Gardner v Smith

[2001] WASCA 116

GARDNER & ANOR -v- SMITH [2001] WASCA 116

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2001] WASCA 116
Case No:	SJA:1203/2000	Heard:	7 MARCH 2001
Coram:	McKECHNIE J	Delivered:	11/04/01
No of pages:	44	Judgment Part:	1 of 1
Result:	Appeal allowed
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Parties:	ROBERT CHARLES GARDNER ROBERT MITCHELL PETER VICTOR SMITH
Catchwords:	Mining Warden's Court Claim for breach of contract Quantum meruit Proceedings with a long history Findings on credibility of witnesses Whether such findings can be made after four years Duty of court to give adequate reasons to support findings
Legislation:	Local Courts Act 1904 (WA) Mining Act 1978 (WA)
Case References:	Browne v Dunne (1894) 6 R 67 Gardner v Smith [1999] WASCA 168 Gardner v Smith [2000] WASCA 93 Gardner v Smith, unreported; SCt of WA (Anderson J); Library No 960579; 27 September 1996 Hoenig v Isaacs [1952] 2 All ER 176 Pavey & Matthews Pty Ltd v Paul (1986) 162 CLR 221 Simpson Steel Structures v Spencer [1964] WAR 101 Smith v Gardner & Mitchell [2000] WAMW 12 Smith v Gardner, unreported; FCt SCt of WA; Library No 970603; 13 November 1997 State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In Liq) (1999) 73 ALJR 306 Corio Guarantee Corporation Ltd v McCallum [1956] VLR 755 Cretazzo v Lombardi (1975) 13 SASR 4 Lemura v Coppola [1960] Qd R 308 McDonald v Jane [1960] VR 184 Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569 Phillips v Ellinson Brothers Pty Ltd (1941) 65 CLR 221

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA CITATION : GARDNER & ANOR -v- SMITH [2001] WASCA 116 CORAM : McKECHNIE J HEARD : 7 MARCH 2001 DELIVERED : 11 APRIL 2001 FILE NO/S : SJA 1203 of 2000 BETWEEN : ROBERT CHARLES GARDNER

ROBERT MITCHELL
Appellants

AND

PETER VICTOR SMITH
Respondent

Catchwords:

Mining - Warden's Court - Claim for breach of contract - Quantum meruit - Proceedings with a long history - Findings on credibility of witnesses - Whether such findings can be made after four years - Duty of court to give adequate reasons to support findings

Legislation:

Local Courts Act 1904(WA)

Mining Act 1978 (WA)

Result:

Appeal allowed

(Page 2)

Representation:

Counsel:

Appellants : Mr M J McCusker QC & Mr M C Hotchkin
Respondent : Mr C G Colvin

Solicitors:

Appellants : Hotchkin Hanly
Respondent : Lawton Gillon

Case(s) referred to in judgment(s):

Browne v Dunne (1894) 6 R 67
Gardner v Smith [1999] WASCA 168
Gardner v Smith [2000] WASCA 93
Gardner v Smith, unreported; SCt of WA (Anderson J); Library No 960579; 27 September 1996
Hoenig v Isaacs [1952] 2 All ER 176
Pavey & Matthews Pty Ltd v Paul (1986) 162 CLR 221
Simpson Steel Structures v Spencer [1964] WAR 101
Smith v Gardner & Mitchell [2000] WAMW 12
Smith v Gardner, unreported; FCt SCt of WA; Library No 970603; 13 November 1997
State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In Liq) (1999) 73 ALJR 306

Case(s) also cited:

Corio Guarantee Corporation Ltd v McCallum [1956] VLR 755
Cretazzo v Lombardi (1975) 13 SASR 4
Lemura v Coppola [1960] Qd R 308
McDonald v Jane [1960] VR 184
Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569
Phillips v Ellinson Brothers Pty Ltd (1941) 65 CLR 221

(Page 3)

McKECHNIE J:

Introduction

1 This is an appeal from a decision of the Warden's Court sitting at Joondalup.

2 That single sentence disguises the depth of litigation which has led to this appeal, a depth which includes three hearings by the Warden, two appeals to Judges of the Supreme Court and two further appeals against their respective decisions to the Full Court. In other words, this is now the eighth judicial consideration of a comparatively simple contractual dispute.

3 To understand the nature of the grounds of appeal and some of the contentions of the parties, it will be necessary to set out in some degree the history of the litigation as well as the matters giving rise to the proceedings in the Warden's Court.

Summary of events leading to litigation

4 Mr Smith is a Mining Consultant. Mr Gardner and Mr Mitchell were partners engaged in gold prospecting. They had interests in tenements at Ora Banda. When speaking jointly of them I shall hereinafter refer to them as "the partners". While Mr Gardner looked after the business side, Mr Mitchell spent much of his time out prospecting. On 22 April 1992 Mr Mitchell discovered a large and valuable nugget, later weighed at 520 ounces. Naturally, the partners wished to exploit the find and to this end approached Mr Smith in 1992 for advice and assistance as how to best exploit the find. Mr Smith agreed to help.

5 At this stage there was no written agreement between the parties.

6 One of Mr Smith's recommendations was that the partners purchase further tenements surrounding the tenement on which the nugget was found. There were discussions as to how best exploit the nugget's find. One suggestion was that a company should be floated. This idea was abandoned. Instead it was decided that the partners, with Mr Smith's advice, should approach selected mining companies who would be invited to tender for the nugget and tenements.

7 Pursuant to that decision, Mr Smith worked to bring about a favourable result. How much work he did is one matter in this appeal. There is no dispute that he did some work and eventually a number of

(Page 4)

mining companies were approached and several visited Mr Smith's office for an inspection.

8 Around May 1993, the partners decided that there should be a written agreement between them. Mr Smith drew up an agreement. Although the agreement dealt principally with relations between the partners in the event of sale, one clause dealt with Mr Smith's position. It provided:

"Gardner and Mitchell have agreed to engage the services of mining consultant Peter Victor Smith to handle the affairs of the partnership in exchange for a 5% interest in the tenements at Ora Banda the subject of the find. Such 5% interest is to be realised upon the sale of the tenements and payable in cash. Smith must use his expertise to effect the sale of the tenements. Smith is not liable for any debts of the partnership. Should the tenements not be sold then Gardner and Mitchell agree to compensate Smith for his time spent on this project."

9 Unfortunately, shortly afterwards, there was a falling out between Mr Smith, on the one hand, and the partners, on the other hand. This falling out seems to have related to differences as to display and marketing of the nugget. Their arrangement came to an end. The tenders were called off. The nugget has never been sold. The tenements have not been sold outside the partnership.

10 Mr Smith commenced proceedings in the Warden's Court against the partners claiming $100,000, being 5 per cent of the value of the tenements which he said were worth $2 million.

11 An alternative basis of claim was that on the 25 May 1993 Mr Smith's services were terminated and because the partners had repudiated the contract. Mr Smith claimed damages amounting to $100,000.

The sorry history of the litigation

12 Mr Smith issued the proceedings in the Warden's Court on 2 December 1994. The claim was amended in November 1995 and at that time the partners filed a defence and counterclaim. Both Mr Smith and the partners acknowledged that the agreement between them was partly an oral agreement and partly the written agreement already referred to. They differed to a degree as to the terms of the agreement.

(Page 5)

13 The partners asserted, among other things, that it was Mr Smith, not they, who repudiated the agreement. Evidence was taken over several days and completed on 28 June 1996. The Warden delivered short reasons for decision on 12 July 1996.

14 The Warden found in favour of Mr Smith and gave judgment against the partners. He ordered them to pay Mr Smith the sum of $100,000. He also dismissed a counterclaim which they had brought against Mr Smith.

15 From that decision the partners appealed to the Supreme Court. The appeal was heard by Anderson J on 25 September 1996: Gardner v Smith, unreported; SCt of WA (Anderson J); Library No 960579; 27 September 1996). He did not interfere with the Warden's dismissal of the counterclaim. That decision forever disposed of claims of misconduct by Mr Smith in relation to the leaking of information and other conduct which the parties had asserted disentitled him to any compensation. The chief matter under consideration was the alleged repudiatory conduct of the partners in May 1994. In the course of his reasons, Anderson J concluded:

"There is simply nothing in that state of affairs which justifies a finding of repudiatory conduct on the part of the appellants.

It seems to me that the real question is whether in virtue of the provisions of the contract recited above, the respondent had obtained a five per cent interest in the tenements. … He [the Warden] seems to have squarely placed his award on a finding that the consultancy contract was repudiated and, as I have said, there are no findings upon which that finding ie repudiation, can be properly based."

16 Anderson J was of the view that the matter must go back to the Warden's Court for rehearing. From that decision Mr Smith appealed to the Full Court in Smith v Gardner, unreported; FCt SCt of WA; Library No 970603; 13 November 1997. At 8 of the judgment, Kennedy J, with whom Steytler and Parker JJ agreed, said:

"I am not persuaded that, there being no repudiation of the agreement by the respondents, the Warden made an independent finding that, having carried out 'the bulk of the work', the appellant was entitled to remuneration as if he had performed all the work which he was required to perform under the agreement. I therefore agree with the learned Judge below that the Warden squarely based his award on a finding that the

(Page 6)

consultancy agreement had been repudiated by the respondents. The matter must therefore be remitted to him for the determination of the appellant's claim for remuneration under the agreement.

If the present direction for a rehearing stands, however, the parties face the possibility of a further four day hearing. They will be offered the opportunity of improving their cases by calling additional evidence. There is, however, a public interest in there being an end to litigation and, in all the circumstances, it appears to me that the parties should not now be entitled to reopen their cases merely for the reason that there may have been some unsatisfactory aspects in the conduct of the hearing before the Warden. The parties have had their opportunity to call the evidence which they desired to call. The proper order, in my view, would be to remit the matter to the learned Warden for determination in accordance with the reasons of the Judge below, without the calling of any further evidence. I would allow the appeal to that extent."

17 The matter was remitted to the Warden by the Full Court. The parties made further submissions on 16 April 1998. The Warden published reasons for decision on 30 April 1999, over a year after he had heard the further submissions of counsel.

18 The Warden found as a fact that the partners did repudiate the contract by their conduct in writing letters to the mining companies with which Mr Smith had been dealing. He gave judgment for Mr Smith in the sum of $100,000 again.

19 From that second decision the partners appealed to the Supreme Court. Heenan J, who delivered judgment on 9 September 1999, Gardner v Smith [1999] WASCA 168, dismissed their appeal.

20 From that decision the partners appealed to the Full Court. On 12 April 2000, the Court, Kennedy, Ipp and Wallwork JJ delivered judgment allowing the appeal: Gardner v Smith [2000] WASCA 93.

21 In the last paragraph of their reasons [22], the court said:

"For the reasons we have set out above, we would uphold the appeal, set aside the order made by Heenan J dismissing the appeal to him, and set aside the orders made by the learned Warden granting judgment in favour of the respondent in the

(Page 7)

sum of $100,000 and costs. Notwithstanding the unfortunate history of this matter we would again remit the matter to the learned Warden, to resolve the determination of the respondent's claim for remuneration under the agreement. As the Full Court previously ordered in the appeal which came before it on 8 October 1997, this issue is to be determined by the Warden without the calling of any further evidence. For the sake of clarity, we reiterate that the only issue to be determined by the Warden is the extent of the remuneration to which the respondent is entitled by way of compensation for his time spent on the project. We trust that expressing the issue in these terms will prevent any other issue from being argued or determined."

22 The relevant reasons of the court are contained in pars [20] and [21]:

"Moreover, the learned Warden erred in finding, again, that under the agreement the appellants were obliged to provide the respondent 'with the five per cent interest in the tenements or alternatively with the cash value established by the [appellants] and fixed at two million dollars.' We have pointed out that, according to the agreement, upon the sale of the tenements, the respondent was entitled to 5 per cent of the selling price and, should there be no sale, to compensation for his time. As it was common cause that the appellants had decided not to sell the tenements (and the tenements were not sold), the respondent's sole entitlement thereunder was compensation for his time. Accordingly, it was not open to make an order grounded on the respondent's so-called entitlement to 5 per cent of the value of the tenements. There was simply no basis under the agreement for such an approach.

In the result, it matters little whether there was a repudiation or not. If there was no repudiation, the respondent's claim would be limited to compensation for his time spent on the project. If there was a repudiation, and the agreement was in consequence terminated, the respondent's damages would be determined by reference to the provision entitling him to compensation for his time."

23 The relevant orders of the court were:

(Page 8)

"4. The matter be remitted to the Warden to resolve the determination of the Respondent's claim for remuneration under the agreement with the Appellants in accordance with the reasons of this Court."

24 The remitted matter came back for the third time before the Warden on 31 August 2000 when further submissions were made by the parties.

25 Over four years had now passed since the Warden heard the evidence in the case.

26 On 29 September 2000 in Smith v Gardner & Mitchell [2000] WAMW 12, the Warden published his third set of reasons for decision. He ordered that the parties pay Mr Smith $72,000 with interest. He ordered that they pay the costs of the action on the applicable scale.

27 This appeal against the Warden's decision of 29 September 2000 is brought by the partners who assert numerous grounds of error by the Warden.

The issues and the evidence before the Warden

(a) The particulars of claim

28 The relevant particulars of claim were pleaded as follows:

"1. At all material times, the Plaintiff was a mining consultant resident in Western Australia.

2. At all material times, the Defendants were prospectors resident in Western Australia.

3. In June 1992, the Defendants verbally engaged the Plaintiff to undertake management services on behalf of the Defendants. The terms of that engagement were subsequently reduced to a written agreement dated the 10th May 1993 and signed by the parties. The Plaintiff will rely upon the full terms and effect of the written agreement at trial.

4. It was an express term of the written agreement that the Plaintiff would receive financial remuneration for his services, namely: …

(Page 9)

(b) compensation in lieu of the 5% interest in the tenements.

5. Acting in accordance with the Agreement and relying upon its terms, the Plaintiff undertook various activities for the Defendants between June 1992 and May 1993.

PARTICULARS
(a) Generally advice and formulation of a plan to maximise the financial benefits to the Defendants subsequent to ROBERT MITCHELL finding The Evening Star Nugget in 1992.

(b) Acquire all tenements along the strike line including negotiation with various parties and undertaking plaints of Mining Lease 24/243 and Prospecting Licences 24/2334-2336, 24/2603 and 24/2870-73 on behalf of the Defendants including instructing solicitors.

(c) Instructing a geologist to prepare an appropriate report with a view to selling the project.

(d) Instructing the Defendants to engage surveyors to survey various tenements.

(e) Attending the stock exchange to research the financial status of Western Australia Gold Producing and Exploration Mining Companies.

(f) Contact of selected mining companies to invite expressions of interest in the purchase of property of the Defendants as a project.

(g) Attending site inspection. One in company with the geologist.

(h) Arranging and attending an inspection in the Plaintiffs (sic) office over two day period with interested company representatives.

(i) Arranging publicity re finding the nugget.

(Page 10)

(j) General all strategy and advice to the Defendants, including evenings and weekends.

6. In or about June 1993, the Defendants decided not to sell the tenements.

7. Notwithstanding subsequent demands by the Plaintiff, the Defendants have refused to pay and continue to refuse to pay the Plaintiff compensation in accordance with the terms of the written agreement.

…


PARTICULARS OF DAMAGE

… 48 weeks of average 30 hours per week at $50.00 per hour = $72,000.00.

11. Further and in the alternative … the Plaintiff seeks payment for services rendered by way of quantum meruit.


PARTICULARS

… 48 weeks of average 30 hours per week at $50.00 per hour = $72,000.00."

(b) The defence and counterclaim

29 The relevant features of the defence and counterclaim are as follows:

"6. Express oral terms included:-

(a) a term that if and whenever called upon to do so by the Defendants, the Plaintiff would, in his name and at the Defendants' cost as to reimbursement of all reasonable out of pocket expenses incurred by the Plaintiff, do all things and make such applications under the Mining Act 1978 as amended ('the Act') and take such action in the Warden's Court as the Defendants directed to assist in their acquisition of certain mining tenements and leases;

…

(Page 11)

(e) a term that the Plaintiff would act for an on behalf of the Defendants to effect a sale of tenements so acquired by the Defendants, and in any other capacity as directed by the Defendants.

…

7. Implied terms included:-

(h) a term that the Plaintiff would render services to the Defendant with due care and skill; and

…

(j) a term that the Plaintiff would act only as directed by the Defendants;

…


8. Save and except that the Defendants admit that the Plaintiff performed services for the Defendants between June 1992 and 25 May 1993, in part performance of obligations owed by him to the Defendants under the agreement and otherwise, the Defendants deny paragraph 5 of the Particulars of Claim.

…

18. Further, if (which is not admitted) the Plaintiff is entitled to any sum upon a quantum meruit, the Defendants deny that the sum claimed is a reasonable fee in the circumstances. The Defendants specifically deny that:-


(a) the Plaintiff spent the hours claimed by him in performance of the agreement; and/or

(b) such time was reasonably necessary for the Plaintiff to perform such services as he did in fact perform.


PARTICULARS OF SERVICES ACTUALLY PERFORMED BY PLAINTIFF

(Page 12)

(a) advice to the Defendants as to the steps to be taken by the Defendants to commercially exploit their find [2 days];

(b) assistance in tenement acquisitions [2 days]; and

(c) ASE research [2 days]; and

(d) invitations to selected mining companies and meetings therewith [3 days]; and

(e) site inspection [half day]; and

(f) visit to Kalgoorlie [one day]; and

(g) drawing and engrossing partnership agreement between Defendants [3 hours]."

(c) The evidence by and on behalf of Mr Smith

30 What follows is a summary of what I perceive to be the evidence relevant to the issues in the appeal. It does not represent any particular findings of fact.

31 Mr Smith gave evidence that while he was bailiff for the Local Court he had some background in law and left the Crown Law Department in 1980 or 1981, following which he was a mining consultant to a number of companies. His principal client was V & D Ridolfo Pty Ltd who had the largest privately owned gold producing mine in Australia at Mount Magnet. He worked there from 1979 on a part-time basis, 1982 on a full-time basis until it was floated in 1985 following which he was Managing Director for a year. He became involved with Mr Gardner through mining operations. Mr Gardner contacted him in May 1992 and advised him that his partner had found a large nugget and he wanted to "talk to me about it and wanted me to talk to his partner about it."

32 Before meeting Mr Smith, Mr Mitchell was quite keen to take his part of the proceeds and purchase a fishing boat and go and do his own thing. Mr Gardner saw more potential in the find and wanted Mr Smith to talk to Mr Mitchell and his wife about the opportunities that did exist. Mr Smith met with Mr Gardner, got the brief, and met with Mr Mitchell and his wife. He explained to Mr Mitchell that in his opinion the value of the ground was far in excess of the value of the nugget and outlined a

(Page 13)

scenario where, by acquiring all the ground around the strike, there could be far greater advantages.

33 Mr Mitchell was reluctant. He was a metal detecting prospector and had no concept of acquisition of large tracts of ground and the commercial realities of gaining as much money from those grounds as possible and "he did take considerable convincing and explaining", but eventually he and Mr Gardner agreed to engage Mr Smith to pursue the issue and act on their behalf.

34 The conversations between the partners commenced the end of May and progressed through June of 1992. Mr Smith was engaged as a mining consultant. In his words:

"… more than that more the role of a manager to manage this enterprise into a maximum return of dollars related to the find the proposition that I put to them was that if all the tenements could be acquired either side of the particular deposit which was a strike of some ten kilometres if all those tenements could be tied up and I went through and explained that it could be done by negotiation and purchase and if it could not be done by negotiation and purchase had the people breach there (sic) conditions of tenure then they could be plainted on the Mining Act once the ground was acquired then a geological report and an assessment of the property could be undertaken and it all could be packaged together as a very worthwhile proposition either to float a public mining company or joint venture into a public mining company or a straight sale to a public mining company."

35 Mr Smith regarded himself as the ideas person and "… having floated the concept then it was a situation where I outlined the strategy and Robert Garner (sic) carried the strategy through." He described the work to some extent as follows:

"Well really it was myself from the very beginning who promoted this concept of acquiring all the ground and in the next nine months it was just literally all efforts working towards that acquisition simultaneously we had discussions with lawyers, stockbrokers, accountants, public company type identities as to what would or wouldn't be available by way of a public company, we had for example on one occasion a meeting with my accountant a fellow called John Palermo who had a

(Page 14)

public listed company that was available called Herbal Life that was explored, we spoke with Peter Kyles Solicitor I spoke with John Pointon (sic), Stockbroker. So it was basically a free exchange of ideas between myself and Gardner with Mitchell through a lesser extent, just to continue down that path, and the aim of it all was to keep the find secret it was certainly accepted that had the knowledge of the find became (sic) public knowledge then it would make the negotiating power with the tenement holders that much more difficult because they would be wanting many more dollars."

36 Mr Smith proceeded on the agreed plan. He took action under the Mining Act and obtained certain tenements. He then researched Western Australian mining companies, being publicly listed mining companies, that had in excess of a million dollars in the bank or access to it. Mr Smith wrote 30 letters to companies and dealt with the responses. There were approximately 13 companies who responded to the invitation by attending Mr Smith's office where the nugget was displayed. Some rang in advance and discussed the proposal. There was a two day viewing in his office and five different companies attended with Mr Mitchell on site. The viewing took place on 12 and 13 May 1993.

37 In early 1993 it became necessary to formulate an agreement between the partners and to cover the event upon sale and to provide for Mr Smith's position, so Mr Smith prepared an agreement in early May. The document was prepared by Mr Smith and typed in his office by his secretary.

38 Mr Smith gave evidence on the acquisition of the tenements. It seems that most of the tenements and search work was done by Mr Gardner who had spent time in the Mines Department. In Mr Smith's words:

"I was, I suppose you could call a director of operations and he [Gardner] was the doer of the operations at that stage."

39 One block of land was purchased from a one McCarthy. Mr Smith was involved in negotiating a price, putting together a draft agreement which was sent to a solicitor "to massage into a simple agreement". Asked about his active involvement in the process he said:

"I was involved in speaking with Russell Smith in the United States. I spoke at one stage with the fellow that Robert Gardner was dealing with and who was always available but by mobile

(Page 15)

phone we could never seem to pin him down and I was involved with many many meetings and telephone calls with Robert Gardner to make it all happen."

40 Mr Smith arranged the actual transaction.

41 In relation to property owned by persons named Chan and Quek, Mr Smith was involved in investigations and took action in the Warden's Court for which he attended at Kalgoorlie and gave evidence. The trip and the solicitor's expenses were all paid for by Mr Gardner. The plaints were paid for by Mr Smith. There were negotiations right through to the bitter end.

42 Mr Smith was responsible for instructing a geologist by the name of Gerald Johnson and meeting with him and visiting the site, doing his report and discussing it.

43 Mr Smith advised that during the period in which the partners and he were again discussing the use of public companies, a second meeting was held with Palermo to discuss the possibility of using Herbal Life as it was a company already in existence. He examined the idea of floating a company themselves but came to the view that it was too difficult to float a company and the more ready money was going to be in a sale. Mr Smith had organised an unveiling of the nugget and it is that step which ultimately led to the parting of the ways. At this point as Mr Smith described it:

"… at the end of the day I had literally finished my job in any event. My role in bringing it to that stage had been successful we'd acquired the ground, we'd marketed the ground and we were just waiting for the tenders to come in to sell the ground."

44 It would appear that the relationship terminated as of 25 May 1993.

45 Mr Smith described his frequency of communications with Mr Gardner as follows:

"Probably 80 % of my time was spent with Robert Gardner. He was, had access to me daily, after hours, weekends. There were periods where.

…

(Page 16)

Full time access to, there were periods when it was full on and it was go go go days, weekends, the works and there were quiet periods. It literally took a year out of my working life.

I had my other interests I had the catering company I had two pubs but I was doing nothing more than being a Director of those. I saw the potential in this project and I ran with this project as my principal project for that year in question. I didn't anticipate it would take year but I said from the outset that it could take up to a year to achieve due to the problems with Quek and Chan it did run the whole year."

46 The contact was very little by correspondence, mostly verbal, by telephone, in person in Smith's office, at his house, at their house, at the coffee shops, Cunderdin Hotel, Kalgoorlie, Gardner's house and Ora Banda:

"I would have been working a probably 60-70 hour week and that year it would of occupied half my time so I would of average the 30 hours a week.

… this was certainly not 9 to 5 Robert Gardner was a workaholic and he would ring me from Bullfinch where he had a Tailings Operation at night or on a Saturday morning or a Sunday night or whatever. There were no restrictions to exact access, and there were a lot of after hours work."

47 The contacts were never short:

"… dealing with Robert Gardner is ever (sic) short he is a very thorough man and he talks every issue through very thoroughly.

… There were many incidents I mean I'll never forget once I took Robert Gardner's wife and child up to Bullfinch. Dropped them off to him that was the visit of the Geologist to Ora Banda. There were times when we would meet at a coffee shop he would pop into my office without an appointment on a very regular basis there were just oodles of them."

48 He was asked to estimate his time spent on specific actions. He described his contact with Palermo: "He was part and parcel from the very beginning" and met all the way through the 12 months. His estimate in relation to Palermo would have been about 45 hours over a six month period.
(Page 17)

49 The dealings in relation to McCarthy went for a further three months and were estimated at 55 hours. The work in relation to Chan's and Quek's property he would estimate to be at least 12 days at 10 hours, totalling 120 hours spread over a number of months.

50 In addition, Mr Gardner used his office as a second office and had access to Mr Smith's secretary. He estimated that probably one-quarter to one-third of her time was in relation to Gardner. The Quek matter he estimated at three full days totalling 30 hours. His relationship with the geologist Johnson he estimated at 28 hours.

51 Mr Smith estimated the amount of time spent in reviewing the ownership of the adjoining ground at three hours a week over nine months. His estimate of involvement with trying to arrange insurance for the nugget during its travels was 10 hours. He spent two days searching ASC records, preparing draft letters, receiving interested companies in his office, and a half a day with one potential bidder. He estimated his time in the bidding process at 5-1/2 days or 55 hours. His final estimate was 38 hours a week for the majority of the relevant time. He had a holiday in the middle of it, so 48 weeks at 30 hours was the estimate he "roughly" put on the time spent pursuing the partners' interests.

52 Mr Smith was then cross-examined.

53 It is fair to say that at the time of the original hearing there were many more matters in issue than now remain. The cross-examination as to the quantum and reasonableness of Mr Smith's claim was limited and in my view not every issue which should have been put to Mr Smith was in fact put.

54 Nevertheless in the course of cross-examining on other matters questions were asked about his time estimates.

55 In the course of cross-examination it was suggested that until 25 May 1993 he was the Manager. Mr Smith said:

"… That's another term you can use. Director of operations is a term I use. I refer more to the fact of day to day doing was the Robert Gardner function?---Basically I recommended policy, it was discussed and agreed upon.

And the implementation of that policy was largely up to Mr Gardner was it?---Depending on what facet was being discussed or done at the time whether I did it or he did it. …"

(Page 18)

56 He confirmed his view that 99 per cent of implementation towards sale had been done by 25 May 1993.

57 Mr Smith was questioned about the McCarthy parcel and his estimate of about three months time and said that it was sometimes full on and sometimes nothing happened. He was questioned about his estimate of 55 hours in relation to McCarthy's tenement and time spent talking to lawyers. He considered that he spent only about 20 minutes talking to Kyle but an hour writing faxes. It was noted that he had about four different discussions with Mr Kyle over that period and that Mr Kyle's bill was $611 on an hourly charge rate of $120 per hour.

58 Mr Smith was asked what he was doing at the Stock Exchange for two days and he replied that he was researching mining companies:

"Going through the, all the listed public mining companies looking at their issued capital, reading their recent reports, finding out who had what money in the bank. Going though their shares to see whether they had room to take on a project of this size, what it would do to their issued capital, whether at the end of the day the vendor consideration would be affected by the number of share on issue. Looking at what tenements they had and at what stage those tenements were at. Doing a general appraisal of the companies in order to select the companies we would approach."

59 The research list of companies became exhibit 13 before the Warden.

60 Mr Smith was asked about his experience and said:

"To be one hundred per cent honest with you I have never had a tender process involved in the sale of mining tenements. As a floater, a person involved in floats, … certainly never done it by way of a tender process. Our decision was not to float this project, our decision was to sell this project to another company and let them have the headaches, the heartaches of either floating it or taking the existing structure or whatever."

It was new to Mr Smith.

61 He was directly cross-examined about his other work during the period as follows:

"I asked you last time what other activities you were engaged in during the year you said you spent time to the value of $72000

(Page 19)

and I think you said you had a hotel and you were managing that at some point. Is that right?---No. I own two hotels. Both hotels are under management and as an absentee owner I had management functions but during part of the period I was engaged on a part time role with the Cunderdin Hotel.

What, How many days a week did that take up?---It took up 4 days a week I think it was that, included Saturday and Sunday?

Can you recall or do you know of the movements of either Mr Gardner of (sic) Mr Mitchell during that year?---Sorry I didn't get the first part?

Do you now (sic) the movements of Mr Gardner or Mr Mitchell how often they were in Perth for example?---Yes. Well when they were in Perth we met and discussed matters. Mr Gardner very frequently Mr Mitchell not so frequently.

Do you know whether either of them were out of Perth on any regular basis?---Both of them were out of Perth on irregular basis.

So Mr Mitchell's recollection is he was in Ora Banda most of the time from May 92 he would be wrong would he?---No, no he would be perfectly correct.

Mr Gardner's recollection is he was in Bullfinch or Ora Banda one week in every two would he be wrong?---I couldn't specifically give evidence as to the specifics of that, no I don't know but he did spend time both in Bullfinch were (sic) he had a tailings operation and lesser amount of time in Ora Banda were (sic) he would meet with Mitchell.

Cause your claims are for 48 continuous weeks of work as I understand it?---That is correct.

30 hours a week, do you mean that is on an average or do you mean 30 hours each week?---No that is on an average.

So you could have done 60 hours in half that time?---Correct.

And some weeks nothing?---Correct.

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You had what 3 days up hereon the Chan plaints in Court?---Correct.

You drafted the agreement with the 5% in it, two versions?---Three

Three versions?---Yes.

Right, some letters I think with McCarthy, you did some corporate research, now I think you mentioned discussion with Mr Palermo over a Thermal Life, is my recollection correct?---So far you are going well yes.

Those discussions with Thermal Life with Mr Palermo were they according to transcript Thermalife one word?---Herbal

Well the transcript comes out as Thermal?---Not its not

Well my apologies I have got it wrong, Herbalife then, we made very early in 92?---Well not very early in 92 because I didn't start the work until June 1992

My understanding is and Mr Gardner's recollection is those discussions were before the nugget was even found?---There may have been well discussions in relation to other matters prior to the nugget being found but post to the nugget being found there were continued discussions and those were discussions that centred around whether we floated or we took over a list of public companies or whether we just ?????.

How long do you think it took you to reduce your list down to 30 companies to circulate letter to?---I was in the Stock Exchange for two days researching and then I had numerous discussions with Mr Gardner on which company we would go and why and what the likelihood of success would be.

Can you estimate how many hours those discussions would have taken?---Probably would have taken place over about five meetings, a number of phone calls, 13-15 hours.

And this is all when?---Early 1993.

You also said that your job was 99% complete when the termination occurred, you agree with that?---Yes, that's correct."

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62 He was hardly challenged as to his estimates of the time he had spent on the project and I doubt whether the cross-examination properly complied with the rule in Browne v Dunne (1894) 6 R 67. Furthermore, there appears to have been no challenge to Ms Pennings' evidence and only a limited challenge to Mrs Smith's evidence. Nevertheless, from reading the transcript and closing submissions then, and in subsequent hearings, it seems clear that Mr Smith and his counsel were well aware that issue was joined as to the amount of work allegedly performed by Mr Smith. In consequence, I do not think that the failure to comply with the rule in Browne v Dunne has led to any injustice. There does not appear to have been any application to re-open the plaintiff's case and recall Mr Smith after Mr Gardner's evidence.

63 Ms Josephine Mary Pennings gave evidence that she worked for Mr Smith over a period of five years finishing in September or October 1993. She was asked what secretarial work she did related to Gardner and Mitchell and she responded:

"Typing up the plaint for the mining claims, typing up an agreement between Peter Smith and the two other gentlemen, typing up letters to mining people and another letter of confidentiality, confidential agreement."

64 She was asked to make an assessment of the time Mr Smith spent doing work for Gardner and Mitchell and her response was as follows:

"Well I would sort of if someone asked me I would say in a like a 12 month period I would say 20-25% of his time. I mean not that I resent so much Mr Mitchell or Mr Gardner but I resented anybody sort of taking up Mr Smith's time because then the work that I had to do for him came second and then it was rush to get it done and inevitably I be out the door late every night of the week."

65 She saw Mr Mitchell only two or three times, but saw Mr Gardner on a number of occasions. When he came to the office the visits were: "… quite lengthy ones actually because you know as I say I be getting cross because other work was being sort of not attended to because Peter was dealing with Mr Gardner." She indicated that Mr Gardner would come in without an appointment on lots of occasions and when Mr Smith spoke with Mr Gardner, on most occasions they were very lengthy meetings. She was asked about the meetings with Mr Gardner and she said:

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"… it would be hard for me to say to be specific and say whether Mr Gardner came in three times a week, I mean one week he might come in four times the next week we might not see him."

66 She was of the view that Mr Smith was spending too much time on Gardner's work and that his own work was suffering.

67 Catherine Paula Smith gave evidence that she was the wife of Mr Smith. She frequently saw Mr Gardner. She said she had only possibly seen Mr Mitchell three times. Mr Gardner was a frequent visitor to home and office. At the time Mrs Smith worked five days a week full-time at the office. Her direct involvement was:

"… I was involved directly on the occasion when the nugget was actually brought to our offices and our offices was used as the place were (sic) prospective buyers of the nugget and or the leases involved came to view the nugget and see the proposal. I was involved in typing a lot of stuff on various occasions and proof reading."

68 She described visits by Mr Gardner as frequent:

"There were weeks when they were very frequent. There would be two or three occasions during a week when Mr Gardner would appear at the office and it wouldn't be day when he wouldn't be on the phone for lengths of time or lengthy period."

He was consulting with Mr Smith.

"Frequently, almost nightly there would be phone calls. I can remember at least two separate Saturday afternoons he appeared at our house around about midday and left at 4.45 in the afternoon. Having sat on one occasion with my husband all afternoon planning and discussing various things. Another occasion he must have spent at least 3 hours there on a weekend but he could take two or three hours in the office as well."

69 Mrs Smith's assessment of the amount of time that Smith was working for Gardner and Mitchell was:

"He would average 4 nights a week between 7.00 and 10.00 in the evening I would say. I could remember one occasion which was actually the occasion of his birthday when we had guests and Mr Gardner rang as he did almost nightly and I said no

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Robert you can't speak to him tonight its his birthday. He said Cathy I won't keep him for long. Two of our guests left the gathering and said to me as we left tell Peter we are terribly sorry we didn't get to catch up with him on his birthday. Which was a bit humiliating, the inference was we're very sorry your husband saw fit to regard the person on the end of the phone as more important than his guests. … on that occasion he didn't appear again until after 10.00.

70 In her opinion Mr Gardner treated the office as his own. In cross-examination it was put to her:

"Were there times, weeks when he didn't come into the office and didn't telephone?"

71 She acknowledged that there were times when he did not come in when he was in Brazil or on one of his leases, but he certainly telephoned on those occasions.

(d) The evidence by the partners

72 Mr Mitchell gave evidence and acknowledged that by and large the paperwork and research was done by Mr Smith and Mr Gardner. Mr Mitchell said that he arranged the insurance with GIO.

73 In cross-examination he was asked:

"… you don't dispute that Mr Smith in fact did the work he claims to have done?---Oh I can't see the hours but I can't say because I wasn't there.

…

My job was purely to do what I do up the bush, go prospecting."

74 Mr Gardner gave evidence. He agreed that most of the discussions were between he and Mr Smith. He agreed that there were discussions with Mr Smith concerning floating of companies and purchasing of the grounds surrounding the tenement.

75 Mr Gardner disputed the amount of hours which he had been in contact with Mr Smith. What he said was:

"… Mr Smith has said in essence he spent 30 hours a week on average over 48 weeks working for you and Mr Mitchell.

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Doing work putting in time and he has listed out the sort of things he does. Both he and Mrs Smith say you constantly telephone, regularly calling, frequently calling, frequently telephoning. You rang weekends and Mrs Smith I think said something like 3 evenings a week on average with 2-3 hours on phone calls. What do you recall of the frequency of which you had contact with Mr Smith?---It simply wasn't that possible for me to do that.

What were your movements between 92 and 93?---My movements were quite hectic because (sic) running a business.

What you were (sic) doing up there?---At that time I had been prospecting with Robert up in the Ora Banda area earlier in the year. I had made decisions to build and get a stripping plant so I was buying parts getting a stripping plant going, it was for my gold operation in Bullfinch, building dams, we had.

What sort of gold operation is up there?---It’s a tailings leach operation, dam leach vat leach.

Who was doing the dams for you?---Well, I had a contractor earlier, that wasn't working, so in 92 I decided at that point that I buy my own machine and do it myself. Which is, so I started looking around earlier in the year for a loader. I had mentioned to Peter about a loader and he said I'll see my mate Caratti. He had the loader which I was looking for ….

Just tell us this, how often did you go to Bullfinch?---I sort of most of the time I would either go up there for maybe 2 weeks or week about, or 2 weeks and back to Perth for a week. It was never set time. Going back and forwards all the time.

Lets say the time that the Nugget was found to you came back from Brazil. Can you estimate how much time you spent in Perth?---At the time I was desperately trying to get this loader built I came back into Perth a few days or maybe a week and straight back to generally bringing parts and stuff and we were actually trying to get this loader to work before I was going away to Brazil.

Were (sic) are talking about a 48 week period here. Nearly a year. How much of that year can you estimate that you spent in Perth and how much did you spend out of Perth?---Well, with

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the (sic) I'll be battling to spend 6 months in Perth, probably more that particular time I was spending more time outside of Perth than any other.

Not more than 6 months?---Yes, even if you have given good allowance 50/50.

Did you telephone Mr Smith from Bullfinch?---On occasions I did, yes.

How many times do you recall?---Not a lot because there is nothing much I can do from Bullfinch when I am there. If I need to speak or go on meeting or something I can't do it. So if I knew there was a meeting or something to go something like that I may have called a few times.

How long did you talk on the phone with Mr Smith when you rang from Bullfinch?---Very short periods because then it mean that I speak during office hours and that means I have to come off the job. So I would come up, ring up and get out of there, and go back to work. I tried to get as much as I possibly could (sic) done in the field, there was quite a few things happening.

When you were back in Perth how often did you ring them?--- Early stages you know I just ring up occasionally to see what was going on if anything had. We didn't have the ground earlier in the piece. We were only trying to acquire the damn stuff. And I used to do all the meetings and the negotiations with the people, with Chan and also Collins, and I can only do it when I come back on my trips. It is actually only the reason why we got hold of Collins in the first place because I happened to see Steve Millward down here, the surveyor."

76 Mr Gardner denied telephoning Mr Smith a lot concerning the acquisition of the Collins' tenement. He acknowledged there were a few calls but said that there were not a lot of phone calls to Mr Smith in relation to Collins. He accepted that Mr Smith did the work in relation to the plaint in respect of the Chan land. He denied making many evening telephone calls to Mr Smith saying they were very very few, maybe two or three, in the entire time at his house for about 5 to 10 minutes. He specifically denied Mrs Smith's evidence of a two to three hour telephone call. In relation to Ms Pennings' and Mr Smith's evidence that he attended at the office often, he said:

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"I went there a few times and I also went there a few times and Peter wasn't there. If I was near the area picking up parts or whatever I sometime I often go in and see if he was there and maybe chat to him for a few minutes over the situations. But he wasn't often there and I should always make an appointment because he is a busy man, and your going to be stuck (sic). I said fine if he's there, he's there if he's not he's not."

77 He had "probably around 3" meetings with Mr Palermo of Thermal Life (also referred to in the transcript as Herbal Life) and Mr Smith, those meetings lasting two to three hours. There was "possibly half to three quarters of an hour" discussion prior to going to those meetings.

78 He acknowledged that Mr Smith prepared the agreement to do with Ora Banda and wrote a letter of invitation to the mining companies. Mr Smith also wrote the contract for Collins and one letter to Chan. In relation to research of companies, Mr Gardner said that Mr Smith said:

"… he sent his daughter in there for one day to go through to do some work in there searching stuff out."

79 He acknowledged that they had a discussion about the companies and that Mr Smith did have a list. He was asked whether he visited regularly at Cunderdin and responded that he dropped into the pub a couple of times. He acknowledged that Mr Smith did a site inspection with the geologist Mr Johnson.

80 He recalled meeting at Mr Smith's house once for two hours and ringing at home on the weekend a couple of times. He denied using Mr Smith's office as his own.

81 He was asked his estimate of the times that Mr Smith had spent and his response was:

"Somethings I can't say how much he spent. I take it from the conversation we had from Peter it wasn't a lot were (sic) he actually went in and researched the mining companies maybe one or two days. Wrote out these tenders or invites to tender and so forth I would have thought probably including the Court days were (sic) we actually had to fly up as it was a day up a day down or whatever was taken up with that and I would have thought only two weeks, three weeks all together.

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He claims 30 hours a week on average over 48 are you saying 30 hours a week for two three weeks?---I can't I just can't see any possible way that you could spend 30 hours a week and only think that I was doing most of it. Doing the negotiations and everything else there wasn't anything to do. Just have a meeting talk and then that was it."

82 In cross-examination he was asked about the number of Ora Banda tenements owned by he or Mitchell prior to the discovery of the nugget and responded that apart from the tenement upon which the nugget was found there were no others. He went to visit Mr Palermo with Mr Smith on two occasions. He agreed that there were a number of things Mr Smith did which were not in Mr Gardner's presence including the arranging of legal representation in Kalgoorlie for the plaints against Chan. He did not know whether Mr Smith did or did not do tenement searches of the strike line relating to the find of the nugget on 22 April 1993.

Proceedings before the Warden on 30 August 2000

83 When the matter came before the Warden for this third time, the task which had been set by the Full Court was clear enough. He was to resolve the determination of the extent of the remuneration to which Mr Smith may be entitled by way of compensation for his time spent on the project without regard to further evidence.

84 In broad terms the submissions made before the Warden on behalf of the partners are reflected in the present grounds of appeal and in submissions before me.

85 The task before the Warden was not without difficulty. Due to circumstances, for which it must be said the Warden himself had contributed, he had to resolve the extent of remuneration due to Mr Smith by reference to oral evidence heard some four years earlier.

86 Because of the way in which the litigation unfolded, and the issues which were previously live, the Warden was for the first time considering the particular evidence I have just set out. It had been unnecessary for him to consider it earlier because the focus of his attention had been on the issue of repudiation of the contract. There were additional difficulties. The evidence as to the time spent, and work done was challenged in substantial respects by Mr Gardner. Mr Smith kept no records of times so his claim for remuneration is no more than his estimate. While the lack of records was not fatal to his claim, this absence meant that Mr Smith's

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evidence and that of Ms Pennings and Mrs Smith had to be scrutinised with special care by the Warden.

87 In particular, the conflict where it existed between the evidence of Mr Smith and his witnesses, on the one hand, and Mr Gardner, on the other hand, had to be resolved. This meant that the Warden had to assess the credibility and the reliability of the witnesses and make findings as to those issues.

88 Despite some weighty judicial pronouncements to the contrary, particularly those of Kirby J in State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In Liq) (1999) 73 ALJR 306, I respectfully maintain the opinion there can be a distinct advantage afforded to a trial Judge or Warden in hearing evidence unfold in the course of examination and cross-examination. The demeanour of witnesses is important as one factor in the formation of an assessment of the credibility of a witness.

89 Any such advantage enjoyed by the Warden in this case must be discounted almost completely having regard to the passage of time between the original reception of the evidence, and the relative unimportance at that time of what is now the central issue. There is a lack of any particular findings by the Warden as to why he accepted one or other version or witness as credible or reliable. No doubt the Warden who is also a Stipendiary Magistrate, has had many cases since 1996. Even if he had formed a view on credibility, this view would have to be open to question. As I read his judgment, the principal reason for accepting the evidence of Mr Smith was the view he expressed that the evidence was largely unchallenged.

90 As a result only limited assistance could be gained by the Warden in the assessment of Mr Smith's credibility from his response to specific questions in cross-examination about particular matters in issue.

The Warden's reasons for judgment

91 The Warden delivered his reasons for judgment on 29 September 2000 and correctly stated the issue to be determined by him.

92 He noted Mr McCusker's submissions on behalf of the partners that Mr Smith wrongfully terminated the agreement, effectively ruling himself out from any form of compensation for time spent prior to the agreement.

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93 The Warden did not resolve the issue of a repudiation of the contract by Mr Smith and any consequences which might flow from that repudiation.

94 Having set out the submissions he then said:

"In respect of those submissions, I, having sat and heard the evidence on the matter, am of the view that the plaintiff did in fact do a considerable amount of work."

95 It was not in issue that Mr Smith had done a considerable amount of work. The issue was the actual extent of that work in terms of hours spent. The issue raised by Mr McCusker was whether Mr Smith was entitled to any compensation at all because he had repudiated the contract before he had performed his side of the bargain.

96 The Warden referred to the agreement which he described as a type of loose arrangement and noted that the partners, by the written agreement, wished to protect Mr Smith's interest. The agreement dated 10 May 1993 crystallised the earlier agreement.

97 Before me, counsel for Mr Smith conceded that the inevitable result of the litigation on appeal and the findings that the partners did not repudiate the contract must be that Mr Smith himself repudiated the contract. In my view this concession is proper and well made.

98 It was necessary for the Warden to reach a view as to whether Mr Smith had repudiated the contract. If Mr Smith had repudiated the contract, as is now conceded, then the question arises whether, in the events which had occurred, Mr Smith was nevertheless entitled to some form of compensation at law, whether by reference to the contract and its express or implied terms, or by a claim for a quantum meruit.

99 Only after that question had been answered affirmatively could the Warden move to examine the amount of compensation.

100 The Warden failed to determine this issue.

101 He referred to the agreement:

"The statement in exhibit 1 in relationship to compensation for time spent, was in my view an alternative form of payment should the parties fail to sell the tenements."

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102 That response did not address the question as to what would occur if Mr Smith repudiated the contract.

103 The Warden then turned his mind to the amount of work which had been carried out.

104 What he said was:

"That evidence was largely unchallenged and, upon examining the transcript, it is quite clear that the plaintiff's evidence as to the amount of work done, although not reduced to writing, was in fact typical of the type of work designed to create a company which could be floated and hopefully attracting a reasonable share price for the exploration and exploitation of the tenements which the parties then held."

105 There are two problems with this passage. The first is that the evidence was not largely unchallenged. It may not have been challenged crisply in cross-examination, as I have indicated, but nevertheless it was challenged. More importantly, however, Mr Gardner had given specific evidence which I have set out. This evidence had to be considered by the Warden and either accepted or rejected with reasons for either course. The Warden did not do that.

106 The error about the evidence is continued by the Warden where he said:

"The only real evidence before me was that given by the plaintiff, the plaintiff's wife and the plaintiff's secretary."

107 While Mr Mitchell could not throw any light on the issue, certainly Mr Gardener's evidence demanded consideration. The Warden then continued:

"Although Mr Wilson, who was then counsel for the defendants, cross-examined in respect of the time claimed by the plaintiff, I am satisfied that there was no real dispute as to the amount of work which the plaintiff carried out."

108 Having read the transcript, I am unable to see a basis for that comment.

109 The second error in the paragraph was that the work was not done to float a company at all. All parties were agreed that flotation of a company

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was considered and rejected. Rather, the approach was to purchase the mining tenements surrounding the key tenement and call tenders.

110 As to the issue of the telephone calls from Bullfinch by Mr Gardner to the plaintiff, the Warden made a finding that they did in fact last as long as two hours and more:

"That was the best evidence put before me and there was no particular objection to that type of evidence."

111 While such a finding may be open, in order to make such a finding the Warden would have to positively accept the evidence of Mr Smith, Mrs Smith and perhaps Ms Pennings and reject the evidence of Mr Gardner. Moreover, the Warden was required to give reasons as to why he accepted that evidence. Saying: "That was the best evidence put before me and there was no particular objection to that type of evidence" both ignores Mr Gardner's evidence and avoids the explanation required.

112 The Warden accepted the plaintiff's claim for 30 hours per week over a period of 48 weeks.

113 He accepted the rate of $50 per hour. The rate of $50 per hour is not now in issue.

114 Based on that acceptance, he determined that the plaintiff's claim for compensation should be fixed at $72,000 which is based on an amount of 30 hours a week for 48 weeks at $50 an hour.

The grounds of appeal

115 The notice of appeal sets out alternative forms of orders to be made. The first form is that the appeal is allowed and the plaintiff's claim be dismissed; but in the alternative that judgment be entered for the plaintiff in an amount of $6000 or alternatively $22,650 and that the respondent pay two-thirds of the appellant's costs of the action to be taxed as aforesaid and that the respondent pay the appellant's costs of the appeal to be taxed and other orders.

116 The grounds of appeal are lengthy and the first ground effectively challenges a lack of finding of repudiation and its consequences.

117 The second ground challenges the finding to which I have referred as to the type of work designed to create a company which could be floated. The third ground challenges the finding that the work of the plaintiff, his

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wife and secretary indicated that he had done a considerable amount of work on the preparation of the float, challenges the finding that the evidence given on behalf of the respondent was largely unchallenged and that there was no real dispute about it. The fifth ground challenges the finding about a remuneration of $50 per hour. The sixth ground challenges the calculation of the quantum of compensation.

118 The seventh ground challenges the question of costs.

Specific grounds

Ground 1

119 Ground 1 reads as follows:

"1. The Learned Warden erred in law in failing to find that on its proper construction, the contract provided for the Respondent to be compensated for his time only if there was no sale of tenements despite the Respondent using his expertise to effect a sale of tenements, and the Learned Warden erred in fact and in law in failing to find that the Respondent's conduct in wrongfully and prematurely withdrawing his services as a consultant to the Appellants on 25 May 1993 constituted a repudiation of the contract which the Appellants accepted, and that the Respondent was therefore not entitled to be paid any compensation."

120 An objection is taken to this ground on the basis of issue estoppel. I will deal with this objection first.

Claim for issue estoppel

121 In respect of the argument as to whether or not the contract was an entire contract with the consequence that Smith was not entitled under the contract to remuneration, counsel for Smith raised an issue estoppel point on the basis that the Full Court in Gardner v Smith [2000] WASCA 93 had resolved that issue.

122 Because of the conclusion I have reached in relation to the contract and more particularly the alternative claim of quantum meruit, it is not strictly necessary for me to deal with the plea of issue estoppel. However,

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having regard to the protracted history of this litigation, I have decided, as far as possible, to deal with every point in issue between the parties.

123 The defence and counterclaim specifically pleaded that the contract was an entire contract and was not completely performed.

124 When the appeal was heard by Anderson J in Gardner v Smith, unreported; SCt of WA; Library No 960579, his Honour said at 7:

"It seems to me that the real question is whether in virtue of the provisions of the contract recited above, the respondent had obtained a five per cent interest in the tenements. The warden found that he had obtained that interest because he had 'carried out the bulk of his work'. By this the warden must be taken to have found that the respondent had done what was both necessary and sufficient to satisfy any conditions to which his entitlement was subject."

125 The Full Court dealt with this in Smith v Gardner, unreported; FCt SCt of WA; Library No 9770603. Kennedy J held at 8:

"I am not persuaded that, there being no repudiation of the agreement by the respondents, the Warden made an independent finding that, having carried out 'the bulk of the work', the appellant was entitled to remuneration as if he had performed all the work which he was required to perform under the agreement. I therefore agree with the learned Judge below that the Warden squarely based his award on a finding that the consultancy agreement had been repudiated by the respondents. The matter must therefore be remitted to him for the determination of the appellant's claim for remuneration under the agreement."

126 When the matter was returned to the Warden, the partners made specific submissions concerning the entire contract. In the manner in which the Warden decided the case on the second occasion he did not decide this issue.

127 On the appeal from that decision to Heenan J, Gardner v Smith [1999] WASCA 168, Heenan J noted the plea in the pleadings as to the entirety of the contract, but did not rule upon it.

128 In the appeal to the Full Court from the decision of Heenan J in Gardner v Smith [2000] WASCA 93, ground 3 was as follows:

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"3. The learned trial judge should have held that:

(a) as Anderson J and the Full Court had previously held, the Appellants' refusal to accept the Respondent's advice, on 25 May 1993, was not a repudiation or breach of their contract;

(b) it followed that when the Respondent 'resigned' on 25 May 1993, his contract with the Appellants was terminated by him without justification;

(c) the Respondent was therefore not entitled to recover damages for breach of contract."

129 The Full Court did not specifically deal with this ground of appeal.

130 At par 8 their Honours said:

"As it was common cause that the tenements were not sold, and the appellants had decided not to sell the tenements, and as it was not suggested that that decision was taken otherwise than in good faith, the respondent's entitlement under the agreement, at most, was only for compensation for his time spent on the project. …" (My emphasis)

131 At par 22 they said:

"For the sake of clarity, we reiterate that the only issue to be determined by the Warden is the extent of the remuneration to which the respondent is entitled by way of compensation for his time spent on the project."

132 When the matter was returned to the Warden in August 2000, there were submissions made on this issue once again.

133 From this narrative it can be seen that the partners in their pleadings raised the issue that there was an entire contract which was not performed and have at all times maintained the submissions.

134 At no time has either the Warden or any court dealt with and resolved that issue so as to give rise to an estoppel.

135 In the way in which the matter has unfolded on appeal when successive courts remitted the matter to the Warden's Court for determination of compensation, implicit in that remitter was a

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determination of the issue whether any compensation should be ordered at all having regard to the terms of the contract and its termination. The Warden has never dealt with that issue and it, having been raised directly in the grounds of appeal, accordingly remains available as a legitimate issue for determination by this Court.

The contract and repudiation

136 The Warden did not consider the question of repudiation by Mr Smith and its consequences and to that extent he erred. It now being conceded that there was repudiation, the question as to the results which flow from that conduct is a legal question. I propose to resolve that question as I do not think it would be fair to either party to send this matter back to the Warden for a fourth time. I bear in mind Kennedy J's remarks as to the finality of litigation in Smith v Gardner (supra).

137 From the whole of the evidence I am able to conclude that the parties entered into an arrangement in 1993.

138 That arrangement did contemplate Mr Mr Smith would be paid in some form for the work that he did.

139 The work he was to do was to utilise his mining experience in relation to the acquisition of tenements and to do other work associated with the tender of the concept to interested parties.

140 The agreement was not reduced to writing until, as it turned out, a late stage in the proceedings, shortly prior to the end.

141 Nevertheless, the document which was exhibit 1 does reflect in general terms an agreement which had been in operation for some preceding period, nearly a year. There does not appear to be any dispute that Mr Smith did arrange and organise tenders and that the process had been completed prior to the termination of the contract.

142 Termination took place on 25 May 1994 and the parties' mutual obligations came to an end.

143 The partners argue that this was an entire contract and that there is therefore no obligation to pay Mr Smith anything. I do not accept this submission.

144 On the state of the evidence, notwithstanding his repudiation, I find that Mr Smith had substantially completed the obligations imposed on

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him by the contract and that the partners had taken the benefit of that work even though they ultimately chose not to proceed to sale.

145 In these circumstances, I enforce the contractual obligation of the partners notwithstanding Mr Smith's repudiation: Hoenig v Isaacs [1952] 2 All ER 176; Simpson Steel Structures v Spencer [1964] WAR 101.

Quantum meruit

146 Mr Smith also based his claim upon an alternative plea of quantum meruit. As part of the defence and counterclaim, it was pleaded that Mr Smith was not entitled to a claim by way of quantum meruit because of his conduct, presumably by leaking information of the nugget and other misconduct.

147 The Warden found against the partners on this issue in 1996 and Anderson J, and subsequently the Full Court, dismissed the appeal in this respect. The issue of Mr Smith's disentitling conduct may therefore be regarded as having been resolved adversely to the partners.

148 The basis of a claim of quantum meruit as decided by the High Court in Pavey & Matthews Pty Ltd v Paul (1986) 162 CLR 221 is the concept of unjust enrichment and a claim for restitution.

149 The partners certainly received considerable benefits from the efforts of Mr Smith over the year in the work that he performed on their behalf and it would be unjust to enrich them at the expense of Mr Smith. Therefore, whatever the position concerning the liability under the contract, the alternative claim by Mr Smith for payment by way of quantum meruit should succeed.

150 For these reasons, although it is now clear that Mr Smith repudiated the contract, he did so in circumstances where he had substantially performed all his side of the bargain and was entitled to enforce the partners' performance of their side of the bargain to pay him for his time. Even if this conclusion is wrong, then Mr Smith is entitled to succeed on the claim for quantum meruit. Therefore, although the Warden erred in failing to find that Mr Smith had repudiated the contract, he did not err in concluding that Mr Smith was nevertheless entitled to compensation.

151 Consequently, ground 1 of the appeal fails.

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Grounds 2, 3 and 4

152 I have said enough by way of comment during my analysis of the Warden's reasons for decision to explain why I consider grounds 2, 3 and 4 must be upheld. As to ground 2, the error as to the work required to float a company must have been taken into account by the Warden in his assessment of the reasonableness of the claim as to hours worked.

153 The same error flows into ground 3 and also misstates the evidence of Ms Pennings and Mrs Smith.

154 The evidence as to the amount of work done by Mr Smith was in dispute and the subject of challenge. This is the error pleaded in ground 4.

Ground 5

155 In light of a concession made by the partners on the appeal that $50 per hour is an appropriate rate to use, this ground falls away. I doubt that the concept of judicial notice extends to the Warden's knowledge of the income of truck drivers in the goldfields without specific evidence of that fact but in light of the concession nothing more need be said.

Calculation of the compensation

156 Ground 6 of the appeal provides as follows:

"6. The Learned Warden erred in fact in finding that the Plaintiff's claim for compensation of 30 hours per week over a period of 48 weeks at $50.00 per hour was proved on the evidence before him, when:

(a) The Respondent's evidence of what he did and the amount of time he spent on doing it amounted to approximately $22,650.00 in value, not $72,000.00, even of (sic) his claimed hourly rate was accepted;

(b) The Respondent failed to account in his evidence for approximately 1000 hours (or more than 20 hours per week) of his claim over the relevant period;

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(c) The evidence of Mrs Smith was not of sufficient accuracy or weight to reasonably satisfy a Court that her estimate of time spent by the Respondent in her presence was in fact spent or was part of the approximately 1000 hours unaccounted for by the Respondent;

(d) The evidence of Gardner on behalf of the Appellants to the effect that the Respondent had spent only two or three weeks 'altogether' on the Appellants' matters was more consistent with the Respondent's evidence as to the specific work he did and the time he spent on such work, and the Respondent's estimate of the total time spent by him, unsupported either by records or detail, should have been rejected;

(e) Given the dispute on the pleadings as to the Respondent's claim for compensation, the failure on the part of the Respondent to call witnesses to verify the amount of time the Respondent spent on each particular matter (as distinct from the Respondent's wife and employee giving evidence generally as to their impressions), should have caused the Court to draw an inference adverse to the Respondent as to the time he did spend on the matters on behalf of the Appellants;

(f) The evidence of Mrs Pennington was to the effect that her estimate of the time the Respondent spent on the Appellants' matters, given that she worked four days a week between 8.30am and 4.30pm, of 20 to 25 percent of his time, amounted to between six and 10 hours per week on average, which is closer to the sum of $22,650.00 referred to above than the $72,000.00 claimed by the Respondent."

157 I have already remarked that, to some extent, the resolution of this ground depends on findings of credibility between the parties, particularly those of Mr Smith and his witnesses, and Mr Gardner.
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158 The passage of time now precludes, as a realistic possibility, the return of this matter to the Warden to make those findings. There are other reasons why that course would not be favourable.

159 In any event, even if such a course was feasible, the Warden's ability to make proper findings on credibility has now been infected to a degree by some findings he has made which have been overturned. In particular, it is likely that his general approach that the partners were responsible for repudiatory conduct, and that Mr Smith was not, is such that it would be difficult for him to ignore those findings now, even though the issue of the amount of hours worked on compensation is, to a degree, a discrete issue.

160 Despite having read the transcript and taking account of the submissions, both oral and written, in respect of the credibility of the various parties, I am not in a position to resolve issues of credit generally, although there may be areas at the margin upon which a view can be formed on the balance of probabilities.

161 There is nothing inherently implausible in the accounts given by any witness such as would cause rejection of that account as improbable on a mere reading of the testimony.

162 While Mr Smith has, generally speaking, the support of Mrs Smith and Ms Pennings as to his account of the hours he put in and the work he undertook, there is a caution in ascribing too much weight to the number of persons one side or the other. Mrs Smith's relationship with Mr Smith is a factor to be taken into account but does not lead to a necessary rejection of her evidence. Ms Pennings no longer works for Mr Smith, and may in that respect be regarded as, to a degree, an independent witness. However, determining the balance of probabilities is more than determining the number of witnesses on each side to decide whether the scales tip.

163 Both Mr Smith and Mr Gardner are witnesses with an undoubted stake in the outcome, but that obvious fact is almost universally present in litigation.

164 The fact that Mr Smith kept no records at all of the time he spent is a matter which could adversely affect his credit. One might expect a consultant to keep records of the time spent on a particular project. However, I do not consider it does affect his credibility in the particular circumstances. For much of the period under consideration he was working, not as a consultant hired on an hourly or daily basis, but in order to achieve a particular result, the reward for which would be some stake in

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the proceeds of an eventual sale. In those circumstances it is understandable that detailed time records were not kept.

165 Nevertheless, the lack of time records does affect his reliability as in evidence he was recalling time spent doing particular tasks up to two years before. Some of those matters, such as speaking with Mr Gardner were repetitive with no reason why particular phone calls or their length would need to be stored in memory for later recall.

166 Ultimately, the burden of proving a quantum of compensation by reason of services rendered is on the plaintiff, in this case Mr Smith. Because the matter cannot now be returned to the Warden, for the reasons I have expressed, I will have to determine whether the grounds of appeal in respect of compensation have been made out. Where there is an issue upon which there is a direct disagreement, and the resolution of which requires an assessment of credit, I will proceed on the basis that the plaintiff has failed to establish that issue on the balance of probabilities. An example of such an issue is telephone calls, in general, by Mr Gardner to Mr Smith out of hours at the Smith home, and in particular the telephone call on Mr Smith's birthday which distressed Mrs Smith. Mr Gardner denied these calls.

167 Although it might be said that the Warden has accepted Mr Smith's evidence in preference to that of Mr Gardner, he provides no reasons for so doing. As his assessment was in any event based on a false premise, the fact that the evidence was largely unchallenged, I can give no weight to this acceptance by the Warden.

168 With those general observations in mind, I now turn to the particulars raised by the ground of appeal.

169 The essential issue is the number of hours spent by Mr Smith.

170 Although Mr Smith's evidence was challenged and submissions were made questioning the reliability of his estimates on specific matters, I am prepared to accept Mr Smith's estimates as to specific work he carried out. In respect of some of the matters, the partners are unable to comment they not being present. While criticism is made as to the specific estimates of work on particular matters, I am unable to conclude, by reading the evidence, that there is an exaggeration. The challenge, such as it was, in cross-examination was not such to cause me to reject Mr Smith's evidence on a mere reading of his testimony. Had the matters upon which submissions were made to the Warden and to me been put to Mr Smith, there may have been some prospect of resolving the issue. They were not.

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Mindful of the submissions made, I nevertheless have no sufficient ground to reject Smith's evidence on these specific issues:

MatterHours

Palermo negotiations 45

McCarthy negotiations 55

Chan and Quek plaints 120

Quek negotiations 30

Johnson discussions 28

ASC research and discussions with bidders 55

Reviewing tenement ownership 110

GIO negotiations 10

____

453

At a rate of $50 an hour, this translates to a figure of $22,650.

171 The figure in fact aligns more closely with the evidence of Ms Pennings whose estimate was that Mr Smith worked on this project for 25 per cent of his time over a year.

172 Of course her evidence does not take account of after hours and weekend calls.

173 I am not satisfied on the balance of probabilities that secretarial services were used by Mr Gardner to any extent.

174 On a claim of quantum meruit, I am not sure whether all time spent on the project should be compensated. After all, for much of the period Mr Smith and the partners were pursuing a project for their joint eventual benefit, albeit in different shares. I do not consider that discussions by telephone or in person between the three constitute unjust enrichment by the partners so that it is fair to compensate Mr Smith for all the time spent on those calls, even if Mr Smith was giving advice in the course of the telephone calls. Therefore, even if I accepted Mr Smith's evidence entirely, I would still not award him the full sum of $72,000 which he claimed on the basis of a quantum meruit.

175 The position is different under the contract. Under the contract Smith is entitled to compensation "for his time spent on this project."

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Such a claim, if falling in contract would include discussions with the partners.

176 Regarding the claim under contract and the claim for quantum meruit, I am not satisfied that Mr Smith has discharged the burden of proof as to the nature and extent of those discussions and telephone calls, having regard to the unresolvable conflict in the evidence. I am only prepared to find on the balance of probabilities that he undertook the specific work which I have listed.

177 It follows that the appellant is entitled to partially succeed on ground 6. The overall order for compensation should be reduced from $72,000 to $22,650.

Costs

178 Ground 7 is as follows:

"The Learned Warden erred in law in awarding the costs of the whole action against the Appellants when the only issue in the Respondent's claim on which the Respondent succeeded was the discrete claim for compensation, which occupied a small fraction of the time of the Court and of the matter generally by the parties, and the Warden should have awarded costs against the Respondent on the major issue, on which the Appellants had succeeded."

179 The practice and procedure of the Warden's Court is governed by the Local Courts Act 1904; Mining Act 1978, s136.

180 The Local Courts Act 1904, s 81 provides that costs shall be in the discretion of the Magistrate.

181 Generally, the Magistrate will order that the successful party in any action or matter will recover his costs: O 37 r 1.

182 The Warden had a discretion as to the order for costs.

183 The ultimate result before the Warden is that Mr Smith lost on some issues, but did succeed in an order for compensation in the amount of $72,000. The counterclaim brought by the partners was dismissed.

184 In litigation a party will often win on some issues and lose on others. The discretion generally is exercised so as to award a successful party

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costs. What might be classified as successful is a matter of degree in some cases, hence the need for judicial discretion. I am not persuaded that the Warden's discretion miscarried by his findings Mr Smith was substantially successful.

185 There is a further matter.

186 In the appeal proceedings, the solicitor for Mr Smith has filed an affidavit, apparently without objection, deposing as follows:

"…

2. I attended at the Joondalup Court Complex on the 29th September 2000 when the Reasons for Decision bearing that date were delivered by Warden Boothman S.M.

3. The Appellants were represented on that occasion at the hearing by a female legal practitioner whose name I do not know.

4. Upon the Warden indicating that his Judgement was in favour of the Respondent (Plaintiff), I moved for Judgment on behalf of the Plaintiff together with costs and interest. I made an oral submission to the Warden in support of an Order for costs and interest.

5. Warden Boothman invited the Appellants' solicitor to address him in respect of the issue of costs. The Appellants' solicitor made no comment."

187 The absence of any submission as to costs provides a further reason why it cannot be said that the Warden's discretion miscarried, he not being invited to exercise his discretion in any other way than that set out in his ultimate order.

188 For these reasons I do not uphold ground 6 of the appeal.

Conclusion

189 For the reasons I have set out, this appeal should be allowed and the judgment of the Warden's Court be set aside.

190 Judgment should be entered for Mr Smith, the plaintiff in the Warden's Court proceedings, and respondent in these proceedings, for the sum of $22,650.

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191 I will hear the parties as to the appropriate order for costs in respect of these proceedings, but for their guidance I should state that although I have not upheld every ground of appeal and although I have not dismissed the plaintiff's claim in the Warden's Court, nevertheless I regard the appellants to have generally succeeded on this appeal.