B & W Windows (Aluminium) Pty Ltd v Marcellos

A right to make a claim in quantum meruit is a bare right of action and is not assignable 5The parties did not refer me to any case that deals with the question whether a claim in quantum meruit may be the subject of an assignment, nor could I find such a case. 6An unlicensed builder can recover on a quantum meruit: O'Connor v LEAW Pty Ltd (1997) 42 NSWLR 285 at 294. On a claim for a quantum meruit a builder may recover no more than what is fair and reasonable in the circumstances as compensation for the benefit of the work he has actually done and which has been accepted by the building owner: Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 262. To succeed on a claim in quantum meruit it must be established that a request for work was made to the claimant by the building owner: Lumbers & Anor v W Cook Builders Pty Ltd (in liquidation) (2008) 232 CLR 635. In Pavey at 262 Justice Deane described a claim in quantum meruit as an ordinary common law right of a builder to recover, in an action founded on restitution or unjust enrichment, reasonable remuneration for work done and accepted under a contract which is unenforceable. 7In Equuscorp Pty Ltd v Haxton [2012] HCA 7 at [53] the plurality said: A restitutionary claim for money had and received under an unenforceable loan agreement is inescapably linked to the performance of that agreement. If assigned along with contractual rights, albeit their existence is contestable, it is not assigned as a bare cause of action. Neither policy nor logic stands against its assignability in such a case. The assignment of the purported contractual rights for value indicates a legitimate commercial interest on the part of the assignee in acquiring the restitutionary rights should the contract be found to be unenforceable.... the restitutionary claims were assignable. 8In Equuscorp it was argued that the rights under the unenforceable contract and a restitutionary right for money had and received in relation to that unenforceable contract had been assigned. In this case the plaintiff has argued that only the restitutionary right against the defendant was assigned and the defendant has met that argument by saying that is a bare right to litigate and unassignable. A right to make a claim in quantum meruit is a right to bring an action arising from the concept of unjust enrichment. The implication of the quote from Equuscorp in paragraph 7 of these reasons is that a right to make a claim in restitution is a bare cause of action and is unassignable, whereas a contractor may assign rights under a contract and any restitutionary rights related to that contract. In these proceedings the plaintiff may have sued on a quantum meruit if there was a valid assignment by DW509 of its contract with the defendant and any restitutionary rights in relation to that contract to the plaintiff. The plaintiff did not argue that it had been assigned rights under the contract and a restitutionary right to a claim in quantum meruit arising from that contract by DW509.

There was no assignment of contractual rights or restitutionary rights arising from the contract 9The Statement of Claim pleads a written assignment dated 1 July 2013. 10The defendant tendered Exhibit 1 on the application. Exhibit 1 is a nine page document that was part of Annexure C to the affidavit of Mr Voits sworn 15 July 2014, relied upon in this application by the plaintiff. Mr Voits swore that Annexure C was the 11 page written assignment dated 1 July 2013. Mr Voits is a director of the plaintiff and was a director of DW509. 11In argument the defendant said that the final two pages of the annexure could not have formed part of the agreement as they bear the date 6/02/14. The defendant's submission was that the agreement was the nine page document which on its face was an asset sale agreement by B & W Windows P/L (DW509 Pty Ltd) to B & W Windows (Aluminium) P/L. 12In written submissions and in argument the plaintiff said that the final two pages of Annexure C headed "Receivables Reconciliation" did form part of the written agreement and was a list of the assets sold by DW509 to the Plaintiff. 13After the decision was reserved the plaintiff applied to re-open the evidence on the basis that pages 10 and 11 of Annexure C were not part of the written agreement and that page 7 of Annexure C (schedule 1 of the agreement) was not part of it either and that these three pages had been mistakenly included as part of Annexure C. After argument I refused to permit the plaintiff to re-open the evidence. 14I accept the submission of the defendant that the final two pages of Annexure C could not form part of the written agreement for assignment because they are dated some eight months later. For the purpose of this motion, having rejected the application to re-open, I am obliged to consider the evidence is that Exhibit 1 is the written agreement of assignment. 15In Exhibit 1 the recital is as follows: Background A. The Seller is the owner of the Assets and responsibilities listed in Schedule 2. B. The Seller has agreed to sell and the Buyer has agreed to buy the Assets and assume responsibility for the Liabilities on the terms and conditions contained in this Agreement. 16In Exhibit 1, clause 1.1 'Assets' is defined to mean the assets of the Seller as at 30 June 2013 being the assets listed in Schedule 1. 17In Exhibit 1, Schedule 1 (being page 7 of the agreement) is as follows: Assets as per Valuation List? Intellectual Property? Software Licences? Lease Bond/Bank guarantee to be changed? 18In Exhibit 1, Schedule 2 is as follows: to be advised. There is nothing else in Exhibit 1 that is relevant to the question of what was the subject matter of the sale. 19The recital in Exhibit 1 makes it clear that it is an asset sale agreement. Clause 1.1 records the purchase price as $95,000 and clause 3.2 provides that it must be paid on completion. 20An assignment is a transfer of rights or liabilities such as those that arise under an instrument, chose in action or debt. In respect of a contract an assignment is an arrangement in which one of the original parties to a contract transfers his benefits and obligations under the contract to a third party. Assignments of a contract may be effected by contract of novation, by equitable assignment, or by statutory assignment in which the creditor assigns a right to a debtor by complying with a statute such as s 12 of the Conveyancing Act 1919 (NSW). See Butterworths Concise Australian Legal Dictionary, 2nd edition, 1998. 21An assignment is to be distinguished from the sale of an asset in that it is a transfer of rights (and obligations) accruing under a contract or otherwise at law, whereas the sale of an asset may not include any rights. 22Equuscorp (supra) is an example of an attempted assignment. In that case the High Court considered an asset sale agreement in which Rural (a company) sold its loan agreements with investors to Equuscorp. Pursuant to the agreement Rural executed a deed assigning its interests under the loan agreements to Equuscorp and the amounts of the debts owing thereunder. Equuscorp sued the investors for breach of the loan agreements and for money had and received. In the case there was an asset sale agreement in which the asset was defined as 'the investor loans between Rural and others.' Further, a deed was executed between Rural as assignor and Equuscorp as assignee. The operative part of the deed provided: 'pursuant to the asset sale agreement, Rural as legal and beneficial owner, hereby sells, assigns, transfers and sets over the debts, its interests under the loan contracts... for the assignee to hold absolutely'; and: 'the assignment is an absolute assignment intended to take effect immediately as a legal assignment of, the legal right to such debts... and all interest due and becoming due on the debts and all legal and other remedies for these matters.' 23In this case the written agreement is limited to a sale of "the assets of the seller as at 30 June 2013 being the assets listed in schedule 1". Schedule 1 sets out a list of categories of property which on its face is a note raising questions for the drafter of the document rather than a list of assets the subject of the sale. I accept the defendant's submission that schedule 1 to the written agreement is meaningless as to what had been sold by DW509 to the plaintiff. 24There is a further objection to the validity of the assignment pleaded. There is no language of assignment in the written agreement, only of sale. The written agreement cannot be construed as assigning anything to the plaintiff. 25I have found for both arguments made by the defendant. I have relied upon the unchallenged facts asserted by the plaintiff including Annexure C to the affidavit of Mr Voits sworn 15 July 2014. On the evidence presented to the court on the application and on the Statement of Claim dated 1 May 2014 I am satisfied that no reasonable cause of action is disclosed. The claim in quantum meruit could not have been assigned and was not assigned. I dismiss the proceedings as sought by the defendant on the motion. I shall hear any argument about costs. Magistrate Lisa Stapleton Downing Centre Local Court 12 September 2014

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 October 2014