MacErlean v Notfair Pty Ltd (No 3) - [2013] SADC 113

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
MACERLEAN v NOTFAIR PTY LTD (No 3)
[2013] SADC 113
Judgment of His Honour Judge Tilmouth
21 August 2013
PROCEDURE - COSTS
The respondent to this application for review of a minor civil proceeding succeeded in upholding the judgment of the Magistrate. The question arose as to what order for costs should be made, if any.
Held: (1) Orders for costs in such reviews are governed by ss 38(4) and (5) of the Magistrates Court Act 1991 (SA), rather than by s 42G(2) of the District Court Act 1991 (SA).
(2) As both parties were represented on the review, the general rule that the successful party was entitled to costs applied.
(3) In order to finally resolve the dispute between the parties, it was appropriate to make and fix a lump sum for costs pursuant to Rule 6R 264(5)(c) of the District Court Civil Rules 2006.
Magistrates Court Act 1991 (SA) s 38(4), s 38(5), s 38(6), s 38(7); Magistrate Court (Civil) Rules 2013 (SA) Rule 106; District Court Act 1991 (SA) s 42B(1), s 42G(2); Magistrates Court (Civil) Rules 1992 Rules 13(4), 106; Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 120; Eat Media Pty Ltd v Mulready Media Pty Ltd (No 2) (2010) 267 ALR 573 at [7], [22]; Wide Bay Conservation Council Inc v Burnett Water Pty Ltd (No 9) (2011) 194 FCR 250 at [303]; Harrison v Schipp (2002) 54 NSWLR 738 at [21]; Retail and Commercial Leases Act 1995 (SA) s 68(2)(j), referred to.

MACERLEAN v NOTFAIR PTY LTD (No 3)
[2013] SADC 113

In two judgments of the Court, certain orders and declarations were made in relation to this application for review from a judgment given in a minor civil action in the Magistrates Court.[1] Those judgments effectively upheld and affirmed the decision of the Magistrate at first instance.
[1] MacErlean v Notfair Pty Ltd [2013] SADC 80 & MacErlean v Notfair Pty Ltd [2013] SADC 109
Additional orders were made with a view to fully defining the rights and responsibilities of the parties in relation to rent reviews under a retail shop lease. A dispute over the proper interpretation of the lease formed the subject matter of the underlying action commenced in the Magistrates Court. This judgment deals with the outstanding question as to what order for costs is appropriate, if any.
As a general rule cases conducted in the Civil (Minor Claims) Division of the Magistrates Court, do not attract any liability for costs of any party, under

s 38(5) of the Magistrates Court Act 1991 (SA), except in two circumstances specified therein:
38—Minor civil actions
(5)In a minor civil action costs for getting up the case for trial, or by way of counsel fees, will not be awarded unless all parties were represented by counsel, or the Court is of opinion that there are special circumstances justifying the award of such costs.
Hence s 38(5) creates an exception to the primary rule that the successful party in an action is entitled to costs against an unsuccessful party pursuant to Rule 106 of the Magistrate Court (Civil) Rules 2013 (SA). The right of review in the District Court is furnished by s 38(6) of the Magistrates Court Act, but that Act is otherwise silent as to the disposition of costs of a review of minor civil judgments in the District Court.
Appeals brought in the Administrative and Disciplinary Division of the District Court (which includes applications for review from decisions of Magistrates made in the minor civil jurisdiction of the Magistrates Court) are governed by Part 6 Division 2 of the District Court Act 1991 (SA) “subject to the provisions of the special Act” conferring that jurisdiction on the Court

(s 42B(1)). Section 42G(2) of the District Court Act provides that:
However no order for costs is to be made unless the Court considers such an order to be necessary in the interests of justice.
Returning to the Magistrates Court Act, s 38(5) provides that costs in the minor civil division of the Magistrates Court “will not be awarded unless all parties were represented by counsel”. The parties were not represented before the Magistrate but they were in the District Court, for reasons to become apparent. For the moment however, it is clear that s 38(5) reverts to the position that costs are awarded to a successful party in minor civil actions, when the parties are represented.
Normally parties to minor civil actions are not entitled to legal representation except in the circumstances provided for in s 38(4) of the Magistrates Court Act.   This reads as follows:
38—Minor civil actions
(4)The following provisions govern representation in minor civil actions:
(a)representation of a party by a legal practitioner will not be       permitted unless—
(i)another party to the action is a legal practitioner; or
(ii)all parties to the action agree; or
(iii)the Court is of the opinion that the party would be      unfairly disadvantaged if not represented by a legal        practitioner;
(ab)however, the Court may, in its discretion, permit representation of a party by a legal practitioner at the hearing of an      interlocutory application;
(b)if a party to the action is a body corporate, the Court must, if the       party seeks to be represented by an officer or employee who is     not a legal practitioner, permit such representation;
(c)if a person is subrogated to the rights of a party, the Court will permit that person to appear in the proceedings on behalf of that party and to be represented in the same way as if that person        were a party;
(d)the Court will permit a party, or a person subrogated to the      rights of a party, to be assisted by a person who is not a legal      practitioner but only if that person is not acting for fee or      reward.
In determining whether a party would be unfairly disadvantaged if not represented, the presiding Magistrate is also to consider the matters set out in the Magistrates Court Rules 1992, Rule 13(4) which reads:
LEGAL REPRESENTATION
13 (4)        In deciding whether a party would be unfairly disadvantaged in a minor civil                action, if not represented by a legal practitioner, the Court must have regard             to whether –
(a)   the party has a judgment in his/her favour in the action,
(b)   the party will suffer undue expense or inconvenience in          attending,
(c)   the party is unable to attend due to ill health,
(d)   any other proper cause exists.
(5)        A company may be represented by a director with authority to bind                  the company.
When the matter first came before this Court, the applicant landlord appeared by counsel who applied for permission for him to be represented in the review. This was opposed by the respondent tenant on the grounds of financial hardship, and who then appeared personally by a Director of the company.
The power of the District Court to make an order for legal representation in reviews of this kind, are precisely the same as those furnished to Magistrates under s 38(4) of the Magistrates Court Act, because of s 38(7)(a) thereof:
38—Minor civil actions
(7)The following provisions apply to such a review by the District Court:
(a)the right of a party to be represented by a legal practitioner at the review will be determined in accordance with subsection (4).
In this particular case I made an order permitting representation for the applicant, having formed the opinion that proper cause for doing so existed, and because I considered the respondent would be unfairly disadvantaged if not represented by a legal practitioner. I formed this view partly because it became obvious that if there were no such order, the applicant was intending to file written submissions drawn by his solicitors or his counsel in any case. I also made the order because of the complex and novel points of construction that arose, which as lay persons the parties – and particularly the respondent being unrepresented – would struggle to deal with. Having made that order the respondent also then elected to obtain legal representation.
Once it is accepted that s 38(5) of the Magistrate Court Act prevails over the District Court Act on the subject of costs on review in the District Court, the consequence is that the ordinary “default” position that a successful party should obtain an order for costs pertains. Moreover Rule 6 DCR 279A(10)(g) of the District Court Civil Rules 2006 authorises the Court to “make an order for costs of the review”.
There is no reason to deprive the respondents of its costs of the review. Counsel for the respondent applied for an order in favour of the respondent fixed by way of a lump sum, pursuant to Rule 6R 264(5)(c) of the District Court Rules. She presented a calculation based on the scale of counsel costs provided for in Schedule I to the Rules of Court. As to reasonableness, counsel for the appellant took no serious issue.
The purpose of the Rule is to avoid unreasonable delay and expense that would be involved in taxing costs, even in relatively straightforward cases such as the present: Beach Petroleum NL v Johnson (No 2).[2]A lump sum order for costs is appropriately made when it would have the effect of promoting the interests of justice in the circumstances of a particular case: Eat Media Pty Ltd v Mulready Media Pty Ltd (No 2)[3], Wide Bay Conservation Council Inc v Burnett Water Pty Ltd (No 9)[4] and Harrison v Schipp.[5]
[2] (1995) 57 FCR 119 at 120
[3] (2010) 267 ALR 573 at [7], [22]
[4] (2011) 194 FCR 250 at [303]
[5] (2002) 54 NSWLR 738 at [21]
This dispute is plainly consequential from the point of view of both parties as the outcome may result in a considerable difference in the rent than is currently due under the subject lease. In any event an order for lump sum costs is entirely in keeping with the intention lying behind the Retail and Commercial Leases Act 1995 (SA) s 68(2)(j) which facilitates the making of orders “necessary or desirable to resolve a dispute between the parties” to retail shop leases. This is such a case.
Ms Clark presented figures in her written submission at $2,949, not including the further appearance for taking judgment and attending to a brief argument on costs, exclusive of solicitor’s costs. She sought a broad-brush sum of $3,000. Given the complexities of the issues involved and the considerable assistance the Court obtained from both counsel, I consider the sum of $3,000 to be reasonable, and quite modest in the circumstances.
There will be an order that the applicant pay the costs of the respondent to this review fixed at $3,000. As the Magistrate made no order for costs, that topic requires no reconsideration.