Starczowski v Hydropol Plumbing P/L - [2018] SADC 64

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Minor Civil Review)
STARCZOWSKI v HYDROPOL PLUMBING P/L
[2018] SADC 64
Judgment of His Honour Judge Cuthbertson
25 June 2018
MAGISTRATES - APPEAL AND REVIEW
Application to review a judgment in a minor civil claim disallowing certain claims of the applicant for accounting work performed for the respondent.
Held:
1.1 The Magistrate was correct in allowing a set off in the sum of $880 which had been paid by a third party to the applicant on behalf of the respondent, as the third party's account to the respondent had been paid twice.
1.2 The Magistrate erred in allowing a deduction from the applicant's account for failure to lodge a September 2015 BAS statement as no charge had been made by the applicant for the lodging of a September 2015 BAS return.
1.3 The Magistrate was correct in disallowing certain charges by the applicant for work performed as a tax agent when the applicant held no authority under the Tax Agents Services Act 2009 to charge for such services.
2.1 The Magistrate was correct in allowing a deduction from the applicant's accounts for the applicant not producing to the respondent the respondent's accounts in MYOB form for the year ended 30 June 2014.
2.2 The Magistrate was correct in allowing as a set off against the applicant's accounts an amount paid twice in error by the respondent to the applicant.
2.3 The Magistrate was correct in disallowing a late payment charge by the applicant as the accounts not paid were genuinely in dispute.
3.1 The Magistrate was in error in allowing a deduction in account 548 of $1460.
3.2 The Magistrate was correct in allowing a set off against the applicant's accounts of $1173 for work required to correct the work of the applicant.
Tax Agents Services Act (2009) , referred to.

STARCZOWSKI v HYDROPOL PLUMBING P/L
[2018] SADC 64
Introduction

This is an application by Mr Starczowski seeking a review of a judgment entered by a Magistrate in a Minor Civil Review pursuant to s 38 of the Magistrates Court Act 1991 (SA).
On 29 March 2018 the Magistrate entered judgment for the applicant in the sum of $2,727.20 plus $138.00 filing fee, costs of $150.00 and $100.00 interest, total $3,115.20.
In dispute were two invoices of the applicant to the respondent being invoices numbers 548 and 549 dated 16 November 2015 (Exhibit P1 at trial). The issues in the case are whether the applicant is entitled to payment for the invoices for accounting work performed for the respondent and whether the respondent is entitled to certain set offs.
The nature of a Minor Civil Review
The provisions applicable to the trial and any review of a minor civil action are set out in s 38 of the Magistrates Court Act 1991 (SA). Section 38 reads as follows:
38—Minor civil actions
(1)The following provisions are applicable to the trial of a minor civil action:
(a)     the trial will take the form of an inquiry by the Court into the matters in dispute between the parties rather than an adversarial contest between the parties;
(b)     the Court will itself elicit by inquiry from the parties and the witnesses, and by examination of evidentiary material produced to the Court, the issues in dispute and the facts necessary to decide those issues;
(c)     the Court may itself call and examine witnesses;
(d)     the parties are not bound by written pleadings;
(e)     the Court is not bound by the rules of evidence;
(f)    the Court must act according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal forms.
(2)At or before the trial of a minor civil action, the Court should explore any possible avenues of achieving a negotiated settlement of the matters in dispute.
(3)After giving judgment in a minor civil action, the Court—
(a)     should advise the unsuccessful party of his or her right to apply for review of the proceedings by the District Court; and
(b)     should give the successful party any advice or assistance as to the enforcement of the judgment that the Court considers appropriate in the circumstances; and
(c)     if there is a judgment debtor who is present, should proceed immediately to investigate his or her means of satisfying the judgment and to take any further action that appears appropriate in view of the results of that investigation.
(4)The following provisions govern representation in minor civil actions:
(a)     representation of a party by a legal practitioner will not be permitted unless—
(i)     another party to the action is a legal practitioner; or
(ii)    all parties to the action agree; or
(iii)     the Court is of the opinion that the party would be unfairly disadvantaged if not represented by a legal practitioner;
(ab)   however, the Court may, in its discretion, permit representation of a party by a legal practitioner at the hearing of an interlocutory application;
(b)     if a party to the action is a body corporate, the Court must, if the party seeks to be represented by an officer or employee who is not a legal practitioner, permit such representation;
(c)     if a person is subrogated to the rights of a party, the Court will permit that person to appear in the proceedings on behalf of that party and to be represented in the same way as if that person were a party;
(d)     the Court will permit a party, or a person subrogated to the rights of a party, to be assisted by a person who is not a legal practitioner but only if that person is not acting for fee or reward.
(5)In a minor civil action costs for getting up the case for trial, or by way of counsel fees, will not be awarded unless all parties were represented by counsel, or the Court is of opinion that there are special circumstances justifying the award of such costs.
(6)The District Court (constituted of a single Judge) may, on the application of a party dissatisfied with a judgment given in a minor civil action, review the matter.
(7)The following provisions apply to such a review by the District Court:
(a)     the right of a party to be represented by a legal practitioner at the review will be determined in accordance with subsection (4);
(b)     the Court may inform itself as it thinks fit and, in doing so, is not bound by the rules of evidence;
(c)     the Court may, if it thinks fit, re-hear evidence taken before the Magistrates Court;
(d)     in determining the matter, the Court may—
(i)affirm the judgment; or
(ii)rescind the judgment and substitute a judgment that the Court considers appropriate; or
(iii)if the review arises from a default judgment or summary judgment, rescind the judgment and—
(A)
substitute a judgment that the Court considers appropriate;

or
(B)remit the matter to the Magistrates Court for hearing or further hearing;
(e)     in hearing and determining the review, the Court must act according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal forms.
(8)A decision of the District Court on a review is final and not subject to appeal.
(9)However, the District Court may reserve a question of law arising in a review for determination by the Full Court of the Supreme Court which may determine the question and make any consequential orders or directions appropriate to the circumstances of the case.
The nature of a review of a minor civil action was considered by Blue J in Harradine v District Court (SA) [2012] SASC 96. His Honour said at paragraph 53:
1.     The review is not in the nature of an appeal stricto sensu.
2.     The review is not necessarily a hearing de novo in that the Court is entitled to have regard to the evidence adduced before a magistrate and “may” rehear that evidence.
3.     The review is not necessarily an appeal by way of rehearing in that it is a “review” (not an “appeal”), the Court may inform itself as it thinks fit, the Court must act according to the substantial merits of the case and the Court may rehear evidence without being confined by the “fresh evidence” rules which apply to appeals by way of rehearing.
4.     The Court can tailor the nature of the hearing to the circumstances. In a case where the review will not turn on findings of fact or credibility of witnesses, the Court might simply have regard to the evidence adduced before a magistrate and a magistrate’s findings of fact. In a case which does turn on disputed issues of fact or credibility, the Court might simply proceed to hear the evidence afresh.
5.     If the District Court concludes that a magistrate made an error vitiating the judgment and had not made findings of fact necessary to determine the matter, it will be necessary for the Court itself to hear the evidence relevant to those findings of fact (as it does not have power to remit the matter for rehearing).
6. To the extent that the Court does itself hear evidence, it should proceed in a similar manner to that provided by section 38(1), namely adopting the form of an inquiry by the Court rather than an adversarial contest between the parties. This is because section 38(7) provides that the Court may inform itself as it thinks fit and also because it would be incongruous if the District Court were to adopt a radically different approach to the hearing to that required to be adopted by a magistrate at first instance given that there is no power of remitter.
The Magistrate’s findings
The Magistrate conducted an extensive enquiry into the matter and heard evidence from the applicant and respondent.
The Magistrate’s findings are conveniently set out on pages 12-14 of the Magistrate’s judgment and I shall deal with the matters in that order.
As to Invoice 548
1.1
The first issue is whether the respondent was entitled to set off an amount of $880.00 it had been owed by Taylor Accountants and Advisors. This was an accounting firm that was engaged to perform tax agent work for the respondent that the applicant was not licensed to perform himself.
Email correspondence tendered by the respondent (Exhibit D3) indicates that an amount of $880.00 that had been paid twice by the respondent to Taylors Accountants and Advisors was paid back to the applicant by Taylors. (See also evidence of Pirmezis T38, 39). This should have been paid to the respondent.
The Magistrate was entitled on the balance of probabilities, to find that the $880.00 was paid by Taylors to the applicant and was owed by the applicant to the respondent and had not been paid.
In those circumstances she was entitled to set off against the amount owed to the applicant in invoice 548, the amount of $880.00.
1.2
Failure to lodge September 2015 quarter BAS by the applicant.
I note that the accounts 548 and 549 did not include a charge for lodging the September 2015 quarter BAS return as they dealt with costs incurred by the respondent up until 30 June 2015.
In those circumstances there should not be a deduction from the account for the applicant failing to do that which he had not charged to do.
I reduce the amount ordered by the Magistrate to be set off from the two accounts by $450.00.
1.3
It is common ground between the parties that at all relevant times the applicant did not hold an authority under the Tax Agent Services Act 2009 to perform the work of a registered tax agent.
The applicant stated that he did not perform any duties of a registered tax agent and all such duties were performed by his agent, Taylors, who are resident in Victoria.
Invoice 548 on its face charges for the work of preparation of accounts for the lodgement of the respondents BAS returns for the years ending 30 June 2012, 2013, 2014 and 2015.
The relevant BAS returns have been certified correct by the applicant (see D8 & D9).
The Magistrate has found that the fees in invoice 548 include fees for tax agent services, which includes the lodgement of BAS accounts.
Being unable on the material before her to ascertain precisely which services provided by the applicant relate to tax agent services for which the applicant is not able to charge, the Magistrate has applied the broad axe approach allowing for half of the fees for the invoice 548 being for services for which the applicant is not entitled to recover payment.
This comes to half of the four items charged on invoice 548. Thus the account should be $3,150.00
If the applicant had used a registered tax agent to do the work that only a registered tax agent could charge for, then one might have expected the invoice 548 to charge for the work done by the applicant himself and for a disbursement for the amount done by Taylors. The matter is peculiarly within the knowledge of the applicant and if the applicant wished to particularise in more detail how the work was divided between him and Taylors it was open for him to do so.
In the circumstances, I cannot see how the Magistrate has erred. In the absence of the provision of information as to what work was done by Taylors and what work was done by the applicant, there was no other alternative but to apply the broad axe approach.
In my view no error is demonstrated and the amount allocated by the Magistrate should stand.
In summary, the Magistrate’s findings in 1.1 and 1.3 should stand and there should be an adjustment having regard to my finding that she is in error in relation to finding 1.2.
As to invoice 549
2.1
The complaint is that the applicant did not produce the respondent’s MYOB accounts for the year ending 30 June 2014 at the appropriate time. For this reason the Magistrate reduced the amount of the invoice by $1,800.00. This was the amount charged for preparation of the accounts in MYOB for the year ending 30 June 2014.
The applicant admitted to me that he did not hand over the MYOB accounts until the proceedings were on foot before the Magistrate. Apparently he did this because the accounts were in dispute. Of course it was of no use to the respondent that it received the MYOB accounts during the course of proceedings in which it was complaining about the accounts and in particular that the MYOB accounts for 2014 had not been handed over.
The charge was $1,800.00 for the work done in MYOB for the year ending 30 June 2014. It was appropriate that the account be reduced by the amount of $1,800.00, the charge for producing the account in MYOB for that year.
2.2
The complaint 2.2 is that the respondent, in error, made two payments of $2,400.00 in payment of invoice 547 and has not received a refund or credit for that amount.
The Magistrate preferred the evidence of the respondent to the evidence of the applicant. The applicant has put forward no cogent argument as to why she should not have done so. Accordingly, the Magistrate was entitled to accept the evidence of the respondent that it had made two payments without receiving a credit or a refund.
I can see no error in her finding that the respondent is entitled to a set off of $2,400.00 in respect of what is owed on invoice 549.
2.3
The late payment fee of $315.00 was disallowed as the Magistrate found that the respondent is justified in its claims in relation to invoice 549.
This finding must logically follow given the Magistrate’s findings in relation to 2.1 and 2.2.
3.1
As to 3.1 the Magistrate has noted that the original accounts 548 and 549 (see D6) included an amount for GST of $560.00 and $900.00.
The subsequent substituted accounts (P1) have had deleted from them the GST amounts but have increased the amount being charged for the other items. Thus $560.00 plus $900.00 equals $1,460.00 being the GST amount has been deleted from the revised accounts but the fees of P1 account 548 have been increased by $700.00.
No explanation satisfactory to the Magistrate has been adduced for the increase. The Magistrate has allowed reductions for the fact that no GST is claimed but not permitted the additional charges, hence a reduction in the final accounts (Exhibit P1) of $1,460.00. I would vary the figure to allow $700.00 off the account as $1,460.00 has already come off by the removal of the GST amount. Otherwise I can see no error in the Magistrate’s approach.
3.2
This is a set off of a fee paid to an accounting firm SJN to correct work allegedly improperly performed in respect of the invoices 548 and 549.
Although the respondent did not call evidence from SJN indicating that it undertook and charged for work that was required to correct and rectify work carried out by the applicant, the Magistrate found that the accounts do evidence that some re-working was required.
There was also the assertion of the respondent that re-working of the applicant’s work was required. Essentially the respondent’s evidence was accepted by the Magistrate and the evidence of the applicant was not.
The Magistrate would allow one third of the account of $3,520.00 ie $1,173.00 was for work required to correct or vary the work carried out by the applicant.
I cannot say that Her Honour’s broad assessment was wrong and I would confirm the deduction.
Conclusion
Since the hearing I have received and considered an e-mail from the respondent dated 13 June, 2018.
I would vary the Magistrate’s allowed deductions by removing the deduction in 1.2 of $450.00 and deleting the deduction in 3.1 of $1,460.00 and substituting a deduction of $700.00.
Accordingly I vary the Magistrate’s allowed deductions by deleting the deduction in 1.2 of $450.00 and substituting the deduction of $1,460.00 in 3.1 with a deduction of $200.00.
Final Orders
Accordingly, the final substituted orders are that there will be judgment for the applicant in the sum of $2,727.20 plus $450.00 (1.2) and $700.00 (3.1) equals $3,877.20 plus $138.00 filing fee, costs of $150.00 and $100.00 interest, total of $4,265.20.
There will be no order as to costs in this jurisdiction.