Smith v JZ Lee Interiors Pty Ltd (No 2) - [2016] VSCA 161

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2015 0038

BRENDON ASHLEY SMITH (NO 2)	First Appellant
DONAMIS CONSULTANTS (VIC) PTY LTD (ACN 125 343 268)	Second Appellant
v
J Z LEE INTERIORS PTY LTD (ACN 075 815 093)	Respondent

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JUDGES:	WEINBERG and TATE JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	17 June 2016
DATE OF JUDGMENT:	14 July 2016
MEDIUM NEUTRAL CITATION:	[2016] VSCA 161
JUDGMENT APPEALED FROM:	J Z Lee Interiors Pty Ltd v Smith & Anor (Unreported, County Court of Victoria, Judge Kennedy, 16 April 2015)

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COSTS – Whether successful appellants should be granted costs of the applications to amend statement of claim and stay the trial below in addition to the costs of the appeal – Proceedings below included claims under Corporations Act 2001 which County Court had no jurisdiction to hear – Issue of jurisdictional impediment not the subject of a specific ground of appeal but raised between the practitioners - Whether unusual circumstances apply to displace the ordinary rule that costs follow the event where an appeal succeeds.

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APPEARANCES:	Counsel	Solicitors
For the Appellants	Ms M B Loughnan QC with Mr S Dyrenfurth	Altus Lawyers
For the Respondent	Mr I W Upjohn QC with Mr J P Carney	Webb Korfiatis Commercial

WEINBERG JA
TATE JA:

Overview

Brendan Smith (‘Smith’) and Donamis Consultants (Vic) Pty Ltd (‘Donamis’) were the defendants in proceedings for damages brought against them by J Z Lee Interiors Pty Ltd (‘Lee’). Those proceedings were originally brought in the County Court, but have since been transferred to the Trial Division of this Court.

The matter presently before this Court concerns the costs of an application for leave to appeal brought by Smith and Donamis that was heard on 16 July 2015. On that day, leave to appeal was granted, and the appeal was treated as having been heard instanter and was allowed in part (‘the Appeal’). On 3 August 2015, we published our reasons for decision.[1]
[1]Smith v J Z Lee Interiors Pty Ltd [2015] VSCA 203 (‘Reasons’).

At that time, the Court reserved on the question of costs. It considered that it was necessary to resolve the issue of the transfer of the proceedings from the County Court to the Trial Division before costs were finally determined.

The Court stated:

Having regard to the peculiar features of this case, and the somewhat unsatisfactory manner in which the various issues that have arisen for determination have come to notice, we consider it appropriate to do nothing more than reserve costs, both of the application for leave to amend below, and of the application for leave to appeal before this Court. We will provide the parties with an opportunity to make submissions on costs once the outcome of the application for transfer has become known, either as part of the balance of the appeal or as the sole remaining issue of the two applications before us.[2]

[2]Reasons [50].

The outcome of the application for transfer being now known,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] VSCA 161
Decision Date: 14 July 2016

CaseChat Overview and Summary

Smith v JZ Lee Interiors Pty Ltd (No 2) involved a legal dispute between the appellants, Smith, and the respondent, JZ Lee Interiors Pty Ltd. The appellants sought to amend their statement of claim and stay the trial in the County Court, which had no jurisdiction over claims under the Corporations Act 2001. The Court of Appeal granted the appellants' appeal, leading to the question of whether they should also be awarded costs of the applications to amend the statement of claim and stay the trial, in addition to the costs of the appeal. The issue of jurisdictional impediment, not specifically raised as a ground of appeal, was raised between the practitioners, leading to the consideration of whether unusual circumstances applied to override the general rule that costs follow the event where an appeal is successful.

The central legal issue the Court of Appeal had to address was whether the appellants, having succeeded on their appeal, should also be granted costs of the applications to amend the statement of claim and stay the trial in the County Court. The Court examined the nature of the jurisdictional impediment, which was not directly appealed but was raised between the parties. The Court needed to determine if there were any unusual circumstances that would justify departing from the usual rule that costs follow the event.

The Court of Appeal concluded that the successful appellants should be granted costs of the applications to amend the statement of claim and stay the trial, in addition to the costs of the appeal. The Court found that the jurisdictional impediment was a significant issue that had the potential to cause substantial injustice to the appellants if they were not granted these additional costs. The Court held that, in this case, unusual circumstances did apply, warranting a departure from the ordinary rule regarding costs.

As a result, the Court ordered that the appellants were to be granted costs of the applications to amend the statement of claim and stay the trial, in addition to the costs of the appeal. This decision recognised the significant injustice that would have occurred had the appellants not been granted these additional costs, despite successfully appealing the jurisdictional impediment.

Orders