Boral Resources (NSW) Pty Limited v Douglas John Challinor t/as Bedgebury Products & Services

1. [1]

   HER HONOUR: This is an appeal from a Local Court Magistrate concerning unpaid invoices arising out of a contract in relation to the supply of equipment and services.

2. [2]

   By amended summons filed 23 February 2018, the plaintiff seeks firstly, the appeal be allowed; secondly, in the alternative and to the extent necessary, leave to appeal from the whole of the decision of his Honour Magistrate Brender and thirdly, an order that the judgment of the Local Court be set aside and in lieu thereof there be judgment for the plaintiff.

3. [3]

   The plaintiff in this Court is Boral Resources (NSW) Pty Limited, who was the defendant in the Local Court (“Boral Resources”). The defendant in this Court is Douglas John Challinor t/as Bedgebury Products & Services, who was the plaintiff in the Local Court proceedings (“Mr Challinor”). For convenience, I shall refer to the parties by name.

4. [4]

   On 8 May 2017, Magistrate Brender (“the Magistrate”) entered judgment in favour of Mr Challinor in the sum of $74,758.20 plus costs.

The appeal

1. [5]

   Section 39(1) of the Local Court Act 2007 (NSW) provides that a party to proceedings before the Local Court sitting in its General Division who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law. This appeal does raise a question of law, namely the proper interpretation of a contract.

2. [6]

   Section 41 of the Local Court Act provides that this Court may determine an appeal made under ss 39(1) or 40(1) by either (a) varying the terms of the judgment or order, or (b) setting aside the judgment or order, or (c) setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court’s directions, or (d) dismissing the appeal.

Grounds of appeal

1. [7]

   Boral Resources appeals from the whole of the decision of the Magistrate dated 8 May 2017, on the following grounds. The Magistrate erred firstly, in holding that the master hire agreement, on its proper interpretation, obliged Boral to hire the grader and the excavator for a particular period and at a fixed price; secondly, by determining quantum by finding that Mr Challinor’s claim was in debt (rather than in damages) and did so by reference to whether the pleadings were certified or not and in circumstances where the issue as to the form of the pleadings was not argued before him and as such Boral Resources was denied natural justice; thirdly, the Magistrate erred by finding that the damage suffered by Mr Challinor was $74,758.20 plus costs without making an appropriate allowance or discount for the fact that Mr Challinor mitigated his loss; the Magistrate erred by finding that Mr Challinor proved the loss and damage he suffered; and finally, the Magistrate erred in that he failed to provide adequate reasons.

The Local Court proceedings

1. [8]

   On 25 July 2016, Mr Challinor filed a statement of claim seeking the sum of $85,646, plus costs for invoices not paid by Boral Resources.

2. [9]

   Mr Challinor pleaded that on 5 December 2012, he and Boral Resources entered into a contract for the provision of equipment and services by Mr Challinor to Boral Resources. (“the contract”). By document dated 10 November 2015, an extension of the contract was offered for a further 12 months.

3. [10]

   On 3 March 2016, Boral Resources terminated the contract on 30 days notice. On 14 April 2016, Mr Challinor served on Boral Resources invoices totalling $85,646. On 22 December 2016, Boral Resources paid Mr Challinor the sum of $10,887.80, being the outstanding balance of Mr Challinor’s October 2015 and November 2015 grader wet hire invoices. (Aff, David Simpson 27 March 2017, [2]). A “Wet hire” refers to a hiring arrangement in which an operator is provided along with the equipment (as is the case here), compared to a “dry hire” which is the hire of the equipment only.

4. [11]

   The main issues to be determined by the Magistrate were firstly, whether the contents of clause 3.1 was an enforceable term of the contract as a result of its construction, or, alternatively was it implied to form part of the special conditions as contained in Part D of the contract; and secondly, whether Boral Resources was indebted to Mr Challinor in the sum of $85,646.

Ground 1 – proper construction of the master hire agreement

1. [12]

   Boral Resources submitted that the Magistrate erred in deciding that the master hire agreement, on its proper interpretation, obliged Boral Resources to hire the grader and the excavator for a particular period and at a fixed price.

2. [13]

   It is now necessary to briefly set out the relevant terms of the master hire agreement here.

3. [14]

   The master hire agreement was dated 5 December 2012. The agreement was between Boral Resources and Mr Challinor t/as Bedgebury Products & Services. It was a term of the agreement that Boral Resources agreed to hire the services from the supplier and the supplier has agreed to provide the services to the Boral Group, on the terms of the agreement.

4. [15]

   Under the heading Part B (Plant Operator Services) of the agreement, it stated:

5. [16]

   The pricing clause is as follows:

6. [17]

   Part C is headed “General Terms and Conditions. The relevant clauses read:

7. [18]

   The Magistrate in his extempore judgment dated 8 May 2017 stated that clause 13.1(a) contained within Part C (General Terms and Conditions) conflicted with clause 3.1 contained within Part B and, in the circumstances, clause 13.1 should be read down.

8. [19]

   The Magistrate referred to Franklins v Metcash [2009] NSWCA 407 (“Metcash”). In summary, it establishes the following five principles:

   1. (1)

      The task of construction is to determine what a reasonable person in the position of the contracting party would have understood the words of the contract to mean.

   2. (2)

      That involves consideration of surrounding circumstances as an aid to construction, given that words take meaning from their context.

   3. (3)

      It is not necessary to find ambiguity before reviewing the surrounding circumstances.

   4. (4)

      Negotiations may be admissible if they elucidate the surrounding circumstances but they are not receivable in so far as they are reflective of actual intentions and expectations.

   5. (5)

      Subsequent conduct would not generally be admissible, an exception may be if there was an admission as to the fact of some relevant past surrounding circumstance. Another one may be, in the case of an admission, if the contract was partly oral and the admission relation to the ascertainment of an oral term.

9. [20]

   The Magistrate also referred to the Court of Appeal’s decision Taylor v Dexta Corporation Limited and Others [2006] NSWCA 310 (“Dexta”), where Ipp JA stated at [89]:

10. [21]

    The Magistrate continued (J3.31-50; J4.1-22):

11. [22]

    The Magistrate continued at J4.24-50; J5.1-13:

12. [23]

    Boral Resources submitted that the central question is whether the master hire agreement obliged Boral Resources to hire certain equipment (namely a grader, together with an operator and an excavator) for a minimum period and at an agreed rate. Or, alternatively, whether the obligation to minimum hire and rates was only enlivened if and when Boral Resources requested the provision of this equipment and services.

13. [24]

    Boral Resources submitted that the Magistrate erred in law by treating clause 13.1 as redundant and his Honour failed to consider other clauses in Part C of the contract which supported Boral Resources’ construction. These were:

14. [25]

    With regards to clause 13.1, Boral Resources submitted that there is nothing contained in the special conditions which limits or removes the effect of clause 13.1. If that was the parties’ intention, that is where such a condition would have been found.

15. [26]

    Boral Resources submitted that a court should not lightly treat the words used by parties as redundant when in conflict and should seek to give all clauses effect.

16. [27]

    Boral Resources further submitted that their construction was supported by Part B of the contract (“Goods”). Clause 1 provides that equipment may be requested from the supplier from time to time. This suggests that the starting point is that the agreement concerns equipment that may be required. Clause 3.1 of Part B, which provides indicative costing other equipment, indicates that there was plainly no agreement as to an agreed price and, as such, there cannot have been any obligation to minimum hire. This is supported by the matters under this clause. For example, there was no obligation for Boral Resources to hire the dozer or the dump truck. It follows that it cannot be said that if Boral Resources hired either of these, the price was fixed and not open to negotiation.

17. [28]

    Finally, Boral Resources submitted that the notation in Part B of the contract that provides Boral Resources was a priority customer with minimum hire of 40 hours per week did not assist Mr Challinor. It simply meant that if Boral wished to hire the excavator, it must do so for a minimum of 40 hours per month. The machine could be taken from the site with Boral Resources’ approval and could be used elsewhere for an entire month. If this was to hypothetically occur, it could not be said that Boral Resources must pay the 40 hours of hire for that month as that would permit Mr Challinor to double dip. At its highest, Boral Resources agreed to hire the excavator for a minimum period (ie 40 hours a month), if it choose to hire it at all (which is consistent with Clause 13.1 in Part C). Such a conclusion gives the contract a harmonious operation.

18. [29]

    Counsel for Mr Challinor submitted that the Magistrate relied upon clear legal authority in his reasoning, being Metcash and Dexta. Boral Resources made no such reference to authority either to support their interpretation of the contract or to demonstrate the Magistrate had erred.

19. [30]

    In respect of Boral Resources’ submission that the minimum hire was only enlivened when Boral Resources requested services, this was not supported by any evidence placed before the Court in first instance. In particular, Boral Resources advanced no evidence that it had ever utilised equipment on a request basis. To the contrary, the Magistrate had considered and rejected this. (J4.34-41).

20. [31]

    Mr Challinor further submitted that Boral Resources provided no authority for their assertion that the Magistrate erred in law through his interpretation of Clause 13.1. His Honour relied upon the Court of Appeal decision of Metcash and adopted the same approach in reading out a term where there is an intractable contradiction between clauses. This was done to give effect to the contract in a commercially sensible and businesslike meaning. Boral Resources did not provide authority as to why the Magistrate should have ensured both clauses 3.1 and 13.1(a) had work to do in circumstances where taking such an approach would not give effect to the true commercial intentions of the parties.

21. [32]

    Mr Challinor also submitted that Boral Resources was attempting to rerun the same argument as it did in the Local Court and that it did not provide any legal authority reflecting the Magistrate’s error. Boral Resources provided a narrow interpretation of the contract and adopted an approach that is arguably contrary to legal authority, including Dexta at [30]. There was only one possible conclusion to be reached in the circumstances, being that the parties intended for there to be minimum hire amounts included in the contract. Nor does the Court of Appeal’s decision in Dexta support the narrow approach adopted by Boral Resources. The Court is to look at and give the contract an interpretation that is commercially sensible and in accordance with commercial reality. As the Magistrate took such an approach, there was no error of law.

22. [33]

    In respect of Boral Resources’ reference to hiring a dozer or dump truck, the mere fact that there was no obligation to hire this equipment does not mean that there was no obligation to hire the grader, excavator and operator. This is especially so given the contract explicitly stated minimum hours in respect to each of those items but made no such declaration in relation to the dozer or dump truck. These are therefore irrelevant to determining the matters in dispute.

23. [34]

    Finally, Mr Challinor submitted that the “double dip” argument raised by Boral Resources was incorrect because the contract stated that Boral Resources was a priority customer and that the excavator could only be removed from site with their approval. Pursuant to the terms of the contract, the excavator was under the control of Boral Resources and therefore the only way Mr Challinor could double dip would be if Boral Resources allowed him to do so. In any event, this concern is irrelevant as Boral Resources did not provide evidence that they gave permission for the excavator to be removed from the site or that any concerns of double dipping ever arose during the contract. It follows that such concerns of double dipping are irrelevant to the construction of the contract. Nor does this interpretation of the wording make any commercial sense. Looking at the words of the contract objectively, it clearly states that the excavator must remain on site and can only leave with Boral Resources’ approval. It would make no sense if the contract was to be interpreted as Boral Resources suggests because Boral Resources had the discretion to require the excavator to remain on site for the entire three years of the contract, plus the extended term of a further 12 months and at no time require it to be used. Nor did any clause impose a requirement for Boral Resources to agree to any request by Mr Challinor for the excavator to be removed, and as such, Boral Resources would be entitled to refuse such permission at any time. It follows that if Boral Resources’ interpretation of the agreement as existing on a request basis was accepted, the requirement that the excavator remain on site and not be removed without Boral Resources’ consent makes no commercial sense.

24. [35]

    Where a conflict exists between the terms of a written contract, the correct approach is that set out by the Court of Appeal in Metcash at [30]:

25. [36]

    His Honour correctly identified that Clause 3.1 of Part B and Clause 13.1(a) are in conflict and not readily reconciled. Clause 3.1 provides the specified pricing of certain equipment and notes that Boral Resources is a priority customer with minimum hire of 40 hours per month and the excavator can only be taken from site with Boral Resources’ approval. Clause 13.1(a) is a general clause that provides there is no minimum purchase or exclusivity, with nothing obliging Boral Resources’ to request or hire any minimum level of plant and/or operator services from Mr Challinor.

26. [37]

    It is my view that the tension between the clauses should be resolved in favour of clause 3.1. This is because clause 3.1 is a specific clause, whereas clause 13.1(a) is a general clause under the General Terms and Conditions. To my mind, this suggests the parties considered the minimum hire period and price to take priority over the general terms and conditions. This also gives a businesslike interpretation to the contract as it recognises that Mr Challinor, in supplying equipment and services, would likely have desired a specific price to ensure the hire agreement was financially viable. It follows that Boral Resources’ interpretation of the hire being on a request basis is incorrect.

27. [38]

    Boral Resources drew this Court’s attention to three additional clauses in Part C of the contract: clause 1.2 which provides that Boral may place orders for hire in accordance with the contract; clause 1.3 which provides that each hire order may specify the hire period; and clause 16.1 which provides that if Boral Resources terminated the hire order, it must pay Mr Challinor a certain proportion of charges and, in any event, no more than the applicable rate for one day. However, nothing in these clauses assists the Court in resolving the tension between clauses 3.1 and 13.1(a). Clauses 1.2 and 1.3 merely provide that the hire orders may be placed and may specify a hire period. Similarly, Clause 16.1 relates to the process and effect of termination and does not impact the existence or non-existence of a minimum hire period. While the Court should not readily interpret the words used by parties as being redundant, it does not follow that every clause is relevant to every conflict that arises between terms.

28. [39]

    Nor do I consider Boral Resources’ issue of double dipping in the Magistrate’s interpretation to be particularly persuasive. Under the agreement, Boral Resources (as a priority customer) had full discretion over whether or not the excavator was to be removed from the site. Therefore, Boral Resources’ hypothetical suggestion that Mr Challinor could remove the machine from site with Boral Resources’ approval and thereby double dip is untenable and in no way informs whether or not the Magistrate gave the requisite businesslike interpretation to the contract. Nor does Boral Resources’ reference to the hire of a dozer and a dump truck assist it. The contract makes specific reference to minimum hire hours for the excavator in the contract, but does not do so for the dozer or the dump truck. Therefore, to treat them as being subject to the same minimum hire conditions is incorrect.

29. [40]

    In reaching his decision, the Magistrate relied upon the Court of Appeal decisions of Metcash and Franklins. In my view, the Magistrate adopted the correct approach in finding a commercially sensible and businesslike interpretation of the contract. The Magistrate did not err in deciding that the master hire agreement, on its proper interpretation, obliged Boral Resources to hire the grader and the excavator for a particular period and at a fixed price.

30. [41]

    For these reasons, this ground of appeal fails.

Ground 2 – debt or damages and denial of natural justice

1. [42]

   This ground of appeal is that the Magistrate denied Boral Resources natural justice as his Honour determined quantum by finding that Mr Challinor’s claim was in debt (rather than in damages) by reference to whether the pleadings were certified despite the form of pleadings not being argued before him.

2. [43]

   It is necessary that I briefly set out the pleading framework here.

3. [44]

   By statement of claim filed 25 July 2016, Mr Challinor pleaded:

4. [45]

   Mr Challinor’s solicitor also certified that the statement of claim did not require a certificate under cl 4 of sch 2 to the Legal Profession Uniform Law Application Act 2014 (NSW).

5. [46]

   By amended defence filed 11 November 2016, Boral Resources denied that it was a term of the contract that Mr Challinor would be provided with payments for minimum hours for both the equipment provided and his own services. While Boral Resources admitted that a demand for payment was made, it denied Mr Challinor’s entitlement to the payment of $85,646 or any other relief. (AD, [2], [7] and [8]). In answer to the claim as a whole, Boral Resources pleaded that to the extent that Mr Challinor is entitled to any amount under the contract, he is only entitled to the profit he would have earned; and that he failed to mitigate his loss by seeking and entering other contracts. (AD, [9]).

6. [47]

   The Magistrate discussed the principles concerning the distinction between debt and damages at J5.23-50; J6.1-8):

7. [48]

   His Honour concluded (at J6.10-35):

8. [49]

   Boral Resources say that Mr Challinor’s claim is “for a debt, not for damages”. Boral Resources submitted that the Magistrate erred in law for the following reasons. Firstly, the statement of claim was directed as one of breach of contract (on its proper interpretation) with no allegation of a debt; secondly, even if the statement of claim did allege a debt, this would not be determinative; thirdly, the Magistrate referred to the decision of Young v Queensland Trustees (1956) 99 CLR 560 (“Young”) which concerned a claim for money payable for money lent and therefore does not support the finding that “the rules dealing with mitigation are not relevant”; fourthly, his Honour referred to the decision of Albanis v Eleftheriou [2014] NSWSC 416 (“Albanis”), which concerned a claim for money had and received and is therefore not supportive of the finding of the Magistrate; fifthly, the Magistrate erred in his finding that the statement of claim “was a claim for a money amount and as such it is not one for damages” because a claim for a “money amount” or a liquidated amount can nonetheless be a claim in damages; sixthly, the fact that the solicitor for the plaintiff provided a particular certification under the Legal Profession Uniform Law Application Act 2014 cannot be in any way determinative of whether Boral Resources’ claim is one for damages or in debt; and seventhly, the Mr Challinor’s submissions dated 5 April 2017 states “the plaintiff’s claim is based in contract” with no assertion of a debt.

9. [50]

   Mr Challinor submitted that Boral Resources incorrectly attempted to reframe Ground 2 as being a question of debt or damages rather than the ground raised in the amended summons. This ground concerned whether the Magistrate had denied Boral Resources natural justice by determining quantum through finding Mr Challinor’s claim was a debt (rather than damages), particularly where the Magistrate took into account the certification of the pleadings despite this issue not being argued before him. Mr Challinor submitted even if the Court did allow Boral Resources to reframe Ground 2 in this way, it would have no effect on the outcome of the appeal as Boral Resources has not demonstrated that the Magistrate erred by finding the claim was a debt. To the contrary, the Magistrate relied upon sufficient legal authority. It was also submitted that the Magistrate’s reference to the certification of the pleadings was one of many reasons for his Honour concluding the claim was in debt. Hence, even if it could be shown that the Magistrate made an error by referring to the certification of the proceedings, his Honour would not have erred in law because he had other reasons for reaching this decision.

10. [51]

    In relation to Boral Resources’ submission that the statement of claim was pleaded in contract and not debt, Mr Challinor submitted that paragraphs 10 and 11 of the statement of claim (reproduced earlier in this judgment) refer to there being a debt owing. In addition, an allegation of a breach of contract can also be an allegation of debt. This is because any claim for a debt would also rely upon there being a breach of contract. Boral Resources recognised this in its Local Court submissions. Hence, to distinguish between an allegation of breach of contract and an allegation of debt creates a false dichotomy.

11. [52]

    In regards to Boral Resources’ submission that it would not be determinative even if the statement of claim alleged a debt, Mr Challinor submitted that this does not provide any error of the Magistrate.

12. [53]

    Mr Challinor also submitted that there is no legal authority which prevents the principles set out in Young from applying to the current proceedings. It is not uncommon for legal principles to be carried over between cases which do not have the same factual matrix. If the principle is correct, it is correct and there is no reason why it has been incorrectly applied.

13. [54]

    In regards to Boral Resources’ submission that the Magistrate’s erred in finding that “the rules dealing with mitigation are not relevant”, Mr Challinor submitted this is an incorrect reference as the words formed part of a quote from Contract Law in Australia by Professor Carter rather than a finding.

14. [55]

    Mr Challinor further submitted that the reference to Albanis was solely for the purpose of establishing the Local Court had jurisdiction to determine the debt matter. It was not relied upon as a basis for finding the proceedings were a debt. His Honour’s conclusion that the Local Court had jurisdiction to deal with the matter in debt is therefore not an error.

15. [56]

    It was also submitted by Mr Challinor that the Magistrate did not err in finding that the statement of claim “was a claim for a money”. Simply stating that a claim for a money amount can also be a claim for liquidated damages does not in of itself highlight an error and Boral Resources’ submission is a mere assertion which provides no basis for why the Magistrate was in error.

16. [57]

    In relation to the Magistrate’s reference to the Legal Profession Uniform Law Application Act in finding it was a claim for debt, Mr Challinor submitted that this is a mere assertion and not supported by any legal authority.

17. [58]

    It was further submitted by Mr Challinor that the mere fact his written submissions in the Local Court dated 5 April 2017 raised no assertion of debt does not prevent the claim being one of debt. The reference to a claim being based in contract does not exclude that it is a claim for a debt. These are not mutually exclusive propositions but are intrinsically linked. It is also erroneous to refer the lack of reference to debt in written submissions as creating an indication that it is not an issue for the whole of Mr Challinor’s case. This is particularly so where he dealt with the issue in oral submissions and the whole of the case is based upon an accrued right under the contract.

18. [59]

    Finally, in respect of Boral Resources’ submission that the Magistrate had erred by finding the claim was a debt and failing to consider both mitigation and proof of loss, Mr Challinor submitted that this was an assertion not supported by authority. The whole attempt by the Boral Resources to attack the case as one of damages is a nonsense. Mr Challinor would not need to prove damages as he has accrued rights under the contract. The Magistrate found that minimum hours are required to be paid under the contract and these had to be paid while the contract was on foot. Only upon termination did the obligation of Boral Resources to pay minimum hours cease. This is not a matter where the contract has been terminated and there is an argument of improper termination or that there should be post contractual damages paid. Rather, it is simply a case where the defendant was entitled to minimum hours under the contract with payments accruing until termination. Boral Resources had an absolute discretion over whether termination occurred under clause 15.2 and choose not to terminate until the notice of 3 March 2016.

19. [60]

    Boral Resources’ ground of appeal raises the issue that this was a claim for damages not debt. I do not accept Mr Challinor’s first submission that the plaintiff has attempted to reconstrue this ground of appeal. I shall briefly refer to legal authority on “debt” and then “damages” as Boral Resources submitted that these were separate bases of claim.

20. [61]

    A “debt” is defined in the Encyclopaedic Australian Legal Dictionary (2014, LexisNexis Australia) as follows:

21. [62]

    In Pavey & Matthews Pty Ltd v Paul (1987) 69 ALR 577 (“Pavey”), Brennan J states at 585-586:

22. [63]

    Damages is defined in Encyclopaedic Australian Legal Dictionary (2014, LexisNexis Australia) as follows:

23. [64]

    In Haines v Bendall (1991) 99 ALR 385, Mason CJ, Dawson, Toohey, and Gaudron JJ stated at 386:

24. [65]

    In Gates v City Mutual Life Assurance Society Ltd (1986) 63 ALR 600, Mason, Wilson and Dawson JJ stated at 607:

25. [66]

    Boral Resources’ first, second and fifth submissions all concern whether debt falls within the statement of claim in the Local Court and therefore I will deal with them together.

26. [67]

    It is my view that paragraphs 10 and 11 of the statement of claim in the Local Court proceedings refer to the claim as being one for debt. Paragraph 10 pleads that “at the expiry of the period for payment the plaintiff [the defendant in these proceedings] made demand for payment pursuant to the Contract”. Paragraph 11 provides that “the Defendant has refused or neglected to pay the invoices as required by the Contract leaving an amount owing to the plaintiff [the defendant in these proceedings] of $85,646. Both paragraphs raise an allegation of debt: see Pavey. Hence, it is incorrect to conclude the statement of claim as solely being one of breach of contract. A claim for debt will also generally require the court to find a breach of contract or agreement and it is therefore inappropriate to characterise breach of contract and debt claims as being mutually exclusive.

27. [68]

    While I agree with Boral Resources’ submission that even if the statement of claim alleged a debt that is not determinative, this does not have a bearing on whether the claim is one of debt in the present circumstances. Similarly, Boral Resources’ submission that a claim for a money amount (or liquidated amount) can also be a claim in damages and the Magistrate therefore erred in finding the statement of claim “was a claim for a money amount and not damages” is also incorrect. The mere fact that a claim for a money amount can take the form of either a claim for a debt or a claim for a breach of contract is not a sufficient ground for finding the Magistrate fell into error. The Magistrate stated that the claim meets all the requirements of a debt not damages and it was open for his Honour to do so. Hence, there is no error of law.

28. [69]

    So far as Boral Resources’ submission that the Magistrate incorrectly found that the rules of mitigation are not relevant by reference to Young, a case concerning a claim for money payable is concerned, it is my view that such an argument is incorrect. The principles in Young are general principles. It is authority for the proposition that the common law does not and never has conceived of indebtedness in a sum certain for an executed consideration as a mere breach of contract but a detention of a sum, irrespective of whether the creditor enforced his or her demand by an action of debt or indebitatus assumpsit. Boral Resources also referred to the Magistrate’s decision that “rules dealing with mitigation are not relevant”, but read in context this appears to be a further quotation from Professor Carter’s Contract Law in Australia.

29. [70]

    Boral Resources also contended that the Magistrate incorrectly applied the authority of Albanis, which concerned a claim for money had and received, as the decision was not supportive of his Honour’s finding. However, Boral Resources did not address in either oral or written submissions why the decision was inappropriate. The Magistrate referred to Albanis as authority in establishing the Local Court’s jurisdiction to hear claims of debt for a liquidated sum. (J6.10-21). This is supported by the Magistrate’s reference to the jurisdictional limits set out in ss 29, 29A and 30 of the Local Court Act.

30. [71]

    Boral Resources submitted the fact that Mr Challinor’s solicitor certified that the statement of claim did not require a certificate under cl 4 of sch 2 of the Legal Profession Uniform Law Application Act cannot in any way be determinative of whether Boral Resources’ claim is one for damages or debt. The Magistrate noted the provision and stated that “the fact they certified there was no need for a certificate suggests the claim was not a claim in damages but a claim in debt”. It is my view that the making of a certification (or otherwise) is certainly not determinative of a claim for debt or damages. However, it is clear from its context that the Magistrate noted it, but did not rely upon it as a substantive reason for his finding. The Magistrate had already concluded that the claim met all the requirements for a debt and not damages.

31. [72]

    In relation to natural justice, Professor Stanley A de Smith, Judicial Review of Administrative Action (5th ed 2013, Thomson Reuters), in his wellknown passage, stated at 432:

32. [73]

    In Kioa v West (1985) 159 CLR 550, the High Court of Australia held that the duty to accord natural justice is a duty to act fairly. In the normal course, a party to judicial proceedings (as are those in a tribunal) could expect to be apprised of the nature of the case sought to be made against it, and of the date and time fixed for hearing such as to give it a reasonable opportunity to meet that case and to advance its own. Brennan J (as he then was) stated at 628:

33. [74]

    In relation to procedural fairness, Mason J stated that the law had now developed to a point where it may be accepted that there is a common law duty to act fairly, in the sense of according procedural fairness, in the making of administrative decisions which affect rights, interests and legitimate expectations, subject only to the clear manifestation of a contrary statutory intention. Procedural fairness as a notion is a flexible obligation to adopt fair procedures which are appropriate and adapted to the circumstances of the particular case (at 584-585).

34. [75]

    Boral Resources has not explained why it was not afforded procedural fairness or natural justice to support a finding that the Magistrate fell into error. Boral Resources ran their case for damages and was given the opportunity to be heard. Therefore, it is my view that Boral Resources has been afforded procedural fairness.

35. [76]

    Finally, in regards to the Boral Resources’ seventh submission that Mr Challinor’s submissions dated 5 April 2017 were based in contract and does not assert a debt, this proposition is incorrect. The mere reference to a claim being based in contract does not mean the claim cannot be one in debt. As I have previously stated, it is inappropriate to define claims for debt and claims for contract as being mutually exclusive. Thus, the Magistrate was entitled to conclude that Boral Resources owed Mr Challinor the sum of $78,881.70.

36. [77]

    For these reasons and on the basis of Pavey and Turner (which I have set out above), the Magistrate was justified in reaching his finding that the claim is one of debt. The sum is for a liquidated amount under the master hire agreement which Mr Challinor has performed by making the equipment exclusively available to Boral Resources, irrespective of whether Boral Resources made use of it. Accordingly, this ground of appeal fails.

Grounds 3 and 4 – mitigation in proof of loss

1. [78]

   Grounds 3 and 4 are dependent upon whether the claim is correctly classified as a debt and not damages.

2. [79]

   Ground 3 is that the Magistrate erred by finding that the damage suffered by Mr Challinor was $78,881.70 without making an appropriate allowance or discount for the fact that Mr Challinor mitigated his loss. Ground 4 is that the Magistrate erred by finding that Mr Challinor proved the loss and damage he suffered.

3. [80]

   The Magistrate, in finding that the claim was for a debt, was not required to consider mitigation or proof of loss as the claim rests upon the accrued rights in a contract.

4. [81]

   His Honour stated at J5.23-26:

5. [82]

   Boral Resources submitted that the Magistrate, in quantifying the alleged loss and damage by reference to the loss of turnover, fell into error by ignoring the costs Mr Challinor would have incurred in generating that revenue and the savings Mr Challinor enjoyed.

6. [83]

   According to Boral Resources, Mr Challinor was required to provide fuel and the operator. Mr Challinor also enjoyed savings as a result of not having to pay for an operator as a result of Boral Resources not hiring the equipment. These savings should have been brought to account and they were not because the Magistrate incorrectly concluded the amount was a debt. It follows that Mr Challinor failed to prove his loss

7. [84]

   Mr Challinor submitted that after the Magistrate had found that there were minimum hours payable under the contract, he was not required to make any reference to the costs Mr Challinor would have incurred in generating the revenue or savings from any nonuse of equipment. If minimum hours are payable under the contract, then regardless of whether the equipment was used, the agreed rates based upon the minimum hours are payable. Where the contract provides no obligation on the part of Mr Challinor to set off any amounts in the event that the equipment is not used for minimum hours, the accrued rights under the contract are the totality of the minimum hours payable.

8. [85]

   For the reasons I have previously stated, the claim is to be characterised as one of debt not damages. It is my view that once the Magistrate had found there were minimum hours payable under the master hire agreement, there was no reason for his Honour to reference mitigation or proof of loss which are relevant in a claim for damages. It follows that the Magistrate was justified in his finding that mitigation and proof of loss did not need to be considered as the debt concerns an accrued right in the contract.

9. [86]

   Accordingly, this ground of appeal fails.

Ground 5 – failure to provide reasons

1. [87]

   This ground of appeal is that the Magistrate erred in that he failed to provide adequate reasons.

2. [88]

   Boral Resources submitted that inadequate reasons were provided for the finding that the claim was one of debt. Mr Challinor submitted that Boral Resources has made no real attempt to substantiate this ground and, in any event, any reasonable review of the Magistrate’s decision would find that sufficient reasons were provided.

3. [89]

   In Wang v Yamamoto [2015] NSWSC 942, I referred to some authorities on what constitutes adequate reasons. At [35] to [38], I stated:

4. [90]

   Further, in Jung v Son [1998] NSWCA 120, Stein JA stated at [16]:

5. [91]

   In short, the judicial officer should make it clear what he or she is deciding and why.

6. [92]

   It is my view that the Magistrate has shown a clear basis upon for his decision. His Honour has provided adequate reasons and this ground of appeal fails.

7. [93]

   The result is that the appeal is dismissed. The decision of his Honour Magistrate Brender dated 8 May 2017 is affirmed. The summons dated 23 February 2018 is dismissed.

8. [94]

   Costs are discretionary. Costs usually follow the event. Boral Resources is to pay Mr Challinor’s costs.

   1. (1)

      The appeal is dismissed.

   2. (2)

      The decision of his Honour Magistrate Brender dated 8 May 2017 is affirmed.

   3. (3)

      The summons dated 23 February 2018 is dismissed.

   4. (4)

      The plaintiff is to pay the defendant’s costs.

   5. (5)

      Liberty to apply in relation to indemnity costs on 3 days notice.

   6. (6)

      If liberty is not exercised within 28 days, the file will be marked as closed.