On 23 July 2015 judgment was given for the appellant (Integrated Asset Management Pty Ltd v Trans Communications Pty Ltd [2015] NSWSC 984). The parties were disagreed as to costs.
Written submissions were later filed, with all that finally required determination being firstly, whether the defendants should have a certificate under the Suitors' Fund Act 1951 (NSW) and secondly, whether an order should be made in favour of the defendants as to the costs of a notice to admit facts and a notice to admit authenticity of documents, which the appellant had filed in the Local Court in 2013.
[2]
The Suitors' Fund Act Certificate
There was no issue between the parties that the defendants were entitled to a certificate under s 6 of the Act, given the conclusion reached in the July judgment at [87], that the presiding Magistrate had erred in law in concluding that Mr Scales was a subagent, but that error was not the result of the cases which the parties had advanced. The appellant thus neither consented to nor opposed the order sought.
The purpose of the Act was considered in Gurnett v The Macquarie Stevedoring Co Pty Ltd (No 2) [1956] HCA 29; (1956) 95 CLR 106. Dixon CJ observed at 113, that "the purpose of the legislature was to relieve litigants of the burden of costs that might be imposed upon them by reason of erroneous decisions upon questions of law."
In Mir Bros Developments Pty Ltd v Atlantic Constructions Pty Ltd (1985) 1 NSWLR 491, the principles applying to such an application were considered. Kirby P and Samuels JA observed at 494 that the object of s 6 was to ensure that litigants do not bear the costs inevitably occasioned when an error of law requiring correction is disclosed on appeal. Discretionary considerations, it was noted at 499, include the question of whether there was any fault on the part of the litigants, in the subordinate court's legal error.
In this case I am satisfied that while the way in which the parties conducted the proceedings in the Local Court made them unnecessarily long and difficult, as discussed at [95] of the July judgment, they were not responsible for the legal errors into which her Honour fell.
In the result, I am satisfied that the discretion granted by s 6, must be exercised in the defendants' favour.
[3]
Costs
The parties were agreed other than as to order 9 sought by the defendants:
"The Plaintiff to pay the costs of the First and Second Defendants of its 26 June 2014 application for costs of and incidental to the Notice to Admit Facts dated 23 July 2013 and the Notice to Admit Authenticity of Documents dated 23 July 2013 on the party-party basis."
The orders agreed were:
"1. Appeal allowed.
2. An order pursuant to s41 (1)(b) of the Local Court Act 2007 setting aside the judgment made in favour of the First and Second Defendants on 9 May 2014 by the Local Court of New South Wales in proceedings Number 2012/00286088.
3. An order pursuant to s41 (1)(b) of the Local Court Act 2007 setting aside the costs order made on 9 May 2014 by the Local Court of New South Wales in proceedings Number 2012/00286088.
4. A verdict and judgment in favour of the Plaintiff against the First and Second Defendants in the amount of $23,479.60.
5. An order that the First and Second Defendants pay the Plaintiff interest on the judgment amount from 19 December 2012 pursuant to section 100 of the Civil Procedure Act 2005.
6. An order that the First and Second Defendants pay the Plaintiff's costs of the Local Court Proceedings Number 2012/00286088 on a party/party basis up to and including 16 April 2013 and thereafter on an indemnity basis.
7. An order that the First and Second Defendants pay the Plaintiff's costs of this Appeal on a party/party basis."
Judgment was given in the Local Court on 9 May 2014 in favour of the defendants. The appellant then made an oral application for costs in its favour, in relation to its 23 July 2013 notice to admit facts and authenticity of documents. The defendants had filed motions to have that notice set aside. They were resolved on the basis of an agreement announced to the Local Court at the commencement of the hearing, that a late notice disputing facts and authenticity of documents would be accepted and accordingly, neither the notice nor the motions would be pressed.
It was also common ground that on 26 June 2014 the appellant's application for costs of the notices was refused by the Local Court. There are no reasons for that refusal in evidence. It appears that they may appear in transcript, but it has not been tendered.
The defendants now claim that they should have their costs of resisting the notices, submitting amongst other things, that the appellant's application for an order for costs in respect of the notice had failed; that the costs order had not been appealed; that the costs order concerned a distinct procedural event in the Local Court proceedings; and that the appellant had not sought, nor been granted leave to appeal the costs order, as s 40(2)(c) of the Local Court Act 2007 (NSW) required. It was also submitted that to the defendants' knowledge, there was no transcript of the hearing of the costs application, but no evidence was led about this, particularly as to what enquiries had been made about that transcript, or the reasons given for the refusal of the applicant's application, or what they had revealed.
What was led by the defendants, without objection, was the June 2014 written submissions on costs which they had advanced in the Local Court; the affidavit sworn on 24 June by the appellant's solicitor Mr Simons, annexing correspondence between the parties, including the notice to admit facts and authenticity of documents and the documents in question; the notices disputing those facts and the authenticity of the documents and the affidavit sworn by Mr Van Rooyen, in August 2013, in support of the defendants' motions, by which they sought leave to withdraw deemed admissions under r 17.3 of the Uniform Civil Procedure Rules 2005 (NSW).
The defendants then contended that the admissions which the appellant had sought in its motion were not admissions as to facts, but as to questions of law and/or mixed questions of fact and law, which fell to the Local Court to determine and that the principal and agency agreement was a document which could not be admitted, because the defendants were strangers to it.
The applicant's notice sought admissions in relation to a principal and agency agreement between it and Technology Fund Management Pty Ltd, of which it claimed to be the undisclosed principal. Admissions that it had entered into a rental agreement with Trans Communications Pty Ltd, as well as another agreement, a guarantee provided by Mr Van Rooyen, were also sought. Other admissions were sought in relation to the payment of monthly rental payments and the failure to return the equipment the subject of the agreement, as well as admissions as to the authenticity of the principal and agency agreement and the rental agreement.
The appellants opposed the costs order sought by the defendants on appeal, arguing that the defendants had not raised the question of these costs in their notice of contention, or at the hearing. In the absence of the relevant transcript, which the defendants had had the opportunity to put before the Court, it was argued that there was a procedural disadvantage to their application in the defendants pursuing the order sought, particularly at this late stage of the proceedings.
It was also argued to be relevant that no costs order had in fact been made in the Local Court on 26 June 2014. The only costs order had been made on 9 May, when the order made was:
"The plaintiffs are to pay the defence's costs and disbursements on the ordinary basis as agreed as calculated from 13 September 2012 in default of agreement within 28 days for costs to be assessed under the Legal Practitioners Act."
The appellants had then sought to be heard on the question of its July 2013 notice to admit facts and authenticity of documents. No further order as to those costs was later made, the appellant's costs application having failed at the further hearing in June 2014. In the result, the cost of the notices was comprehended in the order which had been made on 9 May, which was the subject of the appeal.
Further, it was argued that there had been no separate costs order made in relation to the notices and so no need for the appellant to have raised the issue of those costs, as a separate ground of appeal. That was a matter which the defendants needed to raise and having failed to do so, they were not now entitled to the relief claimed.
The appellants also submitted that in the result, given its success on the appeal, the Local Court's orders having been overturned, all costs should follow that event. Further, the success of the appeal was consistent with it having proved the matters the subject of its notice, with the result that under Rules 42.8 and 42.9 of the Uniform Civil Procedure Rules 2005 (NSW), it was entitled to its costs, on an indemnity basis. In the circumstances the defendants were not entitled to the departure sought from the usual order that costs follow the event.
I am satisfied that the order sought by the defendants must be refused.
Under s 40(2)(c) of the Local Court Act an appeal as to an order as to costs requires leave. The orders sought in the summons initiating these proceedings included an order that the defendants pay the costs of the Local Court proceedings, as agreed or assessed until 3 September 2013 and thereafter on an indemnity basis. To the extent that questions of mixed fact and law were raised by any of the grounds advanced, leave was sought. By their 24 July 2014 notice of contention the defendants raised no issue as to the Local Court's costs order.
In the circumstances of this case, the appellants having succeeded on appeal as they did on all of the issues which the parties had identified at the hearing as lying between them, as explained at [6] of the July judgement, it is appropriate for the leave sought in relation to the Local Court's costs order to be granted, as the parties otherwise agreed.
Whether such leave should be refused in relation to the part of the order which is concerned with the costs of the appellant's July 2013 notice, is what is now, in reality, raised, for the first time, as lying in issue between the parties.
The issues identified to be lying between the parties at the hearing of the appeal did not include any question as to a costs order being made in favour of the defendants in relation to the appellants' notices, in the event that the appeal succeeded. Nor was that raised by the defendant's notice of contention. That explains why the transcript of the hearing of that argument in the Local Court in June 2014 and the reasons for the rejection of that application, was not led on the appeal by the appellant.
Rule 50.11 "Notice of contention" of the Uniform Civil Procedure Rules requires a defendant who wishes to contend that the decision of the court below should be affirmed on grounds other than those relied on by that court, but who does not seek a discharge or variation of any part of that decision, to give the required notice of that contention, stating, briefly but specifically, the grounds relied on in support of the contention. If the decision or orders of the court below are sought to be challenged, a cross-summons must be filed in accordance with r 50.10. The defendants neither raised the question of the costs order in relation to the applicant's 2013 notice in their notice of contention, nor did they file a cross-summons seeking a variation of the costs order made in the Local Court, in respect of that notice, if the appeal succeeded. They also did not identify the question of the costs of the appellant's notice as lying in issue between the parties at the hearing of the appeal, in the event that the appeal succeeded.
Rule 50.14 specifies the materials which an appellant must put before the Court on an appeal. Unless the Court otherwise orders, they include
"(a) a copy of the reasons for the decision of the court below, unless the court below has not given, and does not intend to give, written reasons, and
(b) a copy of the transcript of the proceedings in the court below, unless a transcript cannot be obtained in respect of proceedings of that type, and
(c) a copy of any exhibit, affidavit or other document from the proceedings in the court below that the plaintiff wishes to be considered at the hearing of the appeal or proposed appeal."
Litigation should not be conducted by ambush or surprise. Under the Rules, a defendant thus may also provide any other exhibit, affidavit or other document from the proceedings in the court below, that is sought to be considered at the hearing of the appeal, cross-appeal or application for leave to appeal or cross-appeal. Nothing was provided as to costs of the notice.
While the transcript of the commencement of the hearing, when the agreement between the parties as to the applicant's notice and the defendants' motions was announced to the Court was in evidence, the transcript of the hearing of the appellant's June 2014 costs application and the reasons for the refusal of the application were not. Only now is it said by the defendants that they are unobtainable, but no evidence was led about what enquiries had been made in that regard. Nor was any order sought in relation to the obligation to provide the transcript of the June 2014 hearing, or the reasons given for the refusal of the costs application.
It was submitted that the costs order had been refused, because the submissions advanced by the defendants had been accepted by the Local Court. That may be so, but does not alter the fact that until required to address the question of the order to be made as to costs, after judgment was given, the defendants had not disclosed that the appeal as to costs was to be resisted by reference to what had transpired in relation to the costs of the motion, in the event that the appellant succeeded.
Having so approached the issue of costs and not having taken steps either to ensure that all of the relevant material was put before the Court on appeal, or to seek leave to be excused from leading that material, it must be accepted that what the defendants now seek by way of variation of the Local Court's costs order, after the appellant's success on all of the issues identified to be lying between the parties, may not justly be granted.
Further, true it is, on the one hand, that the appellant's notice raised not only questions of fact. On the other, it is relevant that it sought admissions as to the authenticity of the rental agreement and guarantee which had unquestionably been entered, which amongst other facts ought to have been admitted by the defendants, given the duty imposed on the parties by s 56 of the Civil Procedure Act 2005 (NSW), to assist the Local Court to further the overriding purpose there specified, the just, quick and cheap resolution of the real issues in the proceedings. The failure to make relevant admissions undoubtedly unnecessarily protracted the proceedings in the Local Court.
In the result, the question of the costs of the appellant's notice is not as simple as the defendants now submitted.
In all of the circumstances, I am satisfied that justice does not permit the order as to costs in relation to the notice sought by the defendants, particularly in the absence of the relevant transcript of the proceedings in the Local Court and the reasons given for the refusal of the appellant's application for costs of the notice.
[4]
Orders
For these reasons, I make orders in terms sought otherwise agreed by the parties, namely:
1. Appeal allowed.
2. An order pursuant to s41 (1)(b) of the Local Court Act 2007 setting aside the judgment made in favour of the First and Second Defendants on 9 May 2014 by the Local Court of New South Wales in proceedings Number 2012/00286088.
3. An order pursuant to s41 (1)(b) of the Local Court Act 2007 setting aside the costs order made on 9 May 2014 by the Local Court of New South Wales in proceedings Number 2012/00286088.
4. A verdict and judgment in favour of the Plaintiff against the First and Second Defendants in the amount of $23,479.60.
5. An order that the First and Second Defendants pay the Plaintiff interest on the judgment amount from 19 December 2012 pursuant to section 100 of the Civil Procedure Act 2005.
6. An order that the First and Second Defendants pay the Plaintiff's costs of the Local Court Proceedings Number 2012/00286088 on a party/party basis up to and including 16 April 2013 and thereafter on an indemnity basis.
7. An order that the First and Second Defendants pay the Plaintiff's costs of this Appeal on a party/party basis.
[5]
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Decision last updated: 12 November 2015