FLYER SERVICES PTY LTD and MARSHALL
[2014] WASAT 52 (S)
•9 MAY 2014
FLYER SERVICES PTY LTD and MARSHALL [2014] WASAT 52 (S)
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2014] WASAT 52 (S) | |
| COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA) | |||
| Case No: | CC:774/2013 | DETERMINED ON THE DOCUMENTS | |
| Coram: | MR T CAREY (MEMBER) | 9/05/14 | |
| 18 | Judgment Part: | 1 of 1 | |
| Result: | Application for costs granted in part | ||
| B | |||
| PDF Version |
| Parties: | FLYER SERVICES PTY LTD COLIN MARSHALL MARY JEANETTE MARSHALL COBALT NOMINEES PTY LTD RUTH MARGARET BARRETT GEORGE EDWARD BERNARD BARRETT SANDRA MARJORY GATTI WILLIAM KIMBERLEY ROUTLEDGE PULLINGTON INVESTMENTS PTY LTD GWENYTH BAILEY DAVID VENTRESS WEDDERBURN JOHN WESLEY BUTLER NORA MAY McWHINNEY JOHN WILLIAM CALDOW RODD KENNETH BUDGE CAROLYN JAN GUIDA JACQUELYN KAYE BOYLE |
Catchwords: | Retail shop Application for costs Whether appropriate case for exercise of discretion To award costs |
Legislation: | Commercial Tenancy (Retail Shops) Agreement Act 1985 (WA), s 11(3), s 11(5), s 16 Legal Practitioners (State Administrative Tribunal) Report and Determination 2012 Legal Practitioners (Supreme Court) (Contentious Business) Report and Determination 2012 State Administrative Tribunal Act 2004 (WA), s 87(1), s 87(2) State Administrative Tribunal Rules 2004 (WA), s 40, s 41, s 42 Supreme Court Rules 1971 (WA), o 24A |
Case References: | Ampezzo Pty Ltd and Franken [2009] WASAT 109 (S) Beba Enterprises and Elle Pty Ltd [2013] WASAT 120 Flyer Services Pty Ltd and Marshal [2014] WASAT 52 Flyer services Pty Ltd and Marshall [2013] WASAT 188 Gill & Ors and Wildnight Pty Ltd [2008] WASAT 135 J&P Metals Pty Ltd and Shire of Dardanup [2006] WASAT 282 (S) Law and Town of Vincent [2006] WASAT 263(S) Marvelle Investments Pty Ltd and Argyle Holdings Pty Ltd [2010] WASAT 125 (S) Mc Kay V Commissioner of Main Roads (7) [2011] WASC 223 (S) Medical Board of Australia and Costley [2013] WASAT 2 Myers v Pioneer Concrete (Vic) Pty Ltd [1997] ANZ ConvR 331 |
Orders | On the application heard on 15 September 2014 by Member Tim Carey, it is on 15 September 2014 ordered that: ,1. The respondents shall pay the applicant a contribution to its costs fixed at $13,150.60 payable within 14 days of the date of this order. |
Summary | The applicant sought an order for costs upon the conclusion of the Tribunal's determination of the rent payable as a result of a market review. It did so based on the strength of its case, the complexity of the issues, the importance of the outcome, and aspects of the respondents' conduct, including their refusal of settlement offers. ,The Tribunal rejected all but one of the applicant's grounds. It agreed that the respondents should pay the applicant's costs in relation to a preliminary hearing concerning the validity of the rent review, which the respondents instigated before the original final hearing date, and in relation to which they were unsuccessful.,The Tribunal went on to fix the costs based on the limited scope of the costs award. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL ACT : COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA) CITATION : FLYER SERVICES PTY LTD and MARSHALL [2014] WASAT 52 (S) MEMBER : MR T CAREY (MEMBER) HEARD : DETERMINED ON THE DOCUMENTS DELIVERED : 9 MAY 2014 FILE NO/S : CC 774 of 2013 BETWEEN : FLYER SERVICES PTY LTD
- Applicant
AND
COLIN MARSHALL
MARY JEANETTE MARSHALL
COBALT NOMINEES PTY LTD
RUTH MARGARET BARRETT
GEORGE EDWARD BERNARD BARRETT
SANDRA MARJORY GATTI
WILLIAM KIMBERLEY ROUTLEDGE
PULLINGTON INVESTMENTS PTY LTD
GWENYTH BAILEY
DAVID VENTRESS WEDDERBURN
JOHN WESLEY BUTLER
NORA MAY McWHINNEY
JOHN WILLIAM CALDOW
RODD KENNETH BUDGE
CAROLYN JAN GUIDA
JACQUELYN KAYE BOYLE
Respondents
Catchwords:
Retail shop Application for costs Whether appropriate case for exercise of discretion To award costs
Legislation:
Commercial Tenancy (Retail Shops) Agreement Act 1985 (WA), s 11(3), s 11(5), s 16
Legal Practitioners (State Administrative Tribunal) Report and Determination 2012
Legal Practitioners (Supreme Court) (Contentious Business) Report and Determination 2012
State Administrative Tribunal Act 2004 (WA), s 87(1), s 87(2)
State Administrative Tribunal Rules 2004 (WA), s 40, s 41, s 42
Supreme Court Rules 1971 (WA), o 24A
Result:
Application for costs granted in part
Summary of Tribunal's decision:
The applicant sought an order for costs upon the conclusion of the Tribunal's determination of the rent payable as a result of a market review. It did so based on the strength of its case, the complexity of the issues, the importance of the outcome, and aspects of the respondents' conduct, including their refusal of settlement offers.
The Tribunal rejected all but one of the applicant's grounds. It agreed that the respondents should pay the applicant's costs in relation to a preliminary hearing concerning the validity of the rent review, which the respondents instigated before the original final hearing date, and in relation to which they were unsuccessful.
The Tribunal went on to fix the costs based on the limited scope of the costs award.
Category: B
Representation:
Counsel:
Applicant : M G Cobby
Respondents : Ms E Hensler
Solicitors:
Applicant : M 6:8 Legal
Respondents : Borello Legal
Case(s) referred to in decision(s):
Ampezzo Pty Ltd and Franken [2009] WASAT 109 (S)
Beba Enterprises and Elle Pty Ltd [2013] WASAT 120
Flyer Services Pty Ltd and Marshal [2014] WASAT 52
Flyer services Pty Ltd and Marshall [2013] WASAT 188
Gill & Ors and Wildnight Pty Ltd [2008] WASAT 135
J&P Metals Pty Ltd and Shire of Dardanup [2006] WASAT 282 (S)
Law and Town of Vincent [2006] WASAT 263(S)
Marvelle Investments Pty Ltd and Argyle Holdings Pty Ltd [2010] WASAT 125 (S)
Mc Kay V Commissioner of Main Roads (7) [2011] WASC 223 (S)
Medical Board of Australia and Costley [2013] WASAT 2
Myers v Pioneer Concrete (Vic) Pty Ltd [1997] ANZ ConvR 331
Introduction
1 On 9 May 2014, the Tribunal delivered its determination under s 11(5) of The Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (CTRSA Act) of a question regarding the rent payable for a retail shop leased by Flyer Services Pty Ltd (tenant) from Mr Marshall and his co-respondents (landlord) arising from a rent review: see Flyer Services Pty Ltd and Marshall [2014] WASAT 52 (substantive decision).
2 On 29 May 2014, the tenant filed an 'interim application' seeking its costs of the proceeding on five separate grounds. The grounds were supplemented in an outline of submissions filed on 18 June 2014. The costs sought to be awarded are in the vicinity of $85,000, based on a claim for some portion of the costs being awarded on an indemnity costs basis, or approximately $73,000, if no indemnity costs are granted.
3 The landlord, in its submissions filed on 1 July 2014, expressed its opposition to the tenant's costs application, and to the amounts claimed, assuming a cost order is made.
4 The tenant filed submissions in reply to the landlord's submissions on 7 July 2014.
5 In this decision, in accordance with the order of the Tribunal on 3 June 2014, I will determine the costs application on the basis of the documents filed by the parties, and, in the event of any award of costs, fix the amount of those costs.
Merits of costs application
6 The tenant relies explicitly on the following five factors as giving rise to its claimed entitlement to a costs order:
1) Its case was strong. It succeeded in each issue for determination.
2) The proceeding involved technical issues and complex legal arguments, differentiating it from most rental determination cases in the Tribunal.
3) The importance of the proceeding to the tenant, given that the outcome would continue to operate for the remaining three years of the lease.
4) The landlord's conduct, which resulted in an increased costs exposure for the tenant.
5) The landlord's refusal of three offers which should have been accepted by it to resolve the matter.
7 There is now a number of published decisions of The Tribunal dealing with the circumstances in which costs orders might be made under s 87(2) of the State Administrative Tribunal Act 2004 (WA) (SAT Act) despite the presumption arising from s 87(1) of the SAT Act that parties bear their own costs: see for example Pearce & Anor and Germain [2007] WASAT 291 (S) (Pearce), Gill & Ors and Wildnight Pty Ltd [2008] WASAT 135, J&P Metals Pty Ltd and Shire of Dardanup [2006] WASAT 282 (S), Medical Board of Australia and Costley [2013] WASAT 2 and Marvelle Investments Pty Ltd and Argyle Holdings Pty Ltd [2010] WASAT 125 (S).
8 In the commercial tenancy context, the following excerpt from Pearce, a decision of (the then) Deputy President, Judge Chaney (as he then was) is particularly apposite (Pearce at [24]):
In my view, the approach that should be taken to costs in proceedings under the CTRSA Act should reflect …. that decisions on costs might serve to promote certainty and responsibility in parties to their contractual responsibilities. That does not mean that there is a presumption that costs will follow the event. Rather, where it is necessary for a party to a retail shop lease to take proceedings in the Tribunal to vindicate its clear contractual entitlements, and to incur costs in doing so, it will 'often not be unreasonable for an award of costs to be made'. The position is the same where costs are incurred in defending an obviously unmeritorious claim. Where, however, there is a genuine dispute between the parties to a lease, their respective rights are unclear and one or both seek determination of their rights in the Tribunal, the starting point remains that each party should expect to pay their own costs[.]
9 As a general rule, I would have thought that where, as here, parties to a retail shop lease invoke the rent review process set out in s 11(3) of the CTRSA Act by each party appointing its own licensed valuer, the parties' respective valuers fail to reach agreement on the rent payable as a result of the review, and the dispute is referred to the Tribunal under s 11(5) of the CTRSA Act, that the dispute would be reasonably regarded as a genuine dispute between the parties, the respective rights of whom are unclear.
10 I am disinclined to the view that a party who ultimately can be regarded as the unsuccessful party (the lack of success being measured on the basis of the outcome more closely aligning itself with the opposing party's valuation) ought thereby be penalised by a costs order against it. A party is generally entitled to rely upon advice received from an expert it engages when the advice is within the expert's area of expertise. Even where, as here, the unsuccessful party's valuer has been found to adopt a wrong method (in this case, the zoning method), that would, on its own, be an insufficient basis to overturn the no costs presumption.
11 In this matter, the tenant was critical of the landlord's choice of Mr Kish as its valuer, based on a perceived conflict of interest arising from Mr Kish's directorship of Messrs Burgess Rawson, the landlord's managing agent. All I need say in relation to the claim of conflict of interest is that the Tribunal did not consider Mr Kish to be so compromised as to exclude his evidence, but rather, decided the dispute based upon its critical analysis of the evidence of both valuers.
12 I do not consider that any of the tenant's first three nominated factors overrides the conclusion I have reached, on the above reasoning, that that part of the proceeding concerned with the Tribunal's determination of market rent should not be the subject of a costs order.
13 The tenant then relies upon the landlord's conduct in the proceeding, which it claimed to have increased the tenant's costs, by reference to the following two examples:
• the preliminary issue raised shortly before the first scheduled hearing date, which was decided against the landlord’s position; and
• arguments of the landlord in the substantive hearing which were 'technical, convoluted and unmeritorious', including reliance on the depth analysis valuation method and a strained and complex construction of the lease.
14 I have already discounted the landlord's valuer's methodology as a factor justifying a costs order. Nor am I persuaded that the matter was unduly prolonged by any arguments at the final hearing concerning the construction of the lease, noting that the main issue of construction concerned the incentive associated with the Kathmandu lease, in relation to which, as the Tribunal found, the provisions of the CTRSA Act prevailed over the provisions of the lease when in conflict.
15 However, for the reasons which follow, I consider that the landlord ought to bear the tenant's costs associated with a preliminary issue or matter which was, at its behest, heard and determined before the final hearing.
16 The factual circumstances which led to the Tribunal dealing with the matter raised by the landlord, which amounted to a challenge to the legality of the application, and the jurisdiction of the Tribunal to hear it, based upon an assertion that no valid rent review had been undertaken, are set out in Flyer Services Pty Ltd and Marshall [2013] WASAT 188 (preliminary decision) at [1][6], which I incorporate into these reasons. In fact, the preliminary decision was concerned explicitly with two questions arising under the lease, which the tenant was permitted to add to its application. In the event, the Tribunal found both that the landlord was obliged to instigate a rent review in respect of each market review date, and that the landlord was estopped from denying that a rent review for the relevant date had been commenced. The result was that the hearing concerned with the determination of the market rent then proceeded.
17 I accept, as submitted by the landlord, that merely finding against a party on an issue is insufficient to invoke the power to award costs in respect of that issue. However, in my view, there are sufficient indicators that the additional cost to the tenant occasioned by the landlord's unsuccessful attempt to prevent the substantive hearing from proceeding was reasonably to be regarded as being at the landlord's risk. Those indicators are:
a) The landlord's challenge was raised very late in the proceeding, some two weeks prior to the original hearing date for the substantive matter, when it might be expected that the tenant's legal representatives would have commenced their hearing preparation.
b) The landlord's challenge was precipitated by the Tribunal's decision in Beba Enterprises and Elle Pty Ltd [2013] WASAT 120 (see the landlord's solicitors' letter dated 22 August 2012 to the Tribunal), when the lease concerned in that matter contained terms different in significant respects from the parties' lease.
c) Although not using any words expressing particular lack of merit to describe the landlord's arguments in the preliminary decision such as 'untenable', 'frivolous', or 'vexatious', I did in the preliminary decision make a number of observations and findings which reflected poorly on the quality of the landlord's challenge. They included:
• (at [14]) the landlord's submissions fail to pay proper regard to the ordinary meaning of, in particular, the critical clause of the lease;
• (at [19] [20] ) the landlord's attempt to distinguish Myers v Pioneer Concrete (Vic) Pty Ltd [1997] ANZ ConvR 331, a case seemingly on all fours with the present case, based on the use of 'shall' in preference to 'will' was fulsomely rejected;
• further arguments advanced by the landlord were emphatically rejected at [32] - [42];
• (at [43]) the landlord's submissions relying upon the CTRSA Act said to favour the landlord's construction of the lease were described as 'tenuous'; and
• in accepting the tenant's estoppel case, I found that to allow the departure from the assumption adopted by the parties that acceptance of the landlord's submissions would have entailed would be unconscionable (at [86]).
19 The tenant relies upon three offers, the details of which are:
First Offer
20 In the tenant's legal counsel's email to Mr McCormick of Burgess Rawson, dated 7 June 2013 and marked 'without prejudice save as to costs', the following proposal was put:
1) Net rental set at $600,000 from 1 July 2012; and
2) The landlord to waive the tenant's refurbishments works set out in clause 14.3.
21 The email stipulated that the offer would remain open for seven days.
Second Offer
22 In the tenant's solicitors' letter to Mr McCormick, dated 18 July 2013 and marked 'without prejudice save as to costs', the following offer was put:
1) Net market rental as at 1 July 2012 be fixed at $580,000 exclusive of GST;
2) Interest to accrue on the difference between the rent paid since 1 July 2012 and the agreed rent at 12%; and
3) The landlord to release the tenant from any obligations to repaint and redecorate during the current lease term.
23 The letter stated that the offer was open for 21 days.
Third offer
24 In the tenant's solicitors’ letter to the landlord's solicitors, dated 4 February 2014 and marked 'without prejudice save as to costs', the following offer was made:
1) The base rent for 1 July 2012 be fixed at $600,000 exclusive of GST; and
2) Certain conditions were placed on repayment of rent overpaid by reason of the agreed figure.
25 The letter stipulated the offer to be open until 4.30pm on 6 February 2014.
26 The State Administrative Tribunal Rules 2004 (WA) (SAT Rules) contain a number of provisions regarding settlement offers, the acceptance of offers and the possibility of an order for costs if an offer is rejected. I reproduce below r 40, 41 and 42 of the SAT Rules to the necessary extent:
40. Settlement offers
(1) An offer to settle a proceeding that is before the Tribunal may be made
(a) with prejudice, meaning that any party may refer to the offer, or to any terms of the offer, at any time during the proceeding; or
(b) without prejudice, meaning that the Tribunal is not able to be told of the making of the offer until after it has made its decision in respect of the matters in dispute in the proceeding (other than in relation to the making of orders in respect of costs).
(2) If an offer does not specify whether it is made with or without prejudice, it is to be treated as if it had been made without prejudice.
(3) A party may make more than one offer[.]
41. Acceptance of settlement offers
(1) An offer may be open for acceptance for any period. However, an offer must be open for acceptance until the commencement of the hearing or until the expiry of a specified period after the offer is made, whichever is the shorter period.
(2) The minimum period that can be specified is 14 days.
(3) An offer cannot be withdrawn while it is open for acceptance without the permission of the Tribunal[.]
42. Order for costs if settlement offer is rejected
(1) This rule applies if
(a) a party to a proceeding (other than a proceeding in the Tribunal's review jurisdiction) gives another party to the proceeding an offer in writing to settle the proceeding; and
(b) the other party does not accept the offer within the time the offer is open; and
(c) the offer complies with rules 40 and 41; and
(d) in the opinion of the Tribunal, the orders made by the Tribunal in the proceeding are not more favourable to the other party than the offer.
(2) If this rule applies, the Tribunal is to, in determining the costs that may be awarded, take into account that the party did not accept an offer more favourable than the Tribunal's order.
(3) In determining whether its orders are or are not more favourable to a party than an offer, the Tribunal
(a) must take into account any costs it would have ordered on the date the offer was made; and
(b) must disregard any costs it ordered in respect of any period after the date the offer was received.
28 The requirement that the offer be at least as favourable as the order is to be contrasted with the different question, relevant in the context of indemnity costs orders, of whether a rejection of an offer was reasonable. As Beech J said in connection with the Calderbank offer with which he was concerned in Mc Kay v Commissioner of Main Roads (No 7) [2011] WASC 223 (S) (Mc Kay) at [127]:
The character of what animates the exercise of the exceptional power to award indemnity costs explains why the courts require a finding of unreasonable rejection before indemnity costs are available based on a Calderbank offer. Those considerations do not apply to using a Calderbank offer to order party-party costs. I do not think the breadth of the costs discretion should be or is constrained by a requirement of finding unreasonable rejection as a prerequisite to a party-party costs order based on a Calderbank offer.
29 The effect of the order made by the Tribunal was to fix the net market rent of the premises as at 1 July 2012 at $585,754.50 per annum exclusive of GST.
30 Notwithstanding the importance placed by the tenant on the second offer, including proposing that costs be awarded on an indemnity basis from the date that the second offer lapsed, that offer does not fulfil the precondition to which I have referred. An offer to fix the rent at $580, 000 is not more favourable to a landlord than an order fixing the rent at $585,000. Further, the offer included a release of the tenant's refurbishment obligation under the landlord, to the further disadvantage of the landlord.
31 To argue, as the tenant does, that the offer was 'not much less than' the decision amount is not to the point, and seems to rely upon a reasonableness argument, rather than whether the offer fulfils the most critical requirement for the making of an adverse costs order, whether based on the SAT Rules or Calderbank principles.
32 The first offer, which is not compliant with the SAT rules (the period for acceptance being less than the required 14 days), but might nonetheless be considered in accordance with the Calderbank principles, is tainted by the fact that it is not limited to fixing the rent at $600,000 (which I am prepared to assume is exclusive of GST). It contained as well a requirement of a waiver of the tenant's refurbishment obligation. The landlord sought to demonstrate that this might amount to an impost upon it of almost $74,000, based on a painting quotation provided with its costs submissions.
33 The tenant advanced a number of reasons why the landlord's reliance on the painting quotation was misplaced and the Tribunal should not afford it any weight. However, it is for the tenant to persuade me that the first offer, if accepted, would have been more favourable to the landlord than the Tribunal's decision. The proposed new rent figure is some $14,000 per annum higher than the Tribunal's determination, which would have enured for three years. However, the tenant produced no evidence going to the diminished value to the landlord represented by the proposed waiver of the refurbishment obligation. In these circumstances, I cannot be satisfied that the first offer was more favourable to the landlord than the Tribunal's offer.
34 This leaves the third offer upon which the tenant relies.
35 The third offer was made on 4 February 2012, six days before the substantive hearing, and was open for acceptance for just two days. The third offer was clearly not an offer to which r 42 applies. In order for it to be so, it would have needed to have been open for acceptance until the commencement of the hearing, by reason of r 41(1) of the SAT Rules. I therefore need to consider whether a costs order consequential upon the landlord's rejection of the third offer based on Calderbank principles is warranted. I do so in the absence of either party making submissions on that matter specific to the third offer.
36 In contrast with the first and second offers, I am satisfied that the third offer does meet the critical requirement under r 42 that the final order not be more favourable to the landlord than the offer. The amount of the proposed rent was some $14,000 per annum higher than the Tribunal's determination. The further condition of the third offer, relating to interest on the rent overpaid in light of the proposed agreed rent, and the time of its payment, would not have represented any detriment to the landlord which, on my reading of the lease and the provisions of the Act relating to reimbursement of overpaid rent in the scenario being considered, it would have otherwise been exposed to.
37 The judgment of Beech J in Mc Kay at[135] [150] contains an interesting discussion regarding offers made shortly before trial and, generally, open for a short period. The NSW authorities to which his Honour refers need to be read with caution, as the analogous rule to r 42 of the SAT Rules (and o 24A of the Supreme Court Rules1971 (WA)) themselves provide that in the 28 days leading to trial, an offer must be open for a 'reasonable period', and the cases are concerned with whether the periods allowed were reasonable.
38 Beech J summarised the cases considered by him as follows (at [150]):
(a) in some cases, offers open for less than a week have been sufficient, or described as borderline;
(b) an offer open for less than a day was 'borderline';
(c) in other cases, offers made in the week before trial have been given little weight; and
(d) each case depends on its own circumstances.
39 In the context of a formal regime in the Tribunal requiring that, in order for the rule to be invoked, the offer remain open until the commencement of the hearing, I consider that an offer made six days before the hearing and left open for two days only is not one the rejection of which should alter the usual position that each party bear its own costs.
Quantification of costs allowed
40 I have found the tenant to be entitled to an order for its costs, limited to those costs incurred by reason of the landlord's raising, some two weeks before the original substantive hearing date, a preliminary issue based upon its assertion that a market review had never been validly commenced.
41 The tenant produced a schedule of costs in relation to the entirety of the proceeding (tenant's schedule). Items 4, 5, 6 and 7 relate to the period during which the preliminary issue was raised and determined. Those items are reproduced below:
|
|
| Scale Item | Amount $ |
|
|
SP – 7.7 hours @ $374 per hour Clerk – 11 hours @ $132 per hour Counsel, Mr Gary Cobby: 10.42 hours @ $297 per hour 0.5 days @ $2,970 per day | 22 by analogy | 8,911.54 |
|
|
SP – 1.5 hours @ $374 per hour | 1 (c) by analogy | 1,980.66 |
|
|
SP – 1.5 hours @ $374 per hour Clerk – 3.7 hours @ $132 per hour Counsel, Mr Gary Cobby – 0.58 hours @ $297 per hour | 1 (a) by analogy | 1,221.66 |
|
|
SP – 1.7 hours @ $374 per hour | 24 | 635.80 |
42 Each of the amounts claimed in respect of the above items is claimed on an indemnity basis. As already discussed, the reason for this is linked to the rejection by the landlord of the second offer. As I have declined to have regard to that rejection in relation to the tenant's entitlement to costs, it cannot form the basis of a claim, in respect of the preliminary issue period, for indemnity costs, rather than party and party costs. For reasons that follow, this has made no difference to the amounts I have decided to allow in fixing the tenant's costs.
43 The tenant's written submissions on costs explain that the claims in the tenant's schedule were formulated 'using the SAT scale as a guide, and the Supreme Court scale as an additional guide'. The 'SAT scale' is the Legal Practitioners (State Administrative Tribunal) Report and Determination2012, ('SAT scale') and the 'Supreme Court scale' is the Legal Practitioners (Supreme Court) (Contentious Business) Report and Determination 2012. The reliance on the Supreme Court scale in respect of the four identified items appears to be limited to their characterisation. The actual, financial, claims made are calculated by reference to time spent by those working on the matter at rates reflecting the maximum allowable rates under the SAT scale.
44 I have no difficulty in allowing the maximum allowable rates for each category of practitioner under the SAT scale as claimed by the tenant, having regard to the following matters:
• the circumstances of the raising of the preliminary issue by the landlord, some two months after commencement of the proceeding (which followed a period when the dispute was with the Small Business Commissioner) and two weeks prior to the original substantive hearing date;
• the serious consequence for the tenant, were the landlord’s challenge to succeed, that the Tribunal’s determination of the market rent would not proceed;
• the requirement, to facilitate the landlord’s challenge, that the tenant amend its application by adding two questions for referral to the Tribunal; and
• the number and nature of the issues required to be considered and argued at the hearing, reflected in the Tribunal's reasons for decision going to 27 pages.
45 Further, in all the circumstances, including the lack of response by the landlord to the tenant's claimed times spent by a senior practitioner, clerk and counsel, I am, with two reservations, prepared to fashion the costs order based upon the times stipulated in the tenant's schedule.
46 The first reservation concerns item 5 (Statement of Issues Facts and Contentions), for which allowance is sought for a senior practitioner of 1.5 hours and counsel for 4.78 hours.
47 At the directions hearing on 27 August 2013, when the original final hearing date was vacated, the tenant was directed to file and serve 'an amended application and outline of submissions addressing questions referred to the Tribunal under s 16 of the [CTRSA Act]'.
48 On 5 September 2013, the tenant filed a 'Statement of Issues, Facts and Contentions'. This contains submissions addressing the s 16 questions, but also deals with the substantive question of the appropriate amount of the market rent for the premises at the relevant time. Given the limited scope of the costs order, it is necessary for me to estimate the relative proportion of the document dealing with the preliminary issue, and allocate the appropriate portion of the total amount claimed for this item.
49 Going on the contents of the Statement of Issues Facts and Contentions, roughly equal work was involved on the preliminary issue/referred questions and the substantive rent determination. I am prepared to allow $1,000 of the $1,988.66 claimed in respect of item 5.
50 My second reservation relates to item 6 (amended application), which claims $1221.66 based upon 1.5 hours for a senior practitioner, 3.7 hours for a clerk and 0.50 hours for counsel.
51 On 4 September 2013, in compliance with the direction made on 27 August 2013, the tenant filed an amended minute of proposed orders. When compared with the original of minute of proposed orders which accompanied the original application document, the amended minute contained a referral of two questions to the Tribunal, a plea, in the event of particular answers to those questions, for two alternative orders, and the introduction of the orders sought in the original minute of the scenario in which those orders were now to be sought.
52 These amendments do not, in my view, justify the time claimed to have been spent on their formulation. I am prepared to allow 0.5 hour for a senior practitioner and counsel's full claim of 0.58 hours. Adding the relevant amounts together, an amount of $359.26 is arrived at.
53 Given the objective of the costs order to recompense the tenant for its additional legal costs arising from the landlord’s unsuccessful challenge to the validity of the rent review process, it is appropriate that I make another allowance for the undoubted consequence of the initial substantive hearing date being vacated that some preparation for the original final hearing date was wasted. I note that this concerns item 3 in the tenant's schedule, preparing of case for hearing, in respect of which five hours of a senior practitioner's time is claimed. Although the final claim for preparation (item 10) includes a seemingly generous claimed times for the senior practitioner of 44 hours and clerk of 40.7 hours, I am prepared to assume that the intercession of the hearing and determination of the preliminary issue meant that a substantial proportion of the five hours' preparation prior to 8 August 2013 was wasted, in the sense that it needed replication some months later after the preliminary issue was dealt with. I estimate that three of the five hours were so wasted, which I will add to the costs for which the landlord is responsible.
54 The only other item in the tenant's schedule capable of falling within the scope of the costs to be awarded to the tenant is item 15, costs application including quantification.
55 Unlike the other items I have allowed, this item merely refers to an amount, $7000, without referring to time spent by whom. The analogous item in the Supreme Court scale said to be relevant is item 10(a), which is ‘Proceedings in Chambers’ for which a maximum of $10,560 is payable, based upon two days preparation and one day’s hearing by counsel.
56 In Law and Town of Vincent [2006] WASAT 263(S), Member Parry (as he then was) said at [24]:
… [A]s the Tribunal said in J & P Metals Pty Ltd and Shire of Dardanup at [38], it expects 'thatrepresentatives of parties before the Tribunal will approach a proceedings in a way that minimises costs to their clients'. This expectation extends, perhaps even more strongly, to the assessment of costs. The Tribunal is a generally no costs jurisdiction. Its objectives include to 'minimise the costs to the parties': SAT Act s 9(b). Where, exceptionally, an order for costs is made, the Tribunal expects the parties and their representatives to take a sensible, pragmatic and broadbrush approach to the reasonable assessment of costs, such as the approach set out above.
57 A claim for $7000 in connection with this costs application is, by any measure, excessive, particularly so having regard to the above sentiment. Further, given its amount, the landlord and the Tribunal are entitled to expect a more informative statement of the reasons for the claimed amount than a mere reference to an item in the Supreme Court scale which is general in form and not especially apposite.
58 I accept that it was necessary for the tenant, through its lawyers, to draft the costs application and provide the tenant’s schedule and submissions supporting its claims. It is entitled to be reimbursed the reasonable cost of those endeavours to the extent that they relate to the limited scope of the costs order. I will allow the equivalent of three hours at the senior practitioners’ rate, in the amount of $1,122.
59 In summary, the amounts which I have found to have been incurred by the tenant for reimbursement by the landlord by way of an order for costs are:
|
| $1,122.00 |
|
| $8,911.54 |
|
| $1,980.66 |
|
| $359.36 |
|
| $635.50 |
|
| $1,122.00 |
Total | $13,150.60 |
Order
60 The Tribunal shall issue an order in the following terms
1. The respondents shall pay the applicant a contribution to its costs fixed at $13,150.60 payable within 14 days of the date of this order.
I certify that this and the preceding [60] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR T CAREY, MEMBER
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