Carneiro v Robinson (No 2) - [2005] SADC 151

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
CARNEIRO & ANOR v ROBINSON & ORS (NO 2)
Reasons of His Honour Judge Robertson
9 November 2005
PROCEDURE - COSTS
Plaintiffs successful in claim for misrepresentation - Plaintiffs received a small award of damages - Plaintiffs obtained final injunctive relief relying upon promissory estoppel - application that Plaintiffs receive no order for costs on misrepresentation claim - application relying upon Section 42(2) of the District Court Act 1991 refused - refusal to consider a Calderbank offer in the exercise of the discretion - apportionment of costs in the exercise of the discretion.
Misrepresentation Act 1972; Fair Trading Act 1987 ss56 & 85; Trade Practices Act 1974 ss52, 87 & 87(1A); District Court Act 1991 s42(2); Magistrates Court Act 1991 ss3(1), 3(2), 8(1) & 10; District Court Rules r 40, referred to.
Conroy's Port Pirie Abattoirs v Channel Seven Adelaide (No 3) [2005] SADC 110; City of Victor Harbor v Roeger & Anor (2002) 82 SASR 140; Morris v McEwen & Anor [2005] SASC 284, applied.

CARNEIRO & ANOR v ROBINSON & ORS (NO 2)
[2005] SADC 151
JUDGE ROBERTSON
CIVIL

The Plaintiffs obtained a judgment for two thousand dollars damages against all Defendants. The Second and Third Defendants were found to have made misrepresentations and liable to damages pursuant to the Misrepresentation Act 1972, arising from the sale of a vacant allotment of land. Furthermore, as a result of the misrepresentations, the Defendants were found to have engaged in misleading and deceptive conduct in breach of Section 56 of the Fair Trading Act 1987 (“FTA”). The misrepresentations were made by the Second Defendant Southgate Real Estate (“Southgate”), who were acting as land agents for the First Defendant (“Mrs Robinson”), and the Third Defendant (“Mr Holt”), an employee of Southgate. Mrs Robinson was held to be liable for the misrepresentations and to be guilty of misleading or deceptive conduct in breach of Section 56 of the FTA as a result of the conduct of her agents.
The proceedings centred upon a narrow strip of unmade land immediately adjacent to the vacant allotment of land purchased by the Plaintiffs from Mrs Robinson. It was represented to the Plaintiffs, prior to entering into the Agreement to purchase, that the land was a public roadway which they could use to enter and exit their land to gain access to the street abutting the front of their land. Such a representation was false. It was not a public road, but a strip of land leading from the main street to allow access to a large piece of land to the rear of the Plaintiffs’ land. This large piece of land, and the strip of land, were owned by Mrs Robinson.
In addition to the damages, the Plaintiffs obtained injunctive relief against Mrs Robinson in which she is restrained from hindering the Plaintiffs’ use of the strip of land to gain access to their property. This relief was granted relying upon the doctrine of promissory estoppel. The promises upon which relief was granted occurred in conversations between Mrs Robinson and the Second Plaintiff in December 1999 and January 2000. These conversations arose because the Plaintiffs had become aware that the strip of land was not a public roadway but was land owned by Mrs Robinson. This claim, and the relief sought, were introduced by the Plaintiffs by way of amendment to their Statement of Claim shortly after the Trial commenced.
Prior to the amendments seeking relief by way of promissory estoppel, the Plaintiffs had opened their case on the basis that the primary relief sought was against Mrs Robinson, in which they were seeking an order that Mrs Robinson grant a right of way over the strip of land. In seeking such an order the Plaintiffs relied on the provisions of the Trade Practices Act 1974 (“TPA”), the FTA and by way of the doctrine of proprietary estoppel. In seeking this relief, the Plaintiffs relied upon the misrepresentations by Southgate, and Mr Holt, which had been made in June 1999. As an adjunct to that relief, the Plaintiffs sought interlocutory injunctive relief against Mrs Robinson.
As an alternative to the claim for a right of way, the Plaintiffs claimed damages under the TPA, the FTA and the Misrepresentation Act, arising from the June 1999 misrepresentations against all Defendants. In other words, the Plaintiffs’ approach was that if they obtained an order for a right of way, then they did not seek damages for the misrepresentations.
As I mentioned earlier, after the amendments, the Plaintiffs had added a further alternative claim for relief, namely, an injunction restraining Mrs Robinson from hindering their use of the strip of land to gain access to their property from the side. As I said, for this part of their claim they relied on the doctrine of promissory estoppel and they relied upon promises said to be made by Mrs Robinson in December 1999 and January 2000 regarding the Plaintiffs’ use of the strip of land.
The Plaintiffs were unsuccessful in their claim to obtain an order for a right of way, arising out of the June 1999 misrepresentations, relying upon the TPA, the FTA and the doctrine of proprietary estoppel, albeit that all of the Defendants had been found guilty of misrepresentations. I held that the relief was not available in the form of an order for a right of way under those Acts, or by way of the doctrine of proprietary estoppel. I held that the only relief available, based upon the misrepresentations, was by way of damages.
With respect to the claim for damages, the Plaintiffs’ claim was for the sum of approximately eighty four thousand dollars, which the Plaintiffs claimed was the difference in value between their property with access from the side, over the strip of land, and where no access was available. The Plaintiffs sought to have their loss measured at the date of Trial, that is, the difference in value was to be measured at that time. They were unsuccessful in this regard. Whilst they were successful in their claim for misrepresentations and misleading or deceptive conduct, and obtained relief under the FTA and the Misrepresentation Act, their loss was measured at the date when the vacant allotment was transferred to them in July 1999.
That is the background to the issues arising on the question of costs. I now turn to consider those issues.
The Plaintiffs claim their party and party costs against all Defendants.
Mrs Robinson opposes this application and submits that she is only liable for fifty per cent of the Plaintiffs’ costs, being those costs arising from the events in December 1999 and January 2000 which were relevant to the Plaintiffs’ claim relying on the doctrine of promissory estoppel. It was submitted by her Counsel, Mr Dal Cin, that it was appropriate to divide the costs equally between the June 1999 misrepresentations issue and the December 1999/January 2000 promises issue. Mr Dal Cin submitted that the balance of the costs, being those costs relevant to the Plaintiffs’ claim in misrepresentation arising from the events in June 1999, should be borne by Southgate and Mr Holt as they had made misrepresentations without her knowledge.
Southgate, and Mr Holt, deny that the Plaintiffs are entitled to any costs arising out of misrepresentations in June 1999. Further, it was submitted that, as the promissory estoppel issue was confined to the circumstances between the Plaintiffs and Mrs Robinson, then those costs should not be borne by Southgate or Mr Holt.
These are the issues of costs which now stand to be resolved.
It is convenient to first deal with the submission by Southgate that the Plaintiffs should not receive any costs relating to the misrepresentations claim. Southgate relies upon the terms of Section 42(2) of the District Court Act1991 (“DCA”) in making this submission. That subsection provides (together with the Rules) that where damages of less than twelve thousand dollars are recovered in District Court proceedings, and the action might have been brought in the Magistrates Court, then no order for costs is to be made in favour of a Plaintiff unless the Court is of the opinion that it is just in the circumstances of the case that the Plaintiff should recover costs, or part of the costs. Mr Henry, Counsel for Southgate and Mr Holt, submitted that as the Plaintiffs only recovered the sum of two thousand dollars damages, then the proceedings could have been brought in the Magistrates Court and, as a result, the Plaintiffs should be denied their costs. The effect of Mr Henry’s submissions were that the action could have been brought by the Plaintiffs within the Civil (General Claims) Division of the Magistrates Court. Alternatively, that the action was a minor civil action as defined in subsection (2) of Section 3 of the Magistrates Court Act 1991 (“MCA”) and, therefore, it could have been brought in the Civil (Minor Claims) Division.
With respect to civil actions, Section 8(1) of the MCA relevantly provides:
8.1 The Court has jurisdiction –
(a)to hear and determine an action (at law or in equity) for a sum of money where the amount claimed does not exceed –
…
(ii) in any other case - $40 000;
(b)to hear and determine an action (at law or in equity) to obtain or recover title to, or possession of, real or personal property where the value of the property does not exceed $80 000;
…
(d)to grant any form of relief necessary to resolve a minor civil action.
Section 10 of the MCA provides that the Court has any jurisdiction conferred on it by Statute.
The Plaintiffs’ action involved a claim for damages. However, this was expressed in the alternative. The primary claim of the Plaintiffs was the seeking of an order granting them a right of way over the strip of land. The Plaintiffs relied upon the provisions of Sections 87(1) and 87(1A) of the TPA and Section 85 of the FTA to obtain that relief. They also relied on the doctrine of proprietary estoppel for such relief. Alternatively, as I stated earlier, the Plaintiffs sought injunctive relief in which they sought an order restraining Mrs Robinson from hindering their use of the strip of land to gain side access to their property.
Full argument was not presented regarding the issue of the jurisdiction of the Magistrates Court to hear these proceedings and grant the relief of a right of way sought by the Plaintiffs. Accordingly, I do not propose to consider in any detail the question of whether the Magistrates Court has jurisdiction to make orders under Section 87 or 87(1A) of the TPA or Section 85 of the FTA as, in the end, it is unnecessary to do so. On first glance it does appear that the Court has jurisdiction to hear matters arising out of misleading and deceptive conduct under either Act (with respect to the TPA see Section 86). That being the case, there seems to be no reason in logic why the Court would not have jurisdiction to provide ancillary relief under those provisions of the respective Acts. However, as I said, I do not need to reach any final conclusion on that question because, in my opinion, the proceedings, as they ended up after the amendments, could not have been brought in the civil jurisdiction of the Magistrates Court. The Plaintiffs’ claim relying upon promissory estoppel arising from the promises said to have been made in December 1999 and January 2000 sought relief by way of a permanent injunction. A claim for permanent injunctive relief relying upon the doctrine of promissory estoppel is a claim in Equity.
In my opinion, the Magistrates Court does not have jurisdiction to hear and determine such a claim. The Magistrates Court is not a Court of Equity. If it has equitable jurisdiction, then it must be derived from the MCA. I am of the view that the MCA does not provide jurisdiction to hear and determine a claim of that nature.
The question of whether the Magistrates Court has jurisdiction to hear a claim in Equity for a final injunction was considered by Lunn DCJ in Conroy’s Port Pirie Abattoirs v Channel Seven Adelaide (No3) [2005] SADC 110. His Honour applied the reasoning of Perry J in City of Victor Harbor v Roeger& Anor (2002) 82 SASR 140 in reaching the conclusion the MCA does not “confer equitable jurisdiction on the Magistrates Court for a claim in Equity for a final injunction” (P.3).
In City of Victor Harbor Perry J held that the jurisdiction granted in equity under Section 8(1) of the MCA was a jurisdiction associated with a money claim and not a general equitable jurisdiction. His Honour held that the Court did not have jurisdiction to hear and determine a claim where the primary relief sought was specific performance, because the Court only has limited equitable jurisdiction.
I agree with Perry J’s reasoning regarding the restrictive nature of the equitable jurisdiction provided in Section 8(1) of the MCA. I also agree with Lunn DCJ’s observations that, by parity of reasoning, a claim in Equity seeking a permanent injunction is not part of the equitable jurisdiction granted in Section 8(1) of the Act.
I now turn to the second submission made by Mr Henry, namely, that the proceedings were within the jurisdiction of the Magistrates Court as they were a “neighbourhood dispute” as defined in Section 3(1) of the MCA and, as a result, they are a minor civil action.
I am of the view that it is not a “neighbourhood dispute”. A “neighbourhood dispute” is defined in Section 3(1) of the MCA as:
“neighbourhood dispute” means a dispute between neighbours or the occupiers of properties in close proximity, based on allegations of trespass or nuisance;
Whilst the proceedings brought by the Plaintiffs had their genesis in Mrs Robinson’s complaint that the Plaintiffs were trespassing on the strip of land, reference to “trespass” in the definition of “neighbourhood dispute”, in my view, relates to where the gravamen of the proceedings is the issue of trespass or nuisance. That is not the case here. The claim was for the ordering of a permanent injunction relying upon the doctrine of promissory estoppel.
The claim seeking an order for a permanent injunction was confined to Mrs Robinson. However, the proceedings involving Southgate and Mr Holt and the issues of misrepresentation were so intertwined that it would have been completely impractical for the Plaintiffs to have brought separate proceedings against Southgate and Mr Holt on the one hand, and Mrs Robinson on the other. It was the misrepresentations of Southgate and Mr Holt which were the genesis of the proceedings arising from the promises of December 1999 and January 2000. Both claims needed to be tried together.
For the reasons I have expressed, I am of the opinion that Section 42 has no application to the issue of costs in this matter.
The second substantive argument put forward by Mr Henry, on behalf of Southgate and Mr Holt, relates to what is described as a “Calderbank letter”. On 6 October 2004, a letter was forwarded by the Solicitors for Southgate to the Solicitors for the Plaintiffs offering to settle the Plaintiffs’ claim against Southgate and Mr Holt for the sum of five thousand nine hundred and ninety nine dollars. The letter stated that the offer was made “… on a commercial basis and is reflective upon our assessment of our clients’ legal position …”. The Trial commenced on 12 October 2004.
Mr Henry, Counsel for Southgate, submitted it was only after the Solicitors for Southgate received further Discovery from the Plaintiffs’ Solicitors and, in particular, the invoice regarding the installation of a septic tank system on 28 September 2004, that they were in a position to make the “risks” offer. There was no other evidence led by any party regarding this issue apart from the Calderbank letter and letters relating to further discovery which were admitted by consent. This submission was put forward to explain why a formal offer pursuant to Rule 40 of the District Court Rules had not been made earlier. By 6 September 2004, the time for making an offer under Rule 40 had expired, as any offer must be made at least twenty one days before Trial.
When referring to the septic tank invoice, Mr Henry was referring to an invoice of Septreat Pty Ltd for five thousand two hundred and thirty dollars, which was part of Exhibit P10 in the Trial. The Calderbank offer was for the sum of five thousand nine hundred and ninety nine dollars, and made “in full and final settlement”. In other words, the offer included costs and interest. I heard no evidence regarding how the offer was constructed. I heard no evidence regarding why it was not possible to make a “risks” offer prior to that time. I am not satisfied on the evidence before me that a “risks” offer could not have been made earlier using the provisions of Rule 40. In any event, the failure to lodge a Rules offer does not exclude a Court from considering a Calderbank offer. The fact that a Rules offer could have been made is only one factor which may be considered by a Court in the exercise of its discretion (Morris v McEwen & Anor [2005] SASC 284 at pp21-22).
In considering the Calderbank offer, it is important to bear in mind that, at the time of the offer (before the amendment to the Statement of Claim), the primary claim of the Plaintiffs, with respect to the misrepresentation issue, was for an order that Mrs Robinson grant a right of way over the adjoining strip of land. The claim for damages was in the alternative and that claim was against all Defendants. For the Plaintiffs to succeed against Mrs Robinson, and obtain an order for a right of way, the Plaintiffs first needed to prove that she was guilty of misleading or deceptive conduct under Section 52 of the TPA, or Section 56 of the FTA, or with respect to the claim relying on proprietary estoppel, to prove that the Plaintiffs relied upon the misrepresentations. Of course, it was the same misrepresentations which the Plaintiffs relied upon for relief under the TPA, the FTA and for relief relying upon the doctrine of proprietary estoppel. The Plaintiffs’ position was that they only sought damages if they failed to obtain an order for a right of way. In other words, as I said earlier, it appears that the Plaintiffs, if they obtained an order for a right of way, did not seek any damages by way of compensation.
It seems to me that if the Plaintiffs had accepted the offer by Southgate and Mr Holt, then they may have placed their claim for a right of way against Mrs Robinson in jeopardy. They were open to the argument that they had elected to be compensated by way of damages for the misrepresentations and, as a result, had abandoned their claim for a right of way.
A further matter to consider is the position of both the Plaintiffs and Southgate and Mr Holt regarding the issue of damages at the time of the Calderbank offer. The Plaintiffs relied upon the valuation of Mr Wright, who concluded that the difference in value of the property with and without access was eighty four thousand dollars. This valuation had been presented to the Solicitors for Southgate and Mr Holt. Those Solicitors had obtained and delivered a valuation from Mr Hawkins. Based upon his instructions, he undertook the exercise of estimating the cost of constructing a driveway and re-developing the surrounds of the Plaintiffs’ house to permit access from the front of the property. It was his opinion that it was possible to construct a driveway commencing at the front of the house, which would have led to costs of re-developing some of the surrounds of the house. He estimated an overall cost to the Plaintiffs at forty one thousand one hundred dollars.

I mentioned earlier that it was the position of Southgate and Mr Holt, at the date of Trial, that the Valuation Report of Mr Wright was irrelevant as it did not value the Plaintiffs’ loss at July 1999 when the Plaintiffs acquired the land. There was nothing in the Pleadings to indicate the position of Southgate and Mr Holt on the issue of damages. On the evidence before me, the battle lines on the question of damages seemed to be drawn on the basis of the Valuation Reports of Mr Wright and that of Mr Hawkins.
As I said earlier, the Calderbank letter did not provide any explanation regarding the construction of the all-inclusive offer of five thousand nine hundred and ninety nine dollars. It simply said the offer was made following the giving of further discovery by the Plaintiffs on 28 February 2004. The additional discovery on that date was quite substantial.
I was not told if the Plaintiffs rejected the Calderbank offer, or failed to respond to it. In any event, I do not consider, in the circumstances, that it was imprudent or unreasonable for the Plaintiffs to fail to accept the offer. As I mentioned earlier, if the Plaintiffs had accepted the offer, then they placed their claim for a right of way against Mrs Robinson in jeopardy. In any event, even if that circumstance was not present I would not have concluded that the Plaintiffs were imprudent or unreasonable. The offer was made very close to the commencement of the Trial. It was an all-inclusive offer. There was no way of determining the components of the offer. It was a very small offer, including a component for costs and interest. The Plaintiffs were entitled to believe that they had a strong case on liability. Taking into account all of these factors, even ignoring the question of the right of way claim being placed in jeopardy, I am of the opinion, as I said, that the Plaintiffs were not unreasonable or imprudent in not accepting the offer.
For the reasons I have expressed, I am not prepared to consider the offer in the Calderbank letter in the exercise of my discretion in making orders for costs.
As I stated earlier, there were two major issues in this Trial, the first arising from the misrepresentations in June 1999, and the second arising from the promises of Mrs Robinson in December 1999 and January 2000. This latter claim, relying on the doctrine of promissory estoppel, was directed solely to Mrs Robinson. Because of these circumstances, in my opinion, it is necessary to make separate orders for costs relating to the first issue and the second issue. With regard to the second issue being a claim relying on promissory estoppel, the Plaintiffs have succeeded and, therefore, must have their costs against Mrs Robinson. Mr Dal Cin, Counsel for Mrs Robinson, submitted that the costs between the two issues should be divided equally. I think this approach is equitable.
I now turn to the first issue, being the misrepresentation issue. The Plaintiffs virtually failed in their claim for damages. There was a fundamental flaw in the approach taken to assess damages. I do not consider that it is equitable that they should obtain an order for costs regarding the issue of damages. They are entitled to their costs on the question of liability. I think an equal division between liability and damages is appropriate here, taking into account the time taken on each question. Accordingly, the Plaintiffs are entitled to twenty five per cent of their costs relating to the first issue. The Plaintiffs succeeded against all Defendants with respect to their claim, on this issue, so each of the Defendants must be liable for those costs. However, as Mrs Robinson’s liability arose from the misrepresentations of Southgate and Mr Holt made without her knowledge, then it is appropriate that I order that those two Defendants indemnify Mrs Robinson in relation to her liability for costs of the Plaintiffs on the first issue. In other words, Southgate and Mr Holt are to be responsible for the costs regarding liability on the misrepresentations issue, which are twenty five per cent of the Plaintiffs’ total costs subject to the qualification I will mention in a moment.
As a result of my finding that the damages should be assessed at June 1999, and not the date of Trial, the Valuation Report of Mr Wright had no relevance. In those circumstances, I do not consider it appropriate that the Defendants pay for any part of that Report or the costs of Mr Wright giving evidence.
In accordance with the conclusions I have reached, I make the following orders:
(1)The Plaintiffs are to have seventy five per cent of their party/party costs of the action except for the costs of Mr Wright’s Valuation Report, and the costs pertaining to his giving evidence, which are to be excluded.
(2)All the Defendants are to pay to the Plaintiffs twenty five per cent of those costs.
(3)That the Second and Third Defendants indemnify the First Defendant with respect to her liability for the costs ordered in paragraph 2.
(4)That the First Defendant pay the remaining fifty per cent of the Plaintiffs’ costs.
(5)That the Plaintiffs pay to the Defendants the costs thrown away as a result of the amendments made to the Plaintiffs’ Statement of Claim shortly after the commencement of the Trial.