Marisha Nominees Pty Ltd v Daw - [2019] SASC 77

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
MARISHA NOMINEES PTY LTD & ANOR v DAW
[2019] SASC 77
Judgment of The Honourable Justice Lovell
21 May 2019
MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT - PROCEDURE - SERVICE OF NOTICE
EQUITY - GENERAL PRINCIPLES - EQUITABLE DEFENCES - LACHES AND DELAY - EFFECT AND AVAILABILITY AS A DEFENCE
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - REMUNERATION - RECOVERY ON QUANTUM MERUIT
LIMITATION OF ACTIONS - CONTRACTS, TORTS AND PERSONAL ACTIONS - WHEN TIME BEGINS TO RUN
The appellants sued the respondent for breach of contract or, in the alternative, on a quantum meruit basis for the sum of $40,000. The Magistrate found that as the first appellant was not licenced under section 6(2) of the Building Work Contractors Act 1995 (SA) they could not sue the respondent under the agreement. Further, the Magistrate found that the alternative claim in quantum meruit was brought out of time and therefore statute barred.
Whether a claim in quantum meruit is a claim in equity - whether the Magistrate erred in applying section 35 of the Limitations of Actions Act to quantum meruit claims – whether the Magistrate erred in finding equity would follow the law and apply a six year limitation period to a claim in restitution by analogy
Held, dismissing the appeal:
1. Quantum meruit is not a claim in equity.
2. The Magistrate did not err in finding that section 35 of the Limitations of Actions Act 1936 (SA) applied to quantum meruit claims.
3. The Magistrate did not err in finding it would be appropriate to apply the statutory limitation by analogy under section 35 of the Limitations of Actions Act 1936 (SA) if the cause of action was one in equity.
Limitations of Actions Act 1936 (SA) ss 35, 38; Building Work Contractors Act 1995 (SA) s 6, referred to.
Shiu Shing Sze Tu v Lowe [2014] NSWCA 462; Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; Coshott v Lenin [2007] NSWCA 153; The Duke Group Ltd (In Liq) v Alamain Investments Ltd [2003] SASC 415; Barker v Duke Group Ltd (In Liq) (2005) 91 SASR 167; Gerace v Auzhair Supplies Pty Ltd (2014) 87 NSWLR 435; Beamer Pty Ltd v Star Lodge Supported Residential Services Pty Ltd [2005] VSC 236, considered.

MARISHA NOMINEES PTY LTD & ANOR v DAW
[2019] SASC 77
LOVELL J:
Overview

The second appellant Mr Antoniadis, a director of the first appellant, entered into an oral agreement with Mr Daw, the respondent, for renovations to be carried out at Mr Daw’s premises. Eventually a dispute arose about the works and the respondent refused to make further payments. The appellants sued for breach of contract or, in the alternative, on a quantum meruit basis for the sum of $40,000. The matter proceeded to trial in the Adelaide Magistrates Court.
The Magistrate found that, although the renovations were carried out by Mr Antoniadis, the first appellant, Marisha Nominees Pty Ltd, received and paid invoices, acquitted payments and issued the final invoice in June 2009. Mr Antoniadis held the appropriate builders licence but Marisha Nominees Pty Ltd did not. The Magistrate found that, when entering into the contract, Mr Antoniadis acted in his capacity as a director of Marisha Nominees Pty Ltd and that Marisha Nominees Pty Ltd carried on the business of performing the building work, supervised by Mr Antoniadis, for Mr Daw. The company was not licenced and section 6(2) of the Building Work Contractors Act 1995 (SA) prevented Marisha Nominees Pty Ltd from suing Mr Daw under the agreement. There is no appeal from these findings of the Magistrate.
The Magistrate also found that the alternative claim in quantum meruit was brought “out of time” and therefore statute barred. The appellants appeal the decision that the claim in quantum meruit was statute barred.
The facts
The second appellant (‘Mr Antoniadis’) and his wife are the directors and shareholders of the first appellant (‘Marisha Nominees’). Mr Antoniadis is the Executive Director of Marisha Nominees. At the relevant time, Mr Antoniadis held a building work contractors licence but Marisha Nominees did not.
In 2005 Mr Antoniadis and the respondent (‘Mr Daw’) entered into an oral agreement for Mr Antoniadis to carry out building work on Mr Daw’s property (‘the property’). It was agreed that Mr Antoniadis would renovate the property on the basis of “cost plus 20 per cent”. Work commenced on the property on 1 April 2005 with Mr Antoniadis supervising the works. Marisha Nominees received and paid invoices. Mr Daw made several payments for work done on the property between April and October 2005.
Towards the end of 2005 Mr Daw asked Mr Antoniadis to slow down with the renovation because he was having financial problems. In November 2006 Mr Daw informed Mr Antoniadis that he did not want the renovations to continue and asked Mr Antoniadis to issue the final invoices. Mr Daw and Mr Antoniadis had ongoing negotiations in relation to payment, with the final invoice in the sum of $41,060.36 being provided to Mr Daw by Marisha Nominees on 2 June 2009. This invoice was never paid and so Mr Antoniadis and Marisha Nominees sought damages in the Magistrates Court in the sum of $40,000 for breach of contract or, alternatively, on a quantum meruit basis.
Before the Magistrate Mr Daw contended that the building contract was between him and Marisha Nominees and, as Marisha Nominees did not have a building work contractors licence at the relevant time, it was not entitled to claim in contract. Mr Daw also contended that both the claim in contract and the quantum meruit claim were filed out of time.
The contract claim was filed on 22 December 2012. On 17 May 2016 the Court received a draft amendment that Marisha Nominees proposed to make to the claim. On 28 March 2017, the claim was amended to include the quantum meruit claim (‘the amendment’).
At the time that the appellants sought to amend and add the quantum meruit claim, Mr Daw submitted that the amendment should take effect from the date of the application to amend, and the parties agreed that the argument as to the amendment would be conducted at the time of trial.
At trial the Magistrate accepted that the amendment, being based on substantially the same facts as the original claim, would relate back to the commencement of the original action, namely 22 December 2012.
The Magistrate then determined the date on which the cause of action in quantum meruit arose. The Magistrate concluded that for a claim in quantum meruit, time runs from when the defendant received the benefit that gave rise to the obligation to make restitution. On the facts, the Magistrate decided that the building work, the subject of the claim, had finished by 30 July 2006. The appellants had furnished all invoices to Mr Daw by 27 November 2006, at which time the parties engaged in negotiations about payment of the invoices. Those negotiations concluded in June 2009 when a final invoice was rendered. The Magistrate rejected the submission of the appellants that time ran from June 2009. The Magistrate found that the limitation period ran from 30 July 2006, the time at which the respondent had received and accepted the benefit of the building work. There is no appeal from these findings of the Magistrate.
The limitation period pursuant to section 35(a)[1] of the Limitations of Actions Act 1936 (SA) (‘LAA’) being six years meant the claim was out of time and therefore statute barred.
[1] The time limit pursuant to section 38 is the same.
Grounds of Appeal
The factual findings of the Magistrate are not challenged on appeal. The appeal grounds are limited to challenging the dismissal of the claim as being statute barred. The appellant relied on three grounds of appeal.
1The Learned Magistrate erred in law and/or fact insofar as she found that section 35 of the LAA applied to quantum meruit claims and thereby determined that the Plaintiffs’ claim be dismissed.
2The Learned Magistrate erred in law and/or fact insofar as she found, in the alternative, that if section 35 of the LAA did not apply, that equity would follow the law and apply a six year limitation period to a claim in restitution by analogy.
3The Learned Magistrate erred in that she failed to conclude either:
a.That the defence of laches ought to have been the only basis upon which the issue of any time bar was determined, and that such a defence was not made good on the facts of the case; or
b.That the justice of the case required that section 35 of the LAA not be applied by analogy, in the Court’s discretion, which discretion, by way of further error, the Magistrate failed to consider and exercise properly or at all.
Mr Daw filed a notice of alternative contentions whereby he contended that the Magistrate’s decision ought to be upheld for the reasons given by her and further, because:
1The Magistrate correctly found that a claim on a quantum meruit is made on restitutionary grounds.
2The Magistrate erred in law in finding that section 38(1) of the LAA applied only to actions “…for the recovery of money paid…”.
3The Magistrate should have found that section 38(1) of the LAA was of direct application to claims “…otherwise based on restitutionary grounds…”.
4The Magistrate should therefore have dismissed the action pursuant to section 38(1) of the LAA on the ground that the action was not commenced within six years after the cause of action accrued.
Ground 3(a)
It is convenient to deal with this ground of appeal first.
As acknowledged by Mr Heuzenroeder, counsel for the appellants, this ground is nuanced. By suggesting that the defence of laches was the only basis upon which the time bar point should have been decided camouflages the point being made. I do not suggest there is anything sinister in the way the ground is expressed. However, for the defence of laches to be relevant, a quantum meruit claim must be a claim in equity. The equitable defence of laches is confined to equitable claims which are not subject to a statutory bar, either expressly or by analogy.[2] The error alleged is that the Magistrate failed to consider that a claim in quantum meruit is a claim based in equity.
[2] Shiu Shing Sze Tu v Lowe [2014] NSWCA 462 [414].
It was accepted that this argument was not agitated before the Magistrate. The case argued before the Magistrate was that a claim in quantum meruit was a common law claim. The question of the defence of laches was simply not mentioned by the appellants at trial.
To support his argument that a cause of action based on quantum meruit is a claim in equity, Mr Heuzenroeder relied upon a number of 18^th and 19^th century English decisions. Mr Heuzenroeder, relying on authorities to establish that there existed in earlier times an equitable jurisdiction in quantum meruit, argued that the equitable jurisdiction had survived to today. I do not need to analyse the argument of Mr Heuzenroeder in any detail as I consider the argument is contrary to High Court authority. In Pavey & Matthews Pty Ltd v Paul,[3] Deane J (with whom Mason and Wilson JJ agreed) concluded that an action on a quantum meruit basis rests not on implied contract but on a claim to restitution or unjust enrichment arising from a party’s acceptance of the benefits accruing to him from another person’s performance of an unenforceable contract. Their analysis of quantum meruit makes it clear that they classed the action as one based on common law principles, not a claim in equity. I reject this ground of appeal.
[3] (1987) 162 CLR 221.
In those circumstances it is strictly unnecessary to consider Ground 3(b). I deal with it briefly later in these reasons.
Ground 1
The appellants challenge the Magistrate’s finding that section 35(a) of the LAA applies to quantum meruit claims. The respondent, at trial, did not seek to argue that section 35(a) applied. Rather he argued at trial that section 38 of the LAA applied, not section 35(a). Before me, the respondent maintained that argument by way of a Notice of Alternate Contentions. I deal with that argument later in these reasons.
Relevantly section 35 states:
Actions on simple contract and in tort
The following actions namely:
(a)actions founded upon any simple contract express or implied, or upon any award where the submission is not by specialty;
...
shall, save as otherwise provided in this Act, be commenced within six years next after the cause of action accrued and not after.
The appellants submitted that as the High Court in Pavey[4] had concluded that an action on a quantum meruit basis rests not on implied contract but on a claim to restitution or one based on unjust enrichment, section 35(a) had no application as it applied only to contracts express or implied.
[4] Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221.
I do not accept that argument. It is true that in Pavey[5] their Honours did not accept that “implied contract” was an accurate description of the doctrinal basis for a quantum meruit claim. However, it does not necessarily follow from this that the reference in section 35(a) of the LAA was not intended to be, or at least include, reference to quantum meruit claims. To the contrary, and particularly bearing in mind that section 35(a) was drafted at a time when quantum meruit claims were routinely described as claims in quasi contract or implied contract, I consider that the legislative reference to an action founded upon an “implied contract” was intended to include reference to quantum meruit claims. To put that another way, while “implied contract” is an inaccurate descriptor of the doctrinal basis for a quantum meruit claim it is nevertheless apt as a legislative reference to such claims.
[5] Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221.
This is consistent with the approach adopted by Mason P in Coshott v Lenin.[6] The equivalent NSW legislation referred to a “cause of action founded on contract (including quasi contract)”. Mason P observed:[7]
Quasi contract was the legal category of reference in 1969 for claims to remuneration litigated at common law that were not based on contract. Pleaders used the common money count for work done, known by the Latin tag of quantum meruit. In Pavey, the High Court held that the quasi-contractual right to recover on a quantum meruit did not depend on the existence of an implied contract but on a claim to restitution or one based on unjust enrichment. The Court was at pains, however, to stress that (in Deane J's words at 256-7) unjust enrichment is a "unifying legal concept which explains why the law recognises, in a variety of distinct categories of case, an obligation on the part of a defendant to make a fair and just restitution for a benefit derived at the expense of a plaintiff".
This explanation of the principles underpinning quantum meruit and other recognised causes of action in restitution did not mean that "quasi-contract" ceased to exist as a legal category in the context of the Limitation Act. That Act continues to speak according to its plain intent to claims, however labelled or packaged, and whatever general principles may be perceived to underpin them, which depend on the well established common law cause of action stemming from quantum meruit. Whether or not it is now passe to use the old language of quasi-contract and whether or not there now exist causes of action "in" unjust enrichment has no bearing on the matter because "a sovereign legislature is not bound to respect legal orthodoxy" (Sharpe v Goodhew (1990) 33 IR 238 at 243 per Pincus J).
[6] [2007] NSWCA 153; see also Gott (t/a Aplro Welding Fabricators) v Commonwealth [2000] TASSC 86.
[7] Coshott v Lenin [2007] NSWCA 153 [15]-[16].
In my view, the Magistrate was correct in concluding that section 35(a) of the LAA applies to quantum meruit claims. I would dismiss this ground of appeal.
As mentioned the respondent maintained, by Notice of Alternate Contentions, that section 38 applies not section 35(a). While it is strictly not necessary for me to consider this aspect given my conclusion in relation to section 35(a), I add the following remarks.
Relevantly section 38 states:
Limitation on actions for recovery of money
(1) Subject to subsection (2), an action for the recovery of money paid under a mistake (either of law or of fact) or otherwise based on restitutionary grounds must be commenced—
(a)if the cause of action arose on or after the commencement of this section—within 6 years after the cause of action arose; or
(Underlining added)
As stated earlier in Pavey & Matthews Pty Ltd v Paul,[8] Deane J (with whom Mason and Wilson JJ agreed) concluded that an action on a quantum meruit basis rests not on implied contract but on a claim to restitution or one based on unjust enrichment. The respondent argued that as quantum meruit is a claim based in restitution section 38 applies. The respondent submitted that the word “otherwise” in the section makes it plain that the section is intended to be a provision applying to all restitutionary grounds. This would lead to the conclusion that both section 35(a) and section 38 applied to quantum meruit claims. While that is an unusual conclusion it is not a disqualifying feature.
[8] (1987) 162 CLR 221.
The Magistrate rejected that argument. She considered that the expression “otherwise based on restitutionary grounds” took its meaning from the subject of the sentence “an action for the recovery of money paid under a mistake”. To put that another way, as a claim in quantum meruit is not “an action for the recovery of money paid under a mistake”, section 38 had no application.
The Magistrate relied on the remarks of Doyle CJ in The Duke Group Ltd (In Liq) v Alamain Investments Ltd[9] where he considered the interpretation of section 38. Doyle CJ stated:[10]
The present claim is a claim based on the defendants’ participation in a breach of fiduciary duty by the directors of KO. But neither claim gives rise to a claim “for the recovery of money paid”. The breach of duty by the directors on which the present claim is based gives rise to a claim for equitable compensation or equitable damages for breach of that duty, as does the claim against the present defendants. Taking the words of s 38(1) in their natural ordinary meaning, this is not the type of case to which they refer. It is not a claim for the recovery of money paid. It is a claim for compensation for the loss suffered by KO as a result of the takeover.
(Underlining added)
[9] [2003] SASC 415.
[10] The Duke Group Ltd (In Liq) v Alamain Investments Ltd [2003] SASC 415 [103].
His Honour’s conclusion on the interpretation of section 38 was not challenged when that matter went on appeal.[11]
[11] Barker v Duke Group Ltd(In Liq) (2005) 91 SASR 167 [68].
Before me, the respondent sought to distinguish The Duke Group[12] decision on the basis that the matter before Doyle CJ was an application for a “strike out”. I do not consider that to be a distinguishing feature. Doyle CJ was clear that section 38 did not apply. However, the action before him was neither a “claim for money paid” nor a restitutionary claim, and therefore section 38 could have no application. Doyle CJ did not necessarily decide the meaning of the expression “or otherwise on restitutionary grounds”. The precise meaning of “or otherwise” did not arise in that case.
[12] The Duke Group Ltd (In Liq) v Alamain Investments Ltd [2003] SASC 415.
The respondent restricted his argument to the meaning of “otherwise” not “or otherwise”. “Or otherwise”, in its natural and ordinary meaning, is used to refer to the opposite of the words that come immediately before it. That is, the conjunction “or” links “otherwise” to the phrase “mistake (either of fact or law)”, not to an “action for the recovery of money paid”. This is, in effect, the argument accepted by the Magistrate.

The matter is unclear and was not fully argued before me. It is unnecessary for me to determine the question and I decline to do so. It is an issue which requires further argument.
My conclusion that section 35(a) of the LAA applies leads to the dismissal of the entire appeal. However, in the event that this conclusion is in error and the LAA does not apply, I will consider whether a time limit by analogy should apply.
Ground 2 (time limit by analogy)
This issue can only arise if a claim in quantum meruit, contrary to my earlier conclusion, is an equitable one.
A court exercising equitable jurisdiction, where no statutory limitation applies to the equitable right, may apply a statutory limitation by analogy to the grant of an equitable remedy. This reflects the principle that equity follows the law. Application of this principle is limited to cases where there is a sufficiently close similarity between the equitable right in question and the legal right to which the statutory provision applies.
A court of equity will not apply a statutory period of limitation by analogy if in the circumstances of the case it would be unjust to do so.[13]
[13] Barker v Duke Group Ltd(In Liq) (2005) 91 SASR 167.
In applying these principles, the NSW Court of Appeal in Gerace v Auzhair Supplies Pty Ltd[14] stated:
The authorities referred to above, and in particular R v McNeil, show that in purely equitable proceedings, where there is a corresponding remedy at law in respect of the same matter and that remedy is the subject of a statutory bar, equity will apply the bar by analogy unless there exists a ground which justifies its not doing so because reliance by the defendant on the statute would in the circumstances be unconscionable. They do not support the proposition that equity retains any broader discretion whether to apply the bar. The description of such a ground, or the conduct giving rise to or constituting it, as unconscionable or unconscientious leaves to be identified the principles according to which equity justifies that conclusion: Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63; (2001) 208 CLR 199 at [45] per Gleeson CJ and Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd [2003] HCA 18; (2003) 214 CLR 51 at [41]–[42] per Gummow and Hayne JJ.
[14] [2014] NSWCA 181 [70].
Here, the claim in quantum meruit deals with the same subject matter as the contract. The relationship between the parties is the same. The basis for damages is different but often the contract sum can be used as an indicator of an appropriate measure of damages in a claim in quantum meruit.
The Magistrate considered that the analogy was sufficiently strong that it should apply, subject to consideration of whether it would be unjust to do so. The delay here was not the responsibility of the respondent. There was no suggestion of fraud or that the respondent behaved unconscionably. Also, as the respondent submitted, to not apply the statutory bar by analogy would lead to an odd result. A builder, who had the appropriate license, would be caught by the statutory bar but a builder, who had not obtained the appropriate licence, would not be.
Having considered the evidence in the case the Magistrate considered it would not be unjust to do so. No error has been demonstrated in her approach. In any event, in my view, the Magistrate was correct in her conclusion.
In my view, it would be appropriate to apply the statutory limitation under section 35(a) if the cause of action was one in equity. I would dismiss the appeal on this ground.
Ground 3(b)
It is appropriate to consider, briefly Ground 3(b).
The application of the doctrine of laches, on my conclusions, does not arise. However, I make the following observations.
The doctrine of laches enlivens a discretion to refuse relief on equitable claims “in any circumstances where the plaintiff’s delay would make it unjust to grant the relief which he seeks”[15]. In Beamer Pty Ltd v Star Lodge Supported Residential Services Pty Ltd Hollingworth J observed that:[16]
The equitable doctrine of laches provides a defence to an equitable claim if the defendant can demonstrate that the plaintiff, by delaying the institution or prosecution of its case, has either acquiesced in the defendant's conduct, caused the defendant to alter its position in reasonable reliance on the plaintiff's acceptance of the status quo, or otherwise permitted a situation to arise which it would be unjust to disturb. Mere delay, of itself, is not enough to constitute either laches or acquiescence.
(Footnotes omitted)
[15] Meagher, Gummow and Lehane, Equity: Doctrines & Remedies (Butterworths, Third ed, 1992) 800.
[16] [2005] VSC 236 at [469].
The parties did not consider at trial that the doctrine of laches was applicable. The factors to be considered in the exercise of this discretion are not identical to the factors considered by the court when deciding the question of limitation by analogy. The evidence may well be incomplete.
If the doctrine of laches is applicable, contrary to my earlier conclusion, the matter would need to be remitted to the Magistrates Court for further evidence to be given and considered.
Order
The appeal is dismissed.