Kluge Jackson Consultants v Edey Bros Pty Ltd
[2013] VCC 83
•30 May 2013
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE CIVIL DIVISION | Not Restricted |
COMMERCIAL LIST
GENERAL DIVISION
Case No. CI-11-03584
| KLUGE JACKSON CONSULTANTS PTY LTD | Plaintiff |
| v | |
| EDEY BROS PTY LTD | Defendant |
| and | |
| KIELEN PTY LTD | Third Party |
Case No. CI-11-00635
| KIELEN PTY LTD | Plaintiff |
| v | |
| EDEY BROS PTY LTD | Defendant |
---
JUDGE: | HIS HONOUR JUDGE GINNANE | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 19-20, 25-27 February and 25 March 2013 | |
DATE OF JUDGMENT: | 30 May 2013 | |
CASE MAY BE CITED AS: | Kluge Jackson Consultants v Edey Bros Pty Ltd & Anor | |
MEDIUM NEUTRAL CITATION: | [2013] VCC 83 | |
REASONS FOR JUDGMENT
---
SUBDIVISION OF LAND – land owned by two persons – liability of owners for subdivision expenses - alleged over payment of expenses by one party – claim for money had and received and for payment by mistake – entitlement to share in rebate paid by electrical supply company – fencing work carried out by one owner on other owners – entitlement to payment for fencing work
---
APPEARANCES: | Counsel | Solicitors |
| For Kluge Jackson Consultants Pty Ltd and Kielen Pty Ltd | Mr M Black | Simon Parsons & Co |
| For Edey Bros Pty Ltd | Mr D Laidlaw | James Trembath & Associates |
HIS HONOUR:
1 These two proceedings were heard together, with evidence in one to be treated as evidence in the other. They arise from the subdivision of land at Hazelwood in the LaTrobe Valley into forty-four lots. Lots 1-34 were owned by Edey Bros Pty Ltd (Edey Bros), and Lots 35-44 by Kielen Pty Ltd (Kielen).
2 In issue is the liability of the parties to pay costs associated with the subdivision of the lots.
3 Proceeding CI-11-03584 was commenced in the Magistrates’ Court and transferred to this Court. It is a claim by Kluge Jackson Consultants Pty Ltd (Kluge Jackson), who are surveyors, engineers and estate planners, against Edey Bros for professional fees in relation to the subdivision. The amount claimed is $40,661.78 plus interest.
4 Edey Bros, by third party proceeding against Kielen seeks the sum of $31,155.45 for fencing that it erected for Kielen at the Hazelwood Ridge development.
5 Both Kluge Jackson and Kielen are companies associated with Mr Hans Peter Kluge. He is a director of both companies.
6 The second proceeding, CI-11-00635, was commenced by Kielen against Edey Bros. That claim, in the first instance, is for a proportion of the moneys that Kielen paid to Sure Constructions Pty Ltd (Sure Constructions), who is a civil contractor and performed road works as part of the development.
7 Kielen also claims from Edey Bros a share of a rebate paid in connection with the installation of the electricity infrastructure for twenty-three lots of the development. It alleges that Edey Bros must pay it the sum of $34,080.87 being its share of a rebate paid by the electricity supplier, SP Ausnet.
SUMMARY OF JUDGMENT
Proceeding CI -11- 03854
8 Kluge Jackson is entitled to judgment against Edey Bros in the sum of $33,431.61 - see paragraph 41.
9 Edey Bros is entitled to judgment against Kielen on the third party notice in the sum of $26,487.60 –see paragraph 69.
Proceeding CI -11- 00635
10 Kielen’s claim in respect of the payments made to Sure Constructions does not succeed - see paragraph 144.
11 Kielen is entitled to judgment against Edey Bros for $32,059.87 in respect of the SP Ausnet rebate – see paragraph 182.
The background to the development
12 Mr Peter Edey gave evidence on behalf of Edey Bros Pty Ltd.[1] He was formerly a director of that company. He explained the process by which Edey Bros purchased land and reached an agreement with Mr Kluge that his company would buy the remaining land to take part in the development.[2]
[1]Mr Peter Matthew Edey’s brother, Andrew Leslie Edey, currently a director of Edey Bros Pty Ltd, gave permission for Mr Peter Matthew Edey to speak on behalf of the company. T255.
[2] T 241
13 Kluge Jackson Consultants’ involvement in the development included the preparation of plans of subdivision for all lots, the provision of engineering drawings for the road construction and drainage and engineering drawings for water services installation and the provision of contract supervision services.[3]
[3]T 32
14 Mr Edey purchased farming land owned by a Mr Moody, that was contained in three separate titles between 2000 and 2004.[4] That land is now lots 1-34 and was referred to in proceedings as the Edey Bros land. For a time, at least part of the land was used to spell livestock from the Edey family farm.[5] Edey Bros wanted to purchase the balance of the land owned by Mr Moody, but could not afford to.[6]
[4]T239-240.
[5]T240
[6]T241
15 In 2005, Mr Edey and Mr Kluge agreed that Mr Kluge would purchase the fourth, and remaining parcel, of the Moody land.[7] This land was referred to in these proceedings as the Kielen land and comprises lots 35-44. Mr Edey and Mr Kluge had known each other socially for some years. Mr Edey said the idea of combining their efforts was with a view to having a “friendly neighbour and to be able to do what we wanted to do to make the subdivision work for both of us”.[8] Mr Kluge said the idea was to work “hand in hand…to achieve a good outcome”.[9] Not long after Mr Kluge bought the land, in the name of Kielen Pty Ltd, that land and the Edey Bros land was rezoned to permit two-hectare lots. This re-zoning allowed for the development of the land.
[7]T59
[8]T242
[9]T60.
16 Discussions took place about how best to develop the land, in anticipation of seeking planning approval. Various options for road access were explored. Ultimately, it was decided to cut access into the development from a pre-existing road called Warren Terrace. This saw Kielen and Edey Bros join together to purchase a strip of land (the Pitzner land), which ran down the side of a lot owned by a third party, which fronted Warren Terrace. This enabled the lots in the northern half of the development to have access to Warren Terrace. A road was later built from Warren Terrace down the middle of the twenty-two lots.[10] That road is called Edey Terrace and runs north-south through the subdivision to Hazelwood Ridge, which in turn runs in an east-westerly direction.
[10]T 244-245
17 Edey and Kielen each contributed 50 per cent of the $40,000 purchase price for the strip of land. The land was put in the Edey Bros’ name.[11] Mr Edey said it was decided that “Right from the word go if we were going to do it through Warren Terrace we wanted to have an arrangement where it was fair to all parties”.[12] Mr Edey said apportionment was discussed “very early in the piece”.[13]
[11]T 247
[12]T 243
[13]T 243
18 Mr Kluge, in cross-examination, agreed that there had been detailed discussions regarding the purchase of the Pitzner land in order to build Edey Terrace, to provide access to Warren Terrace. Mr Kluge was prepared to contribute to the purchase price because it benefited his lots, by giving them access to Warren Terrace.[14]
[14]T 120
19 Edey Bros granted Kielen an easement of way over the portion of land abutting lots 35 and 24, along the southern boundary of lot 24 and all the way to Warren Terrace. Mr Kluge said he would not have gone ahead with the plan unless he had the easement.[15] Mr Edey recalled signing the instrument that created the easement, but thought he was signing a document to create the two-lot subdivision, brought about by the purchase of the Pitzner land to create Warren Terrace.[16] Mr Edey said it was only during the hearing that he understood that it was an easement of carriageway.[17]
[15]T 62, 146
[16]T 247
[17]T 247
20 The local council approved the subdivision, with access into the development from Warren Terrace. Objectors appealed the development to the Victorian Civil and Administrative Tribunal (VCAT), which in 2006 approved it. The costs of the VCAT application were apportioned between Kielen and Edey Bros on the basis of the number of lots that they owned.[18]
[18]T 245
21 Stage 2 of the development commenced in September 2006, being lots 22 to 34 on Edey’s land and lots 35 to 43 on Kielen’s land.
Proceeding CI-11-03584 – Kluge Jackson’s claim for payment of invoices
22 Kluge Jackson claims the amount of $40,661.78, plus interest, for unpaid invoices rendered for services in respect of the subdivision of the land. Kluge Jackson provided professional services to Kielen and Edey Bros in the preparation of plans of subdivision, engineering drawings and specifications, tender documents for contract works and contract supervision. Kluge Jackson also claims amounts owing under invoices rendered by SFC Consulting Engineers for the preparation of drawings for stages of the development.
23 The invoices fall into two categories – those relating to professional fees and disbursements incurred by Kluge Jackson, totalling $36,481.78; and those relating to engineering services provided by SFC Consulting Engineers, totalling $4,180.00.[19] The two amounts total $40,661.78.
[19]CB 4
24 Mr Edey said that from the commencement, the arrangement for the payment of costs was intended to be fair and equitable for the parties.
25 Edey Bros, says that it did not request Kluge Jackson to incur these expenses on its behalf. There was a dispute in relation to the amount owing.[20] It contends that a 59.1/40.9 apportionment of expenses, or as it was often referred to in the proceeding, a 59/41 split, applied to all expenses.
[20]CB 7
The parties’ agreed position in respect of invoices
26 Edey Bros conceded a liability to pay most of the Kluge Jackson’s invoices. It concedes that it was obliged to pay it for the amount of Invoices 6188, 6216, 6239, 6241 and 6243 which total $15,944.78. It concedes that it liable to pay Kluge Jackson 59.1% of the amount of Invoices 6218 and 6245 being a further sum of $12,137.37 (the remaining 40.9% of those two invoices being disputed). Edey Bros also concedes that it is liable to pay Kluge Jackson the amount of $3,595.13 being invoices from SFC Consulting Engineers. The amounts thus conceded total $31,677.28.
The Kluge Jackson invoices that remain in dispute
27 The invoices that remain in dispute between Kluge Jackson and Edey Bros are for professional fees and disbursements:
(i) Invoice 6218 (25/06/2007) - $4,290.00
(ii) Invoice 6245 (26/07/2007) - $16,247.00
28 Kluge Jackson seeks the sum of $8,399.63, being the remaining 40.9% of those invoices. As, previously stated, Edey Bros accepts an obligation to pay 59.1% of them.
29 Kluge Jackson’s Invoice 6218[21] is dated 25 June 2007 and was for “water supply – design and documentation, construction, certification and as constructed field notes” for Stage 2 of the Hazelwood/Edey Terrace in the sum of $4,290.00. Mr Kluge gave evidence that the work described in the Invoice was not done in connection with Kielen land.[22]
[21]CB 50
[22]T71
30 Kielen paid the whole of a separate invoice numbered 6219, for similar work in respect of its land.[23]
[23]CB 50 and 50A
31 Invoice 6245[24] is dated 26 July 2007 and relates to a claim for “Engineering Design – Road and Drainage for Hazelwood Ridge and Edey Terrace and submission to the Council for approval” in the sum of $16,247.00. Mr Kluge said that it did not relate to design work for Kielen land.[25]
[24]CB 54
[25]T 72
32 Kluge Jackson argues that these two invoices are for work carried out on Edey Bros’ lots only and should therefore not be apportioned on a 59/41 basis, but rather that Kielen should pay all of the invoice.
33 Edey Bros submits that the liability to pay the amount of the two invoices should be apportioned 40.9% to Kielen and 59.1% to Edey Bros. Edey Bros’ general approach was that all expenses should be apportioned according to that formula.
34 Kluge Jackson’s invoice 6123[26] dated 17 November 2006 for $1375 for additional engineering design work was an example of the parties applying the 59/41 per cent split. That invoice was:
“ For provision of professional services as quoted, preparation of Tender document for Edey Terrace, miscellaneous expenses and disbursements, assistance in preparation for turning areas for Edey Terrace truck moments for Kevin Hart.”
[26]CB 63
35 Edey Bros submitted there was no room for Kielen to differentiate between invoices for design work and those for contract supervision, given the application of the 59/41 apportionment agreement.
Conclusion
36 The dispute about these two invoices is about the terms of the agreement on which Kluge Jackson provided professional services to Edey Bros. There was no written agreement about the payment of Kluge Jackson’s costs. Its claim is for work and labour done.
37 The evidence supports the conclusion that the parties generally divided expenses on the basis of a 59/41 division. A number of the consultants’ invoices were split on that basis. These included the cost of the VCAT proceeding, electrical infrastructure and design work costs, additional engineering design work,[27] and a number of construction supervision, contract administration and occupational health and safety invoices.[28]
[27]CB 63
[28]CB 64, 51-53
38 However, I do not consider that that arrangement applied where the work and labour was clearly performed only for the benefit of one party. I consider that to be the case in respect of Invoice 6218. The work that was the subject of that invoice was performed only for the benefit of Edey Bros. Kielen paid the whole of a similar invoice in respect of its land.
39 I consider that Edey Bros is obliged to pay Kluge Jackson the remaining 40.9% of Invoice 6218, which amounts to $1,754.61.
40 The position with Invoice 6245 is not as clear. It is for engineering design road and drainage. It is not clear that it only relates to, or only provides benefit to, Edey Bros land. Kluge Jackson’s claim that Edey Bros pay the additional 40.9% of invoice 6245 therefore fails.
Conclusion concerning invoices
41 Edey Bros is obliged to pay Kluge Jackson the amount of $33,431.61 for professional services consisting of:
(a) Invoices from Kluge Jackson and SFC Consulting Engineers that were conceded and which total $31,677;
(b) an additional $1,754.61 in respect of Invoice 6218.
Proceeding CI-11-03584 – Edey Bros’ claim for fencing
42 Edey Bros claims against Kielen payment for fencing works it performed on its land at Mr Kluge’s request. The claim was ultimately brought by a third party notice in Kluge Jackson’s proceeding against Edey Bros. It claims the sum of $31,155.45 as a debt. Alternatively, it claims such other amount as may be assessed by the Court, on a quantum meruit as the reasonable value of the services provided.
43 Kielen admits that in July 2007 it requested Edey Bros to undertake the fencing of its lots in the subdivision. It says that it was a term of the agreement that Edey Bros would charge for the fencing works at the same rates that it charged previously for carrying out the same types of work on other sections of the development. Those rates were $6.50 per lineal metre and $85.00 for a 12’ x 12’ gate. It admits that applying those rates, it is liable to Edey Bros for the sum of $13,585.70, but has never received an invoice for that sum and therefore had not paid it.
44 Mr Edey gave evidence that, in late 2006 Mr Kluge engaged Edey Bros to build fences on the Kielen land.[29] No price was mentioned. It took some three to six months to complete and involved removing old fences, and sometimes trees, in order to erect the new fences.[30] Mr Edey said the work was complicated by the fact that the ground was hard because of the drought and holes had to be drilled, first, to assist in driving in the fence poles.[31] He also said there were difficulties with the terrain and at one point there was a very steep gradient on the land that was to be fenced.[32] Some of the land was rocky. The fence at the back of Lots A also had to be removed and replaced because the pegging was wrongly located.
[29]T 268, 268.
[30]T 266-267.s
[31]T 268
[32]T 270
45 Edey Bros did not issue an invoice for the fencing until 12 months after it was completed. That invoice was dated 14 December 2007 and was for the sum of $31,155.45. The description of the work was:
“ Removal of existing fences & clear lines.
Construction of new fences to all blocks including re-alignment of fence at back of Lot 24, wrong measurements were supplied. All holes drilled due to hardness hence price variation.
2077.03m x $15.00.”[33]
[33]CB 121
46 The Invoice was based on a rate of $15 per linear metre, which was double the previous rate that Mr Edey had charged for fencing performed on his own land. Mr Edey said that the higher rate was because the soil was hard and difficult to put posts in.
47 Mr Kluge, in essence, did not accept that there was any justification for Edey Bros to charge a different rate.[34]
[34]T 107-109; CB 122-126
48 Mr Edey said that the delay in sending out the Invoice was because there were invoices coming from Kluge Jackson and “I suppose we were busy and we just didn’t send it out.”[35] In December 2007, he considered that Edey Bros should send its tax invoice to Kielen, because it was coming to the end of the subdivision.
[35]T356
49 Mr Edey said that the reference made to “wrong measurements” in the Invoices was because the pegs were put in the wrong spot by Kluge Jackson’s surveyors. Kielen’s case, on the other hand, was that part of the fence was in the wrong place, because Mr Edey had used the wrong markers and that Mr Kluge told him that at that point only the poles were in place, not the wires.[36]
[36]T 358
50 Mr Edey denied that he had deliberately inflated the invoice to use it as a bargaining chip in the wider financial dispute between Mr Kluge and Edey Bros.
51 Mr Kluge’s evidence was that while Mr Edey was erecting fencing on his own land, he requested him to continue on to fence his part of the land. Mr Kluge said that the price for the fencing was not discussed but was implied from the rate that Mr Edey was charging.[37]
[37]T176
52 Mr Edey said neither he, or his brother who assisted him with the fencing, had any commercial fencing experience.[38] In order to arrive at a price for the fencing work, Mr Edey “phoned two people to find out what the going rate for fencing was and explained to them what I had done”.[39] They were a friend who was a commercial fencing contractor, Mr S Hodge, and a farmer, Mr K Coridas. Mr Edey asked Mr Coridas what he has been charged for a fence recently built on his property.[40]
[38]T 272
[39]T 273
[40]T 274
53 Mr Edey referred to invoices for fencing work made out to Edey Bros that he had performed on his lots. He said that they were rendered to enable him to drawdown on his loan from the ANZ Bank. These invoices were based on rates of $6.50 and $7 a metre. But he did not agree that they were the highest commercially possible rates for fencing. [41]
[41]T 348
54 Mr Mark Moyes, who is a rural fencing contractor, was called as a witness by Edey Bros. He has had 10 years experience in fencing. He gave evidence that he would have charged $16 plus GST per metre, plus the cost of stays and gates, to erect the fences on the Kielen land. However, if he had found rock on the land, where the fence was to be constructed, he would have increased his price to $25 per metre, plus GST.[42] Mr Moyes inspected the site for 30 minutes just before dusk. He was advised that there were 2 kilometres of fencing.[43]
[42]T 320
[43]T 325
55 It appeared from Mr Moyes’ evidence in cross-examination that he had issued very few invoices for fencing work. He produced only eleven, pursuant to a subpoena to produce quotes and accounts for the last 5 years. He produced few that supported his figures, many were at $11.50 to $15 a metre.[44] They were mainly for the 2008, 2009 and 2010 years. He said that he did a lot of work on verbal quotes, without paperwork.[45]
[44]T 328-330, 335-338
[45]T329
Submissions on fencing works
56 Kluge Jackson admits that in July 2007 it engaged Edey Bros to carry out fencing works on the Kielen lots.
57 In December 2012, it amended its defence and now claims that it was an express term of the contract, that Edey Bros would charge for the fencing works at the same rates that it had previously charged on other sections of the development.[46]
[46]CB 24
58 Kluge Jackson submits that it would be unusual in a commercial arrangement for parties not to discuss a price, that a price was easy to establish and that the Edey Bros’ invoice, by making reference to a price variation, implied that there was an initial agreement as to price.[47]
[47]CB121, T267
59 Edey Bros’ case is that the price was not discussed when the agreement was made to erect the fences.[48] Rather, Edey Bros says it was an implied term of the contract that reasonable remuneration would be paid for the work and labour done. Alternatively, Edey Bros claims it is entitled to be paid a reasonable sum for the fencing work on a quantum meruit basis.[49]
[48]T 267
[49]CB 26
60 Edey Bros claims that, owing to the hardness of the ground, it was reasonable for it to charge Kielen $15.00 per metre for the fencing work. It argues that Mr Moyes’ evidence supports this claim.[50]
[50]CB 131
61 Edey Bros submits that the evidence of Mr Edey is to be preferred to that of Mr Kluge. It points to the delay in Kielen amending its defence, to allege that the appropriate rate was that previously charged.[51]
[51]CB 24
Conclusion
62 There is no dispute that Edey Bros performed fencing work on Kielen’s land, at Mr Kluge’s request.
63 I find that there was no agreement about a price. Although, it may have been anticipated that the same price would be charged as Mr Edey had charged his own company, there was no agreement to that effect.
64 Therefore, the claim must be determined on a quantum meruit by the determination of reasonable price for the work.
65 I accept that the hardness of the soil due to the drought made the erection of the fencing more difficult than otherwise would have been the case.
66 I give some weight to Mr Moyes’ evidence, where it was supported by written invoices.
67 The reference to a “variation” in the invoice is equivocal, in determining the amount of a reasonable rate for the work.
68 I have taken into account that Edey Bros invoice was not sent for 12 months and at a time when the parties were in dispute about the allocation of the costs of the subdivision.
69 I consider that, on the evidence that was available, a reasonable price for Edey Bros’ fencing work was $12.00 a metre. Applying that rate to 2207.03 metres leads to a price of $26,487.60. Edey Bros is entitled to judgment against Kielen for that amount.
Proceeding CI-11-00635 – the Sure Constructions claim
70 Sure Constructions is a long established road and civil contracting business, which was awarded the contact to perform the road works at the Hazelwood Ridge and Edey Terrace development.
71 By letter of 18 September 2006 addressed to Kluge Jackson Consultants, Sure Constructions quoted for the Hazelwood Ridge Estate Stages 1 & 2, being Lots 22–34 on Edey Bros’ land and Lots 35–43 on Kielen’s land. The tender was divided into three parts:
(a) Part A Site establishment and supervision $15,800.00 plus GST
(b) Part B Construction on Edey’s thirteen lots $407,323.60 plus GST
(c) Part C Construction on Kielen’s nine lots $207,501.00 plus GST
Total Lump Sum Stage 1 $630,624.60
GST @ 10% $63,062.46
Total Lump Sum Including GST $693,687.08
72 Part A related to site establishment and supervision costs across lots owned by both parties. The amount payable under Part A only amounted to $800 after a discount of $15,000 offered by Sure Constructions was deducted. The discount was explained as follows:
‘Through various synergies attainable, we are able to offer a discount of $15,000 should we be successful on both Stages 1 & 2 and the sites are available to be run concurrently.”
73 Mr David Muir, who is the Construction Director for Sure Constructions, stated that it wanted to progress the works as quickly as possible. Kluge Jackson accepted its offer of a reduction in price if it could go straight on with the job. There was no signed contract. Sure Constructions had dealt with Mr Kluge for years.
74 The road works for Warren Terrace down to Hazelwood Ridge were commenced in late January/early February 2007.
75 Kielen’s case is that there was an agreement to divide the amounts that were owing to Sure Constructions, so that Edey Bros would pay the cost of Part B set out in the quotation, Kielen would pay the cost of Part C and the parties would pay the remaining cost of $800 for Part A.
76 Kielen’s case is that it paid the sum of $283,718.10 to Sure Constructions. That amount was $55,466.91 more than the $207,501.00, plus GST, that was owing for the Part C works, which it was obliged to pay under the agreement. It argues that it would be unconscionable for Edey Bros to retain the benefit of the payment of $55,466.91, which has reduced their joint indebtedness. It claims that sum as money had and received.
77 Mr Kluge’s evidence was that the 59/41 split did not apply to these road construction costs. That division only applied to two items. The first was electrical costs including design. The second was supervision costs.[52]
[52]T159
78 Edey Bros’ defence is that there were a series of agreements made between the parties about the division of costs. Initially, the parties did make an agreement in the terms that Kielen alleged. But that agreement was amended by a subsequent agreement that all expenses associated with the road, drainage and related infrastructure would be borne by the parties in the proportions 40.9% by Kielen and 59.1% by Edey Bros.That amended agreement reflected the benefit that Kielen would achieve from the works that Edey Bros would perform as part of the Part B works in providing access to Kielen’s land. Kielen obtained access through Edey Bros’ land to Warren Terrace. Edey Bros granted Kielen an easement of carriageway, during the planning permit stage. [53]
[53]T145
79 Edey Bros argued that the amended agreement was in writing and was contained in Mr Kluge’s letter of 14 March 2007, that is referred to below and in discussions that occurred between Mr Edey and Mr Kluge on that day.
How much did Kielen pay Sure Constructions?
80 Kielen says that it has paid Sure Constructions amounts totalling $283,718.01, made up of:
(a) $80,000 in early March 2007;
(b) $80,000 on 29 June 2007;
(c) $123,718.01 on 4 September 2007.
81 There is evidence in the financial records of Sure Constructions, to support the conclusion that Kielen paid Sure Constructions the sums described in the previous paragraph that total $283,718.01.[54]
[54]T95 and CB 107-108
82 Sure Constructions’ computer records of “Sales by Customer Detail” show that payments of $80,000 were made on 31 May 2007 and on 28 June 2007. A further payment of $123,718.01 was made on 4 September 2007.[55]
[55]CB 108 and T 167
83 Amongst the invoices that Sure Constructions sent to Kielen, were two for $80,000.[56] Invoice 307 was dated 30 April 2007 and was for works completed that day. Invoice 308 was dated 28 February 2007 was for work completed that day. The numbering of the invoices suggests that Invoice 308 was prepared some time after 30 April 2007, which was the date of Invoice 307. Invoice 308 was paid on 31 May 2007.[57]
[56]CB 103,104
[57]T 215, CB 107
84 Mr Kluge said that he paid the sum of $123,718.01 deliberately and was not mistaken. He said that Mr Edey would not reach an agreement about payment. The only way that he could sort things out was by paying that amount and going to Court afterwards.[58] He decided that “unless we came to an agreement before titles were issued”, that he would go to Court to obtain the $55,000.[59]
[58]T164
[59]T92
85 The payment of the $123,718.01 is significant because it resulted in Kielen paying the amount of $55,461.64 more than it says that it was obliged to pay.
86 Edey Bros relied on the fact that Sure Constructions’ records contain only three accounts addressed to Kielen or Mr Kluge. They were Invoices 307 and 308 each for $80,000 and Invoice 664 for $30,499.13. These three accounts total $190,499.13. Invoice 664 was for “Total outstanding” in respect of Part B and Part C.[60] Edey Bros submitted that this contradicted Kielen’s assertion that it was only ever liable to Sure Constructions for the sum of $207,502 plus GST.
[60]CB 105
87 An important aspect of this part of Kielen’s claim was Mr Kluge’s evidence that, in February 2007, Mr Muir of Sure Constructions advised him that, unless Edey Bros paid their bills for the work performed on O’Donnell Court, they were going to pull all machinery off site.[61] He said that he agreed to pay Mr Muir $80,000 in the following two days. Mr Muir was happy with that arrangement.[62]
[61]T83
[62]Ibid
88 Mr Kluge said that he had paid that amount from funds in his and his wife’s private bank account. He wanted Sure Constructions to continue the work, because some of the lots had been pre-sold and he wished to get to settlement. He knew of other projects where the contractor had stopped work and removed equipment and the project had gone bankrupt.
89 Mr Edey said that he had no discussion with Mr Kluge about the payments of $80,000 or $123,718.01, before they were paid. [63]
[63]T 263, 265
90 Mr Kluge said that after he paid the amount of $80,000 to Sure Constructions, he contacted Mr Edey and told him to get his finances in order and that the payment would eventually come off his contract sum or liability.[64] Much later, he received an invoice for the amount of $80,000 from Sure Constructions.[65]
[64]T 84
[65]T 84
91 Mr Muir gave evidence that he did not threaten Mr Kluge or Mr Edey with the withdrawal of equipment, but suggested that option to his partner.[66]
[66]T 217
92 Mr Edey stated that his only discussion with Sure Constructions about non-payment of bills concerned the payment of $30,000 for sealing works at the end of the project. Sure Constructions never threatened him with pulling the equipment off the project.[67]
[67]T 262
93 I am unable to accept Mr Kluge’s evidence that he had a conversations with Mr Muir in which he threatened to remove the equipment from the site. I prefer Mr Muir’s evidence on this point. It remains possible that Mr Muir’s partner gave him some such message, but there is no evidence to enable me to make such a finding. The witnesses were giving evidence of conversations that occurred almost six years ago.
94 The fact that I am unable to accept Mr Kluge’s evidence on this issue is significant. Mr Kluge’s explanation of how he first came to pay amounts to Sure Constructions that he says should have been paid by Edey Bros depended to a significant degree on the conversation with Mr Muir.
95 Mr Kluge gave evidence that in late March or early April, Mr Edey rang him and told him that his accountant had suggested that Mr Kluge owed Mr Edey a contribution to the road construction costs that had occurred on his land.[68] The accountant had suggested that it would be more appropriate to split the costs associated with the construction according to the proportion of lots that each of them owned.
[68]T155
96 Mr Edey stated that from the commencement of the subdivision, the parties apportioned costs and expenses in a manner that attempted to be fair to both of them. Mr Edey said that he divided costs based on the number of lots that were in each part of the subdivision.[69]
[69]T249
97 Mr Kluge said that the road construction costs were not be allocated on a 51/49 per cent basis because Parts A, B and C were separate contracts.
98 Mr Edey gave evidence that he and Mr Kluge met on 14 March 2007 at Mr Kluge’s office and discussed the apportionment of the cost of the subdivision.[70]
[70]T251
99 Mr Kluge could not remember that meeting, although he did remember a telephone conversation that discussed such issues.[71] However, I accept Mr Edey’s evidence that it occurred. I considered his recollection of events to be more reliable.
[71]T150
100 Mr Edey said that, at the meeting, Mr Kluge produced a document marked “OVERVIEW HAZELWOOD RIDGE, EDEY/KIELEN”.[72] It had an annotation at the top of two columns headed “Kielen” and “Edey” of “59%/41%”. However, except in respect of electricity costs, the amounts recorded in it were not divided according to those percentages.
[72]CB79
101 Mr Edey said that those annotations were not on the document, when he first saw it. They were written on by Mr Kluge when “we agreed to it”,[73] ie, reached an agreement about the allocation of costs at the meeting.
[73]T253
102 Mr Edey told Mr Kluge that all expenses that related to Edey Terrace and Hazelwood Ridge should be divided on a 59/41 basis.[74] He said that he reached an agreement in those terms with Mr Kluge at the meeting on 14 March 2007.[75] He described his objective as follows:
“…I was trying to get Peter Kluge to have some input to the road coming from Edey Terrace - from Warren Terrace to Edey Terrace and back up to his block. It just seemed fair to me that 59.1 per cent should be put across the road construction and power.”[76]
[74]T254
[75]T254,300
[76]T 300
103 Mr Edey was unable to explain why Edey Bros alleged in its defence that the original agreement was that it would pay the costs of Part B and Kielen the costs of Part C. He said that the wording of that defence might be wrong, but that the parties had commenced with a 59/41 apportionment arrangement of the costs of Edey Terrace and Hazelwood Ridge.[77] The VCAT costs and water expenses were so apportioned.
[77]T283
104 Mr Kluge’s evidence was that the only costs that were split 59/41 were electrical design and supervision costs.[78]
[78]T159
105 Mr Edey said that it was an unfair that he paid for all of the road works of the road off Warren Terrace down to Hazelwood Terrace. He had granted Mr Kluge an easement to enable him to access his lots.
106 Mr Kluge prepared another document concerning the division of the subdivision expenses. It was dated 23 August 2007 and was headed “Hazelwood Ridge/Edey Terrace Road Construction Analysis”. It advanced three options or “payment analyses” for the road contract costs: on a 32.9% (Kielen) 67.1% (Edey) division, in accordance with a 40.9% (Kielen)/59.1% (Edey) division and on a 36.9% (Kielen)/63.1% (Edey) division. The 40.9%/50.9% option was described as the “Matthew Edey Based Adjustment.”[79]
[79]CB 116
107 Mr Edey said that he had not seen that document, prior to its production on discovery.[80]
[80]T 264
108 Also in evidence, was a sheet containing Mr Kluge’s calculations of the manner in which costs would be split on a per lot basis. However, little of significance in resolving the dispute between the parties can be drawn from that document.[81]
[81]EX 1, T134,141
109 Mr Kluge and Mr Edey exchanged letters about the costs issue. Mr Kluge sent a letter to Mr Edey with the heading “Final Settlement Hazelwood Estate”. Mr Kluge’s letter, which was headed “DRAFT” and stated in part:
“ Please find enclosed documents totalling $67,648.87 directly payable to Kielen Pty Ltd and $40,661.78 payable to Kluge Jackson Consultants. The only area of concern to the enclosure is the percentage adjustment to the construction of Hazelwood Ridge and Edey Terrace. We have had many discussions on the percentage and I am happy to discuss what your perception of percentage is to mine, but in any case the percentage was not all that different to alter the amount in a major way. I require percentage and settlement of the enclosures as I am under an amount of pressure to fix up Hazelwood Ridge accounts both from an accounting point of view and taxation point of view.”[82]
[82]CB 117
110 Mr Edey wrote letter of reply dated 21 August 2009.[83] He disputed claims that he owed Mr Kluge the sum of $100,000. The letter stated in part that:
[83]T264
“Regardless of this the percentages that I worked out 59.1% and the invoice you owe me of $31,155.45 show that I owe no money. Many of the invoices are inconsistent and incorrect I would have thought from our last discussion that you were going to work on the percentages you have simply sent me the same documentation that I have several copies of.
You did the work and you need to prove to me that all invoices are true and correct.
You may say I am stalling the fact remains I have paid you and project management team (Sub contractors) a lot of money over the years and in all cases the reconciliation has been poor and not accurate and work incomplete to this day.
It was most embarrassing when you were asking me for money when you owed me money at the same time.
I am sure there is an amicable situation to be achieved but we have not moved any further than you demanding money with limited accuracy in calculations or proper justification.
To say I owe $100,000 is clearly not the case and has never been the case after doing the research.”[84]
[84]CB 118A
111 Mr Kluge said that when he spoke to Mr Edey about the amounts that Edey Bros owed in respect of Sure Constructions’ costs, Mr Edey said that he owed him money for fencing. Mr Kluge thought an error had been made in the fencing bill, so he did not pay any money for it.[85]
[85]T 76
112 Mr Edey denied that Edey Bros had financial problems early in 2007.[86]
[86]T 262, 293 and 295
The parties’ submissions
113 Kielen relied on Edey Bros’ admission in its defence that the initial agreement was that Sure Construction’s costs were to be paid by Edey Bros in respect of Part B and by Kielen in respect of Part C.
114 Kielen then argued that the first agreement was never amended and still applied. Even if discussions between Mr Kluge and Mr Edey had occurred in the manner in which Mr Edey gave evidence, they fell short of establishing a binding agreement. There was no consideration to support any amendment to the first agreement.
115 If an apportionment agreement on the basis of 59/41 always existed, as Edey Bros contended, there would have been no need for Mr Kluge and Mr Edey to meet on 14 March 2007 to discuss the proportions in which each party would pay.
116 Kielen had not been obliged to pay the additional amounts. They exceeded the cost of Part C by $55,466.91. It would be unconscionable for Edey Bros to retain the benefit of those overpayments. It was money had and received. In addition, it was a payment for which the consideration had failed, as it was made in contemplation of the parties reaching a new or amended agreement about the division of costs. However, the parties never reached any other agreement. Kielen relied on the judgment of Deane J in Muschinski v Dodds[87] to support this part of its argument.
[87](1984) 160 CLR 583
117 Kielen argued in the alternative, that the additional amount of $55,461.64, was paid by the mistake that the parties would reach an agreement about the appropriate division of the expenses. However, they never reached an agreement and it would be unjust for Edey Bros to retain the benefit of the additional payment or payments.
118 In the further alternative, if a 59/41 apportionment agreement existed between the parties for all the subdivision expenses, Kielen claimed that any costs paid, that were not made on the basis of a 59/41 apportionment, would have to be recalculated with appropriate adjusting payments made to the parties.
119 Edey Bros submitted that Mr Kluge, in his letter of 23 August 2007, mapped out what he intended to do and could not retreat from paying costs on the basis of the 59/41 apportionment.
120 Kielen had not made a separate payment of $55,461.64 to Sure Constructions. That sum was a mathematical calculation based on the amount by which Kielen’s total payments exceeded the costs of Part C. Kielen had not demanded the repayment of the sum of $55,461.64.
121 Edey Bros submitted that Kielen had not paid it any money to it, or for it, in circumstances that required it to make restitution. Mr Kluge had apparently made payments for commercial reasons, while privately planning to argue that it was unjust that he should have had to do so.
122 The Sure Constructions’ tender was one contract accepted by Kluge Jackson as agent for Kielen and Edey Bros, and not two contracts, one for the Part B work and one for the Part C work of Stage 1. Mr Muir’s evidence was unaware of Kielen’s existence until after the development had commenced. The parties were jointly liable for the full amount of the contract sum. In those circumstances, Kielen should have been aware that Edey Bros would rely on the apportionment agreement. Mr Kluge had recorded the “59/41” apportionment as the “Matthew Edey adjustment” in his document of 23 August 2007.
123 The original tender from Sure Constructions on which Kluge Jackson sued had been varied with some variations decreasing, and some increasing, the contract price.
124 Edey Bros relied on the first version of Kielen’s pleading of the agreement concerning Sure Constructions’ costs, including the allegation that Edey Bros expressly requested that funds be advanced on its behalf. Mr Kluge had conceded that that was not correct.
125 Kielen had not brought a claim in contract for damages or for a debt under the agreement that it said that it had with Edey Bros.
126 Kielen had not established that it would be unconscionable for Edey Bros to retain the benefit of any payments that it made.
127 Kielen’s claim that there had been a total failure of consideration could not succeed, because its payments reduced a joint liability of the parties. Kielen received considerable benefit from having work performed on Edey Bros land, particularly as it obtained access to Kielen land from Warren Terrace, by a cheaper and more attractive alternative.
128 Kielen’s payment was a voluntary payment and could not be recovered.
Conclusion
129 In my opinion, Kielen’s claim that it would be unconscionable for Edey Bros to retain the benefit of a payment or payments, that comprise the sum of $55,466.91, has not been established.
130 Kielen has not established a claim for money had and received on any of the bases that it advanced. Nor has it established a claim in mistake.
131 It is important to bear in mind that Kielen’s claim is not made in contract seeking a debt or damages. There may well have been a difficulty bringing such a claim. The terms of any contract that bound Kielen and Edey Bros to pay Sure Constructions’ costs were not clearly identified by the evidence.
132 On one view, Mr Kluge and Edey Bros were joint venturers, but neither party expressly analysed the arrangement in those terms.
133 The Court must decide the case on the basis on which it is pleaded and cannot consider Kielen’s claim as made in contract. Thus, the fact that Edey Bros admitted in its defence that there was an initial agreement to divide costs with it paying Sure Constructions’ costs for Part B, would have been of particular relevance to a claim in contract.
134 Kielen’s claim was said to be based on unconscionable conduct. However, it really amounted to a claim for restitution based on Edey Bros being unjustly enriched. Kielen’s claim was not proved to come within the ambit of either of those doctrines.
135 Mr Kluge’s account of his reasons for making a payment of $80,000, which he considered to be the responsibility of Edey Bros, was not supported by Mr Muir’s evidence.
136 There has been no total failure of consideration based on the creation of an anticipated contract.
137 In Equuscorp Pty Ltd v Haxton, French CJ, Crennan and Kiefel JJ stated that:
“In David Securities Pty Ltd v Commonwealth Bank of Australia, this Court explained the part played by unjust enrichment in a claim for money had and received (in that case for recovery of a payment made under mistake of law). That explanation may be expressed, at a fairly high level of abstraction, as an approach to determining such claims. In summary:
·recovery depends upon enrichment of the defendant by reason of one or more recognised classes of ‘qualifying or vitiating factors’;
·the category of case must involve a qualifying or vitiating factor such as mistake, duress, illegality or failure of consideration by reason of which the enrichment of the defendant is treated by the law as unjust;
·unjust enrichment so identified gives rise to a prima facie obligation to make restitution;
·the prima facie liability can be displaced by circumstances which the law recognizes would make an order for restitution unjust.”[88]
[88](2012) 286 ALR 12 at [30]
138 Kielen has not proved any “qualifying or vitiating factor” affecting any payment that it made to Sure Constructions. Mr Kluge was not influenced by a mistake when Kielen made payments to Sure Constructions. Rather, Kielen made the payments with Mr Kluge anticipating that it might have to commence legal proceedings to recover them.
139 The alternative basis for the claim for money had and received, which was a total failure of consideration, has also not been established. The evidence does not show that the Mr Kluge and Mr Edey were involved in negotiations to create a new contract, when Kielen made any payment to Sure Constructions. Rather, Mr Kluge was well aware of Mr Edey’s view that expenses should be divided on the basis of the 59/41 apportionment.
140 Kielen has not established that Edey Bros engaged in unconscionable conduct in respect of the payments that Kielen made to Sure Constructions.
141 At the heart of Mr Kluge’s case, was the claim that Edey Bros had benefited from his payment of bills owing to Sure Constructions for which Edey Bros was responsible. The terms of the legal liability that Kielen and Edey Bros each had, collectively or individually, to Sure Constructions was not explored in evidence. The admission of Edey Bros in its defence was that it was “initially” liable for the costs associated with Part B and Kielen for Part C, forms part of a pleading that includes that there were a “series of agreements made between the parties”. The defence then proceeds to plead that there was a subsequent agreement that all expenses associated with road, drainage and related infrastructure would be borne by the parties in the proportions 40.9%/59.1%. Mr Edey’s oral evidence was to that effect.
142 When all the evidence of the commercial dealings between Mr Kluge and Mr Edey is considered, it is unclear which of them ended up in a more financially advantageous position.
143 The evidence does not establish why Mr Kluge made the payment of $123,718.01 that took the total of his payments to Sure Constructions over the amount required to pay the Part C costs. Mr Kluge’s evidence concentrated on the first payment of $80,000, but I am not persuaded of his account of how it came to be made.
144 Kielen has not established a claim for money had and received or in mistake. Nor has it identified any other ground based on unconscionable conduct on which it could rely to recover the sum of $55,461.64.
Proceeding CI-11-00635 – Kielen’s claim for a share of the SP Ausnet rebate
145 Kielen claims that it is entitled to payment from Edey Bros of $34,080.87, or 49.1% of the total rebate of $78,386, including GST, that Edey Bros received from SP Ausnet.
146 Kielen’s pleading of this claim is as follows. In or about September 2007, Edey Bros entered into an agreement with SP Ausnet for it to install the electricity infrastructure to enable the supply of electricity to 23 lots at the development. Edey Bros owned 13 of the lots and Kielen owned 10. Edey Bros says that the contract related to 22 lots and that Kielen owned 9 lots and it owned the remaining 13 lots. The difference in the number of lots is caused by whether lot 44 is claimed. It was a term of the agreement that Edey Bros would be entitled to an infrastructure rebate of $78,386.00. Kielen and Edey Bros agreed that the infrastructure rebate would be apportioned between them on the basis of the number of their lots to which the electricity infrastructure, installed by SP Ausnet, enabled the supply of electricity. Edey Bros received the sum of $78,386.00 as a rebate from SP Ausnet, but has failed to pay to Kielen its portion of the rebate, which amounts to $34,080.87, including GST.
147 During the trial, I gave Kielen leave to plead an claim for a share of the rebate in the following terms. Kielen and Edey Bros would join together to install the electricity infrastructure for lots 22 to 43 at the development and the costs would be borne by the parties in proportion to their ownership of the lots, ie 40.9% for Kielen and 59.1% for Edey Bros. Edey Bros would enter into a contract with SP Ausnet for the connection of the installed electricity infrastructure to the electricity supply grid and claim an infrastructure rebate.
148 Kielen alleges that there was an implied term that the infrastructure rebate that would be paid by SP Ausnet would be divided between the parties in accordance with their respective ownership of lots 22 to 43, namely 10 parts out of 23 for Kielen and 13 parts out of 23 for Edey Bros. Kielen claims the sum of $34,080.87, including GST, of the infrastructure rebate on that basis. The term was said to be implied in law. Edey Bros denied that any such term was implied.
149 Edey Bros admits that the costs of the installation of electricity for lots 22 to 43 at the development would be borne by the parties in proportion to their respective ownership of the lots, namely 40.9% for Kielen and 59.1% for Edey Bros. That agreement was part of the general apportionment agreement that Edey Bros says applied to all expenses of the development.
150 The installation of the electricity supply to the lots required the erection of power poles and the installation of underground cabling. SP AusNet, which was the electricity supply company, offered a scheme under which it would pay a rebate, if it considered that it could make a profit from the supply of electricity as a result of the installation.[89]
[89]T 277
151 Mr Kluge suggested that Kielen and Edey Bros arrange one design contract for the supply of electricity to the lots, as they would thereby save themselves $10,000 of the costs of having separate contracts. Edey Bros was named as the contracting party, but the contract was to install infrastructure in respect of lots owned by each of them.
152 Both parties agreed that the break-up of costs was to be on a 59/41 basis. The electrical infrastructure was installed by Prima Weld at a cost of $159,703.80, which the parties paid in the 59/41 proportions.[90]
[90]T 89
153 The schedule to the contract with SP Ausnet was in evidence.[91] It recorded the date of the contract as 10 September 2007. It named Edey Bros as the developer. It noted that there were 23 lots in the subdivision. It provided for an infrastructure rebate of $71,260, plus GST of $7,126 equalling $78,386. The remainder of the contract was not in evidence.
[91]T183 and CB 119
154 Mr Kluge’s evidence was that he received the rebate cheque made out to Edey Bros. He contacted Mr Rod Smith of SP Ausnet, who he said told him that he was entitled to $30,982 of the $71,260. Mr Smith was not called as a witness.
155 Mr Kluge said that he told Mr Edey that he would give him the cheque if he received a cheque for $31,289 in return.[92]
[92]T103, 187
156 He rang SP Ausnet and they told him that a second cheque had been made out and the cheque sent to Mr Kluge had been cancelled. Mr Kluge said that he gave the original cheque to his solicitor, but it could not be located in order to be produced at trial.
157 Mr Kluge considered that his share of the money had been stolen by Mr Edey and he stopped communicating with him.[93]
[93]T 106
158 It was put to Mr Kluge in cross-examination that his evidence about the cheque was wrong and that, in fact, he was describing a problem with a cheque from Gippsland Water, which had been sent to Mr Hart on behalf of Kluge Jackson.[94] Mr Kluge did not agree that his memory was mistaken on that point.
[94]T 190
159 Mr Edey gave evidence that he was unaware of the rebate scheme until about September 2007,[95] when he received a rebate cheque from SP Ausnet in respect of the infrastructure that was installed at O’Donnell Court. The cheque was for $71,260.00 plus GST of $7,126.00, totalling $78,386.00.[96] Edey Bros banked that cheque.
[95]T 276
[96]T 276
160 Mr Kluge said that there was no discussions about dividing up the rebate cheque, because they would have been unnecessary. It was a joint project and everything was done on a per block basis.[97]
[97]T103
161 Edey Bros denied that there was any agreement to divide any rebate that was received from SP Ausnet. Mr Edey said the agreement about splitting the electricity costs had been reached at the meeting of 14 March 2007. However, there was no discussion about any rebate that might be paid.
162 At one point in his evidence in cross-examination, Mr Edey was asked why he had not given Kielen a share of the rebate cheque. He gave the following answers on that issue:
“ Q. So you agree that Kielen is entitled to a portion of that amount, but you say Edey Bros is entitled to keep it as an offset against other monies that are owed to it by Kielen Pty Ltd?
A. Yes, I think that would be a fair assumption.
Q. Never any discussion between you and Kielen Pty Ltd, that Edey Bros was to retain the entire amount of $71,260 plus GST, which was the infrastructure rebate?
A. No.”[98]
[98]T345
The parties’ submissions about the rebate
163 Kielen claims that there was an agreement reached that the parties would join to install the electricity infrastructure to service lots 22-43. The costs would be borne by the parties in proportion to their ownership of those lots, namely 40.9% for Kielen and 59.1% for Edey Bros.
164 Kielen pleaded that there was an oral agreement that the rebate would be apportioned between them on the basis of the number of lots each owned to which electricity was supplied.[99] It also pleaded, pursuant to the amendment, that there was an implied term in the agreement that the rebate would be divided between Kielen and Edey Bros on the basis of the number of lots that each of them owned to which the electricity supply was connected.
[99]CB 37C-4
165 Edey Bros argues that it is entitled to retain the whole of the rebate. Kielen did not prove the terms of the contract or arrangement under which SP Ausnet paid the rebate. It was improbable that Mr Kluge would have agreed to an apportionment based on the number of lots that each party owned. At the time the parties agreed to obtain the electricity supply to the lots there was no certainty that a rebate would be obtained. The locations of the infrastructure made a simple lot based apportionment inappropriate. It was unclear whether the apportionment should be on 22 lots, 23 lots or on a 80%/20% division because of the location of the power poles.
166 Different features of the development had benefited one side, rather than the other. This was another instance of the “swings and roundabouts” of the development. There was no basis for implying the term relied on.
Conclusion
167 The parties did agreed to arrange for the supply of electricity to the 23 lots. They agreed to divide the cost of that project on a 59(Edey Bros)/41 (Kielen) basis in accordance with the number of lots that each of them owned.
168 They did not discuss who would be entitled to any rebate and there was no express agreement about that question. It is not crucial that the whole of the contract is not in evidence. The Schedule gives an overview of the project. It in fact records that there will be a rebate of $71,260, plus GST. Edey Bros was named as the developer in order to save the parties costs. But its postal address was given as c/- Kluge Jackson.
169 Mr Edey’s letter of 21 August 2009, from which I have quoted above, contains a paragraph concerning the rebate and appears to suggest that poor planning cost the parties a rebate for Stage 1.[100] However, the parties did not make submissions about the possible significance of that letter to this issue.
[100]CB 118A
170 Kielen’s pleading of the implied term alleges that the implication was by law. I take that as relying on the legal principles as to when a term will be implied in a contract. The conditions that must be satisfied to imply a term into a contract are set out in BP Refinery (Westernport) Pty Ltd v Shire of Hastings[101]as follows:
“ In their view, for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that ‘it goes without saying’; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.”
[101](1977) 180 CLR 266 at 283
171 I consider that each of these requirements is satisfied and that there was an implied term of the contract between Kielen and Edey Bros by which they arranged for the supply of electricity entitling Kielen to receive from Edey Bros a proportionate part of the rebate.
172 The application of the conditions for the implication of a term, that are set out in the BP Refinery Case, must occur against the background of the parties’ commercial dealings. This includes that electrical infrastructure expenses were to be divided in the proportions 59/41. The rebate was recorded in the contract Schedule as part of the details of the supply contract with SP Ausnet.
173 The ordinary meaning of the word rebate is the return of part of an original amount paid for some service. (The Macquarie Dictionary).
174 It is clear enough from the description of the work that was contained in the schedule, that the rebate was paid because of the installation of the electricity infrastructure. Mr Kluge gave evidence based on his previous experience of many developments of the circumstances in which rebates are paid.[102] It seems clear enough that SP Ausnet paid a rebate as a result of the parties paying for the infrastructure necessary for the electricity supply to occur. They shared in the payment of those expenses and the rebate returns a payment in recognition of their expenses.
[102]T98
175 Mr Edey came close to giving express acceptance of Kielen’s entitlement to a share of the rebate in the evidence that I have set out.
176 It is not a reason to refuse to imply the term that Kielen relies on, that in some other areas of dispute, Mr Kluge contended that there should be a lot based apportionment.
177 In view of the basis of the parties’ electricity arrangement, the implication of the term concerning the division of the rebate on which Kielen relies was reasonable and equitable. It was necessary to give business efficacy to the contract, because the parties had not dealt with the eventuality of a rebate being paid. In the context of the dealings between the parties, it was so obvious as to go without saying and it was capable of clear expression. It does not contradict any express term of the contract.
178 It is not critical that there no direct evidence of how SP Ausnet calculated the rebate. The parties shared the cost of enabling the supply to occur. The project therefore became eligible for the rebate. The implication of a term that they should share the rebate satisfies all the conditions described in the BP Refinery Case.
179 The Schedule records that were 23 lots involved in the subdivision for the purposes of the electricity supply. The rebate should be divided on the basis of the ownership of 23 lots.
180 The question then is whether the 59/41 formula should divide the rebate or whether the ownership of the 23 lots should be used to determine the entitlement to share in the rebate. That approach results in Edey Bros being entitled to 56.5% of the rebate (13 lots) and Kielen being entitled to 43.5% of the rebate (10 Lots). I consider that the term implied should contain a division based on the 59/41 formula. That is how the electricity infrastructure expenses were paid.
181 The Court is not bound by exact form in which the term sought to be implied is pleaded, but can formulate it with at least some modifications to reflect the evidence. The conclusion that I have reached results in Kielen being entitled to the sum of $32,059.87.
Conclusion
182 Kielen is entitled to judgment against Edey Bros in the sum of $32,059.87.
0
3
0