Supreme Court New South Wales Medium Neutral Citation: Robert Nagle v Ultra Developments Pty Limited [2015] NSWSC 1791 Hearing dates: 24 April 2015 Date of orders: 27 November 2015 Decision date: 27 November 2015 Jurisdiction: Common Law Before: Hidden J Decision: Summons dismissed. The parties are to pay their own costs. Catchwords: COSTS – application for leave to appeal against interlocutory orders in the Local Court – subsequent development renders proceedings futile – summons dismissed – issue of costs of the proceedings Legislation Cited: Civil Procedure Act 2005 Cases Cited: Australian Securities Commission v Aust-Home Investments Ltd & Ors (1993) 44 FCR 194 Re Minister for Immigration and Ethnic Affairs: Ex Parte Lai Qin (1997) 186 CLR 622 Texts Cited: Ritchie's Civil Procedure (NSW) Category: Costs Parties: Robert Nagle (1st plaintiff) Kelly Nagle (2nd plaintiff) Ultra Developments Pty Limited (defendant) Representation: Counsel: J Williams (1st & 2nd plaintiffs) S Lipp (defendant) Solicitors: Garden & Montgomerie (1st & 2nd plaintiffs) Blackwell Short Lawyers (defendant) File Number(s): 2014/362754 Publication restriction: No Judgment 1. HIS HONOUR: The origin of the proceedings in this Court is litigation between the plaintiffs, Robert and Kelly Nagle, and the defendant, Ultra Developments Pty Ltd in the Consumer Trading and Tenancy Tribunal (CTTT) in 2012. For present purposes the nature of the proceedings need not be examined. It is sufficient to note that the defendant brought proceedings against the plaintiffs claiming payment for work done (Ultra proceedings), while the plaintiffs resisted payment through a claim of misleading and deceptive conduct on the part of the defendant (M & D Claim). The plaintiffs' claim was dismissed. The defendant succeeded in its claim and was awarded a little over $59,000. The plaintiff was ordered to pay the costs of the proceedings. 2. The plaintiffs appealed to the District Court in respect of the Ultra proceedings only. The plaintiffs paid the judgment amount, but it was held in a controlled moneys account pending the outcome. The appeal was largely successful, and in March 2014 Hoy DCJ remitted the Ultra proceedings to the CTTT for re-hearing. The defendant was ordered to pay two thirds of the appeal costs. 3. The remitted hearing became the responsibility of the Civil and Administrative Tribunal (NCAT), the successor of the CTTT. In the meantime the defendant's'costs of the plaintiffs' unsuccessful M & D Claim had been assessed at a little under $21,000, and a certificate of determination to that effect was filed in the Local Court at Orange on 30 July 2014. Upon filing, that certificate became a judgment of the Local Court, and the defendant issued a writ of execution to enforce it. 4. On 5 November 2014 the Ultra proceedings were re-heard in the NCAT and the Tribunal reserved its decision. The plaintiffs sought a stay of execution of the writ pending that decision, which ultimately was refused by Magistrate Lucas on 5 December 2014. For the purpose of the stay application the plaintiffs had served on the defendant a notice to produce financial records, but on the same day his Honour granted a motion by the defendant to set the notice aside. 5. It is those two decisions of the magistrate which the plaintiffs sought to challenge by the proceedings in this court. By a summons filed on 10 December 2014, they sought leave to appeal against each decision, primarily upon the basis that his Honour had failed to give any, or any adequate, reasons for it. However, on 4 March 2015 the NCAT decision was handed down in favour of the defendant. In round figures the judgment was for $75,000. The money held in the controlled moneys account was paid to the defendant with an additional amount by way of interest, totalling roughly $62,000. At the time this matter came before me the balance, about $12,000, remained outstanding. 6. In the light of this development, the orders sought by the plaintiffs in this court became nugatory except as to costs. It is that issue which I must determine. It relates to the proceedings in this court, including a successful application before Hamill J to stay execution of the writ pending the outcome in this court, the costs of which were reserved. It is common ground that the summons should now be dismissed, but the question of costs involves some examination of the merits of the matter. 7. In the Local Court the plaintiffs had been represented by their solicitor, Mr Tancred, and the defendant by its solicitor, Mr Carpenter. Mr Tancred's position was that the writ of execution should be stayed pending the NCAT decision, so as to preserve the status quo in the interim. He noted that, when accrued interest and enforcement costs were added to the costs assessment, the total amount was in the order of $25,000. He relied upon evidence on affidavit of a solicitor employed in his firm that the District Court costs awarded to the plaintiffs would be about $49,500, based on an estimate of solicitor's fees and an invoice for counsel's fees which had been provided. He argued that, subject to formal assessment of those costs, the plaintiffs may be entitled to a set-off in their favour against the defendant's entitlement. 8. Mr Tancred explained that the notice to produce had been served to assess the defendant's financial position and to determine whether it was able to meet any significant financial liability to the plaintiffs. The defendant had not supplied a statement of assets and liabilities in response to a letter requesting it to do so. In the absence of information as to the defendant's financial position, Mr Tancred said, the plaintiffs were unwilling to incur the expense of a formal assessment of the District Court costs. 9. Mr Tancred noted that the defendant enjoyed the benefit of the amount held in the controlled moneys account, should the NCAT proceedings be resolved in its favour. In addition, the plaintiffs had disclosed their financial position, demonstrating a capacity to meet any liability they might face, and Mr Nagle had given his personal undertaking to the court to meet any such liability. 10. After Mr Tancred had completed his submissions the magistrate took the luncheon adjournment. Upon resumption, he called upon Mr Carpenter in relation to the notice to produce. That notice had been served pursuant to the general provision to be found in UCPR r 34.1. Mr Carpenter referred, wrongly, to r 21.10, relating to a notice to produce documents or things referred to in pleadings or written evidence, and other specific documents or things identified as relevant to a fact in issue in proceedings. He argued that the documents sought by the plaintiffs did not fall within that rule. His Honour disposed of the matter at that stage saying: "Dealing with the matter now before the Court, the application … in respect to the document …, having heard the arguments I have considered the matters over the luncheon adjournment, quite simply I agree with Mr Carpenter and make a ruling that way." 1. Mr Carpenter then developed his arguments in response to the stay application, and Mr Tancred addressed in reply on that issue. Put shortly, Mr Carpenter's position was that the costs assessment sought to be enforced, relating to the plaintiffs' M & D claim, was not challenged on appeal. Accordingly, the proceedings in respect of that claim had been finally determined and the defendant had a judgment in the Local Court for the assessed costs which it is entitled to enforce. He noted that the plaintiffs had not had the District Court costs assessed, so that the amount of them had not been finally determined. That being so, there were not "mutual debts" between the parties such as to confer a right of set off within the meaning of s 21 of the Civil Procedure Act 2005, because the plaintiffs' estimate of the District Court costs was unsubstantiated. 2. The application for the stay invoked the court's power under s 135 of the Civil Procedure Act. Mr Carpenter referred to the notes on that section at p2830 of Ritchie's Civil Procedure (NSW) to the effect that the power to stay is exercisable whenever the requirements of justice demand it, and that it is not confined to closed categories of circumstances. It is also states that, apart from cases involving the grant of a stay pending an appeal, there are a number of other circumstances where a stay may be appropriate. Examples of those circumstances are set out, including where a defendant has a right of set-off against a plaintiff's judgment, and where the judgment debt does not finally determine the parties' entitlements and the judgment debtor is insolvent. 3. Mr Carpenter repeated his submission that the plaintiffs here had no right of set-off, and noted that there was no evidence that the defendant was insolvent. He referred to authority for the proposition that a litigant is normally entitled to the fruits of a favourable judgment and that, in determining whether there should be a stay of enforcement of a judgment, regard must be had to the competing rights of the parties. He argued that there were here no competing rights, and that there were "some separate proceedings" which would take their course. The defendant sought the enforcement of a costs order in proceedings brought to finality, whereas the cost order relied upon by the plaintiffs was 'untested, unassessed, unenforceable." 4. After hearing Mr Tancred in reply, his Honour also dealt with this issue briefly. He referred to Mr Carpenter's argument that "there is valid judgment before the court," and continued: "Mr and Mrs Nagle are seeking a stay of the exercise of that judgment of the court on the basis of an NCAT proceedings that may or will be dealt with in some time in the future. There is before this court at the moment as I have indicated a valid judgment. I do not see why there should be a stay in relation to the application by Mr and Mrs Nagle, as such that is the court's ruling." 1. It will be seen that the plaintiffs had an arguable case for relief in this court. His Honour's brief disposition of the issue of the notice to produce by his expressed acceptance of the argument of Mr Carpenter might be seen as adequate, but it was based upon a consideration of the wrong provision. However, there is a real issue as to the adequacy of his reasons for refusing the stay, as the broad discretionary considerations raised by Mr Tancred were not addressed. 2. The focus of counsel for the parties in this court was upon the merit of the plaintiffs' claim for relief. Each adopted the arguments put by their instructing solicitors in the Local Court, addressing the merit of the cases sought to be made out in that court. Their submissions as to the appeal in this court centred upon the adequacy of the Magistrate's reasons. Counsel for the defendant, Mr Lipp, accepted that they were brief but argued that they could be seen as sufficiently addressing the issues raised. 3. The preferred position of Ms Williams, counsel for the plaintiffs, was that they should be awarded the costs of the proceedings. Her alternative position was that the parties should pay their own costs. Mr Lipp submitted that, as the summons was to be dismissed, the defendant was entitled to its costs. 4. In Re Minister for Immigration and Ethnic Affairs: Ex Parte Lai Qin (1997) 186 CLR 622, an unsuccessful applicant for a visa had commenced proceedings for prerogative relief in the High Court but had been granted a visa before the matter was heard. On the issue of costs in those circumstances McHugh J expressed the proper approach in this way (at 625): "If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as the cost of the proceedings." 1. His Honour noted that this approach had been adopted on a large number of cases, set out in a footnote. One of those was Australian Securities Commission v Aust-Home Investments Ltd & Ors (1993) 44 FCR 194. Hill J, after an examination of authority at pp 200 – 201, concluded that it would rarely, if ever, be appropriate for a court determining costs in these circumstances "to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial… ." 2. The present case is one in which the further prosecution of the proceedings in this court has been rendered futile. Guided by this authority, I am satisfied that the parties should pay their own costs. It is not for me to determine how the proceedings might have been resolved if they had been continued to finality. I find nothing unreasonable in the conduct of the parties which might dictate another approach to the question of costs. It is apparent from my summary of the Local Court proceedings that the plaintiffs acted reasonably in seeking the stay and pursuing the notice to produce, just as it was reasonable for the defendant to contest the matter. As I have said, the plaintiffs had an arguable case in seeking the relief in this court, just as the defendant had a reasonable basis upon which to resist it. 3. Accordingly, the summons is dismissed. The parties are to pay their own costs. ********** Amendments 29 March 2016 - [3] defendants' replaced by defendant's [18] Ethinic Affairs replaced by Ethnic Affairs [18] High Court replaced by the High Court [18] (Quote by McHugh J) costs discretion replaced by cost discretion 29 March 2016 - Coversheet - Cases Cited: Ethinic Affairs replaced by Ethnic Affairs 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: 29 March 2016