Cowling v Alexander

[2009] VCC 41

IN THE COUNTY COURT OF VICTORIA Revised

(Not) Restricted

AT MELBOURNE
COMMERCIAL LIST

GENERAL DIVISION

Case No. CI-07-03739

CAROLYN DIANE COWLING	Plaintiff
v
DENNIS LESLIE ALEXANDER	Defendant

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JUDGE:	HIS HONOUR JUDGE ANDERSON
WHERE HELD:	Melbourne
DATE OF HEARING:	9-12 February 2009
DATE OF JUDGMENT:	18 February 2009
CASE MAY BE CITED AS:	Cowling v Alexander
MEDIUM NEUTRAL CITATION:	[2009] VCC 0041

REASONS FOR JUDGMENT

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Catchwords:  Contract – Agreement for provision of bookkeeping services – Whether terms of the arrangement sufficiently settled – Alternative claim based on a quantum meruit

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P Pickering	Sharrock Pitman
For the Defendant	Mr T Sowden	Ken Smith & Associates
HIS HONOUR:

1           Diane Cowling acted as the bookkeeper for the business, Eastfield Natural Foods, for about 10 years from June 1997 until July 2007. For that period, she claims a total sum of $276,520 for the work she performed. The plaintiff says that this is calculated according to the terms on an agreement she reached in about June 1997 with Dennis Alexander, the proprietor of the business, and according to certain subsequent variations to the agreement.

2           The defendant denies there was any such agreement. He says that the plaintiff was engaged on a different basis altogether which involved payments on the plaintiff’s account, the allowance of discounts on purchases and the provision of services without charge. Later, it was agreed that upon presentation of invoices by the plaintiff, direct payments would be made by the defendant to the plaintiff, initially of $70 per week, rising eventually to $200 per week. The defendant said that these sums were requested by the plaintiff as remuneration for the bookkeeping services, additional to the other items of recompense. The plaintiff said that these invoiced sums were simply part payment of the amounts which had accrued, and related to past arrears.

3           Alternatively, the plaintiff made a claim based upon a quantum meruit. The work performed by the plaintiff was described in lists of tasks, year by year, contained in further and better particulars provided in the proceeding and in a computer disc apparently with over 750 pages of data on the Quickbooks program.

4 Bruce Saward, but only in the sense that he has added up the number of transactions

The data on the disc has been examined by the plaintiff’s accounting expert, Mr offered an opinion as to what would be the reasonable value of the bookkeeping services provided by the plaintiff to the defendant. The defendant’s expert, Mr Alan Bliss, whilst accepting Mr Saward’s calculation of the transactions, has made a very different assessment of the value of the plaintiff’s work.

5           The issues for determination in the proceeding are:

a.	whether an enforceable agreement was entered into in the terms alleged by the plaintiff or the defendant;
b.	whether the plaintiff is entitled to recover upon a quantum meruit and if so what sum is recoverable after taking account of other recompense offered or paid by the defendant;
c.	whether the part of the claim relating to work performed before September 2001 is statute barred or whether that part of the claim has been revived by part payment of the debt.

6           In 1984 the defendant established a naturopathy practice and organic food shop in the South Croydon Mall. The plaintiff was a customer of the business. In 1997 the business was struggling. The plaintiff offered her services as a bookkeeper. Later she was to describe her position with the business, as the “Finance Co-ordinator”.

7           The plaintiff said that initially it was agreed with the defendant that she would be paid $35 per hour and that she would limit the hours she claimed to no more than 10 hours each week. She said that because of the poor financial position of the business she was not to be paid until the business was sold, or as was later agreed, until she advised the defendant that the business could afford to pay her the money she had earned. The plaintiff said that because payment was to be delayed the defendant offered to provide her with free naturopathic services.

8           The plaintiff said that this arrangement continued for a number of years. The business accounts were put in order and the plaintiff offered advice and assistance upon a variety of business matters including superannuation, taxation and restructuring the financing of the business. The defendant subsequently moved into new premises, the business began to trade profitably and the defendant built up a substantial bank balance.

9           The plaintiff did most of the bookkeeping work at home. She attended the business each week to pick up the relevant documents. The plaintiff said that she regularly told the defendant how many hours she was working although the defendant denied that this had happened.

10         During the course of the arrangement, there was no dispute that a number of additional benefits were offered to the plaintiff:

a.	at an early stage, the defendant commenced paying the plaintiff’s home electricity bill;
b.	in about 2002 the defendant commenced contributing $80 each week to a superannuation fund for the plaintiff. This was not made as an employer’s obligation to pay the 9% superannuation contribution for employees but rather

as a further agreed sum in a form of payment requested by the plaintiff;

c.	the plaintiff was offered free naturopathic consultations and discounts for items purchased in the shop;
d.	the defendant paid for at least two upgrades to the plaintiff’s computer.

11         The plaintiff said that as from 1 July 2001 the defendant agreed to an increase in the rate of remuneration from $35 to $40 per hour and the hours to be remunerated increased from 10 to 18 hours per week from 1 September 2002.

12         On 17 August 2003, the plaintiff submitted an invoice to the defendant for $35. The invoice was paid in cash. The plaintiff said that this was the first repayment of the arrears owed by the defendant which by that time totalled about $126,000. The current charges under the terms of the agreement alleged by the plaintiff, were accruing at the rate of $720 per week (18 hours at $40 per hour). The plaintiff continued to invoice the defendant at the rate of $70 a week until May 2004 when, by agreement, the amount was increased to $140 per week and in November 2005 when the invoiced sum increased to $200. The invoices were provided regularly and were paid by the defendant upon presentation. The invoices did not contain any details of the periods to which they purported to relate and did not state that the invoices were for arrears rather than current charges.

13 Initially, the plaintiff offered to do bookkeeping work without remuneration. The
defendant said he would not accept that offer and the agreement was that the plaintiff
received a 20 per cent discount in respect of all purchases from the shop and was

The defendant said that the arrangement with the plaintiff was quite different. the plaintiff several times whether he could pay her.

14         In 2002, the plaintiff requested the defendant to commence paying $80 per week into a superannuation fund. The defendant did not regard this as a statutory obligation towards an employee, as he viewed the plaintiff as an independent contractor. In addition, the defendant continued to offer the plaintiff a discount on purchases and paid for her home electricity.

15         The plaintiff’s daughter, Selina, commenced working as a casual shop assistant in the business and at some stage it was agreed between the plaintiff and the defendant that Selina would be paid to carry out certain administrative tasks at home to assist her mother. An additional two hours was added to Selina’s weekly timesheets.

16 plaintiff said that this was a lump sum repayment off the arrears. The defendant said
that he had found out that the plaintiff had invested in a business which had failed

Towards the end of 2006, the defendant paid the sum of $6,500 to the plaintiff. The plaintiff and her daughter were suffering.

17         The increase in the regular payments from $70 to $140 per week in February 2004, and to $200 per week in November 2005, were made after a discussion with the plaintiff. The defendant said that at no time was he told the plaintiff was claiming that a sum was accumulating as arrears or that the regular invoice payments were not for current work the plaintiff was performing.

18         Upon a consideration of the evidence, I am not satisfied that the arrangement for remuneration for the bookkeeping services was as alleged by the plaintiff. The following are the critical considerations:

a. arrangement with the defendant. The document is headed “Recompense for
Works” and lists “electricity paid”, “20 per cent discount on all purchases”,
“free health treatment”, “service of computer”, “update of systems”, “hours
spent on finance co-ordinating approximately 8-15 per week” and “current rate
$40 per hour”. At the time the plaintiff was receiving $70 paid on invoice each
week, $80 per week superannuation payment and the other benefits, which
so far as the plaintiff calculated certain of these benefits, amounted to at least
a further $61 to $71 per week. Although the reference in the document to a

A document prepared by the plaintiff on 16 May 2003 recorded the rate of $35 per hour had been increased, the letter does not confirm the arrangement to accrue substantial unstated debts for an indefinite period.

b.

A letter dated 19 November 2005 from the plaintiff to the defendant read in part as follows: “It is time we went away from a payment for the hours of work

that I put in as much of my time has never been paid for in the past. Instead I now propose that a payment of $200 per week would be made in addition to the other payments that are made in kind. It would greatly assist me if that payment was made automatically by direct debit to my bank account each week…The payment of $200 per week is not an hourly rate but an amount for work done that can be from time renegotiated depending on the volume of

work to be done.”

The plaintiff said that when she sent the letter it was accompanied by a
statement setting out that the arrears at that time were “about $126,000”.
However, the attachment was not produced and there is no reference, either
expressly or by implication, to such a document having been brought to the
defendant’s attention. The terms of the letter suggest, in my view, that $200
per week was to be paid for ongoing work.

c.

It seems quite at odds with an arrangement that had continued for many were being repaid at the rate of $70, then $140 and later $200 per week, when the plaintiff’s current services were incurring a further liability at the rate of $720 per week.

d. There was never a written demand for any arrears until after the plaintiff ceased working with the defendant in July 2007 and the documents in May 2003 and November 2005 are inconsistent with the suggestion that arrears were accruing.

19         I cannot accept the plaintiff’s evidence of the arrangement. The defendant’s account is generally consistent with the objective evidence and seems much more likely to have reflected the arrangement between the parties. I accept the defendant’s evidence that the arrangement reached by the parties and varied from time to time. Although the parties may have discussed other arrangements for paying or compensating the plaintiff for her work, the fact that the plaintiff accepted payment over many years in the form offered by the defendant and without there being any objective evidence of contemporaneous demands or something similar to support the plaintiff’s contentions, are strong reasons for supporting the conclusions I have reached.

20         In these circumstances, there is no basis for the plaintiff’s claim upon a quantum meruit. However, as the matter was the subject of considerable evidence before me, I will make comment upon it.

21         The plaintiff performed the services of a bookkeeper for the defendant for about 10 years. She took on some responsibilities which would not ordinarily have been within the role of a bookkeeper. The title of “finance co-ordinator” seems not inappropriate to describe the functions she performed. Whilst much of the work the plaintiff did was carried out at her home, the defendant would have been aware of the breadth of the services she was performing. At his request the plaintiff, on occasion, listed the tasks she carried out, including in a document headed “Job Description” which she gave to the defendant on 16 May 2003.

22         However, even if I were not satisfied that the arrangement between the parties was as the defendant described it, it would be difficult to conclude on the evidence before me that the plaintiff had not been paid a reasonable sum for the work she carried out. Neither accounting expert had examined the business of the defendant, or in any detail, the actual work performed by the plaintiff. In the circumstances, it would be very difficult to quantify the benefit to the defendant of the plaintiff’s services.

23         The quantitative analysis of the Quickbooks transactions was a very rough and ready method of determining the nature of the plaintiff’s bookkeeping services. Mr Saward and Mr Bliss offered very different opinions as to the time required to complete the

tasks described by the plaintiff in her further and better particulars. The estimates of
the two experts is indicative, not only of the limited value in many cases of experts
employed by the parties, but also the fact that the information each was asked to
interpret was extremely limited.

24         If I were required to determine the reasonable cost of the plaintiff’s services on the current evidence, it would not be based upon objective facts or criteria apart from a totalling of the transactions entered on Quickbooks and a general listing of tasks.

Further, some assessment would have been required of the appropriateness of the services having regard to the nature and circumstances of the defendant’s business at the relevant times. It is obvious that, particularly during the early years, the

defendant’s business could not have sustained the cost of bookkeeping services at the rates claimed by the plaintiff or which Mr Saward considered were reasonable.

25         Because of these findings there is no need to consider the limitation of actions defence. The plaintiff’s claim must fail and the proceeding will be dismissed.

Certificate

I certify that the preceding 6 pages are a true copy of the reasons for decision of His

Honour Judge Anderson delivered on 18 February 2009.

Dated: 18 February 2009.

Julien Lowy

Associate to His Honour Judge Anderson