Barsoum v Glebe Administration Board (No. 2)

[2002] NSWADT 174

CITATION:	Barsoum -v- Glebe Administration Board (2) [2002] NSWADT 174
DIVISION:	Retail Leases Division
PARTIES:	APPLICANT Samy Barsoum RESPONDENT Glebe Administration Board
FILE NUMBER:	015041
HEARING DATES:	18/04/2002
SUBMISSIONS CLOSED:	05/10/2002
DATE OF DECISION:	09/20/2002
BEFORE:	Molloy GB - Judicial Member
APPLICATION:	Costs
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Retail Leases Act 1994
CASES CITED:	Barsoum -v- Glebe Administration Board [2002] NSWADT19 Multicon Engineering Pty Ltd -v- Federal Airports Corporation [1996]138ALR425 Marinis -v- Jeweller [2000]NSWCA282 Wenzel -v- Australian Stock Exchange Ltd [2002] FCA353 Law Society of NSW -v- Gallagher [1999] NSWADT 8 Gizah P/L -v- AXA Trustees Ltd (No 2) [2001] NSWADT 164
REPRESENTATION:	APPLICANT In person RESPONDENT D Flaherty, barrister
ORDERS:	1. The Applicant pay the Respondent's costs incurred from and after 3 August 2001 on an indemnity basis; 2. The Applicant to pay the Respondent's costs as agreed or assessed.

1 On 18 February 2002 I delivered Judgment in proceedings instituted by the Applicant as tenant against the Respondent as Landlord of certain premises in the Town Hall Arcade, Sydney.

2 Those proceedings were instituted by Application filed 5 April 2001 by the Applicant who sought an order that the Respondent pay to him damages, interest and costs. The hearing lasted three (3) days (12, 13 and 14 November 2001) and on 18 February 2002 I dismissed the application.

3 In dismissing the application I made the following supplementary order:

“Leave granted to the Respondent to re-list this matter before me within fourteen (14) days of the date of this order to argue whether the Applicant should pay the costs of the Respondent for the whole matter, or any part of the matter. Should the Respondent re-list to argue this issue then such argument will be limited to that issue the subject of the re-listing. In the event that the Respondent does not re-list for argument, then there will be no order as to costs.”

4 It is important to recognise that in this Tribunal orders for costs are only made where the Tribunal “is satisfied that there are special circumstances warranting an award of costs” (Administrative Decisions Tribunal Act 1997, Section 88). It is for that reason that the order that I made 18 February 2002 was effectively a self-executing order such that any applicant for costs in this Tribunal must make a positive application for costs in order to comply with Section 88, the old common law rule that generally “costs follow the event” not applying.

5 The Respondent applied for a costs order pursuant to the leave granted and sought an order for costs and for those costs to be paid on an indemnity basis.

CONDUCT OF THE APPLICATION

6 The application itself was heard before me on 18 April 2002, the Respondent/Applicant being represented by Counsel and the Applicant/Respondent to the application being unrepresented. The Respondent as part of its application tendered written submissions and addressed on those written submissions. At the conclusion of those submissions, the Applicant expressed (in my view) some confusion as to his understanding relating to the proceedings. Although it was plain to me what the proceedings were about, it seemed that the Applicant wanted more time in order to consider his position and put forward written submissions as to why a costs order should not be made against him.

7 There was an issue of procedural fairness and there being no prejudice to the Respondent I formed the view that the Applicant should be granted leave to file any written submissions on or before 3 May 2002, the Respondent to file any written submissions in reply by 10 May 2002 and I also ordered that in the event that the Applicant did not comply with the order relating to his written submissions, then I would determine the matter on the basis of the material and the submissions that were before me on 18 April 2002.

8 The Applicant in fact filed his own written submissions on 3 May 2002 in accordance with the orders that I made, the Respondent has replied and it now falls to me to determine the issue.

APPLICANT’S SUBMISSIONS

9 It is appropriate firstly to reverse the order of consideration and look firstly at the Applicant’s submissions. The reason that I have adopted this approach is because the Applicant’s submissions deal with some very general principles that the Applicant urges upon me as disentitling the Respondent to any order as to costs.

10 The Applicant’s submissions are in detail and at length and, save as may be otherwise may be dealt with later in this judgment, can be conveniently categorised under the following headings:

(a) The Applicant attempted to settle the matter but despite numerous attempts failed to persuade the Respondent to accept a genuine and reasonable offer of settlement or a compromise based on commercial standards.
(b) To make an order for costs is against the basic principle underlying the Act under which this Tribunal operates, namely that access to the Tribunal should be accessible, informal and that members of the public should not be deterred from ‘seeking justice’ and that justice should be available to all and not simply to ‘powerful corporations’ such as the Respondent or the very rich who can afford to pay costs.
(c) The Applicant brought his case ‘as an action of self-defence’ to preserve his basic financial survival, taking that course ‘for the sake of justice rather than for the sake of litigation’; the case involved ‘basic rights, rather than commercial disputes’ and that the actions of the Respondent destroyed the Applicant’s ‘prospect of a job and an income’ and deprived him ‘from some of his basic rights’, one of which was his ‘right to seek justice in such circumstances’.

11 I now deal with each of these primary submissions seriatim.

REFUSAL TO COMPROMISE OR ACCEPT ANY REASONABLE OFFER FOR SETTLEMENT

12 The Applicant submitted that he had attempted mediation, made all kinds of offers, had done everything he could do to seek settlement during a period of over twelve months, had done everything to avoid litigation, but the Respondent ‘on multiple occasions refused to accept any reasonable commercial settlement or compromise’. The Applicant effectively submitted that his offers of settlement were genuine and reasonable offers of settlement or compromise ‘based on commercial standards’. The Applicant complained that the Respondent ‘was not willing to offer any sort of compromise’. The Applicant submitted that but for the actions of the Respondent and the Applicant’s ‘forcible eviction from the demised premises’, he would not have started any action or any litigation.

13 The answer to this submissions is simple:

Firstly, the Respondent took the view, vindicated at the hearing, that its position was rock solid at law and that the Applicant would lose. A Respondent is entitled to take that position, and, of course, takes the risk that at hearing it itself may not be successful. In those circumstances, the shoe would be on the other foot and no doubt the Applicant would be applying for costs.

14 Secondly, there was no material before me to demonstrate (if relevant having regard to the Tribunal’s decision) exactly what offers of settlement were made by the Applicant. On the contrary, there was evidence before me which demonstrated that it was the Respondent who made an offer of settlement. This offer was made on the first day of the hearing (12 July 2001) when in fact the matter (although fixed for hearing on that day) did not proceed and it was an open offer made in Court by Counsel for the Respondent to the following effect:

“What has come to light yesterday when the Respondent was preparing its case, was that the Respondent did, by use of the Bank Guarantee, take to its own purposes a sum of about $3,800.00 for the occupation of June (referring to the month) which was (a) mistake. It shouldn’t have done that, which was admitted by the Respondent and the Respondent (has) made an open offer to the Applicant. You might want this recorded: To pay the Applicant that sum plus something for interest which is rounded up to $5,000.00 plus something for costs which we assess at about $10,000.00. And that’s an open offer which we make to pay the Applicant a total of $15,000.00.”

15 Of that sum, $5,000.00 was in fact paid by the Respondent to the Applicant by way of refund of the amount mistakenly deducted by the Respondent from funds obtained by the conversion of a Bank Guarantee provided by the Applicant, including a component for interest as identified above. That money was paid on 17 July 2002. The balance of the open offer, namely $10,000.00 was not accepted by the Applicant.

16 As I have pointed out in Gizah P/L v AXA Trustees P/L (No 2) [2001] NSWADT 164, this Division of this Tribunal deals with commercial disputes. In the context of this Tribunal, this Division is therefore fairly unique. To some degree its jurisdiction supplants that of the Supreme Court and parties who come before it must be aware, indeed acutely aware, that their dispute is one critically of a commercial nature. So, when looking at making offers of compromise, settlement offers, when discussing the matter, considering mediation and so on, each party needs to be acutely aware of the commercial nature of the dispute and the need to resolve that dispute on a commercial basis if it is at all possible. The fact that a party does not accept a proposal may (not ‘must’) result in a costs order if in fact that party is ultimately unsuccessful. Where a dispute involves various different aspects which can be conveniently quarantined, the failure to accept a commercial offer may result in a costs order relating to a particular aspect(s).

17 As Rolfe J pointed out in Multicon Engineering P/L v Federal Airports Corporation [1996] 138 ALR 425 at 439, any ‘offer’ must be ‘sensible’ thus reflecting at least some element of compromise. The effect to which the offer can be so characterised is established, largely, by the result.’ The submissions of the Applicant do not particularise the offers that were made and allegedly rejected by the Respondent but in any event the Applicant was wholly unsuccessful so to that extent any offer or compromise advanced by him or on his behalf fails the elementary test. In any event, absent particulars, it is impossible to form a view on whether an offer or a compromise was based on commercial standards or was reasonable or was in all the circumstances appropriate to be accepted by the Respondent.

ACCESS TO JUSTICE

18 Firstly, the Applicant referred to Section 3, Administrative Decisions Tribunal Act 1997, which sets out the objects of the Act. Sub-section (b) states that one of the objects is ‘to ensure that the Tribunal is accessible, its proceedings are efficient and effective and its decisions are fair’. Sub-Section (c) provides a further object, namely, ‘to enable proceedings before the Tribunal to be determined in an informal and expeditious manner’.

19 It was submitted that costs should not be awarded against a needy member of the public and in favour of powerful corporation or institution such as the Respondent, a ‘mighty corporation which is protected by a powerful law firms’. It was submitted that the Tribunal should be ‘accessible to the public to seek justice without any burden and without any fear and costs should not be awarded to a powerful corporation …. against a needy member of the public such as the Applicant’. It was further submitted that ‘it is an insult to the justice system of Australia to argue that justice should only be accessible to powerful corporations …. or the very rich who can afford to pay costs’.

20 The difficulty with those submissions is that they avoid the impact of the Administrative Decisions Tribunal Act, Section 88. The real question, in all cases involving applications for costs, is whether there are ‘special circumstances warranting an award of costs’ in the circumstances of the particular case. As I endeavoured to point out in Gizah, there are significant differences within the various Divisions of this Tribunal such that there may be circumstances where the Section 88 hurdle may be higher or lower depending upon which Division is hearing the particular matter. I make no further observation about that simply because I dealt with all of that in Gizah.

21 It seems to me that there is nothing in this submission by the Applicant that would persuade me that Section 88 should not be given its full force and effect if it applies to the circumstances of this particular case. The submission that the Applicant ‘has a right to seek justice’ and that it ‘is clear that the Government established this Tribunal for the oppressed members of the public to seek a resolution to their problems in a less expensive, more accessible way’ is only true as to part. Obviously, any person has ‘a right to seek justice’ but I reject the proposition that the Tribunal was established ‘for the oppressed members of the public to seek a resolution to their problems’. Rather the Tribunal was established for all members of the public to seek problem resolutions within the framework and jurisdiction of the Tribunal.

22 When one comes to commercial disputes it is really not an issue that one person may be a tenant (whether well–off or not) and the other a well-off or not as well-off landlord. The issue is whether which party to the dispute is correct in its submissions/stance. To that extent, this Division carries out the same role as any other Court resolving commercial disputes. Obviously, if the parties can themselves resolve the dispute without the assistance of a decision of the Tribunal, either by direct negotiation or some form of alternative dispute resolution, then clearly that is preferable. However, if the only way to resolve their commercial dispute is through this Tribunal, then so be it and the parties take the risk of a costs order if Section 88 is satisfied.

BASIC RIGHTS

23 The Applicant submitted that his case involved ‘basic rights rather than commercial disputes’. It was submitted that the Applicant ‘relied on promises and grants made by the Respondent and upon such reliance the Applicant spent all his savings to establish a business (in the demised premises) that would provide him with the prospect of a job and an income. However, the Respondent’s actions destroyed that prospect and deprived the Applicant from some of his basic human rights ….. (one of which was his) ‘right to seek justice in such circumstances’. It was further submitted that by the actions of the Respondent landlord, the Applicant ‘lost his business, his fittings, his fixtures and a proportion of his goods … all the money he paid in rent and all other expenditures he incurred … his job and all his chances and expectations for … a prosperous Christmas and a busy Olympic period with a flux of international visitors’. It was then submitted that the ‘matter (was) a very complicated one involving the very survival (financially) of the Applicant and (could) only be determined by the justice system.’

24 That submission flies directly in the face of, in my view, the Judgment that I delivered on 18 February 2002. I am unable to see how this submission can stand up to any critical examination having regard to the findings made in the substantive proceedings and having regard to the very clear view that I have formed that proceedings in this division are commercial disputes.

25 I therefore reject those three primary submissions made by the Applicant.

RESPONDENT’S APPLICATION FOR COSTS

26 The Respondent submitted that there were special circumstances within Section 88(1) warranting an award of costs in its favour, those special circumstances being:

(a) the making a genuine offer of settlement at an early stage of the proceedings more favourable to the other party than the ultimate outcome;
(b) repeated failure by the Applicant to comply with directions of the Tribunal, including directions as to the timetable in the lead-up to the hearing; and/or
(c) the Applicant’s persistence in his allegation or claim that was or should reasonably have been known to him to have been untenable on the evidence, in particular alleging breaches of the Trade Practices Act (which were abandoned at the hearing), reliance upon Section 34 of the Retail Leases Act and that the Respondent’s works to the Town Hall Arcade so effected the income of the Applicant that he was unable to meet the rent.

27 I shall now deal with each of these submissions.

OFFER OF SETTLEMENT

28 I have set out above the offer of settlement that was made at the first (aborted) day of hearing 12th July 2001. There is no doubt that the offer was made and there is no doubt that it was not accepted. The offer in respect of the $3,800.00 rounded out to $5,000.00 to include interest cannot really be categorised as an offer because it was simply moneys that the Respondent owed to the Applicant. No submission was made on whether that amount could have been set off against any amount found ultimately owed by the Applicant to the Respondent, rather it is plain that the Respondent actually paid the $5,000.00 to the Applicant on 17th July 2001.

29 The balance of the offer, $10,000.00 was specified by counsel for the Respondent as ‘something for costs’ and then the whole of the offer ($5,000.00 plus $10,000.00) was then categorised as ‘an open offer’.

30 It is plain to me that what the Respondent was doing on 12th July 2001 was offering the Applicant a sum of money to go away. It was a (rough) assessment of what the Respondent thought the Applicant’s costs may have been to that point, but in my view it was not an offer to pay his costs (although perhaps loosely categorised in that fashion), rather it was an offer to make a payment to him of an amount of money to dispose of the proceedings.

31 Looked at in that light and in the face of the offer being made in open court, the Applicant (in my view) had an obligation to himself to carefully look at his case, the way in which it was to be presented, its merits, and the likelihood of success, and weigh that up against the $10,000.00 offered.

32 It may be argued (although this argument was not advanced) that put the way it was put (and I have directly quoted it above) then the offer was not such as would fall within the Calderbank (Calderbank v Calderbank [1976 Fam 93]) principle or any other principle that applies to offers rejected and consequent costs following. Perhaps a less generous judicial officer would try and categorise the phraseology used by counsel for the Respondent as not amounting to such an offer the rejection of which may support a costs application. However, that is not my view – I have a strong view that offers made ought to be properly considered and when rejected the rejecting party must understand that a costs order may follow if the rejecting party does not obtain a more favourable verdict.

33 It was strongly submitted to me orally by counsel for the Respondent that the decision of Rolfe J in Multicon Engineering Pty Ltd v Federal Airports Corporation [1996] 138 ALR 425 was a case upon which I could comfortably rely in making an order for costs in the circumstances of this case. Indeed, there is a great deal to be said for that submission – the decision of Rolfe J is clear and sets out in my view, with clarity, the matters that ought to be considered. In that case, his Honour advanced the view (at 451) that ‘there should be a prima facie presumption in the event of the offer not being accepted and in the event of the recipient of the offer not receiving a result more favourable than the offer, then the party rejecting the offer should pay the costs of the other party on an indemnity basis from the date of the making of the offer ….. the unreasonableness (of the rejection) was the failure by the offeree to accept the offer, which unreasonableness is demonstrated, prima facie, by the ultimate result. This approach is consistent with (inter alia) … the widely accepted philosophy that settlement should be encouraged”.

34 Later on in that paragraph, His Honour observed that ‘a defendant, which is ultimately successful, (and) has done everything it can to extricate itself from expensive and extensive litigation, and it seems to me that if a defendant has done that and its prognostication of the case proves to be correct, in the relevant sense, it is totally unfair that it should be required to pay costs as if it had not acted in that way. In the circumstances, the relevant unreasonableness of the recipient of the offer is the failure to accept what is established to be an appropriate offer’.

35 At page 435-6, Rolfe J quoted remarks of Cole J in NRMA Insurance Ltd v F R Coyle P/L (13 May 1994 unreported) to this effect:

“ … in modern society, while a person or corporation engaged in business may, as an incident of business, run the risk of being subjected to litigation, society requires that careful consideration be given by those intending to litigate before the claim is brought. That is particularly necessary with the current high legal costs. A person in business is entitled to assume that he will not be subjected to untenable litigation causing disruption to his business and cost. If litigation is brought against him, and it is held to be untenable, he should not in consequence suffer in a monetary sense. Great care must be taken by prospective plaintiffs and their legal advisers before proceedings are commenced.”

36 Like Rolfe J, I also entirely agree with those observations and although they were made in the context of striking out an originating process as failing to disclose a cause of action, resulting in an indemnity costs order, it seems to me that the principle applies in commercial ligation generally.

37 It is not the case however that even a Calderbank type letter automatically results in an indemnity order. In Marinis v Jeweller [2000] NSWCA 282, the Court of Appeal noted a settlement offer made during the pendency of the appeal, noted that the offer was not expressed in the form of a Calderbank offer, noted Section 131(2)(h) of the Evidence Act 1995, noted that the Appellant had failed to obtain a result better than the offer but observed (at para. 32) that ‘the offer was made some three and a half months before the hearing of the appeal by which time, presumably, a substantial proportion of the costs of the appeal had been incurred and were incurred whilst the appellant was reasonably entitled to consider the offer. It is necessary for parties to give serious consideration to such offers. Parties who chose to ignore them and do not receive a better result should not assume that an indemnity costs order will not be made. On the other hand parties wishing to make offers, on which reliance for such an order can be placed, should do so early before heavy expense is incurred’. In this case, the Court of Appeal exercised its discretion not to make “a special order for costs”.

38 In the recent case of Wenzel v Australian Stock Exchange Ltd [2002] FCA 353, Sunberg J in the Federal Court dismissed an application by a successful defendant for an order for costs to be paid on an indemnity basis. In that case, his Honour reviewed Multicon, Black v Lipovac [1998] FCA 699 and other cases and concluded that there was no substantial difference of opinion between the view of Rolfe J in Multicon (to the effect that there should be a prima facie presumption in the event of an offer not being accepted) and the view of the Federal Court that the non-acceptance of an offer of compromise or Calderbank letter was only a factor to be taken into account.

39 The view taken by Sunberg J was (as I read it) that the Court has to look at the whole situation, including the circumstances that applied at the time of non-acceptance of the offer (Coshott v Learoyd [1999] FCA 276 per Wilcox J at 46) and that any Calderbank letter must ‘descend to particularity’ (para. 8). In the case of Wenzel the solicitors for the defendant identified in their offer letter a ‘principle’ and point of defence which was in fact rejected at trial. Their client’s fall-back position was upheld but (apparently) the proper construction of the particular clause was open to argument and as the letter of offer (at para.9) ‘lacked sufficient particularity and did not show why the applicant’s claims had to fail’ then the application for indemnity costs failed.

40 It seems to me that the totality of the authorities indicates that there is no prima facie presumption arising out of an offer that is not accepted where the party not accepting the offer of compromise achieved no better result at trial, rather it is a factor to be taken into account in determining whether the offeree acted unreasonably. In the light of the Evidence Act and the general appreciation of commercial litigation as examined thoroughly in Multicon, I do not think that it makes any difference whether an offer was made in open court, by some form of letter or by a formal Offer of Compromise pursuant to particular rules of a particular court. The real issue is whether in all the circumstances the offer was properly made (having regard to the whole course of the litigation) and whether it was unreasonably rejected.

41 In this case the offer was made effectively on the first day of the hearing. It is not to the point that the hearing on that day did not in fact proceed – certainly if it had then in my view the principle described above by the Court of Appeal in Marinis v Jeweller may well have applied. However, in this case the offer was made in its terms as specified above on the day in which the application was first set down for Hearing on 12th July 2001. As it turns out the matter did not proceed on that day. The Hearing actually took place some four months later and in the meantime I would have thought it appropriate for the Applicant to have carefully considered the open offer made in Court, and made quite specifically ‘on the record’ by Counsel for the Applicant and in the presence of the Applicant and his legal representatives. Further, at the very end of the proceedings on 12 July 2001 Counsel for the Respondent made this statement at line 18ff on Page 9:

“Sorry, there is one other thing that could be noted on the file – I know it is on the transcript; the open offer by the Respondent. If that could be recorded on the file?
Chairman: Well, it’s noted in my notes of today. My notes of today will be in the file.
Counsel: Oh, thank you.”

And later at line 25:

Chairman: “If there is any doubt about it gentlemen anyone can obtain a copy of the tape without any difficulty.
Counsel for the Applicant: The only thing I would say to that in response is that the offer was made today. Chairman: I understand that.”

42 It is plain from that exchange that the Respondent wished to make it absolutely clear that the open offer was made and noted by, not only the Tribunal but also by the applicant; secondly, that the Applicant’s counsel correctly not only noted the offer but observed that it was only made that day. In my view the effect of that exchange emphasises the force of the open offer made earlier in the proceedings on that day and makes it plain that it was clearly in the mind of the Applicant and his legal team. It may well have had a negative effect on an indemnity application had the matter proceeded that day or perhaps even shortly after; but importantly the matter did in fact proceed as a fully defended three day case some four months later, after further preparation, further costs being incurred by the Respondent and further time being taken up by the Respondent’s officers. In my view there was more than adequate time for the Applicant to have properly considered the open offer, clearly specified as being $10,000.00, yet the Applicant ignored that offer, apparently did not respond at all, and proceeded with the matter at considerable expense.

43 In all the circumstances, what happened on 12 July 2001 seems to me to be a factor that would in itself constitute special circumstances warranting an award of costs in favour of the Respondent. There is no doubt at all in my mind that had the Applicant accepted the $10,000.00, then the matter would not have proceeded, the Respondent would not have been put to the additional expense and trouble and the matter could have easily resolved itself. Having regard to the ultimate findings and result in these proceedings there is also no doubt in my mind that the offer made was reasonable in all the circumstances.

REPEATED FAILURE BY APPLICANT TO COMPLY WITH DIRECTIONS OF THE TRIBUNAL

44 It was submitted by the Respondent that there were a number of occasions when the Applicant did not comply with directions:

(a) By order made 24 May 2001 the Applicant was directed to file Affidavits/Statements by 21 June 2001, yet no Affidavits were filed until 12 July 2001, the first date set down for hearing;
(b) The Applicant did not respond to a request to provide further and better particulars for a little over one month – I do not find this to be a ‘special circumstance’ in itself – and the Applicant provided a ‘schedule of loss’ which significantly increased the damages sought by him and which was not served until the first hearing date.
(c) The Applicant was not ready to proceed on that date, not having filed and served his evidence. Costs were reserved on that occasion.
(d) Directions made on that first Hearing date required the Applicant to file and serve further Affidavits and to supply the Respondent with copies of all the documentation that would go to support his claim for damage and loss, on or before 2 August, yet the Applicant did not serve his further Affidavits until 22 August 2001. In the circumstances, and having regard to the actual date of hearing, I do not regard that as a special circumstance.
(e) Further directions were made on 13 September, a revised Summons to Produce Documents was required to be served by the Applicant by 20 September 2001 and to be returnable on 28 September 2001, yet this was not served until after that date resulting in the return date being extended to 19 October 2001. Again, in the circumstances that does not amount to special circumstances.
(f) The Applicant failed to appear on that extended return date (19 October 2001) and by letter dated 23 October 2001 the Respondent informed the Applicant that it would seek its costs associated with the delay occasioned by the Applicant’s failure to attend on that day. I do not find this to be special circumstances.

45 In total there was a failure by the Applicant to comply with directions but in the totality of all the circumstances I am not of the opinion that such a failure amounts to special circumstances.

UNTENABLE CLAIMS

46 The Respondent submitted that the Applicant alleged certain breaches by the Respondent of the Trade Practices Act which were not pressed at the final hearing. Secondly, the Respondent alleged that the Applicant stated that he would rely upon the terms of Section 34 of the Retail Leases Act yet the Tribunal found against the Applicant on that aspect. That in itself is not a ‘special circumstance’ to warrant a costs order - the simple fact is that the Applicant failed on that ground.

47 The other arguments advanced by the Respondent under this head also fail because it is not the law that because a party fails in advocating a particular aspect of his/her case, that failure in itself, or even coupled with other failures, constitutes ‘special circumstances’. There may be occasions when it does, where an argument is so totally without merit that it is in reality unarguable, but simply because a party fails in a particular aspect of their case is not a ground for finding special circumstances. As Rolfe J pointed out in Multicon (at page 436) and as apposite to this case:

“There can be little doubt that the case thus formulated had difficulties. But most cases do and it is not every case, which has difficulties, which ultimately fails. While I am not to be taken as acquitting litigants and their advisers of investigating as thoroughly as possible a case brought, I am not to be taken as suggesting that cases in which there are problems should not be brought and, as I have just said, many such cases succeed either wholly or substantially or, at least, lead to a reasonable settlement for the benefit of those bringing them. It would be quite wrong, in my respectful opinion, to say that a case should never be brought unless the parties and their legal advisers were satisfied that it must succeed. If that were so, few cases would be brought.”

48 It may well be that these well formulated words should receive careful consideration when considering the effect of the Civil Liability Act 2002. Indeed, one’s experience shows that there are many good quality lawyers who take on very difficult or ‘hopeless’ cases and yet find that at the end of the day their client is successful. (See also Ashby v Russell [BC 9605550, South Australian Court of Appeal, at 15.5 and 16, para. 3]).

CONCLUSIONS

49 In my opinion the making of the open offer by the Respondent on the first day fixed for hearing (12 July 2001) in the circumstances set out above and where that open offer was not accepted and in circumstances where the Applicant continued with the matter and lost on all grounds, is a ‘special circumstance’ within the meaning of Section 88. The Applicant’s claim in this Division was a claim for money. Because of Retail Leases Act Section 75 this Tribunal has exclusive jurisdiction to hear and determine nearly all retail lease disputes and such disputes are by definition of a commercial nature involving parties to a commercial agreement and I refer to and confirm the views that I expressed previously in Gizah. In my view the Respondent’s offer was ‘sensible’, reinforced on 12 July 2001, was made on an open basis and expressed to be by way of compensation for costs incurred by the Applicant to that date. In my view the circumstances of its being made and its non-acceptance/rejection are sufficient to warrant an order for costs being made against the Applicant.

50 I reject in the circumstances of this particular case the other submissions made by the Respondent (those relating to failure to comply with directions and assistance in maintaining alleged untenable claims).

51 Having regard to the date of the making of the open offer, I am of the view that the Respondent is entitled to its costs as and from a period three weeks after 12 July 2001, being a time which in my view was a reasonable time for the Applicant to have considered the offer and accepted it. Costs incurred after the expiry of that three week period by the Respondent should be paid by the Applicant.

52 The next question is: Should those costs be paid on a reasonable basis (the ordinary usual order) or on an indemnity basis? No argument was advanced to me that this Tribunal does not have power to make orders for costs on an indemnity basis. The general principle set out in Milosevic v GIO [1993] 31 NSWLR 326 (a case that in my respectful opinion is, and was, difficult to understand having regard to the reality of life and litigation) is no longer relevant – matters involving costs are now governed by the Legal Profession Reform Act 1993 and subsequent amendments and in my opinion this Tribunal has power to make indemnity orders in appropriate circumstances. Such an order was made by the Legal Services Tribunal in Attorney General of NSW v Ronald Gouder, No. 23 of 1995 (16 April 1997 unreported) where that Tribunal not only found “special circumstances” within Section 171E(2) Legal Profession Act but ordered that the legal practitioner’s costs be paid from the Statutory Interest Account on an indemnity basis; the principles are set out at pages 11-15 of the Judgment.

53 Where Costs Assessors properly assess costs then in my view in the usual course of a matter there would be very little difference between costs on a reasonable basis and costs on an indemnity basis. The principles are set out in my Judgment in Law Society of NSW v Gallagher [1999 NSWADT 8]. On 12 July 2001 clearly the matter was not ready to proceed and in all the circumstances in my opinion at that point in time there appeared to be some confusion regarding what was required in order to prepare the case properly for hearing and I do not think that anybody necessarily is to blame for that situation. Indeed, I noted at Page 8 of the transcript:

“The information that has been provided to me by counsel for both parties indicates clearly to me that there is a degree of prejudice that will be suffered by both parties if the matter is forced to go on today and I am not prepared to allow that to happen. There is a considerable amount of money in issue as claimed by the Applicant and that requires in my view proper preparation by both parties in order to either agitate it or respond to it …. I propose to make some administrative orders that will assist in the smooth preparation of the matter and may even result in the matter being resolved but if not will assist in the smooth hearing of the matter when it’s ultimately listed for hearing.”

54 The orders that I made thereafter provided for the filing and serving of affidavits as to liability and quantum, provision of documentation alleged to support the Applicant’s claim for damages and loss, the filing of affidavits in reply and so on.

55 But the point is this: at that stage there was an opportunity given by the Respondent for the Applicant to re-assess his position and withdraw from the proceedings upon payment of the $10,000.00 offered. The circumstances of this case are therefore different from those in Marinis v Jeweller and Wenzel v Australian Stock Exchange Ltd. The matter before me was quite clear in that there was (in my opinion) a clear precise offer, repeated, and which offer was sensible and was to all intents rejected.

56 In all the circumstances I am of the opinion that the costs so ordered to be paid by the Applicant should be assessed on an indemnity basis.

57 There should be liberty to apply granted to either party on the question of how (ie the administrative procedures) those costs are to be assessed pursuant to this Judgment.

ORDERS:

1. The Applicant pay the Respondent’s costs incurred from and after 3 August 2001 on an indemnity basis.
2. The Applicant to pay the Respondent’s costs as agreed or assessed.