New South Wales Supreme Court CITATION : Bonner v Fauna Productions Pty Ltd [2009] NSWSC 604 HEARING DATE(S) : 23 June 2009 JUDGMENT DATE : 1 July 2009 JUDGMENT OF : Gzell J DECISION : Second further amended statement of claim to be struck out and plaintiff's proceedings to be dismissed. CATCHWORDS : PROCEDURE - Summary Termination - alleged agreement that in consideration of entering work agreement as an actor in a television series, defendant would pay the plaintiff a reasonable share of profits if the show was successful - whether a claim in the nature of a quantum meruit - whether a liquidated demand - whether an unenforceable agreement to agree - whether the Limitation Act 1969 likely to defeat any claim - earlier pleading struck out and leave to replead granted - whether further leave should be granted LEGISLATION CITED : Uniform Civil Procedure Rules 2005 Supreme Court Act 1970 CATEGORY : Principal judgment Dey v Victorian Railways Commissioners (1948-1949) 78 CLR 62 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Penthouse Publications Ltd v McWilliam (Court of Appeal, 14 March 1991, unreported) De Bernardy v Harding (1853) 8 Exch 822 at 824; 155 ER 1586 Planché v Colburn (1931) 8 Bing 14; 131 ER 305 Steven v Bromley & Son [1919] 2 KB 722 Craven-Ellis v Canons Ltd [1936] 2 KB 403 CASES CITED : Pavey & Matthews Pty Ltd v Paul (1986-1987) 162 CLR 221 Clay v Yates (1856) 1 H & N 73; 156 ER 1123 Way v Latilla [1937] 3 All ER 759 Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600 Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104 Spain v Union Steamship Co of New Zealand Ltd (1923) 32 CLR 138 Segur v Franklin (1934) 34 SR (NSW) 67 Peter Kent Development Pty Limited v The Australia and New Zealand Banking Group Limited (Supreme Court of New South Wales, Hunt J, 6 May 1980, unreported) PARTIES : Anthony Bonner (Plaintiff) Fauna Productions Pty Ltd (Defendant) FILE NUMBER(S) : SC 4140/08 COUNSEL : A Rogers (Plaintiff) J Baxter (Defendant) SOLICITORS : Morgan Ardino & Co (Plaintiff) Hardings Lawyers (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION GZELL J WEDNESDAY 1 JULY 2009 4140/08 ANTHONY BONNER v FAUNA PRODUCTIONS PTY LTD JUDGMENT 1 An application under the Uniform Civil Procedure Rules 2005, r 14.28(1)(a) was made to strike out the further amended statement of claim in this matter on the basis that it disclosed no reasonable cause of action. Other forms of summary termination of the proceedings were also sought under the Court's inherent jurisdiction to which reference is made in the Supreme Court Act 1970, s 23 and under the Uniform Civil Procedure Rules, r 13.4 for the dismissal of the proceedings. In the alternative, orders for further and better particulars were sought. 2 The principles applicable to summary termination of proceedings are well understood. The case must be very clear to justify summary intervention to prevent a plaintiff submitting a case for determination in the usual way (Dey v Victorian Railways Commissioners (1948-1949) 78 CLR 62 at 91). The court's powers of summary dismissal should not be exercised to deny a plaintiff access to the courts unless the lack of a cause of action is clearly demonstrated (General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129). It is for the applicant to demonstrate that a statement of claim is beyond saving by legitimate amendment (Penthouse Publications Ltd v McWilliam (Court of Appeal, 14 March 1991, unreported), citing Mutual Life & Citizens' Assurance Co Ltd v Evatt (1970) 122 CLR 628 at 631). 3 The further amended statement of claim sought judgment in the sum of $750,000. The relevant part of the pleading was as follows: "2 In or about 1966 or 1967 the Plaintiff and the Defendant entered into an agreement ("the Residuals Agreement") whereby, if the Plaintiff agreed to enter into a work agreement with the Defendant whereby he would perform work as an actor on a television show for the Defendant for a certain period, the Defendant would, should the show be successful, thereafter pay to the Plaintiff a reasonable share of any profits generated by the television show in perpetuity including, but not limited to, profits derived from the sale of merchandise referable to the show, sales of the show to local and international markets and any other moneys generated by the show ("the Profits"). Particulars (i) The agreement was oral. (ii) The parties to the conversation on the part of the Defendant were Lee Robinson and John McCallum. 3 In pursuance of the Residuals Agreement, the Plaintiff entered into a work agreement with the Defendant. Particulars (i) The work agreement was in writing dated 8 May 1967. 4 In breach of the terms of the Residuals Agreement the Defendant has failed to pay to the Plaintiff any percentage of the profits generated by the television show." 4 I gave leave to further amend the further amended statement of claim by adding the words "Denis Hill" after the words "Lee Robinson" in paragraph 2(ii) – the second further amended statement of claim. 5 For the plaintiff, Anthony Bonner, it was submitted that the cause of action disclosed by this pleading was in the nature of a quantum meruit. That submission is misconceived. 6 At common law, a quantum meruit arises in three distinct situations. First, where one party has partly performed a contract when the other party breaches it, the former is entitled to sue for breach of contract or claim a quantum meruit. 7 Of this type of case, Alderson B said in De Bernardy v Harding (1853) 8 Exch 822 at 824; 155 ER 1586 at 1587: "Where one party has absolutely refused to perform, or has rendered himself incapable of performing, his part of the contract, he puts it in the power of the other party either to sue for a breach of it, or to rescind the contract and sue on a quantum meruit for the work actually done." 8 In that case an agent was appointed to sell tickets for seats for viewing a public funeral for a commission on tickets sold. He had incurred expenses before any tickets were sold. The defendant terminated the agency. 9 Another example of this type of case is Planché v Colburn (1931) 8 Bing 14; 131 ER 305. The plaintiff was engaged by the defendants to write a volume for publication. After he had written some of the work the defendants abandoned the publication. It was held that the plaintiff could, without tendering his completed work, sue to recover reasonable remuneration for his work already done. 10 That is not the situation in the instant circumstances. Mr Bonner performed the role of the helicopter pilot, Jerry King, in the television series "Skippy – The Bush Kangaroo" after the work agreement was executed. He was paid for his services in accordance with that agreement. It provided that the defendant, Fauna Productions Pty Limited, would pay Mr Bonner $140 per week for rendering his services, such sum to include payment for residual rights and holiday pay. The payments were to be made to Mr Bonner in respect of each of a minimum of 38 television episodes. Under the agreement, Mr Bonner assigned to Fauna the sole and absolute rights throughout the world to all results and proceeds of the services rendered by him. 11 There were no expenses incurred by Mr Bonner for which he received no payment due to a breach of contract by Fauna. 12 The second situation in which a quantum meruit is recognised at common law is as a mode of redress when a new contract replaces an earlier one. 13 Thus in Steven v Bromley & Son [1919] 2 KB 722, charterers of a ship agreed to load her with a full cargo of steel billets at a specified rate of freight. But the ship was loaded partly with general merchandise. It was held by the Court of Appeal that there was an implied new contract to load general cargo for which a reasonable price would be paid. That reasonable price was the current rate of freight for general merchandise that was higher than the rate of freight specified in the replaced contract. 14 That situation is distinguishable from the instant circumstances. The work agreement was not supplanted by any other agreement. 15 The third situation in which a quantum meruit arises is where there is no enforceable price or remuneration under the contract because it is void, unenforceable or illegal, or it lacks the specification of a price or remuneration. For work done, a reasonable price or remuneration can be recovered. 16 Thus in Craven-Ellis v Canons Ltd [1936] 2 KB 403 the plaintiff was appointed managing director by an agreement under the company seal which provided for his remuneration. The contract was void because the executing directors had not obtained their qualification shares. The plaintiff having done work was held entitled to recover on a quantum meruit since the company had the benefit of the plaintiff's services knowing that they were not intended to be gratuitous. 17 In Pavey & Matthews Pty Ltd v Paul (1986-1987) 162 CLR 221 a licensed builder performed work under an oral contract that was unenforceable because a statute provided that enforceable contracts by licensed builders had to be in writing. It was held that the statute did not prevent a licensed builder from bringing an action upon a quantum meruit for the value of work done and materials supplied as an independent restitutionary claim arising from the acceptance of the benefits accruing to the defendant from the plaintiff's execution of the work. 18 Where a plaintiff learns that the defendant intends to perform its part of a contract in an illegal manner, the plaintiff cannot enforce the contract, nor recover in respect of the period after his discovery of the illegality. But he may bring a restitutionary claim to recover on a quantum meruit in respect of lawful work already done. 19 Thus, in Clay v Yates (1856) 1 H & N 73; 156 ER 1123 a printer agreed to print a treatise to which a dedication was to be prefixed. The treatise was printed but when the printer received the dedication he discovered that it contained libellous matter and he refused to complete the printing of it. It was held that he was entitled to recover for the printing already done. 20 Finally, in this category, is the case where a contract for work to be done sets no remuneration for it. The law imposes an obligation to pay a reasonable sum on a quantum meruit where it is clear that the work was not to be done gratuitously. 21 Thus in Way v Latilla [1937] 3 All ER 759 the plaintiff was to obtain and send information relating to goldmines and concessions in West Africa to the respondent who was to protect the appellant's interests in respect of concessions acquired and give to the appellant the customary or a reasonable share in the same and to pay the appellant a reasonable sum in respect of information and reports. The House of Lords held that there was no concluded contract between the parties as to the amount of the share or interest that the appellant was to receive and it was impossible for the court to complete the contract for them. But there was a contract of employment that clearly indicated the work was not to be done gratuitously and the appellant was therefore entitled to a reasonable remuneration on the implied contract to pay him a quantum meruit. 22 Mr Bonner does not fall within this class of case. The work agreement was not void, unenforceable or illegal and it did specify the remuneration to which he was entitled. 23 It may be that the class of case in which a quantum meruit arises is not closed. But the gravamen of each of the categories discussed above is that the cause of action affords recovery of expenses already incurred or compensation for work already done where none is provided by contract. This case lacks those elements and is not a vehicle for an extension of the present categories of quantum meruit. 24 As to Mr Bonner's claim that there was in the Residuals Agreement a concluded contract for a share of profits if the show was successful, Lord Atkin had this to say in the analogous situation before him in Way at 763: "The question now is, what are Mr Way's rights to remuneration? He originally claimed that there was a completed agreement to give him an interest in the concession, which, by custom, or on a reasonable basis, the court was asked to define as one-third. The trial judge accepted this view, holding that he was entitled to assess a reasonable share, and he accordingly awarded him £30,000, as being roughly 3 per cent. on the sum of about £1,000,000, which he took to represent Mr Latilla's profits in the transaction. The Court of Appeal rejected this view, and, in my opinion, rightly. There certainly was no concluded contract between the parties as to the amount of the share or interest that Mr Way was to receive, and it appears to me impossible for the court to complete the contract for them. If the parties had proceeded on the terms of a written contract, with a material clause that remuneration was to be a percentage of the gross returns, but with the figure left blank, the court could not supply the figure." 25 The Residuals Agreement is, at best, an agreement to agree and agreements to agree are unenforceable. In Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600 at 604, Gibbs CJ, Murphy and Wilson JJ said: "It is established by authority, both ancient and modern, that the courts will not lend their aid to the enforcement of an incomplete agreement, being no more than an agreement of the parties to agree at some time in the future." 26 That passage was cited with approval by the Court of Appeal in Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104 at 126-127. 27 It was submitted that far from the Residuals Agreement being an agreement to agree, the $750,000 claimed was for a debt or liquidated demand. Spain v Union Steamship Co of New Zealand Ltd (1923) 32 CLR 138 was relied upon. A clause in an award provided that an employer should pay any reasonable expenses of an employee incurred in the service or in the interests of the employer. The captain of a ship brought proceedings in the District Court against the owner to recover the reasonable expenses incurred by him upon an inquiry by the Court of Marine Inquiry. It was held that the claim was for a debt or liquidated demand within the meaning of the District Courts Act 1912. 28 That is a vastly different situation from the instant circumstances. Here there was no incurrence of expenditure for which Mr Bonner was not paid. Nor did he perform work for no consideration. He was paid under the work agreement. Like the unsuccessful attempt in Way, Mr Bonner seeks an undefined share of profits. 29 To like effect to Spain is Segur v Franklin (1934) 34 SR (NSW) 67 in which an arbitrator, entitled to a sum on delivering his award, who was prevented from doing so by the defendants, was held entitled to recover a quantum meruit for the services he had rendered under the contract. 30 There is neither an entitlement to $750,000 under the Residuals Agreement, nor is there a prospect that any claim beyond the terms of the work agreement would result in a judgment. The Limitation Act 1969 would, most likely, put an end to the matter. 31 The second further amended statement of claim raised an alternative claim under an agreement between Actors' and Announcers' Association of Australia and Fauna as follows: "5 Further or in the alternative, the Plaintiff, in entering into the work agreement became entitled to the benefit of an agreement styled "a general Agreement between Actors' and Announcers' Association of Australia and Fauna Productions" ("the General Agreement"). 6 In so as the General Agreement provided for the payment of moneys to the Plaintiff on an ongoing basis, the Defendant has failed to pay to the plaintiff any such moneys." 32 The work agreement contained a provision incorporating the General Agreement. It was in the following terms: "The Agreement is entered into in the express understanding that it is subject to and governed by a general Agreement between Actors' and Announcers' Association of Australia and Fauna Productions Pty Limited." 33 John Neil McCallum gave evidence that during the making of the Skippy series, Fauna entered into a number of agreements with Actors' and Announcers' Equity Association of Australia in relation to minimum fees, salary, wages, expenses, overtime and other remuneration to be paid to, and the conditions of engagement of actors in the Skippy series. He annexed an example of such an agreement to an affidavit. 34 Mr McCallum was cross-examined. There was nothing in the example of the General Agreement or in the cross-examination that established an entitlement to a share of profits or to remuneration giving rise to a debt of $750,000 or any other sum. 35 Counsel for Mr Bonner conceded that he could not succeed on the alternative claim as the evidence then stood. But he submitted that if it was appropriate for the primary case to go to trial, the alternative case should go with it. 36 In Peter Kent Development Pty Limited v The Australia and New Zealand Banking Group Limited (Supreme Court of New South Wales, Hunt J, 6 May 1980, unreported) at 13 his Honour pointed out that the remedy afforded by a forerunner of the Uniform Civil Procedure Rules r 14.28(1) is discretionary and part only of a claim or cross-claim should not be struck out. His Honour said: "The remedy afforded by Part 13 Rule 5 is discretionary. Where part of a claim or cross-claim must in any event proceed to trial, the application for summary judgment on the other part would, in my view, have to show an exceedingly strong case why the whole case should not go to trial." 37 Since I am of the view that the primary case should not go to trial, and it is conceded that there is no present basis for alternative claim, that situation does not arise. 38 Nor is it necessary for me to consider Fauna's alternative claim to relief with respect to further and better particulars. 39 It is normal in striking out a pleading to grant leave to replead. In this case, however, that has already happened. An earlier pleading was struck out and the further amended statement of claim was the result of leave to replead. There was no suggestion in argument that Mr Bonner's case could be put in some other form. In these circumstances, it appears to me to be inappropriate to grant such further leave. 40 The second further amended statement of claim should be struck out and the plaintiff's proceedings should be dismissed. 41 I will hear the parties on costs. I direct the parties to bring in short minutes of order reflecting these reasons. ********** 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.