Gott and Anor t/as Alpro Welding Fabricators; v Commonwealth of Australia
[2000] TASSC 86
•10 July 2000
[2000] TASSC 86
CITATION: Gott & Anor t/as Alpro Welding Fabricators
v Commonwealth of Australia [2000] TASSC 86
PARTIES: GOTT, Andrew
GOTT, Kaye
t/as ALPRO WELDING FABRICATORS
v
COMMONWEALTH OF AUSTRALIA
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 1154/1994
DELIVERED ON: 10 July 2000
DELIVERED AT: Hobart
HEARING DATES: 4 July 2000
JUDGMENT OF: Blow J
CATCHWORDS:
Procedure - Supreme Court procedure - Tasmania - Practice under Rules of Court - Amendments - Statement of claim - Whether amendment introduced statute-barred causes of action - Quantum meruit.
Weldon v Neal (1887) 19 QBD 394; Ritchie & Parker Alfred Green & Co v Gornalle [2000] TASSC 8, applied.
Aust Dig Procedure [276]
Limitation of Actions - General - Application of statutes of limitation - Amendment of writ of pleading - Amendment introducing new cause of action - Whether contract implied by law - Basis to claim restitution or unjust enrichment - Quantum meruit.
Limitation Act 1974 (Tas).
Pavey & Matthews Pty Ltd v Paul (1986) 162 CLR 221, discussed.
Aust Dig Limitation of Actions [8]
REPRESENTATION:
Counsel:
Applicants/Plaintiffs: G F Abel
Defendant/Respondent: A J Abbott and R J Pinson
Solicitors:
Applicants/Plaintiffs: Wallace Wilkinson & Webster
Defendant/Respondent: Australian Government Solicitor
Judgment Number: [2000] TASSC 86
Number of Paragraphs: 24
Serial No 86/2000
File No 1154/1994
ANDREW GOTT & KAYE GOTT t/as ALPRO WELDING FABRICATORS v COMMONWEALTH OF AUSTRALIA
REASONS FOR JUDGMENT BLOW J
10 July 2000
The plaintiffs have applied to amend their statement of claim, which was filed with the writ herein on 4 July 1994. The proposed amendments are quite extensive. The defendant objects to nearly all of them, relying on Weldon v Neal (1887) 19 QBD 394. It contends that the plaintiffs are seeking to introduce new causes of action after the expiry of the limitation period of six years imposed by the Limitation Act 1974, s4(1)(a) in respect of "actions founded on simple contract (including contract implied by law)".
Because of the nature of some of the proposed amendments, it is appropriate to consider at the outset the meaning of the words "contract implied by law" in s4(1)(a). Prior to the High Court's decision in Pavey & Matthews Pty Ltd v Paul (1986) 162 CLR 221, Australian courts regarded the common law as imputing the existence of a contract between parties in certain circumstances when no actual contract existed. A plaintiff was able to bring an action in indebitatus assumpsit to recover a reasonable sum as a quantum meruit in respect of work done by him for the benefit of the defendant in certain circumstances, despite there being no contract, or no enforceable contract, between the parties. See, for example, Liebe v Molloy (1906) 4 CLR 347 at 353 - 354, and Turner v Bladin (1951) 82 CLR 463 at 474 - 475. The cause of action that was available in such circumstances was quite distinct from the cause of action that was available in respect of an actual contract that contained an implied term for the payment of reasonable remuneration. See Pavey & Matthews Pty Ltd v Paul (supra) per Brennan J at 232, per Deane J at 255 - 256, and per Dawson J at 267. The reference in s4(1)(a) to "contract implied by law" was no doubt a reference to the cause of action that was regarded as being based on the imputation of a contract when there was no actual contract.
In Pavey & Matthews, the High Court, by majority, took the view that when an action on a quantum meruit is available in the absence of an actual contract, or of an enforceable contract, the true basis of the action is not an implied or imputed contract, but a right to restitution based on unjust enrichment arising from a defendant's acceptance of benefits accruing to the defendant at the expense of the plaintiff: per Mason and Wilson JJ at 227, and per Deane J at 256 - 257. Significantly, their Honours did not regard the cause of action based on an implied or imputed contract as not having existed, but regarded the basis of the cause of action as having been misunderstood. Thus, at 227, Mason and Wilson JJ said the following:
"Deane J, whose reasons for judgment we have had the advantage of reading, has concluded that an action on a quantum meruit, such as that brought by the appellant, rests, not on implied contract, but on a claim to restitution or one based on unjust enrichment, arising from the respondent's acceptance of the benefits accruing to the respondent from the appellant's performance of the unenforceable oral contract."
That case concerned a claim on a quantum meruit for remuneration in respect of work done by the appellant at its expense, and accepted by the respondent, pursuant to an oral contract that was made unenforceable by a statutory provision. Obviously Parliament, in enacting s4(1)(a), was referring to the cause of action whose true nature has subsequently been explained by the majority in Pavey & Matthews.
The Full Court has recently considered the principles to be applied when an amendment is sought after a limitation period has expired: Ritchie & Parker Alfred Green & Co v Gornalle [2000] TASSC 8. In that case, at par12, Wright J formulated three propositions which were intended to state a modern version of the rule in Weldon v Neal, as follows:
"1When an amendment is sought which seeks to set up a new cause of action which would be statute barred if made the subject of a fresh proceeding, it should normally be disallowed.
2If the proposed amendment does not seek to set up a new cause of action, but seeks to set up a fresh set of facts or ideas, or involves a fundamental departure from the existing claim, to allow which would involve prejudice or injustice to the opposing party, which cannot be overcome by an award of costs, an adjournment or other procedural means, it should normally be disallowed.
3If a proposed amendment offends neither of these principles, it should normally be permitted, upon appropriate terms if necessary."
In stating these propositions, his Honour expressed one reservation, namely that it was open to question whether the rule in Weldon v Neal was confined to cases in which the proposed amendment sought to introduce a new cause of action in a technical sense.
The other member of the majority in Ritchie & Parker Alfred Green & Co v Gornalle (supra) was Cox CJ. He regarded the significant decided cases as establishing a proposition that he formulated as follows (at par3):
"… an amendment will normally be refused if it introduces a new cause of action in a technical sense, or if, though not doing so, it introduces such significantly different facts that the defendant for reasons other than loss of a right to plead the relevant Limitation Act would be prejudiced by the amendment."
This proposition is virtually identical to the first two propositions stated by Wright J. The third proposition stated by Wright J is essentially a restatement of the general rule that leave to amend is ordinarily given so long as that can be done without injustice to the other party. See Cropper v Smith (1884) 26 Ch D 700 at 710; Shannon v Lee Chun (1912) 15 CLR 257 at 261; Clough v Frog (1974) 48 ALJR 481; Commonwealth v Verwayen (1990) 170 CLR 394 at 456, 464, 485.
There is little authority as to the circumstances in which a court will depart from the normal rule and allow an amendment that sets up a new cause of action in a technical sense, despite the expiry of a limitation period. The authorities as to that aspect of the rule in Weldon v Neal were reviewed by Underwood J in National Mutual Life Association of Australasia Ltd v Chris Poulson Insurance Agencies Pty Ltd (No 3) 5/1998 at 6 - 7. It seems clear that the normal course should be departed from only in peculiar or exceptional circumstances.
This action concerns a contract dated 26 May 1992 for the erection of a fence. It was an expensive fence. It is common ground that the contract price was to be $274,532, subject to any adjustments mutually agreed or determined by an independent industry expert, pursuant to cl 11 of the contract. It is common ground that the defendant has paid the plaintiffs $310,863, a figure exceeding the original contract price. In their 1994 statement of claim, the plaintiffs claimed a further $153,417.09, plus unliquidated damages under a number of heads (bank interest and penalties, loss of business goodwill, loss of work, and loss of profit), plus interest and costs. The claims pleaded can be summarised as follows:
(a)In pars9 - 12 of the pleading, it was alleged that six sums relating to variation works were added to the original contract price by agreement between the parties, pursuant to cl 11 of the contract, making the revised contract price $315,365, of which $310,863 was paid, leaving a balance of $4,502 outstanding.
(b)In pars13 - 15, it was alleged that, also pursuant to cl 11, an agent of the defendant gave the plaintiffs verbal notice of further variations to the work they were required to carry out, as a result of which a further $123,221 was payable for work that was done.
(c)On the basis of matters pleaded in pars16 - 18, the same sum of $123,221 was claimed on the alternative basis that the defendant had made an implied promise to pay the plaintiffs for such variation works, and that the implied promise could be inferred from certain conduct of the defendant's authorised agent.
(d)In pars19 - 23, it was alleged that a further $25,693.86 was payable in respect of "additional and ongoing administrative and other costs" resulting from the time for the completion of the total contract works having been extended three times. It was pleaded that the three extensions of time had been agreed to expressly by the defendant's authorised agent or, in the alternative, that agreement for such extensions of time was to be implied. The sum of $25,693.86 was claimed solely on the basis of an implied promise made by the defendant's authorised agent. It was alleged that such a promise was to be implied from the conduct of that agent.
(e)In pars26 and 27, the claims that I have referred to for bank interest and penalties, loss of business goodwill, loss of work, and loss of profit, were made as claims for unliquidated damages in respect of consequential loss and damage.
The plaintiffs are seeking to substitute a wholly rewritten amended statement of claim. The proposed amended statement of claim is dated 23 June 2000. I will deal in turn with the five claims, (a) - (e) that I have referred to, and the amendments that the plaintiffs are seeking to make in relation to each of them.
(a) Claim for balance of revised contract price of $315,365
The paragraphs setting out a claim that the revised contract price became $315,365 have been rewritten, somewhat more elegantly. There is no reason why the amendments in respect of this claim should not be allowed, except for a sentence which refers to a r261 schedule. The insertion of that sentence should not be permitted since the schedule does not exist.
(b) Claim of further increase to contract price
The claim that the contract price was increased by four sums totalling $123,221 has been expanded. The plaintiffs now wish to plead that there were 22 further sums, totalling $285,949, added to the revised contract price.
Particulars of the $123,221 originally claimed appeared in par13 of the 1994 statement of claim, which reads as follows:
"13 In addition to the variations referred to in Paragraph 10 hereof the Defendant's Authorised Agent, pursuant to Clause 11 of the Conditions of Contract referred to in Paragraph 4(c) hereof, gave verbal notice to the Plaintiff of further variations to the work to be carried out by the Plaintiff between the 8th February 1993 and the 19th August 1993.
particulars of further variations
Working in 'fill' not 'good going' and working with incorrect and inaccurate plans and drawings
8th February 1993 to 19th August 1993:
(i) Main gate to Albuera Street Sub-Station $93,150.00 (ii) Albuera Street and Part Molle Street
(to Telecom pit)
$7,225.00
(iii) Main gate to Albuera Street Sub-Station (metal work items only) $21,976.00
(iv) Gates 1 and 3 $870.00 TOTAL
$123,221.00"
The corresponding paragraph in the proposed amended statement of claim still relies upon cl 11 of the contract, and still alleges that notice was given on behalf of the defendant to the plaintiffs of variations to the original contract works. In par15 of the 1994 statement of claim, it is alleged that the defendant, by an agent, expressly promised to pay the plaintiff for the work referred to in par13 as variation works. In the proposed amended statement of claim, it is alleged that adjustments by way of increases to the tender prices were agreed to by the Facilities Officer, an individual referred to in cl 11 of the contract who had the power to agree with the plaintiffs as to such increases. The references to "working in 'fill' not 'good going' and working with incorrect and inaccurate plans and drawings" are expanded so as to become intelligible. The old particulars 13(iii) and (iv) are repeated as particulars 12(h) and (o) respectively. Mr Abel, who appeared for the plaintiffs, told me that the old claim for $93,150 in particular 13(i) was now the subject of a claim for $124,890 in particular 12(f), but that is not self-evident from the reading of the two documents. He was unable to tell me what had become of the old claim for $7,225 in particular 13(ii). It seems to have been fragmented. Numerous new claims for amounts totalling about $130,000 have been made. These include over $77,000 in respect of redesign work, whereas nothing was claimed in the 1994 statement of claim in respect of redesign work. In fact, it was pleaded in the 1994 document that it was a term of the contract that there was to be no design responsibility imparted upon the plaintiffs, but that plea is not repeated in the proposed new document.
Mr Abbott submitted, on behalf of the defendant, that the new claims that are included in the claim for $285,949 involve new causes of action not previously pleaded. He submitted in the alternative that the plaintiffs are seeking to set up thereby a fresh set of facts or ideas involving a fundamental departure from the existing claim, and that allowing the relevant amendments would involve prejudice or injustice to the defendant. In my view, the primary basis for the proposed claim of $285,949 does not involve setting up a new cause of action. It still involves the same basic assertion: that the defendant has failed to pay in full the contract price, as adjusted pursuant to cl 11 of the contract. It does not involve an allegation that the defendant has failed to perform any contractual obligation not relied upon in the 1994 statement of claim. Rather, the proposed new allegation is that the extent of the contractual obligation in question was greater than originally pleaded. But I accept Mr Abbott's alternative submission that the amendment seeks to set up a fresh set of facts or ideas involving a fundamental departure from the existing claim.
There is no evidence that allowing the amendments by which $285,949 is sought to be claimed would result in any specific prejudice to the defendant. That is to say, there is no suggestion that any witness has died, that the whereabouts of any witness are now unknown, or anything of that nature. However, I accept that allowing the relevant amendments would result in the sort of general prejudice described by McHugh J in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541, particularly in relation to the dimming of memories and the likelihood of difficulty in locating witnesses and documents. To a large extent, the new allegations relate to work said to have been done by the plaintiffs over and above the work detailed in the contract plans and drawings. It seems likely that the plans and drawings are still available, and that a comparison between them and the works completed by the plaintiffs is likely to be possible. However, the new material also involves allegations that the contract price was adjusted by agreement by adding 20 sums not referred to in the 1994 pleading. The chances of individuals alleged to have taken part in such conversations in 1992 and 1993 now being able to recollect, reliably or at all, details of as many as 20 alleged conversations, which they might not yet have been asked about, are so remote that I believe this is an appropriate case for the relevant proposed amendments to be disallowed. It seems most unlikely in the circumstances that the prejudice or injustice to the defendant that would result from allowing the relevant amendments could be overcome by an order for costs or by procedural means.
(c) Extra works ¾ implied promise/restitution
In the 1994 statement of claim, the sum of $123,221 is claimed on the alternative basis that there was an implied promise by the defendant to pay for the work in question. It is not alleged that there was an implied contract, as distinct from an implied promise by one party. It is not alleged that the implied promise was a promise to pay a reasonable sum, or any particular sum. It is only alleged that there was an implied promise to pay for the work.
The plaintiffs now seek to plead, as an alternative to a plea in contract, that the sum of $285,949 is recoverable by way of restitution in respect of works carried out by the plaintiff at its expense for the benefit of the defendant, who has accepted that benefit and will otherwise be unjustly enriched. What the plaintiffs seek to plead is a classic Pavey & Matthews claim, as distinct from a claim on a contract for reasonable remuneration payable pursuant to an implied term.
Mr Abel submitted, on behalf of the plaintiffs, that I should regard the claim in the 1994 statement of claim on the basis of an implied promise as amounting to a Pavey & Matthews claim, and therefore treat the proposed amended statement of claim as not setting up a new cause of action. Mr Abbott submitted, on behalf of the defendant, that the relevant paragraphs in the 1994 statement of claim should be treated as pleading, if anything, a claim in contract for reasonable remuneration payable pursuant to an implied term of a real contract. I think they were an attempt to plead such a claim. By the time this action was instituted in 1994, it was over seven years since Pavey & Matthews had been decided by the High Court, and quantum meruit claims based on the fiction of an implied contract were things of the past. Insofar as the paragraphs pleading an implied promise can be recognised as pleading, or even partly pleading, a cause of action, they are inconsistent with a cause of action for restitution of the Pavey & Matthews type.
It is quite clear that a Pavey & Matthews claim, not being a claim on a contract, constitutes a separate cause of action from the contract claims pleaded, or partly pleaded, in pars13 - 18 of the 1994 statement of claim. Thus, in Pavey & Matthews, which of course concerned an unenforceable contract and a claim by way of restitution for a quantum meruit, Mason and Wilson JJ said, at 228, "The purpose of proving the contract is not to enforce it but to make out another cause of action having a different foundation in law" [my emphasis]. What the plaintiffs are seeking to do in pars14 - 16 of the proposed amended statement of claim is to introduce a new Pavey & Matthews cause of action not previously pleaded after the expiry of the relevant limitation period. Such an amendment should normally be disallowed in accordance with Weldon v Neal. There are no exceptional circumstances in this case of the sort discussed by Underwood J in National Mutual Life Association of Australasia Ltd v Chris Poulson Insurance Agencies Pty Ltd (No 3) (supra) at 6 - 7 that would warrant departing from the normal course. The plaintiffs must therefore not be permitted to make amendments so as to plead this claim.
(d) Claims based on extensions of time
In pars19 - 24 of the 1994 statement of claim, the plaintiffs claimed $25,693 as administrative and other costs in respect of extensions of time for the completion of the contract works, solely on the basis of an implied promise. In pars17 - 19 of the proposed amended statement of claim, that claim is substantially repeated. Further, in pars20 and 21 of that document, the plaintiffs seek to introduce, as an alternative to the claim based upon an implied promise, a claim for the sum of $25,693.86 by way of restitution on a Pavey & Matthews basis.
So far as the proposed pars20 and 21 are concerned, I hold that the plaintiffs are seeking to plead a new cause of action which must be disallowed in accordance with Weldon v Neal for the same reasons as the other Pavey & Matthews claim sought to be introduced by pars15 and 16. Once again, the 1994 claim based on an implied promise should be treated as a claim in contract, and there are no exceptional circumstances warranting departure from the normal course.
So far as the claim based on an implied promise is concerned, the proposed pars17 - 19 are not satisfactory. They do not allege the making of a contract of which the alleged implied promise is said to be an implied term. They do not allege an implied term that the plaintiffs would be paid reasonable remuneration in respect of their extensions of time, but simply allege an implied promise "to pay the plaintiff for the additional administration costs incurred in relation to the extension of time". It is not clear whether the implied promise is alleged to have been a term of the original contract referred to in the statement of claim, or of some new contract not otherwise mentioned, or a non-contractual promise. Because of those defects, the proposed paragraphs should not be allowed.
However, if the plaintiffs wish to plead that there was a contract between the parties that included an implied term that the defendant would pay the plaintiffs a reasonable remuneration in respect of costs incurred as a result of extensions of time, and that $25,693.86 was reasonable remuneration as a result of the extensions which were agreed to, then I think the plaintiffs should be allowed to do so. I do not think it would be unduly generous to the plaintiffs to treat pars19 - 24 of the 1994 statement of claim as pleading such a claim, albeit very badly.
(e) Consequential losses
The claims for unliquidated damages in respect of bank interest and penalties, loss of business goodwill, loss of work, and loss of profit are not repeated in the proposed amended statement of claim, save that a claim for damages by way of interest appears in its prayer for relief. That interest claim appears to be the same as the 1994 claim for damages in respect of bank interest. If the plaintiffs wish to advance a claim pursuant to Hungerfords v Walker (1989) 171 CLR 125, I think they should be permitted to do so, but only if the basis of that claim is pleaded.
Conclusion
For the reasons I have stated, most of the proposed amendments must be refused, but some will be permitted. I grant the plaintiffs leave to amend their statement of claim in accordance with the conclusions set out above. I will adjourn the further hearing of the interlocutory application. I direct that the plaintiffs file and serve a fresh proposed amended statement of claim within 21 days.
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