Graves v Choppazilla - [2012] QCAT 302

CITATION:

Graves v Choppazilla Pty Ltd [2012] QCAT 302

PARTIES:	Matthew Graves (Applicant)
v
Choppazilla Pty Ltd
(Respondent)

APPLICATION NUMBER:

MCDO909-11

MATTER TYPE:

Other minor civil disputes matters

HEARD AT:

Brisbane

DECISION OF:

Ms Williams, Adjudicator

DELIVERED ON:

23 January 2012

DELIVERED AT:

Brisbane

ORDERS MADE:

In full satisfaction of claim MCDO909-11 and counterclaim the Tribunal orders:

1. The applicant or authorised agent pay the respondent or authorised agent, the sum of $920.83 by no later than 5pm Monday 13 February 2012;

2. The respondent or authorised agent is to make available for collection by the applicant or authorised agent, on Monday 13 February 2012 between the hours of 4pm to 5pm from its premises located at 107 Mayne Road, Bowen Hills, the following items belonging to the applicant:

a. The partially completed motorcycle (which is the subject of the claim) with all parts listed in receipts and invoices dated 2 February 2011 and 30 March 2011;

b. Tools and materials loaned to the respondent for the build – listed as cutters, cutting tips, high speed steel and carbide, air plenishing hammer and frame, alloy bar 6061 diameter 127 mm x 1.5m long and remaining rolls of scotch blue tape; and

c. All documents, drawings, plans and manuals provided by the applicant to the respondent for the purpose of assisting with frame build and driveline.

CATCHWORDS:

Minor Civil Dispute – consumer trader – contract void for uncertainty – implied terms – test for essentiality of terms – misleading and deceptive conduct – quantum merit for applicant’s unjust enrichment – parties to bear own costs

APPEARANCES and REPRESENTATION (if any):

APPLICANT:

Mr Iskander

RESPONDENT:

Mr Erwin and Mr Tutticci

REASONS FOR DECISION

Relevant Background

The applicant claims the respondent breached terms of their oral contract.
The applicant approached the respondent to modify an American built motorcycle frame so it would comply with Australian Design Standards. The frame was taken to the respondent’s workshop and there was an agreement between the parties, for the respondent to undertake initial works relating to the frame, at the agreed price of $1,000. A deposit of $200 was paid by the applicant, which was later receipted on 2 December 2010 as being for “steering head fabrication & rake change.”
Further discussions were held between the parties regarding work required to the tank. The respondent’s agent Mr Erwin recalls:
“[w]hile taking measurements and checking the trueness of the frame, I found that the dimensions of the frame would not accommodate [the applicant’s] engine. Mr Graves informed me at the time that he had tried to install his engine in the frame and it would not fit.”
Multiple deposits, totalling $2,200 were paid by the applicant and receipted on 2 December 2010. In addition to the initial fabrication works to the steering head and rake change (referred to above at paragraph two) the receipt was itemised to include:
·       Rotary Mill table – $200 deposit
·       Front steering head frame backbone 2010-10-08 – $400 deposit
·       Further work on frame (i.e. down tubes) 2010-10-19 – $500 deposit
·       Continued work on frame 2010-11-19 – $500 deposit
From 3 December 2010 to at least 23 January 2011, the parties exchanged a number of emails as to the suitability of particular accessories.[1]
[1]See emails from applicant to respondent dated 3 December 2010, 7 January 2011 and 23 January 2011.
Then on 7 February 2011, the respondent submitted two documents to the applicant being:
(a) A receipt for $4,200 paid, for works to “frame neck/headstock, frame backbone, frame front down-tubes, frame/seat base area including battery box, remove frame from jig and dress;” and
(b) An invoice in the amount of $6,571.25 for an additional 131.425 hours of labour, charged at $50 per hour.
Both documents also carry a notation written by the respondent: “The condition of the original frame as delivered had various flaws (all noted and discussed with customer) which had to be dealt with on an individual basis. Due to the high number of built in defects the simple processes of installing motor and driveline were impossible. Although these corrections are not listed as individual job schedules, they are included in the below list.”
On 14 February 2011 the applicant wrote to the respondent to convey his “shock at the second invoice” [dated 7 February 2011] charged by Choppazilla Pty Ltd for the amount of $6,571.25. As a way forward, Mr Graves requests:
·       “Every part I have purchased that is not currently on the bike is to be made available for collection by me;
·       What I do with the bike will be confirmed once I go through everything; and
·       Don’t do any more work on my bike as we need to settle this before anything else is done.”
The parties were unable to resolve the dispute; which caused the applicant to file a claim on 23 March 2011 with the Queensland Civil and Administrative Tribunal seeking the following Orders:
(a)     Relief from payment in the sum of $6,571.25;
(b)    Return of goods including: e.g. motor bike as shown in picture provided, my (sic) documents given to Choppazilla to assist with frame build, MSOs (sic) for the frame and driveline, all manuals and instructions, and all parts supplied by me (sic);
(c)    Return of tools and materials loaned to Choppazilla to use during the rebuild of the bike only (sic) – listed as cutters and tools as shown in photo provided, Scotch Blue tape, Planishing hammer, Aluminium Stock etc (sic);
(d)    All items ordered to be returned, be made available for collection at Choppazilla, 107 Mayne Road, Bowen Hills on 14 May 2011 between the hours of 2-3pm; and
(e)    That police (sic) be requested to attend and facilitate the collection of all items from Choppazilla, 107 Mayne Road, Bowen Hills on 14 May 2011 between the hours of 2-3pm on request of the claimant (sic).
Approximately one week after being served with a copy of the claim the respondent sends the applicant a letter of demand.[2]
“The invoice dated 7 February 2011 for the amount of $6, 571.25 which was calculated at the rate of $50 hour [referred to above at paragraph 6] has now been withdrawn. The invoice is now replaced by the invoice dated 30 March 2011 for the amount of $9,856.88 which (sic) has been calculated at the rate of $75 per hour. The reduced labor (sic) charge of $50 per hour is reserved for long term projects completed by Choppazilla Customs Pty Ltd.
As you have terminated this project prematurely you are now required to pay the standard labour charge of $75 per hour.
Also find enclosed an invoice dated 30 March 2011 for the amount of $1,620.83 for parts and materials used in your project which have not yet been paid by you.
As payment of your account is now overdue, you will incur a storage fee of $25 per day for an uncollected vehicles or parts.”
[2] Letter dated 30 March 2011.
Consistent with the aforementioned demands, the respondent filed with Registry a counter-claim and supporting evidence seeking the following orders to be made in its’ favour:
(a)The original discounted invoice [dated 7 February 2011] issued to Mr Matt Graves to be withdrawn;
(b)The outstanding full price invoice issued to Mr Matt Graves be paid;
(c)The outstanding parts and material invoice issued to Mr Matt Graves be paid;
(d)Any storage fees incurred by Mr Matt Graves to be paid; and
(e)Mr Matt Graves reimburse Choppazilla Customs Pty Ltd for any and all fees involved with this dispute.
The matter was heard by the Tribunal with leave granted to the applicant appear by telephone. At the conclusion of the hearing the Tribunal reserved its decision so it could consider the oral and documentary evidence relied on by the parties.
Leave was granted to the parties to file written submissions at the conclusion of the hearing of evidence. The applicant’s legal representative filed a document, dated 11 November 2011 on behalf of Mr Graves. The Tribunal notes these submissions, in part, differ from the original claim in so far as the applicant seeks different Orders, namely:
·       Relief from payment of invoices issued by the respondent after the applicant had instructed the respondent to cease all work on 7 February 2011 (sic) when an invoice was issued by the respondent that did not reflect the terms of the agreement that the applicant had previously understood with the respondent;
·       Recovery of all goods including the motorcycle, associated documents provided by the applicant and all manuals, tools and parts supplied by the applicant; and
·       Unspecified damages to place the applicant in a position he should be in had the respondent completed the work as agreed and for the price as agreed.
The Tribunal accepts these submissions as an amendment to the original claim.

Findings of the Tribunal

The standard of proof required to support a claim in the minor civil dispute jurisdiction is not as high as the standard – ‘beyond a reasonable doubt’ required in criminal matters; instead the civil standard requires proof on the ‘balance of probabilities’. The High Court case of Briginshaw v Briginshaw[3] is the leading case concerning the ‘civil standard of proof.’ In this instance the Tribunal must, on hearing the evidence and in consideration of the seriousness and gravity of the case, be ‘reasonably satisfied’ or feel ‘comfortably satisfied’ it can reach ‘a correct and just conclusion’ for each complaint as alleged against the respondent.
[3] (1938) 60 CLR 336.

A. Is there an agreement as to price?

At the heart of the dispute is the contract price.
Although the broad objective was for the respondent to modify the applicant’s imported motorcycle frame so it would comply with Australian Design Standards; there appears to be two distinct contracts through which the intended aim would be achieved.
The first agreement related to initial works to the frame in which the respondent later described on a receipt[4] as “steering head fabrication and rake change.” The contract price was fixed at $1,000.
[4] For partial deposit of $200 received and receipted on 2 December 2010.
The second agreement relates to additional modifications to the frame so as to accommodate the engine or tank. The cost of this work is in dispute.
Mr Graves claims that he understood the “tank works … [to be] for a fixed price of $2,000 … and was not advised of any to the contrary at the time of the agreement nor was [he] provided with any detailed terms and conditions that would cause [him] to think any differently.” The applicant recalls providing the respondent with two quotes from other fabricators, being approximately $1,500 and $900 respectively. Although the respondent was alleged to have offered a more expensive quote to do the work, the applicant claims he accepted the amount of $2,000 because Choppazilla Pty Ltd’s premises was situated in a convenient location.
In reply Mr Erwin, on behalf of Choppazilla Pty Ltd maintains “I never said I would build a tank for $2,000. I stated I charged $2,000 to $2,600 to build a tank, not specifically his tank.” The respondent explains the figure was an estimate, “a standard reply to all customers with a tank of similar complexity.” Consequently, the applicant then asked Choppazilla Pty Ltd to construct a template (and not build the tank), so it could be sent to the United States for fabrication.
At this stage the respondent maintains price was not agreed because the applicant “did not tell me to build the tank until days (sic) later.”
The respondent submits the only agreed price was the $1,000 for the initial works done to the headstock. Then the applicant later decided to use Choppazilla Pty Ltd’s services to modify the frame to accommodate the tank, as opposed to using an overseas fabricator. Because of the changing scope of the project from the initial correction of the headstock to additional, significant alterations to other parts of the frame (including the backbone, down tubes and realignment of the frame’s geometry) – the respondent argues the parties agreed such works would be charged at an hourly rate.
Mr Erwin claims: “on more than one occasion the customer Mr Matt Graves was informed of our $75 hourly rate. Our hourly rates are posted in the workshop area as well.” However “Choppazilla Pty Ltd decided to give Mr Graves a massive 33% discount to $50 per hour due to his becoming (sic) a long term project.”
Photographs were produced showing A4 size printed signs purportedly posted on the walls of the respondent’s premises. However, this in itself is not evidence that the signs were in existence at time when the contract was formed or proof that the applicant was aware of the respondent’s hourly charge rate.
In the absence of a written agreement, it is difficult for the Tribunal to ascertain with certainty the price agreed by the parties for the additional fabrication works. Each party has a different recollection of the pre-contractual negotiations and ultimately the accepted consideration for the agreement. Furthermore each party is adamant he would not have entered into the contract if the terms were not as how they remembered.
His Honour Jordan CJ in Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632 at 641-642 stated:
“The test of essentiality is whether it appears from the general nature of the contract considered as a whole or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or substantial performance of the promise, as the case may be, and this ought to have been apparent to the promisor.”
Thus in these circumstances, the question of price and the importance placed upon the amount by each party, makes it an essential term of the contract.

Certainty of Contract

The general proposition in contract law is that no valid agreement will exist unless the exact obligation undertaken can be determined objectively and with a reasonable degree of certainty.[5]
[5] Whitlock v Brew (1968) 118 CLR 445.
Therefore in the case of an incomplete contract, a term can be implied by a court if it is obvious, certain terms were intended by both parties[6], but through inadvertence or bad drafting, were not expressly included in the formal agreement. In limited circumstances terms can be implied where there is an established practice or custom in a particular trade, industry, market, local or workplace. Whether a particular practice or custom is such that it justifies being implied into a contract is, in all cases, a question of fact.[7] However, the custom or usage must be notorious, certain and reasonable. His Honour Griffiths CJ in Young v Tockassie (1905) 2 CLR 470 at 478 held, the custom must be:
“…so well known that everyone making a contract in the terms used must be taken to have contracted with respect to [it].”
[6] BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266.
[7] Summers v Commonwealth (1918) 23 CLR 144.
From the evidence available at hearing, the Tribunal is not satisfied such a uniform pricing standard exists in the industry. Mr Erwin cited examples of other traders charging an hourly rate; however there is no consistency as to a standard industry rate (ie with traders charging from $75 to $125.50 per hour). Even in the present matter, Choppazilla was inconsistent in its pricing schedule – charging the applicant (a) a fixed price as opposed to an hourly rate, for the headstock fabrication; and then (b) an hourly rate of $75 for the subsequent modifications to accommodate the tank, which was further discounted at the discretion of respondent.
On these facts the Tribunal is unable to objectively ascertain the intention of the parties as to price – an essential term of the contract. The exact cost of the works or even the formula used to calculate the cost (ie whether it is fixed price or an hour rate and if a discount applies because of the long term status of the project) appears to be unclear, as both parties at the time of formation, had a different understanding of the price. Therefore a legally binding agreement does not exist and in these circumstances “the law does not permit a court to imply a term into a bargain between parties for the purposes of making their bargain an enforceable contract”.[8]
[8] Per Kaye J in ANZ Banking Group v Frost Holdings [1989] VR 695 at 702.
The Tribunal finds the agreement between the parties to make additional modifications to the frame (so as to accommodate the tank) is void for uncertainty.

B. Breaches under the Trade Practices Act 1974

Mr Graves alleges the respondent’s conduct contravenes the Trade Practices Act 1974 (Cth).
Within days of being served with a duplicate of the applicant’s QCAT claim, Choppazilla Pty Ltd sent Mr Graves revised invoices attached to a copy of the company’s Terms and Conditions – reserving the right to “raise or lower the fee schedule or hourly rate charged on work related to vehicles or the fabrication of objects for customer. This will be and can be done by Choppazilla Customs Pty Ltd by its own discretion…”
A storage fee of $25 per day for uncollected vehicles or parts is said to now be payable by the applicant as per the respondent’s Terms and Conditions sent to Mr Graves on 30 March 2010.
The applicant has requested the release of his partially completed motorcycle, parts and tools – which the respondent refuses to do so, until the revised invoices are paid in full. Until this occurs, a storage fee accumulates on a daily basis.
The applicant states these terms were never brought to his attention “at the beginning of the agreement” and do not form part of the contract. Mr Graves argues the respondent’s attempts to enforce terms that were not agreed to, such as the storage fee, is misleading or deceptive conduct.
Section 52 of the Trade Practices Act 1974 (Cth) prohibits a person, in trade or commerce from engaging in conduct that is misleading or deceptive or is likely to mislead or deceive. Hence in simple terms, misleading means conduct which has led the other party into error, with no element of fault.
In Demagogue Pty Ltd v Ramsensky (1992) 39 FCR 31, Black CJ stated at page 32 that if “…a particular matter is relevant, then it should be disclosed…” The Tribunal accepts the applicant’s submission that price was a relevant consideration in deciding to use the respondent’s services.
There is insufficient evidence to show that the applicant was aware of the respondent’s standard ‘Terms and Conditions’ (at the time of formation) and accepted such terms. Therefore the agreement between the parties is silent on many of those terms (including the charging of a storage fee) Choppazilla Pty Ltd is seeking to enforce. And in circumstances of silence, it is reasonable for a party to have a mistaken or erroneous belief as to what he or she believed were the terms of an agreement.
Whether the respondent had intended the applicant to have an erroneous belief is irrelevant, as ‘fault’ is not a pre-requisite of the trade practices provision. Instead the focus is on the respondent’s conduct during negotiations and whether such conduct is misleading or deceptive or is likely to mislead or deceive.
On the balance of probabilities the Tribunal is satisfied from the weight of evidence, the respondent’s conduct contravened section 52 of the Trade Practices Act 1974.

C. Remedies

As this matter was heard and determined within the Minor Civil Dispute jurisdiction, the remedies available are limited by section 13 of the Queensland Civil and Administrative Tribunal Act 2009.

The effect of a void contract

In the preceding paragraphs, the Tribunal has found the agreement between the parties to make additional modifications to the frame (so as to accommodate the tank) is void ab initio, or from the beginning. Put simply the promises agreed to by the parties cannot be relied upon or legally enforced. Remedies are therefore generally limited to restoring the parties to their original position.

The applicant seeks the return of the partially completed motorcycle and all associated materials provided to the respondent. The Tribunal finds this prima facie reasonable in the circumstances and makes an Order in favour of the applicant to account for these items.
However the Tribunal also recognises that the frame will be returned to the applicant in an improved condition or standard (than what it was at the start of the contract), because of the respondent’s work.

Quantum Merit

The courts award a quantum merit in cases where work was done or goods supplied under a contract that was later held to be void. The aim is to remunerate a party for the value of the benefit conferred on the other party.[9] In the present matter, the Tribunal notes the frame will be returned in a more valuable condition and the applicant will benefit from this unjust enrichment. In these circumstances Choppazilla Pty Ltd should therefore be entitled to reasonable remuneration for this work.
[9] Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221.
In Pavey & Matthews Pty Ltd v Paul[10] the High Court held quantum merit is to be calculated at a reasonable rate for work or the fair market value of the materials supplied.
[10] Ibid.
The Tribunal has regard to the respondent’s quote, given orally to the applicant during the pre-contractual negotiations to build a tank (see discussion at paragraphs 21 to 24 herein). The range of $2,000 to $2,500 was provided as an estimate, which Mr Erwin explained to be “a standard reply to all customers with a tank of similar complexity.” This figure, although more expensive, is consistent with the two alternative quotes provided by the applicant.
Of course the respondent disputes that work done to the motorcycle frame was far greater than the aforementioned estimate – with an invoice[11] for $6,571.25, in addition to the sum of $3,200 already received and receipted for works associated to the tank-related modification[12] – making it a total of $9,771.25 for labour as at 2 February 2011.
[11] Dated 2 February 2011.
[12] Also dated 2 February 2011.
The applicant questions the amount of work claimed in the invoice by the respondent and the accuracy of it as a record. The Tribunal shares similar concerns as to the respondent’s creditability, noting in particular (a) the above finding of misleading or deceptive conduct; and (b) the questionable existence of signage that Mr Erwin claims to be hanging in his workshop at the time of the contract (see discussion at paragraph 26).
In the absence of independent evidence to confirm the reasonableness of the invoices charged by Choppazilla Pty Ltd, the Tribunal relies on the respondent’s initial estimate of $2,500 as the basis upon which to calculate the quantum merit. This amount is in addition the respondent’s cost for consumables (ie materials supplied by the respondent) and itemised in a further invoice dated 30 March 2011 for the sum of $1,620.83.
Although the applicant also questions the accuracy of this invoice, there is no other evidence which the Tribunal can rely on to reasonably ascertain the ‘fair market value of materials.’ The Tribunal accepts that the respondent would have supplied some additional materials and workshop consumables, over and beyond the components supplied by Mr Graves.
Therefore the total quantum merit awarded to the respondent is $2,500 for labour and $1,620.83 for materials. Taking into account the $3,200 deposit already received and receipted for this work, the outstanding balance owing by the applicant in full satisfaction of the enrichment is $920.83. The Tribunal’s Order takes into consideration these matters.

Damages and Costs

In these reasons, no adverse finding was made against the respondent for breaching the contract; instead the Tribunal found the contract void. Thus the Tribunal dismisses the applicant’s claim for unspecified damages.
Both parties sought reimbursement of costs associated with bringing the matter before the Tribunal. Rule 84 of the QCAT Rules limits the amount of costs that can be awarded for a minor civil dispute claim. Sections 100 and 102 of the QCAT Act require each party to bear their own costs unless it is the interests of justice for the Tribunal to make an order. In the present matter, the Tribunal is not satisfied the interests of justice require such an order.
The parties are to bear their own costs.