PARTIES:	STUART, Russell

v

HIGH NORTH PTY LTD

TITLE OF COURT:	SUPREME COURT (NT)

JURISDICTION:	APPEALS from LOCAL COURT

FILE NOS:	No. 55 of 1993

DELIVERED:	Darwin 21 April 1994

HEARING DATES:	25/3/94 and 30/3/94

JUDGMENT OF:	Angel J

CATCHWORDS:

Costs - Appeals as to costs - Whether discretion as to the awarding of costs has miscarried - Decision to award no costs stands outside sound exercise of discretion - Successful party should ordinarily be awarded their costs where no offer to compromise has been filed -
Local Court Act, s31
Cummings v Lewis (1993) 113 ALR 285, considered
Sheehy v Mitchell Crane Hire (1991) 102 ACTR 1, considered Appeal and new trial - Appeal - General principles - In general
and right of appeal - Whether appeal to the Supreme Court lies as of right from a costs order made at the conclusion of a trial in the Local Court
Local Court Act, s19 Supreme Court Act, s51
Road	Chalets	Pty	Ltd	v	Thornton	Motors	(1986)	47	SASR	532, considered

REPRESENTATION:
Counsel:
Appellant:	J Stirk Respondent:	S Stewart

Solicitors:
Appellant:	McBride & Stirk Respondent:	Stewart & Co

Judgment category classification: B Court Computer Code:
Judgment ID Number: ang94010 Number of pages:	11

ang94010

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY OF AUSTRALIA

No. 54 of 1993

BETWEEN:

RUSSELL STUART
Appellant

AND:

HIGH NORTH PTY LTD
Respondent

CORAM:	ANGEL J

REASONS FOR JUDGMENT

(Delivered 21 April 1994)

The first question in this matter is whether what purports to be an appeal from the Local Court is properly constituted.	The matter arises in this way.	Russell Stuart, whom for convenience I shall call the appellant, sued High North Pty Ltd, whom for convenience I shall call the respondent, for $14,125.75.	That sum was the balance allegedly due pursuant to an agreement to compromise a dispute arising over monies due for work and labour done.	The claim was made in the Local Court at Alice Springs.		The respondent defended the claim and counterclaimed.	Paragraph 4 of the

filed defence, which sits somewhat uncomfortably with the counterclaim, was in the following terms:

"The defendant admits that it owes the plaintiff the sum of $1,900.00 being the amount outstanding to the plaintiff for work done at an agreed price, less monies owing by the plaintiff to the defendant."

By its counterclaim the respondent alleged that the appellant "was contracted by the (respondent) to perform work which involved using a Mac truck owned by the (respondent)." It further alleged, inter alia, that the appellant negligently drove the truck causing damage to the truck and that as a result of what constituted the breach of an implied term to take reasonable care for the truck, the respondent sustained loss and damage.	The respondent counterclaimed for $15,000, allegedly the cost of repairing the engine of the truck, and for $21,000 "being the value of business lost to the (respondent) as a result of the truck remaining inoperative while undergoing repairs."

The trial of the action before his Worship Mr Hook SM took place on 9, 10 and 11 November 1993.	At the conclusion of which his Worship, in an ex tempore judgment, gave judgment for the appellant in the sum of $4,232.00 on the claim, dismissed the counterclaim and ordered each party to pay their own costs.	The appellant now seeks to appeal to this Court against the order for costs only.	The appellant says that there is a right of appeal by virtue of s19 of the Local Court Act which materially provides:

2

"19. APPEAL TO SUPREME COURT

A party to a proceeding may -

within 28 days; or

with the leave of the Supreme Court, after the expiration of 28 days,

after the day on which the order complained of was made, appeal to the Supreme Court, on a question of law, from a final order of the Court in that proceeding.

...

(3)	A party to a proceeding (other than a small claim proceeding) may, within 14 days after the day on which the order complained of was made, appeal to the Supreme Court from an order of the Court, (other than a final order) in that proceeding, with the leave of the Supreme Court.

...

An appeal under this section shall be brought in accordance with the Rules of the Supreme Court.

After hearing and determining the appeal, the Supreme Court may make such order as it thinks fit, including an order remitting the case for re-hearing to the Court with or without directions on the law.

An order made by the Supreme Court on the appeal, other than an order remitting the case for re-hearing to the Court, may be enforced as an order of the Supreme Court.

..."

The appellant says the order as to costs is a final order and may be the subject of an appeal as of right just like any other final order.	The respondent denies there is any right of appeal against an order for costs only of the Local Court.

I am unaware of this question having arisen before.

Counsel cited some cases from bankruptcy law concerning the meaning of a final order.	Of course, there are many cases involving the meaning of final order or final judgment, for example on the question of whether there was a necessity to seek leave to appeal to the Privy Council under the 1909 Orders in Council.	The respondent submitted that the question of costs in the Local Court is a question of practice and procedure rather than substantive law and that s19 of the Local Court Act, in so far as it provided for a right of appeal, was concerned with questions of law arising from substantive judgments rather than issues as to costs.	The appellant pointed out that the Local Court Act provision relating to costs, viz s31 was not in that part of the Local Court Act dealing with practice and procedure, see s21 and following.	The position was contrasted with that in relation to appeals from single Judges of the Supreme Court to the respective Full Courts of Victoria and South Australia, and reference was made to the controversy in the cases as to whether, arising from the common provision in Victoria and South Australia (see s39 of the Supreme Court Act 1958 of Victoria, and s50(2) of the Supreme Court Act 1935 of South Australia), leave to appeal against an order for costs is necessary where a substantive appeal is unsuccessful, see and compare Road Chalet Pty Ltd v Thornton Motors Pty Ltd (1986)
47 SASR 532 at 538, 539 per Zelling ACJ and at 550, 551 per O'Loughlin J, Cox J concurring.	The Victorian decisions of

Wolfe v Alsop (1886) 12 VLR 887, Critchley v Australian Urban Investments Ltd [1979] VR 374 and Thorne v Doug Wade Consultants Pty Ltd [1985] VR 433, were all cases where a Full Court refused to entertain an appeal against costs which were in the trial Judge's discretion without leave of the trial Judge where an appeal on the merits failed.	Zelling ACJ in Road Chalets Pty Ltd v Thornton Motors Pty Ltd, supra, agreed with that view which was contrary to that of Lord Denning MR in Wheeler v Somerfield [1966] 2 QB 94 at 106, who said:
"If a person makes no complaint against the judgment below, except about the order for costs, then he must obtain the leave of the trial Judge before he can come to this Court.	But if he makes a complaint, not only about the costs, but also about other matters, then he can appeal both on those other matters and also on the costs; and the Court has full jurisdiction to deal with them.
Even if he fails on the other matters, this Court has jurisdiction to deal with the costs ... although (the appellant) has lost on the other matters, nevertheless his appeal as to costs stands.	It is within the jurisdiction of the Court to consider it."

However the position in the Northern Territory Supreme Court differs from that in Victoria and South Australia.
Section 51 of the Supreme Court Act (Northern Territory) provides:

"(1) Where the jurisdiction of the Court in a proceeding or a part of a proceeding was exercised otherwise than by the Full Court, the Master or a referee, a party to that proceeding may, subject to this Act appeal to the Court from a judgment given in that proceeding or part, as the case may be.

The Court, when exercising its appellate jurisdiction under subsection (1), may be known as the Court of Appeal of the Northern Territory of Australia."

Section 9 defines 'judgment' as including an order 'whether final or otherwise'.

Appeals lie, inter alia, from final costs orders of single Judges of the Supreme Court to the Court of Appeal.

However, I do not think the present question turns on these matters or on whether an order for costs forms part of the judgment of the court or not, cf Zabic v Nabalko (1983-84)
25 NTR 28.	Section 19 of the Local Court Act provides for appeals from final orders of the court and makes no mention of judgments.	"Order" is not defined by the Local Court Act.	I think it follows from s19 Local Court Act that an appeal to the Supreme Court lies as of right from a costs order made at the conclusion of a trial in the Local Court and that such an appeal lies irrespective of whether or not the judgment of the Local Court is also challenged.	I uphold the competency of the appeal.

What then as to the merits of the appeal?

The appellant only partially succeeded with his claim and wholly succeeded in having the counterclaim dismissed.	He was ordered to bear his own costs of the action, ie both as to claim and counterclaim.	The transcript of the proceedings relating to costs reads as follows (Mr Stirk represented the appellant and Mr Ribbands represented the respondent):

"MR STIRK:	Your Worship, I have made application for costs under order 36, rule 12.	That's - - -

HIS WORSHIP:	Will you?

MR STIRK:	Well, normally costs would just be the scale amount that is set out in the schedule, but - - -
HIS WORSHIP:	Unless I make a specific order, is it?  MR STIRK:	Unless you make a specific order.	But
I - - -

HIS WORSHIP:	That's what I intend to do, subject to argument from either side.

MR STIRK:	Yes.	Well, that's my submission.

HIS WORSHIP:		That is that each party will bear their own costs, which seems to me in all the circumstances reasonable.	I have the power to do that, do I not?

MR STIRK:	You certainly have the discretion, Your Worship, but we would - well, my argument simply is that the plaintiff has been successful in respect of its claim and the counterclaim has been dismissed.

HIS WORSHIP:	No he hasn't.	He hasn't been successful in that.	That's why I'm saying it's doubtful in my mind if it's even a judgment in his favour, because	- - -

MR STIRK:	Well, can I just - - - HIS WORSHIP:	If I can finish?
MR STIRK:	Yes, Your Worship.

HIS WORSHIP:	He made a claim for, let's say, $15,000 or thereabouts, all right?

MR STIRK:	Yes, Your Worship.

HIS WORSHIP:	In actual fact he had already been told, "We owe you $4000-odd on the original price agreed between us 2 years ago", all right?

MR STIRK:	Yes, Your Worship.

HIS WORSHIP:	Now, I agree the defendant then tried to take off something other than tax.

MR STIRK:	He did, Your Worship.

HIS WORSHIP:	That's the only reason why I say it's a judgment.

MR STIRK:	Yes, Your Worship, because - yes.	If I can take you to the defence, the admission is for a sum of
$1900, as Your Worship has pointed out.	Your Worship, we say we should get the costs simply for the reason that there is provision under the rules for offers of compromise to be filed.	In that case that is something Your Worship could take into account on the question of costs.	I can tell Your Worship that no such offer of compromise has ever been filed either for the sum of
$1900 or any greater sum.

In respect of the $1900 the defendant's case, and it's in the pleadings, is whilst that amount is admitted it says it doesn't have to pay it at all because of the counterclaim.	So for that reason we say it was necessary to continue these proceedings.	If such an offer had been made of $3500 with the counterclaim not being pursued, yes, we would say an exercise of your discretion - you shouldn't make an award for costs.	But in the absence of that, we say the normal rule is that costs ought to be awarded.	I accept what Your Worship says about friends falling out and the other matters and this case is effectively over fairly small amounts taking a long time
- - -

HIS WORSHIP:	All I said was that it's unfortunate that this is as a result of friends falling out.

MR STIRK:	Yes, Your Worship.

HIS WORSHIP:	I made no comment other than that.

MR STIRK:	I'm sorry, Your Worship.	But my submission is that the normal rule of costs ought to be made in the absence of offers of compromise being made and only the sum of $1900 being pleaded in the defence and that $1900, it being asserted, was not being payable on the basis of the counterclaim, we say we had to proceed with the - - -

MR RIBBANDS:	I must confess I admire Mr Stirk.	On the one hand he says it's necessary to continue these proceedings because of our counterclaim, and yet he made great reliance upon the fact that the counterclaim only arose because we were sued for an extortionate sum.
That's precisely my submission, sir, why costs ought not be awarded.	There has never been any denial.	The evidence - put the pleadings aside, the evidence has been that on the very day when he first made this claim it was admitted by Mr Ohlmus that a sum was owing, and when

these various deductions are made there is a sum of
$1900.

HIS WORSHIP:	Except that he then deducted $1100.

MR RIBBANDS:	I accept that, sir.	But the admission at the starting point was $4200.	That's the crucial point because had my friend - - -

HIS WORSHIP:	No, no.	The crucial point is not the
$4200, it's the $1900 at the - - -

MR RIBBANDS:	Yes, yes, yes.	But the relevance of the
$4200 is the admission that that is the sum owing.	It's never been denied.	Had my friend initiated proceedings for $4232, this case would have taken 30 minutes and there would be no defence filed more than likely because there is just no argument to it.	He is right - he was right the first - - -

HIS WORSHIP:	I take it what you're saying is that he says he should get costs and you are saying each should pay their own.

MR RIBBANDS:	Well, I was going to say no costs and that's the net result.	Thank you, sir.

HIS WORSHIP:	There will be judgment for the plaintiff in the sum of $4232.	The defendant is to pay income tax of $846.40; the plaintiff is to receive the residue, which is $3385.60.	I have listened with great interest to the argument put to me by counsel for the plaintiff. I don't accept it.	I believe in this case it is just that each side pay their own costs, and I so order.	"

Costs are, of course, in the discretion of the Court and it has a wide discretion.	Section 31 of the Local Court Act provides:

"(1) Subject to this or any other Act or the Rules, the costs of and incidental to proceedings in the Court are in the Court's discretion and it has full power to determine by whom, to whom and to what extent the costs are to be paid.

(2)	This section and section 32 apply to a purported proceeding in the Court which is beyond its jurisdiction as if the purported proceeding were within its jurisdiction."

The question is whether the discretion in this case has miscarried.		I think it has.	The learned Magistrate appears from his brief remarks to have considered the litigation to have been unfortunate ("a falling out between friends") and both sides to have been unreasonable in pursuing it to its conclusion. I think the learned Magistrate was entitled to so view the litigation, but not as being greatly relevant to the question of costs, cf Cummings v Lewis (1993) 113 ALR 285 at 325, 326.	The costs of the litigation obviously were out of  all proportion to the final success - to the extent it can be called that - of the appellant.	Particularly was this so when compared to the extent of the appellant's initial claims.	In the circumstances however, I think the learned Magistrate ought to have awarded the appellant some costs.	No offer to consent to judgment had been filed by the respondent.	The respondent had paid nothing in to court.	The respondent had lost, what in the context of the whole case was a substantial counterclaim.	He was required by the judgment on the claim to pay the appellant more than $4000.	The learned Magistrate obviously gave thought to the order he should make, ie he addressed his discretion and he subsequently exercised it, as it was, adversely to making any order in favour of the appellant.		The learned Magistrate had regard to the admission in paragraph 4 of the defence, but I think, in the circumstances, too much regard.	It was not 'the crucial point'.	Of greater relevance was the fact no offer to compromise had been filed.	Bearing in mind that, absent

special reasons, a successful party is ordinarily to be awarded his costs - see Cummings v Lewis, supra, at 327, and the cases cited in Sheehy v Mitchell Crane Hire (1991) 102 ACTR 1 at 10, I think the learned Magistrate was in error and that his decision to award no costs stands outside the limits of a sound exercise of his discretion as to costs.

The appeal should be allowed with costs.

It remains to substitute an appropriate order for costs of the trial.	In the circumstances there is no justification for dealing separately with the costs of the claim and the costs of the counterclaim.	There should only be one set of costs and on the scale appropriate to the counterclaim; there was no set-off, cf Sheehy v Mitchell Crane Hire, supra, at 10.

The orders of the court are as follows:

Appeal allowed.

Order for costs in court below set aside.

Order that the respondent pay the appellant's costs of action on the Local Court scale appropriate to the counterclaim.
Respondent to pay appellant's costs of the appeal.