Australian Lease & Property Consultants Pty Ltd v LMT Holdings Pty Ltd and Active Lawyers Pty Ltd [2016] QCAT 177

CITATION: Australian Lease & Property Consultants Pty Ltd v LMT Holdings Pty Ltd and Active Lawyers Pty Ltd [2016] QCAT 177 PARTIES: Australian Lease & Property Consultants Pty Ltd (Applicant) v LMT Holdings Pty Ltd Active Lawyers Pty Ltd (Respondents) APPLICATION NUMBER: MCDO57-15 MATTER TYPE: Other minor civil dispute matters HEARING DATE: 24 November 2015 HEARD AT: Holland Park DECISION OF: Adjudicator Bertelsen DELIVERED ON: 23 February 2016 DELIVERED AT: Brisbane ORDERS MADE: 1. The application is dismissed. CATCHWORDS: Expert’s report – instructions to prepare report – expert’s qualifications – variation of instructions – failure to provide limited report on varied instructions – absence of reasons – absence of usable report Uniform Civil Procedure Rules 1999 (Qld) r 428 Christodoulou & Nobilio v ISPT Pty Ltd [2013] QCAT 206 Schnitzel World Pty Ltd v Yung Chon Pty Ltd [2010] QCAT 474 APPEARANCES: APPLICANT: Donald Gilbert, Director RESPONDENT: Joseph Yohan Lewis, Director for LMT Holdings Pty Ltd -- 1 of 9 -- 2 Andrew Redburn, Director for Active Lawyers Pty Ltd REASONS FOR DECISION Application [1] By application filed 29 April 2015, the Applicant Australian Lease & Property Consultants Pty Ltd (‘ALPC’) represented by Mr Gilbert, Director, at hearing claims $22,133.00 for preparation of four versions of a report addressing disruption of trade and losses sustained by LMT Holdings Pty Ltd (‘LMT’) the operator of a Subway food outlet at Westfield Carindale shopping centre. Background and evidence [2] Active Lawyers Pty Ltd (‘Active’) represented by Mr Redburn, acted for LMT in its proceeding against Westfield Carindale. LMT represented by Mr Lewis had, as a sub-tenant of Westfield, suffered a diminution in business. To prosecute its case in the Tribunal, expert evidence would be required to establish causation and consequential quantum of loss. [3] Mr Redburn stated that he engaged ALPC as a ‘disclosed principal’ on behalf of his client LMT to prepare an expert report. LMT, in its separate response, asserted its relationship with Active was not one of agency for the reason that LMT did not authorise Active to contractually bind it to any agreement with ALPC; alternatively any instructions by Active directed to ALPC were outside the scope of any existing agency; in the further alternative, LMT did not enter into any agreement with ALPC. [4] Mr Gilbert indicated that he had ‘released Mr Lewis at this point in time, from any claim for the reason he and Mr Lewis could come to an arrangement at a later point in time; that his report could still be utilised and that the report could still be published.’ Mr Gilbert asserted that Mr Redburn had ‘frustrated the contract’, whilst Mr Redburn asserted the ‘contract or the retainer was terminated validly’. It became clear that LMT was no longer a client of Active. [5] Mr Gilbert stated that he held Active responsible for 50% of his claim only, apparently on the basis that, he – Mr Gilbert, and Mr Lewis could sort out the balance at some time in the future. Mr Redburn stated that, in any event, he would pursue LMT on the basis that the report to be prepared by Mr Gilbert was never going to be for his own benefit anyway. [6] Some discussion took place on the exact quantum of Mr Gilberts claim. It transpired that Mr Gilbert was claiming $19,107.92 on account of four variations of the report he was initially briefed to prepare. That quantum was quite apart from Mr Gilbert’s claim for unconscionable conduct. The Tribunal informed Mr Gilbert that such a claim was outside the jurisdiction of the Tribunal in its Minor Civil Disputes – Minor Debts jurisdiction. Mr Gilbert’s claim was primarily evidenced by his tax invoice of 16 April 2015 which was -- 2 of 9 -- 3 a running commentary of what he was doing in the period 5 March 2015 through 8 April 2015. [7] Mr Redburn proffered emails of 13 and 14 April 2015, which he said made it clear that Mr Gilbert expected payment of some $10,000.00 plus GST for report preparation. He said that was after Mr Gilbert’s retainer was terminated. He questioned the substantial increase from $10,000.00 to $23,000.00. He further contended that there was no itemisation of the costs, which were initially negotiated at $275.00 plus GST per hour of preparation. [8] Mr Redburn sent an email to his client Mr Lewis on 9 March 2015 stating that after meeting with Mr Gilbert, that Mr Gilbert was to prepare a fairly simple letter style report that would take some 15 – 20 hours all up, at a rate of $275.00 per hour plus GST i.e. about $5,500.00 plus GST. Mr Lewis and Mr Redburn had a discussion about obtaining a report from Mr Gilbert. Mr Redburn asserted that there was no liability to pay Mr Gilbert for the reason that Mr Gilbert’s retainer was terminated validly because he refused to stay within the bounds of his qualifications when preparing reports. Mr Gilbert asserted that Mr Redburn did not have any expertise in the area of retail shop lease disputes; that instructions changed requiring multiple reports that in turn increased the cost; that Mr Redburn did not know what he was doing. [9] Mr Gilbert stated he produced a physical version 1 report; that Mr Redburn required changes necessitating the production of physical version 2 which he was happy to undertake. Mr Gilbert said he was happy to produce a physical version 3 report; that subsequent additional instructions from Mr Redburn would have him breach r 428 of the Uniform Civil Procedure Rules (requirements for expert reports). Mr Gilbert said that he expended 58 hours on version 1 and version 2, less time deducted for when he had the flu. He said he then expended 27 hours over the Easter weekend 2015 working on variations to his report (Easter weekend being Friday 3 April 2015 – Monday 6 April 2015). He said the changes were ‘fine tuning’ customer numbers; and developing graphs which ‘linked cause effect to damage and I’ve never actually done that before’. Mr Gilbert stated all the changes were at the request of Mr Redburn and that the four versions of his report were prepared over about a three week period. With respect to increasing cost of each version, Mr Gilbert said ‘there was no discussion of that in any way, shape or form. I had an hourly rate…’. [10] Mr Redburn could not remember how many versions of reports were furnished, but recalled that he did ask for refinements to be made. There were two refinements asked for, one of which ultimately lead to terminating Mr Gilbert’s retainer. That was for Mr Gilbert to refrain from making any comments in regard to quantum; that Mr Gilbert was ‘retained to address the issue of causation… what was the cause of the reduction in customers past Mr Lewis’ shop’. [11] Mr Redburn said an initial meeting occurred at Mr Lewis’ shop on 4 March 2015 attended by him, Mr Lewis and Mr Gilbert; that subsequently on 13 March 2015 he emailed instructions to Mr Gilbert to prepare a report -- 3 of 9 -- 4 addressing the cause of flow reduction and quantum. Mr Redburn said that he had previously used one Peter Hayley at Vincents Accountants on quantum issues; that Mr Gilbert suggested one John Thynne at Vincents; that he, Mr Gilbert, had worked with John Thynne on numerous occasions in the past, and that he Mr Gilbert could produce the calculations that Mr Thynne would be able to adopt. Mr Gilbert agreed that Mr Thynne would adopt his calculations. [12] Mr Redburn said that on 23 March 2015 he emailed Mr Gilbert saying: In the mean time, can you please send through your calculations for the quantum, as urgently as possible as we discussed, so I can make contact with John Thynne. I need John to be working on this matter straight away to ensure we are in a position to meet the Tribunal’s recent directions. [13] Mr Redburn said he had, by then, made contact with John Thynne who informed him that he would have to do the calculations himself. Mr Redburn then sent an email to Mr Gilbert on 26 March 2015 stating: As discussed yesterday, we are getting to the point where we need a draft of your report urgently. Can you please produce the draft as far as you have it by today. Do not worry about spending any time on quantum of our client’s loan as Mr John Thynne of Vincents will address quantum. [The word loan was misspelled, it should have read claim]. [14] Subsequently, Mr Redburn emailed Mr Gilbert on 1 April 2015 stating ‘would you be available at say 2pm tomorrow to meet with me and Yohan at my office regarding your draft report’. Later on 1 April 2015, Mr Gilbert emailed Mr Redburn saying ‘I can easily make it. I have analysed 1000’s of PYL’s. I am far far more competent than the “average” accountant. 2hy [sic] not use me as a backup for a backup answer’. Mr Redburn said he kept saying to Mr Gilbert ‘don’t address quantum’. [15] Mr Redburn said he became aware that Mr Gilbert was not a qualified accountant; that ‘in assessing Mr Lewis’ quantum it would have been expected that an accountant would have carried out that work’. That brought on three consequential concerns for Mr Redburn: firstly, evidence on quantum would not be accepted; secondly, less weight placed on such evidence; and thirdly, whether Mr Gilbert was prepared to give evidence ‘about something he didn’t have the appropriate qualifications for that in itself impacting evidence he was qualified to give’. [16] Mr Redburn referenced two QCAT decisions, both of which he said criticised Mr Gilbert and / or his evidence was not accepted in terms of quantum. Those two decisions were: Schnitzel World Pty Ltd v Yung Chon Pty Ltd1 and Christodoulou & Nabilio v ISPT Pty Ltd.2 [17] Mr Redburn said if Mr Gilbert had produced a report which did not address quantum, the report would have been useful and there would have been a liability for Mr Gilbert’s fees. He said that if he had asked Mr Gilbert to 1 [2010] QCAT 474. 2 [2013] QCAT 206. -- 4 of 9 -- 5 ‘initially look at quantum and then said no, then I accept that there could’ve been liability for that period’. Mr Redburn said even if Mr Gilbert could be considered a lay expert, the whole of the report might well be tainted; that Mr Thynne was already engaged to produce a report on quantum. [18] Mr Redburn asserted that at the meeting of 2 April 2015 at which he, Mr Lewis and Mr Gilbert were present, that he specifically asked Mr Gilbert to remove those parts of his report referring to quantum. [19] On 9 April 2015, Mr Redburn emailed Mr Gilbert stating: I have simply asked you to confirm that you are agreeable to providing a report that does not attempt to refer to the quantum of our clients claim. I have already informed you before you commenced preparing the report that our Client does not want you to comment on this aspect as John Thynne has been engaged to do that. Any views you or colleagues might have as to the benefits of you also discussing the figures are irrelevant. You have been instructed not to include those issues in your report because in our view you do not have the appropriate qualifications. You would be aware of this concern given that your qualifications have previously been the subject of challenge and some criticism in Schnitzel World Pty Ltd v Yung Chon Pty Ltd. [20] The email went on to quote extracts from the hearing of that application. The email then continued: Accordingly I ask you to confirm that you will restrict your report so that it does not attempt to refer to the quantum of our Client’s claim. If you believe you cannot complete your report to the Tribunal in a genuine and honest way as a consequent of that instruction please tell me as a matter of urgency. If I do not receive confirmation from you about that today, I will have to assume that you will not restrict your report as requested. [21] Later on 9 April 2015, Mr Gilbert emailed Mr Redburn stating: We are on the same page… why do you think when we first met at Carindale I said I am not an accountant but John Thynne will sign off on my calculations… we moved on from there. John is the quantum expert. [22] Mr Redburn said Mr Gilbert refused to provide a report without including quantum in it; that if he ‘provided a report just on causation then, absolutely, we could’ve used that. But he refused to do that’. He said Mr Lewis received no benefit from any of the work that Mr Gilbert had done. On 13 April 2015 Mr Redburn emailed Mr Gilbert stating: Further to the various emails received from you, I note that you do not agree to provide your report without it making reference to our client’s losses. Accordingly, in our view you are stepping outside of the areas for which you have appropriate qualifications and expertise and you have refused to limit your report to ensure you don’t. On that basis, our client hereby terminates your retainer. We confirm that we will not be utilising your intellectual property in this matter, nor in any other matter. Our client will be briefing an alternate expert to answer the matters we sought your opinion on. Whilst we disagree with various comments contained in your recent emails, we do not propose to address each of those issues. However, in relation to the -- 5 of 9 -- 6 suggestion that the instructions have changed 3 to 4 times, that is simply untrue. Most relevantly, in terms of whether you were instructed to investigate loss on behalf of our client, you were informed very shortly after we first met that our client did not want you to calculate or report on our client’s losses because our client did not consider you had the appropriate qualifications to do that and our client was engaging Mr Thynne for that purpose. [23] Mr Gilbert in reply stated ‘I have an arrangement with John Thynne of Vincents Accountants, that he will either sign off on a letter with me or he will review my work and – because as – Mr Redburn points out I’m not an accountant’. Mr Gilbert went on to say in this context ‘I’m not a lay expert’. [24] Mr Gilbert referred to a conversation about this matter with his colleague, one Malcom McRae, wherein Mr McRae stated: It would do no harm, the case no harm at all, to have a – to have your numbers on the table as well so that the parties have – so that John Thynne has got something to work with, and so that the other side has got something to work with to let the interlocutory have – do work. [25] Mr Gilbert went on to describe other matters in which he had been, he asserted, successfully involved and in which he considered himself a lay expert. [26] Mr Gilbert said he was willing to settle for $10,000.00 but that offer had lapsed. He said that it was about 9 April 2015 that he was told not to calculate quantum; that his invoice date was 4 April 2015; that the last recording date of doing report work was 4 April 2015. He said Mr Redburn did not tell him to ‘get nicked’ he told Mr Redburn to ‘get nicked’. He said he walked away. [27] Mr Redburn reiterated that it was 26 March 2015 that he told Mr Gilbert to stop addressing quantum, to which Mr Gilbert replied he had by then ‘finalised working on quantum’. Mr Redburn reiterated that Mr Gilbert had simply refused to provide a report that did not address quantum. [28] Mr Lewis stated Mr Gilbert’s report was never able to be used. Vincents Accountants did prepare a quantum report which was paid for by Mr Redburn and included as a disbursement on Mr Lewis’ LMT Account with Active Lawyers at the time. [29] Mr Redburn reiterated that a report without quantum was required; that if assessment of quantum had been completed prior to instruction to desist on any assessment of quantum then a liability for payment for that work in assessing quantum could be justified, but that it was the refusal to provide a report without addressing quantum that led to the termination of the retainer. [30] Mr Redburn also raised Mr Gilbert’s calculation in his reports of pedestrian flow past stated at 4% p.a. Mr Redburn interpreted that part of Mr Gilbert’s report as meaning that because the rent was going up by 4% p.a. that meant, or indicated, there was 4% more people walking past the door. He -- 6 of 9 -- 7 didn’t think that was justified; that it made Mr Lewis’ claim look like a money grab; that it appeared to be similar to the strategy adopted in the Christodoulou report; that in Christodoulou’s case a different methodology was adopted. [31] Mr Redburn asserted that Mr Gilbert had acted unprofessionally such being a further justification for termination of the retainer. Those assertions were set out in the initial response filed 3 June 2015 and included refusal by Mr Gilbert to produce a report within the scope of Mr Redburn’s instructions and insisting on basing the report on an alleged expected increase in foot traffic of 4% p.a. [32] Mr Redburn said if there was to be any payment at all it should be limited to the initial estimate of $5,500.00; that Vincents fee for work on quantum was $8,000.00. [33] Mr Lewis queried how the cost went from $5,000.00 to $10,000.00 to $23,000.00 without any contract in place resulting in a report that was not able to be used. Conclusions [34] On 13 March 2015, Mr Gilbert was instructed by Mr Redburn to prepare an expert’s report addressing both causation and quantum in relation to loss of business suffered by Mr Lewis, operator of a Subway food outlet at Westfield Carindale. [35] Initially, Mr Redburn instructed Mr Gilbert, he said, as a disclosed principal i.e. on behalf of Mr Lewis his client. Mr Lewis said LMT did not authorise Active to contractually bind it to any agreement with ALPC, nor did LMT ever enter into any agreement with ALPC. On that basis, the Tribunal considers that it was Active that directly contracted with / retrained ALPC to prepare the expert report. [36] Subsequently, 10 days later on 23 March 2015 Mr Redburn requested of Mr Gilbert that he send through quantum calculations so that Mr Thynne of Vincent’s Accountants could begin work on quantum. [37] At about this time, Mr Redburn became aware of two relevant matters. Firstly, it was made clear to him by Mr Thynne that he would do the quantum calculations himself, and secondly, it came to his knowledge that Mr Gilbert was not a qualified accountant. [38] On the first point, it had become clear to Mr Redburn that it was not a case of Mr Thynne simply adopting any quantum calculations made by Mr Gilbert, but rather Mr Thynne being totally responsible for the calculation of quantum from scratch. [39] On the second point, Mr Redburn was reasonably of the view that assessment of quantum should be carried out by a qualified accountant. This was particularly so in the light of Mr Redburn referring to two QCAT -- 7 of 9 -- 8 decisions Schnitzel World Pty Ltd v Yung Chon Pty Ltd3 and Christodoulou & Nabilio v ISPT Pty Ltd4 which clearly criticised Mr Gilbert and / or his evidence relating to quantum. [40] Mr Redburn was justifiably fearful that Mr Gilbert’s evidence on quantum would not be accepted; that less weight would be placed on such evidence; that even if evidence was given by Mr Gilbert in respect of matters in which he was not appropriately qualified, that in itself could impact on evidence he was qualified to give. [41] Mr Redburn’s concerns prompted him to email Mr Gilbert on 26 March 2015 requesting him to furnish a draft report, or even a partial report as a matter of urgency. He made it clear that Mr Gilbert ought not spend any time on quantum as Mr Thynne of Vincent’s was attending to that. [42] Mr Gilbert did state in evidence that by 26 March 2015 he had finalised working on quantum. By implication that would mean that he had completed work on causation and then quantum. Despite requests on 26 March 2015 for a draft report the first draft was only provided on 27 March 2015. [43] That draft report was discussed at a meeting attended by Mr Redburn, Mr Gilbert and Mr Lewis on 2 April 2015. The Tribunal accepts Mr Redburn’s evidence that he specifically asked Mr Gilbert to remove those parts of his report referring to quantum. That accords with the earlier written request of 26 March 2015 to drop quantum as part of any report. It was abundantly clear that Mr Redburn did not want gratuitous quantum assessments in Mr Gilbert’s report. Nor was it the case that limiting Mr Gilbert’s report to causation meant that Mr Redburn did not know what he was doing. [44] Mr Gilbert stated he expended 58 hours on versions 1 and 2 of this report (less some sickness time) and 27 hours over the Easter weekend 2015. He said changes required were fine tuning customer numbers and developing graphs which he had never done before. There was no further elaboration on what fine tuning was required to take hours expended from an estimated 15 – 20 hours to well in excess of 60 hours (taking into account sickness time). This is all in the face of notification on 26 March 2015 that quantum was being dropped as part of any report, and at a time when Mr Redburn was still awaiting a first draft report. [45] Mr Gilbert said he was frustrated by changes, that he walked away, that it was he who told Mr Redburn to get nicked. There is nothing unusual about the production of draft reports as a lead up to a final report. Why Mr Gilbert walked away is not apparent. If it was a concern about breaching r 428 of the Uniform Civil Procedure Rules (requirements for expert reports) there was no evidence about how that would have occurred. [46] What is clear, on any interpretation of the evidence, is that Mr Gilbert was requested to provide a report on causation only; that the calculation of 3 [2010] QCAT 474. 4 [2013] QCAT 206. -- 8 of 9 -- 9 quantum was within the purview of a qualified accountant such as Mr Thynne. [47] As far as Mr Redburn was concerned there was no evidence that he was ever dissatisfied with the causation aspect of Mr Gilbert’s report. He insisted on the removal of calculation of quantum. [48] There was no evidence to suggest that Mr Gilbert could not have produced a report limited to causation. Despite abundant evidence of requests to do so, Mr Gilbert would not produce a report limited to causation. Whilst that was a reduction in instructions, there was no cogent reason put to the Tribunal why such a report could not have been produced given Mr Gilbert’s own self-lauded experience in shopping centre disputes. [49] Quite apart from those considerations, Mr Redburn’s position consistently was to the effect that if it could be established that assessment of quantum had been completed prior to instruction to desist on any assessment of quantum, then liability to pay for that work could be justified. [50] Apart from Mr Gilbert’s statement that he finalised working on quantum by 26 March 2015, there was no evidence of what portion of his claim was ever applicable to quantum as opposed to causation. Mr Gilbert’s invoice was simply a running account of what he says he did in the period 5 March 2015 through 8 April 2015. [51] If the quantum is not identifiable or able to be calculated, it is not recoverable. It is not enough for such to form part of an invoice where obviously a good deal of the work, perhaps even the bulk of the work, on the part of Mr Gilbert was post 26 March 2015. [52] Even if that were not so, there is the even larger issue, namely, that because no report limited to causation was forthcoming, Mr Redburn and his client were not able to use any of the reports produced by Mr Gilbert, they were forced to make alternative arrangements. Put another way, they might as well have got nothing at all from Mr Gilbert because the result was the same. [53] Mr Gilbert did not adhere to instructions and failed to produce a report in accordance with instructions. There was a complete failure to produce a report that could have been of any use. In these circumstances there is no liability to pay. The application is dismissed. -- 9 of 9 --