TSW Analytical Pty Ltd v The University of Western Australia - [2017] WASCA 67

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: TSW ANALYTICAL PTY LTD -v- THE UNIVERSITY OF WESTERN AUSTRALIA [2017] WASCA 67

CORAM: BUSS P
NEWNES JA
MITCHELL JA

HEARD: 22 NOVEMBER 2016

DELIVERED : 13 APRIL 2017

FILE NO/S: CACV 141 of 2014

BETWEEN: TSW ANALYTICAL PTY LTD
Appellant
AND
THE UNIVERSITY OF WESTERN AUSTRALIA
Respondent

ON APPEAL FROM:
Jurisdiction              :  DISTRICT COURT OF WESTERN AUSTRALIA
Coram  :STAUDE DCJ
File No  :CIV 3792 of 2013

Catchwords:

Practice and procedure - Judgment entered for respondent in default of appearance - Application to set aside default judgment dismissed - Whether primary judge erred in finding appellant had no arguable defence to claim - Whether fresh evidence should be admitted on appeal - Turns on own facts

Legislation:

Nil

Result:

Appeal allowed

Category: B

Representation:

Counsel:

Appellant: Mr S Penglis
Respondent: Mr R J Price

Solicitors:

Appellant: Thompson Downey Cooper
Respondent: P A Martino

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

Abigroup Contractors Pty Ltd v ABB Service Pty Ltd [2004] NSWCA 181; (2005) 21 BCL 12
Alexander v Ajax Insurance Co Ltd [1956] VLR 436
Allen v Carbone [1975] HCA 14; (1975) 132 CLR 528
Australian Broadcasting Corp v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540
Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14; (2014) 253 CLR 560
Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1908] HCA 88; (1908) 5 CLR 647
Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153
Brenner v First Artists' Management Pty Ltd [1993] 2 VR 221
Carr v Finance Corporation of Australia Ltd [No 1] [1981] HCA 20; (1981) 147 CLR 246
Character Design Pty Ltd v Kohlen [No 2] [2013] WASC 340
Design Joinery & Doors Pty Ltd v IPower Pty Ltd [2015] SASC 93
Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89
Hall v Hall [2007] WASC 198
Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [No 3] [2014] WASC 162
Lumbers v W Cook Builders Pty Ltd (in liquidation) [2008] HCA 27; (2008) 232 CLR 635
Parker v Transfield Pty Ltd [2000] WASCA 382
Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221
Peet Ltd v Richmond (No 1) [2009] VSC 130
R J Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2009] WASC 206
R J Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2010] WASCA 128
Saunders v The Public Trustee [2015] WASCA 203; (2015) 13 ASTLR 226
Spencer v The Commonwealth [2010] HCA 28; (2010) 241 CLR 118
Sunwater Ltd v Drake Coal Pty Ltd [2016] QCA 255
The University of Western Australia v TSW Analytical Pty Ltd [No 2] [2014] WADC 145
TSW Analytical Pty Ltd v The University of Western Australia [2015] WASC 232
Vasco Investments Ltd v Morgan Stanley Australia Ltd [2014] VSC 455
Waldron‑Brown v Geraldton Fisherman's Co‑Operative [1983] WAR 83
Westwind Air Charter Pty Ltd v Hawker De Havilland (1990) 3 WAR 71

BUSS P & NEWNES JA: This is an appeal from a decision of Staude DCJ who dismissed the appellant's appeal from the decision of a deputy registrar. The deputy registrar had refused to set aside a judgment entered by the respondent in default of appearance, finding that the appellant had no arguable defence to the respondent's claim. The primary judge reached the same conclusion. The appellant contends that his Honour erred in doing so.
The appellant requires leave to appeal: Supreme Court Act 1935 (WA), s 60(1)(f); Carr v Finance Corporation of Australia Ltd [No 1] [1981] HCA 20; (1981) 147 CLR 246.
For the following reasons, we would grant leave to appeal, allow the appeal, set aside the decisions of the primary judge and the deputy registrar, set aside the default judgment, and grant the appellant unconditional leave to defend the action.

Background

On 26 November 2013, the respondent (UWA) commenced proceedings in the District Court against the appellant (TSW) claiming the sum of $696,462.46. UWA alleged that the money was owing by TSW under a partly written and partly oral 'research grant and funding agreement', pursuant to which UWA 'would provide academic staff, students and the provision of laboratory resources and other resources (infrastructure resources), and [TSW] would pay [UWA] the expenses for the infrastructure resources and provide funding to [UWA]'. It was alleged that TSW had failed to pay:
•for the infrastructure resources for the period January 2009 to September 2013 in the sum of $30,045.79 (including GST);
•funding for December 2012 in the sum of $79,016.67 (including GST); and
•funding for the period January 2013 to June 2013 in the sum of $587,400.
On 11 December 2013, UWA entered judgment in default of appearance. An application to set aside the default judgment was filed on 30 December 2013. That application was dismissed by a deputy registrar and an appeal from that decision was dismissed by the primary judge, hearing the matter de novo. The primary judge, as had the deputy registrar before him, accepted that TSW had satisfactorily explained the circumstances of its default and that there had been no undue delay in bringing the application, but found that TSW did not have an arguable defence to the claim.
TSW contends that the primary judge (and it necessarily follows, the deputy registrar) was in error in so finding. It contends, in substance, that it has a good defence to the claim as:
1.the research grant and funding agreement did not stand or operate alone but dealt with only one aspect of a broader relationship or arrangement between the parties; and
2.TSW has a counterclaim and an equitable set-off for work done and material provided to UWA outside the research grant and funding agreement, in respect of which TSW is entitled to recover by way of a quantum meruit.
A number of affidavits were filed on the application to set aside the default judgment. None of the deponents was cross-examined on their affidavit and no issues of credibility were relied upon by the primary judge. It is therefore convenient at this stage to turn to the substance of the affidavit evidence.

The affidavit evidence

Mr Scadding's affidavit of 30 December 2013

TSW's application was supported by an affidavit of 30 December 2013 of a director, Mr Scadding. In that affidavit Mr Scadding said, relevantly, that he, Mr Allen Thomas and Dr John Watling had established TSW in 2007. At the time they were all employed by the respondent (UWA) in UWA's Centre for Forensic Science (the Centre). TSW was formed, with the approval of the Vice‑Chancellor of UWA, as a vehicle for Messrs Scadding, Thomas and Watling to undertake consulting work for industry in the interpretation of data associated with fingerprint technology and pattern recognition.
In or about May 2009, TSW expanded its operations to include the provision of analytical services. At that time, TSW began operating from the Centre, and continued operating from that location until November 2013.
Mr Scadding said that no formal agreement regarding the use of UWA's space in the Centre was ever made but the understanding between TSW and UWA was that the relationship should be 'as cost‑neutral as possible' and therefore UWA students would have access to TSW facilities at a discount rate. However, a practice emerged by which:
a)TSW would offer research funding to the Centre calculated by reference to the wages of the UWA staff for the time TSW used the staff members in its business, plus a 15% 'infrastructure charge' to cover 'services, facilities and premises provided by the Centre';
b)UWA would issue monthly invoices to TSW for one-twelfth of the amount of the grant;
c)The money paid by TSW would be used by UWA to pay Centre staff for the time they spent on TSW business or to compensate UWA if those staff had been paid before TSW was invoiced or before UWA received payment from TSW.
Mr Scadding said that, in or about September 2009, TSW and UWA agreed that a facilities access agreement or similar was required to regulate the relationship between TSW and UWA. TSW considered such an agreement was needed to allow for a proper accounting of the services TSW was supplying to UWA, including:
a)support for research students, including the provision of analytical services, training and research supervision;
b)provision of funds for PhD research programmes; and
c)provision of laboratory resources, including equipment owned by TSW.
According to Mr Scadding, while there were subsequently discussions about an agreement, none eventuated.
In relation to the period 1 July 2012 to 31 December 2012, Mr Scadding said that, by a letter of 20 December 2011, TSW offered to provide further research funding to UWA in the amount of $431,000, calculated on the basis that he, five other named employees of UWA and a new team member or casual appointment, would provide their services full‑time to TSW during that period and that an infrastructure charge would apply. On 12 December 2012, UWA invoiced TSW for research funding for December 2012.
Mr Scadding said that, by a letter of 28 February 2013, TSW informed UWA that TSW would provide research funding for the period 1 January 2013 to 30 June 2013 in the sum of $534,000 (excluding GST). That amount was again calculated on the basis that the same persons would provide their services to TSW on a full‑time basis. On 28 March 2013, UWA invoiced TSW for the proportionate amounts of the grant for the months of January, February and March 2013. On 15 May 2013, UWA invoiced TSW for the month of June 2013. Then, on 18 May 2013, UWA invoiced TSW for April and May 2013.
According to Mr Scadding, however, in the period 1 January 2013 to 30 June 2013, UWA failed to provide the services of its staff to TSW at the levels that were the basis of TSW's funding grant; one staff member was on long service leave from UWA, another on maternity leave, and two others were engaged for significant periods over that time in teaching and supervising UWA students. Dr Watling, a director of TSW, was also fully engaged in the supervision of PhD students at UWA. Mr Scadding said that, on his calculations to date, that had involved at least 40% of their respective working weeks.
Mr Scadding said that as a result of those matters TSW's grant exceeded the value of the services actually provided by UWA by $264,582.80. The 15% infrastructure charge had therefore to be adjusted, the adjusted amount being $39,687.42. When GST of $30,427.02 was included, the total amount overpaid by TSW was $334,697.24.
According to Mr Scadding, in or around May 2013, TSW decided to leave the UWA premises and take a lease of premises in Bibra Lake. He then commenced discussions with Professor Dadour, on behalf of UWA, to sort out any amounts owing by one party to the other and regarding the prospect of a continuing relationship between TSW and UWA.
Mr Scadding said that, on or about 10 October 2013, TSW received an invoice from UWA in the sum of $30,045.79 for the period 1 January 2009 to mid‑2013. Mr Scadding denied that the money was owed. He said that some of the charges in the invoice are the subject of other invoices rendered by UWA and the rest do not relate to any goods or services provided by UWA to TSW.
Mr Scadding said he wrote to Professor Dadour on 12 November 2013 regarding the state of their discussions to date. A copy of the letter is annexed to the affidavit. In the letter, Mr Scadding acknowledged that TSW had some liability under the research grant agreements. He said it was his objective to ensure that during TSW's time in the Centre it was as close to 'cost neutral' as possible and he was confident that that was already the case, but he said that before any payment was made to UWA he would like to review and negotiate the amount that needed to be repaid in the context of TSW's contribution and having regard to the fact that some of the amounts claimed by UWA were incorrect. He said that once the amount was established he would like to negotiate repayment over the four‑year period of the proposed new arrangement.
Then, on or about 15 November 2013, TSW received a letter from a solicitor for UWA demanding payment of the sum of $697,352.21. That amount included amounts invoiced by UWA under the research grant agreement and a further $889.75 for additional services in the form of chemical storage and gas and rent charges. Mr Scadding said he responded on 21 November 2013, disputing liability for the amount claimed and attaching a copy of his letter to Professor Dadour of 12 November 2013.
Mr Scadding said that, on 12 December 2013, he wrote to Professor Dadour setting out a claim by TSW against UWA, as the claim had been calculated to that point, in the total sum of $3,709,925.56 exclusive of GST. A copy of the letter is annexed to the affidavit. In the letter, Mr Scadding said that UWA's actions in claiming costs for which TSW obtained a benefit had caused him to undertake a detailed review of all costs incurred by TSW from which UWA had gained a benefit in its delivery of research and the teaching of its students. Mr Scadding said TSW believed this was in line with the understanding that the relationship was based around mutual and equitable benefits to both parties. Enclosed with the letter was an invoice from TSW for 'Recovery of expenses incurred by TSW' in the sum of $4,089,918.12 (including GST).

Ms Rorrison's affidavit of 31 January 2014

Mr Scadding's affidavit drew a response from UWA by way of an affidavit, dated 31 January 2014, of Ms Rorrison, the Faculty Manager (Business Services) for the Faculty of Science at UWA. It was not in issue that Ms Rorrison was not involved in the discussions or correspondence relating to the arrangements between TSW and UWA, apart from some email exchanges she had with Mr Scadding in early 2013, and that her evidence was based on documents in UWA's files.
In her affidavit, Ms Rorrison gave a general description of what she said was the agreement between TSW and UWA. Ms Rorrison said, relevantly, that every six to 12 months during the period 1 January 2008 to 30 June 2013, TSW requested, and UWA provided, the 'Services' [20]. The 'Services' were described by Ms Rorrison as 'academic and research staff and administration and payment of salaries and related costs for the staff' [7]. The staff requested by TSW were employed by UWA on a contract basis. Ms Rorrison said that UWA also provided premises for TSW at UWA's campus at no cost to TSW.
In exchange for the Services, TSW agreed to pay a 'Research Grant' equal to the salaries paid by UWA to the academic and research staff, plus an infrastructure charge of 15% of the total salaries 'to cover [UWA] for indirect costs associated with the provision of the Services, for example, the cost of [UWA's] finance staff processing the wages of the academic and research staff provided to [TSW].' UWA, at TSW's request, would invoice TSW for the research grant on a monthly basis.
Ms Rorrison said that the costs incurred by UWA in providing the Services were, at the conclusion of the 'research grant period' (the period 1 January 2008 to 30 June 2013), to 'be fully funded and any shortfall was to be paid by [TSW] to [UWA]' ([20] ‑ [25]).
Ms Rorrison said that throughout the period 1 January 2008 to 30 June 2013, UWA had provided the Services to TSW but in breach of the research funding agreement TSW had not paid invoices rendered by UWA totalling $666,416.67. According to Ms Rorrison, once it was confirmed that the research funding agreement would not be renewed beyond 30 June 2013, UWA reviewed all costs for the Services provided by UWA over the period of the research funding agreement to ensure that it was cost neutral to UWA. An additional amount of $30,045.79 (including GST) was found to have been incurred by UWA and was invoiced to TSW.

Mr Scadding's affidavit of 4 July 2014

Ms Rorrison's affidavit brought forth a further affidavit of Mr Scadding, sworn on 4 July 2014. In that affidavit, Mr Scadding expanded upon the development of the arrangements with UWA.
Mr Scadding said that after TSW commenced operations in July 2007, work that he, Mr Thomas and Professor Watling carried out for TSW was initially done out of UWA work hours or within the 20% allowable for consultancy work. In early 2008, he and Professor Watling had a number of meetings with Professor Dadour, the head of the Centre, to discuss how to develop the relationship between the Centre and UWA. Mr Scadding said that at a meeting held in about March 2008, Professor Dadour had suggested that staff paid by TSW should be transferred to the UWA payroll. The reasons Professor Dadour gave were that UWA and the Centre would be seen to attract research funding and that, in turn, would attract government funding; TSW research publications would count towards the Centre's performance, making it easier to attract external funding; it would strengthen the relationship between TSW and UWA; and the increased staff would make it easier for the Centre to deal with UWA bureaucracy. As a result, between about August 2008 and July 2009, TSW research staff were transferred to the UWA payroll.
Mr Scadding said that, in September 2009, he received a letter from Professor McEachern, Deputy Vice Chancellor (Research and Innovation), in which Professor McEachern stated that it was imperative there was a formal agreement that defined the relationship between UWA and TSW. There were then discussions to that end with an officer of UWA, Mr Handford. On 24 September 2009, Mr Scadding replied to Professor McEachern's letter, acknowledging the need for a formal agreement and setting out TSW's view as to the benefits of the relationship to each party.
Mr Scadding said that he did not receive a reply from Professor McEachern and nothing more was heard from UWA until Professor Watling received a letter, dated 3 March 2010, from Professor Louden, Senior Deputy Vice Chancellor of UWA. A copy of the letter is attached to the affidavit. In the letter, Professor Louden referred to correspondence between UWA and TSW in late 2006 and observed that there appeared 'to be some ambiguity about the relationship between [UWA] and [TSW]'. Professor Louden asked for written information about six specific issues. One of those issues was whether TSW was operating from UWA premises and, if so, the documentation approving those activities and the terms that governed the use of UWA premises. Professor Watling wrote a lengthy letter, dated 21 March 2010, in response, a copy of which is attached to the affidavit. In his reply, Professor Watling said in relation to that issue that TSW did operate from UWA premises as all TSW staff were UWA employees paid for by TSW research grants. He said that TSW had been actively trying for 18 months to get terms and conditions for its association with UWA. He complained that nothing had been forthcoming from UWA 'to constructively help us establish the relationship' and expressed the hope that Professor Louden's initiative would be 'the first constructive attempt to put [TSW's] association with UWA on a firm and logical footing.'
Mr Scadding said that shortly afterwards UWA commenced requesting various pieces of information and he annexed to his affidavit correspondence in relation to those requests.
Turning to TSW's claim against UWA, Mr Scadding said that prior to the commencement of the legal action by UWA, TSW had not invoiced UWA for any of the support provided by TSW to UWA students at the Centre because of TSW's 'agreement' with UWA. That support involved analysis of research samples, direct costs such as consumables, chemicals, travel, staff support and supervision. Mr Scadding said he considered that, by taking the legal action, UWA had reneged on the agreement and he had therefore undertaken a detailed review of TSW's contribution to the Centre. He described in the affidavit the process of review by which he identified analytical service charges of $2,613,137.60, student costs of $44,534.30 and staff costs of $1,052,253.66, a total of $3,709,925.56, plus GST. A spreadsheet setting out his calculations was attached to his affidavit. He said that he had since identified further costs to be recovered. We should mention that the 'agreement' referred to by Mr Scadding is not specifically identified in his affidavit. On the hearing of the appeal, counsel for TSW said it referred to discussions in 2006 with Dr Dadour in which reference had been made to a collaboration between UWA and TSW in which neither party profited at the expense of the other (ts 32).

Mr Scadding set out (at [85]) what he considered to be TSW's defence to UWA's claim, as follows:
a)A joint venture agreement exists between TSW and UWA;
b)The terms of that joint venture included:
i.Neither party would be obliged to pay the other for what the other contributed to the joint venture;
ii.Neither party would profit at the expense of the other party;
c)The alleged 'Research Funding Agreement' was not a binding agreement (or set of agreements) between the parties, alternatively any such agreement(s) did not stand or operated [sic] separately from the joint venture agreement between TSW and UWA, but rather was no more than an agreed mechanism by which funds were paid by TSW to UWA under the umbrella of the joint venture agreement;
d)Alternatively, if UWA denies the existence of the joint venture agreement, then TSW has a counterclaim and set-off against UWA with respect to all of the work done by TSW for the benefit of UWA (including its students) for which TSW did not invoice UWA and which amount exceeds the amount claimed by UWA in this action. It would also have a counterclaim and set-off against UWA for breach of the alleged 'Research Funding Agreement' as a consequence of UWA staff members not being available to TSW notwithstanding that the amounts claimed by UWA against TSW in this action related to those people being wholly available to TSW.

Ms Rorrison's affidavit of 21 July 2014

That affidavit in turn drew a response from UWA in the form of another affidavit of Ms Rorrison, sworn 21 July 2014. It is largely repetitive of her earlier affidavit. In this affidavit, Ms Rorrison again described the research funding agreement. She did so, however, in the following terms:
9.…the Research Funding Agreement was an agreement whereby [UWA] employed certain staff (requested by [TSW]) which were made available to [TSW] in return for payments by [TSW] for the provision of those staff.
10.The Research Funding Agreement was cost neutral in that [UWA] would neither profit nor lose from the Research Funding Agreement which it entered into with [TSW].
We should note that, in contrast to the indorsement of claim on the writ, in neither of her affidavits does Ms Rorrison suggest that the research funding agreement included the provision by UWA of 'laboratory and other resources'. In her first affidavit, Ms Rorrison said the Services to be provided by UWA under that agreement were 'academic and research staff and administration and payment of salaries and related costs for the staff'. She said the infrastructure charge of 15% of the total salaries which constituted part of the research grant was 'to cover indirect costs [such as] processing the wages of the academic and research staff.' In both affidavits, Ms Rorrison said that the research funding agreement was to be 'cost neutral' (GAB 35 [7], 301 [10]).

The reasons of the primary judge

TSW contended before the primary judge that the agreement to pay the research grant for the Services was part of a broader agreement, or joint venture, between the parties. Under that broader agreement, TSW obtained, among other things, accommodation and the corporate positioning of being a partner of UWA, and UWA received the use of TSW's equipment by UWA students, the provision of analytical service charges for the student's work and the supervision of the students by staff paid for by TSW. The research funding agreement was simply a mechanism by which TSW paid for its staff after they were transferred to the UWA payroll. Under the broader agreement, neither party was to benefit at the expense of the other; it was to be 'cost neutral' in that sense. On the evidence, UWA had in fact gained a much greater benefit from the relationship than TSW, the value of which TSW was entitled to recover on a quantum meruit.
TSW submitted that if it was under a legal obligation to pay the research funding grants it has a defence in the form of an equitable set-off on the basis that:
a)UWA is indebted to TSW for the services TSW provided to UWA students on a quantum meruit; and
b)UWA breached the funding agreement for the period 1 January 2013 to 30 June 2013 by failing to provide replacement staff for those required staff who were unavailable or engaged in that period for work for UWA.
UWA argued that there was no evidence that UWA had entered into a joint venture with TSW, or that UWA had requested or agreed to pay for the services provided to it by TSW. The only agreement between the parties was the research funding agreement by which TSW funded UWA to provide staff to TSW, that agreement being evidenced by the offers made by TSW and accepted by UWA over the period 2008 to 2013. As the relationship between the parties was governed by that agreement, there could be no claim by TSW by way of unjust enrichment.
The primary judge considered that two things were clearly established. First, that from 2009 to 2013 there was 'a series of funding agreements pursuant to which TSW paid UWA for the salaries of its personnel and a 15% infrastructure fee'. The primary judge found that TSW's contractual liability to pay UWA the amount of the salaries of TSW personnel employed by UWA (plus infrastructure charge) for December 2012 and the first half of 2013 was established by the consistent periodic offers and acceptances in relation to salary funding over the period 2008 to 2013 [106], [108]. (We note in passing that that appears to be inconsistent with the indorsement of claim which refers to a single, partly written and partly oral, agreement.)
Second, there was no evidence of an agreement for TSW to pay for the use of UWA's facilities or for UWA to pay for the teaching, supervision and analytical services provided by TSW personnel to UWA students [106].
His Honour found that while there was more to the arrangement between the parties than just the funding of salaries, in that there were also to be mutual benefits to the parties, the model adopted was intended to be 'cost neutral' [109]. That was demonstrated by the letter from Mr Scadding to Professor McEachern of 24 September 2009 in which Mr Scadding made it plain that although TSW saw itself as contributing more to the relationship than UWA in terms of value, the model adopted was intended to be cost neutral. That, his Honour found, was common ground. There was no agreement by which UWA would be liable to pay TSW for its services [110], [114]. The only agreement involving the payment of money was the research funding agreement in respect of salaries [111]. In relation to matters other than the funding of the salaries of TSW personnel, there was no express agreement other than that the arrangements between the parties would be cost neutral [114].
The primary judge observed that TSW did not allege an implied contract in respect of the services it provided but contended it was entitled to recover for those services on a quantum meruit, on the basis that it would be unconscionable for UWA, having requested services from TSW from which UWA has benefited, not to pay a reasonable fee for them [119]. His Honour rejected that contention as unarguable. He described it as common cause that the agreement that TSW was able to operate its business within the Centre involved the mutual benefits described in the letter of 24 September 2009 from Mr Scadding to Professor McEachern [121]. TSW having enjoyed the identified benefits to it, it was not open to it at the conclusion of the relationship to argue that it would be unconscionable for UWA to retain the identified benefits to UWA [122]. By admitting an agreement that the mutual benefits would be cost neutral, TSW was precluded from maintaining a claim for restitution [123].
The primary judge also rejected as unarguable TSW's contention that it had a claim against UWA for breach of the research funding agreement by failing to provide replacement staff for the staff on which TSW's offer of funding for the period 1 January 2013 to 30 June 2013 was based who were unavailable [124]. His Honour found that the agreement was for TSW to pay for the employment by UWA of the specified TSW personnel, not simply for TSW to pay UWA for the time that those personnel were actually working on TSW business. That was evident from the way in which grant amounts were calculated by TSW. The salary calculations for the period January to June 2013 were made by Mr Scadding in the knowledge that one employee would be on long service leave, another on maternity leave and that others would be involved in teaching and supervision of UWA students [126]. There was no evidence of any agreement that TSW was liable only to pay for actual services [129].
The primary judge concluded that TSW did not have any credible defence to the claim and dismissed the appeal.

Grounds of appeal

The grounds of appeal relied upon by TSW can be sufficiently summarised as follows:
1.The primary judge erred in fact and law in finding that in relation to matters other than the funding of the salaries of TSW personnel, there was an express agreement that the arrangements between the parties would be cost neutral. His Honour should have found that in relation to all other arrangements between the parties no binding agreement existed to the effect that such arrangements would be cost neutral;
2.The primary judge erred in law in finding that by admitting an agreement that the mutual benefits provided by the parties would be cost neutral, TSW was precluded from maintaining the claim for restitution. His Honour should have found that, as he did not uphold the agreement contended for by TSW, TSW was not so precluded as the work and services fell outside any contract found by his Honour. In addition, his Honour should have found that 'cost neutrality' does not mean one party agreeing not to charge the other;
3.The primary judge erred in fact and law in finding that no ambiguity about the relationship between the parties had been shown with respect to their financial obligations; and
4.The primary judge erred in fact and law in finding that it was not reasonably open to TSW, having benefited from the relationship with UWA, to argue at the end of the relationship that it would be unconscionable for UWA to retain the benefit it had accepted and that no possible equitable set-off or credible defence had been made out. His Honour should have held that TSW had an arguable claim for quantum meruit that sounded as a credible equitable set-off.

The disposition of the appeal

The principles relevant to an application to set aside a default judgment that had been regularly entered were not in issue. It was common ground on the appeal that it was not for the court to attempt to resolve factual issues but that, provided the defendant's case is not inherently incredible, the question is whether, if the defendant's evidence were accepted at trial, the defendant would have a real prospect of success. That is, whether, on that basis, the defence is reasonably arguable. See Parker v Transfield Pty Ltd [2000] WASCA 382 [3]; Hall v Hall [2007] WASC 198. That is not a high threshold.
The grounds of appeal can conveniently be dealt with together. The central issue on the appeal was whether the primary judge had erred in finding that TSW did not have an arguable defence by way of a set‑off of a quantum meruit for the value of services it provided to UWA in the period 2008 to 2013, or alternatively a counterclaim on a quantum meruit for the value of those services so that enforcement of the judgment obtained by UWA should be stayed until UWA's liability was determined. TSW accepted that a finding, as was made by the primary judge, that the supply of the services to UWA was provided for under a contract between the parties was fatal to such a claim: see Lumbers v W Cook Builders Pty Ltd (in liquidation) [2008] HCA 27; (2008) 232 CLR 635 [111]. It maintained, however, that the primary judge had erred in finding that such a contract clearly existed.
UWA maintained that the primary judge had correctly found ([114], [123]) that TSW did not have an arguable claim against UWA for the services or benefits that TSW claimed; that on the affidavit evidence the only conclusion reasonably open was that, apart from the agreement for the provision and funding of TSW staff, there was an express agreement or understanding between UWA and TSW that the arrangements between them were to be 'cost neutral' - that is, neither was to charge for services or benefits provided to the other.
We are satisfied that the position is not as clear as the primary judge found. The determination of what agreement or agreements were made between the parties, and the terms of them, involves a determination of the objective intention of the parties. In the present case that involves a consideration of the (many) communications between them. It is therefore both appropriate and necessary to have regard to the circumstances surrounding the exchange of communications: Allen v Carbone [1975] HCA 14; (1975) 132 CLR 528, 531 ‑ 532; Australian Broadcasting Corp v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, 550. Regard may also be had to subsequent conduct of the parties, which is admissible on the question whether a contract has been formed, as distinct from its interpretation: Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1908] HCA 88; (1908) 5 CLR 647; Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 [25]; Abigroup Contractors Pty Ltd v ABB Service Pty Ltd [2004] NSWCA 181; (2005) 21 BCL 12 [63].
That is not a task that ordinarily can appropriately be undertaken on affidavit evidence on an interlocutory application of the nature below, except in the most straight-forward cases. This, in our view, is not such a case. On the affidavit evidence it could not be concluded that TSW's case was unarguable. Indeed, it is evident that, perhaps not surprisingly in the circumstances, there appears even on UWA's part to be significant equivocation as to the contractual relationship between them.
In the writ, UWA alleged that the agreement was partly written and partly oral. Insofar as the agreement is alleged to have been written, it is evidently to be found in the correspondence and other documents that passed between the parties. The specific documents relied upon are not, however, identified in the writ and nor are they clearly identified in the profusion of documents in the affidavit evidence. Nor are the persons who are alleged to have participated in the relevant conversations identified or the substance of those conversations stated. There was no affidavit from anyone on behalf of UWA who was involved in making the alleged agreement.
As mentioned earlier, the only affidavit evidence relied upon by UWA was that of Ms Rorrison, who had no such involvement. The agreement described by Ms Rorrison, in contrast to the indorsement on the writ, makes no mention of the provision of 'laboratory and other resources' by UWA. On Ms Rorrison's evidence, the only agreement between the parties was the research funding agreement which involved the payment by TSW of the salaries of staff provided by UWA and an infrastructure charge of 15% of the total salaries to cover indirect costs such as processing the wages of the academic and research staff. That agreement was to be 'cost neutral in that [UWA] would neither profit nor lose from [it].' In respect of the premises occupied by TSW, Ms Rorrison simply said that they were provided free of charge by UWA.
In the course of argument, when asked why there was no evidence from anyone from UWA involved in the agreement on which it relies, counsel for UWA said there was 'no affidavit from Professor Dadour' because UWA had 'four excellent documents from TSW' (ts 64 ‑ 65). Counsel conceded that but for those four documents 'there might be an argument' that TSW had a claim based on a quantum meruit (ts 42).
In circumstances where UWA relies upon an agreement that is said to be partly written and partly oral it is difficult, however, to understand why, in order to establish the agreement, UWA should be relying merely upon the four documents referred to as constituting admissions by TSW, and why no evidence was sought to be adduced by UWA as to the substance of the discussions alleged to constitute the oral part of the agreement. Indeed, it would appear from Ms Rorrison's affidavits that, unaided by such evidence, UWA is attempting to reconstruct the alleged agreement simply from the material on its files. In the circumstances, what are said to be the admissions by TSW in the documents must be approached with some caution.
The four documents referred to by UWA's counsel were:
1.an 'Introduction and Positioning Document' written by Mr Scadding and Professor Watling on behalf of TSW in or around December 2008 and sent to the Vice Chancellor of UWA, the Dean of Science and Professor Dadour;
2.a letter, dated 24 September 2009, from Mr Scadding on behalf of TSW to Professor McEachern;
3.a letter dated 21 March 2010, from Professor Watling on behalf of TSW to the senior deputy vice chancellor of UWA, Professor Louden; and
4.a document, dated 11 October 2011, entitled 'Observations and Findings Report: Review of TSW Analytical', prepared by Deloitte Touche Tohmatsu, on which Mr Scadding had made some handwritten comments (GAB 190 et seq).
We were taken through those documents, and others, in some detail by counsel for UWA who identified various passages that he submitted were consistent only with UWA's case that the services and benefits were expressly provided by TSW on the basis that UWA would not be charged for them. Counsel for TSW went through some of the same documents, and others, to extract other passages which he submitted were consistent with TSW's case.
It is unnecessary to canvass the documents and, as we have concluded that the matter should go to trial, it is inappropriate to do so. Suffice it to say that there are obvious dangers in drawing conclusions of the nature UWA seeks to draw from particular passages extracted from documents of that nature spanning a period of some four years, isolated from a full understanding of the surrounding circumstances in which they occurred and the discussions which are alleged to constitute part of the agreement. The documents were written not by lawyers but by laymen, and it is evident that they were written not with an eye to identifying the specific contractual rights and obligations of the parties but for other purposes. Having read the documents, we consider that the necessary task of identifying the objective intention of the parties as to the legal effect of the arrangements between them goes beyond something that could properly be undertaken on the available affidavit evidence. For present purposes, it is sufficient to say that on the evidence we are satisfied that TSW's case cannot be said to be unarguable.
We are reinforced in that view by the additional evidence that TSW seeks to adduce on the appeal. That evidence comes from proceedings commenced by TSW against UWA shortly after the decision of the primary judge was delivered. In particular, TSW seeks to rely upon the defence filed by UWA in that action and an affidavit of Ms Rorrison filed on behalf of UWA. The application was opposed by UWA on the ground that the additional evidence was of no probative value.
The relevant principles are well‑established and were recently set out in Saunders v The Public Trustee [2015] WASCA 203; (2015) 13 ASTLR 226 [87] ‑ [90]. They can for present purposes be sufficiently summarised as follows:
a)the strong public interest in the finality of litigation is an important consideration and that is a powerful reason for strictly confining the circumstances in which a party will be allowed on appeal to augment the evidence led below;
b)an important consideration is whether the additional evidence is fresh evidence that either did not exist at the time of the proceedings below or could not then have been discovered with reasonable diligence - generally the discretion will be exercised against evidence which is not fresh evidence;
c)relevant considerations will be the strength of the evidence, whether it is contested, and whether there is a significant possibility that it would have led to a different result if admitted below. If evidence is contested and, if admitted, would require a new trial to resolve factual issues, that will count against its admission on appeal.

It is necessary to explain the context of the proposed new evidence before going to that evidence. On 23 December 2014, TSW commenced proceedings in the Supreme Court against UWA (the Supreme Court action) claiming the sum of $4,705,246.97 by way of a quantum meruit in respect of substantially the same services and benefits that constitute the quantum meruit it seeks to advance in the District Court proceedings. A statement of claim in the Supreme Court action was filed and served on or about 17 February 2015.
On 9 March 2015, UWA applied for defendant's summary judgment under O 16 r 1 of the Rules of the Supreme Court 1971 (WA). In support of that application, it filed an affidavit of Ms Rorrison, sworn on 9 March 2015. On 8 June 2015, Master Sanderson dismissed UWA's application: TSW Analytical Pty Ltd v The University of Western Australia [2015] WASC 232. The master considered that there was too much uncertainty about the contractual position of the parties for summary judgment to be entered [9].
As we have mentioned, TSW seeks to adduce on the appeal the statement of claim, Ms Rorrison's affidavit, and UWA's defence in the Supreme Court action. The statement of claim is sought to be admitted only by way of context. The additional evidence is plainly fresh evidence, being evidence that was not available at the time of the hearing before the primary judge, and it is plainly not contested evidence.
In the statement of claim, TSW pleads, in substance, that it supplied the services, materials and benefits to UWA. TSW further pleads that the parties intended to enter into a legal agreement to govern the terms upon which the services, materials and benefits were to be provided but did not do so. It alleges that the services, materials and benefits were provided at UWA's request and accepted by UWA knowing they were not being provided gratuitously, and TSW claims a reasonable amount for them. Based on its affidavit evidence, that is an adequate pleading of a restitutionary claim against UWA. See Sunwater Ltd v Drake Coal Pty Ltd [2016] QCA 255 [34] ‑ [41].
In her affidavit in support of UWA's application for summary judgment, Ms Rorrison says, apparently by way of explanation for the delay between service of the writ and the application, that UWA wanted to consider the full particulars of TSW's claim before making the application, as such an application 'requires careful consideration'. That consideration has, however, produced a rather different version of the contractual position of the parties to that asserted in the District Court proceedings.
Ms Rorrison says, at [9] to [20] of her affidavit, that during the period 2008 to 2013 a 'research funding agreement' came into effect between UWA and TSW under which TSW would offer research funding to UWA to reimburse it for salaries and related costs of academic staff, and a 15% infrastructure charge. Ms Rorrison says the process was that Mr Scadding would submit a written offer for the funding and request periodic invoices. The offers were then processed by UWA and invoices issued in line with the request. Attached to the affidavit were offer letters sent by Mr Scadding to UWA in the period 2008 to 2013. Ms Rorrison says that her knowledge of that agreement comes from her access to UWA's business records and her involvement in email exchanges with Mr Scadding in February 2013 and March 2013 [20].
At [21] of her affidavit, Ms Rorrison says:
In addition to the research funding agreement referred to in paragraphs 9 to 20 inclusive, throughout the period of 2008 to 2013 an agreement between [TSW] and [UWA] arose from conduct of [TSW] and [UWA] in that [TSW] used [UWA's] premises for carrying on its business, had access to [UWA's] facilities such as library and other services, [TSW] had perceived association and credibility by being located on [UWA's] campus and [TSW] was better positioned to source expertise by being located on [UWA's] campus. In return for the services that [UWA] provided to [TSW], [TSW] supported [UWA's] students, provided tuition, provided laboratory equipment and consumables for the use of [UWA] and its students.
Ms Rorrison says that her knowledge of that agreement comes from her access to UWA's business records [28].
As we have said, the application for summary judgment was dismissed. In the defence that UWA subsequently filed, it denied TSW's plea that no contract was entered into in respect of the services, materials and benefits, and pleaded that at all material times a contract, partly in writing and partly by conduct, existed between UWA and TSW. Insofar as it was in writing it was alleged to be constituted by a letter from UWA dated 23 November 2006 and TSW's reply dated 8 December 2006. Insofar as it was constituted by conduct it was alleged to be constituted by the following conduct:
i.Following the exchange of the above letters, between 2008 and 2013, [UWA] provided to [TSW] free of charge use of its laboratories, offices and other facilities, access to and use of its libraries and the commercial benefit of being associated with [UWA's] standing and reputation as a place of learning and research.
ii.In return, between 2008 and 2013, [TSW] provided to [UWA] free of charge support for [UWA's] research students, provision of student tuition and lecturing, and provision of funds for post-graduate research.
iii.During the same period [TSW] utilised certain of [UWA's] staff for its private commercial purposes and paid for the time of such staff. It would periodically advise [UWA] of what staff were involved in [TSW's] business and the period of their involvement whereupon [UWA] would invoice [TSW] for a sum equal to the salaries of those staff and, until December 2012, [TSW] paid the amount of [UWA's] invoices.
iv.Other than the charges referred to in sub-paragraph (iii), neither party sought from the other payment for the services provided by each of them and particularised in sub-paragraphs (i) and (ii).
On this appeal, counsel for TSW submitted that UWA's case in the Supreme Court action was a different case to the case that UWA had put to, and had been found by, the primary judge. Counsel for UWA conceded (quite properly) that it was a different case (ts 59). He said:
Your Honour, I can't deny that because your Honour can see … that there are different positions as to what the agreement was, as to how you would shape the agreement. I can't deny that but what I can say is that, although there is difficulty pinning down the exact particulars of the agreement, there's no doubt that there was an agreement. So whether the agreement is wrapped up with the salaries agreement, the research funding agreement, or whether it's separate matters not. Whether it's a partly oral or partly written or wholly by conduct matters not (ts 59 - 60).
We do not, however, accept UWA's submission that it is immaterial what the nature and character of the agreement was - or the agreements were. The fact that in another court UWA has put a different case is relevant to the cogency of the case it put to the primary judge. It is evident that, as its counsel conceded, UWA is having difficulty pinning down the particulars of the agreement it contends governed the parties' relationship. Indeed, it is evident that it is having difficulty pinning down the contractual relationship between the parties.
UWA has now alleged three different contractual relationships:
•in the District Court, it alleged the research funding agreement, which was partly written and partly oral - albeit, the relevant terms of the agreement alleged in the writ were somewhat different to those subsequently deposed to by Ms Rorrison in that court;
•in the application for summary judgment in the Supreme Court action, it alleged by the supporting affidavit of Ms Rorrison that there were two contracts - the research funding agreement, which was partly written and partly oral, and a separate agreement by conduct in relation to the services; and,
•in its defence in the Supreme Court action, it alleges there was one contract, which was partly written and partly by conduct, that single contract apparently subsuming the two contracts alleged in Ms Rorrison's affidavit in the summary judgment application.
This shifting of ground demonstrates an uncertainty on UWA's part as to the arrangements between them that is mirrored in some of the contemporary documents and which is entirely explicable in the absence of any document clearly spelling out the terms of the relationship. We do not accept UWA's submission (ts 60) that its equivocation is beside the point because on the affidavit evidence it is able to point to a clear, unequivocal consensus between the parties that TSW would not charge UWA for the services and benefits that constituted its quantum meruit claim. That is because, for the reasons we have previously explained, we do not accept the contention that on the affidavit evidence it is able to point to such a clear, unequivocal consensus.
In our view, there is a significant possibility that the result below would have been different had the additional evidence been available. We would admit the additional evidence.
In our respectful opinion, the primary judge erred in concluding that on the affidavit evidence TSW's case was not reasonably arguable. It is not in issue that TSW provided services to UWA of the nature relied upon by TSW for the proposed quantum meruit. The issue between the parties is the basis upon which TSW did so. That involves a process of fact-finding that, in our view, can only be undertaken at trial when all of the relevant communications between the parties can be examined in the context of the surrounding circumstances. On the basis of the affidavit evidence alone, it could not be said that TSW does not have an arguable claim. The fresh evidence reinforces that view. We would allow the appeal.
Finally, there was a question on the appeal whether, if an arguable quantum meruit were made out, it was capable of giving rise to an equitable set-off. In its written submissions, UWA argued that it was not, as it did not go to the root of or impeach UWA's claim, nor was it directly connected with UWA's claim: Westwind Air Charter Pty Ltd v Hawker De Havilland (1990) 3 WAR 71, 84 ‑ 86. At most, it was in the nature of a counterclaim.
In oral argument, counsel for UWA acknowledged, however, that a quantum meruit was capable of giving rise to a legal set‑off, on the basis that a quantum meruit was within the meaning of 'debts' under the Statutes of Set-Off (1729) 2 Geo II c 22, s 13; (1735) 8 Geo II c 24, s 4. Reference was made to Alexander v Ajax Insurance Co Ltd [1956] VLR 436 (cf Waldron‑Brown v Geraldton Fisherman's Co‑Operative [1983] WAR 83, 86). We were invited not to expend any great amount of ink on the issue of an equitable set‑off if we found there was a legal set‑off (ts 57). Counsel for UWA also expressly conceded that if the court found that TSW's claim did not give rise to a set‑off but simply a counterclaim, it could order that enforcement of UWA's judgment be stayed, albeit he argued that there was no basis for a stay as the claim had no merit (ts 65 ‑ 66).
In light of the state of the evidence, we do not think it is possible to conclude that TSW's claim that the alleged quantum meruit gives rise to an equitable set-off is unarguable. It is a matter that should be left to trial. In any event, the claim arguably gives rise to a legal set‑off. If we were wrong on the question of set‑off, we would, in any event, have ordered that enforcement of the judgment entered for UWA be stayed until the determination of TSW's claim.

Conclusion

We would:
1.grant leave to appeal;
2.allow the appeal;
3.set aside the orders of the primary judge;

4.set aside the orders of the deputy registrar;
5.set aside the judgment entered for UWA in default of appearance;
6.grant TSW unconditional leave to defend the action; and
7.hear from the parties on costs.

MITCHELL JA: I agree with Buss P and Newnes JA that this appeal should be allowed for the reasons which their Honours have explained in their joint reasons. I also agree that the orders proposed in the joint reasons should be made. I would add the following supplementary observations in relation to the issues raised by this appeal.

Summary

The appellant, TSW Analytical Pty Ltd (TSW) was formed in 2006. It was formed by three employees of the respondent, the University of Western Australia (UWA), who were working in UWA's Centre for Forensic Science. TSW was formed at least in part as a vehicle for the employees to undertake consultative work in areas associated with forensic analysis. TSW operated from UWA's premises until 2013. TSW's 'personnel' were employed as staff members of UWA at least until June 2013.
The precise nature of the relationship between TSW and UWA, and the arrangements by which UWA staff worked as TSW's 'personnel', is largely undocumented and opaque. Writing to TSW on 3 March 2010, UWA's Senior Deputy Vice‑Chancellor observed that there 'appears to be some ambiguity about the relationship between' UWA and TSW.[1] The material produced by the parties to this litigation strongly suggests this observation to have been, and remain, accurate.
[1] Annexure CJS-37 to the affidavit of Cameron Jay Scadding sworn 4 July 2014; GAB 155.
On 29 November 2013, UWA served the writ of summons in the primary proceedings, in which UWA claimed payment of $696,462.46, on the North Perth registered office of TSW. Judgment was regularly entered in default of appearance on 11 December 2013. When TSW attempted to enter an appearance on 13 December 2013, it could not do so as default judgment had already been entered. TSW promptly applied for the default judgment to be set aside.

On 20 March 2014, a registrar of the District Court of Western Australia reduced the default judgement sum by $30,045.79, and granted TSW leave to defend UWA's claim with respect to that amount. The registrar otherwise dismissed TSW's application to set aside the default judgement. TSW appealed to the primary judge seeking a (de novo) review of its application.
The primary judge was satisfied that the delay in entering an appearance had been satisfactorily explained. The primary judge would have set aside the whole of the default judgment but for his conclusion that TSW had no arguable defence to the claim.
In my view, the primary judge erred in adopting that approach. The material before the District Court did not enable it to conclude that TSW's defence was certain to fail. Default judgment ought to have been wholly set aside in the circumstances.

The undesirability of arguments about what is arguable

This case illustrates the threat which disputes about the existence of an arguable case or defence pose to the fair and efficient resolution of civil litigation. The action was commenced in 2013, and if default judgment had been set aside in January 2014 the final resolution of the claims could have been well advanced, if not concluded, by this time. The ultimate resolution of the action has been delayed by over two years while the issue of whether TSW has an arguable defence has been resolved. The parties have been put to the expense of contested hearings before a registrar of the District Court of Western Australia, the primary judge and this court. The limited resources of the courts have been taken up in dealing with the issue. The result of all this effort is that progress of the action towards final resolution is no further advanced than when the action was commenced. The years taken to determine whether TSW had an arguable defence would have been more productively spent by the parties and the court working towards determining whether or not the defence was actually made out.
Primary and appellate litigation about what is arguable can result in considerable wastage of time and resources while the issue is resolved. The summary determination of proceedings also risks injustice to the unsuccessful party who is denied a full opportunity of presenting that party's case. These considerations inform the court's general approach of summarily determining contested questions only in the clearest of cases, where one party can demonstrate that the question will certainly be resolved in their favour.[2]
[2] See, for example, Spencer v The Commonwealth [2010] HCA 28; (2010) 241 CLR 118 [54] ‑ [55] as to the similar principles applied on a summary judgment application.
Parties considering making an application which depends on establishing the absence of any arguable case or defence should consider the risks involved before embarking on the exercise, in which they bear a heavy onus. Courts exercising the broad case management powers in O 4A of the Rules of the Supreme Court 1971 (WA) (Rules), in a manner consistent with the case management principles in O 1 of the Rules, should consider other options when a party is contemplating such an application. For example, particularly where there are few primary facts in dispute, a prompt trial of whether a claim is established may be achievable in a similar timeframe required to decide whether the claim is arguable. Active case management to determine, with the parties, the most efficient manner of resolving the case may reduce the extent to which the time and resources of the court and the parties is distracted by arguments about what is arguable. While there will be cases where summary determination is appropriate, they will not involve complex and contestable issues of fact or law.

UWA's contractual claim

By its endorsement of claim in the primary proceedings, UWA alleged the existence of a 'partly verbal and partly written research, grant and funding agreement' between TSW and UWA. That agreement was said to have been entered into '[t]hroughout 2009 to 2013'. The agreement allegedly required UWA to provide TSW 'academic staff, students and provision of laboratory and other resources ("infrastructure resources")'. The agreement was also said to provide for TSW to pay UWA 'the expenses for the infrastructure resources and provide funding to' UWA. It was alleged that, in breach of the agreement, TSW failed to reimburse UWA for infrastructure resources provided by UWA between January 2009 and September 2013 and to pay specified amounts of funding between December 2012 and June 2013. UWA made a claim for payment of $696,462.46, of which $30,045.79 related to reimbursement of infrastructure resources.
TSW advanced two alternative defences to this claim.

TSW's principal defence was rejected

The principal defence was that there was a joint venture between UWA and TSW pursuant to which 'neither party would be obliged to pay the other for what the other contributed to the joint venture'. TSW contended that the alleged research funding agreement was not a binding agreement, but rather was 'no more than an agreed mechanism by which funds were paid by [TSW] to [UWA] under the umbrella of the joint venture agreement'.[3]
[3] Defendant's outline of submissions before the primary judge, pars 14 ‑ 15; BAB 50 ‑ 51; affidavit of Cameron Jay Scadding sworn 4 July 2014, par 85; GAB 117 ‑ 118.
The primary judge rejected TSW's principal defence. He found that there was, from 2009 to 2013, a series of funding agreements pursuant to which TSW paid UWA for the salaries of its personnel and a 15% infrastructure fee. He found that this constituted a contractual arrangement to pay amounts which UWA had invoiced to TSW.[4] TSW does not challenge that aspect of the primary judge's decision.
[4] The University of Western Australia v TSW Analytical Pty Ltd [No 2] [2014] WADC 145 [106], [107], [111] ‑ [112].

TSW's alternative defence

TSW's alternative defence was a true alternative, in that it only arose if its principal defence was rejected: ie if the court found that the joint venture arrangement which TSW asserted did not exist. Relevantly, the alternative defence was that TSW had a counterclaim and set‑off in equity against UWA 'with respect to all of the work done by [TSW] for the benefit of [UWA] (including its students) for which [TSW] did not invoice [UWA] and which amount exceeds the amount claimed by [UWA] in the' primary proceedings.[5]
[5] Defendant's outline of submissions before the primary judge, par 14(d); BAB 50 ‑ 51; affidavit of Cameron Jay Scadding sworn 4 July 2014, par 85(d); GAB 118.

TSW's restitutionary counterclaim

The legal framework of TSW's counterclaim is best articulated in its Statement of Claim in the Supreme Court proceedings which it subsequently commenced.[6] TSW claims that, between January 2008 and December 2013, it provided 'to or on behalf of' UWA services, materials and benefits (Benefits) comprising:
1.Chemical analyses of various samples for the purposes of research projects and practical exercises undertaken by post-graduate students of UWA, and a research project undertaken by UWA.
2.Teaching, research supervision, technical support, laboratory supervision and administrative support services provided by staff members of TSW in courses of study conducted by UWA.
3.Money paid for 'consumables', equipment and travel costs in relation to particular student projects.
[6] Statement of claim in CIV 2760 of 2014; YAB 6 ‑ 28.
It is pleaded that TSW and UWA intended to enter into a legal agreement to govern the terms on which these Benefits were to be provided, but did not do so. It is said that the Benefits were provided by TSW at the request of UWA, and that UWA accepted the Benefits 'knowing that they were not being provided by [TSW] gratuitously'. In those circumstances, TSW claims to be entitled to be paid by UWA a reasonable sum for the Benefits. The total quantum of TSW's restitutionary claim is $4,705,246.97.

Restitutionary claims for quantum meruit

A claim for quantum meruit was a plea of a form of action which, prior to abolition of forms of action more than a century ago, had become a form of action within indebitatus assumpsit. The continued practice of pleading a form of action using Latin terms has been described as unhelpful.[7] The term 'quantum meruit' can also be seen as a label, the established use of which identifies for the legally trained reader the nature of the claim. However, the use of the label should not mask the need to identify with precision the elements of the cause of action which must be established to make good a claim.
[7] See, for example, Character Design Pty Ltd v Kohlen [No 2] [2013] WASC 340 [17].
In Pavey & Matthews Pty Ltd v Paul,[8] Deane J noted that the common law action accommodated two distinct categories of claim. The first category of claim involved the recovery of a debt arising under a genuine contract. A contract in the first category may expressly or implicitly provide for the payment of a reasonable sum for work performed or services provided by one party to another. The second category of claim which Deane J identified involved recovery of a debt owed in circumstances where the law itself imposes or imputes an obligation to make compensation for a benefit accepted.
[8] Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221, 255 ‑ 256.
In Pavey,[9] the majority of the High Court concluded that an action in the second of Deane J's categories, for reasonable remuneration for work done under an unenforceable contract, did not rest on an implied contract. Rather, it was a claim to restitution based on unjust enrichment, arising from one party's acceptance of benefits accruing from another party's performance of an unenforceable contract. Pavey was a case involving building work undertaken pursuant to an oral contract which was unenforceable because of non-compliance with the Statute of Frauds.
[9] Pavey, 227 (per Mason & Wilson JJ), 256 - 257, 262 - 263 (per Deane J).
The High Court has repeatedly stated that the concept of unjust enrichment is not a definitive legal principle which supplies a sufficient premise for direct application in a particular case.[10] Whether enrichment is unjust is not determined by reference to a subjective evaluation of what is unfair or unconscionable. Rather, recovery depends on the existence of a qualifying or vitiating factor falling into some particular category.[11]
[10] Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14; (2014) 253 CLR 560 [73] ‑ [74], [105] (and cases cited therein).
[11] Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 [150].
TSW's restitutionary claim, falling in the second category Deane J identified in Pavey, seeks to establish the existence of an established qualifying or vitiating factor in two ways.[12]
[12] The authors of Mason & Carters Restitution Law in Australia (3^rd edition, 2016) [156] ‑ [158] argue that the concept of acceptance is a proper basis for establishing unjust enrichment in both types of case. It is unnecessary to resolve that question in this appeal.
First, TSW's plea that it provided Benefits to UWA at UWA's request invokes what in Lumbers v W Cook Builders Pty Ltd (In liq)[13] was seen to be a claim falling within 'long-established principles'.[14] That is a claim for reasonable remuneration for work done by one person for and at the request of another which the recipient accepts and which it would be unconscionable for the recipient to retain without payment.[15] As was made clear in Lumbers, such a request may be made expressly, or its making may be implied from the actions of the parties in the circumstances of the case.[16]
[13] Lumbers v W Cook Builders Pty Ltd (In liq) [2008] HCA 27; (2008) 232 CLR 635.
[14] Lumbers [86], [89].
[15] Lumbers [79], [89]. Relatively recent examples of restitution being ordered in circumstances where services were provided by one party at the request of another include Brenner v First Artists' Management Pty Ltd [1993] 2 VR 221; Peet Ltd v Richmond (No 1) [2009] VSC 130; Vasco Investments Ltd v Morgan Stanley Australia Ltd [2014] VSC 455 [337] ‑ [398] and, in relation to the provision of goods, Design Joinery & Doors Pty Ltd v IPower Pty Ltd [2015] SASC 93.
[16] Lumbers [89].
In R J Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd,[17] Beech J described the facts which would establish the cause of action (subject to exceptions) in the following terms. If party A requests party B to provide services in circumstances where, objectively, B expects to be paid for the services, then A will be obliged to pay a reasonable remuneration to B for the services.
[17] R J Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2009] WASC 206 [153]. This decision was affirmed in R J Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2010] WASCA 128, but issues of restitution were not considered in the appeal.
It has been held that the fact that services have been requested and accepted justifies the conclusion that the provision of requested services is a benefit to A.[18]
[18] Brenner (257 - 258), discussed in R J Baker Nominees [164] - [166], and Vasco Investments [345].
Beech J said that this general rule operated subject to a number of recognised exceptions. One exception arises where the request is made in the context of an enforceable contract between A and B. In such a case, any claim by B must be founded on the contract, not in restitution. As will be seen, UWA relies on that exception in the present case. However, subject to consideration of that defence, it is at least arguable that proof of the facts to which Beech J referred in R J Baker Nominees would establish a restitutionary cause of action in the present case.
The second aspect of TSW's restitutionary claim seeks to invoke the concept of 'free acceptance'. The question of whether 'free acceptance' of an unrequested benefit gives rise to a restitutionary obligation in Australian law was discussed by Edelman J in Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [No 3].[19] In that case Edelman J refused to strike out a claim for restitution based on the acceptance of a benefit of goods which the recipient knew the claimant was not providing gratuitously, without taking a reasonable opportunity to reject the goods. He recognised the existence of this category of restitutionary claim as arguable, and UWA does not contend to the contrary in this case.
[19] Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [No 3] [2014] WASC 162 [56] ‑ [89].

UWA's response to TSW's restitutionary counterclaim

UWA's response to this restitutionary claim does not deny that TSW provided the Benefits. Given that the persons who actually delivered those services were employees of UWA, it may be necessary at any trial to consider the capacity in which they acted when undertaking tasks such as teaching and supervising UWA's students. However, for present purposes it may be accepted that there is an arguable case that TSW provided the pleaded Benefits to UWA.
In this appeal, UWA identified two defences to TSW's restitutionary claim, which it contends are certain to succeed.
First, UWA contends that 'there was unarguably an agreement between TSW and UWA regarding or "covering" the provision of services and materials provided by TSW to UWA or its students'.[20] UWA contends that TSW's quantum meruit argument does not have a real prospect of success in these circumstances.
[20] Respondent's amended submissions, par 5; WAB 35.
In my view, the first aspect of UWA's defence is not certainly made out. It is established that a restitutionary claim of this kind will not be allowed where to do so would redistribute the allocation of risks, rights and obligations made by a contract between the parties.[21] However, as explained by the joint reasons, the scope and content of the agreement reached between TSW and UWA is uncertain and cannot be properly determined on the material available at this interlocutory stage.
[21] Lumbers [45] ‑ [48], [79] ‑ [80].
Secondly, UWA contends that, irrespective of the scope of the contractual relationship, the evidence demonstrates that the parties 'agreed' and proceeded on the basis that TSW would not charge UWA for the provision of other services and benefits, and that the 'contrary position is inherently incredible and not reasonably arguable'.[22]
[22] Respondent's amended submissions, par 6; WAB 36.
In my view, the evidence on which UWA relies falls short of unequivocally establishing any firm understanding or agreement that the pleaded Benefits were to be provided by TSW without charge. Nor does the evidence unequivocally establish that, objectively, TSW did not expect to be remunerated for the Benefits. The highest the evidence gets is a statement by Dr Scadding,[23] which refers to the existence of a joint venture agreement under which neither party would be obliged to pay for what the other contributed to the joint venture. That was a conclusionary statement made after the relevant events. Further, the agreement asserted in this paragraph of Dr Scadding's affidavit was found not to exist.
[23] Dr Scadding's affidavit sworn on 4 July 2014, par 85; GAB 117 ‑ 118.
Once the existence of such an agreement is rejected, it is necessary to consider the detail of contemporaneous events to determine whether the evidence supports the conclusion that:
1.UWA expressly or implicitly requested TSW to provide the Benefits in circumstances where, objectively, TSW expected to be paid for the Benefits; or
2.the Benefits were 'freely accepted' by UWA, in the sense described above, so as to make it unconscionable for UWA to retain the benefits without any payment.
UWA relies on the uncontroversial fact that TSW never sought payment for the Benefits which it provided until after the relationship had ended. UWA also points to correspondence (much of it written after the relevant events occurred) from which an inference might well be drawn that TSW provided Benefits on the basis that UWA would not be charged.[24] However, none of the selected correspondence unequivocally establishes that to be the case. In my view, it is not appropriate to summarily undertake the task of determining whether the Benefits were provided on the objective basis that TSW did not expect to be charged. Whether the Benefits were provided at UWA's express or implicit request, or were 'freely accepted' by UWA, so as to make their retention unconscionable without any payment to TSW will depend on an analysis of the circumstances in which the Benefits were provided. That analysis is not appropriately undertaken at this interlocutory stage.
[24] Respondent's amended submissions, par 14 WAB 38 ‑ 43.

The primary judge's reasons

The crux of the primary judge's reasons for rejecting TSW's quantum meruit claim appears in the following paragraphs of his decision:
It is common cause that the agreement by which TSW was able to operate its business within the Centre involved the mutual benefits described in Mr Scadding's letter to Professor McEachern.
Accordingly, the proposed defence is simply not tenable. It is not reasonably open to TSW, having benefited from the relationship with UWA in the way that Mr Scadding described, to argue at the conclusion of that relationship that UWA accepted a benefit which it would be unconscionable for it to retain. It involves no finding of fact, nor any adjudication of an issue of law, to find that no defence of set‑off is available on this basis.
By admitting an agreement that the mutual benefits provided by the parties would be cost neutral, TSW is precluded from maintaining a claim for restitution. No triable issue is disclosed [121] ‑ [123].
In my respectful view, there are a number of difficulties with the primary judge's analysis.
First, the reasons appear to be predicated on the existence of an agreement between UWA and TSW in certain terms. For the reasons discussed above, and explained by the joint reasons, there is considerable uncertainty as to the existence and scope of any contractual agreement covering the provision of the pleaded Benefits.
Secondly, acknowledgment of the existence of mutual benefits does not carry with it any necessary conclusion about the extent to which, and manner in which, the parties will pay for the benefits they receive. The letter of 24 September 2009, to which the primary judge's reasons refer, acknowledged the need for a formal agreement which was to be negotiated after UWA established how 'this model is best formalised'. It does not expressly state what will happen if no formal agreement emerged.
Thirdly, the term 'cost neutral' used in various correspondence is itself ambiguous, and not necessarily inconsistent with UWA paying for Benefits which it receives from TSW. This point may be illustrated by Ms Rorrison's statement that the 'Research Funding Agreement' she had previously identified:[25]
was cost neutral in that [UWA] would neither profit nor lose from the Research Funding Agreement which it entered into with [TSW].
The use of the term 'cost neutral' in that sense is not inconsistent with UWA being required to pay a reasonable amount for the net benefit which it receives.
[25] Affidavit of Abbe Louise Rorrison sworn 21 July 2014, par 10; GAB 301.
Fourthly, it cannot be said that rejecting TSW's quantum meruit claim 'involves no finding of fact'. The rejection of that claim requires consideration of evidence which goes to the existence or absence of a contractual agreement which covers the provision of the pleaded Benefits and the objective basis on which those Benefits were provided to and accepted by UWA.
On the material available to this court, TSW's restitutionary claim does appear to face a number of significant difficulties. However, resolution of the claim will involve making a variety of factual findings concerning the precise circumstances in which the pleaded Benefits were provided by TSW to UWA. An application to set aside judgment entered in default of appearance is not the forum to resolve those issues. Until the facts are properly found, it cannot be concluded that TSW's quantum meruit claim is certain to fail. The position is not so clear as to justify a conclusion that TSW has no arguable case on its quantum meruit claim.
If the quantum meruit claim were to be established, it has not been demonstrated that TSW's argument that the claim gives rise to a legal or equitable set‑off must certainly fail.

Conclusion

For the above reasons, as well as those explained by the joint reasons, I agree that the appeal should be allowed, the default judgment should be set aside and TSW should be given unconditional leave to defend the action.