2FC Pty Ltd v Sokkon Pty Ltd (No 2)

[2011] NSWADT 304

Administrative Decisions Tribunal

New South Wales

Medium Neutral Citation:	2FC Pty Ltd v Sokkon Pty Ltd (No 2) [2011] NSWADT 304
Hearing dates:	On the papers
Decision date:	20 December 2011
Jurisdiction:	Retail Leases Division
Before:	K Rickards, Judicial Member
Decision:	The Respondents' application for costs is dismissed
Catchwords:	Costs
Legislation Cited:	Administrative Decisions Tribunal Act 1997
Category:	Costs
Parties:	2FC Pty Limited (Applicant) Sokkon Pty Limited (First Respondent) Thita Hospitality Pty Limited (Second Respondent) Konstantine Bakafoukas (Third Respondent) Sokratis Peter Bakafoukas (Fourth Respondent) Sam Bakas (also known as Themis Bakafoukas) (Fifth Respondent)
Representation:	Counsel N Carney (Applicant) N Cotman SC (Respondents) Georgiadis & Baker (Applicant) VA Lawyers (Respondents)
File Number(s):	115060

REASONS FOR DECISION

1. The Respondents in these proceedings have made an application for payment of their costs following the principal decision made in these proceedings on 8 November 2011.

1. All Respondents were represented during the proceedings and at the hearing by the same lawyers.

1. The First Respondent did not contest at any relevant time prior to the commencement of these proceedings that it owed rent to the Applicant in a sum of $46,076.19 for the period 1 March 2009 to 31 March 2010 when the subject restaurant premises were vacated. However, the Applicant claimed a further two months' rent from April 2010 during which certain claimed rectification works were carried out by its contractors, claimed the costs of rectification, and also claimed that a new lease had been entered into by one or other of the Respondents as a result of which there was an ongoing liability for unpaid rent. These components of the Applicant's claim were disputed by the Respondents, and ultimately failed.

1. The Respondents contend that their costs up to the date of an offer made in a letter sent by their solicitors on 25 October 2010 should be paid by the Applicant upon a party/party basis up to that date and upon an indemnity basis thereafter. In support of this contention, the Respondents fundamentally rely upon the fact that the Applicant's claims as set out above in paragraph 3 failed in circumstances where the First Respondent had offered on 25 October 2010 to pay the unpaid rent in the conceded sum of $46,076.19 together with an allowance for interest, in a rounded off total amount of $50,000. There are also other grounds upon which the Respondents submit that their costs should be paid, which are dealt with below.

1. Section 88(1A) of the Administrative Decisions Tribunal Act 1997 provides that parties are to bear their own costs unless it is fair to make a costs order. A non exhaustive list of factors which the Tribunal may take into account in determining whether it is fair to make a costs order are set out within the section.

1. Although a letter was sent by the Respondents' solicitors on 25 October 2010 offering to pay the sum of $50,000 in settlement of the claim, there is no apparent reason why the rent for the premises which had been properly due and outstanding since at least March 2010 had not been paid by or at that time, nor indeed why the rent for the period to March 2010 still remained unpaid as at the date of hearing. This liability for rent clearly emerges from the terms of the original lease agreement between the Applicant and the First Respondent and there is no discernible reason why this rent could not have been paid while still preserving the Respondents' interests in disputing the balance of the claims made by the Applicant.

1. The Applicant's claim has also ultimately succeeded in an amount higher than the settlement amount offered on behalf of the Respondents.

1. It also cannot fairly be said that the Applicant's claim against any of the Respondents was so clearly untenable as to justify a costs order. It was reasonably arguable that a new lease had in fact been entered into by one or more of the Respondents, under which possession of the premises had been entered into and obligations had arisen, and upon which part of the Applicant's claim in these proceedings was based.

1. There were also a series of quite different positions taken by or on behalf of each of the Respondents during the course of communications between the parties when the term of the original lease was ending, as to the role which they were to take in the proposed new lease of the premises; much of the complexity surrounding the Applicant's claim about which the Respondents now complain arose from their own equivocation at this time when the term of original lease came to an end and a new lease was being proposed by the parties.

1. The conduct of the proceedings was not significantly prolonged or expanded by reason of the ultimately unsuccessful components of the Applicant's claim.

1. Another important factor which emerged from the evidence was that the fixtures and fittings which were found to have been justifiably removed by the First Respondent at the end of the term of the lease had in fact been expressly purported to have been sold to the Applicant when it purchased the premises. The Applicant quite reasonably but mistakenly considered that he had owned this material and that he should be reimbursed by one or more of the Respondents for the rectification costs.

1. For the above reasons, it would not be fair to make any order for costs.

Orders

(1)   The Respondents' application for costs is dismissed.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Administrative Decisions Tribunal.

Registrar

Decision last updated: 20 December 2011