Finch v Samios
[2012] NSWADT 16
•08 February 2012
Administrative Decisions Tribunal
New South Wales
Case Title: Finch v Samios Medium Neutral Citation: [2012] NSWADT 16 Hearing Date(s): 15 September 2011, 13 October 2011 Decision Date: 08 February 2012 Jurisdiction: Retail Leases Division Before: S Montgomery, Judicial Member Decision: The Applicant is to pay the Respondent the sum of $500 as costs of and incidental to these proceedings. Catchwords: Retail Tenancy Claim - costs Legislation Cited: Administrative Decisions Tribunal Act 1997
Retail Leases Act 1994Cases Cited: AT v Commissioner of Police, NSW [2010] NSWCA 131
Gizah Pty Limited -v- AXA Trustees Limited (No. 2) [2001] NSWADT 164
Kriletich v Dee Why Projects Pty Limited (No. 2) [2011] NSWADT 255
Petria Pty Ltd v Makhoul [2005] NSWADTAP 12;
Prasad & anor -v- Fairfield City Council [2002] NSWADTAP 2;
Profilio v Coogee Bay Village Pty Ltd (No. 4) [2011] NSWADT 64
Randi Wiks Pty Limited v Pokana Pty Limited [2003] NSWADTAP 27;
Singh v Solomon & Ors (No 2) [2005] NSWADTAP 58Texts Cited: Category: Costs Parties: Phylis Marie Finch (Applicant)
Helen Samios (First Respondent)
Stamatina Tsikleas (Second Respondent)Representation - Counsel: - Solicitors: P Finch (Applicant in person)
Sparke Helmore Solicitors (Respondents)File number(s): 115126 Publication Restriction:
REASONS FOR DECISION
RETAIL LEASES DIVISION (S MONTGOMERY, (JUDICIAL MEMBER)): The Applicant applied to the Tribunal seeking both urgent interim orders and final orders in relation to the lease ("the Lease") for premises at 1013 Old Princess Highway, Engadine ("the premises"). The Lease commenced on 1 October 2010 and expires on 30 September 2013. The permitted use of the premises stated in the Lease is "Laundromat and dry cleaning services". The Applicant conducts a laundrette business on the premises.
It is not in dispute that the Lease is governed by the Retail Leases Act 1994 ("the Act").
The initial application sought an order for the assignment of rights under the Lease and asserted that the Respondents had refused to agree to the assignment in circumstances that were unreasonable.
At the time the matter came before me on 15 September 2011, it was apparent that the Applicant's case could not succeed and the Applicant sought to address these by filing an amended application. In her amended application for urgent interim orders the Applicant stated:
"I am in ill health, 70 years of age and cannot continue for another two years.
3 other buyers have walked away because the Landlords will not grant an extension to my restrictive lease and the current buyer has now walked away due to the hassles of obtaining the assignment of the lease with the changes he requires to give him continuity of business.
The current buyer has no further interest in obtaining the business at these premises.
Three other buyers have walked away in the past 9 months due to the fact that the Landlords would not grant an extension beyond the two years remaining on my lease.
I feel very victimised by this whole affair. I am very stressed and suffer repeated anxiety attacks
I am quite sure that in this strained economic environment now I will have great difficulty in selling this business with no right of renewal on the lease.
Ideally the landlords could consider buying the business from me at a fair market price and settle this matter."
In the Applicant's amended Application For Original Decision the order sought is stated as:
"An order to cancel my lease that expires September 2013"
The grounds for the application are stated as:
"Ground 1Buyer has walked away due to too many hassles in getting the lease assigned.
Particulars 1.1
My buyer has now walked away due to the fact that he no longer wishes to have these people for his landlords even though he wants the business.
Ground. 2 The Landlords have repeated thwarted my attempts to sell this business over the past year
Particulars 2.1
by not responding to information requested from numerous buyers
by the Landlord refusing the buyers requests after they have made numerous phone calls to see why their correspondence has not been answered.
Buyers concerned have walked away because "The Landlords are so slack in answering their correspondence and phone calls regarding requested changes to the lease."
Ground 3Term of Lease restrictions
Particulars 3.1
I am quite sure I that I would not now be able to sell this business in the current economic climate with a two year lease with no right of renewal."
When the urgent interim application came before me for hearing on 15 September 2011, the problems with the application were apparent. I stood the matter over to allow the Applicant the opportunity to consider legal advice and I referred the matter for mediation. Mediation was unsuccessful and the matter again came before me on 13 October 2011.
The Respondents objected to the amended application on the basis that it concerned issues of commercial negotiation only. Mr Oros, solicitor for the Respondents, submitted that the Tribunal has no jurisdiction to hear the matter where there is no defined 'dispute' in accordance with the Act.
The Applicant conceded that there had been no breach of the Lease by the Respondents and that her request was of a commercial nature only.
I indicated to the parties that I agreed with Mr Oros's submission that the Tribunal did not have jurisdiction to hear the matter. In the circumstances, the Applicant withdrew her application and I made the order that the application was dismissed.
Mr Oros sought an order for costs in favour of the Respondents and made brief submission in support of that application.
I set a timetable for filing of submissions in relation to the issue of costs - to allow the Applicant to respond to the application for costs and for the Respondents to reply. Each of the parties filed submissions.
Applicable legislation
The Tribunal is empowered to award costs under section 88 of the Administrative Decisions Tribunal Act 1997 ("the ADT Act") and section 77A of the Act.
Section 88 of the ADT Act provides:
88 Costs
(1) Each party to proceedings before the Tribunal is to bear the party's own costs in the proceedings, except as provided by this section.
(1A) Subject to the rules of the Tribunal and any other Act or law, the Tribunal may award costs in relation to proceedings before it, but only if it is satisfied that it is fair to do so having regard to the following:
(a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings by conduct such as:
(i) failing to comply with an order or direction of the Tribunal without reasonable excuse, or
(ii) failing to comply with this Act, the regulations, the rules of the Tribunal or any relevant provision of the enactment under which the Tribunal has jurisdiction in relation to the proceedings, or
(iii) asking for an adjournment as a result of a failure referred to in subparagraph (i) or (ii), or
(iv) causing an adjournment, or
(v) attempting to deceive another party or the Tribunal, or
(vi) vexatiously conducting the proceedings,
(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,
(c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law,
(d) the nature and complexity of the proceedings,
(e) any other matter that the Tribunal considers relevant.
(2) The Tribunal may:
(a) determine by whom and to what extent costs are to be paid, and
(b) order costs to be assessed on a basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis.
(3) However, the Tribunal may not award costs in relation to proceedings for an original decision unless the enactment under which the Tribunal has jurisdiction to make the decision provides for the awarding of costs.
(4) In this section, costs includes:
(a) costs of or incidental to proceedings in the Tribunal, and
(b) the costs of or incidental to the proceedings giving rise to the application, as well as the costs of or incidental to the application.
Section 77A of the Act provides:
77A Tribunal may award costs
The Tribunal may award costs under section 88 of the Administrative Decisions Tribunal Act 1997 in respect of proceedings commenced by an application made under this Part.
The Respondents' case
The Respondents assert that they have incurred costs:
(a) in connection with the first application, attendance at hearing, preparation and ancillary matters;
(b) in connection with the amended application, attendance at hearing, preparation and ancillary matters;
(c) in connection with the submission for costs.
The Respondents submit that the initial application, in which the Applicant sought an order for the assignment of the Lease, was substantially flawed. The orders sought were redundant and the application held no reasonable prospect of success.
The Respondents further submit that the amended application concerned only issues of a commercial nature with no legal basis.
The Respondents submit that a special circumstance exists for the awarding of costs in favour of the Respondents for the following reasons:
(a) the first application made by the Applicant was substantially flawed and posed no reasonable prospect of success;
(b) the amended application was not based in law and held no reasonable prospect of success;
(c) section 88 of the ADT Act is qualified by the commercial relationship of such matters relating to retail dispute applications, see Gizah Pty Limited -v- AXA Trustees Limited (No. 2) [2001] NSWADT 164, Singh v Solomon & Ors (No 2) [2005] NSWADTAP 58 and Petria Pty Ltd v Makhoul [2005] NSWADTAP 12;
(d) the question of costs is a matter to be considered on the facts of each case, Randi Wiks Pty Limited v Pokana Pty Limited [2003] NSWADTAP 27;
(e) where such special circumstances are found a costs order must be made, Gizah Pty Limited -v- AXA Trustees Limited (No. 2) [2001] NSWADT 164;
(f) the Applicant's conduct was not reasonable as set out in Prasad & anor -v- Fairfield City Council [2002] NSWADTAP 2;
(g) the fact that a party is not represented, has brought proceedings in good faith or had no legal advice are not reasons for denying an order for costs, Gizah Pty Limited -v- AXA Trustees Limited (No. 2) [2001] NSWADT 164.
The Respondents referred to a number of other matters in which costs have been awarded: Hoctor v Scheib [2001] NSWADT 141, Kindful (Australia) Pty Limited v. Country Villa Holdings Pty Limited (No 2) [2006] NSWADT 357, Sarip Investment Pty Ltd v Uno Uno Pty Ltd [2004] NSWADT 27, Sarker v World Best Holdings Ltd, World Best Holdings Ltd v Sarker (No.3) [2004] NSWADT 119, Risorto & Ors v Hanjoena Pty Ltd [2004] NSWADT 171 and Gu v Gold Valley Investments Pty Ltd (No 2) [2006] NSWADT 1.
Mr Oros submitted that the Respondents have been put to considerable cost and expense as a result of the first and amended applications sought by the Applicant which where both without substance and borderline vexatious in nature.
The Applicant's case
The Applicant did not take issue with the Respondents' assertions in regard to the legal issues involved in this matter. In essence, her submissions concern the extent of the costs sought by the Respondents.
She stated:
"I chose not to use a solicitor due to my reduced financial circumstances ... I feel this is a case of big business making a small business owner feel totally inadequate and this has been the case all the way through these aborted negotiations.
As to their claim for costs of $2750, I would respectfully request that these be reduced to the $500 quoted at the hearing on 13th October 2011, as I work on my own and to attend hearings I have had to close my business for up to 5 hrs a day each time which has already cost me considerable time and money.
Discussion
Section 88 of the ADT Act contains a general rule that each party to the proceedings is to bear its own costs of the proceedings and that an award of costs will only be made if the Tribunal is satisfied, having regard to the factors set out in subsection 88(1A), that it is fair to make an award of costs: see the Court of Appeal decision in AT v Commissioner of Police, NSW [2010] NSWCA 131 - a case emanating from the General Division of the Tribunal. At paragraph [21] of that decision Basten JA said the following in regard to the Tribunal's exercise of its discretion under subsection 88(1A):
21 ... In its terms, s 88(1A) requires that the Tribunal (which includes for this purpose the Appeal Panel) be "satisfied" that the proposed award is "fair". That exercise involves, potentially, both findings of primary fact and the exercise of an evaluative judgment. ...
At paragraph [33] Basten JA referred to the general principle set out in subsection 88(1) that each party should bear its own costs and stated:
33 ... Although an order varying the general rule may be made "only if" the relevant criterion is satisfied in a particular way, there is a relatively low hurdle for an applicant seeking an order. The criterion of "fairness" will take into account the compensatory purpose of an award of costs, which will generally favour the successful party. The circumstances in which fairness may be identified are indicated by the specific attributes listed in sub-s (1A), but subject to the generality of paragraph (e), read in its context. Other considerations will no doubt include the nature of the jurisdiction of the Tribunal which is invoked and the objects identified in s 3(b)-(g) of the Tribunal Act.
At paragraph [42] of the decision in Profilio v Coogee Bay Village Pty Ltd (No. 4) [2011] NSWADT 64 (" Profilio ") the Tribunal referred to Basten JA's observations. The Tribunal has accepted that the general principles enunciated by Basten JA equally apply to proceedings within the Tribunal's Retail Leases Division: see also Kriletich v Dee Why Projects Pty Limited (No. 2) [2011] NSWADT 255 at paragraph [11].
At paragraphs [39] - [40] of Profilio the Tribunal stated:
For the purposes of the present decision, case law relating specifically to two matters arising under subsection (1A) of section 88 should be considered. These matters are the interpretation of paragraph (c) of this subsection and the significance of evidence that the successful party has rejected a favourable offer of compromise put forward by the unsuccessful party.
Paragraph (c) of Section 88(1A). It is clear that a successful party cannot claim costs under paragraph (c) simply by pointing to the fact that it succeeded. Equally, it is clear that the scope of the paragraph is not confined merely to proceedings where the case advanced by the unsuccessful party had 'no tenable basis in fact or law'. What the paragraph requires is that the Tribunal, in determining whether it is 'fair' to award costs to the successful party, should assess 'the relative strengths' of the claims made by each of the parties.At paragraphs [42] and [43] of Profilio the Tribunal cited with approval two decisions of the Victorian Civil and Administrative Tribunal in regard to the equivalent provision of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (i.e. section 109).
"[42] In the first of these decisions, Dennis Corporation Pty Ltd v Casey CC (Red Dot) [2008] VCAT 691, the Victorian Tribunal said at [14 - 19]:-
14 The relative strengths of the claims appear to refer to the strength of claims of one party compared to the strength of the claims of another. A difficult, doubtful or test case might be necessary to clarify the legal position of the parties. It is probably seldom that an order for costs would be made having regard to this consideration alone where there was a real issue to be tried and real justification for the claims made on either side. I take it that it is generally where there is a very weak case for one side, or none at all, that this consideration is likely to lead to an order for costs. I note that the wording says that the absence of a "tenable basis in law or fact" is a consideration included within the consideration of the relative strengths of the claims of the parties.
15 This certainly cannot mean that an unsuccessful party should be required to pay costs because, at the end of the case, that party's claims have been found to be untenable in fact or law to the extent that they were not upheld and were not successful. That would amount to "costs following the event". It would compromise the general rule created in s 109(1).
16 As I have said, I do not think that the consideration indicates an order for costs where there are strong cases on either side, or perhaps evenly balanced cases on either side.
17 I am not minded to go so far as to say that a weak case will necessarily indicate an order for costs. The word "untenable" is stronger than "weak". The Macquarie Dictionary, second revision, defines untenable as incapable of being held against attack, incapable of being maintained against argument, as an opinion, scheme etc.
18 The ethical rules of the Bar, as I recall them, indicates that a barrister has a duty to do his or her best by the client even if the client has a weak case. On the other hand, a different duty applies if the case is so weak as to be unarguable or "untenable". It extends to a case that is so weak that it should not be argued or so weak that it would be an abuse to seek to maintain it.
19 I think "untenable" in the context of s 109(3)(c) means something like so weak as to be unarguable, rather than merely weak.
43 In the second of these decisions, Winky Pop Pty Ltd v Hobsons Bay CC [2008] VCAT 1512, the Tribunal said at [7]:-
7 Although the applicant was ultimately unsuccessful in its application, I do not believe that its case was so weak as to be untenable in fact or law. I endorse the comments of Senior Member Byard in Dennis in relation to this issue. I agree with the applicant that, although I indicated in my reasons that the applicant's case in relation to its access to material was "disingenuous" to a panel process that it well understood, I certainly did not consider the applicant's case to be completely unarguable, unreasonable or untenable in a manner that would clearly justify an award of costs having regard to the relative strengths of the arguments put by each party. This was simply a case where both parties raised and carefully articulated a number of matters of fact and law before the Tribunal, and the applicant was ultimately unsuccessful in persuading the Tribunal to support its view."
In the present matter, the initial claim was based on a refusal of the Respondents to agree to an assignment of the lease. It is evident that the Applicant's claim was not strong. However, it appears that circumstances had altered from the time of the original issue of the Respondents refusal to the extent that by the time the matter came before me the Applicant's case was in fact untenable. Notwithstanding the Respondents' assertions, it cannot be said that at the time the claim was lodged it was unarguable.
In my view, the Applicant's claim should have been withdrawn at the time the matter came before me on15 September 2011 or shortly afterwards. The Applicant had the benefit of advice from an officer from the Retail Tenancy Unit and she in fact conceded that she did not allege any breach of the Lease on the part of the Respondents. Rather, she accepted that the request was more akin to a moral matter between the parties.
In the circumstances, it is my view that the Respondents have been put to unnecessary expense in defending the matter. The Applicant should pay the reasonable costs of attending the Tribunal on 13 October 2011.
However, having regard to the matters referred to in subsection 88(1A) of the ADT Act, I am not satisfied that the circumstances of this application are such that it is fair to make an award of costs in favour of the Respondents other than the costs related to the brief hearing on 13 October 2011. I do not consider that the written submissions made by the Respondents advanced the case argued on that occasion in any significant way.
Accordingly, with that exception, the general rule as set out in subsection 88(1) of the ADT Act applies.
I have given consideration to the basis on which the costs should be calculated and it is my view that an amount of $500 should be payable in relation to the hearing on 13 October 2011.
Order
The Applicant is to pay the Respondent the sum of $500 as costs of and incidental to these proceedings.
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