Kalfine Pty Limited v Kenneth Hill

[2007] NSWSC 284

CITATION:	Kalfine Pty Limited v Kenneth Hill [2007] NSWSC 284
HEARING DATE(S):	30/03/2007
JUDGMENT DATE :	3 April 2007
JUDGMENT OF:	Associate Justice Malpass
DECISION:	The appeal fails. The Summons is dismissed. The plaintiff is to pay the costs of the proceedings.
CATCHWORDS:	Appeal from Magistrate - claim for indemnity by managing agent in respect of costs of other proceedings - no error as to point of law.
PARTIES:	Kalfine Pty Limited t/as Wilkinsons Real Estate Agency Kenneth Egerton Hill
FILE NUMBER(S):	SC 14254/06
COUNSEL:	Mr D. Priestley (Pl) Mr M. Eirth (Def)
SOLICITORS:	Thomson Playford Lawyers (Pl) Johnstone Robinson Legal (Def)
LOWER COURT JURISDICTION:	Local Court
LOWER COURT FILE NUMBER(S):	11696/05
LOWER COURT JUDICIAL OFFICER :	Lulham LCM
LOWER COURT DATE OF DECISION:	31 July 2006
LOWER COURT MEDIUM NEUTRAL CITATION:	Kalfine Pty Limited t/as Wilkinson Real Estate Agency v Kenneth Hill

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IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

ASSOCIATE JUSTICE MALPASS

3 APRIL 2007

14254/06 Kalfine Pty Limited v Kenneth Hill

JUDGMENT

1 HIS HONOUR: The plaintiff carries on a real estate agency. The defendant is the owner of property at 30 Pitt Street, Richmond (the property). A management agency agreement (the agreement) was entered into between the parties. It appointed the plaintiff to exclusively let and manage the property.

2 On 24 March 2000, a tenant suffered personal injury on the property. He was electrocuted. He brought proceedings against the defendant. In those proceedings, he sought to add the plaintiff as a party (as a second defendant). The application was ultimately dismissed by consent with each party paying its own costs.

3 The agreement contained, inter alia, the following:-

“16. Agent’s Indemnity and Liability
The Principal will hold and keep indemnified the Agent against all actions suits proceedings claims demands costs and expenses whatsoever which may be taken or made against the Agent in the course of or arising out of the proper performance or exercise of any of the powers duties or authorities of the Agent hereunder.”

This clause has been referred to as the indemnity.

4 The plaintiff sought to recover costs (being in the sum of $25,000) said to have been incurred by it in defending the motion. The costs were claimed pursuant to clause 16.

5 The plaintiff brought proceedings in the Local Court to recover the costs. The proceedings were defended. The defended proceedings were heard by Lulham LCM. He found in favour of the defendant. The Magistrate delivered detailed written reasons. In the making of his decision, he was asked to consider a number of decided cases.

6 In the reasons, he observed as follows:-

“40. Both Mr Priestly (sic) and Mr Torrington agreed that for the Agent to be entitled to an indemnity under cl 16, it was necessary for the Agent to have properly performed its duties and obligations. They agreed that if the Agent was negligent, the Agent would not be entitled to the indemnity.
41. It follows, in my view, that it was necessary for me to be satisfied that the Agent properly performed its duties or was not negligent before it is entitled to rely on the indemnity. As indicated, unlike the position in George Halmay, Colliers Jardine and BCS Strata Management there has been no finding by any court that the Agent in this matter was not negligent.”

7 In paragraphs 42-46 thereof, the Magistrate proceeded to consider the evidence that he had before him on the question of whether or not the plaintiff had effected proper performance.

8 In paragraph 47 thereof, he referred to authorities which gave support to the proposition that an agent can only rely on the indemnity if there is a finding by a court that the agent was not negligent.

9 He then made the following observations:-

“48. I have come to the view that I am not prepared to find that there is evidence which would allow me to positively find that the Agents properly performed their duties and obligations under the Management Agency Agreement. I repeat that this case is different from the other cases to which I was referred, because in those cases after a full hearing there was a finding by the court that the Agent was not negligent. There has been no such finding in these proceedings or indeed in the proceedings by the plaintiff Mr Tramontano. Absence such a finding in those proceedings and absence evidence which would allow me to make a finding in these proceedings, then in my view the plaintiff’s claim must fail.
49. In coming to that finding I relied on the oral submissions of Mr Torrington for the plaintiff and I took into account the oral submissions of Mr Priestly (sic). When the matter was raised in submissions Mr Priestly submitted that his client could rely on the Affidavit of Joanne Buttler, attached to Mr Harrison’s Affidavit and submitted that there was no evidence that the Agent did not properly carry out its duties and obligations. He relied heavily on the decision of Judge Neilson in George Halmay, but in that case there was a full hearing on the question of negligence and the judge found the Agent not negligent. There has been no such full hearing in this matter, and as I have previously indicated, I consider that the crucial difference in this case. I am not satisfied that the Agent can rely on the negative proposition that is, that there was no evidence in this case that it did not properly carry out its duties and obligations. I am satisfied that the onus was on the plaintiff to prove that it did properly carry its duties and obligations, and I am not satisfied that there is sufficient evidence for me to find that it did so.”

10 In paragraph 53 thereof, the Magistrate addressed what he described as “a second main issue” (it concerned alleged waiver of rights to recover the costs under the indemnity). As it was unnecessary for him to decide it, he did not express a final view on the issue. However, he made observations which suggested that he favoured the arguments of the defendant on the issue. I shall return to it in due course.

11 A Summons was filed in this Court on 28 August 2006. It purports to bring an appeal as of right from the Local Court. In those circumstances, the plaintiff bears the onus of satisfying the Court that there was error in point of law that justified the disturbing of the decision.

12 The grounds of appeal set forth therein are as follows:-

“1. The learned magistrate misdirected himself in concluding that he could not make a finding as to whether the Appellant had properly performed its duties under the contract without a “full hearing” on the question of negligence.
2. The learned magistrate erred in finding there was insufficient evidence that the Appellant had properly performed its duties under the contract.”

13 The appeal was heard on 30 March 2007. Both parties were represented by Counsel.

14 It was conceded by the plaintiff that both grounds were related. Little was said to support the view that the second ground gave rise to error in point of law. In my view, it does not. Largely, the argument was directed to the first ground.

15 It was contended by the defendant that the first ground misrepresents what was done by the Magistrate. In my view, that submission is correct.

16 There is no issue that the plaintiff had the onus to prove proper performance and so bring himself within the ambit of the indemnity. There was no dispute that the Magistrate correctly enunciated that onus in the reasons.

17 It seems to me that in addressing what the Magistrate regarded as the first main issue, his reasoning process involved the taking of a number of steps. He correctly identified what had to be proved and the onus had in respect of it. He distinguished certain cases by reason of there not having been a finding on the issue elsewhere. He then looked at the evidence that was before him on the issue. After a detailed consideration of it, he came to the view that such evidence as there was failed to discharge the onus of proof. In my view, there was no error in point of law.

18 The reaching of that view makes it unnecessary to consider what was said in paragraph 53 of the reasons. Counsel for the plaintiff, quite properly, drew attention to what had been said therein. The issue addressed in it may have rendered this appeal futile. In the circumstances, I need take that matter no further.

19 The appeal fails. The summons is dismissed. The plaintiff is to pay the costs of the proceedings.

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