Leduva Pty Ltd v NM Structural Engineering Pty Ltd

[2010] NSWSC 1164

CITATION:	Leduva Pty Ltd v NM Structural Engineering Pty Ltd [2010] NSWSC 1164
HEARING DATE(S):	13 October 2010
JUDGMENT DATE :	22 October 2010
JUDGMENT OF:	Garling J
DECISION:	Appeal dismissed with costs.
CATCHWORDS:	APPEAL – Appeal from Local Court of NSW – Appeal by way of rehearing – Whether leave to appeal on questions of mixed fact and law –– Whether matters the subject of the appeal are matters of fact, mixed fact and law, or of law – Obligation for Magistrate to provide adequate reasons. - PRACTICE AND PROCEDURE – Whether plaintiff’s pleadings in the Local Court were adequate – Purpose of pleadings and particulars – Whether the defendant in the Local Court knew the nature and extent of allegations made against it – Where the defendant did not object to the adequacy of the plaintiff’s pleadings until its written submissions made ten weeks after the conclusion of trial. - CONTRACTS – Whether there was sufficient evidence before the Magistrate to find the existence of an agreement in the terms set out in a written fee proposal – Clause in the agreement provided for termination payments in lieu of notice – Whether clause is penal. - BUILDING AND CONSTRUCTION – Whether consultant engineer was entitled to a variation under the agreement – Whether there was sufficient evidence before the Magistrate to find that there had in fact been a variation to the agreement .
LEGISLATION CITED:	Administrative Appeals Tribunal Act 1975 (Cth) Environmental Planning & Assessment Act 1979 Local Court Act 2007 Supreme Court Act 1970 Uniform Civil Procedure Rules 2005
CATEGORY:	Principal judgment
CASES CITED:	Abdel Naser Qushair v Naji Raffaul [2009] NSWCA 329 AME-UDC Finance Ltd v Austin (1986) 162 CLR 170 Australian Gas Light Co v Valuer General (1940) 40 SR(NSW) 126 Australian Securities & Investments Commission v Saxby Bridge Financial Planning Pty Ltd (2003) 133 FCR 290 Australian Gas Light Co v Valuer General (1940) 40 SR(NSW) 126 Dare v Pulham (1982) 148 CLR 658 Dunlop Nematic Tyre Co Ltd v New Garage & Motor Co Ltd [1915] AC 79 Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 Pettitt v Dunkley [1971] 1 NSWLR 376 Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 Public Service Board of NSW v Osmond (1986) 159 CLR 656 RL & D Investments Pty Ltd v Bisby (2002) NSWSC 1082 Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656 Sims v Wran [1984] 1 NSWLR 317 Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 US Manufacturing Co Pty Limited v ABB Service Pty Ltd [2008] NSWSC 705
PARTIES:	Leduva Pty Limited (Plaintiff) NM Structural Engineering Pty Ltd (Defendant)
FILE NUMBER(S):	SC 2010/076638
COUNSEL:	C. Gleeson (Plaintiff) S. Philips (Defendant
SOLICITORS:	Sachs Gerace Lawyers (Plaintiff) Self-represented (Defendant)
LOWER COURT JURISDICTION:	Local Court
LOWER COURT FILE NUMBER(S):	3353/2008
LOWER COURT JUDICIAL OFFICER :	Magistrate Madgwick
LOWER COURT DATE OF DECISION:	26 February 2010

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

GARLING J

FRIDAY, 22 OCTOBER 2010

2010/076638 LEDUVA PTY LIMITED v NM STRUCTURAL ENGINEERING PTY LTD

JUDGMENT

1 HIS HONOUR: NM Structural Engineering Pty Ltd is a company based in Dee Why, Sydney, whose sole director and shareholder is Mr Nader Mohareb. Mr Mohareb is a Chartered and Registered Structural Engineer and a member of the College of Structural Engineers. Leduva Pty Limited is a property development and building company based in Randwick, which is controlled and operated by its directors, Kashlah Taouk, and his son, Amerr Taouk.

2 The appeal to this Court arises from dealings which Mr Mohareb, on behalf of NM, and the Messrs Taouk on behalf of Leduva, had in April 2007 through to February 2008 about a development project at 105 Forest Road, Hurstville.

3 Mr Mohareb claimed, and the Taouks denied, that NM was entitled to payments arising out of work which he did as a structural engineer relating to the Hurstville project.

4 NM, the plaintiff, brought proceedings in the Local Court seeking $60,000 plus interest and costs, from Leduva as defendant. Leduva denied the claim.

5 Over a period of four days in March and August 2009, Magistrate Madgwick heard evidence from both parties and oral submissions from NM. At the conclusion of that period, she adjourned the matter in order to receive written submissions from Leduva, and written submissions in reply from NM. On 26 February 2010, the learned Magistrate delivered judgment. She ordered that NM have judgment for $60,000 plus costs and interest. On 29 April 2010, she varied the order for interest so as to order interest to be calculated at the rate of 20% per annum. On that day, Magistrate Madgwick ordered that Leduva pay NM’s legal fees and costs, totalling $7,587. The total of the judgment sum, resulting from her Honour’s orders, was $93,587.

6 Leduva filed a summons in this Court seeking to appeal, and where necessary leave to appeal, in respect of a variety of grounds arising out of Magistrate Madgwick’s judgment.

7 On 5 July 2010, Leduva filed an amended summons. The amended summons sought to raise 14 grounds upon which the appeal would be argued.

8 The proceedings before this Court were heard on 13 October 2010 when Ms C. Gleeson of counsel appeared for Leduva in its capacity as plaintiff, and Mr S. Philips appeared for NM in its capacity as defendant.

Appeal from Local Court to Supreme Court

9 A party to proceedings in the Local Court does not have a general right of appeal to the Supreme Court.

10 A party to proceedings before the Local Court which is dissatisfied with the judgment or order of the court may appeal to the Supreme Court but only on a question of law: s 39(1) Local Court Act 2007.

11 If the party wishes to appeal on a ground which involves a question of mixed law and fact, then leave of the Supreme Court is necessary: s 40(1) Local Court Act 2007.

12 In an appeal to the Supreme Court, a dissatisfied party is not entitled to challenge a pure error of fact.

13 On an appeal to under the Local Court Act 2007, the Supreme Court may determine the appeal:

“(a) by varying the terms of the judgment or order, or
(b) by setting aside the judgment or order, or
(c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court’s directions, or
(d) by dismissing the appeal.”

s 41(1) Local Court Act 2007.

14 Any appeal to the Supreme Court is by way of rehearing. On any such rehearing, the Court can receive further evidence but only on special grounds: s 75A Supreme Court Act 1970. No application was made to the Court to receive further evidence in this case.

Error of fact or error of law?

15 It is necessary to keep in mind, when hearing an appeal under the Local Court Act 2007, whether the error relied upon to ground the appeal is one of law, or of fact, or of mixed fact and law.

16 Hall J has considered the issue of what constitutes an error of fact or law in US Manufacturing Co Pty Limited v ABB Service Pty Ltd [2008] NSWSC 705 at [46]-[55].

17 I adopt what Hall J has written and in particular [54] where his Honour says:

“[54] It is clear that an error in point of law may include:

(1) A finding made where there is no evidence to support it or draws an inference from facts that cannot be reasonably drawn.

(2) A finding that no person acting judicially and properly instructed as to the relevant law could have made.

(3) Where a Court has misdirected itself in law: Australian Gas Light Co v Valuer-General (1940) 40 SR (NSW) 126.”

18 For present purposes, there is no need to distinguish between the phrase “an error in point of law” and the phrase “question of law”.

19 It is to be recalled that there is no right of appeal from an error of pure fact. However, as Jordan CJ said in Australian Gas Light at 138:

“(3) A finding of fact by a tribunal of fact cannot be disturbed if the facts inferred by the tribunal, upon which the finding is based, are capable of supporting its finding, and there is evidence capable of supporting its inferences …
(4) Such a finding can be disturbed only:
(a) if there is no evidence to support its inferences; or
(b) if the facts inferred by it and supported by evidence are incapable of justifying the finding of fact based upon those inferences …; or
(c) if it has misdirected itself in law ...”

20 That part of the decision of Jordan CJ was referred to with approval by Kirby J in RL & D Investments Pty Ltd v Bisby (2002) NSWSC 1082 at [12]-[14] where his Honour encapsulated the relevant authorities in this way:

“Arising from these authorities, a number of broad propositions can be stated:

First, there is no error of law in simply making a wrong finding of fact ( Australian Broadcasting Tribunal v Bond … per Mason CJ at 341), unless there is no evidence to support that finding.
Second, it does not amount to an error of law if the finding of fact, or the inference (or the refusal to make a finding of fact or draw an inference) is perverse, in the sense that it is contrary to the overwhelming weight of evidence: Glass JA in Azzopardi v Tasman UEB Industries Ltd … at 155.
Third, it is not an error of law even if the reasoning process by which the court reaches its conclusion of fact is demonstrably unsound or illogical (Menzies J in R v District Court: Ex Parte White (1966) 116 CLR 644 , at 654).
Fourth, there is limited exception (which has no application in this case) in relation to decisions of fact in the context of a statutory description. In such a case there may be an error of law if the decision on the facts is one which could not be reasonably entertained, or supported, if the tribunal had properly understood the true construction of the relevant enactment: Mahoney v Industrial Registrar of NSW & Anor … per Hope JA at 1 and Samuels JA at 5).”

21 I will apply these principles in considering the submissions of the parties in this case.

Abandoned grounds of appeal

22 Leduva informed the Court, either in its written or oral submissions that some of the grounds of appeal, although pleaded, were abandoned. Those grounds were:

(a) Ground 1(a) – although the balance of ground 1 was pressed (see Leduva’s written submissions, para 23);

(b) Grounds 4 and 11 (see Leduva’s written submissions, para 17);

(c) Grounds 7 and 14 (see T 1.19-25).

23 Accordingly, it is unnecessary to consider these grounds.

Underlying issues relevant to the appeal

24 In her judgment, the learned Magistrate made it plain that in disposing of the issues before her, she relied on issues of demeanour and credibility. With respect to the principals of each party, she made these findings:

(a) “ I found both the Taouks not to be credible witnesses ” (T 9.38 - 26 February 2010);

(b) “ Mr Amerr Taouk’s evidence was at times just not believable. He was hesitant and evasive when answering questions …” (T 9.39-.40 – 26 February 2010);

(c) “ … the Taouks are not naïve businessmen and at no stage … was there documentation saying otherwise than what the [plaintiff] says happened ” (T 10.26 – 26 February 2010);

(d) “ Mr Mohareb was unshaken in cross-examination and impressed as a witness of truth. Where there is conflict in the evidence between the plaintiff and the defendant … I will accept the evidence of the plaintiff ” (T 9.48-T 10.01 – 26 February 2010). I should note that in this extract the plaintiff to whom the Magistrate was referring was NM.

25 Counsel for Leduva accepted that these findings were open to be made by the learned Magistrate, and that they were not open to be challenged in the course of the appeal.

26 Close attention to the judgment of the learned Magistrate shows that the findings of credibility and demeanour, leading to a preference for the evidence of Mr Mohareb over that of Messrs Taouk, were indispensable to the following findings in the judgment on litigated issues:

(a) The initial agreement between Leduva and NM was, as contended for by NM, namely an agreement the terms of which were to be found in the facsimile from NM to Leduva dated 13 April 2007 and the accompanying Fee Proposal;

(b) The variation to the initial agreement was that contended for by NM, namely the variation encompassed by the work contained or referred to in a number of emails sent by NM to Leduva on or before 23 February 2008;

(c) The agreement (as varied) was terminated by Mr Kashlah Taouk and Mr Amerr Taouk without notice on 23 February 2008.

27 To the extent that there is any challenge to these findings on litigated issues, it is necessary to bear in mind the extent to which the findings were dependent upon the credibility and demeanour findings to which I have earlier referred and which are not sought to be disturbed.

Reasons and adequacy of reasons

28 It is appropriate before proceeding to deal with further grounds of appeal for me to consider the legal test capable of being applied upon an appeal such as this when it is alleged that the Magistrate has failed to give reasons or alternatively has failed to give adequate reasons.

29 It is now beyond question that the obligation to give reasons is a normal, but not a universal, incident of the judicial process: Public Service Board of NSW v Osmond (1986) 159 CLR 656 at 666-667 per Gibbs CJ; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 269C per Mahoney JA, 279A per McHugh JA.

30 The extent and content of the reasons will depend on the particular case and the issues under consideration: See Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 at [58] per McColl JA; Abdel Naser Qushair v Naji Raffoul [2009] NSWCA 329 at [52] per Sackville AJA.

31 Where a Magistrate has failed to deal with a submission explicitly, or else has implicitly dealt with it but without giving any, or at least any adequate, reasons, a question arises as to whether it is in every case that the Supreme Court on appeal will intervene. In other words, is it sufficient for an appellant merely to establish that there had been a failure of the judicial process on the part of the Magistrate, or must it establish something more.

32 Leduva submitted that the appropriate approach to follow is that which is found in Australian Securities & Investments Commission v Saxby Bridge Financial Planning Pty Ltd (2003) 133 FCR 290. There, the Full Court of the Federal Court of Australia was dealing with an appeal to it from the Administrative Appeals Tribunal. Appeals as of right from the Tribunal to the Court were limited to questions of law: s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth). It was contended before the Full Court of Federal Court that the Tribunal had overlooked, and failed to consider, a material submission to it. It was submitted that this amounted to an error of law.

33 Jacobson and Bennett JJ said at [143]:

“ Dennis Willcox Pty Ltd v Commissioner of Taxation (Cth) (1988) [79 ALR 267], is authority for the proposition that the question of whether a tribunal has overlooked a submission ‘worthy of serious consideration’ is a question of law.”

34 In Dennis Willcox, Jenkinson J (with whom Woodward and Foster JJ agreed), said at 276:

“Not every failure by the Administrative Appeals Tribunal to mention a contention advanced on behalf of a party will amount to a failure to comply with the requirements of s 43(2) of the Administrative Appeals Tribunal Act 1975, or demonstrate that the contention was not considered in deciding the matter before the tribunal. But this submission concerning the ascertainment of profit was worthy of serious consideration and was seriously advanced to the tribunal. It ought, therefore, to be inferred that the submission was inadvertently overlooked by the tribunal, either when the reference was being decided or when the reasons for decision were being committed to writing.”

35 The then requirements of s 43(2) of the Administrative Appeals Tribunal Act 1975 obliged the Tribunal to give reasons in writing for its decision, including reasons in making findings on material questions of fact. This statutory obligation did not differ in substance from the general obligation to which I have earlier made reference.

36 Moffitt JA in Pettitt v Dunkley [1971] 1 NSWLR 376 said at 389F that “…it is clear that a mere failure in every case to give reasons does not establish error”. His Honour went on to say at 390A:

“It is sufficient if it appears from the judgment that the point of law was dealt with and dealt with erroneously. If the decision involves matters of fact and of law, it is sufficient that it clearly appears by inference that upon the facts the judge must have decided the question of law in a particular way and erroneously …”.

37 These authorities seem to me to make it plain that:

(a) the content of reasons will vary from case to case;

(b) a failure to give reasons will ordinarily, but not universally, give rise to an error of law;

(c) issues can be determined both implicitly and explicitly, particularly where a submission is obviously wrong, or without merit or proper factual basis, it may be sufficient for an implicit rejection of that submission to be apparent; and

(d) if a submission is not worthy of serious consideration, then a failure to refer to it, decide it explicitly or give reasons for an implicit determination will not ordinarily result in an error on a question of law with the consequence that a new hearing is ordered.

38 In its amended summons, Leduva alleged as a separate ground of appeal (ground 13) that the learned Magistrate erred in failing to give reasons, or alternatively sufficient reasons, for her judgment. However, Leduva did not ultimately make a separate submission as to the adequacy of her Honour’s judgment as a whole, but instead directed its submissions on the adequacy of reasons towards the furtherance of some of its other grounds of appeal. It is therefore appropriate for me to apply the principles set out above in considering those other grounds below, rather than to consider ground 13 separately.

Failure to consider Leduva’s submission about pleading (ground 1)

39 The first ground of appeal is that the learned Magistrate made an error of law by failing to determine, and give reasons for her determination, with respect to an issue raised by Leduva. That issue was, so it was submitted, that NM’s claim ought to have been dismissed because the statement of claim did not disclose an arguable cause of action, and in particular, did not plead any breach of contract.

40 The purpose of pleadings, and particulars, is to ensure that the opposing party has a sufficient knowledge of the nature of the case to enable the opposing party to meet it. In Dare v Pulham (1982) 148 CLR 658, the High Court of Australia said at 664:

“Pleadings and particulars have a number of functions: they furnish a statement of the case sufficiently clear to allow the other party a fair opportunity to meet it …; they define the issues for decision in the litigation and thereby enable the relevance and admissibility of evidence to be determined at the trial …; and they give a defendant an understanding of a plaintiff’s claim in aid of the defendant’s right to make a payment into court. Apart from cases where the parties choose to disregard the pleadings and to fight the case on issues chosen at the trial, the relief which may be granted to a party must be founded on the pleadings … But where there is no departure during the trial from the pleaded cause of action, a disconformity between the evidence and particulars earlier furnished will not disentitle a party a verdict based upon the evidence ...”.

41 See also the discussion of the role of particulars by Hunt J in Sims v Wran [1984] 1 NSWLR 317 at 321E-F.

42 It might fairly be said that the statement of claim before the learned Magistrate was not a model of clarity or good pleading. However, this is not the only, nor the relevant, test in these circumstances.

43 In its defence in the Local Court, Leduva did not make any reference to the inadequacy of NM’s pleading. It did not plead that NM’s statement of claim failed to disclose an arguable cause of action. Nor did it plead that there was any other inadequacy in NM’s statement of claim. On the contrary, over four pages, Leduva provided a comprehensive defence which addressed each paragraph of the statement of claim individually. It denied allegations in these paragraphs, denied various facts and factual conclusions, and advanced one or more alternative cases.

44 A fair reading of the statement of claim, which was drafted by NM without the benefit of legal assistance and the defence together, seems to me to produce the following issues for determination:

(a) NM was alleging a retainer or contract, the terms of which accorded with the Fee Proposal dated 13 April 2007 sent by NM to Leduva;

(b) Leduva denied that any such contract had ever been made and alleged that NM had been engaged on a limited retainer, the purpose of which was for NM to demonstrate that it was competent to prepare engineering drawings for the Hurstville project;

(c) NM claimed that by reason of the changes in the underlying architectural drawings, and the obtaining of a further approval under s 96 of the Environmental Planning & Assessment Act 1979, it was required to carry out additional work which amounted to a variation to the original scope of work and hence a variation of the original agreement;

(d) Leduva denied that it had made, or authorised any variation, to its original (and limited) retainer. Ludeva pleaded in the alternative that any amendment to the architectural drawings concerned only stage 2 of the Hurstville project and not stage 1. It pleaded that the retainer of NM did not extend to include stage 2.

(e) NM pleaded that the agreement had been terminated without notice in circumstances which meant that it was entitled to the value of future, but uncompleted work, as fixed by clause 12 of the agreement;

(f) Leduva denied that it had terminated the agreement. It alleged that since it was not satisfied with NM’s work, the agreement, according to its formulation, had expired. It also pleaded, in the alternative, that clause 12 of the Fee Proposal was a penalty and hence void;

(g) NM pleaded that it was entitled to be paid the balance of the monies owing as calculated in its invoice of 23 February 2008;

(h) Leduva denied that NM had any entitlement at all, pleaded that it had fully discharged all of its obligations to pay NM any monies, asserted that NM had carried out work which it was instructed not to do, and challenged the assessment of NM that it had completed 70% of the work for which an agreement existed;

(i) In addition, Leduva pleaded that NM’s structural engineering work was incompetent in a number of ways.

45 In addition to the immediately preceding analysis, the question whether Leduva sufficiently knew what the case was that it had to meet and knew the nature and extent of the allegations being made against it can be tested by examining its conduct in the Local Court.

46 In preparation for a hearing of the issues, for which were outlined in the pleadings to which I have referred above, both parties prepared and served evidence. NM filed an affidavit of its principal, Mr Nader Mohareb, of 20 pages which was accompanied by 21 separate annexures. In response, Leduva filed an affidavit of Mr Amerr Taouk of 11 pages. It filed a statement of its director Kashlah Taouk of 5 pages.

47 The Local Court appointed Jeffrey Lind, an expert structural engineer, to prepare a report and give expert evidence in relation to technical structural engineering matters in the proceedings. Each party, separately, provided Mr Lind with a set of questions which it thought were relevant for the expression of his expert opinion.

48 As I have described above, there were then four hearing days over which evidence for both parties and oral submissions for NM were heard in the Local Court.

49 At no time before the commencement of the hearing in the Local Court, nor at any time during the hearing itself, did Leduva’s legal representative assert that NM’s statement of claim failed to plead any action known to law, or that the pleading was one that did not enable Leduva to understand what the issues being litigated were. No such assertion was made in Leduva’s pleadings. Leduva did not bring any motion, or address any submission to the Local Court, or raise any objection to the matter proceeding to a hearing.

50 Once the hearing commenced, Leduva did not seek any adjournment on the basis of inadequate pleadings, or on the basis that NM’s case had departed from them. Nor did Leduva submit that it was in any way prejudiced or adversely affected by any inadequacy or inappropriateness in NM’s pleadings. There was no suggestion that Leduva could not meet NM’s case.

51 On the contrary, Leduva was able to and did prepare for and conduct a lengthy hearing in the Local Court which canvassed the variety of issues which I have earlier set out.

52 As well, the conduct of Leduva’s legal representative in the Local Court did not suggest that he was under any misapprehension as to the issues in the proceedings. In his cross-examination of Mr Mohareb, Mr Sachs, the solicitor for Leduva, tested the witness by referring, in his questions, to the nature of the case which NM was bringing. Those questions included the following:

“Q: You understand, Mr Mohareb, that this case is about an invoice that you issued that hasn’t been paid? (Ex B, p 36; T 19.6: 11 March 2009).
…
Q: Do you understand that in your statement of claim, that what it is you are claiming is for payment of an invoice, number 71, dated 23 February 2008? (Ex B, p 36; T 19.11: 11 March 2009)..
…
Q: … that’s how you arrive at your claim on the invoice for $68,945, and you understand that part of the process of you proving your case is for you to prove each of the elements of that invoice, that you’ve in fact either done the work or you’re entitled to claim the three amounts that are set out in the invoice? (Ex B, p 36; T 19.35: 11 March 2009)..”

53 These questions clearly demonstrate that Mr Sachs knew and understood the nature of the case as outlined in the pleadings, which Leduva was called upon to meet.

54 At the conclusion of the oral evidence, Mr Mohareb, on 14 August 2009, made oral submissions about the nature of his case, the content of it and the evidence by which the case was proved. At the conclusion of those oral submissions, Mr Sachs, on behalf of Leduva, indicated that he wished to reply and was willing to do so in writing. An order was made that Leduva file its written submissions by 23 October 2009. That was a period of about ten weeks. It is clear from the discussion in the transcript (Ex E, p 310) that Mr Sachs was intending to have the benefit of a transcript of Mr Mohareb’s submissions before having to file his submissions.

55 As it turned out, Leduva’s submissions were filed on 4 November 2009 and consisted of ten pages. The first paragraph, upon which Leduva relies in this Court, was in the following terms:

“1.1 The plaintiff sues for $60,000 plus the filing fee. The plaintiff does not plead a proper cause of action. Its claim is not for quantum meruit. It does not plead breach of contract. The claim should fail on that basis. Although the plaintiff was represented by its sole director and did not have legal representation. However, that is not a reason to dispense with the requirement to plead and particularise a cause of action.”

56 The defendant’s submissions went on to deal with the allegation of a claim for damages for breach of contract. As well, the submissions canvassed the content and nature of the evidence, and made submissions generally in support of the issues raised by Leduva’s defence to NM’s claim. In so doing, the submissions challenged the claim which NM made.

57 In this Court, it is submitted that the learned Magistrate did not make reference to the submission which I have extracted above and provided no reasons for rejecting it. It is clear that the submission was rejected. Such rejection was implicit in the reasons for decision delivered by the Magistrate on 26 February 2010.

58 In the course of her judgment (Ex A, p 7; T 3.25 – 26 February 2010), the Magistrate summarised accurately the content of the defendant’s submission to which I have referred above. She did so when recounting the thrust of all of the defendant’s submissions. Her reasons for judgment then recounted various parts of the evidence which had been given before her, and then proceeded to resolve a series of evidentiary conflicts.

59 It is correct to say that the learned Magistrate in her reasons for judgment did not return to the submission about the inadequacy of the pleaded cause of action. She did not discuss it or in any way refer to it again.

60 Equally, at the end of her judgment which was delivered orally, the legal representative of Leduva did not draw her Honour’s attention to an omission in her judgment with respect to this particular submission. Nor was any later application made to her Honour in accordance with rule 36.17 UCPR (“the slip rule”) to further address an issue which had not been properly addressed in the judgment.

61 In my opinion the submission made, as it was only in the first paragraph of the written submissions filed by Leduva and not in its defence, and in the terms in which it was made, conveys a sense that it was at best only faintly pressed. The learned Magistrate would have been entitled to ignore the submission on the basis that it was not pleaded, and the conduct of the case did not indicate that it was an issue.

62 However, it is not necessary to determine the ground on that point because, in any event, as is apparent from the course of the pre-trial pleadings and preparation of evidence, the nature of the evidence filed and the conduct of Leduva’s legal representatives, there is no merit whatsoever in this submission.

63 The pleadings were adequate to disclose the nature of the case which had to be met. Leduva was under no misapprehension as to the nature of the case which it had to meet and was fully prepared to and did meet that case. It did not do so successfully but that is not the point of this submission.

64 It is also clear that the Magistrate paid attention to the submission because in her judgment she referred to it. The fact that she went on to determine the proceedings upon the merits of the arguments demonstrates beyond argument that she considered the submission and implicitly dismissed it. If she had not dismissed it then there would have been no need to consider the arguments to the extent which she did.

65 The submission made to the learned Magistrate was not worthy of serious consideration. I would not be prepared to uphold the appeal to this Court on the basis of this ground.

Error of law concerning the agreement between the parties (grounds 2 and 3)

66 Leduva submitted that the finding of the learned Magistrate that there was an agreement between the parties, which was valid, and which appointed NM as the structural engineer for the Hurstville project on the terms set out in the Fee Proposal was erroneous. It submitted this was an error on a question of law, which gave rise to a right of appeal. Alternatively, it submitted that it was an error of mixed fact and law and that leave ought be granted to appeal.

67 Leduva submitted in writing that the learned Magistrate erred because it was not open to her to conclude, in the absence of some positive indication of conduct by Leduva, which was consistent with the contract, that a contract had been accepted by conduct, because the conduct was constituted only by an omission. This position, it was submitted, is the stronger when there are unresolved issues between the parties.

68 NM submitted that the question whether an agreement existed and what the terms of the agreement were, at least in the present circumstances where there was no suggestion of any implied terms, was purely a question of fact. It relied upon what was said by McHugh JA in Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 at 535C-D:

“This formulation states acceptance in terms of a rule of law. However, the question is one of fact. A more accurate statement is that where an offeree with a reasonable opportunity to reject the offer of goods or services takes the benefit of them under circumstances which indicate that they were to be paid for in accordance with the offer, it is open to the tribunal of fact to hold that the offer was accepted according to its terms. A useful analogy is to be found in the ticket cases’ where an offeree, who has or ought to have knowledge of the terms of a contract of carriage or bailment, is generally bound unless he raises objection: cf Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163 at 169 and MacRobertson Miller Airline Services v Commissioner of State Taxation (Western Australia) (1975) 133 CLR 125 at 136-140.
The ultimate issue is whether a reasonable bystander would regard the conduct of the offeree, including his silence, as signalling to the offeror that his offer has been accepted.”

69 NM submitted that no appeal was open on these grounds and that these grounds of appeal ought be dismissed.

70 In oral submissions, Leduva amplified its earlier submissions by submitting that the evidence of Mr Mohareb on this issue, before the learned Magistrate, was contradictory, and could not have been relied upon to form the conclusion reached about the existence of the agreement.

71 A careful reading of the judgment of the learned Magistrate, making due allowance for the fact that it was delivered orally and has not had the benefit of correction for transcription error, punctuation and formatting, and paying regard to the press of work in the Local Court, seems to me to reveal the following reasoning process which led to the conclusion that there was an agreement in the terms contended for by NM:

(a) The evidence of Mr Mohareb was accepted and the evidence of the Messrs Taouk was rejected (Ex A, p 13; T 9.36ff – 26 February 2010).

(b) Prior to the meeting of 24 April 2007, Mr Mohareb sent to Leduva his facsimile of 13 April 2007 and the accompanying Fee Proposal (Ex A, p 14; T 10.15ff – 26 February 2010);

(c) The Messrs Taouk had the fee proposal at the meeting of 24 April 2007 (Ex A, p 14; T 10.17 – 26 February 2010);

(d) The evidence of Mr Mohareb was that an agreement was reached at that meeting (Ex L, pp 2-3, para 4) and NM was given instructions to proceed with the work for the project (Ex L, p 3, para 4). This was a part of Mr Mohareb’s evidence which was accepted by the learned Magistrate;

(e) Following the meeting, there was conduct by NM which was consistent with the agreement which had been reached (Ex A, p 14; T 10.20ff – 26 February 2010);

(f) Following the meeting there was no conduct by Leduva which contradicted or denied the existence of the agreement (Ex A, p 14; T 10.22 – 26 February 2010);

(g) There was conduct by Leduva or its architects, evidenced by a series of emails, facsimiles or exchanges of documents which demonstrated that Leduva took the benefit of NM’s services which were provided in a manner consistent with the Fee Proposal (Ex A, pp 12-13; T 8.21-9.38 – 26 February 2010);

(h) There were indicia which also pointed to the existence of an agreement: The Messrs Taouk were experienced developers and businessmen (Ex A, p 14; T 10.24ff – 26 February 2010). In the circumstances of the dealings between Leduva and NM, a usual incident of such business would be expected to be the existence of an agreement covering work being undertaken (Ex A, p 14; T 10.25 – 26 February 2010) and there was no documentation in existence which said otherwise than what the plaintiff contended (Ex A, p 14; T 10.27 – 26 February 2010).

72 I should add that a careful reading of Mr Mohareb’s evidence does not reveal any inconsistency of a significant or material kind so far as the findings under challenge are concerned.

73 As the exposition (which is drawn from the learned Magistrate’s judgment) referred to above demonstrates, there was abundant factual material for her Honour to find the existence of an agreement in the terms set out in the Fee Proposal. It also demonstrated clearly that this conclusion was one purely of fact and from which no appeal is available. The remarks of McHugh JA in Empirnall Holdings which are set out earlier are clearly applicable. I can discern no error on a question of law. I can discern no error of mixed fact and law.

74 These grounds of appeal including the seeking of leave to appeal must be dismissed.

Error of law concerning the variation to the agreement between the parties (grounds 9 and 10)

75 Leduva submitted that the learned Magistrate erred:

(a) in finding that the defendant was entitled to a variation claim in accordance with the terms of the Fee Proposal; and

(b) in awarding NM $21,945 for variation work when there was either no, or else insufficient, evidence of variations being ordered, carried out, or the value of the work claimed.

76 NM submitted that there was abundant evidence available to the learned Magistrate to support her conclusion of the existence of a variation and, secondly, insofar as Leduva challenged the construction of the Fee Proposal, that challenge was not made good.

77 In order to understand the competing submissions, it is necessary to commence by noting some of the features of the Fee Proposal, which the learned Magistrate was satisfied contained the terms of the relevant agreement:

(a) The fee proposal was stated to be “…. In accordance with McFadyen Architects’ DA drawings ”;

(b) It included this term: “ Items of work additional to our discussions, not on the drawings used to work this fee out, or any major changes, instigated by others, shall be carried out as variations and charged on a time basis and in accordance with the following rates … ”;

(c) Clause 16 of the “terms of agreement” read: “ The Consulting Engineer shall be entitled to an equitable variation to this agreement and an appropriate adjustment to the Payment where delays, events or circumstances beyond the reasonable control of the Consulting Engineer or reasonable anticipation of the parties thereto delay, increase or adversely affect performance of the Services ”.

78 Leduva submitted that as a matter of the proper construction and interpretation of the Fee Proposal, clause 16 was the exclusive source of any right to variations. If a variation did not occur within the terms of clause 16, Leduva submitted, then any finding of a variation was erroneous in law, because it did not reflect the proper construction of the agreement between the parties.

79 I reject this submission. There are number of reasons for this. They are:

(a) The terms of clause 16 themselves do not suggest that it is the only basis upon which a variation to the agreement can be made. Rather, the terms suggest that only particular events and circumstances are covered by the clause.

(b) The clear statement on the first page of the document, that the Fee Proposal was in accordance with the DA drawings of McFadyen architects, makes it plain that any drawings and work done with respect to different DA drawings would constitute a variation from the original Fee Proposal;

(c) The term set out in paragraph 77(b) above suggests that it was within the contemplation of the parties that there may be items of work additional to what was contemplated in the Fee Proposal. The terms suggest that if there were, then those items of work would be carried out as variations to the Fee Proposal and charged on a time basis. The document included a schedule of rates for such work;

(d) A reading of the entirety of the Fee Proposal including all of the standard terms of the agreement does not suggest that clause 16 was the only basis upon which any variation could be agreed.

80 The decision of the learned Magistrate not to restrict consideration of a variation to this agreement by reference only to clause 16 was not erroneous. On the contrary, it was the correct interpretation of the agreement. I am satisfied that there has been no error on a question of law in the learned Magistrate’s construction of this part of the agrement.

81 The question then becomes whether there was any evidence from which the learned Magistrate could conclude as a matter of fact that there had been a variation to the agreement, that the work had been carried out and what the value of the work was.

82 The judgment of the learned Magistrate found that there had been a variation of the agreement because she was satisfied of the following facts:

(a) McFadyen, the original architects, upon whose drawings the original Fee Proposal was based, were replaced as architects for the Hurstville project by Form Architects;

(b) The new architects, Form Architects, prepared and submitted to Hurstville City Council an application under s 96 of the Environmental Planning & Assessment Act 1979 to modify the relevant development consent;

(c) The drawings which existed prior to the s 96 application, and those that existed when it was made, to demonstrate the modification and variations made by that application, were different. The later drawings replaced the earlier drawings.

(d) NM had produced a series of structural drawings based on the original architectural drawings before Form Architects became involved with the project. The evidence of the existence of these drawings is contained at least in the email from NM to Leduva of 13 February 2008;

(e) NM prepared a series of structural drawings and, as well, drawings for shoring, foundations and footings all of which related to the modified drawings prepared for the s 96 modification application by Form Architects. The evidence of these drawings was contained in a series of emails from NM to Leduva also dated 13 February 2008;

(f) By an email also of 13 February 2008, NM provided to Leduva at the request of Leduva, the preliminary/approximate quantities for concrete and reinforcement with respect to the amended drawings;

(g) The tax invoice dated 23 February 2008 issued by NM made a claim for the variation and described it in this way:

“variation to our commission for undertaking complete preliminary design of the project based on pre-section 96 architectural drawings. That whole process was repeated for post-section 96 architectural drawings.”

(h) There was evidence before the learned Magistrate, contrary to the submission of Leduva of requests by Leduva or its architect for NM to undertake the work in producing the drawings which it did for the amended plans.

83 As well, the learned Magistrate had available to her, as attachment 5 to the affidavit of Mr Mohareb of 19 June 2008 (Ex L in the proceedings in this Court), a series of emails with respect to the Hurstville project which demonstrated that the work being undertaken to produce structural drawings with respect to the amended architectural plans was both known to Leduva and approved by its architects who were engaged by Leduva to work on the project.

84 The calculation of the value of the work carried out which constituted the variation was a very simple one. The Fee Proposal contained the hourly rates which were to be charged. The tax invoice sent by NM to Leduva, which was referred to by the learned Magistrate in her judgment, contained a description of the number of hours spent by NM in undertaking the work. The learned Magistrate accepted the accuracy of that document because she accepted the evidence of Mr Mohareb as being truthful and reliable. There was a sufficient basis for the learned Magistrate to be satisfied about the value of the variation work claimed.

85 The learned Magistrate’s reasons are sufficiently based on factual material that was before her. The question of whether there was an error of law in her reasons arising from there being no evidence to support the variation must fail. There was evidence which was sufficient to support the claim that the agreement was varied during its term. Her Honour accepted that evidence. If there was an error, which does not appear to me to do so, then it was an error of fact and one from which an appeal does not lie.

86 These grounds must be dismissed.

Error of law with respect to whether clause 12(b) of the agreement amounted to a penalty (ground 5)

87 Leduva submits that the learned Magistrate failed to consider, determine and provide reasons for the determination of its submission that the terms of clause 12(b) of the agreement constituted a penalty and accordingly were invalid.

88 Clause 12(b) was in the following terms:

“The Client may terminate his obligation under this agreement:

(a) … ;

(b) Upon giving the Consulting Engineer 60 days’ written notice of his intention to do so. During that 60 days’ notice period, both the Client & the Consulting Engineer will continue to exercise their rights and obligation under the current agreement. In the alternative the Client may choose to pay the Consulting Engineer’s fees in lieu of the 60 day’s notice and terminate the agreement immediately without notice. In which case the amount of fees payable will be estimated based on the amount of work that would have been completed during the 60 days notice period.”

89 For the purpose of the consideration of this submission, Leduva accepts that the learned Magistrate, having found that it terminated the agreement and that it did not itself continue, nor require the consulting engineer to continue, to carry out work during the 60 day notice period, found that it had made an election to terminate the agreement “… immediately without notice”.

90 Leduva submitted that the balance of clause 12(b), namely, that in the event that such alternative (ie termination without notice) was chosen, it was obliged to pay an amount of fees referable to an estimate based on the amount of work that would have been completed during that period, amounted to a penalty and was therefore void.

91 On this issue, Leduva made the following submissions to the learned Magistrate:

“5.1 This is a claim for work that was not done.
5.2 The defendant says that it is a penalty and not enforceable. This is because it does not represent a genuine pre-estimate of loss likely to be suffered.
5.3 As it emanates from a standard document produced by ACEA, it could not possibly be a genuine pre-estimate of loss. There is no such thing as a generic pre-estimate of loss.
5.4 In any event, it effectively requires the defendant to pay for work that has not been done and for which the plaintiff has not incurred any costs. It does not even calculate the loss by reference to the loss of profit. It calculates loss by reference to loss of revenue. That is not, and never has been the measure of damages for breach of contract.”

92 These submissions articulate one manner of expression of the relevant legal test, and then put these arguments about why the clause constituted a penalty:

(a) A generic clause can never be a genuine pre-estimate of damage;

(b) The clause requires payment for work which has not been done, and for which no costs have been incurred; and

(c) A loss of revenue, as opposed to profit, can never be the proper measure of damages.

93 On the hearing of the appeal to this Court, in its written submissions, Leduva repeated the substance of what it had put before the learned Magistrate. In relevant part, its submissions to this Court included the following:

“30. … That finding ignored the Plaintiff’s argument that clause 12 was a penalty in that it represented an outcome wholly disproportionate to the breach and to the genuine pre-estimate of loss that may arise from termination in different circumstances: Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656 at [12], [27], [32]. This is particularly so where the clause operates indiscriminately to entitle the defendant to remuneration for work not done regardless of the reasons for the termination: O’Dea v Allstates Leasing System (WA) Pty Ltd (1983) 152 CLR 359; Esanda Finance Corp Ltd v Plessnig (1989) 166 CLR 131 at 143; Macdonald Holdings (QLD) Pty Ltd v Nikolas [2007] NSWSC 552 at [94].”

94 The submissions for NM on the appeal contend that the learned Magistrate clearly considered this submission because she referred to it at Ex A, p 9; T 5.40ff – 26 February 2010. NM argues that because the submissions were put in a summary fashion and no reasoning or argument of substance was advanced in support of the contention, the fact that the learned Magistrate referred to the submission and implicitly rejected it was sufficient because the matter “… was not the subject of submissions made to the court below in a way which called for a reasoned consideration of them”: See Mahoney JA in Soulemezis at 270C, Page v Home Team Constructions Pty Ltd [2008] NSWSC 613 at [33] per Hislop J; Kalokerinos & anor v HIA Insurance Services Pty Ltd [2004] NSWCA 312 at [43] per Bryson JA (Santow JA agreeing). As well, NM argued that the clause could not on any view of the authorities be regarded as a penalty.

95 The law of penalties operates where a contract stipulates that when a breach occurs, the party in breach will pay “… an agreed sum which exceeds what can be regarded as a genuine pre-estimate of the damage likely to be caused by the breach”: Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656 at 662 [10].

96 Various tests have been applied including that a clause will be held to be a penalty if the sum stipulated is “… extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach”, or if the money stipulated is “… in terrorem of the offending party”: Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd [1915] AC 79 at 86-87 per Lord Dunedin.

97 In AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170, Mason and Wilson JJ said at 193-194:

“But equity and the common law have long maintained a supervisory jurisdiction, not to rewrite contracts imprudently made, but to relieve against provisions which are so unconscionable or oppressive that their nature is penal rather than compensatory. The test to be applied in drawing that distinction is one of degree and will depend on a number of circumstances, including (1) the degree of disproportion between the stipulated sum and the loss likely to be suffered by the plaintiff, a factor relevant to the oppressiveness of the term to the defendant, and (2) the nature of the relationship between the contracting parties, a factor relevant to the unconscionability of the plaintiff’s conduct in seeking to enforce the term. The courts should not, however, be too ready to find the requisite degree of disproportion lest they impinge on the parties’ freedom to settle for themselves the rights and liabilities following a breach of contract. The doctrine of penalties answers, …, an important aspect of the criticism often levelled against unqualified freedom of contract, namely the possible inequality of bargaining power. In this way the courts strike a balance between the competing interests of freedom of contract and protection of weak contracting parties …”.

98 In the same case, although dissenting in the outcome, Deane J said at 197:

“… In determining whether the amounts payable by the lessee upon such termination are properly to be seen as a genuine pre-estimate of loss or as a penalty, relevant loss is not restricted to the loss flowing immediately and merely from the actual breach of contract; it includes the loss of the benefit of the contract resulting from the election to terminate for breach …”.

99 In Ringrow at 669 [32], the High Court of Australia said:

“Exceptions from that freedom of contract require good reason to attract judicial intervention to set aside the bargains upon which parties of full capacity have agreed. That is why the law on penalties is, and is expressed to be, an exception from the general rule. It is why it is expressed in exceptional language. It explains why the propounded penalty must be judged ‘extravagant and unconscionable in amount’. It is not enough that it should be lacking in proportion. It must be ‘out of all proportion’.”

100 It is appropriate to record that counsel for Leduva, properly in my opinion, withdrew the third submission, which I have recorded earlier, that the clause constituted a penalty because it operated by reference to revenue and not profit. Counsel conceded that damage can properly be assessed by reference to lost revenue as well as by reference to lost profit.

101 In my opinion, clause 12(b) is not, and is not capable of, amounting to a penalty.

102 There are number of reasons for this. The first is that reading clause 12 as a whole does not suggest that the provision is a penal one. Leduva had the choice firstly of whether to terminate the agreement or not, and if so what course to follow.

103 If there was a substantial breach by the contractor, Leduva could call for the breach to be remedied. Alternatively to seeking to have the breach remedied, Leduva was entitled to give 60 days notice of its intention to terminate the agreement.

104 Given the nature of this contract, including the complexity of the Hurstville project, the length of time likely to be necessary to complete the structural engineering work and the fact that NM was a small organisation, 60 days was a reasonable period for notice to be given. Leduva did not submit otherwise.

105 There were then two alternatives, Leduva could require the consulting engineer to continue to work and deliver the work product for which the consulting engineer would be entitled to be paid, or alternatively Leduva could choose to pay the fees which the consulting engineer would have earned during that 60 day period, and not require the consulting engineer to undertake any work.

106 As can be observed, it was Leduva’s choice as to whether it received work product from the consulting engineer, or whether it did not.

107 The second reason is that the clause, as it is designed to work in practice, seems to me to be analogous to an ordinary employment situation where an employer is entitled to terminate an employee’s contract of employment providing that the employer gives either the agreed period of notice or else a reasonable period of notice, having regard to the terms of the contract. In those circumstances, the employer has a choice of requiring the employee to work out the period of notice or to pay the employee what they would have earned in that period of time by way of pay in lieu of notice. There has been no case which my research has uncovered which suggests that this typical arrangement in employment terms does, or could possibly, amount to a penalty and be thereby void. The parties did not draw any such case to my attention.

108 The third reason is that I accept the submission of NM that, properly construed, the clause does not amount to a penalty because recovery of the fees payable during the 60 days notice period, is reasonable and not extravagant or out of all proportion because “… it allows the engineer to structure their affairs (for example by retaining appropriate staff or setting aside requisite periods of time to be devoted exclusively to the client’s project) safe in the knowledge that he will be compensated appropriately should the client decide, for whatever reason, to terminate the agreement immediately and without notice. In the absence of such a provision the engineer would face the significant risk that having committed substantial resources to the job, the client might terminate the agreement without notice and the engineer would be unable to recover the amounts expended or committed”.

109 The fourth reason is that I reject the submission that because the clause is contained in a standard form document, it can never amount to a genuine pre-estimate of loss. It is clear that the time at which an assessment must be made as to whether the clause is a penalty, is at the time the contract is entered into. The genuineness of the pre-estimate is to be determined at that stage by reference to the contract as a whole, the nature of the bargain, the obligations due under it and the consideration. The pathway by which the term comes to be drafted or submitted as part of the agreement is wholly irrelevant to the appropriate analysis.

110 This is particularly so, where, as exists here, the clause does not specify a fixed sum of money, but rather provides a formula for calculation of the monies payable by reference to the terms of the specific contract or agreement, and the timing of when the termination takes place.

111 Finally, Leduva submits that NM will be paid for work which it is not obliged to do and hence the clause is necessarily a penalty. It is correct that NM may be entitled to payment in circumstances where it is not obliged to perform any work. However, I reject the submission that the clause must thereby necessarily be a penalty, because upon proper analysis, it can be seen that what NM has lost is the benefit of the contract, and therefore it is entitled to proper damages to compensate for that loss: see Deane J in AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170 at 197. It is the loss of the benefit of the contract, as well as wasted expenditure, to which clause 12(b) is directed as a genuine pre-estimate of damage.

112 Whether NM has to do work or not after termination is irrelevant. What is relevant is whether the amount of money which NM is entitled to receive is extravagant by reference to the greatest loss which could be proved. Since the sum of money involved cannot, under any circumstances, exceed the initial contract value contained in the Fee Proposal, I am not satisfied that there is any element of extravagance or excessiveness.

113 Although the argument that clause 12(b) was a penalty was not considered by the learned Magistrate, if it had been, she was obliged to reject it.

114 In those circumstances, I am not prepared to hold that the learned Magistrate’s failure explicitly to consider and reject the submission and accompany that rejection by reasons was an error of law.

115 I would dismiss the appeal on this ground.

Errors of law of mixed fact and law relating to the amount of work which could have been done in the 60 days after termination (grounds 8 and 12)

116 Leduva submitted in writing that there had been an error of law (or alternatively mixed fact and law) because the learned Magistrate found that NM could have completed all of the work required under the contract during the 60 day period referred to in the termination clause.

117 It was submitted that this finding was an error because:

(a) there was insufficient evidence that it could do so;

(b) such finding was contrary to the evidence of the court appointed expert Mr Lind to the effect that NM had only completed a little over 42% in design documentation; and

(c) such finding was contrary to the evidence that NM could not have completed any of the inspection component of the work in the 60 day period.

118 Ordinarily, an allegation that there was insufficient evidence to justify a finding of fact, as appears in ground 8, suggests that the appeal ground is one relating to an error of fact rather than an error of law or mixed error of law and fact. The same comment can apply to ground 12.

119 However, Leduva’s submission is this:

“The Magistrate’s determination in relation to this issue displays a lack of reasoning such that no person, acting judicially, and instructed as to the relevant law could have come to it.”

120 This seems to be a suggestion that the findings with respect to these issues were so unreasonable that no person acting judicially and properly instruction as to the relevant law could have made them: US Manufacturing Co at [54].

121 There was clearly an issue between the parties, on a matter of fact, to which the evidence of Mr Lind contributed, as to whether within the 60 day notice period NM could have completed the work required by the contract and therefore whether the appropriate damages to be awarded with respect to the termination of the contract was the remainder of the entire contract value, as NM claimed.

122 The learned Magistrate referred to the evidence of Mr Lind. She compared his evidence with that of Mr Mohareb who had estimated that he had completed in excess of 70% of his commission, whereas Mr Lind had, in his report, estimated that the completion was only a little over 42%. She then said this:

“… whilst there is some dispute as to the amount of work that had been done, I formed the view that having regard to the volume of material, drawings, etc, attached to the affidavits of Mr Mohareb, the material and his email and faxes as to the work done, Mr Mohareb would have completed the entire commission during the 60 day notice period if he had not been summarily terminated.”

123 She then referred in some detail to that work.

124 NM has submitted that, contrary to Leduva’s submissions, in fact, Mr Lind did give evidence which was consistent with the learned Magistrate’s finding. In Ex B, p 32, there is an exchange about whether the plaintiff could have completed the project within 60 days. When he was questioned about this by Mr Mohareb and asked whether he would acknowledge that 60 days was sufficient for Mr Mohareb to have completed the project in terms of design, Mr Lind gave this answer::

“A. From the stage that the drawings were at, as I’ve reported here, to completion of the design, 60 days, I would think so, yes.” (T 15.21-22 – 11 March 2009)

125 That evidence alone is sufficient for the learned Magistrate to have concluded that there was a proper basis for a finding of fact that NM could have completed all of the relevant design work within the 60 day period. But as is clear from her judgment, the learned Magistrate also had the evidence of Mr Mohareb and the documents upon which she relied. Mr Mohareb gave evidence that he would have completed all of the relevant work. The learned Magistrate accepted this evidence.

126 Again, there was nothing demonstrated in the argument in this Court which would enable me to be satisfied that there is no factual basis for the learned Magistrate’s conclusion that the site inspections could not have been done within the relevant 60 day period.

127 There is no error of law in the finding which the learned Magistrate made to which I have referred above.

128 Given that a proper factual basis has been identified, grounds 8 and 12 must be dismissed because they raise only errors of fact and no appeal lies from them. The decision is not of the type or quality which Leduva submits. On the contrary, I am of the opinion that the decision is an entirely rational one and well within the range of reasonably available decisions in all of the circumstances.

Error of law in finding that NM was entitled to payment of fees (ground 6)

129 Ground 6 of the summons is in the following terms:

“6. Her Honour erred in law in finding that the defendant was entitled to payment of fees in accordance with the termination clause in the fee proposal.”

130 Leduva’s submissions on this ground were in the following form:

“The consequence of the errors in grounds 2, 3 and 5 is that her findings as to the defendant’s entitlement under clause 12 of the terms and conditions attached to the fee proposal cannot be made out in accordance with ground 6 …
Accordingly the court should set aside the award of damages to the defendant on this ground.”

131 I have already determined that there has been no error of law, or mixed fact and law, demonstrated by Leduva’s arguments with respect to grounds 2, 3 and 5.

132 As errors demonstrated by those grounds are the only basis for the argument in ground 6, it follows from my earlier reasons that this ground must be dismissed.

Conclusion

133 I am not satisfied that Leduva has demonstrated any error of law or mixed error of law and fact which requires the intervention of this Court. Accordingly the appeal must be dismissed.

134 The parties, who were engaged in mutual commercial activities over two and a half years ago, have now engaged in litigation over a relatively small sum of money (ie $60,000). The Local Court has devoted four days to the hearing of the matter. The learned Magistrate has devoted additional time to the consideration of submissions and the preparation of a judgment. She accepted the case contended for by NM and rejected, largely on the unchallenged grounds of credibility and demeanour, the case contended for by Leduva. Leduva has sought to appeal against that judgment to the Supreme Court which has heard all of the arguments on its appeal, and rejected them. It cannot be said that either of the parties has not had the full benefit of the system of justice which the State provides, and to which they are entitled. The legal costs must now exceed, or else go close to exceeding the sum originally in issue.

135 This case serves as a good example of the benefits which would enure to parties who engage in alternative dispute resolution by means such as mediation.

Orders

(1) Summons dismissed.

(2) Plaintiff to pay the defendant’s costs.

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