Hoist-up Pty Ltd v Heartland Motors Pty Limited

Before the Court is an appeal brought pursuant to ss 39 and 40 of the Local Court Act 2007 (NSW) (the Act) against a verdict entered by her Honour Magistrate Schurr sitting in the civil jurisdiction of the Local Court of New South Wales.

The appellant, Hoist-up Pty Ltd, was the plaintiff in the Local Court. The defendant before me, Heartland Motors Pty Limited (trading as Heartland Holden), was also the defendant in the Local Court. It is convenient to refer to the parties simply as the plaintiff and the defendant.

The plaintiff did not resist the submission of the defendant that the appeal creating provisions only permit as of right an appeal on a matter of law (s 39(1)). An appeal on a question of mixed fact and law requires a grant of leave (s 40(1)), as does an appeal about a costs order (s 40(2)(c)). There can be no appeal on a question of fact alone: see Waterford v The Commonwealth [1987] HCA 25; (1987) 163 CLR 54, 77 (Brennan J); Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321, 356 (Mason CJ).

By way of exhibits to a number of affidavits, the judgment of her Honour was placed before me, along with the pleadings in the Local Court, a copy of the transcript of proceedings at first instance, and a copy of the documentary exhibits tendered there. I was also provided with a transcript of the final addresses of counsel at first instance, and a copy of the written submissions filed by counsel for the defendant in the court below.

To state things succinctly, the plaintiff provided invoices to the defendant for repair and maintenance work that the plaintiff claimed it had done to machines owned by the defendant at various premises of the defendant in suburbs of Sydney. It is convenient to extract from the judgment the table of unpaid invoices that made up the claim. There was no dispute before me about the accuracy of that table as a summary of the case for the plaintiff:

The invoices were not paid by the defendant. The plaintiff sued the defendant in the Local Court, and the operative iteration of the claim was a further amended statement of claim filed on 8 May 2013 in the Local Court at Burwood. The total amount claimed was a little under $26,000 plus interest and fees.

That pleading of the plaintiff was based upon three causes of action.

First, although expressed a little obliquely, a claim in contract founded upon the submission of six invoices by the plaintiff to the defendant.

Secondly, a claim pursuant to the Trade Practices Act 1974 (Cth) (since repealed), founded upon representations said to have been made by a representative of the defendant, Mr Mark Jordan, to the plaintiff.

Thirdly, a claim based upon unjust enrichment, to which I shall refer by way of shorthand as “quantum meruit”.

A pleaded claim in estoppel was not pressed at first instance.

At the request of the defendant, the plaintiff provided particulars of its claim in contract (pursuant to an earlier version of the statement of claim of 27 June 2012 that referred only to the service of the invoices) before the hearing commenced on 15 August 2013. The pertinent portion of those particulars, which were dated 17 August 2012, is as follows:

The evidence in the hearing at first instance gave rise to a number of disputes about questions of fact. In particular, in dispute was the evidence of Mr Calleja (the principal of the plaintiff) about authorisations to proceed with work that he claimed had been given to him during conversations with officers of the defendant; his evidence that the work reflected in the invoices had actually been done, and, in particular, his evidence about doing authorised work on a certain oil pump; and the date upon which the invoices of the plaintiff had been provided to the defendant. Generally, those disputes about questions of fact were resolved in the judgment in favour of the defendant.

To summarise the legal determinations in the judgment, her Honour disallowed the Trade Practices Act claim: at [29]. That determination is not the subject of any ground of appeal.

Separately, it can be seen from the judgment that her Honour permitted the plaintiff to rely upon that portion of the pleadings that contained the asserted representations that founded the Trade Practices Act claim in support of the claim in contract: at [12].

Secondly, her Honour held the plaintiff to its pleadings and particulars with regard to the claim in contract: at [16]-[21]. That claim was rejected, except as detailed below.

Thirdly, her Honour rejected the claim in quantum meruit: at [30]-[37]. That rejection was in truth founded upon a pleading point, because her Honour said as follows:

Fourthly, her Honour disallowed all claims except one, that being for the first invoice appearing in the table of October 2010 in the sum of $2,662: at [24].

Fifthly, her Honour made no order as to costs, with the result that each party paid its own costs at first instance: at [46].

Although it can be seen that the grounds notified in the summons commencing the appeal were expressed in an extensive way, by the end of the hearing before me counsel for the plaintiff had helpfully refined his grounds as follows.

First, it was an error of law to confine the plaintiff to its pleadings with regard to its claim in contract in the way her Honour did.

Secondly, it was an error of law (or, at the least, an error of mixed fact and law with regard to which leave should be granted) for her Honour to misconstrue the terms of the contract between the plaintiff and defendant.

Thirdly, it was an error of law (or, at the least, an error of mixed fact and law with regard to which leave should be granted) for her Honour to misapply the evidence about the essential preconditions of quantum meruit; in the alternative, it was an error of law to confine the plaintiff with regard to its claim in quantum meruit in the way her Honour did.

Fourthly, her Honour made a slip in assessing the number of particular claims within the overarching proceedings of the plaintiff that found success. Accordingly, the fact that her Honour made no order as to costs (with the effect that each party was to pay its own costs) was itself erroneous, and leave should be granted so that it can be corrected. Furthermore, if the appeal were to succeed, the plaintiff should have its costs in the Local Court on that basis as well.

In response, the defendant made the following submissions.

First, there was no error of law in her Honour confining the plaintiff to its pleadings, and the specific particulars that it had provided in response to a request of the defendant, with regard to the claim for breach of contract.

Secondly, there was no misconstruction of the contract in question. To the contrary, all of the complaints made by the plaintiff about the relevant portions of the judgment are attempts to impugn findings of fact, and therefore fall outside the appeal-creating provisions.

Thirdly, there was no misapplication of the principles about quantum meruit. Rather, the plaintiff was prohibited from relying upon quantum meruit founded upon acquiescence in work being done, as opposed to a request that work be done, because it had not been pleaded, or particularised, or addressed upon, by the plaintiff in that way. There was no error of law in that approach of her Honour.

Fourthly, the defendant did not dispute that there was a slip by her Honour with regard to the acceptance by the defendant of the validity of one invoice. But that meant that, in the ultimate, the plaintiff succeeded with regard to two of seven of its claims, as opposed to one of six; such a difference could have no effect on the discretion as to costs. And in any event, her Honour had provided ample opportunity for the plaintiff to make submissions contrary to the proposed order as to costs before it was made. In circumstances in which the plaintiff did not take advantage of that opportunity, leave should not be granted to permit the further agitation of that question in this Court.

Finally, the defendant filed a notice of contention in the proceedings before me. I shall turn to analyse the force of it if any substantive ground of appeal of the plaintiff is upheld by me.

These were notified as follows:

As I have said, all of these grounds were the subject of helpful clarification and refinement in the oral submissions of counsel for the plaintiff.

At the hearing, it was accepted by the defendant that this was a slip on behalf of her Honour. In other words, there was no dispute that the defendant was liable to pay the plaintiff on the invoice in question. Having said that, the evidence placed before me shows that, by way of a letter of 20 November 2013, the defendant paid both the sum that was the subject of the judgment of her Honour, and also the sum that underpinned this other invoice about which the slip was made.

For abundant caution, I shall uphold the appeal with regard to ground one, at the least to give effect to that concession, whilst recording my clear intention that I do so as a matter of formality only, for the simple reason that the debt has already been satisfied.

In that strictly formal sense, ground one of the appeal will be upheld.

As I have said, it was explained before me that this ground could be understood as having two related bases. First, the plaintiff impugned the decision of her Honour to hold the plaintiff to its pleaded and particularised case. Secondly, in coming to certain findings about whether Mr Jordan had authorised Mr Calleja to do the work, her Honour had misconstrued the contract.

Turning to the first basis of ground two, as I have said, the pleadings with regard to contract were a little Delphic, and simply asserted the service of the invoices and the work done. In the judgment, her Honour adopted a flexible approach to those pleadings, and was content to regard the particulars of the Trade Practices Act claim as applying to the claim in contract as well. Her Honour also placed emphasis on the particulars supplied by the plaintiff with regard to the claim in contract, which I have extracted at [12] above.

In a nutshell, the pleaded and particularised claim of the plaintiff was that Mr Jordan had expressly and orally authorised the doing of each piece of work that founded each invoice shortly before it was done. That assertion was expanded upon by way of the particulars, which spoke of a partly oral and partly written contract, and gave an example of the general nature of an authorising conversation.

It can be seen from para 12(d) of the statement of claim that, quite apart from an explicit conversation authorising the work, there was also reliance placed upon an implied representation. That paragraph of the statement of claim is as follows:

In his final address at first instance, counsel for the plaintiff sought to alter the claim in contract to a degree. It can be seen that, by that stage, he submitted that there had been a general authorisation with regard to the doing of the work by the plaintiff: see address transcript (AT) at 2.5 and 2.20-2.2.

In his final address at first instance, counsel for the defendant made extensive submissions resisting that asserted change of position, commencing at AT 12.8, and submitted that it should not be permitted by her Honour.

In submissions in reply at first instance, counsel for the plaintiff submitted that any divergence between the pleadings and particulars and his final address was “not material”: AT at 17.28.

It is in that context that the following paragraphs of the judgment must be read:

Turning to my determination of the first part of ground two, it can be seen that her Honour dealt with the question of whether there was express authorisation for each of the pieces of work done in the judgment at [10]-[15].

It can also be seen that her Honour dealt with the question of whether the plaintiff had established an implied representation on each occasion. By that I mean, her Honour dealt with that question in the narrow sense of whether the representative of the plaintiff, without engaging in any actual conversation, impliedly represented that an invoice presented should be proceeded upon by the plaintiff and would be the subject of payment in due course: at [20]-[24]; [25]-[27]; and [38]-[42].

Finally, it can be seen from the paragraphs that I have extracted that the result of the determination of her Honour that the plaintiff should be held to its pleadings and particulars was that the judgment did not determine on the merits a question of “general authorisation” arising from a long-standing course of conduct on the part of the plaintiff, and the general business relationship between the plaintiff and the defendant.

Before me it was said by the plaintiff that that was an error of law, or at least an error of mixed fact and law with regard to which leave should be granted. It was said that her Honour had adopted an overly punctilious approach to the question of departure from pleadings, especially in light of the fact that these proceedings were brought in the Local Court, where one would expect a greater degree of informality.

I reject that proposition, for the following reasons.

First, it is well established that the general rule is that pleadings must be the subject of adherence. In Dare v Pulham [1982] HCA 70; (1982) 148 CLR 658 at 664, it was said that:

More recently, in Forrest v Australian Securities and Investments Commission [2012] HCA 39; (2012) 247 CLR 486 at [26], a plurality of the High Court referred to what had been said by Isaacs and Rich JJ in Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in Liquidation) [1916] HCA 81; (1916) 22 CLR 490 at 517; namely, that “the fundamental principle that no man ought to be put to loss without having a proper opportunity of meeting the case against him” requires that “pleadings should state with sufficient clearness the case of the party whose averments they are”.

Secondly, whilst I accept that proceedings will often be less formal in the Local Court than in this Court, it is clear that this was a hard-fought battle over a relatively small sum of money. In those circumstances, it was not inappropriate for her Honour to apply the above principles with a degree of rigour.

Thirdly, formal particulars were sought and supplied that said nothing of an overarching general authorisation in support of the claim in contract.

Fourthly, both the version of the statement of claim that was the subject of particulars, and the final iteration of that document, were very unclear with regard to the claim for contract, and one is entitled to infer that that is why particulars had been sought. For that reason, the particulars assumed an added importance.

Fifthly, her Honour adopted an expansive approach by regarding the pleadings with regard to the statutory claim as being applicable to the claim in contract as well. In other words, the fact that her Honour had already granted an indulgence to the plaintiff with regard to pleadings argues against the proposition that her Honour adopted an overly strict approach to the general question of pleadings.

Sixthly, although para 12(d) of the final statement of claim of the plaintiff did indeed speak of an implied representation, it is clear that that part of the statement of claim was speaking of something far more specific than the kind of claim that her Honour ultimately disallowed at [19] of the judgment.

Seventhly and finally, the degree to which a judicial officer permits departure from pleadings is very much an evaluative judgment that depends upon a multitude of factors. An evaluative judgment of that kind made at first instance is not one that should lightly be interfered with on appeal, even accepting that it may be characterised as a question of law. And in any event, I am not satisfied that the plaintiff has established that there was any error in the approach of her Honour to this question.

It follows that ground two cannot succeed on its first basis.

Turning to the second basis of ground two, the plaintiff submitted that, at a number of points in the judgment, her Honour was construing a contract that was partly oral and partly written. To the extent that her Honour found that certain of the activities of the plaintiff had or had not been authorised by Mr Jordan on behalf of the defendant, it was said that her Honour was engaging in a legal exercise (or in the alternative, a partly legal exercise), and error had been demonstrated in that exercise.

It was also submitted that para [25] of the judgment suffers from the same defect. That paragraph is as follows:

Turning to my determination of the second basis of ground two, I reject those propositions of the plaintiff. In all of the paragraphs to which I was taken on its behalf, I consider that her Honour was making findings of fact as to whether or not words were actually said, and not construing the meaning of such words: at [15]; [27]; [40]; and [42]. Determining what was said by whom, to whom, when, and where is an exercise of fact finding, not the legal exercise of construing what a contract objectively means: see generally Thorner v Major [2009] UKHL 18 at [58] (Lord Walker).

Nor do I consider that the judgment shows any error at [25]. To my mind, that paragraph is a summary of findings about objective facts, not the legal consequences of things said or done. To the extent that the Magistrate there spoke of authorisation by Mr Jordan, that was a summary of what had or had not been said, not an analysis of its legal meaning or effect.

In short, I am not satisfied that her Honour made any legal error in holding the plaintiff to its pleadings and particulars with regard to the claim in contract. Nor am I satisfied that her Honour made any error in construing a partly oral and partly written contract; to the contrary, I consider that the passages of the judgment that are the subject of complaint are findings of fact, not legal analysis. Because they are findings of fact, they cannot found an appeal.

It follows that ground two must be rejected.

Turning to ground three, it was not contended before me that her Honour had misstated the principles applicable to a claim in quantum meruit. It was explicitly accepted that her Honour was correct when she took the view that an essential precondition to a claim in quantum meruit is a request for service by a defendant, or encouragement by a defendant in the work being done, or acquiescence by a defendant in the work being done.

Rather, it was at first submitted that those principles, although correctly stated, had been misapplied to the facts found, therefore giving rise to, at the least, a question of mixed fact and law with regard to which leave should be granted.

On further analysis during the hearing before me, however, it became clear that the complaint of the plaintiff was in truth about a pleading point in this further context. That is because the complaint focused upon the paragraph of the judgment that I have extracted above at [17].

At the conclusion of her judgment, her Honour said at [44]:

It was submitted by the plaintiff that the Magistrate had been overly prescriptive in her approach to this pleading point about quantum meruit as well.

Turning to my determination, analysis of the final address of counsel for the plaintiff demonstrates that the secondary cause of action of quantum meruit was certainly relied upon at the close of the evidence. Indeed, submissions were made by counsel about its elements: at AT 10.31-10.43.

But analysis of the same transcript shows that counsel for the plaintiff made it quite clear in his final address that the claim in quantum meruit was founded upon a “request for work”, not any acquiescence in work done. So much is clear from AT 2.20-2.28, where counsel said:

And the same position is clear from the concluding paragraph of the submissions of counsel, which appears at AT 10.33-10.42 and following. That paragraph is as follows:

Finally, analysis of the final address at first instance of counsel for the defendant shows that he analysed the case for the plaintiff with regard to quantum meruit as being squarely based upon a request for work, and no other basis: at AT 13.9-13.18.

In short, although the pleadings about quantum meruit were nebulous, and there were no particulars with regard to it, it is clear from the final address of counsel for the plaintiff that the claim in quantum meruit was said to be founded upon a request for work done, not acquiescence in work being done, or having being done. Counsel having orally specified the basis of that cause of action in that way at the conclusion of the hearing, there was no error in her Honour holding the plaintiff to that specification.

Ground three must therefore be rejected.

As I have said, these grounds seek leave to impugn the order with regard to costs that was made at first instance. It was said by the plaintiff that the slip that underpins ground one meant that the discretion of her Honour miscarried with regard to the question of costs. That was on the basis that, in truth, the plaintiff had been more successful, with regard to more invoices, than her Honour understood to be the case.

I reject the submission that the costs order in the Local Court can be impugned. Indeed, to the extent that her Honour made no order as to costs, that order was if anything favourable to the plaintiff. That is for the simple reason that, on any analysis, the bulk of the claims of the plaintiff were dismissed in the Local Court.

Separately, apart from the formality underpinning ground one, the plaintiff has not found success before me either. The resolution of this appeal provides no foundation for alteration of the costs order made in the Local Court.

Leave to appeal should be refused with regard to grounds four and five.

Due to my rejection of all grounds of appeal save for the formality of ground one, the notice of contention does not require consideration.

All grounds of appeal must be rejected, except for the first ground. But that was founded on a formality, and there was no dispute before me that the sum of money that underpins it had been paid by the defendant many months ago.

For that reason, although ground one will be upheld as a formality, the plaintiff must pay the costs of the defendant of the appeal.

I make the following orders: