Drought breaks for Katzenjammer Kid

Brunswick solicitor has costs victory in eight year losing battle over repairs to his Toyota Camry ... Luby's Mobile Mechanic charged $705.32 to fix the engine ... Lawyers charged $46,000 for trial and appeal ... If you stick with the litigation long enough there's bound to be a break through ... Barry Lane reports from Yarraside

Gentle rain falling from the Court of Appeal has revived the fortunes of a suit by the Katzenjammer Kid, Gabe Kuek, which until now had become desiccated by years of drought.

I first mentioned the matter in an article on November 8, 2006.

A description of the relevant facts giving rise to the suit was set out by Acting Appeal Justice Kevin (Tinker) Bell in Kuek v Devflan Pty Ltd & Anor [2006] VSCA 186. 

Kuek owned a 1994 2.2 litre Toyota Camry. When it broke down he contacted Luby's Mobile Mechanics and Ljubomir Nikolovski turned-up to repair the vehicle.  On March 24, 2003 Nikolovski replaced the timing belt and performed some other minor work.  Luby's Mobile Mechanics was the trading name of Devflan Pty Ltd and Nikolovski was an employee and a director of that company.  

The invoice carried a warranty, saying: 'Warranty 12 months, 20,000'.

On May 13, 2003 Gabe's Camry broke down again. A mechanical examination revealed that the timing belt was frayed and that the engine had bent valves.

The wily solicitor issued proceedings in the Magistrates' Court against Devflan Pty Ltd and Nikolovski. He claimed:

• The breakdown was due to negligence and/or unsatisfactory work that the defendants performed on the engine. The defendants failed to properly check the engine; failed to properly identify all the problems in the engine; failed to properly assess what problems in the engine required replacement, repair and/or servicing; failed to replace those parts in the engine that required replacing; and failed to properly undertake necessary repairs and/or service to the engine.

• Further and in the alternative, the defendants failed to fulfil their contractual obligation.

• As a result of the defendants' negligence and/or breach of contract, the plaintiff suffered financial loss.

"Particulars of loss: (a) Tow truck fee (to be advised). (b) Auto-electrician's diagnostic fee: $77. (c) Mechanic's assessment fee: $53.90. (d) Cost of repairs to engine of motor vehicle: $1,925. (e) Loss of remunerative time by reason of lack of motor vehicle: $1,800. Total: $3,855.90."

For the repairs originally undertaken Ljubomiri charged Gabe $705.32.

On October 22, 2004, Magistrate Hassard at the Heidelberg Magistrates' Court dismissed Gabe's claim and ordered him to pay costs of $5,909

Gabe appealed to the Supreme Court on various points of law none of which found any favour with Justice Rosemary Balmford.

HH dismissed Gabe's appeal and ordered him to pay costs on an indemnity basis - see Kuek v Devflan Pty Ltd [2005] VSC 163.

From those orders Gabe appealed to the Court of Appeal, which dismissed the appeal on the substantive issues, but allowed it on the indemnity costs order - see Kuek v Devflan Pty Ltd & Anor [2006] VSCA 186.

Justice (Tinker) Bell: Did not disturb magistrate's findingOn the substantive issues, Acting Appeal Justice Bell, with whom Chief Justice Marilyn Warren and Appeal Justice Geoffrey Eames agreed, said:

"The appeal must be dismissed because of the magistrate's unchallenged finding as to the lack of any causation between the frayed timing belt and the damage to the engine. This unchallenged finding constitutes an insuperable obstacle to Mr Kuek's case."

Gabe's claim was for damages relating to the damage caused to the engine by virtue of the failure of the timing belt. The damage was primarily quantified as the cost of a replacement engine.

The magistrate in deciding the claim in negligence, breach of contract and breach of warranty had to determine whether the damage to the engine was due to the belt.

Vic Appeals said that once that was decided against Kuek his case had to fail. No ground of appeal invited the judges to disturb that positive finding.  

Kuek also argued that the appeal should be allowed on a basis not put before the magistrate or Justice Balmford, namely that the warranty claim encompassed a lesser claim for the cost of replacing the frayed belt.  

Tinker Bell and the others said this submission must be rejected. It was not an issue at the trial.

"He is seeking to put on appeal a wholly different case as to damages, which is inherently a question of fact. It is inappropriate to allow this case to be put on this alternative basis at this late stage."

Gabe was ordered to pay the costs of the appeal and before Justice Balmford on a party/party basis.

One might have thought that he would toss in the towel at that point, but that's not in Gabe's nature as a litigator.

As one who has looked at a bit of his history fighting over costs it came as no surprise that the great litigator would simply morph the substantive issues into a costs battle and soldier on.

By summons filed on March 6, 2007, Devflan sought taxation of a bill of costs covering all of the proceedings in the Supreme Court.

The bill contained 273 items and totaled $46,585.60.

A brief summary of Gabe's toing and froing is detailed in Justice Beach's decision on appeal from the Taxing Master:

"On 10 October 2007, the respondents' costs were taxed in the sum of $39,105.20. The appellant then sought a review pursuant to Rule 63.56.1. As a result of this review, a further sum of $375 was taxed off by the Taxing Master on 8 February 2008. On 26 March 2008, the Taxing Master ordered there be no order as to the costs of this review. This order was made without the benefit of the respondents' submissions, which had been filed but had not found their way onto the court file. Upon these submissions being drawn to the attention of the Taxing Master and upon hearing further argument, the Taxing Master then (on 29 October 2008) set aside his order of 26 March 2008 and ordered the appellant to pay 90 percent of the respondents' costs of the review up until 26 March 2008. On 12 November 2008, the appellant filed a notice of application to review the orders of the Taxing Master made on 8 February 2008 and 29 October 2008. This is the determination of that review."

I won't burden you with the detail of the items under review because you might go mad and sue the editor, suffice it to say that Justice Beach found no real fault with what the Taxing Master had done and dismissed the appeal - Kuek v Devflan Pty Ltd & Anor [2009] VSC 91.

Gabe appealed to the Court of Appeal and succeeded big time!! - see Kuek v Devflan Pty Ltd & Anor [2011] VSCA 25. 

Justice of Appeal Hartley Hansen delivered judgment on behalf of the court.

HH found that Gabe had been denied procedural fairness by both the Taxing Master and on review by Justice Beach.

The nub of Gabe's complaint was the application of the indemnity principle in relation to costs, i.e. that a successful party cannot recover costs in excess of his liability to pay. In other words, a party cannot seek indemnification from the other party where no loss has been sustained. 

Central to the quantification of that loss were the documents evidencing the retainer between Devflan and its solicitors and correspondence between them on costs. 

In relation to those documents, the Taxing Master had refused Gabe's application to order their production and although Beach had no difficulty requiring production he had only done so in running and, according to the Court of Appeal, had not given Gabe or his counsel (fellow Katzenjammer Kid, David Perkins) sufficient time to consider them.

The Court of Appeal sent the whole costs issue back to the costs judge for a "fresh hearing" according to law.

On behalf of long suffering Victorian taxpayers, could I leave you with Gabe's own words delivered on the occasion of his client receiving a favourable determination from VCAT and being informed by the defendant Education Department, which had been ordered to pay $82,000 compensation to a disabled schoolgirl, that it would appeal to the Supreme Court:

"Access Law principal solicitor Gabriel Kuek urged the government to accept (the) decision. He said the litigation had cost both sides about $1 million so far.  'Further litigation at a cost that exceeded the value of the remedies ordered would be an inexcusable waste of community resources,' he said."

Couldn't have put it better myself.