Haslam v Emu Air Charter P/L, McKean & Johnstone No. Scgrg-98-242 Judgment No. S6990

HASLAM v EMU AIR CHARTER PTY LTD, MCKEAN & JOHNSTONE
[1998] SASC 6990

Magistrates Appeal: Civil

MULLIGHAN J. The appellant is an officer of the Civil Aviation Safety Authority.
He laid a complaint in the Adelaide Magistrates Court against the respondents alleging breaches of the Civil Aviation Act 1988. The first respondent (“Emu Air”) operated a Cessna aircraft on a flight between Adelaide and Kangaroo Island on about 23rd March 1996 and it was alleged that, contrary to the Act, dangerous goods, namely ex-army jerry cans containing fuel known as “Avgas” were carried in the cabin of that aircraft in circumstances contrary to regulations. The second respondent was a director of Emu Air and it was alleged that he aided, abetted, counselled and procured Emu Air in the commission of that offence. The third respondent was a passenger in the aircraft and it was alleged that he was directly knowingly concerned in the commission of the offence in that he was a passenger in the aircraft at the relevant time, he was aware that the cans of fuel were being carried and that he assisted the second respondent to unload them. Another charge under that Act was laid against the respondents in the alternative, the nature of which is unimportant for present purposes.
The respondents denied the charges and the complaint proceeded to trial. Ms Batt, a solicitor, acted for all of the respondents and retained Mr Griffin as counsel. The appellant was represented by the Director of Public Prosecutions (Cth) who, in turn, briefed senior junior counsel. The complaint proceeded through various pre-trial procedures and there were numerous attendances at the Adelaide Magistrates Court before the trial commenced on 1st September 1997 before a learned Magistrate. It occupied six days in all and concluded on 27th November 1997. On 19th December the learned Magistrate informed the parties of her decision, namely that each of the respondents had been found not guilty of both charges and the matter was adjourned until 23rd January 1998 for delivery of the reasons for her decisions. On that date the learned Magistrate recorded her findings of not guilty and dismissed the complaint. The respondents applied for costs having earlier supplied details of their costs with a view to reaching agreement with the appellant as to quantum. They claimed $11,514.40 by way of solicitor costs and $13,360.00 by way of counsel fees, making a total of $24,874.40.
The appellant did not oppose an order for costs against him but opposed the order being in the amount sought. The learned Magistrate heard argument and ordered that the appellant pay to the respondents their costs which she fixed at $24,844.40 and allowed him three months to make payment. She did not give reasons for her decision.
The appeal is against the amount of the costs ordered and is on the following grounds:
1...... The learned Magistrate erred in law in allowing costs in that amount in that she failed to have regard to the principles normally applied when assessing quantum of costs in courts of summary jurisdiction.
2The amount of the costs is manifestly excessive having regard to the circumstances of the case.
3...... In fixing the amount of the costs, the learned Magistrate misapprehended the principles upon which she should have exercised her discretion and took into account extraneous considerations.
Before considering the respective contentions of the parties as to quantum of costs, it is appropriate to first consider the principles upon which the assessment should be made.
In proceedings on complaint, as is the case here, the Magistrate may award such costs for or against a party to the proceedings as the Magistrate thinks fit: s189(1) of the Summary Procedure Act 1921 (SA). In the present case there were no circumstances such as delay, neglect, incompetence or obstruction which could affect the discretion to award costs: s189(3), (4) and (5). The discretion is unfettered but must be exercised judicially in each case according to its own circumstances: Puddy v Borg [1973] VR 626, Latoudis v Casey (1990 170 CLR 534 and Norton v Morphett (1955) 83 ACrimR 90.
The next matter is the basis upon which the costs are to be assessed. The appellant contends that they should be awarded not as a full indemnity but upon a party and party basis rather than a solicitor client basis. That is the view taken by Olsson J in Anderson v Glen Ewin & Staff Pty Ltd (1985) 41 SASR 42 at p45, by Legoe J in Carter v Coombe (1989) 154 LSJS 317 at p326 and by Miles CJ in Lansley v Knight; Ex Parte Murphy (1992) 65 ACrimR 327 at p335. However, that is not the approach taken in Norton v Morphett. In that case the Court of Appeal, Victoria, expressed the view that the discretion was at large and the Magistrate must exercise it as he sees fit in light of all of the particular circumstances of the case.
In Anderson v Glen Ewin and Carter v Coombe, costs were awarded pursuant to s77 of the Justices Act 1921 now the Summary Procedure Act.
Whilst s77 was expressed in terms different to s189(1) of the Summary Procedure Act, the difference is of no significance as both provisions provided for a wide and unfettered discretion to be exercised by the Magistrate.
In Anderson v Glen Ewin Olsson J, at p46, accepted that the quantum of costs to be allowed must include a proper sum in respect of all necessary preliminary work entailed and actually and reasonably done in taking instructions, proofing witnesses and generally getting the matter up for trial, together with such counsel fees as are properly chargeable in the circumstances. I agree with that approach. However, as to counsel fees, he accepted that as a starting point, two-thirds of the lower range of fees normally allowed junior counsel for a defended case in the Supreme Court would appear not unreasonable for a run of the mill defended case in a court of summary jurisdiction. In Carter v Coombe Legoe J approved of the view of Master Boehm that, in the usual run of cases, counsel fees in defended cases should not normally be allowed at a rate in excess of two-thirds of the fees prescribed at the lower end of the range for junior counsel in the Supreme Court. Master Boehm also expressed much the same view as that of Olsson J in Anderson v Glen Ewin as to solicitor fees. In Director of Public Prosecutions v Su (1996) 19 ACSR 572 in a report to a Judge on 22nd October 1996 in action number 313/96 in this Court, Master Bowen Pain accepted that as a matter of practice it is usual for Magistrates to allow solicitor costs at two-thirds of the Supreme Court scale and counsel fees at two-thirds of the lower range for junior counsel in the Supreme Court. However, it appears that there was no contest before him about that approach.
This approach was contested by Ms Shaw QC for the respondents. She contended that the respondents were entitled to an award of costs which is by way of compensation for the purpose of indemnifying them as successful parties against the expense to which they had been put as a result of the prosecution and she relied upon Latoudis v Casey. At p543, Mason CJ expressed the position in that way. Toohey J, at p563, accepted the concept of “proper indemnity” in the award of costs. McHugh J accepted that the rationale of making a costs order is that it is just and reasonable that the unsuccessful party should be reimbursed for the costs incurred in bringing on or defending the action. However, in Latoudis v Casey, the Court did not address the basis upon which costs were to be fixed but, as Phillips JA said in Norton v Morphett at p94, the more general question of whether, and if so when, costs were to be awarded at all. Phillips JA concluded, and the other members of the Court agreed, that Latoudis v Casey is not authority for the proposition that costs are to be awarded on an indemnity basis, ie on the basis that all costs should be allowed save to the extent that they are shown to be unreasonable. The High Court was not using the expression “indemnity” as meaning full recovery of all reasonable costs expended, solicitor and client costs, solicitor and own client costs or some other type of costs which are sometimes embraced by the expression “indemnity”. I respectfully adopt, without repeating, the conclusions of Phillips JA and the reasoning in his judgment.
What then of the approach taken in Anderson v Glen Ewin, Carter v Coombe and DPP v Su? It seems to have been accepted as appropriate for most, if not all, types of cases by the author of Lunn in Criminal Law South Australia at p75,426 citing Carter v Coombe and by the authors of Ward & Kelly Summary Justice in South Australia at p9113. It is accepted by Judge Lunn in Criminal Law South Australia at p75,426 citing Carter v Coombe. In my view, there should not be any hard and fast rule governing the exercise of the discretion by Magistrates, even for “run of the mill cases”. Cases which they hear vary enormously in seriousness and complexity which may not be determined by the nature of the charge alone or some other method of generalised categorisation. Some charges may result in cases which are relatively simple and straightforward. Other cases involving the same charge may be complicated and difficult. Personalities and attitudes of parties and witnesses may vary enormously from case to case regardless of the charge and may create difficulty. Also, the method of proof may vary and in some cases may pose considerable difficulty. What may appear to be a run of the mill case to someone not involved in the trial, may not be the case.
The Magistrate conducting the trial is in the best position to make the appropriate judgment about the basis of an award of costs. Hence the need for the unfettered discretion.
In recent years the jurisdiction of Magistrates has increased enormously. Whilst they always dealt with some cases which were serious and difficult, such is now commonplace. Magistrates in the criminal jurisdiction now deal with many cases which not long ago had to be tried by juries in this Court and then the District Court. Such cases usually have potentially grave consequences for the accused. Consequently, it is to be expected that many cases will be hard fought and involve considerable expense. Often these cases involve matters of law and fact of considerable difficulty. For all of these reasons the guidelines or rules of thumb for the assessment of costs which are in any way binding on Magistrates are generally inappropriate.
The correct approach, in my view, is to be found in Norton v Morphett. The relevant legislation in Victoria provided for a wide discretion as is the case here. The Magistrates Court Act 1991 in that State provides:
“s131(1)... The costs of and incidental to all proceedings in the Court are in the discretion of the Court and the Court has full power to determine by whom, to whom and to what extent the costs are to be paid.”

I do not think the discretion to be exercised under this provision is any different in nature or scope that the discretion to be exercised under s189(1) of the Summary Procedure Act. Phillips JA said, at pp95-96:

“To my mind, s131(1) was to be given effect according to its terms when the magistrate came to fix the amount of costs to be allowed in this case. Under s131(1) the magistrate plainly has an unfettered discretion - both in relation to the awarding of costs and in relation to the fixing of their amount. In relation to the first, Latoudis must be taken into account when the magistrate is deciding whether to order costs or not; but when such an order is resolved upon, the question of fixing the amount of those costs is one on which he is altogether at large. Of course the discretion conferred in this regard is a judicial discretion and must be exercised accordingly; it cannot be exercised capriciously, by reference to mistaken facts or irrelevant considerations or for some purpose altogether foreign to that for which the discretion is conferred in the first place: see, for example, House (1936) 55 CLR 499 at 504-505, Australian Coal & Shale Employees’ Federation v Commonwealth (1953) 94 CLR 621 at 627 and Magna Alloys & Research Pty Ltd v Coffey [1981] VR 23 at 26. But subject to such considerations which go to ensure that discretions which are conferred in general terms are nevertheless exercised judicially, the discretion is at large and the magistrate must exercise it as he sees fit in the light of all the particular circumstances of the case before him.
Appellant’s counsel submitted before us that the exercise of that discretion was not to be limited, in a case like this, by considerations pertaining to an award of costs in the civil jurisdiction, and he instanced in particular the scales of costs relevant to civil proceedings. So much may be accepted, because the discretion should not be regarded as ‘limited’ by reference to such things. But that is not to say that those very things may not provide guidance if in a given case they appear useful to the magistrate. In Latoudis, the analogy with civil proceedings was rejected as imperfect, to a greater or lesser degree (see per Mason CJ at 543-544; 292; per Dawson J at 559, 304; Per Toohey J at 565; 308-309; per McHugh J at 568; 311) but that was said in relation to the question whether there should be any award of costs at all. Once costs have been awarded generally, the amount at which those costs should be fixed or allowed is something on which the scales in civil proceedings, for want of anything more specific, may surely afford some guidance, but only if in a given case the magistrate finds them useful.”

He went on to say that it is for the Magistrate to decide, upon the circumstances of the case, whether the costs should be awarded upon a party and party or some other basis. However, there must always be excluded, at the very least, any costs which have been unreasonably incurred or which are unreasonable in amount: see p98. The other members of the Court concurred in these views.

In my view, that is the approach which must be adopted when a Magistrate assesses quantum. The Magistrate is not to be bound by any scale or any notion that only a percentage of a scale may be applied. The present case is certainly not a run of the mill case and so the approach in Anderson v Glen Ewin, Carter v Coombe and Director of Public Prosecutions v Su fixing a percentage of costs which would be allowed on taxation in an action in this Court need not be applied. However, I do not accept that there is any rule of practice which binds Magistrates along the lines set out in these cases. It is appropriate to bring to mind the observations of Brennan J in Norbis v Norbis (1986) 161 CLR 513 at p537:
“It is one thing to say that principles may be expressed to guide the exercise of a discretion; it is another thing to say that the principles may harden into legal rules which would confine the discretion more narrowly than the Parliament intended. The width of a statutory discretion is determined by the statute; it cannot be narrowed by a legal rule devised by the court to control its exercise: Gardner v Jay (1885) 29 ChD 50, at pp58-59; followed in Huntley v Alexander (1922) 30 CLR 566.”

See also Wilson and Dawson JJ at pp533-534.

I also doubt that those cases offer useful guidelines or that an attempt should be made to do so. Guidelines of that nature tend to fetter the discretion. That is not to say that Magistrates in appropriate circumstances should not have regard to the scale of costs of the Supreme Court, or some other court, and apply it wholly or in part in exercising the discretion. However, it is the Magistrate who hears the case who is in the best position to determine what level of costs should be awarded. It follows that ground one fails.
I mention one other principle and that is the approach which must be taken on appeal. Mr Peek, for the appellant, readily conceded that the Court on appeal will not usually interfere in a matter such as quantum: Kellett v Buchanan [1935] SASR 144 at pp146-7, Magna Alloys & Research Pty Ltd v Caffey (No 2) [1982] VR 97, Norton v Morphett and South Australia Police v Leonard (1995) 64 SASR 390. However, as those cases show, the Court will interfere if there has been some mistake in principle, the amount awarded is exorbitant or out of all true proportion.
With these principles in mind, the award of the Magistrate is considered
I deal first with the costs awarded for counsel fees. Mr Griffin charged $150 per hour for reading and conferences and $1,200 per day of the trial. He made other charges for a telephone conference, writing a letter and sending a facsimile transmission but I expect that in fixing these charges, he was charging for his time at the same rate. On 1st August 1994, a guide as to the counsel fees which would be allowed on taxation in actions in this Court as from 1st July 1994 was published after consultation with the Judges and Masters of the Court and the South Australian Bar Association. The guide has not since been altered. The daily fee for trial work for junior counsel was fixed at the range of $650-$1,350 and the hourly rate for preparation at the range of $150-$200. The range for conferences was fixed at $130-$200. The daily fee is based upon a five hour period. Where on any day that period is less than five hours, the appropriate portion of the daily fee is allowed. The fee includes an allowance for one conference and for reading and noting evidence overnight and for preparation of addresses. Mr Griffin’s fees are within these ranges except that he charged a substantial fee and $600 for preparation of his final address and a full daily fee when the Magistrate was unable to sit on what would have been day six. This fee of $100 to attend Court when the decision was given and the application for costs was agreed is less than the $130-$190 specified in the Guide. His fee for day seven was $1,200 even though the time spent in Court exceeded five hours and appears to have been about six and a quarter hours. His memorandum of fees suggests that the items would have been allowed on taxation in the Supreme on either a party and party or solicitor and client basis.
The trial was complex and required an experienced junior counsel such as Mr Griffin. The consequences of conviction for the personal respondents was significant. If convicted, Emu Air may have lost its licence to conduct an airline. The personal respondents may have lost their licences as commercial pilots. The airline may have closed down with serious implications for the personal respondents. Also, the penalties which could have been imposed upon the personal respondents include imprisonment for a term not exceeding 7 years: s29(1B). The defence case had to be conducted carefully and skilfully. Due preparation was essential.
The learned Magistrate did not disclose the basis of her award of counsel fees. She allowed the claim in full. She did not say if she had regard to the Guide or to any scale. However, it would have been entirely reasonable, in the circumstances, to have done so. The Guide would have provided useful assistance to the learned Magistrate had she chosen to consider it. In my view, the learned Magistrate was entitled to the view that all of Mr Griffin’s fees were reasonably incurred and were reasonable in amount except perhaps the fee of $600 to prepare the final address and the fee of $1,200 for the day when the Court did not sit, but that is a matter of opinion and must be balanced against other considerations. The respondents sought no witness fees for their four witnesses, most of whom were in the employ of Emu Air. There is no reason to suppose that the learned Magistrate was in error in the exercise of her discretion regarding the claim for counsel fees. A matter with the degree of difficulty evident in the present case justifies a level of fees as awarded. Furthermore, it must be remembered that the Guide was published on 1st August 1994 and had not been increased since that time. The trial was in late 1997 and despite increases in fees charged by the legal profession over that period, the counsel fees allowed remained within the ranges set out in the Guide. I have mentioned that some fees were allowed which would not have been allowed under the Guide but given the elapse of time since the Guide was published, it cannot be said that the fees allowed by the learned Magistrate were unreasonable as to amount.

As I have said, it is not known if the learned Magistrate had regard to the Guide or if she intended to fix the counsel fees on the basis of what would be allowed on taxation in this Court. If she did, such a course would be entirely appropriate in my view. I accept that the matter should not be treated differently from a trial in this Court given the difficulty, complexity and seriousness of the matter.
However, I have reached a different conclusion about the amount allowed for solicitor costs for various reasons. The first is that they were charged on a time costing basis in excess of what would be allowed upon a taxation of costs in an action in this Court. The costs were charged at $150 per hour. What would have been allowed under the scale of this Court is a little less than $126 per hour. Generally speaking, charges in excess of the Supreme Court scale for work undertaken in the Magistrates Court should be regarded as unreasonable in amount. Such an excess can only be justified if special arrangements are made between solicitor and client and rarely would be reasonable on a party and party basis. I am unable to identify any circumstances of a matter in the Magistrates Court which would justify higher fees than a matter in this Court. Certainly no such circumstances were established or are evident in this matter. The learned Magistrate erred, in my view, in allowing costs at a higher rate than would be allowed in this Court, although costs at the same rate would be justified.
The second reason is that it appears that the solicitor’s costs allowed in this matter were the actual costs charged and not those which should be allowed on a party and party basis. No basis for an award of solicitor and client costs was established. It is well established that other than party and party costs should not be awarded unless there are special and unusual features of the case such as to justify the award. No such features exist. I agree with the observations in Andrew v Glen Ewin, Carter v Coombe and Lansley v Knight, Ex Parte Murphy to the extent that costs should usually be awarded on a party and party basis. Such an observation does not place any fetter upon the discretion to be exercised by Magistrates under s189(1) because costs are awarded on that basis in all Courts, which usually also have a wide discretion, unless there are special and usual features of the case.
The third reason is that those costs have been allowed on the basis of time costing as well as a rate in excess of the Supreme Court scale. Such an approach could not be justified on a party and party basis.
In my view, the learned Magistrate erred in the exercise of her discretion in allowing costs at a rate in excess of the Supreme Court scale and on a solicitor and client basis. Grounds two and three are made out.
I return to the principle that the Court will not usually interfere in a matter such as quantum. However, I have decided that it is appropriate to do so because there has been an error of principle.
It remains to consider what award should have been made for solicitor’s costs. I see no reason to query the disbursements but the profit costs should be reduced on account of some items being only solicitor and client costs, the excessive rate of changing and the use of time costing not permitted on the Supreme Court scale. It is not possible to be precise because the information about the costs lacks detail.
I accept that it was reasonable for Ms Batt to attend the trial. I am informed that if the charging rate is reduced to the hourly rate allowed on taxation in the Supreme court, the total solicitor costs would be reduced by about $1,800. Some further reduction should be made to limit the award to party and party costs. Having considered each item, I would further reduce the award by $500 for that reason. There remains to consider what reduction should be made for time costing instead of costs being fixed according to the Supreme Court scale, having accepted that the award should not be greater than would be allowed on that scale. Having considered the scale and the items claimed, I do not think there should be any further reduction for this reason. Ms Batt has, in some instances, claimed less than the entitlement under the Supreme Court scale. In other instances, it is not possible to say.
In summary, the amount of solicitor’s costs should be reduced by $2,300 as well as the $30 deducted by the learned Magistrate.
I allow the appeal and reduce the award of costs to $22,544.40.

[1998] SASC 6990

1 December 1998