Choppazilla Pty Ltd v Graves [2012] QCATA 192

CITATION: Choppazilla Pty Ltd v Graves [2012] QCATA 192 PARTIES: Choppazilla Pty Ltd (Applicant/Appellant) v Matthew Graves (Respondent) APPLICATION NUMBER: APL038-12 MATTER TYPE: Appeals HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Richard Oliver, Senior Member DELIVERED ON: 5 October 2012 DELIVERED AT: Brisbane ORDERS MADE: 1. Leave to appeal is granted. 2. The decision of the Tribunal dated 23 January is set aside and instead: (a) the respondent’s application is dismissed; and (b) The respondent pay to the applicant the sum of $7,320.20 by 30 November 2012. CATCHWORDS: Minor Civil Dispute – where claim for work done – where claim assessed as quantum meruit – where error in method of assessment of claim – whether procedural fairness – where appropriate to make assessment on the evidence Queensland Civil and Administrative Tribunal Act 2009, ss 142(3), 146 Pavey & Matthews v Paul (1987) 162 CLR 221 APPEARANCES and REPRESENTATION (if any): -- 1 of 8 -- 2 This matter was heard and determined on the papers pursuant to s 32 of Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act). REASONS FOR DECISION [1] Andrew Erwin is a director of Choppazilla Pty Ltd. Choppazilla conducts a business at Bowen Hills which involves the restoration, rebuilding and maintenance of motorcycles. Mr Graves is obviously a motorcycle enthusiast. [2] The relationship between the parties commenced in April 2008 when there were discussions between Mr Graves and Mr Erwin about the possibility of the building a custom motorcycle from a frame. They would speak from time to time and then by October 2010 Mr Graves acquired a frame and then engaged Choppazilla to carry out limited work on the head stock of the frame for a fixed price of $1,000. Mr Graves paid a $200 deposit and then work commenced. Work continued on the frame with Mr Graves regularly visiting the workshop and paying for extra work. There was no specific discussion about what additional work was to be done and how much would be charged although Mr Erwin contends that there was signage in the shop which indicated that the applicant’s hourly rate for labour was $75.00 per hour. [3] In any event, by December 2010 Mr Graves had paid $4,200.00 and on 11 December asked Mr Erwin for a receipt. A receipt was produced on that date which reflected what had been paid. The receipt has a notation that “the following note: more detailed description to follow” no further work was done on the bike after the issuing of the receipt. On 7 February 2011 Choppazilla issued a detailed invoice for hours worked on the bike totalling 131.425 hours at a rate of $50.00 per hour totalling $6,571.25. There was also an additional invoice for the $4,200.00 paid to date which also sets out detailed hours worked on the frame/headstock at an agreed price of $1,000.00 and the balance for frame backbone, frame front down tubes, frame seat base area including battery box and remove frame from jig and dress a total of 64 hours at $3,200.00. The interesting feature of this latter invoice is that Mr Graves was content to pay that amount of money which included costings on an hourly rate. [4] On receipt of these invoices Mr Graves instructed Choppazilla to stop all work on the bike and then the parties fell into dispute about the outstanding amount of $6,571.25. Mr Graves then filed an application in the minor civil disputes jurisdiction of the Tribunal seeking an order that he be relieved from paying that amount because, he says that all work was done on a “work package” rather than on an hourly rate. The reference to work packages is that each segment of the work, he contends, was agreed to and paid accordingly. [5] Choppazilla, within the commenced proceeding, sought to counterclaim the outstanding balance but increased the rate to $75.00 because, Mr Erwin said that the construction modification of Mr Graves’ bike was a long term project and therefore the hourly rate was going to be discounted -- 2 of 8 -- 3 to $50.00 but in view of the stop work instruction, the going rate, as is indicated in the workshop is $75.00 per hour. [6] After a lengthy hearing, a Tribunal Adjudicator on 23 January 2012 made an order that the applicant was to pay to Choppazilla $920.83 and Choppazilla was to make available to Mr Graves the partially constructed bike frame, and all parts and tools belonging to Mr Graves. [7] On 13 November 2012 Choppazilla filed an application for leave to appeal or appeal. Leave to appeal is necessary as this is an appeal from the Tribunal sitting in the minor civil disputes jurisdiction.1 Choppazilla was not represented by a lawyer in the proceeding and has drafted its own grounds of appeal. Although they are very wide, essentially it challenges the learned Adjudicator’s decision in that she did not give sufficient weight to Mr Erwin’s evidence, made incorrect findings of fact, and did not arrive at a fair and reasonable decision. The grounds of appeal have been supplemented with submissions. Procedural Fairness [8] The applicant claims it was denied procedural fairness because one of its key witnesses, Mr Tutticci, was ordered from the hearing room and was never recalled to give evidence. The applicant contends that Mr Tutticci could have given probative evidence about the contract for the supply of the work for Mr Graves; the actual work done on the bike frame and the cost of that work. From the latter point I apprehend this is in reference to the hourly rate displayed in the workshop and the reasonableness of that rate. [9] The applicant was represented by Mr Erwin at the hearing and it is clear from reading the transcript that he struggled with the procedure and the significance of the questions concerning the formation of the agreement and the relevance of the display of the hourly rate in the workshop. It is also evident he was relying on the assistance of Mr Tutticci. At the time Mr Tutticci was asked to leave the hearing room, Mr Erwin was consulting him about the evidence being given. [10] Although the learned Adjudicator said he could return to give evidence, it was not mentioned again and, I infer, Mr Erwin thought that he was permanently excluded from the hearing. There seems to have been a misunderstanding about Mr Tutticci’s involvement. This misunderstanding and confusion may also have arisen because of the way the hearing was conducted. [11] Tribunal adjudicators have an unenviable task of trying to keep parties on track during the hearing when there is constant interruption by the other party. The transcript shows that the hearing was disjointed with both parties and Mr Graves’ solicitor interjecting at various times. It was not 1 QCAT Act, s 142(3). -- 3 of 8 -- 4 conducted in the usual and preferable way where one party gives evidence and makes submissions and then the other. [12] Had Mr Tutticci given evidence about these matters, it may have assisted the learned Adjudicator in coming to her decision. [13] I will return to the procedural fairness point later in these reasons. Contract or Quantum Meruit [14] The learned Adjudicator was not satisfied that there was sufficient certainty as to the terms of engagement of the applicant to do the work for Mr Graves. The work started with a fixed price for the headstock but there was other work undertaken thereafter, but done so without there being any specific discussion about how the work was to be charged. The learned Adjudicator was not persuaded that a term could be implied that the work would be charged out at a reasonable industry rate and therefore sought to compensate the applicant for the work done under a quantum meruit. [15] Although the learned Adjudicator correctly relied on the statement in Pavey & Matthews v Paul2 that the quantum meruit is to be calculated at a reasonable rate for the work done or fair market value for material supplied, she did not apply the formula to the assessment of the applicant’s claim in this case. In deciding what is payable under a quantum meruit there needs to be an assessment firstly, of the work done by the applicant and secondly a determination as to what is a reasonable rate to be allowed for that work. Here the learned adjudicator based her calculation on the “work packages” and gave credit for money paid. This is confusing because adopting her approach in paragraph 53 of her reasons, this would amount to a fixed price contract as opposed to a quantum meruit claim. Assessment of work done [16] It is disputed by Mr Graves that he was to pay on an hourly rate basis, that much is clear. He also disputes the extent of the hours the applicant says it spent doing work on the bike frame but that is as far as his evidence goes. He does not challenge directly the work undertaken and the evidence establishes that Mr Erwin did considerably more work than just the headstock and the partially completed fuel tank. The applicant has justified the hours spent by reference to the invoice, photographs and his oral evidence. Therefore there is credible evidence, in the absence of a direct challenge to it other that a generalisation, that the applicant did spend additional hours working on the bike in addition to the time contained in the invoice for $4,200. It is also not disputed that the applicant received the benefit of the extra work. 2 (1987) 162 CLR 221. -- 4 of 8 -- 5 [17] The approach taken by the learned Adjudicator to calculate the quantum meruit is therefore misconceived. She concluded that as the respondent had paid the applicant $4,200.00 and $1,000.00 of that was for the headstock, then the balance must have been paid for the customised fuel tank only. In addition there was an amount of $1,620.83 for parts. Accepting the applicant’s cost for the fuel tank was to be a fixed price of $2,500.00 (which was not accepted by the applicant), then when the money already paid and the cost of parts was offset the balance payable to the applicant was $920.83. [18] This calculation did not take into account any of the extra work claimed to have been done by the applicant nor were there any reasons given as to why this evidence was rejected other that a general statement on credibility. The reference to the s 52 of the Trade Practices Act 1974 was a distraction which did not have any bearing on the case as there was no claim for damages as a result any misleading or deceptive conduct. Even so the basis of the finding is questionable because the applicant accepts, given the nature of the relationship, the terms and conditions of the applicant’s usual agreement were not given to the respondent when work was first commenced on the bike. The conduct of not providing the standard terms and condition, charging storage fees and increasing the hourly rate did not induce Mr Graves to deal with the applicant and therefore was not relevant to the proceedings at all. The relationship, which had developed over time was one based on trust and good faith. [19] Clearly more work was done than just the headstock and the fuel tank, which was not completed. The photograph of the bike frame taken on 8 October 2010 simply shows the frame without any component parts attached to it. By contrast, the photo taken on 9 December 2010 shows what appears to be a bike at least about 50% complete. The front forks are attached, wheels and mudguard in place with the chain drive system connected to the motor. There is obviously more work to be done but the construction of the bike is well on the way. This extra work was explained in detail by Mr Erwin in the hearing3 and is particularised in the invoice of 7 February 2011. This work goes well beyond the “work packages” for the headstock and fuel tank contended for by the Mr Graves. [20] In fact, Mr Graves acknowledged that additional work was done because, in the payment of $4,200.00 which was receipted in December 2010, he made an additional allowance because he could see that extra work had been done which was not covered by the “work package” arrangement.4 This acknowledgement is consistent with the applicant’s case that additional work was done with Mr Graves’ knowledge. [21] Unfortunately, the extent of this work was not assessed under the quantum meruit claim, rather reference was only made to the “work 3 Transcript page 53. 4 Statement attached to the application. -- 5 of 8 -- 6 packages”, that is the agreed cost for the headstock and the finding as to the cost of fabricating the fuel tank. [22] The assessment of the work undertaken by the applicant may have also been assisted with evidence from Mr Tutticci. It seems Mr Erwin did not realise that he could have called Mr Tutticci to give evidence in the proceeding after he was told to leave the hearing room. It is questionable, in the circumstances of how the hearing was conducted, whether he was actually denied procedural fairness. If Mr Tutticci was not going to give evidence he could have remained in the hearing room and if he was, it would have been preferable, not mandatory, for him to stay outside. Obviously if he heard the evidence of Mr Erwin and then gave his evidence there would have been a question of what weight should be given to his evidence. However it seems Mr Tutticci was, in the end, overlooked and at the very least, Mr Erwin should have been asked about his intentions with respect to Mr Tutticci’s evidence at the conclusion of the hearing. What was a reasonable rate for labour? [23] Mr Erwin says that Mr Graves knew of the standard hourly rate because of the sign displayed in the workshop. The only evidence of a sign in the workshop comes from Mr Erwin and also a photograph of the sign. The sign is to inform the customer that labour will be charged at a rate of $75/hr. Anyone who has visited a mechanical workshop will know that there is nothing unusual about such signage. Mr Erwin gave evidence that the sign was in the workshop when Mr Graves was there to discuss work on the bike. Although the learned Adjudicator cast some doubt on whether the sign was there, there is no evidence to say it was not. Although it was found that Mr Graves may not have been aware of the applicant’s hourly charge rate, it is reasonable to infer, in the absence of a fixed price, that the applicant knew that labour would be charged on an hourly rate, even if the rate was not known. [24] As to whether the rate is reasonable for the work undertaken, Mr Erwin provided a written document where he recorded the rates for his competitors in the Bowen Hills area. Some are well known names that include: Chopperworks, $88.00/hr; Morgan & Wacker, $126.50/hr; Rollies Speed Shop, $77.00/hr. Mr Tutticci, in the same document, was relied on to establish the applicant’s standard rate was $75.00/hr. He could have verified this if he gave evidence. [25] There was sufficient evidence to conclude that a reasonable hourly rate was $75/hr although for the reasons set out below, the rate to be adopted is $50/hr. Conclusion on Leave [26] In my view the approach taken with respect to the calculation of the quantum meruit claim, and to some degree the confusion about Mr Tutticci -- 6 of 8 -- 7 not giving evidence, or assisting Mr Erwin, constitutes an error of law and therefore leave to appeal must be granted. There ought to have been a determination as to what work was done and what would have been a reasonable rate for that work. It follows that the appeal should be allowed and the decision of the Tribunal be set aside. Remit or Decide [27] The next question is whether, under s 146 of the QCAT Act the matter should be returned to the Tribunal for reconsideration or whether I should substitute my own decision. The parties filed voluminous material in the proceeding below. The hearing went for some hours. It would be an impost to have the parties go through the hearing process again even if it was limited to the calculation of the quantum meruit claim. However, the original hearing was not conducted with a focus on the justification of the work done but mainly on the terms of the contract and whether it was limited to the “work packages” or hourly rate. Mr Graves still had the opportunity to challenge the work alleged to have been done by the applicant because this is what was claimed in the counter claim. I am therefore satisfied there is sufficient evidence before the Appeal Tribunal to substitute its own decision. [28] As the rules of evidence do not apply in the Tribunal, the applicant’s evidence, coupled with the sign in the workshop, whether observed by Mr Graves or not, ought to have been sufficient to establish that a reasonable rate was $75.00/hr. However, once the applicant set the rate of $50/hr, in the initial invoice, which rate was paid by Mr Graves for the extra work, then that rate constitutes the reasonable rate for the work to be undertaken on this project. The applicant is not then entitled to recover $75.00 simply because Mr Graves did not pay nor is it entitled to the storage costs because this included in the written terms that were not produced or even raised until after the dispute arose. [29] As there was no direct challenge to the hours claimed for the work done on the bike, other that a generalised objection, I am compelled to adopt the figure of 134 hours. The rate is $50/hr and therefore the total assessed claim on a quantum meruit is $6,700.00. Of the $4,200.00 paid by Mr Graves, he contends that part of this, $1,000.00, was for the extra work done. Although it is not completely clear how this works into the calculation I propose to give him the benefit of that payment and credit it towards the applicant’s claim. [30] There is also the cost of the parts, consumables etc which were used on the bike of $1,620.83 which sum was allowed by the learned Adjudicator. I see no reason to interfere with that finding. [31] Therefore the total payable is for the work done is $6,700.00 plus $1,620.23 for parts and consumables, less a credit of $1,000.00. This results in a sum of $7,320.23 to be paid by the respondent to the -- 7 of 8 -- 8 applicant. To be clear, if the sum already awarded of $920.83 has been paid then this will have to be deducted. [32] The decision of the Tribunal is that leave to appeal is granted and the appeal is allowed. The decision below is set aside and substituted with an order that the respondent’s claim for relief against payment is dismissed. The decision is varied so that the respondent is to pay to the applicant $7,320.23 by 30 November 2012. -- 8 of 8 --