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Supreme Court 24 February 2011

McDonald v Price

[2011] NSWSC 70

Assault & violence
PROCEDURE COSTS APPEAL AS TO COSTS MAGISTRATE ASSESSES COSTS SUMMARILY LEAVE TO APPEAL REQUIRED STATUS OF PRACTICE NOTE

Citation: McDonald v Price [2011] NSWSC 70
Court: Supreme Court of New South Wales
Date: 24 February 2011
Judge: Davies J

Background

The plaintiff brought a damages claim in the General Division of the Local Court against the defendant for assault. The Magistrate awarded the plaintiff $6,341.32 in damages plus disbursements. The parties could not agree on costs.

The defendant sought to have the plaintiff's costs capped at $745.36, calculated by reference to the Scale of Fixed Solicitor's Costs for default judgments in the Small Claims Division. The plaintiff had submitted a costs account of $26,540, a sum the Magistrate described as "clearly grossly disproportionate" to the judgment obtained.

The Magistrate declined to refer the costs for formal assessment and instead assessed them summarily, awarding $1,500 in professional costs plus the doctor's clinical notes fee and filing fees. The plaintiff then sought leave to appeal to the Supreme Court on the basis that the Magistrate was required by a Local Court Practice Note to refer the costs for assessment.

  • Whether leave to appeal from a costs order should be granted, and what threshold must be met for such leave
  • Whether Practice Note 1 of 2000 (reissued 2009) obliged the Magistrate to refer costs for assessment when one party objected to the court determining them
  • Whether the Magistrate erred by having regard to the Small Claims Division costs scale as a starting point for her assessment

Decision

Davies J refused leave to appeal. His Honour applied the principle from Kelly v Norris that, where the amount involved in a proposed appeal is small, it is not sufficient merely to show that the orders under appeal are arguably wrong. More must be demonstrated, including a matter of public importance or that a substantial injustice would result. The plaintiff failed to clear that bar.

On the Practice Note argument, Davies J held that Practice Note 1 of 2000 is subservient to the Civil Procedure Act 2005 and the rules of court. Section 98 of the Act confers a broad discretion on the court to determine costs, and that discretion cannot be cut down by a Practice Note. The Practice Note itself expressly states that costs "always remain at the discretion of the Court." Had the Magistrate treated paragraph 5 of the Practice Note as imposing a mandatory obligation to refer costs for assessment, that would itself have been an error, because it would have wrongly treated the Practice Note as curtailing her discretion.

On the use of the Small Claims Division scale, Davies J found no error of the House v The King kind. The Magistrate used the scale only as a starting point and awarded a final figure that exceeded it, reflecting the fact that the proceeding was a defended one. The court observed that the ultimate award represented approximately 25% of the verdict, and that this was entirely within the Magistrate's discretion to determine. No statutory warrant was required for the Magistrate to treat the scale as a reference point; section 60 of the Civil Procedure Act (the proportionality provision) may in any event have supplied one.

Orders Made

  • Leave to appeal refused
  • The summons dismissed
  • The plaintiff to pay the defendant's costs

Key Takeaways

  • A Practice Note issued by the Local Court does not, and cannot, override the statutory costs discretion conferred by section 98 of the Civil Procedure Act 2005. A Magistrate who treated a Practice Note as mandatory in circumstances where it would cut down that discretion would fall into error.
  • Practice Note 1 of 2000's provision that costs will be referred for assessment if a party objects is not a mandatory rule. The Note itself makes clear that the court retains a full discretion over costs at all times.
  • Leave to appeal a costs order requires more than demonstrating that the order is arguably wrong, particularly where the amount in dispute is small. The applicant must establish a matter of public importance or that a substantial injustice has resulted.
  • No error was established in the Magistrate using the Small Claims Division costs scale as a starting point, provided the scale was not applied mechanically and the final award reflected the circumstances of the case.
  • The proportionality principle in section 60 of the Civil Procedure Act 2005 provides a legitimate basis for a Magistrate to weigh costs claimed against the amount of the judgment when exercising the costs discretion.

Legislation and Cases Referenced

Legislation
- Civil Procedure Act 2005 (NSW), ss 60, 98
- Local Court Act 2007 (NSW), s 40(2)(c)
- Legal Profession Regulation 2005 (NSW)

Cases
- Kelly v Norris & 1 Ors [2004] NSWCA 260
- Ashi Pty Limited trading as LJ Hooker Commercial Liverpool v Karasco Investments Pty Ltd [2009] NSWSC 780
- Carey v Robson & Anor; Nicholls v Robson & Anor (No 2) [2009] NSWSC 1199
- Halpin & Ors v Lumley General Insurance Ltd [2009] NSWCA 372
- Smoker v Pharmacy Restructuring Authority (1994) 125 ALR 577
- House v The King (1936) 55 CLR 499 (referenced as the test for appellate intervention in discretionary decisions)