New South Wales Supreme Court CITATION : RCL Constructions Pty Limited v Ly [2008] NSWSC 500 HEARING DATE(S) : 22 May 2008 JUDGMENT DATE : 26 May 2008 JUDGMENT OF : Malpass AsJ (i) Judgment entered in favour of the first defendant set aside; (ii) matter remitted back to the Local Court for determination according to law; (iii) plaintiff to pay the costs of the appeal in relation to the claim in contract; DECISION : (iv) defendant to pay the costs of the appeal in relation to the claim in quantum meruit; (v) if so entitled, the defendant to have a certificate under the Suitors Fund Act 1951; (vi) balance of summons stood over to a date to be fixed; (vii) parties have liberty to apply; (viii) exhibits returned. CATCHWORDS : COMMON LAW - Local Court appeal - misdirection - failure to deal with claim LEGISLATION CITED : Suitors Fund Act 1951 PARTIES : RCL Constructions Pty Ltd (Plaintiff) Chhor Kheang Ly (Defendant) FILE NUMBER(S) : SC 15158/07 COUNSEL : A Canceri (Plaintiff) E Ito (Defendant) SOLICITORS : Slater & Gordon Lawyers (Plaintiff) LOWER COURT JURISDICTION : Local Court LOWER COURT FILE NUMBER(S) : 494/06 LOWER COURT JUDICIAL OFFICER : O'Shane LCM LOWER COURT DATE OF DECISION : 12 September 2007 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION Associate Justice Malpass Monday 26 May 2008 15158/07 RCL Constructions Pty Ltd v Chhor Kheang Ly JUDGMENT 1 HIS HONOUR: The plaintiff did formwork in relation to the erection of industrial warehouses at a job site in Short Street, Auburn. The first defendant was the builder. Assia Ghattas (second defendant) was a sub-contractor. Pursuant to the sub-contract he was to carry out formwork. There is evidence to support the conclusion that the second defendant was paid in full for work performed by him pursuant to the sub-contract. The plaintiff received payment in part only for the work done by him. 2 The plaintiff brought proceedings in the Local Court. The case went to a hearing on the plaintiff's second amended statement of claim. The first and second defendants were the defendants in those proceedings. The first defendant was sued in contract. This claim was founded on the second defendant being treated as agent for the first defendant. There was an alternative claim in contract against the second defendant. This contractual claim was put in the circumstances where a finding was made that the second defendant was not the agent of the first defendant. There was a further alternative claim founded on quantum meruit. This claim was put against the first defendant only. 3 A balance in the sum of $47,000.00 was sought under the contract claims. A larger sum was sought under the quantum meruit. 4 At the hearing, both the plaintiff and the first defendant were legally represented. There was no appearance for the second defendant. He was not called to give evidence by either of the other parties. 5 During the hearing, the first defendant took the stance that there was no contractual relationship between him and the plaintiff. He denied that the second defendant was his agent and contended that any contractual arrangement involving the plaintiff was with the second defendant. A director of the plaintiff (Rafic El Chami) gave evidence of conversations had between him and the second defendant concerning the formwork done by the plaintiff. The conversations are in terms of the second defendant performing the role of agent for the first defendant. In cross-examination the first defendant conceded that he had the second defendant organise a form worker for him and that the second defendant had organised the plaintiff to do this work. 6 There was a written quotation given by the plaintiff to "Home Building" (which was a business name used by the first defendant). It was given "for the main transfer slab". The quotation was received in evidence without objection. There was no evidence from the first defendant that he did not receive that document. Subsequently, there was a contractual variation for the performance of additional works. There was evidence given by Tony Ghannoum (a foreman of the plaintiff) concerning the performance of this work. Both he and El Chami gave evidence of discussion had with the first defendant concerning it. 7 There were tax invoices from the plaintiff to Home Building. There appears to have been dispute, save as to one of them, as to whether these documents were received by the first defendant. 8 Be that as it may, three payments were made by the first defendant to the plaintiff. The total of the payments was in the sum of $69,000.00. There was a cash payment of $5,000. There were cheque payments in the sums of $20,000.00 and $44,000. As a result of union activity, a further payment in the sum of $10,000 was offered. However, it appears that the cheque was returned to the first defendant. 9 The plaintiff tendered a report from a quantity surveyor. This supported the quantum aspect of the restitution claim. There was evidence that the project had been completed by the first defendant and that he had been paid for it. 10 The Magistrate (O'Shane LCM) delivered an extempore judgment on 12 September 2007. The Magistrate found against the plaintiff on the question of agency. The Magistrate observed that there was no evidence from the second defendant as to the conversations. Despite that, she accepted the evidence given by Mr El Chami as to those conversations. 11 Her judgment contains, inter alia, the following: "First of all, there is no evidence of any connection between Mr Ly and Mr Gattas, where Mr Ly made any representations either by word or by deed which could remotely be interpreted or from which it could be inferred that Gattas was acting as his agent or that he was a principal behind an agent, being Gattas. This court can only determine these matters on the basis of the evidence that has been presented to it. In respect of these matters that evidence comes only from Mr El Chami for the plaintiff and Mr Ly who is the defendant." 12 This appears to have led the Magistrate to conclude that such part of the plaintiff's case as relied on agency failed. Later in her judgment, she made an observation that she found the first defendant to be a credible and reliable witness. This observation was made after she had made the finding that the plaintiff had made out its claim against the second defendant. 13 Judgment was entered for the first defendant against the plaintiff. The plaintiff was ordered to pay the first defendant's costs. Judgment was entered for the plaintiff against the second defendant in the sum of $47,000.00 plus interest. A Bullock order was sought against the second defendant. The result of that application is unclear. 14 On 10 October 2007, the plaintiff brought proceedings in this Court. The proceedings seek to propound an appeal against what was done by the Magistrate. 15 The appeal grounds set forth in the Summons are as follows: "1. The Court below failed to deal with the Plaintiff's claim against the First Defendant for quantum meruit; 2. In finding that there was a contract between the Plaintiff and the Second Defendant, the Court below acted against the facts incontrovertibly established by the evidence" 16 The appeal was listed for hearing on 22 May 2008. The only parties to the appeal were the plaintiff and the first defendant. Both were represented by counsel. 17 It appears that prior to the hearing there was a realisation that the second defendant should have been made a party. An application was brought to achieve that effect. It remained undealt with at the time of the hearing. Personal service had not been effected upon the second defendant. It appears that he may have disappeared and can no longer be located. 18 In the circumstances, the parties acceded to the appeal proceeding to dispose of the issues between the plaintiff and the first defendant. The relief sought against the second defendant was to be stood over to be dealt with at some time in the future. 19 I shall first deal with the result reached in respect of the contract claim brought against the first defendant. The view may be taken that the decision by the Magistrate on this matter was erroneous. Be that as it may, it does not assist the plaintiff in this case. Any error was of fact only and did not give rise to error in point of law. 20 I now turn to the question of the quantum meruit claim. This claim was not dealt with by the Magistrate. 21 The Court does not have before it the transcript of the submissions put to the Magistrate. Counsel for the plaintiff (Mr Canceri) gave the court his best recollection of how he put the plaintiff's case before her. His understanding is that the plaintiff asked for a judgment against the first defendant on the contract claim, but did not ask for a judgment against the second defendant in contract. He was also of the understanding that the quantum meruit claim was pressed as an alternative to the claim in contract against the first defendant. It may be added that the contract claim and quantum meruit claim were put as alternatives as against the first defendant in the plaintiff's process. 22 It seems to me that the Magistrate has misdirected herself by failing to deal with the quantum meruit claim. Accordingly, the judgment entered in favour of the first defendant needs to be set aside and I make such order. The matter is remitted back to the Local Court for determination according to law. 23 The plaintiff is to pay the appeal costs in relation to the claim in contract. The defendant is to pay the appeal costs in relation to the claim in quantum meruit. If so entitled, he is to have a certificate under the Suitors Fund Act 1951. The balance of the summons is to be stood over to a date to be fixed. There is to be a liberty to apply. The exhibits may be returned. ********** 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. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.