Quantum Meruit in the Building Disputes Tribunal

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1 Building t Quantum Meruit in the Building Disputes Tribunal - Philip Davenport, Lecturer, School of Building, University of New South Wales. Synopsis Many claims by builders in the NSW Building Disputes Tribunal include a quantum meruit claim. Although the claim is often made, it is not often that there is a basis in law for awarding the builder a quantum meruit. There are two distinct juridical bases for a quantum meruit, namely contract and unjust enrichment. The method of calculation of a quantum meruit under a contract is not identical to the method ofcalculation ofa quantum meruit based on unjust enrichment. The elements necessary to prove an entitlement to either quantum meruit are discussed, together with a number of examples. Introduction Each year in the NSW Building Disputes Tribunal, hundreds of claims are made by builders for payment for residential building work in respect ofwhich the builders have no enforceable contract. Builders frequently refer to the claims as quantum meruit claims. Some claims are for additional work which was performed by the builder in the course of carrying out a written contract. Sometimes the builder claims that the owner ordered the extra work. Sometimes the builder claims that the extra work was carried out without an order from the owner but that the work was necessary. Sometimes the claim is for amounts paid by the builder, allegedly on behalf ofthe owner, to a third party, e.g. the council, a subcontractor or a surveyor. There are numerous different situations where builders claim a quantum meruit. There is a widespread beliefinthe residential building industry that builders can ignore the requirements s.6 of the Building Services Corporation Act 1989 NSW that contracts for residential building work and variations to residential building work be in writing. Many, maybe all, builders believe thatthey canrecoverpaymentfor residential building work (including variations) notwithstanding that there is nothing in writing describing the work. The following is an extract from a letter from a builders' trade association to an owner: "At law, it is settled that the Association's members are entitled not only to the original contract sum plus the reimbursement offees and costs expended on your behalf but that they are also entitled to be paid for all additional work done by variation orderedbyyou evenifno writtenvariationhas been entered into. The decision of Mr. Justice Brownie in the Supreme CourtofNSWinMay 1991 inthe caseoflee Gleeson Pty. Ltd. v Sterling Estates Pty. Limited & Ors (10ACLR159) at page 165 makes it entirely clear, that, pursuant to the legal doctrine of quantum meruit, the Association's member is entitled to be paid in full for work carried out under your instructions notwithstanding the fact that no written order was obtained for such variation." Quantum meruitis Latin for"as much as he deserved". It is generally translated as "the reasonable value of services". However, the term is ambiguous. When there is in fact anenforceable contractto do workbutthe pricehas not been agreed, the claimant claims a quantum meruit meaning reasonable remuneration for the services provided. When there is no enforceable contract, the claimant claims a quantum meruit meaning restitution of the amount by which the defendant has been unjustly enriched. The first claim is concerned with remunerating the worker. It is not concerned with the value to the defendant of the work performed. The second claim is to prevent unjust enrichment of the defendant. The defendant is called upon to disgorge the enrichment. The distinction is made inpavey & Matthews Pty Ltd v Paul (1987) 61 ALJR 151 by Brennan J at 156 and by Deane J at 165. When builders make a quantum meruit claim for work performed, it is important to distinguish whether the claim is made under or for breach of a contract between the builder and the owner or whether the builder is not able to enforce any contractual remedy for the particular work. The latter instance includes the case where there was a contract but it was repudiated by the owner and the contractoraccepted the repudiation and sues for restitution in preference to damages. The Jurisdiction of the Building Disputes Tribunal The NSW Building Disputes Tribunal was established by the Consumer Tribunals Act, S.10 provides that the Tribunal has jurisdiction to hear and determine a consumerclaim. S.12B provides that a building claim is to be considered a consumer claim. S.12A provides that a building claim includes a claim for payment ofa specified sum ofmoney "that arises from a supply ofbuilding goods or services, whether under contract or not, or that arises

2 under a contract that is collateral to a contract for the supply of building goods or services". S.12A says: "Building goods or services" means goods or services supplied for orin connection with the carrying out ofresidential building work or specialist work (within the meaning of the BSC Act) being goods or services: (a) supplied by the person who contracts to do that work: or (b) supplied in such circumstances as may be prescribedto the person who contracts to do that work. Forpresentpurposes, paragraph (b) ofthe definition is not relevant and will be ignored. The important aspect of the definition is that only goods or services supplied by the person who contracts to do the work, are building goods or services within the meaning of the Act. Take the case ofa builderb who has a contract (written or oral) with an owner 0 to build a house. The residential building work is the house. If the B supplies additional goods or services "in connection with the carrying out of the residential building work" then it seems that that additional work is within the definition of"building goods and services" even though it is not provided under the contract. The goods or services are provided by the person who contracts to do the residential building work. Ifthe goods or services were provided to 0 by C who has no contract with 0 to carry out residential building work, then it seems thatthe goods orservices are notwithin the definition of"building goods or services". Some quantum meruit claims by builders fall within this category. Sometimes, in the expectationthat a contractwill be made, a builder carries out work. Ifno contract is ever made then it seems that the Tribunal does not have jurisdiction. This is because the goods and services were not provided by a person who contracted to carry out residential building work. Sometimes a builder may carry out work in the mistaken belief that the owner will agree to pay for it, but no contract for residential building work exists. Sometimes the buildermay carry outwork on the wrong land orfor the wrong person. There could be a possibility that the builder has a valid claim for restitution (quantum meruit) based on unjust enrichment. However, these are instances where the claim should be brought in a court, not the Tribunal. To bring the claim in the Tribunal, there must be a contract for residential building work. It is not necessary that the contract be in writing and it is not necessary that the amount claimed is claimed under the contract. But for the Tribunal to have jurisdiction, the builder must have had a contract with the respondent for some residential building work. The words "whether under contract or not" in the definition of "building claim" catch goods or services which are not provided under a contract for residential building work but "in connection with the carrying out of residential building work" by the person who contractedto carry out the residential building work. But they do not catch goods or services which are not supplied in connection with the carrying out of building work by the person who contracted to carry out the residential building work. In other words, a claim which is not connected with work under a contract is not within the definition of "building claim". The consequence is that there are quantum meruit claims by builders which are outside the jurisdiction ofthe Tribunal. What about the case where the goods or services are provided directly to 0 the owner by S a subcontractor to B the builder? For example, the bricklaying subcontractor may carry out additional work which is not work required by the contractor and not work under the subcontract. If0 has requested the work then there may be contractbetween o and S. But take the case where there is no contract between 0 and S. The work is not goods or services provided under a contract. Are they goods or services provided in connection with the carrying out ofresidential building work? The answer is "Yes". But are they "goods and services supplied by the person who contracts to do that work"? The answer appears to be "No". It seems that"contracts" mustmean"contracts withthe owner". IfS supplies goods or services to 0 and there is no contractbetween Sand0, it seems that the Tribunal has no jurisdiction to entertain a claim for restitution (quantum meruit). In a court, S might succeed in a claim against 0 for restitution. It is seems that before the Tribunal could entertain a quantum meruit claim, the Tribunal must find the existence ofa contract (oral or written) between the builder and the owner for some residential building work. Ifthere is no such contract, there is no jurisdiction. Ifthere is a contract between the builder and the owner for some residential building work, then (subject to any other limitations under the Act) the Tribunal has jurisdiction to entertain a quantum meruit claim for recompense for work in connection with the residential building work. In this paper, references to residential building work apply equally to specialist work within the meaning ofthe Building Services Corporation Act Section 12B(2) of the Consumer Claims Tribunals Act 1987 excludes claims by builders who were unlicensed at the time ofthe contract for the supply of goods or services. Unlicensed builders cannot bring any claim, much less a quantum meruit claim. This also means that the Tribunal does not have jurisdiction to hear a counterclaim by an unlicensed builder for a quantum meruit. The Building Services Corporation Act 1989 Section 6 of the Act provides: "6(1) A contractunder which the holder ofa license undertakes: (a) to do, in person orby others,any residential building work or specialist work; or (b) to vary any residential building work or specialist work or the way in which any such work is to be done, is not enforceable against the other party to the 14

3 contract unless the contract is in writing signed by or on behalf of each of the parties to it and sufficiently describes the work the subject of the contract." There are some exceptions that are not relevant for present purposes. Since the High Court decision in Pavey & Matthews Pty Ltd v Paul (1987) 61ALJR 151 and the decision of Brownie J in the NSW Supreme Court in Lee Gleeson Pty Ltd v Sterling Estates Pty Ltd (1991) 23 NSWLR571 itis generally accepted that section 6 does not bar a claim by a builder to restitution (quantum meruit) based not on contract but on the doctrine ofunjust enrichment. Accepting that this is the law, the result is that when a builder carries out work under an oral contract which is unenforceable by virtue of section 6, the builder is not precluded from bringing a claim based on the doctrine of unjust enrichment. However, the fact that a builder is not precluded from bringing a claim for quantum meruit based on the doctrine of unjust enrichment does not necessarily mean that the builder is entitled to bring such a claim in the Tribunal or to succeed in such a claim. Unjust Enrichment A claim based on the doctrine of unjust enrichment must be proven just as any other claim has to be proven. The mere fact that s.6 does not preclude a claim based on unjust enrichmentdoes not meanthat there has been unjust enrichment. It is necessary for the builder to prove the existence of the elements which constitute unjust enrichment. Unjust enrichment is not some vague notion of fairness orjustice. It is a legal doctrine the limits ofwhich are to be found in decided cases (see David Securities v Commonwealth Bank (1992) 66ALJR 768). If there has been unjust enrichment then the law provides the remedy ofrestitution. Courts and the Tribunal within their respective jurisdictions can order the person unjustly enriched to give up the enrichment. The award is not an award of damages but the return of the goods or services or their value in money. In Lee Gleeson, Brownie J at589 describes this quantum meruit claim as "aclaim for a sum of money representing a fair remuneration for the benefit of the work received and retained by the owner". See also Deane J in Pavey at 167. To prove an entitlement to restitution based on unjust enrichmentthe buildermustprove the following elements: 1. that the owner has been enriched (received a benefit) by the supply of building goods or services; 2. that the goods or services were supplied by the builder; 3. that it would be unjust for the owner to retain the benefit (the enrichment); 4. that there is no bar to the restitutionary claim such as a valid and enforceable contract between the builder and the owner covering the supply of the goods or services. Following are examples to illustrate the application of the doctrine of unjust enrichment to the type of claims brought by builders in the Tribunal. In these examples, it will be assumed that the Tribunal has jurisdiction and that section 6 of the Building Services Corporation precludes a contractual claim by the builder. Example 1 A licensed builder contracts orally to do specific residential building workfor the ownerfor an agreed price. The builder carries out the work and the owner refuses to pay the agreed price. This is an example of an oral contract which, but for section 6 of the Building Services Corporation Act 1989, the builder could enforce. This is the situation covered by Pavey & Matthews. The builder has a valid claim for a quantum meruit. The claim is not for the contract price but for restitution ofthe enrichment which the owner receives by reason of the fact that the builder cannot sue on the contract. The quantum ofthe owner's enrichment may equal the contractprice. The Tribunalcanhave regardto the contract price in determining a quantum meruit but the Tribunal is not bound by the contract price (see Deane J in Pavey at 168). It may be that the contract price was greater or less than the value (the enrichment) received by the owner. The Tribunal is concerned with the value received by the owner. For example, the builder may have negotiated a price of$9,000 to build a wall which, on the evidence, the owner could have had built by any reasonable builder for $4,500. Half the contract price of $9,000 represents an extraordinary profit for the builder. It is quite irrelevant to the enrichment of the owner. The owner has only been enriched by the amount ($4,500) which it would have cost to have the wall built by a reasonable builder. The amount which should be awarded as a quantum meruit is $4,500. Now take the reverse; the builder agreed to build the wallfor $4,500 when any otherbuilderwouldhave charged $9,000. If the builder were to claim $9,000 as a quantum meruit, the owner could raise the contract as a defence to so much of the claim as exceeds the contract price. However, ifthe owner does not raise the contract as a defence, the Tribunal may award $9,000 as a quantum meruit. This is the amount by which the owner has been enriched. A contract can be a defence to a quantum meruit claim, but only the owner can raise the contract as a defence (s.6 of Building Services Corporation Act 1989). Raising the contract as a defence means that the owner must comply with the contract and pay $4,500. If the work performed by the builder was defective then in valuing the benefit received by the owner an amount should be allowed ordeducted to take into account the cost of making good the defect or the diminution in value of the work on account of the defect. Example 2 The builder has entered a written contract to carry out 15

4 residential building workfor the owner. In the course of the contract, the owner asks for a variation. No written contractfor the variation is made. The variation is to be carried out by a subcontractor to the builder. The subcontractor quotes a price of$5,000 and the builder accepts this. The variation is executed and the builder claims $5,500 from the owner. The additional $500 is the 10% builder's marginprovidedin the originalwritten contract. The owner refuses to pay more than $5,000. The builder claims the $500 and the interest percentage for late payment (15% per annum) prescribed in the original written contract. In so far as concerns the oral variation, the builder cannot enforce any provision ofthe written contract. The builder can only recover restitution ofthe enrichment (the benefit) received by the owner by reason ofthe variation. In valuing the enrichment, regard may be had to the contractrates and prices butthey are notbinding. The 10% builder's margin does not automatically apply. Ifthe value received by the owner is only $5,000, then the builder misses out on the 10% which would have been applicable had the variation been in writing as required by s.6 ofthe Building Services Corporation Act In a claim under a contract which includes specific provision for interest, the Tribunal can award that interest. Itis partofthe contractprice. Itis partofthe debt due under the contract. However, where there is no interestdue under the contract, the Tribunal cannot award interest. There is no statutory power for the Tribunal to award interest from the time a cause of action arises until the date of the Tribunal's award. There is no equivalent of s.31 of the Commercial Arbitration Act 1984 NSW. Hence, although the builder could recover 15% per annum interest had the variation been in writing, the builder will recover no interest in the quantum meruit claim. A builder who sues for quantum meruit in arbitration or in court may recover interest. The point of example 2 is to illustrate that the builder who fails to obtain a written contract for a variation cannot claim the benefit of contractual provisions notwithstanding that those contractual provisions would apply were the variation covered by a written contract. Example 3 While the builder is carrying out residential building work, the owner asks for a variation involving additional workoradditionalcostfor the builder, butnopricefor the variation is agreed and the builder does not obtain a written directionfrom the owner. The builder carries out the variation and the owner refuses to pay extra for it. This is the most common quantum meruit claim made by builders. S.6 ofthe Building Services Corporation Act 1989 prevents the builder from enforcing any oral agreement for the variation, so the builder is forced to make a claimfor restitution based onthe doctrine ofunjust enrichment. The first problem is to ascertain whether there was any agreement (albeit oral) that the owner would pay for the work. There can be a contract to pay for work even though there is no agreed price. In the absence ofan agreed price, the law implies a term of the contract that the owner will pay a reasonable price. Ifthe owner did agree to pay for the variation then, primafacie, the ownerhas beenenriched by the variation. Forexample, the contractmightprovidethatthe builder will build a two bedroom house and the owner asks for an additional bedroom. The circumstances mightbe such that it is quite clearthat the owner was agreeing to pay extra for the extra work. The owner is enriched by the additional work. This is a case where the builder would be entitled to a quantum meruit. Where there was an agreement to pay extra for the variation, a quantum meruit claim presents few problems except quantification ofthe owner's enrichment. The agreement that the owner will pay extra may be implied from the circumstances. Normally, if an owner asks a builder to do additional work, the owner would expect to have to pay for the additional work. The very request for the additional work will sometimes imply an offer to pay for it. However, this is not always the case. For example, the owner may say, "Can I have the door here rather than where shown on the plan?" The owner may not realise that the variation will cause extra work for the builder. The owner may think that the builder is willing to make the change without alteration to the contract price. This type of situation creates the most difficult type of quantum meruit claim. If an owner requests a variation the builder should obtain an agreement in writing as required by s.6 of the Building Services Corporation Act The very fact that there is no agreement in writing and no express oral agreement by the owner to pay, may lend credence to the owner's argument that the owner did not expect to have to pay for the variation. Frequently the owner argues that the builder mentioned nothing about charging extra for the change and that the owner thought that the builder was prepared to make the change within the contract price and without charging extra. In such a situation, the builder may do extra work or incur extra expense and the owner may be enriched by the extra work but, nevertheless, the enrichment is not unjust. The most common example is where the owner says, "Can I have x instead of y?" Unless the builder makes it quite clear to the owner that the change will involve the owner in additional expense, how can the builder prove that the owner has been unjustly enriched by the change? Sometimes the substitution ofx for y or the additional work will not even enrich the owner, much less unjustly enrich the owner. If the owner requests the variation knowing that the builder will expect to be paid for the variation, then the refusal of the owner to pay may result in an unjust enrichment. But the most common defence raised by owners is that they had no idea that the builder intended to charge for the variation. The onus is on the builder to prove that the owner was both enriched by the variation and that the enrichment was unjust. This is a 16

5 difficult onus to discharge when the builder cannot show that the ownerknew at the time ofrequesting the variation that the owner would have to pay extra for it. The general rule is that the builder is not entitled to a quantum meruit where at the time of ordering or consentingto the variation, the ownerwas notaware thatthe owner would have to pay extrafor the variation. Someexceptions to the general rule are discussed below. A consequence ofthe general rule is that the builder's entitlement to a quantum meruit will sometimes depend uponthe state ofmindofthe owner. A commercially aware ownermay know that the builder expects to be paid for the variation. A naive owner may think that builders make variations without extra charge. Example 4 The builder requests permission to make a variation and the owneragrees, butthere is no written agreementandno discussion on a change in price. The variation involves the builder in additional work or additional expense and the owner refuses to pay. Forexample, there may be a delay in obtaining certain materials and the builder asks ifthe builder can substitute x for y. There may be a latent site condition and the builder seeks permission to make a change to work shown on the drawings. There may be a better way of doing something and the result will increase the value of the house. If the builder makes a quantum meruit claim, the builder's first problem is to show that the change actually enriched the owner. The change may be simply for the convenience ofthe builder. Ifthe change did notenrich the owner, then a quantummeruit claimwill fail. Itmaybethat a variation makes the house more valuable, but does not enrich the owner because the owner did not require the variation. Take the case where the builder installs gold plated taps whenthe specificationrequired only plain taps. The owner may have consented to the change but not expecting to have to pay more. The owner may have been quite content withplain taps and see no benefitwhatsoever in gold plated taps. An increase in the value ofthe property is not necessarily a benefit to the owner. The owner may have no intention of selling the property or ever realising the additional value. It may benefit the owner's heirs, but that is not necessarily a benefit to the owner. Ifthe change has enriched the owner, then the builder has to prove that it would be unjust for the owner to retain the benefit without recompensing the contractor. Generally speaking, as in example 3, this will require proofthat the ownerknew at the time ofagreeing to the variation that the owner would have to pay extra for it. It is not unjust to keep a gift. IfA gives B something expecting B to pay and B accepts the item thinking that it is a gift, then there may be a mistake that would entitle A to demand back the gift. B may be unjustly enriched ifb does not return the item or its value in money. However, ifitis something not capable ofbeing returned (eg. a meal consumed or an item that has become a fixture) it would not be unjust ifb did not return the item or its value. The builder who does additional work without the owner being aware that the owner will have to pay for the extra work, has an extremely difficult task to prove that the owner has been unjustly enriched. Example 5 Additional work or expense is required by a statutory authority or to overcome a latent condition or a discrepancy in the drawings providedby the owner or the owner's architect. These are examples of where the builder carries out extra work or incurs extra costs without a direction from the owner. Ifa direction is givenbythe owner, thenthe case falls within an earlier example. Take the case where the Water Board directs additional work, ego that the builder connect the sewer to a different place to that shown on the plans forming part of the contract. Take the case where a latent site condition is found, ego a well that necessitates strengthening the foundations. Take the case where the owner's architect has made an error in the drawings. These and similar situations frequently occur. Frequently the contractor carries out the additional work and later claims an extra payment. Assuming that the situation is one where s:6 ofthe Building Services Corporation Act 1989wouldbara claimbythe builderundercontract, when can the builder recover in a claim based on restitution? Firstly, the builder must show that the owner was benefitted. This does not always follow. Forexample, had the builder advised the owner of the problem before the builder carried out the extra work, the owner may have been able to take a different course to overcome the problem. The owner may have been able to prevail upon the Water Board to change its mind. The owner may have developed a less expensive solution to the problem posed by the latent condition or the design error. Assuming that the owner has been enriched, there are three separate situations where the builder may be entitled to a quantum meruit. They are: 1. breach of contract by the owner; 2. frustration; 3. emergency. It may be that under the contract, it was the owner's responsibility (or the responsibility of the owner's architect) to direct or approve a variation. It may be that the contract specifically provides that the owner will pay for such additional work. In such circumstances, the builder may have a right under the contract or for damages for breach of contract. The quantum meruit claim would not be a claim based on unjust enrichment but a claim for damages for breach ofcontract. The method ofmeasuring the damages may be a quantum meruit being the reasonable remuneration for the builder's additional work. Alternatively, the refusal of the owner to pay for the extra work may be a repudiation of the contract by the owner. This could lead to a quantum meruit claim such as in example 7. 17

6 Now take the case where the contract cannot be completed unless the builder complies with the direction ofthe public authority, or takes measures to overcome the latent condition or to overcome the discrepancy in the drawings provided by the owner's architect. Assume that the additional work required is not work which the builder is required to do under the contract and it is not work which the ownerwas required to do ordirect a variation in respect of. Assume that the eventwhichnecessitates the additional work or expense is something in respect of which the contract is silent and that itis an event which is not the fault of either party. It is possible that the event terminates the contract under the doctrine of frustration. It may be that without fault of either party the contract cannot be completed as contemplated. This is a rare situation, but it can happen. In that event, the contract ceases to cover work performed after frustration. After frustration, the work done by the builder for the benefit ofthe owner is not performed under any contract. The buildercan only recover in a claim based on restitution (see Davenport, P., Termination of Construction Contracts by Frustration (1988) #2 Australian Construction Law Newsletter 11). The problem is illustrated by Update: Constructions Pty Ltd v Rozelle Child Care Centre Pty Ltd (1990) 20 NSWLR 251. In Update, a latent condition (a well) was found. It necessitated digging new footings, construction of additional foundations and the provision of additional reinforcing steel. The owner argued that no variation had been directed and that the owner was not liable to pay for the additional work required to overcome the latent condition. Inthe end, the NSWCourtofAppeal decidedthatthere was a variation under the contract but Kirby J considered that in the absence of a variation, the builder would have been entitled to a quantum meruit on the basis ofpavey & Matthews. Now take the case of an emergency. Assume that a builder installing a new roof discovers, in the course of carrying outthe work, that there is an electrical cable in the roofthatis dangerously frayed and needs immediate repair to avoid a potential accident orfire. Assume that the owner cannot be contacted and the builder calls in an electrician to fix the problem. Thebuildermustpaythe electrician, but the work is outside the scope of the builder's contract. Nevertheless, it seems that the builder could recover the cost from the owner in a claim for restitution. While the law provides no recompense for the officious intermedler, there are cases where the courts have allowed remuneration to an intervenor in an emergency. liable to reimburse A. In order to succeed in a quantum meruit claim, the builder must prove more than that the builder simply paid the owner's debt to a third party. There must be an express or implied request by the owner to discharge the debt. It may be that the failure of the owner to pay will delay work and that the owner's failure is in fact a breach ofthe owner's obligation to do those things which the owner must do in order to enable the builder to complete the builder's obligations. In that event, the builder's conduct may be in mitigation of the damage which would have been incurred had the paymentnot been made. Ifthe builder is entitled to a quantum meruit, it would appear to be the exact amount paid by the builder to the third party. The owner is enriched by this amount. The builder would not be entitled to the contractual percentage for overheads on top ofthe amount paid to the third party. See example 2. Example 7 Prior to substantial completion of the work, the owner repudiates the contract and the builder terminates the contract on that account. The builder has the choice of claiming damages from the owner for breach of contract or claiming restitution (quantum meruit). Normally damages will be greater than a quantum meruit. This is because damages can include loss of profit which would have been earned had the builder completed the work. A claim in restitution for a quantum meruit only takes into account the value ofwork performed, not loss of profit. However, ifthe contract was an unprofitable contract, the builder may wish to sue for a quantum meruit rather than damages. An illustration of the claim is found in Renard Constructions (ME) Pty Ltd v Ministerfor Public Works (1992) 26 NSWLR 234. In such a claim the contractor can recover more than could be recovered as damages. If the builder has completed the work or substantially completed the work when the owner repudiates the contract, then this category of quantum meruit claim is not available (Morrison-Knudsen vb.c. Hydro Power (1978) 85 DLR 3d 186) Example 6 The builder pays a third party. For example, the builder may not be liable to pay the fee payable to the Councilfor building approval but does so. This is a difficult situation. The owner is enriched by the builder's discharge of the owner's liability. However, the mere fact that A pays B's debt to C does not make B