Fernandez v EJ Industries Ltd [2020] VSCA 139

Court of Appeal (Vic)|2020-05-29|Before: Beach JA, Kaye JA

Fernandez v EJ Industries Ltd (Court of Appeal, Supreme Court of Victoria, Pedley JR, 7 May 2020)

PRACTICE AND PROCEDURE - Application to set aside Judicial Registrar's orders refusing extension of time to file application for leave to appeal - Delay of 42 days - No adequate reason for delay - Proposed appeal devoid of merit - Prejudice to respondent if application granted - Application refused - Supreme Court (General Civil Procedure) Rules 2015 r 64.08

1 The applicants apply to set aside orders made by Judicial Registrar Pedley refusing to grant an extension of time for the filing of an application to seek leave to appeal against the decision of the County Court made on 3 December 2019.

2 In the proceeding in the County Court, the respondent claimed USD480,000 against the applicants pursuant to a loan agreement, or alternatively as money had and received. On 23 August 2019, a judicial registrar of the County Court, on the application of the respondent, gave summary judgment against the applicants for the amount claimed. The applicants sought a review of that decision pursuant to r 84.03 of the County Court Civil Procedure Rules 2018. On 3 December 2019, the judge, who heard the review, dismissed the application and ordered costs in favour of the respondent.[1] On 28 February 2020, the applicants made an application, pursuant to r 64.08(1) of the Supreme Court (General Civil Procedure) Rules 2015, that time be extended for the filing and serving of an application for leave to appeal. On the same date, the applicants filed and served a proposed application for leave to appeal.

3 The respondent company is controlled by Everton Murdoch ('Murdoch'), who resides in Canada. He is the brother-in-law of the two applicants. In early November 2013, the second applicant contacted Murdoch requesting urgent financial assistance in respect of a debt that was then due and owing by the applicants to their bank. Murdoch agreed to provide that assistance. In an affidavit sworn in the County Court, the second applicant stated that Murdoch told him that he would provide that finance himself, as he could not 'involve' the respondent in providing the funds to him. On 4 November 2013, the amount of USD480,000 was forwarded to the account of the applicants from the account of the respondent with Scotiabank. On the same day, or the next day, Murdoch sent an email to the second applicant attaching the receipt of Scotiabank, which recorded the sender's name as the respondent and the beneficiaries as the two applicants.

4 It was not in dispute in the County Court proceeding that the applicants received the amount that was forwarded to them on that date. Nor did they dispute that the amount was by way of a loan, and not a gift. In the course of submissions before the County Court judge, they both acknowledged that they were obliged to repay the funds. The fundamental dispute, it would seem, was as to the identity of the lender. The applicants contended that Murdoch himself was the agreed creditor, and not the respondent.

5 The original statement of claim, endorsed on the writ, pleaded a claim based on a loan agreement between the applicants and the respondent dated 1 November 2013, which was partly oral and partly in writing. In the course of the hearing before the judicial registrar of the County Court (on 23 August 2019), the respondent, with leave, amended the statement of claim to add an alternative claim for money had and received.

6 The judge, who heard the application to review the decision of the judicial registrar, noted that the applicants each acknowledged that they had received the money, and that they intended to repay it, but that they had encountered problems in doing so.[2] The judge noted that there had been some dispute about whether the funds had been provided by way of loan or simply in response to a request for help, but he considered that the transaction could reasonably be characterised as a loan.[3] The judge noted that in his amended defence the second applicant pleaded that there was an implied term that the loan was not repayable for ten years. His Honour considered that it was 'extremely improbable' that such a term would be implied in a contract of loan.[4]

The fundamental issue here relates to the question of the identity of the lender. However, in that context, the defendants face the problem that the plaintiff's claim was amended a few months ago to include a claim for moneys had and received. That claim is made by the plaintiff as an alternate claim, and in circumstances where it appears unarguable that the plaintiff made the funds available, and the defendants admit the money was transferred and received into a joint bank account, it is difficult to avoid the conclusion that those moneys are repayable, probably on demand.[5]

8 Accordingly, the judge considered that the applicants' prospects of defending the proceeding were 'much closer to fanciful than ... to real'.[6] Accordingly, his Honour dismissed the application to review the decision of the judicial registrar.

9 In the proposed application for leave to appeal, the applicants seek to rely on two principal grounds, namely:

(a) the applicants had an arguable defence, namely that the monies were advanced by personal loan between Murdoch and the applicants, and the respondent was not privy to that loan;

(b) in those circumstances there could be no claim for money had and received by the respondent against the applicants because 'equity must follow the law'.

(2) The amended statement of claim, in any event, did not 'on its face' disclose a viable claim for money had and received and accordingly the judgment is irregular.

Application for extension of time - legal principles

10 Pursuant to r 64.08 of the Supreme Court Rules, the Court has a discretion to extend the time for filing an application for leave to appeal. Ordinarily, in deciding whether an extension of time should be granted, the Court takes into account a number of factors, including the length of delay, the reasons for the delay, and the extent of any prejudice suffered by the respondent if the extension is granted. Further, an extension of time will not be granted if the appeal 'is so devoid of merit that it would be futile to extend time'.[7] In a case in which that threshold has been met, it may still be relevant to make an assessment, as best can be done, of the prospects of success, as a consideration relevant to the exercise of the discretion.[8]

11 The first relevant consideration is the delay by the applicants in filing their proposed application for leave to appeal. Pursuant to r 64.05(1)(ab)(vii), the applicants had twenty-eight days to seek leave to appeal from the decision of the primary judge. That period ended on 17 January 2020. As noted, the proposed application for leave to appeal was not filed until 28 February 2020, and thus was forty-two days out of time.

12 The solicitors for the applicants filed an affidavit seeking to explain the reasons for that delay. According to the affidavit, the applicants attended the solicitors on 5 December 2019 and it would seem gave the solicitors instructions to appeal the decision. On 17 December, the applicants' solicitors wrote to the associate of the primary judge requesting a transcript of his Honour's judgment. On

20 December, a copy of the transcript of the hearing before his Honour was received by the solicitors for the applicants. However, the transcript did not include a copy of his Honour's reasons. On 20 January 2020, the applicants' solicitors wrote to the associate of the judge, noting that the ruling was not included in the transcript, and requesting whether such a ruling had been delivered. The applicants' solicitors followed up that request by further contacts with the associate on 22 January,

28 January and 3 February. On 4 February, the applicants' solicitors received an email from the judge's associate attaching a copy of the revised ruling. As earlier noted, the application for leave to appeal was filed and served on 28 February.

13 In the meantime, on 23 January, the applicants informed their solicitors that they had received a bankruptcy notice in respect of the judgment debt. On 10 February, the applicants' solicitors wrote to the respondent's solicitor stating that the applicants intended to file an appeal, and requesting that the respondent would refrain from pursuing bankruptcy proceedings in the meantime. On 21 February, the respondent's solicitors responded, stating that the respondent intended to proceed with enforcement of the judgment debt by way of bankruptcy notice.

14 On this application, it was submitted on behalf of the applicants that it would have been inappropriate for their for their solicitor to give advice to the applicants, and to issue an application for leave to appeal on behalf of the applicants, without first having the benefit of the judge's ruling. Counsel for the applicants contended that it was responsible and prudent for the practitioners to defer filing a notice of intention to appeal until receipt of the judge's reasons. Counsel further submitted that having obtained a copy of those reasons, the applicants moved promptly in obtaining advice, and in issuing the application.

15 Contrary to those submissions, the applicants' solicitors' affidavit fails to provide any proper explanation for a significant portion of the period of delay. Having received initial instructions on 5 December 2019, the applicants' solicitors did not request a copy of the transcript of the hearing before the primary judge until 17 December. Having received that transcript on 20 December, the applicants' solicitors then delayed for a period of one month (until 20 January 2020) to contact the judge's associate in order to obtain a copy of the missing ruling. The ruling was itself three pages in length. It was received by the applicants' solicitors on

4 February. It took a further period of twenty-four days for the applicants to file their notice of application for leave to appeal.

16 No adequate explanation has been given by the solicitors for the applicants for any of those particular periods of delay. In combination, the three segments of delay - from 5 December to 17 December, from 20 December to 20 January, and from 4 February to 28 February (excluding the two week period in which the applicants' solicitors' office was closed for the Christmas break), amounted to some fifty days of the seventy days that lapsed between the decision of the primary judge and the filing of the proposed application for leave to appeal. Making due allowance for the ordinary exigencies of practice, and for the time that was required to obtain and consider the judge's ruling, and to obtain appropriate advice, such a period was in our view inordinate, and no adequate explanation has been proffered for it.

17 We turn, then, to consider the merits of the proposed appeal in terms of the principles that we have discussed. Both sides addressed that aspect of this application in some detail.

18 The respondent relied on two affidavits of Murdoch in support of its application for summary judgment. In the principal affidavit (sworn 2 August 2019), Murdoch set out, in some detail, conversations that he had with the second applicant in early November 2013 concerning the proposed loan. In an initial conversation on 1 November 2013, the second applicant told Murdoch that he and his wife had a pressing debt to the bank, and they needed a loan in order to save their house. Following that conversation, on 2 November, he sent an email to Murdoch requesting a loan of $450,000. On 4 November, he sent a further email, requesting that the amount of the loan be $480,000. Then on the same day, Murdoch had a discussion with the second applicant. In his affidavit, Murdoch said that in that conversation the second applicant asked that the loan be for USD480,000 as it would be easier for Australian banks to convert US dollars to Australian dollars, than Canadian dollars to Australian dollars. In response, Murdoch told the second applicant that as the amount that was to be borrowed would be large, the loan would come from his company which had funds set aside in US dollars to purchase some equipment for its business. He told the second applicant that the business would need it back in about three months. The second applicant responded that he did not think that it could be repaid within that time, and that 'we will need a year to repay it'.

19 On the same date, Murdoch electronically transferred, from a bank account in the name of the respondent, the sum of USD480,000 to the joint bank account of the applicants. On the following day, 5 November, he emailed the second applicant a Scotiabank Outgoing Payment/Transfer Summary Receipt for that amount. That document recorded that the sender was 'EJ Industries Ltd', and that the beneficiaries were 'Trevor and Beatrice Fernandez'.

20 In the balance of his affidavit, Murdoch set out a number of contacts that he had with the applicants, commencing in March 2014, in which he sought repayment of the funds. It is not necessary to set out the content of those discussions and emails. It is sufficient to observe that in the course of them each of the applicants acknowledged that the money was owing by them, and each confirmed that 'you' (Murdoch) had loaned the money to them. In an email dated 6 March 2015, the first applicant stated that they had promised to pay the money back within six months, but that they had had difficulty, and that they were in the process of obtaining a loan to repay the debt.

21 In response to the application for summary judgment, the applicants filed some five separate affidavits. In the first affidavit (sworn 2 August 2019), the second applicant deposed that he did have a conversation with Murdoch concerning his financial situation and that Murdoch offered to help him out with funds. He said that there was 'no contract' and that there was 'no payment plan' either written, oral or implied. In a joint affidavit (sworn 16 August 2019), the second applicant confirmed that he had contacted Murdoch because he wanted to speak to Murdoch on a personal basis. He said that the request that he made for a loan was for Australian dollars and not American dollars. During the conversation, no mention was made with regard to repayment. In the affidavit, the applicants stated that their contact was purely with Murdoch on a personal basis and not the respondent.

22 In a third affidavit by the second applicant (sworn 4 September 2019), the second applicant acknowledged receipt of the Scotiabank receipt but said 'in our records we had a redacted copy of the same document'. Exhibited to the affidavit was a copy of the Scotiabank receipt with the name of the sender, and the address of the sender, each redacted.

23 In a fourth affidavit (sworn 13 November 2019), the second applicant elaborated on the initial conversation he had with Murdoch. He said that he had advised Murdoch that he had a problem and asked if he was in a position to help. According to the second applicant, Murdoch 'right away said that he cannot involve EJ Industries with giving money to anyone'. Two days later Murdoch telephoned the second applicant and said that he had decided to help him 'using private funds'. The second applicant told Murdoch he would need AUD450,000, but he subsequently increased that amount to AUD480,000. The money was transferred in US dollars. The second applicant did not realise, immediately, that the amount that was provided was in US dollars. In the affidavit, the second applicant reiterated that he did not have a contract with the respondent. He asserted that Murdoch had 'deliberately misled and misinformed' him that the agreed funds would come from his (Murdoch's) personal account as was the agreement between them.

24 Based on those materials, it is necessary, then, to make some assessment of the merits of the proposed appeal, in respect of which the applicants have sought an extension of time. The subject of the proposed appeal is, of course, the decision of the primary judge upholding the application of the respondent, under s 63 of the Civil Procedure Act 2010, for summary judgment on the claim in the proceeding. Under that section 63, the respondent was entitled to summary judgment if the court was satisfied that the applicants had no real prospect of success in respect of any of the defences relied on by them. In Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd, Warren CJ and Nettle JA outlined the principles that apply to such an application in the following terms:

Upon the present state of authority:

(a) the test for summary judgment under s 63 of the Civil Procedure Act 2010 is whether the respondent to the application for summary judgment has a 'real' as opposed to a 'fanciful' chance of success;

(b) the test is to be applied by reference to its own language and without paraphrase or comparison with the 'hopeless' or 'bound to fail test' essayed in General Steel;

(c) it should be understood, however, that the test is to some degree a more liberal test than the 'hopeless' or 'bound to fail' test essayed in General Steel and, therefore, permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent's case is not hopeless or bound to fail, it does not have a real prospect of success;

(d) at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.[9]

25 Four points are clear from the affidavits to which we have referred. First, the applicants do not dispute that the funds, that were remitted to their account on

4 November 2013, were received and used by them. Secondly, the applicants do not dispute that they have an obligation to repay the funds that were advanced to them on that date. Although, in the defence filed on her behalf, the first applicant suggested that she was not a party to the original loan agreement, nevertheless, in the balance of the defence, she accepted that she is liable (with the second applicant) to repay the monies that have been advanced. In the correspondence between the parties, which we have summarised, each of the applicants acknowledged their obligation to repay the monies that were loaned to them. In the course of oral submissions before the primary judge on 3 December, the first applicant specifically accepted that she (and the second applicant) each had an obligation to repay the funds.

26 The third relevant point is that the monies have not been repaid by the applicants, notwithstanding that a number of demands have been made to them to do so, and notwithstanding that the debt has been outstanding for more than six and a half years. The fourth relevant point is that the evidence establishes - and it is not disputed - that it was the respondent (and not Murdoch) who remitted the loan funds to the applicants.

27 Thus, in summary, it is undisputed that the applicants made a request (to Murdoch) for the loan. The loan funds were paid to the applicants. It was the respondent who advanced those funds to the applicants. The applicants have an acknowledged obligation to repay the funds (albeit that they claim that the debt is owed to Murdoch and not the respondent). Despite a number of requests made to them, the applicants have failed to make any repayment of the funds so advanced to them.

28 The sole point relied on by the applicants, in response to the claim by the respondent under the pleaded loan agreement, is that the respondent was not a party to that loan agreement. That is, the applicants' only defence to the claim is that the loan was made pursuant to an agreement between themselves and Murdoch, and it is to Murdoch (and not the respondent) that they owe the debt.

29 In addressing that proposed defence, it is necessary, first, to deal with a point raised by counsel for the applicants under proposed ground 1(a) of the application for leave to appeal. In essence it is submitted that the judge in fact accepted that the applicants had an arguable defence, on the basis that the respondent was not a party to the loan agreement, yet his Honour upheld the application for summary judgment against the applicants.

30 The underlying premise to that proposition is flawed. The judge did not accept that the applicants did have such an arguable defence. His Honour noted that the 'fundamental issue' in the proceeding related to the question of the identity of the lender.[10] In identifying the point raised by the applicants, the judge did not, thereby, accept that that point constituted an arguable defence. His Honour simply proceeded to note that, in any event, the point was of no avail for the applicants, because of the alternative claim made by the respondent for money had and received. It is clear, from the context of his Honour's remarks, that the judge did not accept, or conclude, that the issue raised by the applicants, as to the identity of the parties to the loan agreement, did constitute an arguable defence in the proceeding.

31 In their affidavits, the applicants did take issue with the respondent's affidavit as to whether Murdoch said to the second applicant that the respondent would be the legal entity which would lend the funds to the applicants. The applicants also raised an issue whether they received an unredacted copy of the Scotiabank receipt.

32 There are a number of difficulties in each point so raised by the applicants. There is no reason why Murdoch would have told the second applicant that he (personally) would be providing the loan funds, when he intended that it was the respondent which would be the source of the funds. Equally, there was no reason why the identity of the lender would be redacted in the copy of the Scotiabank receipt that was forwarded to the applicants. Indeed, in the course of the hearing before the judicial registrar of the County Court on 23 August 2019, the first applicant acknowledged that the name of the respondent was on the receipt. Further, in February 2015, Murdoch sent to the applicants a letter from the respondent's accountant, specifying details of the loan, which included identifying the respondent as the lender, and requesting confirmation by the applicants of that information. In response, the first applicant acknowledged receipt of the loan, and stated that the applicants were in the process of obtaining funds to repay it. Relevantly, she did not dispute that the respondent was the lender.

33 Further, while the applicants maintain that their creditor is Murdoch, and not the respondent, they have made no effort to repay any of the loan funds to Murdoch (or the respondent). They acknowledge that they have an obligation to repay the funds. However, they have made no response to a number of requests and demands made to them for repayment of the funds for a period in excess of four years.

34 In short, the materials, that were before the primary judge, demonstrated that the monies were remitted by the respondent, from its own funds, to the applicants, and were received and used by the applicants. The applicants had requested the monies be provided to them. It was common ground that the advance was a loan and not a gift. The applicants have acknowledged their obligation to repay the debt (albeit to Murdoch, and not his company, the respondent). After six years, they still have not done so. In the context of the materials before the primary judge, the proposed defence relating to the identity of the lender - that is, that the party to the loan agreement was Murdoch and not the respondent - was, taken at its highest, of most tenuous cogency. In terms of s 63 of the Civil Procedure Act, it was well open to the judge to be satisfied that the defence to the proceeding, on that ground, had no real, as opposed to fanciful, prospect of success. The judge's conclusion to that effect was in our view entirely correct.[11]

35 We turn, then, to the alternative claim for money had and received. The proposed written case filed on behalf of the applicants raised three principal points in relation to that claim. First, it is put that the judgment itself was irregular because of the late stage in the application for summary judgment in which the statement of claim was amended to include the alternative claim. Secondly, it is submitted that the claim, for money had and received, was invalid, because it was inconsistent with the contractual arrangements between Murdoch and the applicants. Thirdly, it is submitted that the claim was not validly pleaded in the amended statement of claim, and accordingly the judgment entered on it was, in some way, irregular.

36 In our view, each of those three points, relied on by the applicants, are without merit.

37 In respect of the first point, it is correct that in the course of the hearing before the judicial registrar on 23 August, the respondent was permitted to amend its statement of claim by adding the alternative claim for money had and received. The amended pleading was prepared during the lunch adjournment, and provided to the applicants before the resumption of oral argument. The applicants were unrepresented on that occasion. However, the review of the decision of the judicial registrar by the County Court judge, on 3 December, took place fourteen weeks later. As the judge noted, the review took the form of a rehearing de novo pursuant to

r 84.03(5) of the County Court Rules. Accordingly, at the time at which that review took place, the applicants had had ample time and opportunity to consider and make answer to the alternative claim that was added to the original pleading.

38 The second point, advanced on behalf of the applicants, is in effect that the alternative claim by the respondent, for money had and received, is inconsistent with the contractual arrangements between the applicants and Murdoch. In those circumstances, it is submitted, there is no basis upon which the law would recognise a quasi-contractual claim, for the debt, between the respondent and the applicants. In support of that proposition, counsel relied on the recent decision of the High Court in Mann v Paterson Constructions Pty Ltd and the authorities referred to in that decision,[12] including Lumbers v W Cook Builders Pty Ltd (in liq).[13]

39 That point is also without merit. The principle, referred to by counsel, is that where the relevant parties have entered into a contract, their rights are determined by reference to the terms of that contract. In such a case, the law does not impute, by resort to restitutionary or quasi-contractual principles, terms and obligations between the parties which replace or are inconsistent with those obligations and contractual terms.

40 The decision of the High Court in Mann amply demonstrates that principle. In that case, the appellants entered into a contract with the respondent for the construction of two townhouses. In the course of the works, the appellants wrongfully repudiated the contract, and that repudiation was accepted by the respondent. The Senior Member of VCAT upheld a claim by the respondent for monies for work and labour done and materials provided to the date of the termination of the contract, on a quantum meruit basis. In successive appeals, the Supreme Court, and the Court of Appeal, upheld the decision of the Tribunal member. The appellants were granted special leave to appeal to the High Court on three grounds, the first of which was that the Court of Appeal erred in holding that the respondent, having terminated the contract upon repudiation by the appellants, was entitled to sue on a quantum meruit for works carried out by it. The High Court upheld the appeal on that basis, holding that the respondent's right of recovery in respect of the completed stage of the contract was limited to the amount due under the contract on completion of those stages, or damages for breach of contract.

41 In their joint judgment, Kiefel CJ, Bell and Keane JJ expressed the relevant principles in the following terms:

Restitutionary claims must respect contractual regimes and the allocations of risk made under those regimes. In Pavey & Matthews Pty Ltd v Paul, in a passage cited with approval by French CJ, Crennan and Kiefel JJ in Equuscorp Pty Ltd v Haxton, Deane J said:

'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.'

In Pan Ocean Shipping Co Ltd v Creditcorp Ltd ('The Trident Beauty'), Lord Goff of Chieveley spoke to similar effect:

'[A]s a general rule, the law of restitution has no part to play in the matter; the existence of the agreed regime renders the imposition by the law of a remedy in restitution both unnecessary and inappropriate'.

In Lumbers v W Cook Builders Pty Ltd (In liq), Gleeson CJ noted that the contractual arrangements in that case 'effected a certain allocation of risk' and that there was 'no occasion to disturb or interfere with that allocation' and 'every reason to respect it'. Gummow, Hayne, Crennan and Kiefel JJ spoke of taking 'proper account' of the contractual rights and obligations that existed, and said:

'[A]s is well apparent from this Court's decision in Steele v Tardiani, an essential step in considering a claim in quantum meruit (or money paid) is to ask whether and how that claim fits with any particular contract the parties have made'.

Their Honours noted that it is essential to consider how the claim fits with contracts the parties have made because, as Lord Goff 'rightly warned' in The Trident Beauty, 'serious difficulties arise if the law seeks to expand the law of restitution to redistribute risks for which provision has been made under an applicable contract'.

In MacDonald Dickens & Macklin (a firm) v Costello in the Court of Appeal of England and Wales, Etherton LJ, with whom Pill and Patten LJJ agreed, in rejecting a restitutionary claim, said:

'The general rule should be to uphold contractual arrangements by which parties have defined and allocated and, to that extent, restricted their mutual obligations, and, in so doing, have similarly allocated and circumscribed the consequences of non-performance. That general rule reflects a sound legal policy which acknowledges the parties' autonomy to configure the legal relations between them and provides certainty, and so limits disputes and litigation'.

Accrued contractual rights

In circumstances where the respondent has enforceable contractual rights to money that has become due under the contract, there is no room for a right in the respondent to elect to claim a reasonable remuneration unconstrained by the contract between the parties. As Deane J explained in Pavey & Matthews, in such a case there is a 'valid and enforceable agreement governing the [respondent's] right to compensation', and there is therefore 'neither occasion nor legal justification for the law to superimpose or impute an obligation or promise to pay a reasonable remuneration'. To allow a restitutionary claim in these circumstances would be to subvert the contractual allocation of risk. As Beatson has said:

'[W]here P confers a benefit on D pursuant to a contract, the valuation of that work is a matter of contract, which ... respects the parties' valuation. Valuation is in a sense part of risk allocation: P is taking the risk of market rises and D of falls in the market. To allow P to recover anything other than the contract value - such as the objective value, the market value, or a reasonable value - would be to reallocate that risk.'[14]

42 In similar terms, Gageler J, referring to the claim by the respondent in respect of work done by it under the contract (which his Honour referred to as 'Category 2') stated:

There can be no doubt about the outcome in relation to work done within category (2). The result of the Builder's acceptance of the Owners' repudiation is that the Builder still has in respect of that work the same accrued contractual right to payment under the Contract as the Builder had up until the time of termination of the Contract. The Builder can enforce that accrued contractual right in a common law action in debt.

The continuing existence of a contractual right to payment, enforceable by an action in debt, leaves no room to recover payment by another action in debt on a non-contractual quantum meruit. Times past, any such action would need to have proceeded on the fiction of an implied contractual promise on the part of the Owners to pay for an executed consideration by the Builder. Then, it would have been enough to say that a contract would not be implied to the extent that the rights of the parties were governed by an express or 'special' contract.

Now, it is sufficient to point out that, through the contractual creation of the debt, the Builder has received from the Owners exactly what the Builder agreed with the Owners that the Builder would receive for having done the work. The continuing existence of the enforceable contractual obligation to pay for the work means that there is 'neither occasion nor legal justification for the law to superimpose or impute' a different, non-contractual obligation on the part of the Owners to pay for the work. The more general point is that '[n]o action can be brought for restitution while an inconsistent contractual promise subsists between the parties in relation to the subject matter of the claim'. The continuing application of the regime of rights and obligations set out in the Contract to govern the mutual rights and obligations of the parties in respect of payment for the work has the result that the law of restitution simply 'has no part to play in the matter'.[15]

43 In the present case, as we have already discussed, we consider that it was well open to the judge to conclude that the respondent was the relevant party to the loan agreement with the applicants pursuant to which it advanced USD480,000 to the applicants. The alternative claim for money had and received is based on acceptance of the proposition, relied on by the applicants, that the respondent was not a party to that loan agreement. Assuming that the applicants did have an arguable defence on that ground (which they do not), then, logically, there was no contractual relationship between the applicants and the respondent. In such a case, the maintenance by the respondent of a claim for money had and received against the applicants could not, logically, be inconsistent with any contractual obligations or rights between the applicants and the respondent.

44 In essence, assuming (contrary to the conclusion that we reached when discussing the first point) that the respondent was not a party to the loan agreement, then the principles, stated by the High Court in Mann, and contained in the authorities referred to in the passages that we have quoted, would not apply to the relationship between the applicants and the respondent. In short, the applicants sought (from Murdoch) a loan of USD480,000. The respondent remitted those funds to them out of its own account. The applicants accepted those funds. They did so on the acknowledged basis that they were loan funds, and not a gift. Despite numerous demands, the applicants have not repaid the debt. In such a case, assuming that there was no contractual relationship between the respondent and the applicants, the respondent had a valid claim against the applicants for money had and received.[16]

45 Nor do we consider that the decision of the High Court in Lumbers, that was relied on by counsel for the applicants, precluded a claim by the respondent against the applicants for money had and received.

46 In Lumbers, the appellants (Lumbers) entered into a building contract with W Cook & Sons Pty Ltd ('Sons') for the construction of a house on their property. In the course of construction, and unbeknown to Lumbers, Sons entered into a sub-contract with an associated company, the respondent W Cook Builders Pty Ltd ('Builders'), to perform much of the work. At no time was there any contractual relationship between Lumbers and Builders. In due course, Lumbers paid all amounts claimed by Sons under the contract, but Sons paid Builders less than the amount incurred in construction of the works, and in payment of its sub-contractors. In proceedings commenced in the District Court of South Australia, Builders sued Lumbers and Sons for the outstanding amount. Its claim against Lumbers was pleaded on a number of bases, including restitution and unjust enrichment. The Full Court of the Supreme Court upheld an appeal by Builders in respect of its claim, on the basis that Lumbers had received a benefit at Builders' expense which they had freely accepted. In turn, Lumbers appealed to the High Court which set aside that decision. The High Court unanimously held that Builders did not have any viable claim at law against Lumbers.

So far as appears from the evidence, Builders had, and may still have, a viable claim against Sons. The claim was not defeated on the merits or otherwise in any relevant respect rendered worthless. Builders and Sons have their own separate creditors and members. The contractual arrangements that were made effected a certain allocation of risk; and there is no occasion to disturb or interfere with that allocation. On the contrary, there is every reason to respect it. There was no mistake or misunderstanding on the part of Builders. It was accepted on both sides in argument that in the ordinary case a building sub-contractor does not have a restitutionary claim against a property owner, but must look for payment to the head contractor. That was said to be subject to exceptions, but the difficulty for Builders was to show that the case fell within any recognised exception or within general principles justifying a new exception.[17]

48 In similar terms, the plurality (Gummow, Hayne, Crennan and Kiefel JJ) stated:

The doing of work, or payment of money, for and at the request of another, are archetypal cases in which it may be said that a person receives a 'benefit' at the 'expense' of another which the recipient 'accepts' and which it would be unconscionable for the recipient to retain without payment. And as is well apparent from this Court's decision in Steele v Tardiani, an essential step in considering a claim in quantum meruit (or money paid) is to ask whether and how that claim fits with any particular contract the parties have made. It is essential to consider how the claim fits with contracts the parties have made because, as Lord Goff of Chieveley rightly warned in Pan Ocean Shipping Co Ltd v Creditcorp Ltd, 'serious difficulties arise if the law seeks to expand the law of restitution to redistribute risks for which provision has been made under an applicable contract'. In a similar vein, in the Comments upon s29 of the proposed Restatement, (3d), 'Restitution and Unjust Enrichment', the Reporter says:

Even if restitution is the claimant's only recourse, a claim under this Section will be denied where the imposition of a liability in restitution would overturn an existing allocation of risk or limitation of liability previously established by contract.

Likewise, it is essential to consider whether the facts of the present case yield to analysis as a claim for work and labour done, or money paid, because where one party (in this case, Builders) seeks recompense from another (here the Lumbers) for some service done or benefit conferred by the first party for or on the other, the bare fact of conferral of the benefit or provision of the service does not suffice to establish an entitlement to recovery. As Bowen LJ said in Falcke v Scottish Imperial Insurance Co:

The general principle is, beyond all question, that work and labour done or money expended by one man to preserve or benefit the property of another do not according to English law create any lien upon the property saved or benefited, nor, even if standing alone, create any obligation to repay the expenditure. Liabilities are not to be forced upon people behind their backs any more than you can confer a benefit upon a man against his will.[18]

49 It is clear, from those passages, that the reasoning of the High Court, in Lumbers, is not applicable to the present case. In Lumbers, there was a specific contractual structure between the relevant parties. Lumbers contracted with Sons, and Sons in turn sub-contracted with Builders. That structure reflected the agreed allocation of risks between the parties. As the plurality noted, to permit a claim for work and labour done (or money paid) by Builders against Lumbers would redistribute the risks and rights between the parties contrary to that agreed contractual structure. In the present case, the claim for money had and received would not, in any relevant sense, involve a reallocation of risks between the parties, nor would it redistribute the rights and obligations between the parties in a manner that was contrary to any existing contractual rights. A further difficulty confronting Builders, in Lumbers, was the principle that in order to found a claim for work and labour done (or money paid), the conferral of a benefit, or provision of a service, is not sufficient; as the passage from Bowen LJ in Falcke, cited by the plurality, makes plain, '[l]iabilities are not to be forced upon people behind their backs ...'.[19] The facts of the present case are quite different. It is common ground that, at the very latest, shortly after the loaned money was advanced, the applicants knew the identity of the source of those funds, namely, the respondent. They accepted and used the funds for their own benefit.

50 The third point, relied on by the applicants, is also without substance. It is essentially a pleading point. In essence, counsel for the applicants submitted that, in order to plead a valid claim for money had and received, the respondent was required to plead, not only the payment provided by the respondent, but also the basis for the claim for repayment, such as that it was made on request by the applicants, or the like. It was submitted that that second element was not pleaded. Accordingly, it is contended that the judgment entered in favour of the respondent, based on that pleading, was irregular.

51 The claim for money had and received was pleaded in the added paragraphs 17 to 19 of the amended statement of claim. In essence, it was pleaded, first, that on 4 November 2013 the respondent had transferred the sum of USD480,000 to the joint bank account of the applicants, secondly (in paragraph 18), that the applicants had had the use of that advance at the expense of the respondent, and, thirdly, (in paragraph 19), that the respondent sought repayment of the advance and interest 'as money had and received'.

52 Standing alone, that pleading may not have been sufficient to properly specify a claim for money had and received. However, it was pleaded as a claim 'further or in the alternative' to the claim, under the loan agreement, that was pleaded in paragraphs 1 to 16. Those paragraphs pleaded (inter alia) the request by the applicants for the loan amount, the transfer of the funds, and the acknowledgment by the second applicant that the advance was to be repaid using funds from the sale of a property owned by the applicants. Each of those factual matters, pleaded in the amended statement of claim, and incorporated in the three paragraphs that pleaded the claim for money had and received, laid a sufficient basis for that claim. In essence, by incorporation, the relevant plea included the request for the loan money, the provision of the loan money, and the failure of the applicants to repay it. Those facts were sufficient to found an appropriately pleaded claim for money had and received. The third point, thus relied on by the applicants, is without merit.

53 For those reasons, we consider that the primary judge was correct to conclude that the proposed defence had no real prospect of success. It would follow that a proposed appeal, against that decision would, in our view, be devoid of merit.

54 The final consideration, in respect of the application for an extension of time, is the question of prejudice to the respondent. As we have mentioned, the respondent has now been held out of its funds for more than six years. No interest has been paid to it on the monies advanced by it. If the application for an extension of time were granted, it would result in further delay in the enforcement by the respondent of its right to a return to it of the monies advanced by it to the applicants. It would also involve the incurring by the respondent of legal costs which, in light of the circumstances that have occurred so far, it may have difficulty recovering from the applicants.

55 For the foregoing reasons, we have reached the following conclusions. First, there was inexcusable delay by the applicants in filing and serving an application for leave to appeal. Secondly, the proposed appeal is without merit. Thirdly, if an extension of time were granted to the applicants, the respondent would suffer prejudice. It follows, from those conclusions, that the application for an extension of time for the filing and serving of an application for leave to appeal must be refused, as must be the application to set aside the orders of Pedley JR.

[1] EJ Industries Ltd v Fernandez [2019] VCC 2252 ('Reasons').

[7] Jackamarra v Krakouer (1998) 195 CLR 516, 521 (Brennan CJ and McHugh J). See also Gippsreal Ltd v Kenny [2016] VSCA 65, [21] (Kyrou JA); Kambouris v Kiatos [2016] VSCA 266, [23] (McLeish JA and Riordan AJA).

[8] Bunney v Ryan [2018] VSCA 326, [37] (Niall JA); Wei v Yu [2019] VSCA 175, [28]-[29] (Niall JA).

[9] Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd [2013] VSCA 158; (2013) 42 VR 27, 40 [35].

[12] [2019] HCA 32 ('Mann').

[14] Ibid [14]-[19] (citations omitted).

[15] Ibid [62]-[64] (citations omitted).

[16] Cf Sinclair v Brougham [1914] AC 398, 415-17 (Viscount Haldane LC), 453-4 (Lord Sumner); Re Simms [1934] Ch 1, 20 (Lord Hanworth MR), 32 (Romer LJ).

[17] Lumbers (2008) CLR 635, 654-5 [46] (citations omitted).

[18] Ibid 663-4 [79]-[80] (citations omitted) (emphasis in original).

[19] Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234, 248.

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