Angela Margarete Preda trading as Parramatta Diagnostic Imaging v Australian Imaging & Ultrasound Distributors Pty Limited

[2007] NSWSC 155

CITATION:	Angela Margarete Preda trading as Parramatta Diagnostic Imaging v Australian Imaging & Ultrasound Distributors Pty Limited [2007] NSWSC 155
HEARING DATE(S):	26 & 27/02/07
JUDGMENT DATE :	27 February 2007
JURISDICTION:	Equity Division
JUDGMENT OF:	White J
EX TEMPORE JUDGMENT DATE:	27 February 2007
DECISION:	See paragraphs 62-64 and 70 of judgment.
CATCHWORDS:	CONTRACTS – Rescission – Rescission for innocent misrepresentation – No question of principle.
LEGISLATION CITED:	Trade Practices Act 1974 (Cth) Fair Trading Act 1987 (NSW)
CASES CITED:	Watson v Foxman (1995) 49 NSWLR 315 Gould v Vaggelas [1983] 157 CLR 215 Given v CV Holland (Holdings) Pty Ltd (1977) 29 FLR 212; 15 ALR 439 Thompson v J T Fossey Pty Ltd (No 1) (1978) 20 ALR 496
PARTIES:	Angela Margarete Preda trading as Parramatta Diagnostic Imaging v Australian Imaging & Ultrasound Distributors Pty Limited
FILE NUMBER(S):	SC 3331/05
COUNSEL:	Plaintiff: B De Buse Defendant: J Dupree
SOLICITORS:	Plaintiff: Turks Legal Defendant: Russo & Partners

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WHITE J

Tuesday, 27 February 2007

3331/05 Angela Margarete Preda trading as Parramatta Diagnostic Imaging v Australian Imaging & Ultrasound Distributors Pty Limited

JUDGMENT

1 HIS HONOUR: The plaintiff is a radiologist. Her husband, Dr Oleg Preda, manages her practice. In these reasons when I refer to "Dr Preda" I will be referring to the plaintiff's husband.

2 On 18 November 2004, Dr Preda entered into a contract on the plaintiff's behalf to buy a dental x-ray machine from the defendant. The price of the machine was $44,600. The defendant is suing for the price. The plaintiff says that the contract has been rescinded for an innocent misrepresentation as to the quality of the goods, or that the contract is liable to be declared void pursuant to s 87 of the Trade Practices Act 1974 (Cth) or s 72 of the Fair Trading Act 1987 (NSW).

3 The plaintiff also claims that the defendant breached a condition as to fitness of the goods for a particular purpose. However, she makes no claim for damages for loss of bargain. Counsel for the plaintiff correctly acknowledged that if she failed in her claim based on alleged misrepresentation, she could not succeed in her claim for breach of contract. This claim can therefore be put aside.

4 The key issues are whether a pre-contractual representation was made by the managing director of the defendant, Mr Hatfield, that the films the machine produced would match films produced by a Siemens x-ray machine which the plaintiff also used.

5 Mr Hatfield admits that he was asked whether the machine would provide the same quality images as the Siemens machine and that he said:

“ Yes, I believe that our machine will produce images of a similar quality. "

6 The plaintiff says that whereas the Siemens machine produced images of a patient's teeth and facio-maxillary area to the same scale as the patient's features, the defendant's machine produced magnified images. Accordingly, the plaintiff says that the films produced by the defendant’s machine do not match the images produced by the Siemens machine and are not of the same quality.

7 The machine in question is called a Soredex Cranex Excel OPG Unit + ceph. OPGs are orthopatograms. That is, they take x-rays of a patient's teeth and facio-maxillary areas. They take what is called a "panoramic picture". A ceph attachment is shorthand, I understand, for a "cepholometric tube" and provides a side view of a patient's face.

8 At one stage during the hearing, there was an issue as to whether the machine supplied by the defendant was the model known as the Soredex Cranex Excel. Ultimately, that issue fell away, as it is clear that the machine supplied was that model.

9 The contract provided for the purchase price to be paid partly by way of a trade-in of a Siemens Orthophos machine used in the plaintiff's practice at Granville.

10 Dr Preda was interested in buying a new machine for the practice because there was a five-minute delay with the Siemens machine after the taking of each picture. There was no such delay with the Soredex machine. Dr Preda gave evidence that at a meeting on 8 November 2004 with Mr Hatfield, he asked:

“ How does the quality of your images compare with the Siemens? I have very demanding referrers and the films have to be the same as the Siemens. "

11 He deposes that Mr Hatfield said words to the effect:

“ The films are top quality. They are the best in the field. "

12 He says that he said words to the effect:

“ The machines have to be interchangeable so if someone has a film taken on one day and six months later they come back, it wouldn't matter whether we used the Siemens or your machine. This doctor or dentist has to be able to accurately compare the two images. "

13 He says that he provided Mr Hatfield with a sample of films produced by the Siemens machine and asked him whether the Soredex machine could "match these precisely". He deposes that Mr Hatfield said "Yes, I'm sure of it" and that he asked Mr Hatfield to take the films away to check.

14 Mr Hatfield denies this conversation. He denies that Dr Preda offered to allow him to take the films from the Siemens machine away for checking.

15 In his affidavit in reply Dr Preda deposed that he asked if the Soredex system gave pictures identical to Siemens and was told that it did.

16 Dr Preda says that on 18 November 2004, he had a discussion with Mr Hatfield to the following effect about sample films taken from the Siemens machine. He asked:

“ What did your engineers say about the films I gave you? Do they think that your equipment will match what is produced by the Siemens machine? "

17 Mr Hatfield is said to have replied "You should have no problems, they will match."

18 Mr Hatfield said that at the meeting on 18 November 2004, he was shown images produced by the Siemens machine. These images were placed in a viewing box for him to look at. He was asked by Dr Preda whether the Soredex machine would provide the same quality images and, as I have referred to earlier in these reasons, replied:

“ Yes, I believe that our machine will produce images of a similar quality. However if you are looking for images of a higher quality, then I believe you should consider the Cranex Tome, which is in the brochure I showed you in our first meeting. If you want other references for any of the Soredex systems, I can forward these to you. "

19 In essence it is the defendant's case that in this conversation the parties talked about the "quality" of images and did so in a context in which that term referred to the clarity of the images.

20 In correspondence of 18 December 2004 and 14 February 2005, which was before Dr Preda had examined and compared images produced by the Soredex machine with images produced by the Siemens machine, Dr Preda wrote the following. First, on 18 December 2004, he wrote to Mr Favaloro, the defendant's National Service Manager, and said:

" After January 10th the operation of this unit can be demonstrated to my staff. Subject to it producing images of a quality to match our present unit I will accept it ... "

21 On 14 February 2005, he wrote to the managing director of Soredex in Finland and said that he signed the contract of 18 November 2004:

“ On the clear understanding that ... the quality of images would be at least equal to a Siemens Orthophos we have already in place. "

22 Dr Preda was not cross-examined on this correspondence. Nonetheless, his correspondence is important in deciding precisely what representations were made as to the nature of the images the Soredex machine would produce with careful patient positioning.

23 The differences between his evidence and the evidence of Mr Hatfield are differences as to what precise words were used. Both Dr Preda and Mr Hatfield appeared to be witnesses who were doing their best to tell the truth as they recalled it. There was nothing in their demeanour which would warrant the preference of one to the other.

24 In Watson v Foxman (1995) 49 NSWLR 315, McLelland CJ in Eq said (at 318 to 319):

" Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive (which I will compendiously described as "misleading") within the meaning of s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act ), it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court: (1) what the alleged conduct was; and (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consider­ation of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. "

25 It is common ground that a representation was made as to the quality of the image the Soredex machine could produce. A representation was made that the quality of the image would be the same as or similar to the image produced by the Siemens machine. I do not accept that a representation was made by Mr Hatfield in which Mr Hatfield used words that the Soredex images would match or match precisely the Siemens images, or that he assented to a question or stipulation in those precise terms by Dr Preda. I do not accept that he had previously been given these Siemens films to take away for analysis.

26 The questions then are whether Dr Preda relied upon the representation as to quality and if so, whether that representation was false or misleading. There is no suggestion that Mr Hatfield said anything that was knowingly or intentionally false or misleading. However, that is not the question.

27 The contract was signed shortly after the representation as to the quality of images was made. When problems emerged during the course of the installation of the machine Dr Preda quickly asserted the basis upon which he had signed the contract.

28 In Gould v Vaggelas [1983] 157 CLR 215, Wilson J said (at 236):

“ ...

2. If a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact that he was induced to do so by the representation.
3. The inference may be rebutted, for example, by showing that the representee, before he entered into the contract, either was possessed of actual knowledge of the true facts and knew them to be true or alternatively made it plain that whether he knew the true facts or not he did not rely on the representation.
4. The representation need not be the sole inducement. It is sufficient so long as it plays some part even if only a minor part in contributing to the formation of the contract. ”

29 Mr Hatfield’s representation was calculated to induce entry into the contract. There is a fair inference that it did so. The inference has not been rebutted. Dr Preda was the plaintiff's agent to negotiate and make the contract. It is sufficient that he relied on the representation. The fact that the plaintiff was not called does not displace the inference that the contract made by Dr Preda on her behalf was induced by the representation made by Mr Hatfield to Dr Preda.

30 In his affidavit in reply, Dr Preda said that it appeared to him at the meeting on 8 November 2004 that Mr Hatfield was unfamiliar with the technical sheet. This was a reference to a technical sheet handed to Dr Preda by Mr Hatfield. Dr Preda was led in cross-examination to say that he understood that Mr Hatfield was unfamiliar with the technical capabilities of the machine. From this it was submitted that Dr Preda did not rely on Mr Hatfield's representations as to the nature or quality of the images the machine produced.

31 This was a semantic cross-examination. It was not put to Dr Preda that he formed the view that Mr Hatfield was unfamiliar with the images created by the machine. I am satisfied that Dr Preda relied upon the representation made by Mr Hatfield as to the quality of the image produced by the Soredex machine.

32 The issues arising from the representation that the machine produced images that were of the same or similar quality to those produced by the Siemens machine are fairly within the issues raised by the plaintiff that the images would match.

33 The Soredex machine was installed at the plaintiff's practice in Parramatta over a period between 26 November and 14 December 2004. There were problems with the operation of the lateral x-ray tube, which had to be replaced twice. The training of staff in the operation of the machine was completed on 16 February 2005. The parties treated the machine as having been commissioned on that date.

34 The contract provided that the purchase price was payable by a 10% deposit on acceptance of the quotation and the balance on the day of commissioning. No deposit was paid. There were disputes between the parties, and tension between the parties, which led to the intervention of the defendant's solicitor in December 2004. The matters of dispute and the matters which gave rise to tension concerned the failed lateral x-ray tubes, a question of what the defendant had agreed to provide, or to pay for, by way of protective shielding, and the provision of a list of users of Soredex machines. None of these matters is now in issue.

35 On 21 December 2004, the defendant demanded payment for the machine, claiming that it had been commissioned on 14 December 2004. On 22 December 2004, the defendant's solicitors wrote to the same effect. The position taken by Dr Preda was that the machine had not been commissioned because at his request - a request to which the defendant acceded - the training of the staff in its use had not been completed. At this time, he also made it clear that he would only accept the machine if it produced images of a quality to match the Siemens unit.

36 On 23 December 2004, Dr Preda wrote to the defendant's solicitor, Mr Russo. Dr Preda said that, "In view of the fact that your client continues to reject my timetable and there is mutual distrust, please advise your client to remove his installed machine from our premises ... by 5 pm this afternoon." The plaintiff submits that this was a rescission of the contract of 18 November 2004 and that she is entitled to rely upon the alleged misrepresentation made on 18 November 2004 as a ground justifying rescission. It is not necessary to consider whether this is so or not, because the plaintiff subsequently resiled from that position.

37 On 14 February 2005, the plaintiff's solicitors advised the defendant's solicitor that the plaintiff agreed to the arrangement of the defendant’s attending at the plaintiff’s offices on 16 February 2005. They said that, "If the equipment is operational and produces x-rays of satisfactory quality, our client will provide the cheque for the sum of $38,660 on 23 February 2005".

38 The training of staff was completed on 16 February 2005. The demonstration was conducted by a Mr Mitchell, who was employed as a technician by the defendant. After the training was completed and the first patient was x-rayed using the Soredex system, Mr Mitchell made slight adjustments to the machine. He then observed more patients being x-rayed. The x-ray films produced by the Soredex machine were reviewed by the staff of the Parramatta surgery. Mr Mitchell asked whether the films were okay. He was told by one, or perhaps more radiographers, "Yes, they seem okay".

39 The plaintiff did not pay for the machine on 23 February 2005. The reason for that was explained by Dr Preda in a letter of 21 December 2005. He said:

“ An evaluation of the films produced by their [the defendant’s] Soredex machine shows the following unacceptable features:

(1) The size of the OPG film is approximately 10% larger than anatomical size.

(2) The lateral ceph film has one third to one half of the skull not shown on the film.

(3) The petrous temporal bone is obscured by an ear plug as an artefact. ”

40 He also complained that no compliance certificate had been issued, but that is not a matter now in issue. Only the first of the complaints is now pressed.

41 The defendant replied on 24 February 2005. Mr Favaloro wrote:

“ As you are aware upon hearing of your concerns (unacceptable features as stated in your letter and in italics below) I sent two engineers to your practice to investigate and offer the following in response to each point.

Overall the image you have provided for comparison between the Siemens and the Soredex does not provide a true indication of differences between the machines. It is clear from the image that poor patient positioning during exposure using the Soredex resulted in some distortion and magnification.

(1) The size of the OPG film is approximately 10% larger than anatomical size.

All OPG films from an x-ray machine cannot guarantee 100% correct anatomical size as this relies heavily on patient positioning being 100% accurate. In fact most machines will show magnification and some may even produce reduced size images. Depending on requirements for the image professionals use markers on teeth and films as indicators. "

42 No evidence was called by the defendant to substantiate the assertion that poor positioning during exposure using the Soredex machine resulted in distortion and magnification. Nor was there evidence from the defendant that most machines will show magnification, let alone was there evidence from the defendant that the Siemens machine showed magnification.

43 Mr Favaloro asserted, both in his letter of 24 February 2005 to the plaintiff and in correspondence to the manufacturer in Finland, that patient positioning was incorrect. However, Mr Favaloro was not called and the matter rests with assertions to that effect in the defendant's correspondence. A person called Ritva Manner, at an entity called GE Health Care, asserted in email correspondence to Mr Favaloro that no panoramic unit gave true anatomical sizes and there was always a magnification in images. Again, no-one for the defendant was prepared to swear to that effect.

44 Counsel for the defendant submitted that the onus lay on the plaintiff to establish that the representation as to quality was misleading. That is undoubtedly correct. However, that does not mean that an evidentiary onus on particular issues may not pass to the defendant. Dr Preda gave evidence that about 25% of the referrals to the practice came from specialists who required images that showed teeth, the jaw and cranial areas of actual size. He said that the Siemens machine produced OPGs which did that. In cross-examination he acknowledged that there could be minute differences between pictures taken on different occasions attributable to different patient positioning. However, he said that the patient’s position was fixed in such a way that, if done properly, the images were exactly reproducible.

45 It was said that Dr Preda lacked the necessary expertise to express such opinions. His evidence in his affidavit was not objected to on the ground that he lacked expertise to express the opinions which he did. In any event, his observations as to the size of images produced by the two machines was well within his expertise. It was also within his expertise to say what requirements for images were made known to the practice which he managed.

46 It was not always clear to me whether the defendant disputed that there was evidence that the Siemens machine produced images to the actual anatomical size of the patient. There were assertions to contrary effect in the defendant's correspondence. However, Dr Preda's evidence given on oath has not been contradicted, except by such statements in correspondence. His evidence has not been rebutted.

47 It is also clear that the Soredex images are magnified. Dr Preda deposed that on first analysing the films produced by the Soredex machine he found that they were not anatomically correct. The correspondence tendered by the defendant confirms that such magnification occurs and occurs independently of any operator error in the positioning of patients. The statements made by radiographers, who were employees in the practice responsible for producing (as distinct from interpreting) the image, on 16 February 2005 to Mr Mitchell to the effect that the films seemed okay do not displace the other evidence that the films produced by the Soredex machine were of a different size from the Siemens’ images and did not exactly reproduce the size of the patients’ facio-maxillary features.

48 The film produced by the Soredex machine is provided to a computer and the image shown on the computer monitor can be adjusted for shading by the radiographers. Dr Preda accepted that a radiographer could adjust the size of the image. However, there is no parameter by which the radiographer can determine what adjustment is needed to match the patient's actual size.

49 Accordingly, the question comes down to whether the size of the image produced by the Soredex machine is a part of its quality, in the sense in which the representation was made by Mr Hatfield. If the size of the image is part of the quality of the Soredex image, then the representation that the Soredex images had the same or similar quality to the Siemens’ images was innocently untrue.

50 It was submitted that what was conveyed by the representation as to quality should be determined by the descriptions of the machines given in brochures which were provided to Dr Preda on 8 November 2004. Those brochures make no mention of the size of the image.

51 Mr Hatfield said that if Dr Preda was looking for images of a higher quality then he should consider the Cranex Tome, which was in the brochure he showed to Dr Preda in the first meeting. However, I do not consider that that incidental reference to the brochure conveyed that when Mr Hatfield was talking of the quality of the images, he was confining it to the features of the product referred to in the brochure. Dr Preda already had the brochure. Clearly he was asking for an assurance that went beyond what was stated in the brochure.

52 There is no doubt that in talking of the quality of the image, Mr Hatfield was referring to the clarity of the image. It does not follow that that was all that he was referring to. The question depends not on Mr Hatfield's subjective intentions but what, objectively considered, was conveyed by the words he used in the context in which he used them.

53 I was referred to a number of dictionary definitions of the meaning of the word "quality". In Given v CV Holland (Holdings) Pty Ltd (1977) 29 FLR 212 at 216; 15 ALR 439 at 442, Franki J adopted the following definition from the Shorter Oxford Dictionary applicable to the use of the word "quality" in relation to things, namely, "an attribute, property, special feature. The nature, kind or character (of something)". (See also Thompson v J T Fossey Pty Ltd (No 1) (1978) 20 ALR 496 at 501.

54 The dictionary definition in the Oxford English Dictionary which, to my mind is most apposite, is "an attribute, property, special feature or characteristic of a thing". I was referred by counsel for the defendant to another definition in which the word "quality" is defined as one of three Aristotelian categories, others being relation and quantity. I am quite sure that when Dr Preda and Mr Hatfield were discussing the images they did not have concepts of Aristotelian philosophy in mind. Be that as it may, I would have thought that in that sense, size was an attribute which was a quality of the thing.

55 I was also referred to the special use of the word "quality" cited in the Oxford English Dictionary in reference to radiology. It was there defined as the "penetrating power of a beam of x-rays". However, Mr Hatfield and Dr Preda were not discussing the quality of x-rays, but of the images produced by the machines through the use of x-rays.

56 In my view, the size of the image is an attribute, feature and characteristic of the films produced by the Soredex machine. It was submitted for the defendant that what fell within the concept of "quality" should be discerned from the use which can be made of the resulting images. With that I agree. In my view the features of the images which contribute to the usefulness of the images fall within the concept of the quality of the image.

57 It was then said that radiographers can adjust the scale of the image and that there is no evidence that the images produced by the Soredex machine do not have as much utility as the images produced by the Siemens machine. However, there is such evidence. Dr Preda said that a substantial proportion of OPG referrals from specialists, a proportion he estimated at 25%, were from specialists who required "anatomically correct images". By this he meant images which showed the teeth, the jaw and cranial areas of actual size. He said that these were used by surgeons and orthodontists to take accurate measurements of patients. Accordingly, on the basis of his evidence the size of the image and whether it accords exactly with the size of the patient’s feature is an important attribute of the image and one which affects its utility. It is, in my view, part of the quality of the image.

58 For these reasons, I am of the view that by Mr Hatfield’s confirming that the quality of the image would be the same as or similar to the Siemens’ images without disclosing that there would be a degree of magnification, and without expressly confining the representation to one about the clarity of the image, he innocently misrepresented the features and hence the quality of the product. That representation induced Dr Preda to enter into the contract on behalf of the plaintiff.

59 The defendant commenced proceedings in the Local Court on 31 March 2005 claiming payment of the purchase price. On 6 June 2005, the plaintiff commenced proceedings in this court seeking a declaration that the contract was void pursuant to s 87 of the Trade Practices Act. Damages were sought in the alternative. Nonetheless it is clear from the summons which was filed, if it was not already clear, that the plaintiff regarded itself as not bound by the contract. The filing of the summons showed a clear intention not to be bound by the contract.

60 Subsequently, in April 2006, the plaintiff's solicitors wrote to the defendant's solicitors saying, "As you are aware our client seeks, inter alia, rescission of the contract ... ”. They proposed that the machine which was sitting in the plaintiff's premises unused be taken by the defendant and sold, because they said it was probable that a higher price would be received if the machine was sold by the defendant. That offer was not taken up.

61 It is not suggested - and there is no evidence which would support the suggestion - that there was any bar to the plaintiff’s rescinding the contract. It is possible to effect restitution. The plaintiff, I understand, is willing and would, I assume, provide an undertaking to the Court, to allow the defendant to remove the Soredex machine from its premises. The plaintiff has also offered undertakings to repay sums totalling $2,305.71 which, pursuant to the contract, the defendant paid for the cost of shielding the machine and for the cost of the cassettes to be used with it.

62 In my view, for these reasons, the appropriate orders are as follows:

1. Order that the claim in proceedings No 350/05 in the Local Court at Hornsby be dismissed.
2. Declare that the contract dated 18 November 2004 between the plaintiff and the defendant has been rescinded by the plaintiff.

63 I will note undertakings which I expect I will be given by the plaintiff to allow restitution. In the event that such undertakings are not provided, I will make appropriate orders. I note those undertakings to the Court as follows:

1. That the plaintiff will repay to the defendant within seven days the sum of $2,305.71.
2. That she undertakes to the Court that on being given not less than two business days' notice she, by herself, her servants and agents, will permit the defendant by itself, its servants and agents to have access to the premises at 29 Grose Street, Parramatta for the purpose of taking away the Soredex Cranex Excel OPG Unit and Ceph Dental Panoramic X-Ray system and lead glass, the subject of the contract of 18 November 2004 which is annexure D to Dr Preda’s affidavit of 5 July 2005.

64 I order that proceedings 3331/05 be otherwise dismissed. The exhibits may be returned after 28 days.

65 There has been considerable debate as to what costs orders should be made. The amount of the claim, being just over $40,000, prima facie, is not one which ought to have occupied the attention of this Court. However, the plaintiff sought relief under s 87 of the Trade Practices Act or s 72 of the Fair Trading Act for a declaration that the contract was void by reason of misleading and deceptive conduct which she alleged. Only this Court or the Federal Court has jurisdiction to make orders under those sections.

66 In the result, I have not found it necessary to make any order under those sections, as I have found that the contract was validly rescinded for the defendant’s innocent misrepresentation. That was a ground of defence which was available to the plaintiff as defendant in the Local Court. However, the plaintiff is not to be criticised for seeking to avail herself, in case it became necessary, of the powers available to this Court under s 87 or s 72. I do not think the contrary was suggested. However, counsel for the defendant did make the point that if the plaintiff decided, for the sake of more abundant caution, to seek to avail herself of all of the remedies to which she would be entitled if the misrepresentation were established, and hence brought proceedings in the Supreme Court, she took the risk of an adverse exercise of discretion in relation to costs.

67 It seems to me that on any view the plaintiff should be entitled to at least the costs to which she would be entitled on an assessment had the matter proceeded in the Local Court. I accept, however, that there is difficulty, and potential danger, in framing a costs order which would impose a limit on the costs by reference to an assessment as to what costs would properly have been incurred in a hypothetical event, namely, the proceedings having remained in the Local Court.

68 The better course, and one which I consider to be appropriate, is to except from the costs order to be made any identifiable costs which it can be seen would not have been incurred had the matter remained in the Local Court. Two such costs have been identified by counsel for the plaintiff. The first is the filing fee on the summons. The second is the costs of a notice of motion in the Local Court for a stay of those proceedings.

69 There were numerous appearances before the Registrar in this court. I am not in a position to say whether or not one or other party was at fault and increased the costs by reason of that default. On two occasions orders were made for the defendant to pay the costs of the mentions before the Registrar. If the costs of other attendances before the Registrar were not reasonably incurred they will not be allowed on an assessment.

70 As there was justification for the plaintiff bringing proceedings in this Court, even though in the events which have happened the matter could have been dealt with in the Local Court, I think the appropriate orders as to costs are:

1. That the defendant pay the plaintiff's costs of the proceedings in the Supreme Court and the Local Court, including reserved costs, subject to the following provisos:

(a) that such costs not include the filing fee on the summons in the Supreme Court; and
(b) such costs not include costs of the notice of motion in the Local Court for a stay of the proceedings in that Court.

71 I so order.

72 Application is made by the defendant for a stay of these orders for 28 days. I see no grounds for the grant of such a stay. If the defendant is successful in obtaining leave to appeal from these orders and succeeds on the appeal, the defendant will be fully protected. The defendant would presumably be entitled then to recover the price of the goods from the plaintiff on proffering the goods to the plaintiff. It is within the defendant's power to ensure that it preserves its entitlement, by keeping the machine available for supply to the plaintiff, in the event that it be held that it ought to have succeeded on the hearing before me.

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