Adelaide Marble Specialists Pty Ltd v Ragunath - [2023] SASC 139

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeal: Civil)
ADELAIDE MARBLE SPECIALISTS PTY LTD v RAGUNATH & ANOR
[2023] SASC 139
Judgment of the Honourable Justice Kimber
4 October 2023
MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - APPEALS AS TO COSTS - RELEVANT PRINCIPLES
DAMAGES - ASSESSMENT OF DAMAGES IN ACTIONS FOR BREACH OF CONTRACT - PROOF AND EVIDENCE
This is an appeal against the judgment of a Master in the Magistrates Court.
Judgment was entered for the respondent with an award for damages upon it being found that the appellant had breached a contract for the supply and installation of marble benchtops and splashbacks at the respondents’ premises. The respondents had filed an offer to settle their claim prior to the trial which was rejected by the appellant. The amount of that offer was less than the final award for damages. As a consequence, the appellant was ordered to pay the costs of the respondent on a solicitor client basis from 14 days after the date of the filed offer.
The appellant appeals the decision on the quantum of damages and the costs decision. Quantum is appealed on grounds that the learned Master erred in: the construction of the original contract; finding the respondents met their burden of proof in relation to an aspect of their loss; and the inclusion of a specified amount in arriving at the total sum of damages.
The costs decision is appealed on grounds that the exercise of the learned Master’s discretion to award solicitor client costs miscarried because: it was premised on an erroneous quantum of damages by virtue of the above alleged errors; the landscape of what was included in the claim had shifted during the trial; an award for solicitor client costs was inconsistent with the object of proportionality; and the award of solicitor client costs included inappropriate costs that were incurred by the respondents. In addition, the costs decision is appealed on the ground that the learned Master failed to give the appellant the opportunity to file and serve an affidavit, and develop submissions, in relation to the grounds above.
Held:
1. The appeal is dismissed.
2.The learned Master did not err in his calculation of the damages or the inclusion of any specified amount in the total award.
3.The learned Master did not err in finding the respondents had proved their loss in the circumstances of the case.
4.The appellant has not established that the learned Master erred in failing to give the defendant the opportunity to file affidavit and other materials with respect to issues on costs.
5.The appellant has not established the learned Master erred in the exercise of the discretion with respect to costs.

Competition and Consumer Act 2010 (Cth) sch 2; Magistrates Court (Civil) Rules 2013 (SA) r 58; Uniform Civil Rules 2020 (SA) r 1.4, 2.1, referred to.
Robinson v Harman [1848] ER 135; The Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64; Bellgrove v Eldridge (1954) 90 CLR 613; Placer (Granny Smith) v Thiess Contractors Pty Ltd (2003) 77 ALJR 768; TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd [2014] FCAFC 83; Battye v Shammall [No 2] (2003) 86 SASR 254; Southern Resources Ltd v Residues Treatment Trading Co Ltd (1990) 56 SASR 455; Canvas Graphics Pty Ltd v Kodak (Australasia) Pty Ltd [1998] FCA 23, applied.

ADELAIDE MARBLE SPECIALISTS PTY LTD v RAGUNATH & ANOR
[2023] SASC 139
Magistrates Appeal: Civil
KIMBER J:

This is an appeal against an assessment of damages for breach of contract for performance of building works. The appellant was the defendant at trial and the respondents were the plaintiffs. To avoid confusion in this judgment, I will refer to the appellant as the defendant and the respondents as the plaintiffs.
The dispute in the proceedings below involved a contract for the supply and installation by the defendant of bench tops as well as kitchen and pantry splashbacks for the plaintiffs in a house at Tennyson. The contract governing the works comprised signed order forms and associated documentation,[1] including the General Terms and Conditions, by which the defendant’s quotation dated 20 August 2018[2] was accepted with some minor variations.[3]
[1]     These order forms and associated documents, including General Terms and Conditions, are at AB 103–110.
[2]     AB 102.
[3]     The quotation was a combined quote in relation to both the bench tops and the splashbacks, with there being separate order forms in relation to the bench tops (AB 103) and the splashbacks (AB 104).
The learned Master in the court below found the contract was a tripartite contract between the defendant, the plaintiffs and the plaintiffs’ construction manager, BuildInc Pty Ltd (BuildInc).[4] Under the provisions of a Construction Management Contract between BuildInc and the first plaintiff,[5] BuildInc was acting as agent for the first plaintiff in the provision of construction management services.[6]
[4]     Ragunath & Anor v Adelaide Marble Specialists Pty Ltd [2021] SAMC 33 [263(13)] (AB 57) (first judgment).
[5]     Trial Exhibit A1, 1 (not reproduced in the AB).
[6]     Refer clauses 2(a), 4(a) and 5(b) of the Construction Management Contract.
The defendant’s invoices were issued to BuildInc under the tripartite contract. BuildInc then paid the invoices on behalf of the plaintiffs. Under the provisions of the Construction Management Contract, BuildInc was placed in funds or repaid (as the case may be) by the first plaintiff in respect of amounts paid or to be paid by BuildInc under the tripartite contract with the defendant.
Part way through the performance of the works by the defendant under the contract, disputes arose between the plaintiffs and the defendant in relation to the quality of the work of the defendant and whether the edges of the bench tops were in accordance with the terms of the contract. As a result of these disputes, the works under the contract were not completed by the defendant. Most, but not all, of the bench top works were completed, but nothing was supplied by the defendant to the plaintiffs in relation to the splashbacks component of the contract. The plaintiffs had, through BuildInc, paid a deposit of $1,210 in relation to the splashbacks component of the contract.
Accordingly, the plaintiffs engaged others, in particular Adelaide Architectural Joinery Pty Ltd (AAJ), to complete the bench top and splashback works.
The disputes were unable to be resolved between the plaintiffs and the defendant, resulting in the plaintiffs issuing a Claim in the Magistrates Court seeking damages for breach of contract. The plaintiffs subsequently amended their claim on 1 April 2020 to rely, in the alternative, upon other causes of action and relief, in particular under Building Work Contractors Act 1995 (SA) (BWCA), the Australian Consumer Law (Cth) (ACL)[7] and the Sale of Goods Act 1895 (SA) (SGA) (including for a refund or compensation under the BWCA or the ACL, in lieu of damages for breach of contract).
[7] Competition and Consumer Act 2010 (Cth) Schedule 2.
For reasons which assume some importance, the amended claim of the plaintiffs alleged a single contract with the defendant for the supply and installation of bench tops and splashbacks. The value of the contract was set out as one in the amount of $23,265, entered into on 15 October 2018. The amended defence of the defendant denied the existence of any contract between the plaintiffs and the defendant. The amended defence pleaded two separate contracts between it and BuildInc, entered into on or about 15 October 2018. The first contract with respect to bench tops was for $17,125. The second contact with respect to bench tops was for $6,050. For reasons which also assume some importance, the amended defence made no reference to a variation of any contract.
On 17 March 2020, the plaintiffs filed an Offer to Consent to Judgment under r 55 of the Magistrates Court (Civil) Rules 2013 (MCCR) in the sum of $15,000, inclusive of interest, with some incidental terms that are not relevant on the appeal (the filed offer).[8] Despite the filed offer and various other pre-trial offers,[9] the Magistrates Court action was unable to be resolved and proceeded to trial before the learned Master. That trial lasted some eight days.
[8] AB 237, comprising exhibit MRH1 to the affidavit of Michael Roland Hutton (FDN 57).
[9] See, for example, the offers made by the plaintiffs at AB 238, 239.
During the early part of the trial, it became evident that the amount paid by the plaintiffs to BuildInc in relation to the works performed, or to be performed, by the defendant, was greater than that paid by BuildInc to the defendant on account of the works. This was a primary reason for a reduction during the trial in the amount of the refund claimed by the plaintiffs (in the alternative to damages/compensation) from the defendant. The reduction, and the reconciliation of the payments made by the plaintiffs/BuildInc to the defendant, was as recorded in the document titled ‘Applicants’ Reconciliation of Payments Made/Refund Sought’ produced by the plaintiffs during the trial (the Payments Reconciliation).[10]
[10] Comprising MFI A34, at AB 117.
A summary of the judgments
The proceedings in the Court below have an unfortunate history.
The first judgment
On 29 March 2021, after a trial of some eight days, an initial judgment was entered in favour of the plaintiffs (the first judgment). In the first judgment, the learned Master made several findings of fact. Those findings included that there was a single contract between the plaintiffs and the defendant and BuildInc entered into on 15 October 2018 (original contract); BuildInc became a party to the contract ‘because it was making the payments’ on behalf of the plaintiffs; the defendant had breached the contract in failing to supply bench tops which were in accordance with the contract; that the plaintiffs ‘brought the contract to an end or alternatively accepted the [defendant’s] repudiation of the contract when [the defendant] refused to replace the kitchen bench tops’, that refusal being on 1 April 2019. The learned Master found the ‘measure of the [plaintiffs’] loss is the replacement cost’ of the kitchen and island bench tops and waterfalls, rear kitchen bench top, pantry bench top and splashbacks to the kitchen and pantry.[11]
[11] The pantry is erroneously referred to as the laundry in the first judgment.
The learned Master made a provisional assessment of damages in the sum of $16,745 (exclusive of GST). However, the learned Master held there was uncertainty as to the amount of the splashbacks and gave leave to the parties to make further submissions on that issue. The order made was not expressed in terms consistent with leave being given to call evidence. To the contrary, the order was that the parties be given ‘an opportunity to agree or make submissions on the evidence as to the cost of the splashbacks’ (emphasis added).
Submissions before the second judgment
After the first judgment, both parties raised issues with respect to that judgment. Together with the invitation of the learned Master in the first judgment to make further submissions with respect to the splashbacks, this resulted in a further hearing and submissions focussing on quantum. In submissions after delivery of the first judgment, after having pleaded and alleged at trial the absence of any contract with the plaintiffs, the defendant submitted, for the first time, that the contract had been varied on/about 26 March 2019 (the varied contract) before being breached. This was not only inconsistent with the amended defence and the defendant’s approach at trial; it was also inconsistent with the submissions made by the defendant after the evidence and before the first judgment. In written submissions before the first judgment, the defendant had submitted with respect to the splashbacks, that the contract was to supply and install Carrara marble. That was the type of marble specified by the contracts both parties claimed were entered into on 15 October 2018 and a different type to that which the defendant later claimed was specified under the varied contract.
In submissions after the first judgment, the defendant submitted the variation had the effect of increasing the splashback component of the contract from $6,050 to $10,450. The variation had been to supply a more expensive marble, Arasbescato, for the splashbacks in the kitchen and pantry rather than the Carrara marble the subject of the original contract. The defendant submitted this resulted in an increase in the overall contract price from $23,265 to $27,665. There was no attempt to amend the defence.
Bearing in mind the contract found to have been breached in the first judgment was a contract entered into on 15 October 2018 that had not been previously the subject of a submission it had been varied, the plaintiffs did not concede in their submissions that the contract had been varied. In their submissions, the plaintiffs accepted that more expensive splashbacks (the Arasbescato splashbacks) had been installed by AJA rather than the Carrara marble the subject of the original contract which had been found in the first judgment to have been breached. The plaintiffs submitted, consistent with their position there had been no variation, that the relevant loss was not the more expensive Arabescato marble but the marble for which it had contracted with the defendant (i.e. – Carrara marble). The plaintiffs submitted that as Carrara marble had not been installed, and had ultimately not been purchased by them, the best evidence of the supply and installation cost of what they submitted had been contracted for (i.e – Carrara marble) was the quote of the defendant (i.e. – $6050, inclusive of GST).
The second judgment
The learned Master delivered a further judgment on 16 December 2021 (the second judgment). In the second judgment, the learned Master found, inter alia:
1.The contract was varied on 21 March 2019 when the splashbacks component of the contract price was varied from $6,050 to $10,450. As a result, the overall contract price was increased from $23,265 to $27,665 as contended for by the defendant; and
2.Reduced the damages payable to the plaintiffs to a sum of $9,654.87, inclusive of GST but exclusive of interest.
The third judgment
Following the second judgment, the plaintiffs contended the learned Master had fallen into error in the second judgment and made application pursuant to r 186.1 of the Uniform Civil Rules 2020 (SA) for the alleged error to be corrected. This resulted in a further hearing and submissions with respect to the alleged error and the proper quantification of loss.
After the above hearing and submissions, the learned Master delivered judgment on 22 April 2022 (the third judgment). In the third judgment, the learned Master, inter alia, accepted an error had been made in the second judgment. In the third judgment, the learned Master assessed damages in favour of the plaintiffs in the sum of $15,230.87 (exclusive of interest).
The assessment of the damages immediately above included two findings which are the subject of Grounds 1 and 2 respectively. First, that pursuant to the varied contract found in the second judgment, the cost of supply and installation of Arabescato marble was $10,450 of which $6,457 was held to be the supply cost. As will be seen, no evidence was led to prove the amount ultimately paid by the plaintiffs for supply of the Arabescato marble. The learned Master accepted the submission of the plaintiffs that the supply cost of the Arabescato marble under the varied contract was to be inferred from the price quoted by the respondent before the breach. Second, that an amount of $307.75 was to be included in the damages, being a credit in the accounts of the defendant.
Notice of Alternative Contention
The plaintiffs have filed a Notice of Alternative Contention. I will return to that after dealing with the grounds of appeal of the defendant.
Ground 1
Ground 1 is in the following terms:
1.In circumstances where:
1.1    there was evidence of the cost to the [plaintiffs] of the installation of splashbacks after termination of contract with the [defendant];
1.2    there was no evidence that any supply cost, or what supply cost was incurred by the [plaintiffs] for the splashbacks so installed;
1.3    knowledge of any such supply cost was within the possession of the [plaintiffs] and not the [defendant];
1.4    the [plaintiffs] bore the onus of proof on this issue;
1.5    the [plaintiffs] did not apply to re-open their case to lead or adduce evidence on this issue the trial Judge erred in drawing an inference that a supply cost was incurred, and that the supply cost was, or should be assessed at, $6,457.00.
The defendant submits that, following the breach of the contract, there was no dispute at trial, nor on appeal, that the works were completed by AAJ with the Arabescato splashbacks being supplied by the plaintiffs. The defendant submits the cost of the splashbacks must have been known to the plaintiffs. However, the plaintiffs did not lead evidence of the cost of the splashbacks and nor did the plaintiffs make any application to do so. The defendant submits the plaintiffs did not discharge the onus upon them with respect to that issue.
The defendant also submits the cost of the splashbacks was not a part of the quantum claimed by the plaintiffs in their amended claim and the relevant quantum with respect to splashbacks was limited to installation. That can be accepted but must be viewed in light of the plaintiffs not alleging a varied contract nor seeking damages for the supply of splashbacks more expensive (i.e. – Arabescato marble) than those the subject of the original contract (i.e. – Carrara marble). The plaintiffs accepted that under the original contract, there was no entitlement to the cost of more expensive splashbacks.
The plaintiffs submit that whether they were obliged to lead evidence of the cost of the Arabescato marble falls to be evaluated in the context of how the matter proceeded below. This includes, as set out above, that the defendant denied in its defence any contract with the plaintiffs; did not assert that any contract had been varied until after the key issues in the trial had been determined against it in the first judgment, meaning that, given more expensive marble had been installed than what was to be supplied under the ‘unvaried contract’, the contract price was the best evidence of loss; no variation was found until the second judgment, by which time the evidence had closed; and that throughout the proceedings, the plaintiffs calculated damages by the cost as quoted by the defendants. The plaintiffs also direct attention to the order of the learned Master in the first judgment which was not an order to adduce evidence, but to make submissions on the evidence given. The plaintiffs submit that, in the particular circumstances of this case, they were not obliged to lead evidence of the cost of the splashbacks but, to establish that cost, were entitled to rely, as found by the learned Master in the third judgment, on the quote provided by the defendant before the contact was breached.
Discussion
The ruling principle that governs damages at common law with respect to breach of contract is that the plaintiff is to be placed in the same situation, in so far as money can do it, as if the contract had been performed.[12] The onus is upon the plaintiff to prove the quantum of loss suffered on the balance of probabilities.[13]
[12] Robinson v Harman [1848] ER 135.
[13] The Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64, 80, 99, 118 and 137–138.

The measure of damages is generally the difference between the contract price for the work contracted for and the cost of making the work conform to the contract; provided the undertaking of particular work is reasonable.[14]
[14] Bellgrove v Eldridge (1954) 90 CLR 613, 617–618.
In Placer (Granny Smith) v Thiess Contractors Pty Ltd,[15] Hayne J held (Gleeson CJ, McHugh and Kirby JJ agreeing) that where there is a breach of contract, the plaintiff bears the burden of proving the loss sustained ‘with as much precision as the subject matter reasonably permit[s]’.[16] Justice Hayne held:
It may be that, in at least some cases, it is necessary or desirable to distinguish between a case where a plaintiff cannot adduce precise evidence of what has been lost and a case where, although apparently able to do so, the plaintiff has not adduced such evidence. In the former kind of case it may be that estimation, if not guesswork, may be necessary in assessing the damages to be allowed. - co_footnote_162984~FULLTEXT~FTNT.!18 References to mere difficulty in estimating damages not relieving a court from the responsibility of estimating them as best it can may find their most apt application in cases of the former rather than the latter kind. This case did not invite attention to such questions.[17]
(Footnotes omitted)
[15] (2003) 77 ALJR 768.
[16] Ibid, 774 [37].
[17] Ibid, [38].
In this case, the question is whether the plaintiffs could satisfy the onus upon them without leading evidence of the amount paid for the splashback marble the subject of the varied contract, but by relying upon the price quoted by the defendants. That question must be answered in the particular circumstances of this case. As set out above, the proceedings had a particular history.
The best evidence of the cost of the splashbacks was the price paid by the plaintiffs. Nonetheless, it is not necessarily the case that a plaintiff will fail to discharge the onus to prove the quantum of damages unless the best evidence of such a cost is adduced.
In TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd,[18] the Full Court of the Federal Court held:
…the evidence brought by someone with an onus may be so inadequate in its totality, when the whole context is examined, that there can be said to be no rational foundation for any proper estimate. In other cases, the Court is required to make its best estimate on the materials provided. The proper approach will, in any given case, be an evaluative one influenced by such considerations as the nature of the question, including its amenability to precise proof or assessment, the availability and control of evidence, and the onus of proof. Considerations such as the assessment of evidence according to the power of the party to adduce it will be important to such an evaluation.
…it can be accepted that if the Court has before it a question about which the Court could reasonably expect a party to bring evidence of some precision and no such evidence is brought, and no explanation is given, the Court may be entitled to say the burden of proof has not been discharged: Ted Brown Quarries 16 ALR at 37 (Gibbs J); or the Court might say that in the circumstances sufficient evidence has been brought to require the Court to do its best: Ted Brown Quarries at 26 (Barwick CJ). The difference will reflect (as it did in Ted Brown Quarries) differences of opinion from the evaluation of the evidence and the circumstances of the litigation.[19]
[18] [2014] FCAFC 83.
[19] Ibid, [166].
It must be accepted that there are considerations which weigh against the plaintiffs having discharged the onus upon them. There is good reason to conclude the cost of Arabescato marble was known to the plaintiffs and was amenable to precise proof. I proceed on the basis those things are so. At the same time, the way the matter proceeded below must not be overlooked.
The failure to lead evidence at trial is explained by the plaintiffs having installed more expensive marble than that which was to be provided under the contract which they pleaded. As the plaintiffs consistently submitted, they could not claim the cost of more expensive marble than that which they said was to be supplied under the contact which they pleaded. At trial, the cost of Arabescato marble was irrelevant as it had never been provided. In that circumstance, the most appropriate measure of loss was the cost the subject of the contract pleaded. The best, and indeed only, evidence of that cost was the quoted cost of Carrara marble.
The leave given in the first judgment was to make submissions ‘on the evidence’ given at trial. The issue of the cost of the Arabescato marble only became relevant for the first time after the second judgment. Until that judgment, there was no varied contract and the only measure of damages for the splashbacks was the price quoted for the marble not supplied (i.e. – Carrara marble). It was only after the contract was found to be varied in the second judgment that the cost of the Arabescato marble had any relevance. At that point, it can be accepted that the best evidence was the actual cost paid by the plaintiffs for Arabescato marble. However, by that point the trial had been concluded for more than 12 months and, as set out above, the leave given in the first judgment had been to make submissions ‘on the evidence’. Those things being so, the only evidence was the quoted cost under what was, only following the second judgment, a varied contract.
It cannot be said the defendant was taken by surprise. The plaintiffs’ case had always been the measure of damages was the quoted cost. There is no suggestion the Arabescato marble was not installed. Further, the cost used to measure damages was that quoted by the defendant. The defendant cannot claim that quote was not a reasonable one. In the particular circumstances of this case, the quoted cost of Arabescato marble as provided by the defendant provided a proper basis to assess the cost of that aspect of the damages under the varied contract.
For the above reasons, in the particular circumstances of this case, the defendant has not established the learned Master erred in the approach he took.
I dismiss Ground 1.
Ground 2
In calculating damages, the learned Master included an amount of $307.75 in favour of the plaintiffs. The defendant contends the learned Master erred in bringing that amount into account. It is necessary to identify the source of the amount of $307.75.
As set out above, in the first judgment, the learned Master found that BuildInc was a party to the contract between the plaintiffs and the defendant[20] and was making payments on behalf of the plaintiffs.
[20] First judgment [263].
After the first judgment, the plaintiffs submitted that credit in the BuildInc account with the defendant should be taken into account as amounts paid by the plaintiffs in relation to which no benefit was received and, in accordance with that submission, the plaintiffs were entitled to that amount.
There is no dispute the plaintiffs had to be given credit for any unpaid contract work. The defendant does not contest the relevant principles as set out by the learned Master in the second judgment:
The relevant principle is that the measure of damages recoverable by the building owner for breach of building contract is the difference between the contract price and the cost of making the work conform to the contract subject to the rectification work provided. That rectification work must be a reasonable course to adopt in that is it is both necessary and reasonable (see Bellgrove v Eldridge (1954) 90 CLR 618-9, see also Stone v Chapel (2016) SASCFC 72 [55]).
Further, the contractor must be given credit for any unpaid contract work.[21]
[21] Second judgment [67]–[68].
Having identified the above principles in the second judgment, the learned Master held:
Ordinarily a credit for other goods ordered but not required would be taken into account in reconciling the accounts and then in calculating the damages amount. The evidence was sparse on this point but it seems plausibly clear the applicants ordered different products and were entitled to have those credits taken into account.
Having reduced an offset alleged by the defendant of $1,022.75 by $715 for a change of colour to a tv unit (those amounts having been set out by the defendant in its submissions) the learned Master accepted the submission of the plaintiff and allowed a credit of $307.75 to be included in the assessment of damages.[22] The credit of $307.75 was also included in the final damages calculation in the third judgment.[23]
[22] Second judgment [80].
[23] Third judgment [44].
The contention of the defendant is that the amount of $307.75 formed no part of the amended statement of claim of the plaintiffs. The defendant further contends that if payment of the amount was made to BuildInc, there was no evidence of any demand or obligation upon BuildInc to pay the plaintiffs the amount of $307.75.
The defendant submits that it was insufficient for the learned Master to find, that it was ‘plausibly clear’ that different products had been ordered and the plaintiffs were entitled to have those credits included.
Discussion
I reject that this ground should succeed because the amount of $307.75 had not been pleaded. Before the first judgment, both parties had reconciled payments and credits. The reconciliation of the defendant was in the form of an Aide Memoire accompanied by a Debtors Transaction Listing Summary. The amount of $307.75 was set out there once $715 was deducted for the colour change of a tv unit. It was an amount identifiable as being a credit to BuildInc. The same amount was identified by the plaintiffs in their reconciliation. There is no suggestion that amount might have related to a different contract. I accept the submission of the plaintiffs that the reliance upon the reconciliation was a proxy for an amendment to the statement of claim, particularly given the reconciliations were produced to the learned Master before the evidence was concluded in the trial. There was no prejudice to the defendant. As to the complaint about the use of the words ‘plausibly clear’, I am not satisfied those words reflect a failure to make a finding on the balance of probabilities.
I turn to the contention that if the amount was paid to BuildInc, there was no evidence of any demand or obligation upon BuildInc to pay that amount to the plaintiffs. In considering this contention, it must be borne in mind the defendant does not challenge the finding BuildInc was an agent of the plaintiffs and a party to the contract. The defendant does not challenge the findings of the learned Master that there was a single contract to which BuildInc became a party and that ‘BuildInc necessarily became a party to the contract because it was making the payments’[24] and that ‘BuildInc is an agent of [the plaintiffs] for the purposes of the paying of accounts’.[25]
[24] First judgment [263(13)].
[25] Ibid [270].
In the above circumstances and bearing in mind the amount was an amount identifiable from the reconciliation conducted by the defendant, the defendant has not established the learned Master erred in taking into account the amount of $307.75.
I dismiss Ground 2.
Ground 3
On 17 March 2020, the plaintiffs had made an offer to consent to judgment for $15,000, inclusive of interest. As set out above, the learned Master assessed damages in the sum of $15,230.87 (exclusive of interest).
The reasons of the learned Master
On 26 April 2022, the learned Master heard submissions with respect to costs and gave an ex-tempore judgment (the judgment on costs).
The learned Master made the following orders:
1.The defendant pay the plaintiffs’ costs from 14 days after 17 March 2020 (i.e. – from 1 April 2020) on a solicitor-client basis, save for one day of solicitor’s costs to be deducted. That deduction being to take into account an interlocutory application determined in the defendant’s favour and ‘some minor trial matters referred to’ in the submissions of the defendant on 26 April 2022.
2.The plaintiffs pay the defendant’s costs of, and incidental to, the application filed on 11 March 2020, and any costs thrown away out of any amendments made consequent of the hearing of such application, such costs to be agreed or if not agreed to be taxed on a party-party basis.
3.The costs prior to 1 April 2020 be paid by the defendant to the plaintiffs on a party-party basis.
The above orders were made against the background of the following being referred to by the learned Master in the judgment on costs: that ‘almost every point went against the [defendant] on disputed questions of fact’; the parties had gone into the litigation ‘with their eyes open as to the issues and risks’; that he had considered the submissions about the amount of $307.75. After he stated he had reviewed all the material before the costs argument and had ‘looked at costs from the scope of proportionality’, the learned Master stated:
There were matters that have concerned me concerning costs including how this dispute and action has unfolded, particularly concerning the relatively small claim and the length of the trial, number of witnesses, its complexity and account and construction cost issues. However, all parties had their eyes wide open when they went into this dispute from 1 April 2019 and trial.
The dispute seems to be entirely directed by the attitude of the managing director of the [defendant], Mr John Miteloudis, who on 1 April 2019 took a very uncompromising hard line about the way in which the matter would move forward. He declined to replace the island bench, under any circumstances. The parties were entrenched thereafter.
An offer was made to him that day to resolve everything by replacing the island benchtop and sides. He point blank refused. Although there was going to be another meeting, the dispute centred around his refusal to replace the island benchtop. That was clearly unacceptable to the [plaintiffs]. I have found that they were correct in that they did not get what they ordered. In this regard the director did not even talk to [the representative of the defendant] about the contract, especially when she did not think the installed product was what the [plaintiffs] wanted.
The complaints
Grounds 1 and 2 having been dismissed, the defendants contend the learned Master made the following errors as set out in Ground 3:
1Failed to have regard to the fact that at the time the rules offer was made and open for acceptance, the [plaintiffs] were not claiming or seeking the supply cost of the splashback installed, and had not provided, any record of any such cost;
2Failed to have regard to the fact that at the time the rules offer was made and open for acceptance, the [plaintiffs] were not claiming or asserting that tiles credits totalling $1,430.12 in the defendant’s account with BuildInc were an amount that was paid by the [plaintiffs] to the defendant under the contract;
3The [plaintiffs] failed to have regard to the fact that at the time the rules offer was made and open for acceptance, the [plaintiffs] were not claiming or asserting that an unallocated tiles credit of $307.75 in the [defendant’s] account with BuildInc were an amount as paid by the [plaintiffs] under the contract, or that such sum was able to be applied towards the contract price;
4An award of solicitor client costs was inconsistent with the object of proportionality;
5The award of solicitor client costs included within its scope, attendances for which such an award was inappropriate, having regard:
5.1    the evidence led by the [plaintiffs] in relation to the claimed installation costs of the splashback was erroneous and misleading in that it included sealing costs not included in the contract work and that the actual installation costs of the splashback were found in evidence led by the [defendant] and which came from materials returned under subpoena issued by the [defendant].
5.2    the [plaintiffs] led evidence from about 5 unnecessary witnesses, evidence was peripheral or unrelated to the key issue in dispute, namely what size aris was the [defendant] required to supply under the contract, and what size aris was supplied by the [defendant].
5.3    the [plaintiffs’] case in relation to the size of the aris that the defendant required to supply under the contract (namely an assertion of an express representation by the Appellant that the aris on the benchtops would be in the order of 2-3mm and that such representation constituted an oral term of the contract) was not accepted by the learned Master.
5.4    the [plaintiffs] re-opened their case for the sole purpose correcting evidence from Mr John Goldfinch (as to the date of a particular photograph taken).
5.5    the further hearings and submissions from April 2021 to January 2022, and the further time taken from March 2021 to April 2022, all stemmed from the [plaintiffs] action in relation to the claim that they made but then ultimately seeking damages other than as they claimed and pleaded, namely seeking damages in relation to supply cost of the splashback of which there was no disclosure, production, evidence or otherwise, of any record of any such cost.
5.6    there was nothing unusual or improper about submissions put by the [defendant] on 26 April 2022 that would justify an award of solicitor client costs of that attendance.
As may be obvious, the grounds of the defendant set out many matters but, viewed in the context of the submissions, the contentions are as follows. First, that for a judgment sum, including interest totalling about $17,000, the costs incurred and claimed offend the principle of proportionality. The defendants also direct attention to the matters in [5.1]–[5.5] above. Second, that the learned Master failed to have regard to the matters in [1] and [2] above. Third, the learned Master failed to have regard to the combined effect of the matters in [1], [2] and [3] above. Fourth, the award of solicitor client costs with respect to 26 April 2022 (the date of the argument with respect to costs) should not have been made.
Agreed facts
For the purposes of the appeal, the parties agreed some facts. Those facts included:
1.That the [plaintiffs] served an affidavit upon the [defendant’s] solicitor with respect to costs on 26 April 2022 at 11.18am;
2.On 26 April 2022 at the Adelaide Magistrates Court immediately before the hearing at 2:15pm, Christian Munt, Counsel for the [plaintiffs], and Nicholas Anderson, solicitor and counsel for the [defendant], had a discussion to the following effect:
a.     Mr Anderson wished to file an affidavit on the question of costs.
b.    The [plaintiffs] would consent to an adjournment of the hearing for that to occur.
c.     The parties would seek orders to this effect, plus orders for the parties to file brief written submissions on costs in advance of the adjourned hearing.
3.At the commencement of the hearing on 26 April 2022, the parties sought orders in accordance with the discussion between Mr Munt and Mr Anderson referred to in paragraph 2 above.
4.[The learned Master] responded with words to the effect that he was not willing to adjourn the hearing and would hear from the parties [on that day] in relation to costs.
5.[Counsel] then respectively made lengthy oral submissions on the question of costs.
6.The [defendant’s] oral submissions included points in the nature of those contained in [1] to [4] and [5.1] to [5.4] of [the grounds as set out at [55] above].
7.At the conclusion of the [defendant’s] oral submissions, [counsel for the defendant] sought leave to file, if necessary, an affidavit in support of evidentiary matters referred to by him in his oral submissions and to provide authorities in relation to proportionality of which [counsel] was aware but could not recall by name at the time.
8.[The learned Master] responded with words to the effect that this would not be necessary.[26]
[26] Statement of Facts (FDN 6).
Discussion

Before turning to the above grounds, it is necessary to say something about an argument which arose on appeal about whether the learned Master applied the Magistrates Court (Civil) Rules 2013 (MCCR) or the Uniform Civil Rules 2020 (UCR) which commenced on 18 May 2020. As set out above, the offer was filed on 17 March 2020 but the relevant orders were made on 26 April 2022.
The submissions of the plaintiffs on appeal were consistent with the learned Master having applied the MCCR and having found special reasons. At the time of the filing of the offer, r 58 of the MCCR was in the following terms:
(1)In making an order as to costs at the trial of an action, the Court must take into account any offer to consent to judgment, or any payment of a sum of money to the Registrar, and any refusal or failure to accept such offer or payment.
(2)Unless the Court for special reasons orders otherwise –
(a) A plaintiff who obtains final judgment for a sum of money that is more than the amount of its offer plus the costs and interest due at the time of the offer is entitled to costs on a solicitor and client basis after the expiration of 14 days from the date the notice of the offer was served.
(b) A plaintiff who obtains final judgment for a sum of money that is equal to or less than the amount of any such offer or payment by the defendant (plus costs and interest due at the time of payment) is not entitled to costs after the expiration of 14 days from the date the notice of offer or the notice of payment was served and thereafter the defendant is entitled to solicitor client costs.
The defendant submitted that if the learned Master applied r 58, he was in error. The defendant submitted that the UCR applied. The defendant directed attention to r 1.4(1) of the UCR which contains a transitional provision in the following terms:
(1)Unless the Court otherwise orders—
(a) these Rules apply to—
(i)a proceeding commenced; and
(ii)a step in a proceeding taken,
on or after the commencement date; and
(b) the Previous Rules continue to govern a step in a proceeding taken before the commencement date.
The defendant directed attention to r 2.1 which defines ‘step’ as follows:
step in a proceeding or appellate proceeding includes a document filed, process is sued, action taken or order made in the proceeding.
In my view, the costs order made on 26 April 2022 was a step in the proceedings and the UCR applied. Nonetheless, to so find does not assist the defendant. First, there is no ground of appeal which contends the learned Master applied the incorrect rule. Second, I am not satisfied the learned Master applied the MCCR. The learned Master stated simply ‘I think the matter is best dealt with in fact with an order pursuant to the rules’. The learned Master did not use any language inconsistent with the UCR.
Principles
The decision as to costs was a discretionary one. An appeal court will not lightly interfere with the exercise of that discretion by a trial judge.[27] To succeed on appeal against an order for costs, the defendant must show the exercise of the discretion was so unreasonable or unjust as to require me to substitute my own discretion.[28]
[27] Battye v Shammall [No 2] (2003) 86 SASR 254, 258 [18]
[28] Southern Resources Ltd v Residues Treatment Trading Co Ltd (1990) 56 SASR 455, 480.
Consideration
As to the first of the matters in [55] above, the learned Master stated he had considered proportionality. The question of proportionality of costs was considered in Canvas Graphics Pty Ltd v Kodak (Australasia) Pty Ltd,[29] where O’Loughlin J stated:
When one stands back and reflects upon the ultimate outcome of this matter, there is an applicant, successful on trial and on appeal in the sum of $273,591, quantifying its costs on a party and party basis for the trial at $647,001.18. Whilst there must always be provision made for special or unusual cases, in the majority of cases and this is one, the Court must exercise its discretionary powers so as to ensure that the costs that are awarded to a successful litigant bear some relationship to the measure of its success. It is essential that every effort be made to contain costs. Although the trial was complex - mainly because of the need to explore the technical attributes of the equipment that Kodak had sold to Canvas Graphics - it still remained a basic cause of action in which a dissatisfied purchaser sued its supplier because of faults in the equipment that had been supplied to it. In such a case, it is necessary to keep a firm control on costing issues. They must not be permitted to explode as they obviously have done in this case. In my opinion, in fixing a gross sum for costs in this matter, the Court should take these factors into account so as to ensure that the costs that are awarded bear some relationship to the size of the applicant’s victory.
[29] [1998] FCA 23.
It can be accepted that the filed offer was not a great deal less than the final award of damages. Nonetheless, I am not satisfied the order with respect to solicitor client costs was inconsistent with the object of proportionality. The order must be viewed bearing in mind that the defendant initially claimed that there was no contract. When that claim was rejected by the learned Master in the first judgment, the defendant then alleged, for the first time, a variation in the contract. This approach of the defendant must be borne in mind in addition to the observations made by the learned Master, including about the conduct of the defendant, in the judgment on costs which I have set out at [53] above. Mindful that the issue is whether the order made was one within a proper exercise of a discretion, the defendant has not established that the order was inconsistent with the object of proportionality.
As to the second and third of the matters in [55] above, the defendant has not satisfied me that the learned Master failed to have regard to the matters in [1] and [2], nor their combined effect. It is agreed that each matter was referred to in submissions. The judgment was then delivered immediately thereafter. In those circumstances, I am not satisfied any relevant matter and their combined effect, was overlooked.
As to the fourth of the matters at [55] above, the defendant has not established the learned Master erred in exercising his discretion to order solicitor client costs with respect to the costs hearing on 26 April 2022 in circumstances in which the submissions of the defendant were substantially rejected and the decision was a discretionary one.
For the above reasons, I dismiss Ground 3.
Ground 4
It is common ground that there was an agreement between counsel on 26 April 2022 to allow the defendant time to file and serve affidavit materials and written submissions in relation to costs. The defendant contends that bearing in mind that agreement, the learned Master erred in failing to give the defendant an opportunity to file and serve affidavit material and written submissions. The defendant submits that had the learned Master allowed the defendant the agreed opportunity, it would have developed submissions in relation to the matters referred to in [5.1], [5.2] and [5.4] above, and would have provided authorities in relation to [5.5] above.
Ground 4 must be considered bearing in mind the agreed facts.
The defendant was not denied procedural fairness. In the third judgment given on 22 April 2022, the learned Master ordered that the matter was adjourned to 26 April 2022; he would hear the parties as to costs and that in ‘the event the parties are not available [on 26 April 2022] the Court will give directions for brief written submissions on interests [sic] and costs’.
The correspondence exhibited to the affidavit served on 26 April 2022 was correspondence with respect to the resolution of the matter. The defendant cannot be said to be taken by surprise by that material, particularly in circumstances in which since 22 April 2022, it must have understood that it was expected to prepare for a hearing with respect to costs. It was not submitted on appeal the correspondence was not known to the defendant’s solicitor or that the material exhibited to the affidavit could have taken the defendant by surprise given the purpose of the hearing. On the hearing of the appeal, nothing was produced with respect to what the further evidence might have been had the learned Master granted an adjournment.
It is an agreed fact the defendant made oral submissions which were ‘lengthy’. It is also an agreed fact that the defendant made submissions with respect to in [1]–[4] and [5.1]–[5.4]. Given the history of the matter, I am not prepared to conclude the learned Master was not cognisant of the matters in [5.5] or [5.6].
In the circumstances, the defendant has not established that the learned Master erred in failing to give the defendant the opportunity to file affidavit material and other material. I dismiss Ground 4.
The Notice of Alternative Contention
In the circumstances, it is not necessary to deal with the Notice of Alternative Contention.
Conclusion
The appeal is dismissed.
I will hear the parties as to any further orders.