Attard v Rutkowski

1. [1]

   This is an appeal of the decision of her Honour Magistrate Greenwood (‘the magistrate’) dated 26 September 2022.

2. [2]

   The appellant is Anthony Attard. The first respondent is Jason Paul Rutkowski. The second respondent is Carmen Attard as Joint Trustee of the Attard Family Superannuation Fund. Mr Rutkowski is an accountant. Mr Attard was a client of Mr Rutkowski. J. Horowitz appeared for Mr Attard. P. Boncardo appeared for Mr Rutkowski. For convenience and ease of reference I shall refer to the parties by name. Mr Attard was the defendant in the Local Court and the respondent in this appeal was the plaintiff in the Local Court. I shall refer to the respondent as Mr Rutkowski and this should be read to include the trustee, Carmen Attard. The parties relied on a joint court book (‘Ex A’).

3. [3]

   By summons filed 24 October 2022, Mr Attard appeals:

   1. (1)

      In relation to matter no. 2021/144510-001 (‘the statement of claim’), the whole of the decision.

   2. (2)

      In relation to matter no. 2021/144510-003 (‘the cross-claim’), part of the decision, being the quantum of damages awarded and the costs order made on 26 September 2022.

4. [4]

   Mr Attard seeks the following orders:

   1. (1)

      Leave to appeal from the costs orders made on 26 September 2022 in relation to the statement of claim and the cross-claim.

   2. (2)

      Appeal allowed.

   3. (3)

      In relation to the statement of claim, the judgment and orders of the court below set aside and, in lieu thereof, order that:

   4. (4)

      In relation to the cross-claim:

   5. (5)

      The first defendant to pay the plaintiff’s costs of the proceedings in this Court.

5. [5]

   Section 40 of the Local Court Act 2007 (NSW) reads:

6. [6]

   Section 41 of the Local Court Act provides that this Court may determine an appeal either by (a) varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by 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) by dismissing the appeal.

7. [7]

   Mr Attard advanced six grounds of appeal. The success of grounds (5) and (6) is consequential upon grounds (1), (2) and (3). Hence, I shall consider grounds (1), (2) and (3) first and then grounds (5) and (6) if necessary. The parties agree that appeal grounds (1) and (2) raise questions of law.

The background

1. [8]

   Mr Rutkowski is an accountant. Mr Attard was a client of Mr Rutkowski.

2. [9]

   In 2013, Mr Rutkowski and Mr Attard entered into an agreement (Ex A, p 153), the terms of which included that:

3. [10]

   In July 2020, Mr Rutkowski issued four invoices totalling $16,610.00 in respect of the accountancy work done for the Attard Entities (the ‘invoices’) (Ex A, pp 161-166). Each invoice stated, “To our time and costs”.

4. [11]

   Despite the service of a Notice of Demand, Mr Attard failed or refused to make payment of the debt. Mr Attard denied the balance of the debt and Mr Rutkowski suffered loss and damage to the value of the debt.

5. [12]

   In May 2021, Mr Rutkowski commenced proceedings in the Local Court seeking payment of the invoices. In his defence, Mr Attard denied the allegation in the statement of claim that: “Pursuant to the Agreement, the Services were supplied by [Mr Rutkowski] to a total value of $16,610.00 (Ex A, p 119 [6]; 125 [6]).

6. [13]

   Mr Attard and the Attard Entities filed a cross-claim against Mr Rutkowski (‘the cross-claim’), alleging that the accountancy services provided by Mr Rutkowski’s firm were unfit for purpose (Ex A, pp 131-141).

7. [14]

   The magistrate found that Mr Rutkowski had succeeded on his claim and entered judgment against Mr Attard in sum of $16,610.00 (being the total of the four invoices) (Ex A, p 8).

8. [15]

   Her Honour also found that Mr Rutkowski did not exercise due care and skill in preparing the third cross-claimant’s financial documents (Ex A, pp 18.26-28) and entered judgment against Mr Rutkowski on the cross-claim in the sum of $8,800.00 (Ex A, pp 8-9).

9. [16]

   The current net position of the parties is, therefore, $7,810.00 in favour of Mr Rutkowski. If Mr Attard achieves the order they seek on the appeal, there will be judgment in Advance Pallet's favour of $4,400.00 (see Order 4(a) to Mr Attard’s' summons). Hence, the amount in issue on the appeal is the modest sum of $12,210.00. The cost to the parties in this appeal far outweigh the amount in dispute.

10. [17]

    The parties were ordered to pay their own costs of the proceedings (Ex A, pp 8-9).

The pleading framework

1. [18]

   By statement of claim filed 21 May 2021, Mr Rutkowski pleaded:

2. [19]

   The failure to pay these invoices in accordance with the agreement was a breach of the terms of the agreement and caused Mr Rutkowski to suffer loss and damage (Ex A, p 113, SOC at [9]).

3. [20]

   In his amended defence filed on 29 October 2021 Mr Attard relevantly pleaded:

4. [21]

   In relation to paragraph [10], Mr Rutkowski (Ex A, 117-118) continued:

5. [22]

   Mr Attard did not deny or otherwise put in issue that the services detailed in the invoices had not been performed, had not been performed for a certain number of hours or by a person at an hourly rate (whether agreed or otherwise), or that the invoices did not represent amounts owing for services said by Mr Rutkowski to have been rendered.

6. [23]

   The cross-claim was filed in the General Division of the Local Court.

7. [24]

   Mr Attard, the second to fifth plaintiffs on the appeal and Mrs Attard filed what was styled as a cross-claim against Mr Rutkowski’ (Ex A, pp 124-134). The ‘cross-claim’ was not a cross-claim contemplated by s 22 of the Civil Procedure Act 2005 (NSW) (CPA) or Part 9 of the Uniform Civil Procedure Rules (‘UCPR’) as it was brought by persons other than Mr Attard. Relief was not sought in the purported cross-claim in favour of Mr Attard. Rather, orders were sought by the second to fourth plaintiffs to the appeal (who were the second to fourth cross-claimants) for liquidated damages alleged to have been suffered by them as a result of Mr Rutkowski’s alleged negligence or failure to comply with implied contractual terms or statutory warranties. The fifth ‘cross-claimant’ was styled as ‘Mr Attard and Mrs Attard in their capacities as the trustee of the Fund’ (Ex A, pp 130-131, Amended cross-claim at [10]). Damages were sought by them against Mr Rutkowski for work he had allegedly defectively performed for the Fund. The cross-claim was heard together with Mr Rutkowski’s claim, with evidence in one hearing being evidence in the other.

8. [25]

   The cross-claim sought set-off for Mr Attard against any amount ordered to be paid against Mr Rutkowski (Ex A, p 131, amended cross-claim at [11]). Mr Attard’s amount claimed was a liquidated sum of $20,900 for damages. Each of the claims for damages made by ‘cross-claimants’, other than Mr Attard in his personal capacity, were for amounts well within the jurisdictional limit of the Local Court, being $20,000 (Advanced Pallet’s claim was for $8,800; see Ex A, p 130, and the particulars there contained). On this appeal, no objection was raised to the magistrate’s treatment of the cross-claim.

The hearing in the Local Court

1. [26]

   On 27 May 2022 and 26 September 2022, the hearing took place before the magistrate. Both Mr Attard and Mr Rutkowski gave evidence and were cross-examined. Mr Attard’s case was opened by his counsel on the basis that he had contracted with Mr Rutkowski to provide accounting services for some 20 years:

2. [27]

   Counsel for Mr Attard cross-examined Mr Rutkowski on the basis that he had in fact prepared the tax returns and financial statements the subject of Mr Rutkowski’s claim (Ex A, p 166 Exhibit A, p 62; Day 1 T49.36-41). The gravamen of counsel’s attack on Mr Rutkowski was that the financial statements and taxation returns for the four entities the subject of the invoices had not been ‘finalised’ as Mr Rutkowski had neither discussed them with Mr Attard nor lodged them (Ex A, pp 67-74; Day 1 T54.25-50, T55.1-36, T56.21-50, TT57-61). Mr Rutkowski detailed that he had, in fact, finalised them and attempted to send them by courier to Mr Attard and that they had, in fact, been sent to Mrs Attard (Ex A, pp 68-69, 71-72 and 74; Day 1 T55.16-20, T56.28-33, T58.36-39, T59.1-2 and T61.39-46). He also gave evidence that Mr Attard had met with him on 29 July 2020 to discuss and go through the documents. Mr Attard accepted under cross-examination that this meeting had occurred (Ex A, p 101, Day 2 T15.18-33).

3. [28]

   Mr Rutkowski’s affidavit evidence (which was not relevantly challenged) was that he had, in July 2020, provided accounting services as detailed in invoices issued to Mr Attard. Each of the invoices was directed to Mr Attard and specified, relevantly, that the work involved was, variously, the ‘preparation and lodgement’ of accounts and/or taxation returns, including schedules required by the Australian Taxation Office (Ex A, pp 154-159). An amount was claimed for work specified in each invoice. Particulars of the time spent performing the work were not set out on the invoices. No request was ever made by Mr Attard for particulars of time spent on the work detailed in the invoices or the identity of the person who performed the work and their hourly rate either during the proceedings or before the proceedings were commenced nor after he had been served with the invoices.

4. [29]

   Mr Rutkowski submitted that it was not squarely raised (whether in Mr Attard’s pleadings or his counsel’s opening or otherwise) that an issue in the hearing was that the amounts claimed in the invoices were not computed in accordance with an appropriate hourly rate. Counsel for Mr Rutkowski submitted that this was a matter which it was incumbent on Mr Attard to have raised and the Court and Mr Rutkowski were entitled to infer that this was not a matter in dispute: see generally Vlato Films hid v Speidel [1961] AC 1090 at 1140 (Denning LJ) and 1145 (Morris LJ) and ABCC v CFMMEU (The Nine Brisbane Sites Appeal) (2019) 269 FCR 262 at [112].

A new issue raised in final submissions

1. [30]

   Mr Rutkowski highlighted that in closing written submissions, Mr Attard asserted for the first time that it was a term of the agreement between the parties that work would be performed at an ‘agreed hourly rate’ (Ex A, p 401, plaintiffs’ closing submissions 29/8/2022 [5](ii) (Attard Closing Submissions)). Mr Attard then asserted that the sole question for determination was: “did Mr Rutkowski, under contract, promise to pay a specific or readily calculable sum?” (Ex A, p 402, Attard Closing Submissions at [6]). Mr Attard also submitted (despite the issue never having been raised before) that there was no argument that the agreement provided that services would be provided on a fee for service basis based on hourly rates for members of Mr Rutkowski’s firm. It was next asserted that Mr Rutkowski’s case failed because he had not proven:

2. [31]

   According to Mr Attard, Mr Rutkowski’s claim also appeared to be for unliquidated damages and failed for the three reasons detailed in the paragraph above (Ex A, p 403, Attard Closing Submissions at [12]-[13]).

The grounds of appeal

1. [32]

   As previously attended to, I shall deal with appeal grounds (1) to (3) together as they relate to the same subject matter, namely, whether the invoices were sufficient proof of the work done, then appeal ground (4) that concerns the cross-claim and finally grounds (5)-(6) on costs. The six grounds of appeal are as follows:

   1. (1)

      Ground 1: The Magistrate erred in law by failing to consider Attard’s argument that Rutkowski had not proven his damages because he led no evidence to establish:

   2. (2)

      Ground 2: The magistrate erred in law by entering judgment for Rutkowski on the statement of claim in the sum of $16,610 in the absence of any evidence on Rutkowski’s damages.

   3. (3)

      Ground 3: The Magistrate should have:

   4. (4)

      Ground 4: The magistrate erred in law by entering judgment for the third cross-claimant in the sum of $ 8,800, when her Honour should have:

   5. (5)

      Ground 5: The magistrate erred in law by taking into account the fact that Rutkowski had succeeded in the statement of claim when ordering the parties to pay their own costs of the cross-claim, in circumstances where the statement of claim should have been dismissed (‘costs’).

   6. (6)

      Ground 6: The magistrate should have ordered that Rutkowski pay the cross-claimants’ costs of the proceedings (‘costs’).

2. [33]

   As previously stated, the principal issue on appeal is whether the learned magistrate was wrong to enter judgment for Mr Rutkowski in the purported absence of the number of hours taken to carry out the accountancy work and the hourly rate(s) for the member(s) of his firm who had carried out the work.

3. [34]

   Mr Rutkowski sued Mr Attard on invoices for “time and costs” in relation to various accounting services provided by Mr Rutkowski’s firm pursuant to an engagement letter dated 12 September 2023 (the agreement). The agreement included a term that accountancy services would be provided on a fee for service basis, based on the hourly rates for members of Mr Rutkowski’s firm. Mr Attard submitted that Mr Rutkowski failed to adduce evidence of either:

The law

1. [35]

   It is well-established that it will be an error of law for a Court not to respond to a ‘substantial, clearly articulated argument relying on established facts’. Error will not, however, be established by a mere failure to consider an argument or submission. The ultimate question is whether the failure to consider and address an issue or argument involved a failure to address central or critical elements of the case or claim (Day v SAS Trustee Corporation [2021] NSWCA 71 at [37] (Meagher JA) (‘Day’). See also Allianz Australia Insurance Ltd v Cervantes (2012) 61 MVR 443; [2012] NSWCA 244 at [22] per Basten JA (McColl and MacFarlan JJA agreeing)).

2. [36]

   In Day v SAS Trustee Corporation, Meagher JA explained that:

3. [37]

   Four additional matters are salient in relation to errors of this kind.

4. [38]

   First, as articulated by the majority in Whisprun Pty Ltd v Dixon (2003) 234 CLR 492; [2003] HCA 48 it is a serious charge to level at a judicial officer that they have not considered a party’s case (per Gleeson CJ, McHugh and Gummow JJ at [63]).

5. [39]

   Second, as Kirk JA recently explained in Ming v DPP [2022] NSWCA 209 at [15]:

6. [40]

   Third, a substantial argument will have been considered if it is subsumed within findings of greater generality (NABE v Minister for Immigration and Multicultural Affairs (No 2) (2004) 144 FCR 1 at [63]).

7. [41]

   Fourth, a magistrate’s reasons are not to be nit-picked over with a fine appellate tooth-comb: Beale v GIO of NSW (1997) 48 NSWLR 430 at 444 (Meagher JA) (‘Beale’). Rather, they should be read liberally and in light of the busy lists which magistrates are required to deal with. Allowance should also be given where the reasons are delivered ex tempore.

8. [42]

   Grounds 1-3 cover the same subject matter. Mr Attard’s submissions have dealt with them together, whereas Mr Rutkowski’s submissions have considered them separately. Ground 1 is that the magistrate erred in law by failing to consider Attard’s argument that Mr Rutkowski had not proven his damages because he led no evidence to establish the number of hours taken to carry out the accountancy work; or the hourly rate for the member of his firm who had carried out the work. Ground 2 is the magistrate erred in law by entering judgment for Rutkowski on the statement of claim in the sum of $16,610 in the absence of any evidence on Rutkowski’s damages. Ground 3 is that the magistrate should have found that Rutkowski had not proven his damages, and dismissed the statement of claim.

9. [43]

   Mr Attard’s submissions, in respect of grounds 1-3, are made together. Mr Rutkowski dealt with each ground of appeal separately. It is convenient that I consider all the submissions in respect of grounds 1-3 together.

10. [44]

    Mr Attard submitted that Mr Rutkowski could not succeed in establishing that he was owed monies claimed in the invoices in circumstances where he did not lead evidence to prove:

11. [45]

    I have extracted the relevant clauses of the engagement letter dated 12 October 2023 as follows:

12. [46]

    Mr Attard submitted that her Honour failed to consider this final submission, and instead simply accepted the invoices as proof of the amount owing to Mr Rutkowski (Ex A, pp 15.41-43).

13. [47]

    He submitted that an invoice is not evidence which proves the indebtedness under the agreement. In BB Australia v Constanti [2017] VSC 114 at [2] (‘Constanti’), Mukhtar AsJ held as follows:

14. [48]

    Mr Attard submitted that in order for Mr Rutkowski to succeed, it was not sufficient for him to prove that he had provided accounting services to the Attard Entities. He was required to prove that the amounts claimed in the invoices were in accordance with their agreement.

15. [49]

    In Overdean Developments Pty Limited v Garslev Holdings Pty Limited (No 3) [2021] NSWSC 1482 (‘Overdean Developments’) at [803], Williams J held as follows in relation to a consultancy agreement which provided for fees to be charged at specified hourly rates:

16. [50]

    As in the present the case, Vestecorp’s invoice provided a description of the work done and sought payment of a lump sum: Overdean Developments at [426] and [800]. However, whereas Vestecorp had adduced evidence of the identity of the person who had performed the work, as well as that person’s hourly rate (Overdean Developments at [84] and [800]), Mr Rutkowski allegedly failed to adduce evidence of either. Further, it was submitted that he adduced no evidence of what (if any) costs his firm had incurred for which he was seeking reimbursements in the invoices (each of which stated “To our time and costs…”).

17. [51]

    Finally, Mr Attard submitted that the English Case of Emery Planning Partnership Limited v Bevan [2022] EWHC 494 (QB) (‘Emery’) involved circumstances similar to the present case. Emery was an appeal to the High Court against the decision of a County Court judge dismissing a claim for payment of several lump sum invoices for professional services rendered. The claimant’s retainer agreement provided that fees would be charged at various specified hourly rates, depending on who was doing the work: Emery at [13].

18. [52]

    The County Court Judge concluded that (Emery at [21]) :

19. [53]

    Turner J dismissed the appeal (with the exception of a claim in respect of one fee note for counsel’s fees – which, it appears, provided a break down of the work to which the fees related and how they had been calculated) upholding the primary judge’s conclusion that (Emery at [24]-[25]):

20. [54]

    Mr Attard submitted that on evidence adduced by Mr Rutkowski, it is impossible to ascertain how the amounts claimed in the invoices have been calculated, let alone whether they have been calculated in accordance with the agreement.

21. [55]

    In oral submissions, counsel for Mr Attard reiterated that the central question on this appeal is whether a lump sum invoice making a demand for payment is in and of itself proof of the underlying debt. Counsel for Mr Attard argued that the authorities say that it is not.

22. [56]

    It is common ground the number of hours and the hourly rates are not in evidence.

23. [57]

    Mr Attard also argued that the issue of no evidence was in fact pleaded (see page 9 of the transcript). The affidavit of Maria Scopacasa, a paralegal employed by the solicitors acting for Mr Rutkowski, dated 5 April 2023 (‘Affidavit’), was handed to Magistrate Greenwood at the day of the hearing. The issues articulated in that affidavit are as follows (Ex A, p 473):

24. [58]

    Ms Scopacasa’s affidavit is not a pleading. Mr Attard’s counsel then directed the Court to issue 7 in Mr Rutkowski’s statement of issues and facts which was in a document handed up to the Magistrate. Consequently, Mr Attard argued that the matter was pleaded. It is my view, as I explained during the hearing, “a statement of facts and issues” is also not a pleading. It is the pleadings such as the statement of claim, the defence and the cross-claim that set out the issues in dispute.

25. [59]

    All cases referred to in oral submissions bar one were provided by way of written submissions. The additional authority referred to is West Boat Builders Pty Ltd v Cull Holdings Pty Ltd (2000) 16 BCL 21; [1999] WASCA 72, and Mr Attard referred to paragraphs [3] for the facts and [19]-[20] to support the assertion that there had to be evidence and verification of, among other things, the hours worked and the rate for work so as to prove damages.

26. [60]

    Mr Rutkowski submitted that ground 1 is not elaborated on in Mr Attard’s submissions. It is presumed that ground 1 relies on an error of the kind described in Whisprun at [62]-[63] (Gleeson CJ, McHugh and Gummow JJ) where a judicial officer fails to address a substantial component of a party’s case (see generally: Tonah Investments Pty Ltd v Optima Developments Pty Ltd (2015) 90 NSWLR 268; [2015] NSWCA 287 at [121] (Leeming JA)).

27. [61]

    Mr Rutkowski contended that Mr Attard’s submissions do not make any attempt to explain why the argument raised for the first time in closing submissions above was a ‘substantial component’ of his case. Mr Rutkowski submitted that ground 1 must fail for this reason.

28. [62]

    In any event, Mr Rutkowski suggested that the arguments were not substantial in the sense of being clearly material to Mr Attard’s case. Mr Attard had not pleaded or otherwise properly raised that it was a term of agreement between the parties that Mr Rutkowski was permitted only to charge amounts for agreed hourly rates for members of his firm who performed work. To the contrary, he had admitted that it was a term of the agreement (if the agreement alleged was established) that he would make payment within the time stipulated in any invoice issued to him by Mr Rutkowski for services rendered by Mr Rutkowski. Mr Rutkowski conducted the case on this basis. Mr Attard submitted that the issues raised for the first time in final submissions about Mr Rutkowski needing to prove agreed hourly rates for work and the identity of the person who performed the work were neither pleaded nor articulated by counsel in opening. To the contrary, counsel for Mr Attard identified entirely different issues for determination of Mr Rutkowski’s statement of claim: whether there was an agreement and whether it was sufficient for Mr Rutkowski to have performed work up to (but not including) lodgement and submission of the financial statement and tax returns. The case was fought on this basis.

29. [63]

    In Metwally v University of Wollongong (1985) 60 ALR 68 (‘Metwally’), it was unanimously held that it is only in the most exceptional circumstances that a party will be permitted to raise a new argument after the case has been decided against them when they have failed, either deliberately or inadvertently, to put the argument forward during the hearing.

30. [64]

    Counsel for Mr Rutkowski also placed emphasis on the fact that the statement of Mukhtar AsJ at [2] of Constanti needed to be read in light of the fact that issues as to the necessity to set out hourly rates of the staff who performed the work and the number of hours they worked were squarely pleaded issues in that matter. Counsel further supported that argument by citing [49] of Halls v Pioneer Credit Solutions Pty Ltd (No 2) [2020] NSWSC 621: “The difficulty with this argument is that the magistrate is only obliged to address the defence which has been pleaded.”

31. [65]

    Counsel for Mr Rutkowski further submitted that the argument therefore fails to surmount the “substantiality” threshold. It was not an available argument and was a paradigm example of a species of ‘trial by ambush’ not permitted under the Civil Procedure Act: Baffico v YMCA of Great Lakes Inc [2014] NSWCA 61 at [24]-[25] (Bergin CJ in Eq).

32. [66]

    According to Mr Rutkowski, Mr Attard’s submissions also make no real attempt to establish that the magistrate’s reasons, when read beneficially and in light of the fact they were given ex tempore, did not deal with the argument raised in closing submissions.

33. [67]

    At page 4 of her Honour’s reasons, the magistrate noted that Mr Attard had for the first time in final submissions asserted that the hourly rates set out in the agreement needed to first be agreed between the parties (Ex A, p 6).

34. [68]

    The argument put forward in closing submissions by Mr Attard’s counsel is as follows (Ex A, p 408-410):

35. [69]

    The magistrate said, correctly, that this had not been pleaded and it would not considered. Her Honour then noted that Mr Attard had asserted that the claim was for ‘unliquidated damages’. That claim, as detailed above, relied on the matters Mr Attard complained were not considered by the magistrate’ (Ex A, p 403, Attard closing submissions at [12]-[13]). The magistrate correctly noted again that the claim had not been pleaded and was raised for the first time in written submissions. Her Honour rejected it. It was expressly dealt with by the magistrate, when her Honour stated at Ex A, p 13.22-29:

36. [70]

    Mr Rutkowski emphasised that in the result, the magistrate did consider and deal with Mr Attard’s argument. It was subsumed in her Honour’s conclusions in relation to Mr Attard’s contentions about Mr Rutkowski’s claim being an ‘unliquidated claim’. She determined that it had not been pleaded and could not properly be raised in final submissions. Whether the magistrate was right or wrong about this is immaterial: the argument was dealt with and so ground 1 will fail on this basis.

37. [71]

    In the further alternative, Mr Rutkowski sys that given that the matter was never pleaded nor raised at any stage until final submissions, the argument was not one which needed to be expressly addressed by the magistrate in her reasons. It was a matter that was not of such significance as to warrant a conclusion that it needed to be specifically engaged with.

38. [72]

    Mr Rutkowski averred that ground 1 must be dismissed. If ground 1 is upheld but ground 2 is dismissed, then the proceedings on the statement of claim will (unless relief is refused on discretionary grounds) need to be remitted to the Local Court for re-hearing, given that resolution of the arguments raised requires the making of findings on questions of fact.

39. [73]

    Ground 2 of the appeal is that the magistrate erred in law by entering judgment for Rutkowski on the statement of claim in the sum of $16,610 in the absence of any evidence on Rutkowski’s damages.

40. [74]

    As framed in the summons, ground 2 rises and falls on there being no evidence that could support Mr Rutkowski’s damages claim. Mr Attard must, therefore, establish that there was ‘not a skerrick of evidence’ to support his damages claim: Australian Retailers Association v Reserve Bank of Australia (2005) 148 FCR 446 at [575] (Weinberg J).

41. [75]

    Mr Rutkowski submitted that ground 2 fails at the threshold. There was some evidence of Mr Rutkowski’s damages. The invoices tendered without objection were themselves evidence of work done and amounts due for that work. The cross-examination of Mr Rutkowski elicited evidence that he had in fact prepared the relevant financial statements and invoices. Mr Attard’s own evidence was that Mr Rutkowski had performed work but not to the extent Mr Attard asserted was required for him to be entitled to payment (Ex A, p 166, Attard Affidavit at [26]).

42. [76]

    Counsel for Mr Rutkowski also relied upon various excerpts from the transcript to assert that there was no issue that Mr Rutkowski had done and was responsible for doing the work in accordance with the agreement. I have set out the excerpts below.

    1. (1)

       At Ex A, p 74:

    2. (2)

       At Ex A, p 75:

    3. (3)

       At Ex A, p 77:

43. [77]

    Mr Rutkowski submitted that ground 2 has been fundamentally recast in Mr Attard’s written submissions at [15]-[22]. As recast, Mr Attard’s argument appears to be that there is a principle of law that to establish damages for breach of contract for work performed or services rendered it is always incumbent on a plaintiff to prove with hourly precision the time spent performing the work and the rate at which the work is performed. Mr Rutkowski submitted that there is no such principle of law. According to Mr Rutkowski, the cases relied on by Mr Attard in Mr Attard’s submissions are cited acontextually and are not authority for the proposition propounded. In any event, a ground of appeal premised on an error of principle of the kind asserted in Mr Attard’s written submissions at [15]-[22] is not pleaded and cannot be considered.

44. [78]

    Mr Rutkowski advanced, however, that it was useful to note the following about the cases cited by Mr Attard.

45. [79]

    Mr Rutkowski submitted that the decision of Overdean Developments does not assist Mr Attard. An issue in that case concerned fees claimed for legal work said to have been performed by two individuals, Mr Smits and Mr Mohammed. Neither of these individuals were ‘Australian legal practitioners’ within the meaning of the Legal Profession Uniform Law (NSW) No 16a of 2014 (‘Uniform Law’). Both individuals had been found by Williams J to have been engaged in legal practice contrary to s 10(1) of the Uniform Law. By operation of s 10(2) of the Uniform Law, amounts for such work were irrecoverable and the claim was failed on this basis: see discussion at [779] and [794]-[798]. The invoice discussed by Williams J and detailed in Mr Attard’s submissions at [17] contained what was asserted to be both legal and non-legal work: at [800]-[802]. It did not, however, differentiate between legal and non-legal work. Mr Rutkowski argued that Williams J’s remarks at [803] are cited acontextually by Mr Attard and in a manner that is apt to mislead.

46. [80]

    It is submitted that the decision of Emery also does not assist Mr Attard. In that case, the claimant had been found to have been put to strict proof in relation to amounts claimed in an invoice: at [58]. Turner J dismissed an appeal against this conclusion, noting that the claimant had not established that the work was in fact performed: at [23].

47. [81]

    What Mr Attard in substance complains of is that the evidence before the magistrate was insufficient to prove his claim in damages. Insufficiency of evidence in relation to a factual finding can never be an error upon a question of law.

48. [82]

    Mr Rutkowski submitted that ground 2 should be dismissed. Given ground 3 is consequential upon Mr Attard succeeding on ground 2, it must also be dismissed if ground 2 is dismissed.

49. [83]

    I noted that Mr Attard’s submissions have considered grounds 1-3 together, whereas Mr Rutkowski’s submissions, with greater clarity, delineate the separate grounds of appeal. My resolution will aim to do the latter.

50. [84]

    As I explained earlier, the issues in a dispute arise from what is contained in the pleadings. While counsel for Mr Attard relied on authorities, every case depends on their facts and pleadings.

51. [85]

    So far as ground 1 is concerned, Mr Attard had not pleaded or raised that it was a term of agreement between the parties that Mr Rutkowski was permitted to only charge amounts for agreed hourly rates for members of his firm who provided the work. The was an issue raised for the first time in final submissions. The magisrate correctly made a finding that the claim had not been pleaded. In any event, her Honour did consider this issue as I have previously stated in this judgment. To repeat, her Honour stated:

52. [86]

    Her Honour clearly turned her mind to this issue that arose in final submissions. It follows that the authorities cited by Mr Attard are not applicable, particularly where it appears that the issue of the lack of detail in the invoices was not pleaded.

53. [87]

    In respect of ground 2, there was some evidence of Mr Rutkowski’s damages, such as the invoices tendered without objection as well as the cross-examination of Mr Rutkowski demonstrating that he prepared the relevant financial statements and invoices. Mr Attard also provided evidence that Mr Rutkowski had performed the work and had a meeting with Rutkowski as Mr Rutkowski needed more details. This ground of appeal also fails.

54. [88]

    Ground 3 is that the magistrate should have found that Mr Rutkowski had not proven his damages and dismissed the statement of claim. This ground is consequential upon the success of ground 2. As appeal ground 2 failed, so to does Appeal ground 3.

55. [89]

    This ground of appeal is that the magistrate erred in law by entering judgment for the third cross-claimant in the sum of $8,800.00, when her Honour should have dismissed Mr Rutkowski’s claim for payment of his invoice dated 16 July 2020 (in respect of work done for the third cross-claimant); and entered judgment for the third cross-claimant in the sum of $4,400 (‘the cross-claim’).

56. [90]

    Mr Attard submitted that if the statement of claim is dismissed, it will be necessary to reduce the judgment against Mr Rutkowski on the cross-claim (in favour of the Third Cross-Claimant) from $8,800 to $4,400.

57. [91]

    The judgment on the cross-claim is for the Third Cross-Claimant’s costs of redoing its 2019 and 2020 financial documents (both of which were prepared negligently by Mr Rutkowski’s firm; see Ex A, pp 18.35-37 & 19.11.14). However, as is submitted, the judgment assumes that Mr Rutkowski was paid for preparing both the 2019 and 2020 financial documents. If the judgment on the statement of claim is set aside, then Mr Rutkowski will not be paid for preparing the 2020 financial documents, and accordingly, the costs of redoing those documents (being $4,400) will not be claimable by the Third Cross-Claimant from Mr Rutkowski.

58. [92]

    Ground 4 is directed to the magistrate’s judgment on the cross-claim. Its success depends on ground 3 being upheld and provides for the setting aside of the magistrate’s order that Mr Rutkowski pay Advanced Pallets $8,800 and substitution of that order for an order that Mr Rutkowski pay Advanced Pallets $4,400.

59. [93]

    The parties are in agreement that if the Statement of Claim is dismissed, it will be necessary to reduce the judgment against Mr Rutkowski on the cross-claim (in favour of the Third Cross-Claimant) from $8,800 and $4,400.

60. [94]

    Ground 4 is contingent on ground 3 being upheld. Appeal ground 3 has failed. It follows that ground 4 also fails.

61. [95]

    Here, Mr Attard covered appeal grounds 5 and 6 together, whereas Mr Rutkowski covered them separately. These grounds require leave being granted: see s 40(2)(c) Local Court Act.

62. [96]

    Counsel for Mr Rutkowski argued against a grant of leave to appeal for the following reasons:

    1. (1)

       On Mr Attard’s case on appeal, the judgment entered for Advance Pallets on the cross-claim is to be reduced. It would be curious in the extreme for Advance Pallets to be awarded its costs of the cross-claim in circumstances where the result it obtained on appeal was half as good as the result it obtained at first instance.

    2. (2)

       The notion that Mr Rutkowski should have been ordered to pay all the ‘cross-claimants’ costs of the proceedings is baseless. Apart from Advance Pallets, the ‘cross-claims’ made by the other ‘cross-claimants’ failed and no cross-claim was in fact made in favour of Mr Attard in his personal capacity. No challenge has been brought to the magistrate’s judgment dismissing the balance of the aspects of the cross-claim. It is not pellucid how the other plaintiffs on appeal can sensibly contend they should have their costs on their failed cross-claim. It is even less pellucid how any exercise of her Honour’s discretion on costs in relation to the failed aspects of the cross-claim miscarried.

    3. (3)

       The magistrate no doubt took into account in declining to award costs on the ‘cross-claim’ that the cross-claim had largely failed. It would be unreasonable as well as unfair and unjust for Mr Rutkowski to be ordered to pay costs of a cross-claim he largely succeeded on

    4. (4)

       Local Court Practice Note Civ 1 determines that in all proceedings in the Court’s General Division, regardless of the amount claimed, that where a plaintiff or cross-claimant obtains a judgment in an amount less than $20,000 and is entitled to costs, that an order for costs will not be made in an amount greater than that which would have otherwise been awarded if the proceedings had been determined in the Small Claims Division, unless the Court is satisfied that the commencement and/or continuation of the proceedings in the General Division was warranted. Given that Advance Pallets will only (if Grounds 2-3 of the Summons are upheld) have obtained judgment of $4,000 it was prima facie barred from obtaining more than the scale costs prescribed by r 2.9 of the Local Court Rules 2009 (NSW).

63. [97]

    In the exercise if my discretion, I would not grant leave as the amount in dispute is a very modest $4,400.

64. [98]

    In the event I am wrong, I shall briefly address both parties’ submissions.

65. [99]

    Counsel for Mr Attard submitted that the results of the Local Court proceedings were mixed, in that judgments were entered both for and against Mr Rutkowski (on the statement of claim and the cross-claim respectively). It was in those circumstances that the magistrate ordered the parties to pay their own costs of the proceedings (Ex A, pp 8-9).

66. [100]

    If Mr Attard is successful on this appeal, then Mr Rutkowski will have wholly failed in the Local Court proceedings, and costs should follow the event, in relation to both the statement of claim and the cross-claim.

67. [101]

    It was submitted that in circumstances where the proceedings fundamentally miscarried as a result of the magistrate entering judgment on the statement of claim in the absence of any evidence supporting Mr Rutkowski’s entitlements to the sums claimed in the invoices, leave ought to be granted to appeal the costs order made by her Honour which flowed from that, as is submitted, erroneous decision.

68. [102]

    By way of written submissions in reply dated 12 April 2023, the counsel for Mr Attard submitted:

69. [103]

    Counsel for Mr Rutkowski noted that, as framed in the Summons, Grounds 5-6 concern the costs of the cross-claim. No ground of appeal is directed to the costs of Mr Rutkowski’s statement of claim. Paragraph [9] to Mr Attard’s description of the case is, therefore, erroneous insofar as it says Mr Rutkowski should be ordered, if Mr Attard succeeds in having Mr Rutkowski’s claim against him dismissed, to pay the whole of the costs of the proceedings.

70. [104]

    It was submitted that ground 6 does not raise any error of the kind detailed in House v The King (1936) 55 CLR 499. Rather, it was described by Mr Rutkowski’s submissions as a ‘quibble’ with the outcome reached by the magistrate, which should not constitute an error in the exercise of a discretionary judgment. Mr Rutkowski therefore submitted that leave to appeal on ground 6 must be refused.

71. [105]

    Mr Rutkowski also submitted that ground 5 cannot be established. The magistrate did not take into account, in her relatively brief reasons on costs at pages 10-11 of her judgment (Ex A, pp 12-13), Mr Rutkowski’s success on the statement of claim. Rather, the principal matter which motivated her Honour to make no order as to costs was that the matter had commenced in the Small Claims Division and only made it into the General Division on the second day of the hearing. Mr Rutkowski submitted that the ground was not made out and has insufficient prospects of success to warrant a grant of appeal.

72. [106]

    I agree with the submissions of Mr Rutkowski. Accordingly, appeal grounds 5 and 6 fail.

73. [107]

    Even I am wrong, and there is an error of law, I would exercise my discretion not to remit the matter to the Local Court to be dealt with according to law as the amount in dispute is $12,210.00. The legal costs of the parties have already outweighed the amount in dispute.

The result

1. [108]

   Appeal Grounds 1 – 4 have failed. Leave to appeal is refused in respect of grounds 5 and 6. The appeal is dismissed. The Magistrate’s decision on 26 September 2022 is affirmed. The summons dated 24 October 2022 is dismissed.

Costs

1. [109]

   Costs are discretionary. Costs usually follow the event. The appellant is to pay the respondents’ costs on an ordinary basis.

   1. (1)

      Leave to appeal is dismissed.

   2. (2)

      The appeal is dismissed.

   3. (3)

      The decision of Magistrate Greenwood dated 22 September 2022 is affirmed.

   4. (4)

      The summons dated 24 October 2022 is dismissed.

   5. (5)

      The appellant is to pay the respondent’s costs.