Benarid Pty Ltd v Sarina Consulting Engineers Pty Ltd [2016] QDC 307

DISTRICT COURT OF QUEENSLAND CITATION: Benarid Pty Ltd v Sarina Consulting Engineers Pty Ltd [2016] QDC 307 PARTIES: BENARID PTY LTD (ACN 011 043 345) (appellant) v SARINA CONSULTING ENGINEERS PTY LTD (ACN 118 273 304) (respondent) FILE NO/S: D93/2015 DIVISION: District Court, Mackay PROCEEDING: Appeal (Civil) ORIGINATING COURT: Magistrates Court at Mackay DELIVERED ON: 28 November 2016 DELIVERED AT: Brisbane HEARING DATE: 25 July 2016 JUDGE: Butler SC DCJ ORDER: 1. The appeal is dismissed with costs. 2. The cross appeal is dismissed with costs. CATCHWORDS: APPEAL BY WAY OF RE-HEARING – CROSS-APPEAL – CONTRACT – IMPLIED TERMS - ORAL VARIATION TO CONTRACT - Where plaintiff claims breach of contract – Where plaintiff claims damages for work rendered – Whether there was an agreement to pay for future work – Whether there was an implied term in the contract that there should be payment for the part services already performed – Whether there was an implied term in the contract that the services performed be assessed at an hourly rate – Whether the delay was caused by the plaintiff or defendant COUNSEL: A. Morris for the appellant C. Muir for the respondent SOLICITORS: BC & A Solicitors for the appellant McKays Solicitors of the respondent [1] This is an appeal to the District Court under s 45 of the Magistrates Courts Act 1921 against a decision delivered in the Magistrates Court at Mackay on 21 July 2015. -- 1 of 17 -- 2 Judgment was given in favour of the respondent/plaintiff Sarina Consulting Engineers Pty Ltd (“Sarina Engineers”) in the amount of $76,085.40. A counterclaim brought by the appellant/defendant Benarid Pty Ltd (“Benarid”) was dismissed. [2] The respondent brings a cross-appeal against the learned Acting Magistrate’s failure to award costs in its favour. Background [3] The appellant company, Benarid, was engaged in the subdivision and development of property on the outskirts of Mackay. It engaged the services of a consulting engineer Mr Roy Roberts (“Roberts”) who initially traded as an individual but from 9 February 2006 traded as the company Sarina Engineers. The appellant does not raise any issue regarding the change in the contracting party from Roberts to Sarina Engineers. Accordingly, I will proceed on the basis that the relevant contracting entities were Benarid and Sarina Engineers. [4] The development involved the subdivision of 16 ha of former cane paddock owned by Mr John Galea (“Galea”) and Mr Ron Bradford (“Bradford”). Galea was a director of the appellant and acted as its agent. Roberts is a registered professional engineer and a fellow of the Institution of Engineers Australia. He is experienced as a consultant on land development, including subdivisions. [5] At a meeting on 15 June 2004, Roberts was asked by Galea and Bradford to prepare a proposal to provide engineering services for the subdivision of their land. He prepared a written proposal dated 20 June 2004 and provided it to Galea. [6] It is common ground that the parties formed an agreement for the provision of engineering services by Sarina Engineers on the terms and conditions set out in the 20 June 2004 written proposal (“the Original Agreement”)1. [7] The Original Agreement provided as follows in respect to process and fees: “The Process The several steps considered applicable to the development process for the subject site may be summarised as follows:-  Overall Planning and Preliminary Development Application for a Material Change of Use – Impact/Code Assessable – This would include reaching agreement with Council as to the requirements for truck drainage, truck sewerage, the internal road network, parkland and the principles for any contributions and/or compensation relative to these provisions. A conceptual layout for the total area would be developed in consultation with you defining major details of the proposed development of the area. This would include development of draft individual lot layouts and servicing requirements sufficient to demonstrate the viability of the project. At the end of this process, and in consultation with Evan Westlake, an application would be made to Council for Preliminary Approval for a Material Change of Use over the whole of the area concerned. Such an approval will establish the conditions that could be expected in response to 1 Exhibit 2. -- 2 of 17 -- 3 subsequent applications and would generally satisfy the requirements for public advertising. The Engineering Report for this phase would be reasonably broad with some supporting data and layouts.  Material Change of Use & Reconfiguring of a Lot – Code Assessable – Applications would be lodged, on an area by area basis, for the development of stages, probably in the range of 20-40 lots each. Whilst specific conditions may apply to specific areas, the basis of the conditions could be expected to be stated in the preliminary MCU approval.  Operational Works Design & Documentation – Preparation of detailed designs and documentation for each stage to be constructed. Includes preparation of drawings, particular specifications, schedules and estimates.  Auditing of Construction & Preparation of “As Constructed” Documents – Inspection of Works in Progress to ensure compliance with design intent and specifications, receive survey information and Geotechnical Engineering reports relating to the quality of materials and workmanship and to details of works as they were constructed, prepare “As Constructed” documentation as required by Council and Certify the Works. Fee Proposal Although there is some degree of uncertainty as to the requirements for some of the earlier phases of the process, I am prepared to offer to undertake the various phases of the Engineering Services on a fee per lot basis as follows:- Prepare preliminary layouts and obtain Preliminary Material Change of Use from Council $75.00 per lot (plus GST) Finalise layouts and obtain Material Change of Use from Council, based on Preliminary MCU approval $75.00 per lot (plus GST) Undertake Operational Works designs and prepare documentation for approval by Council $850.00 per lot (plus GST) Carry out Audit Inspections of Operational Works and monitor acceptance criteria, certify works for progress payments, liaise with Council $300.00 per lot (plus GST) Prepare “As Constructed” documentation for approval/acceptance of the Works by Council $100.00 per lot (plus GST) The fees as offered above would be subject to review after 12 months. Proposals for any additional inputs not included above could be -- 3 of 17 -- 4 offered as lump sums, based on the specific nature of inputs required, or on an hourly basis where the limits of inputs are not known”. [8] The initial proposal was for development of 16 ha for low density urban residential allotments with an expected yield in the order of 160 allotments. Over time this reduced to 143 allotments under design.2 The document identified five phases of engineering services to be provided by the respondent. Throughout the trial these five phases were referred to by the letters A-E respectively. The evidence was that construction of the subdivision allotments progressed on a staged basis. Each stage referred to the physical construction work involved in the development a number of allotments in a single group. [9] Following acceptance of the proposal, Sarina Engineers commenced engineering design work for the development. Engineering services were performed by Sarina Engineers, invoiced for and paid for as the project proceeded. Physical construction of the early stages of the subdivision progressed in sequence and are referred to in numerical order. There were to be 10 stages in all and by late 2006 stages 3 and 3A were under construction. [10] In a meeting on 5 December 2006 Galea, acting on behalf of Benarid, told Roberts that he intended to engage new engineers. The parties discussed how the role of Sarina Engineers would be terminated, but the terms reached as to when and how that was to be achieved were the subject of contest at trial. While the appellant accepts that Sarina Engineers was entitled to payment for certain completed work, it disputes the respondent’s claim for payment in respect of engineering work on future construction stages detailed in invoices issued by the respondent engineers on 14 February 2007. [11] The appellant accepts that Sarina was entitled to payment for the following work: “(a) Completion of phase A for stages 3-10 of the development; (b) Completion of phase B for stages 3-5 of the development; and (c) Completion of phases C, D and E for stages 3 and 3A of the development”.3 The appellant calculates the respondent’s entitlement for this work, based on the per lot payment schedule in the Original Agreement, to be $29,625.00. This amount has been paid. [12] The dispute over Sarina’s entitlement to payment relates to engineering work in respect of what are described as “future stages”. This is a reference to allotment development stages upon which physical construction work had not commenced but for which the respondent claims it had performed preliminary engineering design work. Principles for determination on appeal [13] This is an appeal by way of rehearing.4 [14] The notice of appeal sought a hearing de novo but that was not pressed before me. An appeal by way of rehearing is conducted on the record. Ordinarily, it is necessary 2 Transcript 2-22, l 33. 3 Appellant’s outline of argument, p.2 para 4(c). 4 Rule 765 of the UCPR applies by virtue of r 782 and r 785. -- 4 of 17 -- 5 for the appellant to show the decision under appeal was wrong.5 An appeal court is reluctant to interfere with the findings of primary fact made below in the absence of demonstrated error.6 It has, however, a power to draw inferences from primary facts found below which is as extensive as that of the primary judge.7 The appeal [15] Although the notice of appeal lists five grounds for appeal, each with a number of subcomponents, the appellant in its Outline of Argument and before me addressed its argument to only three issues.8 It is submitted the learned Acting Magistrate erred in finding: (a) There was an agreement by Benarid to pay for work in respect of future stages of the development; (b) There was an implied term Sarina was entitled to charge for services performed on an hourly rate; and (c) That a fair and reasonable assessment of the value of the work is the time spent carrying out that work to be charged on an hourly rate. [16] The appeal against the Acting Magistrate’s finding on the counterclaim has been abandoned.9 The pleadings [17] The plaintiff’s claim filed on 14 January 2009 seeks $43,651 for breach of contract; or alternatively as compensation for the fair value of professional services performed by the plaintiff at the defendant’s direction. [18] The second further amended statement of claim pleaded the following matters: “5B. In or about November/December 20067, Mr Roy Roberts and Mr John Galea on behalf of their respective corporations agreed in relation to the engineering agreement that the plaintiff would: (a) complete phase A for stages 3 to 10 of the development; (b) complete phase B for stages 3 to 5 of the development; (c) complete phases C, D and E for stage 3 and 3A of the development; (d) provide a CD of all the work done for the future stages (including stages 4 and 5); (e) issue accounts with respect to all work carried out to date with respect to the future stages. 5C. A CD was provided by the plaintiff to the defendant under cover of letter 14 February 2007. 5D. On 12 April 2007 the engineering agreement was terminated by the defendant (“the termination”). 5 JJ Richard and Sons Pty Ltd v Precast Concrete Pty Ltd [2010] QDC 272 at [8]. 6 Attorney-General (Qld) v Watego (2003) 142 A Crim R 535. 7 Warren v Coombs (1979) 142 CLR 531 at [537]-[541]. 8 Appellant’s outline of argument, p. 4 at [6]; Transcript 1-17, ll 40-48; 1-18, ll 1-6. 9 Appellant’s outline of argument, p. 11 at [33]. -- 5 of 17 -- 6 Particulars (i) Letter from the defendant to the plaintiff dated 12 April 2007. …… 5F. It was an implied term of the engineering agreement, necessary to give it business efficacy, that if the services were not completed by the plaintiff, then the plaintiff was entitled to charge for the services performed by the plaintiff at the plaintiff’s usual hourly rate”. [19] The plaintiff pleaded that the amount of $43,530 comprised fees for engineering work detailed in six invoices issued in February and June 2007 for debts due and owing. At trial the plaintiff elected not to press its case in regard to an alleged increase in rates, and taking that into account, the learned Acting Magistrate, in finding for the plaintiff, gave judgment in the sum of $42,089. [20] The appellant pleaded that in November/December 2006 the parties agreed orally to terminate their agreement.10 The appellant denied that they agreed on any further work beyond that referred to in paragraph [11] above, the total value of which it calculated to be $29,625.11 It also denied the invoices relied upon by the respondent were issued in accordance with the Original Agreement as there was no agreement to charge an hourly rate.12 [21] The respondent contended that termination did not occur until advice in writing was provided by the appellant on 12 April 2007. It pleaded that the Original Agreement was varied by the parties agreeing orally that the respondent would: (i) Complete phase A stages 3-10; (ii) Complete phase B stages 3-5; (iii) Complete phases C, D and E for stage 3; (iv) Provide a CD of all the work done for the future stages (including stages 4 and 5); and (v) Issue accounts with respect to all work carried out to date with respect to the future stages.13 [22] In addition, the respondent denied there was any discussion of fees being as per the initial fee proposal.14 What was the agreement reached? [23] The appellant submits that the learned Acting Magistrate erred in finding there was an agreement to pay for work on “future stages”.15 This follows from the contention that the evidence does not disclose “a full and frank discussion” between Galea and Roberts in respect to future stages and therefore there was no evidence of any offer or acceptance. [24] It is further submitted that the Original Agreement did not contemplate that Roberts was free to do work on stages 1-10 “as and when he felt like it in advance of Council 10 Third amended defence para 4. 11 Third amended defence para 7A. 12 Third amended defence subparagraph 7D. 13 Further amended reply and answer (8 March 2013) para 5(c). 14 Further amended reply and answer (8 March 2013) para 5(d). 15 Appellant’s outline of argument para 20. -- 6 of 17 -- 7 approving each stage for a material change of use”.16 Reliance is placed upon evidence of an engineering witness, Thomas Long, to the effect that it is unwise to design works before the Council has approved a material change of use.17 [25] These submissions challenge the learned Acting Magistrate’s primary findings of fact in respect to the 5 December 2006 meeting. His Honour’s findings as to what was agreed at that meeting were based on his assessment of the credibility and reliability of the two participants in the meeting, Roberts and Galea. The Court found the evidence of Roberts to be reliable and accurate and rejected the evidence of Galea where there was any conflict. [26] In reaching these conclusions his Honour noted that Roberts, as an experienced engineer, had greater knowledge and understanding of “the intricacies, concepts and complexities of engineering work” than Galea who lacked expertise in the engineering field. His Honour also referred to Roberts having the benefit of diary notes to assist his memory of conversations which occurred years earlier. It is apparent from the learned Acting Magistrate’s reasons that he gave careful attention to determining which witness he would accept, considering all the evidence before the Court in doing so.18 [27] The learned Acting Magistrate had the benefit of hearing the evidence of the witnesses as they gave it. His assessment of relevant factors does not disclose any error in the approach taken. His Honour concluded that there was such conflict between the accounts of the two witnesses that one witness was either dishonest or mistaken. He rejected Galea’s testimony where it conflicted with that of Roberts, concluding that Galea was mistaken. [28] Although not referred to by the learned Acting Magistrate, it is worth noting that Galea testified that he had conversations with Roberts varying the original agreement. Those conversations were not pleaded by the appellant or put to Roberts in cross- examination. The late emergence of these claims throws further doubt upon the credibility and reliability of Galea. [29] Upon my review of the evidence, my independent assessment of the witnesses’ credibility and reliability accords with that of the learned Acting Magistrate. The evidence of Roberts should be accepted as reliable and that of Galea rejected where it is in conflict. The Court should act upon the resulting findings of fact. The Acting Magistrate’s findings on the December 2006 conversation [30] The learned Acting Magistrate found the following: “That on 5 December, 2006, Mr Roy Roberts and Mr John Galea on behalf of their respective corporations agreed in relation to the engineering agreement that the plaintiff would: (a) Complete phase A for stages 3-10 of the development; (b) Complete phase B for stages 3-5 of the development; (c) Complete phases C, D and E for stage [sic] and 3A of the development; 16 Transcript (25 July 2016) 1-7, ll 32-38. 17 Appellant’s outline of argument para 9-10. 18 Reasons for decision pp 3-4. -- 7 of 17 -- 8 (d) Provide a CD of all work done for the future states (including stages 4 and 5); (e) Issue accounts with respect to all work carried out to date with respect to the future stages.” [31] These findings followed from the general finding that Roberts and Galea at their meeting on 5 December 2006 determined that “the agreement was to be varied to allow for some work to be completed and then was to be terminated.” [32] These findings did not exclude the possibility that Galea was not aware of all the work already carried out on future stages of construction. His Honour said: “The possibility that Mr Galea did not fully understand the extent of the work that Mr Roberts had carried out in relation to future stage [sic] of the development as at 5 December, 2006 cannot be ruled out entirely.”19 [33] This conclusion is consistent with Roberts’ concession that Galea probably did not know “what he was in for” when he agreed to pay future accounts.20 Prior knowledge by Galea of the specific engineering work done on future stages was not necessary in order for Sarina Engineering to be entitled to payment for services under the Original Agreement as varied by the oral agreement found by the learned Acting Magistrate to have been reached on 5 December. The written agreement made no provision requiring that Benarid be informed in advance of specific work to be carried out under the agreement. [34] The learned Acting Magistrate, having preferred Roberts’ evidence to that of Galea was entitled to accept Roberts’ evidence that “as stage 3 got underway, John said he wanted to roll the estate through.”21 Galea gave evidence which was in stark disagreement with Roberts’ account in this regard. He said that he told Roberts all along that he did not want him doing phase C for the future development for stages 4 and 5 onwards. That he wanted him to do one stage at a time.22 Insofar as this disagreed with Roberts’ testimony the learned Acting Magistrate did not accept it. In addition, these suggested oral variations to the written agreement were not pleaded. [35] His Honour’s findings as to the provision of a CD and the issue of accounts in respect of future stages are not inconsistent with the written Original Agreement and align with Roberts’ testimony that he was asked to continue to roll the estate through. [36] Where an agreement authorises provision of and payment for services in the course of a continuing project, one would ordinarily expect that in the event of termination of the engagement, in the absence of agreement to the contrary, the service provider would be entitled to payment for work completed under the contract up to that point of time. However, it is always necessary for careful attention to be given to the actual terms of the agreement. [37] The Acting Magistrate accepted the following evidence given by Roberts as to the 5 December meeting: 19 Reasons for decision p 3. 20 Transcript 1-89, ll 8-10. 21 Transcript 1-55, ll 1-10. 22 Transcript 2-58, ll 35-45. -- 8 of 17 -- 9 “Well, basically, as I’ve recorded. John said he wasn’t happy with progress and wanted to terminate the agreement. He was going to get someone else to finish off the – the future – future stages. He wanted to push them on. And he asked me to finalise the reports for stages 4, 5 which I had started working on, pass them on to the planners, who were going to do the application for the material change of use. And then to provide electronic files for everything I had done so that he could pass them on to – to whoever he got to do the engineering beyond, and that he’d pay the accounts for work that I’d done to date on those future stages.”23 [38] His Honour also accepted that Roberts was, during 2006, carrying out design work of future stages of the development for stages 4 and beyond.24 There is no challenge to Roberts’ claim that he hadalready carried out this work as at 5 December 2006. The challenge is on the basis that he failed to inform Galea of this. [39] The Acting Magistrate’s findings of fact, based on an acceptance of Mr Roberts’ evidence, justify his conclusions that there was an agreement for Roberts to provide a CD of all work done for future stages (including stages 4 and 5) and to issue accounts with respect to all work carried out to date on future stages. [40] No error is disclosed in his Honour’s findings in this regard. I conclude that the parties orally agreed that Sarina Engineering be remunerated for work carried out as at 5 December 2006. Entitlement to payment for work on future stages [41] The Original Agreement provided for payment for work on a fee per lot basis for each phase of engineering work delivered in respect of that lot. The learned Acting Magistrate said: “The charges by the plaintiff as specified in the Engineering Agreement were for a nominated amount per lot. However, in light of the agreement at the meeting on 5 December, 2006 the plaintiff was unable to complete the work required for each lot.”25 [42] His Honour went on to find: “I accept the submissions on behalf of the plaintiff that under the circumstances the plaintiff should be entitled to be paid a reasonable amount for the work carried out. I also agree that it is not necessary for the plaintiff to show that there was a benefit obtained by the defendant.”26 [43] The Original Agreement provides for payment of a set sum per lot for work contained in a phase. A question arises as to the service provider’s entitlement to be remunerated when termination of the agreement occurred before all work required to be done within a specific phase was completed. Can a term be implied that there should be payment for the part services already performed? 23 Transcript 1-27, ll 10-17. 24 Reasons for decision p 4. 25 Reasons for decision p 5. 26 Reasons for decision p 5. -- 9 of 17 -- 10 [44] The legal principles to be taken into account before a term is implied were set out by the High Court in BP Refinery (Westernport) Pty Ltd v The Shire of Hastings:27 “For a term to be implied, the following conditions (which may overlap) must be satisfied: a) It must be reasonable and equitable; b) It must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; c) It must be so obvious that it “goes without saying”; d) It must be capable of clear expression; and e) It must not contradict any express term of the contract.” [45] In my view, it goes without saying that it is central to the contract that the engineer be remunerated for work performed under the contract. Indeed, the learned Acting Magistrate found that is what was agreed on 5 December 2006. That oral variation envisaged that accounts would be issued for all work carried out to date with respect to the future stages. It is implicit in that agreement that work carried out in part satisfaction of a phase would be remunerated. It is necessary in order to give business efficacy to the agreement to imply a term providing for remuneration for services already performed in part satisfaction of a phase. In my view, such a term would meet all the conditions specified by the High Court in BP Refinery. [46] The appellant submits that the parties made no provision for part payment in the engineering agreement of June 2004 and consciously failed to provide for outstanding fees when termination was discussed in December 2006.28 However, that is contrary to the Magistrate’s finding of fact that oral agreement was reached at the December meeting to provide for outstanding fees. In my independent assessment that finding discloses no error and should be accepted. Furthermore, an implied term that the service provider is entitled to be remunerated for part services performed does not contradict any express term of the contract. Such a term should be implied. Assessment of value of work performed [47] The learned Acting Magistrate found that there was an implied term in the contract that the services performed be assessed at an hourly rate. This finding is strongly challenged by the appellant. [48] The award made by the learned Acting Magistrate derived from a claim based on six invoices issued by the respondent. The relevant invoices are detailed in the following table: 27 (1977) 180 CLR 266 at [283]. 28 Appellant’s outline of argument para 22-27. -- 10 of 17 -- 11 Date Invoice Amount (inclusive of GST) 14 February 2007 401-D09-02-ACC05 (invoice 1) $1,837.0029 14 February 2007 609-D09-03-ACC01 (invoice 2) $13, 861.0030 14 February 2007 609-D09-03-ACC02 (invoice 3) $29,414.0031 14 February 2007 401-D09-02-ACC04 (invoice 4) $1, 716.0032 20 June 2007 401-D09-02-ACC07 (invoice 5) $1,287.0033 20 June 2007 401-D09-02-ACC08 (the Rabobank invoice) $220.0034 [49] His Honour addressed each invoice in turn. Invoices 1, 4 and 5 were calculated on the basis of the per lot fees set out in the Original Agreement. The plaintiff conceded before the Acting Magistrate that invoice 1 should be calculated on the basis of fees per lot and the Acting Magistrate made an award on that basis. The calculated amounts in invoices 4 and 5 were based on a percentage estimate of work completed in the relevant phase. No submission was addressed to me on the calculation of the Robobank invoice. [50] Invoices 2 and 3, which constitute the greater amount of the award, were calculated on the basis of work performed charged at hourly rates. The Court found that it was an implied term of the engineering contract, necessary to give it business efficacy, that the plaintiff was entitled to charge for services performed on unfinalised phases at the plaintiff’s usual hourly rate.35 [51] The appellant submits that there is no basis upon which a court could, or should, imply an hourly rate term into the agreement. Accordingly, it is the amounts in invoices 2 and 3 which are the subject of challenge on this appeal. [52] The appellant advances a number of bases for challenging the use of an hourly rate: (a) an hourly rate may produce a greater charge to the appellant than calculation on a fee per lot basis; 29 Part of Exhibit 11. 30 Part of Exhibit 11. 31 Part of Exhibit 11. 32 Part of Exhibit 11. 33 Exhibit 14. 34 Exhibit 18. 35 Page 5. -- 11 of 17 -- 12 (b) it is unnecessary to imply an hourly rate as Roberts had no difficulty in charging for part lot completion. The appellant submits that this quote would work just as well for work done and not completed.”36 (c) the implication of an hourly rate in a contract exclusively designed to provide for charges on a “per lot” basis is not so obvious that it goes without saying; (d) hourly rate calculation is so contrary to a per lot “charge” that it cannot be said to be consistent with the contract. [53] In considering whether a term should be implied the conditions identified by the High Court must be taken into account.37 An important consideration is whether the implied term is necessary to give business efficacy to the contract. If the contract is effective without a term, the termwill not be implied. The Original Agreement set out fees per lot for each phase. Should it be possible for the fees for work covered by invoices 2 and 3 to be calculated on a per lot basis, then there is no necessity to imply a hourly rate. [54] Roberts accepted under cross-examination the option of billing for work part completed. He was asked and responded as follows: “You have also said that the industry standard is that you could bill for part of a lot, can’t you?--- I could bill for parts, so that I – and certainly in the case of 3, 3A I billed on a percentage basis for work completed.”38 [55] The appellant’s submissions on appeal made this point: “It is unnecessary to imply an hourly rate term into the contract because it works well without that term being implied. Invoices ACC01G and ACC02G are examples of progress claims being made. In short, Mr Roberts had no difficulty charging part-lot completion when making progress claims and in fact Mr Roberts says it is industry standard to do so. It is respectfully submitted that the same process would work just as well for work done and not completed.”39 [56] The learned Acting Magistrate noted that Roberts testified that charging at an hourly rate was the fairest and easiest way to price the work. His Honour also concluded that an hourly rate calculation would result in charges considerably less than an assessment based on percentage of the work carried out on each lot.40 It can therefore be concluded that an hourly rate satisfies the “reasonable and equitable” requirement. This conclusion does not, however, establish that an hourly rate is necessary to give business efficacy to the contract. [57] The respondent’s own submissions advanced calculation on an hourly rate as an available option. They pleaded, in the alternative, a claim for work undertaken on Stages 4, 5 and balance stages; particularised as: (a) 100 per cent of Phase B work on Stages 4 and 5; (b) 65 per cent of Phase C work on 41 Stage 4 and 5 lots; and 36 Appellant’s outline of argument para 29(b). 37 BP Refinery (Western Port) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283. 38 Transcript 1-82, ll 12-16. 39 Appellant’s outline of argument para 29(b). 40 Reasons for decision, p 5. -- 12 of 17 -- 13 (c) 40 per cent of Phase C work on 85 Stage 6 plus lots.41 [58] Evidence was adduced from Roberts that he had completed 65 per cent of Phase C for Stages 4 and 5 and 35 per cent of Phase C for Stages 6 and onwards. He was asked and responded in relation to invoice 2: “So when you say the percentage, at that time, then, what percentage of Phase C for future works do you say you had done for Stages 4 and 5?--- in 4 and 5, I said about two thirds, so 65% for 4 and 5, and about one third of the way through for – for other – other lots. But this one’s related to 4/5.”42 [59] He also testified that invoice 2 included Phase B work for Stages 4 and 5. [60] In regard to Invoice 3, Roberts was asked and replied: “So if you were to charge on a … per lot rate instead of charging on an hourly rate as you did for the invoice in the sum of $29,414, what percentage then of – because, obviously you said that you wouldn’t charge for the full lot – what percentage, then, would you have charged for the work you had done per lot? - - - I think I – I’ve mentioned that as far 4/5 is concerned, I felt I was sort of two thirds into the design, so about 65%. And – but for the balance areas, six and beyond, we had done preliminary work there, so I said roughly a third, 35%. 35% of the work in terms of the design and – all those areas.”43 [61] A calculation of the fees for invoice 2, charging for 41 lots at $75 (plus GST) for a 100 per cent of Phase B work and 41 lots at $850 per lot (plus GST) for 65 per cent of Phase C work gives a total of $28,299.75. A calculation for invoice 3, charging for 90 lots at $850 per lot (plus GST) for 35 per cent of Phase C work gives a total amount of $29,452.50. Those amounts total to $57,752.25 which is obviously considerably greater than the award the learned Acting Magistrate allowed on those two invoices of $38,275.00. [62] Not only did Roberts concede that he could bill on a percentage basis for work concluded44 but also, the witness Thomas Long, an engineer called by the appellant, said that if his services were terminated part way through a phase he would invoice on a percentage basis.45 [63] It is apparent that it is possible to calculate the value of the work performed on a fee per lot basis in accordance with the fee schedules set out in the engineering agreement by applying a percentage apportionment of the work performed on a particular phase. On the evidence, such an apportionment accords with the industry practice and is consistent with the appellant’s submission as to the approach that should have been taken by the Acting Magistrate. [64] The respondent/plaintiff bears the onus of proving the amount sought in damages. I consider that the evidence adduced on the respondent’s case is capable of proving to the necessary standard that the value of work performed may be calculated in accordance with the contract. The evidence establishes (when calculated on a 41 Second further amended Statement of Claim, paras 11-12 and 16. 42 Transcript 1-35, ll 26-30. 43 Transcript 1-36, ll 43 to 1-37, l 5. 44 Transcript 1-82, ll 12-16. 45 Transcript 1-105, ll 1-4. -- 13 of 17 -- 14 percentage completed/ fee per lot basis) that the amounts payable for work completed by the respondent the subject of invoices 2 and 3 are $28,299.75 and $29,452.50 respectively. [65] I am satisfied that proceeding in this way would be an effective, reasonable and equitable way of calculating remuneration for work performed in accordance with the fee structure provided for in the contract. Accordingly I am persuaded that the learned Acting Magistrate erred in applying a term providing for the alternative hourly rate means of calculating the value of work performed. Such a term is not necessary to give business efficacy to the contract. His Honour should have implied a term providing for calculation of the value of the work on a per lot basis. [66] This is the only argument upon which the appellant has been successful but it results in the surprising result that the respondent would be entitled to greater damages than originally awarded. This conclusion only arises on the appellant’s appeal as the respondent did not cross appeal on this issue. What order should be made? [67] The appellant argues that as the term implied by the Acting Magistrate cannot be sustained the respondent should not recover any damages for two reasons. Firstly, because there is no evidence capable of sustaining the alternative basis of calculation. Secondly, that as the respondent’s case in the Magistrates Court was based on the hourly rate implied term it should not be permitted to alter its case now. [68] It was submitted on behalf of the appellant that the respondent had not adduced evidence to prove the quantum payable using the percentage approach.46 I do not consider that submission can be sustained. Roberts testified as to the work he carried out for each relevant phase and provided an estimate of the percentage of the phase which that work represented. He was cross-examined on his account but did not retreat from the evidence he had already given. His estimates are plausible and should be accepted. [69] The appellant submits that at trial in the Magistrates Court and on appeal the respondent’s case was pleaded on the basis of an implied term that he would be paid on an hourly rate.47 It is argued the appellant should not have to meet a different case now. [70] This submission is flawed insofar as it argues the respondent’s pleaded case did not comprehend payment on a fee per lot basis. As is detailed above, the fee per lot basis was pleaded in the alternative and submitted before the learned Acting Magistrate as a course open for him to adopt. Evidence was adduced in support of this alternative. This Court is proceeding by way of rehearing and may draw its own inferences from the evidence and may arrive at any determination open upon the evidence on the case before the Acting Magistrate. [71] I have given careful consideration to what order I should make as to damages, given my findings. Under s 47 of the Magistrates Courts Act 1921 this Court on appeal from a Magistrates Court may in addition to other powers: “(c) order judgment to be entered for any party; 46 Transcript 1-16, ll 17-30; ll 45-50. 47 Transcript 1-34, ll 5-30. -- 14 of 17 -- 15 (d) make any other order, on such terms as it thinks proper, to ensure the determination on the merits of the real questions in controversy between the parties.” [72] In my view the appropriate order is to dismiss the appellant’s appeal and thus confirm the award made by the learned Acting Magistrate. There is no cross appeal on quantum seeking to increase that award. [73] Although the appellant was successful in establishing the Acting Magistrate erred as to the contractual term to be implied, this did not result in a finding favourable to the appellant on the real question in controversy between the parties, namely whether the award made by the Acting Magistrate should be set aside. The term that should have been implied would entitle the respondent to higher damages than awarded by the Acting Magistrate. [74] As the appellant has been unsuccessful on all issues pertaining to the real question in controversy, costs of the appeal should follow in the result. The appeal will be dismissed with costs. The cross appeal [75] The respondent brings a cross-appeal against the decision of the learned Acting Magistrate delivered on 7 August 2015 that no order be made as to costs in favour of the successful party. The respondent’s submissions on cross appeal [76] The respondent submits that the Acting Magistrate erred in fact and in law when failing to award costs in the event. It is submitted that his Honour gave too little weight to the general rule and took into account an irrelevant consideration, namely that a substantial award of interest had been made in favour of the plaintiff.48 That is, his Honour “conflated” the issues of costs and interest.49 [77] The respondent further submits the Acting Magistrate erred in attributing primary responsibility for delay to the respondent. The respondent concedes the proceeding suffered considerable delay but it argues the appellant should also bear responsibility for that delay and points to specific delay said to have been caused by the appellant.50 The respondent argues there is insufficient evidence for the learned Acting Magistrate to justify a conclusion that costs should not follow the event. The appellant’s submission on cross appeal [78] The appellant submits the Court has a wide and completely unfettered discretion under r 981 UCPR on the issue of costs. The appellant argues that the respondent has failed to show that the learned Acting Magistrate failed to exercise the discretion judicially or that there was any error of reasoning in his Honour’s process. Consideration 48 Respondent’s appeal submissions para 68-69; Transcript 1-29, ll 8-11. 49 Transcript 1-31, ll 6-7. 50 Respondent’s appeal submissions para 76. -- 15 of 17 -- 16 [79] I consider that this Court is entitled to have regard to the transcript of the learned Acting Magistrate’s reasons for decision on costs and to the record of the proceedings before the Court below for the purpose of determining this question. In my view, these are matters upon which the Court can take judicial notice without the need for evidence to be advanced by way of affidavit or any other form. A review of the record of the Court proceedings indicates that significant delay occurred in the prosecution of this matter. The claim was filed in January 2009 and the trial commenced on 27 May 2015. [80] A review of the proceedings indicates that both parties must bear some responsibility for the delay but it is apparent from the record that considerable delay was due to inactivity by the plaintiff. The solicitor for the plaintiff with conduct of the file conceded that she took two periods of maternity leave from approximately February 2010 to late 2010 and March 2013 to January 2014 and that “during these periods, the matter was not progressed significantly.”51 [81] The file confirms that delays occurred in the proceeding consistent with the solicitor’s concession. After the defendant filed a rejoinder on 5 February 2010, the plaintiff did not file anything for over 17 months until 14 July 2011 when an amended statement of claim was filed. The plaintiff took no steps, including by way of communicating with the defendant, between 8 March 2013 and 3 April 2014 being a period of approximately 13 months.52 There was a further delay of three months in 2014 referable to the plaintiff. [82] As against delays by the plaintiff, there were lesser delays by the defendant. These consisted of a five month delay in 2009, a four month delay in 2012 and an approximately five month delay in 2013. [83] The delays due to the plaintiff were substantially greater than those referable to the defendant. The plaintiff was also in a better position to progress its own claim. [84] All of the information that I have referred to was on the file and available to his Honour at the time of his decision. [85] The respondent has advanced an argument that the learned Acting Magistrate refused costs because the respondent was to receive a substantial award of interest. On a fair reading of the learned Acting Magistrate’s reasons for decision, his reference to interest is in the context of delay. His Honour’s reasons are as follows: “The matter arose back in 2006 – I think it was – a number of years ago. There may well be some reason why it’s been delayed, but it certainly took a long time before it was finalised. And, as you said, Mr Barlow, there has been a substantial amount of interest, which is now payable. And I think after hearing the submission of Mr Barlow – I did originally have in mind to award costs but after hearing the submissions, I do believe that would be unjust.” [86] Rule 681 of the UCPR provides that costs of a proceeding are in the discretion of the court but follow the event unless the court orders otherwise. It is well-recognised that: 51 Affidavit of Danielle Lee Sanderson filed 10 March 2015 para 3-5. 52 Affidavit of Christopher James Colwill filed 5 March 2015 para 21. -- 16 of 17 -- 17 “When proceedings have been prosecuted by a plaintiff in a dilatory way, the court may dismiss a proceeding for want of prosecution or impose a sanction as to costs.”53 [87] The considerations which a court may have regard to when addressing such conduct by a plaintiff were outlined in the judgment of Atkinson J in Tyler v Custom Credit Corp Ltd & Ors.54 Although those considerations apply more specifically to an action for want of prosecution, they are of assistance in considering the issue of costs. Relevant considerations include whether there have been periods of delay, whether the delay is attributable to the plaintiff or the defendant, whether there is a satisfactory explanation for the delay and whether or not the delay has resulted in prejudice to the defendant. Where delay results in unnecessary expense to a defendant that can be taken into account.55 Here the delay contributed to an increase in the interest awarded. [88] There is material upon which his Honour was capable of drawing the conclusion that the plaintiff was substantially responsible for the delay, and thus caused prejudice to the defendant. I am not persuaded on the material before me that the learned Acting Magistrate allowed extraneous or irrelevant matters to affect the exercise of his discretion or that he erred in failing to order costs in favour of the respondent, Sarina Engineers. [89] His Honour’s determination that there be no order for costs in favour of the respondent/plaintiff should not be disturbed. The cross appeal will be dismissed with costs. Orders [90] The orders of the Court will be: 1. The appeal is dismissed with costs. 2. The cross appeal is dismissed with costs. 53 Tyler v Custom Credit Corp Ltd & Ors [2000] QCA 178 at [4]. 54 [2000] QCA 178 at [2]. 55 G.E. Dal Pont Law of Costs (3rd Ed.) LexisNexis, Australia. -- 17 of 17 --