| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : LANGHAM & ANOR -v- McDONALD & ANOR [2009] WADC 2 (S) CORAM : KEEN DCJ DELIVERED : 15 JANUARY 2009
SUPPLEMENTARY
DECISION : 10 FEBRUARY 2009 FILE NO/S : CIV 1141 of 2007 BETWEEN : RICHARD LANGHAM KATHERINE LANGHAM
Plaintiffs
AND
BARRY McDONALD
LORRAINE McDONALD
Defendants
Catchwords: Costs - Action brought in District Court - Award below level of jurisdiction of Magistrates Court - Whether plaintiff had a reasonable expectation of recovering more than the jurisdiction of the Magistrates Court Legislation: District Court of Western Australia Act 1969 s 74
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Result: Costs awarded on Magistrates Court scale Representation: Counsel:
Plaintiffs : Mr T G Darge
Defendants : Mr D S Ellis
Solicitors:
Plaintiffs : SRB Legal
Defendants : Vogt Graham Lawyers
Case(s) referred to in judgment(s):
Michael Kellaway International Pty Ltd v Shark Bay Airport Pty Ltd, unreported; SCt of WA; Library No 980302; 25 March 1998
Vella v Ivanovski [1984] WAR 8
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1 KEEN DCJ: In this matter I delivered judgment and published reasons for judgment on 15 January 2009.
2 The plaintiffs' claim was for the cost of earthworks carried out at the defendants' property at Brigadoon. The defendants counterclaimed for inter alia rectification work. I allowed the plaintiffs' claim in a sum (including interest) of $44,520.25 and allowed the defendants' counterclaim in a sum (including interest) of $16,082.57. 3 That meant that there was a net balance due to the plaintiffs of $28,437.68. 4 The issue that now has arisen is in relation to the costs of the claim and the counterclaim. 5 The plaintiffs say that the appropriate orders are that the defendants should pay the plaintiffs' costs of the action to be taxed and the plaintiffs should do likewise in respect of the defendants' costs of the counterclaim. The plaintiffs say that those costs should be taxed on the District Court scale. 6 The defendants' position is that the plaintiffs' claim should properly have been brought in the Magistrates Court, it being a claim for (as it turns out) less than $50,000.00 being the jurisdictional limit of the Magistrates Court. Nevertheless the costs of the counterclaim should be on the District Court scale because the defendants had no ability to alter the plaintiffs' choice of forum in the first instance. 7 The defendants also raise other issues going to the net benefit to the plaintiffs following an offer made pursuant to O 24A of the Rules of the Supreme Court ("RSC") and the fact that the defendants had sought to transfer these proceedings to the Building Disputes Tribunal pursuant to s 23(1) Home Building Contracts Act 1991. 8 Order 66 r 17(1) RSC, which applies to the District Court, provides: "If an action is brought in the Supreme Court which could have been brought in the Magistrates Court without the special consent of the defendant, the plaintiff shall recover no greater sum by way of costs than he could have recovered had the action been brought in the Magistrates Court, unless the Court certifies that by reason of some important principle of law being involved, or the complexity of the issues or of the facts, the action was properly brought in the Supreme Court." (Page 4)
9 Section 74 of the District Court of Western Australia Act 1969 relevantly provides: "74. Court may transfer case to Magistrates Court (1) If an action or matter in the Court – (a) is within the Magistrates Court's jurisdiction; (b) becomes within the Magistrates Court's jurisdiction because the claim in the action or matter is reduced by a payment into court, an admitted set-off, a judgment on part of the claim, or otherwise; or (c) becomes within the Magistrates Court's jurisdiction because its jurisdiction is increased, the Court may order that the action or matter be transferred to the Magistrates Court. (2) An order under subsection (1) may be made on the application of a party to the action or matter or by the Court on its own initiative. (3) … (4) … (5) If an action or matter is transferred to the Magistrates Court under an order made under subsection (1) that court is to deal with the action or matter as if it had been commenced in that court." 10 In Michael Kellaway International Pty Ltd v Shark Bay Airport Pty Ltd, unreported; SCt of WA; Library No 980302; 25 March 1998 Kennedy J considered the question of when costs might be awarded on the District Court scale where, in that case, the respondent recovered nominal damages only. 11 In that case the respondent claimed damages of $128,966.00. At trial the respondent was awarded damages of $140,712.12 including interest. On appeal it was established that the respondent had failed to prove its loss and damage. An award of $10.00 nominal damages was substituted. (Page 5)
12 His Honour Kennedy J considered the provisions of s 74 of the District Court Act and other legislation elsewhere. His Honour noted that an application under s 74(1) of the District Court Act to remit the action to a local court could not have succeeded. It is worth noting that in the present case the plaintiffs' claim was one for $51,397.50 which was made up as to $46,725.30 for the cost of work done and $4,672.50 for a 10 per cent bookkeeping fee. Accordingly, on the face of the claim as it stood, as in Michael Kellaway International,an application by the defendants to remove the matter to the Magistrates Court would at first blush appear to be an application that could not have succeeded. 13 Accordingly, on the claim as it stood, the same issue arises in the present case as arose in Michael Kellaway International, that is, whether (on the basis of the amount recovered) the action "might have been brought in a Magistrates Court without the consent of the defendants". 14 His Honour on reviewing the authorities and in particular Vella v Ivanovski [1984] WAR 8 noted that the correct question was whether it was proper to bring the action in the District Court instead of in the Local Court (Magistrates Court). The central test was whether the plaintiffs when instituting the proceedings might reasonably have been expected to recover an amount in excess of the maximum of the jurisdiction of the Local Court. 15 When dealing with the facts of Michael Kellaway International, Kennedy J noted that in that case there was no suggestion of any lack of good faith on the part of the respondent and it might reasonably have been expected to recover an amount in excess of the maximum of the jurisdiction of the Local Court. It failed to do so because, although a significant loss may well have been sustained by it, it failed to satisfy the onus of proof which rested upon it of establishing the amount of the loss and damage. The outcome was that his Honour was of the view that it was not a matter that could have been brought in the Local Court and therefore District Court scales were applicable. It was not case where a grant of a certificate under s 74(2)(b) of the Act was called for. That subsection now finds its effect in O 66 r 17(1) RSC. His Honour noted that had it been necessary to provide such a certificate he would have been inclined to grant one. 16 The plaintiffs' claim was, as I have noted, for the sum of $51,397.50and part of that sum included the claim for a 10 per cent bookkeeping fee because the account was not paid within seven days. In my judgment I disallowed this bookkeeping fee on the basis that there was (Page 6)
no evidence to show that there was a contractual term consistent with such a claim. But for that claim the plaintiffs' claim would have been below the jurisdiction of the Magistrates Court and could have been brought within that jurisdiction without the special consent of the defendants. 17 Unlike the position in Michael Kellaway International where the respondent's claim failed because the respondent had failed to satisfy the onus of proof which rested upon it of establishing the amount of its loss and damage in the present case there was simply no contractual term consistent with a claim for a bookkeeping fee. Whilst in par 167 of my judgment I noted there was no evidence to show that there was a contractual term, it seems to me to be more correct to say that this was not just a failure to satisfy the onus of proof but that there simply was no contractual term to this effect and the plaintiff could never have recovered on that basis. 18 In Michael Kellaway International his Honour in considering the test "whether it was proper to bring the action (in the lower court)" took the view that there was no suggestion of lack of good faith on the part of the respondent. His Honour felt it might reasonably have been expected to recover an amount in excess of the maximum of the jurisdiction of the Local Court. 19 I am of the view that the current case is distinguishable. Michael Kellaway International was a case of failure because the plaintiff had failed to satisfy the onus of proof by leading appropriate evidence. It seems to me that in the present case the plaintiffs could never have succeeded to the bookkeeping fee. Not only was there was no evidence led as to this, but it was clearly not part of the terms agreed between the parties as demonstrated in the various quotations that were sent to the defendants and forming the basis of the contract. Accordingly, I am of the view that the present plaintiffs were not in a position whereby they might reasonably have been expected to recover an amount in excess of the maximum of the jurisdiction of the Magistrates Court. 20 The next question that then arises is whether or not I should grant a certificate pursuant to O 66 r 17(1) that by reason of some important principle of law being evolved or the complexity of the issues or of the facts the action was properly brought in the District Court. 21 Whilst a number of issues arose between the parties and the proceedings were conducted over a period of some days, the issues were not difficult or complex. The plaintiffs' claim was merely a claim for (Page 7)
monies due under a contract for work done. The defendants' counterclaim was essentially for breach of the contract. This was not a difficult case and not one that was beyond the capacity of the Magistrates Court to handle effectively. 22 In the circumstances I decline to grant a certificate. 23 Accordingly, the plaintiffs' costs should be allowed on the Magistrates Court scale. 24 Two further issues arise from the submissions of the defendants. The first is that the net value to the plaintiffs was only $10,742.00. This is arrived at by setting off the judgment on the counterclaim against the judgment on the claim which (before the award of interest on such sums) gives a net figure of $25,742.00. I am told that the defendants proposed a settlement in the sum of $15,000.00 plus interest. Taking that sum from the net judgment leaves $10,742.00. 25 It is not entirely clear to me what the defendants' point is in this regard. An offer of settlement under O 24A RSC will, generally speaking, only be effective to protect a party against costs where the plaintiff does not recover more than the sum offered. In the present case the plaintiff has recovered more. 26 The defendants also raise that they applied to the Court to transfer these matters to the Building Disputes Tribunal. No such order was made by this Court and it seems to me that that submission takes the matter no further. 27 The next issue is in relation to the costs on the defendants' counterclaim. 28 The defendants say that they were required to bring the counterclaim in the District Court because the plaintiffs had commenced their action in this Court. The defendants argue that they should be awarded the costs of their counterclaim on the District Court scale. 29 The defendants' counterclaim was clearly within the jurisdiction of the Magistrates Court. It was a counterclaim which as expressed was for $15,180.00 and was allowed in the sum of $15,000.00. 30 I have a general discretion in relation to costs. It seems to me that the justice of the case requires that I award the defendants' costs also on the Magistrates Court scale. (Page 8)
31 The defendants' position was firmly that the plaintiffs did not have a claim to the bookkeeping fee as (inter alia) there was no contractual entitlement. That must have been a position that the defendants maintained or could have maintained throughout these proceedings. Accordingly, it was open to the defendants to articulate this position and make application at an early stage to have the matter remitted to the Magistrates Court. 32 It is in those circumstances that I am of the opinion that the defendants' costs should also be on the Magistrates Court scale. 33 The effect of my findings is that each party is entitled to be paid and to pay costs. To the extent that any direction may be required under O 66 r 59 RSC, I direct that there be a set-off of such costs in accordance with that rule so that there should be a payment of any balance found to be due to one party or the other.
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