Adwell Holdings Pty Ltd v Ull Pty Ltd

[2010] NSWADT 166

CITATION:	Adwell Holdings Pty Ltd v Ull Pty Ltd [2010] NSWADT 166
DIVISION:	Retail Leases Division
PARTIES:	APPLICANT Adwell Holdings Pty Ltd, 065045 Ull Pty Ltd, 065130 RESPONDENT Ull Pty Ltd, 065130 Adwell Holdings Pty Ltd, 065045
FILE NUMBER:	065045 and 065130
HEARING DATES:	On the papers
SUBMISSIONS CLOSED:	12 April 2010
DATE OF DECISION:	1 July 2010
BEFORE:	Olsson E, SC - Deputy President
CATCHWORDS:	Costs
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997
CASES CITED:	Salon Today Pty Ltd v MMIR Pty Ltd [2009] NSWADT 71 Rucom Pty Ltd and Anor v Multiplex and Ors [2010] NSWADT 1
REPRESENTATION:	APPLICANT Gary Cleary and Associates for Adwell Holdings Pty Ltd S Spring for Ull Pty Ltd REPSONDENT Gary Cleary and Associates for Adwell Holdings Pty Ltd S Spring for Ull Pty Ltd
ORDERS:	Ull Pty Ltd pay the costs of Adwell Holdings Pty Ltd in both matters on the ordinary basis.

REASONS FOR DECISION

1 The Tribunal delivered its decision in these matters on 24 September 2009 and made orders that Ull Pty Ltd pay to Adwell Holdings Pty Ltd the sum of $3,237.88. The Tribunal gave the parties leave to file submissions as to costs, failing which the order would be that each party pay its own costs.

2 An appeal was lodged and determined by the Appeal Panel on 15 March 2010.

3 The appeal required leave as it was brought out of time. Leave was refused.

4 Submissions as to costs relating to the matter before the Tribunal (as distinct from the Appeal Panel) were received from Adwell Holdings Pty Ltd in October 2009 but were not received from Ull Pty Ltd until 12 April 2010, after the appeal was heard and determined.

5 Section 88 of the Administrative Decisions Tribunal Act 1997 (“the Act”) was amended on 1 January 2009. Read with Schedule 5, Part 11 section 43(3), it is clear that the amendment to section 88 applies to “applications and proceedings that were made on or commenced, but not finally determined, before the commencement of the substantive amendment concerned”. Accordingly, it is the new form of s.88 of the Act that pertains to this matter.

6 Both parties indicated in their written submissions that the question of costs should be dealt with by reference to the amended section.

Background

7 The matter had a lengthy background. In January 2006, Adwell Holdings Pty Ltd (“Adwell”) sought to recover from Ull Pty Ltd (“Ull”) the sum of $4,089.98 being an amount alleged to be due for outgoings for the years ended 30 June 2003 to 2005 by Statement of Claim in the Local Court. In February 2006, Ull defended the matter and sought that it be transferred to this Tribunal. The transfer occurred in March 2006 and became proceedings number 065045.

8 In August 2006, Ull commenced proceedings (in effect, a cross application) in what became matter number 065130 which alleged that Adwell had engaged in unconscionable conduct.

9 Ull was unsuccessful in its application; Adwell was successful as to part of its claim.

10 Adwell now seeks an order that Ull pay its costs; Ull resists and contends for an order that each party pay its own costs.

Parties’ submissions

11 The Tribunal is required to have regard to the terms of s.88 itself. It provides as follows:

Section 88 Costs
1)Each party to proceedings before the Tribunal is to bear the party’s own costs in the proceedings, except as provided by this section.

(1A) Subject to the rules of the Tribunal and any other Act or law, the Tribunal may award costs in relation to proceedings before it, but only if it is satisfied that it is fair to do so having regard to the following:
(a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings by conduct such as:
(i) failing to comply with an order or direction of the Tribunal without reasonable excuse, or
(ii) failing to comply with this Act, the regulations, the rules of the Tribunal or any relevant provision of the enactment under which the Tribunal has jurisdiction in relation to the proceedings, or
(iii) asking for an adjournment as a result of a failure referred to in subparagraph (i) or (ii), or
(iv) causing an adjournment, or
(v) attempting to deceive another party or the Tribunal , or
(vi) vexatiously conducting the proceedings,


(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,

(c) the relative strengths of the claims made by each of the parties , including whether a party has made a claim that has no tenable basis in fact or law,

(d) the nature and complexity of the proceedings,

(e) any other matter that the Tribunal considers relevant.
(2) The Tribunal may:

(a) determine by whom and to what extent costs are to be paid, and

(b) order costs to be assessed on a basis set out in Division 11 of Part 3.2 of the Legal Profession Act2004 or on any other basis.

(3) However, the Tribunal may not award costs in relation to proceedings for an original decision unless the enactment under which the Tribunal has jurisdiction to make the decision provides for the awarding of costs .

(4) In this section, "costs" includes:
(a) costs of or incidental to proceedings in the Tribunal , and
(b) the costs of or incidental to the proceedings giving rise to the application , as well as the costs of or incidental to the application .

12 Adverting to s.88(1A)(a), Adwell asserted that Ull failed to comply with directions of the Tribunal and acted in a manner that delayed the conduct of the proceedings and that disadvantaged Adwell by both the delay and increasing Adwell’s costs. Examples were provided. On one occasion, Adwell applied for mediation and direction were adjourned to facilitate the same. Ull refused to participate in the mediation.

13 Thereafter, Ull failed to comply with directions of the Tribunal, necessitating at least 6 adjournments of directions’ hearings.

14 A preliminary hearing was listed in relation to the sufficiency of particulars of Ull’s claim for unconscionability. Ull was directed to (inter alia) provide full particulars and evidence of its claim; it was almost 3 months late in doing so.

15 There were 2 occasions on which Ull failed to comply with other directions although no adjournment was necessitated.

16 After the conclusion of the hearing, Ull sent further (unsolicited) material to the Tribunal in support of its application, necessitating a brief hearing as to whether the hearing should be re-opened. (It was not re-opened although certain further submissions were allowed and they were filed 2 months after the time directed by the Tribunal).

17 There were other instances of delay and confusion as to when documents were filed or served by Ull.

18 Adwell also contended that a consideration of the relative strengths of the respective claims reveals that its claim for outgoings was strong whereas Ull’s claim for unconscionable conduct was weak. The claim for outgoings was not the subject of any real challenge except as to the period in which Similia Pty Ltd continued in occupation (rather than Ull). On the other hand, although Ull’s claim was not found to be wholly without merit, the Tribunal’s findings were such that the foundation upon which unconscionability was said to rest was weak.

19 Adwell also addressed the question of the nature and complexity of the proceedings. Of its claim, little needs to be said. Adwell sought payment of outgoings; the sum was readily identifiable and ascertainable; it was not complex. Ull’s claim was more complex. It required examination of the not insignificant factual matrix which gave rise to the claim and application of the relevant principles. Notwithstanding, I do not consider that this ground alone is determinative in the present case of the question of costs.

20 Ull’s submissions on the question of costs were lengthy. It argued that the proceedings had been conducted in a manner that was not uncommon in the Tribunal, meaning that there had been a number of directions hearings and interlocutory steps.

21 It contended that the unconscionable conduct claim was arguable and that the primary position as to costs should not be disturbed. It was said that in the circumstances of the ‘rarefied’ environment of alleged unconscionable conduct claims where a testing of the evidence needs to be fully ventilated for an effective diagnosis to be made it would be wholly unfair that the Tribunal award costs to Adwell. It contended that the retail leases legislation was enacted to promote behavioural change within the retail leasing industry and that notwithstanding the commercial element of a retail lease, the lessee often found itself in a relatively weaker position both in terms of bargaining power and in accessing forms of redress such as the Tribunal. It suggested that if costs were to be awarded routinely, it had the potential to discourage lessees from accessing the Tribunal in cases of alleged unconscionable conduct and could be seen as punitive in nature.

Decision

22 The proceedings are commercial in nature, arising from two parties who are acting in trade and commerce. One significant effect of the amendment to s.88 is that the notion of ‘fairness’ is to broaden the basis upon which costs might be awarded, particularly in a jurisdiction which is commercial in nature. In Salon Today Pty Ltd v MMIR Pty Ltd [2009] NSWADT 71, the Tribunal said:

“What the Parliament has done…is to recognise that there is a need for this Tribunal to be more flexible and widen the scope of a litigant’s entitlements to costs. This is a concept generally that is now accepted in this Division [Retail Leases Division]….” (paragraph [72])

23 The Tribunal considered the nature of the Retail Leases Division in the context of costs in Rucom Pty Ltd and Anor v Multiplex and Ors [2010] NSWADT 1. Having reviewed the authorities, Judicial Member Molloy said at paragraph 37:

“So, it is plain to me, that not only is this Division a commercial division dealing with commercial issues between lessors and lessees in a retail lease environment, but, and in addition, proceedings should only be commenced in this Tribunal after very careful consideration of the merits of the case: see Trust Company of Australia Ltd v Craig [2005] NSWADT 65 at [44]. After all, commencing proceedings without such consideration inevitably results in considerable expense being incurred by the other party and one might not unreasonably ask: “why should the other party have to bear those expenses when the proceedings should not have been commenced in the first place?”

24 s.88(1A)(a) has two limbs: the Tribunal has to be satisfied that it is fair to award costs having regard to whether a party has conducted the proceedings in a way that unnecessarily disadvantages another party to the proceedings. In the present case, the Tribunal accepts that Ull failed to comply with a number of the orders or directions of the Tribunal and did so without reasonable excuse and that as a result, adjournments were requested and granted. It must be accepted that litigation is attended by many difficulties and unexpected problems which impact upon a party’s ability to conform to a timetable. In the course of a commercial matter, it might not be unusual to find that each party suffers one or more such disturbances in its preparation. One step a party can take to avoid criticism of its conduct of the proceedings is to seek to have the matter relisted to explain the need for further time, or to prepare affidavit evidence as to the reason for delay.

25 However in this case, Ull repeatedly failed to meet timetables for the provision of particulars and for filing and serving evidence and did so without explanation.

26 The Tribunal accepts that this must have occasioned disadvantage to Adwell at least by reason of unnecessary appearances and correspondence, both of which must have implications as to cost. The Tribunal considers that this was an unnecessary disadvantage and that it is fair that Adwell be able to recover its costs.

27 Ull’s non-compliance with directions also had a consequential effect on the unnecessary prolongation of the proceedings. A matter that started in early 2006 was not concluded until 2009. It is worthy of note that the period from August 2006 until May 2007 was occupied by the Tribunal making successive timetables for the filing and service of evidence. This period should and could have been considerably shorter but for the delays occasioned by the conduct of Ull.

28 As to the relative strengths of the cases argued, the Tribunal has found that Adwell’s claim for outgoings (although less than the amount for which it originally contended) was successful and relatively straightforward and unchallenged. Ull’s unsuccessful application occupied the majority of the hearing time yet was by far the weaker case to be prosecuted. In this instance, the Tribunal is not persuaded that a consideration of the merits of the cases should be accorded much weight in the costs debate but nevertheless is a factor to be considered.

29 Finally, the Tribunal observes that both parties are commercial entities, both were represented and both had experience in retail lease agreements and negotiations.

30 In all of the circumstances, the Tribunal finds that it is fair that an award of costs be made and that Ull should pay the costs of Adwell on the ordinary (that is, party-party) basis.