Coleman v Seaborne Pty Ltd [2007] NSWCA 60 | Case summary

Thursday 15 March 2007 DELISE AND TOM COLEMAN v SEABORNE PTY LTD Judgment 1 HODGSON JA: I will ask Young CJ in Eq to give the first judgment. 2 YOUNG CJ in EQ:: This is an appeal from a decision of his Honour Judge Nield in the District Court in which he adopted a report of a referee and found a verdict and gave judgment for the respondent for $190,599.37 being $147,895.94 for the claim and the balance for interest to the date of judgment. 3 The respondent was the plaintiff in the District Court and sought to be paid for renovating a boat, the "Kelly D", owned by the female appellant. 4 There is no doubt that the respondent did work on the boat and indeed it was paid some $415,890.50 by the appellants in respect of that work. The respondent claimed, however, additional amounts which were disputed by the appellants. The appellants also cross-claimed for alleged defective work. 5 The respondent's original pleading claimed the balance of the money due under a contract for a fixed price of $444,063.07 plus variations, increasing the amount due to $473,446.13 less the amount paid. 6 The male appellant originally denied he was a party to any contract with the respondent. The female appellant admitted that she had a contract with the respondent, but denied the terms were as pleaded. 7 The respondent then amended its statement of claim very significantly. The amended pleading was that it was retained by one or both of the appellants to work on the "Kelly D" and would be paid $444,063.07 plus extras at a reasonable price. Alternatively, the respondent claimed to be paid by way of a quantum meruit. 8 The amended defence admitted that the appellants retained the respondent to do the work on the "Kelly D". They denied that extras were to be done unless they had been given prior approval, said that they were defective works and that the cost of remedying these defects far outweighed anything otherwise due to the respondent. 9 The District Court made an order referring the dispute for report to a referee, Mr Ian Bailey SC. 10 Mr Bailey heard the proceedings over four days in late May and early June 2005. 11 The problems surfaced on 1 June 2005. To use the words of the learned trial judge in para 16 of his judgment: "On 1 June 2005, after closing the plaintiff's case, Mr Neal [Mr Neal was counsel for the respondent] told the Referee that the plaintiff 'effectively' withdrew its claim that the 'do and charge' 'retainer' of August 2001 was 'varied' to 'a fixed lump sum contract' in August 2002 (something which was always denied by the defendants) and that the plaintiff relied only upon its alternative claim of 'a contractual quantum meruit in circumstances where the retainer was admitted' ... whereby it is entitled to be paid a reasonable sum for the work done by it and the materials supplied by it." 12 As the learned trial judge remarked, what Mr Neal told the referee appeared to take Mr Goldstein, then counsel for the appellants, by surprise. 13 The referee then said to Mr Goldstein, "What applications do you want to make in relation to how I deal with any other evidence on the quantum meruit? You know what [the plaintiff's] case has been. [Its] case is a contractual quantum meruit." After some discussion, Mr Goldstein told the referee that he would like time to consider it and he would address on the matter the next morning. 14 The transcript of what happened late on 1 June and early on 2 June shows the full discussion that took place between counsel and the referee, but it is not necessary to set it all out. 15 Mr Goldstein reminded the referee that the way the case had been conducted was that there was to be prime focus on the fixed price contract aspect of the case and that the apparent backup claim of quantum meruit was to be postponed for later if the need arose. He said he was caught on the hop because the material on the quantum meruit had been very hurriedly put together (I think in accordance with actual directions that had been made for it to be filed) and now the quantum meruit case would have to be answered earlier than he anticipated and those matters were causing him some difficulties. 16 The referee asked Mr Goldstein whether he had any application to make. He did not in fact make any application, he did not make any application for an adjournment. 17 There was further discussion between counsel, particularly Mr Goldstein and the referee. At black 303K the referee said to Mr Goldstein, "You would say ... so long as there was a request for the work to be done and … it was done ... the plaintiff would receive a reasonable sum for it", to which Mr Goldstein replied, "That's right." The matter then proceeded before the referee without any adjournment. 18 The evidence finished on 2 June and then the matter was adjourned for addresses, which took place on 15 June 2005. 19 On 7 June 2005, the respondent's solicitors wrote to the appellants' solicitors a letter which basically said that in response to a request for clarification of the respondent's pleadings, certain named paragraphs in the amended statement of claim were abandoned and the amount claimed was $167,710.63 plus interest and costs. 20 The letter concluded: "As to the way the case was run, and the way our client puts its case, we respectfully refer you to the detailed exchange between counsel and Referee Bailey SC at TP 369-385." 21 The referee then determined what was a reasonable sum for the work, and, after making some slight deductions for defective work, reported that there should be a verdict for the respondent. The figures were those which were later the subject of the judgment to which I have referred earlier. 22 Both sides moved the District Court in respect of the report. The respondent moved for its adoption and the appellants that the report be rejected. 23 Judge Nield heard the motions, adopted the report and gave judgment accordingly. 24 In proceeding to adopt the report, his Honour applied principles stated by McDougall J in Seven Sydney Pty Ltd v Fuji Xerox Australia Pty Ltd [2004] NSWSC 902, and by Rogers CJ Comm D in Beveridge v Dontan Pty Ltd (1991) 23 NSWLR 13. There has been no complaint about his Honour's doing so. 25 Today, Mr F Corsaro SC appeared for the appellants and Mr G Inatey SC and Mr H J A Neal appeared for the respondent. 26 The basic complaint with the referee's report as stated by senior counsel for the appellants in para 14 of his written submission is that the referee determined a liability on the part of the appellants which was not open on the pleadings, and that the referee had wrongly permitted the respondent to substantially modify the quantum meruit case beyond the specific items of work that had been claimed. 27 Mr Corsaro says that the appellants' counsel before the referee on 1 June reasonably believed that on the pleadings the items which had been paid for were not up for re-examination but only the extras. He says, as is reflected in para 20 of his arguments in the orange book, that from the appellants' point of view they were entitled to approach the reference hearing on the basis that the only items which they had to deal with on the respondent's claim were the items of work which had been claimed and remain unpaid. There was nothing to suggest that the referee would determine their liability by casting aside the fact that the items of work claimed in progress claims 1-9 which had been paid were up for review. 28 Added to this was the problem that the quantum meruit aspect of the claim was being brought on much earlier than the appellants' counsel could reasonably have expected in view of the approach adopted at the beginning of the hearing that the quantum meruit claims would be dealt with after the other claims. 29 There are very great problems with those submissions, even accepting that they are actually relevant to the appeal which is before this court. I must briefly digress into why I have made that comment before dealing with an answer to what Mr Corsaro has submitted. 30 To succeed in this appeal it is not enough for the appellants to establish error on the part of the referee or even that in adopting the report the trial judge made the same error as the referee, but that his Honour made some appealable error in adopting the report; see, for instance, Nine Network Pty Ltd v Kennedy Miller Television Pty Ltd (Court of Appeal, 8 June 1994, unreported). 31 As I have said, his Honour set out the tests he applied and no complaint has been made about them, so that in any event it would seem that the only error alleged against the judge is that he fell into the same error as the referee or failed to recognise the referee's error, which may not be sufficient. 32 Putting that aside and going back to the argument that Mr Corsaro so ably put up, the difficulties are first that the appellants had denied that there was any fixed contract, so right from the beginning, on their view of the legal relations between the parties, the worst that would be happening would be that there was some form of quantum meruit. 33 Secondly, evidence had been put on by Mr Geale, a director of the respondent, that the quantum meruit claim was for the whole of the work and that the amounts claimed were in excess in some respects of the items that had been billed in the progress claims that had been made. 34 Next, even though it was put on belatedly, Captain Kysil, the appellants' expert, did give evidence to counter Mr Geale's view on all items including the items that were in the original progress claims 1-9, not only those of the other two progress claims, and for the extras. 35 Furthermore seems to be made quite clear by what is in the respondent's solicitor's letter of 7 June 2005 and from what was discussed between the referee and counsel on 1 and 2 June, that the plaintiff was claiming an amount in excess of the extras in its quantum meruit claim because there is no other way that you can get the total claim in the letter of $167,710.63. 36 There was accordingly, it seems to me, before the referee, even though there may be some technical problem with the pleading (I do not think there is, but assuming there is for the moment), the case that had been fairly clearly put that the referee was to decide what was the amount due for the total amount of the work. There may have been some problem in counsel for the appellants being caught on the hop, but he never applied for any adjournment and continued on. 37 The appellants in their written submissions at the close says that the result of the appellants' challenge to the referee's report is that there should be a verdict for the appellants on the respondent's claim and a verdict for the appellants on their cross-claim. This, however, with great respect, seems to be a hopeless assertion. The referee rejected the bulk of the appellants' cross-claim, and there has been no real challenge of that. Any fault in the assessment of the claim would merely result, at the worst, in a new trial. 38 Before finally disposing of the appeal I should say something about quantum meruit, because there seems to have been some confusion before the referee and before the learned District Court judge as to what a quantum meruit claim really is. 39 It is true that there are two different types of quantum meruit: (a) contractual quantum meruit; and (b) what used to be called quasi-contractual quantum meruit but what is now called restitutionary quantum meruit. There is a difference in one sense in that in the former, the parties have actually made a contract, but have agreed that the price will be a reasonable price, and in the second case, there is either an ineffectual contract or no contract, but work is done under circumstances where the person providing the benefit is expected to be compensated for it. 40 However, as Deane J pointed out in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 especially at 225, both types of claim were previously pleaded in the old common law system by way of indebitatus counts at common law. Neither type of quantum meruit claim is an equitable claim and a pleading alleging a quantum meruit will be sufficient to cover both types of claim. 41 Accordingly, it does not seem to me that there is any problem with the claim made in para 8A of the amended statement of claim relying on a quantum meruit or that there is any mileage to be gained by anybody in trying to distinguish between the two types of contractual and restitutionary quantum meruit. 42 All that should be said is that where one has a quantum meruit claim, the only significance that payments or other good evidence of the intention of the parties such as statements in an ineffective contract can have is as evidence of what is the reasonable value of the work done and the materials provided; see, for instance, what Jordan CJ said in Horton v Jones (1934) 34 SR (NSW) 359 at 367. 43 Accordingly, in my view, there are no merits in this appeal and it must be dismissed with costs. 44 HODGSON JA: I agree. 45 The point argued before this court was to the effect that the appellants were denied procedural fairness before the referee because he made a determination of liability that was not within the pleadings, in circumstances where the appellants did not have a reasonable opportunity to meet the case made against them. Essentially this was on the basis that, until the end of the fourth day of the hearing before the referee, the appellants had conducted the case on the basis that the only issue was what was a reasonable price for that part of the work that was not included in progress claims for which payment had previously been made. 46 It is by no means clear that this point was argued before the primary judge but, even if it had been, I do not think it could succeed. 47 Para 8A of the amended statement of claim sought a quantum meruit without limitation to part of the work done, that is, it sought a quantum meruit as to the whole of the work done. It is true however that the amount claimed in that amended statement of claim was still something less than $90,000. 48 An affidavit served by the respondent about two months before the hearing before the referee, however, gave particulars of this quantum meruit claim, which made it clear that the quantum meruit claim did cover the whole of the work and was in an amount greater than the sums mentioned in the statement of claim. At the hearing, no objection was taken to this affidavit, and the appellants' expert report itself dealt with the reasonableness of the whole of the quantum meruit claim. 49 It can be said that the respondent's claim was not particularised as clearly as it should have been, and it can also be said that no amendment had been sought to the statement of claim to increase the amount claimed; and in those circumstances, where the appellants' counsel suggested that the appellants suffered some surprise and prejudice, this might have justified an adjournment if it had been sought from the referee. An adjournment was not sought and the matter proceeded to conclusion. In those circumstances, in my opinion, the claim of want of procedural fairness cannot be made out. 50 TOBIAS JA: I agree with Justice Young and with the additional observations of the presiding judge. 51 HODGSON JA: The order of the court is the appeal dismissed with costs.

Coleman v Seaborne Pty Ltd

At a glance

Court

Decision date

Before

Source

Judgment (12 paragraphs)

Parties

Cases Cited (3)

Cited By (2)