Supreme Court of SA|1995-09-08|Before: Doyle CJ

CHRIS ANGELOPOULOS and ANOR v MARIO SABATINO and ANOR No. SCGRG 94/1698 Judgment No. 5230 Number of pages - 15 Restitution (1995) 65 SASR 1 [1995] SASC 5230 (8 September 1995)

COURT IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA DOYLE CJ(1), DUGGAN(2) AND NYLAND(3) JJ

Restitution - mistake: restitution arising from a plaintiff's mistaken actions - recovery for mistakenly conferred services. Owner of hotel property

encourages prospective lessees to make improvements to property - knowledge of expectation that lease to be granted on favourable terrns - acceptance of improvements - restitution appropriate - quantum of restitution. Watson v Watson ; Van den Berg v Giles , applied. Povey and Matthews Pty Ltd v Paul ; ; Brenner v First Artists' Management Ply Ltd ; , discussed.

HRNG ADELAIDE, 8 June 1995 #DATE 8:9:1995 #ADD 28:11:1995

Counsel for appellants: Mr B Hayes QC with Mr S O'Sullivan

ORDER Appeal allowed for the purposes of setting aside judgment against the first defendant, described as Chris Angelopoulos, but otherwise the appeal dismissed

JUDGE1 DOYLE CJ This is an appeal against a judgment entered in favour of the plaintiffs in an action heard in the District Court.

Judgment was entered for the plaintiffs against the defendants for the sum of $64,626. The judgment was for work and labour done and goods supplied by the plaintiffs in the course of restoration work carried out at the Britannia Hotel in Adelaide. The second defendant, Ditara Pty Ltd ("Ditara"), was the owner of the hotel and, when the work was carried out, held the licence under the Liquor Licensing Act. The first defendant, Angelopoulos, was a director of Ditara and appeared to control its business. The Judge found for the plaintiffs against the defendants not on the basis of a contract, indeed he declined to find that there was a contract, but on the basis of restitution or unjust enrichment.

The Judge dismissed a counterclaim by Ditara. The counterclaim was for the cost of remedial works allegedly made necessary because the work done by the plaintiffs was defective.

Both defendants appeal against the judgment in favour of the plaintiffs on the claim. Ditara appeals against the dismissal of the counterclaim.

Facts: What follows is taken from His Honour's judgment, which canvassed at some length the evidence given before him. I propose to omit details which are not central to the resolution of the issue on appeal. Accordingly, what follows does not attempt to describe all of the events the subject of evidence before His Honour.

At the outset I note that His Honour formed an adverse view of the reliability of Mr Angelopoulos. He rejected his evidence wherever it conflicted with that of other witnesses (judgment p32). He proceeded on the basis that Mr Angelopoulos was an experienced business man and property developer.

As I have already said, Mr Angelopoulos was the controller of Ditara, which owned the Britannia Hotel. The hotel was occupied and operated by a tenant. The tenant fell into financial difficulty and went into liquidation. It seems that the liquidator was in possession of the hotel for a time. The plaintiffs were, in contrast with Mr Angelopoulos, inexperienced in business, in dealing in property and in the operation of hotels. One of them held a builder's licence and the other was a plumber. The plaintiffs had become interested in running a hotel, and having learned that it might be possible to obtain a lease of the Britannia Hotel, became interested in doing so with a view to operating that hotel. A Mr Constantino was acting as some sort of intermediary on their behalf. There were some preliminary negotiations with a view to a lease, and negotiations involving Mr Angelopoulos, Mr Constantino and subsequently the liquidator.

At the stage at which the liquidator was in possession of the premises, Mr Angelopoulos requested Mr Constantino to carry out a stocktake at the premises, this to be done at Mr Angelopoulos' expense. At about this time negotiations for a transfer of the lease, plant, equipment and stock from the liquidator to the plaintiffs came to an end and the liquidator, apparently quite suddenly, removed from the hotel all of the plant, equipment and stock which he was entitled to take. It seems that this was a dramatic development. The hotel was more or less stripped, and was left in a state in which it was not able to be operated as an hotel. Mr Constantino's evidence, apparently accepted by His Honour (judgment p15) was that the premises were "devastated" and in his time in the hotel industry he had never seen anything quite like it because the liquidator had "just ripped the guts out of the whole place".

It is pertinent to note that the Britannia Hotel is very close to the location in Adelaide where the Grand Prix is held each year, and these events occurred about a month before it was due to start. It was obvious that the time at which the Grand Prix was to be held would be a time when profitable trading could take place, and it was very much in the interests of Ditara that the hotel should trade at this time. His Honour found (judgment p36) that Mr Angelopoulos took steps for the licence to be transferred to Ditara and Ditara resumed possession of the hotel. The plaintiffs were still enthusiastic about becoming licensees and lessees of the hotel. The plaintiff Sabatino signed a form required for the purposes of the Licensing Court which described him as the Manager of the hotel on behalf of Ditara.

His Honour found (judgment p35) that after the hotel was stripped Mr Angelopoulos requested Mr Constantino to organise and oversee the necessary restoration work at the Britannia Hotel. He agreed to pay Mr Constantino for this work. There was evidence which His Honour accepted to the effect that, for obvious reasons, Mr Angelopoulos was anxious to get the hotel trading before the Grand Prix started.

Mr Constantino set about organising the restoration work, apparently employing contractors and casual workers. His Honour found that in all cases the employer was described as Ditara. Mr Angelopoulos was present on a daily basis while work was being done and was obviously well aware of what was being done and was in regular contact with Mr Constantino.

Mr Sabatino gave evidence, which His Honour appears to have accepted (judgment p6), that after the hotel was stripped there was a discussion involving the plaintiffs, Mr Angelopoulos and Mr Constantino. The discussion centred around how they could "get the hotel up and going again". The tenor of the discussion seems to have been that together they would all work to bring the Britannia to a state in which it could again resume trading.

The result was that the plaintiffs also carried out work on the hotel under the general supervision of Mr Constantino, but things went further than that. Mr Angelopoulos located a substantial amount of plant and equipment at a restaurant which plant and equipment was available for sale, and which Mr Angelopoulos recommended to the plaintiffs as suitable equipment for the Britannia Hotel and available at a reasonable price. His Honour found that, encouraged by Mr Angelopoulos and acting on the recommendation of Mr Constantino, (judgment p36) the plaintiffs purchased this plant and equipment for $57,000 and installed it in the Britannia Hotel.

There was no contract between the plaintiffs and either defendant for payment for the work done by the plaintiffs or for the equipment supplied. But on His Honour's findings Mr Angelopoulos was clearly aware of their involvement and of their work, and it is inconceivable that he was not aware that they were not hired tradesmen like others working on the premises. It is clear that the plaintiffs were still interested in obtaining a lease of the Britannia. His Honour found (judgment p40): "The plaintiffs expended their money and labour in the expectation that they would receive benefit, for instance, favourable terms in a lease, or, rent relief. The defendant was aware of their expectation. I believe the defendant encouraged the plaintiffs to so expend their moneys and labour ..."

In due course the efforts of the parties bore fruit, and about the time of the Grand Prix trading resumed at the hotel. It seems that Mr Constantino was effectively in charge of the running of the hotel, although Mr Angelopoulos was in regular attendance, and it seems further that the plaintiffs were present at the hotel and involved in operating it. Negotiations with a view to a lease continued during this time, although the negotiations seem to have taken the form mainly of a number of demands by Mr Angelopoulos which were unacceptable to the plaintiffs.

It is not altogether clear just what was done by the various people involved when the hotel was trading, but Mr Constantino's evidence was that he employed all required staff and the employer was Ditara.

When the negotiations for a lease between the plaintiffs and Mr Angelopoulos broke down, Mr Angelopoulos turned the plaintiffs and Mr Constantino out of the hotel. Later Mr Angelopoulos found another tenant, and it seems that Ditara granted a lease to that tenant. It was in that context that Ditara sold to the new tenant a substantial amount of plant and equipment, which included much if not most of the plant and equipment which the plaintiffs had brought from the restaurant referred to and installed at the hotel (transcript p504). There is no reason to think that His Honour did not accept that evidence: judgment p27.

It was those events which brought the parties to Court. The plaintiffs sought compensation for their work and for their expenditure, and this claim was rejected by the defendants.

I will now summarise the salient features of the situation as I understand it.

Ditara was the owner of hotel premises, and Mr Angelopoulos was Ditara's agent. Ditara and Angelopoulos wanted the hotel restored quickly to a state in which it could trade. Mr Angelopoulos employed Mr Constantino to attend to that under Mr Angelopoulos' general supervision. The plaintiffs were prospective tenants of the hotel who had negotiated unsuccessfully to take over the lease of the previous tenant. Some of the work required to restore the hotel to a state ready for trading was carried out by the plaintiffs and the plaintiffs also purchased and installed equipment needed in the hotel. The plaintiffs did this because they were hopeful of obtaining a lease once the hotel was ready to trade. The plaintiffs' involvement in the restoration work was done with the approval of Mr Constantino, and was clearly part of the scheme of restoration undertaken by him for Ditara. Mr Constantino was expecting that the plaintiffs would be reimbursed (judgment p16). Mr Angelopoulos was well aware of the plaintiffs' involvement in the restoration work and either actively or tacitly encouraged their involvement, including the purchase of the equipment. There was no express agreement that the plaintiffs would be paid or would be remunerated in any way for their work. But the plaintiffs expected to be recompensed, and expected that this would be done through the grant of favourable terms in the lease which they hoped and expected to obtain: judgment p40.

The Entitlement of the Plaintiffs: On these facts I would not find it difficult to decide that an agreement for a reasonable remuneration should be implied or inferred as a matter of fact between the plaintiffs and Ditara. However, that is not the course which His Honour took and neither was the appeal argued on that basis.

Accordingly, I deal with the matter on the basis upon which it was decided and argued, namely on the basis of a claim in restitution, there being no agreement in fact for the remuneration of the plaintiffs.

Counsel for the defendants founded the argument on appeal on the finding that there was no contract for the payment of the plaintiffs. It was then argued that the obligation to make restitution in the absence of an agreement, express or implied, was a quasi contractual obligation which required of necessity a request that the work be performed and an expectation that it would be paid for. It was said that there was no such request and no such expectation, and accordingly the claim must fail. Reliance was placed by counsel on the decision of the High Court in Pavey and Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221 and on the decision of a Judge of the Supreme Court of Victoria in Brenner v First Artists Management Pty Ltd [1993] VicRp 71; (1993) 2 VR 221.

I cannot find anything in these cases to support the contention that a request, apparently as counsel would have it an explicit request, is an essential element to the success of a claim in a case such as the one before me. Quite apart from that, as I will explain later, it seems to me that in this case there was an implied request for the performance of the work. Moreover, it seems to me that far from supporting the case for the defendants Pavey's Case is in fact the rock against which the defendants' argument founders.

In Pavey's Case the appellant was a licensed builder. The appellant carried out building work pursuant to an oral contract upon terms that the work would be done for a reasonable remuneration. When the appellant sued for the reasonable remuneration, the other party to the arrangement pleaded by way of defence a provision of the Builder's Licensing Act 1971 (NSW) which rendered unenforceable the contract to carry out building work if the contract was not in writing. The issue was whether the claim might nevertheless be made upon a quantum meruit resting not on an implied contract, and so not on any contract caught by the statute, but on a claim to restitution or one based on unjust enrichment. In other words, the issue was whether the builder could recover a reasonable remuneration without having to rely upon the contract which was rendered unenforceable by the statute.

It seems to me that the argument for the defendants in the present case harked back to the notion that a restitutionary claim for a quantum meruit was based upon a fictional promise to pay a reasonable amount, implied into a request to do work. Put a little differently, the argument for the defendants was that a restitutionary claim was based upon a contract which was implied as a matter of fact from the making of a request. But in my opinion Pavey's Case has now made it clear that a restitutionary claim may be described as a claim "to recover a debt owing in circumstances where the law itself imposed or imputed an obligation or promise to make compensation for a benefit accepted": Deane J at 255; see also Australia And New Zealand Banking Group Limited v Westpac Banking Corporation [1988] HCA 17; (1988) 164 CLR 662 at 673. For this reason, the existence of a request in a case such as the present one, that work be performed, is not critical.

In their joint judgment in Pavey's Case Mason J and Wilson J expressed their agreement in substance with the judgment of Deane J. On the relevance of an implied contract they said (at 227): "Deane J., whose reasons for judgment we have had the advantage of reading, has concluded that an action on a quantum meruit, such as that brought by the appellant, rests, not on implied contract, but on a claim to restitution or one based on unjust enrichment, arising from the respondent's acceptance of the benefits accruing to the respondent from the appellant's performance of the unenforceable oral contract. ... We are therefore now justified in recognizing, as Deane J. has done, that the true foundation of the right to recover on a quantum meruit does not depend on the existence of an implied contract."

As to the basis of the action in the case then before them, they went on to say (at 227-228): "Once the true basis of the action on a quantum meruit is established, namely execution of work for which the unenforceable contract provided, and its acceptance by the defendant, it is difficult to regard the action as one by which the plaintiff seeks to enforce the oral contract. True it is that proof of the oral contract may be an

indispensable element in the plaintiff's success but that is in order to show that (a) the benefits were not intended as

a gift, and (b) that the defendant has not rendered the promised exchange value: Fuller and Perdue, loc. cit., ("The Reliance Interest in Contract Damages" (1936-7) 46 Yale LJ), p.387 n.125. The purpose of proving the contract is not to enforce it but to make out another cause of action having a different foundation in law."

In his judgment Deane J examined at some length the history and nature of the actions of debt and assumpsit, as a prelude to his consideration of what is today described as unjust enrichment or as a claim in restitution. His Honour distinguished between two situations in which a claim for debt might have been made under old procedures by way of a common indebitatus count. The first, as mentioned above, is that where the debt is claimed under a contract, express or implied. The other, also mentioned above, is that where the claim is to recover a debt where the law itself imposes or imputes an obligation or promise to make compensation for a benefit accepted. He went on to say (at 256-257): "The quasi-contractual obligation to pay fair and just compensation for a benefit which has been accepted will only arise in a case where there is no applicable genuine agreement or where such an agreement is frustrated, avoided or unenforceable. In such a case, it is the very fact that there is no genuine agreement or that the genuine agreement is frustrated, avoided or unenforceable that provides the occasion for (and part of the circumstances giving rise to) the imposition by the law of the obligation to make restitution.

To identify the basis of such actions as restitution and not genuine agreement is not to assert a judicial discretion to do whatever idiosyncratic notions of what is fair and just might dictate. The circumstances in which the common law imposes an enforceable obligation to pay compensation for a benefit accepted under an unenforceable agreement have been explored in the reported cases and in learned writings and are unlikely to be greatly affected by the perception that the basis of such an obligation, when the common law imposes it, is preferably seen as lying in restitution rather than in the implication of a genuine agreement where in fact the unenforceable agreement left no room for one. That is not to deny the importance of the concept of unjust enrichment in the law of this country. It constitutes a unifying legal concept which explains why the law recognizes, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff and which assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognize such an obligation in a new or developing category of case: see Muschinski v. Dodds [1985] HCA 78; (1985) 160 CLR 583, at pp 619-620; Goff and Jones, op.cit., (The Law of Restitution, 2nd ed (1978)) p 11ff. In a category of case where the law recognizes an obligation to pay a reasonable remuneration or compensation for a benefit actually or constructively accepted, the general concept of restitution or unjust enrichment is, as is pointed out subsequently in this judgment, also relevant, in a more direct sense, to the identification of the proper basis upon which the quantum of remuneration or compensation should be ascertained in that particular category of case."

Later in his judgment His Honour considered the basis upon which the amount recoverable should be ascertained. What he said is relevant both to the basis of the claim and to the amount of the claim. As a matter of convenience I will set out here the whole of the relevant passage, because it will be necessary later in this judgment to consider the amount of the plaintiffs' claim. He said (at 263): "What the concept of monetary restitution involves is the payment of an amount which constitutes, in all the relevant circumstances, fair and just compensation for the benefit or 'enrichment' actually or constructively accepted. Ordinarily, that will correspond to the fair value of the benefit provided (e.g. remuneration calculated at a reasonable rate for work actually done or the fair market value of materials supplied). In some categories of case, however, it would be to affront rather than satisfy the requirements of good conscience and justice which inspire the concept or principle of restitution or unjust enrichment to determine what constitutes fair and just compensation for a benefit accepted by reference only to what would represent a fair remuneration for the work involved or a fair market value of materials supplied. One such category of case is that in which unsolicited but subsequently accepted work is done in improving property in circumstances where remuneration for the unsolicited work calculated at what was a reasonable rate would far exceed the enhanced value of the property."

Neither Brennan J nor Wilson J found it necessary to deal in their judgments with the true basis of liability in restitution. Their judgments were influenced by the fact that the case involved an express contract which was rendered unenforceable by statute. The view of Brennan J was that therefore there could be no claim on an implied contract (at 235) if that implied contract might circumvent the operation of the relevant statute, and he held further that an obligation in quasi contract imposed by law independently of contract and by way of restitution could not succeed when a "subsisting contract is the source and charter of rights and obligations of the parties" and when to give the claimed remedy would be "to vary the contractual provisions or to negative the effect which the Statute of Frauds has upon them" (at 238). It is not necessary for me here to examine His Honour's reasoning in more detail, and I simply note that his conclusion on this aspect of the matter was that having regard to relevant legal principles and relevant section of the New South Wales legislation (at 244): "The contractual promise to pay is clearly unenforceable and there is no room, while the unenforceable contract is persisting, for a quasi contractual claim."

In the present case there is no such obstacle to recovery by the plaintiffs.

Dawson J did not find it necessary to consider whether or not restitution would support a claim in the case before him. This was because (at 269) in his opinion an action upon a quantum meruit was not an action upon an implied contract or, at all events, an implied contract which covered the same ground as an existing contract. Accordingly, to allow the plaintiff to succeed would not be to enforce, directly or indirectly, the contract struck at by s45 of the Builder's Licensing Act.

It seems to me that the decision of the majority in Pavey's Case makes two important points which are relevant to the present case. First, that a claim in restitution is not founded upon an implied agreement, and while facts which might support an implied agreement may be relevant to a claim in restitution, it is not necessary to search for something akin to an agreement or request from which a promise to pay might be implied. Secondly, there is a significant emphasis in the judgments of the majority upon the notion of acceptance of a benefit from the performance by the claimant of an action which confers a benefit or enrichment upon the other person. However, to my mind it is equally clear from the majority judgments that the existing case law in this area has not been overturned. As Deane J pointed out, unjust enrichment is a "unifying legal concept" which explains the result reached in a variety of situations and not in itself a cause of action or a basis for recovery.

I am conscious of the fact that in Pavey's Case the Court was dealing with an express contract which could not be enforced in terms. In the present case we are dealing with an anticipated or hoped for contract which did not come into being. However, the decision in Pavey's Case suggests that acceptance of a benefit is relevant as a basis for recovery in restitution. However, it is clear that more is involved than the simple fact of acceptance. The consideration of the judgments in Pavey's Case, and of other case law in this area, suggests that one must also consider the basis upon which the provider of the benefit acted, the choice which the recipient of the benefit had in deciding whether or not to accept the benefit and the conduct of the defendant, by which I mean the defendant's knowledge of what the plaintiffs were doing and the basis upon which they did it.

Finally, I should add that I recognise that caution is required in applying Pavey's Case. Too sweeping an application of the notion of acceptance as a basis for a claim in restitution might unsettle aspects of the law of contract, the law of landlord and tenant (for example, relating to fixtures and fittings) and principles underlying the law of salvage, to mention just a few examples. In making this point I am conscious of significant academic writing in this area which writing, to my mind, demonstrates quite amply the need to integrate the decision in Pavey's Case into the existing case law while at the same time giving proper force to the emphasis placed upon the notion of acceptance. I refer in passing to Beatson, "Unjust Enrichment in the High Court of Australia (1988) 104 LQR 13, Burrows, "Contract, Tort and Restitution - A Satisfactory Division or Not?" (1983) 99 LQR 217; Mason, "Restitution in Australian Law" in Finn (ed.), Essays on Restitution (Law Book Co, 1990); Jones, "Restitutionary Claims for Services Rendered" (1977) 93 LQR 273.

The decision in Pavey's Case was considered by Byrne J in Brenner and Anor v First Artists' Management Pty Ltd and Anor [1993] VicRp 71; (1993) 2 VR 221. In brief, the facts in Brenner's case were that the plaintiffs claimed remuneration on a contractual basis or alternatively on a quantum meruit for services performed under alleged management engagements. The Judge found that there were no binding or enforceable contracts for management services because the parties had never reached the necessary degree of agreement on terms. He found that the claim succeeded in part on a quantum meruit basis. His Honour considered the decision in Pavey's Case at some length. Referring to a case involving the application of the law of restitution or of unjust enrichment he said (at 257): "In such a case, the gist of the claim is that the defendant has actually or constructively accepted the benefit of the plaintiffs' services in circumstances where it would be unjust for that party to do so without making restitution to the plaintiffs ... The circumstances in which the law considers it unjust to accept the benefit without payment are to be discerned from the principles to be extracted from the decided cases." He went on to refer to a number of factors relevant generally and to the case before him. He went on to say (at 259): "Indeed, where the services have been requested by the party to be charged, the main area of interest is likely to be whether the circumstances of the request are such as to give rise to a right of payment. This will involve proof that the services were not provided as a gift: Pavey's Case, at pp.227-8. Furthermore, it will be necessary for the plaintiff to establish, where a certain event has not occurred, that the services were not provided on the basis that they were not to be paid for unless that event came to pass. In this category will fall cases where a tenderer

carries out estimating or other work in response to an invitation to tender for a contract. It is understood in such cases that, in general, the tenderer takes the risk that the tender will be unsuccessful and that, as a consequence, the work will be unrewarded." A little later he said (at 259-260): "It was submitted on behalf of the defendant that the test was whether each of the parties thought at the relevant time that the work would be recompensed. I think that the court is not concerned with the actual state of mind of the parties or of either of them: Sabemo's Case, (Sabemo Pty Ltd v North Sydney Municipal Council (1977) 2 NSWLR 880) at p.900. Moreover, the enquiry must in my view be principally directed to the position of the party to be charged, for the thread running through this area of law is the injustice of the enrichment of that party. In my opinion the appropriate enquiry is whether the recipient of the services, as a reasonable person, should have realised that a person in the position of the provider of the services would expect to be paid for them and did not take a reasonable opportunity to reject those services: Jones, Restitution in Public and Private Law, (1991), p.108."

He went on (at 261) to make the point that it must be shown that it was the defendant who accepted the services if it is the defendant from whom restitution is sought. If someone else obtained the benefit of the services then the claim was likely to fail. Likewise, it was a question of whether it was in the contemplation of the defendant as a reasonable man that the plaintiffs realised that he would be responsible for payment.

I respectfully agree with His Honour's approach as a matter of principle.

In an area of law such as this, one could range far and wide through cases decided in the past and through academic analysis of those decisions in the light of current theories of the law of restitution. But it seems to me that this case can be disposed of by focusing on the notion of acceptance and applying it in the light of principles to be derived from past case law, an application which is to be informed and enlivened by the understanding that the underlying principle is that of unjust enrichment.

There are two cases that I will mention which seem to me to illustrate the scope of the case law for recovery on these facts.

Watson v Watson (1953) NZLR 266, which was referred to by the trial judge, involved a proposed partnership between two brothers who became plaintiff and defendant. The defendant invited the plaintiff to join him. They planned to do agricultural contracting and the cutting of firewood, but ultimately to build a sawmill and become partners in it. The brothers worked together building the mill, which was completed at least two years after it was begun. Although no partnership agreement ever eventuated, the plaintiff continued to work in the mill, supervising it when the defendant was away. The plaintiff received no wages but was given occasional payments if short of money. The plaintiff also purchased equipment for the mill. Gresson J held that the plaintiff was entitled to recover reasonable remuneration for his services and some equipment costs.

His Honour appears to have approached the question on the basis of an implied contract between the parties (at 272-3). But the case is important as setting out a situation where the case law has permitted recovery on the basis of factors such as the provision of services on the basis of an assumption defeated by later events, and on the basis of the acceptance of those services, despite a different conceptual basis for the importance of these factors in the ultimate recovery. In my view, the case provides a useful guide to the state of the existing case law which must be integrated with the new concepts of acceptance and unjust enrichment.

A second New Zealand case, which is explicitly based upon the principle of free acceptance, is Van den Berg v Giles (1979) 2 NZLR 111. This case involved a claim by a tenant against the owner of property. The tenant did extensive work on the house in which he lived, including the alteration of walls and the replacement of roofing and wiring. The tenant alleged that he had been told by the defendant that he would be able to purchase the house, and that he had proceeded to have the renovation work done on this basis.

The trial judge found that the plaintiff was entitled to restitution. His Honour found that (at 120): "From the commencement of work on the property the defendant fully understood the need for it, the extent of it, and freely accepted it. I find on her part an active encouragement for it to have been carried out, and the deliberate creation of uncertainty about the possible sale of the house. I do not find on her part any request for the services, but a definite acquiescence and acceptance."

His Honour also found that there had been no expectation on the part of the plaintiff that the services would be paid for, the expected benefit being through purchase of the house; that the services were not officiously provided; and that the defendant did not take any of the opportunities that she had to reject the services.

His Honour's conclusion was that recovery would be permitted (at 121): "I think the starting point for the plaintiff is to show that he performed services on the defendant's property which she, without demur and quite freely, accepted."

In my view, this case, which bears many factual similarities to the present one, was correctly decided. The combination of factors involved, including both encouragement and acceptance by the defendant, makes it impossible to dispute the finding that the enrichment of the defendant was unjust. It is interesting to note that a contemporaneous New Zealand case, Avondale Printers and Stationers Pty Ltd v Haggie (1979) 2 NZLR 124, denies that the decision in Van den Berg can properly be based on a general principle of unjust enrichment (at 149); but even so, Mahon J noted that, despite his disagreement with such a wide ratio decidendi for the case, "No-one could quarrel with the result of the litigation in Van den Berg v Giles..." (at 149). When applying the principles laid down in Pavey's case, I am fortified by the acceptance of a just result in this case, whatever differences might be expressed as to the principles underlying that result.

In my opinion the plaintiffs in the present case were entitled to succeed. This is a case in which the defendant accepted benefits (freely accepted, if the addition of that adverb adds anything) accruing to the defendant from the plaintiffs' performance of work. It is a case in which there has been an acceptance of a benefit under circumstances such that the law should, in my opinion, impose an obligation to make fair and just restitution. I now proceed to identify the circumstances which, in my opinion, give to the acceptance of the benefit the character necessary to support the claim. It is convenient at the same time to be a little more specific about what I mean by acceptance in the context of this case.

First, the plaintiffs did not intend to provide their services gratuitously. They expected a return, if only in the form of more favourable terms of lease. Secondly, the plaintiffs did not provide their services and supply the plant and equipment entirely at their own initiative. They acted not only with the knowledge of Ditara, through its agents, but with the approval of Ditara. In my opinion there was more than passive acquiescence. It is not necessary for me to find that there was a request that the services be performed and the plant and equipment supplied, but were it necessary to do so I would be prepared to conclude that there was an implied request. Thirdly, the plaintiffs did not provide their services on the basis that there would be no payment unless a certain event came to pass. By proceeding as they did the plaintiffs incurred the risk that if a lease did not eventuate they would not be remunerated. But this was not a situation in which it was a common understanding that there would be no remuneration in the event of there being no lease. It was not a situation in which common business practice indicates the parties did intend or should as reasonable persons have realised that remuneration was conditional upon the grant of a lease. Fourthly, this was not a case in which the services were provided on a basis from which the plaintiffs chose to depart. It is not necessary to decide whether the failure to agree upon a lease was attributable to unreasonable conduct on the part of either party. It suffices to say that on the findings of His Honour the plaintiffs did not unilaterally or unreasonably terminate negotiations. Fifthly, the defendant Ditara benefited from what the plaintiffs did. Ditara either incurred less expense than it otherwise would have incurred in restoring the premises or alternatively had premises better fitted for letting out. Sixthly, that benefit was conferred at the expense of the plaintiffs. Seventh, Ditara by its agents approved of or agreed to the plaintiffs carrying out the work which they did. In addition, Ditara by its later sale of plant and equipment, including the plant and equipment installed by the plaintiffs (it being the case that some, at least, of that plant and equipment was readily removable), accepted the benefit of that part of the plaintiffs' work. Eighth, in my opinion the circumstances were such that Ditara by its agents must have known as a reasonable person that the plaintiffs expected to be remunerated for their services. Ninth, there is no argument advanced identifying any particular circumstance by virtue of which it is unjust to require Ditara to remunerate the plaintiffs. By this I mean that no matter such as change of position was advanced, nor, subject to the counterclaim, was it suggested that the work carried out was work which Ditara did not want done or which was of no use to Ditara.

In my opinion, for those reasons this is a case of acceptance (or free acceptance) by the defendant of a benefit conferred by the plaintiffs under circumstances such that the law should impose an obligation to make fair and just restitution. I consider that my decision is consistent with the basis upon which Pavey's Case was decided, and consistent with the approach taken by previous case law in this area.

It is unwise and pointless, in my opinion, in a developing area of the law like this to attempt to identify specific facts which, when found, will invariably provide a basis for relief. That is why I have set out the facts upon which I rely in some detail.

Amount of Restitution: I have already set out that part of the judgment of Deane J in Pavey's Case in which he deals with the manner in which the amount recoverable should be ascertained. The central concept is fair and just compensation for the benefit or enrichment accepted. As he says, ordinarily that will correspond to the fair value of the benefit provided.

This was the approach taken by Byrne J in Brenner, and I refer to and respectfully adopt his discussion of the relevant principles at 262-265. In my opinion it is appropriate, as a matter of principle, to take a flexible approach to the manner in which the amount of compensation is determined. The balance of authority favours the view that the normal measure of recovery is the value received by the defendant at the plaintiffs' expense: Tilbury, Civil Remedies Vol.1, para4027. But, apart from emphasising the fact that the cost to the plaintiff of the service provided is not decisive, the principle stated seems to me to be a starting point for enquiry rather than a conclusion. Much will depend upon the particular circumstances, by which I mean the circumstances in which, and the basis upon which, liability is made out. As Deane J points out in Pavey's Case (at 263), in the case of an unsolicited benefit it might be an affront to justice to look at anything other than the enhanced value of the property. I note that Tilbury (op cit) goes on to say (para4036): "The reasonable value of services freely accepted is, prima facie, the market value of such services at the time they were rendered."

It seems to me that this proposition is consistent with what Deane J said in Pavey's Case at 263. I refer also to Carter and Harland, Contract Law In Australia 2nd ed (para2336) where, after observing that Goff and Jones say that the plaintiff should recover whichever is the lesser of value of services rendered and benefit obtained, the authors go on to say: "However, the reason restitution is being awarded should not be forgotten and in cases where the basis is the defendant's request (or free acceptance), rather than 'incontrovertible benefit', the plaintiff should normally recover the value of work done rather than the amount by which the defendant's assets are increased."

In the present case His Honour based his judgment on the cost of the plant and equipment supplied by the plaintiffs and the value of their labour, less certain deductions which deductions were not challenged on appeal: judgment p41. His Honour made the point that it would be difficult indeed to determine with any precision the value to the defendant of the services provided. It would be necessary to embark upon a difficult valuation exercise, comparing the value of the premises with and without the work done by the plaintiffs. That exercise would be further complicated by the fact that Ditara subsequently carried out further work on the premises, and common sense suggests that it would now be difficult to identify the value added to the premises by the work done by the plaintiffs.

Be that as it may, it is my opinion that in a case like this, and I refer again to the factors upon the basis of which I concluded that the plaintiffs should succeed, the market value of the services provided is an appropriate basis, and that is what I understand His Honour to have done. It was not suggested on appeal that, assuming they provided a relevant basis, the plaintiffs' figures were nevertheless erroneous on matters of detail. It is also relevant to note that, as I understand things, the basis of assessment was in effect a determination of what it would have cost Ditara had it obtained the same services elsewhere.

For those reasons it is my opinion that His Honour was right to enter judgment for the plaintiffs for the amount for which he entered judgment.

Counterclaim: On this issue I can be brief. The counterclaim by Ditara was advanced on the basis that it incurred expenditure remedying defective workmanship attributable to the plaintiffs. But it emerged during the appeal that the basis for attributing the relevant expenditure to remedying defective workmanship, as distinct from completing the restoration work on the hotel, was flimsy indeed. There was no evidence identified which established that the expenditure was incurred in remedying defective work carried out by the plaintiffs. That fact acquires added significance when one bears in mind that the work done by the defendants was carried out under the general supervision of Mr Constantino, who was a witness in the case. His Honour disposed of the counterclaim very briefly, and adverted in particular to the fact that the work had been accepted by Mr Angelopoulos. While that might not meet the point advanced on appeal, the fact is that the point advanced on appeal lacked any basis in evidence. In my opinion the challenge to His Honour's decision on the counterclaim must fail.

Judgment Against Mr Angelopoulos: The order drawn up in this matter records a judgment against both defendants. But Mr Angelopoulos seems to have acted at all times in his capacity as a director and shareholder of Ditara. The benefit which the defendants conferred was a benefit to Ditara, and presumably only indirectly benefited Mr Angelopoulos in his capacity as a shareholder. The plaintiffs' understanding of the situation as a matter of law may have been imperfect but it appears that they were aware of the existence of Ditara and of its status as owner of the hotel. Judging by the submissions of counsel on the appeal, little attention was paid at trial to the issue of personal liability of Mr Angelopoulos. It seems to me that nothing has been identified which would justify the entry of judgment against him, other than his interest in Ditara.

Accordingly, in my opinion, the appeal should be allowed for the purposes of setting aside judgment against the first defendant, described as Chris Angelopoulos, but otherwise the appeal should be dismissed.

JUDGE2 DUGGAN J In my view the appeal should be allowed but only for the limited purpose referred to by the Chief Justice in his judgment. Otherwise the appeal should be dismissed. I agree with the reasons given by the Chief Justice.

Builder's Licensing Act 1971(NSW)

CHRIS ANGELOPOULOS and ANOR v MARIO SABATINO and ANOR No. SCGRG 94/1698 Judgment No. 5230 Number of pages - 15 Restitution

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Judgment (72 paragraphs)

CHRIS ANGELOPOULOS and ANOR v MARIO SABATINO and ANOR No. SCGRG 94/1698 Judgment No. 5230 Number of pages - 15 Restitution (1995) 65 SASR 1 [1995] SASC 5230 (8 September 1995)

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Legislation Cited (2)

Cases Cited (6)