Weatherill v Bartlett

[2017] NSWCA 175

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	Weatherill v Bartlett [2017] NSWCA 175
Hearing dates:	17 July 2017
Decision date:	18 July 2017
Before:	Meagher JA at [1]; White JA at [27]
Decision:	(1) Summons seeking leave to appeal dismissed. (2) Appeal dismissed as incompetent. (3) Applicant/appellant pay the respondent’s costs of the Summons and of the appeal, including the respondent’s notice of motion filed 10 May 2017.
Catchwords:	CONSUMER LAW – misleading or deceptive conduct – where aircraft purchased in reliance upon misleading estimate of transportation cost – where value of aircraft exceeded purchase and transportation cost – whether loss suffered PROCEDURE – leave to appeal – where application for leave to appeal from appeal on question of law – whether costs of proceedings at first and second instance included to satisfy threshold in Supreme Court Act 1970 (NSW), s 101(2)(r) – no question of principle
Legislation Cited:	Competition and Consumer Act 2010 (Cth), Sch 2, ss 18, 236 Supreme Court Act 1970 (NSW), ss s 75A(7), 101(2)(c), 101(2)(q), 101(2)(r) Uniform Civil Procedure Rules 2005 (NSW), r 42.1.
Cases Cited:	Condensing Vaporisers Aust Pty Ltd v FDC Construction & Fitout Pty Ltd (No 2) (2014) 86 NSWLR 360; [2014] NSWCA 95 Coshott v Shipton Lodge Cobbitty Pty Ltd [2006] NSWCA 316 James v Douglas [2016] NSWCA 178 Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494; [1998] HCA 69 Oertel v Crocker (1947) 75 CLR 261 Pawlowska v Zajglic [2011] NSWCA 118
Category:	Principal judgment
Parties:	Colin Weatherill (Applicant) Clinton Garth Bartlett (Respondent)
Representation:	Counsel: PE King (Applicant) RC Gration (Respondent)   Solicitors: Freedman & Gopalan Solicitors (Applicant) WMD Law (Respondent)
File Number(s):	2017/147909; 2017/60108
Decision under appeal	Court or tribunal: Supreme Court of NSW Jurisdiction: Common Law Citation: [2017] NSWSC 31 Date of Decision: 6 February 2017 Before: Adamson J File Number(s): 2016/228657

Judgment

1. MEAGHER JA: The applicant (Dr Weatherill) seeks leave to appeal from two decisions of the primary judge (Adamson J). By the first, her Honour allowed the respondent’s (Mr Bartlett) appeal, and dismissed Dr Weatherill’s cross appeal, from a judgment of the Local Court (Curran LCM) of 8 June 2016: Bartlett v Weatherill [2017] NSWSC 31. That appeal and cross appeal as argued only sought to raise questions of law, and accordingly were brought as of right under Local Court Act 2007 (NSW), s 39(1). By the second decision, delivered on 6 March 2017, the primary judge set aside earlier costs orders made in favour of Dr Weatherill and ordered him to pay Mr Bartlett’s costs of the proceeding in the Local Court and of the proceeding in the Supreme Court: Bartlett v Weatherill (No 2) [2017] NSWSC 181.

2. On 5 May 2017, the applicant filed a notice of appeal from the judgment and orders of the primary judge. In response on 10 May 2017, Mr Bartlett filed a notice of motion seeking an order that the appeal be dismissed as incompetent. Dr Weatherill then filed a summons seeking leave to appeal, under Supreme Court Act 1970 (NSW), s 101(2)(r).

3. In the Local Court, Dr Weatherill claimed damages from Mr Bartlett for misleading or deceptive conduct in breach of s 18 of the Australian Consumer Law (Sch 2 to the Competition and Consumer Act 2010 (Cth)). Mr Bartlett was a Licensed Aircraft Maintenance Engineer. In late 2012, Dr Weatherill, who lives in South Australia, was considering purchasing a Cessna 400 aircraft in the United States. He asked Mr Bartlett to estimate the cost of transporting that aircraft to Australia. Mr Bartlett provided an estimate of $52,395 (or as the Magistrate appears to have found $56,895), excluding GST. On the basis of that estimate, Dr Weatherill decided to purchase a Cessna 400 for US$370,000 and bring it to Australia.

4. The Magistrate found that Mr Bartlett’s estimate was misleading or deceptive, and that a “reasonable” estimate would have been about $86,000. The Local Court found that Dr Weatherill had suffered the following loss because of that conduct. Dr Weatherill had been prepared to pay up to $438,000 for the acquisition of the aircraft and its transport to Australia. He in fact spent $490,000. The difference between his expected and actual cost was $52,000. The value of the aircraft at the time it was purchased was more than $500,000, and at the time of the hearing it was worth still more. To take account of that increase in value, and that Dr Weatherill had otherwise “lost the use” of that amount of $52,000 over a period of no more than three years, the amount of $52,000 should be adjusted and damages assessed at $25,000.

5. In doing so, the Magistrate did not accept Dr Weatherill’s claim to damages as formulated. That claim was to the difference between what he actually spent in transporting the aircraft to Australia ($130,703) and Mr Bartlett’s estimate of those costs ($52,395 excluding GST). The amount claimed was $58,857.

6. In Mr Bartlett’s appeal, the primary judge found that the learned Magistrate had applied the wrong principles when determining the measure of Dr Weatherill’s loss where his case was that, by reason of Mr Bartlett’s misleading conduct, he had purchased an aircraft in the United States. Given that he did not contend that he would have entered into some other transaction, instead of the one that he did, Dr Weatherill could only have suffered loss if the value of the aircraft acquired was less than the total amount he paid for purchasing and transporting it: see Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494; [1998] HCA 69 at [48]–[52] (McHugh, Hayne and Callinan JJ). Had the Magistrate applied those principles, his Honour could not have concluded that Dr Weatherill had suffered any loss because, although he spent $490,000 in purchasing the aircraft and having it transported to Australia, its value in Australia at that time was at least $500,000. Applying the Magistrate’s finding as to the value of the aircraft, the primary judge allowed Mr Bartlett’s appeal, set aside the judgment in favour of Dr Weatherill for $25,000 and ordered judgment in favour of Mr Bartlett in relation to Dr Weatherill’s claim.

7. By his cross claim, Dr Weatherill had challenged the Magistrate’s findings both as to the value of the aircraft when purchased and as to its value having increased by the time of the hearing. Those challenges, confined to questions of law, were that there was no evidence to support either finding. Rejecting the first, the primary judge held that there was evidence that at the time the aircraft was purchased in late 2012 Dr Weatherill was told that could buy such an aircraft in Australia “for around $500,000”. There was also evidence that at that time there was a Cessna 400 for sale in Aldinga in South Australia for not less than that amount. The remaining grounds of the cross-appeal sought to argue that Mr Weatherill’s loss ought be assessed by reference to the Magistrate’s undiscounted figure of $52,000. The primary judge also rejected that argument.

8. Her Honour ordered that Dr Weatherill pay Mr Bartlett’s costs of the proceeding in the Local Court and of the appeal proceeding in the Supreme Court. The general rule is that costs follow the event: Uniform Civil Procedure Rules 2005 (NSW), r 42.1. Dr Weatherill had sought a money judgment, established a wrong (being the breach of Australian Consumer Law, s 18) but failed to prove any loss. Accordingly, he did not establish the cause of action alleged, proof of which required loss. The statutory remedy for damages is only available if the claimant is “worse off” as a result of the contravention: Marks v GIO at [57]. The result was that Mr Bartlett was entitled to judgment in the Local Court and that Dr Weatherill’s appeal should be dismissed. In each case, Dr Weatherill was to be regarded as the unsuccessful party. So reasoning, her Honour concluded that the appropriate orders were that Dr Weatherill pay the costs of each proceeding: Judgment [2], [4]-[8].

9. I will first address Mr Bartlett’s motion as to the competency of the appeal. Dr Weatherill’s arguments are summarised in his further written submissions dated 11 July 2017, as confirmed during the oral argument.

Competency of the appeal

10. Supreme Court Act, s 101(2)(r) requires a grant of leave to appeal unless the appeal (i) “involves a matter at issue amounting to or of the value of $100,000 or more” or (ii) “any claim, demand or question to or respecting any property… amounting to or of the value of $100,000”.

11. Mr Bartlett submits that the first limb of para (r) applies to proceedings involving a claim for damages and that the threshold will be met only if a successful appeal would improve the party’s entitlement by at least that amount: Oertel v Crocker (1947) 75 CLR 261 at 265 (Latham CJ); Pawlowska v Zajglic [2011] NSWCA 118 at [13]–[21] (Campbell JA). Neither the costs that Dr Weatherill has been ordered to pay at first instance nor those costs at second instance, namely the appeal before the primary judge, can contribute to the satisfaction of that threshold. That proposition is not controversial in relation to the costs incurred at first instance where there is a single appeal: see, eg, Coshott v Shipton Lodge Cobbitty Pty Ltd [2006] NSWCA 316 at [14]–[15] (Basten JA). It is now established in relation to costs incurred at first instance where there is a double appeal: see Condensing Vaporisers Aust Pty Ltd v FDC Construction & Fitout Pty Ltd (No 2) (2014) 86 NSWLR 360; [2014] NSWCA 95 at [22]–[28] (Leeming JA, Macfarlan and Ward JJA agreeing).

12. Three arguments are made in support of Dr Weatherill’s submission that leave to appeal is not required.

13. First, it is contended that the second limb of para (r) applies and is satisfied because the proceeding involves a “question to or respecting any property… amounting to or of the value of $100,000 or more”. The property is said to be the Cessna 400 aircraft and the relevant question one as to its value because there is an issue, albeit as to the assessment of the damages claimed by Dr Weatherill, which raises a question as to the value of the aircraft. That argument is unsustainable. The second limb of para (r) is engaged where the subject matter of the dispute in the appeal is property or some right or interest in property which has a value exceeding $100,000. There is no such issue in this appeal.

14. Secondly, it is said that, if his appeal is successful, Dr Weatherill will obtain damages in the amount of $58,000 (the amount of his original claim) or $52,000 (as claimed by his cross claim before the primary judge) and an order for the payment of his costs at first instance. The sum of those costs and the damages claim exceeds $100,000. It is separately submitted that the amount in issue on the appeal from the primary judge’s order that Dr Weatherill pay Mr Bartlett’s costs at first instance exceeds $100,000. Accordingly, it is said that in relation to each of the judgments of the primary judge a successful appeal will change the result for Dr Weatherill by more than $100,000. These arguments are misconceived. As to the first, the costs which Dr Weatherill might have recovered had his damages claim been successful are not to be taken into account in determining whether the $100,000 threshold is satisfied: see above [11]. That threshold is directed to the value of the matter at issue in the appeal. As to the second, again the costs which Dr Weatherill was ordered to pay at first instance are not to be taken into account.

15. Thirdly, it is submitted that s 101(2)(q) “is engaged” with respect to Dr Weatherill’s challenges to the costs orders. That paragraph does not assist Dr Weatherill. Paragraph (q) provides that an appeal to this Court from a judgment or order in proceedings of the Court with respect to “the taxation or assessment of costs” does not lie except by leave. The judgment and orders sought to be appealed from were not made in proceedings concerning “the taxation or assessment of costs”. Accordingly, that provision does not apply separately to require a grant of leave. Furthermore, and obviously, that provision does not assist Dr Weatherill in satisfying either of the limbs of the monetary threshold in para (r) in relation to his appeal from the setting aside of the money judgment in his favour.

16. In relation to his proposed costs appeal, Dr Weatherill also submits that he will not require leave under s 101(2)(c) if he is granted leave to pursue his main appeal. This argument turns on whether the proposed costs appeal is an appeal “as to costs only” within the meaning of para (c): see James v Douglas [2016] NSWCA 178 at [10]. This argument only arises if leave to appeal is granted from the judgment entered following the primary judge’s first decision.

17. Finally, reference should also be made to Dr Weatherill’s foreshadowed application in any proposed appeal to lead fresh evidence as to the value of the aircraft at the time of its purchase in 2012. That evidence is said to substantiate his position that the amount claimed (presumably calculated by using the measure adopted by the primary judge) exceeds $100,000. There are two problems for this application and its support for any conclusion that the amount in issue in the proposed appeal exceeds $100,000. The first is that the appeal to the primary judge was limited to questions of law, and accordingly fresh evidence cannot be relevant to any of this issues which would be raised on an appeal to this Court. The second is that, if such evidence were relevant, it would not be admissible under Supreme Court Act, s 75A(7) except on “special grounds”, which are unlikely to be established where the evidence could have been available at the time of the trial.

18. It follows that Dr Weatherill requires leave to appeal from the judgment and orders of the primary judge.

Leave to appeal

19. In Dr Weatherill’s further written submissions, it is said that there are three issues of principle raised by the proposed appeals, which in turn justify a grant of leave. The first and second of these issues were also dealt with in oral argument.

20. The first is that the present case is not one that attracts the principles in Marks v GIO. However, it is accepted that the starting point in any enquiry as to the measure of Dr Weatherill’s loss is that he purchased an aircraft that he would not otherwise have purchased had the misleading conduct not occurred. Marks v GIO is then sought to be distinguished on the following basis:

The example at [50] in Marks referred to in the Reasons at [36] is directed to a purchase of goods, not as in this case the provision of freight forwarding services. It is also directed to a situation unlike the present where the misrepresentation turns out to be true. Here the services were falsely represented as a result of which Dr Weatherill expended funds which he would not otherwise have done. The worth of the aircraft in such a transaction to the importer Dr Weatherill who incurred an immediate loss in reliance by paying more than was warranted by the wrongdoer as held by the trial court is an irrelevance.

21. Neither of the two matters identified above – the provision of freight forwarding services and a misrepresentation that turns out to be true – provide any basis for distinguishing Marks v GIO and the principles it applies. In that case, there was a misrepresentation as to the rate of interest to be charged which in fact was higher than that represented. However, the plaintiff suffered no loss because the cost of the loan taken was lower than any other loan available in the market: Marks v GIO at [59]. Contrary to Dr Weatherill’s assertion, that was not a case in which the representation “turned out to be true”. Here, the misleading conduct related to the provision of freight services, rather than a loan facility. Like Marks v GIO, this case is concerned with a transaction entered into as a result of misleading conduct. In both cases, it was necessary to enquire what would probably have happened but for the contravening conduct.

22. Whilst Dr Weatherill accepts the Magistrate’s finding that he would not have purchased the aircraft but for the misleading conduct, he maintains that he “ended up paying much more than he otherwise would have”. He says that is because he had to pay “more than was warranted” by Mr Bartlett. This submission treats Mr Bartlett’s representation as if it were a contractual promise and the relevant measure of damages as that which would put him in the position he would have been in had the representation been made good. So understood, that claim is to compensate for expectation loss. However, that is not the loss that was suffered by reason of Mr Bartlett’s misleading conduct. The recoverable loss is any “prejudice or disadvantage” sustained “as a result of altering his … position under the inducement of the misleading conduct”: Marks v GIO at [46]. Contrary to Dr Weatherill’s submission, the primary judge did not misunderstand or misapply the causal test required by the language “because of” in Australian Consumer Law, s 236. Her Honour did not treat those words as requiring only that the loss follow in a temporal sense the relevant contravening conduct.

23. The second asserted question of principle said to arise relates to the second of the findings as to value made by the Magistrate that was the subject of Dr Weatherill’s cross appeal. That finding was that the aircraft was worth more at the hearing than it was when purchased in 2012. It is submitted that finding formed the basis for the setting aside of the judgment in favour of Dr Weatherill, and that the finding and reasoning concerning changes in the AUD-USD exchange rate were wrong.

24. This argument does not identify any question of principle which was material to the primary judge’s reasoning. The judgment in favour of Dr Weatherill was set aside because the Magistrate did not formulate and apply the correct measure of loss. When that measure was applied to the Magistrate’s finding that the Cessna aircraft was worth at least $500,000 when purchased, it was apparent that Dr Weatherill had not suffered any loss. None of that analysis depends on any finding as to the value of the aircraft at the time of the hearing at first instance, or the basis on which that value was determined.

25. The remaining asserted error of principle is concerned with the appeal from the primary judge’s order setting aside the Magistrate’s order that Mr Bartlett pay Dr Weatherill’s costs at first instance. The primary judge is said to have erred by proceeding on the basis that Dr Weatherill had not been successful on liability because contravention of the Australian Consumer Law was “admitted for the purposes of the appeal”. This submission must be rejected. What was not challenged by Mr Bartlett’s appeal was the finding of misleading or deceptive conduct and hence contravention of s 18. It did not necessarily follow, and was challenged on appeal, that Dr Weatherill had suffered loss giving rise to a liability to pay damages. That appeal was successful. Dr Weatherill had not made out the cause of action pleaded.

Conclusion

26. Dr Weatherill has not identified any ground justifying a grant of leave to appeal from the judgment and orders of the primary judge. Accordingly, the orders I propose are:

1. Summons seeking leave to appeal dismissed.

2. Appeal dismissed as incompetent.

3. Applicant/appellant pay the respondent’s costs of the Summons and of the appeal, including the respondent’s notice of motion filed 10 May 2017.

27. WHITE JA:   I agree.

28. Dr Weatherill’s argument on the leave application sought to advance a case that had not been maintained at trial, namely, that either:

1. he was worse off as a result of entering into the transaction because according to evidence he seeks to adduce on appeal the Cessna plane was not worth $500,000 at the time of purchase as found by the learned magistrate; or

1. rather than not proceeding with the transaction had a reasonable estimate been provided, he could have proceeded by obtaining different freight forwarding services, e.g. by sea, at a lower cost.

29. Neither argument was available to be advanced before Adamson J on an appeal limited to questions of law. They could not be successfully raised on appeal from her Honour’s orders.

30. Even if Dr Weatherill had identified a seriously arguable ground of appeal, I would refuse leave because of the disproportionality between the costs incurred to date and the further costs of an appeal, when compared with the amount in issue.

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Decision last updated: 18 July 2017