Consultus Recruitment and Research Pty Limited v Lomas Executive Pty Limited - [2013] NSWSC 912 - NSWSC 2013 case summary — Zoe

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Consultus Recruitment and Research Pty Limited v Lomas Executive Pty Limited

[2013] NSWSC 912

Supreme Court of NSW|2013-07-11

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2013-07-11

Catchwords

(1998) 195 CLR 516
(2005) 220 CLR 517 Wiki v Atlantis Relocations (NSW) Pty Ltd [2004] NSWCA 174

Source

Original judgment source is linked above.

Catchwords

(1998) 195 CLR 516(2005) 220 CLR 517 Wiki v Atlantis Relocations (NSW) Pty Ltd [2004] NSWCA 174

Judgment (13 paragraphs)

[1]

Background 14The facts were largely not in dispute. Essentially, I have taken most of background facts and findings from the Magistrate's decision. 15On or about 4 April 2008, Lomas Executive, Consultus Recruitment and a third entity, Lomas Permanent Pty Ltd (Lomas Permanent), entered into a five year lease as tenants in common in equal shares (the lease) in respect of office premises located at Suite 2, Level 11, 80 Mount Street, North Sydney. The lessor was Aspen Funds Management Limited. The term of the lease was from 1 April 2008 to 31 March 2013. All were involved in executive recruitment. Anthony Parkin, Susan Lomas and Ariane Behn became shareholders in Lomas Permanent Pty Limited (Permanent). 16As the lease required a bank guarantee of $47,373.33 to be delivered to the lessor, the lessees contributed $15,791.11 each to the guarantee, which was deposited by Consultus Recruitment into a Westpac term deposit account. 17In May 2009, the second plaintiff, Consultus, was incorporated. Originally, both Ms Lomas (director of Lomas Executive) and Mr Parkin (director of Consultus Recruitment) were co-directors and members of Consultus. 18Lomas Executive invested $30,000 in Consultus. The sum of $15,000 was repaid to Lomas Executive in the form of consulting fees and does not form part of this claim. 19On 29 July 2009, Lomas Permanent transferred its interest and entitlement in the amount of $15,791.11 to Lomas Executive - that amount being Lomas Permanent's contribution to the bank guarantee. On 7 October 2009, Lomas Permanent was deregistered voluntarily. 20By May 2010, the business relationship between Ms Lomas and Mr Parkin had deteriorated. Also in May 2010, Ms Lomas agreed to transfer her shares in Consultus to Mr Parkin on the basis that Lomas Executive or Lomas would be paid $13,200 by Consultus, which was comprised of the outstanding investment of $15,000, less an agreed reduction to assist with the settlement of a legal dispute that Consultus was engaged in. 21On or about 20 May 2010, Ms Lomas resigned as a director of Consultus and transferred her shares to Mr Parkin. 22From about June 2010, the parties agreed that they could no longer share the premises. 23By letter dated 16 August 2010, the solicitors for Lomas Executive proposed that the parties surrender the lease; Lomas Executive enter into a new lease for part of the premises; another tenant on Level 11, 80 Mount Street, Loyalty Media, enter into a new lease for the balance of the premises; and Consultus Recruitment vacate the premises by 20 August 2010. Further terms were also proposed. 24By letter dated 17 August 2010, the solicitors for Consultus Recruitment stated that their client agreed to surrender the lease by 27 August 2010 provided the surrender of the lease and the new lease was finalised. Consultus Recruitment did not agree to the further terms proposed in the letter dated 16 August 2010. 25On 20 August 2010 Consultus Recruitment vacated the premises. 26Between August 2010 and February 2011, the parties undertook certain tasks in order to effect the surrender of the lease and resolution of the other outstanding issues between them. 27As part of the negotiations, Lomas Executive agreed to deduct office expenses that had been paid by Consultus Recruitment from the amount of $13,200.00 owed by Consultus, leaving a balance of $12,058.66. That figure was agreed between Consultus Recruitment and Consultus. 28On 15 October 2010, the parties agreed that, upon the surrender of the lease, the bank should be instructed to draw three different cheques from the bank guarantee funds, including a cheque drawn in favour of Lomas Executive in the sum of $43,807.54 which comprised of $31,748.88 plus $12,058.66. 29On 18 October 2010, Mr Parkin on behalf of Consultus Recruitment executed the surrender of lease documentation and sent them to the lessor's managing agent, Mark Leo of Knight Frank. 30On 20 October 2010, Mr Parkin signed an irrevocable authority for the Westpac bank to draw a cheque for Lomas Executive from the bank guarantee monies as agreed in the parties' correspondence of 15 October 2010. 31On 9 November 2010, Ms Lomas on behalf of Lomas Executive and Lomas Permanent executed the surrender documentation and provided a copy of those documents to Mr Leo on the same day. 32On 23 November 2010, Ms Lomas indicated that she would not sign a new lease until the cheques were drawn. 33On 1 December 2010, Ms Lomas executed a new lease on behalf of Lomas Executive in respect of part of the premises and emailed a copy of the lease to Mr Leo. 34Up until 14 January 2011, Mr Leo was requesting additional documents from Lomas Executive, including the original signed lease executed by Ms Lomas and the original signed car parking licence, before the matter could be finalised. 35On 31 January 2011, Mr Leo informed Ms Lomas that the landlord had returned the bank guarantee. On 7 February 2011, the full amount of the bank guarantee was returned to Mr Parkin. 36On 14 February 2011, by letter to the solicitors for Consultus Recruitment, the solicitors for Lomas Executive sought payment of the monies as had been agreed. On 16 February 2011, Consultus Recruitment refused to pay such monies.

[2]

The pleading framework 37On 7 April 2011, a statement of claim was filed in the Local Court. On 7 September 2011, the plaintiff filed an amended statement of claim ("ASC"). The plaintiff was Lomas Executive and the defendants were Consultus Recruitment and Research Pty Limited ("Consultus Recruitment") as first defendant, Anthony Parkin as second defendant and Consultus Pty Limited ("Consultus") as third defendant. The plaintiff claimed that the defendants owed the sum of $43,807.54. This sum is not in dispute. 38In order to understand the appeal points raised by Consultus, it is necessary to briefly refer to the pleadings. 39At paragraphs [8], [9] and [10] of the ASC Lomas Executive pleads that it paid $15,791.11 to Consultus Recruitment to allow for the provision of a bank guarantee. This amount was paid by way of loan and was to be repaid when the bank guarantee was no longer required and had been returned to Westpac by the lessor of the lease ("the bank guarantee loan agreement"). The defendants admit this save as to say that the bank guarantee loan agreement was varied by subsequent agreement of the parties (D [4] and [5]). 40At [12] of the ASC Lomas Executive set out what it alleges was the joint venture debt. Essentially it is that in May 2010, Susan Jane Lomas agreed to transfer her shares in Consultus to Mr Parkin on the basis that the plaintiff would be paid the amount of $15,000 by Consultus being the balance of the plaintiff's original investment ("the joint venture termination agreement"). The defendants denied paragraph [12] of the ASC and said that any discussions or agreement as to the investment; in shareholding of; operations of or repayment of investment in Consultus were discussions and agreements between Mr Parkin and Susan Jane Lomas only (D [7]). So far as the joint venture termination agreement is concerned, it was the identity of the parties to the agreement that was in dispute. 41The defendants contended that the bank guarantee loan agreement and the joint venture termination agreement were varied by a subsequent agreement. 42At [13] of the ASC, Lomas Executive pleaded that: "13. Alternatively, on or about 13 September 2010 the Plaintiff and First Defendant entered into a variation to the Contract which was reduced to writing to effect the First Defendant's vacation of the premises ('the Varied Contract') Particulars The variation: (i) Involved an exchange of correspondence between the legal representatives for the Plaintiff and the First Defendant; (ii) Was reduced to writing; (iii) Was agreed; (iv) Was reflected in a letter dated 13 September 2010 from the Plaintiff's legal representative; (v) Included the term that the First Defendant would give to the Plaintiff a bank cheque for $12,058.66 as payment of the Joint Venture Debt; (vi) Included the term that the First Defendant would give to the Plaintiff a bank cheque for $31,748.88 by way of payment of the Bank Guarantee Debt; (vii) Included a term whereby the Lease would be surrendered allowing the Plaintiff to enter into a new lease for a lesser area in the same premises." 43At [8] of the defence, the defendants pleaded: "8 In answer to paragraph 13 of the Plaintiff's Statement of Claim the Defendants admit that the Plaintiff and First Defendant entered into an agreement on or about 13 September 2010 and say: (a) Deny that the agreement was reflected in a letter dated 13 September 2010 from the plaintiff's legal representative; (b) That the agreement included a term whereby it was a precondition to making any payments that the First Defendant be released from its obligations pursuant to the lease; (c) That the agreement included a term whereby it was a precondition to the First Defendant making any payments that the Plaintiff and the Landlord contemporaneously execute a Surrender of the Lease and enter into a new lease of the premises; (d) That the agreement included a term whereby it was a precondition to receiving any payments that the Plaintiff execute a Surrender of the Lease and enter into a new lease of the premises by 13 September 2010; (e) Alternatively, that the agreement included an implied term whereby the Plaintiff would perform within a reasonable time." 44And also at [11] that: "... in breach of the terms of the agreement referred to in paragraph 8 above, the Plaintiff failed to execute a Surrender of the Lease and enter into a new lease of the premises within a reasonable time, despite remaining in occupation of the premises and failed to ensure the First Defendant be released from its obligations pursuant to the lease." 45At [14] the defendants pleaded that as a result of Lomas Executive's breach, Consultus Recruitment had suffered loss and damage. 46At [15] the defendants pleaded that they were entitled to a defence by way of set off as against Lomas Executive in the sum of $47,390.84 which incidentally is the same amount that Lomas Executive had originally claimed ("the set off"). 47Hence, at the Local Court hearing there was a dispute firstly, as to the identity of the parties to the joint venture termination agreement; secondly, as to whether or not there was a variation to the agreements and if so, the terms of variation, and was there a breach of that agreement; and finally, were the defendants entitled to a set off. 48The plaintiff's position was, in the alternative, that the letter of 13 September 2010 set out the terms of variation to the agreement. While the defendants agreed that there was a variation, they disagreed that it was that set out in that letter. The solicitor for Lomas Executive in the letter of 13 September 2010 stated: "We note that the agreement as between our clients now is: 1. That your client will pay 50% of the Landlords fees re the Surrender of Lease. ... 2. Your client is to hand to our client a bank cheque in the sum of $12058.66. 3. Your client is to pay 50% of the rent up until the Surrender of the lease. This can be done by handing to our client a further bank cheque in the relevant sum. 4. Your client will surrender all keys to the suite at the time the monies have been paid and the documents signed. 5. Your client will hand to our client a bank cheque in the sum of $31,748.88 as the refund of the bond currently held in your client's name." 49This letter concluded: "We expect the Surrender of Lease document to be ready within the next day or so. Your client will need to sign it. We need to speak to you about the practicalities of effecting the agreement. It is preferable that the parties do not have to meet personally. ..."

[3]

The Magistrate's decision 50The Magistrate stated in her reasons for judgment dated 8 February 2012 that the money alleged to be owing by Consultus Recruitment to Lomas Executive was in relation to the bank guarantee (the bank guarantee loan agreement) and the sale of shares (the joint venture termination agreement). 51In relation to whether there was a variation to the agreements and if so what was its terms, the Magistrate stated (J 4.8-14): "The documents show that there was substantial agreement between the parties from early September 2010 that the following would occur that the defendant would vacate the premises, that the lease would be surrendered, that the defendant would pay rent up to the surrender of the lease or 13 September 2010 whichever is later, and that the parties would each pay 50% of the lessor's legal fees for the surrender of the lease and that the plaintiff would enter into a new lease." 52Her Honour continued (J 4.16 - 5.38): "It is clear that a number of deadlines passed. No evidence was called for Mr Leo to establish why there was a delay in settling the matter. From the material before me I find the following that the defendant executed a surrender of lease document, that the defendant executed the surrender of lease documents on 18 October 2010, that the plaintiff executed the surrender of lease documents on 9 November 2010. The plaintiff signed the new lease on 1 December 2010 and that the bank guarantee was released on 7 February 2011. Clause 21.7 of the lease stated 'return to lessee if the landlord is satisfied, acting reasonably, that the lessee has discharged all of its obligations under this lease, the landlord must return the bank guarantee to the lessee within a reasonable period after the terminating date.' Therefore from 7 February 2011 neither the plaintiff nor the first defendant had any further liability under the lease. Although there was some reluctance on the plaintiff to execute documents prior to the defendant taking certain steps I am not persuaded that the delay that did occur can be attributed to the plaintiff alone. Or that the plaintiff was unreasonable as stated by the defendant in the defence. Irrespective of the arrangements made by the plaintiff and the defendants through their legal representatives to effect a settlement of the matter, whereby all documents would be handed over simultaneously, this appears to have not been possible, firstly because the bank required time to release the bank guarantee after the documents were signed, and provided to the lessor, and the lessor agreed to release. And secondly, because the guarantee was released to the second defendant and was not in the form of three cheques as requested and agreed. The arrangements as to the means by which the parties would be released of the obligations under the lease and the payments that would be made between the parties, in my view, was not a contract. There was no final agreement. The matters that were agreed did not assert the payment would only be made by way of settlement. What was agreed was that the relevant documents would be executed. When all contingencies were finally met and the parties could have arranged settlement the defendant then refused to release the money. The argument of the contract obscures the real issue. The defendant is not claiming that he does not owe money because of a breach of this alleged contract but that because the plaintiff took an unreasonable time to finalise the agreement he is out of pocket. It clearly took a long time for the parties to finalise their arrangements, however I am not persuaded that this delay was caused by the plaintiff solely, or that the plaintiff should bear any of the defendants costs for the defendants participation in the process. The costs are said to be calculated on time spent by the second defendant in arranging for the settlement and some incidental costs. The costs sought are now less than the amount claimed by the plaintiff so it is acknowledged that some monies owed by the defendants to the plaintiff. The parties, both parties, or all parties engaged lawyers to negotiate the settlement between the parties. In reaching settlement each side and when I say settlement, that is finalisation of the legal position between the parties. In reaching settlement each side was required to organise certain things unique to its own situation. The plaintiff entered into a new lease and the defendant refused to pay for this, and the defendant had dealings with the bank guarantee as from the outset this was lodged by the defendant. The defendant did not substantiate the time claimed to have been spent above and beyond what would have been expected in achieving an outcome between the parties. The defendant has not proven any of the costs claimed were the result of the plaintiff's actions and should be paid by the plaintiff. In relation to the amount of $13,200 Ms Lomas sold her shares to the second defendant and resigned her directorship. I am satisfied that based on the agreement that they had that this money should be paid to the plaintiff and the defendant has no claim to this money. In relation to the return of the bank guarantee on 7 February 2011 the first and second defendants have no further liability under the lease and the surrender of the lease had been finalised. The plaintiff should have returned to it $31,582.22 contribution to the guarantee."

[4]

Ground 1 - Adequacy of reasons 53Ground 1 of the notice of appeal states: "Her Honour erred in finding that there was no agreement between the plaintiff and the second defendant on behalf of the first defendant to settle their transaction by a settlement meeting and failed to provide reasons for that conclusion, despite finding that there had been an arrangement and despite there having been an arrangement pleaded in the plaintiff's own pleadings. The failure to provide reasons constituted an error of law." 54The issue of whether the Magistrate's reasons were adequate arises under various grounds of appeal. On this topic of adequacy of reasons, both parties referred to Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430, where Meagher JA said at 443 and 444: "However, where certain evidence is important or critical to the proper determination of the matter and it is not referred to by the trial judge, an appellate court may infer that the trial judge overlooked the evidence or failed to give consideration to it: North Sydney Council v Ligon 302 Pty Ltd (1995) 87 LGERA 435. Where conflicting evidence of a significant nature is given, the existence of both sets of evidence should be referred to. Secondly, a judge should set out any material findings of fact and any conclusions or ultimate findings of fact reached. The obvious extension of the principle in North Sydney Council is that, where findings of fact are not referred to, an appellate court may infer that the trial judge considered that finding to be immaterial. Where one set of evidence is accepted over a conflicting set of significant evidence, the trial judge should set out his findings as to how he comes to accept the one over the other. ... It does not automatically follow that because the reasons for decision are inadequate then an appealable error has occurred. Examination of nearly any statement of reasons with a fine-tooth comb would throw up some inadequacies. Indeed, an appeal court will reserve any intervention to those situations in which it is left with no choice: where no reasons have been given in circumstances where there was an obligation to provide them and in circumstances where a statement of reasons is so inadequate as to constitute a miscarriage of justice. In other words, the statement of reasons must be looked at as a whole and the material inadequacies identified and considered. ... Lastly, it is noted that an appealable error arising from inadequate reasons does not necessarily mean that a new trial is required. An appeal court is entitled to consider the matter and, if appropriate reasons are given, may itself decide the matter. Thus, if the only conclusion open on the evidence available at trial was the conclusion reached by the trial judge, then, notwithstanding an inadequate statement of reasons, the matter need not go to a new trial: NSW Insurance Ministerial Corporation (formerly GIO of New South Wales) v Mesiti (Court of Appeal, 1 December 1994, unreported)." 55Counsel for Consultus also referred to Wiki v Atlantis Relocations (NSW) Pty Ltd [2004] NSWCA 174; (2004) 60 NSWLR 127 at [56] - [57] and [62]. 56So far as there being an agreement between Lomas Executive and Mr Parkin on behalf of Consultus Recruitment to settle their transaction by a settlement meeting, the defence did not raise this issue at all. 57While counsel for Consultus Recruitment and Consultus conceded that it is true the defence does not say, "Yes, there was an agreement that there was going to be a settlement meeting" he submitted that there was no mistake in anybody's mind on the pleadings or how the case ran. In this Court, Mr Barham submitted that he opened the case before me the same way he did in the Local Court and took the Magistrate to all the same documents. He says that there was no misunderstanding by anybody, the evidence was all on and everyone knew what the case was about. (T35.18-28) 58I have carefully read the Local Court transcript of counsel's opening address. At T 54-55 (08.09.11) Mr Barham says: "...There was an agreement in relation to the vacation of the premises - that is, the liability for vacation of the premises and extinguishment - which was reached after protracted correspondence. Essential to that agreement from the outset was that there would be a surrender of lease and that payment which had been discussed would be made conditional upon surrender. ... So far as the settlement is concerned, your Honour, we go back to p 83 of the affidavit, the top paragraph and this is again from Ms Foster, 'There will need to be a settlement to effect all of the above. We suggest this takes place at the office of Knight Frank.' On p 86 again from the plaintiff's solicitors, 'As the writer indicated in our letter of 1 September, there is a need for a settlement in this matter,' and then, 'We shall contact you when we receive the surrender of lease document,' ... On p 115 I don't know that this is really doubted, but in the fourth bullet point, and this is an email from Mark Davidson, 'Both our clients require a simultaneous exchange of signed surrender documents and cheques.' So that was what was predicated but as 13 September came and went, far from there being a settlement, the defendant was hit with new requests, willy nilly. For example, p 88, there were minor matters which were really a fly in the ointment, but all of these matters had to be attended to by my client and/or his solicitor." 59In my view this opening address does not squarely raise that there was an issue in dispute, namely whether there was an agreement between Lomas Executive and Mr Parkin on behalf of Consultus Recruitment to settle their transaction by a settlement meeting. Hence, it is not surprising that the Magistrate did not give detailed reasons on this topic. 60Counsel for Consultus says the Magistrate found that the "arrangements" by which the parties would be released of the obligations on the payments "was not a contract" and that that conclusion was wrong in law and it was difficult to see what arrangement there could be if it was not a contract. According to Consultus, the parties had engaged a solicitor to negotiate a settlement between the parties and if looked at objectively the arrangement must have been a contract. Counsel submitted that it is difficult to see as Lomas Executive sued in contract for the return of moneys, the basis of which had been negotiated between lawyers, and there not be a contract. Counsel says that all the elements of a contract were established. 61Counsel for Consultus referred to County Securities Pty Limited v Challenger Group Holdings Pty Limited [2008] NSWCA 193, per McColl JA at [151] to [153] and submitted that the Magistrate should have concluded that a contract had come into existence for settlement of their relationship dispute, if not by offer and acceptance, by totality of the conduct between the parties. 62There were two prior agreements - the bank guarantee loan agreement and the joint venture termination agreement. The issue was whether there was a variation to those agreements and if so, what was its terms and whether any of them had been breached. 63So far as any variation of the agreements is concerned, the Magistrate held (J 4.44-48): "The arrangements as to the means by which the parties would be released of the obligations under the lease and the payments that would be made between the parties... was not a contract. There was no final agreement. The matters that were agreed did not assert the payment would only be made by way of settlement." 64The conclusion that no variation agreement was reached between the parties was open to the Magistrate on the evidence adduced at hearing (see, for example, B 236 - 237, 238, 239 - 240, 241, 242 - 244). The correspondence between the parties' solicitors does not disclose any party's unqualified assent to the terms of another party's terms of offer. The reason why there was no contract was because there was no final agreement. 65It is my view, although the reasons given by the Magistrate were short and concise, they were adequate to reveal the basis of the decision. In Stoker v Adecco Gemvale Constructions Pty Ltd [2004] NSWCA 449, Santow JA (with whom Mason P and Sheller JA agreed) said at [41]: "41 It is clear that the duty to give reasons is a necessary incident of the judicial process. Without adequate reasons, justice has not been seen to be done, so that failure to give adequate reasons may be an error of law... But the duty does not require the trial judge to spell out in minute detail every step in the reasoning process or refer to every single piece of evidence. It is sufficient if the reasons adequately reveal the basis of the decision, expressing the specific findings that are critical to the determination of the proceedings." 66Her Honour expressed the specific finding that was critical to the determination of the issue, namely there was no final agreement as to the terms of variation of the earlier agreements. Hence, this ground of appeal fails.

[5]

Ground 2 67Ground 2 of the notice of appeal states: "Her Honour erred in finding that the plaintiff was not liable to the first defendant because she was not the sole cause of the first defendant's loss when the requirement for causation of loss in contract is not that the wrongdoer be the sole cause, merely a material cause. Her Honour did not address the question of whether or not the plaintiff was a material cause of the first defendant's claimed loss. This was an error of law." 68Counsel for Consultus submitted that where there are concurrent causes of loss or damage, it is sufficient for the defendant's breach to be a cause of the loss or damage: Simonius Vischer & Co v Holt [1979] 2 NSWLR 322 at 346. 69The Magistrate found that Consultus Recruitment failed to prove that it had suffered any loss or damage, stating (J 5.11-13; 5.25-27): "The [defendants'] costs are said to be calculated on time spent by the second defendant in arranging for the settlement and some incidental costs... The defendant did not substantiate the time claimed to have been spent above and beyond what would have been expected in achieving an outcome between the parties." 70Her Honour also stated that Consultus Recruitment failed to prove that any of the costs claimed by it (that is, legal fees, staff wages, loss of productivity and room hire costs) were caused by the actions of Lomas Executive, stating (J 5.27-28): "The defendant has not proven any of the costs claimed were the result of the plaintiff's actions and should be paid by the plaintiff." 71From the above extracts of the judgment it is my view that her Honour decided that Lomas Executive's conduct had not been a material cause of any loss or damage suffered by Consultus Recruitment. Her Honour did not apply the "sole cause" test. The Magistrate in addressing the question of causation did not misdirect herself as to the applicable law, nor apply the wrong test. 72In any event, her Honour held that there was no [variation] contract between the parties as outlined under appeal Ground 1. It follows that, in the absence of a contract, there could be no breach that caused the defendants to suffer any compensable loss or damage. This ground of appeal fails.

[6]

Ground 3 73Grounds 3 of the notice of appeal states: "Her Honour's judgment did not distinguish between defendants, treating them effectively as one defendant, when the defendants claimed that an agreement had been entered between the second defendant on behalf of the first defendant and the plaintiff to settle the transaction by a settlement meeting." 74This ground of appeal is confusing. As previously stated, it was not properly raised as an issue at the hearing in the Local Court that an agreement had been entered between Mr Parkin on behalf of Consultus Recruitment and Lomas Executive to settle the transaction by a settlement meeting. 75Counsel for Lomas Executive referred to UCPR 50.4(2). This rule obliges the plaintiffs' to identify with precision the grounds of appeal relied on, including any grounds on which it is contended that there is an error of law in the decision below. Counsel for Lomas Executive submitted that this ground of appeal fails to identify any error of law or any error of mixed fact and law (which would require leave) so it ought not be entertained. 76Counsel for Lomas Executive submitted that it is plain from the reasons for judgment that the learned Magistrate did distinguish between the defendants and did not treat them as a single defendant as alleged. Counsel for Lomas Executive further submitted that to the extent that there are references in the reasons for judgment to the "defendant" in the singular, it is imperative to bear in mind that the reasons for judgment were delivered ex tempore and, for that reason, the transcript of the reasons for judgment might not be as precise as written reasons may have been. In any event, Lomas Executive submits that nothing turns on such references and, certainly, such references do not amount to an error of law. 77If this ground of appeal can be construed as referring to the bank guarantee loan agreement, in her reasons for judgment the Magistrate identified the parties that contributed to the bank guarantee as Lomas Executive, Consultus Recruitment and Lomas Permanent. These lessees each contributed the sum $15,791.11. The total sum of $47,373.33 was deposited by Consultus Recruitment into a Westpac term account. It was not in dispute that on 29 July 2009, Lomas Permanent transferred its interest and entitlement to the amount of $15,791.11 to Lomas Executive which meant that Lomas Executive was now owed $31,582.22 in relation to the bank guarantee loan agreement. It follows that when the bank guarantee was refunded to Consultus, it owed the sum of $31,582.22 to Lomas Executive. 78The orders for relief which required Consultus Recruitment to pay the sum of $31,582.22 and Consultus to pay the sum of $12,058.66, make it clear that her Honour did distinguish between the defendants and their respective rights and obligations (J 8.4-7). This ground of appeal fails. 79If this ground of appeal can be construed as relating to the joint venture termination agreement then I shall deal with it in Ground 4.

[7]

Ground 4 80Ground 4 of the notice of appeal states: "Her Honour failed to distinguish between money owing by the second defendant to a director of the plaintiff pursuant to arrangement between those two parties and instead found that the claimed sum, $13,200, should be paid to the plaintiff, and that the defendant (sic) had no claim to this money. Her Honour failed to provide adequate reasons for the decision, which did not distinguish between defendants, and which constitutes an error of law." 81The identity of the parties to the joint venture termination agreement was raised in the defence and was an issue in dispute before the Magistrate. 82In support of Consultus' proposition that this agreement was between Lomas and Parkin, counsel for Consultus drew this Court's attention to the affidavit of Susan Lomas sworn 9 August 2011 at [38] where she deposed: "38 In or about early May 2010 I had a meeting with Anthony Parkin and Brian Higazi, who at that time was the accountant for Lomas Executive and CLC, during which words to the following effect were said: Me: This joint venture (CLC) is not working out. I will agree to leave you the staff, the pipeline, the database and the lease of the premises provided that I am paid the money that I contributed. Parkin: I will pay you the money after you leave. Me: No I want to be paid before I leave. I will transfer the shares held by me in CLC to you on the condition that Lomas Executive will be paid the amount of $15,000. Parkin: OK, I agree. Me: I also want you to return two-thirds of the bank guarantee to me. Parkin: OK." 83However, also exhibited to that affidavit is a copy of the tax invoice dated 20 May 2010 by Lomas Executive and addressed to Consultus Group [B p 221] in the sum of $13,200. The Magistrate made findings that Ms Lomas, on behalf of Lomas Executive, agreed to transfer her shares in Consultus on the basis that Lomas Executive would be paid $13,200 by Consultus, which was comprised of the outstanding investment of $15,000, less an agreed reduction to assist with the settlement of a legal dispute that Consultus was engaged in. The Magistrate also stated that as part of the negotiations between the parties, Lomas Executive deducted office expenses paid by Consultus Recruitment from the amount of $13,200.00 owed to it by Consultus, leaving a balance of $12,058.66 (J 2.44-46). 84On 15 October 2010, the parties agreed that a cheque would be drawn in favour of Lomas Executive in the sum of $43,807.54 (which sum included the amount of $12,058.66) (J 3.4-6). 85Lomas Executive submitted that, after May 2010, all communications by the plaintiffs and their solicitor acknowledged that the monies owed pursuant to the joint venture termination agreement were owed to Lomas Executive (PA 234, 238, 255, 265 - 266) and such evidence constitutes an admission by the plaintiffs that the relevant contracting party was Lomas Executive. 86Counsel for Lomas Executive also submitted that it is plain from the judgment that the learned Magistrate rejected the defendants' allegation that the joint venture termination agreement was an agreement between Mr Parkin and Ms Lomas (as alleged in the Defence at [7]), holding instead that the proper parties to that agreement were Consultus and Lomas Executive (J 2.8-12, 2.44-46, 5.50-6.8). In so doing, her Honour adequately distinguished between the defendants. 87While there may have been a factual dispute as to whether the contract was between Lomas and Parkin, as individuals, or Lomas Executive and Consultus, there was evidence to establish that the joint venture termination agreement was between Lomas Executive and Consultus. Her Honour found that, as Ms Lomas did in fact resign her directorship and transfer her shares to Mr Parkin, Consultus was obliged to pay Lomas Executive the sum of $12,058.66 in accordance with the agreement (J 5.30-33). Those reasons adequately reveal the basis of the Magistrate's decision in relation to the identity of the parties to the joint venture termination agreement. This ground of appeal fails.

[8]

Ground 5 88Ground 5 of the notice of appeal states: "Her Honour failed to find that the plaintiff was in breach of the agreement in that the plaintiff was never ready, willing or able to provide the second defendant with proof of an executed surrender of lease or new lease prior to the commencement of the proceedings. As such, the plaintiff was in breach and by virtue of the plaintiff's continuing failure to perform, the first defendant was justified in failing to perform. This was an error of law." 89Submissions of this topic by Consultus recount the factual history that supports its contention that Lomas Executive was in breach of an agreement in that it was never ready, willing or able to provide Consultus with proof of an executed surrender of lease or new lease. 90Counsel for Consultus submitted that the Magistrate failed to make the necessary factual findings and in doing so, fell into error. Firstly, counsel submitted that her Honour's entire conclusion about the requirement for a surrender document is ignored save for one sentence; secondly, Lomas Executive's breach was ignored and suffers no legal repercussions; thirdly, the reasoning as to why the arrangement was not a contract is opaque and inadequate; fourthly, the submission that the proceedings were peremptory, in that Lomas Executive had not been in a position to perform, was not dealt with; and finally, the Magistrate did not give adequate reasons about the contract or the claimed set off. 91So far as the first submission is concerned, that is the Magistrate only devoted one sentence to the requirement for a surrender document, the Magistrate examined the sequence of events that led to the surrender of the lease by Lomas Executive on 9 November 2010 (J 4.10-23) and concluded that it appeared not to have been possible for all the relevant documents, including the surrender of lease document, to be handed over simultaneously (J 4.35-42). The findings by her Honour on the surrender of the lease were open to her on the evidence adduced at hearing. 92Counsel for Lomas Executive submitted that Ground 5 of the summons fails to specify any error of law as required by r 50.4(2) of the UCPR. Rather, Ground 5 merely asserts error constituted in the decision below, without identifying what the error was. 93The difficulty with Ground 5 is that the alleged failure by the learned Magistrate relates to factual findings and legal conclusions that the Local Court Magistrate was never asked to make. It was never the plaintiffs' case at hearing that Lomas Executive repudiated the alleged agreement, giving rise to relief from performance and a right of termination on the part of Consultus Recruitment which Consultus Recruitment allegedly exercised. The plaintiffs, in the Local Court, alleged that Lomas Executive breached the variation agreement by its failure to execute a surrender of the lease and enter into a new lease of the premises within a reasonable time; and ensure that Consultus Recruitment was released from its obligations under the lease. 94The Magistrate held that there was no such breach, finding that: Lomas Executive executed a surrender of the lease and entered into a new lease in respect of the premises (J 4:17-23); although it clearly took a long time for the parties to finalise their arrangements, the delay was not caused by Lomas Executive alone, nor did Lomas Executive take an unreasonable amount of time in firstly, performing its relevant tasks (J 4.32-35, 5.8-9). 95There was evidence to establish that Consultus Recruitment was in part responsible for the delay as firstly, Consultus Recruitment failed to clear its outstanding liability under the lease until 29 November 2010 and the lessor was not prepared to proceed with the surrender of lease until this had occurred, and Consultus Recruitment did not pay its half share of legal costs under the lease until 9 February 2011: T 42.17-26 (16.12.11) and secondly, from 7 February 2011, Consultus Recruitment had no further liability under the lease (J 4.30-31). This finding was open to the Magistrate and her reasons were adequate. 96So far as it is submitted that the Magistrate did not give adequate reasons in relation to the pre-emptory bringing of proceedings, her Honour stated (at J 5.40-46): "For completeness it was raised that legal proceedings were brought too early, while the defendants were still negotiating to finalise the matters. On 7 February 2011 the bank guarantee was returned. On 14 February 2011 the defendant was issued with a letter from the plaintiff seeking the return of its money by 21 February 2011. On 16 February 2011 the defendant refused. Legal proceedings were brought on 7 April 2011. I am not persuaded that legal proceedings therefore were brought too early." 97In relation to this issue, her Honour's reasons were short and concise but adequate to reveal her reasoning. 98Counsel for Consultus' final point regarding the inadequacy of the Magistrate's findings regarding the contract has been dealt with above in relation to Ground 1. With regard to the set off, this will be dealt with below in relation to Ground 6. 99For the reasons stated above, this ground of appeal fails.

[9]

Ground 6 100This ground of appeal is: "Her Honour erred in finding that the defendant had not proved any of the costs claimed were the result of the plaintiff's actions and should be paid by the plaintiff where there was evidence of such costs and such evidence was ignored in the reasons for decision. Her Honour should have found that the first defendant had incurred costs and suffered other damage by virtue of the breach of the agreement by the plaintiff." 101Once again, counsel for Lomas Executive submitted that Ground 6 of the summons fails to identify any error of law. Rather, the plaintiffs merely assert error in respect of factual findings that were made. 102I will examine Mr Parkin's evidence in relation to his claim for set off. Mr Parkin (Aff, 30/08/2011) at [8] and [9] deposed that as a result Consultus Recruitment had incurred losses and expenses in loss of staff time and productivity in futile attempts to resolve the issue of the premises and the lease. He deposed that he had spent at least three days each month on these issues from the five months from October 2010 to February 2011, losing $1,818 each day. The staff of Consultus were also disrupted due to the change of business premises of Consultus Recruitment and the behaviour of the director of Lomas Executive, causing a loss to Consultus of one month in billings for the two staff at a cost of $15,470.84. 103Mr Parkin deposed that on six occasions he booked a meeting room to meet and settle the lease and premises issues with Mark Leo of Knight Frank. Six times he failed to attend these meeting as arranged, without any prior notice to Mr Parkin that he (Mr Leo) was not intending to attend. Consultus was still required to pay for the meeting room booked at a cost of $300 in total. 104Mr Parkin said that in addition, fees rendered from Consultus' solicitors for the period from October 2010 to February 2011, referable to the lease and the premises and paid by Consultus, totalled $4,300.21. 105In his latter affidavit dated 7 December 2011, Mr Parkin deposed that Consultus Recruitment's solicitor rendered the following invoices to Consultus for the provision of legal services and for expenses with respect to the dispute with Lomas Executive for work done from 23 August 2010 to 10 March 2010[sic], each of which has been paid by Consultus Recruitment: A Invoice 545 dated 15 September 2010 1399.75 B Invoice 576 dated 19 October 2010 2187.90 C Invoice 603 dated 16 November 2010 2805.50 D Invoice 632 dated 14 December 2010 300.30 E Invoice 666 dated 24 January 2011 557.70 F Invoice 695 dated 22 February 2011 1930.50 G Invoice 725 dated 22 March 2011 343.20 Total 9524.85

[10]

106The fees rendered from Consultus Recruitment's solicitors for the period referable to the lease and the premises and paid by it totalled in fact $9,524.85 and not $4,300.21. 107Mr Parkin said that the staff of Consultus Recruitment were in fact employed by Consultus Pty Limited. Therefore, Consultus Recruitment had not suffered the loss of one month in lost billings for the two staff at a cost of $15,470.84 as was deposed in his affidavit of 3 August 2011 and it withdrew such claim. Mr Parkin maintained his diary on his computer, for the period 22 August 2010 to 12 February 2011. The time recorded in blocks records the actual time spent by him with respect to this matter. Some of the work Mr Parkin undertook from home. This was because his business premises are open plan and everyone in the office would be able to hear his telephone conversations with his solicitor, with Mark Leo and others. Some of the meetings referred to occurred at his offices and some of the meetings occurred at Knight Frank. 108His diary records many of the meetings he arranged with Knight Frank to attempt to resolve the issue of the premises and the lease; meetings with his solicitor with respect to these issues; and meetings and time spent at Westpac Bank. In addition Mr Parkin spent significant time in providing instructions to his solicitor by telephone and email; reviewing documents to verify or otherwise, statements made by the Lomas Executive's solicitor; completing various documents for Westpac Bank concerning the guarantee; and numerous telephone attendances and emails with Knight Frank, all of which were with respect to the issues of the premises and the lease. 109The Executive Centre is the serviced office provider to Consultus Recruitment and Consultus. Mr Parkin had marked on the Summary of Service sheets for the period 14 August 2010 to 15 February 2011 the items that relate to meeting room bookings to meet with Mark Leo of Knight Frank and settle the lease and premises issues involving Lomas Executive, or to meet with his solicitor to execute the surrender document on 18 October 2010. 110The cost to Consultus Recruitment of these meeting room bookings was in fact $294.24 and not $300.00. 111Consultus Recruitment claims that delay on the part of Lomas Executive caused Consultus Recruitment loss or damage were undermined by evidence that Consultus Recruitment contributed to the delay in the surrender of the lease and the return of the bank guarantee. Consultus Recruitment firstly, failed to pay its outstanding liability under the lease until 29 November 2010 (PA 290) and the lessor was not prepared to proceed with the surrender of the lease until this had occurred; and secondly, did not pay its half share of legal costs due under the lease until 9 February 2011: T 42.17-26 (16.12.11). 112If Consultus Recruitment was to be awarded these costs, it would have had to be based on a finding that Lomas Executive was responsible for the delay in surrendering the lease. However, her Honour did not make such a finding. Her Honour's finding was (J 5.27-28): "The defendant did not substantiate the time claimed to have been spent above and beyond what would have been expected in achieving an outcome between the parties. The defendant has not proven any of the costs claimed were the result of the plaintiff's actions." 113This ground of appeal fails.

[11]

Ground 7 114This ground of appeal is: "Her Honour failed to provide any reasoning for the conclusion that 'the defendant' had not proved any of the costs claimed were the result of the plaintiff's actions and should be paid by the plaintiff, in circumstances where there was significant evidence of the incurrence of such costs and/or damage and where such evidence was not adverted to in the judgment. The failure to provide reasons constituted an error of law." 115Counsel for Lomas Executive submitted that this ground of appeal should fail as the learned Magistrate did provide adequate reasons for the conclusion that "[t]he defendant has not proven any of the costs claimed were the result of the plaintiff's actions" (J 5.27-28). 116I have already referred to the evidence of Mr Parkin in relation to his incurrence of costs and/or damages and her Honour's findings in relation to that issue. Her Honour's reasoning process is apparent from the judgment (J 5.3-27): "The defendant is [claiming]... that because the plaintiff took an unreasonable time to finalise the agreement he is out of pocket. It clearly took a long time for the parties to finalise their arrangements, however I am not persuaded that this delay was caused by the plaintiff solely, or that the plaintiff should bear any of the defendants costs for the defendants participation in the process. The costs are said to be calculated on time spent by the second defendant in arranging for the settlement and some incidental costs... The parties... engaged lawyers to negotiate the settlement between the parties... In reaching settlement each side was required to organise certain things unique to its own situation...the defendant had dealings with the bank guarantee as from the outset this was lodged by the defendant. The defendant did not substantiate the time claimed to have been spent above and beyond what would have been expected in achieving an outcome between the parties." 117The above extract indicates that the basis of the learned Magistrate's conclusion involved firstly, a finding that the plaintiffs were obliged to undertake certain tasks in order to finalise matters with Lomas Executive; secondly, the plaintiffs retained solicitors for the above purpose; thirdly, it took a long time for the parties to finalise matters between them; fourthly, the plaintiffs bore some responsibility for the delay; and finally, the plaintiffs failed to establish that the cost of finalising matters with Lomas Executive exceeded that which it ought to have expected. It was open to the Magistrate to come to the conclusion that she did. This ground of appeal fails. 118It is my view that the Magistrate provided adequate reasons for her decision. There is no error of law or fact. The result is that the appeal is dismissed. The decision of her Honour Magistrate McManus dated 8 February 2012 is affirmed. The summons filed 6 June 2012 is dismissed. 119Costs are discretionary. Costs normally follow the event. The plaintiffs are to pay the defendant's costs as agreed or assessed.

Parties

Applicant/Plaintiff:

Consultus Recruitment and Research Pty Limited

Respondent/Defendant:

Lomas Executive Pty Limited

Cases Cited (13)

Leave to extend time 4On 8 February 2012, the Magistrate handed down her decision. On 6 June 2012, the plaintiffs filed their summons. The appeal should have been filed on 8 March 2012. There is a delay of about three months. Thus, leave to extend the time to appeal is required. 5It is for the party seeking the extension to persuade the Court that it is in the interests of justice that it should be granted. Such persuasion will usually depend on the provision of an acceptable or satisfactory explanation as to why the time limits were not complied with - see Jackamarra v Krakouer [1998] HCA 27; (1998) 195 CLR 516 at 540; (1998) 153 ALR 276 at 294. Normally this involves four factors. These are the length of the delay, the reason for the delay, whether the applicant has a reasonably arguable case and the extent of any prejudice suffered by the respondent to the application: see Despot v Registrar General [2012] NSWCA 160; Kounnas v Citywide Civil Engineering Pty Ltd [2012] NSWCA 287 at [7]. 6The explanation for delay comes from Consultus Recruitment and Consultus' solicitor, Mr Davidson. He was of the erroneous belief that the matter was not finalised, and that the time to appeal did not run, until the costs order had been made. As previously stated, the delay in filing the appeal is about three months. I accept the solicitor made a genuine mistake. He has given a satisfactory explanation for the delay. It is my view that Consultus Recruitment and Consultus has a reasonably arguable case and Lomas Executive has not demonstrated that they suffer any prejudice. Taking these factors into account and in the exercise of my discretion, it is my view an extension of time should be granted. I make this order.

The appeal 7Section 39 of the Local Court Act 2007 provides that a party who is dissatisfied with a judgment or order of the Local Court may appeal to the Supreme Court, but only on a question of law. 8Section 40(1) of the Local Court Act provides that a party who is dissatisfied with a judgment or order of the Local Court may appeal to the Supreme Court on a ground that involves a question of mixed law and fact, but only by leave of the Supreme Court. 9Section 40(2) provides that a party who is dissatisfied with an order as to costs of the Local Court may appeal to the Supreme Court, but only by leave of the Supreme Court. 10Section 41 of the Local Court Act provides that this Court may determine an appeal either (a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court's directions, or (d) by dismissing the appeal. 11In Swain v Waverley Municipal Council [2005] HCA 4; (2005) 220 CLR 517, Gleeson CJ at [2] reiterated that in the common law system of civil justice, the trial process determines the issues between the parties. The system does not regard the trial as merely the first round in a contest destined to work its way through the judicial hierarchy until the litigants have exhausted either their resources or their possibilities of further appeal. 12On 8 February 2012, the Magistrate awarded Lomas Executive an amount of $43,640.88. The judgment sum comprised of $31,582.22, on account of contributions to a bank guarantee which was held to be repayable by Consultus Recruitment to Lomas Executive; and the sum of $12,058.66 being a debt owed by Consultus to Lomas Executive pursuant to a share sale agreement, less some agreed deductions. The Magistrate did not make an order for set off. 13The plaintiffs', Consultus Recruitment and Consultus, submissions have substantially departed from the grounds of appeal articulated in the summons. As the defendant, Lomas Executive, has addressed the issues raised in the summons, I will address each of them in turn.

(1997) 48 NSWLR 430

(1998) 195 CLR 516

(1998) 153 ALR 276

(2005) 220 CLR 517

(2004) 60 NSWLR 127

(1995) 87 LGERA 435