New South Wales Supreme Court CITATION : ADVANCE FLOORING CO PTY LTD v ARIEL STOLIAR [2003] NSWSC 12 HEARING DATE(S) : JUDGMENT DATE : 3 January 2003 JUDGMENT OF : Dowd J DECISION : Appeal upheld; returned to Local Court; costs reserved. CATCHWORDS : Appeal from Local Court - failure to determine terms and conditions of a contract - multiple amendments to statement of claim - error of law - judicial discretion to award costs. Justices Act 1902 LEGISLATION CITED : Legal Practitioners' Act 1987 Local Courts (Civil Claims) Act 1970 No. 11 Alltrans Express v CVA Holdings (1984) 1 All ER 685 CASES CITED : Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Hughes v Western Australia Cricket Association (Inc) (1986) ATPR 48-134 Pettit v Dunkley (1971) 1 NSWLR 376 PARTIES : Advance Flooring Co Pty Ltd (ACN 274 711 961) (Plaintiff) Ariel Stoliar (Defendant) FILE NUMBER(S) : SC 12461/00 COUNSEL : G Gemmell (Plaintiff) T Lynch (Defendant) SOLICITORS : L Ciaglia, Ciaglia Legal (Plaintiff) P Snellgrove, Snellgroves Solicitors (Defendant) LOWER COURT Local Court JURISDICTION : LOWER COURT 9196/97 FILE NUMBER(S) : LOWER COURT I Barnett LCM JUDICIAL OFFICER : SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION DOWD J Friday 3 January 2003 12461/00 ADVANCE FLOORING COMPANY PTY LTD (ACN 274 711 961) v ARIEL STOLIAR JUDGMENT 1. HIS HONOUR: This is an appeal from the decision of Barnett LCM on 18 August 2000 under the provisions of S69 of the Local Courts (Civil Claims) Act 1970 which appeal is available only on points of law. 2. The order sought in the appeal is that the judgment as to damages, interest and costs be set aside, although the particulars make it clear that it is the judgment itself, rather than, as expressed, "damages", "interest" and "costs". The appeal lies by virtue of S69 Local Courts (Civil Claims) Act 1970 ("the Act") which incorporates Pt 5 of the Justices Act 1902. A court exercising jurisdiction under the Act is a court of record. Background Facts 3. Advance Flooring Co Pty Ltd ("Advance") the defendant before the Local Court performed work for the defendant in these proceedings, Ariel Stoliar, in a newly constructed home unit in Drummoyne. Advance on 21 November 1996 offered to supply and install parquetry flooring, the work commencing in April 1997 and ceasing in June 1997 when the parties were in dispute. 4. Proceedings were commenced by Stoliar by way of statement of claim in the Local Court for $40,000.00. There was an amendment of the statement of claim to which a defence was filed and the matter proceeded to arbitration in November 1998 when there were further amendments. Stoliar on 6 July 1998 further amended the statement of claim and after amended grounds of defence were filed on 2 November 1999 the matter was heard by Barnett LCM. Judgment was delivered on 18 August 2000 and orders were made, after argument, as to costs. 5. The learned magistrate found for Stoliar in the sum of $7,390.15 and dismissed Advance's cross claim. His Worship further ordered that Advance pay Stoliar's costs which his Worship assessed at $24,244.20. Facts of the Dispute 6. Stoliar owned a unit in a block of units he was developing and engaged Advance to lay parquetry flooring throughout the unit. Stoliar alleged in the proceedings that the flooring was defective and for this claim, claimed the sum which became the amount of the judgment. He further claimed a sum of $20,500.00 being forty one week's rent at $500.00 per week which the plaintiff said he was forced to expend because of the delay. He also claimed interest. There was a cross claim by Advance seeking payment of $1,674.20 from Stoliar being the balance of the contract price and wages for two employees and interest. 7. Advance's claim was based on the offer made to Stoliar of 21 November 1996, which Stoliar accepted, and the conditions of contract which accompanied that quote. There is a dispute between the parties as to when those conditions arrived but not that they were received by Stoliar some time prior to the commencement of work. 8. The work should have concluded about mid May. Stoliar took a very close personal interest in the work and described himself as "pedantic, fastidious". He expressed concern about the quality of work in progress and disputes occurred with Advance. 9. Advance contended that they were locked out of the job and, in fact, the work was not finished. There were clear problems with the flooring underneath as well as with quality of workmanship, it being conceded at the hearing in the defence case that there were some sixteen boxes of parquetry blocks that had to be replaced. The blocks were not of the appropriate grade and were not properly machined, causing gaps in the pattern and creating difficulty aligning the blocks. There were also disputes about cracks within blocks, the colour of blocks and the location of different colours adjoining. 10. There were disputes concerning the sub-floor and levels of undulation, the levelling and the question of the coating which it was given before the laying of the tiles. There was not issue between the parties that the slab on which the parquetry work was fitted had been laid to take carpet and that there had been some rain damage and levelling work in one corner. 11. An agreement had been made as to the preparation of the base of the parquetry but only six bags of the ten bags of base ordered were ever used on the floor by Advance's workmen. 12. A dispute arose in late June, Advance demanding payment of the balance owing under the contract notwithstanding that the work had not been completed, it being proposed that this money be held by the legal representative to ensure payment on completion. 13. Ms Leslie Wong, barrister for Stoliar, advised on 20 June that Advance should return to complete the work by 23 June. Advance faxed Ms Wong, stating: "Please advise your client that we refuse to carry out any further work after 12 pm Monday 23rd until such time our contract is signed and all outstanding monies are held by yourself". 14. Advance's case was that two employees turned up and were able to get onto the site but not into the unit in question. The Local Court Hearing 15. There was a protracted five day hearing with experts' evidence about quality of workmanship, trade practices and the question of whether Advance's workmen had been locked out. His Worship found that there had been no lock out by Stoliar and his Worship also found there was an abundance of evidence supporting Stoliar's claim that the work was defective. 16. His Worship then determined the issue of the claim for rent made by Stoliar, his Worship finding that there was no money owed to Stoliar's mother for rent, there was no lease agreement and the mother agreed she would not press the money. Stoliar did not have the funds to go ahead with the work in any event. Grounds of Appeal Ground 1 17. The first ground of appeal was that the learned magistrate erred in failing to determine what the terms and conditions of the contracts were between the parties. 18. The learned magistrate's only findings as to the contract are in the following terms: "At no stage did the Plaintiff ever sign a written contract with the Defendant (although the Defendant sought this). The parties' contract is evidenced by a number of quotes provided by the Defendant and verbally accepted by the Plaintiff: and the parties various conversations, that is between the Plaintiff and Mr Barry Crook on behalf of the Defendant". 19. During the course of the hearing a number of quotes were admitted in evidence as well as the conditions of contract which, it was agreed between the parties, was received at some stage prior to the commencement of the work. His Worship did not, in fact, determine whether a specific condition relating to levelling of the floor was incorporated in the contract between the parties. Other than what was quoted, his Worship does not state what the terms and conditions of the contract were between the parties. 20. I accept the submission of Advance that, this being a fundamental issue in the dispute, it is not possible to determine the rights as between the parties without determining the terms and conditions of the contract and his Worship failed to determine a fundamental question of fact. His Worship further, did not state his findings as to terms and conditions of the contract (Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 156). 21. I also accept the submission of Advance that such failure to find what the terms and conditions of the contract were, was an error of law. See Asprey JA in Pettitt v Dunkley (1971) 1 NSWLR 376 at 382: "… the case is such that the judge's finding of fact and his reasons are essential for the purpose of enabling a proper understanding of the basis upon which the verdict entered has been reached, and the judge has a duty, as part of the exercise of his judicial office, to state the findings and the reasons for his decision adequately for that purpose." 22. It is clear that determining the issues between the parties as to the quality of workmanship and the various issues that have been set out above, would be determined differently depending on the actual terms of the contract. 23. I consider, therefore, that in this fundamental error by his Worship, Advance has established this ground of appeal. 24. It is not, therefore, necessary to determine grounds 2, 3, 4 and 5 as the determination of these issues will arise from the determination of what was in the contract and what, if any, were the breaches of that contract. Grounds 6 to 8 Relating to Costs 25. The grounds relating to costs were expressed by counsel for Advance in the following terms: · The learned Magistrate erred in exercising his discretion to award costs to the Defendant in the sum of $24,422.20. · The Magistrate erred in not ordering an assessment of costs. · The Magistrate erred in law, in effectively awarding either indemnity costs, or solicitor/client costs to the Defendant. 26. The court has a full and unlimited discretion as to costs but that discretion must be exercised judicially (Hughes v Western Australia Cricket Association (Inc) (1986) ATPR 48-134 at 48). 27. Advance submitted that his Worship did not have sufficient material in order to make the assessment that he did, in that his Worship should have had an itemised bill and, His Worship not being an expert in the assessment of legal costs, the matter should have been referred to a costs assessor. 28. Alltrans Express v CVA Holdings (1984) 1 All ER 685 is authority that an appellant court may interfere with the judicial officer's discretion if he has erred in law. It is put by Advance that Stoliar had originally claimed in excess of $45,000.00 and, therefore, was not successful on all issues and failed to take that fact into account, particularly, being the claim for rent, a matter pointed out at the hearing. 29. It is further put, on behalf of Advance, that the court should interfere with the discretion exercised by the magistrate, not just because it would come to a different result but that he had erred in his approach and should have taken into account the large numbers of amendments of the statement of claim and that the prima facie position in relation to amendments is that the court may order, at any time, costs thrown away by the amendment, and failed to give proper reasons for his determination. 30. The Local Court magistrate, particularly in relation to civil claims, but indeed generally, is constantly making determinations as to costs in exercise of a judicial discretion. The failure to refer the matter for assessment does not generally, and in this particular case, constitute a ground of appeal unless there are special circumstances. To find otherwise would be to unnecessarily generate cost inducing activities and would be an unwarranted interference with the general discretion furnished to his Worship. 31. The Local Court practice has been, for some time, to award costs of counsel's fees and indeed solicitors' fees on the basis of accounts furnished to the court. The court does not have to carry out a taxing exercise to determine the appropriate quantum. 32. It is, indeed, in the Local Court, more likely that actual counsel's fees will be recovered in full than, in many cases, within the District Court. 33. I do not, therefore, consider that the failure to refer the matter for assessment or the awarding of the actual sums sought, of themselves constitute an error on his Worship's behalf. 34. The further issue relates to the actual making of the award. Clearly the normal practice of the courts is that costs follow the event, notwithstanding that, in the case of a plaintiff, the plaintiff does not succeed in the whole of that claim. The plaintiff succeeded in the claim which, on the examination of the transcript and evidence, constituted the major part of the claim, in terms of the time actually taken and in terms of the issues to be determined. 35. The issue of rent occupied a relatively short period of time in terms of the overall hearing. The fact that the rent was the larger fiscal part of the claim and was, in fact, an issue unresolved until the conclusion of the claim does not constitute such a factor as to outweigh an exercise of discretion whereby costs are awarded to a successful party. The bulk of the costs incurred were on the issues relating to the parquetry. 36. I can see no issue arising because of the large number of amendments. There is no evidence that there were costs "thrown away" and I can see no basis to show that the magistrate should have exercised his discretion otherwise. 37. I note that there was no application before the learned magistrate that an assessment be made under the Legal Practitioners' Act 1987. His Worship was clearly the best person able to assess costs for a lengthy five day hearing. 38. I can, therefore, see no error as to the orders as to costs made by his Worship which would entitle this Court to interfere. 39. I consider that the question of costs of this hearing should be the subject of further argument in light of the findings that I have made and the orders that I propose below, and I, therefore, reserve for further argument costs of this hearing. 40. As to the order of this Court, it seems clear from the determination above that the matter should be returned to the learned magistrate for determination in accordance with law but that the hearing on the matters argued before the appeal should be limited to the issue of the contract, the allegation of breach and the issues arising from the workmanship and other issues arising from the contract. Accordingly, the hearing should exclude any issues arising out of the question of the claim for rent which has been determined on the evidence by the learned magistrate irrespective of the terms of the contract. 41. It seems to me also, that the hearing should include matters relating to the cross appeal as those matters are inextricably interwoven with the issues raised by the statement of claim concerning the contract and its alleged breach. 42. Accordingly I would propose the following orders: I. That the appeal be upheld. II. That the matter be returned to the Local Court for determination in accordance with law, the hearing to exclude any questions of the claim for rent. III. That the costs of this hearing be reserved to both parties and that liberty to restore the matter by arrangement with my Associate to argue questions of cost, is granted. * * * * * * Last Modified: 02/03/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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