Brown v Baskin Rooney

CATCHWORDS : Contract - Appeal from Local Court on a question of law - Claim by Chartered Accountants for outstanding professional fees - Whether any evidence to support a finding that the fees were fair and reasonable - Whether parties entered into an agreement to vary the original contract - Alternatively, whether there was a voluntary forbearance by the plaintiff. Justices Act 1902 LEGISLATION CITED : Justices Legislation Amendment (Appeals) Act 1998 Local Courts (Civil Claims) Act 1970 Anderson Stuart v Treleavan [2000] NSWSC 283 Bessler Waechter Glover v South Derwent Coal (1938) 1 KB 408 Canvas Graphics v Kodak (Australasia) [1998] 23 FCA Carr v Neil [1999] NSWSC 1263 CASES CITED : Electronic Industries v David Jones (1954) 54 SR 102 Gray v Lang (1956) 56 SR 7 Hickman v Haynes (1875) LR 10 CP 598 Payne v Wilson (1827) 108 ER 781 Short v Murchison Services (Unreported, NSWSC 14662/96, 13 August 1997) Tristan Head v Credit Corp [2000] NSWSC 488 DECISION : See Paragraph 53

• 28 - I1 HIS HONOUR: This is an appeal by Charlotte Anne Brown pursuant to the provisions of s 69 of the Local Courts (Civil Claims) Act 1970 and ss 101-115 of the Justices Act 1902, as amended by the Justices Legislation Amendment (Appeals) Act 1998, against a judgment of his Worship Hugh Dillon LCM dated 16 June 2000. 2 Baskin Rooney & Co Pty Limited t/as Baskin Rooney & Co Chartered Accountants of Woollahra in this State (to whom I shall refer for the sake of convenience as the plaintiff) commenced proceedings in the Downing Street Local Court against Ms Brown (to whom I shall refer as the defendant) to recover accountancy fees allegedly owing to it. 3 The plaintiff was wholly successful in its claim and judgment was awarded against the defendant in the sum of $17,661.36 with costs. 4 Section 104(1) of the Justices Act 1902 provides that there is an appeal to this Court from a Local Court on a point of law. By leave, an appeal lies with regard to a mixed question of fact and law (ss (2)). No such leave was sought in this case. This section was discussed by Sully J in Carr v Neill [1999] NSWSC 1263, and by O'Keefe J in Tristan Head v Credit Corp [2000] NSWSC 488 5 To appreciate the grounds of appeal it is necessary to consider the pleadings in the Local Court. The plaintiff's claim was ultimately enshrined in its Further Amended Ordinary Statement of Claim, filed on 8 October 1999,which is in the following terms: - "1. The plaintiff is a company duly incorporated in the State of New South Wales and is entitled to bring actions in and by its corporate name and style. 2. The defendant is a fashion designer and company director. 3. On or about October 1993, by a contract made orally between the plaintiff and the defendant, the defendant agreed that the plaintiff would provide accounting and consulting services to the defendant on an ongoing basis. 4. It was an implied term of the said contract that the defendant would pay a reasonable fee for the accounting and consulting services. 5. It was a term of the agreement that the plaintiff would render invoices to the defendant at the completion of each service provided. 6. In performance of the agreement the plaintiff has provided accounting and consulting services to the defendant and rendered invoices in respect thereof.

PARTICULARS 09.11.1994 Invoice 6386 $851.60 09.11.1994 Invoice 6387 $14,112.00 09.11.1994 Invoice 6388 $1,700.00 15.03.1995 Invoice 6764 $1,500.00 14.11.1994 Invoice 9429 $23,434.00 23.04.1997 Invoice 9684 $4,522.56

7. On or about 14 July 1995 the plaintiff agreed to adjust the amount owing by the defendant under invoice number 9429 by reducing the amount owing from $23,434.00 to $5,336.38 PARTICULARS 14.07.95 Invoice $5,336.38

8. The defendant has made a number of payments for the services provided: PARTICULARS 06.04.1995 $500.00 15.06.1995 $3,508.98 03.06.1997 $1,500.00 12.12.1995 $9,960.22 02.09.1997 $500.00 9. Deleted 10. Deleted

10A. In the alternative the plaintiff's claim is by way of quantum meruit for work, journeys and attendances done, performed and bestowed by the plaintiff as the defendant's accountant for the defendant at his (sic) request and for disbursements incurred by the plaintiff as such accountant for the defendant. PARTICULARS The plaintiff relies on particulars as set out in paragraphs 6 and 7 of the Further Amended Statement of Liquidated Claim. 11. On or about 28 February 1998 the plaintiff rendered to the defendant a Statement of account for monies owing in the sum of $17,661.36 11. The plaintiff claims: (a) Damages in the sum of $17,661.36 (b) Interest pursuant to Section 39A of the Local Courts (Civil Claims) Act as follows: (i) From 28 February 1998 to 7 October 1998 at the Rate of 10% per annum - 221 days $1,069.36 (ii) and continuing at the rate of $4.84 per day from 8 October 1998. (c) Costs $481.00 TOTAL $19,211.72 "

6 At the hearing the Statement of Claim was further amended to include under the Particulars of Invoices, an invoice dated 30/11/1995 in the sum of $5,608.00, which had been inadvertently omitted.

7 The defendant's Amended Notice of Grounds of Defence was filed on 19 October 1999. Paragraphs 1 to 9 thereof are in the following terms: - "The defendant intends to defend this action upon the following grounds:

1. The defendant denies that she is indebted to the plaintiff as alleged or at all. 2. In the alternative the defendant denies that any amount is presently payable to the defendant as alleged or at all. 3A. The defendant admits paragraphs 1 to 5 inclusive of the further amended ordinary statement of claim. 4A. In answer to paragraph 6 of the further amended ordinary statement of claim the defendant denies that: - (a) the plaintiff provided invoices at the completion of each service; and (b) all the services referred to in the invoices were provided to the defendant at the defendant's request; 5A. In answer to paragraph 7 of the further amended ordinary statement of claim the defendant denies that the amount referred to in the invoice was owed to the plaintiff by the defendant and further says that the amount of the fees for the work done as referred to invoice was agreed to be reduced to $5,336.38 6A. In answer to paragraph 8 of the further amended ordinary statement of claim the defendant denies that she made the payments of $3,508.98 and $9,960.22 as alleged and says that the sums were income tax refunds due to her in relation to her 1994 and 1995 income tax returns which refunds were appropriated by the plaintiff without the then knowledge or consent of the defendant. 6B. In further answer to paragraph 8 of the further amended ordinary statement of claim the defendant says that in or about December 1995 the defendant first became aware that the refund of $9,960.22 was appropriated by the plaintiff and upon raising the matter with the plaintiff in December 1995 the plaintiff agreed that the sum appropriated would be accepted in full payment of all amounts due to the plaintiff for work carried out for the defendant and Charlie Brown Pty Limited and referred to in the invoices rendered. 6C. Further in answer to paragraph 8 of the further amended ordinary statement of claim the defendant says that on or about 13 January 1999 the defendant made a payment of $2,522.56 in further reduction of invoice No. 9684 dated 23 April 1997 without admissions and on a without prejudice basis which after taking into account the payments of $1,500 made on 3 June 1997 and $500 on 2 September 1997 reduced the balance in relation to that invoice to nil. 7.. In further answer to the whole of the plaintiff's claim the defendant denies that any agreement has been reached as to the reasonableness of any fees charged by the plaintiff and the plaintiff has never provided the defendant with any or any sufficient information to enable her to determine whether the fees charged were reasonable. 8. In answer to paragraph 10A of the further amended ordinary statement of claim the defendant denies that the plaintiff is entitled to claim the amount alleged or at all. 9. In further answer to the whole of the plaintiff's claim the defendant says that some of the fees charged related to work performed for and at the request of Charlie Brown Pty Limited and not for the defendant and the plaintiff has never provided the defendant with any or any sufficient information to enable her to determine the amount charged for work carried out for the defendant."

8 The defences raised in paragraphs 6A, 6B, 6C and 9 were resolved against the defendant at the hearing and did not form the basis of a ground of appeal argued in this Court. 9 The first ground of appeal is said to relate to paragraph 7 of the defence. It is in the following terms: - "1. The Magistrate erred in law in concluding as he did that it was possible for the BR [Baskin Rooney] to prove that the fees it charged and which were claimed by it in those proceedings were fair and reasonable by drawing an inference of such fairness and reasonableness only from the facts that the CAB [Charlotte Ann Brown] had: - a. made payment of part of the account of the BR; b. complained about the account of BR when BR pressed for payment." 10 Both in the Local Court and in this Court, the defendant argued that the plaintiff had failed to discharge the onus of establishing an admitted element of the contractual arrangements between the parties, namely, that the plaintiff's charges were fair and reasonable. It was common ground that the burden of proving that the charges were fair and reasonable remained upon the plaintiff from beginning to end: see Short v Murchison Services Pty Limited (Unreported, Supreme Court of New South Wales 14662/1996, 13 August 1997, per Graham AJ). 11 The learned Magistrate found that there was sufficient evidence of a circumstantial nature to infer that the relevant charges for professional services were fair and reasonable. This was a finding of fact and accordingly the defendant bears the onus of establishing on appeal that there was no evidence to support such a finding or the facts inferred by it and supported by evidence are incapable of justifying the finding of fact based upon those inferences: see Anderson Stuart v Treleavan & Ors [2000] NSWSC 283, per Santow J, and cases there cited. Otherwise there was no error of law involved. 12 It is necessary then to consider the evidence which was before the learned Magistrate on this issue. There are four directors of the plaintiff of whom William J. Rooney, Chartered Accountant is the senior. He provided, on behalf of the plaintiff, the major part of the accounting and advisory services to the defendant who carries on business as a Company Director, and Fashion Designer under the label Charlie Brown. At the trial, Mr Rooney was the sole witness for the plaintiff and Ms Brown was the sole witness for the defendant. 13 His Worship found that in October 1993 the parties agreed that the plaintiff would provide accounting services to Ms Brown. It was an implied term of the agreement that the defendant would pay reasonable fees to the plaintiff for the work performed on her behalf. It was also an implied term that the plaintiff would render invoices to the defendant at the completion of each service provided. 14 Mr Rooney gave evidence that the practice of the partners was to record the time spent on behalf of a client in their diaries on a day-by-day basis. Then, once a week, a summary was prepared by each partner for inclusion in a time sheet relating to each client for whom services were rendered. The relevant charges were then calculated for each client by reference to the hours spent by a partner or a member of the staff. The rate would of course vary, depending upon the seniority of the person performing a particular task. 15 At the end of each month invoices were prepared for each client and reconciled by the office administrator who placed them before each partner for checking, prior to being forwarded to the clients. 16 Generally speaking the invoices rendered to the clients did not contain details of the hours worked by the various partners or the hourly rate which was charged. 17 There is one exception in so far as the defendant is concerned. That relates to an invoice dated 12 November 1993 which details the time spent by Mr Rooney on the defendant's behalf and specifically refers to a rate of $150.00 per hour. It appears from the evidence that such rate continued at least until 30 April 1995. 18 The plaintiff tendered a document entitled "Analysis of Time/Fees/Disbursements from 1 January 1993 to 30 April 1995" which appears to be an analysis of weekly summaries prepared over that period for the monthly invoices to be sent to the defendant. Similar documents were tendered for the periods July 1994 to June 1996, and July 1996 to June 1998. These latter documents were extracted from the plaintiff's Debtors and WIP ledger. 19 Mr Rooney gave evidence in a general way, and in some cases of a more specific nature, of the work which he performed over the relevant period for the defendant. 20 No evidence was led from Mr Rooney in chief as to whether in his view, as an experienced chartered accountant, the fees were fair and reasonable. Further, no schedule of fees from an appropriate professional organisation was tendered. 21 At no stage during the course of Mr Rooney's cross-examination was it put to him that the plaintiff's charges were not fair and reasonable or that the plaintiff had failed to provide any information sought by the defendant in order to determine whether the fees were fair and reasonable. 22 His Worship held that there was sufficient evidence to find that the plaintiff's charges were fair and reasonable. He gave the following reasons: - "Were the fees reasonable? No direct evidence of reasonableness of the fees was given by the plaintiff. As a general rule, a party may not give expert evidence in its own case. Such evidence is necessarily self-serving opinion evidence, and is therefore generally inadmissible. No expert evidence was called by the plaintiff. The plaintiff relies on a pattern of acceptance of its fees, except in one instance in which it agreed, after objection by Ms Brown, to reduce its fees from approximately $23,000 to approximately $5000. It is, of course, for the plaintiff to prove that its fees were reasonable. It was an implied term of the contract between the parties that they would be. The plaintiff is not obliged, however, to call expert evidence to prove the reasonableness of its fees. It may prove the reasonableness of fees inferentially. Mr Rooney gave evidence of the system he operated of calculating the hours of work performed on behalf of the defendant and the invoicing of the hours to the defendant's account. The commercial relationship between Ms Brown and Mr Rooney lasted for some years. It was only in the latter stages, it seems, when Mr Rooney was pressing Ms Brown for fees which she found difficulty in paying, that the protest that his fees were unreasonable seems to have been raised. Moreover, the defendant paid a considerable sum of money in fees over that period, a sum in the order of $17,500 without protest about "unreasonableness". While I do not accept that Ms Brown is estopped by her conduct from claiming that the fees were unreasonable - it is possible that a person may not realise the error of his or her ways for some time - in this case it can be inferred from the fact that she only complained in any serious way about one invoice (which was subsequently amended and reduced) that she accepted the general reasonableness of the fees charged. In my view, the assertion that the fees were unreasonable cannot be supported. In my view, it may be inferred that they were, and I make that finding." 23 With respect, it is incorrect to suggest that it is not open to a plaintiff who has the relevant expertise to give expert evidence in his or her own case. However, I do not consider that the fact that Mr Rooney did not give evidence directly to the effect that the fees under consideration were fair and reasonable undermined the plaintiff's case, as submitted by the defendant. 24 It was open to the plaintiff to establish on the balance of probabilities by circumstantial evidence that the fees were fair and reasonable. 25 In this regard his Worship was entitled to take into consideration the somewhat rigorous costing procedures maintained in the plaintiff's office, and the contribution which each of the partners made in that regard, together with the system of checks by the office administrator. Further, as his Worship pointed out, despite the fact that there was a professional relationship between the plaintiff and the defendant, there was no complaint (except in one regard which had exceptional aspects) about the general reasonableness of the fees charged. 26 There is very little authority on this particular point. Counsel for the parties have referred me to the judgment of Graham AJ to which I have already referred. My own research located one further case, namely Canvas Graphics Pty Limited v Kodak (Australasia) Pty Limited [1998] 23 FCA, Unreported, O'Loughlin J. 27 In that case O'Loughlin J was concerned with what he referred to as a "complex problem of costs" arising out of disputes about the reasonableness or otherwise of fees charged by experts who gave evidence at the trial. Of relevant interest is the following passage in which his Honour dealt with complaints by Kodak (against whom a costs order was made) that fees rendered by accountants who gave expert evidence were excessive. Although the issue before his Honour was of a somewhat different nature to that before this Court, it is instructive to consider his Honour's approach to the problem before him. His Honour said in this context: - "ACCOUNTANTS CHARGES Kodak further complains about the amounts that have been included in the draft bill of costs in respect of accountants' charges. The written submissions of Kodak on these charges are as follows: · 'A fee of $47,759.75 is claimed by way of expert fees for Chua Crase. Mr Martin was in the witness box for 3 ½ days and a number of expert reports were prepared. The account is in no way particularised and is clearly excessive. · A further fee for experts is made in respect of Duesbury's of $35,720.00. This is exclusive of the witness fee of $900.00 claimed for Mr Ferguson to give evidence for one day. No particulars are provided' I do not know what the Court is expected to do. Is it expected to agree that the charges are excessive and allow some lesser figure? If so what figure? I would have expected Kodak to give notice that it was challenging these fees: that it wanted the accountants to verify them: perhaps to have them available for cross-examination: perhaps to call their own expert witnesses. Certainly I expect more than a mere assertion that the account is ' clearly excessive' . The Court is not equipped to make its own investigation of accountants' charges: it can perform this exercise with counsels fees and solicitors' charges because of its familiarity with them over years of experience. Normally in assessing an expert's charge the Court would be assisted by having before it the professional body's rates of charge and evidence sufficient to form an opinion that the work charged for was reasonably necessary. Kodak has not attempted to supply any of this information. Indeed, I do not know whether Canvas Graphics knew, in advance, that these items of charging would be challenged. I will not reduce these claims."

These views are broadly relevant, in my opinion, to the fact that in the instant case no challenge was made by the defendant in cross-examination of the plaintiff to the effect that the fees charged were not fair and reasonable 28 I am quite unpersuaded in the instant case that there was no evidence upon which his Worship could have held that the fees charged by the plaintiff were fair and reasonable or that the evidence upon which he relied was incapable of justifying that finding. In addition to the matters I have already mentioned, it is to be noted that although generally speaking the invoices contained relatively little detail, there were primary documents available, at any time, for inspection by clients including the defendant. Summaries of the work performed for the defendant at the appropriate rate were in evidence before his Worship. In this context one is entitled to take into account that there was no challenge in cross-examination to the effect that the plaintiff's charges were not "fair and reasonable". In my view, therefore, the first ground of appeal must be rejected. 29 The second, third, and fourth grounds of appeal are referable to paragraphs 10 and 12 of the Amended Defence, which are in the following terms: - "10. In or about June 1995 the defendant and the plaintiff agreed that the accounting and consulting services provided to her and her company Charlie Brown Pty Limited would be paid at the earlier of: - (a) the completion of the litigation between her and Charlie Brown Pty Limited against Image Clothing Pty Limited, Ecroblack Pty Limited and Alan Green; and (b) when the defendant received profits from an agreement between herself and Discovery Clothing Pty Limited dated 14 October 1994. [There is no paragraph 11] 12. The defendant says that neither of the events referred to in paragraph 11 have yet occurred."

30 There is no doubt that there was a discussion in June 1995 between Mr Rooney and Ms Brown regarding fees owing by her to the plaintiff. 31 However, there was a dispute between the witnesses as to what transpired at this meeting - which was referred to during the hearing as "the June 1995 meeting". In Mr Rooney's witness statement, he relevantly stated: - "17. On or about 13 June 1995 I spoke with Charlie Brown between 5.00 pm and 6.00 pm at the offices of Baskin Rooney regarding the outstanding fee of $23,434.00. To the best of my recollection Charlie Brown said to me words to the effect of: 'I and (sic) having problems with the Howard Showers legal matter and I'm unhappy with my deal with Danny [Avidan] at Discovery. I am working long hours and I am not getting paid enough' Charlie Brown asked me to prepare a document setting out a new agreement that she believed Danny Avidan had agreed to. This I subsequently produced and couriered to her on 30 June 1995. I understand that Danny Avidan subsequently rejected this new deal. Charlie Brown asked me to reduce my fee on the $23,434 invoice to $5,336.38 and to agree to be paid over time. To the best of my recollection she said to me words to the effect of: 'I agree to pay your yearly accounting fees as they fall due and to pay the other fees out of my Howard Showers legal disputes and once turnover is in excess of $4million for the Charlie Brown label' I replied by saying words to the effect of: 'I agree to the arrangements as long as once money comes in from the Howard Showers matters either from the retail stores or legal cases I will get paid. Secondly when turnover reaches $4 million and you start to be entitled to royalties I will be paid. Thirdly as a show of good faith I wish to deposit your tax refund of $3,508.08 which I have in my position (sic) and also get from you $500 per month. Charlie Brown replied by saying words to the effect of: 'I agree'"

32 Ms Brown, in her witness statement, stated: - "18. In about June, 1995 I had a conversation with Bill Rooney to the following effect: - BR: 'When are our accounts going to be paid.' CB: 'As you know I have a lot of expenses at the moment including substantial legal expenses because of all the litigation with Alan Green and I do not have the funds right now. BR: 'Will we get paid when all the legal proceedings have been completed.' CB: 'Yes.' BR: 'Can we also expect to get paid when you receive profits from your agreement with Discovery.' CB: 'Yes'."

33 It can be seen that paragraph 10 of the defence is based broadly upon what is contained in Ms Brown's statement. The reference in her statement to "the litigation with Alan Green" is a reference to proceedings which Charlie Brown Pty Limited commenced in the Equity Division of this Court against Mr Green, Ecroblack and Image Clothing in 1994 (4074/94). These proceedings are still unresolved. 34 With regard to this litigation, his Worship said in his judgment: - "She was granted leave to further amend her Statement of Claim in 1998, but the proceedings were stayed pending payment of costs ordered against her in relation to interlocutory proceedings. As at the date she gave evidence, that action was still subject to the stay order." 35 It is also convenient to note the following letter which was written by Mr Rooney on behalf of the plaintiff to the defendant on 21 May, 1998: - "Dear Charlie, With reference to our telephone conversations we now enclose copies of correspondence from us advising you of group and company tax liabilities. Please forward a cheque and we will arrange payment. In regard to outstanding fees we note that $17,661.36 is outstanding. ie $2,522.56 1996 taxation work $15,138.80 Special work __________ $17,661.36 __________ Our agreement was that we would be paid out of the court case or profits from your Discovery Agreement. We note that the court case is resolved and we believe that you are now receiving profit share from Discovery. We therefore request an arrangement be made for you to pay the above outstanding fees as soon as possible noting this has been a long outstanding debt. As previously advised by telephone your company and personal tax return need to be completed urgently. Please arrange for the above payment and a retainer of $2500.00 toward the 1997 return." 36 Mr Rooney was in error in that the "court case", as already indicated, had not resolved, but was merely stayed. Further, Ms Brown was apparently not receiving "profit share" from Discovery, but was in receipt of a salary from that organisation. 37 It is important to note that no consideration is pleaded to support the agreement alleged in paragraph 10. Further, the defence is not pleaded as a forbearance to sue. 38 His Worship dealt with grounds of defence 10 and 12 in his judgment as follows: - The postponement of collection of the plaintiff's fees "According to Mr Rooney, in mid-1995, he agreed to reduce his invoice for $23,434 to $5336.38 and at the same time he reached an understanding with Ms Brown that: · Ms Brown would pay her annual accounting fees as they fell due; · Ms Brown would pay her outstanding balance out the moneys she received from the Howard Showers litigation and once turnover on her label exceeded $4,000,000 [per annum]; · She would consign her tax refund cheque [for $3508.08] to the plaintiff; · She would pay $500 per month towards outstanding fees. Ms Brown's version of events is different, although there [are] aspects of her evidence in which she is roughly consonant with Mr Rooney's account. She says that Mr Rooney simply asked, "Will we get paid when all the legal proceedings have been completed?" to which she replied, "Yes". And he had also asked, "Can we also expect to get paid when you receive profits from you agreement with Discovery?", to which she also replied, "Yes". The plaintiff submits, firstly, that Mr Rooney's account of the conversation in June 1995 when the contract was purportedly varied is to be preferred, but that even if Ms Brown's version is accepted, the purported variation did not take effect because there was no consideration for the waiver or forbearance. A forbearance to sue (or waiver) absent a request (implied or express) is not consideration and, obviously, does not require consideration from the other party. Unless a request (implied or express) is made, supported by a promise (implied or express) linked to other consideration, such as the repayment of a loan or payment of outstanding fees, the contract is not regarded at law as varied. Nonetheless, a promise without consideration may be enforceable. In Gray v Lang [(1956)56 SR 7] the NSW Full Court said:- 'Whether one refers to it as forbearance, variation or waiver, or even estoppel, it cannot be disputed that at common law contractual obligations may be effected by a promise made without consideration and which is intended to create legal relations and which to the knowledge of the person making the promise is going to be acted upon by the person to whom it is made, and which was in fact so acted upon. In such cases courts of common law have insisted that the promise be honoured.' I am not satisfied that either party is able to give, or has given, a completely accurate account of the meeting of June 1995 because of the passage of time and the absence of contemporaneous documentation directly evidencing the understanding reached between Mr Rooney and Ms Brown. A number of circumstances, however, seem to me to tip the balance in favour of Mr Rooney's account, for the following reasons: First, both parties agree that there was some sort of arrangement that Ms Brown would pay off her debt to the plaintiff after the resolution of the Howard Showers litigation or she started making profits from the turnover of her label with Discovery Clothing. Second, Mr Rooney says that he sought a promise that Ms Brown would pay off the debt at the rate of $500 per month pending a final settling of the debt. I do not doubt his evidence that his partners in his firm were pressing him to take action concerning the outstanding fees: it would be an amazingly negligent or altruistic firm of accountants which would take any other approach and the plaintiff does not present as either. Ms Brown in fact paid the plaintiff $500 once. This is consistent with Mr Rooney's evidence. Third, I have already found, for the reasons outlined above, that it is more likely than not that there was an understanding that the tax refund cheque for $3354.78 being held by Mr Rooney would go to partially reduce her debt. This is consistent with Mr Rooney's evidence about the meeting. Finally, the invitation to the staff of Baskin Rooney to come to Ms Brown's show to help reduce her debt speaks of a consciousness of a present and ongoing obligation to lessen the outstanding balance of her account with the plaintiff. The invitation is inconsistent with an agreement that the payment of the debt be postponed indefinitely, only to be triggered by one or both of two future events. It is plain from the evidence, and not contradicted by Ms Brown, that she only made one payment of $500 to the plaintiff. Ms Brown cannot explain what that payment was for. The only reasonable inference, in my opinion, is that it was a part-payment towards her outstanding balance with the plaintiff. If Mr Rooney's version of the understanding reached with Ms Brown is accepted, and I do accept it, although with some reservations, as being the more likely of the two accounts, it follows that Ms Brown is in fundamental breach of the understanding and cannot rely on it or enforce it herself. Moreover, having fundamentally breached the contract she became immediately liable. In any event, it seems to me that because the Supreme Court action has been stayed due to the defendant's failure to pay an award of costs in relation to interlocutory proceedings, the agreement or understanding between her and Mr Rooney, even if it were on the terms for which she contends, has been frustrated. If she is faultless and cannot advance her Supreme Court case, through no fault of its own, the plaintiff's agreement (if there was one) has been frustrated by the fact that Ms Brown's litigation has come to a dead stop, at least for an indefinite period. No evidence was adduced that Ms Brown had notified or intended notifying the plaintiff that she intended to take action to have the stay lifted or when that might occur. If that is so, in my opinion the plaintiff is entitled to claim a quantum meruit . It has been held that where there is a promise to forbear, and a time is not fixed, a reasonable time is implied. If one party unilaterally does something or omits to do something which has the effect of stopping the clock, it is arguable that he or she has breached the implied term that the contract will be completed within a reasonable time. It cannot be just or equitable that, by her failure to prosecute her action, she prevents the plaintiff recovering fees owing to it. In any arrangement between herself and Mr Rooney, there must have been an implied term that she would take all reasonable steps to conclude her litigation concerning Howard Showers. It is difficult, in the absence of any evidence, to accept that she could not raise the money to pay her legal costs and lift the stay on the proceedings. This is not a point taken by the plaintiff, but it seems to me that if it had been, it would have been decided in its favour. In whatever way the situation is analysed - breach of contract; self-induced frustration or mere frustration - it seems to me that the plaintiff must succeed in its claim."

39 The relevant grounds of appeal are as follows: - "2. The Magistrate erred in law in concluding that the agreement between the parties for the forbearance to sue had come to an end upon the failure of CAB to make payments of $500 each month when: - a. there was no finding by the Magistrate as to whether or not the payment of such monthly sums was so fundamental so as to give rise to a right on the part of BR to elect to terminate that arrangement. b. there was no finding by the Magistrate that BR sought or in fact terminated the arrangement by reason of such non payment; c. the uncontradicted evidence was that BR elected not to treat such non payment as giving rise to a right on its part to determine that arrangement. d. there was no finding by the Magistrate as to whether BR lost any rights he (sic) may have had to terminate the contract. e. failed to find that BR lost any right of termination it may have otherwise had. 3. The Magistrate erred in law in concluding that the agreement for the forbearance to sue had been frustrated. 4. The Magistrate erred in law in concluding that a stay of proceedings on 10 June, 1998 in the Supreme Court, which proceedings formed part of "Howard Showers" matter was, as at the commencement of the proceedings on the 8th October, 1998 had or could have the effect of: - a. giving rise to a frustration of that agreement; b. a breach of that agreement by CAB;"

40 It can be seen from the judgment that his Worship accepted the version of the June 1995 meeting propounded by Mr Rooney and rejected that propounded by Ms Brown. Interestingly, Ms Brown's version included no reference to a payment of $500 per month towards outstanding fees. It also omitted reference to the allocation by Ms Brown of her tax refund cheque in the sum of $3,508.08 towards the payment of outstanding fees due to the plaintiff. 41 It is important to note that his Worship was not satisfied that either party was able to give a completely accurate account of the June 1995 meeting. He was clearly troubled about the difficulty he was experiencing as a consequence in reaching a concluded view as to what really transpired on that occasion. In any event, having preferred Mr Rooney's account, his Worship concluded that by not making the promised monthly payments of $500, Ms Brown was in fundamental breach of "the understanding", and could not rely on it or enforce it herself. Having fundamentally breached "the contract", she became immediately liable for the outstanding fees. 42 It seems to me that his Worship was on this basis alone satisfied that the moneys claimed were payable by the defendant and the plaintiff was entitled to judgment. However, his Worship adopted an alternative approach, holding that "the plaintiff's agreement (if there was one) has been frustrated by the fact that Ms Brown's litigation has come to a dead stop, at least for an indefinite period."

Therefore, he held that the plaintiff was entitled to claim a quantum meruit. 43 His Worship went on to say that by failing to take steps to lift the stay, Ms Brown had breached an implied term of the "promise to forbear" that she would discharge her obligations within a reasonable time: see Payne v Wilson (1827) 7 B & C 423, 108 ER 781. 44 His Worship had difficulty in determining what was the legal effect of what transpired at the June 1995 meeting. So much is clear from the various terms which he used - "an understanding", "some sort of arrangement", "the agreement or understanding", "the plaintiff's agreement (if there was one)" and, "any arrangement between herself and Mr Rooney". Bearing in mind the state of the evidence, his Worship's difficulty is not surprising. 45 His Worship concluded, however, that in the events which happened, that which transpired at the meeting constituted no defence in law to the recovery of the outstanding fees. 46 It seems to me, by reference to the evidence, that all that really happened at that meeting was that the plaintiff agreed to reduce the invoice for $23,44.00 to $5,336.38 and expressed a willingness to defer payment of the outstanding fees until either the Howard Showers litigation was completed or the defendant commenced to receive royalties for the Charlie Brown label. However, as a show of good faith the defendant was to deposit her tax refund of $3,508.08 with the defendant and pay $500.00 per month off the outstanding fees. Further, she agreed to pay yearly accounting fees as they fell due. 47 Leaving aside the difficulties which arise for the defendant by reason of the way in which paragraphs 10 and 12 of the defence are pleaded, a primary question for his Worship was whether the plaintiff had established a binding agreement between the parties in June 1995 to alter the obligations of the defendant as to performance of the original contract in some material particular - the material particular being that the obligation for payment of the relevant outstanding accounting and consulting services be deferred until the earlier of the completion of the Supreme Court litigation or the receipt of profits from the Discovery Clothing agreement. Essentially this was a question of fact. 48 In my view the evidence was completely inadequate to establish such an agreement. At the most there was a mere voluntary forbearance (or indulgence) on the part of the plaintiff. The following passage from the judgment of the Full Court (Street CJ; Maxwell and Owen JJ) in Electronic Industries Ltd v David Jones Ltd (1954) 54 SR 102 at 109 is instructive in this regard: - "The distinction between mere forbearance and mutual rescission or variation is that in the former case the original contract at all times remains in full force. The party who has been requested to forbear must, notwithstanding his readiness to accede to this request, be at all times ready and willing to perform the contract at the time originally stipulated. The effect of the request is to relieve him, not from the obligation to be ready and willing to perform but from the actual tender of performance, and it is to the tender of performance, and not to readiness and willingness to perform, that the forbearance relates. The party who makes the request can always retract it, provided he does so in time to allow the other party, who must be at all times in a state of readiness and willingness, to tender performance on the stipulated date. The party to whom the request is made, and who has expressed his willingness to forbear, may at any time change his mind and tender performance on the stipulated date, without even being required to give notice of his intention so to do, and in that case, if the requesting party does not accept the tender, he is in breach. All these consequences follow from the fact that a mere forbearance has no binding contractual force. Either party may change his mind and insist that the contract be performed according to its terms, subject only to the qualification that the party who has requested the forbearance must give sufficient notice of his change of mind to enable the ready and willing other party to tender performance. That this is the distinction between mere forbearance and a binding agreement to postpone performance is made clear by the cases."

49 At page 111, the Full Court said: - "In Hickman v Haynes (1875) LR 10 CP 598, where it was held that the facts disclosed a mere voluntary forbearance as against a contractual variation of the original contract, so that the plaintiff was entitled to recover on that original contract, Lindley J said: - 'The plaintiff not having bound himself by any valid agreement to give further time, but having for the convenience of the defendants waited for a reasonable time…to enable the defendants to perform the contract on their part, is entitled on the expiration of that time to treat the contract as broken by the defendants at the end of June, when in truth it was broken' (at p. 607) The 'end of June' mentioned by his Lordship was the original contractual date." And further: - "These and other cases were discussed by Goddard J (as he then was)in Besseler Waechter Glover & Co. v South Derwent Coal Co. Ltd (1938) 1 KB 408. After referring to the authorities, his Lordship said: - 'But if what happens is a mere voluntary forbearance to insist on delivery or acceptance according to the strict terms of the written contract, the original contract remains unaffected and the obligation to deliver and accept the full contract quantity still continues'(at 416), and, on the following page, he went on:

'It does not appear to matter whether the request comes from one side or the other or whether it is a matter which is convenient to one party or to both. What is of importance is whether it is a mere forbearance or a matter of contract.'" 50 The Full Court made it clear in the above passages that a mere forbearance has no binding contractual force and that the party to whom the request to forbear is made may change his or her mind and insist that the contract be performed according to its original terms. 51 And indeed, by its letter dated 21 May 1998 the present plaintiff made it clear that it was requiring payment of outstanding fees as soon as possible. That requirement was not complied with by the defendant, and it was open to the plaintiff to insist that the contract be performed according to its original terms. 52 In these circumstances paragraphs 10 and 12 of the defence were incapable of raising any defence in law or fact to the present proceedings. Therefore, in my view, his Worship did not err in law in rejecting these grounds, albeit he approached the issue in a different manner. 53 The evidence failed to establish any defence to the plaintiff's claim and therefore his Worship did not err in law in finding a verdict for the plaintiff. Accordingly the appeal is dismissed with costs.

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