Gibson v Drumm

[2016] NSWCA 206

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	Gibson v Drumm [2016] NSWCA 206
Hearing dates:	29 July 2016
Decision date:	12 August 2016
Before:	Beazley P; Simpson JA
Decision:	(1)   Extend time for filing the summons for leave to appeal to 8 June 2016. (2)   Summons for leave to appeal refused.
Catchwords:	APPEAL – application for leave to appeal – circumstances where grant of leave appropriate – discretionary determination – relevance of sum in issue
Legislation Cited:	Civil Procedure Act 2005 (NSW) Jurisdiction of Courts (Cross Vesting) Act 1987 (Cth) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; 148 CLR 170 Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 BHP Petroleum Pty Ltd v Oil Basins Ltd [1985] VR 756 Carolan v AMF Bowling Pty Ltd t/as Bennetts Green Bowl [1995] NSWCA 69 Clarke v State of New South Wales [2015] NSWCA 27 Collier v Lancer (No 2) [2013] NSWCA 186 Darrell Lea (Vic) Pty Ltd v Union Assurance Society of Australia Ltd [1969] VR 401 Dunn v Ross Lamb Motors (1978) 1 NSWLR 26 House v The King [1936] HCA 40; 55 CLR 499 Jaycar Pty Limited v Lombardo [2011] NSWCA 284 Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2000] FCA 1572; 104 FCR 564 Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274 Minogue v Williams (2000) 60 ALD 366 Niemann v Electronic Industries Ltd [1978] VR 431 Wilson v Tetley [2003] NSWCA 124 Zelden Sewell Henamast Pty Ltd [2011] NSWCA 56
Category:	Principal judgment
Parties:	Neville James Gibson (Applicant) Bernard Joseph Drumm (Respondent)
Representation:	Counsel: In person (Applicant) D F Elliott (Respondent)   Solicitors: Lander & Rogers (Respondent)
File Number(s):	CA 2016/176039
Decision under appeal	Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Division Citation: Gibson v Drumm [2016] NSWSC 570 Date of Decision: 6 May 2016 Before: Young AJ File Number(s): 2015/256225

Judgment

1. THE COURT: The applicant, Mr Gibson, sought leave to appeal from the decision of Young AJ ordering him to pay the respondent’s costs, on an indemnity basis and by way of a gross sum costs order of $10,170, in respect of proceedings which were not ultimately pursued by the applicant against the respondent: Gibson v Drumm [2016] NSWSC 570. The applicant required an extension of time within which to file the summons seeking leave to appeal. That was not opposed and accordingly an extension of time should be granted.

2. The applicant also applied for an adjournment of the hearing of the application for leave to appeal. The bases advanced for seeking the adjournment were, essentially, that the matter had come before the Court quickly, that the date for the hearing had been set to suit the convenience of counsel for the respondent and that the applicant had not had time to fully prepare his documentation and argument. The applicant also stated that he wished to adduce fresh or further evidence.

3. The return date of the summons for leave to appeal was 18 July 2016. The rules of court require that by the return date, the applicant will have filed the summary of argument and lodged the White Folder for filing. The White Folder is intended to contain all the documents relevant for the disposal of the application, other than the respondent’s response: the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 51.12. The usual practice of the Registrar is, on the first return date, to set the date for hearing of the summons for leave to appeal as soon as there is a court day available, provided that he is satisfied that the matter will be ready for hearing. The Court accepts that the date of 29 July 2016 was a date that suited counsel for the respondent. However, as we have explained, the effect of the rules is that an applicant is to be ready for a hearing date to be appointed on the return date of the summons.

4. When the applicant was questioned as to the further evidence that he wished to adduce, it was apparent that it related to the subject matter of the proceedings. In the circumstances, the Court was of the opinion that no basis had been made out for the grant of the adjournment and it was refused. We should add that the applicant and the respondent had each prepared an additional folder of documents, including, on the applicant’s part, a folder of the material upon which he proposed to rely. The applicant was familiar with the large number of documents in that folder and was able to present his argument on the application for leave to appeal in a coherent and organised manner.

5. The applicant, in his draft notice of appeal, sought to challenge the making of the indemnity costs order on the following bases:

“1.   The findings appealed from are wrong in fact and at law in that on the face of the record the findings could not be reached by a judicial officer fully appraised of fact and failed to consider a relevant factor and took into account irrelevant factors or was just plainly wrong in that:

[A]   His Honour fell into error when he asserted without factual basis that ‘the history of this matter shows that indemnity costs are required’.

Particulars

(i)   His Honour erroneously asserted that there were a large number of motions in the proceedings.

(ii)   His Honour erroneously asserted that there were a large number of affidavits in the proceedings when the affidavit material was almost entirely affidavit generated in relation to affidavit material of the Official Assignee and not related to respondent.

[B]   His Honour fell into error in exercising his discretion in awarding the costs he did as he failed to consider a relevant factor and took into account irrelevant factors or was just plainly wrong in that:

Particulars

(i)   The costs that were sought by the Defendant/Respondent which the Learned judge awarded after adjustment were not reasonable costs for the time expended and period for which they were claimed in breach of respective provisions of the Uniform Civil Procedure Rules 2005, Civil Procedure Act 2005 and Supreme Court Rules 1970.

(ii)   The Plaintiff/Applicant was entitled to a credit for his successful motion in transferring the Federal Court matter NSD186/2015 to the Supreme Court assigned matter number 2015/256225) which the Defendant/Respondent opposed.”

6. It does not appear that the applicant sought to challenge Young AJ’s decision to proceed by way of gross costs order. The orders sought, if leave were granted and the appeal allowed, included an order that each party pay its own costs of the Equity Division proceedings.

7. The applicant submitted that leave to appeal should be granted on the basis that there were errors of fact and law which were “plainly wrong on the face of the record”. He submitted that he would be prejudiced if not granted leave, as the respondent has served a bankruptcy notice on him in relation to the judgment debt.

Primary judgment and relevant background

8. The costs order subject of challenge was made in proceedings which were originally commenced in the Federal Court of Australia against The Official Assignee of New Zealand, the respondent and another individual: NSD 186/2015. The proceedings were subsequently transferred to the Supreme Court by Flick J under the Jurisdiction of Courts (Cross Vesting) Act 1987 (Cth), where the proceedings were re-numbered 2015/256225. However, it is relevant to note that there were proceedings on foot in the Supreme Court prior to the commencement of the Federal Court proceedings. Those pre-existing Supreme Court proceedings had been commenced by the applicant and others against, inter alia, the respondent: 2010/425027. The claims of the applicant (and the second and fourth plaintiffs) in those pre-existing proceedings, were dismissed with costs on 11 March 2016 and the proceedings were otherwise transferred to the Local Court pursuant to the Civil Procedure Act 2005 (NSW), s 146.

9. The primary judge, after referring to the transfer of the proceedings from the Federal Court to the Supreme Court, stated, at [4], that “[t]ogether with associated cases and a series of other interlocutory motions (I think about 50 in all) the matter came into my directions list”.

10. At [29] of the primary judge’s reasons, his Honour said:

“The claim is based on an order for indemnity costs. I agree with [counsel for the respondent] that the history of this matter shows that indemnity costs are required. [The respondent] has been put to considerable expense because of the large number of motions and the very large bulk of affidavit material and yet in the end none of that material was ever pressed to a final hearing.”

11. The primary judge made clear that the basis on which the gross sum costs order was calculated was by reference to a detailed bill of costs in which solicitors’ costs totalled $14,734 and counsel’s fees totalled $7,730. The primary judge deducted from each of those components amounts that were covered by a costs order made in the Federal Court by Flick J; excluded five particular items in the bill; and then applied a 12 per cent discount to the amount claimed by way of solicitors’ fees, thus arriving at a costs order comprising $6,040 for solicitors’ fees and $4,130 for counsel’s fees.

The present application

12. The applicant disputed his Honour’s finding that there were a large number of motions in the proceedings, and maintained that he was not responsible for the generation of the “large bulk” of affidavit material to which the primary judge referred. The respondent properly conceded that his Honour was in error to the extent that he relied on there having been a large number of motions.

13. As to the complaint in relation to the primary judge’s reference to the large volume of affidavits in the proceedings, the applicant asserted that the generation of the affidavit material was due to the Official Assignee. The affidavit material was not included in the White Folder. The respondent informed the Court that Flick J had ordered the applicant to notify the respondent of the material on which he proposed to rely. In this regard, the respondent directed the Court to email correspondence in which the applicant indicated some 17 affidavits on which he intended to rely. The respondent submitted, therefore, that the primary judge did not err in taking this factor into account. Finally the applicant resisted any suggestion that his pleadings were prolix.

14. The respondent contended nonetheless that there were other bases sufficient to support the award of indemnity costs. The respondent relied, in particular, upon the fact that the applicant had commenced proceedings against him which could not succeed as a matter of law.

15. The applicant next submitted that, in the course of argument below, he had raised that he had an offsetting claim for costs and that Young AJ had not taken that argument into account. The offsetting claim was said to be in respect of a sum of $350 that the applicant had paid for a barrister to appear before Flick J in the Federal Court on the occasion when his Honour ordered that the proceedings be transferred to the Supreme Court. The applicant also submitted that Jagot J had made an order for costs in his favour on 18 May 2015. The order made by Jagot J to which the applicant referred was in the following terms:

“The applicant’s costs as against the second and third respondent be reserved.”

16. In response to the claim for an offset, the respondent pointed out that the applicant filed the notice of motion for the proceedings to be transferred from the Federal Court to the Supreme Court the day before the matter was due to be heard, and that the applicant’s attendance on that day was therefore required in any event. In response to the claim in relation to the costs order made by Jagot J, the respondent pointed to the terms of that order and further submitted that on 27 August 2015, Flick J had ordered that the applicant pay the costs of the respondent “associated with all directions hearings held in this court”. The respondent contended that that order encompassed the directions hearing before Jagot J.

17. The applicant next contended that his Honour should have applied the 12 per cent discount across the entire costs claimed by the respondent, including barrister’s fees, and not only to the costs claimed by the respondent’s solicitors. In that regard, the respondent submitted that the intent of the discount in cases where there is no referral to a costs assessor is to make an allowance, in a broad and non-specific way, for the possibility that, on a formal costs assessment, the costs assessor would disallow some costs. The respondent thus submitted that there was no error in the manner in which the primary judge applied the discount.

18. The applicant also complained that his Honour’s reasons did not reflect what he understood to be the primary judge’s approach to the application, having regard to comments his Honour made during the course of argument.

Determination

19. There are no exhaustive or rigid rules of practice or criteria governing the grant of leave to appeal: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; 148 CLR 170. However, it has been consistently stated that leave should only be granted where there are substantial reasons that call for appellate review: Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2000] FCA 1572; 104 FCR 564, and, in particular, where there is an error of principle, a matter of public importance, or injustice which is reasonably clear in the sense of going beyond what is merely arguable: see Darrell Lea (Vic) Pty Ltd v Union Assurance Society of Australia Ltd [1969] VR 401; Niemann v Electronic Industries Ltd [1978] VR 431; BHP Petroleum Pty Ltd v Oil Basins Ltd [1985] VR 756; Carolan v AMF Bowling Pty Ltdt/as Bennetts Green Bowl [1995] NSWCA 69; Minogue v Williams (2000) 60 ALD 366; Jaycar Pty Limited v Lombardo [2011] NSWCA 284; Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164; Clarke v State of New South Wales [2015] NSWCA 27. In Collier v Lancer (No 2) [2013] NSWCA 186, the Court reiterated that appellate review will be warranted where, for instance “there is an error of principle which, if uncorrected, will result in substantial injustice”.

20. Another consideration in determining whether to grant leave is the sum in issue in the proposed appeal: Dunn v Ross Lamb Motors (1978) 1 NSWLR 26. Although there is no minimum amount specified in the rules of court below which leave will not be granted, the Court has refused leave in matters because of the small amount involved, such as where it was considered the grant of leave was not warranted having regard to the appropriate allocation of court resources and the disproportionate costs to the parties: see Wilson v Tetley [2003] NSWCA 124; Zelden Sewell Henamast Pty Ltd [2011] NSWCA 56; Jaycar Pty Ltd v Lombardo. Accordingly, whilst the mere fact that a small amount is in issue will not necessarily disentitle a person to a grant of leave, having regard to the case management principles enshrined in the Civil Procedure Act, it will nonetheless be a relevant factor and in an appropriate case may be decisive.

Consideration

21. In the Court’s opinion, leave should be refused in this case for two essential reasons.

No House v The King error

22. The primary judge’s decision involved an exercise of discretion as to costs. To succeed in challenging the exercise of a discretion an error in the House v The King sense must be established: namely, that there was an error of legal principle; that there was a material error of fact; that the decision made took into account an irrelevant consideration or failed to take into account or give sufficient weight to a relevant consideration; or that the decision was so unreasonable or unjust as to bespeak such an error: House v The King [1936] HCA 40; 55 CLR 499 at 504 to 505; Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274 at [45].

23. Although the applicant has correctly identified a factual error in the primary judge’s determination, namely, that there were a large number of motions filed, it is apparent that the applicant commenced proceedings against the respondent when there was no basis in law for the claim that he made. Further, although it is true that the pleading in the amended statement of claim against the respondent only extended to some five pages, any prudent lawyer would review the entire pleading in order to ascertain how it related to the claim made against their client, as the respondent submitted it had done. In any event, it emerged during argument that the amended statement of claim was only a draft provided pursuant to certain orders made by Flick J on 16 July 2015.

24. The other complaints raised by the applicant do not raise any question of principle, nor are they reasonably arguable, and hence are dealt with only briefly. As to the costs orders that have been made in the matter, Jagot J did not make an order for costs in the applicant’s favour and Flick J ordered the applicant to pay costs. Further, the applicant has not demonstrated that the costs in relation to the transfer of proceedings which he sought to offset would have been awarded in his favour. As the respondent pointed out, the applicant’s appearance on that day was required, as the applicant’s claim was listed to be heard on that day. In any event, a costs order against the applicant in respect of the transfer application was a possibility, if not likely, given that the applicant had commenced the proceedings in the Federal Court, which he then sought to have removed to the Supreme Court.

25. Next, the fact that a judge makes comments in the course of a hearing which may appear favourable to one party does not mean that the judge intends to find in that party’s favour. A judge is entitled to ask questions and express preliminary views as part of the process that results in the final determination. Subject to procedural fairness, no question of which has been raised in this case, it is the formal reasons of the judge that contain the basis for and reasoning underlying the decision.

26. None of the issues sought to be raised by way of appellate review of the primary judge’s decision involved any issue of principle. Rather, they were issues that fell for determination as a matter of the primary judge’s discretion.

Small amount of the claim

27. Even assuming that the applicant had a case that was more than arguable, the amount involved in this case is small. The difference between an order for indemnity costs and costs on the ordinary basis in this matter would be no more than a few thousand dollars and would not exceed $4,000. The small amount of the claim itself pointed against the grant of leave in this matter.

Other matters

28. Two further matters require attention. In the week following the conclusion of the hearing of the application for leave to appeal, the applicant forwarded to judges’ chambers a 57 page document. As leave had not been given to file any further documents in the matter, the document was given to the registrar without the Court looking at it. To make the Court’s position clear, we do not give leave for the document to be filed.

29. Subsequently, by letter dated 5 August, the applicant wrote to the ‘Listing Manager’ in the following terms:

“It has become apparent that there are documents that were missing from my case book that ought to have been before the court that the absence of may well affect the decision and cause a prejudice if they are not before the court. They are material to any potential misapprehension of facts or an apparent potential misleading of them.

The inclusion of documents will correct an error. The absent documents are potentially prejudicial to an outcome on an informed basis.”

30. The applicant did not identify in his letter the nature of the documents he now wished to put forward. The Court had before it at the time of the leave application approximately 600 pages of documents. Reference was made only to a few of those documents in the course of argument on the leave application.

30. It must be stressed that this was an application for leave to appeal from a costs order in a sum of just over $10,000. Except in limited circumstances, a matter proceeds before the Court on the date set for hearing and the Court does not entertain applications made after the hearing has finished and judgment has been reserved. Even had the applicant’s request to put further documents before the Court been in proper form, this appears to be a continuation of the applicant’s attempts to raise matters relating to proceedings that were dismissed and not to the costs order made by the primary judge which was the issue on the leave application.

Orders

32. Accordingly, the orders the Court makes are:

(1)   Extend time for filing the summons for leave to appeal to 8 June 2016.

(2)   Summons for leave to appeal refused.

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Decision last updated: 12 August 2016