McVicar v Hanson Construction Materials Pty Ltd

Notice of Motion in the Local Court

1. The Notice of Motion, filed by Hanson on 26 July 2023, sought the following orders: "1. Despite paragraph 38.2 of Practice Note Civ 1, the defendant pay the plaintiff's costs of and incidental to this proceeding on an indemnity basis fixed in the sum of $60,875. 2. Further or in the alternative, despite paragraph 38.2 of Practice Note Civ 1, the defendant pay the plaintiff's costs of and incidental to this proceeding incurred on and from 24 February 2023 on an indemnity basis fixed in the sum of $56,945. 3. Further or in the alternative, the maximum costs order in paragraph 38.2 of the Practice Note Civ 1 is varied to 100% of the amount awarded, and the defendant is ordered to pay the plaintiff's costs of and incidental to this proceeding in the fixed sum of $21,969.20. 4. Pursuant to paragraph 38.10 of Practice Note Civ 1, the defendant pay the plaintiff's costs of this Motion fixed in an amount the Court deems appropriate."

Evidence Filed in Support of the Notice of Motion

1. At the hearing of the Notice of Motion, Hanson relied upon the affidavit of its solicitor, Mr Bruce Patane, sworn 26 July 2023.
2. That affidavit was read at the hearing of the Motion without objection.
3. It is unnecessary for present purposes to do anything other than to describe its contents in summary terms.
4. Mr Patane described his experience as a solicitor and in particular, his lengthy experience of about 30 years practising in commercial litigation which included estimating and charging legal costs.
5. He described the proceedings, including the issues raised in them. His affidavit at paragraph 12 included the following: "12. As detailed below, this matter was somewhat unusual in my experience as the Defendant, among other matters, in her defence raised an allegation tantamount to fraud against her son, Greg McVicar".
6. He described work done by his firm on behalf of Hanson, which included establishing the processes through which Hanson went before opening the credit account, and having the guarantee executed by Ms McVicar. He described other steps taken prior to the proceedings being commenced in an endeavour to collect the debt.
7. He then described in some detail the matters involving the course of the proceedings up to the date of his affidavit. Much of that material has been referred to earlier in this judgment.
8. He detailed all of the attempts which had been made to obtain documents relating to Ikon, and Ms McVicar's role as a director of that company, and her position more generally. His affidavit established that Ms McVicar was a director, secretary and shareholder of 10 different companies, including Ikon.
9. The purpose of that material was to demonstrate that Ms McVicar, who had qualifications as an accountant, knew what the role of a company director involved, and was experienced in that role, including Ms McVicar signing a wide range of documents lodged with ASIC.
10. Mr Patane also outlined his enquiries with respect to the creditors and liquidator of Ikon and the likelihood of any monies being paid to Hanson from that source. He then described other steps taken in the proceedings, including the need to brief Mr Kucharski of counsel to prepare an Amended Statement of Claim addressing the defendant's "allegations of fraud and lack of authority to bind Ikon". He also describes issuing 11 subpoenas to third party entities, all addressed to the need to deal with the issues raised by Ms McVicar's Defence and her persistence as a consequence of her Amended Defence.
11. After concluding the history of the proceedings up to and including the consent orders filed with the Court, Mr Patane turned his attention in the affidavit to the legal costs which Hanson had incurred up to the time of his affidavit.
12. He set out the hourly rate charged to Hanson and recorded that there was no "uplift fee" being charged. The hourly costs ranged from $375ph (+ GST) for a paralegal to $500ph (+GST) for the principal.
13. Mr Patane set out a summary of the costs claimed. In respect of that summary, he stated in his affidavit at paragraph 101: "101. For the purpose of drafting the summary of costs claimed below and the annexed Schedule, I have: a. discounted all time to $375 plus GST per hour then further discounted by rounding down the value of time spent; and b reviewed the work performed by Patane Lawyers and the disbursements incurred, for the purpose of assessing: i. that the costs and disbursements claimed are fair and reasonable; ii. that the matters noted in the summary of costs claimed and Schedule represent a fair and accurate summary of costs and disbursements Hanson is entitled to claim; and iii. that Hanson is not claiming more than it is liable to pay for costs and disbursements; and iv. the calculation of amounts claimed - to assess that calculations are correct."
14. Having set out the basis upon which he engaged with that summary, Mr Patane expressed this view: "102. By reason of the above, and my professional experience, to the best of my knowledge: a. the costs and disbursements claimed in the summary of costs claimed and Schedule are fair and reasonable; b. the matters in the summary and Schedule represent[ed] are a fair and accurate summary of the costs and disbursements Hanson is entitled to claim; c. the calculations are correct; d. amounts claimed are not more than Hanson is liable to pay for costs and disbursements; and e. the amounts claimed are capable of further verification through source material (eg file records, tax invoices, and receipts for payment)."
15. Mr Patane then set out a summary of the costs claimed. That summary is in the following amount: Professional fees: $46,280 Disbursements: $14,595 Total: $60,875
16. It is to be observed that the professional fees amount to about three-quarters of the sum claimed. A Schedule was attached which itemised the disbursements and outlays.
17. Mr Patane went on to say in his affidavit that, having regard to his review of the proceedings, and in light of his professional experience: "… greater costs have been incurred than may otherwise have been required due to the matters explained in this affidavit."
18. Mr Patane referred to the allegations raised by the defendant with regard to her background and position, her failure and refusal to provide any documents or evidence to support her allegations, the necessary investigations required in light of those matters, and the need for Hanson to conduct further investigations as information became gradually available and documents were obtained which apparently contradicted the defendant's allegations. As well, Mr Patane drew attention to the protracted negotiations between the parties.
19. He expressed the opinion in his affidavit that Hanson's claim was a simple liquidated debt claim, routinely dealt with by the Local Court until it was made complex by fraud and other allegations raised by the defendant. These allegations necessitated, he said, a high degree of care and skill.
20. He also set out in reasons why Hanson were entitled to indemnity costs arising from the failure of Ms McVicar to accept the Calderbank offer made on 24 February 2023. He also set out reasons why Hanson were entitled to indemnity costs from Ms McVicar because of her allegation of fraud and her failure to ultimately prove the fraud in any way.
21. His final paragraph included the following: "DEPARTURE FROM USUAL ORDERS/VARIATION FROM MAXIMUM COSTS CAP - Public Policy 121. If a special costs order is not made (whether by way of an order for indemnity costs and/or by varying the costs cap), there would be potential for injustice because a debtor with a debt in the local court jurisdiction would be able to exploit the practice direction by hedging a wager at a fixed percentage costs of the claim (25% or $6,000 in this proceeding) by a. alleging fraud and/or forgery - upon which, the Plaintiff would be forced either [to] i. drop the case (in which case the defendant would get away with the debt); or ii. the plaintiff to incur costs in preparation for trial; then b. when it is apparent that the Plaintiff will not drop its case and/or has made substantial headway in terms of its evidence and prospects, the Defendant will then say 'no admission, but here's the judgment amount, and a fixed percentage of costs'. The potential for exploitation and injustice being, at the risk of paying an extra 25% or so, any defendant could gamble on a plaintiff dropping its debt."
22. This content of the affidavit was clearly tantamount to submissions.
23. Ms McVicar relied upon the affidavit of her solicitor, Mr Luis Ormazabal, sworn 1 December 2023. Mr Ormazabal's affidavit was sworn for the purpose of responding to Mr Patane's affidavit.
24. Mr Ormazabal disclosed that he had been a solicitor for 13 years and for the past six years had held a specialist accreditation in commercial litigation. He deposed to his experience as a commercial litigation lawyer.
25. Mr Ormazabal set out the various court orders and preparation for hearing.
26. With respect to the claim for costs made by Mr Patane, Mr Ormazabal noted that the plaintiff had not incurred any costs in respect of the preparation or finalisation of lay evidence with respect to the proceedings, he noted the same with respect to expert evidence and that the plaintiff had not incurred any specific costs in preparation for hearing of the proceedings.
27. Mr Ormazabal took issue with the assertion that the proceedings were unusual and complex. He contended that the issues in dispute were at all times simple. He contended that the proceedings were not one of fraud being alleged by the defendant against the plaintiff, rather the key issue was whether the signature applied to the Guarantee was that of the defendant or her son.
28. He did not suggest that the hourly rate charged by Mr Patane was other than reasonable.
29. Both parties filed written submissions in the Local Court.

Written Submissions to the Local Court

1. Ms McVicar submitted that the claim for costs was disproportionality high considering the real issues that were in dispute, and that there was no reason for the Court to vary the provisions of the Practice Note.
2. The submissions noted that there had been no determination on the merits of the proceedings and that the Court should not enter into a hypothetical trial about the issues of the dispute between the parties, simply to resolve the question of costs. In particular, the submissions noted that the Court should not draw any inferences as to the reasons for the parties entering into the consent orders.
3. The submissions noted that whilst there was no allegation of fraud against the plaintiff, even if there was, such an allegation was no justification for the claimed costs.
4. The submissions contested the claim for a gross sum costs order by pointing to the fact, amongst others, that the costs incurred have been disproportionate to the result of the proceedings, and that that would disincline the Court to exercise its discretion to make a gross lump sum costs order.
5. Finally, the submissions contested the proposition that the offer made by Hanson on 22 February 2023 was a genuine offer of compromise because it was an offer to the defendant, in essence, to capitulate.
6. Hanson also put in short written submissions which largely reflected the matters set out in Mr Patane's affidavit. Those submissions included that: 1. the defendant's unjustified or unreasonable conduct in the course of the proceedings necessitated Hanson in incurring substantial costs that otherwise would not have been required; 2. the terms of the consent orders resolving the proceedings demonstrated a complete capitulation by the defendant in the proceedings. That was because the sum, which was the subject of the judgment, was the complete sum claimed by Hanson. 3. The persisting in the making of the unsupported and challenged allegation akin to fraud against a third party; 4. The maintenance of a defence which had no prospect of success; and 5. the Calderbank offer of 24 February 2023 had been unreasonably refused.
7. The submissions addressed the unsupported and unchallenged allegation of fraud, asserted that the defendant was advancing a claim with no chance of success, and that the Calderbank offer of 24 February 2023 was unreasonably refused.
8. The submissions then addressed Hanson's costs in responding to the Defence, and submitted that they were all properly incurred. In particular, at paragraph 38, having submitted that the Court should make an order for costs, the following was said: "The costs order sought by Hanson will by necessity require the cap provided for in [38.2] of the Practice Note to be removed or varied. The cap reflects a concern that costs expenditure be proportional to the nature of the proceeding. However, the cap is not intended to be applied as a 'one size fits all' immovable rule based solely on raw figures … Having regard to [38.5(a)] of the Practice Note, it is submitted that this case warrants a removal or variation of the cap due to the complexity of the proceeding and its importance."
9. Finally, the submissions sought that a gross sum costs order in favour of Hanson should be made "… so as to avoid the expense and delay arising out of assessments".
10. The submissions also set out in an annexure the applicable legal principles.

Local Court Hearing

1. The matter came before Barko LCM on 7 August 2023. The affidavits of Mr Patane and Mr Ormazabal were both read without objection and without cross‑examination.
2. Counsel for Ms McVicar tendered a Bill of Costs prepared by the solicitors for Hanson. That was an itemised Bill of Costs with 1,311 items of costs, which totalled $68,838.45 in professional fees and "outlays" of $9,729.01 - being a total of $78,567.46. The Bill of Costs listed item-by-item all of the work which the solicitors for Hanson had done in the course of the proceedings.
3. The itemised Bill of Costs had been produced by Hanson to Ms McVicar in response to a Notice to Produce issued a week before the hearing.
4. Barko LCM informed the parties that he had looked through the affidavits which had been filed relating to the Notice of Motion for costs. He said he had read the "… comprehensive and very helpful written submissions of both parties …". He indicated that he did not need any further oral submissions. He then proceeded to deliver an ex tempore oral judgment which extends for over seven pages of the transcript.
5. It is unnecessary to set out the entirety of that judgment, a summary will be generally sufficient.
6. It recounted the nature of the proceedings. It noted that the claim was marginally above the jurisdictional limit of the Small Claims Division of the Local Court and noted what the costs position would have been had the claim been brought in the Small Claims Division.
7. Barko LCM noted the issues raised by the first Defence, and recorded that by reason of those issues, an Amended Statement of Claim was necessitated. He went on to recount in summary terms the issues joined between the parties.
8. He noted that the parties had settled the proceedings on terms and for reasons which did not "concern me today". He noted that he had read the lengthy affidavit of Mr Patane and the exhibit to it.
9. He noted that there had been no formal Offer of Compromise filed in accordance with the Uniform Civil Procedure Rules 2005 ("the UCPR"), but that there were Calderbank offers. He noted, correctly, that there was no need for him to repeat all of the material set out in the affidavit of Mr Patane.
10. His Honour turned his attention to the provisions of the Civil Procedure Act 2005, including ss 56, 57 and 58. He then said this: "The essence of the plaintiff's claim for costs is, it was a simple liquidated claim which could have been dealt with simply but we had to go to all this trouble, time, and expense, to prove that in fact the defendant had signed and willingly signed the subject guarantee, and if she is going to maintain the fact that she is not the author of the guarantee or the signatory to it we have to prove it on the balance of probabilities, and accordingly, we will amass whatever evidence we can to prove the same, and we will on the advice of experienced commercial litigators do what we have to do on their advice, and that costs a lot of time, trouble and expense."
11. His Honour then referred to some legal principles with respect to costs. He did so, perhaps a little confusingly, but nevertheless efficiently, by reference to the contents of a previous costs judgment which he had given.
12. Importantly, his Honour noted the provisions of s 98 of the Civil Procedure Act which provides the Court with the discretionary power to order costs including that the Court may order the costs to be paid on an ordinary basis or an indemnity basis.
13. His Honour noted the "proportionality principle" in s 60 of the Civil Procedure Act. His Honour noted r 42.1 of the UCPR, and the other rules which relate to the ordering of indemnity costs.
14. His Honour then noted the existence of the Local Court's Civil Practice Note, although it does appear that his Honour may have been mistaken as to some provisions of it.
15. His Honour referred to the Calderbank offers which had been made between the parties. He also noted the merits of each of the offers and addressed the caution which Ms McVicar's lawyer had expressed in the written submissions about the Court engaging in the making of a costs order without factual findings being made as to the merits of the proceedings.
16. His Honour made reference to a further publication about costs by the Judicial Commission of NSW, written by Brereton J (as his Honour then was), which discussed the merits where possible of a court dispensing with the assessment process for costs completely and making a gross sum costs order. That article discussed the appropriate approach to such order.
17. His Honour then came to express his conclusion which, having regard to the lengthy and comprehensive remarks, he expressed quite succinctly. He said: "The plaintiff was entitled to prepare this matter on the basis of the pleadings, and the defendant had made it clear that the plaintiff was required to satisfy the Court on the balance of probabilities that she was a signatory to the guarantee. On what I have read even for the purposes of this application, it was a strong prosecution (sic) case. An allegation of fraud has been made but when I say, 'allegation of fraud', not really as such as is traditionally made i.e., one party has defrauded the other. It is more so pointing a finger at a third party, being the defendant's son, who it would seem is probably the alter ego of all these businesses and just had mum's name on paper for credit purposes or otherwise. But on the material before me, on the balance of probabilities I would have been satisfied that it was Ms McVicar that signed the guarantee. I can infer she gave instructions to her lawyers to draft the defences and to defend the proceedings as have been defended. I take into account all of those issues that I have raised, again having regard to the voluminous material that has been put before me for the purpose of the question of costs. … I take into account the timing of all of that as well. I take into account the nature of the claim. It was a straightforward matter or should have been a straightforward matter, but more complicated by reason of the defence. I have taken all of that into account applying relevant legislation and legal principles. I order the defendant to pay the plaintiff's court and profession costs in the total sum of $45,000."
18. I should note in the extract above, as it appeared in the transcript of the proceedings, large amounts of it had been capitalised. It is not at all clear what the convention is for transcript reporters to capitalise paragraphs. I have regarded the capitalisation as irrelevant and reproduced the transcript in a more usual fashion.

The Supreme Court Proceedings

1. The Summons filed on 20 October 2023 sought a grant of leave to appeal, and dispensation of the relevant time limit. It sought the following orders: "… 3. Appeal allowed. 4. This Court vary the terms of the order of 7 August 2023 that the appellant pays the respondent costs in the total sum of $5,090.89 in lieu of $45,000. 5. Alternatively, this Court vary the terms of the order of 7 August 2023 that the appellant pays the respondent costs as assessed. 6. Alternatively, this Court setting aside the order of 7 August 2023 and the proceedings be remitted to the Court below to a magistrate to determine the extent of the costs order [in the Local Court proceedings]. … 8. Costs of the proceedings in this court."
2. The grounds upon which the orders were sought were set out in paragraph 14 of the Summons as follows: "Magistrate Barko erred by failing to give adequate or sufficient weight to the fact that: (a) there was no determination of the merits and therefore no event for costs to follow; (b) the pleadings in the lower court closed on 11 May 2023 and the lower court substantive proceeding was settled on 21 July 2023, prior to any party filing and serving any evidence; (c) the costs sought were entirely out of proportion to the claim; and (d) the costs sought were entirely out of proportion to the complexity of the proceedings."
3. It is unnecessary to refer to the evidence filed in this Court other than to say that it placed before this Court all of the material that was before the Local Court and, as well, the terms of the Local Court Practice Note Civ 1.
4. In written submissions in support of the Application for Leave to Appeal and the Appeal, Ms McVicar identified errors in the Magistrate's judgment in the following way: 1. a failure to apply the Practice Note where: 1. the Motion [in the Local Court] was brought out of time and his Honour failed to address that fact; 2. the Practice Note therefore applying to his Honour's decision, he entirely failed to apply it; 1. his Honour's misunderstanding of the claim being in the General Division when the proper claim was $17,372.74 and therefore one that should have been brought in the Small Claims Division; 2. his utter failure to give dispositive reasons; 3. his making findings on hypothetical material as to the underlying case that did not run; and 4. it is noted that his Honour refused oral submissions, quoted other judgments of his from other matters, continually referred to HCM as the 'prosecution' and did not apply any reasoning to the actual provisions of the Civil Procedure Act 2005 (NSW), the Local Court Act 2009 (NSW) or the Practice Note cited by his Honour. It can only be by that cursory approach to the decision that his Honour held costs of more than double the claimed amount was reasonable when no evidence was filed or served."
5. The lawyers for Hanson also filed an outline of submissions on the costs appeal. With respect to the proceedings in the Local Court, Hanson's submissions noted that Ms McVicar's appeal was not brought as of right and that there were a number of threshold matters with which she needed to satisfy the Court in order to bring her appeal. They were: 1. first, Ms McVicar must satisfy this Court that it should grant an extension of time; 2. secondly, leave is required because the appeal is in respect of a costs order; 3. thirdly, the decision being discretionary, it is necessary that she establish House v The King error; and 4. fourthly, because the decision is on costs, in order to warrant a grant of leave, it is necessary to not merely show House v The King error, but to show a House v The King error which gives rise to an injustice which is reasonably clear as opposed to one that is merely arguable.
6. Hanson submitted that the extension of time should be refused, leave to appeal should be refused, the Court should be persuaded that the proposed grounds of appeal lacked merit and the Summons should be dismissed with costs.
7. In reply, counsel for Ms McVicar submitted that the threshold for the filtering process of leave to appeal had been met because the Local Court had "so patently failed in its function". And, further, that the matter was not one that was unsuitable for appellant proceedings given the material that was before the Court, the reasons below were minimal and that "section 58 of the Civil Procedure Act 2005 (NSW) requires this Court to redress the patent injustice …".
8. The Court received oral submissions from counsel for both parties.
9. Counsel for Ms McVicar accepted that the general principles relating to the grant of leave to appeal from the Local Court, including a grant of leave to appeal against costs orders, were conveniently collected in Ackerman v Morgan [2019] NSWSC 1250 at [49]-[64]. In so doing, he accepted the submission of counsel for Hanson that the principles were there encapsulated were as recounted by Walton J at [53] as follows: "53. The relevant principles may be summarised as follows: (1) An applicant for leave must demonstrate something more than that the trial judge was arguably wrong in the conclusion arrived at, and 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: Carolan. (2) Ordinarily it is 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: Jaycar at [46]. (3) The leave requirement is 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": Coulter at 356 (Mason CJ, Wilson and Brennan JJ). Whilst that was a criminal matter, the statement is clearly applicable to civil, as well as criminal, appellate jurisdiction: Be Financial at [32]-[36] (per Basten JA, with Tobias AJA agreeing). (4) A requirement of leave to appeal is intended to act as a filter to ensure that unsuitable appellant proceedings are not able to be brought, with the demands they place upon the resources of the Court and the burden they place upon other parties and the delays which they cause to other litigants: Chapmans at [11] per Fitzgerald JA (with whom Mason P and Davies AJA agreed). (5) An application for leave is not a proceeding in the ordinary course of litigation but a preliminary procedure: Collins v The Queen (1975) 133 CLR 120 at 122; [1975] HCA 60. (6) Section 58 of the Civil Procedure Act applies and requires the Court to consider "the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction": s 58(2)(b)(vi). Leave should be granted only where there are substantial reasons to allow an appellate review (Johnson Tiles Pty Ltd v Esso Australia Ltd (2000) 104 FCR 564; [2000] FCA 1572, such as where there is an error of principle which, if uncorrected, will result in substantial injustice."
10. In his oral submissions, counsel for Ms McVicar made it plain that he was not raising for consideration by this Court any issue of legal principle, nor was he raising any question of general importance. He submitted that the claim for leave depended upon there being an injustice which was reasonably clear in the sense of it going beyond what was reasonably arguable: see Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 at [46] per Campbell JA (Young and Meagher JJA agreeing).
11. Recognising that he needed an extension of time, counsel submitted that after the judgment was delivered by Barko LCM on 7 August 2023, there were a number of steps taken by his client indicating that she proposed to challenge the decision. In particular, counsel relied upon the fact that on 4 September 2023 (i.e., within the 28 day period for filing an appeal), a Notice of Intention to Appeal was filed by Ms McVicar. He accepted that that was an error - because such Notices only apply to appeals to the Court of Appeal pursuant to Part 51 of the UCPR. Nevertheless, counsel submitted that the relevance of the filing of that document was that Ms McVicar was taking steps within the requisite 28 day period to pursue the appeal.
12. He noted that on the same day as the Notice of Intention to Appeal was served, that a Motion and affidavit was filed in the Local Court seeking a stay of the costs order, which was subsequently granted.
13. He summarised his argument in this way when addressing the extension of time: "I can only put the submission on this basis. Although filed out of time, your Honour has ample material, both in correspondence between the parties and in the steps taken by the defendant, albeit a misguided step of filing a Notice of Intention to Appeal rather than the Summons, all within the relevant 28 day period."
14. Counsel submitted that Hanson had not suffered any prejudice in any relevant sense from the additional time which had elapsed from when the Notice of Appeal was filed. The only such prejudice would be if Hanson lost the benefit of the Local Court judgment.
15. He turned them to make submissions with respect to the matter of substance.
16. Counsel for Ms McVicar, in his oral submissions, made it clear that he accepted that an order for costs in favour of Hanson was properly made in the Local Court. He sought to attack the Local Court order by submitting that the only liability of Ms McVicar was for the sum of costs fixed in accordance with the Practice Note, i.e., a little less than $6,000.
17. Counsel sought to emphasise that the Practice Note played an important function in replicating the "proportionality principle" which, by Hanson's claim, and the order of the Local Court, had been set at nought. Counsel compared the fact that the judgment sum was a little over $21,000 with the fact that the plaintiff had claimed $60,000 in costs. He also submitted that Hanson had failed to bring a Notice of Motion in a timely fashion in accordance with the Practice Note so as to put Ms McVicar on notice of the potential for a claim for costs outside of, and in excess of, the amount allowed for in the Practice Note.
18. Counsel for Ms McVicar accepted that the existence of, and the terms of, the Practice Note could only constitute a guideline and could not fetter the discretion of the Local Court in ordering costs. However, counsel pointed to the absence of any clear reasons contained in the judgment under appeal as to why the Practice Note was not followed.
19. Counsel submitted that the reasons of Barko LCM did not permit his client to readily understand to what extent the guideline by way of the Practice Note was taken into account; whether the principle of proportionality played any, and if so, what, role on the assessment of the sum of costs; and whether the Local Court had accepted that the provisions of s 98(4)(c) of the Civil Procedure Act dealing with gross sum costs orders, had been appropriately satisfied.
20. Ultimately, counsel put his submission in this way: "We would make this point, and in a large sense, a lot of this appeal comes down to the following thing I am about to say. Is the $45,000 of costs awarded, where there has been pleadings, no evidence, and the Practice Note was in application until the very end of his Honour's judgment, in those circumstances, is a claim for $17,000 such that awarding $45,000 in costs was not a miscarriage of his Honour's discretion to exercise that discretion judicially."
21. Counsel accepted that putting his submission in this way was one, not of patent error, but of error discerned from the outcome rather than any other basis.
22. The patent error identified by counsel was, as well, the Local Court's consideration based upon the fact that the claim was in the General Division, whereas it was clearly a claim which ought to have been made in the Small Claims Division. Counsel also pointed to the finding of a hypothetical and unnecessary fact, namely that Ms McVicar signed the guarantee.
23. Counsel made further submissions about the inadequacy of the reasons, in particular contending that whilst the judgment of the Local Court outlined the appropriate principles to be applied, nowhere in the judgment did it adequately apply those principles to the facts as found.
24. Counsel for Hanson, in her oral submissions, submitted first that there was no basis upon which the Court could grant an extension of time. Secondly, the decision below was one which involved the exercise of a discretion and was limited only to the quantum of costs. She submitted that in the absence of a clear injustice, the Court would not entertain the appeal. Finally, counsel submitted that the proposed grounds of appeal lacked merit. She characterised the appeal by Ms McVicar as simply being one where she disagreed with the amount of costs fixed by way of a gross sum costs order and was in essence inviting this Court to be a costs assessor sitting on an appeal from the Local Court.
25. She submitted that, in substance, when one viewed the submissions of Ms McVicar, her real complaint was with the quantum of costs and with the fact that the reasons which were given in the Local Court were not sufficient for making that order.
26. With respect to the extension of time required for the Summons to be filed, counsel pointed to the fact that neither Ms McVicar or her solicitor had put forward any evidence at all which articulated an explanation for the passage of time which elapsed between the delivery of the Local Court judgment and the filing of the Summons in this Court. She submitted that, in effect, this Court was being asked to speculate about what the true explanation was for the delay in filing the Summons. She noted the fact that, although Ms McVicar's solicitor, Mr Ormazabal, had sworn an affidavit in the appeal, the existence of any explanation for the delay in filing the Summons was not contained in that affidavit.
27. Counsel submitted that, contrary to Ms McVicar's submissions, Hanson would suffer a prejudice if the extension of time was granted. She submitted that Hanson had a vested right to retain the judgment pronounced by Barko LCM on 7 August 2023, and that in the absence of any satisfactory explanation for the delay, any grant of an extension of time would operate prejudicially to Hanson.
28. Counsel submitted that none of the errors in the judgment of Barko LCM which had been pointed to were reasonably arguable, let alone such as to give rise to a clear injustice. She submitted that, properly understood, the issue between the parties was the sum of $40,000 which she submitted, having regard to the evidence that was before the Magistrate, including by way of an itemised Bill of Costs, could not be regarded as a sum fixed without regard to the evidence or else falling outside the reasonable exercise of the Court's discretion.
29. She noted that the judgment was an ex tempore one, in which the Local Court, a busy court, was exercising a broad discretion with respect to costs. She submitted that one ought not fall into the temptation of submitting the reasons to close analysis but that, appropriately, one should look at the substance of them.
30. She submitted that it is clear that the Magistrate had, at length, covered the facts, the circumstances and had come to a decision which was well within his discretion. She submitted that it was plain there was no clear injustice with respect to that decision.
31. In dealing with the oral submissions, counsel submitted that the Local Court Practice Note is not binding and does not have any higher status than the Act or the Rules. She also submitted that where, as was plainly the case before the Local Court, one party is applying for payment of costs on an indemnity basis that, even on the terms of the Practice Note, falls outside of the various provisions capping the costs. Put differently, counsel submitted that where an application was made for indemnity costs, and which was successful, it necessarily followed that the costs limitation in the Practice Note was not being applied.
32. Contrary to the submissions of Ms McVicar, counsel for Hanson submitted that the Notice of Motion seeking costs in the Local Court was not out of time but, rather, it fell within the time limited by consent orders made by the parties when the matter was resolved.
33. She noted that for the purposes of the Practice Note, the consent orders constitute that the Local Court "otherwise ordering" thereby taking this Motion out of the ordinary timed procedure in the Local Court.
34. She also submitted that there was no bar to a Motion being filed at a later point in time.
35. Notwithstanding the submissions that the matter ought to have been brought in the Small Claims Division, counsel submitted that it was properly brought in the General Division because the total sum sought by way of damages exceeded $20,000.
36. As earlier indicated, that submission is correct.
37. Counsel noted that, in his consideration of the costs sought by Hanson, in fact Barko LCM had discounted the costs claim by about 25%, which demonstrated that he had paid careful attention to the question of proportionality, having regard to the issues which were joined between the parties.
38. Counsel went on to draw attention to the fact that when one viewed the amount of the judgment, it was in substance the entirety of the sum claimed, including interest, and that of itself and without more demonstrated complete capitulation by Ms McVicar. She submitted that it was in that context that one had to view the conclusion that Barko LCM arrived at with respect to the issue of determining that, on the probability, the defendant signed the Guarantee. She submitted that the finding was well within an appropriate course, having regard to the nature of the allegations which had been made in the Defence, and the need for the Local Court to determine whether the claim made by Hanson involved the additional work to address the matters in the Defence and thereby giving rise to a greater amount of costs.
39. Even if such a finding was in error, and the Court was persuaded that the reasons were not as clear as they otherwise might be, counsel submitted that there was no clear injustice in the result. As she noted, Ms McVicar, by agreeing to the judgment sum, accepted that the claim was properly brought. The Local Court had before it a broad-ranging and wide explanation for the work involved the proceedings which was necessitated by an unmeritorious claim that Ms McVicar had not signed the Credit Agreement and Guarantee. The Local Court had before it an itemised Bill of Costs which noted that a very large sum of money had been incurred by Hanson to recover this debt.
40. In circumstances where the Local Court did not allow the entirety of the claimed amount, but rather allowed a compromised sum, counsel submitted that there could not be any substantial injustice between the parties such as to warrant this Court interfering with the Local Court's broad discretion in making the costs order.
41. Insofar as the principle of proportionality had effect in circumstances where, as counsel for Ms McVicar had submitted, the time for filing of evidence had not been reached, counsel for Hanson submitted that it was nevertheless necessary at a much earlier stage than any date for service of evidence for Hanson to engage in the process of collecting the evidence and ensuring that it could comply with the Court's directions with respect to the provision of written evidence once they were made. Put differently, counsel submitted that the fact that time for serving of evidence had not arrived made no difference to the costs of the preparation of it.
42. Counsel for Hanson accepted that the Magistrate had referred erroneously to an older version of the Local Court's Practice Note, but submitted that, nevertheless, the discussion engaged in by Barko LCM demonstrated that he was well aware of the principle of capping costs in the Local Court by way of an approach to ensuring the proportionality of costs. She submitted that it was clear that the Magistrate had such principles in mind when he came to make his decision, and as part of his reasoning towards that decision.

Discernment

1. It is first appropriate to commence by considering the question of the extension of time. On this question, Ms McVicar bears the burden of persuading the Court that there are proper grounds to grant her application for an extension of time.
2. In Nanschild v Pratt [2011] NSWCA 85, at [38]-[43], McColl JA (with whom Campbell JA agreed): "38. The discretion to extend time is given for the sole purpose of enabling the court to do justice between the parties. This means that the discretion can only be exercised 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 the extension of time: Gallo v Dawson [1990] HCA 30; (1990) 64 ALJR 458 (at 459) per McHugh J. 39. The underlying premise to these propositions in Gallo … is that the Court's approach to an application to extend the time for filing an appeal from a judgment determining substantive rights (or here to seek leave to appeal) "at any time" recognises that "the respondent to the application has a vested right to retain the judgment" proposed to be the subject of appeal … Tomko v Palasty (No 2) [2007] NSWCA 369 (at [55]) (per Basten JA, Hodgson and Ipp JJA agreeing). 40. Tomko concerned an application for an extension of time to institute an appeal. The necessity to have regard to the vested right to retain the judgment in the case of an application for an extension of time applies, in my view, with even more force when the application is one for an extension of time to file a summons seeking leave to appeal. In such cases, the general principle as to the finality of judgments has been reinforced by the legislature imposing a monetary limit on the applicant's right to challenge a judgment. 41. In Tomko (at [55]) Basten JA identified four factors as of general relevance to an application to extend time within which to appeal: the length of the delay, the reason for the delay, whether the applicant has a fairly arguable case and the extent of any prejudice suffered by the respondent to the application. … 43. In cases involving leave to appeal, it is also necessary to bear in mind that it is not sufficient to show that the judgment appealed against was arguably wrong. Access to an opportunity to appeal has to be kept in proportion with the nature of the controversy, the amount involved and the amount which it is appropriate to spend on resolving the dispute …"
3. It is also appropriate to note in this context, the relevant principles referred to at [100] above in the decision of Ackerman.
4. I accept the submission of counsel for Hanson that Ms McVicar has provided no explanation at all with respect to the time period between the delivery of judgment in the Local Court, the expiry of the time period for an appeal to be filed, and the filing of the Summons in this Court seeking leave to appeal and extension of time so to do. True it is that some things were going on. They demonstrate that Ms McVicar had solicitors instructed to act for her. But, the steps which were taken are not capable of explaining that which did not happen - namely, the preparation of a Summons, the giving of instructions to file it and the filing of it within the appropriate time.
5. The reason why an explanation is important, in this case in particular, is that the judgment is a relatively simple one dealing with one subject: costs. The Local Court was asked to give a decision on whether or not the sum for costs payable by Ms McVicar to Hanson was in one sum or another. The Magistrate gave, orally, reasons why he adjudicated that dispute. A solicitor was apparently present when those reasons were delivered. If there was any error in the reasons, that was discernible when they were delivered or within a short period thereafter, when the transcript of the reasons became available.
6. It was not a complex matter to prepare the Summons to be filed in this Court and obtain instructions. If there was a ready explanation, I would have expected it to be included in the affidavit of Mr Ormazabal which was filed and read in the proceedings in this Court. No such explanation appeared there.
7. I have concluded that Ms McVicar simply has no adequate explanation which justifies the failure to commence these proceedings in time.
8. The prejudice to Hanson is obvious and is capable of being identified as being their entitlement to retain the benefit of the judgment in the Local Court which would be placed at risk if an extension of time was granted. The prejudice to Ms McVicar is non-existent because, as I will shortly explain, leave to appeal should not be granted, and if it was, any appeal would be dismissed.
9. In those circumstances, I have concluded that there is no basis for the grant of an extension of time and it follows that the Summons must be dismissed.
10. It is necessary that I explain why I have concluded that there was no prejudice to Ms McVicar.
11. In accordance with the principles noted, it is ordinarily only appropriate to grant leave to appeal where issues of principle or questions of general public importance are raised. Counsel for Ms McVicar concedes, properly, that any appeal does not involve any issue of legal principles or any question of general public importance.
12. Leave to appeal may also be granted where there is a reasonably clear injustice which goes beyond that which is merely arguable.
13. In my view, there is no room for an argument that there has been an injustice to Ms McVicar.
14. Ms McVicar accepted in the Local Court that she had to pay costs. The only question was in what sum and upon what basis.
15. The reference to the terms of the Practice Note, and the reliance by Ms McVicar on the Practice Note is unpersuasive. The Practice Note is a guideline when the Court considers what order to make on the question of costs. Here, it was clear from the Notice of Motion which was filed in accordance with the order of the Court (which had been consented to by Ms McVicar), that Hanson was seeking an indemnity costs order, and a sum of costs which was in excess of that provided for in the Practice Note. It was inherent in Hanson's Notice of Motion that the Practice Note did not apply insofar as this application was concerned.
16. There was no error in Barko LCM concluding that the cost cap set out in the Practice Note should not apply. There was a more than sufficient basis for him to so conclude. Ms McVicar had set up a Defence which was complex and unusual in the Local Court. It required Hanson to go to significant lengths to collect evidence addressed to disproving the Defence. That Defence was unmeritorious. After all, Ms McVicar, having allowed the proceedings to continue for many months - asserting that the Defence was a good one and could be proved by affidavit evidence, capitulated and paid the entirety of Hanson's claim. Of itself, that approach, in the absence of any particular explanation, bespeaks the unmeritorious nature of the Defence. It was not surprising then in considering the quantum of costs, that Barko LCM concluded that on the material available, he too would have found that Ms McVicar executed the Guarantee. There was no error in that finding being made.
17. Once Barko LCM had reached the conclusion, as he clearly did, that additional work over and above that which was ordinarily required if the case was a simple one, had been undertaken by the solicitors for Hanson necessitated by reason of the Defence mounted by Ms McVicar, it followed, inexorably, that the costs cap in the Practice Note was not appropriate. As well, the existence of the Calderbank offer of 24 February 2023 put Ms McVicar on notice that she was at risk as to costs on an indemnity basis if she did not accept that offer.
18. Barko LCM, seized of that material, was well within the bounds of his discretion to make a gross sum costs order, which was sought by the terms of the Notice of Motion. In exercising his discretion to make that order, the learned Magistrate had before him, tendered by Ms McVicar, an itemised bill of all of the costs incurred by Hanson. He also had abundant evidence from Mr Patane, the solicitor for Hanson, explaining what he had done, why he had done it and why it was necessary. The amount awarded for costs was, in my assessment, significantly less than the sum claimed, and obviously significantly less than the sum to which Hanson may have been entitled.
19. That reduction in the sum allowed for costs manifested an application by the learned Magistrate of the proportionality principle. It also manifested the appropriate approach to take when a gross sum costs order is sought.
20. For these reasons, I did not conclude that there was any injustice to Ms McVicar which was arguable, much less (as the authorities require) one that is reasonably clear.
21. For those reasons, I concluded that Ms McVicar would not be entitled to a grant of leave to appeal.
22. In coming to that conclusion, I also formed the view that even if the grant of leave to appeal was made, the order for costs which was made by the Local Court was not one attended by any patent error nor was it demonstrated to be one arrived at by a lack of application of proper principle or in any other way to be regarded as being a manifestly excessive sum.
23. Accordingly, I concluded that even if leave to appeal was granted, the appeal would not have succeeded.

Conclusion

1. These reasons demonstrate that I formed the view that the applicant, Ms McVicar, was not entitled to an extension of time within which to commence the proceedings, that even if time was extended, she would not have succeeded in obtaining leave to appeal, and further, that even if leave to appeal was granted, she would not have succeeded on her appeal.
2. It was for these reasons that I announced at the conclusion of argument on 27 February 2024, that the Summons filed by Ms McVicar on 20 October 2023 should be dismissed. On that day I made the following orders: 1. Summons dismissed. 2. Plaintiff to pay the defendant's costs.

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