Theo Koutlis v Air-Ride (SA) Pty Ltd No. SCGRG 92/2659 Judgment No. 3808 Number of Pages 6 Contracts Work and Labour Done Practice and Procedure Pleading

[1993] SASC 3808

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA PERRY J

CWDS
Contracts - work and labour done - Owner of a truck appealed against judgment in Magistrates Court for cost of work done and materials supplied in effecting repairs and other work on the truck - his son had brought the truck-to the respondent for repair and modification and all dealings thereafter were with the son - held, rejecting the appeal, that the fact that his name was on the side of the truck, that his son had telephoned him before authorising the work, that he had accepted the work and made part payment for it and promised to pay for the balance was sufficient basis for the conclusion to be drawn that the appellant conracted to pay - but if that was not so, there was a clear right of recovery on a quantum meruit - basis of a claim for quantum meruit discussed.
Pavey and Matthew Pty Ltd v Paul (1986) 162 CLR 221; Reg v Lloyd (1871) 1 AJR 78; Hansen v Mayfair Trading Co Pty Ltd (1962) WAR 148; Penfolds v McGregor (1973) 1 QL 314 and Trimtor Building Consultants Pty Ltd v Hilton and Anor (1983) l NSWLR 259, considered.
Practice And Procedure - Pleading - Plaintiff pleaded a cause of action for 'work and labour done and materials supplied' which was argued in contract - held that it was open on appeal to uphold a judgment in favour of the plaintiff on quantum meruit - a party is entitled to judgment on any cause of action made out in the evidence.
Local and District Criminal Courts Act s35e. S P Hywood Pty Ltd v Standard Chartered Bank Ltd (unreported) Judgment No. 3764, Perry J, 21.12.92; Creedon and Measey Investments Pty Ltd (1988) 91 FLR 318 at 320; Williams v Milotin
(1956) 97 CLR 465 at 474; Drane y Evangelou and Ors (1978) 1 WLR 455 at 458; Konskier v B. Goodman Ltd (1928) 1 KB 421; Hudson v Nicholson 5 M and W 437 and Cairns Australian Civil Procedure 3rd ed page 109, applied.

HRNG ADELAIDE, 29 January 1993 #DATE 12:2:1993
Counsel for appellant:         Mr T Bryant
Solicitors for appellant:     Carabelas and Co
Counsel for respondent:        Mr P Geyer
Solicitors for respondent:     Ward and Partners

ORDER
Appeal dismissed.

JUDGE1 PERRY J. The appellant, who was the defendant in the Court below, appeals against a judgment entered against him in the Port Adelaide Magistrates Court for $7,550 in an action brought by the respondent for the balance said to be owing by the defendant to the plaintiff for "work and labour done and materials supplied by the plaintiff for the defendant in or about the months of January and February 1992". 2. The principal ground of appeal is that the learned trial Magistrate erred in finding that the appellant had entered into a contract for the work in question to be performed. Evidence was given for the plaintiff company by a Mr Gilsmore, who is a director and the manager of the company. His evidence was accepted by the learned trial Magistrate, and was not challenged on appeal. The account which I proceed to give as to the facts, is taken from his evidence. 3. The respondent company was engaged in the manufacture and supply of specialised transport materials and equipment. Amongst other things, it carried out modifications and repairs to heavy commercial vehicles, predominantly trucks and trailers. 4. The appellant was in January 1992 the owner of a prime mover. On 17 January 1992 the appellant's son, one George Koutlis, brought the prime mover to Mr Gilsmore with a request that he undertake work which would have the effect of converting the prime mover to a rigid vehicle, namely, a truck with a tray body. Mr Gilsmore examined the vehicle and George Koutlis then accompanied him into his office where they discussed the work to be carried out, and the cost. While they were in the office, Mr Gilsmore wrote out an itemised quotation. It set out a total price of $10,800 with respect to certain specified work, and left the price to be agreed as to some other work relating to modifications to the exhaust. At the bottom of the quotation, Mr Gilsmore wrote words to the effect that payment was to be made on delivery, "providing semi-trailer sold for $6,000". The document continues: "Or if trailer not sold, 50% payment on delivery, 50% payment 14 days max. No exceptions." 5. The quotation was dated 17.1.92. It was signed by Mr Gilsmore and George Koutlis. 6. Theo Koutlis' name appeared on both sides of the vehicle. During the discussions in Mr Gilsmore's office before the quotation was signed by George Koutlis, George Koutlis said he was going to speak with his father. Using Mr Gilsmore's phone, he made a call and spoke in a foreign language. The call took some three or four minutes. When George Koutlis hung up, according to the evidence of Mr Gilsmore: "I was given the instruction that they would proceed with the work and we then prepared this document here and discussed when the vehicle would be inspected, et cetera." (The emphasis is mine.) 7. The quotation was headed "George Koutlis" and made no reference to Theo Koutlis. 8. A week to ten days later, George Koutlis brought the truck in to the respondent's workshop. The respondent then commenced the work, which took about two weeks. Until the completion of the work, and from the time when George Koutlis first brought the vehicle in, Mr Gilsmore had no contact with Theo Koutlis. George Koutlis came in to collect the vehicle. He brought in a cheque for $4,975 drawn on a bank account in the name of T. and M. Koutlis. It was not disputed at the trial that the cheque was signed by Theo Koutlis. 9. The cheque was not met upon presentation. Mr Gilsmore rang Theo Koutlis. The latter promised to bring in another cheque, this time for $3,600, which would be drawn on the account of his daughter. A week or so later Theo Koutlis came in to see Mr Gilsmore and brought a cheque for that amount, which was met. At the same time, according to Mr Gilsmore's evidence, Theo Koutlis "promised to pay me within seven days". I assume that means pay the rest of the moneys due. 10. Payment was not made within that time, or at all. Although there was some confusion in the evidence as to the precise sequence of events thereafter, on 17 February 1992 George Koutlis signed a written note, prepared by Mr Gilsmore, agreeing to pay $1,975 by 21 February and $5,575 not later than 6 March "without exception". The note went on: "If not paid by 6 March I hereby agree to pay an additional $470 penalty on the money owing and interest will be paid at the rate of 25% per annum from 6 March." 11. That document was headed "Theo Koutlis" but "Theo" was crossed out and "George" was inserted. 12. The understanding recorded in the note of 17 February 1992 was not honoured, and no further payment was made. Thereafter there were a number of calls by Mr Gilsmore to George Koutlis and Theo Koutlis. On one occasion, George Koutlis rang Mr Gilsmore and said: "Write these numbers down." Whereupon he said: "This is my bankruptcy number", and hung up. At no stage during Mr Gilsmore's dealings with Mr Theo Koutlis did the latter deny liability for the debt, question the work or dispute the account. 13. At the trial, Mr George Koutlis was seen to be in the vicinity of the Court, and was called to give evidence by counsel for the appellant. His father, Theo Koutlis, gave evidence in his own cause. No other witnesses were called. 14. The learned Magistrate found Mr Gilsmore to be an "impressive, straightforward witness". She indicated in her reasons for judgment that she accepted his evidence "in its entirety", and she went on to observe: "In all factual matters where his evidence differs from George and Theo, I prefer Mr Gilsmore." As to George Koutlis, the learned Magistrate found him to be: "...untrustworthy as a witness and in no factual matters can be relied upon". She observed:
    "He made an extremely poor attempt to lie to further his aim to
    stop his father being involved in this litigation. I considered
    George Koutlis to be a person who presented in the witness box
    with one idea, and that was to rid his father of any
    responsibility. I formed the view that he would be prepared to
    say anything in response to any question to exculpate his father
    from financial responsibility. He was cynical, dishonest and
    had no intention of confining himself to the truth. There are
    numerous examples of obviously lying in his evidence to further
    his cause." 15. She then proceeds to quote various passages in his evidence, which she disbelieved. As to Theo Koutlis, she was equally unconvinced by his evidence. She concluded that both George and Theo Koutlis had: "...made a cynical attempt to use bankruptcy law and change the facts to suit themselves to stop Theo being responsible for a debt." 16. The learned Magistrate found that at the time the work was done, Theo and George Koutlis were involved in the operation of a fruit block at the Riverland. As well, George Koutlis had operated a fruit transport business, and Theo Koutlis had supported his son by allowing him to use the semi-trailer in question in that business. She dismissed as completely implausible the evidence to the effect that Theo Koutlis was not aware that the truck was under repair and that he had been told about it only later by George. She found that the only "reasonable inference" to be drawn from the evidence was that George had in fact rung his father before authorising Mr Gilsmore to proceed with the repairs. She concluded that Theo Koutlis was party to the arrangement pursuant to which the repairs were done. On the way to reaching that conclusion, she made the observation that Theo Koutlis: "...sold the truck and pocketed the proceeds without a second thought to Mr Gilsmore." 17. It appears that the argument presented on behalf of Theo Koutlis at the trial was that he had nothing to do with the repairs: that the appellant had contracted with George Koutlis and not with him: that although he had made some payments, they were payments which discharged the liability of George Koutlis and not any liability which he had incurred: and that it was nothing to the point that it was his truck and that he ultimately sold it, presumably obtaining the benefit of the work that had been done on it. 18. However, the learned trial Magistrate found on the evidence that there was an undertaking by both Theo and George Koutlis jointly to have the repairs done and to pay for them. 19. On the hearing of the appeal to this Court, Mr Bryant of counsel for the appellant, quite properly did not invite this Court to take a view of the credit of either George or Theo Koutlis, contrary to the view entertained by the learned trial Magistrate. He argued that on the evidence which the learned Magistrate did accept, which is substantially the evidence of Mr Gilsmore, the respondent had failed to establish on the balance of probabilities that Theo Koutlis was a contracting party. 20. In support of his submissions, Mr Bryant drew attention to the fact that the dealings before the work was done were with George Koutlis, and that evidence that Theo Koutlis was willing to make payment for the work afterwards did not necessarily lead properly to the conclusion that he was a party to the contract. He drew attention also to the fact that in the written agreement to pay dated 17 February 1992 "Theo" is crossed out and "George" is inserted at the head of the document, and again it was signed only by George Koutlis (as was the quote). 21. Mr Bryant correctly argued that one passage of evidence was wrongly admitted, that was an answer given to Mr Gilsmore during the course of examination in chief:
    "At that particular moment which was the first time I met George
    Koutlis, I honestly believed I was talking to George Koutlis and
    family. I have dealt quite considerably with ethnic gentleman
    and it is not unusual for one family member to talk to another
family member." 22. In a case where the question is as to the identity of the contracting parties, evidence of the belief of one of the contracting parties as to whom he was dealing with, is not admissible. Be that as it may, in my opinion, although Mr Bryant advanced every argument which could be put in favour of the appeal, the learned Magistrate's decision was correct. It seems to me that the fact that the vehicle was owned by Theo Koutlis, that it had his name on the side of the truck, that George Koutlis spoke to his father before agreeing to the repairs going ahead, and given also the finding by the learned Magistrate which I accept as properly based on the evidence, that it is unlikely that Theo Koutlis was unaware of the repairs being effected to the truck, all amount to a situation in which he was contractually bound to pay for the repairs. While his conduct afterwards, in making the payments and arrangements which he did, do not prove that he was a party to the contract, they are certainly corroborative of that conclusion. The fact that it was George Koutlis only who was referred to in the quotation and in the subsequent agreement for payment does not, in my opinion, operate to displace the conclusion that Theo Koutlis was also a contracting party. In my opinion, he contracted for the repairs through the agency of his son, and had conferred ostensible agency upon George Koutlis to deal on his behalf by arming him with the truck. 23. Even if, contrary to the view which I have expressed, the evidence did not support the conclusion that Theo Koutlis was a contracting party, it would not make any difference to the result. The plaintiff's claim was for "work and labour done and materials supplied". If not recoverable in contract, the amount sought was recoverable on a quantum meruit. 24. It is clear from the decision of the High Court in Pavey and Matthews Pty Ltd v Paul (1986) 162 CLR 221 that an action on a quantum meruit for the value of work done and materials supplied does not depend upon an express or implied contract, but is available where work has been executed and accepted by the defendant. Although that case was concerned with an unenforceable oral contract (unenforceable by reason of provisions of the Builders Licensing Act (NSW)) the principle for which the case stands is of equal application where the evidence falls short of establishing any contract between the parties, as opposed to an unlawful contract. If work was performed on Theo Koutlis' truck, and he accepted the benefit of that work, he must pay for it on the basis of quantum meruit. See Mason and Wilson JJ at p.227:
    "Deane J, whose reasons for judgment we have had the advantage
    of reading, has concluded that an action on a quantum meruit,
    such as that brought by the appellant, rests, not on implied
    contract, but on a claim to restitution or one based on unjust
    enrichment, arising from the respondent's acceptance of the
    benefits accruing to the respondent from the appellant's
    performance of the unenforceable oral contract. This conclusion
    does not accord with the acceptance by Williams, Fullagar and
Kitto JJ in Turner v Bladin (1951) 82 CLR 474 of the views
    expressed by Lord Denning in his articles in the Law Quarterly
    Review, vol 41 (1925), p.79, and vol 55 (1939), p.54, basing
    such a claim in implied contract. These views were a natural
    reflection of prevailing legal thinking as it had developed to
    that time. The members of this Court were then unaware that his
    Lordship had, in his judgment in James v Thomas H. Kent and Co
Ltd (1951) 1 KB 551, as reported in the authorized reports,
    discarded his earlier views in favour of the restitution or
    unjust enrichment theory. Since then the shortcomings of the
    implied contract theory have been rigorously exposed (see Goff
    and Jones, The Law of Restitution, 2nd ed (1978), pp 5-11) and
    the virtues of an approach based on restitution and unjust
    enrichment, initially advocated by Lord Mansfield and later by
    Fuller and Perdue (see "The Reliance Interest in Contract
    Damages", Yale Law Journal, vol 46 (1936-37), pp 52, 373, esp at
    p.387) widely appreciated (Goff and Jones, op cit p.15 et seq;
and see Deglman v Guaranty Trust (1954) 3 DLR 785 at 794-795.
    We are therefore now justified in recognizing, as Deane J has
    done, that the true foundation of the right to recover on a
    quantum meruit does not depend on the existence of an implied
    contract. Once the true basis of the action on a quantum meruit
    is established, namely execution of work for which the
    unenforceable contract provided and its acceptance by the
    defendant, it is difficult to regard the action as one by which
    the plaintiff seeks to enforce the oral contract." 25. See also Reg v Lloyd (1871) 1 AJR 78, Hansen v Mayfair Trading Co Pty Ltd
(1962) WAR 148, Penfolds v McGregor (1973) 1 QL 314 and Trimtor Building Consultants Pty Ltd v Hilton and Anor (1983) 1 NSWLR 259. 26. It is nothing to the point that the case may not have been argued expressly on the footing of quantum meruit in the court below. In S.P. Hywood Pty Ltd v Standard Chartered Bank (unreported) (Judgment No. 3764 - delivered 21.12.92), I considered an appeal against the dismissal of a claim which had been argued on the basis that the defendant had converted the plaintiff's cheque. I held on appeal that it was doubtful that in that case the defendant was guilty of conversion of the cheque in question, but it was clearly liable in either negligence or for moneys paid under a mistake of fact. I held further that irrespective of what cause of action had been pleaded or argued in the court below, an appeal court could substitute a judgment in lieu of an order of dismissal, or uphold a judgment, on any cause of action made out by the evidence, irrespective of whether any reference to that cause of action was made in the pleadings, in the argument, or in the reasons for judgment in the court below. In reaching that view I had regard to the Local and District Criminal Courts Act s.35e; Creedon and Measey Investments Pty Ltd (1988) 91 FLR 318 at 320; Williams v Milotin (1956) 97 CLR
465 at 474; Drane v Evangelou and Ors (1978) 1 WLR 455 at 458; Konskier v B. Goodman Ltd (1928) 1 KB 421; Hudson v Nicholson 5 M and W 437 and Cairns Australian Civil Procedure 3rd Ed p.109. 27. What I said in S.P. Hywood Pty Ltd v Standard Chartered Bank is of equal application here. In my opinion, the Magistrate correctly found that Theo Koutlis was contractually bound to pay for the repairs to the truck; but if that view was wrong, he was clearly liable on a quantum meruit. 28. The appeal must be dismissed. I so order. I will hear the parties as to costs.