WILLIAMS v MOBILETRACK PTY LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MEAGHER, POWELL JJA and SHEPPARD AJA 29 September 1998, 24 November 1998 [1998] NSWCA 264 CONTRACT — Claim for work done as a consultant — Consideration of particular facts of matter — Claim found by trial judge to be false because claim for hours worked inflated — No error of principle. Meagher JA I agree with Sheppard AJA. Powell JA I agree with Sheppard AJA. Sheppard AJA This is an appeal from a judgment of the District Court (HH Bell DCJ) entered as a consequence of a verdict found against the appellant who was the plaintiff in the action. The action was to recover amounts for work said to have been done by the appellant for the defendant pursuant to a contract between them. In the statement of claim appended to the statement of liquidated claim filed in the District Court it was alleged that the appellant was at all material times a consultant with the respondent providing telecommunications services in relation to the development and engineering of technical services associated with various products. The relevant terms of the consultancy agreement were said to be that the respondent would pay the appellant at the rate of $100.00 per hour for all work done by him on its behalf, such work to include all meetings, presentations, discussions and/or either contact between the appellant and client and/or potential clients of the respondent. The rate of $100.00 per hour was applicable to all travel undertaken by the appellant on behalf of the respondent to and from such meetings, presentations, discussions and/or other contacts. ParaS of the statement of claim pleaded that on 30 January 1996 the respondent wrongfully terminated the consultancy agreement under which the appellant was retained. It may be mentioned at this point that, although one might be forgiven for thinking that that was an indication that there was to be a claim for damages based on the alleged wrongful termination of the agreement, no such claim was in fact made. The paragraph seems to be irrelevant to the cause of action which was in fact relied on. Para6 of the statement of claim alleged that as at 2 February 1996 the appellant, in accordance with the consultancy agreement, had performed the work, journeys and attendances on behalf of and at the request of the respondent, its servants and/or agents, such work totalling 1378.5 hours. Para7 claimed that the appellant had lodged with the respondent invoices detailing work done and moneys claimed and that the respondent had failed to meet them. Particulars of the amounts claimed were given. The total amount said to be outstanding was $137,850 made up of 1378.5 hours at $100.00 per hour. The background of the matter is given in his Honour's judgment. In 1994 the appellant was a director of the respondent. The appellant's family company was a shareholder in the respondent. The appellant's expertise was largely responsible for the respondent's success in the field of satellite positioning. His Honour described the business as it then was as "thriving". 2 UNREPORTED JUDGMENTS Pursuant to an agreement dated 22 April 1994, the appellant's family company and other shareholders sold their shares in the respondent to a company called Herbury Pty Ltd. The agreement included a restraint of trade clause and also a clause which provided for the employment of the appellant as a consultant. The relevant provisions of the agreement are to be found in cl11.4 and cl11.5. It was there provided that the respondent agreed to employ the appellant for a minimum term of two years as from the completion date of the agreement for a minimum twenty hours per week at a gross rate of $100.00 per hour, and otherwise on terms satisfactory to the parties "acting reasonably". The respondent and the appellant were recorded as agreeing to use their best endeavours to prepare an employment contract between the date of the agreement and its completion date. CI11.5 provided that, notwithstanding the provisions of cl11.4, the parties agreed to use their best endeavours before and after completion to arrange for the respondent either to employ the appellant on the terms and conditions contained in cl11.4 or to assume the obligations of the respondent in relation to his employment after the completion date. It may be observed that the appellant was not a party to the agreement. It was his family company which entered into the agreement along with others. There was no reference in the judgment appealed from or in the argument before us to the significance this might have in relation to the provisions of cl11.4 of the agreement which provided that the respondent and the appellant agreed to use their best endeavours to prepare an employment contract between them. His Honour said that no formal written agreement was ever entered into between the appellant and the respondent. He referred to discussions which had "apparently" taken place with the respondents new general manager, Mr Wallace. He also referred to letters written on 4 and 11 July 1994 by the respondent confirming that it had agreed to employ the appellant on a salary package of $100,000 per annum apportioned, "for what appear to be legitimate tax reasons" between salary and other purposes. The letter of 4 July 1994 was modified by a further letter in similar terms dated 11 July 1994. Both letters were signed on behalf of the respondent by Mr Wallace. The appellant also signed them apparently as an indication of his agreement with the terms which he was offered. The second letter confirmed discussions relating to the appellant's request to alter the mix of his salary package set out in the previous letter. The new mix was then set out and totalled $100,000. The letter continued: "As previously stated the above salary package is based on your continuing full-time involvement in the role. We are preparing a more detailed letter of engagement which will be forwarded to you in the next few days. This letter of intention supersedes the previous letter of 4 July 1994 only in relation to the mix between the cash component and car allowance." The earlier letter had concluded with a statement congratulating the appellant on his appointment to which Mr Wallace had added, "I'm looking forward to working with you!". It is to be noted that the agreement reflected in the letters of 4 and 11 July 1994 is different from that contemplated by the agreement for sale of the shares in that it contemplates full-time employment for which the appellant was to be paid the equivalent of $100,000 in salary and other benefits. Notwithstanding that to be the case, on 3 January 1995 a company, Spectrum Network Systems Ltd, sent a facsimile to the appellant's bank in which it was said that, as requested by the appellant, it was confirmed that he was a non-executive director of Mobiletrack Pty Ltd, ie the respondent. It was also said URJ WILLIAMS v MOBILETRACK PTY LTD (Sheppard AJA) 3 that the appellant had an agreement to provide services to the respondent for a minimum of two years. In return, the appellant was paid $100.00 per hour for his services. His services were for a minimum of twenty hours per week. This approximated $100,000 per year. The facsimile said that the respondent was a "wholly owned controlled entity of Spectrum Network Systems Ltd, a publicly listed company". The facsimile was signed by Spectrum's financial controller. Other evidence established that the respondent was a wholly owned subsidiary of Spectrum. The facsimile may therefore represent the respondents then view of the contract as well as that of the appellant. The agreement which is referred to in the facsimile is similar to that contemplated by the agreement for sale but bears no resemblance to the agreement reflected in the letter of 11 July 1994. Para4 of the statement of claim in which the agreement relied upon by the appellant is pleaded does not allege an agreements in terms similar either to the agreement for sale or to the letter of 11 July 1994. In those circumstances it was only to be expected that there would be uncertainty at the hearing at first instance as to what the terms of the contract between the appellant and the respondent were. His Honour found that the contract was one pursuant to which the appellant was entitled to be paid for such services as he rendered pursuant to the contract and that the contract was substantially as agreed in the correspondence in July 1994. His Honour noted that the formal document envisaged in those letters was never prepared adding that the parties by their conduct had accepted the terms. But his Honour, in a passage the correctness of which is challenged in this appeal, added: "Of course, that does not prevent the [appellant] from proving an agreement to pay him for excess hours and if I accept his account of the conversations with Mr Wallace he would be entitled to recover and the question next to be decided is whether I should accept that uncontradicted evidence of the [appellant]." I must confess that I have not understood what his Honour meant by the word "that" in the expression "that does not prevent...". It does suggest that his Honour thought that there was a contract which entitled the appellant to be paid for a minimum of twenty hours per week. But, as mentioned, that is not what the July correspondence in which his Honour thought the contract was contained, contemplated. It provided for an employment under which the appellant was to be paid a salary and was to be entitled to other benefits, the value of all of which was $100,000. The July correspondence did not refer to hours but referred to the appellants "full time involvement" as an employee. There is another place in the judgment where one finds a suggestion that the contract was based on hours worked. His Honour referred to evidence given by the appellant to the effect that both Mr Wallace and a Mr Archer, who is the executive chairman of Spectrum Network, had separately told him that he was to work for as many hours as were necessary in order to complete the work which, apparently, consisted mainly of supervising other scientists and engineers. He added that there was very little detail given of the discussion and his Honour's statement is as consistent with a contract in which there was to be provided a minimum amount of twenty hours work and a contract which simply provided that a fee of $100.00 per hour would be paid for each actual hour which was worked. 4 UNREPORTED JUDGMENTS In the view I take of the matter, his Honour's findings about the contract are not important for the outcome of the case. It does seem to me, however, that whatever view one takes of the July letters, the conduct of the parties reflected an understanding that the contract was for the engagement of the appellant as a consultant at a fee of $100 per hour for work done by him. It does not appear to have involved the employment of the appellant on a full-time basis at a salary and other benefits of $100,000 per year as contemplated by the July correspondence. His Honour said that invoices for work done came soon after the July correspondence, the first being dated 15 July 1994. His Honour said that that invoice and each subsequent invoice was on the appellant's family company's letterhead, and the invoice sought payment to the company. The monthly invoices were each expressed to be for approximately twenty hours per week at the agreed rate though the hours were often expressed to two places of decimals indicating some arithmetical calculation. His Honour thought that this might be explained by some arithmetic resulting from the date of the month not falling on the same day of the week as the invoice commenced. It was here that his Honour made reference to the evidence of the appellant about discussions regarding his employment in which, according to his evidence, he said that both Mr Wallace and Mr Archer had separately told him that he was to work as many hours as were necessary in order to complete the work. His Honour also referred at that point to the fact that Mr Wallace had not been called as a witness. He said that, in the ordinary course, he would have drawn an unfavourable inference against the respondent owing to its failure to call him, but Mr Wallace was dismissed. His Honour said that he would thus be unlikely to be favourably disposed toward the respondent and also said that the respondent believed, on reasonable grounds, that Mr Wallace was to be called by the appellant. Counsel for the respondent submitted that any adverse inference should be drawn against the appellant who had, in effect, led those advising the appellant to believe that Mr Wallace would be called in the appellant's case. His Honour concluded that, when all those matters were considered, he ought not draw a Jones v Dunkel (1959) 101 CLR 298 inference against either party. His Honour also said: "At some stage the [appellant] claims to have expressed to Mr Wallace his concern that he was working more than twenty hours per week and was not being paid for it. Indeed, he says that he was working even before 4 July, though he has never sought to invoice the defendant for that earlier period. According to him, Mr Wallace told him that he should invoice the defendant for twenty hours per week only, because that was all that the defendant had budgeted for but that he should keep a record of all additional hours worked and that the defendant would pay him for those additional hours at the conclusion of his contract. He says that he acted on that advice." His Honour said that all the invoices referred to hours worked "as per time sheets". No time sheets were in evidence although the appellant did produce some records of times at which he had left and arrived at the premises of the respondent. His Honour said that in September 1995, after this procedure had been followed for well over a year, the appellant obtained from an employee of the respondent copies of all his invoices to date. All had been paid. But after he obtained the invoices in September, the appellant wrote a note on each indicating that a large number of additional hours had been worked during each month but URJ WILLIAMS v MOBILETRACK PTY LTD (Sheppard AJA) 5 had not yet been invoiced. He returned the invoices, so amended, to the accounts department and thereafter each subsequent invoice bore a similar endorsement. His Honour continued: "That is he still invoiced the defendant for twenty hours per week, sometimes a little more, sometimes a little less, leaving the balance to be claimed later." The appellant also gave evidence of a conversation he had with Mr Archer in September 1995 which his Honour said probably occurred before the invoices had been amended. The appellant claimed that Mr Archer assured him that he would be paid for the additional hours. Mr Archer denied giving any such assurance either then or at any other time. He said that the appellant was referred to the new general manager, Mr Lynch. His Honour said that Mr Lynch, who was new to the job, having just replaced Mr Wallace, said that he, in effect, "passed the buck to other officers", he then being unaware of the letters of July 1994. His Honour said that in January 1996 there was a falling out between the parties and the agreement, "whatever it was", terminated. His Honour also said that the parties had not in the proceedings made any issue in relation to the nature of the termination but the appellant claimed that the contract having terminated, he was now entitled to be paid for the additional hours. It was after referring to some submissions made by counsel for the parties in relation to the contract that his Honour made the remarks earlier set out in relation to the contract where he said that the contract was substantially as agreed in the correspondence of July 1994. It is next appropriate to refer to the detail of the invoices. Those about which there is no dispute, in other words the invoices in their original form, were in similar terms, they were numbered, and they began with a date, the first being 15 July 1994. There was then a statement: "Details of services provided as per time sheets. Provision of Telecommunications Consultancy Services in product development and engineering technical services with respect to GPS products and maintenance of existing client products." The rate was said to be $100.00 per hour and the period of the invoice dated 15 July 1994, 4 July 1995 to 15 July 1994. The total hours were said to be 41.67 and the amount of the invoice was $4,167.24. Invoices continued to be issued in this form. As his Honour said, on occasions the hours exceeded twenty per week. On other occasions they were less. As mentioned, after the appellant retrieved the invoices from one of the respondents employees in September 1995, he added notations to them. On the invoice dated 15 July 1994 he placed an asterisk beside the statement that his total hours for the period 4 July 1994 to 15 July 1994 were 41.67. Beside an asterisk lower down on the invoice are the words, "O/S additional hours not yet invoiced for this period 44 hours @ $100/hour". Similar notation was added to each of the invoices. The amounts claimed in para7 of the statement of claim are in conformity with these additional amounts. The respondent refused to pay them. The claim gave rise to a significant question concerning the credibility of the appellant's evidence in which his claim for these various additional amounts was verified. The upshot was that his Honour disbelieved him regarding the claim as dishonest. His Honour said that the question was whether he should accept the uncontradicted evidence of the appellant. His Honour continued: 6 UNREPORTED JUDGMENTS "(Counsel for the respondent] says no. She points to the serious inroads on the plaintiff's credibility which she made in cross-examination. She cross-examined him about deficiencies in his records, an apparent inconsistency between his evidence and the returns for the family company and about the arrangement pursuant to which money was paid to the family company. And she submits that the plaintiff's version is dishonest and so inherently improbable that I should reject it. She submits that it appears that the plaintiff has been less than frank with those representing the other shareholder in the family company. She points to the extraordinary delay between the commencement of the work in July 1994 and the first notation of the claim in any form in September 1995, to the lack of any evidence of any disagreement in respect of the arrangement described in the letters of July 1994, to the minuteness of the claims actually made in the invoices and to the absence of an acceptable record of hours said to have been actually worked. She points to the lack of explanation for the occasional invoice where less than twenty hours has been claimed, although a larger amount is said to have been worked. The argument is that if he always worked something between forty and sixty hours per week, as he claimed, then one would have expected that every invoice would be for at least twenty hours and any shortfall would be reflected in the calculation of the balance. The plaintiff was unable to explain this in cross-examination and it is consistent with the "extras" being an afterthought. She points also to his apparent evasiveness on the score of the "foreign" work that he did from time to time, in particular work for air charter companies that he had. She also submits that it is unlikely that any employer, or contracting party, would enter into such an open ended arrangement leaving it entirely to the plaintiff to decide whether to work additional hours and how many and further allowing him to defer both claim and particulars of claim until the end of the contract. In my view, it is indeed an unlikely arrangement and in the light of my findings as to the credibility of the plaintiff and of Mr Archer I am not prepared to accept that part of the plaintiff's case and there will be a verdict for the defendant with costs as assessed." Plainly his Honour accepted each of the arguments put to him by counsel for the respondent. The question is whether his Honour fell into error in taking that course. Strangely, the three essential submissions made on behalf of the appellant do not directly touch the critical question of the appellant's credibility. They seek to bypass it. I deal with these submissions as follows. It was firstly said that his Honour was in error in saying that the appellant was not prevented from proving an agreement to pay him for excess hours. Counsel submitted that that was the agreement the parties had. There was no requirement for the appellant to prove any further agreement. The existing agreement contemplated that there might be a claim for hours in excess of the minimum of twenty for which the agreement provided. Counsel for the appellant relied on the expression "a minimum twenty hours per week" used in cl11.4 of the sale agreement to which, of course, the appellant was not a party. The only other place to which reference to a minimum of twenty hours per week is made is in the facsimile that was sent to the bank by Spectrum. As earlier said, this may reflect the common understanding of the parties at that time but there is no finding to that effect. More importantly, the case was one brought by the appellant to recover payment for additional work he had done. The case was contested by the respondent, not on the basis that it was not liable URJ WILLIAMS v MOBILETRACK PTY LTD (Sheppard AJA) 7 to pay for more than twenty hours per week, but on the basis that the claim to be paid for additional work was dishonest. That was the case which his Honour upheld. Thus the case was not one which depended on twenty hours per week at all. It was a case in which the appellant claimed payment for twenty hours per week or thereabouts on each of the original invoices. It was his attempt to inflate the claim that brought about the problem, not any provision of the contract preventing him from doing more. The case is a straight out case of a consultant entitled to be paid $100.00 per hour for work done making an excessive claim. The concentration by counsel in his submission on the word "minimum" is thus unhelpful. It is of no relevance to the outcome of the case. The second submission was that his Honour neglected to mention the evidence of three witnesses, Mr Lynch, the respondent's general manager, Mr Szymanski, an electronics engineer employed by the respondent, and Mr Neil, another of the respondent's employees. Each of these witnesses deposed in a general way to the fact that on occasions the appellant was in the respondent's office for long hours. But their evidence did not deal with the actual number of hours he devoted whether at the office or otherwise to work on behalf of the respondent. They could not say what he was doing from hour to hour when he was at the office and there was the evidence of the appellant doing work for others referred to by counsel for the respondent in her submissions to his Honour in the passage quoted from his judgment. Plainly, his Honour accepted this submission along with the others to which he referred. His Honour no doubt found their evidence unhelpful in resolving the problem, particularly in the light of his very adverse view of the appellant's credibility. I would reject the submission made in relation to the failure to mention the evidence of these three witnesses in the judgment. The third submission was that his Honour had misdirected and misapplied the principles enunciated in Jones v Dunkel (supra). In this respect, an application to lead fresh evidence was made. The evidence consisted of the production of a bill of costs served on the appellant's solicitors by the respondents solicitors in respect of the work done by them for the respondent in connection with the appellant's claim. Items in the bill show that the respondents solicitors were considering calling Mr Wallace and had made arrangements for his attendance at the hearing from Adelaide. There was a dispute between the parties as to whether the evidence should be admitted. There was no discussion during the argument about the circumstances under which a party is permitted to lead fresh evidence. The principles are discussed in Commonwealth Bank of Australia v Quade (1991) 178 CLR 134. Usually it must be reasonably clear that, if the evidence had been available and had been adduced, an opposite result would have been produced or, if it is not reasonably clear that it would have been produced, it must have been so highly likely as to make it unreasonable to suppose the contrary. Otherwise the discovery of fresh evidence will rarely, if ever, be a ground for a new trial; see Greater Wollongong Corporation v Cowan (1955) 93 CLR 435 at 444 referred to by the Court in Quade at 140. There, the Judges in Quade added that the words "rarely if ever" in the passage from Cowan left open the possibility of exceptional circumstances justifying a departure from the general rule. Quade itself was a case about an imperfect discovery and in a different category from that dealt with by the Court in Cowan. 8 UNREPORTED JUDGMENTS This case is different again from both Cowan and Quade. It is true that the evidence could not have been available to the appellant because it appears in a bill of costs served after the trial as a consequence of an adverse order for costs made in the trial. Nevertheless, there is a question in the present case, not pursued by either party in argument, whether the evidence which is sought to be led could in any sense be thought to be fresh evidence of the kind which requires a trial to be reopened. That is because one has to make some assessment of the significance the new evidence would have had on the outcome of the proceedings in the District Court. In my opinion all that the evidence did was to spell out in a little detail the fact that the respondent was contemplating calling Mr Wallace. He was clearly a most relevant witness. And he had been the respondent's general manager before his own dismissal. No doubt there was a tactical question between the parties about who would call him. The party calling him would have been unlikely to be able to cross-examine him. I do not think that attempting to decide whether the evidence was admissible in this appeal as fresh evidence has much value. The question is whether his Honour misdirected himself in relation to the principles in Jones v Dunkel. The essential question is whether the respondents failure to call Mr Wallace warranted the conclusion that his Honour should have taken a different view of Mr Archer's credibility. Mr Wallace was a previous employee and was involved in negotiations and discussions with the appellant. But his Honour took the view that it was not a case to which Jones v Dunkel had any application because the respondent had dismissed Mr Wallace and this was likely, in the circumstances, to make him hostile to its case. His Honour thought that it was therefore not a case in which the respondent should be under a disadvantage because of its failure to call Mr Wallace. It was well open to his Honour to take this view and I detect no error in his approach. As earlier said, the case is a straight out case of a consultant having done some work for a company inflating his claim. The Judge found against him upon the basis that he was not satisfied that the claim had been established. No error is reflected in what his Honour has done. I would dismiss the appeal with costs. 1 The appeal be dismissed. 2 The appellant pay the respondent's costs of the appeal. Counsel for the appellant: A Radojev Solicitors for the appellant: Michael P Carroll & Peter S Knudsen Counsel for the respondent: S J Goddard Solicitors for the respondent: Dunhill Madden Butler, Sydney