Hemer Pty Ltd v Benni (No 3)

[2011] SASCFC 144

SUPREME COURT OF SOUTH AUSTRALIA

(Full Court)

HEMER PTY LTD v BENNI & ORS (No 3)

[2011] SASCFC 144

Judgment of The Full Court

(The Honourable Chief Justice Doyle, The Honourable Justice Gray and The Honourable Justice Sulan)

30 November 2011

PROCEDURE - COSTS - GENERAL RULE - COSTS FOLLOW THE EVENT - COSTS OF ISSUES

PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - CONDUCT OF PARTIES - OTHER CONDUCT

Reasons for ruling on costs – ruling relates to an appeal concerning the purported forfeiture of a 99 year lease for peppercorn rent over land in suburban Adelaide – where trial Judge refused to make declarations sought or grant any other relief – where on appeal appellant successful on some issues and unsuccessful on others – consideration of the conduct of the appellant both at trial and on appeal. 

Held:  appellant to recover one-quarter of its costs of the trial and on appeal.

Landlord and Tenant Act 1936 (SA) s 10, referred to.
Hemer Pty Ltd v Benni [2011] SASCFC 35, considered.

HEMER PTY LTD v BENNI & ORS (No 3)
[2011] SASCFC 144

Full Court        Doyle CJ, Gray and Sulan JJ

THE COURT:

1. On 15 July 2011, an order was made that the appeal be allowed, the orders of the trial Judge be set aside and a number of orders be substituted.  One of those orders was that Marnie Benni, Martin Ridge and Cherise Esme Collins, the defendants and respondents, pay Hemer Pty Ltd, the plaintiff and appellant one-quarter of its costs of the trial and of the appeal.  Our reasons for the costs order follow.

2. This ruling on costs relates to an appeal concerning the purported forfeiture of a 99 year lease for peppercorn rent over land in suburban Adelaide.  The lessee of the land, Hemer, sought at trial declarations, inter alia, concerning the interpretation of a convenant of the lease relating to rates and taxes.  Hemer also sought relief against forfeiture.  The trial Judge refused to make any declarations or grant any other relief.[1]

   [1]    Hemer Pty Ltd v Benni [2010] SASC 242.

3. The background to the dispute and the proceedings is dealt with in some detail in the earlier decision of this Court in Hemer Pty Ltd v Benni,[2] and we adopt the background as there stated. In that decision, the majority, Gray and Sulan JJ, determined that the rates and taxes payable under the lease are to be based on the value of the leased land, as determined by the Valuer-General; that is, they had been incorrectly calculated and were therefore unenforceable. Gray and Sulan JJ further concluded that letters sent by the lessors, the defendants and respondents, to the lessee demanding payment for rates and taxes under the lease did not satisfy the requirements of section 10 of the Landlord and Tennant Act 1936 (SA).  To this end Gray and Sulan JJ determined that it would be contrary to the scheme of the legislation to permit re-entry without reasonable notice from the lessor to the lessee of the lessor’s intention to re-enter in the event of failure to remedy the breach complained of in the notice.  Accordingly, there was no valid re-entry by the lessors, and in this event, there was no forfeiture of the lease and therefore no need to grant relief against forfeiture on appeal.

   [2]    Hemer Pty Ltd v Benni [2011] SASCFC 35.

4. By a different majority, Doyle CJ and Sulan J, it was concluded that through their conduct neither lessor elected not to enforce the right of re-entry and forfeiture. 

5. The Chief Justice determined that the Judge erred in not granting relief against forfeiture.  Gray and Sulan JJ, had it been necessary to do so, would have granted relief against forfeiture notwithstanding the factors identified by the trial Judge that militated against the making of such an order.  However, it is probable that Gray and Sulan JJ would have required an appropriately secured undertaking by Hemer with respect to the future payments of rates and taxes.

6. In reaching our conclusions on the question of costs we have had regard to the following:

   -The director of Hemer was found by the trial Judge to be a wholly unsatisfactory witness.  Nothing was put on the appeal that would allow this conclusion of the trial Judge to be set aside. 

   -Insofar as Hemer sought relief against forfeiture such relief in the circumstances of these proceedings would have in all probability been granted on terms that Hemer pay the costs of the proceedings. 

   -As noted above Hemer was unsuccessful on the issue of waiver both at trial and on appeal. 

   -During the course of the appeal Hemer appeared to shift ground on a number of issues.  Points that had been conceded at trial in favour of the lessors were sought to be re-agitated on the appeal.

   -Although Hemer succeeded on a number of issues, the dispute initially arose because of Hemer’s intransigence.  Until Hemer issued proceedings, it denied any liability under clause 2 of the lease.  In our view, the position taken in that regard was unreasonable. 

   -Throughout the Supreme Court proceedings Hemer acknowledged that an amount was payable in respect of rates and taxes.  On any view the amounts in issue were modest.  It would have been a simple matter for Hemer at the outset to have paid those amounts into Court to abide the further order of the Court or alternatively to have paid those amounts under protest foreshadowing a claim for reimbursement.  At the very least Hemer could have paid the amount that it said was owing.  Rather than doing so, Hemer left the obligation to pay the entire rates and taxes solely “at the door” of the lessors.  This conduct together with a review of correspondence from the parties suggests that Hemer was using the proceedings both in the Magistrates Court and the Supreme Court as a lever in an attempt to encourage the lessors to come to some overall compromise concerning the parties’ property rights. 

7. For these reasons we considered that Hemer should recover one-quarter of its costs of the trial and the appeal.