Liebe v Molloy [1906] HCA 67; (1906) 4 CLR 347 (29 October 1906)

HIGH COURT OF AUSTRALIA

Liebe Plaintiff, Appellant; and Molloy Defendant, Respondent.

H C of A

On appeal from the Supreme Court of Western Australia.

29 October 1906

Griffiths C.J., Barton and Higgins JJ.

Pilkington K.C. (with him Northmore), for the appellant.

Haynes K.C. and Pennefather K.C. (with them Canning), for the respondent.

Pilkington K.C. in reply.

Haynes K.C. As to costs—

The judgment of the Court was delivered by

Griffith C.J.

This is an appeal from a decision of the Full Court of Western Australia, reversing a decision of McMillan J. on a case stated by an umpire raising the question whether the appellant was entitled to recover a sum of £5,000 and upwards from the respondent. The question arises on a building contract, under which the appellant, a contractor, was to build for the respondent, the owner, a theatre at a cost of over £30,000. At the conclusion of the contract, disputes having arisen, the matters in dispute were referred to arbitrators, and, they having disagreed, to an umpire. With respect to the sum now in question, which was claimed for extras, a difficulty arose in the mind of the umpire as to whether he ought to award in favour of the appellant or the respondent, and in accordance with the provisions of the Arbitration Act he stated a case for the opinion of the Supreme Court. After setting out the terms of the contract and specifications, and the submission, he stated certain facts as found by him, and upon those facts submitted this question for the opinion of the Court: "Whether upon the facts as herein stated the said Molloy (the respondent) is liable under the contract between the parties to pay the amount of the said works as set out in list C or any part thereof to the appellant." By the specification of the contract it was expressly stipulated "that no alteration of any kind will be allowed to invalidate the contract, nor will any extra be allowed for any thing or things implied by the specification but the drawings and specification must be taken together. In case of any extra work required to be done or ordered either by architect or proprietor such order must be in writing, stating the nature of the same together with the fixed amount, and to be signed by the architect and indorsed by the proprietor; otherwise no extra of any kind shall be recognized or paid for." In the general conditions of the contract it was specified by clause 6 "No works beyond those included in the contract shall be allowed or paid for without an order in writing from the employer and architect." Then followed a stipulation that if the contractor should be called upon to do work that he considered did not come within his contract and the architect refused to give an order, by which I understand an order in writing indorsed by the proprietor, he should nevertheless perform the work and give notice that he claimed to have the matter decided by arbitration. The works in question, amounting in value to over £5000, were, in one sense at any rate, extras. Whether works of that kind were contemplated in the specifications or drawings or not is a matter which it is not necessary to determine. The umpire found that no orders in writing indorsed by the owner were given in respect of any of them, but he also found that the employer, Molloy, had such knowledge of those extras as might be fairly inferred from the fact that he was constantly on the works and taking an active interest therein. Before McMillan J., and before the Full Court, it was contended that upon these facts it ought to be inferred that the owner, Molloy, entered into an implied contract to pay the fair value of these works as extra works, and so McMillan J. held. On the other hand it was contended that no such inference could be drawn, and that view was accepted by the Full Court. The law on the subject may be very briefly stated. There was a written contract between the parties, and these items cannot be brought within its terms in face of the express stipulation that "no extra shall be paid for unless ordered by an order in writing by the architect indorsed by the employer;" but that stipulation does not exclude altogether the implied doctrine of law that, when one man does work for another at his request, an implied obligation arises to pay the fair value of it. The question therefore is whether,notwithstanding the absence of written orders, the contractor is entitled to recover these sums, or in other words, whether under the circumstances of the case an implied contract to pay for them is to be inferred. That is an inference of fact to be drawn by the tribunal which is called upon to determine the matter, that is, the umpire. Now, the only fact found is that the employer had such knowledge as to these works as may be fairly inferred from the fact that he was constantly on the work, and taking an active interest therein. But a further inference must be drawn before a liability to pay arises, namely, that there was an implied contract to pay. It might be inferred, on the one hand, that, having regard to the nature of the works, the fact of the owner's presence, and the nature of the interest he took, he knew that they were outside the contract, and knew that the contractor expected to be paid for them as extras. On the other hand, it might be inferred as to all or some of them that he did not know that they were extras, or did not know or believe that the contractor expected to be paid for them. But that as I have said is a question of fact, and the umpire, not the Court, is the judge of the facts. It is impossible, we think, for this Court, or for the Supreme Court to draw the necessary inference of fact. It must be drawn by the umpire himself, and upon his finding on the question of fact depends the right of the appellant to recover the amount claimed or any part of it. An implied contract may be proved in various ways. When a man does work for another without any express contract relating to the matter, an implied contract arises to pay for it at its fair value. Such an implication of course arises from an express request to do work made under such circumstances as to exclude the idea that the work was covered by a written contract. So it would arise from the owner standing by and seeing the work done by the other party, knowing that the other party, in this case the contractor, was doing the work in the belief that he would be paid for it as extra work. If the umpire was of opinion that any of this work was done under such circumstances that the owner knew or understood that the contractor was doing the work in the belief that he would be paid for it as extra work, then the umpire might, and probably would, infer that there was an implied promise to pay for it. That is one instance. Again, the architect might have been expressly authorized by the owner to order extra work. Under such circumstances it would not be understood by either party that it was included in the lump sum specified in the contract. As, in the view which we take of the case, the matter must go back to the umpire, it is not desirable to state in further detail what would be sufficient evidence of an implied contract.

It follows that, the necessary inference of fact not having been drawn by the umpire, it is necessary that the matter should be referred back to him for reconsideration as to the material fact which he has not yet found, and the matter for his determination, we think, should be, "whether, irrespective of the express terms of the contract, it has been proved to the satisfaction of the umpire that the respondent, by himself or his authorized agent, promised, either expressly or by implication from his conduct, to pay for the works specified in list C or any of them as extra works." If, on his reconsideration, any question of law arises which he desires to reserve for the opinion of the Supreme Court he can do so, but in the words of Lord Halsbury L.C.:—"In order to reserve it effectually and properly, he must affirmatively, and not in the alternative, find the facts upon which that question of law depends": North and South Western Junction Railway Co. v. Assessment Committee of the Brentford Union[1]. Whether in any case an agent is authorized to make a contract or not is always a question of fact, the proof of which lies on the party alleging the authority. It will be necessary therefore for the umpire to ascertain in each instance, if an implied contract by an agent, and not by the principal, is set up, that the agent had authority to make it.

We think, therefore, that both the orders before us should be discharged, and that the award should be remitted to the umpire to determine the question I have stated; and we think also that under the circumstances there should be no costs of the proceedings before McMillan J. or before the Full Court or before us.

Order appealed from discharged. Order substituted to the effect that the award be remitted to the umpire for reconsideration of the matter above stated.

Solicitors, for appellant, Northmore, Lukin & Hale.

Solicitors, for respondent, R. W. Haynes & Co.

[1] 13 App. Cas., 592, at p. 594.