• Supreme Court Act 1935 s 50(3)(a);
• Acts Interpretation Act 1915 s 16(1);
• Statutes Amendment (Magistrates Court Appeals) Act 1999 , referred to.
• Colonial Sugar Refining Co Ltd v Irving [1905] AC 369;
• Worrall v Commercial Banking Co of Sydney Ltd [1917] HCA 67; (1917) 24 CLR 28;
• Maxwell v Murphy [1957] HCA 7; (1957) 96 CLR 261;
• Continental Liqueurs v G F Heublein and Bro Inc [1960] HCA 37; (1960) 103 CLR 422;
• Bertram Trading Co Pty Ltd v Landsburys (Aust) Pty Ltd [1999] NSWCA 260;
• O'Connor v Argus & Australasian Ltd [1957] VicRp 53; [1957] VR 374;
• Howard v Bondfield (1974) 3 ACTR 62;
• Maxwell v Murphy [1957] HCA 7; (1957) 96 CLR 261;
• Heading v Elston (1980) 23 SASR 491;
• Rodway v R [1990] HCA 19; (1990) 169 CLR 515;
• York Civil Pty Ltd v Workers Compensation Tribunal [1999] SASC 173;
• Holmes v Angwin [1906] HCA 64; (1906) 4 CLR 297;
• South Australian Land Mortgage & Agency Co Ltd v The King (1922) 30 CLR 5232;
• Wreckair Pty Ltd v Emerson [1992] 1 Qd R 700;
• Logan v Woongarra Shire Council [1983] 2 Qd R 689;
• Attorney-General (UK) v Sillem [1864] EngR 352; (1864) 11 ER 1200, considered.

Counsel: MR C KOURAKIS QC WITH HIM MR G PATEL - Solicitors: PATEL & CO

Judgment No. [2001] SASC 285

[2001] SASC 285

DOYLE CJ. I agree with the reasons given by Perry J for concluding that the appeal to the Full Court is competent, that were it necessary to grant leave to appeal such leave should be granted, and that the appeal should be allowed. I also agree that the parties should be allowed an opportunity to consider the position, and then to put further submissions to the Court as to the disposition of the third party proceedings.

Accordingly, I would make the following orders:

(2) that the order of the Supreme Court allowing the appeal to this Court be set aside;

(3) that for that order there be substituted an order that the appeal to the Supreme Court be allowed, that the decision of the Magistrates Court be set aside; that for that decision there be substituted an order that the plaintiff in the Magistrates Court have judgment against the defendants for the sum of $13,100 with costs, and that the counterclaim by the defendants in the Magistrates Court against the plaintiff be dismissed; and that the cross-appeal to this Court be dismissed;

(4) that the respondents pay to the appellants the costs of the appeal to this Court;

(5) that the question of the orders to be made in relation to the order that the third party proceedings be dismissed be adjourned for further consideration.

I would hear the parties on the question of the costs of the appeal to the Full Court.

PERRY J. The appellant, Rocter Tanks Pty Ltd ("Rocter Tanks") sued the respondents, Jim Adam and Deborah Adam, in the Magistrates Court (Civil Division). In the proceedings it claimed $11,700 which it asserted was the agreed price for the construction by Rocter Tanks of a reinforced concrete tank on Mr and Mrs Adam's property at Oakbank.

Mr and Mrs Adam denied liability, and counterclaimed $14,621 damages, said to be the cost of rectifying the alleged failure by Rocter Tanks to put the tank underground. At the same time they issued third party proceedings against Simon Foale trading as Oakbank Earthmoving & Bitumen Paving, claiming an indemnity from him with respect to Rocter Tanks' claim, on the ground that he failed properly to excavate the site for the tank.

The learned special magistrate who heard the trial gave judgment in favour of Rocter Tanks against Mr and Mrs Adam for $6,826.30, and judgment in favour of Mr and Mrs Adam on the third party proceedings against Mr Foale for $4,873.70. In due course I will explain the basis upon which he reached that result.

Rocter Tanks appealed to a single judge of this Court. Mr and Mrs Adam lodged a cross-appeal. Mr Foale did not appeal against the judgment given against him.

The learned judge on appeal allowed the appeal and cross-appeal and quashed the judgments under appeal. He substituted a judgment in favour of Rocter Tanks against Mr and Mrs Adam for $11,700, being the contract price for the construction of the tank. Separately, he directed that judgment be entered in favour of Mr and Mrs Adam on their counterclaim against Rocter Tanks for $14,621. As well, he ordered that the third party proceedings by Mr and Mrs Adam against Mr Foale be dismissed.

Rocter Tanks sought leave to appeal to the Full Court. They made the application without conceding that it was necessary for them to obtain leave.

The learned judge who had heard the appeal, heard the application for leave to appeal to the Full Court, which he refused. Rocter Tanks thereupon applied direct to the Full Court for leave, in case leave should be necessary, but at the same time lodging a notice of appeal to the Full Court.

The Full Court dealt with the application for leave to appeal, the argument as to whether leave was necessary, and the argument on the merits of the appeal, at the same time.

Mr and Mrs Adam filed notices of alternative contention against both Rocter Tanks and Mr Foale.

Mr Foale appeared in person at the hearing of the appeal.

The notice of alternative contention directed to Mr Foale was procedurally irregular. If Mr and Mrs Adam wished to appeal to the Full Court against the dismissal of its third party claim against Mr Foale, it should have filed and served a notice of appeal directed to that end.

When the point was raised at the hearing of the appeal, Mr Foale, while not appearing to understand the procedural complexities, expressed no opposition to the Full Court dealing with the third party claim. But neither did he consent to that course. He appeared bemused at what he understandably thought to be unnecessary legal procedural complexities and repeated his offer of "a certain percentage" towards the cost of rectification.

I deal later with the question whether Rocter Tanks needs leave to appeal to the Full Court.

However the matter is approached, this litigation must be regarded as out of control, particularly having regard to the amount involved. Clearly, this Court must make every effort to bring the litigation to an end. For reasons which I will come to, I am not sure that we can achieve that goal. But it is, I think, possible to conclude the proceedings as between Rocter Tanks and Mr and Mrs Adam.

Mr and Mrs Adam have owned a 26 acre property at Oakbank since March 1991. They decided to replace a number of above-ground rainwater tanks, which they demolished, with an underground tank.

Rocter Tanks is in the business of constructing concrete water tanks. The company is operated by David Jarred. In about March 1999 he was contacted by Mr Adam, as a result of which the two had a discussion at the property. Mr and Mrs Adam had built a garage near the house, and wanted the tank to be placed underground, in close proximity to the garage. The reason why they wanted it underground, was so that they could put a driveway over it, leading to the garage and the house.

Mr Jarred said that he would not be responsible for earthworks, that is, the excavation in which the tank would be constructed. Mr Adam responded by explaining that he would employ another contractor, Simon Foale, to execute the earthworks.

Mr Foale was present on the occasion when the conversation at the site took place between Mr Adam and Mr Jarred. Mr Jarred proceeded there and then to quote for the construction of a 30,000 gallon tank, for which he reached an agreement with Mr Adam on a price of $11,700. In Mr Foale's presence, Mr Jarred explained the size of the tank, which was to be 9.45 metres in diameter, 2.3 metres in height, together with a further 150 millimetres for the concrete slab roof. He left a brochure which set out the measurements, which it seems likely that Mr Foale took away. Mr Jarred further explained in Mr Foale's presence that to allow room to work, the excavation would have to be 12 metres by 12 metres.

Subsequently, Mr Foale did the excavation. When this was completed, Mr Adam contacted Mr Jarred to have the tank installed.

For this task, Mr Jarred engaged another contractor, Mark Billing.

Mr Billing proceeded to construct the tank, using formwork supplied by Rocter Tanks. This was standard formwork made up of demountable panels, the number and size of which varied according to the capacity of the tank to be constructed.

Mr Billing set the formwork in the excavation and poured the concrete. Mr Billing's work was confined to the construction of the base and sides of the tank.

Another contractor, Terrance Jarred, was responsible for the roof. He erected formwork, including steel reinforcing, and poured concrete to form the roof of the tank.

At this stage it became apparent that the tank, including the roof, was not completely underground. It projected above ground level by five or six inches. If left unremedied, this would impede access to the garage and the house, and throw out the levels which it was necessary to maintain if a drive was to be installed as Mr and Mrs Adam had planned.

Discussion and correspondence ensued, involving Mr and Mrs Adam, Mr David Jarred and Mr Foale.

Putting it shortly, Mr Foale accepted that he was responsible for the problem. He conceded that he had not dug the excavation deep enough. Although he did not concede any responsibility, Mr David Jarred, on behalf of Rocter Tanks, agreed to assist Mr Foale to remedy the problem. David Jarred and Mr Foale signed an acknowledgment of the position which they had reached as between themselves. This document is dated 8 June 1999, and is in the following terms:

As per our discussion, you admit liability to rectify the defective tank by cutting the wall as required by the owner.

However, due to our good relationship we agree to give you limited assistance.

I, SIMON FOALE, TRADING AS OAKBANK EARTHMOVERS, hereby admit that I am liable to rectify the defective tank at my own cost.

Subsequently, on 16 June 1999, David Jarred had a discussion by telephone with Mr Stephen White of O'Loughlins Solicitors, who had been engaged to act on behalf of Mr and Mrs Adam. The terms of the offer which he then conveyed to Mr White were confirmed in a letter from O'Loughlins dated 22 June 1999 to Rocter Tanks. The letter is as follows:

We refer to our previous correspondence, and discussions.

In our telephone conversation on 16 June you confirmed the following:

1. Rocter Tanks in conjunction with Oakbank Earthmoving and Bitumen Paving (Simon Foale) would be prepared to cut the wall of the tank and the piers to reduce the tank to its correct height.

2. Provided the work was carried out with your approval you would stand by your 25 year guarantee in respect of the tank.

3. It would take approximately 3 days for the work to be carried out.

4. You indicated that you would require a part payment before the rectification work was carried out. You indicated a figure of $9,000.00.

As you are aware, our clients maintain that they contracted for an underground tank, and as such the contract was what is commonly referred to at law as 'an entire contract' and there is no obligation to make any payment until that has been completed. They are however prepared to resolve the matter and allow you to carry out the rectification work on the following basis:

1. The work is done expeditiously and once commenced you continue on site until the work is completed. The work is to commence on a date nominated by you and agreed by our client.

2. The site be left in a reasonable and proper manner.

3. Our clients are prepared to pay to you forthwith upon acceptance of this proposal the sum of $6,000.00 that is presently sitting in our office trust account.

4. The balance of the monies will be paid within 7 days of the satisfactory completion of the work.

Our clients also wish to indicate that by cutting the height of the tank, to the extent that the tank is cut below the level of the in-flow and out-flow outlets, new in-flow and out-flow outlets will be drilled as part of the rectification work.

You would also be aware that our clients had previously considered engaging an independent contractor, and after further consideration have agreed to allow you and Mr Foale to carry out the necessary work. Our clients obligation is simply to mitigate their loss and they are under no obligation to have you and Mr Foale carry out the rectification work. In the interest of expediency our clients are now prepared to have the work carried out by you.

The $6,000.00 will be paid from our trust account upon you counter signing the letter below.

This letter is an open letter and may be produced to any Court in the event that proceedings are issued, in support of an application for costs.

We accept the terms and conditions of the rectification work contained herein.

The offer made by Mr David Jarred as recorded in the first part of the letter was, in essence, to accept a down-payment of $9,000 against the outstanding contract price, following which Rocter Tanks, together with Mr Foale would do what was necessary to reduce the tank to its correct height. It seems clear from the evidence that what Mr David Jarred and Mr Foale intended to do, if the offer was accepted, was to lift the roof of the tank by means of lifting devices known as Acrow props, to cut through the concrete walls to reduce them to the necessary level, and then lower the roof back on to the walls.

As will be seen from the letter, this offer was rejected, but a counter proposal was made for the work to be done on a down-payment of $6,000.

The counter offer was not accepted and Mr and Mrs Adam proceeded to engage contractors to reduce the level of the tank. This they did by another method again, that is, by lifting, breaking up and removing the existing concrete roof and, after the walls had been lowered, pouring a new concrete roof. The cost of remedying the problem by that means was $14,621.

In the result, against Rocter Tanks' claim for the contract price of $11,700, Mr and Mrs Adam counterclaimed the cost of rectification, namely, $14,621. In their third party claim against Mr Foale, they sought indemnity with respect to any amount which they might be ordered to pay to Rocter Tanks on the ground that Mr Foale's "negligence and breach of duty resulted in or contributed to the defendants' loss and damage". The basis of the claim against Mr Foale in the third party proceedings was pleaded in this way:

"5. The third party was aware or ought to have known that the site had not been properly excavated so as to ensure that the reinforced concrete tank with lid would be below ground level. In breach of his contract with the defendants, or alternatively with the plaintiff, and in breach of his duty of care the third party failed to excavate the site to the correct levels."

The learned special magistrate who heard the trial took very much a broad axe approach.

He took the view that it was not unreasonable for Mr and Mrs Adam to reject the offer of settlement, which was predicated upon the use of Acrow props in effecting the remedial work. In his reasons for judgment, he observed:

"It is my view that that would not have been a solution at all and that it was a distinct possibility that an endeavour to try and remedy the situation by the use of the said props, lifts and cranes etc, would have probably have (sic) substantially escalated the cost involved. This is because it is my opinion that there was a strong probability that, in lifting the lid, the structure would have been damaged, for example in that the lid would have broken."

In the result, he held the three parties, that is, Mr and Mrs Adam, Rocter Tanks and Mr Foale, to be equally responsible for the cost of the rectification works, which he found to be the amount of $14,621 which Mr and Mrs Adam counterclaimed. Setting off one-third of that amount, that is, $4,873.70, against the contract price of $11,700 resulted in a judgment in favour of Rocter Tanks for the balance of $6,826.30, for which he gave judgment in favour of Rocter Tanks against Mr and Mrs Adam.

Mr and Mrs Adam, in turn, recovered a judgment for $4,873.30 against Mr Foale.

In taking that course, the learned magistrate clearly failed to proceed in accordance with legal principle. Rather, he applied what could only be described as a species of palm tree justice.

The learned judge who heard the appeal to this court was of the same view. He held, with reference to the agreement between Rocter Tanks and Mr and Mrs Adam:

"... it was an express term of the contract that the tank was erected underground."

"... the plaintiff could only erect the tank in conformity with the terms of the contract if it erected an underground water tank.

In fact the tank which was erected protruded some six inches above ground level.

In my opinion, in erecting a tank which protruded that far above ground level the plaintiff was in breach of its contractual obligation to the defendants."

The learned judge on appeal accepted that Rocter Tanks had no obligation to prepare the site itself, and held that it was entitled, if it had realised that there was a problem, to call upon Mr and Mrs Adam to put the site in order before the tank was erected. However, he expressed the view that Rocter Tanks was in breach of contract "in failing to ensure when the formwork had been erected that the tank would be underground as specified and as expressly agreed".

It followed that Rocter Tanks was liable to Mr and Mrs Adam in damages for breach of contract.

As for the remedial work offered by Rocter Tanks in association with Mr Foale, he took the same view as did the magistrate, and held that if the rectification work had been carried out in accordance with the offer made by Rocter Tanks in association with Mr Foale "... there was a real possibility that the costs would have been substantially more".

In the result, the learned appeal judge assessed the damages payable by Rocter Tanks to Mr and Mrs Adam at $14,621, for which he ordered that judgment be entered against Rocter Tanks on the counterclaim, holding that "on payment of that sum the plaintiff would be entitled to judgment for $11,700 being the agreed contract sum for the construction and erection of the tank".

It is not clear to me why he made judgment in favour of Rocter Tanks conditional upon payment of the $14,621. I would have thought that, given his findings, the appropriate course was to direct the entry of judgment for $11,700 on the claim, and judgment on the counterclaim for $14,621, at the same time staying execution on the claim and counterclaim to the extent of $11,700.

As for the third party proceedings, the learned appeal judge observed:

"The plaintiff elected not to sue the third party and the defendants elected only to seek indemnity. The plaintiff, of course, is not entitled to any judgment against the third party because there are no issues between the plaintiff and the third party. The defendants are not entitled to indemnity because I have found that the defendants' obligation to the plaintiff is contractual.

The third party therefore, even though he was the party at fault, is, because of the procedure adopted by both the plaintiff and the defendants, entitled to escape any judgment."

Accordingly, he then went on to order the defendants' action against the third party should be dismissed with costs.

The Nature of the Contract between Rocter Tanks and Mr and Mrs Adam

In my opinion, the learned judge on appeal erred in his construction of the contract between Rocter Tanks and Mr and Mrs Adam.

As for the extent of the obligations assumed by Rocter Tanks, the evidence was all one way.

During the course of his evidence, Mr David Jarred deposed to the terms of the conversation which he had on site with Mr Adam on the occasion when he quoted for the installation of the tank. Part of his evidence was: [AB1/30]

A. Mr Adams said he would like to have a concrete tank built ...

A. Yes, he said, 'Could it be possible to build a concrete tank here, underground, to support the weight of the car'. I said 'Yes, it can be but we definitely wouldn't be responsible for the earthworks'.

Q. Did Mr Adams say anything about the earthworks.

A. He said he had employed Simon Foale or earthmovers for that job."

In the course of cross-examination, Mr Jarred said:

"Q. Now, Mr and Mrs Adam made it clear to you that they wanted an underground water tank, didn't they.

Q. You knew that because they showed you where they wanted this tank constructed.

A. I said on that day and many days, I am only responsible to build a concrete tank and not the levels."

"... it was very clear, I was not responsible for any levels but also very, very clear from what the diameter and the height of the tank was, extremely clear."

When asked in the course of cross-examination as to what he would have done if he thought that a site had not been properly excavated, he said:

Q. Say, 'Look, this hasn't been excavated properly'.

Q. You wouldn't just go ahead and build it, would you.

During the course of his evidence, Mr Adam said that he recalled two meetings with Mr Jarred on site. Nothing turns on the fact that he thought that there were two meetings, rather than the one meeting referred to by Mr Jarred. He said in examination in chief:

"Q. ... was there any discussion [with Mr Jarred] on that first visit about who would excavate the site.

A. No, no-one was specified. Mr Jarred said it wasn't part of his company's work.

A. He said, 'You excavate the site, we will put the tank in'."

"A. ... I engaged Mr Foale to dig the hole and Mr Jarred to put the tank in it.

Q. When the site had been excavated by Mr Foale did you do anything after that as far as communicating with Rocter.

A. Yes, I rang him [Mr Jarred] and said it was ready and lets go."

In her evidence, Mrs Adam referred to the discussion with Mr Jarred before the contract was entered into:

"Q. Do you remember what or did you or your husband tell Mr Jarred what you were requiring in respect of this tank.

A. Yes, we wanted it out of sight ... we didn't want to damage any of the tree roots that surround the site. In order to do that we had to go very close to the house.

Q. Did Mr Jarred indicate whether that would be possible.

A. He said that was fine, he said whatever we want.

Q. Did he say anything about whether he would be a party to the excavation.

A. He said you get the site ready and I'll do the rest, no worries."

In my opinion, having regard to those passages of evidence, the obligation assumed by Rocter Tanks was to do no more than construct a concrete tank of the stated dimensions. It was not responsible either for excavating the site in order for the tank to be placed underground, or for ensuring that the excavation was adequate so that the tank, once constructed, would in fact be underground.

Mr and Mrs Adam entered into a separate contract with Mr Foale for the necessary excavation to be effected by him. He was armed with the necessary information as to the dimensions of the tank, and was well aware of the extent of the excavation necessary to accommodate it and also to allow room to work around the tank during the course of construction.

It was not a term of the contract as between Rocter Tanks and Mr and Mrs Adam that Rocter Tanks was obliged to make any check of the depth of the excavation or of the levels, or that it warranted that the tank, once constructed, would be underground. The responsibility of ensuring that the excavation was deep enough to ensure that result rested with Mr and Mrs Adam, and as between them and Mr Foale, with the latter.

However, I would imply a term of the contract between Rocter Tanks and Mr and Mrs Adam that if the excavation was manifestly and clearly inadequate, Rocter Tanks owed a duty to advise the owners to enable the situation to be rectified before the installation proceeded.

But that was not the case here. There were mounds of earth around the excavation, and absent careful measurement with the use of levelling instruments, it would not have been apparent that the excavation was six inches out in depth.

In that connection, I refer to the evidence of Mr Billing, the contractor responsible for the pouring of the base and sides of the tank:

A. I don't normally have to. As much as I do is level the formwork, like the area that the formwork has to sit on but otherwise it is a standard site and what's there we build on.

Q. Did you have any concern about the excavation when you attended at the site.

Q. You knew that this tank would have a lid, didn't you.

Q. Because you knew it was an underground tank it would have to have a lid.

Q. When you completed the formwork, that is before you proceeded with the pour, did you at any time, even just by the naked eye, do any check about the level in relation to the garage of the house.

A. I could see that it was definitely below the level of the ground.

Q. But that, of course, didn't take into account a lid, did it.

A. Just by the naked eye it was going to be fairly close."

This was not a case where the excavation was so manifestly and clearly inadequate that Rocter Tanks owed a duty not to pour the tank until any perceived problem had been raised with the building owner.

It follows that Rocter Tanks was entitled to recover against Mr and Mrs Adam the contract price for the erection of the tank, that is, $11,700. In the claim in the Magistrates Court, Rocter Tanks also sought interest, and there is no reason why it should not be awarded interest. Assuming that judgment will be entered in the Magistrates Court in accordance with the decision of this Court within a short time from now, the period over which interest falls to be calculated is approximately two years. At, say, 6%, the total for interest would be approximately $1,400. This would bring up a total of $13,100.

Putting aside for one moment the question whether Rocter Tanks needs leave to appeal to the Full Court, judgment should be entered for Rocter Tanks against Mr and Mrs Adam for that amount.

An order should be made dismissing the counterclaim by Mr and Mrs Adam against Rocter Tanks.

As for the third party proceedings, Mr and Mrs Adam's cause of action against Mr Foale is for damages for breach of the contract pursuant to which he agreed to excavate the site. More particularly, the damages should be such damages as flow from an implied term of the contract that the excavation would be sufficient to accommodate a tank of the dimensions of the tank to be erected by Rocter Tanks.

It follows that, strictly, the claim by Mr and Mrs Adam in the third party statement of claim against Mr Foale for an indemnity with respect to any amount which they might be ordered to pay to the plaintiff, Rocter Tanks, was misconceived.

However, assuming that the technical deficiency in their pleadings would not preclude the entry of a judgment on the third party proceedings in accordance with their legal entitlement, Mr and Mrs Adam face a more substantial difficulty. This is that they must counter the argument that they failed to mitigate their loss, in that they failed to take reasonable steps to remedy the breach of contract by Mr Foale. More particularly, it was contended on the hearing of the appeal by Mr Kourakis QC of counsel for Rocter Tanks that Mr and Mrs Adam acted unreasonably in refusing to accept the settlement proposal conveyed to their solicitor, Mr White, as recorded in Mr White's letter to Rocter Tanks dated 22 June 1999.

In my opinion, that submission is correct. Whatever misgivings Mr and Mrs Adam might have entertained as to the use of Acrow props in order to elevate the lid of the tank to enable the procedure which was being suggested by Rocter Tanks to be followed, the fact is that the remedial work which Rocter Tanks was offering to perform in conjunction with Mr Foale was entirely at Rocter Tanks' risk.

As recorded in Mr White's letter, the offer of settlement was on the footing that Rocter Tanks would "stand by" its 25 year guarantee in respect of the tank. In agreeing to reduce the height of the tank by whatever method they chose to adopt, Rocter Tanks was accepting the risk involved in the remedial work.

It was entirely reasonable for Rocter Tanks in that situation to require a down payment of $9,000, and it was unreasonable for Mr and Mrs Adam to respond by indicating that they would allow the work to proceed but on a payment of only $6,000.

In my view, the learned judge under appeal erred when he said:

"I am satisfied, as was the Magistrate, that the method of rectification adopted by the defendants was the appropriate course and that the defendants (sic) actions in responding to the breach by the plaintiff were reasonable.

I would also reject suggestions made by the plaintiff that the rectification work could have been carried out by using a system of Acrow props and hydraulic hoists.

The learned Magistrate found such a proposal would not have been a solution at all and that if the work had been carried out as suggested that there was a real possibility that the costs would have been substantially more."

With respect to the learned appeal judge, whatever the costs of rectification would have been, and even if they were substantially more than might have been anticipated by Rocter Tanks or by Mr Foale, those costs were to be borne between Rocter Tanks and Mr Foale to the exclusion of Mr and Mrs Adam. Furthermore, the work would have been guaranteed.

The question which arises is what course should now be followed with respect to the third party claim.

I have been unable to find in the Magistrates Court file, any defence filed by Mr Foale with respect to the third party proceedings against him. However, he appeared in person at the trial, participated by questioning some of the witnesses, and I assume, was given an opportunity to put submissions in response to the claim against him.

Mr Foale did not appear on the hearing of the appeal to the single judge of this Court. In those circumstances, I am not sure that it was right for the learned judge to set aside the judgment against Mr Foale, although I appreciate that it could be said that it did him no harm, as it extinguished the liability found against him by the learned trial magistrate.

As I have indicated, Mr Foale was made the subject of an irregularly issued notice of cross-contention with respect to the hearing of the appeal to the Full Court. But he appeared at the hearing and took the part in it, as I have described above.

In these circumstances, I do not think that it would be right to attempt to express a concluded view as to what the outcome of the third party claim against him should now be. If it is necessary to do so, I think that the appropriate course would be for this Court to convene again after the parties have had an opportunity to consider these reasons, and then to hear counsel for the defendant and Mr Foale as to the course that should be followed as against him.

I have already drawn attention to the fact that the third party notice against Mr Foale was, in the terms in which it was drawn, misconceived. But even assuming that what should have been expressed as a claim for damages against Mr Foale should now be considered, the question arises as to whether or not Mr and Mrs Adam are entitled to any damages against him in view of their unreasonable failure to accept the settlement proposal advanced by him and Rocter Tanks.

Despite those complications, Mr Foale is, apparently, still prepared to consider making some contribution towards the loss suffered by Mr and Mrs Adam.

In my view, they ought seriously to consider accepting any reasonable proposal from Mr Foale, even although it may fall substantially short of the amount which eventually they paid for the rectification work. They will appreciate that there are a number of procedural hurdles in the path of obtaining a judgment, at least for any substantial sum, against Mr Foale, in view of the difficulties which I have identified.

In the circumstances, I think it best that after the delivery of reasons, the Full Court should adjourn the matter to enable discussions to take place between Mr and Mrs Adams and Mr Foale. It may be that Rocter Tanks could also be involved, although there has been no indication so far as to whether or not they are still prepared to make any contribution towards resolution of the matter.

If the matter is not resolved during any such adjournment, the matter should be re-listed to hear further argument as to whether or not Mr and Mrs Adams are entitled to any, and if so what, remedy against Mr Foale.

As between Rocter Tanks and Mr and Mrs Adam, I would dispose of the appeal and notice of cross-contention upon the basis which I have indicated.

Does Rocter Tanks need leave to appeal to the Full Court? To address that question, it is necessary to have regard to the course of the proceedings.

Rocter Tanks instituted the proceedings in the Magistrates Court by filing a claim on 25 June 1999. The judgment of that court dismissing its claim was delivered on 21 July 2000.

The appeal to a single judge of this Court was instituted by Notice of Appeal filed on 18 October 2000. That appeal having been dismissed, the appellant purported to institute an appeal to the Full Court by notice dated 22 February 2001. As well, as I have already observed, in case leave to appeal may be found to be necessary, Rocter Tanks also renewed its application for leave, previously refused by the learned judge on appeal, direct to the Full Court.

Prior to 3 January 2000, s 50 of the Supreme Court Act 1935 provided for an appeal as of right to the Full Court from, inter alia, every judgment of a judge, which included a judgment on appeal from a magistrate exercising civil jurisdiction. However, s 50(3) provided that no appeal would lie without "the leave of the judge or of the Full Court" from-

"(a) any order upon appeal from a court of summary jurisdiction under the Justices Act 1921; ..."

As courts of summary jurisdiction dealt only with criminal matters, the right of appeal to the Full Court in such matters was circumscribed by the requirement to obtain leave.

As from 3 January 2000, s 50(3) of the Supreme Court Act 1935 was amended to extend the requirement for leave to any "order on appeal from the Magistrates Court",[1] which meant that from then on leave was required to appeal to the Full Court against any judgment on appeal from either the civil or criminal jurisdiction of the Magistrates Court.

The question which arises is whether Rocter Tanks' appeal to the Full Court is governed by s 50 as it stood before the 2000 amendment to subsection (3) came into effect, or whether leave is required pursuant to s 50(3) as it now stands.

It is settled law that legislation will be presumed not to act retrospectively unless it is made clear by the words of the statute.[2] The common law rule to that effect is reinforced by s 16(1) of the Acts Interpretation Act 1915 which provides:

"Where an Act is repealed or amended, or where an Act or enactment expires, then, unless the contrary intention appears, the repeal, amendment or expiry does not -

(c) affect any right, interest, title, power or privilege created, acquired, accrued, established or exercisable, or any status or capacity existing, prior to the repeal, amendment or expiry;

The presumption against retrospectivity, both at common law and under the Acts Interpretation Act, applies only to substantive rights. It does not apply to "the law appointing or regulating the manner in which they are to be enforced or their enjoyment is to be secured by judicial remedy ...".[3]

The right of appeal is a substantive right[4] and is "more than a matter of procedure".[5] In York Civil Pty Ltd v Workers Compensation Tribunal, I observed:[6]

"One can readily understand the sense in a decision to the effect that where pending proceedings may be continued after the relevant amending Act comes into force, they should be allowed to continue with whatever rights of appeal might previously have been exercised."

In the present case, the amending Act had the effect of removing the ability to appeal as of right from the judgment of a magistrate sitting in the civil jurisdiction. A party appealing from such a judgment under the amended s 50(3) now requires leave. Arguably, this might be construed as the removal, or at least the diminution, of a substantive right.

On that assumption, and as there is nothing in the amended s 50(3) which indicates that it is to act retrospectively, the presumption against retrospectivity applies.

But to invoke a right of appeal as it stood before s 50(3) was amended, the appellant's right to appeal must have been in existence at the time of the amendment.

A right of appeal is a creature of statute.[7] The right arises when the statute operates. The right of appeal conferred by s 50(1) is a right to appeal against a "judgment" or "order", or "direction" of a judge, or any refusal to make any order.

Were it not for binding authority to the contrary, I would hold that the right of appeal in the relevant sense does not arise until the judgment sought to be appealed from is pronounced. If that reasoning was correct, Rocter Tanks would need leave to appeal to the Full Court.

But such an approach is not open, at least to this Court, having regard to the decision of the Judicial Committee of the Privy Council in Colonial Sugar Refining Co Ltd v Irving.[8] In that case, on 4 September 1903, the Full Court of the Supreme Court of Queensland gave judgment in favour of the Commonwealth Collector of Customs for Queensland on a special case stated in an action brought by Colonial Sugar Refining Co Ltd to recover excise duty paid by it levied on sugar under the Excise Tariff Act (Cth) (1902). Before the judgment was delivered, namely, on 25 August 1903, the Judiciary Act 1903 came into operation, following Royal Assent given on that day. Effectively, the Judiciary Act precluded an appeal to the Queen in Council.

The Privy Council held that the relevant provisions of the Judiciary Act were not either expressly or by implication retrospective in operation. In the result, the removal of the right of appeal to the Privy Council in a suit pending when the Judiciary Act was passed did not affect the continued existence of the right of appeal in those proceedings.

For present purposes, the important feature of that decision is that the Judiciary Act came into operation before the judgment of the Supreme Court on the case stated. It follows that implicit in the decision of the Privy Council in that case is the view that a right of appeal in pending proceedings is a right which exists before judgment in those proceedings is given.

The decision of the Privy Council in the Colonial Sugar Refining Co case has stood for many years, and has been referred to from time to time by the High Court of Australia with approval, although I have not found a decision of the High Court which for present purposes is expressly in point. I do not think that it would be right for this Court to depart from the authority of the Colonial Sugar Refining Co case.

I have considered a separate argument not raised by counsel that the 2000 amendment to the Supreme Court Act effectively confining the right of appeal from a judgment under appeal from the Magistrates Court in a civil action by superimposing a requirement that leave be first obtained was regulatory only, and in that sense procedural. In those circumstances, it might be contended that consistently with principle, it should be accorded a retrospective operation, at least so as to be of application to pending proceedings.

As I have said, the point was not argued, and as this is a matter in which, if leave is required, in my view it should be granted, I do not pause to consider that aspect of the matter further.

However, the point will have to be addressed if it is taken in another case.

To the extent necessary, I would grant leave to appeal to the Full Court.

I would allow the appeal to this Court and quash the orders made by the magistrate and the orders made on appeal to a single judge. I would substitute for the orders made by the learned trial magistrate an order that the plaintiff have judgment against the defendants in the sum of $13,100 plus costs.

109. I would adjourn the hearing to enable consideration to be given by Mr and Mrs Adam and Mr Foale as to possible resolution of the third party proceedings against Mr Foale. If those proceedings are not resolved out of court, I would re-list the appeal as between those parties to hear further argument as to the disposal of the issues arising with respect to that aspect of the matter.

110. BLEBY J. I agree with the orders proposed by the Chief Justice. I agree with Perry J that the appeal to the Full Court is competent and does not require leave. If it were necessary to grant leave to appeal I would grant leave. I agree with the reasons of Perry J and have nothing to add to those reasons.

[1] See Statutes Amendment (Magistrates Court Appeals) Act 1999.

[2] Colonial Sugar Refining Co Ltd v Irving [1905] AC 369 per curiam at 372; Worrall v Commercial Banking Co of Sydney Ltd [1917] HCA 67; (1917) 24 CLR 28 per curiam at 32; Maxwell v Murphy [1957] HCA 7; (1957) 96 CLR 261 per Dixon CJ at 267 and per Fullagar J at 285-286; Continental Liqueurs v G F Heublein and Bro Inc [1960] HCA 37; (1960) 103 CLR 422 per Kitto J at 427; Bertram Trading Co Pty Ltd v Landsburys (Aust) Pty Ltd [1999] NSWCA 260 (unreported, New South Wales Court of Appeal, 3 August 1999) per Sheller JA at [5]; O'Connor v Argus & Australasian Ltd [1957] VicRp 53; [1957] VR 374 per Gavan Duffy J at 377 and per O'Bryan J at 381; Howard v Bondfield (1974) 3 ACTR 62 per O'Connor J at 63-64.

[3] Maxwell v Murphy [1957] HCA 7; (1957) 96 CLR 261 per Dixon CJ at 267. See also Heading v Elston (1980) 23 SASR 491 at 496.

[4] Worrall v Commercial Banking Co of Sydney Ltd [1917] HCA 67; (1917) 24 CLR 28 per curiam at 31.

[5] Colonial Sugar Refining Co Ltd v Irving [1905] AC 369 per curiam at 372. See also Rodway v R [1990] HCA 19; (1990) 169 CLR 515.

[6] [1999] SASC 173 at [54].

[7] Holmes v Angwin [1906] HCA 64; (1906) 4 CLR 297 per Griffith CJ at 304; South Australian Land Mortgage & Agency Co Ltd v The King [1922] HCA 17; (1922) 30 CLR 523 per Isaacs J at 553; Wreckair Pty Ltd v Emerson [1992] 1 Qd R 700 per Williams J at 709; Logan v Woongarra Shire Council [1983] 2 Qd R 689 per Williams J at 691; Attorney-General (UK) v Sillem [1864] EngR 352; (1864) 11 ER 1200 per Lord Westbury LC at 1207.

[8] [1905] AC 369.