Murphy v Police - [2005] SASC 321

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Criminal)
MURPHY v POLICE
Judgment of The Honourable Justice Gray
25 August 2005
PROCEDURE - COSTS - APPEALS AS TO COSTS
STATUTES - ACTS OF PARLIAMENT - INTERPRETATION - RULES OF CONSTRUCTION
Appeal against order for costs made by magistrate - whether legally aided defendant should recover costs following the dismissal of charges - consideration of interpretation and application of section 20 of Legal Services Commission Act 1977 (SA) - rationale and purpose of section to remove legal aid as relevant consideration when determining whether or not to make an order for costs - held: appeal allowed - respondent to pay appellant's costs fixed at $3000.
Legal Services Commission Act 1977 (SA) s 20; Summary Procedure Act 1921 (SA) s 189; Magistrates Court Rules 1992 (SA) r 51; Magistrates Court Act 1991 (SA) s 42, referred to.
Latoudis v Casey (1990) 170 CLR 534; Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355; Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297; Attorney-General v Prince Ernest Augustus of Hanover [1957] AC 436; McNamara Business & Property Law v Kasmeridis [2005] SASC 269; K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309; Owen v South Australia (1996) 66 SASR 251; Hamdorf v Riddle [1971] SASR 398; Schaftenaar v Samuels (1975) 11 SASR 266; House v The King (1936) 55 CLR 499, considered.

MURPHY v POLICE
[2005] SASC 321
Magistrates Appeal
GRAY J:

This is an appeal against a costs order made by a magistrate.
The appeal raises for consideration the question of whether a legally aided defendant should recover costs following the dismissal of charges. At issue is the interpretation and application of section 20 of the Legal Services Commission Act 1977 (SA). That section provides:
(1)A court or tribunal in making an order for costs, or security for costs, in favour of, or against, an assisted person, may not take into account the fact that that person is an assisted person and is for that reason relieved wholly or in part from liability to pay costs.
(2)Where legal assistance has been provided for an assisted person the Commission is subrogated to the rights of the assisted person to costs in respect of that legal assistance and any such costs received or recovered by the assisted person or a legal practitioner engaged to provide the legal assistance must be applied in accordance with the directions of the Commission.
(3)Where the Commission has instituted proceedings for the recovery of any amount in respect of legal costs, and the Commission is entitled to reimbursement of the costs of the proceedings, the costs will be assessed in all respects as if a legal practitioner had acted for the Commission in the institution and conduct of the proceedings whether or not the Commission in fact engaged a legal practitioner so to act.
The rationale underpinning this provision is said to be the removal of legal aid as a relevant consideration when determining whether or not an order for costs should be made such that a legally aided party before the court will be afforded the same treatment as a self-funded party.
Background
On 2 March 2005 a magistrate dismissed a charge of assault against the appellant, Allan William Murphy, following a two-day trial. There was nothing out of the ordinary about the trial; both sides called witnesses and both counsel made closing submissions. At the conclusion of the submissions, the magistrate delivered his judgment, finding the appellant not guilty.
Counsel for the appellant made an application for the costs associated with the trial in the sum of $3,200 calculated in accordance with the Magistrates Court Criminal Scale of Costs. The prosecutor opposed the amount on the basis that the claim was excessive. The appellant was awarded costs in the sum of $200.
Report from Magistrate
At the request of the Court, the magistrate prepared the following report:
The defendant was charged with one count of assault. He entered a plea of not guilty.
At the conclusion of all evidence and after hearing submissions I found the defendant not guilty and delivered my reasons.
I enquired as to whether there was an application for costs. Mr Allen, who appeared for the defendant, indicated that in the adjournment he had some discussion with the prosecutor as to costs in the event that the charge was dismissed.
An application was made for costs. I do not have a note nor can I recall the specific amount sought but to the best of my recollection Mr Allen’s calculation was based on the scale of costs in criminal matters in the Magistrates Court. Mr Allen indicated that in the discussion with the prosecutor some reduction in the quantum sought had been made in recognition of the case turning on issues of credit.
I enquired if the defendant was legally aided. Mr Allen said he was.
I responded that it was only in the last couple of months that I had become aware of practitioners from the Legal Services Commission seeking costs on the dismissal of a charge.
I indicated that on an occasion some weeks earlier when such an application had been made I had expressed the view that an order for costs was to put a successful defendant back in the financial position he or she would have been in if the prosecution had not been brought and, subject to any submission Mr Allen wished to put to me, this was still my view. I indicated that I would make an order for the actual out of pocket costs incurred by the defendant but not for solicitor and counsel fees that he was not required to pay.
I invited Mr Allen to put any submissions to me on this issue and to ascertain what out of pocket expenses his client had incurred.
Mr Allen did not put any submission to me and advised that his client was required to make a modest contribution to the Legal Services Commission and had incurred airfares in travelling to Adelaide for the hearing. He quantified those amounts.
I had already indicated my preliminary view and there being no argument to the contrary I made an order that the prosecution pay the quantified out of pocket expenses brought to my attention by Mr Allen.
It is apparent from this report that, in determining the question of costs, the magistrate did not have regard to section 20 of the Legal Services Commission Act.
Appellant’s case
The appellant submitted that the purpose and effect of section 20 of the Legal Services Commission Act is to remove the existence of legal aid as a factor relevant to determining the appropriate order for costs. It was said that the aim of the legislature in enacting section 20 was to ensure that a legally assisted person is not disadvantaged by the fact of that assistance when a court or tribunal considers an order for costs. Equally, it was said, the section ensures that the other party in a case involving an assisted person is not disadvantaged by the fact that their opponent is an assisted person.
It was said that section 20 should be construed in light of the scope and purpose of the entire Act and that, properly construed, the section requires a court to place a legally funded person on the same footing as any other litigant. This interpretation was said to be supported by authority.
Counsel for the appellant submitted that the discretion to award costs must be exercised judicially and in ordinary circumstances an order for costs should be made in favour of a successful defendant. It was said that no argument to the contrary was put to the magistrate. The prosecution did not contend that the appellant had, by his conduct, brought the prosecution upon himself or otherwise conducted himself in a way that would prevent the court from exercising its discretion in his favour.[1]
[1] See Latoudis v Casey (1990) 170 CLR 534 at 565 (Toohey J).
The effect of the appellant’s argument is that an order for costs is to be made in the ordinary way, meaning that successful defendants who are recipients of legal aid should receive their costs unless they in some way caused or unduly prolonged their prosecution.
Respondent’s Case
Counsel for the respondent submitted that, pursuant to section 189(1) of the Summary Procedure Act 1921 (SA), the question of costs is a matter wholly within the discretion of the magistrate. It was said that the magistrate did not decline to make an order for costs, rather he made a costs order and exercised his discretion with respect to quantum.
In addition, counsel for the respondent drew attention to the fact that the magistrate invited counsel for the appellant to make submissions with respect to the intimated basis for a costs order and that counsel declined to make submissions on this issue. Significantly, counsel for the appellant did not bring to the attention of the magistrate the existence of section 20 of the Legal Services Commission Act.
Counsel for the respondent submitted that appeals on costs are only to be entertained where the award is manifestly wrong or a substantial injustice is disclosed. It was said that the award for costs made by the magistrate was not manifestly wrong and that no substantial injustice to the appellant has been disclosed. It was said that the order for costs made in favour of the appellant indemnified him against the expense to which he was put by reason of the legal proceedings and was therefore appropriate.
With respect to the proper construction of section 20 of the Legal Services Commission Act, counsel for the respondent submitted that the phrase,
may not take into account the fact that that person is an assisted person and is for that reason relieved wholly or in part from liability to pay costs,
in section 20(1) indicates that the section only applies to ensure that an assisted person is not relieved from the liability to pay costs. Therefore, it was said, section 20 deals with the liability of the assisted person to pay costs and not with such person’s entitlement to receive costs; the effect of this argument being that the general principles in relation to costs remain unchanged, namely that costs are awarded to indemnify a person for expenses incurred due to legal proceedings.
It was further submitted that the phrase “any such costs received or recovered” in section 20(2) does not limit the discretion invested in the magistrate by section 189(1) of the Summary Procedure Act to award such costs for or against a party as the magistrate thinks fit.
Accordingly, counsel for the respondent submitted that the order for costs made by the magistrate should not be interfered with. It was said that the appellant has not demonstrated that the quantum of the award was manifestly wrong and that no substantial injustice has been disclosed.
Construction of Section 20
On both a literal and purposive construction of section 20 of the Legal Services Commission Act, it is clear that the intended application of the provision is to remove the fact that a person is a recipient of legal aid from those matters that are relevantly considered in the determination of a question of costs.
The phrase, “in favour of, or against, an assisted person,” in subsection (1) indicates that the section is to apply in respect of an assisted person’s liability to pay costs and entitlement to receive costs.
The contemporary approach to statutory interpretation was addressed by the High Court in Project Blue Sky v Australian Broadcasting Authority[2] by McHugh, Gummow, Kirby and Hayne JJ in the following terms: [3]
The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined "by reference to the language of the instrument viewed as a whole". In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". Thus, the process of construction must always begin by examining the context of the provision that is being construed.
[2] (1998) 194 CLR 355.
[3] (1998) 194 CLR 355 at [69] (footnotes omitted).
Accordingly, when construing section 20 of the Legal Services Commission Act, it is appropriate and necessary to have regard to its context.[4]
[4] Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 304 (Gibbs CJ); Attorney-General v Prince Ernest Augustus of Hanover [1957] AC 436 at 461 and 473; McNamara Business & Property Law v Kasmeridis [2005] SASC 269 at [56].
The construction of legislative provisions should always involve a consideration of their context. To read an individual section:
in isolation from the enactment of which it forms a part is to offend against the cardinal rule of statutory interpretation that requires the words of a statute to be read in their context.[5]
[5] K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309 at 315 (Mason J).
A consideration of the context of a provision requires that regard be had to surrounding provisions and the purpose of the Act generally, as evidenced by the terms of the Act and supported by its legislative history. [6]
[6] Owen v South Australia (1996) 66 SASR 251 at 255-256.
Section 20 is to be interpreted against the background that its terms were designed to ensure that a legally funded person (and the Commission by operation of the subrogation provision contained in section 20(2)) is not disadvantaged by the fact that he or she is the recipient of legal aid when a court or tribunal considers an order for costs. Equally, the other party in a case involving a legally funded person is not to be disadvantaged by the fact that their opponent is the recipient of legal aid.
The stated purpose of the Legal Services Commission Act is:
to establish the Legal Services Commission; to provide for legal assistance for persons throughout the State and for other purposes.
It is unnecessary, and contrary to the underlying purpose of the Act and the section itself, to read down section 20 in the manner suggested by the respondent. The interpretation of section 20 urged upon the Court by the respondent is unduly narrow and is rejected.
Properly construed, section 20 applies in this case to remove the fact that the appellant was the recipient of legal aid from those matters that are relevant when considering an appropriate order for costs.
Failure to consider section 20
By failing to have regard to section 20 of the Legal Services Commission Act in determining the appropriate costs order to be made, the magistrate failed to have regard to a relevant consideration. As such, the magistrate’s discretion erred. A further error arose from the magistrate’s failure to consider section 20, namely that the magistrate took into account and placed some reliance upon the fact that the appellant was the recipient of legal aid. As discussed above, the very purpose of section 20 is to remove the fact of legal aid as a relevant consideration when determining costs.
Awarding Costs in Summary Proceedings
The power to award costs in summary proceedings is contained in section 189 of the Summary Procedure Act, which relevantly provides:
(1)Subject to this section, the Court may award such costs for or against a party to proceedings as the Court thinks fit.
...
(3)If proceedings are delayed through the neglect or incompetence of a legal practitioner, the Court may—
(a)     disallow the whole or part of the costs as between the legal practitioner and his or her client (and, where appropriate, order the legal practitioner to repay costs already paid);
(b)     order the legal practitioner to indemnify his or her client or any other party to the proceedings for costs resulting from the delay;
(c)     order the legal practitioner to pay to the Principal Registrar for the credit of the Consolidated Account an amount fixed by the Court as compensation for time wasted.
(4)If proceedings are delayed through the neglect or incompetence of a prosecutor who is not a legal practitioner, the Court may order the Crown, or, where the prosecution is brought on behalf of a body that does not represent the Crown, that body, to indemnify any party to the proceedings for costs resulting from the delay.
(5)If proceedings are unreasonably obstructed by a party or a witness, or proceedings are delayed through the failure of a party or a witness to appear before the Court when required to do so, the Court may make either or both of the following orders:
(a)     an order that the party or witness indemnify any party for costs resulting from the obstruction or delay;
(b)     an order that the party or witness pay to the Principal Registrar for the credit of the Consolidated Account an amount fixed by the Court as compensation for time wasted in consequence of the obstruction or delay.
(6)Before making an order under subsection (3), (4) or (5), the Court must inform the person against whom the order is proposed of the nature of the proposed order and allow that person a reasonable opportunity to give or call evidence and make representations on the matter.
(7)A person against whom an order for costs is made under subsection (3), (4) or (5) has the same rights of appeal as a party to a civil action.
...
Pursuant to rule 51 of the Magistrates Court Rules 1992 (SA), the successful party in an action is entitled to costs against the unsuccessful party. That rule provides:
51.01Subject to these Rules, the provisions of any Act, or to an order of the Court, a successful party in an action is entitled to costs against an unsuccessful party.
51.02For the purpose of this Rule a successful party includes a party who instigates proceedings that are admitted by plea of guilty, and a party who defends proceedings that are withdrawn or dismissed as a result of no evidence being tendered.
51.03Subject to any order of the court to the contrary, the scale of costs set out in the first schedule shall apply.
The introduction of rule 51.01 on 6 May 2004 had the effect of creating an entitlement to costs in favour of a successful party. Historically, whether costs were to be ordered on the dismissal of an action was entirely within the discretion of the magistrate.[7] In the typical case, costs are awarded to indemnify the successful party against the expense to which he or she has been put by reason of legal proceedings. The appropriate scale of costs is set out in Schedule 1 of the Magistrates Court Rules.
[7] Hamdorf v Riddle [1971] SASR 398; Schaftenaar v Samuels (1975) 11 SASR 266.
There is no doubt that the magistrate did have the power to award costs in favour of the defendant and against the Crown. This is clear from the High Court’s decision in Latoudis v Casey[8] where Mason CJ observed: [9]
By conferring on courts of summary jurisdiction a power to award costs when proceedings terminate in favour of the defendant, the legislature must be taken to have intended to abrogate the traditional rule that costs are not awarded against the Crown.
[8] (1990) 170 CLR 534.
[9] (1990) 170 CLR 534 at 542.
Mason CJ then went on to say:[10]
In ordinary circumstances it would not be just or reasonable to deprive a defendant who has secured the dismissal of a criminal charge brought against him or her of an order for costs. To burden a successful defendant with the entire payment of the costs of defending the proceedings is in effect to expose the defendant to a financial burden which may be substantial, perhaps crippling, by reason of the bringing of a criminal charge which, in the event, should not have been brought. It is inequitable that the defendant should be expected to bear the financial burden of exculpating himself or herself, though the circumstances of a particular case may be such as to make it just and reasonable to refuse an order for costs or to make a qualified order for costs.
[10] (1990) 170 CLR 534 at 542.

McHugh J began the analysis of the issue facing the Court from the traditional viewpoint, that is, that the purpose of costs is to indemnify the successful party in litigious proceedings in respect of liability for professional fees and out-of-pocket expenses reasonably incurred in connection with the litigation. He then continued:[11]
Once it is perceived that costs operate as an indemnity and that the rationale of making a costs order is that it is just and reasonable that the successful party should be reimbursed for the costs incurred in bringing or defending the action, no ground exists for distinguishing between informants in summary proceedings who are public officials and those who are private persons.
[11] (1990) 170 CLR 534 at 567.
McHugh J favoured the approach adopted by the Court in Hamdorf v Riddle[12] as reflecting the correct general approach to the payment of costs in summary proceedings. The Full Court in Hamdorf enunciated the position in South Australia. Bray CJ, Hogarth and Sangster JJ held that, in awarding costs in summary proceedings that terminated in favour of a defendant, courts should, “in a general way”, exercise their discretion as they do in civil cases. In so deciding, the Court rejected the traditional practice that costs were awarded against unsuccessful defendants virtually as a matter of course, though costs were awarded against unsuccessful police prosecutors only in unusual cases.
[12] [1971] SASR 398.
McHugh J stated the approach to be adopted in relation to costs orders in summary proceedings in the following terms:[13]
Likewise, a successful defendant in summary proceedings has a reasonable expectation of obtaining an order for the payment of his or her costs because it is just and reasonable that the informant should reimburse him or her for liability for costs which have been incurred in defending the prosecution. … Speaking generally, before a court deprives a successful defendant in summary proceedings of his or her costs, it will be necessary for the informant to establish that the defendant unreasonably induced the informant to think that a charge could be successfully brought against the defendant or that the conduct of the defendant occasioned unnecessary expense in the institution or conduct of the proceedings.
[13] (1990) 170 CLR 534 at 569.
As is evident from the magistrate’s report, in the present case the primary, if not sole, reason for his decision not to award the appellant his full costs was the fact that he was legally aided. In Latoudis, Mason CJ observed:[14]
The availability of legal aid might be regarded as a possible reason for refusing to award costs. But no court can assume that a particular defendant is entitled to, or in receipt of, legal aid and it would not be right to draw a distinction between defendants based on receipt of legal aid. In any event the courts have traditionally made orders for costs without regard to considerations of that kind.
[14] (1990) 170 CLR 534 at 543.
As already noted, the purpose of section 20 of the Legal Services Commission Act is to remove legal aid as a relevant consideration when determining costs. As such, the above dictum of Mason CJ is not applicable to courts in South Australia in light of legislation that provides expressly to the contrary.
The court’s discretion to order costs is broad. An appellate court will only interfere with an exercise of such discretion in exceptional circumstances. As observed by Dixon, Evatt and McTiernan JJ in House v The King:[15]
The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so.
[15] (1936) 55 CLR 499 at 504-505.
As already observed, the magistrate erred in the exercise of his discretion by treating the fact that the appellant was the recipient of legal aid as a relevant factor. As a result, it is appropriate for this Court to interfere with the magistrate’s decision and, pursuant to the power conferred upon this Court by section 42(5) of the Magistrates Court Act1991 (SA), to substitute its decision for that of the magistrate.
An order for costs should have been made. The parties agreed that if the appellant succeeded in this appeal the costs should be assessed at $3000.
Conclusion
The appeal is allowed. The decision of the magistrate is set aside. The respondent is to pay the appellant’s costs fixed at $3000.