Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Nu Line Construction Group Pty Ltd v Fowler [2014] NSWCA 51
• Hearing dates: 28 November 2013
• Decision date: 17 March 2014
• Before: Basten JA at [1]; Barrett JA at [41]; Young AJA at [183]

Decision

(1) Allow the appeal and set aside the orders made in the Equity Division on 31 May 2012.

(2) Give judgment for the appellant against the respondent in the sum of $151,558.95 plus interest to be determined in accordance with order (3).

(3) Direct that the appellant calculate the interest claimed and submit its calculation to the respondent within 10 days from the date of these orders and within 28 days from the date of these orders -

(a) if the parties agree on the appropriate amount, file in the registry consent orders giving effect to that agreement by way of appropriate adjustment of the judgment sum; or

(b) in default of agreement, each party shall file and serve a document not exceeding two pages that sets forth its calculation with any necessary explanation so that the Court may resolve the matter on the papers and make an appropriate adjustment to the judgment sum.

(4) Order that the respondent pay the appellant's costs in the court below and in this Court.

(5) Grant the respondent a certificate under the Suitors' Fund Act 1951 (NSW), if not disqualified under s 6(7).

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: RESTITUTION - restitution resulting from unenforceable incomplete, illegal or void contracts - where money paid by purchaser to vendor in anticipation of contract - contract never made - claim for recovery by purchaser - principles upon which money recoverable when contract fails to materialise - LIMITATION OF ACTIONS - limitation period for claim in quasi contract - when time begins to run - EVIDENCE - burden of proof - sufficiency of evidence - whether documentary evidence sufficient to prove making of payments pursuant to a particular arrangement
• Legislation Cited: Civil Procedure Act 2005 (NSW); Corporations Act 2001 (Cth); Limitation Act 1969 (NSW)
• Cases Cited: Baltic Shipping Co v Dillon [1993] HCA 4; 176 CLR 344; Cedar Meats (Aust) Pty Ltd v Five Star Lamb Pty Ltd [2014] VSCA 32; CGM Investments Pty Ltd v Chelliah [2003] FCA 79; (2003) 196 ALR 548; Chesworth v Farrar [1967] 1 QB 407; Equuscorp Pty Ltd v Haxton [2012] HCA 7; (2012) 246 CLR 498; Fazio v Fazio [2012] WASCA 72; Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32; Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420; Guardian Ocean Cargoes Ltd v Banco Do Brasil (The Golden Med) [No 3] [1992] 2 Lloyd's Rep 193; Haxton v Equuscorp Pty Ltd [2010] VSCA 1; 28 VR 499; Lumbers v W Cook Builders Ltd [2008] HCA 27; (2008) 232 CLR 635; Marminta Pty Ltd v French [2003] QCA 541; Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583; Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [2012] NSWSC 587; Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [2012] NSWSC 816; Pan Ocean Shipping Co Ltd v Creditcorp Ltd [1994] 1 WLR 161; Pavey & Matthews Pty Ltd v Paul [[1987] HCA 5; 162 CLR 221]; Rowland v Divall [1923] 2 KB 500; Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; 208 CLR 516; Torrens Aloha v Citibank NA (1997) 144 ALR 89; Wallera Pty Ltd v CGM Investments Pty Ltd [2003] FCAFC 279
• Texts Cited: Benjamin's Sale of Goods (8th ed 2010, Sweet & Maxwell) at [4.006]
• Category: Principal judgment
• Parties: Nu Line Construction Group Pty Ltd (Appellant); Peter Fowler (First Respondent); Gabriella Grippaudo (Second Respondent)
• Representation: Counsel: Mr T S Hale SC/Mr B R Kremer (Appellant); Mr H W M Stitt (Respondents); Solicitors: Diamond Conway (Appellant); Hunter Lawyers (Respondents)
• File Number(s): CA 2012/203010

Decision under appeal

• Citation: [2012] NSWSC 587; [2012] NSWSC 816
• Before: Ward J
• File Number(s): 2008/280834

Judgment

1 BASTEN JA: Between (relevantly) 2000 and 2009 the second respondent, Ms Gabriella Grippaudo, was the registered proprietor of a parcel of land described as Lot 5, Lagana Place, Wetherill Park. In a period covering 2000-2002, the first respondent, Mr Peter Fowler, acting on behalf of the second respondent, who was his wife, sought to negotiate a contract for sale of the land to the appellant, Nu Line Construction Group Pty Ltd ("Nu Line").

2 No contract for the sale of the land was executed between the parties. Nevertheless, between June 2000 and February 2001 a number of payments were made by Nu Line to the first respondent or to persons identified by a director of Nu Line (Mr Leo Mijatovic) as contractors working for the respondents on the construction of a new home.

3 On 29 September 2008 Nu Line commenced proceedings in the Equity Division seeking to recover from the respondents the payments made to them or at their direction. At trial, the respondents did not deny the entitlement of the appellant to recover some amounts (others were in dispute) but said that the proceedings were commenced out of time. That defence was accepted by Ward J: Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [2012] NSWSC 587. On appeal, Nu Line challenged that finding and also the refusal of the trial judge to accept that some of the amounts claimed by it had been made in part payment of the anticipated purchase price for the land.

4 Whether the limitation defence should have succeeded depended on whether the appellant's cause of action for money had and received by the respondents to its use commenced to run before 29 September 2002, or only from a later time, as the appellant contended. The critical date (it was agreed) was six years before the commencement of the proceedings on 29 September 2008, that being the period provided by the Limitation Act 1969 (NSW), s 14(1)(a).

Vesting of cause of action

(a) approach of trial judge

5 The nature of the payments made by Nu Line was in dispute at the trial. The trial judge considered whether they (or some of them) should properly have been characterised as payments by way of a deposit, or as the price of an option to purchase. The judge concluded that they were part payments of the anticipated purchase price: at [220]. On appeal, there was no challenge to that characterisation of the main payment of $60,000; a similar finding being accepted, on a hypothetical basis, with respect to the payment of certain invoices: at [239], [240].

6 In determining the date from which the Limitation Act defence ran, the trial judge accepted (a conclusion which is not challenged) that a cause of action for money had and received is an action in "quasi contract" and falls within s 14 of the Act: at [273], [274], referring to Torrens Aloha v Citibank NA (1997) 144 ALR 89 (Sackville J); Chesworth v Farrar [1967] 1 QB 407, and Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32.

7 In the course of considering how the cause of action was to be characterised, the trial judge noted that the case could be approached, by way of analogy, as similar to a claim in respect of a contract which had been frustrated, and as money paid where there had been a "total failure of consideration" or a "failure of a condition" upon which the payment was based: at [283]-[288]. She accepted a submission that a "cause of action for restitutionary claim based on a total failure of consideration arises not by reference to the time at which the payment was made but ... the time [at which] the contemplated state of affairs failed to materialise": at [289]. Applying that test, the critical passage in the reasoning was as follows:

"[293] Looking at the state of the sale from mid-2000, it cannot be said that there was any indication that the purchaser still intended to proceed. It follows that the contemplated state of affairs in anticipation of which moneys had been paid must by then be said to have objectively failed to materialise. The fact that discussions might later have been received in relation to a proposed purchase or that one or more of the principals of Nu Line Construction may have harboured a hope (or even had an expectation) that if and when they later chose to reactivate the discussions, the property would still be available to purchase (whether or not at the same price) seems to me to be beside the point.

[294] As at mid May 2002 (after four months of silence on the part of Nu Line Construction - and in the face of repeated requests as to its position), I consider that the only reasonable conclusion would have been that the purchaser did not intend to proceed with an exchange of contracts and, hence, the contemplated sale had by then failed to materialise. I do not consider that the conversation as to retaining wall payments warrants a different conclusion."

8 It will be necessary to look in more detail at the reference at [294] to the failure of Nu Line to respond to requests that it indicate its position, as at mid-May 2002. At [292], in rejecting a submission that Nu Line remained willing to continue to negotiate, the trial judge had said that such a view did not "sufficiently take into account the fact that, from February to May 2002, the vendor's solicitors were pressing for confirmation as to whether Nu Line Construction intended to proceed with the purchase (and were met with deafening silence on the part of Nu Line Construction), particularly where, leading up to this, Ms Gunesekera [Nu Line's solicitor] had been indicating from time to time a readiness to exchange contracts".

(b) relevant principles

9 In Baltic Shipping Co v Dillon [1993] HCA 4; 176 CLR 344 Mason CJ noted (at 356-357) the historical origins of a cause of action in restitution as based on a fictitious promise, which was required to be implied. Mason CJ noted that "since Pavey & Matthews Pty Ltd v Paul [[1987] HCA 5; 162 CLR 221] such an approach no longer represents the law in Australia".

10 In Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; 208 CLR 516 at [63], after referring to the passage set out above from Baltic Shipping, Gummow J stated:

"The rejection of the implied contract theory, of which Mason CJ spoke in Baltic Shipping, should be taken as reflecting the settled position in Australia."

11 Once that state of legal principle is adopted, it is potentially confusing to speak of circumstances involving "total failure of consideration", being the language of contract: Roxborough at [65], Gummow J referring to Pan Ocean Shipping Co Ltd v Creditcorp Ltd [1994] 1 WLR 161 at 164 (Lord Goff of Chieveley). As Gummow J continued, "that is not to assert that an action for money had and received may not lie to recover payments made with a view to entry into a contract which never comes to pass"; on the contrary such an action does lie. There is a further difficulty with the phrase "total failure of consideration": it assumes that something has been promised and not provided, which may in turn require identification of the precise terms of the supposed obligation, an exercise which may not sit well with the absence of an enforceable obligation.

(c) application of principles

12 If there were an implied contract to be relied upon in the present circumstances, it would involve an obligation on the part of the respondents to repay any moneys received in anticipation of the contract of sale of land, if such a contract were not executed because negotiations failed to achieve that result. On that approach, the restitutionary claim would, in effect, be a claim for breach of the implied obligation to repay. The obligation to repay would presumably only arise when the expectation became impossible of fulfilment, and not merely unlikely to materialise.

13 The alternative terminology proposed by the primary judge was that there had been a "failure of condition" on which the payment was made. By that, it was merely meant that a contract of sale of was not executed by the prospective parties. The term "condition", however, is also redolent of the language of contract. Again, the contractual language may be misleading. Thus the trial judge stated that "[t]here is no right to sue for the return of a conditional payment until the condition fails, as until that time, the defendant retains a right to hold the moneys advanced": at [287]. However, that was to pose a question based on contract: in fact, there being no contract, the appellant could have terminated the negotiations and demanded repayment of the moneys at any time.

14 At the very least, there was no consideration of circumstances which might have precluded it taking that course. More neutrally, the execution of the contract was an anticipated event which did not occur, although nothing precluded it until the land was sold to a third party. On one view, the fact that at no stage prior to September 2002 had Nu Line sought to take the positive step of terminating negotiations and claiming repayment of its money is a strong indication that it intended to proceed with the purchase. Viewed objectively, the fact that one party has paid approximately one-third of the anticipated purchase price and not sought repayment of the money (which is not characterised as a deposit) demonstrates a clear intention to proceed, contrary to the statement in the first sentence at [293], set out above at [7].

15 It is true that it is necessary to weigh, on the other side of the scales, the failure of the solicitor for Nu Line to respond to the letters from the solicitors for the vendor asking as to the proposed intentions of Nu Line. However, there are several factors which limit the weight to be given to that failure to respond. First, there was no suggestion that the vendor was seeking to obtain a free hand to sell the property to another purchaser. Secondly, the vendor was not offering to repay the part payments already received. Thirdly, there were serious unresolved issues concerning the ability of the vendor to give vacant possession.

16 These unresolved issues may be briefly identified. Through a lengthy period during 2000, Nu Line's solicitor had been insisting that attempts be made to have a telecommunication tower on the land relocated. The vendor, on the other hand, was faced with the demand by the lessee and owner of the tower to sign a lease. By letter dated 16 October 2001, Nu Line's solicitor wrote to the vendor's solicitor stating that the communications tower "hindered the intended use and that the installation had to be removed and that this had to be resolved prior to exchange", as noted by the trial judge at [102].

17 The draft contract which had been prepared contained a purchase price of $300,000 with provision for a deposit of $30,000. However, on 6 February 2002 Nu Line's solicitor wrote to the vendor's solicitor stating:

"I understand from my clients [sic] that he [sic] has already paid to your client $100,000 and that your client has had the use of that money for almost a year and as such my client wants a resolution fairly expeditiously."

18 The trial judge referred to the response at [107]:

"The response from the vendor's solicitor to Ms Gunesekera's February 2002 letter, interestingly, made no demur to the proposition that a sum of $100,000 had been paid to the vendor, simply denying any contractual obligation to secure a relocation of the equipment (being the second matter raised in her letter). An inference might therefore be drawn that at least some $40,000 on top of the $60,000 June 'part payment' had been paid to Mr Fowler. The vendor's solicitors suggested that the purchaser proceed to purchase the property 'as is' and take up the matter with the relevant telecommunications company direct."

19 Apart from not taking issue with the statement as to the payment already made, the reply noted that the vendor "has been unsuccessful" in attempting to have the tower moved and asking to be advised whether "your client is still interested in proceeding with all the matters, if not, arrangements will be made for the deposit to be refunded": at [108].

20 The trial judge noted that similar letters were sent by the solicitors for the vendor on 13 March 2002 and on 14 May 2002: at [110]. The judge noted that, in the absence of any response to those requests, "it would not be surprising for the conclusion to be reached that the purchaser no longer wished to proceed with the purchase": at [110].

21 It was undoubtedly open to the vendor to terminate the negotiations and refund the payments already made. Although the negotiations were left in abeyance, the payments were not refunded. In those circumstances, the appropriate inference is that neither party sought to terminate the relationship, but each was content (no doubt for its and her own reasons) to allow the negotiations to remain in abeyance.

22 These circumstances reveal two commercial entities (Mr Fowler was a businessman) dealing with a parcel of land, apparently at arm's length and through solicitors. There was no reason to suppose, on an objective assessment of the circumstances in May 2002, that Nu Line intended to abandon the payments it had already made, whether they were $100,000 or, as later asserted, approximately $160,000. Nor would an objective observer expect a person in the position of the respondents, who had obtained the benefit of such payments, to be entitled to walk away without providing any value in return. Indeed, the concession that the appellant was entitled to the money, subject to the limitation defence, conceded as much. While it must be accepted that the officers of Nu Line were careless as to the precise amounts which had been paid at various times, that did not indicate evidence of abandonment, as opposed to a failure to realise the desirability of precision in financial dealings. Further, it is by no means clear that either party relied upon its solicitors to undertake negotiations, in circumstances where at least Nu Line's solicitor was apparently unaware for over a year of the terms of the proposed purchase and that the draft contract did not reveal the full story (in part, by significantly understating the purchase price).

23 No doubt it was true that, as at mid-May 2002, "the purchaser" did not intend to proceed with an exchange of contracts; it followed that the contemplated sale had "by then" failed to materialise. However, those findings were not critical. Contracts were not exchanged because there were issues yet to be resolved; that the contemplated sale had failed to materialise at that time, was only critical if one party or the other had imposed a time limit on the negotiations. In express terms, neither did. Having asked on several occasions for clarification of the prospective purchaser's position, the vendor did not assert that she proposed to treat the relationship as ended and express an intention to seek a purchaser elsewhere. Rather, she (and her husband) did nothing.

24 The final reference in the passage set out above to the "retaining wall payments" should also be addressed. In October 2003 Mr Lebic, a director of Nu Line, received a letter from a neighbour of the Lagana Place land requesting payment for a retaining wall built on the property. He invited the neighbour to send him the bill because, as expressed in his evidence, "it was only a matter of time 'before we own the land'": at [152].

25 The trial judge accepted Mr Lebic's response as consistent with his view, as at 2003, that the proposed purchase would still eventuate: at [152]. In cross-examination, Mr Fowler accepted that either Mr Lebic or Mr Mijatovic, had told him "that certain payments had been made for the retaining wall and you said 'you don't have to pay them, it was all part of conditions of consent for the next door neighbour'": at [153].

26 This was not, as the trial judge noted, evidence that the respondents had notice of the claim, and approved or disapproved the payment, before it was made: at [154]. However, the inference sought to be drawn by counsel for Nu Line "from Mr Fowler's response was that he did not say that there was no point making the payments (because the sale of the land was not proceeding) but simply said that there was no liability to pay them (as they were part of the neighbour's conditions of consent)." Having noted that submission, the trial judge said she had "difficulty seeing that this warrants a conclusion that, as at mid 2002, the contemplated state of affairs (ie the purchase of the property in anticipation of which payment of at least $60,000 had been made) was something which the purchaser was then still interested in pursuing (given the deafening silence to the successive requests for confirmation of that fact over a four month period)": at [156].

27 Taken in isolation, that piece of evidence may have carried limited weight; taken in combination with the matters discussed above, it was consistent with the proposition that neither party, as at October 2003, treated the relationship as having ended.

28 Finally, there was a meeting in 2006 of which Mr Fowler gave evidence, summarised by the trial judge at [161] in the following terms:

"Mr Fowler, in his affidavit, refers to a meeting at in or around early 2006 attended by Mr Lebic, and both of the Mijatovic brothers, as well as a consultant of Mr Fowler's company (Fowler Homes) - a Mr Sebastiano (Sam) Romeo. Mr Fowler deposes that Mr Leo Mijatovic said at that meeting that they wanted to talk about the purchase of the property and said 'We want to either buy it or see about getting some of our money back'. Mr Fowler says that he said the value of the land had gone up and wrote down a figure in excess of $1m but indicated that he was prepared to drop the price by $100,000 below market value (which might suggest that he was taking into account sums already received by that stage - although Mr Fowler says that this was a gesture of goodwill). Mr Fowler says that Mr Leo Mijatovic asserted that they had an interest in the property and that, if the value of the land had gone up, that interest was worth more."

29 The trial judge accepted that this meeting took place, largely as described by Mr Fowler, but thought that the relevant factor was that the principals of Nu Line were not insisting upon a sale at "the original price" but sought to engage in discussion, "as if the prospect of sale was one that still had to be agreed (consistent with this being a fresh deal and not simply a continuation of the old deal) or (on Mr Mijatovic's evidence) to regard the earlier payments as having resulted in there being already a part interest in the land": at [167].

30 The evidence is significant for a separate reason: although it may be inferred that Mr Fowler did not accept that Nu Line or its principals had any interest in the land, there is no denial by him that payments had been made by or on behalf of Nu Line in relation to the purchase of the land. That evidence is, again, entirely consistent with an objective assessment that the negotiations may have been in abeyance, but the relationship between the parties had not at any stage resulted in Nu Line abandoning its part payments for the land. At all stages up to 2006 the land remained available for purchase and, although he sought to extract a higher price, at no stage did Mr Fowler suggest that negotiations were no longer open.

31 Implicit in the reasoning of the trial judge is a finding that the payments made by or on behalf of Nu Line were made as part payment of the purchase price on a sale to be completed broadly in the terms of the draft contract which was available in May 2002. It is apparent from the last evidence referred to above that no significant variation of the contract price fell within that contemplation. However, why that should be so was unclear. Whatever Mr Fowler's intention in seeking a price in excess of $1 million, there was no evidence as to whether he would have settled for less, except for the fact that in 2009, after the commencement of the proceedings, the land was sold for a little under $500,000, being an increase of approximately 10% on the price proposed in 2001. To approach the circumstances of the payments as being related to a contract the terms of which were settled, was to disregard the evidence (and the findings based upon it) set out earlier in the judgment. The unresolved issues as to the communications tower might have been reflected in a variation of the price, which was in any event not said to be fixed beyond negotiation.

32 Thus, in an affidavit of 23 February 2010, Mr Fowler stated that he had told Mr Lebic that "he wanted $300,000 for the land": at [39]. Mr Lebic thought the price was in the order of $450,000 or $460,000, with a deposit of up to $160,000 and a balance of $300,000. There is no doubt that one version of the contract for sale included a price of $300,000, while another contained details of what was described as "original offer by Peter and Gabrielle", being the respondents, indicating a "Total investment only $500,000". On another copy, that figure had been crossed out. What may have been agreed was the price to appear in the contract, which was not in fact the price contemplated as payable.

33 Further, the dispute as to the siting of the telecommunications tower and the difficulties that was said to cause for the prospective purchaser must have left open the possibility of further negotiation as to price. In a letter to the prospective purchaser, dated 28 June 2000, Nu Line's solicitor raised a number of issues in relation to the contract and the leases and a proposed lease to be given by the vendor to Fowler Homes, being a company associated with her husband. The solicitor, having seen the draft contract, immediately noted that it was "more complicated" than that anticipated when she estimated her fees. That appears to have been a reasonable assessment of the position in mid-2000.

34 Whatever the truth about the increase in value of the property between 2001 and 2006, the fact that the principals of the appellant were prepared to discuss price is not inconsistent with a continuation of the situation with respect to which part payments had been made.

35 In these circumstances, the finding that because no contract had been executed prior to the end of September 2002, the event in anticipation of which the part payments had been made could no longer happen, in the contemplation of the parties, should not have been made. That being so, the proceedings were brought within time and the appeal should be upheld.

Amounts of invoices

36 Barrett JA has identified the features of each of the invoices relied upon by the appellant as constituting a part payment in anticipation of the purchase of the land. In addition to one invoice accepted by the trial judge, as Barrett JA explains, two other payments (identified as Payments B and D) should also be accepted as part payments against the purchase of the land. They total an additional $64,038.40. The remaining payments (A, C, E, F and G) were not accepted as proven to have been part payments to the respondents against the anticipated purchase price of the land. These are lesser amounts, totalling $18,445.55. The details are set out by Barrett JA.

37 There is no reason to suppose that the records of the accountant attributing these payments to the same account in Nu Line's books, namely the account for expenditure on Lagana Place, should not be accepted in relation to these amounts also. Although no invoices are available, accepting that these payments were made to persons nominated by Mr Fowler or his wife, there is no evidence to suggest that the payments were otherwise than part payments on account of the purchase price of the land. For these reasons and those given by Barrett JA, those amounts should also be accepted as amounts repayable to the appellant.

38 On that basis, the total debt is $151,558.95. There should be judgment in favour of the appellant against the respondents in that amount. The orders made by the trial judge dismissing the plaintiff's claim and requiring the plaintiff to pay costs should be set aside. The respondents must pay the appellant's costs of the trial and in this Court.

Interest

39 There remains a question with respect to interest on the judgment debt. In the notice of appeal, the appellant sought "restitutionary interest" and interest pursuant to s 101 of the Civil Procedure Act 2005 (NSW). Although the written submissions filed by the appellant stated that the quantification of interest was dealt with below (at par 53), no such quantification was provided. On the basis of the figures set out above, the appellant should have an opportunity to quantify the relevant amount of interest with, if possible, the agreement of the respondents. If such an amount is agreed, an appropriate adjustment to the judgment debt can be made by consent by filing the relevant papers in the Registry. In the event that agreement is not possible, the respective calculations should be set out in a submission (not to exceed two pages) including any explanation for the proposed calculation. The submissions are to be filed within 28 days of the delivery of judgment. The dispute will then be resolved by the Court on the papers.

Orders

40 The Court should make the following orders:

(1) Allow the appeal and set aside the orders made in the Equity Division on 31 May 2012.

(2) Give judgment for the appellant against the respondent in the sum of $151,558.95 plus interest to be determined in accordance with order (3).

(3) Direct that the appellant calculate the interest claimed and submit its calculation to the respondent within 10 days from the date of these orders and within 28 days from the date of these orders -

(a) if the parties agree on the appropriate amount, file in the registry consent orders giving effect to that agreement by way of appropriate adjustment of the judgment sum; or

(b) in default of agreement, each party shall file and serve a document not exceeding two pages that sets forth its calculation with any necessary explanation so that the Court may resolve the matter on the papers and make an appropriate adjustment to the judgment sum.

(4) Order that the respondent pay the appellant's costs in the court below and in this Court.

(5) Grant the respondent a certificate under the Suitors' Fund Act 1951 (NSW), if not disqualified under s 6(7).

41 BARRETT JA: In Equity Division proceedings determined in May 2012, the appellant ("Nu Line") sought restitutionary relief against the first respondent ("Mr Fowler") in respect of moneys said to have been paid by Nu Line or on its behalf to Mr Fowler in relation to or in anticipation of a proposed purchase by Nu Line of industrial land described as Lot 5, Lagana Place, Wetherill Park owned by the second respondent, Ms Grippaudo, who is Mr Fowler's wife.

42 Ward J (as her Honour then was) held that some payments had been made by or on behalf of Nu Line as alleged and that Nu Line could have maintained proceedings for recovery (with interest) on the basis of total failure of consideration, were it not for the circumstance that the cause of action was statute barred when the proceedings were commenced in September 2008.

43 More particularly, the judge decided that the applicable limitation period of six years began to run in mid-May 2002 and that, since the proceedings were commenced by summons filed on 29 September 2008, Nu Line could not maintain its restitutionary cause of action in respect of the particular payments, all of which were made in 2000 and 2001.

44 Her Honour delivered two judgments: Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [2012] NSWSC 587 (31 May 2012) and Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [2012] NSWSC 816 (18 July 2012). The second judgment concerned costs only.

45 On appeal, Nu Line seeks to challenge two main aspects of the judge's decision. First, it says that the cause of action in restitution accrued a considerable time after mid-May 2002, with the result that no time bar affected the proceedings commenced in September 2008 to the extent that recovery of payments made in 2000 and 2001 was sought. Second, Nu Line contends that, while the judge correctly held that two payments (one of $60,000 and the other of $9,075) had been made by Nu Line in such circumstances as to vest in it a cause of action in restitution (subject to the limitation issue), the same characterisation should have been applied also to a number of other payments made by Nu Line. The second contention, if accepted, will, however, avail Nu Line only if it is successful on the limitation issue.

46 These are the principal issues arising on the appeal. There is, however, a third issue which concerns the date from which restitutionary interest should have been calculated.

47 The appeal thus lies in short compass, having regard to the range of issues her Honour was called upon to determine. There is now no dispute that all relevant payments that were in fact made were made by or on behalf of Nu Line, so that it is Nu Line that may assert any cause of action for recovery. Nor is the nature of the cause of action or the applicable limitation provision in issue.

48 As to the nature of the cause of action in restitution (by way of action for money had and received), the judge canvassed a number of decided cases, particularly Roxborough v Rothmans of Pall Mall Australia Pty Ltd [2001] HCA 68; (2001) 208 CLR 516, Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583, Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221, Lumbers v W Cook Builders Ltd [2008] HCA 27; (2008) 232 CLR 635 and Equuscorp Pty Ltd v Haxton [2012] HCA 7; (2012) 246 CLR 498.

49 Applying the relevant principles, her Honour found that money had been paid by Nu Line to Mr Fowler in anticipation of an exchange of contracts for the purchase of the Lagana Place land by Nu Line, that the moneys so paid represented part payment of the intended purchase price (in the sense that the sums paid would be offset against the purchase price) and that the contemplated state of affairs (that is, exchange of contracts) did not materialise, so that Mr Fowler came under a prima facie obligation to refund the moneys. This conclusion related, in terms, to a sum of $60,000 paid in June 2000 and a sum of $9,025 comprised in an invoice dated 13 February 2001, both of which the judge accepted had been paid by Nu Line.

50 On the limitation question, the judge referred to s 14(1)(a) of the Limitation Act 1969 which prescribes, for "a cause of action founded on contract (including quasi contract)", a limitation period of "six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims". In determining the point at which the restitutionary cause of action for recovery of a particular payment first accrued to Nu Line, the judge recognised a need to choose between two possibilities: the time at which Nu Line made the payment; and the time at which the contemplated state of affairs (in the form of a binding sale contract) failed to materialise. Guided by cases including Roxborough v Rothmans of Pall Mall Australia Ltd (above), Baltic Shipping Co v Dillon [1993] HCA 4; (1993) 176 CLR 344 and Guardian Ocean Cargoes Ltd v Banco Do Brasil (The Golden Med) [No 3] [1992] 2 Lloyd's Rep 193, the judge held that the restitutionary cause of action based on total failure of consideration arose at the time the contemplated state of affairs failed to materialise.

51 As I have said, there is no challenge to these critical parts of her Honour's reasoning and decision. What is challenged, so far as the decision on time bar is concerned, is the finding as to the point at which the relevant "failure to materialise" occurred. The judge held that there was "failure to materialise" at a point in mid-May 2002 when, as her Honour put it (at [294]), "after four months of silence on the part of Nu Line Construction - and in the face of repeated requests as to its position", the "only reasonable conclusion would have been that the purchaser did not intend to proceed with an exchange of contracts and, hence, the contemplated sale had by then failed to materialise".

52 Nu Line does not dispute that the contemplated sale "failed to materialise". Its contention is, however, that that happened at a later time.

53 As to the payments allegedly made by it over and above the $60,000 and the $9,075, Nu Line contends on appeal that the judge should have held that those additional payments were also made in circumstances giving rise to a right of recovery.

Persons

54 As I have said, Mr Fowler and Ms Grippaudo were husband and wife. It is not disputed that he spoke for her and had authority to act for her in relation to the Lagana Place land of which she was the owner. For ease of discussion, Mr Fowler will be referred to as the owner of the land and the prospective vendor unless there is some particular need to refer to Ms Grippaudo.

55 Nu Line was owned by Leo Mijatovic, his brother Mick Mijatovic and Michael Lebic. Evidence was given by Leo Mijatovic and Michael Lebic. They spoke and acted, at the material times, for the company. Their association ended in early 2006 in apparently acrimonious circumstances. Leo Mijatovic gave evidence for Nu Line, while Mr Lebic gave evidence for Mr Fowler and his wife.

56 References below to "Mr Mijatovic" are, unless otherwise stated, references to Leo Mijatovic.

57 Mr Mijatovic had retained Ms Mohini Gunesekera, solicitor, from time to time from 1994. She was instructed to act in connection with the proposed purchase of the Lagana Place land. Albert A Macri Partners acted for Mr Fowler.

"Failure to materialise" - the judge's findings and decision

58 It is accepted on both sides that there was an agreement in principle for the sale of the land to Nu Line and that solicitors were instructed by both parties. There was a dispute about certain aspects of the content of the agreement in principle but that was resolved by the primary judge in a way that does not arise for consideration on appeal. It is also accepted, at this point, that Nu Line made the two payments ($60,00 and $9,075) that the judge properly regarded as advance payments of purchase price.

59 There is, as I have said, no challenge to the judge's opinion that the cause of action in restitution accrued to Nu Line when the "consideration" for its payments "failed" or the "condition" upon which the payments had been made was not satisfied. The terms "consideration" and "condition" are not here used in their usual contractual sense. There was no contract and hence no promise performance of which depended on or involved the passing or provision of consideration or the satisfaction of some condition. Rather, there was a mutual intention that a contract would be formed and the concepts of failure of consideration and non-satisfaction of condition are concerned with the emergence of circumstances which, objectively viewed, demonstrated that the shared expectation had ceased to exist.

60 The primary judge decided that this point was reached after a period of inactivity in the correspondence between solicitors. It is relevant to make brief reference to the course of that correspondence.

61 Conventional conveyancing steps began on 10 May 2000 when Albert A Macri Partners submitted a form of contract to Ms Gunesekera who had received telephone instructions from Mr Mijatovic a few days earlier. Ms Gunesekera gave written advice in relation to the contract in a letter dated 28 June 2000. She wrote to the vendor's solicitors the next day saying that Nu Line's finance had been approved and that she was awaiting instructions on the contract with a view to early exchange.

62 Mr Mijatovic gave evidence that he had not made Ms Gunesekera aware of all the terms that he had negotiated with Mr Fowler. The judge quoted the following part of Mr Mijatovic's evidence at [95]:

"A. No. I did not disclose fully to my solicitor what the actual deal was. I believe that at that time when Mohini Gunesekera had this contract in front of her she had no idea that we were doing any under hand deal. That happened much later, I believe a year a year later that she found out about this.

Q. You say this is an under hand deal. By that you mean, in effect, a deal that is not reflected on the contract for the sale of land is that

A. It was the only deal offered to us and we could acquire that land only under those terms. The terms were from Mr Peter Fowler. He demanded 60,000 cash, 90,000 in invoices and a contract for $300,000.

Q. You went along with that?

A. Yes, because it was a good deal.

Q. So notwithstanding that the documents were not accurate reflections of the deal, you went along with the deal?

A. Yes."

63 After a further exchange of correspondence, Ms Gunesekera wrote to the vendor's solicitors on 26 July 2000 saying that her client was ready to exchange, subject to agreement on a matter concerning a lease for the site of a communications tower on the land. Further correspondence ensued about the lease matter and also an adjoining owner's request for consent to variation of an easement. Ms Gunesekera said in a letter to the vendor's solicitors dated 26 October 2000 that she was "still awaiting the amended contract to enable my client to exchange on the property".

64 At [97] to [103] of the judgment, the judge referred to further correspondence between the solicitors extending to November 2001. Her Honour then said, at [104]:

"It was at this point that Mr Mijatovic apparently saw fit to raise with Ms Gunesekera the fact that something more than the $30,000 noted as a deposit under the contract had been paid to the vendor. By letter dated 6 February 2002, Ms Gunesekera wrote to the vendor's solicitors in relation to the matter (copying her correspondence to Mr Mijatovic) referring for the first time to a payment of $100,000 having been made to the vendor. In that letter she wrote:

'I understand from my clients that he has already paid to your client $100,000.00 and that your client has had the use of that money for almost a year and as such my client wants a resolution fairly expeditiously.'"

65 The judge later referred to Mr Mijatovic's having said in evidence that he had "never fully disclosed" what "the actual deal" was with Mr Fowler concerning payments in advance of exchange of contracts.

66 One matter that had featured in the solicitors' correspondence was removal from the land of equipment belonging to Lucent Technologies. On 27 February 2002, the vendor's solicitors wrote to Ms Gunesekera:

"Numerous attempts have been made to have the equipment belonging to Lucent Technologies Australia Pty Ltd to be removed from its current location. Our client has been unsuccessful with those attempts.

Please advise whether your client is still interested in proceeding with all the matters, if not, arrangements will be made for the deposit to be refunded."

67 The judge observed (at [109]):

"That letter implicitly acknowledged that a deposit had been paid (although there was no acknowledgment of the amount of the deposit). There was no response to that letter. Nor was there any arrangement made for the refund of the 'deposit'."

68 Her Honour continued at [110] and [111]:

"Further letters to similar effect, asking for instructions as to the purchaser's intentions in relation to the sale, were forwarded to Ms Gunesekera on 13 March 2002 and on 14 May 2002. In the last of those letters the vendor's solicitor asked that she telephone 'to advise whether your client still wishes to proceed with the purchase of the above-mentioned property'. (In the absence of any response at all to that request or to the earlier correspondence, in my view it would not be surprising for the conclusion to be reached that the purchaser no longer wished to proceed with the purchase.)

On each occasion on which such a request was made (as Ms Gunesekera acknowledged in cross-examination and as her conveyancing file discloses), Ms Gunesekera sought instructions from her client, to no apparent avail since there was no response to the vendor's solicitors by Ms Gunesekera to the February, March or May letters. As far as the conveyancing file discloses, from at least February 2002 Nu Line Construction had not responded to the vendor's solicitors' request for confirmation as to whether it was still interested in proceeding with the purchase and nothing further happened on the conveyancing file. (In 2006 Ms Gunesekera retired from practice, apparently without ever having closed her file on the matter.)"

69 Nu Line maintained at trial that discussions and negotiations between the parties had continued beyond the point at which the solicitors' correspondence ended. Ms Gunesekera herself gave evidence that, as she understood matters, that was the case but, when pressed in cross-examination, she accepted that there was no contemporaneous evidence supporting the view of matters of which she had expressed herself to be "fairly confident". The judge noted that this recollection on the part of Ms Gunesekera stood in contrast to her general inability to recall anything of relevance except by reference to documents.

70 The judge rejected the proposition advanced by Nu Line that the shared expectations of the parties as to the making of a binding contract between them continued beyond what she described as "the deafening silence to the successive requests for confirmation of that fact over a four month period" - with "that fact" being Nu Line's desire to proceed with the purchase, the "deafening silence" being that of Ms Gunesekera in response to inquiries from the vendor's solicitors and the "four month period" being the period ending in May 2002 when Ms Gunesekera, having received no instructions from her client, made no response to the last of the letters from the vendor's solicitors asking whether Nu Line still wished to purchase the property.

"Failure to materialise" - Nu Line's contentions

71 Nu Line accepts that the shared expectation of sale and purchase came to an end. It contends, however, that the shared expectation survived the "deafening silence" of some four months up to May 2002 and ended either in July 2006 when Mr Fowler made it clear that he would not sell at the originally negotiated price or in 2009 when a contract for sale was entered into with another purchaser. Nu Line takes the position that the original shared expectation continued up to the happening of one of those events, there being no controversy that both events happened as Nu Line describes.

72 Nu Line accepts that the solicitors' correspondence ended at a time consistent with the judge's finding on the "failure to materialise" issue. It says, however, that aspects of the evidence as to events after mid-May 2000 were explicable only on the basis that the shared expectation continued to exist beyond that point.

73 Reliance is placed on two matters. First, it is said that the evidence warranted a finding that the clients had continued to to work towards a contract even though the solicitors had ceased to be active. Second, Nu Line point to a payment of $10,000 made by it in December 2004 in connection with a retaining wall.

74 Before those matters are addressed, reference should be made to the external administration to which Nu Line became subject in April 2003.

The external administration

75 Administrators were appointed to Nu Line under Part 5.3A of the Corporations Act 2001 (Cth) on 7 April 2003. The administration ended on 28 May 2003 when of a deed of company arrangement was executed. The arrangement created by the deed came to an end on 27 June 2005 upon its effectuation.

76 The deed of company arrangement bound all creditors of Nu Line as at 28 May 2003. Certain related party creditors relinquished their claims. The remaining creditors obtained entitlements to prove their debts for participation in a deed fund which was to consist of amounts determined by the deed administrators to be necessary to permit payment in full of the administrators' remuneration and expenses in full, payment in full of the claims of creditors with claims entitled to priority in a winding up and payment of $163,967 rateably among other participating creditors. Nu Line was required to pay the total of those amounts to the deed administrators.

77 The deed of company arrangement provided that, during the arrangement period, the directors of the company were to be responsible for the day to day management, control, supervision and administration of the company's business and affairs, subject to the deed administrators' right, at their discretion, "to exercise all or any of the powers conferred by this Deed to the exclusion of the powers of the Company and its Directors". The company itself was bound to "conduct all of its operations and undertaking in a proper and business-like manner"; and its directors were bound to use their best endeavours to ensure that the company met its obligations under the deed.

78 In summary, therefore, the regime imposed by the deed of company arrangement was such that Nu Line was freed from the claims of the past creditors in return for the payment of the sums necessary to constitute the deed fund, the company itself was required to conduct its operations and undertaking in a proper and business-like manner and the directors were required to cause the company to do so, subject to a power of intervention by the deed administrators. It follows that the directors of Nu Line were in a position, throughout the deed period (28 May 2003 to 27 June 2005), to pursue the matter of the proposed purchase of the Lagana Place land - subject, of course, to commercial realities, not least among which was the availability of funds.

Contacts after May 2002 and before December 2004

79 As will be seen presently, there was a conversation between Mr Lebic and Mr Fowler after Mr Lebic, in December 2004, paid $10,000 to the owner of adjoining land: see [83] - [91] below. In this section, I consider evidence concerning contacts between the parties after May 2002 and before that conversation.

80 The evidence of Ms Gunesekera about her understanding has already been mentioned: see [69] above. She stated no basis for her understanding.

81 Nu Line points to the evidence of Mr Mijatovic that he wanted to proceed but that, after 2002, the matter "almost became a too-hard basket case". This was because of problems involving the communications tower, leases and easements. Mr Mijatovic said that he continued to believe that there was "an existing deal" - [W]e were either going to go in there and [sic: scil: "or"] get our money back and interest as Mr Fowler promised on many occasions".

82 Mr Lebic gave evidence that, after agreement in principle had been reached, Nu Line ran into financial difficulties, with a sudden evaporation of cash flow. It suited Nu Line that issues such as the tower on the land were taking time and "we were happy to let it go and not do anything about the purchase of Peter's property". Mr Fowler phoned him a few times after June 2000 to ask him about settlement and "to find out if we were going ahead"; and Mr Fowler "was being very reasonable about it; he let things go with us for a long time, even years".

The retaining wall payment

83 In October 2003, Mr Lebic received a document in the nature of an invoice from Mr Ivanek, the owner of land known as Lot 6 adjoining the Lagana Place site. The document set out items of cost incurred in connection with a retaining wall. These totalled $36,505 plus GST. The document concluded:

"Half of the above amount is $18,505.50 plus GST.

Hoping the above meets with your approval."

84 Mr Lebic gave evidence that he arranged payment of $10,000 in response to that request. The copy of the invoice in evidence carries a notation "Paid $10,000" and the date 22 December 2004 which Mr Lebic confirmed had been written by him. Mr Lebic was asked in cross-examination:

"And you arranged for the payment because you anticipated that at some stage you would be in a position where the purchase of the land would proceed?"

85 His answer was:

"Well, eventually we were hoping that it would, yes."

86 In response to a question from the judge, Mr Lebic clarified that the hope to which he had referred had existed at the time of the making of the payment in 2004.

87 Mr Lebic also gave evidence that he had spoken to Mr Ivanek at the time of the construction of the retaining wall and had said to him:

"Send me the bill and I'll pay it, because it's only a matter of time before we own the land."

88 Mr Fowler gave evidence in cross-examination as follows:

Q: Can you recall having a conversation with Mr Mijatovic about certain payments that had been made in respect of a retaining wall around the property?

A: Vaguely.

Q: Can you remember him telling you or Mr Lebic telling you that certain payments had been made for the retaining wall and you said 'you don't have to pay them, it was all part of conditions of consent for the next door neighbour'?

A: I remember that.

89 It is noteworthy that this conversation concerned payments (or, according to the evidence, a payment) that "had been made". There was no evidence of any conversation between Mr Fowler and any Nu Line representative in which Nu Line's intention to pay Mr Ivanek was communicated in advance. Indeed, the judge found (at [158]) that Mr Fowler was not aware beforehand that Mr Mijatovic or Mr Lebic intended to make any such payment.

90 Mr Fowler gave evidence that, on his understanding, the building of any retaining wall (and payment for any such wall) was entirely a matter for the adjoining owner.

91 The judge's conclusions concerning the retaining wall payment were as follows (at [156] - [157]):

"As I understand it, the relevance sought to be drawn by Mr Hale [counsel for Nu Line] from Mr Fowler's response was that he did not say that there was no point making the payments (because the sale of the land was not proceeding) but simply said that there was no liability to pay them (as they were part of the neighbour's conditions of consent). I have difficulty seeing that this warrants a conclusion that, as at mid 2002, the contemplated state of affairs (ie the purchase of the property in anticipation of which payment of at least $60,000 had been made) was something which the purchaser was then still interested in pursuing (given the deafening silence to the successive requests for confirmation of that fact over a four month period). The lack of any steps taken from February 2002 to pursue the purchase (until at least 2005/2006) supports such a conclusion.

I do not see the exchange between Mr Lebic and Mr Fowler as to the retaining wall as meaning that the contemplated state of affairs had not (objectively) already failed to materialise by then (so as to give rise to a restitutionary claim for recovery of any moneys so paid by that time). (Indeed, it seems to me that the later discussions, in 2005 and/or 2006, in which a sale of the property was again raised, are not consistent with there being an understanding that there was at that stage any entitlement on the part of Nu Line Construction to proceed with the purchase. Mr Fowler at that time sought a vastly increased purchase price and, while there was objection to the price, objection to that price was not seemingly put on the basis that this involved a departure from the 'deal' that had earlier been struck or that the purchase price previously contemplated should be maintained; rather, Mr Mijatovic's position seems to have been that he already had an interest in a third of the land and should benefit from the increase in value of the land."

The subsequent meeting

92 Apart from those concerning the retaining wall, the only potentially relevant discussions after the solicitors' correspondence ended in May 2002 took place in late 2005 or the first half of 2006. Mr Mijatovic, Mr Lebic and Mr Fowler all gave evidence of such a meeting or meetings, as did Mr Romeo, an associate of or consultant to Mr Fowler. Mr Mijatovic said that there were two meetings, one in late 2005 attended by the Mijatovic brothers, Mr Lebic and Mr Fowler, and another in 2006 attended by the Mijatovic brothers, Mr Fowler and Mr Romeo (with Mr Lebic absent). Mr Lebic referred to one meeting, in early 2006, attended by five persons (being himself, the Mijatovic brothers, Mr Fowler and a person whose name he could not remember who accompanied Mr Fowler). Mr Romeo referred to a meeting attended by himself, the Mijatovic brothers, Mr Lebic and Mr Fowler. Mr Fowler acknowledged a meeting at around the relevant time but could not say precisely who attended.

93 Mr Lebic's account of discussion at the meeting to which he deposed was as follows:

"I said: 'We want to finalise the settlement on the land. It has been a long time and you have been waiting patiently. Is there any way that we could still buy the land for a good price like before.'

Peter said: 'I am still happy to sell you the property again. I have had the property revalued since 2000.' It was obviously going to be more than the $450,000 or so we had agreed years before.

One of us said: 'We will look into it and get back to you.' We were hoping to get our deposit back or maybe if the land was worth $400,000 or $500,000 maybe we could have come to some further arrangement."

94 Mr Mijatovic did not deal with any such meeting in his affidavit evidence (the judge referred to something said about it in an affidavit of 1 March 2012 and to a letter of 25 July 2006 annexed to that affidavit, but the affidavit in question was not read in the proceedings and is not before this Court). Mr Mijatovic was, however, cross-examined on the subject. He, as I have said, referred to two meetings. He said that the participants in the second meeting were himself, his brother, Mr Fowler and Mr Romeo. It was put to Mr Mijatovic that the purpose of the meeting was "to discuss the purchase of the land once again after the company had been resurrected, as it were". He replied:

"Not purchase of the land once again. It was an ongoing thing right up to that meeting."

95 In response to the suggestion that the purpose was "to try to negotiate a fresh deal", Mr Mijatovic said, "It was not a fresh deal". The cross-examination continued:

"Q. You knew that it wasn't going to be on the same terms as had been discussed in 2000, didn't you?

A. Yes, because at this stage Mr Fowler requested $1.56 million for the same property.

Q. So with that fact alone you knew that it was going to be a separate deal, a new deal?

A. Not a new deal, to me it was always an existing deal. We were either going to go in there and get our money back and interest as Mr Fowler promised on many occasions.

Q. Do you accept, sir, that the deal as you understood it and your evidence has been given at great length was that as you understood it the deal was $450,000 made up of these various payments that we have discussed?

A. Correct.

Q. And that the contract said $300,000 so that was the arrangement of what I am calling the original deal?

A. Yes.

Q. If at that meeting Mr Fowler said to you that the price was now one and-a-half million dollars, give or take-

A. Yes.

Q. - that in your mind must have triggered the fact that it was going to be a new deal?

A. No.

Q. But it surely was not going to be the same deal because the price was not the same, do you agree?

A. No, I don't agree.

Q. You think the price was going to be the same?

A. No, on many occasions before that meeting Mr Fowler has indicated to us that we have 2 options, either pay him 1 and a half million less what we already paid him or he would give us our money back plus interest. That was the two options that we had at that stage. There was no new deal."

96 The account given by Mr Romeo in his affidavit began:

"To the best of my recollection, we had a conversation in words to the effect:

Leo said: 'What can we do about getting the property? We have paid this money. We would like to see what we can do about getting the property or getting our money back. We have an interest in the property.'

I said: 'I don't believe there is a contract in place. We haven't seen one. A long time has transpired. There is nothing we can do.'

Peter said: 'I am prepared to offer to sell you the property again. It has gone up in value since 2000. Here is a valuation I obtained for the property recently.'"

97 Mr Romeo further deposed that Mr Fowler then produced a $1.5 million valuation and said:

"I am prepared to offer you the property again for market value with a discount of $100,000 as a gesture of goodwill between us."

98 Mr Fowler's account was recorded by the judge as follows:

"Mr Fowler deposes that Mr Leo Mijatovic said at that meeting that they wanted to talk about the purchase of the property and said 'We want to either buy it or see about getting some of our money back'. Mr Fowler says that he said the value of the land had gone up and wrote down a figure in excess of $1m but indicated that he was prepared to drop the price by $100,000 below market value (which might suggest that he was taking into account sums already received by that stage - although Mr Fowler says that this was a gesture of goodwill). Mr Fowler says that Mr Leo Mijatovic asserted that they had an interest in the property and that, if the value of the land had gone up, that interest was worth more."

99 When cross-examined, Mr Fowler had only a vague recollection of the meeting. The subject matter was, he said, "about re-buying - they wanted to re-buy the property".

100 In the light of this evidence, the primary judge concluded that the meeting had taken place in 2006, with the Mijatovic brothers and Mr Fowler, at least, present. Her Honour's assessment of the significance of what transpired at the meeting was as follows (at [167]):

"Ultimately, it does not seem to me that much turns on when the post-DOCA discussion as to the proposed purchase took place. It seems to me that it is of more relevance that the position adopted by the principals of Nu Line Construction was not to insist upon a sale at the original price but (on Mr Lebic's evidence) to engage in discussion as if the prospect of a sale was one that had still to be agreed (consistent with this being a fresh deal and not simply a continuation of the old deal) or (on Mr Mijatovic's evidence) to regard the earlier payments as having resulted in there being already a part interest in the land."

"Failure to materialise" - the concept

101 The "failure to materialise" concept is, in context, a difficult one. The judge addressed it by reference to Guardian Ocean Cargoes Ltd v Banco do Brasil SA (The Golden Med) [No 3] (above), a case in which a substantial payment had been made by the plaintiffs to the defendants in the context of protracted negotiations for the financing of certain shipbuilding. In an earlier judgment, it had been held that the plaintiffs, having paid the money on the condition that the negotiations were successful, were entitled to be reimbursed by the defendants when the negotiations broke down. Addressing the question of the time at which the cause of action arose, Hirst J (at 199-200) accepted the relevance of an analogy with cases of frustration, in particular Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe [1943] AC 32. Such cases, his Lordship said, show that the claim by a party to get back money paid under a contract, on the grounds that the consideration for which he paid it has totally failed:

"arises because, in the circumstances that have happened, the law gives a remedy in quasi-contract to the party who has not got that for which he bargained; thus the claim is to recover money to which the defendant has no further right, because in the circumstances that have happened the money must be regarded as received to the plaintiff's use..."

102 In the particular case before him, Hirst J held that :

"the cause of action only arose after the negotiations broke down, and it was no longer proper and appropriate for the defendants to continue to hold the $600,000 since the condition under which it had been deposited no longer applied; so that the defendants in the circumstances that had happened had no further right to the monies, which must thereafter be regarded as received to the plaintiffs' use."

103 The primary judge, after quoting that passage, said (at [284]):

"Although Hirst J refers to a remedy in quasi contract for total failure of consideration in course of his reasons, Guardian Ocean strictly so-called may be seen as a failure of condition case (that being also a recognised basis upon which restitution operates to entitle the plaintiff to repayment although in each case relief is based on a different principle). The distinction between a conditional payment and a claim for total failure of consideration was discussed in Baltic Shipping Co v Dillon (1993) 111 ALR 269 where Mason CJ was of the view (at 293) that in addition to total failure of consideration:

'An alternative basis for the recovery of money paid in advance pursuant to a contract in expectation of the receipt of the consideration to be provided by the defendant may arise when the defendant's right to retain the payment is conditional upon performance of his or her obligations under the contract. This basis of recovery has a superficial but not a close resemblance to the concept of an entire contract. In the class of case the plaintiff may be entitled to recover so long as the payment remains conditional.'"

104 Her Honour continued (at [287] - [288]), referring again to Baltic Shipping Co v Dillon (above):

"There is no right to sue for the return of a conditional payment until the condition fails, as until that time, the defendant retains a right to hold the monies advanced. Similarly, the right to sue on the basis of a total failure of consideration can arise only once the consideration has failed. In Baltic Shipping, Mason CJ noted (at 297) that:

'The action to recover money paid on a total failure of consideration is on a common money count for money had and received to the use of the plaintiff. The action evolved from the writ of indebitatus assumpsit. It is available only if the contract has been discharged, either for breach or following frustration, and there has been a total, and not merely partial, failure of consideration.' (emphasis mine)

Here, there is no enforceable contract to be discharged as such but logically the position should be the same."

105 I respectfully agree that an analogy with contract cases is apposite. There are, however, questions as to how the contract principles are to be applied to a case such as the present where payment has been made under or by reference to mere consensus or common intention. A concept of "failure to materialise" tends to imply some expressed or mutually expected time of fruition that is not met. That is not the situation here. It is not possible to point to a shared understanding that a particular deadline applied. The situation was one in which an agreement in principle was reached, solicitors were instructed to make the legal arrangements necessary to translate the non-binding agreement into a contract for sale, payments were made by the prospective purchaser to the prospective vendor in anticipation of that translation and the translation was never achieved.

106 In such a case, "failure to materialise" occurs, in my view, when the parties no longer share the common intention. The necessary inquiry is, to some extent, akin to that which must be made when it is alleged that parties to a contract have abandoned that contract, in the sense recently discussed in Fazio v Fazio [2012] WASCA 72 and Cedar Meats (Aust) Pty Ltd v Five Star Lamb Pty Ltd [2014] VSCA 32. In the former case, Murphy JA said at [74]:

"The abandonment of a contract, in the sense of the mutual release of future obligations, being an inferred agreement, does not depend upon the subjective intention of the parties, but upon whether their conduct (both acts and omissions) viewed objectively manifests an intention to discharge the contract: Summers v The Commonwealth [1918] HCA 33; (1918) 25 CLR 144, 151 - 152; Wallera Pty Ltd v CGM Investments Pty Ltd [2003] FCAFC 279 [2], [40], [57]; DTR Nominees Pty Ltd v Mona Homes Pty Ltd [[1978] HCA 12; (1978) 138 CLR 423]; Marminta Pty Ltd v French [2003] QCA 541 [21] - [22]."

107 There is reference here to the parties' "conduct (both acts and omissions)" and to an objective assessment of it. A particular kind of "conduct" is inactivity. In Marminta Pty Ltd v French [2003] QCA 541 (at [22]), the Queensland Court of Appeal approved the observation of Finkelstein J in CGM Investments Pty Ltd v Chelliah [2003] FCA 79; (2003) 196 ALR 548 (at [22]), that, in order to show that a contract has been abandoned by inactivity on both sides, it is necessary to establish that the inactivity produces the clear inference that one party does not wish to proceed with the contract and the other consented to that situation. That observation was not challenged on the subsequent appeal (Wallera Pty Ltd v CGM Investments Pty Ltd [2003] FCAFC 279) and is consistent with what was said by Dixon CJ and Fullagar J in Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420 at 432:

"There can be no doubt that, where what has been called an 'inordinate' length of time has been allowed to elapse, during which neither party has attempted to perform, or called upon the other to perform, a contract made between them, it may be inferred that the contract has been abandoned. A good example is to be found in Pearl Mill Co Ltd v Ivy Tannery Co Ltd [[1919] 1 KB 78]. See also Mathews v. Mathews [[1941] SASR 250 at p 255] and G W Fisher Ltd v. Eastwoods Ltd [[1936] 1 All ER 421, especially at p 426], per Branson J. What is really inferred in such a case is that the contract has been discharged by agreement, each party being entitled to assume from a long-continued ignoring of the contract on both sides that (in the words of Rowlatt J) 'the matter is off altogether'."

108 Similar reasoning may, I think, be applied to abandonment of common intention, but with important qualifications and, in the end, somewhat different results. The law is obviously more astute to protect contractual relationships than it is to qualify, in terms of legal consequences, the freedom of non-contracting parties to withdraw from an agreement in principle or mere shared intention. A shared intention to enter into a contract (or to seek to do so) leaves each party perfectly free to break off the relationship at any time and, subject to that possibility, implies effectuation of the intention within a time that is reasonable in the circumstances. As time passes and there is no effectuation, the expectation of non-contracting parties must be the opposite of that of contracting parties. Where there is a contract, the expectation is that the passage of time has no effect unless the contract itself so provides (or the delay is of the "inordinate" kind warranting an inference of agreement to abandon); but in case of mere shared intention to work towards a contract, the passage of time, coupled with inaction on both sides, will indicate progressive evaporation of the intention. It follows that a shared intention to enter into a contract should be taken to have ended if a contract has not been concluded by the time impliedly envisaged by the shared intention and there is, in an objective sense, no sufficient evidentiary basis for a finding that the mutual commitment continued beyond that time. Unless the parties' conduct shows some contrary consensus, the envisaged time for the making of the contract will be the time that is reasonable in the circumstances of the case.

"Failure to materialise" - assessment

109 In the present case, the reasonable time just mentioned was indicated by the progress of events from the point at which the vendor's solicitors submitted a contract for sale on 10 May 2000. The solicitors' correspondence shows that the matter was not straightforward. Complications were created by the lease of the communications tower, an adjoining owner's desire to obtain variation of easements and the need to secure removal of the Lucent Technologies equipment. Indeed, on 27 February 2002 - some twenty-two months after the correspondence between the solicitors had begun - the vendor's solicitors indicated that "numerous attempts" to deal with the last issue had been unsuccessful and asked whether Nu Line was "still interested in proceeding with all the matters" or wished to have its deposit back, implying that there were several "matters" that needed to be progressed and that, given the Lucent Technologies problem, the vendor may have apprehended that it would ultimately be unable to perform the fundamental obligation to deliver vacant possession.

110 That letter of 27 February 2002 was the first of three to similar effect to which Nu Line's solicitor made no reply. The judge was correct when, after describing the content of those letters, she referred to "the deafening silence to the successive requests for confirmation . . . over a four month period". In my opinion, the end of the four months' silence marked expiration of a reasonable time beyond which the parties' shared intention no longer envisaged the making of a contract, so that "failure to materialise" was properly regarded as having occurred at that point unless some aspect of the parties' conduct showed, as an objective matter, some contrary consensus.

111 The only postulated bases for a finding of such contrary consensus are the evidence given by Ms Gunesekera, Mr Mijatovic and Mr Lebic about subsequent contacts, the evidence about the retaining wall payment and the evidence about the 2006 meeting.

112 The evidence falls far short of warranting any conclusion that the parties' agreement in principle continued beyond May 2002. Mr Mijatovic himself regarded the matter as almost a "too-hard basket case", albeit one in relation to which he believed there was "an existing deal". But Mr Mijatovic's subjective thinking is of no moment. While he refers to "several occasions" on which Mr Fowler promised to refund the money with interest if there was no sale, he says nothing about when this happened or precisely what was said. Mr Lebic merely referred to phone contact with Mr Fowler "a few times after June 2000". That evidence does not permit any inference that there was meaningful dialogue after May 2002. Nor, in the context of the period of two years from May 2000 during which the solicitors were active, does Mr Lebic's evidence that Mr Fowler was being reasonable even to the extent of letting things go "for a long time, even years".

113 The evidence just mentioned must be viewed in the light of the voluntary administration that began in April 2003 and was followed by a deed of company arrangement that took just over two years to complete. It may reasonably be inferred that, if it took that long for Nu Line to assemble the deed fund needed to effectuate the deed of company arrangement, the theoretical ability of the directors to act for the company in relation to the purchase of the land was simply not matched by financial capability. Unilateral hopes or wishes must have remained in the realms of theory.

114 I also am of the opinion that the evidence about the retaining wall payment in December 2004 did not warrant an objective conclusion that the parties' shared intention regarding sale and purchase was, by their consensus, maintained when the payment was made or at the earlier point in October 2003 when the adjoining owner requested it; and that the judge was correct so to find.

115 The request for payment was received by Mr Lebic and came direct from the adjoining owner, Mr Ivanek. There is nothing to suggest that Mr Ivanek sent or gave it to Mr Lebic at the suggestion of Mr Fowler - indeed, there is no suggestion that Mr Fowler knew in advance about the payment of $10,000 on 22 December 2004 or the request for it made of Mr Lebic more than a year earlier on 20 October 2003.

116 There is no explanation of how it was that Mr Ivanek came to address the request for payment to Mr Lebic, apart from Mr Lebic's own testimony that he asked Mr Ivanek to do so "because its only a matter of time before we own the land". While that may demonstrate the intention of Nu Line (of which Mr Lebic was a director) regarding purchase of the land, it says nothing about the continuing existence of any intention of Mr Fowler that the land should be sold in accordance with the shared intention formed before April 2000 when solicitors were instructed on both sides.

117 Importantly, the evidence did not permit an inference that Mr Fowler, knowing what was to happen, stood by and allowed Nu Line to deal with Mr Ivanek and ultimately to pay him $10,000 in December 2004. This is because Mr Fowler's evidence was merely that, after the event, Mr Mijatovic or Mr Lebic told him that certain payments "had been made for the retaining wall", to which Mr Fowler had replied, "You don't have to pay them, it was all part of conditions of consent for the next door neighbour."

118 Had Mr Fowler been told in advance by Mr Mijatovic or Mr Lebic that Nu Line was about to make a payment for the retaining wall, any failure by him to reply to the effect that the matter had nothing to do with Nu Line would have been of significance. Such a failure could have been characterised as consistent with the continuing existence of an intention of Mr Fowler as to sale and purchase corresponding with that of Nu Line.

119 As it was, Mr Fowler's comment to Mr Mijatovic or Mr Lebic, on learning of the payment after it had been made, was merely that, as between the respective landowners, it was Mr Ivanek who carried the financial responsibility. As the judge correcly observed (at [325]), the fact that the payment had been made by Nu Line by the time Mr Fowler learned of the matter meant that there was no need for Mr Fowler to pursue the issue with Mr Mijatovic or Mr Lebic - added to which Mr Fowler's conduct was consistent with his "not being averse to the possibility that the stalled purchase negotiations might later be revived".

120 Nor, in my assessment, does it avail Nu Line to point to the 2006 meeting in support of its contention that there had been no "failure to materialise" at the time of that meeting. It is necessary to analyse the evidence of what happened at the meeting. Questions of when the meeting was held and who precisely was present do not need to be addressed.

121 Mr Lebic's evidence was that he, on behalf of Nu Line, asked Mr Fowler, "Is there any way that we could still buy the land for a good price like before?" Mr Mijatovic did not give evidence of precise words spoken, as recalled by him. He merely said that there was no "fresh deal" or "new deal" and that, to him, "it was always an existing deal"; and that this was so even though, at the meeting, Mr Fowler made it clear that he wanted over $1 million for the land. Mr Mijatovic did not agree that that created a "new deal". Mr Fowler's evidence was that he indicated that a price of more than $1 million now applied and that the discussion was about "re-buying". Mr Romeo said that Mr Fowler indicated a willingness to "offer you the property again for market value with a discount of $100,000 as a gesture of goodwill between us".

122 It is, to my mind, clear that both parties approached matters at the meeting on the basis that there might be renegotiation and replacement of the original agreement in principle by a new agreement in principle - failing which, Nu Line should have a refund of moneys paid. A basis for retention of those moneys would exist only if renegotiation produced a new consensus. Retention would then be referable to the new consensus as it had been to the old. But on any view of matters, that old consensus had ceased to constitute a basis for retention because the parties no longer subscribed to it.

123 There is the added point that the intervention of the deed of company arrangement had, in a practical sense, inhibited the ability of Nu Line to engage in commercial dealings. It apparently took more than two years (28 May 2003 to 27 June 2005) for the deed fund to be assembled, the entitlements of participating creditors to be ascertained and payments to be made to those creditors. That, plus the fact that a winding up application was filed very soon after the effectuation of the deed, suggests that Nu Line was in no financial position to undertake the purchase at the original price or any increased price. The source of the $10,000 that Mr Lebic caused to be paid to Mr Ivanek in December 2003 during the subsistence of the deed is unexplained. Because the external administration compromised Nu Line's ability to undertake significant financial transactions, it cannot be the case that Nu Line was, in any objective sense, party to a consensus as to purchase of the Lagana Place land during the deed period; and, if and to the extent that Mr Fowler knew of the external administration, he too was not then party to any such consensus.

124 It follows that the judge, having concluded that relevant "failure to materialise" occurred in May 2002, correctly decided that that conclusion did not require revision because of some consensus evidenced by subsequent conversations, events concerning the retaining wall, the 2006 meeting or several of these.

Outcome on the limitation issue

125 It follows that the judge was correct in her conclusion that the restitutionary cause of action, having accrued in mid-May 2002, was barred by s 14(1)(a) of the Limitation Act when Nu Line commenced proceedings on 29 September 2008.

126 It further follows that the judge was correct to deny recovery of all sums sought by Nu Line

127 This makes it unnecessary to decide whether, had the limitation defence not been available, Nu Line would have been entitled to recover in respect of sums beyond the $60,000 and $9,075 accepted by the judge. I proceed nevertheless to consider that question.

The additional payments

128 NuLine contends that her Honour should have been taken into account for the purposes of the restitutionary award several payments represented by invoices put into evidence. Mr Fowler was cross examined about a number of invoices that had been rendered by tradespersons and suppliers and referred, quite clearly, to expenses incurred in connection with the construction of a new home for Mr Fowler and his wife at Cecil Hills. Mr Fowler accepted, in relation to each such invoice, that he had in all probability presented it to Mr Mijatovic with a view to payment being made by Nu Line. Mr Fowler was not able to give an unequivocal answer in relation to any particular invoice, but answered "Yes" to the following question:

"And you asked Mr Mijatovic to pay certain of these invoices in relation to your house and you were aware that he did pay some of them; isn't that right?'

129 Mr Mijatovic, for his part, gave evidence that numerous invoices relating to the Cecil Hills house building project had been presented to him by Mr Fowler and that Nu Line had paid those invoices.

130 Among the tradespersons and suppliers who had rendered invoices in evidence were Eric's Art and Cobblestones. The judge accepted that an invoice dated 13 February 2001 rendered by Eric's Art in the sum of $9,075.00 and addressed to Nu Line itself related to supplies to Mr Fowler for his house building project. Her Honour also accepted that that Eric's Art invoice had been paid by Nu Line so as to confer on Mr Fowler a financial benefit to the extent of $9,075.00.

131 The controversy that confronted the primary judge and which was re-agitated in this Court concerns alleged payments of this kind for which no invoices were produced. There were, relevantly, seven such alleged payments. In relation to each, Nu Line relied on evidence less persuasive than invoices and receipts to support its contention that it had made the payment to a tradesperson or supplier for the benefit of Mr Fowler.

132 The primary judge received, in respect of each of the seven alleged payments, both documentary evidence and oral evidence. The core documentary evidence consisted, in each case, of three items: first, a serially numbered cheque butt containing particulars in handwriting; second, a statement of Nu Line's account with National Australia Bank referring to a cheque having a serial number corresponding with that printed on the cheque butt and an amount corresponding with that written on the butt; and, third, a record in Nu Line's ledger maintained on an MYOB accounting system which, as well as recording a cheque number and an amount, contained a reference to "Job 295" and a short narration. In relation to two payees, there was further documentary evidence (which was before the primary judge but apparently not referred to in submissions) concerning Australian Business Numbers.

133 The judge noted that Mr Fowler, in his evidence, did not deny having provided "some" invoices to Mr Mijatovic for payment. Mr Fowler was, however, unable (or unwilling) to explain which invoices had been so paid or the amounts involved.

134 Her Honour accepted a submission that the MYOB records were of limited value in proving a connection between payments undoubtedly made by Nu Line and any ongoing arrangement that Nu Line had with Mr Fowler regarding the Wetherill Park land. The content of the MYOB entries was in part derived from instructions from Mr Mijatovic to an internal accountant or bookkeeper and, as her Honour observed, there was no evidence from the internal accountant as to the preparation of those records or from the external accountant in relation to the records and accounts of the company. On that basis, the judge said that "the weight that can be attributed to the MYOB records seems low". The judge was invited by counsel for Mr Fowler to draw a Jones v Dunkel inference from Nu Line's failure to call evidence from the internal accountant as to the preparation of the MYOB records but it is not clear that her Honour actually did so.

135 The judge was also critical of the evidence of Mr Mijatovic. It was not that she disbelieved him or regarded him as an unreliable witness. Rather, there was surprise that the evidence had not been more diligently assembled. She noted that, although Mr Mijatovic had said in the witness box that there were (or would be) other records in existence as to some or all of the relevant alleged payments, his evidence on this "was vague and to some extent contradictory". The judge continued (at [135]):

"It might be assumed that in preparation for the hearing (if not indeed at the time of preparation of his affidavit) Mr Mijatovic would have sought to locate all relevant records of the payments claimed to have been made at least to the extent that those were within the company's possession or control. (Mr Mijatovic's refrain, when pressed on this issue, seemed to be that he did not realise that he would be asked about such matters, that he did not realise his case would be so hard to prove and that he regarded the cheque butts as the primary evidence of payment)."

136 It may be that more comprehensive documentary evidence could have been assembled. Perhaps Mr Mijatovic should have been better advised in the lead-up to the proceedings. But the real issue was whether Nu Line had, by means of the evidence it did tender, proved the matters that it was necessary for it to establish in order to make out the case it sought to make, that is, that it had, in each of the seven instances, paid from its own money a number of invoices rendered by tradespersons and suppliers for goods and services acquired by Mr Fowler and his wife in the course of the construction and fitting out of their new house.

137 A review of the evidence in relation to each of the alleged payments should be preceded by an explanation of the significance of the references to "Job 295" which appeared in all the MYOB entries to which reference is about to be made. Mr Mijatovic was asked what "Job 295" meant. His answer was:

"Lugarno [sic] Place was a job we carried in our accounts as a job 295 and all these were carried at 295."

138 That evidence was not challenged and it may be accepted that "Job 295" was an identifier applied internally by Nu Line to accounting entries related to Lagana Place, Wetherill Park. Furthermore, there is no reason to doubt that the several references to "Job 295" in MYOB records are contemporary references recorded at the time each ledger entry was made soon after the making of the relevant payment.

139 It may also be accepted, since there was no suggestion otherwise, that Lagana Place, the street in which the relevant land was situated, had no relevance or significance to Nu Line beyond that concerning the land for which it had negotiated.

Evidence concerning the payments

140 I turn now to a consideration of each of the separate payments.

Payment A: Cobblestones - cheque 011048

141 A cheque butt bearing the number 011048 records;

"28/6/00

COBBLESTONES

New Land

WP

Cheque $3,250-"

142 The words "New Land WP" are written in a different hand and ink.

143 Mr Mijatovich gave evidence that the writing on the cheque butt, except for "New Land WP", is his and that he believed that "New Land WP" had been written by "my accountant when he asked me". He elaborated at a later stage as follows:

"That was written by my accountant when he entered this particular invoice in the system and he would ask me what it was for. He would write it on the cheque butt and then he would enter it into the MYOB accounts as expenses for new land Wetherill Park,"

144 Bank statement 549 shows payment of cheque 011048 on 10 July 2000.

145 An MYOB entry records cheque number "11048", an amount of $3,250, a date of 30 June 2000 and a narration "Expenses New Land Wetherill Park" as well as "Job 295".

Payment B: De Gabrielle Kitchens - cheque 011049

146 A cheque butt bearing the number 011049 records:

"30/6/00

DE GABRIELLE KITCHENS

Bank cheque

New land WP

Chq $55,680-"

147 The words "New land WP" are again in a different hand being that which Mr Mijatovich attributed to the accountant. The balance was written by Mr Mijatovich.

148 Bank statement 548 shows cheque 011049 for $55,680.00 having been paid on 3 July 2000.

149 The MYOB ledger records cheque "11049", an amount of $55,680.00, a date of 30 June 2000 and a narration "Invoice missing" as well as "Job 295".

150 Mr Mijatovic gave specific evidence about this payment. He said that he did not have a copy of the invoice because Mr Fowler had not given him one and that Mr Fowler had not given him a receipt. On 30 June 2000, Mr Fowler asked that Mr Mijatovic obtain a bank cheque for De Gabrielle Kitchens, that he did so and that he called at Mr Fowler's home "on Saturday" - 1 July 2000 was a Saturday - and gave the bank cheque to Mr Fowler who in turn gave it to "his client [sic] who supplied him for the kitchen in his house which I saw on 1 July". Later parts of Mr Mijatovic's evidence make it clear that "client" is a transcript misprint for "supplier".

Payment C: Cobblestones - cheque 011749

151 A cheque butt numbered 011749 records:

"24/11/00

COBBLESTONES

LAGANA PL

Chq $4,640-'

152 Mr Mijatovich gave evidence that the handwriting on the cheque butt is his.

153 Bank statement 568 shows cheque 011749 for $4,640.00 having been paid on 24 November 2000.

154 The MYOB ledger records cheque "11749", an amount of $4,640.00, a date of 24 November 2000, "Job 295" and the following narration:

"Invoice 103 dated 24/11 ABN 83 001 457 727".

155 An invoice bearing a different date and for a different amount and issued to Mr Fowler by "Cobblestones" was in evidence. That invoice bears the name and address of Jaygee Consultants Pty Ltd in such a way as to indicate that that company carried on business under the name "Cobblestones". Below the company's name appears its Australian Business Number:

"ABN 83 001 457 727".

Payment D: Eric's Art - cheque 0011832

156 A cheque butt numbered 0011832 records:

"5/12/00

ERIC'S ART

FOWLER

GST Portion $835.84

Chq $8,358.40."

157 Mr Mijatovich gave evidence that the handwriting is his.

158 Bank statement 570 records payment of cheque 011832 for $8,358.40 on 6 December 2000.

159 The MYOB ledger records cheque "11832" an amount of $8,358.40, "JOB 295" and a narration:

"Invoice 1236 dated 5/12 ABN 43 182 681 737."

160 Several invoices of different dates and for different amounts rendered by "Eric's Art" are in evidence and record the issuer's Australian Business Number as:

"ABN 43 182 681 737."

Payment E: P Trendy Upholstery - Cheque 011944

161 A cheque butt numbered 011944 records:

"11.01.01

P TRENDY UPHOLSTERY & FURNISHING

PETER FOWLER

Chq $6,353.15."

162 Mr Mijatovich identified the handwriting as that of Mr Lebic and Mr Fowler.

163 Bank statement 574 records payment of cheque 011944 for $6,353.25 on 12 January 2001.

164 The MYOB ledger records cheque "11944", as payee "P Trendy Upholstery", an amount of $6,353.15, "Job 295" and a narration:

"Lagana Peter Fowler".

Payment F: Baker Furniture - cheque 011993

165 A cheque butt numbered 011993 records:

"15.01.01

BAKER FURNITURE

Peter Fowler (295)

Chq $3081.10."

166 Mr Mijatovich testified that he had written the content, except for "Peter Fowler (295)" which had been added by his accountant.

167 Bank statement 576 records payment of cheque 0011993 for $3,081.00 on 18 January 2001.

168 An MYOB entry refers to cheque "11993", a date of 15 January 2001 and an amount of $3,081.00. There is a reference to "Job 295" and a narration:

"Peter Fowler (Lagana Place)."

Payment G: Baker Furniture - cheque 012224

169 A cheque butt numbered 012224 records:

"19/2/01

BAKER FURNITURE

Chq $1,115.40"

170 The handwriting appears to be that which Mr Mijatovich confirmed to be his.

171 Bank Statement 584 records payment of cheque 012224 for $1,115.40 on 13 March 2001.

172 An MYOB entry refers to cheque "12224", a date of 19 February 2001 and an amount of $1,115.40. There is a reference to "Job 295" and a narration "Laguna Pl (Invoice to come see Leo)". The reference to "Leo" may be taken to be a reference to Mr Mijatovic.

Assessment

173 The evidence just canvassed warrants the following observations:

1. The coincidence of the cheque numbers and amounts shown on the butts and on the bank statements shows that payments of the particular amounts were made at the particular times out of the Nu Line bank account.

2. The references to corresponding cheque numbers and amounts in the MYOB entries show that those entries relate to the payments made by means of the cheques.

3. The "Job 295" reference in each MYOB entry shows that, for accounting purposes, the payments were recorded as being relevant or applicable to a single matter which Mr Mijatovic's oral evidence identified as the industrial site in Lagana Place, Wetherill Park.

4. There is no suggestion that Nu Line had, at the time, any interest or involvement in Lagana Place, Wetherill Park beyond negotiation with Mr Fowler for the purchase of the particular industrial site in that street.

5. Both Mr Fowler and Mr Mijatovic accepted that there had been an arrangement under which Nu Line, at Mr Fowler's request, made payments from time to time for items referable to Mr Fowler's home building project.

174 The evidence establishes that each of Payment A to Payment G was made by Nu Line. There is no suggestion that the cheque butts were other than genuine and contemporary documents. With one exception (Payment G), the cheque butts recorded some particular showing a relevant connection, as follows:

Payment A: "New Land WP".

Payment B; "New Land WP".

Payment C: "LAGANA PL".

Payment D: "FOWLER".

Payment E: "PETER FOWLER".

Payment F: "Peter Fowler (295)".

175 In addition, the obviously related MYOB entry refers, in each case, to "Job 295", a notation that, on Mr Mijatovic's evidence, shows a connection with the Lagana Place land. In the case of Payment B, Mr Mijatovic gave particular evidence about obtaining the bank cheque, taking it to Mr Fowler and, it seems, seeing Mr Fowler give it to the kitchen supplier.

176 The question for the judge in relation to these payments - as well as that concerning the Eric's Art invoice for $9,075 in respect of which she made findings favourable to Nu Line - was whether Nu Line had established that the payments were made in pursuance of the arrangement to which both Mr Fowler and Mr Mijatovic referred. Her Honour accepted such an arrangement as having been relevant to the $9,075 payment but noted that the evidence as to its terms was vague and unsatisfactory. It may have been, she said, that Mr Mijatovic and Nu Line were simply tiding Mr Fowler over a period of lack of liquidity. But if that were so, a right to repayment would have arisen on a basis different from that on which Nu Line relied.

177 The judge's assessment of the evidence on the matter was as follows:

"[136] Where the evidence was left, therefore, was that Mr Mijatovic says he was given various invoices by Mr Fowler and asked to pay those invoices but he has copies of only two of the invoices in question (though he has annexed other invoices which he now concedes were not paid by him or the company); that he either wrote cheques (evidenced by the cheque butts, the presentation of all but one of which is recorded in the bank statements) on the company bank account in payment of the invoices and that he provided those cheques either to Mr Fowler or to the supplier in question or (in the case of the DeGabriele Kitchen invoice, which was by far the largest in amount) that he wrote a cheque on the company account in order to purchase a bank cheque to give to the supplier (for which he had neither a record from the bank for the provision of the bank cheque nor a receipt from the supplier); that from time to time he provided copies of invoices and/or information to the company's internal accountant on the basis of which the payments were recorded in the company's MYOB records as expenses referable to a particular item of 'work in progress' (295), that being the proposed acquisition of the Wetherill Park land; and that the company's bank statements disclose a payment out of the account of amounts corresponding in all but one case to the amount appearing on the nine cheque butts (though the only evidence as to the recipient of those funds comes from Mr Mijatovic).

[137] Mr Fowler did not deny having provided 'some' invoices to Mr Mijatovic for payment but was unable (or unwilling) to explain which invoices had so been paid or in what amounts.

[138] I was left unpersuaded as to what particular amounts had been paid to third parties at Mr Fowler's request, save to the extent that the inference that could be drawn (from the failure of Mr Fowler's solicitors to demur in February 2002 from the proposition that a sum of $100,000 had been paid) that around $40,000 at least in (largely unidentified) invoices had been paid for his benefit. (As the onus of proof lies on Nu Line Construction to prove its case, this gives rise to a difficulty for it on the invoice payments claim.)"

178 I am of the opinion that this assessment fails to take account of material evidence concerning two of the payments under discussion, being Payment B and Payment D. In the case of Payment B there was specific evidence from Mr Mijatovic of the request from Mr Fowler for a bank cheque and the actions that Mr Mijatovic then took, including taking the bank cheque to Mr Fowler and seeing him give it to the supplier. That was, in my view, sufficient to warrant a conclusion, on the balance of probabilities, that the payment was related to the arrangement. In the case of Payment D, the fact that the payee was the party to whom the accepted payment of $9,075 was made provides a sufficient link with the arrangement.

179 No similar additional link exists in the case of Payments A, C, E, F and G. But, according to the balance of probabilities, the evidence concerning each of those payments was sufficient to require a finding that the payment was made pursuant to the arrangement under which Nu Line, at Mr Fowler's request, made payments from time to time for items referable to Mr Fowler's home building project. The judge referred to the possibility of some other arrangement under which Nu Line was simply to tide Mr Fowler over periods of illiquidity without reference to the proposed purchase of the land. There was, however, nothing in the evidence to suggest the existence of any such separate arrangement; and it is implausible that Nu Line should have become party to such an arrangement when it had already sought advantage for itself in relation to the proposed land transaction through the arrangement for the payment of Mr Fowler's expenses.

180 The evidence ties all of Payments A, C, E, F and G to that arrangement sufficiently to to justify a conclusion that, but for the limitation defence, the restitutionary claim would have succeeded in relation to those payments as well as Payments B and D and the additional payments in relation to which the judge reached conclusions favourable to Nu Line. Were it not for the limitation defence, the restitutionary claim would properly have been allowed not only for the sums of $60,000 and $9,075 in relation to which the judge made findings favourable to Nu Line but also all of Payments A, B, C, D, E, F and G above.

Interest

181 In view of my opinion on the limitation issue, the ground of appeal concerning interest is also academic. I therefore content myself with the observation that the judge's decision, at [263], as to the point at which retention became unjust was one that was open on the authorities.

Orders

182 In the result, therefore, I am of the opinion that there should be orders as follows:

1. Appeal dismissed.

2. That the appellant pay the respondent's costs.

183 YOUNG AJA: The relevant facts have been fully set out in the judgment of Barrett JA and it is of no purpose for me to set them out again except insofar as is necessary.

184 This appeal from a judgement of Ward J, as her Honour then was, raises three issues, though the issues before her honour were considerably more.

185 There were a number of complex issues before Her Honour, but only three arise on this appeal, viz:-

(A) When did the cause of action accrue?

(B) If the respondent was liable to the appellant, for what amount?

(C) From what date should restitutionary interest be calculated?

I will first deal with general matters and matters of background and then consider each of those issues in turn.

186 The basal facts are that the parties entered into negotiations for the purchase by the appellants from the respondent or his wife of land at Wetherill Park.

187 At the time that the initial negotiations were conducted an arrangement was made whereby the appellant would in due course enter into a contract to buy the land for a certain sum. The contract would show a lesser sum, but there would be advance payment made by the appellants to the respondent in addition to the stated contractual sum. These payments were of two types, first cash money, and secondly payments of invoices on which the respondent was liable in connection with the erection of a house on a separate piece of land.

188 There is no doubt that the cash monies were paid. There were problems in the primary judge's eyes with the appellant establishing its claim to the invoices which it says it had paid on behalf of the respondent, but the major problem for the appellant was that the judge held that its claims were barred by s 14(1)(a) of the Limitation Act 1969 (NSW).

189 The proceedings were commenced on 29 September 2008. There is no issue that a 6-year limitation period applies under the section of the Limitation Act previously cited. Accordingly, it is necessary to determine whether or not the appellant's cause of action accrued by 29 September 2002.

190 The cause of action in traditional legal terms would have been said to be an indebitatus for money had and received. These days it is one of the sub-classes of what is vaguely called restitution.

191 There is very little as to when a cause of action for money had and received accrues. However, Hirst J in Guardian Ocean Cargoes Ltd v Banco Do Brasil SA (The Golden Med) [No 3] [1992] 2 Ll Rep 193 held that in a case where the claim is based on what is traditionally called total failure of consideration, the cause of action accrues at the time when the contemplated state of affairs fails to materialise. I agree. Indeed, there was little debate about this principle on this appeal.

192 I share with Basten JA the concern that for modern lawyers the phrase "total failure of consideration" can be misleading. The term "consideration" as a legal term has changed over the centuries but in the present scenario we are not dealing with questions of contract or what is consideration in a contract, but rather with the essential obligation which the parties have taken upon themselves when the disputed money payment was made.

193 Even if one takes that translation of the word "consideration" one has, as Barrett JA has pointed out, difficulties in assessing when the mutually contemplated state of affairs fails to materialise. It is very difficult to put a time on when something doesn't happen.

194 I agree with Barrett JA (and indeed there did not seem to be that much dispute about this) that one must be looking to the time when both parties would be reasonably considered to have taken the position that the arrangement between them was finally and definitely not going to proceed. Only at that time did it, to use the modern jargon, become unjust, or, to use the ancient jargon, become inequitable for the person who received the money to retain it.

195 As clearly agreed by counsel at the hearing, the problem in the instant case is not the applicable principles of law so much as the assessment of how the facts fit into those principles. However, there is one matter that I should mention because although both parties agreed that there was a total failure of consideration it seems to me that it may have been arguable that there was only a partial failure of consideration and that that may have raised different problems. I merely say this because I do not wish to be the victim of academic criticism that I have missed an obvious defect.

196 What is a total failure of consideration has always been a very ticklish matter, in the olden days it could have been vital to a claim at law. Nowadays, it has lesser significance. In the leading case of Rowland v Divall [1923] 2 KB 500 the English Court of Appeal ruled that where a used car was sold to a purchaser and the vendor had no title, even though the purchaser had used the car for some months he could claim back the full amount of his purchase on the basis of a total failure of consideration because the vital matter was that he never had any title to the car. That decision has been the subject of academic debate as to its correctness, even in works as significant as Benjamin's Sale of Goods (8th ed 2010, Sweet & Maxwell) at [4.006].

197 The concept of total failure of consideration was recently reviewed by the Victorian Court of Appeal in Haxton v Equuscorp Pty Ltd [2010] VSCA 1; 28 VR 499. Dodds-Streeton JA, with whom Ashley and Neave JJA agreed, said at [184]:

"In determining whether a party making a payment under an unenforceable contract or otherwise, has a prima facie right to recover it in restitution, as for a total failure of consideration, it is first necessary to identify the benefit or return for which the payer bargained. Reference to many circumstances, including the terms of the unenforceable contracts would, in the usual case, be necessary to ascertain the benefits for which a payer has bargained. Where the unenforceable contract is inextricably connected to other agreements their total effect as a matter of substance is likely to be relevant. As Gummow J stated in Roxborough [Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516], the judicial development of restitution has increasingly emphasised substance over form".

When the case went to the High Court, where the appeal was dismissed, the High Court deliberately did not enter into discussion of this issue, see Equuscorp Pty Ltd v Haxton [2012] HCA 7; 246 CLR 498 at 518 [33].

198 Accordingly, it seems to me that counsel were right in accepting that even though the appellants did receive some benefit from the payment, namely that even though there was no option the subject land was effectively quarantined and reserved for them for some years by virtue of the arrangement. Despite this benefit the reason for the payment was that there would be a contract and that the payments made under the arrangement would form part of the purchase price and this contract never came to fruition.

199 I now turn to the basal issues on the appeal:

A - When did the cause of action accrue?

200 I have set out that in my view, and I believe in everyone's view, the search is for the date at which it became unjust for the respondent to retain the monies which had been paid to it, or on its behalf, and that means the date when the anticipated contract failed to materialise (finally).

201 On this matter my brothers have disagreed.

202 I respectfully adopt the analysis made by Basten JA. Without repeating what His Honour said, because I agree wholeheartedly with his analysis, it seems to me that the major reasons for concluding that the retention of the money had not become unjust before the end of September 2002 are:

(a) That the parties were both people of commerce, unrelated, and such people do not pay hundreds of thousands of dollars out of the goodness of their hearts, they expect some commercial return and when the commercial return is not forthcoming there is no reason why they should not demand their money back. The appellant never did demand its money back until well after September 2002.

(b) The incident respecting the retaining wall and the neighbouring owner points in the same direction. Although the learned primary judge took a different view of it, it seems to me that it is extremely significant that the respondent did not at that stage claim that the whole arrangement was at an end but rather said that there was no liability to pay the neighbouring owner.

203 Accordingly, I agree with Basten JA that the limitation defence fails.

B - If the respondent was liable to the appellant, for what amount?

204 As to how much is owing, I agree with Barrett JA (and also with Basten JA) that the full amount of the invoices must be allowed.

205 With respect to the learned primary judge, when a case is presented with inadequate evidence as to quantum one does bear in mind that there is an obligation on the plaintiff to put forward the evidence to make out it case and that if it does not then one may assume that the evidence is not there, or infer the contrary proposition.

206 However, in many cases, particularly where a long period of time has elapsed between the claimed payments and the time the case comes to court, there are reasons why full documentation may not be available. This may not be one of them but there are many such cases. In such a situation a judge just has to do the best he or she can and in a case such as the present where it was not in issue that invoices had been paid on behalf of the respondent, and there were cheque butts and other supporting material, even though the plaintiff could be justly criticised for not producing the best evidence the judge had the duty to do the best she could with the material that was before her. I agree with my brothers that on the material the primary judgment should have found for the appellant for the whole of the invoices.

C - From what date should restitutionary interest be calculated?

207 As to the date on which restitutionary interest should be calculated I agree with the proposal made by Basten JA.

Orders

208 Accordingly, the appeal should be allowed and orders made in accordance with the reasons of Basten JA.

**********

Decision last updated: 17 March 2014