Alessa Pty Ltd v Total & Universal Pty Ltd

[2001] NSWADT 150

CITATION:	Alessa Pty Limited -v- Total & Universal Pty Limited [2001] NSWADT 150 revised - 26/09/2001
DIVISION:	Retail Leases Division
PARTIES:	APPLICANT Alessa Pty Limited RESPONDENT Total & Universal Pty Limited
FILE NUMBER:	015080
HEARING DATES:	16/08/2001
SUBMISSIONS CLOSED:	08/31/2001
DATE OF DECISION:	09/18/2001
BEFORE:	Donald B - Judicial Member
APPLICATION:	Costs
MATTER FOR DECISION:	Decision on Costs
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Retail Leases Act 1994
CASES CITED:	Townsend v SRA [1999] NSWADT 104 Holpitt Pty Ltd v Varimu Pty Ltd (1991) 103 ALR 684 Hoblos v Marchese [1999] NSW ADT 127) Fonua v BHP Co. Ltd [1999] NSW ADT 59 Langley v UNSW (1984) EOC 92-018 Henry v Henry 135 ALR 564 Citadin Pty Ltd v. Eddie Azzi Australia Pty Ltd & Anor [2001] NSWADT 31
REPRESENTATION:	APPLICANT P Walsh, barrister RESPONDENT A Le Surdo, barrister
ORDERS:	The Applicant pay the costs reasonably and properly incurred by the Respondent assessed on a party and party basis, within 21 days of the date on which the parties may agree on the amount of those costs or failing agreement, such costs to be assessed.

1 On 16 August 2001 I dismissed this application for want of the Tribunal's jurisdiction, finding against the Applicant on all jurisdictional issues. I reserved the question of costs for further submission . Alessa Pty Limited -v- Total & Universal PtyLimited [2001] NSWADT 16 August 2001

2 The parties have now filed further submissions on the question of costs.

3 Under s.88 of the ADT Act 1997, the Tribunal may award costs only "if it is satisfied that there are special circumstances warranting an award of costs".

4 This Tribunal has rejected the general proposition that because of the commercial character of retail lease relationships, costs should follow the event. Townsend v SRA [1999] NSWADT 104. It has done so notwithstanding the tendency to a contrary view in Victoria in retail lease cases. See the review of the Victorian position by the Appeal Panel of this Tribunal in Citadin Pty Ltd v Eddie Azzi Australia Pty Ltd & anor (No 2)[2001] NSWADTAP31

5 The meaning of "special circumstances" has been considered in cases in a number of decisions of this Tribunal. Descriptions of such circumstances range from "circumstances which take the matter out of the ordinary course (see Holpitt Pty Ltd v Varimu Pty Ltd (1991) 103 ALR 684 referred to by this Tribunal in Hoblos v Marchese [1999] NSW ADT 127), to circumstances where the claims "lacked any conceivable merit in fact or law", the purpose of a costs order in those circumstances being described as a measure to prevent "the gross abuse of the legislation by frivolous and vexatious and misconceived proceedings”. Fonua v BHP Co. Ltd [1999] NSW ADT 59 quoting Hutley JA in Langley v UNSW (1984) EOC 92-018 at 75 468.

6 These analyses of the test to be applied make it clear that the circumstances must be seriously beyond the usual or ordinary pursuit of a claim so that it would be seriously unfair to a party to proceedings before the Tribunal not to be awarded some or all of its costs where it has been successful.

7 Clearly vexatious proceedings in the sense confirmed by the High Court in Henry v Henry 135 ALR 564 at 576 namely "productive of serious and unjustified trouble and harassment" would be special circumstances but that ought not be seen as an absolute statement of the test. It would in my view place the bar unnecessarily high for the Tribunal in exercising its discretion in the circumstances of each case. According my formulation of serious unfairness is in my opinion the most useful approach to take.

8 The Appeal Panel of this Tribunal has ruled that, in an appeal context, the fact that no sufficiently arguable questions of law were disclosed constituted special circumstances entitling an award of costs. Citadin Pty Ltd v. Eddie Azzi Australia Pty Ltd & Anor [2001] NSWADT 31.

9 When giving my ex tempore decision on the jurisdictional issues, I observed that on the face of it, given the facts then available to me, the parties were proceeding as bona fide commercial parties seeking to resolve a commercial dispute between them.

10 The submission for the Respondent filed after that decision canvasses evidence not before me at that time and obtained as part of the production of documents including importantly the Applicant's solicitors' file produced without any claim as to confidentiality or privilege.

11 That evidence relates particularly to the Applicant’s understanding about the jurisdiction of the Tribunal when commencing these proceedings. In my judgment on jurisdictional issues I reviewed the evidence concerning the Sale of Business Agreement entered into following the withdrawal of an offer for a prior transaction which had included the lease. I found that the parties had proceeded to a new agreement which expressly excluded a lease and involved a different purchase price, some $100,000 lower.

12 The lawyer’s file notes which are particularly referred to by the Respondent as establishing special circumstances are the following:
6 June 2001
"Lease - not worry about it!!; we'll get Lease later.
-Aware if can't secure … they will have to vacate".
-he not fall under Retail Leases Act
12 June 2001
-he is not under Retail Leases Act.
-does he have a legal right to a lease? I don't think so.
15 June 2001
-no lease
-he will stay as long as possible where he is and will relocate when pressured.
18 June 2001
-re lease …
-will relocate if worse comes to worse.
17 July 2001
-lease - not look like they will get one but he not care. He said he has lot of ? places around.
(? above indicates the Tribunal’s inability to decipher a word.)


13 The Respondent argues on the basis of those notes that the Applicant and its lawyer had formed clear views that the Retail Leases Act did not apply, particularly to the new transaction between the parties.

14 In these circumstances the Respondent submits that the Applicant has acted with an absence of good faith and contrary to legal advice and asked the Tribunal to conclude that the proceedings were vexatious, frivolous or commenced without due cause.

15 By way of reply on costs the Applicant filed further submissions together with an affidavit of the lawyer for the Applicant. The affidavit refers to certain advice said to have been given to the Applicant by the mediator within the Retail Tenancy Unit.

16 As to this, the proper practice of this Tribunal must be that the Tribunal must not have regard to what is said in any mediation session or by the Retail Tenancy Unit. I am of the view that this should also apply in the case of costs questions and accordingly I reject the availability of that evidence in this regard. In any event, even if it were later to be held that it was proper to consider this evidence, the Retail Tenancy Unit is clearly not in a position to be giving legal advice and where, as the affidavit reveals, the Applicant's own lawyer expressed real doubt to his client about that advice, an Applicant cannot rely on the Unit's advice.

17 Furthermore, the Applicant says that the opinion formed by its lawyer was "off the cuff". There is nothing in the file notes to suggest that the opinion was other than an ordinary opinion formed by a qualified legal adviser and repeated throughout the file notes. If despite my comments above, regard may be had to the lawyer's affidavit concerning advice provided during the mediation attempt by the Retail Tenancy Unit, the lawyer's affidavit makes clear that he continued in his opinion that the Retail Leases Act probably did not apply in spite of suggestions to the contrary, and so advised his client.

18 The lawyer for the Respondent also pointed to a Calderbank letter warning the Applicant of potential loss to the Respondents of an assignment of its interests under the Head Lease. The Respondent relied in this letter on its contention that the Applicant had no case in relation to the three points which as it turned out were decided in the Respondent's favour.

19 In my opinion, bearing in mind the further evidence placed before the Tribunal, including the uncontroverted evidence as to the legal advice given to the Applicant by its lawyer, I am persuaded that in the circumstances of this case it would be seriously unfair to the Respondent not to recover costs. In my opinion there was such a weakness in the merits of the case, a weakness recognised by the Applicant’s legal adviser from the outset, as to bring it close to a claim without real merit in the sense referred to in cases dealing with vexatious actions. It is a case which in my opinion satisfies the test I have stated above for an award of costs.

20 For these reasons I consider that the Respondent is entitled to its costs on a party party basis.

21 Accordingly the Tribunal orders that the Applicant pay the costs reasonably and properly incurred by the Respondent assessed on a party and party basis, within 21 days of the date on which the parties may agree on the amount of those costs or failing agreement, such costs to be assessed.