Metziya Pty Ltd v ICR Engineering Pty Ltd; ICR Engineering Pty Ltd v Metziya Pty Ltd; ICR Engineering Pty Ltd v Blayney Cold Storage Distribution Pty Ltd

Metziya Pty Ltd v ICR Engineering Pty Ltd; ICR Engineering Pty Ltd v Metziya Pty Ltd; ICR Engineering Pty Ltd v Blayney Cold Storage Distribution Pty Ltd - [2016] NSWSC 1703 - NSWSC 2016 case summary — Zoe

[5]

Applicable principles

It is wrong to examine an "unedited and unpunctuated report of ex tempore remarks in a busy magistrate's court as if the transcript were a document to be construed strictly. It is the substance of what the magistrate said and did that the court is concerned with" (see Acuthan v Coates (1986) 6 NSWLR 472 at 479; 24 A Crim R 304 at 310). It is relevant in this case, however, that both his Honour's December 2015 decision and the January 2016 costs order were given after he had reserved.
A failure to give adequate reasons for a decision may involve an error of law (see Pettitt v Dunkley [1971] 1 NSWLR 376, Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 278- 279). The obligation to give adequate reasons lies at the heart of the judicial process. Failing to provide sufficient reasons can lead to a real sense of grievance, when the losing party cannot understand why he or she has lost (see Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 at 442). That the parties share such grievances in this case, must be accepted.
In giving reasons for a decision a judge need not "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" (see Stoker v Adecco Gemvale Constructions P/L & Anor [2004] NSWCA 449 at [41]).
The extent and content of the reasons given depends, however, on the particular case and what is in issue, but the reasoning on critical points must be exposed (see Soulemezis at 259 and 280). This may require reference to the evidence which is critical to the proper determination of those issues (see Beale v GIO at 443). In the case of credit issues, it is necessary to explain why one witness is preferred to another. Bald findings on credit, where substantial factual issues have to be resolved, may not comply with the duty to give reasons (see Palmer v Clarke (1989) 19 NSWLR 158 at 170).
If an appellate court concludes that a trial judge failed to give adequate reasons, it has a discretion whether or not to direct a new trial. If, despite the inadequate reasons given, only one conclusion is available, a new trial may not be necessary (see Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 at [67]).

[6]

The costs order

It is convenient to commence with the costs order.
After he had delivered his December 2015 judgment, his Honour received submissions on the parties' dispute over costs. He reserved his decision and made orders in January 2016, but gave no reasons at all to explain the basis on which he had resolved what lay in issue between the parties.
The result is that neither the parties, nor this Court on appeal are in a position to understand the basis on which what lay in issue on the costs question was resolved. There can in those circumstances be no question that his Honour erred and that this aspect of ICR's appeal must succeed.
Undoubtedly, his Honour had a discretion in relation to costs under s 98 of the Civil Procedure Act 2005 (NSW). The Local Court had a practice note in relation to costs (see Local Court Practice Note Cir No 1 - Case Management of Civil Proceedings in the Local Court, 23 March 2011, cl 36.2), which provided in clause 36.2 that: "36.2 Unless the court otherwise orders, the following orders are taken to have been made when the defence is filed in the proceedings: If the plaintiff is successful and the claim is for an amount between $10,000 and $20,000, then the maximum costs that can be awarded to the plaintiff is 25% of the amount awarded by the court plus any amount that might be allowed in relation to costs incurred up to the filing of the first defence in the proceedings. If the defendant is successful and the claim is for an amount between $10,000 and $20,000, then the maximum costs that can be awarded to the defendant is 25% of the amount claimed by the plaintiff Where the proceedings were transferred from the Small Claims Division to the General Division, then the maximum costs that can be awarded to the successful party is $2,500."
What the parties addressed at the hearing and in their written submissions was whether the Court should order otherwise. His Honour reserved, but gave no reasons for his conclusion that there should be no departure from what the Practice Note contemplated. Nor did he reveal how he resolved the issue over the consequences of the refusal of the Calderbank offer.
On appeal it was submitted for Metziya and Blayney that ICR cannot be aggrieved at reasons for the costs order not having been given, because of the existence of the Practice Note and there being no authority for the proposition that it is inconsistent with s 98 of the Civil Procedure Act. That submission cannot be accepted. The parties joined issue over the costs application. Having reserved as he did, his Honour was not only obliged to resolve those issues by the costs order which he made, he was also obliged to give reasons to explain the basis on which those issues were resolved.
In those circumstances, the appeal against the costs order must be upheld.

[7]

The reasons given in the December 2015 judgment were inadequate

Blayney and Metziya's case was that in his 2015 December decision, his Honour failed to identify what lay in issue been the parties; to make findings of fact; to give reasons for his preference of some evidence and rejection of other evidence; to give reasons for the adverse findings which he made in relation to the credit of Mr Tanos; to explain how the sums he ordered in respect of the various claims were arrived at; and to give sufficient reasons for the conclusions which he reached. It also contended that certain findings which were made were not open on the evidence.
For its part ICR advanced similar complaints.
In light of the principles I have discussed, it is relevant to consider that in this case, while his Honour's first decision was delivered orally in December 2015, it had been reserved after a five day hearing in Bathurst in September. Later, the parties provided written submissions which identified what was in issue in respect of each claim and drew attention to the relevant parts of the documents in evidence and the transcript. There the credibility of the witnesses was attacked and submissions were advanced as to matters such as how their oral evidence was not supported by documents in evidence and the relevance of various concessions submitted to have been made.
When delivering his reasons, his Honour said that he had received both the transcript and those submissions. There were no further oral submissions then advanced, other than as to applications which each party had made in the written submissions, one for leave to amend the pleadings and the other seeking leave to lead further evidence, which his Honour dealt with during the course of delivering his judgment. Both applications were refused
There are, it must be accepted, significant aspects of the reasons which his Honour then gave in relation to the five matters which fell to him to decide, which are difficult to follow. Part of the difficulty is that not all that his Honour said when delivering his reasons was able to be transcribed.
Even approached in the way discussed in Acuthan, however, the reasons given fall short of what a judicial officer must do, if the obligation to give adequate reasons is to be met. An early example of this difficulty is an observation made towards the beginning of the reasons, which comprised some 23 pages, before his Honour turned to receive submissions on interest and costs. His Honour was making various introductory remarks when he observed: "It would appear the parties entered into initial business relationships somewhere in 2002 for the area covered by these matters, the initial buildings or otherwise. There was some evidence disputed but it doesn't take me anywhere that the business relationship went well before that. There appears to be on the initial material before the brief material before me there was perhaps some substantial material in that initial agreement as it went further. That level of record keeping or otherwise clearly diminished."
What these and other observations which his Honour made were intended to convey is, it must be accepted, quite unclear.
Despite such undoubted deficiencies, some of the more serious criticisms directed at his Honour's decision may not be accepted. For example, that advanced for Metziya and Blayney, that his Honour misconceived the nature of the civil standard of proof which had to be met, may not be accepted.
When fairly considered, it is apparent that in delivering his reasons orally, after making the observation that he was "so pleased this was not a matter beyond doubt or perhaps it could have been a lot shorter proceedings if that was the test", his Honour misspoke when he then said "[h]owever, at all times incumbent on the plaintiff to prove his case beyond reasonable doubt".
ICR's counsel, Mr Cheney, immediately rose to draw his Honour's attention to his error. Their exchange then was: "CHENEY: Your Honour, you just said it was incumbent on the plaintiff to prove his case beyond reasonable doubt. HIS HONOUR: Sorry I apologise, on the balance of probabilities. As I said, please correct me on those errors, it's not intentional"
There was thus but a spurious basis on which to advance the submission advanced for Metziya and Blayney on appeal that "his Honour appears to have misconceived that he had to determine the disputes in accordance with the civil onus, not the criminal onus". That criticism is simply not open and may not be accepted.
Notwithstanding this, that there are other significant failures in his Honour's approach, which resulted in legal error and must lead to the conclusion that the appeals should be upheld, cannot be doubted.
The reasons given had to do justice to what lay in issue between the parties on the cases they each advanced in their submissions (see Moylan v Nutrasweet Co [2000] NSWCA 337 at [61]). Where their resolution depended on the acceptance of one witness' evidence and the rejection of another's, more explanation had to be given than general observations as to credit. Further, where critical evidence was not referred to, for example concessions made in cross-examination, it may be inferred that his Honour overlooked that evidence, or failed to give consideration to it (see Beale at 443).
His Honour's reasons are, it must be accepted, in significant part difficult to follow. Nor do they adequately reveal the specific findings that were critical to the determination of particular issues, or the basis of his Honour's conclusions on those issues.
In the result both parties' appeals must be upheld

[9]

The freezer door claim

His Honour first dealt with the freezer door claim quantified to be $13,613.63, for repair of two freezer doors.
In its written submissions, ICR had first addressed issues as to the credit of the witnesses. In relation to the freezer door contract, about which Mr Reeks, Mr Saran and Mr Tanos had given evidence, it contended that Blayney had admitted its request to ICR to rebuild the two doors; that the work was to be performed on a "do and charge" basis; that the work had been performed; and that an invoice had been issued.
In its original defence, affirmed by Mr Tanos' verifying affidavit, payment in full had been pleaded by Blayney, but in his March 2015 affidavit, Mr Tanos had claimed that the work was defective. It was in Mr Tanos' cross-examination as to proof of payment, that he claimed a recent realisation that payment had not been made, with the result the amendment of the defence, during the hearing. It was developments of this kind which led to his Honour's criticism of the parties' respective record keeping and raised a particular issue as to Mr Tanos' credit, given the belated alteration in Blayney's case, which was addressed in ICR's submissions.
In its submissions Blayney identified what was in issue to be: "149. Was the work done to a satisfactory standard? Was there an agreement not to invoice? When an invoice was issued, was there an agreement that the defendant was not required to pay it?"
It also sought leave to further amend its defence which ICR opposed, contending that Mr Tanos claimed confusion as to the invoice the subject of the charge, would not be accepted.
His Honour refused Blayney's application to further amend its defence and found for ICR. It is convenient to set out the reasons which his Honour gave, to explain his failure to engage with the matters over which the parties had joined issue, by making necessary findings of fact and giving adequate reasons for the conclusion which he reached, dependent as that was on the records relied on and the credit of those who gave evidence about this claim.
His Honour observed: "The claim is for $13,613.63 inclusive of GST. It involves repair or rebuild as necessary to two freezer doors at the defendant's premises. It is not in dispute that work was carried out. Paragraph, I think it was 150(d) and (e) of the defendant's submissions, the defendant says additional work on 8 October and 9 October. And it is supported by Mr Tanos' evidence. The plaintiff says that the work was between May 2000 and April 2012. Again I go to the record keeping of the parties. But l accept for these proceedings that the work was carried out and an invoice claimed for that work. ..(Not transcribable).. on p 167 of the exhibit books assists in that regard. Set out in the defendant's submissions, at the top of page -..(not transcribable).. plaintiff's submissions at the top of p 4 that these are the issues. Twofold, was there agreement not to invoice and invoice -..(not transcribable).. with the defendant not required to pay the party? Digressing slightly, Mr Tanos has said in his defence that the invoice had been paid. It is conceded by the defence that it had not been paid. Mr Tanos gave an explanation and as I said already I take that not as an attempt to mislead but perhaps Mr Tanos not being fully on top of his own material. I put it down to general confusion by Mr Tanos. He gave evidence that he then realised the invoice had not been paid some months or a few weeks ago which I inferred was prior to the hearing. It is inconsistent with conversations between Mr Reeks and Mr Saran in September 2014 which Mr Saran has agreed in evidence that he said to Mr Reeks, actually he on the inference I draw was Mr Tanos as I said today, "I may not have fixed him up". So quite some months later not just a couple of months or a couple of weeks. The evidence would suggest that Mr Tanos was aware that he had not paid. Mr Tanos conceded eventually during the hearing that they had not been paid but reversed his position in giving evidence as I said. I have a feeling that Mr Tanos confused about his own position and his own records. It is a one way flip, a backward flip and a flip the other way. Mr Reeks denies he would not press for payment or issue an invoice. I have evidence of work, I have evidence of an invoice that sets out the work and it is not a guesstimate, it is fully set out as to the work that was done. Mr Tanos is relying on conversations that are not agreed and not supported by anything and his inconsistencies does not assist in supporting, in finding that such an agreement was in place. On a balance I do not find there was any agreement to either costs by Mr Reeks or to issue the invoice and not accept payment. The issue of the invoice, as I already noted Mr Reeks' record keeping and business practices are not ideal. I have already made comment in my opening that I find nothing adverse as to the issue, the late issue of the invoice or no record of reminders. It is clear these matters had been raised at various times over the intervening period. I find nothing adverse to the plaintiff's position by not calling the person responsible for the accounts. It would not take it anywhere, whether Mr Reeks felt because of the volume of work that Mr Tanos was giving him that he carry some of this work, he would not press for it because other work was coming through, I do not know. I can only guess. It is very clear there is nothing wrong when he issued those invoices. It was raised by Mr Tanos - sorry before I go to that - I had nothing before me, had no evidence and nothing submitted that the amounts claimed on the invoice were either excessive, inappropriate or otherwise. I had nothing either indicating either oral or written agreement how it was to be calculated or billed. It is open to the plaintiff to provide his invoice also said nothing raised about it being excessive or otherwise. No issues as to overcharging. The reality is, other than disputes as to what agreed amounts were, nothing in any of the five summonses indicates any issue as to overcharging or inappropriately high invoices. There is of course a dispute what the initial agreements are. The second issue in this matter of course was whether the work was carried out to a satisfactory standard? As already noted not raised in the defendant's pleadings, I have no doubt the defendant's legal representatives were told what was in the defence and relied on that. Whether paying for is a belief initially by Mr Tanos or not but the work had not had been carried out satisfactorily and other contractors required to repair, replace, it is extremely surprising that there was no material provided, number one. Number two that Mr Tanos' initial recollection when preparing the defence, never turned his mind to the fact that the work was not done satisfactorily."
His Honour then dealt with the application for leave to further amend the defence, which was refused.
There was no issue that the work the subject of the claim had been performed and that an invoice had been rendered, but the basis on which the issues raised on the defence which were pursued at trial and identified in the written submissions to which his Honour referred were resolved, is simply not comprehensible on these reasons.
While his Honour explained why Mr Tanos' evidence could not be preferred, the facts which he found and the basis on which his Honour resolved the matters he identified to have been in dispute, namely, "what the initial agreements were"; what had been agreed as to how the work performed was "to be calculated or billed"; and "what agreed amounts were"; were not revealed, as they had to be, if the obligation to give adequate reasons was to be met.
In the result this appeal must be upheld.

[10]

The service stairs claim

His Honour then turned to the service stairs claim, which was that it had been agreed between Mr Reeks and Mr Tanos in September 2008 that four sets of external stairs would be supplied and installed on a 'do and charge' basis. There was no issue that various stairs were installed, but payment was not sought until 2014. It was not made. In issue was whether the agreement for the original construction of the buildings known as freezer 2, freezer 3 and "pack out and dispatch", where stairs were erected, had included the stairs the subject of this claim.
What thus had to be resolved and explained included the terms of the contracts under which the respective stairs were constructed; when and by whom those terms were agreed, including as to price, there being an issue as to how the $31,900 claimed had been calculated; whether the amount claimed accorded with the contractual terms; whose evidence on critical matters would be preferred; and what impact claimed concessions made by Mr Reeks in cross-examination had, on the payment ICR finally pressed.
His Honour noted that during the hearing, the amount claimed was reduced from $33,000 to $31,900 inclusive of GST, to take into account that two of the stairs had not been painted. He otherwise found for ICR, referring initially to an earlier agreement in respect of the construction of stairs at the freezer 1 building "in the 2000's", which ICR had relied on to support its case as to what was agreed in relation to the stairs later commissioned. His Honour then observed: "The plaintiff contends that the agreement for the stairs as claimed, not the historical ones, occurred in a warehouse in 2000 on a walk around or "walkabout" I think the term was used, in 2008. It would appear in 2003 the defendant has made an allowance for two and a half thousand again in his budget for stairs on these buildings. It is an inconsistency with what happened on freezer 1 but I have nothing before me that says that the plaintiff agreed that they would be incorporated. Some evidence as to one of the stairs was pointed out, that one of the construction of the stairs that it was incorporated. That is a later building and Mr Reeks conceded that it was there, that it was something he has overlooked but he accepted that, that being on the building he would bear the costs. In 2005 after construction of freezer 2 Mr Tanos had made contemporaneous notes referring to freezer 3. What appears to be 205,000 plus GST I have taken that to be 205,000 or just $205. And fire stairs plus two and a half thousand for roof stairs installed. Freezer 3 appears to be completed and paid for by the meeting in 2008. That is the only notes I have from Mr Tanos and by its own handwriting the only inference I can draw is that there is a cost for the building, a separate cost which says plus fire stairs and then a separate cost for the roof stairs. I have no doubt that the defendant believed it was two and half thousand plus GST. I have nothing from the plaintiff either suggesting that amount or otherwise. I do not accept that the stairs were included in the total cost of the building and its own correspondence notes show the plus two and a half thousand and GST. No stairs on the freezer 2 drawings, shown on Mr Tanos' budget, stairways to roof as separate items. Freezer 2 is constructed without the stairs. Full payment is made for the agreed price of the building. Freezer 3 is constructed without stairs, full payment is made. Mr Reeks' conversation during the walkabout was agreed by Mr Saran, the defendant's own witness. And Mr Tanos did not want the stairs that were drawn on a plan which I took it to be a plan drawn by Mr Saran, it is perhaps irrelevant who drew it. But the same is provided by Mr Reeks on freezer 1. This is conceded, this conversation in 2008 and it is raised in that fashion and it is raised as to the nature of it. It is inconsistent with Mr Tanos' evidence that he had previously ordered the stairs. I find it inconceivable that Mr Tanos is overviewing the entire building and clearly aware of costs would pay in full for the building when on his version the work was not completed and then order further buildings and still pay for them even when on his version they are not completed. Sorry Mr Tanos does not present as a witness with a heart of gold. It is inconceivable in terms of business practice and how it is presented that he would allow that to happen. As I already said I accept that Mr Tanos may have believed himself they were included in the overall costs and he has allowed himself an amount within his budget. And on a balance of probabilities the work was done for the stairs, on my view, was separate from the construction costs. Whilst Mr Tanos might have believed something there is nothing to support in the peripheral material that I do have that supports his position. I accept there is an agreement for the plaintiff to construct those stairs but at what cost? Mr Tanos relies on a figure of 2,500 from construction in 2002. I have no evidence before me that was the agreed price by the plaintiff or the defendant another than what was in Mr Tanos' documents that, that was the price. I have no evidence before me that the amount eventually claimed by Mr Reeks is excessive or inappropriate for the work done. I already stated the issue of the later invoice in my view played - but it is no weight or bearing on this matter. I FIND ON THE BALANCE FOR THE PLAINTIFF IN THE SUM OF $31,900 INCLUSIVE OF GST. As indicated there ..(not transcribable).. some costs at a later date - a later date, later today."
Thus his Honour concluded, on balance, that the work the subject of this claim had been done under separate contracts to the construction contracts. His observations do not otherwise reveal, as they must, however, his Honour's reasons for the resolution of the other matters over which the parties had joined issue, particularly how the sum ordered was arrived at.
The claim was, after all, not for payment of a quantum merit, but rather for payment of work performed at a price agreed, identified to be "the normal basis", under the terms of contracts claimed to have been made at particular times, by particular people, in relation to the erection of a number of separate sets of stairs. What thus fell to his Honour to resolve included not only the existence of the contracts under which each set of stairs was constructed, but also their terms.
This depended, in part, on an analysis of documents in evidence, to which no reference was made. His Honour posed the question "I accept there is an agreement for the plaintiff to construct those stairs but at what cost?" The basis on which the answer arrived at rested was not adequately revealed, as it had to be, by the reasons given.
That required an explanation not only of whose evidence on critical matters was accepted, but also findings of fact on which the final conclusion arrived at rested, including as to what was agreed would be paid for the claimed work.
His Honour did not reveal what he had concluded had been agreed as the price for each set of stairs erected. That depended on a particular conversation to which Mr Reeks had deposed, which it was conceded on appeal his Honour had not referred to in his reasons. Nor was the basis of the conclusion that ICR was owed $31,900 explained. The result, amongst other things, also appears to have overlooked the effect of the concession made by Mr Reeks in his evidence, that he would have to bear certain unspecified costs, a concession to which reference is made in his Honour's reasons, but does not appear to be reflected in the order made.
In the result this appeal must also be upheld.

[11]

The steel racks claim

His Honour then turned to the "steel racks claim", where he found for Metziya, concluding that ICR had not met the onus which fell upon it to make out its case.
The issues lying between the parties included the terms of the agreement, the number of racks built and how many were modified and whether any payments were outstanding. There was no issue that ICR had a contractual entitlement to payment for the installation of 5,740 pallet spaces in the freezer 5 and 6 buildings, but whether more had been installed and whether it was entitled to the additional $41,844,22 inclusive of GST it claimed, was in issue.
Mr Reeks gave evidence as to the rate that ICR claimed to be entitled to be paid for the additional work, which Mr Tanos contested and about which Mr Reeks was cross-examined. Mr Reeks also estimated the amount of the work ICR had performed, based on photographs which were in evidence, because he did not have accurate records nor access to the building. He was also cross-examined about those estimates, as was Mr Tanos.
The reasons given are difficult to understand, it must be accepted. His Honour held: "It is a claim for supply of pallet racking to freezers 5 and 6, being an additional claim of $41,844.22 inclusive of GST. Not in dispute that there was an agreement for insulation at $79.44 plus GST per pallet. Mr Tanos skirted around the issue but eventually agreed that, that was there for what he kept on using a different word, question of semantics, whether it is the new steel or what it was. The original agreement appeared to be an amount of 5,740 pallets and some $455,985.60 was paid. I have different figures provided by the parties. The plaintiff in his amended statement of claim refers to 5,820 new constructed pallets. The defendant says inclusive of the new ones there is a total of 10,260. He says there was 5,740 of new constructed pallets - sorry the plaintiff claims there was a total of 10,260, I apologise. The defendant claims 5,740 of newly constructed pallets to a range of about 10,060. Mr Tanos' evidence appears, I think it was at question or answer 886, which 5,740 newly fabricated and balance of 4,146 spaces salvaged or redirected palety(?). In this matter there is no agreement as to actually what the balance was and the work that was done. Of course the onus remains on the plaintiff. What is instructive is that Mr Reeks conceded reconstruction of what was - sorry -concedes that there was a reconstruction in getting his figures. It came in a series of questions put to Mr Reeks in cross-examination at - it was around p 78 onwards. At p 80 he concedes writing in 5,820 newly constructed based on a document prepared after the construction of the racking. It is documents that are coloured. Concedes at p 81 - which I think was on the first day of the hearing - he did not go back at ..(not transcribable).. and count the pallets. Page 111, it is also conceded on the following day and answer I think it was 17. The only inference is that the amounts that Mr Reeks is seeking was not reconciled with what is built. He has reconstructed this. At its basis level he has taken a guess based on the material he has. At p 10, p 81 he denies ..(not transcribable).. but using his own words he says, "At best", it is what was made to put in there. Page 110 on 8 September, at 37, it is put that he is challenged to work out how many pallet spaces were actually built. There was a construction doing his best, that is my emphasis to try and work out how many may have been there or might have been there done to make a figure. I agree with the plaintiff's submissions that Mr Tanos cannot take the view and it is also my view that where additional work is carried out - and it is very clear that amendments and changes were required to those pallets to fit into the new structure as sought by Mr Tanos, he cannot say, "I paid for it" because he paid for the initial construction. Additional work was required. To say he is not liable for all salvage and reconstruction work is at best trite. The plaintiff has claimed the first two figures being an amount of $6,353.20 plus GST for additional 80 spaces and at 79 forty -1 think it was 49 - and the salvage work 31,685 plus GST. As already stated he has conceded his figures are reconstructions, calculated after the event. To paraphrase his evidence, at best it was what was made to put it in there. My words a reconstruction. "Done my best" my words without reconciling with what was actually built. I have no doubt there is some form of claim but I cannot ascertain from the material before me an actual figure which may be payable to the plaintiff. Whether it is a dollar, whether it is the amount claimed in full, I cannot rely on a reconstruction if any based on the paucity of the actual records and the work that was done. I cannot be satisfied on a balance of probabilities that the plaintiff has satisfied his onus to prove the claim. I note the defendant states he has overpaid. There is no cross-claim and I do not and on the material before me can determine any amount and it places no bearing on my decision. IN THIS MATTER THERE IS A VERDICT FOR THE DEFENDANT. As I said I will deal with costs and interests at a later date."
ICR accepted on appeal that these observations reflect a proper rejection of its claim that it had supplied an additional 80 spaces from "new steel". It contended, however, that having found that other spaces were provided by way of "salvage and reconstruction", in addition to those for which payment had been made, which had been invoiced on a "do and charge basis" as discussed between Mr Saran and Mr Reeks, that his Honour erred in not quantifying its damages in respect of those additional spaces.
ICR submitted that the conclusions which his Honour reached required its damages to be assessed, his Honour doing the best he could on the evidence, as discussed in Shree Shirdi Sai Sansthan Sydney Limited v Nirmal Taluja [2014] NSWSC 1825 at [46]. That exercise should have been undertaken by acceptance of the sum claimed, on Mr Reeks' unchallenged evidence, as to a rate not unreasonable for this work, on a "do and charge" basis.
For its part, Metziya contended that there was no error of the type identified in House v The King (1936) 55 CLR 499; [1936] HCA 40 in his Honour's conclusions and so this appeal had to fail.
Further, even though his Honour's reasons were not well expressed and that he had misunderstood, for example, that none of the racking involved "salvage work", rather it was that some of the racking had to be transferred from another site and constructed at this site, Metziya submitted that his Honour was correct to conclude that ICR had not met the obligation falling upon it to discharge its onus of proof in respect of this claim. His Honour had not been persuaded, or satisfied by Mr Reeks' evidence, with the result that ICR's onus had not been met. That was because ICR had not established the rate agreed for this work and because Mr Reeks' evidence as to how he had calculated what he claimed was owing, by the process of "reconstruction" he was cross-examined about, could not satisfy ICR's onus. His Honour was thus correct to dismiss ICR's claim as not proven.
In this case there were obviously difficulties in ICR proving what had been agreed it would be paid for this additional work and in adducing precise evidence of how much of this work it had performed, given the deficiencies in the parties' record keeping. His Honour was, however, persuaded by Mr Reeks' evidence, finding that ICR had been engaged to provide additional pallet racking, for which it had not been paid, as it was entitled to be. In the result, his Honour had to calculate what ICR was owed for that work.
As discussed in Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54 at 31, the settled rule, "is that mere difficulty in estimating damages does not relieve a court from the responsibility of estimating them as best it can" and that this sometimes involves what is guess work, rather than estimation. In Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257; [2003] HCA 10, a distinction was drawn between cases where a plaintiff cannot adduce precise evidence of what has been lost and those where, although apparently able to do so, the plaintiff has not adduced such evidence (see at [38]).
This was not a case where ICR could have adduced precise evidence, but did not do so. No doubt estimating ICR's damages was undoubtedly difficult, but that exercise had to be undertaken in the way discussed in Amann Aviation. It could not be avoided because of a concern that Mr Reeks' reconstruction could not be relied on, given that his Honour had concluded that ICR had performed work for which it was entitled to be paid. That conclusion was not challenged on appeal. Mr Reeks' evidence having been tested as it was, ICR's damages had to be assessed, even if that involved an element of guesswork.
In the result, this appeal, too, must be upheld.

[12]

The Chrisco building claim

His Honour next turned to the "Chrisco Building claim". There in issue was whether ICR had been paid in full for its work of constructing the building. On the evidence, the initial price of $1.63 million was quoted in 2008; that a larger building than was initially contemplated was built, with the result and that additional payments were made, to reflect agreed variations, on the defence case, of over $1.9 million.
What was in issue included whether the additional payments which had been made had satisfied all that was owing, ICR claiming that the final sum owed under the contract was $2,040,515.60, of which $91,075.60 was outstanding. There was also an issue as to whether some of what was claimed related to work performed under an entirely separate contract.
There was documentary evidence as to the original scope of works, a budget estimate and invoices issued for progress claims, some of which were revised and the last of which was paid in 2008. It was a further invoice dated March 2014, but not served by ICR until June, with a letter of demand, which was in dispute. Mr Reeks, Mr Tanos and Mr Saran gave evidence as to what was built, what was discussed at various times, what was paid and the circumstances in which invoices were issued and reissued.
In Metziya's written submissions, what was in issue was identified to be what the terms of the agreement were; whether ICR had established that any sum was outstanding; and what relevance the issue of the invoice on which the claim rested many years after the work was performed, had to the resolution of these issues.
Again, what his Honour found is difficult to understand. His Honour held: "HIS HONOUR: The issue that I need to identify in this matter and deal with, what was the agreement if any, is the amount of $91,075.60 in outstanding balance. The defence has again raised the issue of the invoice. We have already dealt with the lateness of the invoice and the other matters, and again I draw no adverse inference to the lateness. It goes back in so many ways to the business relations between the parties and Mr Reeks' own business acumen. The quality of the work is not an issue. No suggestion that the work is either defective or that there has been any over charging or any inappropriate charging for the work. It is common ground that the initial budget figure of 1.63 million was for works identified. The initial agreement the evidence disputes is an adjustment of an amount to be paid on an as built. It may have been a fixed sum for the original building but it is clear from material before me a substantially larger construction has taken place beyond the original scope of the works. An increase in the work scope suggested by defence, it should be incorporated in initial costings. The reality is, to suggest that is a fixed costing is not really sustainable for this complaint, except that it may be Mr Tanos' belief, but it is not supported by the evidence before me. The plaintiff has provided material in his affidavit 366, 368 and attached, amended plate drawings clearly showing the increase above the original scope, in effect double the height of the offices and amenities area and footprint from 360 square metres to 503 square metres. Not double; my hyperbole, and 900 metres squared to 1100 metres squared of the package. I accept the material before me in terms of plans and the correspondence, that this is beyond the original scope of the work. The plaintiff has provided in this particular matter detailed calculations that in my view, and I can only take a limited view and rely on what is there before me, they are accurate and not based on estimates or reconstructions. It is a completely separate matter to the racking claim. Mr Tanos to a certain degree did not address a lot of those issues that needed to be addressed in terms of size and additional works. He admitted he had not reconciled the work done with the original scope of work, confirming what may or may not have been done. Again he did not display a solid knowledge of what were the rates and deferred to Mr Saran. Mr Saran initially acknowledged the greater scope of the works. He changed his position. I think it was 554 through to 560, inconsistent with his view that an original parquet room was 1100 square metres. He refers to plans that are not before the Court, not in evidence. The defence had a very strong legal team. They knew what the requirements are and what to do and I have no doubt the instructing solicitor spent substantial time in dealing with the affidavits. There is a substantial amount of work, but for a party witness to come to Court and say "Oh yeah, they're not here but I rely on them" when it is critical to the issue that is there, I can put no weight on Mr Saran's evidence. It is not there. It is not in his pleadings, it is not in his oral evidence until the point where he changes his position. The defendant in my view in this matter appeared to rely on its own inaccuracies in the records and payments, Mr Tanos. There are issues as to the lesser payments, that it is a greater payment. I accept that Mr Tanos has given evidence on a sworn oath as to that situation but I have a sworn document and sworn evidence in Court completely conflicting. I cannot tell which one of the two Mr Tanos may have been confused on the material before me. It is very clear he does not know, because to a great degree he is relying on material from the plaintiff. It is not up to him to prove anything, but if he is relying on a defence, he needs something to substantiate it. The fact that his evidence has chopped and changed, Mr Saran's evidence chops and changes, it does not assist at all in determining as to which version is the more appropriate. Invoices, there are invoices on the plaintiff's case that at face value appear inconsistent. There is ample evidence throughout these proceedings and I have already touched on it in my opening, but Mr Tanos has asked invoices and other things to be changed to assist his requirements for either tax, accounting or otherwise. It is not uncommon that invoices are amended and I understand if we are dealing with a multinational company such as BHP or otherwise, the invoices would be cancelled, there would be a fresh invoice issued with an explanation in the accounting records as to why that has occurred. Mr Reeks in no way obtains any of those levels in his accounting and that is consistent all the way through. There is an ongoing relationship between Mr Tanos asking for things and Mr Reeks acquiescing. Noted here for tax purposes GST for dovetailing budgets, Mr Saran according to his evidence was "I asked for it to make my accounting easier" and the inference was he would have to do some additional work which would be completely appropriate if Mr Saran did not want to do that. This is a project manager. In this matter, Mr Saran on 11 September ..{not transcribable).. the conversation where he said "For now just make the value of the final claim invoices so that I can send it on". This is me paraphrasing, "Get it paid. We'll sort out the balance later". I do not have it up in front of me but it was repeated and conceded by Mr Saran. It is consistent with the accounting and recording between the parties. The plaintiff has provided records of payments he has received, detailed account for the work at 429. Yes, one of those invoices has a different place on it, but there is no suggestion by Mr Tanos or Mr Reeks or Mr Saran that that invoice was attributed to any other work or any other building or anything else other than these proceedings. It was expertly picked up by the defence in terms of their submissions but I accept that it is not an error and more a practice of Mr Reeks. Mr Reeks if you have not got the gist of what I am saying today, get yourself an accountant to run your books. That may be of assistance to you, too, Mr Tanos. The defendants' evidence, as I have already said, is inconsistent and not supported either in the pleadings or on the evidence that it is a lesser degree that I can rely on their evidence. I am satisfied the plaintiff has made out his claim on the balance. I FIND FOR THE PLAINTIFF IN THE SUM OF $91,075.60 INCLUSIVE OF GST."
There was no issue that further work had been carried out than was initially contemplated and that more than $1.63 million had been paid. How much more was in issue, and a matter on which Mr Tanos was cross-examined, by reference to various documents. The basis on which his Honour thus resolved what was in issue over the claimed outstanding payment, given the documents in evidence, difficult as they were to reconcile, was not explained, as it had to be. That depended not only on findings as to the work which had been performed under this contract, but also on what payments had in fact been made for that work and what, if anything, was outstanding under the contract, given its terms.
There had been many payments made to ICR in respect of this and other contracts. Its invoices included two which carried the same number. Metziya contended that some of the invoices related to work performed under a different contract. It also contended that in cross-examination Mr Reeks had made a concession as to payment of an invoice in an amount of some $210,000, with the result that he was not entitled to the further amount claimed, a concession not referred to by his Honour.
His Honour accepted Mr Reeks' calculations as to the size of what had actually been built to completion in 2008, but made no finding as to what the terms of the contract were, nor what had to be paid under the contract, for the construction of a building of that size. Nor did his Honour explain what had led him to the conclusion that $91,075.60 ICR only claimed in 2014 was still outstanding under the contract, given the dispute over what had, in fact, earlier been paid and what work the further claimed payment related to. That required more than criticism of the evidence of the defence witnesses.
Having found that ICR's invoices were inconsistent; that some of them had been re-issued at Mr Tanos' request; and having observed that both Mr Reeks and Mr Tanos needed to get an accountant, his Honour had to go on to explain the basis on which he came, nevertheless to conclude that $91,075.60 was still owing under this contract.
Given the matters the parties had addressed by reference to the documentary and oral evidence as to what had been paid under this contract and what remained outstanding, his Honour had to do more than announce that his conclusion rested on inconsistencies in the defence evidence. What he was there referring to is not apparent. It was ICR on whom the onus lay. The basis on which his Honour concluded that it had met that onus, is simply not apparent from the reasons given.
In the result this appeal must also be upheld.

[13]

The freezer 5 and 6 claims

The construction was completed in 2009. The evidence was that Mr Reeks was asked by Mr Saran to reduce the price he originally quoted and that by email sent on 18 February 2007 it was revised downwards to $870,000 plus GST.
In issue was whether there was an agreement to an even lower price of $810,800 plus GST. In evidence were various text and email communications, as well as tax invoices later created by Mr Saran, which evidenced the progress payments totalling some $728,300 plus GST which were paid to ICR in 2009. On the defence case, those payments were made in complete satisfaction of the contract price orally agreed.
In its written submissions Metziya relied on concessions made by Mr Reeks in cross-examination. Its case was that the invoices evidenced the revised agreement, which was supported by Mr Reeks' concessions. It was also said to be relevant that ICR had not pursued a claim for further payment until March 2014, four and a half years after competition of the work.
His Honour held: "It is common ground, one of the few matters that everybody is agreeing with matters up to a point, that there was an initial quote of $903,398.17 plus GST sent to Mr Saran by Mr Reeks, with an attached spreadsheet which was around the end of January 2009. It is common ground, and I am not going to rely specifically on Mr Reeks' recollection of the dates as Mr Saran is somewhere all over the place, but I accept that two weeks later it was sought to reduce the price. It is not suggested at that stage that any figure was proposed to Mr Reeks. After that point as I have already indicated, I believe that Mr Tanos did not engage in any further discussion on this contract. Some two days later after being asked to revise the price, Mr Reeks has sent a revised estimate of $870,000 plus GST including the revised spreadsheet. I can only say hallelujah there is material that supports what is being put in the contractual negotiations. Mr Saran eventually conceded that he had received an SMS and he concedes that he received the email in a conversation; in cross-examination he says "Yes I received that". He concedes and it is common ground that he said words to the effect "I know it's there but I haven't opened it yet". I am not suggesting that Mr Sarah[sic] as a project manager has opened it, but he has 10 received it from the plaintiff. Mr Saran says some five to 12 days later he has a conversation with Mr Reeks in which his figure of $810,000 plus GST was proposed. It is suggested by Mr Saran that this was an immediate agreement by Mr Reeks. This conversation is denied by Mr Reeks. If it occurred, it would occur in the circumstances that Mr Reeks is prepared to waive some $60,000 without any forethought or was so desperate for a contract that he is prepared to do it at a loss. I have nothing in any of the dealings at all that suggests that Mr Reeks carried on his business in that fashion. There is no suggestion in any form of written, notes or otherwise, of confirmation by Mr Saran to Mr Reeks. So that he would agree to this where on two prior occasions in a short period Mr Reeks has recalculated the bill, recalculated his spreadsheets over one or two days is more consistent of the dealings. I do not accept Mr Saran's conversation, of which he has no evidence other than his recollection six years down the track and I must say at various times he did not recall things until it was put in front of him, so not much weight put in his recollection, that Mr Reeks would not have made an immediate agreement. It is suggested that a couple of weeks later there was confirmation to go ahead with the work and on my recollection of that evidence it actually does not say a figure. It is suggested Mr Saran said "Go ahead with that figure" and Mr Reeks is in a position that he is offered 870 plus GST. Mr Saran, whatever recalculations he may have done, has told Mr Tanos, and I accept this from Mr Tanos because he can only say what Mr Saran has given him, that the agreement was for 810 and he has gone off and done his calculations on that basis. This would be one of the critical matters where Mr Saran would have needed to keep a record of what the agreed amount or sent something back either by email, by text, "okay agreed amount is 810". It was not done. I can put no weight on Mr Saran's version of events. I put no weight on Mr Saran suggesting or even putting to Mr Reeks that it was 810. It may have been his workload. It may have been what he did but never got around to it, but told Mr Tanos that was the figure and I have nothing to suggest that Mr Reeks' offer of 870 was in any way rejected and he was told to commence the work and the only material he had was his quote of 870,000. The recipient created a tax invoice, raised or created by Mr Saran on Mr Reeks' letterhead. I raised my eyes during the hearing about that proposition and I make full admissions and profess that I have no great expertise in tax matters. Even at my age I was not aware that such a document existed. To put it bluntly, Mr Reeks' eyebrows were raised as well. He said he did not remember the email, said he did see the documents and he was surprised by it. The common theme throughout this is that Mr Saran says "Oh look just put it in. We'll get that payment to you" and Mr Reeks conceded he was relying on the money coming through to keep the payments up to continue the business. There is no suggestion that Mr Reeks had millions of dollars to sit back on. He needed that money. When he was told by Mr Saran "Just send that through. We'll sort it out", not necessarily that circumstance but in others. The plaintiffs submission refers to the facts ruling, GST R2000/10 and as it says, it fails to satisfy all requirements that it is required for it to be treated as a tax invoice there has to be an agreement by both parties. I do not find in any sense and I have nothing before me other than fact that Mr Reeks emailed back on the basis to get some money that he was agreeing for it to be used in an RCTl agreement. He was surprised to see his own letterhead. I have no evidence either in implied or actual, that Mr Reeks had agreed to use of the RCTIs. I do not buy, is there a document created by the defendant, maybe for the taxation department but I am not going to make a ruling whether they are valid or not. I cannot rely on a document prepared by the defendant as being an invoice that the plaintiff has said is a full payment. Mr Saran prepared these invoices to an amount of 728,300 to meet the figure I accept that he conveyed to Mr Tanos, but there is nothing before me that Mr Saran can confirm that that was the figure. The only observation I can ..(not transcribable).. is that Mr Saran was a substantial wild card in these matters in not meeting the basic requirements to have the matters confirmed or otherwise, or that could be provided in evidence. I do not accept this as ..(not transcribable).. on balance of probabilities. The RCTIs are evidence of the commercial agreement. We have the invoice 1118884 issued for a greater amount than what Mr Tanos believed and again I say, on what Mr Saran told him was the price. It was amended at his request. I am not sure if anybody else sees a pattern developing here, where Mr Tanos asks for things to be done on accounting purpose and they are willingly done. I can take no inference on the material before me that it was amended to meet what is perceived to be an agreed price. He speaks to Mr Bright. Mr Bright seeks confirmation from Mr Reeks and Mr Reeks says he had spoken to Mr Tanos, that it was required to be amended for what he believed was GST in terms of the discussion with Mr Tanos. I am not sure whether it was GST or tax considerations. Mr Tanos in his evidence in a fairly convoluted fashion, but that is the only way I can draw an inference, agreed that he was looking to amend the invoices to assist him in his future planning for tax and otherwise. Inconsistent with a theme running through these matters of Mr Tanos seeking amendments. I am asked to infer the invoice is evidence of the contract. The original amount sought on Mr Reeks' invoice was the amount that he was always working towards. He puts it no higher than varying it by the request of Mr Tanos to benefit Mr Tanos. Sorry to be repeating myself, but as I said it is a constant theme throughout these matters. An example if I have not already said it and I most probably have, but bear with me, where Mr Tanos requested invoices in the prior matter in certain amounts to make his accounting easier. That may have been Mr Saran and he agreed. He said that is what he asked and "We'll sort it out later". It is a consistent theme throughout this. I cannot take any negative evidence. I have already said this in relation to the invoices. They go to four years. It is clear evidence on all these matters that discussions that Mr Reeks was attempting to raise these matters in the preceding years and been brushed off by Mr Tanos or Mr Saran, or Mr Saran on behalf of Mr Tanos. I can only find on the material before me on the balance of probabilities that the amount quoted was 870,000 plus GST and in the total lack of supportive evidence from the defence that it was 810,000. I FIND FOR THE PLAINTIFF IN THE SUM OF $52,487.70 INCLUDING GST WHICH IS THE CLAIM."
The concessions relied on were made in cross-examination, Mr Reeks' evidence in chief being that he had not seen the invoices until 2011. In cross-examination, however, he agreed that he had seen the invoices when they were created in 2009 by Mr Saran, before progress payments were made to ICR, including the "final payment" then made, he accepted, because he had not himself made any claims in writing for any payments under this contract.
The question was whether what had been agreed in relation to the invoices Mr Saran prepared and on which ICR was paid, after Mr Reeks saw them, reflected the terms of the final agreement which the parties had reached.
His Honour's conclusion that the amount quoted by Mr Reeks was for $870,000, was correct, but that did not resolve the question of what the terms of the parties' contract for the construction of freezers 5 and 6 were and whether the final progress payment made to ICR in 2009 pursuant to the invoice which Mr Reeks had, in fact, seen before that payment was made to ICR, satisfied all that was owing under that contract.
What his Honour meant by observations such as "I cannot take any negative evidence" were meant to convey is not apparent, but that the reasons given in respect of this claim were also not such as to satisfy the obligation which fell upon him, must be accepted. The findings on which his Honour's conclusions rested have not been revealed nor their basis explained.
In the result this appeal, too, must be upheld.

At a glance

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Judgment (16 paragraphs)

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