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…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2023] SASC 139
Decision Date

CaseChat Overview and Summary

In the case of Adelaide Marble Specialists Pty Ltd v Ragunath, the defendant, Ragunath, appealed against the orders made by the learned Master regarding costs. The primary contentions of the defendant were that the costs incurred and claimed by the plaintiffs were disproportionate to the judgment sum, that the learned Master failed to consider certain matters, and that the award of solicitor-client costs was improper. The agreed facts established that the parties had a discussion about costs and the learned Master declined to adjourn the hearing to allow further submissions.

The legal issues before the court were whether the learned Master's decision on costs was unreasonable, disproportionate, or failed to consider relevant factors. The court had to determine if the learned Master's exercise of discretion was justifiable and whether the principles of proportionality and fairness were adhered to. The court considered the established principle that an appeal court will not lightly interfere with the exercise of discretion by a trial judge. To succeed on appeal, the defendant had to show that the exercise of the discretion was so unreasonable or unjust as to require substitution of the court's own discretion.

The court found that the learned Master had considered the principle of proportionality in making the costs order. Although the costs were significant, they were not disproportionate to the judgment sum when considering the complexity of the case and the conduct of the defendant. The court also concluded that the learned Master had adequately considered all relevant matters, including those raised by the defendant. The decision to award solicitor-client costs was deemed appropriate in the circumstances.

The court dismissed the appeal and upheld the orders made by the learned Master. The decision affirmed that the discretion exercised by the learned Master in assessing costs was reasonable and in line with legal principles.

Orders

Orders of the court

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Background

Background to the litigation

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.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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.

Ratio Decidendi

Legal Principle Established

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.