New South Wales Supreme Court CITATION : Voss v Ipkendanz [2009] NSWSC 562 HEARING DATE(S) : 10 June 2009 JUDGMENT DATE : 19 June 2009 JURISDICTION : Common Law JUDGMENT OF : Simpson J DECISION : (i) leave to appeal granted; (ii) the order of the Local Court of 3 October 2008, that there be a further hearing for the assessment of damages, is set aside; (iii) the matter is remitted to the Local Court for determination in accordance with these reasons; (iv) the Local Court is to provide the parties with an opportunity to be heard as to the future progress of the matter, and in particular the manner in which damages ought to be assessed. CATCHWORDS : PROCEDURE – inferior courts – New South Wales – claims in nuisance and negligence – hearing on all issues – liability and damages – evidentiary material rejected – defendant liable to plaintiff in nuisance and negligence – decision by magistrate to permit further hearing on damages – appeal by leave – denial of procedural fairness – whether discretion under UCPR r 28.2 available to magistrate - APPEAL – leave to appeal granted – order set aside – direction to further conduct Civil Procedure Act 2005 LEGISLATION CITED : Local Courts Act 1982 Uniform Civil Procedure Rules 2005 CATEGORY : Principal judgment Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc & Anor [1981] HCA 39; (1981) 148 CLR 170 Dalecoast Pty Ltd v Guardian International Pty Ltd [2001] WASC 199 CASES CITED : Dalecoast Pty Ltd v Guardian International Pty Ltd [2003] WASCA 142 Gabor Martin Nagy v Masters Dairy Ltd [1996] FCA 1096 Gabor Martin Nagy v Masters Dairy Ltd [1997] FCA 1410 Masters Dairy Ltd v Gabor Martin Nagy & Anor [1998] FCA 907 PARTIES : Michael David Voss (Plaintiff) Andrew Kendall Ipkendanz (Defendant) FILE NUMBER(S) : SC 15761 of 2008 COUNSEL : Dr J G Renwick (Plaintiff) R A Dick (Defendant) SOLICITORS : Laurence & Laurence (Plaintiff) A C Dunstan Lawyers (Defendant) LOWER COURT JURISDICTION : Local Court LOWER COURT FILE NUMBER(S) : 7665 of 2006 LOWER COURT JUDICIAL OFFICER : Magistrate Bradd LOWER COURT DATE OF DECISION : 3 October 2008 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION SIMPSON J 19 June 2009 15761/2008 Michael David Voss v Andrew Kendall Ipkendanz JUDGMENT 1 HER HONOUR: By amended summons filed in Court on 10 June 2009, the plaintiff, Michael David Voss, seeks leave to appeal against the decision of a Local Court Magistrate delivered on 3 October 2008. Since Mr Voss was the defendant in the Local Court and the present defendant, Andrew Kendall Ipkendanz, was the plaintiff, it will avoid confusion if I refer to the parties by their names. 2 Mr Ipkendanz has filed a cross-summons, by which he seeks (contingently) leave to appeal against certain decisions and rulings of the Magistrate. Background 3 The Local Court proceedings were commenced by statement of claim filed on behalf of Mr Ipkendanz on 4 August 2006. The statement of claim pleaded that he and Mr Voss were the owners of adjoining properties on or near the corner of Cascade and Gurner Streets, Paddington. On the southern boundary of Mr Voss' property was a retaining wall. In about 2004 it was discovered that the wall was in a state of disrepair and was structurally inadequate. Mr Ipkendanz sought to have Mr Voss rectify the wall, and he himself took certain measures to mitigate against the risk of damage that might be caused by it. Eventually, on 4 January 2006, following intervention by the Woollahra Municipal Council, Mr Voss effected the necessary repairs. 4 By the statement of claim, Mr Ipkendanz alleged that, between July 2004 and the date of the repairs, the wall constituted a nuisance that interfered with his reasonable use and enjoyment of his property, and that, by failing to maintain and/or repair the wall prior to that date, Mr Voss was in breach of his duty of care to Mr Ipkendanz, as a consequence of which Mr Ipkendanz suffered loss and damage, including the cost of mitigating precautions. He accordingly claimed damages. He quantified the damages claimed at approximately $54,000. 5 The proceedings were heard in the Local Court over six non-consecutive days, beginning in November 2007, and ending on 1 August 2008, when final submissions were made. Judgment was delivered on 3 October 2008, in favour of Mr Ipkendanz. 6 During the course of the proceedings, certain documents were tendered on behalf of Mr Ipkendanz. The documents relevant for present purposes were invoices (in two categories) said to be relevant to the quantification of damages. Specifically, these were invoices, firstly from an architect, and secondly, for the erection of scaffolding (presumably for the repair measures taken in the first instance by Mr Ipkendanz). The Magistrate rejected each of these. He gave as his reasons that the former (the architect's invoice) did not come within the business records exception to the hearsay rule (Evidence Act 1995, Pt 3.2, especially s 69) and that the latter (the scaffolding invoices) were not, on their face, relevant to the disputed boundary. 7 The argument in this Court proceeded on the foundation that, in each case, the evidence was the evidence upon which Mr Ipkendanz sought to rely to establish the quantum of his damages. Its rejection meant that his case on damages was, to that extent, deficient, and he was disadvantaged. Mr Voss was correspondingly advantaged. 8 This is not to conclude that the evidence was wrongly rejected. I am not in any position to reach such a conclusion. Rejection of the evidence is the subject of the notice of cross-appeal but no separate argument was directed to it. 9 On 10 March 2008 counsel for Mr Ipkendanz raised again the issue of the proposed evidence that had been rejected, and, in effect, re-tendered the documents. They were again rejected. On 16 April, in a published judgment, the Magistrate gave as his reasons for rejection: "● I am satisfied that following my initial ruling [counsel for Mr Ipkendanz] sought to persuade me to admit the document the course of the hearing [sic] and his various applications were properly dealt with; ● I am satisfied that there has not been a lack of procedural fairness; and ● Having regard to Part 6, Division 1 of the Civil Procedure Act, I consider that the purpose of the Act is best satisfied by not doing so." 10 Extensive written and oral submissions were presented by each party, on both the questions of liability and damages. 11 The submissions (in the Local Court) on behalf of Mr Voss included a submission to the effect that Mr Ipkendanz had failed to call adequate evidence to quantify the loss and damage which he asserted. In response to that, in written submissions, counsel for Mr Ipkendanz yet again raised the issue of the rejected evidence. The submission (Outline of Plaintiff's Additional Final Submissions in Reply, 1 September 2008) included the following: "27. … Insofar as it is necessary for the Court to revisit the rulings excluding the invoices … it should do so … The only ground for rejection of these invoices was relevance. Without cavilling again with the ruling as at 15 November 2007, the relevance of the invoices is now manifest … 28. The Court can and should revisit these evidentiary rulings, admit the invoices into evidence and find that the damages comprising scaffolding costs incurred by the Plaintiff in the amount of $12,658.85 are established … 29. Essentially the same reasons militate in favour of the admission into evidence of the Chapman Hutchison invoice …" (bold in original) 12 On 3 October 2008 the Magistrate delivered judgment. He did not deal with the application, or request, for reconsideration of the evidentiary rulings. In short, he found Mr Voss liable to Mr Ipkendanz in both nuisance and negligence. There is no appeal against these determinations. The Magistrate then turned his attention to the question of damages. The judgment contained the following: "38 The invoice of Mr Dowse, Architects addressed to Mr Ipkendanz was not admitted as a business record because other documents showed that it was made in contemplation of litigation. The scaffolding invoices were not admitted into evidence because the documents did not indicate that they related to the boundary between the parties … 39 The time sheets of Hegarty and Elmgreen … have been admitted into evidence, however Counsel for Mr Voss has legitimate concerns as to whether some of the costs sought as damages are costs in the proceedings, and legitimate concerns about the lack of detail of some of the entries, which make it difficult to determine how those entries should be treated." 13 His Honour then said: "40 Having regard to my findings, I consider the best course would be for damages to be assessed in accordance with UCPR 30.1 . Accordingly, I invite the plaintiff to seek a hearing before me to address damages and costs. I propose that the plaintiff file and serve affidavits and the defendant file and serve affidavits in reply …" 14 It is the decision to permit a further hearing in respect to damages that is the focus of the present application. 15 Subsequently, the Magistrate issued directions for the filing of evidence. He did this notwithstanding that he had been advised that Mr Voss had filed an application for leave to appeal and had requested that further proceedings on the damages issue be deferred pending the outcome of the application. 16 Mr Ipkendanz's legal representatives declined to consent to the deferral of the further hearing, and the Magistrate, as I have indicated, gave directions. Accordingly, on behalf of Mr Voss, an application was made in this Court for a stay of further proceedings pending the outcome of the application. That matter came before Latham J on 12 December 2008. Having indicated that she proposed to grant a stay, her Honour said: "… I think I should just indicate that my view is that the Magistrate has fundamentally misunderstood the role of r 30.1. He's fundamentally misunderstood the requirement on any Court of trial to hear all of the issues unless there is some good reason for not doing so and unless the just, quick and cheap resolution of the matter is advanced by such an application, namely, to separate the trial of the issues at an appropriately early time so that when the parties come to the proceedings and put on their evidence they do so in the knowledge that they are not incurring the costs of responding to evidence on damages and that they are confining themselves to one issue or the other." 17 Her Honour made these informal remarks after having been advised that counsel for Mr Ipkendanz did not require detailed reasons for the decision she had foreshadowed. The jurisdiction of this Court 18 Jurisdiction is conferred on this Court by s 74 of the Local Courts Act 1982. Section 74(2) provides: "A party to proceedings under this Part who is dissatisfied with any of the following judgments or orders of a [Local] Court sitting in its General Division may appeal to the Supreme Court against the judgment or order, but only by leave of the Supreme Court: (a) an interlocutory judgment or order, (b) … (c) …" 19 It was common ground that the order contained in para 40 was an interlocutory judgment or order and that, pursuant s 74(2), Mr Voss may appeal to this Court only by leave. 20 By s 75(1) of the Local Courts Act, this Court may determine an appeal under s 74: "(a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the [Local] Court for determination in accordance with the Supreme Court's directions, or (d) by dismissing the appeal." The relevant statutory provisions 21 Apart from those provisions of the Local Courts Act concerning appeals, the relevant statutory provisions are contained in the Civil Procedure Act 2005 and the Uniform Civil Procedure Rules 2005 ("UCPR"). They are: (i) Civil Procedure Act : 56 Overriding purpose (1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. (2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule. (3) A party to civil proceedings is under a duty to assist the court to further the overriding purpose and, to that effect, to participate in the processes of the court and to comply with directions and orders of the court. (4) … (5) … 57 Objects of case management (1) For the purpose of furthering the overriding purpose referred to in section 56(1), proceedings in any court are to be managed having regard to the following objects: (a) the just determination of the proceedings, (b) the efficient disposal of the business of the court, (c) the efficient use of available judicial and administrative resources, (d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties. (2) This Act and any rules of court are to be so construed and applied, and the practice and procedure of the courts are to be so regulated, as best to ensure the attainment of the objects referred to in subsection (1). 60 Proportionality of costs In any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute. 61 Directions as to practice and procedure generally (1) The court may, by order, give such directions as it thinks fit (whether or not inconsistent with rules of court) for the speedy determination of the real issues between the parties to the proceedings. (2) … (3) … (4) … (ii) UCPR : 2.1 Directions and Orders The court may, at any time and from time to time, give such directions and make such orders for the conduct of any proceedings as appear convenient (whether or not inconsistent with these rules or any other rules of court) for the just, quick and cheap disposal of the proceedings. 28.2 Order for decision The court may make orders for the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings. 29.4 Trial to deal with all questions and issues Unless the court orders otherwise, proceedings are to be listed for trial generally, that is, for hearing of all questions and issues arising on every claim for relief in the proceedings. 30.1 Damages under judgment (1) This rule applies to proceedings in which judgment against a party has been given for damages to be assessed. (2) Subject to subrule (3), the proceedings are to proceed to trial for assessment of damages. (3) If the proceedings are carried on against the party on any claim for relief not determined by the judgment, or against any other party, the trial for assessment of damages is to be held together with any other trial in the proceedings. 36.1 General relief At any stage of proceedings, the court may give such judgment, or make such order, as the nature of the case requires, whether or not a claim for relief extending to that judgment or order is included in any originating process or notice of motion. 22 It was not in dispute that the trial had proceeded on the conventional basis, spelled out in UCPR 29.4, that all questions of liability and damages were before the Magistrate for determination. Counsel for Mr Ipkendanz expressly conceded that that was the case. 23 The submissions made on behalf of Mr Voss contained the following: "7. The errors of law are that: (a) on its proper construction, and in the events which have happened, the discretion under UCPR 30.1 was unavailable; (b) alternatively if the discretion was available, it has miscarried in the House v The King [[1936] HCA 40; (1936) 55 CLR 499] sense because the magistrate has failed to have regard to a mandatory relevant consideration, or failed to apply the proper test, in particular the 'overriding purpose' of facilitating 'the just, quick and cheap resolution of the real issues in the proceedings', and the need for the costs to the parties to be 'proportionate to the importance and complexity of the subject matter in dispute': Uniform Civil Procedure Act (sic) s 56, 60; UCPR 2.1." 24 It seems to me that the argument advanced on behalf of Mr Voss proceeded on two misconceptions. The first is that s 74(2) of the Local Courts Act 1982 permits leave to be granted only where some error of law is identified. That does not appear from the sub-section, although, plainly, identification of error of law would facilitate the grant of leave. 25 The second misconception appears to have been drawn from para 40 of the Magistrate's judgment. It was that UCPR 30.1 confers a discretion on the Magistrate to take the course that he did. 26 It is plain that UCPR 30.1 does not confer any discretion at all. By sub-r (1), the rule applies to proceedings in the particular circumstances there stated ie where judgment has been given for damages to be assessed. The subsequent sub-rules direct the procedure which follows. There is no element of discretion contained in this rule. All subsequent submissions were founded on the same proposition, an acceptance that UCPR 30.1 was the source of a discretion for the Magistrate to adopt the course that he did. 27 A discretion of the kind envisaged in the submission is contained in UCPR 28.2, set out above. That rule does confer a discretion on a court to order, at any time in the proceedings, the separate decision of any question. Like all discretionary judgments, the discretion must be exercised in accordance with the rules of procedural fairness. I am prepared to read the submissions made on behalf of Mr Voss with respect to UCPR 30.1 as though they were made with respect to the discretion conferred by UCPR 28.2. 28 It may well be that the Magistrate was under the same misapprehension. Indeed, that appears unarguably to be the case. 29 Had an application been made by either party (which it was not) under UCPR 28.2 for an order for the separate determination of the damages question, it would have been fiercely contested, certainly if it had been made at a late stage in the proceedings. Equally certainly, argument would have been advanced on behalf of Mr Voss that Mr Ipkendanz had had his opportunity to adduce evidence in relation to damages and that the proceedings ought not to be further prolonged or complicated by a separate hearing, and that, in the interests of finalising the litigation, evidentiary rulings, once made, ought not be re-agitated. These are all legitimate concerns in the exercise of a discretion such as that conferred by UCPR 28.1. 30 Counsel for Mr Voss also relied upon the opinion expressed by Latham J on the stay application, that the Magistrate had fundamentally misconceived the tenor, intent and effect of the various provisions of the Civil Procedure Act and UCPR. 31 I am satisfied that there was error in the approach taken. The Magistrate gave no indication to the parties that he was considering taking the course that he took and therefore gave no opportunity to Mr Voss' legal representative to advance any argument against it. That was, in my opinion, a denial of procedural fairness. In the absence of any indication to the contrary, Mr Voss and his legal representatives were entitled to proceed on the basis that, as is conventional, the hearing was to dispose of both liability and damages, and that, at the closure of the case, the evidence on both issues was complete. That means that leave to appeal ought to be granted. 32 In the amended summons, the only orders sought are: "1. Leave to appeal from the decision below. 2. Appeal allowed with costs." 33 So to order would leave the proceedings in a state of suspension. In written submissions, counsel for Mr Voss submitted: "The Court should set aside the Magistrate's order that there be a separate and further damages hearing, and should direct the Magistrate to give judgment upon all questions of damages without further evidence, submissions or hearing." 34 That would involve an order and direction under s 75(1)(c) of the Local Courts Act. 35 Counsel identified four separate reasons why such an order should be made. These were (I paraphrase): (i) that to order a further hearing runs contrary to the injunction contained in s 56 of the Civil Procedure Act , and disregards the further direction of s 60. (Counsel argued that there was no evidence that the Magistrate had considered or applied either of these provisions); (ii) the Magistrate failed to have regard to UCPR 29.4, the general position that all issues are to be determined in and following one hearing; (iii) Mr Ipkendanz has had two opportunities to attempt to have received in evidence the invoices the subject of the adverse rulings on evidence; to make an order which would permit him to have a further opportunity would be so unreasonable that no reasonable court could so decide; and (iv) since all parties proceeded on the basis that all issues were up for determination, each party made forensic choices and decisions which are now irretrievable. One such decision was made by Mr Voss who settled a cross-claim brought by another party, not presently involved. 36 During the course of argument on behalf of Mr Voss heavy emphasis was placed upon the trilogy of objectives stated in s 56 – the just, quick and cheap resolution of the real issues. In fact, considerably more emphasis was placed upon the second and third at the expense of the first. However, in my view, it should not be overlooked that justice is the first of the trilogy. Speed and economy may be achieved at the expense of justice. Where that is the case, the overriding purpose of the Act would not be achieved. It is of some interest that, in stating the objects of case management in s 57, the legislature puts "just determination" first, and efficiency and economy last. That is hardly surprising. The business of the courts is justice according to law. 37 On behalf of Mr Ipkendanz it was contended that the decision is interlocutory (something which is accepted), discretionary, relates to a matter of practice and procedure, and is free from error. 38 Emphasis was placed upon the nature of the decision as one relating to practice and procedure because, where a discretionary decision is properly so characterised, "added restraint" is to be shown by an appellate court asked to review it: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc & Anor [1981] HCA 39; (1981) 148 CLR 170. No argument was put on behalf of Mr Voss that the decision was other than one relating to practice and procedure, nor that the principles stated in Adam P Brown do not apply. 39 Reliance was placed upon UCPR 36.1, permitting the court, at any stage of proceedings, to give such judgment or make such order as the nature of the case requires. Reliance was also placed upon certain previous decisions in which an apparently similar course was followed. These were Dalecoast Pty Ltd v Guardian International Pty Ltd [2001] WASC 199 (per McKechnie J); Dalecoast Pty Ltd v Guardian International Pty Ltd [2003] WASCA 142; Gabor Martin Nagy v Masters Dairy Ltd [1996] FCA 1096 (per Nicholson J); Gabor Martin Nagy v Masters Dairy Ltd [1997] FCA 1410; and Masters Dairy Ltd v Gabor Martin Nagy & Anor [1998] FCA 907. 40 Dalecoast involved claims against each of four defendants in contract, of misleading and deceptive conduct under the Trade Practices Act 1974 and the Fair Trading Act 1987 (WA), for breach of statutory duty, and against individuals as having been knowingly concerned in the statutory breaches. McKechnie J dismissed the claims against all defendants except the first. At [182] he held that Dalecoast was entitled to an order for damages for breach of contract, to be assessed. 41 The circumstances in which he reached this view are set out at [156]-[157] and [161]. He referred to evidence that had been put forward on behalf of Dalecoast for the purpose of quantification of damages, but said that there were significant problems with the evidence, and he was unable to accept it. He said that Dalecoast had failed to prove loss under a particular head of damage claimed. 42 That order was the subject of a ground of appeal by the defendant. It contended that the trial judge should have held that there had been a failure to prove that any damages were incurred as a result of the breach of contract and should have awarded only nominal damages. Murray J, with whom Wallwork J agreed, said: "115 In my opinion, this complaint cannot be made out, particularly having regard to the order made by the trial Judge that Dalecoast should have judgment in respect of the breach of contract for damages to be assessed, an order which it is conceded by the respondents was within power … I can see no reason to disturb the order for the assessment of damages for breach of contract …" 43 Counsel for Mr Ipkendanz also relied on the decision of Nicholson J in Gabor Martin Nagy v Masters Dairy Ltd [1996] FCA 1096 (13 December 1996). However, all that appears from that judgment is that Nicholson J perceived some gap in the evidence before him, and required a further expert's report to be prepared. 44 The judgment, while, perhaps, a precedent for the course taken by the Magistrate, does not assist in the present determination. That is because it is not clear whether the order was made without, or after, argument, or consent of the other party, and there is no explanation other than that to which I have referred. Resolution 45 Given the quantum of damages claimed, it would appear that the costs, involving a six day hearing, and a stay application in this Court, are already out of proportion to the amount in dispute. It is troublesome that the costs of resolution have escalated, and I do not overlook the importance of s 60 of the Civil Procedure Act, requiring an eye to proportionality. However, that does not mean that this Court, or the Local Court, ought to lend its support to injustice. 46 I am also conscious that Mr Voss was denied procedural fairness by the Magistrate's proceeding, in the absence of any indication of his intention to do so, to make the order that he did. That will inevitably involve Mr Voss in the added costs of dealing with whatever additional evidence Mr Ipkendanz proposes to tender, and of a further hearing. 47 But it is also true that Mr Ipkendanz was denied procedural fairness, in that the Magistrate failed to deal with a clearly made application to reconsider the tender (at a time when its relevance or admissibility could more clearly be perceived) of his damages evidence. 48 Nor is the firmly expressed view of Latham J conclusive. It may well be that the Magistrate misconceived the effect of the statutory provisions, but that does not of itself mean that his ultimate decision was wrong. 49 I have reached that conclusion that justice, in this appeal, is best served by an order under s 75(1)(c) of the Local Courts Act, setting aside the order made by the Magistrate, remitting the matter to the Local Court with a direction that the Magistrate give the parties an opportunity to be heard on the future progress of the matter, and in particular on whether he ought to proceed as he has indicated he intends to do. It may be that the cheapest and quickest resolution would be (if rules of evidence permit it, and it is appropriate to do so) to admit the disputed evidence. That is entirely a matter for the Magistrate and one on which I cannot comment. 50 The orders I make are: (i) leave to appeal granted; (ii) the order of the Local Court of 3 October 2008, that there be a further hearing for the assessment of damages, is set aside; (iii) the matter is remitted to the Local Court for determination in accordance with these reasons; (iv) the Local Court is to provide the parties with an opportunity to be heard as to the future progress of the matter, and in particular the manner in which damages ought to be assessed. ********** 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.