James Honner Nominees Pty Ltd v Geard (No 2)

[2019] SADC 99

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

JAMES HONNER NOMINEES PTY LTD v GEARD (No 2)

[2019] SADC 99

Judgment of His Honour Judge Tilmouth

22 July 2019

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

Following a trial in this action the plaintiff was largely but not wholly unsuccessful. It contends there should be no order as to costs. Plaintiff ordered to pay 80% of the defendants’ costs to be agreed or taxed. Discussion as to the ambit of ‘costs’ referred to in s 42(1) of the District Court Act 1991 (SA) and r 264(1) of the District Court (Civil) Rules 2006 (SA) and further discussion of the limited role of the court when one party is unrepresented.

Honner Nominees Pty Ltd v Geard [2019] SADC 78; Australian Consumer Law s 243(c); District Court Act 1991 (SA) s 42(1); Copping and Others v ANZ McCaughan and Another; Tillett Nominees Pty Ltd and Others (1995) 63 SASR 523; Latoudis v Casey (1990) 170 CLR 534; Kenny v Ritter (2009) 263 LSJS 158; Maher v Wall [2000] SASC 176; Nagy v Ryan [2003] 225 LSJS 432; Hamdorf v Riddel [1971] SASR 398; Rajski v Scitec Corporation Pty Ltd Unreported NSWCCA 16 June 1986; Awad v Twin Creeks Properties Pty Ltd [2012] NSWCA 200; District Court (Civil) Rules 2006 r 264(1) and (2), referred to.
Nescor Industries Group Pty Ltd v Miba Pty Ltd (1997) 150 ALR 633; Cachia v Hanes (1994) 179 CLR 403; Santos Ltd v Delhi Petroleum Pty Ltd (2005) 240 LSJS 366, applied.

JAMES HONNER NOMINEES PTY LTD v GEARD (No 2)
[2019] SADC 99

Preliminary

1. When the court delivered judgment in this matter on 21 June 2019, it reserved the question of costs at the request of counsel for the plaintiffs.  Orders were made for filing written submissions on the issue of costs, which the court has now received.

2. Although largely unsuccessful, the plaintiff James Honner Nominees Pty Ltd (Honner Nominees) contends it is appropriate to make no order for costs, whereas the unrepresented defendants seek a number of orders in the nature of costs in their favour.

3. First it is necessary to recall that in the principal judgment, orders were made dismissing Honner Nominees’ claim for damages, dismissing the defendants’ claim to a set-off and declaring the Motel Agreement between the parties unenforceable at the instance of Honner Nominees, pursuant to s 243(c) of the Australian Consumer Law.[1]  In the result Honner Nominees was largely, although not wholly unsuccessful.  The defendants were unrepresented throughout the trial, however they were represented at the time their defence was filed.

   [1]    Honner Nominees Pty Ltd v Geard [2019] SADC 78, [99].

4. Before turning to the individual merits of the submissions, a number of preliminary principles are uncontroversial.  Ordinarily costs follow the event on a party/party basis: r 264(1)&(2) District Court (Civil) Rules 2006 (SA), Hamdorf v Riddel.[2] All the same, the court may in the exercise of unfetted discretion, award costs on any basis it considers appropriate under s 42(1) of the District Court Act 1991 (SA): Copping & ors v ANZ McCaughan & Anor; Tillett Nominees Pty Ltd & Ors.[3]  Even so, a successful party holds a reasonable expectation of obtaining a favourable order for costs: Latoudis v Casey.[4]

   [2] [1971] SASR 398, 402.

   [3] (1995) 63 SASR 523. 527.

   [4] (1990) 170 CLR 534, 557, 569.

   Submissions of Honner Nominees

5. In resisting any order of the usual kind, Honner Nominees first points to the fact that the defendants failed completely in relation to their set-off.  This arose because the defendants did not disclose and nor did they adduce documentary evidence in support of that claim, even though were encouraged to do so by Masters of the Court during earlier interlocutory proceedings.[5]  The fact of the matter is that no time was spent during the course of the trial on this issue for that very reason. 

   [5]    Honner Nominees Pty Ltd v Geard [2019] SADC 78, [93].

6. Next, Honner Nominees points to the fact that insofar as the court made an order declaring the subject Motel Agreement unenforceable, this was not pleaded by the defendants.  So much can be acknowledged.  On the other hand, as pointed out in the primary judgment, unconscionable conduct was pleaded and in any case pleadings ‘cannot require a judge to decide a case otherwise then in accordance with the law’: Nescor Industries Group Pty Ltd v Miba Pty Ltd.[6]  As explained in that case:[7]

   If the pleadings proceed on a misapprehension of law, the judge should … make it clear to the parties what is the correct approach and should proceed accordingly.

   [6] (1997) 150 ALR 633, 639. Honner Nominees Pty Ltd v Geard [2019] SADC 78, [95].

   [7] Ibid 639-640.

7. Accordingly, as the court was confronted with an unrepresented party it had a duty to ensure there was a fair trial and so it is entitled to afford the unrepresented party some assistance, providing it was no greater than was required to further that end: Kenny v Ritter.[8]  Such assistance includes that which is necessary to diminish the disadvantage ordinarily suffered when an unassisted party is faced against a legally represented party: Rajski v Scitec Corporation Pty Ltd.[9]  Mahoney J explains in that case the:

   court will … be careful to … ensure that … because of the lack of legal skill [the unrepresented party] failed to claim rights in which otherwise he might have done.

   [8] (2009) 263 LSJS 158; [2009] SASC 139, [23].

   [9]    Unreported, NSWCCA 16 June 1986, p 14.

8. Of course the court must at the same time guard against the prospect of depriving the represented party of its lawful entitlements: Maher v Wall,[10] Nagy v Ryan.[11]  As pointed out in the primary judgment, the power to declare a contract unenforceable is employed in a manner ‘conformable with the just … protection of the representee … to prevent the likely suffering of loss or damages by the conduct’: Awad v Twin Creeks Properties Pty Ltd.[12]

   [10] [2000] SASC 176, [46].

   [11] [2003] 225 LSJS 432, 439-440.

   [12] [2012] NSWCA 200, [43]; Honner Nominees Pty Ltd v Geard [2019] SADC 78, [96].

9. The next point taken by counsel for Honner Nominees with respect to the declaration of unenforceability was that ‘the plaintiff had to face a case on the run’, cannot be accepted.  The situation was that once the prospect of primary findings adverse to Honner Nominees arose during the course of preparing judgment, the question of what remedies were appropriate came into sharper focus.  It was with this in mind that the parties were invited to return to court to address this very question:

   Are any other remedies available to the defendant, other than damages or for set off, such as for example under s 243 of the Consumer Law?

10. Upon resumption for this purpose, the following exchange occurred with counsel for Honner Nominees:[13]

    HIS HONOUR:     … because they're unrepresented I thought I should raise this issue. The question of declaring the contract void is not pleaded as such, … that's why I asked the question whether s.243 is available …

    …

    HIS HONOUR:  It occurred to me, in drafting a judgment, that this just wasn’t referred to, and I was looking at your submission, which is soundly based, that there’s no proof of damages so that’s the end of the case, in effect, and then I realised that this might be available.  Is there any further evidence or submission you would wish to make about that issue?

    MR RYDER:  I can’t really consider that there could be.  I feel like the plaintiff has run its case and if the only question is whether if an order were made avoiding the contract, where that should occur and when that should occur because the contract was carried into effect for some time.

    [13]   T7.36-8.25, 23 April 2019.

11. Shortly after this exchange counsel for Honner Nominees was asked specifically if he wanted to produce any further evidence on the point and whether he wished to make any further submissions about it.[14]  Both parties were given liberty to present further written submissions on the point, which they did.  The fact of the matter is that the declaration of unenforceability is of no practical consequence to Honner Nominees.  It was made merely to reflect the fact that although the defendants appeared to have meritorious claims in damages, they failed to quantify or prove them.

    [14]   T7.36, T9.1-4, 23 April 2019.

12. A further point made on behalf of Honner Nominees is to the effect that the defendants’ conduct during the pre-trial process was ‘unhelpful’.  Mr Ryder pointed to the fact that they were unsuccessfully encouraged to make to proper disclosure, which they did not.  They were subject to adverse costs orders for wasted attendances on 13 November and 19 November 2018 by a Master of the court.  The court file shows that the defendants were ordered to file and serve a list of documents on 10 September 2018.  On 30 October 2018, the Master noted they had not made disclosure ‘apart from documents produced previously’, however they were given liberty to add further ‘admissible documents to the tender bundle within a further three weeks’.  The defendants also failed to respond to a trial book served on them.  Further orders were made on 1 April 2019 by a Judge of the Court requiring the defendants to respond to the plaintiff’s list of documents within 10 days, which apparently they did not do either.

13. Despite this record of non-compliance the fact of the matter is that the defendants were effectively heavily penalised for their failure to conform with disclosure requirements by failing in their cross-claim for damages, and to a lesser extent by the adverse costs orders of the Master.

14. On the other hand, the Trial Book prepared at the cost of Honner Nominees was of great assistance in determining the matter.  The documents contained within it were principally relied upon by the defendants in making out their case.  The case against the defendants was fairly conducted and the submissions of Mr Ryder were of considerable assistance to the court.

15. In the combined circumstances, and in the exercise of a broad discretion, the appropriate course is to order the plaintiff to pay the defendants 80 per cent of their costs to be agreed or taxed.

    Submissions of defendants

16. Apart from references to legal fees paid in the past by the defendants of somewhere near $14,000, the defendants claim in their written submission ‘two nights’ accommodation to attend the trial at $274 and costs of restaurant staff to cover their absence during the trial of $1,680.  Whether or not the accommodation and indeed travelling expenses might be allowed is a matter for taxation.  The question of covering staff costs does not however come within the ambit of ‘costs’.  When the District Court Act and District Court (Civil) Rules speak of ‘costs’, they mean legal costs, that is to say the costs incurred by instructing solicitors and briefing counsel, and not other associated expenses, apart from properly allowable disbursements incurred by litigants.  The principle is established by the High Court in Cachia v Hanes:[15]

    The ‘costs’ provided for in the Rules do not include time spent by a litigant who is not a lawyer in preparing and conducting his case.  They are confined to money paid or liabilities incurred for professional legal services.  It is only in that sense that the Rules speak of ‘costs’.  … costs in the conventional sense, namely remuneration for work performed by a solicitor or a solicitor’s clerk.

    [15] (1994) 179 CLR 403, 409.

17. The same conclusion flows from the very words of s 42(1) of the District Court Act ‘the costs of and incidental to all proceedings in the court, … shall be in the discretion of the court …’, because ‘the Court has no power to order the payment of amounts of money which are not “costs” for the purpose of that section’: Santos Ltd v Delhi Petroleum Pty Ltd.[16]

    [16] (2005) 240 LSJS 366, [27].

18. Further claims for certain unpaid accounts rendered during the period the defendants operated the Stansbury Motel, including plumbing repairs, cleaning products and electrical charges for instance, are undocumented and unproven for the same reasons as given in the primary judgment.[17]  They are not legal costs in any event.

    [17]   Honner Nominees Pty Ltd v Geard [2019] SADC 78, [92]-[97].

19. The formal order of the court is therefore as indicated earlier.