George Ferizis & Co Pty Ltd v Tzavaras Papasinos Pty Ltd

Representation: Counsel:
G Carolan (Plaintiff)
A Gauja (All Defendants)
Solicitors:
A Plus Legal (Plaintiff)
Antonenas Legal Pty Ltd (Defendants)

File Number(s): 2024/00433541

Publication restriction: Nil

JUDGMENT

1. This judgment involves an appeal from part of the decision of the Local Court.

2. The plaintiff is George Ferizis & Co Pty Ltd (Ferizis & Co) and is represented by G Carolan of counsel. The first defendant is Tzavaras Papasinos Pty Ltd (Papasinos). The second defendant is Northmead Auto Centre Pty Ltd (Northmead Auto). The third defendant is Tzavaras & Sons Pty Ltd (TAS). The fourth defendant is William (who is also known as Bill) Tzavaras (Bill). The fifth defendant is Kylie Louise Tzavaras (Kylie). The sixth defendant is Peter Tzavaras (Peter). The seventh defendant is Northmead Auto Pty Ltd (NA). All defendants are represented by A Gauja of counsel.

3. The parties relied on a court book consisting of 2 volumes marked as exhibit A1 and A2 respectively. For convenience of understanding and without intending any disrespect, I shall refer to the parties by name.

Background

4. Ferizis & Co appeals from part of the decision of Magistrate Reiss (the Magistrate) in the Local Court in relation to its claim seeking recovery of its unpaid fees for accounting services rendered to the defendants, who are members of the Tzavaras family and their related companies. Specifically, the unpaid fees included:

5. the balance of Ferizis & Co’s invoice dated 22 December 2016 and the invoices dated 30 June 2017 and 18 December 2017 (the Outstanding Invoices); and

6. an administration fee or interest on the Outstanding Invoices.

7. Mr George Ferizis (Mr Ferizis) has been the sole director of Ferizis & Co since 28 April 2004. Mr Ferizis has provided accounting and taxation services to the defendants through his company, Ferizis & Co, the plaintiff, from 1979 to 2019.

8. The principal defendants were the fourth defendant, Bill, and the fifth defendant, Kylie, who is also Bill’s wife. Both of them were directors of the first defendant, Papasinos. The second defendant, Northmead Auto, was the trustee of the Northmead Auto Centre Trust and Bill was the director of that company. The third defendant, TAS, was the trustee of the Nicholas Tzavaras Family Trust and the Tzavaras Family Trust. Bill and the sixth defendant, Peter, were directors of TAS. Bill and Brooke Warwick Thomas were the directors of the seventh defendant, NA.

9. On 4 and 14 December 2023, these proceedings were heard in the Local Court. On 22 August 2024, the Magistrate delivered the judgment (the Judgment).

10. Ferizis & Co relied upon the affidavit of Mr Ferizis dated 13 February 2023. Mr Ferizis gave evidence and was cross-examined.

11. Bill and Kylie relied on behalf of all defendants in their affidavits dated 21 June 2023 respectively. They each gave evidence and were cross-examined.

12. On 22 August 2024, the Magistrate entered a verdict for Ferizis & Co against all individual defendants, except Kylie, for specific small amounts which had been claimed from them. However, his Honour rejected the claim for payment of the invoices issued to "Messrs B, J & P Tzavaras & Mesdames G & K Tzavaras", being (CB 1467-1472):

| Invoice dated 22 December 2016 | | $1,742.00 (balance outstanding) | | Invoice dated 30 June 2017 | | $28,600.00 | | Invoice dated 18 December 2017 | | $25,850.00 | | | Total: | $56,192.00 |

11. The claim for payment of the three invoices was rejected because his Honour said that Ferizis & Co had not apportioned the value of the work performed in relation to each invoice between the various defendants for whom work was performed.

12. His Honour also held that Ferizis & Co was not entitled to rely upon the terms of the Client Engagement Letter which was posted to the defendants on 12 December 2016 addressed to the post office box nominated by the defendants to receive their correspondence.

13. In relation to the alternative claim of quantum meruit, his Honour found that there was no dispute that the "work in question was requested and/or freely accepted" (at [45] of the Judgment). His Honour found that the unpaid invoices "reflect fair and reasonable rates for the work done” (at [52] of the Judgment).

Summons

14. By way of the Summons filed on 21 November 2024, Ferizis & Co seeks the following orders:

15. An order nunc pro tunc pursuant to Uniform Civil Procedure Rules 2005 (NSW) (UCPR) rr 50.3(1)(c) and 50.12(1)(c) extending time for the commencement of the appeal to the date of filing of the Summons;

16. Leave to appeal from the part of the decision below in relation to the Magistrate's finding at [41] of the Judgment in relation to service of the plaintiff's Client Engagement Letter;

17. Appeal allowed;

18. Order (i) made in the Local Court be set aside;

19. Judgment for the plaintiff against the fourth, fifth and sixth defendants for the sum of $56,192; and

20. An order that the fourth, fifth and sixth defendants pay the plaintiff's administration fee or, alternatively, interest on amounts outstanding.

21. Ferizis & Co appeals on three grounds. They are:

22. The Magistrate erred as a matter of law in not finding the fourth, fifth and sixth defendants liable for the Outstanding Invoices (Appeal Ground 1), given:

(a) the admission by the defendants in each of their defences that the fourth and fifth defendants provided instructions to the plaintiff to provide accounting services on their behalf; and (b) the finding that each of the invoices reflected fair and reasonable rates for the work done.

2. The Magistrate erred as a matter of law in finding that the plaintiff was required to apportion the amounts charged in the outstanding invoices (Appeal Ground 2).
3. The Magistrate erred as a matter of mixed fact and law in finding that the Client Engagement Letter sent by the plaintiff to the fourth, fifth and sixth defendants on 12 December 2016 was not received by them, being a finding which was against the weight of evidence and contrary to the findings made by the Magistrate in relation to the evidence of the fourth and fifth defendants (Appeal Ground 3).

The pleading framework:

16. The starting point is the pleading framework. I shall briefly set it out here.

Amended statement of claim

17. On 28 March 2023, Ferizis & Co filed its amended statement of claim (ASC) seeking damages for breach of contract or in the alternative, quatum meruit, for the defendants’ failure to pay the Outstanding Invoices. The Outstanding Invoices totalled $66,473.77 for accounting and taxation services provided by the plaintiff to the defendants between 22 December 2016 and 18 February 2019.

18. Ferizis & Co also pleaded that on or about 12 December 2016, it entered into a contract with the defendants to provide accounting and taxation services through the Client Engagement Letter that was posted to the defendants.

19. Ferizis & Co further pleaded that from 12 December 2016, Bill and Kylie provided instructions to it to provide accounting and taxation services in respect of all the defendants.

Amended defences

20. The defendants each filed their amended defences on 6 June 2023, admitting that the Outstanding Invoices had not been paid but denying that they were required to pay the outstanding amount.

21. The defendants denied that they entered into a contract with Ferizis & Co through the Client Engagement Letter.

22. The defendants admitted that Bill and Kylie provided instructions to Ferizis & Co to provide services in respect of the defendants.

23. The defendants denied that Ferizis & Co was entitled to damages for breach of contract, or in the alternative, that the outstanding amount was payable as quantum meruit.

24. The defendants further claimed that Ferizis & Co did not disclose any costs prior to undertaking any work, did not provide an itemised breakdown of the outstanding amount, and that the quantum claimed by the plaintiff was unreasonable for the accounting and taxation services provided by it.

The law

25. Sections 39, 40 and 41 of the Local Court Act 2007 (NSW) (LCA) relevantly read:

39 Appeals as of right

(1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law.

…

40 Appeals requiring leave

(1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court but only by leave of the Supreme Court.

(2) A party to proceedings before the Court sitting in its General Division who is dissatisfied with any of the following judgments or orders of the Court may appeal to the Supreme Court, but only by leave of the Supreme Court--

(a) an interlocutory judgment or order,

(b) a judgment or order made with the consent of the parties,

(c) an order as to costs.

41 Determination of appeals

(1) The Supreme Court may determine an appeal made under section 39 (1) or 40--

(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.

…

Leave to appeal

26. The first issue that needs to be determined is whether Ferizis & Co should be granted leave to appeal on the basis that Appeal Ground 3 refers to a question of mixed law and fact.

27. In BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [19]-[20] the Court of Appeal set out the following principles with respect to the granting of leave to appeal:

“Principles relevant to leave applications

[19] In order to be granted leave to appeal, the applicant must demonstrate something more than that the primary judge was arguably wrong in the conclusion arrived at: Carolan v AMF Bowling Pty Ltd t/as Bennetts Green Bowl [1995] NSWCA 69 per Sheller JA; Zelden v Sewell [2011] NSWCA 56 at [22] per Campbell JA (Young JA agreeing).

[20] Ordinarily it is appropriate to grant leave to appeal only in matters that involve issues of principle, questions of public importance or an injustice which is reasonably clear, in the sense of going beyond merely what is arguable: Carolan per Kirby P; Jaycar Pty Ltd v Lombardo [2011] NSWCAS 284, Campbell JA (Young and Meagher JJA agreeing) at [46]. See also Lee v New South Wales Crime Commission [2012] NSWCA 276 per Bathurst CJ (Macfarlan and Barrett JJA agreeing).”

Ferizis & Co submissions

28. The failure by his Honour to give effect to the oral and/or written contracts between the parties is a clear example of error which, if left uncorrected, would give rise to a substantial detriment to Ferizis & Co and consequently, a miscarriage of justice.

Defendants’ submissions

29. However, the defendants submitted that there is no clear error, or no error at all that would give rise to any substantial injustice to Ferizis & Co which would favour the grant of leave to appeal.

30. In oral submissions, counsel for the defendants stated that beyond Ferizis & Co’s submission that his Honour’s failure to give effect to the oral and/or written contracts between the parties, there were no other factors that the plaintiff could point to that established an error that gave rise to either a substantial detriment to the plaintiff or a miscarriage of justice (T6 [5]-[15]). Counsel further submitted that any injustice must be reasonably clear and more than reasonably arguable (T6 [25]-[35]).

Resolution

31. Appeal Ground 3 raises a mixed question of fact and law. In my view, Appeal Ground 3 raises an important issue of an important principle of practice and procedure as to the law in relation to service of documents by post. In these circumstances, I grant leave to appeal.

The decision of the Local Court

32. In his written judgment dated 22 August 2024 (the Judgment), the Magistrate provided his written reasons.

33. The Magistrate made the following findings in relation to the Client Engagement Letter at [40]-[41]:

“[40] I accept the evidence of Mr Ferizis that he arranged for Ferizis & Co staff to send the letter of engagement [the Client Engagement Letter] to the usual PO box and that it was likely sent. The letter of engagement did not come back to them undelivered.

[41] I note that Mr Ferizis did not have the letter of engagement sent by registered mail and there was no receipt of delivery. It is of course agreed that a signed copy was never returned to him. Mr Ferizis never followed it up by email or phone calls, despite the letter of engagement stating that they were to be signed and one copy returned to him. Even though the letter of engagement stated it would still be binding even if not signed and returned, and that having it signed was not an Institute requirement, it would have been easy and prudent to have ensured that it was. Importantly, this was a long-standing, ongoing relationship between the parties, and not a new engagement whereby there might be more need for the client to focus upon the terms of engagement. Further, as correctly submitted on behalf of the defendants, the letter of engagement was never referred to in any subsequent correspondence or in the invoices themselves. Again, there is a possibility that the letter of engagement went astray in the mail and there is no positive evidence of it actually being received and read. I am not persuaded on the balance of probabilities that it was in fact relevantly received by Kylie or Bill or the other defendants.”

34. The alternative claim of quantum meruit was set out at [44]-[52] of the Judgment:

“[44] The parties did not refer the court to the general principle entitling a party to make a quantum meruit claim. It was no submitted on behalf of the defendants that if the primary position of the plaintiff concerning a contract was rejected by the court that the plaintiff was not entitled to make the alternative claim under quantum meruit. It was submitted on behalf of the defendants that the evidence from the plaintiff on the appropriate quantum meruit rates was not sufficient.

[45] In broad terms, where there is no contract or an ineffective contract, a party is entitled to claim payment for services requested or freely accepted. The following was said in the High Court case of Liebe v Molloy, & Griffith (1906) 4 CLR 347 at 345:

When a man does work for another without any express contract relating to the matter, an implied contract arises to pay for it at its fair value. Such an implication of course arises from an express request to do made under such circumstances as to exclude the idea that the work was covered by a written contract. So it would arise from the owner standing by and seeing the work done by the other party, knowing that the other party, in this case the contractor, was doing the work in the belief that he would be paid for it as extra work.

There was no dispute here that the work in question was requested and/or freely accepted.

[46] As to the issue of how the quantum meruit claim is to be determined, on behalf of the defendants, reference was made to Mann v Paterson Constructions Pty Ltd [2019] CLR 560 and to paragraph 203 on page 645:

In some circumstances, it is necessary or appropriate that the benefit of work to the defendant be determined without reference to a contract price. As Dixon J observed in South Australian Harbors Board v South Australian Gas Co [313], identification of ‘a fair and reasonable rate of remuneration, in other words a quantum meruit’, raises a ‘question of fact’, the answer to which ‘depends very much upon the methods of reasoning which are pursued’. Where the claim to quantum meruit is founded upon a contract which does not expressly fix a price for services, ‘usually’ the value of those services will be ‘assessed by reference to charges commonly made by others for like services’, unless no such standard is available [314]. In such cases, practical necessity justified the default application of an objective price derived from outside the contract which ordinarily depends on evidence of supply costs and market conditions [315]. [emphasis added]

[47] In respect to the quantum meruit claim, it was submitted on behalf of the defendants that there was the error by Mr Ferizis in his affidavit in referring to the wrong WIP for the 22 December 2016 invoice. They also point to the failure of Mr Hilton to have picked up this error when preparing his expert report. As noted above, the evidence of Mr Ferizis did make this error and the expert did not notice this error. This was a significant oversight. It does undermine their credit. However, there are three large invoices that make up the bulk of the claim of the plaintiff. For the later in time two large invoices, the evidence before the court does include the two relevant WIP printouts. For the first large invoice, the WIP was not included in the evidence, and counsel for the plaintiff indicated they were unable to locate that information.

[48] It was submitted on behalf of the defendants that there were other weaknesses in the report of Mr Hilton, such as sections that were ‘a cut and paste’ job. However, that section of the expert report was meant to be a summary of Mr Ferizis’s evidence, so a ‘cut and paste’ there was not inappropriate.

[49] There was no dispute as to Mr Hilton’s expertise. His qualifications and experience appeared extensive and impressive. Whilst there were some areas of concern and failings with the report of Mr Hilton, he is a very experienced and qualified expert. His evidence of appropriate reasonable rates was clear and appears to be reliable, and they were not challenged in cross-examination.

[50] Ms Feng was not presented as an expert witness and that the defence did not present an expert evidence. The fact that the defendants are getting cheaper rates with their current accountant is not germane to the issue. Whilst it appears that much of the work being done by Landen was similar, the court was not presented with a close comparison of the actual work done by the respective firms to establish the degree of similarity. More importantly, the charge-out rates of Lanfen were significantly less than that of Ferizis & Co. The work was done under Ms Feng’s supervision, but not by her as the principal of the firm.

[51] No evidence was presented by the defendants to make out their pleading that ‘the quantum claimed is unreasonable, excessive, and extravagant relative to the work done’.

[52] In these circumstances, the court accepts that the invoices from Ferizis & Co reflect fair and reasonable rates for the work done.”

35. His Honour then dealt with the issue of apportionment at [53]-[58] of the Judgment, saying relevantly:

“[53] Notwithstanding the plaintiff making out a basis for the quantum meruit claim, there is a significant issue in terms of apportionment. In respect to which parties are liable and which defendants an order can be made against for the multi-person directed invoices, there was a lack of precision in the evidence and in the submissions on behalf of the plaintiff…

…

[57] The plaintiff has not presented a summary or schedule based on the WIP reports to show which charges relate to which defendant. Mr Ferizis was not cross-examined on the WIP entries or the invoices to ascertain which people or entities the work was done for. However, it is incumbent on the plaintiff to present its case and evidence. It was pleaded in the defences that the plaintiff has failed to provide an itemised breakdown of the outstanding sum despite repeated requests to do so. Notwithstanding that, the plaintiff failed to provide a detailed breakdown of the sums in the multi-person invoices in these proceedings. Even if it had been pleaded and submitted on behalf of the plaintiff that the large multi-person invoices should be divided up amongst the defendants based on the work done and received by each of them, there is no evidence upon which the court could have made that determination. No evidence was adduced all the plaintiff on which parts of the work and the costs contained in larger compendious invoices directed to multiple defendants was for each of the defendants. This would have been an easy task for Mr Ferizis to work out from his records and it is surprising it was not done.”

36. The Magistrate found that Ferizis & Co had established its claim for quantum meruit on the smaller invoices:

37. The invoice dated 20 September 2017 addressed to the First Defendant for $418.00.

38. The invoice dated 10 October 2018 addressed to the First Defendant for $253.00.

39. The invoice dated 8 November 2018 addressed to the Second Defendant for $253.00.

40. The invoice dated 16 November 2017 addressed to the Second Defendant for $253.00.

41. The invoice dated 19 April 2017 addressed to the Third Defendant for $242.00.

42. The invoice dated 11 April 2018 addressed to the Third Defendant for $253.00.

43. The invoice dated 19 September 2017 addressed to the Fourth Defendant for $418.00.

44. The invoice dated 13 September 2017 addressed to the Sixth Defendant for $275.00.

45. The invoice dated 27 September 2017 addressed to the Eighth Defendant for $253.00.

46. The invoice dated 17 September 2018 addressed to the Eighth Defendant for $253.00.

47. The Magistrate stated that “[g]iven the finding in respect to the Client Engagement Letter, I also find there is no contractual basis for claiming the administration fee” (at [59] of the Judgment).

48. The final orders are as follows:

Formal orders:

I. Verdict for the Plaintiff against the First, Second, Third, Fourth, Sixth and Eighth Defendants on part of the claim. Verdict for the Fifth Defendant.

II. The First Defendant is to pay the Plaintiff $671.00.

III. The Second Defendant is to pay the Plaintiff $506.00.

IV. The Third Defendant is to pay the Plaintiff $495.00.

V. The Fourth Defendant is to pay the Plaintiff $418.00.

VI. The Sixth Defendant is to pay the Plaintiff $275 .00.

VII. The Eighth Defendant for $506.00.

VIII. On each of the above orders is to be added interest, in accordance with section 100 of the Civil Procedure Act 2005, at the statutory rates as varied from time to time, from 7 days after the date of each invoice to date.

IX. The parties are to confer and seek to reach agreement on costs. If a party wishes the court to make a costs order, that party should notify the court within 30 days of this decision to request the matter be relisted for submissions and further determination on costs.

X. The costs order is subject to, and does not override, any previous costs orders made in these proceedings, including but not limited to the costs order made on 28 March 2023 against the plaintiff and on 14 August 2023 against the defendants (CB 21).

39. I will start with Appeal Ground 3, followed by Appeal Grounds 1 and 2 which will be dealt with together as they overlap, if necessary.

Appeal Ground 3

40. Appeal Ground 3 is as follows:

“(3) The Magistrate erred as a matter of mixed fact and law in finding that the Client Engagement Letter sent by the Plaintiff to the Fourth, Fifth and Sixth Defendants on 12 December 2016 was not received by them, being a finding which was against the weight of evidence and contrary to the findings made by the Magistrate in relation to the Fourth and Fifth Defendants.”

The Evidence Act 1995 (NSW) (Evidence Act)

41. S160 Evidence Act reads:

160 Postal articles

(1) It is presumed (unless evidence sufficient to raise doubt about the presumption is adduced) that a postal article sent by prepaid post addressed to a person at a specified address in Australia or in an external Territory was received at that address on the seventh working day after having been posted.

(2) This section does not apply if--

(a) the proceeding relates to a contract, and

(b) all the parties to the proceeding are parties to the contract, and

(c) subsection (1) is inconsistent with a term of the contract.

…

The Client Engagement Letter

42. The Client Engagement Letter acknowledges receipt of instructions to manage accounting and taxation matters for the client’s family, corporate and trustee entities. It outlines the terms and scope of engagement, replacing any previous agreements, explains the new regulations applicable under the Tax Agent Services Act 2009 (NSW) and invites the client to reach out with any questions. It also asks the client to sign and return the Client Engagement Letter to accept the terms but notes that the client will be bound by the terms even without signing, if they provide instructions after the Client Engagement Letter’s date.

Thank you for your instructions to attend to the accounting and taxation requirements for your family members and corporate and trustee entities.

…

This letter sets out our terms of engagement and the scope of the work to be performed by us within that engagement, and supersedes any previous engagement letter provided by us. Please read it, carefully and if you have any queries or wish to discuss any aspect, do not hesitate to contact us.

Since 1 March 2010, a new regime for the regulation of tax agents has applied under the Tax Agent Services Act 2009 (TASA) arid the accompanying regulations. The new regime has implications for registered tax agents and also for their clients.

…

If the terms of our engagement are acceptable, we ask that all persons sign the enclosed copy of this engagement letter in the places indicated and return it to our office.

Please note if you instruct us to carry out any work after the date of this letter you will be bound to the terms and conditions of this letter irrespective of whether you return it executed or not (CB 330).

43. The rest of the Client Engagement Letter is structured as follows with the key information reproduced here:

1. Purpose and Scope of Engagement

…

Each member of the Group engages us on the terms set out in this letter and is bound by those terms. Those persons are jointly and severally liable to pay our accounts, regardless of which Group member those accounts are addressed to, and regardless of which Group member received the benefit of the work performed.

…

2.8 Fees and charges

Our services will be provided to you on a fee for service basis.

Unless otherwise stated in writing, any estimates which we provide to you of our anticipated fees, disbursements and charges for any work are only indicative of the amounts you can expect to be charged. Estimates are not quotes or caps, and are not binding on us.

Where an estimate is given and the scope of the work changes, or if it becomes apparent that the work involves matters which were not taken into account in the estimate, we will endeavour to advise you and provide an amended estimate as soon as it is practicable to do so.

If an estimate cannot be provided, our services will be charged at standard charge out rates applicable to our practice at the time.

The standard hourly charge out rates at present vary from $80 for secretarial staff and from $200 to $300 for accountants depending on who actually carries out your work in our firm, which in turn depends on the complexity of the tasks involved, to $380 for the principal.

Above charge out rates are indexed at the beginning of each financial year by between 2.5% and 5%.

Time spent on your job will be charged at units of 6 minutes.

We may require you to deposit money into our trust account in anticipation of our fees and charges. If you fail to make a required trust deposit, we may suspend work or terminate this engagement. Each client in the Group authorises us to apply trust moneys held on their behalf towards payment of fees and disbursements, and to meet our bill of costs which have been rendered and which have not been paid or disputed within 14 days after issue of the bill of costs.

Accounts outstanding beyond 30 days may be subject to administration charges of between 1% and 1.5% per month.

Each client in the Group is jointly and severally liable to pay our fees in respect of all work performed for all members of the Group. We may require that payment of our fees be guaranteed by one or more persons who are associated with the Group but are not themselves our clients (for example, company directors). If you fail to provide a required guarantee, we may suspend work or terminate this engagement.

If we suspend work or terminate this engagement by reason of your failure to make a trust deposit or provide a guarantee as required, we will not be liable for any loss or damage suffered by any client in the Group as a result of the suspension or termination.

…

4. Confirmation of engagement

Obviously, there are many issues to consider in this engagement and we ask that you consider all aspects of this letter to ensure that you are satisfied with the scope of our engagement. Please contact us if you have any queries about this letter.

Once you are satisfied with the terms of this letter, would you please have all persons sign and date both copies of this letter in the places indicated.

One copy should be forwarded to us as evidence of your acceptance of the terms of our engagement. You should retain the other copy as your evidence of our engagement.

We note again that if you instruct us to carry out any work after the date of this letter you will be bound to the terms and conditions of this letter irrespective of whether you return it executed or not.

We thank you for the opportunity to provide professional accounting and taxation services to your Group and we look forward to developing a close accounting relationship with you for many years to come (CB 330 - 337).

44. There is no clause in the agreement concerning service of documents.

Ferizis & Co’s submissions

45. His Honour found that Ferizis & Co sent the Client Engagement Letter dated 12 December 2016 to the defendants at their usual post office box and that the letter was not returned undelivered (at [40] of the Judgment).

46. His Honour rejected the evidence of Bill on any factual matters in dispute at [35]:

The evidence of Bill in court was far from impressive. Bill was very informal, evasive, and argumentative during cross-examination. I note that the affidavit of Bill was very similar to that of his wife Kylie. Despite his affidavit being mostly one in reply to that of Mr Ferizis, in cross-examination he initially said that he had not read Mr Ferizis's affidavit. When it was shown to him in court, he said he did not know if he had seen it before. Later he said he thinks he might have seen it, but he had not read it 100%. Later he said he browsed through it. It was also clear from his answers in cross-examination that he had not read and/or understood the pleadings and amended pleadings before he signed them. From the content of his affidavit, and having heard his evidence in court, he clearly had significant assistance from his solicitors to prepare his Defence, Amended Defence and affidavit. This was to a level of being highly inappropriate. It was very clear from his own evidence that he had very little involvement in the administration of the Tsavaras group and that he would simply sign documents when required. His positive assertion that the letter of engagement was not received by them when he had no role to play in collecting and filing the mail cannot be accepted. His evidence about the invoices, given that he had no role in reviewing them and he inaccurately said they kept on going up, cannot be accepted. In these circumstances, most of his evidence can be given no weight and will be disregarded on factual issues in dispute.

47. In relation to Kylie's evidence, his Honour observed at [38]:

''As noted above, Kylie was the key administrator who dealt with the mail. She agreed that the common mode of receiving documents was by post. She said that she was not aware of the letter of engagement until it was sent to her lawyers in 2021. She did not depose to having looked for it to see if it was filed away. She said that there were times they did not receive documents. It is not clear if by this she means she was told documents were posted but they never arrived. There was no proof advanced in support of this assertion. It is difficult to see how Kylie could be so categorical in her evidence about not having received the letter of engagement. She could easily have received it but paid it little regard and forgot about it or lost it. This is more likely in light of her own evidence that she did not even know the rates over many years of paying the invoices. This shows that for a long time, she apparently did not care about the terms. Yet in her evidence she unreasonably made no room for the possibility she received it and had forgotten about it."

48. Notwithstanding these observations, his Honour said at [41] that he was "not persuaded on the balance of probabilities that [the Client Engagement Letter] was in fact relevantly received by Kylie or Bill or the other defendants".

49. Having accepted it was sent, his Honour did not provide any reasoning as to why it was not reasonable to expect that the Client Engagement Letter was delivered to the post office box in the ordinary course of post.

50. Counsel for Ferizis & Co elaborated in oral submissions that although there could be some explanation as to why correspondence was not delivered in the ordinary course, there was no evidence of that. As per s 160(1) of the Evidence Act, the presumption is that the letter having been sent, would be received in the ordinary course unless that presumption was somehow rebutted.

51. His Honour’s finding that the letter was never received has no basis and gives rise to either an error of law or an error of mixed fact and law because his Honour failed to deal with the evidence about service of the Client Engagement Letter.

52. This proposition is supported by the decision of the High Court in Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390, 418 at [91] (Kostas) where it was said that the question of whether there was no evidence to support a factual finding is a question of law, not a question of fact. Where a tribunal decides a question of fact when there is no evidence to support that finding, it makes an error of law and the question as to what material could support a factual finding is a question for judicial decision (Kostas at [91]).

53. Counsel also submitted, by reference to Ming v Director of Public Prosecutions (NSW) [2022] NSWCA 209 at [12]-[18], that there was constructive failure to exercise jurisdiction by the Magistrate because of his failure to address the essential matters. His Honour did not address the issue of service properly, and having purported to address it, his Honour did not deal with the evidence that existed before him and in fact ignored his own findings about the existence of that evidence. In so doing, his Honour could not have completed the task because he did not address these essential matters.

54. In oral submissions, counsel also addressed the Magistrate’s observations about the fact that Mr Ferizis did not follow up on whether the defendants had received the Client Engagement Letter, stating that it was irrelevant to determining whether the letter was in fact served. The Client Engagement Letter had been sent to an existing, longstanding client and it was not unusual to not refer to such a letter in unless the terms were to be updated.

55. In counsel’s submissions in reply, attention was drawn to s 160(2)(c) of the Evidence Act which provides that the presumption does not apply if it is inconsistent with a term of the relevant contract. In this case, there is no term in the Client Engagement Letter that relates to service such that, there is no inconsistency.

56. Further, the characterisation at [41] of the Judgment as containing evidence that the Client Engagement Letter was not received, is inaccurate. Rather, his Honour merely makes observations about what may have been but were not available in evidence. Counsel also said that the Magistrate’s findings at [40] and [41] of the Judgment are completely inconsistent. His Honour’s acceptance that the Client Engagement Letter was posted does not sit well with the finding that on the balance of probabilities it was not served.

Defendants’ submissions

57. The defendants submitted that Appeal Ground 3 would fail on the basis that it is purely a question of fact and not a question of mixed law and fact. No appeal lies to the Supreme Court on a question of fact that is not a question of mixed law and fact: El-Hadi v Australian Timbers (NSW) Pty Ltd [2021] NSWSC 501 at [16].

58. As an error of law, a finding of fact can only be disturbed if (a) there is no evidence to support its inferences; (b) the facts inferred by it and supported by evidence are incapable of justifying the finding of fact based upon those inferences; or (c) it has misdirected itself in law (Australian Gaslight Co v Valuer-General (1940) 40 SR (NSW) 126 at 138 (Australian Gasligh**t)).

59. Similarly, as set out by Davies J in Fortune Food Manufacturers Pty Ltd v K Young Trading Pty Ltd [2010] NSWSC 407 at [25]-[26], quoting Kirby P in Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 150:

"... The finding of what have been called the primary facts of a case does not, in itself expose the trial judge to review on a point of law, unless it can be shown that there is no evidence of a primary fact and that, this being crucial to his decision, the judge's fact finding has involved an error of law. If there is evidence, or if there are available inferences which compete for the judge's acceptance, no error of law occurs simply because the judge prefers one version of the evidence to another or one set of inferences to another." (emphasis removed)

60. Ferizis & Co relied on two causes of action being a contractual entitlement based on a Client Engagement Letter or alternatively, a claim of quantum meruit. The issue that his Honour had to decide, was a factual dispute as to whether or not, in effect, there was an offer and acceptance, and his Honour ultimately found that the Client Engagement Letter was not received.

61. In oral submissions, counsel for the defendants noted that s 160 of the Evidence Act contains a carve-out in subsection (2), stating that the presumption does not apply to proceedings relating to a contract where all parties to the proceeding are parties to the contract and subsection (1) is inconsistent with a term of the contract (T22 [45] – [50]; T23 [1] – [6]).

62. Given that this is a proceeding that relates to a contract and all the parties to the proceeding are also parties to the contract, and there is no clause in the Client Engagement Letter, being the contract, that relates to service, s 160(1) of the Evidence Act does not apply. Counsel for the defendants submitted that there may have been a misdirection if s 160 of the Evidence Act applied, but as it does not apply his Honour did not misdirect himself.

63. The Court then returned to the factual question of whether or not the letter was received. Whilst his Honour found that there were issues in relation to Bill and Kylie’s evidence, there was no positive evidence that the Client Engagement Letter had been served. His Honour weighed all the evidence to make a finding of fact that it was never received and accepted. It cannot be an error of law because there was evidence upon which the Magistrate could make that ultimate finding.

64. It is asserted by Ferizis & Co that there is a "mixed question of fact and law" on the basis that the finding is against the weight of the totality of the evidence.

65. None of the above factors identified in Australian Gaslight apply in this case, and similarly, the finding is not against the weight of the totality of the evidence, as asserted. As set out at [41] of the Judgment, the Magistrate took into account the following evidence:

66. Mr Ferizis did not send the Client Engagement Letter by registered mail;

67. There was no receipt of delivery;

68. A signed copy was never returned to Mr Ferizis;

69. There was no follow-up by Mr Ferizis in relation to delivery; and

70. The Client Engagement Letter was never referred to in any subsequent correspondence or the invoices themselves.

71. It is submitted that it was open to the Magistrate to make the findings that he did on the basis of the above evidence.

Resolution

67. The onus is on the defendants to rebut the presumption raised in s160 Evidence Act that the Client Engagement Letter was served validly by post. On the rebuttal issue, Bill made a positive assertion that the Client Engagement Letter was not received despite having no role to play in collecting and filing the mail. Unsurprisingly, on that basis, the Magistrate rejected his evidence. That leaves the evidence Kylie as to satisfy the court that the Client Engagement Letter had not been served on the defendants by post. She offered no proof to support her assertion that she never received the Client Engagement Letter. She neither looked for it nor checked if it was in her file. She unreasonably made no room for the possibility that she received it and had forgotten about it. So far as the rebuttal evidence is concerned, His Honour rejected Bill's evidence in its entirety and questioned Kylie's categorical denial of receiving the letter (at [38]-[39] of the Judgment).

68. This evidence is insufficient to establish the rebuttal that the Client Engagement Letter was not received by the defendants. In these circumstances, the Client Engagement Letter was validly served by post.

69. Counsel for the defendants submitted that the Magistrate’s findings, firstly, raised a question of fact only and, secondly, there was a carve out in s 160(2)(C) Evidence Act that s 160(1) does not apply if it is inconsistent with a term of the Client Engagement Letter. However, there is no term as to service contained in the Client Engagement Letter. Hence, there is no inconsistency with s 160(1) Evidence Act.

70. In relation to the issue as to whether s 160(1) Evidence Act was correctly applied by the Magistrate, it was not. The onus was not on Ferizis & Co to prove service of the Client Engagement Letter but rather for the defendants to provide sufficient evidence to raise doubt about the presumption. There was no such evidence. The Magistrate applied the wrong test. This is an error of law and the decision should be set aside.

71. If the postal rule is applied correctly, there may be a different result. It is now unnecessary to deal with Appeal Ground 1 and 2. In the exercise of my discretion, the matter should be remitted to the Local Court to be dealt with according to law.

The Result

72. Appeal Ground 3 is upheld. The decision of Magistrate Reiss dated 22 August 2024 is set aside. The matter is to be remitted to the Local Court to be determined according to law.

Costs

73. Costs are discretionary. The usual rule is that costs follow the event. The defendants are to pay the plaintiff’s costs.

The Court Orders that

1. The appeal is upheld;
2. The decision of Magistrate Reiss dated 22 August 2024 is set aside;
3. The matter is remitted to the Local Court to be dealt with according to law.
4. The defendants are to pay the plaintiff’s costs.

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Amendments

26 June 2025

changed the decision date to 26 June 2025