Nichols v Lee

[2008] NSWSC 1243

CITATION:	Nichols v Lee [2008] NSWSC 1243
HEARING DATE(S):	20 October 2008
JUDGMENT DATE :	25 November 2008
JURISDICTION:	Common Law
JUDGMENT OF:	McCallum J
DECISION:	(1) I extend the time within which to commence this appeal to 11 April 2008. (2) To the extent necessary, I grant leave pursuant to s 74(2) of the Local Courts Act 1982 to appeal against the order made on 13 March 2008. (3) The order finding against the plaintiffs on the notice of motion dated 11 March 2008 is set aside. (4) The proceedings are remitted to the Local Court for determination in accordance with the Court’s directions. (5) I order the defendants to pay the plaintiffs’ costs of the appeal.
CATCHWORDS:	COMMON LAW - appeal from Local Court - whether error in point of law - whether Magistrate misdirected herself as to the effect of orders striking out the statement of claim
LEGISLATION CITED:	Civil Procedure Act 2005 Local Courts Act 1982 Uniform Civil Procedure Rules 2005
CATEGORY:	Principal judgment
CASES CITED:	ASIC v Saxby Bridge Financial Planning Pty Ltd [2003] FCAFC 244 Australian Gas Light Co v Valuer-General (1940) 40 SR (NSW) 126 Australian Workers Union and Ors v Bowen (1945) 72 CLR 575 B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187 Gould v Vaggelas (1984) 157 CLR 215 Hawksford v Hawksford [2005] NSWSC 463 Latuharhary & Ors v Insight Litigation & Ors (4914/06) Maloney v Commissioner for Railways (1978) 52 ALJR 292 NSW Insurance Ministerial Corporation v Anderson (unreported) NSWCA 14 June 1994 US Manufacturing Co Pty Limited v ABB Service Pty Limited [2008] NSWSC 705
PARTIES:	Peter A Nichols (1st plaintiff) Sandra E Nichols (2nd plaintiff) James Lee (1st defendant) Ben Lee (2nd defendant)
FILE NUMBER(S):	SC 11630/08
COUNSEL:	Mr B Gower (Plaintiffs) Mr J Maconachie QC / Mr K Manion (Defendants)
SOLICITORS:	Insight Litigation & Legal Services Ltd (Plaintiffs) CKB Partners (Defendants)
LOWER COURT JURISDICTION:	Local Court
LOWER COURT FILE NUMBER(S):	11897/05
LOWER COURT JUDICIAL OFFICER :	Madgwick LCM
LOWER COURT DATE OF DECISION:	13 March 2008

- 6 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

McCALLUM J

25 NOVEMBER 2008

11630/08 Peter A Nichols & Anor v James Lee & Anor

JUDGMENT

1 HER HONOUR: This is an appeal from a decision of the Local Court. Peter and Sandra Nichols were the owners of a car that was involved in a collision with another car. The other driver was at fault. Proceedings were commenced in the Local Court against James Lee and Ben Lee, the owner and driver of the other car. The claim was for $6791.04 for the cost of repairing Mr and Mrs Nichols’ car. Ben Lee admitted liability for the collision and the loss and damage caused.

2 The matter was heard over several days by a Magistrate sitting in the General Division of the Court. After the conclusion of the hearing, the defendants submitted, in effect, that it had not been established that there was any retainer between the named plaintiffs and the solicitor on the record.

3 The Magistrate accepted that submission and, without proceeding to decide the claim on its merits, made an order striking out the statement of claim, apparently finding that the solicitor had no authority from the plaintiffs to commence the proceedings. The proceedings were then stood over to afford the solicitor an opportunity to be heard as to whether he should suffer an order for indemnity costs.

4 When the proceedings came back before the Court for the costs argument on 13 March 2008, the solicitor had served a notice of motion seeking to have the statement of claim “reinstated”, together with an affidavit in support, sworn by Mr Nichols, which addressed the question of the solicitor’s authority to commence the proceedings. The present appeal concerns the way in which the learned Magistrate dealt with that motion. There is no appeal against the decision striking out the statement of claim.

5 The issues for my determination are:

(a) what order was made in respect of the motion; and

(b) whether the order was erroneous in point of law.

6 To the extent that leave was required to bring the appeal out of time (see UCPR 50.3(1)), or pursuant to s 74(2)(a) of the Local Courts Act 1982 (if the order was interlocutory), it was not opposed by the defendants. I am satisfied that such leave should be granted, since the appeal was commenced only seven days out of time and raises a substantial issue that may have application in other cases.

Context in which the issues arise

7 Under s 73(1) of the Local Courts Act, there is an appeal as of right by a party to proceedings in the Local Court against the judgment or order of the Court sitting in its General Division, but only as being “erroneous in point of law”.

8 The first issue is to identify what “judgment or order” was made in respect of the notice of motion on 13 March 2008. Before addressing that issue, it is necessary to understand the background to what had happened on the previous occasion on 7 March 2008. The proceedings were listed on that date only for mention. The learned Magistrate had concluded hearing evidence in the proceedings on 13 August 2007 and had on that date stood the proceedings over for mention on 24 September 2007. It appears her Honour’s purpose in doing so was to ascertain whether, by that time, the parties had received the transcript so as to enable them to prepare written submissions, which they subsequently did. The timetable of those events discloses the strained conditions under which the Local Court operates.

9 The plaintiffs’ case was not complex. The statement of claim alleged, relevantly, that they were “the owner and driver” (sic) of the car and that the second defendant drove the other car negligently so as to cause it to collide with their car. They alleged that, as a result of the first defendant’s negligence (apparently a reference to the second defendant), they had been put to the expense of repairing their car. Ignoring a few obvious errors, a cause of action for negligence causing damage to property could not have been pleaded more simply.

10 The defendants did not admit most of the averments in the statement of claim and specifically denied that the plaintiffs had been put to the expense of repair. In addition, the defence stated:

“The defendants do not admit that the plaintiffs are the proper plaintiff.
The defendants do not admit that the plaintiffs have standing.
The defendants do not admit that the plaintiffs may bring or maintain the proceedings.”

11 It is not entirely clear what issue the defendants sought to raise by not “admitting” those matters. They were not elements of the cause of action relied on by the plaintiffs. The plaintiffs had brought the action to recover damages for injury to property owned by them caused by the negligence of Ben Lee. The fact that the defendants did not admit that the plaintiffs were the proper plaintiffs did not raise any additional factual matter for proof by the plaintiffs. Their status as the proper plaintiffs, having standing to sue and an entitlement to bring and maintain the proceedings, followed inexorably from proof of the elements of the cause of action.

12 Shortly before the hearing, the parties filed a notice of agreed facts and issues by which the second defendant admitted that he was liable for the collision between the two vehicles and liable for the loss and damage suffered “by the owner” of the car. The uncontested evidence was that Mr and Mrs Nichols owned the car.

13 During the hearing, Counsel for the defendants sought to advance the issue supposedly raised by the non-admissions. In his cross-examination of Mr Nichols, he raised the fact that Mr and Mrs Nichols had not in fact paid the repairer for the repairs made to their car. The gist of the answers given by Mr Nichols on that issue was that the repairer had not sought payment from them and that he (Mr Nichols) did not expect to have to pay for the repairs personally because he had assumed the repairs would be paid for by the insurer of the other driver. Counsel defended that line of cross-examination as going to credit and “locus standi”. The proposition appears to have been that if the repairer had agreed to bear the risk of recovering the cost of the repairs from the insurer of the negligent driver, that, in some undefined way, divested the plaintiffs of their standing to prosecute the cause of action.

14 In their written submissions, the plaintiffs contended, in my view correctly, that no issue of standing arose, since it was established that the plaintiffs were the owners of a car that had been damaged in a collision caused by the second defendant’s negligence, and that it remained only to prove the damage caused.

15 In response to the plaintiffs’ submissions, the defendants sought to raise an issue as to the retainer of the plaintiffs’ solicitor. They submitted that it was clear from Mr Nichols’ evidence that he had “no idea that he might be becoming involved in legal proceedings”. The submissions complained that no questions had been directed to Mr Nichols to establish any retainer between himself and the solicitors who “purportedly act for him”. The defendants contended, on that basis, that the case raised the same issues as in the decision of Magistrate Dillon in Latuharhary & Ors v Insight Litigation & Ors (4914/06) where, so it was contended, the “real plaintiff” was the panel beater.

16 The decision in Latuharhary had been handed down on 12 October 2007, after the conclusion of the Local Court hearing in this case. The facts of the claim were very similar to the present case, to the extent of involving the same solicitor for the plaintiff and the same motor vehicle repairer. However, there was an important difference. In Latuharhary, the defendants had moved the Court for an order that the proceedings be dismissed on the basis that they were commenced by the solicitor without the authority of the named plaintiff. The decision of Magistrate Dillon relied on was his determination of that application.

17 Further, the defendants in Latuharhary conceded that, as applicants on the motion, they bore the onus of proving that the solicitor had no authority to bring the action. That concession was plainly appropriate: see Hawksford v Hawksford [2005] NSWSC 463 per Campbell J (as his Honour then was) at [33] to [55]. It was not referred to in the defendants’ submissions to the Magistrate in the present case. Those submissions suggested, rather, that the plaintiffs had failed to discharge an onus.

18 Magistrate Dillon was satisfied that Mrs Latuharhary had not retained the solicitor. He dismissed the proceedings and ordered the solicitor to pay the costs of the dismissed proceedings and of the motion challenging his retainer on the indemnity basis.

19 The submission that, in Latuharhary, the “real plaintiff” was the repairer was, in my view, misconceived. No such finding featured in the careful reasoning of Magistrate Dillon. It had been submitted to Magistrate Dillon that the solicitor’s conduct of the proceedings was “consistent with a consignment of rights by Ms Latuharhary to [the panel beater]” (and not consistent with the existence of a retainer) but that submission did not go so far as to suggest that Ms Latuharhary had in fact divested herself of her debt or chose in action and assigned it to the repairer, and no such finding was made by Magistrate Dillon. His Honour simply remarked that the arrangements in question had that appearance.

20 The cause of action in the present case vested in the people to whom the injury was done by Mr Lee’s negligence, namely, the owners of the damaged car, Mr and Mrs Nichols. No other person could bring an action to recover those damages. If authority is needed for that unexceptionable proposition, it may be found in Gould v Vaggelas (1984) 157 CLR 215 at 219 per Gibbs CJ.

21 Further, no application challenging the retainer had been made in the present proceedings, possibly because the decision in Latuharhary, which appears to have been the inspiration for the submission, was not delivered until after the hearing had concluded. Mr Maconachie, who appeared with Mr Manion for the defendants in the appeal, submitted that the retainer had been challenged by the pleadings, albeit not in the conventional way: cf Australian Workers Union and Ors v Bowen (1945) 72 CLR 575 at 590 per Dixon J. With great respect to Mr Maconachie, I do not accept that submission. First, no fact is put in issue by the non-admission of a matter which is neither pleaded nor required to be proved as an element of the cause of action. In any event, what the pleadings said was that the defendants did not admit that the plaintiffs “may bring or maintain the proceedings”. That referred not to the issue of retainer but to the issue of standing. Those concepts may be related but they are not co-extensive.

22 Mr Maconachie submitted in the alternative that pleadings are “the handmaidens of justice” and that the parties can litigate an issue not squarely raised on the pleadings, citing Maloney v Commissioner for Railways (1978) 52 ALJR 292. That may be so, but I do not accept that the issue of the retainer had been litigated in the present case. The cross-examination of Mr Nichols, when objected to, was said to go to the issue of locus standi. The questions touched on his expectations and his understanding of his role as the plaintiff, but that is not the test for establishing the existence of a retainer. It was not squarely put to him at any stage that he did not retain Mr Gower or authorise the commencement of the proceedings. As to the second plaintiff, Mrs Nichols, there was no evidence at all.

23 In my view, the defendants’ submission invoking the decision in Latuharhary misconceived the effect of that decision. There was no suggestion that Ms Latuharhary was not the proper plaintiff (in the sense of being the person in whom the cause of action was vested). More importantly, the finding that Ms Latuharhary did not authorise the commencement of the proceedings did not carry with it the necessary implication that some other person was the “real plaintiff”.

24 Unfortunately, the differences between Latuharhary and the present case were not drawn to the Magistrate’s attention and the defendants’ submission was accepted. When the proceedings came before the Court on 7 March 2008, the Magistrate said:

“I know it’s only ostensibly cause (sic) for mention, but I’ve done a judgment so I hope the parties are happy for me to deliver it.”

25 The Magistrate proceeded to pronounce an oral judgment in which she concluded, so it appears, that the solicitor on the record for the plaintiffs, Insight Litigation, had no authority to commence the proceedings. The Magistrate said:

“To quote from Magistrate Dillon’s judgment, what has happened – has the appearance of an assignment of a debt rather than a contract between Mrs Latto Hahare in (sic) Insight. It follows therefore, that Insight as we are aware is the solicitor retained in these proceedings, had no authority to instruct proceedings in Mrs Latto Hahare’s name.”

26 Her Honour held:

“Accordingly the Statement of Claim is struck out”.

Her Honour then heard the parties as to what other orders should be made, indicating her preliminary view that Insight Litigation should pay the defendants’ costs. An issue arose as to whether those costs should be paid on an indemnity basis. Her Honour noted that Insight Litigation would not have been aware that she was proposing to give a judgment on that date, since the proceedings were listed for mention only. Further, the solicitor appearing for the plaintiffs on that occasion was not the solicitor who had conducted the hearing, Mr Gower, but apparently one of his employees, Ms Kenna.

27 In those circumstances, the Magistrate stood the proceedings over to 13 March 2008 to enable Mr Gower to appear and to address the Court as to whether indemnity costs should be ordered. It was in those circumstances that Mr Gower served the notice of motion seeking to have the statement of claim reinstated.

The grounds of appeal

28 As noted above, an appeal as of right under s 73(1) of the Local Courts Act is confined to the judgment or order being “erroneous in point of law”. Section 74(1) confers a right of appeal with leave on a ground that involves a question of mixed law and fact, but Mr Gower, who appeared for the plaintiffs in the appeal, confirmed that no such leave was sought.

29 The grounds of appeal in the Summons in the present case were unhelpful, in that they did not distil the error complained of. The first ground is: “her Honour erred in law by refusing to hear the Plaintiffs’ Notice of Motion dated 11 March 2008” (ground 7 in the Summons). That merely asserts error constituted in the decision itself, without identifying what the error was. The same may be said of the second ground, which is: “her Honour erred in law by not setting aside or varying her Judgment to strike out the Statement of Claim” (ground 8 in the Summons).

30 The Summons in an appeal to the Court must specify the grounds on which it is contended that there is an error of law in the decision below: UCPR 50.4(2). In my view, the obligation imposed by that rule is to identify with precision the error of law complained of: cf ASIC v Saxby Bridge Financial Planning Pty Ltd [2003] FCAFC 244 at [45] to [48]. The remarks of the Full Court of the Federal Court in that case were made in the different statutory context of an appeal on a “question of law” from the Administrative Appeals Tribunal, but in my view are nonetheless apposite to an appeal to this Court under the Local Courts Act.

31 At the hearing, it emerged that the plaintiffs’ principal complaint in respect of the Magistrate’s treatment of the motion was that her Honour had wrongly treated the earlier decision made on 7 March 2008 as a final order disposing of all issues in the proceedings other than costs. That was the question addressed in submissions by both parties and it is convenient to proceed on that basis. I simply note that it was not clearly identified in the Summons, which should have included a ground of appeal to the effect that the decision was erroneous in point of law in that the Magistrate misdirected herself as to the applicable law, or that the Magistrate applied the wrong test. The misdirection or wrong test should have been identified with specificity.

32 There is a useful analysis of the scope of the ground of appeal conferred under s 73(1) in the decision of Hall J in US Manufacturing Co Pty Limited v ABB Service Pty Limited [2008] NSWSC 705 commencing at [45]. Much of the jurisprudence on that issue concerns the vexed question of the distinction between an error of law and an error of fact, which happily does not arise in this appeal.

33 However, as noted by Hall J in US Manufacturing at [54], it is clear that an error in point of law may include the situation where a Court has misdirected itself in law: Australian Gas Light Co v Valuer-General (1940) 40 SR (NSW) 126 at 138.

34 Ground 9 alleges that the refusal to hear the motion “offends the public interest”. Ground 11 alleges that the refusal to hear the motion offends s 61 of the Civil Procedure Act 2005. In my view, those grounds are not apt to raise any question of error in point of law in the Magistrate’s decision. They were not addressed in oral submissions. It is not necessary to consider those grounds.

35 Ground 10 is that Her Honour erred in making a mistaken assumption on the evidence and erred by not hearing the plaintiffs’ motion seeking to “correct such assumption”. To the extent that this ground raised the correctness of the findings of fact that supported the decision to strike out the statement of claim made on 7 March 2008, it was not pressed, and could not have been pressed without leave. Otherwise it replicated ground 7.

36 Accordingly, I approach the appeal on the basis that the critical question is whether the Magistrate’s decision in respect of the notice of motion was erroneous in point of law, in that the Magistrate misdirected herself as to the applicable law. A threshold issue, however, is to identify what decision the Magistrate made in respect of the motion.

What order was made in respect of the plaintiffs’ notice of motion?

37 At the outset of the costs hearing on 13 March, Mr Gower stated that he had served a motion with an affidavit in support seeking orders that the statement of claim be reinstated. He sought leave to file the notice of motion in Court.

38 In response to that application, the Magistrate said:

“But I have made a finding. I have given judgment in the matter”.

39 Mr Gower noted, correctly, that the order made had in fact been that the statement of claim be struck out. He submitted that such an order is no bar to reconsideration and a reinstatement of the pleading struck out or, alternatively, to the plaintiffs’ recommencing proceedings.

40 The Magistrate then called on Counsel for the defendants. He submitted that the motion was misconceived because the Court was “functus”, having delivered a final judgment. He said that the Court had completed its function in relation to the determination of the issues.

41 After some further exchanges, the Magistrate expressed the view to Mr Gower that it was “too late for [her] to do it”. She stated to Mr Gower that “these matters” (apparently a reference to whether Mr Nichols knew the proceedings were to be commenced) were raised on the first day of the hearing and that she had been “surprised” that nothing was done as a result.

42 Mr Gower then asked whether the Magistrate would allow him to file the motion in the Registry. A discussion followed as to the provisions of the rules and Counsel for the defendant renewed his submission that the motion was misconceived because the proceedings had “been disposed of”.

43 In the course of the exchanges that followed, the Magistrate reiterated that “it was raised…on the first day of the proceedings with Mr Nichols’ evidence” and said “it was raised fairly and squarely in the [defendants’] submissions”. She also stated “it was in the [defence] that the plaintiff was not the true plaintiff”. Her Honour expressed the view that the evidence sought to be called in support of the motion could have been called during the proceedings.

44 Those remarks suggest that the Magistrate was proceeding on the assumption that the alleged absence of a retainer was not only a fact in issue in the proceedings, but that it arose in a way that, if established, amounted to a positive defence.

45 The Magistrate then said “I am going to rule against you, Mr Gower. I should have a look at the Notice of Motion first of all.” Her Honour then raised the issue whether there was a conflict of interest between Mr Gower and Mr and Mrs Nichols, and that was discussed.

46 The exchange in respect of the motion concluded as follows:

“HH: I am going to find against you Mr Gower.
Gower : The Court pleases.
HH: I note that I do have – it appears I do have some sort of a power but – and I have read the Notice of Motion – but because the findings that I made (sic), as far as I am concerned, I think the only avenue would be an appeal or to commence fresh proceedings.”

47 Her Honour did not otherwise pronounce any order or reasons, but moved on to the question of costs.

48 I note that the discussion of the motion began with the premise that it had been served, but not filed, before that day. The application originally under consideration was Mr Gower’s oral application for leave to file the motion in court. That is consistent with the later, alternative request for leave to file it in the Registry to have it heard by another Magistrate.

49 However, the copy of the notice of motion in the appeal papers bears the stamp of the Local Court. The stamp is not dated and there is no other material to indicate when the document was stamped.

50 Although the Magistrate’s initial response to the application was that she had already given judgment in the matter, in due course and after some debate her Honour indicated her intention to rule against Mr Gower, but conceded that she should “look at the motion first of all”. It seems likely that it was stamped at that point. The transcript discloses that the Magistrate received the affidavit in support at the same time. It was after a consideration of that material that the Magistrate repeated her intention to find against the applicants. In so doing, her Honour expressly adverted to the apparent existence of “some sort of a power” but expressed the view that, because of the findings she had made, the only avenue would be an appeal or to commence fresh proceedings.

51 In my view, the Magistrate is properly to be understood as having ruled on the motion by refusing to make the orders sought. The reference to the question of power suggests deliberation on something more than just the question whether to grant leave to file the motion in Court. It suggests that the Magistrate accepted, at some point during the exchange, that she should determine the motion.

52 Further, the Magistrate’s statements “I am going to rule against you” and “I am going to find against you” are more apt to convey a decision in respect of the motion than a refusal to grant leave to file it in Court. On a fair and commonsense reading of the whole exchange, in my view the Magistrate is to be taken to have dismissed the application to have the statement of claim reinstated, rather than refusing to hear it.

Did the Magistrate misdirect herself?

53 Mr Maconachie submitted that the Magistrate’s decision should be characterised as a discretionary decision refusing to afford Mr Gower an opportunity to adduce further evidence on the issue of the retainer. He submitted that the decision was made on the third or fourth day of the hearing in circumstances where the question of the retainer had fairly been raised from the outset of the proceedings, albeit in an irregular way.

54 There is no doubt that the decision whether to grant the relief sought in the motion was discretionary. Further, I accept that some of the remarks made by the Magistrate suggest that her Honour took into account the fact that the application was made so late in the proceedings, which was relevant to the exercise of the discretion. However, the fact that relevant matters were taken into account would not save the exercise of a discretion if it were otherwise an erroneous decision.

55 Mr Maconachie also submitted that, although the order made was to strike out the statement of claim, the Magistrate plainly intended to bring the proceedings to an end. He submitted that the order should be understood as an order to dismiss the proceedings. I accept that a stay or dismissal of proceedings is the usual order where it is established that proceedings have been commenced without proper authority: Australian Worker’s Union v Bowen (1946) 72 CLR 575; Hawksford v Hawksford at [93]. However, that is not what the Magistrate did. Her intention is to be ascertained from the language of the order which she made: NSW Insurance Ministerial Corporation v Anderson (unreported) NSWCA 14 June 1994 per Gleeson CJ, Kirby P and Priestley JA agreeing. The order made in the present case did not purport to dispose of or deal with the proceedings, but only with the pleadings.

56 The Magistrate did not identify the power pursuant to which the order was made. Mr Maconachie submitted that it must have been pursuant to the Court’s inherent jurisdiction to exercise control over its own process to do that which is necessary to prevent an abuse of that process. Equally, the order might have been an exercise of the Court’s power under UCPR 14.28.

57 The question then arises whether a statement of claim struck out under that rule or in the exercise of any inherent power may be “reinstated”. In Anderson, the Court of Appeal considered whether the District Court had power to reinstate an action struck out for want of prosecution. However, the rules there under consideration expressly envisaged reinstatement. The question whether a statement of claim struck out under UCPR 14.28 (presumably as an abuse of process) may be reinstated does not appear to have been expressly considered. Nonetheless, it is generally accepted that when a pleading is struck out, that does not bring the proceedings to an end. When a pleading is struck out with leave to replead, the proceedings remain on foot in the interim.

58 The basis for the order striking out the statement of claim was the finding that the plaintiffs had not established the existence of a retainer. It followed, so the Magistrate held, that Insight Litigation had no authority to institute the proceedings in the name of Mr and Mrs Nichols.

59 Mr Maconachie acknowledged, however, that the commencement of proceedings could be ratified after the event. If that is the case, there should be no difference in principle between an order striking out a statement of claim on the grounds that it discloses no reasonable cause of action and an order striking out a statement of claim on the grounds that authority to commence the proceedings has not been established. In each case, the position can be rectified.

60 It follows, in my view, that the Magistrate misdirected herself as to the applicable law. The defendants do not dispute that the basis on which the Magistrate dismissed the motion was that the proceedings had been brought to an end. Her Honour approached the motion on the premise that the findings she had made meant that “the only avenue would be an appeal or to commence fresh proceedings”. That would have been the appropriate approach if the proceedings had been dismissed, but they had not.

61 It remains to consider the appropriate orders. Mr Gower submitted that this Court should determine the motion. To do so would entail my making findings of fact on the further evidence sought to be adduced. That is beyond the authority of this Court in an appeal confined to error in point of law: cf B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187 at [78] per Allsop P, Giles and Basten JJA agreeing; see also the separate judgment of Basten JA. The appropriate course is to set aside the decision dismissing the notice of motion and to remit the matter to the Local Court for its determination.

Costs

62 Mr Maconachie submitted that the defendants should have their costs in any event. The basis for that submission was that the plaintiffs, in seeking to have the pleading reinstated, sought an indulgence. However, for the reasons I have stated, I do not agree that the issue of Mr Gower’s retainer had been squarely raised as a fact in issue in the proceedings. Rather, it appears to have been raised after the hearing had concluded and in response to the fortuitous decision of Magistrate Dillon in Latuharhary. In my view, the appropriate order is that the defendants pay the plaintiffs’ costs of the appeal. The costs of the proceedings below should be reserved for the determination of the Magistrate.

63 Accordingly, the orders I make are as follows:

(i) I extend the time within which to commence this appeal to 11 April 2008.

(ii) To the extent necessary, I grant leave pursuant to s 74(2) of the Local Courts Act 1982 to appeal against the order made on 13 March 2008.

(iii) The order finding against the plaintiffs on the notice of motion dated 11 March 2008 is set aside.

(iv) The proceedings are remitted to the Local Court for determination in accordance with the Court’s directions.

(v) I order the defendants to pay the plaintiffs’ costs of the appeal.

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