New South Wales Court of Appeal CITATION: COSHOTT v LENIN [2007] NSWCA 153 HEARING DATE(S): 20 June 2007 JUDGMENT DATE: 20 June 2007 JUDGMENT OF: Spigelman CJ at 1; Mason P at 2; Campbell JA at 19 EX TEMPORE JUDGMENT DATE: 20 June 2007 DECISION: Appeal dismissed. CATCHWORDS: LIMITATION OF ACTIONS – Contracts, torts and personal actions – when time begins to run – particular causes of action – cause of action founded on quasi-contract – unjust enrichment – restitution – quantum meruit – time runs from when the defendant received the benefit – Limitation Act 1969, s 14 - RESTITUTION – Recompense for services rendered – quantum meruit – legal practitioner claim for unpaid fees - RESTITUTION – general principles – whether there is a right of action for unjust enrichment simpliciter – where a contractual promise subsists – relationship of restitution to contract – restitution operates around contract and does not subvert it - STATUTE – Acts of parliament – interpretation – particular words and phrases – general – "quasi contract" – rules of construction – irrelevant that phrase may no longer be used in law – Act to be interpreted according to its plain meaning and not according to prevailing legal orthodoxy – Limitation Act 1969, s 14(1)(a) LEGISLATION CITED: Limitation Act 1969 s14 David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22 Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 Robert Coshott v Michael Lenin [2006] NSWDC 139 CASES CITED: Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 Sharpe v Goodhew (1990) 33 IR 238 Stinchcombe v Thomas [1957] VR 509 Trimis v Mina [1999] NSWCA 140 Update Constructions Pty Ltd v Rozelle Child Care Centre Pty Ltd (1990) 20 NSWLR 251 Wasada Pty Ltd v State Rail Authority of New South Wales (No 2) [2003] NSWSC 987 PARTIES: Robert Gilbert COSHOTT Michael Petrovic LENIN FILE NUMBER(S): CA 40765/06 COUNSEL: Appellant: In Person Respondent: J W Conomos SOLICITORS: Appellant: Robert G Coshott Respondent: Hicksons LOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): DC 4185/05 LOWER COURT JUDICIAL OFFICER: Neilson DCJ IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40765/2006 SPIGELMAN CJ MASON P CAMPBELL JA Wednesday 20 June 2007 Robert Gilbert COSHOTT v Michael Petrovic LENIN JUDGMENT 1 SPIGELMAN CJ: I agree with the reasons of Mason P. 2 MASON P: The appellant was the respondent's solicitor between 1 January 1990 and 30 June 1991, representing him in Supreme Court proceedings against an insurer claiming indemnity for losses suffered in the Newcastle earthquake of 28 December 1989. When the appellant ceased to practise as a solicitor on 30 June 1991 he transferred the file to another firm. In May 1992 the insurance claim was settled with the respondent receiving a substantial sum. 3 According to the appellant's statement of claim, the conduct of the proceedings was taken over by the new solicitor (Mr Vardas) in July 1991 "on the basis that [the appellant's] costs and disbursements, as per the bill delivered with the file, would be paid upon completion of the proceedings". Again according to the statement of claim, the appellant learned some time after November 2004 that the respondent had settled the insurance proceedings inclusive of costs. The statement of claim continues: 5. The costs due to the plaintiff herein had not been paid and still have not been paid. 6. As a result of the above, the defendant herein has been unjustly enriched. 7. The plaintiff claims the sum of $540,000, being the amount by which the defendant has been unjustly enriched. Particulars Costs rendered by plaintiff in July, 1991 in Lenin v Seneca Insurance $210,256.50 Interest thereon from July, 1991 to date $330,000.00 4 Following a trial in the District Court, Judge Neilson gave verdict and judgment for the defendant with costs (Robert Coshott v Michael Lenin [2006] NSWDC 139). His Honour summarised his reasons in the penultimate paragraph of the judgment: Accordingly if I may succinctly state what my reasoning process is. Firstly, that the cause of action alleged by the plaintiff does not exist. Secondly, if it did exist it is only still the remedy that was formerly called quantum meruit. Thirdly, that even if it did exist it would still be caught by section 14(1)(a) of the Limitation Act 1969. 5 The judgment contains a body of learning about the distinction between a right of action, a form of action and a cause of action; the history of quasi-contract; the rejection of the implied contract theory of quasi contract in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; and the emergence of the unjust enrichment concept. His Honour said that there was "no authority in the High Court of Australia for there being a right of action for unjust enrichment simpliciter". 6 The notice of appeal and the written submissions of the appellant, who represents himself in these proceedings, seek to raise interesting questions about these matters. However, it is unnecessary to venture down this path. 7 The appellant does not contest the findings of fact in the judgment below. 8 If we are confined to examination of the pleadings, they disclose no more than a label ("unjust enrichment") being assigned to a narrow thread of facts. The High Court has recently reaffirmed that "unjust enrichment is not a 'definitive legal principle according to its own terms'" (Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22 at [151], citing David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 378-9. See also Wasada Pty Ltd v State Rail Authority of New South Wales (No 2) [2003] NSWSC 987 at [18] Campbell J.) 9 On one reading, the instant claim lies in contract, because there must have been a contract of retainer during the time that the appellant acted for the respondent as his solicitor and incurred the costs and disbursements sued for. Alternatively, there was an express contract embodied in the arrangement under which the file was transferred to the new solicitor "on the basis that [the appellant's] costs and disbursements, as per the bill delivered with the file, would be paid upon completion of the proceedings". 10 A restitutionary cause of action cannot sit on top of an effective and continuing contractual arrangement where that would subvert or undermine the contractual allocation of risk. In and around contract restitution operates in a gap-filling role (see Update Constructions Pty Ltd v Rozelle Child Care Centre Pty Ltd (1990) 20 NSWLR 251 at 275; Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 545[75], 553[95], 577[166]). The statement of claim offers no clue to suggest a basis for regarding the parties' contractual arrangements as ineffective. 11 The learned trial judge correctly applied the reasoning in the following passage of my judgment in Trimis v Mina [1999] NSWCA 140 at [54]: The starting point is a fundamental one in relation to restitutionary claims, especially claims for work done or goods supplied. No action can be brought for restitution while an inconsistent contractual promise subsists between the parties in relation to the subject matter of the claim. This is not a remnant of the now discarded implied contract theory of restitution. The proposition is not based on the inability to imply a contract, but on the fact that the benefit provided by the plaintiff to the defendant was rendered in the performance of a valid legal duty. Restitution respects the sanctity of the transaction, and the subsisting contractual regime chosen by the parties as the framework for settling disputes. This ensures that the law does not countenance two conflicting sets of legal obligations subsisting concurrently. As Deane J explained in the context of the quantum meruit claim in Pavey & Matthews (at 256), if there is a valid and enforceable agreement governing the claimant's right to payment, there is "neither occasion nor legal justification for the law to superimpose or impute an obligation or promise to pay a reasonable remuneration." 12 If, notwithstanding the pleader's complete disregard for the requirement of clarity in pleading, we treat the statement of claim as asserting some free-standing cause of action based on "unjust enrichment" arising out of the matters earlier pleaded, the claim remains a hopeless one because it is statute-barred. The work was done in 1990-91 the insurance claim in the Supreme Court was settled in 1992, the present proceedings were commenced in the District Court in September 2005. A defence invoking s14 of the Limitation Act 1969 was pleaded. 13 Section 14 (1) relevantly provides: An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff...: (a) a cause of action founded on contract (including quasi contract) not being a cause of action founded on a deed... 14 However packaged, the appellant's belated claim for remuneration is within the statutory time bar. It is either contract or quasi-contract within the meaning of the Limitation Act. 15 Quasi contract was the legal category of reference in 1969 for claims to remuneration litigated at common law that were not based on contract. Pleaders used the common money count for work done, known by the Latin tag of quantum meruit. In Pavey, the High Court held that the quasi-contractual right to recover on a quantum meruit did not depend on the existence of an implied contract but on a claim to restitution or one based on unjust enrichment. The Court was at pains, however, to stress that (in Deane J's words at 256-7) 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 a defendant to make a fair and just restitution for a benefit derived at the expense of a plaintiff". 16 This explanation of the principles underpinning quantum meruit and other recognised causes of action in restitution did not mean that "quasi-contract" ceased to exist as a legal category in the context of the Limitation Act. That Act continues to speak according to its plain intent to claims, however labelled or packaged, and whatever general principles may be perceived to underpin them, which depend on the well established common law cause of action stemming from quantum meruit. Whether or not it is now passe to use the old language of quasi-contract and whether or not there now exist causes of action "in" unjust enrichment has no bearing on the matter because "a sovereign legislature is not bound to respect legal orthodoxy" (Sharpe v Goodhew (1990) 33 IR 238 at 243 per Pincus J). 17 In a claim based on quantum meruit time runs from when the defendant received the benefit that gave rise to the obligation to make restitution (see Stinchcombe v Thomas [1957] VR 509). 18 The appeal should be dismissed with costs. 19 CAMPBELL JA: I agree with Mason P. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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