Hamilton-Smith v Bernsteen Pty Ltd (in liq) - [2005] SASC 190

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Application)
HAMILTON-SMITH v BERNSTEEN PTY LTD (IN LIQUIDATION)
Judgment of The Full Court
(The Honourable Justice Gray, The Honourable Justice Sulan and The Honourable Justice White)
26 May 2005
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PRACTICE UNDER RULES OF COURT - TIME
PROCEDURE - COSTS - APPEALS AS TO COSTS - DISCRETION
Application for leave to appeal against decision of single Judge of this Court dismissing an appeal against costs order of magistrate.
Consideration of whether applicant had complied with the Supreme Court Rules 1987 (SA) - consideration of section 50 of the Supreme Court Act 1935 (SA).
Held - application for leave to appeal dismissed.
Supreme Court Rules 1987 (SA) r 67.01; Supreme Court Act 1935 (SA) s 50, referred to.
In re Will of Gilbert [1946] 46 SR (NSW) 318; Glenauchen Pty Ltd v Circuit Finance Pty Ltd [2001] SASC 61, considered.

HAMILTON-SMITH v BERNSTEEN PTY LTD (IN LIQUIDATION)
[2005] SASC 190
Leave to Appeal Gray, Sulan and White JJ
THE COURT

This is an application for leave to appeal.
The applicant, the defendant in civil proceedings, seeks to challenge a costs order made by a magistrate on 25 March 2004 following an interlocutory application.
The magistrate made an order setting aside a default judgment. He then made an order for costs in favour of the plaintiff. The magistrate concluded the plaintiff’s claim was for a liquidated amount, that reasonable notice had been given to the defendant of the plaintiff’s intention to sign judgment and that the plaintiff had obtained the default judgment regularly. The magistrate took the view that the plaintiff’s opposition to the setting aside of the default judgment had not been capricious or unreasonable.
The magistrate noted that the plaintiff had sought to confine the argument on the setting aside application to discrete issues. However it appeared to the magistrate that the defendant failed to appreciate the discrete nature of the plaintiff’s opposition and addressed the matter at large. This resulted in far more time than necessary being occupied on the hearing of the interlocutory application. It should also be pointed out that the magistrate also considered that there had been a lack of candour by the defendant and her solicitor.
In the event, the magistrate set aside the default judgment, and ordered that the defendant pay 80 per cent of the plaintiff’s costs of and incidental to the application to be taxed on a party-party basis and based upon 90 per cent of the Supreme Court scale. The magistrate further ordered that the defendant pay the costs incurred of and incidental to the preparation of a particular affidavit on an indemnity basis.
A Judge of this Court dismissed an appeal from the magistrate’s order for costs. The learned Judge summarised the magistrate’s decision in these terms:
Coming to the actual decision, which relates to the way in which costs were finally reasoned by the learned Magistrate, his Honour having had the conduct of the matter throughout and having seen the developments at each stage, the nuances of each party’s strategy and the way in which they were approaching the matter, was in a very strong position to form an opinion in the exercise of his discretion as to what was fair and reasonable on the question of costs. He did just that. He formed the view that a very large amount of unnecessary time was occupied in trifling and unhelpful argument from the appellant. He formed the view that had the appellant appreciated that the respondent was attempting to argue the matter on a very limited basis only, it would not have been necessary to waste the time and costs which were wasted in what I have already described as a saga.
The Judge then concluded:
In such a matter involving an interlocutory decision the discretion of his Honour in relation to costs should not be lightly interfered with. It should only be interfered with if it is obvious that an error of principle has been made. I must say having read each of the reasons set out in paragraph 5 hereof, and having followed the progress on the matter through I am not in the slightest bit surprised to find the order which his Honour made at the end of the day. In fact, it could be said, as indeed Mr Livesey for the respondent contended, that it was charitable in favour of the appellant. Whilst I would not go that far, I think it is a fair and reasonable assessment of the costs on the basis of his Honour’s views none of which have been demonstrated to me as being wrong.
I consider that both in relation to the order that the costs should be taxed on a party and party basis, based on 90% of the Supreme Court scale and in addition that the defendant pay 80% of those taxed costs, it is a fair assessment of the matter. I would therefore not interfere with his Honour’s findings in relation to costs and I would dismiss the appeal.
The learned Judge refused leave to appeal. In the course of the Judge’s ex tempore remarks refusing leave, he made reference to the magistrate having had the advantage of hearing and seeing witnesses. The position was that witnesses had not been called at the interlocutory hearing before the magistrate. This was an obvious slip by the learned Judge. No such misunderstanding is evident in the Judge’s considered reasons dismissing the appeal.
The defendant then made an ex parte application to this Court for leave to appeal from the decision of the learned Judge. That application was issued within time. However, the application was not set down for hearing as required by Rule 67.01(2) of the Supreme Court Rules 1987 (SA). The defendant’s advisers simply let the application lie without the required documentation being filed and without the matter being set down.
On 1 September 2004 a member of the Court registry staff telephoned the solicitors for the defendant and drew attention to the correct procedure to be followed. Court registry staff made two follow-up telephone calls. The solicitors for the defendant did not follow this advice. Almost eight months later, the defendant sought to proceed with the application. A written argument for consideration in private by the members of this Court was filed.
Court registry staff again made contact with the solicitor for the defendant suggesting that it would be appropriate for an affidavit to be filed explaining the delay in the prosecution of the application. This suggestion met with a written response from the solicitors for the defendant, advising that on their reading of the Rules of Court there was nothing to be explained and that they did not intend to file an affidavit. This Court then directed that the matter be referred into Court for oral argument. The parties were advised that the Court would receive submissions inter alia on whether the application had been processed according to the Rules of Court.
The listing of the matter in open court led to the filing of an affidavit by the solicitors for the defendant in which they advanced reasons for the delay in prosecuting the application. In substance, those reasons amounted to an intention not to proceed with the application unless an interim allocatur for costs was pressed for payment and whilst there was said to be a prospect of a negotiated settlement of the action.
The solicitor’s initial affidavit did not disclose the following matters. Default allocaturs for costs had been issued both in the Magistrates Court and the Supreme Court following non-attendance by the defendant’s solicitor. By consent, both defence allocaturs were set aside on the basis that interim allocaturs be issued in agreed amounts. Interim allocaturs were then issued. Bankruptcy proceedings were subsequently issued in respect of the non-payment of the interim allocaturs.
The initial affidavit from the defendant’s solicitor did not disclose that the trial in the Magistrates Court proceeded for four days during January 2005, and had then been adjourned to be finalised at a later date. The affidavit also did not disclose that it was not until February 2005 that an approach to settle the matter took place, and that subsequent discussions in April 2005 did not resolve the proceedings. These latter matters were deposed to in an affidavit filed on behalf of the plaintiff. Some of the matters were disclosed in a late affidavit filed by the defendant’s solicitor.
Section 50 of the Supreme Court Act 1935 (SA) provides for the circumstances in which an appeal lies to the Full Court. By subsection (1), an appeal lies against every judgment, order or direction of a Judge, whether in court or in chambers, and also from the refusal of any Judge to make any order. There follow, however, a number of provisos or qualifications on that general right. There are certain judgments or orders from which no appeal lies. These are specified in sub section 50(1a)(a). Subsection 50(1a)(b) provides that in relation to certain orders there can only be an appeal by leave of the Judge who made the order. Subsection 50(1a)(c) specifies certain orders where an appeal may be brought by leave either of the Judge or of the Full Court itself.
Subsection 50(1a)(b), where no appeal shall lie without the leave of the Judge, includes any order “as to costs only which by law are left to the discretion of the Judge”. It does not purport to relate to every order as to costs, but only those which by law are left to the discretion of the Judge.
The plain intention of section 50 of the Supreme Court Act is that discretionary orders for costs are to be treated differently from interlocutory orders and other types of orders referred to in subsection 50(1a)(c).
The learned Judge treated the appeal as involving more than an issue of costs. He considered that the appeal raised the question of the true nature of the claim as well as the correct test to be applied to the setting aside of a default judgment. This application should be treated as one appropriate to be considered under subsection 50(1a)(c)(i). On the hearing of the application before this court, it was apparent that the default judgment issue was moot. The real issue was the attempt to challenge the order for costs made by the magistrate.
It is settled that an appellate court will be reluctant to interfere with decisions of primary Judges relating to matters of practice and procedure that do not determine substantive rights of the parties. As Jordan CJ observed in In reWill of Gilbert,[1] if a tight reign is not maintained on such interference, the result would be disastrous to the proper administration of justice. A disposal of cases could be delayed indeterminably and costs heaped up indefinitely. A litigant with a deep purse or a litigious disposition could at will, in effect, transfer all exercises of discretion in interlocutory applications from a Judge in chambers to a court of appeal.
[1] [1946] 46 SR (NSW) 318.
In the present case, it would appear that the defendant is of a litigious disposition. This is evidently the view that the magistrate took when describing the unusual nature of the interlocutory application. Similarly, it was the magistrate’s view when making the observation that the plaintiff attempted to confine the application to discrete issues, but that the defendant wished to argue the matter at large support this view. The learned Judge hearing the appeal appears to be of the same view, as is evident from the paragraphs of his judgment referred to above.
The defendant’s litigious disposition can also be discerned in the further proceedings in the Magistrates Court and this Court. This, for example, is evident from the defendant’s attitude towards the taxation of costs. The defendant objected to the short form bill. On the hearing of this application, despite this Court’s repeated requests that the issues of principle be identified, counsel sought to agitate the matter as though it was a hearing of an appeal rather than an application for leave. This conduct tends to confirm that the defendant, or those advising her, are of a litigious disposition and wish to argue every point at every stage of the process.
The fact that the defendant wishes to litigate every aspect of the proceedings whenever the opportunity arises is further demonstrated by: the defendant’s ongoing non-payment of the agreed interim allocaturs; the defendant’s threatening of applications for a stay; the defendant’s rejection of the advice of court officers about the correct procedures to be followed; and the approach of counsel for the defendant on the hearing of this application. The remarks of Jordan CJ, in In re Will of Gilbert, are most apposite.
Unconscionable delay has occurred in the prosecution of this application. More than nine months has passed since the learned Judge’s decision. Counsel for the defendant submitted that there was no obligation to set down the application for hearing. It was enough to issue the application and simply let the process lie. It would appear from the affidavit of the solicitor for the defendant that this was primarily for tactical reasons. The application would be left “hanging” over the plaintiff whilst negotiations were pursued.
The application, in accordance with the rules of the Court, should have been set down at the time of issue. The defendant was obliged to make application in accordance with a prescribed form that in turn required time for hearing to be sought and fixed. It appears that the defendant ignored this procedural process. As the solicitor’s affidavit discloses, the applicant did not wish to proceed whilst settlement negotiations might eventuate and if the interim allocaturs were not pursued. The explanation offered appears to suggest that the application would only be pursued at a time that the defendant’s advisers thought appropriate and convenient to the defendant. The defendant has not offered a satisfactory explanation for the delay.
In Glenauchen Pty Ltd v Circuit Finance Pty Ltd[2], this Court addressed the practice in regard to the grants of leave to appeal:[3]
The court’s practice has been to grant leave to appeal only if a question of general principle arises. The court will usually consider whether there is reason to doubt the correctness of the decision under consideration. However, in the end the court must act as the interests of justice require.
[2] [2001] SASC 61.
[3] [2001] SASC 61 at [3].
To obtain leave to appeal against an order for costs would in the ordinary course require an important question of principle requiring resolution to be identified. In the present proceedings, no point of general principle has been demonstrated. General rules that govern the setting aside of default judgments are well established. The complaint in this case does not relate to general principle, but rather the application of settled principle to particular facts. No point of general principle arises.
The justice of the case does not require a grant of leave. The defendant has aired her complaints fully, and she has debated them both before the magistrate and then on appeal before a Judge of this Court. There is no reason to doubt the correctness of the order for costs made by the magistrate.
The application for leave to appeal is dismissed.