Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Eden Construction Co Pty Ltd v Grigor [2016] NSWCATAP 182 Hearing dates: 8 June 2016 Date of orders: 10 August 2016 Decision date: 10 August 2016 Jurisdiction: Appeal Panel Before: D Patten, Principal Member D Robertson, Senior Member Decision: (1) Appeal and application for leave to appeal dismissed (2) Orders made in the Tribunal below confirmed. (3) Appellant to pay respondent's costs of appeal as agreed or assessed. Such costs to be on the ordinary basis except for those which were additionally incurred by the respondent becoming obliged to brief new counsel for the hearing of the appeal which are to be payable on a full indemnity basis. Catchwords: Building case – claim for quantum meruit – not justified on evidence Legislation Cited: Civil and Administrative Tribunal Act 2013 Civil and Administrative Tribunal Rules 2014 Cases Cited: Damberg v Damberg [2001] 52 NSWLR 492 Friend v Brooker [2009] 239 CLR 129 Henderson's Automotive Technologies Pty Ltd (in liq) v Flaton Management Pty Ltd [2011] VSCA 167; 84 ACSR 93 Lumbers v W Cook Builders Pty Ltd [2007] 232 CLR 635 Skilled Group Ltd v CSR Viridian Ltd [2012] VSC 290 Category: Principal judgment Parties: Eden Constructions Pty Ltd (Appellant) Warwick Robert Grigor (Respondent) Representation: J Cameron (Applicant) M Gracie, instructed by Gadens Lawyers (Respondent) File Number(s): AP 16/02219 Decision under appeal Court or tribunal: NSW Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Date of Decision: 16 December 2015 Before: P Boyce, Senior Member File Number(s): HB 13/11162 REASONS FOR DECISION 1. This is an appeal against a decision of the Tribunal below (Senior Member P Boyce) published on 16 December 2016. The Tribunal dismissed the application and gave directions regarding costs. 2. The notice of appeal itemised the following grounds of appeal which at least arguably raise questions of law: a) The Member erred and misdirecting (sic) his mind that a reasonable person could not be expected to pay for services rendered. b) The Member misconstrued the evidence before him in finding that the value of the claim is zero c) The Learned Member misconstrued the evidence and erred in finding that the letter of 15 October was a two tear (sic) contract, accepting one part of the letter and dismissing the other. d) The findings that influenced the Member's decision in (c above is a question of law and ; e) It constitute an error of law; 1. The Tribunal's decision, occupying some 35 pages, followed a 3 day hearing on 3 and 4 April and 1 July 2015. The case concerned residential building work in a remote country location which was carried out by Eden Construction Co Pty Ltd (the builder) for Warwick Grigor (the owner). The building site was at Yaouk (the building site) in the Cooma-Monaro Shire Council area. The builder was based in Queanbeyan. 2. The appellant had commenced carrying out construction work at the building site in or about 2010. The appellant continued to carry out construction work at the site until about July 2012. 3. The proceedings had been commenced in 2013 in the Consumer Trader and Tenancy Tribunal (CTTT). Upon the abolition of that Tribunal, the proceedings continued in the Civil and Administrative Tribunal. By a preliminary determination on 10 December 2013, the CTTT found that the applicant was not licensed to carry out residential building work and was not entitled to claim pursuant to contract for any work performed for the respondent, that the parties had compromised all claims in respect of work performed prior to 29 December 2011, and that the applicant "may pursue amounts by way of quantum meruit on a 'just and equitable' basis for work done on or after 1 January 2012". By the decision under appeal the Senior Member determined that the appellant was not entitled to any further payment by way of quantum meruit. 4. The notice of appeal filed by the appellant does not specify the amount sought, rather it seeks orders: that the decision below "be set aside and or that the case be re-heard", and "that the applicant is entitled to compensation". 5. In the original application the appellant had sought payment of an amount of $331,414.92. The amount sought by the appellant had reduced by the opening of the hearing below to $230,591.97, which, as set out in paragraphs 28-31 of the Tribunal's decision under appeal, was made up as follows: 1. Labour related claim $56,205.36 2. Plant and Equipment claim $156,722.52 3. Associated expenses claim $17,664.11. 1. The Tribunal below recorded that in the appellant's written submissions the amount sought was expressed in the alternative as $173,975.94 including plant hire and $18,832.04 without plant hire. By deduction, the amount sought in respect of plant and equipment hire can be calculated as $155,143.90. 2. In submissions filed in reply and at the hearing the appellant pressed the appeal only in respect of the disallowance of the Plant and Equipment claim. Thus the amount in issue in the appeal is $155,143.90. 3. When opening the appellant's case at the hearing, Mr J Cameron, who appeared for the appellant, said there were two issues viz: 1. Whether or not there was an expectation for the respondent to pay for truck and back hoe hire or whether such hire charges were included in the appellant's charge for labour. 2. In the event of a liability arising for truck and back hoe hire the quantum of that liability. 1. The issue is dealt with in paras 82 to 86 of the reasons given below: 82 Nevertheless the applicant continued to be engaged with the respondent on a day labour basis and it invoiced the respondent for that work in invoices 14 to 34. The basis of those claims relied on the charges previously made under the agreement between the applicant and the respondent arising out of the letter of 10 October 2010. That was the legal relationship between the parties. 83 By its letter of 29 January 2012 the applicant sought to unilaterally change the basis for its charges by introducing paragraph 3. The amounts were amended by Mr Henderson and the letter was forwarded on to the respondent for further consideration. The respondent did not reply to the proposal. However, the applicant continued to be employed and the respondent paid the invoices presented by the applicant up to invoice 34. 84 The applicant asserts that the respondent took no steps to communicate any rejection of that expectation. The Tribunal is satisfied and finds that from 29 January 2012 the agreement between the applicant and the respondent was that it would provide day labour only. Each invoice submitted after that date was paid by the respondent. The applicant was rewarded for the supply of that day labour. 85 The applicant's business includes that of an earthmover. The only equipment operator was Mr Filardo who carried out the day labour personally. The equipment was on site to assist the applicant perform its tasks as and when required. The remoteness of the site, being some 200 km from the applicants yard, dictated that the fulfilling of the works agreed between the applicant and the respondent required the equipment to be stored by the applicant on site. There isno evidence before the Tribunal that the applicant had any other work during the time Mr Filardo was on site. The equipment was with him to be used when and if necessary. The assertion by the applicant that the respondent should have known that he would be expected to pay for the dry hire of the equipment was not in the respondent's contemplation. Such a notion being completely at odds with the former agreement with the respondent before 29 January 2012 and on the terms of the continuing provision of day labour after that date. The Tribunal is not satisfied that the applicant has established that the respondent could reasonably be expected to have known the applicant expected to be paid the charges that it included in the invoice 35 and after the respondent terminated the applicant's services. 86 The Tribunal is satisfied that the applicant's proposal for the hire of the equipment had been rejected by the respondent's project manager Mr Henderson when he considered the applicants letter of 29 January 2012. The applicant's belated claim arose after the applicant's service was terminated by the respondent. The reward to the applicant for the use of the equipment stored on site, claimed as "dry hire" by the applicant was not in the contemplation of the respondent. 1. As noted above, in or about 2010 the appellant commenced to carry out construction work for the respondent at the building site. 2. Two letters from the appellant to the respondent in October 2010 are relevant to the present dispute. The first is that of 7 October 2010: Dear Mr Grigor, "Re: Ashley Vale Manor - Forecast for work expenses October-December 2010; In keeping with your expectation regarding monthly cash-flow, we provide herewith for your approval the estimated costs related to the construction of the basement structure up to the top of Ground level, including the slab on top: We had a meeting last night with Messrs Dowse and Selleck with the view to trash out minor details on the drawings, both structural and architectural and consensus mostly prevailed, apart from minor issues. It was also agreed as a precondition of going ahead that Mr Selleck in particular is to visit the site on Thursday 14th October to assess for himself the bearing capacity of the ground (CBR rating) and release the hold point that we set in our Inspection and Test plan (copy, of which was provided to Mr Dowse on Tuesday 5th October). We have also asked Mr Dowse whether he had done any costing on the project, so it can be compared with our forecast costing, but it appear that he had not done that at this point in time. It may be fortuitous however, if you were to instruct Mr Dowse to work-out some costing for both our piece of mind, as we do not want to be seen that we either overcharge or undercharge for our work. Now turning to the costing that we have worked out for the construction of the basement. This task we anticipate (even with all good intent and purposes) to take us at least until 22 December 2010 weather permitting of course (Christmas closedown). If this milestone can be achieved, we would be very happy as the soffit false-work can be left in place until the resumption of activities in mid-January 2011, thus enabling the concrete to fully cure before stripping the forms down. As for the costs of all material and incidentals required to complete the milestone. To enable, you to orderly forecast and make appropriate budget allowances, we have estimated and worked out the following:- (a) Dig and stockpile excavation for in-ground slab including 0.700mm past the line for working space say 14.3m2 X 1.65 = 339.29m3 @ $18.87/m3 = $6,402.51. t (b) Dig form and pour perimeter foundation 50.890 linear metres X 0.600 wide X 0.300 thick = 9.160m3 @ $487.50/m3 = $4,465.50. (c) Dig and form internal thickening beams for slab support 32.87 linear metres long X 0.2 deep X 0.4 wide=2.62m3 @ $487.50 = $1,277.25. (d) Form perimeter, supply and fix reinforcement and supply concrete and pump for ground basement slab 12.735mX12.710 =161.86m2 @ $197.65/m2 = $31,991.62 (e) Erection of formwork, supply and fix reinforcement and pour concrete perimeter wall of the basement 50.890m Long X 0.170m Wide X 2.4m High = 20.76m3 @ $987.45/m3 = $20,499.46. (f) Erection of formwork, supply and fix reinforcement and pour internal walls, 25.76 metres combined length X 0.150 thick X 2.4 m high=volume 9.28m3 @ $987.45/m3 = $9,163.53. (g) Erect formwork and form suspended slab above basement 161.86m2 @ $387.65/m2 = $62,745.02. (h) Supply and Fix reinforcement, supply and pour concrete161.86m2 @ $197.65m2 = $31,991.62. (i) Incidentals say $6000.00 (j) Sub-Total (a) to (i) $174,536.52 (k) Add GST $17,453.65 (1) Total Costs $191.990.17 The above costing was extracted and based upon our previous project at Ingebyra carried out in 2008/9, the costing is also very compatible with our previous estimate for the project given to you in December 2007 (copy enclosed). We were advised however that raw materials, cement and the likes will increase from the 21 October by 7.5%, this increase will not be passed on to this quote as we managed to keep it at pre-increased levels until the end of the year. Should you think that we have left out or missed any item or if you have any queries then, please do not hesitate to contact us. . Trusting that the above is in keeping with your expectations, your concurrence to the above is appreciated, we looking forward to be of service to you and to meet you on site at your leisure and earliest convenience. Yours sincerely Ces Filardo [signed] Managing Director Eden Construction Co Pty Ltd 1. The other letter was dated 15 October 2010: Dear Mr Grigor, Re: Ashley Vale Manor - Quotation for Concrete Works Construction: Further to our quotation dated 7th October 2010 and in keeping with our undertaking to you and Mr Henderson, we hereby confirm the total lump sum for our part of the works that it is associated with the civil and structural works package There are still some issues with minor design details that need to be yet resolved between our Mr Henderson and the Architect Mr Dowse, we are aware of these and have been considered and allowed for accordingly in our price. Details when provided by Messrs Dowse Architect, shall not effect or would alter our price below. The Lump sum price below is fixed until the end of December 2011. Should there be increase in the C.P.I. beyond 2011 for labour and or materials, then a reasonable adjustment in costs (if any) can be negotiated between us around the coffee table. The Scope of the Works outlined below includes:- (a) All excavation for foundation piers and slabs in accordance with the latest construction drawing presided by Mr Don Selleck on site this morning. (b) Supply and fixing of reinforcement. (c) Supply pour and finish all concrete works inclusive of: i) labour and material; ii) pumping equipment; iii) formwork for walls; iv) falsework for suspended floors (d) Tanking (water-proofing, please note that there is no details, so we came up with this concept which will meet with the designer's approval) of the basement perimeter walls which we propose thus: i) wrap around the outside walls with 0.002 heavy duty plastic similar to vapour barrier for floor slabs; ii) protect the plastic with a single Iayer of 5mm or equivalent villa-board sheeting iii) supply and install 100mm Subsoil drain & connect into outfall line from building to the Creek; iv) Supply and place 200mm thick 20-40mm crushed gravel for drainage of surface water. (e) Construction of reinforced concrete staircases (monolithic finish) two off for access into the basement and first floor areas. (f) Clean-up, reinstate and landscape effected area of works. ● For ease of reference the total cost is based upon a pro-rata of the previously accepted quotation dated 5th October 2010. The cost below is inclusive of the previous quote. ● Therefore our quotation for the works is calculated thus, 1033.81m2 @ $1,084.07/m2 = $1,120,722.40 ● Add GST @ 10% = $112,072.24 ● Total Costs for the works: $1,232,794.60 Further to the above, we would also offer you our services with men and machinery to help Mr Henderson completing other tasks such as the trusses and roofing as well as fitting-out of windows and doors, scaffolding, rock works etc if and when required. Our rate for Day-work if and when required is as follows:- ● 32 ton Excavator $200.00 Ex. GST ● Ces (as foreman) $80.00 Ex. GST ● Carpenter $55.00 Ex. GST ● Skilled labourer $40.00 Ex. GST ● Machinery Operator $40.00 Ex. GST ● 24 Ton Tipper (for work around the site) No cost -Fuel Only; ● Back-Hoe- Front-End Loader. Ditto - Fuel Only: ● Small Tools and other equipment - No cost Trusting that the above is in keeping with your expectations, should you have any queries, please do not hesitate to contact us at earliest convenience. Yours sincerely Ces Filardo [signed] Managing Director Eden Construction Co Pty Ltd 1. The relationship between the parties continued but a dispute arose during 2011 which, as noted above, the CTTT determined had been the subject of a compromise agreement towards the end of that year. This was to an extent recapitulated on 29 January 2012 by another letter from the appellant to the respondent: Dear Mr Grigor, Re: Ashleighvale Construction – Reconciliation of Costs & of Works: Thank you for your letter dated 17th January 2012. Your response is noted. Effectively, in concert with Mr Henderson, you have cancelled the contract of 15th October 2010. The notion was that "there was no contract but only a quote" Be it as may, the basement was part of the contract/quote of 15th October that was for all its intents and purposes approved, amended along the way and certified; and as explained further in this letter a very competitive contract price indeed by any account. There are few points of paramount importance that need to be clarified and set the records straight so you can be clear that I have not abused my position either as your site representative with the Cooma Council, or as the contractor on site. There should be no misunderstanding or animosity between us going forward with the construction of the project, and for appropriate transparency I outline the following:- 1. The costing of the project so far and what caused the 'cost blow-out ':- In the excel work-out I provided you on site, the total payments made to Eden Construction Co Pty Ltd up to Tax Invoice No.19 was $515,329.95. (Attachment A) That amount included in Tax Invoices No.1 and 2 that were for day work prior to the contract date of 15th October 2010. Therefore the sum of $25,300.00 should come [handwritten notation "out" added] of the equation and for the sake of this exercise and (to be fair on Maurie) it should not be counted within the cost blowout for the underground beam works. The total cost (including variations 1,2 and 3) for the works associated with the basement from Tax Invoice No.3 to Tax Invoice No.14 was $330,110.65. (Attachment B) The actual cost however; as incurred by Eden Construction Co Pry Ltd over the period and in relation to the construction works for the basement (excluding wages for myself) was $347,436.32. (Attachment C) Henceforth, most if not all of the other costs with the exception of Tax Invoices 1 & 2 that were associated with the removal of the old house and other prior peripherals can be attributed to the works related to the underside of the beams, which caused so much controversy with the Council and engineers and animosity within our relationship. Whilst the cost blow out is attributable to Maurie's design for the underground works, in fairness to Maurie however, credit must be given to his innovative ideas for designing the underside beams and support piers. Although it have cost you an extra $250K or so, the other side of the coin is that you have a very solid structure which is quake-proof by most account that it will stand the test of time and beyond. Regrettably, I am of the view that the overrun costing was the cause that induced and prompted you to rescind my contract prematurely. For the record, the actual cost of construction of the basement works incurred by Eden, was $1,867.93m2 as opposed to $1,084.07m2 quoted you in October 2010? Should you so wish to discuss the above with Glen Dowse, and if you and Maurie think that there is any merits to what I am saying in relation to cost then please reconsider. I am still prepared to reconfirm my price of 15 October 2010 contract. This would save you several hundreds of thousands from whichever alternative you may opt or choose 2. Material & Equipment on Site: In light of the discussion yesterday and the stocktaking jointly carried out one would think and fairly expect that Maurie and I will come to a reasonable compromise with a fair and equation for cost and compensation. The original cumulative cost was $100,000 as presented in the schedule based upon actual statements. Some of the timbers are new. 3. New Conditions: Most of the rates given to you in October 2010 remain unchanged. Due to the lapse of time however I would like you to approve from 30th January 2012, the following: a) Rent and cost of accommodation for Ces $200.00 per week; b) Hire Rate for Back-hoe Front end Loader $110.00/h. Exclusive of GST c) Hire Rate for 24 ton Tipper truck $110.00/h Exclusive of GST d) Labour hire, unchanged from 15 October 2010; e) Excavator Hire unchanged from 15 October 2010. ["$200/hour" and initials added] Given the fact that you have had the benefit of this equipment for the cost of fuel only since September 2010, one would think and fairly expect that a bit of good will from your part would be reciprocated this time around. Especially from here on in that the need for minor earthworks is greatly reduced somewhat. Trusting that the above is in order and that you give due consideration, we are looking forward to continue a long lasting and harmonious relationship with you and Maurie. Yours sincerely Ces Filardo [signed] Managing Director Eden Construction Co Pty Ltd CC: Maurie Henderson 1. On the copy of the letter of 29 January 2012 in evidence (reproduced above) the sum of $110.00/h in paragraphs 3(b) and 3(c) is ruled through. The sum of $200/hour is handwritten at the end of 3(e). There was evidence apparently accepted by the Tribunal that these alterations were made by a Mr Ferguson, an employee of the respondent, as indicating that items 3(b) and 3(c) were not agreed to by him. 2. This gives rise to what seems to be the only issue in the case in accordance with Mr Cameron's opening and as recognised by the learned member below in para 26 of his reasons: 26. The applicant submits that the primary issues to be determined by the Tribunal are: (a) Whether the respondent ought to have known that the applicant expected to be paid for the services and whether the defendant did not take the opportunity to reject those services; (b) The value of those services. 1. The "services" referred to in the paragraph seem to be those, the claim for which is reflected in para 29: 29. The "Particulars of Plant and Equipment Claims" is for the hire of a back hoe, truck and excavator for 30 weeks at $5,625.00 per week totalling $151,875.00. The weekly rate is made up of a hire charge for a 5 day week for the back-hoe at $250.00 per day, the truck at $275.00 per day and the excavator at $600 per day less an allowance for payments made of $9,400.00 plus GST added of $14,247.50 the applicant claims that it is entitled to $156,722.50 for equipment hire. 1. There was a dispute in the Tribunal below as to whether or not Mr Henderson had authority to approve the charges and rates proposed by the appellant. The Tribunal made a finding that Mr Henderson did not have such authority but in our view nothing turns on that. On any basis it seems clear that the respondent did not agree to the terms of the letter of 29 January 2012. 2. In its reasons the Tribunal below considered the basis upon which the appellant's claim could succeed: 74. The applicant contends that the building works carried out by it for the respondent benefitted from having the back-hoe and tipper on site for the period 29 January 2012 to 1 July 2012. Therefore there was an expectation that the respondent ought to have known that he would have had to pay for the dry hire of the equipment. 75. The applicant and respondent's contractual relationship prior to 1 January 2012 was based on terms set out in a letter dated 7 October 2010. The works carried out, invoiced by the applicant and paid for by the respondent in invoices 3 to 14 were clearly based on the terms of the applicant's letter of 7 October 2010. Each invoice referred to that letter. The CTTT ordered, as part of the preliminary finding in this matter on 10 December 2013, that part of the dispute was resolved by a compromise between the parties dated 29 December 2011. Clearly an agreement existed between the parties for the carrying out of work on the terms of the applicant's letter dated 7 October 2010. …….. 80. The applicant asserts that it is entitled to bring the claim as the respondent should have known that the applicant expected to be financially compensated for the use of the plant and equipment and that it was not offered by the applicant for free. That expectation arises from the applicant's letter dated 29 January 2012 proposing a lump sum contract or work to be carried out on a rates basis for its plant and material. The arguments presented by both the applicant and the respondent are fully set out previously in these reasons for decision. 81. However, the respondent refutes this reasoning and relies on his fax of 17 January 2012 to clearly state his position that he ended any discussion about matters that took place prior to 29 December 2011, those matters having been resolved by the orders of the CTTT. The applicant's letter of 29 January 2012 was another attempt by the applicant to salvage its involvement in the future building work by throwing itself at the respondent. The applicant had previously aggressively pursued the respondent with proposals set out in its letter 15 October 2010, which was rejected by the respondent. 82. Nevertheless the applicant continued to be engaged with the respondent on a day labour basis and it invoiced the respondent for that work in invoices 14 to 34. The basis of those claims relied on the charges previously made under the agreement between the applicant and the respondent arising out of the letter of 10 October 2010. That was the legal relationship between the parties. 83. By its letter of 29 January 2012 the applicant sought to unilaterally change the basis for its charges by introducing paragraph 3. The amounts were amended by Mr Henderson and the letter was forwarded on to the respondent for further consideration. The respondent did not reply to the proposal. However, the applicant continued to be employed and the respondent paid the invoices presented by the applicant up to invoice 34. 84. The applicant asserts that the respondent took no steps to communicate any rejection of that expectation. The Tribunal is satisfied and finds that from 29 January 2012 the agreement between the applicant and the respondent was that it would provide day labour only. Each invoice submitted after that date was paid by the respondent. The applicant was rewarded for the supply of that day labour. 85. The applicant's business includes that of an earthmover. The only equipment operator was Mr Filardo who carried out the day labour personally. The equipment was on site to assist the applicant perform its tasks as and when required. The remoteness of the site, being some 200 km from the applicants yard, dictated that the fulfilling of the works agreed between the applicant and the respondent required the equipment to be stored by the applicant on site. There isno evidence before the Tribunal that the applicant had any other work during the time Mr Filardo was on site. The equipment was with him to be used when and if necessary. The assertion by the applicant that the respondent should have known that he would be expected to pay for the dry hire of the equipment was not in the respondent's contemplation. Such a notion being completely at odds with the former agreement with the respondent before 29 January 2012 and on the terms of the continuing provision of day labour after that date. The Tribunal is not satisfied that the applicant has established that the respondent could reasonably be expected to have known the applicant expected to be paid the charges that it included in the invoice 35 and after the respondent terminated the applicant's services. 86. The Tribunal is satisfied that the applicant's proposal for the hire of the equipment had been rejected by the respondent's project manager Mr Henderson when he considered the applicants letter of 29 January 2012. The applicant's belated claim arose after the applicant's service was terminated by the respondent. The reward to the applicant for the use of the equipment stored on site, claimed as "dry hire" by the applicant was not in the contemplation of the respondent. 1. As a consequence of this reasoning the appellant's claim was dismissed. 2. Mr Cameron challenged the Tribunal's finding that there was not a reasonable expectation that the respondent would pay for the disputed hire charges. In relation to paragraph 82 of the Tribunal's reasons he pointed out that there was in evidence no letter of 10 October 2010 and suggested this was an erroneous reference to the letter of 15 October 2010 reproduced above. Obviously there was an error, but it is unclear to us whether the reference was intended to be to the letter of 7 October 2010 or to that of 15 October 2010. In any event, it was submitted, correctly we think, that there was no contractual relationship between the parties as to payment for the hire of back hoe and truck subsequent to January 2012 which was simply an unresolved matter 3. The appellant's submission relied on Lumbers v W Cook Builders Pty Ltd [2007] 232 CLR 635 and the opening words of para 53. That paragraph, which is part of the reasons of Gleeson CJ, reads in full: The concept of "free acceptance" invoked by the majority in the Full Court, whatever its exact scope, is commonly related to a defendant who "did not take a reasonable opportunity open to him to reject the proffered services" . That was not the situation of the Lumbers in the present case. Similarly, what was sought to be characterised as an "incontrovertible benefit" was that which Sons had undertaken to provide for the Lumbers and for which the Lumbers had agreed to pay Sons. If the principle relied upon by Builders extends to the claim by Builders against the Lumbers, it is difficult to see why it would not extend also to the work performed by the numerous sub-contractors engaged by Sons and later by Builders. Much, perhaps most, of the physical construction work on the site was performed, and many of the physical materials brought to the site were supplied, by such sub-contractors. Why Builders was in a different position from them vis-a-vis the Lumbers was not explained. In a broad colloquial sense, they were conferring benefits on the Lumbers, and the Lumbers were accepting those benefits, but that was not so in any legal sense. [Footnotes omitted]. 1. In Lumbers the quantum meruit claim was made in a very different context. In effect a building contract had been largely performed by a company related to the contracting builder but without the knowledge of the home owners. Gleeson C J rejected the claim for reasons given at para 54. 54. It was argued that the Lumbers had received a "windfall" and that it would be unconscionable of them to refuse to pay Builders for the work in question. This characterisation proceeds upon assumptions as to the respective rights and obligations of the Lumbers, Sons and Builders which, for reasons already stated, have not been justified. In so far as the Lumbers have been relieved from liability to pay the full agreed price for the work done on their property it appears principally to be the consequence of Builders' failure to make or pursue a prompt claim against Sons, and Builders' failure to pursue its claim against Sons in the present proceedings. If that claim had been pursued, it may well have resulted in a claim by Sons against the Lumbers. Alternatively, it may be the consequence of the unexplained attitude of Sons in the letter written by Mr Malcolm Cook in early 1999. The procedural and evidentiary deficiencies in the case make it impossible to conclude that the conduct of the Lumbers in refusing to pay Builders is unconscionable. If they have been enriched, it is at the expense of Sons. If any party has been enriched at the expense of Builders, it is Sons. 1. The other members of the court (Gummow, Hayne, Crennan and Kiefel JJ) also rejected the claim, concluding their reasons on the issue: 124. When account is taken of the contractual relationship between the Lumbers and Sons several observations may then be made. 125. First, the Lumbers accepted no benefit at the expense of Builders which it would be unconscionable to retain. The Lumbers made a contract with Sons which either has been fully performed by both parties or has not. Sons made an arrangement or agreement with Builders which again has either been fully performed or it has not. If either the agreement between Sons and the Lumbers or the agreement or arrangement between Sons and Builders has not been fully performed (because all that is owed by one party to the other has not been paid) that is a matter between the parties to the relevant agreement. A failure of performance of either agreement is no reason to conclude that Builders should then have some claim against the Lumbers, parties with whom Builders has no contract. 126. Because Builders had no dealings with the Lumbers, Builders has no claim against the Lumbers for the price of any work and labour Builders performed or for any money that Builders may have paid in relation to the construction. Builders has no such claim because it can point to no request by the Lumbers directed to Builders that Builders do any work it did or pay any money it did. Reference to whether the Lumbers "accepted" any work that Builders did or "accepted" the benefit of any money it paid is irrelevant. It is irrelevant because it distracts attention from the legal relationships between the three parties: the Lumbers, Sons and Builders. To now impose on the Lumbers an obligation to pay Builders would constitute a radical alteration of the bargains the parties struck and of the rights and obligations which each party thus assumed. There is no warrant for doing that. 127. The second observation to be made is more general. It is that identification of the rights and obligations of the parties, in this as in any matter, requires close attention to the particular facts and circumstances of the case. Necessarily that requires close attention to what contractual or other obligations each owes to the other. 1. The concept of "free acceptance" referred to by Gleeson CJ in the passage quoted above was discussed by the Court of Appeal in Damberg v Damberg [2001] 52 NSWLR 492 and the learned member below quoted relevant passages in his decision under appeal: "191. Acceptance could be found in a subsequent evaluation of the benefits and the consent to take them; the corresponding non-acceptance would be a refusal to take them. Acceptance could also be found in an expression of willingness to take the benefits before they were provided (that is, a request that they be provided); the corresponding non-acceptance would be an expression of unwillingness to take the benefits before they were provided (that is, a request that they not be provided). … 192 Goff and G Jones, Law of Restitution, 5th ed (1998) …, at 18-19, in discussing the need to establish that the provision of services benefited the defendant, say: "…But a defendant, who is not contractually bound, may have benefited from services rendered in circumstances in which a court holds him liable to pay for them. Such will be the case if he freely accepts the services. In our view, he will be held to have benefited from the services rendered if he, as a reasonable man, should have known that the plaintiff who rendered the services expected to be paid for them, and yet he did not take a reasonable opportunity open to him to reject the proffered services. Moreover, in such a case he cannot deny that he was unjustly enriched." [and] "…It is said that the recognition of free acceptance, so defined, is in principle objectionable for it erodes the right of a person to determine his own choices; only if he has requested services can he be said to have 'chosen' and gained a benefit. If a principle of free acceptance is recognised, a defendant may be compelled to pay for the services which he asserts, honestly if perversely, are of not benefit to him; or he may be indifferent, not caring one way or the other, whether the services are rendered or not. Again the defendant may concede that the services are beneficial but plead that he had 'more important things on which to spend his money'. But, in these exceptional circumstances, the burden should be on the defendant; who is not the reasonable man, immediately to tell the plaintiff that he is perverse, indifferent or that he has more important things to do with his money. If he does not do so, he cannot deny that he has gained a benefit. It is true that few judges have explicitly adopted a principle of free acceptance. But the principle enshrined in that concept is the most satisfactory explanation of those decisions which is recognised the plaintiff's claim that his services, which had not been requested, had benefited the defendant. …" 194 Further, Goff and Jones, The Law of Restitution (5th ed) at 63, in discussing the principle that a plaintiff who acts officiously in conferring a benefit on the defendant cannot succeed in a restitutionary claim, say: "Judges and jurists have sought to express this limiting principle in a number of different ways. Other statements of the same principle are: recovery will be denied if the plaintiff is officious; or if he thrust himself on the defendant; or if he intervened without 'adequate justification'. Such expressions as 'officiousness,' mere volunteer' or thrust himself on another' are simply a 'form of legal shorthand' which conceals the conclusion that a defendant should be not be required to pay for benefits which the plaintiff knows that the defendant neither solicits nor desires. He takes the risk that the defendant will pay him for the benefit which he conferred on him. The risk is on his head. He has no cause to complain if his hope is disappointed. Consequently, it is irrelevant whether or not the defendant has gained an incontrovertible benefit." 1. The Tribunal below also quoted from Friend v Brooker [2009] 239 CLR 129 at para 7: "in general, the bare fact of the conferral of some benefit upon another does not suffice to establish an obligation to repay the expenditure in providing that benefit. The second proposition is that while the concept of unjust enrichment may provide a link between what otherwise appears to be a variety of distinct categories of liability, and it may assist, by ordinary processes of legal reasoning, in the development of legal principle, the concept of unjust enrichment itself is not a principle which can be taken as a sufficient premise for direct application in a particular case." and set out a passage from Henderson's Automotive Technologies Pty Ltd (in liq) v Flaton Management Pty Ltd [2011] VSCA 167; 84 ACSR 93 at para 56 (which was cited in Skilled Group Ltd v CSR Viridian Ltd [2012] VSC 290 at para 29): "…even where a claim for restitution is properly brought, primacy is to be given to any legal relationships that exist between the parties… Moreover, as Lumbers v Cook makes clear, where there is an agreement between the parties, the scope of that agreement will almost invariably govern the relationship between the parties independently of any questions about so-called incontrovertible benefits or unconscionability." 1. Those principles are to be considered in a context where over a lengthy period the relationship between the parties had been governed by letters which expressly denied the appellant the right to be paid for the dry hire of the tipper truck and back hoe–front end loader, and in which, moreover, both these items of equipment were already on the building site some 200 kilometres from the appellant's yard. The equipment remained on the site throughout the period from 29 January 2012 until the parties terminated their relationship and during that period the appellant invoiced the respondent for work done but made no mention of any claim for hire charges in respect of the two items of equipment. 2. No doubt the appellant wanted to be paid for such hire from 29 January 2012, as the letter of 29 January evidences, but in our view there was no basis for the appellant to have any expectation of receiving payment unless the proposal it made in the letter of 29 January 2012 was accepted. The very terms of the last two paragraphs of the letter make it clear in our view that the appellant was seeking, reasonably or unreasonably, to impose a new term in the relationship. The respondent's failure to accept that term left the appellant with several options; it could have removed the equipment, it could have ceased to perform work for the respondent or it could have continued to work without the benefit of the new term. On the face of it the appellant chose the third option up to and including invoice 34. It was only after the relationship terminated that it sought to recover the hiring charges. 3. In the circumstances, in our opinion, what occurred in this case did not constitute a "free acceptance" or an unjust enrichment. The Tribunal below was correct to reject the claim and the appeal should be dismissed. 4. We note that by the notice of appeal the appellant sought leave to appeal on the basis that the decision of the Tribunal below was not just and equitable and was against the weight of evidence. For the reasons set out above we do not consider that the decision below was not just and equitable or that it was against the weight of evidence. Therefore, the application for leave to appeal will also be dismissed. 5. The appeal was brought from a decision of the Consumer and Commercial Division of the Tribunal. The amount claimed or in dispute in the proceedings exceeded $30,000. In those circumstances, pursuant to rule 38(2) of the Civil and Administrative Tribunal Rules 2014 (NSW) the Tribunal below was empowered to award costs in the absence of special circumstances despite the provisions of s60 of the Civil and Administrative Tribunal Act. 6. Rule 38A of the Civil and Administrative Tribunal Rules 2014 (NSW) provides: 38A Costs in internal appeals (1) This rule applies to an internal appeal lodged on or after 1 January 2016 if the provisions that applied to the determination of costs in the proceedings of the Tribunal at first instance (the "first instance costs provisions" ) differed from those set out in section 60 of the Act because of the operation of: (a) enabling legislation, or (b) the Division Schedule for the Division of the Tribunal concerned, or (c) the procedural rules. (2) Despite section 60 of the Act, the Appeal Panel for an internal appeal to which this rule applies must apply the first instance costs provisions when deciding whether to award costs in relation to the internal appeal. 1. The appeal was filed on 13 January 2016. Therefore rule 38A applies and we are required to apply the provisions that applied to the determination of costs in the Tribunal at first instance. Those provisions (rule 38(2)) provided that special circumstances were not necessary before costs could be awarded. Accordingly the usual rule in relation to costs should apply, that is costs should follow the event. 2. Mr Gracie, who appeared for the respondent submitted that part of his client's costs should be awarded on an indemnity basis. In an affidavit sworn on 6 March 2016 by Mr Filardo, the Managing Director of the appellant, there was an allegation of an improper conversation during the course of the hearing below between Counsel then appearing for the respondent and an expert witness. This allegation, although subsequently withdrawn, caused the respondent to brief new Counsel for the hearing of the appeal thereby incurring additional expense. Mr Gracie submits that it is appropriate, where a serious allegation has been made which causes the other party to incur costs but is subsequently withdrawn, that the party making the allegation bear the costs incurred by the other party by reason of the allegation on the indemnity basis. We accept the force of Mr Gracie's submission. ORDERS 1. Appeal and application for leave to appeal dismissed 2. Orders made in the Tribunal below confirmed. 3. Appellant to pay respondent's costs of appeal as agreed or assessed. Such costs to be on the ordinary basis except for those which were additionally incurred by the respondent becoming obliged to brief new counsel for the hearing of the appeal which are to be payable on a full indemnity basis. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar Amendments 15 May 2017 - Case Name amended to correct name of appelant 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. Decision last updated: 15 May 2017