Carpenter & Anor v Morris & Anor

Court of Appeal (NSW)|2022-10-24|Before: Bell CJ, White JA

Solicitors: Aqua Law (Appellants) Farrell Lusher (Respondents) File Number(s): 2022/14029 Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Division Citation: [2021] NSWSC 1700 Date of Decision: 23 December 2021 Before: Williams J File Number(s): 2016/159226

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE [This headnote is not to be read as part of the judgment] In September 1996, the second appellant, Tastex Pty Ltd ("Tastex"), and the second respondent, Central West Granite Pty Ltd ("Central West"), commenced a partnership for the conduct of a quarry, and the treatment, marketing, and selling of gabbro (under the name "Grandee Granite") extracted therefrom. The first appellant, Mr Carpenter, and the first respondent, Mr Morris, were the respective controllers of Tastex and Central West. The quarry operated by the partners was located on two parcels of land, one of which was held by Mr Morris and his siblings as tenants-in-common, the other by Mr Morris' siblings outright. It was not in issue that the partnership was dissolved in August 2003. During the course of the partnership, the partners, after satisfying their liabilities to pay rent to the owners of the quarry and a number of royalties, apportioned income derived from the conduct of the partnership business equally. Unbeknownst to the appellants, however, the quarry's financial manager had, from July 2000 to August 2003, made additional monthly payments to Mr Morris from the partnership's income, totalling $246,324.45. The receipt of those payments by Mr Morris was only discovered by the appellants when he served a correcting affidavit at trial. After the partnership had been dissolved, Tastex continued to mine and treat gabbro from the quarry until late 2014. The appellants contended that Tastex did so on the basis of an agreement reached between Mr Carpenter and Mr Morris that: Tastex would have the exclusive rights to mine the gabbro; Mr Morris, in addition to administering the business of the quarry, would use reasonable endeavours to market and sell that gabbro; and Tastex would be entitled to a portion of any sale proceeds at fixed rates, depending on the quality of the gabbro sold. The appellants also contended that agreement was reached between Mr Carpenter and Mr Morris, whereby Mr Carpenter and Tastex would expose covered deposits of gabbro at the quarry, and Mr Morris would retain them to extract it and treat it prior to sale. Tastex's quarrying operations came to an end after amendments to the Mining Act 1992 (NSW) were considered by the respondents to render the conduct of a quarry without an exploration or mining licence unlawful. The appellants instituted proceedings seeking, amongst other relief, restitution of half of the additional monthly payments received by Mr Morris from partnership income by way of an action for money had and received, and damages for repudiation of the agreement relating to Tastex's quarry operations after dissolution of the partnership, by virtue of Mr Morris' failures to use reasonable endeavours to market and sell all gabbro extracted and to procure a suitable licence for quarrying. The primary judge dismissed each claim. As to the first, the primary judge held that Tastex's failure to sue in the name of the partnership firm sufficed to dispose of its claim for restitution, and that, even if it did not, any relief against Mr Morris for wrongful receipt of partnership income was not to be obtained by recourse to one of the common money counts, but rather by recourse to a claim for knowing receipt of funds obtained in breach of fiduciary obligation. As to the second, the primary judge was not satisfied that the evidence established an agreement or agreements of the kinds asserted by the appellants. The primary judge found that, while Mr Carpenter and Mr Morris did reach an agreement regarding Tastex's quarrying, that agreement limited Mr Morris' obligation to use reasonable endeavours to sell extracted gabbro only to first-grade gabbro, and did not incorporate an implied term to procure an exploration or mining licence. On Mr Carpenter and Tastex's appeal, the issues before the Court were: (i) Whether Mr Morris was liable to restore to Tastex half of the partnership moneys paid to him; (ii) Whether Mr Morris repudiated the agreement or agreements for Tastex to quarry the gabbro after the partnership was terminated by not obtaining the requisite authorities for the venture to continue. The Court (per White JA, Bell CJ and Simpson AJA agreeing), allowing the appeal in part, held: As to issue (i): (1) An action for money had and received may be instituted and maintained, notwithstanding the existence of an alternative claim in equity for knowing receipt of property obtained in breach of fiduciary obligation: [1] (Bell CJ), [59] (White JA), [97] (Simpson AJA). Fistar v Riverwood Legion and Community Club Ltd (2016) 91 NSWLR 732; [2016] NSWCA 81, followed. Farah Construction Pty Ltd v Say Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22, cited. (2) Where a third-party to a partnership receives partnership income, otherwise than as a bona fide purchaser for value without notice of the defect in title, there arises an obligation to make restitution of the income received, such obligation falling within the established categories of restitutionary liability and attended by a qualifying or vitiating factor: [6] (Bell CJ), [62]-[71] (White JA), [97] (Simpson AJA). Attorney General v Perry (1773) 2 Comyns 481; 92 ER 1169; Calland v Loyd (1840) 6 M & W 26; 151 ER 307; Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; [1987] HCA 5; Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; [1992] HCA 48; Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; [2014] HCA 14; Sims v Commonwealth of Australia (2022) 109 NSWLR 546; [2022] NSWCA 194, discussed. (3) It suffices to establish liability to make restitution in an action for money had and received that a putative defendant has received money or some other form of benefit at the plaintiff's expense, it being unnecessary for a putative plaintiff to identify through tracing specific money into the hands of a putative defendant: [2] (Bell CJ). As to issue (ii): (4) There was no error in the primary judge's rejection of an implied term in the agreements asserted by the appellants that Mr Morris would procure an exploration or mining licence as and when necessary to facilitate the continued operation of the quarry by Tastex. Such a term would be unnecessary to facilitate the reasonable and effective operation of any such contract: [1] (Bell CJ), [80]-[89] (White JA), [97] (Simpson AJA). Byrne v Australian Airlines Ltd (1995) 185 CLR 410; [1995] HCA 25, applied.

JUDGMENT

BELL CJ: I have had the benefit of reading in draft the reasons of White JA. Subject to one very minor qualification, I agree with his Honour's reasons and the orders proposed.
The qualification relates to the citation in [69] of White JA's reasons from Mason & Carter's Restitution Law in Australia. To the extent that the passage cited employs the language of tracing, if that is simply to note that the putative defendant received money or some other form of benefit, it is unexceptional. If the language of tracing is employed in some more technical sense, it is not necessary as part of any action for money had and received and may be apt to confuse.
Central to the upholding of ground 1 of the appeal is the primary judge's unchallenged finding that the payments the subject of the claim for money had and received at first instance were made from partnership property. The corollary of this was that Mr Morris had no entitlement to receive them (for he was not a partner and had no personal entitlement) and the company of which it was accepted he was the controller, Central West Granite Pty Ltd (the Second Respondent to the appeal and one of the two partners) would only have been entitled to 50% of the payments Mr Morris received.
In fairness to the primary judge, the claim for moneys had and received made at first instance wrongly included as an element of the claim the presence of fraud (which the primary judge did not find had been established). That, however, was an unnecessary element of the claim for money had and received. It had been alleged that the moneys paid out to Mr Morris belonged to the partnership.
On appeal, Mr Muddle SC, reasonably and responsibly, took no standing point or pleading point. Rather, his position was reflected in the following exchange of argument on appeal: "MUDDLE: What was not put and what I am advancing is that, your Honour, there still remains a need for an additional element. Either that payment was made under an operative mistake or it was made in circumstances where there was a total failure of consideration involving a contract which does not come into fruition or fails. It is not simply enough on the existing authorities to say: you have that money. Your basis for thinking you are entitled to it has not been accepted. Therefore, you have to give it to someone else. BELL CJ: That is a submission that the universe of the common money count of moneys had and received [is limited to] cases of mistaken payments or cases for recovery based on total failure of consideration. That seems to be what that is. Otherwise you are just knocking down false straw men. MUDDLE: I am not suggesting to your Honour that the categories are closed. What I am suggesting is that what Say Dee says is that this is a principle which underlies existing established categories of case, and what happened below and what has happened in this Court is that none of those particular categories is pointed to by the appellants. They simply say that was partnership money, and that is enough."
Subject to defences such as change of position or bona fide purchase for value without notice, a common money count for moneys had and received may be brought and sustained against a defendant who never had any entitlement to receive money not given as a gift. Neither mistake nor total failure of consideration is required to be established although they may separately sustain a claim for restitution. So much is illustrated, at least by analogy, in this Court's recent decision in Sims v Commonwealth of Australia (2022) 109 NSWLR 546; [2022] NSWCA 194 at [43]-[46], [78] in the context of payments out of Consolidated Revenue where the recipient had no entitlement to receive and no entitlement to retain payments which were not authorised. The cases referred to by White JA at [62]-[66] also illustrate this proposition.
WHITE JA: This is an appeal from orders of the Equity Division (Williams J) dismissing the appellants' claims for relief in relation to arrangements with the respondents pursuant to which the appellants performed quarrying operations at a quarry at Mulyandry near Forbes in New South Wales (Carpenter v Morris [2021] NSWSC 1700).
The issues raised on appeal are narrower than those raised before the primary judge. On appeal there are only limited challenges to the primary judge's findings of fact. The essential facts relevant for the disposition of the appeal may be summarised as follows.
The quarry in question is known as the Grandee Quarry. It contains a rock known as gabbro. When cut and polished, this is a shiny black rock used for purposes such as making kitchen benches, headstones, decorating public buildings and landscaping. It is also referred to as dimension stone or granite (J [6]). It was marketed under the name "Grandee Granite".
The second appellant and plaintiff in the court below, Tastex Pty Ltd ("Tastex"), entered into a partnership agreement with the second respondent, Central West Granite Pty Ltd ("Central West") in September 1996 for the purposes of conducting a quarrying business. The first appellant, Mr Carpenter, and the first respondent, Mr Colin Morris, were described as the controllers of Tastex and Central West respectively. Profits of the partnership were to be divided equally (J [50]).
There was a dispute as to whether the partnership business extended only to the business of mining, cutting and shaping granite at the quarry, or whether it also extended to the marketing and sale of that granite (J [49]). The primary judge found that the partnership business extended to the marketing and sale of granite mined from the quarry. The respondents do not challenge that finding.
The partnership was dissolved from about 2003 (J [49]). Mr Carpenter put the time of dissolution of the partnership as August 2003. Mr Morris did not take issue with that date.
The quarry was located on two titles called lots 31 and 134. The primary judge recorded that, at the beginning of the partnership in September 1996, lot 31 was owned by Colin Morris and his brother John as tenants in common in equal shares, and lot 134 was owned solely by John. Colin and John had sisters, Alison and Kathryn. John died in September 1997. Kathryn and Alison acquired John's interest in lot 134 and his half share of lot 31 (J [34]-[35]).
Pursuant to a mineral lease granted by the owners of the lots, from 1 January 1998, the leasehold interest in the minerals in both lots was held by Colin Morris. He was entitled to quarry, remove and sell the granite and was required to pay a rent plus royalty to himself and Kathryn as executor of John's estate in respect of lot 31 and to Kathryn as executor of John's estate in respect of lot 134 (J [38]). This was the position when the partnership came to an end in August 2003 (J [39]).
Notwithstanding the dissolution of the partnership between the companies controlled by Mr Carpenter and Mr Colin Morris in August 2003, Mr Carpenter's company, Tastex, continued to mine the quarry from 2003 until 2014.
One of the principal issues in the proceedings was as to the terms upon which Tastex did so. Mr Carpenter deposed to having had a conversation on or about 4 July 2003 with Mr Colin Morris in which words were said to the following effect: "On about 4 July 2003, Colin Morris and I were discussing my proposal that the Morris/Carpenter partnership be dissolved. I then had a conversation with Colin Morris at the Grandee Quarry to the following effect: I said: 'I need $600 per cubic metre to keep going in the Quarry.' He said: 'I can't agree to that. I have got to pay Bernice's commission and I have to share what's left over with Kathryn and Alison.' I said: 'We have got some good dark rock to cut. It is first grade material. It will bring top price.' He said: 'I tell you what we'll do. We'll pay you $600 per cubic metre for the first grade rock above 1.5 m3; $500 per cubic metre for first grade blocks under l.5m3 and $300 per cubic metre for any second grade rock, which has a white or black vein running through it.' I said: 'I would give that a fly, so long as you make a serious effort to sell the first grade rock.' He said: 'That's a deal.' I said: 'What about the small pieces of rock? What about the offcuts and the small boulders?' He said: 'There isn't any market for those things at the moment. Stockpile them and we'll talk about them later, when they become saleable?' I said: 'OK. I will agree to that. I will need security for my future work in the Quarry.' He said: [struck out] I said: 'I have to be sure that I have the exclusive rights to mine all of the rock in the Quarry. I wouldn't want someone coming in and competing with me.' He said: 'That's fine. You have the exclusive rights to all of the rock in the Quarry.' He then said: 'You 're pushing those small boulders and off cuts over the edge of the quarry. Grab a tape and we'll measure them up. We'll see how much is there!' Colin Morris and I then used a measuring tape and we identified the dimensions of the small boulders and the off cuts that I had been pushing over to the edge of the working platform in the quarry. Our conversation then continued to the following effect: He said: 'Just rip the edge off that one (pointing to a small boulder). Run a quick cut here and there and make a stockpile. There will be a market for those rocks, and we'll have some ready for sale. It'II be money for jam! When a customer comes out to look at the rock, we'll sell him the lot.' I said: 'It's all right for you and the girls. You don't have the overhead of cutting rock that might sit on the ground for years'. He said: 'Get into it, Carpo. Well sell it for you. It'll be money for jam.' I said: 'All right, Butch. I'll do the best that I can.' Colin Morris and I then shook hands and Colin left the Quarry."
The "Bernice" referred to was a Ms Bernice Huggard who, for many years, had marketed the granite quarried and, through her company W M Ashcroft Pty Ltd, had an entitlement to a portion of royalties payable to the owners (see [20] and [25] below).
Mr Carpenter was deposing in 2017 to his recollection of a conversation said to have been had with Mr Colin Morris more than 14 years earlier. There was no contemporaneous note of the conversation.
Mr Morris denied that the conversation occurred. He deposed: The conversation as deposed did not occur for amongst other things, the following reasons:- (a) I have no right nor did I ever make an agreement on behalf of my sisters, Kathryn and Alison. In fact I haven't spoken to them since my brother died on 2 September 1997 as we had an emotional falling out. (b) I do recall seeing a figure of $600.00 per cubic metre for the first grade granite that was negotiated between the Plaintiff and Bernice Huggard and I have seen certain invoices and payment arrangements to that effect. (c) I do not recall ever seeing a figure of $500.00 per cubic metre for first grade blocks under 1.5 cubic metres [balance of sentence rejected]. (d) $300.00 per cubic metre for second grade rock one is ridiculous because that rock is on most occasions unmarketable. On the odd occasion some Is sold for a price negotiated but more in the order of $100.00 to $150.00 per cubic metre. (e) I have never nor would I agree to a price for off cuts and small boulders or even bother with stockpiling them but they have to be put somewhere as if they are not taken away from the main part of the quarry they can hinder the quarry process. (f) I have never offered any exclusive rights to mine all of the rock in the quarry because it is not my business to do so. I would be unable and unwilling to agree to anything on behalf of my sisters. (g) I never used a measuring tape with Carpenter in the manner suggested. As to the last part of the conversation as deposed to at the top of page 30, it did not occur. I did not measure up the small boulders as alleged and do not use the expression "it will be money for jam" although it is an expression I have heard Bernice Huggard use on a fairly regular basis and perhaps Carpenter is confused with a conversation that he might have had with her."
Mr Morris deposed that, from a short time after the establishment of the quarry in about 1965 until her retirement in 2014, the exclusive marketing agent charged with the sale of granite from the quarry had always been Bernice Huggard. Mr Morris deposed that Ms Huggard had assumed the overall financial management of the quarry. She was responsible for distribution of funds after the granite had been sold by payment of a sale commission and a royalty payment to WM Ashcroft & Co Pty Ltd based on its one-sixteenth ownership of the quarry, the payment of royalties to various members of the Morris family as owners or part owners of the quarry, and a payment to the quarry master for recovering the granite.
Mr Carpenter deposed that, between August 2003 and December 2014, he would receive advice from Ms Huggard as to the quantities of dimension stone that were required by customers she had procured. He deposed that Mr Morris also advised him of quantities of dimension stone required by customers he had procured. He deposed that both Ms Huggard and Mr Morris placed orders with him for dimension stone blocks. He would tell them the amount that he required to be paid for production of the blocks from customers of the quarry. He made no enquiries as to the price at which the blocks had been sold to the customers. Ms Huggard or Mr Morris would pay the fee that he required for mining the blocks for delivery to customers of the quarry.
Mr Carpenter deposed that between August 2003 and December 2014 when orders for rocks were confirmed by Ms Huggard, he would fill the orders for the customers. Ms Huggard would receive the sale proceeds from the purchaser and then distribute the sale proceeds. She paid him his agreed fee for mining, cutting, shaping and loading the dimension stone.
Mr Carpenter and Tastex brought claims both in relation to the affairs of the partnership, and in relation to the mining of the quarry after the dissolution of the partnership in August 2003 up to 2014. They pleaded that during the term of the partnership they stockpiled a quantity of unsold dimension stone, quarry offcuts and boulders, and that part of the stockpile that had been created by 2003 was an asset of the partnership. They sought an order for the taking of accounts of the partnership. The primary judge held that it was impossible to identify what materials had been stockpiled during the operation of the partnership, let alone to identify and value any saleable material that may be contained in it (J [114]-[124]). Her Honour held that there would be no purpose in ordering the taking of accounts and, in any event, a claim for the taking of accounts 13 years after the partnership had been dissolved would be barred by reason of s 15 of the Limitation Act 1969 (NSW), either by direct application or by analogy (J [247]). The appeal against these findings was not pressed.

First Claim on the Appeal: Moneys had and received

The second claim advanced at first instance arising from the partnership concerned payments of what were claimed to be partnership moneys to Mr Colin Morris. This is the first claim arising on the appeal.
The primary judge described this claim as follows: "[52] The proceeds of sale of granite mined from the Grandee Quarry during each month of the Morris Carpenter Partnership were distributed as follows: (1) royalty payments payable under the private mining agreements to Colin, Kathryn and Alison as owners of Lot 31 and Lot 134; (2) a sales commission paid to Mrs Huggard, together with a further payment described as a royalty or "lease premium" and calculated on the basis that she had a 1/6th interest in Lot 31 and Lot 134 (even though the evidence revealed that Mrs Huggard and W M Ashcroft & Co had only ever had an interest in that land pursuant to an assignment of a 1/6th interest in a lease that had expired many years before the Morris Carpenter Partnership commenced); (3) rental payments to Colin, Kathryn and Alison as landowners under the private mining agreements; (4) a payment to the Morris Carpenter Partnership calculated on the basis of an amount per cubic metre of granite sold. During the period between July 2000 and the end of the partnership in mid-2003, the rate per cubic metre varied between $450 and $500; (5) payment of expenses of the Morris Carpenter Partnership, including equipment leasing costs and weekly wages paid to Jimmie for his labour in mining the granite from the Grandee Quarry. These payments were made by Colin or his former wife from the bank account of the Morris Carpenter Partnership, to which Jimmie had no access; and (6) a further payment to Colin, the amount of which varied significantly from month to month. It is convenient to refer to these payments to Colin as the additional monthly payments. During the period from July 2000 to August 2003, the additional monthly payment amount ranged from $862.96 to $16,568.28. The total additional monthly payments made during that period was $246,324.45. [53] It is only the additional monthly payments that are the subject of dispute in these proceedings. In relation to those payments, the plaintiffs allege that: (1) Mrs Huggard marketed and sold the stone as an agent of the Morris Carpenter Partnership; (2) the proceeds of sale were partnership income; (3) the additional monthly payments were made to Colin at his direction, at the direction of Central West "or by someone at their behest"; (4) the additional monthly payments made to Colin were made in breach of Central West's fiduciary duty owed to Tastex as its partner in the Morris Carpenter Partnership, and were fraudulent; and (5) Colin knew that his receipt of the additional monthly payments was "wrongful". [54] The only relief sought by the plaintiffs in relation to the additional monthly payments is an order requiring Colin to repay 50 per cent of the additional monthly payments to Tastex as money had and received. ... [56] Despite the numerous amendments made to the pleadings by all parties during the course of the final hearing, the plaintiffs did not plead any claim for relief against Central West for its alleged breach of fiduciary duty in allegedly causing or permitting the additional monthly payments to be made to Colin and did not plead any claim for relief against Colin under the first or second limb of Barnes v Addy. In oral closing submissions, senior counsel for the plaintiffs abandoned a submission that Colin was liable under Barnes v Addy as a constructive trustee. [57] Colin acknowledges that he received the additional monthly payments but denies that the money out of which the payments were made was partnership income or that his receipt of those payments was wrongful."
As noted above, the primary judge found that the partnership business extended to the marketing and sale of granite mined from the quarry. Her Honour held that the sale proceeds of granite mined by the partnership were partnership moneys and the additional monthly payments made to Mr Morris were paid to him out of partnership moneys (J [233]). That conclusion was not challenged on the hearing of the appeal. But in written submissions delivered after the hearing the respondents belatedly seek to challenge the finding (see [75] below)
The primary judge noted that Mr Morris did not rely on any defence of change of position or any limitation defence (J [234]).
Tastex claimed 50% of the payments from the proceeds of sale that Mr Morris received from it. The claim was pleaded as follows: "13G In the alternative. during the course of the Morris and Carpenter Partnership the First Defendant was paid monies from sale proceeds belonging to the Morris and Carpenter Partnership. 13H The amounts were paid to the First Defendant by Bernice Huggard. 13I The amounts were paid at the direction of the First or Fourth Defendant, or by someone at their behest. 13J The amounts paid were not payable to the First Defendant under the terms of the private mining agreements (or mineral leases) exhibited to the affidavit of the First Defendant sworn 6 February 2018. 13K The First Defendant knew that the payments were wrongful 13L The payments to the First Defendant were: (a) in breach of the Fourth Defendant's fiduciary duty it owed to the Morris and Carpenter Partnership (b) fraudulent 13M In the premises, the said payments were moneys had and received by the First Defendant to the use (to the extent of 50%) of the Second Plaintiff."
The primary judge rejected this claim for the following reasons: "[234 ]...The only issue remaining for consideration is Colin's submission that the claim in money had a[nd] received is misconceived because it ignores the existence of the Morris Carpenter Partnership and the interests of the partners and seeks an order for payment directly to Tastex as one of the partners. [235] I accept that submission for the following reasons. [236] The additional monthly payments were made out of the sale proceeds of granite mined by the Morris Carpenter Partnership after the various partnership expenses had been paid. The amounts of those payments represented profits of the partnership, in which Tastex and Central West were entitled to share equally under the terms of the partnership agreement. [237] The plaintiffs pleaded that Colin accepted the additional monthly payments knowing that they were wrongful, in the sense that they were paid in breach of Central West's fiduciary obligations owed to the partnership and/or they were fraudulent. The contention that the payments were "fraudulent" involved, in substance, a contention that Colin knew that the payments he received were made out of partnership funds to which Tastex and Central West were entitled. The plaintiffs' submissions were devoid of any analysis as to how this gave rise to a restitutionary claim for money had and received, as opposed to a claim for knowing receipt of partnership monies paid in breach of a fiduciary obligation owed by Central West to Tastex as its partner. After summarising the evidence, the plaintiffs simply submitted that "the appropriate finding of fact is that the 'extra payments' made to Colin were partnership income and belonged to the partnership" and that Colin's conduct in taking those payments was fraud or wrongful "and Colin is liable to repay 50% to Tastex as money had and received". As noted at [56] above, no Barnes v Addy claim was pleaded. [238] As the High Court said in Farah Constructions Pty Ltd v Say-Dee Pty Ltd, unjust enrichment is not a definitive legal principle according to its own terms and is not identified by subjective evaluation of what is unfair or unconscionable: (2007) 230 CLR 89; [2007] HCA 22 at [150]-[151] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ). Their Honours continued (at [151]): 'The areas in which the concept of unjust enrichment applies are specific and usually long-established. Recipient liability for breach of trust or fiduciary duty has not been one of them.' [239] For those reasons, Colin's receipt of the additional monthly payments was not unjust in the requisite sense for the purpose of a claim for money had and received, and that claim fails. The plaintiffs did not press any claim against Central West for breach of fiduciary duty."
The primary judge's finding on this claim was the subject of Ground 1 of the Amended Notice of Appeal. Ground 1 was as follows: "1. The primary judge erred in failing to order damages [sic] in respect of the monthly payments paid to the second respondent. In doing so the primary judge disregarded the second appellant's common law rights in respect of breach of contract and other grounds grounding the claim for money had and received and misapplied Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22. The claim for damages [sic] in respect of the monthly payments arose as a result of breach of contract and/or mistake on the part of Mrs Huggard [sic] or illegality on the part of the first and second respondents as well as a result of breach of fiduciary duty. The common law claim was not ousted by the equitable claim." (underlining and striking out in original)
That ground, as formulated, was not pressed on appeal. Instead, Mr Golledge SC, who appeared with Mr Barham for the appellants, submitted that the partnership was entitled to recover the moneys received by Mr Morris in an action for money had and received. Both partners were parties to the proceeding. Tastex would have been entitled to sue in the name of the firm. It did not do so, but the claim should not have been defeated on that ground where both partners were parties to the litigation.
The appeal in relation to this claim is dealt with at pars [55] to [76] below.

Second Claim on Appeal: Damages for repudiation of July 2003 agreements

In relation to mining conducted by Tastex after the dissolution of the partnership, the appellants pleaded three agreements, the second of which was abandoned at trial. [1]
The primary judge referred to the two agreements that were pressed as the "Quarrying Agreement" and the "Future Mining Agreement". Her Honour observed (J [135]) that both agreements were said to arise from the single conversation to which Mr Carpenter deposed he had with Mr Morris on or about 4 July 2003 that is quoted above at [16].
The Quarrying Agreement was pleaded as follows: "15 In or about July, 2003, the First Defendant, made an oral agreement with the Plaintiffs (the First Agreement) to the effect that: (a) The First, Defendant, through the agency of the said Bernice Huggard, would thereafter procure orders from customers wishing to purchase quantities of dimension stone mined at the Grandee Quarry (the Customers); (b) The First Defendant would thereafter administer the business of the mining activities conducted at the Grandee Quarry; (c) The First Defendant and/or Bernice Huggard would from time to time thereafter notify the Plaintiffs of the quantities of dimension stone required by the Customers (the Orders); (d) If the Plaintiffs would thereafter utilise his/their own labour, plant, equipment and financial resources to mine, cut, shape and prepare dimension stone for sale at the Grandee Quarry, so as to fill the Orders of the Customers, the First Defendant would permit the Plaintiffs to extract the dimension stone from the Grandee Quarry; (e) If the Plaintiffs carried out the works identified in the preceding sub paragraph, they would receive payment at the rates agreed for their said work; Particulars of rates agreed (i) The rate agreed for the Plaintiffs' work in mining, cutting, shaping and preparing First Grade dimension stone for sale was $600 per cubic metre for dimension stone blocks larger than 1.5 cubic metres; (ii) The rate agreed for the Plaintiffs' work in mining, cutting, shaping and preparing First Grade dimension stone for sale was $500 per cubic metre for dimension stone blocks smaller than 1.5 cubic metres; and (iii) The rate agreed for the Plaintiffs' work in mining and stockpiling Second Grade dimension stone and boulders for sale was $300 per cubic metre; (f) The Plaintiffs would stockpile in the Grandee Quarry for future sale any Second Grade dimension stone and boulders which they mined therein; and (g) The First Defendant would do, inter alia, such acts and things as could reasonably be done to procure the sale of the Second Grade Dimension Stone and the boulders mined and stockpiled by the Plaintiffs in and around the quarry."
The appellants further pleaded: "18. Between January, 2003 and about December, 2014, the First Defendant attended the Grandee Quarry periodically where he made additional representations to and/or agreements with the Plaintiffs to the effect that, if the Plaintiffs would, at their own expense, attend to additional work in the Grandee Quarry (the Additional Works) the Plaintiffs would receive fair reward for such work from the First Defendant (The Second and Third Agreements, as more fully pleaded in paragraphs 18A, 19A, 19B and 19C hereof)."
As noted above, reliance on the agreement pleaded in paragraph 18A was abandoned.
The Future Mining Agreement was pleaded as follows: "19B The Plaintiffs and the First Defendant agreed that the Plaintiffs would at their own expense, by excavation, expose more of the Gabbro deposit in the Grandee Quarry for future mining and, in consideration, the Plaintiffs would be retained for reward by the First Defendant to mine, cut shape and prepare for sale the rest and residue of the Gabbro deposit in the Grandee Quarry."
The appellants did not plead when the alleged Future Mining Agreement was made. Consistently with paragraph 18 the allegation was that it was made periodically between January 2013 and December 2014. As noted above, the primary judge understood the appellants' claim to have been that the Future Mining Agreement was also made in June 2003. This appears to be challenged in the appellants' written submissions. But it is not a ground of appeal and was not addressed orally. It is not referred to in the appellants' schedule of challenged factual findings. The court was not taken to any evidence of later conversations that could be said to contain, or be reiterations of, the Future Mining Agreement.
The appellants pleaded (par 19E) that it was an implied term of each agreement that Mr Morris: "…would cooperate in the performance of those agreements by doing all such acts and things as were necessary on their part to enable the plaintiffs and the first defendant to perform and carry into effect their obligation thereunder."
It was common ground and the primary judge found (J [41]) that amendments to the Mining Act 1992 (NSW) effected by the Mining Amendment Act 2008 rendered quarrying activities on the quarry unlawful from 15 November 2011 without a mining lease granted by the State (Mining Amendment Act 2008 (NSW) Sch 1 cll 2 and 273). Her Honour found that the Department of Industry, Resources and Energy did not notify Mr Morris, as the private mining agreement lessee, of the amendments to the Mining Act. Quarrying continued unlawfully from 15 November 2011 until late November or early December 2014 when Mr Morris became aware of the amendments. He then told Mr Carpenter to cease quarrying and remove Tastex's equipment from the land (J [172]).
The plaintiffs pleaded (par 20) that in breach of the Quarrying Agreement and the Future Mining Agreement, Mr Morris took no steps to procure, or alternatively allowed to lapse, approvals required from the NSW Department of Mines and the Forbes Shire Council for the conduct of the quarry.
The appellants pleaded that, in performance of the Future Mining Agreement, they excavated and exposed for cutting, shaping and selling of dimension stone a deposit of approximately 79,908m³ of gabbro within the quarry. They said that First and Second Grade stone was stockpiled on the quarry and they were not paid for this work. They did not maintain a claim in quantum meruit for the value of their services in excavating and exposing dimension stone for future cutting, shaping and sale. Instead they pursued a more ambitious claim that Tastex (and Tastex alone) was entitled to mine the granite until the resource was exhausted.
The primary judge summarised the appellant's claims in relation to the alleged Quarrying Agreement and Future Mining Agreement as follows: "[74] Finally, the plaintiffs contend that Colin has repudiated the Quarrying Agreement because he is not ready, willing or able to perform his obligation "to sell the 2014 stockpile" due to his lack of legal authority to sell the 2014 stockpile since November 2011 without the permission of Kathryn and Alison (to the extent that the stockpile is located on Lot 31) and Mr and Mrs Dunkley (to the extent that the stockpile is located on Lot 134). The plaintiffs allege that Colin has taken no steps to obtain that permission, which they say is required because the ownership in the 2014 stockpile reverted to the landowners in November 2011 when quarrying at the Grandee Quarry became unlawful by reason of the amendments to the Mining Act referred to at [42]-[48] above... [75] The plaintiffs say that they accepted Colin's alleged repudiation of the Quarrying Agreement by commencing these proceedings. They claim damages assessed by reference to what they say is the value of the 2014 stockpile. The amount of damages claimed is in the order of $1,200,000 plus interest. The plaintiffs accept that, if they succeed on this claim, they will not be entitled to damages for the alleged breaches of contract and conversion referred at [72]-[73] above. [76] The plaintiffs allege that Colin repudiated the Future Mining Agreement by terminating it in early 2015 on the basis that "the mining license has expired". The plaintiffs claim damages assessed by reference to what they say is the volume and value of first and second grade dimension stone yet to be mined at the Grandee Quarry. The amount of damages claimed is approximately $4,500,000 (including interest up to the date of the hearing)."
The primary judge summarised Mr Morris' contentions as follows: "[77] Colin denies that he entered into the Quarrying Agreement or the Future Mining Agreement. He says that he did enter into an agreement with the plaintiffs after the Morris Carpenter Partnership came to an end, but contends that the agreement was simply that the plaintiffs would mine, cut, shape and prepare dimension stone for sale for a cubic metre rate to be agreed between the plaintiffs and Mrs Huggard and payable at the time of sale of the dimension stone. [78] Colin denies the plaintiffs' allegations of breach of the alleged Quarrying Agreement. He acknowledges that the plaintiffs worked to fill orders for dimension stone during the period from 2003 to 2014 in accordance with the agreement that he says they entered into in 2003. He admits that the plaintiffs were paid a portion of the sale proceeds of first grade dimension stone during that period and relies on the plaintiffs' pleading concerning these payments as an admission that no monies are owing to the plaintiffs in respect of dealings prior to December 2014. [79] Colin also denies the alleged repudiation of the Quarrying Agreement. He says that the agreement that he made with the plaintiffs in 2003 came to an end in 2014 by reason of the legislative changes that obliged him to require the plaintiffs to cease quarrying operations. On Colin's case, that agreement did not concern the sale of any stockpiled second grade material in any event. Colin also disputes the plaintiffs' contentions concerning the volume and value of dimension stone in the 2014 stockpile. [80] In addition to denying the existence of the alleged Future Mining Agreement, Colin disputes the plaintiffs' contentions concerning the volume and value of dimension stone yet to be mined at the Grandee Quarry. [81] Finally, Colin also relies on s 14 of the Limitation Act in relation his defence to the plaintiffs' claims for damages for the alleged repudiation of the Quarrying Agreement and the Future Mining Agreement."
The primary judge observed that the plaintiffs abandoned all pleaded causes of action in closing submissions other than, relevantly, their claims for damages for alleged repudiation of the Quarrying Agreement and the Future Mining Agreement (J [83]-[84]).
In September 2003 the parties' solicitors exchanged correspondence with a view to drafting an agreement to give effect to the discussions between Mr Carpenter and Mr Morris (J [148] and [150]). Whilst there was consensus on a number of issues, as the primary judge found, the correspondence revealed that no concluded agreement had been reached (J [153]). The primary judge rightly observed that the correspondence was inconsistent with Mr Carpenter's evidence that Mr Morris said to him "You have the exclusive rights to all of the rock in the quarry". It is also significant that one of the matters upon which there was a degree of consensus was that the agreement would be for a period of five years with an option for a further five years (according to Tastex's solicitors, the option was to be exercisable by Tastex).
The Quarrying Agreement as pleaded did not contain any condition as to the term of the Agreement. In oral submissions the appellant's counsel submitted that, in the absence of agreement, the Agreement would be terminable on reasonable notice by either party. That was not how the claim had been framed below. The plaintiff's claim below was rather that the Agreement would persist for as long as it took to extract the stone remaining in the quarry (J [157]).
In concluding that she was not satisfied that the agreements asserted by the appellants had been made, the primary judge, whilst accepting Mr Carpenter to be an honest witness, concluded that his recollection of the conversation said to have occurred in July 2003 was unreliable, as it was contrary to contemporaneous solicitors' correspondence and to inherent probabilities in several respects (J [183]).
The primary judge found that the parties' agreement after dissolution of the partnership was essentially as Mr Morris contended: "[165] … the plaintiffs have failed to prove the alleged Quarrying Agreement and the alleged Future Mining Agreement on the balance of probabilities. On the basis of the solicitors' correspondence referred to above, I find that no agreement had been reached as at 8 September 2003 and that negotiations were continuing at that time. On the basis of the parties' subsequent conduct during the period until about December 2014 - Tastex's ongoing extraction of granite from the Grandee Quarry, Colin's ongoing marketing and sale of that granite (through Mrs Huggard) and the payment to the plaintiffs of varying rates per cubic metre of granite sold - I find that they made an agreement essentially on the terms for which Colin contends. That is to say, they agreed that the plaintiffs would mine, cut and shape granite in preparation for sale and, in respect of granite sold, Colin would pay the plaintiffs an amount per cubic metre to be determined by the plaintiffs and Mrs Huggard at the time of sale. Having regard to the work and cost involved in extracting the granite that was known to the parties at the time and the fact that the plaintiffs were not entitled to any reward for that work unless and until the granite was sold, I infer that the agreement also included a term that Colin would use reasonable efforts to sell the first grade material. I do not infer from those circumstances that the agreement included a term requiring Colin to use reasonable efforts to sell the second grade material. As referred to at [9] and [117] above, there was already a plentiful supply of second grade material stockpiled at the Grandee Quarry and customers had less demand for that material. The demand for second grade rock was sometimes non-existent. I note that even Jimmie's account of his conversation with Colin at [137] above does not include discussion of Colin being required to try and sell the second grade material, although the possibility of such sales in the future was referred to. The agreement lacked the security of a fixed term for which the plaintiffs were negotiating in September 2003."
The primary judge found that the appellants had not proved that Mr Morris had failed to use reasonable efforts to sell first grade granite or that Mr Morris had repudiated the agreement that was made (J[250]-[252]). Her Honour held that if the alleged Future Mining Agreement had been made it was not repudiated by Mr Morris' requiring quarrying activities to cease in 2014, because such activities were unlawful. Such an agreement, if made, would have been frustrated, not repudiated by Mr Morris (J [260]). Her Honour also found that the appellants had not provided any rational basis for the assessment of damages if it had been held that Mr Morris had repudiated the alleged agreements (J [253]-[255]).
Ground 5 of the Amended Notice of Appeal challenged the primary judge's rejection of the appellants' claim that agreements in terms of the alleged Quarrying Agreement and Future Mining Agreement were entered into. Ground 7 challenged the primary judge's rejection of the claim that the agreements, either as alleged by the appellants or the respondents, were repudiated by the second respondent (Granite Quarry). Ground 7 also asserted that the primary judge ought to have found that the appellants were entitled to contractual damages for work done in exposing rock faces for future mining and stockpiling up to the point the agreement or agreements was or were terminated.
Grounds 2 to 4 challenged the judge's findings as to the inadequacy of the evidence to establish that any damages would be recoverable if repudiation or breach were established.
Ground 6, concerning the judge's refusal to order the taking of partnership accounts, was not pressed.

First Claim: moneys had and received

The primary judge's reasons for rejecting this claim are quoted at [29] above. Her Honour's first reason for rejecting the claim was that the claim belonged to the partners and could not be brought by Tastex alone.
Mr Muddle SC, who appeared with Mr Tierney for the respondents, did not seek to maintain that reasoning. A claim could have been brought by Tastex in the name of the firm for the whole of the $246,324.45 joining Central West as a defendant if it declined to join in the claim as plaintiff. Tastex would be required to account to Central West for half the moneys recovered. The failure to bring the claim in the name of the firm was a procedural irregularity that should not have defeated the claim (Civil Procedure Act 2005 (NSW), s 63). Central West was already a party to the proceeding. True it is that the claim should have been for $246,324.45 plus interest. Tastex only claimed half of the moneys that it claimed Mr Morris was liable to pay. No objection was taken by the respondents on that account. They did not submit that if the claim succeeded judgment should be given against Mr Morris in favour of both Tastex and Central West for $246,324.45 plus interest.
Prima facie Mr Morris was liable to restore those moneys by an action for money had and received. He did not plead a change of position defence. He did not plead a defence under the Limitation Act to this claim. The appellants only found out about the payments when Mr Morris served a correcting affidavit during the final hearing (J [111]).
The second basis upon which the primary judge rejected the claim was that the only pleaded or articulated basis on which the claim was advanced was that Mr Morris knew he was not entitled to the moneys because they were partnership funds and the payment (or presumably his receipt) was fraudulent. The claim failed because, as articulated, it was a claim for knowing receipt of moneys paid by a fiduciary in breach of fiduciary duty. That did not support a common law claim for money had and received. A claim against Central West for breach of fiduciary duty had not been pressed.
To the extent the primary judge considered that the claim for money had and received was precluded by reason of the observation in Farah Construction Pty Ltd v Say Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 quoted at [238] of her Honour's reasons, her Honour erred (Fistar v Riverwood Legion and Community Club Ltd (2016) 91 NSWLR 732; [2016] NSWCA 81 at [1], [53], [55], [93]).
The primary judge did not find that Mr Morris had no honest belief that he was entitled to the moneys. The reason he was not so entitled was because of the primary judge's conclusion that the business of the partnership extended to the marketing and sale of the stone extracted. That was a contestable issue.
The statement of claim did plead that the moneys Mr Morris received belonged to the partnership (paragraph 13G quoted at [28] above)
In Attorney General v Perry (1773) 2 Comyns 481; 92 ER 1169 at 1174, the Court of Exchequer said: "…whenever a man receives money belonging to another without any reason, authority or consideration, an action lies against the receiver as for money received to the other's use; and this, as well where the money is received through mistake under colour, and upon an apprehension, though a mistaken apprehension of having a good authority to receive it, as where it is received by imposition, fraud or deceit in the receiver (for there is always an imposition and deceit upon him that pays, where it is paid) by colour of a void warrant or authority, although the receiver be innocent of it."
In Bullen & Leake's Precedents of Pleadings, (3rd ed 1868, Stevens and Sons), at 44, it was said of the indebitatus count for money had and received that: "(a) Money received - This is the most comprehensive of all the common counts. It is applicable wherever the defendant has received money which in justice and equity belongs to the plaintiff, under circumstances which render the receipt of it a receipt by the defendant to the use of the plaintiff. (Per Lord Mansfield, Moses v Macferlan, 2 Burr 1005, 1110; and see Marriott v Hampton, 2 Smiths L C 6th ed 375; and Owen v Challis, 6 CB 115)."
Calland v Loyd (1840) 6 M & W 26; 151 ER 307, that is cited in Bullen & Leake and later texts, is analogous to the present case. There, a wife was a legatee under her late father's will. As the law then stood her legacy belonged to her husband. He gave a portion of the money to his wife to take care of. Without her husband's knowledge, she deposited £50 with a bank in an account in the name of the infant son of her previous marriage. The Court of Exchequer held that the wife was not the plaintiff's agent and that the plaintiff was entitled to recover the money from the bank in an action for money had and received. Lord Abinger CB, with whom Aldersen and Gurney BB agreed, said (at 31-32; 309): "The question is, whether the bankers, when the plaintiff has given them notice that it is his money, have a right to set up the jus tertii. The answer is, that there is no jus tertii: it is admitted that the money is the plaintiff's, and the defendants are merely setting up an unlawful title in answer. If this were allowed, it would be a recipe for every woman who gets possession of her husband's money, to go and make a provision out if it for her minor children… The wife was not the agent of her husband, nor had she any right to make a deposit for the infant, who could give her no authority. It is preposterous to suppose that, although the son can have no right to receive the money when he comes of age, nor can draw a cheque in the meantime, yet the bankers have a right to keep it from the true owner for nine years".
There was no plea of fraud or mistake.
Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 applied the same principle. The solicitors succeeded because they could trace their property into the cash obtained by the fraudulent partner. Because the wagering contracts were rendered void by statute, the casino gave no valuable consideration for the money it received.
In closing submissions counsel appearing at trial for the appellants put the claim against Mr Morris on three bases: first, that the "'extra payments' made to Colin were partnership income and belonged to the partnership"; secondly, that the facts supported a finding of fraud or that the "taking of the moneys was wrongful"; and thirdly, that Mr Morris would be liable to hold the moneys on constructive trust for the plaintiffs on either limb of Barnes v Addy. The second and third contentions can be put to one side. They were additional to the first and the first was not conditional on either of them being established. The plaintiffs pleaded (FASOC par 13G) and submitted that a basis for recovery was that the payments were of moneys that belonged to the partnership.
Mr Muddle SC submitted that whatever might have been the position in the 17th and 18th Centuries, authority binding this Court requires the existence of a qualifying or vitiating factor falling into some particular category as an element of the action. This might be mistake, duress, illegality, total failure of consideration, or the defendant's wrong, but only the defendant's wrong was pleaded and that was not established or was abandoned. Reference was made to a statement of the plurality in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 379; [1992] HCA 48. The plurality cited what was said by Deane J in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 256-257; [1987] HCA 5, that the concept of unjust enrichment is a unifying legal concept which explains why the law recognises in a variety of distinct categories of case an obligation on the part of the defendant to make fair and just restitution for a benefit derived at the plaintiff's expense and which informs the processes of legal reasoning as to whether an obligation should be recognised in a new or developing category of case. The plurality added (at 379) that: "Accordingly, it is not legitimate to determine whether an enrichment is unjust by reference to some subjective evaluation of what is fair or unconscionable. Instead, recovery depends upon the existence of a qualifying or vitiating factor such as mistake, duress or illegality." (See also Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; [2014] HCA 14 at [20], [78], [139]).
The respondents' submission assumes that this was not a recognised "distinct category of case" and that a "vitiating factor" cannot be the unauthorised payment by X, of money belonging to A, to B, who does not receive it as bona fide purchaser for value without notice of the defect of title. But that is an established ground for restitutionary claims. In Mason & Carter's Restitution Law in Australia (4th ed, 2021 LexisNexis), the learned authors deal with restitutionary claims under the headings "Claims based on want of title", "Mistake", "Claims based on legal or moral compulsion", "Claims arising out of ineffective contracts", "Claims based on wrong committed" and "Special claims involving the Executive". Dealing with the first type of claim, the authors state: "[307] Principle stated. A personal cause of action, deriving from the count for money had and received, is available to the owner of money, or of property that is changed into money or its equivalent, that can be traced to someone who did not take the money as or from a bona fide purchaser for value without notice of defect of title. The plaintiff's right does not turn upon proof of a tort or other wrong, although that is often the way of demonstrating the defendant's unauthorised gain. The independent restitutionary claim is one means whereby the plaintiff's property right is vindicated. Merely because the defendant has paid over the money to a third party provides no defence to the personal claim, but defences including change of position are available." (Footnotes omitted)
Goff & Jones The Law of Unjust Enrichment (9th ed, 2016, Sweet & Maxwell) (at [8-104] state that: "There are many common law cases where D has immediately received a benefit from X, but has more remotely received the benefit from C, and C has been given a personal claim against D which can be explained as responding to C's lack of consent or X's want of authority. Consistently with the general character of personal claims in unjust enrichment, D's prima facie liability is strict - it does not depend on C's proving fault on D's part - and is measured by the value received".
Amongst the examples cited in both texts is Calland v Loyd.
Not only did Mr Morris not plead a change of position defence, he did not plead that if the moneys paid to him were partnership moneys, he received them for valuable consideration without notice. He did not assert that he only acquired notice of the claim at a later date, by which time the moneys, or some of them, had been spent. No such issue was raised.
Mr Morris' initial position was that the balance of the sale proceeds remained in the partnership. He later (on the fifth day of the hearing) admitted that he received payments from the sale of rock from Ms Huggerd and not out of partnership funds. He then asserted they were made to him as an owner. The primary judge did not so find and there is no notice of contention.
For these reasons, I do not accept that it is not open to the appellants to maintain this claim. That claim ought to have been upheld in the absence of any defence to it.
In written submissions, otherwise delivered with leave after the oral hearing, the respondents sought to challenge the finding that the moneys paid to Mr Morris were not partnership property. That was not an issue for which leave to provide further submissions was given. Whether the moneys were partnership property was an issue at trial. The respondents submitted that the relationship between Ms Huggard or her company and the partnership may have been that of debtor and creditor because, according to Mr Carpenter's evidence, a fee paid to the partnership was agreed with Ms Huggard. It is not self-evident why this would impugn the judge's finding. It was not raised below. The issue as to whether the moneys paid to Mr Morris were partnership moneys, as it was presented for the primary judge's determination at trial, turned on whether the partnership business extended to the marketing and sale of the granite (J [217]). As set out above, the primary judge found that it did and held (at J [233]) that the monthly payments to Mr Morris were paid out of partnership moneys. There was no notice of contention challenging that finding. It is not open to the respondents to reopen that issue.
For these reasons I would uphold the first claim.

Second Claim: Damages for repudiation of the Quarrying Agreement and the Future Mining Agreement

Both at trial and on appeal the appellants accepted that they would only be paid for granite sold. The appellants' claim, as opened at trial, was that between 2003 and 2014 they extracted not only rock that was sold and for which Tastex received payment, but also, at the request of Mr Morris, stockpiled first and second grade stone for future sale and exposed further first grade stone for future quarrying. They contended that it was agreed that they would be paid for the stone sold from that stockpile when it was sold. They also contended that Mr Carpenter or Tastex or both owned the 2014 stockpile because Mr Morris, as lessee under the private mineral lease, granted them the right to mine, and that s 11 of the Mining Act provided that the stockpile of materials that had been lawfully mined for the purpose of enabling the mineral to be recovered remained the property of the person by, or on behalf of whom, the material was mined and did not become part of the land on which it was situated. On that analysis, Mr Morris would also have been entitled to the ownership of the stockpile.
The appellants then submitted that, by the amendment to the Mining Act enacted in 2008, and which came into effect from 15 November 2011, their authority to quarry pursuant to the then existing private arrangement ceased. They submitted that, from then, the stockpile became vested in the owners of lot 134 (Kathryn and Alison Morris) being the lot on which the stockpile was located. They submitted that the respondents could have salvaged the situation by applying for an exploration licence or mining licence but, instead of doing so, Mr Morris allowed his son, through his company Marble Craft Pty Ltd, to obtain an exploration licence. This placed the stockpile beyond the reach of the appellants and the respondents to sell. It was submitted that thereby the respondents repudiated the contract, which repudiation had been accepted, giving rise to an entitlement of the appellants to damages.
It was implicit in this submission that it was an implied term of the contracts pleaded that Mr Morris would obtain relevant approvals that were necessary to allow for the sale of the stone that had been stockpiled or had been exposed. This was the subject of paragraphs 19E and 20 of the Further Amended Statement of Claim referred to at [40] and [42] above.
Paragraph 19E was at the forefront of the appellants' submissions on the hearing of the appeal. Because there was no formal written contract, but an informal oral agreement, the approach to the implication of a term is that expressed in Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 422; [1995] HCA 25: "…as Deane J has observed (Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 121), the cases in which the criteria in BP Refinery (Westernport) Pty Ltd v Shire of Hastings have been applied in this Court are cases in which there was a formal contract, complete on its face. He pointed out that a rigid approach should be avoided in cases, such as the present, where there is no formal contract. In those cases the actual terms of the contract must first be inferred before any question of implication arises. That is to say, it is necessary to arrive at some conclusion as to the actual intention of the parties before considering any presumed or imputed intention. And the test to be then applied was in a later case formulated by Deane J in these terms (Hawkins v Clayton (1988) 164 CLR 539 at 573): 'The most that can be said consistently with the need for some degree of flexibility is that, in a case where it is apparent that the parties have not attempted to spell out the full terms of their contract, a court should imply a term by reference to the imputed intention of the parties if, but only if, it can be seen that the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case. That general statement of principle is subject to the qualification that a term may be implied in a contract by established mercantile usage or professional practice or by a past course of dealing between the parties.'" [2]
The primary judge did not expressly deal with the question whether the term pleaded in paragraph 19E could be implied in the contract found, or the contracts alleged. No doubt that was because no submissions specifically directed to that question were advanced. When asked what submissions were made to the primary judge on the implication of the term alleged in paragraph 19E, Mr Golledge SC referred to the appellants' written closing submissions at trial. These made no reference to paragraph 19E, nor to whether term there alleged should be implied. Rather, it was submitted that Mr Morris agreed to sell the 2014 stockpile and pay the plaintiffs for their share when sales were achieved and that, in order to do that, he would need to be able legally to sell the stone, that he did not have the legal authority to do so after the amendments to the Mining Act came into force, but could only sell the stockpile with his sisters' permission, which he had not sought or obtained, and had not himself taken any steps to acquire the legal rights. Those submissions assumed that Mr Morris was obliged to obtain the requisite authorities. They did not advance any argument in support of the alleged implied term.
In 2003 there was no reason to think there was any doubt about Mr Morris' title to the stone mined. No reason was suggested as to why the parties might have anticipated any change to that position. The consequences of Mr Morris' being obliged to obtain future approvals, if required, were potentially onerous. Further, Mr Morris' compliance with future legislative changes in order to secure the right to continue the mining activities might require the consent of his sisters, who had ownership rights in respect of lots 31 and 134. There would be no reason to assume that he could obtain their consent, if their consent were required, to any new regulatory requirements. His evidence was that he had not spoken to them since his brother John died on 2 September 1997 and they had had an emotional falling out.
Mr Golledge SC submitted that the term contended for was absolute, so that Mr Morris would be in breach of the term, even if he were unable to obtain any licence that might in future be required, or might be unable or be reasonably unwilling to comply with any future onerous conditions, for example, as to remediation.
If the contract were, as found by the primary judge (that the appellant would mine, cut and shape the granite in preparation for sale and in respect of the granite sold be paid an amount per cubic metre as determined by the appellants and Ms Huggard at the time of sale, and Mr Morris would use reasonable efforts to sell first grade stone, but without any fixed term, and without any term as to potential but unknown future sales) it would not be necessary, but would be unreasonable, to imply the term alleged for the reasonable and effective operation of a contract of that nature.
The primary judge was entitled to reject the appellants' case that the agreement was that they would have the exclusive right to mine the whole of the granite on the quarry for as long as that took. The appellants' contention was inconsistent with the terms of the solicitor's correspondence referred to at par [47] above. It would not be necessary for the effective operation of the agreement to imply the term alleged in paragraph 19E because either party could give reasonable notice, bringing the contract to an end, before any proposed legislative change took effect.
The appellants' written submissions included: "30. Taking into account the evidence subsequent to July-September 2003, the agreement which should have been found included that the appellants should continue to get stuck into it, get the "holy grail" by exposing rock in the quarry and stockpiling it so that future sales could be made, that Morris would use reasonable efforts to sell all of that material, whether it was first grade or second grade material, and the implied term at paragraph 19E of the 3 FASOC (Red 102). It would appear that the reason that the primary judge did not make such findings was based largely on the solicitors' correspondence in September 2003, which it is conceded does not constitute an agreement, and the perceived abandonment of a large part of the statement of claim. The primary judge's failure to find a term in respect of second grade material is based upon events in July-September 2003 only. The fact that there was a plentiful supply of second grade material and less demand for it at that time was not a basis to conclude that the parties did not want to sell it, especially given the finding that they had discussed it, in circumstances where there was a wealth of evidence concerning sales of second grade material before, around that time, and since."
The submissions did not address the reasons given by the primary judge (at [165] quoted at [50]) for rejecting the terms contended for. The court was not referred to any evidence that would suggest that the primary judge erred in so finding.
The appellants complain that they carried out substantial work at Mr Morris' request in stockpiling granite for future sale and removing overburden to expose granite for future sale, for which they are not entitled to be remunerated because neither they nor Mr Morris is entitled to the granite remaining in situ. This may not follow. The primary judge held (at J [42]-[47], [170]) that the parties' assumptions as to the interpretation of s 11 of the Mining Act were incorrect. No arguments were advanced on appeal on this issue. The primary judge also observed (at J [171]) that Mr Morris' consistent position was that the appellants would be paid for any granite extracted between 2003 and 2014 if and when it was sold. Whether he could honour that intention is another question.
In any event, the appellants chose, presumably for good reason, not to pursue a claim in quantum meruit for reasonable remuneration for work done in stockpiling and exposing granite for sale, notwithstanding the frustration of the contract. Any complaints about the fairness of the outcome to the appellants do not justify different findings from those reached by the primary judge as to the terms of the parties' contract.
The appellant submitted in writing that the primary judge ought to have found that the agreement included a term requiring Mr Morris to use reasonable efforts to sell second grade material. They submitted that the evidence clearly supported the findings contended for on that issue. Whilst accepting that the primary judge was entitled to reject their claim that they would receive $300 per m³ for work in mining and stockpiling second grade dimension stone and boulders for sale, the judge ought to have found that Mr Morris would act reasonably in seeking to procure the sale of second grade dimension stone and boulders mined and stockpiled in or around the quarry.
It was not a ground of appeal that the primary judge ought to have found that Mr Morris failed to make reasonable efforts to sell second grade stone. The court was not referred to any evidence that would have supported such a ground. The primary judge accepted Mr Morris' evidence that second grade stone is a by-product of first grade stone and rarely saleable, and that there was a huge amount of second grade rock lying about in the quarry. Competition from China made it usually unmarketable (J [9], [117], [165]).
For these reasons, I would reject the second claim advanced on appeal. It is unnecessary to deal with the issue of damages. It suffices to say that I see no error in the primary judge's reasons on this issue.

Conclusion and orders

For these reasons I conclude that the first claim advanced on appeal should succeed, but the second should be dismissed. The respondents have advanced no submission as to why Tastex should not be entitled to interest on its claim for money had and received. No calculations of interest have yet been provided to the Court.
I propose that the appeal be allowed in part. Both parties have had partial success and partial failure. That will require the reassessment of the costs orders made below. Justicelink records that costs orders in favour of the respondents and other defendants were made on 1 February 2022.
The appellants should provide a calculation of interest payable pursuant to s 100 of the Civil Procedure Act up to the primary judge's orders of 23 December 2021. If the respondents contend that the judgment to be given should not take effect as from that date, but from the date of this court's orders, then a calculation of interest pursuant to s 100 should be provided up to the date of submissions and at a daily rate thereafter. The parties should provide written submissions as to costs in respect of the proceedings below and of the appeal.
For these reasons I propose the following orders: 1. Appeal allowed in part. 2. Set aside the orders of the court below made on 23 December 2021 so far as they concern the appellants and the respondents. 3. Set aside the orders made on 1 February 2022 so far as they concern the appellants and the respondents. 4. Within 14 days the appellants file and serve written submissions on the matters referred to at par [95] above. 5. Within 14 days thereafter, the respondents file and serve written submissions on the matters referred to in para [95] above. 6. Any submissions in reply be filed and served by the appellants 7 days thereafter.
SIMPSON AJA: Noting the qualification expressed by the Chief Justice, I agree with White JA.

Endnotes

The primary judge said that the allegation of the second agreement had been abandoned (J (fn 51)). In their written submissions the appellants said this was a mistake. But it was confirmed at the hearing of the appeal.
In Realestate.com.au Pty Ltd v Hardingham [2022] HCA 39; (2022) 97 ALJR 40, Steward and Edelman JJ suggested (at [86], [112]) that no different principle concerning the implication of terms applies to informal contracts than applies to formal contracts. I do not understand that to be the view of the other members of the court (per Kiefel CJ and Gageler J at [15]-[20]; Gordon J at [75]-[76]). In any event, no different result would follow from an application of the criteria in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283; [1977] UKPCHCA 1 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: 05 July 2023

Mining Amendment Act 2008(NSW)

State (Mining Amendment Act 2008(NSW)

(Civil Procedure Act 2005(NSW)

(2022) 109 NSWLR 546

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