Southern Fire Australia QLD Pty Ltd (In liq) v Dayshelf Fire Systems Pty Ltd
[2017] QCATA 39
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- Southern Fire Australia QLD Pty Ltd (In liq) v Dayshelf Fire Systems Pty Ltd[2017] QCATA 39
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Southern Fire Australia QLD Pty Ltd (In liq) v Dayshelf Fire Systems Pty Ltd[2017] QCATA 39
Southern Fire Australia QLD Pty Ltd (In liq) v Dayshelf Fire Systems Pty Ltd[2017] QCATA 39
CITATION: | Southern Fire Australia QLD Pty Ltd (in Liquidation) v Dayshelf Fire Systems Pty Ltd & anor [2017] QCATA 39 | |
PARTIES: | Southern Fire Australia QLD Pty Ltd (in Liquidation) (Applicant/Appellant) | |
| v | |
| Dayshelf Fire Systems Pty Ltd (Respondents) | |
APPLICATION NUMBER: | APL267-16 | |
MATTER TYPE: | Appeals | |
HEARING DATE: | 21 February 2017 | |
HEARD AT: | Brisbane | |
DECISION OF: | Senior Member Stilgoe OAM | |
DELIVERED ON: | 6 April 2017 | |
DELIVERED AT: | Brisbane | |
ORDERS MADE: |
| |
CATCHWORDS: | APPEAL – LEAVE TO APPEAL – CONTRACT – PARTICULAR PARTIES – PRINCIPAL AND AGENT – AUTHORITY OF AGENTS – where contract for provision of labour – where terms of contract not in writing – where protocol for ordering work and paying invoices established by previous dealings between parties – where variation in method of ordering work – where invoices for work ordered outside protocol not paid – where tribunal found contracts manager had no authority to vary terms of contract – whether error – whether grounds for leave to appeal Alderslade v Hendon Laundry Ltd [1945] KB 189 BM Culley & Associates Pty Ltd v Email Metals Pty Ltd [1997] QCA 64 Chambers v Jobling (1986) 7 NSWLR 1 Dearman v Dearman (1908) 7 CLR 549 First Energy (UK) Ltd v Hungarian International Bank [1993] BCLC 1409 Fox v Percy (2003) 214 CLR 118 Freeman and Lockyer v Buckhurst Park Properties [1964] 2 QB 480 Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549 Klement v Pencoal Ltd [2000] QCA 152 Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 Pickering v McArthur [2005] QCA 294 Whywait Pty Ltd & Mays v Davidson [1996] QCA 178 | |
APPEARANCES |
| |
APPLICANT: | D McGrath of Collection & Recovery Options Pty Ltd | |
RESPONDENT: | F Buchanan of MCG Legal | |
REASONS FOR DECISION
- [1]Southern Fire Australia QLD Pty Ltd (in Liquidation) and Dayshelf Fire Systems Pty Ltd were engaged in a commercial relationship for services rendered without a formal written contract. From 2011 until the end of 2014, Southern Fire and Dayshelf had operated on the basis that Dayshelf would pay only on receipt of a purchase order and a day sheet. The day sheet was required so that Dayshelf could receive payment from its head contractor.
- [2]On this particular job, Southern Fire issued invoices according to the usual procedure, which were paid. It then issued five invoices, totalling $10,296, which had purchase orders but no day sheets. All five invoices were issued on the same day, 2 November 2014. It issued eight invoices, all dated 13 November 2014, totalling $13,244, without either invoices or day sheets. Dayshelf did not pay the invoices, so Southern Fire filed a claim in the tribunal.
- [3]The tribunal dismissed Southern Fire’s claim because it found that Southern Fire had not complied with the terms of the agreement and there was no basis for a claim under the principles of quantum meruit.
- [4]Southern Fire wants to appeal that decision. Because this is an appeal from a decision of the tribunal in its minor civil disputes jurisdiction, leave is necessary.[1] Leave to appeal will usually be granted where there is a reasonable argument that the decision is attended by error, and an appeal is necessary to correct a substantial injustice to the applicant caused by that error.[2]
- [5]Southern Fire has thirteen grounds of appeal. It says that the tribunal erred:
- In fact and law in making findings contrary to the evidence;
- In finding that the law relating to ostensible and apparent authority did not apply to the dispute;
- In finding that the manager of Dayshelf lacked authority to provide binding instructions to Southern Fire;
- In finding that the manager of Dayshelf was not Dayshelf’s agent;
- In finding that it was a fundamental term of the agreement that there was a requirement for purchase orders to be issued before Dayshelf was liable to Southern Fire for the work;
- In finding that Southern Fire could not make a claim in the absence of purchase orders;
- In finding that the law of, quantum meruit did not apply;
- In finding that the law of unjust enrichment did not apply;
- In finding that, because Dayshelf was not paid by its head contractor, it did not receive a benefit in Southern Fire carrying out the work and, therefore, it was not enriched;
- In finding that, although Southern Fire did the work as instructed, and there was a distinct unfairness, Southern Fire was not entitled to payment;
- In finding that the absence of day sheets was a basis for finding that Southern Fire was not entitled to payment;
- In finding that one of the bases for non-payment was defective work when the defects were design defects;
- In failing to find for Southern Fire when that was the only reasonable finding to be made on the evidence.
- [6]For reasons that will become apparent, I will firstly deal with Southern Fire’s submissions that involve questions of mixed fact and law. I will consider whether the tribunal’s decision was contrary to the preponderance of evidence last.
Ground 2 – Did the tribunal err in finding that the law relating to ostensible and apparent authority did not apply?
- [7]I do not know why the parties have transformed this simple case of a claim for payment for work done into a dissertation on the law of agency. The dispute, as framed by the application and response, was clear – was Southern Fire asked to do work in accordance with the terms of an unwritten agreement? It was Southern Fire, in its submissions, that raised whether its site foreman, Adam Lansdown, had authority to issue requests for work that were not in accordance with established practice. Dayshelf had not raised the issue of Mr Lansdown’s capacity; its argument was solely on whether, pursuant to the terms of the contract, it was obliged to pay invoices that did not comply with the ususal practice.
- [8]Southern Fire says that the tribunal found the law relating to ostensible and apparent authority related only to one-off transactions and not to a course of dealings. The tribunal was taken to a number of cases in support of Southern Fire’s argument that Mr Lansdown had ostensible authority.[3] Southern Fire took the tribunal to the four principles established by Lord Diplock in Freeman and Lockyer v Buckhurst Park Properties:
- The representation that the agent had authority to enter into a contract of the kind sought to be enforced;
- The representation was made by a person who had actual authority to manage the business of the company;
- The contractor was induced by such representation to enter the contract; and
- The memorandum or articles do not deprive the company of the capacity either to enter into the type of contract concerned or to delegate authority to enter into that kind of contract to the agent.[4]
- [9]The tribunal stated:
What’s relevant with those particular principles, the four factors that you’ve given in that decision and the cases that you’ve quoted, is that in each of those cases, it was a one off transaction. It wasn’t preceded by a history of those dealings between the parties.[5]
- [10]At the appeal hearing, I asked Mr McGrath, for Southern Fire, whether he could point to any cases that did deal with the factual situation before the tribunal – an established course of dealings that were, apparently, varied by an agent during the course of dealings. He could not assist me.
- [11]An agent can be given authority to conduct all necessary dealings with a contractor.[6] In BM Culley & Associates Pty Ltd v Email Metals Pty Ltd[7] the court considered a similar situation. A memorandum between the parties prescribed the procedure for processing claims for payment, which included delivery dockets to be addressed to BM Culley and approval by a third party prior to payment. During the course of the construction contract, orders were placed orally and the necessary paperwork was not generated.
- [12]The Court of Appeal found that the construction manager had actual authority to alter the terms of the contract, and that the parties proceeded on that basis. Dowsett J held that, in the absence of actual authority, there was sufficient evidence to justify a finding of ostensible authority.
- [13]This fact situation is no different. Mr Lansdowne was the construction manager for Dayshelf. In sending an instruction by email, without a purchase order or day sheet, Mr Lansdowne did vary the terms of the contract. Southern Fire, doing the work, accepted the variation. If Mr Lansdowne did not have actual authority to vary the way in which the parties did business, the evidence was sufficient to support a finding that he had ostensible authority. The tribunal was in error.
Ground 3 – Did the tribunal err in finding that Mr Lansdown lacked authority to provide binding work instructions to Dayshelf?
- [14]For the reasons already expressed above, the tribunal did err in finding that Mr Lansdowne lacked authority to provide binding work instructions to Dayshelf.
Ground 4 – Did the tribunal err in finding that Mr Lansdown was not the agent for Dayshelf?
- [15]The tribunal did err in finding that Mr Lansdowne was not the agent for Dayshelf.
Ground 5 – Did the tribunal err in finding it was a fundamental term of the agreement that Dayshelf had to issue a purchase order before it was liable to Southern Fire for the work?
- [16]A term of a contract is a fundamental term if it is at the core of the contract, the non-performance of which destroys the very substance of the agreement.[8] An example of a fundamental term is when a seller delivers goods wholly different from the agreed goods or so seriously defective as to render them in substance not the goods contracted for.[9]
- [17]I disagree with the tribunal’s finding that the provision of a purchase order was a fundamental term of the contract. It may well be true that Mr Murphy knew or should have known that he was to obtain a purchase order in order to be paid for work,[10] but the failure to obtain a purchase order did not destroy the very substance of the agreement. Work was done and Southern Fire raised an invoice for that work. The essence of the contract survived.
- [18]The tribunal was in error.
Ground 6 – Did the tribunal err in finding that Southern Fire could not make a claim in the absence of purchase orders?
- [19]Because I have found that Mr Lansdowne was Dayshelf’s agent, and because I have found that it was not a fundamental term of the agreement that Dayshelf had to issue a purchase order, the tribunal was also in error in finding that Southern Fire could not make a claim in the absence of a purchase order.
Ground 7 – Did the tribunal err in finding that the law of quantum meruit did not apply?
- [20]The tribunal found:
And a fundamental step was that a purchase order was to be obtained. The benefit of quantum meruit here doesn’t apply on that basis. It is only where it is not clear and not covered under the terms of the contact that this wasn’t the case.[11]
- [21]I have already found that the tribunal erred in finding that the need for a purchase order was a fundamental term of the contract.
- [22]Southern Fire has pointed out that a builder’s right to recover on a quantum meruit does not depend on the existence of an implied contract but on a claim to restitution independent of contract.[12] I agree with that position and I also agree that the tribunal’s reasoning does not adequately deal with the nature of a quantum meruit claim or whether one existed in this case.
- [23]However, this submission does not assist Southern Fire. Its claim was filed in the minor civil disputes jurisdiction of the tribunal. The tribunal only has jurisdiction to consider this claim because it is a claim arising out of a contract between two or more traders.[13] If, as is clear, a quantum meruit claim is independent of a contract, then it cannot be said to arise out of a contract and, therefore, the tribunal, in its minor civil disputes jurisdiction, had no power to consider a claim on that basis.
- [24]For reasons different from those given by the tribunal, it was not in error in failing to consider a claim for quantum meruit.
Ground 8 – Did the tribunal err in finding that the law of unjust enrichment did not apply to the present case?
- [25]Southern Fire says the tribunal made no specific reference to the law of unjust enrichment and seemed to treat it in the same way as a quantum meruit claim. There is good reason for that. Both claims are independent of the contract.
- [26]A claim for unjust enrichment has the same basis as a claim for quantum meruit – it is an equitable remedy independent of the contract. For that reason, as with the claim for quantum meruit, the tribunal had no jurisdiction and it did not err in failing to consider Southern Fire’s claim on that basis.
Ground 9 – Did the tribunal err in finding that, because Dayshelf had not been paid by Southern Fire, it did not receive a benefit?
- [27]As I have found the tribunal did not have jurisdiction to consider a claim for unjust enrichment, it is not necessary to consider further this ground of appeal.
Ground 10 – Did the tribunal err in failing to find that Southern Fire was not entitled to be paid for the work that it carried out even though it found that Southern Fire did the work as instructed and there was a distinct unfairness in the circumstances?
- [28]To the extent that this ground of appeal depends upon a claim of quantum meruit and/or unjust enrichment, for the reasons already given, I do not need to consider the submission. To the extent that the ground of appeal is an alleged error of fact and law based on the preponderance of the evidence, I will consider it below.
Ground 11 – Did the tribunal err in finding that the absence of day sheets was a basis for finding that Southern Fire was not entitled to be paid for the work?
- [29]If the absence of a purchase order was not a basis for finding that Southern Fire was not entitled to be paid for the work, it must also be true that the absence of a day sheet was not a basis for finding that Southern Fire was not entitled to payment.
Ground 12 – Did the tribunal err in not finding that Southern Fire’s contract was for labour only and, therefore, any defect in design was Dayshelf’s responsibility?
- [30]Southern Fire repeats and relies on its submissions for Ground 1 of its grounds for appeal. I will, therefore, deal with the question in my reasons on that Ground.
Ground 13 – Did the tribunal err in not finding for Southern Fire as this was the only reasonable finding to be made on the evidence?
- [31]This ground of appeal is a restatement of the first ground of appeal – that the tribunal erred in its findings of fact.
Ground 1 – Was the tribunal’s decision contrary to the preponderance of evidence?
- [32]Findings of fact by a tribunal will not usually be disturbed on appeal if the facts inferred by the tribunal, upon which the finding is based, are capable of supporting its conclusions, and there is evidence capable of supporting any inferences underlining it.[14] An appellate tribunal may interfere, however, if the conclusion at first instance is ‘contrary to compelling inferences’ in the case.[15]
- [33]Argument about agency, purchase orders, and day sheets were a distraction. The real question is whether the work was done and Southern Fire is entitled to payment. The onus of proof lies with Southern Fire.
- [34]The tribunal did not turn its mind to whether Southern Fire satisfied that onus. That is an error of law and it is not for me, sitting as the appeal tribunal, to conduct a rehearing and come to a decision about the weight of evidence. The appropriate course is to remit the proceeding to the tribunal to consider the question of whether Southern Fire has satisfied the onus of proof so that it is entitled to payment.
Footnotes
[1] Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’) s 142(3)(a)(i).
[2] Pickering v McArthur [2005] QCA 294 at [3].
[3]Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549 at 583, First Energy (UK) Ltd v Hungarian International Bank [1993] BCLC 1409, and Freeman v Lockyer v Buckhurst.
[4]Park Properties (Mangal) Ltd [1964] 2 QB 480 (see transcript page 1-35, lines 36 – 40).
[5] Transcript page 1-36, lines 9 – 18.
[6] See, for example, Klement v Pencoal Ltd [2000] QCA 152; Whywait Pty Ltd & Mays v Davidson [1996] QCA 178.
[7] [1997] QCA 64.
[8]Alderslade v Hendon Laundry Ltd [1945] KB 189.
[9] Joseph Chitty and Hugh G. Beale, Chitty on Contracts (Sweet & Maxwell, 32nd ed, 2015) 789.
[10] Transcript page 1-36, lines 27 – 28.
[11] Transcript page 1-37, lines 4 – 7.
[12] Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 228, 263.
[13] QCAT Act s 12(4)(c).
[14]Dearman v Dearman (1908) 7 CLR 549 at 561; Fox v Percy (2003) 214 CLR 118 at 125-126.
[15] Chambers v Jobling (1986) 7 NSWLR 1 at 10.