Fathullah v Varma (RLD) - [2013] NSWADTAP 39

Administrative Decisions Tribunal

New South Wales

Medium Neutral Citation: Fathullah v Varma (RLD) [2013] NSWADTAP 39
Hearing dates: 22 May 2013
Decision date: 08 August 2013
Jurisdiction: Appeal Panel - Internal
Before: M Chesterman, Deputy President
D Bluth, Judicial Member
M Foldi, Non-judicial Member
Decision:
1. (a) The appeal against the Tribunal's decision given on 15 November 2012 is allowed.
(b) The order made in that decision is set aside and the following order made: 'The Respondents are to pay to the Appellant the sum of $23,950.39, comprising $20,550 as principal and $3,400.39 as interest.'
2. (a) The appeal against the Tribunal's decision given on 23 January 2013 is allowed.
(b) The order made in that decision is set aside and the following order made: 'The Respondents are to pay to the Appellant the sum of $8,239 in respect of the costs of the proceedings.'
3. The Respondents are to pay to the Appellant the sum of $9,044 in respect of the costs of these appeal proceedings.

Catchwords: Retail lease - failure by lessor to grant possession - assessment of damages payable to lessee - costs
Legislation Cited: Administrative Decisions Tribunal Act 1997
Business Names Registration Act 2011 (Cth)
Legal Profession Act 2004
Local Court, Practice Note Civ 1
Retail Leases Act 1994
Suitors' Fund Act 1951
Cases Cited: ACN 079 830 596 Pty Ltd (trading as Jolly Joe's Fish 'n' Chips) v Wallis Lake Fishermen's Co-operative Ltd [2007] NSWADT 297
Ali v Nationwide News Ltd [2008] NSWCA 183
B & L Linings Pty Ltd v Chief Commissioner of State Revenue (No 5) (RD) [2010] NSWADTAP 21
B & L Linings Pty Ltd v Chief Commissioner of State Revenue (No 6) (RD) [2012] NSWADTAP 26
Building Professionals Board v Hans (GD) [2008] NSWADTAP 13
Commonwealth of Australia v Amann Aviation Pty Ltd [1991] HCA 54; (1992) 174 CLR 64
Coogee Bay Village Pty Ltd v Profilio (No 2) (RLD) [2011] NSWADTAP 67
Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81
Fathullah v Varma [2012] NSWADT 237
Fathullah v Varma (No 2) [2013] NSWADT 13
G & M Dawson Pty Ltd v Cripps & Ors (RLD) [2004] NSWADTAP 38
Hull v Thompson [2001] NSWCA 359
Jonamill Pty Ltd v Alramon Pty Ltd (No 2) (RLD) [2010] NSWADTAP 3
Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313
O'Neill v Henry (RLD) [2010] NSWADTAP 40
Sarker and anor v World Best Holdings Limited and anor [2008] NSWADT 75
Torchia v Swanton (RLD) [2012] NSWADTAP 5
Trowbridge v Morris (RLD) [2010] NSWADTAP 70
Uszok v Henley Properties (NSW) Pty Ltd [2007] NSWCA 31
World Best Holdings Limited v Sarker [2010] NSWCA 24
Category: Principal judgment
Parties: Nihad Fathullah (Appellant)
Arun Deo Varma (First Respondent)
Kamlush Deo Varma (Second Respondent)
Aranesh Deo Varma (Third Respondent)
Representation: H Soltan (Agent for Appellant)
A D Varma (In person, and as agent for Second and Third Respondents)

File Number(s): 129040, 139006
Decision under appeal

Citation:

Fathullah v Varma [2012] NSWADT 237
Fathullah v Varma (No 2) [2013] NSWADT 13

Before:

Retail Leases Division

File Number(s):

125118

reasons for decision

Introduction

This decision relates to appeals filed against two decisions of the Retail Leases Division of the Tribunal. They were delivered on 15 November 2012 and 23 January 2013 respectively.

In the first of them, Fathullah v Varma [2012] NSWADT 237 ('the principal decision'), the Tribunal held that the Applicant, Nihad Fathullah, was entitled to recover damages totalling $9,658.38 (which included a sum of $646.38 on account of interest) from the Respondents, Arun Deo Varma (hereafter 'Mr Varma') , Kamlush Deo Varma and Aranesh Deo Varma. The hearing on which this decision was based had taken place on 5 October 2012.

In the second, Fathullah v Varma (No 2) [2013] NSWADT 13 ('the costs decision'), the Tribunal rejected an application by Mr Fathullah for the costs of the proceedings and ordered that the parties should bear their own costs. The Tribunal arrived at this decision 'on the papers', i.e., without a hearing. It took into account submissions on costs that Mr Fathullah had filed, but it had received no submissions within the specified period from the Respondents.

Throughout the proceedings in the Tribunal, Mr Haney Soltan has represented the Appellant, in the capacity of an agent. Mr Varma has represented himself and acted as the agent for the Second and Third Respondents (who are his sons).

Relevant procedural matters

By a Notice of Appeal filed on 10 December 2012, Mr Fathullah appealed against the principal decision. He did not question any aspect of the Tribunal's determination that the Respondents were liable to pay damages to him. But he maintained that on account of certain errors of law, the amount awarded by the Tribunal was insufficient.

The Notice included an application for leave to be granted for the appeal to extend to the merits under section 113(2)(b) of the Administrative Decisions Tribunal Act 1997 ('the ADT Act').

On 30 January 2013, the Respondents filed a Notice of Reply to Appeal. In it, they disputed certain aspects of the Notice of Appeal and alleged that they had themselves suffered financial loss on account of Mr Fathullah's conduct.

The Respondents claimed also that the Notice of Appeal had been filed out of time. This claim, which was not pressed subsequently, is clearly unfounded, since the Notice was filed within the period of 28 days allowed by section 113(3) of the ADT Act.

On 7 February 2013, Mr Fathullah filed submissions relating to his appeal against the principal decision, together with submissions contesting the correctness of the costs decision.

At a directions hearing on 18 February 2013, the Appeal Panel directed as follows: (a) any notice of appeal against the costs decision (this having been foreshadowed by Mr Soltan) should be filed within 48 hours; (b) within 21 days, the Respondents should file and serve either a notice of cross-appeal (which Mr Varma had foreshadowed) or a notice that they did not wish to institute such a proceeding; (c) within 28 days, the Respondents should file and serve their submissions relating to both the principal decision and the costs decision; and (d) on 22 May 2013, a one-day hearing of all appeals that had been instituted should take place.

By a second Notice of Appeal filed on 20 February 2013, Mr Fathullah filed a Notice of Appeal relating to the costs decision.

On 8 March 2013, the Respondents filed a one-page handwritten document stating that they wished to file a cross appeal and that they sought leave to file 'the documents' within seven days. Save in this respect, the Respondents did not comply with the directions to file and serve documents given on 18 February 2013.

On 9 May 2013, Mr Varma advised the Registry by fax that the Respondents sought leave to vacate the hearing date, on the ground that he would not be available. He proposed that the matter be listed before the Appeal Panel on or after 12 June 2013.

The Registry, having contacted Mr Soltan to ascertain Mr Fathullah's response to this request, left a message on Mr Varma's telephone. This was to the effect that Mr Fathullah did not consent to it, that any further request for an adjournment should be put before the Appeal Panel at the commencement of the hearing and that reasons in support of an adjournment should be furnished.

The hearing of Mr Fathullah's appeal took place before us on 22 May 2013. Mr Soltan was present at the hearing. Mr Varma's attendance was by telephone.

At the start of the hearing, Mr Varma repeated his application for an adjournment. He alleged that he did not receive any communication from the Registry about his prior request. He also indicated that he wished to put on further evidence. His submissions did not include any reasons why the hearing should be adjourned. Mr Soltan advised us that Mr Fathullah maintained his opposition to any adjournment.

Having given consideration to the matter, we ruled that Mr Varma's request to adjourn should be refused and that the hearing should proceed.

During the hearing, we granted leave to Mr Fathullah to adduce, by way of fresh evidence, a witness statement signed by him on 27 November 2012. With the assistance of an interpreter, he attested to the truth of this statement and was briefly cross-examined by Mr Varma. In addition, Mr Soltan addressed us on both of the appeals brought by Mr Fathullah and Mr Varma addressed us relatively briefly with regard to Mr Fathullah's appeal against the principal decision.

At the conclusion of the hearing, we gave leave to Mr Varma to file and serve, on or before 19 June 2013, any further submissions that the Respondents might wish to advance on either or both of the appeals, and we directed that any submissions in reply by Mr Fathullah should be filed and served by 3 July 2013.

In accordance with these directions, submissions from both sides have been filed, and have been taken into consideration in the preparation of the reasons that follow.

the appeal against the principal decision

Outline of facts

The following outline of the facts relevant to this appeal is chiefly drawn from paragraphs [1] to [16] of the principal decision.

The Respondents were the owners of retail shop premises located in Liverpool ('the Premises').

At some point during 2011, Mr Fathullah discovered that the Premises were available for lease. On 6 August 2011 he paid the sum of $3,700 into the trust account of the Respondents' agents, PRD Nationwide Cabramatta ('PRD'). This amount is slightly less than the monthly amount for rent that the parties later agreed on.

On 23 August 2011, the Respondents' solicitors forwarded disclosure documents, a retail tenancy guide and a draft lease to PRD. The Lessor's Disclosure Statement prepared on behalf of the Respondents relevantly indicated as follows: (a) the estimated handover date for the Premises was to be 28 September 2011; (b) the Premises were to be used as a mixed business and grocery store; (c) the term of the lease was to be for a period of 3 years; (d) the annual rent was to be $45,000 plus GST; and (e) there would be an initial three week rent free period.

In the Lessor's Disclosure Statement, a question as to whether there were 'current legal proceedings in relation to the lawful use of' the Premises was given the following answer:-

Yes - Challenge to mortgagee's default enforcement judgment in the Supreme Court.

On 22 September 2011, having received these documents from PRD, Mr Fathullah signed the Lessee's Disclosure Statement.

In a letter to Mr Fathullah's solicitor dated 6 or 26 October 2011 (the date is not clear on the copy tendered to the Tribunal), the Respondents' solicitors enclosed duplicate copies of a lease for signature by Mr Fathullah and indicated (inter alia) that a bank cheque for three months' rent was required from him. They also stated as follows:-

The Lease is conditional upon successful outcome of lessors' action in the Supreme Court to set aside Mortgagee (sic) default judgment with regard to the property subject of the Lease.

Having executed the memorandum of lease (hereafter 'the Lease'), received a key from PRD and paid them a further sum of $7,500, Mr Fathullah took possession of the Premises on or about 19 November 2011. The commencement date shown on the Lease was 24 October 2011.

In an email dated 22 November 2011 to PRD, Mr Varma advised them that Mr Fathullah had 'moved in', having claimed to have paid them '2 plus 1 months rent'. He asked PRD whether they had 'the Deposit and the Bank Guarantee in order' and requested that they deposit two months' rent into the Respondents' nominated account 'by today'.

Subsequently, PRD forwarded a payment of rent to the Respondents and also applied part of the funds received from Mr Fathullah to payment of their 'letting fee' and other expenses.

In order to prepare for trading, the Applicant purchased a counter, shelving and a hot food bar and set about having these items installed.

Towards the end of his first week of occupation, there was heavy rain. It caused the ceiling of the toilet inside the Premises to collapse partially. This in turn allowed water to penetrate into the Premises.

On 29 November 2011, a postal envelope addressed to the Respondents was delivered to Mr Fathullah at the Premises whilst he was undertaking his fit out work. He passed it on to the Second or the Third Respondent, who opened the envelope in Mr Fathullah's presence and made observations leading him to understand that he needed to speak to Mr Varma about the Premises. He gained the impression that there had been some form of communication of an adverse nature from the Respondents' mortgagee.

On the following day, Mr Varma told Mr Fathullah to cease using the Premises or undertaking any activities within it. He claimed that the Respondents needed to have their insurance company repair the damage that had been caused by the rain. Following this conversation, Mr Fathullah returned the original set of keys to Mr Varma.

On or about 2 December 2011, Mr Fathullah obtained a bank guarantee in the sum of $12,375 in favour of the Respondents.

The legal proceedings referred to in the Lessors' Disclosure Statement and in the letter of 26 October 2011 from the Respondents' solicitors to Mr Fathullah's solicitor did not conclude favourably for the Respondents.

Wishing to be admitted back into the Premises, Mr Fathullah continued unsuccessfully to ask about progress with the repairs that he understood to have been required by the Respondents' insurer.

On 24 January 2012, he tried to enter the Premises, using a copy key. But he discovered that the locks had been changed. At about this time, he learnt that the change had been effected by the Sheriff, as a result of action taken by the Respondents' mortgagee.

Mr Fathullah succeeded later in recovering the sum of $2,950 from PRD. While giving evidence before the Tribunal, he conceded that he was also able to recover the hot food bar, counter and shelving from the mortgagee.

The claims advanced by the parties

In his Application, filed on 27 August 2012, Mr Fathullah sought from the Tribunal an order for payment of the sum of $8,250, representing the balance of the rent that he had paid to PRD and had not been refunded.

On 24 September 2012, after he had received assistance from Mr Soltan, he filed an Amended Application. This included additional claims of $7,500 for lost fixtures and fittings, $760 for the cost of mediation and $21,450 for the loss of 33 weeks' wages.

In a letter sent by Mr Varma to the Tribunal on 29 August 2012, the Respondents made a claim for 'balance of rental payments due in an amount of $11,250, and a further amount for interest'. A number of documents relating to the dispute between the parties were attached to this letter.

On 2 October 2012, the Respondents filed a document entitled 'Amended Application for Original Decision'. It set out claims for 'liquidated and unliquidated damages for the sum of $13,800' and 'compensation for the sum of $300,000' and sought an order to 'restrain Applicant (Nihad) from entering and causing any future disruptions to our principle (sic) place of business and residence".

The issue of liability

The Tribunal's reasons. It was not disputed that the Lease was governed by the Retail Leases Act 1994 ('the RL Act').

In the principal decision, the Tribunal dealt relatively briefly with questions of liability. The relevant passages are at paragraphs [6] and [26 - 30] of its reasons.

At [26] and [28], it described the claims made by the Respondents as 'nebulous' and 'fanciful' and 'not supported by any cogent evidence'. The reasons that it gave (at [27 - 28]) were as follows:-

27 The Respondents claim an entitlement to payment of rent from the Applicant in circumstances where at no time was exclusive possession or quiet use and enjoyment of the Premises given to the Applicant. The Respondents say that the reason why the Applicant was unable to return to the Premises was due to his breach of the lease agreement in not providing an insurance certificate and a security deposit, but this alleged reason was never communicated to the Applicant; it is also contradicted by the fact that the Applicant was allowed into possession of the Premises in order to effect installation of fittings during a three week rent holiday period but subsequently was asked to leave the Premises to permit repairs to take place and was unable to again re-enter due to locks being changed by the Respondents' mortgagee.

28 The Respondents' claim that it was the Applicant's failures which caused the Premises to be taken by their mortgagee is fanciful. There is simply no evidence to support such an assertion. Further, it is quite clear from the very documents which were provided by the Respondents to the Tribunal that the Respondents' bank had taken legal proceedings against them for previous alleged default and that it was likely to seek to take possession of the Premises some time shortly after the Applicant had entered into the subject lease agreement.

At [6], the Tribunal dismissed a specific argument that the Respondents had advanced by way of defence to Mr Fathullah's claim:-

6 Despite the Respondents' submission made during the hearing that the Respondents' stated requirements were not met by the Applicant because no suitable security for rent was provided, it should be here noted that the Tribunal is satisfied from the evidence that a Bank Guarantee dated 2 December 2011 in the sum of $12,375 was obtained by the Applicant in favour of the Respondents and that, in accordance with section 16B of the Retail Leases Act 1994 this form of security was valid and appropriate.

At [29 - 30], it endorsed, in very brief terms, one of the grounds on which Mr Fathullah claimed that the Respondents were liable to him:-

29 It is clear from the evidence that the Applicant executed the lease documents which were provided to him on behalf of the Respondents, and that these executed documents were provided to the Respondents' agent who then allowed the Applicant into possession of the Premises pursuant to the terms of the lease agreement between the parties in order to undertake the agreed fit out work.

30... Due to the Respondents' mortgagee taking possession of the Premises, preceded by the Respondents' request that the Applicant vacate the Premises during the rent free period, the Applicant simply did not obtain any consideration for the rent payments made by him...

Mr Fathullah's submissions. In his submissions to us, Mr Soltan did not question the Tribunal's decision that the Respondents were liable to pay damages to Mr Fathullah. He did however claim, in the course of challenging the Tribunal's assessment of the damages payable, that it erred in not holding the Respondents liable on three further grounds in addition to total failure of consideration: namely, equitable fraud, pre-lease misrepresentation under section 10 of the RL Act and misleading or deceptive conduct under sections 62D and 62E of this Act.

According to Mr Soltan, the Tribunal had erred in not dealing at all with these grounds, even though they had been elaborated in supplementary written submissions that he had filed after the Tribunal hearing. Accompanying those submissions was a copy of a Supreme Court judgment, reported as Perpetual Trustee Company Limited v Varma [2011] NSWSC 1322. This revealed that on 21 October 2011 the Court had dismissed a Notice of Motion that the Respondents had filed, seeking orders (a) setting aside a default judgment that the mortgagee had obtained against them in proceedings for possession of the Premises and (b) granting them leave to file a cross claim. Mr Soltan pointed out that this judgment was delivered three days before the date of commencement stipulated in the Lease to Mr Fathullah.

In the principal decision at [23- 24], the Tribunal mentioned that at the conclusion of its hearing it had rejected an application by Mr Soltan to file supplementary submissions, that Mr Soltan had nonetheless filed such submissions, that the Respondents had done likewise, but that neither of these sets of submissions added anything to the evidence or oral submissions that the parties had provided and that they should not have been filed.

The Respondents' submissions. Mr Varma submitted at the hearing that Mr Fathullah had not complied with the terms of the lease, in particular through not paying rent as required, and that if the mortgagee had not obtained possession of the Premises the Respondents would have terminated the lease. He submitted also (as we understood him) that the Disclosure Statement placed on Mr Fathullah, as lessee, the duty of checking the situation with regard to possession of the Premises.

In his submissions filed after the hearing, Mr Varma did not supplement these submissions in any way.

Our conclusions. For several reasons - including that the Respondents did not file a Notice of Appeal or any documentary evidence purporting to substantiate these claims - this challenge by them to the Tribunal's decision on liability is wholly unmeritorious.

We deal below with Mr Soltan's claim that the Tribunal should have taken into consideration the supplementary submissions that he had filed and held, as argued in those submissions, that the conduct of the Respondents had amounted to equitable fraud, pre-lease misrepresentation and misleading or deceptive conduct.

The issue of damages

At [30], the Tribunal held that Mr Fathullah was entitled to recover the full amount of the rent that he had paid to the Respondents. Since this amount was $11,200 and he had received only $2,950 from PRD by way of repayment, the Tribunal's award of damages to him included the balance ($8,250).

At [37], the Tribunal held that Mr Fathullah should also recover the amount of a fee ($760) that he paid for an unsuccessful mediation of his dispute with the Respondents that had been conducted by the Registrar of Retail Tenancy Disputes under Part 8, Division 2 of the RL Act.

The remainder of the total award of $9,656.38 determined by the Tribunal comprised interest on these two amounts from 19 November 2011 to the date of the principal decision.

As noted earlier, the grounds of Mr Fathullah's appeal concerned the quantification of the damages payable to him. They stemmed from the Tribunal's rejection of a number of additional heads of damage for which he had sought compensation.

It is convenient to deal with these heads of damage one by one, outlining the Tribunal's rulings on each of them, the basis on which Mr Fathullah challenged these rulings, the competing arguments put by the Respondents and our conclusions.

Cost of fixtures and fittings

The Tribunal's reasons. At [31 - 32], the Tribunal gave the following reasons for rejecting Mr Fathullah's claim, in his Amended Application, for an amount of $7,500 representing the cost of the fixtures and fittings that he had installed:-

31 The Applicant seeks payment of a sum of $7,500 in respect of fixtures and fittings. Of this amount, a sum of $600 is said to refer to "sundry items" in respect of which no satisfactory evidence of has been provided to establish the nature or cost of such items. This component of the claim cannot therefore be allowed.

32 The balance amount of $6,900 relating to fixtures and fittings is for the claimed costs of a counter, hot food bar and shelves. A receipt from Petra Equipment in the sum of $400 being the cost of the hot food bar was placed into evidence, as was a hand written piece of paper which seems to be dated 22 February 2012 from someone called "Yacine.a" which refers to sale which took place at Liverpool of "46 bays with 6 shelves" for a total amount of $3,500. In relation to the counter, a receipt dated 3 February 2012 from a person "Raj" indicating that on that date there was a cash payment of $3,000 made by "Nehad", was put into evidence. These post dated and somewhat vague receipts are clearly an unsatisfactory basis for establishing any loss suffered by the Applicant. What further complicates this component of the claim is that, during giving evidence at the hearing, the Applicant conceded that he been able to successfully recover these items from the mortgagee. There was no further evidence as to what the Applicant had done with these items or whether these items had subsequently been sold or otherwise utilised by him. In these circumstances, there is simply insufficient evidence to establish the extent of any loss suffered by the Applicant in relation to the fixtures or fittings which were installed at the Premises.

Three further aspects of the evidence on this question are usefully mentioned here.

First, Mr Fathullah's affidavit contained assertions by him that he paid the amounts claimed in respect of the hot food bar ($400), the shelves ($3,500) and the counter ($3,000). These assertions were not challenged in cross-examination or contradicted in the Respondents' evidence.

Secondly, the evidence included a number of photographs showing the counter and shelves in place at the Premises. The Tribunal accepted that they had been taken during the week commencing 21 November 2011.

Thirdly, on the receipt for $3,000 signed 'Raj' and referring to the counter, the surname 'Singh' is discernible. The relevance of this will appear shortly.

Mr Fathullah's case in the appeal. In the witness statement that we admitted into evidence at the hearing of the appeal (see [18] above), Mr Fathullah testified as follows: (a) during June 2012, he retrieved his fixtures and fittings from the mortgagee of the Premises; (b) he stored them until November 2012 in a garage belonging to a friend, Muhaini Ismail; (c) he paid a total of $1,000 in cash as removal and storage fees; and (d) on or about 5 November 2012, he sold the fixtures and fittings to M & N Halal Meat & Indo Pak Groceries for the sum of $3,000.

Attached to this witness statement were (i) a statement by Mr Ismail that he rented his garage to Mr Fathullah from June to November 2012 at a monthly rental of $200; (ii) a statement by Tahsin Syed, on the letterhead of M & N Halal Meat & Indo Pak Groceries, that on an unspecified date he bought 'a service counter and the shelves' from Mr Fathullah for $3,000; and (ii) a copy of a photograph that, according to Mr Fathullah, showed the counter and shelves after their installation in Mr Tahsin's premises.

During cross-examination by Mr Varma, Mr Fathullah stated that he had advertised the fixtures and fittings for sale on a website and that Mr Tahsin had responded to this advertisement.

In his submissions, Mr Soltan argued that the Tribunal had erred in law in stating at [32] that 'These post dated and somewhat vague receipts are clearly an unsatisfactory basis for establishing any loss suffered by the Applicant'. He claimed that this reflected 'a legally erroneous view that a post dated receipt for a service will disentitle the recipient of the receipt from using it as a basis to quantify his loss'.

He submitted also that (a) the photos tendered by Mr Fathullah depicted the service counter that had been purchased, (b) 'common sense' led to the conclusion that 'this service counter has incurred cost to the Applicant' and (c) it was 'natural' that the receipt for the counter should be post-dated.

In response to a claim (made in Mr Varma's submissions filed after the hearing) that the cost of the counter was only $600, Mr Soltan argued that the photographs were sufficient in themselves to show that the counter must have cost significantly more than that amount.

With reference to the observations made by the Tribunal (at [32]) about Mr Fathullah's retrieval of the hot food bar, shelves and counter from the mortgagee, Mr Soltan argued as follows: (a) in view particularly of the Respondents' conduct in granting a lease to Mr Fathullah when they knew that in all probability the mortgagee would take possession of the Premises, he should have been awarded the full value of these items, without being subject to any duty to try to resell them; (b) it was not his fault that he did not succeed in selling these items until after the Tribunal's hearing; and (c) if the amount obtained on his resale of them did have to be taken into account, his witness statement provided sufficient evidence to enable the Appeal Panel to calculate how much should be deducted from his costs incurred in purchasing them.

On this basis, Mr Soltan maintained, as his primary submission, that we should award under this head of damages the total figure of $6,900 spent by Mr Fathullah in purchasing the hot food bar, shelves and counter. In the alternative, he maintained that the proceeds of the sale of these items ($3,000) should be deducted from the claim, but the cost of storage ($1,000) should be added to it, producing a figure of $4,900. He further submitted that interest should be added.

In support of these submissions, Mr Soltan cited the Appeal Panel's decision in O'Neill v Henry (RLD) [2010] NSWADTAP 40. In this case, a sublessee of retail shop premises (Mr O'Neill) who had been locked out of them unlawfully by the sublessor (Mr Henry) claimed damages representing (amongst other things) the cost of equipment that he had recently purchased ('Head 2') and the value of stock on hand ('Head 3'). At [46 - 58], the Panel dealt as follows with these heads of damage:-

Reassessment of Heads 2 and 3

46 On both of these matters, Mr O'Neill's submissions are: there was uncontested evidence as to the value of the goods, most of which were purchased within a relatively short time prior to the lockout; he had been denied access, by virtue of the lockout, to the goods, thus denying him an opportunity to have them valued; any alleged difficulty in having them valued should not be a bar to recovery, given that the courts have acknowledged that difficulty in quantifying damages is no bar to recovery. As to the last point, the submissions refer to Turner, Australian Commercial Law (23rd ed), 203 which cites Jones v Schiffman [1971] HCA 52; (1971) 124 CLR 303 at 308 per Menzies J; Chaplin v Hicks [1911] 2 KB 796; and Howe v Teefy (1927) 27 SR (NSW) 301.

47 We will begin with Head 3, and then turn to Head 2, where there is a difference of opinion.

48 Head 3. Mr O'Neill's first affidavit filed in the proceedings referred to the loss of the 'value of food and like items' and said, as to their amount, 'not yet ascertained'. At this point, there was no satisfactory evidence of loss. In his second affidavit (Ex B), he attached what he described as a 'true copy of a list of food and other stock which was on the Premises at the time I was locked out'. He said 'I have put the list together from my records and memory of what was in the Premises and have priced the stock and other items from purchase records and from my recollection of the costs thereof'. He claimed a total of $6,320. The main item was for drinks ($3,500).

49 He did not file any business records, receipts or other documentation supporting the stock claims. Mr O'Neill's solicitor asked him at hearing to explain why he did not have any formal financial records and had not completed a tax return re the business. He said that he was waiting for these proceedings to come up, and that left in the shop was a drawer full of invoices that he would need to file tax returns (tspt, 16/03/09, 11.04).

50 This explanation was not rejected. It is a plausible explanation, and should be accepted. In our view, no serious issue as to present value arises. These are all items of a usual kind in a business of this type. There is a mix of perishable (e.g. food ingredients) and non-perishable items (e.g. bottled soft drinks). He was not challenged on these valuations. In our view, Mr O'Neill should be compensated in full for the items claimed under this head.

51 Head 2. Mr O'Neill's proof is contained in his second affidavit (Ex B), at annexure 'B'. They are all, in our view, items of a usual kind in a business of this type. He states at para 11 of his affidavit that the amounts he gives represent their 'approximate value'. Receipts were provided for approximately $4,600 worth of the amount claimed.

52...

53 There is a division of views on whether any damages should be awarded to Mr O'Neill in respect of these items. The amounts claimed by Mr O'Neill are supported by receipts. They show the purchase price of the various items, and these amounts are claimed.

54 President's Opinion. As the subject items were ones used in the business, they would, I think, have lost much of their value by the time of the lockout. In my view, Mr O'Neill got the benefit of his expenditure during the entire period his business was a going concern. It was not 'wasted expenditure' in the way identified by cases such as Amann Aviation and McRae v Commonwealth Disposals Commission [1951] HCA 79; (1951) 84 CLR 377.

55 As noted earlier, the Tribunal found that Mr O'Neill had ceased to operate the business as at the date of the lockout. It is not appropriate for there to be an award compensating a tenant in these circumstances for the original price paid for the equipment. Such an award would deliver him a windfall exceeding his actual loss.

56 Subject to adequate proof, Mr O'Neill would, I consider, be entitled to the present value of those items. I do not consider it appropriate for me to attempt an estimate as to the likely value of used goods of this type. This is a matter, it seems to me, that could have been the subject of evidence from Mr O'Neill as a person with some experience in the industry. None was provided. I do not think I should hazard my own guess. It is likely, I suspect, that most of the items would have had little or no market value. So for different reasons to the Tribunal below, I would also not make any award in respect of Head 2.

57 My colleague, Judicial Member Molloy, has a different view. As the difference is one of law, and the judicial members are equally divided, my opinion, as President, must prevail. See ADT Act, s 78.

58 Judicial Member Molloy's Opinion. The claim for loss of the "value of food and like items" is made by the owner/proprietor of the business (see Mr O'Neill's second affidavit). It was not traversed by either respondent and Mr O'Neill was not cross-examined on the matter. Both Mr O'Neill and Mr Henry were in the same business and would be expected to know, or be able to express an educated opinion on, this issue. Thus, absent some disentitling factor, Mr O'Neill's evidence ought to be accepted. It is unremarkable and within his knowledge. In my view this head of damage should be allowed in full.

Mr Soltan placed particular reliance on paragraphs [46], [50], [53], [54] and [58].

The Respondents' case in the appeal. In their Notice of Reply to Appeal, the Respondents maintained that Mr Fathullah was not entitled to any damages under this head because he had removed all his fixtures and fittings from the Premises. They added that the photographs were 'irrelevant' because they could have been taken at any time.

At the hearing, Mr Varma did not address this issue. In their submissions filed after the hearing, the Respondents argued that the Tribunal 'correctly denied' Mr Fathullah's claim for damages under this head, on the grounds that the invoices were 'vague and unsatisfactory, being post-dated and not genuine' and that he 'failed to provide relevant evidence on actual costs, supported by authentic documents'.

The Respondents also alleged in these submissions that the actual amount paid for the counter was only $600, not $3,000 as claimed. They attached to the submissions a typewritten one-page statement, headed 'To Whom It May Concern' and displaying the typewritten words 'R Singh' in a location where one might expect to find a signature. The gist of the statement was that the maker of it, having been approached by 'Mr Nihad' to provide 'a quote to make a front service counter and few miscellaneous work' at the Premises, had quoted a total figure of $3,000 but had only installed the 'front service counter', for which the sum of $600 was paid.

Our conclusions. We reject this 'tender' by the Respondents, made in appeal submissions filed by leave after the hearing, of an unsigned document purporting to provide evidence on a disputed factual matter. We also attach no weight to their assertion that Mr Fathullah himself removed the fixtures and fittings because there is no evidence to support it and the finding of the Tribunal was that the mortgagee had removed them.

We agree with Mr Soltan that the passage that he cited from O'Neill v Henry (RLD) [2010] NSWADTAP 40 lends significant support to his submissions. It provides authority for the following propositions: (a) any alleged difficulty in having Mr Fathullah's goods valued should not be a bar to recovery, given that the courts have acknowledged that difficulty in quantifying damages is no bar to recovery (see O'Neill v Henry at [46]); (b) the case for accepting his evidence on this question is strengthened by the fact that it was not contested, except by a very late 'tender' that we have rejected (see [46], [50] and [58]); and (c) the receipt accompanying his verified evidence as to the prices that he paid can and should be taken to constitute sufficient evidence (see [51], [53], [54] and [58]).

We agree also with Mr Soltan's submission that the President's decision in O'Neill v Henry against awarding damages under Head 2 was not based on the informal nature of the evidence as to value adduced by Mr O'Neill, but on the consideration that this evidence related to the value of the goods at the time of purchase and did not take into account that through being utilised in his business they had become 'used goods'. Because Mr Fathullah was compelled to remove the hot food bar, shelving and counter from the Premises very soon after he had installed them, and did not at any stage use them for the purposes of his business, this consideration does not arise in the present proceedings.

We accordingly conclude that the Tribunal, in ruling at [32] that the 'post dated and somewhat vague receipts' were 'clearly an unsatisfactory basis for establishing any loss suffered by the Applicant', did not take sufficient account of the propositions that we have just extracted from the Appeal Panel's decision in O'Neill v Henry. They produce the outcome that informal documentary evidence of a price paid to a supplier of goods or services, coupled with verified and unchallenged evidence from the purchaser that this price was actually paid, should not be ruled out as insufficient evidence of value in retail tenancy proceedings in the Tribunal.

This stance taken by the Tribunal constitutes a sufficient error, in our opinion, to warrant granting leave, as sought by Mr Soltan, for this appeal to extend to the merits under section 113(2)(b) of the ADT Act.

We do not, however, accept Mr Soltan's submission that the award of damages to Mr Fathullah under this head should take no account of the proceeds of his sale of the relevant items to M & N Halal Meat & Indo Pak Groceries. To do so would be in conflict with the well-established and fundamental principle - to which the President specifically referred in the final sentence of paragraph [55] of O'Neill v Henry - that damages should reflect the 'actual loss' sustained by the person to whom they are awarded. It follows that the amount obtained by Mr Fathullah through reselling the hot food bar, shelving and counter and the amount paid by him for storage must be taken into account in calculating damages under this head.

In the final sentence of paragraph [32] of the principal decision, the Tribunal observed that by virtue of Mr Fathullah's disclosure that he had retrieved these items from the mortgagee, there was 'simply insufficient evidence to establish the extent of any loss suffered by the Applicant in relation to the fixtures or fittings which were installed at the Premises'.

That evidence has, however, been put before us, in the form of Mr Fathullah's witness statement dated 27 November 2012 and his answers given in cross-examination. It is undoubtedly relevant to the assessment of the actual loss that he sustained. Having admitted it, we are bound to take account of it, because once an appeal has been extended to the merits, the task of the Appeal Panel is to determine 'what the correct and preferable decision is having regard to the material then before it' (see ADT Act, section 115(1) and the discussion of these matters in Building Professionals Board v Hans (GD) [2008] NSWADTAP 13).

On the question that we have been considering - namely, Mr Fathullah's claim for damages representing his loss sustained on account of purchasing fixtures and fittings that he intended to use in his business in the Premises - the award should take the form for which Mr Soltan argued in the alternative. It should be for $4,900, representing the purchase price of the goods ($6,900) and the cost of their storage ($1,000) less the proceeds of their resale ($3,000).

Loss of wages

The Tribunal's reasons. Mr Fathullah claimed compensation from the Respondents for wages that he would have earned but for their conduct. The Tribunal rejected this claim. At [33 - 36], it summarised the evidence on the matter and its reasons for so deciding:-

33 The Applicant also claims a loss of wages at $650 per week for a period of 33 weeks from the beginning of November 2011 until the end of May 2012. He claims that when he left his job with MRM Supermarket in order to begin setting up his new business at the Premises, he was earning $650 per week. Within his affidavit evidence, the Applicant says that, in relation to this part of his claim:

"This experience has left me traumatised emotionally and financially and I could not resume my normal life for another 4 months".

34 In support of this claim for loss of wages, the Applicant also relies upon a letter dated 13 September 2012 from a person by the name of Mahmoud Kahdir who describes himself as the general manager and proprietor of MRM Supermarket. The letter states that the Applicant had worked for Mr Kahdir for one year prior to 31 October 2011 and had "earned a weekly wage of $650". Mr Kahdir further states in his letter that "I'm happy to give evidence to that effect in any court"; however, Mr Kahdir did not attend to give evidence during the hearing. This absence is not of itself fatal to the Applicant's claim for loss of earnings, but may have addressed the problems outlined below.

35 The claim for loss of earnings is quite unsatisfactory. There is no apparent reason why payslips or banking records, a group certificate or a tax return have not been provided to the Tribunal to support the amount claimed. It is also unclear whether the "weekly wage of $650" is a gross figure or a net figure. The evidence given by the Applicant does not satisfactorily explain why he did not return to MRM Supermarket or to any other type of employment at least by late January 2012 when it was abundantly clear that he had been denied access to the Premises. Within his affidavit as recited above, the Applicant says that he was unable to return to employment because he was "traumatised emotionally and financially"; a quite different reason for the Applicant not returning to work was put forward upon his behalf by Mr Soltan, who submitted that the reason why the Applicant did not return to employment until June 2012 was because his legal position in relation to the Premises and the lease was unclear.

36 The Tribunal is not satisfied on the balance of probabilities that the Applicant has lost the amount claimed nor can the amount of any loss of income be determined with any satisfactory precision. Further, the Applicant has failed to show that he has mitigated any loss of income. Accordingly, the claim for loss of income is not allowed.

Mr Fathullah's submissions. In challenging this decision, Mr Soltan relied again on the proposition that any difficulty experienced by a court or tribunal in quantifying damages should not be treated as a bar to recovery. As additional authorities, he cited Commonwealth of Australia v Amann Aviation Pty Ltd [1991] HCA 54; (1992) 174 CLR 64 at [31] and Uszok v Henley Properties (NSW) Pty Ltd [2007] NSWCA 31 at [134 - 136].

A second proposition that he repeated was that unchallenged evidence should prima facie be accepted, unless it has been contradicted by other evidence or is inherently illogical or improbable. He referred here to Hull v Thompson [2001] NSWCA 359 at [21] and Ali v Nationwide News Ltd [2008] NSWCA 183 at [112].

With specific reference to the Tribunal's observation (at [35]) that there was 'no apparent reason why payslips or banking records, a group certificate or a tax return have not been provided to the Tribunal to support the amount claimed', and its ruling (at [36]) that the amount of any loss of income could not be 'with any satisfactory precision', Mr Soltan relied on a passage in the Tribunal's decision in ACN 079 830 596 Pty Ltd (trading as Jolly Joe's Fish 'n' Chips) v Wallis Lake Fishermen's Co-operative Ltd [2007] NSWADT 297.

In this case, the Tribunal was constituted by its President, O'Connor DCJ, sitting with two advisory members. The Tribunal found that the respondent, which was the lessor of retail shop premises, had unlawfully evicted the applicant lessee in a manner that it held to amount to unconscionable conduct. The lessee was, in the Tribunal's words, 'Mr Morris's family company'. In assessing the damages to be paid by the lessor, it said (at [117 - 125]):-

117 Mr Morris presented as an experienced operator of businesses of fish and chips-type takeaway businesses. Through the years at the Co-op he had one regular employee, Mark Davies. His wife assisted as needed. He also engaged other casuals from time to time, the main one mentioned in these proceedings being a Mr McNally. His practices in relation to keeping records of inputs appeared to be of a usual kind...

118 He was not able to produce at hearing the original vouchers and till tapes, or other source documents that had been used by his accountants. His evidence was that since being evicted from the takeaway he had moved home. In the course of the move he left out for collection four boxes of business records, including the kind of records sought. His evidence was that they were mistakenly dumped by the removalist rather than moved to his new home. The Tribunal accepts this evidence.

119 There was substantial 'secondary' documentation made available (via a notice to produce) and before the Tribunal. They included the earlier statements prepared by Mr Atkinson and Mr Edmunds that preceded their final reports; and banking records of electronic transfers to the Morris's business and personal bank accounts. The Tribunal has no reason to doubt the evidence of Mr Lindfield and Mr Atkinson that they prepared statements in the usual way relying on documentation of an appropriate kind supplied by Mr Morris. Both Mr Lindfield and Mr Atkinson presented as credible and reliable.

120 Mr Morris acknowledged candidly at a number of points in cross-examination that his record keeping practices were of a relatively rudimentary kind, and that, as to the treatment of items of expenditure and income, he left that to his accountants. He was also candid in acknowledging that some of his practices, especially in dealing with payment of the wages and the like, may have implicated him in conduct that was not in compliance with external obligations.

121 In the Tribunal's opinion, it will often be the case that businesses of the kind under notice in this case will not readily withstand the 'blowtorch' of scrutiny across the range of legal obligations that bear on the employment of staff, maintenance of records, and taxation requirements. The business was a small one, it relied on seasonal trade, it dealt overwhelmingly in cash, customer purchases would have been, overwhelmingly, in small amounts of cash, and it employed staff as needed with the exception of one or two regulars.

122 The Tribunal is not in the best position in an inquiry of this kind to reach final conclusions of the degree of specificity urged by counsel for the Co-op in relation to particular issues of legal compliance. The obligations to which attention was drawn are sometimes complex, and the ultimate determination of compliance lies with other regulatory bodies and processes.

123 The Tribunal must, in the end, make the best assessment of all the evidence before it: Fink v Fink (1946) 74 CLR 127 at 143; Biggin & Co v Permanite Ltd [1951] 1 KB 422; and recently, Uszok v Henley Properties (NSW) Pty Ltd [2007] NSWCA 31 per Beazley JA at [135]-[137]. The evidence in this case, in my opinion, is adequate to that task. I do not regard this as a case where the applicant has failed to adduce evidence that might have assisted the Tribunal in its task: see further, Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) [2003] HCA 10, (2003) 77 ALJR 768 at [38] per Hayne J.

124 Mr Atkinson was pressed by counsel for the Co-op on what evidentiary basis he had for accepting Mr Morris's advice that he and his wife took $600 a week in cash from the till in drawings. He said that this was consistent with what, in his experience dealing with small businesses of this kind, was a likely level of drawings.

125 In my view, Mr Atkinson's estimate in this regard fits in with the break-up seen in the set of figures with which he and Mr Morris have no connection...

A further element in the reasoning of the Tribunal in the present case that Mr Soltan claimed to involve error on its part was its statement (at [36]) that Mr Fathullah had 'failed to show that he has mitigated any loss of income'. Mr Soltan submitted that the duty of an innocent party to mitigate his or her damage is 'not a high one' and that it was 'not obvious' what a reasonable person in Mr Fathullah's position could have done in this regard. On this question, he again cited ACN 079 830 596 Pty Ltd (trading as Jolly Joe's Fish 'n' Chips) v Wallis Lake Fishermen's Co-operative Ltd, referring to paragraph [137]:-

137 The Co-op submitted that a discount should be made on the basis that the applicant had failed in its duty to mitigate its loss. The closing submissions state: 'The Applicant has failed in all respects to take any steps to mitigate its loss and damage arising for [sic] the asserted conduct of the Respondent. No attempt has been made by it to take possession or start any business using the equipment which it had in the premises. This should mitigate against any award of damages or compensation.' As the applicant notes in its closing submissions, the duty of the innocent party not to mitigate is not a high one: Sacher Investments Pty Ltd v Forma Stereo Consultants Pty Ltd [1976] 1 NSWLR 5 at 9. It is not obvious to me what 'reasonable steps' that a 'reasonable man' in the shoes of Mr Morris could have taken to mitigate the loss in the present circumstances.

Mr Soltan accepted the validity of the Tribunal's observation (at [35]) that it was 'unclear whether the "weekly wage of $650" is a gross figure or a net figure'. He submitted that the award that we should make under this head should be calculated on the basis that it was a gross figure.

The Respondents' submissions. In their Notice of Reply to Appeal, the Respondents stated that they 'did not agree' that Mr Fathullah was out of work 'during the period mentioned' and that one of them had seen him working at MRM Supermarket.

Mr Varma did not address this question at the hearing of the appeal. In their submissions filed after the hearing, the Respondents argued that Mr Fathullah had failed to substantiate his claim because his alleged employer had not attended to give evidence before the Tribunal.

Our conclusions. To a significant degree, we agree with Mr Soltan's submissions. The authorities on which he relied illustrate, in our opinion, that the factors listed by the Tribunal as its grounds for making no award at all under this head of damages were insufficient to justify this conclusion. Our reasons are as follows.

First, there was unchallenged evidence by Mr Fathullah, supported by a letter from Mr Mahmoud Kahdir, to the effect that he received a weekly wage of $650 from MRM Supermarket during the year preceding his brief period of occupation of the Premises. It was open to the Respondents to cross-examine Mr Fathullah on this matter and/or to object to the admission of Mr Kahdir's letter into evidence. They did neither of these things.

Secondly, the considerations outlined by President O'Connor in the passage quoted above (at [92]) from ACN 079 830 596 Pty Ltd (trading as Jolly Joe's Fish 'n' Chips) v Wallis Lake Fishermen's Co-operative Ltd - notably, his observations at [121] - indicate that a rate of remuneration in employment of this nature may be sufficiently established even though the evidence does not include any payslips, banking records, group certificate or tax return. The practical reality may well be that these documents are never prepared. The Tribunal's apparent view in the present case was that their absence was fatal to Mr Fathullah's claim under this head.

Thirdly, the Tribunal's comment that Mr Fathullah 'has failed to show that he had mitigated any loss of income' is at odds with the principle that in contract law the onus on the question of mitigation of damages lies on the 'wrongdoer' (i.e., the party who has been held liable to pay damages), not the 'innocent party'. Furthermore, as Mr Soltan submitted, the standard of the 'duty to mitigate' is not high.

The following passage in the judgment of Giles JA in Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313 at 187 makes these points clear:-

187 A plaintiff who acts unreasonably in failing to minimise his loss from the defendant's breach of contract will have his damages reduced to the extent to which, had he acted reasonably, his loss would have been less. This is often misleadingly referred to as a duty to mitigate, although the plaintiff is not under a positive duty. The plaintiff does not have to show that he has fulfilled his so-called duty, and the onus is on the defendant to show that he has not and the extent to which he has not (TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130). Since the defendant is a wrongdoer, in determining whether the plaintiff has acted unreasonably a high standard of conduct will not be required, and the plaintiff will not be held to have acted unreasonably simply because the defendant can suggest other and more beneficial conduct if it was reasonable for the plaintiff to do what he did (Banco de Portugal v Waterlow and Sons Ltd (1932) AC 452; Pilkington v Wood (1953) Ch 770; Sacher Investments Pty Ltd v Forma Stereo Consultants Pty Ltd (1976) 1 NSWLR 5).

A further matter on which we are in accord with Mr Soltan's submissions is that in the absence of any evidence as to whether the weekly rate of $650 was a gross or a net figure, the former alternative is to be preferred. To adopt this approach is not unfair to the Respondents because it leads to a lower award under this head. According to the income tax rates applying to the 2012 tax year, the tax on a taxable income of $33,800 ($650 x 52) was $4,170. The net annual income that Mr Fathullah was earning before he left MRM Supermarket to take up occupation of the Premises may therefore be taken to have been $29,630.

We part company with Mr Soltan on the question of the period over which an award should be made. The Tribunal said at [35] that Mr Fathullah's evidence did not 'satisfactorily explain why he did not return to MRM Supermarket or to any other type of employment at least by late January 2012 when it was abundantly clear that he had been denied access to the Premises'. At [36], it expressed doubts, which we share, about the conflicting reasons suggested to it: namely (a) that Mr Fathullah was 'traumatised emotionally and financially' (b) that 'his legal position in relation to the Premises and the lease was unclear'. Mr Soltan's submissions to us contained nothing to allay these doubts. In particular, we are not prepared to make a finding of incapacity to work based solely on a claim, unsupported by medical evidence, of emotional and financial 'trauma'.

In our judgment, the period over which Mr Fathullah should receive compensation for loss of wages is the three-month period between 31 October 2011 (when he stopped working for MRM Supermarket) and 31 January 2012 (this is shortly after he knew that his chances of regaining possession of the Premises were nil, or virtually nil). The appropriate amount is therefore one quarter of the figure that we have determined as his net annual income from his prior employment. Rounded down slightly, this amount is $7,400.

Loss of expected profits

At the conclusion of his written submissions relating to the appeal, Mr Soltan indicated that the orders sought by Mr Fathullah were that the Respondent pay him (i) damages 'on account of fixtures and fittings' and for lost wages, (ii) interest and (iii) his costs at first instance.

Earlier in his written submissions, however, and also in oral submissions, Mr Soltan argued that the Tribunal erred in failing to compensate Mr Fathullah for 'all his losses' caused by the Respondents' termination of the Lease. He maintained, as we indicated above at [49 - 50], that it should have made findings against them of equitable fraud, pre-lease misrepresentation and misleading or deceptive conduct, but failed to do so. In this connection, he relied on the fact that at paragraph [60] of its decision in G & M Dawson Pty Ltd v Cripps & Ors (RLD) [2004] NSWADTAP 38, the Appeal Panel appeared to accept a proposition that counsel for the appellant had put to it, to the effect that 'a fraudulent defendant was liable for all damage caused by his or her fraud and could not be permitted to complain that any such damage was not reasonably foreseeable' (see the decision at [46]).

From this starting-point, Mr Soltan developed the argument that we should make a further award of damages to Mr Fathullah, in order to compensate him for deprivation of the profits that he would have made if the Respondents' wrongful conduct had not prevented him establishing and conducting his business in the Premises. Mr Soltan contended that the period covered by this award should not be limited to the three years stipulated in the Lease but should include a further two years, by virtue of the statutory extension of retail shop leases to five years effected by section 16 of the RL Act.

When asked by the Appeal Panel what evidence was available as to the scale of any such profits, Mr Soltan pointed to a statement in Mr Fathullah's affidavit in the following terms:-

Based on my experience working as an assistant manager at MRM Supermarket I estimate that my proposed business would have generated a weekly income in excess of $1500 for the whole family.

We have no hesitation in rejecting this argument put by Mr Soltan. The following three considerations provide ample justification.

First, it was not until Mr Soltan addressed us at the appeal hearing that this claim was clearly formulated as being for damages for loss of profits, or 'expectation damages'. Earlier formulations - for example, in the Amended Application and in the Notice of Appeal - had used vague and unhelpful phrases such as 'unliquidated damages' or 'all losses'. For this reason, the Respondents had insufficient notice of the nature of the claim being pressed.

Secondly, the statement just quoted from Mr Fathullah's affidavit, standing alone, manifestly falls far short of providing acceptable evidence as to what might reasonably constitute the future profits of any business, let alone of a business that never commenced to operate.

Thirdly, it has been established that when the wrongful conduct of a party to a commercial contract prevents another party from carrying on a proposed business for a sufficient period to enable its profitability to be assessed, any award made must be of 'reliance damages', not 'expectation damages'. The following extract (at [38]) from the judgment of Mason CJ and Dawson J in a case that Mr Soltan cited, Commonwealth of Australia v Amann Aviation Pty Ltd [1991] HCA 54; (1992) 174 CLR 64, provides ample authority:-

It should be observed that, in a case where it is not possible to predict what position a plaintiff would have been in had the contract been fully performed ... it is not possible as a matter of strict logic to assess damages in accordance with the principle in Robinson v Harman... But the law considers the just result in such a case is to allow a plaintiff to recover such expenditure as is reasonably incurred in reliance on the defendant's promise. In this case, the law assumes that a plaintiff would have at least recovered his or her expenditure had the contract been fully performed. It will still be open to a defendant, however, to argue that, notwithstanding it is impossible to assess what profits, if any, the plaintiff would have made had the contract been fully performed, the expenditure claimed by a plaintiff would nevertheless not have been recovered ...

In a case decided in the Tribunal under the RL Act, Sarker and anor v World Best Holdings Limited and anor [2008] NSWADT 75, this passage was adopted and applied (see [236 - 248]). The Court of Appeal endorsed the Tribunal's approach: see World Best Holdings Limited v Sarker [2010] NSWCA 24 at [74 - 82].

We will mention finally that the awards relating to specific heads of damage that we have held appropriate in this case - repayment of rent, net cost of fixtures and fittings and loss of wages - are all instances of 'reliance damages'.

The mediation fee

As mentioned above, the damages awarded to Mr Fathullah by the Tribunal included the amount ($760) of a fee that he had paid for an unsuccessful attempt by the Registrar of Retail Tenancy Disputes to resolve his dispute with the Respondents by mediation.

The Tribunal held to this effect without any discussion of the matter. There was also no discussion of it in the appeal.

In our opinion, such an award should not be made. It is in conflict with the following provision (section 66(2)) of the RL Act governing mediation by the Registrar:-

(2) The costs of and associated with formal mediation before a mediator of a retail tenancy dispute or other dispute or matter under arrangements made by the Registrar are to be paid by the parties to the mediation in such proportions as they may agree among themselves or, failing agreement, in equal shares.

Since there was no agreement between the parties as to the payment of these costs, this provision states that the parties must pay them in equal shares. In the absence of any authority on the matter (so far as we are aware), our opinion is that the provision precludes any claim by a party succeeding in later litigation to recover them from an unsuccessful party.

As we said earlier, section 115(1) of the ADT Act requires to reach the 'correct and preferable decision' on the material before us, since we have granted leave for this appeal to extend to the merits. Accordingly, we should correct this error (as we perceive it) by the Tribunal, even though neither party referred to it in their submissions.

Our orders relating to the principal decision

For the foregoing reasons, the award of damages made to Mr Fathullah by the Tribunal should be set aside and the damages should be recalculated as follows.

The principal amount to be awarded should have the following components: Refund of rent, $8,250; Loss on fixtures and fittings, $4,900; Loss of wages, $7,400. The total of these is $20,550.

Interest should be added, as from 19 November 2011, being the date on which Mr Fathullah moved into the Premises. It is an appropriate starting-point, because it lies roughly midway between 6 August 2011, the date of his earliest loss (i.e., his first payment of rent), and the date of his last loss (on or about 31 January 2012, when he would have received his last instalment of wages).

The rates to be applied should not exceed those payable on a judgment debt of the District Court: see section 72A(3) of the RL Act. These rates of the District Court are commonly employed in decisions of the Retail Leases Division. Calculated up to the date of the present decision, the amounts of interest payable on the principal sum of $20,550 are as follows:-

19.11.11 to 31.12.11 - 42 days @ 10.75% - $254.20

01.01.12 to 30.06.12 - 6 months @ 10.25% - $1,053.19

01.07.12 to 31.12.12 - 6 months @ 9.5% - $976.12

01.01.13 to 31.06.13 - 6 months @ 9% - $924.75

30.06.13 to 08.08.13 - 39 days @ 8.75% - $192.13

Total amount for interest - $3,400.39

The total amount of damages to be awarded is accordingly $23,950.39.

the costs decision

The Tribunal's reasoning

In the costs decision, as indicated earlier, the Tribunal rejected Mr Fathullah's application for a costs order against the Respondents. It commenced its discussion of the matter by reproducing the terms of section 88 of the ADT Act. By virtue of section 77A of the RL Act, this is the applicable provision.

It is sufficient here to quote subsections (1), (1A) and 2 of section 88:-

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.

The Tribunal then described the main features of subsections (1) and (1A). In the course of doing so, it referred (at [4]) to the list of factors in paragraphs (a) to (e) of subsection (1A) as 'non-exhaustive'. Such a description is justifiable because under paragraph (e) the Tribunal is to have regard to 'any other matter that the Tribunal considers relevant'.

Having outlined some of the established principles regarding the application of the criterion of 'fairness' to proceedings in the Retail Leases Division, the Tribunal turned its attention to the status of Mr Soltan as Mr Fathullah's agent in the present proceedings. It noted that under section 77C of the RL Act, Mr Fathullah was entitled to appoint Mr Soltan as an agent to represent him without being required to obtain the leave of the Tribunal. But for section 77C, such leave would be required under section 71 of the ADT Act. The Tribunal pointed out also that according to the Appeal Panel's decision in B & L Linings Pty Ltd v Chief Commissioner of State Revenue (No 6) (RD) [2012] NSWADTAP 26, the Tribunal may award costs to a successful party who was represented by an agent who was not an Australian legal practitioner.

The Tribunal then outlined (at [15 - 20]) a number of aspects of Mr Soltan's representation of Mr Fathullah that, in its view, militated against any award of costs being made to Mr Fathullah. For the purposes of the present decision, it is necessary to reproduce these paragraphs in full:-

15 At the hearing of these proceedings, the Tribunal did not restrain the right of audience of Mr Soltan. However, material filed on behalf of the Applicant indicated that the Applicant was being represented by a business called "The Retail Leases Doctor" that was owned by an incorporated entity of which Mr Soltan was a director. At the commencement of the hearing, Mr Soltan confirmed to the Tribunal that he was appearing for the Applicant as the representative of the registered business "The Retail Leases Doctor"; Mr Soltan undertook to file a copy of the registration document for this business with the Tribunal within the ensuing week. It transpired from the document then later filed by Mr Soltan that no such registered business existed prior to or at the date of the hearing, and that this business name was registered by him some days afterward.

16 The fact that the Tribunal was misled by Mr Soltan as to the registration of the business "The Retail Leases Doctor", when such business had been put forward as representing the Applicant in these proceedings, is another factor which may be taken into account when considering whether it is fair to make a costs order in favour of the Applicant pursuant to section 88 of the ADT Act.

17 The Applicant's claim for costs is specified to be in the sum of $10,197; this amount is a relevant factor to take into account pursuant to section 88 when considering the Applicant's application for a costs order, particularly in these circumstances where the amount claimed for costs exceeds the amount of compensation which has been ordered in the original decision to be paid to the Applicant by the Respondents.

18 The total costs amount is said to be based upon a costs agreement which has been filed with the Applicant's submissions. The relevant document recites that the parties entering into the agreement are the Applicant and a business referred to as "The Retail Leasing Doctor", which is a trade name different to the business name which was subsequently registered some weeks later by Mr Soltan on behalf of his company Wentworth Warehousing Pty Ltd.

19 The costs agreement contains some provisions which are common in costs agreements entered into between lawyers and their clients, but also contains provisions which are uncommon in such agreements, are expressed in quite complex language, and include a purported disclaimer from liability on the part of Mr Soltan or the business "The Retail Leasing Doctor" for any negligent advice, a further limitation of liability on the part of Mr Soltan or the business set at such amount of costs as may be payable by the Applicant under the agreement, and a right of novation or assignment of rights under the agreement reserved to Mr Soltan or his business.

20 It is clear to the Tribunal, having observed the Applicant giving evidence during the proceedings, that his knowledge of English is very poor; the written submissions filed upon his behalf also assert this to be the case. No material has been provided which can comfortably satisfy this Tribunal that the costs agreement is fair, or that it has been properly understood by the Applicant before he apparently signed the document on an unspecified date. For the reasons set out above in this and the preceding two paragraphs, the Tribunal is not satisfied that the costs agreement is enforceable against the Applicant; accordingly, neither the agreement nor the amount of costs claimed to be payable by the Applicant to his agent should be taken into account in deciding whether an order should be made that the Respondents pay the Applicant's costs.

At [21 - 23], the Tribunal compared the relative strengths of the parties' claims. It stated that the Respondents' case 'certainly lacked legal foundation or real factual basis', but that Mr Fathullah's claims for loss of fixtures and fittings and for loss of earnings 'also failed, due to a substantial lack of evidence'. It described as 'impermissible' Mr Soltan's attempt, in his submissions relating to costs, to introduce fresh evidence in support of these claims. At [23], it summarised its views on the merits of the parties' cases as follows:-

23The conclusion reached by the Tribunal is that each of the parties succeeded to a degree in these proceedings, and that each of the parties also failed to establish a significant proportion of their respective claims against the other. The compensation claim brought by the Respondents was certainly the least meritorious of any of the claims brought by either of the parties, and this is a factor which may be balanced against the other factors considered within this decision.

At [24 - 25], the Tribunal rejected claims by Mr Soltan that the Respondents had unreasonably prolonged the hearing of the case and had engaged in misleading conduct during the proceedings.

At [26], it stated its conclusion that it was 'not satisfied that it would be fair to depart from the statutory presumption that each party should bear its own costs'.

The parties' submissions in the appeal

In challenging this decision of the Tribunal, Mr Soltan presented arguments regarding its treatment of seven topics. These arguments were to the following effect:-

1. In discussing his own position as agent for Mr Fathullah, the Tribunal erred in taking into consideration the fact that his business name, 'The Retail Leases Doctor', was not registered until 9 October 2012, four days after the Tribunal hearing. Registration of an entity was not a pre-requisite for trading, but was merely a 'cosmetic' factor that should have been ignored.

2. The Tribunal should not have had regard to the relationship between the amount that he had claimed for his costs and the amount that it had awarded to Mr Fathullah by way of damages. If this was a matter of concern, it was always open to the Tribunal under section 88(2) of the ADT Act to award a lesser sum than he had claimed.

3. The Tribunal erred by giving consideration to the fairness of the costs agreement between himself and Mr Fathullah and ruling that it was in fact unfair. The reasons why this amounted to error by the Tribunal were as follows: (a) the enforceability of this agreement was not within its jurisdiction; (b) there was no evidence before it that the agreement was not fair or was not understood by Mr Fathullah; (c) the onus lay on the Respondents to establish that the agreement was unfair or unenforceable, but they had not filed any submissions on costs for the Tribunal to consider; and (d) the Tribunal, if concerned about this matter, was empowered to make a lesser award of costs under section 88(2).

4. The Tribunal did not properly compare the relative strengths of the parties' cases for the purpose of determining whether paragraph (c) of section 88(1A) was applicable. It gave insufficient weight to its own description of the Respondent's claim in the principal decision as 'fanciful' and 'nebulous' and to the fact that this claim was for the 'astronomical' sum of $300,000.

5. The Tribunal erroneously failed to consider a submission by Mr Soltan that the Respondents, by bringing such a claim, had acted vexatiously, within the meaning of paragraph (a)(vi) of section 88(1A).

6. The Tribunal erroneously failed to take into consideration the fact that the Respondents had committed 'equitable fraud' by concealing from Mr Fathullah, prior to the commencement of the Lease, the fact that the Supreme Court had rejected their attempt to file a cross claim against the mortgagee. Their conduct in this regard gave grounds for a costs order against them under section 88, by virtue of the Court of Appeal's decision in Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81.

7. The Tribunal erroneously failed to take account of the fact that until 30 August 2012, the date of the first directions hearing in the proceedings, the only claim made by Mr Fathullah was for $8,250 (being the balance of the rent that he had paid), but because the Respondents refused to refund even this amount he had been compelled to engage representation and have his case heard by the Tribunal.

The Respondents' submissions in reply were prepared with the assistance of a solicitor who, they indicated, was 'not on the record'. The main arguments made in these submissions were as follows:-

(a) The Tribunal never gave leave, pursuant to its discretion under section 71 of the ADT Act, for Mr Soltan to appear before it as agent for Mr Fathullah.

(b) It was Mr Fathullah, not the Respondents, who acted 'vexatiously'. He did so by including in his Amended Application his additional claims for loss relating to fixtures and fittings ($7,500), loss of wages ($21,450) and the mediation fee ($760). The first two of these claims were dismissed.

(c) Mr Soltan who had no formal qualifications of relevance, displayed his lack of professionalism by (i) 'presenting' a legal entity that did not exist (thereby misleading the Tribunal) and (ii) filing supplementary written submissions after the Tribunal hearing without having obtained leave to do so.

The Respondents contended that by virtue of these matters the costs decision was correct and Mr Fathullah's appeal against it should be dismissed.

Our conclusions

On giving careful consideration to these competing submissions, we have decided that the appeal by Mr Fathullah should be allowed and a costs order in his favour should be substituted for the Tribunal's costs decision.

Our reasons for so deciding can be summarised as follows. In the first place, we agree with the first five of the seven arguments by Mr Soltan that we summarised above at [133]. (The remaining two of his arguments do not, in our opinion, carry significant weight.) Secondly, we find the Respondents' submissions to be unpersuasive. Thirdly, our decision upholding Mr Fathullah's claims for losses relating to fixtures and fittings and to wages adds significant support to his claim for costs in so far as it is based on section 88(1A)(c) of the ADT Act.

We wish to add the following observations relating to Mr Soltan's arguments (nos. 1 to 3) concerning his status as agent for Mr Fathullah.

First, having given consideration to the statute governing the registration of business names (the Business Names Registration Act 2011 (Cth)), we are bound to say that in our opinion a failure to register an entity under this Act does not have the significance that the Tribunal appeared to attach to it. Nothing in the Act suggests that a failure to register should detract from the rights of the entity concerned so far as its business operations are concerned.

Secondly, the Tribunal's ruling, at [20], that it was 'not satisfied that the costs agreement is enforceable against the Applicant' was made with no detailed consideration of the applicable legal principles and without any opportunity being offered to Mr Soltan to argue to the contrary.

Thirdly, and perhaps most significantly, the person most harmed by the Tribunal's rulings on these two matters could well be Mr Fathullah. To the extent that these rulings contributed to its dismissal of his costs application, they diminished his chance of recovering from the Respondents some part (at least) of the amount that he would remain obliged to pay to Mr Soltan if either (a) he decided not to contest the validity of the costs agreement, or (b) he contested it, but contrary to the Tribunal's expectation was unsuccessful in doing so.

With reference to the Respondents' submissions, our observations are these: (a) as the Tribunal itself made clear, section 77C of the RL Act eliminated any requirement on Mr Soltan to obtain leave to represent Mr Fathullah as his agent; (b) any claim that Mr Fathullah's Amended Application was 'vexatious' is nullified by our decision increasing the amount of damages to be paid by the Respondents; and (c) any 'lack of professionalism' on Mr Soltan's part is far from sufficient to constitute a bar to his client obtaining a costs order.

We turn now to the framing of the costs order that in our judgment should be made against the Respondents. We deal with this topic at some length because a number of the issues have not, so far as we know, been discussed in any detail in any Tribunal decision on the costs of proceedings brought under the RL Act.

In B & L Linings Pty Ltd v Chief Commissioner of State Revenue (No 5) (RD) [2010] NSWADTAP 21, the Appeal Panel held that the Appellants, who had engaged a firm of accountants (Byrons) to act on their behalf in proceedings against the Chief Commissioner of State Revenue and had been substantially successful, could obtain an order under section 88 of the ADT Act requiring the Commissioner to pay an amount in respect of the costs charged to them by Byrons. The employee of Byrons (Mr Eager) who appeared for them at the Tribunal hearings and did most of the work required to prepare their case was in fact a legal practitioner. So far as relevant here, the terms of the costs order made by the Appeal Panel were as follows:-

1. The Respondent is to pay the Appellants' extra costs occasioned by the following aspects of its conduct in the course of these proceedings...

2. The Respondent is to pay 75% of the remainder of the Appellants' costs of the proceedings, both at first instance and on appeal.

3. These costs are to include amounts in respect of

(a) fees paid or payable by the Appellants to Byrons, Chartered Accountants, for work done by its employees as agents of the Appellants in these proceedings and

(b) any additional out-of-pocket expenses incurred by the Appellants in consequence of the conduct identified in Order 1.

4. If the parties cannot agree as to the amount of these costs, the Appellants have liberty (within 42 days of the date of these reasons) to apply to the Tribunal for an order to be made by the Appeal Panel determining the mode of assessment and for any other order required to give effect to this decision regarding their application for costs.

The parties were unable to agree as to the amount of the costs ordered. Following a further hearing, the Appeal Panel held, in B & L Linings Pty Ltd v Chief Commissioner of State Revenue (No 6) (RD) [2012] NSWADTAP 26, that the amount to be paid to the Appellants under clause 3(a) of this order should be assessed under Division 11 of Part 3.2 of the Legal Profession Act 2004 ('the LP Act 2004') by a costs assessor appointed under that Division.

The particular provision of the LP Act 2004 on which the Appeal Panel relied in determining that this mode of assessment was available was section 367A. This states:-

367A Determinations of costs assessments for party/party costs

A costs assessor is to determine an application for an assessment of costs payable as a result of an order made by a court or tribunal by making a determination of the fair and reasonable amount of those costs.

The Appeal Panel further decided that in the circumstances with which it was dealing, the regime for assessment provided by this Act was more appropriate than any competing alternative. Its discussion of this question included the following passages, being extracts from paragraphs [102] to [118]:-

102 Because we have the power, under section 88(2) of the ADT Act, to order assessment other than under the LP Act 2004, the question whether some alternative approach to assessment would be more appropriate in this case requires consideration.

103 There are actually two distinct issues within this question. The first is whether the basis of the assessment to be undertaken should be, to adopt the formulation in section 88(2)(b) of the ADT Act), 'a basis set out in' Division 11 of Part 3.2 of the LP Act or 'some other basis'. The second is as to the procedure to be adopted in obtaining an assessment.

104 With regard to the first and most important of these issues, we believe the following to be factors of major importance. The costs that we are considering are 'costs in relation to proceedings' before the Tribunal (see ADT Act, section 88(1A)). The proceedings with which we are dealing, while lengthy and protracted, did not have any unusual feature suggesting that costs assessment under the LP Act 2004 would be inappropriate, other than the fact that the Appellants employed an accountancy firm (Byrons), rather than a law practice, to conduct their case. The spreadsheet and other evidentiary material tendered by the Appellants at the hearing before us reveal that a very high component of the work undertaken by Byrons for the purposes of the proceedings was performed by Mr Eager, a solicitor holding a practising certificate. There is nothing in this material, or in any other evidence put before us, to suggest that the tasks carried out by Mr Eager differed in any material respect from the tasks normally performed by barristers and/or solicitors pursuant to instructions from clients to represent them in civil proceedings.

106 The disputed item of costs is costs 'in respect of' the fees paid or payable to Byrons. In their submissions to us, the parties were in agreement that criteria importing the values of 'fairness' and 'reasonableness' should be applied... It is well recognised that in applying criteria of this nature to the assessment of party/party costs under the LP Act 2004 and its predecessors, both the amount that the successful party is required to pay to its lawyers for costs and disbursements and an amount that can be fairly regarded as reasonable to obtain from the unsuccessful party are highly relevant factors. If the former amount is exorbitant, the unsuccessful party can legitimately claim that it be scaled down to or towards the latter amount. When the latter amount is the greater, the 'indemnity principle' to which Davies A-J referred in Commonwealth Bank of Australia v Hattersley (2001) 51 NSWLR 333; [2001] NSWSC 60... may be applicable.

107 Assessment of party/party costs under the LP Act 2004 and its predecessors is an expert process, developed over many years, for resolving issues such as these. By contrast, the uncontradicted evidence adduced by the Respondent as to the assessment of accountants' fees by relevant professional bodies... provides no reason to believe that any such assessment would be informed by the expertise and experience required to take proper account of these particular considerations, specific as they are to the particular exercise of assessing party/party costs in legal proceedings.

108 As already emphasised, the disputed item of costs is not defined in the Costs Order as simply the 'fees paid or payable by the Appellants to Byrons'. It is instead an amount 'in respect of' those fees. We are satisfied that for the reasons that we have just outlined, assessment of the costs thus defined under Division 11 of the LP Act 2004, utilising the criterion of 'fair and reasonable' stated in section 367A, is the most appropriate basis for determining such an amount.

109 In view of this conclusion on the first of the two issues defined above, discussion of the second issue - that of the procedure to be adopted - can be relatively brief.

110 In their submissions, the parties canvassed two alternative procedures for assessment. Within each of these, some variants were suggested.

111 First, Mr Thawley [counsel for the Appellants] submitted that the Tribunal should itself determine the disputed item of costs, with the rider that if the Tribunal thought fit, it could obtain evidence on one or more aspects of the assessment from an independent expert appointed by it. Mr Thawley indicated that the Appellants had a 'slight preference' for this approach because it was likely to be more economical than any other and the assessment would remain within the control of the Tribunal...

112 Mr Latham [counsel for the Respondent] expressed opposition to this proposal, describing it as 'clumsy'. He drew our attention to a dictum of the Legal Services Division of the Tribunal in Legal Services Commissioner v Galitsky (No 2) [2008] NSWADT 153 at [23], to the effect that the Tribunal should not adopt the role of a costs assessor because it does not possess any expertise or experience in determining the quantum of fair and reasonable costs.

115 Our view on assessment by the Tribunal is as follows. We recognise that the Tribunal may and in practice does determine the amounts payable pursuant to costs orders made under section 88 of the ADT Act. But it only takes this step when the determination is comparatively simple. In proceedings that have been as lengthy and as complex as these proceedings, it does not purport to have the necessary expertise.

118 In the light of our decision that the basis of assessment of the disputed item of costs should be the basis set out in section 367A of the LP Act 2004, and since this Act, in section 353(2), prescribes a mechanism for the Tribunal to refer this item for assessment, we see no advantage in departing from the standard procedure applying to these circumstances. The assessment should be by a costs assessor appointed under Division 11 of Part 3.2 of this Act.

The present proceedings, in our opinion, are akin to those described by the Appeal Panel at paragraph [115]. As Mr Soltan submitted, a costs order stipulating a fixed amount is preferable to an order for the payment of costs 'as agreed or assessed'. As he pointed out, the Appeal Panel, hearing an appeal from the Retail Leases Division, said this in Trowbridge v Morris (RLD) [2010] NSWADTAP 70 at [33]:-

33 We would encourage Tribunal members to make fixed sum costs orders in cases where neither party is legally represented as is the case here. We think that orders using the 'as agreed or assessed' formula are best confined to cases with lawyers on both sides.

Annexed to Mr Soltan's primary submissions were copies of (a) a costs agreement, dated 4 September 2012, between his company, Wentworth Warehousing Pty Ltd, and Mr Fathullah, which Mr Fathullah had signed and (b) a tax invoice, dated 23 November 2012, relating to the proceedings at first instance. The costs agreement stated that the hourly rate for Mr Soltan's services was to be $200 plus GST. The total amount quoted in the invoice, which incorporated a time sheet, was $10,197, made up of $9,790 for 'total professional costs' (44.5 hours @ $200 plus GST) and $407 for disbursements. On this basis, Mr Soltan sought a costs order in the amount of $10,197.

Annexed to Mr Soltan's supplementary submissions was a copy of Practice Note Civ 1 of the Local Court. Under the heading 'Guideline Amounts', clause 35.3 of this Practice Note sets out amounts, determined by the Local Court and the Law Society of New South Wales, to be awarded as costs in 'relatively short and straightforward matters'. Relevantly, these include an hourly rate of $280 for attendances at the Court. Clause 35.4 states that 'where a clerk or paralegal carries out the attendances, costs for that person should be allowed at 40% of the amount for a legal practitioner'.

Having regard to the fact that the total amount of damages that we are awarding ($23,950.39) is relatively small, we agree with Mr Soltan that these rates determined for Local Court proceedings furnish useful guidance. We do not think that the rate of $112 per hour suggested for a 'clerk or paralegal' is appropriate, given the level of responsibility assumed by Mr Soltan and the range of matters with which he had to deal. We should not, however, simply adopt the hourly rate stipulated in his costs agreement with Mr Fathullah. Section 365(2) of the LP Act specifically enjoins costs assessors not to do this. Taking these various considerations into account, we consider that a 'fair and reasonable' hourly rate is $160, to which GST should be added. We do not question the amount of time for which Mr Soltan claimed professional fees.

On this footing, the amount that should be paid by the Respondents to Mr Fathullah on account of his costs of the proceedings at first instance is $8,239, comprising $7,832 for Mr Soltan's professional fees and $407 for disbursements.

the costs of the appeals

In his submissions, filed after the appeal hearing, in support of Mr Fathullah's claim for the costs of the two appeals, Mr Soltan relied principally on the following arguments:-

(1) The Respondents acted so as to disadvantage Mr Fathullah by failing to comply with directions given by the Appeal Panel and by seeking an adjournment (this being conduct falling under paragraph (a) of section 88(1A) of the ADT Act).

(2) They unreasonably prolonged the appeal proceedings (being conduct under paragraph (b)).

(3) Paragraph (c) of section 88(1A) was engaged, because there was a 'substantial disparity' between Mr Fathullah's case in the appeal against the principal decision and the Respondent's attempt to revive, without any specific grounds or supporting evidence, their 'astronomical' claim for damages totalling $300,000.

(4) On 7 February 2013, well before the hearing of the appeals, the Respondents received Mr Fathullah's fresh evidence as to the residual value of the fixtures and fittings, but failed to acknowledge that they should therefore pay additional damages under this head.

(5) These were appeals in proceedings of a commercial nature.

(6) By virtue of the Court of Appeal's decision on costs in Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81, the 'equitable fraud' committed by the Respondents provided a sufficient basis for a costs order against them.

The Respondents' submissions included an allegation in the following terms:-

Mr Soltan failed to serve the Appellant's submissions to the Respondent to allow the Respondent to prepare for the hearing before the Appeal Panel on 22 May 2013. When he did serve the documents on 27 May 2013, many pages were missing in the documents.

It is convenient to examine this allegation before discussing the matters on which Mr Soltan relied.

The allegation was not supported by any evidence. The submissions on Mr Fathullah's behalf to which it referred were filed by Mr Soltan on 7 February 2013. At the directions hearing on 18 February 2013 (described above at [10]), the filing of them was mentioned and it was directed (inter alia) that the Respondents' submissions in reply to them were to be filed and served within 28 days. Mr Varma, appearing in person and as agent for the Second and Third Respondents, did not indicate that he had not received a copy of them. Moreover, if that was in fact the case, he still had ample opportunity to ask Mr Soltan to serve a copy on him as soon as possible, in order that he could meet the deadline set for the filing of the Respondents' submissions in reply. Neither he nor anyone else on the Respondents' behalf provided any explanation for their failure to take either of these steps.

We may add that by virtue of the directions that we gave at the end of the hearing, the Respondents had a period of four weeks (from 22 May until 19 June 2013) within which to obtain from Mr Soltan a further copy of his submissions (and indeed request the delivery of any 'missing' pages) and to prepare, file and serve their submissions on all matters raised in the appeal proceedings. According to material annexed to Mr Soltan's submissions filed after the hearing, Mr Varma did in fact request a copy and Mr Soltan complied with this request on 27 May 2013.

For these reasons, it cannot be said that the Respondents were prejudiced by any late service (if indeed this occurred) of the submissions that Mr Soltan had filed before the hearing.

We turn now to the arguments by Mr Soltan that we summarised above at [153]. In our opinion, they are sufficient to show that it would be 'fair' under section 88(1A) of the ADT Act to make a costs order against the Respondents relating to the costs of both appeals.

In so concluding, we have taken careful account of the following passage in a case, Torchia v Swanton (RLD) [2012] NSWADTAP 5, to which we drew the parties' attention at the hearing. The relevant passage in the Appeal Panel's reasons is at [113 - 123]:-

113... [In this case] the Applicants [who were also the Appellants] were not in fact wholly successful. The claims that they advanced both on liability and on damages included significant components that the Tribunal did not accept...

115 As indicated above at [10], the grounds on which they claimed relief were unconscionable conduct, misleading or deceptive conduct, breach of clause 8 of the Mediation Agreement and estoppel. The remedies that they claimed (as indicated above at [11]) included a declaration that they had an interest in the land to which the lease related and an order that a five-year lease of this land be granted to them at a current market rent.

116 In its first decision, however, the Tribunal stated (in the passage quoted above at [20]):-

As to that part of the conversation [on 24 May 2007] concerning the grant of a further lease at the expiration of the term then current, it is clear that the conversation stopped well short of one giving rise to a contractual obligation to grant a fresh lease...

117 By virtue of this finding, the Applicants did not obtain any relief at all based on their claim that the Respondents had promised to grant them a new lease. They did not obtain the declaration that they sought, nor the order for a grant of a five-year lease... In addition, their claim for damages for economic loss sustained by virtue of reliance on Ms Swanton's alleged representation (in May 2007) that a new lease would be forthcoming was not upheld...

118 The only relief that the Tribunal granted to the Applicants was an award of compensation for the loss of the opportunity to obtain a new lease that had been afforded to them under clause 8 of the Mediation Agreement. The contractual promise made to them under this clause, and held by the Tribunal to have been breached through conduct that it found to be unconscionable, was not that the Applicants would actually obtain a new lease. It was instead a promise by the Respondents to 'discuss in good faith and with fair consideration any request for a new lease'.

119 As Mr McCall pointed out in his submissions before me, the Applicants appeared, both before and during the hearing on damages, to believe that their compensation should reflect either the value of the prospective new lease or the amount lost by them through reliance on Ms Swanton's alleged representation, not merely the value of the opportunity to obtain a lease that clause 8 had conferred on them. The Applicants based their case relating to quantum on this assumption...

120 As can be seen, however, from the passage in the Tribunal's second decision quoted above at [27], the approach taken by the Tribunal was to adopt the amount given by Mr Hughes 'at the bottom of his range' as 'the value of the business as it would have been at 30 April 2010 had there also been in place a lease for a reasonable term', then to discount this amount ($137,500) by the significant proportion of 30% because of its finding that only an 'opportunity' had been denied to the Applicants. At [42], the Tribunal said:-

As indicated earlier the applicants in my opinion in effect lost, as a result of the respondents' breach of their contractual obligations, a 70% chance to acquire an asset worth $137,500. I would assess their damages at $92,650.

121 If the Applicants had been wholly successful, as Mr Spring maintained, they would have obtained either a new lease or a sum substantially exceeding $92,650.

122 Accordingly, since the Respondents successfully contested significant components of the Applicants' case, both on liability and on damages, it cannot be said that there was a 'substantial disparity' between the relative strengths of the parties' cases. As Mr McCall argued, the Respondents did not act unreasonably in choosing to defend the proceedings.

123 For these reasons, the Applicants' claim for the costs of the Tribunal proceedings must fail in so far as it is based on paragraph (c) of section 88(1A) of the ADT Act.

In the appeal against the principal decision, the case argued by Mr Soltan included a substantial claim for damages for loss of profits that we held not to be sustainable (see above at [106 - 114]). On the face of it, this provides grounds for ruling that the Respondents 'did not act unreasonably' in defending the appeal. But as we also pointed out (see [105]), the written submissions filed by Mr Soltan before the hearing concluded with a statement that the orders sought by Mr Fathullah were that the Respondent pay him (i) damages 'on account of fixtures and fittings' and for lost wages, (ii) interest and (iii) his costs at first instance. No reference was made here to any claim relating to loss of profits. For reasons that we have explained (at [156 - 158]), the Respondents either received a copy of these submissions well before the hearing or, at the least, were aware of their existence but unreasonably failed to advise Mr Soltan that he had not supplied them with a copy.

A further matter of importance when comparing the strengths of the parties' cases is that before and during the appeal hearing the Respondents continued to claim, without any supporting evidence, that Mr Fathullah was liable to pay substantial damages to them (see [52 - 54] above).

For these reasons, we are satisfied that there was a 'substantial disparity' (to repeat the phrase used in this context in Jonamill Pty Ltd v Alramon Pty Ltd (No 2) (RLD) [2010] NSWADTAP 3 at [47]) between the relative strengths of the parties' cases in the appeal against the principal decision and that this provides good grounds under section 88(1A)(c) of the ADT Act for making an order for costs against the Respondents. We have formed this view even though Mr Soltan, in adding the claim for damages for loss of profits to Mr Fathullah's case, significantly overstated the scale of the Respondents' liability.

We agree also with the first, second and fifth of the arguments by Mr Soltan as summarised above at [153].

The Respondents' conduct in relation to the appeal against the principal decision fell within paragraphs (a) and (b) of section 88(1A). The fact that it was an appeal in proceedings of a commercial nature is a relevant factor under paragraph (d).

Our reasons for concluding that paragraphs (a) to (d) of section 88(1A) were 'enlivened' in the appeal against the principal decision apply equally, in our opinion, to the appeal against the costs decision. In particular, the case in favour of making a costs order against the Respondents in the proceedings at first instance must be viewed as a very strong one, once the adjustments that we have made to the damages awarded are brought into consideration.

As with the costs at first instance, it is appropriate that we make an order fixing the amount to be paid.

A copy of a tax invoice addressed by Wentworth Warehousing Pty Ltd to Mr Fathullah was annexed to Mr Soltan's submissions filed after the appeal. It was dated 27 June 2013 and related to the appeal proceedings. Once again, the hourly rate charged for Mr Soltan's services was stated as $200 plus GST.

The total amount quoted in this invoice, which incorporated a time sheet, was $10,991, made up of $9,735 for 'total professional costs' (44.25 hours @ $200 plus GST) and $1,256 for disbursements. The main reason why the figure for disbursements significantly exceeded the figure quoted in the invoice relating to the proceedings at first instance was that it included a filing fee of $309 paid on each of the two Notices of Appeal. On this basis, Mr Soltan sought a costs order in the amount of $10,991.

We do not question the amount of time for which Mr Soltan claimed professional fees. But for reasons explained earlier, a lower hourly rate of $160 plus GST is appropriate for a costs order 'in respect of' such fees.

On this footing, the amount that should be paid by the Respondents to Mr Fathullah on account of his costs of the appeal proceedings is $9,044, comprising $7,788 for Mr Soltan's professional fees and $1,256 for disbursements.

Mr Soltan requested that, if we upheld Mr Fathullah's application for costs relating to the appeals, we should grant to the Respondent a certificate under the Suitors' Fund Act 1951. He pointed out that the Appeal Panel in Coogee Bay Village Pty Ltd v Profilio (No 2) (RLD) [2011] NSWADTAP 67 granted such a certificate (at [17]) in comparable circumstances.

The types of proceeding in which a certificate may be granted (these are defined in sections 6, 6A and 6B of the Suitors' Fund Act) do not, however, include an appeal to an Appeal Panel under the ADT Act. We cannot, therefore, accede to this request. We must respectfully differ on this matter from the view taken by the Appeal Panel in the Coogee Bay Village case.

Our orders

For the foregoing reasons, our orders in these appeal proceedings are as follows:-

1. (a) The appeal against the Tribunal's decision given on 15 November 2012 is allowed.

(b) The order made in that decision is set aside and the following order made: 'The Respondents are to pay to the Appellant the sum of $23,950.39, comprising $20,550 as principal and $3,400.39 as interest.'

2. (a) The appeal against the Tribunal's decision given on 23 January 2013 is allowed.

(b) The order made in that decision is set aside and the following order made: 'The Respondents are to pay to the Appellant the sum of $8,239 in respect of the costs of the proceedings.'

3. The Respondents are to pay to the Appellant the sum of $9,044 in respect of the costs of these appeal proceedings.

**********

Decision last updated: 08 August 2013

Medium Neutral Citation:	Fathullah v Varma (RLD) [2013] NSWADTAP 39
Hearing dates:	22 May 2013
Decision date:	08 August 2013
Jurisdiction:	Appeal Panel - Internal
Before:	M Chesterman, Deputy President D Bluth, Judicial Member M Foldi, Non-judicial Member
Decision:	1. (a) The appeal against the Tribunal's decision given on 15 November 2012 is allowed. (b) The order made in that decision is set aside and the following order made: 'The Respondents are to pay to the Appellant the sum of $23,950.39, comprising $20,550 as principal and $3,400.39 as interest.' 2. (a) The appeal against the Tribunal's decision given on 23 January 2013 is allowed. (b) The order made in that decision is set aside and the following order made: 'The Respondents are to pay to the Appellant the sum of $8,239 in respect of the costs of the proceedings.' 3. The Respondents are to pay to the Appellant the sum of $9,044 in respect of the costs of these appeal proceedings.
Catchwords:	Retail lease - failure by lessor to grant possession - assessment of damages payable to lessee - costs
Legislation Cited:	Administrative Decisions Tribunal Act 1997 Business Names Registration Act 2011 (Cth) Legal Profession Act 2004 Local Court, Practice Note Civ 1 Retail Leases Act 1994 Suitors' Fund Act 1951
Cases Cited:	ACN 079 830 596 Pty Ltd (trading as Jolly Joe's Fish 'n' Chips) v Wallis Lake Fishermen's Co-operative Ltd [2007] NSWADT 297 Ali v Nationwide News Ltd [2008] NSWCA 183 B & L Linings Pty Ltd v Chief Commissioner of State Revenue (No 5) (RD) [2010] NSWADTAP 21 B & L Linings Pty Ltd v Chief Commissioner of State Revenue (No 6) (RD) [2012] NSWADTAP 26 Building Professionals Board v Hans (GD) [2008] NSWADTAP 13 Commonwealth of Australia v Amann Aviation Pty Ltd [1991] HCA 54; (1992) 174 CLR 64 Coogee Bay Village Pty Ltd v Profilio (No 2) (RLD) [2011] NSWADTAP 67 Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 Fathullah v Varma [2012] NSWADT 237 Fathullah v Varma (No 2) [2013] NSWADT 13 G & M Dawson Pty Ltd v Cripps & Ors (RLD) [2004] NSWADTAP 38 Hull v Thompson [2001] NSWCA 359 Jonamill Pty Ltd v Alramon Pty Ltd (No 2) (RLD) [2010] NSWADTAP 3 Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313 O'Neill v Henry (RLD) [2010] NSWADTAP 40 Sarker and anor v World Best Holdings Limited and anor [2008] NSWADT 75 Torchia v Swanton (RLD) [2012] NSWADTAP 5 Trowbridge v Morris (RLD) [2010] NSWADTAP 70 Uszok v Henley Properties (NSW) Pty Ltd [2007] NSWCA 31 World Best Holdings Limited v Sarker [2010] NSWCA 24
Category:	Principal judgment
Parties:	Nihad Fathullah (Appellant) Arun Deo Varma (First Respondent) Kamlush Deo Varma (Second Respondent) Aranesh Deo Varma (Third Respondent)
Representation:	H Soltan (Agent for Appellant) A D Varma (In person, and as agent for Second and Third Respondents)
File Number(s):	129040, 139006
Decision under appeal	Citation: Fathullah v Varma [2012] NSWADT 237 Fathullah v Varma (No 2) [2013] NSWADT 13 Before: Retail Leases Division File Number(s): 125118