Sandersons Eastern Suburbs v Mercedes-Benz Australia/Pacific (No. 2)

[2018] NSWSC 631

Supreme Court

New South Wales

Medium Neutral Citation:	Sandersons Eastern Suburbs v Mercedes-Benz Australia/Pacific (No. 2) [2018] NSWSC 631
Hearing dates:	On the papers
Decision date:	09 May 2018
Jurisdiction:	Equity - Commercial List
Before:	McDougall J
Decision:	See at [12].
Catchwords:	COSTS – hearing for primary proceedings vacated as no justiciable issue had yet crystallised – both parties contributed to outcome – no basis to allocate individual responsibility – no order as to costs leading up to hearing date.   COSTS – summary dismissal – plaintiff accepts it must pay costs associated with notice of motion – orders made.
Legislation Cited:	Competition and Consumer (Industry Codes – Franchising) Regulation 2014 (Cth) Motor Dealers and Repairs Act 2013 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Sandersons Eastern Suburbs v Mercedes Benz Asia/Pacific [2018] NSWSC 52
Category:	Costs
Parties:	Sandersons Eastern Suburbs Pty Limited (Plaintiff) Mercedes-Benz Australia/Pacific Pty Limited (Defendant)
Representation:	Counsel: S Couper QC / P Silver (Plaintiff) DR Pritchard SC / S Golledge (Defendant)   Solicitors: HWL Ebsworth (Plaintiff) Robinson Legal (Defendant)
File Number(s):	2015/71826

Judgment

1. HIS HONOUR:   On 6 February 2018, I gave judgment on an application by the defendant (MBAP) to dismiss the claim of the plaintiff (Sandersons) pursuant to UCPR r 13.4 [1] or alternatively r 14.28. I ordered that the proceedings be dismissed summarily, and gave directions for written submissions on costs[2] . The parties have provided written submissions. In these reasons, I deal with the question of costs.

   1. Sandersons Eastern Suburbs v Mercedes Benz Asia/Pacific [2018] NSWSC 52.

   2. At [69].

Background

2. Much of the background appears from my earlier reasons, and I will not repeat at any length what I said. However, to enable what follows to make some sense, it is necessary to state some factual matters:

1. Sandersons and MBAP were parties to a “dealer agreement” under which Sandersons was authorised to sell Mercedes Benz vehicles and associated products. The Franchising Code of Conduct (the Code) [3] applies to the dealer agreement.

   3. Established pursuant to the Competition and Consumer (Industry Codes – Franchising) Regulation 2014 (Cth).

2. By cl 8 of the dealer agreement, the agreement continued from year to year unless MBAP gave Sandersons written notice of non-renewal at least 90 days before the date of expiry of the current term of that agreement.

3. MBAP gave Sanderson two notices stating that it did not propose to renew the dealer agreement beyond a specified date. The first notice, dated 6 February 2014, specified 31 December 2016. The second notice, dated 14 April 2016, specified 31 December 2017.

4. At no time has MBAP given a notice specifically said to be given under cl 8 and specifically notifying Sandersons that MBAP would not renew the dealer agreement.

5. Sandersons commenced proceedings, alleging that by giving those notices, and for numerous other reasons that were pleaded, MBAP had contravened the Code and various statutory proscriptions of misleading or deceptive or unconscionable conduct, and that cl 8 of the dealer agreement was “unfair”[4] .

   4. See s 145 of the Motor Dealers and Repairers Act 2013 (NSW).

6. Neither Sandersons in its amended or further amended Commercial List Statement, nor MBAP in its Commercial List Response, raised specifically the question of whether either of the notices was a valid notice for the purposes of cl 8.

7. The matter was fixed for hearing for 10 days commencing 18 July 2016.

8. In its written outline of submissions provided prior to the commencement of the hearing, MBAP contended that the dispute was premature because neither of the notices was (nor both of them together were) effective for the purposes of cl 8. That was the first time that this “issue”, which I shall call “the prematurity point”, had been raised.

9. Although MBAP stated that it did not wish to take the prematurity point, I called the parties in for directions. Having considered cl 8 and the form of the notices, I expressed the view (which the parties accepted) that neither notice was effective for the purposes of cl 8. Without opposition, I made declarations, in respect of each notice, to the effect that it was not a notice for the purposes of cl 8 and was not effective to terminate the dealer agreement. On that basis, there being no notice which, if valid, would have the effect of terminating the dealer agreement, I vacated the hearing. I did so on the basis that the remaining issues (which were multitudinous, both legally and, especially, factually) were hypothetical.

10. There were several directions hearings thereafter, in the course of which Sandersons indicated an intention to keep the proceedings alive, and to amend so as to claim on a final basis the relief set out in its process.

11. Finally, MBAP brought the matter to a head by filing its notice of motion seeking summary dismissal pursuant to UCPR r 13.4 or that the proceedings be struck out pursuant to r 14.28.

The costs applications

MBAP’s notice of motion

3. Sandersons accepted that the costs of MBAP’s notice of motion should follow the event of its success. That is correct. The appropriate order will be made.

Costs up until 15 July 2016

4. In the usual way, the parties’ submissions sought to rewrite history. Sandersons submitted that it had achieved substantial success, because it had obtained relief in respect of the two notices. MBAP submitted that the validity of the notices (as notices under cl 8 of the dealer agreement) had never been in issue, and that the “success” that Sandersons had obtained was contrary to the fundamental thrust of its case.

5. I do not agree with the position taken by either side. Sandersons had not sought to challenge the validity of the notices. It did not plead that they were ineffective for the purposes of cl 8, nor did it seek relief of a declaratory nature aimed at establishing that proposition. On the contrary, Sandersons’ pleading appeared to rely upon the notices as elements in a course of conduct that, it said, should be characterised in the various ways that I have summarised.

6. MBAP did not plead that the notices were ineffective as notices pursuant to cl 8. It did not plead, or indeed otherwise suggest, that the proceedings were premature, until it filed and served written submissions a few days before the scheduled commencement of the hearing.

7. It is plain that a huge amount of effort was wasted on preparing for a hearing where the essential point – the validity of an actual decision to terminate (more accurately, not to renew) the dealership agreement was not squarely raised. Sandersons sought various declarations as to the effect of the conduct, in circumstances where there was no existing and prima facie, at least, legally effective notice that could bring to an end to its enjoyment of those rights.

8. In my view, the parties contributed equally to the creation of a situation where much work was done, and no doubt very substantial amounts were expended on costs, to fight an issue that had not evolved to the point where it gave rise to a justiciable dispute. So much is apparent from the reasons that I gave in ordering summary dismissal. The parties should have perceived and dealt with the prematurity point much earlier, so as to avoid the waste of time and money that has in fact occurred.

9. I do not think that it is correct to say that the declarations made on 15 June 2016 represented some sought of victory for Sandersons. On the contrary, they were instrumental in making good the point that there was no justiciable dispute. Sandersons had never sought that declaratory relief. The fact that I made the declarations cannot be regarded as some vindication of Sandersons’ position.

10. In my view, each party has contributed, whether through ignorance, oversight or otherwise, to the waste of time, effort and money involved. There is no basis on which the court could allocate with any precision individual responsibility for that result. Thus, there is no principled basis for reallocating, in whole or in part, the burden of costs.

Conclusion and orders

11. There should be no order for costs up until and including 15 July 2016. MBAP should have its costs of the application for summary dismissal. In the absence of agreement, it will be a matter for an assessor to determine the extent to which those costs should include the costs referable to directions hearings and the like after 15 July 2016.

12. I make the following orders:

1. make no order as to the costs of the proceedings up until and including 15 July 2016, to the intent that each party should pay its own costs up to that time.

2. Subject to order (1), order the plaintiff to pay the defendant’s costs of and incidental to the summary dismissal of the proceedings.

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Endnotes

Decision last updated: 09 May 2018