GoldenGrove Building Group Pty Ltd v Gunnedah Legal Services Pty Ltd t/as Gunnedah Grow and Mow

Supreme Court of NSW|2019-03-01

Judgment

HER HONOUR: This is an appeal of the decision of his Honour Magistrate Breton dated 7 June 2018 in relation to costs.
By amended summons filed 6 August 2018, the plaintiff seeks firstly, leave to appeal from the whole of the decision of Magistrate Breton dated 7 June 2018 in the Gunnedah Local Court; secondly, leave to file the appeal out of time; thirdly the appeal be allowed; fourthly, an order that the decision of Magistrate Breton in relation to costs be set aside; and fifthly, an order that the defendant pay the plaintiff's costs of the proceedings in the Local Court on an indemnity basis or, in the alternative, on a party and party basis as agreed or assessed.
The plaintiff in these proceedings is GoldenGrove Building Group Pty Ltd ("GoldenGrove"), who was the defendant in the Local Court proceedings. The defendant in these proceedings is Gunnedah Legal Services Pty Ltd, t/as Gunnedah Grow and Mow ("Grow and Mow"), who was the plaintiff in the Local Court proceedings. For convenience, I shall refer to the parties by name. GoldenGrove relied on its court book (Ex A).

Grounds of appeal

GoldenGrove appeals from the whole of the decision of the Magistrate on the following grounds: 1. the Local Court, by failing to admit into evidence the affidavit of Richard Allan Morris dated 12 April 2018, made an error of law; 2. the Local Court made an error of law by failing to read the affidavit of Richard Allan Morris dated 12 April 2018 before rejecting it, thus denying itself of the opportunity to properly consider the evidence; 3. the Local Court below made an error of law by failing to consider without prejudice any correspondence before making a determination on costs, despite the defendant's counsel seeking to tender the documents; 4. the Magistrate denied GoldenGrove procedural fairness in that the Court refused to consider evidence with respect to costs that had come into existence following the first call over of the matter; and 5. the Magistrate denied GoldenGrove natural justice in that the Court refused to consider evidence with respect to costs that had come into existence following the first call over of the matter.

Extension of time

It is common ground that GoldenGrove lodged its application to appeal one day out of time and requires an extension of time to appeal.
The parties referred to Gallo v Dawson (1990) 93 ALR 479; [1990] HCA 30 ("Gallo"), in which McHugh J at [2] stated: " …The grant of an extension of time under this rule is not automatic. The object of the rule is to ensure that those Rules which fix times for doing acts do not become instruments of injustice. The discretion to extend time is given for the sole purpose of enabling the Court or Justice to do justice between the parties: see Hughes v National Trustees Executors and Agency Co. of Australasia Ltd [1978] VR 257 at 262. This means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time: see Avery v No 2 Public Service Appeal Board [1973] 2 NZLR 86 at 92; Jess v Scott (1986) 12 FCR 187 at 194-5. When the application is for an extension of time in which to file an appeal, it is always necessary to consider the prospects of the applicant succeeding in the appeal: see Burns v Grigg [1967] VR 871 at 872; Hughes, at 263-4; Mitchelson v Mitchelson (1979) 24 ALR 522 at 524. It is also necessary to bear in mind in such an application that, upon the expiry of the time for appealing, the respondent has 'a vested right to retain the judgment' unless the application is granted: Vilenius v Heinegar (1962) 36 ALJR 200 at 201. It follows that, before the applicant can succeed in this application, there must be material upon which I can be satisfied that to refuse the application would constitute an injustice. As the Judicial Committee of the Privy Council pointed out in Ratnam v Cumarasamy [1965] 1 WLR 8 at 12; [1964] 3 All ER 933 at 935: 'The rules of court must prima facie be obeyed, and in order to justify a court in extending the time during which some step in procedure requires to be taken there must be some material upon which the court can exercise its discretion.'"

GoldenGrove's submissions

GoldenGrove's explanation for delay in filing the summons is set out in the affidavit of GoldenGrove's solicitor Richard Morris, dated 30 July 2018.
Mr Morris deposed that on 29 June 2018, he contacted Andrew Hadden, the General Manager of Group Operations for GoldenGrove and requested that funds be paid into trust for the Supreme Court's filing fee of $3,014 as it was not his practice to fund such disbursements. Mr Hadden told Mr Morris that he instructed GoldenGrove's accounts manager to pay the funds. However, Mr Morris' firm did not receive these funds until 6 July 2018. Once the funds were received, the summons was immediately filed in this Court (Aff, [5] and [6]).

Grow and Mow's submissions

Grow and Mow submitted that GoldenGrove's application for an extension of time does not meet the requirements outlined in Gallo because, firstly, there has been no evidence adduced as to the injustice that GoldenGrove will suffer if strict compliance with the rules is required. Secondly, there has been no adequate explanation for the delay. The affidavit of Richard Allan Morris deposed 30 July 2018 and read in this Court on 31 July 2018 at [6] reveals that the reason the appeal is out of time was due to a conscious choice to not file any appeal until funds had been paid into a solicitor's trust account. Thirdly, when the history and nature of the litigation is considered, there is no injustice in requiring strict compliance with the rules. In fact, given the small nature of the claim in the Local Court, the fact that the decision appealed against is a costs decision, and the fact that GoldenGrove has already been awarded costs, the principles of finality and proportionality weigh in favour of strict compliance with the rules being enforced. Finally, the judgment had already vested before any summons was filed. As such, GoldenGrove's application offends against the principles of finality in litigation and inherently prejudices Grow and Mow.

Consideration

The decision as to whether or not to grant an extension of time to lodge the summons seeking leave to appeal is discretionary. The summons was filed one day out of time, and it appears to have been the solicitor's oversight in not ensuring the filing fee was received from GoldenGrove, rather than a conscious decision to file the appeal out of time. I accept the amount in dispute is a modest one. There is no real prejudice to Grow and Mow. In these circumstances and in the exercise of my discretion it is my view that GoldenGrove should be granted an extension of time to lodge the appeal to 7 July 2018.

Whether leave to appeal should be granted

The next issue is whether leave should be granted. GoldenGrove requires leave to appeal in accordance with s 40(2) of the Local Court Act. Grow and Mow opposes leave being granted.
Two cases which deal with the principles governing leave to appeal are BE Financial Pty Ltd v Das [2012] NSWCA 164 ("BE Financial"), and Lee v New South Wales Crime Commission (2012) 224 A Crim R 94; [2012] NSWCA 262 ("Lee").
In BE Financial, the Court of Appeal set out the principles to be considered in deciding whether leave to appeal should be granted. At [32], [33] and [35], Basten JA stated: "[32] The principles governing cases such as these have recently been restated in Zelden v Sewell; Henamast Pty Ltd v Sewell [2011] NSWCA 56. As Campbell JA noted (with the agreement of Young JA) at [22]: 'It is of some importance to reiterate the principles that were stated in Carolan v AMF Bowling Pty Limited [1995] NSWCA 69, where Sheller JA said that an applicant for leave must demonstrate something more than that the trial judge was arguably wrong in the conclusion arrived at. Cole JA relied on a principle that where small claims are involved, it is important that there be early finality in determination of litigation, otherwise the costs that will be involved are likely to swamp the money sum involved in the dispute.' [33] In Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 Campbell JA, with the agreement of Young and Meagher JJA, expanded on his summary of Carolan, noting that Kirby P had recognised 'that ordinarily it was appropriate to grant leave to appeal only concerning matters that involve issues of principle, questions of general public importance or an injustice which is reasonably clear, in the sense of going beyond [what is] merely arguable': at [46]. … [35] In Coulter v R [1988] HCA 3; 164 CLR 350, dealing with a challenge to a refusal of the South Australian Full Court to grant leave to appeal in a criminal matter, the majority noted that a leave requirement was a preliminary procedure 'recognised by the legislature as a means of enabling the court to control in some measure the volume of appellate work requiring its attention': at 356 (Mason CJ, Wilson and Brennan JJ). That statement is clearly applicable to civil, as well as criminal, appellate jurisdiction."
Similarly in Lee, Bathurst CJ at [12] outlined the principles relevant to the granting of leave as follows: "[12] The principles upon which leave to appeal is granted are well established. Ordinarily it is only appropriate to grant leave concerning matters that involve issues of principle, questions of general public importance or where it is reasonably clear there has been an injustice in the sense of going beyond it being reasonably arguable that the primary judge was in error: Carolan v AMF Bowling Pty Ltd [1995] NSWCA 69; Zelden v Sewell [2011] NSWCA 56 at [22]; Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 at [46]; GKD v Director of Department of Family & Community Service [2012] NSWCA 219 at [10]; Be Financial Pty Ltd v Das [2012] NSWCA 164 at [32]-[34]."
It should also be borne in mind that leave ought not be denied where there has been a clear injustice, even when relatively small amounts are involved: He v Yeung [2015] NSWCA 392 per Bergin CJ at [49].
GoldenGrove also referred to Coulter v R [1988] HCA 3; (1998) 164 CLR 350 at 359, Deane and Gaudron JJ noted the requirement for leave: "... represents a constraint upon the overall cost of litigation by protecting parties, particularly respondents, from the costs of a full hearing of appeals, which should not properly be entertained by the relevant court either because they are hopeless or, in the case of a civil appeal to the second appellate court, because they do not possess special features which outweigh the prima facie validity of the ordinary perception that the availability of cumulative appellate processes can, of itself, constitute a source of injustice."

GoldenGrove's submissions

These submissions seem to rely on the same submissions for both the application for leave to appeal and the appeal itself. So far as the appeal is concerned, the parties agree that the test on appeal is set out in House v The King (1936) 55 CLR 499 at 504-5. It is common ground that the test in relation to a discretionary judgment is stated definitively in a short passage in the joint judgment of Dixon, Evatt and McTiernan JJ in that case. It is, I think, useful to re-state the passage as follows: "The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred."
GoldenGrove submitted that this is a case in which the refusal of the Court to accept evidence gives rise to a prima facie injustice, in that a party who sought to be heard on an issue was refused because of the failure to file an application by 23 November 2017.
GoldenGrove says that much of the evidence in support of the notice of motion did not come into existence until after the first return date. The material is a combination of offers and rejections including after 23 November 2017 and some negotiations on the first day of hearing. All of the correspondence is marked "Without Prejudice", and as the Magistrate observed, it was to be filed according to the practice note. This would have been impossible, as most of the relevant materials for the application and in respect to a maximum cost order occurred after 23 November 2017. According to GoldenGrove, the refusal to accept affidavit evidence on the notice of motion was a denial of procedural fairness.
It is and was the obligation of GoldenGrove to establish that there was a prima facie case to rebut the practice note direction with respect to costs of a matter below $20,000. To put it simply, his Honour needed to receive the evidence and then rule, but instead he chose to refuse all the evidence and rule to dismiss the notice of motion.
GoldenGrove did not file a notice of motion more than two weeks prior to the first review date 6 December 2017 (as per clause 36.3 of the practice note), despite having pleaded that the Building Construction Industry Security of Payments Act 1999 (NSW) had not been engaged and despite having made some offers as to resolution of the proceedings. However, his Honour correctly accepted that the practice note is rebuttable.
Following the hearing of evidence but before the Magistrate gave judgment, GoldenGrove filed a notice of motion seeking to displace the practice note order as to costs.
The supporting affidavit explained that the practice direction should be varied for several reasons: that Grow and Mow had sought to use a statutory instrument which required technical interpretation of a concept determined by the High Court; that Grow and Mow had filed and served extensive affidavits in the Local Court which were either not read or rejected, with the effect that Grow and Mow offered no evidence; and that the matter required two full days of hearing.
On 12 April 2018, GoldenGrove prepared a further affidavit, which was served on Grow and Mow on 7 June 2018. It contained correspondence passing between the parties and some observations as to the admission of evidence which was not controversial.
GoldenGrove identifies that the Magistrate made two distinct errors. The first error was accepting, correctly, that the practice note is rebuttable and then determining, incorrectly, that Grow and Mow's failure to comply with the practice note was fatal to the application.
The second error was refusing to accept the affidavit in support of the notice of motion on the basis of non-compliance with the practice note. This is in the face of an application that had been made properly by notice of motion, as is required by the UCPR, supported by affidavit evidence. The practice note had no operation on the notice of motion and the Magistrate rejected it because it failed to comply with the practice note. The Magistrate, in refusing to read the evidence on the motion, therefore fell into error.
GoldenGrove accepts that ordinarily, an appeal court should not grant leave to appeal from costs orders unless there is some clear error of principle or manifest injustice. The error of principle must be of the kind described in House v The King.
GoldenGrove submitted that this case is one where, as set out in the affidavit of Richard Allan Morris 12 April 2018, the likely costs would far outweigh the actual amount claimed. Mr Morris also raises the conduct of Grow and Mow as a significant factor to be considered. Specifically, that they sought to replead on the run at hearing, and further, that they put on evidence which was irrelevant to the proceedings.

Grow and Mow's submissions

Grow and Mow's position is that leave should not be granted and the appeal dismissed. GoldenGrove has invoked the appellate jurisdiction of this Court in an attempt to re-agitate a costs order arising from a $12,000 Local Court claim. In these circumstances, the appeal ought to be dismissed for two reasons: 1. Leave should not be granted given the subject matter of the appeal. GoldenGrove has failed to point to any matter of public importance or general principle so as to justify a grant of leave 2. No clear House v The King error has been identified, and as such the appeal lacks substantive merit.
Grow and Mow referred to Ashi Pty Ltd v Karasco Investments Pty Ltd [2009] NSWSC 780, where Davies J stated at [34]: "…a party seeking leave to appeal needs to point to some other matter which in justice requires that leave to appeal be granted."
Grow and Mow submitted that given the appeal is in relation to a costs order, GoldenGrove needs to clearly identify some other matter which in justice requires that leave to appeal be granted. No such matter has been identified, because no such matter exists in this case.
Grow and Mow further submitted that in this case, GoldenGrove has failed to address on what basis, other than the Magistrate being in error, leave to appeal ought to be granted. There is no relevant issue of principle, question of general public importance, or injustice beyond the possibility that the Magistrate fell into error present in this case. The fact that GoldenGrove may have, as a result of the decision, been denied the possibility of obtaining a more favourable costs order is not a requisite injustice for the purposes of leave, especially in circumstances where it has already been granted the benefit of a costs order. It must not be forgotten that this is an appeal from the exercise of judicial discretion in relation to a costs order. For this reason alone, leave ought to be refused and the appeal dismissed.
Grow and Mow referred to recent decisions that have been critical of situations in which litigation is conducted in such a way as to let "the costs tail wag the substantive dog": see Lease Collateral v Johnson [2018] NSWSC 452 at [9]; Lakis v Lardis (No 3) [2018] NSWSC 1296 at [142]; McGlashan v QBE Insurance (Australia) Ltd (No 4) [2014] NSWSC 882 at [27]. According to Grow and Mow, these proceedings are the ultimate example of such a situation. The costs that have been, and will continue to be, incurred on this appeal far outweigh the amount of the claim, which was only $12,000. The appeal itself is in direct opposition to the overriding principles of civil litigation in this State. This of itself provides a strong reason for the Court to refuse leave to appeal.
Furthermore, there are public policy grounds that weigh in favour of refusing leave to appeal: the principle of finality in litigation, and a public interest in discouraging parties from bringing appeals from costs decisions of the Local Court to the Supreme Court in future.
Grown and Mow referred to Johnson v Gore Wood and Co [2002] 2 AC 1 where Lord Bingham of Cornhill at 31 stated: "…The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. …"
Grow and Mow further submitted that this Court, and in particular this division, has a sizeable case load. The requirement for leave to appeal a costs decision from the Local Court is in itself a reflection of Parliament's intention to discourage such appeals, and to give this Court the ability to refuse leave to hear them. In this day and age, the interest of other users of the Court ought to also be factored into the decision regarding leave. In this case, there is nothing remarkable about the decision from which leave to appeal is sought. It does not possess any significant issue of principle beyond the contention that the Magistrate may have fallen into error, which renders it inappropriate for such leave to be granted.
Grow and Mow says that GoldenGrove's grounds of appeal are misconstrued. There is no principle of natural justice/procedural fairness that requires a judicial officer to admit evidence, or in this case, read it into evidence. In this case, the Magistrate considered both of the affidavits sought to be relied upon, and gave counsel adequate opportunity to address why they should be read into evidence despite their non-compliance with the practice note.
However, despite the benefit of counsel's submissions on this point, due to non-compliance with the relevant practice note, his Honour refused to read into evidence the two affidavits and dismissed the notice of motion. A refusal to "read" into evidence an affidavit does not equate to a refusal to read and consider the affidavits, or to provide a party the opportunity to be heard on them. These things were done, as the transcript reveals. What ultimately occurred is that his Honour refused to read the affidavits formally, such that they did not become evidence on the motion. His Honour did so discretionary grounds, including prejudice to Grow and Mow by reason of late service and the failure to comply with the time limits required by the practice note, which has the force of a rule of Court. As such, to be successful on this appeal, GoldenGrove would have to identify House v the King error in his Honour's discretion to not excuse non-compliance with the practice note. GoldenGrove has not identified such a discrete error, and as such there is no merit in the appeal.

The proceedings in the Local Court

In the Local Court proceedings, the submissions provided by both parties did not provide a chronology. As best I can understand, in the statement of claim, Grow and Mow sought to recover the sum of $12,386 pursuant to the Building & Construction Industry Security of Payment Act. The primary dispute raised by the defence concerned a reference date in the contract. The court review date took place on 6 December 2017. That means GoldenGrove's notice of motion seeking to vary the costs order should have been filed in accordance with the Practice Note Civ 1, clause 36.3, by 23 November 2017. GoldenGrove's notice of motion was filed on 13 February 2018 after the hearing that took place on 9 February 2018. After the hearing was finalised, the Magistrate required submissions from both parties.
On 7 June 2018, the Magistrate gave an extempore judgment in relation to the substantive proceedings. His Honour entered judgment in favour of GoldenGrove against Grow and Mow in the sum of $12,386 (a transcript of that decision is not before the Court). Then the Magistrate addressed Grow and Mow's notice of motion.

Costs

The starting point is s 98 of the Civil Procedure Act 2005 (NSW), which relevantly reads: "98 Courts powers as to costs (cf Act No 52 1970, section 76; SCR Part 52A, rules 5, 6, 7 and 8; Act No 9 1973, section 148B; Act No 11 1970, section 34) (1) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis. …"
Section 69 of the Local Court Act reads: "69 Costs (cf LCA 1982, section 62) (1) The Court may award costs in application proceedings at its discretion and may determine by whom, to whom and to what extent costs are to be paid in or in relation to application proceedings. (2) The Court may order costs to be assessed on the basis set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) or on an indemnity basis. (3) This section is subject to this Act, the rules and any other Act. …"

The practice note

Practice Note Civ 1 is issued pursuant to s 15 of the Civil Procedure Act and pursuant to s 27 lf the Local Court Act. Case management of civil proceedings in the Local Court comprises parts A to H.
Part G reads: "Part G - Maximum costs orders in the general division 36.1 This section applies to all proceedings (regardless of when the proceedings commenced) where the amount of the claim is $20,000 or less and includes proceedings that are transferred from the Small Claims Division to the General Division. 26.2 Unless the court otherwise orders, the following orders are taken to have been made when the defence is filed in the proceedings: if the plaintiff is successful and the claim is for an amount between $10,000 and $20,000, then the maximum costs that can be awarded to the plaintiff is 25% of the amount awarded by the court plus any amount that might be allowed in relation to costs incurred up to the filing of the first defence in the proceedings. if the defendant is successful and the claim is for an amount between $10,000 and $20,000, then the maximum costs that can be awarded to the defendant is 25% of the amount claimed by the plaintiff where the proceedings were transferred from the Small Claims Division to the General Division, then the maximum costs that can be awarded to the successful party is $2,500. 36.3 A party may file and serve a notice of motion and supporting affidavit seeking to vary the maximum costs order at any time up until two weeks prior to the first review date. 36.4 The notice of motion must specify the amount sought as an alternative maximum costs order. 36.5 The supporting affidavit must: explain why it is appropriate to vary the maximum costs order in light of the importance of the subject matter of the proceedings and the complexity of the proceedings include an estimate of the costs of the party on an ordinary basis as at the date of the application include an estimate of the costs on an ordinary basis that will be incurred between the date of the application and the completion of the trial. not annex any bills of costs. … 36.8 The court may confirm or vary the amount of the maximum costs order or make such other order as is appropriate. … 36.10 The maximum costs order referred to in paragraph 35.2 does not include the costs of any notice of motion, which will be separately determined by the court at the time of the hearing of the notice of motion."
It is common ground that the Magistrate accepted that the practice note was not mandatory.

The decision of the Magistrate

Both the application to appeal and the appeal itself centre upon whether the Magistrate did consider the contents of the affidavits of Mr Morris dated 13 February 2018 and 12 April 2018, although I note that GoldenGrove only complain in relation to the latter affidavit.
The relevant contents of the affidavit of Mr Morris dated 13 February 2018 are at [5] to [11]. They read: "5. Despite the relatively small amount claimed, the proceedings relate to a complex piece of legislation that has been the subject of High Court, NSW Court of Appeal and NSW Supreme Court litigation. 6. The Defendant has retained a specialist barrister due to the technical nature of the claim and applicable law. To my knowledge there are less than 20 barristers in NSW that specialise in this area of law of the approximately 2,400 in the State. 7. The primary issue in dispute is the technical issue of a Reference Date in the contract. It is far from being a simple claim in contract or tort, but rather a matter that has necessitated Counsel for the Defendant assisting the Court on a regular basis on 9 February 2018. 8. The Plaintiff's evidence involved multiple affidavits, including one of 185 pages (including exhibits), all of which had to be viewed, instructions sought and affidavits in reply prepared. All of which increase the cost and burden on the Defendant. 9. Written submissions will now need to be prepared and considered and filed with the Court. A further appearance in Gunnedah is required on 9 May 2018. The matter could not be finalised despite having almost a full day on 9 February 2018. Estimate of costs 10. The Defendant's costs to date are approximately $15,000 plus Counsel fees of approximately $9,000. 11. It is estimated that the costs to proceed to the end of the trial, including considering the Plaintiff's submissions, and preparing submissions in reply, and appearing on 9 May 2018 will be a further $10,000 (inclusive of Counsel fees)."
The affidavit dated 12 April 2018 does refer to offers of compromise for the period of 3 October 2017 up until the date of hearing on 7 June 2018. I accept that there was one offer made after the review date, namely 6 December 2017, and an offer on the morning of the hearing.
The Magistrate's reasons have not been put in summary form because at T14.27-28 counsel for the defendant stated: "Your Honour I accept what you're saying and I would imagine the discourse between yourself and myself would suffice for reasons."
Hence it is necessary to reproduce excerpts from the transcript of the hearing of GoldenGrove's notice of motion seeking costs on 7 June 2018.
The Magistrate stated at T4 to T15: "HIS HONOUR: Well, just let me have a look at the first affidavit. I haven't read that yet. Well, doesn't the affidavit address all those matters in the Civil Procedure Act with respect to those areas? I mean what you're talking about is some sort of behaviour by the defendant which gives rise to the length of this matter in some way, but haven't you raised the issues in the affidavit of Mr Morris that set out - … HIS HONOUR: No, no, that's fine, I appreciate that except to say that the practice note makes it clear, and noting that it already takes into account the concepts which are set out in ss 56 to 60, that the Court - putting aside the general broad discretion of the Court in relation to costs - but the notice of motion must be served 2 weeks prior to the first review date and it must have an affidavit attached to that particular point in time. That's what the practice note says. BLAND: And I can't step around that, your Honour, safe to say the correspondence I'm trying to get before you is quite clear in that there were significant attempts to resolve this. … HIS HONOUR: Just so you understand, Mr Bland, I'll only be making one order in my view as to costs. Whatever you decide to do following a decision based upon the material I've got and pursuant to the current practice note is a matter for you. At this stage I'm only going to be making one order, it's either going to be - which includes the affidavit that you've got with you at the moment or it doesn't, and that's the only way I can put it at this stage. BLAND: Well, you Honour, I would seek to read the affidavit of 12 April [2018] if your Honour is against me and decides that that is going to present an unreasonable prejudice then I've done what I've been instructed to do. HIS HONOUR: I'm also saying that it's not within the practice note to start filing fresh affidavits in relation to these matters. I mean the practice note is clear and in my view sets out the process by which an application to vary the standard directions which are made at the time of the defence being filed in relation to the 25% provisions are - at least in that regard - inflexible. I don't see how it's then possible to say, 'Well, I'll just add material to it.' … BLAND: Your Honour has the power to vary the - HIS HONOUR: I accept that. BLAND: We say that as a result of the hearing we filed the notice of motion because we believe that there was an outcome we were hoping for. HIS HONOUR: I could appreciate that except to say that what you've done is you've hedged your bets until after the day of hearing when the practice note calls for it to be any time up until two weeks prior to the first review date. Nothing about the hearing date. … BLAND: One of the reasons for seeking to put the correspondence before you and because the correspondence is marked without prejudice this is the problem that the forensic decision that needed to be made, do we put without prejudice correspondence as part of this application and the practice note says certain things, or do we redact that until such time as the outcome of the proceedings is known and the notice of motion becomes an active notice of motion. HIS HONOUR: There's not even a reference to any correspondence there, not [even] obliquely in relation to the affidavit which was submitted on 13 February [2018], not even obliquely. BLAND: Your Honour there are two issues which you will need to make orders on. The first is whether you are satisfied that you would vary the costs order and- HIS HONOUR: I appreciate that. BLAND: And secondly what you would - the way you would vary that costs order. HIS HONOUR: Well let's be fair I think it is simply a matter of determining whether or not I should vary it and if so then it's not so much whether I change the effect of it, it's just the amount isn't it? BLAND: No because your Honour if you changed - if you varied the cost order, you could do one of three things. You could make a lump sum cost order in line with the affidavit of February. HIS HONOUR: Yes. BLAND: You could make a cost order in respect of the costs being paid on the usual basis as agreed or assessed and in fact there's a fourth option you could make a cost order on the basis of the old indemnity or maximum cost order or in the alternative you could make a proportionate cost order. So there's four alternatives that come into play if you made the decision to amend - to allow the practice note to be overridden by your decision. HIS HONOUR: Well I accept that, except to say this that it is about maximum cost orders. It is about the maximum which is set by the direction which is -unless the court orders otherwise taken to have been at the time the defence is filed. There's a maximum set, that's all it is, is a maximum. It doesn't say how it is to be made up or what it is to be called. It is just the maximum that's what it is talking about. … HIS HONOUR: But my point is Mr Bland that those matters you've just raised were always within the knowledge of the defendant at the time, that the notice of motion was filed, putting aside the date upon which it was filed for a moment. The practice note makes provision for that, it doesn't in any way limit you on what you can put into the affidavit, it in fact sets out the things you must put into the affidavit which include an estimate of the costs of the party on an ordinary basis as at the date of the application, so those are things which must go to what you're talking about when I'm having to make a decision about whether to confirm or vary or to make other orders as the Court considers appropriate in terms of the maximum costs orders. … BLAND: Your Honour you and I will respectfully disagree on that particular point, but I am in the hands of the Court and you will make your determination. I have sought to read the affidavit you're telling me, I believe that you're considering rejecting that affidavit. HIS HONOUR: I'm considering rejecting it, based upon the fact that it wasn't served in accordance with the practice note. I haven't heard Mr Long on any of this of course, he may take a different view completely, I don't know. Because the practice note confirms the very essence and the objects of ss 56 to 60 of the Civil Procedure Act and the point of that is to make sure that there are in - or there is in every way possible a cheap, just and equitable resolution to these matters and the costs are proportional in relation to these sorts of matter. We are talking about a $12,000 matter, I appreciate what's been said by Mr Morris in respect of the complexity of the matter, but it seems to me that the practice note would suggest that those considerations that you've raised well and truly contemplate it in order to make sure that we don't go through a process of having essentially another wad of evidence being presented on the day of the notice of motion for the costs in relation to such a relatively small commercial matter. … HIS HONOUR: I will hear from Mr Long. Mr Long, I haven't formed a final view obviously but you've heard what I've had to say. What do you say about the admission into -I would say evidence, but at least at this stage the tender of the - or the reading, even the reading of the affidavit provided, which has been provided to you, I [suppose] from Mr Morris, is it? Mr [Morris'] additional affidavit. Yes, in respect of the notice of motion to vary the maximum costs. LONG: Well the plaintiff objects to it going into evidence or being read into evidence. My friend didn't answer your question of well why wasn't it just served on the plaintiff earlier you were worried about - … HIS HONOUR: That is fair enough, I mean the point about the date of service or the date of filing of the notice of motion I suppose is something I think I will allow Mr Bland to talk more about now. I have heard what you've had to say, anything further? … HIS HONOUR: I appreciate that, no we haven't got into anything else yet. Mr Bland, what do you say about the non-compliance issue in relation to -remembering that there's already an order in place in respect of costs and that's the - … BLAND: The non-compliance was because my client was actually offering to pay some money. … BLAND: The starting point is 8 September 2017 when the defence was filed. The defence clearly put the plaintiff on notice that they hadn't properly engaged the Act, and that their claim was liable to fail. Paragraph 2. HIS HONOUR: Yes, can I just say this, I don't think you need to argue with me about the defence, the defence ultimately, if I made any sense this morning, was made out. The issue is that armed with your adamant stance in relation to the matter, your client's at least and knowing that the matter was, regardless, given the correspondence you say took place between the dates, the first review date, just having a look was it 6 December 2017, is that right, 6 December 2017, so the party may file and serve a notice of motion, in supporting affidavit, seeking to vary the maximum costs order of 36.3, any time up until two weeks prior to the first review date. So you were on notice at that stage that the plaintiff was proceeding with the statement of claim, and of course all of the hairs on everyone's neck stands up and they say, well we're going to have to get all ducks in a row at that stage, that's why the practice note makes provision for the filing of the notice of motion and supporting affidavit within that timeframe and it doesn't provide any cope, putting aside the general power of the Court to vary in the case management way, those orders. The timeframes that are allowed for that, so why wasn't that done? I mean other than well there was an offer to pay. BLAND: The problem was this, the conduct of the plaintiff was - to use my words "bloody minded" and was difficult in that they refuse - … HIS HONOUR: No no, let's be clear the reality of the situation is that the parties were at loggerheads in sometimes a futile and ineffective way to try and get parties to negotiate to settle to sort things out. There was no chance of that happening in this case clearly and neither party is to be necessarily criticised for adopting their particular position. Ultimately though, the remedy for all of that is the costs issue at the end of the matter. That's the remedy for all of that, and the behaviour of the parties in some sense can go to that, but you are saying that the defendant didn't file the notice of motion on time because they were still in a position where they were trying to compromise and offered to pay some amount of money. … HIS HONOUR: I appreciate that, but you knew at the time, at least as at 13 February and putting aside again the date for a moment that there was an impasse which was going to be relied upon in an application to vary the costs. I AM AGAINST YOU MR BLAND IN RELATION TO THAT - SO THAT IS TO ATTACH A SUPPORTING, A FURTHER SUPPORTING AFFIDAVIT TO THE NOTICE OF MOTION. I think without going into specific reasons, we have discussed those ad nauseam now, we have taken up another three-quarters of an hour of the court's time. No criticism there, no criticism. BLAND: Your Honour I accept what you're saying and I would imagine the discourse between yourself and myself would suffice for reasons. … [HIS HONOUR:] The other issue then of course is whether or not the notice of motion should simply be well dismissed because of the fact that it wasn't served pursuant to the time frames provided in the practice notes. I have heard what you've had to say about that. The regime is set up in my mind is not without completing flexibility, but is minded to take into account the very real and pressing concerns which are set out in ss 56 and 60 of the Criminal Procedure Act which demand that these matters be dealt with in expeditious - as expeditiously as possible which include of course providing proper and timely compliance in order to keeps costs and appearances down. There is already a costs order in place it is my view THAT THE NOTICE OF MOTION OUGHT BE DISMISSED. … COSTS TO DEFENDANT $3096.50 FORTHWITH."

Conclusion

The Magistrate actually considered and referred to the contents of the affidavits when deciding whether or not they were to be admitted into evidence and read. Grow and Mow objected to them being read into evidence. As the Magistrate stated, much of the content of the affidavits was known to GoldenGrove's legal representatives prior to the review date. There were only two offers made after the review date, and they are the only relevant documents which came into existence after the review date.
The focus of GoldenGrove's submission to this Court is that much of the evidence in support of the notice of motion dated 13 February 2018 did not come into existence until after the review date. As the Magistrate did not take into account that the material did not exist before the review date, it was denied procedural fairness and the Magistrate made an error of law. However, this submission is not the submission that was actually made before the Magistrate. In the Local Court, GoldenGrove's counsel admitted that the non-compliance with the practice note and the late filing of the notice of motion and affidavits were because his client was actually offering to pay some money. His Honour stated that GoldenGrove had hedged its bets until the day of the hearing. He also referred to the objectives of ss 56 and 60 of the Civil Procedure Act and the objects of the practice note, in particularly the issue of proportionality.
The sum in dispute is a modest amount of about $12,000. Grow and Mow was ordered to pay $3,096.50 costs in relation to its successful $12,000 claim. GoldenGrove has the benefit of a costs order in its favour, albeit in its mind, it is not enough. In these circumstances, his Honour exercised his discretion to reject the affidavits and dismiss the notice of motion. While I do not have to deal with the appeal itself, it is my view that there was no denial of procedural fairness nor was there an error of law.
As far as leave to appeal is concerned, the appeal does not raise a matter of public importance, nor is it reasonably clear that there has been an injustice, in the sense of going beyond what is reasonably arguable, that the primary judgment was in error. In these circumstances and in the exercise of my discretion, the application for leave to appeal should be refused. If I am wrong and leave to appeal should have been granted, for the reasons I have given above, the appeal should be dismissed.

Costs

Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendant's costs on an ordinary basis.

The Court orders that: (1) The plaintiff is granted an extension of time to lodge the appeal to 7 July 2018. (2) The plaintiff's application for leave to appeal is refused. (3) The plaintiff's amended summons filed 6 August 2018 is dismissed. (4) The plaintiff is to pay the defendant's costs on an ordinary basis.

I certify that this and the 23 preceding pages are a true copy of the reasons for judgment herein of the Honourable Associate Justice Harrison. Dated: Monday, 18 March 2018 Associate

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: 30 October 2019

Building Construction Industry Security of Payments Act 1999(NSW)

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