Fares v Bleakley

[2006] NSWADT 53

CITATION:	Fares & ors v Bleakley & anor [2006] NSWADT 53
DIVISION:	Retail Leases Division
PARTIES:	APPLICANTS Ghassan Fares Jittmia Chawalittara Kektanok Roongsawang Jutarpon Channoom RESPONDENTS Robert John Bleakley Shala Pty Limited CROSS APPLICANTS Robert John Bleakley Shala Pty Limited CROSS RESPONDENTS Ghassan Fares Jittmia Chawalittara Kektanok Roongsawang Jutarpon Channoom
FILE NUMBER:	035135; 045036
HEARING DATES:	On the papers
SUBMISSIONS CLOSED:	11/16/2005
DATE OF DECISION:	02/21/2006
BEFORE:	Boyce P - Judicial Member
CATCHWORDS:	Costs
MATTER FOR DECISION:	Costs
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Retail Leases Act 1994
CASES CITED:	Alessa v Total and Universal Pty Limited [2001] NSW ADT 150 at [4-6] Alessa v Total and Universal Pty Limited [2001] NSW ADT 150 at [4-6] Citadin Pty Limited v Eddie Azzi Australia Pty Ltd & Anor (No2) [2001] NSW ATAP 31Forma v BHP Co. Ltd [1999] NSW ADT 59G&M Dawson Pty Limited -v- Cripps & Ors (No.3)(RLD)[2005] NSW ADTAP 24Gizah Pty Limited v Axa Trustees Limited (No 2) [2001] NSW ADT 164 at [29]Hoblos v Marchese [1999] NSW ADT 127)Holpitt Pty Ltd v Varimu Pty Ltd (1991) 103 ALR 684Langley v UNSW (1984) EOC 92-018 at 75 468Trust Company of Australia Limited v Craig and Ors [2005] NSWADT 65 at [44]Wood and Anor v Bergman (No.2) [2003] NSWADT 175 at [11]
REPRESENTATION:	APPLICANTS & CROSS RESPONDENTS M Southwick, barrister RESPONDENTS & CROSS APPLICANTS D Warren, barrister
ORDERS:	1.The application for costs by the Respondents is dismissed; 2.No order as to costs.

1 This is an application by the Respondents and the Cross Applicants, Robert John Bleakley and Shala Pty Limited who will be called in this decision the Respondents, for an order for costs against the Applicants and Cross Respondents, Ghassan Fares, Jittmia Chawalittara, Kektanok Roongsawang and Jutarpon Channoom, who will be called in this decision the Applicants.

2 The Applicants made an application for a declaration of rights, obligations and liabilities under a lease and a claim for payment of monies against the Respondents. The Respondents cross-application sought orders for payment of money by the Applicants.

3 This Tribunal gave its decision on 11 October 2005 making orders in matter No 035135, partially dismissing the Applicants’ application and ordering the Respondents to repay to the Applicants the security deposit held by the Respondents under a retail lease and ordering that an overpayment of outgoings paid by the Applicants during the lease be repaid by the Respondents to the Applicants.

4 In respect of the Respondents Cross Application, matter no. 045036, this Tribunal ordered that it be dismissed.

5 In my decision of 11 October 2005 I made further orders that the parties could make written submissions in relation to costs within 28 days of that decision. On 4 November 2005 the Respondents made their submissions in support of their application for costs and the Applicants made their submissions in reply on 15 November 2005. Although the Applicants made their response outside the time for making their submissions in accordance with the orders of 11 October 2005, I am prepared to accept their submissions because of an error in the mailing address when the Respondents submissions were served on the Applicants. This delayed the service of those submissions.

6 To preclude the Applicants from its entitlement to make submissions in reply for such a reason would be unfair to the Applicants.

Conduct of the proceedings

7 The Applicants application was filed on 11 November 2003 and given file number 035135. The Applicants claimed damages and declarations against the Respondents in respect of a retail lease for premises at Level 1, Verona Centre, 17 Oxford Street, Paddington from which the Applicants conducted a restaurant business known as “La Thailande”.

8 The Respondents were the registered proprietor of the building of which the retail premises formed part; and head lessor, respectively.

9 At the hearing the Applicants pursued their claim against the Respondents in respect of an allegation of misrepresentations made by the Respondents prior to the Applicants entering into the Lease.

10 The Applicants purchased the business known as “La Thailande” from the Vendors of the business conducted from the retail lease premises, Greg Wright & Associates Pty Limited and Neil Wright & Associates Pty Limited.

11 In each of the allegations of misrepresentation against the Respondents by the Applicants this Tribunal found that no misrepresentations had been made by the Respondents.

12 The Applicants also sought damages against the Respondents for unreasonably failing or refusing to agree to an assignment of the lease of the premises to a subsequent potential purchaser from the Applicants. This Tribunal found that the Respondents had not unreasonably failed or refused to agree to the assignment of the sub-lease.

13 In Applicants application for damages as a result of water leakage from the retail lease premises leaking through the floor of the restaurant to other retail premises owned by the Respondents this Tribunal found that because of an inherent defect in the water proofing of the floor, the premises became unusable by the Applicants. However, the Applicants claim for loss of income, when their premises could not be used as a restaurant was not pressed and there was no evidence that the business ever traded at a profit.

14 In response to the Respondents Cross Application for rent payable from when the Applicants vacated the premises on 15 October 2003 until the end of the term of the lease on 31 March 2005 this Tribunal found that no damages in the nature of the rent that would have otherwise been paid should be ordered.

15 The Applicants were successful in the proceedings in having orders made that the security deposit held by the Respondents be returned to the Applicants together with an amount of $3,522.19 being a refund of overpaid outgoings because of an error in the calculation of the lettable area upon which the proportion of outgoings payable by the Applicants during their tenancy were payable.

16 In the Respondents cross-application for damages, being rent that would otherwise been payable from the date of the Applicants’ vacation of the premises on 15 October 2003, this Tribunal found that as the premises had not been made fit for occupation by resolving the issue of the failed waterproofing membrane by the Respondents that it could not rely on its own default under the lease in order to recover rent from the Applicants and its cross application was dismissed.

17 The Respondents now seek an order for costs against the Applicants.

Authority for costs in the Administrative Decisions Tribunal

18 Section 88(1) of the Administrative Decisions Tribunal Act provides that the Tribunal may award costs in relation to proceedings in the Tribunal but only if it is satisfied that there are special circumstances warranting an award of costs.

19 Section 77A of the Retail Leases Act expressly provides that the Tribunal may award costs under Section 88 of the Administrative Decisions Tribunal Act in respect of proceeding commenced by an application under the Retail Leases Act.

Principles as to the award of costs

20 It is now well established that if the Applicants can establish that special circumstances have been established in the conduct of proceedings then the Tribunal may award costs.

21 In Gizah Pty Limited v Axa Trustees Limited (No 2) [2001] NSW ADT 164 at [29] the Tribunal defined “special circumstances” as:

“consequently, I am of the opinion that in order to satisfy the test “special circumstances” one must find circumstances that are out of the ordinary, but without having to be extraordinary or exceptional but those special circumstances would warrant an award of costs”.

22 In Alessa v Total and Universal Pty Limited [2001] NSW ADT 150 at [4-6] the Tribunal found:

“This Tribunal has rejected the general proposition that because of the commercial character of retail lease relationships, costs should follow the event: Townsend v SRA [1999 ] NSW ADT 150 at [104 ]. It has done so notwithstanding the tendency to a contrary view in Victoria in retail leases cases. See the review of the Victorian position by the Appeal Panel of this Tribunal in Citadin Pty Limited v Eddie Azzi Australia Pty Ltd & Anor (No2) [2001 ] NSW ATAP 31.

23 The meaning of “special circumstances” has been considered in cases in a number of decisions of this Tribunal. Descriptions of such circumstances range from “circumstances which take the matter out of the ordinary courses (see Holpitt Pty Ltd v Varimu Pty Ltd (1991) 103 ALR 684 referred to by this Tribunal in Hoblos v Marchese [1999] NSW ADT 127), to circumstances where the claims “lacked any conceivable merit in fact or law”, the purpose of a costs order in those circumstances being described as a measure to prevent “the gross abuse of the legislation by frivolous and vexatious and misconceived proceedings”. Forma v BHP Co. Ltd [1999] NSW ADT 59 quoting Hutley JA in Langley v UNSW (1984) EOC 92-018 at 75 468. These analyses of the test to be applied make it clear that the circumstances must be seriously beyond the usual or ordinary pursuit of a claim so that it would be seriously unfair to a party to proceedings before the Tribunal not to be awarded some or all of its costs where it has been successful.”

24 Gizah No 2 at [22] and [33-34] explained the significance of the Retail Leases Division being unique within the Tribunal, in that it is the sole Division of the Tribunal to deal with commercial disputes between parties engaged in trade and commerce for reward. Wood and Anor v Bergman (No.2) [2003] NSWADT 175 at [11]:

It is recognised that the Retail Leases Division is unique within the Tribunal, in that it alone deals with commercial disputes between parties who are engaged in trade and commerce disputes between parties who are engaged in trade and commerce for reward. In Gizah , at [22] and [33 – 34], the significance of this for costs orders was explained as follows. Whereas in the context of appeals from administrative decisions the requirement of ‘special circumstances’ might be interpreted so as not to discourage proceedings by a private individual on account of the risk of an adverse costs order, no such consideration should apply in the context of retail lease disputes. The ‘commerciality’ of the retail Leases Division calls for an interpretation quite different from that which might be adopted in any other Division of the Tribunal.”

25 In Trust Company of Australia Limited v Craig and Ors [2005] NSWADT 65 at [44] Tribunal held:

“the commencement of proceedings should only be carried our after the greatest of consideration to ensure that proceedings are not commenced in circumstances where they should not have been commenced

and at paragraph [45]:

“the withdrawal of the proceedings in the circumstances of this case amounts to “special circumstances” within the meaning of the Act and the Respondents is entitled to a costs order in their favour, subject to appropriate assessment.

26 The Respondents submit that special circumstances exist in the matter entitling it to an award of costs. These submissions included:

a. “the nature of the case bought by the Applicants and the extent of the costs that the Applicants compelled the Respondents to incur in meeting the case;

b. the witnesses for the Applicants were just not believed on essential parts of their case (paragraphs 24, 67, 71, 79 of the Judgment);

c. the circumstances of this case were out of the ordinary but not extraordinary or exceptional;

d. (i) following an unsuccessful mediation there were without prejudice negotiations between the parties in an attempt to settle the matter. In the course of these negotiations the Respondents offered to settle a matter on the basis that their applications be withdrawn, the security deposit which had not been claimed by the Respondents was repaid to the Applicants and the Respondents paid to the Applicants $10,000.00 in full satisfaction of their claim;

(ii) these negotiations were conducted orally between the parties respective legal teams;

(iii) there was one written confirmation of these negotiations and the Respondents offer in writing in a without prejudice letter to Macquarie Lawyers dated 26 February 2004 (a copy of which is transcribed in this decision). The offer to settle was not accepted by the Applicants which if accepted would have resulted in a greater payment to the Respondents than provided in the decision and is relevant to any decision for costs.

(iv) the offer of 26 February 2004 was made before the original hearing date.

(v) it will be recalled that the matter was originally set down for hearing in March 2004 and the date vacated as the Applicants had not filed their statements.

(vi) the offer to settle was not accepted.”

e. Any costs incurred by the Respondents after 26 February 2004 should be costs recoverable from the Applicants.

27 The letter from the Respondents Solicitor to the Applicants Solicitor dated 26 April 2004 stated it was “without prejudice” and stated as follows: -

“We refer to previous offers put to your client and advise that the previous offer to pay your client $10,000.00 will be withdrawn once we file our application for the hearing date to be vacated which we anticipate will be in the next one or two days. That offer is withdrawn however your client will have a further 14 days to take up the offer for him to settle the matter on a release for outstanding rent. This offer is open for 14 days from the date of our client filing for the vacation of the hearing date.”

28 The Applicants submitted:

“a. that the Respondents submissions proceed on the false basis that the only issues were the claim by the Applicants for damages and the claim for the outgoings.

b. that the Respondents submissions completely overlook that the cross application in file number 045036 also sought substantial relief and that the Respondents/Cross-Applicants failed in that claim completely.

c. the Respondents submissions suggest incorrectly that the “case ran over 6 days with the time spent being substantially in respect of the Applicants case”. This submission is misleading. The bulk of the case involved technical evidence. The Applicants succeed in relation to the gross lettable area of the premises and in relation to the issue of the maintenance of the premises (water damage). Indeed it was the fact that he succeeded in relation to those issues which resulted in the dismissal of the Cross-Application and the order for refund of the overpayment of outgoings.

d. the evidence in relation to the misrepresentations and the refusal to assign the sub-lease whilst significant in terms of the outcome of the proceedings was not as time consuming as the technical issues – being affectively confined to the alleged misrepresentations and refusal and the various documents supporting or refuting those.

e. objection is taken to the use of negotiations at the mediation “without prejudice” settlement discussions and “without prejudice” correspondence in to support the claim of “special circumstances”.

f. the Respondents submissions rely heavily on “without prejudice” negotiations.

g. it is a complete abuse of the “without prejudice” communications for them to be referred to at all in these submissions (these are not Calderbank offer nor Offers of Compromise).

h. if the “without prejudice” communications are to be considered at all (which it is submitted would require extraordinary circumstances) then the Applicants would seek the opportunity to put evidence in relation to aspects of those offers not dealt with in the submissions.

29 The Respondents submissions referred to in paragraph 25 a & b of this decision are not special circumstances entitling the Respondents to an award of costs. The Applicants were entitled to bring their case to the Tribunal it was for the Tribunal to decide the veracity of the Applicants evidence. The Applicants should not be penalised for pursing their entitlement to bring their application to the Tribunal. The orders made in the litigation in the Tribunal provides sufficient remedies to the agreed party: G&M Dawson Pty Limited -v- Cripps & Ors (No.3)(RLD)[2005] NSW ADTAP 24 at paragraph 32.

30 As to the Respondents submissions referred to in 25c, it is well established that the circumstances of the case must be seriously beyond the usual or ordinary pursuit of a claim so that would be seriously unfair to a party to proceedings before the tribunal not to be awarded some or all of its costs where it has been successful: Alessa -v- Total and Universal Pty Limited [2001] NSW ADT 150 at [6].

31 The Applicants submissions referred to in paragraph 27 a, b, c & d support the argument to refute the Respondents submission that the case was out of the ordinary.

32 The circumstances that gave rise to the Applicants’ application were complex and because of the complexity it was necessary for the Applicants and the Respondents to bring their applications to the Tribunal for resolution. The Applicants’ submissions that the circumstances of the case were out of the ordinary cannot be successful and accordingly I find that this submission does not support the respondents establishing that special circumstances exist.

33 The Respondents final submission in relation to their application for costs is referred to in paragraph 25d of these reasons for decision. The Respondents seek to establish that the negotiations to settle the dispute between the parties as set out in their solicitor’s letter of 26 February 2004 establishes the special circumstances upon which the Tribunal may make a finding of costs against the Applicants. It was established in Gizah (No.2) (supra) that the Respondents must establish:-

a. that it made an offer or compromise of the dispute before the conclusion of the proceedings:

b. that the Applicants had rejected the offer without good reason:

c. the terms of the offer were more favourable to the Applicants then the orders made by the Tribunal;

to satisfy a test of special circumstances.

34 It is not disputed that the offer was made before the conclusion of the proceedings.

35 There is nothing in the submissions by the Respondents or the Applicants to suggest that the Applicants rejected the offer made by the Respondents without good reason.

36 Apart from the submission by the Respondents, there is no evidence before the Tribunal that the return of the security deposit was offered to the Applicants in addition to the Respondents paying to the Applicants $10,000.00 in full satisfaction of their claim. With the return of the security deposit, the refund of the outgoings and succeeding in the defence of the Respondents claim the Applicants were in a much better position than if they agreed to the offer as set out in the Respondents solicitors of 26 February 2004.

37 Accordingly I find that the offer made by the Respondents to the Applicants in their letter of 26 February 2004 does not satisfy the test in Gizah (No 2)(supra) to amount to special circumstances.

38 The Applicants in their submission take objection to the use of negotiations that the mediation “without prejudice” settlement discussions in support of the Respondents submissions. The Respondents submissions are not clear as to whether the negotiations they refer to were during the mediation, however I am inclined to the view that these negotiations took place after the mediation. Had they been during the mediation then, of course, Section 69 of the Retail Leases Act would prohibit any statement or admission being admissible at the hearing of the claim or in any subsequent proceedings.

39 I note the objection made by the Respondents about the use of the “without prejudice” correspondence in support of the Respondents claim of special circumstances, however it will not be necessary for the Tribunal to address those objections as I find that the Respondents have not been able to establish special circumstances which would warrant an award of costs under Section 88(1) of the Administrative Decisions Tribunal Act.

40 Accordingly, I dismiss the Respondents application for costs.

ORDERS

1. The application for costs by the Respondents is dismissed.

2. No order as to costs.