Hruska v Maxcem Pty Ltd - [2021] SADC 153

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
HRUSKA & ANOR v MAXCEM PTY LTD & ANOR
[2021] SADC 153
Reasons for Decision of his Honour Judge Slattery (ex tempore)
17 December 2021
LANDLORD AND TENANT - LEASES AND TENANCY AGREEMENTS - CONSTRUCTION AND INTERPRETATION
The parties are involved in a long-running dispute about the lease arrangements between the applicants as lessors and the first respondent as lessee of a restaurant and associated land in the Adelaide Hills. The applicants allege that rent is outstanding from at least November 2017.
There has been a history of disputes between the parties about the lease including about the terms of settlement of a previous dispute, the operation of a further licence to occupy other land owned by the lessors for an activity ancillary to the operation of the restaurant. Alternative claims are made that if the formal lease does not apply, an equitable lease in the same terms exists between the parties and that it may be enforced.
The first respondent has filed a defence and a cross claim seeking orders of the court in relation to the leased property and the rights and obligations under the parties’ contractual or equitable arrangements. The respondents contend that the applicants’ claims are premature and should be stayed under the operation of the COVID-19 Emergency Response (Commercial Leases No 2) Regulations 2020 (SA) (the Regulations). The respondents contend that under the Regulations, the Magistrates Court has exclusive jurisdiction to hear and determine claims between the lessors and the lessee arising during the period in which the Regulations operated, namely between 15 May 2020 and 3 January 2021 (the COVID Regulation period). The respondents have commenced separate Magistrates Court proceedings seeking a resolution of the parties’ disputes arising during the COVID Regulation period. The applicants have brought an application pursuant to s 19(1) of the Magistrates Court Act for a transfer of those Magistrates Court proceedings to the District Court.
Notwithstanding that the respondents have operated the restaurant since 27 July 2020, it paid only half rent for a short period of time between January and April 2021. Otherwise, the respondents have paid no rent or outgoings since March 2020. The applicants are reliant upon the rent from the property for their sustenance. The failure or refusal of the first respondent to pay rent and outgoings have left the applicants bereft.
There are a range of claims arising between the parties in relation to these obligations under the lease including in relation to rent from 7 November 2017 and in relation to all of the obligations under the lease before and after the COVID Regulation period, all of which are justiciable by this court. The total outstanding rent exceeds $250,000 before outgoings and costs.
Whether the respondents’ application for a stay should be granted;
Whether the applicants’ application for a transfer of the Magistrates Court proceedings should be granted;
Whether and to what extent the Regulations exclude the jurisdiction of any court apart from the Magistrates Court to make orders about lease obligations arising during the COVID Regulation period.
Held:
1. The respondents’ application for a stay of the District Court action is dismissed. That action raises matters that are justiciable and arise outside of the COVID Regulation period;
2. The claims arising in the District Court action raises the same or similar legal issues as are raised in the respondents’ Magistrates Court proceedings and insofar as those issues are to be canvassed in respect of the claims of the applicant in the period prior to and after the COVID Regulation period, they may be resolved in the District Court action;
3. The Magistrates Court has exclusive jurisdiction to hear and determine claims arising between the lessors and the lessees during the COVID Regulation period irrespective of the amount or type of the claim;
4. The Magistrates Court does not have the power under the Regulations to transfer any action between lessor and lessee arising within the COVID Regulation period to any other court;
5. The District Court does not have the power pursuant to s 19(1) of the Magistrates Court Act to transfer to the District Court any action commenced in the Magistrates Court where that action involves a claim between lessor and lessee arising during the COVID Regulation period;
6. There is a lacuna within the operation of the Regulations due to the absence of a power in the Magistrates Court to transfer an action arising in the COVID Regulation period to a higher court or, in the absence of the Regulations defining “court” to include, according to its jurisdiction, a higher court;
7. The application for a transfer of the proceedings in the Magistrates Court to the District Court pursuant to s 19(1) of the Magistrates Court Act is dismissed.
Covid-19 Emergency Response (Commercial Leases No. 2) Regulations 2020 (SA) s 8, 9; Uniform Civil Rules (SA) r 113.3; Covid-19 Emergency Response Act 2020 (SA); Acts Interpretation Act 1995 (SA) s 34; Retail and Commercial Leases Act (SA) s 68, 69; Magistrates Court Act 1991 (SA) s 19, 22, 38, referred to.
Anders & Anor v NACS Nominees Pty Ltd [2013] SASC 152; Tarasenko v Boylan (1992) 58 SASR 587, considered.

HRUSKA & ANOR v MAXCEM PTY LTD & ANOR
[2021] SADC 153

On 4 December 2020, the applicants commenced proceedings against the respondents for an interim injunction restraining the respondents from entering onto the land at 15 Onkaparinga Valley Road, Verdun more commonly known as Maximilian’s Restaurant. The applicants are the owners of that property. The applicants alleged that the corporate respondent is a lessee of that property and the second respondent is a guarantor of the obligations of the corporate respondent. It is alleged that as at October 2020 the respondents had not paid outstanding rentals for the period between 7 November 2017 and 31 March 2020 in the amount of $35,771.61 inclusive of GST. This was called the outstanding pre-COVID 19 rent amount. It was also alleged that the first respondent was in default of its obligations under the alleged lease about the insurance of the premises, that it had undertaken alterations without permission, and other breaches. The applicants claimed to be entitled to re-enter upon the land and to terminate the lease. Orders were sought for the lease to be terminated on account of these breaches and that the applicants be entitled be paid damages on account of those breaches. Other ancillary orders were sought.
The proceedings were commenced as an interlocutory application. It was supported by an affidavit which set out the issues for determination between the parties connected with the remedies sought by the applicants and the contentions of the applicants consistent with the requirement to show a prima facie case in support of the application. The interlocutory application did not proceed. Consent orders were made on 7 December 2020 for the application to be adjourned until further order. I have not been informed why that application did not proceed and it is not necessary to consider that matter further.
On 29 September 2021, an application was made for the applicants’ action to continue as an inter-parties claim between the applicants and the respondents. On 1 October 2021, orders were made for the variation of the names of the applicants and for other ancillary orders including for the service of the Statement of Claim, a Defence and a Reply. On 5 October 2021 a claim was filed by the applicants which contained the following allegations of fact: in 2012, the applicants leased the restaurant Maximilian’s and other property to the first respondent; in 2017 there was a lease dispute; the dispute was settled and terms were recorded in a deed; attached to that deed was an unsigned lease and a licence agreement, the terms of which were also said to be agreed by the parties; under these arrangements, the tenant was to have exclusive possession and use of the restaurant and other land under a licence and rent was to be fixed by a market valuation; and a licence fee was also payable.
The applicants allege that in December 2018 the market rent was determined at $130,000 per annum and it was paid by the first respondent at that rate for a period of about 15 months between January 2019 and March 2020.
It is alleged that in March 2020 the first respondent ceased making payments of outgoings, rent and other expenses. Notwithstanding that the first respondent recommenced trading from the premises since 27 July 2020 after the COVID-19 shutdown in March 2020, no rent or outgoings were then paid by the respondents until about 3 January 2021.
It is alleged that after 3 January 2021, the first respondent paid about half of the rent up until and including April 2021. Then in May 2021 the first respondent ceased paying any rent, licence fees or any outgoings at all. It is alleged that the outstanding rent and other outgoings due to be paid by the first respondent is in the amount of $200,000. The applicants are retirees and rely entirely upon the rental income from this property for their sustenance; they seek an early hearing and determination of the proceedings. The first applicant is 82 years of age and the second applicant is 75 years of age. The second applicant is suffering from a number of health maladies. In the ordinary course, this court will set an early trial date to hear and determine this action.
In the claim, the applicants alternatively plead the terms of a November 2017 deed, the lease terms pursuant to a deed between the parties and then plead that in the period from 7 November 2017, the applicants and the first and second respondents became bound by an equitable lease.
There is also a pleading of a deed licence under which the applicants permit the first respondent limited use of a licenced area primarily for the conduct of a one hole game of golf from the restaurant area. Alternatively, there is a plea of an equitable licence for the same purpose. The applicants plead the performance of the leases and the licences and then allege breaches of the lease and licence agreement by the respondents. At paragraph 29 of the statement of claim, the applicants plead a failure to pay rent, licence fees and outgoings. There are also pleas of alterations and additions to the property and its structures having been made without permission, the failure to maintain the premises as required under the terms of the lease and the licence, the breach of the lease insurance terms, a breach of assignment terms and in the performance of the deed lease as well as a breach of the licence agreement.
At paragraph 31 of the statement of claim, the applicants plead notices issued by them in relation to the breach of the lease and licenses and for an expedited trial due to the age and infirmities suffered by the applicants.
The respondents have filed a defence and in general put in issue the allegations of the applicants concerning the lease, deny any breach of the lease, allege breaches of the obligations of the applicants under the terms of a lease, the failure by the valuer to properly determine rent (under the deed arrangements) and then allege that they entitled to a set off. They have also filed a cross claim in which they allege wilful neglect of the applicants in relation to a right of way, an ongoing failure to comply with their obligations under the deed which led to the failure of the deed, a failure to comply with clause 2.8 of the deed, a failure to take all steps necessary to give effect to a right of way, a failure of cooperation and other breaches. It is also alleged that there was an overpayment of rent and it pleads COVID related issues from paragraphs 43 onwards. At paragraph 45 and following of the cross claim, the respondents plead that by letter of 6 April 2020 they wrote to the applicants and notified them that they would not be making payments of any rental until further notice, that they resumed trading on 25 July 2020 subject to additional restrictions and the COVID lockdown and that on 18 December 2020 they applied to the Office of Small Business Commissioner for a mediation. Rent was not paid between 1 April 2020 and 31 December 2020.
The respondents then assert at paragraph 49 that this court does not have jurisdiction to hear the claim as it is a condition precedent to any claim to rent that the applicants obtain from the South Australia Magistrates Court in its special jurisdiction a determination for rent waived and/or deferred pursuant to the Regulations under the COVID-19 emergency response, (the Regulations). It is said that the current proceedings are premature. There is then a pleading of loss suffered as a result of multiple breaches of the deed by the applicants and by their son.
In the cross claim, the respondents seek the following orders:-
1 That the applicants have breached the terms of the deed;
2 That the applicants are liable to pay any outstanding payments required as a consequence of the deed;
3 That the applicants are to perform the necessary work to comply with the deed;
4 That the applicants are to undertake specific performance of the deed;
5 The respondents are entitled to damages on account of the breaches of the deed to be assessed;
6 An order that the applicants be jointly and severally liable for damages suffered by the respondents;
7The costs of the within proceedings be determined in accordance with the provisions of the deed; and
8 Any other order that the court sees fit.
A reply and defence to counterclaim have been filed.
The respondents have separately commenced an action in the Magistrates Court (CIV-21-013258). This action is not before me but it appears to be connected at least in part with some common issues including the operation of the Regulations and their influence upon the parties’ legal obligations.
The matter came before me on 9 December 2021 on an interlocutory application filed by the respondents dated 30 November 2021 under which the first respondent sought an order that the proceedings and the claims pleaded within the statement of claim be stayed until such time as the applicants have complied with Regulation 9(1) of the COVID-19 Emergency Response (Commercial Leases No. 2) Regulations 2020. The application was supported by an affidavit of Mark James Gowans sworn 30 November 2021.
Also before me today was an interlocutory application under which the applicants sought that the court dispense with the requirements that an application to transfer the proceedings be by way of an originating application and that the court in its discretion accept the applicants’ interlocutory application as a proper procedural process to make an application for transfer of proceedings under UCR 113.3. The applicants seek an order that the Adelaide Magistrates Court proceeding now commenced by the respondent namely CIV-21-013258 be transferred to the District Court and be managed with these proceedings together with ancillary orders.
The basis of the respondents’ stay application is disclosed in the affidavit of Mark James Gowans solicitors sworn 30 November 2021.[1] Paragraphs 9-15 inclusive of that affidavit provides as follows:-
[1] FDN 17.
COVID-19 Rent Relief Issue
9.I am aware that the South Australian Parliament enacted emergency legislation to provide emergency relief to commercial and residential entities.
10.Specifically, the Covid-19 Emergency Response (Commercial Leases No 2) Regulations 2020 (‘the Regulations’) were adopted under the Covid-19 Emergency Response Act 2020 to, having regard to the National Cabinet Mandatory Code of Conduct – SME Commercial Leasing Principles During Covid-19 published on 7 April 2020;
10.1To implement temporary measures to apply to parties to certain commercial leases related to circumstances brought about by the Covid-19 pandemic; and
10.2To provide for mechanisms to resolve disputes concerning those leases.
11.I have been instructed by the Respondents to seek the issue relating to rent relief to be pre-determined on the basis that it is fundamental to the Claim, wherein the amounts sought are incidental to the financial position of the Respondents.
12.The current Proceedings are premature, as any amounts alleged to be payable have not yet crystallised until there has been a determination of any amount payable after the determination of the valuation issue, which in turn will determine both the amount payable and amount sought for rent relief pursuant to an application per regulations 7 and 9(5)(b) of the Regulations.
13.Pursuant to the Regulations, it is apparent that the only Court which has jurisdiction to make orders in relation to an application under the Regulations is the Magistrates Court of South Australia. Now produced and shown to me and marked ‘MG1’ is an Originating Application for Rent Relief filed in the Magistrates Court of South Australia on 29 November 2021.
14.On 26 October 2021, I was instructed to send a letter to RSA Law, the solicitors for the Applicants to request a consent for the proceedings to be stayed, to avoid unnecessary costs to the parties. Now produced and shown to me and exhibited here to as ‘MG2’ is a copy of said letter.
15.On 27 October 2021, I received a letter of response from RSA Law. It was determined that RSA Law would not consent to the request for a stay of the proceedings. Now produced and shown to me and marked ‘MG3’ is a copy of said letter.
A second issue arises because it is clear from a recitation of the content of the statement of claim, there are other issues for determination on the claim made by the applicants outside of the operation of the Regulations. The amount of rent claimed is in dispute. It is said that an independent assessment is being made of the rental valuation. I have not seen any materials to support that assertion. This appears to be a challenge to the valuation process undertaken pursuant to the deed. However, that process appears to be one that is agreed to be undertaken by an expert. Such a challenge must be within a very narrow scope according to well settled common law principles. There is no pleading to support a challenge based on such principles.
Mr Gowans then asserts at paragraph 19 of his affidavit that the rental amount payable is a fundamental issue to be determined in order to allow the cross claimants to seek an amount of rent relief as determined by the market valuation of rent for the property pursuant to the Regulations. Therefore, at a number of levels, there is an uncertainty around the amount of the rent sought. On that basis also, a stay of the proceedings is sought.
In submissions before me, Ms Billich for the applicants conceded that there are a number of aspects involving the lease, the deed and the licence all of which remain subject to dispute between the parties. It follows that the question of any determination of an amount payable must include a determination of the respective rights and liabilities of the parties under their contractual arrangements or alternatively under any equitable lease or licence. A determination of those issues is the foundation upon which a court may make any order arising on the statement of claim, the defence and the cross claim.
Within the period of the claim by the applicants whether under the term of the lease, the licence or the equitable lease there is included the period between 15 May 2020 and 3 January 2021. This is the period within which the COVID-19 Emergency Response (Commercial Leases No. 2) Regulations 2020 operated. It is the applicable prescribed period and in that time the Regulations applied to affected leases. An affected lease is one where the lessee is suffering financial hardship as a result of the COVID-19 pandemic and the turnover in a relevant year was less than $50,000,000. It may be accepted that almost every lease was so affected.

The objectives of the Regulations were to implement temporary measures to apply to parties to commercial leases as a result of the COVID-19 pandemic and to provide for mechanisms to resolve disputes concerning the application of those Regulations. The Regulations apply during the applicable prescribed period. Under Regulation 6, the parties to a commercial lease must make genuine attempts to negotiate in good faith the rent payable under the commercial lease and the other terms of that lease during prescribed period. In that negotiation process, regard must be had to the economic impacts of the COVID-19 pandemic, the provisions of the COVID-19 Emergency Response Act 2020 and the provisions of the National Cabinet Mandatory Code of Conduct.
Regulation 7 prohibits and restricts prescribed action against the lessee by a lessor during the applicable prescribed period on the grounds of breach of the lease or because of a failure to pay rent or outgoings or the failure to operate the business during that period. The sub-regulation does not apply to or in relation to a failure to pay rent if the amount of the rent is agreed by the parties under a mediation under Regulation 8 or is determined by the court under Regulation 9.
The court is defined in regulation 3 to mean the Magistrates Court. The powers under Regulation 9 are those with which I am presently concerned. Under that Regulation, a party to a commercial lease may apply to the court for resolution of a relevant dispute arising under a commercial lease where a Commissioner has issued a certificate under Regulation 8(4). A Commissioner will issue a certificate under Regulation 8(4) where there has been a mediation before the Commissioner which has failed or is unlikely to resolve a dispute and which has been terminated without resolution or where a mediation would not be reasonable or where a party has not participated in good faith in the mediation.
Once the Court is satisfied of the provision of the certificate under Regulation 8(4), it may make a determination as to whether or not a lessee is an affected lessee and it must assess the entitlement of the lessee to receive for example Job Keeper payments and assess any reduction in the turnover of the business of the lessee during a specified period compared with any other specified period relevant to whether or not the lessee is suffering financial hardship as a result of the COVID-19 pandemic. These are obviously matters that require a detailed factual enquiry.
Under Regulation 9(5) the court may make the following orders:-
(a)An order granting relief to an affected lessee in relation to payment of rent under the commercial lease;
(b)An order requiring the payment of some or all of the rent under a commercial lease into the court until the lease has been performed;
(c)An order requiring that rent paid into the court be paid out and applied as directed by the court;
(d)An order modifying the terms and conditions of the lease in a manner specified;
(e)An order to defer the payment of rent under the commercial lease for a specified period not exceeding 24 months from the day in which the order is made;
(ea) An order varying, revoking or substituting an agreement or the terms of an agreement entered into by the parties to the commercial lease as contemplated by the Regulation.
(f)Any other order necessary or desirable to resolve the dispute between the parties.
In making any order for the grant of the relief under sub-regulation 9, the court must have regard to: the obligations of the lessor under the Act; the reduction in turnover of the business of the lessee; whether the lessor has agreed to waive recovery of any outgoing; whether a failure to provide rent relief would comprise the lessee’s ability to fulfill its obligations; the ability of the lessor to provide rent relief; any reduction by a third party to outgoings in relation to the premises; and any other matter that the court thinks fit.
Under Regulation 10, if a lessee is suffering from financial hardship as a result of the COVID-19 pandemic and in the relevant period the lessor has taken or commenced prescribed action, or the lessor has taken action which it would not otherwise have been able to take but for the operation of the Regulation, then the action or the operation or effect will insofar as it remains incomplete or ongoing be taken to be stayed or suspended until the end of the period prescribed period.
A prescribed action means taking any action under the provisions of the commercial lease or seeking orders or issuing proceedings in a court for any of the following:-
prescribed action means taking action under the provisions of a commercial lease or seeking orders or issuing proceedings in a court for any of the following:
(a)eviction of the lessee from premises the subject of the commercial lease;
(b)exercising a right of re‑entry to premises the subject of the commercial lease;
(c)recovery of land;
(d)distraint of goods;
(e)forfeiture;
(f)damages;
(g)requiring a payment of interest on unpaid rent otherwise payable by a lessee;
(h)recovery of the whole or part of a security bond under the commercial lease;
(i)performance of obligations by the lessee or any other person pursuant to a guarantee under the commercial lease;
(j)possession;
(k)termination of the commercial lease;
(l)any other remedy otherwise available to a lessor against a lessee at common law or under the law of this State;
The prescribed action relates to seeking any orders or issuing proceedings in a court whereas Court is otherwise defined to mean the Magistrates Court.
The Regulations do not provide a power for a court apart from a Magistrates Court to make any orders under its terms. The Regulations operated for only a short period of time and were remedial in nature. Although it is not explicitly stated, it is apparent that the intent of Parliament was that within the operation of the Regulations, the conferral of jurisdiction on the Magistrates Court is exclusive. That is so even though the content of Regulation 9(1) and (2) provides that a party to a commercial lease may apply to the court for resolution of a dispute. The expression ‘may’ suggests a permissive or facultative construction: Acts Interpretation Act 1995 (SA) s.34. I think it is apparent that Parliament intended that questions of the operation of leases, issues of default and any other prescribed action that might be taken where there is a default, fall within the original jurisdiction of the Magistrates Court such that there is a prescription of an act or occurrence which is a condition on the exercise of the power. However, as in this instance, a peculiar result arises. The civil jurisdiction of the Magistrates Court is limited to claims which do not exceed $100,000. If claims exceed $100,000, then a Magistrates Court is obliged to refer the matter to the civil division of the District Court. In the ordinary course, absent the Regulations, where a claim under a lease exceeds $100,000, then it is obligatory for the Magistrates Court to refer the matter to the District Court.
It is well settled that apart from the operation of the Regulations, the Magistrates Court itself does not have exclusive jurisdiction over retail and commercial lease disputes. So much is made clear by Peek J in his Honour’s decision in Anders & Anor v NACS Nominees Pty Ltd [2013] SASC 152. There his Honour held that the jurisdiction of the Magistrates Court under s.68(2) of the Retail and Commercial Leases Act was not a specialist jurisdiction which vested exclusively in that court. His Honour held that the District Court has power to exercise the review jurisdiction over orders made by a Magistrate under s.68(2) pursuant to s.38(6) of the Magistrates Court Act and, importantly, the Retail and Commercial Leases Act provides for the transfer of proceedings to the District Court under s.69(1). This court very often deals with issues arising at common law and under the Act in relation to retail and commercial leases.
The Retail and Commercial Leases Act contemplates under s.69(1) that there may be transfer of proceedings by a magistrate to the District Court. There are a number of reasons why such an order would be made. It is well settled that it is inappropriate for there to be two proceedings, one in the Magistrates Court and one in the District Court involving largely the same parties and the same issues, the determination of which may give rise to inconsistent judgments. Although that is not the only test, it is a cornerstone of one aspect of the exercise of such a discretion by a court. Also, s.22 of the Magistrates Act gives a District Court judge the power to exercise the jurisdiction powers or functions of a magistrate. The decision of King CJ in Tarasenko v Boylan (1992) 58 SASR 587 at 590-591, makes clear that a District Court judge has power to exercise the jurisdiction powers and functions of a magistrate and so, may exercise the jurisdiction, powers or functions of the Magistrates Court. That judge may also exercise the jurisdiction and powers of a lower court whilst sitting as a District Court judge. All of these principles are well settled.
In my opinion, a significant difficulty arises in this matter. Under the Regulations, the powers under Regulation 9 to be exercised to determine a dispute is vested only in the Magistrates Court. Prescribed actions may be taken in other courts but they will be stayed to the extent that they seek orders or involve proceedings concerning any of the subparagraphs under the definition of prescribed action in Regulation 3, the interpretation provision. Within the Regulations, there is no power for the Magistrate to transfer a matter to any other court. The intention of Parliament is apparent: the Magistrates Court must have exclusive jurisdiction in relation to a determination of the relevant dispute under Regulation 9. Thus, the repository of the power to exercise the jurisdiction under Regulation 9 is the Magistrates Court. There is no other power or prescription within those Regulations which allows the Magistrates Court to transfer the action to another court such that the content and powers within the Regulations would then be applicable in any proceeding heard and determined by, for example, the District Court. Even though the District Court has power under s.19(1)(a) of the Magistrates Court Act to order the transfer to it of proceedings commenced in the Magistrates Court, such an order would not, without more, mean that a District Court judge who became seized of that action, would be empowered to exercise the jurisdiction conferred under Regulation 10. This is because, in the ordinary course, a District Court judge is not able to take the power of the magistrate being exercised under the Regulation. Rather, the Regulation itself must empower both the transfer of the proceeding and for the District Court judge to exercise the jurisdiction applicable in relation to the proceedings once it is transferred from Magistrates Court to the District Court.
A District Court judge making an order under s 19(1)(a) of the Magistrates Court Act or a magistrate, making an order under s 19(2) of that Act, is not empowered to clothe a judge of the District Court with the specific jurisdiction of the Magistrates Court as prescribed under the Regulations. These circumstances, therefore, are to be distinguished from those which confronted Judge Tilmouth in his Honour’s decision in Cirocco Constructions Pty Ltd v Clark [2015] SADC 98 where his Honour said at [27] as follows:
The significance of an order of referral to the Civil Division of the District Court pursuant to s 40(2) of the Building Work Contractors Act, lies in the fact that such orders pick up and transfers to the District Court, the additional powers of disposition available under s 32, that would not otherwise be available to it. This is because upon referral, Part 5 of the Building Work Contractors Act ‘applies in relation to the proceedings’: s 40(2). In contrast, that situation is not brought about when a ‘bare’ order is made by the District Court pursuant to s 19(1)(a) of the Magistrates Court Act, transferring proceedings commenced in the Magistrates Court to the District Court. The same applies in the case of an order made by a Magistrate transferring proceedings from the Magistrate Court into the District Court, pursuant to s 19(2) of the Magistrates Court Act.
There is no power within the Regulations, equivalent to s 40(2) of the Building Work Contractors Act, to transfer to the District Court additional powers of disposition under Regulation 10 that would not otherwise be available to it. A bare order made under s 19 of the Magistrates Court Act would not be sufficient to clothe the District Court with that power.
I consider that this situation is both unacceptable and anomalous. There is plainly an unintended lacuna within the contents of the Regulations. It is a matter that should be brought to the attention of the Attorney General for the State of South Australia. A facilitative correction would be quite straightforward: a retrospective amendment to the Regulations may define Court as meaning any of the Magistrates Court, District Court or Supreme Court, as the case may be. Alternatively, a further Regulation may empower the Magistrates Court to transfer an action to the District Court which would then be clothed with those dispositive powers. Any issue arising as a result would, in the usual course, depend upon the statutory monetary limit of the court with the consequence that, for example, a claim of this nature would commence in the District Court. One hallmark of the unsatisfactory nature of the present position is that in the current matter, a portion of the claim would have to be heard and determined in the Magistrates Court, and the balance of the claim may be heard and determined in the District Court; the delay, costs, and disadvantage suffered by all litigants as a result of that outcome is completely unsatisfactory. Parties in the position of these applicants are put to extraordinary disadvantage leaving them bereft. That plainly enough could not have been the intention of Parliament. Even though that is the legal position, as a matter of practicality, this court is not prevented from considering all relevant legal issues between the parties insofar as those issues arise both before and after the period in which the Regulations operate. Taking this case as an example, the claims of the applicants date back to 7 November 2017 and include payment of outstanding rent, outgoings and other claims in relation to the alleged failures of the first respondent to observe the terms and obligations under the lease. The same claims are made following the end of the COVID Regulation period on 3 January 2021. It is apparent that this court has jurisdiction to hear and determine those claims and it takes little foresight to comprehend that the disposition by this court of those issues will largely determine the obligations between the parties during the COVID Regulation period. That is the position, notwithstanding that the Regulations operate as a stay of claims between the parties under the lease during the operation of the Regulations. This a most unsatisfactory result.
I will hear the parties further in relation to directions about this matter. I refuse the application for a stay of the proceedings. It is a matter for the respondents whether they wish to continue with their proceedings in the Magistrates Court. Equally unsatisfactory, is that any District Court judge hearing and determining this matter, is unable to make any order in relation to the leases in the period between 15 May 2020 and 3 January 2021. A judge of this Court could not proceed to attempt to hear and determine the matter once and for all because the applicants would then be exposed to an appeal on the basis that this court has made orders without any jurisdiction. I refuse the application of the applicants for an order under s 19(1) of the Magistrates Court Act, because for the reasons given, such an order would have no utility.