Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Causmag Ore Company Pty Ltd v Blue NRG Pty Ltd [2022] NSWCA 251 Hearing dates: 6 December 2022 Date of orders: 6 December 2022 Decision date: 06 December 2022 Before: Gleeson JA; Basten AJA Decision: (1) Extend the time for service of the summons seeking leave to appeal from the judgment in the Common Law Division up to and including 28 September 2022. (2) Dismiss the application for leave to appeal. (3) Order that the applicant pay the respondent's costs of the application. Catchwords: APPEAL – leave to appeal – application for leave to appeal from judgment in Division on appeal from Local Court – appeal to Division limited to question of law – amount in issue below threshold in Supreme Court Act 1970 (NSW), s 101(2)(r) – disproportion between amount in dispute and costs – no more than arguable error of law – no issue of principle – applicant bore onus of proof at trial and failed to adduce evidence to support claim Legislation Cited: Civil Procedure Act 2005 (NSW), s 60 Courts Legislation Further Amendment Act 1997 (NSW), Sch 1.11[2] Local Court Act 2007 (NSW), s 40 Supreme Court Act 1970 (NSW), s 101 Uniform Civil Procedure Rules 2005 (NSW), r 51.10 Cases Cited: Secretary, Department of Family and Community Services v Smith (2017) 95 NSWLR 597; [2017] NSWCA 206 Category: Principal judgment Parties: Causmag Ore Company Pty Ltd (Applicant) Blue NRG Pty Ltd (Respondent) Representation: Counsel: A E Maroya (Applicant) A L Oakes (Respondent) Solicitors: Mahony Law (Applicant) Steele & Co (Respondent) File Number(s): 2022/294561 Publication restriction: N/A Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Common Law Citation: [2022] NSWSC 859 Date of Decision: 30 June 2022 Before: Lonergan J File Number(s): 2021/259058 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] JUDGMENT 1. THE COURT: Throughout the calendar year 2017 the applicant, Causmag Ore Company Pty Ltd, obtained electricity from the respondent, Blue NRG Pty Ltd. Under cl 5.2 of the supply contract the respondent was entitled, upon giving notice in writing, and in specified circumstances, to vary the rates at which it supplied electricity. Towards the end of 2017, the respondent gave notice of a variation applicable to a renewed supply agreement from 1 January 2018. 2. From January 2018, the applicant obtained an alternative supplier, at higher rates than those originally charged by the respondent in 2017, but lower than the increased rates proposed by the respondent for 2018. At the same time, the applicant failed to pay outstanding invoices rendered by the respondent. 3. On 14 May 2019, the respondent commenced proceedings in the Local Court seeking payment of the outstanding invoices, totalling some $53,379, plus interest. 4. On 14 June 2019, the applicant filed a cross-claim. The cross-claim did not deny liability for payment of the outstanding invoices, but relied on a set-off, asserting that the applicant had a claim for damages based on the refusal of the respondent to continue to provide electricity at the rates agreed in 2017. It calculated those damages as the difference between the 2017 rates and those which it had obtained from an alternative supplier in 2018. The calculation assumed that there would be no change in the rates under the respondent's supply agreement from 1 January 2017 to 31 December 2020. The claim and cross-claim were heard by Magistrate J Kiely in the Local Court at Young. Judgment was delivered on 31 May 2021 rejecting the cross-claim and giving judgment for the respondent in the amount sought by it. 5. On 10 September 2021, the applicant commenced proceedings in the Supreme Court by way of appeal from the decision of the Local Court. Such an appeal is limited to grounds raising a question of law, unless leave is granted pursuant to s 40(1) of the Local Court Act 2007 (NSW) with respect to a ground involving a question of mixed law and fact. The primary judge, Lonergan J, considered that the grounds raised by the applicant all involved questions of law so that the issue of leave did not arise. The applicant required a short extension of time, which was granted, but the appeal was dismissed; judgment was delivered on 30 June 2022: Causmag Ore Company Pty Ltd v Blue NRG Pty Ltd [2022] NSWSC 859 (Primary judgment). 6. On 28 September 2022, the applicant filed a summons seeking leave to appeal. No notice of intention to appeal had been filed, as a result of which the summons was almost two months out of time: Uniform Civil Procedure Rules 2005 (NSW), r 51.10(1)(b). No issue is taken in relation to the lateness of the filing of the summons. Accordingly, there should be an order extending time. 7. The application for leave is, however, opposed. The respondent submits that the proposed appeal is for a small sum, raises no issue of principle or question of public importance, identifies no reasonably clear injustice or ground going beyond one which is merely arguable. 8. Leave is required because the amount in issue is less than $100,000: Supreme Court Act 1970 (NSW), s 101(2)(r). The approach identified by the respondent correctly reflects principles adopted in this Court: see, for example, Secretary, Department of Family and Community Services v Smith (2017) 95 NSWLR 597; [2017] NSWCA 206 at [28] (Gleeson JA, Macfarlan and Payne JJA agreeing). 9. The exchange of documentation between the parties in late 2017 led to a degree of confusion on both sides, which continued through the hearing in the Local Court. However, the only issue of significance identified before the primary judge was whether the magistrate was satisfied that the respondent was entitled under cl 5.2 of the contract to vary the rates in the circumstances which then existed and, if so satisfied, gave adequate reasons for her conclusion. The primary judge held that the magistrate had (i) properly considered the construction of cl 5.2, (ii) focused on a particular component of the reasons for a variation in cl 5.2(d), and (iii) referred to the evidence responsive to that requirement: Primary judgment at [28]. Indeed, as the judge noted, there was no dispute as to the proper construction of the clause; the only question was whether a variation was justified on the basis of the facts asserted by the respondent, namely the significant market increases in the cost of supply: Primary judgment at [25]. The judge was satisfied further that the reasons given by the magistrate adequately dealt with those issues: Primary judgment at [25], [28]. 10. The applicant's claim, as revealed in the summons filed in the Supreme Court, was for a little under $62,000, although the calculation was based on an implausible assumption as to the cost of electricity over three years, unsupported by evidence. Even the amount claimed is comfortably below the threshold of $100,000, but it should be observed that that threshold has been in place, unchanged, since before the enactment of the Civil Procedure Act 2005 (NSW). [1] It may also be noted that the proposed appeal if allowed would provide a third opportunity for the applicant to resist a payment of an undisputed debt of about the same amount. The relationship between such an amount and the likely costs of the proceedings is more clearly disproportionate today than it would have been 15 years ago. That is a consideration which may be taken into account pursuant to s 60 of the Civil Procedure Act 2005 (NSW). That, in turn, is relevant to the question whether, if an arguable error were established, there would be any substantial injustice in refusing leave to the applicant. 11. There is, however, no clear error on the part of the primary judge. Indeed, it is not at all clear that there was any question of law raised by the appeal. While the proper construction of the contract might have involved a question of law, that was not the real issue. Rather, the question was whether the facts provided a basis for the proposed variation. The applicant contended that the respondent had failed to prove facts which warranted a variation of the rates it charged for supplying electricity. So expressed, that submission obscured the true issue. The proposed increase in rates did not affect the charges incurred for electricity supplied in 2017. It was the applicant whose claim for damages (to be set off against the acknowledged debt) required proof that the proposed increase in rates was not justified. It was not open to the applicant to rely upon an absence of evidence in that regard. Nor was it clear that there was an absence of relevant evidence: the issue appears to have been the adequacy of the evidence to establish the amount of the proposed increase. In fact there was evidence, found in a report obtained by the applicant in seeking advice as the best available rates and tendered by the respondent in the Local Court in support of its right to vary the rates under cl 5.2. 12. In oral submissions, counsel for the applicant contended that cl 5.2 constituted an exemption clause, at least when relied on by way of defence to the cross-claim, thus reversing the onus of proof. That submission should not be accepted. 13. Finally, there was an unresolved issue as to whether a claim for payment at an increased rate, purportedly pursuant to a contractual clause entitling the supplier to make such a variation, could have established a repudiation of the contract, had it been established that the proposed variation was not justified. The primary judge did not need to reach that question, although it was raised in a notice of contention. It is not necessary for this Court to express a view about it either, except to note that it gives rise to an unresolved issue upon which the applicant might ultimately fail in any event. 14. This case is not one in which any of the criteria for a grant of leave is satisfied. Accordingly, leave to appeal must be refused. The applicant must pay the respondent's costs of the application. 15. The Court makes the following orders: 1. Extend the time for service of the summons seeking leave to appeal from the judgment in the Common Law Division up to and including 28 September 2022. 2. Dismiss the application for leave to appeal. 3. Order that the applicant pay the respondent's costs of the application. ********** Endnote 1. Section 101(2)(r) was inserted by Sch 1.11 [2] of the Courts Legislation Further Amendment Act 1997 (NSW); it commenced on 2 February 1998. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 December 2022