Supreme Court New South Wales Medium Neutral Citation: La Vie Developments Pty Ltd v Illawarra Regional Development Group Pty Ltd [2013] NSWSC 748 Hearing dates: 4 June 2013 Decision date: 05 June 2013 Jurisdiction: Common Law Before: Beech-Jones J Decision: Appeal allowed in part. Catchwords: Appeal from Local Court - agreement for consultancy services - parties to the contract - whether Plaintiff entitled to payment - whether Defendant owed payment obligation - whether notice given of termination. Legislation Cited: Local Court Act 2007 Cases Cited: - Alchin v Daley [2009] NSWCA 418 - Toyota Motor Corporation Australia Ltd and Anor v Ken Morgan Motors Pty Ltd and Ors [1994] 2 VR 106 Category: Principal judgment Parties: La Vie Developments Pty Ltd (atf Dobre Trust) (Plaintiff) Illawarra Regional Development Group Pty Ltd (Defendant) Representation: Counsel: J.M. White, N. Mirzai (Plaintiff) B. Loukas (Defendant) Solicitors: Maurice Marshan (Plaintiff) Joe Weller & Associates (Defendant) File Number(s): 2012/226435 Decision under appeal Jurisdiction: 9109 Date of Decision: 2012-06-25 00:00:00 Before: Ryan LCM File Number(s): 2011/015188 EX TEMPORE Judgment 1This is an appeal by La Vie Developments Pty Limited ("La Vie") against a judgment for $27,935.83 together with costs entered against it by the Local Court in favour of Illawarra Regional Development Group Pty Ltd ("IRDG"). IRDG had sued La Vie for moneys it alleged were owing pursuant to an oral consultancy agreement. Background 2At all relevant times the relevant principals of each of IRDG and La Vie were Mr Wilkinson and Dr Gooley respectively. It seems that, for a number of years, Dr Gooley and La Vie had been pursuing a proposal which involved the re-zoning of land owned by La Vie, and the obtaining of approval for the construction of a private hospital precinct on that property. 3Mr Wilkinson met Dr Gooley in 2007 and offered to provide services as a consultant. In his witness statement tendered in the Local Court, Dr Gooley described a number of dealings between himself and Mr Wilkinson and their respective companies in the calendar years 2007 and 2008. It is not necessary to consider those dealings in any detail as ultimately they were not relevant to the issues in dispute between the parties and were not the subject of any findings of fact by the presiding magistrate. 4It was common ground that in January 2009 Dr Gooley and Mr Wilkinson had, on behalf of La Vie and IRDG respectively, reached some form of agreement for the supply of consultancy services in exchange for the payment of a monthly amount of $8,020 including GST. I will return to discuss the terms of the arrangement as found by the presiding magistrate in more detail later in these reasons. 5At present it need only be noted that under those arrangements, consideration was given to payment of the sum of $8,020 pursuant to a number of invoices issued by different entities. The consultancy agreement continued until October 2010 when, according to her Honour, it was terminated by IRDG. IRDG's Claim 6In its proceedings IRDG sought recovery of consultancy fees for the months of August, September and October 2010. The only plaintiff in the Local Court was IRDG and the only defendant was La Vie. In its statement of claim, IRDG pleaded the existence of an agreement between itself and La Vie for the payment of the monthly sum for consultancy fees. In paragraph 7 of its statement of claim IRDG pleaded that it issued invoices for payment in August, September and October 2010, but that La Vie failed to pay. 7In paragraph 2.12 of its defence La Vie admitted that in January 2009 "the parties" reached an agreement for the provision of consultancy services. In context, the reference to "the parties" could only have been a reference to IRDG and La Vie. In relation to the terms of that agreement La Vie pleaded that the terms of the agreement were, inter alia, as follows: "2.14.1 The plaintiff would submit invoices to the defendant totalling $7,400 (plus GST) per month payable as follows: (a) $1,200 plus GST per month to be paid by [La Vie], (b) $2,200 plus GST per month to be paid by [La Vie], (c) $2,000 plus GST per month to be paid by Blue Cross Medical Centre, (d) $2,000 plus GST per month to be paid by Australian Health Care Centre." 8Further in its defence, La Vie expressly pleaded that the invoices were not issued by IRDG. It did not expressly plead that there was any party to the contract for the provision of consultancy services other than itself and IRDG. 9Mr Wilkinson appeared on behalf of IRDG at the hearing in the Local Court but did not give evidence. Apparently he called his parents in an endeavour to show that consultancy work was performed by IRDG during at least the period August to September 2010. He tendered the invoices that had been issued for the months of August, September and October 2010. There were eight invoices covering the period August to September 2010 together totalling $16,040 including GST. All of these invoices were on the letterhead of Sydwest Design and Development Pty Limited ("Sydwest"), trading as "Illawarra Regional Development Group". 10Four of the invoices were issued to "La Vie Developments", two were issued to "Australian Health Care Centre" and two were issued to "Blue Cross Medical Centre". Australian Health Care Centre and Blue Cross Medical Centre were registered business names owned by companies associated with Dr Gooley. 11The invoice for October 2010 was dated 29 September 2010. It was also on the letterhead of Sydwest. It was addressed to La Vie and sought the full amount of $8,020.10. The invoice included the description "memorandum of fees for notice of termination". 12In the hearing before the presiding magistrate, it appears that there was only limited evidence adduced concerning the entry into of the consultancy agreement. There was tendered before her Honour a statement from Dr Gooley which included the following evidence on that topic: "In early 2009 I attended a meeting with Michael Wilkinson at the home of his parents in Gladesville. At this meeting we discussed his precise requirements for our business relationship and it was agreed that he would submit monthly invoices to me totalling $7,400 plus GST and they would be paid as follows: by La Vie $1,200 plus GST per month, by La Vie $2,200 plus GST per month, by Blue Cross Medical Centre $2,000 plus GST per month, by Australian Health Care Centre $2,000 plus GST per month and this would be paid to whichever of its entities sent out the tax invoices." 13As was contemplated by this evidence, and similar to the invoices that were tendered at the hearing, it seems that between February 2009 and July 2010 invoices were issued in the name of Sydwest to La Vie and the other entities. In cross examination Dr Gooley agreed that the arrangements, at least so far as he understood them, were that the companies associated with him would pay whichever entity raised the invoice. Her Honour's Judgment 14Her Honour's judgment briefly recorded the commercial background to the litigation. Under the heading, "[I]s There a Contract between the Parties" her Honour found that there was an oral contract between "the parties", being La Vie and IRDG. Her Honour noted that that was a matter that appeared to be accepted by the pleadings. The next heading in her Honour's judgment was: "To Summarise the Contract". It included the following passage: "Work was done by the plaintiff company from the [sic] early January 2009 and the agreed monthly sum of $8,020 to be paid to the plaintiff company by the defendant company. I find that from reviewing exhibit A, attachments 20 and 21, it is very clear from this documentation that the arrangement between the plaintiff and the defendant encompassed Mr Michael Wilkinson, Illawarra Regional Development Group, Mid-West Design and Development or any other company associated Mr Michael Wilkinson [sic], by the same token, the same arrangement is extended to Dr Gooley, La View [sic] Developments, as trustee for Dobre and La Vie Trusts and any other company of which Dr Gooley is a director. In the absence of a written agreement, it is this Court's view that this oral contract encompasses an intention to include all companies that are referred to, especially in the document dated 24 August 2010 and also that document dated previously, 1 July 2009. They are the attachments 20 and 21. To say that the agreement is strictly between [La Vie] and Illawarra Regional Development Group Pty Ltd is, in my view, misleading. The relevant agreed terms in that oral contract are: (1) that Mr Wilkinson would submit monthly invoices to Dr Gooley totalling $8,020 including GST. The invoices would be paid by [La Vie] as to $1,200 including GST per month; (2) [La Vie] as to $2,200 plus GST per month; (3) Blue Cross Medical Centre as to $2,000 plus GST per month; (4) Australian Health Care Centre as to $2,000 plus GST per month. The invoices would be paid to whichever of his entities sent out the tax invoices. I find that the defendant was paid the $8,020 as a retainer for services as a development consultant. The arrangement was not calculated on a time/cost basis but a monthly retainer." 15The next part of her Honour's judgment is entitled, "[a]t what point did the Defendant terminate the services of the Plaintiff?" In short, her Honour's answer to the question posed was that it did not. Instead, her Honour found that it was an implied condition of the contract that either party could terminate it upon the provision of a minimum thirty days notice. Her Honour further found that there was no evidence that La Vie terminated the contract, but instead that there "was evidence that [IRDG] terminated the contract from 1 October 2010 by way of letter of demand effectively giving thirty days notice". It seems that her Honour implicitly accepted that evidence, that is, that her Honour made a finding in the terms that her Honour understood the evidence as suggesting. 16Her Honour then rejected various further assertions made by La Vie as to the quality of IRDG's compliance with the terms of the consultancy contract in terms which are not necessary to address. Her Honour then upheld IRDG's claim to recover all of the invoices for the period August, September and October, the fees for the latter month being sought in the invoice dated 29 September 2010 to which I have referred. Nature of the Appeal 17The scope of an appeal from the Local Court to this Court is governed by ss 39 to 41 of the Local Court Act 2007. I address each of the grounds of appeal raised later in these reasons. At present, it need only be noted that all of those grounds are said to raise questions of law and as such are matters that do not need leave (see s 39(1)). La Vie did not seek leave to appeal to raise any mixed question of law and fact (cf s 40(1)). 18It is apparent from La Vie's summons that it also seeks to set aside the order for costs made against it by the Local Court and to that extent it must seek leave to do so (see s 40(2)(c)). No separate ground of appeal was directed to the costs order and that aspect of the appeal appears to turn upon the fate of La Vie's attack upon the Local Court's substantive judgment. Ground One: Identity of the Payee 19Ground one of the appeal alleges that her Honour erred in law in construing the contract so that it required La Vie to pay IRDG the sums claimed for invoices issued by Sydwest. Ground one also complains that her Honour erred in law in failing to find that La Vie was only required to pay such of Mr Wilkinson's entities that rendered an invoice to La Vie. 20In his written submissions and oral argument, counsel for La Vie, Mr White, pointed to the passage extracted above (at [14]) and in particular the statement that "it was misleading to say that the agreement was strictly between [IRDG] and [La Vie]". He also pointed to the finding that a relevant term of the contract was that "the invoices would be paid to whichever of Mr Wilkinson's entities sent out the tax invoices". In his written submissions, Mr White contended that, according to her Honour's findings "Sydwest was itself a party to the relevant contract", and that the better construction of the contract is that "the entities on Dr Gooley's side of the bargain made several promises to pay such entities to the entities on Mr Wilkinson's side of the bargain". On this reasoning, the only contractual right to payment that accrued to IRDG would have been in the event that it rendered an invoice in its own name. 21Counsel for IRDG, Mr Loukas, submitted that this approach both wrongly construes her Honour's findings and was not a construction of the contract that was reasonably open. He submitted that her Honour did not find that any entity other than IRDG or La Vie were parties to the contract for the provision of consultancy services. He submitted that the discussion of the invoicing arrangements in her Honour's judgment was simply a reference to the terms of the contract by which the arrangements for payment were to be effected. He submitted that the effect of her Honour's finding was that the contractual obligation to pay the fees was only owed to IRDG and only owed by La Vie. He submitted that the effect of the other invoicing arrangements was merely the machinery by which that obligation could be discharged. 22It followed, according to Mr Loukas' argument, that the only party that could sue to enforce the obligation to seek payment was IRDG, and that the only party that could be sued was La Vie. In substance, Mr Loukas' submissions alluded to the distinction "between the question who the parties to the contract are and the question by what person or persons a particular act required by the contract is to be performed" (see Toyota Motor Corporation Australia Ltd and Another v Ken Morgan Motors Pty Ltd and Others [1994] 2 VR 106 at 128). 23Although her Honour's reasons were not clear on this point, I consider that Mr Loukas' construction of this aspect of her Honour's judgment is to be preferred. The starting point for the analysis was the admission on the pleadings of the existence of a contract between at least IRDG and La Vie. This starting point was taken up by her Honour in finding an oral contract between "the parties" which, as I said, could only be a reference to the parties to the litigation. 24In the opening sentence from the above extract, her Honour referred to either the fact of, or the obligation to make payment "to the plaintiff company by the defendant company". Again this is consistent with the only parties to the agreement being La Vie and IRDG. Otherwise, at no point in the judgment did her Honour expressly find that any of the other entities became a party to the contract. It is true that her Honour suggested that it was "misleading" to contend that the agreement is "strictly between" La Vie and IRDG. However, that statement is ambiguous. It is perhaps consistent with the suggestion that there are other unknown or unstated parties to the agreement but it is equally consistent with the proposition that the contract between La Vie and IRDG merely contemplated that other parties or entities would take steps to give effect to its terms. Further, the reference in her Honour's judgment to the invoices being paid "to whichever" of Mr Wilkinson's entities that sent out the tax invoices, is not the same as a finding that such of the entities that issued an invoice became a party to the contract. 25Critically in my view, and contrary to La Vie's contention, it seems to me that it would have been wholly unwieldy to have a contract entered into between IRDG and La Vie in January 2009 that enabled IRDG, via Mr Wilkinson, to add as a party to the contract any entity that it wished to by adopting the simple expedient of issuing an invoice in their name to a company associated with Dr Gooley. 26In oral submissions, Mr White contended that, if her Honour had construed the contract in this manner, then it was not open to her Honour to do so. I do not agree. As I have said, the starting point based on the pleadings was his client's assertion that at least IRDG and La Vie were parties to the relevant contract. The burden was thrown upon La Vie to demonstrate, if it wished to, that some other entity also became a party to the contract. On my reading of her Honour's judgment, her Honour was not so convinced. To the extent that it may be relevant on an appeal confined to a question of law, neither am I. For the reasons I have indicated, it seems to me that it would be a very unusual agreement that operated in a manner whereby IRDG via Mr Wilkinson could determine at a later time which entity was to be a party to the contract by sending an invoice in their name. 27It follows that I reject ground one of the appeal. 28It is also appropriate at this point to address part of ground five of the appeal, which contends that her Honour's reasons in relation to this aspect of the case were inadequate. 29The gravamen of the complaint concerning the adequacy of her Honour's reasons on this issue is that "no reason is provided for the decision that IRDG was entitled to pursue the invoices rendered by Sydwest". 30I will not traverse the various authorities concerning the obligation imposed on her Honour (see for example Alchin v Daley [2009] NSWCA 418 at [35] to [47] per Sackville AJA, with whom McColl and Young JJA agreed). I have already referred to the fact that aspects of her Honour's judgment were not particularly clear. Nevertheless, I am satisfied that her Honour did not conclude that there were any parties to the contract other than La Vie and IRDG. Once this is made clear, it enables La Vie's complaint about her Honour's judgment to be answered. Her Honour's reasons meant that IRDG was entitled to "pursue" or seek recovery in respect of the amounts referred to in the invoices rendered by Sydwest, because the contractual obligation to make a payment was one that was only owed to IRDG and not to Sydwest. On her Honour's findings, the use of Sydwest to render an invoice was simply the machinery adopted by the parties to facilitate the discharge of the payment obligation owed by La Vie to IRDG. In my view, her Honour's reasons were in this respect adequate. Ground Two: Identity of the Payer 31Ground two of La Vie's appeal alleges that her Honour erred in construing the contract so as to require La Vie to pay IRDG the sum claimed in the invoices rendered to entities other than La Vie, namely, those companies that owned the business names Blue Cross and Australian Health Care. This ground further alleges that her Honour erred in failing to find that La Vie was only obliged to pay such invoices as were issued to it. In reality this ground raised exactly the same issues as arose in relation to ground one of the appeal except that they concern the identity of the payer of the invoices rather than the payee. 32Nevertheless, for the reasons I have given in relation to ground one, I reject this ground and the related part of ground five alleging that her Honour's reasons were inadequate in this respect. Grounds Three and Four: Invoice for October 2010 33Ground three of the appeal contends that her Honour erred in law in finding that IRDG was entitled to payment for work performed for the month of October 2010 when there was no evidence that any such work was performed. Ground four of the appeal is in the alternative to ground three. It contends that, in circumstances where her Honour found that IRDG terminated the contract, her Honour erred in law in construing the contract such that it required La Vie to pay IRDG an amount in respect of notice of termination. These grounds were addressed together and they all concerned the finding that IRDG was entitled to be paid the amount claimed in the invoice issued by Sydwest on 29 September 2010 which was, on one view, for consultancy fees for October 2010. 34I have described the steps in her Honour's reasoning that led to the finding that IRDG was entitled to recover this amount (see [15]). Mr White took issue with each step in that reasoning. First, Mr White took issue with her Honour's finding that there was an implied term of the contract that entitled either party to terminate the agreement by the provision of a minimum of thirty days notice in writing. Mr White contended that her Honour's reasons reveal an error in law because the basis for the implied term was said to be a clause in an unsigned draft contract between the parties that had included a thirty day notice period. Her Honour had previously noted in her judgment that the parties had disagreed over the terms of that draft. In particular, it was said that there was evidence before her Honour that Mr Wilkinson had specifically rejected the inclusion of the clause that was relied on by her Honour. There is considerable force in these submissions but for reasons I will explain, it is not necessary to decide this aspect of Mr White's complaint. 35Second, Mr White contended that no obligation to make a payment could arise in the circumstance where there was no finding, or any evidence that would support a finding, that IRDG had performed consultancy services in the month of October 2010. Again, it is not necessary to decide this point. However, given that her Honour found that it was a contract for the payment of a fixed amount "as a retainer for services", it is difficult to see how IRDG's entitlement to receive fees was dependent upon a finding that it, in fact, performed work. Instead, prima facie it would appear to be sufficient that the agreement was on foot, and that IRDG was willing to provide such services as might be required by La Vie. 36Third, Mr White attacked a finding by her Honour to the effect that IRDG "terminated the contract from 1 October 2010 by way of a letter of demand effectively giving thirty days notice". Mr White submitted that there was no evidence capable of supporting that finding. However, in my view, an anterior question arises as to what this finding meant. A finding that the "contract was terminated from 1 October 2010" suggests the contract came to an end at that time. If that is what her Honour meant, then it would have a number of consequences. These would include that IRDG would be in breach of the implied term that her Honour found. Moreover, it would mean that IRDG would have no right to receive any consultancy fees for October 2010 as by that time the contract was either at an end or, at the very least, IRDG would have manifested an intention that it was not willing to provide services for that month. On the other hand, a conclusion that "IRDG gave a letter of demand effectively giving thirty days notice" on its face suggests that, in conformity with the implied term, her Honour found IRDG gave notice that the contract would terminate in thirty days but that IRDG would observe it in the meantime. If that were the case and for the reasons that I have already tentatively suggested, it would appear to be entitled to receive consultancy fees for that period. 37Ascertaining what her Honour meant in this respect is no easy matter. The only document that either counsel could point to as constituting the "letter of demand" referred to in this finding is the invoice bearing the date 29 September 2010 that I have referred to (at [11]). This is curious in that it is not a letter and the only "demand" in that document is an implicit request to pay. Moreover, nothing in that document purported to give thirty days notice of anything. Instead it only refers to "notice of termination". 38It is not my function on an appeal involving questions of law to make findings of fact concerning the effect of such a notice. However, I can have regard to the terms of that notice to resolve what appears to be an apparent ambiguity in her Honour's finding. For my part, I cannot see how the invoice could possibly be construed as the provision of thirty days notice of the expiry of the contract; i.e. as notice by IRDG that the contract would expire at the end of October 2010. The reference to "notice of termination" strongly suggests that what was being stated was that the contract was to end immediately, and it was accompanied with a demand for payment as some form of compensation for that fact. 39Thus, my reading of that invoice confirms that the proper construction of her Honour's finding was that IRDG purported to give notice of the immediate termination of the contract and made some request for payment. Once her Honour's finding is construed that way, it follows as a matter of law that IRDG had no right to payment of retainer fees for October 2010. In terms of ground 4 of the appeal, it would also follow that there was no available construction of the contract by which IRDG could purport to give notice of the immediate termination of the contract, on the one hand, and then maintain a claim for a payment for a period after its purported termination, on the other. 40It follows that I uphold ground four of the appeal. It is not necessary to determine ground three, as success on that ground cannot give to La Vie any better result than it will achieve as a consequence of its success on ground four. Ground Five: Inadequate Reasons 41I have already addressed so much of the complaint concerning the inadequacy of the reasons, as relates to the claim for invoices for August and September 2010. The balance of ground five of La Vie's appeal concerns her Honour's reasons for upholding IRDG's claim to recover the fees for October 2010. In light of La Vie's success on ground four, it is not necessary for me to address the remainder of ground five. Relief 42It follows from my conclusions in relation to grounds one and two that so much of La Vie's appeal as concerns the August and September 2010 invoices will be dismissed. It also follows from my conclusion on ground four that so much of La Vie's appeal as concerns the invoice claiming an amount for October 2010 will be allowed. 43It is not necessary for the matter to be remitted to the Local Court as it follows from what I have found that her Honour's finding that IRDG'S claim in respect of fees for October should have failed. Instead, the appropriate order is to vary the judgment that was granted in IRDG's favour. There will also need to be an adjustment of the interest awarded. [Parties addressed] 44The parties have now had the opportunity to address on the appropriate adjustment to the Local Court judgment in light of my findings. It was accepted that the appropriate adjustment was to revise the Local Court judgment downwards to reflect the failure of IRDG to recover the amount of $8,020 for October 2010. It was also agreed that there would be a consequential reduction in the amount of interest awarded by one third. The end result is a revised judgment figure of $18,779.22. It was also accepted that there should not be any interference with the Local Court costs order made in favour of IRDG, on the basis that it seems overwhelmingly likely that had this revised judgment been awarded by the Local Court then the same costs order would have been made. 45This leaves the costs of these proceedings. 46La Vie sought an order that it be awarded costs on the basis that it had achieved substantial success, so it said, in an appeal restricted to a question of law. Mr White stated that there was no concession of any part of the appeal by IRDG. IRDG seeks an order for its costs. It submitted that it was substantially successful. IRDG's claim in the Local Court was comprised of three months' fees for which it has ultimately been successful in respect of two months. In my view, La Vie's success on the appeal can best be described as it being successful as to one-third, and IRDG successful as to two-thirds. Bearing in mind that there are two sets of legal costs involved, I consider that the appropriate order which reflects the differing levels of success is that La Vie pay one-third of IRDG'S costs of the proceedings in this court. 47Accordingly, the Court orders as follows: (1)Appeal allowed in part. (2)Set aside the judgment entered by the Local Court in proceedings 2011/00015188 on 25 June 2012. (3)In lieu thereof that: (a)there be judgment for the Plaintiff in the Local Court proceedings 2011/00015188 in the amount of $18,779.22, together with interest on the amount of $16,040.00 from 25 June 2012; (b)the Defendant in Local Court proceedings 2011/00015188 pay the Plaintiff in those proceedings its costs of those proceedings. (4)The Plaintiff in this Court pay one-third of the Defendant's costs of these proceedings. (5)The summons be otherwise dismissed. ********** Amendments 02 August 2013 - Substitute "IRDG's claim" for "La Vie's Claim" in fifth sentence. Amended paragraphs: 46 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: 02 August 2013