Morrison v Drage - [2023] WADC 31

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION:   PERTH
CITATION:   MORRISON -v- DRAGE [2023] WADC 31
CORAM:   MACLEAN DCJ
HEARD:   27 OCTOBER 2021
DELIVERED          :   30 MARCH 2023
FILE NO/S:   APP 78 of 2020
BETWEEN:   KIMBERLY JOHN TAYLOR MORRISON
First Appellant
AURO PTY LTD
Second Appellant
AND
JULIE LYNETTE DRAGE
Respondent

ON APPEAL FROM:
Jurisdiction              :   MAGISTRATES COURT OF WESTERN AUSTRALIA
Coram:   MAGISTRATE DARGE
File Number            :   PER/GCLM/601/2019

Catchwords:

Appeal notice - Grounds critical - Jurisdiction - When time starts to run

Legislation:

District Court Rules 2005 (WA), r 49, r 50(1), r 50(2), r 51A
Magistrates Court (Civil Proceedings) Act 2004 (WA), s 40(1), s 40(3)

Result:

Appeal dismissed

Representation:

Counsel:

First Appellant	:	Mr S K Shepherd
Second Appellant	:	Mr S K Shepherd
Respondent	:	Mr G J Douglas

Solicitors:

First Appellant	:	JNC Legal
Second Appellant	:	JNC Legal
Respondent	:	Douglas Cheveralls Lawyers

Case(s) referred to in decision(s):

Abigroup Limited v Abignano (1992) 39 FCR 74
Ali v Insurance Australia Ltd [2022] NSWCA 174
Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172
Auro Pty Ltd v Drage [2020] WADC 24
Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321
Avsar v Binning [2009] WASCA 219
Caledonia v BT [2002] 1 Lloyd's Rep 553
Clayton v Bant [2020] HCA 44; (2020) 272 CLR 1
Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 253 CLR 169
Jones v Darkan Hotel [2014] WASCA 133
Kuligowski v Metrobus [2004] HCA 34; (2004) 220 CLR 363
Lister v Romford Ice & Cold Storage Co Ltd [1957] 1 All ER 125
Paterson v Pongrass Group Operations Pty Ltd [2011] NSWSC 1588
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Proudlove v Burridge [2017] WASCA 6
Rankilor v Circuit Travel Pty Ltd [2013] WASCA 148
The Trust Co (Australia) Ltd v Hungry Jack's Pty Ltd [2021] WASCA 29

MACLEAN DCJ:

This is an appeal against the decision of Magistrate Darge in Magistrates Court proceedings PER/GCLM/601/2019.
The appeal asserted six grounds. Five of which this court does not have jurisdiction to hear. All of which must be dismissed.
The first appellant (Mr Morrison) was the sole director of Auro Pty Ltd (Auro). Amongst other things they conducted a haulage business.
The respondent (Ms Drage) was an employee of Auro and conducted a business on her own account in entities including Starcap Bobcat Services and Starcap Logistics.
Ms Drage worked for Auro and occasionally hired trucks from Auro.
Previously to the proceedings before Magistrate Darge, Mr Morrison and Auro commenced proceedings against Ms Drage in the Magistrates Court. These proceedings were heard before Magistrate Ward in PER/GCLM/17372/2014.
Auro sought:
(a)payment of money owed to it by Ms Drage; and
(b)possession of property held by Ms Drage.
Ms Drage counterclaimed for monies owing because of her employment with Auro.
An issue in that trial was whether Ms Drage was an employee of Auro. Ms Drage claimed that she was. Mr Morrison and Auro asserted that she was not. Ms Drage was successful on this issue.
Subsequently there was an appeal against findings made by Magistrate Ward. The appeal was heard in this court and his Honour Judge Staude upheld the appeal in part setting aside some of the findings of fact made by the Magistrates Court.[1]
[1] Auro Pty Ltd v Drage [2020] WADC 24.
The decision in the appeal had no impact on the finding that Ms Drage was for certain periods an employee of Auro.
When Ms Drage's claims were heard before Magistrate Darge the following were established facts:
1.Ms Drage had been an employee of Auro.
2.Ms Drage acted as a business principal in her own right in which she contracted with Mr Morrison and Auro.
Magistrate Darge described the claim in his reasons for decision dated 6 October 2020 (Reasons for Decision):[2]
[2] Appeal Book (AB) page 61, Reasons for Decision [6].
... Ms Drage seeks an indemnity for her tax liabilities on the basis that they represent monies she paid on behalf of her employer, [Auro], in reliance on representation of repayment by [Mr Morrison].
Magistrate Darge identified:
•The losses claimed as falling within three categories; Pay As You Go tax; unpaid superannuation entitlements and Goods and Services Tax.
•The Australian Tax Office (ATO) had issued Ms Drage with an assessment requiring payment from her on the basis that she operated a labour hire business.
•Ms Drage had not challenged the assessment but said that Mr Morrison and Auro were obliged to indemnify her.
•Mr Morrison and Auro disputed the claim, denied her employment, and asserted that Ms Drage was operating her own employment business, Starcap Logistics, the invoices and expenses related to that business and had nothing to do with them.
The issue of the indemnity was to be considered in circumstances identified by Magistrate Darge as:[3]
[3] AB page 66, Reasons for Decision [33].
Here the real question is one of fact - were these payments for Auro, her employer, or were they for another party, such as her own labour hire business, Starcap Logistics.
This was the issue that was to be determined. In considering the resolution of that issue Magistrate Darge observed, correctly with respect, that:[4]
[4] AB page 66, Reasons for Decision [34].
If they were payments for Auro then there is a reasonable expectation of indemnity. If essentially they were payments to her own benefit then they are unlikely to be reasonable expenses for which the company should indemnify her.
The case was decided against that question. By way of an uncomplicated summary the court determined that:
•the payments were for Auro;
•it was a term implied by law that her employer, Auro, indemnify her for expenses incurred on behalf of her employer;
•in the course of her employment Ms Drage followed instructions from Mr Morrison described as the 'process' (the Process);
•following the Process caused Ms Drage to incur expenses or losses in her name;
•the losses claimed were reasonable expenses for which Auro should indemnify;
•Mr Morrison had represented that he and Auro would indemnify her; and
•her claim succeeded against Mr Morrison and Auro.

Does this court have jurisdiction to hear the appeal?

On 4 September 2020 the Magistrates Court issued a general order (Judgment Order) which included orders for judgment for Ms Drage against Mr Morrison and Auro in a sum to be assessed. This order determined a liability against Mr Morrison and Auro.
The amount of the liability was to be assessed and was later established by a further order made on 6 October 2020.
On 6 October 2020 judgment was assessed in the sum of $30,172.87.
Reasons for Decision were delivered on 6 October 2020.
An issue in this appeal is whether the Magistrates Court made a separate decision on 4 September 2020. That is when judgment was entered. Entry for judgment followed an advance copy of the reasons delivered on 3 September 2020. Ms Drage's position is that grounds 1 to 5 of the appeal were not properly before this court.
The question of jurisdiction was reserved in the hearing of the appeal.
I approach this issue based on the principle as explained in Avsar v Binning.[5] The principle is authoritative and binding on me. It is not a matter of discretion.
[5] Avsar v Binning [2009] WASCA 219 [37].
The Court of Appeal said:[6]
[6] Avsar v Binning [37].
While, by virtue of the rules, an appeal to this court is by way of rehearing, the task of the court is nonetheless to discern error. The fact that a litigant may be disappointed with the result does not mean that the appeal court is able to intervene. An appellant must demonstrate that there has been error of a recognised genre that falls to be corrected and which entitles the appellant to the orders or relief that she or he seeks. This explains why the grounds of appeal are a critical part of the process because they are the vehicle which guide the review process. The failure of parties properly to attend to grounds of appeal is by no means limited to self-represented litigants. In this regard it is as well to bear in mind what Kirby J said in Gipp v The Queen [1998] HCA 21; (1998) 194 CLR 106 [58]:
'The jurisdiction of a court of appeal ordinarily depends on the grounds of appeal that can be legally raised in support of the appeal. Under the common law system of justice, jurisdiction is the authority to decide issues between parties. In the case of an appellate court, that authority is governed by the issues raised in the notice of appeal and any notice of contention relied on to support the judgment against which the appeal is brought. In the absence of a special statutory regime, a notice of appeal that does not specify a ground of appeal is invalid and the appellate court in which it is "filed" has no authority to determine any issue affecting the parties'. (authorities omitted)
Therefore, I am required to resolve this issue understanding that:
•The grounds of appeal are a critical part of the process - they are the vehicle which guide the review process.
•The jurisdiction of a court of appeal ordinarily depends on the grounds of appeal that can be legally raised in support of the appeal.
•Jurisdiction is the authority to decide issues between parties. In the case of an appellate court, that authority is governed by the issues raised in the notice of appeal and any notice of contention relied on to support the judgment against which the appeal is brought.
•In the absence of a special statutory regime, a notice of appeal that does not specify a ground of appeal is invalid and the appellate court in which it is 'filed' has no authority to determine any issue affecting the parties.
According to the minute of amended appeal notice filed 12 April 2021 (Appeal Notice) the appeal is against the decision made on 6 October 2020. The original appeal notice (Original Appeal Notice) was filed on 27 October 2020 and so this appeal is governed by the grounds which were raised in the Original Appeal Notice, subject to their amendment in the Appeal Notice.
Grounds 1 to 5 inclusive address the Judgment Order.
Ms Drage contends that appeal grounds 1, 2, 3, 4 and 5 must fail because the alleged error was not the subject of the decision under appeal. The appeal grounds raised were not filed within time.
The general order (Assessment and Costs Order) was made on 6 October 2020.
Effectively, on the face of the Appeal Notice the appeal is only against the Assessment and Costs Order. The Appeal Notice was filed 21 days after this order.
Mr Morrison and Auro contend that the judgment was made by the Assessment and Costs Order on 6 October 2020. They say that this was the order which was intended to finally determine the liability of the defendants to the claimant.
I do not accept the submission made by Mr Morrison and Auro that '[t]he appeal brought by the Appellants is, and can only have been, against the judgment of the Magistrate in the Court below'[7] as demonstrating that there were not separate orders made on separate dates. This may have been the wish in the appeal documents, but it is not what is said by them.
[7] Appellants' submissions in reply filed 3 November 2021, par 2.
The only order addressed by the Appeal Notice is the appeal against the assessment.
The order Mr Morrison and Auro wish to address is the order that grounded liability of Mr Morrison and Auro to Ms Drage made on 4 September 2020. The appeal against the Judgment Order must have been instituted by 25 September 2020, according to r 51A of the District Court Rules 2005 (WA) and s 40 of the Magistrates Court (Civil Proceedings) Act 2004 (WA) (MCCP Act).
The Judgment Order was the order which grounded the issue of the appellants' liability to Ms Drage. The decision on the amount of the liability was separate.
The Assessment and Costs Order quantified the amount of the liability, leaving costs to be again separately quantified in default of an agreement.
The parties referred to the decision in TheTrust Co (Australia) Ltd v Hungry Jack's Pty Ltd.[8] This decision provides in part:[9]
[8] TheTrust Co (Australia) Ltd v Hungry Jack's Pty Ltd [2021] WASCA 29 [72] - [74].
[9] TheTrust Co (Australia) Ltd v Hungry Jack's Pty Ltd [72].
... the time within which to appeal starts to run when the order or judgment to be appealed is made or pronounced, not upon publication of the reasons.
On any reading the time to appeal started to run when the Judgment Order was pronounced, in this case on 4 September 2020.
There are two distinct decisions. The first is the decision as to liability that is the Judgment Order. The second is the decision as to the amount that was owing under that liability. This is the Assessment and Costs Order.
The submission that the judgment was not finally determined until the general order dated 6 October 2020 does not address the fact of the Judgment Order made 4 September 2020. The Assessment and Costs Order of 6 October 2020 went to quantum and costs only and not to liability.
The time for the appeal commenced on 4 September 2020. The decision was an appealable decision as defined in r 49 of the District Court Rules. This requires an appeal to be commenced within 21 days of the decision.
I accept Ms Drage's submission that the express wording of the order dated 4 September 2020 is:[10]
[10] AB page 57.
1.There is judgment for Claimant against the First Defendant and the Second Defendant in a sum to be assessed by the Court.
I am satisfied that this was an order of the Magistrates Court and that the time for appealing this order was within 21 days of 4 September 2020.
I am satisfied also that neither Mr Morrison nor Auro appealed the judgment order within 21 days and accept the submission that the grounds of appeal relating to liability must be dismissed.
Grounds 1, 2, 3, 4 and 5 in the Appeal Notice assert errors which are not the subject of the decision under appeal by the Appeal Notice in this appeal. The Appeal Notice stands as an appeal against the general order of 6 October 2020 only.
The Assessment and Costs Order is a separate order. The order provided:[11]
[11] AB page 58.
1.Damages assessed in the sum of $30,172.87.
2.The Defendant is to pay the Claimants costs of the claim to be assessed if not agreed.
An appeal against the Judgment Order must have been commenced within 21 days from 4 September 2020. It was not. Leave to appeal has not been sought and was not sought in the appeal hearing.
This court has no jurisdiction to determine grounds 1 to 5 in the current appeal.
If the court did have jurisdiction to determine grounds 1 to 5 of the appeal I would have resolved the appeal for these reasons.
Magistrate Darge made the following observations:[12]
[12] AB page 63, Reasons for Decision [16].
... a simple case has been confounded by the lack of clear documentation between the parties identifying the core obligation between them. There was no single document which explained the understanding both parties had of the arrangements between themselves.
His Honour identified the issues in the case:[13]
[13] AB page 64, Reasons for Decision [22] - [25].
1.The background to the indemnity claim is an invoicing scheme colloquially referred to as the Process in which she used her own bank account to pay Auro's invoices.
2.These payments were made under her employment contract with Auro. Mr Morrison - as a director of Auro told her to make the payments. He told her she would be indemnified by Auro. It was an express term of her employment contract that she would be indemnified by Auro for her liability.
3.If it were not an express term that she would be indemnified for these payments Ms Drage relied upon an implied term of her employment contract that an employee is entitled to be indemnified for any expenses incurred on behalf of her employer.
4.Ms Drage alleged Mr Morrison personally 'engaged in misleading and deceptive conduct by representing to her that she would be reimbursed for any payments made at his direction'.
His Honour identified the periods of time that Ms Drage was employed by Auro.
His Honour found that it was trite law that an employee is entitled to an indemnity for liabilities incurred in the course of their employment.[14] His Honour cited Lister v Romford Ice & Cold Storage Co Ltd[15] as being applied generally. The citation of Lister and what the case was authority for was the subject of contention.
[14] AB page 65, Reasons for Decision [30].
[15] Lister v Romford Ice & Cold Storage Co Ltd [1957] 1 All ER 125 (Lister).
The decision concerned the issue, as described by Viscount Simonds,[16] who gave an opinion which formed part of the majority in dismissing an appeal, on a:
[16] Lister (132) - (133).
... question of general importance. For the real question becomes not what terms can be implied in a contract between two individuals who are assumed to be making a bargain in regard to a particular transaction … we are concerned with a general question, which, … can only be answered by considering the relation in which the drivers of motor vehicles and their employers generally stand to each other … the question must be asked and answered whether, in the world in which we live today, it is a necessary condition of the relation of master and man that the master should, to use a broad colloquialism, look after the whole matter of insurance.
The issue arose from the crossroads of separate torts:
(a)the tort for which an employee and the employer may be vicariously liable for; and
(b)the tort for which the employee may be liable to an employer in breach of a duty of care owed to the employer.
In that case the House of Lords declined to imply in a contract of employment a term to indemnify an employee against any civil liability for accidental injury or damage done by him in the course of his employment when driving a motor vehicle in breach of his duty of care.
Lord Tucker who gave an opinion which was consistent with the majority found:[17]
[17] Lister (142).
... I am of the opinion that a servant employed to drive a vehicle in the course of his employment by his master owes a duty to his master to take reasonable care in the driving and management of the vehicle, that for breach of this duty an action founded in contract can be brought by the master against the servant, and that damages can be brought by the master against the servant, and that damages which have been awarded against the master by reason of the servant's negligence or breach of his duty are not too remote to be recoverable in the master's against his servant claiming damages for breach of contract.
His Lordship, while declining to imply a term absolving the servant from certain of the consequences of a breach of his recognised duty to take care, did refer, without controversy to established principles:[18]
[18] Lister (144).
(a)some contractual terms may be implied by general rules of law; and
(b)'[i]t has always been an implied term that the master will indemnify the servant from liability arising out of an unlawful enterprise on which he has been required to embark without knowing it was unlawful'.
Leaving whether Lister was:
•authority for the proposition that an employee is entitled to a liability for indemnities incurred in the course of their employment; or
•whether the decision has been applied generally.
Ms Drage's case, as presented and accepted by his Honour was put in her opening written submissions:[19]
[19] AB page 105, Claimant's opening submissions, par 44.
The taxation and superannuation liabilities incurred by the claimant in this case arose because the claimant was following instructions from the first defendant, in the course of her employment with the second defendant, such liability being innocently incurred on the understanding that the process being followed was 'standard business practice'.

The statement that it was trite law that an employee is entitled to an indemnity for liabilities incurred in the course of their employment was correct.[20] The citation of Lister and description of it being applied generally is also correct.
[20] AB page 65, Reasons for Decision [30].
This was not a case in which Ms Drage had committed a tort or breached a duty to her employer. Clearly on his Honour's findings the Process was not a standard business practice.
Magistrate Darge found:[21]
[21] AB page 66, Reasons for Decision [32].
Therefore Auro is responsible for any expenses Mrs Drage incurred on behalf of her employer. Such a term would be implied into the employment contract irrespective of the question of whether it was expressly stated by Mr Morrison ...
Magistrate Darge considered:[22]
[22] AB page 66, Reasons for Decision [33].
Here the real question is one of fact - were these payments for Auro, her employer, or were they for another party, such as her own labour hire business ...
This was the issue that was to be determined.
In considering the resolution of that issue his Honour observed, correctly with respect, that:[23]
[23] AB page 66, Reasons for Decision [34].
If they were payments for Auro then there is a reasonable expectation of indemnity. If essentially they were payments to her own benefit then they are unlikely to be reasonable expenses for which the company should indemnify her.

General principles relating to the appeal

The District Court's appeal jurisdiction is found in pt 7 of the MCCP Act. The District Court must decide the appeal on the material and evidence that were before the Magistrates Court[24] and any other evidence that it gives leave to be admitted.[25] Such leave may only be given in exceptional circumstances.[26]
[24] MCCP Act s 40(4)(a).
[25] MCCP Act s 40(4)(b).
[26] MCCP Act s 40(5).
Rule 50(1) and r 50(2) of the DCR provides that:
(1)An appeal to the Court must be by way of reconsideration of the evidence that was before the primary court unless the parties agree otherwise.
(2)At the hearing of an appeal a party must not adduce evidence that was not adduced in the primary court except with the leave of the Court.
As a rehearing, the appellate powers of the District Court are only exercisable if the appellant demonstrates that the decision made by the magistrate the subject of the appeal was the result of some legal, factual, or discretionary error.[27] A breach of the duty to act judicially or in accordance with the rules of procedural fairness will constitute an error of law.[28] The onus is on the appellant to demonstrate this error.[29]
[27] Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172 [23] (Gaudron, McHugh, Gummow & Hayne JJ).
[28] Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321, 366 - 367 (Deane J).
[29] Jones v Darkan Hotel [2014] WASCA 133 [31] (judgment of the court).
The grounds of appeal may be summarised as collectively alleging errors in fact and law. Grounds 1 and 2 assert an error in fact and law; ground 3 an error in law; ground 4 asserts an error in fact; ground 5 asserts an error in law and of fact, and an error of law is asserted in ground 6.
So, the errors in grounds 1 to 5 contended for are:
•In ground 1 by implying an indemnity term.
•In ground 2 by finding payments made relating to Ms Drage's employees were Auro's expenses and as such Auro was responsible for them.
•In ground 3 by not finding Ms Drage was estopped from bringing the proceedings.
•In ground 4 by finding Ms Drage was acting as an employee when arranging payments to those providing haulage services when employed by Auro and when not employed by Auro.
•In ground 5 by finding Auro was responsible to indemnify Ms Drage following representations made by Mr Morrison while Ms Drage was employed by Auro.
Ground 6 asserted an error of law in determining quantum in absence of evidence.
The fact that Ms Drage was an employee of Auro for periods of time as identified by his Honour is an established fact. It cannot be the subject of an appeal in this hearing. Likewise, the fact that Ms Drage acted on her own account as a business principal and provided services to entities including Auro is an established fact. His Honour was clearly aware of this and identified this as being central to the resolution of the issue.

Ground 1 - Implied term - indemnity

Neither Mr Morrison nor Auro have demonstrated that the decision made by his Honour was the result of some legal, factual, or discretionary error.
I accept Ms Drage's submission that the term was implied by law. Namely that an employee is entitled to an indemnity for liabilities incurred in the course of employment which extends to expenses incurred for and on behalf of the employer.[30]
[30] AB page 66, Reasons for Decision [32].
Mr Morrison's and Auro's submissions regarding his Honour's reliance on Lister was unhelpful. The term was implied by law. It was not a term his Honour found was implied to give business efficacy to the contract.
Ms Drage was an employee of Auro. Auro gave instructions to her by the medium of Mr Morrison and pursuant to an unusual system called the Process. While following the Process obligations were created. Because of the way the unusual system operated those obligations were in Ms Drage's name. They were:
•Pay As You Go tax;
•Superannuation entitlements; and
•GST.
These are payable by an employer and not an employee.
The submissions as to the implication of a term in the employment contract in circumstances where Magistrate Ward found that an employment contract existed 'in the absence of any claim for a term requiring reimbursement'[31] is misplaced. Magistrate Ward's decision is not under appeal. The claim for reimbursement is a different claim.
[31] AB page 22, Appellants' submissions, par 44.

The implication of terms

Courts imply terms in contracts in a number of ways:[32]
[32] Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 253 CLR 169 [21] (French CJ, Bell & Keane JJ).
(a)in fact or ad hoc to give business efficacy to a contract;
(b)by custom in particular classes of contract;
(c)in law in particular classes of contract; or
(d)in law in all classes of contract.
His Honour did not err in law, from the outset or otherwise, when he, adopting the nomenclature used in Auro's submissions, relied upon it being 'trite law' that:[33]
[33] AB page 22, Appellants' submissions, par 45.
45.1an employee is entitled to an indemnity for liabilities incurred in the course of their employment; and
45.2the indemnity extends, as a matter of course, to expenses incurred for and on behalf of the employer.
The reference to this correct statement of principle does not demonstrate the decision made by his Honour the subject of the appeal was the result of some legal, factual, or discretionary error; nor does it demonstrate that the reliance on it was productive of an error of the type necessary before this court might intervene.
His Honour did not make an error of law by implying the term. This was not a case where a term was implied because of the imputed intention of the parties but rather implied as a matter of law, once an employment agreement was established, whatever the intention of the parties.
Auro's submissions as set out in pars 47, 51, 52, and 53 do not respond the facts of this case. The term was implied as a matter of law. I do not accept there was no requirement in the circumstances that Mr Morrison and Auro should be made responsible for the tax liabilities incurred by Ms Drage, against the background of the question identified by his Honour, and I do not consider the term unusual, or not necessary. These are questions more properly directed to the issue of implying a term to make an agreement workable. That is not the basis for implication here. It follows that I do not accept that the decision made by his Honour the subject of the appeal was the result of some legal, factual, or discretionary error.

Ground 2 - Ms Drage's payments were not Auro's expenses

I accept the submission made by Ms Drage that the actual finding made by his Honour was that the expenses were incurred on behalf of Auro. His Honour did not find that the payments made related to her employees; in the sense that they were engaged in work for her on her own account.
As is clear from the finding made:[34]
[34] AB page 72, Reasons for Decision [72].
I consider that as a matter of fact Mrs Drage was acting in the course of her employment when following the process. She was doing it for Auro even if aspects of that involved Starcap employees.
His Honour's finding of fact at [72] of the Reasons for Decision followed his Honour's identification of the implied term at [32] and identification of the issues at [32] - [34].
The fact that Ms Drage was aware from previous dealings with the ATO that she was responsible for paying tax on income derived from her business activities does not demonstrate an error on the part of his Honour in finding that the expenses incurred were so incurred as an employee of Auro.
The facts were complicated by Ms Drage's joint endeavours as an employee and as a business principal but finding that she was acting as an employee and in so far as this income and consequent tax liability was open to his Honour, there is no demonstration that the decision made by his Honour was the result of some legal, factual, or discretionary error.
Furthermore, I accept Ms Drage's submission that the complaint that the implied term was too imprecise to be implied cannot be considered in this appeal.
The submission was not part of the material or evidence before his Honour. It was not included as a ground in the Appeal Notice. The appellants are bound by the conduct of their case at trial, and it is too late to raise it now.[35]
[35] Rankilor v Circuit Travel Pty Ltd [2013] WASCA 148 (Rankilor).
In Rankilor, Newnes JA, in considering a ground of appeal not raised before the primary judge, found:
67This is not a ground of appeal raised before the primary judge. In my view, it is too late to raise it now. In Metwally (No 2) v University of Wollongong (1985) 60 ALR 68; (1985) 59 ALJR 481, 483, the High Court said:
It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so.
68In Coulton v Holcombe (1986) 65 ALR 656, 661, the High Court referred to the importance of this principle in light of the public interest in:
[T]he finality of litigation, the difficulty of inducing an appeal court to consider new facts, the undesirability of encouraging tactical decisions not to present an issue at first instance: keeping it in reserve for appeal; and the need for vigilance to avoid injustice to a party having to meet new facts and new issues of law for the first time at the appeal court (8).
The observations apply here.
The court does not have jurisdiction to hear this complaint.
In any event I do not accept that submission that the term implied was too imprecise - it was implied as a matter of law. Further the quantum was identified and determined by his Honour. The evidence in support of the quantum was included in the materials demonstrating the claim against Ms Drage by the ATO.

Ground 3 - Estoppel and issue estoppel and Anshun estoppel

Issue estoppel is not raised in the Appeal Notice.
I accept Ms Drage's submission that this court does not have jurisdiction to consider the submissions made in support of ground 3. This asserts issue estoppel applied to prevent Ms Drage from agitating the matters of the Process and the implied term in the proceedings before Magistrate Darge.
It was not included as a ground of appeal. The argument was not raised in the hearing before his Honour.
The court does not have jurisdiction to hear this complaint.
In any event I do not accept the submission that issue estoppel applied.
I find:
1.A claim for an indemnity was not raised in the proceedings before Magistrate Ward.
2.Damages for misleading and deceptive conduct were not raised in the proceedings before Magistrate Ward.
3.That the terms of Ms Drage's employment were not determined - exhaustively in the earlier proceedings. I make this finding notwithstanding the submission, in relation to the findings of Magistrate Ward, that 'when determining whether a person was an employee a Court considers all aspects of the parties' relationship, taking into account all the indicia which may point either way'.[36]
[36] Appellants' amended submissions filed 19 July 2021, par 32.
I do not accept the submission reflects a matter of general principle. Ms Drage is not estopped from claiming an indemnity if her employer did not meet her tax obligations.
The issue of the indemnity was not raised, as the proceedings before Magistrate Ward were a different action and engaged different claims. Notwithstanding on one view the sense in having the claims resolved at the same time, the fact remains that the issues were different.[37]
[37] At ts 157, counsel for Ms Drage made compelling submissions as to why the claims were not heard at the same time.
I accept Ms Drage's submission that for an issue estoppel to apply the issue determined must have been identical in each case.
The High Court in Kuligowski v Metrobus[38] identified that the law has strict requirements for the application of issue estoppel. The court quoted Barwick CJ in a passage the court described as exemplifying the law in so far as determining, analysing and considering whether in the second set of proceedings the same question had been decided in the first set of proceedings:[39]
[38] Kuligowski v Metrobus [2004] HCA 34; (2004) 220 CLR 363 (Kuligowski).
[39] Kuligowski [40].
In Ramsay v Pigram, Barwick CJ encapsulated what was involved in answering that question by saying:
'Long standing authorities, in my opinion, warrant the statement that, as a mechanism in the process of accumulating material for the determination of issues in a proceeding between parties, an estoppel is available to prevent the assertion in those proceedings of a matter of fact or of law in a sense contrary to that in which that precise matter has already been necessarily and directly decided by a competent tribunal in resolving rights or obligations between the same parties in the same respective interests or capacities, or between a privy of each, or between one of them and a privy of the other in each instance in the same interest or capacity. The issue thus determined, as distinct from the cause of action in relation to which it arose, must have been identical in each case'.
(footnotes omitted)
And further in relation to issue estoppel and the impact or otherwise where a court does not make a finding of fact on an issue in earlier proceedings, the High Court said:[40]
[40] Kuligowski [59] - [62].
59In the leading Western Australian decision, which the majority of the Full Court applied, and which it was the purpose of this appeal to test, Owen J said that where 'a party has failed to prove a fact in workers' compensation proceedings that party may be estopped in a common law action from asserting the existence of that fact'. With one exception, the authorities then cited do not support that proposition. The exception is Egri v DRG Australia Ltd, where Clarke JA rejected an argument that a failure by the worker to establish that he had a disc lesion was insufficient to create an estoppel preventing him from later contending that he did. The reasoning is not clear, and it was not supported by McHugh JA, who found that, in substance, there had been a positive finding that there was no disc lesion.
60In general, disbelief in a witness's evidence does not establish the contrary. Similarly, disbelief in the case presented by the moving party does not necessarily permit the court to conclude that the positive case of the opposing party is correct. In particular cases it may not be possible to reach a conclusion either way:
'[T]he judge is not bound always to make a finding one way or the other with regard to the facts averred by the parties. He has open to him the third alternative of saying that the party on whom the burden of proof lies in relation to any averment made by him has failed to discharge that burden'.
A failure to find a matter alleged does not establish the truth of the contrary of that which is alleged. There are many general statements about the operation of issue estoppel, approved in this Court, which require more than non-satisfaction to establish an estoppel in later proceedings.
61For example, in Jackson v Goldsmith, Williams J approved a passage from Halsbury's Laws of England including the following:
'A party is precluded from contending the contrary of any precise point which, having been once distinctly put in issue, has been solemnly found against him'.
Much here turns upon what is involved in the phrase 'solemnly found'. The form of the first proceeding, particularly the issues joined or admitted on any pleadings, will be important. In Hoysted v Federal Commissioner of Taxation, Higgins J said:
'A point or an issue may be actually controverted, may be in actual controversy, in actual litigation, although it is not argued, or argued properly. A point may be in controversy although counsel may address no arguments to it or may overlook certain aspects'.
62An issue admitted on pleadings or other formal process or otherwise conceded at a hearing may, from the nature of the outcome, necessarily have been decided. But what of other questions arising in the first proceeding? In Blair v Curran, Dixon J observed that a 'judicial determination concludes, not merely as to the point actually decided, but as to a matter which it was necessary to decide and which was actually decided as the groundwork of the decision itself, though not then directly the point at issue'. His Honour went on to distinguish findings concerning only 'evidentiary facts' not the 'ultimate facts' which formed the very title to rights in dispute. This analysis, with the emphasis on decision-making, would require more than non‑satisfaction.
(footnotes omitted)
I accept Ms Drage's submissions that:
•Magistrate Ward did not make a finding about and was not required to make a finding about the exhaustive terms of the employment contract.
•A failure to make a finding of fact does not establish the contrary to what is alleged. The fact Ms Drage did not raise the issue of the implied term does not establish that there was no implied term either.
Neither issue estoppel, in so far as the claim for indemnity goes, nor Anshun estoppel, in so far as the claims for indemnity and misleading and deceptive conduct, responded to Ms Drage's claims against Mr Morrison and Auro.

Anshun estoppel

His Honour considered and declined the application that Ms Drage's claim should be estopped on the principles of Port of Melbourne Authority v Anshun Pty Ltd.[41]
[41] Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.
His Honour considered that Ms Drage was aware the ATO indicated their intention to recover the payments and considered whether she ought to have included them in the original proceedings. He expressed the view that it would have been preferable for the matters the subject of that claim and this appeal to have been included in the original proceedings and observed 'the failure to do so has resulted in unnecessary duplication and cost, both to the parties and court'.
This was and remains a sensible observation although as noted previously there were perhaps compelling reasons why the current matters were not included in the original proceedings. The obvious sense though in claiming the indemnity; if the fact that Mr Morrison and Auro were not going to honour their obligations to Ms Drage was known at the time of the proceedings before Magistrate Ward, does not mean that she was estopped under any basis from bringing the claim in separate proceedings later.

The submission that his Honour took no steps to hear the parties' submissions on estoppel before hearing the parties on the substantive issues is not accurate.
The application was raised, considered and rejected.
The complaint, footnoted in the written submission, his Honour failed to exercise the discretion at all is not accurate. His Honour considered that matter. The discretion did not arise as the claim concerned an incident of Ms Drage's employment and was a matter of a different kind than that which was before Magistrate Ward.
I do not accept the submission that his Honour declined to apply the Anshun principles because argument had not been heard by the court prior to the hearing of the substantive issues in the action. The principles did not respond to the facts of Ms Drage's claim.
I do not accept the submission that his Honour fell into error when declining to exercise his discretion to not determine the matter.
As observed by the HCA in Clayton v Bant, in the circumstances of that case:[42]
[42] Clayton v Bant [2020] HCA 44; (2020) 272 CLR 1 [30] (Clayton).
... In the case of Anshun estoppel, establishing a basis for the relief he sought also required him to prove the unreasonableness in all the circumstances of the choice made by the wife to refrain from asserting such rights as were legally available to be asserted by her in the Dubai proceedings.
(footnotes omitted)
'Could have' does not mean 'should have':[43]
[43] Clayton [31] - [32].
31In the manner in which the application for the permanent stay appears to have been conducted, the husband did not deign to prove the unreasonableness of the choice made by the wife. His case for the existence of Anshun estoppel seems to have been put on the basis that the fact that the wife could have asserted a right in the Dubai proceedings meant that she should have asserted that right in the Dubai proceedings in the sense that it was unreasonable for her not to have done so. That approach to Anshun estoppel has rightly been said to involve 'fundamental error'. As was pointed out in Port of Melbourne Authority v Anshun Pty Ltd, 'there are a variety of circumstances … why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings eg expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few'.
32But the problems with the husband's reliance on estoppel are not confined to his failure to engage with the unreasonableness element of Anshun estoppel. His more fundamental problem lies in his failure to establish the requisite correspondence between the rights asserted by the wife in the property settlement proceedings and the spousal maintenance proceedings and any right the existence or non-existence of which was or might have been both asserted in the Dubai proceedings and finally determined by the Dubai Court. Absent such a correspondence of rights, neither form of estoppel can have any operation.
(footnotes omitted)
It was not the court's role to raise, investigate and determine this issue. Auro and Morrison carried the responsibility of running this issue.
In any event there is not a sufficient connection between Ms Drage's claim in the proceeding before Magistrate Darge and the proceeding before Magistrate Ward. The claims went to different rights. As accurately submitted by Ms Drage in her closing submissions before Magistrate Darge the claim did not even have identicality of parties.

Ground 4 - Error of fact - finding that Ms Drage was acting as an employee

Mr Morrison and Auro contend that Magistrate Darge made errors of fact in finding that Ms Drage was acting in the course of her employment when:
(a)arranging for services to be provided by drivers;
(b)preparing and delivering invoices for the services provided by drivers;
(c)accepting payment of the invoices raised and delivered by her; and
(d)paying wages to drivers from her accounts.
In support of this ground Mr Morrison and Auro contend that Ms Drage did not meet her burden of proving Auro's liability because she failed to bring sufficient evidence to establish that the drivers whose work she arranged and for whose services she rendered invoices (inclusive of GST) and whom she paid from her bank accounts, were employees of Auro and not her business.
I do not accept these submissions.
The findings made by his Honour were open on the evidence that was before him.
It has not been established by controvertible facts or uncontested testimony that there was an error of fact. This is necessary for this ground to be established. There is no reasonable suggestion that the finding was glaringly improbable or contrary to compelling inferences, such as are required to demonstrate a viable ground of appeal. The fact that the appellants do not accept the finding does not make it wrong.
The principles to be applied in considering alleged errors of fact were considered in Proudlove v Burridge where Newnes and Mitchell JJA said:[44]
[44] Proudlove v Burridge [2017] WASCA 6 [123] (Proudlove).
... The High Court recently restated the principles governing an appeal on a question of fact in the following terms in Robinson Helicopter Company Incorporated v McDermott:
'A court of appeal conducting an appeal by way of rehearing is bound to conduct a "real review" of the evidence given at first instance and of the judge's reasons for judgment to determine whether the judge has erred in fact or law. If the court of appeal concludes that the judge has erred in fact, it is required to make its own findings of fact and to formulate its own reasoning based on those findings. But a court of appeal should not interfere with a judge's findings of fact unless they are demonstrated to be wrong by "incontrovertible facts or uncontested testimony", or they are "glaringly improbable" or "contrary to compelling inferences"'. ...
(footnotes omitted)
And in considering inferences said:[45]
[45] Proudlove [127].
However, even where the appeal concerns the inferences to be drawn from established primary facts, it remains necessary for the appellant to demonstrate error. As Beaumont and Lee JJ observed in Minister for Immigration, Local Government and Ethnic Affairs v Hamsher:
'[T]he court is not obliged to proceed to make new findings of fact on all relevant issues and discharge the judgment appealed from if those findings differ from those of the trial judge and do not support the judgment. The court must be satisfied that the judgment of the trial judge is erroneous and it may be so satisfied if it reaches the conclusion that the trial judge failed to draw inferences that should have been drawn from the facts established by the evidence. The court is unlikely to be satisfied if all that is shown is that the trial judge made a choice between competing inferences, being a choice the court may not have been inclined to make but not a choice the trial judge should not have made. ...
(footnotes omitted)
Mr Morrison and Auro assert:[46]
[46] AB page 27, Appellants' submissions, par 68.
The inferences to be drawn from the records produced by the Respondent is that the receipts were in payment of Starcap invoices and subsequent payments to drivers were to Starcap's employees.
This inference, if left unexamined and unexplained by evidence, was one inference open on the records referred to. However, on the evidence, the inference his Honour drew, as demonstrated by his reasoning, was certainly open to him.[47]
[47] AB pages 68 - 72, Reasons for Decision [48] - [73].
In considering the evidence Magistrate Darge found when considering the Process:[48]
[48] AB pages 68 - 71, Reasons for Decision [48], [50], [54], [59], [60].
48The impression I gained from the entirety of her evidence and the documents is that she did not fully comprehend the complete purpose of the process. After hearing Mr Morrison, I am similarly left with a feeling of unease that this arrangement, which seems unnecessarily convoluted and vague was to achieve a purpose other than that explained by either witness.
...
50On any clear view the arrangement did not make commercial sense for Mrs Drage. Nevertheless, she followed that arrangement.
...
54Whilst the arrangement does seem strange Mrs Drage was not cross-examined about her understanding of the process. ...
...
59The documentation supplied by the parties is contradictory. As said, there is no document which purports to set out the financial arrangements between the parties nor is there any contemporaneous material to explain why such an arrangement would be of benefit to the parties. Ms Drage explains her lack of evidence as business naivety combined with a fear of Mr Morrison.
...
60Mr Morrison puts forward a more complicated explanation that a company he owned, Tower Link Pty Ltd, was proposed to be a business venture between him and Ms Drage as well as Mr Knudson. He was to manage it until it became profitable and they would then receive half the shares in the company for no money ... If that was the plan then it was never fully realised as Mr Morrison remained the only director of Tower Link.
In his Reasons for Decision, his Honour referred to and considered the inconsistencies in the documentary evidence;[49] he considered the issue of superannuation[50] and considered Ms Drage's evidence regarding various invoices and examples such as in document CD 24 where she had been asked by Mr Morrison to invoice the whole amount being gross, super and GST[51] and concluded:[52]
[49] AB page 71, Reasons for Decision [62] - [66].
[50] AB pages 71 - 72, Reasons for Decision [67].
[51] AB page 72, Reasons for Decision [68] - [69].
[52] AB page 72, Reasons for Decision [70] - [73].
70The overall effect of the documents is to show that part of the job that Mrs Drage was engaged to perform was preparation of invoices based on spreadsheet materials. The documentary material is in my view inconsistent with an arm's-length arrangement between two independent contracting parties.
71There is perhaps nothing unusual about one party complaining about the structure or content of invoices rendered by another. However, the level of association between Mrs Drage, Mr Morrison and Mrs McDonald was more in keeping with Mrs Drage being required by her employer to follow a process.
72I consider that as a matter of fact Mrs Drage was acting in the course of her employment when following the process. She was doing it for Auro even if aspects of that involved Starcap employees.
73The result of following that process, even if it included miscalculations and omissions in her own invoicing, was that she incurred a personal loss. Her employer is responsible to indemnify her for that loss.
The reference in Mr Morrison's and Auro's submission to his Honour's findings at [47] is apt to mislead. His Honour did not make any findings in that paragraph but was setting out Ms Drage's statement of claim.
Mr Morrison's and Auro's evidence and position was squarely before his Honour. His findings about the process being engineered by Mr Morrison and Auro and such being followed by Ms Drage was open on the evidence.
Neither Mr Morrison nor Auro have demonstrated that the decision made by his Honour was the result of some legal, factual, or discretionary error.
Ms Drage was not obliged to challenge the assessment by the ATO that she was personally liable to meet the taxation obligations alleged. In circumstances where she was an employee and where Auro was required to indemnify her and where Mr Morrison had made the representation she did not have to.
I do not accept the submission that the inference to be drawn from Ms Drage's records is that the payments related to Ms Drage's own business enterprise. The finding of fact made by his Honour, and which was supported by the evidence, was that they were pursuant to the Process.
Mr Morrison and Auro complain that Ms Drage had the burden of proving that the drivers were employed by Auro. I do not accept this submission. Ms Drage had the burden of proving that her conduct was as an employee. She did not have to demonstrate that others were. She was not obliged to call any of the drivers. Their evidence could only have gone as to the legal conclusion that might have been reached in so far as their relationship with Auro went and could not be determinative of the issue of Ms Drage's relationship with Auro.
Given Ms Drage's dual status as an employee and as a business principal and the burden of proof she carried to demonstrate her case and establish that the reimbursement was due, his Honour had to carefully consider the evidence and the inferences it supported.
It was open to find that Ms Drage was acting in the course of her employment when she followed the Process.

Ground 5 - Representations made by Mr Morrison while Ms Drage was employed by Auro

Ms Drage, by her general procedure claim dated 27 February 2019, alleged:[53]
[53] AB page 86, par 7.
Mr Morrison instructed Ms Drage to use her own personal bank accounts to process transactions for Auro and its related entities, in accordance with the following process ('Process').
Mr Morrison and Auro complain that the representations were denied in Mr Morrison's statement of intended evidence and that his Honour erred in concluding that since the denial was not put when Ms Drage was under cross-examination that it followed that the court could make a finding that the representations were made.[54]
[54] AB page 29, Appellants' submissions, pars 75 - 76.
His Honour clearly set out in [85] - [90] of his Reasons for Decision why it was that Mr Morrison faced difficulty in denying either personally or as a director of Auro that he had made the representations to Ms Drage and explained in those paragraphs how it was he found that the representations were made. In so doing his Honour did not reverse the onus, nor did he accept without analysis, Ms Drage's evidence.
I accept Ms Drage's submission that while the evidence was not unchallenged, having regard to the statement of intended evidence, Ms Drage's account was not tested in cross-examination, his Honour was entitled to accept her evidence. Having regard to the entirety of the evidence and his Honour's findings at [85] - [90] in addition to the findings at [48], [50], [54], [57], [70] and [71] of his Reasons for Decision, his Honour considered whether Ms Drage's evidence was persuasive.
The decision was open, and it has not been demonstrated that the decision made by his Honour was the result of some legal, factual, or discretionary error.
Mr Morrison and Auro also complain that arising from his Honour's expressed impression:[55]
[55] AB page 68, Reasons for Decision [48].
The impression I gained from the entirety of her evidence and the documents is that she did not fully comprehend the complete purpose of the process. ...
that his Honour did or should have found that Ms Drage's evidence was therefore 'unreliable and insufficient to find, on the balance of probabilities, that the representations were made in the form alleged'.[56]
[56] AB page 29, Appellants' submissions, par 78.
This does not follow. The impression demonstrated a finding of a lack of understanding on Ms Drage's part as to how the Process worked. Given her inexperience in business and her reliance on Mr Morrison to tutor her this was not surprising. Given his Honour's lament at the outset of the reasons the impression was neither surprising nor inconsistent with Ms Drage being an accurate and reliable witness.
Mr Morrison and Auro also complain that the pleading did not allege that the alleged representation was made in trade or commerce and that this was a 'requisite fact'.
I accept Ms Drage's submission that the submissions about trade and commerce cannot be considered without leave. The issue was not included in the material or evidence before the Magistrates Court and Mr Morrison and Auro are bound by their conduct at trial.[57]
[57] See Rankilor.
This is clearly so in this case where the issue of 'trade or commerce' and its application to the facts as would be alleged in the case before his Honour were addressed in Ms Drage's opening submissions filed 4 May 2020.[58]
[58] AB pages 97 - 99, Claimant's opening submissions, pars 10, 14, 16, 17 - 20.
The submissions were accepted by his Honour. The quality of the representations, if made, were not in contest. The issue was whether they were made. Neither Mr Morrison nor Auro have demonstrated legal, factual, or discretionary error.
Mr Morrison and Auro also complain that Ms Drage did not demonstrate reliance on the representation and that the reliance caused her to suffer loss and damage.
This matter was also not put before his Honour in the trial. Ms Drage was not cross-examined on this issue. The matter cannot now be argued in this appeal.[59]
[59] See Rankilor.
In any event reliance was demonstrated by Ms Drage's following of instructions by engaging in the Process. Reliance was addressed in pars 16, 24 and 25 of Ms Drage's opening submissions filed 4 May 2020 and it was open to his Honour to accept it.
The submissions directed to 'outside assistance' are not persuasive in demonstrating that Ms Drage did not act in reliance or that his Honour made a factual error; the way the ATO treated her was not and could not be determinative of the actual relationship between her, Mr Morrison and Auro as found by his Honour.

Ground 6 - Damages finding not supported by the evidence

Mr Morrison and Auro contend that Magistrate Darge erred in law when determining the quantum of damages claimed by Ms Drage in the absence of reliable evidence to support her claim. They contend that if the term identified was implied into the employment contract it gave rise to a liability on the part of Auro only to compensate Ms Drage.
I do not agree that this submission has merit regarding either Mr Morrison's or Auro's liability to Ms Drage.
According to Mr Morrison and Auro the finding made by his Honour that 'Mrs Drage does not seek a windfall but rather indemnification to limit her loss'[60] gave rise, on the term implied by his Honour, a liability only to compensate Ms Drage. Caledonia v BT[61] was cited in support of this proposition. The decision does not support this proposition.
[60] AB page 70, Reasons for Decision [57].
[61] Caledonia v BT [2002] 1 Lloyd's Rep 553 (Caledonia).
Caledonia dealt with a liability of various contractors under an indemnity clause in a contract between them and an operator in the operation of a gas platform in the North Sea.
The issue was whether on the construction of a maritime insurance contract an indemnity clause responded to an event. The terms of the indemnity provision were written and were critical. The terms were in turn reflective of a practice developed among those undertaking offshore oil operations and were further informed by statute.
The claim was not a claim for breach of contract employment or otherwise. It was not a claim arising from fair trading or misleading and deceptive conduct legislation. It was a claim to an indemnity for a liability incurred by the operator outside the contract between it and the contractors for loss arising out of liability for death or injury in respect of the contractor's employees.
The decision confirmed a long-settled principle, in the United Kingdom it seems, that an insurer who has fully indemnified an insured against a loss covered by a contract of insurance between them may ordinarily enforce, in the insurers own name, any right of recourse available to the insured.
It confirmed that a surety who is obliged to pay the debt owed by the debtor to the creditor is entitled to contribution from his/her/their companion co‑sureties.
A contention in that case that the indemnity provision should have a term implied into it that it did not respond unless the contractor was liable at common law or for breach of statutory duty for a triggering event was rejected.

The decision also confirmed that it is not permissible to be indemnified twice in respect of the same loss.
Interestingly, and of no assistance to Mr Morrison or Auro, Lord Hoffmann considered the use of the word indemnity:[62]
[62] Caledonia [95].
But what is a liability for an indemnity? It surely includes a liability to make good a loss. The question cannot turn upon whether the contract uses the word indemnity. That would be an extraordinary technicality in a branch of commercial law based upon principles of fair dealing.
While it was a treat to be referred to this authority it was of no assistance and did not support a proposition that Mr Morrison and Auro were only responsible if Ms Drage first paid the expenses.
The term as implied by his Honour was:[63]
[63] AB pages 66, 72 - 73, Reasons for Decision [32], [73], [77], [78].
32... Auro is responsible for any expenses Mrs Drage incurred on behalf of her employer. ...
...
73The result of following that process, even if it included miscalculations and omissions in her own invoicing, was that she incurred a personal loss. Her employer is responsible to indemnify her for that loss.
...
77... whatever the strict employment relationship in the period October 2012 to June 2013 the process was still being followed based on the understanding reached whilst Mrs Drage was a full-time employee of Auro …
78I find that those obligations continued. I find that Auro is responsible to pay Ms Drage for the expenses she incurred in the intermediate period whilst following the process.
The express terms as found by his Honour were:[64]
[64] AB page 77, Reasons for Decision [94] - [95].
94Mr Morrison made representations to Mrs Drage that if she followed the process she would not be out of pocket. She was out of pocket, and he is liable to her in damages pursuant to s236 of the ACL.
95The fact that her employer Auro through Mr Morrison arranged for this process makes it incidental to her employment by the company. The representations were made to her whilst she was employed by Auro and it follows that the company is liable to indemnify her based on his express representations and also pursuant to the implied entitlement of indemnity under her employment contract.
96This liability extends for the duration of the process, irrespective of whether she was employed by Auro at the time or on a hiatus, where the process was managed by Kirby Wiksey.
97This indemnity extends to liability for the wages, superannuation, PAYG and GST.
The use of the word indemnify, or indemnity by his Honour in finding the implied and express terms of the contract did not import into the oral contract of employment an extra technicality in an agreement and relationship which was governed by law.
The use of the word indemnity or indemnify also falls to be considered against his Honour's duties in resolving the case as set out in s 13 of the MCCP Act, which obliges the court to ensure cases are dealt with efficiently economically and expeditiously.
Ms Drage referred to the decision of Paterson v Pongrass Group Operations Pty Ltd.[65]
[65] Paterson v Pongrass Group Operations Pty Ltd [2011] NSWSC 1588 (Paterson).
This case concerned a claim to enforce an indemnity given in writing by the defendant to the plaintiff against his liabilities incurred as a director. The defendant denied it was presently liable to pay the indemnity because the plaintiff had not paid any part of the penalty incurred.
The plaintiff contended the defendant was liable to pay either him or the ATO the amount of the penalties so that he was not exposed to the threat of suit.
An issue therefore was whether the indemnity required the defendant to relieve the plaintiff from having to pay the penalties for which he was liable.
The court found the indemnity required the defendant to relieve the plaintiff of the burden of his liability and not to merely compensate him for any amounts he paid toward his liability.
In Patersonthere was an unsavoury background to the indemnity being provided in that the plaintiff was appointed as a director of the defendant as a
29... straw man to provide 'asset protection' … it was never intended that [the plaintiff] should perform the functions of a director. The inference is irresistible that [the plaintiff] was appointed as director to deceive those who would be appointed as voluntary administrators of the subsidiaries that would be put into voluntary administration about who truly were the directors of the companies.
The matter before his Honour was strange and unusual, if not unsavoury given the superficial transfer to Ms Drage of the responsibility owed by Mr Morrison and Auro, the Process was structured to suit Mr Morrison and Auro. His Honour found:
•there was no documentation between them identifying the core obligation between them;[66]
[66] AB page 63, Reasons for Decision [16].
•a feeling of unease that this arrangement which seems unnecessarily convoluted and vague was to achieve a purpose other than that explained by either witness;[67] and
[67] AB page 68, Reasons for Decision [48].
•whilst the arrangement does seem strange Ms Drage was not cross-examined about her understanding of the process.[68]
[68] AB page 69, Reasons for Decision [54].
In Paterson the case turned upon the construction of a written agreement, so obviously there is an important factual distinction. However, an important point of principle, about the trigger of the indemnity by reference to the agreement found in that case applies here:[69]
[69] Paterson [54] - [57].
54An obligation to indemnify can arise in a variety of circumstances. The obligation might arise under an express contract, as in this case. It may be implied as in the case of a guarantor and principal debtor. Without any express contract, it is implied that the principal debtor will indemnify the guarantor against the guarantor's liability to the creditor. In such cases equity may grant quia timet relief requiring the principal debtor to satisfy the debt where there is an accrued and fixed liability so as to relieve the guarantor from that liability, it being unreasonable that the guarantor should always have such a cloud hanging over him (Ranelaugh v Hayes (1683) 1 Vern 189; Nisbet v Smith (1789) 2 Bro. C.C. 579; Ascherson v Tredegar Dry Dock & Wharf Co Limited [1909] 2 Ch 401; Watt v Mortlock [1964] Ch 84; Thomas v Nottingham Incorporated Football Club Limited [1972] Ch 596; Woolmington v Bronze Lamp Restaurant Pty Ltd [1984] 2 NSWLR 242; Abigroup Limited v Abignano (1992) 39 FCR 74 at 81-82).
55The present case is not one of principal debtor and surety, both liable to the creditor. Even in such a case, the obligation of the surety will depend on the terms of any express contract that there may be between the surety and principal debtor.
56In McIntosh v Dalwood (No. 4) (1930) 30 SR (NSW) 415, Street CJ (with whom Owen and Long Innes JJ agreed) said in relation to a contract for indemnity (at 418):
'The suggested distinction between contracts of simple indemnity and other classes of contract has in my opinion no basis either of authority or of principle. The test is always the same. In every case the contractual obligation must first be ascertained in order that it may be seen whether an adequate remedy exists at law in the event of a breach. If the obligation is merely an obligation to indemnify a person, in the sense of repaying to him a sum of money after he has paid it, no equitable relief is needed. Damages will provide an adequate remedy. If, however, the obligation on its true construction is an obligation to relieve a debtor by preventing him from having to pay his debt, equity will in such a case give relief in the nature of quia timet relief, and, instead of compelling the party indemnified first to pay the debt, and perhaps to ruin himself in doing so, will specifically enforce the obligation by ordering the indemnifying party to pay the debt'.
57The proper construction of any contract of indemnity must depend upon the terms of the individual contract, considered, where appropriate, in the objective matrix of facts in which the contract was entered into. There can be no rule of law that a particular form of words is necessary in order to conclude that the indemnity is to prevent the indemnified party from suffering loss rather than to compensate the indemnified party for loss he or she has suffered. In every case the proper meaning of a contract of indemnity must be taken from the words the parties have used and the context in which the agreement is made in order to ascertain objectively their intention.
White J considered[70] 'The ordinary meaning of compensate is to "make up for", and this, it was submitted, required that the loss first be paid out'.
[70] Paterson [61].
His Honour found:[71]
[71] Paterson [65], [66].
65... the draftsman of the indemnity took a belts and braces approach by providing both a promise to prevent Mr Paterson from suffering loss arising out of a described claim and a promise to compensate him in respect of any such loss. ...
and
66... in this case, the indemnity covers both a promise to compensate for loss actually suffered, and a promise to indemnify in the sense of preventing a loss from being suffered.
His Honour considered and applied the reasoning in Abigroup Limited v Abignano in which the Full Court of the Federal Court observed that:[72]
[72] Abigroup Limited v Abignano (1992) 39 FCR 74, 83.
It is well and long established in equity that a person entitled to an indemnity may obtain relief from the indemnifying party as soon as the person's liability to the third person arises and before he has made payment himself, except where the contract otherwise provides or certain exceptional circumstances exist ...
Paterson was recently considered in the New South Wales Court of Appeal in Ali v Insurance Australia Ltd,[73] where Mitchelmore JA giving judgment of the court referred to the decision and distinction:
[73] Ali v Insurance Australia Ltd [2022] NSWCA 174 [36].
It is worth noting in this context that there is a distinction between a promise to indemnify and a promise to make a payment to compensate in respect of a loss. In Paterson v Pongrass Group Operations Pty Ltd [2011] NSWSC 1588, White J was considering a claim to enforce an indemnity given by the defendant ('PGO') to the plaintiff against his liability to penalties (levied by the Commissioner of Taxation) that he incurred as a director of four subsidiaries of PGO. In denying the claim, PGO contended that it was not presently liable to pay any moneys under the indemnity because the plaintiff had not paid any part of the penalties. The plaintiff, on the other hand, contended that PGO was liable either to pay the Commissioner or to pay him the amount of the penalties, so that he was not exposed to the threat of a suit. ...
The distinction is uncontroversial. Whether the term is described as indemnify or compensate is immaterial. The real issue is whether his Honour made an error in deciding that Mr Morrison and Auro relieve Ms Drage of the burden of her liability not merely to compensate her for any amount spent toward the liability.
This required his Honour to consider the terms of the promise. It would have made no sense, given the finding that the acts that incurred the liability were undertaken in the course of her employment with Auro, to find that the term meant that Ms Drage would first have to pay something toward the liability, and perhaps ruin herself in doing so before she could look to either Mr Morrison or Auro to indemnify or compensate her.
Ms Drage did not have to demonstrate that the ATO had recovered its debt before claiming that Mr Morrison and Auro honour their commitment to her.
The fact that the ATO might seek payment from Ms Drage on the basis that she was acting in her capacity as a sole trader is irrelevant.
The fact that Ms Drage was not able to verify how the losses were calculated is irrelevant. These were the consequences of the unusual practice described as the Process and found by his Honour to be an arrangement that did not make commercial sense for Ms Drage.[74] The significant fact is his Honour's finding that the liabilities were incurred because of her employment with Auro, that they were in fact Auro's liability, and they were outstanding in the amount claimed by the ATO.
[74] AB page 69, Reasons for Decision [50].
The findings made by his Honour were open on the evidence.
There is no demonstration that the decision made by his Honour was the result of some legal, factual, or discretionary error.
Further the issue was not included in the material or evidence before the Magistrates Court and Mr Morrison and Auro are bound by their conduct at trial.[75]
[75] See Rankilor.
Mr Morrison and Auro also submit that Ms Drage was unable to verify the accuracy of the documents produced to support her claims. This is a complaint about the outcome of his Honour's reasoning but does not demonstrate an error in the reasoning.
His Honour considered Mr Morrison's and Auro's argument at trial that Ms Drage's accounting records were so poor as to make it impossible to determine the amount claimed.
The reasoning demonstrates that Magistrate Darge found:
•Ms Drage produced bundles of invoices as well as various schedules to evidence the loss.
•Ms Drage had explained the uncertainty.
•Nothing raised by Mr Morrison or Auro rendered Ms Drage's claim unreliable.
•The records Ms Drage presented were records presented from invoices and bank statements as allowed the best estimate of her losses.
•The ATO prepared schedules, which Ms Drage relied upon, as identifying the sums claimed from her.
•Judicial officers are often called upon to make best estimates of losses from a variety of materials.
•The loss could be quantified by reconciling a prepared spreadsheet with the bank statements and the assessment by the ATO.
Neither Mr Morrison nor Auro have demonstrated any error in this reasoning much less demonstrated that the decision made by his Honour was the result of some legal, factual, or discretionary error.
The appeal is dismissed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
JH
Associate to Judge MacLean
29 MARCH 2023