Cavuoto v Thornally T/A All Star Catering No. Scgrg-98-324 Judgment No. S6755
[1998] SASC 6755
•2 July 1998
CAVUOTO V THORNALLY T/A ALL STAR CATERING
Magistrates Appeal (Civil)
Lander J
The appellant who was the defendant in the Court below appeals against a judgment entered against him in the Magistrates Court in the sum of $10,000 being an amount owing to the respondent for goods and services provided by the respondent to the appellant.
The respondent’s claim against the appellant was for the sum of $11,426.18 being the amount the respondent claimed was due by the appellant to the respondent for goods provided by the respondent to the appellant at the appellant’s request in or about October and November of 1995.
In particular, the respondent claimed that he provided a total of $27,926.18 for goods and services to the appellant. He claimed that of that sum of $27,926.18, builders’ labour costs amounted to $1,075.00. Apart from a minor item for transport costs the rest of the claim seems to be for goods.
The respondent further claimed that the defendant made two part payments, the first being $10,000 on 4 August 1995 and the second being $5,000 on 17 November 1995. The respondent also accepted a “Fry Master Deep Fryer” as a trade in and credited the appellants’ account by the amount of $1,500. The respondent therefore claimed the sum of $11,426.18.
The appellant denied that he was indebted to the plaintiff in the sum of $11,426.18 and then pleaded to a number of the items the subject of the particulars in the plaintiffs’ claim. The appellant claimed that a number of the items were not of the value claimed in the particulars and a number of other items were faulty or improperly installed. Part of the respondent’s claim was for a stud wall. The respondent claimed $893.18 for materials and $1,075 for builder’s labour costs. The appellant admitted the cost of the materials but denied a liability to pay the labour costs because the respondent “did not hold the relevant builders licensing (sic) and is not entitled to claim builders and labour costs”. In all the defendant admitted that the total value of the items provided was $9,616.15. The appellant did not plead to the allegation that he had paid two instalments of $10,000 and $5,000 each and that he had been credited for an item of the value of $1500. Presumably his case was that he had paid more than enough for the goods and services supplied.
However, the appellant did counter claim for faulty workmanship and faulty material supplied by the respondent causing the appellant to suffer loss and damage, which the appellant particularised as:
1. Spoilt gelati $1,000.00
2. Spoilt cake $1,000.00
3. Replacement of sign
blown off because of faulty fittings $180.00
4.Loss of trade because of delays in delivery of equipment and faults thereon. (In particular the appellant claimed that his business opened six weeks late by reason of delay and there was a six week loss of profit of $1,522 per week.)
The appellant also claimed a loss of business and claimed $25,000 under that head. Further the appellant claimed the costs of repairs to a number of items as pleaded in the defence in the sum of $5,000. The appellant limited his counter claim to $30,000 interests and costs.
Mr Mellows, who appeared for the appellant on the appeal, conceded that the appellant “effectively” abandoned the cross appeal. He said the appellant did not seek compensation. However, he said the appellant was still entitled to argue that some of the items had no intrinsic value and that the learned Magistrate could have regard to the absence of intrinsic value in determining the reasonable price of those goods supplied. I think with respect that is the same as the appellant’s defence. I do not think on the way the case was presented that the counterclaim played any part. I think, in truth, it was abandoned entirely. Eventually Mr Mellows conceded that the counterclaim was entirely abandoned except for a claim for $425 or $470 for damage caused to the roof of the premises. I think the claim is de minimis and does not need to be further addressed.
The respondent conducted the business of All Star Catering Equipment which carried on the business of the sale of new and second hand catering equipment and as a supplier to cafes, hotels and restaurants.
The respondent said that his business was to shop around and find second hand goods. He mainly went to failed businesses for the purpose of buying equipment. He would purchase that equipment then recondition the goods, add on a margin of sixty per cent, and on sell.
The respondent first met the appellant in 1994 at the Canterbury Take Away which was a pizza and chicken take away shop conducted by the appellant. The respondent supplied that business with a toaster and a deep fryer. In about May 1995 the appellant contacted the respondent and told the respondent that he intended to enter into a new venture to be known as the Cafe Di Sera.
The appellant presented to the respondent a list of shop fittings and equipment and I set out that list.
“Equipment New Old On hand
Grill and stove $3200 $1800 N/A
Cuppacino machine $3200 $2000 N/ADeep Fryer * 2 $5800 $2000 N/A Display Fridge N/A $3000 N/A Cheff fridge/pizza bar N/A $2200 N/A Flooring $3000 N/A N/A Air conditioner $1400 N/A N/A Tables and Chairs $1000 N/A N/A Electical (sic) $1500 N/A N/A How Water (sic) $600 N/A N/A Gas $500 N/A N/A Kitchen Bench/Sink $1000 N/A N/A Pizza oven * 2 N/A N/A $6000
Pizza Bench/Work bench N/A N/A $1000
Fridge N/A N/A $400
Freezer N/A N/A $300
Sink and kitchen bench N/A N/A $1000
Menu Boards and signs $500 N/A $1000”
Some months later the appellant instructed the respondent to start putting the equipment to one side for the appellant. The respondent claims that at that time he had given an indication to the appellant that the cost of the equipment would be in the range of $20-24,000. The respondent however accepted in cross examination that the appellant had told him that he was concerned about costs and told him that he had budgetary restraints in the vicinity of $20,000. It was agreed that a deposit of $10,000 would be paid in the new financial year. The respondent says, and the appellant agrees, that he collected that deposit in August of 1995. The appellant said that he told the respondent that his budget for the fit-out was $25,000.
The respondent said that he commenced installing the various items in September 1995. By that time there had been some variations to the list of items required by the appellant. The appellant had added to the list a second refrigerator in the kitchen, a second six burner cook top and various other items were added as installation progressed.
There was some construction work required. A stud wall was to be installed. The respondent built that wall.
The respondent claimed that he completed the supply and installation in the second week of November. At that stage the appellant had paid him a further sum of $5000. At the end of November he invoiced the appellant in respect of the supply of equipment and for the supply and fixing of the stud wall, some ceiling panels, transport costs and for the copies of floor plans and extra bench work and shelving.
When he supplied the two invoices, both of which were dated 30 November 1995, he also supplied a document described as “Terms, Conditions and Warranty on Second Hand Equipment”. The respondent accepted that the first written costing provided by the respondent to the appellant was by the delivery of the invoices dated 30 November 1995.
The respondent said that there were items on the first invoice which were not included in the estimate of $20,000 - $24,000 which the respondent had given to the appellant earlier. He admitted that the additional items meant that the original estimate was too conservative and the fit-out was going to cost a lot more than was initially thought. Although there were numerous additions to the original list, only a fryer was taken off that list.
The appellant said that when he received the invoices he told the respondent that the invoices came to an amount which was $14,000 over budget. He said that he had a budget of around $20,000, that the respondent said that the fit-out would cost much less than that, and that he had ended up receiving an invoice for around $30,000. In cross examination he said that the initial estimation was $15,000 and not $20,000 - $24,000. He did say, however, that there was a discussion subsequent to the initial quote where the respondent said that there were a few items which needed to be added to the list and this might mean that the estimation was more realistically something a little over $15,000. His evidence in cross examination may be contrasted with his evidence in chief when he said that his restraint was about $25,000. The learned Magistrate took up that issue with the appellant:
“HER HONOUR
QYou had it in mind at some stage this may cost you $24,000.
AI wasn’t sure.
QYou had it in mind that was a possibility.
AYes, because I allowed for a certain amount of extra things like, some might say 15 hundred and come in at 17. As he went through the job it was evident that did occur, not to the tune of the bill that I received.”
The cross examiner continued:
“QSo is it your evidence that when you say you asked Mr Thornally if it was okay to go over budget, what you were really doing is asking Mr Thornally if he would pay the extra on your behalf and you repay him on the drip system.
AIn a round about way yes.
QDid you say to Mr Thornally ‘look if this comes in over $20,000 I won’t be able to pay for it, so you will have to pay it for me and I will try and pay it back as best I can’.
ANo.
QWhat did you say to him about him spending his money to get your shop fit out.
AI said to him that if the budget went over the 20 thousand as we discussed, I said would it be okay if we, you covered me for that and I would pay you on a time payment system, probably within 6 to 8 months.
QWhen did you have that discussion.
ADuring the course, originally setting up the shop.
QYou don’t know when.
AIt was a little while after because he said we may need some more equipment, he said ‘a couple of things you have left out and that if you want those things then it might be a little bit more than the 15 thousand or thereabouts’ and I said okay no worries. I said that is okay if you can cover me, if you can’t, I would have found the money, I would have found the money, simple as that, gone to my Mum or gone to the bank for more money.
HER HONOUR
QYou said $20,000 and a capacity to pay the balance off at 500 a month.
AI had more than 20, I had nearly 50 thousand dollars, 20 thousand was only the portion I allowed for Mr Thornally to put into his piece your Honour. The other money was to pay for all the other incidentals that we needed.”
I think it fair to say that the appellant’s evidence was unsatisfactory on this issue. His evidence differs in a number of respects.
Of course the appellant did not claim in his defence that the parties had agreed on a figure for the goods and services. His defence was that the goods were over priced and the services not recoverable.
After delivery of the invoices some work was done pursuant to the warranty. A fan blade was replaced on one of the refrigerators and some electrical work needed to be done on a gelati freezer. None of the items supplied by the respondent to the appellant were returned. No further payment was made by the appellant after 17 November 1995.
The two invoices of 30 November 1995 were together reproduced as the particulars in the particulars of claim.
The particulars are:
PARTICULARS
2 x gas burner cook tops at $1,800.00 each 3,600.00
1 x pizza bench with pots and marble 2,950.00
1 x Chefs fridge with stainless top 2,650.00
1 x 9 pot Gelati freezer with storage 2,850.00
1 x cake display unit 2,750.00
1 x gas single pan deep fryer 1,800.00
1 x exhaust canopy with twin flue 3,850.00
1 x Brice food slicer 650.00
1 x hotplate 295.00
1 x hand basin 25.00
1 x twin bowl sink 350.00
1 x Casio cash register 330.00
1 x Bonzo can opener 110.00
1 x fly zapper 90.00
2 x 20 lt stock pots @ $70.00 each 140.00
30 x aprons @ $4.90 each 147.00
2 x ceiling fans @ $180.00 each 360.00
4 x pizza slaids 28.00
30 pizza trays 162.00
Bricks for pizza oven 300.00
11 x 100 ml pots 103.00
Stud wall:
(a) Materials 893.18
(b) Builders labour costs 1,075.00
Egg crate ceiling panels 285.00
Transport costs 120.00
5 x copies of floor plan 150.00
Benches and shelving 1,863.00
_______
SUB TOTAL $27,926.18”
The respondent said in his evidence that at the time the restaurant opened, which he believed was on 21 November 1995, all of the goods the subject of the two invoices had been supplied and all of the work included in those invoices had been completed.
The learned Magistrate found that there was never an agreed price for the goods and services rendered by the respondent. In reaching the conclusion she rejected the appellant’s claim that a figure of $15,000 had been agreed. She therefore proceeded upon the basis that she had to determine a reasonable price for those goods and services. In determining a reasonable price the Magistrate accepted the evidence of Ms Rosidoni who was called on behalf of the appellant. Ms Rosidoni runs a business called the Cool Lady. The business buys second hand catering equipment for the purpose of fitting out commercial kitchens she designs around Adelaide. On Ms Rosidoni’s evidence the Magistrate found that a reasonable price for a kitchen of the type installed at Cafe di Sera would be $30,000 - $32,000. The Magistrate also accepted that there were various problems with the kitchen which would need $5,000 to $7,000 to fix or replace. On this basis the total cost owing to the respondent amounted to $25,000, of which $15,000 had already been paid, and there was an order that the worthless cake display be returned to the respondent.
The figure arrived at was not calculated by determining a reasonable price for each and every item or service, but rather by a determination of the value of the kitchen as an entire and complete fit out.
The sole ground of the appeal is:
“The learned Magistrate erred by assessing the liability of the defendant [appellant] to the plaintiff [respondent] for goods supplied by reference to the difference between the value of what the goods associated with the installation at a shop similar to the defendant’s might be if properly supplied and those goods actually supplied, as distinct from simply valuing the goods as supplied.”
I think it beyond dispute that the learned Magistrate was right to conclude that a contract for the sale of goods and the provision of services existed but that the price had not been agreed upon prior to the delivery of the goods and performance of the services.
I think the evidence was so confusing no other result could have been arrived at.
I think in those circumstances the buyer was under an obligation to pay a reasonable price: s8(2) Sale of Goods Act, 1895. In Hall v Busst (1960) 104 CLR 206 at p222 Fullagar J said:
“So far as contracts for the sale of goods are concerned, there may or may not be a general rule, applicable in respect of executory, as distinct from executed, contracts, that, where the price is not otherwise determined, a promise to pay a reasonable price is to be implied.”
I think the same is also true in respect of work which has been accepted and a price not agreed. As in the delivery of property a person who has accepted the goods and the work is bound to pay a reasonable price for what he or she has received: Hall v Busst (supra) per Fullagar J at 232.
The appellant has recognised on this appeal he was under an obligation to pay a reasonable price for both the goods and the services.
The question is whether the learned Magistrate was right to determine that a reasonable price could be arrived at on the basis that a reasonable kitchen of the type installed by the respondent would cost between $30,000 to $32,000 or whether the learned Magistrate was obliged to determine a reasonable price item by item.
The appellant submitted that the valuation of the kitchen as a whole, even with the deduction for the remedial work necessary, which the learned Magistrate made, was inappropriate.
The learned Magistrate, the appellant submitted, should have proceeded upon the basis that each and every item must be examined to determine what a reasonable price would have been for that item. The items then needed to be totalled and the payments of $10,000 and $5,000 and the credit of $1,500 set off against the total of the items. It was submitted that the correct approach was to have regard to the market value of the goods and their “intrinsic value”. I think by that the appellant was saying no more than the determination of a reasonable price should have been arrived at by reference to the condition of each item and the market value for an item in that particular condition. At one point the appellant suggested that the Court should have regard to the purpose for which the item was supplied in determining the “intrinsic value” of the particular item. I think in due course that submission was not pressed.
It was accepted there was evidence upon which the learned Magistrate could have come to the conclusion that she did. The appellant called Ms Rosidini and qualified her as an expert. It was her evidence that the value of a kitchen of this type was between $30,000 and $32,000. The expert said that she would not be surprised if a job of this type was in the range of $30,000-$32,000 although the job, she said, had not been done quite right. It was her evidence that a figure of $5,000 to $7,000 would need to have been expended on the items supplied for the purpose of bringing the kitchen up to the standard required.
The learned Magistrate accepted that evidence and assessed damages accordingly. It is clear enough that there was evidence to support the decision arrived at by the learned Magistrate but the question is whether or not the approach was right.
The short point then in the case is whether or not Her Honour was entitled to assess damages upon that basis or whether she should have, as the appellant submits, dealt with each item seriatim.
The answer to the question, of course, lies in the contract. The obligation on the Court was to arrive at a reasonable price. The first question is, a reasonable price for what? The learned Magistrate approached the task upon the basis that it was a reasonable price for a kitchen. In my view that approach was erroneous. The contract between the parties was for the supply of various items to be installed in a restaurant. The contract was not for the supply of a kitchen. That it was a contract of supply of individual items is made clear by the fact that the original list was added to from time to time and in fact an item was deleted.
In those circumstances, it appears to me, that it was inappropriate to have regard to the reasonable price of the kitchen as a whole. If the respondent had contracted to supply and install a kitchen that would have included, no doubt, some design features and some advice in relation to the layout of the various items which were to be installed.
That was not the bargain between the parties. The bargain between the parties was simply for the supply of various items of equipment which could be used in the kitchen of a restaurant.
I agree with the appellant that the learned Magistrate erred in her approach.
The respondent argued that the question of a reasonable price is a question of fact dependent upon the circumstances of each particular case. That is undoubtedly so: s8(2) Sale Of Goods Act. But that does not answer the problem.
In determining the circumstances of the case one must have regard to the terms of the contract and for what it is that the buyer has agreed to pay a reasonable price. The buyer did not agree to pay a reasonable price for a kitchen.
In my opinion this buyer agreed to pay a reasonable price for each of the items specified in the particulars. There is a dispute as to whether the appellant received the sixth item and all of the bricks described in the twentieth item.
The next question is whether this Court can determine a reasonable price for each of the items. I think not.
The learned Magistrate is in a far better position to determine a reasonable price for each of these items. She has heard the witnesses and has had an opportunity of observing their demeanour in the giving of their evidence. Having heard the evidence she is in a better position to weigh the evidence on each of the items and arrive at a reasonable price. Moreover she is in a better position to decide whether in view of this ruling it would be appropriate to allow further evidence to be called by either party.
I make the following orders:
1. That the appeal be allowed;
2.That the matter be remitted to the learned Magistrate who heard the matter at first instance for the determination of the reasonable price for each of the items the subject of the contract.
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