Dyne & Safe Investments Pty Ltd v. Keith Henry Pty Ltd

[2004] QDC 74

[2004] QDC 074

DISTRICT COURT

CIVIL JURISDICTION

JUDGE ROBIN QC

No 264 of 2003

LESLIE SEPTIMUS DYNE

First Appellant

and

SAFE INVESTMENTS PTY LTD

and

KEITH HENRY PTY LTD

Second Appellant

Respondent

SOUTHPORT

..DATE 24/03/2004

JUDGMENT

Catchwords:
Appeal to District Court from final judgment pronounced by Magistrate in building dispute - First appellant successful, as respondent-plaintiff had made it clear at trial no judgment was sought against him - Second defendant successful as the Magistrate's refused to allow anything for 16 metres of new carpet which it had acquired for an earlier client and which was left over (so that only 13 metres were supplied by the contractor attending to water damage caused by the plaintiff's fault)- Judgment against second defendant not interfered with otherwise - Circumstances in which state of pleadings (by which, allegedly, the plaintiff's claim renamed one for "unfit enrichment", and was never properly amended to a contractual claim for the price of materials, labour and supervision) did not justify setting aside the judgment - Appellant contended plaintiff never proved its claim - Magistrate's construction of second defendant's pleading as admitting the claim (subject to set-off and counterclaim) with consequence that defence case should be presented first upheld in Uniform Civil Procedure Rules, r 149.

HIS HONOUR:  This is an appeal by the two defendants who

remain parties in a Magistrates Court action commenced in

Southport, 1209 of 2001, by the plaintiff, Keith Henry Pty

Ltd, which is the respondent in the appeal; the plaintiff

obtained judgment against both.  In contractual negotiations

the plaintiff had been represented by its director, Mr Henry,

and Mr Dyne, the first defendant in the trial and first

appellant represented some unidentified entity or entities of

his for which the plaintiff was requested to do building work. 

This was to be done on a cost-plus basis, whereby the

plaintiff was to obtain payment calculated at 10 per cent of

the cost of materials and labour.

The plaintiff was willing to trust Mr Dyne with nominating

the entity or entities with which it contracted, and fairly

early on it seems to have identified the second appellant,

which was originally the third defendant but became the second

defendant after the action was shorn some of its parties.

There is no suggestion whatever that Mr Dyne was engaged in

any exercise of rendering the plaintiff's prospects of

obtaining payment less certain by nominating one entity rather

than some other.  The overall circumstances were more confused

than I've hitherto suggested and included payment on

occasions being made to the plaintiff by other entities so

that the plaintiff may be forgiven for its scattergun approach

in relation to parties.

On the eve of the trial, the appellants/defendants amended

Their pleadings to set out their view of matters, namely, that there were two distinct contracts, each between the plaintiff

and the second defendant, made about a year apart, for

different work.  The plaintiff accepted that situation and,

indeed, indicated to the Magistrate on the first day of trial

that the action was, "simply against the second defendant as a

result of that further amended reply and answer."  Mr Morrow

assented to the Magistrate's suggestion that the claim was

"only against the second defendant" and that he was

"abandoning any claim against Mr Dyne".

Matters somehow became more complicated.  Mr Dyne's counsel

was unsuccessful in persuading the Magistrate to give judgment

for his client against the plaintiff, a course which Mr Morrow

was not favouring.  Her Worship's view was that since Mr Dyne

would have to remain as a witness, it might be convenient to

keep him on the record as a party.  She also seemed

apprehensive that matters might change in such a way as to

make it appropriate or convenient that he be a party.  Indeed,

so things eventuated, because the judgment that was entered by

the Magistrate went against both Mr Dyne and the company. 

This appears to have happened on the basis of a view the

Magistrate developed as to the liability of the agent for a

principal whose existence is disclosed, but whose identity is

not.

What happened flew in the face of the lengthy and helpful

written submissions which the Magistrate had after a five-day

hearing from Mr Morrow and the defendants' counsel, which made

it clear that the plaintiff claimed no entitlement to and did

not seek any judgment against Mr Dyne.  On the occasion of

reserved judgment being handed down, the solicitors

effectively reminded the Magistrate of that, but that wasn't

successful, from the point of view of avoiding judgment being

pronounced against Mr Dyne and also the company, in accordance

with views which the Magistrate had reached and explained in

lengthy reasons, which give the appearance of being carefully

prepared.

There's no occasion here to become involved in interesting

questions as to the liability of an agent for a principal

regarding whom there's some kind of mystery, or as to the

appropriateness of a plaintiff obtaining judgment against

both.  It's common ground that the first appellant's appeal

ought to succeed and the judgment against him be set aside.

The only contentious matters relate to the quantum of costs of

the appeal which the first appellant might recover under the

order which it's conceded he ought to get for his costs, and

as to the costs which he ought to get, if any, of the trial.

In the end I'm not sure if Mr Morrow opposed what Mr Roney,

who was counsel for the appellants but didn't appear at the

trial, proposed in relation to Mr Dyne's costs of the trial.

In any event, I think his suggestion was an entirely

appropriate one.

I indicate now that I'll add to the orders made at the

commencement of this appeal in relation to Mr Dyne's

situation, an order that the respondent pay the first

appellant's costs of the trial, to be assessed on the

appropriate Magistrates Court scale, being the one indicated

by the amount sued for by the plaintiff, limited to costs

incurred on or before the first day of the trial when the

respondent/plaintiff's counsel indicated that the claim

against him has been abandoned.

I may say the plaintiff/respondent's outline of argument,

which has been filed pursuant to the practice direction,

concedes that Mr Dyne was entitled to the success which he has

enjoyed and there never was anything contentious in the appeal

relating to him.  It may be the case that some costs could

have been avoided if there had been some consent order filed

in the appeal in relation to Mr Dyne's situation. See UCPR rr

666, 764 and 785. 

Otherwise the appeal concerns the second defendant.  The

principal argument presented to the Court is that there

ought to have been no judgment against the second defendant,

on the basis that the claim pleaded against it was one for

unjust enrichment, the pleaded claim in contract or debt

being one against Mr Dyne.  Possibly because the defendants

amended their pleadings to plead contractual arrangements in a

way that the plaintiff accepted without amending the statement

of claim, the plaintiff did not seek to make out any kind of

enrichment claim.  Although the pleadings are open to

technical objection, I think the basis on which the matter was

actually argued below is that there was a contractual debt

claim pursued against the second defendant once it had clearly

been identified as the contracting party.

It would be an affront if the outcome of this appeal were that

the plaintiff, which claimed it provided some useful services,

were left without receiving any compensation for them.  I make

that comment acknowledging that the defendant or some

associated person paid the bulk of the plaintiff's invoices.

Mr Roney correctly says that the way out of that

unsatisfactory situation would be to send the matter back to

the Magistrates Court for a trial limited to quantum matters

only.  That submission was also or, indeed, may have been

exclusively made in a slightly different context which comes

about because of the line followed by the second appellant.

It challenges the Magistrate's finding that the plaintiff's

claim had been admitted by the defendants so that proof of it

was not necessary. 

The amended statement of claim sought $36,607.71.  Mr Henry

gave only the most perfunctory evidence of the correctness of

that claim in the form of verifying invoices.  The

Magistrate's view that it had been admitted, subject to a

claim for set-off and a counterclaim, may well have made it

improper for the plaintiff to prove it up in the ordinary way,

something which could have been seen as an inappropriate

costs-making exercise.

On the assumption that he would succeed in establishing error

in the Magistrate's construction of the defendants' pleadings

as involving an admission, Mr Roney contemplated that the

matter would have to return to the Magistrates Court to give

the plaintiff an opportunity to prove its quantum.  Such an

outcome of the appeal has little attraction.  The claim is a

modest one.  I say that without belittling it.  The philosophy

of present day litigation as set out in rule 5 of the UCPR is

hardly honoured if this matter, which has already occupied

five days of Magistrates Court time, has to occupy more.

The Magistrate, as I have indicated, appears to have given

careful consideration to the various issues which the parties

identified as requiring resolution in this building dispute.

It has to be conceded, I think, that the second appellant did

not get a particularly good run, but the issues it raised were

considered by the Magistrate and with a degree of success for

it.  The Magistrate may well have approached the whole

controversy on the basis that it gave every appearance of

involving a defendant which ultimately identified itself as

the liable party engaging in a determined effort to avoid a

judgment and, indeed, to avoid even the trial going ahead.

The transcript shows, even as late as the third day,

suggestions that because of the monetary value of the

counterclaim, the counterclaim, at least, should be

transferred to the District Court, the plaintiff's claim

stayed in the meantime.  There was also reference to the

possibility of the matter going to the Building Tribunal.

Except in respect of the issue of the provision of new carpet

to deal with a situation when a leak admitted to be the

plaintiff's responsibility developed, it's not shown - indeed,

it wasn't attempted to be shown on the appeal that the

Magistrate erred in the way in which she resolved the issues

in the counterclaim.

I have concluded in the end that the Magistrate's construction

of the pleadings was correct.  The system hardly covers itself

in glory in this situation where indulgence appears to be

extended to the plaintiff from the point of view of its being

allowed to pursue a contractual claim against the second

defendant when it's at least arguable whether such a claim has

been pleaded, whereas the second defendant is held to fairly

strict consequences of the way in which it pleaded. 

It is open to parties to amend pleadings at advanced stages of

litigation, and, indeed, on appeal.  I'm firmly of the view

that the claim which the plaintiff had against the second

defendant is the one that was, in substance, litigated,

whatever the state of the pleading.  I'd have no difficulty in

permitting the plaintiff to make amendments if that were

necessary, but it seems to me that's a step which involves

only unnecessary work.

Under Rule 149 and the following rules of the UCPR, pleadings

must be informative.  They must include, specifically, "any

matter that if not stated specifically may take another party

by surprise."  Justifications have to be given for denials and

non-admissions.

The issue arose when at the commencement of the trial Mr

Morrow submitted to the Magistrate that the defendants ought

To go first because the plaintiff had nothing to prove.  In

other words, the plaintiff's claim was admitted on the

pleadings.  The Magistrate accepted that view and required the

defendant to go first to establish the setoff and

counterclaim.

So far as the pleadings are concerned, what was admitted was

the doing of work and invoiced amounts being as the plaintiff

indicated; the defendants' pleading indicated that the

following paragraphs set out the true situation.  There is no

clear assertion that the quantum of the plaintiff's claim was

wrong, let alone any proposal of a different amount.

What strikes me as significant is the apparent acceptance by

the defendants' then counsel of the Magistrate's ruling that

the plaintiff had nothing to prove and that the defendant

ought to go first.  I would have thought that if the

Magistrate's interpretation of the pleadings was contended to

be in error, the thing for counsel to do was apply for an

amendment at that stage.  Nothing of that kind happened.  Such

a request for amendment ought to have been allowed.  Later

amendments to the defendants' pleadings were allowed, although

somewhat grudgingly, it must be conceded.  See page 177 of the

transcript below.  Amendments at the beginning of the trial

would be a different matter.

Intriguingly, those amendments which were allowed and in the

context where paragraph 5 of the second further amended

defence and counterclaim asserted "the true facts are alleged

in paragraph 7 to 14 hereof" include a new paragraph 13

brought in by that document.  There one finds a list of

aspects in which it was claimed that "the plaintiff has

overcharged".  Those are matters which the Magistrate

considered and on which the second defendant enjoyed some

success.

It appears to me that that paragraph is tantamount to an

acknowledgment that otherwise the plaintiff has not

over-charged.  It's true that at page 304 of the transcript

there was an exchange which is capable of being read as

indicating some continuing uncertainty as to whether the

defendants were being treated as having made admissions.

Counsel said, "It is admitted on the pleadings that invoices

were issued to that amount.  The pleading then says there has

been unjust enrichment.  The second defendant, as I understand

it, has been enriched by saying that the quantum of it hasn't

been admitted, in my submission."  The Magistrate indicated to

Mr Morrow, "You've got to decide whether it is an admission or

not."  Mr Morrow told the Magistrate he assumed that it was.

In all the circumstances, I think that he was correct.  I

observed during the appeal that it is an example of how things

can go wrong or become complicated when litigation follows a

different course from the norm, which it certainly did here as

a consequence of Mr Morrow's successful application below that

the defendants ought to go first.  I am not suggesting at all

that what he did was indefensible, but experience suggests

that all sorts of complications can arise when the ordinary

course is departed from.  They certainly did here.

The crux of my ruling, I suppose, is the failure of the

defence to attempt to amend in the face of the Magistrate's

construction of the pleadings.  I think the effect of that was

to bind the defendants to the proposition that the

Magistrate's construction of the pleadings was correct.  I

think that the second defendant shouldn't be permitted to

resile from that now.  (My understanding is that during the

trial there was an unsuccessful appeal to this Court against

the refusal of the Magistrate to give judgment for Mr Dyne

against the plaintiff.  If necessary, an appeal about that

time might have led to the pleadings being construed (or

amended) to suit the defendants.

The last matter for consideration is the carpet point, which

may be shortly stated.  Because of admittedly deficient work

done or supervised by the plaintiff, a leak developed which

caused certain carpet in premises to require replacement.  A

quotation was obtained from Mr Kent to do that work for

$4,756.  This involved provision of 29 metres of carpet at

$130 per metre.  It happened that the second defendant had 16

metres of the carpet required left over from the original

outfit of the premises where the plaintiff had done the work.

That reduced the amount which Mr Kent was paid to $2,676.

The Magistrate took the view that since the second defendant

had not had to outlay anything for the carpet which it had had

to buy there ought to be no compensation in that regard;

only what was paid to Mr Kent was allowed.  It seems to me

that is an erroneous approach, which ought to be corrected on appeal.  Mr Morrow pointed to evidence

which was before the Magistrate and got there in a slightly

different context dealing with spoiled - that is, shrunk -

carpet, that second-hand carpet had no value.  What the first

defendant made available was new carpet, which obviously had a

value; the length of the piece or pieces would indicate that

it shouldn't be approached as valueless offcuts or anything of

that kind.  To be restored to its position, had the breach of

contract not happened, the first defendant would have to get

in new carpet.

I agree with Mr Roney that the approach indicated by Belgrove

v. Eldridge (1954) 90 CLR 613 as applied in Director of War

Service Homes v. Harris (1968) Queensland Reports 275,

especially at 278, per Gibbs J applies here.  The appeal

should be allowed to the extent of reducing the judgment

amount by $2,080, which is the value of 16 metres of carpet at

$130 per metre, and also, presumably, to the extent of any

interest which related to that.

MR RONEY:  Your Honour, I have worked it out.  I've worked
that out at $360 applying as at-----

HIS HONOUR:  360?

MR RONEY:  Yes.

HIS HONOUR:  Do you want to say anything about that,
Mr Morrow?

MR MORROW:  I don't question the quantum, your Honour.

HIS HONOUR:  I will accept from Mr Roney-----

MR MORROW:  Might I just point out that it wasn't as if money
was outlaid laid for it.  It was carpet they had in storage
for these particular events.  They weren't-----

HIS HONOUR:  All right.  What do you say about that?

MR RONEY:  Well, it doesn't matter.  The allowance in the
judgment to the plaintiff allowed it, the interest.

HIS HONOUR:  I think that's right.

MR RONEY:  So it's got to come off.

HIS HONOUR:  So the reduction will be by $2,440.

Do we know what it is?  Well, the order can be worked out.
Now, in relation to costs, I think the appeal has essentially failed and what I'm minded to order is that so far as the second appellant is concerned, the costs of the appeal which is otherwise dismissed be paid by it to the respondent as to - I'm trying to work out a percentage for the order, but it should be nearly all of it.  What's the percentage that 2440 is of the judgment amount?  It should be something like that, shouldn't it?

MR MORROW:  The judgment was $37,269.

HIS HONOUR:  So what's the percentage?

MR MORROW:  That includes interest.

MR RONEY:  Can I just be heard about that?

HIS HONOUR:  Yes.

MR RONEY:  Although the issue does not involve a great deal of
money, in my submission, it's wrong to conclude that the
appeal has essentially failed.  Roughly the same time is spent
on each of the points.  In relation to the carpet issue, my
learned friend really had an indefensible position and couldn't really argue against the proposition that that part
of the appeal ought be allowed, but we were still brought here
to argue that point successfully.

In relation to the point which we lost upon, which was the
second was the unsuccessful point, your Honour has already
indicated that in part the difficulty that was presented was
the result of an amendment not being made in circumstances in
which counsel was clearly inexperienced and thrown by an
application made to conduct the trial in the way different to
the usual, and as I have noted in your reasons, you have
indicated that it was at least arguable that it was a wrong

conclusion for the Magistrate to reach that the admission had
been made, albeit not on the basis of what you've found
correct.  So it was at least arguable that the Magistrate was
wrong to reach that conclusion and there ought to have been
amendment made to the plaintiff's case to reflect the case it
wanted to run.  On the other hand, we want-----

HIS HONOUR:  I found the Magistrate was right.

MR RONEY:  Yes, that's right.

HIS HONOUR:  On her interpretation of the pleadings and
therefore counsel should have reacted by saying, "Well, if
that's what my pleadings mean, I'm going to change them."

MR RONEY:  Yes, but the same point could be said about the
plaintiff's failure to amend its case.  In fact, that an
appeal was brought upon the consequences of that.

HIS HONOUR:  I've expressed my embarrassment at what at least
at first blush looks like an inconsistent approach, so-----

MR RONEY:  All I was going to submit, your Honour, if I could,
in one sentence, a proper order in this case is not to order
any costs against the appellant because it has been
successful, but not on all issues, but rather to allow it
perhaps half the costs - that is, the second appellant half
the costs of the appeal - that being to reflect the fact that
it was successful on one of the two issues, and on the third,
of course, you're going to make an order, as I understand it,
upon the issue of the agency point, I think, independently.

HIS HONOUR:  What do you say?

MR MORROW:  I would support your Honour's approach towards the
matter.  The carpet issue was relatively minor.

HIS HONOUR:  It doesn't take any time at all, really.

MR MORROW:  No, not from my point of view, your Honour.  I
would submit that we have substantially won the appeal.

HIS HONOUR:  I think that's right.  I will order the second
appellant pay 80 per cent of the respondent's costs of the
appeal.  I think that covers everything.  Reducing the amount
by $2,440, and I've indicated separately the orders for Mr
Dyne.

MR RONEY:  In the end the costs order for Mr Dyne was simply
an order that the respondent pay those costs of the appeal.

HIS HONOUR:  Yes.

MR RONEY:  And the certificate, yes.

HIS HONOUR:  Well, I will also add a direction that the
Registrar in assessing Mr Dyne's costs have regard to the
concessions made in the respondent's outline.  That's a
suitable way to do it, isn't it?

MR MORROW:  Yes, your Honour.

HIS HONOUR:  Filed when?

MR RONEY:  They were served on the 15th of October 2003.

HIS HONOUR:  Filed the 14th of October 2003.  I pay a tribute
to counsel who prepared those outlines and also the ones that
the Magistrate had.

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