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Master Club Consultants v Stanbritt & ANOR

MASTER CLUB CONSULTANTS PTY LTD V STANBRITT PTY LTD & ANOR [2000]

Supreme Court of the ACT – 18 February 2000

FACTS

Master Club issued proceedings against Stanbritt alleging damages for an alleged repudiation of a management consultancy contract. This proceeding followed a similar proceeding that had been issued by a director of Master Club and discontinued with an order that the director pay costs to Stanbritt.

Stanbritt had only received half the costs owing by the director of Master Club and was concerned that Master Club would be unable to pay Stanbritt’s costs if it successfully defended this proceeding. Stanbritt therefore issued an application for security of costs.

Master Club failed to provide any evidence to the Court about its financial position. Stanbritt were able to prove that Master Club had a share capital of $12 and was not the registered owner of any property.

ISSUE

Should the Court make an order that security of costs against Master Club?

FINDING

The Court ordered that Master Club provide security for costs of $30,000.00 within 21 days and that the proceeding be stayed until the security was provided.

QUOTE

Master Connolly said:

“The defendant applicant in this matter has established that the company has a very limited paid up capital and no identifiable assets.

It has established that a costs order in related litigation remains unpaid in full.

That is not sufficient evidence, but does establish creditable grounds for suspicion. An affidavit stating that the company is in a position to meet debts as they arise would however effectively meet this evidence.

Where the company has chosen not to put any evidence, and has resisted disclosing any information relating to its financial affairs, it seems to me that the adverse inference can be drawn from this, together with the evidence positively adduced by the defendant applicant, is sufficient to satisfy me that there is reason to believe that the corporation would not be able to pay any costs order, and a sufficient basis is established for an order for security of costs.”

 IMPACT

While the applicant making an application for security of costs has the burden of proving that the Plaintiff may not be able to pay costs, the Plaintiff is obliged to provide evidence that that the Plaintiff may be unable to pay costs.

Home Management Maintenance v Doyle

HOME MANAGEMENT MAINTENANCE PTY LTD V. DOYLE [1992] ACTSC 44

Supreme Court of the ACT – 13 May 1992

FACT

Doyle wanted to extend their home and Home Management through sub-contractors agreed to complete the necessary building works.

Doyle claimed that the contract was for a fixed price of $30,000 while Home management said the agreement was that the work would be done for cost.

ISSUE

Had the parties agreed on the price for the work and thus created a binding contract for the price?

FINDING

Home Management were entitled to restitution as Doyle had benefited from the work on the extensions at the expense of Home Management. The failure by Home Management to clarify the price was not so unjust that it should lose its claim to restitution, but did allow the Court to reduce the award by 50%.

QUOTE

Miles CJ said:

“In the circumstances, I conclude that whilst there was a contract between the two parties that Home Management would construct the extensions according to the plans, subject to agreed variations, there was no agreement as to price or method of payment and no agreement as to the precise limits on the range of work that might be carried outby Mr. Doyle. Each party had  a different understanding from the other.” Paragraph of [1992] ACTSC 44

“The principal of unjust enrichment presupposes three things: first, that the defendants have been enriched by the receipt of a benefit, secondly, that they have been so enriched at the plaintiff’s expense, and thirdly, that it would be unjust to allow them to retain the benefit.” Paragraph 12 of [1992] ACTSC 94

“In this case the Doyles have benefited from the receipt of building materials supplied by and building services provided by Home Management. In my view the Doyles have benefited; first by having received an immediate and realisable financial gain (being the increased value of their home brought by the extensions), and secondly, by having saved an expense which they otherwise would necessarily have incurred (being the expense of paying another builder to carry out the extensions). The Doyles have gained a likely financial benefit and have been saved an expense.” Paragraph 13 of [1992] ACTSC 44

“The finding of the arbitrator is that Home Management incurred costs of $62, 961.48 after taking into account thecost of rectification for unsatisfactory work. The question is, is it just and equitable that Mr & Mrs Doyle should have to pay Home  Management the full cost of what that company incurred in carrying out the extensions, or whether it is just and equitable and that some lesser sum should be awarded to Home Management? In my view the

Doyles should not have to pay the full cost because of three factors: one, the conduct of Mr. Cooper which led Mr. and Mrs Doyle to believe that the costs to them would not exceed $ 30,000, two, the delay in completing the work and, three, the failure of Home Management to ensure that the sub-constractors kept costs down to a reasonable level.” Paragraph 14 of [1992] ACTSC 44

IMPACT

When negotiating a contract it is important for the principal to confirm the price in writing and ensure the price is included as a term of the contract.

If there is no agreement about the price the court may make an order for restitution which may still exceed what the principal expected to pay to the contractor.