Palace Backpackers Australia Pty Ltd v Christensen Industries Pty Ltd
[2002] QDC 84
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- Palace Backpackers Australia Pty Ltd v Christensen Industries Pty Ltd[2002] QDC 84
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Palace Backpackers Australia Pty Ltd v Christensen Industries Pty Ltd[2002] QDC 84
Palace Backpackers Australia Pty Ltd v Christensen Industries Pty Ltd[2002] QDC 84
DISTRICT COURT OF QUEENSLAND
CITATION: | Palace Backpackers Australia Pty Ltd v. Christensen Industries Pty Ltd [2002] QDC 084 |
PARTIES: | PALACE BACKPACKERS AUSTRALIA PTY LTD (Appellant) v. CHRISTENSEN INDUSTRIES PTY LTD (Respondent) |
FILE NO/S: | Appeal 5262/01 Claim No 142 of 2001 |
DIVISION: |
|
PROCEEDING: | Appeal |
ORIGINATING COURT: | Magistrates Court Bundaberg |
DELIVERED ON: | 8 May 2002 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 8 April 2002 |
JUDGE: | McGill D.C.J. |
ORDER: | Appeal allowed in part, judgment sum reduced to $36,177.11, order that the balance of the plaintiff’s claim may proceed to trial, order the appellant to pay two-thirds of the respondent’s costs of the appeal. |
CATCHWORDS: | PRACTICE – Summary Judgment for the plaintiff – r.292 – test to be applied – whether any real prospect of successful defence – excluded for part but not all of claim. PERSONAL PROPERTY – Ownership and possession – whether recoverable in detinue – assessment of damages. TORRENS SYSTEM – Indefeasibility – sale subject to interest of third party in fixtures – whether purchaser obtains titles to fixtures – when remedy in detinue available. TROVER AND DETINUE – whether available – when cause of action arises – measure of damages. VENDOR AND PURCHASER – Title – property sold – chattels on land – whether fixtures – whether property passed to purchaser – when cause of action in detinue arose. Bourseguin v. Stannard Bros Holdings Pty Ltd [1994] 1 Qd.R. 231 – considered CSR Ltd v. Casaron Pty Ltd [2002] QSC 21 – followed. Dey v. Victorian Railways Commissioners (1949) 78 CLR 62 – distinguished. Food Co Management Pty Ltd v. Go My Travel Pty Ltd [2001] QSC 291 – followed. Gaba Formwork v. Turner Corporation (1991) 32 NSWLR 175 – cited. General and Finance Facilities Ltd v. Cook’s Cars (Romford) Ltd [1963] 1 WLR 644 – considered. General Steel Industry Inc v. Commissioner for Railways (1964) 112 CLR 125 – distinguished. McPhee v. Zarb [2002] QSC 4 – followed. University of Wollongong v. Metwally [No.2] (1985) 59 ALJR 481 – applied. Robinson Motors Pty Ltd v. Fowler [1982] Qd.R. 374 – distinguished. Strand Electric and Engineering Co Ltd v. Brisford Entertainments Ltd [1952] 2 QB 246 – considered. Swain v. Hillman [2001] 1 All ER 91 – followed. |
COUNSEL: | M.J. Byrne for appellant R.W. Morgan for respondent. |
SOLICITORS: | Noel Woodall & Associates for the appellant. Baker O'Brien & Toll for the respondent. |
- [1]This is an appeal from a decision of a Magistrate who on 10 October 2001 gave judgment for the plaintiff against the defendant for $42,766.38, including $2,874.66 by way of interest and $1,582 by way of costs, on an application for summary judgment under r.292. A number of matters were raised on behalf of the appellant/defendant.
Background
- [2]It is necessary to explain something of the history of the dispute which led to the action. Following the notorious hostel fire in Childers, loss assessors acting on behalf of the then owner contacted the respondent who provided a quote for doing work to make the premises safe, which included the supply on hire of various items. That was accepted by the then owner by a letter from the owner’s solicitor dated 13 July 2000. The work was completed by 3 August 2000, and an invoice was sent including a reference to the hire of various chattels for a period of three weeks. That invoice was apparently paid. A letter was also sent at the same time claiming continuing ownership of the chattels which were hired.
- [3]Subsequently the premises were sold in their then current state to the appellant. The respondent was aware of the sale prior to settlement, and apparently there was some money owing from the vendor for hire of the chattels up to that time, which the respondent ultimately received. The chattels were not removed on or before settlement, and remained on the land. Some of them were removed by the respondent on 25 January 2001 and the same day a letter was sent which made a demand for the respondent to be able to retake possession on 2 February 2001. However by a letter dated 31 January 2001 from the solicitors for the appellant, the position was clearly taken that possession would only be allowed on various conditions which had been set out in a previous letter of 4 January.
- [4]These conditions included the provision of WorkCover insurance in respect of any persons undertaking the work on the property and a public liability policy for $10,000,000 in the names of the parties jointly; the respondent had to obtain prior consent from the relevant government departments to do the necessary work; the respondent had to remove all of the items used in erecting the relevant items; at least five clear days notice had to be given following production of evidence that the requirements for consent had been satisfied; and the respondent was to be responsible for the restoration and repair to the appellant’s property and premises to the satisfaction of the appellant’s architect “ … caused by your client’s removal of the structure from securing fasteners”. If these were not reasonable conditions (and I infer the Magistrate concluded that they were not) then this was tantamount to a refusal.
Judgment beyond statement of claim
- [5]It was first submitted by the appellant that there was no jurisdiction to give judgment for the amount awarded because it was more than the amount claimed in the statement of claim. The claim however sought recovery of possession of certain goods or damages not exceeding the jurisdiction of the court for their detention. There is no jurisdiction in the Magistrates Court to order the specific return of goods, but the plaintiff pleaded the elements of a cause of action in detinue for which the traditional judgment is one for recovery of either the goods or their value: Fleming “The Law of Torts” 9th ed., 1998, p.76. If the plaintiff had a good cause of action in detinue, it was entitled to the value of the goods at the date of judgment together with consequential loss, including in the case of goods lent out by the plaintiff on hire, the amount ordinarily charged for the hire of such goods during the period when the defendant’s possession was wrongful: Fleming p.77.
- [6]In the present case the statement of claim which was attached to the claim pleaded the value of the goods, and the hire rate in respect of them, and claimed an amount calculated up to just before the claim and the statement of claim were filed. The Magistrate when giving judgment brought this figure up to the date of judgment. The appellant’s objection is that this ought not to have been done because it resulted in a judgment for more than the amount claimed in the statement of claim.
- [7]This is not a matter which took the judgment outside the jurisdiction given by r.292; that rule operates by reference to the plaintiff’s claim or part of the claim, and the plaintiff’s claim as identified in the Claim was for an amount up to the jurisdiction of the court. Nevertheless, judgment ought not to be given for more than the amount claimed in the statement of claim. In such circumstances, unless the statement of claim made it clear that there was also claimed an amount accruing at a particular rate until the date of judgment, the correct procedure is for the statement of claim to be amended to bring the claim up to date prior to the time when the judgment is given. In the present case no amendment was made by the Magistrate, but I was told that this point was not taken before the Magistrate. I do not doubt that if it had been taken before the Magistrate it would have resulted in an application to amend the statement of claim which would have been successful. Accordingly, the point is not one which ought to be entertained for the first time on appeal: University of Wollongong v. Metwally [No.2] (1985) 59 ALJR 481 at 483. Accordingly, in my opinion, this submission should not be entertained on appeal. Had it been necessary to do so, I would have given the plaintiff leave to make the appropriate amendment to the statement of claim.
Nature of claim
- [8]It was next submitted that the Magistrate had given judgment on a restitutionary basis when the respondent’s cause of action was properly in detinue (or perhaps conversion). It is true that the Magistrate at one point stated that the defendant had been unjustly enriched at the expense of the plaintiff, but I would interpret that as a general comment on the merits of the case rather than as an attempt by the Magistrate to define the nature of the cause of action on the basis of which he was giving judgment. In any case, the law as to the assessment of damages for detinue has developed with a strong restitutionary element. Strand Electric and Engineering Co Ltd v Brisford Entertainments Ltd [1952] 2QB 246 at 255; Fleming, op cit, p.77.
Fixtures
- [9]The next matter which was raised on behalf of the appellant was that the chattels in question had become fixtures prior to the time when the defendant acquired title to the land. There was evidence that the various items had been used in the process of making the premises safe following the fire. There was, however, no evidence that the items had become fixtures as a result of that use of them. The question of what is a fixture can be a matter of some complexity. It depends on all the circumstances of the case: Hawkins v Farley [1997] 2 Qd R 361 at 367. The fact that the work was undertaken for the temporary purpose of making safe the premises pending more substantial repair, or demolition, may well be relevant to the determination of that question: Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700 at 712. The fact that the chattels were hired is not, however, of any consequence: Bank of Melbourne Ltd v CBFC Leasing Pty Ltd (Writ 937/91, McPherson SPJ, 18-6-91, unreported). Before that question arose, there would need to be some proper evidentiary basis put forward by the appellant to show that there was at least some reasonable prospect that if there were a trial a court might conclude that the chattels in question had become fixtures as a result of the work done by the respondent prior to the time when the appellant purchased the land. In the absence of such evidence from the appellant, the issue of whether the relevant chattels had become fixtures simply did not arise in this matter.
- [10]In any case, in my opinion it would have made no difference if the appellant had been able to show that the items concerned were fixtures. It is clear from the correspondence pursuant to which the work was done by the respondent for the previous owner that the respondent was intending to retain ownership of the chattels in question and in particular was asserting a right to remove them at the conclusion of the period of hire. If in spite of this the chattels became fixtures because of their degree of annexation, nevertheless as a result of the contract between the parties there would have arisen an equitable right in the respondent to sever and remove the fixtures. Ordinarily such a right would not survive against a purchaser of the freehold because a purchaser would take title free of any such claim pursuant to the Land Title Act 1994 s.184.
- [11]However, in the present case there was evidence[1], in the form of a facsimile from the former owners’ solicitor dated 1 November 2000, the day before settlement, that the only basis upon which the vendor was prepared to proceed with settlement was that the appellant acknowledged that the items the subject of the hire agreement did not form part of the property sold. There is no evidence offered by the appellant that the sale proceeded on any other basis, so the appropriate conclusion is that that remained the vendor’s attitude up to the time of settlement. Assuming that the goods had become fixtures and an equitable right to sever the fixtures had arisen in favour of the respondent, the effect of this was that the vendor was offering to settle only on the basis that the respondent’s rights in the property, which if they were fixtures meant the equitable right to sever and remove them, was recognised by the appellant. If the appellant therefore proceeded with the settlement, it came under an equitable personal obligation enforceable against it notwithstanding the indefeasibility provision in the Land Title Act: Bourseguin v. Stannard Bros Holdings Pty Ltd [1994] 1 Qd.R. 231. Accordingly even if the chattels in question had become fixtures prior to the date when the appellant acquired title to the land, the respondent’s equitable right to sever and remove the fixtures was preserved as against the appellant. It is therefore irrelevant whether or not the goods the subject of the hire agreement had become fixtures.
Immediate right to possession
- [12]The next argument advanced on behalf of the appellant was that the respondent had not shown an immediate right to possession of the goods, because there were various restrictions on doing things with the property because of its heritage character. But those were restrictions operating on, or principally on, the owner, and did not affect either the title of the respondent to the goods or its right as against the appellant to possession of them. As between the parties, the respondent had an immediate right to possession of the goods. Even if there was some legislative restriction about what the appellant could do with the property, it did not require that it be supported or made secure with the respondent’s goods, or interfere with the respondent’s proprietary right in those goods. I am not aware of, and was not referred to, any principle which would entitle the appellant to retain, without the consent of the respondent, the respondent’s property in order to enable the appellant to satisfy its legal obligation to secure the premises from further damage. Obviously as a practical matter other equipment or other means could be substituted. The appellant was unable to cite any authority in support of the proposition that it had a right to continue to use the respondent’s property in these circumstances.
Exception to nemo dat rule
- [13]It was submitted that the Magistrate had failed to consider an exception to the nemo dat rule where the appellant was a purchaser in good faith acting honestly. Reference was made to Robinson Motors Pty Ltd v. Fowler [1982] Qd.R. 374. That case concerned provisions of the Sale of Goods Act 1896 and the Factors Act 1892 which do not appear to me to be applicable in the present circumstances, but in any case there was no evidence from the appellant that the vendor had by a contract with the appellant purported to sell any of this property and it is clear from the facsimile to which I have previously referred that prior to settlement the vendor had made clear that she was not purporting to pass title in the property. Clearly therefore there is no substance to this argument.
Estoppel
- [14]It was further submitted that the respondent was estopped from asserting its rights to the goods, either generally or at least until the appellant had ceased to want them. This was on the basis of a conversation deposed to on 1 November 2000 (the day before the date of settlement of the sale) in which it is alleged that a representative of the respondent told the representative of the appellant:
“Just let us know when you are finished with the gear, when you are finished we can come and get it”.
This part of the conversation was disputed on behalf of the respondent, but assuming that was said, and that it ought properly to be interpreted as a representation to the effect the appellant could keep the goods in question as long as it liked (notwithstanding that the appellant had just made it clear that it was not proposing to pay any hire charges on the goods), estoppel will only arise if the appellant has, in reliance on such a representation, so acted that it would now be unjust to allow the respondent to resile from that position because in such circumstances the appellant would suffer detriment: Grundt v Great Boulder Ply Gold Mines Ltd (1937) 59 CLR 641 at 674 per Dixon J. There was no evidence of such detriment.
- [15]It was submitted that as a result of the representation the appellant had passed up an opportunity to negotiate a different basis of settlement of the contract with the vendor, but, particularly in the light of the facsimile from the vendor’s solicitors to which I have already referred, such a prospect seems to me to have been fanciful. It is certainly not something which suggests any real possibility of the appellant’s successfully defending the claim in this way, by showing that the respondent is estopped from asserting its title to the goods, or its right to immediate possession of them. In my opinion there is clearly no substance to the estoppel argument
Quantum
- [16]It was also submitted that there needed to be a trial because there was a dispute as to the value of the chattels. It is true that the representative of the appellant claimed that the value of the chattels was grossly inflated, but there was no evidence of any basis upon which he was qualified to express an opinion on the value of this material, and no other evidence of their true value. I accept that it would not be necessary for the appellant to show very much in order to show that it was appropriate to have a trial on the basis that there was some real dispute as to the true value of the property, but in my opinion the appellant needed to do more than this properly to raise that issue, and the Magistrate was entitled to take the view that no real issue as to quantum in respect to the value of the property had been shown.
Test for summary judgment
- [17]Accordingly, the Magistrate was entitled in my opinion to come to the view that the appellant had no real prospect of successfully defending the respondent’s claim against it in detinue. Indeed, in my opinion, on the material before him that was the appropriate conclusion. There was also no need for a trial in relation to the entitlement of the respondent to recover the value of the chattels in question. That is the appropriate test now under r.292, and that test, and no other, ought to be applied when considering an application under that rule: Swain v. Hillman [2001] 1 All ER 91; Food Co Management Pty Ltd v. Go My Travel Pty Ltd [2001] QSC 291; McPhee v. Zarb [2002] QSC 4; CSR Ltd v. Casaron Pty Ltd [2002] QSC 21. In McPhee Wilson J said that the new test on an application under this rule calls for a more robust approach by the court, consistent with the overriding purpose of the Uniform Civil Procedure Rules.
- [18]In my opinion, this is a different test from that formulated by the High Court in Dey v. Victorian Railways Commissioners (1949) 78 CLR 62 and General Steel Industry Inc v. Commissioner for Railways (1964) 112 CLR 125, which is the test applicable to an application under r.171 of the Uniform Civil Procedure Rules to strike out a pleading or part of a pleading, and even then only applies in circumstances where the striking out is to be without liberty to replead (that is, where the deficiency is not simply one of pleading). In my opinion those decisions reflect a very different test from that now established under r.292.
Loss of Hire
- [19]A successful plaintiff in a detinue action is also entitled to recover damages for loss of use of the chattels detained. Where they were chattels ordinarily let out on hire by the plaintiff, the appropriate measure of damages for loss of use is the normal hiring rate, regardless of how much use the equipment would otherwise have had: Fleming p.77. This approach is supported by both English[2] and Australian[3] authority and may be taken to be clearly established. What is less clear however is whether the Magistrate was right to award the amount of hire charge calculated over the whole period for which the appellant was in possession of the goods, rather than just for the period when the cause of action was in existence. The cause of action in detinue does not arise until there has been demand and refusal.
- [20]The remedies available in detinue were discussed in General and Finance Facilities Ltd v. Cook’s Cars (Romford) Ltd [1963] 1 WLR 644, and although this particular issue was not dealt with expressly in the course of the reasons for judgment, the approach in that case is consistent with the entitlement to damages arising only from the date of the refusal. On the other hand, in Strand Electric and Engineering Co Ltd v. Brisford Entertainments Ltd [1952] 2 QB 246 at 225, Denning LJ said in the course of his judgment that the hire period ran from the time when the defendant first came into possession of the goods. There was some discussion of the appropriate approach to a judgment for detinue in these circumstances in Gaba Formwork v. Turner Corporation (1991) 32 NSWLR 175, but it appears that the one
point which was not touched on in the course of that judgment was the question of the date from which hire charges as damages should be calculated.
- [21]No doubt this is an unusual situation, because commonly the defendant’s possession of the goods would have been wrongful from its inception. The present case however may be different; the goods were present on the property when it was purchased by the appellant, and there was no obligation merely because of that to return the goods to the respondent. There was no contract between the parties giving rise to a contractual entitlement to obtain remuneration for the use of the goods. Although the appellant had apparently continued to use the goods because they were still being used as part of the continuing process of making the remains of the building safe and secure, there would be no room for an implied promise to pay a reasonable remuneration for goods in circumstances where the appellant had expressly said it would not pay for the goods. That this was included in the conversation on 1 November 2000 appears from both the versions of that conversation. At that point it was open to the respondent to demand the return of the goods, as indeed the respondent did not all that long thereafter, in January 2001, and, once the appellant refused to deliver the goods in response to that demand, the cause of action in detinue arose: The Premier Group Pty Ltd v Followmont Transport Pty Ltd [2000] 2 Qd.R. 338 at 344. That, in my opinion, gave rise to an obligation to pay for the goods thereafter.
- [22]There was in my opinion no conversion of the goods prior to this time, so as to found an argument that the goods had been wrongfully applied by the appellant to its own use. To the extent that the goods had been applied to securing the building, that was done before the appellant had obtained possession of the land. In my opinion, there is an important distinction between such a situation and one where a defendant does something to apply to its own use a chattel which has been left behind on land, or does something which could be characterised as acceptance of the benefit of the chattel. Insofar as there was a benefit which the appellant received from the use of these chattels, it was a benefit which in a sense the appellant had thrust upon it. It is by no means clear to me that there was anything done by the respondent which amounted to free acceptance of the benefit of the chattels, in the relevant sense; the contrary is at least arguable. But once there was a demand for their return and a refusal of that demand, continued possession became wrongful and there was a liability to pay by way of damages the hire charge which would otherwise have applied for the chattels.
- [23]It appears that the relevant dates are 25 January 2001 for the demand, and 31 January 2001 for the refusal. The respondent submitted that there was an earlier refusal in the letter of 4 January 2001 from the solicitors for the appellant. But there is no evidence of a prior demand for possession of the chattels (as distinct from a demand for payment of hire charges) and there must be both demand and refusal to give a cause of action in detinue. It is therefore not clear on the present evidence that the cause of action arose prior to 31 January 2001. Accordingly, the respondent was entitled to recover as damages for a loss of use of the chattels what it would have reasonably charged as hire for them during the period from 31 January 2001 to the date of judgment. That amount was included in the sum for which judgment was given.
- [24]That judgment however also included hire for the period from November 2000 to 31 January 2001. Whether the claim is based on an entitlement to damages at law, or an entitlement to restitution, in my opinion it is certainly arguable that the defendant is not liable in respect of the period prior to 31 January 2001, so I could not be satisfied on the present evidence, and with the benefit of such argument as to the law as I have had, that the appellant has no real prospect of successfully defending that part of the respondent’s claim. Indeed, my present view is that the appellant is not liable for that part of the respondent’s claim, but the contrary is at least arguable, and that is not a matter which should be decided on an application under r.292. The position therefore is that the Magistrate in my opinion ought not to have been satisfied that there was no real prospect of the appellant’s successfully defending that part of the respondent’s claim. The Magistrate ought to have directed that the matter proceed to trial in relation to that part of the respondent’s claim. Accordingly, the appeal should be allowed in respect of that part of the respondent’s claim, and the judgment reduced accordingly.
- [25]I should say that it is not clear that this is a point which was separately argued before the Magistrate, and he may well have been left with the impression that the only issue was whether or not hire charges for the relevant period (whatever that was) represented the appropriate measure of damages. However, the point is not one which might have been met by the respondent had it been raised then, so there is no obstacle to its being raised on appeal.
- [26]Some of the items, some tilt props and a universal beam, were returned on 15 December 2000, and in my opinion judgment for hire charges in respect of those items ought not to have been included in the summary judgment. They were, and represent part of the sum of $1,987.83 and all of the sum of $521.90. The balance of the sum of $1,987.83 was in respect of hire charges on those tilt props which were ultimately not returned in the period from 2 November 2000 to 15 December 2000, and that ought not to have been recovered either. Those 14½ props were the subject of a further claim in respect of the period from 15 December 2000, and a period of seven weeks of this ought not to have been allowed. At $8.45 per week, that comes to $61.25. In addition, claims for roughsawn hardwood at $150 per week and barricade mesh at $5 per week for the 13 weeks from 2 November 2000 to 31 January 2001 ought to have been deducted, in the sums of $1,950 and $65 respectively. Accordingly, the judgment was for $4,585.98 more than it ought to have been.
- [27]Interest was awarded by the Magistrate at 10% for a period from 2 January 2001. Interest was calculated separately on the amount recovered for the value of the chattels, and the amount representing the notional hire charges, but apparently for the same period, from 2 January 2001. The amount of the hire charges was actually an accruing loss which ought to have commenced from 31 January 2001 and run to the date of judgment, 10 October 2001, a period of 36 weeks. Because the loss was accruing over that period, interest should have been calculated for the amount of the loss at half the normal rate, so the interest ought to have been allowed on $12,452.14 at 5% for 36 weeks. This I calculate at $431. Accordingly the interest amount ought to have been this figure plus the interest which ought to have been allowed on the amount allowed for the value of the goods (for a period of 32 weeks from 31 January 2001), $1,419.37, to give a total of $1,850.37 interest.
- [28]The Magistrate also awarded costs of the action, whereas on the view I take of the appropriate outcome the only costs that ought to have been awarded were the costs of the application. That would be Item 16 ($196), 6b ($114), 6j ($193) and 6i ($100), a total of $603. Accordingly the judgment which ought to have been given including interest and costs ought to have been in the sum of $36,177.11.
- [29]Accordingly, I order as follows:
- Appeal allowed in part
- Judgment in the Magistrates Court at Bundaberg on 10 October 2001 varied by substituting for the sum of $42,766.38 the sum of $36,177.11.
- Direct that the balance of the plaintiff’s claim may proceed to trial.
- Order that the appellant pay two thirds of the respondent’s costs of the appeal to be assessed.