Olympic Batteries Pty Ltd v O'Leary & Polymeneas - [2020] SASC 229

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
OLYMPIC BATTERIES PTY LTD v O’LEARY & POLYMENEAS
[2020] SASC 229
Judgment of The Honourable Justice Parker
2 December 2020
MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT
PROFESSIONS AND TRADES - ACCOUNTANTS AND AUDITORS - ACCOUNTANTS - REMUNERATION
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - IMPLIED TERMS
This is an appeal against the decision of a Magistrate to award judgment in favour of the respondents in the amount of $42,432, inclusive of GST and a payment in lieu of interest.
The respondents had provided accounting services to the appellant from about 1 June 2001 until about May 2012 when the appellant terminated the respondents’ retainer. On 9 October 2014, the respondents commenced an action in the Adelaide Magistrates Court for payment of two invoices dated 5 July 2011 and 21 May 2012 for a total amount of $78,452 on the basis that the appellant was in breach of contract by failing to pay the invoices. Ultimately, the Magistrate held that:
1.      the appellant was liable to pay the respondents’ invoice dated 5 July 2011 in the amount of $132 including GST;
2.      in respect of the invoice dated 21 May 2012, the respondents’ entitlement to damages for accounting services provided during the financial years ended 30 June 2007 to 30 June 2011 and for other attendances to provide accounting services during the financial years ended 30 June 2005 and 30 June 2006 was $36,300 including GST; and
3.      the respondents be awarded a lump sum of $6,000 in lieu of interest.
The appellant appeals on 4 different grounds of appeal.
Held, per Parker J, dismissing the appeal:
1.      The extension of time for lodgement of the appeal until 19 February 2020 is granted.
2.      The Magistrate did not err in finding that in the period from 1 June 2005 to 30 April 2012 the respondents had provided professional services to the appellant in accordance with their retainer.
3.      The Magistrate did not err in failing to find that the accounting services provided by the respondents were performed negligently.
4.      The Magistrate did not err by adopting a “broad axe” approach to determine the quantum of fees payable by the appellant to the respondents for the accounting services.
5.      The Magistrate did not err in finding that the appellant was not entitled to a set off.
Evidence Act 1929 (SA) s 53; Limitation of Actions Act 1936 (SA) s 35; Magistrates Court Act 1991 (SA) s 34(3), referred to.
BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266; Whisprun Pty Ltd v Dixon (2003) 200 ALR 447, applied.
Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221; Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; Kidd v Regional Skills Training Pty Ltd [2019] SASC 144, discussed.
Cachia v Isaacs (1985) 3 NSWLR 366; Forman & Co Pty Ltd v The Ship Liddesdale [1900] AC 190; Hoenig v Isaacs [1952] 2 All ER 176; Nicholson v Burnett (1922) 25 WALR 101; Steele v Tardiani (1946) 72 CLR 386; Trevorrow v State of South Australia (No 5) (2007) 98 SASR 136; Ulowski v Miller [1968] SASR 277; Underwood, Son, & Piper v Lewis [1894] 2 QB 306; William Thomas & Sons v Harrowing Steam Ship Co [1915] AC 58, considered.

OLYMPIC BATTERIES PTY LTD v O’LEARY & POLYMENEAS
[2020] SASC 229
Magistrates Appeal: Civil

PARKER J: This is an appeal against the decision of a Magistrate to award judgment in favour of the respondents in the amount of $42,432.00, inclusive of GST and a payment in lieu of interest. The respondents had claimed that they were entitled to $78,452.00 plus interest of $8,845.13.
For the reasons that follow, I would dismiss the appeal.
Grounds of appeal
The appellant has advanced four grounds of appeal. However, each of those grounds is supported by detailed particulars that, in some instances, effectively amount to further subsidiary grounds of appeal. I will not reproduce the particulars and ancillary grounds due to their length. However, I have considered each of the contentions raised by the appellant.
The four grounds of appeal are as follows:
1.The learned Magistrate erred in finding at [74] that “on balance that during the period 1 June 2005 to 30 April 2012 the plaintiff provided professional services to the defendant in accordance with the retainer” and should have found that the plaintiff failed to provide professional services to the defendant in accordance with the retainer between the plaintiff and the defendant given that …
(Emphasis in original)
This ground is followed by a further seven paragraphs referring to particular findings made by the Magistrate. The key point identified was that the respondents had failed to prepare the tax returns required under the contract and had not provided a satisfactory explanation for failing to do so.
2.The Learned Magistrate erred in failing to find that the plaintiff’s accounting services were performed negligently and should have found that the plaintiff’s accounting services were performed negligently given …
This ground is followed by a sub-paragraph that adopts all the matters referred to in support of Ground 1 and six additional sub-paragraphs that refer to the findings of the Magistrate. The main point raised in the additional sub-paragraphs is that the Magistrate had found that the respondents’ record keeping appeared to fall below the relevant professional standards. The appellant also contended that there was a paucity of information to substantiate the fees charged by the respondents. A further four of the additional sub-paragraphs refer to findings made by the Magistrate that the respondents had charged for certain work when they had no proper basis to do so. In fact, those findings actually favour the appellant.
3.The Learned Magistrate erred in adopting a “broad axe” approach to determine the quantum of fees owed by the defendant to the plaintiff for accounting services said to have been provided under the retainer and should have found that the plaintiff had not adduced sufficient evidence to substantiate its claim and/or the reasonableness of any fees said to be owing under the retainer having regard to [the matter set out in a further six paragraphs].
4.The Learned Magistrate erred in finding at [81] that the defendant was not entitled to a set off and should have found that the defendant was entitled to a set off because [of errors said to have been made by the Magistrate].
The particulars for Ground 4 indicate that the alleged error was the failure by the Magistrate to have regard to the invoices from other accounting firms and the evidence of Mr George Bouras and Mr Robert Creasy.
Extension of time
Judgment was delivered in the Magistrates Court on 13 December 2019. The notice of appeal was not filed until 19 February 2020. The appellant’s solicitor has sworn an affidavit in which he sets out a number of matters that are said to be relevant to the application for an extension of time. Those are as follows.
The managing director of the appellant company, Mr Peter Bouras, is aged 80 years. He was born in Greece and English is his second language. Mr Peter Bouras requires that persons providing advice and obtaining instructions meet with him in person at his Wingfield office. Mr Peter Bouras travelled to Greece in December 2019 and January 2020. The trial counsel was also overseas during February 2020 but he settled the notice of appeal while abroad.
The solicitor also stated that in December 2019 and January 2020 he was heavily engaged with a complex commercial trial in this Court and also appeared as counsel on three occasions in Perth. His home and neighbourhood were adversely affected by the Cudlee Creek bushfire in December 2019. While his own home was saved, he spent the latter part of December 2019 and part of January 2020 assisting his neighbours in dealing with the fire damage.
The solicitor acknowledged that it would have been technically possible to have commenced the appeal within time, but that was very difficult due to the matters referred to above. The delay was not caused by the appellant.
While the application for an extension of time is opposed by the respondents, I extend time for the lodgement of the appeal until 19 February 2020. I do so for the following reasons.[1] First, the appeal is plainly arguable. Secondly, the length of the delay was only a few weeks. Thirdly, as the solicitor concedes, the cause of the delay is largely attributable to him rather than his client. Fourthly, the extension of time would not cause any prejudice to the respondents.
[1] Ulowski v Miller [1968] SASR 277 at 282–283 (Bray CJ); Trevorrow v State of South Australia(No 5) (2007) 98 SASR 136 at 328–329 (Gray J).
Background
The respondents, Mr Angelo Polymeneas and Mr Daniel O’Leary, were formerly in partnership as accountants. The partnership was dissolved in March 2018. Mr O’Leary has given full authority for Mr Polymeneas to pursue the proceedings on behalf of the partnership.
Mr Peter Bouras is the Managing Director of the appellant company and clearly its controlling mind. The appellant is the trustee of the Bouras Family Trust. Mr Peter Bouras has also been involved in property development for many years and is the Managing Director of Olympic Developments Pty Ltd. The profits received by the Bouras Family Trust would be distributed to Olympic Developments, which would then pay income tax.
From 2005, Mr Polymeneas and Mr Peter Bouras were involved in a property development at Christies Beach conducted through a company described as Decabon. Mr Polymeneas, and for some time also Mr O’Leary, were the directors of Decabon and acted as its accountant. Mr Polymeneas’ family trust had a small interest in the development project. The other investors were all clients of the respondents, including Mr Peter Bouras who held a 50 percent interest. Eventually, this development failed. Mr Peter Bouras stated that he terminated the respondents’ retainer as the failure of the Christies Beach project led him to lose confidence in the competence Mr Polymeneas to provide accounting services. That occurred in about May 2012 by way of an “ethical letter” sent to the respondents by the appellant’s new accounting firm, Hungerfords.
The respondents ultimately handed over records relating to the appellant to Hungerfords. The Magistrate rejected the evidence of Mr Polymeneas that he had done so after his staff had been subjected to duress by large heavily tattooed men acting for the appellant. Several different accounting firms then acted successively for the appellant to prepare its annual accounts and income tax returns and negotiate with the Australian Taxation Office (ATO) on its behalf.
The pleadings
The respondents sued the appellant for payment of two invoices dated 5 July 2011 for $132 and 21 May 2012 for $78,320, i.e. a total of $78,452. The invoices were rendered for accounting services said to have been provided by the respondents to the appellant between 1 June 2005 and 30 April 2012. The respondents alleged that the appellant was in breach of contract by failing to pay the invoices.
The appellant denied that it was liable to pay for reasons that the Magistrate summarised as follows:[2]
1.the invoices did not relate to accounting services performed for or for the benefit of the defendant but instead related to accounting services performed for other entities not party to the proceedings;
2.any invoices relating to work performed prior to 8 October 2008 are statute barred;
3.the fees claimed in the invoices are not reasonable;
4.the fees claimed in the invoices relate to matters beyond the scope of the retainer; and
5.the plaintiff performed the work negligently, including failing to lodge any income tax returns on time or at all, and incorrectly assessing the taxation liability of the defendant and related entities as approximately $1.3 million when it should not have been greater than approximately $43,000. Consequently, the defendant received no benefit or value for the work performed. As a further consequence, the defendant is entitled to set off any amount owing against further accounting fees it incurred as a result of the plaintiff’s negligence.
[2] O’Leary & Polymeneas v Olympic Batteries P/L [2019] SAMC 15 at [10].
While the appellant had originally alleged that it was entitled to set off the amount payable as penalties for failure to lodge its income tax returns on time, this claim was abandoned at trial. Although the Magistrate was critical of the late abandonment of this element of the claim for set off, the claim was not pursued as the ATO had waived the penalties. However, the appellant persisted with its claim to set off the fees payable to other accounting firms to undertake the work that had not been finalised by the respondents.
The appellant contended that the respondents were estopped from asserting that the services they had provided were not performed for the appellant or for its benefit. The basis for the alleged estoppel was the manner in which the appellant had conducted the proceedings prior to the amendment of their defence and also the practice of the respondents to bill the appellant for services provided to several entitles connected with the appellant.
Issues identified by the Magistrate
The Magistrate noted that the parties did not dispute that there had never been a written retainer agreement, nor had there been any agreement as to the rates at which the respondents would charge the appellant for their services. Her Honour identified the issues between the parties to be as follows:[3]
1.What were the terms of the retainer agreement?
2.What work was performed by the plaintiff for the defendant, and did this fall within the scope of the retainer agreement?
3.If all or some of the work performed by the plaintiff was within the scope of the agreement, were the plaintiff’s charges for this work reasonable having regard to the plaintiff’s rates and the way the work was performed?
4.If so, is the plaintiff precluded from recovering any amount from the defendant in respect of services provided prior to 8 October 2008 by operation of s 35 of the Limitation of Actions Act, 1936 (SA)?
5.If some or all the work performed by the plaintiff falls outside the scope of the retainer agreement, is the plaintiff entitled to be paid for this work on a quantum meruit basis and if so, what is the fair and reasonable value of that work?
6.If the defendant is liable to pay all or some of the plaintiff’s invoices, is it entitled to set off against this liability its costs incurred in engaging new accountants?
[3] Ibid at [15].
Witnesses
The only witness called by the respondents was Mr Polymeneas. The appellant called Mr Peter Bouras, his son Mr George Bouras and Mr Robert Creasey. The latter was an accountant who had been retained by the appellant a year or more after it had dispensed with the services of the respondents.
The Magistrate observed that most of the evidence was given by Mr Polymeneas and Mr Peter Bouras. In her Honour’s view, neither was a particularly impressive witness. Amongst other observations, her Honour noted that she had formed the impression that Mr Polymeneas tailored his evidence to suit his case and was evasive and uncooperative on several occasions during cross‑examination. Her Honour set out in some detail the matters where she held concerns about the evidence of Mr Polymeneas.
The Magistrate also observed that much of the evidence given by Mr Peter Bouras was in general terms and he often responded to a question by asking a question. The result was that his recollections were not particularly detailed and the Magistrate found that his approach did not assist in the assessment of his credibility.
Mr George Bouras had only commenced working in the family business in January 2015. Apparently for that reason, the Magistrate considered that much of his evidence was of limited relevance, although he did give evidence in an honest and straightforward manner. Her Honour also noted that she was satisfied that the evidence given by Mr Creasey was truthful and reliable.
Earlier invoices
The appellant had paid earlier invoices rendered by the respondents dated 22 January 2002, 13 March 2002, 11 December 2002 and 17 June 2005. The amount paid in response to these invoices ranged from $2,200 to $16,500. The Magistrate accepted the evidence of Mr Peter Bouras that he had not seen most of these invoices because they would have been dealt with by an employee and only brought to his notice if there was a query.
Mr Polymeneas stated that these earlier invoices related to work performed for entities in addition to the appellant. Some of the work was on behalf of the Bouras Family Trust and Olympic Developments. However, the Magistrate rejected the evidence of Mr Polymeneas that particular financial statements had been prepared so as to assist the appellant obtain refinancing.
The Magistrate apparently accepted the evidence of Mr Polymeneas that the invoice dated 11 December 2002 in the sum of $9,900 was for the completed 2002 financial statements. The invoice also referred to work done for entities other than the appellant because it was the practice of the respondents to bill the main trading entity for all work done for the group where there was multiple companies and trusts. Mr Peter Bouras did not suggest in his evidence that this practice was not agreed or acceptable.
The unpaid invoice for $132 dated 5 July 2011 was directed to Auscell Pty Ltd. That invoice would have represented a fixed fee for the company’s secretarial requirements and preparation of the annual tax return for that company.
More significantly, the unpaid invoice in the sum of $78,320 dated 21 May 2012 was said by Mr Polymeneas to relate to accounting services provided in the period from 30 June 2005 to 30 April 2012. Mr Polymeneas stated in cross‑examination that, consistently with his usual practice, he had not sent invoices for this work at an earlier time because the work had not been finalised.
The Magistrate stated that she was sceptical about Mr Polymeneas’ explanation for the failure to render an invoice for seven years. Her Honour noted that this was a considerable period for a business to carry work in progress. Furthermore, Mr Polymeneas had also stated in evidence that he provided accounting services in relation to discrete matters. Given his statement that he billed when work was finalised, her Honour indicated that he could have rendered an invoice for these services at an earlier time.
The Magistrate’s findings as to the terms of the retainer
Mr Polymeneas admitted that the respondents had not provided a letter of engagement or otherwise recorded the terms of the arrangement. He accepted that this failure was in breach of his professional obligations as a certified practising accountant.
Mr Polymeneas also agreed in cross-examination that he had not informed Mr Peter Bouras or the appellant company in advance of the services that he would be providing and charging for. He stated that the work he was doing each year was “trying to prepare and get Peter with his statutory requirements” and that he provided services “as we went along as he required them”. He claimed that the appellant was aware that he would be charging for meetings, as such attendances had been itemised in his first invoice. Mr Polymeneas also acknowledged that the failure to issue invoices in the period from 2005 to 2012 prevented Mr Peter Bouras from considering the invoices and objecting to charges that he did not consider fell within the scope of the retainer.

Mr Peter Bouras stated that the scope of the retainer was limited to the completion of tax returns on an annual basis and the fulfilment of all obligations to the ATO. He was adamant that he did not seek or require advice from the respondents in relation to his business. However, Mr Peter Bouras did acknowledge that he would require advice on tax minimisation and he would receive advice from Mr Polymeneas on taxation issues from time to time.
In light of the preceding evidence, the Magistrate found that it was an express term of the retainer that the respondents would provide accounting services to the appellant in the nature of:[4]
·    the preparation of accounting records, financial statements and taxation returns;
·    the lodging of taxation returns; and
·    advice on related taxation issues.
[4] Ibid at [32].
Because the parties had not agreed the fees payable for services, it was an implied term that the appellant would pay a fair and reasonable sum for the services identified by her Honour.
The Magistrate also found that, due to the absence of any evidence of an agreement as to when the respondents would invoice the appellant, and the irregular intervals at which that occurred, the respondents had not established on the balance of probabilities that it was an express or implied term that they would only invoice the appellant when work was completed.
The work practices of Mr Polymeneas
Mr Polymeneas stated that it was his practice to make a handwritten note of the work that he had undertaken each day. He would transfer this information to his timesheets in his MYOB Accountant’s Office software package each day and then discard his handwritten notes.
The Magistrate noted that the timesheets contained little information. Most entries consisted of two or three words which purported to identify the work undertaken.
Mr Polymeneas stated that the MYOB package contains codes for work types. He had also created some additional codes for other types of work. The codes appeared on his timesheets. He also stated that the value of the work recorded in timesheets that provided the basis for his final invoice was about $79,000. However, consistently with his ordinary practice, he had discounted the final invoice to $71,200 plus GST. Thus, the invoice dated 21 May 2012 was for $78,320 inclusive of GST.
The Magistrate found that the entries under the code for “journals and annual accounts analysis” referred to work at a cost of $50,380. Mr Polymeneas stated that each year he would collect bank account statements, cheque books and a “pile of documents” and use that material to prepare journals and the profit and loss balance sheets for the appellant and related entities. This evidence was not challenged.
Mr Polymeneas said the most significant and time-consuming aspect of this work was the coding of bank statements. He attributed this to the practice of the appellant of making lump sum transfers that were related to several different items of expenditure. These items would have to be broken down by Mr Polymeneas and coded to reflect the category of expenditure or income. Often this would require him to take further instructions from the appellant. After that process was completed, the material was entered into the MYOB program by his secretary and used to prepare financial statements for the appellant. The Magistrate accepted that this work was time consuming.
The Magistrate found that Mr Polymeneas had not finalised nor filed any tax returns on behalf of the appellant for the financial years ending 30 June 2005 to 30 June 2011. Her Honour rejected the assertion by Mr Polymeneas that he was prevented from preparing final tax returns due to the failure of Mr Peter Bouras to provide him with information about small technology certificates (STC’s).[5] On that basis, her Honour concluded that no satisfactory explanation had been provided by Mr Polymeneas for the failure to finalise and lodge tax returns.
[5] These certificates were also frequently referred to in evidence and submissions as “solar tax credits”. The ATO website indicates that the correct description is “small-scale technology certificates”, see <>
Mr Peter Bouras stated that he was not aware that the tax returns had not been lodged. He stated that he thought that he had signed tax returns but later acknowledged that he often signed documents without reading them and relied upon what he was told by others.
As the timesheets prepared by Mr Polymeneas did not record any time entries relating to journals and annual account analysis prior to 1 May 2007, the Magistrate found that Mr Polymeneas had not undertaken this work in the financial years ending 30 June 2005 and 30 June 2006. Her Honour accepted the evidence of Mr Polymeneas that he had prepared financial statements for the appellant and related entities for the financial years ending 30 June 2007 to 30 June 2011. However, as I have already noted, her Honour rejected Mr Polymeneas’ explanation as to why this work had not been finalised.
The Magistrate’s reasons
The Magistrate rejected a number of the claims for payment advanced by the respondents. As these decisions are not the subject of a cross-appeal, it is only necessary to note briefly these matters.
The Magistrate rejected claims for personal attendance charged by Mr Polymeneas under the “special meeting” code. Her Honour found that some of these meetings may have involved the provision of accounting and taxation advice, however, she found that many of the attendances were to consolidate the client relationship rather than to provide accounting services.
The Magistrate also found that many of the attendances coded as “general accounting services” actually related to business transactions being pursued by Mr Polymeneas for the benefit of his own clients. Her Honour also found that Mr Polymeneas had not been requested to provide accounting services or advice concerning two proposed land purchases and also the sale of businesses by Mr Peter Bouras. Her Honour preferred the evidence of Mr Peter Bouras that he had not requested any advice from the respondents that went beyond taxation matters, nor had he relied upon or gained any benefit from such advice as may have been proffered by Mr Polymeneas. For that reason, the Magistrate found that the respondents were not entitled to payment in respect of those matters on a quantum meruit basis.
Mr Polymeneas acknowledged in cross-examination that he had set the respondents’ hourly rate without ever informing Mr Peter Bouras and nor had he informed him of the increases in rates over the period from 2005 to 2012. As the final invoice covered seven years, her Honour rejected the evidence of Mr Polymeneas that the appellant would have known and accepted the respondents’ hourly rates.
Mr Polymeneas stated that in 2005 his hourly rate for accounting services was $190. He and Mr O’Leary reviewed that rate every year. The rate had increased to $200 on 30 July 2007 and to $210 in 2009. The Magistrate noted that this rate was not challenged in evidence and Mr Peter Bouras had stated that the appellant had paid between $7,000 and $9,000 to others for the cost of preparation of taxation returns. Mr Creasey stated that his firm charged a higher hourly rate. In view of this evidence, the Magistrate concluded that the hourly rate charged by the respondents was reasonable.
The Magistrate found that during the period from 1 June 2005 until 30 April 2012 the respondents had provided professional services to the appellant in accordance with the retainer. While noting that Mr Polymeneas’ contractual documentation and standard of record keeping would appear to fall below the relevant professional standards, the appellant had not led any expert or other evidence to support its pleading that the respondents were negligent in the provision of accounting services. There was also no evidence as to the reasonableness of the time taken by Mr Polymeneas to complete the work for which he had charged. For that reason, the Magistrate concluded she could only determine what was a fair and reasonable sum as a quantum meruit by adopting a “broad axe” approach. Her Honour stated that this was consistent with the approach adopted by the High Court in Commonwealth v Amann Aviation Pty Ltd.[6]
[6] (1991) 174 CLR 64 at 83.
The Magistrate noted that in an invoice dated 17 June 2005 the respondents had billed the appellant for the sum of $15,000 plus GST for the preparation of financial statements and tax returns for two financial years. That amount also included charges for the filing of tax returns, which had not been undertaken after 30 June 2004. The invoice also incorporated charges for attendances on other matters that the Magistrate had found were not covered by the retainer. After adjusting to exclude work outside the retainer, the Magistrate allowed $6,000 plus GST for accounting services provided during each of the financial years ended 30 June 2007 to 30 June 2011. Her Honour also allowed a nominal amount of $1,500 plus GST for other attendances to provide accounting services during the years ending 30 June 2005 and 30 June 2006. On that basis, her Honour assessed the respondents’ entitlement to damages at $36,300 including GST.
The Magistrate also found that although the explanation given by Mr Polymeneas for the failure to render invoices was unsatisfactory, she accepted the submission that the respondents’ cause of action had not accrued until final invoices were issued and a formal demand was made for payment. For that reason, her Honour concluded that s 35 of the Limitations of Actions Act 1936 (SA) did not preclude the recovery of any portion of the damages as assessed.
The Magistrate also found that the appellant was liable to pay the respondents’ invoice dated 5 July 2011 addressed to Auscell Pty Ltd in the amount of $132 including GST. There was no dispute on the evidence that the appellant would pay the respondents’ invoices for accounting services provided for related entities. The appellant was estopped from resiling from that position due to its previous conduct and the conduct of its defence up until the filing of the amended defence.
The Magistrate awarded the respondents a lump sum of $6,000 under s 34(3) of the Magistrates Court Act 1991 (SA) in lieu of interest. The Magistrate rejected the appellant’s claim that it was entitled to set off the cost of remedial work undertaken by new accountants to fix problems in the tax returns prepared by the plaintiff and to lodge those returns. The appellant tendered invoices rendered by accounting firms covering the period from 25 September 2012 to 14 December 2015 in the sum of $174,090.04.
The Magistrate observed that the appellant had not led any expert or other evidence as to the extent to which it was necessary for the other accounting firms to replicate work performed by the respondents. There was also no evidence as to the reasonableness of the rates charged by the other firms and the manner in which that work had been undertaken. Her Honour also observed that there was a real risk that there had been repetition in the work performed by the other firms. Due to the lack of evidence, the Magistrate concluded that the appellant had not established on the balance of probabilities that it was entitled to a set off.
For these reasons, the Magistrate awarded judgment in favour of the respondents in the amount of $42,432 inclusive of interest and GST.
The appellant’s submissions
The appellant’s submissions focussed upon Grounds 1, 3 and 4 in the Notice of Appeal. The contention in Ground 2 that the work of the respondents had been performed negligently was not the subject of specific submissions but was referred to in support of the other grounds, particularly Ground 4.
Ground 1 - entire contract and services not provided
The fundamental point advanced by the appellant is that the respondents were engaged to prepare financial statements and to prepare and lodge income tax returns on behalf of the appellant. However, the respondents never provided financial statements to the appellant nor did they finalise or lodge income tax returns. The respondents merely prepared draft financial statements. That did not occur until after the retainer had been terminated, when draft documents were provided to a newly appointed accountant.
The appellant submits that is necessary to consider how a service provider who failed to provide the required service could be entitled to receive fees. The appellant submits that, properly understood, the obligation to deliver financial statements and to lodge tax returns was an entire contract in respect of each financial year. Because this was a series of entire contracts, the rendering of service was entire, indivisible and not severable. Complete performance of an obligation under an entire contract is a condition precedent to payment. A contract which is entire precludes recovery for anything short of full and complete performance. That is the case regardless of whether the claim for payment is premised on the contract itself or based upon a quantum meruit.
Whether or not a contract or obligation is entire or divisible is a question of construction. A contract will be entire if the parties can be taken to have intended that full and complete performance of all executory obligations is a condition precedent to enforcement of the contract. The corollary is that a right to recover or to be credited with a monetary sum for part performance of a contract is dependent upon the contract being divisible or severable and not entire.
The appellant further submits that contracts which define all executory obligation in terms of a single contractual objective are generally treated as entire. The manner in which executory obligations are expressed and the way in which the consideration referable to them is payable are particularly important, but not determinative, of the intention of the parties as to whether the contract is entire.
In this case the contract was for the lodgement of an annual income tax return and the necessary anterior step of preparing financial statements. When viewed objectively, it is apparent that the appellant would only obtain any benefit from the performance of the retainer upon the income tax returns being lodged. Alternatively, and at the very least, the financial statements would need to be finalised and provided to the appellant before it derived any benefit. Accordingly, until such time as the financial statements were finalised and the income tax returns were lodged, the respondents had no entitlement to remuneration.
The appellant further submits that it is both uncommercial and contrary to common sense to conclude that the parties mutually intended that the respondents were entitled to recover remuneration to whatever arbitrary stage they had reached while leaving the appellant to commence the process afresh with another accountant.
To the contrary, the appellant submits that a businesslike interpretation of a contract of retainer such as this is that each annual engagement to prepare income tax returns is itself an entire contract, or alternatively a single divisible part of the contract, so that performance of the obligation as contracted is a precondition to the right to be paid. The appellant submits that the situation is analogous to that which exists between solicitors and their clients, where the solicitor has accepted a retainer. In the absence of evidence indicating a contrary intention, such an arrangement is presumed to be an entire contract by way of custom or historical usage.[7]
[7] Cachia v Isaacs (1985) 3 NSWLR 366 at 377 (Hope JA).
The position would have been different if complete performance of the entire contract had been prevented by the appellant. In those circumstances, the respondents would be entitled to recover a reasonable sum as compensation for their part performance if they had fully performed all obligations that were not affected by the interference of the appellant. The appellant also notes that a contracting party can recover a reasonable sum for part performance of the entire contract when the other party has repudiated the contract before performance is complete. However, the Magistrate rejected the respondents’ submissions to that effect.
The appellant contends that where a breach or repudiation by the plaintiff has led to the discharge of a contract, a claim for a quantum meruit payment for the incomplete performance of an entire obligation is generally rejected.[8] Thus, the appellant submits that the failure by the respondents to perform their side of the bargain by delivering completed financial statements and lodgement of the tax returns for the period from 2005 to 2012 should have led to the dismissal of the respondents’ claim. Thus, the appellant submits that the Magistrate erred by permitting recovery notwithstanding the failure of the respondents to perform their obligations.
[8] Steele v Tardiani (1946) 72 CLR 386 at 402–403 (Dixon J, with McTiernan J agreeing); Nicholson v Burnett (1922) 25 WALR 101.
Alternatively, the appellant submits that the respondents were only entitled to payment of a reasonable sum for the benefit provided to the appellant. The respondents are not entitled to payment for, as senior counsel put it, “spinning your wheels” without handing over any work. At best, the appellant received a negligible benefit.
Ground 3 – insufficient evidence to substantiate claim for fees
The appellant submits that the Magistrate also erred in calculating what was a supposedly a fair and reasonable sum in respect of services performed. More particularly, the appellant submits that if the respondents were in fact entitled to charge a fair and reasonable sum for accounting services provided under the retainer, that did not extend to an entitlement to payment for services that did not enure for the benefit of the appellant.
The appellant points to the fact that the engagement was not based on time costing and thus any fee could only have been a reasonable charge for the services actually provided. Such a payment had to be based upon the benefits actually obtained by the appellant, rather than time spent by the respondents that was ultimately of no benefit to the appellant.
The appellant also submits that the Magistrate erred in the approach adopted to determining what was a fair and reasonable fee. Her Honour extrapolated from an invoice dated 17 June 2005 which related to the provision of completed financial statements and the lodgement of tax returns and, after excluding fees charged for attendances on other matters, found that the appropriate annual fee was $6,000 plus GST. However, the appellant submits that a charge based upon a year where the work was actually performed bears no foundation to a charge in years where the work was not performed. In addition to that alleged error, the appellant also contends that a reasonable charge should not have been fixed by reference to the costs incurred by the respondents but rather the benefits provided under the contract, of which there are none. Furthermore, and alternatively, the Magistrate did not undertake any assessment of the work actually undertaken pursuant to the retainer, but rather adopted a hypothesis as to what a reasonable charge might have been had the retainer been performed. Furthermore, and also alternatively, the appellant submits that it is illogical and unsound to assess reasonable remuneration charges by reference to a different period where the services were actually provided as required by the contract.
The appellant submits that contrary to the observations made by the Magistrate, the decision of the High Court in Commonwealth v Amann Aviation Pty Ltd does not support the approach adopted by her Honour.[9] The issue considered by the High Court was the difficulty in estimating future profits that had been lost due to a breach of contract. In the present case, the respondents needed to prove the value of the services that they had provided under the retainer. The Magistrate should have dismissed the claim by the respondents on the basis that they had failed to prove that they had supplied any relevant services for which they are entitled to remuneration.
[9] (1991) 174 CLR 64 at 83 (Mason CJ and Dawson J).
Ground 4 –entitlement to set off

The appellant submits that a further and alternative basis upon which the Magistrate should have refused the claim by the respondents is that due to their failure to provide completed financial statements and to lodge tax returns it was necessary for the appellant to retain an alternative accountant to undertake the same work.
On that basis, the appellant submits that if the respondents were entitled to charge for work that had not been properly completed, it was entitled to set off the cost that it incurred in having the work performed properly. That is because the effect of the Magistrate’s findings is that the respondents breached their contract of retainer.
The Magistrate had rejected the claim for set off on the basis that it was not supported by any expert or other evidence. It was not appropriate for the Court to undertake the assessment. The Magistrate purported to justify that conclusion by reference to the decision of Hinton J in Kidd v Regional Skills Training Pty Ltd.[10]The appellant submits that Kidd provides no support for the approach adopted by the Magistrate. The issue in that case did not concern the adequacy of the evidence but rather a party seeking to depart, impermissibly, from its pleaded case.
[10] [2019] SASC 144.
The appellant submits that, in any event, the Magistrate erred in finding that the appellant had not adduced any expert or other evidence in support of the set off claim. The appellant had tendered invoices rendered by its subsequent accountants which demonstrate that, so as to avoid the imposition of additional penalties by the ATO due to the failure to lodge tax returns, it had been necessary to lodge returns based upon the draft financial statements prepared by the respondents and provided after the termination of their retainer. It had then been necessary for the new accounting firm, Hungerfords, to prepare draft financial statements and draft tax returns for the years from 2006 to 2012 at a cost of $20,707.50. Subsequently, McCormack Reynolds, had completed the process of finalising the financial statements and tax returns at a further total cost of $34,735.54.
Mr Creasey of Creasey Associates Pty Ltd gave evidence as to the process undertaken by his firm in relation to the lodgement of the tax returns for the years from 2006 to 2012. The Magistrate found that his evidence was truthful and reliable. Mr Creasey stated that his firm had started the process again by re‑doing the accounts using the appellant’s general ledger.
The appellant submits that the evidence of Mr Creasey shows that the financial statements prepared by the respondents in draft form were ultimately of no benefit to the appellant. That had necessitated the appellant engaging new accountants to perform the work again. The costs incurred by the appellant in having the work performed again substantially exceeded the amount that the Magistrate found was otherwise payable to the respondents. Those accounting fees should have been allowed by way of set off.
The appellant submits that the appeal should be allowed and the judgment set aside. The respondents’ claim should be dismissed
The respondents’ submissions
The respondents contend that this appeal does not satisfy the “glaringly obvious” criteria stated by the High Court in Fox v Percy[11] and restated in Robinson Helicopter Company Inc v McDermott[12] that is required to impugn the findings of fact made at first instance.
[11] (2003) 214 CLR 118 at 125–128 (Gleeson CJ, Gummow and Kirby JJ).
[12] (2016) 331 ALR 550; 90 ALJR 679.
The Magistrate found that Mr Polymeneas had provided taxation advice and business advice to Mr Peter Bouras. That finding was open to the Court and there were no incontrovertible facts or uncontested testimony to the contrary. In fact, Mr Peter Bouras acknowledged that Mr Polymeneas had given tax advice.
The respondents further submit that it was open to the Magistrate to find that the work done by the respondents had some value. The contractual relationship was terminated by the appellant without notice for reasons unrelated to the performance of the contract and prior to lodgement of the tax returns.
Mr Peter Bouras accepted that he had asked the new accountants, Hungerfords, to obtain the statutory records and draft accounts from Mr Polymeneas. Mr Peter Bouras accepted that Mr Polymeneas had cooperated and handed over the work that he had performed to the new accountant, even though he had not been paid for this work. Mr Nicholas Akakios of Hungerfords then recommended that the financial statements prepared by Mr Polymeneas be used to prepare tax returns on behalf of the appellant. I note that Mr Peter Bouras stated in cross-examination that he instructed Mr Akakios to use the statements prepared by Mr Polymeneas. However, for reasons that have not been established, Mr Akakios did not lodge the overdue tax returns during the period of over 12 months that he was retained by the appellant.
The respondents submit that the preparation of financial statements is the overwhelming majority of the work performed by an accountant for a corporate group. The preparation and lodgement of tax returns is a minor by‑product of the creation of the financial statement in the sense that the tax returns are, in effect, a report derived from the financial statements. The financial statements prepared by Mr Polymeneas were used by Mr Creasey to produce tax returns for the appellant.
The respondents submit that the following findings of fact made by the Magistrate are not reasonably capable of challenge:
·The retainer related to the preparation of accounting records, the preparation of lodgement of tax returns and the provision of advice on taxation issues.
·The plaintiff provided tax advice from time to time.
·It was an implied term of the retainer that the appellant would pay a reasonable fee for services.
·The plaintiff provided the financial documents that he had prepared to Hungerfords.
·Some meetings involved the giving of tax advice but many were not chargeable.
·The hourly rate sought by the respondents was reasonable.
The respondents submit that the appellant conducted its case at trial on the basis of an unpleaded allegation of fraud. The suggested fraud was that Mr Polymeneas had concealed the fact that tax returns had not been prepared by pretending to Mr Peter Bouras that documents he was asking him to sign were tax returns. The evidence given by Mr Peter Bouras did not support this allegation. While his evidence was vague and argumentative, Mr Peter Bouras said that he did not read what he was signing and could not remember whether his secretary or the accountants had told him that he was signing tax returns. He resisted the suggestion that as a substantial businessman he would be aware of whether or not he had received an annual tax assessment.
Notwithstanding that the Magistrate did not make any finding that Mr Polymeneas had concealed the failure to lodge tax returns from Mr Peter Bouras, the respondents have persisted with that allegation in its written outline of argument. They contend that the appellant did not plead that there was an entire contract with the complete performance of the contract being a condition precedent to enforcement. Consistently with the pleaded case, the suggestion that there was an entire contract was never put to Mr Polymeneas. Written closing submissions filed in the Magistrates Court by the appellant also made no mention of there being an entire contract.
Different case on appeal
For these reasons, the respondents submit that the appellant cannot present a different case on appeal, asserting that there was an entire contract. This is not merely a question of law but also a question of fact. If the appellant had contended that there was an entire contract the respondents would have dealt with that question in evidence, in particular they would have questioned Mr Peter Bouras about the arrangement.
The respondents submit that the alleged existence of an entire contract had not been pleaded by the appellant. If the appellant was asserting that there was an entire contract, that contention should have been pleaded at paragraph 3.2 of the defence, where the appellant said, “[t]he Accounting Services included the preparation and lodgement of income tax returns”. There was also no reference whatsoever to an entire contract in the written submissions filed on behalf of the appellant in the Magistrates Court.
The respondents complain that the contentions advanced on appeal by senior counsel for the appellant that there was an entire contract, were not advanced at trial by the counsel then representing the appellant. The respondents contend that if this issue had been raised in the pleadings it would have known the basis for the contention. At trial, the matter could have been dealt with by cross-examining Mr Peter Bouras and calling additional evidence. Mr Peter Bouras could have been asked whether he paid his subsequent accountants for the work performed even though, in several instances, they had not lodged tax returns.
There was not an entire contract
The respondents submit that quite apart from the failure of the appellant to conduct the trial on the basis that there was an entire contract, the unchallenged findings of the Magistrate established that there was not an entire contract. Her Honour found that there was a general retainer whereby the respondents would provide a range of accountancy services. Her Honour further found that the appellant had not established on the balance of probabilities that it was an express or implied term of the retainer agreement that the respondents would only render invoices when the work was completed. There was also a finding that the hourly rate charged by the respondents was reasonable.
Whether or not a contract is an entire contract is a matter of construction. A contract will be entire if the parties have expressly or impliedly agreed that complete performance by the promisor is a condition precedent to enforcement of the contract. Such contracts are most commonly found in cases where payment is dependent upon success, e.g. real estate sales contracts. However, it has also been held that payment of a lump sum upon completion of the contract is not, of itself, conclusive proof that there is an entire contract.[13]
[13] William Thomas & Sons v Harrowing Steam Ship Co [1915] AC 58 at 64 (Viscount Haldane LC with Lord Shaw of Dunfermline, Lord Moulton and Lord Parmoor agreeing).
The respondents also submit that the example of a solicitor’s retainer in common law proceedings referred to by the English Court of Appeal in Underwood, Son, & Piper v Lewis is not apposite to the type of ongoing general retainer found by the Magistrate.[14] Even where there is an entire contract, the service provider is entitled to payment without having completed the agreed task if their client has terminated the retainer.[15] The service provider will also be entitled to payment where their client has requested, received and used the product created by the part performance.
[14] [1894] 2 QB 306.
[15] Forman & Co Pty Ltd v The Ship Liddesdale [1900] AC 190 at 202.
Mr Peter Bouras acknowledged in cross-examination that he understood that accountants charged for their time on an hourly basis, although soon thereafter he sought to resile from that position.
The respondents also point to the fact that there was no prior notice given by the appellant of the termination of the contract nor was there any evidence of an instruction making time of the essence. The appellant contends that these factors are important because, even if there was an entire contract, it was not terminated by the respondents.
The appellant also submits that it is of equal importance that, after having terminated the contract, the appellant requested that the draft financial reports be provided to its new accountants, Hungerfords. That firm then provided written advice that the accounts prepared by Mr Polymeneas should be used for the preparation of tax returns. Thus, the appellant received the benefit of the work done by the respondents. No explanation was given by Mr Peter Bouras as to why this advice was not acted upon.
The appellant submits that it was a natural consequence of the forensic decision made by the respondents not to produce an expert report, despite earlier indications that it would do so, that the Magistrate was unable to find that Mr Polymeneas was negligent. In the circumstances, it would have been unreasonable for the appellant to have examined Mr Creasey on the topic of the suitability of the financial statements prepared by Mr Polymeneas when there had been an election not to obtain or provide an expert’s report.
Assessment of the quantum
The appellant submits that the fact that it may have been difficult to assess the sum due is not a bar to recovery.[16] The Magistrate was assisted by the availability of contemporaneous business records compiled by Mr Polymeneas. For that reason, it would have been open to the Magistrate to simply accept the accuracy of the hours that he had recorded and which her Honour had already found to be reasonable. Such an approach would have been permitted by s 53 of the Evidence Act 1929 (SA) as it provides that a business record is admissible in evidence without further proof and is evidence of a fact stated in the record and of any fact that may be inferred from the record. The approach actually adopted by the Magistrate was a stringent approach that favoured the appellant. Thus, the respondents submit that, although it has not lodged a cross-appeal, the award in its favour was parsimonious.
[16] Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 102.
The respondents submit that it would not be appropriate for this Court to make calculations based on the business records when that process has already been undertaken in the Magistrates Court.
The respondents have also suggested that the amount awarded by the Magistrate was parsimonious, as it excluded a substantial amount of the work done by Mr Polymeneas. However, the respondents have elected not to pursue that contention by way of a cross‑appeal.
The negligence claim and set off
The respondents point out that the appellant elected not to call expert evidence to review the preparation of the draft financial statements and the reconciliation of accounts performed by Mr Polymeneas. That leads to an inference that the appellant accepted that any attempt to find errors in the work done by Mr Polymeneas would be futile. Moreover, the Magistrate expressly noted the difficult and time-consuming nature of the work involved in reconciliation of accounts. The replacement accountants, Hungerfords, recommended in 2012 that the financial statements complied by Mr Polymeneas be used to generate the required tax returns.
The respondents further observe that, not only did the appellant elect not to call expert evidence that criticised the work of Mr Polymeneas, it also chose not to call the subsequent accountants, Hungerfords (retained by the appellant from February 2012 to November 2012), McCormack Reynolds (December 2012 to August 2013) nor the accountants engaged subsequent to Mr Creasey. This decision was made despite a claim being made in respect of their charges prior to the abandonment of the set off claim during the trial.
The respondents submit that the failure by the appellant to call subsequent accountants was of critical importance. The interactions between Mr Peter Bouras and his accountants between February 2012 and August 2013 occurred at the time when the work done by Mr Polymeneas might properly have been reviewed. There was no satisfactory evidence from the appellant covering this 18-month period.
The appellant points out that accountancy work to the value of $31,000 was done during the period from February 2012 to August 2013. However, on 18 October 2012 Hungerfords had expressly recommended in writing that the financial statements prepared by Mr Polymeneas be used to prepare the outstanding tax returns.
The appellant warns against the danger of adopting post hoc ergo propter hoc reasoning. In other words, the fact that Mr Creasey charged a fee for amending the tax returns that had previously been prepared in reliance upon the financial statements compiled by Mr Polymeneas was not evidence that his work was negligent or defective. Furthermore, the respondents notes that the appellant had the opportunity to criticise the quality of the work done by Mr Polymeneas but chose not to do so.
Summary
The respondents contend that the findings made by the Magistrate were open to her Honour. The award made by her Honour was, on one view, parsimonious because it had excluded a significant amount of work done by Mr Polymeneas due to the uncertainty arising from the lack of a written retainer. Thus, the absence of a written retainer did not cause any injustice to the appellant.
It is not possible to simply assert that the claim by the respondents should be dismissed in circumstances where there were unchallenged findings concerning the provision of taxation advice under the retainer at a reasonable hourly rate, and also the provision of financial statements at the express request of the appellant after it had unilaterally terminated the retainer. Furthermore, in the absence of compelling evidence, this Court should not recalculate the sum due.
Consideration
Several issues arise that must be considered. First, did the appellant contend at trial that there was an entire contract and thus the respondents were only entitled to payment for work that had been completed. Secondly, if not, should the appellant be permitted to advance that contention for the first time on appeal. Thirdly, if that is to be permitted, was there an entire contract.
Did the appellant contend at trial that there was an entire contract?
I have considered the pleadings, the evidence given at trial, the parties written submissions made at the conclusion of the trial and the submissions on appeal. The respondents have correctly submitted that the contention that the contract was an entire contract was not mentioned prior to the appeal hearing.
Despite that omission, I will consider the effect of the plea by the respondents at paragraph [4.3] of their claim that they “would issue an invoice/s when the work was completed”. The appellant’s amended defence did not contend that there was an entire contract and nor was this suggested in the written submissions provided to the Magistrate. At paragraph 4 of the amended defence the appellant denied the matters pleaded in paragraph 4 of the claim. That necessarily includes a denial by the appellant of the assertion made by the respondents at paragraph [4.3].
The respondents’ plea that it was a contractual term that an invoice would only be issued when work was completed was apparently intended to explain its failure to issue invoices for long periods. The Magistrate rejected that explanation due to the lack of any evidence as to the terms of the agreement and the fact that the respondents had issued some invoices at irregular intervals.
In addition to its denial of the contention advanced at paragraph [4.3] of the claim, the appellant pleaded in the alternative at paragraph 4 of the amended defence that, if it was in fact a term of the retainer that an invoice would be issued when the work was completed, the respondents had not completed the accounting services which were the subject of the invoices. Therefore, it was not entitled to issue the invoices.
While the latter plea has a different basis to a contention that there was an entire contract, the practical effect is not dissimilar. Moreover, an agreement not to issue an invoice until the work is completed might potentially be regarded as evidence that there was an entire contract. However, the respondents submit that their plea that it was a term of the agreement that an invoice would be issued when the work was completed related only to the timing of invoices.

As I understand the latter contention, the respondents were suggesting that they were progressively accruing an entitlement to be paid as the work was performed but had agreed not to seek payment in respect of the accruing entitlement until the work was completed. The distinction between such an arrangement and an entire contract will only become significant when, as in the present case, the contract is terminated prior to completion of the work.
As the Magistrate rejected the claim that it was a term of the agreement that an invoice would not be issued until the work was completed, and there is no appeal against that finding, the only relevance of this matter is that paragraph [4] of the amended defence served to inform the respondents of the contention that they were not entitled to be paid until the work was completed.
The rejection by the Magistrate of the respondents’ claims that it was a term of the agreement that an invoice would not be issued until the work was completed, combined with the absence of any suggestion in the pleadings or at trial that there was an entire contract, had the result that her Honour did not need to consider the appellant’s claim that there was no entitlement to be paid until the work was finished. The appellant seeks to avoid that result by contending in its submissions on appeal that there was an entire contract even though that is not specifically contended in the notice of appeal. The question arises as to whether the appellant is entitled to pursue this contention on appeal, after having not raised the point at first instance.
The appellant has contended at paragraph [1] of the notice of appeal that the respondents failed to provide professional services in accordance with the retainer. That contention is further particularised at [1.1] [1.2.1] and [1.2.3] where the appellant refers to the failure of the respondents to finalise financial documents and lodge tax returns for the years ending 30 June 2005 to 30 June 2011 although it was an express term of the contract that they would provide such services. While it has not been directly suggested in the notice of appeal that the Magistrate erred by failing to find that there was an entire contract, the appellant has effectively contended that the respondents were not entitled to payment as the agreed work had not been completed. The existence of an entire contract was not directly suggested until the appellant lodged its written submissions.
Whether a fresh point may be pursued on appeal
The principles to be applied where a party seeks to agitate on appeal a question that was not taken at trial, were stated by Gleeson CJ, McHugh and Gummow JJ in Whisprun Pty Ltd v Dixon as follows:[17]
It would be inimical to the due administration of justice if, on appeal, a party could raise a point that was not taken at the trial unless it could not possibly have been met by further evidence at the trial. Nothing is more likely to give rise to a sense of injustice in a litigant than to have a verdict taken away on a point that was not taken at the trial and could or might possibly have been met by rebutting evidence or cross-examination. Even when no question of further evidence is admissible, it may not be in the interests of justice to allow a new point to be raised on appeal, particularly if it will require a further trial of the action. Not only is the successful party put to expense that may not be recoverable on a party and party taxation but a new trial inevitably inflicts on the parties worry, inconvenience and an interference with their personal and business affairs.
(Citations omitted)
[17] (2003) 200 ALR 447 at [51].
The respondents complain that if the existence of an entire contract had been made an issue before or during the trial they would have asked questions of Mr Peter Bouras in cross-examination to confirm that he had paid his subsequent accountants, Hungerfords and McCormack Reynolds, for the work that they had done even though they had not completed his tax returns. Counsel would also have suggested to Mr Peter Bouras that he had always known that accountants charge progressively on an hourly rate.
A difficulty with this suggested approach is that is contrary to the principle that the terms of a contract must be determined on an objective basis, rather than in accordance with the subjective view of one party. Moreover, what Mr Peter Bouras may have understood about his obligations to different accounting firms several years later would have been of little assistance to the Court in determining the terms of his company’s earlier contractual arrangement with the respondents. On the other hand, if asked, Mr Peter Bouras might possibly have agreed in cross‑examination that he had understood at all relevant times that accountants were ordinarily paid on an hourly basis and, more importantly, knew that there was such an arrangement with the respondents. However, that possibility is speculative.
More significantly, the respondents also submit that they would have conducted the trial on a different basis if it had been pleaded that there was an entire contract. They would have known on what basis the existence of an entire contract was asserted and could have addressed that issue in the evidence.
For these latter two reasons, I consider that it would be contrary to the Whisprun principle to permit the appellant to contend at this late stage that there was an entire contract. In case I am wrong about that, I will consider whether the evidence was such that the Magistrate should have found that there was an entire contract even though that contention was not put to her Honour.
Was there an entire contract?
The Hon JD Heydon QC has provided the following definition of an entire contract in Heydon on Contract – The General Part at paragraph [21.460]:
In Baltic Shipping Co v Dillon (The “Mikhail Lermontov”) Mason CJ said: “An entire contract or, perhaps more accurately, an entire obligation is one in which the consideration for the payment of money or for the rendering of some other counter‑performance is entire and indivisible.” The capacity of the promisor to enforce the contract depends on complete performance by the promisor. Or, as Mason CJ went on, “[t]he concept of an entire contract is material when a court is called upon to decide whether complete performance by one party is a condition precedent to the other's liability to pay the stipulated sum or to render an agreed counter-performance”. The fact that consideration is to be paid in a lump sum is not decisive of the question – a question of construction – whether a contract is an entire contract. What is decisive is whether the sum is only to be paid when performance is complete.
(Citations omitted)
If there was an entire contract it could only have operated on an annual basis. The primary basis for that conclusion is that the principal tasks to be performed under the retainer were the preparation of annual accounts and the lodgement of annual tax returns. Those tasks are clearly divisible. Furthermore, the contract did not have a fixed term and must have operated on an ongoing basis until it was brought to an end by one or the other of the parties. It seems highly unlikely that the parties would have jointly intended that no payment was to be made until the retainer agreement was concluded, potentially after many years.
The question, therefore, is whether there was an entire contract under which the respondents were only entitled to an annual payment upon the finalisation of the financial statements and the lodgement of taxation returns for that year. A possible difficulty with reaching that conclusion is the unchallenged finding that Mr Polymeneas also provided taxation advice to Mr Peter Bouras from time-to-time. It seems that this taxation advice was of a general nature and not specifically linked to the preparation of a particular taxation return. However, I think that the Court is permitted to know that it is not uncommon for the provision of general advice by solicitors to a major client to be covered by a periodic retainer payment. I see no reason why some accountants would not adopt the same practice. Thus, the fact that general taxation advice was to be provided under the retainer in addition to the preparation of annual financial statements and tax returns is not, of itself, a barrier to a finding that there was an entire contract.
A potential difficulty in reaching a conclusion that there was an entire contract is that the parties had not agreed that an annual fee would be payable on completion of the work. However, just as the fact that consideration is to be paid in a lump sum is not decisive of the question of whether there is an entire contract,[18] the likely corollary is that the use of time based costing is also not conclusive as to the absence of an entire agreement. It is possible, but uncommon, that the sum payable might be computed on an hourly basis but with there being no right to be paid until the work has been fully completed.
[18] See the passage from Heydon on Contract cited above.
In fact, the Magistrate also found that no hourly rate was agreed and thus it was an implied term that the respondents would be paid a fair and reasonable hourly rate for the services identified by her Honour. The hourly rate arrived at by her Honour is challenged on this appeal and also, apparently, the use of time costing. More particularly, the appellant complains that a fair and reasonable sum can only be fixed on a quantum meruit basis for those services which provided it with a benefit.
As the passage quoted above from Heydon on Contract makes clear, whether or not a contract is an entire contract is a question of construction. As there was no written agreement, the question is whether it can be implied that there was an entire contract. That question must be approached in accordance with the principles stated by the Privy Council in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council.[19] For a term to implied, the following five conditions must be satisfied. The proposed term must be reasonable and equitable. Secondly, the term must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it. Thirdly, it must be so obvious that it “goes without saying”. Fourthly, the term must be capable of clear expression and, lastly, it must not contradict any express term of the contract.
[19] (1977) 180 CLR 266 at 283 (Viscount Dilhorne, Lords Simon and Keith).
I do not consider that the implication of a term that there was an entire contract under which payment would only be made upon finalisation of the annual accounts and lodgement of tax returns was so obvious that it “goes without saying”. I also doubt that the implication of such a term was necessary to give business efficacy to the contract. In considering whether a term should be implied, the issue must be approached by reference to the state of affairs when the parties entered into the agreement and not with the benefit of hindsight after difficulties arose. For these reasons, I am not persuaded that an implication should be drawn that there was an entire contract.
Whether respondents entitled to a quantum meruit payment
In view of my conclusion that there was not an entire contract, the further question is whether the respondents were entitled to payment on a quantum meruit basis or pursuant to an implied contractual term that reasonable remuneration would be paid. The appellant contends that it did not receive any value for the work performed by the respondents. Thus, it submits there was no basis for the Magistrate to hold that they were entitled to payment. Before considering that question, is it necessary to review some of the evidence.
What work did Mr Polymeneas complete?
The appellant has submitted at paragraph [34.3] of its written submissions that the respondents had failed to finalise “financial documents” for the defendant and its related entities for the financial years ended 30 June 2007 to 30 June 2011. The submission that the respondents had failed to finalise financial documents for the years in question was supported by a reference to paragraph [47] of the judgment.
The Magistrate opened [47] with the following observations:
I accept the evidence of Mr Polymeneas that he prepared financial documents for the defendant and its related entities for the financial years ended 30 June 2007 to 30 June 2011 but I do not accept his explanation as to why these were not finalised.
The Magistrate went on at [47] to discuss the failure of Mr Polymeneas to file tax returns. When viewed in that context, I consider that the term “financial documents” was used by her Honour in a broad sense to cover both financial statements and taxation returns.
Consistently with that observation, I note that the Magistrate stated at paragraph [38]:
Notwithstanding the work undertaken in preparing the draft final accounts, Mr Polymeneas did not finalise or file any tax returns for the defendant for the financial years ending 30 June 2005 to 30 June 2011. I consider this failure was never satisfactorily explained.
I also note that in a letter dated 18 October 2012 addressed to Mr Peter Bouras, his new accountant Mr Akakios of Hungerfords, advised that Mr Polymeneas had prepared the financial statements for the years ending 2010 and 2011 for the Bouras Property Trust, for the years 2006 to 2011 for the Bouras Family Trust and for the years 2006 to 2011 for Olympic Developments Pty Ltd. Mr Akakios also observed that Mr Polymeneas had not prepared taxation returns and would not do so until his outstanding account was paid. Mr Akakios further noted that Mr Polymeneas had recently provided him with copies of the financial statements, being the profit and loss statement and balance sheets, and copies of those documents were attached to the letter.
Mr Akakios advised that as the timeframe for the settlement of the dispute between Mr Peter Bouras and the respondents was unknown, and so as to avoid additional penalties being applied by the ATO, he suggested that after Mr Peter Bouras had perused the financial documents he provide written instructions to prepare the outstanding tax returns based on the information presented by Mr Polymeneas.
For the reasons set out in the preceding four paragraphs, I do not consider that the submission by the appellant that Mr Polymeneas had not finalised the annual “financial documents” to be correct. The correct position is that he had finalised the annual financial statements but he had not completed or lodged the income tax returns. Whether the appellant gained any benefit from the work done by Mr Polymeneas and whether the annual financial statements had been negligently prepared are different questions, to which I will return.
McCormack Reynolds
By letter dated 23 July 2013 McCormack Reynolds, the new accountants for Mr Peter Bouras, rendered an invoice that included a charge for preparation of draft financial statements and draft income tax returns for the years ended 30 June 2006 to 30 June 2012 for what was described as the “Bouras Family Group of entities and individuals”. The narrative also noted that charges were made for meetings with, amongst others, the ATO and Mr Polymeneas. However, for reasons that have not been explained, the tax returns prepared by McCormack Reynolds were not lodged although payment was made for that work.
Creasey Associates
Mr Creasey stated that by the time his firm had been engaged, the ATO had allowed about a further week to lodge the outstanding tax returns. He had lodged returns for the years 2006 to 2012 within the week allowed but did so by relying upon the accounts that had been prepared by earlier accountants, i.e. the respondents. He had negotiated with the ATO to lodge the tax returns using the information in the financial statements prepared by others on the proviso that he could then review the accounts and make any amendments necessary to the tax returns.
Mr Creasey stated that Mr Peter Bouras and “his accounts lady – Sue” did not believe that the financial statements provided to him were correct. The income was too high, as was the tax.
Mr Creasey stated that his firm was engaged to recreate the accounts using the appellant’s general ledger. The firm obtained details of 100 percent of all transactions for each of the relevant years and then recreated the accounts from scratch, and did the same for the inter entity accounts. After using an accounting program to “make sure all the inter entity accounts lined up”, it was found that the wages disclosed in the tax returns and in the accounts did not line up with what had been declared on the business activity statements (BAS).
I note that the BAS returns were lodged by the appellant and not by the respondents, except in some isolated instances where the returns were late. On three occasions, the BAS returns were lodged by the respondents so that the appellant could gain the benefit of the delayed lodgement arrangements that the ATO extends to accountants.
Mr Creasey also stated that work was done by his firm to cross-check superannuation and WorkCover and “stuff like that” to ensure that these payments had been properly reconciled. Mr Creasey also observed that some of the bank accounts of the respondents had quite large balances recorded as being, for example, sundry expenses. It was necessary to allocate those sums to an appropriate area within the ledger. He went on to state that part of the work done in preparing the new financial statements was a review of the work done by the appellant’s internal bookkeeper and to ensure that payments had been appropriately allocated. Payments had been recorded in the ledger against the wrong entities. Mr Creasey also observed that work had been required to deal with the STC’s. This had flow on effects which affected the profit and loss statement. The STC’s had been incorrectly recorded in the appellant’s ledger. The adjustment made in relation to the STC’s had a significant effect upon the GST liability and had also reduced the profit recorded and thus the income tax liability.
Mr Creasey also stated in cross-examination that the accuracy of the general ledger maintained by a business depended upon the accuracy of the work done by its bookkeepers when entering figures into the general ledger. Mr Creasey was unable to say whether the appellant’s general ledger had been reconciled with its bank statements. In preparing the financial statements Mr Creasey’s firm had used the appellant’s general ledger and its trial balance. The information was input into a special accounting system and the results examined. This work identified that some of the expenses recorded were wrong. That led to an investigation into the accuracy of the general ledger. It was also necessary to seek backup information from the appellant where necessary before entering any data. Mr Creasey was unable to make any comment upon the basis upon which the accounts had been prepared prior to his firm undertaking the work afresh.
Mr Creasey stated that if an accountant were to reconcile the figures in a client’s general ledger against the source documents and bank statements, that would be the “gold standard”. Mr Creasey had not undertaken that work. He agreed that this was a time-consuming process but it would enable an accountant to be completely satisfied as to the accuracy of the figures by reference to the source documents.
George Bouras
Mr George Bouras, a son of Mr Peter Bouras, stated that he had commenced working in the family business in January 2015. He is a certified practicing accountant. Soon after he started work in the business, he had met with an ATO officer. The officer had advised that there was a problem in reconciling the “tax portals” and it appeared that the entities in the appellant’s group had overpaid their tax for several years.[20]
[20] I understand a “tax portal” to be a means to obtain online access to information held by the ATO about a taxpayer.

Mr George Bouras then spent about nine months reconciling the tax portal information. The result was that an overpayment of tax of close to $800,000 was identified. According to the evidence of Mr George Bouras, the quarterly BAS statements had not been reconciled to the tax returns. Once the tax returns were lodged, the overpayment of tax became clear. BAS returns had also not been lodged for the quarters ending March 2011, June 2011 and September 2011. That resulted in interest charges and penalties being incurred. The interest and penalties were ultimately remitted by the ATO.
Was the respondents’ work negligent?
The Magistrate noted that the appellant had not led any expert or other evidence to substantiate its pleading that the respondents’ accounting services were performed negligently. However, the appellant contends that the evidence of Mr Creasey was sufficient to establish that Mr Polymeneas had negligently performed the accounting work. The respondents submit that this contention is based upon invalid post hoc ergo propter hoc reasoning, i.e. just because something happens later does not, of itself, prove anything about an earlier event.
Mr Creasey specifically stated that he was unable to comment on the basis upon which the accounts had been prepared prior to him undertaking that work. His evidence suggests that there were problems with the accuracy of the work performed by employees of the appellant when they entered data into its general ledger and performed other financial record keeping tasks. There were also problems with the BAS returns lodged by the appellant and the treatment of STC’s. Those problems caused issues with GST liability.
It is important to observe that the involvement of the respondents with the lodgement of BAS returns was limited to three occasions when returns were lodged through them so that advantage could be taken of the extended time for lodgement allowed by the ATO to accountants.
While Mr Creasey stated that there had been inappropriate treatment of STC’s, as far as Mr Polymeneas is concerned the evidence merely establishes that he had spoken to Mr Peter Bouras about the STC’s. The Magistrate rejected his attempt to justify the late lodgement of tax returns on the basis that he was waiting for instructions from Mr Peter Bouras about the STC’s. However, it has not been established that Mr Polymeneas had any involvement in the incorrect tax treatment of the STC’s. The evidence tends to suggest that he was not involved in that aspect.
It is also important that Mr George Bouras, a certified practicing accountant with substantial experience, took about nine months to reconcile the data contained in the tax portal with the records of the appellant (although it is not known how much time he actually spent on this task). This work was undertaken by Mr George Bouras after he started working for the family business early in 2015. However, the work done by Mr Creasey in relation to the lodgement of the outstanding tax returns had been completed in the second half of 2013 (as indicated by invoices issued by Creasey Associates on 23 August 2013 and 22 November 2013). Thus, there were still problems with the correct assessment of tax liability after Creasey Associates had created fresh financial statements and lodged the overdue tax returns. I hasten to add that I am not suggesting that the work of that firm was defective but rather that there were ongoing problems with the establishment of the appellant’s correct tax liability.
The Magistrate found that both Mr George Bouras and Mr Creasey were truthful and reliable witnesses. Their evidence indicates that the problems with the appellant’s taxation liabilities had causes in addition to the financial statements prepared by Mr Polymeneas. Those causes included the inaccuracy of the general ledger, problems with allocation of transactions to the correct entity within the group and problems with BAS returns and STC’s and thus GST liability. The relevant functions were carried out by the staff of the appellant, with the exception of the lodgement of three (of many) BAS returns by Mr Polymeneas.
The finding by the Magistrate that Mr Polymeneas had failed to meet the relevant professional standards did not extend to the quality of the work he had done in preparing annual financial statements. Her Honour’s inability to make such a finding was because of the lack of expert evidence. The finding that there was a failure to meet professional standards related only to record keeping and contractual documentation.
Some 18 months after the engagement of the respondents had been terminated, the financial statements that Mr Polymeneas had prepared were used as the basis for the lodgement of income tax returns by Mr Creasey. While it was recognised at the time that there were problems with these financial statements, the combined effect of the evidence of Mr Creasey and of Mr George Bouras suggests that the overstatement of income, and the consequential excess taxation liability, was at least partially caused by deficiencies in the records maintained by the appellant.
Most importantly, there was no evidence as to whether the failure of Mr Polymeneas to detect any such deficiencies while he was preparing the annual financial statements amounted to professional negligence. Mr Creasey did not comment upon the work performed by Mr Polymeneas and was not called as an expert witness.
I suspect that the appropriate level of performance may have been to approach the preparation of the financial statements in a manner broadly similar to that described by Mr Creasey. I also suspect that this should have led to the identification of any inaccuracy in financial record keeping, whether caused by the staff of the appellant or otherwise. It is also possible that in addition to these matters, there may also have been other deficiencies in the work of Mr Polymeneas.
Despite those observations, the important point is that due to the absence of expert evidence the Magistrate was unable to determine that the work done by Mr Polymeneas in preparing the financial statements did not meet the professional standard expected of a certified practising accountant and tax agent. Importantly, as previously noted, Mr Creasey declined to comment on that matter and he had not been called as an expert witness. The evidence did not establish why the financial statements prepared by Mr Polymeneas led to the overstatement of the appellant’s tax liability.
I do not consider that the evidence permitted the Magistrate to infer, as the appellant contends, that simply because the work done by Mr Creasey produced a significantly different result, that the work done previously by Mr Polymeneas must have been negligent. That would be to fall into the post hoc ergo propter hoc error cautioned against by counsel for the respondents. Thus, in the absence of expert evidence, I do not consider that the Magistrate erred in not finding that the work performed by Mr Polymeneas was negligent.
Whether the appellant derived any benefit from the services of the respondents
The appellant contends that it gained no benefit from the accounting services provided by the respondents. As previously noted, the financial statements that Mr Polymeneas had prepared substantially overstated the income of the Olympic Batteries Group and the consequential tax liability. It was necessary for the financial statements to be compiled afresh by Mr Creasey and revised tax returns lodged with the ATO.
I have already noted that Mr Akakios advised on 18 October 2012 that, to avoid additional penalties being applied by the ATO, the outstanding tax returns should be prepared in accordance with the financial statements compiled by Mr Polymeneas. Mr Akakios also advised that, after Mr Peter Bouras had perused those documents, he should provide written instructions to lodge the tax returns. Mr Peter Bouras stated in cross-examination that he had instructed Mr Akakios to proceed in accordance with the financial statements prepared by Mr Polymeneas.
In fact, for reasons that are unknown to the Court, the outstanding tax returns were not lodged until Mr Creasey did so in about November 2013. Importantly, the tax returns prepared by Mr Creasey were based on the financial statements that had been compiled by Mr Polymeneas. However, it was known at that time that the financial data was not reliable and the returns were lodged at the insistence of the ATO, on the understanding that Mr Creasey would then lodge amended returns containing accurate financial information.
As I have already indicated in discussing the issue of negligence, the Magistrate had proper reason not to be satisfied on the balance of probabilities that Mr Polymeneas acted negligently in preparing the financial statements. In essence, that is because it has not been established that he should have detected the deficiencies in the appellant’s financial information. Moreover, the fact that the financial statements prepared by Mr Polymeneas were used to address the concerns of the ATO about delay, indicates that the appellant did gain some benefit for work done by Mr Polymeneas.
Mr Creasey stated that he was engaged to prepare new financial statements from scratch because of concerns held by Mr Peter Bouras and his “accounts lady - Sue” that the income and tax was too high. While the latter view was proven to be correct by the reduced ATO assessments, the evidence did not establish that it was necessary to prepare new financial statements from scratch and why that might be so. There may be an implicit suggestion that it was easier and more reliable to start from scratch, but the evidence did not go that far. The evidence leaves open the possibility that Mr Creasey could possibly have made at least some use of the work done by Mr Polymeneas and amended it as necessary, if that had been permitted by his instructions.
The further questions that arise from that conclusion are the appropriateness of the remuneration assessed by the Magistrate, and whether her Honour was correct to refuse to set off amounts paid to other accountants against the payment due to the respondents.
The quantum awarded to the respondents
The decision of the Magistrate to allow $6,000 plus GST per annum for services provided from 2007 to 2011 was not determined by reference to an hourly rate. Instead, the Magistrate determined the annual fee on the basis that on 17 June 2005 the respondents had invoiced the appellant $15,000 plus GST for the preparation of financial statements and tax returns for two financial years. That amount also incorporated charges for the filing of tax returns. However, the respondents did not lodge tax returns for the appellant after the year ending 30 June 2004. The invoice of 17 June 2005 had also incorporated charges for attendances relating to other matters. Having regard to these matters, the Magistrate determined that an award of $6,000 plus GST was appropriate.
The Magistrate noted that there was no evidence as to the reasonableness of the time taken by Mr Polymeneas to complete his work. A further difficulty was the lack of information in his timesheets and the lack of any other documentary evidence. For those reasons, the Magistrate considered that in assessing what was a fair and reasonable sum to be paid by the appellant for the accounting services provided by the respondents it was necessary to adopt a “broad axe” approach. Her Honour considered that such an approach was consistent with that articulated by the High Court in Commonwealth v Amann Aviation Pty Ltd.[21]
[21] (1991) 174 CLR 64.
The appellant submits that the Magistrate erred by placing reliance upon Amann as that case was concerned with the assessment of damages where there had been a breach of contract. It appears that the Magistrate was relying on the following statement of principle in the judgment of Mason CJ and Dawson J in Amann:[22]
The settled rule, both here and in England, is that mere difficulty in estimating damages does not relieve a court from the responsibility of estimating them as best it can. Indeed, in Jones v Schiffmann Menzies J went so far as to say that the “assessment of damages ... does sometimes, of necessity involve what is guess work rather than estimation”. Where precise evidence is not available the court must do the best it can.
(Citations omitted)
[22] Ibid at 83.
While the appellant has correctly submitted that Amann was concerned with the assessment of damages upon breach of contract, the principles stated by Mason CJ and Dawson J are closely analogous to those that must often be applied when assessing an entitlement to payment on a quantum meruit basis or what is reasonable remuneration where the contractual parties have failed to agree on that point.
In that respect, I note that in Brenner v First Artists’ Management Pty Ltd Byrne J relied upon the preceding passage from the judgment of Mason CJ and Dawson J in Amann as authority for the proposition that in a case where it is difficult or impossible to assess the number of hours of work performed or to itemise the precise services, the Court is entitled to make a global assessment or to reduce or increase the remuneration from that which can be proved with some certainty in order to arrive at a fair and reasonable value.[23]
[23] [1993] 2 VR 221 at 263–264.
I consider that the Magistrate was relying upon Amann in the same way as Byrne J did in Brenner. I respectfully consider that Byrne J adopted the correct approach. Moreover, the general principles to which I am about to refer are consistent with the approach adopted by the Magistrate to the assessment of what would be reasonable remuneration.
The ordinary approach in a quantum meruit claim is that the Court will award the sum that it considers just[24] or so much as the plaintiff reasonably deserves to have.[25] Where services have been rendered by a professional, they will generally be valued in accordance with the commercial rate commonly accepted in the industry while having regard to the standing of the person providing the services and the difficulty of the task.[26] In my view the same approach should be adopted in determining what is reasonable remuneration when a contract is silent on the point.
[24] Hoenig v Isaacs [1952] 2 All ER 176 at 182 (Denning LJ).
[25] Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 251 (Deane J, with Mason and Wilson JJ agreeing).
[26] Brenner v First Artists’ Management Pty Ltd [1993] 2 VR 221 at 263 (Byrne J).
The appellant also submits that the Magistrate erred by fixing what was reasonable remuneration by reference to the fees paid by the appellant for the work done in two earlier years. The appellant contends that what was a reasonable allowance for work actually performed provided no basis to determine a fee for work that was not performed. However, that argument assumes that Mr Polymeneas did not do any work and the appellant did not gain any benefit from the work performed. I have concluded above that Magistrate correctly found that the appellant did gain a benefit as the financial statements prepared by Mr Polymeneas were used by Creasey Associates to lodge the initial tax returns, albeit that it was recognised that the statements were not reliable. The Magistrate also correctly found that the evidence did not establish that this state of affairs was due to the negligence of Mr Polymeneas.
Although the Magistrate did not apply an hourly rate when she determined that an annual payment of $6,000 was reasonable remuneration, she did observe that the hourly rates referred to in evidence by Mr Polymeneas[27] were less than the fees charged by Creasey Associates at the time of trial.[28] Mr Peter Bouras had stated in cross‑examination that he expected to pay an accountant about $10,000 per annum for preparing financial statements and lodging tax returns. While the respondents did not lodge tax returns, the preparation and lodgement of the tax returns was a relatively minor task in comparison to the preparation of the financial statements. The amount of $6,000 was also discounted by the Magistrate from the $7,500 charged in earlier years in recognition of the fact that the earlier invoices covered a wider range of work.
[27] $190 per hour in 2005, $200 per hour from 30 July 2007 and $210 per hour in 2009.
[28] $300 per hour plus GST.
For these reasons, I am not persuaded that the Magistrate erred in determining that an annual payment of $6,000 was appropriate for the preparation of the financial statements by Mr Polymeneas.
Set off
While the Magistrate found that the respondents’ record keeping and contractual documentation appeared to fall below the relevant professional standards, due to the absence of any expert evidence she rejected the appellant’s contention that the accounting fees it had paid to other firms after the engagement of the respondents was terminated should be set off against the amount claimed by the respondents. I have already found that her Honour did not err by not finding that the work performed by Mr Polymeneas was negligent.
The Magistrate observed that there was no evidence as to the extent to which it was necessary for the other firms to replicate the work performed by the respondents. There was also no evidence as to the reasonableness of the rates charged by the other firms and the need for the work that they undertook. Her Honour noted that there was a real prospect of repetition in the work performed. For these reasons, her Honour declined to allow any set off in recognition of the fees paid by the appellant to other accountants.
Examination of the invoices issued by other accounting firms after the respondents ceased to act for the appellant shows that a great deal of the work done by those firms dealt with matters unrelated to the correction of, or response to, errors allegedly made by Mr Polymeneas.
Mr Creasey’s firm, Creasey Associates, rendered seven tax invoices to the appellant in the period from 23 August 2013 to 8 July 2014. The total amount claimed in these invoices, inclusive of GST, was $63,862.24. None of the invoices specifies the amount charged for particular work. In each case, a global figure is stated.
The narrative for the first invoice date 23 August 2013, in the sum of $11,892.94 (inclusive of GST), suggests that the work performed was largely concerned with correcting the financial statements for the years ended 30 June 2006 to 30 June 2012 and the lodgement of the corresponding tax returns. However, not all of the work covered by the invoice was attributable to those issues. The appellant was charged for a meeting with Mr Polymeneas “with respect to proposal being presented to you to avoid litigation against Mr Polymeneas” and then providing advice on that matter and consulting with a solicitor. I also note that a meeting with an ATO officer dealt with not only the lodgement of outstanding tax returns and payment proposals, but also “discussion of proposed voluntary disclosure of undeclared GST on Solar Tax Credits purchased from customers due to misunderstanding of the GST rules”.
As I have previously noted, the lodgement of BAS returns, and thus the declaration of amounts received as GST, was dealt with by the staff of the appellant and not by Mr Polymeneas. I further note that a charge was also made for the preparation of the personal tax returns for Mr Peter Bouras and his wife, Mrs F Bouras. There is nothing before the Court to indicate that the respondents were responsible for preparing personal tax returns for Mr Peter Bouras and his wife.
It is apparent that a substantial, but unspecified, component of the amount charged in the invoice of 23 August 2013 was concerned with resolving income tax issues for the years from 2006 to 2012. However, unspecified amounts were also charged for a significant volume of unrelated work.

The narrative for the invoice dated 22 November 2013 in the sum of $22,846.60, inclusive of GST, also includes some work directed at correcting the financial records of the appellant and the amendment of tax returns covering the period when Mr Polymeneas had been engaged to perform that work. In that respect, the tax invoice included the following information:
Meeting with Mr Bouras and Mrs S Clifton with respect to results of previous lodgement with the Australian Tax Office, which was done under sufferance since the figures could not be properly confirmed. Review accounts as prepared for the lodgement and look at the corrected figures from your software. Obtaining summary of all years in question for the Bouras Family Trust (Olympic Batteries) and Olympic Developments Pty Ltd. Prepare summary of all BAS and IAS Statements lodged with the Australian Tax Office for the financial years ended 30th June 2006 to 2012. Comparing results from your computer system to the BAS to ensure that the correct sales and wages figures lined up. Review Profit & Loss items for all years and review detailed transactions for several accounts, prepare journals for reallocations to correct accounts in Profit & Loss or Balance Sheet.
Prepare adjustments to original figures and reconcile inter entity accounts including unpaid present entitlement. Complete distributions and amend figures presented for adjustments as required by the Australian Tax Office for the previously undeclared GST of STC purchases. Adjust figures for the income and expenditure declared in Bouras Property Trust, so that double up of income does not occur.
In addition to the preceding matters, the invoice also referred to the preparation of financial statements for the years ended 30 June 2011 and 2012 for presentation to banks to assist in seeking finance, charges for dealing with the ATO “and debt collection for unpaid superannuation”, making a payment arrangement and objecting to debt in integrated client accounts, to hold off any further legal action against the Bouras Family Trust. Once again, the invoice dated 22 November 2013 reveals that a significant, but unspecified, component of the amount charged was concerned with resolving income tax issues outstanding from the period that Mr Polymeneas had dealt with such matters. However, charges were also made for a large volume of unrelated work.
The clear effect of the information contained in the tax invoice dated 22 November 2013 was that only part of the sum charged could properly be attributed to rectification of the deficiencies in the financial statements prepared by Mr Polymeneas. However, as I have previously found, it was not clear to what extent the deficiencies in that work can be attributed to Mr Polymeneas. At the risk of undue repetition, I note again that there were clearly deficiencies in the approach taken by the appellant to its taxation obligations. That fact is reinforced by the content of the invoice dated 22 November 2013. I refer to the work done by Mr Creasey and his firm to resolve issues relating to the BAS returns and GST liabilities. That work was not the responsibility of the respondents.
The subsequent tax invoices issued by Creasey Associates were almost entirely concerned with addressing issues that had arisen after the engagement of the respondents was terminated. They refer to such matters as the preparation of ASIC documents for 2013 and 2014, reconstruction of the general ledger for the year ended 30 June 2013, preparation of financial statements and the like. I also note that Creasey Associates had taken on the appellant’s responsibility for the lodgement of BAS returns. The only matter covered by the later invoices that, at least to some extent, may arise from the work done by Mr Polymeneas is the dealings with the ATO in relation to the remission of penalties and interest. However, that work might also to relate to the problems with BAS returns and the GST, for which Mr Polymeneas was not responsible.
The question is whether some part of the fees charged by Creasey Associates in the invoices dated 23 August 2013 and 22 November 2013 may be set off against any amount otherwise payable to the respondents. If the only issue was the determination of the amount that should be set off, that might be dealt with by this Court assessing a sum on a broad-brush basis having regard to the content of the two invoices. Alternatively, and preferably, the matter could be remitted to the Magistrates Court to be resolved with the assistance of further evidence. However, for the reasons that follow, I do not consider that either of these two approaches is appropriate.
The Magistrate noted that there was a real prospect of repetition in the work performed. Mr Creasey stated that he was asked to prepare from scratch new financial statements for the years in question. However, I also note that Mr Peter Bouras stated in cross-examination that he had instructed Mr Akakios to make use of the financial statements prepared by Mr Polymeneas. The evidence does not disclose why Mr Creasey was instructed to start from scratch rather than, for example, applying the program referred to in his evidence for the purpose of identifying inconsistencies between the accounts prepared by Mr Polymeneas and the records of the appellant. Moreover, as I have previously found, the Magistrate did not err in finding that it had not been established that the work performed by Mr Polymeneas was negligent.
For that reason, I have not been persuaded that the Magistrate erred by finding that there was no evidence as to the extent to which it was necessary for Creasey Associates to replicate the work previously undertaken by Mr Polymeneas. Accordingly, the evidentiary foundation for a set off was not established.
The Magistrate also found that there was no evidence as to the reasonableness of the rates charged by the firms that succeeded the respondents. Mr Creasey indicated that, at the time of trial, his hourly rate was $300 plus GST. He could not recall what had been his firm’s hourly rate several years earlier when the work in question was undertaken but clearly it was a lesser amount. If it had been necessary to remit the matter back to the Magistrates Court for evidence about the fees charged for the relevant work that was billed in the invoices of 23 August 2013 and 22 November 2013, the appropriate hourly rate could also have been determined.
The bundle of invoices provided to the Magistrates Court also included a tax invoice from McCormick Reynolds dated 23 July 2013. This invoice is in the sum of $20,707.50, inclusive of GST. The description of the services provided includes the preparation of draft financial statements and draft income tax returns for the years ending 30 June 2006 to 30 June 2012 and various meetings with, amongst others, the ATO and Mr Polymeneas. The breakdown of fees attributable to that work is not recorded. The invoice also refers to work done in relation to the lodgement of outstanding BAS returns, the lodgement of GST corrections regarding sustainable tax credits, dealings with banks about unspecified matters, preparation of draft financial statements for the Christies Beach unit trust and preparation of ASIC annual company statements for all companies including minutes and also other ASIC changes.
It is quite apparent that a great deal of the work charged for by McCormack Reynolds was not related to the alleged inadequacies in the financial statements prepared by Mr Polymeneas and his failure to lodge tax returns. The fees attributable to the latter work are not specified in the invoice. Furthermore, the tax returns ultimately lodged by Mr Creasey were not based upon the financial statements prepared by McCormack Reynolds but the earlier versions completed by Mr Polymeneas. Thus, as the draft financial statements and draft tax returns prepared by McCormack Reynolds were not used by the appellant, I do not consider that the fees charged for this work could be set off against the payment awarded to the respondents.
The appellant complains that the Magistrate erred in relying on the decision of Hinton J in Kidd v Regional Skills Training Pty Ltd as supporting, in the absence of any expert or other evidence, her Honour’s decision that it was not appropriate for the Court to undertake the assessment in the amount that might be set off against the quantum otherwise awarded to the respondents. The appellant submits that the Magistrate misconstrued the issue decided in Kidd. That case was not concerned with any question of evidence but rather the impermissible departure by a party from its pleaded case. Accordingly, the appellant submits that Kidd provides no support for the decision of the Magistrate not to determine the quantum of the set off.
The issue in Kidd was that the plaintiff had sought orders for payment of the amount claimed in a series of invoices. However, at trial the plaintiff had abandoned his pleaded case and adduced evidence of numerous other invoices for which payment was sought. The Magistrate in Kidd had dismissed the plaintiff’s claim and in doing so stated that it was not part of the Court’s function to sift through the invoices tendered by the plaintiff to determine which were reasonable and which were not. On appeal, Hinton J held that although a case may sometimes be properly run on a different basis to the pleadings, this was not such a case. The Magistrate had correctly concluded that the forensic contest did not require the Court to assess the additional tendered invoices for the purpose of determining the payment that should be awarded.
In this light, I accept the correctness of the submission by the appellant that the Magistrate has misconstrued the ratio decidendi of Kidd. However, I have found that the Magistrate did have proper grounds to refuse to set off the amount claimed by the appellant as additional accounting fees. While the Magistrate incorrectly relied upon Kidd, that misapprehension did not lead her Honour into error.
For the preceding reasons, I do not consider that the Magistrate erred in finding that there was no basis upon which the fees charged by subsequent firms may be set off against the amount otherwise payable to the respondents.
Conclusion
I extend time for the lodgement of the appeal until 19 February 2020. For the reasons stated above, I find as follows:
·The Magistrate did not err in finding that in the period from 1 June 2005 to 30 April 2012 the respondents had provided professional services to the appellant in accordance with their retainer;
·The Magistrate did not err in failing to find that the accounting services provided by the respondents were performed negligently;
·The Magistrate did not err by adopting a “broad axe” approach to determine the quantum of fees payable by the appellant to the respondents for accounting services; and
·The Magistrate did not err in finding that the appellant was not entitled to a set off.
Accordingly, I dismiss the appeal. I will hear the parties as to costs.