Perum Building & Construction Pty Ltd v Tallenford Pty Ltd

[2007] WASCA 245

PERUM BUILDING & CONSTRUCTION PTY LTD -v- TALLENFORD PTY LTD [2007] WASCA 245

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2007] WASCA 245
Court:	THE COURT OF APPEAL (WA)	Published:	14/11/2007
Case No:	CACV:80/2006	Heard:	2 NOVEMBER 2007
Coram:	STEYTLER P BUSS JA NEWNES AJA	Delivered:	1/11/07
No of pages:	7	Judgment Part:	1 of 1
Result:	Appeal allowed
Category:	B
PDF Version

Parties:	PERUM BUILDING & CONSTRUCTION PTY LTD (ACN 060 774 343) TALLENFORD PTY LTD (ACN 009 126 443)
Catchwords:	Contract Lump sum construction contract Contract to produce particular result Value of completed construction work greater than contract price Claim by building contractor of unjust enrichment No basis for claim of unjust enrichment Entitlement to remuneration of building contractor determined by contract Turns on own facts
Legislation:	Nil
Case References:	Coshott v Lenin [2007] NSWCA 153 Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22 Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 Tallenford Pty Ltd v Perum Building & Construction Pty Ltd [2006] WADC 86

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : PERUM BUILDING & CONSTRUCTION PTY LTD -v- TALLENFORD PTY LTD [2007] WASCA 245 CORAM : STEYTLER P

BUSS JA
NEWNES AJA

HEARD : 2 NOVEMBER 2007 DELIVERED : 2 NOVEMBER 2007 PUBLISHED : 15 NOVEMBER 2007 FILE NO/S : CACV 80 of 2006 BETWEEN : PERUM BUILDING & CONSTRUCTION PTY LTD (ACN 060 774 343)

Appellant

AND

TALLENFORD PTY LTD (ACN 009 126 443)
Respondent

ON APPEAL FROM:

Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA

Coram : FENBURY DCJ

Citation : TALLENFORD PTY LTD -v- PERUM BUILDING AND CONSTRUCTION PTY LTD [2006] WADC 86

File No : BUN 53 of 2003

(Page 2)

Catchwords:

Contract - Lump sum construction contract - Contract to produce particular result - Value of completed construction work greater than contract price - Claim by building contractor of unjust enrichment - No basis for claim of unjust enrichment - Entitlement to remuneration of building contractor determined by contract - Turns on own facts

Legislation:

Nil

Result:

Appeal allowed

Category: B

Representation:

Counsel:

Appellant : Mr P G McGowan
Respondent : Mr K E Yin

Solicitors:

Appellant : Vincent Partners
Respondent : Joe Scurria & Associates

Case(s) referred to in judgment(s):

Coshott v Lenin [2007] NSWCA 153
Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22
Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221
Tallenford Pty Ltd v Perum Building & Construction Pty Ltd [2006] WADC 86


(Page 3)

1 JUDGMENT OF THE COURT: On 2 November 2007, at the conclusion of the hearing of this appeal, we allowed the appeal and ordered that the order of the learned trial judge be set aside, that the respondent's action be dismissed, and that the respondent pay the appellant's costs of this appeal and of the action. We said we would publish reasons later. These are those reasons.

The facts

2 The appellant is a construction company which, at the relevant time, was involved in the construction of a development at Lot 150 Goldsmith Street, Bunbury. The respondent, which traded under the name G & B Drainage, carried on business as a drainage and construction contractor.

3 In January 2003, the appellant and the respondent entered into a contract by which the respondent agreed to construct a sewer line to connect the development to the main sewer line running past the property and the appellant agreed to pay the sum of $20,174 for that work.

4 It was common ground at trial that the contract was partly oral and partly written. The written part was contained in three documents, a quotation dated 22 January 2003 from the respondent 'to construct a sewer to serve Lot 150 Goldsmith Road, Bunbury' for the sum of $20,174, a purchase order from the appellant to the respondent dated 31 January 2003, and a site plan which, among other things, contained certain measurements said to be required for the installation of the sewer line. The oral part consisted of the representative of the appellant handing the representative of the respondent the site plan and informing him that it was the site plan for the works.

5 The sewer line to be constructed by the respondent was designed to rely on gravity and it was accordingly critical that it was installed so that it was in a downward plane along its entire length to its connection with the main sewer line. The site plan contained measurements of surface levels (called 'invert levels') at the point of connection of the sewer line to the plumbing in the development and at the point at which it connected to the main sewer line.

6 The respondent elected to install the sewer line by using a machine which bored a subterranean hole in which the sewer pipes to be connected to the main sewer line were laid. The machine is guided by laser operated equipment to ensure that the hole is bored at the correct angle.

(Page 4)

7 In the event, the hole which the respondent bored turned out to be at least 0.3 of a metre too high at the end where it was to be connected to the main sewer line. It emerged that that was because the invert levels shown on the site plan were incorrect. The respondent subsequently bored a second hole using the correct levels and made the sewer connection.

8 In the action, the respondent sought to recover the cost of boring the second hole in the sum of $29,130, plus GST. It appears the cost involved was somewhat greater than the first hole because the lower level of the second hole required the respondent to carry out dewatering.

9 It was the respondent's case that it had contracted simply to construct a sewer line in accordance with the site plan. It was entitled to rely on the invert levels shown on the site plan in carrying out the work and had done so. The respondent contended that the boring of the second hole to enable installation of the sewer line did not, therefore, fall within the contract but was additional work done pursuant to a subsequent oral contract of March 2003 or, alternatively, the respondent was entitled to recover the cost of it on a quantum meruit. In either case, the respondent claimed the sum of $29,130, plus GST.

10 The appellant, on the other hand, contended that on the proper construction of the contract the respondent had agreed to do all things necessary to make the sewer connection between the internal plumbing in the development and the main sewer line running past the property. The appellant said that the errors in the invert levels in the site plan were obvious and, in any event, under the contract it was the respondent's responsibility to check the invert levels. In respect of the latter contention, the appellant relied, in particular, on the following notations on the site plan:

All invert levels are approximate only. Check on site.

The contractor is to ensure all invert levels are correct and make allowances for inspection shafts and rising shafts although not necessarily located on the drawings …

Prior to earthworks, the contractor shall check all connection levels to sewer to confirm connection and that finished floor levels can be achieved.

11 The appellant denied that there was a separate contract for the second hole or that the respondent was entitled to recover on a quantum meruit, contending that all of the work fell within the contract of January 2003, so that the respondent was entitled only to the sum of $20,174, which it had been paid.

(Page 5)

12 As the learned trial judge put it, 'the dispute [was], in essence, whether the plaintiff contracted to execute precisely the work described in the site plan and other documents, or whether the plaintiff contracted to produce a result': Tallenford Pty Ltd v Perum Building & Construction Pty Ltd [2006] WADC 86 [39].

The findings of the trial judge

13 The learned trial judge found that under the contract the respondent contracted to 'produce a result' and that as the first connecting sewer line was unworkable, the respondent had to bear the cost of the second connecting sewer line, 'subject to the issue of betterment or unjust enrichment'. We will return to that proviso in due course. It is clear from his reasons for judgment that the learned trial judge found that it was the responsibility of the respondent to check the invert levels before embarking upon the work.

14 The finding of the learned trial judge that the respondent had contracted to connect the sewer line, rather than simply carry out the work set out in the site plan, was not challenged on this appeal.

15 The learned trial judge went on, however, to find that the cost of the subsequent work, in the sum of $29,130, was a 'fair evaluation of the cost of the work that was required in order to install a connecting sewer that "worked" '. His Honour concluded that the respondent had therefore obtained a connecting sewer line worth $29,130. He found that, had the respondent been provided with an accurate site plan initially, it is likely that it would have submitted a quote in the order of $29,130 and that that quote would have been accepted by the appellant. We should say that it is not apparent on what evidence his Honour based those conclusions.

16 The learned trial judge then went on to say:

I accept Mr Yin's [counsel for the respondent] unchallenged observations at the end of his closing submissions to the effect that 'equity and good conscience' require in the circumstances at least that the plaintiff be entitled to judgment in an amount equivalent to the difference in the cost of the two connecting sewer lines. [57]

17 The respondent subsequently obtained judgment in the sum of $9,296, together with interest on that sum from 16 April 2003 and costs.

The ground of appeal

18 The appellant's ground of appeal was as follows:

(Page 6)

1. The learned trial judge erred in law and fact in concluding that the appellant had got a connecting sewer line worth $29,130 and that the respondent was entitled in equity and good conscience to be paid the difference in value when:

(a) The fact was the appellant was the builder not the owner and consequently had no interest other than the contract to carry out building works; or in the alternative,

(b) There was no evidence before the learned trial judge either that the appellant was the owner of the land or that the appellant had any benefit other than the contract to carry out building works.

19 It was evident, however, from the written submissions filed on behalf of the appellant that the ground of appeal did not reflect its principal contention; namely, that any entitlement of the respondent to payment for the work it carried out was governed by the terms of the contract and there was no basis for any claim based on 'equity and good conscience' or, as it seems that expression was used by the learned trial judge, on unjust enrichment. It was also apparent from the respondent's written submissions that, despite the terms of the ground of appeal, the respondent's counsel had come prepared to meet that case.

The disposition of the appeal

20 The point that is determinative of this appeal is, with respect, a fundamental one in relation to restitutionary claims in respect of claims for work done; namely, that no claim can be brought for restitution which is inconsistent with a valid and enforceable contractual promise between the parties governing the claimant's right to compensation in relation to the subject-matter of the claim.

21 As Deane J explained, in the context of a quantum meruit claim, in Pavey & MatthewsPty Ltd v Paul (1987) 162 CLR 221, at 256, if there is a valid and enforceable agreement governing the claimant's right to compensation, there will be neither occasion nor legal justification for the law to superimpose or impute an obligation or promise to pay a reasonable remuneration. In such a case the benefit is provided in the performance of a valid legal duty arising under the agreement and the claimant's right to compensation is provided for by the agreement.

22 In the present case, once it was found that the respondent had contracted to install the sewer line from the development to the main sewer line (rather than simply carry out certain specific work), it

(Page 7)

necessarily followed that the respondent's entitlement to payment for installing the sewer line fell to be determined under the contact. On the findings of fact he made, it was not open to the learned trial judge to find that the respondent was entitled to payment on any other basis. The respondent's only entitlement, therefore, was to be paid the agreed contract sum.

23 It was not to the point, if it were the case, that the value of the work that the respondent agreed to carry out was greater than the contract price. The contractual allocation of risk was a matter for the parties and was determined by the contract. A restitutionary cause of action cannot sit on top of an effective contractual arrangement where that would subvert or undermine the contractual allocation of risk: Coshott v Lenin [2007] NSWCA 153 [10].

24 Nor, with respect, was it open to the learned trial judge to determine the respondent's entitlement to remuneration in respect of the work by reference to abstract notions of 'equity and good conscience'. It is clear that whether enrichment is unjust is not determined by reference to a subjective evaluation of what is fair or just, or to the respective merits of particular litigants: rather, recovery depends on the existence of a qualifying or vitiating factor falling into some particular category: Pavey & MatthewsPty Ltd v Paul at 256, Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22 [150]. No factor which could give rise to an entitlement to recover on the basis of unjust enrichment was identified by the learned trial judge or by the respondent on this appeal, and none is evident.

25 In the circumstances, it was unnecessary to consider the matters raised in the ground of appeal filed on behalf of the appellant.