Huang v Drumm

On 23 January 2015 the plaintiff, Biru Huang, commenced proceedings in the Local Court of New South Wales against Bernard Drumm. By a Second Amended Statement of Claim filed 14 June 2016 the plaintiff sought an order that Mr Drumm pay her the sum of $77,193.70 pursuant to an alleged oral contract, in the alternative as a result of “unjust enrichment”. In a Reply dated 17 November 2016 the plaintiff alleged an estoppel arising from what was said to be an acquiescence by the defendant in the plaintiff continuing to advance money to him.

The amount of the claim was in two parts. The plaintiff claimed $34,793.70 in respect of costs and disbursements paid by the plaintiff, allegedly on the defendant’s behalf, in proceedings in this Court against a Dr Mackintosh between July 2011 and September 2014. The second part of the claim was for $42,400 in respect of documents stored at the plaintiff’s premises in Brisbane, allegedly on the defendant’s behalf, between May 2011 and November 2014. The claim was particularised at a rate of $200 per week for 212 weeks.

The Supreme Court proceedings commenced in 2010 (the SC 2010 proceedings) involved a trust known as Corporate Consulting Services Trust which sought to recover a sum for professional services provided on behalf of the Trust by a Mr Neville James Gibson to Dr Mackintosh. The plaintiffs in that claim were Mr Gibson who was the final beneficiary of the Trust, the defendant as trustee of the Trust and a Ms Xiao Yan Huang. One of Mr Gibson’s sisters, Donna Ojia, had been the trustee of the Trust until 2010. At that time the Trust was known as the Neville James Gibson Family Trust. At some time around April 2010 its name was changed to Corporate Consulting Services Trust, and the defendant was appointed trustee on the retirement of Mr Gibson’s sister.

In December 2014 the defendant and Dr Mackintosh settled those proceedings on a walk-away basis. On 20 February 2015 the plaintiff became the trustee of the Trust in place of the defendant.

Although the plaintiff was not a party to those proceedings, she had paid certain costs and disbursements in respect of them and allegedly stored documents in relation to those proceedings at her home. It appears that Mr Gibson was the moving party in relation to the proceedings, at least in the sense that he had provided the services on behalf of the Trust and he was the beneficiary of the Trust (see the plaintiff’s evidence on 8 December, 2016 at Court Book 599-601), and the arrangements in relation to the payment of the costs and disbursements by the plaintiff appear to have been made by him.

The proceedings in the Local Court ran for 14 days between 8 December 2016 and 2 November 2017. On 2 November 2017, at the end of the plaintiff’s submissions, Magistrate Barnett delivered a lengthy ex tempore judgment. He found against the plaintiff and entered a verdict and judgment in favour of the defendant.

Subsequently, on 23 November 2017, and in the absence of the plaintiff who failed to appear, his Honour read and heard submissions on costs and delivered another ex tempore judgment. His Honour made an order for a lump sum of $63,229 in favour of the defendant made up of $25,875 for the defendant’s solicitor’s attendance at Court for the 15 days, $27,300 for the defendant’s counsel for those 15 days and $10,054 for the cost of the transcripts of the hearing. The Magistrate otherwise ordered costs as assessed or agreed up until 6 December 2016 on the ordinary basis and thereafter as assessed or agreed on an indemnity basis. The order for indemnity costs was made on the basis of an Offer of Compromise served by the defendant on 6 December 2016.

On 30 November 2017 the plaintiff filed a summons in this Court appealing against the judgments of the Magistrate. On 18 April 2018 she filed an amended summons containing some 17 grounds in relation to the principal judgment and six grounds in relation to costs. The amended summons expressly said that it was brought under s 39 of the Local Court Act 2007 (NSW).

By a notice of motion filed 12 April 2018 the defendant sought orders that the summons be dismissed pursuant to r 12.7 Uniform Civil Procedure Rules 2005 (NSW) on the basis of a want of due dispatch of the appeal. In the alternative, orders were sought that the summons be struck out under r 14.28 on the basis that the appeal as pleaded in the amended summons was embarrassing and/or did not disclose grounds of appeal identifying errors of law.

The motion was heard by Adams J on 18 April 2018. Her Honour declined to dismiss the summons on the basis of a lack of due dispatch but struck out a large number of the grounds of appeal on the basis that they did not identify errors of law.

The remaining grounds are these:

The plaintiff was legally represented in the Local Court proceedings up to the end of the second day’s hearing. Thereafter she acted for herself although she seems to have had some considerable assistance from Mr Gibson.

After the hearing before Adams J the proceedings were adjourned to the Registrar’s List on 30 April 2018. On that day there was no appearance for the plaintiff. The Registrar fixed the matter for hearing commencing 14 August 2018 with a two-day estimate. Directions were made in relation to the preparation of a court book that was principally to be prepared by the defendant. However, a direction was made that the plaintiff was to serve any supplementary volume to the court book by 4 June 2018. The plaintiff was also directed to serve written submissions on the defendant by 4 June 2018.

The defendant duly prepared a court book but that court book was not supplemented by any material from the plaintiff. The plaintiff did not serve written submissions by 4 June 2018 or at all until during the hearing before me.

On the evening of 8 August 2018 the plaintiff filed and served a notice of motion seeking an order that the appeal be adjourned “pending independent investigation of corruption of court process” and an order seeking to “strike in” grounds of appeal 5, 8, 14, 15, 16 and 17 that had been struck out by Adams J on 18 April 2018. The plaintiff filed an affidavit in support which said that she had assembled some 40,000 to 50,000 documents in relation to Corporate Consulting Services Trust. She said that from an examination of those documents there was an orchestrated campaign against Mr Gibson which amounted to a criminal enterprise, with the result that the matters needed to be investigated “by the Corruption Commission and other relevant independent governmental bodies prior to my appeal being heard”. The affidavit attached a large number of documents which appeared to go to the substance of the proceedings in the Local Court. The affidavit also suggested that her grounds of appeal had been unfairly and inappropriately removed from her appeal, and she sought that they be reinstated.

The plaintiff also relied on an affidavit that she had sworn on 6 July 2018. She said she made that affidavit to set out the difficulties she had encountered in preparing her submissions on the appeal. The affidavit complained of the striking out of the grounds of appeal by Adams J and sought that the matter be re-listed to have the grounds “struck back in”. The affidavit said that she wished to advise that she had been in China between 5 and 29 June 2018.

The application for an adjournment was referred to the List Judge, Fagan J on 10 August 2018.

The transcript of that day relevantly discloses the following:

Despite what had been said by Fagan J, and instead of preparing written submissions, the plaintiff swore a further affidavit on 11 August 2018 which was filed on the morning of 12 August. In that affidavit the plaintiff said that she made the affidavit in support of the adjournment of the hearing of the appeal. She said that the affidavit was a supplement to her earlier affidavit of 8 August 2018. The affidavit, some 91 paragraphs in length, annexed with explanations a large number of documents that appeared to relate to the documents she had annexed to her affidavit of 8 August 2018.

When I received the file in this matter on 13 August, I asked my Associate to write to the plaintiff directing that her submissions be emailed to my Associate as soon as possible on 13 August 2018. On the morning of 14 August 2018 my Associate found an email sent at 10:54pm on 13 August from the plaintiff saying that she had only just seen my Associate’s email. She said she was struggling “to meet time” with the body of material she had. She said she was still working on her submissions and she would send them through as soon as she was able to do so.

When the matter was called on for hearing before me on 14 August 2018 the plaintiff again sought an adjournment. I refused the adjournment. In doing so, I had regard to what Fagan J had said in response to the plaintiff’s application on 10 August 2018. I also considered that there was no proper basis justifying an adjournment or any further delay in hearing the present appeal. The matter involved a claim for $77,000 which had taken 15 days to hear and determine in the Local Court. The appeal to this Court was filed on 30 November 2017 and had not been significantly advanced until the defendant’s motion of 12 April 2018. The costs were already vastly disproportionate to the amount in issue.

I enquired of the plaintiff about her written submissions and she told me that she was still working on them. She thought that the hearing had been fixed for two days which, she suggested, would have enabled her to complete the submissions by the second day. I informed her, partly because of what Fagan J had told her regarding the hearing and partly because I considered that a two-day hearing in all the circumstances was out of proportion to the issues raised on the appeal, that the matter would conclude in one day.

Mr Gibson was present. The plaintiff asked if he could assist her as a Mackenzie friend. I permitted him to act in that role. Mr Gibson then sought to be added as a party to the appeal on the basis that he had been a witness in the court below. I declined to join him to the appeal. I considered that there was no proper basis on which he ought to be a party to the appeal. He had not been a party to the proceedings below and there was nothing to suggest that he had any interest in the outcome of the appeal.

The plaintiff then commenced to address me. It was apparent that she was not able to make submissions and answer my questions without constant prompting from Mr Gibson. Eventually the plaintiff requested that Mr Gibson be given leave to make submissions on her behalf. The defendant did not consent to this course. However, having regard to the fact that English was clearly the plaintiff’s second language and having regard to her need constantly to enquire from Mr Gibson what she should say, I considered that the better course was that he be permitted to address me. At the conclusion of his submissions I enquired of the plaintiff if Mr Gibson had addressed me on all of the matters the plaintiff wished to raise. She indicated that he had.

The background to this issue, as best I could understand it from what Mr Gibson told me, was that the plaintiff wished to cross-examine the defendant on affidavits he had sworn in the SC 2010 proceedings to show that there were inconsistencies between those affidavits and documents created or signed by the defendant at earlier times.

The issue particularly arose during cross-examination of Mr Drumm on 25 July 2017. Objection was taken by counsel for the defendant that the plaintiff had not been able to establish that the affidavits which she sought to put to the defendant were able to be used in that way because of the implied undertaking that they would only be used in the proceedings in which they were sworn and filed. The learned Magistrate explained to the plaintiff about the implied undertaking without mentioning Hearne v Street (2008) 235 CLR 125; [2008] HCA 36 by name, but by simply referring to what the High Court had said. The following exchange then occurred (at court book 1367):

A little later on, and immediately before the luncheon adjournment on that day, the Magistrate handed to the plaintiff a copy of Hearne v Street and referred her particularly to paragraphs [46]-[65].

A little later on that day the plaintiff wished to ask further questions of the defendant in relation to inconsistencies between documents and his affidavits. The following exchange occurred:

The affidavit of Mr Drumm sworn 18 October 2013 was marked MFI Y. Counsel for the defendant said:

The plaintiff then continued to cross-examine Mr Drumm, and he made admissions that what appeared in certain paragraphs of that affidavit contradicted notes on his file made in October 2010. He said the file note was correct. His explanation for what was contained in the affidavit was that it had been prepared by Mr Gibson and emailed to him to have it signed urgently. He said he did not read the affidavit in great detail at the time.

Immediately before adjourning on that day the transcript discloses the following:

The following day, the plaintiff provided to the defendant’s counsel a list of topics. That document was marked AA in the court below and was marked Exhibit 1 at the hearing before me. The document did not refer to any of the affidavits sworn by the defendant in the SC 2010 proceedings. Nevertheless, the plaintiff cross-examined the defendant about inconsistencies in his affidavit of 30 October 2014 (the transcript refers to the affidavit as being sworn on 13 October but that is a transcript error). Again, the defendant agreed that his earlier notes were correct and the affidavit was incorrect. The plaintiff thereafter tendered the affidavit sworn by Mr Drumm in October 2014. It was admitted as Exhibit 10.

The Magistrate then asked the plaintiff what questions she wanted to ask the defendant. She said that she had an email. The following exchanges then occurred:

At the conclusion of the defendant’s evidence the Magistrate said this to the plaintiff:

An issue then arose about whether documents marked as MFIs had been admitted into evidence. The transcript discloses the following:

The learned Magistrate then permitted the defendant to be recalled for further cross-examination. When that was concluded the following exchanges occurred:

His Honour then explained to the plaintiff that all the evidence in the matter had concluded. He said that evidence consisted of all the documents that had been tendered, which meant all the documents in the court books and included the exhibits tendered in her case which numbered 1-10. He said it included all of the evidence that had been given by witnesses in the witness box in the course of examination in chief, cross-examination and re-examination.

Counsel for the defendant then commenced his closing address. The matter was subsequently adjourned to 1 November 2017 so that addresses could be completed.

In the interim, the solicitors for the defendant wrote to the plaintiff on 25 September saying this:

The solicitors wrote again on 20 October 2017 saying this:

When the proceedings resumed on 1 November 2017 without any notice to the solicitors for the defendant or the Court, the plaintiff sought to tender a number of affidavits sworn by Mr Drumm in the SC 2010 proceedings that had been marked for identification before the Magistrate. The Magistrate was informed of the two letters written by the solicitors for the defendant to the plaintiff and the fact that there had been no reply to them. The Magistrate sought to ascertain the purpose for which the plaintiff wished to tender the affidavits. She said that Hearne v Street did not apply to the circumstances before the Magistrate. She said that she wanted to rely on the affidavits to show the defendant’s involvement in the SC 2010 proceedings and the inconsistencies between those affidavits and the other documents.

The Magistrate pointed out that she had previously been invited to make submissions, after an adjournment, about why the objection taken by counsel for the defendant in accordance with Hearne v Street was not a correct objection. It was pointed out that the objection by counsel for the defendant had been withdrawn and she had been allowed to cross-examine on the affidavits. The Magistrate reminded the plaintiff of what had transpired on 26 July and how, particularly, she had said that she did not want to re-open her case to present further evidence. He continued:

A number of things emerge from those portions of the transcript. First, the Magistrate did not reject the tender of the affidavits on the basis of the implied undertaking referred to in Hearne v Street. Secondly, the plaintiff was given a number of opportunities after explanation from the Magistrate to tender documents she wished to put into evidence at earlier times. Thirdly, she was given detailed explanations about what was and what was not in evidence before addresses began by both the Magistrate and the solicitors acting for the defendant. Fourthly, the objection based on Hearne v Street had been withdrawn and the plaintiff was permitted to cross-examine the defendant on those affidavits. Fifthly, the Magistrate was not satisfied that admitting the affidavits into evidence would prove anything more than had been admitted by the defendant in his evidence. Indeed, she tendered one of those affidavits following the cross-examination.

I put to Mr Gibson that the objection based on Hearne v Street had been withdrawn and the Magistrate had given the plaintiff a number of opportunities to tender documents that she wanted. Mr Gibson agreed that she declined to tender the documents when offered the opportunity but said that the plaintiff as a litigant in person was confused and thought that an earlier exchange between the Magistrate and the plaintiff had dealt with the tender of the affidavits. Mr Gibson was not able to point to that part of the transcript that he referred to as the “earlier exchange”. My examination of the transcript indicates that nothing had earlier been finally determined because the plaintiff persisted with her desire to cross-examine the defendant on the basis of the affidavits. Moreover, after doing so in relation to the affidavit of 30 October 2014 she tendered that affidavit.

The decision of the Magistrate to refuse the plaintiff the right to re-open and tender the affidavits that were marked as MFIs was not made on the basis of the decision in Hearne v Street. It was made on the basis that the plaintiff had been given a number of opportunities, after explanation, to tender what documents she wanted, and that, by the time she came to make the application on 1 November, she could not point to any basis for those affidavits being admitted into evidence where she had obtained admissions from the defendant concerning his involvement in the proceedings and about inconsistencies in those affidavits.

This ground is not made out.

I sought on a number of occasions to ascertain from Ms Huang and Mr Gibson whether they were relying on actual bias or apprehended bias. They said, without differentiating amongst the various pleaded assertions of bias in ground 13, that they relied on both. However, the way the matter was put in submissions suggested that the matters complained of when viewed together demonstrated apprehended bias. I repeatedly sought from them indications from the transcript of where actual bias was demonstrated, particularly because pre-judgment and a closed mind were asserted. I was not taken to any portions of the transcript in relation to these grounds.

The submissions in relation to bias concentrated on errors said to be have been made by the Magistrate in reaching his decision. Some or all of these errors were said to result in improbable findings or conclusions.

In the written submissions handed to me at the hearing after morning tea by Mr Gibson, the plaintiff set out various principles of law concerning the test for establishing actual bias and apprehended bias. The submissions properly identified the tests and some of the significant cases which have dealt with the principles concerning bias. However, the submissions say nothing about the way the Magistrate in this case was said to have demonstrated actual bias, nor the matters which constituted an apprehension of bias.

In Reid v Commercial Club (Albury) Ltd [2014] NSWCA 98 Gleeson JA (with whom Emmett JA and Tobias AJA agreed) said:

In Michael Wilson & Partners Limited v Nicholls & Others (2011) 244 CLR 427; [2011] HCA 48, the joint judgment of Gummow ACJ, Hayne, Crennan and Bell JJ said:

It is apparent from what is said in Reid that an allegation of actual bias must be distinctively made and clearly proved, such a finding should not be lightly made, and cogent evidence is required.

I asked the plaintiff at an early stage of her submissions if she was saying that the Magistrate was actually biased or if there was an apprehension of bias. The plaintiff replied:

During the course of submissions being made on the plaintiff’s behalf I repeatedly asked Mr Gibson to identify matters in the transcript which demonstrated actual bias on the part of the Magistrate. I informed him that it was not part of my task as a judge sitting on an appeal based on error of law to read the transcript to find matters.

In Chamoun v District Court of New South Wales [2018] NSWCA 187 the Court of Appeal has said at [37], following Michael Wilson, at [63], that there is a two stage process in the application of the apprehension of bias principle:

Similarly, where actual bias is alleged, there is first the need to identify what has been said or done by the judge to demonstrate actual bias. At no stage was I taken to any part of the transcript at all, let alone a part which indicated actual bias on the part of the Magistrate.

Reference was made by Mr Gibson, and more indirectly by the plaintiff herself, to the opening address by counsel for the defendant, and to the fact that the Magistrate was biased from an early time in the transcript. It was suggested that the defendant’s counsel’s opening address shifted the focus of the case, and that the Magistrate’s background in the criminal law and his supposed lack of knowledge of the Uniform Civil Procedure Rules when taken together demonstrated bias.

I have read the transcript of the first day up to the time the plaintiff commenced to give her evidence. It must first be remembered that the plaintiff was represented by her lawyer Ms Leung for the first two days of the trial. Secondly, the Magistrate’s interventions during opening addresses were only to clarify matters. He did not express any views. Thirdly, the Magistrate said that he had not even read the various affidavits filed by the time of the opening addresses. Nothing that is recorded there could in any way indicate actual bias, nor could there be an apprehension of bias using the test in the authorities earlier set out.

Although my attention was not directed to it, since the plaintiff was unrepresented, I have read carefully the judgment of the Magistrate to see if there were indications of actual bias in that judgment. The Magistrate set out (at T 62, 2/11/17) the matters the plaintiff needed to prove to succeed on her claim. His Honour also needed to make findings as to the three witnesses who gave evidence: the plaintiff, the defendant and Mr Gibson. His Honour ultimately accepted the evidence of the defendant but not without some criticism. His Honour said (at T66-67):

Counsel for the defendant submits that the word “not” was intended in that extract but was either accidentally omitted by the Magistrate or not transcribed. I agree that the context points strongly to that being the case. It is also supported by the Magistrate considering the objective evidence to assess each of the witnesses and finding that the objective evidence supported the defendant’s account, but did not support the accounts of the plaintiff and Mr Gibson. It is of some significance, in that regard, that none of the matters raised in grounds 10 and 13 challenged the assessment of the support or lack of support for the credibility of the witnesses.

The criticisms made of the defendant tend against any view that the Magistrate was actually biased.

In any event, a reading of the matters set out in ground 13 that are said to demonstrate bias, points strongly against their being matters demonstrating actual bias. All of the matters set out in paragraph 13, taken at their highest, could point only to apprehended bias by the Magistrate having said or done particular things during the course of the hearing.

I reject grounds 10 and 13 insofar as they seek to establish actual bias on the part of the Magistrate.

Submissions made by the plaintiff and on her behalf distinguish no bright line between assertions of actual bias and assertions of apprehended bias. Having dealt with those matters that appeared, by what was said in the submissions, to be called in aid of the assertions of actual bias, I will now deal with other matters raised which, at their highest, could only support an apprehension of bias. The matters identified were these:

It should be said that, as with the assertions of actual bias, I was not taken to any parts of the transcript to provide support for those assertions that I have listed, where the Magistrate was asserted to have done particular things during the course of the trial. For example, I was never taken to the notice of motion of July 2017 to understand the point being made. As far as I can ascertain, it did not form part of the Court Book.

Mr Gibson, on behalf of the plaintiff, relied upon the cumulative effect of these matters to say that the plaintiff gained the impression that the decision reached was not a fair one and that there was an apprehension of bias. Of the matters listed, two things were emphasised repeatedly. The first was said to be the refusal of the Magistrate to admit the evidence the plaintiff wished to tender. That matter has been dealt with already in relation to ground 7. Although it was accepted on behalf of the plaintiff that she failed to tender the material she wanted admitted into evidence when given the opportunity on a number of occasions, the explanation given by Mr Gibson was that she was confused and that she believed a ruling had been made already which prevented her from tendering the documents. There was no evidence to that effect. It was a statement made from the bar table. It must be seen in the light of the material set out from the transcript and from the letters from the defendant’s solicitors in the discussion about ground 7 above. Even, however, if the Magistrate erred in not admitting the material into evidence, that would not form any basis for a ground of apprehended bias. It was not suggested that the Magistrate had taken unfair advantage of the plaintiff. Indeed, the extracts set out above and others demonstrate that the Magistrate probably went beyond what he was required to do to assist a litigant in person.

The second matter emphasised was the Magistrate’s ultimate finding, although a finding incidental to the real issues in the proceedings, that the proceedings were effectively being run by Mr Gibson. Regardless of whether the Magistrate was right or wrong in having the view that the defendant was a nominal plaintiff, the real issues in the case were whether he had ever been party to a three-way agreement to pay back Ms Huang for the monies she paid and, secondly, whether or not he knew and/or agreed to pay her for document storage at her premises.

Mr Gibson himself admitted that he was:

What the Magistrate said about this matter immediately following the passage set out at [57] above was this:

I do not consider that any of the matters identified on behalf of the plaintiff in her submissions give rise to any apprehension of bias. No fair-minded lay observer might reasonably apprehend from those matters, particularly knowing the detailed explanations given to the plaintiff about procedure, and knowing of the indulgences granted to her, that the Magistrate might not bring an impartial and unprejudiced mind to the resolution of the questions he was required to determine.

These grounds should be rejected.

Under s 40(2)(c) of the Local Court Act a party who is dissatisfied with an order as to costs may only appeal to this Court by leave of this Court. No leave was sought in the amended summons, but I was informed by counsel for the defendant that it was agreed that the plaintiff made clear when the matter was before Adams J that she sought leave to argue those grounds. The defendant took no point that she was not permitted to argue them.

In Zelden v Sewell Henamast Pty Limited v Sewell [2011] NSWCA 56 Campbell JA (Young JA agreeing) said at [22]:

In Jaycar Pty Limited v Lombardo [2011] NSWCA 284 Campbell JA (Young and Meagher JJA agreeing), having repeated his remarks in Zelden above, went on to say at [46]:

The result is that a party seeking leave to appeal must point to something more than error.

The six grounds of appeal deal, in substance, with three matters. The first is the refusal of the Magistrate to adjourn the proceedings when the plaintiff did not appear for the costs hearing on 23 February 2018. The second concerned the plaintiff’s notice of motion for a gross sum costs order and the way it was dealt with by the Magistrate. The third concerned the order for indemnity costs not dealt with by the gross sum costs order.

On 14 December 2017, following an exchange of written submissions on costs, Magistrate Atkinson fixed the costs hearing before Magistrate Barnett on 23 February 2018. On that day at 9:24am the plaintiff sent an email to the Court which attached a document entitled “Memorandum”. That document relevantly said this:

At 9:41am the plaintiff sent a further email to the Court attaching a copy of her ticket on Virgin flight VA0904 leaving Brisbane at 5:30am and arriving in Sydney at 8:05am. The defendant tendered a record demonstrating that the Virgin flight left and arrived ahead of departure time.

At 11:01am the Magistrate caused the Registry of the Local Court to send an email to the plaintiff which read:

At 12:36pm no response had been received by the Court.

The Magistrate then delivered a judgment refusing to adjourn the costs hearing. He did so on a number of bases. One was the plaintiff’s failure to explain adequately why she did not catch the second flight and appear late. Secondly, she did not respond to the email from the Court requiring a response by 11:50am. Thirdly, the proceedings had been delayed many times by the conduct of the plaintiff. Fourthly, the Magistrate accepted the submission on behalf of the defendant that costs proceedings were frequently dealt with on the papers in chambers. In this case written submissions had been filed. Finally, the Magistrate had regard to a notice of motion which the plaintiff had filed in relation to costs. His Honour said that that notice of motion should be treated as one under r 36.16(3A) which enables the setting aside or varying of a judgment if application is made within 14 days in respect of certain judgments, of which a costs judgment was one.

The Magistrate’s decision to refuse the adjournment was a discretionary one. It would be necessary for the plaintiff to point to an error of the type discussed in House v The King (1936) 55 CLR 499; [1936] HCA 40. In circumstances where written submissions had been filed and no satisfactory explanation given for the plaintiff’s non-appearance, I do not consider that the discretion not to adjourn miscarried.

Ground 17 is expressed in a confusing way. It seems to assume that the Magistrate dismissed the plaintiff’s notice of motion for a gross sum costs order. That was not the way the Magistrate dealt with the matter. His Honour made a gross sum costs order on the defendant’s application and then said:

On 6 December 2016, two days before the first day of the hearing, the solicitors for the defendant served an Offer of Compromise on the solicitors for the plaintiff. In the Offer of Compromise the defendant offered a judgment in favour of the defendant, that the proceedings be dismissed, and that no order be made as to costs with the intent that each party bear their own costs of the proceedings. The covering letter said that the defendant’s costs to date were approximately $95,000 including counsel’s costs. The letter went on to say:

The letter went on to say that if the plaintiff accepted the terms of the Offer of Compromise, she would not be required to meet any of the defendant’s costs in the proceedings but that, even if she was successful at the final hearing, she would still be required to meet the costs order referred to earlier that had been made by Magistrate Atkinson. The figure of $27,063.23 was what was claimed for the costs thrown away. The costs were assessed subsequently at $16,000.

The following day the solicitors for the plaintiff wrote rejecting the Offer of Compromise, and offered to settle the proceedings on the basis that the defendant paid to the plaintiff the sum of $30,000 in full and final settlement of the Local Court proceedings, that each party was to bear their own costs of those proceedings and that the defendant consented to indemnify the plaintiff for the sum of $19,695.30 by ways of costs ordered in favour of a Mr Charles Thornley in District Court proceedings involving the plaintiff.

On December 2016 the solicitors for the defendant sent a Calderbank letter rejecting the offer from the plaintiff and offering to pay the plaintiff $15,000 to settle the matter with each party to bear their own costs of the proceedings.

The Magistrate held that the refusal of the plaintiff to accept either of the offers from the defendant to her of 6 and 8 December was unreasonable. Whilst that was a necessary determination for the Calderbank letter, it was not a necessary determination in respect of the Offer of Compromise. UCPR r 42.15 provides that, where the plaintiff obtains a judgment no more avourable to the plaintiff than the terms of the offer, the plaintiff is entitled to an order for costs assessed on the ordinary basis up to the time at which the defendant becomes entitled to indemnity costs. In relation to the offer of 6 December 2016 that time was the day following that on which the offer was made.

After I had reserved my judgment in the matter, my Associate received an email from the plaintiff in relation to the estimated amount of $27,063.23 which was reduced on assessment to $16,000 (referred to at [84]-[85] above). The email is difficult to understand, so I should set it out. It reads:

I do not know what misunderstanding is being referred to. It was clarified during submissions that an order had been made that the plaintiff was to pay costs thrown away by reason of an amendment and the filing of new evidence that changed the way the plaintiff was putting her case. The estimate in the covering letter forwarding the Offer of Compromise of $27,063.23 was subsequently assessed by a costs assessor at $16,000. According to Mr Gibson, the plaintiff has paid that amount to the defendant.

An Offer of Compromise does not have to satisfy a test of unreasonableness. However, the Magistrate found that, having regard to what was contained in the covering letter, it was unreasonable for the plaintiff not to have accepted the offer. The defendant was not only offering to pay his own costs, he was offering to waive the requirement for the plaintiff to pay what ultimately turned out to be $16,000. Whether the Magistrate’s judgment on the point was discretionary or evaluative, it cannot be said to be in error. Viewed objectively in the light of the costs ordered and those otherwise expended, the offer was a considerable compromise by the defendant.

The plaintiff, in submissions made on her behalf, did not appear to disagree that, in the ordinary course, no error could be demonstrated by the Magistrate in ordering indemnity costs, as he did, from 7 December 2016 on the basis of the Offer of Compromise. The plaintiff, however, challenged the order for indemnity costs on the basis that the Magistrate ought to have heard the plaintiff’s motion whereby she received an order for costs that were payable partly by the defendant and partly by some legal advisors including the solicitor for the defendant. That submission was said to be based on disentitling conduct of both the defendant and those other persons. That was not the basis of ground 19 in the amended summons. Reference was made by the plaintiff to Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [40] and [69] and G R Vaughan Holdings Pty Ltd v Vogt [2006] NSWCA 263 as to the effect of disentitling conduct on costs.

Assertions of disentitling conduct were not put to the Magistrate in the written submissions prepared by the plaintiff which his Honour considered before delivering his judgment on costs. I note that the plaintiff filed written submissions and written submission in reply to the defendant’s submissions. Further, as noted earlier, the plaintiff did not pursue the notice of motion she filed in that regard notwithstanding that the Magistrate reserved her right to do so.

At the time of the offers by the defendant on 6 and 8 December 2016 the plaintiff was legally represented. Nothing has been put forward to show error on the Magistrate’s part in ordering indemnity costs from 7 December 2018. No disentitling conduct has been demonstrated.

The plaintiff suggested that the costs lacked proportionality. However, the proceedings ran for 15 days in circumstances where the plaintiff re-examined Mr Gibson over four days and cross-examined the defendant over five days. By ordering a gross sum costs order in respect of the defendant’s lawyers’ time in Court and the cost of the transcript, his Honour was helping to minimise the extent to which the costs were out of proportion to the amount claimed.

In my opinion, no error is shown in relation to any of the grounds arising out of the costs judgment.

Accordingly, I make the following orders: