New South Wales Supreme Court CITATION : Lissa v Browne (No. 2) [2009] NSWSC 1161 HEARING DATE(S) : 29 October 2009 JUDGMENT DATE : 4 November 2009 JUDGMENT OF : Davies J DECISION : (1) The application for indemnity costs is refused. (2) The first Defendant must pay the Plaintiff's costs of that application. CATCHWORDS : PROCEDURE - costs - indemnity costs - late abandonment of an appeal - failure of successful party to give a warning that the appeal was hopeless - whether relevant delinquency or unreasonable conduct on the part of the appellant. LEGISLATION CITED : Local Court Act 2007 Uniform Civil Procedure Rules CATEGORY : Consequential orders Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 Harrison v Schipp [2001] NSWCA 13 CASES CITED : Horseshoe Pastoral Co Pty Ltd v Murray Smith [1995] NSWCA 200 Huntsman Chemical Co Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242 Liverpool City Council v Estephan [2009] NSWCA 161 Oschlack v Richmond River Council (1998) 193 CLR 72 PARTIES : Gary Lissa (Plaintiff) Patrick Browne (First Defendant) FILE NUMBER(S) : SC 10049/09 COUNSEL : E White (Plaintiff) N Allan (First Defendant) SOLICITORS : John Byrnes & Associates (Plaintiff) Ziman and Ziman Solicitors (First Defendant) LOWER COURT JURISDICTION : Local Court LOWER COURT FILE NUMBER(S) : 2399/07 LOWER COURT JUDICIAL OFFICER : Acting Magistrate Price LOWER COURT DATE OF DECISION : 14 December 2008 - 1 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION DAVIES J 4 NOVEMBER 2009 10049/09 GARRY LISSA v PATRICK ANTHONY BROWNE & ANOR (NO. 2) JUDGMENT 1 I gave judgment in this matter on 2 October 2009. Relevantly, for present purposes, I upheld Mr Lissa's appeal in relation to the cross-claim brought against him by Zonie but I ordered that he pay the costs of the First Defendant (Mr Browne) because during the course of the hearing Mr Lissa abandoned the appeal against Mr Browne. 2 Mr Browne now makes application that the costs order in his favour should be an order that Mr Lissa pay his costs on an indemnity basis. Although the claim for indemnity costs is ultimately made because of the abandonment of the appeal against Mr Browne, Mr Browne submits that one needs to look both to what he has called the structure of the appeal and the conduct of the appeal to see why he is entitled to indemnity costs. 3 In relation to the structure of the appeal Mr Browne points to the failure of Mr Lissa to comply with Part 50.4(1)(b) UCPR which provides that the summons commencing the appeal must contain a statement as to what decision the Plaintiff seeks in place of the decision of the Court below. The Summons and the Amended Summons which was ultimately relied upon at the hearing simply asked that the appeal be allowed. 4 This is not a complaint about a technicality. When it is remembered that Mr Browne was the Plaintiff in the Court below and Mr Lissa was the Cross-Defendant, it was not immediately apparent precisely what Mr Lissa was seeking to do on the appeal as far as Mr Browne was concerned. Was the appeal simply in relation to the cross-claim brought by Zonie against Mr Lissa or was Mr Lissa in effect endeavouring to argue that Mr Browne's claim against Zonie should, in the first instance, be dismissed with the result that there would be no third party liability on Mr Lissa? 5 The second aspect of the structure of the appeal that was complained about was that the appeal was purportedly on grounds of fact as well as well as grounds of law. There is no appeal from the Local Court to this Court on questions of fact only: ss 39 and 40 Local Court Act 2007. It is said, for that reason, that the grounds based on questions of fact were always doomed to fail. 6 In relation to the conduct of the appeal, Mr Browne first draws attention to the fact that it was not until the draft Amended Summons was forwarded by letter of 14 August 2009 that there was any reconsideration by Mr Lissa of what the real issues were on the appeal. Thereafter, as I have recorded in my earlier judgment at [27] – [30], the appeal grounds were at first narrowed and then abandoned entirely against Mr Browne. 7 Mr Browne draws my attention to 2 cases in the Court of Appeal where there was a late decision to abandon the appeal and the impact that abandonment had on the question of costs. Mr Browne in particular relies on Horseshoe Pastoral Co Pty Ltd v Murray Smith [1995] NSWCA 200 where the result of the abandonment was that the appellant was to pay the costs on an indemnity basis. Mr Browne quite correctly also draws my attention to Huntsman Chemical Co Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242 where, by majority, such an abandonment did not result in an indemnity costs order. Mr Browne points to the reference in Horseshoe Pastoral Co to the fact that the amount in question on that appeal was very small and submits that, in a similar fashion, the amount in question in the present case, $19,919 was also a very small sum. That can scarcely be disputed. 8 Although Mr Browne puts forward powerful arguments in support of an indemnity costs order, I have formed the view that it is not appropriate to make such an order in this case for the following reasons. 9 First, although there was no compliance with Part 50.4(1)(b) UCPR it is reasonably apparent from a number of the questions of law said to have been determined incorrectly by the Magistrate that the appeal as originally drafted was intended to overturn the whole of the Magistrate's decision and not just his decision on the cross-claim. 10 Secondly, Mr Browne accepts that it was not until he served his written submissions on or about 22 September 2009 (6 days prior to the hearing) that there was any endeavour to point out to the legal advisors for Mr Lissa that the appeals on questions of fact must necessarily fail. At no stage did Mr Browne seek to clarify with Mr Lissa's solicitors what was ultimately to be sought on the appeal as it concerned Mr Browne. Once Mr Lissa's submissions were forwarded under cover of the letter of 14 August 2009 it would have been reasonable for Mr Browne's legal advisors to enquire whether what remained in the appeal concerned their client at all. The one remaining ground of law that was being pursued from the original Notice of Appeal and the questions of law sought to be added by the Amended Summons all on their face were concerned with the cross-claim and not Mr Browne's claim against Zonie. Although Ground 4 referred to Mr Browne it did so only in the context of questioning the indemnity and not in a way that challenged Mr Browne's verdict against Zonie. 11 In both Huntsman Chemical and Horseshoe Pastoral the importance of a timely warning by the party ultimately seeking the indemnity costs order was emphasised. Although in Horseshoe Pastoral it was said that the requirements for such a warning was not inflexible and, in that case, it did not ultimately stand in the way of an indemnity costs order being made, that case had other features mentioned by Kirby P which do not obtain in the present case. Kirby P noted that the appeal on its face appeared to be hopeless and that the lack of merit was indicated in the grounds of appeal filed. This was particularly because the decision of the trial judge largely rested on his assessment of the credibility of witnesses. There was also unconscionable delay in the appeal both being brought on and ultimately abandoned because it was realised at the last minute that it was a hopeless one. Indeed, Kirby P went so far as to suggest that the long delay was intentional. 12 In the present case, whilst it is true that the conduct of the proceedings in the Local Court was drawn out by various applications made by Mr Lissa the appeal itself was commenced and conducted with reasonable diligence and expedition. 13 Nor can it be said that the grounds of appeal, even the original grounds of appeal touching questions of law, were obviously hopeless or without merit. 14 Thirdly, the Court of Appeal has recently emphasised in Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 that there needs to be some blameworthy or unreasonable conduct on the part of the losing party to justify an indemnity costs order and that the test of unreasonableness should not be upheld on other than clear grounds – see at [113]. This, of course, is entirely consistent with what the High Court said in Oschlack v Richmond River Council (1998) 193 CLR 72 at [44] that there needs some "relevant delinquency" – see also Harrison v Schipp [2001] NSWCA 13 at [132]-[136] and Liverpool City Council v Estephan [2009] NSWCA 161 at [93] – [95]. 15 I do not consider the late abandonment of the appeal against Mr Browne to be such relevant delinquency or unreasonable behaviour to justify an indemnity costs order. As I have noted, the written submissions of Mr Lissa left only grounds on questions of law that touched Zonie. The questions of fact could not be argued on appeal, a fact that Mr Browne and his legal advisors recognised by their repeated reference to that matter in the submissions filed on behalf of Mr Browne of 22 September. This meant that by that time (since they had not sought to clarify the position earlier) Mr Browne's legal advisors must have known that the appeal no longer affected their client. As Kirby P pointed out in Huntsman Chemical it would be undesirable for the Court by the costs orders it makes to discourage the proper but late abandonment of unwinnable appeals or points (see at 247). 16 Those submissions were served under cover of letter of 14 August – a month and a half before the hearing of the appeal. If it was not clear to Mr Browne and his advisors what the position was this was a further opportunity to clarify it that was not taken. Although Mr Lissa did not expressly abandon the appeal against Mr Browne until the hearing of the appeal the matter of "late abandonment" must be viewed in the context of the written submissions of August 2009. Kirby P's remarks in Huntsman Chemical sound more clearly in those circumstances against an indemnity costs order. 17 There can be no doubt that by what Mr Lissa's counsel conceded and abandoned at the commencement and during the hearing of the appeal the matter was considerably shortened. However, in saying that, it should not be thought that I accept, by the submission made on behalf of Mr Lissa that the Court is entitled to take into account that the reality in litigation is that it is only shortly before the hearing that the parties and their lawyers typically give their full attention to the matter, that that somehow exonerates such a party from cost consequences in appropriate circumstances. Mr Lissa's legal advisors had been involved in the matter for a long time and counsel who argued the appeal had drafted the original Notice of Appeal. But, had a warning letter been sent Mr Browne would have had a more powerful case for an indemnity costs order. 1. The application for indemnity costs is refused. 2. The first Defendant must pay the Plaintiff's costs of that application. ********* 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.