National Cellular v Efficient Marketing Services

[2001] NSWSC 244

CITATION:	National Cellular & Anor v Efficient Marketing Services & Anor [2001] NSWSC 244
FILE NUMBER(S):	SC 12377/00
HEARING DATE(S):	26/03/01;27/03/01
JUDGMENT DATE:	30 March 2001
PARTIES :	National Cellular Group Pty Ltd & Anor v Efficient Marketing Services Pty Ltd & Anor.
JUDGMENT OF:	O'Keefe J

LOWER COURT JURISDICTION :	Local Court
LOWER COURT FILE NUMBER(S) :	4938-39/98
LOWER COURT JUDICIAL OFFICER :	Magistrate J Dive

COUNSEL :	Plaintiffs: Mr V Ruta Defendants: Mr P Stitz
SOLICITORS:	Plaintiffs :Duker & Associates, Sydney Defendants :Duffield & Duffield, Sydney
CATCHWORDS:	Appeal from local court - Application for leave to appeal - Refusal of adjournment application by a magistrate - Discretion - Principles on which discretion may be interfered with - Withdrawal from hearing by counsel - Non-appearance by solicitor - Entry of judgment following ex parte hearing - Application for extension of time in which to seek leave to appeal - Principles - Natural justice - Indemnity costs - when awarded
CASES CITED:	Jakamarra v Krakouer (1998) 153 ALR 276 Brown v Dean (1910) AC 373 Gallow v Dawson (1990) 64 ALJR 458 Pace v Read [2000] NSWSC 823 Cohen v McWilliam (1995) 38 NSWLR 476 State of Queensland v J L Holdings Pty Limited (High Court, unreported 14 January 1997) House v The King (1936) 55 CLR 499 at 504-505 Degmam Pty Limited (in liq) v Wright No 2 (1983) 2 NSWLR 354 Wentworth v Rogers No 5 (1986) 6 NSWLR 534 at 542 Hobartville Stud Pty Limited v Union Insurance Company Limited (1991) 25 NSWLR 358 Northridge v Central Area Health Service [2000] NSWSC 1241, Supreme Court unreported 29 December 2000
DECISION:	1. The relief sought in the summons is refused; 2. Summons dismissed; 3. Plaintiff to pay the costs. Such costs shall include indemnity costs in respect of appearances before the court on 11 December 2000; 22 January 2001 and 26 Februray 2001

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

O’KEEFE J

DATE: Friday 30 March 2001

No: 12377/00 - NATIONAL CELLULAR GROUP PTY LIMITED AND NATIONAL TELECOMMUNICATIONS GROUP PTY LIMITED v EFFICIENT MARKETING SERVICES PTY LIMITED

JUDGMENT

1    HIS HONOUR:

INTRODUCTION

2    National Cellular Group Pty Limited (NCG) and National Telecommunications Group Pty Limited (NTG) (collectively referred to as the plaintiffs) seek an extension of time for the filing of an application for leave to appeal against the decision of a magistrate in two actions in the Local Court, Downing Centre, Sydney in which an adjournment was refused and judgments adverse to them were given on 24 July 2000.

3    They further seek leave to appeal against such decisions together with orders setting aside the judgments and providing for a new trial in each action.

4    These claims for relief are based upon the refusal by the Magistrate in the Local Court to grant an adjournment of the actions at the request of the counsel for NCG and NTG and the subsequent entry of judgments against them after a hearing, but in their absence. Such absence came about because counsel retained on their behalf withdrew from the hearing shortly before the taking of evidence and their solicitor did not appear despite the fact that the hearing had been adjourned to a later time on the date fixed for hearing to afford an opportunity for him to appear.

BACKGROUND

5    In its first action (4938/98) Efficient Marketing Services Pty Limited (EMS) sued NCG and NTG in the Local Court for services provided to them. The services were in the nature of consultancy and telemarketing that had been requested by Mr Hakim, the managing director of the plaintiffs. An amount of $2290 had been paid, leaving an unpaid balance of $8413.50. An additional amount of $201.50 was claimed in respect of advertising which had been paid for on behalf of the plaintiffs at the request of Mr Hakim.

6    In its second action (4939/98) EMS sued for $5384.68 for like services in respect of the period from 17 January 1997 to 27 February 1998.

7    In the result there was a verdict and judgment for $8615 in favour of EMS in action 4938/98. There was also a verdict and judgment in favour of EMS on a cross-claim which had been filed and verdict and judgment for the third party (the second defendant in the present proceedings). In action 4939/98 there was a verdict and judgment in favour of EMS for $5384.68, a verdict and judgment in its favour on the cross-claim and a verdict and judgment in favour of the third party (which is also the second defendant in the present proceedings). Thus the amount in issue in the present proceedings is $13,999.68 together with costs - on any view a minor claim.

8    The history of these actions in the Local Court showed consistent and repeated default on the part of NCG and NTG. EMS commenced actions numbers 4938/98 and 4939/98 in the Local Court on 5 May 1998. On 4 June 1998 NCG and NTG filed their defences and cross-claims. They also joined Mr Avramovski as a third party.

9    On 6 August 1998 the solicitors for EMS and Mr Avramovski sought further and better particulars of the cross-claims. There being no response, they wrote on 18 September 1998 again seeking the particulars. In the meantime defences to the cross-claims and third party notices had been filed on behalf of EMS and Mr Avramovski on 13 August 1998.

10    As there was still no reply to the request for particulars despite the expiration of six months, yet another request was made on 19 February 1999.

11    On 2 March 1999 a telephone call was received from Mr David Lind-Mitchell on behalf of NCG and NTG requesting a further twenty-one days from 2 March 1999 in which to supply the particulars. This was also agreed to but the particulars were not supplied within the extended time. At the request of the representative of NCG and NTG a further extension of time was granted until 30 March 1999. Again, there was default in the supply of particulars and on 8 April 1999 a notice of motion seeking an order for the supply of particulars was filed on behalf of EMS and was listed for hearing on 21 May 1999.

12    Between 11.26pm on 20 May 1999 and seven minutes past midnight on 21 May 1999, particulars were supplied by facsimile. As a consequence the motion for particulars did not proceed but NCG and NTG were ordered to pay $360 as the costs of the proceedings. Although this order was made on 21 May 1999, those costs remain unpaid.

13    As the particulars which had been supplied were not satisfactory, a further request was made on 14 July 1999. Despite follow-up correspondence in respect of such further particulars, they remained unsupplied as at the date fixed for the hearing of the actions.

14    On 24 March 2000 a certificate of readiness was served by EMS and Mr Avramovski in respect of each of the Local Court actions and on 31 March 2000 such certificates were filed. Both actions were then called over before the Local Court on 8 May 2000 when they were specifically fixed for hearing on Monday 24 July 2000 at 9.30am. In addition, the Local Court made orders that the parties exchange witness statements on or before 10 July 2000 and that an outline of the issues of the case be prepared and handed up at the hearing on 24 July 2000.

15    On 14 July 2000 the solicitors for EMS and Mr Avramovski wrote to the solicitors for NCG and NTG pointing out that, although EMS was, and at the material time had been, in a position to exchange witness statements as ordered, no advice had been received on behalf of NCG or NTG that their statements were ready for exchange. The solicitors for NCG and NTG were informed: "We will not consent to late service by your clients" and were also requested to supply the particulars which had been outstanding since July 1999. No response was forthcoming.

16    On 14 July 2000 a notice to produce was served on the solicitors for NCG and NTG. When no response was received, the solicitors for EMS and Mr Avramovski again wrote to their opponents' solicitors confirming the failure to comply with the Court's order and advising:

"We will be objecting to any attempts to call experts or other witnesses whose statements have not been supplied."

17    As at the date fixed for hearing, there was still no response in respect of the outstanding particulars or the letters requesting the supply of statements in accordance with the orders of the Local Court.

18    From the foregoing it can be seen that the history of NCG and NTG was one of consistent delay, as well as failure to comply with the orders of the Local Court.

19    Such particulars as had been supplied on behalf of NCG and NTG indicated that the relevant contractual negotiations between the parties had been conducted in writing and orally by Mr Tony Hakim, the managing director of NCG and NTG, and by the sales and service managers, whose names were not revealed in the particulars or in evidence filed by EMS on behalf of NCG and NTG in the present proceedings. However, as is clear from the evidence filed in the present proceedings, the persons occupying those positions did not include Mr David Lind-Mitchell. He was the administration manager and his position involved dealings with the legal advisers, outside accountants and financiers of his employer. Furthermore, the evidence confirms that neither Mr Avramovski nor anyone on behalf of EMS had any dealings or conversations with Mr David Lind-Mitchell concerning the subject matter of the actions. Their dealings were with Mr Hakim, Mr George Tawas (or Tawaff) and the sales manager, who name is referred to only as Steve F. Thus, on the particulars supplied and the evidence in the present matters, the parties were in agreement that Mr David Lind-Mitchell had not been involved in the contractual negotiations or in the allocation of work. This is relevant in view of what occurred on the day of hearing.

THE HEARING IN THE LOCAL COURT

20    When the matter was called on for hearing in the Local Court, counsel for NCG and NTG sought an adjournment. This was on the basis that:

" my principal witness today on the way down here seems to be having difficulty with his chest." (bold added)

21    However, it is clear from what transpired before the Magistrate that counsel for NCG and NTG had been going to seek an adjournment in any event. It is also clear that witness statements had not been prepared and signed, either by Mr Lind-Mitchell (who was unavailable because of indisposition) or any other witness. Furthermore, no witness on behalf of NCG and NTG was present when the matter was called on for hearing, or at any time thereafter during the course which the proceedings took before the Local Court; nor was the solicitor for NCG and NTG.

22    Counsel for NCG and NTG later described Mr Lind-Mitchell as "a principal witness for the hearing today" (bold added).

23    However, during the course of the hearing before this Court, it became clear that Mr Lind-Mitchell's evidence went only to the application to vacate the hearing date and adjourn the hearing of the actions to another date.

24    Counsel for NCG and NTG clearly made the most of the sudden and unexpected indisposition of Mr Lind-Mitchell. However, no acceptable or satisfactory explanation was given to the Local Court as to why witness statements had not been filed in accordance with the orders of the Local Court, nor was any explanation given as to why Mr Hakim and the other persons referred to by position in the particulars were not present to offer to give oral evidence.

25    In these circumstances, the Magistrate refused to adjourn the application, whereupon counsel for NCG and NTG said:

"I would simply ask to be given a short amount of time in that I contact my instructing solicitor and let him know the Court's decision and that the matter is ready to go on today."

26    Counsel then sought to withdraw for that purpose and was given such leave to do so by the Magistrate, who added:

"but you are going to come back and tell me what your fresh instructions are, Mr Anstee?
ANSTEE: Yes."

27    The matter was then adjourned to enable this to occur.

28    On resumption, counsel for NCG and NTG advised the Court that he had:

"indicated to (his) instructing solicitor ... that he should attend down here."

29    He also advised the Court that Mr Lind-Mitchell was still unwell and put before the Court an unexchanged document indicating that his instructing solicitor would seek to rely upon it. The Magistrate rejected the document on the basis, inter alia, that it had not been sworn. He then asked counsel whether there was "any other evidence for the defendant/cross-claimant" to which counsel replied "not that I am aware of, your Worship, that's correct." Counsel then informed the Court that his "instructing solicitor is coming down" and asked "for a short time for him to come down and continue with the case", later adding that such solicitor "may well be on his way down". The Magistrate then asked if counsel was seeking to have the matter stand in the list to enable this to occur. Counsel replied in the affirmative. By this time it was just after noon. The Magistrate then stood the actions down in the list until 12.40pm, thereby giving yet another 35 minutes for the solicitor for NCG and NTG to appear. The Magistrate advised counsel that if there was no appearance he would proceed to deal with the actions ex parte at 12.40pm, but that if the solicitor for NCG and NTG appeared in the meantime he would return to the Bench and commence the hearing of the cases.

30    At 12.40pm the matter was called again. Counsel for NCG and NTG appeared as a matter of courtesy, but gave no explanation as to the absence of his instructing solicitor, of witnesses or of any other representative of NCG and NTG. The Magistrate then proceeded to hear the actions and determine them in accordance with the pleadings and evidence.

31    It is in respect of the decision refusing an adjournment beyond the date for which the hearing had been fixed that the plaintiffs in the present proceedings have based their claim to relief.

RELIEF SOUGHT

32    NCG and NTG have sought the relief referred to in paragraph 1 hereof on grounds set out in the statement filed pursuant to pt 53B r 7. All such grounds relate to the refusal of the Magistrate to grant the adjournment sought. The claim is that in refusing the adjournment the Magistrate erred in law and unreasonably exercised the discretion conferred on the Court. The refusal of the adjournment is also characterised as a denial of natural justice. Although expressed variously in the statement of the grounds filed, the errors of law ultimately come down to an assertion that the Magistrate applied a wrong principle in determining not to grant the adjournment sought.

33    The decision by the Magistrate was given on 24 July 2000. The summons seeking leave to appeal was not filed until 7 September 2000. It was thus out of time by more than two weeks. Furthermore, it was agreed between the parties that since the determination that was at the heart of the matter was the refusal to grant the adjournment, the decision appealed against was interlocutory and required leave to appeal. It was also common ground between the parties that the sole ground on which leave to appeal could properly be sought was that the decision of the Magistrate involved an error of law. The matter was argued on those bases and will be so determined.

EXTENSION OF TIME

34    Although the time limits prescribed by the Rules may be extended, a case for such extension must be made. An extension of the time provided for appealing or seeking leave to appeal is not to be had merely for the asking. The decision to grant or refuse such an extension involves the exercise of a discretion. The fact of delay is a relevant consideration in this regard. Time limits for appeal are fixed for good reasons. The purpose for such time limits has been described as follows:

"They are not prescribed for the purpose of implementing what Roscoe Pound referred to more than 90 years ago as the 'sporting theory of justice'. They are prescribed as aides to the attainment of justice" ( Jakamarra v Krakouer (1998) 153 ALR 276 at 284 per Gummow and Hayne JJ).

35    Prima facie a party is required to adhere to the time limits prescribed by the Rules. However, where there is a power to extend such time and there is good reason in the interests of justice to do so, the time limits may be extended. It is for the party seeking the extension to persuade the Court that it is in the interests of justice that it should be granted. Such persuasion will usually depend on the provision of an acceptable or satisfactory explanation as to why the time limits were not complied with. (Jakamarra v Krakouer, supra at 294 per Kirby J).

36    Whilst the grounds of refusal of an extension of time involve the exercise of a discretion, it is not an unfettered discretion. It must be exercised judicially and by reference to appropriate considerations or criteria. Whilst it has been said that there are 'no rigid rules' which confine the exercise of such discretion, and that its exercise must in each case depend upon the particular circumstances of the case (Jakamarra v Krakouer, supra at 294 per Kirby J), a number of considerations or criteria have commonly been taken into account and are generally regarded as important, indeed, usually treated as the main factors to be considered is to be given in determining what is the interests of justice. They are the length of delay, the reasons for the delay, whether there is an arguable case on appeal or, as is sometimes said, whether to allow the case to appeal would be futile and the degree of prejudice to the successful party in the proceeding should the time for appeal be extended.

37    In Jakamarra v Krakouer, Brennan CJ and McHugh J referred to 'the substantive rights' of the party who is the respondent to an application for an extension of time within which to appeal (supra at 279). Their reference to 'the substantive rights of the respondent' echoes what was said by Lord Loreburn LC in Brown v Dean (1910) AC 373, that a litigant:

"is by law entitled not to be deprived of (his) judgment without very solid grounds" (at page 374).

38    In Gallow v Dawson (1990) 64 ALJR 458, McHugh J considered an application for an extension of time in which to file a notice of appeal in a matter in which there would have been an appeal as of right had the notice of appeal been filed within time. In refusing an extension of time McHugh J stressed:

1. The grant of extension of time is not automatic;

2. The discretion to extend time is given for the sole purpose of enabling the Court to do justice between the parties;

3. The discretion to extend time should only be exercised in favour of an applicant upon proof that strict compliance of the Rules will work an injustice.

4. In order to determine whether there would be an injustice it is necessary to have regard to 'the history of the proceedings, the conduct of the parties, the nature of the litigation and the consequences for the parties of the grant or refusal of the application for the extension of time' and, where the application is for an extension of time in which to lodge an appeal 'the prospects of the applicant succeeding on the appeal'.

39    McHugh J also stressed that it was:

"necessary to bear in mind in such an application that, upon the expiry of the time for appealing, the respondent has 'a vested right to retain the judgment' ..." (supra at p 459).

See also the authorities collected in Pace v Read [2000] NSWSC 823; Supreme Court, unreported 18 August 2000.

40    The foregoing principles require that there be an adequate or satisfactory explanation for the failure to comply with the time limits prescribed by the Rules. In the present case no adequate or satisfactory explanation was tendered to the Court as to why the application for leave to appeal was not made until after the time for so doing had expired.

41    In an affidavit filed on behalf of NCG and NTG, Mr David Lind-Mitchell said that on the morning of 24 July 2000 he suffered a heart attack and was in hospital for three days and did not resume work until late August 2000. Unfortunately, perhaps conveniently, the precise date of his return to work is not specified in the affidavit. However, it is clear from the form of his affidavit that it was likely to have been prior to 20 August 2000, and that his reason for not seeing correspondence concerning the matter was because he:

"was extremely behind in (his) work schedule relating to the implementation of the goods and services tax compliance program and the preparation of the National Telecom's Group initial public offering."

42    There is no evidence as to why others in the control or employ of the plaintiffs, particularly those who would have been expected to make statements, e.g. the managing director, Mr Hakim, and Messrs Tawas and Steve F, failed to ensure that timely action was taken.

43    It is clear from the evidence filed on behalf of NCG and NTG that their solicitor, Mr Tees, was aware of the outcome of the proceedings in the Local Court on the day on which this outcome occurred. His affidavit is silent about communications on the topic between him and his clients. That very silence, combined with the inherent probability that a solicitor, knowing of adverse decisions against his clients, would advise the clients of the decisions and perhaps even as to their right of appeal, cause me to conclude that NCG and NTG were probably aware of such decisions in the proceedings in the Local Court within the time limited for appealing or for seeking leave to appeal.

44    At worst for EMS, the situation is that there is no direct evidence as to when it was that NCG and NTG became aware of the decisions against them and an absence of explanation as to why steps were not taken to exercise their rights of appeal, or to seek leave to appeal within time. That does not constitute a reason which is, in my opinion, either adequate or satisfactory.

45    It is more probable, however, that they were aware of the adverse decisions on or about the day on which they were made. In such case there is a complete absence of explanation as to why they did not exercise their rights within time rather than wait until 7 September 2000 when the summons in the present matter was filed.

46    The foregoing considerations alone justify the dismissal of the claim for an extension of the time within which to make an application for leave to appeal.

THE DECISION OF THE MAGISTRATE

47    There are, however, additional grounds. The first is that no error of law is to be found in the decision of the Magistrate to exercise his discretion to refuse the adjournment sought in the Local Court on behalf of NCG and NTG.

48    The transcript of the Local Court proceedings revealed that NCG and NTG set out for court on the morning of 24 July 2000 intent upon making an application for an adjournment. The grounds for such an adjournment were, in essence, that they had given priority to other matters rather than preparing the cases for hearing and complying with the orders of the Local Court.

49    The administration manager of the company, Mr Lind-Mitchell, swore an affidavit in support of the application for an adjournment in the Local Court. In it he said:

"Since April 2000 my time has been totally occupied in assisting the companies to prepare for the commencement of the goods and services tax whilst, at the same time, assisting in the preparation of the National Telecom's Group for an additional public offering, which is scheduled to take place next month."

50    He also said that since April 2000 the companies had

"been introducing new accounting, information and data collecting systems necessitated (inter alia) by ... the growth of the companies."

51    There is no explanation in relation to the period of twenty-three months between the filing of the claims on 5 May 1998 and April 2000. Staff training was also relied upon as was the fact that

"all accounts department and administrative staff have been fully occupied in the conversion of all company records, data bases and accounting systems."

52    Mr Lind-Mitchell also referred to renovation and reconstruction of the companies' business premises to

"accommodate the additional staff engaged and the logistic requirements due to the requirements of the impending initial offer."

53    However, when this was done is not made clear. What is quite clear is that Mr Lind-Mitchell, at least, gave his priorities to matters other than the preparation of the case, notwithstanding that on 8 May 2000 his employers advised the Court that the matter was ready for hearing, that they would have some six witnesses, and that 24 July 2000 was a suitable date for the hearing.

54    The Magistrate considered these matters and concluded that NCG and NTG had:

"made a commercial decision not to trouble themselves with this particular piece of litigation."

55    This conclusion is material to his ultimate decision. Not only does it not reveal any error of law, but it is also well supported by the evidence. In my view it is correct.

56    In his judgment refusing the adjournment application, the Magistrate recounted the history of delay on the part of NCG and NTG. He referred to the events at the call-over on 8 May 2000 and to the readiness of NCG and NTG to accept the hearing date of 24 July 2000. He adverted to their failure to adhere to the Court's time-table or to make any application to the Local Court for an extension of time within which to exchange witness statements. He also adverted to the fact that no application for adjournment had been foreshadowed or sought prior to the date fixed for hearing, a matter relevant to the efficient operation of the Court and the delays that others experience because of lost court time as a result of last-minute adjournment applications. Furthermore, he correctly pointed out that the inability of Mr Lind-Mitchell to appear on the morning fixed for the hearing was irrelevant.

57    He then referred to the principles in Cohen v McWilliam (1995) 38 NSWLR 476 and to what he described as "that most important decision in the High Court", State of Queensland v J L Holdings Pty Limited (High Court, unreported 14 January 1997) and said:

"I have to decide on the balance of the interests of justice. Certainly the law is that parties should not be deprived of a hearing on their merits unless it is only in the interests of justice that that be the case."

58    He was conscious of the fact that the claim did not involve a lot of money, in commercial litigation terms, and was of the opinion that the application to vacate the hearing date had "no merit". He then summarised his reasons for refusing the adjournment sought as follows:

"Accordingly, this is, in reality, a small commercial case where the plaintiffs have filed their statements of claim in May 1998. It is now July 2000. The defendants have done nothing to prepare for today. They have not notified the other side, they have no witnesses here, no witness statements have been exchanged. They haven't provided the particulars. In my view they have made a commercial decision not to trouble themselves with this particular piece of litigation.
Bearing in mind the prejudice that quite clearly will befall the defendant if the hearing is not vacated and, bearing in mind all of those considerations, in my view the balance of the interests of justice would be met by refusing to vacate these hearing dates, and accordingly the vacation of the hearing is refused."

59    Applying the principles authoritatively stated in House v The King (1936) 55 CLR 499 at 504-505 per Dixon, Evatt and McTiernan JJ, I am of the opinion that the Magistrate did not act upon a wrong principle, did not allow extraneous or irrelevant matters to guide or affect him, did not mistake the facts and did not fail to take into account some material consideration in arriving at his conclusion. Furthermore, the result is neither unreasonable nor unjust. As a consequence, the conclusion to which the Magistrate came in exercising his discretion does not involve error of a kind that would be reviewed by this Court. In my opinion, the decision of the Magistrate was correct.

NATURAL JUSTICE

60    The claim that the plaintiffs were denied natural justice by the Magistrate must also fail. The Magistrate did not err in the exercise of his discretion to refuse to vacate the hearing date. What is more, he gave the plaintiffs every opportunity to be represented and to defend the cases against him. Counsel was given the opportunity to contact his instructing solicitor. Such counsel advised the Court that he had indicated to the solicitor that he should attend the Court. A further adjournment was given at the request of counsel for the plaintiffs. It was "for a short time for him (i.e. the solicitor) to come down and continue with the case." When asked by the Magistrate why the solicitor was not present at that time, the response was, "He (i.e. the solicitor) may well be on his way down. That's what I understand he is doing." The Magistrate then stood the matter down again for a further thirty-five minutes to allow the solicitor for NCG and NTG to appear. He informed counsel that the matter would proceed at 12.40pm. When the matter was called on at 12.40pm counsel again appeared on behalf of NCG and NTG and, despite the fact that he said he did so only "... as a matter of courtesy" sought to argue the matter further but, after some discussion, finally withdrew. No explanation was given to the Local Court for the absence of the solicitor for the plaintiffs. The Magistrate then heard and determined the case.

61    Counsel for NCG and NTG argued that leave should be granted because the failure to make the application within time was an oversight which was adequately explained. The answer to this is that there is no evidence that it was an oversight and, as I have already indicated, there is no adequate or satisfactory explanation tendered in respect of the delay. He further argued that departures from a court ordered time-table are not decisive. Whilst departures from the court ordered time-table may not necessarily be decisive in a particular case they are, nonetheless, relevant. The Magistrate in the present case did not treat such departures as decisive. He regarded them as relevant and, in doing so, did not fall into error.

62    Another argument advanced on behalf of NCG and NTG is that a court should not give decisive weight to court efficiency or to non-compliance with case management requirements. The Magistrate did not do so. He did, however, have regard to those factors as indicative of a commercial decision to allocate resources to expansion of the business of the companies and their premises, as well as to the impending float and the implementation of GST programs rather than to attend to the preparation of the case. His approach in this regard accords with authority and does not bespeak an error of principle that would attract the supervisory jurisdiction of this Court.

63    In my opinion the course taken by the Magistrate was proper and appropriate to the circumstance of which the Local Court was aware. On the face of the transcript of the proceedings there was no denial of natural justice and there is no ground in the statement filed pursuant to pt 53B r 7 which asserts that the Magistrate denied natural justice, other than by his refusal of the application to vacate the hearing date and adjourn the matter to another date.

64    In my opinion, even if time were to be extended for the making of an application for leave to appeal, the case is not one in which it would be appropriate to grant such leave to appeal.

65    Before making formal orders dismissing the summons, there is an additional matter that should be adverted to, namely, an affidavit filed on the second day of the hearing by Mr A Tees, solicitor NCG and NTG. This affidavit was filed only after it had been pointed out that there was an absence of evidence from the solicitor as to his absence from the Local Court on 24 July 2000. It was submitted by counsel for the plaintiffs that the allegations in Mr Tees' affidavit were not material to the issues posed in the present matter. That was accepted by counsel for EMS. No application was made to expand the grounds referred to in the pt 53B r 7 statement so as to include a reference to misconduct on the part of counsel. However, the allegations in Mr Tees' affidavit raise serious questions in relation to the internal management of the case in the Local Court and the conduct of the legal practitioners for NCG and NTG.

66    Clear issues of fact exist between counsel who appeared in the Local Court and his instructing solicitor, Mr Tees. The conduct and statements to the Local Court by counsel for NCG and NTG involve clear assertions of contact by him with Mr Tees (either directly or indirectly) and of an expectation that Mr Tees would come to and appear at the Local Court on behalf of his clients. Mr Tees, on the other hand, expressly states that he had no direct contact with counsel between a telephone call at about 9.45am in which counsel advised him of the indisposition of Mr Lind-Mitchell at approximately 4pm on the afternoon of that day. The clear thrust of Mr Tees' affidavit is that he was not aware of what had transpired and the need for him to attend court until well after the cases in the Local Court had concluded. Whilst Mr Tees' affidavit is not necessarily inconsistent with indirect contact having been made, the purport of his affidavit implies that this did not occur.

67    Although it has been correctly accepted that the allegations are not material to the issues posed in the present case, in the light of the form and content of the statement of grounds provided pursuant to pt 53B r 7, nonetheless the factual dispute raised and the questions involved in such disputes are of concern for the legal profession.

68    Accordingly, I think it is appropriate to refer the papers to both the New South Wales Bar Association and the Law Society of New South Wales for their consideration and I propose to do so.

69    The orders of the Court will be:

1. The relief sought in the summons is refused.

2. Summons dismissed.

3. Plaintiffs to pay the costs.

70    (Mr Stitz sought costs on an indemnity basis. Discussion ensued.)

71    HIS HONOUR: Application has been made on behalf of the successful defendant for an order that the costs in this matter awarded against the plaintiffs should be on an indemnity basis. Counsel for the defendants has submitted that:

1. The appeal was hopeless.

2. The fact that at 3.25pm on the first day of hearing counsel for the plaintiffs sought an adjournment so as to put on an additional affidavit, being that of Mr A Tees, meant that the case went into a second day.

3. That in the conduct of this case there was delay and failure to comply with the Court's orders which resulted in the matter having to be mentioned on a number of occasions additional to those that would have normally have been expected. They included in particular 11 December 2000 when the matter had to be adjourned as a result of default on the part of the plaintiffs in complying with an order for the filing of affidavits made on 16 October that such affidavits be filed by 16 November 2000. It was necessary for the matter to be mentioned and a further order made extending the time within which affidavits could be filed until 22 January 2001. Again there was default and it was necessary to adjourn the matter and it was only a matter of a short time before the adjourned date that, still in default, the affidavits were nonetheless filed on behalf of the plaintiffs.

72    The normal order is that costs should follow the event and that is the conclusion to which I came in this case. However, the nature of the claims made and the conduct of the parties during the course of the lead up to as well as the conduct of the hearing are relevant to a consideration of any special orders as to costs.

73    An order for costs on an indemnity basis generally betokens that a claim has been made which is wholly unjustified or that a defence or claim that is deliberately false or time wasting has been filed or embarked upon, or that there have been some circumstances in relation to the conduct of the case which call for a departure from the usual order for costs.

74    By making a special order for costs the Court records its disapprobation of the party against whom such an order is made. Cases such as Degmam Pty. Limited (in liq) v Wright No 2 (1983) 2 NSWLR 354 per Holland J, Wentworth v Rogers No 5 (1986) 6 NSWLR 534 at 542 per Kirby P; Hobartville Stud Pty Limited v Union Insurance Company Limited (1991) 25 NSWLR 358 per Giles J; Northridge v Central Area Health Service [2000] NSWSC 1241, Supreme Court unreported 29 December 2000at para 121 are examples of this.

75    In the instant case the appeal failed and failed clearly, but there were areas in which counsel for the plaintiffs was able to argue a matter that could not be said to be utterly hopeless; weak, unlikely to succeed, but I do not think it fair to say utterly hopeless.

76    In relation to the matter going into the second day, an examination of the Associate's record of proceedings makes it quite clear that it would have done so whether or not the matter had been adjourned at 3.35 on the first day to allow for the filing of an additional affidavit. So there was nothing in the actual conduct of the hearing before this Court on 26 and 27 March 2001 which would indicate that it was appropriate to make an order for indemnity costs.

77    However, antecedent to that, there had clearly been a repetition by the plaintiffs of the very type of behaviour in the conduct of the case in the Local Court as had attracted an order for indemnity costs there. The fact that the Magistrate made an order for indemnity costs is not the point. The point is that there was continued conduct in the preparation of the case before this Court that showed that what occurred was not accidental, but flowed as a continuation from what had occurred in the Magistrate's Court.

78    Because of default on the part of the plaintiffs in filing their affidavits there were additional costs incurred by the defendant in the lead up to the hearing and so I think it is appropriate that a special order for costs be made in respect of those days on which additional mentions were required.

79    Accordingly I will add to my order for costs that such costs shall include indemnity costs in respect of appearances before the Court on 11 December 2000, 22 January 2001 and 26 February 2001.

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Last Modified: 05/01/2001