SAMMY'S on the Marina Pty Ltd v Shopping Centre Management Pty Ltd - [2007] SADC 91

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
SAMMY'S ON THE MARINA PTY LTD v SHOPPING CENTRE MANAGEMENT PTY LTD
[2007] SADC 91
Judgment of His Honour Judge Lovell
28 August 2007
PROCEDURE - COSTS - DEPARTING FROM THE GENERAL RULE - OTHER CASES - DISCONTINUANCE OR ABANDONMENT
Trial settled without a hearing but costs of action not agreed – general principles discussed - Rule 6R 107 considered.
No order as to the costs of the proceedings.
Leave granted to the plaintiff to discontinue the proceedings.
Supreme and District Court Civil Rules 2006 6R 107, referred to.
Boscaini Investments Pty Ltd & Ors v Corporation of the City of Kensington and Norwood [1999] SASC 327, applied.
Taylor v Pace Developments Ltd [1991] BCC 406; Solowij & Ors v Parish of St Michael & Ors (No 2) [2003] SASC 48; Pentroth Pty Ltd v Kirschild Pty Ltd [2006] SASC 356; Ex parte Lai Qin 143 ALR 1, considered.

SAMMY'S ON THE MARINA PTY LTD v SHOPPING CENTRE MANAGEMENT PTY LTD
[2007] SADC 91
Background

The plaintiff owned and operated a seafood restaurant known as Sammy’s on the Marina at Glenelg. It leased premises from the defendant. The lease, entered into on 17 January 2006, was for a term of five years.
On 3 February 2007 the plaintiff entered into an agreement to sell the business to an entity called East Sun Group Pty Ltd subject to obtaining the defendant/landlord’s consent to an assignment of the lease.
Clause 9 of the lease stated (relevantly):
9.1 It is a term of this Lease that the Lessee had the right, subject to the consent of the Lessor, to adding the Lessee’s rights under this Lease and that the Lessor will not unreasonably withhold consent nor make any charge for consent …
On 13 February 2007, the plaintiff’s solicitors forwarded information to the defendant for its consideration. The defendant responded by seeking additional information; the plaintiff’s solicitors responded. On 26 February 2007 the defendant wrote to the plaintiff’s solicitors refusing its consent to the assignment. It reconsidered the position, in controversial circumstances, on 16 May 2007 and again refused its consent to the assignment of the lease.
The plaintiff issued proceedings on 9 March 2007 seeking a declaration that the defendant/landlord acted in breach of clause 9.1 in unreasonably refusing consent.
The defendant duly filed a defence. Interlocutory matters were heard by a Master of this Court. Amendments were made to the statement of claim; some were later abandoned.
There was substantial correspondence between solicitors for the parties.
The pleadings both by way of statement of claim and defence articulated a number of other issues that were alleged to be relevant to the question of the refusal of consent. Some of these issues were also raised in the correspondence. I do not intend to go through those matters.
The matter was listed before me for urgent hearing on 24 May 2007.
The issues identified in the pleadings were wider than a simple review by me of the landlord’s decision. The admissibility of documents and the interpretation of the lease were issues to be argued. It became apparent that the trial would not finish in the time allotted and given the allegations and counter allegations regarding some of the issues I suggested that the parties should consider deferring the commencement of the trial and the plaintiff resubmitting whatever information it wanted to put before the landlord. The landlord could then consider the matter afresh with the benefit of whatever extra information the plaintiff wished to provide. If the matter did not resolve, I suggested that I would then be in a position to hear the action based on the various refusals including, if necessary, the latest one.
The option of a further submission to the landlord was available to the plaintiff pursuant to the lease in any event. The matter adjourned briefly for the parties to consider the suggestion. Upon resumption both parties, in a spirit of cooperation, embraced the suggestion. To agree to that position both parties had to make, and did make, concessions. The sensible and commercial position adopted by both parties may have had the effect of reducing, if the matter did not resolve, the number of issues to be decided at trial. The hearing of the matter was adjourned to 14 July 2007 this being the earliest time when I was available to hear the matter.
On 14 July I was informed that further submissions had been made to the defendant and consent to the assignment of the lease had been given. Therefore there was no need for the trial to proceed. Unfortunately the parties had been unable to agree the question of costs of the action. Accordingly the question of costs was set for argument.
On 26 July 2007 the plaintiff, pursuant to Rule 6R 107 sought leave to discontinue its action. It also applied for the costs of the action. The defendant was prepared to consent to the discontinuance provided it received the costs of the action. The argument proceeded on that basis.
Legal Principles
There is only one immutable rule in relation to costs, and that is that there are no immutable rules.[1] In Boscaini Investments Pty Ltd & Ors v Corporation of the City of Kensington and Norwood[2] Debelle J reviewed, helpfully, the authorities in relation to cases where costs were left to a trial judge to decide when there had not been a trial. Whilst acknowledging that much will depend on the facts and circumstances of each individual case His Honour distilled the following principles:
(1)    Where neither party desires to proceed with litigation the court should be ready to facilitate the conclusion of the proceedings by making a cost order.
(2)    It will rarely, if ever, be appropriate, where there has been no trial on the merits for a court determining how the costs of the proceeding should be borne, to endeavour to determine for itself the case on the merits or, as might be put, to determine the outcome of a hypothetical trial. This is particularly so where a trial on the merits would involve complex factual matters where credit is an issue.
(3)    Depending on the circumstances, where the applicant has acted reasonably in commencing proceedings, has an arguable case, and it is reasonable to conclude that the respondent has acted in consequence of the commencement of proceedings, the court may be prepared to make an order as to costs in favour of the applicant.
(4)    In a particular case it might be appropriate for the court in its discretion to consider the conduct of a respondent prior to the commencement of the proceedings where such conduct may have precipitated the litigation.
(5)    Where the proceedings terminate after interlocutory relief has been granted, the court may take into account the fact that the interlocutory relief has been granted. The fact that interlocutory relief was granted is not conclusive and will be of no force where it is not possible to assess the prospects of success.
(6)    The court will not make an order where the subject matter of the action has ceased to exist through the lawful action of a person who is not a party to the proceedings.
[1] Taylor v Pace Developments Ltd [1991] B.C.C. 406; Solowij & Ors v Parish of St Michael & Ors (No 2) [2003] SASC 48
[2] [1999] SASC 327
I adopt, gratefully, His Honours guiding principles.
I bear in mind that whilst the Court has a discretion whether to order costs, that discretion must be exercised judicially. The wording of 6R 107(4) does not suggest that the general discretion as to costs should be confined by creating a presumptive entitlement for a defendant to have its costs.[3]
[3] As to the previous but similar R 52.03 see Pentroth Pty Ltd v Kirschild Pty Ltd [2006] SASC 356 per White J at paragraph 27
Discussion
I have read and taken into account the affidavit material presented on the question of costs. I have taken into account the arguments of counsel both written and oral. I do not intend to canvass all the arguments.
It could not be said that the plaintiff acted unreasonably in instituting the proceedings. It could not be said that the defendant acted unreasonably in defending the proceedings. Whether the plaintiff would have succeeded in the original proceedings is entirely speculative. The fact that the plaintiff eventually achieved its desired result in obtaining the consent for the assignment is also of little weight. Clearly there was further material put to the defendant by way of submission subsequent to the adjournment of the trial. For me to say that such information was necessary would be to, in effect, find that the original refusal by the defendant was in fact not unreasonable i.e. decide the case. I decline to do so. Whether the further material submitted by the plaintiff to the defendant was necessary is speculative.
In relation to the adjournment of the trial, as mentioned earlier, both parties agreed to the suggestion. There were significant benefits to both parties to do so and both parties acted reasonably and cooperatively in setting a timetable to allow a further submission to occur, and be assessed, prior to the resumed hearing date. Either party could have insisted that the trial proceed on 24 May 2007; sensibly neither did so.
The correspondence that passed between the solicitors for both parties, before and after the adjourned hearing date, demonstrated, perhaps somewhat robustly, that there were significant disagreements on points of law and fact. That does not mean that either party acted unreasonably in the litigation or indeed before proceedings were issued. Clearly both parties considered their cases reasonably arguable.
In Ex parte Lai Qin[4], a case where the eventual granting of a protection visa rendered the continuation of the High Court proceedings unnecessary, McHugh J said:
If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to costs.[5]
[4] 143 ALR 1
[5] supra at page 3
His Honour’s remarks are apposite to the facts of this case.
Other than those costs orders already made by the Master (which are to stand) I make no order as to the costs of the proceedings.
I therefore give leave to the plaintiff pursuant to 6R 107 to discontinue the proceedings.