Drive My Car Rentals Pty Ltd v Gabriel

1. [1]

   MACFARLAN JA: I agree with Gleeson JA.

2. [2]

   MEAGHER JA: I agree with Gleeson JA.

3. [3]

   GLEESON JA: This application for leave to appeal arises out of proceedings brought in the Local Court by Joseph Gabriel against Paul Grech. On 4 August 2011, Mr Grech, the driver of a rental car owned by Drive My Car Rentals Pty Ltd (DMC), collided with and damaged the rear end of a BMW car driven by Joseph Gabriel’s son, Mark Gabriel. Joseph Gabriel sued Mr Grech for damages, and Mr Grech brought a cross-claim against DMC claiming indemnity or contribution.

4. [4]

   There was a formal admission by Mr Grech on the pleadings that Joseph Gabriel was the owner of the BMW. On the cross-claim, DMC denied Mr Grech’s allegation that Joseph Gabriel was the owner of the BMW. DMC alleged that the cross-claim was a fraudulent claim because the collision was a “staged” accident involving the drivers of three cars, including Mr Grech and Mark Gabriel. DMC also alleged that the BMW had sustained prior damage which had not been disclosed by Joseph Gabriel.

5. [5]

   After an 8-day hearing extending over 12 months , the Magistrate (Atkinson LCM) gave judgment on 10 March 2017 finding that, although the collision was caused by Mr Grech’s negligence and the damage suffered amounted to $15,900, Joseph Gabriel was not entitled to judgment on his claim because he did not own the BMW and was therefore “not entitled to bring proceedings arising out of the collision”. The Magistrate contingently found that DMC would have been liable to Mr Grech had Joseph Gabriel succeeded against Mr Grech, finding that the collision was not staged and therefore not fraudulent. The Magistrate concluded that Joseph Gabriel’s claim against Mr Grech ought to be dismissed and, as Mr Grech was not liable to Joseph Gabriel, the cross-claim also ought to be dismissed. There is some doubt as to whether orders to this effect were entered on 10 March 2017. The correct date is not presently significant.

6. [6]

   Following a costs argument in the Local Court over two days in May and July 2017, the Magistrate gave judgment on costs and made orders on 11 August 2017 as follows:

7. [7]

   Joseph Gabriel appealed to the Supreme Court seeking to set aside the orders on the claim and the cross-claim. His appeal was brought as of right on a question of law pursuant to s 39(1) of the Local Court Act 2007 (NSW), with leave of the Supreme Court on a question of mixed law and fact pursuant to s 40(1) of the Local Court Act, and also with leave of the Supreme Court as to costs pursuant to s 40(2)(c) of the Local Court Act.

8. [8]

   If an error on a question of law, a question of mixed fact and law or an error in the exercise of the costs discretion was established, the Supreme Court had power under s 41(1) of the Local Court Act to determine the appeal made under s 39(1) or s 40:

9. [9]

   By his amended summons filed 3 October 2017, Joseph Gabriel joined Mark Gabriel as third defendant to the appeal and raised 5 grounds of appeal. Ground 1A challenged the finding on the ownership of the BMW issue as being precluded by the formal admission by Mr Grech on the pleadings. Grounds 1B and 1C challenged the finding on the ownership issue on the facts. Ground 1 challenged the finding on the extent of damages. Ground 2 challenged the third party costs award in favour of DMC.

10. [10]

    The primary relief sought on the appeal was an order that Mark Gabriel be substituted or added as a plaintiff in the Local Court proceedings and as a party to the appeal, and for judgment in favour of Mark Gabriel against Mr Grech in the sum of $15,900 plus interest (pars 1A and 1B). Orders were also sought on the cross-claim for judgment in favour of Mr Grech against DMC (par 1B(c)) and an order that DMC indemnify Mr Grech in respect of the judgment in favour of Mark Gabriel and Joseph Gabriel’s costs (par 1B(d)).

11. [11]

    Alternatively, orders were sought for judgment in favour of Joseph Gabriel for $15,900 plus interest (par 3(a)), judgment on the cross-claim in favour of Mr Grech against DMC (par 3(c)), and an order that DMC indemnify Mr Grech in respect of the judgment in favour of Joseph Gabriel and his costs (par 3(d)).

12. [12]

    Mr Grech filed an appearance and appeared at the early stages of the appeal but did not take an active part. He did not appear at the substantive hearing of the appeal on 4 March 2020. DMC was the active contradictor on the appeal, as it had been in the Local Court. DMC filed a notice of contention asserting that the Local Court was correct to dismiss Joseph Gabriel’s claim.

13. [13]

    Adamson J gave judgment on 11 March 2020 allowing the appeal by Joseph Gabriel from the two judgments of the Local Court and set aside the order made in the Local Court dismissing Joseph Gabriel’s claim. In lieu thereof, Adamson J ordered judgment in favour of Joseph Gabriel, whilst reserving the question of the appropriate order on the cross-claim and the question of costs in the Supreme Court and the Local Court: Gabriel v Grech (No 3) [2020] NSWSC 218 (the principal judgment or PJ).

14. [14]

    Her Honour only determined ground 1A of the appeal, which raised a question of law challenging the finding on the ownership issue given the formal admission on the pleadings by Mr Grech. Her Honour found that the Magistrate was bound by the pleadings on the claim and was therefore unable, as a matter of law, to make the findings which she did, being that Joseph Gabriel’s claim failed because he had not established that he owned the BMW for the purposes of his claim against Mr Grech: PJ [105]. Her Honour also found that s 22 of the Civil Procedure Act 2005 (NSW) had the effect that if Mr Grech was found liable to Joseph Gabriel, DMC was not subject to any issue estoppel on the question of ownership of the BMW car since it was not a party to that “issue”, and DMC could challenge that finding of liability insofar as it was relevant to its defence to the cross-claim: PJ [96].

15. [15]

    After delivery of the principal judgment, Joseph Gabriel abandoned his claims for relief in pars 1B(c) and (d) of the amended summons: see [10] above. Implicitly, he also abandoned the similar claims for relief in pars 3(c) and (d).

16. [16]

    Following receipt of written submissions, Adamson J gave a further judgment on 9 September 2020 and made orders fixing the amount of the judgment for Joseph Gabriel against Mr Grech in the sum of $21,942.77 and made costs orders against Mr Grech and DMC in the Local Court proceedings and against DMC in the Supreme Court proceedings: Gabriel v Grech (No 6) [2020] NSWSC 1220 (the costs judgment). The full terms of those orders are:

17. [17]

    DMC seeks leave to appeal to this Court from the judgments of Adamson J. Leave is required because the amount in issue is less than the monetary threshold of $100,000: Supreme Court Act 1970 (NSW), s 101(2)(r)(i). Leave is also required with respect to the costs judgment: Supreme Court Act, s 101(2)(c).

18. [18]

    Although Mr Grech did not appear in this Court, I am satisfied by the evidence of service that he has been given notice of the proceedings and hearing in this Court.

19. [19]

    Ground 1 of DMC’s amended draft notice of appeal contends that Adamson J erred in her approach to the operation of s 22 of the Civil Procedure Act and in finding that the issue of ownership of the BMW had been foreclosed by the formal admission by Mr Grech on the pleadings (the pleading issue). Ground 2 contends that Adamson J erred in her discretionary costs order (the costs issue). Ground 2 only arises if ground 1 is unsuccessful.

20. [20]

    In oral submissions in this Court, senior counsel for Joseph Gabriel, Mr Bret Walker SC, acknowledged that Adamson J had erred on the pleading issue. As explained below, that concession was properly made. Nevertheless, it was argued by reference to a draft notice of contention that the decision of Adamson J should be affirmed on the ground that the Magistrate should have held that “Joseph Gabriel, had proved [his] ownership of the vehicle”.

21. [21]

    The application for leave to appeal was argued on the basis that if leave was granted and the appeal allowed, this Court would consider dealing with the remaining grounds of appeal from the Local Court, exercising the powers of the Supreme Court without further argument beyond the submissions already made. That was subject to one qualification, namely the parties were afforded the opportunity to provide supplementary submissions on ground 2 of the appeal from the Local Court challenging the Magistrate’s costs order. Leave was also given for the parties to provide supplementary submissions on the question of costs in the Supreme Court and in this Court. Those submissions have now been received.

22. [22]

    I have concluded that there should be a grant of leave to appeal on the pleading issue notwithstanding the small amount in issue. The appeal on that ground should be allowed and the orders made in the Supreme Court on 11 March 2020 and 9 September 2020 should be set aside. Rather than remit the matter, this Court should exercise the powers of the Supreme Court conferred by s 41(1) of the Local Court Act and deal with the remaining grounds of appeal from the Local Court, including the question of leave to appeal, given the small amount in issue and the desirability of avoiding incurring further costs on a remitter.

23. [23]

    In my view, there should be a grant of leave to appeal from the Local Court limited to ground 2 of the amended summons below which challenged the Magistrate’s third party costs award in favour of DMC. The Magistrate’s third party costs order should be set aside and no order as to costs should be made as between DMC and Joseph Gabriel in the Local Court.

24. [24]

    The consequential costs orders with respect to Joseph Gabriel’s appeal from the Local Court, and in turn, DMC’s appeal to this Court, are addressed below at [128] and [137]-[138].

Ground 1: the pleading issue

1. [25]

   Ground 1 of the draft amended notice of appeal contends that the judge erred in finding that the formal admission in Mr Grech’s defence – that Joseph Gabriel owned the BMW – removed ownership of the BMW as an issue in the proceedings, irrespective of the fact that DMC had denied Joseph Gabriel’s ownership in its defence to the cross-claim and irrespective of the way Joseph Gabriel ran the case at trial, being that ownership was a fact in issue between the parties.

2. [26]

   As indicated, senior counsel for Joseph Gabriel acknowledged that Adamson J erred on the pleading issue with respect to the operation of s 22 of the Civil Procedure Act. Further, and contrary to her Honour’s view of how the trial was conducted in the Local Court, counsel accepted that Joseph Gabriel chose to run the damages claim on the basis that to obtain judgment against Mr Grech he had to establish ownership of the BMW car.

3. [27]

   Given the general importance of s 22 of the Civil Procedure Act with respect to third party proceedings, it is appropriate to explain its operation and application to the present case.

Civil Procedure Act, s 22

1. [28]

   The cross-claim by Mr Grech against DMC in the Local Court was authorised by s 22 of the Civil Procedure Act which relevantly provides:

2. [29]

   Section 22 is the current iteration of legislative provisions authorising third party proceedings. In Insurance Exchange of Australasia v Dooley (2000) 50 NSWLR 222; [2000] NSWCA 159 (Dooley), Handley JA noted at [10]-[12] that the predecessor provision, s 78 of the Supreme Court Act, can be traced through s 3 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) to s 24(3) of the Judicature Act 1873 (UK).

3. [30]

   The nature and purpose of third party proceedings under the English provision was explained in Barclays Bank v Tom [1923] 1 KB 221 by Scrutton LJ at 223-224:

4. [31]

   In Stewart v Sydney County Council; Government Insurance Office of New South Wales (Third Party) [1973] 1 NSWLR 444 (Stewart), Kerr CJ said at 448 that “[t]he whole point about third party proceedings is that they have been provided for by legislation to ensure that common factual matters will be investigated in the one hearing and that consistent factual findings will be made for all the purposes of the trial”.

5. [32]

   To similar effect, Hutley JA said in Stewart at 457-458:

6. [33]

   These statements by Kerr CJ and Hutley JA in Stewart were referred to with approval by Handley JA (Giles JA agreeing) in Dooley at [43].

7. [34]

   Helicopter Sales (Australia) Pty Ltd v Rotor-Work Pty Ltd (1974) 132 CLR 1; [1974] HCA 32 (Helicopter Sales), involved a third party’s application for leave to appeal from a judgment between a plaintiff and defendant, where although an order had been made giving the third party leave to defend the plaintiff’s claim, the order was silent as to the extent to which the third party was bound by any judgment. The then Supreme Court Rules (Qld) did not state that a third party was automatically bound by a judgment between plaintiff and defendant. There was no objection to the competency of the appeal, but the High Court considered the question holding that “… a third party who is given leave to defend a plaintiff’s action, and who does so, is bound by the result of the issues which that third party contests”: at 4 (Barwick CJ), also see Stephen J at 14 and Mason J at 15.

8. [35]

   Of relevance to the present appeal, Barwick CJ at 5 and Mason J at 15 also expressed the view, in obiter, that where a third party contests the action without any order being made for leave to defend the claim, the third party would have standing to appeal against the judgment entered for the plaintiff.

9. [36]

   In Sandtara Pty Ltd v Abigroup Ltd (1997) 42 NSWLR 5, the Court (Gleeson CJ, Meagher and Handley JJA), after referring to the remarks of Scrutton LJ in Barclays Bank v Tom, succinctly explained the effect of the third party procedure authorised by s 78 of the Supreme Court Act at 8-9:

10. [37]

    In Sandtara v Abigroup at 9 the Court further held that, as a party to the first proceedings, the third party can rely on issue estoppels flowing from the judgment in the proceedings.

11. [38]

    In Dooley, Handley JA after referring to Sandtara v Abigroup, observed at [14] that it has long been settled that a third party may raise a defence on behalf of a defendant which the defendant has not raised, citing Barclays Bank v Tom at 224.

12. [39]

    The judge below distinguished Dooley on the ground that it involved former rules of court that are no longer contained in the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). It is necessary to explain why that does not lead to a different result under s 22 of the Civil Procedure Act and the UCPR.

13. [40]

    Dooley involved the competency of an application by a third party insurer for leave to appeal against a District Court judgment as between plaintiff and defendants (Mr Dooley and the Baseball League) and as between defendants and third party (the Baseball League and the insurer). The proceedings were commenced by the plaintiff at a time when Pt 21 of the District Court Rules 1973 (NSW) continued to apply to the cross-claim filed by the League against the insurer: Dooley at [11]. At trial, Mr Dooley was given leave to file a cross-claim against the insurer to which the new Pt 20 of the District Court Rules applied: Dooley at [28]. The new Pt 20 gave the Court power, amongst others, to grant leave for a defendant to a cross-claim to appear at the trial and to take part in the trial. No orders were made under Pt 20 with respect to Mr Dooley’s cross-claim. However, the trial was conducted on the basis that the insurer had full rights of defence in respect of Mr Dooley’s claims against the defendants and counsel for the insurer cross-examined the plaintiff without objection: Dooley at [29].

14. [41]

    The Court held that the appeal by the third party insurer from the judgment entered for the plaintiff against the second defendant (the League) was competent: Dooley at [27], [47] (Handley JA, Giles JA agreeing), at [86] (Fitzgerald JA).

15. [42]

    Before turning to the reasoning in Dooley, it is of assistance to reproduce the relevant parts of former District Court Rules Pt 21 and the subsequent District Court Rules Pt 20 which took effect on 1 January 1997 (since repealed), as well as the former Supreme Court Rules, Pt 6, r 4, which was in substantially similar terms to the District Court Rules, Pt 20.

16. [43]

    District Court Rules Pt 21 which applied prior to 1 January 1997, relevantly provided:

17. [44]

    District Court Rules Pt 20, which applied after 1 January 1997, before being repealed in 2005, relevantly provided:

18. [45]

    The former Supreme Court Rules 1970, Pt 6, r 4, relevantly provided:

19. [46]

    Addressing the League’s cross-claim against the insurer, Handley JA said of the second limb of Pt 21 r 4(1), which is in similar but not identical terms to s 22(3)(a) of the Civil Procedure Act at [13]:

20. [47]

    As to Pt 21 r 5(1), which was incorporated into r 4(1) by the expression “subject to the Rules”, and enabled the Court to direct “what part the third party shall take in the trial”, Handley JA emphasised the importance of affording the third party full procedural fairness, observing at [15]–[16]:

21. [48]

    Turning to Mr Dooley’s cross-claim against the insurer, to which the new District Court Rules, Pt 20 rr 4 and 6 applied, after noting at [29] that no orders had been made under Pt 20 giving the cross-defendant insurer leave to defend the plaintiff’s claim or to appear and take part in the trial, Handley JA said at [47] that the Court should follow the High Court’s decision in Helicopter Sales and apply the obiter statements of Barwick CJ and Mason J referred to at *[35]* above, in finding that the appeal by the cross-defendant from the judgment entered for the plaintiff against the second defendant was competent.

22. [49]

    Whilst the UCPR does not make express provision for the grant of leave to a cross-defendant to defend a plaintiff’s claim, unlike the former Supreme Court Rules, Pt 6, r 4, and District Court Rules, Pt 20, r 4, this is now addressed by UCPR, r 9.8 which provides:

23. [50]

    Comparing the former Supreme Court Rules with the Civil Procedure Act and UCPR, three matters should be noted:

24. [51]

    The directions power in UCPR, r 9.8(b) enables the court to control the extent to which the third party takes part in the proceedings as between the plaintiff and defendant. As Handley JA observed in Dooley at [15], there may be issues between plaintiff and defendant which are of no concern to the third party, who should not be permitted to meddle in the hearing on such issues. That directions given under a power such as UCPR, r 9.8(b) can address officious intermeddling by a third party in the dispute between plaintiff and defendant is not something new. In Parramatta City Council v Sandell [1973] 1 NSWLR 151 Hutley JA observed at 174:

25. [52]

    Of course, if the court gives directions limiting the third party’s participation in the trial between the plaintiff and defendant on issues which are of no concern to the third party, that may provide the basis for the cross-defendant to seek an order under s 22(3)(b)(ii) of the Civil Procedure Act limiting the extent to which the cross-defendant is bound by any judgment on any claim for relief in the proceedings.

26. [53]

    Mr Grech sought by his cross-claim to transfer any liability to Joseph Gabriel to DMC as the cross-defendant. Procedural fairness required that DMC was entitled to be heard on the ownership issue in the Local Court proceedings, the determination of which could impose liability on DMC to the defendant, Mr Grech: Dooley at [15].

27. [54]

    The effect of s 22 of the Civil Procedure Act is that when Mr Grech cross-claimed against DMC, the latter became “a party to the first proceedings” and DMC was “bound by any judgment or decision on any claim for relief in the proceedings”, since no contrary order under s 22(3)(b)(ii) was made in the Local Court.

28. [55]

    Both Mr Grech and DMC could rely on and were bound by issue estoppels arising from the judgment in the proceedings, specifically, the issue estoppel as to the ownership of the BMW car: Sandtara v Abigroup at 9; Dooley at [12]. This was because the ownership issue was, for the purpose of the cross-claim against DMC, “a state of fact … alleged or denied the existence of which is a matter necessarily decided by the prior judgment …” between Joseph Gabriel and Mr Grech: Blair v Curran (1939) 62 CLR 464 at 532 (Dixon J); [1939] HCA 23.

29. [56]

    Although the operation of s 22 of the Civil Procedure Act was not expressly adverted to by the parties in the Local Court, the parties ran the case on the basis that ownership of the BMW was an issue of fact to be determined by the Magistrate, notwithstanding the formal admission by Mr Grech on his pleadings. Thus, the parties correctly recognised the need for a common factual finding on the claim and the cross-claim on the ownership issue: Stewart at 448. It follows that I respectfully disagree with the view of the judge below that the statement in closing submissions by the legal representative for Joseph Gabriel that “[i]f the plaintiff is not the owner of the motor vehicle well then, the plaintiff’s case must fail” was a misstatement: at PJ [94].

30. [57]

    The Magistrate was correct to proceed on the basis that the formal admission on the pleadings by Mr Grech that Joseph Gabriel was the owner of the BMW did not foreclose the ownership issue in the Local Court proceedings. It follows that Adamson J erred in upholding the pleading issue in ground 1 of the amended summons below.

31. [58]

    Although the amount in issue is quite small, there is a clear injustice to DMC resulting from the error on the pleading issue: Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 at [32], [39]; Secretary, Department of Family and Community Services v Smith (2017) 95 NSWLR 597; [2017] NSWCA 206 at [28]. There should be a grant of leave to appeal on ground 1 of the draft amended notice of appeal, the appeal to this Court should be allowed and the orders made by the judge below on the appeal from the Local Court on 11 March 2020 and 9 September 2020 should be set aside. The question of consequential appellate relief is addressed below.

Ground 2: costs order in the Supreme Court

1. [59]

   It is not necessary to address ground 2 of the draft notice of appeal which seeks to challenge the costs order made by Adamson J; this ground was advanced in the alternative if DMC failed on ground 1.

What appellate relief should this Court grant?

1. [60]

   The debate in this Court ultimately centred on what should be done in terms of appellate relief, assuming ground 1 was upheld. Should this Court remit the remaining grounds of the appeal from the Local Court to the judge below, or alternatively exercise the power of the judge on such an appeal and deal with the outstanding grounds of the appeal, including the question of leave?

2. [61]

   Senior counsel for Joseph Gabriel identified the “unfinished business” in the court below as grounds 1B and 2 of the amended summons. Ground 1B challenged the factual finding by the Magistrate that Joseph Gabriel was not the owner of the BMW. Ground 2 challenged the Magistrate’s exercise of her costs discretion in ordering Joseph Gabriel to pay 50 per cent of DMC’s costs in the Local Court.

3. [62]

   No oral submissions were made by counsel for Joseph Gabriel in support of ground 1A of the amended summons seeking a substitution order joining Mark Gabriel as plaintiff in the Local Court and as a party to the Supreme Court proceedings: see [10] above. I take this ground not to have been pressed. Nor were grounds 1C or 1 of the amended summons mentioned in oral argument.

4. [63]

   There are good reasons for this Court to deal with the two remaining grounds of the appeal from the Local Court, exercising the powers of the judge below on that appeal. First, the Court must bear in mind the statutory command to resolve the issues between the parties in such a way that the cost is proportionate to the importance and complexity of the subject-matter in dispute: Civil Procedure Act, s 60. Second, the amount in issue is small and a remitter would result in additional costs to the parties. Third, it was not suggested that this Court was not in as good a position as the judge below to address the undetermined grounds of appeal, given the parties’ detailed written and oral submissions made below and on appeal.

Ground 1B: Ownership issue

1. [64]

   Ground 1B of the amended summons below challenged the Magistrate’s finding on the ownership issue: that Joseph Gabriel was not the owner of the BMW. It was common ground that this finding involved a question of mixed fact and law, and accordingly, leave to appeal on this ground is required: Local Court Act, s 40(1). By contrast, there is no right of appeal on a question of fact alone.

2. [65]

   The first matter to observe is that the Magistrate approached the question of ownership of the BMW by incorrectly reversing the onus of proof, but nothing is said to flow from this error. The Magistrate said at [38]:

3. [66]

   The Magistrate went on at [39] to observe that before the court makes a finding of fraud, it needs to be comfortably satisfied that such fraud occurred in accordance with Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 at 361-362 and Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170.

4. [67]

   The Magistrate rejected the evidence of Joseph Gabriel and his son Mark, that Mark bought the car at auction for Joseph, finding at [40]:

5. [68]

   The Magistrate found that she was “comfortably satisfied” that Mark Gabriel owned the BMW car, giving the following reasons at [41] and [43]:

6. [69]

   In support of the grant of leave, Joseph Gabriel submitted that the ownership finding involved an injustice as the Magistrate had, in essence, made three errors. The Magistrate erred: (1) in failing to identify or apply any legal test of ownership, (2) in applying an incorrect test of ownership based on who had greater use of the car, and (3) in determining that Joseph Gabriel was not the owner of the car.

7. [70]

   DMC opposed the grant of leave, pointing to the small amount in issue, and the difficulty for Joseph Gabriel in overturning the Magistrate’s finding on ownership insofar as it was informed by credibility and reliability findings.

8. [71]

   In supplementary written submissions filed with leave of the Court after the conclusion of the hearing in relation to the Magistrate’s costs order, Joseph Gabriel submitted that the ownership finding was a “monstrous and impermissible finding” which involved an injustice and serious misapplication of principle. This was so because the evidence as to credit or credibility which the Magistrate considered on the question of ownership was simply the inadequate evidence that DMC relied on when seeking to prove that the collision was fraudulently staged. This evidence was sufficient to leave a “taint” that caused the Magistrate to find against Joseph Gabriel on the ownership issue. The submission continued that, notwithstanding that DMC had expressly abandoned a pleading of fraud against Joseph Gabriel, implicit in its allegation contesting ownership of the BMW by Joseph Gabriel is that there was fraudulent collusion between father and son as to ownership of the BMW, or at least a fraudulent claim of ownership by Joseph Gabriel. It was argued that it was not open to the Magistrate to make the ownership finding because the allegation of collusion as to the registration of the car in the name of Joseph to conceal Mark’s true ownership was never pleaded, never put to any of the witnesses, there was no evidence of any such arrangement and it was never submitted by DMC. .

9. [72]

   DMC objected to these additional submissions on the ground that they were outside the leave given by this Court on 23 February 2021. That objection was properly made.

Decision

1. [73]

   In my view, there are compelling reasons to refuse leave to appeal on the ownership issue.

2. [74]

   First, accepting that the concept of “ownership” connotes a legal right to have and to dispose of possession and enjoyment of the subject matter (Yanner v Eaton (1999) 201 CLR 351; [1999] HCA 53 at [25] (Gleeson CJ, Gaudron, Kirby and Hayne JJ), it is unfair for Joseph Gabriel to criticise the Magistrate for not identifying any legal test of ownership in her reasons, when the parties advanced no argument directed to this issue, and the trial was run on the basis that the essential question was a factual dispute, namely, whether Mark Gabriel had purchased the BMW on behalf of Joseph Gabriel at a wrecker’s auction on 22 August 2008 for $49,596.50 using family money of Joseph Gabriel kept in a safe at the family home, and that after repairs had been undertaken and paid for by Mark Gabriel, the car was registered in Joseph Gabriel’s name in March 2009.

3. [75]

   Second, in rejecting the ownership claim by Joseph Gabriel, the Magistrate made findings which were informed by her assessment of the credibility and reliability of both Joseph Gabriel and Mark Gabriel. In order to succeed on an appeal, Joseph Gabriel must establish that “incontrovertible facts or uncontested testimony” demonstrate that the trial judge’s conclusions are erroneous, or that the decision is “glaringly improbable” or “contrary to compelling inferences”: Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [28]-[29]; Robinson Helicopter Co Inc v McDermott [2016] HCA 22; (2016) 90 ALJR 679 at [43]; Lee v Lee (2019) 266 CLR 129; [2019] HCA 28 at [55]. Given this hurdle, I am not persuaded that the challenge to the ownership finding is more than merely arguable: Be Financial at [32]-[33].

4. [76]

   Third, the Magistrate did not err in having regard to the evidence of who had possession of the car and for what purposes. Nor is it accurate to characterise the Magistrate’s reasons as applying an incorrect test of ownership based on who had greater use of the BMW.

5. [77]

   Fourth, the amount in issue is very small, $15,900 plus interest, and the costs of an appeal from the Local Court on this ground are disproportionate to the amount in issue: Be Financial at [37]-[39].

6. [78]

   Fifth, insofar as Joseph Gabriel relied upon Exhibit 6 for the alternative contention that he became the owner of the BMW on 2 February 2009, that document was not tendered before the Local Court to prove the truth of its contents. Exhibit 6 is a receipt dated 2 February 2009 for $25,000 which, according to the submission, showed that Joseph Gabriel purchased the BMW from Mark Gabriel on that date. Given the limited basis of admissibility of Exhibit 6 and the absence of any challenge to the evidentiary ruling, the Magistrate did not make an error of mixed fact and law in not considering the effect of Exhibit 6 on the ownership issue.

7. [79]

   Moreover, Exhibit 6 did not in fact assist Joseph Gabriel’s case. In his evidence, Joseph Gabriel disclaimed any knowledge of Exhibit 6 or the suggestion based on that document that he purchased the BMW from Mark Gabriel on 2 February 2009. Mark Gabriel also disclaimed knowledge of this document and agreed in his evidence that he did not sell the BMW to his father, Joseph, for $25,000 on 2 February 2009.

8. [80]

   Sixth, even if regard is had to Joseph Gabriel’s supplementary submissions which were outside the grant of leave given by the Court (see [71] above), the matters relied upon do not demonstrate an injustice which is reasonably clear with respect to the ownership finding.

9. [81]

   The premise of these submissions and the related complaint of procedural unfairness – that the ownership finding was based on acceptance of an implicit allegation of collusion as to the registration of the car to conceal the true owner – is incorrect. The Magistrate made no such finding. The Magistrate went no further than observing, in the context of Mark Gabriel having purchased the BMW at the wreckers auction and the BMW subsequently being registered in Joseph Gabriel’s name, that it was “plausible” that Joseph Gabriel and Mark Gabriel had decided to register the BMW in Joseph’s name even though it was actually Mark’s car. That observation is not to be read as an implicit, let alone explicit, finding by the Magistrate of collusion between Joseph Gabriel and Mark Gabriel as to who was the true owner.

10. [82]

    Whilst the failure of Joseph Gabriel to prove ownership gave rise to the possible inference that he had in fact colluded with his son to show a false position to the Court, this was not the finding of the Magistrate. Nor does it follow, as Joseph Gabriel suggested, that procedural fairness required that DMC had to plead a fraud allegation against Joseph Gabriel as to the issue of collusion before it could argue that the evidence failed to prove that Joseph Gabriel was the owner of the BMW, or that the Magistrate could not find against Joseph Gabriel on the question of ownership without denying Joseph Gabriel procedural fairness.

11. [83]

    Leave to appeal to the Supreme Court on ground 1B of the amended summons below should be refused under s 40(1) of the Local Court Act.

Ground 2: costs order in the Local Court

1. [84]

   Ground 2 of the amended summons contended that the Magistrate erred in ordering Joseph Gabriel to pay 50 per cent of DMC’s costs in the Local Court. It is common ground that leave to appeal against the costs order is required under s 40(2)(c) of the Local Court Act.

2. [85]

   In her judgment on costs, the Magistrate made the following findings at [15]-[20]:

3. [86]

   Addressing DMC’s claim for a “pass on” costs order against Joseph Gabriel, the Magistrate found that DMC was the true defendant in the proceedings and that it did the work which ultimately led to the result that Joseph Gabriel could not prove his claim against Mr Grech: at [23]-[24].

4. [87]

   The Magistrate’s dispositive reasons are set out in full:

5. [88]

   The Magistrate rejected DMC’s application for a costs order on the indemnity basis: at [33].

6. [89]

   In support of the grant of leave, Joseph Gabriel submitted that the Magistrate’s costs order was manifestly unjust and, if it stands, would visit a gross injustice upon him, pointing to four matters:

   1. (1)

      the costs incurred by DMC in the Local Court in the order of $365,000, including disbursements of $115,000 were “quite outrageous and disproportionate in the extreme”;

   2. (2)

      it was unreasonable for DMC to have alleged fraud when DMC’s expert crash investigator, Mr Burgess, had not made any findings of fraud;

   3. (3)

      the Magistrate impermissibly used her conclusions on credit to find that Joseph Gabriel was not the owner of the BMW due to some further or other fraud that was never pleaded, never put, never submitted and never formed part of DMC’s case;

   4. (4)

      the Magistrate’s costs discretion had miscarried because she had failed to consider or take into account that (a) an unsuccessful fraud allegation is commonly met by a significant adverse costs order, (b) DMC had defended the proceedings and alleged fraud despite the advice of its own crash investigator that he had found nothing which would indicate any suggestion that the collision was staged, and (c) DMC caused grossly disproportionate costs to be accrued by unnecessarily prolonging the proceedings.

7. [90]

   It was submitted that the appropriate costs order in the Local Court would be that DMC pay Joseph Gabriel’s costs, and in the alternative, a substantial proportion thereof (90%).

8. [91]

   In opposing the grant of leave and seeking to uphold the Magistrate’s costs order, DMC submitted that:

   1. (1)

      no question of principle is involved;

   2. (2)

      the high hurdle required by House v The King (1936) 55 CLR; [1936] HCA 40 to challenge a discretionary costs order was not satisfied;

   3. (3)

      the quantum of costs which DMC incurred in the Local Court is not of itself sufficient to justify a finding that those costs are “outrageous and disproportionate in the extreme”, nor a reason to grant leave to appeal; and,

   4. (4)

      no submissions were made in the Local Court based on DMC’s failure to follow the advice of its own crash investigator.

9. [92]

   If leave was granted, DMC submitted that it would not be open to the Supreme Court to overturn the critical finding of the Magistrate that “50% of the case related to issues on which DMC has been successful” because the Supreme Court has no power to find alternative facts on appeal from the Local Court, at least in relation to the facts of litigation, and the same should apply to fact-finding for the costs judgment. Reference was made to Ken Wolf Real Estate Pty Ltd v O’Halloran [2012] NSWSC 993 at [50] (Beech-Jones J). Joseph Gabriel did not argue to the contrary.

Principles

1. [93]

   The Court has a wide discretion with respect to costs conferred by s 98 of the Civil Procedure Act. The general rule contained in UCPR, r 42.1 is that costs follow the event. The “event” may be characterised in more than one way, but generally the “event” refers to the result of the claim or counter-claim, as the case may be, and may be understood as referring to the practical result of a particular claim: Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15] (Ward, Emmett and Gleeson JJA).

2. [94]

   The principles to be applied in relation to the costs of a third party claim are discussed in Furber v Stacey [2005] NSWCA 242 at [30]-[34] (Hodgson JA) and [108]-[119] (Einstein J). Both Hodgson JA (at [32]) and Einstein J (at [114) qualified what King CJ had said in Lombard Insurance Co (Australia) Ltd v Pastro (1994) 175 LSJS 448 at 449 was “a” guiding principle, namely:

3. [95]

   Hodgson JA said at [32] that it may be putting it too highly to say that the result indicated by King CJ in Lombard is the one that “ordinarily” should follow, and that the “guiding principle” stated by King CJ needs to be qualified to the extent suggested by Finn J in GEC Marconi Systems Pty Limited v BHP Information Technology Pty Limited [2003] FCA 688; (2003) 201 ALR 55, where having referred to King CJ’s reference to the need for other guiding principles, Finn J continued at [72]-[75]:

4. [96]

   Einstein J agreed with this qualification by Hodgson JA and observed at [115]:

Decision

1. [97]

   The requirement in s 40(2)(c) of the Local Court Act for leave to appeal from a costs order reflects that a party may only be allowed to further litigate the issue of costs if the Supreme Court thinks there is some good reason over and above the Court’s opinion of what would have been the best costs order in the particular circumstances if it was exercising the discretion afresh: Wentworth v Rogers (No 3) (1986) 6 NSWLR 642 at 651 (Priestley JA, Glass JA agreeing).

2. [98]

   As the decision to order a party to pay costs in a particular way is a discretionary decision, it is necessary for an applicant for leave to show that the exercise of that discretion has miscarried in one of the ways described in House v The King at 504-505; Morris v Hanley [2001] NSWCA 374 at [14] (Heydon JA). And, since costs fall within the category of matters of practice and procedure, there is an added restraint on granting leave to appeal in such matters: Re the Will of F B Gilbert (Deceased) (1946) 46 SR (NSW) 318 at 323 (Jordan CJ); Wentworth v Rogers (No 3) at 644 (Kirby P), 651-652 (Priestley JA, Glass JA agreeing).

3. [99]

   The present case is concerned with a “pass on” order made in favour of the third party, in circumstances where (a) the defendant failed against the third party as a consequence of the plaintiff failing against the defendant, and (b) the third party failed on fraud allegations made against the defendant and the plaintiff’s son. The ultimate question before the Magistrate was whether in the circumstances the costs of DMC, as the successful third party, “ought fairly to be borne” by the unsuccessful plaintiff, Joseph Gabriel: GEC Marconi at [72], citing Johnson v Ribbins [1977] 1 WLR 1458 at 1464.

4. [100]

   It is not in dispute that it was reasonable for Mr Grech to bring the cross-claim against DMC for indemnity; the cross-claim was reflexive of Joseph Gabriel’s claim against Mr Grech. Insofar as the cross-claim was successfully defended by DMC on the ownership issue (with the consequence that the claim by Joseph Gabriel against Mr Grech also failed), a pass on costs order against Joseph Gabriel was appropriate with respect to the costs of that issue.

5. [101]

   However, the third party claim raised substantial issues involving fraud allegations against Mr Grech and also Mark Gabriel on which DMC lost. They were the remaining issues in the trial, and were contested between Joseph Gabriel and DMC as the “true defendant”. Accordingly, her Honour implicitly found that those issues also occupied 50 per cent of the trial. DMC submitted that there was no occasion for the Magistrate to consider whether DMC should be ordered to pay the costs of the fraud allegations because the Magistrate rejected Joseph Gabriel’s argument that DMC’s allegations of fraud were improperly and unreasonably made simply because the fraud claim failed. This is a misreading of the Magistrate’s reasons.

6. [102]

   What the Magistrate said at [25] of the costs judgment was that the fraud allegation required proof on the balance of probabilities, not proof as in a criminal prosecution beyond reasonable doubt, and accordingly it was reasonable for DMC to adduce less evidence than might be required in a criminal prosecution. It does not follow that DMC’s unsuccessful fraud allegation was reasonably made, or that the Magistrate made a finding to that effect.

7. [103]

   Nor did the Magistrate’s finding at [27] of the costs judgment, that DMC only failed in relation to proving fraud to the “requisite standard”, being a reference to the principles in Briginshaw v Briginshaw at 361-362 (Dixon J), render the making of the unsuccessful allegation of fraud reasonable (see now s 140(2) of the Evidence Act 1995 (NSW)). That the fraud allegation did not reach the “requisite standard” of proof meant that DMC failed to prove the very serious allegation of fraud against the three drivers involved in the collision.

8. [104]

   Insofar as DMC asserted that the circumstances of the collision were “suspicious”, a matter to which the Magistrate referred at [60] in her principal judgment, that did not provide a reasonable basis for DMC making the serious allegation that the collision was fraudulently staged. That allegation was contrary to the advice of DMC’s own crash investigator, Mr Burgess. Although the affidavit of Mr Burgess and the relevant transcript in the Local Court was not included in the materials before this Court, DMC did not dispute the accuracy of the summary of that evidence by Adamson J in the costs judgment at [18]-[19]:

9. [105]

   In my view, the Magistrate’s costs discretion miscarried because it was plainly unreasonable and unjust that Joseph Gabriel should bear his own costs of the issues on which DMC was unsuccessful on its defence to the cross-claim, which occupied 50 per cent of an 8-day trial. In addition, the Magistrate failed to take into account a material matter: that the making of the unsuccessful fraud allegation was a reason to make an adverse costs order against DMC, and not merely a reason to deny DMC part of its costs of the proceedings on a severable issue, which on the Magistrate’s assessment, occupied 50 per cent of the trial.

10. [106]

    McHugh J explained in Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [69], the “misconduct” of a successful party which disentitles it to costs, includes conduct relating to the litigation, such as conduct that unnecessarily protracts the proceedings.

11. [107]

    Here, the fraud allegation unnecessarily protracted the proceedings in the Local Court both in terms of the number of hearing days (8) and the period of time over which the hearing proceeded (one year from November 2015 when DMC obtained leave to file an amended defence to the cross-claim which raised the fraud allegation). The Local Court proceedings were commenced in 2014, and the hearing commenced in November 2015. The evidence was given over six days in March and July 2016 and closing submissions were made in November 2016, with judgment given in March 2017. Plainly, DMC’s conduct in making the unsuccessful fraud allegation unnecessarily prolonged the Local Court proceedings, which was inconsistent with the statutory command of the “just, quick and cheap” resolution of the real issues in the proceedings: Civil Procedure Act, s 56(1).

12. [108]

    Mr Walker SC for Joseph Gabriel described the Local Court proceedings as “the occasion for a monstrous disproportion of costs”, referring to DMC’s costs of the 8-day trial in the Local Court which are said to be $365,000. DMC contested this submission, arguing that there is no evidence that the costs that will eventually be payable to DMC are “grossly disproportionate” since the costs have not been subject to any form of assessment. Whatever reduction might occur in DMC’s costs on an assessment, the starting point for the assessment is undoubtedly grossly disproportionate to the small amount in issue. That will necessarily give rise to an unacceptable disproportion between DMC’s costs as assessed and the small amount in issue.

13. [109]

    In Dalma Formwork (Australia) Pty Ltd v Maricic (No 3) [2008] NSWCA 29, Basten JA said at [39]-[41]:

14. [110]

    In this case, there should be a grant of leave on the basis that a significant amount of costs is in issue, there is a clear case of misapplication of principle by the Magistrate and the error has resulted in an injustice to Joseph Gabriel.

15. [111]

    No attempt was made by Joseph Gabriel to contradict the Magistrate’s implicit finding that 50 per cent of the hearing related to issues on which DMC was unsuccessful. It is appropriate to proceed upon the basis of that finding.

16. [112]

    Since no new findings of fact are required to be made, this Court should exercise the power of the Supreme Court conferred on it by s 41(1) of the Local Court Act and s 75A(10) of the Supreme Court Act and re-exercise the discretionary power of the Local Court with respect to costs: Thaina Town (on Goulburn) Pty Ltd v City of Sydney Council (2007) 71 NSWLR 230; [2007] NSWCA 300 at [104] (Spigelman CJ, Mason P, Beazley, Giles and Ipp JJA agreeing) a case involving leave to appeal from a decision of the Land and Environment Court with respect to costs, where appeals to this Court were only permitted on a question of law. In Rose v Tunstall [2018] NSWCA 241, Payne JA (Basten JA and Simpson AJA agreeing) referred with approval to Lesley-Swan v Owners SP 32735 [2013] NSWSC 1635, where Beech-Jones J said:

17. [113]

    Given that there has been a mixed outcome in the Local Court proceedings on the ownership issue (on which DMC succeeded) and the fraud issue (on which DMC failed) and taking into account the parties’ relative success or failure on other contested issues such as the damage issue (on which DMC partly succeeded), it is appropriate to entertain the process of apportioning costs as between different issues in the proceedings. In general such an exercise will be carried out on a relatively broad-brush basis, and largely as a matter of impression and evaluation by the court: Doppstadt at [19]; James v Surf Road Nominees Pty Limited (No 2) [2005] NSWCA 296 at [36]; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 at [22]; Sze Tu v Lowe (No 2) [2015] NSWCA 91 at [40]-[41].

18. [114]

    In my view, having regard to DMC’s respective successes and failures on discrete and severable issues in the Local Court, and accepting the Magistrate’s assessment of the amount of the trial spent on the fraud issue, Joseph Gabriel should pay 50 per cent of DMC’s costs in the Local Court (being the time spent relating to issues on which DMC succeeded) and DMC should pay 50 per cent of Joseph Gabriel’s costs in the Local Court (being the time spent relating to issues on which DMC failed). These costs orders should be set-off and there should be no order for costs as between DMC and Joseph Gabriel in the Local Court.

C. COSTS OF THE APPEAL TO THE SUPREME COURT

1. [115]

   The next question is what consequential costs order should be made with respect to the partially successful appeal from the Local Court to the Supreme Court.

2. [116]

   DMC contends that the appropriate costs order, assuming the only relief Joseph Gabriel obtains is varying the costs order in the Local Court, is:

3. [117]

   Joseph Gabriel contends that the appropriate costs order is that made by Adamson J in order 5 of her Honour’s costs judgment (see [16] above), subject to one amendment. The proposed amendment to her Honour’s costs order is that DMC pay Joseph Gabriel’s costs of DMC’s motion to disqualify Adamson J for apprehended bias (rather than 75 per cent of those costs), given that DMC wholly failed in that motion and has not sought to appeal the outcome. Accordingly, Joseph Gabriel proposes the following costs order:

4. [118]

   DMC submitted by reference to the parties’ submissions in the Supreme Court proceedings and in this Court that only a very small part of the Supreme Court proceedings (and virtually none of the proceedings in this Court) concerned the question of whether the Magistrate’s discretion as to costs miscarried. In those circumstances it was submitted that Joseph Gabriel lost on all issues in the Supreme Court proceedings except one that took up very little of the Court’s time.

5. [119]

   DMC accepted that it should not be awarded the costs of its two unsuccessful interlocutory applications in the Supreme Court proceedings, and submitted that Mr Gabriel should also not be awarded his costs of those applications given the overall lack of success that he had in the Supreme Court proceedings. Those applications were to strike out the proceedings on the ground that the appeal was incompetent as having been filed out of time, which was dismissed by Walton J on 1 November 2018: Gabriel v Grech [2018] NSWSC 1652, and an application for security for costs filed 19 months after the commencement of the appeal, which Harrison AsJ refused on 11 September 2019: Gabriel v Grech [2019] NSWSC 1163.

6. [120]

   Joseph Gabriel submitted that in circumstances where he has succeeded in the Supreme Court proceedings on an alternative ground to that found by Adamson J, there is little significance of that fact to the appropriate costs outcome in the Supreme Court proceedings. The submission continued that DMC took multiple steps that prolonged and delayed the determination of the appeal in the Supreme Court, including two significant motions which were said to be unnecessary, misconceived and wholly unsuccessful. In addition, the notice of contention filed by DMC was wholly dismissed by Adamson J, and DMC’s application for disqualification of Adamson J was unsuccessful: Gabriel v Grech (No 6) [2020] NSWSC 1220.

7. [121]

   It was further submitted that Joseph Gabriel’s principal concern in the appeal from the Local Court was setting aside the Magistrate’s costs order and that order overwhelmed the substantive amount in issue by a significant magnitude. An order that DMC pay Joseph Gabriel’s costs of the Supreme Court proceedings would simply reflect the general rule that costs follow the event.

Decision

1. [122]

   The approach to the assessment of costs where there has been a mixed outcome in the proceedings is well-established. In Sze Tu v Lowe (No 2), I said, with the agreement of Meagher and Barrett JJA at [40]-[41]:

2. [123]

   If one looks at the appeal to the Supreme Court, in my view, Joseph Gabriel has succeeded insofar as the costs order in favour of DMC should be set aside, but otherwise has been unsuccessful against Mr Grech and DMC. DMC has been successful in upholding the Magistrate’s finding on ownership of the car, but unsuccessful on its notice of contention that Joseph Gabriel had suffered no loss (assuming Joseph Gabriel had made out his ground of appeal on the pleading issue or the ownership issue). DMC was also unsuccessful on its three interlocutory applications.

3. [124]

   In monetary terms, although Joseph Gabriel has failed to set aside his liability to Mr Grech in the sum of $21,942.77 plus costs, he succeeded in setting aside his liability for 50 percent of DMC’s costs in the Local Court, which, as indicated, were said to be $365,000 before assessment. Even after assessment of costs, the amount of Joseph Gabriel’s success in reducing his costs liability to DMC in the Local Court will most likely substantially outweigh his failed claim against Mr Grech for damage to the car.

4. [125]

   It is appropriate to make separate costs orders with respect to DMC’s three interlocutory applications; the costs of those discrete applications should follow the event: UCPR, r 42.1. Here the “event” is Joseph Gabriel’s partial success on the appeal from the Local Court. That Joseph Gabriel’s success was limited to setting aside the costs order in the Local Court is not a sufficient reason not to award him costs of these applications. DMC should pay Joseph Gabriel’s costs of those three applications.

5. [126]

   Subject to those separate costs orders, it is preferable, in my view, to make a costs order which is the result of an overall assessment reflecting the respective successes of the parties on the appeal to the Supreme Court, rather than separate orders directed to specific issues on which one or other of the parties was successful. I do not consider that an issue-by-issue approach to the grounds of appeal and the notice of contention will produce a result that is fairer than looking at the remaining aspects of the matter globally.

6. [127]

   Adopting this approach, it is necessary to keep in mind that Joseph Gabriel’s success on the appeal in terms of setting aside the Magistrate’s costs order results in the reduction to nil of his costs liability to DMC in the Local Court, compared to his failure to set aside his liability to Mr Grech and his failure to obtain relief on Mr Grech’s cross-claim against DMC, which ultimately was not pursued. Balancing both the time spent on the respective issues and the monetary significance of those issues, I would set-off the costs of the issues on which Joseph Gabriel won against the costs of the issues on which DMC won, including those which Joseph Gabriel did not pursue.

7. [128]

   In the result the appropriate costs order in the Supreme Court proceedings is: (a) DMC to pay Joseph Gabriel’s costs of DMC’s notice of motion to strike out the proceedings, DMC’s notice of motion for security for costs, and DMC’s notice of motion to disqualify Adamson J for apprehended bias, and (b) otherwise there be no order for costs of the proceedings in the Supreme Court.

D. COSTS IN THIS COURT

1. [129]

   DMC contends that both Joseph Gabriel and Mark Gabriel should in any event pay DMC’s costs of the proceedings in this Court.

2. [130]

   Joseph Gabriel contends that DMC should pay Joseph Gabriel’s costs of the proceedings in this Court, assessed on the ordinary basis.

3. [131]

   DMC submitted that, on any view of the matter, DMC has been successful in the appeal, and to the extent that Joseph Gabriel has been successful in disturbing the Magistrate’s costs orders, that arises from arguments that he did not annunciate in either the Supreme Court or this Court, until granted leave at the end of oral argument.

4. [132]

   Joseph Gabriel submitted that if the appeal to the Supreme Court against the Magistrate’s costs order is allowed and a substituted costs order imposed, then Joseph Gabriel has been wholly successful, and costs should follow the event.

5. [133]

   It was further submitted that the fact that the appeal to this Court was concerned principally with the pleading issue was because that was the only ground determined by Adamson J, and it was reasonable of Joseph Gabriel to assume that the undetermined ground of appeal and leave to appeal against costs was subsumed within the “unfinished business” which would be remitted to Adamson J. It is those matters which determined the prominence of issues in submissions in this Court.

Decision

1. [134]

   In assessing the appropriate costs order in this Court, a distinction should be made between the costs involved in addressing the appeal on ground 1 and the costs in relation to the consequences of the upholding of that ground, which required the disposition of grounds 1B and 2 in the appeal from the Local Court to the Supreme Court, as well as the appropriate costs order in the Supreme Court appeal.

2. [135]

   In this Court, DMC was successful in relation to the pleading issue, which was the principal issue in the appeal to this Court until it was conceded at the hearing. The concession of error by the primary judge was only made belatedly. In the circumstances, Joseph Gabriel should pay DMC’s costs of the appeal up to and including the hearing on 23 February 2021.

3. [136]

   The costs incurred in this Court after 23 February 2021 concerned the disposition of the remaining grounds of appeal from the Local Court to the Supreme Court. Those costs should be dealt with in the same way as the costs of the Supreme Court proceedings.

4. [137]

   Accordingly, the appropriate costs order in this Court is: (a) Joseph Gabriel to pay DMC’s costs of the proceedings in this Court up to and including the hearing on 23 February 2021, and (b) there be no further order for costs in this Court after 23 February 2021.

5. [138]

   In respect of DMC’s separate application for leave to appeal against the costs order of Adamson J, this application for leave to appeal became otiose once DMC succeeded on the pleading issue. The appropriate order is that the summons seeking leave to appeal be dismissed with no order as to costs.

Orders

1. [139]

   I propose the following orders:

   1. (1)

      Grant leave to appeal in relation to ground 1 of the draft amended notice of appeal contained in Tab 2 of the combined White Folder.

   2. (2)

      Direct the applicant to file the draft amended notice of appeal within 7 days.

   3. (3)

      Appeal allowed.

   4. (4)

      Set aside:

   5. (5)

      In lieu, make the following orders on the appeal from the Local Court to the Supreme Court:

   6. (6)

      Joseph Gabriel to pay DMC’s costs of the appeal to this Court up to and including the hearing on 23 February 2021.

   7. (7)

      No order as to the costs in this Court after 23 February 2021.

   8. (8)

      Summons seeking leave to appeal filed 4 December 2020 dismissed with no order as to costs.