Café Du Liban Pty Ltd v Bespoke Garage Pty Ltd [2017] NSWSC 1232 | Case summary

Supreme Court of NSW|2017-09-20|Before: Beech-Jones J

Solicitors: Unrepresented (Plaintiffs) A R Conolly & Company (Defendant) File Number(s): 2016/276065 Decision under appeal Court or tribunal: Local Court of New South Wales Jurisdiction: General Division Date of Decision: 19 August 2016 Before: Magistrate S Freund File Number(s): 2015/308817

Judgment

This judgment deals with the orders necessary to give effect to a judgment in which a party was partially successful in an appeal from the Local Court.
On 16 June 2017, I published the principal judgment in these proceedings (Café Du Liban Pty Ltd v Bespoke Garage Pty Ltd [2017] NSWSC 779; "Bespoke (No 1)") which should be read with this judgment. At the conclusion of Bespoke (No 1), I stated that the parties would need to prepare submissions concerning the forms of order that were necessary to give effect to the judgement, including the appropriate costs order in this Court and the Local Court (Bespoke (No 1) at [116]). I ordered the parties to file draft forms of order and submissions on those topics by 31 July 2017 and listed the proceedings for mention on 6 September 2017. I also stated that, if the parties agreed, I would deal with these matters "on the papers".
In their submissions, Café Du Liban Pty Ltd ("Liban") and Dorothy Krahe stated that they were content for the Court to deal with the matter on the papers. Liban and Ms Krahe are the plaintiffs in this Court and were the Defendants in the Local Court. Bespoke Garage Pty Ltd ("Bespoke") did not mention this in their written submissions but advised the Court on 5 September 2017 that it also wanted the matter dealt with on the papers. Bespoke is the defendant in this Court and was the plaintiff in the Local Court. However, on the day the matter was listed for judgment, Counsel for Bespoke, Ms Gatland, applied for leave to make a supplementary submission. This is addressed below at [14].

Judgment Amount

On 19 August 2016, judgment was entered against Liban and Ms Krahe in the Local Court for $66,323.68 with interest. The parties are agreed that the effect of Bespoke (No 1) is that Bespoke is entitled to a judgment sum of $36,371.68 with interest from 12 August 2015. Bespoke has calculated the interest owing to 19 August 2016 to be the sum of $2,219.30. As the judgment is being entered on 20 September 2017, it is appropriate to enter a judgment amount that includes interest up to and including that day at the rates provided for in Uniform Civil Procedure Rules 2005, r 6.12(8). Interest from 20 August 2016 to 20 September 2017 is a further $2,207.11 (134 days at $5.7141 per day and 263 days at $5.4807 per day). Accordingly, judgment for $40,798.09 will be entered in favour of Bespoke.

Costs in the Local Court

On 17 February 2017, the Presiding Magistrate ordered Liban and Ms Krahe to pay Bespoke's costs of the proceedings in that Court on an indemnity basis. Her Honour so ordered because, prior to the litigation commencing, Liban and Ms Krahe refused an offer made by Bespoke to resolve the matter, which was far more favourable to them than the judgment obtained by Bespoke.
The Presiding Magistrate did not, however, order that Bespoke's costs be assessed. Instead, her Honour fixed the amount of costs to be paid pursuant to s 98(4) of the Civil Procedure Act 2005. In so ordering, her Honour referred to Liban and Ms Krahe's "obstinance" in failing to return the relevant equipment, the "conduct of the litigation generally" and the conduct of Ms Krahe and Mr Malas in correspondence and in giving their evidence which was said to be "aggressive and argumentative". Her Honour concluded that the "Defendants will take a similar attitude in relation to any assessment procedure in relation to costs". Her Honour then referred to an affidavit sworn by the plaintiff's solicitor which annexed the relevant invoices. Her Honour concluded that the amount claimed of $44,000.00 was "reasonable, in the circumstances" and awarded that amount.
In this Court, Liban and Ms Krahe did not challenge the order that they pay Liban's costs on an indemnity basis. Even though Bespoke's damages have been almost halved, the amount it will recover still exceeds the offer it made prior to the litigation commencing. However, Liban and Ms Krahe challenge the order fixing the amount they had to pay at $44,000.00. They do not contend that this order was subject to any legal error at the time it was made. Nevertheless, they contend that the outcome of their appeal warrants it being revisited. In particular, they contend that, as the amount of costs ordered to be paid, namely, $44,000.00 is disproportionate to the amount of the revised judgment debt, "fairness dictates that the Plaintiff have the opportunity to have the claimed costs … assessed".
While there is some force in these submissions, I do not consider that any basis has been shown for disturbing the Presiding Magistrate's determination to make a gross sum costs order in the amount that was determined. None of the findings of fact that led to the making of that order have been disturbed. Further, although on its face, a claim for $44,000 in costs is high relative to the revised judgment debt, neither in this Court nor the Local Court was any specific matter raised that would create a doubt about the recoverability of the amount sought on an indemnity basis. In that regard, on 25 August 2016, Bespoke served its submissions in support of its costs application including the affidavit noted above at [7]. Liban and Ms Krahe's submissions in reply did not point to any aspect of the invoices annexed to that affidavit as being excessive. Otherwise, I note that, having heard the matter, the Presiding Magistrate was especially well placed to determine whether the amount claimed represented a reasonable assessment of costs if they were assessed on an indemnity basis.
Accordingly, I will not interfere with the costs order made on 17 February 2017. No specific order is necessary to give effect to that determination other than to order that the proceedings in this Court be otherwise dismissed.

Costs in this Court

Each of Liban and Ms Krahe on the one hand, and Bespoke on the other, sought an order for the payment of their costs of the proceedings in this Court. Liban and Ms Krahe pointed to their success in reducing the judgment against them by almost one half and submitted that the Court should not attempt to differentiate between the issues upon which they succeeded and those in respect of which they were unsuccessful. Bespoke submitted that it was substantially successful because the bulk of the grounds of appeal were ultimately rejected and that, despite Liban and Ms Krahe asserting that they had no liability for any amount, the outcome is that they are still liable for a substantial sum.
These submissions simply reflect the reality that both parties achieved substantial success (and corresponding failure) on the appeal. Subject to one matter, the appropriate order is that each party pay their own costs of the proceedings in this Court.
The one possible matter of exception concerns a dispute about the cost of the preparation of the appeal books. In its submissions, Bespoke contended that Liban and Ms Krahe were responsible for their preparation but that Bespoke undertook this task, with its attendant costs, due to the inability of Liban and Ms Krahe to do so. In their submissions, Liban and Ms Krahe disputed this. Neither party placed any evidence before the Court on this issue. As a consequence, I cannot take this matter further.

Bespoke's Supplementary Submission

Ms Gatland's supplementary submission related to the Court of Appeal's judgment in Miwa Pty Ltd v Siantan Property Pte Ltd (No 2) [2011] NSWCA 344 ("Miwa"). Ms Gatland submitted that, in considering the conduct of Liban and Ms Krahe when refusing the offer noted in [6], their conduct "must be assessed at the time it was made, and not with the benefit of hindsight resulting from a known outcome, recorded in a judgment" or on appeal (Miwa at [11]). So much can be accepted but it is irrelevant to this matter because Liban and Ms Krahe did not dispute their obligation to pay indemnity costs in respect of the proceedings at first instance. Instead, they disputed the Presiding Magistrate's assessment of those costs. Otherwise, I note that Ms Gatland expressly disavowed the contention that Liban and Ms Krahe should pay the costs of the proceedings in this Court on an indemnity basis because of their failure to accept the offer made prior to the litigation at first instance commencing.

Orders

Accordingly, the Court orders that: (1) Appeal allowed in part. (2) The judgment entered in the Local Court on 19 August 2016 in proceedings no 2015/308817 be set aside and in lieu thereof order judgment for Bespoke Garage Pty Ltd against Café Du Liban Pty Ltd and Dorothy Krahe in the sum of $40,798.09. (3) The proceedings be otherwise dismissed. (4) Each party pay their own costs of the proceedings in this Court.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 September 2017

Café Du Liban Pty Ltd v Bespoke Garage Pty Ltd

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