OnQ Management Pty Ltd v Hall (No 2)
[2007] WADC 214
•14 DECEMBER 2007
ONQ MANAGEMENT PTY LTD -v- HALL (No 2) [2007] WADC 214
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2007] WADC 214 | |
| Case No: | CIV:719/2005 | 2 AUGUST 2007 | |
| Coram: | MCCANN DCJ | 13/12/07 | |
| PERTH | |||
| 12 | Judgment Part: | 1 of 1 | |
| Result: | $7,000 awarded | ||
| PDF Version |
| Parties: | ONQ MANAGEMENT PTY LTD GRIFF EGAN HALL |
Catchwords: | Contract Unjust enrichment or quantum meruit claim Whether defendant is entitled to compensation Assessment of compensation |
Legislation: | Nil |
Case References: | Brenner v First Artists' Management Pty Ltd [1993] 2 VR 221 Independent Grocers Co-operative Ltd v Noble Lowndes Superannuation Consultants Ltd (1993) 60 SASR 525 Pavey and Matthews Pty Ltd v Paul (1987) 162 CLR 221 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
GRIFF EGAN HALL
Defendant
Catchwords:
Contract - Unjust enrichment or quantum meruit claim - Whether defendant is entitled to compensation - Assessment of compensation
Legislation:
Nil
Result:
$7,000 awarded
(Page 2)
Representation:
Counsel:
Plaintiff : Mr S K Shepherd
Defendant : Mr A J Lloyd
Solicitors:
Plaintiff : Lavan Legal
Defendant : A J Lloyd
Case(s) referred to in judgment(s):
Brenner v First Artists' Management Pty Ltd [1993] 2 VR 221
Independent Grocers Co-operative Ltd v Noble Lowndes Superannuation Consultants Ltd (1993) 60 SASR 525
Pavey and Matthews Pty Ltd v Paul (1987) 162 CLR 221
(Page 3)
1 MCCANN DCJ: On 25 May 2007 I delivered reasons for decision in this matter in which I held that:
(i) In or about early November 2002 Mr Robert Roget and Mr Lewis Cross ("Roget and Cross") on the one hand, and the defendant on the other, entered into an agreement ("the agreement") of principal and agent whereby the defendant agreed to purchase quantities of native timber logs on behalf of Roget and Cross. (Reasons [74]).
(ii) Material terms of the agency agreement included that the defendant would purchase, store and sell native timber with funds provided by Roget and Cross for which he would receive a commission calculated at the rate of 20 per cent of their net profit. It was not originally agreed that any of the timber acquired on behalf of Roget and Cross would be processed (ie, milled). (Reasons [75] – [78]).
(iii) The defendant set about performing the agreement and purchased various quantities of native timber logs and slabs with funds provided by Roget and Cross (Reasons [80]).
(iv) With the agreement of Roget and Cross the defendant and his father carried out the milling of a large quantity of the timber in January, February and March 2003. However, there was no express agreement between the parties as to the remuneration of the defendant and his father for this work, or in relation to the reimbursement of their expenses (Reasons [76] – [77], [100]). The defendant and Mr Cross discussed this subject on at least one occasion whilst the milling was taking place and Mr Cross accepted that it was reasonable for the defendant to be paid.
(v) In or about early 2003 the plaintiff acquired the interests of Roget and Cross, with the eventual consent of the defendant, and thereupon the agency agreement continued between the plaintiff and the defendant.
2 In the light of these findings I dismissed the defendant's contractual claim for payment of the sum of $15,549 for services rendered in connection with the milling. However, on 2 August 2007 I gave the defendant leave to amend his counterclaim to plead a claim based on the doctrine of quantum meruit, on the basis that the claim be determined on the evidence led at trial. The parties subsequently filed amended pleadings and written submissions and have agreed that the claim can be determined on the papers.
(Page 4)
The amended pleadings
3 By his amended counterclaim the defendant pleads that:
(i) Between 20 January 2003 and 31 March 2003 he and his father milled not less than 55 cubic metres of the plaintiff's jarrah timber into slabs.
(ii) In doing so the defendant and his father each worked 304 hours, that he procured the use of a forklift for five weeks, and that he travelled between Bridgetown and Myalup and return (a total of 200 kilometres per day) for 38 days.
(iii) Mr Cross was aware of the abovementioned work, accepted the benefit thereof on behalf of Roget and Cross and told the defendant that it was reasonable for him to be paid for the work.
(iv) The plaintiff has been unjustly enriched by the work and services provided or procured by the defendant and accordingly he is entitled to reasonable compensation, namely $30 per hour for each of himself and his father, $50 per day for travel and $250 per week for the use of the forklift.
4 The plaintiff has simply traversed the defendant's pleading. In its written submissions the plaintiff has further contended that the defendant's quantum meruit or restitution claim is not made out on the pleadings.
Unjust enrichment and/or quantum meruit – relevant principles
5 In order to make out a claim for restitution for unjust enrichment and/or on a quantum meruit basis, a claimant must establish three elements:
(i) A benefit was received, retained or was realisable by the other party.
(ii) The benefit was (as a matter of law) obtained at the claimant's expense and not at the expense of another person.
(iii) It would be unfair, unconscionable or inequitable for the other party to obtain or retain the benefit.
6 (See Carter & Harland, "Contract Law in Australia" (2002) 4th ed at [2309]).
(Page 5)
7 The amount of monetary restitution represents an amount which constitutes, in all relevant circumstances, fair and just compensation for the benefit or "enrichment" actually or constructively accepted by the defendant. Ordinarily, that will correspond to the fair value of the benefit provided. (See Pavey and Matthews Pty Ltd v Paul (1987) 162 CLR 221 per Deane J at 263.)
The issues
8 Against this background the issues for me to determine are:
(i) Whether, as a result of the defendant procuring the milling of Roget and Cross' timber, a benefit was received, retained or is realisable by the plaintiff, and, if so, whether such benefit was obtained at the defendant's expense.
(ii) If so, whether it would be unfair, unconscionable or inequitable for the plaintiff to retain the benefit without compensating the defendant.
(iii) If so, what is an appropriate amount of compensation?
Was a benefit received by the plaintiff?
9 The defendant contends that the plaintiff received a benefit for two reasons. First, Roget and Cross wanted to mill the timber, that is to say, it can be presumed that they regarded it as being to their commercial advantage to do so. Second, Roget and Cross paid West Coast Timbers $7,854 for band-saw milling of a quantity of their timber, for 42 hours. (Reasons [24] and exhibit 3).
10 The plaintiff submits that these contentions have not been properly pleaded, nor supported by evidence. It is submitted that there is no pleading, and no evidence, that the value of the original timber was increased by being milled. It is submitted that it might be the case, for example, that milling of the timber diminished its value and was only performed to facilitate its sale by the defendant. The plaintiff submits that there is no evidence to allow any comparison between the value of the timber in its raw and milled states, or to establish that the milling was properly undertaken.
11 I accept the plaintiff's submission that the mere rendering of services does not necessarily prove that a correlative benefit accrued to the recipient. However, in my view the balance of the plaintiff's submissions should be rejected. There was evidence adduced at the trial to support a
(Page 6)
- finding that the native timber was more valuable in its milled form rather than in its raw form:
(i) I accept the defendant's submission that a finding can be made that Roget and Cross regarded it as being to their benefit or commercial advantage to have the timber milled; otherwise they would not have acceded to the idea.
(ii) Roget and Cross agreed to pay West Coast Timbers to mill some of their timber. The inference is open on the balance of probabilities that they regarded the milling of this timber as being for their benefit and a similar finding can be made in relation to the timber that was milled by the defendant and his father, albeit it is not possible (because of a lack of evidence) to find that the work performed by the defendant was identical to the work performed by West Coast Timbers.
(iii) Third, Mr Cross admitted in evidence that it was reasonable for the defendant to be paid for his work.
13 Further, I find that Roget and Cross and subsequently the plaintiff, accepted the benefit of the milling carried out, or arranged, by the
(Page 7)
- defendant. My reasons are as follows. First, they agreed that the milling be carried out. Second, Mr Cross was aware at all material times that milling was being carried out and did not tell the defendant to desist. On the contrary, he regarded it as reasonable for the plaintiff to be paid for it. Third, I find that Mr Roget on behalf of the plaintiff actively endeavoured to bring the milled timber within his direct control, or bring about its sale. (See the evidence referred to in Reasons [30], [34], [36] - [37], [39], [41].)
14 Further, I find that the milling services were carried out at the defendant's expense. In particular, I am satisfied based on his evidence that he drove from his home in Bridgetown to West Coast Timbers' mill in Myalup every day that milling was carried out. At the very least, he incurred fuel costs doing so. Second, I am satisfied that the defendant was unable to partake of any other gainful employment whilst he was travelling and working. The defendant testified, and I accept (see Reasons [5]) that he is a craftsman who builds timber furniture through his family company. I accept that he requested some interim payment from Roget and Cross while the milling was being carried out because his cash flow was affected whilst he was milling the plaintiff's timber (Reasons [53] - [54]). The defendant further testified, and I accept, that his normal hourly rate for craftsman's work was $50 per hour (Reasons [56]).
15 In these circumstances it is my opinion that it is not necessary for the defendant to prove the exact nature of the work he would have performed if he had not milled the plaintiff's timber. I am satisfied that he was obliged to forego other income earning opportunities and as such the milling was carried out at his commercial expense.
16 There was no evidence adduced at trial as to the costs, if any, that the defendant incurred hiring plant and equipment (including a forklift) or in employing his father. So, I am limited to making a finding that the expense involved in carrying out the milling work from the defendant's point of view was limited to his own travel expenses, and the opportunity cost to him caused by being unable to employ his own labour and skills elsewhere.
Injustice to the defendant
17 I turn now to consider whether it would be unjust, inequitable or unconscionable for the plaintiff to retain the benefit of the work that was performed by the defendant without remunerating him. It is relevant to point out the following matters. First, the milling was carried out at Roget and Cross' request (albeit at the defendant's suggestion) and with their
(Page 8)
- fully informed acquiescence. Second, the defendant did carry out a large amount of work on the plaintiff's behalf, at his cost. Third, as I have said, the milling of the timber provided a benefit to the plaintiff. Fourth, the work performed by the defendant was in the nature of skilled, manual work for which a person is usually paid. Although milling the timber had the potential to enhance the value of the timber, and thus the defendant's commission or profit share, it was not part of his original scope of work and I am not satisfied that any increment in the value of his profit share would properly compensate him for the value of the milling work. Fifth, I find that the defendant told Mr Cross that he wanted to be paid for his work (Reasons [77]) and Mr Cross regarded it as reasonable for the defendant to be paid.
18 In all of these circumstances, in my view it would be unjust and unconscionable for the plaintiff to retain the benefit of the milling work that was performed or procured by the defendant unless the defendant is paid for that work.
The quantum of the compensation
19 The following principles in relation to the quantification of an appropriate amount of compensation were set out in Brenner v First Artists' Management Pty Ltd per Byrne J at 262 - 264:
(i) The Court's task is not to assess damages for breach of contract, but to ascertain what is fair and reasonable compensation for the benefit of the services performed.
(ii) The Court can only assess the value of the work performed on a "reasonably and properly incurred" basis. Although the actual costs incurred by the claimant are relevant, they are not decisive.
(iii) Any price or other consideration which was provisionally agreed or negotiated between the parties in the course of a failed contract may be received as evidence of the value the parties themselves placed on the services performed, although it is not determinative.
(iv) The Court may have regard to the rate of remuneration which is commonly accepted in the industry, and assess the benefit by applying an hourly rate to the time involved in performing the relevant services, having regard to the standing of the person performing the services, the
- difficulty of the task and the degree of imagination or creativity involved.
- (v) In a case where the services are of such a kind that it is difficult or impossible to assess the number of hours involved or itemize the precise services, the Court is entitled to make a global assessment or reduce or increase the remuneration which can be proved with some certainty in order to reflect a fair and reasonable value. In such a case the Court is simply performing the task of the trier of facts and is entitled to have regard to all the circumstances.
20 I turn now to address the evidence and make the necessary findings.
21 I find, based on the defendant's evidence, that his father worked side by side with him carrying out the milling. However, there is no evidence that the father did so at the defendant's expense, and in particular, there is no evidence that the defendant employed the father, or remunerated him in any way for his work. Accordingly, I find that the defendant cannot be compensated on a restitutionary or quantum meruit basis for any work that was performed by his father.
22 Next, I find that there is no evidence of any actual costs incurred by the defendant.
23 Further, I find that there is no evidence of any price or other consideration which was negotiated, discussed or provisionally agreed between the parties. Indeed, for the reasons set out in my earlier reasons, I find that the parties did not have any express discussion dealing explicitly with the quantum of any payment that would be made by Roget and Cross to the defendant in respect of milling work. Further, I find that there is no other evidence as to the value the parties themselves placed on the actual services performed by the defendant. I am unable to attach significant weight to the consideration that was paid to West Coast Timbers, namely $187 per hour, since that was for "band-saw milling" and there is insufficient evidence for me to determine whether that work was similar in nature to the work that was performed by the defendant. In my opinion the invoice which the defendant tendered to the plaintiff in late 2004 (exhibit 7) has no probative value in relation to the issue of fair compensation, because it was unilaterally produced by the defendant after the parties fell into dispute and, at best, it is simply the defendant's self-serving valuation of his own work.
(Page 10)
24 The most relevant evidence as to the value of the defendant's work is the fact that he normally charged $50 for his own woodcraft. However, that evidence is not decisive, since the defendant did not explain the relative difficulty or skill associated with his work as a craftsman compared to milling work. Nevertheless, I am satisfied on the totality of the evidence that the defendant performed a skilled task on behalf of Roget and Cross, and ultimately the plaintiff, in that milling native timber requires experience and expertise. This fact is exemplified by the fact that the plaintiff set up and implemented a system of stacking and drying the milled timber (Reasons [57]). In all the circumstances I am satisfied that the rate of $30 per hour which the defendant has claimed in respect of his own labour is reasonable, as reflecting a discount upon the defendant's maximum rate for skilled work, but which nevertheless reflects the experience and expertise which the plaintiff brought to bear. I have borne in mind the fact that as a sub-contractor the defendant was responsible for his own overheads and superannuation and notional sick leave, annual leave and public holiday payments.
25 There is very little evidence in relation to the quantum of work performed by the defendant. In particular, no evidence was adduced as to the quantity of timber that was milled, or the hours that the defendant worked. In my view this omission was not cured by the defendant's invoice (exhibit 7). The defendant did not expressly testify that he performed the amount of work stipulated in that invoice (304 hours). The defendant asked Mr Cross questions about this which predicated that a significant amount of work was performed, but Mr Cross did not accept those propositions (since he was in no position to do so) and therefore I obtained minimal assistance from that aspect of the evidence. The only evidence that is capable of assisting me is as follows:
(i) Mr Cross testified that "as things progressed" the defendant was "putting a bit of time in". As I understand it, Mr Cross was here speaking ironically and understated the facts, that is to say, he understood and accepted that the defendant had in fact performed a substantial amount of work. In cross-examination Mr Cross accepted that the defendant is a very conscientious worker.
(ii) The defendant testified that the milling work he performed was "a big job and it does take many days of working very long hours and driving 200 kilometres a day to and from the mill". I appreciate that this part of the defendant's evidence was given in the context of his evidence (which I
- rejected) as to the contractual discussions that he contended he had with Messrs Roget and Cross before he did the work. Nevertheless, in my view the evidence remains probative insofar as it provides a general indication of, or insight into, the nature of the work that the defendant in fact performed and the number and duration of his working days.
- (iii) The defendant testified that he assisted West Coast Timbers. He also testified about the financial and personal pressures which mounted on him while he was carrying out the project and in particular performing the milling work. He said that he made the mistake of putting business before his family and his commitment almost led to the breakdown of his marriage. He testified that the personal cost to himself associated with the milling work and the cost of travelling between Bridgetown and Myalup "every day" were "quite huge".
(iv) The defendant testified that he contacted Mr Cross on a weekly basis and, in one of these reports, he told Mr Cross that he "was clocking up the hours and that some money would be appreciated because [he] was running low".
26 Based on all this evidence, and in particular the defendant's uncontradicted evidence, which I accept, I find on the balance of probabilities that the defendant carried out milling work at Myalup on behalf of Roget and Cross on many days over a period of several weeks. My finding as to "several" weeks is made in light of the evidence that the defendant reported to Mr Cross on a weekly basis and reported about the progress of the milling on those occasions combined with the fact that the milling work placed the defendant under severe personal and financial stress. I also conclude that, on a conservative basis, the defendant worked for approximately 12 hours on each working day (including two hours travel).
27 It is not possible to make an accurate finding as to the number of hours or days that the defendant worked and I therefore intend to make a global assessment doing the best that I can on the evidence. I am satisfied on the balance of probabilities that the defendant performed the equivalent of several weeks' work, and intend to adopt a figure of 18 12-hour days (3 6-day weeks). At $30 per hour, this equates to work to the value of $6,480. If one adds the cost of fuel and other incidental expenses, a figure of $7,000 is justified and I assess fair and reasonable compensation in that
(Page 12)
- sum. I stress that in doing so I do not purport to make a finding as to the exact number of hours that the defendant worked. On the contrary, I reiterate that I am seeking only to determine a global figure which on my view of the evidence reflects a conservative position. The assessment must necessarily be conservative having regard to the paucity of evidence provided by the defendant (see Independent Grocers Co-operative Ltd v Noble Lowndes Superannuation Consultants Ltd per Matheson J at 559).
28 In conclusion, I find that the defendant is entitled to payment from the plaintiff of $7,000.
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