The Directors, VLST Investments P/L v Rinaldi & Co - [2006] SASC 266

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
THE DIRECTORS, VLST INVESTMENTS P/L v RINALDI & CO
[2006] SASC 266
Judgment of The Honourable Justice Anderson
30 August 2006
MAGISTRATES - APPEALS FROM AND CONTROL OVER MAGISTRATES - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT - PRINCIPLES ON WHICH COURT ACTS - INTERFERENCE WITH DISCRETION
MAGISTRATES - APPEALS FROM AND CONTROL OVER MAGISTRATES - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT - POWERS AND PRACTICE OF COURT ON HEARING - REMISSION FOR REHEARING
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS
PROFESSIONS AND TRADES - ACCOUNTANTS AND AUDITORS - ACCOUNTANTS
Claim for a debt relating to professional fees for Chartered Accountant - what was agreed in respect of annual retainer - findings of Magistrate incomplete on whether work performed was within or outside retainer - question of what accounts came within agreed retainer - evidence incomplete - application to call further evidence - Held: matter remitted to Magistrate for further hearing and determination as to outstanding amounts and whether covered by retainer - direction as to further evidence.
Devries v Australian National Railways Commission (1993) 177 CLR 472, considered.

THE DIRECTORS, VLST INVESTMENTS P/L v RINALDI & CO
[2006] SASC 266
Magistrates Appeal
ANDERSON J
Background

In this matter the appellant company appeals from a decision of a Magistrate given on 2 March 2006. The Magistrate entered judgment for the respondent in the sum of $7,700 together with costs to be taxed. He also dismissed the appellant’s counterclaim. The claim was for a debt owing in respect of professional services rendered by the respondent at the request of the appellant.
The appellant seeks an extension of time in which to appeal. There was some delay because of the late provision of a transcript due to an administration oversight by the appellant’s solicitors. The respondent takes no point and I grant the necessary leave for the appeal to proceed out of time.
The Facts
The respondent ran a Chartered Accountant practice, and the appellant was, at the relevant time, a client of that practice. The respondent claimed for unpaid accounting fees for the 2002 and 2003 financial years. The appellant denied the claim and counterclaimed the sum of $1,051.70.
At the trial in the Adelaide Magistrates Court, the respondent was represented by counsel, whereas the appellant was represented by Mr Cartier, one of the directors.
The background leading up to, and including the discussions regarding the basis of the retainer, is summarised by the Magistrate in his reasons at [3] and [4] as follows:
Mr Rinaldi said that in September of 2002 Rinaldi & Co received instructions to provide accounting services to the defendants. Those instructions were terminated in 2005. Mr Rinaldi met with Mr Alex Cartier and Mr Cartier engaged the plaintiff to provide services. His instructions were for the plaintiff to prepare financial statements for taxation purposes for Mr Cartier’s trading entity, his trading trust, the trustee and personal tax returns for himself. Mr Rinaldi and Mr Cartier discussed accounting fees and Mr Rinaldi told Mr Cartier that he expected the overall fees to be in the order of $2,000 for each financial year. He said that the estimate was made on the premise that Mr Cartier would provide the plaintiffs with information of sound format which could readily be used to prepare the required financial statements. Mr Rinaldi said that he understood from Mr Cartier that Mr Cartier possessed accounting skills. They discussed how the costs could be minimized. Because of Mr Cartier’s accounting skills and relying upon the matters raised in the discussion, Mr Rinaldi expected to receive comprehensive information from the defendant. Mr Rinaldi said that did not happen.
Mr Rinaldi’s evidence was that he did not receive the information promised. The result was that the defendant’s work required more attention than anticipated and required the expertise of a senior accountant, rather than a junior as had been intended. The cost of preparing the accounts for the defendant was more than expected and in addition there were other services which were not covered by the original estimate.
The Judgment Under Appeal
The Magistrate, after analysing the evidence, made the following findings:
1.That the information provided by the defendant to the plaintiff was not sufficient for its intended purposes.
2.That it was necessary for the plaintiff to undertake certain inquiries and perform additional work because of the deficiencies in the information provided by the defendant.
3.That the plaintiff performed the accounting services for the 2002 and 2003 financial years competently and professionally.
4.That the defendant is liable for the full amount of the unpaid invoices rendered by the plaintiff to the defendant.
5.That the defendant is not entitled to any refund as claimed in his counterclaim.
The Magistrate reached his conclusions on the basis of an acceptance of the evidence of Mr Rinaldi, on behalf of the respondent, as against the evidence of Mr Cartier on behalf of the appellant. The Magistrate said that where there was any conflict between the evidence of the respondent and the appellant concerning the adequacy of the information provided, he preferred the evidence of Mr Rinaldi because of his professional experience and skill.
His Honour went on to say that despite Mr Cartier’s claims of some accounting expertise and knowledge of the requirements for the preparation of accounts, that was not sufficient. He held that it was not sufficient because the information provided lacked the detail required by the respondent. The Magistrate was quite entitled to that view, having seen and heard the witnesses and assessed their evidence. There was evidence to support such a finding. In my view it is not possible to interfere with that finding. - See Devries v Australian National Railways Commission (1993) 177 CLR 472. However that is not sufficient to dispose of the matter for the reasons which follow.
Arguments on Appeal
Mr Riggall, who appeared for the appellant, summarised his argument as relating to the failure of the learned Magistrate to examine:
1The legal consequences of an agreed estimate of fees and the need to advise the other party if the circumstances changed so that the original fees contemplated were no longer appropriate.
2What agreement was actually reached at the time? He suggested an uncertainty as to the terms of the agreement.
3Whether the information actually provided did accord with what was agreed by the parties?
In relation to those points, it seems to me that both points 2 and 3 cannot be disturbed because of the Magistrate’s decision to prefer one set of evidence over the other. It is not possible to argue that the Magistrate was not entitled to make that finding on the evidence before him.
Point 1 above is not an issue in the way I see this matter.
There was no dispute that the services actually charged for were in fact performed by the respondent. Likewise there is no dispute about the quality of the services provided by the respondent. However, there is a question of which services were charged for and whether in turn they came within the retainer or whether they were for services provided over and above the retainer. This aspect needs further consideration. The answer is not clear on the state of the existing evidence, and the parties could not really assist me during the hearing of the appeal.
What was covered by the retainer?
Mr Rinaldi said that, included in the fee estimate of $2,000 per annum plus GST, was the expectation that sufficient detail would be supplied to enable the movements in the balance sheet to be reviewed, checked and then certified so that it could form part of the annual accounts.
The Magistrate accepted the evidence of Mr Rinaldi. It was accepted that the respondent failed to provide either a balance sheet or the necessary primary documents to enable the required reconciliation to take place.
There is no dispute that the estimate given, when the two parties discussed the question of fees at the outset, was in fact $2,000 plus GST for each financial year. The anticipated work was performed by the respondent for the 2000/2001 financial year, and the appellant paid the respondent’s fees. That work was again performed for the financial year 2001/2002. The fee paid for that year’s work however was $3,302.20 including GST. It is not now clear what work that fee covered but the appellant paid the full amount of $3,302.20.
The respondent said that it has not been paid for services rendered for the financial years ending June 2002 or June 2003. It alleged that those fees amounted to $7,700 and that is the amount which the Magistrate gave judgment for. However, what work was actually included in the fees rendered for those years is still uncertain.
Which invoices were actually paid?
During the appeal, I therefore asked the parties to provide me with an agreed schedule showing the total of the various invoices rendered by the respondent and the amounts actually paid by the appellant, so that the amount outstanding could be clarified.
Following my request, it became apparent that there was considerable dispute as to what was actually paid in the relevant financial years and whether the amounts paid were for services rendered within or outside of the agreed retainer.
Both parties then put in further submissions in writing. The appellant contends that it paid $9,200 in total during the relevant period, and that this was not challenged before the Magistrate. However, additional invoices not in evidence before the Magistrate were then produced by the respondent to the appellant by way of further discovery. Those invoices had not been discovered by the respondent before the trial. The further submissions only tend to emphasise the uncertainty which exists and to what amounts remain outstanding.
The appellant has indicated that it wishes to respond to those further invoices by calling further evidence. The quantum of those invoices is now in dispute but was not an issue in the trial.
The respondent says that the invoices were not discovered because they were not relevant. As I understand it, they are said to be irrelevant because they were invoices rendered at an earlier point of time and paid for by the appellant. It seems to me, however, that that begs the question of whether they were invoices covering work which was within the agreed $2,000 per annum retainer.
Conclusion
It is my view that the details of the actual invoices rendered in the relevant financial years, and whether they covered the work agreed to be included within the retainer, needs to be clarified. Further, it is my view that it can only be clarified by further evidence, and the learned Magistrate should hear that further evidence.
The Magistrate did not have sufficient evidence presented to him on this aspect of the case. He needs to make findings on what was actually paid for in each financial year, and then whether the services paid for formed part of the services agreed to come within the retainer. It should simply be a matter of lining up all the relevant invoices, determining whether they covered work in the agreed retainer, and then calculating what amount remains outstanding.
I therefore direct that the matter be referred back to the Magistrate for further hearing and determination in accordance with these reasons.