Carpenter & Anor v Morris & Anor

1. [1]

   BELL CJ: I have had the benefit of reading in draft the reasons of White JA. Subject to one very minor qualification, I agree with his Honour’s reasons and the orders proposed.

2. [2]

   The qualification relates to the citation in [69] of White JA’s reasons from Mason & Carter’s Restitution Law in Australia. To the extent that the passage cited employs the language of tracing, if that is simply to note that the putative defendant received money or some other form of benefit, it is unexceptional. If the language of tracing is employed in some more technical sense, it is not necessary as part of any action for money had and received and may be apt to confuse.

3. [3]

   Central to the upholding of ground 1 of the appeal is the primary judge’s unchallenged finding that the payments the subject of the claim for money had and received at first instance were made from partnership property. The corollary of this was that Mr Morris had no entitlement to receive them (for he was not a partner and had no personal entitlement) and the company of which it was accepted he was the controller, Central West Granite Pty Ltd (the Second Respondent to the appeal and one of the two partners) would only have been entitled to 50% of the payments Mr Morris received.

4. [4]

   In fairness to the primary judge, the claim for moneys had and received made at first instance wrongly included as an element of the claim the presence of fraud (which the primary judge did not find had been established). That, however, was an unnecessary element of the claim for money had and received. It had been alleged that the moneys paid out to Mr Morris belonged to the partnership.

5. [5]

   On appeal, Mr Muddle SC, reasonably and responsibly, took no standing point or pleading point. Rather, his position was reflected in the following exchange of argument on appeal:

6. [6]

   Subject to defences such as change of position or bona fide purchase for value without notice, a common money count for moneys had and received may be brought and sustained against a defendant who never had any entitlement to receive money not given as a gift. Neither mistake nor total failure of consideration is required to be established although they may separately sustain a claim for restitution. So much is illustrated, at least by analogy, in this Court’s recent decision in Sims v Commonwealth of Australia (2022) 109 NSWLR 546; [2022] NSWCA 194 at [43]-[46], [78] in the context of payments out of Consolidated Revenue where the recipient had no entitlement to receive and no entitlement to retain payments which were not authorised. The cases referred to by White JA at [62]-[66] also illustrate this proposition.

7. [7]

   WHITE JA: This is an appeal from orders of the Equity Division (Williams J) dismissing the appellants’ claims for relief in relation to arrangements with the respondents pursuant to which the appellants performed quarrying operations at a quarry at Mulyandry near Forbes in New South Wales (Carpenter v Morris [2021] NSWSC 1700).

8. [8]

   The issues raised on appeal are narrower than those raised before the primary judge. On appeal there are only limited challenges to the primary judge’s findings of fact. The essential facts relevant for the disposition of the appeal may be summarised as follows.

9. [9]

   The quarry in question is known as the Grandee Quarry. It contains a rock known as gabbro. When cut and polished, this is a shiny black rock used for purposes such as making kitchen benches, headstones, decorating public buildings and landscaping. It is also referred to as dimension stone or granite (J [6]). It was marketed under the name “Grandee Granite”.

10. [10]

    The second appellant and plaintiff in the court below, Tastex Pty Ltd (“Tastex”), entered into a partnership agreement with the second respondent, Central West Granite Pty Ltd (“Central West”) in September 1996 for the purposes of conducting a quarrying business. The first appellant, Mr Carpenter, and the first respondent, Mr Colin Morris, were described as the controllers of Tastex and Central West respectively. Profits of the partnership were to be divided equally (J [50]).

11. [11]

    There was a dispute as to whether the partnership business extended only to the business of mining, cutting and shaping granite at the quarry, or whether it also extended to the marketing and sale of that granite (J [49]). The primary judge found that the partnership business extended to the marketing and sale of granite mined from the quarry. The respondents do not challenge that finding.

12. [12]

    The partnership was dissolved from about 2003 (J [49]). Mr Carpenter put the time of dissolution of the partnership as August 2003. Mr Morris did not take issue with that date.

13. [13]

    The quarry was located on two titles called lots 31 and 134. The primary judge recorded that, at the beginning of the partnership in September 1996, lot 31 was owned by Colin Morris and his brother John as tenants in common in equal shares, and lot 134 was owned solely by John. Colin and John had sisters, Alison and Kathryn. John died in September 1997. Kathryn and Alison acquired John’s interest in lot 134 and his half share of lot 31 (J [34]-[35]).

14. [14]

    Pursuant to a mineral lease granted by the owners of the lots, from 1 January 1998, the leasehold interest in the minerals in both lots was held by Colin Morris. He was entitled to quarry, remove and sell the granite and was required to pay a rent plus royalty to himself and Kathryn as executor of John’s estate in respect of lot 31 and to Kathryn as executor of John’s estate in respect of lot 134 (J [38]). This was the position when the partnership came to an end in August 2003 (J [39]).

15. [15]

    Notwithstanding the dissolution of the partnership between the companies controlled by Mr Carpenter and Mr Colin Morris in August 2003, Mr Carpenter’s company, Tastex, continued to mine the quarry from 2003 until 2014.

16. [16]

    One of the principal issues in the proceedings was as to the terms upon which Tastex did so. Mr Carpenter deposed to having had a conversation on or about 4 July 2003 with Mr Colin Morris in which words were said to the following effect:

17. [17]

    The “Bernice” referred to was a Ms Bernice Huggard who, for many years, had marketed the granite quarried and, through her company W M Ashcroft Pty Ltd, had an entitlement to a portion of royalties payable to the owners (see [20] and [25] below).

18. [18]

    Mr Carpenter was deposing in 2017 to his recollection of a conversation said to have been had with Mr Colin Morris more than 14 years earlier. There was no contemporaneous note of the conversation.

19. [19]

    Mr Morris denied that the conversation occurred. He deposed:

20. [20]

    Mr Morris deposed that, from a short time after the establishment of the quarry in about 1965 until her retirement in 2014, the exclusive marketing agent charged with the sale of granite from the quarry had always been Bernice Huggard. Mr Morris deposed that Ms Huggard had assumed the overall financial management of the quarry. She was responsible for distribution of funds after the granite had been sold by payment of a sale commission and a royalty payment to WM Ashcroft & Co Pty Ltd based on its one-sixteenth ownership of the quarry, the payment of royalties to various members of the Morris family as owners or part owners of the quarry, and a payment to the quarry master for recovering the granite.

21. [21]

    Mr Carpenter deposed that, between August 2003 and December 2014, he would receive advice from Ms Huggard as to the quantities of dimension stone that were required by customers she had procured. He deposed that Mr Morris also advised him of quantities of dimension stone required by customers he had procured. He deposed that both Ms Huggard and Mr Morris placed orders with him for dimension stone blocks. He would tell them the amount that he required to be paid for production of the blocks from customers of the quarry. He made no enquiries as to the price at which the blocks had been sold to the customers. Ms Huggard or Mr Morris would pay the fee that he required for mining the blocks for delivery to customers of the quarry.

22. [22]

    Mr Carpenter deposed that between August 2003 and December 2014 when orders for rocks were confirmed by Ms Huggard, he would fill the orders for the customers. Ms Huggard would receive the sale proceeds from the purchaser and then distribute the sale proceeds. She paid him his agreed fee for mining, cutting, shaping and loading the dimension stone.

23. [23]

    Mr Carpenter and Tastex brought claims both in relation to the affairs of the partnership, and in relation to the mining of the quarry after the dissolution of the partnership in August 2003 up to 2014. They pleaded that during the term of the partnership they stockpiled a quantity of unsold dimension stone, quarry offcuts and boulders, and that part of the stockpile that had been created by 2003 was an asset of the partnership. They sought an order for the taking of accounts of the partnership. The primary judge held that it was impossible to identify what materials had been stockpiled during the operation of the partnership, let alone to identify and value any saleable material that may be contained in it (J [114]-[124]). Her Honour held that there would be no purpose in ordering the taking of accounts and, in any event, a claim for the taking of accounts 13 years after the partnership had been dissolved would be barred by reason of s 15 of the Limitation Act 1969 (NSW), either by direct application or by analogy (J [247]). The appeal against these findings was not pressed.

First Claim on the Appeal: Moneys had and received

1. [24]

   The second claim advanced at first instance arising from the partnership concerned payments of what were claimed to be partnership moneys to Mr Colin Morris. This is the first claim arising on the appeal.

2. [25]

   The primary judge described this claim as follows:

3. [26]

   As noted above, the primary judge found that the partnership business extended to the marketing and sale of granite mined from the quarry. Her Honour held that the sale proceeds of granite mined by the partnership were partnership moneys and the additional monthly payments made to Mr Morris were paid to him out of partnership moneys (J [233]). That conclusion was not challenged on the hearing of the appeal. But in written submissions delivered after the hearing the respondents belatedly seek to challenge the finding (see [75] below)

4. [27]

   The primary judge noted that Mr Morris did not rely on any defence of change of position or any limitation defence (J [234]).

5. [28]

   Tastex claimed 50% of the payments from the proceeds of sale that Mr Morris received from it. The claim was pleaded as follows:

6. [29]

   The primary judge rejected this claim for the following reasons:

7. [30]

   The primary judge’s finding on this claim was the subject of Ground 1 of the Amended Notice of Appeal. Ground 1 was as follows:

8. [31]

   That ground, as formulated, was not pressed on appeal. Instead, Mr Golledge SC, who appeared with Mr Barham for the appellants, submitted that the partnership was entitled to recover the moneys received by Mr Morris in an action for money had and received. Both partners were parties to the proceeding. Tastex would have been entitled to sue in the name of the firm. It did not do so, but the claim should not have been defeated on that ground where both partners were parties to the litigation.

9. [32]

   The appeal in relation to this claim is dealt with at pars [55] to [76] below.

Second Claim on Appeal: Damages for repudiation of July 2003 agreements

1. [33]

   In relation to mining conducted by Tastex after the dissolution of the partnership, the appellants pleaded three agreements, the second of which was abandoned at trial. [1]

2. [34]

   The primary judge referred to the two agreements that were pressed as the “Quarrying Agreement” and the “Future Mining Agreement”. Her Honour observed (J [135]) that both agreements were said to arise from the single conversation to which Mr Carpenter deposed he had with Mr Morris on or about 4 July 2003 that is quoted above at [16].

3. [35]

   The Quarrying Agreement was pleaded as follows:

4. [36]

   The appellants further pleaded:

5. [37]

   As noted above, reliance on the agreement pleaded in paragraph 18A was abandoned.

6. [38]

   The Future Mining Agreement was pleaded as follows:

7. [39]

   The appellants did not plead when the alleged Future Mining Agreement was made. Consistently with paragraph 18 the allegation was that it was made periodically between January 2013 and December 2014. As noted above, the primary judge understood the appellants’ claim to have been that the Future Mining Agreement was also made in June 2003. This appears to be challenged in the appellants’ written submissions. But it is not a ground of appeal and was not addressed orally. It is not referred to in the appellants’ schedule of challenged factual findings. The court was not taken to any evidence of later conversations that could be said to contain, or be reiterations of, the Future Mining Agreement.

8. [40]

   The appellants pleaded (par 19E) that it was an implied term of each agreement that Mr Morris:

9. [41]

   It was common ground and the primary judge found (J [41]) that amendments to the Mining Act 1992 (NSW) effected by the Mining Amendment Act 2008 rendered quarrying activities on the quarry unlawful from 15 November 2011 without a mining lease granted by the State (Mining Amendment Act 2008 (NSW) Sch 1 cll 2 and 273). Her Honour found that the Department of Industry, Resources and Energy did not notify Mr Morris, as the private mining agreement lessee, of the amendments to the Mining Act. Quarrying continued unlawfully from 15 November 2011 until late November or early December 2014 when Mr Morris became aware of the amendments. He then told Mr Carpenter to cease quarrying and remove Tastex’s equipment from the land (J [172]).

10. [42]

    The plaintiffs pleaded (par 20) that in breach of the Quarrying Agreement and the Future Mining Agreement, Mr Morris took no steps to procure, or alternatively allowed to lapse, approvals required from the NSW Department of Mines and the Forbes Shire Council for the conduct of the quarry.

11. [43]

    The appellants pleaded that, in performance of the Future Mining Agreement, they excavated and exposed for cutting, shaping and selling of dimension stone a deposit of approximately 79,908m³ of gabbro within the quarry. They said that First and Second Grade stone was stockpiled on the quarry and they were not paid for this work. They did not maintain a claim in quantum meruit for the value of their services in excavating and exposing dimension stone for future cutting, shaping and sale. Instead they pursued a more ambitious claim that Tastex (and Tastex alone) was entitled to mine the granite until the resource was exhausted.

12. [44]

    The primary judge summarised the appellant’s claims in relation to the alleged Quarrying Agreement and Future Mining Agreement as follows:

13. [45]

    The primary judge summarised Mr Morris’ contentions as follows:

14. [46]

    The primary judge observed that the plaintiffs abandoned all pleaded causes of action in closing submissions other than, relevantly, their claims for damages for alleged repudiation of the Quarrying Agreement and the Future Mining Agreement (J [83]-[84]).

15. [47]

    In September 2003 the parties’ solicitors exchanged correspondence with a view to drafting an agreement to give effect to the discussions between Mr Carpenter and Mr Morris (J [148] and [150]). Whilst there was consensus on a number of issues, as the primary judge found, the correspondence revealed that no concluded agreement had been reached (J [153]). The primary judge rightly observed that the correspondence was inconsistent with Mr Carpenter’s evidence that Mr Morris said to him “You have the exclusive rights to all of the rock in the quarry”. It is also significant that one of the matters upon which there was a degree of consensus was that the agreement would be for a period of five years with an option for a further five years (according to Tastex’s solicitors, the option was to be exercisable by Tastex).

16. [48]

    The Quarrying Agreement as pleaded did not contain any condition as to the term of the Agreement. In oral submissions the appellant’s counsel submitted that, in the absence of agreement, the Agreement would be terminable on reasonable notice by either party. That was not how the claim had been framed below. The plaintiff’s claim below was rather that the Agreement would persist for as long as it took to extract the stone remaining in the quarry (J [157]).

17. [49]

    In concluding that she was not satisfied that the agreements asserted by the appellants had been made, the primary judge, whilst accepting Mr Carpenter to be an honest witness, concluded that his recollection of the conversation said to have occurred in July 2003 was unreliable, as it was contrary to contemporaneous solicitors’ correspondence and to inherent probabilities in several respects (J [183]).

18. [50]

    The primary judge found that the parties’ agreement after dissolution of the partnership was essentially as Mr Morris contended:

19. [51]

    The primary judge found that the appellants had not proved that Mr Morris had failed to use reasonable efforts to sell first grade granite or that Mr Morris had repudiated the agreement that was made (J[250]-[252]). Her Honour held that if the alleged Future Mining Agreement had been made it was not repudiated by Mr Morris’ requiring quarrying activities to cease in 2014, because such activities were unlawful. Such an agreement, if made, would have been frustrated, not repudiated by Mr Morris (J [260]). Her Honour also found that the appellants had not provided any rational basis for the assessment of damages if it had been held that Mr Morris had repudiated the alleged agreements (J [253]-[255]).

20. [52]

    Ground 5 of the Amended Notice of Appeal challenged the primary judge’s rejection of the appellants’ claim that agreements in terms of the alleged Quarrying Agreement and Future Mining Agreement were entered into. Ground 7 challenged the primary judge’s rejection of the claim that the agreements, either as alleged by the appellants or the respondents, were repudiated by the second respondent (Granite Quarry). Ground 7 also asserted that the primary judge ought to have found that the appellants were entitled to contractual damages for work done in exposing rock faces for future mining and stockpiling up to the point the agreement or agreements was or were terminated.

21. [53]

    Grounds 2 to 4 challenged the judge’s findings as to the inadequacy of the evidence to establish that any damages would be recoverable if repudiation or breach were established.

22. [54]

    Ground 6, concerning the judge’s refusal to order the taking of partnership accounts, was not pressed.

First Claim: moneys had and received

1. [55]

   The primary judge’s reasons for rejecting this claim are quoted at [29] above. Her Honour’s first reason for rejecting the claim was that the claim belonged to the partners and could not be brought by Tastex alone.

2. [56]

   Mr Muddle SC, who appeared with Mr Tierney for the respondents, did not seek to maintain that reasoning. A claim could have been brought by Tastex in the name of the firm for the whole of the $246,324.45 joining Central West as a defendant if it declined to join in the claim as plaintiff. Tastex would be required to account to Central West for half the moneys recovered. The failure to bring the claim in the name of the firm was a procedural irregularity that should not have defeated the claim (Civil Procedure Act 2005 (NSW), s 63). Central West was already a party to the proceeding. True it is that the claim should have been for $246,324.45 plus interest. Tastex only claimed half of the moneys that it claimed Mr Morris was liable to pay. No objection was taken by the respondents on that account. They did not submit that if the claim succeeded judgment should be given against Mr Morris in favour of both Tastex and Central West for $246,324.45 plus interest.

3. [57]

   Prima facie Mr Morris was liable to restore those moneys by an action for money had and received. He did not plead a change of position defence. He did not plead a defence under the Limitation Act to this claim. The appellants only found out about the payments when Mr Morris served a correcting affidavit during the final hearing (J [111]).

4. [58]

   The second basis upon which the primary judge rejected the claim was that the only pleaded or articulated basis on which the claim was advanced was that Mr Morris knew he was not entitled to the moneys because they were partnership funds and the payment (or presumably his receipt) was fraudulent. The claim failed because, as articulated, it was a claim for knowing receipt of moneys paid by a fiduciary in breach of fiduciary duty. That did not support a common law claim for money had and received. A claim against Central West for breach of fiduciary duty had not been pressed.

5. [59]

   To the extent the primary judge considered that the claim for money had and received was precluded by reason of the observation in Farah Construction Pty Ltd v Say Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 quoted at [238] of her Honour’s reasons, her Honour erred (Fistar v Riverwood Legion and Community Club Ltd (2016) 91 NSWLR 732; [2016] NSWCA 81 at [1], [53], [55], [93]).

6. [60]

   The primary judge did not find that Mr Morris had no honest belief that he was entitled to the moneys. The reason he was not so entitled was because of the primary judge’s conclusion that the business of the partnership extended to the marketing and sale of the stone extracted. That was a contestable issue.

7. [61]

   The statement of claim did plead that the moneys Mr Morris received belonged to the partnership (paragraph 13G quoted at [28] above)

8. [62]

   In Attorney General v Perry (1773) 2 Comyns 481; 92 ER 1169 at 1174, the Court of Exchequer said:

9. [63]

   In Bullen & Leake’s Precedents of Pleadings, (3rd ed 1868, Stevens and Sons), at 44, it was said of the indebitatus count for money had and received that:

10. [64]

    Calland v Loyd (1840) 6 M & W 26; 151 ER 307, that is cited in Bullen & Leake and later texts, is analogous to the present case. There, a wife was a legatee under her late father’s will. As the law then stood her legacy belonged to her husband. He gave a portion of the money to his wife to take care of. Without her husband’s knowledge, she deposited £50 with a bank in an account in the name of the infant son of her previous marriage. The Court of Exchequer held that the wife was not the plaintiff’s agent and that the plaintiff was entitled to recover the money from the bank in an action for money had and received. Lord Abinger CB, with whom Aldersen and Gurney BB agreed, said (at 31-32; 309):

11. [65]

    There was no plea of fraud or mistake.

12. [66]

    Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 applied the same principle. The solicitors succeeded because they could trace their property into the cash obtained by the fraudulent partner. Because the wagering contracts were rendered void by statute, the casino gave no valuable consideration for the money it received.

13. [67]

    In closing submissions counsel appearing at trial for the appellants put the claim against Mr Morris on three bases: first, that the “’extra payments’ made to Colin were partnership income and belonged to the partnership”; secondly, that the facts supported a finding of fraud or that the “taking of the moneys was wrongful”; and thirdly, that Mr Morris would be liable to hold the moneys on constructive trust for the plaintiffs on either limb of Barnes v Addy. The second and third contentions can be put to one side. They were additional to the first and the first was not conditional on either of them being established. The plaintiffs pleaded (FASOC par 13G) and submitted that a basis for recovery was that the payments were of moneys that belonged to the partnership.

14. [68]

    Mr Muddle SC submitted that whatever might have been the position in the 17th and 18th Centuries, authority binding this Court requires the existence of a qualifying or vitiating factor falling into some particular category as an element of the action. This might be mistake, duress, illegality, total failure of consideration, or the defendant’s wrong, but only the defendant’s wrong was pleaded and that was not established or was abandoned. Reference was made to a statement of the plurality in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 379; [1992] HCA 48. The plurality cited what was said by Deane J in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 256-257; [1987] HCA 5, that the concept of unjust enrichment is a unifying legal concept which explains why the law recognises in a variety of distinct categories of case an obligation on the part of the defendant to make fair and just restitution for a benefit derived at the plaintiff’s expense and which informs the processes of legal reasoning as to whether an obligation should be recognised in a new or developing category of case. The plurality added (at 379) that:

15. [69]

    The respondents’ submission assumes that this was not a recognised “distinct category of case” and that a “vitiating factor” cannot be the unauthorised payment by X, of money belonging to A, to B, who does not receive it as bona fide purchaser for value without notice of the defect of title. But that is an established ground for restitutionary claims. In Mason & Carter’s Restitution Law in Australia (4th ed, 2021 LexisNexis), the learned authors deal with restitutionary claims under the headings “Claims based on want of title”, “Mistake”, “Claims based on legal or moral compulsion”, “Claims arising out of ineffective contracts”, “Claims based on wrong committed” and “Special claims involving the Executive”. Dealing with the first type of claim, the authors state:

16. [70]

    Goff & Jones The Law of Unjust Enrichment (9th ed, 2016, Sweet & Maxwell) (at [8-104] state that:

17. [71]

    Amongst the examples cited in both texts is Calland v Loyd.

18. [72]

    Not only did Mr Morris not plead a change of position defence, he did not plead that if the moneys paid to him were partnership moneys, he received them for valuable consideration without notice. He did not assert that he only acquired notice of the claim at a later date, by which time the moneys, or some of them, had been spent. No such issue was raised.

19. [73]

    Mr Morris’ initial position was that the balance of the sale proceeds remained in the partnership. He later (on the fifth day of the hearing) admitted that he received payments from the sale of rock from Ms Huggerd and not out of partnership funds. He then asserted they were made to him as an owner. The primary judge did not so find and there is no notice of contention.

20. [74]

    For these reasons, I do not accept that it is not open to the appellants to maintain this claim. That claim ought to have been upheld in the absence of any defence to it.

21. [75]

    In written submissions, otherwise delivered with leave after the oral hearing, the respondents sought to challenge the finding that the moneys paid to Mr Morris were not partnership property. That was not an issue for which leave to provide further submissions was given. Whether the moneys were partnership property was an issue at trial. The respondents submitted that the relationship between Ms Huggard or her company and the partnership may have been that of debtor and creditor because, according to Mr Carpenter’s evidence, a fee paid to the partnership was agreed with Ms Huggard. It is not self-evident why this would impugn the judge’s finding. It was not raised below. The issue as to whether the moneys paid to Mr Morris were partnership moneys, as it was presented for the primary judge’s determination at trial, turned on whether the partnership business extended to the marketing and sale of the granite (J [217]). As set out above, the primary judge found that it did and held (at J [233]) that the monthly payments to Mr Morris were paid out of partnership moneys. There was no notice of contention challenging that finding. It is not open to the respondents to reopen that issue.

22. [76]

    For these reasons I would uphold the first claim.

Second Claim: Damages for repudiation of the Quarrying Agreement and the Future Mining Agreement

1. [77]

   Both at trial and on appeal the appellants accepted that they would only be paid for granite sold. The appellants’ claim, as opened at trial, was that between 2003 and 2014 they extracted not only rock that was sold and for which Tastex received payment, but also, at the request of Mr Morris, stockpiled first and second grade stone for future sale and exposed further first grade stone for future quarrying. They contended that it was agreed that they would be paid for the stone sold from that stockpile when it was sold. They also contended that Mr Carpenter or Tastex or both owned the 2014 stockpile because Mr Morris, as lessee under the private mineral lease, granted them the right to mine, and that s 11 of the Mining Act provided that the stockpile of materials that had been lawfully mined for the purpose of enabling the mineral to be recovered remained the property of the person by, or on behalf of whom, the material was mined and did not become part of the land on which it was situated. On that analysis, Mr Morris would also have been entitled to the ownership of the stockpile.

2. [78]

   The appellants then submitted that, by the amendment to the Mining Act enacted in 2008, and which came into effect from 15 November 2011, their authority to quarry pursuant to the then existing private arrangement ceased. They submitted that, from then, the stockpile became vested in the owners of lot 134 (Kathryn and Alison Morris) being the lot on which the stockpile was located. They submitted that the respondents could have salvaged the situation by applying for an exploration licence or mining licence but, instead of doing so, Mr Morris allowed his son, through his company Marble Craft Pty Ltd, to obtain an exploration licence. This placed the stockpile beyond the reach of the appellants and the respondents to sell. It was submitted that thereby the respondents repudiated the contract, which repudiation had been accepted, giving rise to an entitlement of the appellants to damages.

3. [79]

   It was implicit in this submission that it was an implied term of the contracts pleaded that Mr Morris would obtain relevant approvals that were necessary to allow for the sale of the stone that had been stockpiled or had been exposed. This was the subject of paragraphs 19E and 20 of the Further Amended Statement of Claim referred to at [40] and [42] above.

4. [80]

   Paragraph 19E was at the forefront of the appellants’ submissions on the hearing of the appeal. Because there was no formal written contract, but an informal oral agreement, the approach to the implication of a term is that expressed in Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 422; [1995] HCA 25:

5. [81]

   The primary judge did not expressly deal with the question whether the term pleaded in paragraph 19E could be implied in the contract found, or the contracts alleged. No doubt that was because no submissions specifically directed to that question were advanced. When asked what submissions were made to the primary judge on the implication of the term alleged in paragraph 19E, Mr Golledge SC referred to the appellants’ written closing submissions at trial. These made no reference to paragraph 19E, nor to whether term there alleged should be implied. Rather, it was submitted that Mr Morris agreed to sell the 2014 stockpile and pay the plaintiffs for their share when sales were achieved and that, in order to do that, he would need to be able legally to sell the stone, that he did not have the legal authority to do so after the amendments to the Mining Act came into force, but could only sell the stockpile with his sisters’ permission, which he had not sought or obtained, and had not himself taken any steps to acquire the legal rights. Those submissions assumed that Mr Morris was obliged to obtain the requisite authorities. They did not advance any argument in support of the alleged implied term.

6. [82]

   In 2003 there was no reason to think there was any doubt about Mr Morris’ title to the stone mined. No reason was suggested as to why the parties might have anticipated any change to that position. The consequences of Mr Morris’ being obliged to obtain future approvals, if required, were potentially onerous. Further, Mr Morris’ compliance with future legislative changes in order to secure the right to continue the mining activities might require the consent of his sisters, who had ownership rights in respect of lots 31 and 134. There would be no reason to assume that he could obtain their consent, if their consent were required, to any new regulatory requirements. His evidence was that he had not spoken to them since his brother John died on 2 September 1997 and they had had an emotional falling out.

7. [83]

   Mr Golledge SC submitted that the term contended for was absolute, so that Mr Morris would be in breach of the term, even if he were unable to obtain any licence that might in future be required, or might be unable or be reasonably unwilling to comply with any future onerous conditions, for example, as to remediation.

8. [84]

   If the contract were, as found by the primary judge (that the appellant would mine, cut and shape the granite in preparation for sale and in respect of the granite sold be paid an amount per cubic metre as determined by the appellants and Ms Huggard at the time of sale, and Mr Morris would use reasonable efforts to sell first grade stone, but without any fixed term, and without any term as to potential but unknown future sales) it would not be necessary, but would be unreasonable, to imply the term alleged for the reasonable and effective operation of a contract of that nature.

9. [85]

   The primary judge was entitled to reject the appellants’ case that the agreement was that they would have the exclusive right to mine the whole of the granite on the quarry for as long as that took. The appellants’ contention was inconsistent with the terms of the solicitor’s correspondence referred to at par [47] above. It would not be necessary for the effective operation of the agreement to imply the term alleged in paragraph 19E because either party could give reasonable notice, bringing the contract to an end, before any proposed legislative change took effect.

10. [86]

    The appellants’ written submissions included:

11. [87]

    The submissions did not address the reasons given by the primary judge (at [165] quoted at [50]) for rejecting the terms contended for. The court was not referred to any evidence that would suggest that the primary judge erred in so finding.

12. [88]

    The appellants complain that they carried out substantial work at Mr Morris’ request in stockpiling granite for future sale and removing overburden to expose granite for future sale, for which they are not entitled to be remunerated because neither they nor Mr Morris is entitled to the granite remaining in situ. This may not follow. The primary judge held (at J [42]-[47], [170]) that the parties’ assumptions as to the interpretation of s 11 of the Mining Act were incorrect. No arguments were advanced on appeal on this issue. The primary judge also observed (at J [171]) that Mr Morris’ consistent position was that the appellants would be paid for any granite extracted between 2003 and 2014 if and when it was sold. Whether he could honour that intention is another question.

13. [89]

    In any event, the appellants chose, presumably for good reason, not to pursue a claim in quantum meruit for reasonable remuneration for work done in stockpiling and exposing granite for sale, notwithstanding the frustration of the contract. Any complaints about the fairness of the outcome to the appellants do not justify different findings from those reached by the primary judge as to the terms of the parties’ contract.

14. [90]

    The appellant submitted in writing that the primary judge ought to have found that the agreement included a term requiring Mr Morris to use reasonable efforts to sell second grade material. They submitted that the evidence clearly supported the findings contended for on that issue. Whilst accepting that the primary judge was entitled to reject their claim that they would receive $300 per m³ for work in mining and stockpiling second grade dimension stone and boulders for sale, the judge ought to have found that Mr Morris would act reasonably in seeking to procure the sale of second grade dimension stone and boulders mined and stockpiled in or around the quarry.

15. [91]

    It was not a ground of appeal that the primary judge ought to have found that Mr Morris failed to make reasonable efforts to sell second grade stone. The court was not referred to any evidence that would have supported such a ground. The primary judge accepted Mr Morris’ evidence that second grade stone is a by-product of first grade stone and rarely saleable, and that there was a huge amount of second grade rock lying about in the quarry. Competition from China made it usually unmarketable (J [9], [117], [165]).

16. [92]

    For these reasons, I would reject the second claim advanced on appeal. It is unnecessary to deal with the issue of damages. It suffices to say that I see no error in the primary judge’s reasons on this issue.

Conclusion and orders

1. [93]

   For these reasons I conclude that the first claim advanced on appeal should succeed, but the second should be dismissed. The respondents have advanced no submission as to why Tastex should not be entitled to interest on its claim for money had and received. No calculations of interest have yet been provided to the Court.

2. [94]

   I propose that the appeal be allowed in part. Both parties have had partial success and partial failure. That will require the reassessment of the costs orders made below. Justicelink records that costs orders in favour of the respondents and other defendants were made on 1 February 2022.

3. [95]

   The appellants should provide a calculation of interest payable pursuant to s 100 of the Civil Procedure Act up to the primary judge’s orders of 23 December 2021. If the respondents contend that the judgment to be given should not take effect as from that date, but from the date of this court’s orders, then a calculation of interest pursuant to s 100 should be provided up to the date of submissions and at a daily rate thereafter. The parties should provide written submissions as to costs in respect of the proceedings below and of the appeal.

4. [96]

   For these reasons I propose the following orders:

   1. (1)

      Appeal allowed in part.

   2. (2)

      Set aside the orders of the court below made on 23 December 2021 so far as they concern the appellants and the respondents.

   3. (3)

      Set aside the orders made on 1 February 2022 so far as they concern the appellants and the respondents.

   4. (4)

      Within 14 days the appellants file and serve written submissions on the matters referred to at par [95] above.

   5. (5)

      Within 14 days thereafter, the respondents file and serve written submissions on the matters referred to in para [95] above.

   6. (6)

      Any submissions in reply be filed and served by the appellants 7 days thereafter.

5. [97]

   SIMPSON AJA: Noting the qualification expressed by the Chief Justice, I agree with White JA.