Padlyn Pools Pty Ltd trading as Smart Pools & Renovations v Muggridge [2009] NSWSC 1041

New South Wales Supreme Court

CITATION : Padlyn Pools Pty Ltd trading as Smart Pools & Renovations v Muggridge [2009] NSWSC 1041

HEARING DATE(S) : 14 May 2009

JUDGMENT DATE : 2 October 2009

JURISDICTION : Common Law

JUDGMENT OF : Rothman J

(i) Leave to appeal refused;

DECISION : (ii) The proceedings are dismissed;

(iii) No order as to costs.

CATCHWORDS : APPEAL – exercise of discretion below – costs – arguable issue of principle – leave refused - COSTS – appeal – ordinary rule that costs follow the event – issue of event – primary judge exercises discretion for perceived unreasonable conduct – leave to appeal refused

LEGISLATION CITED : Local Courts Act 1982 Uniform Civil Procedure Rules 2005

CATEGORY : Principal judgment

CASES CITED : House v The King [1936] HCA 40; (1936) 55 CLR 499

PARTIES : Padlyn Pools Pty Ltd trading as Smart Pools & Renovations (Plaintiff) Maureen Caroline Muggridge (Defendant)

FILE NUMBER(S) : SC 12430/2008

COUNSEL : C Biscoe (Plaintiff) R Desiatnik (Defendant)

SOLICITORS : Mahony Dominic Lawyers (Plaintiff) Maurice Marshan Lawyer (Defendant)

LOWER COURT JURISDICTION : Local Court

LOWER COURT FILE NUMBER(S) : 280/00

LOWER COURT JUDICIAL OFFICER : George LCM

LOWER COURT DATE OF DECISION : 24 April 2008

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

ROTHMAN J

2 OCTOBER 2009

12430/2008 Padlyn Pools Pty Ltd trading as Smart Pools & Renovations v Muggridge

JUDGMENT 1 HIS HONOUR: Padlyn Pools Pty Ltd, trading as Smart Pools & Renovations ("Smart Pools") seeks to appeal a costs order issued by the Manly Local Court on 24 April 2008. For that purpose, Smart Pools seeks leave, and if it be granted, the setting aside of the costs order made by the learned Magistrate and an order that the defendant, Ms Maureen Caroline Muggridge, pay the costs before the Local Court on an indemnity basis, as well as the costs of this appeal. 2 Smart Pools' submission suggests that the appeal is brought pursuant to Part 50 of the Uniform Civil Procedure Rules 2005. While the provisions of that Part govern the appeal and application for leave to appeal, the appeal is brought pursuant to the provisions of s 74(2) of the Local Courts Act 1982, which allow a party, dissatisfied with an order as to costs, to appeal to the Supreme Court, but only by leave of the Court. Facts and Judgment Below 3 In December 1999, the Local Court convicted the defendant of a number of offences relating to stealing property from her employer, Smart Pools. A custodial sentence was not imposed. By separate order, made on 23 February 2000, the Local Court ordered that compensation be paid in the amount of $27,084.65. In or about May 2000, in response to an application for writ of execution, the Local Court ordered that the amount of judgment (or any amount remaining unpaid) be paid by instalments of $50 per week, commencing 1 October 2000. A Registrar made the last mentioned order. There was objection to the order, and the order and objection was listed before a magistrate and ultimately resolved by consent. It seems that the original order of the Registrar continued to have effect. 4 On 4 October 2000, representatives of Smart Pools informed the Local Court that the first payment, due on 1 October 2000, had not been received, nor had any payment since 20 June 2000. A further application for writ of execution was filed in or about late October 2000. 5 According to the learned Magistrate, there were no further entries in the court file thereafter until 6 July 2007, when solicitors representing Smart Pools wrote to the Registrar seeking a copy of the original Certificate of Judgment. On 19 June 2007, Smart Pools wrote to Ms Muggridge, acknowledging payments by instalments for the past seven years and referring to an alleged agreement that a payment would be made from Ms Muggridge's superannuation entitlements. The letter asserts that the defendant received a reduced or lesser sentence on conviction because of the agreement to repay the money that had been stolen. 6 The learned Magistrate referred to such a suggestion as "inconceivable that a lawyer could assert such a thing. Such an arrangement is contrary to law and it's incapable of creating any legal obligations. It can only be a deliberate falsehood designed to intimidate the defendant." Smart Pools complain about that statement and assert that it, amongst other things, gives rise to a ground of appeal. 7 The learned Magistrate, in his decision on the question of costs, also refers to the letter, to which reference is made above, as being misleading in that it asserts that there had been a breach of the repayment agreement, which assertion was inconsistent with the earlier acknowledgement that payments had been made in accordance with the instalment arrangements. The learned Magistrate also asserted that the letter contained a "deliberate falsehood", in that it asserted a debt that included $2,783 in legal costs, in circumstances where no court order had been made as to costs, and there had been no involvement of any legal representatives to recover any outstanding judgment debt. The learned Magistrate also repeats a threat to issue a writ of execution, a demand that required payment of the debt in full within 21 days, and a threat to issue a creditor's petition that would permit a trustee in bankruptcy to sell the defendant's home and distribute the proceeds to creditors. 8 The learned Magistrate then made the following comment: "Fortunately he stopped short of a threat to send the boys round to break her legs." 9 The letter from Smart Pools, after threatening to issue a writ of execution and explaining the consequences thereof, offered not to proceed in that manner, if the defendant immediately agreed to pay $250 a week into the plaintiff's solicitor's trust account. Such a payment would be a variation of the instalment orders made by the Local Court. The letter also suggests that the defendant should provide a full statement of her financial affairs and obtain finance to enable her to pay all the money to the client in one lump sum. The learned Magistrate described that last suggestion as "ridiculous". His Honour referred to the letter of 19 June 2007, the descriptions of which have been outlined above, as, in his view, "a disgraceful dishonest exercise in cold blooded intimidation". 10 Because the defendant received monies from a testamentary disposition, independently of any issue before the Local Court, judgment debt was satisfied in full, in or about 30 October 2007. The learned Magistrate took the view that the judgment creditor had sought to pursue an application for costs, that had otherwise remained unresolved for seven years, for revenge and had not acted reasonably. Moreover, the learned Magistrate held that Smart Pools "failed to demonstrate that [Ms Muggridge] or [her] solicitor has acted unreasonably". 11 The learned Magistrate found that, amongst other reasons, the reason that Smart Pools sought immediate reimbursement was that Ms Muggridge had notified them of her change of address, following the purchase of a home unit. Of itself, a desire to obtain full satisfaction of a judgment debt, a catalyst for which is the knowledge, recently acquired, that the judgment debtor has acquired sufficient funds to satisfy the debt, ought not be criticised. It seems, however, that the learned Magistrate was more critical of the means by which that was sought to be achieved. Conclusion 12 The principles applicable to the exercise of discretion by a court in awarding costs are well known and have been stated authoritatively, on a number of occasions. In the ordinary course, costs follow the event. But ultimately, costs are a matter for the discretion of the court, which discretion must be exercised judicially. 13 A court, on appeal, will not interfere with the exercise of the discretion to award costs, except on one of the well-known bases relating to the interference with an exercise of discretion: House v The King [1936] HCA 40; (1936) 55 CLR 499. In this case, there are "nice questions" as to the event. If it be the original judgment, it was seven years' earlier. If it be the later applications, the plaintiff was unsuccessful, at least in some of them. 14 There is much to be said for the submission of Smart Pools that the learned Magistrate has erred in principle in the exercise of his discretion. At least on one view, which view was not the subject of submissions, the learned Magistrate reversed the onus in determining that it was necessary for Smart Pools to demonstrate that the defendant had acted unreasonably. Nevertheless, it is also clear that the learned Magistrate was dealing with a debt, by that stage fully satisfied, and cost applications relating to a judgment debt over seven years old. The learned Magistrate, in language which may have been infelicitous, considered that the plaintiff, Smart Pools, had acted unreasonably in threatening action in a manner, which was "over the top", and exercised his discretion on that basis. 15 The original amount involved in the cost application must have been something less than $3,000. The proceedings before the learned Magistrate, exacerbated by the proceedings before this Court, would render that amount insignificant. 16 Assuming, without deciding, that there are good reasons to overturn the judgment of the Local Court, as an exercise of discretion, this Court will not interfere. The amount involved is minuscule. The proceedings have already become far too complicated, the delay is unexplained, and it is inappropriate, notwithstanding the infelicitous language, to interfere in this exercise of discretion. By this stage, the costs have overtaken the amount in dispute. There comes a point when parties must understand that there is a limit to what may be litigated. As presently advised, the Court is not inclined, for the above reasons, to order costs of these proceedings, but, if a party wishes to address the issue, it may do so, in writing, within three working days. Any other party may respond within a further two days. 17 The Court makes the following orders: