Kingsford Smith Transport Pty Ltd v Slattery Auctions Australia Pty Ltd [2008] NSWSC 393 | Case summary

JUDGMENT 1 HIS HONOUR: The plaintiff brought proceedings in the Local Court against Slattery Auctions Australia Pty Limited (the defendant). The claim concerned the purchase of a motor vehicle. The proceedings were defended on the basis that the defendant was merely an agent. The defendant later brought a cross-claim against Bruce Mulvaney (the cross-defendant). The cross-claim sought indemnity. 2 In May 2007, a settlement took place between the defendant and the cross-defendant. In effect, the cross-defendant conceded that it was liable to indemnify the defendant. The question of the costs of the cross-claim was to be reserved. There was a change of solicitors for the defendant (7 May 2007). Presumably, the cross-defendant then took over the conduct of the defence and the parties had the same legal representation as from the original proceedings. 3 Thereafter a hearing took place between the plaintiff and the defendant (it commenced on 16 May 2007). Judgment was delivered on 24 May 2007. The defendant was successful on the agency issue. 4 The Magistrate then heard argument on questions of costs. Largely, it concerned the costs of the cross-claim. One argument was that the plaintiff should pay the cross-defendant's costs (reference was made to the making of a Bullock or a Sanderson order). Reference was also made to settlement attempts on 24 August 2006, 17 January 2007 and 11 April 2007. 5 After hearing argument, the Magistrate made the following observations: "I propose to make the following orders: costs in favour of the defendant as assessed or agreed from commencement of proceedings up to 11 April 2007, thereafter indemnity costs in favour of the defendant. In relation to the cross-claim, I'll make the following order: judgment in accordance with the terms dated 2 May 2007 and signed by the parties. Further noted notice of discontinuance filed by the parties on 8 May 2007. As to the plaintiff and the defendant, no order as to costs. Thank you Mr Oliveri and Mr Arblaster, you are excused." 6 The proceedings came back to Court on 6 September 2007. The stance taken by the cross-defendant was that the Magistrate had not dealt with the question of the cross-defendant's costs of the cross-claim. This application brought the following observation from the Magistrate: "I think I stated as between the plaintiff and the defendant there was no order as to costs, that's in relation to the cross-claim and there was no, I don't think there was any application before me with respect to any other costs whether between the cross-defendant and the cross-claimant." 7 The Magistrate then proceeded to hear argument on the question. The plaintiff took the stance that, inter alia, the Magistrate was functus officio. The argument that was put on behalf of the cross-defendant was similar to that which had been put on 24 May 2007. After hearing argument, the Magistrate adjourned the matter to 12 September 2007. 8 On 12 September 2007, the Magistrate observed, inter alia, as follows: "I not that on that day there was some issue in relation to the third party's position and in relation to the third party which is Bruce Mulvaney, the cross-defendant, it was noted that as between the defendant and the cross-defendant, that a notice of discontinuance had been filed. And also as to costs the court stated that as to the plaintiff and the defendant there was no order as to costs. Therefore on that date the issue between the plaintiff and the defendant was decided in relation to costs in relation to the cross-claim." 9 The Magistrate further observed as follows: "Firstly, looking at the short minutes of order which were filed and also the notice of discontinuance that were filed in relation to the cross-claim, it is clear that costs were reserved at that time in relation to both documents. In dealing with this matter it is important to have a look at whether assistance can be provided by cases decided on this issue from superior courts. In particular there is a case in the New South Wales Court of Appeal referred to as Furber v Stacey [2005] NSWCA 242. This sets out various propositions and things which need to be considered as to whether the plaintiff, amongst other things, should pay the costs of a third party. In this matter it was considered that even where the making of a third party claim can be said to have been justifiable, this is not sufficient to make it appropriate to pass the costs of the successful party on to the plaintiff. And various principles were then set out. It's noted that the court does have a broad discretion in relation to costs and should seek to do justice between the parties. And whilst the prima facie rule that costs follow the event can be varied in particular cases, the court should have regard to particular circumstances. Including the claims which have been lodged, the evidence and the result. In looking at this matter the pleadings, the cross-claims, the defence and various correspondence and taking into account the evidence which was provided and my previous judgment it would appear to the court that the defendants in this matter were virtually forced by the plaintiff to join the third party. And I note, in particular, the correspondence which was handed up by the defendant on the last occasions, that's 6 September and this correspondence being evidence that was previously provided in the case or produced to the court. Considering that, it is clear to the court that it was inevitable that once these proceedings were brought by the plaintiff against the defendant that the defendant had to join a third party, and in this instance Bruce Mulvaney, in these proceedings. On that basis I intend to make a costs order in favour of the cross-defendant in these proceedings." 10 He then proceeded to make orders of the following effect:- The costs order is that the Plaintiff pay the costs of the Cross-Defendant to the First Cross-Claim as agreed or assessed up to 24 August on an ordinary basis and thereafter on an indemnity basis. 11 On 5 October 2007, the plaintiff filed a Summons in this Court. It seeks leave to appeal what was raised in the Summons, and has been reduced to the following matters: "2. The Plaintiff confines the relief sought in the appeal proceedings herein to: (i) An Order that the said costs order made by the Magistrate on 12 September 2007 be set aside; (ii) An Order that leave be granted if required to appeal from the said costs order made by the Magistrate on 12 September 2007. (iii) An Order that the Cross-Defendant pay the Plaintiff's costs of the appeal.

(iii) alternatively, the Magistrate erred in the exercise of his discretion in making a costs order against the Plaintiff." 12 The hearing took place on 7 May 2008. Both parties were represented by counsel. Both relied on written submissions supplemented by oral argument. 13 The plaintiff contends that what was said by the Magistrate on 24 May 2007 brought about a final disposition of all matters in issue in the proceedings. The argument was elaborated in paragraphs 5 - 35 of its written submissions. 14 Whilst what was said by the Magistrate on that occasion may on one view be suggestive of ambiguity, it seems to me that the better view is that either by oversight or otherwise he failed to address the question of the cross-defendant's costs of the cross-claim. In my view, he retained jurisdiction to deal with that outstanding question when the matter was brought back before him during September 2007. This disposes of what has been put by the plaintiff on the matters of jurisdiction and estoppel. 15 There remains the contention of error in exercise of discretion. Reference has been made to various decided cases (including House v The King (1936) 55 CLR 499). 16 Questions of costs are governed by the provisions of s 98 of the Uniform Civil Procedure Act 2005 and Part 42 of the Uniform Civil Procedure Rules 2005. Subject to those provisions, the making of an order for costs is a discretionary exercise. The discretion is to be exercised judicially. It is exercised so that the dictates of justice are best served. 17 The relevant circumstances of each case will be determinative of the result. Decided cases can be expected to play the part of useful guidance. 18 The argument as to the discretionary error was elaborated in paragraphs 36 - 48 of its written submissions. Largely, the complaint was of acting on wrong principle and failure to take into account relevant circumstances. 19 Without reference to any supporting authority, it was briefly argued that error in the exercise of discretion constituted error in point of law. If that be the case, I am not satisfied that there was error that justifies the disturbing of the decision made by the Magistrate. 20 The cross-defendant's costs of the cross-claim would not be expected to be in a large amount. The cross-claim was settled in early May 2007 prior to the commencement of the hearing. Thereafter, the only outstanding matter was the question of his costs. Following the settlement, the incurring of costs would largely be in the name of the defendant. If there be any duplication in the claims for costs made on behalf of the defendant and the cross-defendant, these matters can be addressed in the cost assessment process. 21 Appeals to this Court from the Local Court are governed by the provisions of s 73 and s 74 of the Local Court Act 2007. Section 73 provides an avenue as of right where there has been error in point of law. Section 74 provides an avenue that is only available by leave of this Court (where the error involves a question of mixed law and fact and, inter alia, the appeal is from an order as to costs). 22 The plaintiff has contended that its jurisdictional argument did not require the grant of leave. I do not accept that submission. It seems to me to be contrary to the structure of the statutory provisions and the express requirement that leave is required where the appeal is brought against an order as to costs. It seems to me that there was a clear intention to filter the appellate process in respect of the matter mentioned in s 74. 23 Accordingly, I am of the view that the only avenue available to the plaintiff is by way of leave. Before addressing the question of leave, I have first addressed the merits of the arguments advanced on behalf of the plaintiff. By reason of the view taken as to those matters, it seems to me that it would be futile to make a grant of leave in this case. 24 In considering a grant of leave, a number of matters may be relevant. The Court usually requires the demonstration of manifest error. It may also look to matters such as the amount involved and the public interest. 25 As earlier said, the costs of the cross-defendant may not be in a large amount and the issues throw up no novel question of law or other matter of public interest. 26 The Summons is dismissed. The plaintiff is to pay the costs of the Summons. The exhibits may be returned. **********

Kingsford Smith Transport Pty Ltd v Slattery Auctions Australia Pty Ltd

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Judgment (16 paragraphs)

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Cases Cited (2)