Bernstone v Almack-Kelly (No 2)
[2014] VSC 388
•21 August 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
No. 4720 of 2013
IN THE MATTER of an appeal under s 109 of the Magistrates Court Act 1989
| TERRY BERNSTONE | Appellant |
| v | |
| PHILIPPA ALMACK-KELLY | Respondent |
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JUDGE: | McMillan J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 6 August 2014 | |
DATE OF JUDGMENT: | 21 August 2014 | |
CASE MAY BE CITED AS: | Bernstone v Almack-Kelly (No 2) | |
MEDIUM NEUTRAL CITATION: | [2014] VSC 388 | |
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PRACTICE AND PROCEDURE — Appeal from the Magistrates Court — Appeal dismissed — Costs — Whether appeal succeeded — Magistrates Court Act 1989, s 109 — Appeal Costs Act 1998, s 4 — No point of principle
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr L Magowan | Schembri & Co |
| For the Defendant | Mr P Nicholas | Rodda Legal |
HER HONOUR:
This matter was an appeal from the decision of Magistrate Cashmore to dismiss a claim made by the appellant against the respondent for the repayment of a sum of $24,000 plus interest. On 6 August 2014, I dismissed the appeal, and invited the parties to file written submissions as to costs.
In my judgment, I held that:
I am satisfied on the basis of the transcript set out above that the learned magistrate failed to entertain the appellant’s alternative restitutionary claim and therefore denied the appellant procedural fairness. It cannot be said that, had the learned magistrate heard the appellant’s submissions on the restitutionary claim, there could have been no difference to the outcome of the proceeding. The denial of procedural fairness constitutes an error of law.[1]
[1]Bernstone v Almack-Kelly [2014] VSC 358 (6 August 2014) [33] (McMillan J).
However, as the parties agreed that it was appropriate for the Court to determine the matter on the evidence, rather than remit the matter for retrial, I went on to determine that the appellant’s claim must fail.
The appellant sought an order that the respondent pay the appellant’s costs, but that both the appellant and the respondent be granted a certificate under ss 4–6 of the Appeal Costs Act 1998 (‘the Act’). Those sections relevantly provide:
Application by respondent for indemnity certificate in respect of appeal
(1) If an appeal against a decision of a court in a civil proceeding—
(a)to the Trial Division of the Supreme Court; or
…
succeeds, a respondent to that appeal may apply to the Supreme Court for, and the court may grant, an indemnity certificate in respect of costs.
Certificate entitles respondent to payment of costs
(1)Subject to subsection (2), a respondent granted an indemnity certificate under section 4 is entitled to be paid by the Board, on an application made to it by the respondent in the approved form—
(a)an amount equal to the appellant's costs (if any)—
(i)of the appeal in respect of which the indemnity certificate was granted; and
…
that the respondent has been ordered to pay and has actually paid; and
(b)an amount equal to the respondent's own costs—
(i)of the appeal in respect of which the indemnity certificate was granted; and
…
that have not been ordered to be paid by any other party, as assessed by the Board on a party and party basis, or as agreed to by the Board and the respondent; and
(c)if the costs referred to in paragraph (b) are assessed, an amount equal to the costs incurred by the respondent in connection with the assessment.
Appellant may request direct payment in certain circumstances
(1)An appellant, whose costs referred to in section 5(1)(a) were ordered to be paid by a respondent granted an indemnity certificate under section 4, is entitled to be paid those costs (or any part of them) by the Board, on an application made to it by the appellant in the approved form, if the respondent has not actually paid those costs or that part and the Board is satisfied that—
(a)the respondent is refusing, or is unable because of lack of means, to do so; or
(b)doing so would cause the respondent undue hardship.
The appellant submitted that:
(a)in finding that there had been a denial of procedural fairness, the appeal was successful within the meaning of s 4 of the Act;
(b)if the parties had not elected to have the matter determined by this Court, the matter would have been remitted for retrial;
(c)the election to have the matter determined by this Court promoted efficient justice, and ought be encouraged; and
(d)it would be perverse if that election disentitled the appellant to a costs certificate he would otherwise have been entitled to under the Act.
In the alternative the appellant submitted that the Court, in its discretion, ought not order costs.
The respondent submitted that it cannot be said that the appeal against the magistrate’s decision succeeded, because although the Court determined that there had been a denial of procedural fairness, the appellant in substance failed in his claim against the respondent.
The respondent sought an order that costs follow the event, in accordance with the usual order as to costs.
The respondent referred to two decisions considering the meaning of the word ‘succeeds’ in s 4 of the Act.
In Quadrant Construction Pty Ltd (in liq) v Morgan Smith Barney Pty Ltd,[2] J Forrest J considered an application for an appeal costs certificate in circumstances where the result was that the decision of an Associate Justice to require security for costs in the amount of $21,000 was varied to require security of $60,000. His Honour said:
[2][2009] VSC 535 (27 November 2009).
As the terms of the Act make clear, the right to make an application for a certificate is enlivened by the success of the appeal.
The principles relevant to the determination of applications such as this were set out by the Court of Appeal in Eureka Funds Management v Freehill Services (No. 2).[3] In particular, Cavanough AJA, speaking for the Court, said:
[3][2008] VSCA 177 (11 September 2008) [7].
The grant of a certificate will usually lead to the expenditure of public money. In my view it is not enough that a case merely falls within one of the descriptions in s 4. The Court needs to be satisfied that it is appropriate in all the circumstances that a certificate should be granted. It is a discretion to grant, not a discretion to refuse, a certificate. On the other hand, a relatively generous approach to the exercise of the discretion is supported by the remarks of the then Attorney-General in her second reading speech for the 1998 bill for the Act.
His Honour then set out the 2nd Reading Speech.[4] It is worth repeating:
[4]Victoria, Parliamentary Debates, Legislative Assembly, 8 October 1998, 458.
The bill repeals the current Appeal Costs Act 1964 and replaces it with a new, simpler and clearer act. In so doing, the bill implements the government’s justice policy objective of reforming the justice system so that it is accessible and efficient.
The Appeal Costs Act originated as a form of compulsory insurance.
It was based on the premise that, although the majority of legal disputes can be resolved in one substantive hearing, in a small proportion of cases it is necessary for an appeal or a re-hearing. For example, a party may have to appeal to the Court of Appeal or the High Court because there are conflicting authorities or the area of law in question is new. Equally, in a small number of cases it is necessary to have a re-hearing because the original hearing was aborted or discontinued: for example, because the jury had to be discharged. The act was designed to apply only to those cases where the appeal or re-hearing was necessary. It does not apply if an appeal is brought simply because the party who lost at the first hearing was dissatisfied with the decision.
Since its enactment in 1964, the current act has undergone a succession of substantial amendments. However, it has never been comprehensively reviewed. As a consequence, the coherence of the act has been undermined and anomalies have arisen.
The principal objective of this bill is to address these inconsistencies and anachronisms to ensure that the underlying policies of the appeal costs scheme are properly reflected in the legislation.
The basis for granting an indemnity certificate has been made simpler and more consistent under the bill. The bill provides that the decision to grant or refuse a certificate following a successful appeal is in the discretion of the court.
For example, a party may have succeeded in a trial by deliberately misleading the trial judge. The losing party may then have to appeal against the judgment. The appellate court may allow the appeal and order the respondent to pay the appellant’s costs.
In these circumstances the court may refuse to grant an indemnity certificate to the respondent, on the ground that if the respondent had not misled the judge in the court below, it would not have been necessary to have the appeal.’
Contrary to the submissions made on behalf of CSM, it is not necessary for an applicant for an indemnity certificate to have obtained a favourable result at first instance and then be a respondent to a successful appeal against that decision. Rather, the section focuses on the outcome of the appeal and whether the appellant ‘succeeds’.[5]
[5][2009] VSC 535 (27 November 2009) [4]–[6].
In Pickford v Incorporated Nominal Defendant,[6] the Full Court of this Court considered an application under s 13(1) of the Appeal Costs Fund Act 1964 (a predecessor provision to s 4 of the Act) in circumstances where an appeal had been allowed by consent. Brooking J said:
The expression ‘succeeds’ in s 13(1) is ambiguous. It may denote no more than a successful outcome; or it may signify a successful outcome by virtue of an adjudication by the appellate court. Section 13(2) seems to proceed upon the basis that all successful appeals will have been ‘determined’. That expression is itself ambiguous: it may mean simply ‘brought to an end’, or it may mean ‘resolved by an adjudication’.
…
The consideration of policy which underlies s 13(1) is that an error of law occurring in a court may ordinarily be attributed to a fault in the administration of justice rather than of the parties, so that the costs of having the error rectified ought ordinarily not to be borne by the unsuccessful respondent to the appeal but to be paid from a public fund established for that purpose.[7]
[6][1981] VR 583.
[7]Ibid 584–5, citing Gurnett v Macquarie Stevedoring Co. Pty. Ltd. (No.2) (1956) 95 CLR 106, 113; Acquilina v Dairy Farmers Co-operative Milk Co. Ltd. (No. 2) [1965] NSWR 772, 773; Pataky v Utah Construction and Engineering Pty. Ltd (1966) 84 WN (NSW) 201, 208; Jansen v Dewhurst [1969] VR 421, 429–30; Richards v Faulls Pty. Ltd [1971] WAR 129, 138.
His Honour went on to hold (Starke and Anderson JJ concurring) that as the appeal had been allowed by consent, without adjudication by the Court, the appeal could not be said to have succeeded.
As is clear in the second reading speech referred to above, the Act is intended to provide a form of insurance for that small number of cases in which an appeal of some form is, through no fault of the parties, necessary. It is not intended to apply to an appeal brought simply because the party who lost at the first hearing was dissatisfied with the decision.
I consider that it is incorrect to describe the appeal as having succeeded within the meaning of s 4 of the Act. It is true that the appellant was denied procedural fairness, but the substantive decision of the learned magistrate was correct. The respondent resisted that part of the appeal on the basis that although the appellant had been denied a right to be heard:
there was no lack of procedural fairness because the appellant was not deprived of the possibility of a successful outcome. The learned magistrate would have been bound to reject the appellant’s submissions.[8]
[8]Bernstone v Almack-Kelly [2014] VSC 358 (6 August 2014) [32] (McMillan J).
I disagreed with that submission, and concluded that it could not be said that had the appellant been given the opportunity to make submissions, there could have been no difference to the outcome of the proceeding. But in going on to determine the matter, I concluded that the evidence led did not support the restitutionary claim the appellant had sought to establish.
The appeal brought by the appellant was not an appeal brought in circumstances where there were competing authorities or difficult questions of law needing to be resolved, nor was it brought in circumstances where there was some public interest in the magistrate’s mistake being corrected. It was an appeal brought to seek to displace the decision of the magistrate that the appellant’s claim at first instance had failed. It was not successful in that respect.
As to the appellant’s submission that to refuse an appeal costs certificate would be to punish the appellant for promoting the efficient administration of justice, I do not accept that submission. The denial of procedural fairness alleged (and established) by the plaintiff occurred after the closing of evidence. There was no suggestion that further evidence could have been called, or that the appellant would have been entitled to call further evidence. In the event that the appellant had sought to have the matter remitted on that point, I would not have made such an order.
No further grounds were advanced by the appellant to support the submission that the Court should exercise its discretion to make no order as to costs. Accordingly, I consider that costs should follow the event, and so order.
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