Roennfeldt v Wyness (No 2)

[2022] SASC 139

Supreme Court of South Australia

(Civil)

ROENNFELDT & ANOR v WYNESS & ANOR (No 2)

[2022] SASC 139

Judgment of the Honourable Auxiliary Justice Parker  

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - GENERAL RULE: COSTS FOLLOW EVENT - PARTIAL SUCCESS

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - SCALES OF COSTS - APPLICABLE SCALE

This is a claim for costs following a successful appeal against a decision of a Magistrate. The appellants have sought the costs of the appeal and also the costs of the proceedings in the Magistrates Court.

Held:

1.      The appellants are entitled to their costs of and incidental to the appeal, including the taking of further evidence on the appeal.

2.      The appellants are entitled to 90% of their costs of and incidental to the proceedings in the Magistrates Court, subject to order 3.

3.      The costs fixed under order 2 are to be fixed at 75% of the rate applicable from time under the Higher Courts scale or Supreme Court scale (as the case may be).

Fences Act 1975 (SA) s 12(7); Magistrates Court (Civil) Rules 2013 (SA) Sch 3 item 7; Uniform Civil Rules 2020 (SA) r 1.4, sch 6 pt 3 item 7 , referred to.
Miller v Miller (No 2) [2017] SASC 53; Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107; James & Ors v Surf Road Nominees Pty Limited & Ors (No 2) [2005] NSWCA 296; Dodds Family Investments Pty Ltd v Lane Industries Ltd (1993) 26 IPR 261; Rawley Pty Ltd ACN 009 027 454 v Bell (No 3) [2007] FCA 1429, considered.

ROENNFELDT & ANOR v WYNESS & ANOR (No 2)
[2022] SASC 139

PARKER J:

Introduction

1. This is a claim for costs following a successful appeal against a decision of a Magistrate.  The appellants have sought the costs of the appeal and also the costs of the proceedings in the Magistrates Court. 

   The principles to be applied - the respondents’ submissions

2. In support of their contention that a “broad axe’ should be applied to determine costs, the respondents refer to the decision of Blue J in Miller v Miller (No 2).[1]  In that case Blue J stated that it was necessary to consider the degree to which the issues on which the successful party failed were distinct and severable, the proportion of costs incurred in respect of the issues on which the successful party failed, the strength or merit of the issues on which they failed, and the conduct generally of the successful party.  The respondents further submit that the costs order can be made either on an issue by issue basis or as a percentage depending upon the severability of the issues.[2] 

   [1] [2017] SASC 53 at [6].

   [2]    Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107. Finkelstein and Gordon JJ at [3]-[5].

3. The respondents note that in James & Ors v Surf Road Nominees Pty Limited & Ors (No 2) the New South Wales Court of Appeal stated that the assessment of such a costs order is “not a matter of mathematical precision”.[3]  The exercise of the judicial discretion will often depend upon matters of impression and evaluation.[4]  The question of “impression” must be assessed with regard to “how the litigation itself unfolded and the conduct of the parties in it”.[5] 

   [3] [2005] NSWCA 296, Beazley, Tobias and McColl JJA at [40].

   [4]    Dodds Family Investments Pty Ltd v Lane Industries Ltd (1993) 26 IPR 261.

   [5]    Rawley Pty Ltd ACN 009 027 454 v Bell (No 3) [2007] FCA 1429, Finn J at [17].

4. Those principles are well recognised.  However, the issue is the application of those principles to the facts of the appeal and of the proceedings in the Magistrates Court.

   The costs of the appeal

5. The appellants observe that they succeeded on six out of the seven grounds of appeal.  The only ground on which they failed concerned a short discrete point of statutory interpretation under the Fences Act 1975 (SA), which did not change the result. For that reason, the appellants submit that the ordinary principle that costs follow the event should apply.

6. The respondents submit that the costs of the appeal should not be determined until the remediation works ordered by the Court have been approved by the Council.  That will enable costs to be determined once it is known whether the works ordered by the Court can be completed.  Alternatively, the respondents submit that if costs are to be awarded now, it is appropriate to make no order as to costs having regard to the mixed success of the parties and the late provision of the report by the appellants which was the basis for the final orders made by the Court. 

   Costs of the trial

7. The appellants submit that the proceedings under the Fences Act could have been pursued as a minor civil claim.  However, the respondents sought damages in the Magistrates Court above the monetary threshold for a minor civil action and were legally represented.  They sought $24,999 by way of damages under several different heads.  In 2017 the respondents filed an amended claim in which they sought damages in the sum of $46,014.38 based upon an allegation that the appellants had damaged the fence.  In 2018 the respondents filed a further amended claim in which they sought damages of $33,360.18 founded upon a cause of action in negligence.  Their alternative claim under the Fences Act was based upon the entire costs that they had incurred or would incur.

8. While the appellants filed a counter‑claim for personal injury in the sum of $50,000 (plus costs), the amended version filed on 12 March 2019 was in the sum of $135 together with the court filing fee of $311.  That claim related to damage caused to plants because of an acid wash.

9. The Magistrate dismissed the negligence claim and the claim for damages made by the respondents.  The respondents did not lodge a cross‑appeal against those decisions.  The Magistrate also dismissed the appellants’ counter‑claim for $135.  The appellants observe that the approach adopted by the respondents in seeking damages as the primary remedy and being legally represented resulted in the proceedings not being a minor civil action.  They also note that both parties incurred considerable costs in dealing with engineering issues. 

10. I observe that, save for one minor detail, this Court found in favour of the rectification proposal recommended by Mr Magryn, the expert called by the appellants.  Although the detail of his rectification proposal had been substantially revised during the proceedings, that occurred when he became aware that the footings for the existing fence were substantially defective.  His fundamental premise was always that rectification of the fence was feasible.

11. The appellants observe that the respondents failed to engage at all with the concept of rectification.  They simply refused to countenance rectification.  They always wanted a new fence.  The appellants submit that this was apparent from, amongst other matters:

    ·The failure of the respondents to obtain an expert’s report that engaged with the rectification proposals put forward by Mr Magryn;

    ·The failure of the respondents to entertain the offers of settlement made on 8 May 2018 and 9 June 2020 which involved proposals to equally share the costs of underpinning the fence; and

    ·Failing to respond to the amended rectification proposal developed by Mr Magryn for the joint conference ordered by the Magistrate.

12. The appellants note that the costs of the various engineering reports have been substantial and they should not be out of pocket for successfully defending an unsuccessful claim.  In support of that submission the appellants refer to the fact that the experts engaged by the respondents did not respond in their reports to the proposals put forward by Mr Magryn.  Their only comment was contained in a joint report and even then they did not engage with the revised proposal and that led to further costs on the appeal. 

13. In that respect I note that the respondents’ expert Mr Deek, when called to give further evidence on the appeal, acknowledged that the rectification proposals put forward by Mr Magryn at the joint conference ordered by the Magistrate made sense from an engineering perspective. He also conceded that three of the criticisms that he had made in the joint report related only to the original proposal of Mr Magryn and were not relevant to his revised proposal.

14. The appellants submit that as the respondents were entirely unsuccessful in their claim, and as the primary relief that they sought was damages, the Court should order that the respondents are liable for the costs incurred in and incidental to the proceedings in the Magistrates Court. 

15. Given the complexity of the matter and the unreasonable failure of the respondents to engage with the settlement proposals based on rectification or to respond to the expert reports suggesting rectification, the appellants submit that costs should be awarded on a percentage of the Supreme Court scale (eg 75 percent) rather than on the Magistrates Court scale.  Alternatively, they submit that costs could be awarded on the Magistrates Court scale but with counsel fees and engineering fees being covered as disbursements.

16. The respondents submit that the ultimate decision made on appeal was based upon the revised report provided by Mr Magryn part-way through the trial.  They further submit that it would not have been reasonable for them to have consented to any offer from the appellants that involved rectification of the fence prior to that time.  Furthermore, they submit that prior to an acceptable rectification proposal being provided, they were justified in proceeding with the trial.  The respondents submit that all costs incurred prior to the provision of the revised report by Mr Magryn should be awarded to them. 

17. The respondents further submit that the rectification proposed by Mr Magryn in his final report differed from that ordered by the Court on the appeal.  The Court ordered that galvanised steel be substituted for the timber cross-members proposed by Mr Magryn.  This is said to support further the respondents’ position that it was not reasonable for them to agree to the rectification proposed by Mr Magryn in his final report.

18. The respondents also refer to the fact that the appellants had commenced a personal injury counterclaim on 16 May 2018 for the injuries that they sustained for “inconvenience”, that were said to amount to $50,000.  The respondents submit that it is “curious” that the appellants have not mentioned this counterclaim in their costs submission albeit that the counterclaim was amended on 12  March 2019 to remove the personal injury claim.  The respondents submit that all costs in relation to the personal injury claim should be awarded to them. 

    Consideration – the costs of the appeal

19. I observed at [149] in the primary judgment that the respondents’ expert, Mr Deek, had acknowledged that only Building Rules consent was required for the proposed rectification of the existing fence.  Mr Deek did not suggest that the specifications prepared by Mr Magryn were contrary to the Building Rules.  As the Council must grant consent if a private building certifier has certified that the proposed work complies with the Building Rules, I was not persuaded that the concern expressed by Mr Deek about the fact that Council consent had not yet been obtained had any substance.  In that light, I accept the submission of the appellant that no useful purpose will be served by delaying a decision on the costs application until the decision of the Council is known. 

20. The second contention advanced by the respondents relies on the fact that the appellants did not succeed in all grounds in the appeal. I dismissed ground 6 of the notice of appeal which advanced a particular construction of s 12(7) of the Fences Act.  That issue occupied a very brief time in submissions and the rejection of the construction advanced by the appellants did not affect in any way the outcome of the appeal.  The appellants succeeded entirely in setting aside the decision of the Magistrate and securing orders for rectification of the fence as they had sought at all stages of the proceedings. 

21. While I take into account the matters referred to by Blue J in Miller v Miller (No 2), I do not consider that it is appropriate to make an order for the apportionment of the costs of the appeal.  The clear position is that the appellants overwhelmingly succeeded on the appeal save for a narrow point of statutory construction that had no other consequences.  For that reason, costs should follow the event with the appellants being awarded the costs of the appeal. That includes the costs incurred in relation to the taking of further expert evidence on the appeal and also the costs arising from the written submissions on the award of costs.

    Consideration – costs of the trial

22. The respondents contend that they should be entitled to the costs of the trial up until the time that Mr Magryn significantly revised the details of his rectification proposal soon before the conference of experts. Mr Magryn had revised his proposal upon becoming aware that the footings for the fence posts had not been dug to the specified depth and also that the concrete was of inadequate quality.

23. The appellants contend that any issues with Mr Magryn’s rectification proposal could have been resolved before trial if the respondents had been willing to consider rectification and had also addressed Mr Magryn’s proposal in their expert reports as required by the Rules. They also refer to their two settlement offers based upon rectification.

24. There is substantial force in this submission. However, Mr Magryn had not identified the deficiencies in the footings when he inspected the site for the purpose of preparing his initial report. While the lack of depth in the footings may not have been readily detectable, later evidence suggests that the fact that the concrete crumbled when touched should have been readily ascertainable. However, Mr Magryn ultimately modified his proposal upon becoming aware of the defective footings. It was the modified proposal that was ultimately accepted by this Court on appeal (save for the use of timber cross members).  The respondents’ expert, Mr Deek, had declined to respond to the modified proposal at the conference of experts but in his evidence on appeal he acknowledged that the proposal made sense from an engineering perspective. His only objections concerned matters of implementation. I did not find his objections to be persuasive.

25. The respondents have referred to my decision that steel rather than timber cross members should be used as supporting their contention that it was not reasonable for them to agree to Mr Magryn’s final rectification proposal. I reject that contention.  The evidence of Mr Magryn was that timber would eventually rot in the long term (perhaps 40 to 50 years) but steel would not be much more expensive. It was apparent that Mr Magryn did not hold a strong preference for the use of timber. In the circumstances, I considered it preferable to require the use of steel. I regard the choice between use of timber and steel as very much at the margin of decision making and not a basis to refuse to engage whatsoever with his proposal.  

26. While the appellants succeeded on appeal, the award of costs must acknowledge that Mr Magryn’s initial proposal did not recognise and appropriately respond to the defect in the concrete used in the footings. Limited recognition may also be given to the personal injury counterclaim for $50,000 (plus costs) made by the appellants on 6 June 2018 although it appears from the Magistrates Court file that an amended defence was not filed in response to this counterclaim. The $50,000 counterclaim was abandoned on 12 March 2019 when an amended counterclaim was filed by the appellants in the sum of $135 for damage to their plants.  Limited recognition is also required for dismissal of the latter counterclaim. 

27. Adopting a broad-brush approach, while giving far greater weight to the fact that the proposal for rectification of the fence made by the appellants from the outset ultimately succeeded, I determine that the appellants are entitled to 90% of the costs of and incidental to the trial, subject to the matters that follow.

28. The appellants have advanced two alternative footings for the assessment of costs. They seek either an appropriate percentage (e.g. 75%) of the Higher Courts Costs Scale or the Magistrates Court Costs Scale with expert and counsel fees treated as disbursements. 

29. The application of the Rules to this matter is affected by the fact that the proceedings in the Magistrates Court were commenced in early 2016 but did not conclude until 30 April 2021. More significantly, the trial was conducted over four days from 30 March 2020 until 2 April 2020 and then on 10 August, 12 August and 14 August 2020, with judgment being delivered on 30 April 2021.

30. On 18 May 2020, the Magistrates Court (Civil) Rules 2013 (SA) were replaced by the Uniform Civil Rules 2020 (SA) (the UCR). UCR 1.4 provides that the latter Rules apply to any step taken in proceedings on or after 18 May 2020. The result is that scale costs after that date are to be fixed in accordance with Part 3 of Schedule 6 of the UCR. Item 7 of Part 3 fixes counsel fees for the first day of trial (including the fee on the brief) at the greater of $1,333 or 4% of the amount claimed and for each day thereafter at the greater of $1,000 or 3% of the amount claimed. 

31. Prior to 18 May 2020 scale costs were fixed in accordance with the Third Schedule to the Magistrates Court (Civil) Rules.  Item 7 of the Third Schedule fixed counsel fees for the first day of trial (including the fee on the brief) at 3% of the amount claimed and for each day thereafter at 2.5% of the amount claimed.

32. The amount claimed in these proceedings varied over time as did the pleaded causes of action. The respondents initially claimed $24,999 under various heads but that was increased to $46,014.38 on 20 June 2017 based upon alleged breaches of the Fences Act and an alleged failure to comply with the conditions of Development Plan Consent.  By further amended claim on 1 May 2018, the respondents sought damages of $33,360.18 in negligence. The negligence claim was dismissed by the Magistrate and there was no appeal against that decision.

33. While in essence this was a dispute under the FencesAct, the matter was far more complex than the ordinary run of such cases. The matter was also substantially more complex than the sums that had been claimed as damages would ordinarily suggest. That was the position for two reasons, First, due to the various modifications and additions made over time by the parties, the fence was an unusually complex structure for a domestic fence.[6] That resulted in both parties engaging engineers to provide several expert reports. The engineers gave extensive evidence at trial.  Secondly, the history of changes to the fence was substantial and needed to be explored at some length in oral evidence given the allegation of negligence. Largely for these two reasons, the trial ran for seven days. An experienced barrister appeared for the appellants (the defendants at trial) while a solicitor with extensive experience as trial counsel acted for the respondents.

    [6]    The respondents’ expert, Mr Deek, described it in his evidence on the appeal as the most complex that he had ever seen.

34. The rejection by the Magistrate of the respondents’ claims in negligence and the finding on appeal that rectification under the Fences Act, as had always been proposed by the appellants, was the proper remedy makes clear that these proceedings about a dispute between neighbours should have been conducted differently.  I agree with the appellants’ submission that the respondents should have engaged at an early stage with the rectification proposals that they had advanced.

1. For the reasons indicated at [32] to [34] I do not consider that fixing costs in accordance with the ordinary scale for proceedings in the Magistrates Court is appropriate. I consider that costs should be fixed at 75% of the scale applicable in the Higher Courts.

   Conclusion

2. I will make orders in the following terms:

   1.The appellants are entitled to their costs of and incidental to the appeal, including the taking of further evidence on the appeal.

   2.The appellants are entitled to 90% of their costs of and incidental to the proceedings in the Magistrates Court, subject to order 3.

   3.The costs fixed under order 2 are to be fixed at 75% of the rate applicable from time under the Higher Courts scale or Supreme Court scale (as the case may be).