CDM v Roth

[2006] NSWSC 847

CITATION:	CDM v Roth [2006] NSWSC 847
HEARING DATE(S):	15 August 2006
JUDGMENT DATE :	24 August 2006
JURISDICTION:	Common Law Division
JUDGMENT OF:	Associate Justice Harrison
DECISION:	(1) The decision of Her Honour Magistrate Corbett dated 17 February 2006 is affirmed; (2) The summons dated 11 March 2006 is dismissed; (3) The plaintiff is to pay the defendant's costs as agreed or assessed.
CATCHWORDS:	Appeal decision of Local Court Magistrate - deed
LEGISLATION CITED:	Legal Profession Act 1987 (NSW) Legal Procession Act 2004 (NSW) Local Courts Act 1982 (NSW) - s 73
CASES CITED:	Allen v Kerr & Anor (1995) Aust Torts Reports 81-354 Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Carr v Neill [1999] NSWSC 1263 Codelfa Constructions Pty Limited vState Rail Authority of NSW (1981) 149 CLR 337 Devries v Australian National Railways Commission (1993) 177 CLR 472 State Rail Authority of New South Wales vEarthline Constructions Pty Ltd (in Liq) (1999) 160 ALR 588 Swain v Waverley Municipal Council [2005] HCA 4
PARTIES:	Communications Design & Management Pty Limited - Plaintiff Richard Roth - Defendant
FILE NUMBER(S):	SC 11181/2006
COUNSEL:	Mr C A Vindin - Plaintiff Mr R de Meyrick - Defendant
SOLICITORS:	S A Teen Solicitor - Plaintiff Chegwidden Solicitors - Defendant
LOWER COURT JURISDICTION:	Local Court
LOWER COURT FILE NUMBER(S):	7330/2004
LOWER COURT JUDICIAL OFFICER :	Corbett LCM
LOWER COURT DATE OF DECISION:	17 February 2006

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

ASSOCIATE JUSTICE HARRISON

THURSDAY, 24 AUGUST 2006

11181/2006 - Communications design &
management pty limited v
RICHARD ROTH
JUDGMENT (Appeal decision of Local Court Magistrate
- deed)

1 HER HONOUR: By summons filed 10 March 2006 the plaintiff seeks, firstly, an order that the judgment of Her Honour Magistrate Corbett in proceedings 7330/2004 in the Downing Centre Local Court between Richard Roth (“Roth”) as plaintiff and Communications Design & Management Pty Limited (“CDM”) as defendant on 17 February 2006 in favour of Roth against CDM be set aside; secondly an order that, in lieu thereof, judgment be entered in favour of CDM against Roth; thirdly, in the alternative, an order that the Local Court proceedings be remitted to the Local Court for redetermination according to law. CDM relied on the affidavit of Stephen Arthur Teen sworn 31 May 2006.

2 At the outset, it may be helpful to make some brief comments concerning the remedy pursued by the plaintiff. Section 73 of the Local Courts Act 1982 (NSW) (the Act) permits a party who is dissatisfied with a judgment as being erroneous in point of law to appeal to this Court. The onus lies on the plaintiff to demonstrate that there has been an error of law. What is a question of law (as opposed to a question of fact) was considered, inter alia, in Allen v Kerr & Anor (1995) Aust Torts Reports 81-354; Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 155-156; Carr v Neill [1999] NSWSC 1263 and R L & D Investments Pty Ltd v Bisby [2002] 37 MVR 479; [2002] NSWSC 1082. It cannot be said that the judicial officer acted on evidence inconsistent with facts incontrovertibly established by the evidence - see Devries v Australian National Railways Commission (1993) 177 CLR 472 per Brennan, Gaudron and McHugh JJ at 479 and State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in Liq) (1999) 160 ALR 588.

3 In Swain v Waverley Municipal Council [2005] HCA 4, the Chief Justice at [2] reiterated that in the common law system of civil justice, the issues between the parties are determined by the trial process. The system does not regard the trial as merely the first round in a contest destined to work its way through the judicial hierarchy until the litigants have exhausted either their resources or their possibilities of further appeal.

4 Section 75 of the Act provides that the Court may determine an appeal either by (a) varying the terms of the judgment or order, (b) setting the judgment or order aside, (c) setting the judgment or order aside and remitting the matter for determination in accordance with the Court’s directions or, (d) by dismissing the appeal.

5 On 17 February 2006 the Magistrate decided that the deed of release dated 27 June 2003 was an enforceable contract, specifically, the term 1.2 of the operative provisions. The Magistrate assessed damages and entered judgment in favour of Mr Roth in the amount of $16,227.73 with interest.

Grounds of appeal

6 The grounds of appeal are that firstly, Her Honour erred in law in finding that CDM had breached the deed between the parties dated 27 June 2003 in circumstances where the costs payable by CDM to Roth in respect of proceedings IRC 931/12002 and IRC 4272/2002 (“the IRC proceedings”) pursuant to clause 1.2 of the deed have not been agreed or assessed as required by the deed; secondly, Her Honour erred in law in holding that Roth is entitled to damages from CDM for breach of the deed; thirdly, Her Honour erred in law in holding that Roth is entitled to damages from CDM for breach of the deed in the sum of $16,227.73 in circumstances where (a) the costs payable by CDM to Roth in respect of the IRC proceedings pursuant to clause 1.1 of the deed have not been agreed or assessed as required by the deed, (b) there was no evidence before Her Honour as to the expertise to assess legal costs of the author or authors of the purported bill of costs upon which Roth relied, and (c) the purported bill of costs upon which Roth relied made it clear on its face that it was intended to constitute, not an assessment of Roth’s costs in respect of the IRC proceedings, or even an expert’s report for use as evidence in the Local Court proceedings, but merely an annexure to, or part of, an application for the assessment of Roth’s costs in respect of the IRC proceedings pursuant to the Legal Profession Act 1987 (LPA), as the first, not the last, step in the costs assessment process; fourthly, Her Honour erred in law in treating the purported bill of costs relied upon by Roth as expert evidence, or as evidence of the costs payable by CDM to Roth in respect of the IRC proceedings at all, in that (a) there was no evidence before Her Honour as to the expertise as to assess legal costs of the author or authors of the purported bill of costs upon which Roth relied, (b) there was no evidence before Her Honour that the author or authors of the purported bill of costs intended the purported bill to be used in the Local Court proceedings as expert evidence, or consented to the bill being used as expert evidence or as evidence at all or had read or agreed to be bound by the expert witness code of conduct; fifthly, Her Honour erred in law in effectively assessing the costs payable by CDM to Roth in respect of the IRC proceedings when she had no jurisdiction to do so, particularly after she had specifically held that she had no jurisdiction to assess costs in litigation in another jurisdictions; and sixthly, Her Honour erred in law in effectively circumventing the costs assessment process established by the Legal Profession Act 1987 and continued by the Legal Profession Act 2004.

7 The Local Court proceedings arose from a deed entered into between the parties as a result of proceedings in the Industrial Relations Commission.

The prior Industrial Relations Commission (IRC) proceedings

8 Mr Roth commenced two proceedings in the IRC. The first proceedings were 931/2002 between Mr Roth and Communications Design & Management Pty Limited. Mr Roth discontinued those proceedings and the IRC made no order as to costs. The second proceedings were 4272/2002 between Mr Roth and Communications Design & Management Pty Limited and were referred to in this Court “as an unfair contract claim”. The second proceedings were settled on the basis set out in a deed between the parties (and Mrs Roth).

9 The operative parts of the deed dated 27 June 2003 read:

“1. Without any admission of liability Mr Roth, CDM agrees:
1.1 to pay to Mr Roth on or prior to 30 June, 2003 by way of damages for unfair dismissal an amount of $20,300.00 (“the agreed amount”), &
1.2 to pay Mr Roth’s costs of these Proceedings and Proceedings IRC 931/2002 as agreed or assessed.
2. Mr Roth agrees to accept the Agreed Amount in full & final settlement, satisfaction & discharge of his claim in the Proceedings & all other actions, claims, suits or demands which he has or, but for this Deed, would or might have had against CDM for salary, wages, damages, costs or on any other account whatsoever.
3. Mr Roth must forthwith upon receipt of the Agreed Amount discontinue the Proceedings & cause the Proceedings to be removed from the list on 16 July 2003.
4.1 In consideration of CDM’s entry into this Deed both Mr & Mrs Roth agree that they will not disclose to any person, Corporation or other entity (unless compelled to do so by law):
4.1.1 The amount of this settlement.
4.1.2 Details of how the amount has been calculated.
4.2 Both Mr & Mrs Roth jointly & severally acknowledge that in the vent of any breach by either of them of the warranty or covenant contained in clause 4.1, that partly shall be liable in damages to CDM.”

10 The sum of $20,300 was paid to Mr Roth by CDM. It is clause 1.2 of the deed that is the subject of dispute before the Magistrate.

Local Court proceedings

The pleadings

11 At [6] – [11] of the statement of claim Roth pleaded:

6. In breach of the 1.2 of the Deed the Defendant has refused to pay the Plaintiff’s costs pursuant to clause 1.2 of the Deed.
7. Further, the Defendant has expressly repudiated the Plaintiff’s entitlement to receive payment of his costs of proceedings 931/2002.
8. The Plaintiff has submitted to the Defendant his bill of costs incurred and payable under clause 1.2 of the Deed, in the total amount of $20,606.07.
9. The Plaintiff has also submitted an independently prepared Bill of Costs in assessable form to the Defendant. This Bill of Costs totalled $16,227.73.
10. The Defendant has not paid any of the plaintiff’s costs.
11. The Defendant has not agreed costs with the Plaintiff, and has not submitted to the assessment of those costs.”

12 In answer the defence pleads at [4] – [7]:

“4. The defendant denies paragraph 6 & further says that conditions precedent to the obligation on the part of the defendant to pay any costs have not been satisfied as costs have not been agreed or assessed, & further, that the plaintiff has not sought the submission of the defendant to an assessment of the plaintiff’s costs of proceedings number IRC 4272/2002 alone.
5. The defendant denies paragraph 7 on the basis that it denies that the plaintiff has any entitlement to receive payment from the defendant of his costs of proceedings number IRC 931/2002 but admits that it has evinced an intention not to pay such costs.
6. The defendant denies paragraph 8.
7. The defendant admits paragraphs 10 & 11 save that the defendant says that it has always been ready & willing to submit to the assessment of the plaintiff’s costs of proceedings number IRC 4272/2002.”

The Magistrate’s decision

13 On 17 February 2006 there were two issues argued before the Magistrate in relation to the deed. They were firstly, equitable mistake; and secondly, clause 1.2 in relation to costs. The Magistrate’s decision in relation to equitable mistake went against CDM and is not part of this appeal.

14 The Magistrate in her reasons for decision stated:

“The second issue is that of the assessment of costs. The term in the deed states, “Costs as agreed or assessed”. There has been no agreement and an assessment under the Legal Profession Act is not available, because there is no court order. …

It has already been found that the deed, including the disputed term, is binding upon the parties. Accordingly, this is now simply an alleged breach of contract and a claim for damages. The agreement stated only, costs as agreed or assessed, without including the words, under the Legal Profession Act. I accept that that however, was the expectation of both parties. However, in order to give affect to the agreement, it is reasonable to construe it, that in the absence of agreement, assessment by means other than under the Legal Profession Act would be intended by the parties. The plaintiff alleges a breach of the agreement and seeks damages, by covering letter dated 21 June 2004, the plaintiff forwarded to the defendant, an independently prepared bill of costs in assessable form. The letter sought an agreement either, to pay the costs itemised, or to have the costs assessed by an independent party. There is no evidence of any correspondence after that date, but it preceded by a letter of 11 May 2004 from Mr Teen, which clearly indicates his client had no intention to pay the costs of the first proceeding. No payment of the costs has been made and no assessor agreed upon. Accordingly I am satisfied that the term of the agreement, relating to the payment of costs, has not been complied with by the defendant. It is necessary therefore, to assess what the plaintiff would be entitled to, had the agreement been complied with.
The only evidence available is the bill of costs annexed to Mr Chegwidden’s statement. That was tendered without objection and there was no challenge to the items, or the total amount. No evidence with respect to quantum has been tendered by the defendant. In submissions, the defendant does refer to the bill of costs and comments that the identity and expertise of the person or persons who prepared it, is not known. That is correct, but it is the only evidence available upon which damages can be assessed.”

The letter

15 In the defendant’s solicitor’s letter to the plaintiff’s solicitor dated 11 May 2004, Mr Teen (referred to in the Magistrate’s decision) stated:

“Would you kindly note that my client intends to leave no stone unturned, irrespective of the expense involved, to resist/overturn any order that it pay your client’s costs of proceedings number IRC931/2002 on the basis that at no time did it ever agree to pay your costs of those earlier proceedings.
My client admits that it is obliged to pay your client’s costs of the later proceedings, that is number IRC 4272 of 2002, as agreed or assessed, & it is prepared to consent to an order to that effect to enable your client to make an application for assessment of his costs of the later proceedings only, subject to your client acknowledging that he is not entitled to any costs from my client in respect of the earlier proceedings.”

16 The plaintiff submitted that the costs could not be payable until there was either agreement or assessment and neither an agreement nor an assessment has yet occurred. According to CDM, once the court determined that it would not be relieved of its obligation to pay Mr Roth’s costs of the discontinued IRC proceedings, there was nothing to suggest CDM would not submit to an assessment. I do not read the contents of CDM’s solicitor’s letter dated 11 May 2004 that way.

17 In Codelfa Constructions Pty Limited v State Rail Authority of NSW (1981) 149 CLR 337 the High Court at 352 stated:

“The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract, if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract where is has a plain meaning.
…
Consequently, when the issue is which of two or more possible meanings is to be given to a contractual provision we look not at the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties’ presumed intention in this setting.”

18 The Magistrate at page 10 made a finding of fact that the parties intended their reference to “costs as agreed or assessed” to be to assessment by means other than under the LPA 2004. According to CDM there was no construction point to be addressed, there was simply a difficulty implementing their agreement. However if the construction point was not addressed, the parties could not have their costs assessed under the LPA and the parties may never agree on costs nor upon the mechanism for assessment.

19 The plaintiff submitted that the Magistrate proceeded in a way which ignored the very existence of the regime for assessment created under the Act. The plaintiff further submitted the bill on which she based her assessment of damages should have been evidence of what Mr Roth was entitled to recover and the Magistrate did not indicate that she had formed her own view as to the reasonableness of the charges. Finally, the plaintiff submitted that the Magistrate simply acted upon the contents of a bill prepared as the first step in the assessment process without regards to the fact that such a course ignored the dictates of the assessment regime under the LPA and that CDM was thereby robbed of its statutory rights to assessment by an assessor, automatic rights of review by a panel and rights of appeal to this Court and that the Magistrate has set a precedent which cannot be allowed to stand without damaging the fabric of that regime.

20 It was open to the Magistrate to find that a term of the contract (the deed) had been breached. CDM indicated vide letter dated 11 May 2004 that it was not going to pay Mr Roth’s costs of proceedings IRC 931/2002. It would “leave no stone unturned”.

21 The next task was the assessment of damages. Mr Roth’s solicitor had referred to two bills of costs, one in the sum of $16,227.73 prepared by a costs assessor on his behalf and the other in the sum of $20,606.07. CDM did not tender any evidence to show that as to the quantum of damages was excessive nor any evidence as to what would have been a fair and reasonable amount of costs. It could have tendered the objections prepared by its solicitor and argued that a lesser sum of damages was reasonable. It did not do so. The Magistrate was entitled to accept the bill of costs for a lesser sum, namely $16,227.73. It was necessary at this point to invoke some sort of assessment of costs process to ascertain the quantum of damages. It is my view that there has been no error of law. The decision of Her Honour Magistrate Corbett dated 17 February 2006 is affirmed. The summons dated 11 March 2006 is dismissed.

22 Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendant’s costs as agreed or assessed.

The Court orders:

(1) The decision of Her Honour Magistrate Corbett dated 17 February 2006 is affirmed.

(2) The summons dated 11 March 2006 is dismissed.

(3) The plaintiff is to pay the defendant’s costs as agreed or assessed.
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