Turner v Kostoglou - [2004] SASC 174

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
TURNER & ANOR v KOSTOGLOU & ANOR
Judgment of The Full Court
(The Honourable Justice Mullighan, The Honourable Justice Nyland and The Honourable Justice Anderson)
17 June 2004
LANDLORD AND TENANT - RENT - RECOVERY - DISTRESS FOR RENT
APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - INTERFERENCE WITH DISCRETION OF THE COURT BELOW
Appeal against the decision of a single Judge in relation to costs - the learned Judge held that the parties should bear their own costs, both as to the Magistrates Court proceedings and as to the appeal - whether the Full Court should interfere with the Judge's discretion as to costs - appeal allowed as to the costs ordered by the learned Judge in relation to the trial in the Magistrates Court - further clarification sought from the parties in relation to the appeal against the order for costs of the appeal before the learned Judge.
Landlord and Tenant Act 1936 ss 17, 22 and 24; Magistrates Court (Civil Rules) 1992 R 3(2), referred to.

TURNER & ANOR v KOSTOGLOU & ANOR
[2004] SASC 174
Full Court: Mullighan, Nyland and Anderson JJ

MULLIGHAN J The appellants, Mr Kostoglou and Mrs Kostoglou were, at all material times, the owners of the shop premises at 335 Main North Road, Enfield.
They leased the premises to Mr Tennyson Turner for a period of five years commencing on 1 September 1998. Mr Turner is a bankrupt. He and his wife, the respondent Turner, claimed that she carried on the business of an art and craft shop at the premises. The respondent Turner claimed that she was the sole proprietor of that business.
The respondent Zollo had previously leased the premises with Mr Turner as tenants in common pursuant to a lease commencing on 1 April 1995 for a term of three years. When a new lease was subsequently granted, the respondent Zollo did not want to be a tenant and he did not participate in the lease. Mr Zollo is an artist and during the period of the original lease he produced art work which was sold as part of a business, conducted jointly by him and Mr Turner. It was the case of the respondent Turner that she and her daughter conducted a business at the premises after the commencement of a new lease on 1 September 1998 and that from that time she owned all of the items of personal property at the premises, except for items owned by Mr Zollo which were kept at the premises.
As at 22 February 2002 Mr Turner owed in excess of $30,000 to the appellants as arrears of rent payable under the 1998 lease. On that day the appellants, through an agent, re-entered the premises and terminated the lease. The agent also seized items of personal property purportedly by way of distress for arrears of rent.
On 11 March 2002 the respondent Turner brought proceedings in the Magistrates Court against the appellants pursuant to s 24 of the Landlord and Tenant Act 1936 (“the Act”) seeking return of the property, which had been seized by the agent of the appellants and an order restraining them from selling any of this property. On 11 April 2002 the respondent Zollo commenced proceedings against the appellants of the same nature. He claimed that the value of his property which was seized was $3,180,000. Earlier, on 25 February 2002 he had given notice to the agent of the appellant that he was the owner of a substantial part of the seized property and that the tenant had no interest in that property.
The two actions were heard together before a learned Magistrate in eight days over the period from 15 July 2002 until 17 December 2002. She gave her decision on 17 December 2002. Both actions were brought pursuant to Part II of the Act which relates to distress for rent. Section 17 provides that every person making a distress for rent shall forthwith make out a written inventory of the goods distrained in a specified form. It must be signed by the person making the distress and delivered to the tenant or some other person residing at the premises where the distress is levied. If distress is levied on any goods being the property of a person other than the tenant, that person or his agent may serve the landlord with a declaration in the form prescribed by the Act, setting forth that the immediate tenant has no right of property, or beneficial interest, in the goods and that the goods are his or her property. An inventory of the goods must be annexed: s 22. Any justice of the peace, upon a complaint in writing by either the landlord or the person claiming the interest in the goods, other than the immediate tenant, may issue a summons to the landlord and the claimant and any two justices of the peace may adjudicate on such claim in a summary manner: s 24. This was the process adopted by the respondents.
The applications were not heard by two justices of the peace but by a learned Magistrate. The respondent Turner was not represented by a legal practitioner but received extensive assistance from Mr Turner who is a former legal practitioner. The respondent Zollo was unrepresented and the appellants were represented by counsel. Before the learned Magistrate, the respondents asked that the goods which had been distrained be returned to them.
The learned Magistrate had a view of the premises during the course of which two paintings claimed to be of particular value to the respondent Zollo were located. They were parts of the goods distrained. Another Magistrate, in the interlocutory proceedings, ordered their return to the respondent Zollo before the trial before the learned Magistrate and they were returned after the trial. The learned Magistrate concluded that each of the respondents was obliged to prove ownership of the goods claimed by each of them.
Evidence in support of their claims was given by the respondents and Mr Turner. It was claimed that Mr Turner had transferred ownership of the goods at the premises to the respondent Turner, at the time the new lease was granted in 1998. This claim was supported by the respondent Zollo. At no time was any documentary evidence produced to confirm this claim. If ownership had not been transferred, then Mrs Turner had no claim. There were a number of adjournments granted to the respondent Turner to enable her to produce such documentary evidence but it was not forthcoming.
The learned Magistrate found that the appellants were not told that the respondent Turner was to be the tenant and Mr Turner entered into the lease without suggesting any change in the tenancy to the appellants. No change was made to the ownership of the business name for the business, to arrangements with the bank, Telstra and EFTPOS, all of which had been established by Mr Turner. The learned Magistrate took into account the demeanour of the respondent Turner in the courtroom. She claimed to be a person who stands on her own feet and responsible for running the business but Mr Turner became, on occasions, agitated, he interrupted her and insisted that his view be heard. He advised her about cross-examination of witnesses and presentation of evidence. The learned Magistrate took the view that it was significant that no documents were produced to establish or support the claims of Mr Turner and the respondent Turner, that she was the owner of the goods.
Extensive reasons were given by the learned Magistrate for the view which she took as to the credibility of Mr Turner and the respondent Turner. She rejected their evidence as to the respondent Turner being the proprietor of the business and the owner of the goods to the exclusion of Mr Turner. She found that the respondent did not pay any consideration to Mr Turner for the business, including the goods. No rent was paid by her. There was no documentation and nothing in the shop or the shed to confirm their evidence which, the learned Magistrate said, had been contrived for the purposes of the litigation.
The learned Magistrate concluded that Mr Turner and the respondent Turner were the joint owners of the goods.
The respondent Zollo also failed to produce to the Court any documentation to support his claims as to ownership of goods and the extraordinary value which he placed upon them. The learned Magistrate described his evidence as to this matter as “astounding and incredible”. An example is that he claimed to have sold one of his paintings in the United States of America for $1m. He claimed that the transaction did not involve any documentation on the transfer of money. He said the consideration was paid by the transfer of jewels which were given to the Women’s and Children’s Hospital. He claimed that no documentation was created. Mr Turner gave evidence supporting the gift of the jewels. The learned Magistrate rejected the evidence of both men and did not accept either of them as a witness of truth.
The learned Magistrate found that Mr Turner and the respondent Zollo were involved in a joint venture regarding the sale of Mr Zollo’s artwork except with respect to the two paintings which were found in the shed.
The learned Magistrate dismissed the applications of the respondents and ordered that they pay the appellant’s costs of the proceedings.
There is one matter which must be mentioned. During the trial before the learned Magistrate, the respondent Turner on many occasions requested the learned Magistrate to consider the validity of the distraint of the goods. The learned Magistrate expressed the view that a Master of the District Court, in proceedings in that Court, had decided that matter. It appears that the allegation before the learned Magistrate was that the distraint was invalid because it was excessive and that the lessee was not the owner. The Master had concluded that the appellants were entitled to the unpaid rent. The appellants had instituted the proceedings against Mr Turner and sought, and obtained, summary judgment. The learned Magistrate concluded that the value of the goods which the respondents claimed were, in effect, of little value and therefore the distraint was not excessive.
The respondent Turner appealed to the Supreme Court. The appeal was heard by Perry J in February and determined in May 2003. The learned Judge ordered that the respondent Zollo be joined as an appellant. They were represented by the same counsel. It was claimed by them that the distraint was invalid.
The learned Judge concluded that the question of validity of the distraint had not been decided by the Master. However, for other reasons, he concluded that none of the parties could question the validity of the distraint in the proceedings before the learned Magistrate. He held that the claims by the respondents under Part II of the Act were as third parties who asserted that the immediate tenant had no right of property or beneficial interest in the goods. Mr Turner, who was the immediate tenant, was not a party to the proceedings and for that reason alone it would not be proper to address the question of validity of the distraint.
However, the learned Judge decided that if a serious question as to the validity of the distraint did arise, it was preferable that the question be resolved before proceedings pursuant to s 24 of the Act were commenced. He held that a serious question did arise and he proceeded to hear and determine that question.
The learned Judge decided that the distraint of all of the goods on 22 February 2002 was invalid because distraint could not be effected after the expiration of the lease. He found on the basis of evidence given by the respondent Turner and Mr Turner, that the agent of the appellants had terminated the lease before the distraint. This finding was made even though the learned Magistrate had found both Mr Turner and the respondent Turner untruthful about other matters and had not addressed this issue. The learned Judge observed that the evidence of Mr Turner as to this matter was not challenged and decided that the re-entry (terminating the lease) should be taken to have occurred upon the entry of the agent into the premises. Both actions were almost contemporaneous in that the lease was terminated before the distraint, which followed immediately thereafter.
Although the learned Judge found that the distraint was unlawful, he concluded that in the proceedings before him it would not be proper to make an order which was binding on the appellants and Mr Turner. Such an order could only be made in proceedings between the appellants and Mr Turner. Nevertheless, he said that he should not make an order in the proceedings in favour of the respondents because the distraint was unlawful. He adjourned the appeal to allow Mr Turner to obtain appropriate relief should he so decide.
The matter came back on for hearing before the learned Judge on 10 June 2003. He decided that contrary to the view he had earlier expressed, the learned Magistrate could have considered the question of validity of the distraint. He accepted that the parties had not had the opportunity to adduce evidence as to that matter and decided that they should have upon the hearing of the appeal. He addressed the complication of Mr Turner’s bankruptcy and concluded that he could reach a conclusion about the validity of the distraint in Mr Turner’s absence, but he allowed to him the status of intervenor and that his trustee in bankruptcy be given notice.
The hearing of the appeal resumed on 3 July 2003. No further evidence was adduced as to the validity of the distraint. The appellants submitted that the distraint was lawful. The trustee in the bankruptcy of Mr Turner appeared and claimed that the goods rested in him. Consequently, Mr Turner was not joined as an intervenor. As no further evidence was adduced, the learned Judge confirmed his view that the distraint was unlawful and held that, in consequence, the learned Magistrate had no jurisdiction to entertain the application under Part II of the Act.
The learned Judge allowed the appeal on the issue of jurisdiction. He held that the applications of the respondents in the Magistrates Court were correctly dismissed but for the wrong reasons as they should have been dismissed because the learned Magistrate lacked jurisdiction.
The appeal came on for further hearing before the learned Judge in relation to costs on 4 August 2003. He decided that no order for costs should be made and that each party should bear their own costs. He accepted that the respondents had been unsuccessful before the learned Magistrate but that they had unsuccessfully attempted to raise the issue of validity of the distraint. The respondents did raise the question of validity but on the basis that the distraint was excessive and that the lessee was not the owner, not that it was unlawful for the reasons found by the learned Judge. Whilst it is correct to say that the learned Magistrate refused to hear that objection for the reasons I have mentioned and the respondents did seek to argue that the distraint was invalid before the learned Magistrate, the bases of their contention were different from the basis decided by the learned Judge. It is clear from the reasons for judgment of the learned Magistrate that she did not accept that the value of the goods purportedly distrained was anything like the value asserted by the respondents and she made findings as to the ownership of the goods, contrary to the assertions of the respondents. Clearly, the learned Magistrate regarded this assertion as untruthful and so it may be said that in a practical sense the learned Magistrate ruled against the submission of invalidity as it was asserted by the respondents.
The appellants appeal to the Full Court on four new grounds. Two of them relate to the issue of invalidity of the distraint and those grounds were abandoned. However, the appellants contend that the respondents, by bringing the proceedings in the Magistrates Court pursuant to Part II of the Act, asserted that the distraint was valid and they cannot subsequently contend to the contrary. The respondents had necessarily asserted the fact of distraint in order to attract the jurisdiction under Part II of the Act. It is contended by the appellants that it would be unfair or an abuse of process to permit them to assert invalidity of the distraint as found by the learned Judge. No authority was cited in support of that proposition.
I reject this contention. In my view, a Court must resolve any issue which arises as to its jurisdiction. The learned Judge took that view and decided that issue even though the basis for the contention was not raised by any party.
The next issue raised by the appellants is that once the proceedings were commenced, the Magistrates Court had jurisdiction to deal with a complaint about ownership of the goods. It is submitted that the learned Judge erred in quashing the findings of the learned Magistrate about ownership of the goods. That issue was determined by the learned Magistrate on the merits and the learned Judge did not adjudicate on those findings because it was not necessary for him to do so. We were informed that the respondents have brought separate proceedings in the District Court against the appellants seeking damages for conversion of goods. Those proceedings were instituted later in 2003 after the completion of the appeal before the learned Judge and the findings of the learned Magistrate had been quashed. We were also informed that the goods were returned to the respondents on 18 February 2003, shortly before the hearing of the appeal commenced. However, in his submissions to us, counsel for the respondents stated that the goods were returned after the learned Judge made his decision on the appeal.
The appellants contend that the respondents have split their claims between the two courts and they should not be permitted to do so.
Our attention was drawn to R 3(2) of the Magistrates Court (Civil) Rules 1992 which provides that in the exercise of its jurisdiction and powers the Court “must attempt to determine all matters in dispute in an action so as to avoid multiplicity of claims”. It is submitted by the appellants that the learned Magistrate could have determined the claim in conversion which would avoid a multiplicity of claims.
I reject these contentions. The learned Magistrate could only act upon R 3(2) in proceedings which were properly before her and were within jurisdiction. It is accepted that the claim pursuant to Part II of the Act was not within jurisdiction. Furthermore, parties cannot consent to jurisdiction which does not, and cannot, exist. A party cannot wrongly assert jurisdiction and thereafter be bound by that assertion if jurisdiction does not and cannot exist.
It is also submitted by the appellants that the respondents could not assert jurisdiction in the Magistrates Court by instituting the proceedings and then assert lack of jurisdiction. They could make an election whether to institute the proceedings or to take other proceedings. Having made those decisions they could not later assert to the contrary. I reject that submission. If the Court decides that it does not have jurisdiction, it cannot hear and determine the matter regardless of the attitude of any of the parties.
The proceedings before the learned Magistrate were for return of the goods. The proceedings for damages for conversion could not seek return of the goods. The claim by the respondent Turner is for damages for loss of use of the goods until they were returned. She was deprived of possession of the goods for about 12 months and has claimed $250,000 or more for such loss of use. The claim of the respondent Zollo is in excess of $1m.

Having seen a list of the goods prepared by the respondent Turner, the claims of the respondent Zollo and the findings of the learned Magistrate as to the nature and general value of the goods, it is difficult to take these claims seriously. If the respondent Turner lost $250,000 for loss of use of her share of the goods, it is likely that she will have documentary evidence, including financial statements and taxation returns, to justify such a claim. If the respondent Zollo lost in excess of $1m in one year, he also should be able to support that claim with appropriate documentation. These new claims are not in detinue as the goods have been returned.
I mention these matters because the claims in the District Court are different in nature to the claim in the Magistrates Court. I do not think the learned Magistrate could purport to deal with any claim which may arise out of the seizure of the goods by the agent of the appellants unless an action, setting out the claim or claims was instituted by the respondents. The learned Magistrate could not now resolve claims which are the subject of proceedings in the District Court if this matter was returned to her in accordance with the submission of the appellants.
In my view, all that is left for us to consider is the appeal against the orders for costs. This Court, on appeal, should be reluctant to interfere with an order for costs made upon a single judge appeal, but it must be observed that the learned Judge did interfere with the order for costs made by the learned Magistrate. It is not clear whether the learned Judge was informed that the goods had been returned before the appeal came on for hearing. However, counsel for the appellants informed us that as the goods had been returned, there was no subject matter for that appeal, except as to costs. The respondents were well aware that the goods had been returned to them before the appeal was heard. They knew that the issue about validity of the distraint was a dead issue in so far as recovery of the goods was concerned. Counsel for the respondents contended otherwise.
The conduct of the respondents at the trial caused unnecessary costs to be expended by the appellants. A simple matter which should have been dealt with summarily occupied eight days, at vast expense to the appellants who were represented by counsel. The learned Magistrate found that there was no merit in the case of any of the respondents except in minor respects. The challenge to jurisdiction by the respondents was on a different basis to that determined by the learned Judge. The basis claimed by the respondents lacked merit as it was not established that the value of the goods exceeded the arrears of rent. The respondents chose to make their claim under Part II of the Act and not in tort. They asserted that their goods had been taken by way of distraint for rent. Their claims were dismissed by the learned Magistrate on the merits and by the learned Judge on jurisdictional grounds.
The respondents brought their proceedings in the Magistrates Court which did not have jurisdiction. In those circumstances it is to be expected that an order for costs would be made against them. They could have brought proceedings in tort and a jurisdictional issue would not have arisen.
It was contended by the respondents that the process of distress commenced when the appellants purported to distrain for rent, using the procedure under Part II of the Act and consequently the proceedings by the respondents in the Magistrates Court did not institute that process. I reject that contention. As I have said, the respondents commenced the proceedings in the Magistrates Court and in doing so asserted that the lessee was not the owner of the goods. They chose the forum and the jurisdiction to be exercised.
In my view, the appeal against the orders for costs made by the learned Judge should succeed. He based his decision not to award costs against the respondents on the ground that they had attempted to raise the issue of the validity of the distraint before the learned Magistrate, but had not been permitted to do so. He said that the appellants did not, at any stage, assert that the distraint was unlawful. They succeeded before the learned Magistrate on the merits. The learned Judge took the view that his order effectively quashed the findings on the merits made by the learned Magistrate.
I do not think these matters justify the orders which the learned Judge made as to costs.
For the reasons I have mentioned the appellants should have their costs before the learned Magistrate. They succeeded on the merits. The respondent commenced the proceedings in that Court which did not have jurisdiction. Their conduct at the trial caused substantial waste of costs. Their assertion of invalidity of the distraint was on different grounds which were correctly rejected by the learned Magistrate.
The next question is whether we should interfere with decisions by the learned Judge as to the costs of the appeal heard and determined by him. If the goods had not been returned to the respondents before the appeal was heard, I think the decision of the learned Judge should stand and there should be no order for costs because the basis of the lack of jurisdiction was discovered by the learned Judge and not advanced by the respondents. However, if the goods were returned before the appeal was heard, there was no subject matter left in the proceedings and the appeal was unnecessary. In those circumstances the respondents, who brought the appeal, should pay the appellant’s costs.
I would allow the appeal and set aside the order made by the learned Judge regarding costs of the proceedings in the Magistrates Court and order that the respondents pay the appellant’s costs of those proceedings. I would seek clarification from the parties as to when the goods were returned to the respondents and then either confirm the decision of the learned Judge as to costs of the appeal or order that the respondents also pay the appellant’s costs of that appeal, depending upon when the goods were returned.
I would hear the parties as to the costs of this appeal.
NYLAND J I agree with the reasons of Mullighan J and the orders proposed by him.
ANDERSON J I agree with the reasons of Mullighan J.