Yarraford Pastoral Co Pty Ltd v Lewington

1. [1]

   The Plaintiff sued the Defendant in the Local Court at Gunnedah for damages for the use by the Defendant of a 32 tonne excavator, a flat top Isuzu truck and a Bobcat belonging to the Plaintiff. The Defendant had been allowed to use these vehicles but the Plaintiff asserted that he had not paid the full amount for the hire of them. It appears that the amount claimed by the Plaintiff allowed an offset for monies that the Plaintiff ought to have paid to the Defendant for work that the Defendant did for the Plaintiff.

2. [2]

   On the last day of the hearing the Magistrate reserved her decision. The transcript relevantly reads:

3. [3]

   Judgment was delivered on 15 August 2014 but the parties were not notified prior to judgment being delivered. It seems that the Defendant was largely successful because the Plaintiff was given judgment for $8,250 in circumstances where the Defendant agreed that some money was owing to the Plaintiff. Further, the figure of $8,250 was referable only to the Bobcat with the Magistrate finding that the arrangement in relation to the excavator had been satisfied and the evidence put forward by the Plaintiff in relation to the tray truck was unreliable. The Magistrate found that $2,056 was owing to the Defendant on his cross-claim and that was said to be offset against the amount due by the Defendant.

4. [4]

   In a document from the Local Court of New South Wales headed “Notice of Orders Made” dated 4 September 2014 the following appeared:

5. [5]

   Her Honour made no costs order. The Defendant’s solicitor said in an affidavit that he received, after a request to the Local Court at Gunnedah, a copy of the orders made on 4 September 2014. Magistrate Kok retired on 12 September 2014 but the Defendant’s solicitor was not aware of her Honour’s retirement until after the event. The elliptical statement that “it’s got to be before 12 September” was not understood at the time it was made.

6. [6]

   On 15 September 2014 the Plaintiff filed a summons in this Court seeking leave to appeal against Magistrate Kok’s decision. The summons was heard by Beech-Jones J on 6 May 2015, and on that day his Honour dismissed the summons and ordered the Plaintiff to pay the costs of the proceedings: Yarraford Pastoral Co Pty Ltd v Lewington [2015] NSWSC 522.

7. [7]

   On 4 November 2015 the Defendant’s solicitor filed a Notice of Motion in the Local Court at Gunnedah seeking the following orders:

8. [8]

   The Motion was subsequently transferred by consent of the parties to the Local Court at Sydney. The Motion was heard on 1 August 2016 by Magistrate Greenwood. Her Honour gave judgment on 11 August 2016 and the orders she made were relevantly these:

9. [9]

   By Summons filed 7 September 2016 the Plaintiff seeks leave pursuant to s 40(2)(c) of the Local Court Act 2007 (NSW) to appeal against the first and third of the orders made by Magistrate Greenwood. Although the Summons contained three grounds of appeal the Plaintiff abandoned the third ground (which concerned the Motion Costs Order) in its submissions. The two remaining grounds are these:

10. [10]

    Although the judgment in favour of the Plaintiff was only $8,250 with an offset for the cross-claim the Defendant asserts that the costs of defending the proceedings before Magistrate Kok were $48,068.59.

11. [11]

    Section 39 of the Local Court Act provides that a party to proceedings before the Local Court in its General Division may appeal to the Supreme Court but only on a question of law. Section 40 then provides:

12. [12]

    Leave is, therefore, necessary as a preliminary consideration.

The judgments of the Magistrate

1. [13]

   The matter proceeded before Magistrate Greenwood in two parts on two separate days. On 1 August 2016 the question of whether she had any jurisdiction to make an order for costs was argued. Part of that argument concerned the issues argued on the present appeal but the arguments ranged more widely to include an argument that the costs application could not any longer be brought by reason of the appeal that had been determined by Beech- Jones J. That argument is no longer pursued.

2. [14]

   Magistrate Greenwood gave reasons in relation to the jurisdictional issue. It is not necessary to set them out in their entirety. The following passage encompasses those reasons relevant to the present appeal:

3. [15]

   The second aspect of the matter before Magistrate Greenwood was the merits of the costs application. Her Honour gave judgment on that matter on 11 August 2016. During the course of that judgment her Honour said this in relation to the application for costs thrown away by reason of amendments to the Statement of Claim (prayer 6 in the Motion):

Submissions

1. [16]

   The Plaintiff accepts that ordinarily an appeal court should not grant leave to appeal from costs orders unless there is some clear error of principle or manifest injustice. The error of principle must be of the kind described in House v The King (1936) 55 CLR 499 at 505.

2. [17]

   The Plaintiff submits that a question of general public importance is raised, namely, whether in circumstances where final orders have been entered but no order as to costs has been applied for or made, the power of the Court to order costs under s 98 of the Civil Procedure Act is subject to r 36.16 of the Uniform Civil Procedure Rules 2005 (NSW). The Plaintiff submits further that the costs are not insubstantial.

3. [18]

   On the question of leave, the Defendant submitted that if an error of principle was established leave ought to be given. If it was not, leave should be refused.

4. [19]

   In relation to the grounds of appeal the Plaintiff points to what was said by Barwick CJ in Bailey v Marinoff (1971) 125 CLR 529 and 530 concerning when orders made affecting proceedings are beyond recall.

5. [20]

   The Plaintiff accepted that s 98(3) is a “specific and relevant statutory provision” (as Barwick CJ refers) but submitted that the provision is expressly subject to the rules of the Court. The Plaintiff submitted that s 98(3) does not mean that a court never becomes functus officio with respect to the making of costs orders. The Plaintiff submitted that where the power to make a costs order that varies an entered judgment is concerned it can only be varied in accordance with Pt 36 UCPR which includes r 36.16(3A) that limits a period of 14 days from the entry of judgment. The Plaintiff submitted that this approach is consistent with ss 56-60 of the Civil Procedure Act.

6. [21]

   The Plaintiff submitted that this approach is consistent with a number of authorities including some in the Court of Appeal dealing with applications that were analogous to, but not the same as, the present application decided by the learned Magistrate.

7. [22]

   The Defendant submitted that s 98(3) governs the position and that that provision enables the Court to make a costs order after the conclusion of the proceedings. The Defendant said that r 36.16 has no application or relevance since the Defendant was not seeking the amendment of any entered order. No costs order of any sort had been made by Magistrate Kok. The Defendant relied on what was said by the Court of Appeal in Roads and Traffic Authority of New South Wales, Council of the Shire of Evans & Pioneer Road Services Pty Ltd v Palmer (No 2) [2005] NSWCA 140.

8. [23]

   Counsel made clear that the issue on the present appeal concerns only the power or jurisdiction of the Local Court to make a costs order in the circumstances of this case and not any exercise of discretion in making such an order.

Legislation

1. [24]

   Section 98 of the Civil Procedure Act 2005 (NSW) relevantly provides:

2. [25]

   Part 36 Uniform Civil Procedure Rules 2005 (NSW) relevantly provides:

3. [26]

   As far as counsel’s research and mine can ascertain none of the cases which have considered s 98(3) and r 36.16 has been concerned with the precise situation that obtains in the present case. That position is that orders were made in relation to the substantive relief sought but no order for costs was made at the time those orders were pronounced. It is not clear from the evidence I have whether judgment was ever entered to perfect the orders made, but I have assumed on the basis of what appears on the Notice of Orders Made of 4 September 2014 that it was entered.

4. [27]

   In Bailey v Marinoff Barwick CJ said at 530:

5. [28]

   In Palmer (No 2) Giles JA (with whom Spigelman CJ and Handley JA agreed) said of Pt 52A r 5 (the predecessor to s 98(3)):

6. [29]

   In New South Wales Insurance Ministerial Corporation v Edkins (1998) 45 NSWLR 8 the District Court judge handed down two reserved judgments in favour of the plaintiff in respect of two claims. In one case he ordered the first defendant to pay the plaintiff’s costs and in the second he ordered the plaintiff to pay some costs to the second defendant because that defendant had made an Offer of Compromise that exceeded the judgment. Subsequently the plaintiff applied for an order that the first defendant pay the costs he was obliged to pay to the second defendant. The trial judge so ordered. The first defendant challenged that order in the Court of Appeal. Relevantly, the third ground of challenge was that once the verdicts and costs orders in the cases were announced the trial judge was functus officio and he could not add to or vary his costs orders.

7. [30]

   In respect of that argument, Priestley JA (with whom Spigelman CJ and Shepherd A-AJ agreed) said:

8. [31]

   In Raybos Australia Pty Ltd v Tectran Corporation Pty Ltd (1988) 77 ALR 190 the respondents successfully obtained an order dismissing the applicants’ summons but neglected to ask for an order for costs. They sought by way of further summons an order amending the earlier order so as to provide that the applicants pay the respondents’ costs of the earlier proceedings.

9. [32]

   Justice Toohey said that although he might have expected some explanation for the failure to ask for costs on the earlier occasion, the inference he drew was that the failure was a matter of oversight on the part of counsel. His Honour was satisfied that the application fell within order 29 rule 11 of the High Court Rules which is the equivalent of r 36.17 UCPR, the slip rule. His Honour said:

10. [33]

    Justice Giles in Palmer (No. 2) at [24]-[25] cited Raybos v Tectran as authority for the power to make an order for costs when one was not earlier sought notwithstanding that the original judgment or order had been entered.

11. [34]

    The Plaintiff relied on Raybos v Tectran and its adoption in Palmer (No. 2) as indicating that in seeking an order for costs not earlier dealt with, a party was in fact seeking to vary the judgment earlier given. From there it was argued that r 36.16 necessarily operates because that rule only enables the variation of a judgment if the notice of motion to do so is filed before entry of the judgment or within 14 days of its entry.

12. [35]

    The significant distinction in Palmer (No. 2) from the present case was that the court had previously made costs orders and the plaintiff sought to vary those orders by obtaining a Bullock order from the unsuccessful defendant. Although Giles JA noted the provisions of Pt 52A r 5 (now s 98(3)) he said that the rule was concerned with costs orders after the substantive decision has been given and the rule must be subject to finality from entry of costs orders already made. For that reason the plaintiff could not apply under that rule since costs orders had already been made. Accordingly, it was necessary to resort to the slip rule to find a basis for the power to vary the costs order already made.

13. [36]

    In Zepinic v Chateau Constructions (Australia) Ltd (No 2) [2013] NSWCA 227 McColl JA was dealing with a notice of motion seeking an order pursuant to s 101(4) of the Civil Procedure Act 2005 (NSW) that the plaintiff pay interest on costs and disbursements. Previously, Tobias JA had dismissed the applicant’s summons seeking leave to appeal and ordered the applicants to pay the costs of the summons for leave to appeal and the respondent’s notice of motion. The notice of motion being dealt with by McColl JA was filed a little over three years after the orders made by Tobias JA.

14. [37]

    Justice McColl followed Handley AJA’s view in Drummond & Rosen Pty Ltd v Easey [No 2] [2009] NSWCA 331 that an application for interest on costs pursuant to s 101(4) of the Civil Procedure Act must be made within the time limited in r 36.16(3A). Her Honour held that an order for interest on costs is made in respect of "an order for the payment for costs".

15. [38]

    Her Honour said:

16. [39]

    In Short v Crawley (No 45) [2013] NSWSC 1541 White J (as his Honour then was) reached a different conclusion from that of McColl JA in Zepinic in relation to an application for interest on costs and also for an order for a gross sum costs order where an earlier costs order had been made. In relation to the latter decision his Honour was influenced by what appears in s 98(3) and (4) and his Honour’s construction of r 36.16(3) where he held that the words “except so far as” were not equivalent to “unless”. His Honour held at [27] that the variation to order a gross sum costs order would not be in respect of a claim for relief or of any question arising on a claim for relief that had been determined but would only be as to the mode of quantifying what sum of money was payable pursuant to the costs orders.

17. [40]

    His Honour went on to say:

18. [41]

    In relation to McColl JA’s conclusion in Zepinic, White J said this:

19. [42]

    His Honour also concluded that he was not bound to follow McColl JA’s decision in Zepinic because the decision was not given by her Honour sitting as a member of the Court of Appeal in the framework of the appellate structure for appeals from judgments from the Supreme Court or lower courts – see at [66].

20. [43]

    In Grace v Grace (No 9) [2014] NSWSC 1239 Brereton J was also dealing with an application for interest on the costs order made some 12 months prior to the application. His Honour also declined to follow McColl JA’s reasoning in Zepinic although not altogether for the same reasons given by White J in Short v Crawley.

21. [44]

    Justice Brereton said:

22. [45]

    In Rodi v Gelonesi [2016] NSWCA 348 Mr Rodi and a company of which he was a director brought proceedings against Mr Gelonesi and another company over the sale of a business. The proceedings were heard in the District Court and were dismissed.

23. [46]

    On 22 November 2012 consent gross sum costs orders were made in the District Court against Mr Rodi and his company in favour of Mr Gelonesi and Northside Deli Pty Ltd. By consent enforcement of those orders was stayed until determination of a summons for leave to appeal by Mr Rodi and his company to the Court of Appeal. On 5 December 2012 that summons for leave to appeal was refused with costs by Beazley and Ward JJA.

24. [47]

    In March 2016 Mr Gelonesi filed motions in both the District Court and the Court of Appeal with a view to obtaining orders for costs against the solicitor for the Rodi parties.

25. [48]

    As Payne JA noted at [33], the first issue to be determined was whether the 14 day time limit provided by r 36.16(3A) precluded the application.

26. [49]

    Justice Payne (with whom Meagher and Gleeson JJA agreed) said this:

27. [50]

    In all of the cases mentioned, except Raybos v Tectran about which more will be said, an order of some sort had been made in relation to the costs of the proceedings with the applicant seeking either a modification of the costs order or an order which might be regarded as supplementary or ancillary to the costs order already made. In the present case no order in relation to costs has been made of any sort.

28. [51]

    Moreover, the finality principle is not offended in the present case by making a costs order both because costs have not been dealt with and because the magistrate who gave judgment on the principal claims anticipated that further orders might be needed. If the principle was not offended in Edkins where the judge was unaware that his duties were done, a fortiori in the present case where the magistrate anticipated that further orders may be necessary. For the same reason it cannot be said that Magistrate Kok, and hence Magistrate Greenwood, was functus officio.

29. [52]

    In any event, even if the judgment given by Magistrate Kok can be said to be an order disposing of the proceeding, the finality principle is subject to any specific and statutory provision which modifies that principle. It is difficult to see why s 98(3), particularly when read with sub-s (4) is not a specific statutory provision that modifies the finality principle. If the words “at any time before costs are referred for assessment” are to have any work to do I do not see how an application for an order specified in s 98(4) can be said to be a variation with the result that r 36.16(3A) means that such an application must be made within 14 days. Since the matters in subs (4) are particular examples of orders as to costs that s 98(3) deals with, that tends to suggest that “after the conclusion of the proceedings” in subs (3) is, as a matter of jurisdiction, only limited by the restriction in subs (4) for those particular matters.

30. [53]

    To similar effect, Brereton J said in Moustach Pty Ltd v Eddie Takchi [2015] NSWSC 2080:

31. [54]

    Although the Court of Appeal’s decisions in Zoef v Nationwide News Pty Ltd (No. 2) [2017] NSWCA 2 and Rodi may impose a limitation on s 98(3) for the sorts of orders sought in those cases, that would appear to be because costs orders of some sort had already been made. In that way the Court of Appeal considered that what was being sought was a variation to a costs order already made. The result was that r 36.16 was engaged with the limitation in subs (3A).

32. [55]

    That is not the present case. No costs order has been made. I respectfully agree with Brereton J in Grace where he said at [38] that an order for costs can be made after the conclusion of proceedings so long as it does not impugn or alter a final costs order already made.

33. [56]

    It is still necessary to deal with what was said in Raybos v Tectran. It should first be said that I am not bound by a single judge of the High Court although I would not lightly differ from his or her decision. Secondly, the High Court Rules 1952 (the relevant Rules at the time of this decision) with regard to costs were not as expansive as s 98. They did not contain any provision similar to s 98(3). The only path for the application in Raybos was by invoking the slip rule. The wording of the rule (O 29 r 11) meant necessarily that any order made would involve a “correction” to the judgment or order. Hence, the order made by Toohey J was an order “varying” the order earlier made although that order simply dismissed the summons and did not involve a costs order. Thirdly, the case stands as authority for the principle that the slip rule can be invoked to obtain an order for costs where they were not sought at the time judgment was given (Palmer (No 2) at [25]). It ought not be seen as authority for the proper construction of r 36.16 concerning the varying of a “judgment or order” with which it was not concerned.

34. [57]

    In my opinion the learned Magistrate was correct to conclude that s 98(3) provided the basis of the power to make the costs order which she made.

35. [58]

    Further, in the light of what was determined in Raybos and L Shaddock & Associates Pty Limited v The Council of the City of Parramatta (No 2) (1983) 151 CLR 590 at 594-595 to similar effect, and what has been said in Palmer (No 2), I do not see why the same result could not have been achieved by an application under the slip rule. It provides a source of power in any event.

Conclusion

1. [59]

   Although the Plaintiff is ultimately unsuccessful, the appeal raised a legal question of some importance. In those circumstances leave should be granted to appeal but the appeal should be dismissed.

2. [60]

   Accordingly, I make the following orders: