Krix & Krix v the Citrus Board of South Australia No. Scciv-02-1863

KRIX & KRIX v THE CITRUS BOARD OF SOUTH AUSTRALIA
[2003] SASC 387
Full Court: Mullighan, Debelle and Gray JJ

MULLIGHAN J I shall refer to the parties to this appeal as the plaintiffs and the defendant as used in the proceedings in the Magistrates Court. The plaintiffs held a grower registration pursuant to the Citrus Industry Act 1991 (“the Act”) by virtue of which they were permitted to carry on business as a grower of citrus fruit and a seller of the fruit to registered citrus packers or processors. On 15^th June 2000 they entered into a fruit delivery agreement with a registered citrus packer to supply a large quantity of navel oranges. In about late June or July 2000, the plaintiffs delivered to that packer a large quantity of navel oranges. The packer refused to accept them having been notified by the defendant, the Citrus Board of South Australia, that the plaintiffs were not a registered grower and that accepting the delivery would be aiding and abetting a contravention of the Act.
The Act establishes the Citrus Board of South Australia and provides for registration of growers, packers and others involved in the citrus industry: Parts 2 and 3. It is an offence to carry on business as a grower unless registered as a grower: s 29. The functions of the Board are set out in s 13 of the Act and they include developing policies for the orderly marketing of citrus fruit and citrus fruit products, the collection of information relating to that production and marketing, the promotion and encouragement of the consumption of citrus fruit and citrus fruit products and research. Section 19 of the Act provides, inter alia, that the Board may require a registered grower to furnish in writing to the Board such information in relation to citrus fruit or a citrus fruit product as the Board thinks necessary for the administration of the Act. The information required may include type and quantity of fruit grown and delivered for sale.
An action was commenced in the Magistrates Court by the plaintiffs against the defendant claiming that the defendant had engaged in false and misleading conduct pursuant to s 56 of the Fair Trading Act 1987 as they alleged, the plaintiffs had remained registered as a grower pursuant to the Act. The plaintiffs sought a declaration to that effect, damages, interest and costs.
The defendant filed a defence and asserted that, pursuant to s 25(6), registration under the Act is for a period of only 12 months, and can be renewed each year for a further period of 12 months. It asserted that the plaintiffs did not apply for renewal of their registration in the 1996/1997 year or thereafter and accordingly were unregistered after April 1996. It alleged that by memorandum dated 14^th October 1996, due to computer difficulties, the defendant was late in seeking renewals of registrations and requested all growers to provide the required information by 15^th November 1996 as part of the renewal of registration process. The plaintiffs failed to do so and has not since applied for renewal of registration.
In their reply the plaintiffs claimed that the defendant was estopped from asserting that the plaintiffs were unregistered after April 1996 and for various reasons which need not be set out in detail for present purposes. However, it included that the defendant failed to seek renewal of registration from the plaintiffs in the 1996/1997 year and that the invitation to renew their registration as a citrus grower on 14^th October 1996 required them to complete and return a form marked “Growers Census” which required them to provide information which was not of the kind set out in Reg 6 of the Regulations made under the Act. This form required information as to plantings of citrus. It appears that the defendant combined the forms seeking information pursuant to s 19 and for renewal of registration pursuant to s 25(6). The form for renewal of registration is set out in Form 4 of Schedule 4 of the Citrus Industry Regulations 1992.
There were various pre-trial hearings before the trial of the action. The plaintiffs requested, at a conciliation conference on 15^th November 2001, that a magistrate should read relevant documents and hear full argument on the action and give an intimation to the parties. The conference was adjourned to 31^st January 2002 for that purpose.
On that day the action came before a learned Magistrate for that purpose, which was a conciliation conference held pursuant to R 89 of the Magistrates Court (Civil) Rules 1992.
It was agreed by the parties that the Magistrate hear argument from the plaintiffs and the defendant on facts and law and that he give an informal ruling as to whom he thought would win and lose the action. This Magistrate said that his decision could later be considered on the question of costs of the action. R 106(10) of the Magistrates Court (Civil) Rules provides:
“106(10)A magistrate may intimate her or his view of the likely result of a case at any time in pretrial processes and if s/he does so that intimation must not be available to the trial magistrate until after judgment when the trial magistrate may take it into account in relation to costs.”
This Magistrate expressed the view that the defendant had two problems in the action. It had mixed in its mind the process of renewals of registration and the process under s 19 of the Act for non-compliance with a request for information. Also, he said, there was a real issue as to whether the Board’s decision accurately reflected its decision as minuted. He did not refer to a specific decision, but I assume he was referring to the decision to take action against the plaintiffs for not providing information. He then mentioned the plaintiffs’ problem in the action in that they did not renew registration. He said that the plaintiffs had made a stand against the Board and the estoppel argument would not succeed. He went on to say, “So, the plaintiff[s] will lose because they [sic] were [sic] not a member because he did not renew, so I think that is where it will end”. This intimation was reduced to writing and placed in a sealed envelope only to be shown to the Trial Magistrate at the conclusion of the trial if relevant to the question of costs.
The action came to trial before another learned Magistrate who gave judgment on 24^th June 2002 in favour of the defendant and dismissed the plaintiffs’ claim. On 25^th July 2002 the defendant’s solicitors wrote to the plaintiffs’ solicitors seeking costs on a solicitor and own client basis for reasons which may be summarised as follows:
1The plaintiffs could only succeed in the action if they were registered growers and they were not.
2The plaintiffs raised at the trial their dissatisfaction with the allocation of funds to various organisations of growers and did so as a political protest.
3At the conference before the first learned Magistrate, the defendant offered to pay its own costs if the plaintiffs did not proceed which offer was rejected by them.
4The plaintiffs sought an informal intimation at the conference before the first learned Magistrate who heard argument and then intimated that they may lose the action because they were not registered.
The plaintiffs did not respond and the defendant made an application to the learned Trial Magistrate for its costs of the action on an indemnity basis. The plaintiffs were not represented at the hearing before the learned Trial Magistrate who made an order in their absence that they pay the defendant’s costs on a solicitor and client basis. The plaintiffs brought the matter on for hearing again and applied to set aside that order. The learned Trial Magistrate heard that application and again considered the defendant’s application for costs on the merits. She set aside the order for costs made in the absence of the plaintiffs.
The learned Trial Magistrate opened the sealed envelope and referred to the intimation given by the first learned Magistrate. She acknowledged that the case on estoppel advanced by the plaintiffs at the trial differed from that advanced before the first Magistrate. What was advanced at the trial was that no applications to renew registration were issued to citrus growers. The learned Trial Magistrate concluded that this contention was clearly disproved by documents discovered before the trial and admitted into evidence. She concluded that the plaintiffs proceeded with the action when they were unlikely to succeed. They were told by the first learned Magistrate that their estoppel claim was unlikely to succeed. Having referred to the intimation given by the first learned Magistrate, that the plaintiffs would lose the action, the learned Trial Magistrate said that the intimation was correct. She said:
“In all the circumstances I am satisfied that the plaintiffs continued the action when it was unlikely to succeed. The fact that the basis of the plaintiffs claim and the initial argument in relation to estoppel were unlikely to succeed were clearly intimated by [the first Magistrate] in January. The altered basis of the estoppel claim was also unlikely to succeed as it was reformulated in the amended Reply for the reasons which I have indicated. In these circumstances I consider that proper cause exists to grant the defendant’s application for costs on a solicitor client basis.”
She found that proper cause existed for an order that the plaintiffs pay the defendant’s costs on a solicitor and client basis. The expression “proper cause” is to be found in R 106(4) of the Magistrates Court Rules which provides:
“(4)Where proper cause exists, the Court may order that a successful party is entitled to costs on a solicitor and client basis.”
In R 2(1) of those Rules “costs on a solicitor/client basis” is defined as meaning “calculated in accordance with the Supreme Court scale unless otherwise specified”.
The plaintiffs appealed to this Court against that order. The appeal came before a Judge of this Court. He allowed the appeal and set aside the order of the learned Trial Magistrate that the plaintiffs pay the defendant’s costs on a solicitor and client basis and substituted an order that they pay the defendant’s costs on a party and party basis.
The learned Judge observed that R 106(10) is poorly worded as the Magistrates Court could not give an intimation of “the result of a case” before trial and he assumed that the meaning of the rule is that the Court may give an intimation as to “the likely” result of the case which intimation may be taken into account on any question as to costs. It is unnecessary for present purposes to consider whether that observation is correct. The learned Judge was informed that the parties were not shown the record of the intimation by the learned Trial Magistrate which he regarded as an irregularity justifying his deciding the question of the appropriate order for costs afresh. He said that even if the plaintiffs were making a political stand and were not seeking renewal of registration because of an issue as to the use of levies paid by registered growers, it did not follow that they brought the action to make a political statement. He regarded the long-standing dispute between the plaintiffs and the defendant as marginally relevant, if at all, to the question of costs and that what was more relevant was the view taken by the learned Trial Magistrate of the genuineness of the claim.
I mention findings made by the learned Trial Magistrate. She accepted the evidence of the male plaintiff. He said that at all times he thought that he was a registered grower and continued in that belief despite correspondence from the defendant. She found that the plaintiffs continued to grow and sell citrus to packers who deducted levies which were collected by the defendant. She also found that there was ambiguity in correspondence from the Board in 1997. It contained warnings about the need to be registered as a grower and that it is an offence against the Act not to be registered.
However, the learned Trial Magistrate found that nowhere in the letters from the defendant was there clear language to the effect that an application form for re-registration must be completed or that their registration would be cancelled and informing them of rights of appeal. She accepted the evidence of the male plaintiff that if he had received such a form he would have completed it. Nevertheless the plaintiffs did not seek re-registration and consequently were unregistered growers after 1996. She went on to say that the male plaintiff well knew that there was a procedure to apply for registration on an annual basis. He had extensive experience in the citrus industry under the Act and previous legislation and he had applied for registration in each year preceding 1997. Previously he had been a member of the Citrus Board. I do not think the male plaintiff could have genuinely believed that he continued to be a registered grower after 1996 in view of his familiarity with the system and his not having sought renewal of registration.
The learned Trial Magistrate considered and rejected the plaintiffs’ claim of estoppel based upon the change of procedure in 1997 and thereafter on the basis that documents sent to other growers in each of the years 1997 until 2001 clearly reminded them of the need to return applications for renewal of registration.
I return to the reasons for judgment of the learned Judge. He said:
“While she does not during the course of her reasons state in as many words that she considered that the appellants had an arguable case, in my view, a fair assessment of the reasons, which extend over some seven pages, is that there clearly was an arguable case over the currency of the registration of the appellants as growers.”
He accepted that it was proper to give some weight to the intimation of the first Magistrate but regarded the learned Trial Magistrate’s assessment of the case, her assessment of the genuineness of the evidence of the male plaintiff and other matters as more important factors in considering the appropriate order as to costs. He went on to say:
“In my opinion, the award of solicitor and client costs or an award on a more beneficial basis than party and party costs should not be lightly made in the Magistrates Court. It is a court in which litigants are entitled to bring their genuine claims, however misguided they might be in pursuing them, and to have them litigated.
If a claim is completely without merit, or is an abuse of the process of the court, or is vexatious or quite unsustainable, there is ample procedure available for an application to be brought for summary dismissal of it.”
He noted that after the intimation, which he described as a “dogmatic preview” of the plaintiffs’ prospects of success, the defendant did not seek to have the plaintiffs’ action struck out.
The learned Judge concluded that no basis had been made out for an award of costs other than on a party and party basis.
There are four grounds of appeal. I do not deal with them in their order in the Notice of Appeal but in the order convenient to address the issues raised on this appeal.
The first ground is that the learned Judge erred in holding that the learned Trial Magistrate made “a not insignificant procedural error” in her use of the intimation of the first Magistrate without placing the written note of the intimation before counsel, which justified his exercising the discretion as to costs afresh. Mr Lazarevich, who appeared for the defendant, submitted that the discretion could not be exercised afresh as there was no such error on the part of the learned Trial Magistrate.
The learned Judge was informed that the intimation of the first Magistrate was given verbally to the male plaintiff, a representative of the defendant and counsel for the parties at the time. The written note of the intimation is expressed to be an ex tempore judgment and is expressed in a manner which suggests that it was said in those terms to the parties. The last paragraph of the written note is:
“Having given that and recorded that intimation, I shall have it typed, put in an envelope and have it sealed and it should remain a matter of privacy between the parties. If they proceed and the magistrate who hears it is called upon to make a decision, after making the decision the magistrate could then look at my intimation and that may affect an order as to costs.”
The intimation was given in simple and easily understood terms. There is no suggestion that the male plaintiff or his solicitor did not understand it. An intimation had been requested by the plaintiffs, presumably in the hope of resolving their claim.
With respect to the learned Judge, I do not think there was an irregularity on the part of the learned Trial Magistrate in not giving copies of the written note to the parties because they were well aware of it and of its contents.
Mrs Shaw QC, who appeared with Ms Burgess for the plaintiffs on this appeal, submitted that there was procedural irregularity for another reason, namely that the learned Trial Magistrate relied upon the intimation without informing the parties that she intended to do so and thereby deprived them of the opportunity to make submissions as to whether it was appropriate for her to rely upon it and, if so, the weight that should be given to it in light of the way the issues emerged at the trial. We were referred to Stead v State Government Insurance Commission (1986) 161 CLR 141 in support of these submissions. In that case a party did not address upon the evidence of a witness because of an intimation of the Trial Judge that he would not accept that evidence. In fact the Trial Judge did act upon his evidence when reaching his decision. The Court held that not every departure from the rules of natural justice at a trial will entitle a party to a new trial. There is likely to be a difference between a party being denied the opportunity of making submissions on a question of law “when in the opinion of the appellate court, the question of law must clearly be answered unfavourably to the aggrieved party” so it would be futile to order a new trial and when a party is denied the opportunity of making submissions on a question of fact: 145. The Court went on to say at 147:
“All that the appellant needed to show was the denial of natural justice deprived him of the possibility of a successful outcome. In order to negate that possibility, it was, as we have said, necessary for the Full Court to find that a properly conducted trial could not possibly have produced a different result.”
The learned Trial Magistrate, after a trial on the merits, reached the same conclusion as the first Magistrate expressed in the intimation. The parties were well aware of the intimation. There is no reason to suppose that if the learned Trial Magistrate had referred to the intimation and said that she proposed to have regard to it on the question of costs, any submissions by counsel could possibly have produced a different result. Furthermore, the issue about costs was a question of law, namely whether, in the circumstances, there was good reason to make an order for solicitor and client costs. There was no procedural error and no reason for the learned Trial Judge to decide the application afresh.
This ground of appeal must succeed.
The next ground of appeal is that the learned Judge erred in concluding that the learned Trial Magistrate erred in law in the exercise of her discretion in awarding solicitor client costs. I have not been able to detect any error on the part of the learned Magistrate. Rule 106 relates to costs. Rule 106(1) provides, inter alia, that subject to the Rules, a successful party in an action, other than a minor civil action, is entitled to costs against the unsuccessful party. That is the starting point. I have mentioned R 106(4) which provides that where proper cause exists, solicitor and clients costs may be awarded where “proper cause exists” and I have mentioned R 106(10) which relates to the giving of an intimation. Obviously that rule is to operate, where appropriate, in the context of making an order for costs.

Rule 55(1) provides that a party may at any time before final judgment file and serve on any other party an offer to consent to judgment and R 55(3) makes it clear that the offer does not have to be in monetary terms as it may relate to liability and matters in issue as well as quantum. R 59(1) provides that the Court may take into account any offer to consent to judgment, or any payment of a sum of money to the Registrar of the Court, and any refusal or failure to accept such offer or payment in making an order as to costs at the trial of an action. I need not mention R 59(2) in detail as it relates to a monetary offer which are not bettered at the trial by the party to whom it is made. Rule 106 operates in addition to s 55 and R 59.
There was considerable debate on the hearing of this appeal as to the potential unfairness in a party taking part in a conciliation conference and later suffering the burden of an order for solicitor and client costs because the outcome of the trial is the same as an intimation given pursuant to R 106(10). Parties should be encouraged to participate in such conferences with a view to settling disputes before trial and they must be encouraged to participate promptly and honestly and to disclose all relevant evidence. It was suggested in argument that parties may be reluctant to do so if a subsequent order for solicitor and client costs is, in effect, inevitable.
Upon consideration I do not think these concerns have any relevance in the present case for the reasons which have been mentioned. The plaintiffs sought the intimation and R 106(10) makes it plain that the Trial Magistrate may take an intimation into account in relation to costs.
I expect that at most conciliation conferences an intimation could, and would, not be given and would not be sought, because the issues could not be resolved at that pre-trial stage of the proceeding. But in some cases an intimation could be given where sufficient information is known about the case to permit an informed view to be reached. No doubt magistrates exercise the power sparingly and only in a clear case like the present case.
The learned Trial Magistrate held that the plaintiffs failed in their action for the reason expressed by the first Magistrate in his intimation. The plaintiff could not succeed because they were not registered growers and their claim that the defendant was estopped from asserting that they were unregistered was rejected. The only witness at the trial was the male plaintiff and he acknowledged that the plaintiffs were not registered and had not made an application for registration after 1997. He also acknowledged that he was aware of the relevant provisions of the legislation. He could not establish an estoppel but, in any event, any losses sustained by the plaintiffs were due to the political stand taken by them and not any conduct on the part of the defendant. Apart from the evidence given by the male plaintiff, the other evidence, in the form of documents before the learned Trial Magistrate was, in the main, before the first Magistrate.
In my view, the learned Trial Magistrate was entitled to have regard to the intimation which turned out to be correct. The evidence before the learned Trial Magistrate was substantially the same as the material before the first learned Magistrate. It was the plaintiffs who sought the intimation. Having received it, they chose to disregard it. The evidence was known and available to the parties before the intimation was given.
I mention some aspects of the correspondence between the parties. On 28^th February 1997 the male plaintiff wrote to Mr Cain, the Chief Executive Officer of the defendant. He explained his reason for not returning a completed census form sent to him pursuant to s 19 of the Act requiring information relevant to the defendant in the discharge of its functions. Refusal to do so, without reasonable excuse, constitutes an offence: s 19(3). The reasons for his refusal are irrelevant for present purposes. He completed his letter by writing, “Therefore I must continue to protest, and this appears to be the only way I can”. Mr Cain responded on 4 March 1997. He regarded the male plaintiff’s letter as a response to a letter from him requesting renewal of registration. In his letter, Mr Cain informed the male plaintiff that he was exposing himself to the possibility of legal action for carrying on business as a grower when not registered to do so and of the defendant instructing packers and processors that they could not take delivery of his fruit. He was also informed that he could not be treated differently from any other person. It may be seen that the male plaintiff, and presumably the female plaintiff, were put on notice at this time about what action was later taken. Mr Cain wrote to him again on 26^th March 1997 and informed him that the letters had been discussed at a meeting of the Board on 18^th March 1997. He was again informed that it is illegal to carry on business as a citrus grower if not registered. The male plaintiff wrote to Mr Cain on 4^th April 1997 indicating that his original letter of 28^th February 1997 “still stands”. Mr Cain wrote to both plaintiffs on 16^th April 1997 informing them that as he had received no response to the request for details of the plaintiffs’ citrus plantings, it had been concluded by the Board that they “were never a grower and are no longer a grower”. They were informed that if nothing was heard from them before 30^th April 1997 their names would be removed from the active grower list and packers and processors would be advised that they are not registered and therefore could not take delivery of fruit from them. The letter also contains the following:
“A person must not carry on business as a citrus grower unless that person is registered as a grower.
Penalty: For a first offence - a division 8 fine (Maximum $1,000).”
This penalty accords with s 29 of the Act.
Once again the plaintiffs were given notice in clear and unambiguous terms of what eventually happened. They chose to disregard this notice and continued to carry on business without registration contrary to the provisions of the Act.
Mrs Shaw sought to counter the contention that the plaintiffs were not registered growers by submitting that the conduct of the defendant as acknowledged in its original Defence demonstrates that the plaintiffs remained registered as growers. In that Defence the defendant pleaded that the registration of the defendants was cancelled in or about May 1997 pursuant to s 26 of the Act. That section provides for cancellation or suspension of registration if a registered person contravenes or fails to comply with the Act. It was pleaded that the plaintiffs were in breach of s 19 of the Act by not providing the information required in the memorandum of 14^th October 1996, which I earlier mentioned. In the amended Defence filed in October 2001 the defendant pleaded that the plaintiffs did not apply for renewal of their registration and were unregistered after April 1996.
It was the plaintiff’s case that the defendant treated the plaintiffs as if they were registered. They continued to sell fruit to a registered packer and the defendant continued to receive levies from them until the notification was given to the packer. Furthermore, it is submitted that the defendant could only seek information from the plaintiffs if they were registered growers as s 19 of the Act provides that the defendant may, by notice in writing, require a registered person to furnish the required information. This last submission is not supported by the facts. As I understand the position, the learned Trial Magistrate found that information was required from growers other than the plaintiffs in the years from 1997 to 2001. There is no challenge to this finding and it establishes that the defendant did not regard the plaintiffs as registered growers during those years, as is indicated by Mr Cain’s letter to the male plaintiff on 16^th April 1997.
The receiving of levies by the Board during the period from 1997 until 2000 when the packer was informed that the plaintiffs were not registered is not a matter of significance.
It appears that levies are deducted by the packers and sent to the defendant. There was no evidence adduced as to the deduction and payment of those levies by the packer and why the defendant received them without any communication with the plaintiffs. It is not appropriate to conclude that the defendant’s receiving the levies was an acknowledgement that the plaintiffs were registered.
I do not regard any of these matters as indicating that the plaintiffs had an arguable case. As has been mentioned, registration is for 12 months: s 25(6). Application for renewal is necessary and will be granted if made in the prescribed form and upon payment of the prescribed fee. The registration of the plaintiffs lapsed and was not renewed to their knowledge. As the correspondence between the male plaintiff and the defendant reveals, failure to renew was a deliberate decision and the consequences were made known to the male plaintiff. The sending of the forms by the defendant had no relevant consequence.
It was submitted that the letters from the defendant to which I have referred constitute an admission of the plaintiffs’ case on estoppel because in those letters the defendant regarded the plaintiffs as registered even though their registration had expired and had not been renewed. I reject that submission. As has been mentioned, the male plaintiff knew the plaintiffs were not registered because he had not applied for renewal and failed to do so. In his letters, Mr Cain was trying to assist the plaintiffs and requested that they apply for renewals.
Mrs Shaw QC also submitted that the defendant never informed the plaintiffs that they had been de-registered and denied them natural justice by informing the packer that they were not registered without giving them the opportunity to be heard. That submission is also rejected. The plaintiffs were not de-registered by the defendant. Their registration was deliberately not renewed by them.
It may be seen that the plaintiffs continued the action when there were really no prospects of success. They had rejected the “walk away” offer of the defendant well before trial. They initiated the action with the knowledge that they were not registered growers and that they had been forewarned of consequences some years earlier. Even if the plaintiffs were “genuine” in bringing the action which the learned Judge found, their claim was without merit as they had been informed well before the trial.
We were referred to a number of authorities where the basis of an order other than party and party costs was discussed. However, as Sheppard J said in Colgate Palmolive and Another v Cussons Pty Ltd (1993) 118 ALR 248 at 257:
“The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.”
The categories for the award of indemnity costs are not rigid or closed: Ragata Developments Pty Ltd v Westpac Banking Corporation (unreported, Federal Court of Australia, Davies J, unreported 5^th March 1993) and TETIJO Holdings Pty Ltd v Keeprite Australia Pty Ltd (unreported, Federal Court of Australia, 3^rd May 1991). Both of these cases are referred to by Sheppard J, with approval in Colgate Palmolive. They were concerned with indemnity costs but they may be applied in consideration of the circumstances in which “good cause” is established under R 106(4). It is established by these cases that the discretion is absolute and unfettered but must be exercised judicially: see also Groon v Earthmoving Contractors Association of SA Inc (No 2) [2001] SASC 241.
The learned Magistrate was required first to determine if proper cause existed. In my view, she was correct in reaching that decision. Then she had to exercise the discretion whether to order solicitor and client costs. That was her discretion to exercise and I can detect no error in her exercise of it. The learned Judge should not have interfered with her decision.
This ground must also succeed.
I doubt that the observation of the learned Judge that the Magistrates Court “is a court in which litigants are entitled to bring their genuine claims, however misguided they might be in pursuing them, and to have them litigated” assists in the resolution of what type of costs to which the successful party is entitled. The Magistrates Court exercises civil jurisdiction which is extensive and important. Those against whom unmeritorious claims are made are entitled to appropriate protection of the Court, including by justifiable orders for costs. If a party has been shown to be wrong headed and his or her case is lacking in merit, a solicitor and client order may well be appropriate, and particularly where that party has requested the intimation procedure and then chooses to ignore an unfavourable intimation. I expect that the use of that procedure involves significant expenditure by the defendant in costs.
It may readily be accepted that magistrates should not lightly make orders for solicitor and client costs, as the learned Judge observed, but there is no reason to suppose that the learned Trial Magistrate did so. Her reasons for her decision on the costs application demonstrate that she gave thorough consideration to the arguments put to her. In my view, the circumstances establish a clear case to depart from the usual order of an order for party and party costs and this ground of appeal must also succeed.
The next ground of appeal is that the learned Judge erred in holding that the defendant not having made an application for summary judgment after the intimation had been given was a factor relevant to declining to make an order for solicitor and client costs. I do not think that the defendants not having made such an application is of significance. The defendant should not be deprived of that to which it is entitled simply because it did not make the application which may well have failed at the time. I think it was entitled to accept the intimation and take its chances under R 106(4). That rule and R 106(10) are important provisions in the scheme of the making of orders for costs in the Magistrates Court.
Furthermore, as I have said, the defendant had offered to settle the action after the intimation had been given by the parties “walking away” and each paying their own costs.
The issue for the learned Magistrate was whether these circumstances justified a finding of “proper cause” to make an order for solicitor and client costs.
The last ground of appeal is that the learned Judge erred in not accepting the conclusions of the learned Trial Magistrate that the plaintiffs continued the action when they had little prospects of success. The learned Judge said in his reasons that the learned Trial Magistrate had concluded that she considered that the plaintiffs had an arguable case and, having considered her reasons for judgment in the action, he expressed the opinion that “there was clearly an arguable case over the currency of the registration of the plaintiffs as growers”. The learned Trial Magistrate did not say that the plaintiffs had an arguable case. She concluded that registration and re-registration are mandatory under the Act. She went on to say:
“I reject the plaintiff’s submissions. I consider that registration and re‑registration are mandatory. The Board’s role was in part to ensure registration and re‑registration. Even if the information collected was basic, it was essential to that part of the Board’s function. Failure to keep a proper register of growers would render ineffective the relevant portion of the Act. It follows that I consider that the defendant is not estopped from denying that Mr Krix is unregistered on the basis urged by the plaintiff.”
She found that the plaintiffs were not registered because of their failure to apply. She said:
“The loss claimed by the plaintiff is dependant on a finding that the Board wrongfully advised Simpson Packaging Pty Ltd that the plaintiff was not registered. I am satisfied, as I have previously stated, that the plaintiff was not registered because of his failure to apply. Despite the fact that the plaintiff may well have had a legitimate grievance and despite my criticisms of the Board’s lack of clarity in their letters to him, he remained unregistered. In particular, he was unregistered at the time of the events in question here. The defendants were therefore entitled to take the actions they did in relation to advising Simpson Packing [sic] Pty Ltd. It follows that the defendant cannot be held responsible for any loss which the plaintiff suffered.”
In my view, the learned Trial Magistrate did not express the view that the plaintiffs had an arguable case, even impliedly. She did express the view that the plaintiffs had an arguable case as to whether there should be an order for solicitor and client costs. I have mentioned that the first order for such costs was made in the absence of the plaintiffs and their counsel. In order for that order to be set aside, they had to establish, inter alia, that they had an arguable case: R 87(2)(a). The learned Magistrate held that they did in relation to the claim for solicitor and client costs, not in the action itself. I have not been able to reach the conclusion that the learned Trial Magistrate held the view that the plaintiffs had an arguable case in the action.
Having considered the evidence before the learned Trial Magistrate and accepting her findings which have not been challenged, it is my view that the plaintiffs did not have an arguable case. They were not registered after 1997. They knew they were not registered. They had been warned of the consequences of carrying on business if not registered. They carried on business for some years without registration and did so deliberately as a protest. Any ambiguity in forms sent out by the defendant was not relevant to the plaintiffs not being registered.
This ground of appeal also succeeds.
In my view, there was no sound basis to set aside the decision of the learned Trial Magistrate to award solicitor and client costs and there is no error in the exercise of her discretion, except in one respect. Since preparing these reasons for judgment, I have read the reasons prepared by Debelle J. I am prepared to accept that the appellants should pay solicitor and client costs only from 31^st January 2002, the day the intimation was given.
I mention one further matter. As has been seen, the learned Judge expressed concern about the intimation being given by the first learned Magistrate well before the trial. I do not think there are appropriate grounds for that concern in the circumstances. The plaintiffs asked him to adopt that procedure. The facts were really not in issue. As it turned out, the intimation was correct. I expect that in the usual case intimation that a party is likely to succeed or fail would seldom be given before the facts are found, except in obvious cases, but the material before the first learned Magistrate justified his acceding to the request of the plaintiffs.
I would allow the appeal and restore the order for solicitor and client costs made by the learned Magistrate to the extent I have mentioned. The appellants should pay the costs of the appeal to the Judge.
DEBELLE J This is an appeal by leave against an order for costs.
Mr and Mrs Krix, commenced an action in the Magistrates Court claiming that the Citrus Board of South Australia (“the Board”) had engaged in false and misleading conduct contrary to s 56 of the Fair Trading Act, 1987. I will refer to the parties as “the plaintiffs” and “the Board”.
The plaintiffs claimed that a packing company had refused to accept oranges owned by them on the ground that the Board had informed the packer that the respondents were not registered growers. It is an offence against s 29 of the Citrus Industry Act 1991 (“the Act”) for a person to carry on business as a grower unless that person has been registered under the Act. Presumably, the packer had refused to accept the oranges lest it be charged with aiding and abetting that offence. The plaintiffs claimed a declaration that they were at all material times registered growers under the Act. They also claimed damages for the loss of the oranges which the packing company had refused to accept. The Board defended the claim.

The action was heard on 29 and 30 April 2002. On 24 June 2002 the magistrate published reasons for judgment dismissing the plaintiffs’ claim. On 19 September 2002, the Board applied for an order that the plaintiffs pay its costs of the action on a solicitor and client basis. The application was listed for hearing on 27 September. The plaintiffs did not attend. The magistrate granted the Board’s application. The plaintiffs obtained an order setting aside the order made on 27 September. The question of costs was re-argued on 22 November. The magistrate reserved her decision. On 6 December the magistrate published reasons and ordered the plaintiffs to pay the Board’s costs on a solicitor and client basis. The plaintiffs appealed to this Court from that order. Their appeal was heard by a judge of this Court who, on 6 February 2003, allowed the appeal. From that decision the Board appeals by leave to this Court.
An Indication of the Likely Result
The Board’s application for costs was grounded, among other things, on the plaintiffs’ prosecution of their case in the face of an intimation made by a magistrate during a conciliation conference before the trial. I set out the circumstances in which the intimation was made.
After the pleadings had closed, the parties appeared before Dr Cannon DCM at a directions hearing. A conciliation conference was proposed. Counsel for the plaintiffs asked Dr Cannon if he would hear submissions from the parties on the facts and law and make an informal ruling as to the likely result of the action. The procedure was agreed and a conciliation conference was listed for 31 January 2002. The parties and their legal representatives were present at the conciliation conference. At that conference the parties made their respective submissions. Dr Cannon then made an intimation as to the likely result of the action. The text of his intimation was reduced to writing. It was in these terms:
“¹      I discuss this frankly.
² I think the Citrus Board has some problems in that it mixed in its mind the process of renewal and the process under s.19 for non-compliance with information. I do not think a court would have any real trouble with the fact that they required s.19 information as part of the renewal process, coincident in time with it. However, the linking of the giving of that information and suggesting the failure to give it has a consequence that you cannot renew I think is mixing up what the Act says. So, there is in that correspondence some problems for the Board.
³ Also there is a real issue as to whether the correspondence subsequent to the Board decision accurately reflects the minuted Board decision. The minuted Board decision would seem to suggest an authority to take action under s.19 for non-compliance rather than the letter which followed which said, in effect, ‘If you don’t supply the information within 14 days we won’t renew’.
⁴        So, if that were where the matter rested then I think the Board has some problems. However, the plaintiff has the problem he did not renew. I think the estoppel argument is very weak because I do not think that the plaintiff moved to his disadvantage in relation to any misrepresentation, as his advisor would like to put it, that was given. I think that at the end of the day the plaintiff was determined to go there anyway and make a stand and part of that stand was not renewing. I think the plaintiff will win the battle of proving that the Board, putting it in the vernacular, mucked up the legal procedure to bring his membership to an end, but is likely to lose the war because I think a court will find that he just did not renew and the estoppel argument won’t get up. So, the plaintiff will lose because he was not a member because he did not renew, so I think that is where it will end.
⁵        Having given that and recorded that intimation, I shall have it typed, put in an envelope and have it sealed and it should remain a matter of privacy between the parties. If they proceed and the magistrate who hears it is called upon to make a decision, after making that decision the magistrate could then look at my intimation and that may affect an order as to costs.”
As is apparent from the last paragraph of the intimation, the note was dictated in the presence of the parties. Thus, the parties were aware of the effect of the intimation. The note was placed in a sealed envelope. Dr Cannon did not hear this action. As will be seen, the note was not opened by the magistrate until 22 November 2002 when she heard reargument on the Board’s application for costs.
At the conciliation conference, the Board made an offer that, if the plaintiffs discontinued their action, the Board would not seek costs. The plaintiffs did not accept the offer. Notwithstanding the intimation of Dr Cannon and the offer made by the Board, the plaintiffs continued to prosecute their action and, as already noted, the claim was dismissed after a full hearing. The respondents had failed in their action for reasons similar to those expressed by Dr Cannon.
The only authority for a magistrate to give an intimation as to the magistrate’s view of the prospects of success of an action is to be found in Rule 106 of the Magistrates Court Rules which deal with issues affecting orders as to costs. The authority is in sub-rule 9, which is in these terms:
“ (9) Where a Non Payment Order is in force Rule 127A deals with a creditor’s right to costs.
The Court may give an intimation of the result of a case at any time and if it does so that intimation must not be available to the trial magistrate until after judgment when the trial magistrate may take it into account in relation to costs.”
Plainly, the expression “an intimation of the result of a case” means “an intimation as to the likely result of a case”. The form of the rule is curious. There is no relationship at all between the first paragraph, which deals with occasions when the court makes a non-payment order (an order made when the court finds that a judgment debt has no assets available to satisfy a judgment debt) and intimations as to the result of an action. It is apparent that the numbering of the sub-rules in Rule 106 has not been carefully made. The rule about an intimation as the result of a case should be a separate sub-rule. Some versions of the Magistrates Court Rules show it as Rule 106(10). The definition of “judicial intimation” in Rule 2 states that a judicial intimation means “an intimation made under Sub-rule 106(10)”. There are in fact two sub-rules (10). One deals with judicial intimations and the other with a separate matter. I will refer to the rule as “Rule 106(9)”.
Board applies for Solicitor and Client Costs
When making its application for costs, the Board relied on the intimation given by Dr Cannon on 31 January 2002 and on the fact that the plaintiffs had failed on all of the grounds on which they had relied when prosecuting their claim. The Board also asserted that the plaintiffs had attempted to use the action for political purposes, namely, to voice concerns of Mr Krix to protest as to the manner in which the Board expended levies recovered from growers. The Board’s costs were estimated to be $20,000.
When the Board’s application was re-argued on 27 November 2002, the magistrate had regard to Dr Cannon’s intimation. The magistrate noted that the trial had proceeded on the basis on which Dr Cannon had dealt with the matter and had failed for reasons similar to those he had expressed. She also noted that, although the plaintiffs had amended their claim as to estoppel, Dr Cannon had described the estoppel argument as “weak” and, in her view, that position remained notwithstanding the plaintiff’s amendments. The magistrate was satisfied that the plaintiffs had continued the action when it was not likely to succeed. The magistrate said:
“¹⁶ In all the circumstances I am satisfied that the plaintiffs continued the action when it was unlikely to succeed. The fact that the basis of the plaintiffs claim and the initial argument in relation to estoppel were unlikely to succeed were clearly intimated by Dr. Cannon SM in January. The altered basis of the estoppel claim was also unlikely to succeed as it was reformulated in the amended Reply for the reasons which I have indicated. In these circumstances I consider that proper cause exists to grant the defendant’s application for costs on a solicitor client basis.
¹⁷It has been submitted for the plaintiffs that this order should apply only to costs incurred in relation to the trial of this matter since the estoppel argument proceeded at trial on a different basis from that earlier indicated. However, it is clear that the original issues, as put before Dr Cannon SM, were pursued at the trial in addition to the reformulated estoppel argument. I therefore reject this submission.”
For these reasons, the magistrate ordered that the plaintiffs pay the Board’s costs on a solicitor and client basis.
The magistrate did not open the envelope containing Dr Cannon’s written intimation until 27 November 2002, five days after she had reheard the argument on costs. Thus, Dr Cannon’s note was not put before counsel at any stage in the course of the hearing on 22 November. There was no application for that omission. However, the argument on 22 November had proceeded on the basis of the intimation given by Dr Cannon.
Breach of Rule of Procedural Fairness
The judge below held that the fact that the magistrate had opened the envelope in the absence of the parties as “a not insignificant procedural irregularity”. He expressed the view that, on that ground alone, leave to appeal should be given and he would consider afresh the question of what was the appropriate order as to costs.
Although the judge noted the fact that the parties were both present when Dr Cannon had made his intimation and had heard him express the view that reference could be made by the parties to that intimation when costs were to be ordered, he did not in his reasons refer to the fact that the argument as to costs before the magistrate had proceeded on the basis of the intimation. That the argument proceeded on that footing is apparent from the terms of paras 6 and 6.1 of an affidavit sworn in support of the application for costs by the solicitor for the Board and filed on 19 September 2002. That affidavit was relied on during the hearing of the application for costs.
I agree with the judge that the note ought to have been placed before the parties on the argument on the question of costs. The rules of procedural fairness required no less. However, as the argument concerning costs proceeded on the basis of the views expressed by Dr Cannon, no adverse consequences resulted and neither party was at a disadvantage. Not every departure from the rules of procedural fairness will entitle the aggrieved party to a new trial except where the departure affects the entitlement of a party to make submissions on an issue of fact: Stead v State Government Insurance Commission (1986) 161 CLR 141 at 145. In the particular circumstances of this matter, the breach of the rules of procedural fairness did not lead to any injustice or unfairness. As the High Court said in Stead v State Government Insurance Commission (supra), an appellate court will not order a new trial if it would inevitably result in the making of the same order as already had been made; an order for a new trial would be a futility. So it is here. There was nothing in the note which would have caused either party to add or alter the submissions which had been made. The failure to open the note in the presence of counsel and inform them of its terms is not a ground for setting aside the magistrate’s costs order.
However, the judge gave additional reasons for setting aside the magistrate’s order. He referred to the magistrate’s reasons for dismissing the plaintiffs’ claim and continued:
“³⁶While she does not during the course of her reasons state in as many words that she considered that the appellants had an arguable case, in my view, a fair assessment of the reasons, which extend over some seven pages, is that there clearly was an arguable case over the currency of the registration of the appellants as growers.
³⁷While no doubt it was proper for some weight to be given to the intimation made by Dr Cannon SM, it seems to me that the more important factor in considering the appropriate order as to costs was the trial magistrate’s own assessment of the case, her assessment of the genuineness of the claim, her assessment of the evidence of the appellant Mr Krix and the other matters which she sets out at length in her reasons for judgment.
³⁸In my opinion, the award of solicitor and client costs or an award on a more beneficial basis than party and party costs should not be lightly made in the Magistrates Court. It is a court in which litigants are entitled to bring their genuine claims, however misguided they might be in pursuing them, and to have them litigated.
³⁹If a claim is completely without merit, or is an abuse of the process of the court, or is vexatious or quite unsustainable, there is ample procedure available for an application to be brought for summary dismissal of it.
⁴⁰It is perhaps surprising that if Dr Cannon SM gave such a dogmatic preview of the plaintiffs’ prospects of success, the defendant did not avail itself of those procedures and seek to have the claim struck out. Instead, it went to trial on the issue of the currency of the registration of the appellants at the relevant time, a matter which was obviously by no means straightforward and the subject of some significant arguments which were, in part, generated by the conduct of the Board itself, which might well have given rise to an estoppel.
⁴¹In those circumstances, in my view, a proper basis was not made out for the award of other than party and party costs.”
He then allowed the appeal.
For these reasons, the lack of procedural fairness was not, I think, a ground for interfering with the magistrate’s order.
In my view, while it was appropriate to have regard to the magistrate’s reasons for dismissing the claim, it is more useful to have regard to her reasons for making the costs orders. The relevant part of those reasons has already been quoted. In addition to noting the effect of Dr Cannon’s intimation, the magistrate expressly stated that “the plaintiffs continued the action when it was unlikely to succeed”. It is well established that an order for solicitor and client costs may be made where an action has been commenced or continued in circumstances where the plaintiff, properly advised, should have known that he had no prospect of success: Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397. In my view, this was an alternative basis upon which the magistrate could make her order as to costs.
This was a case where the plaintiffs continued to prosecute an action which was unlikely to succeed and in circumstances where a magistrate had already given a clear intimation that, in all likelihood, the action would fail. After that intimation, the plaintiffs had the opportunity to discontinue their action without being liable for the costs of the Board. That was the clear effect of the Board’s offer to them. The fact that the plaintiffs did not accept Dr Cannon’s intimation is the more surprising, as it was the plaintiffs who had asked that he give the intimation. Dr Cannon’s view is reinforced by the judgment of the magistrate who stated that the plaintiffs continued the action when it was unlikely to succeed. That was the view of the magistrate before the issues as to costs arose. Nothing in her reasons for making the orders as to costs diminished the effect of those earlier reasons.
It is true, as the judge said in para 38 of his reasons, that orders for solicitor and client costs should not lightly be made in the Magistrates Court. Nor, indeed, should they be lightly made in any court. However, the question is not whether a party has a genuine claim or defence but whether the claim or defence has merit. Claims without merit fall within the principles in Fountain Meats. Later, in para 40 of his reasons, the judge referred to other procedures by which an unmeritorious claim may be struck out. I do not think that that is a reason for refusing an order for solicitor and client costs in this case. Similar procedures exist in this Court but, notwithstanding those procedures, the power to order solicitor and client costs remains. I do not think that the existence of those procedures in the Magistrates Court militates against orders for solicitor and client costs in appropriate cases.
For all of these reasons, I would allow the appeal from the judge below. However, I would not restore the order of the magistrate in its entirety. In my view, the more appropriate course is to order party and party costs to the end of the proceedings on 31 January 2002. Thereafter, the plaintiffs had clear notice that, notwithstanding that they believed they had a genuine claim, there was a substantial risk of failure. From that date, therefore, they should be ordered to pay costs on a solicitor and client basis.
I confess to some concern that the rules in the Magistrate Court contemplate a procedure whereby a magistrate can give an intimation and subsequent orders for costs may, in the result, hang on that intimation. That concern is increased by the fact that Rule 89, which provides for conciliation conferences and directions hearings, says nothing about intimations being given by a magistrate as to the likely result of the action. However, neither party has questioned the validity of what occurred in this action. Furthermore, what is significant is the fact that it was the plaintiffs’ solicitors who initiated the request for the intimation. Notwithstanding they had sought it, the plaintiffs were not prepared to act on the intimation. In all the circumstances, it is not appropriate in this case, to examine the utility of the procedure.
For all of these reasons, I would make the following orders.
1. Appeal allowed.
2.Set aside the order of the judge below made on 6 February 2003 and, in lieu thereof, order that the plaintiffs pay the defendant’s costs of and incidental to the proceedings on the relevant scale in the Third Schedule applicable to a claim for $12,834 until 31 January 2002 and, thereafter, pay the defendant’s costs as taxed or agreed on a solicitor and client basis.
3.That the plaintiffs pay the defendant’s costs of and incidental to the appeal to the judge below.
I would hear the parties as to the costs of this appeal.
GRAY J I would allow the appeal for the reasons given by Mullighan J.

[2003] SASC 387

11 December 2003