Shamieh v Easy Buy International Pty Limited

Supreme Court of NSW|2010-08-05|Before: Hislop J

Introduction 1 In late 2005 the plaintiff purchased 88 office chairs from the defendant, a vendor of office furniture, for $25,940. 2 Some of the chairs were purchased by the plaintiff on his own behalf, some as agent for Wiseowl.com Pty Limited and others as agent for SGS Building Services. The plaintiff did not disclose to the defendant that he was acting as agent for Wiseowl.com Pty Limited or SGS Building Services in purchasing the chairs. 3 The chairs were delivered in December 2005. The plaintiff asserted many of the chairs were defective. He brought proceedings in the Local Court to recover damages in respect of 72 chairs, some of which had been purchased by him for Wiseowl.com Pty Limited and SGS Building Services. 4 The statement of claim alleged the chairs were not fit for purpose and/or not of merchantable quality pursuant to s 19 of the Sale of Goods Act and s 71 of the Trade Practices Act. The plaintiff also relied upon ss 52 and 53 of the Trade Practices Act. 5 The plaintiff relied on evidence which he summarised in his written submissions as follows: "12. Both Consolidated Lawyers [the plaintiff's firm] and Wise Owl began experiencing problems with the chairs from about February 2006 onwards. Defects included castors falling off, arm rests falling off and chair legs snapping. 13. Between February and November 2006 the defendant made repairs to and provided certain spare parts for chairs which broke in that period. 14. The plaintiff continued to have problems with the chairs and in April 2007 made a request for the defendant to replace some 34 broken chairs which he had taken out of service and stored in his premises. The defendant made an offer to repair and replace some of the chairs on terms which were ultimately not accepted." 6 The plaintiff gave evidence that he expressly told the defendant's sales representative he wanted "safe and sturdy chairs that will last a long time". The chairs were expensive, ranging from a recommended price of $165 to $750, with many of them in the price range $350-400. 7 No evidence was adduced by the defendant. 8 The plaintiff was unsuccessful in the proceedings. There was a verdict for the defendant. The plaintiff was ordered to pay the defendant's costs on an indemnity basis. 9 The plaintiff, by summons filed on 21 May 2009, appealed against the verdict and the costs order.

A preliminary matter 10 An appeal to this court from a Local Court decision is to be commenced by filing a summons within 28 days after the material date (here 20 March 2009) or within such further time as this court may allow - UCPR 50.3(1). 11 The summons was not filed within 28 days of the material date. The plaintiff seeks the necessary extension of time pursuant to UCPR 50.3(1). 12 The plaintiff's explanation for the failure to file the summons within 28 days of the material date was that he erroneously filed a notice of intention to appeal in the Court of Appeal on 14 April 2009. That document was served on the defendant on 15 April 2009. The defendant did not inform the plaintiff that the purported appeal was not competent. The plaintiff was informed by the court on or about 29 April 2009 of the error. Counsel was then briefed to settle an appropriate summons and grounds of appeal and the summons was duly filed and served. This evidence was not disputed. 13 The defendant opposed the plaintiff's application for an extension of time. Save for the question of prejudice, it relied upon the considerations outlined by Einstein J in Currabubula Holdings Pty Limited v State Bank of New South Wales [2000] NSWSC 232 where, at [87] his Honour said: "The principles upon which a party can seek an extension to appeal have been fully considered in recent authorities and can be shortly stated. An extension of time in which to appeal is not granted automatically or as of right: the Rules of Court governing time steps for pursuing an appeal are to be complied with. However, those Rules of Court are not to be used to effect an injustice: the object of the power of the Court to extend time is to do justice as between the parties. The Court will extend time where not to do so would work an injustice. Relevant considerations in exercising the discretion include the history of the proceedings, the conduct of the parties, the nature of the litigation, the consequences to the parties of the grant or refusal of the extension of time, the prospects of the appeal's success and any prejudice caused to the respondent by extending the time. The trend of recent authorities is towards a growing liberality in granting extensions of time in which an appeal can be lodged."

The defendant conceded that it will suffer no prejudice if the extension is granted. 14 The error on the part of the plaintiff was a not uncommon mistake. It occasioned the defendant no prejudice as the document filed in the Court of Appeal put the defendant on notice within 28 days of the material date that the plaintiff intended to appeal. The matter has an unfortunate history. However, the plaintiff had prospects of success on the appeal and substantive claim and, though the issue now, in a practical sense, only concerns costs, these costs, I assume, are considerably more than the original claim. Having regard to all of the circumstances, it seems to me that the extension of time sought should be granted.

Consideration 15 An appeal from the Local Court lies, as of right, only on a question of law - s 39(1) Local Court Act 2007. An appeal, by leave of the court, is available in respect of questions of mixed law and fact and costs- s 40 Local Court Act 2007. 16 The powers of the court are contained in s 41 which provides that the Supreme Court may determine an appeal made under ss 39(1) or 40 "(a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court's directions, or (d) by dismissing the appeal." 17 The defendant is now in liquidation. The plaintiff obtained leave to pursue the appeal against the defendant. The parties accept that the defendant has no funds to meet any verdict should a verdict be ordered against it. Neither party seeks an order that the matter be remitted to the Local Court should the present judgment be set aside or that this Court should substitute a verdict. As a practical matter, the ultimate issue is whether the costs order should stand and, for the purposes of determining that issue, whether the judgment should be set aside.

Determination 18 The plaintiff submitted that the verdict resulted from his Honour's determination of an application by the defendant for a verdict pursuant to UCPR 29.10 on the basis there was "no evidence" to support a verdict for the plaintiff. 19 UCPR 29.10 states: "(1) An opposite party may apply to the court to give judgment for the opposite party, either generally or on any claim for relief in the proceedings, on the ground that, on the evidence given, a judgment for the beginning party could not be supported. (2) Such an application may be made at any time after the conclusion of the evidence for the beginning party in his or her case in chief. (3) The court may not give judgment under this rule unless the opposite party satisfies the court that, on the evidence given, a judgment for the beginning party could not be supported. (4) If the opposite party fails to satisfy the court that, on the evidence given, a judgment for the beginning party could not be supported, the opposite party may not adduce evidence or further evidence in the proceedings generally or on the claim for relief concerned, as the case may be, except by leave of the court. (5) If not all opposite parties apply to the court under subrule (1), the court must not deal with any such application before the conclusion of the evidence given for all parties." 20 It is not entirely clear that the matter was determined on that basis. The recollection of counsel for the defendant is otherwise and there is no reference to UCPR 29.10 in the judgment. However, in my opinion, it is more probable than not that the proceedings were determined on an application pursuant to r 29.10. The following matters have led me to that conclusion:

(a) defendant's counsel, at the close of the plaintiff's case, submitted "The defendant's position is that there isn't a case to answer, your Honour." He then commenced submissions;

(b) plaintiff's counsel commenced his submissions as follows "Your Honour, not surprisingly, the plaintiff rejects the application as having any foundation. I presume it's made under r 29.10 of the CPA." He was not contradicted by counsel for the defendant or his Honour. He then outlined the test which he submitted should be applied on such an application, again without contradiction and then proceeded to make submissions on that basis;

(c) his Honour accepted that, depending on the terms of his judgment, the parties should have time to determine what they were going to do by way of further submissions or evidence;

(d) his Honour's conclusions were expressed in terms of "no evidence". 21 Such an application involves a question of law - Azzopardi v Tasman UEB Industries Limited (1985) 4 NSWLR 139 at 155C; Naxakis v Western General Hospital [1999] HCA 22; (1999) 197 CLR 269 at [40]: "The question for the judge is not whether a verdict for the plaintiff would be unreasonable or perverse but whether the plaintiff has adduced evidence which, if uncontradicted, would justify and sustain a verdict in his or her favour."

The application is to be determined by a consideration of the plaintiff's case at its highest - De Gioia v Darling Island Stevedoring and Lighterage Co. Ltd (1941) 42 SR(NSW) 1 at 3, Hunt v Watkins [2000] NSWCA 229; (2000) 49 NSWLR 508 at [9]. 22 His Honour in his judgment said "There is evidence of four chairs breaking. Mr Eldahr gives evidence of a chair breaking on or about 17/4/2007. Mr Harb, who was employed by Wiseowl.com Pty Limited gives evidence of a chair breaking on 10/4/2007. Mr Khodeir, who was employed by Wiseowl.com Pty Limited says that: on 21/1/2007 a wheel coming off a chair on 28/1/2007; on 20/03/2007 one of the legs snapped off the chair; and on 06/08/2007 one of the wheels came off the chair. Mr Fullick says on 13/07/2007 a wheel sheared off the leg of a chair." The plaintiff said there had been ongoing defects with various types of chairs. 23 His Honour then made some limited findings and concluded: "[23] There is no evidence that the chairs were not fit for the purpose. There is no evidence that the chairs were not of merchantable quality. [24] Verdict is for the defendant." 24 In my opinion, the verdict should be set aside for the following reasons:

(a) There was evidence from which it could be concluded that the chairs were not fit for purpose and not of merchantable quality - see paras [5], [6] and [22] hereof. The plaintiff had adduced evidence which, taken at its highest, would justify and sustain a verdict in his favour. His Honour's conclusion that there was no evidence that the chairs were not fit for purpose and no evidence that the chairs were not of merchantable quality was erroneous;

(b) His Honour on occasions proceeded to determine disputed issues of fact, eg as to reliance and whether the chairs were in fact of merchantable quality or fit for purpose. This involved an error of law in that his Honour did not apply the appropriate legal test to the application before him. Additionally, his determination of the disputed issues was not the subject of adequate reasons and arguably involved error;

(c) There was a failure to give adequate reasons in that it is not apparent from the judgment which factors led his Honour to his ultimate conclusions;

(d) His Honour failed to determine the claims pursuant to ss 52 and 53 of the Trade Practices Act or to give reasons for not determining those claims.

Costs 25 His Honour referred to authority that indemnity costs should be considered: "where an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law." 26 His Honour ordered the plaintiff to pay the defendant's costs on an indemnity basis as "The plaintiff has continued the case in circumstances where he was aware that [he had] no chance of success, and did so in wilful disregard of the facts and the law". 27 His Honour made the costs order without hearing full submissions from the plaintiff on this issue. He said in his judgment "The parties have submitted on costs." This was an error. The plaintiff, after a few short comments, had expressly reserved his submissions on costs until after the judgment was delivered. His Honour agreed to that course. 28 In my opinion, the order for indemnity costs should be set aside for failure to afford procedural fairness to the plaintiff and because the substratum for the costs order, namely the verdict for the defendant, will be set aside. I would add that I do not regard the law to which his Honour referred as so clearly established that an inference that the plaintiff continued the case for some ulterior motive and in wilful disregard of the facts and law should be drawn. 29 As the verdict for the defendant will be set aside, it would be inappropriate to make an order that either party should pay the costs of the hearing before his Honour. 30 Although the plaintiff has been successful on this appeal, the justice of the case, it seems to me, is best achieved by an order that each party bear his or its costs of the appeal.

Orders 31 1. The time for commencing this appeal is extended to 4.00 pm on 21 May 2009.

The verdict for the defendant and the order for costs are set aside.

Each party is to bear his or its costs of the appeal. **********

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

CITATION : Shamieh v Easy Buy International Pty Limited [2010] NSWSC 970

Currabubula Holdings Pty Limited v State Bank of New South Wales [2000] NSWSC 232 Azzopardi v Tasman UEB Industries Limited (1985) 4 NSWLR 139 CASES CITED : Naxakis v Western General Hospital [1999] HCA 22; (1999) 197 CLR 269 De Gioia v Darling Island Stevedoring and Lighterage Co. Ltd (1941) 42 SR(NSW) 1 Hunt v Watkins [2000] NSWCA 229; (2000) 49 NSWLR 508

At a glance

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Judgment (19 paragraphs)

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Cases Cited (7)

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