Housman v Camuglia

Coffs Harbour City Council v Polglase [2020] NSWCA 265 Dasreef Pty Ltd v Hawchar [2010] NSWCA 154 Dight v Gordon (1863) 3 SCR Eq 62 Dillon v Gosford City Council [2011] NSWCA 328; 284 ALR 619 Dixon v Williams (1875) 13 SCR Eq 7 Dunn v Lowe (1876) 14 SCR 371 Dwyer v Calco Timbers Pty Ltd (2008) 234 CLR 124; [2008] HCA 13 Eberlein v Eberlein (1887) 8 LR (NSW) Eq 1 Harpham v Shacklock (1881) 19 Ch D 207 Harris v Aaron (1877) 4 Ch D 749 Inglis v Mansfield (1835) 3 Cl & Fin 362; 6 ER 1472 Jackmain (a pseudonym) v R (2020) 102 NSWLR 847; [2020] NSWCCA 150 Mussumat Keemee Baee v Latchman-das Narrain-das (1837) 1 Moo Ind App 470; 18 ER 188 Muswellbrook Shire Council v Hunter Valley Energy Pty Ltd [2019] NSWCA 216; 372 ALR 695 Owen v Griffith (1749) 1 Ves Sen 250; 27 ER 1012 Perara-Cathcart v The Queen (2017) 260 CLR 595; [2017] HCA 9 Richards v Birley (1864) 2 Moo PC (NS) 96; 15 ER 838 Road Chalets Pty Ltd v Thornton Motors Pty Ltd (1986) 47 SASR 532 Robinson v Sutton (1909) 9 SR (NSW) 295 Sahade v Bischoff [2015] NSWCA 418 Stephenson v Santos [2020] NSWCA 262 Tyco Australia Pty Ltd v Optus Networks Pty Ltd [2004] NSWCA 333 Vella v Commissioner of Police (NSW) [2019] HCA 38; 93 ALJR 1236 Victorian Stevedoring and General Contracting Co Pty Ltd v Dignan (1931) 46 CLR 73; [1931] HCA 34 Walsh v Law Society of New South Wales (1999) 198 CLR 73; [1999] HCA 33 Wheeler v Somerfield [1966] 2 QB 94 Yeo v Tatem (1871) 3 LR PC 696 Texts Cited: W Courtney, "Contract Damages and the Promisee's Role in its own Loss" (2019) 42(2) MULR 406 J Edelman, McGregor on Damages (21st ed, Sweet & Maxwell, 2021) M Leeming, "The Primary Judge in Equity" (2016) 90 ALJ 783 Morgan and Wurtzburg, A Treatise on the law of Costs in the Chancery Division of the High Court of Justice (2nd ed, Stevens and Sons, London, 1882) W Parker, The Practice in Equity (New South Wales) (Law Book Co of Australasia Ltd, 1930) T Prince, ("Recent Cases: Coffs Harbour City Council v Polglase [2020] NSWCA 265" (2021) 95 ALJ 181 D Steele, "The Judicial House of Lords: Abolition and Restoration 1873-6" in L Blom-Cooper et al (eds), The Judicial House of Lords 1876-2009 (Oxford University Press, 2009) The Annual Practice 1961 (Sweet & Maxwell Ltd, London, 1960), Vol 1 Category: Principal judgment Parties: Bardia Housman (First Appellant) Beatriz Pena Alda (Second Appellant) Pacific Plus Constructions Pty Ltd (Third Appellant) Yolenda Camuglia (Respondent) Representation: Counsel: J Turnbull SC, A Ahmad (Appellants) G Sirtes SC, G Rubagotti (Respondent)

Solicitors: Holman Webb Lawyers (Appellants) Leslie Pozniak, Landerer & Co (Respondent) File Number(s): 2020/262274 Publication restriction: Nil Decision under appeal Court or tribunal: District Court of New South Wales Jurisdiction: Civil Citation: [2020] NSWDC 446 Date of Decision: 14 August 2020 Before: Weber SC DCJ File Number(s): 2019/102298

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE [This headnote is not to be read as part of the judgment] The first and second appellants, Mr Housman and Ms Alda, own harbourside land at Lavender Bay. The respondent, Ms Camuglia, owns neighbouring land, on which is constructed a building containing six apartment units. Ms Housman and Ms Alda engaged the third appellant, Pacific Plus Constructions Pty Ltd to undertake substantial building and construction works, including excavation works, on their land. The works caused damage to Ms Camuglia's land; in particular, the supporting foundations for a stairway providing access to four of the units had collapsed and the stairway showed signs of cracking and settlement. Temporary propping was installed to restore access to the stairway. An engineering report indicated that the temporary measures were adequate to ensure the safety of the stairway until a permanent solution was implemented. Notwithstanding the temporary propping, Ms Camuglia's leasing manager, Mr D'Ettorre, advised her that the property was incapable of being advertised to let. Ms Camuglia commenced proceedings in the District Court of New South Wales seeking damages for, inter alia, negligence. The primary judge entered judgment for Ms Camuglia in the amount of $231,316.32, comprising $74,076.18 in respect of rectification costs and $157,240.14 for consequential loss relating to lost rent. It emerged that an offer by Ms Camuglia that the proceedings be discontinued on the basis that each party bear their own costs and the defendants/appellants pay Ms Camuglia lump sums of $100,000 in respect of the proceedings and $100,000 in respect of costs was refused. The primary judge ordered costs in Ms Camuglia's favour on an ordinary basis to 7 September 2019 and thereafter on an indemnity basis. The principal issues on appeal were: 1. Whether the primary judge erred in finding that the damage caused by the building and construction works had caused the units to be unlettable, such that damages for consequential loss should not have been awarded; 2. Whether the primary judge failed properly to assess whether it had been unreasonable for the appellants to reject the Calderbank offer made by Ms Camuglia, such that a special costs order should not have been made in her favour. An associated issue was whether leave to appeal was required in respect of this ground. The Court held (Leeming JA, Bell P and White JA agreeing), dismissing the appeal:

1. It was not unreasonable for Ms Camuglia to await the construction of a permanent solution to access before re-letting the premises, notwithstanding the indication in Mr Herbertson's engineering report that the temporary solution was adequate in terms of safety: at [1]; [36]-[40]; [95]. a. A permanent solution was reasonably expected in the short term and there would be a need for a prospective tenant's furniture and other possessions to be delivered to the premises: at [1]; [36]; [95]. b. The opinion of Ms Camuglia's leasing agent that the property was incapable of being advertised to let was inherently plausible, as the obstacles to access, if disclosed in advertising material, might have made the apartments unappealing to prospective tenants, and if not disclosed, might have caused irritation upon inspection: at [1]; [37]; [95]. c. Ms Camuglia's and Mr D'Ettorre's evidence, which had been subject to rulings restricting use, had not been misused, as it was those witnesses' perceptions of the position as to the stairway that were critical, not whether, from an engineering perspective, the stairway had in fact been unsafe: [1]; [39]; [95]. Inutility of adequacy of reasons as a ground of appeal where an appeal proceeds by way of rehearing discussed: at [33]-[35]. Capilano Honey Ltd v Dowling (No 2) [2018] NSWCA 217; Stephenson v Santos [2020] NSWCA 262 referred to. Relationship between causation and failure to mitigate loss discussed: at [41]. Bunge SA v Nidera BV [2015] UKSC 43; 3 All ER 1082 referred to.

Judgment

1. BELL P: I agree with Leeming JA.
2. LEEMING JA: The issues in this appeal are very narrow. They are whether the plaintiff's claim for consequential loss should be set aside, whether there was error in a special costs order based on a Calderbank letter, and whether leave is required to advance the second point. The confined nature of the appeal warrants a highly abbreviated account of the background to a five day trial in the District Court.
3. The first and second appellants, Mr Bardia Housman and Ms Beatriz Pena Alda, own harbourside land at Lavender Bay. The respondent, Ms Yolenda Camuglia, is the owner of neighbouring land. Both lots occupy steep slopes from the roadway to the harbour foreshore. On Ms Camuglia's land is constructed a building containing six apartments, two of which are accessible from the street, but the remaining four of which are only accessible down a staircase along the boundary between the two lots.
4. The third appellant, Pacific Plus Constructions Pty Ltd, was retained by the first and second appellants to undertake substantial building works on their land. It subcontracted the demolition and bulk excavation works which commenced in around September 2017. Those works caused damage to Ms Camuglia's land. The primary judge found that, among other things, the supporting foundations for the stairway had collapsed and the stairway showed signs of cracking and settlement. Ms Camuglia sued her neighbours and Pacific Plus Constructions.
5. By the conclusion of the trial, a large number of issues had been resolved. As between the three appellants, all had become represented by the same firm of solicitors, a cross-claim had been disposed of and it was accepted that any judgment should be entered against them all, reflecting a joint and several liability to Ms Camuglia. Further, the defendants/appellants accepted that their acts and omissions had caused damage to the stairway. Many aspects of the quantum of damage referrable to rectifying the damage were also agreed.
6. After a five day trial, the primary judge promptly produced a judgment, reflecting the limited issues for resolution: Camuglia v Housman [2020] NSWDC 446. His Honour noted that after the concessions (some concessions had only been made on the last day of the hearing), there were only three outstanding issues.
7. One issue was whether damage had been caused to a balcony. His Honour found that the damage was not causally linked to the defendants' breaches and dismissed that aspect of the claim. There is no cross-appeal from that part of the judgment.

Ground 1 - challenge to the claim for consequential loss

The evidence of Mr Herbertson

1. The critical evidence on which the appellants relied in support of the first ground of appeal was a report dated 17 December 2018 by Mr Robert Herbertson, a consulting engineer retained by Ms Camuglia's solicitors. His report was principally directed to whether subsidence or withdrawal of support or vibration from the defendants' land had caused the damage to the site, and the appropriate rectification works to remedy the damage to Ms Camuglia's property. However, his report also addressed the temporary measures which had been put in place to restore access to the stairway. It stated the following: "9.5.4. The cracking and settlement of the stairs (Item 1 in Cantilever report) is unambiguously related to and a consequence of the collapse of the wall supporting the stair edge at the boundary with the adjoining property. This is reported as occurring during excavation on the adjoining site. (Damage shown on photograph 9 in the Cantilever report is not, in my opinion, related to construction on the adjoining site). (a) Temporary propping has been installed which in my opinion is adequate to ensure re-support until permanent re-support is reinstated. (Refer to section 10. of this report below)."
2. The cross-reference to section 10 of the report was directed to additional steps which in Mr Herbertson's opinion should be undertaken in order to provide a permanent engineering solution for the stairway.
3. Mr Herbertson was called in the plaintiff's case, and cross-examined. He was not asked questions about his opinion as to the adequacy of the temporary propping in place.

The submissions made at trial

1. In final address, in both the defendants' written and oral submissions, the defendants relied on Mr Herbertson's evidence. At [6.6] of their written submissions they said: "Even still Mr Herbertson's evidence was quite clear that the temporary solution is structurally satisfactory. There is no evidence to suggest why the apartments are unsuitable to be rent. It is worth repeating that recovering compensatory losses in this sense must be reasonable and causative to the apparent loss. In this sense Ms Camuglia's assertion that it is a bandaid solution might be a way of characterising the solution as temporary but it does not qualify the habitability of the premise[s]."
2. In oral submissions, Mr Ahmad (who appeared alone at trial, but was led in this Court by Mr Turnbull SC) put to the primary judge that: "[Mr Herbertson's] report of December 18 identifies that it's safe." He also pointed to the fact that the majority of the tenants had left before any damage had been suffered. He contended that Ms Camuglia's decision had been to say "well, I'm never going to rent these units".
3. One aspect of this ground of appeal was that neither this submission, nor the evidence on which it was based, was addressed by the primary judge.

The rulings restricting the use of Ms Camuglia's and Mr D'Ettorre's evidence

1. The appellants also submitted that the evidence of Ms Camuglia and Mr D'Ettorre was misused by the primary judge.
2. The portions of Ms Camuglia's affidavit which survived objection included the following: "[21] Upon the vacation of Units/Apartments 3, 6, 4, 5 & 1 of the Camuglia Property, I received advice from the leasing agent, D'Ettorre Properties Pty Limited t/as D'Ettorre Real Estate, that it was not possible to re-let those premises by reason of the noise and vibration caused by the Building Works upon the Housman & Alda Property and/or the damage caused to the Camuglia Property by reason of the Building Works. [22] I have been unable to re-let any of the apartments/units in the Camuglia Property since September 2018."
3. The first paragraph of that passage was admitted on a limited basis, namely that "the paragraph not be used for the purposes of establishing the truth of the representation made to the deponent by Mr D'Ettorre".
4. In cross-examination, the fact that Mr Herbertson had given advice that the temporary propping of the stairs was adequate was put to Ms Camuglia as follows: "Q. As at 6 July 2018, the stairs had been propped by PPC. Do you understand that proposition? A. Well, I, I see the, the props under the stairs, I see it now. I see it. Q. Have you understood that Herbertson described the propping of the stairs as structurally satisfactory? A. Can you repeat the question? I don't know, because even if I read the report, I don't understand what they mean, the engineer. I do not understand; I'm sorry, but I don't understand. That's what the engineer - I don't understand that. Maybe -- Q. Do you understand that you're seeking compensation for lost rent? A. Well, but, you know-- Q. Do you understand you're seeking-- A. I'm, well, I'm not getting, I'm not getting any rental money. I'm, I'm not, because-- Q. I'm not asking about what's happening; I'm asking about whether you understand you're seeking it? A. 'I'm seeking it. I'm seeking it.' I don't understand your question that and I, I don't know the question-- Q. I withdraw the question."
5. Subsequently, the cross-examination continued: "Q. I suggest to you that you have currently advertised for the letting of the premises and you're aware of it. A. No, that's not correct and it's not true. Q. Can I suggest to you that you have also deliberately chosen not to advertise unit 2 because your son lives in there. A. That's not correct and it's - it's not true because I'm not - we're advertising it. We're not advertising it because we can't lease it. It hasn't been leased until-- Q. Can you just please confine your answer to the questions? A. I'm answering your question. I'm saying that I can't say yes or no because I have to - because the property has been empty since that damage happened because I'm not willing to put people at risk to climb down the stairs that have been damaged."

Consideration

1. I would accept, favourably to the appellants, that it would have been preferable for reference to the report from Mr Herbertson as to the adequacy of the stairway providing access to the lower four apartments and the cross-examination of Ms Camuglia dealing with that evidence to have been made in the reasons for judgment. However, although Mr Herbertson's opinion was prominent in the submissions on appeal, it was far less prominent in the closing submissions at trial. And, as will be seen below, there may have been good reason for it not to have been especially prominent at trial.
2. In the foregoing I have refrained from expressing a conclusion whether the reasons were inadequate. That is because in an appeal such as the present, which is not confined to questions of law, and which proceeds by way of rehearing, and where there are no issues of credibility, the adequacy or inadequacy of reasons is usually not to the point. As was said by this Court in Stephenson v Santos [2020] NSWCA 262 at [24]: "[E]ven if there were a deficiency in the reasons, this Court would not intervene unless it were persuaded that the finding could not stand. This appeal is by way of rehearing, and there is no need for Ms Stephenson to establish error of law. For the reasons given under the heading 'Inadequacy of reasons as separate ground' in Shellharbour City Council v Rhiannon Rigby [2006] NSWCA 308, which have subsequently been followed in NSW Police Force v Winter [2011] NSWCA 330 at [89]-[90], these grounds were not of themselves sufficient to make out an appeal."
3. The same point was made in Capilano Honey Ltd v Dowling (No 2) [2018] NSWCA 217 at [41]: "If the reasons provided addressed an issue, it is open to the unsuccessful party to challenge the reasoning on appeal. If they did not address an issue, it is open to the unsuccessful party to contend that the matter was not considered by the trial judge and, if materiality is established, the omission demonstrates error on that basis. The reasons given are the judge's actual reasons for deciding a point. Usually the appeal court can address the substance of the matter and will not remit because the reasons were 'inadequate'."
4. I shall follow the usual course described in the passages above and address the substance of the matter, for only if there were error which was productive of injustice would the appeal be allowed and the proceedings remitted for retrial.

Is there a requirement of leave?

1. Ms Camuglia's written submissions maintained that the appellants required leave to challenge the exercise of discretion by the primary judge as to costs. She submitted that "if there be a separate item in a notice of appeal relating to costs only it can only be raised with the leave of the Court". There was said to be: "no sound reason to permit appeals as of right from discretionary orders going to costs only whether on their own (as proscribed by s 102(1)(c)) or as an adjunct to an appeal from another order as of right. To do so would be contrary to what was described in Zhang v ROC Services (NSW) Pty Ltd; National Transport Insurance by its manager NTI Ltd v Zhang [2016] NSWCA 370; 93 NSWLR 561 at [199] as the evident purpose of s 101(2)(c), namely, to discourage appellate review of such orders."
2. On 13 April 2021, following receipt of Ms Camuglia's submissions, the appellants filed a notice of motion seeking leave to appeal as to costs against the possibility that leave was required (I pass over the fact that this should have been by way of summons in a separate proceeding). The appellants nonetheless relied on the reasoning of Lord Denning in Wheeler v Somerfield [1966] 2 QB 94 for the proposition that leave was not required. They noted, however, that the correctness of Wheeler had been left open by this Court in Coffs Harbour City Council v Polglase [2020] NSWCA 265 at [179] and C G Maloney Pty Ltd v Noon [2011] NSWCA 397 at [104]-[106]. In each of those cases, leave to appeal was granted to the extent such leave was necessary, in circumstances where it was not necessary to decide the issue. The same position was adopted in Arena Management Pty Ltd (rec and mgr apptd) v Campbell Street Theatre Pty Ltd (2011) 80 NSWLR 652; [2011] NSWCA 128 at [129] and AF Concrete Pumping Pty Ltd v Ryan [2014] NSWCA 346 at [72]. In Sahade v Bischoff [2015] NSWCA 418 at [166] it was assumed, in the absence of argument, that leave was unnecessary. However, there are decisions in other jurisdictions disapproving Wheeler, many of which are summarised in Apache Northwest Pty Ltd v Department of Mines and Petroleum [2012] WASCA 167 at [97]-[102] commencing with the sentence "That decision has received a mixed reception in Australia". The strongest disapprobation is found in Road Chalets Pty Ltd v Thornton Motors Pty Ltd (1986) 47 SASR 532 at 538 where Zelling ACJ said that this aspect of Wheeler was "unfortunately … against the whole course of reported cases for a century".

District Court - expansion in 1995 to permit appeals from costs orders

1. Section 127 of the District Court Act 1973 (NSW) relevantly provides: 127 Right of appeal to Supreme Court (1) A party who is dissatisfied with a Judge's or a Judicial Registrar's judgment or order in an action may appeal to the Supreme Court. (2) The following appeals lie only by leave of the Supreme Court - ... (b) an appeal from a judgment or order as to costs only, ...".
2. That wording was inserted in substantially the same form by the Courts Legislation Further Amendment Act 1995 (NSW), Schedule 1 Item 1.3 [10]. The explanatory note stated, somewhat obliquely, that the amendment would simplify the provisions governing appeals.
3. The new provision replaced an earlier regime which made provision for applications for new trials after a jury's verdict, and (simplifying slightly) otherwise conferred a right of appeal "from any ruling, order, direction or decision of the Judge in an action": see, respectively, ss 126 and 127, and s 128(2A), of the District Court Act 1973 in the form those provisions took before 1995. Those words "ruling, order, direction or decision of the Judge" had previously been found in s 142 of the District Courts Act 1912 (NSW) and s 107(1) of the District Courts Act 1901 (NSW). Earlier still, the right of appeal was confined, relevantly, to "the determination or direction of the said Court in point of law": District Courts Act 1858 (NSW) (22 Vic No 18), s 94. These provisions were held not to extend to appeals as to costs.
4. A plaintiff who obtained an order for detinue in his favour but no order for costs brought an appeal under s 107 of the District Courts Act 1901 in Robinson v Sutton (1909) 9 SR (NSW) 295. Cohen J wrote the leading judgment, with which Pring J and Sly J agreed. The Court followed Dunn v Lowe (1876) 14 SCR 371 which had held that an appeal from the District Court against a costs order did not lie. After dealing with English cases on the Judicature legislation, Cohen J addressed Dight v Gordon (1863) 3 SCR Eq 62, and said it was "sufficient to say that this was a case on the equity side of the Court, where, apparently, different rules prevail, and the decision was based on the words of the statute, and the Court followed the practice of the Courts of Equity in England": at 297. Cohen J then reproduced s 107 and said: "I think these words 'ruling,' 'order,' 'direction,' or 'decision,' refer to some question which has arisen in the course of the trial, that is to say, up to the time of judgment: some ruling of the Judge, some ruling of law, something going to the merits of the case, or upon the admission or rejection of evidence. These words point to something in the course of the trial, but preceding any question as to costs. In the words of Lord Campbell CJ in Carr v Stringer (EB & E 123), they refer to a determination on a decision of the cause. Here there is no appeal from the decision of the Court apart from the question of costs, which is not included in the words I have just quoted" (at 297-298).

Supreme Court - imposition in 1972 of requirement of leave upon costs appeals

1. Prior to the commencement of the Supreme Court Act 1970 (NSW) on 1 July 1972, the position was markedly different in equity. Far from there being no appeal at all, appeals in equity lay as of right from decrees or orders as to costs.
2. Section 21 of the Administration of Justice Act 1840 (4 Vic No 22) had authorised the nomination of a judge to hear and determine matters in Equity. "[A]ny person feeling aggrieved by any such decree or order at any time within fourteen days next after the pronouncing or making of the same" was authorised to enter an appeal against such decree or order (originally to the other two judges of the Court, expanded to three judges by s 13 of the Advancement of Justice Act 1841 (5 Vic No 9)). The circumstances in which this legislation was enacted are described in a note, "The Primary Judge in Equity" (2016) 90 ALJ 783.
3. Two divided decisions of the Full Court had held that the words "any decree or order" bore their ordinary meaning, and extended to appeals where the only issue was costs, although that position was only reached with some expressions of dissatisfaction.
4. In Dight v Gordon, Stephen CJ said that: "The Court here is in a different position from that of the Vice Chancellor in England. We are governed by the wording of the Statute under which appeals in Equity are brought (4 Vic No 22, s 21), which provides 'that it shall be lawful for any person feeling aggrieved by any such decree or order, at any time within fourteen days next after the pronouncing or making of the same, to enter an appeal in the office of the Court against such decree or order, &c.' This, in my opinion, obliges us to hear appeals of all sorts, and leaves us no discretion as to whether we ought or ought not to entertain an appeal for costs."
5. Wise J agreed, regretting that there was no alternative in light of the statute, but noting: "It is plain that in England the Court would not allow any such appeal; and if it had not been for the express words in the statute, I should have had no doubt that we could not have allowed it."
6. Milford J dissented, saying that "if the Courts of appeal in England can refuse to hear appeals upon costs, we can do so here". His Honour did not explain how that construction accorded with the statute upon which his colleagues had based their decision.

The English position adopted in 1972 and extended in 1995 to District Court appeals

1. The 1995 amendments introducing s 127(2)(b) of the District Court Act 1973 aligned the position to that which applied to Supreme Court appeals (that, presumably, is the meaning of the "simplification" mentioned in the explanatory note). Section 101(2)(c) of the Supreme Court Act 1970 (NSW) is in materially identical terms. As is pointed out in Mr Prince's note, s 101(2)(c) of the Supreme Court Act 1970 (originally enacted as s 101(3)(a)) itself derives from English provisions. In England, a different approach had long been taken.
2. Prior to the Judicature reforms which commenced in 1876, appeals in England lay (a) within the Court of Chancery (from the Vice Chancellors and the Master of the Rolls to the Lord Chancellor and, after its creation in 1851, to the Court of Appeal in Chancery); (b) from the civilian courts (including admiralty and ecclesiastical matters) and the colonial courts to the Privy Council, and (c) from a variety of courts to the House of Lords (Disraeli's success in preventing the abolition of most appeals to the House of Lords, effected by the Appellate Jurisdiction Act 1876, is described in D Steele, "The Judicial House of Lords: Abolition and Restoration 1873-6" in L Blom-Cooper et al (eds), The Judicial House of Lords 1876-2009 (Oxford University Press, 2009), pp 13-29).
3. Absent from the foregoing is reference to the superior courts at common law at Westminster, and the multitude of local courts administering common law. That reflects Dixon J's observation that "[a]ppeal as distinguished from error was not a process of the common law": Victorian Stevedoring and General Contracting Co Pty Ltd v Dignan (1931) 46 CLR 73 at 108; [1931] HCA 34, and see Dwyer v Calco Timbers at [2].
4. The prevailing rule in all those areas was that an appeal could not be brought confined to a question of costs, at least unless there was some patent error or mistake in the order. However, if there was some other non-colourable ground of appeal, then the appellate court could revisit the issue of costs, even if the other ground failed.
5. The English pre-Judicature position, which was evidently familiar in colonial New South Wales, was explained in a large number of decisions. First, in Chancery, in Owen v Griffith (1749) 1 Ves Sen 250; 27 ER 1012, the general rule that there could not be an appeal for costs only was insisted on. Lord Hardwicke LC said of the rule: "The foundation of it was to prevent vexation and trouble; for as cases in equity often depend on abundance of circumstances, about which as the reason of mankind might differ, it would create perpetual appeals; but this is no printed rule; and it seems somewhat strict and hard to adhere to it …".

The Judicature legislation

1. The Judicature legislation extended the right of appeal to the (newly created) Court of Appeal from all Divisions of the (newly created) High Court of Justice. However, s 49 of the Judicature Act 1873 provided: "No order made by the High Court of Justice or any Judge thereof, by the consent of parties, or as to costs only, which by law are left to the discretion of the Court, shall be subject to any appeal, except by leave of the Court or Judge making such order."
2. The language "as to costs only" will be noted. That is reflected in the current forms of s 101(2)(c) of the Supreme Court Act 1970 and s 127(2)(b) of the District Court Act 1973. Broadly speaking, s 49 replicated the existing position. However, it will also be noted that s 49 of the Judicature Act made the grant of leave from the judge at first instance a condition of appellate jurisdiction in those appeals to which it applied. This was re-enacted in some Australian legislation (for example, s 27 of The Judicature Act 1883 (Vic) (47 Vic No 761)) but was not repeated in New South Wales, where it was the Court of Appeal which could grant leave, if leave be needed. That distinction has made it possible to avoid resolving the point by granting leave to the extent necessary (see the decisions in [44] above).
3. The effect of the prohibition upon appeals as to costs only was raised in the Court of Appeal in Harris v Aaron (1877) 4 Ch D 749. The plaintiff's bill had been dismissed, but without costs. The plaintiff appealed. The defendant sought, in the event the appeal was dismissed, to challenge the absence of a costs order at first instance. James LJ, with whom Mellish and Baggallay LJJ concurred, said: "[T]he Court had no power to alter the direction of the Vice-Chancellor as to costs, which were entirely within his discretion. The 49th section of the Judicature Act, 1873, was imperative."
4. Harpham v Shacklock (1881) 19 Ch D 207 was similar. After the appeal had been dismissed, the successful respondent sought a variation to the Vice-Chancellor's order as to costs. Sir George Jessel MR said: "If we were to vary the order of the Court below as to costs when an appeal on the merits fails, we should practically be allowing an appeal for costs only, and appeals would be brought nominally on the merits, but really only for the purpose of varying the order as to costs."

Modern Australian decisions

1. In Road Chalets Pty Ltd v Thornton Motors Pty Ltd (1986) 47 SASR 532, Zelling ACJ addressed a submission that leave was not required to challenge a costs order in circumstances where there were other substantive grounds of appeal which had failed. His Honour said that the proposition in Wheeler v Somerfield that the appeal extended to the ground concerning costs was quite wrong, and proceeded on the basis of a concession which ought not to have been made. He added: "If counsel had taken the care to look at the Annual Practice he would have found that there was ample authority for the proposition which he was asserting. I need only refer to the decision of the Court of Appeal in Harris v Aaron (1877) 4 Ch D 749 which is a clear authority for the long-standing practice of the Court and which would have bound the later Court of Appeal had they been referred to it in Wheeler's case, and I refer also to the discussion of the matter in the 1961 Annual Practice, vol 1, p 1845."
2. As Mr Prince has explained, this is incorrect. Harris v Aaron was a challenge to a costs order by the respondent to an appeal. The respondent made no other challenges to the order. It is tolerably clear that a cross-appeal confined to costs is caught by the provision requiring leave to appeal "as to costs only". The report of Harris v Aaron is a little confusing, because the respondent's challenge was rejected peremptorily, before the judgment dealt with the failure of the appellant's appeal on substantive grounds, and the summary in the Annual Practice is also less than pellucidly clear. I would also note that the point was not fully argued in Road Chalets (as is recorded at 551) and was not addressed by Cox J or O'Loughlin J.
3. This Court has held, relying upon Wheeler v Somerfield, that an appellant with a bona fide ground of appeal enjoyed as of right may also challenge a costs order without leave: see Tyco Australia Pty Ltd v Optus Networks Pty Ltd [2004] NSWCA 333 at [200] and Dasreef Pty Ltd v Hawchar [2010] NSWCA 154 at [61]. In light of the statement in Road Chalets that Wheeler v Somerfield should not be followed, there has been hesitation on the point, notably in Arena Management Pty Ltd (recs & apptd) v Campbell Street Theatre Pty Ltd at [129]. But the matters mentioned above persuade me that the statement in Road Chalets is incorrect and ought not to be followed. And indeed, the weight of authority in New South Wales thereafter, notably Dillon v Gosford City Council [2011] NSWCA 328; 284 ALR 619 at [53]-[57], supports the proposition already reached that where there is a substantive ground of appeal as of right, then even if that ground fails, the appellant may nonetheless challenge the costs order as of right. (Of course, if one or more of the substantive grounds succeeds, the costs discretion will have to be re-exercised and thus any ground of appeal as to costs will be otiose.) A discussion of the position in relation to other statutory provisions, many of which are slightly different, is found in Muswellbrook Shire Council v Hunter Valley Energy Pty Ltd [2019] NSWCA 216; 372 ALR 695 at [46]-[63].

Appellants' submissions on ground 3

1. The substance of this ground, in contrast with whether it is available as of right, may be resolved much more concisely.
2. The appellants accepted, correctly, that they needed to establish House v The King error in order to challenge the exercise of discretion as to costs, but said that such error was disclosed, in three ways.
3. First, they said, that the offer was not one which would "meet one third of [Ms Camuglia's] legal costs" and the primary judge erred in saying that it was. Instead, the $100,000 was two thirds of the $150,000 which had been represented to be Ms Camuglia's costs at that time.
4. Secondly, relying upon a bill of costs brought into existence in January of this year, they ultimately submitted that Ms Camuglia's costs had not been $150,000 as at 23 August 2019, but materially less, some $113,696.10.
5. Thirdly, they submitted that the evidence which was ultimately dispositive, that of the leasing agent Mr D'Ettorre, had not been served at the time the offer was rejected.

Consideration

1. I do not consider that any basis to re-exercise the discretion as to costs has been made out. The crucial consideration was that the offer was substantially more advantageous than the judgment Ms Camuglia ultimately obtained. The fact that her costs at that time are now shown to be some $113,696.10 rather than $150,000 does not materially detract from the substantiality of the compromise when viewed as a whole. The insignificance of the costs component was reflected in the failure on the part of the appellants to make any inquiries as to the basis of costs being $150,000, as the primary judge observed.
2. The error concerning the compromise amount of $150,000 being two thirds, rather than the one third stated by the primary judge, is an obvious slip and immaterial.
3. I do not regard the subsequent service of Mr D'Ettorre's affidavits as material. Two days prior to the offer, Ms Camuglia's affidavit of 21 August 2019 had been served, [21] and [22] of which have been reproduced above. The essential case advanced by Ms Camuglia, namely, that D'Ettorre Properties Pty Ltd had told her that it was not possible to re-let the properties by reason of the noise and vibration caused by the building works and the damage to the property was available to the defendants at the time they reviewed the offer.
4. Ground 3 is not made out.

Orders

1. For those reasons, although the appellants are correct to submit that their appeal is as of right, their appeal should be dismissed. There is no reason why costs should not follow the event. If either side seeks a special costs order, application may be made within the time specified by UCPR r 36.16.
2. WHITE JA: I agree with Leeming JA.

Amendments 11 October 2021 - Coversheet - "4 Russ 179" changed to "4 Russ 180", "8 SCR Eq 1" changed to "8 LR (NSW) Eq 1", "1 Ves Sen 249" changed to "1 Ves Sen 250" and "7 SASR 532" changed to "47 SASR 532" in list of cases cited Headnote, holding 2 - "7 SASR 532" changed to "47 SASR 532" [44] - "7 SASR 532" changed to "47 SASR 532" [62] - "8 SCR Eq 1" changed to "8 LR (NSW) Eq 1" [68] - "1 Ves Sen 249" changed to "1 Ves Sen 250" [69] - "4 Russ 179" changed to "4 Russ 180" 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: 11 October 2021