Housman v Camuglia

1. [1]

   BELL P: I agree with Leeming JA.

2. [2]

   LEEMING JA: The issues in this appeal are very narrow. They are whether the plaintiff’s claim for consequential loss should be set aside, whether there was error in a special costs order based on a Calderbank letter, and whether leave is required to advance the second point. The confined nature of the appeal warrants a highly abbreviated account of the background to a five day trial in the District Court.

3. [3]

   The first and second appellants, Mr Bardia Housman and Ms Beatriz Pena Alda, own harbourside land at Lavender Bay. The respondent, Ms Yolenda Camuglia, is the owner of neighbouring land. Both lots occupy steep slopes from the roadway to the harbour foreshore. On Ms Camuglia’s land is constructed a building containing six apartments, two of which are accessible from the street, but the remaining four of which are only accessible down a staircase along the boundary between the two lots.

4. [4]

   The third appellant, Pacific Plus Constructions Pty Ltd, was retained by the first and second appellants to undertake substantial building works on their land. It subcontracted the demolition and bulk excavation works which commenced in around September 2017. Those works caused damage to Ms Camuglia’s land. The primary judge found that, among other things, the supporting foundations for the stairway had collapsed and the stairway showed signs of cracking and settlement. Ms Camuglia sued her neighbours and Pacific Plus Constructions.

5. [5]

   By the conclusion of the trial, a large number of issues had been resolved. As between the three appellants, all had become represented by the same firm of solicitors, a cross-claim had been disposed of and it was accepted that any judgment should be entered against them all, reflecting a joint and several liability to Ms Camuglia. Further, the defendants/appellants accepted that their acts and omissions had caused damage to the stairway. Many aspects of the quantum of damage referrable to rectifying the damage were also agreed.

6. [6]

   After a five day trial, the primary judge promptly produced a judgment, reflecting the limited issues for resolution: Camuglia v Housman [2020] NSWDC 446. His Honour noted that after the concessions (some concessions had only been made on the last day of the hearing), there were only three outstanding issues.

7. [7]

   One issue was whether damage had been caused to a balcony. His Honour found that the damage was not causally linked to the defendants’ breaches and dismissed that aspect of the claim. There is no cross-appeal from that part of the judgment.

8. [8]

   Secondly, the primary judge noted that it was not agreed that the defendants were liable for the (agreed) costs of rectifying the damage, on the basis that the cost of rectification was not an appropriate measure of damages, and that the plaintiff had failed to mitigate her loss. The primary judge found in Ms Camuglia’s favour in relation to rectification. This was challenged by ground 2 of the appeal, but in the appellants’ written submissions in reply, that ground was abandoned.

9. [9]

   That left only a contest concerning a claim for consequential loss. That issue was summarised by the primary judge as follows (at [13]):

10. [10]

    The primary judge accepted that Ms Camuglia was entitled to consequential loss, calculated in the amount of $157,240.14. That amount was based upon evidence adduced by Mr Dominic D’Ettorre. The appellants pressed a ground of appeal based on inadequate reasons (although it was not the subject of separate oral submissions), and it is convenient to reproduce in full [32] which contains the reasons for allowing this head of damage:

11. [11]

    The consequential loss claim was quantified in the following way:

    1. (1)

       Ms Camuglia’s rental ledgers indicated that five of the six units had been rented at weekly amounts ranging between $600 and $765, while the sixth unit, unit 2, had from time to time been occupied by Ms Camuglia’s son rent-free. The weekly rental totalled $3,489.

    2. (2)

       However, unit 6, unlike units 1, 3, 4 and 5, was capable of being continuously occupied, notwithstanding the damage to the stairway, as it appears to have had direct access to the street. Accordingly, $600 was deducted from the weekly return.

    3. (3)

       From that amount, the primary judge applied a discount of 1/3, reflecting the loss of amenity of the units due to their proximity to the building works, that being a loss which Ms Camuglia accepted was not attributable to the defendants.

    4. (4)

       Still further, the primary judge recorded an acceptance by Mr Sirtes SC, who appeared for Ms Camuglia at first instance and in this Court, that there should be a discount to reflect the vicissitudes of life as a landlord. The primary judge determined a discount of 20%.

    5. (5)

       By reducing $2,889 (being $3,489 minus $600) by first 1/3, and then by 20%, the primary judge reached a consequential loss per week of $1,541.57.

    6. (6)

       Ms Camuglia in her written submissions at trial had sought consequential loss only from October 2018, which was when Mr D’Ettorre told her that the premises were unlettable.

    7. (7)

       The primary judge allowed a period from October 2018 until 1 month after judgment, ie 14 September 2020, amounting to a period of 102 weeks, and thus determined consequential loss as $157,240.14.

12. [12]

    No aspect of the appeal challenged any element of the calculation of consequential loss.

13. [13]

    Instead, the appellants maintained that no consequential loss should have been ordered, because the primary judge had erred in finding that the damage caused by their construction and demolition works had caused the units to be unlettable. This gave rise to the first ground of appeal.

14. [14]

    By a subsequent judgment as to costs, his Honour directed that the defendants pay the plaintiff’s costs on an ordinary basis up to and including 7 September 2019 and thereafter on an indemnity basis: Camuglia v Housman (No 2) [2020] NSWDC 518. The judgment (as amended to correct an arithmetical mistake) was for $231,316.32. The special costs order arose from a letter dated 23 August 2019 stated to have been written in reliance on the principles in Calderbank v Calderbank [1975] 3 All ER 333 which proposed that the proceedings be discontinued on the basis that each party bear their own costs with the defendants paying lump sums of $100,000 in respect of the proceeding and a separate $100,000 in respect of costs. The letter referred to the evidence which, at that date, had been served, namely the evidence of Mr Herbertson, Mr Curtis, Mr Maynier and Ms Camuglia. The affidavits of Mr D’Ettorre had not at that stage been served. The letter also addressed the plaintiff’s costs as follows:

15. [15]

    The primary judge regarded the extent of the compromise contained in the letter as considerable. His Honour said:

16. [16]

    His Honour rejected submissions that the offer had not been supported by a bill of costs (on the basis that the defendants had sought no particulars of the costs) and that the 14 days for acceptance was insufficient time (on the basis that no request was made for any additional time to consider the offer). His Honour concluded that it was unreasonable for the defendants to have rejected the Calderbank offer, and accordingly made a special costs order in favour of Ms Camuglia.

17. [17]

    The challenge to the costs order was ground 3 of the appeal. Ms Camuglia belatedly (cf UCPR r 51.41) maintained that leave was necessary to bring that challenge, and, against the possibility that that was correct, the appellants sought leave.

Ground 1 – challenge to the claim for consequential loss

1. [18]

   The critical evidence on which the appellants relied in support of the first ground of appeal was a report dated 17 December 2018 by Mr Robert Herbertson, a consulting engineer retained by Ms Camuglia’s solicitors. His report was principally directed to whether subsidence or withdrawal of support or vibration from the defendants’ land had caused the damage to the site, and the appropriate rectification works to remedy the damage to Ms Camuglia’s property. However, his report also addressed the temporary measures which had been put in place to restore access to the stairway. It stated the following:

2. [19]

   The cross-reference to section 10 of the report was directed to additional steps which in Mr Herbertson’s opinion should be undertaken in order to provide a permanent engineering solution for the stairway.

3. [20]

   Mr Herbertson was called in the plaintiff’s case, and cross-examined. He was not asked questions about his opinion as to the adequacy of the temporary propping in place.

4. [21]

   In final address, in both the defendants’ written and oral submissions, the defendants relied on Mr Herbertson’s evidence. At [6.6] of their written submissions they said:

5. [22]

   In oral submissions, Mr Ahmad (who appeared alone at trial, but was led in this Court by Mr Turnbull SC) put to the primary judge that:

6. [23]

   One aspect of this ground of appeal was that neither this submission, nor the evidence on which it was based, was addressed by the primary judge.

7. [24]

   The appellants also submitted that the evidence of Ms Camuglia and Mr D’Ettorre was misused by the primary judge.

8. [25]

   The portions of Ms Camuglia’s affidavit which survived objection included the following:

9. [26]

   The first paragraph of that passage was admitted on a limited basis, namely that “the paragraph not be used for the purposes of establishing the truth of the representation made to the deponent by Mr D’Ettorre”.

10. [27]

    In cross-examination, the fact that Mr Herbertson had given advice that the temporary propping of the stairs was adequate was put to Ms Camuglia as follows:

11. [28]

    Subsequently, the cross-examination continued:

12. [29]

    Mr Dominic Bruno D’Ettorre had been the property’s leasing manager since 2015. He observed the stairway at a site inspection in October 2018, and gave the following evidence, all of which was subject to a ruling that “the evidence be limited to the witness’ perception of the property’s defects and his perception of the effect of those defects on a prospective tenant”:

13. [30]

    It was also submitted on behalf of the appellants that Ms Camuglia could have let the units out on short term tenancies, via Airbnb. That led to the following exchange:

14. [31]

    That exchange referred to correspondence from the local council, dated 30 September 2018, annexed to Mr D’Ettorre’s affidavit. The council advised that the property could not permissibly be let short term under its zoning, and that a standard 3 month residential lease should be the minimum length of stay. That letter included a direction to:

15. [32]

    I would accept, favourably to the appellants, that it would have been preferable for reference to the report from Mr Herbertson as to the adequacy of the stairway providing access to the lower four apartments and the cross-examination of Ms Camuglia dealing with that evidence to have been made in the reasons for judgment. However, although Mr Herbertson’s opinion was prominent in the submissions on appeal, it was far less prominent in the closing submissions at trial. And, as will be seen below, there may have been good reason for it not to have been especially prominent at trial.

16. [33]

    In the foregoing I have refrained from expressing a conclusion whether the reasons were inadequate. That is because in an appeal such as the present, which is not confined to questions of law, and which proceeds by way of rehearing, and where there are no issues of credibility, the adequacy or inadequacy of reasons is usually not to the point. As was said by this Court in Stephenson v Santos [2020] NSWCA 262 at [24]:

17. [34]

    The same point was made in Capilano Honey Ltd v Dowling (No 2) [2018] NSWCA 217 at [41]:

18. [35]

    I shall follow the usual course described in the passages above and address the substance of the matter, for only if there were error which was productive of injustice would the appeal be allowed and the proceedings remitted for retrial.

19. [36]

    First, it was unclear from Mr Herbertson’s report how long precisely the “temporary” propping up of the stairway would be adequate. The impression I obtain from the material is that a permanent solution was sought to be put in place in the next weeks or months. That did not occur, in circumstances which need not be summarised in this judgment. It does not seem unreasonable for any decision to let the premises to await the construction of a permanent solution to access, when one was reasonably expected in the short term, especially bearing in mind the need for furniture and other possessions to be delivered to the premises. This may have accounted for the limited attention given at trial to this aspect of Mr Herbertson’s report.

20. [37]

    Secondly, and more fundamentally, it is one thing for Ms Camuglia to have the benefit of an engineering report that the temporary solution was adequate in terms of safety. It was another thing entirely for Ms Camuglia to have the advice of her leasing manager that the property was incapable even of being advertised to let. That opinion was inherently plausible. If the properties were to be advertised, then the leasing manager had to make a decision to provide information concerning the temporary access or not. It is easy to see that a photograph, even if accompanied by a description of Mr Herbertson’s opinion, would make the apartments unappealing to prospective tenants. On the other hand, if the access obstacles were not disclosed in the advertising, then it is easy to see the irritation which a prospective tenant who inspected the premises and found the hitherto undisclosed difficulties of access might display. In any event, Mr D’Ettorre was not cross-examined about this.

21. [38]

    In short, while the evidence of Mr Herbertson bore upon the finding made by the primary judge and it would have been preferable for it to have been referred to, even having regard to it, no sufficient case has been made out to impugn the finding.

22. [39]

    Thirdly, the finding that it was reasonable not to seek to re-let the apartments involved no misuse of the evidence of Ms Camuglia and Mr D’Ettorre having regard to the rulings which had been given. What was critical to the reasonableness of the decision was those witnesses’ perceptions of the position, not the engineering opinion that, superficial appearances notwithstanding, the temporary repairs to the stairway had made it safe.

23. [40]

    Fourthly, the submissions concerning the possibility of renting the premises short term through Airbnb suffer from the same difficulty. Added to this is the correspondence from the local council mentioned above to the effect that doing so was unlawful, to which the appellants’ submissions paid no regard.

24. [41]

    Separately from the above, a further obstacle on this issue faced by the appellants may arise having regard to the way the case was pleaded and particularised. At trial, the defendants were directed to particularise the ways in which they said Ms Camuglia had failed to mitigate her loss. They complied with that direction, and no part of those particulars (which were reproduced in full by the primary judge) extended to a claim that she had failed to take reasonable steps to re-let the properties. Insofar as this aspect of the case turns upon failure to mitigate, it is therefore outside the case advanced by the defendants at trial. But the relationship between causation and mitigation is contested. In the United Kingdom, mitigation has been said to be “an aspect of the principle of causation”: Bunge SA v Nidera BV [2015] UKSC 43; 3 All ER 1082 at [81]. On the other hand, McGregor on Damages warns against the danger “of using causation as a sole touchstone to disguise … the real ground of a decision”: J Edelman, McGregor on Damages (21st ed, Sweet & Maxwell, 2021), at [9.019]. In cases to which the Civil Liability Act 2002 (NSW) applies, s 5D and, especially, s 5E will apply, and as presently advised I am unaware of analysis of the relationship between mitigation and the onus of proving “any fact relevant to the issue of causation” imposed by the latter. Proponents of the separatist and causal approaches, and examples of where the different approach may matter, are discussed in W Courtney, “Contract Damages and the Promisee's Role in its own Loss” (2019) 42(2) MULR 406 in section II(A) “The Controversy and Why it Matters”. The pleading point raised in the present appeal is another example of when this aspect of taxonomy may matter. But nothing turns on it, because irrespective of whether the appellants are precluded from relying on this by their pleading of mitigation, they fail on the facts for the reasons already given, and it is unnecessary to consider the point further.

25. [42]

    Ground 1 is not made out.

Ground 3 – Challenge to the special costs order

1. [43]

   Ms Camuglia’s written submissions maintained that the appellants required leave to challenge the exercise of discretion by the primary judge as to costs. She submitted that “if there be a separate item in a notice of appeal relating to costs only it can only be raised with the leave of the Court”. There was said to be:

2. [44]

   On 13 April 2021, following receipt of Ms Camuglia’s submissions, the appellants filed a notice of motion seeking leave to appeal as to costs against the possibility that leave was required (I pass over the fact that this should have been by way of summons in a separate proceeding). The appellants nonetheless relied on the reasoning of Lord Denning in Wheeler v Somerfield [1966] 2 QB 94 for the proposition that leave was not required. They noted, however, that the correctness of Wheeler had been left open by this Court in Coffs Harbour City Council v Polglase [2020] NSWCA 265 at [179] and C G Maloney Pty Ltd v Noon [2011] NSWCA 397 at [104]-[106]. In each of those cases, leave to appeal was granted to the extent such leave was necessary, in circumstances where it was not necessary to decide the issue. The same position was adopted in Arena Management Pty Ltd (rec and mgr apptd) v Campbell Street Theatre Pty Ltd (2011) 80 NSWLR 652; [2011] NSWCA 128 at [129] and AF Concrete Pumping Pty Ltd v Ryan [2014] NSWCA 346 at [72]. In Sahade v Bischoff [2015] NSWCA 418 at [166] it was assumed, in the absence of argument, that leave was unnecessary. However, there are decisions in other jurisdictions disapproving Wheeler, many of which are summarised in Apache Northwest Pty Ltd v Department of Mines and Petroleum [2012] WASCA 167 at [97]-[102] commencing with the sentence “That decision has received a mixed reception in Australia”. The strongest disapprobation is found in Road Chalets Pty Ltd v Thornton Motors Pty Ltd (1986) 47 SASR 532 at 538 where Zelling ACJ said that this aspect of Wheeler was “unfortunately … against the whole course of reported cases for a century”.

3. [45]

   The issue, while it remains unresolved, will continue to engender debate in appeals in this Court. The exchange of submissions in the present appeal, and the review in a recent note in the Australian Law Journal by Mr Prince (“Recent Cases: Coffs Harbour City Council v Polglase [2020] NSWCA 265” (2021) 95 ALJ 181, to which White JA referred the parties), make it appropriate to consider this issue.

4. [46]

   Appeals are creatures of statute: see eg Walsh v Law Society of New South Wales (1999) 198 CLR 73; [1999] HCA 33 at [50] and Dwyer v Calco Timbers Pty Ltd (2008) 234 CLR 124; [2008] HCA 13 at [2]. As was emphasised in Perara-Cathcart v The Queen (2017) 260 CLR 595; [2017] HCA 9 at [40], it is necessary to “look to the statute in order to determine what question or questions are required to be answered, rather than proceed on a priori assumptions”. Indeed, it will be seen that the same approach was adopted in 19th century Full Court decisions on previous provisions governing the right of appeal. Thus in determining whether the challenge to the special costs order is available at all, or only with leave, or as of right, the starting point is the terms of the statute.

5. [47]

   Section 127 of the District Court Act 1973 (NSW) relevantly provides:

6. [48]

   That wording was inserted in substantially the same form by the Courts Legislation Further Amendment Act 1995 (NSW), Schedule 1 Item 1.3 [10]. The explanatory note stated, somewhat obliquely, that the amendment would simplify the provisions governing appeals.

7. [49]

   The new provision replaced an earlier regime which made provision for applications for new trials after a jury’s verdict, and (simplifying slightly) otherwise conferred a right of appeal “from any ruling, order, direction or decision of the Judge in an action”: see, respectively, ss 126 and 127, and s 128(2A), of the District Court Act 1973 in the form those provisions took before 1995. Those words “ruling, order, direction or decision of the Judge” had previously been found in s 142 of the District Courts Act 1912 (NSW) and s 107(1) of the District Courts Act 1901 (NSW). Earlier still, the right of appeal was confined, relevantly, to “the determination or direction of the said Court in point of law”: District Courts Act 1858 (NSW) (22 Vic No 18), s 94. These provisions were held not to extend to appeals as to costs.

8. [50]

   A plaintiff who obtained an order for detinue in his favour but no order for costs brought an appeal under s 107 of the District Courts Act 1901 in Robinson v Sutton (1909) 9 SR (NSW) 295. Cohen J wrote the leading judgment, with which Pring J and Sly J agreed. The Court followed Dunn v Lowe (1876) 14 SCR 371 which had held that an appeal from the District Court against a costs order did not lie. After dealing with English cases on the Judicature legislation, Cohen J addressed Dight v Gordon (1863) 3 SCR Eq 62, and said it was “sufficient to say that this was a case on the equity side of the Court, where, apparently, different rules prevail, and the decision was based on the words of the statute, and the Court followed the practice of the Courts of Equity in England”: at 297. Cohen J then reproduced s 107 and said:

9. [51]

   The re-enactment of the same language in the 1912 and 1973 statutes is some confirmation that the meaning given to the same words in Robinson v Sutton was endorsed: see for example Vella v Commissioner of Police (NSW) [2019] HCA 38; 93 ALJR 1236 at [19] and [52]; other authorities are considered in Jackmain (a pseudonym) v R (2020) 102 NSWLR 847; [2020] NSWCCA 150 at [166]-[174].

10. [52]

    Thus s 127(1) and (2)(b) when introduced in 1995 represented an expansion of the scope of District Court appeals from the position which had obtained over the previous century. The new language followed the course taken in the Supreme Court Act 1970 (NSW) which made provision for appeals to the Court of Appeal from the Supreme Court constituted by a single judge.

11. [53]

    Prior to the commencement of the Supreme Court Act 1970 (NSW) on 1 July 1972, the position was markedly different in equity. Far from there being no appeal at all, appeals in equity lay as of right from decrees or orders as to costs.

12. [54]

    Section 21 of the Administration of Justice Act 1840 (4 Vic No 22) had authorised the nomination of a judge to hear and determine matters in Equity. “[A]ny person feeling aggrieved by any such decree or order at any time within fourteen days next after the pronouncing or making of the same” was authorised to enter an appeal against such decree or order (originally to the other two judges of the Court, expanded to three judges by s 13 of the Advancement of Justice Act 1841 (5 Vic No 9)). The circumstances in which this legislation was enacted are described in a note, “The Primary Judge in Equity” (2016) 90 ALJ 783.

13. [55]

    Two divided decisions of the Full Court had held that the words “any decree or order” bore their ordinary meaning, and extended to appeals where the only issue was costs, although that position was only reached with some expressions of dissatisfaction.

14. [56]

    In Dight v Gordon, Stephen CJ said that:

15. [57]

    Wise J agreed, regretting that there was no alternative in light of the statute, but noting:

16. [58]

    Milford J dissented, saying that “if the Courts of appeal in England can refuse to hear appeals upon costs, we can do so here”. His Honour did not explain how that construction accorded with the statute upon which his colleagues had based their decision.

17. [59]

    The second Full Court decision was Dixon v Williams (1875) 13 SCR Eq 7. This was an appeal by the plaintiff from a decree by the primary judge in Equity (Hargrave J) that the defendant should have his taxed solicitor/client costs from the trust estate. The Full Court was constituted by Martin CJ, Hargrave J and Faucett J. Over Hargrave J’s dissent, the appeal was allowed. Faucett J commenced his judgment:

18. [60]

    Hargrave J, dissenting, considered that his own judgment was correct, on the basis that the Full Court’s earlier decision in Dight v Gordon was:

19. [61]

    Once again, no attempt was made to address the language of the statute.

20. [62]

    Thereafter, s 70 of the Equity Act 1880 (NSW) and s 81 of the Equity Act 1901 (NSW) seemingly expanded the scope of appeals confined to costs, the latter providing that “[a]ny person aggrieved by any decree or order of the Judge, whether sitting in open Court or in chambers, may ... enter an appeal”. The re-enactment of the earlier statutory language, this time expanded to include orders made in chambers, was regarded as confirmatory of the construction reached under the 1840 statute. The notes on p 109 of W Parker, The Practice in Equity (New South Wales) (Law Book Co of Australasia Ltd, 1930) identify a series of cases dealing with appeals for costs only. One is Eberlein v Eberlein (1887) 8 LR (NSW) Eq 1, where the only question was costs, and which proceeded on the basis that the appeal lay as of right.

21. [63]

    That was the position in equity until 1972.

22. [64]

    The 1995 amendments introducing s 127(2)(b) of the District Court Act 1973 aligned the position to that which applied to Supreme Court appeals (that, presumably, is the meaning of the “simplification” mentioned in the explanatory note). Section 101(2)(c) of the Supreme Court Act 1970 (NSW) is in materially identical terms. As is pointed out in Mr Prince’s note, s 101(2)(c) of the Supreme Court Act 1970 (originally enacted as s 101(3)(a)) itself derives from English provisions. In England, a different approach had long been taken.

23. [65]

    Prior to the Judicature reforms which commenced in 1876, appeals in England lay (a) within the Court of Chancery (from the Vice Chancellors and the Master of the Rolls to the Lord Chancellor and, after its creation in 1851, to the Court of Appeal in Chancery); (b) from the civilian courts (including admiralty and ecclesiastical matters) and the colonial courts to the Privy Council, and (c) from a variety of courts to the House of Lords (Disraeli’s success in preventing the abolition of most appeals to the House of Lords, effected by the Appellate Jurisdiction Act 1876, is described in D Steele, “The Judicial House of Lords: Abolition and Restoration 1873-6” in L Blom-Cooper et al (eds), The Judicial House of Lords 1876-2009 (Oxford University Press, 2009), pp 13-29).

24. [66]

    Absent from the foregoing is reference to the superior courts at common law at Westminster, and the multitude of local courts administering common law. That reflects Dixon J’s observation that “[a]ppeal as distinguished from error was not a process of the common law”: Victorian Stevedoring and General Contracting Co Pty Ltd v Dignan (1931) 46 CLR 73 at 108; [1931] HCA 34, and see Dwyer v Calco Timbers at [2].

25. [67]

    The prevailing rule in all those areas was that an appeal could not be brought confined to a question of costs, at least unless there was some patent error or mistake in the order. However, if there was some other non-colourable ground of appeal, then the appellate court could revisit the issue of costs, even if the other ground failed.

26. [68]

    The English pre-Judicature position, which was evidently familiar in colonial New South Wales, was explained in a large number of decisions. First, in Chancery, in Owen v Griffith (1749) 1 Ves Sen 250; 27 ER 1012, the general rule that there could not be an appeal for costs only was insisted on. Lord Hardwicke LC said of the rule:

27. [69]

    Similarly, Lord Lyndhurst LC said in Attorney-General v Butcher (1827) 4 Russ 180 at 181; 38 ER 773 at 773-4 that:

28. [70]

    In the Privy Council, appeals on costs alone were disfavoured. In Mussumat Keemee Baee v Latchman-das Narrain-das (1837) 1 Moo Ind App 470; 18 ER 188, it was said that “no appeal against a decree merely as to costs would be allowed” where costs were in the discretion of the court (the decisions altering the first instance order as to costs were, however, affirmed because there had been no discretion as to costs in the court below). In Attenborough v Kemp (1861) 14 Moo PC 351 at 352-3; 15 ER 338 at 339 (an appeal from the Court of Arches on a disputed church rate), Turner LJ for the Privy Council advised:

29. [71]

    That approach was applied in Richards v Birley (1864) 2 Moo PC (NS) 96; 15 ER 838 (on appeal from the Prerogative Court of York disputing another church rate) and in Yeo v Tatem (1871) 3 LR PC 696 at 702 (an admiralty appeal).

30. [72]

    In the House of Lords, dealing with a Scottish appeal, Lord Brougham wrote in Inglis v Mansfield (1835) 3 Cl & Fin 362 at 371; 6 ER 1472 at 1476:

31. [73]

    There were exceptions including where a question of principle was involved or where there was patent error. See for example Yeo v Tatem at 702, and see the cases cited in The Annual Practice 1961 (Sweet & Maxwell Ltd, London, 1960), Vol 1 at p 1846 and Morgan and Wurtzburg, A Treatise on the law of Costs in the Chancery Division of the High Court of Justice (2nd ed, Stevens and Sons, London, 1882) at p 160.

32. [74]

    The Judicature legislation extended the right of appeal to the (newly created) Court of Appeal from all Divisions of the (newly created) High Court of Justice. However, s 49 of the Judicature Act 1873 provided:

33. [75]

    The language “as to costs only” will be noted. That is reflected in the current forms of s 101(2)(c) of the Supreme Court Act 1970 and s 127(2)(b) of the District Court Act 1973. Broadly speaking, s 49 replicated the existing position. However, it will also be noted that s 49 of the Judicature Act made the grant of leave from the judge at first instance a condition of appellate jurisdiction in those appeals to which it applied. This was re-enacted in some Australian legislation (for example, s 27 of The Judicature Act 1883 (Vic) (47 Vic No 761)) but was not repeated in New South Wales, where it was the Court of Appeal which could grant leave, if leave be needed. That distinction has made it possible to avoid resolving the point by granting leave to the extent necessary (see the decisions in [44] above).

34. [76]

    The effect of the prohibition upon appeals as to costs only was raised in the Court of Appeal in Harris v Aaron (1877) 4 Ch D 749. The plaintiff’s bill had been dismissed, but without costs. The plaintiff appealed. The defendant sought, in the event the appeal was dismissed, to challenge the absence of a costs order at first instance. James LJ, with whom Mellish and Baggallay LJJ concurred, said:

35. [77]

    Harpham v Shacklock (1881) 19 Ch D 207 was similar. After the appeal had been dismissed, the successful respondent sought a variation to the Vice-Chancellor’s order as to costs. Sir George Jessel MR said:

36. [78]

    Baggallay LJ said that “we must follow the rule that there shall be no appeal upon the question of costs only.”

37. [79]

    In both those decisions, the Court of Appeal was dealing with an informal application which in substance amounted to a cross-appeal against the failure to make a costs order in favour of the respondent to the appeal.

38. [80]

    Harris v Aaron and Harpham v Shacklock are mentioned at p 1845 of the 1961 Annual Practice under the heading “Appeal as to Costs”. The text reproduced the successor provision to s 49 of the Judicature Act 1873, namely, s 31 of the Supreme Court of Judicature (Consolidation) Act 1925, preventing appeals “as to costs only which by law are left to the discretion of the Court” without obtaining the leave of the Court or Judge making the order, and then stated:

39. [81]

    In Road Chalets Pty Ltd v Thornton Motors Pty Ltd (1986) 47 SASR 532, Zelling ACJ addressed a submission that leave was not required to challenge a costs order in circumstances where there were other substantive grounds of appeal which had failed. His Honour said that the proposition in Wheeler v Somerfield that the appeal extended to the ground concerning costs was quite wrong, and proceeded on the basis of a concession which ought not to have been made. He added:

40. [82]

    As Mr Prince has explained, this is incorrect. Harris v Aaron was a challenge to a costs order by the respondent to an appeal. The respondent made no other challenges to the order. It is tolerably clear that a cross-appeal confined to costs is caught by the provision requiring leave to appeal “as to costs only”. The report of Harris v Aaron is a little confusing, because the respondent’s challenge was rejected peremptorily, before the judgment dealt with the failure of the appellant’s appeal on substantive grounds, and the summary in the Annual Practice is also less than pellucidly clear. I would also note that the point was not fully argued in Road Chalets (as is recorded at 551) and was not addressed by Cox J or O’Loughlin J.

41. [83]

    This Court has held, relying upon Wheeler v Somerfield, that an appellant with a bona fide ground of appeal enjoyed as of right may also challenge a costs order without leave: see Tyco Australia Pty Ltd v Optus Networks Pty Ltd [2004] NSWCA 333 at [200] and Dasreef Pty Ltd v Hawchar [2010] NSWCA 154 at [61]. In light of the statement in Road Chalets that Wheeler v Somerfield should not be followed, there has been hesitation on the point, notably in Arena Management Pty Ltd (recs & apptd) v Campbell Street Theatre Pty Ltd at [129]. But the matters mentioned above persuade me that the statement in Road Chalets is incorrect and ought not to be followed. And indeed, the weight of authority in New South Wales thereafter, notably Dillon v Gosford City Council [2011] NSWCA 328; 284 ALR 619 at [53]-[57], supports the proposition already reached that where there is a substantive ground of appeal as of right, then even if that ground fails, the appellant may nonetheless challenge the costs order as of right. (Of course, if one or more of the substantive grounds succeeds, the costs discretion will have to be re-exercised and thus any ground of appeal as to costs will be otiose.) A discussion of the position in relation to other statutory provisions, many of which are slightly different, is found in Muswellbrook Shire Council v Hunter Valley Energy Pty Ltd [2019] NSWCA 216; 372 ALR 695 at [46]-[63].

42. [84]

    The upshot of the above is that an appeal raising bona fide substantive grounds as well as costs is not an appeal as to “costs only” within the meaning of s 101(2)(c) of the Supreme Court Act 1970 or s 127(2)(b) of the District Court Act 1973, and that remains so even if the substantive grounds are rejected. There is no reason to depart from the construction which has hitherto been given to the provisions, which reflect an intermediate position from what had previously been the case in equity and in District Court appeals, and one which aligned the position in New South Wales with that in the United Kingdom. While it was appropriate to adopt a cautious approach in light of the criticism in Road Chalets, a fuller examination enables the conclusion to be reached that ground 3 of the appellants’ appeal is as of right. That construction respects the language of the provision, and aligns with the legislative history summarised above. It also accords with the practical consideration that there is little benefit in there being a separate requirement of leave, where three Judges of Appeal are already required to consider the substantive grounds in an appeal brought as of right.

43. [85]

    The substance of this ground, in contrast with whether it is available as of right, may be resolved much more concisely.

44. [86]

    The appellants accepted, correctly, that they needed to establish House v The King error in order to challenge the exercise of discretion as to costs, but said that such error was disclosed, in three ways.

45. [87]

    First, they said, that the offer was not one which would “meet one third of [Ms Camuglia’s] legal costs” and the primary judge erred in saying that it was. Instead, the $100,000 was two thirds of the $150,000 which had been represented to be Ms Camuglia’s costs at that time.

46. [88]

    Secondly, relying upon a bill of costs brought into existence in January of this year, they ultimately submitted that Ms Camuglia’s costs had not been $150,000 as at 23 August 2019, but materially less, some $113,696.10.

47. [89]

    Thirdly, they submitted that the evidence which was ultimately dispositive, that of the leasing agent Mr D’Ettorre, had not been served at the time the offer was rejected.

48. [90]

    I do not consider that any basis to re-exercise the discretion as to costs has been made out. The crucial consideration was that the offer was substantially more advantageous than the judgment Ms Camuglia ultimately obtained. The fact that her costs at that time are now shown to be some $113,696.10 rather than $150,000 does not materially detract from the substantiality of the compromise when viewed as a whole. The insignificance of the costs component was reflected in the failure on the part of the appellants to make any inquiries as to the basis of costs being $150,000, as the primary judge observed.

49. [91]

    The error concerning the compromise amount of $150,000 being two thirds, rather than the one third stated by the primary judge, is an obvious slip and immaterial.

50. [92]

    I do not regard the subsequent service of Mr D’Ettorre’s affidavits as material. Two days prior to the offer, Ms Camuglia’s affidavit of 21 August 2019 had been served, [21] and [22] of which have been reproduced above. The essential case advanced by Ms Camuglia, namely, that D’Ettorre Properties Pty Ltd had told her that it was not possible to re-let the properties by reason of the noise and vibration caused by the building works and the damage to the property was available to the defendants at the time they reviewed the offer.

51. [93]

    Ground 3 is not made out.

Orders

1. [94]

   For those reasons, although the appellants are correct to submit that their appeal is as of right, their appeal should be dismissed. There is no reason why costs should not follow the event. If either side seeks a special costs order, application may be made within the time specified by UCPR r 36.16.

2. [95]

   WHITE JA: I agree with Leeming JA.