Hopkins v Baglin[1998] QDC 312

[Before McGill DCJ]

[William John Hopkins & Pauline Elvina Hopkins t/a Bullett Engineering v. S.W. Baglin & E.M. Baglin]

BETWEEN:

AND:

JUDGMENT

BETWEEN:

AND:

REASONS FOR JUDGMENT - McGILL D.C.J.

Delivered the 18th day of November 1998

This is an application to dismiss for want of prosecution an appeal to the District Court at Southport from a decision of a Magistrate striking out the appellants' action against the respondents. The Notice of Appeal was filed on 4 November 1997, and the Entry of Appeal on 14 January 1998, but no Outline of Argument on behalf of the appellant was filed as required by the practice direction, and on 25 September 1998, the respondents applied on summons for the appeal to be struck out. When that application came on before me on 30 October 1998, the appellants promised to file an outline of argument within the immediate future, but the respondents sought to support the application on the ground that further time should not be allowed since the appeal was hopeless anyway. I adjourned the application to give the appellants the opportunity to have counsel appear and argue in response to this ground, which occurred on 5 November 1998 at Brisbane. Notwithstanding his submissions, I am satisfied that the appeal is hopeless, and in these circumstances it is appropriate that it be struck out for want of prosecution, notwithstanding that a document called “Appellants Outline of Argument” has now been filed. That document is in any case inadequate as an outline of argument; it does no more than give a brief history of the litigation, and identify two points sought to be raised in the appeal.

The dispute, the subject of the action, started a long time ago and there has been already a good deal of litigation arising out of it. The claim was for repair work carried out by the appellants in or before June 1992 on a vessel “Keno Runner”, pursuant to an agreement alleged to have been made in April 1992. The appellants commenced proceedings in the District Court at Southport in 1992, and the matter went to trial on an amended plaint filed in that court on 5 July 1993, although apparently at a later time the action was remitted to the Magistrates Court. In the amended plaint it was alleged that the work was carried out by the plaintiff's pursuant to an agreement with a Mr. Abela who was the first defendant in the action (i.e., in contract), although there was an alternative allegation that the work was carried out for him at his request, and that the same amount as was sought under the contract was sought on a quantum meruit as reasonable renumeration for the work done. It was then alleged “further or in the further alternative” that the agreement was made by the first defendant as a servant or agent of the second defendants, Mr. & Mrs. Baglin who are the respondents in the current appeal. It was also claimed against them, as an alternative to liability under the agreement, that they were liable on a quantum meruit, by reason of the fact that the work was done at the request of the first defendant as their servant or agent.

The matter proceeded to trial in the Magistrates Court, and judgment there was given against the defendants in the amount of $33,118.06 inclusive of interest and costs. The trial occupied some five days, and after the first three days the counsel and solicitors appearing for the defendants withdrew, the first defendant appeared on his own behalf, but the second defendants were not present in person or represented. The judgment was ultimately given against the first defendant on the merits, and against the second defendant in default of appearance at the trial.

An appeal was brought to the District Court from this decision by both the first and second defendants in that action. On 15 September 1995 his Honour Judge Newton allowed the appeal, set aside the judgments and ordered that the matter be retried in respect of the claims against all defendants.

The judgment was set aside on appeal against the second defendants because they may not have been aware of the need to appear on the fourth day, which was after an adjournment, and may not have been aware that their solicitors were no longer going to act for them. The appeal against the first defendant was allowed because his Honour considered that the Magistrate ought to have granted an adjournment sought by the first defendant, for reasons which need not be gone into because his Honour's decision in this respect was subject of an appeal to the Court of Appeal by the plaintiffs (the present appellants) which was successful. The reasons of the Court of Appeal indicate that the second defendants were not a party to that appeal. Accordingly, the judgment given by the Magistrate against the first defendant was reinstated.

The first defendant on the appeal raised the proposition that the plaintiffs, by electing to take judgment by default against the second defendants, had lost their right to judgment on the merits against him, relying on the authority of Petersen v. Moloney (1951) 84 CLR 91. The Court held that that argument could not succeed, on the basis that the judgment against the second defendants had been set aside. At p.10 of its reasons it said that the liability of the first defendant and the second defendants was, properly speaking, alternative, that having succeeded in obtaining judgment on the merits against the first defendant, it may not then have been open to the plaintiffs to have obtained judgment in default against the second defendants, but that that judgment had been set aside and “the plaintiffs have now elected not to pursue it”. There was therefore no obstacle in that decision to the plaintiffs' retaining a judgment against the first defendant. The Court noted that no orders were sought with respect to the second defendants and continued:

The Court, however, went on to deal with costs as follows:

On 26 November 1996, the Court of Appeal amended the amount of the judgment against the first defendant which was restored by its order, and ordered that its earlier order be amended to include an order “that the first respondent (first defendant) pay the costs of the appellants (plaintiffs) and of the second respondents (second defendants) of and incidental to the appeal to the District Court to be taxed”.

The costs which the plaintiffs were ordered to pay to the second defendants were the costs of the appeal to the District Court and the costs of the previous Magistrates Court trial. As appears from part of the transcript of the argument in the Court of Appeal which I was shown on 5 November, McPherson J A, during argument, pointed out that if there was to be a new trial as against the second defendants, the appropriate order in respect of their costs would be that the costs of the first trial and the costs of the appeal (to the District Court) would await the outcome of the second trial. But that order was not made; rather, the order made initially had the effect that the plaintiffs were entitled to recover from the first defendant the costs of the appeal to the District Court, and the costs of the first Magistrates Court trial which had been ordered to be paid by the plaintiffs to the second defendant, and, following the amendment, an order that the first defendant pay the costs of the appellant and of the second respondents (second defendants) of and incidental to the appeal to the District Court to be taxed. These orders, which are appropriate when defendants have been properly sued in the alternative, and therefore the action succeeds against one but fails against the other, would not have been appropriate had the Court contemplated that the action would be proceeding against the second defendants, and were really only appropriate on the basis that, as the Court of Appeal said in its reasons at p. 10, “the plaintiffs have now elected not to pursue it”, i.e., a judgment against the second defendants.

I was told that in the course of argument in the Court of Appeal it was indicated that the plaintiff was not abandoning the claim against the second defendants in quantum meruit. I was shown part of the transcript, but it seems to me that what was recorded there was an argument that the principle in Petersen v. Moloney did not apply to claims in quantum meruit. As argued before me, it was submitted that the fact that there was a judgment against the first defendant on a contract was not a bar to a claim against the second defendant which was not on the contract, but which was based on unjust enrichment. Counsel for the appellants referred to the existence of a claim in quantum meruit in the existing pleadings, and foreshadowed an intention to apply to amend the pleading to claim on a wider basis of unjust enrichment in the alternative.

The Claims as Pleaded

I think this argument needs to be approached one step at a time. The first step is to consider the position on the pleadings as they stand. The action as pleaded was in contract or, in the alternative, on a quantum meruit, on the basis of a request by the first defendant. The Magistrate found that the first defendant was liable, although his reasons do not disclose with any clarity whether that finding was on the basis of contract or quantum meruit. For present purposes it does not matter; the plaintiff could only succeed against the first defendant on the basis that, whatever he did (whether it was entering into a contract or making a request) he did as principal rather than as agent for the second defendants. If he did it as principal, it necessarily followed that he did so do it as agent for the second defendants, so they could not be liable on the case pleaded. In that sense, as the Court of Appeal pointed out, the claims against the defendants were in the alternative: p.10. In Petersen v. Moloney the Court, in a joint judgment, said at p.102:

There were authorities cited, and there was some analysis of the origin of the rule which, for present purposes, does not matter, in my opinion, since it is plainly not confined to cases of co-contractors, as the Court pointed out at p.103.

In that case, the plaintiff sued the first defendant for the price payable under a contract for the sale of land, and in the alternative, claimed against a person to whom the first defendant said he had paid the purchase money on behalf of the plaintiff, to recover the money as money received by him on her account. Plainly the two defendants were not co-contractors, but equally plainly the liability was in the alternative. Indeed, one claim was in contract, and the other in quasi-contract, or as it is now known, in restitution. At trial the plaintiff succeeded against the second defendant, but not against the first, on the basis that the second defendant had had authority to receive the money on behalf of the plaintiff. On appeal it was held that the finding that the second defendant had the authority of the plaintiff to receive the money was unjustified and ought to be set aside. After the trial the plaintiff had entered judgment against the second defendant, and the question was whether the plaintiff was permitted on the appeal to maintain “that the judgment against that defendant should be discharged and that judgment should go against the other defendant”: p.103. Accordingly, the case was not one where the plaintiff was seeking a judgment against both defendants. The Court held that the rule did not preclude it from giving judgment against the first defendant, having first discharged the existing judgment and substituted a judgment in favour of the second defendant in respect of the plaintiff's claim against him. That was done on the basis that, on the High Court's analysis of the evidence, that was the right result as between the three parties. It was not the case that the plaintiff merely wanted the existing judgment discharged so as to obtain judgment against the other defendant.

When this matter was before the Court of Appeal, the argument that the claim against the first defendant was barred by the fact that there had been a judgment against the second defendant therefore could not be maintained because that judgment had already been set aside, and the plaintiffs were not seeking to reinstate it. Indeed, according to the Court of Appeal, they elected not to pursue it. They were therefore, at least in the Court of Appeal, in the same position as the appellant in Petersen v. Moloney, who was not asking for a judgment against both defendants: p.103. In this case the judgment against the first defendant remains, and because on the pleadings the first and second defendants were properly regarded as liable only in the alternative, the principle in Petersen v. Moloney, in my opinion, does properly stand as a bar to the plaintiffs' pursuit of the claim pleaded against the second defendants. This does not depend on whether it is the same or a different cause of action, but is because the claims are properly regarded as alternative claims. The true principle in Petersen v. Moloney, in my opinion, is that there cannot stand together judgments on claims which are properly regarded as alternatives: Cairns “Australian Civil Procedure” (4th ed, 1996) p.311.

Indeed, if there were a further trial as against the second defendants, they would be entitled to argue that they were not liable to the plaintiffs, on the cause of action pleaded, because the first defendant had done whatever he had done as principal and not as their agents. They would be bound to succeed on that assertion, because that issue has already been found in an action to which the appellants and the respondents were parties (the action in the Magistrates Court) which resulted in a judgment (against the first defendant) a necessary element of which was the conclusion that the first defendant contracted as principal (and therefore not as agent). There would therefore be, at least so long as that judgment remains in place, an issue estoppel against the appellants preventing them from seeking to allege against the respondents that, in respect to the cause of action currently pleaded, the first defendant was not their agent: Blair v. Curran (1939) 62 CLR 464 at 531; Sandtara Pty Ltd v. Abigroup Ltd (1997) 42 NSWLR 5.

It therefore necessarily follows from the circumstance that, in the Court of Appeal, the plaintiffs elected to take, that is to say have reinstated, their judgment against the first defendant, that they thereby abandoned any claim against the second defendants which was properly characterised as a claim in the alternative. That the claim then pleaded was properly so characterised is, in my opinion clear, but in any case it has been so characterised by the Court of Appeal, which is binding on me as well as the parties to these proceedings. So far as the cause of action currently pleaded goes, the Magistrate acted quite properly in striking out the plaintiffs' claim, in the order under appeal. On the current pleadings, the appeal is hopeless because the plaintiffs, having in the Court of Appeal elected not to pursue the second defendants, cannot now go back on that election because it proved (because of the inability to execute the judgment against the first defendant) to have been one where they chose an unprofitable course. One other consequence of that election was that they obtained orders for costs in the Court of Appeal which would not have been made had that Court expected that the claim against the second defendants was to be pursued. That shows that that Court understood the plaintiffs to be electing not to pursue any claim against the second defendants.

That does not mean that if they had elected to pursue the second defendants instead they would necessarily have done any better; in respect of that cause of action if the second Magistrate came to the same conclusion as the first Magistrate, they would still have failed. If they had elected not to take the judgment against the first defendant, it would however have been open for them to have alleged in a new trial that the first defendant acted as the second defendants agent. It is, however, unnecessary to consider that situation, since that is not what occurred. It is clear law that once an election has been made it cannot be revoked: Commonwealth of Australia v. Verwayen (1990) 170 CLR 394 at 421.

Proposed New Claim

It is then necessary to consider whether the situation is any better if the plaintiffs seek to overcome this difficulty by seeking to amend. In my opinion, in circumstances where the existing claim is one that should be struck out, an action should not be left on foot on the basis of no more than a foreshadowed intention to amend at a later date. There was no cross-application to amend before the Magistrate. In the present case it is not now appropriate to send the matter back to the Magistrates Court in order to enable the plaintiffs now to apply for leave to amend, because any claim now made will be statute barred. The relevant work was done between April and June 1992, according to the pleading, and there was a finding that by July 1992 that the boat had been finished: p.9.

It was submitted that the proposed claim was for unjust enrichment, and that there was no limitation period. Section 10(1) of the Limitation of Actions Act 1974 provides a limitation period of six years for “an action founded on simple contract or quasi contract or in tort where the damages claimed by the plaintiff do not consist of or include damages in respect of personal injury to any person.” It was submitted that there was no limitation period in respect of a claim in equity, and that a claim in unjust enrichment was an equitable claim. This is wrong in two respects; in my opinion in so far as there is an action which properly bears the label of unjust enrichment, it is an action in law and not an action in equity. Furthermore, s.27 of the Limitation of Actions Act provides that there is not a period of limitation in respect of an action in fraud or for fraudulent breach of trust by a beneficiary under a trust against the trustee, or an action to recover trust property. Otherwise actions by a beneficiary to recover trust property or in respect of a breach of trust as subject to a limitation period of six years: ss.(2).

Deane J said in Pavey & Matthews Pty Ltd v. Paul (1987) 162 CLR 221 at 256-7:

That judgment was the subject of general agreement by two of the other members of the Court (p.227) and is generally regarded as the authority in this field. On p.256 his Honour also said:

In my opinion, his Honour's judgment makes abundantly clear the proposition that he is speaking of recovery at law, and by a cause of action which falls within the category which was commonly described as “quasi contract”, and is therefore within the limitation period of six years. Any such claim therefore now is statute barred.

It is also clear from his Honour's judgment that the existence of an enforceable contract in respect of the doing of the work is necessarily fatal to such a claim. The same emerges from a passage in the judgment of the majority in the Court of Appeal in Pohlmann v. Harrison [1995] 2 Qd.R. 59 at 62:

See also Gino D'Allessandro Constructions Pty Ltd v. Powis [1987] 2 Qd.R. 40 at 59.

If, in the present case, the work the plaintiff did was done pursuant to a contract with the first defendant, that contract is just as much a bar to a restitutionary claim against the second defendants based on unjust enrichment as it would have been a bar to a restitutionary claim against the first defendant. The fact that the first defendant has not paid and is insolvent is irrelevant; the contract was enforceable, as established by the fact that it has been enforced by judgment. Unfortunately the Magistrate did not expressly say whether or not he found a contract, but in my opinion it would not matter if the situation was that the plaintiffs did the work at the request of the first defendant. In those circumstances they are doing the work on the basis that the first defendant would pay for it, and in that situation any enrichment of the second defendants by virtue of their ownership of the boat at some stage was not unjust, regardless of the terms on which they acquired it from the first defendant. The plaintiffs chose to do work in respect of which they extended credit to the first defendant, and in that situation if the first defendant proves to have been a bad credit risk, they cannot recover from someone else who obtained a benefit from the doing of the work.

If there was a contract between the plaintiffs and the first defendant, then in my opinion any claim based on unjust enrichment is bad in law. If there was not a contract but the work was done at the request of the first defendant (and one or other of these things must have been found by the Magistrate at the first trial to sustain a judgment against the first defendant), the position is probably not as clear, in the sense that there are no statements in the leading case in the High Court and a judgment of the Court of Appeal which say in effect that the plaintiffs must fail, but in my opinion that is the correct view of the law, and I think the position is fairly clear. Even if that were not enough in the ordinary case to justify striking out such a pleading, the claim at best is marginal, if there is a claim it is statute barred, there has been one trial already where the issue was not raised and the relevant facts were not ventilated, and the plaintiff elected in the Court of Appeal not to pursue a judgment against the second defendants, and obtained thereby reinstatement of a judgment and an order for costs, so there are compelling discretionary reasons for not allowing the plaintiffs at this stage to amend to raise fresh issues for the purposes of a second trial.

There is provision for amendment of the statement of particulars of claim in Rule 100 of the Magistrates Courts Rules, but on the face of that rule nothing which would expressly approve an amendment which would have the effect of adding a fresh cause of action outside the limitation period. Leave is required by Magistrates Court Rule 100 (2) to make an amendment which adds a new cause of action and such leave should ordinarily be refused when the proposed new cause of action is statute barred: Lynch v. Keddell (No. 2) [1990] 2 Qd.R. 10 at 12. It follows that there would be no point in now allowing the action to be revived for the purpose of making an application to amend the pleadings in the Magistrates Court; it would not be right to amend to add a fresh claim which is statute barred.

There is some irony in the circumstance that this particular difficulty has arisen only because the appellants failed to pursue their appeal with reasonable diligence, since the statute did not run until after the Notice of Appeal had been filed. But it has run now, and any application now made to amend should be doomed for that reason. In any case, the action foreshadowed had so many difficulties that it is, I think, a kindness to the appellants to prevent them from spending any more money on litigating this matter. It may well be most unfortunate for them that they did a lot of work for which they have not been properly paid, but that in itself does not justify the continuation of these proceedings.

In my opinion, however the matter is viewed, it is clear that the plaintiffs' claim is doomed. The Magistrate was right to strike it out, and the appeal, if it were allowed to proceed, is equally in my opinion, doomed to failure. There has been inordinate and unexplained delay in prosecution of the appeal, notwithstanding a number of reminders, and I am satisfied that there is jurisdiction to dismiss an appeal for want of prosecution, on the ground that such jurisdiction must be implied when a court is given an appellate jurisdiction: see R v. His Honour Judge Noud, ex parte MacNamara [1991] 2 Qd.R. 86 at 93. In the light of the circumstances to which I have referred it is, in my opinion, right to exercise that jurisdiction in the present case. The appeal is therefore struck out.

I order the appellants (plaintiffs) to pay the respondents (second defendants) costs of and incidental to the application and the appeal to be taxed.