Chronopoulos v Carossel (No 2) Pty Limited
[2010] NSWADT 236
•6 October 2010
NEW SOUTH WALES ADMINISTRATIVE DECISIONS TRIBUNAL
CITATION:
Chronopoulos v. Carossel (No 2) Pty Limited [2010] NSWADT 236
DIVISION:
RETAIL LEASES DIVISION
PARTIES:
APPLICANT
John Chronopoulos
RESPONDENT
Carossel Pty Limited
FILE NUMBERS:
095177
HEARING DATES:
On the papers
SUBMISSIONS CLOSED:
25 August 2010
DATE OF DECISION:
6 October 2010
BEFORE:
Molloy G - Judicial Member
LEGISLATION CITED:
Retail Leases Act 1994
Administrative Decisions Tribunal Act 1997
CASES CITED:
Chronopoulos v. Carossel Pty Limited [2010] NSWADT 191
Jewell Bay Pty Limited v. DPT Operator Pty Limited (No 2) [2010] NSWADT 204
Salon Today Pty Limited v. MMIR Pty Limited [2009] NSWADT 71
TEXTS CITED:
APPLICATION:
Costs
MATTER FOR DECISION:
REPRESENTATION:
APPLICANT
John Chronopoulos
RESPONDENT
Carossel Pty Limited
ORDERS:
The Applicant pay 75% of the costs of the Respondent and incidental to these proceedings on the ordinary basis as assessed or as agreed.
Reasons for Decision:
REASONS FOR DECISION
In Chronopoulos v. Carossel Pty Limited [2010] NSWADT 191 I determined that the claim by the Applicant in or to the effect that the Respondent was estopped by convention from claiming that the Applicant had no right or title or entitlement to occupy a part of the shopping centre described as the “Loading Dock area” should be dismissed.
I also vacated certain interim consent orders and then I made the following order:
“No order as to costs; save that should either party file and serve an Application for costs coupled by appropriate submissions, within 14 days, then the other party is to file and serve its reply within a further 14 days; and the Tribunal will make a decision on the papers as permitted by the Administrative Decisions Tribunal Act 1997, s.76, unless persuaded that there should be oral submissions”.
This is now a fairly usual type of order that is made in this Division of this Tribunal, save that occasionally there are variations to the time limits.
This type of order is based upon Administrative Decisions Tribunal Act, 1997 (“the ADT Act”), s.88, which starts off with the words “Each party to proceedings before the Tribunal is to bear the party’s own costs in the proceedings, except as provided by this section”. In other words, and it is now plain from many decisions of this Tribunal, that the starting point is that there will be no order for costs unless the Tribunal is satisfied that there should be a costs order having regard to the various matters referred to in s.88(1A); such that it is for the party seeking a costs order in their favour to displace the usual rule that each party bears its own costs.
S.88 is relevantly in the following terms:
“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 of the Tribunal, or
(vi) veraciously 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 Act 2004 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 sections,
“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.
Thus, in order to succeed in an application for costs a party would need to satisfy the Tribunal that its application was warranted having regard to the various factors/aspects set out in s.88(1A). In Jewell Bay Pty Limited v. DPT Operator Pty Limited (No 2) [2010] NSWADT 204, Fox JM expressed the opinion, at [12], that:
“The concept of fairness must involve an evaluation of each individual issue considered in the contest; and so it may be necessary to award a party some cost to compensate them for having to defend or prosecute one issue, and to make no order in respect to another issue pursued in the same litigation”.
There is a great deal to be said in favour of that approach, save that (for the reasons that I set out in Salon Today Pty Limited v. MMIR Pty Limited [2009] NSWADT 71) such a course would also require any valuation of s.88(1A)(e), namely “any other matter that the Tribunal considers relevant” – in my respectful opinion, and for the reasons that I have specified previously, sub-section (e) is a catch-all sub-section which obliges the Tribunal to consider the whole of the proceedings for relevant matters that impinge on the issue of costs.
As Fox JM points out in Jewell Bay at [8], and although s.88 does not import “a regime that costs follow the event”, the Tribunal must examine very carefully “the concept/principle of fairness”.
Fox JM (at [9]) divided up s.88 into two categories of activities “which may give rise to the unfairness required to support an order for costs”. In his view ss(1A)(a) and (b) can be properly described as “misbehaviour”; and ss.(1A)(c) and (d) “might well be called “the evaluation category … because these call for an assessment of the background of the case, whether (they) be the issue of fact or law”. For the reasons that I have endeavoured to set out above, that appreciation does not seem to include ss.(e), and that sub-section calls for (in my respectful opinion) a wider consideration of the matter that was agitated before the Tribunal.
There is no need for me to re-hash the reasons in Chronopoulos v. Carossel Pty Limited. It is, in my view, sufficient to make reference to that decision as thereby incorporated into this discrete issue of costs.
The Respondent has sought an order that the Applicant pay its costs of and incidental to the proceedings. The Applicant opposes the making of that order. It is convenient to deal firstly with one of the submissions of the Applicant in seeking to defeat the Respondent’s costs application. That is not to say at all that by this approach one is reversing the onus of proof; but rather its serve to identify some of the problems which, in my respectful opinion, are inherent in the Applicant’s opposition.
Applicant’s Submissions
10 The Applicant opposed the costs order sought by the Respondent and submitted that there should be no order as to costs. The important submission that I would seek to deal with here is the submission by the Respondent that the Applicant’s case, “even as re-articulated, was unsuccessful and lacked the factual or legal basis” needed for it to succeed. The Applicant accepted that the real issue was whether there was a conventional estoppel that could be found against the Respondent. It was submitted that the Applicant “had a strong case of conventional estoppel against Polifroni Pty Limited (“Polifroni”)”, which, it will be remembered, was the previous owner of the retail shopping centre. It was submitted that Polifroni engaged the same solicitor as engaged by the Respondent, namely Messrs Carbone Lawyers, “in the preparation of the lease to the Applicant and the preparation of the Deed of Sale of Plant and Equipment to the Applicant, which included the coolroom”. It was said that “the same solicitor acted for both Polifroni and the Respondent Carossel Pty Limited when it, (Carossel) purchased the retail shopping centre and the solicitor on the record is the husband of the sole director and secretary of the Respondent”.
11 It was submitted that Mrs Carbone, the sole director of the Respondent, was aware of the wall “preventing access to the loading dock area” when she inspected the property prior to purchase and was also aware that the area was “used solely by the Respondent”. It was submitted that, even having been so aware, she “made no objection or indeed reference to such exclusive use but discussed the issue of variation of the lease”. This silence about exclusive use continued, that “silence can amount to representation giving rise to a conventional estoppel”, and that the later submission of a variation of lease “with no mention of exclusive use of the Applicant is a factor that could be construed as acceptance of the situation”. It was submitted “that could be construed as evidence of adoption of the situation by the Respondent giving rise to estoppel by convention” such that “on the basis of that available evidence there was a tenable case both in fact and in law against the Respondent”.
12 If it is suggested that somehow Messrs Carbone Lawyers were a party to, or part of, some type of conduct (because they acted for both Polifroni and Carossel in the preparation of the lease and the Deed), then I should say that there was not the slightest evidence to that effect, neither was there any submission at the hearing to that effect and neither was it suggested that Messrs Carbone Lawyers were seized of any information or facts that would have encouraged them to form a view, as the solicitors for Carossel, that there was conventional estoppel having regard to their role as I have identified.
13 Thus, the gravamen of this submission is that, on the facts, there was an arguable case that there was conventional estoppel such that the evidence could be construed as adoption of the position by the Respondent Carossel “giving rise to estoppel by convention”.
14 I must say that, although I admire the ingenuity of the argument, the plain fact is that on any view, and having regard to the authorities which I set out in the original decision, there was never any conventional estoppel on the facts, even on the facts as led by the Applicant. At [44] I observed that the Applicant needed “to prove, firstly, that he has adopted the assumption that the Loading Dock area formed part of the leased area; secondly, that the Respondent adopted the same assumption; thirdly, that both he and the Respondent have conducted their relationship on that mutual assumption; and fourthly, that the departure from the assumption will occasion detriment to the Applicant”. It is plain to me that the Applicant could not prove, even on its own case, that the Respondent adopted the assumption “that the Loading Dock area formed part of the leased area” and secondly, could not prove that the Respondent conducted its relationship with the Applicant “on that mutual assumption”. There was, in my opinion, no evidence at all that the Respondent adopted the assumption, a vital part of any conventional estoppel argument. There mere fact that the sole director of the Respondent knew of the existence of the wall sealing off the Loading Dock area from the balance of the common property, and even that the Applicant had sole use of this Loading Dock area, could not possibly result in a conventional estoppel argument having regard (in particular) to the fact that this is a retail shopping centre and the area so occupied was without argument common area, and bearing in mind the precise terms of the lease and the title.
15 Indeed, and although not argued before me at the substantive hearing, there is yet another argument that may have been available to the Respondent, namely the rights of other tenants in the retail shopping centre to use the common area, rights that were denied to them as tenants of defined demised premises within the centre. It is arguable, in my view, that in order to establish a conventional estoppel against the owner of a retail shopping centre one may also have to establish some sort of estoppel against other lessees who would otherwise be entitled, as a matter of contract law, to access to and use of defined common areas within the shopping centre. By way of further enlargement of this issue I make reference to paragraph [7(b)] of my decision in which I pointed out that the lease to the Applicant defined “common areas” as “those parts of the (shopping complex) designated by the lessor for use by the tenants and other occupiers of the complex in common with each other”; and there is no doubt that the Loading Dock area formed part of the “common areas”. See also [7(f)].
16 It seems to me that in a shopping centre milieu the concept of conventional estoppel with respect to common areas against the owner of the centre would be very difficult to establish absent a clear analysis of the terms of the lease contracts with other tenants and their individual rights to use common areas. If it could be established that in their leases there was a waiver, or some form of restriction, on such rights, then that would go a long way towards establishing conventional estoppel against the owner. But absent that sort of analysis, clearly absent in the case before me, it would seem not unreasonable to assume that, consistent with common practice, the leases of the other shops in the centre would contain similar terms and conditions to the lease granted to the Applicant such that the other tenants would clearly have rights to use the common area and the Loading Dock area claimed by the Applicant.
17 This costs application is not the vehicle in which to further explore the principle/ concept of conventional estoppel in relation to retail shopping centres; but I simply raise the presumed rights of other lessees as an argument, admittedly not advanced by either party but, in fairness, raised by the Respondent’s sole director as part of her reasoning process (Chronopolous paragraph [15]); thus it highlights an additional evidentiary difficulty facing the Applicant and not addressed by him at all.
18 The Applicant made further submissions by way of response/defence, and I shall deal with these later in this decision.
Respondent’s Submissions
19 The Respondent approached the cost issue by firstly referring, in some detail, to the course of the matter up to and including the hearing, referring in particular to paragraphs [21-29] of my decision; and also to [53ff]. The Respondent referred to the Retail Leases Act 1994 (RL Act) s.72(e) which deprives the Tribunal from making orders for rectification. The Respondent submitted that it had prepared its case on the basis that the relief sought by the Applicant (ie rectification) was beyond the “scope of power” or jurisdiction of the Tribunal, and that, “in the absence of any ancillary orders (being sought) such as a prayer for damages there was no scope for the Tribunal to explore the issue of rectification pursuant to the terms of the Amended Application (before the Tribunal) and in this sense the case (before the Tribunal) was distinguishable from both Prasad and Pious Society” , both of which were referred to and discussed in my decision at [56-57].
20 The Respondent also observed that at the date of hearing the Applicant abandoned the rectification argument, stating that it was not a rectification case, neither was it a declaration case; but rather asserted it to be an “estoppel by convention” case. This statement was made orally at the commencement of the proceedings – see paragraphs [2] and [21ff] of my decision. The Applicant was given leave to re-plead its application and at 2-00pm, during the course of the hearing, the Applicant filed, by leave, a Further Amended Application in the terms set out at [28]. It was submitted that this change of direction by the Applicant required the Respondent to “reformulate and redraft its submissions in defence … to address these new grounds”.
21 In my opinion, and having regard to the evidence, the only paragraphs of the Further Amended Application that could have been argued by the Applicant were 1 and 2 and (perhaps) 3 and 4. It is my further opinion that any argument relating to the coolroom (paragraphs 2, 4 and 6 of the Further Amended Application) had absolutely no merit at all although, in fairness, very little (if anything) was said in relation to those prayers for relief. Paragraphs 3 and 4 were prayers for consequential orders had the Tribunal found an estoppel by convention pursuant to paragraphs 1 and 2. It is perhaps also arguable that paragraphs 3 and 4 may have fallen within the general principles that I sought to enunciate in paragraph [55], but that (in an argument of some circularity) would have required a declaration of right and that, in turn, would have required a finding of conventional estoppel.
22 The Respondent submitted that it “suffered significant disadvantage” by being firstly, required to answer a claim that was “fundamentally hopeless” in that it sought rectification, a remedy denied to the Tribunal in RL Act s.72(e); in any event, in the absence of other prayers for relief in the Amended Application filed 8 October 2009 then that application “had no reasonable prospects of success”; and secondly, the prayers as sought in the Further Amended Application, although giving rise to a justiciable issue within the jurisdiction of the Tribunal, the “timing of that Application required the Respondent to abandon its submissions and conduct of the case that it had prepared to meet, to then answer the Further Amended Application … on the day of hearing (on an entirely new footing) as set out in that pleading. In any event, the Respondent submitted that “notwithstanding the disadvantages, the claim as re-articulated by the Applicant was unsuccessful and lacked the factual basis or legal basis to make the claim relied upon …”. The Respondent referred to the “relative strengths of the claims made by each of the parties” and that the “Applicant did not have a claim with any tenable basis in fact or law” such that an award of costs should be made in favour of the Respondent. Reliance was also placed upon paragraphs [46-51] of my reasons for decision.
Applicant’s Submissions
23 The Applicant observed that the Respondent “made no objection to the Applicant amending its application (on) the day of the hearing” and “conceded that it had no difficulty in responding to the re-framing of the orders sought as a matter of evidence ..” The applicant submitted that its case was not “untenable” or “hopeless” and referred to [46] of my decision. [46] was in these terms:
“[46] … I would need to be persuaded that, even if there was a conventional estoppel proved as against Polifroni … that somehow the Respondent purchaser would be bound by it. That, it seems to me would fly in the face of the Torrens system of title. In order to be bound by it it would be necessary, in my opinion, for it to be demonstrated that the Respondent adopt the estoppel. There was, in my opinion, absolutely no evidence that the Respondent did any such thing,. Rather, in my view, the evidence demonstrates the opposite.” (my italics).
It was submitted that paragraph [46] “does not detract from the contention of the Applicant such that an argument on the evidence filed in the proceedings was tenable”.
24 It was also submitted that there was no conduct of the Applicant which would displace the presumption that each party would bear its own costs and it was submitted that there was no other sub-paragraph of s.88 that was relevant save that it was the Applicant who “has suffered a detriment in that he was obliged to abandon the exclusive use of the Loading Dock area” and also to remove his cool room, an item for which he paid … valuable consideration”.
Tribunal’s Decision
25 In my opinion it is irrelevant that the result of the Tribunal’s Decision is that the Applicant had to abandon the Loading Dock area and was required to remove the coolroom. That is a natural consequence of the decision and not a factor to be borne in mind on the discrete issue of costs. Neither is the fact that the same lawyers acted for the vendor Polifroni as acted for the purchaser Carossel. There was not the slightest evidence that they were somehow privy to evidentiary material that would, or might, have founded a claim for conventional estoppel. And, for the reasons that I set out in my decision, whether or not there was conventional estoppel binding upon Polifroni was simply not an issue before the Tribunal – the issue was whether the Respondent, as purchaser, was bound.
26 The case for the Applicant was thin. It could not be said to have been “without merit” and, ordinarily, and absent the specific terms of s.88, would have resulted in a costs order. However, that is not the law in this Tribunal. A win, or a loss, is not a factor in itself that is to be put into the balance – if it was, then s.88 would be framed differently and the Tribunal would fall back on the usual principles regarding costs and indemnity costs.
27 But there are a number of factors in the particular case before me which, in my opinion, need to be considered adversely to the Applicant on the issue of costs. These factors are as follows:
a)The case for the Applicant as pleaded in the initial Application sought rectification of the lease, and no other prayer for relief, in clear defiance of RL Act s.72(e).
b)The Applicant sought an interim urgent order restraining the Respondent from removing the offending wall and the Respondent consented to those orders on 8 October 2009 but, understandably, complains that, although the orders were made by consent, it was there by denied the legal right to remove the offending wall from 8 October 2009 to the date of my decision 29 July 2010, and thereby denied the right to utilise the Loading Dock area to its maximum advantage consistent with its legal rights as the owner of the retail shopping centre and, presumably, consistent with the legal rights of various of the other lessees in the centre.
c)By the Amended Application filed 8 October 2009 the Applicant again pleaded rectification; and this pleading was continued all through the various Directions Hearings commencing 8 October 2009 through to 3 June 2010, when the matter was set down for hearing.
d)When the matter came before me for hearing 7 July 2010 the Applicant abandoned the rectification argument “stating that it was not a rectification case, neither was it a declaration case; but rather … an “estoppel by convention case” and the applicant referred to RL Act s.72(1)(f). Thus, for the reasons I set out in my decision at [26]ff, the whole direction of the Applicant’s case changed, even though (in contradistinction to the submission by the Applicant’s counsel at the commencement of the hearing) in his Further Amended Application, in paragraphs 5 and 6, the Applicant persisted with its rectification claim.
e)The case for the Applicant was thin, but not hopeless and not entirely without merit; it was arguable but only, in my respectful opinion, to the slightest degree.
f)The submissions made on behalf of the Applicant, and the filing of the Further Amended Application at 2-00pm on the date of hearing, demonstrates, on my opinion the thinness of the arguments advanced by the Applicant; this is so, even though all the evidence had been filed.
28 In contrast to the above the Respondent at the hearing sought to challenge the jurisdiction of the Tribunal by endeavouring to mount an attack upon the Applicant with a view to asserting that the business of the Applicant was not a business caught by Schedule 1 of the RL Act. I referred to this at [53-54] of my decision.
29 I respectfully agree with the submissions of counsel for the Respondent that the starting point for the Tribunal “is that each party bears its own costs” subject to the various other enumerated matters in s.88: and that the “central tenet of the provisions of s.88 … is the concept of “fairness””. In looking at s.88(1A)(a) it is important to observe that the words “such as” identify the subsequent sub-sections as examples only. In my opinion, and within that sub-section (a), one could easily accommodate the facts in this case where the Applicant asserted right up to the date of hearing a rectification case and only was able to re-plead its true case of conventional estoppel at 2-00pm on the date of hearing. In any event, if that conduct does not fall within sub-paragraph (a) in my opinion it would certainly fall within sub-paragraph (e).
30 It is my opinion also that the case for the Applicant was at best thin, although not completely hopeless, and that would fall within sub-paragraph (c).
31 In addition, in my opinion the application deprived the Respondent with the legal right to use the whole of the common areas of the retail shopping centre (in the circumstances I have set out above) and that, in my opinion, is a relevant consideration having regard to the interim orders that were made and the final orders that were made.
32 Although, in this Tribunal costs do not follow the event, this was a case perilously close to the line of being without merit and, in the exercise of my discretion, and having regard to my above observations, in my view it is fair that the Applicant should pay 75% of the Respondent’s costs, assessed on the ordinary basis.
Orders
The Applicant pay 75% of the costs of the Respondent of and incidental to these proceedings on the ordinary basis as assessed or as agreed.
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