Russell Edwards Design Services Pty Ltd v Anne Baring & Anor

Supreme Court of NSW|2007-02-21|Before: Harrison J

CITATION : Russell Edwards Design Services Pty Ltd v Anne Baring & Anor [2007] NSWSC 140

DECISION : (1) Leave to appeal granted; (2) Verdict for the plaintiff

CATCHWORDS : APPEAL from Magistrate - procedural fairness - denial of natural justice - inadequate reasons - findings of credit without party given sufficient opportunity to respond

Beale v GIO of NSW (1997) 48 NSWLR 430 at 444 CASES CITED : Devries v Australian National Railways Commission (1993) 177 CLR 472 at 479 Pavey and Matthews Pty Limited v Paul (1987) 162 CLR 221 Update Constructions Pty Limited v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251

Russell Edwards Design Services Pty Ltd (Plaintiff) PARTIES : Anne Baring (First Defendant) Crerar Baring Interiors Pty Ltd (Second Defendant)

COUNSEL : S Kerr - Plaintiff R Freeman - First and Second Defendants

SOLICITORS : Colin Biggers & Paisley - Plaintiff Beazley Singleton - First and Second Defendants

LOWER COURT JUDICIAL OFFICER : Magistrate B A Lulham

20 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION PROGRESSIVE LIST

14911 of 2005 Russell Edwards Design Services Pty Ltd v Anne Baring & Anor

1 HIS HONOUR: By an Amended Notice of Cross Claim dated 30 April 2004 filed in the Local Court, Russell Edwards Design Services Pty Ltd ("the plaintiff") claimed $69,246.96 from Anne Baring ("the first defendant") and Crerar Baring Interiors Pty Ltd ("the second defendant"). Mr Russell Edwards ("Mr Edwards") was the principal of the plaintiff and gave evidence on its behalf. The plaintiff's claim was pleaded in two ways. First, as a claim in contract made on or about 25 October 1999 pursuant to which the plaintiff undertook to carry out certain design and implementation services for the defendants in connection with renovations to be performed at a property at 3 Wentworth Ave, Point Piper ("the property"). The plaintiff alleged that the contract was partly written and partly oral, the written part consisting of a letter dated 25 October 1999 and the oral part consisting of requests made from time to time to the plaintiff to carry out additional services and to supply goods and materials in connection with the renovations to be performed at the property at prices agreed to by the parties. Secondly, the plaintiff claimed in the alternative that it performed certain services and supplied certain goods and materials in connection with the renovations at the request of the first defendant as a result of which it thereby became entitled to a reasonable remuneration. The plaintiff contended that the sum it claimed in contract also amounted to a reasonable remuneration for the work performed.

2 The defendant admitted the existence of a contract but put its precise terms in issue. For reasons that will emerge, it is unnecessary presently to deal in detail with the ways in which the defendants sought to resist the plaintiff's claims.

3 Although the matters giving rise to the litigation occurred in late 1999 and early 2000, the original proceedings were not commenced until 2002 and the hearing of the matter did not commence until 2004. To be precise, the matter was heard before Magistrate B A Lulham over three days in August and two days in November 2004 and one day in March 2005. His Honour's reasons for judgment were published on 23 September 2005. His Honour dismissed the plaintiff's claim (brought as the cross claimant in the court below) and entered a verdict and judgment for the defendants. His Honour also dismissed the defendants' claims (brought as the plaintiffs in the court below) and entered a verdict and judgment for the plaintiff. Both parties appealed to this Court.

4 The plaintiff appealed to this Court by Summons filed 8 November 2005. By the time of the hearing before me on 20 and 21 February 2007 the plaintiff's original Summons had been uncontroversially replaced by an Amended Summons. By that document the plaintiff claimed: - "(a) An order that leave be given to appeal [from] the judgment of His Honour Magistrate Lulham dated 23 September 2005;

(b) An order setting aside Order 1 of the judgment of His Honour Magistrate Lulham dated 23 September 2005 giving judgment and verdict (sic) for the defendants herein;

(d) Costs". 5 Order 1 in the Summons was sought by the plaintiff upon the basis that the appeal to this Court proceeded pursuant to s 74 of the Local Courts Act 1982 ("the Act"). Relevantly, that section provided as follows: - 74 (1) A party to proceedings under this Part who is dissatisfied with the judgment or order of Court sitting in its General Division may appeal to the Supreme Court against the judgment or order on a ground that involves a question of mixed law and fact, but only by leave of the Supreme Court.

(2) . . . 6 It was agreed between the parties that in the circumstances of the present case leave to appeal was required by each of the parties. I granted leave in the circumstances. I note in passing, lest there be any controversy about it, that Mr Freeman of Counsel, who appeared for the defendants, and Mr Kerr of Counsel, who appeared for the plaintiff, each conceded that it was appropriate to grant such leave. It was also agreed between the parties that in the determination of the present appeals I should exercise, as appropriate, the powers given by s 75 of the Act. 7 The judgment of the learned Magistrate was relatively long and quite detailed. He described the case (in par 4) as "the longest, most difficult and most disappointing civil proceedings in which [he had] been involved". It will be necessary shortly to examine his Honour's judgment and reasoning carefully. The starting point for such an examination can conveniently be found in the several grounds of appeal set forth in the Amended Summons. Those grounds of appeal were as follows: - 1. The Magistrate erred in law in failing to give any or any proper reasons for finding that the plaintiff was not entitled, on the balance of probabilities, to the amount of $8058 despite finding that amount to be outstanding to the plaintiff.

The plaintiff was denied natural justice and, in the alternative, the Magistrate erred in law in the following respects:

(a) the Magistrate made adverse findings particularly at pars 172, 183 and 225 of the judgment as to the credibility of the principal of the plaintiff in circumstances where the plaintiff was deprived of any, or any proper opportunity to respond to the matters that the Magistrate relied on in making such findings;

(b) additionally, the Magistrate erred in making those findings as there was no proper basis, on the evidence before the Magistrate, on which those findings could be made;

(c) the Magistrate made findings particularly at pars 183, 223, 239, 243, 244 and 246 that sums of money were not payable to the plaintiff in circumstances where the plaintiff was deprived of any, or any proper opportunity of putting forward its case that the sums of money were payable;

(d) additionally, the Magistrate erred in making those findings as there was no proper basis, on the evidence before the Magistrate, on which those findings could be made;

(e) the Magistrate, in reaching the conclusion that the plaintiff was not entitled to payment of amounts claimed, effectively found that the defendant was entitled to restitution of amounts paid, when no claim for restitution was made against the plaintiff, either by way of defence and set-off or cross claim;

(f) the Magistrate made findings particularly at par 246 that certain sums of money were paid by the plaintiff in circumstances where the plaintiff was deprived of any, or any proper opportunity of putting forward its case as to the sums paid;

(g) additionally, the Magistrate erred in making those findings as there was no proper basis, on the evidence before the Magistrate, on which that finding could be made;

(h) the Magistrate erred in finding that there was no agreement between the plaintiff and the defendant for a design and implementation fee, as there was no proper basis, on the evidence before the Magistrate, on which that finding could be made; and

(i) the Magistrate, despite the fact that the defendant was represented by experienced counsel, made assumptions as to what might have occurred had the principal of the plaintiff been cross examined on certain matters (see, for example, par 244). Those findings were made in circumstances where the plaintiff was given no, or no proper, opportunity to respond to those matters either in evidence or by way of submissions. 3. Consequently, the decision of the Magistrate, insofar as it gives judgment and verdict for the defendants herein, is perverse and should be set aside. Consideration 8 At par 241 of his judgment his Honour indicated that he proposed to examine the plaintiff's claims on two bases. A summary of the first approach can be found at par 243 of the judgment. With allowance for the fact that the learned Magistrate erroneously substituted $69,325.45 for the sum of $69,246.96 as the amount claimed by the plaintiff in its original Amended Notice of Cross claim, par 243 is in the following terms: - Amount claimed in Statement of Claim (sic) $69,325.45

D&I Fees disallowed $38,166.96

D&I Fee charged to Hodge Wright Constructions but passed onto Baring and disallowed: $9,000.00

Rubbish removal fee withdrawn $4,700.00

Payments appropriated to D&I account but not included in RWE49 (see para 219 and following of judgment) $7,200.00

JCW (sic) Pty Ltd overcharge on amount paid (see para 176 and following of judgment) $1,280.00

North West Plasterers overcharge on amount paid (see para 238 of judgment) $920.00

Amount outstanding: $61,266.96 $ 8,058.00

9 In general terms his Honour appears to have accepted the sum claimed in the Amended Notice of Cross Claim as a starting point, and thereafter to have deducted certain sums of money, under various headings, to which sums he concluded the plaintiff was not entitled. The manner in which the learned Magistrate proceeded to make these deductions, and his expressed reasons for doing so, or alternatively, where applicable, the absence of expression of his reasons for doing so, lie at the heart of the plaintiff's case before me.

10 The second basis upon which his Honour approached the matter commenced at par 245 of his judgment. By this approach his Honour examined the figures which were set forth in Exhibit 17 before him which totalled $60,455.46. He then proceeded to make from that sum the same deductions which he made adopting the first approach, which are set out above. This would appear to be the manner in which his Honour dealt with the plaintiff's claim based upon a quantum meruit. Unfortunately, his Honour does not say so in terms and it is difficult to know whether or not that is what he was doing. The plaintiff raises other objections to his Honour's methodology, to which it will be necessary later to return. Formation of the contract 11 His Honour dealt with this topic commencing at par 185 of his judgment. His Honour concluded this section of his judgment at par 203 stating that he was "not satisfied that there was an agreement between [the first defendant] and [the plaintiff] whereby [the plaintiff] was entitled to charge the design and implementation fee of eight per cent." The plaintiff's letter of 25 October 1999 contained no reference to a fee of eight per cent. Furthermore, the first defendant denied any conversation with Mr Edwards in which she agreed to pay any design and implementation fee. His Honour found that Mr Edwards required the first defendant to sign and return the letter, which she refused to do. Accordingly, his Honour said at par 197 "I have come to the view that I am not satisfied that [Mr] Edwards has proved that he communicated to [the first defendant] so as to incorporate it into the contract that he was going to charge a design implementation fee of eight per cent. I am not satisfied, on the balance of probabilities, that prior to the 25 October letter, there was any conversation in which [Mr] Edwards referred to the imposition of a design and implementation fee of eight per cent."

12 In the absence of other matters to which the plaintiff draws my attention in these proceedings, his Honour's findings on this issue were unexceptionable. However, interspersed with his consideration of the question of whether or not the plaintiff made out its claim for this fee were a series of other unusual comments.

13 For example, at par 198 his Honour said "I take into account the circumstances surrounding the formation of the contract. Clearly [the first defendant] was in a very difficult and unfortunate position". Earlier evidence in proceedings before his Honour made clear that the defendants had encountered some difficulties in obtaining a suitable builder in late 1999 and that the plaintiff arrived at a time to assist the defendants when, on one view, they were desperate to start their project. If his Honour intended to indicate by the last quoted sentences that the plaintiff took advantage of the defendants in the situation in which they found themselves, he does not say so in terms. Even if it were true, no criticism can be levelled at the plaintiff by reason of that circumstance alone.

14 At par 200 of the judgment his Honour said "I am satisfied that [Mr] Edwards deliberately tried to confuse [the design and implementation fee based on a percentage of the value of the work and the design fee charged at $120 an hour] in his statements so as to make it as difficult as possible for [the first defendant] to understand the accounts and to appreciate how much she was paying him". It is also difficult to understand precisely the basis for this comment. For example, counsel for the plaintiff cross examined the first defendant at considerable length trying to get her to concede that in his letter of 25 October 1999 the plaintiff had clearly distinguished between the design and implementation fee on the one hand and the design fee which he proposed to charge at an hourly rate of $120 on the other hand. As his Honour noted at par 199, "[the first defendant] was far too slow in acknowledging that the distinction was made in that letter. Such reluctance affected her credibility". In my opinion, there was no basis for his Honour's finding that Mr Edwards deliberately tried to confuse the first defendant in the way specified. Even if there were, it is not entirely clear what his Honour did with the finding.

15 Mr Kerr took me at some length to that portion of the judgment in which his Honour dealt with questions of credit. This section started at par 164 of the judgment. It commenced with a general comment by his Honour that he found both Mr Edwards and the first defendant "to be unimpressive and unhelpful witnesses". He went on to say that he was "satisfied that little weight should be given to what each of them alleged, and when making findings as to factual situations [he] should give great weight to any independent corroborative evidence supporting one or other versions of the evidence".

16 His Honour then went on to deal with a small portion of the evidence which concerned the payment of two sums of $4000 and $5000 respectively by the builder Mr Wright to the plaintiff which the first defendant asserted had been included in, and had subsequently been taken out of, moneys which the first defendant had paid to the plaintiff for on-payment to the builder. When asked in cross examination by counsel for the defendants whether or not Mr Edwards had increased the plaintiff's quote by the amounts in question, he frankly conceded that he had done so. His Honour quoted the relevant portion of the transcript at par 171.

17 However, at par 172 his Honour said: "Such evidence disclosed at the very least disgraceful and dishonest conduct on behalf of [Mr] Edwards". Then, at par 173, his Honour said "In my view the amount claimed by [the plaintiff] will have to be reduced by $9000 to reflect the payment improperly received by [Mr Edwards] and paid, in effect, by [the first defendant]. Moreover, [Mr] Edwards' behaviour reflected extremely poorly on his credit and honesty. It is a matter which I took into account generally when assessing his credit and when considering his other claims" (emphasis added).

18 His Honour appears to have formed the view that each of the payments amounted, in effect, to a secret commission. It is certainly true that the precise nature of these payments appears never to have been accurately or adequately revealed in the evidence. However, Mr Edwards was never cross examined in a way that confronted him with the allegation that the payments were illicit or wrongful. The plaintiff submitted, and I accept, that in the conduct of the case before the learned Magistrate Mr Edwards was given no opportunity to confront allegations of impropriety arising out of these payments. I note in passing that when, at par 174, his Honour commented that he could not understand why "such matter was not raised earlier in the proceedings than the third or fourth day of cross examination", his Honour was not referring to, because the transcript does not contain, material amounting to a proper challenge to Mr Edwards concerning these sums. If, as his Honour indicated, these matters influenced the views that he formed about Mr Edwards' credit, this was procedurally unfair. It is clear from the terms of par 175 that his Honour took this matter into account when dealing with competing contentions about formation of the contract upon which the plaintiff sued. His Honour's "deductions"

19 From the total amount claimed by the plaintiff, his Honour first deducted $38,166.96 in respect of fees claimed for design and implementation. As counsel for the plaintiff pointed out, however, this sum represented the total amount charged by the plaintiff of which all but $19,420.76 had been paid. The defendants made no claim for repayment of any monies paid under this item so that in the proceedings as circumscribed by the pleadings before the learned Magistrate, the only sum in issue was the amount in fact claimed by the plaintiff. If any sum were to be deducted from the total sum claimed by the plaintiff, it should have been limited to the sum of $19,420.76.

20 As I already indicated, his Honour formed the view, and found, that the plaintiff had not made out its case to establish an agreement entitling it to charge the design and implementation fee of eight per cent. Indeed, his Honour was not satisfied that the plaintiff was entitled to charge a design and implementation fee at all. The plaintiff challenged the way in which his Honour dealt with this aspect of the claim on the basis that his Honour's findings were infected by conclusions which he formed about the plaintiff's credit which the plaintiff was not given an opportunity to meet. However, in my opinion, although these submissions have force in another context (see below), they do not go so far as to invalidate his Honour's reasoning and consequent findings made in relation to the existence of the contractual term contended for by the plaintiff. Nor does this aspect of his Honour's reasoning fall foul of the obligation to give proper or sufficient reasons. In my opinion, his Honour was entitled to make a deduction from the whole of the plaintiff's claim but in the circumstances, that deduction should have been limited to the smaller sum of $19,420.76 claimed by the plaintiff and should not have included the additional monies paid by the defendants which, in the events that occurred, were not the subject of a pleaded claim for recovery which his Honour had been asked to decide. (In this last respect, see pars 37 and 38 below).

21 His Honour next reduced the sum claimed by the plaintiff by $9000, representing the two sums of $4000 and $5000 to which earlier reference has been made. In my opinion, no valid basis for doing so existed. It seems apparent that his Honour's decision to deduct these amounts was based upon the view he formed that Mr Edwards had been guilty of disgraceful and dishonest conduct when no proper exploration of the evidence touching and concerning these payments occurred. If the reasons, which his Honour gave for disallowing these payments, were on their face adequate, they were based upon a view of Mr Edwards' credit formed in circumstances that amounted to a denial of natural justice. In my opinion his Honour was not entitled to deduct the sum of $9000.

22 His Honour then deducted from the amount claimed the sum of $7200. He did so following a consideration of the matter under the heading "APPROPRIATION OF AMOUNTS RECEIVED BY EDWARDS" commencing at par 219 of his judgment. His Honour's analysis of this aspect of the matter is, with respect, somewhat confusing. However, the burden of his conclusion is to be found at pars 223 and 224, which in part are in the following terms: - "223 I have checked through the various invoices carefully and the only conclusion which can be drawn from the information contained in para 157 [of Mr Edwards' statement] and from [his] evidence was that he had appropriated to the company as D&I fees a sum of $7200 which had been shown in various invoices as having been paid to Hodge Wright Constructions…

224 In my view the findings which I have made cast great doubt on the honesty, accuracy and integrity of the account documents prepared by [Mr] Edwards. They equally cast doubt on his own honesty and integrity".

23 His Honour gives no detail of what his check through the various invoices revealed, or even which invoices he referred to when undertaking that task. His Honour's judgment is, therefore, effectively silent on the reasoning process that would have permitted him to draw the conclusion which he did. The plaintiff complains before me that a finding so highly critical of Mr Edwards' honesty and integrity should be transparent and supported by sufficient reasons to permit the plaintiff to follow or to understand the manner in which his Honour arrived at those conclusions. I accept the plaintiff's submission in this regard. I am supported in this conclusion by his Honour's own comment at par 225 of his judgment where he noted that Mr Edwards was not cross examined in relation to par 157 and that "the above matters" (presumably the matters to which his Honour referred) were not put to him. In my opinion, his Honour erroneously deducted the sum of $7200 from the sum claimed. JCV Pty Ltd overcharge

24 His Honour also dealt with the plaintiff's claim for $1280 in relation to certain columns and balustrades commencing at par 176 of his judgment. In that paragraph he said "I set out my findings as to what occurred, based on my extensive examination of all of the documents and the evidence". His Honour also said "I was not assisted greatly by the cross examination of [Mr] Edwards".

25 After dealing with the matter in some small detail his Honour set out his conclusions at pars 182 and 183 as follows: - "182 This aspect of the matter was not subject to cross examination, but it would appear to me that there was no other inference or conclusion available other than that [Mr] Edwards claimed for a payment which he claimed to have made to JCV Pty Ltd of $4960, when the account was in fact for $3680. The cheque number for both payments was the same.

183 In other words, in his statement to [the first defendant], [Mr] Edwards overstated the amount which he had paid by $1280. Such finding would appear to reflect very poorly on the honesty of [Mr] Edwards". 26 His Honour's candid reference to the absence of cross examination on this topic serves to underscore the plaintiff's contention before me that the plaintiff was improperly deprived of an opportunity of putting forward its case on the question of whether or not its claim for this sum should be allowed. Not only was the topic not made the subject of cross examination; as far as I can determine, it was not the subject of discussion between his Honour and counsel, nor was it the subject of relevant submissions. His Honour's finding, and decision to deduct this sum from the plaintiff's claim, was patently made upon the basis of an adverse view about Mr Edwards' credit to which the plaintiff had been given no proper opportunity during the course of the hearing to respond. In my opinion, his Honour improperly deducted the sum of $1280 from the sum claimed.

27 Finally, at par 239, his Honour deducted $920 from the sum claimed, a sum "which was apparently to be paid to the Taxation office by [the first defendant]". His Honour described this as "another instance where [Mr] Edwards charged an amount over and above the payment which he had actually made". 28 Putting aside his Honour's reference to this being "another instance", a clearly pejorative and apparently gratuitous comment, I have some difficulty understanding precisely the basis upon which his Honour dealt with this sum. This deduction was not the subject of any cross examination. Although his Honour purports to deal with the matter upon the basis of his own examination of the accounts, the deduction should in fact have been a credit to the account of the plaintiff as it was an amount that the first defendant had initially paid and which was later credited back to her. His Honour would appear to have failed to consider unchallenged evidence to that effect. In my opinion, his Honour's deduction of the sum of $920 was erroneous.

29 As the figures set forth in par 243 of his Honour's judgment reveal, the deductions made by his Honour (allowing for a small arithmetical error) left an amount outstanding of $8058. It is accurate to record that his Honour was unable to provide any particular basis for the deduction of this amount. Rather, his Honour rejected the plaintiff's claim to be entitled to what amounted to the balance remaining after his Honour's earlier deductions had been made, by resorting to the severely critical analysis of Mr Edwards that is to be found in par 244 of his judgment. That paragraph is in the following relevant terms: - "244 Although the above calculations show an amount as still outstanding to [the plaintiff], I have come to the view that he has not satisfied me, on the balance of probabilities, that [the plaintiff] was entitled to any payment at all. I rely on the findings which I made as to his credibility and honesty, particularly in relation to the D&I fee dishonestly charged to the builder, the overcharge dishonestly charged in relation to payments to JCV Pty Ltd and to North West Plasterers . . . I have grave doubts whether he did as much work as he claimed, particularly towards the end of his work on the site. I believe he exaggerated the work he did. As a result of my findings in relation to the credibility and honesty of [Mr] Edwards, I have no faith at all in the accuracy of the accounts. I believe that if his accounts were properly scrutinised in cross examination in the proceedings more discrepancies would have been disclosed . . . In my view [the plaintiff] has not discharged the onus on it, and for all of the above reasons I am not prepared to find for [the plaintiff] for any sum at all under this basis [that is to say, the contract]". 30 Mr Freeman urged upon me the integrity of his Honour's judgment and his reasoning processes. He submitted that his Honour was entitled, on the material before him, and in the light of the manner in which the matter had proceeded before him, to form the views he did with respect to Mr Edwards' credit. Mr Freeman contended that the plaintiff was given an appropriate opportunity to respond to the matters which formed the basis of his Honour's judgment and that no denial of natural justice occurred.

31 As an example of this Mr Freeman took me to the transcript of his cross examination of Mr Edwards. For instance, at p 34 of the transcript on 24 November 2004 Mr Freeman cross examined him concerning an allegation that the plaintiff had double charged the defendants for a design and implementation fee. His Honour in fact set out this passage at par 169 of his judgment. Whatever suspicions attached to the subject matter of the cross examination, it ended abruptly without any challenge to Mr Edwards suggesting impropriety or dishonesty or in a way that gave rise to material from which an inference could be drawn unfavourable to his credit. Similarly, at p 47 of the transcript on the same day, Mr Edwards was cross examined about the sums of $4000 and $5000 (referred to above) but not in a way that required, or permitted, him to confront an allegation of impropriety or in a way that indicated an attack upon his credit. Written submissions made on behalf of the defendants below after the evidence had concluded contain a statement that the plaintiff "was being paid by the builder via his secret commissions of $5000 and $4000 respectively": see p 583 in Exhibit "JAN -12" to the affidavit of James Andrew Neal sworn 18 January 2006. Without commenting upon the substance of that submission, it was never put to Mr Edwards as it should have been if the defendants had intended to rely upon it as the basis for an attack upon him. At one level, his Honour appears to have adopted this submission in a way unfavourable to the plaintiff, although, for reasons set forth above, it is not possible to be certain precisely what use was made of it.

32 The plaintiff's case before me was that it had been denied natural justice in and to the extent that it was not afforded a proper opportunity to respond to the matters which apparently led his Honour to form an adverse view of Mr Edwards' credit. In Devries v Australian National Railways Commission (1993) 177 CLR 472 at 479, a majority of the High Court put the matter as follows (omitting references to authorities): "…If the trial judge's finding depends to any substantial degree on the credibility of the witness, the finding must stand unless it can be shown that the trial judge 'has failed to use or has palpably misused used his [or her] advantage' … or has acted on evidence which was 'inconsistent with facts incontrovertibly established by the evidence' or which was 'glaringly improbable'. " 33 Clearly, his Honour's findings, which are challenged before me, depended to a substantial degree on the credibility of Mr Edwards. The comments that his Honour made, in support of his deductions from the sum claimed by the plaintiff, demonstrate this. Additionally, the nature of the matters referred to in par 244 of his judgment are of an omnibus nature, wide ranging and general and go, in my opinion, beyond what was permissible even having regard to the special position of a trial judge.

34 The plaintiff also argued that his Honour fell into error in the manner in which he dealt with the plaintiff's claim based upon a quantum meruit. However, it is unnecessary for me to deal with this challenge. The obligation to make restitution will not arise where there is a subsisting enforceable contract between the parties for the performance of the services in question: see Pavey and Matthews Pty Ltd v Paul (1986-1987) 162 CLR 221 and Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251. There is no doubt that his Honour accepted - indeed found - that a valid and enforceable contract existed between the plaintiff and the defendants, even though he was not prepared to find that the plaintiff was entitled to any (further) remuneration for services provided in accordance with it.

The cross claim 35 The proceedings before me included a cross claim filed on behalf of the defendants. For presently relevant purposes, this consisted of a document described as an Amended Cross Summons filed in court on 21 February 2007. Pursuant to that document, the defendants sought, inter alia, an order that the judgment (presumably, but not expressly) limited to a dismissal of the defendants' claim in the court below, be set aside.

36 In the events which occurred before me, consideration of this cross claim became unnecessary. Principal among the reasons for this was the fact that Mr Beazley, the solicitor for the defendants, conceded at p 99 of the transcript that the cross claim could not succeed. As Mr Beazley quite accurately noted, the defendants at trial in the court below became restricted to a reliance upon a case formulated in accordance with pars 31 and 32 of their Ordinary Statement of Liquidated Claim filed in court on 24 November 2004. In terms, those paragraphs pleaded a breach of contract which alleged that the plaintiff in the case before me was required to inspect the works prior to payment, approve the works and pay the builder subject to the plaintiff's advice and the approval of the second defendant in accordance with the contract. The defendants alleged that they had suffered loss and damage in a specified sum by reason of this breach of contract.

37 Before me it was agreed that the reference on p 3 of the transcript for 24 November 2004 at lines 28 and following encapsulated a reference to an agreement between counsel for the parties appearing before the learned Magistrate, in effect, that the case pleaded in par 33 of the Ordinary Statement of Liquidated Claim had been abandoned. As I noted at p 98 of the transcript, par 33 had been "excised from the case".

38 It is important to note this for two reasons. First, it serves to authorise and to explain Mr Beazley's concession that the defendants' cross claim could not succeed. Secondly, it also serves to explain what may otherwise appear to be unclear when one has regard to Mr Kerr's submissions that there was no claim by way of set-off or similar made on behalf of the defendants with respect to the plaintiff's claim for design and implementation fees. It will be recalled that his Honour was minded to deduct from the amount claimed by the plaintiff the full amount of the fees charged by the plaintiff under this heading. Counsel for the plaintiff contended that the only relevant sum to be considered was the sum of $19,420.76 explained above. My earlier reference to consideration of the cross claim being unnecessary (at par 36) should therefore be understood as a reference to what flowed from the limited pleadings to which the defendants were restricted in the case before his Honour. Conclusion 39 In these circumstances I consider that the plaintiff is entitled to an order allowing the appeal, and to an order varying the terms of the judgment below by substituting for Order 1 in par 258 of the judgment, a verdict for the plaintiff for $40,000 (the jurisdictional limit of the Local Court at the time) reduced to that sum from $45,126.20 calculated in accordance with the following schedule: Claim $69,246.96 Less D&I amount $19,420.76 HWC D&I $nil (not pressed $4,700.00) HWC D&I $nil JCV charge $nil Tax amount $nil Balance $45,126.20

40 I raised with counsel during the course of the hearing the prospect that the matter may have to be remitted to the Local Court for determination in accordance with s 75 of the Act. For any number of obvious reasons, including most obviously the incurring of further significant costs, such a result is to be avoided if at all possible. In Beale v GIO of NSW (1997) 48 NSWLR 430 at 444, Meagher JA said this: "Lastly, it is noted that an appealable error arising from inadequate reasons does not necessarily mean that a new trial is required. An appeal court is entitled to consider the matter and, if appropriate reasons are given, may itself decide the matter. Thus, if the only conclusion open on the evidence available at trial was the conclusion reached by the trial judge, then, notwithstanding an inadequate statement of reasons, the matter need not go to a new trial": NSW Insurance Ministerial Corporation (formerly GIO of New South Wales) v Mesiti (Court of Appeal, 1 December 1994, unreported)."

41 Although in my opinion adequate reasons for the adverse findings which his Honour made about the plaintiff's credit were not given, the effect of my rejection of his Honour's conclusions in this regard is, in my opinion, to restore the plaintiff's case otherwise established by the evidence. I am satisfied that his Honour's rejection of the plaintiff's claim for design and implementation fees was appropriate. However, his Honour's other deductions from the sum claimed in the respects set forth above all proceed, in my opinion, upon his Honour's unsubstantiated rejection of Mr Edwards' credit. I have not discerned any other attack upon these rejected aspects of the plaintiff's claim.

(1) Grant leave to the plaintiff to appeal from the judgment of his Honour Magistrate Lulham dated 23 September 2005.

(2) Set aside Order 1 made by his Honour on 23 September 2005 and in lieu thereof enter a verdict for the plaintiff for $40,000.

43 I will hear the parties on the question of costs. **********

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

Local Courts Act 1982(NSW)

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (68 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (4)