Marathon Group Pty Ltd v Latrobe Valley Building Services Pty Ltd

1. [1]

   The plaintiff, Marathon Group Pty Ltd (“Marathon”), is a company based in Singleton. It operates a business constructing modular buildings including classrooms, storage facilities, factories and warehouses. The defendant, Latrobe Valley Building Services Pty Ltd (“Latrobe”), is a building contractor based near Traralgon in Victoria. It supplies building contract labour. Marathon contracted Latrobe at the end of March 2015 to provide labour services for a project it was undertaking in Traralgon and later in East Sale in Victoria. The agreement between Marathon and Latrobe was an oral agreement.

2. [2]

   In 2016, Marathon commenced proceedings against Latrobe in the Local Court seeking, relevantly, recovery of an amount of $31,418.18 said to have been overpaid to Latrobe. Latrobe defended the proceedings on the basis that it was entitled to charge the additional amount in dispute as to do so was consistent with the terms of its oral agreement with Marathon.

3. [3]

   The hearing proceeded before Acting Magistrate Price at the Downing Centre Local Court on 1 February 2017. The evidence was concluded that day and the matter was then stood over for submissions on 27 March 2017. After hearing submissions, his Honour reserved his decision until 1 May 2017, at which time he found in favour of Latrobe.

4. [4]

   On 26 May 2017, Marathon filed a summons appealing against his Honour’s decision to this Court. The statutory basis for this appeal is to be found in s 39(1) of the Local Court Act 2007 (NSW) which provides as follows:

5. [5]

   The jurisdiction of this Court to review the decision of Magistrate Price is thus limited to errors which involve a question of law. Ground 2 alleges a failure to provide adequate reasons for “that part of the decision identified by it as the overpayment claim.” I am satisfied that leave is not required for Marathon to rely upon ground 2 as it involves a question of law: Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 277-278.

6. [6]

   The sole director of Marathon at the relevant time was Andrew Bird. He employed Filipe Cruz as his project manager from March until June 2015, at which time he left the company. The principal and director of Latrobe at the relevant time was Andrew Brady. These three men were the only witnesses to give evidence before Magistrate Price. Before turning to the disputed evidence given by these witnesses, I shall briefly set out those facts which are agreed.

7. [7]

   In about September 2014, Marathon entered into a contract with Thiess on behalf of the Department of Defence for Marathon to construct and install a modular Search and Rescue (SAR) building at the Royal Australian Air Force (RAAF) Base at East Sale in Victoria. Marathon leased a warehouse in Traralgon, which is approximately 55 kilometres from East Sale, where the prefabricated SAR building would be constructed. It was proposed that, after it was constructed, it would be dissembled and transported to the RAAF Base at East Sale where it would be reassembled and installed.

8. [8]

   On or about 24 March 2015, Mr Cruz, then the Project Manager at Marathon, contacted Mr Brady at Latrobe. He had obtained his telephone number from the Yellow Pages. He spoke with him about “the Traralgon Project”, which involved the construction of the SAR building at Traralgon. There is no dispute that, as a result of that conversation, Marathon agreed to use Latrobe’s labour services at Traralgon at certain rates. What is disputed is whether any agreement was reached in March 2015 as to what the rates would be if Latrobe was also engaged to provide labour services at East Sale.

9. [9]

   On 26 March 2015, work commenced at Traralgon. The Easter period that year was between 3 and 6 April 2015. There was an onsite conversation on or about 28 March 2015 between Mr Cruz and Mr Brady, the contents of which are disputed.

10. [10]

    In June 2015, Mr Cruz ceased his employment with Marathon and was replaced by John Bloomfield. John Bloomfield was not called as a witness at the hearing.

11. [11]

    In mid-July 2015, there were one or more conversations between Mr Bird of Marathon and Mr Brady. Mr Bird engaged the services of Latrobe for work at the East Sales site at this time. In late July 2015, work ceased at Traralgon.

12. [12]

    On 4 August 2015, work commenced at the RAAF Base at East Sale. Invoices were issued by Latrobe for the work performed which included charges of $55.00 per labour hour rather than $45.00 per hour (which had applied for the work conducted at the leased Traralgon site) and also included two additional hours per worker for travel time to and from the RAAF Base each day. That is, Latrobe charged an extra $10.00 an hour and an extra $110.00 per day for each worker at the East Sale site.

13. [13]

    In early September 2015, there was a conversation between Mr Bird and Mr Brady concerning the charging of travel time between Traralgon and East Sale. On 1 October 2015, work ceased at the RAAF Base at East Sale.

14. [14]

    In October 2015, Marathon refused to pay the final two outstanding invoices issued, claiming that Latrobe had been overcharging. Payment was ultimately made by Marathon because of statutory obligations pursuant to a payment claim issued under the Building and Construction Industry Security of Payment Act 1999 (NSW).

15. [15]

    Mr Cruz gave evidence that he was the Project Manager for Marathon from March to June 2015. By the time he gave his evidence, it had been 18 months since he had left Marathon and he did not have the benefit of any of his documents from which to refresh his memory.

16. [16]

    He recalled that, on or about 24 March 2015, he contacted Mr Brady at Latrobe. He had obtained his telephone number from the Yellow Pages. He spoke with him about “the Traralgon Project”, which involved fabricating some buildings at premises leased at Traralgon. He told Mr Brady that those buildings were later to be transported and erected at the RAAF Base at East Sale. He made no commitment on behalf of Marathon for any works to be done at the RAAF Base by Latrobe because Marathon had contracts with other contractors and he did not know which contractor would be required to perform that work.

17. [17]

    During this initial conversation, labour rates of $45.00 per hour were quoted. After this conversation, Mr Cruz sought and gained approval of this rate from Mr Bird and an agreement was reached. Mr Cruz denied that there was any discussion at that time in which Mr Brady stated that, if the workers were required at East Sale, they would require an extra $10 an hour and two hours of travel time (one hour each way).

18. [18]

    Mr Cruz stated that Mr Brady subsequently asked him from time to time about what would be happening “down the track” when the buildings were to be transported to the RAAF Base. Mr Cruz stated that his “standard response” was:

19. [19]

    It was suggested to Mr Cruz in cross-examination that Mr Brady told him that, if he wanted to use his men at the East Sale project, he would have to pay both an extra $10.00 an hour as well as two hours travel time. Mr Cruz stated:

20. [20]

    Mr Cruz recalled a conversation about paying an additional $10.00 an hour for nightshift because the project was running behind schedule. His recollection was that the rates were $45.00 an hour or $35.00 an hour for apprentices, an extra $10.00 an hour for nightshift and an extra $20.00 an hour over Easter. Mr Cruz did not agree that it was always his intention to have the same contractors work at the East Sale site as had worked at the Traralgon site.

21. [21]

    Mr Cruz stated that, after he left Marathon, he was telephoned by either Mr Bird or Mr Bloomfield and asked whether he had ever approved any additional travel time for the East Sale work and he said, “most definitely not.” He stated, “…I didn’t agree to anything, I didn’t make any commitment I’d use them, and I just thought that would be the end of it.”

22. [22]

    Mr Cruz’s evidence was that, at no time did he ever agree to any rates to be charged for the RAAF Base works, nor did he represent that he had the authority to do so. He did not recall Mr Brady suggesting that a written contract be made.

23. [23]

    Mr Cruz commenced receiving invoices from Latrobe from March 2015 as well as emails from Mr Brady and his wife. It was his responsibility to check the invoices to ensure they married up to the sign-in book. He then emailed the invoices to Marathon’s accounts department for approval and payment. It was not his role to approve payment. He states that he always checked the sign-in register when he was employed by Marathon because he had, on occasion, six or seven different companies working at the site.

24. [24]

    In late April or early May 2015, Mr Cruz had a conversation with Mr Brady regarding outstanding invoices. Mr Brady told Mr Cruz that if the invoices were not paid he may have to “pull the pin and chase other paying work”. Mr Cruz agreed to follow the issue up with Mr Bird. He told Mr Brady: “He is the owner and signs off on payment, sorry I don’t control that.”

25. [25]

    Mr Brady’s evidence was that he was contacted by Mr Cruz on 24 March 2015 by telephone. Mr Cruz told him he needed construction works performed at the RAAF base at East Sale. Two or three days later, three employees of Latrobe commenced work at Traralgon. Mr Brady met Mr Cruz at the Traralgon site before Easter. There was a discussion regarding rates as Mr Cruz wanted the workers to work over Easter. Mr Brady gave evidence that he had a face-to-face conversation with Mr Cruz at which time an agreement was reached as to the rates for the work at both Traralgon and East Sale. His evidence was:

26. [26]

    Mr Brady gave evidence that, when Mr Bloomfield took over from Mr Cruz as Project Manager, he reiterated to him the terms agreed by Mr Cruz as follows:

27. [27]

    Mr Brady gave evidence that Mr Bloomfield said to him, “Yes, that’s fine. I’ve already discussed it with Phil and we’re happy to go on with what we’ve already agreed to.”

28. [28]

    When he first sent tax invoices to Marathon in April 2015, Mr Brady forwarded them to Mr Cruz only. He later started copying in more employees of the plaintiff, being Andrew Bird, Sarah, Jon, Ella and Jeremy Bird. After the invoices for the first three weeks of work at Traralgon were rendered, they had not been paid, despite payment being due within seven days. Until that time, he was not aware that the tax invoices needed to be approved by Mr Bird.

29. [29]

    Mr Brady telephoned Mr Bird and spoke to him about payment of the outstanding invoices. There was ongoing contact between Mr Bird and Mr Brady in May 2015 concerning payment of the invoices.

30. [30]

    The works at Traralgon were almost completed in mid-July. There was only one employee of Latrobe still working there at that time. Mr Brady again spoke to Mr Bird about payment and was told that the invoices would be paid.

31. [31]

    Mr Brady gave evidence that, in mid-July 2015, Mr Bird rang him and told him he required more labour for the transport of the buildings to East Sale. Mr Brady agreed to do so and reiterated that he wanted his payment terms to be met. Mr Bird told him he would be paid on time and “he had everything sorted in that regard from now”. There was no discussion of rates at that time.

32. [32]

    Mr Brady later received a telephone call from Mr Bird asking why his men were signing on an hour earlier and signing off an hour later than when they had in fact arrived and departed. Mr Brady told him that this was to allow for the two-hour travel time and Mr Bird “wasn’t happy with that”. He said he had never agreed to that. Mr Brady told him that it had been agreed with both Mr Cruz and Mr Bloomfield and that it was too late to re-negotiate the terms at that stage. Mr Bird also tried to “talk him out of” the additional $10.00 an hour for the works at the RAAF base. Mr Brady refused because that amount had already been agreed by Mr Cruz. Mr Bird then rang him and told him he had “no option” but to pay the extra $10.00 an hour.

33. [33]

    Mr Brady maintained in cross-examination that, in the very first conversation with Mr Cruz in March, he had raised the issue of the rate increase to $55.00 an hour as well as the two hours travel time. It was put to him in cross-examination that that was not true but he maintained his position.

34. [34]

    Mr Brady gave evidence that, to the best of his knowledge, Mr Cruz had authority to approve rates because he was the only person from Marathon he had dealt with. He did not hear of Mr Bird until they were half way through the Traralgon job and he was chasing up unpaid invoices. That was the only reason he found out who Mr Bird was. Mr Brady maintained throughout cross-examination that all of the rates were agreed to in the initial conversation with Mr Cruz. He stated that all of the other rates agreed upon were paid except for the travel time. The extra $10.00 for the East Sale job was described by Mr Brady as a “site allowance” and he agreed that Mr Bird was unwilling to pay that amount but said he had no option but to do so.

35. [35]

    Mr Bird swore two affidavits in the Local Court proceedings. In his second affidavit, he corrected a number of inaccuracies in his first affidavit. When he gave evidence, he made a number of further concessions. The Magistrate made some adverse comments regarding Mr Bird’s evidence. Counsel for Marathon conceded before me that it was open for his Honour to make those findings and they form no part of this appeal. I do not propose to summarise his evidence in any detail apart from what he alleged he discussed with Mr Brady concerning the $10.00 additional rate at the East Sale site and the travel costs.

36. [36]

    In Mr Bird’s first affidavit, it was deposed that, after having discovered the labour-hire workers were registering their arrival time an hour early and their time of departure an hour late, he telephoned Mr Brady and had a conversation as follows:

37. [37]

    Mr Bird further deposed that, approximately one week later, he telephoned Mr Brady and had a conversation in words to the following effect, after which Mr Bird terminated the call:

38. [38]

    The Magistrate delivered a written judgment on 1 May 2017. It is not in the usual format of judgments from the NSW Local Court and appears to have been typed either by or on behalf of his Honour. The judgment does not appear to have been transcribed by the Reporting Services Branch and then revised by his Honour as is the usual practice. Given that the primary complaint on this appeal was as to the adequacy of his Honour’s reasons, I consider it appropriate to extract a number of relevant portions of them, in the same form in which they were provided to the parties and this Court, rather than summarise them. Any typographical errors are in the original. I have, however, added underlining to some of the latter parts of the extracted reasons in order to be able to reference matters relevant to my consideration below.

39. [39]

    His Honour commenced his reasons by outlining the nature of the claim. After describing Marathon’s opening submission he extracted the following from counsel for Latrobe’s opening submission:

40. [40]

    His Honour then summarised the evidence of Mr Bird. His Honour’s assessment of that evidence plays no part in this appeal. It is relevant, however, to note that his Honour was critical of that evidence. His Honour observed that “Mr. Bird found himself in the embarrassing situation of having to make significant recantations, corrections to portions of his affidavit material and what he had deposed to in Chief.” A significant concession made by Mr Bird noted by the Magistrate was that, contrary to his first-sworn affidavit, Mr Cruz was in fact the person “on the ground dealing with this project and dealing with contractors”.

41. [41]

    His Honour then proceeded to summarise the evidence of Mr Cruz and Mr Brady as follows:

42. [42]

    His Honour then went on to refer to the evidence relevant to the question of whether Mr Cruz had authority to bind Marathon, an issue not forming any part of this appeal.

43. [43]

    His Honour then summarised counsel’s submissions. Relevantly to this appeal, his Honour summarised Marathon’s submissions as follows: that the court would prefer the account of the plaintiff’s witnesses; that the evidence cannot establish that Mr Cruz ever agreed to that travel time; that the evidence cannot establish that there was a conversation between Mr Bloomfield and Mr Bird regarding rates (it would be “pure conjecture” to suggest that Mr Bloomfield approved the invoices); that no adverse inference can be drawn by the court for the failure of the plaintiff to call Mr Bloomfield; and that any dispute between the witnesses’ recollections should be found in favour of Marathon’s witnesses.

44. [44]

    His Honour summarised the defendant’s submissions as being that any resolution of a contested or disputed account ought to be determined on the defendant’s “witnesses”. He noted the submission that Mr Cruz’s account can only be of “limited assistance” and that Mr Bird’s recollection can only be “second-hand”. His Honour then noted the following:

45. [45]

    His Honour then proceeded to make his findings under a heading “Court Findings”. It was accepted by the parties that his Honour made no findings prior to that part of his judgement. The reasons up to this point concerned a summary of the evidence, albeit, with some comments about the witnesses and submissions. The first significant finding his Honour made was as follows:

46. [46]

    His Honour then went on to deal with the question of whether Mr Cruz had authority to bind Marathon and was satisfied that he did. His Honour then noted:

47. [47]

    His Honour then dealt briefly with a discrete claim of overcharging not relevant to this appeal. His Honour then concluded in these terms:

48. [48]

    Two grounds of appeal are identified in the summons as follows:

49. [49]

    Counsel for the plaintiff focussed his submissions on the inadequacy of the Magistrate’s reasons. He submitted that, it follows from the fact that Marathon lost, that the Magistrate was satisfied that Latrobe was entitled to charge the additional travel time. But the Magistrate did not decide between the competing versions in circumstances where it was critical to do so. His Honour did not explain why he preferred Mr Brady over Mr Cruz, which was fundamental concerning the overpayment claim. In fact, the Magistrate appeared to favour Mr Cruz’s evidence over Mr Brady’s evidence at various points in his reasons without making any express findings in that regard.

50. [50]

    Counsel for the plaintiff also pointed to the fact that his Honour made no express finding as to whether there was a contractual term whereby Latrobe was entitled to charge Marathon the additional travel time. Nor did he identify whether any such a term was express or implied or by conduct. It was submitted that the basis for his Honour’s conclusion is entirely unknown to Marathon.

51. [51]

    No issue was taken with his Honour’s findings that Mr Cruz had the authority to bind Marathon. The only part of the reasons said to be opaque was why the Magistrate preferred the evidence of Mr Brady to that of Mr Cruz. Furthermore, it was said that his Honour did not set out any reasons as to how the Magistrate applied the law to the facts.

52. [52]

    It was submitted that it is insufficient for Latrobe to submit that it must be inferred that the Magistrate preferred Mr Cruz to Mr Brady given the result. His Honour appears to have accepted both versions.

53. [53]

    It was further submitted that what Mr Brady believed was agreed to was not relevant; the court was called upon to determine objectively what the agreement was: see JW Carter, E Peden and GJ Tolhurst, Contract Law in Australia (5th ed, 2007, LexisNexis) at [3.06], and the cases cited therein.

54. [54]

    Counsel for the defendant did not concede that the issue before the Local Court was one of credibility. Counsel for the defendant noted that, in his written submissions in the Local Court, he did not submit that Mr Cruz was lying. On the contrary, it was submitted that Mr Cruz appeared to be making a genuine effort to recall the evidence but was disadvantaged in giving his evidence as he had left Marathon 18 months earlier. It was submitted in the Local Court that his evidence would be of “limited assistance”. It was also submitted to the Magistrate that a Jones v Dunkel (1959) 101 CLR 298 (“Jones v Dunkel”) inference should be drawn for the failure of Marathon to call Mr Bloomfield as a witness.

55. [55]

    It was submitted that, the only conflict as between the evidence of Mr Brady and Mr Cruz as to their initial conversations, was whether anything was finally agreed at that time. The two men were in agreement that the issue of what would be charged at East Sale if Latrobe workers were to be engaged was raised.

56. [56]

    It was conceded that there is no evidence that the topic was revisited as between Mr Cruz and Mr Brady but it was submitted there was no need for this to occur. In any event, it was revisited with Mr Bloomfield. Latrobe also relied upon the fact that when Mr Bird telephoned Mr Brady in September 2015 to complain about the extra travel time being charged, he did not say it could not be charged. He simply said he was not happy about it but he “left it hanging.” Thereafter, the labour continued to be provided and invoices rendered.

57. [57]

    It was submitted that it was only in late October when an outstanding amount was due that Marathon asserted that it had never agreed to the travel time and indicated it would withhold about $40,000.00 in travel time.

58. [58]

    Latrobe relied upon six findings by his Honour as constituting sufficient reasons in this matter, as follows:

59. [59]

    It was accepted that the Magistrate did not make any findings as to whether Mr Cruz agreed to the rates offered by Mr Brady in the 28 March 2015 conversation but it was submitted that was not fatal because Latrobe’s case in the Local Court was that the issue in dispute between the parties was whether it was agreed, “either expressly or impliedly or by conduct”. He relied upon Marathon’s conduct in initially paying for the full amounts.

60. [60]

    In the Local Court, Latrobe argued that the terms of the agreement were to be considered taking into account “the full range of relevant surrounding circumstances”. Those circumstances were not confined to the oral conversations between Mr Brady and Mr Cruz but also between Mr Brady and Mr Bloomfiled (who was not called as a witness). The fact is that the invoices were initially paid and Mr Bird did not raise the issue of travel time until September 2015 and then did not raise it again, even though invoices continued to be rendered, including those amounts for travel time.

61. [61]

    It was submitted that it was open for the Magistrate to find that that there had been a tacit agreement between the parties and that, viewed objectively, Latrobe was entitled to charge the additional travel time. It was noted that the plaintiff’s evidence comes to a halt by the end of June 2015. Mr Cruz was no longer working there and the Magistrate found Mr Bird to be unreliable. Therefore, there is no evidence as to the terms of the agreement thereafter relied upon by Marathon.

62. [62]

    It was submitted that what the Magistrate found was that there had been an offer by Latrobe of the terms for the second stage of the project. When Mr Bird requested that Latrobe do the work on the second stage that was an acceptance of the offer made to Mr Cruz because Marathon was bound by that knowledge. Marathon was then bound to accept those conditions after Latrobe started doing the work it was contracted to do.

63. [63]

    Marathon relies upon two grounds of appeal. Under ground 1, Marathon seeks to challenge the Magistrate’s fact-finding as to the terms of an oral contract. It was conceded at the commencement of the hearing of this appeal that ground 1 involves a question of mixed law and fact rather than a question of law within s 39(1) of the Local Court Act. Although leave can be sought to commence an appeal based on a question of mixed law and fact under s 40(1) of the Local Court Act, this appeal was brought under s 39(1) of that Act.

64. [64]

    A further difficulty with the plaintiff’s first ground of appeal is that it alleges error in the learned Magistrate’s finding that an oral agreement was reached when Mr Brady disclosed to Mr Cruz in March 2015 what the terms of engagement would be in the event that Latrobe was engaged at East Sale. It was contended that an offer of terms without any agreement was insufficient to establish an agreement in those terms and thus error is established. The problem with this ground of appeal is that it is not entirely clear to me that this was in fact a finding made by his Honour, although it may well have been. On that basis, I propose to first consider Marathon’s complaint under the second ground - that his Honour’s reasons are inadequate.

65. [65]

    The principles in relation to the requirement that reasons be provided for any decision are well established. Clearly, the question of adequacy will depend upon the nature of the case. In Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 (“Soulemezis v Dudley (Holdings)”), McHugh JA observed at 279 that the provision of reasons is important to the judicial process because:

66. [66]

    His Honour went on to observe (at 278-279):

67. [67]

    In Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430, Mason P put the principle as follows at 431:

68. [68]

    In Mifsud v Campbell (1991) 21 NSWLR 725, Samuels JA, with whom Clarke JA and Hope AJA agreed, observed at 728D:

69. [69]

    His Honour went on to observe at 728E:

70. [70]

    In Wiki v Atlantis Relocations (NSW) Pty Ltd (2004) 60 NSWLR 127; [2004] NSWCA 174, Ipp JA, with whom Bryson JA and Stein AJA agreed, referred to these decisions then went on to state the following at [58]-[59]:

71. [71]

    I have also had regard to the observations of Beech-Jones J in A.V. Jennings Properties Ltd v Kam Civil Pty Ltd [2013] NSWSC 1900 (“A.V. Jennings”), where his Honour considered (at [21]-[26]) the scope of the requirement of Magistrates to provide reasons where the only avenue of appeal from such a decision is on a question of law. His Honour cited the judgment of McHugh JA in Soulemezis v Dudley (Holdings) at 281 as follows:

72. [72]

    In A.V. Jennings, Beech-Jones J was satisfied (at [51]) that the Magistrate was not required, in relation to a “bare, albeit critical, finding of fact”, to expressly address the evidence of a particular witness if the basis for the ultimate finding was otherwise clearly explained in the judgment.

73. [73]

    With these principles firmly in mind, the starting point is to identify the specific complaint made by Marathon. There is no complaint made as to the adequacy of his Honour’s reasons concerning the discrete question of whether Mr Cruz had authority to bind Marathon, nor as to his Honour’s finding there was only one contract between the parties, rather than two. This latter argument had fallen away by the time of closing submissions in the Local Court in any event. Similarly, no complaint is made concerning his Honour’s reasons for rejecting the additional claim in the Local Court for over-charging in the amount of $2,420.45.

74. [74]

    Marathon’s complaint is directed to the adequacy of his Honour’s reasons for finding that it was a term of the agreement between Marathon and Latrobe that two extra hours of travel time could be charged each day for the work done at East Sale. Both parties agreed below, and his Honour clearly recognised in his reasons (see above at [39]), that this was the primary issue in dispute in the Local Court.

75. [75]

    In seeking to establish that there had been no agreement that travel time could be charged, Marathon relied heavily upon the evidence of Mr Cruz, who was adamant that no such agreement was ever reached. Latrobe, on the other hand, argued that an agreement could be inferred from a number of circumstances, being: the conversation between Mr Brady and Mr Bloomfield; the time sheets recording the extra travel time; the related invoices being initially paid; and the fact that, after Mr Bird complained to Mr Brady about the travel time in September 2015, the issue was not raised again until the project was completed, at which time Mr Bird refused to pay the outstanding invoices. It would be expected that the reasons would address, even in the briefest of terms, whether these arguments were accepted, whether they were rejected, or whether his Honour considered it unnecessary to resolve them.

76. [76]

    The reasons do not address Marathon’s central argument, which turned on the Magistrate either accepting or rejecting Mr Cruz’s evidence over that of Mr Brady. Mr Cruz was quite insistent throughout his evidence that, at no stage, did he ever indicate to Mr Brady that Marathon agreed to additional terms regarding the extra travel time, whereas Mr Brady insisted that there was a definite agreement reached. There was a significant factual dispute as between these two witnesses on the question of whether any relevant agreement had been reached between them. Although his Honour summarised the competing evidence (see above at [41]), he did not then go on to make any findings in relation to which version he accepted.

77. [77]

    His Honour stated that “the basis of engagement was determined on the basis of what was put by Mr Brady and what was indicated by Mr. Cruz.” With respect to his Honour, it is not entirely clear to me what this statement means. Does this sentence reflect, as Marathon contended, that his Honour found that it was sufficient for an agreement to be reached if the matter had been discussed, even though Mr Cruz did not agree to what Mr Brady “put” to him? This construction was the basis for ground 1. Or, did his Honour make a finding that Mr Brady offered those terms and that the telephone call from Mr Bird in mid-July 2015, engaging the services of La Trobe for the East Sale work (in which no rates were discussed), was an agreement to the terms earlier suggested to (but not accepted by) Mr Cruz? Did his Honour make a positive finding that it was not necessary for him to form a view as to which version of this conversation was accepted because of other findings he made? This was the meaning of the sentence advanced by Latrobe. The difficulty with this latter construction is that other findings of his Honour point in different directions on this issue, an issue I address below.

78. [78]

    His Honour expressly accepted that Latrobe “made overtures” concerning the East Sale component and “on the evidence received neither a definitive nor affirmative response”. His Honour stated that “this court has no difficulty in accepting that the Sale aspect or component figured in [the initial] appraisal and discussion”. No doubt the reason that his Honour had “no difficulty” accepting this is because it was not disputed by Marathon that Mr Brady had suggested to Mr Cruz at any early stage that if Latrobe workers were engaged at East Sale different rates would apply. Mr Cruz accepted this. The dispute was as to whether there was ever any agreement made between Mr Cruz and Mr Brady on this issue. Stating that his Honour accepted that the subject was raised does not address what happened after that.

79. [79]

    Similarly, his Honour “readily accept[ed]” that the “pricing was two-fold both so far as it related to Taralga and later at Sale.” Again, it is unclear whether his Honour means that he readily accepted that Mr Brady suggested those rates or whether they were agreed upon. His Honour immediately follows this finding by stating that “Equally Mr. Cruz acknowledged that in so far as he distinguished Taralga from Sale he responded to the effect Not now later when pressed as to the successful tendered to carry on or continue the works, the 55 K distant at East Sale.” This latter statement suggests that his Honour accepted Mr Cruz’s evidence and was not satisfied any agreement was reached as between Mr Cruz and Mr Brady.

80. [80]

    His Honour earlier stated that, “inferentially”, it could be concluded that “Marathon was aware of, and approved, the terms of the basis of contracting”. Given where this statement appears in his Honour’s reasons, it is to be presumed that his Honour is referring to the period of time when Mr Cruz was still employed by Marathon. The evidence is that Mr Cruz checked and approved the invoices when he was working at Marathon. There was no dispute on the evidence that Marathon “approved the terms and basis of contracting” for the work done at Traralgon. The real question is what happened after Mr Cruz left the employ of Marathon.

81. [81]

    His Honour did, at times, describe the evidence of Mr Cruz in favourable terms by, for example, stating that he gave his evidence with “candour”. Nowhere does his Honour reject any of the evidence of either Mr Cruz or Mr Brady. On the contrary, his Honour appears to have accepted Mr Cruz’s evidence that he would say “[n]ot now later” when Mr Brady raised the subject of the applicable rates at the East Sale site. If his Honour accepted the evidence of Mr Cruz that no agreement was reached between Mr Cruz (on behalf of Marathon) and Mr Brady, then his Honour might have found in favour of Latrobe if he was satisfied that there had been agreement by conduct on the part of Mr Bird in initially paying the invoices. The difficulty is that his Honour made no finding in relation to this issue either. Nor was there any evidence from Mr Cruz to the effect that, if the services of La Trobe were in fact engaged for the East Sale work, the rates would be as suggested by Mr Brady.

82. [82]

    Latrobe’s defence in the Local Court relied heavily on the fact that Marathon initially paid some of the invoices charging the higher amount before Mr Bird telephoned Mr Brady in September 2015 to complain about the over-charging. His Honour’s “finding” was that the protest lodged by Marathon about this was “in one view” consistent with the belief that “no contractual arrangements had been so entered into.” His Honour then noted that Latrobe would “dismiss” this argument. His Honour then made no finding on this issue beyond stating that there was “no doubt that the subsequent payment of the claims was under protest” suggesting that, if anything, his Honour was satisfied there was no acquiescence on the part of Marathon.

83. [83]

    The observations by his Honour that Mr Bird’s protest concerning the invoices was consistent with his belief that no contractual arrangements had been entered into regarding the additional travel time also reflects the evidence before his Honour that the invoices did not stipulate anywhere on them that an additional two hours travel time was being charged. Rather, the workers were simply told to sign on an hour earlier than they had actually arrived at work and to sign off an hour later. In this way, it would not have been readily apparent to any person authorising the payment of the invoices that it was a term of the agreement that two hours additional travel time was being paid. It is to be noted that the evidence was that payment was only ultimately made by Marathon because of statutory obligations pursuant to a payment claim issued under the Building and Construction Industry Security of Payment Act 1999 (NSW).

84. [84]

    Another material dispute between the parties in the Local Court was whether his Honour would draw a Jones v Dunkel inference from the fact that Mr Bloomfield was not called as a witness for Marathon. Latrobe had invited his Honour to do so which was resisted by Marathon. His Honour did not draw any such inference. Instead, his Honour found that Mr Bloomfield’s involvement could “add little” to the matter “other than on the version available to this court he acquiesced in the early arrangement with… Mr Cruz.” It is not apparent what “arrangement” his Honour is referring to. It is pertinent to note that the only evidence regarding Mr Bloomfield was the hearsay evidence from Mr Brady extracted in his Honour’s reasons that, when Mr Brady suggested what the rates at East Sale would be, John Bloomfield said “Yes, that’s fine. I’ve already discussed it with Phil and we’re happy to go on with what we’ve already agreed to.”

85. [85]

    If the Magistrate accepted the hearsay evidence of Mr Brady as to what Mr Bloomfield told him this would have meant rejecting Mr Cruz’s evidence. Prior to his Honour’s statement that Mr Bloomfield’s evidence could add “little” to the matter “other than on the version available to this court he acquiesced in the early arrangement”, his Honour already appears to have found that he accepted Mr Cruz’s evidence regarding “Not now later”, such that his Honour was not satisfied that there was any “agreement” between Mr Cruz (on behalf of Marathon) and Mr Brady. If this is the case, it is not entirely clear what it is his Honour found that Mr Bloomfield acquiesced to.

86. [86]

    Overall, it is not apparent from his Honour’s reasons the basis upon which he found in favour of Latrobe. Latrobe contended that the reasons disclose that his Honour found that an oral contract was formed having regard to a combination of factors, including the initial conversation between Mr Brady and Mr Cruz, as well as the initial payment of the invoices. Although this might be the case, it is inconsistent with the passages I have just identified. It might equally be the case that his Honour was not satisfied that any agreement had been reached at all but when Latrobe started charging a higher amount and the invoices were paid there was acceptance of that amount by Marathon which led to agreement by conduct. Again, this is inconsistent with his Honour’s observations that complaint was made by Mr Bird and the payments were made under protest. His Honour simply made no finding that he was satisfied that, when the invoices were initially paid, that constituted acceptance of the terms by Marathon.

87. [87]

    His Honour’s reasons do not disclose that any of Latrobe’s submissions on this issue were accepted. His Honour placed little reliance on the hearsay evidence regarding Mr Bloomfield, noted that the time sheets were paid only until complaint was made about the additional travel time, and not thereafter, and that the payments were made under protest. These observations by his Honour are inconsistent with Latrobe’s position that there had been acquiescence on the part of Marathon and that a contract could be inferred by conduct.

88. [88]

    This appeal is concerned with whether Marathon has established that his Honour’s reasons were inadequate. That is a question of law. This appeal is not concerned with the merits of the decision. It is to be accepted that it was open to his Honour to have found in favour of Latrobe. It is also to be accepted that it was open to his Honour to have found in favour of Marathon. But Marathon was the losing party in the Local Court. It was entitled to understand properly the grounds upon which it was unsuccessful in it claim. The fact that significant time was spent at the hearing of this appeal attempting to identify what findings were made by his Honour lends further support for the proposition that his Honour’s reasons do not adequately disclose why it was that Marathon was unsuccessful.

89. [89]

    In approaching this ground of appeal, I have made full allowance for the demands on a Magistrate in a busy Local Court. As Johnson J observed in Director of Public Prosecutions (NSW) v Illawarra Cashmart Pty Ltd (2006) 67 NSWLR 402; [2006] NSWSC 343 at [15] (albeit in the context of the hearing of criminal charges):

90. [90]

    The difficulty with the application of this principle to the present matter is that these reasons were not delivered ex tempore; his Honour reserved his decision for six weeks and then delivered his reasons in a typed judgment.

91. [91]

    For these reasons, I am satisfied that ground 2 has been established. Putting to one side the question of leave, I am not satisfied that ground 1 could be established in any event because the reasons do not permit me to accept the premise of Marathon’s argument in support of that ground. That is, it is not clear to me that his Honour’s finding that “the basis of engagement was determined on the basis of what was put by Mr Brady and what was indicated by Mr Cruz” meant that his Honour was satisfied that this was sufficient to amount to an agreement. Accordingly, I do not propose to consider the question of leave to rely upon ground 1.

92. [92]

    I propose to allow the appeal. As for the appropriate orders, the orders sought in the summons were that I would allow the appeal and make the following consequential orders:

93. [93]

    Section 41 of the Local Court Act provides:

94. [94]

    It was submitted on behalf of Latrobe that, if I upheld ground 2, I would not remit the matter to the Local Court for a further hearing because there has been no miscarriage of justice. It was submitted on behalf of Latrobe that there are sufficient factual findings in the Magistrate’s decision for this court to finally determine the matter on its merits.

95. [95]

    On behalf of Marathon, it was submitted that if ground 1 was established, this court could finally determine the matter but it was conceded that if only ground 2 was upheld then the appropriate order would be remittal to the Local Court for a re-hearing.

96. [96]

    I have recently considered the scope of this court’s powers under s 41(1) of the Local Court Act in Regency v Nadinic [2018] NSWSC 68 at [87]-[93] and those principles are applicable here. I have had regard to the observations of Spiegelman CJ in Thaina Town (On Goulburn) Pty Limited v City of Sydney Council (2007) 7 1 NSWLR 230; [2007] NSWCA 300 at [103] and Basten JA in B & L Linings Pty Limited v Chief Commissioner of State Revenue (2008) 74 NSWLR 481; [2008] NSWCA 187 at [149]-[150]. In Getex Pty Limited v Reed Business Information Pty Limited [2013] NSWSC 1161 (“Getex”), Bellew J relied upon these decisions and observed at [100]:

97. [97]

    In Getex, Bellew J concluded that he could not determine the matter because it would have required him to make new findings of fact. Similarly, I am satisfied that I could only make the orders sought by Marathon in this appeal if I was satisfied that to do so would not require me to make new findings of fact. This also applies to Latrobe’s submission that I could find in favour of Latrobe on the merits. As is disclosed in my consideration of ground 2 above, I am satisfied that a number of factual findings were required to be made by his Honour which were not, and some of these factual findings involved matters of credit. Accordingly, the only appropriate orders I can make are under s 41(1)(c) of the Local Court Act, setting aside the judgment and remitting the matter to the Local Court for determination.

98. [98]

    Marathon has been successful. The usual order would be that costs follow the event “unless it appears to the court that some other order should be made as to the whole or any part of the costs”: Uniform Civil Procedure Rules 2005 (NSW) r 42.1. It was not submitted in Latrobe’s written submissions that some other order ought to be made and I propose to order that Latrobe pay the costs of this appeal.

99. [99]

    It also seems to me that this would be an appropriate matter in which I would exercise my discretion under s 6 of the Suitor’s Fund Act 1951 (NSW) to grant a certificate in favour of Latrobe. The requirements of s 6 are here satisfied. The appeal has been upheld on a question of law. In Robinson v Zhang (2005) 158 A Crim R 575; [2005] NSWCA 439, Basten JA observed at [38] that, “[w]here the power is available, a certificate is usually granted as a matter of course, in the absence of particular considerations which would warrant withholding a certificate in the exercise of the Court’s discretion.” No such considerations arise in this case.

ORDERS

1. [100]

   I make the following orders:

   1. (1)

      The appeal is allowed.

   2. (2)

      The judgment and orders of the Magistrate, dated 1 May 2017, insofar as they pertain to the “overpayment claim”, are set aside.

   3. (3)

      That part of the proceedings being “the overpayment claim” is remitted to the Local Court of New South Wales to be dealt with according to law.

   4. (4)

      The defendant to pay the plaintiff’s costs.

   5. (5)

      The defendant is to be provided with a certificate pursuant to s 6(1) of the Suitors Fund Act 1951 (NSW).