Judgment
1BASTEN JA: Between (relevantly) 2000 and 2009 the second respondent, Ms Gabriella Grippaudo, was the registered proprietor of a parcel of land described as Lot 5, Lagana Place, Wetherill Park. In a period covering 2000-2002, the first respondent, Mr Peter Fowler, acting on behalf of the second respondent, who was his wife, sought to negotiate a contract for sale of the land to the appellant, Nu Line Construction Group Pty Ltd ("Nu Line").
2No contract for the sale of the land was executed between the parties. Nevertheless, between June 2000 and February 2001 a number of payments were made by Nu Line to the first respondent or to persons identified by a director of Nu Line (Mr Leo Mijatovic) as contractors working for the respondents on the construction of a new home.
3On 29 September 2008 Nu Line commenced proceedings in the Equity Division seeking to recover from the respondents the payments made to them or at their direction. At trial, the respondents did not deny the entitlement of the appellant to recover some amounts (others were in dispute) but said that the proceedings were commenced out of time. That defence was accepted by Ward J: Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [2012] NSWSC 587. On appeal, Nu Line challenged that finding and also the refusal of the trial judge to accept that some of the amounts claimed by it had been made in part payment of the anticipated purchase price for the land.
4Whether the limitation defence should have succeeded depended on whether the appellant's cause of action for money had and received by the respondents to its use commenced to run before 29 September 2002, or only from a later time, as the appellant contended. The critical date (it was agreed) was six years before the commencement of the proceedings on 29 September 2008, that being the period provided by the Limitation Act 1969 (NSW), s 14(1)(a).
Vesting of cause of action
(a) approach of trial judge
5The nature of the payments made by Nu Line was in dispute at the trial. The trial judge considered whether they (or some of them) should properly have been characterised as payments by way of a deposit, or as the price of an option to purchase. The judge concluded that they were part payments of the anticipated purchase price: at [220]. On appeal, there was no challenge to that characterisation of the main payment of $60,000; a similar finding being accepted, on a hypothetical basis, with respect to the payment of certain invoices: at [239], [240].
6In determining the date from which the Limitation Act defence ran, the trial judge accepted (a conclusion which is not challenged) that a cause of action for money had and received is an action in "quasi contract" and falls within s 14 of the Act: at [273], [274], referring to Torrens Aloha v Citibank NA (1997) 144 ALR 89 (Sackville J); Chesworth v Farrar [1967] 1 QB 407, and Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32.
7In the course of considering how the cause of action was to be characterised, the trial judge noted that the case could be approached, by way of analogy, as similar to a claim in respect of a contract which had been frustrated, and as money paid where there had been a "total failure of consideration" or a "failure of a condition" upon which the payment was based: at [283]-[288]. She accepted a submission that a "cause of action for restitutionary claim based on a total failure of consideration arises not by reference to the time at which the payment was made but ... the time [at which] the contemplated state of affairs failed to materialise": at [289]. Applying that test, the critical passage in the reasoning was as follows:
"[293] Looking at the state of the sale from mid-2000, it cannot be said that there was any indication that the purchaser still intended to proceed. It follows that the contemplated state of affairs in anticipation of which moneys had been paid must by then be said to have objectively failed to materialise. The fact that discussions might later have been received in relation to a proposed purchase or that one or more of the principals of Nu Line Construction may have harboured a hope (or even had an expectation) that if and when they later chose to reactivate the discussions, the property would still be available to purchase (whether or not at the same price) seems to me to be beside the point.
[294] As at mid May 2002 (after four months of silence on the part of Nu Line Construction - and in the face of repeated requests as to its position), I consider that the only reasonable conclusion would have been that the purchaser did not intend to proceed with an exchange of contracts and, hence, the contemplated sale had by then failed to materialise. I do not consider that the conversation as to retaining wall payments warrants a different conclusion."
8It will be necessary to look in more detail at the reference at [294] to the failure of Nu Line to respond to requests that it indicate its position, as at mid-May 2002. At [292], in rejecting a submission that Nu Line remained willing to continue to negotiate, the trial judge had said that such a view did not "sufficiently take into account the fact that, from February to May 2002, the vendor's solicitors were pressing for confirmation as to whether Nu Line Construction intended to proceed with the purchase (and were met with deafening silence on the part of Nu Line Construction), particularly where, leading up to this, Ms Gunesekera [Nu Line's solicitor] had been indicating from time to time a readiness to exchange contracts".
(b) relevant principles
9In Baltic Shipping Co v Dillon [1993] HCA 4; 176 CLR 344 Mason CJ noted (at 356-357) the historical origins of a cause of action in restitution as based on a fictitious promise, which was required to be implied. Mason CJ noted that "since Pavey & Matthews Pty Ltd v Paul [[1987] HCA 5; 162 CLR 221] such an approach no longer represents the law in Australia".
10In Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; 208 CLR 516 at [63], after referring to the passage set out above from Baltic Shipping, Gummow J stated:
"The rejection of the implied contract theory, of which Mason CJ spoke in Baltic Shipping, should be taken as reflecting the settled position in Australia."
11Once that state of legal principle is adopted, it is potentially confusing to speak of circumstances involving "total failure of consideration", being the language of contract: Roxborough at [65], Gummow J referring to Pan Ocean Shipping Co Ltd v Creditcorp Ltd [1994] 1 WLR 161 at 164 (Lord Goff of Chieveley). As Gummow J continued, "that is not to assert that an action for money had and received may not lie to recover payments made with a view to entry into a contract which never comes to pass"; on the contrary such an action does lie. There is a further difficulty with the phrase "total failure of consideration": it assumes that something has been promised and not provided, which may in turn require identification of the precise terms of the supposed obligation, an exercise which may not sit well with the absence of an enforceable obligation.
(c) application of principles
12If there were an implied contract to be relied upon in the present circumstances, it would involve an obligation on the part of the respondents to repay any moneys received in anticipation of the contract of sale of land, if such a contract were not executed because negotiations failed to achieve that result. On that approach, the restitutionary claim would, in effect, be a claim for breach of the implied obligation to repay. The obligation to repay would presumably only arise when the expectation became impossible of fulfilment, and not merely unlikely to materialise.
13The alternative terminology proposed by the primary judge was that there had been a "failure of condition" on which the payment was made. By that, it was merely meant that a contract of sale of was not executed by the prospective parties. The term "condition", however, is also redolent of the language of contract. Again, the contractual language may be misleading. Thus the trial judge stated that "[t]here is no right to sue for the return of a conditional payment until the condition fails, as until that time, the defendant retains a right to hold the moneys advanced": at [287]. However, that was to pose a question based on contract: in fact, there being no contract, the appellant could have terminated the negotiations and demanded repayment of the moneys at any time.
14At the very least, there was no consideration of circumstances which might have precluded it taking that course. More neutrally, the execution of the contract was an anticipated event which did not occur, although nothing precluded it until the land was sold to a third party. On one view, the fact that at no stage prior to September 2002 had Nu Line sought to take the positive step of terminating negotiations and claiming repayment of its money is a strong indication that it intended to proceed with the purchase. Viewed objectively, the fact that one party has paid approximately one-third of the anticipated purchase price and not sought repayment of the money (which is not characterised as a deposit) demonstrates a clear intention to proceed, contrary to the statement in the first sentence at [293], set out above at [7].
15It is true that it is necessary to weigh, on the other side of the scales, the failure of the solicitor for Nu Line to respond to the letters from the solicitors for the vendor asking as to the proposed intentions of Nu Line. However, there are several factors which limit the weight to be given to that failure to respond. First, there was no suggestion that the vendor was seeking to obtain a free hand to sell the property to another purchaser. Secondly, the vendor was not offering to repay the part payments already received. Thirdly, there were serious unresolved issues concerning the ability of the vendor to give vacant possession.
16These unresolved issues may be briefly identified. Through a lengthy period during 2000, Nu Line's solicitor had been insisting that attempts be made to have a telecommunication tower on the land relocated. The vendor, on the other hand, was faced with the demand by the lessee and owner of the tower to sign a lease. By letter dated 16 October 2001, Nu Line's solicitor wrote to the vendor's solicitor stating that the communications tower "hindered the intended use and that the installation had to be removed and that this had to be resolved prior to exchange", as noted by the trial judge at [102].
17The draft contract which had been prepared contained a purchase price of $300,000 with provision for a deposit of $30,000. However, on 6 February 2002 Nu Line's solicitor wrote to the vendor's solicitor stating:
"I understand from my clients [sic] that he [sic] has already paid to your client $100,000 and that your client has had the use of that money for almost a year and as such my client wants a resolution fairly expeditiously."
18The trial judge referred to the response at [107]:
"The response from the vendor's solicitor to Ms Gunesekera's February 2002 letter, interestingly, made no demur to the proposition that a sum of $100,000 had been paid to the vendor, simply denying any contractual obligation to secure a relocation of the equipment (being the second matter raised in her letter). An inference might therefore be drawn that at least some $40,000 on top of the $60,000 June 'part payment' had been paid to Mr Fowler. The vendor's solicitors suggested that the purchaser proceed to purchase the property 'as is' and take up the matter with the relevant telecommunications company direct."
19Apart from not taking issue with the statement as to the payment already made, the reply noted that the vendor "has been unsuccessful" in attempting to have the tower moved and asking to be advised whether "your client is still interested in proceeding with all the matters, if not, arrangements will be made for the deposit to be refunded": at [108].
20The trial judge noted that similar letters were sent by the solicitors for the vendor on 13 March 2002 and on 14 May 2002: at [110]. The judge noted that, in the absence of any response to those requests, "it would not be surprising for the conclusion to be reached that the purchaser no longer wished to proceed with the purchase": at [110].
21It was undoubtedly open to the vendor to terminate the negotiations and refund the payments already made. Although the negotiations were left in abeyance, the payments were not refunded. In those circumstances, the appropriate inference is that neither party sought to terminate the relationship, but each was content (no doubt for its and her own reasons) to allow the negotiations to remain in abeyance.
22These circumstances reveal two commercial entities (Mr Fowler was a businessman) dealing with a parcel of land, apparently at arm's length and through solicitors. There was no reason to suppose, on an objective assessment of the circumstances in May 2002, that Nu Line intended to abandon the payments it had already made, whether they were $100,000 or, as later asserted, approximately $160,000. Nor would an objective observer expect a person in the position of the respondents, who had obtained the benefit of such payments, to be entitled to walk away without providing any value in return. Indeed, the concession that the appellant was entitled to the money, subject to the limitation defence, conceded as much. While it must be accepted that the officers of Nu Line were careless as to the precise amounts which had been paid at various times, that did not indicate evidence of abandonment, as opposed to a failure to realise the desirability of precision in financial dealings. Further, it is by no means clear that either party relied upon its solicitors to undertake negotiations, in circumstances where at least Nu Line's solicitor was apparently unaware for over a year of the terms of the proposed purchase and that the draft contract did not reveal the full story (in part, by significantly understating the purchase price).
23No doubt it was true that, as at mid-May 2002, "the purchaser" did not intend to proceed with an exchange of contracts; it followed that the contemplated sale had "by then" failed to materialise. However, those findings were not critical. Contracts were not exchanged because there were issues yet to be resolved; that the contemplated sale had failed to materialise at that time, was only critical if one party or the other had imposed a time limit on the negotiations. In express terms, neither did. Having asked on several occasions for clarification of the prospective purchaser's position, the vendor did not assert that she proposed to treat the relationship as ended and express an intention to seek a purchaser elsewhere. Rather, she (and her husband) did nothing.
24The final reference in the passage set out above to the "retaining wall payments" should also be addressed. In October 2003 Mr Lebic, a director of Nu Line, received a letter from a neighbour of the Lagana Place land requesting payment for a retaining wall built on the property. He invited the neighbour to send him the bill because, as expressed in his evidence, "it was only a matter of time 'before we own the land'": at [152].
25The trial judge accepted Mr Lebic's response as consistent with his view, as at 2003, that the proposed purchase would still eventuate: at [152]. In cross-examination, Mr Fowler accepted that either Mr Lebic or Mr Mijatovic, had told him "that certain payments had been made for the retaining wall and you said 'you don't have to pay them, it was all part of conditions of consent for the next door neighbour'": at [153].
26This was not, as the trial judge noted, evidence that the respondents had notice of the claim, and approved or disapproved the payment, before it was made: at [154]. However, the inference sought to be drawn by counsel for Nu Line "from Mr Fowler's response was that he did not say that there was no point making the payments (because the sale of the land was not proceeding) but simply said that there was no liability to pay them (as they were part of the neighbour's conditions of consent)." Having noted that submission, the trial judge said she had "difficulty seeing that this warrants a conclusion that, as at mid 2002, the contemplated state of affairs (ie the purchase of the property in anticipation of which payment of at least $60,000 had been made) was something which the purchaser was then still interested in pursuing (given the deafening silence to the successive requests for confirmation of that fact over a four month period)": at [156].
27Taken in isolation, that piece of evidence may have carried limited weight; taken in combination with the matters discussed above, it was consistent with the proposition that neither party, as at October 2003, treated the relationship as having ended.
28Finally, there was a meeting in 2006 of which Mr Fowler gave evidence, summarised by the trial judge at [161] in the following terms:
"Mr Fowler, in his affidavit, refers to a meeting at in or around early 2006 attended by Mr Lebic, and both of the Mijatovic brothers, as well as a consultant of Mr Fowler's company (Fowler Homes) - a Mr Sebastiano (Sam) Romeo. Mr Fowler deposes that Mr Leo Mijatovic said at that meeting that they wanted to talk about the purchase of the property and said 'We want to either buy it or see about getting some of our money back'. Mr Fowler says that he said the value of the land had gone up and wrote down a figure in excess of $1m but indicated that he was prepared to drop the price by $100,000 below market value (which might suggest that he was taking into account sums already received by that stage - although Mr Fowler says that this was a gesture of goodwill). Mr Fowler says that Mr Leo Mijatovic asserted that they had an interest in the property and that, if the value of the land had gone up, that interest was worth more."
29The trial judge accepted that this meeting took place, largely as described by Mr Fowler, but thought that the relevant factor was that the principals of Nu Line were not insisting upon a sale at "the original price" but sought to engage in discussion, "as if the prospect of sale was one that still had to be agreed (consistent with this being a fresh deal and not simply a continuation of the old deal) or (on Mr Mijatovic's evidence) to regard the earlier payments as having resulted in there being already a part interest in the land": at [167].
30The evidence is significant for a separate reason: although it may be inferred that Mr Fowler did not accept that Nu Line or its principals had any interest in the land, there is no denial by him that payments had been made by or on behalf of Nu Line in relation to the purchase of the land. That evidence is, again, entirely consistent with an objective assessment that the negotiations may have been in abeyance, but the relationship between the parties had not at any stage resulted in Nu Line abandoning its part payments for the land. At all stages up to 2006 the land remained available for purchase and, although he sought to extract a higher price, at no stage did Mr Fowler suggest that negotiations were no longer open.
31Implicit in the reasoning of the trial judge is a finding that the payments made by or on behalf of Nu Line were made as part payment of the purchase price on a sale to be completed broadly in the terms of the draft contract which was available in May 2002. It is apparent from the last evidence referred to above that no significant variation of the contract price fell within that contemplation. However, why that should be so was unclear. Whatever Mr Fowler's intention in seeking a price in excess of $1 million, there was no evidence as to whether he would have settled for less, except for the fact that in 2009, after the commencement of the proceedings, the land was sold for a little under $500,000, being an increase of approximately 10% on the price proposed in 2001. To approach the circumstances of the payments as being related to a contract the terms of which were settled, was to disregard the evidence (and the findings based upon it) set out earlier in the judgment. The unresolved issues as to the communications tower might have been reflected in a variation of the price, which was in any event not said to be fixed beyond negotiation.
32Thus, in an affidavit of 23 February 2010, Mr Fowler stated that he had told Mr Lebic that "he wanted $300,000 for the land": at [39]. Mr Lebic thought the price was in the order of $450,000 or $460,000, with a deposit of up to $160,000 and a balance of $300,000. There is no doubt that one version of the contract for sale included a price of $300,000, while another contained details of what was described as "original offer by Peter and Gabrielle", being the respondents, indicating a "Total investment only $500,000". On another copy, that figure had been crossed out. What may have been agreed was the price to appear in the contract, which was not in fact the price contemplated as payable.
33Further, the dispute as to the siting of the telecommunications tower and the difficulties that was said to cause for the prospective purchaser must have left open the possibility of further negotiation as to price. In a letter to the prospective purchaser, dated 28 June 2000, Nu Line's solicitor raised a number of issues in relation to the contract and the leases and a proposed lease to be given by the vendor to Fowler Homes, being a company associated with her husband. The solicitor, having seen the draft contract, immediately noted that it was "more complicated" than that anticipated when she estimated her fees. That appears to have been a reasonable assessment of the position in mid-2000.
34Whatever the truth about the increase in value of the property between 2001 and 2006, the fact that the principals of the appellant were prepared to discuss price is not inconsistent with a continuation of the situation with respect to which part payments had been made.
35In these circumstances, the finding that because no contract had been executed prior to the end of September 2002, the event in anticipation of which the part payments had been made could no longer happen, in the contemplation of the parties, should not have been made. That being so, the proceedings were brought within time and the appeal should be upheld.
Amounts of invoices
36Barrett JA has identified the features of each of the invoices relied upon by the appellant as constituting a part payment in anticipation of the purchase of the land. In addition to one invoice accepted by the trial judge, as Barrett JA explains, two other payments (identified as Payments B and D) should also be accepted as part payments against the purchase of the land. They total an additional $64,038.40. The remaining payments (A, C, E, F and G) were not accepted as proven to have been part payments to the respondents against the anticipated purchase price of the land. These are lesser amounts, totalling $18,445.55. The details are set out by Barrett JA.
37There is no reason to suppose that the records of the accountant attributing these payments to the same account in Nu Line's books, namely the account for expenditure on Lagana Place, should not be accepted in relation to these amounts also. Although no invoices are available, accepting that these payments were made to persons nominated by Mr Fowler or his wife, there is no evidence to suggest that the payments were otherwise than part payments on account of the purchase price of the land. For these reasons and those given by Barrett JA, those amounts should also be accepted as amounts repayable to the appellant.
38On that basis, the total debt is $151,558.95. There should be judgment in favour of the appellant against the respondents in that amount. The orders made by the trial judge dismissing the plaintiff's claim and requiring the plaintiff to pay costs should be set aside. The respondents must pay the appellant's costs of the trial and in this Court.