Burnett & Anor v Randwick City Council

[2007] HCATrans 91

[2007] HCATrans 091

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S288 of 2006

B e t w e e n -

JOHN ROBERT BURNETT

First Applicant

CARMEL BURNETT

Second Applicant

and

RANDWICK CITY COUNCIL

Respondent

Application for special leave to appeal

GLEESON CJ
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 2 MARCH 2007, AT 9.34 AM

Copyright in the High Court of Australia

MR P.T. TAYLOR, SC:   May it please the Court, I appear with my learned friend, MR M.E. LUITINGH, for the applicants.  (instructed by Lincoln Smith & Company)

MR C.T. BARRY, QC:   May it please the Court, I appear for the respondent with my learned friend, MR R.B. WILSON.  (instructed by Shaw Reynolds Bowen & Gerathy)

GLEESON CJ:   Yes, Mr Taylor.

MR TAYLOR:   Your Honours, the application asserts two errors of significance.  The first is found in the application book page 104, paragraph 103 where the Court of Appeal decided that because the equipment was owned by a corporation and because the business was owned by a corporation, that it followed that the applicants personally did not obtain legal possession of the equipment even though they were in occupation of the premises where the equipment was located and required personally to pay a fee in respect of that occupation.

GLEESON CJ:   Since this dispute was about the ownership of equipment and since the competing possibilities were your clients or the corporation that your clients controlled, why was not the corporation that your clients controlled a party to the litigation?

MR TAYLOR:   I cannot give you a definitive answer to that other than at the time that the proceedings were maintained it may have been that the corporation that owned the equipment was not registered any more.

GLEESON CJ:   Defunct.

MR TAYLOR:   Yes, had been deregistered by that point in time.

GUMMOW J:   That seems to have been something that happened on 4 March 1994, deregistration.

MR TAYLOR:   In respect of one ‑ ‑ ‑

GUMMOW J:   There are also some bankruptcies around, too.

MR TAYLOR:   Yes, your Honour.  We say, however, your Honours, that it is not simply with respect to question of ownership, but whether the applicants had an immediate right to possession at the time.

GLEESON CJ:   It is a case about title to sue in conversion.

MR TAYLOR:   Yes, and the applicants do not contest the general rule that usually goods entrusted to the custody of a servant do not become - that the servant does not become a bailee of those goods and obtain legal possession.  But the first exception of that rule, recognised in Palmer on Bailment, is where the goods are entrusted to the servant for the purposes of the servant’s personal purposes and use and that is what we say occurred here.  The applicants were provided with the custody of the equipment at least in part for their own private non‑corporate purpose of meeting the occupancy fee in respect of the premises, something which the corporation which owned, or the corporation which carried on the business, neither of those were responsible for that fee.

If your Honours see at paragraph 103 on page 104 of the application book, the Court of Appeal recognised in the second sentence that the corporate owner of the equipment, “may be taken to have authorised its use as and for the purposes” of the business owned by a different corporation, presumably because that is why the equipment was there to be used in part for carrying on the business even though the business ‑ ‑ ‑

GUMMOW J:   Your client has incorporated this family company, to use that expression, to carry on the business for all sorts of reasons we all know about and what you seem to be doing is trying to turn all that, and the ordinary expectations and understandings that follow from that, on its head to avoid the consequences that flow from the deregistration of the company.

MR TAYLOR:   No, your Honour, we are saying that in this situation the question is, who had an ‑ ‑ ‑

GUMMOW J:   If this company had never been deregistered, we would not be having this debate.

MR TAYLOR:   That may be true, your Honour.  It does not necessarily ‑ ‑ ‑

GUMMOW J:   The company itself would sue and no one would bat an eyelid.

MR TAYLOR:   The question that the court needed to determine was:  for what purpose were the applicants in custody of the equipment?  Was it merely for the purpose of, effectively, their corporate employer to carry on the business or was it for their own personal purposes of meeting an occupation fee for which they were personally liable for the premises where the equipment was located?  Like, for example, a motor vehicle given to an employee for his personal purposes, at least in part, we submit that the employee has an entitlement to immediate possession of that motor vehicle and can maintain an action in conversion because of that entitlement. 

As in paragraph 103, the court was prepared to recognise that, although the owner of the business was not the owner of the equipment, the owner of the equipment “may be taken to have authorised its use” by the owner of the business.  We submit, by parity of reasoning, the corporate owner must also be taken to have authorised the use of the equipment by the applicants for the payment of the occupation fee, a personal expense of theirs, and the fact that they were the directing mind and will of all of these corporations only strengthens the inference that that is what occurred in respect of the equipment for the period immediately prior to the Council’s action when the premises were occupied and paid for by the applicants.  So that in the result they become bailees with an immediate right to possession.  At page 90, paragraph 56 of the application book there is, effectively, in our submission, a concession that if that was so that was sufficient for the applicants to succeed. 

The second error relied upon in the application concerns the question of costs.  Could I ask your Honours - some material was provided to your Honours late, I apologise, but in that is a cover sheet and an extract from a decision of Mahlo v Westpac Banking Corporation, a decision of the Court of Appeal in this State.  At paragraph 88 on the second to last page of the bundle, the second page of the extract, the court refers to some English Court of Appeal decisions, one of which was said to be approved by the House of Lords, and comes to the view that the costs of the cross‑claim are only those costs which are occasioned by it, in other words, those costs which are additional to the claim. 

In this case the Court of Appeal and the primary judge took the view that because there were overlapping issues between the cross‑claim and the claim, that each party should bear their own costs but, in our submission, as a matter of principle, in the first place, costs following the event, the applicant was entitled to the costs of the principal claim.

GUMMOW J:   Was this line of authority, to dignify it in that way, put to the Court of Appeal?

MR TAYLOR:   It does not appear to have been, your Honour.  Secondly, that ‑ ‑ ‑

GUMMOW J:   Why should we get involved in a costs dispute that was not litigated in the court below?

MR TAYLOR:   Well, your Honour, whether the authority was put to the Court of Appeal, the argument was put that the proper course is for each party to pay the costs of the successful party in respect of the claims.  The Court of Appeal and, if I might submit, with respect, a very strong bench of

the court had said that it was wrong in principle to decide the costs of the cross‑claim on any other basis than that they are the costs additional to the claim.  In that event, there being no parity between the costs of the claim and the costs of the cross‑claim, it was an egregious error of principle by the Court of Appeal to order each party to bear their own costs on the basis that the costs of each claim was equivalent.  Those are our submissions, your Honours.

GLEESON CJ:   Yes, thank you, Mr Taylor.  We do not need to hear you, Mr Barry.

The unanimous decision of the Court of Appeal affirming the decision of the primary judge turned on the application of settled principles to the particular facts and circumstances.  On the question critical to the applicants’ title to sue, there are concurrent findings of fact adverse to the applicant and there are insufficient prospects of success to warrant a grant of special leave to appeal.

As to the matter of costs, the case does not raise an issue suitable to a grant of special leave to appeal and the application is dismissed with costs.

AT 9.45 AM THE MATTER WAS CONCLUDED