HORSESHOE PASTORAL CO PTY LTD v MURRAY SMITH TRADING

Kirby P At the last minute this appeal was abandoned. The Court received word that the appeal was not proceeding only yesterday afternoon.

This morning we have heard argument concerning the level of costs that should be provided as a consequence of the appeal's being dismissed in consequence of its abandonment. It is common ground that the appeal must be dismissed with costs. The matter in contest has been whether the costs ordered should be ordered at a particular level. The exact significance of any additional order that we make has not been explored.

It is at least open to doubt that under the Legal Profession Act 1987 the old categories of party and party costs, solicitor and client costs and indemnity costs have their former significance. However, the matter has been argued with the vigour that is usually reserved to arguments about costs. I will therefore assume that it has significance and that the assignment of the proper level of the costs will affect the recovery of the successful respondent. At the least, it may be of some value for the Court to indicate the level of costs in case that is of help to the assessor.

In this case the costs should, in my view, be ordered on an indemnity basis. I say that because the appeal, which comes from a judgment of Garling DCJ entered on 17 December 1992, concerned very small sum. The appeal appears, on its face, to have been hopeless. The lack of merit was really indicated in the grounds of appeal filed. But it took nearly three years for the lack of merit to come fully to the attention of the appellant.

The appeal was hopeless because, amongst other reasons, in large part the decision of the primary judge rested upon his assessment of the credibility of witnesses. That fact would have restrained, or prevented, this Court from entering into the merits in the way that was necessary if the appeal were to succeed.

Placed before the Court this morning have been affidavits which indicate that the lack of assignment of counsel up to last week led to energetic endeavours on the part of the respondent to find the identity of counsel who was to argue the appeal. There were then offers to dispose of the matter on the part of the appellant on the basis that each party should pay its own costs of the appeal. This offer was rejected by the respondent, not unsurprisingly. A counter offer was put forward.

In the end, however, there was no agreement on the costs. Hence the argument before us.

Only two matters have made me pause before proposing that indemnity costs should be ordered. The first is the fact that, as late as 27 October 1995, the appellant agreed to accept costs of $2,000 of the appeal to dispose of it without a hearing. That would fall far short of the indemnity costs of the appeal. However, the fact is that that offer was not accepted. It has been placed before us today without objection. Counsel w*s then confirmed in his brief on the hearing. The respondent had to be ready to defend the judgment.

The second reason for hesitation is that the Court has indicated that, ordinarily, to secure indemnity costs in litigation between commercial parties, the solicitor for the party ultimately successful should be able to point to a letter which puts the opponent on notice and warns that party of an intention to seek indemnity costs. See Huntsman Chemical Co Australia Ltd and Anor v International Pools Australia Pty Ltd and Ors, Court of Appeal (NSW), unreported, 16 March 1995; [1995] NSWJB 29. That was not done here. But this can scarcely be called the ordinary commercial case. The requirement of such warning is not inflexible. Other considerations may suggest that an indemnity costs order should be made even where no such notice has been given. The notice simply makes success in an application more likely, and in particular in litigation between commercial parties.

As [have said, the amount at stake here was extremely small. The conduct of the appeal was extremely dilatory. It is almost impossible to understand why an appeal book would have been prepared and the long delay that has been occasioned caused unless it was simply to secure delay. However that may be, the conduct of the case has been quite unsatisfactory.

The Court must indicate that this is so. Above all, it must protect a party, such as the respondent, which has incurred costs in what has ultimately been revealed to be a hopeless appeal. This is a characterisation which would have been given to the appeal, at the very outset, had it been the subject of serious reflection, even for a short time and proper legal advice. Of course, such advice may have been given by the appellant's advisers. If it was, it was not taken.

The order that I propose, therefore, is that the appeal be dismissed with costs. Such costs are to be assessed on an indemnity basis.

Clarke JA I agree. Powell JA I also agree. KIRBY P: Such are the orders of the Court.

1. Appeal dismissed with costs; and
2. Such costs to be assessed on an indemnity basis.

WRORSESHOE PASTORAL CO PTY LTD v MURRAY SMITH TRADING AS SOUTH COAS3 TILE AND SLATE CO (Powell JA)

Appellant: K Emanuel (Solr) Respondent: FD Curtis SOLICITORS: