Pegela Pty Ltd v Oates

Pegela Pty Ltd (appellant) appealed to the Court of Appeal of New South Wales against a judgment of the primary judge in favour of Oates (respondent). The dispute concerned the interpretation of an agreement between the parties regarding the sharing of litigation costs, specifically whether the appellant was bound to pay 12% or 1/12th of the total costs. The primary judge had found that the parties had agreed to a 1/12th share, leading to a finding that the respondent had overpaid.

The Court of Appeal was required to determine whether leave to appeal was necessary under section 127(2)(c) of the *District Court Act 1973* (NSW), considering whether the appeal involved a sum of $100,000 or more and whether there was a realistic prospect of success. Further, the court had to consider whether the primary judge erred in finding that the parties had entered into a binding agreement for a 1/12th share of costs, and whether subsequent conduct or communications varied this agreement, or indeed varied it back to the initially discussed 12% share. The court also considered whether an implied term that the agreement was net of GST was present and whether an "account stated" had been pleaded or run at trial.

The Court of Appeal found that leave to appeal was not required as the appeal involved a sum exceeding $100,000 and had a realistic prospect of success. The court reasoned that the primary judge's finding of a binding 1/12th agreement was not supported by the evidence and was, in fact, "glaringly improbable" given the initial discussions and subsequent conduct. The court concluded that the parties had not effectively varied the original agreement to a 1/12th share, and that the appellant's liability was indeed 12% of the total costs. The court also found that the primary judge erred in holding that the respondents had overpaid.

Consequently, the Court of Appeal allowed the appeal, set aside the judgment of the primary judge, and entered a verdict for the appellants for $91,000 plus interest. The respondents were ordered to pay the appellants' costs both at first instance and on appeal, with a potential certificate under the *Suitors' Fund Act 1951* for the appeal costs if qualified.