Bantick v Boss Properties Pty Ltd

Supreme Court of Victoria|2000-05-03|Before: Gillard J

COSTS - Amount recovered in Supreme Court $31,919 for damages and debt - Application of Rule 63.24 - claim for declaration not pursued - application of Rule depends on recovery - additional claim only in the Supreme Court would have failed - no special circumstances - plaintiff's costs on County Court scale.

The court handed down reasons for judgment on 7 April 2000 and invited counsel to make submissions with respect to interest and costs.

On that day, after some discussion, the court proposed the following orders should be made -

1. That the defendant pay to the plaintiff the sum of $23,700 plus $6,558.73 damages in the nature of interest.

2. That the defendant pay to the plaintiff the sum of $1,303.32 damages plus $357.50 damages in the nature of interest.

This represented a total recovery by the plaintiff of $31,919.55.

The first order is in respect of a claim for debt, namely, the recovery of a deposit paid pursuant to a contract of sale of land validly terminated by the plaintiff and the second order relates to the amount of damages he suffered by reason of the unlawful repudiation of the agreement by the defendant.

Mr I. Jones of counsel who appeared for the defendant submitted that Rule 63.24(1) of the Rules of Court applied and accordingly the plaintiff was only entitled to his costs on the applicable County Court scale and was obliged to pay to the defendant the additional costs properly incurred by it by reason of the proceeding having been brought in this court instead of the County Court.

Mr M. Colbran QC who appeared for the plaintiff submitted that Rule 63.24(1) did not apply and that the plaintiff should have his costs on the Supreme Court scale.

Before considering the application of Rule 63.24(1) to the proposed judgment it is necessary to briefly outline the progress of the proceeding through the court.

The writ was issued on 12 February 1998. The claim was for the return of the deposit and damages. The prayer for relief sought two declarations, namely -

"1. A declaration that the agreement is rescinded. 2. A declaration that the agreement is void or unenforceable.

In my opinion the declarations were unnecessary. They added nothing to the real claim which was for the return of the deposit and damages.

Very soon after the issue of the writ, the defendant issued a summons on 26 March 1998 seeking an order that pursuant to s.30 of the Courts (Case Transfer) Act 1991 the proceeding be transferred to a lower court.

In addition, the defendant sought an order that paragraphs 10 and 11 of the statement of claim be struck out.

It is clear from the plaintiff's statement of claim that his complaint was that he was entitled to the return of the deposit paid pursuant to a contract, for the purchase of a strata title unit, which was which was not settled, together with damages. The value of the property was about $237,000.

The County Court jurisdiction in contract claims is $200,000. But it is noted that under s.37 of the County Court Act the parties can consent in writing to increasing the jurisdiction. The application came on for hearing before The Honourable Mr Justice Kellam and in a reserved judgment he refused the application. The reason why he refused to transfer the proceeding was because of the claim for declaratory relief in relation to property, the value of which exceeded the jurisdictional limit of the County Court. However, his Honour made it clear that "it would be inappropriate to conduct, in this court, the balance of matters which were the subject of this proceeding were it not for the claims for declaratory relief. Were it not for the view that I form with regard to the prayer for declaratory relief, I would certainly order that the matter be transferred to the County Court."

Later, in 1999, the parties discussed the question of transferring the proceeding to the Magistrates' Court. Unfortunately, they could not agree on the terms of transfer and it did not take place.

In September 1999, the plaintiff's solicitor queried the defendant's solicitors as to whether the matter could be transferred to the Magistrates' Court. The defendant's solicitors wrote on 7 October 1999 stating that the defendant was prepared to agree to the transfer to the Magistrates' Court subject to certain conditions, namely that the plaintiff remove the claim for declaratory relief, that the plaintiff pay the difference between the defendant's costs on the Magistrates' Court scale and the Supreme Court scale to the date of transfer to the Magistrates' Court and that if the plaintiff was successful, he would not claim any costs other than on the Magistrates' Court scale. The plaintiff's solicitor rejected the conditions as being unreasonable and pointed out it was unnecessary to delete the claim for declaratory relief because if the parties consented to the jurisdiction in writing, the court had power to grant declaratory relief. The defendant's solicitors joined issue on the conditions and requested the plaintiff to reconsider the matter. That occurred in late October 1999.

On 23 February 2000, the plaintiff's solicitors wrote to the defendant's solicitors confirming the plaintiff's willingness to transfer the matter to the Magistrates' Court but stated would not agree to the conditions demanded by the defendant. On 24 February 2000, the defendant replied asserting that in the circumstances the conditions were reasonable especially as the plaintiff had strenuously opposed the application before Mr. Justice Kellam.

The trial came on before me on 16 March and was concluded the following day.

The total sum recovered by the plaintiff is $31,919.55 which is substantially less than half the jurisdictional limit of the County Court and represents something less than the limit of the Magistrates' Court jurisdiction which is $40,000.00. However, if the proceeding had been heard in the County Court, the plaintiff would have been entitled to recover County Court costs. The defendant has submitted that the plaintiff should only get Magistrates' Court costs but in my opinion taking into account the legal matters involved, that the County Court would have been the more appropriate court to hear the case rather than the Magistrates' Court. In my opinion, the present application comes down to a contest between Supreme Court and County Court costs.

"(1) Where in a proceeding for debt or damages (other than a proceeding in which the jurisdiction of the County Court is unlimited) the plaintiff by judgment or by the acceptance in accordance with Rule 26.03(4) of an offer of compromise recovers an amount (exclusive of costs) not exceeding one-half of the amount to which the jurisdiction of the County Court is limited, the plaintiff shall, unless the Court otherwise orders, be entitled only to the costs to which he would have been entitled if he had brought the proceeding in the County Court less an amount equal to the additional costs properly incurred by the defendant by reason of the proceeding having been brought in the Supreme Court instead of the County Court, but shall not be required to pay to the defendant any amount by which the additional costs exceed the costs payable to the plaintiff." (Emphasis added).

The operation of paragraph 1 of the sub-rule is clear. In a proceeding for debt or damages, if the plaintiff by judgment recovers an amount not exceeding $100,000, then he is only entitled to costs on the applicable County Court scale and is obliged to pay the defendant additional costs because the proceeding has been brought in the Supreme Court instead of the County Court. However, that rule is subject to the court otherwise ordering and it has been held that the rule applies unless the plaintiff persuades the court that there is some special characteristic justifying the order for costs on the Supreme Court scale.

The similar County Court rule was discussed by the Full Court in O'Doherty v McMahon [1971] VicRp 75; (1971) VR 625. The court stated the object and the purpose of the rule. At page 628 the court said-

"The object of the rule is to protect the defendant against the unnecessary expense of high costs in a court which is not appropriate for the case. The plaintiff, however, is left free to select his court. If he fails, no protection of the defendant is necessary because he receives costs applicable in the court to which he is taken. If he succeeds, the defendant is liable for costs appropriate to the court to which he is taken, provided, however, that the plaintiff obtains more than half of the amount which the lower court has jurisdiction to award. If the plaintiff recovers less than that amount, the defendant is liable only for costs applicable in the lower court, in the absence of a special order. The purpose of conferring a discretion to make a special order is to enable the court to order greater costs where the case has about it some special characteristic justifying the ordering of greater costs. Our conclusion is, therefore, that to justify an order being made there must be some special circumstances associated with the case. This conclusion is supported by deciding cases on the equivalent rule in the Supreme Court." (Emphasis added).

Mr Colbran QC submitted that paragraph 1 did not apply because the proceeding was not "for debt or damages" but included in the prayer for relief a claim for a declaration of right.

In addition, he relied upon the fact that the plaintiff also claimed relief under section 49(2) of the Property Law Act which gives jurisdiction to this court to order the repayment of any deposit paid in a sale of land transaction.

The court in the reasons for judgment held that there was no basis for relief from forfeiture of the deposit under section 49(2) of the Property Law Act 1958, if the plaintiff had failed in his other two causes of action. Further, when Mr Colbran QC opened the case, he did not press for a declaration and at no stage during the course of the hearing did he ask for any such relief. No such relief was granted. As I have already stated it is my opinion that the claim for such relief was unnecessary and superfluous to the real cause of the plaintiff's complaint.

As a result of the plaintiff not seeking declaratory relief and because he was successful in his claim for debt and damages, the end result was that his proceeding was "for debt or damages." That was the result.

Mr Colbran submitted that the presence of the prayer for declaratory relief and the claim for relief under section 49(2) of the Property Law Act meant that the proceeding was not for "debt or damages".

On any view the plaintiff by judgment obtained orders for payment of a debt and payment of damages.

In my opinion, the court must look at the judgment in the proceeding to determine whether or not it is "a proceeding for debt or damages."

First, the wording of the paragraph is satisfied because the proceeding is for "debt or damages." The wording does not say that the proceeding must be confined to a claim for debt or damages and not include any other claim before the paragraph can apply.

Secondly, it gives effect to the object of the rule which is to protect a defendant against unnecessary expense in a proceeding that should have been heard in the County Court.

Thirdly, the conclusion gives effect to the reality of the proceeding and excludes the possibility of a plaintiff pleading a claim without substance, to attract the jurisdiction of this court.

Fourthly, any potential injustice to the plaintiff can be considered in the exercise of the court's discretion and if there are some special circumstances associated with the case, such as a claim which was arguable but failed, this may be a ground for not applying the rule.

Finally, dicta in the cases support the conclusion. In considering the dicta it is important to bear in mind the difference in the wording of the various rules of court but the object of each rule is the same. Kirby P in John Fairfax & Sons Ltd v Palmer (1987) 8 NSWLR 297 at p.305 after referring to a number of Victorian cases which defined the discretion as resting upon "exceptional" or "special circumstances" said -

"Although I would not adopt, in terms, some of the language in these judgments, with their emphasis on 'exceptional' and 'special' cases to justify the exercise of a discretion favourable to the plaintiff, there being no reflection of that language in the terms of our rule, the decisions rightly point to the need to uphold the policy of the rules, which is to deflect smaller cases, demonstrated as such by the judgment returned, to a lower court. The rules do not prohibit commencing in the higher court. They simply attach a penalty to a small verdict. In that way, ex post, they apply a sanction which is designed a priori to direct the attention of the plaintiff and those advising him to this issue and to stimulate him in commencing in the right place." (Emphasis added.)

In Keates v Woodward (1902) 1 KB 532 the Court of Appeal was concerned with a case where judgment was entered for nominal damages but also an injunction. Under the County Court's Act 1888 a plaintiff who recovers no more than £10 in an "action founded on tort" is not entitled to any costs. The Court of Appeal held that because the plaintiff had recovered an injunction the section did not apply.

"It seems to me that there is a preponderating authority for the view that I have indicated - that the fair meaning of the words 'action founded on tort' ... , is that a tort should be the gist of the action, and that the section is not applicable to an action which, though nominally to recover damages for tort, includes, as the main relief sought, a claim for an injunction. The real basis of this action was the claim of a right in respect of which an injunction was sought and the case was, in my opinion, outside (the section) and the plaintiff is entitled to his costs." (Emphasis added.)

"I wish to guard myself against being understood to say that a plaintiff who is substantially seeking damages can take the case out of the section by adding a colourable claim for an injunction. But when there is, besides the pecuniary claim, a substantial claim for relief of another kind, it seems to me that the section is inapplicable. To hold otherwise would be to produce extraordinary results." (Emphasis added.)

In that case the plaintiff was granted a permanent injunction. His claim was not colourable. The above dicta provides some support for my conclusion.

In my respectful opinion, Mr Colbran QC submission lacks reality. It would mean that a plaintiff could plead a cause of action without substance, fail at the hearing on that claim but get Supreme Court costs in respect of a claim which should have been heard in the County Court.

This all leads me to the conclusion that the court should look at the judgment pronounced to determine the question whether the sub-rule applies, namely whether the proceeding is "for debt or damages."

In my opinion it is clear that the plaintiff's claim was "for debt or damages" and rule 63.24(1) applies.

The rules do not specify what constitutes special circumstances.

However, the authorities identify the relevant matters to the exercise of the discretion. By way of example where the case involved difficult or complicated questions of law or fact - see Minehan v Clarke (1870) 9 SCR (NSW) 227 and John Fairfax & Sons Ltd v Palmer, supra. Complexity of either law or fact usually is a justification for the exercise of the discretion in favour of the plaintiff.

The fact that the plaintiff sought declaratory relief in my view could not possibly constitute special circumstances. The relief was unnecessary and could have no real practical effect on the outcome of the proceeding. It is not surprising that it was not pressed by Mr Colbran QC at the trial.

The claim for relief under section 49(2) of the Property Law Act was not in the original statement of claim, but was added when the statement of claim was amended subsequently to the decision of Kellam J. It was foreshadowed before him but other than noting it, he made no other observations with respect to it.

Section 3 of the Property Law Act defines "Court" as meaning this court and in relation to property, the value of which does not exceed the jurisdictional limit of the County Court, this court or the County Court.

In my opinion the plaintiff was not in a position to make this claim in the Magistrates' Court.

The plaintiff could only make the claim in the County Court if the parties consented to the jurisdiction of that court being increased.

It follows that in the absence of that consent, the plaintiff was obliged to bring that part of his claim in this court and this court only. Prima facie therefore, this constitutes a special circumstance justifying the exercise of discretion in favour of the plaintiff. However, it would be necessary to consider the substance of the claim and taking into account the authorities to which I referred to in the reasons for judgment, this claim had no substance. Indeed, Mr Colbran QC was unable to point to any particular special circumstances for the operation of the sub-section.

Legal practitioners before embarking upon costly litigation must carefully consider and analyse any proposed cause of action or claim for relief. A moment's reflection by the plaintiff's advisers on the question of the likely amount of recovery should have alerted them to the question of which court the proceeding should be instituted in. This was especially so when application was made very early in the piece by the defendant's solicitors to have the proceeding transferred to a lower court. This was before the amended statement of claim was delivered which for the first time raised a claim for relief under s.49(2) of the Act. Before making that claim for relief consideration should have been given to whether it had any substance. As I said, a perusal of the leading authorities in this State on the sub-section would have led to a view that there was no substance in the claim.

In my opinion the pleading of the claim for relief in the circumstances did not constitute a special circumstance which would exclude the application of the sub-rule.

The other circumstance relied upon by Mr Colbran QC was the attitude of the defendant's solicitors to the proposal by the plaintiff's solicitors to transfer the proceeding in October 1999. It was submitted that the defendant's solicitors were acting unreasonably in imposing conditions that the plaintiff pay the difference between the defendant's costs on the Magistrates' Court scale and the Supreme Court scale to the date of transfer to the Magistrates' Court and that if the plaintiff was successful he would not claim any costs other than those on the Magistrates' Court scale. With the benefit of hindsight both parties should have adopted a more flexible approach to the question at the end of 1999 and before the substantial costs were run up in preparation for trial and the hearing itself.

However, one must go back in time to the application made by the defendant's solicitors to transfer the proceeding to a lower court soon after the writ was issued.

In my opinion the plaintiff was acting unreasonably in opposing the application and should have taken steps to facilitate a transfer. It would not have been difficult to do so. However, the plaintiff and his advisers did not take any step and persevered in keeping the matter in the Supreme Court. An amended statement of claim was delivered. Any concern about the claim under s.49(2) of the Property Law Act could have been overcome by the parties consenting to an increase in the jurisdiction of the County Court.

It lies ill in the mouth of the plaintiff to then lay blame for the failure to transfer the proceeding in October 1999 at the door of the defendant and assert that it and its solicitors were acting unreasonably at that stage. The plaintiff made the decision to bring the proceeding in this court and opposed its transfer. The fault for bringing the proceeding in the wrong court is the plaintiff's. The imposition of the conditions by the defendant in the context could not be described as unreasonable. Its refusal to transfer except on condition in my opinion does not constitute a special circumstance.

In my opinion there are no special circumstances associated with this case justifying the exercise of the discretion in flavour of the plaintiff.

The proceeding should have been brought in the County Court and in my opinion the plaintiff is only entitled to County Court costs on the appropriate scale and is obliged by reason of Rule 63.24(1) to pay the additional costs properly incurred by the defendant by reason of the proceeding having been brought in the Supreme Court instead of the County Court.

In my opinion Rule 63.24(1) applies to the judgment in this proceeding, there are no special circumstances justifying the exercise of the discretion in favour of the plaintiff to exclude the operation of the rule and accordingly the plaintiff is entitled to his costs pursuant to the paragraph but with an obligation to pay additional costs to the defendant by reason of the proceeding having been brought in the Supreme Court instead of the County Court.

(i) That the defendant pay to the plaintiff the sum of $23,700.00 plus $6,558.73 damages in the nature of interest;

(ii) The defendant pay to the plaintiff the sum of $1,303.32 damages plus $357.50 damages in the nature of interest;

(iii) That the defendant pay the plaintiff's costs in accordance with Rule 63.24(1) of the Rules of the Supreme Court.

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Under the County Court's Act 1888

At a glance

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Judgment (65 paragraphs)

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