Radin Legal Pty Ltd v Pasquale - [2016] SADC 115

DISTRICT COURT OF SOUTH AUSTRALIA
(District Court Administrative and Disciplinary Division: Minor Civil Review)
RADIN LEGAL PTY LTD v PASQUALE
[2016] SADC 115
Judgment of His Honour Judge Tilmouth
16 September 2016
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - INTERFERENCE WITH JUDGE'S FINDINGS OF FACT - FUNCTIONS OF APPELLATE COURT
Discussion of the principles attending the review of minor civil actions in the Magistrates Court and the capacity to receive further evidence on review. Application for review granted on the basis of misperception of the facts. Matter reconsidered on the merits, substantially upholding the decision under review. Application to adduce further evidence refused except in one respect.
Magistrates Court Act 1991 (SA) s 38(7), s 38(7)(b), s 38(7)(c), s 38(7)(d); District Court Act 1991 (SA) s 42E(1), referred to.
Allesch v Maunz (2000) 203 CLR 172; Precision Plastics Pty Ltd v Demir (1975) 132 CLR 362; Warren v Coombes (1979) 142 CLR 531, applied.

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - FORMATION OF CONTRACTUAL RELATIONS - CONTRACT IMPLIED FROM CONDUCT OF PARTIES
Discussion of the circumstances required in order to form a binding contract.
Held: No binding agreement reached in terms alleged by the applicant.
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, referred to.
Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; Harradine v District Court of South Australia (2012) 280 LSJS 572, applied.

RADIN LEGAL PTY LTD v PASQUALE
[2016] SADC 115
The Review

This is an application for review of a judgment given in the small claims jurisdiction of the Adelaide Magistrates Court. These reasons explain why the application substantially fails.
Background Facts
The applicant Radin Legal Pty Ltd (trading as Radin Legal) is a firm of solicitors with offices in metropolitan areas of Adelaide, including the outer northern suburb of Gawler. Mr Radin is the principal of the firm. The respondent, Adriana Pasquale, is a legal practitioner admitted to practice in 2009. She was initially employed as an Associate with a predecessor of Radin Legal, from 2009 to 2011, and subsequently with Radin Legal until she resigned in 2012. In about June 2012 she was retained by Radin Legal as a consultant on an hourly basis. It is accepted on both sides that the rate varied between $35 and $60 per hour, as time went on.
By a claim issued on 11 November 2014, Ms Pasquale sued Radin Legal for $15,660 for consultancy fees claimed to be outstanding for work performed by her pursuant to this retainer. An additional sum of $2,200 was claimed for counsel fees, pursuant to a separate arrangement from the retainer.
In its defence filed on 3 December 2014, Radin Legal claimed the consultancy agreement was subject to the condition that Ms Pasquale was to be reimbursed for work done on receipt of funds from the clients. At the same time Radin Legal filed a counter-claim for damages, on the basis that Ms Pasquale was employed under a contract of employment commencing on 26 May 2014, which she terminated two days later, in breach of a condition that she provide at least 28 days’ notice of resignation.
The Magistrate found entirely for Ms Pasquale. Her Honour entered judgment pursuant to the consultancy and in respect of the retainer in the above amounts and she dismissed the counter-claim. She made final orders by consent on 11 March 2016, that Radin Legal pay the additional sums of $6,556.65 by way of legal costs, plus interest of $1,143.04.
The Application for Review
The application for review filed in this court on 16 May 2016, claims in essence, that her Honour erroneously made findings as to the terms of the consultancy, misconstrued or gave inappropriate weight to the evidence in respect of work performed on legal aid matters, and failed to give adequate consideration to evidence relevant to Radin Legal’s position in general and in respect to the counter-claim.[1] Counsel for Radin Legal, Mr Jacobi, abandoned the issue in respect of counsel fees at the beginning of the review.
[1] As final judgment was not entered until 11 March 2016, Radin Legal’s application for review was filed within the 21 days required by DCR 279A(2) of the District Court Civil Rules 2006 (SA).
The reasons for judgment
In order to understand the grounds of complaint, it is first necessary to establish the principal findings of the Magistrate. In her reasons of 24 February 2016 relating to primary liability, her Honour found Ms Pasquale to be a witness of truth.[2] She rejected the evidence of Mr Radin, for these reasons:[3]
I did not consider Mr Radin to be an impressive witness. Many of his responses to questions, both in examination-in-chief and cross-examination were prefaced with lengthy self-serving statements about the close relationship he had enjoyed with Ms Pasquale, the affection he felt for her and his belief that he was like a ‘father figure’ to her. There were several inconsistencies in his evidence particularly in relation to the knowledge of the invoices rendered by Ms Pasquale and his expectations of her in relation to her hours worked and billed. I will refer to these inconsistencies subsequently in this judgment.
[2] Magistrate’s Reasons, [15].
[3] Ibid, [16].
The inconsistencies referred to in this portion of the judgment relate first to Mr Radin’s knowledge of the invoices submitted by Ms Pasquale. On this issue her Honour found:[4]
[4]    Ibid, [24].
Mr Radin gave evidence that he received reports as to productivity, billings, banking, work in progress and debtors on a weekly basis. He told the Court he paid ‘serious regard to the performance of Ms Pasquale’. He accepted she worked in respect of the files and submitted her invoices as agreed. He looked at the fees she generated for the firm and he conceded he knew what he was paying her, despite also claiming he did not keep a close eye on the invoices rendered, as they were provided to the Accounts Manager. No evidence was placed before the Court to establish that, at any stage, Radin Legal had on-billed to the client every hour Ms Pasquale had charged for.
The second area of inconsistency identified in the above passage was Ms Pasquale’s expectation of hours worked and billed. On this topic her Honour reasoned:[5]
I do not accept Mr Radin’s evidence that it was a term of the agreement with Ms Pasquale that she was to be paid only in respect of work that could be on-billed to the particular client. The fact remains that during the entire period when Ms Pasquale worked as a consultant he did not query her invoices, despite the fact that it is clear from the evidence of Ms Cleland that he kept a very close eye on the finances of the firm and was provided with regular reports detailing the productivity of each of the fee earners employed by the firm. Furthermore, it is clear from his own evidence that Mr Radin closely supervised the financial situation of Radin Legal as, from time to time, the firm experienced cash flow difficulties. He told the Court the cash flow was something he needed to be across on a daily basis.
And later:[6]
… it would be unrealistic to expect Ms Pasquale’s chargeable units to correspond exactly to billable units.
Her Honour concluded:[7]
Despite maintaining the terms of the alleged agreement, Mr Radin acknowledged in his evidence that he was not going to get a 100% return on her hours, however, he maintained a specific percentage had never been agreed. He conceded he had congratulated her on numerous occasions as to her productivity and he was happy with the fees she was generating.
These passages contain an implicit rejection of Mr Radin’s evidence that in respect of legal aid work, Ms Pasquale ‘would be paid the amount designated on the certificate issued by the Legal Services Commission’.[8]
[5]    Ibid, [32].
[6]    Ibid, [36].
[7]    Ibid, [38].
[8]    Ibid, [21].
As to the counter-claim, the Magistrate ultimately concluded ‘the terms of her employment were not “settled” or “agreed” as of 26 May 2014’.[9] The essence of the reasoning process giving rise to this conclusion was that although the parties were at one on weekly salary ‘there were other matters to be discussed’.[10] Her Honour found Ms Pasquale was to ‘prepare a draft proposal’, that she ‘had done so, and therefore ‘the terms of her employment had not been agreed’.[11]
[9] Ibid, [60]-[61].
[10] Ibid, [56], [60].
[11] Ibid, [60], [62], [63].
There is an additional application by Radin Legal to introduce further evidence in the review process that was not before the Magistrate. These are first a series of invoices submitted by Ms Pasquale arranged on a ‘day by day … matter by matter’ basis, as well as reports explaining the differences between the times charged in those invoices, and the equivalent times entered into the firm’s software management system, LEAP.[12] This material was not submitted to the Magistrate for reasons that remained unexplained during the review process.
[12] Affidavit of Ms Cleland 8/7/16, Exhibits JC-1, JC-4.
The Grounds for Review
The specific complaints proffered on behalf of Radin Legal are that there was insufficient evidence to establish that Mr Radin ‘acquiesced’, in that he ‘did not query’ the invoices, that her Honour erred in paying too much regard to the ‘unrealistic’ uncommerciality of the situation from Ms Pasquale’s point of view, without weighing the commerciality of the arrangement from Radin Legal’s point of view, and that the adverse credit findings were not justified.
As both counsel referred extensively to passages from the evidence given in the trial court, it becomes necessary to consider that evidence, so as to assess the merits of the submissions made on both sides.
Consultancy terms
The position of the applicant is conveniently summarised in the written submission of its counsel:[13]
A key issue pursued at trial by the contractor was that the firm principal had paid invoices in the period prior to those the subject of dispute, and that this conduct was inconsistent with the existence of the contended term. That argument of ‘acquiescence’ requires proof that:
(i)there was a divergence between the hours recorded in the earlier invoices and time recorded;
(ii)that the invoices had been seen by the firm principal;
(iii)that from what he saw he must have appreciated the divergence between the time on a matter on the invoice and the time recorded.
None of those steps was established. That is so because there was no evidence with the level of precision necessary to be satisfied of each of those matters.
[13] Applicant’s Outline of Argument, [5].
The evidence before the trial court was generally to the effect that Ms Pasquale’s accounts were paid without the involvement of Mr Radin. Under cross-examination Mr Radin conceded knowledge of the invoices ‘at a general level’ or ‘at a macro level but not at a micro level’, but that the invoices themselves ‘were not submitted to me’,[14] as he ‘delegated that responsibility’.[15] The cross-examination on this assertion then proceeded:[16]
QMrs Cleland said that she never saw Ms Pasquale’s invoices, that you approved the invoices.
AThat I what?
QThat you approved the invoices, isn’t that the case.
ANo, no, that’s not the case, that’s not the case. I don’t believe she said that and I certainly didn’t say that. I believe the invoices were sent straight to the accounts person to deal with. I believe that was my evidence.
[14] T133.26-.27, T134.18-.19.
[15] T168.7-.8.
[16] T168.9-.17.
The second basis of attack on the Magistrate’s conclusion, was that ‘it would be unrealistic to expect Ms Pasquale’s chargeable units to correspond exactly to billable units’.[17] This conclusion was premised in part on the observation that: [18]
… she was being paid at the hourly rate of $60, and it appears her time was being charged to private clients at the rate of $422 per hour exclusive of GST.
Hence when translated into dollar terms, of the 241 hours actually worked by her, just 96 hours and 22 minutes were billed to clients, her claim was unrealistically limited to just $5,784.[19]
[17] Magistrate’s Reasons, [36].
[18] Ibid, [37].
[19] Ibid, [39].
The evidence of Mr Radin given under cross-examination, included the following:[20]
There needed to be a clear nexus between her work on our files and our ability to be able to then on-bill and generate income from the client in relation to that. So she needed to do productive work within the scope of our retainer arrangement with the clients, in other words, work that was billable to the client. That was the underpinning of the arrangement that we entered into. I was happy to acknowledge the fact that we would pay her an hourly rate but it was an hourly rate, on my understanding, for productive work.
And:[21]
So it could only work in terms of producing a suitable outcome for the practice financially if her presence and her work on files was geared towards doing work that we could recover from the client and that was the underpinning understanding between us, so at least from my perspective.
[20] T125.36-126.8.
[21] T126.18-.24.
There is no doubting Ms Pasquale was required to enter the invoice details into the LEAP system to enable them to be duly processed. She accepted this was her responsibility, one she proved less than proficient in performing. The Magistrate clearly found as much:
·It is clear that the time charged on her invoices for this period did not correlate with the times entered on LEAP.[22]
·She had insufficient time to enter the time spent on LEAP.[23]
·There was no correlation between the hours recorded on the invoices and charged to Radin Legal and the time entered on LEAP.[24]
[22] Ibid, [29].
[23] Ibid, [31].
[24] Ibid, [40].
Her Honour accounted for the discrepancies on the basis that ‘there is always a component of this work that is non-chargeable’, some ‘administrative time was not billable’, that Ms Pasquale undertook ‘a significant amount of legal aid work’ as well as ‘a lot of work for disadvantaged people’, and therefore she ‘agreed to reduce her charges’.[25] It is therefore on these premises that the ‘unrealistic to expect’ conclusion depends.
[25] Ibid, [33], [34], [36], respectively.
These kinds of factors were no doubt inherent in the arrangements. This line of reasoning however, fails to reconcile why billable hours stood at around 40 per cent of the total hours worked, on the figures accepted by the Magistrate.[26] It equally fails to account for the evidence that Ms Pasquale was not entering all the hours worked in the LEAP system, thereby reducing Radin Legal’s capacity to correspondingly charge more billable hours.
[26] Ibid, [39].
The evidence of Ms Pasquale herself was that she rendered weekly invoices on average for about 10 to 15 hours per week.[27] As mentioned, she accepted the responsibility for entering her time into the system.[28] She spoke of encountering on occasion a few problems, including with remote access, and on others organising office staff to enter them for her.[29] She readily conceded in these circumstances that ‘there would also be a discrepancy’.[30] The significant differences between the hours charged and those entered on LEAP are quite evident from the summary compiled in paragraph [28] of the Magistrate’s Reasons.
[27] T5.26-.29.
[28] T5.30-.38, T8.18-.25, T17.30-.34.
[29] T38.33-.38, T40.21-.25.
[30] T41.17-.20.
It is on this basis the submission is advanced that the retainer was just as much an uncommercial proposition from Radin Legal’s point of view, as it was from the point of view of Ms Pasquale. Counsel for the applicant argued that by accepting the latter but not the former, her Honour fell into error. As the summary of the discrepancies between the hours charged and those entered on LEAP demonstrates, this criticism has some force. This issue is considered again later.
The counter-claim
As noted at the beginning of these reasons, her Honour held against the applicant on the basis that no agreement was reached to include a requirement to give 28 days’ notice of resignation. It is common ground that no written contract of employment was executed. An aspect of Radin Legal’s case before the Magistrate was based on a single email of 22 May 2014, in which Mr Radin instructed his office manager, Ms Cleland, to make arrangements for Ms Pasquale to commence on 26 May 2014.[31] Her Honour accepted Ms Pasquale’s evidence that ‘Mr Radin had planned to provide a letter of engagement’.[32]
[31] Ibid, [55].
[32] Ibid, [57].
The situation was in fact that a standard form employment contract was handed to Ms Pasquale by Ms Cleland personally, providing for a ‘period of notice’ to terminate of four weeks.[33] It is this document and the associated contemporaneous emails which are the subject of the application to adduce further evidence on review, on this topic. If further evidence is admitted, it establishes that Ms Pasquale was given a draft ‘standard employment contract’ to consider.[34]
[33] Affidavit of Ms Cleland dated 8/7/16, paragraph 4, and Exhibit ‘JC-2’ thereto.
[34] Affidavit of Ms Cleland, paragraph 4 and Exhibit ‘JC-2’ thereto.
Review - analysis
The District Court as the review court, is vested with the powers of rescission or affirmation of the judgement given below, but not of remission in this instance: s 38(7)(d) of the Magistrates Court Act 1991 (SA). It is unnecessary to resolve the exact scope and nature of the review process under this legislation, for it is clear there will be reviewable error when orders subject to review are ‘the result of some legal, factual or discretionary error’: Allesch v Maunz.[35]
[35] (2000) 203 CLR 172, [23].
To this point in the analysis then, there was an insufficient basis upon which to draw inferences against Radin Legal on the premises that Mr Radin kept a close eye on the invoices from Ms Pasquale and ‘did not query’ them, because the evidence was that he did not vet the invoices themselves. The adverse inference drawn from an ‘unrealistic expectation’, focuses too much on the commercial aspect of the arrangement on Ms Pasquale’s side, but not from Radin Legal’s perspective. Furthermore, there was no adjudication resolving the explanation for wide variations with data entry into the LEAP system, as it served to contribute to the disparity between billed and billable hours.
Accordingly, there were factual errors in concluding the invoices were not queried, and in assessing the ‘commerciality’ of arrangements. And, as will appear later, to the extent that the Magistrate considered there was no difference in the arrangement in relation to charges invoiced for work undertaken on legal aid matters, she fell into error.[36] That being the case, it is appropriate to rescind the judgment under review and proceed to ‘substitute a judgment that the court considers appropriate’: s 38(7)(d) Magistrates Court Act.
[36] Magistrate’s Reasons [34], [36] and [40].
So far as the decision below rests on issues of credit are concerned, the review court must pay heed to the trial court’s substantially better position in seeing and hearing the witnesses, and will therefore be slow to intervene where no error of principle or no misapprehension of the facts is involved: Precision Plastics Pty Ltd v Demir.[37]
[37] (1975) 132 CLR 362, 369.
By and large her Honour’s critical findings stem from inferences drawn from the conclusion that the invoices were not questioned, that the supposed terms of the retainer were unrealistic, and from the implicit conclusion that no letter of engagement was given to Ms Pasquale. In that situation this court is entitled to reach its own conclusion as to what inferences are properly drawn from the primary facts. So much was made clear in Warren v Coombes:[38]
Shortly expressed, the established principles are, we think, that 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. These principles, we venture to think, are not only sound in law, but beneficial in their operation.
[38] (1979) 142 CLR 531, 551.
Reconsideration – Conditions of consultancy

The evidence referred to earlier, discloses Mr Radin ‘did not keep a close eye on the invoices rendered’, as her Honour found.[39] Nevertheless it provides a secure foundation for the conclusion that Mr Radin was provided with ‘monthly productivity reports for each lawyer’, which ‘included the time recorded on LEAP on a daily basis and the dollar value attributed to those entries, enabling him to judge the productivity and financial performance of each lawyer’.[40]
[39] Magistrate’s Reasons [24].
[40] Ibid, [25].
Mr Radin freely volunteered having ‘weekly consultation with the accounts manager’ during which invoices were discussed, and from which he detected ‘nothing untoward so as to stand out in my memory … particularly during that early period’.[41] He further conceded the office manager, Ms Cleland, retained ‘a good sense of … monies coming in and monies going out’.[42] On the question of invoice vetting, Mr Radin could not recall any specific discussion concerning Ms Pasquale’s invoices ‘other than the fact they were being submitted and they were being paid’.[43] He acknowledged she was a ‘productive worker’, that they had an ‘excellent relationship’ and that ‘her performance in terms of conduct of the files and dealing with the clients was always very sound’.[44]
[41] T88.12-.22.
[42] T119.25-.27.
[43] T88.20-.22.
[44] T89.10-.34.
The fact of the matter remains that Mr Radin received monthly productivity reports as the sole principal responsible for the overall management of the firm. These included reports as to ‘billings, as to banking, as to WIP and debtors … on a weekly basis’, which he carefully monitored, and during which he paid ‘serious regard to Ms Pasquale’s performance’.[45] In that process he utilised the LEAP system to monitor her performance ‘in part’, and he further considered ‘the amount she was costing’ throughout the period of the consultancy ‘on a regular basis’.[46]
[45] T127.35-128.9. The reference to ‘WIP’ is work in progress.
[46] T132.20-.38.
His evidence on this topic continued under cross-examination:[47]
QHow did you consider how much she was costing your firm.
AOn the basis of the statistical reports which were provided to me, I would review that issue. I would review the issue of our budgets. I would review our budget performance actual against projected on a periodic basis. I would look at payments out, I would look at payments in.
QBut isn’t that the point, that you would have to, to make that whole process of any value to you whatsoever, consider how much she was costing you.
AI’d have to consider it of course, yes.
QYes, and so you would have regard to the invoices she submitted.
AYes, at a general level but I didn’t look at the specific evidence.
[47] T133.3-.18.
This material was more than sufficient to enable Mr Radin to monitor the work of Ms Pasquale and to assess on a weekly, and if not monthly basis, the differentials between the invoices and billable work and thereby deal with it as he saw fit. On this understanding of his evidence, it is clear enough that he kept a close eye on the progress of the financial state of the firm in general, as well as Ms Pasquale’s hours of work and charges, in particular. To that extent, the Magistrate’s conclusion that he received ‘regular reports detailing the productivity of each of the fee earners’ and that he ‘closely supervised the financial situation of Radin Legal’, was one firmly grounded on the evidence of Mr Radin himself, so that the Magistrate’s conclusion in this respect was correct.[48]
[48] Magistrate’s Reasons [32].
There is a further consideration, and it is this. Radin Legal claims it was a condition of the retainer that Ms Pasquale was only paid for the time that could be on-billed, as a formalised aspect of the retainer itself. An examination of the evidence given by Mr Radin demonstrates there was no meeting of minds on this issue. To begin with, the consultancy relationship began in circumstances when Ms Pasquale ‘was in two minds about how long she might continue to work as a legal practitioner’.[49] It was in this context that the ‘issue of consultancy’ emerged. Mr Radin himself expressed it as ‘an agreement that in the foreseeable term she would do some work on her own account’ on terms ‘as flexible as possible’, so as ‘to enable her to come and work on files which I allocated to her’.[50]
[49] T82.13-.14.
[50] T83.6-.30.
It may be accepted they initially agreed upon an hourly rate of $35 to be reviewed ‘as we went along’, for which there was ‘no firm arrangement’.[51] Indeed, Mr Radin considered the terms of the retainer gave her ‘a fairly autonomous run at the files’ as he had the confidence in her ability to ‘run those files autonomously’.[52]
[51] T85.21-.34.
[52] T84.13-.37.
The degree of informality involved in the arrangement is clear from the following evidence-in-chief given by Mr Radin:[53]
QWhat was the agreement in terms of how Ms Pasquale would account for her time.
AShe was to provide us with her tax invoices. She was to do that on a regular basis and I think we agreed that that ought to be weekly but of course it depended upon whether or not she’d been into the firm or undertaken any work during that given week. But certainly regular periodic submission of tax invoices for the work that she had done and that work was to be billed on a time basis to the firm and any invoices were to be submitted to the responsible member of staff, which in this instance would have been our accounts manager of the day.
QHow would the actual work she performed be recorded.
AShe was required to simply continue on as she’d done previously and that is enter her time into our time management system.
QWas there any alternative agreement in respect of specific files or was it a general hourly basis, an hourly rate.
ALook I can honestly say it was a general hourly basis but we did – as we teased out the specific aspects of her consultancy because there are a number of variables there including, you know, her ability to give us time, the amount of work that she wanted, I remember that fluctuated up and down, at times she’d say I want more work, at times she’d say I don’t want more work and so on and so forth, but we’d ease out the arrangements.
[53] T86.1-.86.27.
He added this observation later in his evidence in the context of the hourly rate to be charged:[54]
So it was a kind of a loose type of arrangement … I wanted her to continue to involve herself in my firm and whatever it took to retain her I was prepared to do, within limits of course. There had to be some outcome for the firm at the end of the day as well.
[54] T124.17-.26.
When questioned specifically on his assertion that ‘my understanding of our agreement was that she would bill me for the time spent working on files which were billable to the client’,[55] he responded in this manner:[56]
[55] T145.22-.25.
[56] T148.2-149.18.
QSo we’ve heard her understanding of what the agreement was. Now I need to try and clarify with you, what was your understanding of the agreement. Your understanding was that you would pay her $60 per hour excluding GST, is that correct.
AAt the end, yes.
QAnd that you in respect of that expected her to fee $422 excluding GST for each and every minute that she billed at all.
AThat was overstating the case.
QHow, tell me how I’m overstating the case.
AWell look, in broad terms, as I said, the agreement which created the framework for her work was that she would work on files and that she’d undertake tasks on those files which were in principle billable to the client. If we’re breaking it down to an infinite degree then perhaps we weren’t going to get 100% return for those hours.
QWell, this is crucial to the case, Mr Radin, isn’t it.
AWell, if we break it down a little bit at a micro level, I’m not sure any firm operates on that basis, seriously.
QWhat percentage was the agreement.
AI don’t think we agreed on a specific percentage for the amount of work done in terms of its billability, if I could put it that way, to the client.
QSo we have finally got to the point where you agree that you do not expect Ms Pasquale to perform as a robot producing 100% billable hours in respect of each hour she billed you.
AI don’t think that that was ever an expectation if you put it in those terms. Here was an arrangement between two people who had worked together in one guise or another for a number of years where Adriana was committed to the firm, wanted to assist but wanted to ensure that she got a fair payday for her efforts and I was quite happy to facilitate her continued work give her the flexibility she desired as a consultant but ensure the bottom line at the end of the day was there was something in it for the firm. If you want to suggest the other arrangements were flexible and casual you may do that but my broad understanding of the agreement was it has been encapsulated by the evidence that I’ve given to this point in time.
This evidence demonstrates as clearly as can be, that the arrangement was a very flexible one, in that it evolved over time, and certainly that no consensus was reached so as to constitute a binding agreement between the parties that Ms Pasquale would charge solely for billable hours. On the contrary, the evidence suggests, particularly in the last quoted portion of Mr Radin’s cross-examination, that this notion might have developed as a matter of his subjective assessment of matters later during the arrangement, and that it never evolved to the point of an agreement viewed on an objective analysis.
It is quite apparent this subjective view of his was not conveyed to Ms Pasquale. This conclusion emerges from the evidence of Mr Radin himself, in this exchange with his counsel:[57]
QBefore we get there, during Ms Pasquale’s work as a consultant, were any other issues raised by either the accounts manager or the practice manager or any other staff in relation to Ms Pasquale’s work.
AIt became apparent to me after discussions with Jan Cleland that there wasn’t sufficient itemisation of her invoices. As I said, I generally didn’t see them. I had a huge level of trust in her. She was aware of the fact from discussions that we’d had that she really needed to account fully for the work that she did for the firm and my understanding was that she would present tax invoices which were sufficiently well itemised for us to understand the nature of her claim for fees in that regard. It became apparent after my discussion with Jan that there wasn’t sufficient particularisation in our view of her tax invoices and I recall on one or two occasions that subsequently, discussing that with her, I believe that other members of staff, I’m not sure whether it was Jan Cleland or perhaps the accounts manager raising the issue of insufficient particularisation of her fee claims on her invoices.
QWas this a concern simply from a bookkeeping perspective or were there wider implications.
AI think the answer to that is that in both respects. One is certainly it would make life easier for us in terms of recording her efforts on files and with clients if she did particularise but it would also then enable me some greater insights into how she went about her work, in particular servicing our clients, and enable me just a general correlation between what she was charging in terms of the time that she provided the firm and the fees that were going out the door at the end of the day.
[57] T90.26-91.21
The same may be said of the following portion extracted from a long answer, again during evidence-in-chief:[58]
Secondly, it’s an open secret that at that particular time I discussed with Adriana the fact that we’d had some cash flow pressures in the practice, so I was apologetic in the context of not being able to deliver some of her expected payments on time. That was I guess a common discussion that we’d had, not that she necessarily exercised any responsibility ultimately in the management of that particular issue within the firm but it was something that I shared with her and she was cognisant of, that cyclically we would have issues of cash flow constrictions which would impact on our ability to pay creditors and so on and so forth. I say again that she was very cognisant of that fact and for the most part where it pertained to her own invoices, she was extremely obliging and understanding in relation to it until effectively she’d left and then the attitude seemed to change somewhat.
[58] T106.24-107.3.
Accordingly, quite apart from inferences properly drawn from the primary facts, the more fundamental problem for Radin Legal is that it cannot demonstrate a contract was formed between the parties containing a term of the consultancy agreement that the practitioner would charge only for on-billable hours. On the contrary, the evidence demonstrates there is no such meeting of minds and that the issue emerged much later in the relationship, solely in the mind of Mr Radin.
It is well established that a court generally examines the objective commercial context in which agreements are reached by the parties thereto: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd,[59] Broadcasting Corporation v XIVth Commonwealth Games Ltd.[60] The requisite intention necessary to create contractual relations is that described by Gaudron, McHugh, Hayne and Callinan JJ in Ermogenous v Greek Orthodox Community of SA Inc:[61]
It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties.
[59] (2004) 219 CLR 165 at 589.
[60] (1988) 18 NSWLR 540 at 549.
[61] (2002) 209 CLR 95, [25], footnote omitted.
There is no contest that an agreement was formed, and yet the evidence was unclear as to the precise contractual relationship. The evidence falls far short of proving a mutual intent to create legally binding relations so far as charging only for billable hours was concerned.
The counter-claim – notice of resignation
The ‘fresh’ evidence engaged here proves Ms Pasquale was given a letter of engagement to consider. Since she did not have access to the relevant emails at the time of trial, and since they were not produced nor discovered, her evidence that no letter of engagement was provided to her, is explicable.[62] It certainly was the case that she ‘put a draft proposal’ to Mr Radin and had agreed on salary. There remained, however, ‘other matters that needed to be discussed’.[63] Under cross-examination, Ms Pasquale said that they only agreed she would ‘return on a full-time basis’, on a salary, and that there were continuing discussions about long service leave and other entitlements.[64]
[62] T36.32-37.1.
[63] T12.32-.37.
[64] T35.13-36.31.
Mr Radin himself accepted there were no specific discussion about the notice requirement:[65]
QWhat about notice periods, what was the discussion about that.
ALook, I’m not sure that we had a specific discussion about it. I know that we’d said that the general terms would apply as had applied previously. Adriana was aware of the fact that when she was previously engaged by the firm that the terms as stipulated in the letter of appointment made it clear that it was 28 days. We’d had various casual discussions over time because I often, you know, spoke to her about other people, other employees. She was well aware of the fact it was a 28 days notice period.
QDid she have any specific issues with any of the terms or were they generally agreed once things like salary and so forth had been sorted out.
AOnce those key aspects had been put in place, once we had achieved agreement on them and we did, there were some other matters that she wanted me to address and I believe that she sent me an email setting out those issues. I really can’t recall a lot of them, to be honest, but I do recall her addressing me in relation to them. I don’t remember them as being substantive, substantive ones. Clearly were her salary, her leave entitlements and so forth.
This evidence implicitly acknowledges an agreement as to notice of resignation was not achieved, as well as on other outstanding issues for that matter.
[65] T101.38-102.23.
The material sought to be introduced by way of ‘fresh’ evidence, manifestly supports that conclusion. On 25 April 2014 Ms Pasquale emailed Ms Cleland seeking a copy of the ‘standard employment contract for lawyers’. In a long email of 11 April 2014 to Mr Radin, she raised a number of issues including ‘flexibility in hours and work location’ and her entitlements to annual leave on account of previous employment with Radin Legal. There is no mention in this or the other correspondence, of the 28 days’ notice requirement, except in the standard draft agreement given to her. Accordingly, the weight of the evidence demonstrates a proposal by way of draft agreement was put to Ms Pasquale which was not formally accepted. Only the broader aspects of the employment situation crystallised. Other aspects remained under negotiation, including questions of leave entitlements as well as the notice provision.
The counter-claim - damages
The evidence is that Ms Pasquale fell ill shortly after commencing work and remained so for the period of about a month thereafter. Mr Radin recalled that upon reporting for work on the first day of the arrangement, Monday 26 May 2014, ‘she didn’t look particularly well’. He told her ‘you look after your health, let me know how it goes, …’ and it was implicit that he accepted she required at least a fortnight off work due to this condition, which he accepted as genuine.[66]
[66] T102.24-103.28.
On 31 May Ms Pasquale spoke with Mr Radin about her continuing illness and suggested she would render an invoice: [67]
… in accordance with our consultancy arrangement because at that point I was no longer able to continue and the arrangement was frustrated because of that.
She added that at this time she ‘didn’t work for about a month’, or at least ‘for a good three or four weeks’.[68] This is effectively what the Magistrate found to be the situation.[69]
[67] T12.19-.26.
[68] T13.25-.32.
[69] Magistrate’s Reasons [59].
Irrespective of whether there was a contract requiring 28 days’ notice or not, the situation was then that the practitioner was entitled, one way or another, to either leave or time off work without pay, due to genuine illness. The draft contract of employment itself provided for 10 working days off on full salary for sickness. The fact of the matter therefore is that Radin Legal was confronted with the situation of having to take alternative measures on account of her absence, irrespective of whether or not there was compliance with the supposed notice requirement.
‘Fresh evidence’
The question now arises as to the capacity of the court to receive fresh evidence of this kind. Reviews are governed by s 38(7) of the Magistrates Court Act 1991 (SA), which appears to confine the capacity to take evidence merely to ‘rehear evidence taken before the Magistrates Court’: s 38(7)(c). This stands in contrast to s 42E(1) of the District Court Act 1991 (SA), which empowers the court sitting in its Administrative and Disciplinary Jurisdiction to allow further evidence or material to be presented, ‘as it thinks fit’. A review of the present nature exercises jurisdiction conferred under a ‘special act’, so that the powers and procedures available therefrom remain ‘subject to the provisions’ of the Magistrates Court Act. The court does however enjoy the additional capacity to ‘inform itself as it thinks fit’, as provided for in s 38(7)(b) of the Magistrates Court Act. In a case such as the present, which at least in part turns on disputed issues of fact, the court can ‘simply proceed to hear the evidence afresh’: Harradine v District Court of South Australia.[70]
[70] (2012) 280 LSJS 572, [53(4)].

In light of the above analysis, the application to adduce evidence of the actual invoices submitted by Ms Pasquale is refused, as they were not adduced as they could have been in the lower court. The inferences drawn by the Magistrate were available and sustained by Mr Radin’s monitoring the situation from the reports regularly submitted to him in any case.
Insofar as the further material annexed to the affidavit of Ms Cleland is concerned, the emails demonstrating Ms Pasquale received a draft contract of employment, is received, so as to set the record straight to confirm Mr Radin’s evidence that this was the case. Otherwise, leave to introduce the remaining material is refused, because no explanation for the failure to produce was forthcoming, and because in light of the above conclusions, that material could have no bearing on the outcome. This ruling is made in the context of observations rightly made by her Honour, that the process of discovery by Radin Legal was ‘unacceptable’.[71]
[71] Magistrate’s Reasons [18]-[19].
Still further a reconsideration on the merits would prove futile, in view of the fact that Radin Legal was placed in a position of finding a substitute for Ms Pasquale on account of illness, so that the failure to give notice of resignation was not causative of any loss.
The Legal Aid Issue
There is one final matter. In her reasons the Magistrate averted to the fact that a significant amount of the work undertaken by Ms Pasquale was ‘legal aid work’, work that was not ‘profitable’. It was this observation that in part, led her to find against Radin Legal.[72] Ms Pasquale’s evidence was that she several times questioned why she was given legal aid files, when she could be more productive on other, presumably better paying, matters.[73] It was the evidence of Mr Radin that part of the retainer was that ‘her claim for fees in respect of legal aid files … [were limited] … to the amount on the face of the certificate issued by the Legal Services Commission’.[74]
[72] Ibid, [34], [36], [40].
[73] T25.23-.27.
[74] T108.5-.8.
It is well known in the legal profession that legal aid matters attract fixed rates for various items of work, for which the Commission certifies standard fees in most cases. Mr Radin spoke of having a specific discussion with Ms Pasquale about those legal aid matters.[75] There is a complaint on review that the Magistrate failed to reduce the amount of damages awarded in order to take account of the fact that invoices for legal aid matters were to be invoiced according to Legal Services Commission certified rates, rather than for hours worked or charged. It was submitted by Mr Jacobi that this arrangement required ‘a separate mechanical exercise’ in the charging process,[76] and that it was ‘not possible to attribute a value to it on a daily basis’.[77]
[75] T86.28-87.30.
[76] T32.17-.23, 11 July 2016.
[77] T67.3-.6, 11 July 2016.
It appears on the face of the transcript taken in the lower court, that Ms Pasquale all but agreed this was the position. For example, she said at one point during examination-in-chief ‘so I would either reduce or sometimes if legal aid was then received, I would pay for legal aid on those ones in lieu of the fees that I had rendered’,[78] and in another passage she implicitly accepted that was so.[79]
[78] T9.25-.27.
[79] T18.35-19.11.
At all events on the second day of the review, her counsel Mr Miller conceded there was ‘… a diversion between the practice for the hours that would be chargeable against private clients and the practice that developed for legal aid clients which was a different matter’. [80]
[80] T78.4-.9, 12 July 2016.
Shortly afterwards he further conceded ‘I think it’s pretty settled ground that legal aid was treated differently to the matter we are in dispute about’.[81] Accordingly there was a formal admission on Review that Ms Pasquale received the legal aid rate of remuneration, irrespective of the hours undertaken when doing work on files funded by the Legal Services Commission.[82] On that basis, insofar as the award of damages was greater than warranted in failing to factor in the legal aid invoices, the application for review must succeed on this additional ground.
[81] T79.5-.7, 12 July 2016.
[82] T80.1-.9, 12 July 2016.
Conclusions and orders
For the reasons set out above, the judgment given in the Adelaide Magistrates Court on 11 March 2016 is rescinded. Judgment is substituted in favour of Ms Pasquale for damages to be assessed, as a consequence of the conclusion there was no condition of the contract of retainer that she would only charge billable hours other than in respect of legal aid files. Radin Legal’s counter-claim is dismissed. The parties are to be heard in respect of the appropriate award of damages in light of the failure to properly account for invoices in respect of legal aid matters.
The formal orders proposed are therefore as follows:
1The judgment entered by the Magistrate on 11 March 2016 is rescinded.
2Judgment is given in favour of Ms Pasquale for damages to be assessed in accordance with these reasons.
3The parties are directed to confer with a view to resolving the amount by which the award of damages should be reduced and interest awarded, to reflect the agreement that Ms Pasquale was to be remunerated at legal aid rates for her time spent on legal aid matters.
4In the absence of such an agreement, the matter be referred to a Master of this Court for the taking of an account and to make an award of interest with respect thereto, pursuant to 6R 251 of the District Court Civil Rules.
5The question of costs in both courts is reserved, bearing in mind that as both parties were legally represented, any orders for costs are governed by s 38(4), (5) and (7) of the Magistrates Court Act.
6Liberty to apply.