Cosmos E-C Commerce Pty Ltd v Sue Bidwell & Associates Pty Ltd (No 2)

NEW SOUTH WALES COURT OF APPEAL

CITATION: Cosmos E-C Commerce Pty. Ltd. v. Sue Bidwell & Associates Pty. Ltd. (No.2) [2005] NSWCA 238

FILE NUMBER(S):
40379/04

HEARING DATE(S): Matter dealt with on written submissions in Chambers

JUDGMENT DATE: 14/07/2005

PARTIES:
Cosmos E-C Commerce Pty. Ltd. - claimant
Sue Bidwell & Associates Pty. Ltd - respondent

JUDGMENT OF: Hodgson JA Ipp JA

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): DC2590/03

LOWER COURT JUDICIAL OFFICER: Cooper DCJ, Rolfe DCJ

COUNSEL:
Mark J. Cohen - claimant
Janet Pentelow - opponent

SOLICITORS:
Watson Mangioni, Sydney for claimant
Muggletons, Westgate for opponent

CATCHWORDS:
PROCEDURE
COSTS - Whether affected by Calderbank letters - Whether otherwise questions of costs should be re-opened.

LEGISLATION CITED:

DECISION:
1. Order 4 made on 18 May 2005 vacated, and in lieu thereof "Set aside the order that the proceedings be set down to be heard on 30 July 2004 on the question of damages and the orders that the claimant and opponent file and serve evidence in relation to question of damages". 2. No order as to the costs of the post-judgment submissions.

JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES
COURT OF APPEAL

CA 40379/04
DC 2590/03
HODGSON JA
IPP JA
Thursday 14 July 2005

COSMOS E-C COMMERCE PTY. LTD V. SUE BIDWELL & ASSOCIATES PTY. LTD. (NO.2)

Judgment

HODGSON JA: On 18 May 2005, the Court gave judgment on the appeal in this matter, and made the following orders:
1.Leave granted to the opponent to appeal; Notice of Appeal to be filed within seven days;
2.The appeal is allowed;
3.The following orders of Cooper ADCJ are set aside:
(a)the order striking out the claimant’s grounds of defence;
(b)the order giving summary judgment for the opponent;
(c)the order setting the proceedings down for the assessment of damages;
(d)the orders as to costs on the opponent’s notice of motion.
4. Set aside the orders of Rolfe DCJ;
5. Order the opponent to pay the claimant’s costs of:
(a)the application for leave and the appeal, except in relation to the abandonment of any appeal against the orders rejecting leave to the opponent to file amended grounds of defence;
(b)the opponent’s notice of motion in the court below.
6.Order the claimant to pay the costs of the opponent thrown away by reason of the abandonment of any appeal against the order rejecting leave to the opponent to file amended grounds of defence.
7.The opponent is to have a certificate under the Suitors Fund Act if so qualified.
However, the Court also gave leave for further submissions in relation to costs, and it has now received further submissions from the claimant (Cosmos) and the opponent (Bidwell).
Those submissions relied on an exchange of letters in September 2004.
On 10 September 2004, the solicitors for Cosmos wrote as follows to the solicitors for Bidwell:
We refer to the orders of the NSW Supreme Court of Appeal on 28 July 2004 by which our client was successful in its application for a stay of the orders of the District Court of 14 May 2004.
We note that Justice Hodgson held that:
(1)there were serious arguable errors made by Acting Judge Cooper in his judgement on 14 May 2004; and
(2)it is strongly arguable that Acting Judge Cooper was in error not to permit a defence, which, in substance, put the plaintiff to proof of the plaintiffs case as to the existence of a contract and the performance of it, in circumstances where ownership of the defendant has changed.
As you are aware, our client has at all times been of the view that Acting Judge Cooper's judgment on 14 May 2004 is infected irremediably with error and is bound to be set aside upon appeal. Indeed, our client now is fortified in such view by the definitive terms of the judgment of Justice Hodgson and expects that such a view will be vindicated by a grant of leave to appeal, and orders that the appeal be upheld.
In these circumstances, we are instructed to offer that upon your client consenting to all orders made by the District Court on 14 May 2004 and 11 June 2004 being vacated, and consenting to vacating any and all costs orders made against our client by the Court of Appeal on 28 July 2004, our client will consent to the balance of the proceedings in the Court of Appeal being dismissed with no order as to costs, thereby returning the proceedings to the District Court for disposition in the ordinary course.
Such offer remains open for acceptance by notice in writing until 17 September 2004, after which time it shall lapse.
In the event that your client does not accept our client's offer, and our client is successful in its appeal, we are instructed to tender this letter in support of our client's further application for its costs being payable by your client on an indemnity basis from the date of this letter, and for orders that it have its costs on a party-party basis of an incidental to the Notices of Motion relied upon by the parties and the subject of determinations of the District Court on 14 May 2004 and 11 June 2004.
This letter is pursuant to the principles Calderbank v. Calderbank [1975] 3 All ER 333.
The solicitors for Bidwell responded with a “without prejudice” letter dated 17 September 2004, as follows:
We refer to your letter of 10th September last and thank you for same.
We are instructed to reject your offer contained therein.
We are further instructed to make the following counter offer:-
1.Leave to appeal be granted and the appeal allowed with no Order as to costs save that the Order for costs in Order 3 made by Hodgson JA on 28th July, 2004 are to stand.
2.The Order made by acting Judge Cooper on 14th May, 2004 that your client pay our client's costs of the Notice of Motion is to stand.
3.An Order be made in the District Court that the cross claim shall be separately tried from our client's claim.
4.That upon the Orders being made in the Court of Appeal the sum of $10,000.00 presently held in the joint names of your Mr Watson and our Mr Muggleton be released for payment of our client's costs which Hodgson JA ordered to be paid in Order 3 made on 28th July, 2004 once those costs have been agreed or assessed.
5.That the District Court proceedings be re-listed by consent within 14 days of the date of the acceptance of this offer for the making of Directions for the future conduct of these proceedings.
Cosmos seeks an order that it have costs from 11 September 2004 upon the indemnity basis; and also an order that an order made for security in the sum of $10,000.00 be discharged, with a direction that the amounts paid be returned to Cosmos.
Bidwell seeks the following orders:
1.That Order 4 be amended to read “Set aside the order that the proceedings be set down to be heard on 30 July 2004 on the question of damages and the orders that the claimant and opponent file and serve evidence in relation to the question of damages”.
2.Vacation of Orders 3(d) and 5(b).
3.An order that the $10,000.00 held in the joint names of solicitors be released for payment of the opponent’s costs.
4.Vacation of Order 5, and in lieu thereof an order that the claimant pay the opponent’s costs of the application for leave and the appeal from 17 September 2004.
CHRONOLOGY OF EVENTS
Bidwell commenced proceedings in the District Court on 12 June 2003, Cosmos filed its defence on 17 October 2003 and a cross-claim on 9 March 2004.
On 1 April 2004, Bidwell filed a Notice of Motion seeking orders inter alia that the defence be struck out, that Bidwell have leave to apply for summary judgment and that the cross-claim be tried separately from the Statement of Claim. On 2 April 2004, the cross-defendants filed a Notice of Motion for orders that the cross-claim be struck out and that Cosmos provide security. On 3 May 2004, Cosmos filed a Notice of Motion seeking leave to file an amended defence.
The three Notices of Motion were dealt with by Cooper ADCJ on 14 May 2004. On Bidwell’s Notice of Motion, his Honour struck out the grounds of defence, entered summary judgment in favour of Bidwell, set the proceedings down for hearing as to damages, ordered a separate trial for the cross-claim, and ordered Cosmos to pay Bidwell’s costs. On Cosmos’s Notice of Motion, he refused leave for the filing of an amended defence. On the cross-defendant’s Notice of Motion, he dismissed the application to strike out the cross-claim and for security for costs. His Honour also granted a seven-day stay of his orders to enable Cosmos to consider an appeal.
On 19 May 2004, Cosmos filed a holding summons for leave to appeal.
On 28 May 2004, the proceedings were listed before Rolfe DCJ for directions. Cosmos opposed the proceedings being listed for hearing on the question of damages, arguing that the orders made by Cooper ADCJ on 14 May 2004 were stayed pursuant to s.128 of the District Court Act. Rolfe DCJ made orders for written submissions.
On 11 June 2004, Rolfe DCJ found that s.128 of the District Court Act did not extend the operation of the stay ordered by Cooper ADCJ; ordered that the matter be set down for hearing on 30 July and made orders concerning the service of evidence; and ordered Cosmos to pay Bidwell’s costs of the directions hearing on 28 May 2004 on an indemnity basis, including the costs of written submissions.
On 28 July 2004, I heard an application by Cosmos for a stay, and made orders staying the orders made by Cooper ADCJ and Rolfe DCJ, ordered Cosmos to pay Bidwell’s costs of the stay application and costs thrown away by reason of the vacation of the hearing on 30 July 2004, and ordered Cosmos to provide security for those costs in the sum of $10,000.00 to be paid into an account in the names of the solicitors for the parties. I also extended time for an application for leave to appeal from the orders made by Rolfe DCJ.
On 8 August 2004, Cosmos filed an ordinary summons for leave to appeal from those judgments.
ISSUES
The written submissions of the parties raise the following issues:
1.Whether Order 4 made on 18 May 2005 should be altered so as to preserve the costs order made by Rolfe DCJ.
2.Whether the costs orders 3(d) and 5(b) should stand.
3.Whether the order for the costs of the application for leave and appeal should be changed because of the exchange of letters referred to above.
4.Whether any order should be made about the $10,000.00 held as security for costs.
The parties have agreed that these matters be dealt with by Justice Ipp and myself, in circumstances where Pearlman AJA is no longer sitting as an acting judge of this Court.
COSTS ORDERS OF ROLFE DCJ
The matter argued before Rolfe DCJ was whether orders made by Cooper ADCJ were stayed pursuant to s.128 of the District Court Act. When I extended the time for an application for leave to appeal from the decision of Rolfe DCJ, this was to ensure there was no procedural problem arising from his orders setting the matter down to be heard. Although the question of the interpretation of s.128 of the District Court Act was referred to in written submissions on the appeal, there were no oral submissions on the matter and no decision was made. Accordingly, there was no decision that Rolfe DCJ was in error in his decision on the matter contested before him, namely the effect of s.128 of the District Court Act.
Thus, the judgment of the Court did not in terms refer to the costs order made by Rolfe DCJ, and the setting aside of Rolfe DCJ’s orders was simply consequential on the finding of error by Cooper ADCJ. In those circumstances, in my opinion the intention of Order 4 was to set aside no more than the orders of Rolfe DCJ referred to in the judgment; and the amendment sought by Bidwell to the order should be made so as to make this clear.
COSTS ORDERS 3(d) AND 5(b)
It was submitted for Bidwell that there should be no order that Bidwell pay Cosmos’s costs of Bidwell’s Notice of Motion in the District Court, because those costs would be cancelled out by the costs of the unsuccessful application by Cosmos to amend its defence. Furthermore, Cooper ADCJ’s order that there be a separate trial of the cross-claim has not been set aside.
In my opinion, the considerations advanced by Bidwell are insufficient to re-open a matter determined in the main judgment. In any event, I do not think the costs of the respective motions cancelled each other out: the main question determined by Cooper ADCJ was the question of entitlement to summary judgment.
As regards the order for separate trial of the cross-claim, this was not set aside by the Court of Appeal because of the absence of the cross-defendants from the appeal. It may well be that the change of circumstances brought about by the Court of Appeal decision will make it appropriate for that matter to be reconsidered by the District Court.
EXCHANGE OF LETTERS
In my opinion, Cosmos’s letter does not improve its position on costs, as it required Bidwell to give up all costs orders in its favour made on 28 July 2004.
In my opinion, Bidwell’s letter does not improve its position on costs, as it required Cosmos to pay the costs ordered on 14 May 2004, forego any costs of the leave application and appeal, and consent to the payment out of $10,000.00.
Accordingly, Orders 5 and 6 as previously made should stand.
$10,000 SECURITY
Each party submitted that the $10,000.00 paid as security for costs should be paid out to it.
In my opinion, insufficient reason has been advanced to re-open this question. In any event, this money was provided as security for costs thrown away in the circumstances of the vacation of the earlier hearing. Cosmos now has counter-balancing costs orders in its favour, so it is not appropriate to release the $10,000.00 to Bidwell; but the ultimate balance of costs is uncertain, and the continuance of the security in place is appropriate.
ORDERS
For those reasons, I would make the following orders:
1.Order 4 made on 18 May 2005 vacated, and in lieu thereof “Set aside the order that the proceedings be set down to be heard on 30 July 2004 on the question of damages and the orders that the claimant and opponent file and serve evidence in relation to question of damages”.
2.No order as to the costs of the post-judgment submissions.
IPP JA: I agree with Hodgson JA.

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LAST UPDATED: 14/07/2005

[2005] NSWCA 238

14 July 2005

Key Legal Topics

Areas of Law

Civil Procedure

Legal Concepts

Costs

Remedies