Metziya Pty Ltd v ICR Engineering Pty Ltd; ICR Engineering Pty Ltd v Metziya Pty Ltd; ICR Engineering Pty Ltd v Blayney Cold Storage Distribution Pty Ltd

1. [1]

   ICR Engineering Pty Ltd brought proceedings in the Local Court for recovery of what it claimed were outstanding sums it was owed under five separate construction contracts, four entered with Metziya Pty Ltd and one with Blayney Cold Storage and Distribution Pty Ltd. In December 2015, ICR succeeded on its claim against Blayney and on three of its claims against Metziya.

2. [2]

   ICR was thus awarded $13,613.36 for the “freezer door” claim against Blayney and against Metziya, $91,075.60 in respect of the “Chrisco building contract”, $59,512.34 in respect of the “Freezer 5 and 6 contract” and $31,900 for the “external service stairs contract”. ICR also received an order for costs, fixed at 25% of these judgment sums. ICR’s claim against Metziya for $41,844.22 in respect of “three steel racks” failed.

3. [3]

   Blayney, Metziya and ICR all now seek leave to appeal Mijovich LCM’s decision. ICR also seeks an extension of time to appeal and leave to appeal the costs order.

The extension of time application must be granted

1. [4]

   This application was supported by an affidavit sworn by ICR’s solicitor, Mr King, in which he explained how it was that ICR’s application for leave to appeal was not filed until 16 March 2016, after expiry of the appeal period on 24 February. In those circumstances, Metziya did not oppose the leave sought.

2. [5]

   No reasons were given for the costs order made on 27 January 2016, despite his Honour having reserved on the question of costs, after argument.

3. [6]

   On the evidence, transcript of the Local Court proceedings was sought on 8 February and obtained on 19 February; advice from counsel was then sought and received on 26 February; and pleadings were then drafted, settled and filed on 16 March. On all of that evidence I am satisfied that the leave sought should be granted, as was common ground between the parties.

Grounds of Appeal

1. [7]

   The grounds of appeal advanced by Blayney and Metziya include alleged failures to give an intelligible decision; to find that the parties had entered into fixed price contracts; to consider relevant evidence; to have regard to, or give appropriate weight to, the unreliable nature of ICR’s business records; errors in the assessment of evidence given by various witnesses; and to have regard to relevant post contractual conduct.

2. [8]

   The grounds of appeal advanced by ICR in relation to the “steel racks” claim include that his Honour erred in concluding that it had not discharged its onus of proof; in dismissing its claim; and in giving inadequate reasons. In relation to costs, his Honour having failed to give any reasons for his decision, ICR contends that the exercise of the costs discretion miscarried, his Honour not having revealed how he resolved issues lying between the parties as to the purported effect of the provisions of the Local Court’s Practice Note Div 1, as confining the Court’s discretion under s 98 of the Civil Procedure Act 2005 (NSW) and in failing to have proper regard to a Calderbank offer.

Leave to Appeal must be granted

1. [9]

   Section 39(1) of the Local Court Act 2007 (NSW) gives parties a right to appeal a judgment of the Local Court, only on a question of law. Appeals which raise mixed questions of fact and law and those which concern costs judgments require this Court’s leave (see s 40).

2. [10]

   As discussed in Ciszek v Enterprise Financial Solutions Pty Ltd [2010] NSWSC 1265 at [10], s 39 must be read as being subject to the particular provisions made in s 40, here in the case of costs orders. Accordingly, leave to appeal the costs order is required, even if an error of law is raised on the application.

3. [11]

   Blayney and Metziya's case was that their appeals raise questions of law and that otherwise, they would be granted leave to appeal. ICR contended that not only would it be granted an extension of time to appeal in the circumstances outlined in Mr King’s affidavit, given his Honour’s failure to give any reasons at all for the costs order, over which the parties had joined issue, the leave to appeal which it sought would also be granted. It contended, nevertheless, that Blayney and Metziya would not be given the leave which they sought.

4. [12]

   The circumstances in which leave to appeal will be granted were discussed in Gibson v Drumm [2016] NSWCA 206 at [19] - [20]. The amount in issue on an appeal is a relevant consideration, but the mere fact that the amount is small, will not preclude the grant of leave where the appeal raises errors of principle, matters of public importance, or injustice going beyond what is merely arguable.

5. [13]

   In this case, I am satisfied that the matters over which the parties have joined issue on these appeals, which I discuss below, raise both errors of law, and in so far as the appeals raise mixed questions of law and facts, they are matters of sufficient gravity that justice demands the grant of the leave sought by both parties, notwithstanding the considerable costs and effort expended in pursuit of the five day hearing.

Applicable principles

1. [14]

   It is wrong to examine an “unedited and unpunctuated report of ex tempore remarks in a busy magistrate’s court as if the transcript were a document to be construed strictly. It is the substance of what the magistrate said and did that the court is concerned with” (see Acuthan v Coates (1986) 6 NSWLR 472 at 479; 24 A Crim R 304 at 310). It is relevant in this case, however, that both his Honour’s December 2015 decision and the January 2016 costs order were given after he had reserved.

2. [15]

   A failure to give adequate reasons for a decision may involve an error of law (see Pettitt v Dunkley [1971] 1 NSWLR 376, Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 278- 279). The obligation to give adequate reasons lies at the heart of the judicial process. Failing to provide sufficient reasons can lead to a real sense of grievance, when the losing party cannot understand why he or she has lost (see Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 at 442). That the parties share such grievances in this case, must be accepted.

3. [16]

   In giving reasons for a decision a judge need not “spell out in minute detail every step in the reasoning process or refer to every single piece of evidence. It is sufficient if the reasons adequately reveal the basis of the decision, expressing the specific findings that are critical to the determination of the proceedings” (see Stoker v Adecco Gemvale Constructions P/L & Anor [2004] NSWCA 449 at [41]).

4. [17]

   The extent and content of the reasons given depends, however, on the particular case and what is in issue, but the reasoning on critical points must be exposed (see Soulemezis at 259 and 280). This may require reference to the evidence which is critical to the proper determination of those issues (see Beale v GIO at 443). In the case of credit issues, it is necessary to explain why one witness is preferred to another. Bald findings on credit, where substantial factual issues have to be resolved, may not comply with the duty to give reasons (see Palmer v Clarke (1989) 19 NSWLR 158 at 170).

5. [18]

   If an appellate court concludes that a trial judge failed to give adequate reasons, it has a discretion whether or not to direct a new trial. If, despite the inadequate reasons given, only one conclusion is available, a new trial may not be necessary (see Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 at [67]).

The costs order

1. [19]

   It is convenient to commence with the costs order.

2. [20]

   After he had delivered his December 2015 judgment, his Honour received submissions on the parties’ dispute over costs. He reserved his decision and made orders in January 2016, but gave no reasons at all to explain the basis on which he had resolved what lay in issue between the parties.

3. [21]

   The result is that neither the parties, nor this Court on appeal are in a position to understand the basis on which what lay in issue on the costs question was resolved. There can in those circumstances be no question that his Honour erred and that this aspect of ICR’s appeal must succeed.

4. [22]

   Undoubtedly, his Honour had a discretion in relation to costs under s 98 of the Civil Procedure Act 2005 (NSW). The Local Court had a practice note in relation to costs (see Local Court Practice Note Cir No 1 – Case Management of Civil Proceedings in the Local Court, 23 March 2011, cl 36.2), which provided in clause 36.2 that:

5. [23]

   What the parties addressed at the hearing and in their written submissions was whether the Court should order otherwise. His Honour reserved, but gave no reasons for his conclusion that there should be no departure from what the Practice Note contemplated. Nor did he reveal how he resolved the issue over the consequences of the refusal of the Calderbank offer.

6. [24]

   On appeal it was submitted for Metziya and Blayney that ICR cannot be aggrieved at reasons for the costs order not having been given, because of the existence of the Practice Note and there being no authority for the proposition that it is inconsistent with s 98 of the Civil Procedure Act. That submission cannot be accepted. The parties joined issue over the costs application. Having reserved as he did, his Honour was not only obliged to resolve those issues by the costs order which he made, he was also obliged to give reasons to explain the basis on which those issues were resolved.

7. [25]

   In those circumstances, the appeal against the costs order must be upheld.

The reasons given in the December 2015 judgment were inadequate

1. [26]

   Blayney and Metziya’s case was that in his 2015 December decision, his Honour failed to identify what lay in issue been the parties; to make findings of fact; to give reasons for his preference of some evidence and rejection of other evidence; to give reasons for the adverse findings which he made in relation to the credit of Mr Tanos; to explain how the sums he ordered in respect of the various claims were arrived at; and to give sufficient reasons for the conclusions which he reached. It also contended that certain findings which were made were not open on the evidence.

2. [27]

   For its part ICR advanced similar complaints.

3. [28]

   In light of the principles I have discussed, it is relevant to consider that in this case, while his Honour’s first decision was delivered orally in December 2015, it had been reserved after a five day hearing in Bathurst in September. Later, the parties provided written submissions which identified what was in issue in respect of each claim and drew attention to the relevant parts of the documents in evidence and the transcript. There the credibility of the witnesses was attacked and submissions were advanced as to matters such as how their oral evidence was not supported by documents in evidence and the relevance of various concessions submitted to have been made.

4. [29]

   When delivering his reasons, his Honour said that he had received both the transcript and those submissions. There were no further oral submissions then advanced, other than as to applications which each party had made in the written submissions, one for leave to amend the pleadings and the other seeking leave to lead further evidence, which his Honour dealt with during the course of delivering his judgment. Both applications were refused

5. [30]

   There are, it must be accepted, significant aspects of the reasons which his Honour then gave in relation to the five matters which fell to him to decide, which are difficult to follow. Part of the difficulty is that not all that his Honour said when delivering his reasons was able to be transcribed.

6. [31]

   Even approached in the way discussed in Acuthan, however, the reasons given fall short of what a judicial officer must do, if the obligation to give adequate reasons is to be met. An early example of this difficulty is an observation made towards the beginning of the reasons, which comprised some 23 pages, before his Honour turned to receive submissions on interest and costs. His Honour was making various introductory remarks when he observed:

7. [32]

   What these and other observations which his Honour made were intended to convey is, it must be accepted, quite unclear.

8. [33]

   Despite such undoubted deficiencies, some of the more serious criticisms directed at his Honour’s decision may not be accepted. For example, that advanced for Metziya and Blayney, that his Honour misconceived the nature of the civil standard of proof which had to be met, may not be accepted.

9. [34]

   When fairly considered, it is apparent that in delivering his reasons orally, after making the observation that he was “so pleased this was not a matter beyond doubt or perhaps it could have been a lot shorter proceedings if that was the test”, his Honour misspoke when he then said “[h]owever, at all times incumbent on the plaintiff to prove his case beyond reasonable doubt”.

10. [35]

    ICR’s counsel, Mr Cheney, immediately rose to draw his Honour’s attention to his error. Their exchange then was:

11. [36]

    There was thus but a spurious basis on which to advance the submission advanced for Metziya and Blayney on appeal that “his Honour appears to have misconceived that he had to determine the disputes in accordance with the civil onus, not the criminal onus”. That criticism is simply not open and may not be accepted.

12. [37]

    Notwithstanding this, that there are other significant failures in his Honour’s approach, which resulted in legal error and must lead to the conclusion that the appeals should be upheld, cannot be doubted.

13. [38]

    The reasons given had to do justice to what lay in issue between the parties on the cases they each advanced in their submissions (see Moylan v Nutrasweet Co [2000] NSWCA 337 at [61]). Where their resolution depended on the acceptance of one witness’ evidence and the rejection of another’s, more explanation had to be given than general observations as to credit. Further, where critical evidence was not referred to, for example concessions made in cross-examination, it may be inferred that his Honour overlooked that evidence, or failed to give consideration to it (see Beale at 443).

14. [39]

    His Honour’s reasons are, it must be accepted, in significant part difficult to follow. Nor do they adequately reveal the specific findings that were critical to the determination of particular issues, or the basis of his Honour’s conclusions on those issues.

15. [40]

    In the result both parties’ appeals must be upheld

16. [41]

    His Honour began by making general observations about the contest between the parties; evidence given by their respective witnesses and their credibility; and as to the evidence of the parties’ respective record keeping, which he criticised. He then turned to consider and resolve each of the five claims.

17. [42]

    As to matters of credit, while not entirely clearly expressed, it must be concluded from what his Honour said on commencement, that he found Mr Reeks and Mr Bright, who were called by ICR, to have been witnesses of credit. He had reservations about the evidence of those called by Metziya and Blayney, which he explained. His Honour did not find that Mr Tanos had been untruthful, or trying to mislead the Court. Still, his Honour did not think that Mr Tanos was on top of his own material and considered that aspects of his evidence were inaccurate, views to which he later returned. His Honour also had reservations about Mr Saran’s evidence, concluding that it was difficult to place much weight on his recollections of conversations and matters that were not put into evidence.

18. [43]

    It follows that in so far as ICR’s submissions on appeal were advanced on the basis that Mr Tanos was accepted to have been a witness of credit, whose evidence should have been preferred over that of ICR’s witnesses, its case may not be accepted.

19. [44]

    Even so, it must be accepted that his Honour did not adequately reveal the basis of the decisions he came to, particularly when resolving issues which depended in part on a consideration of documents argued to have supported the evidence of Mr Tanos and Mr Saran. Without explanation, such issues could not be resolved simply on an acceptance of the oral evidence of Mr Reeks, over their evidence.

20. [45]

    His Honour first dealt with the freezer door claim quantified to be $13,613.63, for repair of two freezer doors.

21. [46]

    In its written submissions, ICR had first addressed issues as to the credit of the witnesses. In relation to the freezer door contract, about which Mr Reeks, Mr Saran and Mr Tanos had given evidence, it contended that Blayney had admitted its request to ICR to rebuild the two doors; that the work was to be performed on a “do and charge” basis; that the work had been performed; and that an invoice had been issued.

22. [47]

    In its original defence, affirmed by Mr Tanos’ verifying affidavit, payment in full had been pleaded by Blayney, but in his March 2015 affidavit, Mr Tanos had claimed that the work was defective. It was in Mr Tanos’ cross-examination as to proof of payment, that he claimed a recent realisation that payment had not been made, with the result the amendment of the defence, during the hearing. It was developments of this kind which led to his Honour’s criticism of the parties’ respective record keeping and raised a particular issue as to Mr Tanos’ credit, given the belated alteration in Blayney’s case, which was addressed in ICR’s submissions.

23. [48]

    In its submissions Blayney identified what was in issue to be:

24. [49]

    It also sought leave to further amend its defence which ICR opposed, contending that Mr Tanos claimed confusion as to the invoice the subject of the charge, would not be accepted.

25. [50]

    His Honour refused Blayney’s application to further amend its defence and found for ICR. It is convenient to set out the reasons which his Honour gave, to explain his failure to engage with the matters over which the parties had joined issue, by making necessary findings of fact and giving adequate reasons for the conclusion which he reached, dependent as that was on the records relied on and the credit of those who gave evidence about this claim.

26. [51]

    His Honour observed:

27. [52]

    His Honour then dealt with the application for leave to further amend the defence, which was refused.

28. [53]

    There was no issue that the work the subject of the claim had been performed and that an invoice had been rendered, but the basis on which the issues raised on the defence which were pursued at trial and identified in the written submissions to which his Honour referred were resolved, is simply not comprehensible on these reasons.

29. [54]

    While his Honour explained why Mr Tanos’ evidence could not be preferred, the facts which he found and the basis on which his Honour resolved the matters he identified to have been in dispute, namely, “what the initial agreements were”; what had been agreed as to how the work performed was “to be calculated or billed”; and “what agreed amounts were”; were not revealed, as they had to be, if the obligation to give adequate reasons was to be met.

30. [55]

    In the result this appeal must be upheld.

31. [56]

    His Honour then turned to the service stairs claim, which was that it had been agreed between Mr Reeks and Mr Tanos in September 2008 that four sets of external stairs would be supplied and installed on a ‘do and charge’ basis. There was no issue that various stairs were installed, but payment was not sought until 2014. It was not made. In issue was whether the agreement for the original construction of the buildings known as freezer 2, freezer 3 and “pack out and dispatch”, where stairs were erected, had included the stairs the subject of this claim.

32. [57]

    What thus had to be resolved and explained included the terms of the contracts under which the respective stairs were constructed; when and by whom those terms were agreed, including as to price, there being an issue as to how the $31,900 claimed had been calculated; whether the amount claimed accorded with the contractual terms; whose evidence on critical matters would be preferred; and what impact claimed concessions made by Mr Reeks in cross-examination had, on the payment ICR finally pressed.

33. [58]

    His Honour noted that during the hearing, the amount claimed was reduced from $33,000 to $31,900 inclusive of GST, to take into account that two of the stairs had not been painted. He otherwise found for ICR, referring initially to an earlier agreement in respect of the construction of stairs at the freezer 1 building “in the 2000’s”, which ICR had relied on to support its case as to what was agreed in relation to the stairs later commissioned. His Honour then observed:

34. [59]

    Thus his Honour concluded, on balance, that the work the subject of this claim had been done under separate contracts to the construction contracts. His observations do not otherwise reveal, as they must, however, his Honour’s reasons for the resolution of the other matters over which the parties had joined issue, particularly how the sum ordered was arrived at.

35. [60]

    The claim was, after all, not for payment of a quantum merit, but rather for payment of work performed at a price agreed, identified to be “the normal basis”, under the terms of contracts claimed to have been made at particular times, by particular people, in relation to the erection of a number of separate sets of stairs. What thus fell to his Honour to resolve included not only the existence of the contracts under which each set of stairs was constructed, but also their terms.

36. [61]

    This depended, in part, on an analysis of documents in evidence, to which no reference was made. His Honour posed the question “I accept there is an agreement for the plaintiff to construct those stairs but at what cost?” The basis on which the answer arrived at rested was not adequately revealed, as it had to be, by the reasons given.

37. [62]

    That required an explanation not only of whose evidence on critical matters was accepted, but also findings of fact on which the final conclusion arrived at rested, including as to what was agreed would be paid for the claimed work.

38. [63]

    His Honour did not reveal what he had concluded had been agreed as the price for each set of stairs erected. That depended on a particular conversation to which Mr Reeks had deposed, which it was conceded on appeal his Honour had not referred to in his reasons. Nor was the basis of the conclusion that ICR was owed $31,900 explained. The result, amongst other things, also appears to have overlooked the effect of the concession made by Mr Reeks in his evidence, that he would have to bear certain unspecified costs, a concession to which reference is made in his Honour’s reasons, but does not appear to be reflected in the order made.

39. [64]

    In the result this appeal must also be upheld.

40. [65]

    His Honour then turned to the “steel racks claim”, where he found for Metziya, concluding that ICR had not met the onus which fell upon it to make out its case.

41. [66]

    The issues lying between the parties included the terms of the agreement, the number of racks built and how many were modified and whether any payments were outstanding. There was no issue that ICR had a contractual entitlement to payment for the installation of 5,740 pallet spaces in the freezer 5 and 6 buildings, but whether more had been installed and whether it was entitled to the additional $41,844,22 inclusive of GST it claimed, was in issue.

42. [67]

    Mr Reeks gave evidence as to the rate that ICR claimed to be entitled to be paid for the additional work, which Mr Tanos contested and about which Mr Reeks was cross-examined. Mr Reeks also estimated the amount of the work ICR had performed, based on photographs which were in evidence, because he did not have accurate records nor access to the building. He was also cross-examined about those estimates, as was Mr Tanos.

43. [68]

    The reasons given are difficult to understand, it must be accepted. His Honour held:

44. [69]

    ICR accepted on appeal that these observations reflect a proper rejection of its claim that it had supplied an additional 80 spaces from “new steel”. It contended, however, that having found that other spaces were provided by way of “salvage and reconstruction”, in addition to those for which payment had been made, which had been invoiced on a “do and charge basis” as discussed between Mr Saran and Mr Reeks, that his Honour erred in not quantifying its damages in respect of those additional spaces.

45. [70]

    ICR submitted that the conclusions which his Honour reached required its damages to be assessed, his Honour doing the best he could on the evidence, as discussed in Shree Shirdi Sai Sansthan Sydney Limited v Nirmal Taluja [2014] NSWSC 1825 at [46]. That exercise should have been undertaken by acceptance of the sum claimed, on Mr Reeks’ unchallenged evidence, as to a rate not unreasonable for this work, on a “do and charge” basis.

46. [71]

    For its part, Metziya contended that there was no error of the type identified in House v The King (1936) 55 CLR 499; [1936] HCA 40 in his Honour’s conclusions and so this appeal had to fail.

47. [72]

    Further, even though his Honour’s reasons were not well expressed and that he had misunderstood, for example, that none of the racking involved “salvage work”, rather it was that some of the racking had to be transferred from another site and constructed at this site, Metziya submitted that his Honour was correct to conclude that ICR had not met the obligation falling upon it to discharge its onus of proof in respect of this claim. His Honour had not been persuaded, or satisfied by Mr Reeks’ evidence, with the result that ICR’s onus had not been met. That was because ICR had not established the rate agreed for this work and because Mr Reeks’ evidence as to how he had calculated what he claimed was owing, by the process of “reconstruction” he was cross-examined about, could not satisfy ICR’s onus. His Honour was thus correct to dismiss ICR’s claim as not proven.

48. [73]

    In this case there were obviously difficulties in ICR proving what had been agreed it would be paid for this additional work and in adducing precise evidence of how much of this work it had performed, given the deficiencies in the parties’ record keeping. His Honour was, however, persuaded by Mr Reeks’ evidence, finding that ICR had been engaged to provide additional pallet racking, for which it had not been paid, as it was entitled to be. In the result, his Honour had to calculate what ICR was owed for that work.

49. [74]

    As discussed in Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54 at 31, the settled rule, “is that mere difficulty in estimating damages does not relieve a court from the responsibility of estimating them as best it can” and that this sometimes involves what is guess work, rather than estimation. In Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257; [2003] HCA 10, a distinction was drawn between cases where a plaintiff cannot adduce precise evidence of what has been lost and those where, although apparently able to do so, the plaintiff has not adduced such evidence (see at [38]).

50. [75]

    This was not a case where ICR could have adduced precise evidence, but did not do so. No doubt estimating ICR’s damages was undoubtedly difficult, but that exercise had to be undertaken in the way discussed in Amann Aviation. It could not be avoided because of a concern that Mr Reeks’ reconstruction could not be relied on, given that his Honour had concluded that ICR had performed work for which it was entitled to be paid. That conclusion was not challenged on appeal. Mr Reeks’ evidence having been tested as it was, ICR’s damages had to be assessed, even if that involved an element of guesswork.

51. [76]

    In the result, this appeal, too, must be upheld.

52. [77]

    His Honour next turned to the “Chrisco Building claim”. There in issue was whether ICR had been paid in full for its work of constructing the building. On the evidence, the initial price of $1.63 million was quoted in 2008; that a larger building than was initially contemplated was built, with the result and that additional payments were made, to reflect agreed variations, on the defence case, of over $1.9 million.

53. [78]

    What was in issue included whether the additional payments which had been made had satisfied all that was owing, ICR claiming that the final sum owed under the contract was $2,040,515.60, of which $91,075.60 was outstanding. There was also an issue as to whether some of what was claimed related to work performed under an entirely separate contract.

54. [79]

    There was documentary evidence as to the original scope of works, a budget estimate and invoices issued for progress claims, some of which were revised and the last of which was paid in 2008. It was a further invoice dated March 2014, but not served by ICR until June, with a letter of demand, which was in dispute. Mr Reeks, Mr Tanos and Mr Saran gave evidence as to what was built, what was discussed at various times, what was paid and the circumstances in which invoices were issued and reissued.

55. [80]

    In Metziya’s written submissions, what was in issue was identified to be what the terms of the agreement were; whether ICR had established that any sum was outstanding; and what relevance the issue of the invoice on which the claim rested many years after the work was performed, had to the resolution of these issues.

56. [81]

    Again, what his Honour found is difficult to understand. His Honour held:

57. [82]

    There was no issue that further work had been carried out than was initially contemplated and that more than $1.63 million had been paid. How much more was in issue, and a matter on which Mr Tanos was cross-examined, by reference to various documents. The basis on which his Honour thus resolved what was in issue over the claimed outstanding payment, given the documents in evidence, difficult as they were to reconcile, was not explained, as it had to be. That depended not only on findings as to the work which had been performed under this contract, but also on what payments had in fact been made for that work and what, if anything, was outstanding under the contract, given its terms.

58. [83]

    There had been many payments made to ICR in respect of this and other contracts. Its invoices included two which carried the same number. Metziya contended that some of the invoices related to work performed under a different contract. It also contended that in cross-examination Mr Reeks had made a concession as to payment of an invoice in an amount of some $210,000, with the result that he was not entitled to the further amount claimed, a concession not referred to by his Honour.

59. [84]

    His Honour accepted Mr Reeks’ calculations as to the size of what had actually been built to completion in 2008, but made no finding as to what the terms of the contract were, nor what had to be paid under the contract, for the construction of a building of that size. Nor did his Honour explain what had led him to the conclusion that $91,075.60 ICR only claimed in 2014 was still outstanding under the contract, given the dispute over what had, in fact, earlier been paid and what work the further claimed payment related to. That required more than criticism of the evidence of the defence witnesses.

60. [85]

    Having found that ICR’s invoices were inconsistent; that some of them had been re-issued at Mr Tanos’ request; and having observed that both Mr Reeks and Mr Tanos needed to get an accountant, his Honour had to go on to explain the basis on which he came, nevertheless to conclude that $91,075.60 was still owing under this contract.

61. [86]

    Given the matters the parties had addressed by reference to the documentary and oral evidence as to what had been paid under this contract and what remained outstanding, his Honour had to do more than announce that his conclusion rested on inconsistencies in the defence evidence. What he was there referring to is not apparent. It was ICR on whom the onus lay. The basis on which his Honour concluded that it had met that onus, is simply not apparent from the reasons given.

62. [87]

    In the result this appeal must also be upheld.

63. [88]

    The construction was completed in 2009. The evidence was that Mr Reeks was asked by Mr Saran to reduce the price he originally quoted and that by email sent on 18 February 2007 it was revised downwards to $870,000 plus GST.

64. [89]

    In issue was whether there was an agreement to an even lower price of $810,800 plus GST. In evidence were various text and email communications, as well as tax invoices later created by Mr Saran, which evidenced the progress payments totalling some $728,300 plus GST which were paid to ICR in 2009. On the defence case, those payments were made in complete satisfaction of the contract price orally agreed.

65. [90]

    In its written submissions Metziya relied on concessions made by Mr Reeks in cross-examination. Its case was that the invoices evidenced the revised agreement, which was supported by Mr Reeks’ concessions. It was also said to be relevant that ICR had not pursued a claim for further payment until March 2014, four and a half years after competition of the work.

66. [91]

    His Honour held:

67. [92]

    The concessions relied on were made in cross-examination, Mr Reeks’ evidence in chief being that he had not seen the invoices until 2011. In cross-examination, however, he agreed that he had seen the invoices when they were created in 2009 by Mr Saran, before progress payments were made to ICR, including the “final payment” then made, he accepted, because he had not himself made any claims in writing for any payments under this contract.

68. [93]

    The question was whether what had been agreed in relation to the invoices Mr Saran prepared and on which ICR was paid, after Mr Reeks saw them, reflected the terms of the final agreement which the parties had reached.

69. [94]

    His Honour’s conclusion that the amount quoted by Mr Reeks was for $870,000, was correct, but that did not resolve the question of what the terms of the parties’ contract for the construction of freezers 5 and 6 were and whether the final progress payment made to ICR in 2009 pursuant to the invoice which Mr Reeks had, in fact, seen before that payment was made to ICR, satisfied all that was owing under that contract.

70. [95]

    What his Honour meant by observations such as “I cannot take any negative evidence” were meant to convey is not apparent, but that the reasons given in respect of this claim were also not such as to satisfy the obligation which fell upon him, must be accepted. The findings on which his Honour’s conclusions rested have not been revealed nor their basis explained.

71. [96]

    In the result this appeal, too, must be upheld.

There must be a new trial

1. [97]

   If the only conclusions open on the evidence at trial were those reached by his Honour, then it would be unnecessary to order a new trial, even despite the errors into which his Honour fell. Given what was in issue and how much of their resolution depended in part on documents, the parties’ record keeping having been criticised as inadequate by his Honour, as well as on the credit of the witnesses, it is impossible to come to the view that the only conclusions open on the evidence were those which his Honour reached.

2. [98]

   In this case the Court is simply not in as good a position as his Honour was, to decide the matters which lay between the parties.

3. [99]

   In the result, regrettably, like in Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110, his Honour’s decision did not do justice to the issues lying between the parties. This is a case where the matter must be remitted to the Local Court for a new trial.

Costs and Suitors Fund Act

1. [100]

   Both parties have succeeded on their appeals. The usual order as to costs is that they follow the event. The parties should formulate proposed orders.

2. [101]

   I will also hear the parties on any application under the Suitors Fund Act 1951 (NSW) at 9:30am on 13 December 2016.