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Mineforce (Construction Labour) Pty Ltd v Basi QCATA 9
Mineforce (Construction Labour) Pty Ltd v Basi  QCATA 9
Mineforce (Construction Labour) Pty Ltd
On the papers
Senior Member Stilgoe OAM
25 January 2017
APPEAL – LEAVE TO APPEAL – CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – FORMATION OF CONTRACTUAL RELATIONS – whether Tribunal should have considered bank statements as evidence of formation of contract – whether Tribunal should have considered payment of funds on direction was evidence of existence of contract – whether grounds for leave to appeal
APPEAL – LEAVE TO APPEAL – EVIDENCE – GENERAL PRINCIPLES – PROOF – BURDEN OF PROOF – whether respondent was required to prove that contract did not exist – whether grounds for leave to appeal
APPEAL – LEAVE TO APPEAL – CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – privity of contract – whether beneficiaries not party to a contract may benefit – whether Tribunal erred in not applying Trident v McNiece Bros – whether grounds for leave to appeal
Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 142(3)
Auss Metals Pty Ltd v Express Mobile Services Australia Pty Ltd  FCA 745
Pickering v McArthur  QCA 294
Williams v Bartholomew  EngR 237
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).
REASONS FOR DECISION
- Mineforce (Construction Labour) Pty Ltd filed an application for minor debt for work done and invoiced.
- Attached to the application was a document called ‘Appointment Package’ dated 15 November 2015 between Daniel Murphy and a number of entities including ‘key executive’ Navi Basi. It records an employment contract in which a company RNR, which was not a party to the agreement, agreed to pay Mr Murphy $60,000 per annum. At the hearing, Mr Murphy, as a director, and on behalf, of Mineforce, submitted that the agreement had been varied so that Mr Basi agreed to pay Mineforce that $60,000. The tribunal, not persuaded that there was an agreement between Mineforce and Mr Basi, dismissed the application.
- Mineforce 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. 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.
- Mineforce submits that the tribunal erred in fact and law in finding no evidence that a contract existed between Mineforce and Mr Basi. Mineforce has written thirteen paragraphs about the correct law of contract that the tribunal should have applied. I will consider each in turn. As a preliminary comment, however, I hope that no lawyers were involved in the drafting of the Appointment Package.
The tribunal erred in giving reasons ‘You can’t rely on the bank statements as proving the contract. It does not. All it does is prove some payments were made.’
- Mineforce submits that the tribunal was asserting on behalf of Mr Basi that Mr Basi made these payments gratuitously. The tribunal was not asserting anything on behalf of Mr Basi. It was summarising and applying the law as it saw it.
- Mr Murphy, on behalf of Mineforce, told the tribunal that the written document had been varied. When the tribunal asked Mr Murphy for evidence to support that submission, Mr Murphy relied on bank statements showing payments to Mineforce. The tribunal made the point that bank statements, in themselves, don’t prove the contract on which the payment was made.
- I agree with the tribunal’s statement. In particular, it must be read in context in the tribunal’s reasons for decision. The tribunal noted that it gave Mr Murphy a number of opportunities to show that the contract had been varied and he could not do so. The tribunal noted Mr Murphy gave two different explanations. The tribunal did not believe Mr Murphy.
- I have read the transcript. The tribunal was not asserting that Mr Basi made the payments gratuitously. It simply did not accept Mineforce’s submissions. There is no error.
For Mr Basi to sustain the assertion that there is no contract with Mineforce, he would need to prove that the contract was only with Murphy
- This submission does not, in fact, direct my attention to an error by the tribunal. The fact is, Mr Basi did not have to prove anything; it was for Mineforce to prove its claim.
The fiction, manufactured by the tribunal for Mr Basi and then grasped by Mr Basi is that the amounts were paid on direction
- Shortly after this exchange, Mr Murphy also tried to put Mr Basi’s comment within a legal framework. He told the tribunal that: ‘The debt had been assigned, yes.’ As it transpired, the tribunal did not expressly accept either explanation.
Mr Basi’s own admission is that he never contracted with Mineforce in any form whatsoever
- That submission does not assist Mineforce. On the contrary, it only serves to highlight the very issue the tribunal had to decide: was there a contract between Mr Basi and Mineforce?
If Mr Basi did not contract with Mineforce, then Mineforce could not have received funds on direction
- A payment by direction confirms that the person directing the payment is the person entitled to the payment. Therefore, Mr Murphy’s direction to Mr Basi that he pay Mineforce is actually evidence that the original contract was between Mr Murphy and Mr Basi, not Mineforce and Mr Basi.
- Mineforce then submits that it could not have received the money under direction from Mr Murphy because that would not ‘mitigate’ Mr Basi’s debt to Mr Murphy. For the reasons just expressed, that argument cannot succeed.
- Mineforce says that the payment under direction is an agreement to receive funds in exchange for an offer to do something with those funds and, therefore, constitutes an agreement between Mineforce and Mr Basi, or a variation of the agreement between Mr Murphy and Mr Basi. The agreement to receive funds is an agreement between the director of those funds, Mr Murphy, and the receiver, Mineforce. If there is an agreement to do something with those funds, it is an agreement between Mineforce and Mr Murphy. Consideration for the agreement, if any, is between Mineforce and Mr Murphy. Mineforce could have received funds on direction from Mr Murphy. This is not a valid ground of appeal.
Any argument there is no contract between Mineforce and Mr Basi asserts that Mr Basi made a series of payments in error and Mineforce has these funds sitting in a suspense account
- The consequences of the tribunal finding there was no contract between Mineforce and Mr Basi are not evidence to support a contrary finding. The tribunal was asked to determine a claim for minor debt between two parties. It did so. If Mineforce is now holding money to which it is not entitled, that is a matter for another time. It is not a valid ground for appeal.
If Mr Basi never contracted with Mineforce, then he has a much larger debt owing to Mr Murphy directly
- If the result of the tribunal’s finding is that Mr Basi owes Mr Murphy money that is also a matter for another day. It is not evidence of an error by the tribunal. It is not a ground of appeal.
The doctrine of privity of contract means that only the parties to a contract are bound by it and entitled to enforce it. As both Mr Basi and the tribunal agree that Mineforce was bound to apply those funds to Mr Murphy’s betterment in partial mitigation of Mr Basi’s debt, Mineforce is a party to a contract with Messrs Murphy and Basi.
- Mineforce is correct in saying that the doctrine of privity of contract means that only the parties to the contract are bound by it.
- Mineforce is not correct in asserting that Mr Basi and the tribunal agreed that Mineforce was bound to apply those funds to Mr Murphy’s benefit. The evidence is silent as to what Mr Murphy’s directions to Mineforce were. Certainly, apart from the direction to Mr Basi to pay the money into a particular account, there is no evidence that Mr Basi knew of the direction, or its purpose. The tribunal made no findings about this point, nor was it required to do so.
The doctrine of privity of contract was relaxed by the High Court in 1988
- Mineforce refers to Trident General Insurance Co Ltd v McNiece Bros Pty Ltd as authority for the proposition that beneficiaries under a contract, who are not parties to it, may obtain benefits under the contract.
- The case involved an insurance policy in which the insurer agreed to indemnify the insured against all sums it may be liable to pay in respect of personal injuries on specific building sites. ‘Insured’ included contractors of the named insured. A person was injured due to the negligence of one of the insured’s contractors. The contractor was not a contractor at the time of the policy. Mason CJ and Wilson J held that the contractor was covered by the policy because it fell within a class of persons expressed to be covered.
- Toohey J held that, where a policy shows an intention to cover contractors, and the contractor arranges its affairs by reference to the existence of the policy, the contractor may sue on the policy even though there is no consideration from the contractor to the insurer and even though the contractor is not a party to the insurance contract. Gaudron J held that a promisor (the insurer) who has accepted agreed consideration for a promise to benefit a third person owes an obligation to the third person on the basis of unjust enrichment. Further, Deane J said at 147:
‘In the context of such a contractual promise, the requisite intention should be inferred if it clearly appears that it was the intention of the promisee that the third party should himself be entitled to insist upon performance of the promise and receipt of the benefit and if trust is, in the circumstances, the appropriate legal mechanism for giving effect to that intention.’
- None of those explanations of the basis on which the contractor could sue under the policy assists Mineforce. Mineforce did not fall within a class of persons named in the contract. There is no evidence of any expression of intent that the contract would also confer benefits on Mineforce. If there is an argument about unjust enrichment, then it tells against Mineforce, because it is the party that was allegedly unjustly enriched. It is not a valid ground of appeal.
- The alternative argument is that Mineforce is free and clear to enjoy the funds and Mr Basi and other have to pay Mr Murphy from scratch.
- That is, indeed, an alternative argument. It is not a ground for appeal and, as I have already mentioned, it was not a matter that the tribunal had to decide. I have doubts, however, that the alternative argument is a good one: if Mr Murphy directed payments to Mineforce, then there is a strong argument that Mr Murphy ‘received’ the payments but chose to send them on to another entity for his own purposes.
The bargain theory of contract supports the rule, as only parties to a bargain should benefit from, or be burdened by, the terms of the contract. As Mineforce was burdened by the implied term to apply the funds in partial mitigation of a debt owed by Mr Basi to Mr Murphy and Mr Basi benefited by this application of funds, they are both parties to an ongoing contract.
- This submission is simply a restatement, with another label, of arguments I have already addressed. It is not a valid ground of appeal.
What happens according to law is the right thing must be done. Mr Basi has admitted the contact is on foot and he has attempted to evade the contract on a technicality.
- Mr Basi admitted there was a contract with Mr Murphy although he told the tribunal that Mr Murphy was in breach of this contract and the contract was made fraudulently. Whether Mr Basi has attempted to evade that contract was not a matter for the tribunal. The technicality referred to by Mineforce is, in fact, at the heart of this dispute. If, as the tribunal found, there was no contract between Mineforce and Mr Basi, then there was no basis for the tribunal making an order that Mr Basi pay Mineforce.
- There is no reasonably arguable case that the tribunal was in error. Leave to appeal should be refused.
 QCAT Act, s 142(3)(a)(i).
Pickering v McArthur  QCA 294 at .
 Transcript page 1-10, lines 45 – 47.
 Transcript page 1-11, lines 1 – 3; page 1-14, lines 19 – 21; 1-17, and lines 37 – 45.
 Transcript page 1-21, lines 14 – 17; page 1-40, lines 40 – 46.
 Transcript page 1-40, lines 19 – 21.
 Transcript page 1-40, lines 38 – 39.
 Transcript page 1-40, lines 39 – 40.
 Transcript page 1-19, lines 40 – 45.
 Transcript page 1-19, line 47.
 Transcript page 1-20, line 3.
Williams v Bartholomew  EngR 237.
 (1988) 165 CLR 107.
 Auss Metals Pty Ltd v Express Mobile Services Australia Pty Ltd  FCA 745 at  quoting Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1998) 165 CLR 107 at .
 Transcript page 1-15, lines 21 – 41.
- Published Case Name:
Mineforce (Construction Labour) Pty Ltd v Navi Basi
- Shortened Case Name:
Mineforce (Construction Labour) Pty Ltd v Basi
 QCATA 9
Senior Member Stilgoe
25 Jan 2017