved, the absence of the witness may be taken into account as a circumstance in favour of the drawing of the inference. However, the absence of a witness cannot be used to make up any deficiency of the evidence, that is it cannot be used to support an inference which is not otherwise sustained by the evidence. The absence of a witness cannot fill gaps in the evidence or convert conjecture and suspicion into the drawing of an inference: Jones v Dunkel (308, 312 and 320 -321); RPS v The Queen [2000] HCA 3; (2000) 199 CLR 620 [26]; Schellenberg v Tunnel Holdings Pty Ltd [2000] HCA 18; (2000) 200 CLR 121 [53]; The Bell Group Limited (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239 [1003] - [1004].

75 At the trial, RJB Nominees submitted that the failure of PMG to call witnesses to explain the apparent admissions in certain letters and emails written by Mr Craig Parsons and Mr Kerry Parsons sustained an inference that the parties had made one of the three alternative agreements pleaded by RJB Nominees and summarised above. For the reasons which follow, I do not accept that submission. In summary, that is essentially because RJB Nominees' case derives no assistance from the evidence of Mr Baker.

76 Mr Baker's witness statement (exhibit C) contained no direct evidence of any conversation between Mr Craig Parsons and him in which it was agreed that two lots would be transferred to RJB Nominees for a total price of $190,000. The only evidence of any relevant conversation following the Second Quotation of 17 August 2005, and prior to January 2006, was that contained in par 22 of the witness statement. That paragraph states, relevantly, as follows:

In about October 2005 Craig [Parsons] told me that PMG accepted RJB [Nominees'] quotation 320B. At about that time I told Craig that:

(a) I was prepared to agree to his proposal for payment by the transfer of 2 lots in the proposed subdivision rather than cash;

(b) I would take lots 81 and 83;

(c) I could not do the work until the forward earthworks had been completed.

77 It will be seen that there is no mention of any price for lots 81 and 83.

78 Paragraph 25 of Mr Baker's witness statement deals with Mr Craig Parsons' letter of 31 October 2005. In that context, Mr Baker said that as for Mr Craig Parsons' suggestion that there should be a variation in the price for lots 81 and 83, he did not regard that as an issue for discussion as 'there was already an agreement for RJB [Nominees] to undertake the work and the land to be valued at $190,000'. The quoted passage is not admissible or persuasive evidence of the existence of any agreement that the land be valued at $190,000. It is the mere assertion of a conclusion. Nowhere in the witness statement is there any evidence of the agreement, said to have been made 'already', that the land be valued at $190,000.

79 The position, from RJB Nominees' perspective, did not improve as a result of the viva voce evidence of Mr Baker.

80 Mr Baker was cross-examined about his response to PMG's letter of 8 June 2005. He said that RJB Nominees did not accept the proposal in the letter dated 8 June 2005 involving a reduction in the price of the work to $130,000. He said that he accepted a land value of $190,000, but never communicated to Mr Parsons that he accepted the land value at that figure (ts 44 - 45).

81 Mr Baker was asked whether he could recall being telephoned by Mr Craig Parsons after he had sent the Second Quotation and being asked to do the quoted work as soon as possible. Mr Baker said that he recalled such a conversation but did not know whether it had occurred shortly after the Second Quotation was sent, or some time later (ts 46). The following exchange then occurred.

[COUNSEL FOR PMG]: When you had that discussion that you have just mentioned on the date you can't remember, you did say to Craig Parsons that you were prepared to agree his proposal to take two lots in the subdivision rather than cash, didn't you?---Yes.

You said to him you would like to take lots 81 and 83 in the subdivision?---Yes, that's correct.

During the discussion at that time that I am just asking you about, you didn't reach agreement with Craig Parsons at that time or around that time that lots 81 and 83 would be valued at a total of $190,000, did you?---No, I did not (ts 47).

82 The first two answers in the passage just set out are, with two exceptions, consistent with par 22 of Mr Baker's witness statement. The first exception is that in his evidence in cross-examination Mr Baker could not say when after 17 August 2005 the conversation had occurred. The second exception is that in his evidence in cross-examination he agreed that the conversation about payment by transfer of the lots occurred at the same time and as part of the same conversation as Mr Craig Parsons' acceptance of the quotation. To the extent of these differences I prefer Mr Baker's evidence in cross-examination to the evidence in his witness statement.

83 The third answer in the passage just quoted makes explicit what might have been thought to be implicit in par 22 of the witness statement (given the absence of mention in that paragraph of any agreement valuing the lots at $190,000).

84 I infer that the conversation occurred before 27 October 2005. By then, Mr Craig Parsons was chasing Mr Baker to start the work the subject of the Second Quotation. I will say more about this later in these reasons.

85 The conversation the subject of par 22 and of Mr Baker's evidence at ts 46 - 47 is the conversation that underpins the alleged First Agreement. The effect of the evidence, both in the witness statement and in cross-examination, is that during the conversation there was no agreement about the price of the lots. That evidence is reinforced by Mr Baker's evidence that he never communicated to Mr Parsons that he accepted the land value of $190,000.

86 Thus Mr Baker's evidence on the point is directly inconsistent with RJB Nominees' case that the alleged First Agreement was made during this conversation.

87 In cross-examination Mr Baker was asked about his letter of 16 February 2006. In that letter he stated that 'the figure we agreed was for $190,000 for both blocks'. Mr Baker was asked to what agreement he was referring and when the agreement had been made. Mr Baker said that the agreement was made in July or August 2005, and that he had agreed with the price of $190,000 when it was first put to him in the letter of 8 June 2005 (ts 57 - 58).

88 If and insofar as that evidence is intended to suggest that there was a discussion between Mr Baker and Mr Craig Parsons between 8 June 2005 and 17 August 2005, in which it was agreed that payment for any work to be done by RJB Nominees would be made by the transfer of two lots to be valued at $190,000, I do not accept it. Mr Baker's witness statement does not contain any evidence of an agreement as to the value of the lots during this period. Nor was any such agreement or discussion during this period pleaded in the statement of claim. An agreement or discussion to that effect is also inconsistent with Mr Baker's evidence that he never communicated his acceptance of the figure of $190,000 for the land value (ts 44 - 45).

89 It may be that the evidence of Mr Baker to which I have just referred is not intended to suggest that any discussion occurred after PMG's letter of 8 June 2005. At the conclusion of his evidence in cross-examination, Mr Baker said that the term that lots 81 and 83 would be transferred for a price of $190,000 was 'a part of the agreement from day one, from when [Mr Craig Parsons] first made the offer' (ts 66). Asked when that term became part of the agreement and in what manner, Mr Baker referred only to the letter of 8 June 2005 (ts 67). Mr Baker agreed that RJB Nominees' case is that as a result of the letter of 8 June 2005 it became a term of the agreement, and of every agreement thereafter discussed, that RJB Nominees would be paid with two blocks at an agreed value of $190,000 (ts 67).

90 Of course, Mr Baker's subjective understanding of the effect of the letter of 8 June 2005 has no significance in the process of determining whether the parties made a contract and if so, on what terms. Whether a contract has been formed, and the terms of any contractual arrangement, are to be determined objectively: Ermogenous v Greek Orthodox Community of SA (Inc) [2002] HCA 8; (2002) 209 CLR 95 [25]. Thus I mention this evidence not for its contractual significance, but because it may explain Mr Baker's evidently genuinely held understanding that the parties had 'agreed' a transfer of two lots for a total price of $190,000.

91 Mr Baker referred to the 'original agreement' in his witness statement [42], his evidence (ts 53 and 56), and in correspondence (including his letter of 9 March 2006). Mr Baker's references to the 'original agreement' are generalised and conclusionary in nature. Given his specific evidence on the topic of his discussions with Mr Craig Parsons in 2005, Mr Baker's assertions as to the 'original agreement' do not sustain a finding that any agreement as to the figure of $190,000 was reached during 2005.

92 I turn to the evidence about the meeting of 18 January 2006. At one point in the course of his cross-examination (ts 53), Mr Baker said that the price of $190,000 for the blocks was agreed during the meeting of 18 January 2006. I do not accept that evidence. It is inconsistent with the substance of Mr Baker's evidence given in his witness statement and in cross-examination. Both in his witness statement [37] - [38], and in cross-examination (ts 56), Mr Baker's evidence was that the price for the lots was not discussed at all, let alone agreed, at the meeting of 18 January 2006.

93 RJB Nominees submit that notwithstanding that Mr Baker's evidence on the topic was 'problematic' (ts 102), the unexplained admissions in PMG's letters or emails of 31 October 2005, 15 February 2006, 14 March 2006 and 28 April 2006 sustained a finding that the parties had entered into the alleged First Agreement. RJB Nominees pointed to references, in that correspondence, to the parties having 'agreed' or to the existence of an 'agreement'. In the context of determining whether communications between parties amount in law to a binding contract, care is to be taken in determining the weight given to the use by the parties of words such as 'agreement'. In a passage cited in many cases, Geebung Investments Pty Ltd v Varga Group Investments (No 8) Pty Ltd (1995) 7 BPR 14,551, 14,552, Gleeson CJ said as follows:

In a case such as the present, there are two, sometimes related, questions which require to be considered. The first is whether the parties to the putative contract intended to make a concluded agreement.

The second is whether they succeeded in doing so...

As the decision in the Australian Broadcasting Corp case illustrates, the fact that parties to negotiations have agreed upon the major matter under discussion, confidently believing that the remaining matters to be decided will be sorted out later between them or their lawyers, without any difficulty, can sometimes create a misleading appearance of consensus. Such parties may well believe that they have a 'deal' or a 'bargain', and speak and act accordingly, whilst at the same time knowing and intending that further and more detailed agreement is necessary. For that reason, conduct such as shaking hands, or using the language of agreement, can be ambiguous. The resolution of the ambiguity may require more detailed factual and legal analysis.

94 In considering the alleged admissions, I take into account that PMG did not call any evidence.

95 The letter of 31 October 2005 from Mr Craig Parsons states that in 'our previous written conversation we agreed to $190,000 plus GST and stamp duty' for the two blocks. The notion of a written conversation is unusual and ambiguous. I take it to be a reference to written communication. Elsewhere it may involve a reference to the letter of 8 June 2005 standing alone. In the letter 'we' is used to refer to PMG, rather than to both parties. To say that 'we agreed' to something may mean no more than that by the letter of 8 June 2005 PMG had said that it was willing to proceed on that basis. On the evidence, that seems the most likely reading of what is said in the letter of 31 October 2005.

96 In any event, I am not persuaded that any admission by PMG contained in the letter of 31 October 2005 supports the oral agreement pleaded in pars 12 and 13 of the statement of claim.

97 The letter of 15 February 2006 includes a statement that if certain things did not occur then 'our agreement is voided'. In the context of what had by then occurred between the parties, I consider that the reference to 'our agreement' is intended to refer to what had been agreed at the meeting on 18 January 2006. A number of matters had been agreed on that day, as listed in the dot points in the letter of 1 February 2006. What the parties had agreed on 18 January 2006 about the transfer of the lots was incomplete; it did not include agreement on the essential topic of price. Consequently, no agreement which amounted to a contract to transfer the lots was made on 18 January 2006.

98 The email of 14 March 2006 was evidently written and sent by Mr Kerry Parsons. He had not been a party to any of the negotiations during 2005. The language of the email of 14 March 2006 reflects what is said in the last two paragraphs of Mr Baker's facsimile of 9 March 2006: see [56]. I do not consider that this email amounts to an admission of the First Agreement pleaded in pars 12 and 13 of the statement of claim.

99 Finally, RJB Nominees relies on Mr Kerry Parsons' letter of 28 April 2006. That letter states that 'there was an agreement early last year'. Again, Mr Kerry Parsons was not a party to the negotiations. Moreover, the agreement is said to have been 'early' 2005. This would seem to be a reference to the letter of 8 June 2005. Again, the reference to an agreement would seem to reflect a willingness on the part of PMG to transfer the land at the price of $190,000, rather than an expression of mutual consent by both parties.

100 To the extent that any of these letters might constitute an admission of the alleged First Agreement, the value of any such admission must be weighed with the direct evidence of Mr Baker.

101 For these reasons, I am not persuaded that PMG has, by any of the letters and emails relied upon by RJB Nominees, admitted the making of the alleged First Agreement.

102 For the reasons given, and in light of the findings I have made, I am not satisfied that the alleged First Agreement was made. The only support for that agreement in Mr Baker's evidence is in conclusionary assertions. His evidence at ts 44 - 45 and 47, which I accept, supports the conclusion that the alleged First Agreement was not made.

103 Counsel for RJB Nominees accepted, rightly in my opinion, that there was no evidence to support the alleged Third Agreement.

104 The Second Agreement is said to be implied. The principles about when an agreement may be implied or inferred, in the absence of an identifiable offer and acceptance, were outlined in Lighting By Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23; (2008) 35 WAR 520 [21] - [23], [90] and [204] - [205]. See also Kriketos v Livschitz [2009] NSWCA 96 [111] - [120]. The question is whether the conduct of the parties viewed in the light of the surrounding circumstances shows a tacit understanding or agreement. The parties' conduct must be capable of proving all the essential elements of an express contract.

105 Conduct may amount to an acceptance of an offer. In order for that to be so, not 'only must the conduct point to the existence of a contract but it must point to the existence of the contract in the terms alleged in the proceedings': Laidlaw v Hillier Hewitt Elsley Pty Ltd [2009] NSWCA 44 [9].

106 I have identified earlier in these reasons [43] matters from which RJB Nominees says the alleged Second Agreement is to be implied. In my opinion, those matters do not support a conclusion that the parties impliedly made the Second Agreement. There is nothing in the matters relied upon by RJB Nominees about the price at which any lots would be transferred to RJB Nominees. Consequently, the facts and matters relied on by RJB Nominees provide no basis to imply an agreement containing a term to the effect that PMG would partly pay RJB Nominees for its work by transfer of two lots to it for a price of $190,000 plus GST.

107 For these reasons, RJB Nominees' primary claim, that it made an agreement under which it was to be partly paid by the transfer of two lots for a total price of $190,000 plus GST, fails.

108 I turn to RJB Nominees' secondary contract claim for the price of the work it did.

Did the parties contract for RJB Nominees to do the work for an agreed price?

109 RJB Nominees pleads three alternative contracts by which it is said that the parties contracted for RJB Nominees to do work for an agreed price. These alleged contracts mirror the three alternatives outlined in the previous section of these reasons, but without reference to transfer of the lots in part payment for the work done. RJB Nominees pleads an oral agreement made in or about October 2005 (pars 12.1 and 13A); an implied agreement in November or December 2005 (par 27A); and an oral agreement made on 18 January 2006 (par 30A).

110 The effect of the first two of these agreements is said to be that RJB Nominees would carry out the Original Scope of Work and the Additional Work for $193,254 plus GST. The third of these agreements is to the same effect, with an additional term that RJB Nominees would carry out the Forward Earthworks and be paid cost plus 10%.

111 I have set out [76] and [81] Mr Baker's evidence as to the conversation he says he had with Mr Craig Parsons at some time between 17 August 2005 and 31 October 2005. See exhibit C [22] and ts 46 - 47. That evidence was not challenged in cross-examination.

112 RJB Nominees submits that notwithstanding that evidence I should find that the conversation during which the Second Quotation was accepted occurred at the meeting on 18 January 2006. PMG submits that a quotation can only be accepted once, and points out that one of the matters recorded in the letter of 1 February 2006 as having occurred at the meeting of 18 January 2006, and accepted by Mr Baker as having occurred, was the acceptance of RJB Nominees' Second Quotation.

113 I do not accept that submission. I accept the evidence of Mr Baker that at some time after 17 August 2005 Mr Craig Parsons told him to go ahead, to do the work and to do it urgently. I find that the conversation occurred before 27 October 2005.

114 That finding is supported by the fact that on 31 October 2005 and on 4 November 2005 PMG demanded that RJB Nominees get on with doing the work the subject of the Second Quotation.

115 Moreover, it is supported by RJB Nominees' admission in its defence that in October 2005 Mr Craig Parsons verbally informed Mr Baker that PMG accepted the Second Quotation. I accept, as PMG submits, that the court is not bound to act on admissions made by the parties and that the court can (and perhaps should) decline to act on an admission when there is reason to doubt its correctness or reason to question the correctness of the facts admitted or agreed: Damberg v Damberg [2001] NSWCA 87; (2001) 52 NSWLR 492 [148] - [160]; Australian Competition & Consumer Commission v Leahy Petroleum Pty Ltd [2007] FCA 794; (2007) 160 FCR 321 [42] - [49]. In this case, I do not consider that there is reason to doubt the correctness of PMG's admission or the fact agreed. The admission is consistent with the evidence of the only witness on the point. The admission is also supported by the objective probabilities, given the undisputed evidence that by the end of October 2005 Mr Craig Parsons was complaining that RJB Nominees had not commenced doing the work the subject of the Second Quotation.

116 PMG puts two further submissions as to why any apparent acceptance by Mr Craig Parsons of the Second Quotation during the conversation I have referred to does not give rise to a binding contract that RJB Nominees would do the work for the price set out in the Second Quotation.

117 First, PMG submits that any acceptance of the quotation must be seen in the context of the discussion as a whole. The conversation contemplated that RJB Nominees would do the work and would be paid by the transfer of lots in the subdivision. That much may be accepted. PMG submits that any agreement for RJB Nominees to do the work at the quoted price cannot be divorced from the agreement that the price would be partly paid by transfer of lots.

118 The question is whether the parties intended (in an objective sense) that payment by the transfer of lots was an essential feature of any binding agreement for RJB Nominees to do the work at the price in the Second Quotation. At the time of the conversation, the parties had not reached agreement as to the price for the transfer of the lots. By definition, it was not inevitable that they would agree on the price. This invites attention to whether the parties intended that if no agreement as to the price of the lots was reached there would be no binding agreement to pay the quoted price of the work in the Second Quotation.

119 In this context it is relevant that Mr Craig Parsons had said PMG wanted the work done immediately. Thus the parties' communications contemplated that RJB Nominees would do the work immediately and without waiting for agreement to be reached on the price for transfer of the two lots.

120 In my opinion, the more likely intention on the part of the parties is that the subsequent reaching of an agreement as to the price for a transfer of the lots was not essential to the creation of an obligation on the part of PMG to pay the price in the Second Quotation in return for RJB Nominees doing the work in that quotation.

(a) an oral acceptance of the Second Quotation was legally ineffective to create a contract;

To accept this quotation and the conditions shown on reverse side, please sign where shown and return to Ron J Baker & Co;

(c) thus, the offer stipulated a mode of acceptance, namely by signature and return of the quotation, with the consequence that a purported acceptance by any other method is invalid and does not result in the formation of a contract.

122 In support of its submission PMG relied upon Latec Finance Pty Ltd v Knight [1969] 2 NSWR 79, 81 and Robophone Facilities Ltd v Blank [1966] 3 All ER 128, 131 - 132. In my opinion, the focus of these cases was on a different question. They were not concerned with whether a particular mode of acceptance had been specified as the exclusive mode, but rather whether the offer in question had dispensed with the requirement of communication of acceptance. In Latec Finance, a clause in the offer provided that the offer:

shall not be binding upon [the offeree] until the memorandum of acceptance endorsed hereon shall have been signed by [the offeree]...

123 The offeree signed the offer but did not communicate its acceptance. The question was whether the clause dispensed with the requirement of communication of acceptance. The New South Wales Court of Appeal held that it did not, stating that one would need clear language before a contract would be construed as dispensing with the requirement of communication.

124 PMG also relies on the decision of Simmonds J in Mitchell v Schofield [2007] WASC 303. That case concerned a contract for sale of land. Contracts for sale of land give rise to special considerations, as his Honour explained [142]. The terms of the offer provided strong support for a construction that the offer could be accepted only by signature. The term 'Contract Date' was defined to mean the date on which the last party to sign the contract signs it [25]. Clause 2 of the contract conditions stated that 'acceptance of [the] offer shall be sufficiently communicated to the Buyer if verbal or written notification shall be given by the Seller or Seller's agent to the Buyer that the acceptance has been signed by the Seller' [131].

125 The question in this case is whether the offeror has specified a particular mode of acceptance as being the exclusive mode. That is a question of construction of the offer; see, for example, George Hudson Holdings Ltd v Rudder [1973] HCA 10; (1973) 128 CLR 387. Consequently, consideration of the result of cases involving other clauses in different contracts will be of limited assistance.

126 I note the discussion in Cheshire & Fifoot's Law of Contract (9th ed, 2008) [3.42]. The tenor of that discussion is that in the absence of mandatory language, courts will generally be slow to construe a mode of acceptance mentioned in the offer as being the exclusive method of acceptance.

127 The provision on the Second Quotation identified a permissible mode of acceptance. The language of that provision is not mandatory. The provision is not expressed in terms that the offer may be accepted only by signing and returning the quote.

128 Viewed from the perspective of the offeror (in an objective sense), I am not persuaded that the content, subject matter and context of the offer would have required acceptance only by signature and return of it.

129 I am not persuaded that on a proper construction of the Second Quotation it could be accepted only by signing and returning it.

130 For these reasons, I find that RJB Nominees has established the agreement pleaded in par 13A of its statement of claim.

131 Consequently, there is no need to consider whether the parties made the implied agreement pleaded in par 27A of the statement of claim. That agreement is substantially to the same effect as the agreement I have already found.

132 Finally, I turn to the question of whether any contract was made at the meeting of 18 January 2006.

133 I have found that matters agreed at the meeting of 18 January 2006 were accurately recorded in PMG's letter of 1 February 2006. These included that PMG accepted the quote for RJB Nominees to do the work the subject of the Second Quotation and that PMG accepted that RJB Nominees would organise the Forward Works at cost plus 10%, plus GST.

134 I have also found that the parties had earlier agreed, in the conversation that occurred sometime between 17 August 2005 and 27 October 2005, that PMG accepted RJB Nominees' Second Quotation. What was agreed at the 18 January 2006 meeting is in that respect a reiteration of what had already been agreed. That does not necessarily deprive it of contractual effect.

135 It was open to the parties to replace the earlier agreement with an agreement to the same effect but with an additional term about the Forward Earthworks. I find that is what the parties objectively intended.

136 Part of what was also agreed at the 18 January 2006 meeting was that RJB Nominees would take lots 81 and 83. As I have said, the price for which those lots were to be transferred was not discussed at that meeting and had not otherwise been agreed. Consequently, the corresponding questions arise, as arose in relation to the First Agreement, whether the parties intended (objectively) that payment by transfer of lots was an essential feature of any binding agreement that PMG accepted the Second Quotation and for RJB Nominees to do the Forward Earthworks on the agreed basis.

137 I do not overlook Mr Baker's evidence (ts 56) that the mechanism for transfer of the lots was a significant component of the arrangements being contemplated.

138 For corresponding reasons to those already given [118] - [120], in my opinion, the more likely objective intention of the parties is that the obligation of PMG to pay RJB Nominees the amount of the Second Quotation and cost plus 10% in respect of the Forward Earthworks was not conditioned on the parties subsequently coming to an agreement as to the price for which lots 81 and 83 were to be transferred to RJB Nominees.

139 For these reasons I find that on 18 January 2006 the parties made the agreement pleaded in par 30A, that:

(a) RJB Nominees would carry out the Original Scope of Work and the Additional Work for $193,254 plus GST; and

(b) RJB Nominees would carry out the Forward Earthworks and be paid cost plus 10%.

(a) the agreed price for the Original Scope of Works and the Additional Work under the Second Quotation, namely $193,254 plus GST, (ie $212,579.40); and

(b) payment on the agreed basis for the Forward Earthworks, namely cost plus 10%, being $70,703.95.

141 This conclusion is sufficient to dispose of the action. However, for the sake of completeness, I will set out my conclusions in relation to RJB Nominees' alternative claim for quantum meruit, and state my reasons for those conclusions in a summary way.

142 This claim is, as I have said, in the alternative to the contract claim. Thus it arises only on the assumption that the contract claims have failed. Consequently it is to be approached on the hypothesis that neither the telephone conversation between Mr Baker and Mr Craig Parsons in 2005 [24], [76] and [81], nor their conversation at the meeting of 18 January 2006, gave rise to any agreement that was binding in law.

143 It is convenient to say something more about the facts before dealing with the legal principles relevant to this claim.

144 RJB Nominees first provided to PMG services relevant to this action in November 2005. Those services were described as 'pre-start forward works' and were not part of the Original Scope of Work or the Additional Work. By November 2005, the parties had discussed the provision by RJB Nominees of services for the Original Scope of Work and the Additional Work. However, there had not been any request by PMG for RJB Nominees to perform the Forward Earthworks.

145 In December 2005 RJB Nominees commenced providing services that were part of the Original Scope of Works (exhibit 1 pages 50 - 51, ts 51).

146 By about 24 April 2006 RJB Nominees had completed the Original Scope of Work and the Additional Work. The evidence does not make clear how much of that work was done in January and the first half of February 2006. I infer from the tenor of the communications between the parties that very little of the work was done in that period and that the substantial majority, if not substantially all, of it was done after the letter of 16 February 2006 from PMG to RJB Nominees. In any event, for reasons which I will explain, it does not seem to me to matter whether work was done in January or early February, or after 16 February 2006.

147 The following arise from the findings I have already made:

(a) by no later than 27 October 2005 Mr Baker and Mr Craig Parsons had agreed, in the telephone conversation referred to at [76] and [81], that RJB Nominees would do the Original Scope of Work and Additional Work and be paid in accordance with the Second Quotation;

(b) on 18 January 2006 Mr Baker and Mr Craig Parsons reiterated that agreement, and further agreed that RJB Nominees would do the Forward Earthworks and be paid costs plus 10%;

(c) by 17 February 2006, the parties were in disagreement as to the terms of their arrangement, in particular about whether RJB Nominees would be paid in part by the transferred lots and, if so, at what price;

(d) thereafter RJB Nominees performed the substantial bulk of the work the subject of the Original Scope of Work, the Additional Work and the Forward Earthworks.

148 Notwithstanding the disagreement between the parties evident from 17 February 2006 onwards as to the terms on which services were to be provided by RJB Nominees, at no time did PMG communicate to RJB Nominees that PMG no longer wished services to be provided by RJB Nominees. I will return to this point.

149 I deal with the quantum meruit claim on the hypothesis, contrary to my earlier finding, that the agreements referred to in subpars (a) and (b) did not amount to binding contracts. On this hypothesis, the parties either mistakenly believed that their agreement amounted to a binding contract, or they intended and expected that there would be a binding contract once agreement was reached about the price at which the lots were to be transferred. On the first alternative, the services were provided under what is often (in this context) described as a void contract. On the second, the services were provided in anticipation of a contract which did not ultimately materialise. The services provided were the entirety of the services the subject of the contemplated contract.

151 Claims in restitution or unjust enrichment are not determined 'by reference to a subjective evaluation of what is fair or unconscionable: recovery rather depends on the existence of a qualifying or vitiating factor falling into some particular category': Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 [150]; see also Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221, 256 - 257.

152 There is, as four justices of the High Court said in Lumbers v W Cook Builders Pty Ltd (in liq) [2008] HCA 27; (2008) 232 CLR 635 [86], a 'long-established and well-recognised category of cases constituted by claims for work and labour done or money paid at the request of another'. (emphasis omitted)

153 In my opinion, as a general rule, and subject to exceptions, if party A requests party B to provide services in circumstances where, objectively, B expects to be paid for the services, then A will be obliged to pay a reasonable remuneration to B for the services. Counsel for PMG submitted that that rule was subject to an exception which applied in this case. I will come to the exception sought to be relied upon by PMG shortly. Before doing so, I mention some well-established exceptions which do not apply in this case.

154 If the request is made in the context of an enforceable contract between A and B, then any claim by B must be founded on the contract, not in restitution: Lumbers [111]; Pavey v Paul (256).

155 Another exception is where a request is made in circumstances where, objectively, the services are provided on the basis that B will be paid for those services only if a certain event subsequently occurs, for example, a contract being entered into between A and B. Services in preparation for a tender often fall into this category. See, for example, Brenner v First Artists Management Pty Ltd [1993] VicRp 71; [1993] 2 VR 221, 259. Although on one view the present case could (on the hypothesis that there was no contract) be seen as an anticipated contract that did not materialise, this exception does not apply to this case. Objectively, it was not the parties' intention that RJB Nominees be paid for completing all of the work the subject of the Original Quote, the Additional Work and the Forward Earthworks only if and when the parties entered a contract. I refer to my findings in [182] - [189] below.

156 Counsel for PMG submits that the general rule I have set out above does not apply to a request by A to B for B to perform works which will benefit a third party (C), for example, by performing work on land owned by C. Counsel submits that a request to do work for someone else's benefit (or, I add, apparent benefit) does not of itself give rise to a benefit in the form of the reasonable value of the services to the party making the request. Rather, the submission continues, it would be for the party providing the services (B) to establish, by further facts, that the provision of those services provided some benefit to the requesting party (A) and to identify what that benefit was.

157 For the reasons that follow, I do not accept that submission.

158 In Lumbers v Cook, the owners of property (the Lumbers) contracted with a building company (referred to as 'Sons') for the building company to build a house. That building company entered into an arrangement with an associated company (referred to as 'Builders') for the associated company to perform much of the work. The associated company made a claim against the owners of the house. The High Court rejected the associated company's claim, essentially on the basis that the associated company had not performed work or made payments at the request of the owners. See, for example, [39], [49], [89] - [91] and [126].

159 After setting out nine factors that the associated company had argued in support of its claim (based on what was said by Doyle CJ in Angelopoulos v Sabatino [1995] SASC 5230; (1995) 65 SASR 1, 12 - 13), Gummow, Hayne, Crennan and Kiefel JJ said as follows:

It will be noted that the second of the matters identified was the making of an 'implied request' by the Lumbers to Builders to do the work and to pay money. At once it should be pointed out that, if Builders did whatever work it did and paid whatever money it paid at the Lumbers' request, Builders' claim for a reasonable price for the work and for the money it paid would fall neatly within long-established principles. It would matter not at all whether the request was made expressly, or its making was to be implied from the actions of the parties in the circumstances of the case. Builders would have an action for work and labour done or money paid for and at the request of the Lumbers.

And if Builders did work or paid money at the Lumbers' request, it would also follow that it would be neither necessary nor appropriate to consider any of the other eight factors identified in Angelopoulos in deciding whether Builders could recover a fair price for the work it had done and the amount it had paid for and at the request of the Lumbers. To the extent that Angelopoulos is understood as requiring separate or additional consideration of those other factors, where a plaintiff seeks to recover a fair price for work done at the defendant's request, or the amount the plaintiff has paid for the defendant at the defendant's request, Angelopoulos is wrong and should not be followed [89] - [90].

160 Counsel for PMG submitted that the general rule apparent in that passage did not apply where the request was for performance of work for the benefit or apparent benefit of a third party, rather than for the benefit of the requesting party, for example, where the work was to be performed on land owned by a third party.

161 In this context, the following passage of their Honours' reasons should be noticed.

In any event, however, if no concluded agreement was made between Builders and Sons before work was done or money was paid, there is no doubt that, if the work was done by Builders it was done at Sons' request, or that, if Builders paid money, it did so at Sons' request. It follows that, if Builders did work or paid money, it had a claim against Sons for work done and money paid at Sons' request. That is, if Builders did work or paid money, Builders could look to Sons for payment for the work it did and the money it paid at the request of Sons in performance of the building works which Sons had agreed to perform under its contract with the Lumbers ...[111].

162 In that passage, their Honours state that a request to the associated company (Builders) by the party (Sons) which had contracted with the owners (the Lumbers) for work to be done on the owners' land, would give rise to an obligation on the requesting party to pay reasonable remuneration to the associated company that was requested to do the work.

163 I do not overlook that, in Lumbers, there was a contract between the building company (Sons) and the owners, and that this contract was referred to in the passage I have set out. Consequently, it could be said that the benefit to the requesting party (Sons) in the work done by the associated company derived from the fulfilment of the requesting party's contractual obligations to the owners of the land and not simply from the request itself. However, I do not think that that restriction is supported by principle or other authorities, to which I now turn.

164 A claim for quantum meruit can arise in respect of services which do not have any end product of economic value (sometimes termed 'pure services'): Brenner (257 - 259); ABB Power Generation Ltd v Chapple [2001] WASCA 412; (2001) 25 WAR 158 [20].

165 In Brenner, Byrne J explained the position as follows:

The defendant's submission, however, exposes a difficulty which arises in different ways in this area of law. Where a person pays money to another it is not difficult to see that a benefit has thereby accrued to the recipient. Services present greater difficulty. If the law of restitution is available to oblige the recipient of the benefit of services to make restitution, it must acknowledge that such benefit may take many forms. It seems to me unlikely that the law would introduce into this area the difficult and somewhat arbitrary distinction which has been drawn in the law of negligence between pure economic loss and physical loss. To take an extreme case, it may be of benefit to an artist simply that it be known that a particular person has accepted the role of his or her manager or that the manager by accepting the artist as a client is then precluded from acting for a competitor of the artist. I have referred to non-economic benefits which may be requested, conferred and accepted. I would need clear authority to deny a claimant the right to restitution for such services when all the other requirements of the cause of action are established If a landowner requests an architect to prepare a design for a building in circumstances where there is no enforceable contract and the architect undertakes the preparatory work but does not produce any design before the defendant abandons the project, it may be said that no benefit exists which is capable of acceptance. Planche v Colburn [1831] EngR 856; (1831) 8 Bing 14; 131 ER 305 is authority against such a conclusion. In my opinion, 'benefit' in this context must be seen from the perspective of the recipient who is, after all, the person to be charged. It may be that for some idiosyncratic reason a defendant seeks the performance of work which another would see as without benefit or, indeed, as a positive dis-benefit. Examples of this are given by Goff J in BP Exploration Co (Libya) v Hunt (No 2) [1979] 1 WLR 783, at 803. But where a person requests another to do something, it is not unreasonable for the law to conclude that the former sees some benefit in its performance, however wrong this view may be on an objective basis and for the law to act upon the perception of the recipient.

...

I conclude that in a case where the services were requested and accepted, the law will not stop to enquire whether they were, on any other basis, of benefit to the party requesting and accepting them (257 - 258).

166 Thus Byrne J held that a request by A for B to provide services of itself justifies the conclusion that the provision of the requested services is a benefit to A (unless A did not accept the services following A's request).

167 His Honour held that the benefit to the party making the request was to be valued at the reasonable value of the services requested: Brenner (258 - 259, 263).

168 So if, for example, A requests B, a professional musician, to perform a private concert, A will be obliged to pay B the reasonable value of B's services. That will be so, in my opinion, whether the request is made to perform to A, or to perform for other third parties in the absence of A.

169 In my opinion, the same position applies in respect of a request to provide services which have or may have an end product of economic value. When A requests B to provide services, B is entitled to proceed on the basis that the provision of the services is itself a benefit to A. B need not be concerned if the provision of the services benefits, or appears to benefit, in a more direct or obvious way, a third party C. Absent special considerations, it is to the requesting party A, not C, that B should look for payment.

170 Counsel for PMG relies upon a passage in the judgment of Byrne J in Brenner (261) in which his Honour stated that:

(a) it was of significance on the facts of the case that it was the defendant who accepted the services, for it was the defendant from whom restitution was sought; and

(b) where on a proper analysis it cannot be said that it was the defendant who obtained the benefit of the services, or it was not in the contemplation of the defendant as a reasonable man that the plaintiffs realised he would be responsible for payment, then the claim against him in respect of those services must fail.

171 Counsel submitted that in the present case it was not PMG who received any benefit because PMG was not the landowner. It is convenient to set out the whole paragraph in which this passage is found, in order to explain why I do not consider that it supports PMG's submission.

But, in my view, there is a further matter associated with the defendant's allegations of contract which must be considered. The claim of the plaintiffs is that they provided services and that the defendant accepted the benefit of their services in circumstances where he, as a reasonable person, should realise that the plaintiffs would expect to be paid for them. It is of significance on the facts of this case that it is the defendant who accepts the services in these circumstances for it is the defendant from whom restitution is sought. Where, upon a proper analysis of the facts, it cannot be said that it was the defendant who obtained the benefit of the services or, in this case, it was not in the contemplation of the defendant as a reasonable man that the plaintiffs realised that he would be responsible for payment, then the claim against him in respect of those services must fail. Furthermore, the situation may change as circumstances alter from time to time: Watson v Watson [1953] NZLR 266. When, as I have found in this case, certain of the services were provided at a time when the plaintiffs understood that they would in due course be recompensed by FAM and that it was for FAM that they were providing the services, there can be no room for restitution by the defendant, Braithwaite. The fact that Braithwaite under his contract with FAM and the investors stood to benefit from the income of FAM derived as a result of these services does not impose on him an obligation of the kind contended for by the plaintiffs. This result must follow from the fact that the services were provided at the request of FAM and any recompense in the absence of contract must be sought from the quarter (261).

172 It seems to me that his Honour's reference to whether there is a benefit must be read with what he had already said about the concept of benefit: a requested service will be taken to be a benefit to the party making the request. That is supported by the concluding part of the paragraph. There Byrne J stated that the prospect of ultimate benefit to one party (Braithwaite) from the provision of services was insufficient to lead to a claim against that party where the services were provided at the request of another (FAM). It is the party who made the request against whom any claim must be made.

173 There is authority that an obligation to pay reasonable remuneration for services will arise, in the absence of a request, if the services are accepted. See, for example, Brenner (257 - 261); ABB v Chapple [15], [20] - [21]; Andrew Shelton & Co Pty Ltd v Alpha Healthcare Ltd [2002] VSC 248; (2002) 5 VR 577 [97] - [117]; Alma Hill Constructions Pty Ltd v Onal [2007] VSC 86; (2007) 16 VR 190 [57] - [63]. These cases rely primarily on what was said in Pavey v Paul (227 - 229, 255 - 257, 262 - 263).

174 The test applied in Brenner (260) and ABB v Chapple [21] as to when services have been accepted is that stated in Goff & Jones, The Law Of Restitution (7th ed, 2007) [1-019]. A person will be taken to have accepted services if:

as a reasonable man [or woman, he or she] should have known that the claimant who rendered the services expected to be paid for them, and yet he did not take a reasonable opportunity open to him to reject the proffered services.

175 That test was also applied in the context of explaining why no claim arose in Damberg v Damberg [2001] NSWCA 87; (2001) 52 NSWLR 492 [192] - [193] and in Lumbers [53].

176 Where services are provided under a contract which turns out to be void or otherwise ineffective, or pursuant to a request made in a normal commercial relationship with a person whose business it is to provide those services for reward, the test for acceptance will, generally at least, be satisfied: Brenner (260), quoted with approval in ABB v Chapple [21].

177 There may be doubt as to whether acceptance of a benefit, without a request, will be sufficient to found an action for quantum meruit for work done: see Lumbers v Cook [82], [86]. In any event, it is not necessary to consider that question in this case. That is because I find, as I will shortly explain, that the relevant services were both requested and accepted by PMG.

178 Where one party requests the other party to provide services, the benefit to the party requesting the services will generally be the reasonable value of those services: Brenner (258 - 259, 263). The benefit may be valued in a different way in the case of unrequested ('unsolicited') services: Pavey v Paul (263).

179 The provisions of an ineffectual or void agreement between the parties as to the price to be paid for the services are evidence of the appropriate reasonable remuneration, but not determinative of it: Pavey v Paul (257); Brenner (263).

180 I now apply these principles to the present case.

181 In my opinion, RJB Nominees is not entitled to a quantum meruit claim in respect of the work which it performed in November 2005. That work related to the Forward Earthworks. There is no evidence of an express request by PMG for RJB Nominees to perform the Forward Earthworks in November 2005. I am not satisfied that there was an implied request to this effect. Nor am I satisfied that PMG can be said to have accepted those services, in the sense I have explained.

182 In my opinion, RJB Nominees is entitled to a reasonable remuneration for work which it performed in December 2005 and January 2006 in respect of the Original Scope of Work and the Additional Work. That work was done at the request of PMG. PMG made that request in the conversation between Mr Craig Parsons and Mr Baker prior to 27 October 2005, and again in their discussions at the meeting of 18 January 2006.

183 PMG submits that the work was not done in accordance with its request in that:

(a) PMG requested that the work be done urgently; and

(b) RJB Nominees delayed considerably before doing the work.

184 To my mind, the short answer to this point is that PMG never withdrew its request for RJB Nominees to do the work.

185 The same position pertains, in my opinion, to work done between 18 January 2006 and 17 February 2006.

186 From 17 February 2006 the parties were, as I have said, in disagreement as to the terms on which further work by RJB Nominees would be remunerated by PMG. See, in this regard, the exchanges of letters on 17 February 2006; the letters of 9, 14 and 23 March 2006; and the letters of 24, 26 and 28 April 2006.

187 In those letters, Mr Kerry Parsons on behalf of PMG stated that PMG would not remunerate RJB Nominees for its work by transferring the two lots at a price of $190,000. Rather, Mr Kerry Parsons stated that PMG would pay cash or transfer the lots at some other price or on some other basis. Thus the differences between the parties related to the form of the remuneration and, if it involved the transfer of lots 81 and 83, the price to be allocated to those lots.

188 At no point in the communications did Mr Kerry Parsons suggest that RJB Nominees would not be remunerated for the work at the price or cost plus basis that had earlier been discussed. Nor did he instruct RJB Nominees not to do the work.

(a) from 17 February 2006 until RJB Nominees completed the work in July 2006, PMG expressly or impliedly maintained its request for RJB Nominees to perform the various works;

(b) the request was for the works to be performed on the basis that RJB Nominees would be paid in accordance with the price or cost plus basis that had already been discussed and agreed;

(c) further, PMG accepted the services in that, viewed objectively, PMG should in the circumstances have known that RJB Nominees expected to be paid for the services, but PMG did not take the opportunity open to it, after 17 February 2006, to say that it no longer wished RJB Nominees to provide the services in question.

190 For these reasons, I find that RJB Nominees is entitled to reasonable remuneration for all the services it provided, apart from the services provided in November 2005.

191 The only evidence as to the value of the services lies in what the parties themselves agreed. As I have said, that is relevant but not determinative evidence of the reasonable value of the services.

192 Counsel for PMG submitted that any agreement between the parties as to the price of the work to be done was reached only in the context of the expectation that payment would be made in part by transfer of the lots. That meant, the submission continued, that the agreed price could not be taken as reflecting agreement regarding the value of the services if the services were to be paid for by cash. I do not accept that submission. Apart from anything else, once the dispute as to the basis for valuing lots 81 and 83 emerged, PMG at all times indicated a willingness to pay RJB Nominees in cash.

193 In the absence of any other evidence and in the circumstances of this case, I am satisfied that the price and basis agreed by the parties reflects the reasonable value of the services.

194 For these reasons, had I dismissed the contract claims, I would have allowed RJB Nominees' quantum meruit claim, except in relation to the work done in November 2005.

195 My major conclusions may be summarised as follows:

(a) I would dismiss RJB Nominees' contract claim that it was entitled to be paid on the basis that payment would be made in part by the transfer of lots 81 and 83 at a price of $190,000;

(b) that is essentially because I am not persuaded that the parties ever agreed on the price at which the lots would be transferred; and

(c) I would uphold RJB Nominees' contract claim for the agreed price of the Original Scope of Work and the Additional Work, and for payment at cost plus 10% for the Forward Earthworks, being a total of $283,283.35.

196 I will hear from the parties as to the orders to be made and as to costs.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : R J BAKER NOMINEES PTY LTD -v- PARSONS MANAGEMENT GROUP PTY LTD [2009] WASC 206 (S)

BETWEEN : R J BAKER NOMINEES PTY LTD (ACN 008 852 168)

Costs - Confidential and privileged nature of mediation - Scope of exception to mediation privilege in Supreme Court Act 1935 (WA) s 71(3)(c) - Plaintiff awarded judgment in the sum of $283,283 - Calderbank offer made in the sum of $270,000 inclusive of interest and costs - Whether offer should be construed as if it excluded GST - Appropriate costs orders - Turns on own facts

Supreme Court Act 1935 (WA) s 71

Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Company Ltd [2008] WASCA 119

Amaca Pty Ltd v Hannell [2007] WASCA 158(S)

Permanent Building Society v Wheeler [No 2] (1993) 10 WAR 569

RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2009] WASC 206

Western Areas Exploration Pty Ltd v Streeter [No 2] [2009] WASCA 15

1 On 27 July 2009 I delivered my reasons on the trial of this action: RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2009] WASC 206. In summary:

(a) I dismissed RJB Nominees' contract claim that it was entitled to be paid on the basis that payment would be made in part by the transfer of lots 81 and 83 at a price of $190,000; and

(b) I upheld RJB Nominees' contract claim for the agreed price of the Original Scope of Work and the Additional Work, and for a payment at cost plus 10% for the Forward Earthworks, being a total of $283,283.35.

2 I also found that, had the alternative contract claim not succeeded, I would have upheld RJB Nominees' quantum meruit claim except in relation to the work performed in November 2005.

3 On 27 July 2009 I ordered that PMG pay RJB Nominees $283,283 and interest on that sum at 6% from 22 September 2007 until judgment.

4 I also ordered that the parties exchange submissions and any affidavits on the question of costs, and that the question of costs be determined on the papers.

5 Both parties contend that they are entitled to an order for costs in their favour. In essence, RJB Nominees contends that it was the successful party and should have its costs on that basis. Among other things, PMG relies on offers it made to RJB Nominees before and after the action was commenced.

6 I begin with RJB Nominees' objections to the evidence relied on by PMG.

7 PMG filed an affidavit of Mr Christopher Williams, a solicitor employed by PMG's firm of solicitors. The affidavit comprised 15 paragraphs and 14 annexures. Objection was taken to 10 of the paragraphs. A substantial part of the affidavit and its annexures are unnecessary. The first seven annexures and annexure CSW-10 are already before the court. All but one of these annexures were evidence in the trial. The other annexure is part of the court record, being the writ of summons in one of the two actions the subject of the trial.

8 I will deal in a summary way with the objections, although I do not consider that the evidence objected to makes any difference to the conclusion I have reached in relation to the appropriate costs order to be made.

9 I uphold the objections to pars 6, 7, 10, 12, 13 and 14 on the ground of secondary evidence. I also uphold the objection to the first sentence of par 7 on the ground that it is conclusion and comment.

10 I overrule the objections to pars 9 and 11 on grounds of relevance. Notwithstanding that, I consider that the offer made by RJB Nominees by letter of 23 June 2007 does not bear in any significant way upon my decision.

11 I overrule the objection to par 15. The grounds of the objection go to weight of the evidence, not to admissibility.

12 Paragraph 8 of Mr Williams' affidavit gives evidence about things said and done at a court conducted mediation in the action. RJB Nominees objects to this evidence on the ground that it offends the confidentiality of the mediation process, which is given a statutory privilege by s 71(1) of the Supreme Court Act 1935 (WA). For the reasons that follow, I uphold that objection.

13 Section 71 is in the following terms:

(1) Subject to subsection (3), evidence of -

(a) anything said or done;

(b) any communication, whether oral or in writing; or

(c) any admission made,

in the course of or for the purposes of an attempt to settle a proceeding by mediation under direction is to be taken to be in confidence and is not admissible in any proceedings before any court, tribunal or body.

(a) any document prepared in the course of or for the purposes of an attempt to settle a proceeding by mediation under direction;

(b) any copy of such a document; or

(c) evidence of any such document,

is to be taken to be subject to a duty of confidence and is not admissible in any proceedings before any court, tribunal or body.

(3) Subsections (1) and (2) do not affect the admissibility of any evidence or document in proceedings if -

(a) the parties to the mediation consent to the admission of the evidence or document in the proceedings;

(b) there is a dispute in the proceedings as to whether or not the parties to the mediation entered into a binding agreement settling all or any of their differences and the evidence or document is relevant to that issue;

(c) the proceedings relate to a costs application and, under the rules of court, the evidence or document is admissible for the purposes of determining any question of costs; or

(d) the proceedings relate to any act or omission in connection with which a disclosure has been made under section 72(2)(c).

(4) A mediator cannot be compelled to give evidence of anything referred to in subsection (1) or (2) or to produce a document or a copy of a document referred to in subsection (2) except -

(a) in proceedings referred to in subsection (3)(d); or

(b) in proceedings relating to a costs application where there is a dispute as to a fact stated or a conclusion reached in a mediator's report prepared under the rules of court on the failure of a party to cooperate in the mediation and the evidence or document is relevant to that issue.

costs application means an application for the costs of the mediation or of the proceedings to which mediation relates.

14 PMG relies upon the exception in s 71(3)(c). Two elements must be established in order to engage the exception in s 71(3)(c). First, the proceedings must relate to a costs application. 'Costs application' is defined to mean an application for the costs of the mediation or the proceedings to which the mediation relates. That element is satisfied in the present context. The second element is that 'under the rules of court, the evidence or document is admissible for the purposes of determining any question of costs. PMG's submission fixes upon the word 'under' in the phrase 'under the rules of court...'.

15 The only rule of court which, by its terms, makes any evidence or document admissible for the purpose of determining a question of costs is O 29 r 3(2) of the Rules of the Supreme Court 1971 (WA). That rule is in the following terms:

(a) shall not, unless the parties agree, report to the Court on a mediation conference;

(b) whether or not the parties agree, may report to the Court on any failure by a party to cooperate in a mediation conference; but the report shall not be disclosed to the trial judge except for the purposes of determining any question as to costs.

16 PMG relies upon an order made by a case management Registrar in the action. The Registrar's order of 29 January 2007 was in the following terms:

By consent the mediation be conducted on a confidential basis. The parties shall not tender in evidence in any proceedings or disclose to any person who did not attend the mediation anything said or done, any communication (whether oral or in writing), or any document made or created in the course of or for the purpose of the mediation except:

...

(b) in regard to any questions of costs.

17 PMG submits, and I accept, that pursuant O 29A r 3(2)(j), (k) and (l) of the Rules of the Supreme Court, case management Registrars are given power to 'set the terms or conditions' for a mediation conference and to deal with anything in relation to that conference. PMG submits that:

(a) the case management Registrar's order of 29 January 2007 was a case management direction setting a term or condition for the mediation conference;

(b) 'under' is defined in s 5 of the Interpretation Act 1984 (WA) to include 'by', 'in accordance with', 'pursuant to', and 'by virtue of';

(c) the case management direction was made 'by', 'in accordance with', 'pursuant to', or 'by virtue of' O 29A r 3(2)(j), (k) and (l); and

(d) consequently, evidence of what occurred at the mediation is admissible 'under' the rules of court with respect to a costs application.

18 I do not accept that submission. In my opinion, on a proper construction, evidence or documents are admissible for the purposes of determining any question of costs 'under the rules of court', for the purposes of the exception in s 71(3)(c), only if the rules of court make specific and express provision to that effect. In other words, the exception is not engaged by a case management order. Moreover, I do not think that it is open to a case management Registrar (or any judicial officer) to make a case management direction under O 29 or O 29A of the Rules of the Supreme Court that affects the protection afforded to a mediation by s 71 of the Supreme Court Act.

19 The legislative history is relevant to the proper construction of s 71. The legislative history was explained by Buss JA in Western Areas Exploration Pty Ltd v Streeter [No 2] [2009] WASCA 15 [9] - [11]. Section 71 of the Supreme Court Act was inserted by s 18 of the Courts Legislation Amendment Act 2000 (WA). That latter Act also amended s 167(1) of the Supreme Court Act by deleting par (q) and inserting, in its place, the following:

(1) Rules of court may be made under this Act, by the judges of the Supreme Court, for the following purposes:

...

(q) For enabling and regulating the mediation of any of the differences between any parties to a proceeding generally and, in particular, providing for -

(i) the reference of a proceeding or any part of a proceeding to a mediator with or without the consent of any party to the proceeding;

(ii) the conduct of the mediator and of the parties;

(iii) the terms and conditions upon which the mediation conference is to be held; and

(iv) the admissibility of evidence in relation to a mediation for the purpose of determining the costs of the mediation or the costs of the proceedings between the parties to the mediation.

20 In my opinion, the proper construction of the phrase 'under the rules of court, the evidence or document is admissible for the purposes of determining any question of costs' should take into account the insertion of s 167(1)(q), at the same time, in the rule-making section of the Act. This section inserted a power for the court to make rules providing for the admissibility of evidence in relation to a mediation for the purpose of determining the costs of the mediation or the costs of the proceedings between the parties to the mediation. The subject matter of the rule-making power created by new par (q) of s 167(1) resonates with the subject matter of the rules of court referred to in s 71(3)(c).

21 In Western Areas Exploration v Streeter the argument put by PMG in this case does not appear to have been raised and was not specifically addressed by the Court of Appeal. Nevertheless, the reasoning of Buss JA (with whom Wheeler and Pullin JJA agreed) seems to me to provide strong support for the construction which I anyway prefer.

22 Buss JA commented on the close connection between s 71(3)(c) and the amended s 167(1)(q). He observed that each provision is 'concerned in substance with the admissibility of evidence in relation to a mediation under a Rule of Court for the purpose of determining any question of costs between the parties to the mediation' [32].

23 In Western Areas Exploration v Streeter, the appellants argued that evidence was 'under the rules of court' admissible for the purposes of determining a question of costs (within the meaning of s 71(3)(c)) if it complied with O 37 of the Rules of the Supreme Court. This rule regulates the form and contents of affidavits for use in civil proceedings in the court. The Court of Appeal rejected that contention. In doing so, Buss JA came to the following conclusion as to the proper construction of these provisions.

(a) s 71(1) and (3), read with the amended s 167(1)(q); and

(b) the contrast between para (c) of s 71(3) on the one hand, and paras (a), (b) and (d) of s 71(3) on the other, to which I have referred at [28]-[31] above,

indicate that the exception in s 71(3)(c) authorises the admissibility of evidence or documents relating to statements, communications and admissions made, in the course of or for the purposes of an attempt to settle a proceeding by mediation under direction, only where the evidence or documents are sought to be given or tendered:

(c) in proceedings relating to a 'costs application' (as defined in s 71(5)); and

(d) the Rules specifically permit the evidence or documents to be admitted in evidence for the purposes of determining any question of costs (whether in relation to the mediation only or in relation to the civil proceedings as a whole).

1. The construction of s 71(1) and (3) that I prefer is consistent with (and, indeed, reinforced by) the Attorney-General's second reading speech which suggests a Parliamentary intention, in enacting Pt VI of the Act, relevantly, to impose on the parties to civil proceedings a statutory obligation of confidence and to extend the 'without prejudice' basis of court ordered mediation. The new statutory provisions were intended to reinforce the public policy objectives of encouraging parties to settle civil proceedings by the mediation process as soon as practicable before trial. The Attorney-General's speech confirms the ordinary meaning which is conveyed by the statutory text.
2. Order 29 r 3 did not, in the present case, authorise the admission into evidence of the affidavits sought to be relied on by the appellant. No other provision of the Rules specifically authorised the admission of the affidavits. The exception in s 71(3)(c) was therefore unavailable.

In the present context, his Honour's use of the word 'specifically' in [38(d)] and [40] should be noticed.

24 That brings me to the question of the appropriate costs orders.

25 It is convenient to consider the question of costs in two stages. First, I will consider the question in the absence of any offer to settle the action. Then I will consider the effect of the offers relied upon by PMG.

26 By O 66 r 1(1) of the Rules of the Supreme Court the court has a broad discretion in relation to costs but, absent other considerations, will usually order that the successful party recover his or her costs.

27 By O 66 r 1(3) of the Rules of the Supreme Court if a party, although generally successful, has failed on some issue or issues which increased the costs of the action, that party can be ordered to pay the costs of those issues. That will generally be appropriate only where the successful party failed on discrete issues which added to the costs of the action in a significant and readily discernable way: Amaca Pty Ltd v Hannell [2007] WASCA 158(S) [7].

28 Order 66 r 2(a) of the Rules of the Supreme Court provides as follows:

2**. Costs where several causes of action or several defendants etc.**

In the absence of any special order -

(a) where the statement of claim contains more than one cause of action and the plaintiff succeeds on one or more causes of action and the defendant succeeds on another or others, costs shall be allowed to the plaintiff on the cause or causes of action on which he succeeds and to the defendant on that or those on which he succeeds, in the same manner as if separate actions had been brought.

29 The effect of this rule is that a defendant is prima facie entitled to its costs on causes of action on which the plaintiff fails. However, an order of that kind is not made as of course. The court looks at the realities of the case and attempts to do justice. Where all causes of action arise out of the one course of dealing with the same facts, there would usually be one order for the general costs of the action moulded as necessary to ensure that substantial justice is done: Permanent Building Society v Wheeler [No 2] (1993) 10 WAR 569, 574 - 575.

30 In this action, RJB Nominees failed in its primary claim that payment for the work it did would be made in part by the transfer of lots 81 and 83 at a price of $190,000. RJB Nominees succeeded in its secondary alternative contract claim for the price of the work done, and otherwise would have substantially succeeded on the quantum meruit claim.

31 The same facts and evidence were relevant to the question of whether the primary claim would succeed and whether the secondary contract claim would succeed. The additional evidence in relation to quantification of the damages for the primary contract claim was insubstantial.

32 PMG's position at trial was to deny liability on any ground.

33 In substance, therefore, in relation to one set of facts RJB Nominees said that it was either entitled to something over $500,000, or was entitled to about $280,000, while PMG contended that RJB Nominees was entitled to nothing.

34 In those circumstances, it seems to me that (leaving aside any offer of settlement) RJB Nominees was the successful party in the action and should, subject to one matter, have its costs of the action. The exception relates to the costs of the original action incurred before 22 September 2007.

35 The action heard and determined at trial was the consolidation of two actions. RJB Nominees commenced the first action (CIV 1527 of 2006) in May 2006. In that action the claim was for transfer of the land by specific performance or damages. There were no alternative claims.

36 A second action (CIV 1977 of 2007) was commenced on 21 September 2007. It made the primary claim for the transfer of land or its value, but also included, as an alternative, a claim for quantum meruit. (Contrary to a submission of PMG, the quantum meruit claim was pleaded from the beginning of the section action.)

37 Prior to the commencement of the second action, therefore, the only claim made by RJB Nominees was the claim in relation to lots 81 and 83. That claim failed. In those circumstances, in my opinion, it is appropriate that RJB Nominees pay PMG's costs of action CIV 1527 of 2006 up to and including 20 September 2007.

38 That brings me to the effect of the offers relied upon by PMG. The offers are in two categories: offers made before the litigation commenced; and the Calderbank offer of 26 June 2007.

40 PMG relies upon the offers it made to RJB Nominees on 17 February 2006 and 14 March 2006.

41 The history of the communications between the parties is recounted in my reasons on the trial. From 17 February 2006 the parties were at odds about the terms on which work was to be done by RJB Nominees. In that context, Mr Kerry Parsons stated, at the meeting of 17 February 2006 and in a letter written that day, that PMG was willing to pay cash or transfer the blocks on a certain basis. On 14 March 2006, after further correspondence, Mr Kerry Parsons sent an email to Mr Baker. Part of the content of the email is set out in [57] of my primary reasons. The email also said that 'I am sure that you will see [the] funniness of what I have stated and accept the compromise or take cash'.

42 These emails reflect the parties' competing positions at the time during which their dispute emerged. Most of the work was done after those emails. The original action was commenced some months later. Before the action was commenced, by letter of 20 September 2007 RJB Nominees, by its solicitors, demanded payment of $283,283.35. To my mind, what was said by Mr Kerry Parsons in the communications in February and March 2006 is of little weight in determining the appropriate costs order for the action.

43 I turn to the Calderbank offer relied upon by PMG.

44 On 26 June 2007 PMG's solicitors wrote to RJB Nominees' solicitors. The letter was 'without prejudice save as to costs'. The letter rejected the offer which had been made by RJB Nominees and made a counter-offer, expressed as follows:

1. Our client agrees to pay your client the sum of $270,000 (inclusive of interest and costs) in full and final settlement of any claims your client has or may have against our client.
2. The sum of $270,000 is comprised of the sum of:

2.1 $193,000 in respect of the works undertaken by your client for the subdivision of lot 74 Harold Street, Gosnells (the 'Subdivision'), that are referred to in your client's statement of claim in [the original action]; and

2.2 the sum of $76,700 in respect of the other claims that your client alleges that he has for payment for other works undertaken in respect of the Subdivision that were referred to by your client at the mediation held on 15 May 2007.

45 There were other terms in the letter providing for a release by RJB Nominees of PMG, orders dismissing the proceedings, and the parties entering into a mutually acceptable deed of release.

46 It will be seen that the offer is expressed to be for $270,000. RJB Nominees obtained judgment for a greater sum, namely $283,283.

47 PMG submits that its offer of 26 June 2007 should be construed as an offer of $270,000 plus GST, namely $297,000. PMG refers to a number of background facts and aspects of the letter (PMG's submissions pars 17 and 18). I am not persuaded that the offer of 26 June 2007 should be construed as an offer of $297,000. When a figure is specified in an offer of settlement it seems to me that there would need to be strong justification to read the offer as offering something more than the figure specified. Moreover, it was PMG who made the offer and therefore chose its terms. I do not think that RJB Nominees can be said to have been unreasonable in failing to interpret the offer as exclusive of GST, or in failing to seek clarification from PMG.

48 PMG also contends that a conventional estoppel arises from RJB Nominees' solicitors' email of 30 October 2007 and PMG's solicitors' letter of the next day. RJB Nominees' solicitors' email of 30 October 2007 included the following:

Please tell me why my client should not have a partial judgment pursuant to Order 14 for $283,283.35 inclusive of GST. That is the agreed value of the work in the second quotation which your client accepted in writing plus the value of the forward earthworks. I think it is also the amount your client offered in full and final settlement. (emphasis added)

PMG relies upon the italicised words. Further, PMG says that nothing to the contrary was said in its solicitors' letter of 31 October 2007.

49 In my opinion, these letters fall well short of establishing conventional estoppel to the effect alleged by PMG. The elements of an estoppel by convention include the following:

(1) the parties had proceeded on the basis of an underlying assumption of fact, law or both, of sufficient certainty to be enforceable (the assumption);

(2) to the extent that the proponent relies on an assumption of law or an assumption of mixed fact and law, the assumption of law must relate to private legal rights, which includes a common assumption as to the effect of contracts or agreements;

(3) each party has, to the knowledge of the other, expressly or by implication accepted the assumption as being true for the purposes of the transaction;

(4) such acceptance was intended to affect their legal relations in the sense that it was intended to govern the legal position between them;

(5) the proponent was entitled to act and has, as the other party knew or intended, acted in reliance upon the assumption being regarded as true and binding;

(6) the proponent would suffer detriment if the other party were allowed to resile or depart from the assumption; and

(7) in all the circumstances it would be unconscionable to allow the other party to resile or depart from the assumption: Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Company Ltd [2008] WASCA 119 [27], [164].

50 There is no sufficient evidence to establish these elements. For example, there is no evidence of any reliance or detriment.

51 For the reasons I have given I make the following orders:

1. The plaintiff pay the defendant's costs in action CIV 1527 of 2006 up to and including 20 September 2007, such costs to be taxed if not agreed; and
2. The defendant pay the plaintiff's costs of the action from 21 September 2007, such costs to be taxed if not agreed.