John Conrad Hansen trading as Derrawee Pastoral Company v Monterey (Coolah) Pty Limited [2012] NSWSC 1383 (19 November 2012)

Last Updated: 22 November 2012

Supreme Court

New South Wales

Case Title:	John Conrad Hansen trading as Derrawee Pastoral Company v Monterey (Coolah) Pty Limited

Medium Neutral Citation:	[2012] NSWSC 1383

Hearing Date(s):	3 August 2012

Decision Date:	19 November 2012

Jurisdiction:	Common Law

Before:	Schmidt J

Decision:	1. Leave to appeal is granted. 2. The appeal is upheld. 3. The matter is remitted to the Local Court for rehearing.

Catchwords:	APPEAL - leave sought to appeal against Local Court decision - failure to give reasons - conduct of a rehearing under the Civil Procedure Act 2005 and the Uniform Civil Procedure Rules 2005 - section 44 of Civil Procedure Act - Rule 20.12 of the Uniform Civil Procedure Rules - relevant material not received in evidence - costs and orders

Legislation Cited:	Civil Procedure Act 2005 Evidence Act 1995 Local Court Act 2007 Uniform Civil Procedure Rules 2005

Cases Cited:	MacDougall v Curlevski (1996) 40 NSWLR 430 Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 Wainohu v New South Wales [2011] HCA 24; (2011) 243 CLR 181

Texts Cited:

Category:	Principal judgment

Parties:	John Conrad Hansen t/as Derrawee Pastoral Company (Plaintiff) Monterey (Coolah) Pty Limited (Defendant)

Representation

- Counsel:	Counsel: Mr M Bradford (Plaintiff) Mr PA Regattiori (Defendant)

- Solicitors:	Solicitors: Peacockes (Plaintiff) Booth Brown Samuels & Olney (Defendant)

File number(s):	2011/164333

Publication Restriction:	None

JUDGMENT

The plaintiff, Mr Hansen, seeks leave to appeal under s 40 of the Local Court Act 2007, from orders made by the Local Court. They require him to pay the costs Monterey (Coolah) Pty Limited, the defendant, incurred in an arbitration, as well as the costs of a limited rehearing as to those costs, dealt with by the Local Court under s 44 of the Civil Procedure Act 2005. Mr Hansen complains that while he succeeded on the principal issue lying between the parties in the arbitration and had also made offers of settlement prior to the arbitration, which Monterey had not bettered, he had been ordered to pay Monterey's costs of both the arbitration and the rehearing, rather than having an indemnity costs order made in his favour.

The proceedings concerned Monterey's claim for work it had done in harvesting crops on Mr Hansen's property. Monterey claimed a sum of $35,000. The matters which Mr Hansen's defence put in issue included the number of acres harvested and the rate charged for the work. There was no issue between the parties that the arbitrator had made an award in favour of Monterey for $29,597.28 and that there would be judgment in its favour for that amount, at the conclusion of the rehearing.

Mr Hansen's case was that the arbitration had proceeded on the basis of his concession that an amount was owing to Monterey and that he had succeeded in the arbitration, the issue as to the rate being determined in his favour. The issue as to the number of acres harvested took almost no time in the arbitration. The parties were each ordered to pay their own costs, even though he had made offers which Monterey had not bettered and so he applied for a rehearing as to costs. Instead of making an indemnity costs order in his favour, the Local Court ordered that he should pay Monterey's costs of both the arbitration and the rehearing.

Monterey's case was that in the Local Court the parties were in agreement that no regard could be paid to the arbitration material and that the rehearing had proceeded on that basis. Neither party tendered any evidence. His Honour said that he did not have sufficient material to make a determination, which had to be understood as meaning that there was not sufficient evidence to warrant a departure from the usual order, which was an order in its favour. In the circumstances, his Honour's order accorded with settled principle, no basis for departure from the usual rule that costs follow the event, having been established by Mr Hansen. There was submitted to be nothing particular, or unusual about the orders made and that accordingly, leave to appeal would be refused.

The issues on appeal

What was in issue on appeal concerned not only the question of what evidence could be relied on at such a rehearing, but also whether Mr Hansen had sought to tender the arbitrator's reasons, or other evidence. Whether the reasons given for the orders made in favour of Monterey were adequate, was also in dispute.

The cases advanced in the Local Court proceedings

There is a difficultly in fully understanding what happened at the hearing in the Local Court, although it is clear that it was accepted that Mr Hansen could not rely on the arbitrator's reasons. The transcript is not complete. In the result there was no common ground between the parties as to all that occurred. What the transcript clearly establishes, however, is that an entirely unsatisfactory process was pursued, which had the result that the proceedings miscarried.

On appeal Monterey submitted that its case before the Local Court had been that a costs order should be made in its favour, it having succeeded on the arbitration. The arbitrator had to determine two issues, the first, the number of acres harvested and the second, the rate. The first was resolved in its favour and the second in Mr Hansen's. Neither issue was clearly dominant or separable and accordingly, could not provide a basis for departure from the usual order. Even if it did, his Honour was not entitled to make a costs order which required an assessment of the evidence before the arbitrator, or the weighing of the significance of particular issues in the proceedings, or of a party's success on a particular issue. It was also submitted that a mere reading of the arbitrator's award could not give an understanding necessary to carry out such an exercise.

The transcript of the hearing on 21 April 2011 reveals that his Honour was informed that Monterey's case concerned a recovery of a debt in relation to its harvest of a crop on Mr Hansen's property; that the hearing before the arbitrator had taken a full day, with several witnesses called; that the arbitrator had made a costs order that each party bear its own costs; and that Monterey did not propose to go into liability or damages, because that part of the hearing was finished. It sought an order for costs under Part 42, on the usual basis, an award having been made in its favour of some $29,597.

His Honour indicated that he had looked at the arbitrator's award and that he could not understand why each party had been ordered to bear their own costs. It was submitted for Monterey that this was a difficulty, because 'you have to know about the matter and you can't'. All that his Honour was entitled to know, it was submitted, was the plaintiff's success. In the result it was submitted that 'unless the defendant can show a reason why that usual cost does not follow then you would make that cost order.'

For Mr Hansen it was submitted that in determining the costs order, his Honour first had to decide who had won in the arbitration, which in this case was he, not Monterey. To demonstrate that this was so, Mr Hansen sought to rely on the arbitrator's reasons. That was objected to.

It was submitted for Mr Hansen that the key to the issue lying between the parties was who had won the case. It was he, because the arbitrator had found in his favour on the key issue, with the result that the usual order was an order in his favour, costs following the event. It was also explained that Mr Hansen sought an indemnity order in his favour, but that the starting point for the making of the costs order, was the determination of who had succeeded on the arbitration.

Counsel for Monterey suggested that this issue be dealt with immediately, submitting that while his Honour had read the arbitrator's award, Mr Hansen was not entitled to rely on it, at the rehearing. That was not disputed for Mr Hansen. The submissions then advanced as to how the rehearing was to be conducted and what he was entitled to rely on, were not transcribed.

When the transcript resumes, it records what his Honour said as to his discomfort, in being asked to decide the question of costs on, 'only some of the material and my concern is that I feel that I am riding somewhat blind. I do not think that is a fair way for any judicial officer to make a determination'. He also expressed concerns as to the submissions that he had to consider the offers which the parties had exchanged, on the limited material before him.

The reasons for his Honour's concerns were obvious. They were responded to by a submission for Monterey, that the Rules dictated that the usual costs order could be displaced by evidence of offers substantially more favourable than the result which the successful party had achieved. Even though the terms of the offers were not in evidence, it was submitted that all of the offers made by Mr Hansen were less favourable and some suffered the difficulty that they were inclusive of costs. In the result, it was submitted that Monterey had received more than what was offered and that there was no basis for any departure from the usual order. Given the way the hearing had been conducted, there was no evidentiary basis for those submissions.

Without calling on Mr Hansen's counsel to respond to those submissions, his Honour than observed:

"Well as uncomfortable as I am, but I think I have given good and valid reasons for where I stand. It seems to me that in the invidious position that I am on that limited material that is before me, which is all that I am entitled to have in this instance, it seems to me that the defendant who is the mover of the matter before me, if I could use that term, will not be able to sustain this application for these reasons because what he relies upon is in effect paragraph 6 and at the end of the day the determination by the arbitrator in effect is more than what was offered."

Without giving any further explanation, his Honour then ordered:

"SO THERE IS A JUDGMENT FOR THE PLAINTIFF IN THE SUM OF $29,597.28 AND THERE WILL BE AN ORDER FOR COSTS IN FAVOUR OF THE PLAINTIFF AS AGREED OR AS ASSESSED."

The proceedings then took an unusual turn, with Mr Hansen's written submissions and chronology, which it was common ground had been the subject of earlier submissions, which were not transcribed, then being tendered.

The chronology dealt with various relevant events, including the dates of the various offers. In the written submission, it was explained that before the arbitrator Mr Hansen's case had been that the hourly rate was $465 per hour, not the $475 per hour which Monterey had claimed. That case had succeeded, with the result an order of $25,693.80. It was argued that this success warranted costs being ordered in his favour, at the least. It was also submitted that he had made offers which had not been bettered, which had the result that an indemnity costs order should be made in his favour under Rule 42.15. It was submitted that the correspondence was admissible under s 131(2)(h) of the Evidence Act 1995. An order as to the costs of the rehearing was also sought.

After short further submissions as to the costs of the rehearing, a costs order was made in favour of Monterey for the rehearing. His Honour concluded:

"HIS HONOUR: As far as the costs of the re-hearing are concerned, I think on the material that is before me in reality,

"COSTS SHOULD BE IN FAVOUR OF THE PLAINTIFF. THE DEFENDANT TO PAY THE COSTS IN THE SAME TERMS AS ABOVE, THAT IS, AS AGREED OR AS ASSESSED."

The order made was:

"Costs order made. Plt. as agreed or as assessed.

Costs of rehearing in favour of Plaintiff. Defendant to pay costs in same terms."

The appeal must be upheld

On appeal, contrary to the case advanced for Monterey, Mr Hansen has established not only that his Honour failed to give any reasons for his decision, but also that what transpired at the rehearing did not accord with the requirements of s 44 of the Civil Procedure Act.

In part, that reflects a concession which was wrongly made for Mr Hansen, as to the operation of the statutory scheme under which the rehearing was being conducted. Nevertheless, it may not be overlooked that in the result, both parties led his Honour into serious error.

These errors of law require that Mr Hansen must be given leave to appeal the Local Court's decision under s 40 of the Local Court Act and orders must be made in his favour, setting the decision aside.

The failure to give reasons

The obligation to give reasons has been repeatedly discussed in the authorities, Recently it was observed in Wainohu v New South Wales [2011] HCA 24; (2011) 243 CLR 181:

"[56] Gummow J in Grollo described the essential attributes of the judicial power of the Commonwealth in familiar terms by reference to the resolution of justiciable controversies by ascertainment of the facts, application of the law and the exercise where appropriate of judicial discretion, adding "which are delivered in public after a public hearing, and, where a judge is the tribunal of fact as well as law, are preceded by grounds for decision which are animated by reasoning."[(1995) [1995] HCA 26; 184 CLR 348 at 394.] Heydon J in AK v Western Australia [(2008) 232 CLR 438 ; [2008] HCA 8.] described the duty of judges to give reasons for their decisions after trials and in important interlocutory proceedings as "well-established". His Honour adopted as a summary of the objectives underlying that duty an extra-curial statement by Gleeson CJ [(2008) [2008] HCA 8; 232 CLR 438 at 470 [89], citing Gleeson, "Judicial Accountability", (1995) 2 The Judicial Review 117 at 122]:

"First, the existence of an obligation to give reasons promotes good decision making. As a general rule, people who know that their decisions are open to scrutiny, and who are obliged to explain them, are more likely to make reasonable decisions. Secondly, the general acceptability of judicial decisions is promoted by the obligation to explain them. Thirdly, it is consistent with the idea of democratic institutional responsibility to the public that those who are entrusted with the power to make decisions, affecting the lives and property of their fellow citizens, should be required to give, in public, an account of the reasoning by which they came to those decisions."

The duty does not apply to every interlocutory decision, however minor. Its content - that is, the content and detail of the reasons to be provided - will vary according to the nature of the jurisdiction which the court is exercising and the particular matter the subject of the decision.

[57] ...

[58] The provision of reasons for decision is also an expression of the open court principle, which is an essential incident of the judicial function. A court which does not give reasons for a final decision or for important interlocutory decisions withholds from public scrutiny that which is at the heart of the judicial function: the judicial ascertainment of facts, identification of the rules of law, the application of those rules to the facts and the exercise of any relevant judicial discretion."

It is well settled that a failure to give reasons may constitute an error of law (see Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247). There Kirby P referred at 257 to long settled authority as to the obligations imposed on magistrates:

"Jordan CJ, in Carlson v King (1947) 64 WN (NSW) 65 at 66, stated the principle:

...It has long been established that it is the duty of a Court at first

Instance, from which an appeal lies to a higher Court, to make, or cause to be made, a note of everything necessary to enable the case to be laid properly and sufficiently before the appellate Court if there should be an appeal. This includes not only the evidence, and the decision arrived at, but also the reasons for arriving at the decision. The duty is incumbent, not only upon magistrates, Ex parte Powter; Re Powter [1945] NSWStRp 35; (1945) 46 SR (NSW) 1 at 4-5; 63 WN 34 at 36 and District Courts, but also upon this Court, from which an appeal lies to the High Court and the Privy Council: Ex parte Reid; Re Lynch [1943] NSWStRp 14; (1943) 43 SR (NSW) 207 at 212; 60

WN148 at 150."

The circumstances here were no doubt difficult, given the parties' approach at the rehearing. That was all the more reason for his Honour to adhere to his obligation to give reasons for his decisions as to the matters over which the parties had joined issue and how they were resolved. No reasons at all were given. Observations directed to the parties during the course of their arguments, is no substitute for such reasons.

Even accepting that the rehearing proceeded in a busy magistrate's court, the obligation to give at the least, short reasons which explained the issues lying between the parties and how they were resolved, had to be met.

The conduct of a rehearing under the Civil Procedure Act 2005 and the Uniform Civil Procedure Rules 2005

Mr Hansen complained that given the way in which the proceedings were conducted, he had not been given a fair opportunity to demonstrate what the 'event' in question was, for the purpose of the exercise of the costs discretion

That was what the question arising to be determined at the rehearing hinged on. Section 98 of the Act gives the power to award costs. It is a discretionary power. Under Part 42.1 of the Rules, the usual order is that costs follow 'the event', although there too reference is made to the discretion to make some other order. It follows that how the Rule operates in a particular case, depends on what 'the event' in question is. This requires consideration to be given to the practical outcome of the proceedings, that is, by reference to who the successful party in the proceedings was, having in mind the matters over which the parties joined issue and who succeeded on them. That is not necessarily the party who has had an order made in their favour in the proceedings.

In this case, the rehearing commenced with Monterey seeking a costs order in its favour, without revealing that the issues determined in the arbitration were not concerned with whether an order should be made in its favour, but rather with how it should be calculated. It did not reveal, as it clearly ought to have done, that it had not succeeded on the critical question of the rate at which it was entitled to be paid for the work done. That was not only relevant to the question of costs, but also to the question of whom the onus fell on, to establish that there should be a departure from the usual order.

The arbitrator had given reasons for his decision in accordance with Rule 20.11, which requires that the arbitrator specify reasons 'so that, in his or her opinion, they make the parties aware of his or her view of the case made by each of them'. There the arbitrator identified the limited issues finally pursued in the arbitration, observing that the principal issue was the agreed separator rate. Mr Hansen had conceded that he owed Monterey for the work performed, at the rate of $465 per hour. The arbitrator found that was the rate, not the rate which Monterey claimed. The payment due was accordingly calculated by reference to an agreed number of hours worked, at that rate. The other issue, the number of acres worked, was resolved on the basis of a diary record which Monterey maintained, that being found more reliable than an earlier invoice provided by another contractor, on which Mr Hansen had earlier relied, but which was not put in evidence.

In that context, it is difficult to see that the approach adopted by Monterey at the rehearing adhered to the duty imposed on the parties by s 56(3) of the Act, 'to assist the court to further the overriding purpose' specified by s 56(1), namely 'the just, quick and cheap resolution of the real issues in the dispute or proceedings'. At the rehearing those issues concerned what had been determined in the arbitration and in whose favour they had been decided, those matters being critical to the resolution of the dispute over the costs order.

The parties approach was also inconsistent with the long settled authority as to what information needs to be put before a court, when costs of an arbitration must be determined in a rehearing. As discussed in MacDougall v Curlevski (1996) 40 NSWLR 430 at 435, in relation to predecessor legislation:

"It would seem to follow that no matter how wide the scope of the words "the action... shall be heard and determined ... as if it had never been referred to an arbitrator", the court determining the re-hearing must be able to be informed of such of the circumstances of the hearing before the arbitrator as are relevant to the determination of costs orders in respect of that hearing when the judge comes to the question of costs at the end of the re-hearing."

So, for example, in that case, where a witness not called at an arbitration was called at a rehearing, that was found to be a relevant matter to consider, when costs of the arbitration were determined. An indemnity costs order was there made against the ultimately successful defendant, who had not called the critical witness at the arbitration. Likewise, a defendant who did not disclose investigative films at an arbitration, also had a costs order made against them at the rehearing (see Quach v Mustafa (Court of Appeal unreported 15 June 1995).

Under this statutory scheme, by s 42 (3), the arbitrator's award was suspended from the time the application was made. By s 43(6), the order for a limited rehearing had to specify the aspects that were to be the subject of the rehearing. The rehearing in the Local Court on the question of costs was subject to the provisions of s 44 the Act and Rule 20.12. The cost of the rehearing itself is dealt with in Rule 42.12 and offers of compromise in Division 3 of the same part.

Sections 44 and Rule 20.12 relevantly provide:

"44 Rehearing

(cf Act No 43 1983, section 18B)

(1) .....

(2) If an order is made for a limited rehearing:

(a) the award is suspended from the time the order is made until the proceedings are determined, and

(b) the aspects ordered to be dealt with at the limited rehearing are to be heard and determined in the court concerned as if they had not been dealt with in the arbitration, and

(c) following the rehearing, the court may reinstate the award with such modifications (if any) as the court thinks appropriate, and

(d) the award, as reinstated, is final and conclusive, and is taken to be a judgment of the referring court.

(3) Subject to this Division, this Act and the uniform rules apply to proceedings on a rehearing in the same way as they apply to any other civil proceedings.

20.12 Rehearing

(cf SCR Part 72B, rule 5; DCR Part 51A, rule 11; LCR Part 38, rule 12)

(1) An application under section 42 of the Civil Procedure Act 2005 for the rehearing of referred proceedings is to be made by notice of motion.

(2) On the date fixed for the proceedings to be listed before the court, or any date to which the proceedings are adjourned, the court must make a determination as to whether the proceedings are to be a full rehearing or a limited rehearing.

(3) Before the record of any proceedings is brought before the court for a rehearing, the registrar must seal within the record, or separate from the record, both the application for rehearing and all information as to the nature and quantum of the arbitrator's award.

(4) Despite subrule (3), the court is not required to disqualify itself from rehearing the proceedings because it becomes aware in any manner of information as to the nature or quantum of the arbitrator's award.

(5) Unless the court otherwise orders, matter that has been sealed within the record is not to be opened, and matter that has been separated from the record is not to be returned to the record, until after the rehearing has been determined."

It was common ground that the requirements of Rule 20.12(3) had not been complied with in this case. His Honour had read the arbitrator's reasons, prior to the commencement of the rehearing. That no doubt helps explain the concerns he expressed as to the parties' approach to the matters which could properly be put before him.

In the ordinary course, determination of any costs order requires a consideration of the outcome of the issues over which the parties joined in the proceedings, as well as any offers which the parties had made. That was not only relevant in this case, it was critical. Section 44(2)(b) did not preclude consideration of those matters on the rehearing. The submission that in a rehearing under s 44, the parties are not entitled to lead evidence about such critical matters, in the event of a disagreement, may not be accepted. Such a conclusion would be absurd and clearly not one intended by this statutory scheme.

Given the parties approach, there was clearly a dispute between them as to what the issues in the arbitration were and how they were resolved. That dispute could only be resolved on the basis of evidence. By s 56 of the Evidence Act, Mr Hansen was entitled to lead relevant evidence, that is, 'evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding' (s 55).

The provision made in Rule 20.12 is designed to ensure that the arbitration material, including the reasons for the arbitrator's award, do not come to the attention of the trial judge, as a part of the court file. It does not preclude evidence relevant to the determination of costs being led by the parties on the rehearing, if that be necessary, as was finally conceded for Monterey on appeal.

The parties are entitled to lead evidence as to the factual matters on which the exercise of the costs discretion rests. They may include what issues had to be resolved in the arbitration and how they were decided, as well as whether any relevant offers of settlement had been made.

Subsection 44(3) of the Act provides that the Act and the Rules apply to the proceedings in the same way as they apply to other civil proceedings, subject to the provisions made in Division 3 Rehearing. Section 62 permits the trial judge to give directions as to the conduct of the proceedings, but the provision of s 62(4) must be observed. It provides:

"(4) A direction under this section must not detract from the principle that each party is entitled to a fair hearing, and must be given a reasonable opportunity:

(a) to lead evidence, and

(b) to make submissions, and

(d) at trial, other than a trial before the Local Court sitting in its Small Claims Division, to cross-examine witnesses."

These requirements were not observed, as they ought to have been.

Relevant material was not received in evidence

In a rehearing on the question of costs, the discretion must, of course, be exercised judicially, that is on the basis of the relevant evidence and submissions which the parties advance. The question of whether there should be any departure from the usual costs order may arise in a particular case where parties have made offers of settlement, or where there were multiple issues, with the party in whose favour orders are finally made, not succeeding on all issues.

It follows that on the rehearing Mr Hansen was entitled to lead evidence about the arbitrator's reasons for his decision, which identified the issues which had to be resolved in the arbitration and who succeeded on them, as well as the offers of compromise and Calderbank letters. Consistently with Rule 20.12, he was not, however, entitled to reveal or rely on the arbitrator's award on costs, or information revealing its nature and quantum. That requirement could have been accommodated by excision of that part of the arbitrator's reasons. Given that his Honour had already read them and that Rule 20.12(4) expressly accommodated such a possibility, that posed no practical problem for the hearing.

On appeal it was argued for Monterey that what was required, in those circumstances, was for an application to have been made by Mr Hansen under Rule 20.12(5), for the Court file to be unsealed and for him to tender the relevant part of the arbitrator's award. That was not attempted and so no complaint was available on appeal.

This submission, it seems to me is somewhat disingenuous, in circumstances where the Court file was never sealed and when Mr Hansen sought to rely on the arbitrator's reasons, which his Honour had already read, to establish his success in the arbitration, it was objected to as being contrary to the statutory scheme, for his Honour to have any regard to it at all. There was certainly no concession, as there clearly ought to have been, if this was the necessary procedure to be followed in the circumstances, that if followed, it would not be objected to.

As discussed in the authorities, in exercising the discretion regarding costs of the rehearing and the arbitration, his Honour had to consider the provisions of the applicable Rules, in the light of the evidence pertaining to matters relevant to the exercise of the costs discretion. In the event of dispute as to how the issues in the arbitration were resolved, the parties were entitled to lead evidence about that question, including by way of tender of relevant parts of the arbitrator's reasons.

Mr Hansen was also entitled to tender the offers on which he relied. Monterey's case on appeal was that while the existence of the offers was not in dispute at the rehearing, which were offers of compromise and which were Calderbank offers was in issue, as was their effect. That could only be resolved by their tender, a tender which was sought in the written submission, but they were seemingly not received, even though subsequently Monterey made submissions about their contents, submissions to which Mr Hansen was not invited to respond. Mr Hansen sought to have the offers included in the appeal book, but that was also opposed by Monterey and so the Registrar directed their removal from the appeal book.

In the result, given some of his observations, his Honour appears to have considered that at least one of the offers, made before the proceedings were commenced, was irrelevant. Why that was so, was not explained. What conclusions he reached about any of the other offers, was not revealed.

The only proper conclusion on the material is that there was an unsuccessful attempt to tender relevant offers of compromise and Calderbank letters, which were not received. This is also a basis for upholding this appeal.

Costs and orders

The transcript clearly establishes that his Honour was led into error by the case advanced for Monterey. The case advanced for Mr Hansen was, it seems on what is available, also inadequately put. That does not provide a basis upon which this appeal can be refused, as was submitted for Monterey, on appeal, but is relevant to the question of costs.

In the result leave to appeal must be granted, the appeal upheld and the matter remitted to the Local Court for rehearing. The usual order as to costs is that they should follow the event. I will hear the parties in the event of any disagreement. They have liberty to apply within 14 days in that respect.

Otherwise the Court's orders are:

1. Leave to appeal is granted.

2. The appeal is upheld.

3. The matter is remitted to the Local Court for rehearing.

**********

Authorities Cited0