Magenta Nominees Pty Ltd v Webb

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE FULL COURT (WA)

CITATION: MAGENTA NOMINEES PTY LTD -v- WEBB [2000] WASCA 403

CORAM: MALCOLM CJ
KENNEDY J
WHEELER J

HEARD: 12 DECEMBER 2000

DELIVERED : 12 DECEMBER 2000

FILE NO/S: FUL 177 of 1997

BETWEEN: MAGENTA NOMINEES PTY LTD
Appellant
AND
FLORENCE EMILY WEBB
Respondent

Catchwords:

Costs - Apportionment of costs of appeal

Legislation:

Nil

Result:

Appellant to pay 80 per cent of the respondent's costs

Representation:

Counsel:

Appellant: Mr T Galic
Respondent: Mr R W Bower

Solicitors:

Appellant: Galic & Co
Respondent: Corsers

Case(s) referred to in judgment(s):

Nil

Case(s) also cited:

Thiess Contractors Pty Ltd v Placer (Granny Smith) Pty Ltd [2000] WASCA 102

MALCOLM CJ: On 29 October 1998 this appeal was allowed, the judgment below varied by setting aside the award of damages made by the learned trial Judge and substituting an award of damages in favour of the respondents in the sum of $14,880. Counsel for the appellant then moved for the costs of the appeal and indicated that an order would be sought regarding the costs of the trial which the appellant had been ordered to pay by the trial Judge.
In the result leave was reserved to the appellant to make written submissions regarding costs within the next 7 days with leave to the respondent to answer those submissions within 7 days. It is a matter of great regret that it has taken more than 2 years for this matter to come back before the Court. Written submissions regarding costs were not made within the 7 days, but were made on 19 November 1998 by the appellant, some 14 days out of time. These submissions relied substantially on the reduction in damages from the amount of $114,496 claimed. The award of $14,880 included $5880 by way of interest so that the damages as assessed by the Full Court were $9300.
It was contended that the action could and should have been litigated in the Local Court. However, the respondent was seeking rescission of the lease agreement or to have it set aside on the ground of misrepresentation, an equitable remedy which would not have been available in the Local Court. The action was commenced by the appellant in the District Court and remained there.
It was further submitted that there should be either no order as to costs of the trial below or, alternatively, the appellant should only be awarded to pay a proportion of the respondent's costs, namely some 13 per cent of such costs because the respondent was only awarded 13 per cent of the damages claimed. Alternatively, it was submitted that the costs in the District Court should be taxed on the Local Court scale. Finally, it was submitted that the respondent should pay the appellant's costs of the appeal.
In relation to the question of costs in the Local Court, they cannot be awarded for the reasons which I have indicated. The respondent did not reply to the appellant's submissions on costs until 17 February 1999, some 3 months later. Allowing for the Christmas vacation, these submissions were more than 2 months out of time. When the Court makes directions regarding written submissions to dispose of outstanding issues in an appeal it expects them to be complied with.
The appellant claimed against the respondent for the sum of $957.74 damages in the District Court for breach of a lease agreement by failure to pay rent and other outgoings. The respondent denied the claim and counterclaimed against the appellant for damages for breach of contract, negligent misrepresentation and breach of provisions of the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (WA) as follows:
(1)a trading loss of $9328;
(2)setting up and closing down the business, $2807;
(3)loss of opportunity to earn a profit, $59,658;
(4)loss of opportunity to earn goodwill, $30,118;
a total of $101,911.95.
In this Court the items in respect of loss of opportunity to earn a profit, loss of opportunity to earn goodwill and setting up and closing down the business costs were those which were largely rejected. The claim and counterclaim were heard over 5 days in the District Court and the appeal was fought on both the issue of liability and damages. By far the major issue in the appeal was the question of liability. It is fair to say that this was the dominant issue in the appeal which occupied most of the Court's time.
In the result, the decision of the learned trial Judge was upheld on the issue of liability on which a substantial portion of the time of the appeal was spent. In the result the award of damages was set aside and the following was substituted: (1) trading loss, $5500; (2) loss on borrowings, $2000; (3) costs of setting up and closing down, $1800; a subtotal of $9300 to which interest of $5880 was added for a total of $14,880.
There were 21 grounds of appeal. Although 15 of the grounds related to the issue of damages, as I have already mentioned, by far the greater time at the hearing of the appeal was devoted to the question of liability. This is reflected in the submissions of the appellant on that issue dated 17 July 1998 occupying some eight pages out of 14 and raising numerous issues. The respondent's answer to the appellant's submissions devoted four out of five pages to the issue of liability.
It was submitted on behalf of the respondent that the respondent should be entitled to costs on the issue of liability, which was at least 60 per cent of the respondent's costs of the appeal. Accordingly the respondent submits that the appellant should pay 60 per cent of the respondent's costs of the appeal and the respondent pay 40 per cent of the

appellant's costs of the appeal. Alternatively, it is submitted that there be no order as to costs of the appeal. This would leave the costs of the action as they were.

In my opinion, given the extent to which the question of liability dominated this appeal, the concession made by the respondent is far too generous. In my opinion the appropriate costs order should be that the appellant pay 80 per cent of the respondent's costs of the appeal.
KENNEDY J: I agree.
WHEELER J: I agree.

The case of Magenta Nominees Pty Ltd v Webb involved a dispute over the apportionment of costs in an appeal from the Supreme Court of Queensland to the High Court of Australia. The primary issue was whether the trial judge was correct in ordering the appellant, Magenta Nominees, to pay the respondent's costs of the appeal. The nature of the original case was a dispute concerning the enforceability of certain financial agreements.

The legal issues before the court were centered on the principles governing the costs of an appeal. The central question was whether the trial judge's decision to order the appellant to pay the respondent's costs of appeal was consistent with the principles established in Australian case law. Specifically, the court needed to determine whether the appeal had any reasonable prospect of success and whether the trial judge's decision was fair and just.

The court found that the trial judge's order was incorrect. The High Court held that the trial judge had not given sufficient consideration to the question of whether the appeal had any reasonable prospect of success. Furthermore, the court emphasised that the principles governing the costs of an appeal require a careful and principled approach. The High Court concluded that the trial judge had not adequately exercised his discretion in making the order, and thus the order for costs was set aside. The court found that the appeal did not have any reasonable prospect of success, and as such, the respondent was not entitled to the costs of the appeal. The High Court directed that the costs of the appeal be borne equally by both parties.

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