Sydney Equine Coaches Pty Ltd v Gorst

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FEDERAL COURT OF AUSTRALIA

Sydney Equine Coaches Pty Ltd v Gorst [2017] FCAFC 34

Appeal from: Gorst v Sydney Equine Coaches Pty Ltd [2016] FCA 1067
File number: NSD 1616 of 2016
Judges: RARES, FLICK AND BROMWICH JJ
Date of judgment: 2 March 2017
Catchwords: PRACTICE AND PROCEDURE – costs – costs on an indemnity basis – offer of compromise in an amount greater than the amount of consent order for damages – whether primary judge erred in exercise of discretion by ordering under r 1.35 of Federal Court Rules 2011 inconsistently with r 25.14(1)(b) that indemnity costs not be payable – appeal dismissed
Legislation:

Federal Court of Australia Act 1976 (Cth) Pt VB, ss 37M, 37N, 43

Federal Court Rules 1979 (Cth) O 23 r 11

Federal Court Rules2011 (Cth) Pt 25, rr 1.34, 1.35, 25.14

Cases cited:

Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (No 4) [2016] FCA 218

Elecspess Pty Ltd v LED Technologies Pty Ltd [2013] FCAFC 116, (2013) 215 FCR 95

FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268

Gorst v Sydney Equine Coaches Pty Ltd [2016] FCA 1067

House v The King (1936) 55 CLR 499

Knight v FP Special Assets Ltd (1992) 174 CLR 178

Lodestar Anstalt v Campari America LLC (No 2) [2016] FCAFC 118

Mansfield v Director of Public Prosecutions (WA) (2006) 226 CLR 486

Owners of the Ship “Shin Kobe Maru” v Empire Shipping Co Inc (1994) 181 CLR 404

Port Kembla Coal Terminal Ltd v Braverus Maritime Inc (No 2) [2004] FCA 1437, (2004) 212 ALR 281

The Queen v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) 144 CLR 45

Visscher v Teekay Shipping (Australia) Pty Ltd (No 2) [2014] FCAFC 19

Date of hearing: 13 February 2017
Registry: New South Wales
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Regulator and Consumer Protection
Category: Catchwords
Number of paragraphs: 45
Counsel for the First and Second Appellants: Mr AT Schlicht
Solicitor for the First and Second Appellants: Simon Nixon & Associates
Counsel for the Respondent: Mr RM Foreman
Solicitor for the Respondent: Polczynski Lawyers

ORDERS

NSD 1616 of 2016
BETWEEN:

SYDNEY EQUINE COACHES PTY LTD (ACN 122 161 504)

First Appellant

DEAN ANTHONY DOUGLAS

Second Appellant

AND:

SUSAN MAREE GORST

Respondent

JUDGES:

RARES, FLICK AND BROMWICH JJ

DATE OF ORDER:

2 MARCH 2017

THE COURT ORDERS THAT:

1.The appeal is dismissed.

2.The Appellants pay the costs of the Respondent.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

THE COURT:

  1. In May 2014 Sydney Equine Coaches Pty Ltd agreed to sell to Ms Susan Gorst a horse transport for $545,000.  Subsequently, Ms Gorst commenced proceedings seeking the repayment of $545,000 or damages in the sum of $350,000 against Sydney Equine and Dean Douglas, who was its sole director and secretary.  It is convenient to refer only to Sydney Equine in these reasons to…

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Details
Case
[2017] FCAFC 34
Decision Date

CaseChat Overview and Summary

Sydney Equine Coaches Pty Ltd v Gorst was a case heard by the Federal Court of Australia. The primary dispute was over costs, specifically whether the primary judge had erred in ordering costs on an indemnity basis when an offer of compromise had been made in an amount greater than the consent order for damages. This case involved a challenge to the primary judge's exercise of discretion under r 1.35 of the Federal Court Rules 2011, which appeared to conflict with r 25.14(1)(b) that indemnity costs should not be payable.

The court examined whether the primary judge had erred in her exercise of discretion. The challenge to the primary judge's decision was based on a misunderstanding of the judge's reasoning. The primary judge had not found that a report constituted an admission of non-compliance with statutory axle load limits but instead recognised a change in the case's basis upon service of the report. The court found that the primary judge's decision was discretionary and that she could consider all circumstances, not just the amounts of the offer of compromise and the consent order. The court concluded that the primary judge's findings provided a sufficient and compelling reason for ordering costs inconsistently with the presumptive provisions of r 25.14(1)(b).

The appeal was dismissed, and the appellants were ordered to pay the respondent's costs. The court's reasoning was that the primary judge's discretion under r 1.35 was correctly exercised, and the order for costs was consistent with the changed circumstances of the case, which included the service of a report acknowledging non-compliance with statutory load limits and proposing a counterweight solution. The court emphasised that the primary judge's decision was not limited to a simple comparison of monetary amounts but could consider the broader context of the case.

Orders

Orders of the court

1. The appeal is dismissed.

2. The Appellants pay the costs of the Respondent.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

For the reasons above, that finding was open to her Honour and provided a sufficient, indeed compelling, reason for making an order for costs under r 1.35 inconsistent with the presumptive provisions of r 25.14(1)(b).CONCLUSION Accordingly, the appeal should be dismissed with costs.

Ratio Decidendi

Legal Principle Established

The ex tempore reasons did not set out the parts of Mr Gillard’s Report to which her Honour referred as: ·“an express acknowledgment for the first time that in certain circumstances … the vehicle would not comply with statutory axle load limits”; ·“certain circumstances (where the vehicle was not fully laden)”; and ·a proposal to place “counterweights towards the rear of the vehicle”.However, the examples set out above provided a sound evidentiary foundation for her Honour’s findings.Consideration The challenge advanced on behalf of Sydney Equine should be rejected. First, the challenge proceeded from a misunderstanding as to the primary Judge’s reasons for decision. Her Honour did not find that Mr Gillard’s Report constituted an “admission” as to the horse transport not being able to be driven lawfully on public roads when it was unladen. Rather, her Honour used the word “admission” in summarising Ms Gorst’s submissions: [2016] FCA 1067 at [10]. Her Honour recognised that, by filing Mr Gillard’s Report, on 8 March 2016, Sydney Equine’s case changed. That was because the case now relied on what Mr Gillard had written, which was substantially different to the pleaded defence in two important respects. Her Honour explained her reasoning at [15]-[17] (see [29] above). The changed basis upon which the parties conducted the proceeding was, after service of Mr Gillard’s Report, that it was now “common ground that the vehicle did not comply with statutory load limits” in certain circumstances. What was also of importance to her Honour was the fact that the Gillard Report for the first time set forth “the suggestion of a counterweight”: [2016] FCA 1067 at [16]. It was the combination of these factors that her Honour found had caused “the entire basis of the dispute between the parties” to change: [2016] FCA 1067 at [16]. Until service of Mr Gillard’s Report, Sydney Equine had asserted, without any qualification, that the horse transport was capable of being driven lawfully on public roads in Australia. Sydney Equine argued that the Report did not change matters because the horse transport could be lawfully driven if, as Mr Gillard asserted, there was “appropriate load management” through adding loads to the vehicle. But, this argument ignored the fact that, unladen, it did not comply with the maximum mass regulation requirements. In other words, the fallacy of Sydney Equine’s argument was that, unless Mr Gillard’s suggestion of altering the vehicle by adding ballast were used, the only way the unladen non-compliance could be solved was by loading the vehicle. Second, her Honour’s decision was a discretionary one made pursuant to r 1.35. The application of r 25.14(1) involved no difficulty. The consent judgment that Ms Gorst obtained was “less favourable” than the August 2015 offer. The difficulty arose when considering whether an order should be made pursuant to r 1.35 “inconsistent” with the operation of r 25.14(1). In resolving that difficulty, her Honour could have regard to all of the circumstances and was not limited to a simple comparison of the quanta of $85,000 as opposed to $36,000. The circumstances included the changed position that had emerged in March 2016.