Patel & Carapa Nominees Pty Ltd v Glazbrook & Migration Partners Australia Pty Ltd - [2010] SASC 260

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
PATEL & CARAPA NOMINEES PTY LTD v GLAZBROOK & MIGRATION PARTNERS AUSTRALIA PTY LTD
[2010] SASC 260
Judgment of The Honourable Justice Kelly
24 August 2010
MAGISTRATES - APPEALS AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT - PRINCIPLES ON WHICH COURT ACTS - OTHER MATTERS
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - FORMATION OF CONTRACTUAL RELATIONS
Appeal against decision of Magistrate - where parties previously undertook a joint enterprise in a migration services business - where joint enterprise dissolved by deed of dissolution - where certain fees owing to appellants - where appellants paid for renovations to shared premises - whether Magistrate made sufficient findings of fact - whether Magistrate erred in preferring the evidence of the first respondent in relation to fees owing in circumstances where Magistrate discounted the evidence of the first respondent on another matter - whether Magistrate erred in apportioning the cost of renovations as 50 per cent for each party.
Held: appeal dismissed - the Magistrate's findings on each disputed issue were open to him - in circumstances where there was limited evidence available as to the content of meetings, the Magistrate's approach accorded with common sense - just because a witness may be mistaken on one issue does not mean their evidence cannot be accepted on another - each party had the benefit of the renovations.
Magistrates Court Act 1991 (SA) s 40; Supreme Court Civil Rules 2006 (SA) r 286, referred to.
Fox v Percy (2003) 214 CLR 118; Papps v Police (2000) 77 SASR 210, discussed.
The Glannibanta [1875] 1 PD 283; Paterson v Paterson (1953) 89 CLR 212; Warren v Coombes (1979) 142 CLR 531, considered.

PATEL & CARAPA NOMINEES PTY LTD v GLAZBROOK & MIGRATION PARTNERS AUSTRALIA PTY LTD
[2010] SASC 260
Magistrates Appeal: Civil
KELLY J:
Introduction

The appellants, Mr Patel and Carapa Nominees Pty Ltd appeal against a decision of a Magistrate of 19 March 2010. The dispute in the Magistrates Court arose out of the dissolution of a joint venture between Mr Patel and the first respondent, Mr Glazbrook. Subsequent to the dissolution of the joint venture there were disagreements between the former partners as to the amounts owing by and to each party.
The appeal raises three principal issues. The first is whether the Magistrate made adequate findings of fact in relation to a meeting said to have occurred between Mr Patel and Mr Glazbrook in December 2006. The second is whether the Magistrate failed to give adequate reasons for rejecting the evidence of Mr Patel and preferring the evidence of Mr Glazbrook as to what occurred at that meeting. The final issue is whether the Magistrate erred in determining that both parties should pay equally renovation costs incurred by the appellants in respect of premises jointly occupied by both parties during the period of the joint venture.
Background
Mr Patel is a legal practitioner and a registered migration agent. Carapa Nominees Pty Ltd is Mr Patel’s incorporated legal practice, which trades as Patel & Co. Mr Glazbrook is a licensed migration agent. The second respondent, Migration Partners Australia Pty Ltd (Migration Partners), is now Mr Glazbrook’s incorporated migration business but was previously the business run pursuant to the joint venture, trading as DGA Consultants.
In about February 2004 Mr Patel and Mr Glazbrook came to an oral agreement whereby they would set up and operate a migration business, to be incorporated as Migration Partners Australia Pty Ltd. The business was initially funded by two loans of $20,000; one each from family trusts controlled by Mr Patel and Mr Glazbrook respectively. The $20,000 provided by the Glazbrook Trust was in turn loaned from the trustee of the Patel Trust, Parimal Properties Pty Ltd, and secured by a guarantee of Mr Glazbrook and the Glazbrook Trust.
The agreement between the parties contemplated that the business would operate out of premises at 61/63 Grote Street, Adelaide, then leased and occupied by Mr Glazbrook’s migration business. Although there is some dispute as to the precise nature of the services provided by the parties, Mr Patel was to provide legal services and Mr Glazbrook general migration services. Before moving to Grote Street, Mr Patel arranged for a contractor to undertake renovation work on the premises. Those renovations were completed in September 2003 and Mr Patel took up residence in that month. The joint venture commenced in about June 2004.
In the middle of 2005 Mr Patel and Mr Glazbrook agreed in writing to dissolve the joint venture. As a result, Glazbrook Trust became the sole shareholder of Migration Partners. The deed of dissolution signed by the parties and dated 30 June 2005 relevantly states:
1.The joint venture between Dick and Patel shall be unwound as if it were never entered into.
2.Patel shall pay the Company [Migration Partners] reasonable expenses in respect of the benefit received from the Company.
3.The Company shall pay the balance of the loan at market rate interest and any fees due to Patel & Co Solicitors for services rendered to the Company.
4.Dick shall procure Glazbrook Pty Ltd to repay a loan of $20,000.00 to Parimal Property Pty Ltd.
5.Dick and Patel shall endeavour to settle any disputed claim for expenses or fees amicably, failing which differences shall be resolved by an independent person who shall not act as expert and whose decision shall be final and binding on the parties. The cost of independent person shall be shared equally between Dick and Patel.
6.Patel shall procure Parimal Property Pty Ltd to transfer 50% of shares in the Company to Glazbrook Pty Ltd.
7Parties hereto agree to execute any documents or do any act to give effect to their intention expressed herein.
The Magistrates Court action essentially arose due to the failure of the written dissolution agreement to explicitly deal with three matters. First, there was a dispute as to expenses that were owed by Patel & Co to Migration Partners arising from their use of premises at 61/63 Grote Street, Adelaide, over the time of the joint venture. Second, there was a dispute over the amount of fees that were owing to Patel & Co arising from legal work undertaken on behalf of the joint venture. Third, there was a dispute over which party was liable to pay for renovations made to the premises, which were funded by Patel Trust.
As to the expenses owed, the appellants claimed that there was a meeting in June 2007 in which both parties agreed that a fair and reasonable estimate of expenses was $24,565. The respondents rejected any such agreement and claimed an amount of $35,581. The Magistrate ruled in favour of the appellants’ version of events and awarded the respondent $26,565. The appellants have not appealed this aspect of the judgment, however, the appellants point to the Magistrate’s rejection of Mr Glazbrook’s evidence on the topic of the agreed expenses as one of the factors which should have caused the Magistrate to reject Mr Glazbrook’s evidence on the issue of the legal fees.
Regarding the legal fees owing to Patel & Co, the appellants claimed an amount of $39,562.50. This was calculated by amounts received for each file allegedly conducted by Mr Patel, less amounts of $100 to $200 per file to account for preparatory work done by Mr Glazbrook and others. The appellants submitted that the parties orally agreed in December 2006 that Mr Patel was to be paid an amount of $2,200 to $2,500 per file, depending on the fee recovered. The respondents said that the amount owing was $9,855 after taking into account work done by Mr Glazbrook and others. The respondents said that contrary to Mr Patel’s evidence as to the meeting in December 2006, no agreement was reached in that meeting of December 2006 concerning the quantum of legal fees owing to the appellants.
The Magistrate held that Mr Patel was entitled only to a reasonable fee for work actually performed on files and to be paid only for work that he actually performed. The Magistrate made orders to allow for the sum owing to be assessed by a legal practitioner experienced in migration work, nominated by the president of the Law Society of South Australia and agreed by the parties. The appellants appeal against those orders.
On the subject of the renovations, the appellants claimed the sum of $11,988, which they said should have been treated as a loan to Migration Partners. The respondents denied all liability for the renovations and asserted that they were carried out for the sole benefit of the appellants. The Magistrate found that both parties benefited from the renovations and held that the respondents should reimburse the appellants for 50 per cent of the costs, being $5,994. The appellants appeal against the order to this effect and say that the full amount should be reimbursed.
Function of the Appellate Court
In accordance with the s 40 of the Magistrates Court Act 1991 (SA) and r 286 of the Supreme Court Civil Rules 2006 (SA), an appeal from a decision of a magistrate is to be heard by way of rehearing. In a rehearing the Court may in its discretion hear further evidence on a question of fact, but in the circumstances of this case no further evidence was admitted.
The principles applicable to a rehearing were set out by the High Court in Fox v Percy (2003) 214 CLR 118. Gleeson CJ, Gummow and Kirby JJ noted in their joint judgment that the appellate court should be aware of the “natural limitations” it faces at [23]:
…These limitations include the disadvantage that the appellate court has when compared with the trial judge in respect of the evaluation of witnesses' credibility and of the "feeling" of a case which an appellate court, reading the transcript, cannot always fully share. Furthermore, the appellate court does not typically get taken to, or read, all of the evidence taken at the trial. Commonly, the trial judge therefore has advantages that derive from the obligation at trial to receive and consider the entirety of the evidence and the opportunity, normally over a longer interval, to reflect upon that evidence and to draw conclusions from it, viewed as a whole.
[Footnotes omitted]
Nevertheless, mistakes can occur at trial and the Court must weigh conflicting evidence and draw its own inferences and conclusions; see The Glannibanta [1875] 1 PD 283 at 287, Paterson v Paterson (1953) 89 CLR 212 at 219 – 220, Warren v Coombes (1979) 142 CLR 531 at 551. See also Fox v Percy (supra) at 126 - 127 [25]:
…in general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the trial judge but, once having reached its own conclusion, will not shrink from giving effect to it…
A failure to provide adequate reasons is also an error which may justify the appellate court’s intervention. In Papps v Police (2000) 77 SASR 210 the Court articulated the test for determining whether reasons are adequate in a particular case. Gray J (with whom Olsson and Wicks JJ agreed) stated at [34]:
The courts have encountered difficulty in articulating a test to determine whether or not reasons are adequate. Much must depend upon the circumstances of each case. As was said in Lawson v Lee, the reasons must be "coherent, intelligible and comprehensive." But there is more. The reasons must be adequate to allow an appellate court to perform its function and they must be such that justice is seen to be done. As was said in Sun Alliance Insurance Ltd v Massoud:
“The adequacy of the reasons will depend upon the circumstances of the case. But the reasons, will, in my opinion, be inadequate if:
(a)the appeal court is unable to ascertain the reasoning upon which the decision is based; or
(b)justice is not seen to have been done.
The two above stated criteria of inadequacy will frequently overlap. If the primary Judge does not sufficiently disclose his or her reasoning, the appeal court is denied the opportunity to detect error and the losing party is denied knowledge of why his or her case was rejected.”
[Footnotes omitted]
With these principles in mind I turn now to the issues which arise on this appeal.
Discussion
As previously noted the written dissolution agreement signed by the parties on 30 June 2005 did not explicitly deal with three important matters that had to be resolved between the former partners; the matter of the expenses owed by the appellants to the respondents arising out of the use of the premises occupied by the partners, the legal fees owed to the appellants by the respondents and the issue of who should pay for the renovations undertaken by the appellants prior to the commencement of the joint venture.
The evidence disclosed that Mr Patel and Mr Glazbrook had a number of discussions after the signing of the agreement on 30 June 2005. There was also a number of letters exchanged between the former partners, some of which were tendered at the trial. Neither party made notes of meetings, including some of the more important meetings in which Mr Patel claimed to have reached agreement on some of the issues. The Magistrate was therefore required to grapple with the competing accounts given by Mr Patel and Mr Glazbrook as to what transpired at particular meetings.
With regard to the fees, at one stage, counsel for the respondents proposed to call evidence of every file the subject of the dispute. The Magistrate resolved the situation by suggesting to the parties that should he decide in favour of the respondents, a specialist taxing officer could be engaged to determine the amount owed. In taking this approach his Honour implicitly recognised that there were only two possible outcomes to determine the distribution of fees. Either there was an agreement as suggested by Mr Patel, that Mr Patel was to be paid $2,200 to $2,500 (depending on the fee recovered) per file, or there was an agreement as suggested by Mr Glazbrook, that that each party should be paid only for the work they performed. This approach meant that the Magistrate did not need to consider the precise amount of work done by various people on the files, rather, he merely needed to consider which agreement applied. The appellants apparently accepted the Magistrate’s approach and did not suggest any further alternative basis for the distribution of fees.
The Magistrate accepted Mr Glazbrook’s evidence that there was no agreement, either at the meeting in December 2006 or at any other time, that Mr Patel was to be paid $2,200 to $2,500 (depending on the fee recovered) per file. He took a practical and common sense view of the circumstances of the case to decide that there was no possibility Mr Glazbrook would agree to give up the whole of the fee for ordinary Migration Review Tribunal work. His Honour agreed with the respondents’ assertion that this was the “bread and butter work of a migration review consultant”.
There is limited evidence pointing to the existence of an agreement in December 2006. Mr Patel gave a personal recollection of the meeting, but admitted no contemporaneous notes were made. The other source is Mr Patel’s letter of 22 June 2007, which states that an agreement had been reached that for each appeal, Mr Glazbrook would be credited $200 but that the remainder was payable to Mr Patel.
A factor which militates against the appellants’ position that there was an agreement reached in December 2006 is the fact that Mr Patel did not mention any such agreement at a meeting of 19 June 2007, even though at that meeting Mr Glazbrook informed him he was not entitled to fees for migration services work. Mr Patel’s letter of 22 June 2007 states that “Mr Patel saw no point in discussing the matter any further as it had been gone over before”. This point was acknowledged by the Magistrate at [33] of his judgment. Nor was there any reference to an agreement in any of Mr Patel’s letters to Mr Glazbrook of 16 January 2007, 5 June 2007 or 3 September 2007, even though, in the 3 September 2007 letter Mr Patel notes the meeting of 19 June 2007 and Mr Glazbrook’s refusal to pay the fees of $42,462.
The Magistrate formed the view that the agreement alleged by Mr Glazbrook, namely that each party should be paid only for the work they performed, was a more likely arrangement arising from the dissolution of a joint venture of this nature, and he found accordingly.
It was put on behalf of the appellants that in failing to accept the evidence of Mr Patel that there was an agreement in December 2006 whereby Mr Glazbrook was to be paid $200 for each file and Mr Patel would retain the rest of the fees, the Magistrate necessarily relied on the evidence of Mr Glazbrook, a witness whose evidence on the topic of the expenses had been plainly rejected by the Magistrate. In these circumstances it was suggested that the credibility of Mr Glazbrook had been undermined to such an extent that the Magistrate’s reliance on and preference for his evidence over Mr Patel’s on the topic of the fees, cannot stand. Particular complaint was made that the Magistrate’s reasons in [78] - [85] do not adequately explain why the Magistrate preferred the evidence of Mr Glazbrook on that topic over the evidence of Mr Patel.
I cannot accept the appellants’ submission. When the Magistrate’s reasons, as a whole, are examined it is plain that he took into account a number of factors before concluding that no agreement as alleged by Mr Patel was made in the December 2006 meeting.
A perusal of the transcript of the evidence reveals that there were numerous meetings between the two former partners after the dissolution agreement in June 2005. Most of these were not documented in any way. In the circumstances, there was ample scope for misunderstandings between the two former partners in relation to both the content of the discussion and what, if any, agreement was struck at the meeting of December 2006.
The rejection of Mr Glazbrook’s evidence concerning an agreement in relation to the expenses fixed at $24,565, a figure referred to in Mr Glazbrook’s own letter to Mr Patel on 13 September 2007, is explicable. It was open to the Magistrate to find, in effect as he did, that on that particular matter Mr Glazbrook was mistaken. This did not necessarily involve rejecting him altogether as a witness of credit. In light of the extensive communications between the parties, as I have already said, there was ample scope for one or other of the partners to be mistaken on particular matters, and/or to entertain misunderstandings as to what was and what was not agreed in those meetings. Just because Mr Glazbrook may have been mistaken as to the terms of any agreement as to expenses, is not to say he was necessarily mistaken as to any agreement as to the retention of fees. This is particularly so when Mr Glazbrook’s recollection of the fee arrangement aligns with what might naturally be expected having regard to the nature of the migration services industry generally, and the commercial reality as it was put to the Magistrate that the migration work was the bread and butter of Mr Glazbrook’s business. In these circumstances I find there is nothing glaringly improbable about the Magistrate’s finding.

The appellants pointed to the terms of the deed of dissolution of partnership dated 30 June 2005. However on one view, the terms of the deed support the position of Mr Glazbrook, which he consistently maintained. The deed states that the company shall pay fees due to Patel & Co Solicitors for services rendered.
The Magistrate accepted that the position of Mr Glazbrook that he would pay Mr Patel a reasonable amount for each of the files, based on the limited contribution Mr Patel made, was a position he consistently maintained. These were all factors that the Magistrate was entitled to and did take into account when determining whose evidence he preferred in relation to the issue of the legal fees.
Although the Magistrate did not specifically say that the outcome of the fees did not entirely depend on Mr Glazbrook’s credit in the way contended for by Mr Patel, that finding is implicit in the finding that a migration agent in Mr Glazbrook’s position would never have given up his principal source of income.
In that sense the argument put forward by Mr Glazbrook is supported by the objective circumstances. This may be contrasted with the Magistrate’s decision regarding the disputed expenses, where there was ample scope in the history of the negotiations for Mr Glazbrook to be simply mistaken.
There is nothing inherently problematic about the fact that a judicial officer may accept in part the evidence of one witness and reject in part the evidence of the same witness. It all depends on the circumstances. For these reasons I do not consider that the Magistrate’s approach to the evidence on this topic discloses any error on the part of the Magistrate. On the contrary I find that the findings he made were open to him on the whole of the evidence.
With regard to the cost of the renovations, the Magistrate found it significant that Mr Patel conducted his legal practice from the premises. This was an uncontested fact. Furthermore it does not appear to be in dispute that Mr Patel occupied the joint premises from about September 2003, well before the entering into of the joint venture, and did not vacate until at least June 2006. Thus it can be seen that the inference that the appellants benefited from the renovations to the premises was properly drawn. In the circumstances the Magistrate’s determination that both parties should bear 50 per cent of the cost of the renovations was not only open to him but a common sense practical resolution of that particular issue.
Conclusion
Having reviewed the whole of the evidence I am satisfied that the Magistrate’s findings on each of the disputed issues was open to him. There is nothing glaringly improbable about his finding that no agreement was reached in the December 2006 meeting about the legal fees to be paid to the appellants. Contrary to the appellants’ submissions I am of the view that the Magistrate’s reasons are adequate and his conclusion accords with plain common sense.
For these reasons the appeal must be dismissed.