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

KRIX and ANOR v THE CITRUS BOARD OF SOUTH AUSTRALIA
[2003] SASC 36
Magistrates Appeal: Civil

PERRY J. (ex tempore) This is an appeal against an order as to costs made by a magistrate, following her dismissal of the appellant’s claim in that court after a trial.
In the formal particulars of claim filed in the Magistrates Court the appellants sought a declaration that they are, and remain, registered growers under the Citrus Industry Act 1991 (“the Act”).
In addition, they sought damages which were said to have flowed from the notification by the respondent, the Citrus Board of South Australia, given to a company which had contracted to buy a quantity of navel oranges from the appellant, that the appellants were not registered growers.
The immediate consequence of that notification was that the purchasers, Simpson Packaging Pty Ltd (“Simpson Packaging”), declined to receive any further fruit from the appellants, as a result of which they lost the profit which they would have made if they had completed the contract of sale.
In her reasons for judgment dated 24 June 2002, the trial magistrate found that the appellants were not registered growers at the relevant time. Accordingly, the appellants could not make out a case for damages against the Board for having notified Simpson Packaging in the terms to which I have referred.
In the result the appellant’s claim was dismissed.
After delivering judgment, the magistrate ordered that the appellants pay the Board’s costs “to be agreed or taxed”. She added, “If they cannot be agreed then there will be liberty to apply”.
I have been given to understand by Mr Strawbridge of counsel for the respondent that at the time judgment was delivered, he raised the question of the appropriate scale of costs, suggesting that it should be on a higher scale than party and party. Her Honour did not rule on that application, and I think it is clear in those circumstances that her reservation of liberty to apply was intended to provide an opportunity to pursue the question of the appropriate scale of costs if the parties were unable to reach agreement as to that aspect of the matter.
Discussion between the parties as to costs were unfruitful and the board took out an application which relevantly sought orders:
“2.That the plaintiffs pay the defendant’s costs of action on an indemnity basis.
3.In the alternative an order that the plaintiffs pay the defendant’s costs of action on a solicitor/client basis.
4.In the further alternative that the plaintiff pay the defendant’s cost of action on such percentage on the Supreme Court scale such as this Honourable Court sees fit.
5.In the further alternative that the plaintiffs pay the defendant’s costs to be taxed on such scale as this Honourable Court sees fit.”
That application came on for hearing before the trial magistrate, but the appellants were not present. It was later accepted by her that this was due to inadvertence.
At all events, on 27 September 2002, she made an order in terms of paragraph 3, that is, for payment by the plaintiffs of the defendant’s costs of action on a solicitor/client basis.
When they became aware of that order, the solicitors for the appellants applied to set aside the order.
On 22 November 2002, the trial magistrate heard argument both on the application to set aside the costs order and on the merits of the respective contentions by the parties as to the application by the respondents for costs on a more advantageous basis than as between the party and party.
On 6 December 2002, the magistrate made an order granting the appellant’s application that the costs order of 27 September be set aside, but then made an order in the same terms, namely that the respondent “be entitled to its costs on a solicitor/client basis”.
It is from that order that the appellants appeal to this Court.
The grounds of appeal set out in the notice of appeal are as follows:
“4.1The Learned Magistrate erred, in exercising her discretion pursuant to Magistrates Court Rule 106(4), in ordering that the Respondent be entitled to costs on a solicitor-client basis.
4.2Her Honour erred in law in ordering solicitor-client costs solely on the basis that the Appellants’ case was unlikely to succeed.
4.3Alternatively, if despite the above, Her Honour did rule that the Appellants’ case was without any merit, Her Honour erred in doing so in the circumstances of the case.
4.4Having found that the issues before her were different than those before Dr Cannon SM (who gave an intimation) [11], or alternatively having found that the estoppel issue was extended and reformulated but did not succeed as a matter of law [13], Her Honour ought to have found that the previous intimation was irrelevant or of insufficient relevance to the question of costs.
4.5The Learned Magistrate erred in allowing the application of the Appellants to have the costs order of 27^th September 2002 set aside, on the ground that the Appellants had an ‘arguable case on the merits’ in relation to the question of solicitor-client costs but then finding that the Appellants’ case at trial was without merit.
4.6In the alternative to all of the above, the Learned Magistrate erred in ordering that the Respondent have its costs on a solicitor-client basis prior to the handing down of the intimation or for 28 days thereafter.”
Before the appeal came on for hearing, I notified the parties that I would be assisted if they came prepared to argue the question whether or not the judgment or order under appeal was an interlocutory order, as to which leave to appeal would be required under SCR r 96B.02.
That question raises difficult issues, and in the circumstances, having regard to the conclusion which I have ultimately reached in this case, rather than deal with the authorities which were cited to me on that aspect of the matter, I will give leave to the extent to which leave may be required, without determining the question whether leave is required.[1]
[1] As to this aspect of the matter, see McKelliff v Police (unreported) [2000] SASC 269; Rzadkowski v Donald Craig & Associates [2000] SASC 396; Licul v Corney (1976) 8 ALR 437; Carr v Finance Corp of Australia Ltd (1981) 147 CLR 246; Atco Industries Aust Pty Ltd v Ancla Maritima SA (1984) 35 SASR 408 at 410; Heller Financial Services Ltd v Solczaniuk (1989) 99 FLR 304; Re R. & G. Shelley Pty Ltd (in liq) (1991) 101 ACTR 5; Michael v Freehill Hollingdale & Page (1990) 3 WAR 223; Mikulic v Grosvenor Motors Pty Ltd (SC(SA)), Cox J, Judgment No S3025, 11 September 1991, unreported.
I will proceed then to deal with the merits.
Before doing so I should refer to an aspect of the reasons dated 6 December 2002 given by the trial magistrate following the argument as to costs.
In the course of the reasons she refers more than once to an intimation given by Dr Cannon SM, which, so I understand, was given by him at a hearing which followed a directions hearing.
The intimation was made pursuant to r 106(9) of the Magistrates Court Rules. This provides:
“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.”
With respect to the authors of the rule, it is poorly worded. It is impossible, I would have thought, to give an intimation of the result of a case before it was heard. I assume that what the rule means is that the court may give an intimation as to the likely result of the case and that that may be taken into account on any question of costs.
Be that as it may, after hearing the parties informally, Dr Cannon SM apparently expressed the view that it was likely that the plaintiffs would fail in the action because they were not registered at the time. He wrote down his intimation as well as expressing words to the effect that I have just indicated to the parties, and sealed the written intimation in a sealed envelope which he placed on file.
In accordance with what appears to be the accepted procedure in the Magistrates Court, the trial magistrate indicated in her written reasons for judgment on the question of costs that she did not open that sealed envelope until 27 November 2002, that is, after she had given judgment following the trial. She quoted part, but obviously not all, of the intimation of Dr Cannon SM in those reasons. She quoted his comment, “The plaintiff will lose because he was not a member, because he did not renew”. And a further statement apparently made by him, “A court will find he just did not renew and the estoppel argument will not get up”. [The estoppel argument relates to the conduct of the Board which the appellants maintain estopped the Board from denying the currency of their registration.]
In my view, it was not proper for the learned trial magistrate to have regard to a written note of the intimation which Dr Cannon SM had given, and rely on it, as she does extensively in the course of her judgment, without placing the note before counsel so as to allow them to comment on it.
It appears from what I have been told by Mr Strawbridge that the note was not put before counsel at any stage. In my view, this is a not insignificant procedural irregularity. On that ground alone, in my view, leave should be given to appeal, if leave should be required, and on the hearing of the appeal I should determine afresh the question of the appropriate costs order.
Turning to the merits, Mr Strawbridge has said everything which could be said in favour of the order which was made by the learned magistrate. In common with her approach to the matter, he relies on the intimation given by Dr Cannon SM and submits that that intimation should have caused the appellants to discontinue the action at that stage.
In defying the intimation and proceeding with the action, they exposed themselves to the likelihood that an order for costs would be made on a more generous basis than party and party costs. He further submitted that the defendants had a collateral purpose for bringing the action, namely, to make a political statement [Outline of Submissions paragraph 16.5].
In support of that latter submission, he drew attention to paragraph 11 of the magistrate’s trial reasons for judgment, in which she found that in certain correspondence with the Board the appellants were pursuing what she described as an issue of “agripolitics” involved in the use of the levies which were paid by registered growers.
But it does not follow that the action was brought to make a political statement.
It is true that there appears to have been a long-standing dispute between the appellants and the Board pre-dating the commencement of these proceedings over the use which the Board was making of the levies which the appellants were paying under the Act.
However, it seems to me that in the relevant sense that circumstance is marginally relevant, if at all, to the question of costs. What is more relevant and pertinent to the costs issue is the view which the magistrate took at the trial of the genuineness of the claim.
The appellant Mr Krix gave evidence which she accepted was “forthright”. She found in her reasons [paragraph 15] that he gave unequivocal evidence on the question of whether or not he considered himself unregistered, and referred to his evidence that at all times he thought he was registered and continued so to think, despite the correspondence from the board.
She went on to observe:
“However, I note the following question and answer in cross-examination:
‘Q. You elected, in the end, that you would risk prosecution for failing to register, didn’t you. (my emphasis)
A. I believe - yes I did. To endeavour to have the matter looked at. That’s all.’
The answer appears to indicate that Mr Krix knew he was unregistered after 1996. However, I note his further assertion in cross-examination:
‘You’re trying to confuse me by saying that I understand about not - but I don’t believe that I’m not registered. I don’t believe that. I have no understanding from any of those letters that I’m not registered.’
The Board’s approach to this matter did not help the confusion. It appears to have treated him as registered in 1996-7 despite its position now that he was unregistered because he failed to apply. The Board’s request to Mr Krix to provide statistics appears to be based on section 19 of the Act. Those requests are to be directed as section 19 states to registered persons. Apparently Mr Krix continued to grow fruit and sell it. It would appear that levies continued to be deducted by the packers who packed his fruit. The Board seemingly continued to collect those levies. Levies can only be collected from registered growers (section 37(2)(i) of the Act). In addition, the Board’s correspondence with Mr Krix in 1997 is ambiguous. Whilst containing warnings about the necessity to be registered and the fact that it was an offence not to be registered whilst a grower, nowhere is there clear language used to the effect of either you must complete a re-registration application or that your registration has been cancelled and here are your rights of appeal.”
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.
While 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.
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.
It 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.
In those circumstances, in my view, a proper basis was not made out for the award of other than party and party costs.
I allow the appeal. I quash the order under appeal. I substitute for the order under appeal an 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.
[AFTER HEARING COUNSEL AS TO COSTS]
PERRY J. I order that the respondent pay the appellants’ costs of and incidental to the appeal to be taxed. I further order that there be no order as to the costs of the application for costs which was determined in the court below on 6 December 2002.
JUDGMENT CITATIONS
LISTED IN ORDER OF APPEARANCE IN JUDGMENT
1. As to this aspect of the matter, see McKelliff v Police (unreported) [2000] SASC 269; Rzadkowski v Donald Craig & Associates [2000] SASC 396; Licul v Corney (1976) 8 ALR 437; Carr v Finance Corp of Australia Ltd (1981) 147 CLR 246; Atco Industries Aust Pty Ltd v Ancla Maritima SA (1984) 35 SASR 408 at 410; Heller Financial Services Ltd v Solczaniuk (1989) 99 FLR 304; Re R. & G. Shelley Pty Ltd (in liq) (1991) 101 ACTR 5; Michael v Freehill Hollingdale & Page (1990) 3 WAR 223; Mikulic v Grosvenor Motors Pty Ltd (SC(SA)), Cox J, Judgment No S3025, 11 September 1991, unreported.

[2003] SASC 36

6 February 2003