Benyameen v Wetherill Park Market Town Pty Ltd (No 2)
[2011] NSWADT 120
•26 May 2011
Administrative Decisions Tribunal
New South Wales
Medium Neutral Citation: Benyameen v Wetherill Park Market Town Pty Ltd (No 2) [2011] NSWADT 120 Hearing dates: On the papers Decision date: 26 May 2011 Jurisdiction: Retail Leases Division Before: M Chesterman, Deputy President Decision: The Applicant is to pay the Respondent's costs of and incidental to these proceedings as between party and party, as agreed or assessed under the Legal Profession Act 2004.
Catchwords: Costs - indemnity costs - retail lease - summary dismissal of application Legislation Cited: Administrative Decisions Tribunal Act 1997
Retail Leases Act 1994Cases Cited: AT v Commissioner of Police [2010] NSWCA 131
Benyameen v Wetherill Park Market Town Pty Ltd [2011] NSWADT 85
Calderbank v Calderbank [1975] 3 All ER 333
De Costi Seafoods (Franchises) Pty Ltd v Broadway Shopping Centre Sydney Pty Ltd [2011] NSWADT 40
Gizah Pty Ltd v AXA Trustees Ltd (No 2) [2001] NSWADT 164
Jonamill Pty Ltd v Alramon Pty Ltd (No 2) (RLD) [2010] NSWADTAP 3
Salon Today Pty Ltd v M M I R Pty Ltd [2009] NSWADT 71
Torchia v Swanton [2010] NSWADT 142Category: Costs Parties: Akhaker Benyameen (Applicant)
Wetherill Park Market Town Pty Ltd (Respondent)Representation: No appearance (Applicant)
McGrath, Dicembre & Co (Respondent)
File Number(s): 105027
REASONS FOR DECISION
Introduction
This decision relates to the costs of proceedings instituted on 26 February 2010 by Akhaker Benyameen, a lessee under a lease governed by the Retail Leases Act 1994, against the Respondent lessor, Wetherill Park Market Town Pty Ltd. The lease was of premises forming part of a shopping centre owned by the Respondent.
On 2 September 2010, the Applicant, Mr Benyameen, filed an Amended Application. On 14 September 2010, the Respondent filed a Reply to the Amended Application.
The principal ground advanced in the Amended Application contained the following allegations: (a) in a disclosure statement preceding the execution of an earlier lease of the premises to the Applicant, the Respondent represented that it would not alter the tenancy mix within the shopping centre by introducing a competitor; (b) in reliance on this representation the Applicant agreed to enter into a subsequent lease, the terms of which were set out in consent orders made by the Tribunal on 6 June 2008, thereby bringing earlier proceedings between the parties to a conclusion; and (c) in or about 1 December 2009, the Respondent caused damage to the Applicant by introducing a direct competitor within the shopping centre.
The hearing of the Application in its amended form took place on 21 and 22 February 2011. Mr Bland of counsel, instructed by Harb Lawyers, appeared for the Applicant and Mr Pretti, an estate agent, appeared by leave as agent for the Respondent.
During the first day of the hearing, the Tribunal heard argument on an application by the Respondent, which it had foreshadowed in its Reply, for an order summarily dismissing the proceedings. The ground of dismissal advanced by the Respondent was that in instituting and maintaining the proceedings the Applicant was seeking to relitigate issues that had already been resolved in the consent orders made by the Tribunal on 6 June 2008.
The Tribunal then adjourned overnight to consider these arguments. On the second day, 22 February 2011, it gave an ex tempore decision, in which it dismissed the proceedings on the ground put forward by the Respondent.
On 22 April 2011, pursuant to a request made on 21 March 2011 under section 89(3) of the Administrative Decisions Tribunal Act 1997 ('the ADT Act'), the Tribunal published written reasons for this decision ( Benyameen v Wetherill Park Market Town Pty Ltd [2011] NSWADT 85).
At the conclusion of the hearing on 22 February 2011, the Tribunal also made consent orders resolving certain other issues in dispute between the parties and gave the following directions on the question of costs:-
(a) Any application for costs by the Respondent is to be filed and served by its representatives, together with supporting submissions and (if necessary) a notice of appearance, within 14 days of the date of these orders.
(b) The Applicant is to file and serve submissions in reply within a further 14 days.
(c) The question of costs is to be determined 'on the papers', pursuant to section 76 of the Administrative Decisions Tribunal Act 1997.
On 7 March 2011, the solicitor now acting for the Respondent, Mr Anthony Dicembre, filed a notice of representation and an application, with supporting submissions, for an order that (a) the Applicant pay the Respondent's costs on an indemnity basis, or in the alternative on a party/party basis, and (b) that those costs be assessed on the basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004.
The Applicant has not filed submissions in reply. On 18 May 2011, an officer in the Registry, having contacted Harb Lawyers by telephone, was informed that they had no instructions to represent the Applicant on the matter of costs.
In these circumstances, it is appropriate that this matter should now be determined, even though no submissions have been received from the Applicant.
One of the grounds on which the Applicant sought relief was that the Respondent had engaged in unconscionable conduct. Accordingly, the Tribunal was constituted at the hearing in accordance with clauses 1 and 4 of Part 3B of Schedule 2 of the ADT Act. For the purposes, however, of this decision relating to costs, which is an 'ancillary function' as defined in subsection (1) of section 24A of this Act, it is constituted by a single judicial member of the Retail Leases Division, pursuant to subsection (2)(b) of that section.
Relevant principles governing the award of costs
Section 77A of the Retail Leases Act 1994 (hereafter 'the RL Act') provides that the question of costs in Tribunal proceedings under the Act should be resolved in accordance with section 88 of the ADT Act. According to subsection (1) of section 88, the starting point is that each party should bear its own costs. But subsection (1A) states that the Tribunal may make an award of costs if it is satisfied that it is 'fair' to do so, having regard to a number of matters stated in paragraphs (a) to (e) of the subsection. For present purposes, the following paragraphs are relevant:-
(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.
In deciding whether the criterion of 'fairness' has been satisfied in proceedings instituted under the RL Act, the following three matters are of general significance.
First, in a relatively recent case relating to section 88 of the ADT Act, AT v Commissioner of Police [2010] NSWCA 131, Basten JA, delivering the judgment of the Court of Appeal, referred at [33] to 'the force of the general principle that each party should bear its own costs in the Tribunal, a principle applicable at both first instance and before the Appeal Panel'. He then said:-
Although an order varying the general rule may be made "only if" the relevant criterion is satisfied in a particular way, there is a relatively low hurdle for an applicant seeking an order. The criterion of "fairness" will take into account the compensatory purpose of an award of costs, which will generally favour the successful party. The circumstances in which fairness may be identified are indicated by the specific attributes listed in sub-s (1A), but subject to the generality of paragraph (e), read in its context. Other considerations will no doubt include the nature of the jurisdiction of the Tribunal which is invoked and the objects identified in s 3(b)-(g) of the [ADT Act]. (emphasis added)
Secondly, paragraph (d) of subsection (1A) of section 88 requires the Tribunal to take account of the 'nature' of the relevant proceedings when determining 'fairness'. In cases applying an earlier criterion of 'special circumstances warranting an award of costs' (the amending legislation substituting 'fairness' became operative on 1 January 2009), it was consistently held that because of the 'commerciality' of proceedings in the Retail Leases Division the interpretation of the phrase 'special circumstances' should differ significantly from the interpretation that might be adopted in any other Division of the Tribunal. The Tribunal's decision in Gizah Pty Ltd v AXA Trustees Ltd (No 2) [2001] NSWADT 164 provides an example.
Thirdly, it is generally accepted that one of the overall consequences of the amending legislation was to make costs orders more readily obtainable, at least in the Retail Leases Division. In Salon Today Pty Ltd v M M I R Pty Ltd [2009] NSWADT 71 (a case decided in this Division), the Tribunal said (at [72]):-
What the Parliament has done, in its 1 January 2009 amendments, is recognise that there is a need for this Tribunal to be more flexible and widen the scope of a litigant's entitlement to costs. This is a concept generally that is now accepted in this Division... and the result of this re-assessment by the Parliament is a different test, a test of fairness, having regard to a number of parameters/factors.
The Respondent's submissions
The principal matter relied on by Mr Dicembre in his submissions on the Respondent's behalf was that in four letters written by him to Harb Lawyers (their dates being 28 July, 9 August, 30 August and 6 September 2010) and in the Reply to the Amended Application (which was filed on 14 September 2010), he had explicitly drawn the Applicant's attention to the ground on which, ultimately, the Tribunal dismissed the Application. This was that the Applicant, in instituting these proceedings, was seeking to relitigate matters that it had already determined as between the parties, in the proceedings culminating in the consent orders on 6 June 2008.
Mr Dicembre pointed out that in each of these four letters to Harb Lawyers (copies of which were attached to his submissions), he claimed that the Application had 'no tenable basis in law or fact' and was indeed an abuse of process and/or vexatious. He also referred to the Tribunal's power to award costs under section 88(1A) of the ADT Act and stated in each letter that if the Applicant did not agree to withdraw the proceedings the letter would be tendered in relation to an application by his client for indemnity costs.
The primary argument advanced by Mr Dicembre was indeed that the Applicant's case in these proceedings had 'no tenable basis in law or fact' and was wholly misconceived. In so arguing, he relied expressly on paragraph (c) of section 88(1A).
He referred also to certain costs decisions within the Retail Leases Division in which principles stemming indirectly from the English case of Calderbank v Calderbank [1975] 3 All ER 333 have been applied. These decisions are to the effect that if the unsuccessful party has unreasonably rejected an offer of compromise made by the successful party and the terms of that offer were more advantageous to the unsuccessful party than the decision of the Tribunal, that of itself will constitute grounds for a costs order.
Mr Dicembre's submissions did not expressly advance any reasons why the Tribunal should depart from the normal form of costs order - that is, an order for the payment of party/party costs - and should order instead that the costs payable by the Applicant be assessed on an indemnity basis.
Although in his submissions Mr Dicembre reproduced the text of section 88(1A) of the ADT Act and referred more than once to this provision, other parts of the submissions were framed as if the pre-2009 version of section 88 were still operative. In this earlier version, the governing criterion is 'special circumstances warranting an award of costs', not 'fairness', Most of the cases that he cited were decided with reference to this criterion and therefore provide only indirect guidance on the questions to be resolved.
Discussion and conclusions
The Tribunal has not had the benefit of submissions from the Applicant on this question of the costs of the proceedings.
As appears from the Tribunal's published reasons for summarily dismissing the Application (see Benyameen v Wetherill Park Market Town Pty Ltd [2011] NSWADT 85), its conclusion, based on principles of issue estoppel, required consideration of a number of issues. An issue of particular importance was the range of questions that the consent orders must be taken to have settled between the parties. As mentioned earlier, the Tribunal made use of an overnight adjournment to arrive at its conclusion and to formulate brief reasons.
It is also significant that if the Applicant had succeeded in rebutting the Respondent's claim of issue estoppel, he might have been able to establish the other components of his case. The Tribunal cannot make any assumptions on this question.
Taking these matters into account, the Tribunal does not accept Mr Dicembre's argument that the Applicant's case in these proceedings had 'no tenable basis in law or fact' and was wholly misconceived.
The Applicant's case in reply to this claim by the Respondent was, however, distinctly weak. In Jonamill Pty Ltd v Alramon Pty Ltd (No 2) (RLD) [2010] NSWADTAP 3 at [41 - 47], the Appeal Panel, hearing a case that originated in the Retail Leases Division, held that where there was a 'substantial disparity' between the relative strengths of the parties' cases, this provided sufficient grounds for making a costs order based on section 88(1A)(c). It rejected the proposition that it was only when the losing party's case was 'unarguable, unreasonable or untenable' that the operation of paragraph (c) would be attracted.
Paragraph (d) of section 88(1A) requires that account should also be taken of the 'nature' of the proceedings. For reasons outlined above at [16], the fact that these are proceedings under the RL Act renders costs orders more readily obtainable than if they had been instituted in another Division of the Tribunal.
Having regard to these matters, the Tribunal's conclusion is that due to a 'substantial disparity' between the strengths of the cases of the two parties, and taking into account the fact that these are proceedings in the Retail Leases Division, it is 'fair' that the Applicant be ordered to pay the Respondent's costs.
It remains now to consider whether the order should be for indemnity costs, as the Respondent maintained, or for party/party costs only.
In resolving this question, it is useful to refer to a recent costs decision in which, as here, the respondent in retail lease proceedings advanced the argument that the applicant was attempting to relitigate questions already determined in a manner that bound the parties.
In Torchia v Swanton [2010] NSWADT 142, the applicant lessee filed a retail tenancy claim and an unconscionable conduct claim under the RL Act against the respondent lessor, seeking substantial damages. After three directions hearings had been conducted, the respondent filed a notice of motion, accompanied by a substantial affidavit, seeking an order dismissing the proceedings, or in the alternative permanently staying them. The ground stated in the notice of motion was that the disputed matters about which the applicant complained had been resolved in Heads of Agreement that the parties had signed following mediation by the Retail Tenancy Unit. After the notice of motion had been set down for hearing in Lismore, the applicant discontinued the proceedings.
In upholding a costs application by the respondent, the Tribunal relied chiefly on the fact that the applicant, having instituted the proceedings, had withdrawn them without good cause before any substantive hearing had taken place.
Furthermore, the Tribunal ordered that these costs should be paid on an indemnity basis. The following passages, drawn from paragraphs [37], [40], [45] and [46] of the Tribunal's decision, sufficiently explain its reasoning:-
37 The Respondent applies for costs to be awarded on an indemnity basis. The Respondent submits, and it is the fact, that the Applicants "have been on notice for the whole of the proceedings that an order for costs would be sought". The Applicants relied upon the concession by the Respondent that the relevant initial letter [of] 19 June 2009 did not amount to "a Calderbank offer". The letter was from the Respondent's solicitors to the Applicant and which asserted that the Section 71 claim was "an attempt to relitigate" the original dispute which had been "resolved at mediation", the Section 71A claim "sets out no grounds for a claim of unconscionable conduct" and warning the applicants that if they pursued their "application and are unsuccessful, we (the respondent) shall seek costs against you from the date of this letter" but if the application was withdrawn within 14 days no such costs order would be sought.
40 It is my respectful view that Calderbank has got absolutely nothing to do with this issue now before the Tribunal. Thus, even if a letter such as the 19 June letter is not a Calderbank letter or a Calderbank offer, it constitutes a very clear warning to the applicants and very fairly gives them an opportunity to withdraw, and importantly, without costs penalty. Such letters are not uncommon and it does not follow, in my respectful view, that because such a letter is not specified to be a Calderbank letter, or does not meet the Calderbank requirements, that costs, and indemnity costs, should not flow as a consequence of the failure of the Applicants to heed the warning fairly given.
45 There is no doubt that this Tribunal has power to make costs orders on an indemnity basis. Barsoum [ Barsoum v. Glebe Administration Board (No 2) [2002] NSWADT 174] is adequate authority for that proposition; similarly, Rucom Pty Limited v. Mutiplex [2010] NSWADT 1. Indeed, in Rucom there was a careful analysis of the law relating to indemnity costs from [59 ff]. It is plain that the Tribunal "needs to be satisfied that there is "a sufficient or unusual feature", or some "relevant delinquency" bearing a relevant relation to the conduct of the case...
46 It is my view that the withdrawal of the proceedings in all the circumstances I have been at pains to set out above is "a sufficient or unusual feature" that would support an award of indemnity costs. In my view the Tribunal needs to look at the whole of the issues raised, starting from the commencement of the proceedings, the letter 19 June 2009, the continuation of the proceedings, the filing of a Motion seeking dismissal, various Directions Hearings and the ultimate abandonment of the proceedings without any reason being given.
In the present proceedings, the letters in which the Respondent sought to persuade the Applicant to withdraw the proceedings (see [18] above) were equally not ' Calderbank letters'. But this is not only because they did not contain any genuine offer of compromise. A further reason of prime importance is that, in contrast to the letter described in paragraph [37] of the judgment in Torchia v Swanton , they did not give the Applicant an opportunity to withdraw without any costs penalty. In paragraph [40] of this judgment, the Tribunal characterised this aspect of the letter written in that case as 'important'.
In the present case, the Respondent's letters left open the possibility that if the Applicant, in response to any one or more of them, had decided to discontinue the proceedings, the Respondent might still have sought a costs order against him, based on paragraph (b) of section 88(1A). The Respondent did not forego any right to argue that, in accordance with the primary ground of the decision in Torchia (and indeed with other decisions on section 88(1A): see e.g. the discussion in De Costi Seafoods (Franchises) Pty Ltd v Broadway Shopping Centre Sydney Pty Ltd [2011] NSWADT 40 at [48 - 57]), a withdrawal of the Applicant's claim in these circumstances would furnish good grounds for such an order.
For this reason, and in the absence of any other reason for ruling that there is in the present case a 'a sufficient or unusual feature' or 'relevant delinquency' justifying indemnity costs (cf the use of these phrases in Torchia at [45]), the Tribunal's conclusion is that the Applicant should be ordered to pay party/party costs, not indemnity costs.
The Tribunal orders that the Applicant is to pay the Respondent's costs of and incidental to these proceedings as between party and party, as agreed or assessed under the Legal Profession Act 2004.
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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: 01 June 2011
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