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:
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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- Case
- [2017] FCAFC 34
- Decision Date
CaseChat Overview and Summary
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
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.