Dee Why Grand Shopping Centre Pty Ltd v Kriletich
[2012] NSWADT 26
•17 February 2012
Administrative Decisions Tribunal
New South Wales
Medium Neutral Citation: Dee Why Grand Shopping Centre Pty Ltd v Kriletich [2012] NSWADT 26 Hearing dates: On the papers Decision date: 17 February 2012 Jurisdiction: Retail Leases Division Before: S Montgomery, Judicial Member Decision: Nick Kriletich is to pay Dee Why Grand Shopping Centre Pty Ltd's costs of and incidental to these proceedings as agreed or assessed.
Catchwords: Retail Tenancy Claim - costs Legislation Cited: Administrative Decisions Tribunal Act 1997
Retail Leases Act 1994
Civil Procedure Act 2005Cases Cited: AT v Commissioner of Police, NSW [2010] NSWCA 131
Chronopoulos v Carossel (No 2) Pty Limited [2010] NSWADT 236
Meriton Properties Pty Ltd v DCM Leases-Five Pty Ltd (No 2) [2010] NSWADT 11
Profilio v Coogee Bay Village Pty Ltd (No. 4) [2011] NSWADT 64
Rucom Pty Ltd and Anor v Multiplex & Ors [2010] NSWADT 1
Salon Today Pty Limited v MMIR Pty Limited [2009] NSWADT 71
Whyte v Brosch and Others [1998] 45 NSWLR 354Category: Costs Parties: Dee Why Grand Shopping Centre Pty Ltd (Applicant)
Nick Ted Kriletich (Respondent)Representation: Shaw Reynolds Bowen and Gerathy (Applicant)
GP Legal (Respondent)
File Number(s): 115009 and 115042
REasons for decision
GENERAL DIVISION (S MONTGOMERY, (JUDICIAL MEMBER)): These proceedings relate to a lease ("the Lease") entered between Mr Kriletich and Dee Why Projects Pty Ltd ("DW Projects") for the premises known as Shop 32A Dee Why Grand Plaza, 834 Pittwater Road, Dee Why NSW ("the Premises"). The Premises are part of the property known as the Dee Why Grand Shopping Centre. The Lease was for a term of five years commencing on 29 July 2010 and terminating on 28 July 2015. Dee Why Grand Shopping Centre Pty Ltd ("the Applicant") purchased the Centre from DW Projects on 31 August 2010.
It is not in dispute that the Lease is governed by the Retail Leases Act 1994 ("the Act").
In December 2010 the Applicant issued a Notice of Breach of Covenant pursuant to section 129 of the Conveyancing Act 1919 to Mr Kriletich ("the Respondent") and put the Respondent on notice that there had been a breach of an essential term of the Lease.
The Applicant failed to comply with the Notice and on 28 January 2011 the Applicant re-entered and took possession of the Premises. The Respondent filed the application in matter No. 115009 on 4 February 2011. In his application the Respondent sought orders for relief against forfeiture of the lease and various orders in relation to the fit out of the premises.
Matter No. 115042 was filed in March 2011. In that application the Applicant sought orders in relation to rent arrears, loss of rent and other costs.
At the hearing of the matter on 1 August 2011, Mr Gelonesi withdrew the application in matter No. 115009. In matter No. 115042 I ordered that the Respondent was to pay the Applicant the amount of $26,998.22, payable immediately, for interest on arrears and shortfall of rent, loss of rent, removal fees, storage fees and centre management costs.
The Applicant sought an order for costs in both matters No. 115042 and No. 115009. I set a timetable for the filing of submissions in regard to costs and the parties agreed that the matter of costs would be determined on the papers.
The Applicant filed submissions in compliance with that timetable. The Respondent did not. The Respondent has filed no submissions.
Applicable legislation
The objects of the Administrative Decisions Tribunal Act 1997 ("the ADT Act") are set out in section 3 which provides:
3 Objects of Act
The objects of this Act are as follows:
...
(b) to ensure that the Tribunal is accessible, its proceedings are efficient and effective and its decisions are fair,
(c) to enable proceedings before the Tribunal to be determined in an informal and expeditious manner,
...
(f) to foster an atmosphere in which administrative review is viewed positively as a means of enhancing the delivery of services and programs,
(g) to promote and effect compliance by administrators with legislation enacted by Parliament for the benefit of the citizens of New South Wales.
The Tribunal is empowered to award costs under section 88 of the ADT Act and section 77A of the Act.
Section 88 of the ADT Act provides:
88 Costs
(1) Each party to proceedings before the Tribunal is to bear the party's own costs in the proceedings, except as provided by this section.
(1A) Subject to the rules of the Tribunal and any other Act or law, the Tribunal may award costs in relation to proceedings before it, but only if it is satisfied that it is fair to do so having regard to the following:
(a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings by conduct such as:
(i) failing to comply with an order or direction of the Tribunal without reasonable excuse, or
(ii) failing to comply with this Act, the regulations, the rules of the Tribunal or any relevant provision of the enactment under which the Tribunal has jurisdiction in relation to the proceedings, or
(iii) asking for an adjournment as a result of a failure referred to in subparagraph (i) or (ii), or
(iv) causing an adjournment, or
(v) attempting to deceive another party or the Tribunal, or
(vi) vexatiously conducting the proceedings,
(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,
(c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law,
(d) the nature and complexity of the proceedings,
(e) any other matter that the Tribunal considers relevant.
(2) The Tribunal may:
(a) determine by whom and to what extent costs are to be paid, and
(b) order costs to be assessed on a basis set out in Division 11 of Part 3.2 of the Legal Profession 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 section, costs includes:
(a) costs of or incidental to proceedings in the Tribunal, and
(b) the costs of or incidental to the proceedings giving rise to the application, as well as the costs of or incidental to the application.
Section 77A of the Act provides:
77A Tribunal may award costs
The Tribunal may award costs under section 88 of the Administrative Decisions Tribunal Act 1997 in respect of proceedings commenced by an application made under this Part.
Section 7 of the Act provides:
7 This Act overrides leases
This Act operates despite the provisions of a lease. A provision of a lease is void to the extent that the provision is inconsistent with a provision of this Act. A provision of any agreement or arrangement between the parties to a lease is void to the extent that the provision would be void if it were in the lease.
These provisions have been considered in numerous decisions. It is settled law 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 section 88(1A). The party seeking a costs order in their favour must displace the usual rule that each party bears its own costs.
History of the proceedings
The proceedings have been before the Tribunal on numerous occasions. The Application for Urgent Interim Order in matter No. 115009 came before the Tribunal on 10 February 2011 and Judicial Member Molony made Directions. On 24 February 2011 the matter again came before the Tribunal and Consent Orders were made to facilitate the removal of equipment from the Premises. The matter was listed for hearing on 9 May 2011.
The Respondent did not comply with the Tribunal's orders of 24 February 2011 but he filed a further Application for Urgent Interim Order. That matter came before the Tribunal on 10 March 2011.
On 31 March 2011 the Applicant filed proceedings No. 115042 and filed its evidence, consisting of an affidavit of Andrew Walsh, on 20 April 2011.
On 9 May 2011 the hearing was vacated at the Respondent's request, on the basis that he needed to obtain more evidence to support his claim and so that he could issue an amended Summons. Deputy President Higgins made directions for the filing and serving of further evidence and the amended Summons. The matter was listed for hearing on 1 and 2 August 2011. The Deputy President noted the Applicant's application for costs and made a direction that costs would be in the cause.
On 1 August 2011 the Respondent discontinued proceedings 115009. Proceedings 115042 remained and were determined in the Applicant's favour. There remains the issue of costs for both proceedings.
The Applicant's submissions
The Applicant contends that it is fair to make an order for cost in the Applicant's favour in each of these matters.
Clause 22(b) of the Lease provides that the tenant must pay or reimburse the landlord for the landlord's costs in connection with the tenant's default, including enforcing rights or considering doing so. The Applicant relies upon clause 22 of the Lease to the extent that it is not inconsistent with section 7 of the Act and section 88 of the ADT Act.
Application 115042
The Applicant contends that in this instance costs should follow the event on the basis that:
(a)the Applicant's application was made out on the evidence adduced;
(b)the Respondent did not file any reply or evidentiary material to the Applicant's application;
(c)the Respondent's failure to submit to the Applicant's application meant that the Respondent was:
i.responsible for prolonging unreasonably the time taken to complete the proceedings as per section 88(1A)(b) of the Act; or
ii.alternatively, the fact that the Respondent did not present any evidence contrary to the Applicant's and during the proceedings verbally confirmed the Applicant's submissions on the facts is sufficient reason for costs to be awarded pursuant to section 88(1A)(e).
The Applicant contends that further weight for this submission can be found in the words of section 88(1A) which suggests that it is fair to award costs in circumstances where a party:
(a)causes an adjournment as a result of a failure to comply with an order or direction of the Tribunal without reasonable excuse [section 88(1A)(a)(i)];
(b)asks for an order as a result of such a failure [section 88(1A)(a)(iii)];
(c)causes an adjournment [section 88(1A)(a)(iv)];
(d)has been responsible for prolonging unreasonably the time taken to complete proceedings [section 88(1A)(b)] .
It is submitted that each of these subsections infers that if costs are unnecessarily incurred by a party due to the other party's conduct of the case, then it is only fair that costs be awarded to the party who is detrimentally affected. It is further submitted that such an outcome goes to the objects as set out in section 3 of the ADT Act.
The Applicant submitted that the Respondent contested the Applicant's Application in the lead up to the hearing, allowed the proceedings to continue and failed to accept the Applicant's offer to mediate. However, at the hearing the Respondent did not contest the application other than to put forward an untenable argument suggesting that the Applicant had an obligation under the Lease to mitigate its loss and that this would have been a more suitable outcome if the Lease had not been terminated. The Tribunal rejected this submission as the obligation to mitigate only arises after the Lease is terminated: clause 21.4 of the Lease.
The Applicant further submitted that such a submission ignored the correspondence from the Respondent and his solicitor indicating that payment of rent would cease.
The Applicant contends that the Respondent should have acknowledged his obligation under the Lease, thus avoiding the costs incurred by the Applicant in pursuing him in the Tribunal. It is submitted that in the circumstances the Tribunal should be satisfied that it is fair to award costs on the basis that:
(a)the Respondent continued to contest the proceedings right up to the day of the hearing;
(b)the Respondent's solicitor acknowledged that he accepted the facts of the case as submitted by the Applicant's solicitor;
(c)the Respondent's conduct was contrary to section 88(1A)(b) in that he was responsible for prolonging unreasonably the time taken to complete the proceedings, and
(d)the Respondent did not justify his opposition to the proceedings and such argument that he attempted to put forward, which went to the Applicant's obligation to mitigate its loss by not terminating the Respondent, had no tenable basis in fact or law and thus was contrary to section 88(1A)(c).
The Applicant contends that section 88(1A)(e) provides a wide scope for the Tribunal to award costs and that in the present circumstances it is unfair to cause the Applicant to incur substantial costs in bringing proceedings in response to a breach of a Lease and to require the Applicant to elevate the matter to the Tribunal to seek orders which are clearly justified on a commercial basis as set out in the Lease.
Application 115009
The Applicant contends that the Tribunal should be satisfied that it is fair to award costs in its favour on the basis that the Respondent conducted the proceedings in a way that unnecessarily disadvantaged the Applicant by:
(a)failing to comply with an order or direction of the Tribunal without reasonable excuse. [section 88(1A)(a)(i)];
(b)asking for an adjournment as a result of a failure to comply with the order or direction. [section 88(1A)(a)(iii)]; and
(c)causing an adjournment. [section 88(1A)(a)(iv)].
The Applicant further submitted that the Respondent "made a claim that has no tenable basis in fact or law" [section 88(1A)(c) ADT Act] in that:
(a)he did not put forward any evidence to satisfy the requirements for maintaining an unconscionable conduct claim;
(b)he did not put forward any evidence which supported his application generally;
(c)he sought to rely upon representations alleged to have been made by the previous owner of the Centre, who is not a party to the proceedings;
(d)he did not put forward any evidence of any costs incurred or loss suffered to support his application.
The Applicant contends that by commencing proceedings that were clearly untenable, i.e. without any evidence in support, the Respondent has caused considerable expense to the Applicant.
The Applicant referred to comments by Judicial Member Molloy in Rucom Pty Ltd and Anor v Multiplex & Ors [2010] NSWADT 1 where he stated at paragraph [37]:
37 So, it is plain to me that, not only is this Division a commercial division dealing with commercial issues between lessors and lessees in a retail lease environment, but, and in addition, proceedings should only be commenced in this Tribunal after very careful consideration of the merits of the case: see Trust Company of Australia Ltd v Craig [2005] NSWADT 65 at [44]. After all, commencing proceedings without such consideration inevitably results in considerable expense being incurred by the other party and one might not unreasonably ask: "why should the other party have to bear those expenses when the proceedings should not have been commenced in the first place?"
The Applicant contends that the Respondent should have acknowledged his obligation under the Lease, thus avoiding the costs incurred by the Applicant in pursuing him in the Tribunal. It submitted that as the Respondent abandoned his application on the eve of the second attempt at the hearing it must be assumed that the Respondent recognised the absence of any prospects of success, despite being given ample opportunity by the Tribunal to amend his Application, to file and serve subpoenas and to adduce further evidence.
It is submitted that the Applicant has been put to the cost and expense of defending proceedings in circumstances where the Respondent abandoned his case, despite being given many opportunities by the Tribunal to rectify any deficiency and specifically after the Respondent acknowledged that it needed to do so. The Applicant argues the it should be inferred by the Respondent's failure to adduce any evidence at the hearing that the Respondent's case had absolutely no merit at all and therefore it is fair to make an order for cost in the Applicant's favour.
The Applicant contends that the Respondent unreasonably prolonged the time taken for the completion of the proceedings. It is submitted that if the Respondent had presented his case and evidence in a clear and open way on the first occasion, the Tribunal would have been in a position to dismiss it summarily at that time. It was the Respondent's application and the adjournments and the vacation of the hearing dates were due to the Respondent not having complied with the orders made by the Tribunal and failing to be ready to prosecute his case at the hearing.
In support of this submission the Applicant relies on views expressed in Salon Today Pty Limited v MMIR Pty Limited [2009] NSWADT 71 where Judicial Member Molloy stated at paragraph [48]:
"It has been stated before - (see Gizah and Armstrong Jones Management Pty Limited v. Saies-Bond & Associates Pty Limited (No 2) [2007] NSWADT 58) and elsewhere - that this Division of this Tribunal is a commercial division in that it deals with the commercial relations between lessors and lessees in particular commercial circumstances. It is for that reason that the Retail Leases Act requires, as does this Tribunal, that parties engage in mediation in a genuine attempt to resolve their differences. Indeed, it is now common (if it ever was uncommon) for attempts to be made, prior to litigation and in the course of litigation, by parties and their lawyers to resolve cases without the issues going to a full hearing. Indeed, lawyers, even before the advent of modern credited mediators, have been mediating and resolving cases since time immemorial".
The Applicant contends that the Respondent ignored its requests for mediation until such a late stage in the proceedings that the Applicant had completed its preparations for the hearing. It is submitted that the circumstances were not conducive to the Respondent entering into mediation with the intention of resolving the proceedings.
The Applicant referred to further comments by Judicial Member Molloy in Rucom Pty Ltd and Anor v Multiplex & Ors where he stated at paragraph [55]:
55 ... In addition, I would refer to Haralovic & Carr v Law Society of NSW (No 2) [2007] NSWADT 97 where that Tribunal made this observation at [30]: "A recognised category of "special circumstances" - see eg Trust Company of Australia Ltd v Craig & Ors [2005] NSWADT 65 at [44-45] and Nawi No. 3 Pty Ltd & Ors v ING Management Ltd [2005] NSWADT 235 at [23] - is where a party, having commenced a proceeding in the Tribunal, withdraws it without good reason before the commencement of the hearing. This is not an "ordinary" circumstance, and the fact that the other party or parties have been put to significant expense in conducting preparations that turn out to be unnecessary has been held sufficient to "warrant" a costs order". In GN & Anor v Public Guardian & anor [2009] NSWADTAP 6, that Appeal Panel made this observation at [27]: "In our view, section 88(1), stating the normal requirement that the parties to proceedings before the Tribunal will bear their own costs, is consistent with the objects stated in section 3. The Tribunal's discretion to award costs is the exception to the general position, and this may only be exercised where it is fair to do so having regard to the matters referred to in paragraphs (a) to (e) of section 88(1A)". See also Kyriacou v Chief Commissioner of State Revenue [2009] NSWADT 175 at [38].
It is submitted that such matters as set out above give the Tribunal further reason to award costs under section 88(1A)(e) of the Act.
Indemnity Costs
The Applicant submits that not only should costs be awarded in its favour, but that such costs should be awarded on an indemnity basis. It referred to further comments by Judicial Member Molloy in Rucom Pty Ltd and Anor v Multiplex & Ors where he stated at paragraphs [61] - [66]:
61 Although it is true that the categories of conduct, "sufficient or unusual feature" or "relevant delinquency" are not closed (see Colgate Palmolive at [257]) it is plain that indemnity costs orders are most regularly awarded where litigation is commenced with no reasonable prospects of success. There are a number of cases where such awards have been made where the cases could be generally regarded as "hopeless", or with no chance of success, or categorised as being "without substance", "groundless", "fanciful or hopeless", no reasonable prospects of success or so weak as to be futile. Reference can be made to the recent decision of Hoeben J in Ludon Investments No 7 Pty Ltd v Barton [2009] NSWSC 1179 at [45-46]. Although it is true that a weak case will not ground an indemnity costs award, where the matter raised has been decided previously then that would generally result in an indemnity order - see Bayne v Blake (No 3) (2009) CLR 366.
62 In the case before this Tribunal the arguments initially raised by the Applicants were clearly covered by the decision in Red Roll and were also clearly covered by the Deed of Settlement to which I have made detailed reference above. The only reason why the Applicant "succeeded" in obtaining an urgent interim order on the first occasion was simply to enable them to get a grip on the arguments that were raised at the Tribunal by the Respondents. There was not the slightest suggestion that the case raised by the Applicants had any merit; but rather, perhaps with a generosity of spirit, the Tribunal wished to preserve the status quo to enable the Applicants to, perhaps, articulate their case in a more persuasive fashion having regard to the arguments that were raised.
63 When the matter came back on the second occasion 9 April 2009 the arguments sought to be advanced were, quite frankly, hopeless. For the reasons I have set out above there was not the slightest jot of evidence that would have supported the amendments and no real attempt was made to address the real argument/discussions that were ventilated on the first occasion. The Tribunal had no difficulty at all in dismissing in the Application for Urgent Interim Order and dismissing from the proceedings the Second and Third Respondents.
64 The Applicants then sought to appeal, but when "push came to shove" the appeal was simply abandoned, with the orders as set out above.
65 I wish to repeat the point that has been made on at least two prior occasions in this Tribunal: parties have an obligation to carefully, and consistently, examine their case and, where it doesn't "stack up" then find some way of vacating the field of battle: see, for example Law Society of NSW v Jayawardena [2008] NSWADT 187; Law Society of NSW v Martin [2008] NSWADT 305 at [76]; and Salon Today at [51-52].
66 It seems to me that the course/conduct of these proceedings as against the Second and Third Respondents clearly justifies, not only a costs order against the Applicants but also an order that those costs be assessed and paid on an indemnity basis.
The Applicant contends that the Respondent adduced no evidence to support his application. No evidence was adduced to respond to the Applicant's application, which was brought about in response to the Respondent's refusal to pay rent. The Respondent was given numerous opportunities by the Tribunal to adduce evidence and to amend his application but he failed to comply with the Tribunal's directions in this regard and as such caused the Applicant to incur costs in preparing its case.
The Applicant submits that the correct response should have been for the Respondent to discontinue the proceedings upon becoming aware that it would not or could not submit any evidence to support his application.
The Applicant further submits that the Respondent was presented with opportunities to mediate and chose to ignore them.
The Applicant contends that to continue the proceedings without any evidence clearly amounts to pursuing a case "with no chance of success", "without substance", "groundless", "fanciful or hopeless" or "no reasonable prospects of success or so weak as to be futile". In such circumstances it is appropriate that costs be paid by the Respondent in both proceedings on an indemnity basis.
Costs against the Respondent's Solicitor
As noted above, section 88(2)(a) of the ADT Act allows the Tribunal to determine by whom and to what extent costs are to be paid. The Applicant submits that the Respondent's solicitor, Mr Bruno Gelonesi, being an "officer of the Court" has the same obligations to the Tribunal as a solicitor has in any other jurisdiction to which a solicitor of the NSW Supreme Court is entitled to appear. The Applicant further submits that Mr Gelonesi failed to meet his responsibilities to the Tribunal and should be held accountable pursuant to section 88(2)(a) of the ADT Act.
It referred to the provisions of section 99 of the Civil Procedure Act 2005 which states:
99 Liability of legal practitioner for unnecessary costs
(cf Act No 52 1970, section 76C; SCR Part 52A, rules 43 and 43A)
(1) This section applies if it appears to the court that costs have been incurred:
(a) by the serious neglect, serious incompetence or serious misconduct of a legal practitioner, or
(b) improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible.
(2) After giving the legal practitioner a reasonable opportunity to be heard, the court may do any one or more of the following:
(a) it may, by order, disallow the whole or any part of the costs in the proceedings:
(i) in the case of a barrister, as between the barrister and the instructing solicitor, or as between the barrister and the client, as the case requires, or
(ii) in the case of a solicitor, as between the solicitor and the client,
(b) it may, by order, direct the legal practitioner:
(i) in the case of a barrister, to pay to the instructing solicitor or client, or both, the whole or any part of any costs that the instructing solicitor or client, or both, have been ordered to pay to any other person, whether or not the solicitor or client has paid those costs, or
(ii) in the case of a solicitor, to pay to the client the whole or any part of any costs that the client has been ordered to pay to any other person, whether or not the client has paid those costs,
(c) it may, by order, direct the legal practitioner to indemnify any party (other than the client) against costs payable by that party.
(3) Before making such an order, the court may refer the matter to a costs assessor (within the meaning of Part 3.2 of the Legal Profession Act 2004 ) for inquiry and report.
(4) The court may direct that notice of any proceedings or order under this section with respect to a legal practitioner be given:
(a) in the case of a barrister, to the instructing solicitor or client, or both, as the court may direct, or
(b) in the case of a solicitor, to the client.
(5) The court may give ancillary directions to give full effect to an order under this section, including directions to a legal practitioner to provide a bill of costs in assessable form:
(a) to the court, or
(b) to a party to the proceedings, or
(c) in the case of a barrister, to the instructing solicitor or client, or both, or
(d) in the case of a solicitor, to the client.
(6) A party's legal practitioner is not entitled to demand, recover or accept:
(a) in the case of a barrister, from the instructing solicitor or client, or
(b) in the case of a solicitor, from the client,
any part of the amount for which the legal practitioner is directed by the court to indemnify any party pursuant to an order referred to in subsection (2) (c).
(7) In this section, "client" includes former client.
The Applicant contends that Mr Gelonesi's obligations include ensuring that proceedings in which he has carriage are progressed in accordance with the directions and orders of the Court. The exception is where there are unusual or unexpected circumstances that require a variation of such orders or directions. The Applicant referred to the decision in Whyte v Brosch and Others [1998] 45 NSWLR 354 at page 355 where Spigelman CJ stated:
Legal practitioners, both solicitors and barristers, owe duties to the Court. That is what distinguishes the practise of a profession from a business or a trade or a job, insofar as the legal profession is concerned. Those duties include a duty to ensure that proceedings before the Court are conducted efficiently and expeditiously.
...
It is important for the profession to understand that other sanctions are available to this Court and may be exercised.
In a case where the opposing party seeks an adjournment of proceedings by reason of the late filing of submissions , if the Court grants the adjournment in accordance with its usual approach, the profession ought be aware that the Court can order that costs thrown away by any adjournment should be paid by the legal practitioner responsible for the failure.
Other possible sanctions include a reference to one of the professional associations to investigate whether any breach of professional obligations has occurred.
The Applicant contends that it is the responsibility of the practitioner to inform the Tribunal where unusual or unexpected circumstances arise which require a variation of such orders or directions, and to seek a variation. One reason for this is to ensure that unnecessary costs are not incurred. In this matter, there were no unusual circumstances put to the Tribunal that would justify non-compliance with the Tribunal's directions or orders or the vacation of hearing dates.
The Applicant put Mr Gelonesi on notice that the Respondent had not complied with the Tribunal's orders but Mr Gelonesi failed to communicate with the Applicant or with the Tribunal so as to ensure the efficient and effective progress of proceedings. The Applicant contends that this renders Mr Gelonesi in breach of his responsibilities to the Tribunal. It says that in particular Mr Gelonesi had a responsibility to assist the Tribunal to meet its objectives, particularly objectives 3(b) and (c) of the ADT Act. He failed in this regard and as such should primarily be held accountable.
Discussion
Section 88 of the ADT Act contains a general rule that each party to the proceedings is to bear its own costs of the proceedings and that an award of costs will only be made if the Tribunal is satisfied, having regard to the factors set out in subsection 88(1A), that it is fair to make an award of costs. As Judicial Member Molloy noted in Chronopoulos v Carossel (No 2) Pty Limited [2010] NSWADT 236 at paragraph [29], the central tenet of section 88 is the concept of fairness.
Section 88 was considered by the Court of Appeal in AT v Commissioner of Police, NSW [2010] NSWCA 131 - a case emanating from the General Division of the Tribunal. At paragraph [21] of that decision Basten JA said the following in regard to the Tribunal's exercise of its discretion under subsection 88(1A):
21 ... In its terms, s 88(1A) requires that the Tribunal (which includes for this purpose the Appeal Panel) be "satisfied" that the proposed award is "fair". That exercise involves, potentially, both findings of primary fact and the exercise of an evaluative judgment. ...
At paragraph [33] Basten JA referred to the general principle set out in subsection 88(1) that each party should bear its own costs and stated:
33 ... 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 Tribunal Act.
In Meriton Properties Pty Ltd v DCM Leases-Five Pty Ltd (No 2) [2010] NSWADT 11, Deputy President Chesterman observed:
16 The current version of section 88, in which the criterion of 'fairness' stated in subsection (1A) has replaced a rule that in the absence of 'special circumstances' no costs might be awarded, became operative on 1 January 2009. ...
17 In cases applying the earlier criterion stipulated in section 88 (see for example Gizah Pty Ltd v AXA Trustees Ltd (No 2) [2001] NSWADT 164), it was consistently held that because of the 'commerciality' of 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. In Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81, the Court of Appeal held that the costs of proceedings in the Tribunal under the RL Act, both at first instance and on appeal, should be awarded against the lessors. At [60], Santow JA said: 'While a finding of "serious unfairness" is not a prerequisite to determining that there are special circumstances, it is nonetheless a highly relevant consideration.'
18 Because the criterion is now one of 'fairness', as contrasted with the notion of 'serious unfairness' mentioned by Santow J, there are good grounds for believing that costs orders should be more readily obtainable. In Salon Today Pty Ltd v M M I R Pty Ltd [2009] NSWADT 71 (a case within the Retail Leases Division), the Tribunal advanced this proposition. At [72], it stated:-
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 certainly touched upon by the Court of Appeal in Cripps , 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 Deputy President then quoted the comments by Judicial Member Molloy in Rucom Pty Ltd and Anor v Multiplex & Ors cited above.
In Profilio v Coogee Bay Village Pty Ltd (No. 4) [2011] NSWADT 64 (" Profilio ") the Tribunal, Deputy President Chesterman presiding, stated at paragraphs [39] - [40]:
39. For the purposes of the present decision, case law relating specifically to two matters arising under subsection (1A) of section 88 should be considered. These matters are the interpretation of paragraph (c) of this subsection and the significance of evidence that the successful party has rejected a favourable offer of compromise put forward by the unsuccessful party.
40. Paragraph (c) of Section 88(1A). It is clear that a successful party cannot claim costs under paragraph (c) simply by pointing to the fact that it succeeded. Equally, it is clear that the scope of the paragraph is not confined merely to proceedings where the case advanced by the unsuccessful party had 'no tenable basis in fact or law'. What the paragraph requires is that the Tribunal, in determining whether it is 'fair' to award costs to the successful party, should assess 'the relative strengths' of the claims made by each of the parties.
At paragraphs [42] and [43] of Profilio the Tribunal cited with approval two decisions of the Victorian Civil and Administrative Tribunal in regard to the equivalent provision of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (i.e. section 109).
"42. In the first of these decisions, Dennis Corporation Pty Ltd v Casey CC (Red Dot) [2008] VCAT 691, the Victorian Tribunal said at [14 - 19]:-
14 The relative strengths of the claims appear to refer to the strength of claims of one party compared to the strength of the claims of another. A difficult, doubtful or test case might be necessary to clarify the legal position of the parties. It is probably seldom that an order for costs would be made having regard to this consideration alone where there was a real issue to be tried and real justification for the claims made on either side. I take it that it is generally where there is a very weak case for one side, or none at all, that this consideration is likely to lead to an order for costs. I note that the wording says that the absence of a "tenable basis in law or fact" is a consideration included within the consideration of the relative strengths of the claims of the parties.
15 This certainly cannot mean that an unsuccessful party should be required to pay costs because, at the end of the case, that party's claims have been found to be untenable in fact or law to the extent that they were not upheld and were not successful. That would amount to "costs following the event". It would compromise the general rule created in s 109(1).
16 As I have said, I do not think that the consideration indicates an order for costs where there are strong cases on either side, or perhaps evenly balanced cases on either side.
17 I am not minded to go so far as to say that a weak case will necessarily indicate an order for costs. The word "untenable" is stronger than "weak". The Macquarie Dictionary, second revision, defines untenable as incapable of being held against attack, incapable of being maintained against argument, as an opinion, scheme etc.
18 The ethical rules of the Bar, as I recall them, indicates that a barrister has a duty to do his or her best by the client even if the client has a weak case. On the other hand, a different duty applies if the case is so weak as to be unarguable or "untenable". It extends to a case that is so weak that it should not be argued or so weak that it would be an abuse to seek to maintain it.
19 I think "untenable" in the context of s 109(3)(c) means something like so weak as to be unarguable, rather than merely weak.
43. In the second of these decisions, Winky Pop Pty Ltd v Hobsons Bay CC [2008] VCAT 1512, the Tribunal said at [7]:-
7 Although the applicant was ultimately unsuccessful in its application, I do not believe that its case was so weak as to be untenable in fact or law. I endorse the comments of Senior Member Byard in Dennis in relation to this issue. I agree with the applicant that, although I indicated in my reasons that the applicant's case in relation to its access to material was "disingenuous" to a panel process that it well understood, I certainly did not consider the applicant's case to be completely unarguable, unreasonable or untenable in a manner that would clearly justify an award of costs having regard to the relative strengths of the arguments put by each party. This was simply a case where both parties raised and carefully articulated a number of matters of fact and law before the Tribunal, and the applicant was ultimately unsuccessful in persuading the Tribunal to support its view."
In matter 115009, the claim was lodged but not prosecuted and the Applicant was put in the position where it needed to respond. The Respondent did not put forward any evidence that supported his application. It is evident that his claim was not strong and it was ultimately withdrawn. Prior to the withdrawal the Respondent failed to comply with the Tribunal's directions and a hearing was vacated as a consequence of that failure.
Documents filed by the Applicant suggest that attempts to discuss the progress of the matter with the Respondent did not receive any response. The Respondent did not respond to the Applicant's requests for mediation until mediation was no longer feasible. The Applicant proceeded to file evidence and prepared for the final hearing however the matter was withdrawn shortly before the day of hearing. By that time the Applicant had already incurred unnecessary expenses.
It appears that the Respondent's case was untenable. If in fact it was tenable, he did not put forward any evidence to supported it. In my view, the Respondent's claim should have been withdrawn at a time prior to the filing of the Applicant's evidence. The lack of communication from the Respondent left the Applicant in the position where it had little choice but to proceed to defend the Respondent's claim and to prosecute its own application.
I am satisfied that the Respondent has conducted the proceedings in a way that unnecessarily disadvantaged the Applicant by:
i.failing to comply with an order or direction of the Tribunal without reasonable excuse; [section 88(1A)(a)(i)]
ii.asking for an adjournment as a result of a failure to comply with an order or direction of the Tribunal without reasonable excuse; [section 88(1A)(a)(iii)] and
iii.causing an adjournment [section 88(1A)(a)(iv)].
I am also satisfied that the Respondent's conduct was responsible for prolonging unreasonably the time taken to complete the proceedings in matter No. 115009: [section 88(1A)(b)].
In my view it would be 'fair' to order the Respondent to pay the Applicant's costs in matter No. 115009.
In matter 115042, the Applicant prosecuted its claim was but the Respondent did not file any material in defence of the claim. The Applicant complied with the timetable that was set by the Tribunal but the Respondent did not. The Respondent failed to accept the Applicant's offer to mediate and continued to contest the Applicant's claim until the day of the hearing when he conceded the facts of the case as submitted by the Applicant. The Respondent's argument was not tenable and inevitably the Applicant was entitled to the orders that it sought.
In my view, the Respondent's concession should have been made much earlier in the proceedings. If he had done so, the Applicant would have avoided the costs of preparing for hearing.
I am satisfied that the Respondent's conduct was responsible for prolonging unreasonably the time taken to complete the proceedings in matter No. 115042: [section 88(1A)(b)].
In my view it would be 'fair' to order the Respondent to pay the Applicant's costs in matter 115042.
In the circumstances I do not consider that an award for costs should be on an indemnity basis. I accept that the Applicant has a strong argument for indemnity costs in matter No. 115009. However, it is less so in matter 115042. In that matter it was necessary that the Applicant prove its case in order to obtain the orders that it sought. While there is no doubt that the Applicant was inconvenienced by the Respondent's failure to comply with the Tribunal's timetable and it is clear that the Respondent's conduct was responsible for prolonging unreasonably the time taken to complete the proceedings, some cost to the Applicant was inevitable.
It is not possible for me to determine the extent to which the Applicant's costs were apportioned between the two matters. The Applicant was able to rely on an affidavit of Mr Walsh that was relevant to both matters and in that way it was able to minimise its costs.
In my view, it is fair that the Respondent pay the Applicant's costs in both matter No. 115009 and matter 115042. However, the costs should not be payable on an indemnity basis.
Order
Nick Kriletich is to pay Dee Why Grand Shopping Centre Pty Ltd's costs of and incidental to these proceedings as agreed or assessed.
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Decision last updated: 17 February 2012
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