Court of Appeal Supreme Court New South Wales Medium Neutral Citation: ELB Pty Ltd v Lumina BPO Pty Ltd [2021] NSWCA 91 Hearing dates: 31 March 2021 Date of orders: 17 May 2021 Decision date: 17 May 2021 Before: Bell P at [1] Brereton JA [2] Beech-Jones J at [3] Decision: (1) Appeal dismissed. (2) Appellant pay the respondent's costs of the appeal including its notice of contention. Catchwords: CONTRACT – written retainer of accountants – scope – whether primary judge erred in concluding retainer extended to all work for a client of an accounting and financial nature – opinion evidence – whether evidence of accounting partner that certain work "required" to complete task was opinion evidence – whether evidence was admissible as expert opinion – Held – primary judge correct – appeal dismissed Legislation Cited: Evidence Act 1995 Supreme Court Act 1970 Uniform Civil Procedure Rules Cases Cited: Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 5) (1996) 64 FCR 73 ASIC v Hellicar (2012) 247 CLR 345; [2012] HCA 17 ASIC v Vines (2003) 48 ACSR 291; [2003] NSWSC 1095 Cellarit v Cawarrah [2018] NSWCA 213 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011] HCA 21 Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 Jones v Dunkel (1959) 101 CLR 298 Lithgow City Council v Jackson (2011) 244 CLR 352; [2011] HCA 36 Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305 Metropolitan Gas Co v Federated Gas Employee's Industrial Union (1925) 35 CLR 449 Obeid v R (2017) 96 NSWLR 155; [2017] NSWCCA 221 Payne v Parker [1976] 1 NSWLR 191 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 Category: Principal judgment Parties: ELB Pty Ltd (Appellant) Lumina BPO Pty Ltd (Respondent) Representation: Counsel: Mr S Robertson with Mr M Keene (Appellant) Mr D Neggo (Respondent) Solicitors: John De Mestre & C Pty Ltd (Appellant) Watson Mangioni (Respondent) File Number(s): 2020/277460 Decision under appeal Court or tribunal: District Court Jurisdiction: Civil Citation: Lumina BPO Pty Limited v ELB Pty Ltd (No 2) [2020] NSWDC 712 Date of Decision: 1 September 2020 Before: P Taylor SC DCJ File Number(s): 2019/228108 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] HEADNOTE [This headnote is not to be read as part of the judgment] The Appellant is a large propriety company with reporting obligations. Following the departure of its financial controller it retained the Respondent, a firm of accountants, pursuant to a Letter of Engagement. The Letter of Engagement contained a Scope of Works clause which listed 8 tasks the Respondent was to perform including acting as the CFO of the Appellant's group, reviewing and assessing its policies and accounting systems, implementing and supervising changes to train the Appellants' staff to reduce reliance on the Respondent's staff and closing the Appellant's "2017 and 2018 books". The Letter of Engagement included details on charges out rates and an overall fee estimate. The Respondent rendered an invoice for work done in October 2018 which was paid. It then rendered invoices for work done in November 2018 and December 2018, neither of which was paid. The Respondent sued the Appellant in the District Court for the amount of the two outstanding invoices. The Appellant contended, inter alia, that much of the work done to support all three invoices was outside the Scope of Work Clause. A partner of the Respondent swore an affidavit adopting a schedule which included entries asserting that the various items of work were "required" to perform one or more of the tasks listed in the Scope of Works clause. The Appellant objected to the evidence contending that it was inadmissible under s 76 of the Evidence Act 1995 as it was evidence of an opinion and the exception in s 79 was not engaged. The primary judge upheld the Respondent's claim. The primary judge held that, provided the Respondent was engaged in accounting work concerning the Appellant and its related companies and trusts, it was engaged in tasks within the Scope of Works clause. The primary judge rejected the challenge to the admissibility of the partner's evidence. The principal issues on appeal were: (i) Whether the primary judge erred in his finding about the Scope of Works Clause? and (ii) Whether the primary judge erred in admitting the evidence given by the partner of the Respondent. (iii) Whether the Respondent was required to file a notice of contention or cross‑appeal where it only sought entry of a lesser judgment on the basis that Letter of Engagement only supported some but not all of the charges for the work complained about by the Appellant? The Court held, dismissing the appeal: As to issue (i), per Beech-Jones J (Bell P and Brereton JA agreeing): 1. To arrive at the proper construction of the Engagement Letter, the document as a whole must be considered. The meaning of the words used is to be ascertained by reference to what a reasonable person would have understood the language of the letter to have conveyed (at [20]). Metropolitan Gas Co v Federated Gas Employee's Industrial Union (1925) 35 CLR 449; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52; Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 applied 2. The primary judge did not err in concluding that, provided the Respondent was engaged in accounting work concerning the Appellant and its related companies and trusts, it was engaged in tasks within the Scope of Works clause. The Letter of Engagement conferred significant scope for judgment on the Respondent as to what work was required to perform the various tasks and conferred on the Appellant the means to protect itself from overcharging (at [25] and [47]); As to issue (ii), per Beech-Jones J (Bell P and Brereton JA agreeing): 3. To the extent that the partner was stating that certain work was "required" to be performed he was giving evidence of an opinion within the meaning of s 76 of the Evidence Act (at 51]). However, this evidence was admissible under s 79 as "little explicit articulation" of the reasoning process was required given his knowledge and experience and the scope of the evidence (at [54]). Lithgow City Council v Jackson (2011) 244 CLR 352; [2011] HCA 36; Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011] HCA 21 applied. Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305 referred to. As to issue (iii), per Beech-Jones J (Bell P and Brereton JA agreeing): 4. Neither a cross‑appeal or notice of contention is required merely to support the award of reduced damages where a Respondent is only contingently seeking entry of a lesser judgment based on a claim that was successful at first instance (at [56] to [58]). Cellarit v Cawarrah [2018] NSWCA 213 considered. Judgment 1. BELL P: I have had the benefit of reading in draft the reasons for judgment of Beech-Jones J. I agree with those reasons and the orders his Honour proposes. 2. BRERETON JA: I agree with the orders proposed by Beech-Jones J, and with his Honour's reasons. 3. BEECH-JONES J: This is an appeal from a judgment of Taylor SC DCJ upholding a claim by a firm of accountants to recover fees for professional services rendered to a client. As refined, the focus of the appeal concerned the findings of his Honour rejecting the contention that some of the services provided were outside the scope of the accountants' retainer. For the reasons that follow, I would reject the contention and dismiss the appeal. Background 1. None of the parties sought to challenge the primary findings of fact in the judgment appealed from. Unless stated otherwise, the following is taken from those findings. 2. The appellant, ELB Pty Ltd ("ELB"), was described by the primary judge as "a large proprietary company of a size attracting certain reporting obligations". In the financial year ended 30 June 2018 its revenue exceeded $23 million and net assets exceeded $97 million. 3. In September 2018, ELB's financial controller gave notice of his intention to leave his employment. After consulting with its auditors Price Waterhouse Coopers ("PWC"), ELB decided to "outsource much of its accounting work". 4. Lumina provided an "Engagement Letter" to ELB dated 4 October 2018 with an estimate of fees of $171,840.00. According to the primary judge this "assumed a very heavy involvement" of Lumina. 5. Marie Bolton, the sole managing director of ELB, proposed some changes to the Engagement Letter. Ultimately, on 9 October 2018 Ms Bolton and the Managing Partner of Lumina, John Williams, signed the Engagement Letter in its final form. The relevant terms of the letter and its accompanying terms of trade are set out below. 6. On 10 October 2018, Lumina commenced work for ELB. On 31 October 2018, Lumina rendered ELB a "Memorandum of Fees and Disbursements" for a total amount of $102,744.76 (the "October Invoice"). The memorandum listed the services provided as including "reviewing existing processes and adherence to policies", "reconciliation of accounts", "adjustments to accounting as required", training of staff and meeting with Ms Bolton to "discuss progress and recommended course of action". Attached to the invoice was a more detailed work in progress report listing the work undertaken, the staff member who undertook that task and the time spent on that task. 7. On 15 November 2018, ELB paid the October Invoice. 8. On or about 22 November 2018, ELB received correspondence from the Australian Securities & Investments Commission ("ASIC") about its failure to lodge financial statements for the financial year ended 30 June 2017. The primary judge found that there were discussions between ELB and Lumina about this which resulted in Lumina sending ELB a letter on 6 December 2018 entitled "Proposal for Outsourced Accountancy Services". The letter set out an estimate of the cost to prepare financial statements for ELB and two associated trusts. 9. On 12 December 2018, ELB received Lumina's invoice dated 30 November 2018 for $100,269.77 for the work undertaken in November 2018 (the "November Invoice"). 10. On 9 January 2019, ELB received Lumina's invoice dated 31 December 2018 for $51,373.29 for the work undertaken in December 2018 (the "December Invoice"). The primary judgment states that this invoice was for $51,457.49. Nothing turns on the difference. 11. Both the November Invoice and the December Invoice were in similar format to the October Invoice. They both attached a work in progress report. Unlike that invoice, they were not paid. 12. Thereafter, there were discussions about the amount of the invoices. On or about 10 January 2019, Lumina ceased working for ELB. The primary judge found that neither the work contemplated by items 4 and 8 of the scope of works in the Engagement Letter (see below), nor the work referred to by the letter dated 6 December 2018, was completed. The Engagement Letter 1. The Engagement Letter commenced by specifying that a number of entities form part of the corporate group to whom Lumina would be providing services. Under the heading "Scope of Work" the letter then stated: "We [Lumina] understand that the services we have agreed to perform are as follows: 1. Act as CFO of the Group supervising the overall policies, procedures and performance of the accounting team with the aim of providing accurate, useful and timely management reporting. If required, providing guidance on a turnaround strategy, providing insight into direction of the business. Assisting the Board in identifying areas in need of attention and defining its goals, assisting with developing a plan to rectify these areas and to achieve goals, including attendance at meetings thereon; 2. Assess existing policies, procedures and accounting systems. Specifically, redesigning policies and procedures for: - Accounts payable and banking; - Sales and accounts receivable; - Warehouse, inventory management and stock obsolescence; - Payroll; - Month-end procedures, including prepayments and accruals; - Job costing and work in process; - Provision of statutory compliance information to PwC; and - Make recommendations of changes utilising either Lumina or inhouse software. 3. Understand the Board's objectives and plans, provide feedback and recommendations thereon. Develop a budgetary model which reflects the organisational goals and is consistent with sales objectives/budgets that have been established; 4. Design a quality monthly management report which provides focus on the key financial drivers of the business successes and objectives, from a balance sheet, profit and loss and other indicators; 5. Understand accounting and finance team structure and ability level, identify any full-time resources required; 6. Implement and supervise changes to be adopted and train ELB staff, so the reliance on Lumina staff is reducing over time; 7. Meeting regularly with ELB management to review and interpret results, identify areas requiring attention and assess the performance of the business against defined goals; and 8. Close 2017 and 2018 books including preparation of year end file and liaison with PwC thereon." (emphasis added) 1. The Letter of Engagement identified six persons who comprised the "specific team responsible for the delivery of your work". They consisted of Mr Williams, another partner, Mr Connolly, a finance manager, a senior accountant, a graduate accountant and a personal assistant. 2. Under the heading "Professional Fees", the Letter stated "[o]ur fees are based upon time incurred to complete each assignment" and that "[i]n respect of each assignment, staff are allocated according to their experience". The Letter stated that, "[w]e estimate our charges over the initial 3 months to be approximately". It then listed four staff with a corresponding estimate of hours, charge out rate and total for each staff member. The total estimate of fees was $171,840.00 exclusive of GST. 3. The Engagement Letter included attached "Terms of Trade", which were said to "form part of the conditions of" the retainer. Clause 14 of the Terms of Trade enabled Lumina to terminate on three months' notice and ELB to terminate on one month's notice. Clause 16(d) provided that invoices were to be rendered monthly and payment was due withing 14 days of the invoice date. Clause 16(f) specified that disputes over fees should be taken up with the Managing Partner. 4. To arrive at the proper construction of the Engagement Letter, the document as a whole must be considered (Metropolitan Gas Co v Federated Gas Employee's Industrial Union (1925) 35 CLR 449 at 455 per Isaacs and Rich JJ). The meaning of the words used is to be ascertained by reference to what a reasonable person would have understood the language of the letter to have conveyed (Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 at [40]; Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35]). 5. Adopting that approach, a number of matters of relevance to the construction of the Engagement Letter should be noted. First, the terms of the Engagement Letter were agreed upon by commercial entities, both well capable of looking at their own interests. 6. Second, as the emphasised portions of the Scope of Work clause make clear, the Engagement Letter reposed significant scope for judgment on Lumina as to what work was to be performed. Hence, Lumina was required to "assess" existing policies and "redesign" them, "understand" the Board's objectives and the accounting and finance team structure, "design" a report, "implement" and "supervise" changes, meet with management and to do all things necessary to complete the 2017 and 2018 accounts. Moreover, Lumina was required to provide staff that collectively "act[ed] as the CFO", a task that was necessarily broad in scope and which had significant responsibilities. 7. Third, Task 6 of the scope of work necessarily contemplated or assumed that there were deficiencies in the performance of the existing "ELB staff" and that for a period some, and perhaps many, of the tasks they performed would be performed by Lumina staff. Hence, ELB staff were to be trained so that the reliance on Lumina staff to perform their tasks would reduce over time. Implicit in that statement was that, initially at least, ELB would be significantly reliant on Lumina to perform the tasks that should have been but could not be undertaken by ELB staff. The "ELB staff" being referred to included the members of the accounting and financial team referred to in Task 5 (as well as the "accounting team" referred to in Task 1). It follows that the tasks they should have performed, but could not, included the accounting and financial tasks performed by that team. 8. Fourth, not only did the work to be performed by the Lumina staff include the work of the finance and accounting team (as well as training them), it also included the responsibility of the "CFO" in supervising the "accounting team" (Task 1). Further, the analysis of what the CFO role entails must be done in a context whereby ELB is a private company ("ELB Pty Ltd") whose "books" for the financial years ended 30 June 2017 and 30 June 2018 were not yet closed (Task 8). A Chief Financial Officer in that position would be expected to assume direct responsibility for the preparation of the accounts including undertaking some accounting tasks themselves, if there were deficiencies in the performance of the "accounting and finance team". 9. The end result is that the Engagement Letter conferred a very wide set of duties on Lumina that included the tasks of the finance and accounting team and afforded Lumina a wide area of judgment as to how to perform those duties. ELB had the benefit of an estimate of the fees that would be charged. ELB was able to supervise the amount of work Lumina performed by scrutinising its monthly bills and, if appropriate, raising a dispute about them with the Managing Partner under clause 16(f) of the Terms of Trade and, if necessary, terminating on one month's notice under clause 14(a). ELB could scrutinise the quality of the work performed via its own assessment, informed by the various reporting tasks undertaken by Lumina contemplated by Tasks 1, 3 and 7. The Proceedings Below and the Primary Judgment 1. Lumina sued ELB for the amounts sought in the November and December Invoices with interest. It used a short form pleading that simply asserted that the services were supplied at ELB's "request". One aspect of ELB's amended defence was that certain tasks that were charged for were extraneous to the tasks listed in the scope of works in the Engagement Letter. ELB pleaded that this included the October Invoice and thus it had paid more to Lumina than it was entitled to receive. Attached to the Amended Defence was a schedule of 102 items of work (the "Extraneous Tasks") taken from the work in progress reports attached to each of the October, November and December Invoices. This schedule included a column containing the commentary provided in the work in progress report for that item and a column setting out ELB's objection to having to pay for it (the "Schedule of Extraneous Tasks"). 2. Despite this pleading, ELB did not file a cross‑claim seeing recovery of the money paid in response to the October Invoice as monies had and received. Even so, I am proceeding on the assumption, favourable to ELB, that any excessive amount it paid under the October Invoice could be offset against any amount that was found to be otherwise owing by it. Primary Judge's Construction of the Letter of Engagement 1. Three issues were raised before the primary judge, only the third of which is pursued on appeal. First, ELB contended that the Engagement Letter constituted a "maximum price agreement" under which Lumina was obliged to complete the entire scope of works for the fixed price of "$171,840 plus GST". Second, ELB contended that Task 8 in the above scope of works had to be completed within three months. The primary judge rejected both contentions. In relation to the latter, the primary judge found, consistent with the above analysis, that the "obligation on Lumina was to work on the tasks, and charge according to the agreed rates". 2. The third point raised by ELB before the primary judge was the contention that Lumina charged for work outside the terms of the Engagement Letter; ie the Extraneous Tasks. The primary judge resolved this by reference to the terms of the Engagement Letter. His Honour noted that the Engagement Letter contemplated Lumina working for not just ELB but also for three related companies and two related trusts. The dispositive part of his Honour's reasons was as follows: 52 As Lumina was to act as Chief Financial Officer of the Group (Task 1), anything of an accounting or financial nature for the ELB Group appeared to be within the ambit of the retainer. … … 63 The context of the work done by Lumina was a broad scope of works, requiring Lumina to involve itself in all the financial and accounting systems of ELB. So long as Lumina was engaged in accounting work concerning ELB and its related companies and trusts, it was, in my view, engaged in tasks within the scope of works. No contrary test of the scope of works was proposed. The invoices, once it is accepted that the work was done, prove that the work was for ELB, and without more, established that it was very likely within the broad scope of works. That conclusion is not displaced by the circumstance that Mr Connolly's memory of particular entries was limited or unhelpful, or that evidence of other like witnesses was not given. … 65 In the absence of some reasoned assertion that an item was unconnected to the ELB retainer, I would not draw a Jones v Dunkel inference, because there was no controversy on which the witness could assist. Even without Mr Connolly's opinion, the invoices were sufficient to establish that the work was within the scope of the retainer. The evidence of Mr Connolly's opinion explaining the types of work recorded on the invoices was admitted and provided additional support for the conclusion I would reach from the invoices. There was no contrary evidence, nor any coherent reason for the Court to conclude otherwise. … 67 Accordingly, I was satisfied that the work recorded in the invoices was within the broad scope of work in the Engagement Letter, and that Lumina was entitled to charge for it, as it did." (emphasis added) 1. As a consequence of these findings, the primary judge entered judgment in favour of ELB for the amount owing under the November and December Invoices ($151, 643.06) with interest ($37,692.45). Primary Judge's ruling on Mr Connolly's Evidence 1. In light of the arguments on appeal, it is necessary to explain the reference to Mr Connolly's evidence in the above extract from the primary judgment, although his Honour only found that it provided "additional support" for his rejection of ELB's contention about Extraneous Tasks. 2. At the hearing before the primary judge, Lumina read an affidavit from the partner who formed part of the team referred to in the Engagement Letter, Daniel Connolly. The work‑in‑progress reports attached to the invoices recorded that he worked on the engagement with ELB. Attached to Mr Connolly's affidavit was a schedule that he and other staff prepared which added a column to ELB's schedule of Extraneous Tasks entitled "Response". This column contained comments that sought to connect the work described to one of the eight specific tasks in the Scope of Works clause noted above. Mr Connolly attested to that column. 3. For example, the original Schedule of Extraneous Tasks included a row referable to work undertaken by another staff member on 12 October 2018. The column titled "comment" for that row stated "Review 2016 and 2017 reconciliation where available on the system. Discuss approach to month end process". This is the task description extracted from the work in progress report. Under the column "Reason for Objection", ELB inserted the words "un-authorised /out of scope". The additional column entitled "Response" inserted by Lumina and attested to by Mr Connolly for this row stated as follows: "This is required as part of Item 8, Close 2017 and 2018 books including preparation of year end file and liaison with PWC thereon. It is necessary to understand 2016 and progress on 2017 to close 2017 financial statements. Also required as part of Item 2, Assess existing policies, procedures and accounting systems." (emphasis added) 1. Further, in the body of his affidavit, Mr Connolly addressed certain work described in the work in progress reports and tied that work to various tasks set out in the above scope of works. Thus, for example, he described the work undertaken by one member of staff between 6 November 2018 and 19 November 2018 who acted under his supervision in preparing and reconciling working papers and discussing intercompany loan queries for two of the entities in the ELB group. He explained how this work was necessary to complete the "books" for those entities for the 2016 financial year which in turn was necessary to finalising their accounts for the 2017 financial year. 2. Before the primary judge, ELB objected to the tender of that part of Mr Connolly's evidence in which he adopted the Response column to the schedule described above. The bases for the objection were that in seeking to connect the work done to a particular task he expressed an opinion, but the factual basis for his opinion was not established, it was also not established that Mr Connolly's opinion was based on his specialised knowledge and that otherwise his knowledge of the individual items was limited. The primary judge received this evidence without ruling on the objection. His Honour reserved to ELB the opportunity to address its admissibility and weight in submissions. 3. ELB submitted to the primary judge that, even if this evidence was admitted, little weight should be attached to it given that the relevant staff of Lumina were not called as witnesses (other than Mr Williams and Mr Connolly). Although this submission was described as a Jones v Dunkel submission (Jones v Dunkel (1959) 101 CLR 298), it better reflects the reasoning described by Glass JA in Payne v Parker [1976] 1 NSWLR 191 at 201 namely that the failure to call a witness who could have been called by a party may result in the direct evidence of that party being "more readily rejected" and the inferences for which that party contends being "treated with greater reserve" (although see ASIC v Hellicar (2012) 247 CLR 345; [2012] HCA 17 at [257]). 4. The primary judge dismissed ELB's objections to Mr Connolly's evidence as follows: 60 The factual basis for Mr Connolly's opinions was principally inferentially the contents of the invoices themselves and perhaps his own experience of working at ELB would also factor into his opinion. ….. 61 For this reason, I think the Makita (Australia) Pty Ltd v Sprowles … objections to his opinions, and the Jones v Dunkel submission in respect of the other Lumina workers, are not persuasive. The evidence of the nature of the work is recorded in the invoices. Mr Connelly's opinion served merely to give explanations that connected the detailed specific work in the invoices to the larger objectives in the scope of works. 62 In my view, little assistance would likely be gained from calling the other employees even if that step was financially feasible in respect of the many transactions for less than a few thousand dollars, sometimes only hundreds of dollars or less. This is especially so when no challenge was put to Mr Connelly about any particular item being outside the scope of works, even the items of work that he performed personally." The Appeal 1. As noted, on appeal, ELB only challenged the primary judge's rejection of its contention about the Extraneous Tasks. In its amended notice of appeal, ELB raised one ground of appeal as follows: 1. The trial judge erred in finding (at [67]) that the plaintiff (Lumina) had proven that it was entitled to charge the defendant (ELB) for performing all of the tasks referred to in the trial judge's reasons and in argument below as "[e]xtraneous tasks". In so doing, his Honour: a. erred in finding (at [52]) that "anything of an accounting or financial nature for the ELB Group appeared to be within the ambit of the retainer"; and b. erred in finding (at [63], sentence 2) that the "scope of works" of ELB's engagement of Lumina included all "accounting work concerning ELB and its related companies and trusts" that may be engaged in by Lumina. The trial judge should have held that Lumina had not proven that ELB was liable to pay Lumina for the work referred to in the highlighted rows of the schedule attached to this notice of appeal. In so holding, his Honour should have held that the "Response" cells in the highlighted rows of the schedule were not admissible as evidence because those "[r]esponse[s]" were opinions that Lumina had not demonstrated fell within the "expert evidence" exception in s 79 of the Evidence Act 1995 (NSW) (cf J at [61])." 1. The "schedule attached to this notice of appeal" as referred to in this ground, is an amended version of the Schedule of Extraneous Tasks attached to Mr Donnelly's affidavit noted above that included Lumina's response column. This was revised from the version produced at the hearing by the deletion of certain rows that corresponded to parts of the work in progress reports that ELB no longer challenged. In the end result, on appeal, ELB contended that just over $100,000 across the three invoices was referable to Extraneous Tasks and should not have been awarded. Construction of the Engagement Letter 1. Although there is only one ground of appeal, it incorporates complaints about both aspects of the primary judgment described above, ie the construction issue and the reliance on Mr Connolly's evidence. That said, both parties' submissions contended that the primary judge's ultimate decision was not based on his Honour's acceptance of Mr Connolly's evidence. I agree. The above passages make it clear that the primary judge's decision rested on three matters: the accepted fact that the "Comment" column in the Schedule of Extraneous Tasks recorded the type of work that was done in relation to each row in the Schedule; the fact that on any view each such item of work amounted to "accounting work concerning ELB and its related companies and trusts"; and the conclusion in [63] of the primary judgment that "[s]o long as Lumina was engaged in accounting work concerning ELB and its related companies and trusts, it was, in my view, engaged in tasks within the scope of works." 2. ELB's submissions on appeal took issue with the third step in this reasoning. It was contended that this amounted to a "blank cheque" construction of the Engagement Letter. ELB contended that it was apparent from the Engagement Letter that "the parties had, with some care, agreed upon the scope of the work that Lumina was required to perform". In relation to Task 1, ELB submitted that it was not the parties' intention that Lumina be retained to "perform all of the work of 'accounting or financial nature' that might be required or that Lumina might think desirable to be performed" such as "basic bookkeeping". It was submitted that Tasks 2 to 8 "are what might be described as management-level tasks" that do not contemplate Lumina "perform[ing] routine accounting or financial work". The submissions referred to Task 5 as not contemplating the performance by Lumina of the work of the finance and accounting team but only "understanding" it and identifying if further resources were required. 3. Lumina's submissions on appeal contended that ELB's complaints about the primary judge's construction of the Engagement Letter as involving a "blank cheque" approach and that Lumina was restricted to a supervisory and management role were not raised before the primary judge. This can be put aside because, at the very least, ELB did not accept before the primary judge the proposition that all accounting work concerning ELB and its related entities fell within the Engagement Letter. In reliance on a notice of contention, Lumina also contended that the primary judgment could be supported by evidence which was said to demonstrate that each of the items was requested by ELB in either the Engagement Letter or other correspondence. In light of the construction of the Engagement Letter that I prefer, it is not necessary to address the notice of contention. 4. Lumina's principal submission was that the primary judge's finding at [63] of the primary judgment that "[s]o long as Lumina was engaged in accounting work concerning ELB and its related companies and trusts" then it was "engaged in tasks within the scope of works" was correct. In particular, it was submitted that the scope of Lumina's engagement included but was not restricted to supervisory and management level tasks and extended to such financial and accounting work that Lumina determined was necessary. This was said to be so because both the list of Tasks and the balance of the Engagement Letter contemplated Lumina providing a team that would supplement and, in some respects, replace the internal finance and accounting team employed by ELB and that Task 8 entailed the very specific job of completing the accounts. Lumina's submissions also referred to a concession made in cross‑examination by Ms Bolton that, inter alia, she "employed Lumina to close the books". In relation to Task 1, in oral argument, reference was made to Ms Bolton's concession that "[i]n my company, if I was to have a CFO, [they would] look after anything to do with the finances and …. also, day-to-day finances …" (emphasis added). 5. Leaving aside the reference to Ms Bolton's evidence, Lumina's submissions are consistent with the above analysis of the Engagement Letter. ELB's characterisation of Tasks 2 to 8 as "management level tasks" is inconsistent with Task 8 which required Lumina staff to do all such things that were necessary to finalise the 2017 and 2018 accounts. It is also inconsistent with so much of Task 6 that contemplates ELB relying on Lumina to undertake the work of ELB accounting and financial staff, with such reliance reducing over time. It is true, as ELB contended, that the parties agreed upon the scope of the duties to be performed by Lumina with care and they included management and supervisory tasks. However, they were not restricted to those tasks. The "care" the parties took was to confer on Lumina the scope to perform duties that ranged from the performance of accounting and financial duties to the training and supervision of staff, the design of such processes as Lumina considered was necessary and the management tasks that ELB referred to. 6. In both written and oral submissions ELB submitted that it is one thing to construe the Scope of Work clause as extending to a wide variety of work but another to construe it as though Lumina was to "do all things at all times". This is just another variation of the "blank cheque" submission namely that the vice in the primary judge's finding is that it conferred on Lumina the opportunity to charge for whatever accounting and financial work it considered appropriate. However, as noted above, the phrases used in the Scope of Work clause did leave a wide area of judgment for Lumina to determine what was required. This was almost inevitable given that the entire premise of the Engagement Letter was that ELB did not have a CFO or a functional finance and accounting team and Lumina had the expertise to determine what was required. 7. The protection offered by the Engagement Letter to ELB was its ability to scrutinise the accounts that were invoiced on a monthly basis and, if not satisfied, terminate Lumina's retainer on one month's notice. By this means, ELB could avoid writing "blank cheques". In this case, Lumina had the opportunity to take that course when it received the October Invoice which charged for more than half the estimated fees. However, ELB did nothing and paid the invoice. In substance, ELB's complaint is not about charging outside the scope of the Engagement Letter but (allegedly) excessive charging for too many tasks within the scope of the Engagement Letter. The Engagement Letter and Terms of Trade conferred on ELB the means to protect itself against that occurring and it chose not to exercise them. 8. Accordingly, the primary judge was correct to conclude that, if Lumina was engaged in accounting work concerning ELB and its related entities, then it was "within the scope of works" of the Engagement Letter. 9. This is sufficient to dispose of the appeal. For the sake of completeness, I note four further matters. 10. First, the above construction of the Engagement Letter flows from a consideration of the text of Engagement Letter itself. In [63] of the primary judgment his Honour referred to the "context of the work done by Lumina was a broad scope of works". This reference to "context" was to the context that could be discerned from a consideration of the terms of the Engagement Letter itself, an approach that is consistent with the authorities cited above and does not raise any issue concerning the application of Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352. Otherwise, I have had no regard to the evidence of Ms Bolton relied on by Lumina and referred to at [43] above. I am doubtful that that evidence falls within any known category of evidence outside the terms of an agreement that can be used to construe its terms. 11. Second, there is some doubt that that portion of the evidence of Mr Connolly set out in [33] above constituted "evidence of an opinion" such that it was prima facie excluded by s 76 of the Evidence Act 1995 unless an exception such as that provided for expert opinions in s 79 was invoked. Although the phrase "opinion" is not defined in the Evidence Act, in Lithgow City Council v Jackson (2011) 244 CLR 352; [2011] HCA 36 at [10] and [27], French CJ, Heydon and Bell JJ proceeded on the basis that an opinion means "an inference [drawn] from observed and communicable data" (citing Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 5) (1996) 64 FCR 73 at 75). Whether something is an opinion is to be assessed as a matter of substance not form. Thus evidence from a suitably knowledgeable person about the existence of a particular practice adopted by professionals or members of Parliament does not, or at least may not, constitute "opinion evidence" and is not for that reason excluded by s 76 (ASIC v Vines (2003) 48 ACSR 291; [2003] NSWSC 1095 at [20]; Obeid v R (2017) 96 NSWLR 155; [2017] NSWCCA 221 at [250]). 12. Mr Connolly undoubtedly has expertise in accounting. Equally, from his work for ELB, it can be inferred that he learnt about the state of its accounting and financial systems and had knowledge of what work was involved in making them compliant. If Mr Connolly had simply stated that a particular type of work was in fact performed as part of, say, the process of "closing the books" then his evidence would not have been "opinion" evidence at all and the discussion about whether he satisfied s 79 would have otiose. However, in the "response" column of the Schedule of Extraneous Tasks, Mr Connolly attested to a statement that work performed by others was "required" to complete various tasks, principally closing the books. By stating more than what work was in fact done to close the books and stating that it was "required", Mr Connolly was expressing an opinion in that he drew an inference from "observed and communicable data" including data that was observed by him about the audit. 13. However, even accepting that Mr Connolly's expressions in the "Response" were only admissible if s 79 was satisfied, the debate in the submissions before the primary judge and in this Court about the admissibility of this evidence appears to have proceeded on the misapprehension that this Court's judgment in Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305 represents a complete statement of the law concerning the operation of s 79, specifically the statement of Heydon JA (at [85]) as follows: "… that is, the expert's evidence must explain how the field of 'specialised knowledge' in which the witness is expert by reason of 'training, study or experience', and on which the opinion is 'wholly or substantially based', applies to the facts assumed or observed so as to produce the opinion propounded. If all these matters are not made explicit, it is not possible to be sure whether the opinion is based wholly or substantially on the expert's specialised knowledge. If the court cannot be sure of that, the evidence is strictly speaking not admissible, and, so far as it is admissible, of diminished weight." (emphasis added) 1. The apparent strictness of this statement was significantly qualified in the following passage from the judgment of French CJ, Gummow, Haynes, Crennan, Kiefel and Bell JJ in Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588; [2011] HCA 21 at [37] ("Dasreef"): "The admissibility of opinion evidence is to be determined by application of the requirements of the Evidence Act rather than by any attempt to parse and analyse particular statements in decided cases divorced from the context in which those statements were made. Accepting that to be so, it remains useful to record that it is ordinarily the case, as Heydon JA said in Makita … , that 'the expert's evidence must explain how the field of 'specialised knowledge' in which the witness is expert by reason of 'training, study or experience', and on which the opinion is 'wholly or substantially based', applies to the facts assumed or observed so as to produce the opinion propounded'. The way in which s 79(1) is drafted necessarily makes the description of these requirements very long. But that is not to say that the requirements cannot be met in many, perhaps most, cases very quickly and easily. That a specialist medical practitioner expressing a diagnostic opinion in his or her relevant field of specialisation is applying 'specialised knowledge' based on his or her 'training, study or experience', being an opinion 'wholly or substantially based' on that 'specialised knowledge', will require little explicit articulation or amplification once the witness has described his or her qualifications and experience, and has identified the subject matter about which the opinion is proffered." (emphasis added) 1. In this case, a specialist accountant who had worked for a particular client expressed an opinion that some item of accounting work was required to complete the client's financial statements. That he was applying his "specialised knowledge" based on his "training, study or experience", is a matter that required "little explicit articulation or amplification" once Mr Connolly described his qualifications and experience and identified the subject matter about which the opinion was proffered, as he did. Had it been necessary to decide this issue then, at least to the extent that Mr Connolly expressed an opinion about what was required to "Close the books", I would have concluded that his evidence was rightly held to be admissible. 2. Third, in his submissions, counsel for ELB, Mr Robertson, submitted that it was sufficient for his client to succeed on the appeal to merely show that the primary judge's finding at [63] of the primary judgment involved too wide a construction of the Engagement Letter. He submitted that, if the Court determined that some narrower construction was warranted, which nevertheless supported a finding that some but not all of the charges for the items of work listed in the Schedule of Extraneous Items were recoverable, his client would, in the absence of a cross‑appeal seeking a different judgment amount, succeed entirely in setting aside the judgment below. Mr Robertson referred to this Court's decision in Cellarit v Cawarrah [2018] NSWCA 213 ("Cellarit") esp at [248] to [253] per McColl AP (with whom Macfarlan and Leeming JJA agreed). 3. I reject this contention. From beginning to end, Lumina's case was simple. It contended that it provided services at ELB's "request" at agreed hourly rates. It contended that the principal source of the "request" was the Engagement Letter. The primary judge held that the Engagement Letter was authority for all the charges it sought to recover. If, on its proper construction, this Court found that the Engagement Letter was only authority for some of the work it sought to recover then it would vary the judgment appealed from to give effect to that finding. In this context, s 75A(10) of the Supreme Court Act 1970 (NSW) provides that this Court may make any finding or assessment, give any judgment, make any order or give any direction which ought to have been given or made or which the nature of the case requires. It was also open to Lumina to seek to uphold the recovery of some items in whole or in part on a basis not found by the primary judge namely that the request to perform the work was not made in the Engagement Letter but elsewhere. As noted, Lumina sought to do this. However, to the extent that Lumina sought to support recovery of any amount charged based on the Engagement Letter as the source of the "request", it did not need to file a notice of contention or a cross‑appeal. 4. This analysis is consistent with Cellarit. The respondent in Cellarit had succeeded at first instance in seeking recovery of allegedly excessive commission charges they had paid to the appellant on the basis that the commission rate was fixed at 15%, a matter that the appellant denied. On appeal, and against the contingency that the appellant succeeded, the respondent sought entry of a judgment for a lesser amount calculated on the basis that the appellant had overcharged for commission even applying the rates the appellant contended were correct and the appellant had wrongly reversed certain discounts previously applied to their account. The respondent had not succeeded on either ground at first instance (at [251]). It was in that context that, in Cellarit, McColl AP held that the respondent was required to file a cross‑appeal, ie it sought to obtain a judgment for a lesser sum on different basis to that upheld by the primary judge in that case (at [248] to [253]). 5. A cross-appeal is required only where the respondent to an appeal "seeks the discharge or variation of the decision below" (Uniform Civil Procedure Rules, "UCPR", r 51.17). A notice of contention is required only where the respondent seeks to support the judgment on grounds other than those favourably relied on by the primary judge (UCPR r 51.40). Neither is required merely to support the award of reduced damages, where an appeal on quantum succeeds. Orders 1. It follows that I consider that the appeal should be dismissed with costs. 2. Accordingly, the orders that I propose are: (1) Appeal dismissed. (2) Appellant pay the respondent's costs of the appeal including its notice of contention. ********** 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: 17 May 2021