The Entrance Plaza Pty Ltd v Davids

[2016] NSWCA 362

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	The Entrance Plaza Pty Ltd v Davids [2016] NSWCA 362
Hearing dates:	15 December 2016
Decision date:	15 December 2016
Before:	Meagher JA; Leeming JA
Decision:	1. Summons seeking leave to appeal dismissed.  2. Applicant to pay the respondent’s costs of that summons.
Catchwords:	APPEALS – leave – costs – small amount in issue – primary judge declined to make costs order in favour of successful defendant – no question of principle – no clear case of substantial injustice
Legislation Cited:	Civil Procedure Act 2005 (NSW), ss 60, 98 District Court Act 1973 (NSW), s 127
Cases Cited:	Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 Carolan v AMF Bowling Pty Ltd [1995] NSWCA 69 House v The King (1936) 55 CLR 499 Joo v Yoo [2016] NSWCA 172
Category:	Principal judgment
Parties:	The Entrance Plaza Pty Ltd (Applicant) Deanne Davids (Respondent)
Representation:	Counsel: N Polin SC (Applicant) R de Meyrick (Respondent)   Solicitors: McCabes Lawyers (Applicant) CBD Law (Respondent)
File Number(s):	2016/181069
Decision under appeal	Court or tribunal: District Court of New South Wales Jurisdiction: Civil Date of Decision: 19 May 2016 Before: Williams DCJ File Number(s): 2014/19191

ex tempore Judgment

1. THE COURT: This is an application for leave to appeal confined to a challenge in relation to a small amount of costs which were not ordered in favour of a successful defendant.

Background

2. Ms Dianne Davids claimed that she had slipped over and injured herself at a shopping centre in The Entrance in New South Wales. She commenced proceedings in the District Court against the applicant for leave, The Entrance Plaza Pty Ltd, which was the occupier of the centre. She also sued a cleaning contractor. The trial ran in the District Court in May 2016. It started on Tuesday 17 May, with an adjournment so that counsel for Ms Davids could “put a more keenly pitched offer to my friends and so hopefully we might be able to do something with this matter”. The matter was called on later that day, and on page 2 of the transcript, counsel for Ms Davids advised that there had been a settlement between her and the cleaning contractor. The amount of the settlement was $65,000 inclusive of costs. Orders were made by consent then and there. The trial proceeded against the occupier for the remainder of that day, with CCTV footage being played, and for the whole of Wednesday 18 May, following which the primary judge delivered ex tempore reasons resulting in a verdict for the first defendant against the plaintiff.

3. Late in the afternoon of that day, immediately after delivery of reasons dealing with liability, the question of costs was flagged. Counsel appearing for Ms Davids stated that there had been a “walk away” offer and that the plaintiff was a pensioner of no means. The fact that she was a pension accorded with her evidence and the finding of the primary judge. It seems that that offer was made by solicitor’s letter sent at 4.27pm on 17 May 2016.

4. On the following day, Thursday 19 May, the hearing resumed. Ms Davids’ solicitor apologised for the absence of her counsel. The solicitor advised that there would be no appeal against The Entrance Plaza, so that there was no occasion for the judge to assess damages provisionally. There were short submissions on the only outstanding question, which was as to costs. It was said that The Entrance Plaza had offered to accept a verdict in its favour with a order that Ms Davids pay $5,000 towards its costs, and then that it had made a “walk away” offer. That reflected written offers made on 14 July 2014, 7 January 2015 and 16 June 2015. A solicitor’s affidavit was supplied to the court, recording that the first defendant’s costs had been some $36,000 exclusive of the costs of attendance at trial. This was the basis of an application for a lump sum costs order in favour of The Entrance Plaza of half of the costs it had incurred, or some $18,000. We return to this below.

5. During the course of argument, the primary judge said:

“Wednesday afternoon your side was told, Wednesday evening, your side was told that he would [walk] away knowing that he’d settled with the other party. So your client was prepared to take a day of the Court’s time, incur all the expense, everyone sitting here running a case for no good purpose at all. Your trying to chew into a modest settlement that this lady got against the other defendant by taking her costs from her with no prospects other than that of realistically recovering the costs that you seek, whether it be half your costs or half of the $30,000 or so that the solicitor says you’ve spent on the case already. I regard that as an irresponsible use of court time, to force Mr de Meyrick to run a case for a day in the hope of getting a costs order against him.”

6. The primary judge exercised the discretion under s 98 of the Civil Procedure Act 2005 (NSW) by making no order as to costs. His Honour’s reasons addressed the procedural history of the litigation, the series of offers that had been made between the parties and concluded as follows:

“[C]ounsel for the first defendant presses his application for costs on the basis that the defendant had maintained the position that it would walk away and bear its own costs for some considerable time and that on occasions defendants are entitled to press for costs.

That is may be true but there is the overriding obligation pursuant to the [Civil Procedure Act] to achieve a just, quick and cheap resolution of the matters and in my view the conduct of the first defendant in effectively forcing the plaintiff to run the case for a day in hope of obtaining a costs order against it knowing that the plaintiff was prepared to walk away at the start of the proceedings yesterday morning justifies me exercising my discretion to make no order as to costs between the plaintiff and the first defendant.”

Applicable principles

7. The Entrance Plaza accepts, in accordance with what was stated in Carolan v AMF Bowling Pty Ltd [1995] NSWCA 69, that it will only be appropriate to grant leave to appeal if there is an issue of principle, a question of general public importance or an injustice which is reasonably clear in the sense of going beyond what is merely arguable.

8. In the same case, Cole JA drew attention to the principle that, where small claims are involved, it is important that there be early finality in the determination of the litigation, otherwise the costs involved are likely to swamp the money sum involved in the dispute.

9. Further, irrespective of the amount at stake, if the question is one as to costs alone, then Parliament has limited the right of appeal so as to require leave: District Court Act 1973 (NSW), s 127(2)(b). That reflects a policy to discourage the spending of court time and parties’ resources where the only question is one as to the costs of earlier litigation. It also anticipated and is in part reflected in the precept now found in s 60 of the Civil Procedure Act 2005 (NSW) that “in any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute.”

10. As Basten JA pointed out in Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 at [39]:

“This direction has an important operation in respect of leave applications involving amounts below the statutory threshold. Where, as in the present case, the costs of the trial are disproportionate to the amount in dispute, the incurring of additional costs, for a potentially uncertain return, will be a factor weighing heavily against a grant of leave.”

11. That passage was applied in Joo v Yoo [2016] NSWCA 172 at [39], where there had been a four day trial involving shares valued at US$12,000. It has particular importance when there is no amount in dispute between the parties, and the only question is one of costs.

12. Finally, in order to obtain appellate intervention in reviewing the broad discretion as to costs conferred by s 98 of the Civil Procedure Act it is necessary to establish error as formulated in House v The King (1936) 55 CLR 499.

Consideration

13. The Entrance Plaza Pty Ltd insisted on an oral hearing in this Court. Its written submissions in chief were concise. In this Court, it accepted that a submission which suggested that the judge “had decided the question of costs prior to hearing the party’s submissions” based on a comment he had made late on 18 May, after delivering judgment, fell outside the draft notice of appeal and would require an amendment. In any event, the primary judge went on to hear submissions from both parties on the following day.

14. The Entrance Plaza maintained that the decision was clearly wrong. It referred to the general rule that costs followed the event, and complained that the primary judge “did not identify and find that there were ‘special circumstances” as to why he should depart from the general rule that costs follow the event”. But that is precisely what the primary judge did in his reasons, although his Honour did not in terms use the words “special” or “exceptions”.

15. The Entrance Plaza also filed written submissions, purportedly in reply. Those submissions amount, in substance, to a new presentation of its case.

16. Nowhere in the written submissions in chief or in reply is there an attempt to grapple with the gravamen of the reasons of the primary judge, which were that the plaintiff, who must be taken to have been found to have been injured in the shopping centre, and whose income was from a carer’s pension, was unable to pay any appreciable amount of costs, save from the judgment she had obtained in her favour from the other defendant. The absence of means of the plaintiff was consistent with what the court had been told by Ms Davids’ counsel. It was also consistent with the application made by counsel then appearing for The Entrance Plaza not to rely on such rights as it had to obtain an indemnity order as to costs, which he said would amount to “an exercise in futility”, but instead to seek a limited lump sum costs order. In any event, it was not suggested that there was any material error of fact by the primary judge in proceeding on that basis. So far as the materials made available to this Court disclose, and this was confirmed when the application was heard, The Entrance Plaza had not filed a cross-claim against the cleaner, against which it would have been open for the Entrance Plaza to seek an order as to costs.

17. Contrary to the written submissions of The Entrance Plaza, the present decision does not establish some general proposition that “To allow this costs order to stand in these circumstances is in essence an acceptance of the position that any party should be able to offer to ‘walk away’ from proceedings at the last minute and not run the risk of any adverse costs order”. The critical facts of this case were that the plaintiff was of limited means, was in fact injured on the defendant’s premises, and the defendant who failed to accept a late “walk away” offer had not cross-claimed against its contractor who was ultimately held to be liable.

18. Save perhaps for the foregoing, The Entrance Plaza does not suggest that there is any question of principle or public importance. The threshold question on the grant of leave is whether there is shown to be a case of clear injustice.

19. The evidence in this Court is that the total costs of The Entrance Plaza were $60,616.21. Rather less than that amount of costs would have been recoverable on a party-party basis had a favourable costs order been obtained; precisely how much less is not established from the evidence. It may be noted that there was no expert evidence, no affidavits, no written submissions, and the testimonial evidence of the plaintiff and her daughter, and the only witness called for The Entrance Plaza (Mr Muir, who was employed at the centre) was completed before the luncheon adjournment, and addresses were brief. It was a very short case, which would have completed in a day save for the fact that the plaintiff sought a delayed start in order to seek to reach a compromise.

20. The Entrance Plaza submits that if the primary judge considered that it was unreasonable for it not to have accepted Ms Davids’ offer conveyed to it at 4.27pm on 17 May 2016, then even so the most the primary judge should have done was to disentitle it to its costs incurred thereafter. The evidence is that the billed costs prior to trial were some $36,000. The amount of costs recoverable on a party-party basis would be appreciably less than that. And in assessing the question of injustice, it is also appropriate to have regard to the application for a lump sum costs order in the amount of some $18,000 which its counsel made at the time.

21. The question of injustice also falls to be assessed in light of costs subsequently incurred. The Entrance Plaza ran the case at trial with junior counsel, but briefed senior counsel on the application for leave. If leave is granted, then there will be another day’s hearing. It seems likely that costs incurred by The Entrance Plaza of a successful challenge to the failure to order costs at first instance will exceed – and perhaps considerably exceed – the recoverable costs to which it says it was entitled. That would be so even if there had been a concurrent hearing of the leave application and the appeal (which is what The Entrance Plaza had sought). There is a further question whether if such a costs order were made, it would in fact yield any recoverable costs. The materials available to this Court do not permit a view to be expressed on that question, and so it is to be put to one side for present purposes. However, it is appropriate also to have regard to the public cost of court time used, and the delay to other litigants. Those feed directly into the importance of ensuring that costs not swamp the real issues between the parties.

22. One final matter appears from the transcript. The Gosford sittings in May 2016 may be inferred to have been busy. The primary judge read the material supplied by the parties on the night of 17 May 2016. It is plain from the transcript that matters were being interposed throughout the following day. At the commencement of 19 May, his Honour said “Now back to Davids v The Entrance Plaza. We got to the point yesterday afternoon where I delivered a judgment on liability and then time expired and the staff needed to be given some relief.” The primary judge referred repeatedly to the number of matters in the list, and was critical of The Entrance Plaza running the matter, notwithstanding Ms Davids’ offer, in the hope of obtaining a favourable costs order.

23. In all of those circumstances, The Entrance Plaza has not established a clear case of substantial injustice. Leave should be refused. Costs should follow the event.

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Decision last updated: 16 December 2016