Saravinovski v Duncombe [2017] NSWSC 1521 | Case summary

Supreme Court of NSW|2017-10-03

Background

The hearing in the Local Court took place on 29 July 2016 and 28 September 2016.

Agreed facts

The agreed facts were as follows.
Mr Duncombe was licensed to carry out private investigations including surveillance services.
On 25 February 2015, Mr Saravinovski engaged Mr Duncombe to provide surveillance services. The surveillance related to an ongoing Supreme Court case that was due to resume of 16 March 2015.
The agreement was oral and without any written contract. It was agreed between the parties that the plaintiff would charge a rate of $90 per hour. At the hearing, the parties also gave evidence that the charge out rate was $90 an hour, so this issue was no longer in dispute.
Mr Duncombe then conducted the surveillance service.
On 10 March 2015, Mr Saravinovski, through his solicitor Sundar Rajeev ("Mr Rajeev"), requested that Mr Duncombe cease all surveillance activities until further advice was received.
On the evening of 17 March 2015, Mr Saravinovski provided a written report, run sheets and a tax invoice payable within 30 days.
Mr Saravinovski has not paid any part of Mr Duncombe's tax invoice which totals $15,489.65.

Matters in dispute

The matters in dispute were identified as follows: 1. Whether Mr Saravinovski was contracting with Mr Duncombe on his own account or was acting as a "Tutor" only. The Magistrate made a finding that the contract was between Mr Duncombe and Mr Saravinovski. There is no challenge to that finding in this appeal. 2. The terms of the contract as to: 1. The nature of the material that was to be supplied; 2. The total cost of the work; 3. The provision of updates and reviews to the Mr Saravinovski and/or his solicitor, and the date upon which such updates and reviews were to be provided; 4. Upon who the Mr Duncombe was to conduct surveillance; and 5. When the surveillance was to be conducted. 1. Whether the terms of the contract were fulfilled in part or at all; 2. Whether the information provided to the Mr Saravinovski was of such quality as to not warrant payment; and 3. Whether the Mr Saravinovski owes the Mr Duncombe any money.

The Magistrate's reasons dated 24 November 2016

The Magistrate identified that the main issue to be decided was whether or not the surveillance undertaken by Mr Duncombe complied with the terms of the oral agreement.
On 24 November 2016, the Magistrate handed down his written reasons for the decision. I will outline these reasons later when I address the grounds of appeal. His Honour entered judgment in favour of Mr Duncombe in the sum of $15,489.65 together with interest and costs.
I interpose here to draw attention to several well known authorities in relation to contracts.
In John Holland Pty Limited v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451, Hammerschlag J summarised the principles relevant to the formation of an oral agreement at [93] and [94]:: [93] A binding agreement is made when a reasonable person would believe that, based on their words and behaviour, the parties intended to contract. This is an objective test, which in most cases can be administered by determining whether there has been an offer by one party to be bound on certain terms accompanied by an unqualified acceptance of that offer communicated by the other party to the offeror. See generally: Paterson, Robertson, and Duke, Principles of Contract Law, (4th ed 2011, Thomson Reuters) at [1.15] and [12.10]; J W Carter, Contract Law in Australia, (6th ed 2013, LexisNexis Butterworths) at [3.06]. [94] Where a party seeks to rely upon spoken words as a foundation for a cause of action, including a cause of action based on a contract, the conversation must be proved to the reasonable satisfaction of the court which means that the court must feel an actual persuasion of its occurrence or its existence. Moreover, in the case of contract, the court must be persuaded that any consensus reached was capable of forming a binding contract and was intended by the parties to be legally binding. In the absence of some reliable contemporaneous record or other satisfactory corroboration, a party may face serious difficulties of proof. Such reasonable satisfaction is not a state of mind that is obtained or established independently of the nature and consequences of the fact or facts to be proved. The seriousness of an allegation made, inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question of whether the issue has been proved to the reasonable satisfaction of the court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony, or indirect inferences: see Briginshaw v Briginshaw (1938) 60 CLR 336 at 362; Helton v Allen (1940) 63 CLR 691 at 712; Rejfek v McElroy (1965) 112 CLR 517 at 521; Watson v Foxman (1995) 49 NSWLR 315 at 319.
The commercial context and any previous dealing between the parties are also relevant in determining whether a binding agreement has come into existence between the parties. It is also appropriate to consider the object of the transaction between the parties. (Codelfa Construction Pty Limited v State Rail Authority (NSW) (1982) 149 CLR 337 at 350 (Mason J)) ("Codelfa Construction").
So far as implied terms are concerned, in AAP Industries Pty Ltd v Rehau Pte Ltd [2017] NSWSC 390 ("AAP Industries"), Davies J stated at [64]: 64. In Byrne v Australian Airlines Ltd (1995) 185 CLR 410 McHugh and Gummow JJ (at 442): Secondly, where the contract is not in writing and is oral or partly oral or it appears that the parties themselves did not reduce their agreement to a complete written form, caution is required against an automatic or rigid application of the cumulative criteria identified in BP. We should proceed on the footing that the present case is to be approached in this way. In such situations, the first task is to consider the evidence and find the relevant express terms. Some terms may be inferred from the evidence of a course of dealing between the parties. It may be apparent that the parties have not spelled out all the terms of their contract, but have left some or most of them to be inferred or implied. Some terms may be implied by established custom or usage, as described above. Other terms may satisfy the criterion of being so obvious that they go without saying, in the sense that if the subject had been raised the parties to the contract would have replied "of course". If the contract has not been reduced to complete written form, the question is whether the implication of the particular term is necessary for the reasonable or effective operation of the contract in the circumstances of the case; only where this can be seen to be true will the term be implied.
When determining the terms of the oral contract the Magistrate adopted the approach that in addition to assessing witnesses recall as to what was said during the meeting on 25 February 2015, he examined the post contractual actions and communications of Mr Duncombe, Mr Saravinovski and Mr Rajeev that bear upon the actual terms of the agreement. (Judgment, [17]).

Credibility findings

At the hearing in the Local Court, Mr Saravinovski, Mr Duncombe and Mr Rajeev relied upon affidavit evidence and were cross examined.
The Magistrate made findings on the credibility of both Mr Duncombe and Mr Saravinovski and, to a lesser extent, Mr Rajeev. His Honour recorded the impressions he gained of Mr Duncombe and Mr Saravinovski when he observed them being cross examined during the proceedings. His Honour stated that they were vastly different. While Mr Duncombe had a sometimes smug demeanour, his evidence was consistent, honest and credible. On the other hand, his Honour recorded that Mr Saravinovski had an air of belligerence and was evasive in his answers. He displayed an attitude that suggested he should not be liable to pay for any of the surveillance work carried out by Mr Duncombe. This appeared to be because, despite some surveillance being conducted at night, the surveillance failed to produce anything useful against the targets, surveillance was conducted of the target's parents and he did not receive the written report before the resumption of the Supreme Court proceedings. It was the Magistrate's view that this stance was not reasonable. (Judgment, [15])-[16]).
In relation to Mr Rajeev, the solicitor who was acting for Mr Saravinovski, the Magistrate commented that his evidence was very short and his ability to recall the terms of the agreement was brought into question by Mr Duncombe. (Judgment, [16]). This was firstly due to the lapse of time between the meeting on 25 February 2015 and his affidavit, which was sworn on 29 June 2016; and secondly, the lack of any reference within the contemporaneous file note of the crucial, disputed details of the agreement. While the Magistrate did not suggest Mr Rajeev was not being honest, he was of the view that Mr Rajeev's affidavit appeared to be more of a reconstruction than an actual recollection of events.

The meeting on 25 February 2015

It was common ground that on 25 February 2015, there was a meeting at the offices of Vaikon Law at Liverpool. Present at the meeting was, Mr Rajeev, Mr Duncombe and Mr Saravinovski, who arrived an hour later. It was at this meeting that the terms of the agreement were discussed.
Mr Saravinovski relied upon two affidavits that referred to the meeting, both dated 29 June 2016. The first affidavit provides his version of events as follows (Joint Appeal Book, Tab 11): "4 After being introduced to the plaintiff I explained to the plaintiff:- "My father is being sued by my brother and his wife in the Supreme Court. They are trying to force him to hand over his properties. The court appointed me tutor for my father and I am running his case for him". Mr Duncombe said "Yes Sundar told me you are running the case for your father.'" 5 I then said:- "The reason we need you to help us is that the court is going to hear evidence from my nephew and niece. They are going to be in the witness box starting Monday, 16th March. I need you to carry out surveillance on them both to see if we can use any material to attack their credibility". The plaintiff said "I have done this sort of thing many times and understand". The plaintiff then asked: "How soon does this have to be done?" 6 I replied: "Well they're due to start giving evidence by Monday 16th March. We have a senior counsel and junior Barrister who will need to have anything useful on these witnesses' characters' conduct in enough time to assess and review it to see if it can be used. To do this I think they will need to have your surveillance and report by 6th March at the latest". 7 The plaintiff said: "I am sure I can meet that time frame". I said: "That deadline will be very important". The plaintiff responded "I am aware of what is required". 8 I then said: "The names of the two children are Bobby and Belinda Saravinovski. They are living with their parents George and Maria who are the ones taking my father to court. I can provide you all the extra background information you need to start. What sort of information do you want from me?" … 12 I said to the plaintiff:- "You should also be aware that Bobby may have been involved in some suspect motor vehicle accidents and claims. I don't know if you can find out anything about this but it might be worth keeping that in mind". I also said:- "You are more likely to find out something useful if you observe their behaviour after work when they go out at night. …" 13 The plaintiff said: "Alright. We will need to get started as soon as possible. I can start this coming Saturday 28th (of February 2015). I will provide daily updates and we can review how it is going next Tuesday (3rd March 2015)". 14 I then asked: "What are you charging for these services?" The plaintiff replied:- "The charge is $90.00 per hour. I will have two agents on the job. I estimate that the overall cost will not exceed $10,000.00 for surveillance, videos, pictures and a report. We will be about halfway through the surveillance by next Tuesday (3rd March 2015) so that should be around $5,000.00 at that point. We can then discuss how the job is progressing and what further direction you might want to take". 15 I said: "I agree with that figure. But the timing is very important - we need the surveillance by the 6th and all the relevant information". I then asked "Will you personally be carrying out the surveillance as whoever does will probably need to be available for court?" The plaintiff replied "don't worry Louie this is not my first rodeo I know exactly what's required Sundar has used me before". I asked the plaintiff what he needed to start and he just said "Who lives at 14 Lennox Street and preferably photos of all them. Can you also tell me what cars are kept at that address". I also discussed an issue with an affidavit in the court proceedings which was witnessed by a JP. I discussed the possibility of the Plaintiff interviewing the JP with a view to checking the authenticity of the signatures with the document. 16 Before we concluded the meeting we exchanged email details and all contact information. The plaintiff also mentioned "I will send through a written fee agreement to Sundar". … 18 The plaintiff emailed me on the 27th February 2015 requesting the photos be provided. I provided photographs of the subjects Bobby and Belinda Saravinovski in a group photo with their parents to the plaintiff prior to the 28th February 2015 when surveillance was agreed to commence…"
Mr Saravinovski also stated that he made a brief note of the meeting on 25 February 2016. It reads (Joint Appeal Book, Tab 17, Ex 15): "25/2/15 Met Rodney Duncan P.I. Surveillance BOBBY & Belinda Night Time $10,000 MAX Surveillance - Report 6/3/15 Daily updates Review halfway through ??? Tuesday Discussed J.P. and Affidavit Rodney Planning 28/2/15 start P???? Rodney Sending letter to Sundar."
In cross examination, Mr Saravinovski was asked the following question about the contemporaneous note (T55.7-11): "Q. Can I suggest to you that they are notes of what you would like - when you did these notes, what you would like to happen rather than what the discussion was with Mr Duncombe? A. No, your suggestion's wrong."
Mr Rajeev relied on two affidavits, one dated 30 June 2016 (Joint Appeal Book, Tab 14) and the other dated 27 September 2016 (Joint Appeal Book, Tab 15). His version of events set out in his earlier affidavit are as follows: "5 I recall Louie saying "We need surveillance reports on Bobby Saravinovski and Belinda Saravinovski who are my nephew and niece respectively. I think it is important that the surveillance be carried out at night after hours." 6 I recall that the plaintiff said "The way we work is that we work on hourly billing. It is better to start the work and initially for a couple of days and if nothing comes out of it, we ask client whether to proceed further or not. That way we know there are no surprises in the end. "We take it in stages." 7 Louie said "I want to keep the cost under $10,000.00. I would like to do this in stages and you can give me reports as you go. I can then make an informed decision if we need to go further or not." 8 The parties agreed that the Plaintiff would start the job on 28 'February. The Plaintiff indicated that he would contact Louie "next Tuesday to see if it is worth going further." I also recall the Plaintiff saying "I will send daily updates and the report with surveillance material." 9 I clearly remember Louie saying to the Plaintiff "We need to have report by 6 March (2015). So it is in time for the court proceedings." As I was acting for Louie and his father in those Supreme Court proceedings I can confirm that the Court had listed the 16 and 17 March 2015 as the days for Bobby and Belinda to give their evidence in those proceedings."
Mr Rajeev also produced his file note during the hearing in the Local Court (Ex A in this Court; Joint Appeal Book, Tab 17, Ex 15). The handwriting is hard to decipher but doing the best I can, it reads: "Conference with Louie Saravinovski tutor son of Chris Saravinovski and Robert Duncan private investigator. The meeting was scheduled at 4, and Rod came early. And it was some time before Louie came to the office. I discussed the matter with Rod, and told him Louie son of Chris has been instructing me. The case in the Supreme Court is about Chris and his son George and Maria the daughter in law. I think Louie is the tutor. I said the specifics of surveillance will be given by him when he comes. Louie came in finally and they exchanged pleasantries. Louie then did his best to (indecipherable) Rod Duncombe directly and with surveillance on Bobby and Belinda Saravinovski, the son and daughter of his brother George Saravinovski. Have discussed the specifics of the surveillance required including the fees and the procedure going forward. The whole conference lasted for about half an hour."
Mr Duncombe relied on his affidavit dated 13 May 2016. (Joint Appeal Book, Tab 3). His version of events were as follows: "9 The Defendant, Mr Rajeev and I discussed the Defendant's requirements and the scope of work which the Defendant was seeking. The Defendant indicated that the litigated matter was between his family members who were against his Father. I recall the Defendant mentioned the family members were trying to get their hands on certain assists prior to his Father passing away. 10 The Defendant advised he was seeking some information on a "Bobby and Belinda Saravinovski" that might be useful to use against them when in court The Defendant further advised these persons were due to give evidence in the matter in the coming weeks although I do not recall that we discussed the specific date at that time. 11 The Defendant stated that he was looking for any information that would discredit either person or both. The Defendant provided background information around the male subject "Bobby Saravinovski" and that he had previously been involved in car rebirthing and staged accidents. The Defendant described a number of vehicles which this person may or may not be driving. The Defendant was not aware if the male was currently working. 12 It was discussed with the Defendant that the work requested would require two operatives. The Defendant was then verbally informed of the applicable rates for the service to be provided. These costs were quoted as $90 per hour each agent and $0.80 per kilometre each agent charged from my offices in Campbelltown plus any disbursements. 13 The Defendant was quoted an approximate figure of $20,000 to carry out the work in the manner I had been instructed. 14 The Defendant was advised the quoted price of approximately $20,000 would cover the surveillance, video footage if required and a detailed report. 15 At that time the Defendant called someone on his mobile phone and whilst the Defendant spoke in his native language, I did hear the Defendant repeat the quoted amount. 16 At the completion of the phone call the Defendant agreed to engage my services. There was no written contract and the only terms agreed to were those which were discussed. 17 When discussing payment, the Defendant stated "I am a man of my word" in reference to any account being settled. 18 At the conclusion of this meeting, the Defendant undertook to provide images of the persons whom the surveillance related to…"
As to post contractual events, Mr Duncombe deposed (Joint Appeal Book, Tab 3): "20 On around 26 or 27 February 2015, the Defendant provided a photograph of a family which identified the persons the Defendant wanted surveillance conducted on. The Defendant also provided the document we had previously discussed in a separate email. 21 Surveillance services were commenced then commenced as agreed on Saturday 28 February 2015. 22 Throughout the surveillance periods, the Defendant and I communicated by either phone or email where updates were provided. I also communicated with the Defendant's legal representative Mr Rajeev. 23 I recall one particular conversation with the Defendant where an agent had observed the older persons residing at the supplied address and it appeared the female had been engaged in shoplifting while in a retail store. This appeared to interest the Defendant for reasons I am not aware of. 24 After conducting surveillance for the period 27 February 2015 to 7 March 2015 inclusive I placed the enquiries on hold due to not being able to establish any relevant evidence based on the brief provided by the Defendant. At this point my agents had only obtained information that demonstrated the two subjects were living a normal day to day life that would be expected of two persons of their age. 25 The last date of surveillance conducted was Saturday 7 March 2015. 26 On Monday 9 March 2015, at 8.08 a.m. I received an email from the Defendant which simply stated: "Hi Rod Any News? Regards Louie" 27 I responded to the Defendant on Monday 9 March 2015 at 9.12 a.m. with a brief update and advised the Defendant I would contact him later that day. I am unable to recall if that call was made or if I received a call from Mr Rajeev where I provided the same update. 28 On 10 March 2015 at 6.53 p.m. I received an email from Mr Rajeev advising that surveillance cease. In fact the email stated to "case (sic) all surveillance activities until further advice from me or client I rang you and left voice messages to advise you" 29 All surveillance activities were placed on hold at that point as instructed even though I had ceased all action effective the close of activities on 7 March 2015. 30 Having not heard anything subsequent to the email from either Mr Rajeev or the Defendant, I commissioned the surveillance report and tax invoice so as to facilitate payment from the Defendant. I did not go to the expense of providing numerous DVD's as there was no relevant footage obtained that could assist the Defendant. 31 The Defendant was sent the report and tax invoice on 17 March 2015…"
Mr Duncombe in his affidavit dated 13 May 2016 denied that it was ever a term of the agreement that Mr Saravinovski be provided with the results of any surveillance by 6 March 2015 and stated that this date was never discussed. He said that Mr Saravinovski was provided with verbal updates, as was his legal representative who contacted him during this period. He was also aware that any useful information was required for the Supreme Court proceedings for 16 to 19 March 2015. Mr Duncombe denied that there was any agreement or term placed on the agreement that an activity report would be commissioned and supplied within 24 hours, because he had never provided an activity report as part of his surveillance services. Had this been requested by Mr Saravinovski, Mr Duncombe would have advised him that he did not provide this service. Finally, Mr Duncombe denied that there was any agreement or term placed on the agreement that he would conduct predominately night surveillance. (Joint Appeal Book, Tab 3, [34], [36] and [37]).
Mr Duncombe gave evidence that normally he received instructions in writing but he was not in the habit of confirming instructions in writing when they were received during a meeting. (T17.21-34).

The Magistrate's reasons

The Magistrate referred to both the contemporaneous file notes of the meeting on 25 February 2015, one made by Mr Saravinovski and the other by Mr Rajeev.
So far as Mr Saravinovski's file note was concerned, the Magistrate commented that Mr Saravinovski produced a document he claimed was a notation of the terms of the discussion which he made after the meeting. (Joint Appeal Book, Tab 3, Ex 9, Annexure "A"). (My emphasis). Although the Magistrate noted that the contents of his file note were consistent with his affidavit. (Judgment, [10]).
In relation to Mr Rajeev's file note taken during the meeting, this was produced by Mr Rajeev during cross examination. (Ex A in this Court; Joint Appeal Book, Tab 17, Ex 15). The Magistrate made findings that within that short file note, while there was mention of the targets of the surveillance, there was no mention of any crucial deadline, any requirement for daily or update reports, any request for night time surveillance, or fees and the capping of the fees. (Judgment, [13]).
Having read the file note (reproduced earlier in this judgment) the Magistrate accurately recorded its contents.
The Magistrate referred to and reproduced passages from County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193, Spigelman CJ, at [21] and [24]; Lym International Pty Ltd v Marcolongo [2011] NSWCA 303 Campbell JA at [143] ("Lym International"); and Re Centura Global Holdings Pty Ltd [2016] NSWCA 62, Black J at [64] to [67]. As they are similar authorities referring to post contractual conduct, I shall only refer to Lym International where Campbell JA explained at [143]: "143 ...the task in ascertaining what are the terms of a contract that are not wholly in writing ...is finding as a fact what the parties have agreed. A range of post-contractual conduct could be relevant to ascertaining what the parties have agreed. For example, their conduct in carrying out the contract could itself be objective evidence of what they had agreed, an admission of one of the parties could assist in ascertaining what they have agreed, and business records created to record or report on the contract rather than carry it out could also assist in that task."
The Magistrate analysed Mr Duncombe, Mr Saravinovski and Mr Rajeev's evidence and made findings as to their credit (reproduced earlier in this judgment). His Honour then examined post contractual communications. His Honour stated (Judgment, [22]-[32]): "22 Apart from the file note of Mr Rajeev and the note of the defendant, there was evidence of a number of communications between the plaintiff and the defendant and Mr Rajeev. Some were via phone calls and others were via email. It is noted that at the meeting the defendant had exchanged email addresses with the plaintiff. 23 The plaintiff sent the defendant an email (Ex 2) requesting the defendant send him photos of "all four persons". This was consistent with his understanding that while Bobby and Belinda were the targets of the surveillance their parents were related and involved in the Supreme Court proceedings. The plaintiff consequently received a photo of those 4 persons (Ex 7 - pge 3). While the plaintiff acknowledged that Bobby and Belinda were the focus of the surveillance, he defended the surveillance of their parents at times when the main targets were unable to be surveilled. The defendant says he supplied the photo for the purpose of identifying Bobby and Belinda, and the presence of their parents in the photo was purely incidental. I don't accept that explanation and it is not consistent with the response to the request by the plaintiff. 24 Further to that, while there were some telephone calls between the parties, the defendant emailed the plaintiff at 8.08am on 09/03/15 (Ex 3) and inquires "Hi Rod Any news?" 25 Within that email there was no expression of any urgency or any expression of anger or displeasure that the plaintiff was well past the claimed deadline of 06/03/15. This is completely inconsistent with the claims of the defendant, and consistent with the claims of the plaintiff that the only urgency was that the Supreme Court proceedings were recommencing on 16/03/15. 26 The plaintiff's reply at 9.12am to the defendant also carries the same flavour as there is no apology or urgency evidenced therein when he tells the defendant the surveillance has failed to uncover any discrediting information about the targets. 27 The evidence also revealed the plaintiff had suspended or ceased surveillance at 10.45pm Saturday 07/03/15 (Exs 5 & 7). 28 A further email was sent by Mr Rajeev to the plaintiff at 6.53pm on 10/03/15 (Ex 14) wherein he states, "Dear Rod, Thank you for your e-mails regarding the status of the investigations. As it turned out that nothing came out of the surveillance process, I believe that there is no point in continuing the surveillance. Accordingly, please case (sic) all surveillance until further advice from me or client. I rang you and left voice messages to advise you. Thanks and Regards" 28 Again, there is an absence of any air of disappointment or displeasure that the surveillance was now well past the 06/03/15 deadline. One of the reasons raised by the defendant for the apparent need for 06/03/15 deadline was to allow time for his senior and junior counsel to consider the information well prior to the resumption of the Supreme Court proceedings. I do not accept that counsel would have required nearly 2 weeks to consider any forthcoming information. Mr Rajeev supported that contention, but also conceded he had expressed the view that "nothing came out of the surveillance". 29 I am not persuaded by Mr Rajeev's explanation that he was merely being polite as he may wish to utilise the plaintiff's services in the future and did not want to develop any hostility in the relationship. 30 It is also notable that there is no other correspondence from the defendant with any reference to any update report of 03/03/15 nor the claimed $10,000 cap. 31 Whilst the final report of the plaintiff was not forwarded to the defendant until the evening of 17/03/15, after the recommencement of the Supreme Court there can be no doubt the contents were not going to assist in the Supreme court proceedings. As contended by the plaintiff, I accept his explanation that the preparation and service of the report was more to formalise the extent and nature of the surveillance in pursuit of, and support of, the tax invoice served upon the defendant (Ex 5). 32 Based upon my assessment of the evidence presented in this case, particularly the behaviours of the plaintiff, defendant, and Mr Rajeev after 25/02/15, and my findings as to the credibility of those witnesses (including my assessments of their demeanour) I am satisfied of the following: (1) The agreement was reached between the plaintiff and the defendant for the plaintiff to undertake surveillance activities, primarily targeting Bobby and Belinda Saravinovski, but allowing collateral surveillance of their parents. (2) The agreed rate was $90 per hour per agent with 2 agents being required. An allowance of $0.80 per km was for travel. (3) There was no strict deadline of 06/03/15. (4) There was no strict requirement that surveillance was to be conducted primarily during the evening. (5) There was no strict requirement for daily updates or an update report by 03/03/15. (6) There was no overall fee cap of $10,000. (7) The plaintiff met his obligations under the contract. (8) The defendant is liable for the monies claimed in the Tax Invoice (Ex 5)."

The grounds of appeal

I turn now to consider the grounds of appeal that were raised by Mr Saravinovski. My understanding is that Mr Saravinovski's main complaint is that the Magistrate did not properly analyse and consider the two contemporaneous file notes. While Mr Duncombe's submissions addressed each ground of appeal, Mr Saravinovski's submissions did not. They were framed so as to set out the applicable law then his summation of the evidence but they do not directly address the grounds of appeal. Therefore, perhaps the best way to approach the grounds of appeal is to first refer to Mr Saravinovski's summary of the evidence and criticisms of the Magistrate's findings, and then refer to the grounds of appeal.

Mr Saravinovski's submissions on evidence

Mr Saravinovski submitted that the context of the transaction between the parties was clear; he wished to obtain video and/or other surveillance in relation to witnesses in the Supreme Court proceedings in which he was embroiled. Mr Saravinovski's version of events was that the costs were not to exceed $10,000, while Mr Duncombe's version was that there was a price limit of $20,000. Neither party committed the terms of the agreement to writing, however, Mr Saravinovski made contemporaneous hand written notes of the terms of the agreement that were not challenge in cross examination, thereby giving rise to a Browne v Dunn (1893) 6 R 67 inference ("Browne v Dunn").
Three critical dates were argued to fall from the evidence. The 25 February 2015, being the date Mr Duncombe was engaged to carry out surveillance, 6 March 2015, being the date that any report was to be forwarded to either Mr Saravinovski or Mr Rajeev, and 16 March 2015, being the day the Supreme Court proceedings were listed for a continued hearing.
Counsel for Mr Saravinovski submitted that there was no issue that some surveillance was conducted. Indeed, the evidence was that on 10 March 2015, Mr Rajeev instructed Mr Duncombe to cease all further surveillance. Mr Saravinovski raised the issue that there was no video evidence presented to him, only a written report by a third party.
Mr Saravinovski also submitted that the direction by Mr Rajeev to cease all further surveillance was consistent with a term of the agreement that the report was required to be submitted by 6 March 2015, five business days before the resumed hearing. It was argued that such a term had an element of logic to it because any surveillance report would need to be considered by counsel appearing in the Supreme Court proceedings prior to the cross examination of the witnesses on 16 March 2015. Counsel for Mr Saravinovski further submitted that even if the date deadline was not a specific term of the agreement, it was an implied term to the agreement that any surveillance report would be provided before the Supreme Court hearing resumed. This was on the basis that if the agreement lacked such a term, it would be rendered a commercial absurdity because the report would serve no purpose.
Mr Saravinovski argued that Mr Duncombe's evidence in cross examination confirmed that he had not provided Mr Saravinovski or Mr Rajeev with any report prior to 16 March 2015. (T26.24-26). Additionally, it was not disputed that Mr Duncombe only forwarded a written surveillance report to Mr Saravinovski on the evening of 17 March 2015, being the day after the recommencement of the Supreme Court proceedings. (T27.17-26). Accordingly, the report could be of no assistance to Mr Saravinovski in those Supreme Court proceedings.
Counsel for Mr Saravinovski further submitted that the Magistrate had failed to consider or otherwise deal with the evidence he presented in support of his version of the agreement's terms, including making adequate reference to the context of the commercial agreement. This evidence included the following: (a) Mr Saravinovski's contemporaneous notes of the meeting on 25 February 2015, (noting that he was not challenged on these notes during cross examination). (T9.7-13); (b) Mr Saravinovski's "any news" email requesting an update from Mr Duncombe. (T25.32-40); (c) Mr Rajeev's notes that the "targets" of the surveillance were to be Bobby and Belinda Saravinovski. (T33.22-25); (d) Mr Duncombe unilaterally ceasing surveillance on 7 March 2015. (T25.21-26); (e) that Mr Duncombe had knowledge of the impending Supreme Court proceedings; (f) the correspondence passing between the parties between 28 February 2015 and 9 March 2015; (g) there was no evidence of Mr Duncombe communicating to either Mr Saravinovski or Mr Rajeev that he considered the surveillance yielded little or no probative information; and (h) that it was not disclosed to Mr Saravinovski that he would be subcontracting part of the surveillance operations to third parties, who may or may not have been available to give evidence in the Supreme Court proceedings.
Counsel for Mr Saravinovski also submitted that Mr Duncombe did provide evidence from the three third party agents who carried out the surveillance work on his behalf. This was despite the work sheets and other related documents being the subject of a notice to produce. I interpose here. It was not necessary to call third persons to give evidence in what was, at best, a claim of $15,489.65 in the Local Court. Mr Saravinovski's only evidence of the work being performed was an invoice. There was no underlying evidence to support the claim of an entitlement to fees by Mr Duncombe in the Local Court. Mr Duncombe conceded that he was only in telephone communication with his operatives and therefore was not in a position to provide daily updates to Mr Saravinovski. (T29.10-34).
According to Mr Saravinovski, the Magistrate's failure to "engage with, or grapple or wrestle with" this evidence leads to the conclusion that he erroneously overlooked or discarded it: see Mitchell v Cullingral Pty Ltd [2012] NSWCA 389 at [116] (Campbell JA). If that is the case, then the Magistrate has fallen into error: see Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 151 (Kirby P). It was contended that had the Magistrate properly grappled or wrestled with this evidence, the inevitable result would have been that his characterisation of the agreement would have been accepted in preference to that of Mr Duncombe.

Ground 1 - context of the contract between the parties

Counsel for Mr Saravinovski submitted that the Magistrate erred in law by failing to take into consideration the context of the contract between the parties. He referred to Electricity Generation at [35] where the High Court per French CJ, Hayne, Crennan and Kiefel JJ stated at [35]: "35 … this Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating". As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption "that the parties … intended to produce a commercial result". A commercial contract is to be construed so as to avoid it "making commercial nonsense or working commercial inconvenience". (citations omitted).
Counsel for Mr Duncombe submitted that the Magistrate sets out in some detail the behaviour of the parties and Mr Rajeev in his judgment at [22] to [31]. This behaviour supported Mr Duncombe's version of the terms of the oral contract and was inconsistent with the version proffered by Mr Saravinovski. The behaviour in Mr Duncombe's submissions as follows: (a) Mr Duncombe asked for and Mr Saravinovski willingly sent photographs of "all four persons". This was contrary to Mr Saravinovski's argument that Mr Duncombe was asked for surveillance on only two people; (b) There was no urgency in Mr Saravinovski's email sent on 9 March 2015, contrary to his claim that it was a term of the contract that surveillance was to cease on 6 March 2015; and (c) On 10 March 2015, Mr Rajeev instructed Mr Duncombe via email to discontinue his surveillance, contrary to Mr Saravinovski's submission that the contract had a term which provided that surveillance was always to cease on 6 March 2015.
Mr Duncombe also submitted that the Magistrate took into account the context of the contract when he noted Mr Rajeev's prior dealings with Mr Duncombe. (Judgment, [2]-[4] and [12]).
Both parties gave the same evidence that the purpose of the surveillance was to see if the material could form as a basis to attack the credibility of family members who were giving evidence in the Supreme Court proceedings that commenced on 16 March 2016. It was also agreed that the charge out rate was to be $90 per hour. There was a dispute, however, as to whether it was two or four family members who were the subject of Mr Duncombe's surveillance. The Magistrate resolved this dispute by finding that Mr Duncombe sent an email asking for Mr Saravinovski to send him a photograph of all four persons. He received back a photograph of "all four persons". There was also a dispute about the reporting conditions.
The Magistrate referred to the objective evidence, the two files notes, emails and telephone conversations. He preferred Mr Duncombe's evidence as he made favourable findings as to his credibility. Mr Duncombe's evidence was "consistent, honest and credible". Not so for Mr Saravinovski, who the Magistrate considered as being "evasive in his answers". (Judgment, [15]).
So far as the reporting conditions are concerned, the Magistrate accepted that there was no deadline of 6 March 2015. This was on the basis of evidence regarding several communications that occurred between the parties. While several phone calls occurred, there was an email sent by Mr Saravinovski at 8:08 am on 9 March 2015 to Mr Duncombe which read "Hi Rod, Any news." His Honour commented that this email displayed no expression of urgency or anger that Mr Duncombe was well past the alleged deadline. Nor did Mr Duncombe's reply, which was sent on the same day at 9:12 am, carry an apology or sense of urgency. The Magistrate also referred to the email from Mr Rajeev to Mr Duncombe on 10 March 2015, thanking him for his emails regarding the status of the investigations and advising him that there was no point continuing the surveillance. This email was considered by his Honour to lack the "air of disappointment or displeasure" at the surveillance being well past the alleged deadline. Finally, The Magistrate also made a finding that the counsel in the Supreme Court proceedings would not require two weeks to consider the surveillance evidence. (Judgment, [28]).
From my reading of the Magistrate's reasons, he took into consideration the parties and Mr Rajeev's evidence, as well as the objective language used by the parties, the circumstances known to them and the commercial purposes or objects to be secured by the contract. His Honour's construction of the contract was construed to give it a business like interpretation. This was in accordance the discussion of Mason J in Codelfa Construction, set out earlier in this judgment. Therefore, it is my view that his Honour correctly considered the context of the contract. This ground of appeal fails.

Ground 2 - implied term of the contract

Mr Saravinovski submitted that the Magistrate erred by failing to take into consideration an implied term of the contract as required by BP Refinery at 377.
The applicable principles for the implication of terms in oral agreements was dealt with by Deane J in Hawkins v Clayton (1988) 164 CLR 539 where his Honour stated at 571: "18. Care must be taken to avoid an automatic or rigid application of the ordinary cumulative criteria for determining whether a term should be implied in a written contract to a case where the contract is oral or partly oral or where it is apparent that the parties have never attempted to reduce their agreement to complete written form (cf. Hospital Products Ltd. v. United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41, at p 121). The cases in which those criteria were laid down or accepted as the cumulative ingredients of an overall test were concerned with the question whether a term should be implied in a formal contract which was complete upon its face (see, in particular, BP Refinery (Westernport) Pty Ltd v Hastings Shire Council [1977] HCA 40; (1977) 52 ALJR 20, at p 26; [1977] HCA 40; 16 ALR 363, at p 376; Secured Income Real Estate (Australia) Ltd v St. Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596; Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337). In such cases, the insertion of an additional term effectively involves an alteration to what the parties have formally accepted as the complete written record of the compact between them. As the judgment of Mason J. in Codelfa (at pp 345-347; Stephen and Wilson JJ. concurring with his Honour's comments on this aspect of the case) clearly indicates, the cumulative criteria formulated or accepted in such cases cannot be automatically applied to cases such as the present where the parties have not attempted to spell out all the terms of their contract but have left most or some of them to be inferred or implied. Where that is so, there is no question of effectively altering the terms in which the parties have seen fit to embody their agreement; the function of a court is, as Lord Wilberforce pointed out in Liverpool City Council v Irwin [1976] UKHL 1; (1977) AC 239, at p 254, "simply ... to establish what the contract is, the parties not having themselves fully stated the terms." In the performance of that function, considerations of what is "reasonable", "necessary to give business efficacy to the contract" and "so obvious that 'it goes without saying'" (BP Refinery (Westernport) Pty Ltd at p 26; The Moorcock (1889) 14 PD 64, at p 68; Shirlaw v Southern Foundries (1926) Ltd (1939) 2 KB 206, at p 227) may be of assistance in ascertaining the terms which should properly be implied in the contract between the parties. There will not, however, be the need or the justification for the law to refuse to imply any imputed term which does not clearly satisfy all such requirements. This is particularly so where, as here, the contract has passed from the executory stage and has been executed by one or both parties."
As I have previously noted, the Magistrate preferred Mr Duncombe's evidence and made reference to the Mr Saravinovski's file note that he made after the meeting which he "claimed" was a notation of the terms discussed. So far as the file note is concerned, it does not make reference to a deadline of 6 March 2015. But it does say: 'Surveillance - report 6/3/15' and 'Review halfway through ??? Tuesday'. For the reasons I set out earlier, the Magistrate was satisfied that the deadline of 6 March 2015 was not a term of the contract. As I understand Mr Saravinovski's submissions, he argued that if the 6 March 2015 was not a specific term of the contract, then it was an implied term of the agreement that any surveillance report would be provided before the Supreme Court hearing resumed on 16 March 2015. However, his Honour noted that Mr Duncombe was asked by Mr Rajeev to cease his surveillance on 10 March 2015, and accepted Mr Duncombe's evidence that he had reported to Mr Saravinovski that there was nothing of interest in his surveillance. On 17 March 2015, Mr Duncombe also sent invoices for payment.
In these circumstances, it would be inconsistent with the parties' post objective actions to imply the deadline as a term of the contract. Nor is it necessary to be implied to give effect to the contract. It is my view that the Magistrate was correct not to imply such a term. His approach was also in accordance with the well known principles of implied terms as stated by Davies J in APP Industries, which I set out earlier. This ground of appeal fails.

Ground 3- consideration of oral term of the contract

Mr Saravinovski submitted that the Magistrate erred in law by failing to take into consideration an oral term of the contract as required by Hospital Products.
According to Mr Saravinovski, the oral terms that the Magistrate needed to consider were firstly that any report was required to be submitted by a key date, being either 6 March 2015 or prior to recommencement of the Supreme Court proceedings; secondly, the identity of the persons who were to be the subject of surveillance; and thirdly, the alleged cap on the fees which Mr Duncombe would be entitled to charge.
This repeats what I said earlier but for completeness, the Magistrate set out the reasons for there being no key date for submission of the surveillance reports, except by the recommencement of the Supreme Court case in mid March 2015. However, because Mr Duncombe made reports and was told to cease work on 10 March 2015, there was nothing further to report between 10 March 2015 and 16 March 2015.
As to the identity of the persons who were to be the subject of surveillance, it is clear that the Magistrate did take this issue into consideration. His Honour referred to the email sent by Mr Duncombe to Mr Saravinovski asking for a photograph of the "all four persons", and Mr Saravinovski forwarded him a photograph showing four persons (Judgment, [23]).
Mr Saravinovski's evidence is that it was agreed that Mr Duncombe was given a cap of $10,000 on his work. However, the file note of Mr Rajeev of the meeting on 25 February 2015 makes no mention of any cap on fees. The Magistrate expressed scepticism when he stated that Mr Saravinovski produced a document which he claimed was a notation of the terms of the discussion which he made at the meeting. (Judgment, [13]). Further, Mr Duncombe's evidence was that when he told Mr Saravinovski that his fees would be approximately $20,000, Mr Saravinovski made a phone call on his mobile phone and while he spoke in his native language, Mr Duncombe heard him repeat the quoted amount of $20,000. Due to issues with Mr Saravinovski's credibility and the lack of logic in his version of events, the Magistrate preferred the evidence of Mr Duncombe and did not make findings favourable to Mr Saravinovski. His Honour was not obliged to do so.
Therefore, it is my view that the Magistrate has taken into account all oral terms of the contract. This ground of appeal fails.

Ground 4 - fact finding process

Mr Saravinovski submitted that the Magistrate erred in law during the course of his fact finding process by reaching an erroneous conclusion contrary to the overwhelming weight of his evidence. Mr Saravinovski referred to Mitchell v Cullingral Pty Ltd [2010] NSWCA 389, where Campbell JA (with whom Allsop P and McColl JA agreed) stated at [116]: "116 A trial judge has a duty to refer to material evidence and make findings about material issues in the case: Waterways Authority v Fitzgibbon [2005] HCA 57; (2005) 79 ALJR 1816 at [130] (Hayne J). The absence of such findings and the absence of reference to such evidence can properly be taken as showing that the trial judge has erroneously overlooked or discarded it: ibid; Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 at 443-444 (Meagher JA); Whalan v Kogarah Municipal Council [2007] NSWCA 5 at [40] (Mason P, Ipp JA and Tobias JA); Najdovski v Crnojlovic [2008] NSWCA 175; (2008) 72 NSWLR 728 at [21] (Basten JA, Allsop P agreeing); Sangha v Baxter [2007] NSWCA 264 at [22] (Ipp JA, Campbell JA agreeing); Nominal Defendant v Kostic [2007] NSWCA 14 at [59] (Ipp JA, Hodgson JA and Campbell JA agreeing). Another way in which this has been put is that the judge must engage with, or grapple or wrestle with, the cases presented by each party: Whalan at [40]; Kostic at [2]. This is not adequately done by setting out the evidence adduced by one side, setting out the evidence on the other side, and saying that the judge prefers one body of evidence to another: Goodrich Aerospace Pty Ltd v Arsic [2006] NSWCA 187; (2006) 66 NSWLR 186 at [28] (Ipp JA, Mason P and Tobias JA agreeing); Kostic at [58]."
Mr Duncombe submitted that it is not clear from Mr Saravinovski's submissions what the erroneous conclusion is, but presumably it was that the Magistrate did not accept Mr Saravinovski's evidence as to the alleged terms of the contract.
Perhaps Mr Saravinovski is suggesting that the Magistrate reached his conclusion contrary to the overwhelming weight of his evidence. As pointed out in the earlier ground of appeal, this submission ignores the evidence of Mr Duncombe and the post contractual objective evidence. The Magistrate referred to several examples where Mr Saravinovski's evidence did not support his version of the contract. These are: (a) The email from Mr Rajeev on 9 March 2015 which showed no urgency about the receipt of the surveillance report. This is at odds with Mr Saravinovski's evidence that the contract provided for a final report on 6 March 2015. (Judgment, [23] to [24]). (b) The file note of Mr Saravinovski, which the Magistrate was sceptical as to whether it was an accurate contemporaneous record, made no mention of a $10,000 cap in fees to be charged. Similarly, his Honour was also sceptical whether Mr Rajeev's file note of the conference on 25 February 2015 constituted a reconstruction as opposed to a recollection. (Judgment, [16]). (c) Mr Saravinovski's inconsistent evidence that the surveillance was to be carried out on only two people even though he supplied photographs to Mr Duncombe of four people not two. Mr Duncombe's evidence is that he was aware that two people, Bobby and Belinda Saravinovski, were the main target of the surveillance, but that the contract did not exclude the surveillance of Bobby Saravinovski's parents.
It is my view that the Magistrate engaged with, or grappled or wrestled with the cases presented by each party. Not only did he set out the evidence adduced by both parties, he considered the objective correspondence and telephone calls and critically analysed the actual issues in dispute. In doing so, his Honour clearly demonstrated his path of reasoning. This reasoning process was more than adequate and does not appear to reach an erroneous conclusion. This ground of appeal fails.

Ground 5 - drawing an inference (Browne v Dunn)

Mr Saravinovski submitted that the Magistrate erred by drawing an inference in favour of Mr Duncombe that could not be reasonably drawn when considering the evidence before him. However, Mr Saravinovski failed to specify what that inference was in his submission on this ground of appeal. It appears to be Mr Saravinovski's argument that because he made a contemporaneous file note that was not challenged in cross examination, a Browne v Dunn inference should have been made in his favour.
However, Mr Saravinovski was challenged in cross examination on the contemporaneous file note. He was asked the following question (T55.7-11): "Q. I suggest to you that they are notes of what you would like - when you did these notes, what you would like to happen rather than what the discussion was with Mr Duncombe? A. No, your suggestion's wrong."
The rule in Browne v Dunn is one of fairness. It was put to Mr Saravinovski that his file note was not accurate. He denied it. The rule in Browne v Dunn was complied with.
In these circumstances, it was open to the Magistrate to make the findings he did and he was not obliged to draw a certain unspecified inference. Nor did the Magistrate have to accept the accuracy of the file note. This ground of appeal fails.

Ground 6 - irrelevant considerations

Mr Saravinovski submitted that the Magistrate erred by taking into account irrelevant considerations. Mr Duncombe submitted that it is not clear what these irrelevant considerations are and it appears not to have been addressed by Mr Saravinovski's counsel in his submissions.
I agree that Mr Saravinovski has not set out the "irrelevant considerations". From my reading of his submissions, he only set out the positive findings he believed should have been made. This ground of appeal therefore fails.

Ground 7 - costs in the Local Court

Mr Saravinovski's final submission was that the Magistrate erred in ordering him to pay Mr Duncombe's costs of the proceedings in the Local Court.
Mr Duncombe submitted that this is a "puzzling ground" because assuming that the Magistrate erred in finding in favour of Mr Duncombe, it is self evident that a costs order should not have been made in favour of Mr Duncombe. Such an argument is a non sequitur.
In any event, 42.1 and 42.2 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") read: "42.1 General rule that costs follow the event Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs. 42.2 General rule as to assessment of costs Unless the court orders otherwise or these rules otherwise provide, costs payable to a person under an order of the court or these rules are to be assessed on the ordinary basis."
The Magistrate properly applied 42.1 and 42.2 of the UPCR. Accordingly, this ground of appeal fails.

Conclusion

As none of the grounds in Mr Saravinovski's submission are made out, the result is that the appeal fails. The decision of his Honour Magistrate Degnan dated 3 February 2017 is affirmed. The further amended summons 19 May 2017 is dismissed.
Costs are discretionary. Costs usually follow the event. The defendant is to pay the plaintiff's costs on an ordinary basis of this appeal.

The Court orders that: 1. The appeal is dismissed. 2. The decision of his Honour Magistrate Degnan dated 3 February 2017 is affirmed. (3) The further amended summons filed 19 May 2017 is dismissed. (4) The defendant is to pay the plaintiff's costs on an ordinary basis of this appeal.

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. Decision last updated: 10 November 2017

Grounds of appeal

Mr Saravinovski appeals from the whole of the decision of the Magistrate dated 24 November 2016 on the following grounds: 1. The Court erred in law by failing to take into consideration the context of the contract between the parties as required by Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35] ("Electricity Generation"). 2. The Court erred in law by failing to take into consideration an implied term of the contract as required by BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 16 ALR 363 at 377 ("BP Refinery"). 3. The Court erred in law by failing to take into consideration an oral term of the contract as required by Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 121 (Deane J) ("Hospital Products"). 4. The Court erred in law during the course of its fact finding process by reaching an erroneous conclusion contrary to the overwhelming weight of Mr Saravinovski's evidence. 5. The Court erred in law by drawing an inference in favour of Mr Duncombe that could not be reasonably drawn when considering the evidence before it. 6. The Court erred by taking into account irrelevant considerations. 7. The Court erred in ordering Mr Saravinovski to pay Mr Duncombe's costs of the proceedings below.

Saravinovski v Duncombe

At a glance

Court

Decision date

Source

Judgment (19 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (36)