Larkin McDonald and Associates v Mahoney

[1992] QCA 163

IN THE COURT OF APPEAL

[1992] QCA 163

SUPREME COURT OF QUEENSLAND

Before the Court of Appeal

The President
Mr. Justice McPherson JA

Mr. Justice Derrington

Appeal No. 42 of 1991

BETWEEN:

LARKIN McDONALD & ASSOCIATES

(Plaintiff) Respondent

AND:

JOHN WILLIAM MAHONEY

(Defendant) Appellant

Appeal No. 43 of 1991

BETWEEN:

LARKIN McDONALD & ASSOCIATES

(Plaintiff) Respondent

AND:

JOHN WILLIAM MAHONEY

(Defendant) Appellant

JUDGMENT OF THE COURT

Delivered the Twenty-fourth day of June 1992.

MINUTE OF ORDER:

Both Appeals dismissed with costs.

CATCHWORDS:

Contract for services. Identification of employer. No ground for disturbing findings of trial Judge. Parties discussing business while drinking together at licensed premises. Whether chargeable.

Interest. Claim of 8% in writ issued in 1979. Whether
allowance of 12% at trial wrong.

Costs. Higher interest rate allowed than rate claimed in writ. Payment into court made insufficient. Whether notional adjustment should be made.

Counsel:	Crooke QC with Boughen for Appellant. Keane QC with McGhee for Respondent.
Solicitors:	Gall Stanfield & Tilley for the Appelllant. Bells Solicitors for the Respondent.

Hearing dates: 27th May and 28th May 1992.
IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 42 of 1991

BETWEEN:

LARKIN McDONALD & ASSOCIATES

(Plaintiff) Respondent

AND:

JOHN WILLIAM MAHONEY

(Defendant) Appellant

Appeal No. 43 of 1991

BETWEEN:

LARKIN McDONALD & ASSOCIATES

(Plaintiff) Respondent

AND:

JOHN WILLIAM MAHONEY

(Defendant) Appellant

ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ

ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ

The President
Mr. Justice McPherson JA

Mr. Justice Derrington

ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ

ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ

Judgment of the Court delivered on

the Twenty-fourth day of June 1992.

ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ

ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ

BOTH APPEALS DISMISSED WITH COSTS.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 42 of 1991

BETWEEN:

LARKIN McDONALD & ASSOCIATES

(Plaintiff) Respondent

AND:

JOHN WILLIAM MAHONEY

(Defendant) Appellant

Appeal No. 43 of 1991

BETWEEN:

LARKIN McDONALD & ASSOCIATES

(Plaintiff) Respondent

AND:

JOHN WILLIAM MAHONEY

(Defendant) Appellant

JUDGMENT OF THE COURT

Delivered the Twenty-fourth day of June 1992.

Because there is an appeal and a cross-appeal it is most convenient to describe the parties by their status in the action.

The plaintiff is an accountant who was engaged by the defendant to provide professional services variously for the defendant himself and for his company between June 1974 and May 1979. The plaintiff sued for professional fees for work done and recovered a judgment in the sum of $18,272.50 and interest at 12 per cent per annum from the 17th October 1979, the date upon which he rendered his account, to the date of judgment. That produced a total of $25,369.23. He was also awarded his costs.

The action was begun on 2nd November 1979 but did not come to trial until the 29th April 1991. In his specially endorsed writ the plaintiff claimed interest at the rate of 8 per cent but at the trial he made submissions for the figure of 12 per cent which he was awarded. That is the rate which for some years has been commonly adopted by the courts. In April 1983 the defendant paid into court the sum of $25,000.00, including interest, but made no further payment into court nor informal offer to the plaintiff.

The plaintiff now appeals against the judgment, asking for a greater sum for various reasons and pursuant to success in this he asks for a higher scale in respect of his order for costs. The defendant also appeals, seeking a reduction of the rate of interest allowed and its consequential amount. He further appeals against the order for costs because if the above point is successful the adjusted judgment should not reach the amount paid into court. Alternatively he seeks an order for costs because the insufficiency of the amount paid in was due to a change in the rate of interest claimed by the plaintiff at trial.

The plaintiff's appeal

The disputed items are many but fortunately they fall into three classes which can be discussed collectively. The parties agree that they may be classified within the following categories according to the way in which they were dealt with by the learned trial Judge:

(a)	Work for which it was found that the plaintiff was paid and accepted such payments in satisfaction;
(b)	Subsequently to the above, work which was found to be done for the company rather than for the defendant; and
(c)	Work which the plaintiff claimed to have done while drinking with the defendant at various licensed premises.

It is desirable to describe these respective classes somewhat more fully by resference to their chronological order.

The learned trial Judge found that:

(a)	the plaintiff's claim for the work he performed for the defendant from 25th June 1974 to the time of the sale of the company's business in March 1975 failed because, irrespectively of who employed the plaintiff and the terms of his employment, he was paid for the services which he did render;
(b)	only 105 hours of work were performed by the plaintiff for the defendant at his request between 17th March 1975 and 3rd July 1975 when the company went into liquidation, the other work having been performed for the company for whose indebtedness the defendant was not liable; and
(c)	during the whole of the relevant period there were frequent occasions when the plaintiff and the defendant discussed the latter's business while they were drinking together at various licensed premises but that these occasions were not chargeable as coming within the contract.

Now that the issues are adequately identified, it is desirable to place them into a more detailed context. In about May 1974 the defendant engaged the plaintiff to endeavour to extricate him from financial difficulties in the company's business and paid him $3,000.00 of his own moneys in advance. His paying this sum personally is ambivalent. Pursuant to arrangements made with the defendant in August 1974, the plaintiff claimed from the company a further $2,500.00 for further work done and the company paid it. Then by further arrangements between the parties, the plaintiff withdrew $150.00 per week from the company's business for his continuing services until March 1975 when the business was sold.

Although it relates to the next period here, it should be mentioned that when the company went into liquidation, the plaintiff claimed a further $2,500.00 against it and lodged a proof of debt. No doubt this had some bearing on His Honour's view as to the true position in the period now under discussion.

The learned trial judge found that the claim against the defendant in respect of this period failed because "irrespective of who did employ him and what in fact were the terms of his employment, the end result is that he has been paid for the services he did render". This finding obviously rejected the plaintiff's claim that he temporarily withheld his account for his work done for the defendant personally because of the latter's financial difficulties.

The reasons for this rejection are not difficult to see.

The plaintiff attempted to impugn this finding upon the argument that the amount which he did receive did not nearly match the total number of hours worked at the rate of $35.00 per hour, which was advanced unopposed and accepted by His Honour as being the correct rate of charge for the period from 1975 to 1979 inclusive. That however is insufficient to disturb His Honour's findings. The flat rate accepted by His Honour as appropriate for the entire period does not necessarily mean that it was the correct rate for the first part of that period. On the whole of the evidence which he accepted, he was entitled to have been satisfied that the plaintiff had submitted accounts for all his charges during this period and that he had directed them to the company and was paid. There was evidence to support that proposition and attempts to dislodge it by analysis containing contentious assumptions cannot succeed.

The evidence substantially implies the plaintiff's acceptance that he was totally engaged by the company during this period and looked to it for payment. His evidence of withholding any claim against the defendant personally is not supported by his own evidence as to relevant conversations, and his failure to submit even an account directing the defendant's attention to and warning him of the growing amount of any such indebtedness is not consistent with what might be expected.

Much of the submissions in his behalf in respect of this and other grounds depended upon the proposition, frequently stated, that the learned trial judge accepted his evidence. This is not so. While he expressly indicated that he preferred it to the respondent's evidence, it is manifest that the trial judge rejected it in respect of a number of important issues, and in this he was justified.

For example, the appellant's time sheets make no mention of the many hours of work claimed to have been done while the parties were at licensed premises. Moreover when it is examined in detail the list of hours claimed for this item includes times when, by the time sheets themselves, the appellant was clearly engaged in work for other clients.

Consequently the arguments advanced upon the foundation that the appellant's evidence was accepted are seriously flawed.

After the sale of the business in March 1975 the defendant engaged the plaintiff in relation to disputes between himself and his fellow directors, and the plaintiff also did what His Honour regarded as work for the company until it went into liquidation on 3rd July 1975. He carefully dissected the claim and attributed 105 hours of work to the defendant's personal affairs in this period.

The value of this was included in the judgement. The balance was disallowed because it related to business of the company. It was in respect of this work that the plaintiff had proved his claim in the winding up.

There has really been no substantial attack made upon this finding, which is not surprising. It is difficult to controvert it seriously on appeal in the light of the available evidence. Little over $1,000.00 is in issue, and no submission were made as to any error of detail in the judgment below. The only argument pursued seemed to be that His Honour wrongly attributed some work to the company's indebtedness rather than totally to that of the defendant, but this argument experiences the same fate that it did in respect of the first period.

For the period following the winding up of the company until the end of the plaintiff's engagement, it was found that the plaintiff performed further substantial work for the defendant personally. After allowance for a payment by the defendant of $23,500.00, judgment was given for the plaintiff for the balance in respect of the hours worked for the defendant in this and the preceding period. No argument is directed at this later period except to the extent that it forms part of the third class of claim in the above classification. It is now necessary to turn to that topic.

The amount of this part of the claim exceeds $30,000.00 and it refers to time allegedly spent by the parties over the entire period of the engagement when they drank together at the Southport R.S.L. Club and other licensed premises and when, the plaintiff claims, they spent in effect the whole of that time in business discussion for the defendant's benefit. None of this was allowed because it was found that these occasions were not comprehended in the agreement between the parties as chargeable items. But this finding does not stand alone. There were other adverse findings and factors within the general topic. First, the learned trial Judge was clearly dissatisfied with the plaintiff's evidence as to the hours claimed for under this head. Some mention has been made of this already. Secondly, the plaintiff gave the defendant no warning that he was to be charged for these occasions, and there was no express agreement that they were chargeable. Thirdly, his account of the content of the conversations was far from convincing. For example, there was a suggestion that he frequently had to go to find other directors to get them to attend meetings. Yet the claim was not for time spent in the pursuit of the directors but for time spent at the licensed premises, and no claim was made for any other time spent in that pursuit.

These are but a few of the reasons why the plaintiff cannot now found his argument, as he has done, upon the assumption that his evidence was accepted. His Honour did accept that many meetings took place and that there were long and detailed discussions about the defendant's financial troubles; but on all of the evidence, including that of the plaintiff, he still found that such meetings were outside any engagement of services. Once it is understood that he did not accept the plaintiff's evidence in this matter, there is no difficulty, for it was certiainly open to him on the whole evidence to find as he did. For example, quite apart from those matters mentioned above he was entitled to rely on the witness, Mr. Murphy, who was present at many of the relevant events and described them as social drinking occasions. There is nothing which would justify this court in interfering with these findings.

In the result, the plaintiff does not succeed on any of the grounds of his appeal. It follows that his further appeal against the scale of costs allowed must fail because it depends upon an adjustment upwards of the award.

The Defendant's Appeal

The defendant's appeal as to the amount of interest allowed to the plaintiff has two legs. The first is that it is said to have been a wrongful exercise of the trial Judge's discretion to allow interest for the period from the 17th October 1979, when the plaintiff presented his account, to the date of trial. The reason for this criticism is the delay in the prosecution of the action. Seresier Investments Pty. Ltd. v. English [1989] 1 Qd.R. 678, 679; B.P. Exploration v. Hunt (No. 2) (1979) W.L.R. 783, 846-7.

Although it was commenced on the 2nd November 1979 and there were numerous interlocutory procedures along the way, particularly because of the conduct of the defendant, there was a period between November 1985 and June 1989 when the action went to sleep. The plaintiff explained this delay as due to his serious ill-health.

In these circumstances, it was clearly within His
Honour's discretion to allow interest for the entire period.

The second leg of the appeal concerning interest relates to its rate. In his specially endorsed writ in 1979, the plaintiff claimed 8 per cent but His Honour allowed a rate of 12 per cent. There is nothing wrong with this. During the long history of the action, the rate of interest applied to judgments changed and was conventionally adopted at 12 per cent unless there was good reason to the contrary: Seresier Investments Pty. Ltd. v. English (supra) at 681. The discretion of the learned trial judge was not limited in any way by the rate claimed in the writ which was issued in 1979. Consequently, the complaint of the defendant is without cause.

However he also relies upon this set of circumstances in support of his other ground of appeal which relates to costs. His payment into court would have been larger than the award if the rate of 8 per cent had been used, but it was smaller than the award when 12 per cent was allowed.

His point is that the fact that the rate awarded was larger than that claimed by the defendant should be taken into account in making a notional adjustment of the amount paid into court on the issue of costs.

The simple answer to this is that he should have been well aware of the shift in the rate of interest usually awarded by the court and should have made a further payment into court to meet this. The appropriate rate was not a matter peculiar to any feature of the plaintiff's claim which was not known or could not have been anticipated. He should have taken into account any such change in reviewing the sufficiency of his payment into court. Accordingly there is no basis for making any notional adjustment of the amount paid into court based upon surprise, and this point fails also.

For the above reasons the appeal of each of the plaintiff and the defendant should be dismissed with costs.