Wilson Pastoral International Pty Ltd v George Street Steel Pty Ltd

[2020] SASCFC 54

Supreme Court of South Australia

(Full Court)

WILSON PASTORAL INTERNATIONAL PTY LTD (ACN 167 284 399) v GEORGE STREET STEEL PTY LTD (ACN 008 179 708)

[2020] SASCFC 54

Judgment of The Full Court

(The Honourable Chief Justice Kourakis, The Honourable Justice Parker and The Honourable Auxiliary Justice Tilmouth)

19 June 2020

CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - REMUNERATION - RECOVERY ON QUANTUM MERUIT

Wilson Pastoral International Pty Ltd (WPI) appeals a judgment entered against it based on two invoices rendered by the respondent George Street Steel Pty Ltd (George Street Steel) on 10 August and 1 September 2015, for plant works on the land of a related corporation, Wilson Pastoral Australia Pty Ltd (WPA), in the respective sums of $76,092.75 and $39,708.93, claiming there was no consideration in order to render it liable thereon.

By cross appeal, George Street Steel contends that the trial Judge erred in failing to find that the works it performed for WPI was at an hourly rate of $100, with a 15 per cent mark-up for materials and, alternatively, for failing to assess its claim for damages on a quantum meruit basis.  George Street Steel further complains the trial Judge should have upheld its worker’s lien in respect of the work it undertook for WPI, and that the trial Judge erred in failing to find WPA equally liable and in failing to make cost orders against all defendants, rather than solely against WPI.

Held per Tilmouth AJ (Kourakis CJ and Parker J agreeing), dismissing the appeal and allowing the cross-appeal in part:

1.  The trial Judge was correct to uphold the validity of the invoices and in finding there was supporting consideration.

2.  There was insufficient evidence on which it could be properly concluded that the terms of remuneration for the works done by George Street Steel was on the contended terms. 

3.  The cross-claim for damages on a quantum meruit basis fails due to the want of evidence of what a reasonable rate of remuneration would be and because no fair value of the benefit actually, or constructively accepted, was proven.

4.  The finding based on the observation that there was no evidence of involvement of WPA other than as owner of the subject land cannot be sustained by reference to the objective facts which lead to the inference that both WPI and WPA were contracting parties with George Street Steel. 

5.  Given this conclusion the orders for cost should be made against WPI and WPA jointly and severally.

6. The trial Judge erred by invalidating the worker’s lien on the ground that George Street Steel failed to establish the contract price, but the lien was invalid in any event because it was not proven that any work it did related ‘to any fixture’, as required by s 5 of the Worker’s Lien Act 1893 (SA).

7.  WPI  is granted an extension of time in which to appeal but otherwise its appeal is dismissed.

8.  The cross appeal by George Street Steel is allowed to the extent that judgment is entered against WPA in addition to WPI and the trial costs orders varied to apply to both WPA and WPI, but is otherwise dismissed.

George Street Steel Pty Ltd (ACN 008 179 708) v Wilson Pastoral International Pty Ltd (ACN 167 284 399) & Ors [2019] SADC 11; Pao On v Lau Yiu Long [1980] AC 614; Lampleigh v Braithwait (1615) Hobart 105; Sturlyn v Albany (1587) Cro Eliz 67; Chappell & Co Ltd v Nestle Co Ltd [1960] AC 87, 114; Equuscorp Pty Ltd v Glengallan Investments (2004) 218 CLR 471; Fox v Percy (2003) 214 CLR 118; Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; Slinger v Southern White Pty Ltd (2005) 92 SASR 303; McCauley v McCauley (1910) 10 CLR 434; Maiden v Maiden (1909) 7 CLR 727; Forlyle Pty Ltd v Tiver (2007) 252 LSJS 387; Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700, referred to.
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; TEC Desert Pty Ltd v Commissioner of State Revenue (WA) (2010) 241 CLR 576, applied.
Wigan v Edwards (1973) 47 ALJR 586; Butler v Fairclough (1917) 23 CLR 78; Edwards v Baugh (1843) 152 ER 962; The Alliance Bank (Limited) v Broom (1864) 2 DR & SM 289; Jones v Ashburnham (1804) 4 East 455; Longridge v Dorville (1821) 5 B & ALD 121; In re Pilet [1915] 3 KB 519; Miles v New Zealand Alford Estate Company (1886) 32 Ch D 266, discussed.
Newton v State Government Insurance Office (Qld) (1986) 1 Qd R 431; Commonwealth v Verwayen (1990) 170 CLR 394, considered.

INDUSTRIAL LAW - SOUTH AUSTRALIA - REGULATION OF PARTICULAR MATTERS UNDER PARTICULAR STATUTES - WORKMEN'S LIENS

Discussion of the proper construction of s 5 of the Worker's Lien Act, and the meaning of 'contract price' contained in s 2 thereof.

Worker's Liens Act 1893 (SA) s 5; Chase v Westmore (1816) 5 M & S 180; Tappenden v Artus [1964] 2 QB 185; Pitt Ltd v Corporation of Town of Glenelg [1927] SASR 501; Holland v Hodgson (1872) LR 7 CP 328; Reid v Smith (1905) 3 CLR 656, referred to.

WILSON PASTORAL INTERNATIONAL PTY LTD (ACN 167 284 399) v GEORGE STREET STEEL PTY LTD (ACN 008 179 708)
[2020] SASCFC 54

Full Court:               Kourakis CJ, Parker J and Tilmouth AJ

1. KOURAKIS CJ:       I agree that the appeal should be dismissed for the reasons given by Tilmouth AJ and join in the orders he proposes. 

2. I only wish to add the following on the proposition put by the appellant that the mere temporary forbearance to sue, if no liability exists, provides no valuable consideration.  It is one of four related propositions set out in the judgment of Isaacs J in Butler v Fairclough.[1] It is useful to set out all four of them:[2]

   (1) A promise not to sue for a limited period, definite or indefinite, is a valuable consideration where the substantive claim is one for which the other party is liable (Longridge v. Dorville; Fullerton v. Provincial Bank of Ireland).

   (2) A promise not to sue at all, that is, an abandonment of a substantive claim, is a valuable consideration, if there be either liability or a bonâ fide belief of liability (Longridge v. Dorville; Miles v. New Zealand Alford Estate Co.).

   (3) A promise to abandon a suit in whole or part already commenced is a valuable consideration where there is a bonâ fide claim.

   (4) Mere temporary forbearance to sue where there is no liability is no consideration (Jones v. Ashburnham; In re Pilet; Longridge v. Dorville; Graham v. Johnson), even if the claim be disputed (Edwards v. Baugh).

   (Italics added; citations omitted)

   [1] (1917) 23 CLR 78 at 96.

   [2]    The propositions are focused on the sufficiency of the promise not to sue as consideration for, and in exchange for, a promise to provide some consideration other than the satisfaction of the claim that is the subject of the proposed suit.  One would expect the propositions to apply symmetrically to a promise not to deny a claim in whole or in part, but that need not be explored further.  See Newton v State Government Insurance Office (Qld) (1986) 1 Qd R 431; and as to estoppel and waiver see The Commonwealth v Verwayen (1990) 170 CLR 394.

3. The first proposition is largely self-evident.  An early illustration of its application can be found in The Alliance Bank (Limited) v Broom.[3] In that case, a customer of a bank offered security to forestall the bank bringing an action to recover the loan.  The customer then refused to provide the security.  The bank sought orders in equity that the security be provided.  The customer accepted that the loan was due and payable when the security was offered.  It was held that the bank’s forbearance was good consideration, even though the bank might, after a certain amount of forbearance, have brought an action on the loan.

   [3]    (1864) 2 DR & SM 289 at 632.

4. A delay in bringing proceedings is good consideration because it saves the proposed defendant the cost of filing a defence and allows more time to procure funds to meet the claim, or to put available funds to another use before payment is made.  Conversely, the delay may diminish the value in real terms of the judgment obtained and may leave enforcement of the judgment fraught.  If a plaintiff who brings an action on a forbearance agreement proves that the defendant was liable on his or her substantive claim, there is undoubtedly consideration for the forbearance agreement.  However, the forbearance, which is the subject of the first proposition, is so closely related to compromising a claim, the subject of the second and third propositions, that the question arises why a promise to delay bringing an action to enforce a claim, which the plaintiff honestly believes is sound, is not also good consideration.  After all, there are many claims which, even though not certain, will very probably succeed.  If such a claim is compromised, why should it be a necessary element of an action to enforce the deferral agreement to that the action would have succeeded. 

5. The decision of Longridge v Dorville,[4] cited by Isaacs J to support the first proposition, suggests that an agreement not to pursue a claim honestly made is good consideration.  In that case, the plaintiffs had instituted an action in the Court of Admiralty against a ship.  The plaintiffs sought to compel the owners of the ship to make good damage done by it in a navigation collision.  The defendants could have redeemed the ship from the suit by posting bail.  Instead, they persuaded the plaintiffs to renounce all claims on the ship on their undertaking to pay for the repair of the ship when the cost of that repair was known.  The plaintiffs relinquished the ship.  Although this was not a case of forbearance, it is analogous in that the plaintiffs agreed not to pursue an interlocutory proceeding.  There was, at the time, some uncertainty as to the plaintiffs’ legal entitlement to bail in the circumstances of that suit.  Nonetheless, Abbott CJ found that there was sufficient consideration holding:[5]

   The plaintiffs, by not insisting upon the bail required, therefore relinquished a benefit which they might have had, if the law had been with them.  The law might fairly be considered as doubtful, for there had been contradictory decisions on the subject; and the parties agree to put an end to all doubts on the law and the fact, on the defendants engaging to pay a stipulated sum.  I am of the opinion that this case is distinguishable from those cited in argument, inasmuch as in this case, the law was doubtful, and the parties agree to waive all questions of law and fact.  I am therefore of opinion, that the plaintiff is entitled to recover.

   [4]    (1821) 5 B & ALD 121.

   [5]    Longridge v Dorville (1821) 5 B & ALD 121 at 121.

6. If it is good consideration to delay bringing an action to enforce a claim honestly made, then the present case falls squarely within it.

7. The second proposition is sound in principle and now well accepted.  If the parties to the proposed action agree to exchange one set of rights and obligations for another, then the mutual release from the former legal charter by which they were bound, and the subsequent submission to another, is plainly sufficient consideration.

8. The second proposition was first applied in Longridge v Dorville but developed in Miles v New Zealand Alford Estate Company.[6] In that case, shareholders were unhappy with the company’s management by Mr Miles, one of the company’s directors.  Mr Miles gave a guarantee, with respect to liens over his shares held by the company, that they would be given priority over a mortgage of the shares he had given another.  The issue was whether the company had given good consideration for that promise.  It was accepted by the whole Court ‘that if an agreement is made to compromise a disputed claim, forbearance to sue in respect of that claim is a good consideration’.[7]  However, Cotton and Fry LJJ found that there was no valuable consideration because there was insufficient evidence that the company contemplated any legal action against the director shareholder with respect to his management of the company. 

   [6] (1886) 32 Ch D 226.

   [7]    Miles v New Zealand Alford Estate Company (1886) 32 Ch D 266 at 274.

9. Cotton LJ held that a serious claim honestly made, if abandoned or compromised, is a good consideration.  His Lordship held that a claim is honest if the claimant does not know that it is unsubstantial, or does not know facts, unknown to the other party, which show that his or her claim is a bad one.  Accordingly, it followed that if both parties know all of the facts and reach a compromise it cannot be said that the claim was dishonest.[8]

   [8]    Miles v New Zealand Alford Estate Company (1886) 32 Ch D 266 at 283-284.

10. Fry LJ articulated the position of principle on which he thought the Court was unanimously agreed as follows:[9]

    In my opinion when a real claim has been made and there is a bonâ fide compromise, that is sufficient consideration.

    [9]    Miles v New Zealand Alford Estate Company (1886) 32 Ch D 266 at 297.

11. Fry LJ accepted that whether or not there is real consideration depends not on the actual commencement of a suit, but on the reality of the claim made and the bona fides of the compromise.

12. Bowen LJ, although in dissent on the application of the principles to the facts, stated the principle as follows:[10]

    Speaking broadly, what has to be determined is, in my opinion, whether there was at a critical moment any forbearance to press a real claim on the part of the company, or of the directors of the company, who had ample powers under their articles of association to act for the company, and, if so, whether such forbearance was brought about by the express or implied request of Mr. Grant and in consideration of his guarantee.  A valuable consideration may, of course, either consist of some right, interest, profit, or benefit which accrues to one party, or some forbearance, or detri-ment, or loss, or responsibility, which is given to or undertaken by the other.  We have to see here in the first place whether there was forbearance promised, in which case the promise would be the consideration to the guarantee, or whether there was an actual forbearance given at the request of the guarantor and in return for something.

    [10] Miles v New Zealand Alford Estate Company (1886) 32 Ch D 266 at 289.

13. A more contemporary statement of the principle can be found in Newton v State Government Insurance Office (Qld):[11]

    Equally I see no great difficulty in identifying the consideration in a case like this. Forbearance to sue, even if only for a short period, is consideration for a promise: Alliance Bank v. Broome. The forbearance must, however, have been granted at the request, express or implied, of the promisor: Miles v. New Zealand Alford Estate Co.; Re Casey’s Patents; Australian Woollen Mills Pty. Ltd. v. Commonwealth. It was because of that requirement that the plaintiff failed in Davidson v. Atlas Assurance Co. Ltd. There the relevant admission or acknowledgment was communicated to the plaintiff’s insurers on September 17. It was not until November 15 (the report at p. 1169 erroneously says September 15) that there was any suggestion from the defendant insurer that there should be a delay; and even then, as Reed J. pointed out, there was no request that, in view of the admission, proceedings be stayed: Here it is not at all difficult to discern in the correspondence at least an implied request by the S.G.I.O. that the plaintiffs refrain from suing pending an investigation by the former of the circumstances of the accident. It was in consideration of this forbearance, which was both a detriment to the promisee and a benefit to the promisor, that in the end the S.G.I.O. agreed to accept liability. The delay in instituting proceedings gave it an opportunity of thoroughly investigating the matter of liability. Given that opportunity, which it sought and acted upon, the S.G.I.O. agreed that it was liable. It may not now say that there was no consideration for that agreement.

    (Citations omitted)

    [11] [1986] 1 Qd R 431 at 444.

14. The third proposition is entailed by the second and need not be considered further. 

15. The fourth proposition is, however, inconsistent with both the second and third proposition if it suggests that forbearance is not good consideration unless it is shown that there was an actual liability and not a mere honest belief in the soundness of the claim.  As I have observed, it is difficult to see why a delay in bringing an honest claim is any less consideration than a final compromise of it.

16. The ratio of the decision of the Court of Exchequer in Edwards v Baugh,[12] which Issacs J cites in support of the fourth proposition, is a narrow one.  The case was decided on the face of the pleadings, which alleged only that there were ‘certain disputes and controversies’ pending between the plaintiff and the defendant.[13]  It was not pleaded that the plaintiff genuinely believed he had a claim.  Nonetheless, I acknowledge that Lord Abinger C.B. went further, stating that for a forbearance to be good consideration the plaintiff must prove that at least some amount, about which there was a dispute, was owing, which resulted in a compromise for an amount certain.[14]

    [12] (1843) 152 ER 962.

    [13] Edwards v Baugh (1843) 152 ER 962 at 964.

    [14] Edwards v Baugh (1843) 152 ER 962 at 964.

17. The decision in Jones v Ashburnham[15] (Jones) does not support the fourth proposition.  In that case, it was plain that, as a matter of law, the plaintiff must have known that he did not have a valid claim.  Its forbearance to sue was therefore no consideration at all.  The result in Jones can be explained on the basis that there can be no genuine belief in the soundness of a claim which, on its face, is undisputedly bad in law.

    [15] (1804) 4 East 455 at 464.

18. The case of In re Pilet[16] concerned a deed of arrangement for the benefit of creditors.  Two of the persons named in the schedule to the deed as creditors claimed debts which, before the execution of the deed, had been discharged by the earlier bankruptcy of the assignor in which they had refrained from proving their debts.  No fresh consideration was subsequently given.  The Court held that the trustee was entitled to obtain a declaration that the persons in question were not in fact creditors of the assignor, even though the trustee was a party to the deed in which they were so described.  It was held that the insertion of the creditors in the schedule by the debtor was not in any way a new consideration given by the debtor, or an estoppel operating either against the trust funds or the trustee.  Horridge J held that the creditors ‘must be taken to have known what is perfectly clear law, that their debt had been discharged; and an agreement to give [further] time for [payment of] a discharged debt is not a valid consideration’.[17]  It follows that the decision in In re Pilet does not support the fourth proposition.

    [16] [1915] 3 KB 519.

    [17] In re Pilet [1915] 3 KB 519 at 526.

19. Accordingly, I would respectfully hold that the fourth proposition should now be qualified.  A promise to defer bringing a claim which is honestly made, on reasonable grounds, is good consideration.  In any event, this case falls within the first and second of the propositions for the reasons given by Tilmouth AJ.

20. On the cross appeal, I would allow it for the purposes of entering judgment against Wilson Pastoral Australia Pty Ltd in addition to Wilson Pastoral International Pty Ltd, also for the reasons given by Tilmouth AJ.

21. PARKER J:         I agree with the reasons of Tilmouth AJ and the orders that he proposes.  I also agree with the additional observations of Kourakis CJ.

1. TILMOUTH AJ:

   Contents

   Overview......................................................................................................................... 6
   The parties and the nature of the arrangements.......................................................... 7
   Conclusions of the trial Judge....................................................................................... 8
   Brief overview of appellate issues............................................................................... 9
   The invoice based claim.............................................................................................. 10
   The WPI appeal............................................................................................................ 13

   No consideration for deferral agreements............................................................. 13
   Indivisible contract - no entitlement to invoice.................................................... 18

   Cross appeal.................................................................................................................. 19

   Contractual agreement and terms........................................................................... 19
   The contracting parties............................................................................................ 21
   The costs orders....................................................................................................... 23
   The quantum meruit claim...................................................................................... 25
   The worker’s lien issue........................................................................................... 28

   The loan agreements.................................................................................................... 31
   Orders............................................................................................................................ 32

   Overview

2. The appeal and cross appeal before the Court relate to an arrangement entered into around late April 2015, by which George Street Steel Pty Ltd[18] undertook to provide services and materials for setting up and commissioning a pellet plant and boiler on land owned by Wilson Pastoral Australia Pty Ltd.[19]  The property is situated at Clements Gap, located not far from Crystal Brook in the mid-North of South Australia.

   [18] ACN 008 179 708, hereafter referred to as ‘George Street Steel’.

   [19] ACN 008 030 297, hereafter referred to as ‘WPA’.

3. By late November 2015 a dispute developed to the point that George Street Steel was required to leave the property and to cease all works, bringing about the effective termination of the arrangement.  Subsequently, it issued proceedings in the District Court claiming damages for breach of contract and at the same time registered a worker’s lien over the Clements Gap property.  It also brought subsidiary claims in the Adelaide Magistrates Court in respect of two loan agreements.

4. WPA counter claimed in the District Court proceedings for breach of contract and for breach of a common law duty of care.  WPA further claimed lost profits, the cost of remedying deficiencies in the boiler and pellet plant, increased labour costs and damage to grain silos.  There was a further cross-claim to set-off under the loan agreements.

   The parties and the nature of the arrangements

5. In order to follow the issues raised on appeal, it is necessary to sketch in some detail, the parties involved and the broad nature of the arrangements between them.  These are largely gathered from the judgment under appeal.[20]

   [20] George Street Steel Pty Ltd (ACN 008 179 708) v Wilson Pastoral International Pty Ltd (ACN 167 284 399) & Ors [2019] SADC 11 (hereafter referred to as the ‘Trial Judgment’).

6. George Street Steel is an engineering firm based in Port Pirie, trading under the business name ‘SJ Cheeseman’.  A number of its employees were called to give evidence during the trial.  Twenty-nine employees were said to have worked on the plant works at one time or another.[21]

   [21] ACB V 1, pp 294-295. 

7. Brian Wilson and his wife Jillian Wilson are Directors and Shareholders of WPA.  They are also the Directors and Shareholders of Wilson Pastoral International Pty Ltd.[22]  Mr and Mrs Wilson were joined as the third and fourth defendants, in his and her individual capacities and as a partner of the partnership trading as the Wilson Partnership.  George Street Steel brought its proceeding in the District Court against WPI.

   [22] ACN 167 284 339, hereafter referred to as ‘WPI’.

8. As farmers, the Wilsons saw the potential, and then investigated the possibility, of expanding the family business by selling livestock feed in pellet form, made from native saltbush, a novel process they patented.  Saltbush grew naturally on the Wilson farms as it does throughout Australia.  Saltbush provides a good source of protein for sheep and was not hitherto used for making feed pellets.  Pelletising barley and hay for stockfeed was, on the other hand, commonplace at this time. 

9. Mr and Mrs Wilson incorporated WPI in January 2014 for the express purpose of the pelleting business and in the expectation of constructing the plant on the Clements Gap property.  George Street Steel was engaged to provide services and materials in relation to setting up and commissioning a second-hand pellet plant and boiler purchased by WPI in mid-2014, with the assistance of government grants.

10. After constructing a large shed to house the pellet plant and a smaller adjacent shed for the boiler room on the property, arrangements were made to connect utilities, such as power, water and natural gas.  It was for the purposes of reassembling the pellet plant, organising the commissioning of the boiler and to construct a steam line between them, that George Street Steel was essentially engaged, in around late April 2015.

11. George Street Steel commenced work on site in early May 2015, which continued until termination of the arrangement on 30 November 2015.  Those arrangements were not formalised.  They were in fact conducted largely by means of email communications between Mr Richter, a fitter and turner and Managing Director of George Street Steel, and Mrs Wilson and conversations between Mr Richter and Mr and Mrs Wilson, together with on and off-site meetings.

12. The case for George Street Steel depended on proof of the failure to pay tax invoices rendered by it, ultimately amounting to $316,743.73.  The Wilson defendants claimed not to have received invoices at all, because of an expectation they were to be billed at the conclusion of the pellet plant works.  The precise nature and extent of the contractual arrangements was a matter of some contention and evidential complexity during the trial.  At issue was the nature and extent of the works, the terms of remuneration and which Wilson entity contracted with George Street Steel.

13. The lien aspect of the case related to a worker’s lien registered on 11 March 2016, under s 5 of the Worker’s Liens Act 1893 (SA), over the Clements Gap land. This claimed an original amount of $359,574.09 for the provision of services and materials under the arrangement.

14. The loss of profits limb of the counter claim stemmed from allegations that the works were not completed by mid-July 2015 as contemplated and resulted in an inoperable (or barely inoperable) pellet plant, which failed to produce a minimum 100 tonnes of saltbush pellets per week it was expected to.  The counter claim further alleged services provided in respect of the boiler were not competently or diligently performed.  These caused the boiler to become unsafe, in breach of a common law duty of care to perform the work and provide services with the skill and care to a standard of reasonably competent tradesmen. 

15. The issue relating to the two loan agreements stems from the common ground that Mr Richter, on behalf of George Street Steel, agreed to lend $50,000, advanced in three unsecured tranches; $5,000 on 1 September 2015, $20,000 on 2 September 2015 and $25,000 on 7 September 2015.  Two letters evidencing the loans nominate the borrower as WPA, but it was on ‘the basis of WPI’s admissions and the concessions’ that the trial Judge found the loan was made to WPI.[23]  The issues here were the amount(s) outstanding, if any outstanding amount could be properly offset, and if so in favour of which party.  Proceedings in respect of the loans were originally issued in the Adelaide Magistrates Court.  They were transferred to the District Court and heard together with the substantive proceedings at trial.[24]

    [23] Trial Judgment [53], [57], [249].

    [24] Action Nos. DCCIV-16-349 (substantive action) and DCCIV-16-657 (loan action). 

    Conclusions of the trial Judge

16. Stated in brief for the present, the trial Judge found George Street Steel failed in its breach of contract claims and declined to award damages on a quantum meruit basis.  She concluded that WPI was the only Wilson entity contracting with George Street Steel.  Her Honour found George Street Steel was entitled to recover under a contract made between it and WPI, by which it was agreed that WPI would be given time to pay the amounts claimed for work done as specified in two invoices dated 10 August and 1 September 2015.  After upholding the validity of two agreements to defer payment, her Honour allowed WPI a credit of $10,000 on account of a payment of $10,000 made on 30 December 2015.  The trial Judge further determined that WPI failed on its counter claim for breach of contract, but her Honour held that it was entitled to damages of $30,000 for George Street Steel’s breach of the common law duty of care.

17. In the result, her Honour entered judgment in favour of George Street Steel founded on two ‘deferred invoices’ for $105,801.68, together with pre-action interest thereon of $35,344.87, and gave judgment in favour of WPI for the $30,000 in damages.  Although the sum of those two invoices was $115,801.68, WPI was allowed the credit of $10,000 for the payment it had made. 

18. With respect to the loan proceedings, the trial Judge entered judgment in favour of George Street Steel against WPI in the sum of $45,000, after giving it credit for a repayment of $5,000, together with pre-judgment interest of $9,752.67 under the separate loan agreements.[25]  She further held that WPI was entitled to set‑off against the sum of $45,000 it owed under the loan agreements, its entitlement to the damages award of $30,000.  Finally, the trial Judge held the worker’s lien was invalid.

    [25] ACB V 2, pp 924 and 926.

19. So far as costs were concerned, her Honour made an order that WPI pay George Street Steel’s costs on a party and party basis up to 30 May 2018 and thereafter on an indemnity basis.  The indemnity costs order followed from what her Honour considered to be the Wilson’s ‘exaggerated claim and attitude toward negotiations rendered settlement impossible despite the plaintiff’s efforts’ and the ‘imprudent’ and unreasonable failure to accept offers to settle,[26] conclusions that are not otherwise challenged on appeal.  No order for costs was made in respect of WPA, or Mr and Mrs Wilson.[27] 

    [26] George Street Steel Pty Ltd (ACN 008 179 708) v Wilson Pastoral International Pty Ltd (ACN 167 284 399) & Ors (No 2) [2019] SADC 39, [36], [37].

    [27] Ibid [8].

    Brief overview of appellate issues

20. There are no appeals against the judgment given on the loan claims.  As there is no opposition to granting an extension of time in which to appeal, it is appropriate to extend the time for WPI to appeal.[28]

    [28] Its appeal was filed on 18 April 2019, seven days out of time.

21. A good deal of attention was focussed during the appeal on two invoices rendered by George Street Steel on 10 August and 1 September 2015, in the respective sums of $76,092.75 and $39,708.93.  These became the subject of ‘deferral agreements’, by which George Street Steel agreed to defer payments of those invoices.  The trial Judge found these were contractually binding, ‘standalone agreements’.[29]  WPI maintains they were unenforceable as they were entered into for no supporting consideration.

    [29] Trial Judgment [36] and [297]-[298].

22. By its cross appeal, George Street Steel essentially raises four complaints.  The first is that it contends that the works were performed at an hourly rate of $100, with a 15 per cent mark-up for materials.  Second, it points to error in the alternative to the first ground, of failing to assess the claim for damages on a quantum meruit basis.  The third ground relates to the worker’s lien aspect of the case.  Finally, there is a complaint as to one particular aspect of the order for costs, in respect of which ‘Wilson’ party the costs orders would ‘capture’.  At issue is whether it was WPA rather than WPI, or both WPA and WPI, which contracted with George Street Steel.  It was the order of 28 March 2019 that there be ‘no order as to costs in respect of the second, third and fourth defendants’, that is the subject of the fourth issue raised by the cross appeal.[30]

    [30] ACB V 2, p 921.

    The invoice based claim

23. Communications between the parties commenced on 28 April 2018, by means of an email sent to Mr Richter by Mrs Wilson, in which she advised him that ‘our family is starting a new saltbush livestock pelleting plant’, and that they would be home tomorrow.[31]

    [31] RCB V 2, Tab 34.

24. The invoices upon which George Street Steel initially relied in proof of its claim were detailed by the trial Judge as these:[32]

    [32] Trial Judgment [203].

    16/06/2015        $  48,777.32

    10/08/2015        $  76,092.75

    01/09/2015        $  39,708.93

    20/10/2015        $  45,278.76

    06/11/2015        $  10,575.36

    06/11/2015        $    1,375.00

    06/11/2015        $  52,830.36

    01/01/2016        $    3,861.99

    01/01/2016        $    1,118.18

    01/01/2016        $130,332.38

25. The first invoice of $48,777.32 was handed to the Wilsons at a meeting of 16 June 2015 and it was paid.  Regrettably the evidence does not disclose who paid it.  It is remarkable that no evidence was adduced on either side as to the identity of the payer of this invoice.  On the face of matters, it was equally in the capacity of any party to have done so.

26. The claim in respect of the invoice of 6 November 2015 was withdrawn as it was duplicated in the invoice of 1 January 2016.  George Street Steel’s claim therefore amounted to $316,743.84.  Of these invoices her Honour observed:[33]

    … the invoices leave something to be desired in terms of specific information … [they] … do not provide any breakdown of costs … Not all of the invoices differentiate between labour and materials … [and] … do not … provide much detail about the work performed … [N]o explanation was proffered for this during evidence.

    [33] Ibid [205]-[207].

27. The first invoice dated 16 June 2015 was as follows:[34]

    [34] RCB V 2, Tab 49.

WILSON PASTORAL 552 CLEMENTS GAP SA 5523
Your ABN 50 008 030 297
Description	Qty	Unit	Total Price ex GST
Wilson pellet Plant – LABOUR Wilson Pellet Plant – MATERIALS Part Claim for Costs as at 12/6/2015	1	1	26453.80 17889.22
Sub Total GST	44393.02 4434.20
Total Inc GST		$48777.32

The ABN specified in this invoice is in fact the ACN of WPA.  As just noticed, this was paid in full.[35]

[35] Trial Judgment [40], [204].

1. The second invoice of 10 August 2015 was likewise addressed to ‘Wilson Pastoral’ and ‘Your ABN 50 008 030 297’.[36]  It was attached to a letter of 4 August 2015 under the hand of Mr Richter.  This letter read:[37]

   [36] ACB V 1, Tab 14 p 364.

   [37] ACB V 1, Tab 14 p 362.

   4^th Aug 2025
   Jill Wilson
   Wilson Partnership T/A Wilson Pastoral
   552 Clements Road

   CLEMENTS GAP  SA  5523

   DETAILS: AGREEMENT TO PAY INTEREST ON LATE PAYMENT OF ACCOUNT

   Dear Jill,

   This is to confirm the arrangement under which we will accept payment of our progressive invoicing of Job 150394, Invoice SINV045472 for $76,092.75 (Incl GST).

   Please sign and return the enclosed copy of this letter indicating admission of the full amount of the account and acceptance of the terms of our agreement.

   You currently have 30 days from the date of our Invoice SINV045472 to pay your account in full without interest charges.  After this time we will then accept payment of the account up until 3 months, together with interest.  The interest rate will be the current George Street Steel Pty Ltd BankSA Account 1570587695940 overdraft interest rate of 9.45%pa.

   If there is a default in making full payment by the agreed 30 days + 3 months, at our option, the full balance owing on the account, together with accrued agreed interest shall immediately become due and payable and continue to accrue interest before and after judgment, at the same rate of interest until paid off in full.

   Please return the signed copy of this agreement before the invoice due date of 30 days, otherwise the agreement will be null and void.

2. The ‘agreement’ accompanying this letter was signed by Mr and Mrs Wilson on 12 August 2015.  It was as follows:[38]

   [38] Ibid p 363.

3. The third invoice of 1 September 2015, rendered for $39,708.93, was likewise addressed to ‘Wilson Pastoral’, and again nominated ‘Your ABN 50 008 030 297’, the WPA ACN, and likewise attached a second ‘deferment agreement’.[39]  This second letter was expressed in precisely the same terms as the first, except only that it contained a different invoice number and a different principal sum, as was to be expected.  It attached an identical ‘Admission and Acceptance’ document, signed by Mr and Mrs Wilson on 21 September 2015.[40]  There were very minor differences between the two, which are of no consequence.

   The WPI appeal

   [39] ACB V 1, Tab 15, pp 356 and 367 respectively.

   [40] Ibid p 366.

   No consideration for deferral agreements

4. It is the aforementioned deferral letters and attached ‘Admissions and Acceptance’ documents that form the focus of the WPI appeal.  The submission at trial and on appeal was that both agreements were not supported by any real or valuable consideration and hence were unenforceable, because there was no extant liability when they were executed.

5. This submission was rejected by the trial Judge for the following reasons:[41]

   WPI contends that there were no monies owing at the time the agreements were signed because no invoices had been rendered, it had not agreed to pay more than $76,092.75 as a capped price sum; there was no ability to charge until completion of the works, the works were not complete and the works performed were of a defective nature. 

   I reject this argument because, on the face of the agreement WPI admits the full amount of the outstanding account in each case and also agrees that this amount was due and payable within 30 days from the date of the invoice.  The clear purpose of the agreement was to clarify WPI’s position as to outstanding liability.  The question of whether consideration was given by the plaintiff must proceed on the premise set out in the agreement.  The court ought not go behind unambiguous contractual stipulations.

   [41] Trial Judgment [290]-[291].

6. It was submitted on appeal that her Honour failed to engage in any analysis of the existence of an extant liability.  It was claimed her conclusion proceeded on the assumption of the existence of such liability.  It was further submitted that an antecedent enquiry was required as to the liability of WPI on the two invoices, before reaching a conclusion as to the existence of valid consideration.  Counsel contended such an enquiry was particularly necessary in light of her Honour’s conclusions that no timeframe, labour rate and scope of works were agreed upon, or what works were in fact undertaken, and that they were in any event of ‘limited benefit to WPI’.[42]

   [42] Ibid [331]-[334].

7. The legal basis for supporting this contention commenced with reference to Butler v Fairclough,[43] for the uncontroversial proposition that mere temporary forbearance to sue where no liability exists provides no valuable consideration.  The appellant’s counsel took the Court to Wigan v Edwards,[44] a decision of the High Court of Australia.  The case involved a contract for sale of land to purchasers, who provided a list of issues to the vendor they wanted resolved before they would consider finalising the contract.  The vendor promised to expeditiously remedy minor defects and major faults five years from the purchase date.

   [43] (1917) 23 CLR 78, 96.

   [44] (1973) 47 ALJR 586.

1. The vendor in fact did nothing.  A demand was made by the purchasers for the payment of a sum representing the cost of repairs of the proposed rectifications.  On the vendor’s failure to pay that sum, the purchasers sued for it in the District Court of Queensland, where they succeeded.  An appeal to the Full Court of the Supreme Court of Queensland was dismissed.

2. The High Court unanimously held that the District Court Judge rightly determined the vendor’s promise was supported by valuable consideration, because of the bona fide compromise of the dispute arising from the claim.  Following reference to the general rule that a promise to perform an existing duty is no consideration if to do so amounts to no more than what the promissor was already bound to do under the contract, Mason J continued:[45]

   An important qualification to the general principle is that a promise to do precisely what the promisor is already bound to do is a sufficient consideration, when it is given by way of a bona fide compromise of a disputed claim, the promisor having asserted that he is not bound to perform the obligation under the pre-existing contract or that he has a cause of action under that contract. The qualification recognizes that for the court itself to examine and determine the correctness of the promisor's claim would be a pointless exercise when the new bargain indicates that the promisee regarded the fresh promise as a benefit, presumably viewing the promise of performance as more advantageous than the remedies available to him for breach of contract. But the law, by insisting that the claim in dispute is one which was honestly or bona fide made, prevents the qualification from assisting the party who would seek to gain an unfair advantage by threatening unscrupulously to withhold performance under a contract.

   [45] Ibid 594-595.

3. Applying these principles to the facts of the case, Mason J held that the trial Judge was correct in finding the purchasers were not bound to complete the contract.  His Honour went on to point out that although a threat to bring an action or enter a defence was not an essential element of a bona fide compromise, ‘it is enough if there is a claim … that the contracting party is not bound to perform the contract’.[46]

   [46] Ibid 595.

4. An alternative contractual analysis which supports the Judge’s finding in this case was essayed by the Privy Council in Pao On v Lau Yiu Long (Pao On).[47]The Privy Council held that there are three preconditions to converting what is prima facie past consideration into sufficient consideration in law to support a promise:[48]

   An act done before the giving of a promise to make a payment or to confer some other benefit can sometimes be consideration for the promise. The act must have been done at the promisors' request: the parties must have understood that the act was to be remunerated either by a payment or the conferment of some other benefit: and payment, or the conferment of a benefit, must have been legally enforceable had it been promised in advance. All three features are present in this case.

   The Board continued in its advice with respect to the second of those three conditions to observe that:[49]

   … whether the act done at the request of the promisor raises an implication of promised remuneration or other return is simply one of the construction of the words of the contract in the circumstances of its making.

   [47] [1980] AC 614.

   [48] Ibid 629.

   [49] Ibid 630.

5. The principle stated in Pao On effectively allows the past supply of goods or services under an arrangement which would support a quantum meruit claim to be governed by the terms of a contract subsequently made.  The contract made in those circumstances may also be supported as a bona fide compromise, or the substitution of existing rights and interests under a quantum meruit claim with the agreed terms of the contract. 

6. As to the circumstances of the making of the deferral agreements in this instance, it is important to understand the context at the time they were entered into.  The parties were in conflict as to whether payments were due as invoiced or until the works were completed.  As time went on, it became less clear what the scope of the works were to be.  At a meeting on the property on 1 June 2015, between Mr Richter and Mr and Mrs Wilson, there were inconclusive discussions about the terms upon which George Street Steel would undertake the work on the plant and as to invoice or progress payments.[50]  Another meeting on 3 June 2015 was called for the express purpose of ensuring ‘that everyone was on the same page and not working on top of each other’ as well as ‘to ensure that all the different contractors understood what they were doing’.[51]  At a subsequent meeting of 11 June 2015 convened for the purpose of taking a ‘dry’ inspection of the boiler, issues emerged concerning the alignment of attachments to the boiler and there were suggestions the ‘plumbing work was substandard’.[52]  Hence there was an extant dispute as to liability to that extent.

   [50] Trial Judgment [87]-[102].

   [51] Ibid [106].

   [52] Ibid [110], [115].

7. At a further meeting at Elders Bank[53] on 17 June 2015, the invoice of 16 June 2015 was discussed in terms of being nearly ‘twice as much’ as what the Wilsons were quoted for ‘assembly and completion of the boiler and steam work’.[54]  It was accepted that further action was required in order for the plant to be ‘running and complete’, and that ‘[s]tage two had not been agreed upon and it was unclear what the next stage would be’.[55]  It was in this uncertain and unresolved context that the first deferral letter of 10 August 2015 was generated.  The attached invoice of the same date for $76,092.75 was expressed as ‘a claim for labour and material to the end of July’.[56]

   [53] Elders Bank were the financiers of the project.

   [54] Ibid [129].

   [55] Ibid [138].

   [56] Ibid [154].

8. There was an unsuccessful attempt to start the plant for the first time, either on 21 or 22 August 2015.[57]  At a second meeting of 22 August 2015 with Elders Bank for budgeting of up to about $75,000, Mr Richter expressed the view that ‘things were taking longer than expected and it would be another 4 to 6 weeks to complete’.[58]  It was in this context that the second deferred letter of 21 September 2015 arose.  These discussions at Elders Bank suggest a recognition by the Wilsons that they were liable for the cost blowout for which they were seeking more finance.

   [57] Ibid [144]-[149].

   [58] Ibid [150].

9. So far as the words of the deferral agreements are concerned, there are a number of attributes warranting notice.  Firstly, they purport to confirm ‘an arrangement’ accepting liability for payment of the respective invoices in face value dollar amounts.  Secondly, even though imperfectly expressed, George Street Steel agreed that the amounts would not fall due and payable for a period of ‘30 days + 3 months’ thereafter, after which time on George Street Steel’s demand, it fell due together with interest at George Street Steel’s overdraft rate.  But for the deferral agreement, the invoiced amount was due and payable within 30 days.  It follows that George Street Steel forewent its right to immediate payment of the debts as well as interest.  Importantly, George Street Steel gave up any greater amount which it might be otherwise entitled to on a quantum meruit basis, or under contract, if it were the case that a contract rate of remuneration was agreed.

10. It is no answer to this analysis that the trial Judge ultimately found there was a single contract, albeit varied from time to time.  That finding was not yet made and did not therefore replace the parties’ legal rights and interests with a new charter established by the terms of a judgment.  In any event, the bare finding of a contract without a certain term as to remuneration is no contact at all. 

11. In the context of a running dispute between the parties over just about every subject matter of the project – price, mode of remuneration, scope of works and quality of performance – the circumstances clearly yielded significant consideration to support the enforcement of the two deferral agreements, not that the law requires as much.  As stated in Lampleigh v Braithwait:[59]

    If that courtesie were moved by a suit or request of the party that gives the assumpsite, it will bind, for the promise … it is not naked … .

    [59] (1615) Hobart 105, 106: 80 ER 255, quoted in Pao On at 630.

12. The courts are not required to inquire into the adequacy of consideration.  All that is required is for ‘a thing … to be done by the plaintiff, be it never so small, this is a sufficient consideration to ground an action’: Sturlyn v Albany.[60]  As famously stated in Chappell & Co Ltd v Nestle Co Ltd:[61]

    … a peppercorn does not cease to be good consideration if it is established that the promise does not like pepper and will throw away the corn.

    [60] (1587) Cro Eliz 67, 68; 78 ER 327, 328.

    [61] [1960] AC 87, 114 per Lord Keith.

13. Returning attention to the Pao On preconditions, Mrs Wilson expressly requested Mr Richter, in her email of 22 May 2015, to ‘go ahead with the work required’.[62]  He duly forwarded a ‘construction plan’ in his email of 1 June 2015, for which he was thanked by Mrs Wilson the following day.[63]  Whatever the precise position thereafter, it is clear that works continued on the steam line and later a ‘paint blowdown vessel’, as evidenced by the photographs and the time sheets presented to the trial court.

    [62] RCB V 2, p 705.

    [63] RCB V 2, pp 707 and 736 respectively.

14. As to the second precondition, it is common ground that George Street Steel was to be remunerated irrespective of the extant dispute as to the terms of that remuneration.  Putting aside the issue of negligent work, the Wilson entities never contended that they expected the work to be done without charge.  The expression ‘Admission and Acceptance’ convey a bona fide admission of liability and acceptance that it must pay.

15. As to the third precondition, the payment of the invoiced amount was legally enforceable if it had been agreed in advance of the work being done.

16. The Wilson entities submitted, by way of alternative to their primary submission, that the deferral agreements amounted to no more than a mere forbearance to sue and that George Street Steel had failed to prove that work of any benefit to the Wilson entities was performed in the periods covered by the invoices subject to deferral agreements.  That submission cannot stand in the face of what was, in effect, an admission that work of benefit was done, constituted by Mr and Mrs Wilson’s execution of the Admission and Acceptance clause of the deferral agreements.

17. In any event, the evidence of Mr Caven[64] and associated documentation, including photographs and the workers’ timesheets, shows that the work on the steam line to the pelletiser manifold was performed before and after 13 June 2015, and therefore was work done at the request, and to the benefit, of the Wilson entities in the period covered by the first invoice.  The submission that the photographs taken on 13 June of yet to be installed Sarco parts might be left over parts is entirely speculative.

    [64] T495-498.

18. As to the period covered by the second invoice, it expressly itemised the abrasive blasting and painting.  The execution of the admission and acceptance clause is an admission of the performance of that and all of the other itemised work in the period following the first deferral invoice.

19. The nature of the consideration evidenced here might be expressed in different ways.  Nevertheless, it is clear this was no temporary compromise, by any measure.  The deferral agreements went further than repeating promises to fulfil earlier promises.  The promises to pay fixed sums thereby became independently enforceable debts, thus replacing one set of reciprocal rights with a completely different set.  This was clearly a beneficial compromise on both sides.  From the Wilsons’ perspective, liability was limited to the fixed sums, and the debts, otherwise due within 30 days, did not fall due until ‘30 days + 3 months’, whilst George Street Steel gained certainty out of uncertainty in the admission of liability, in addition to interest protection in the event of extended default in payment.  There was further benefit to George Street Steel in the acknowledgement that the Wilsons had ‘no rights of set off or counter claim’. 

20. Although the reference by the trial Judge to the undesirability of going behind ‘unambiguous contractual stipulations’ is unexplained, her Honour correctly concluded these agreements amounted to admissions of ‘the outstanding account in each case’.[65]  The observation that the ‘purpose of the agreement was to clarify WPI’s position as to outstanding liability’ is to be understood as conveying the conclusion that the certainty thereby established amounted to a completely new set of reciprocal rights and hence not simply agreements to adhere to extant legal obligations without more.[66]

    [65] Trial Judgment [291].

    [66] Ibid.

    Indivisible contract - no entitlement to invoice

21. As noted above, the case for the Wilson parties was that they understood monies fell due only at the conclusion of the pellet plant works.  This stance was based on the notion that the contract was an entire or indivisible one, under which payment fell due only on completion of the project.  As the contract was rescinded, that event clearly did not materialise. 

22. Quite apart from the observation that such a position was ‘not borne out by the evidence’, the trial Judge was correct to observe ‘findings as to the deferred payment agreements … are inconsistent with the position asserted by WPI’ and in rejecting the submission as ‘unproven’.[67]  Both conclusions were clearly open on the evidence.  The deferral agreements provided otherwise.  Payment in full of the first invoice of 16 June 2015 of $48,777.32, for the initial boiler works, was equally inconsistent with that position.[68]  No error justifying intervention is demonstrated as to this aspect of WPI’s appeal, which fails accordingly. 

    Cross appeal

    [67] Ibid [258]-[259].

    [68] Ibid [204].

    Contractual agreement and terms

23. By its cross appeal, George Street Steel complains that the trial Judge erred in concluding there was no term in the arrangements for payment at an hourly rate of $100, with a 15 per cent mark-up for materials.[69]  Her Honour’s reasons for so ruling were these:[70]

    The plaintiff bears the onus of proof in relation to its breach of contract claim.  I am not satisfied that the plaintiff has established the contract for which it contends; specifically, that there was one contract for the design, development and construction of a pellet plant and ancillary equipment at a rate of $100 per worker plus materials at cost plus 15% with no cap and no time frame.  On the other hand, I also do not accept the defendants’ position that there were two fixed price contracts for a fixed time frame albeit the prices and time frame were varied from time to time.  Likewise, I am not satisfied that the plaintiff was only engaged to assemble the second-hand plant purchased from Hill River Hay.  Even if this is how it started, on any view, the defendants at least acquiesced in some expansion of those works.  

    [69] Ibid [8], [35], [281].

    [70] Ibid [243].

24. Counsel for George Street Steel based this part of the cross appeal substantially on an email from Mr Richter to Mrs Wilson of 20 May 2015 enclosing three attachments, one nominating a labour rate of $100 per hour, under which there was a list of a number of employees said to have worked on the project, whose hours of work were charged at that very rate.[71]  This was followed by the email from Mrs Wilson two days later containing the note ‘go ahead with the work required’, referred to earlier.[72]

    [71] RCB V 2, pp 699-703.

    [72] RCB V 2, p 705.

25. If taken alone, it was open to regard this exchange of emails as objective evidence of the contractual relationship between the parties on a time, cost and materials mark-up footing: Equuscorp Pty Ltd v Glengallan Investments.[73]  As against that, her Honour rejected Mr Richter’s evidence about this topic as ‘most unsatisfactory’.  The findings in relation to his evidence on this particular issue were these: [74]

    On the other hand, I do not accept Mr Richter’s evidence that WPI agreed to pay $100 an hour per worker with no limits as to price or time frame.  Whilst the Wilsons took a somewhat naive and rather casual approach to this project I do not accept that they would have agreed to an open-ended arrangement such as that contended by the plaintiff.  I do not accept that the Wilsons, having purchased a second-hand pellet plant for $115,000, would have been prepared to give the plaintiff a blank cheque in order to make the plant operational whatever their financial position.  This would have been fiscally irresponsible to say the least.  In the financial circumstances that the Wilsons were experiencing it would have been unthinkable.

    Mr Richter’s evidence on this topic was, moreover, most unsatisfactory.  He initially said there was no discussion about cost beyond his informing the Wilsons of the hourly rate at the 1 June 2015 meeting; the Wilsons did not query that rate or ask any questions.  I find this improbable to say the least.  Further, Mr Richter gave no evidence about the charge for materials.  Mr Richter however subsequently agreed that he may have given a rough indication or estimate of that cost in the region of $48,000.  This suggests some discussion of costs along the lines that the Wilsons indicated in their evidence.  Further the evidence of Mr Tucker and Mr Eckert supports the evidence of the Wilsons that there were subsequent discussions in which Mr Richter gave various cost indications.  Whilst the evidence about the quantum of indications might vary, it is clear that Mr Richter did give such estimates.  It further appears that he never referred to invoices that had been rendered, work in progress or to the basis upon which he calculated the estimates during the course of those conversations. 

    [73] (2004) 218 CLR 471, [34].

    [74] Trial Judgment [254]-[255].

26. The complaint is that the premise ‘unthinkable’ was misplaced, given such arrangements were common place and it fails to acknowledge this arrangement reflected the financially straightened circumstances of the Wilson parties. The payment of the first invoice at $48,777.32 implies no admission of an hourly rate because it was not specified in the invoice what that was, nor was the means of calculation of the labour component identified for works on the boiler and steam line.[75]  There was no mention of this rate by Mr Richter in his letters of 30 September and 1 October 2015, written with a view to supporting applications for government assistance with the project, although it is not necessarily to be expected that he would.[76] 

    [75] RCB V 2, p 763.

    [76] RCB V 2, pp 785-791.

27. All the same, statements provided to Elders Bank by Mr Richter contained no fixed pricing for labour,[77] and he made no reference to pricing to the Wilsons’ accountants on 3 September 2015.[78]  When challenged about excessive charges in November 2015, he made no mention of such a time-costs contract to the accountant either.[79]

    [77] Trial Judgment [134], [152].

    [78] Ibid [159]-[168].

    [79] Ibid [172]-[186].

28. Whether the contractual terms were reached as claimed depends upon an analysis of the objective evidence: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd.[80]  The evidence bearing out a concluded agreement based on $100 per hour was, in truth, rather thin.  In the end, the trial Judge rejected the contention on the basis that George Street Steel had not discharged the onus of proof it bore on the issue.[81]  There was no evidence, or at least no convincing evidence of mutuality in respect of such a rate of remuneration.  Mr Richter himself accepted there were no discussions about this prior to the meeting of 1 June 2015.[82]  He was non-specific about it in the course of his evidence, merely asserting ‘because I was unable to quote it we would charge $100 an hour per man’.[83]  He added under cross-examination that he ‘quite often reiterated my $100 an hour per man discussion to’ Mr Wilson, as very much as an afterthought.[84]

    [80] (2004) 219 CLR 165, [40].

    [81] Trial Judgment [257].

    [82] Ibid [90].

    [83] T751.1-.2.

    [84] T922.19-.20.

1. Having rejected Mr Richter’s evidence, there was nothing of substance upon which a finding of $100 per hour for labour with a materials mark-up of 15 per cent could properly be made.  The reference by her Honour in the reasons for rejecting this aspect of George Street Steel’s case to the ‘blank cheque’ was no doubt driven by the fact that Elders Bank was tightly monitoring and controlling expenditure.  This in turn leads to the inference that the Wilsons were doing the same.

2. It follows from the above considerations that there is insufficient objective evidence to enable this Court to draw different conclusions than the trial Judge.  So far as the conclusions are based on findings of credibility adverse to Mr Richter – which were well based – it is simply not open on appeal to interfere with or disturb those findings: Fox v Percy.[85]  This aspect of the cross appeal must fail accordingly.

   [85] (2003) 214 CLR 118, 125-126.

   The contracting parties

3. The trial Judge drew the conclusion that WPI was the contracting party with George Street Steel, largely on the premise that there was ‘no evidence of the involvement of WPA other than as the owner of the land’.[86]  Her Honour’s entire process of reasoning on this issue was as follows:[87]

   [86] Trial Judgment [250].

   [87] Ibid [248]-[251].

   Who were the parties?

   Neither the plaintiff nor the defendants gave evidence about their understanding of the parties to the contract.  There is no dispute that GSS was a contracting party; the only issue is in relation to which of the defendants was also a party.   

   It is not clear on the evidence that the plaintiff ever turned its mind to this topic.  The plaintiff variously addressed correspondence to Mrs Wilson, “Wilson Pastoral” and “Wilson Partnership T/A Wilson Pastoral”.  The ABN number quoted on the invoices was that of the second defendant WPA.  The unsigned loan agreement documents were similarly addressed but, as outlined above, all parties appear to accept that the correct entity in respect of the loans is WPI.  The plaintiff’s pleadings are not specific.  Its submissions indicate that I ought to find that WPI, as the owner of the pellet plant, and WPA, as the owner of the land on which the plant was built, were parties to the contract

   The defendants pleaded that the contract, or contracts, were with WPI.  WPI was incorporated for the purpose of pursuing the pelleting business.  WPI purchased the boiler and pellet plant equipment.  WPI is the applicant in relation to various grants related to the pelleting business.  There is no evidence of the involvement of WPA other than as the owner of the land. 

   I find that the contracting parties were the plaintiff and the first defendant WPI. 

4. As demonstrated above, correspondence was directed to Wilson Pastoral specifying the WPA ACN, most noticeably in the two invoices attached to the deferral agreement letters.  Mr and Mrs Wilson signed the respective admission and acceptance documents in their capacities as Director, without discriminating between WPI and WPA and in the knowledge that, although described by reference to an ABN in the invoices, they were references to WPA. 

5. Exactly the same observation applies to the first invoice of 16 June 2015, which was paid without protest, query or any request to reissue to a different entity.[88]  A receipt for this payment was issued by George Street Steel in the name of ‘Wilson Pastoral’, equally without demur.[89]  There is no evidence of any query, criticism or challenge from the Wilsons about that description embracing WPA.[90]  The same equally applies to all the remaining invoices,[91] even acknowledging that the trial Judge was not satisfied the invoice of 20 October 2015, or the three invoices of  6 November 2015, were delivered by Mr Richter.[92]  The unsigned loan agreements were similarly addressed to WPA.[93]  Mrs Wilson followed her email of 28 April 2018 to Mr Richter with another on 30 April, specifically signed off in her capacity as Director of WPA.[94]

   [88] Ibid [253].

   [89] Exhibit P2, p 7. 

   [90] RCB V 2, Tab 49.

   [91] Exhibit P2 in the trial court, pp 6 (16/6/15), 41 (10/8/15), 139 (1/9/15), 183 (20/10/15), 231 (6/11/15), 243 (6/11/15), 247 (6/11/15), 251 (23/11/15), 259 (1/1/16), 269 (1/1/16).

   [92] Trial Judgment [283].

   [93] Ibid [249].

   [94] Exhibit D55. 

6. A purpose-built shed was constructed on the WPA property for the purposes of sheltering the plant from the elements and, as her Honour correctly noted, WPA was the owner of the Clements Gap property on which it was built.  There is no evidence of any licence by WPA to WPI permitting use of its lands for such purposes, or as to who paid for or built it.  No documents formalising such arrangements were adduced by the Wilson parties.  There is no evidence of the actual accounting structure as between WPI and WPA.

7. WPI was incorporated for the express purpose of establishing the saltbush pellet plant, which it bought from Hill River Hay in 2014.  The letter of 28 September 2015 written by Mr Richter, for the purpose of supporting government grants, referred to an engagement by ‘Wilson Pastoral International Pty Ltd’.[95]  He gave evidence that he thought there was ‘communication to the Wilsons asking them which entity we were invoicing …’,[96] however there is no specific finding with respect to that discrete issue, presumably because no such communication was produced.  As stated earlier, there is no evidence as to which entity (or which person for that matter) paid the first invoice.

   [95] RCB V 2, p 790.

   [96] T976.33-.35.

8. Although the evidence on this topic is somewhat diffuse, the proven manner of dealing with the pellet plant demonstrates that Mr and Mrs Wilson used the two Wilson Pastoral corporate entities interchangeably at will when transacting for the project.  Her Honour’s conclusions about this issue is drawn from inferences arising from the objective facts, which places this Court in just as good a position as the trial court, when drawing appropriate inferences: Warren v Coombes.[97]

   [97] (1979) 142 CLR 531, 551.

9. For the above reasons, this aspect of the cross appeal must succeed.  The trial Judge’s finding that George Street Steel recover solely from WPI the sum of $105,801.68 together with pre-judgment interest thereon of $35,344.87 should be set aside and in lieu thereof an order made substituting judgment in those terms against both WPI and WPA, jointly and severally. 

   The costs orders

10. It necessarily follows that the costs order made in favour of George Street Steel, allowing its costs on a party-party basis up to and including 30 May 2018 and thereafter on an indemnity basis, should be set aside and in lieu thereof there be an order substituted against both WPI and WPA in similar terms.

11. By its written submissions on the cross appeal, George Street Steel further contends that ‘if the Court is with the Respondent that the second, third and fourth defendants were parties to the contract … the ordinary rule ought to follow that costs be against all defendants jointly and severally’, and in the alternative it was more appropriate to exercise the Court’s unfettered discretion to award the costs of the action against the second, third and fourth cross-claimants, at least in so far as those costs were incurred prior to 16 November 2017.  The ‘exceptional circumstances’ identified for this purpose include the fact that WPA and the Wilsons were second, third and fourth defendants respectively and active cross-claimants until 16 November 2017, before the Wilsons ‘unilaterally’ withdrew on that date by reason of amendments to the pleadings, and that the trial Judge was critical of the manner in which the cross-claim was prosecuted by the cross-claimants. 

12. For its part, WPI maintained on appeal that as no error emerges, this Court should not interfere with discretionary costs orders other than for ‘for strong reasons’ in accordance with well-established practice, citing McCauley v McCauley[98] and Maiden v Maiden.[99]  Counsel for WPI emphasised that the claim against Mr and Mrs Wilson failed entirely.  So far as the 16 November 2017 amendments were concerned, counsel pointed to the order for costs against all defendants at the time of the amendment made on 24 November 2017 by another Judge of the Court, which meant ‘the matter as to costs has already been dealt with’.

    [98] (1910) 10 CLR 434, 455.

    [99] (1909) 7 CLR 727, 742.

13. A portion of the criticisms levelled at the Wilson interests were quoted earlier in these reasons.  These related, essentially, to what her Honour described as an ‘exaggerated claim and attitude toward negotiations’ on their part.[100]   In her reasons for judgment on the question of costs, her Honour determined there was no ‘sufficient basis to deprive [George Street Steel] of its costs and that it was entitled to its costs from WPI’.[101]  Although her Honour did not say so expressly, this conclusion appears to entirely depend on the conclusion that WPI was the contracting party, to the exclusion of WPA.  Likewise, it appears the same conclusion correspondingly dictated the order that there be no order for costs in respect of WPA and Mr and Mrs Wilson.

    [100] George Street Steel Pty Ltd (ACN 008 179 708) v Wilson Pastoral International Pty Ltd (ACN 167 284 399) & Ors (No 2) [2019] SADC 39, [37].

    [101] George Street Steel Pty Ltd (ACN 008 179 708) v Wilson Pastoral International Pty Ltd (ACN 167 284 399) & Ors (No 2) [2019] SADC 39, [16]–[17].

14. No reason was given for treating the natural defendants in the same way as WPA.  It can be readily accepted as a general rule that an appellate court will be reluctant to interfere with an order for costs made by a trial judge: Forlyle Pty Ltd v Tiver.[102]   There is no reason to suppose other than that the unreasonable active role in the course and conduct of the proceedings taken by Mr and Mrs Wilson identified by her Honour was done by them in the interests and on behalf of the Wilson Corporate entities.

    [102] (2007) 252 LSJS 387; [2007] SASC 464, [27].

15. No error is apparent in the highly discretionary exercise of the power to award costs in respect of the natural defendants, so the cross appeal by George Street Steel must fail.  Indeed, given that the action against them personally failed, their departure from the litigation on 16 November 2017 and the consequent adverse costs order, this aspect of the costs order fell well within discretionary bounds. 

    The quantum meruit claim

16. Since there was a conclusion at trial that no contractual terms for remuneration were agreed, it became necessary in order for George Street Steel to succeed, to fall back on a quantum meruit claim: Mann v Paterson Constructions Pty Ltd.[103]  This could only relate to the period following 30 August 2015, because of the antecedent conclusion that the deferred payment agreements validly covered all the work completed by then.[104]  It is complained that her Honour fell into error by limiting the assessment to the period following 30 August 2015 and in drawing the conclusion that the work completed by George Street Steel was of no benefit.[105] 

    [103] [2019] HCA 32; (2019) 93 ALJR 1164.

    [104] Trial Judgment [318].

    [105] Ibid [331].

17. The nature of the enquiry for quantum meruit claims is such that the court will ordinarily determine the fair and reasonable value of the work actually performed: Pavey & Matthews Pty Ltd v Paul.[106]  At trial, George Street Steel failed, due to her Honour’s conclusions that ‘it is virtually impossible to ascertain what aspects of the plaintiff’s work occurred at what stage’ and that it was ‘virtually impossible to ascertain what a reasonable payment would be for those benefits’.[107]

    [106] (1987) 162 CLR 221.

    [107] Trial Judgment [304], [336].

18. It is conceded on appeal that there was very little evidence of what a reasonable rate of remuneration would be, except only that the written submissions of George Street Steel suggest an alternative service provider, instructed following termination, charged a higher hourly rate.[108]  This was however in respect of works of quite a different nature.  Hence there was a fundamental difficulty in assessing the value of the work undertaken by reference to charges commonly made by others for like services.  Neither did George Street Steel adduce evidence proving the payment of invoices for materials supplied or used on the works.

    [108] ACB V 1, p 275, [171]-[172] of George Street Steel’s written closing submissions before the trial Judge.

19. Apart from the significant shortfall in proof, given the conclusion that the deferred payment agreements were enforceable and covered the period to 30 August 2015, it was plainly correct to refuse any further claim on a quantum meruit basis for that period.   As remarked in Mann v Paterson Constructions Pty Ltd:[109]

    … to allow a restitutionary claim for quantum meruit to displace the operation of the compensatory principle where the measure of compensation reflects contractual expectations would be inconsistent with … the gap-filling and auxiliary role of restitutionary remedies.

    (Footnote omitted)

    Gageler J expressed the principle in this way:[110]

    … the continuing existence of a contractual right to payment, enforceable by an action in debt, leaves no room to recover payment by another action in debt on a non-contractual quantum meruit.

    [109] (2019) 373 ALR 1, [22].

    [110] Ibid [63].

20. As for the subsequent work, an assessment is made by identifying the ‘reasonable remuneration or compensation for a benefit actually or constructively accepted’: Pavey & Matthews Pty Ltd v Paul.[111]   In other words, the measure of reasonable remuneration will correspond with the fair value of the benefit provided: Pavey & Matthews Pty Ltd v Paul.[112] 

    [111] (1987) 162 CLR 221, 257.

    [112] Ibid 263.

21. On this issue, a joint conclave paper prepared by four experts (comprising the engineers Mr Van Der Loo, Mr Bryant and Mr Mikulic and the boiler maker Mr Masters) spoke with one voice of wholesale failure in the project, as well as total failure of project management and performance by George Street Steel.[113]  Their conclusions are best encapsulated in the following extract from the report:[114]

    EXECUTIVE SUMMARY

    On Monday 26th February, 2018, four experts, John Bryant, Paul van de Loo, Ty Masters and Marijan Mikulic entered into a conclave to create a position paper.

    There is broad agreement between the four experts. The small difference between the experts arises from the difference in scope of their investigations and not due to any technical disagreement.

    It is agreed that the plant falls a long way short of an acceptable commercial standard. The shortcomings are manifested as low productivity, safety hazards, low levels of reliability and durability. The safety hazards render the plant non-compliant with regulations. Many of the defects are inherent and not easily rectified. The experts agree that the project has been undertaken without the normal project management, procurement, design, construction and commissioning processes for a project of this nature. This has compromised the outcome of this project both technically and commercially.

    As many of the plant’s defects are fundamental, rectification work cannot readily result in a plant of typical commercial standard. To improve the plant significantly would require extensive rework and replacement of some equipment.

    [113] ACB V 2, Tab 20.

    [114] Ibid p 656. 

22. In his own report of 17 April 2016, Mr van de Loo considered:[115]

    … the plant was operational but that it was not capable of operating in accordance with the apparent design intent of the plant … due to a number of defects … the most significant being the inability of the plant to operate as a continuous flow process.

    He added that ‘exacerbating these fundamental issues … is that the plant has been configured and assembled with a generally poor level of design and workmanship’.[116]  Mr Bryant considered ‘the plant as it is currently configured would not appear capable of the output of product as was expected’ and was ‘not safe to operate’.[117]  For his part, Mr Masters was of the opinion that the boiler was ‘unsafe to operate’, as ‘unsuitable for its design and described purpose’ and that it did not comply with Occupational Health, Safety and Welfare Regulations, or with Australian Standards.[118]

    [115] ACB V 1, p 5.

    [116] Ibid p 6.

    [117] Ibid p 112.

    [118] ACB V 2, p 491.

23. The trial Judge duly noted the defence contention that ‘fair and reasonable compensation for the services performed by the plaintiff is zero based on the conclave report’ and that the plaintiff did not lead sufficient evidence about the works to enable an estimate of value to be made.[119]  Her Honour then considered the conclave report including the observation that ‘the plant fell a long way short of an acceptable commercial standard because it had low productivity’,[120] before drawing these conclusions:[121]

    There are significant difficulties in establishing what work the plaintiff’s workers performed because of the deficiencies in the plaintiff’s accounting systems, the lack of detail in the time sheets and the invoices and the limited evidence of what was done and when.  Further, it is plain that a lot of the work undertaken by the plaintiff’s workers was, at the least, misguided in the sense that there was no, or no adequate, project management by the plaintiff.  I find therefore that there was limited benefit to WPI in the performance of those works.  I further find that GSS has established that WPI accepted some benefit in respect of pellet making and for the shipping container (which is included in invoice SINV045847) which remains on site. 

    [119] Trial Judgment [301].

    [120] Ibid [318]-[330].

    [121] Ibid [331]. The Invoice SINV045847 referred to therein is to the second ‘deferred’ invoice dated 10 August 2015.

24. And finally:[122]

    The work performed by GSS in respect of the pellet plant machinery was, as I have found, of limited benefit to WPI.  WPI also had to undertake works to rectify the plant and equipment after the departure of GSS.  WPI has paid an invoice for part of that work and is obliged to pay further amounts under the terms of the deferred payments agreements.  Leaving aside the question of interest, that is a total of $164,579.00.  The context for this is Mr Richter’s quote for the boiler work and his original estimate of the cost of the pellet plant work together with the original purchase price of the pellet plant and boiler from Hill River Hay. 

    In all of the circumstances, the plaintiff has not satisfied me that WPI would be unjustly enriched if it retained the limited benefits that I have identified without further payment.  It is moreover virtually impossible to ascertain what a reasonable payment would be for those benefits.  In the circumstances, I dismiss the plaintiff’s claim in quantum meruit. 

    [122] Ibid [335]-[336].

25. It appears that the ‘original quote’ came to something in the order of $48,000.[123]  The purchase price for the second-hand boiler and pellet plant machine bought from Hill River Hay in mid-June 2014 was $115,500.00.[124]  In the analysis contained in the quoted passages of the Trial Judgment, her Honour duly discharges the obligation to assess what reasonable remuneration or compensation was appropriate to the benefit actually or constructively accepted.  In determining the fair value of that benefit, which was not established over and above the sum of $164,579.00 George Street Steel was entitled to, there was no error in the approach in point of principle as applied to the proven facts.  The quantum meruit limb of the cross appeal must therefore fail.

    [123] Ibid [98], [119].

    [124] Ibid [24].

    The worker’s lien issue

26. It is to be recalled the trial Judge held the worker’s lien to be invalid. This lien was registered on 11 March 2016 under s 5 of the Worker’s Liens Act over the Clements Gap property, to enforce a claim then in the sum of $359,574.09, for the provision of services and materials.  The Wilson parties claimed it was invalid because no monies were owed, no work of use took place on the land, the pellet plant was not a fixture on the land and because WPI as contracting party was not the owner of the land. 

1. Her Honour held the lien invalid for these reasons:[125]

   I have found that the plaintiff has failed to establish the contract price of $359,574.09 for which the lien was registered nor has it established the agreement that formed the basis of that contract price.  For that reason, the lien cannot be maintained over WPA’s land.  I need not therefore consider the other issues raised by the parties.  The lien is invalid.

   [125] Ibid [375].

2. This conclusion depends upon the meaning her Honour ascribed to ‘the contract price’, contained in s 5 of the Worker’s Liens Act.  This provides:

   A contractor or sub-contractor shall have a lien for the contract price, so far as accrued due, on the estate or interest in land of any owner or occupier in each of the following cases:

   (a)Where the work is done, with the assent, express or implied, of the owner or occupier to the land or to any fixture thereon:

   (b)Where the materials are, with the assent, express or implied, of the owner or occupier, used or intended to be used in or about work done, or intended to be done, to the land or to any fixture thereon.

3. With due respect to her Honour, the failure to establish a contract price was not fatal to the claim to a worker’s lien, since such liens can arise for work actually done even if there is no fixed contract price, or when a workman is entitled to be paid on a quantum meruit basis: Chase v Westmore.[126]  As Lord Diplock observed in Tappenden v Artus:[127]

   If, pursuant to the contract, the artificer does his work, he is entitled to retain possession of the goods so long as his charges, whether agreed in advance or (if not so agreed) payable in a quantum meruit, are satisfied.

   [126] (1816) 5 M & S 180, 183-184; 105 ER 1016, 1081.

   [127] [1964] 2 QB 185, 194-195.

4. This conclusion is consistent with the definition of ‘contract price’ contained in s 2 of the Worker’s Liens Act, which extends that price to cases in which ‘such price has been fixed by express agreement or not’.  Moreover, as Richards J notes in Pitt Ltd v Corporation of Town of Glenelg, ‘contract price’ does not mean ‘the amount specified in the contract’, but rather ‘the money payable under the contract’.[128] 

   [128] [1927] SASR 501, 508-509.

5. In any case, the conclusion that there was an enforceable contract price to the extent of that claimed in the deferred payment invoices was otherwise sufficient to found the registration of a worker’s lien.  As the above process of reasoning determines that WPA was a contracting party, it is unnecessary to consider if it gave an ‘assent, express or implied’ to building the works on its land by WPI.

6. Since her Honour found it unnecessary to deal with it, the question whether what was done related to ‘any fixture’ on the property remains for resolution. Section 2 of the Worker’s Liens Act defines a ‘fixture’ as meaning:

   … such a fixture upon land, having been attached to such land by the vendor, would pass to the purchaser upon the sale of the fee simple land.

7. This definition simply imports the common law notion from the law of real property of what amounts to a fixture, laid down in Holland v Hodgson:[129]

   There is no doubt that the general maxim of the law is, that what is annexed to the land becomes part of the land; but it is very difficult, if not impossible, to say with precision what constitutes an annexation sufficient for this purpose. It is a question which must depend on the circumstances of each case, and mainly on two circumstances, as indicating the intention, viz., the degree of annexation and the object of the annexation. When the article in question is no further attached to the land, than by its own weight it is generally to be considered a mere chattel; see Wiltsheer v Cottrell, and the cases there cited. But even in such a case, if the intention is apparent to make the articles part of the land, they do become part of the land.

   This passage was quoted with approval by Griffith CJ and referred to with approval by Barton and O’Connor JJ in Reid v Smith.[130] 

   [129] (1872) LR 7 C.P 328, 334, 335.

   [130] (1905) 3 CLR 656, 662-663, 671, 678.

8. The evidence as to annexation was imprecise at best.  George Street Steel pointed to very little of substance to make good its submission that the plant was fixed to the land, other than reliance on the proposition that the intention to remain in position permanently or indefinitely, or for a substantial period of time was sufficient, citing Australian Provincial Assurance Co Ltd v Coroneo.[131]  However as the High Court made clear in TEC Desert Pty Ltd v Commissioner of State Revenue (WA),[132] it is the objective of annexation coupled with the degree of annexation, which determines the question:

   The two considerations which are commonly regarded as relevant to determining the intention with which an item has been fixed to the land are first, the degree of annexation, and secondly, the object of annexation.

   [131] (1938) 38 SR (NSW) 700, 712.

   [132] (2010) 241 CLR 576, [24].

9. The fact that the plant has remained on the property for over three years says very little, if anything, about the question.  It is known that a purpose-built shelter was erected and a concrete floor slab laid.  It is also known that the plant and boiler were transported to the property following purchase.  Mr Richter himself accepted that the plant and equipment remained moveable ‘apart from it’s bolted down …’.[133] 

   [133]  T976.36 – 977.18.

10. The expert reports of the engineers Mr van de Loo of 18 April 2016 and Mr Bryant of 8 June 2016 demonstrate that the plant was far from secure, so far as fixation was concerned.[134]  They report, amongst other things, that the mixer was without masonry bolts securing it to the concrete floor, the augur between the mixer and the hammermill remained unsecured, resting on a temporary frame held down by ‘G’ clamps, a hay teaser sat outside the shed on pieces of wood and steel, and silos used in the plant were not bolted down.  Mr van de Loo considered a number of items were installed in a temporary manner ‘characterised by not being securely mounted to the floor … and not operating under an integrated control system’.[135]  Mr Bryant observed that many pieces were not secured to the floor, some were attached in a very temporary manner and others were ‘tek-screwed together rather than bolted’.[136] 

    [134] ACB V 1, Tabs 16 and 17. 

    [135] ACB V 1, p 420. 

    [136] ACB V 1, p 481. 

11. In these circumstances, there was barely any secure basis on which the trial court could properly conclude that the pellet plant was affixed to the land and therefore was a ‘fixture thereon’ as required by s 5 of the Worker’s Liens Act.  The conclusion of the trial Judge on the validity of the worker’s lien must therefore be affirmed, albeit on different grounds.

    The loan agreements

12. There is no direct complaint as such from either side as to the trial Judge’s conclusions in respect of the loans by George Street Steel.  The conclusion that WPA was a contracting party in respect of the pellet plant works makes it necessary to review the consequences, because of the set-off of $30,000, which her Honour allowed WPI against the outstanding amount of $45,000 it owed to George Street Steel.[137]  The issue then is whether WPA is now entitled to the same order for set-off.

    [137] ACB V 2, p 926.

13. In the narrative portion of the judgment, her Honour refers to the separate proceedings in the Adelaide Magistrates Court,[138] in which George Street Steel claimed against WPI the sum of $45,000 plus interest under two loan agreements made in about September 2015.  In this action, WPI claimed a set-off to the extent of any amount owing by WPI thereunder.[139]

    [138] Action No. AMCCI-16-911.

    [139] Trial Judgment [5]-[6], [8], bullet points 4 and 8.

14. WPI contended during the trial that it made two repayments, one of $5,000 on 17 December 2015 and the other of $10,000 on 30 December 2015.  George Street Steel resisted any order to set-off on the basis that the loans raised were separate and discrete issue, having nothing to do with the pellet plant arrangement.

15. As to this dispute, her Honour found there was an oral loan agreement between George Street Steel and WPI for loans totalling $50,000, $5,000 of which was repaid.[140]  The only remaining questions for the trial Judge to resolve in that event was whether a payment of $10,000 made on 30 December 2015 ‘ought to have been applied to the loan’ thus reducing the amount outstanding to $35,000 and whether there is an entitlement to a set-off in respect of the outstanding loan amount.[141]

    [140] Ibid [57].

    [141] Ibid [58], [376].

16. Matters were compounded by the fact that the unsigned loan agreement documents were addressed to the same ABN quoted on the deferred invoices belonging to WPA and the covering letters enclosing them were addressed directly to WPA.[142]  Despite this, it emerges that all parties appeared to accept at trial that the correct entity in respect of the loans was WPI.[143]  After analysing the evidence, her Honour came to the conclusion that it was ‘not inappropriate’ for George Street Steel to have applied the $10,000 advance towards the outstanding invoices, hence the conclusion that the balance owing on the loans stood at $45,000.[144]  As her Honour considered the primary claims were ‘sufficiently connected’ with the loan, she allowed an equitable set-off by WPI against what it owed to George Street Steel under the loans.[145]  This effectively meant that the $30,000 awarded to WPI for the breach of common law duty claim was deducted from the $45,000 owed to George Street Steel in the loan action.

    [142] Exhibit P2, tabs 12, 13 and 14.

    [143] Trial Judgment [53], [57], [249]. 

    [144] Ibid [55], [378].

    [145] Ibid [379].

17. Nevertheless as observed earlier, there are no appeals against the orders made in the loan action and no submissions were advanced on appeal about the loan aspects of the case.  By letter of 21 April 2020, the Chief Justice sought clarification of this question by the parties.  In responses, neither side sought to disturb the order for set-off as made by the trial Judge.   In any event, there is good reason to doubt the power of the Full Court to vary the order in the absence of an appeal or cross appeal.  For these reasons, the orders for set-off in favour of WPI and the final judgment in the loan action must therefore stand intact.

    Orders

18. For the various reasons articulated above, the orders proposed are these:

    1Grant an extension of time in which Wilson Pastoral International Pty Ltd may appeal to 18 April 2019, but otherwise dismiss the appeal.

    2The cross appeal by George Street Steel Pty Ltd be allowed by:

    2.1Giving judgment in its favour in action DCCIV-16-349 in the sum of $105,801.68 together with prejudgment interest of $35,344.87, against Wilson Pastoral Australia Pty Ltd and Wilson Pastoral International Pty Ltd, jointly and severally;

    2.2By varying the costs order made on 28 March 2019, by ordering that Wilson Pastoral Australia Pty Ltd and Wilson Pastoral International Pty Ltd be jointly and severally responsible for the payment of George Street Steel Pty Ltd’s costs on a party and party basis up to 30 May 2018 and thereafter on an indemnity basis and by making no order as to costs in respect of Mr and Mrs Wilson;

    2.3    The cross appeal is otherwise dismissed.