Supreme Court allows appeal dismissing quantum meruit award due to lack of pleaded claim and insufficient evidence.

THE SUPREME COURT

[Appeal No. 219/2011]

Denham C.J.

O’Donnell J.

Laffoy J.

BETWEEN

MARK REYNOLDS

PLAINTIFF/RESPONDENT

AND

PAUL BLANCHFIELD

DEFENDANT/APPELLANT

Judgment of Ms. Justice Laffoy delivered on 4th day of February, 2016

Introduction

1. This judgment relates to an appeal of the defendant/appellant (the Appellant) against an order of the High Court of 6th April, 2011

made by Kearns P. (the trial judge) following a hearing on oral evidence. The order recorded the finding of the trial judge that “there

was not a concluded agreement between the parties for payment of €200,000.00”. It ordered that the plaintiff/respondent (the

Respondent) recover against the Appellant the sum of €75,000 and costs of the action when taxed and ascertained, the trial judge

having assessed “the value of services delivered by the [Respondent] to the [Appellant] in the sum of €75,000.00”. On the appeal,

the Appellant seeks an order discharging so much of the order as made an award of damages quantum meruit in favour of the

Respondent. There is no cross-appeal by the Respondent against the finding that there was not a concluded agreement between the

parties for the payment of €200,000 by the Appellant to the Respondent. Accordingly, the issue which arises on the appeal is whether

the award in the sum of €75,000 in favour of the Respondent on a quantum meruit basis was made in error, as the Appellant

contends. Peculiarly because of an absence of complexity in the procedures adopted and, in particular, in the manner in which the

claim and the defence were pleaded, it is necessary to outline what happened prior to the hearing on oral evidence in some detail.

Procedures/pleadings

2. The Respondent’s High Court proceedings were initiated by a summary summons which issued on 29th October, 2008. The material

statements in the special indorsement of claim on the summary summons for present purposes were as follows:

“At the [Appellant’s] request the [Respondent] rendered services to the [Appellant] assisting the [Appellant] with a

significant property development in which the [Appellant] was involved at Chateau Jouarries, Carcasonne (sic), France.

In and around November of 2006 within the jurisdiction of this Honourable Court, the [Appellant] agreed that he would pay

to the [Respondent] the sum of €200,000.00 in respect of services rendered by the [Respondent] to the [Appellant] and

this payment was to fall due on the practical completion of this development . . . The development was practically

completed in and around September/October 2008 and accordingly the sum due by the [Appellant] to the [Respondent] is

now due and owing.

Despite request for payment and in breach of the agreement between the [Respondent] and the [Appellant], the

[Appellant] has failed to pay the sum of €200,000.00 or any sum to the [Respondent].”

As the foregoing illustrates, the Respondent was seeking only to recover a debt, a liquidated sum in money, upon a

contract. Accordingly, the action was properly brought by way of summary summons in accordance with Order 2 of the

Rules of the Superior Courts 1986, as amended. There followed the Respondent’s prayer for relief which, in addition to a

claim for judgment in the sum of €200,000, contained a claim for “[s]uch further or other relief as this Honourable Court

shall deem meet”.

3. The next procedural step which is of significance is that by order of the High Court (McKechnie J.) made on 15th February, 2010 it

was ordered that, an earlier order, which had been made by the Master of the High Court on 19th January, 2010 in which it had been

ordered that the Respondent be at liberty to enter final judgment in the sum of €200,000 with interest from 1st November, 2008

together with costs when taxed and ascertained, be vacated. The circumstances in which that order had been made do not bear on

the issues on this appeal. It was further ordered that the action stand adjourned to plenary hearing as if the proceedings had been

commenced by plenary summons. Directions were given in relation to delivery of pleadings.

4. The Respondent’s statement of claim was delivered on 5th March, 2010. As was submitted by counsel for the Appellant on the

hearing of the appeal, it was in substance in similar terms to the special indorsement of claim on the summary summons. The relief

sought by the Respondent in the prayer for relief in the statement of claim was a verbatim replication of the relief sought in the

summary summons: judgment in the sum of €200,000; such further or other relief as to the Court should deem meet; interest

pursuant to the Courts Act 1981; and an order for costs.

5. Subsequently, a notice for particulars was raised by the solicitors for the Appellant. The only aspect of the notice of relevance for

present purposes is to be found in paragraph (1) in which particulars were sought of each request of the Appellant that the

Respondent render services as pleaded in the statement of claim, the particulars sought being – the date, the place and the

circumstances of the request and the names of the persons present. The response of the Respondent’s solicitors, as well as asserting

that the position of the Respondent had been extensively set out in the affidavits already sworn in the proceedings, that is to say,

the affidavits filed on the motion to the Master of the High Court and on the appeal against the Master’s Order, stated as follows:

“As the [Appellant] well knows he and the [Respondent] were partners in exploiting the commercial benefit to be gained

from the development at Chateau Jouarries, Carcasonne (sic), France. Both the [Respondent] and the [Appellant]

engaged in whatever was necessary to ensure a successful outcome for this development and the [Respondent] attended

site meetings, meetings with the local Mayor and the Vendor. The [Respondent] met with prospective investors such as

Mr. Conor Clarkson and the [Respondent] held meetings with prospective sales agents such as Tony Forte of Douglas

Newman Good. The [Respondent] had extensive meetings with prospective operators of the development, Eurogroup and

was involved in the negotiations of the contract with those operators. The [Respondent] had numerous meetings and

communications with the selling agents and was involved in the organisation of marketing campaigns including

accompanying selling agents on site visits. The [Respondent] was responsible for introducing the eventual funder of the

contract and had numerous meetings with that funder Neil McCann.”

6. The Appellant’s defence was delivered on 28th May, 2010. It traversed all matters pleaded by the Respondent. In particular, it was

denied that –

(a) the Appellant agreed that the Respondent would render services whether alleged or at all;

(b) the Appellant agreed to pay to the Respondent the sum alleged or any sum, whether in respect of services as

alleged or at all; and

(c) that the alleged sum or any sum was due and owing by the Appellant to the Respondent.

It was specifically pleaded that the Appellant was under no obligation, legal or moral, to make payment of the sum of €200,000 or any

other payment to the Respondent.

7. The delivery of the defence marked the end of the pleadings. No reply was delivered on behalf of the Respondent.

The hearing

8. The hearing took place over two days, on 5th and 6th April, 2011. On the appeal, counsel for the Appellant attached particular

emphasis to the fact that, when opening the case, counsel for the Respondent identified the issue for the Court as a very net issue,

that is to say, as to whether or not the Appellant owed the sum of €200,000 claimed by the Respondent. Emphasis was attached to

the fact that in opening, counsel for the Respondent, while outlining a joint venture agreement entered into by the parties in early

2006, under which the Respondent was to invest €750,000 in the French project, which had fallen away, specifically identified the

agreement in respect of which the Respondent was then suing as an agreement under which the Respondent was to be paid €200,000

on completion of the development for services rendered. The first day of the hearing was taken up with the opening and the evidence

of the Respondent.

9. At the commencement of the hearing on the second day, the trial judge raised with the parties whether, in the event that he was

unable to be satisfied as to the definite terms of any agreement between the parties, the parties were agreed that the matter could

be progressed on a quantum meruit basis, in which event the Court would have to decide what sum might be appropriate. The

unequivocal response of counsel for the Appellant was that he was not agreeing that the matter could be dealt with on a quantum

meruit basis, giving as a reason the way in which the matter had been pleaded and, in essence, that the Court was not in a position

to deal with a quantum meruit based claim. After a short recess, the cross-examination of the Respondent continued. In the course

of the cross-examination, the trial judge intervened, as counsel for the Appellant emphasised, pointing to the fact that the net issue

upon which counsel for the Appellant insisted, whether there was agreement reached between the parties, was the only issue in the

case, the “crucial” issue being whether there was a discussion between the parties at which a “buyout figure”, a valuation for

services rendered up to that time, was discussed and agreed, and if so what was decided. In the course of the intervention, the trial

judge stated that, if counsel for the Appellant was indicating that he should not deal with the case on a quantum meruit basis, then

the trial judge simply would have to decide it “on an all or nothing basis”.

10. After the intervention, the cross-examination of the Respondent was completed. Two witnesses, apart from the Respondent, were

called on behalf of the Respondent: Mr. Tony Forte and Mr. Neil McCann, both of whom were referred to in the reply to para. (1) of

the notice of particulars quoted above. Following the completion of the case of the Respondent, the Appellant then testified. One

other witness, an external accountant and auditor in this jurisdiction for the Appellant’s group of companies, gave evidence on behalf

of the Appellant.

11. Thereafter, the trial judge indicated that he was going to give his decision. He indicated that the longer he had been listening to

the case, the more sympathy he had with both sides in the matter. Indeed, the evidence adduced in relation to the collapse of the

property market in 2008 is conducive of sympathy for the parties.

Findings and decision of the trial judge

12. In his ex tempore judgment, having outlined the evidence as to the relationship between the Respondent and the Appellant in

relation to the development in France from its inception, the trial judge focused on the position from late November 2006 and the

alleged agreement pleaded and relied upon on behalf of the Respondent, outlining the evidence as to the interaction between the

parties in late November 2006, by e-mail and otherwise. He set out his conclusion as follows:

“. . . I am quite satisfied that this sum of €200,000.00 was mentioned by [the Respondent] . . . because [the Appellant]

accepts himself that it was mentioned. But insofar as reaching a conclusion, on the balance of probabilities, that a

concluded agreement was reached that that sum would be paid, I am not satisfied on the balance of probabilities that

any such agreement was made. I think that what [the Appellant] has said to me strikes me as more probable, that he

would consider this alternative proposal of €200,000.00 even though he did not revert and nothing further was heard from

[the Appellant]. I am driven to that conclusion by the emails, the contents of those emails, that there was a buy-off

figure, that [the Appellant] recognised that there would have to be some sort of settlement or deal. But if a figure was

mentioned and if he did not respond with a simply worded email, I am of the view that [the Appellant] nonetheless

recognised that he had to pay [the Respondent] something. But I am not satisfied on the balance of probabilities that

there was a concluded agreement that the sum should be €200,000.00.”

As has been outlined earlier, there has been no cross-appeal against that finding.

13. The trial judge then referred to the Respondent’s claim for such further and other relief as to the Court should seem meet and

indicated that he proposed to consider and apply it notwithstanding the protest by counsel for the Appellant. The trial judge made it

clear that he considered that there was nothing that had not been dealt with fully and comprehensively in the evidence. He rejected

the contention that the Appellant could not deal with the case, or could not deal with the evidence that had been given, or that the

Court had not been given enough information from which he could make a fair assessment of the value of the services rendered by

the Respondent.

14. In relation to that claim for relief, the trial judge went on to state that he was going to reach his own conclusion as to the value

of the Respondent’s services. He continued:

“I do believe while they were not as significant or as far reaching as he himself believes, they were nonetheless of

considerable value to [the Appellant], particularly in the early stages. I propose to assess the value of those services at

€75,000 and give a decree for that sum together with costs.”

Earlier, the trial judge had outlined the Respondent’s view of his contribution to the Appellant as follows:

“[The Respondent] on the other hand took the view I have added great value to this project: I have introduced Neil

McCann to it; I have also introduced DNG and I have introduced Tony Forte; I have made a significant ongoing

contribution.”

No evidence whatsoever, independent, expert, or otherwise, had been adduced at the hearing as to the scope of the benefit which

had flowed to the Appellant from, and was attributable to, the services which had been provided by the Respondent to the Appellant

or to put a monetary value on that benefit.

The appeal

15. As has been noted earlier, on the appeal the Appellant seeks to have so much of the judgment of the High Court as made an

award of damages on a quantum meruit basis discharged. The grounds on which it is alleged that the trial judge erred in law and in

fact or on mixed questions of law and fact in reaching that conclusion are set out comprehensively in the Appellant’s notice of appeal.

Those grounds, on the basis of the submissions made on behalf of the Appellant, may be subsumed into the following arguments:

(a) that a claim by the Respondent based on the principle of quantum meruit formed no part of the Respondent’s

claim as pleaded, as particularised, or as opened to the High Court on the hearing;

(b) that there was no evidence of the value attributable to the services the Respondent contended that he

provided to the Appellant before the High Court, there being no witnesses on that matter and no opportunity to

cross-examine;

(c) that there was no evidence of the benefit which was alleged to have accrued to the Appellant from those

services before the High Court and, in particular, no evidence that such benefit accrued to the Appellant personally,

as distinct from the Appellant’s group of companies; and

(d) that the issue of granting relief on a quantum meruit basis was raised by the trial judge and neither party

invited him to determine the claim on that basis.

What flows from those submissions is that it is contended that, in the course of the hearing in the High Court, the Appellant and his

counsel were taken by surprise, there being two elements which gave rise to that situation: that the pleadings did not contain a claim

for an award on a quantum meruit basis; and that the facts which might have underpinned a claim for an award on a quantum meruit

basis and its quantification were neither pleaded nor part of the case, in consequence of which no evidence was adduced in relation

to those facts.

Pleading point

16. The starting point for the Appellant in outlining the legal position in relation to pleading was to quote the oft-quoted passage from

the judgment of Fitzgerald J. in Mahon v. Celbridge Spinning Co. Ltd. [1967] I.R. 1, which, as stated by Keane J. in McGee v. O’Reilly

[1996] 2 I.R. 229, “conveniently and compendiously” states the purpose of a pleading. Fitzgerald J. stated (at p. 3):

“The whole purpose of a pleading, be it a statement of claim, defence or reply, is to define the issues between the

parties, to confine the evidence at the trial to the matters relevant to those issues, and to ensure that the trial may

proceed to judgment without either party being taken at a disadvantage by the introduction of matters not fairly to be

ascertained from the pleadings. In other words, a party should know in advance, in broad outline, the case he will have to

meet at the trial.”

Of course, the consequence of the importance of pleadings in defining the issues between the parties, as pointed out in Delany and

McGrath on Civil Procedure in the Superior Courts (3rd Ed. at para. 5 – 32), is that a party will not be permitted to make a case that

is materially different to its pleaded case, unless leave to make an appropriate amendment in the pleadings of that party is obtained.

No opportunity was sought by the Respondent in this case to amend his pleadings to include a claim for damages based on quantum

meruit or unjust enrichment. Delany and McGrath cite the decision of the High Court (Clarke J.) in Moorview Developments v. First

Active Plc [2008] IEHC 211 in support of that proposition. Clarke J. emphasised that, when opening a case, the plaintiff is confined to

his or her pleaded case. While counsel for the Respondent in their written submissions recognised that as being the law, it was

submitted that on any fair analysis of the case as pleaded, and on the evidence, the trial judge was entitled to assess the value of

the work done and the services rendered by the Respondent on the basis that he did. The reality, in my view, is that there was no

objective evidence before the High Court by reference to which the trial judge was in a position to assess the value of the work done

or the services rendered by the Respondent for the benefit of the Appellant.

17. However, in their submissions counsel for the Respondent went further. It was submitted that the trial judge was entitled to

determine the issue on a quantum meruit basis and to make the award he made, notwithstanding that the Respondent had not

pleaded or advanced in any way a claim based on quantum meruit. In support of that contention, counsel for the Respondent relied

on a recent decision of this Court: Duffy v. Ridley Properties Limited [2008] 4 I.R. 282. I consider that reliance on that decision is

misconceived.

18. In the commentary on the necessary contents of a statement of claim in Delany and McGrath (op cit.), it is stated at para. 5 –

42 that the statement of claim must contain a prayer for relief at the end setting out clearly the relief sought in summary form similar

to that used in an endorsement of claim in a plenary summons. However, the authors point out that there are some reliefs that can

be granted even if not specifically claimed. As regards the relevant examples given, it is stated that –

“it is not necessary to specifically claim the relief of damages in addition to or in lieu of specific performance, an inquiry in

damages . . .”,

citing the decision in Duffy v. Ridley Properties Limited. The rationale for that aspect of the decision in Duffy v. Ridley Properties

Limited is to be found in the judgment of Finnegan J., with whom the other judges of the Supreme Court concurred, (at para. 62).

There Finnegan J. stated:

“It is customary in the indorsement of claim and statement of claim in an action for specific performance, as here, to

claim damages in addition to or in lieu of specific performance but also to claim as a relief if necessary an inquiry as to

title and an inquiry as to damages. It is not necessary to do so. Special damages should be claimed and particularised in

the statement of claim. Prior to the Chancery Amendment Act 1858 the Court of Chancery, in refusing to grant specific

performance of a concluded agreement did so without prejudice to the right of the plaintiff to bring an action at common

law for damages. After the Act of 1858 the Court of Chancery and after the Judicature Act the High Court, in refusing

specific performance will proceed to consider the question of damages even where such question is not raised by the

pleadings: see Daniell's Chancery Practice (10th ed.) p. 1134 and cases there cited. In recent times at least, the common

practice for the court in refusing to award specific performance is to direct an inquiry as to damages: see In re Greendale

Developments Ltd. (No.3) [2000] 2 I.R. 514.”

That passage demonstrates that the exception to the general rule which arises where there is no express claim for damages in

addition to or in lieu of specific performance has a clear statutory basis. Further, the practice of directing an inquiry as to damages

ensures that the party seeking specific performance has an opportunity to address the issue of the quantum of damages on the

hearing of the inquiry. Nothing similar applies on or arises in this case.

19. Indeed, the Respondent’s reliance on the decision in Duffy v. Ridley Properties Limited and, in particular, the passage from the

judgement of Finnegan J. which was cited, highlights an evidential deficiency in this case, which clearly did not arise in Duffy v. Ridley

Properties Limited. Finnegan J. stated (at p. 75):

“I am satisfied that the trial judge was entitled to adopt the approach which she did. She dealt with the matter on the

basis of the evidence which the parties chose to adduce. She rationalised clearly the basis upon which she assessed the

evidence of the valuers, each of whom gave oral evidence and were cross-examined. This court should not interfere with

her finding.”

In contrast, as has already been noted, there was no evidence adduced in this case of the value of the work done and the services

rendered by the Respondent or the benefit which accrued to the Appellant on the basis of which the Respondent could be properly

remunerated on a quantum meruit basis by the Appellant.

20. The position adopted on behalf of the Appellant on the appeal was that it would be out of place to enter into a detailed exposition

of the law relating to a quantum meruit claim, when no such analysis took place in the court below. On the other hand, the line

adopted on behalf of the Respondent was that the Respondent rendered services to the Appellant, from which the Appellant had the

commercial benefit, and for which he continued to deny the Respondent recompense, so that, as I understand the argument, the

Appellant was thereby unjustly enriched. Counsel for the Respondent then referred to the decision of this Court in Corporation of

Dublin v. Building and Allied Trade Union [1996] 1 I.R. 468 as authority for the pre-conditions for the application of the doctrine of

unjust enrichment. It is true that in the judgment of Keane J. in that case, it was found that Irish law recognises the principle of

unjust enrichment, although the case was decided on the basis of the principle of res judicata.

21. In any event, even if the Respondent could have advanced a claim on the basis of the equitable principle of unjust enrichment,

the reality of the situation is that he did not do so. Such a claim would have had to be pleaded and evidence would have had to be

adduced to support it and, in particular, to value the alleged unjust enrichment. Neither was done. Accordingly, a submission that a

claim based on unjust enrichment should succeed, is just as flawed as the submission that a claim based on quantum meruit was

properly addressed and determined by the trial judge.

22. Returning to the pleadings in this case, the claim for relief as pleaded by the Respondent in the pleadings before the High Court

was for a specific sum, €200,000, founded on the contention that the Appellant was contractually liable to the Respondent for that

specific sum. Relief on the basis of quantum meruit or unjust enrichment was not sought, nor were the underlying facts relevant to

the establishment of a claim for either such relief pleaded. The consequence of the failure to plead those matters from the

perspective of the Appellant was two-fold. First, the Appellant did not have the opportunity to answer the claim for such relief by

pleading matters which he would have contended disentitled the Respondent to such relief. Secondly, the Appellant, not having any

advanced knowledge that he would have to meet a claim for such relief at the trial of the action, was not in a position to adduce the

appropriate evidence to answer the Respondent’s claim. On an examination of the statement of claim, as elaborated on by the replies

to notice for particulars, it is beyond question that the Respondent did not claim relief on a quantum meruit basis and did not plead

the factual and legal foundation for entitlement to such relief. That failure, in my view, should have been totally fatal to the

advancement of a claim for such relief at the trial, unless the Respondent had applied for leave to amend the pleadings, the

application had been acceded to, and the Appellant had been afforded an opportunity to answer and to adduce the evidence

necessary to address the amended claim. That did not happen. Therefore, the Respondent’s claim should not have been determined

on the basis of a quantum meruit claim.

Lack of evidence

23. As a matter of fact, there was no evidence before the High Court from which a reasoned decision could have been made as to the

valuation of the quantum meruit to which the Respondent now contends he is entitled.

24. Counsel for the Respondent referred this Court to the commentary on valuing the quantum meruit in Chitty on Contracts, 31st

Ed., at para. 29 – 077, which is addressed by reference to the decision of the Court of Appeal of England and Wales in Benedetti v.

Sawiris [2010] EWCA Civ. 1427. In fact, the most recent edition of Chitty on Contracts, the 32nd edition, deals with the topic at

para. 29 – 078 on the basis of the decision of the United Kingdom Supreme Court in Beneditti v. Sawiris [2014] AC 938. Without going

into the complexities of the commentary on that decision, it is sufficient for present purposes to note that it was held that the value

of the services which the claimant had provided should be assessed “by reference to their market value”. There was no evidence

before the High Court on the basis of which the market value of the services which the Respondent claimed he was entitled to be

recompensed for by the Appellant could be assessed.

25. The Court was also referred by counsel for the Respondent to a recent decision of the High Court (Hogan J.) in Bergin v. Walsh &

Ors. [2015] IEHC 594. In that very complex case, Hogan J. was in a position to value the entitlement of the plaintiff, an accountant,

on a quantum meruit basis for what was described as his “significant input” into the acquisition of, coincidentally, a property in

France, the assessment being based on 2% of the acquisition price of the property in question, as set out in the judgment at paras.

513 and 535 of the judgment. That method of assessment could not be applied by analogy to the evidence which was before the High

Court in this case.

26. In support of the argument that it is open to this Court to let the trial judge’s valuation of the quantum meruit in this case stand,

counsel for the Respondent pointed to the fact that the Respondent himself, apparently, valued the services he provided to the

Appellant at €350,000, but was prepared to settle for €200,000, and that the figure arrived at by the trial judge, €75,000, was

minimalist and very conservative. That argument does not stand up to scrutiny. There was no evidence before the High Court on

which the value of the quantum meruit could be properly assessed and there is no rational basis for the figure of €75,000 awarded to

the Respondent against the Appellant.

27. An alternative argument advanced on behalf of the Respondent was that, if this Court were to accept the submission on behalf of

the Appellant that there was inadequate evidence before the High Court by reference to which the quantum meruit could be valued,

the appropriate order for this Court to make would be to remit the matter to the High Court to have the value of the quantum meruit

assessed. The lack of relevant evidence in the High Court is attributable to the fact that the Respondent’s claim was not pleaded as a

claim for relief on a quantum meruit basis. Therefore, it would not be appropriate to remit the matter to the High Court.

Summary of conclusions

28. The approach adopted in the High Court of awarding the sum of €75,000 to the Respondent against the Appellant for services

rendered on a quantum meruit basis was incorrect in that:

(a) neither a claim for such relief nor the matters which would have established an entitlement to it had been pleaded;

and

(b) there was insufficient evidence before the High Court to arrive at a proper valuation of the quantum meruit, even

assuming entitlement to payment on a quantum meruit basis could be established.

In the light of those conclusions, I would allow the Appellant’s appeal.