Olympic Batteries Pty Ltd v O'Leary & Polymeneas

Case [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…

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AGLC
Olympic Batteries Pty Ltd v O'Leary & Polymeneas [2020] SASC 229
Case
[2020] SASC 229
Decision Date

CaseChat Overview and Summary

In this case, the appellant, Olympic Batteries Pty Ltd, was sued by the respondents, Mr Angelo Polymeneas and Mr Daniel O'Leary, for payment of accounting services rendered between 1 June 2005 and 30 April 2012. The respondents alleged that the appellant was in breach of contract by failing to pay two invoices amounting to $78,452. The respondents claimed that they were entitled to payment for the services they provided to the appellant, including the preparation of financial statements and tax advice. The appellant, on the other hand, argued that the contract was an entire contract and that the respondents were only entitled to payment for work that had been completed. The case was heard in the Supreme Court of South Australia.

The legal issues that the court was required to decide included whether the appellant contended 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. The court had to 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.

The court found that the Magistrate did not err 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. The court found that the Magistrate did not err in failing to find that the accounting services provided by the respondents were performed negligently. The court also found that 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. Furthermore, the court found that the Magistrate did not err in finding that the appellant was not entitled to a set off. Accordingly, the appeal was dismissed. The court extended time for the lodgement of the appeal until 19 February 2020.

The final orders of the court were that the appeal was dismissed, and the parties would be heard as to costs. The court found 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. The court also found that the respondents had provided professional services to the appellant in accordance with their retainer, and that the appellant was not entitled to a set off.

Orders

Orders of the court

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Background

Background to the litigation

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.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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.

Ratio Decidendi

Legal Principle Established

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.