Vision X-Ray Group Pty Limited v Alexander Associates Pty Ltd

Background

1. Alexander Associates is a company that provides recruitment services in the medical industry. Vision X-Ray operates a business providing medical imaging services.
2. By amended statement of claim ("ASC"), Alexander Associates claimed for the amount owing under two invoices for candidates it placed with Vision X-Ray.
3. The hearing took place on 17 February 2020 in the Downing Centre Local Court before the Magistrate.
4. On 30 April 2020, the Magistrate entered judgment, and delivered his written reasons on 5 May 2020. The Magistrate ordered that Vision X-Ray pay Alexander Associates the sum of $37,077.29.
5. On 20 May 2020, Vision X-Ray commenced this appeal.

Appeals generally

1. Section 39 of the Local Court Act provides that a party who is dissatisfied with a judgment or order of the Local Court may appeal to the Supreme Court, but only on a question of law.
2. Section 40(1) of the Local Court Act provides that a party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court, but only with leave.
3. Section 41 of the Local Court Act provides that this Court may determine an appeal either by (a) varying the terms of the judgment or order, (b) setting aside the judgment or order, (c) setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court's directions, or (d) dismissing the appeal.
4. The main issues can be summarised as: 1. whether there was an agreement between the parties which governed the provision of Alexander Associates' recruitment services to Vision X-Ray and set off (appeal grounds 3, 4, 7 and 8); 2. whether an agreement between the parties for the reinstatement of a replacement guarantee was formed and whether Vision X-Ray was denied procedural fairness (appeal grounds 1 and 2); and 3. whether Mr Yang left his employ with Vision X-Ray within 6 months of commencement, entitling it to a free replacement guarantee (appeal grounds 5 and 6).

Grounds of Appeal

1. Vision X-Ray appeals the decision of the Magistrate on the following grounds: 1. that the Magistrate erred in finding that the 2015 Agreement was in force as at 2 June 2017, and that the agreement was varied; 2. that the Magistrate denied Vision X-Ray procedural fairness; 3. that the Magistrate erred in not finding that an agreement had been reached on 24 August 2018; 4. that in relation to his finding that an agreement had not been reached on that date, the Magistrate failed to give adequate reasons; 5. that the Magistrate erred in finding that Mr David Yang's employment had concluded on 18 September 2018 rather than 31 August 2018; 6. that in relation to his finding that Mr Yang's employment had concluded on that date, the Magistrate failed to give adequate reasons; 7. that the Magistrate erred in finding that Vision X-Ray was not entitled to a set-off of the fees of Ms Julie Mitchell; and 8. that in relation to his finding that Vision X-Ray was not entitled to a set-off, the Magistrate failed to give adequate reasons.
2. At the hearing of the appeal, ground 9 was not pressed.
3. Vision X-Ray submitted that appeal grounds 1, 2, 4, 6 and 8 raise questions of law only, and that grounds 3, 5 and 7 raise questions of mixed law and fact. Alexander Associates submitted that leave should not be granted in relation to grounds 3, 5 and 7.
4. Appeal grounds 3, 4, 7 and 8 are related. Counsel for Vision X-Ray conceded that if grounds 3 and 4 fail, so do grounds 7 and 8.

The amended statement of claim

1. At the hearing in the Local Court, Alexander Associates was granted leave to file an amended statement of claim ("ASC").
2. The relevant paragraphs of the ASC are [3] to [8] and [9] to [11]. They plead: "The Agreement 3. On 9 June 2017, the Defendant entered into a Consultancy Agreement with the Plaintiff for the recruitment of sonographers and radiographers ("the Agreement"). Particulars i. The Agreement was express, partly in writing and partly oral, ii. To the extent that the Agreement's terms were in writing it consists of the Consultancy Agreement dated 9 March 2015; iii. To the extent that the Agreement's terms were oral it consists of the teleconference on 9 June 2017, between Anthony Barono, an employee of the Plaintiff, Peter Baker, the Director of the Plaintiff, Sarah Martin, an employee of the Defendant and Andrew Zadelis, the Chief Executive Officer and authorised representative of the Defendant ("the Defendant's CEO") ("the June teleconference"); a. The terms were as follows: i. Provided that the Defendant made payment of the Plaintiffs invoices in accordance with the terms of the invoices, a replacement guarantee applied for a period of six months of commencement; ii. The Plaintiff's invoice was payable within one month of the Candidate completing their first shift; iii. If the Plaintiff's invoice was not paid within 30 days of being issued, the Plaintiff was entitled to charge interest; and iv. The Plaintiff was entitled to charge fees for recruitment at a rate of 12.5% of the total renumeration of the candidate. v. The Defendant accepted the terms of the Agreement during the June teleconference. 4. It was implied by the Defendant's conduct that the Defendant had accepted the Agreement. Particulars i. After the June 2017 teleconference, the Defendant's CEO authorised the Plaintiff to provide candidates to the Plaintiff, ii. The Plaintiff sourced candidates which were subsequently employed by the Defendant; iii. On 23 March 2018, the Defendant made payment of $16,911.18 towards the Plaintiff's invoice number 11600 dated 12 December 2017; and iv. On 13 September 2018, the Defendant made payment of $2,937.63 towards the Plaintiffs invoice number 12042 dated 22 January 2018. 5. The Defendant instructed the Plaintiff to source candidates pursuant to the Agreement and the Plaintiff provided those services. Particulars i. Email dated 26 June 2017 from Sarah Martin to the plaintiff, ii. Email dated 29 September 2017 from Defendant's CEO to the Plaintiff. 6. From time to time the Plaintiff agreed to provide the Defendant with services for a fee. The fees for the services provided were charged by way of tax invoices issued by the Plaintiff for payment by the Defendant. 7. Further or in the alternative, the Plaintiff relies upon the terms of the agreement which preceded the Agreement. 8. On 16 March 2015, the Defendant entered into a Consultancy Agreement with the Plaintiff for the recruitment of sonographers and radiographers. (a) The terms of the agreement were express and recorded in writing. Particulars i. On 11 March 2015, the terms were sent by email to the Defendant's Chief Sonographer ("2015 Agreement"). ii. To the extent that the 2015 Agreement's terms were in writing, it consists of the attachment to the email sent to the Defendant's Chief Sonographer on 11 March 2015. (b) The Defendant accepted the terms of the 2015 Agreement in writing. Particulars i. Email dated 16 March 2015 from the Defendant's Chief Sonographer to the Plaintiff. (c) Further or in the alternative, the Defendant accepted the terms of the 2015 by conduct. Particulars i. Email dated 16 March 2015 from the Defendant's Chief Sonographer the Plaintiff. … The Services 10. On 21 November 2017, the Plaintiff introduced candidate David Yang to the Defendant and on 5 March 2018, David Yang commenced employment with the Defendant. 11. On 15 March 2018, the Plaintiff introduced candidate Mitchell Prentice to the Defendant and on 21 May 2018, Mitchell Prentice commenced employment with the Defendant."
3. Alexander Associates claims for non-payment of the outstanding invoices in the sum of $37,077.29.

The defence

1. The substance of the defence can be summarised as follows: 1. Vision X-Ray denies that it entered into an agreement with Alexander Associates on or about 9 March 2015; 2. Vision X-Ray admits that the teleconference occurred on 9 June 2017, but denies that any agreement was formed; 3. Vision X-Ray denies that its conduct was in acceptance of any alleged agreement; 4. any instructions provided by Vision X-Ray to Alexander Associates to source candidates was not pursuant to the alleged agreement; 5. Vision X-Ray admits that Alexander Associates introduced it to Mr Yang and Ms Mitchell, but denies any obligation to pay fees for Mr Yang as he was not employed for more than 6 months; 6. Vision X-Ray denies any breach of agreement and any liability to pay Alexander Associates any monies; 7. should the Court find that there was an agreement between the parties as alleged, Alexander Associates should be estopped from relying on the agreement, as it represented to the defendant that it would not rely upon provisions of the purported agreement and that such conduct amounts to a waiver; 8. further, should the Court find that there was an agreement between the parties, the agreement is void for uncertainty; 9. should the Court find that the agreement is not void, it is unenforceable by reason of there being no consideration given by Alexander Associates, and no intention of the parties to create legal relations; 10. Vision X-Ray is entitled to a set-off in the sum of $16,911.18 in respect of fees paid by the defendant for the employment of Ms Mitchell, which were not payable pursuant to the purported agreement; and 11. Vision X-Ray never signed any agreement, and accordingly never accepted any of the terms.

The hearing in the Local Court

1. At the hearing before the Magistrate, Alexander Associates relied upon the affidavits of Tony Barono dated 19 December 2019, and of Peter Baker dated 20 December 2019 and 4 February 2020. Vision X-Ray relied upon the affidavits of Andrew Clarey Zadelis sworn 29 January 2020, and of Sarah Martin sworn 4 February 2020. None of the deponents were cross examined.
2. After the hearing in the Local Court, with leave, Vision X-Ray served written submissions on 3 March 2020. On 16 March 2020, Alexander Associates served written submissions in reply.

The 16 March 2015 written agreement

1. Clause 1 of the 16 March 2015 Agreement provides as follows: "1. Acceptance of terms and conditions The introduction or presentation of candidate's details or interviewing of a candidate or engagement of a candidate introduced or presented by us or the passing to any other person or organisation of personal information pertaining to a candidate introduced or presented to you by us, will amount to your acceptance of the Terms and Conditions. No variation can be made to these terms without the written consent of a Director of Alexander Associates Pty Ltd."

The 2017 oral agreement

1. Anthony Barono, a director of Alexander Associates, swore an affidavit on 19 December 2019. It was admitted into evidence in the Local Court proceedings, without objection, together with its annexures and marked as Ex 1. The Magistrate summarised the substantive evidence as follows (J [7(f)-(h)] and J [8(j)-(m)].
2. Between 2 and 7 June 2017, Mr Barono exchanged a number of emails with Sarah Martin, Alexander Associates' Chief Executive Officer, about the terms and conditions of the business dealings between the parties.
3. On about 8 June 2017, Mr Barono spoke with Mr Baker about the parties' dealings and Alexander Associates' proposed amendments to the working terms and conditions.
4. On 9 June 2017 at 3:15 pm, a teleconference was conducted between Mr Barono, Mr Baker, Ms Martin and Andrew Zadelis. Mr Baker and Mr Zadelis did most of the talking in respect of the handwritten amendments made to the Consultancy Agreement document. Mr Barono specifically recalled Mr Baker agreeing to reduce ss 5.12-14 from 24 months to 12 months. Later that afternoon, he spoke with Mr Baker, who made reference to a number of amendments he had made to the Consultancy Agreement. However, he had refused to agree to some amendments sought, including the money back guarantee. The Magistrate preferred the evidence of Mr Barono to that of Mr Zadelis.
5. Mr Baker swore two affidavits, which were marked as Exs 2 and 4. The Magistrate summarised his evidence as follows (J [8(j)-(m)]).
6. On about 5 June 2017, Mr Baker spoke with Mr Barono, who told him that Mr Zadelis wished to negotiate new terms for future candidates. Mr Baker agreed to have a teleconference for that purpose. On about 7 June 2017, he received an email from Mr Zadelis attaching proposed amendments to Alexander Associates' terms of business.
7. On about 9 June 2017, Mr Baker spoke with Mr Barono and told him that he was prepared to provide Vision X-Ray services, on the basis of minimum fees for sonographers at 12.5% and radiographers at 10%, with a 3 month guarantee. On 9 June 2017, he took part in the teleconference with Mr Barono, Mr Zadelis, and Ms Martin, which was predominantly conducted between himself and Mr Zadelis. During the teleconference, he discussed with Mr Zadelis proposed amendments to the document that Mr Barono had forwarded to Vision X-Ray.
8. In addition to setting out this evidence, the Magistrate also summarised documents and extracts at pp 16-18 of his written reasons.

The Magistrate's reasons for decision dated 5 May 2020

1. In his judgment, the Magistrate began by summarising the evidence of the four witnesses set out earlier. His Honour then reviewed and summarised the business and other records annexed to the witnesses' statements, highlighting certain portions of those documents. It is a lengthy judgment of 50 pages.
2. Under the heading "Findings of Fact and Application of the Law", the Magistrate relevantly stated at [38(d)-(g), (o)-(u), (w), (y)]: "(d) Mr Barker's email to Mr Stevenson on 11 March 2015 constituted an offer by the plaintiff to provide future services to the defendant; (e) Mr Stevenson responded to Mr Baker's email on 16 March 2015 (Ex 1, p 54-55) stating '…we agree to this contract…' Mr Stevenson was authorised by the defendant to write the email and to represent the defendant's interests. Mr Stevenson's response constituted an express acceptance of the plaintiff's offer. The express terms and conditions of the agreement between the parties are those set out in the revised TOB ('the 2015 Agreement'); (g) The 2015 Agreement provided a replacement guarantee if a candidate 'Leaves…within three months of commencing' however the guarantee did not apply if the defendant had not paid the specified fee (12.5% of total annual remuneration package) within 30 days of the date of invoice for the fees; … (o) The 2015 Agreement remained in force as at 2 June 2017; (p) On 2 June 2017 Mr Barono emailed Ms Martin a copy of the Consultancy Document; (q) The Consultancy Document noted the 'Date of Contract' as 9 March 2015 - around the time of Mr Barono's discussion with Mr Stevenson; (r) On 5 June 2017 Ms Martin returned the Consultancy Document to Mr Barono with Mr Zadelis' handwritten proposed amendments noted; (s) On 9 June 2017 the teleconference occurred between Mr Baker, Mr Barono, Ms Martin, and Mr Zadelis. Mr Baker and Mr Zadelis did most of the talking and discussed Mr Zadelis' proposed amendments; (t) Mr Baker, as Director of the plaintiff, expressly agreed orally to vary some of the terms in the Consultancy Document, and noted his consent in writing on the Consultancy Document. Mr Baker consented to, amongst other things: a 6 month guarantee period for candidates provided the defendant had paid the candidate's fees in time; a 30 day period in which to pay invoices; and a fee percentage of 12.5%; (u) Mr Baker made contemporaneous notes of these discussions and what he consented to. Mr Zadelis and Ms Martin did not; … (w) The net result of the teleconference meeting between the parties was to vary, orally, the existing 2015 Agreement by adding extra terms concerning matters not previously dealt with, such as concerning Locums, and varying the replacement guarantee to 6 months. Other conditions such as the 30 day payment requirement and the 12.5% fee were confirmed. The terms were expressly written or confirmed orally. There is no room for any other terms to be implied into the agreement. This finding is supported by the fact that none of the very senior business executives/professionals followed up the teleconference with any further documentation or signed Consultancy Agreement. All of the parties were satisfied with what was said during the teleconference, given that Mr Baker and Mr Zadelis most likely believed that Mr Barono and Ms Martin were witnesses to what variations were made. All of the amendments sought by Mr Zadelis were not accepted by Mr Baker. The parties agreed to vary the 2015 Agreement to take into account what was discussed in the teleconference;" … (y) I infer that the reason why neither party sought a signed agreement for the other in June 2017 is because each party understood the 2015 Agreement to have been varied by agreement to the satisfaction of each other." (Magistrate's emphasis)

Leave to Appeal

1. As stated previously, appeal grounds 3, 5 and 7 raise questions of mixed fact and law for which leave is required. Alexander Associates submitted that leave should not be granted.
2. Vision X-Ray referred to a number of authorities, including Collector of Customs v Agfa-Gevaert Limited (1996) 186 CLR 389 at 394 ("Agfa") and Attorney General for the State of New South Wales v X (2000) 49 NSWLR 653 ("Attorney General v X").
3. In Agfa, the High Court stated at 394: "The distinction between questions of fact and questions of law is a vital distinction in many fields of law. Notwithstanding attempts by many distinguished judges and jurists to formulate tests for finding the line between the two questions, no satisfactory test of universal application has as yet been formulated."
4. In Attorney General v X, Spigelman CJ stated at [28]: "[28] The determination of whether a particular alleged error in matters such as fact finding, the exercise of a discretion or a process of evaluation answers the description 'question of law', will depend on the scope, nature and subject matter of the statute, including the nature of the body making the relevant decision."
5. Grounds of appeal on the basis that a finding was made without evidence raise a question of law: see Kostas v HIA Insurance Services Pty Ltd t/as Home Owners Warranty (2010) 241 CLR 390; (2010) 270 ALR 228 at [90] per Hayne, Heydon, Crennan and Kiefel JJ; Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 326 per Mason J.
6. Alexander Associates referred to Café Du Liban Pty Ltd v Bespoke Garage Pty Ltd [2017] NSWSC 779 ("Café Du Liban"), where Beech-Jones J stated at [4]: "[4] The considerations affecting a decision to grant leave to appeal under s 40(1) include whether any reason has been shown to doubt the correctness of the impugned part of the Local Court decision and the desirability of avoiding the parties incurring further costs and expense in litigating the matter if it is remitted to the Local Court. However, in an appeal under ss 39 to 41 of the Local Court Act this Court has no power to make any finding of fact (Lesley-Swan v Owners SP 32725 [2013] NSWSC 1635 at [70] to [75]). This means that if, following the determination of any question of law or, with the grant of leave, any question of mixed law and fact, there remains any factual question to be resolved, then the proceedings must be remitted to the Local Court for further hearing."

Vision X-Ray's submissions

1. Vision X Ray submitted that in relation to the appeal grounds that contain questions of mixed law and fact, the factual findings and the legal errors are linked, and as such, leave to appeal should be granted in relation to them.

Alexander Associates' submissions

1. Alexander Associates submitted that leave to appeal should only be granted if there is an issue of principle or a question of general public importance, or if it is reasonably clear that there was an injustice in the sense of going beyond what is reasonably arguable (T 10.14-18).
2. In Lee v New South Wales Crime Commission (2012) 224 A Crim R 94; [2012] NSWCA 262 ("Lee"), Bathurst CJ at [12] outlined the principles relevant to the granting of leave as follows: "[12] The principles upon which leave to appeal is granted are well established. Ordinarily it is only appropriate to grant leave concerning matters that involve issues of principle, questions of general public importance or where it is reasonably clear there has been an injustice in the sense of going beyond it being reasonably arguable that the primary judge was in error: Carolan v AMF Bowling Pty Ltd [1995] NSWCA 69; Zelden v Sewell [2011] NSWCA 56 at [22]; Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 at [46]; GKD v Director of Department of Family & Community Service [2012] NSWCA 219 at [10]; Be Financial Pty Ltd v Das [2012] NSWCA 164 at [32]-[34]."

Resolution

1. Alexander Associates referred to Lee as authority in relation to the granting of leave. These principles ordinarily apply where a party seeks an extension of time to appeal, or where statute requires that leave be granted to appeal. Rather, the authority in relation to a question of mixed fact and law is set out in Café Du Liban.
2. It is my view that there are inextricable links between the factual findings and the alleged legal errors. In these circumstances, I am satisfied that leave to appeal should be granted in relation to the mixed question of fact and law, and as such I grant leave to appeal in relation to appeal grounds 3, 5 and 7.

Ground 1 - agreement for reinstatement of replacement guarantee

1. Ground 1 of Vision X-Ray's appeal is that the Magistrate erred in finding both that the 2015 Agreement was in force as at 2 June 2017, and that the agreement was varied.

Vision X-Ray's submissions

1. The primary case propounded by Alexander Associates on the pleadings was that on 9 June 2017, "[the plaintiff] entered into a Consultancy Agreement with [the defendant] for the recruitment of sonographers ('the Agreement')". Alexander Associates particularised the basis for the pleading as follows (ASC [3]): 1. the 2015 Agreement was express, partly in writing and partly oral; 2. the written part of the Agreement consisted of terms of the 2015 Agreement; 3. the oral part of the Agreement consisted of a conversation between Mr Barono, Mr Baker, Ms Martin and Mr Zadelis ("the conversation").
2. Vision X-Ray submitted that the effect of [7] and [8] of the ASC is that it has no work to do, given the particulars for the Agreement pleaded at [3]; and that there was no pleading to the effect that the conversation amounted to a variation of the 2015 Agreement, nor did those particulars form part of the pleaded 2015 Agreement.
3. In oral submissions, counsel for Vision X-Ray submitted that Alexander Associates' case against it was binary. The ASC at [8] pleads an alternate claim to the effect that the terms and the written terms of the 2015 Agreement represented the true agreement. The position taken by Alexander Associates in the Local Court was that Vision X-Ray was either bound by the 2015 Agreement or the Agreement (as pleaded at [3] of the ASC). Put another way, if Alexander Associates failed in relation to the Agreement, then it relied upon the written terms of the 2015 Agreement to make out its case. There was no middle ground.
4. Vision X-Ray submitted that the Magistrate decided a question of fact based on an absence of evidence. It is its case that there was no evidence before the Magistrate that would tend to establish that the conversation amounted to a variation of the 2015 Agreement. There was no evidence led by Alexander Associates that there was an intention that those matters varied the 2015 Agreement - it if had, then presumably it would have formed part of its case (T 2.44-48).
5. Finally, Vision X-Ray submitted that if the Magistrate was correct in his finding, that finding is inconsistent with Alexander Associates' case. As such, it was not open to the Magistrate to make those findings as to the existence of the 2015 Agreement, having regard to the findings at [38(o)] to [38(y)] of his Honour's reasons.

Alexander Associates' submissions

1. Alexander Associates agree that this ground of appeal raises a question of law only.
2. Appeal ground 1(a) fails as there was evidence of the fact that the 2015 Agreement was varied by the terms contained in the consultancy document, which terms were expressly written or confirmed orally, which evidence is was as follows: 1. the evidence of Alexander Associates' recruitment consultant, referred to at page 7 [7(f)-(h)] of the written reasons; 2. the evidence of Alexander Associates' director, Mr Baker, referred to at page 7 [8(j)-(m)] of the written reasons, which the Magistrate preferred over Vision X-Ray's evidence; and 3. the documents summarised and extracted at pages 16-18 of the Magistrate's written reasons.
3. Further, Vision X-Ray has misconstrued particular (ii) to [3] of the ASC. Vision X-Ray misstates that the written part of the Agreement there alleged consisted of the terms of the 2015 Agreement. What is in fact pleaded is that to the extent that the agreement's terms were in writing it consists of the Consultancy Agreement dated 9 March 2015.
4. The effect of [7] and [8] of the ASC is clearly that Alexander Associates was relying, further and in the alternative, on the terms of the 2015 Agreement. As such, it is expressly pleaded, or can at the very least be inferred, that Alexander Associates was relying on the terms of the Agreement reached on 9 June 2017, including those terms contained in the Consultancy Agreement dated 9 March 2015, and further or in the alternative, the terms of the 2015 Agreement.
5. In any event, a party need only plead a summary of the material facts, from which inferences of law may be drawn, not law.
6. Even if the legal result is pleaded for convenience, the party is not bound by, or limited to, the legal result he or she has alleged but may rely on any legal consequences of the pleaded facts which may properly flow from them.
7. The ASC made plain Alexander Associates' case and the material facts on which it relied, so that Vision X-Ray knew the issues of fact to be investigated at hearing.
8. Vision X-Ray has cited no law in support of the proposition that a Magistrate is bound to determine a matter in accordance with the submissions of a party.
9. As has been said in Accident Towing and Advisory Committee v Combined Motor Industries Pty Ltd [1987] VR 529 at 547, quoting with approval Saif Ali v Sydney Mitchell and Co (A firm) [1980] AC 198 at 212. "Judges are more than mere selectors between rival views - they are entitled to and do think for themselves."

Resolution

1. The ASC [3(i)-(ii)] pleads that on 9 June 2017, Vision X-Ray entered into an agreement with Alexander Associates that was partly express and partly oral. The written terms of the Agreement consist of the Consultancy Agreement dated 9 March 2015, and the oral terms of 9 June 2017 are set out in [3(iii)] of the ASC, which pleads that it was implied by Vision X-Ray's conduct that it accepted the Agreement. It is also pleaded that Alexander Associates relied upon the terms of the 2015 Agreement, set out at [8] of the ASC.
2. At [38(o)] of his reasons, the Magistrate stated that the 2015 Agreement remained in force as at 2 June 2017. At [38(o)] to [38(y)] (excluding [38(r)]), the Magistrate set out the conversation that varied some of the terms of the earlier 2015 Agreement.
3. In the Local Court submissions in reply, Alexander Associates submitted that the 2015 Agreement was terminated by reason of the events of 9 June 2017, but that that outcome was only possible if it was found that the parties entered into the 2017 Agreement. If it were to be found that the parties did not enter into the 2017 Agreement, the conduct of the parties on 9 July 2017 could not amount to the termination of the 2015 Agreement.
4. In Metwally v University of Wollongong [1985] HCA 28; (1985) 60 ALR 68 at 71, the High Court (in the joint judgment of Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ) stated: "It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case has been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when had an opportunity to do so."
5. The High Court cited this principle with approval in Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 and Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 200 ALR 447.
6. It is my view that from the pleadings, the factual evidence given by the parties and the way in which the case was argued, the Magistrate was entitled to make findings that the 2015 Agreement remained in force and was varied by the 2017 oral agreement. The 2017 oral agreement added extra terms concerning matters not previously dealt with in the 2015 Agreement. The evidence of the oral variations was given by Messrs Barono and Baker on behalf of Alexander Associates and Ms Martin and Mr Zadelis of Vision X-Ray in relation to the oral variation in 2017. This ground of appeal fails.

Ground 2 - procedural fairness

1. Appeal ground 2 is that the Magistrate, in making the findings he did in appeal ground 1, denied Vision X-Ray procedural fairness.

Vision X-Ray's submissions

1. Vision X-Ray referred to Allesch v Maunz (2000) 203 CLR 172, where Kirby J stated at [34]: "[35] It is a principle of justice that a decision-maker, at least one exercising public power, must ordinarily afford a person whose interests may be adversely affected by a decision an opportunity to present material information and submissions relevant to such a decision before it is made. The principle lies deep in the common law. It has long been expressed as one of the maxims which the common law observes as 'an indispensable requirement of justice'. It is a rule of natural justice or 'procedural fairness'. It will usually be imputed into statutes creating courts and adjudicative tribunals. Indeed, it long preceded the common and statute law. Even the Almighty reportedly afforded Adam such an opportunity before his banishment from Eden." (footnotes omitted)
2. In Kioa v West (1985) 159 CLR 550, Mason J stated at 582: "It is a fundamental rule of the common law doctrine of natural justice expressed in traditional terms that, generally speaking, when an order is to be made which will deprive a person of some right or interest or the legitimate expectation of a benefit, he is entitled to know the case sought to be made against him and to be given an opportunity of replying to it."
3. Vision X-Ray submitted that given the findings at [38(o)]-[38(y)] of the Magistrate's reasons concerning the 2015 Agreement, the Magistrate proceeded on the basis that it had been varied by the conversation particularised at [3] of the ASC. Vision X-Ray submitted that nothing in Alexander Associates' pleadings or written submissions placed Vision X-Ray on notice that it was conducting the alternate case reflected in the Magistrate's findings concerning the 2015 Agreement. The Magistrate also gave no indication that he was so inclined to make those findings, and failed to invite the parties to make submissions in respect of them. As such, Vision X-Ray submitted that it was denied the opportunity to be heard.

Alexander Associates' submissions

1. Alexander Associates submitted that this ground of appeal fails for the same reasons submitted in respect of ground 1. In any event, the conclusion would have been the same whether 2015 Agreement was varied or replaced by the 2017 Agreement, as the end result is that the 2017 Agreement contains all relevant terms to which the parties were subject.

Resolution

1. I have already found in relation to ground 1 that it was open to the Magistrate to find as he did. Vision X-Ray had the reasonable opportunity to be heard and make submissions. It is not a denial of procedural fairness or natural justice for the Magistrate to have decided the case, not in accordance with Vision X-Ray's submissions, but in accordance with the pleadings, evidence and submissions before him. This ground of appeal fails.

The law - adequate reasons

1. Recently in Alexandria Landfill Pty Ltd v Transport for NSW [2020] NSWCA 165 ("Alexandria Landfill"), Basten JA (with Macfarlane and Leeming JJA agreeing) restated what will constitute adequate reasons, and in particular, at what level of detail the Court requires the process of reasoning to be recorded. In Alexandria Landfill, the Court of Appeal referred to Pettitt v Dunkley [1971] 1 NSWLR 376 at [19] and Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at [21].
2. In Alexandria Landfill, Basten JA stated at [29] to [32] and [50]: "[29] Where the process of fact finding is unreviewable except to the extent that it reveals an error of law, the reasons required must be sufficient to demonstrate that the legal limits of the process have not been contravened. Having regard to the purpose of giving reasons, the standard is properly identified negatively: it must be shown that the decision has not been reached capriciously or arbitrarily, but rationally. The reasons must thus reveal that all material factors have been identified and addressed, and that no prohibited considerations have been operative. If there is an available process of reasoning from the evidence to the outcome which has been adopted, either expressly or by implication, the appellate court should be slow to reach the conclusion that the function of the trial court has not been exercised according to law. [30] Despite the suggestion, frequent in recent years, that the reasons should disclose that the judge has 'grappled with' the issues to be resolved, this is a metaphor which provides little guidance as to the intensity or nature of the intellectual process required as a matter of law. Further, the description seems directed to reasons as evidence of a failure to exercise jurisdiction, and not as a standard of disclosure of the process in fact adopted. [31] In any event, such language is inapt to impose a particular standard. The standard should not be set at a level which risks an appellate review involving an assessment of the evidence, a function which is conferred exclusively on the trial judge where the appeal is confined to questions of law. [32] So much is clear from the reasoning of the majority in Soulemezis. It is true that McHugh JA stated in Soulemezis that where there was no right of appeal against findings of fact, 'a failure to state the basis of or even a crucial finding of fact, if it involves no legal standard, it will only constitute an error of law if the failure can be characterised as a breach of the principle that justice must be seen to be done.' However, the adage that 'justice must not only be done, but be seen to be done', whilst a way of identifying the obligation to give reasons as part of the principle of open justice, provides no further assistance in identifying the standard to be applied. … [50] In most cases, the judge expressly or implicitly adopted the respondent's submissions for a particular conclusion. This was not a case of unattributed adoption, as considered in LVR and Cojocaru. No authority was relied upon by the appellant for the proposition that adoption of one party's submissions was inadequate to satisfy a judicial obligation to give reasons. In a multi-member court, it is common place for one judge to adopt the reasoning of another. To the extent that the setting out of reasons for a decision is conducive to good decision-making, there could be an objection to that practice, but it is not suggested that a judge who agrees with another judge has failed to provide reasons. On the other hand, the adoption of reasons will not provide an adequate compliance with the obligation to give reasons if the reasons adopted are themselves inadequate. Thus, if the reasons of one party adopted by the judge do not adequately engage with the other party's case, they may not demonstrate that the judge has engaged with that case. Accordingly, it is necessary to look at the content of the adopted submissions in considering a ground of challenge to the adequacy of the reasons and so far as they are relied on to demonstrate a failure to exercise jurisdiction."

Grounds 3, 4, 7 and 8 - adequate reasons (set-off)

1. Grounds 3, 4, 7 and 8, which I will consider together, are that the Magistrate erred in not finding that an agreement was reached on 24 August 2018, and in finding that Vision X-Ray was not entitled to a set-off of the Ms Mitchell's fees. These grounds also allege that the Magistrate failed to give adequate reasons in respect of those two findings.
2. The findings relevant to grounds 3 and 4 are set out earlier in this judgment.
3. On 1 August 2018, Mr Baker made an offer, by email, to reinstate the guarantee contingent on Mr Zadelis agreeing to the outstanding liability in respect of four employees. Critically, Mr Baker wrote: "If you agree to the above I will raise the invoices today and we can resume normal service. On 2 August 2018, Mr Zadelis sent an email seeking clarification of the phrase '[we] will reinstate the guarantee if you agree to these terms.'"
4. On 2 August 2018, Mr Baker responded to the above email in the following terms: "As per our terms of business the free replacement guarantee is only valid if the invoice is paid on time. But I am saying I will reinstate the guarantee and offer you a free replacement, if you agree to settle the invoice amounts below."
5. In considering this issue, the Magistrate stated a [39]: "[39] By reasons of my findings stated above, it would be apparent that I am satisfied and find that the plaintiff provided services to the defendant pursuant to the 2015 Agreement as varied on 9 June 2017, that the plaintiff did not breach the agreement, and that the plaintiff is entitled to be paid the outstanding invoices in respect of Mr Yang and Mr Prentice. I am also not satisfied that the defendant is entitled to any set-off in respect of the fees it paid for Ms Mitchell's employment."

Vision X-Ray's submissions

1. Vision X-Ray submitted that the invoices referred to are those contained in the email sent by Mr Baker on 1 August 2018, noting that the Agreement propounded by Vision X-Ray was that the Agreement required nothing more than the invoices to be raised.
2. On 6 August 2018, Mr Baker sent an email to Mr Zadelis enquiring about payment of the invoices, presumably referable to those in his email dated 1 August 2018.
3. Between 7 August 2018 and 9 August 2018, Mr Zadelis and Mr Baker exchanged various emails regarding payment.
4. On 24 August 2018, Mr Zadelis sent an email to Mr Baker. The effect of the email was that Vision X-Ray accepted the offer made by Alexander Associates on 1 August 2018, and as such, there was a concluded agreement. Vision X-Ray submitted that the email dated 28 August 2018 does not affect the legal intent of the Agreement struck on 24 August 2018.
5. Vision X-Ray submitted that the Magistrate erred by ignoring evidence, namely the email of 24 August 2018. This evidence was critical to an issue in the case. Vision X-Ray submitted that the Magistrate erred in making the finding he did at [38(dd), and that had the Magistrate not ignored the evidence, it was open for him to make the following findings: 1. there was a concluded agreement in the terms described by the email dated 1 August 2018 between Vision X-Ray and Alexander Associates; 2. the Agreement required Alexander Associates to reinstate the guarantee; 3. the effect of the reinstatement of the guarantee was that Alexander Associates would provide a free replacement for Ms Mitchell; 4. Vision X-Ray had paid the tax invoice relating to Ms Mitchell in the amount of $16,911.18; 5. Alexander Associates failed to provide the free replacement for Ms Mitchell in accordance with the agreement reached on 24 August 2018 in breach of it; and, as such 6. Alexander Associates was unjustly enriched to the extent it had received the benefit of payment in respect of Ms Mitchell.
6. Vision X-Ray submitted that in respect of this issue, the Magistrate failed to give adequate reasons, or any reasons, as to why no agreement was struck on 24 August 2018.
7. The Agreement reached on 24 August 2018 was a critical part of Vision X-Ray's resistance to Alexander Associates' claim and the Magistrate was aware of that issue. Having regard to the reasons, it is apparent that the Magistrate clearly considered the emails dated 1, 2 and 7 August 2018. However, while the Magistrate mentioned the balance of the emails in his reasons, Vision X-Ray submitted that his Honour did not have regard to them - or, at leave, it is not apparent from his relevant findings at [38(dd)].
8. The effect of the error made by the Magistrate in ignoring the email dated 24 August 2020 was that the fees paid in respect of Ms Mitchell ought to have been offset in accordance with s 20 of the Civil Procedure Act 2005 (NSW) against any liability the Magistrate found as against Vision X-Ray. Further, the case propounded by Vision X-Ray was that Alexander Associates' breach of the Agreement reached on 24 August 2018 resulted in Alexander Associates being unjustly enriched by the sum paid by Vision X-Ray. It was never contended by Vision X-Ray that the there was an agreement that Alexander Associates would offset those fees in the terms described by the Magistrate at [38(dd)]. The Magistrate at [39] found that: "I am not satisfied that the defendant is entitled to any set-off in respect of the fees it paid for Ms Mitchell's employment."
9. Vision X-Ray submitted that this constitutes a failure to give adequate reasons as to why Vision X-Ray was not entitled to the set-off.

Alexander Associates' submissions

1. Alexander Associates submitted that the Magistrate's finding that no agreement had been reached was available to him, and was not made because he ignored the evidence. On the contrary, the Magistrate set out, in great detail, the relevant correspondence between the parties and ultimately found the following at [38(dd)]: "…There was never an agreement by the plaintiff to set-off the fees of Ms Mitchell from the fees owing in respect of Mr Prentice. The offer of a free replacement was always premised on the basis that all outstanding invoices would be paid beforehand."
2. The Magistrate found that the relevant agreement "was conditional on the outstanding fees being paid", and that Vision X-Ray never paid the outstanding fees. As the condition was never fulfilled, any such agreement did not come into being, and is not enforceable.
3. Moreover, Alexander Associates submitted that whether a contract has been formed is a question of fact: see Sand Ground Engineering Pty Ltd v Super Render Pty Ltd [2020] NSWSC 458 at [56]. Findings of fact are not to be disturbed on appeal.

Resolution

1. The Magistrate set out the documentary evidence from 6 August 2018 to 24 August 2018. It is as follows: "6 August 2018 - Mr Baker wrote to Mr Zadelis by email (Ex 2, p 337) asking 'Are these going to be paid?' 7 August 2018 (9:25am) - Mr Baker wrote to Mr Zadelis by email (Ex 2, p 341 - 342) stating: 'I am yet again left feeling frustrated as this is has now stalled again, when I really didn't want to negotiate in the first place. I'm not going to waste any more time begging to get these invoices paid. Please indicate to your director that I'm going to withdraw the offer of the free replacement and proceed to recover my money and associated costs, unless this is settled today.' 7 August 2018 (2:03pm) - Mr Zadelis wrote to Mr Baker by email (Ex 2, p 340) apologising that he would respond the next day. … 9 August 2018 (10:38am) - Mr Baker wrote to Mr Zadelis by email (Ex 2, p 347; Ex 5, p 479 - 480) confirming the amount of the outstanding invoices. 24 August 2018 - Mr Zadelis wrote to Mr Baker by email (Ex 2, p 346; Ex 5, p 462 - 463 & p 478 - 479) stating: '...the below is the most recent detail of balance owing to (you) from your records. 2. Kristy Buesnel - now showing a balance of $2,397.63...Please forward the amended invoice and this will be paid next week...3. Julie Mitchell- invoice paid and employee left. 4. Mitchell Prentice (commenced 21 May 2018) - please issue the invoice. I thought it best all remain in writing so that there is no ambiguity or misunderstanding.' 28 August 2018 - Mr Baker wrote to Mr Zadelis by email (Ex 2, p 345; Ex 5, p 478) enclosing outstanding invoices for Mitchell Prentice, Kristy Buesnel and David Yang and stating that a free replacement for Julie Mitchell would be provided once the invoices were paid. 28 August 2018 - The plaintiff provided the defendant with a revised invoice for Ms Buesnel's employment (Ex 5, p 476) for the sum of $2,397.63 (incl. GST). 28 August 2018 - The plaintiff invoiced the defendant (Ex 5, p 464) in respect of Mr Prentice's employment for a total salary of $138,791.25 with the plaintiff's fee (@ 12.5%) in the sum of $19,083.80 (incl. GST). (Magistrate's emphasis)
2. At [38(dd)], the Magistrate made the following findings: "On 1 August 2018 Mr Baker by way of a 'Without Prejudice' offer to find a replacement for Ms Mitchell if the defendant paid the outstanding fees for Mr Prentice - such fees were not paid. Thereafter Mr Baker wrote to Mr Zadelis on 2 and 7 August 2018 repeating that the free replacement for Ms Mitchell was conditional on the outstanding fees being paid. There was never an agreement by the plaintiff to set-off the fees of Ms Mitchell from the fees owing in respect of Mr Prentice. The offer of a free replacement was always premised on the basis that all outstanding invoices would be paid beforehand."
3. It is clear from the evidence that Mr Baker's offer for a free replacement for Ms Mitchell was conditional on the invoices being paid. These invoices were never paid.
4. From the evidence given on this topic, it was open to the Magistrate to make a finding that there was never an agreement by Alexander Associates to set-off the fees of Ms Mitchell from the fees owing in respect of Mr Prentice. The offer of a free replacement was always premised on the basis that all outstanding invoices would be paid beforehand. There was no agreement in August 2018 for a free replacement, so therefore there is no set off.
5. Appeal grounds 3 and 4 fail. It follows that appeal grounds 7 and 8 also fail.

Grounds 5 and 6 - conclusion of Mr Yang's employment

1. There is no controversy that Mr Yang tendered his resignation to Vision X-Ray on 31 August 2018 and ceased working for Vision X-Ray on 18 September 2018.
2. At 38-(h)], the Magistrate found: "The 2015 Agreement provided a replacement guarantee if a candidate 'Leaves…within three months of commencing' however the guarantee did not apply if the defendant had not paid the specified fee (12.5% of total annual remuneration package) within 30 days of the date of invoice for the fees A reasonable business person would understand the word 'leaves" to mean that a candidate is no longer physically present to perform his/her employment duties. It is common place in the employer/employee relationship for both parties to agree on an appropriate period for notice of termination or cessation of employment which may vary greatly depending on the seniority, expertise, and experience of the employee. This notice period would not be the subject of any scrutiny or influence of the plaintiff. Further, just because an employee tenders a notice of resignation does not necessarily mean that the notice will be accepted and the employee may be convinced to remain. In this case, for example, there was a 'dispute' between the defendant and Mr Yang as to his notice period. Mr Yang originally provided one week however Mr Stevenson and Mr Zadelis responded with one month. Ultimately Mr Yang agreed to stay for over two weeks."
3. At 38], the Magistrate found: "Mr Yang was introduced to the defendant on 21 November 2017 and commenced employment with the defendant on about 9 March 2018. The invoice for Mr Yang was dated 13 March 2018 in the amount of $17,993.49. The invoice remained unpaid for more than 30 days thereafter. Mr Yang ceased employment with the defendant on 18 September 2018 - more than 6 months employment. The invoice for Mr Yang still remained unpaid at that time. The invoice for Mr Yang remains unpaid to date."

Vision X-Ray's submissions

1. Vision X-Ray submitted that the Magistrate fell into error in finding that Mr Yang's employment ceased on 18 September 2018. This is because the Magistrate erred in making the findings in regard to the 2015 Agreement, which were not open to him, especially given that there was a lack of evidence to do so.
2. Ultimately, there was no dispute as to Mr Yang's notice period, which was ultimately accepted.
3. Vision X-Ray submitted that Mr Yang's employment ended on 31 August 2018 upon tendering his resignation to Vision X-Ray.
4. The Magistrate failed to give any reasons as to why Mr Yang's employment did not come to an end upon the tendering of his resignation. If he did so, it is not apparent from the reasons.

Alexander Associates' submissions

1. Alexander Associates submitted that the Magistrate did not err, as his reasons at [38(g)-(h)] were cogent and the finding made was available to him, for the reasons submitted by Alexander Associates at [40] of its written submissions in chief in the Local Court dated 17 February 2020, and at [17] of its written submissions in reply dated 16 March 2020.

Resolution

1. The Magistrate's reasons is that the 2015 Agreement provided for payment of fees (other than contractor fees) to be paid within 30 days of the invoice date.
2. The 2015 Agreement provided a replacement guarantee if a candidate "leaves...within three months of commencing". However, the guarantee did not apply if Vision X-Ray had not paid the specified fee (12.5% of total annual remuneration package) within 30 days of the date of invoice for the fees.
3. A reasonable business person would understand the word "leaves" to mean that a candidate is no longer physically present to perform his/her employment duties.
4. Mr Yang was introduced to Vision X-Ray on 21 December 2017, and commenced employment with Vision X-Ray on about 9 March 2018. Mr Yang ceased employment with Vision X-Ray on 18 September 2019, after more than 6 months employment. The invoice for Mr Yang dated 13 March 2018 is in the amount of $17,993.49. The invoice remained unpaid for more than 30 days. The invoice for Mr Yang remains unpaid to date.
5. In summary, the Magistrate made finds that Mr Yang remained employed for more than 6 months and the invoice remained unpaid. The finding is in accordance with the contractual relationship between the parties and Vision X-Ray was obliged to pay Alexander Associates for the services of Mr Yang.
6. There is no legal or factual error in the Magistrate's reasons. These grounds of appeal fail.

The result

1. The result is that the appeal fails. Hence, it is not necessary to consider Alexander Associates' notice of contention.

Costs

1. Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendant's costs on an ordinary basis.

The Court orders that: (1) Leave to appeal is granted in relation to appeal grounds 3, 5 and 7. (2) The appeal is dismissed. (3) The decision and judgment of Magistrate Barko dated 5 May 2020 is affirmed. (4) The summons filed 20 May 2020 is dismissed. (5) The plaintiff is to pay the defendant's on an ordinary basis.

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: 23 September 2020