Theo Koutlis v Air-Ride (SA) Pty Ltd No. SCGRG 92/2659 Judgment No. 4107 Number of Pages 5 Contracts Practice

[1993] SASC 4107

COURT IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA KING CJ(1), MOHR(2) AND BOLLEN(3) JJ

CWDS
Contracts - Work done and materials supplied - work on truck authorized by son of owner purportedly with authority of owner - circumstantial evidence justifying finding that owner had authorized the work - judgment of Magistrates Court and single judge of Supreme Court upheld on appeal to Full Court.
Practice - Plaintiff pleading a cause of action for 'work and labour done and materials supplied' - trial proceeding on basis of claim in contract - whether judgment can be justified on appeal on basis of quantum merit - effect of course of trial referred to.

HRNG ADELAIDE, 10 August 1993 #DATE 10:8:1993
Counsel for appellant:     Mr T R Bryant
Solicitors for appellant:    Carabelas and Co
Counsel for respondent:     Mr P J Geyer
Solicitors for respondent: Ward and Partners

ORDER
Appeal dismissed.

JUDGE1 KING CJ This is an appeal against a judgment of a single judge whereby he dismissed an appeal against a judgment entered in the Magistrates Court at Port Adelaide in favour of the present respondent for the sum of $7,550, in an action brought by the respondent for the balance said to be due for work and labour done and materials supplied. The facts are set out in the judgment of the judge appealed from and I quote from his reasons for judgment:
    "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. 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." 2. I interpolate that Mr Gilsmore was a director and manager of the respondent company.
    "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.' The quotation was dated
    17.1.92. It was signed by Mr Gilsmore and George Koutlis. 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.) The quotation was headed 'George Koutlis' and made no
    reference to Theo Koutlis. A week to ten days later, George
    Koutlis brought the truck into 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. 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.
    Payment was not made within that time, or at all." 3. His Honour goes on to recount a number of telephone calls from Mr Gilsmore to both George and Theo Koutlis and he refers to one occasion on which George Koutlis rang and told Gilsmore to write some numbers down: they were his bankruptcy number. His Honour states that 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. 4. The learned magistrate who tried the case heard evidence from Mr Gilsmore and also from George Koutlis and the appellant, Theo Koutlis. She accepted the evidence of Mr Gilsmore. She was unimpressed by George Koutlis and the appellant and based her findings upon the evidence of Mr Gilsmore and inferences which she drew from the facts as deposed to by him. Her conclusion was that the appellant had authorised George Koutlis to contract on his behalf and that he was liable as a party to the contract. 5. His Honour, the judge appealed from, affirmed those findings. Mr Bryant, who has conducted the appeal before us, has argued that there was no satisfactory evidence that the appellant was a contracting party and that each of the matters relied upon by the magistrate and the learned judge on appeal are capable of being explained upon other bases, and primarily on the basis that the appellant may have been simply financing George Koutlis in relation to the truck and this transaction. 6. It seems to me that there is clear evidence on the version accepted by the magistrate that George Koutlis purported to contract on behalf of the appellant as well, no doubt, as on his own behalf. He told Mr Gilsmore at the interview at which the contract was made that he intended to ring his father, the appellant. Following the telephone call he told Mr Gilsmore, according to Mr Gilsmore's evidence, that "they", undoubtedly meaning the appellant and George, would proceed with the work. That, to my mind, was a clear statement to Gilsmore that not only he, but also his father, was authorising the work. 7. The real question is whether George Koutlis had authority to make that statement. That authority was considered by the magistrate and by the learned judge on appeal to have been derived from the telephone call which George Koutlis made. Of course, George Koutlis' statement to Gilsmore that he had spoken to his father and that they would proceed with the contract, is not evidence that he, in fact, spoke with his father. 8. The question of whether George Koutlis was in fact authorised by the appellant at that telephone conversation to commit him to the contract must depend therefore upon circumstantial evidence. 9. To my mind there is an abundance of circumstantial evidence to that effect. There are indications in the evidence of a close association between the appellant and George Koutlis in their business activities. It is true that the appellant said in his evidence that George Koutlis was conducting a transport business of his own and that the appellant's involvement was simply by way of helping him, by providing him with a truck and with financial assistance, but there were indications that George Koutlis had a close association with the grape fruit growers business conducted by the appellant. 10. The learned magistrate who saw and heard the appellant and George Koutlis give evidence reached this conclusion: "There was a joint enterprise between father and son and no matter how they described their business relationships they were working in close proximity to each other, and with the aim of furthering a family business." 11. So, the circumstances which are relevant in considering whether George Koutlis was authorised in the telephone conversation to enter into a contact on the appellant's behalf include that there was this business association between them. 12. In addition to that, the appellant's truck was in the possession of George Koutlis when he went to the respondent's premises to arrange for the modifications. The truck was in the possession of the respondent for about two weeks for the purposes of doing the work. 13. It was a reasonable conclusion on the part of the magistrate, and the judge on appeal, that the appellant must have been aware that the truck was absent from its customary place and was at the premises of the respondent. 14. It is a reasonable inference from that that the appellant must have known of the modifications being performed on the truck. Moreover, when the work was completed, the appellant signed a cheque payable to the respondent in part payment of the amount due for the work done and materials supplied in performing the modifications of the truck. Subsequently, the appellant was involved in the negotiations with Mr Gilsmore as to payment, and indeed, promised to pay the balance. 15. There is some question as to whether the balance referred to in that promise was the balance on the contract or the balance of the dishonoured cheque, but whatever may be the fact about that, the appellant did make a promise to pay money in connection with the work on the truck. 16. In addition, there is the failure of the appellant during the course of all these discussions to disclaim liability for the cost of the modifications in circumstances in which it might reasonably be expected that he would make such disclaimer. He was involved in discussions concerning how the modifications were to be paid for and there were clearly difficulties about making the payments. It must have been obvious to him that he might be thought to be acknowledging the liability and that it was important to make it clear to Gilsmore that whilst he was participating in these discussions he was under no liability to the respondent. 17. I think if all those circumstances are taken into account, it can be said that there was a clear and cogent circumstantial case justifying the finding that the appellant was a contracting party and the finding that the conversation, which occurred on the telephone in a foreign language, was indeed a conversation between George Koutlis and the appellant in which the appellant authorised George Koutlis to enter into the contract on his behalf. 18. For those reasons I consider that the finding made by the learned magistrate, and upheld on appeal, is correct. 19. It is not necessary to say anything further to dispose of this appeal but I do refer in passing to an alternative ground upon which the learned judge on appeal dismissed the appeal. He considered that even if, contrary to his view, it was not proved that the appellant was a party to the contract he would nevertheless be liable on quantum merit by reason of having taken the benefit of the modification of the vehicle. It is not necessary for this court to reach any final conclusion on that point but I think it is right to mention that I do feel some difficulty about that aspect of his Honour's judgment. It must be an exceptional case in which the owner of a chattel, who has had unauthorised work performed to his chattel, can be held to have been unjustly enriched and therefore liable on quantum merit simply because he takes possession of and uses that chattel and disposes of it in due course. There may perhaps be such circumstances but it is unnecessary to analyse the facts in the present case to consider whether they exist in the present case. 20. There is the further difficulty about any judgment based upon quantum merit in this case that the case at trial appears not to have been conducted on the basis of quantum merit. There is no indication from what counsel have told us, or from the judgment of the learned magistrate, to indicate that the issue of quantum merit was canvassed. That would explain why issues relevant to quantum merit such as the degree, if any, to which the value of the vehicle was enhanced by the modifications which were undertaken were not explored at the trial. 21. It is, however, unnecessary to explore further the issue of quantum merit because in my opinion the magistrate and the learned judge on appeal were correct in holding that the appellant was a contracting party and was liable for the amount claimed in contract. 22. In my opinion the appeal should be dismissed.

JUDGE2 MOHR J I agree.

JUDGE3 BOLLEN J I too agree and I share his Honour's reservations about the quantum merit point.